Vakil Help Desk News: the National Consumer Disputes Redressal Commission has held that buyers of commercial units acquired as an investment — to lease out for profit — are not 'consumers' and cannot use the consumer forums against the builder; their remedies lie elsewhere.
Vakil Help Desk News, RWA & Housing Societies. Before fighting a builder in a consumer forum, you have to clear a threshold: are you a 'consumer' at all? The National Consumer Disputes Redressal Commission (NCDRC) answered this for commercial-property investors.
The dispute
Several buyers of commercial units in a mall project (offices, retail and service apartments) complained to the consumer commission about post-handover grievances — construction on land meant for parking, maintenance-fund and common-area issues, and structural defects. The builder objected that they were not consumers, because the units were bought as investments and leased to businesses for rental profit, with some buyers holding multiple units.
What the Commission held
- The buyers were not 'consumers' — the units were acquired for a commercial purpose. Looked at as a whole (buy, lease to businesses, earn rent), the dominant purpose was profit generation.
- Buying an under-construction unit is a 'service', not 'goods'. Under the Consumer Protection Act, 2019, the 'self-employment for livelihood' exception now applies only to goods — so it did not help these buyers.
- A service availed for a commercial purpose is excluded; the test is the dominant purpose of the transaction, judged on the facts, with 'no straitjacket formula'.
- That rental income is taxed as house-property income does not make the purpose non-commercial.
- The complaint was dismissed as not entertainable; no compensation, refund or interest was awarded.
Why it matters
Consumer forums are quick and low-cost, but they are meant for buyers acquiring for personal use or genuine livelihood — not large-scale commercial investment. If you buy commercial property to lease out, your remedies against the builder usually lie in civil court, arbitration or under RERA, not the consumer forum.
What this means for you
If you buy property as an investment — especially commercial units to lease out for profit — you may not qualify as a 'consumer', and a consumer-forum complaint against the builder can be dismissed at the threshold. Choose the right forum from the start (civil suit, arbitration, or RERA as applicable), and always disclose material facts such as holding multiple units. Buyers acquiring for personal use or genuine self-employment stand on a different footing. We advise homebuyers and investors on builder disputes, RERA and the right remedy for their situation.