Court case(2020) 2 SCC 265

The appellant, a charitable trust that runs a well-known hospital in Mumbai, booked flats in a building to be constructed by the respondent developers, intending to use them as residential accommodation for its staff (such as nurses and doctors) near the hospital. The developers failed to deliver the flats, and the trust complained to the National Commission under the Consumer Protection Act 1986. The National Commission dismissed the complaint, holding that the trust had bought the flats for a commercial purpose connected with running its hospital and was therefore not a consumer. The trust appealed to the Supreme Court.

The Supreme Court allowed the appeal. Reviewing Laxmi Engineering Works and later cases, it summarised the principles: whether a transaction is for a commercial purpose is a question of fact; "commercial purpose" generally means a purpose connected with profit-making; the purchase must have a close and direct nexus with a profit-generating activity; the identity of the purchaser (an individual, trust or company) or the value of the transaction is not decisive; and the court must look to the dominant intention or dominant purpose of the transaction. Housing for staff, provided as a welfare measure and not linked to generating profit, was not a commercial purpose. The trust was a consumer, and the complaint was restored for decision on merits.