LILAVATI KIRTILAL MEHTA MEDICAL TRUST versus M/S UNIQUE SHANTI DEVELOPERS & ORS. on 14 November 2019

[2019] 14 S.C.R. 563

LILAVATI KIRTILAL MEHTA MEDICAL TRUST

v.

M/S UNIQUE SHANTI DEVELOPERS & ORS.

(Civil Appeal No. 12322 of 2016)

NOVEMBER 14, 2019

[MOHAN M. SHANTANAGOUDAR ANDAJAY RASTOGI, JJ.]

Consumer Protection Act,1986– Explanation to s.2(1)(d) –’Commercial Purpose’ under – When an activity/transaction is notfor said purpose – Agreements to sell executed for 29 flats in 1995–Appellant-Trust took possession of said flats, constructed byrespondent no.1, for providing hostel facilities to nurses employedby the Hospital run by the appellant – However, the structurebecame dilapidated and the appellant vacated the flats in 2002 –Complaint filed by the appellant before the National Commission–Initially, dismissed as barred by limitation– In review, the order wasrecalled, however the Commission again dismissed the complainton the ground that the appellant was not ‘consumer’ u/s.2(1)(d)as the said section excludes a person who obtains goods andservices for ‘commercial purpose’ – On appeal, held: Explanationclause to s.2(1)(d) was added by way of Ordinance No.24 of 1993(subsequently replaced by Amendment Act No.50 of 1993) –SaidAmendment Act also added ‘housing construction’ to the definitionof ‘service’ u/s.2(o) – In the present case, the appellant validly tookthe possession of the flats constructed by respondent no.1 and paidconsideration and can therefore be said to have availed of itshousing construction services– Explanation to s.2(1)(d) isclarificatory in nature and only re-affirms the definition of‘consumer’ as it already exists – Ultimately, whether or not a personis consumer or whether an activity is meant for commercial purposewill depend upon the facts and circumstances of each case – It isnot the identity of the person but the purpose for which thetransaction is made which is relevant – Hence, private corporatebodies such as the appellant may engage the services of thirdparties for the purpose of providing perquisites to their employees– If in all such cases the third party service-provider disclaimsliability on the ground that the hirer of the service is engaged in

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Atrade and commerce, it will open Pandora’s box wherein theemployer as well as the employees will not have any remedy –Purchase of the good/service should have close and direct nexuswith profit-generating activity – There is no direct nexus betweenthe purchase of flats by the appellant trust and its profit generatingactivities – Further, applying the dominant purpose test, it cannotBbe said that the provision of such hostel facilities is integral to theappellant trust’s commercial activities– Purchase of flats by theappellant for providing hostel facilities to the nurses is not evenremotely related to the object of earning profits or for anycommercial use as envisaged u/s.2(1)(d) and hence, does not Cqualify as meant for ‘commercial purpose’ – Appellant is‘consumer’ u/s.2(1)(d) for the present transaction underconsideration– Impugned judgment set aside – Appeal restoredbefore the National Commission, who is to decide the matterexpeditiously.

