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Lilavati Kirtilal Mehta Medical Trust V. M/S Unique Shanti Developers & Ors. - (Supreme Court) (14 Nov 2019)

Provision of hostel facilities to nurses so as to facilitate better medical care is a positive duty enjoined upon hospital and cannot be linked to any commercial activity



In present matter, the Appellant’s case is that Respondent No. 1/Opposite Party No. 1 had developed two buildings ‘Madhuvan’ with thirty two ‘1 BHK’ flats in colony ‘Shanti Park’ in Thane, Maharashtra. Out of these the Appellant/complainant trust took possession of 29 flats for provision of hostel facilities to nurses employed by Lilavati Hospital, which is run by the Appellant trust. 29 agreements to sell were executed in respect of each flat, which were registered and entire consideration amount was paid for the same. The architect issued completion certificate in respect of the flats. The flats were used for the purpose of hostel facilities till 2002. However, within 2-3 years of completion of the project, because of alleged poor building quality, the structure became dilapidated.

The Appellant vacated the flats in 2002 and since 2004, the flats are lying unused. In the meanwhile, an interim Board of Trustees was constituted by this Court by order, which is a separate litigation concerning dispute over control of the appellant trust between different groups of trustees. The aforesaid interim Board of Trustees called for a structural report from Raje Consultants, which submitted their report finding that the cost of repairs would be more than the cost of reconstruction. The Appellant also claims that Respondent No. 1 obtained the occupation certificate for the flats by playing fraud upon the local municipal corporation.

The National Commission dismissed the complaint, on the ground that, the Appellant trust was not a ‘consumer’ within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986 as the aforesaid section excludes a person who obtains goods and services for a ‘commercial purpose’. Since providing hostel facility to the nurses is directly connected to the commercial purpose of running the hospital, and is consideration for the work done by them in the hospital, the Appellant would not be a ‘consumer’ under the 1986 Act. Hence, present appeal.

The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, ‘commercial purpose’ is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities. (ii) The purchase of the good or service should have a close and direct nexus with a profit-generating activity. (iii) The identity of the person making the purchase or the value of the transaction is not conclusive to the question of whether it is for a commercial purpose. It has to be seen whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary. (iv) If it is found that the dominant purpose behind purchasing the good or service was for the personal use and consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, the question of whether such a purchase was for the purpose of ‘generating livelihood by means of self-employment’ need not be looked into.

Applying these principles to the facts of the present case, there is no direct nexus between the purchase of flats by the Appellant trust and its profit generating activities. 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 is not the Respondents’ case that the Appellant was generating any surplus from occupying the flats or engaging in buying and selling of flats. 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 Appellant’s profits.

Further, it cannot be said that the provision of such hostel facilities is integral to the Appellant trust’s commercial activities. The paramount object of providing such facilities is to cater to the needs of nurses and combat the challenges faced by those who lack permanent accommodation in the city, so as to recompense the nurses for the pivotal role which they play as co-ordinators and custodians of patients’ care. 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) of the 1986 Act.

Hence, the Appellant trust is a ‘consumer’ under Section 2(1)(d) of the 1986 Act for the present transaction under consideration. The matter remanded to the National Commission for consideration in accordance with law. The appeal is allowed.


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