In a landmark ruling that provides major relief to homebuyers across India, the Supreme Court has held that simply renting out or leasing a purchased residential flat does not strip a buyer of their rights as a “consumer” under the Consumer Protection Act, 1986. This means homebuyers can still file complaints against builders for delays, unfair charges, or other issues, even if they later decide to rent the property instead of living in it themselves.
The case, Vinit Bahri and Another vs. M/s MGF Developers Ltd. and Another (Civil Appeal No. 6588 of 2023, Neutral Citation: 2026 INSC 114), was decided by a bench comprising Justices Prashant Kumar Mishra and N.V. Anjaria.
The dispute dates back to March 2005, when Vinit Bahri and his co-appellant booked a residential flat (Unit No. VP-C/802) in the builder’s group housing project called “The Villas” at Village Sahraul, Sector-25, Gurgaon. They paid an initial booking amount of Rs. 15 lakh.
On September 2, 2005, the flat was allotted to them – a ground-floor unit in Tower-C with a super built-up area of 3,590 square feet.
In June 2006, the parties signed a Flat Buyer’s Agreement. Clause 9.1 promised possession within 36 months from the agreement date, plus a 90-day grace period for obtaining the occupation certificate – meaning possession was due by around September 11, 2009.
The buyers alleged that M/s MGF Developers Ltd. (the main builder, respondent No. 1) failed to deliver on time. They claimed the builder unilaterally changed the layout plan of Tower-C without informing buyers (admitted in a builder meeting on April 23, 2009). Despite this, the builder raised multiple demands for extra payments, including Rs. 10.82 lakh on September 6, 2009, and later charges for EEDC, IDC, service tax, and fixtures (totaling over Rs. 30 lakh plus Rs. 4.8 lakh for deficient fixtures).
The buyers paid these under protest and took possession on January 8, 2015. The occupation certificate was issued by the Haryana authorities on August 14, 2015.
In January 2017, Vinit Bahri and his co-appellant filed a consumer complaint (No. 74/2017) before the National Consumer Disputes Redressal Commission (NCDRC) in New Delhi. They sought:
- 18% interest on the amount paid (Rs. 1.59 crore approximately),
- Rs. 50 lakh for mental agony and harassment,
- Rs. 15 lakh for issues due to the Tower-C layout change,
- Rs. 35.61 lakh as refund of excess charges for fixtures/fittings,
- Rs. 2.5 lakh in litigation costs, and other reliefs.
The builder defended the case, arguing that the buyers had already received/adjusted delay compensation of Rs. 12.10 lakh as per the agreement’s Clause 9.7. They also claimed the flat’s area had increased by about 271 square feet, justifying extra payments. Crucially, MGF Developers pointed out that the buyers had leased the flat to a third party (Sunil Raman) starting March 2015, with a formal lease deed executed on March 3, 2016. This, they argued, showed “commercial purpose,” disqualifying the buyers from consumer forum protection.
Respondent No. 2 (another party involved earlier in the project) claimed it had transferred all liabilities to MGF Developers via deeds in 2013 and 2016.
On May 11, 2023, the NCDRC dismissed the complaint purely on the ground that leasing made it a commercial activity, so the buyers were not “consumers.”
Vinit Bahri appealed to the Supreme Court. The apex court overturned the NCDRC order, ruling that the burden to prove “commercial purpose” lies on the builder (not the buyer), and it must be shown on a “preponderance of probabilities.” Mere leasing of a residential flat does not automatically prove the dominant intention at purchase was profit-making or commercial – there must be a close nexus between the purchase and profit generation.
The court emphasized that buying property (even multiple units) cannot ipso facto exclude consumer status unless dominant commercial intent is proven. Relying on earlier judgments like Lilavati Kirtilal Mehta Medical Trust (2020) and others, the bench held the NCDRC erred in dismissing the case without examining merits.
The Supreme Court set aside the May 2023 NCDRC order and restored the complaint for fresh decision on merits – including delay, extra demands, layout changes, and compensation.
This ruling strengthens protections for homebuyers facing builder delays or unfair practices, ensuring renting out a flat (common for investment or family reasons) does not bar access to consumer forums.
Also Read: This Supreme Court Judgement is Very important for Homebuyers & Builders as well