DAllowing the appeal, the CourtHELD: 1.1 The purchase of flats by the Appellant for thepurpose of providing hostel facilities to the hospital nurses doesnot qualify as meant for a ‘commercial purpose’. Though the term‘commercial purpose’ as referred to under Section 2(1)(d) hasEnowhere been defined under the provisions of the ConsumerProtection Act, 1986, Supreme Court has expounded upon itbased on its lateral dictionary meaning in various decisions. Itis true that the said decisions were rendered in the context ofdeciding whether the goods or services availed of in the factsof those cases were for a commercial purpose or exclusively forFthe purpose of self-employment. This does not mean, however,that in every case a negative test has to be adopted wherein anyactivity that does not fall within the ambit of ‘earning livelihoodby means of self-employment’ would necessarily be for acommercial purpose. Respondent No.1’s argument is rejectedGin this regard. Explanation clause was added to Section 2(1)(d)by way of Ordinance No. 24 of 1993 (subsequently replaced byAmendment Act No. 50 of 1993). Amendment Act No. 50 of 1993also added ‘housing construction’ to the definition of ‘service’under Section 2(o) of the 1986 Act. In the present case, it isnot denied that the Appellant has validly taken possession of theHflats constructed by Respondent No. 1 and paid consideration for the same, and can therefore be said to have availed of itshousing construction services. The Explanation clause to Section2(1)(d) of the 1986 Act is only clarificatory in nature. Thereforethe Explanation clause only re-affirms the definition of‘consumer’ as it already exists. Ultimately, whether or not aperson is a consumer or whether an activity is meant for acommercial purpose will depend upon the facts andcircumstances of each case. It may be the case that a personwho engages in commercial activities has purchased a good oravailed of a service for their personal use and consumption, orfor the personal use of a beneficiary, and such purchase is notlinked to their ordinary profit-generating activities or for creationof self-employment. Such a person may still claim to be a‘consumer.’ If there is any deficiency in service, the service-provider cannot claim that merely because the person availingof the service is a profit-generating entity, and because suchtransaction does not relate to generation of livelihood throughself-employment, they do not fall under the definition of a‘consumer.’ A commercial entity may also be a consumerdepending upon the facts of the case. It is not the identity ofthe person but the purpose for which the transaction is madewhich is relevant. [Paras 3-5] [570-E-F; 571-F-G; 574-H; 575-A-D-G]

1.2 Private corporate bodies such as the Appellant trustmay engage the services of third parties for the purpose ofproviding perquisites to their employees. If the third partyservice-provider disclaims liability before consumer forums onthe ground that the hirer of the service is engaged in trade andcommerce, it will open a Pandora’s box wherein the employeras well as the employees will not have any remedy. This woulddefeat the object of providing a speedy remedy to consumers,as outlined in the provisions of the 1986 Act. Further, settingsuch a precedent may discourage employers from undertakingto provide any facilities for their employees. Hence, it isnecessary to clarify that the provision of such services wouldnot usually be included in the definition of ‘commercial purpose.’Though a straight-jacket formula cannot be adopted in everycase, the following broad principles can be culled out fordetermining whether an activity or transaction is ‘for acommercial purpose’: (i) The question of whether a transaction ABC

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Ais for a commercial purpose would depend upon the facts andcircumstances of each case. However, ordinarily, ‘commercialpurpose’ is understood to include manufacturing/industrialactivity or business-to-business transactions betweencommercial entities. (ii) The purchase of the good or serviceshould have a close and direct nexus with a profit-generatingBactivity. (iii) The identity of the person making the purchase orthe value of the transaction is not conclusive to the question ofwhether it is for a commercial purpose. It has to be seenwhether the dominant intention or dominant purpose for thetransaction was to facilitate some kind of profit generation forCthe purchaser and/or their beneficiary. (iv) If it is found that thedominant purpose behind purchasing the good or service wasfor the personal use and consumption of the purchaser and/ortheir beneficiary, or is otherwise not linked to any commercialactivity, the question of whether such a purchase was for thepurpose of ‘generating livelihood by means of self-employment’Dneed not be looked into. Applying these principles to the factsof the present case, there is no direct nexus between thepurchase of flats by the Appellant trust and its profit generatingactivities. The flats were not occupied for undertaking anymedical/diagnostic facilities within the hospital but forEaccommodating the nurses employed by the hospital. Moreover,the flats were being provided to the nurses without any rent.Further, applying the dominant purpose test, it cannot be saidthat the provision of such hostel facilities is integral to theAppellant trust’s commercial activities. Hence the provision ofhostel facilities to nurses so as to facilitate better medical careFis a positive duty enjoined upon the hospital so as to maintainthe beneficial effects of the curative care efforts undertaken byit. Such a duty exists irrespective of the surplus or turnovergenerated by the hospital, and hence is not even remotelyrelated to the object of earning profits or for any commercial useas envisaged under Section 2(1)(d). Hence the Appellant trustGis a ‘consumer’ under Section 2(1)(d) of the 1986 Act for thepresent transaction under consideration. The matter isremanded to the National Commission for consideration inaccordance with law. The appeal is restored before the NationalCommission, and the impugned judgment is set aside, in theHaforesaid terms. The parties are relegated to record their A

