oppn parties Can A Purchaser Of Goods For Commercial Purpose Be A Consumer Under the Consumer Protection Act?

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Can A Purchaser Of Goods For Commercial Purpose Be A Consumer Under the Consumer Protection Act?

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.

The Supreme Court has, once again, affirmed that a purchaser of commercial goods will be a consumer under Section 2 (1) (d) of the Consumer Protection Act, 1986 (CP Act) if uses those goods to earn a living for himself. Referring to several previous cases of the apex court, the bench said that the National Consumer Commission (NCC) was wrong in dismissing a complaint on the grounds of maintainability.

In the case Sunil Kohli & Anr vs M/s Pureearth Infrastructure Ltd., the court ruled that "as laid down by this Court in Laxmi Engineering Works, the explanation to Section 2(1)(d) of the Act clarifies that in certain situations, purchase of goods for "commercial purpose" would not yet take the purchaser out of the definition of expression "consumer". If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods is yet a "consumer". This court went on to observe that what is "commercial purpose" is a question of fact to be decided in the facts of each case".

Earlier, the NCC had dismissed the complaint on the grounds of maintainability. The complainant had purchased a property in Delhi to start a business. But the developer had failed to deliver the unit even after several years had passed from the agreed date of delivery. Aggrieved, the complainant had approached the consumer forums. But the NCC ruled that since he had purchased the property for commercial purposes, he was not a consumer under section 2(1)(d) of the CP Act.

But the apex court quoted a relevant ruling from the Laxmi Engineering Ltd. case which said that "the Explanation excludes from the ambit of commercial purpose in sub-clause (i) of Section 2(1)(d), any goods purchased by a consumer and used by him exclusively for the purpose of earning his livelihood by means of self-employment. Such purchase of goods is not a commercial purpose." It also illustrated the same from another long passage from the above case which said that "Parliament stepped in and added the explanation to Section 2(d)(i) by Ordinance/Amendment Act, 1993. The explanation excludes certain purposes from the purview of the expression "commercial purpose" - a case of exception to an exception. Let us elaborate: a person who buys a typewriter or a car and uses them for his personal use is certainly a consumer but a person who buys a typewriter or a car for typing others' work for consideration or for plying the car as a taxi can be said to be using the typewriter/car for a commercial purpose. The explanation however clarifies that in certain situations, purchase of goods for "commercial purpose" would not yet take the purchaser out of the definition of expression 'consumer'. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods is yet a 'consumer'. In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other words, if the buyer of goods uses them himself, i.e., by self-employment, for earning his livelihood, it would not be treated as a "commercial purpose" and he does not cease to be a consumer for the purposes of the Act. The explanation reduces the question, what is a "commercial purpose", to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to. The several words employed in the explanation, viz., "uses them by himself", "exclusively for the purpose of earning his livelihood" and "by means of self-employment" make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. A few more illustrations would serve to emphasize what we say. A person who purchases an auto-rickshaw to ply it himself on hire for earning his livelihood would be a consumer. Similarly, a purchaser of a truck who purchases it for plying it as a public carrier by himself would be a consumer. A person who purchases a lathe machine or other machine to operate it himself for earning his livelihood would be a consumer. (In the above illustrations, if such buyer takes the assistance of one or two persons to assist/help him in operating the vehicle or machinery, he does not cease to be a consumer.) As against this a person who purchases an auto-rickshaw, a car or a lathe machine or other machine to be plied or operated exclusively by another person would not be a consumer. This is the necessary limitation flowing from the expressions "used by him", and "by means of self-employment" in the explanation. The ambiguity in the meaning of the words "for the purpose of earning his livelihood" is explained and clarified by the other two sets of words."

The court ruled that "while allowing these appeals and holding the Complainants to be "consumers" and the Complaint to be maintainable under the provisions of the Act, we remit the matter back to the National Commission to consider the other issues. The Complaint No.62 of 2018 stands restored to the file of the National Commission. Since the proceedings were initiated in the year 2013, we request the National Commission to consider disposing of the matter as early as possible and preferably within six months from today."