Section 2(1)(d) of The Consumer Protection Act, 1986 II

The Court has to look at the dominant purpose for which the purchase is made in order to decide whether it was for a ‘commercial purpose.’ We are of the considered opinion that the purchase of flats for the purpose of providing hostel facilities to the hospital nurses does not qualify as meant for a ‘commercial purpose’. Though the term ‘commercial purpose’ as referred to under Section 2(1)(d) has nowhere been defined under the provisions of the Act, this Court has expounded upon it based on its lateral dictionary meaning in various decisions.

Recently, a Two-Judge Bench of this Court, comprising of one of us, in Paramount Digital Colour Lab., (2018) 14 SCC 8 has re-emphasized the importance of there being a ‘close nexus’ between the purpose for which the good or service is availed of and a large-scale profit activity in order to classify such a transaction as commercial in nature. Ultimately, whether or not an activity is meant for a ‘commercial purpose’ will depend upon the facts and circumstances of each case.

With regard to goods and services availed of by employers for the benefit of their employees, it is particularly important to note that we live in a socialist economy, wherein the ethos dictates that employers are obligated to make provisions for the welfare of their employees. No doubt, welfare measures undertaken by employers may increase workers’ health and efficiency, and therefore improve the employing entity’s overall productivity. However this is a duty to be shared by all employer organizations and not merely those looking to increase their productivity/profits. This obligation exists irrespective of how much profit or turnover the organization generates in a year, though the degree to which it extends may differ depending upon the financial capacity of the employer.

The flats were not occupied for undertaking any medical/diagnostic facilities within the hospital but for accommodating the nurses employed by the hospital. Moreover, the flats were being provided to the nurses without any rent. It may be the case that provision of comfortable hostel facilities to the nurses, generates a feeling of gratitude and loyalty towards their employer and improves their overall efficiency, which indirectly results in the hospital gaining more repute and therefore generating more income. However, this is a matter of conjecture and there is no direct causal chain which can be drawn between provision of accommodation to hospital employees and increase in the profits. Hence, the provision of hostel facilities to nurses so as to facilitate better medical care is a positive duty enjoined upon the hospital so as to maintain the beneficial effects of the curative care efforts undertaken by it. Such a duty exists irrespective of the surplus or turnover generated by the hospital, and hence is not even remotely related to the object of earning profits or for any commercial use as envisaged under Section 2(1)(d).

Hon’ble Mohan M. Shantanagoudar, Lilavati Kirtilal Mehta Medical Trust v. M/s. Unique Shanti Developers, [Civil Appeal No. 12322 of 2016].