evidence before the National Commission, and the NationalCommission is requested to hear the matter on merits anddecide the same expeditiously, at an early date. [Paras 6-9] [576-B-H; 577-A-D; 578-A-E-G]

Kalpavruksha Charitable Trust v. Toshniwal Brothers(Bombay) Pvt. Ltd. (2000) 1 SCC 512 : [1999] 3 Suppl.SCR 619 – distinguished.

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Spring Meadows Hospital v. Harjol Ahluwalia throughK.S. Ahluwalia, I (1998) CPJ 1 (SC) ; LaxmiEngineering Works v. P.S.G. Industrial Institute (1995)3 SCC 583 : [1995] 3 SCR 174 ; Paramount DigitalColour Lab v. Agfa India Private Limited (2018) 14SCC 81 – relied on.

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Cheema Engineering Services v. Rajan Singh (1997)1 SCC 131 : [1996] 8 Suppl. SCR 340 ; Synco TextilesPvt. Ltd. v. Greaves Cotton and Company Limited(1991) 1 CPJ 499 – referred to.

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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 12322of 2016.

From the Judgment and Order dated 25.10.2016 of the NationalConsumer Disputes Redressal Commission in Review Application No.76 of 2016.

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Guru Krishna Kumar, Ms. Sangeeta Bharti, Ms. Anubha Dhulia,Ms. Prerna Mehta, Advs. for the Appellant.

Ms. Kiran Suri, Sr. Adv., S.J. Amith, Ms. Aishwarya Kumar,Dr. (Mrs.) Vipin Gupta, Ms. Abha R. Sharma, Advs. for theRespondents.

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AThe Judgment of the Court was delivered byMOHAN M. SHANTANAGOUDAR, J.

1. This appeal arises out of judgment of the National ConsumerDisputes Redressal Commission (‘National Commission’) dated25.10.2016 dismissing the Appellant’s Review Application No. 76/2016Bagainst the order dated 1.3.2016 by which the National Commissiondismissed the Appellant’s Consumer Complaint No. 117/2016.

2. The Appellant’s case is that Respondent No. 1/Opposite PartyNo. 1 had developed two buildings ‘Madhuvan’ with thirty two ‘1 BHK’flats in colony ‘Shanti Park’ in Thane, Maharashtra. Out of these theCAppellant/complainant trust took possession of 29 flats for provision ofhostel facilities to nurses employed by Lilavati Hospital, which is runby the Appellant trust. 29 agreements to sell were executed in respectof each flat on 25.11.1995, which were registered on 16.3.1996, andentire consideration amount was paid for the same. The architect issuedDcompletion certificate in respect of the flats on 17.2.1997. The flatswere used for the purpose of hostel facilities till 2002. However, within2-3 years of completion of the project, because of alleged poor buildingquality, the structure became dilapidated. The appellant vacated the flatsin 2002 and since 2004, the flats are lying unused.

EIn the meanwhile, an interim Board of Trustees was constitutedby this Court by order dated 21.5.2014 in SLP No. 3772/2014, whichis a separate litigation concerning dispute over control of the appellanttrust between different groups of trustees. The aforesaid interim Boardof Trustees called for a structural report from M/s Raje Consultants,which submitted their report in September 2015 finding that the cost ofFrepairs would be more than the cost of reconstruction. The appellantalso claims that Respondent No. 1 obtained the occupation certificatefor the flats by playing fraud upon the local municipal corporation. Hencethe appellant filed Consumer Complaint No. 117/2016 before the NationalCommission claiming Rs 7,65,95,400/- in compensation on account ofGannual loss of rent from 2002 to 2015, cost of reconstruction of building‘Madhuvan’ and future loss of rent of Rs 35,00,000/- per year, alongwith Rs 5,00,000/- in damages.

