Introduction:
In earlier times people used to organize themselves in groups and it was thus believed that certain amounts of frictions were obvious. Individuals in those groups would get engaged with each other in various forms of purchase and transaction and it was also reasonably supposed that in the situation some conflict would arise in the society. There will always be one side suffering from damages and awarded with compensation for the consequent loss. That’s exactly where “The Consumer Protection Act” comes into play.
With time various laws have faced amendments pertaining to their various sections and with time the ambit and the scope have varied. In 2002 the act relished the definition of ‘Consumer’ under Section 2. Any purchase of goods by a person for the purpose of resale or any other commercial purpose was excluded from the purview of ‘Consumer’. In return, several interpretations were made regarding the concept of ‘Consumer’ and ‘Commercial Purpose’.
This article would shed some light on what is ‘Commercial Purpose’ and its space under the ambit of ‘Consumer’ under the Act.
Consumer Protection Act, 1986
The Act was enacted in the year of 1986. The acts main principle was to protect the interest of consumers against any business which might defraud the consumer. The act was a pioneering inventiveness that aims to provide easy remedies to resolve all consumer disputes through various Consumer Dispute Redressal forums established under the Act.
The term ‘Consumer’ was defined under Section 2(1)(d) of the Act. Any person hiring or purchasing any goods or services for a consideration either paid in full or in part can be stated as a ‘Consumer’. It was also tinted that-
- Any goods purchased for the purpose of reselling or any other commercial purpose;
- And any benefit arising from such purchaser hire of such goods or service would also be deemed as a ‘Consumer’ under this Act;
The Consumer Protection Act, 1982 after its drafting has been amended several times. The Amendment Act 62/2002 directly excluded any person from being a ‘Consumer’ who hires or purchases any goods for resale or any other commercial purpose.
The blow to the scope of a person being a ‘Consumer’ was felt at dept in the case of Super Engineering Corporation v. Sanjay Vinayak Pant & Anr.[1] The National Consumer Commission in the above case observed the intent of the Parliament behind the amendment. It stressed on the fact of benefits being denied to individuals who purchased goods for the purpose of resale and making profits at large scale.
The Consumer Protection Act thus barred the goods and services hired or purchased for commercial purposes. An exception was drawn on goods purchased or services hired for earning livelihood. It was observed with time that certain commercial businesses would try to obscure their activity as a mode of earning livelihood to come under the purview of the Act. Sometimes even the Consumer Forums fail to understand which complaint to be maintained and whether a particular complaint of commercial nature stands a chance at all.
“Commercial Purpose” and “Consumer Protection Act”
The term ‘Commercial Purpose’ and ‘Livelihood’ has not been defined under the Act or its rules. However several judgments gave a clear insight on the terms. Each time a case hits the forum it is important to identify a transaction as a commercial one or not. And to do so it is important to observe the nature of the business and the transaction charged with deficiency. The most essential part is determining the nature of the business and it is not transacted for commercial purposes although the same transaction might hold the attributes of Commerce. A company buying raw materials to furnish other goods isn’t a consumer but the same company purchasing office machineries or air conditioners would be considered as a consumer. The mere irony being that the purchase of the later items is not intended to resale. A printer might thrive for a commercial activity but would not amount to anything regarding the consumption of that printer.
In Synco Textile Private Ltd v. Greaves Cotton & Co Ltd[2], for the first time, the NCDRC interpreted the Act to include people for purchasing goods and services with the sole purpose of earning a livelihood. The case differentiated ‘commercial purpose’ from commercial organization or commercial activity.
The Hon’ble Supreme Court stressed on the ambit of the term ‘Commercial purpose’ in Lakshmi Engineering works v. PSG Industries[3]. The focus was a direct connection with commercial activity. The Court further held that the explanation appended to Section 2(d)(ii) reduces the question on what is ‘commercial purpose’. The Court emphasized the purpose of the goods over its value to determine the commercial angel. The Parliament cleared the air by stating that self-employment would only culminate in those cases where the buyer has employed himself for earning his livelihood. The Court observed the simple fact that any good used by the purchaser himself for commercial use will come under the ambit of being a consumer whereas any person who doesn’t use the good for his personal use but also ends up engaging some other person into it would be out of the ambit of the definition of ‘consumer’. The question of fact above would be decided by analyzing the facts and circumstances of a case.
In Bhupendra Guna v. Regional Manager & others[4], the NCDRC held that purchasing a tractor and further hiring someone to till the lands of his and others would not amount to commercial use.