Initially, the National Commission by order dated 1.3.2016dismissed the complaint as barred by limitation on the ground that causeHof action for raising the complaint arose in 2004, the year since when the flats are lying unused; however the complaint was filed in 2016.Under Section 24A of the Consumer Protection Act, 1986 (‘1986 Act’)the period of limitation for filing a complaint is two years, hence thecomplaint was time-barred. The National Commission further held thatthe pending litigation between the trustees in SLP No. 3772/2014 (supra)is not sufficient to explain the delay as the dispute concerningconstitution of Board of Trustees of the appellant trust arose in 2014whereas it was not the appellant’s case that there was no competentBoard of Trustees in 2004 when the cause of action arose.

Subsequently the National Commission in the impugned judgment,hearing Review Application No. 76 of 2016 against the order dated1.3.2016 (supra), found that it had incorrectly recorded in the aforesaidorder that ‘conveyance deeds’ of the 29 flats were registered on16.3.1996, whereas what was registered by the appellants was actuallyagreements to sell. Hence on account of this error on the face of therecord, the National Commission recalled the order dated 1.3.2016.However the National Commission again proceeded to dismiss thecomplaint, this time on the ground that the appellant trust was not a‘consumer’ within the meaning of Section 2(1)(d) of the 1986 Act asthe aforesaid section excludes a person who obtains goods and servicesfor a ‘commercial purpose’; that since providing hostel facility to thenurses is directly connected to the commercial purpose of running thehospital, and is consideration for the work done by them in the hospital,the appellant would not be a ‘consumer’ under the 1986 Act. Hencethis appeal.

3. Section 2(1)(d) of the 1986 Act defines ‘consumer’ as follows:

“(d) “consumer” means any person who—

(i) buys any goods for a consideration which has been paidor promised or partly paid and partly promised, orunder any system of deferred payment and includesany user of such goods other than the person who buyssuch goods for consideration paid or promised or partlypaid or partly promised, or under any system ofdeferred payment when such use is made with theapproval of such person, but does not include a personwho obtains such goods for resale or for anycommercial purpose; or AB

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(ii) hires or avails of any services for a considerationwhich has been paid or promised or partly paid andpartly prom-ised, or under any system of deferredpayment and includes any beneficiary of such servicesother than the person who ‘hires or avails of theservices for consideration paid or promised, or partlypaid and partly promised, or under any system ofdeferred payment, when such services are availed ofwith the approval of the first mentioned person but doesnot include a person who avails of such services forany commercial purposes.

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Explanation.— For the purposes of this clause, “commercialpurpose” does not include use by a person of goods bought andused by him and services availed by him exclusively for thepurposes of earning his livelihood by means of self-employment.”

(emphasis supplied)

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The above Explanation clause was added to Section 2(1)(d) byway of Ordinance No. 24 of 1993 (subsequently replaced byAmendment Act No. 50 of 1993), with effect from 18.6.1993.Amendment Act No. 50 of 1993 also added ‘housing construction’ tothe definition of ‘service’ under Section 2(o) of the 1986 Act.

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In the present case, it is not denied that the Appellant has validlytaken possession of the flats constructed by Respondent No. 1 and paidconsideration for the same, and can therefore be said to have availedof its housing construction services. This Court has held in SpringMeadows Hospital v. Harjol Ahluwalia through K.S. Ahluwalia, IF(1998) CPJ 1 (SC), that the person who hires the service for abeneficiary can also be included in the definition of ‘consumer’ underSection 2(1)(d)(ii). Though that case was in the context of parents hiringthe services of a hospital for their minor child, the same principle mayalso be extended to a case such as the present one where an employersuch as the Appellant trust hires certain services for the welfare of itsGemployees. Hence, though possession of the flats was acquired for thepurpose of providing housing facility to the hospital nurses, the Appellantis entitled to claim against Respondent No. 1 as a consumer.