In Super Computer Centre v. Globiz Investment Pvt. Ltd[5], the ambit as to the definition of consumer was highlighted. The compliant company had purchased a computer system from the other party. An intellifax machine was sent to the respondent as a part of the same and it turned out to be a defective one. The Redressal party confronted that the company fails to fall under the ambit of “consumer” under the Consumer Protection Act and hence the complaint is not maintainable. However, the NCDRC held that though the computer and its parts were brought to serve commercial need the complaint stands a chance as the defect appeared within the period of warranty. Thus, the company can be rightfully called a ‘consumer’.
The warranty period was a question and any deficiency found during the particular time would lead to ‘deficiency of service’ under Section 2(1) (d). This above fact was highlighted in the case of C.P Moosa v. Chowgle Industries Ltd [6]where an appellant was rightfully awarded compensation for deficiency of service during the warranty period of a EPBAX system and AMC period.
The NCDRC in Action Construction Equipment Ltd & Anr v. Bablu Mridha[7], held that any buyer taking assistance of one or two people would not cause for him to cease as a consumer. There was no connection for the respondent to be engaged in commercial activities.
The NCDRC remanded back the case to the State Commission in Vimal Mehra v Manager/ Managing Director.[8] Initial stage, the State Commission rejected the complaint claiming Mehra was not a ‘consumer’. The State Commission failed to understand the nature of the case. The shop was booked by Mehra for earning livelihood.
On being challenged the NCDRC changed the order of the State Commission for rejecting a complaint initially. The view on ‘Commercial Purpose’ or ‘Livelihood’ was not typically expressed as it is on the parties to prove the same.
The main highlight from the series of judgment was that even a person who purchases goods or hires services for commercial purposes is also a ‘Consumer’ if any defect pertaining to the goods is found during a warranty period.
‘Purpose of Purchase”- The question of fact to be determined
The purpose of purchase would determine the falling of an act under the ambit of “Consumer”. The Supreme Court has taken into consideration various facts and terms used by the legislature while explaining the meaning of ‘consumer’. The purpose of the purchase was used to determine if the goods were being used to earn livelihood by way of self-employment.
To fall under the ambit of exception to Section 2 (1) (d) of the act the below essential elements needs to be proved-
- Goods and services are only used by the purchaser;
- Only for the purpose of earning a livelihood;
- By the course of self-employment;
The above three conditions are required for a complainant to prove. And if the same person acquires the goods and services to increment his income or enlarge his business will be directly barred from being a factor of ‘earning a livelihood’.
The Supreme court emphasized the term ‘Self-employment’ under Section 2 (1) (d) in the case of Cheema Engineering Services v. Rajan Singh[9]. It was a burden of proof to showcase the exclusiveness of a purpose of purchase done solely to earn livelihood and not otherwise as the Court didn’t define the word ‘Self-employment’. In a situation where a person employs his family members or few employees to assist him would come within the ambit of the exclusion as opposed to situations where a qualified worker is used to carry out an activity.
The Supreme Court marked the utilization of commercial goods and its exploitation for the exclusive purpose of earning a livelihood by means of self-employment as an act falling within the meaning of ‘Consumer’ in the case of Sunil Kohli & Ors v. Purearth Infrastructure Ltd.[10]
Conclusion
The Consumer Protection Act 2019 will replace the old Act of 1986. The Act of 2019 under Section 2 (1) (d) retains the said section which carves out the exception. The Parliament clearly zones out the people from being a ‘consumer’ who obtain a good or service to resell or with the intention of any commercial agenda. For adjudicating a particular case the circumstances and facts should be considered to determine the question of fact as to who is a ‘Consumer’ and what is a ‘Commercial Purpose’. Over the years the Courts and NCDRC have been successful in determining the nature of a case and awarding the essential award. The vibrant vision of a judiciary has adequately worked in promoting the nature of the Act and maintaining the right of every consumer over the years.
References:
[1] 1992 CPJ (1) 95 NC
[2] (1991) 1 CPJ
[3] AIR 1995 SC 1428
[4] (II 1995 CPJ 139)
[5] III (2006) CPJ 265 (NC)
[6] 2001-CPJ-3- 9-NC ; 2001-CPR-2-92-NC
[7] 4(2012)CPJ245(NC)
[8] APPEAL NO. 620 OF 2016 (Against the Order dated 08/04/2016 in Complaint No. 271/2016 of the State Commission Delhi)
[9] (1997) 1 SCC 131
[10] CIVIL APPEAL NOS.9004-9005/2018
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