The only issue which arises for our considerationtherefore is whether the purchase of flats for the purpose of providingHaccommodation to nurses employed by the Appellant trust’s hospital

qualifies as a ‘purchase of services for a commercial purpose’; andconsequently whether the Appellant is excluded from the definition of‘consumer’ under Section 2(1)(d) of the 1986 Act?

Learned senior counsel for the Appellant, Mr. Guru KrishnaKumar argued in reliance upon this Court’s decisions in LaxmiEngineering Works v. P.S.G. Industrial Institute, (1995) 3 SCC 583,and Paramount Digital Colour Lab v. Agfa India Private Limited,(2018) 14 SCC 81, that the Court has to look at the dominant purposefor which the purchase is made in order to decide whether it was fora ‘commercial purpose.’ In this case, the dominant purpose forpurchasing the flats was to provide housing to the nurses and was notlinked to the commercial operations of the hospital.

Per contra, learned senior counsel for the Respondents Ms. KiranSuri argued that under the Explanation to Section 2(1)(d), only goodsand services availed “exclusively for the purpose of earning livelihoodby self-employment” are excluded from the ambit of ‘commercialpurpose’. In the present case, the hostel facilities in the flats constructedby Respondent No. 1 were for the purpose of providing comfortableaccommodation to the nurses, which in turn would increase theirefficiency and lead to provision of better services to the hospital. Hencethe flats were indirectly connected to the commercial purpose ofincreasing profits for the hospital. Such a purchase would not fall inthe category of ‘earning livelihood by self-employment’. Learned seniorcounsel relied on this Court’s decisions in Laxmi Engineering (supra),Cheema Engineering Services v. Rajan Singh, (1997) 1 SCC 131,and Kalpavruksha Charitable Trust v. Toshniwal Brothers (Bombay)Pvt. Ltd., (2000) 1 SCC 512, to buttress her argument.

4. Taking into account the material on record and the relevantjurisprudence on this issue, we are of the considered opinion that thepurchase of flats by the Appellant for the purpose of providing hostelfacilities to the hospital nurses does not qualify as meant for a‘commercial purpose’. Though the term ‘commercial purpose’ asreferred to under Section 2(1)(d) has nowhere been defined under theprovisions of the 1986 Act, this Court has expounded upon it based onits lateral dictionary meaning in various decisions.

In Laxmi Engineering (supra), which is one of the leadingauthorities on this point, a two-Judge Bench of this Court elucidatedupon the meaning of ‘commercial purpose’ as follows:

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“10. A review of the provisions of the Act discloses that the quasi-judicial bodies/authorities/agencies created by the Act known asDistrict Forums, State Commissions and the National Commissionare not courts though invested with some of the powers of a civilcourt. They are quasi-judicial tribunals brought into existence torender inexpensive and speedy remedies to consumers…The ideawas to help the consumers get justice and fair treatment in thematter of goods and services purchased and availed by them ina market dominated by large trading and manufacturing bodies.Indeed, the entire Act revolves round the consumer and isdesigned to protect his interest. The Act provides for “business-to-consumer’ disputes and not for “business-to-business”disputes.This scheme of the Act, in our opinion, is relevant toand helps in interpreting the words that fall for consideration inthis appeal.

11. Controversy has, however, arisen with respect to meaningof the expression “commercial purpose”. It is also not definedin the Act. In the absence of a definition, we have to go by itsordinary meaning. “Commercial” denotes “pertaining tocommerce” (Chamber’s Twentieth Century Dictionary); it means“connected with, or engaged in commerce; mercantile; havingprofit as the main aim” (Collins English Dictionary) whereas theword “commerce” means “financial transactions especiallybuying and selling of merchandise, on a large scale” (ConciseOxford Dictionary). The National Commission appears to havebeen taking a consistent view that where a person purchasesgoods “with a view to using such goods for carrying on anyactivity on a large scale for the purpose of earning profit” hewill not be a “consumer” within the meaning of Section 2(d)(i)of the Act…

“…The explanation reduces the question, what is a commercialpurpose”, to a question of fact to be decided in the facts of eachcase. It is not the value of the goods that matters but the purposeto which the goods bought are put to. The several wordsemployed in the explanation, viz., “uses them by himself”,“exclusively for the purpose of earning his livelihood” and “bymeans of self-employment” make the intention of Parliamentabundantly clear, that the goods bought must be used by thebuyer himself, by employing himself for earning his livelihood.”

(emphasis supplied)

In the aforementioned discussion in Laxmi Engineering, thisCourt relied upon Synco Textiles Pvt. Ltd. v. Greaves Cotton andCompany Limited, (1991) 1 CPJ 499. In Synco Textiles, a 4 Member-Bench of the National Commission headed by V. Balakrishna Eradi J.,expounded upon the meaning of the term ‘commercial purpose’, priorto the insertion of the Explanation clause to Section 2(1)(d) of the 1986Act:

“3…The words “for any commercial purpose” are wide enoughto take in all cases where goods are purchased for being usedin any activity directly intendedto generate profit…

4. Going by the plain dictionary meaning of the words used inthe definition section the intention of Parliament must beunderstood to be to exclude from the scope of the expression‘consumer’ any person who buys goods for the purpose of theirbeing used in any activity engaged on a large scale for thepurpose of making profit. It is obvious that Parliament intendedto restrict the benefits of the Act to ordinary consumerspurchasing goods either for their own consumption or even foruse in some small venture which they may have embarked uponin order to make a living as distinct from large scalemanufacturing or processing activity carried on for profit. In orderthat exclusion clause should apply it is however necessary thatthere should be a close nexus between the transaction ofpurchase of goods and the large scale activity carried on forearning profit.

6. There is a close and direct nexus between the purpose ofpurchase of the generating sets and the commercial activity ofmanufacturing of edible oils for trade carried on by the appellantcompany, since the generating sets were intended to be used, asand when the need arose, for generating electric current formanufacture of edible oils for the purpose of trade. We do not,therefore, find any reason to interfere with the view taken bythe State Commission that the appellant is not a ‘consumer’.”

Recently, a two-Judge bench of this Court, comprising of one ofus, in Paramount Digital Colour Lab (supra) has re-emphasized theimportance of there being a ‘close nexus’ between the purpose forwhich the good or service is availed of and a large-scale profit activity A

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Ain order to classify such a transaction as commercial in nature, asillustrated below:

“12…It is therefore clear, that despite “commercial activity”,whether a person would fall within the definition of “consumer”or not would be a question of fact in every case. Such questionBof fact ought to be decided in the facts and circumstances ofeach case.

17. Since there is nothing on record to show that they wantedthe machine to be installed for a commercial purpose and notexclusively for the purposes of earning their livelihood by meansCof self-employment, the National Commission was not justifiedin concluding that the appellants have utilised the services of anoperator or a helper to run a commercial venture. One machinedoes not need many operators or helpers to complete the workentrusted. Since the appellants were two partners, they must haveDbeen doing the work on their own, of course, may be with theaid of a helper or an operator. The machine would not have been--used in a largescale profitmaking activity but, on the contrary,the appellants purchased the machine for their own utility, personalhandling and for their small venture which they had embarkedupon to make a livelihood. The same is distinct from large-scaleEmanufacturing or processing activity carried on for huge profits.There is no close nexus between the transaction of purchase of-the machine and the alleged largescale activity carried on forearning profit. Since the appellants had got no employment andthey were unemployed graduates, that too without finances, it isFbut natural for them to raise a loan to start the business ofphotography on a small scale for earning their livelihood.”

Therefore this Court in Paramount Digital Colour Lab (supra)held that the purchase of a machine for appellants’ photographybusiness, which was a small-scale business meant for earning theirGlivelihood, would not be interpreted as being for a ‘commercial purpose.’

5. It is true that the aforementioned decisions were rendered inthe context of deciding whether the goods or services availed of in thefacts of those cases were for a commercial purpose or exclusively forthe purpose of self-employment. This does not mean, however, that inHevery case a negative test has to be adopted wherein any activity that does not fall within the ambit of ‘earning livelihood by means of self-employment’ would necessarily be for a commercial purpose. We rejectRespondent No. 1’s argument in this regard. The Explanation clauseto Section 2(1)(d) of the 1986 Act is only clarificatory in nature, as washighlighted by this Court in Laxmi Engineering (supra):

“14. Yet another clarification; the Explanation, in our opinion isonly explanatory; it is more in the nature of a clarification a factwhich would become evident if one examines the definition(minus the explanation) in the context and scheme of theenactment. As indicated earlier, the explanation broadly affirmsthe decisions of the National Commission. It merely makesexplicit what was implicit in the Act. It is not as if the law ischanged by the said explanation; it has been merely madeclearer.”

Therefore the Explanation clause only re-affirms the definitionof ‘consumer’ as it already exists. Ultimately, whether or not a personis a consumer or whether an activity is meant for a commercial purposewill depend upon the facts and circumstances of each case. It may bethe case that a person who engages in commercial activities haspurchased a good or availed of a service for their personal use andconsumption, or for the personal use of a beneficiary, and such purchaseis not linked to their ordinary profit-generating activities or for creationof self-employment. Such a person may still claim to be a ‘consumer.’

For example, a large corporation may hire the services of acaterer or a 5-star hotel for hosting a function for its employees andtheir families. If there is any deficiency in service, the service-providercannot claim that merely because the person availing of the service isa profit-generating entity, and because such transaction does not relateto generation of livelihood through self-employment, they do not fallunder the definition of a ‘consumer.’ A commercial entity may also bea consumer depending upon the facts of the case. It is not the identityof the person but the purpose for which the transaction is made whichis relevant.

6. With regard to goods and services availed of by employersfor the benefit of their employees, it is particularly important to notethat we live in a socialist economy, wherein the ethos dictates thatemployers are obligated to make provisions for the welfare of theiremployees. No doubt, welfare measures undertaken by employers may A

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Aincrease workers’ health and efficiency, and therefore improve theemploying entity’s overall productivity. However this is a duty to beshared by all employer organisations and not merely those looking toincrease their productivity/profits. This obligation exists irrespective ofhow much profit or turnover the organization generates in a year, thoughthe degree to which it extends may differ depending upon the financialBcapacity of the employer.

Hence private corporate bodies such as the Appellant trust mayengage the services of third parties for the purpose of providingperquisites to their employees. For example, an employer may bookflight tickets or train tickets for an employee so as to facilitate theirCtravel in the ordinary course of business. If any negligence occursresulting in injury to the employee or their property, the airline/railwaycompany cannot disclaim liability on the ground that the activity wascarried out for a ‘commercial purpose’.

As discussed earlier, if in all such cases the third party service-Dprovider disclaims liability before consumer forums on the ground thatthe hirer of the service is engaged in trade and commerce, it will opena Pandora’s box wherein the employer as well as the employees willnot have any remedy. This would defeat the object of providing a speedyremedy to consumers, as outlined in the provisions of the 1986 Act.EFurther, setting such a precedent may discourage employers fromundertaking to provide any facilities for their employees. Hence, it isnecessary to clarify that the provision of such services would not usuallybe included in the definition of ‘commercial purpose.’

7. To summarize from the above discussion, though a straight-Fjacket formula cannot be adopted in every case, the following broadprinciples can be culled out for determining whether an activity ortransaction is ‘for a commercial purpose’:

(i) The question of whether a transaction is for acommercial purpose would depend upon the facts andGcircumstances of each case. However, ordinarily,‘commercial purpose’ is understood to includemanufacturing/industrial activity or business-to-businesstransactions between commercial entities.

(ii) The purchase of the good or service should have a closeHand direct nexus with a profit-generating activity.

(iii) The identity of the person making the purchase or thevalue of the transaction is not conclusive to the questionof whether it is for a commercial purpose. It has to beseen whether the dominant intention or dominant purposefor the transaction was to facilitate some kind of profitgeneration for the purchaser and/or their beneficiary.

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(iv) If it is found that the dominant purpose behind purchasingthe good or service was for the personal use andconsumption of the purchaser and/or their beneficiary,or is otherwise not linked to any commercial activity, thequestion of whether such a purchase was for the purposeCof ‘generating livelihood by means of self-employment’need not be looked into.

8. Applying these principles to the facts of the present case, wefind that there is no direct nexus between the purchase of flats by theAppellant trust and its profit generating activities. The flats were notoccupied for undertaking any medical/diagnostic facilities within thehospital but for accommodating the nurses employed by the hospital.Moreover, the flats were being provided to the nurses without any rent.It is not the Respondents’ case that the Appellant was generating anysurplus from occupying the flats or engaging in buying and selling offlats.

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It may be the case that provision of comfortable hostel facilitiesto the nurses, generates a feeling of gratitude and loyalty towards theiremployer and improves their overall efficiency, which indirectly resultsin the hospital gaining more repute and therefore generating moreincome. However, this is a matter of conjecture and there is no directcausal chain which can be drawn between provision of accommodationto hospital employees and increase in the Appellant’s profits.

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The decision in Kalpavruksha Charitable Trust (supra), reliedupon by the Respondents, does not support them inasmuch as it wason a different set of facts. In that case, this Court held that the purchaseof CT scan machines by a diagnostic centre would be included withinthe meaning of ‘commercial purpose’. There is an apparent direct nexusbetween the purchase of the machines, medical equipment, etc. andthe running of a diagnostic centre/hospital. The present case does notinvolve any such purchase.

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AFurther, applying the dominant purpose test, it cannot be said thatthe provision of such hostel facilities is integral to the Appellant trust’scommercial activities. The paramount object of providing such facilitiesis to cater to the needs of nurses and combat the challenges faced bythose who lack permanent accommodation in the city, so as torecompense the nurses for the pivotal role which they play as co-Bordinators and custodians of patients’ care.

Nurses help in the speedy recovery of patients and are a vitalresource for hospitals and medical centres inasmuch as they are theonly resource available 24/7 for catering to patients’ needs. They aredirectly involved in all aspects of hospital service quality, be it in theCform of monitoring patients’ recovery, bedside medication managementor assistance with surgeries and other major operations. In somesituations they are responsible for performing immediate interventionsto prevent medical complications. They are on the frontlines ofadministering and evaluating treatment, and provide invaluable emotionalDsupport as they are best placed to understand the complexities andimplications of having a serious illness.

Hence the provision of hostel facilities to nurses so as to facilitatebetter medical care is a positive duty enjoined upon the hospital so asto maintain the beneficial effects of the curative care efforts undertakenEby it. Such a duty exists irrespective of the surplus or turnover generatedby the hospital, and hence is not even remotely related to the object ofearning profits or for any commercial use as envisaged under Section2(1)(d).

9. Hence we find that the Appellant trust is a ‘consumer’ underFSection 2(1)(d) of the 1986 Act for the present transaction underconsideration. In light of the above discussion, we consider it appropriateto remand the matter to the National Commission for consideration inaccordance with law. The appeal is allowed and restored before theNational Commission, and the impugned judgment is set aside, in theaforesaid terms. The parties are relegated to record their evidenceGbefore the National Commission, and the National Commission isrequested to hear the matter on merits and decide the sameexpeditiously, at an early date.