Consumer Protection Act, 1986 – s.2(d) – The complainant respondent entered into a tripartite agreement with the appellant and its franchisee – As per the agreement, the respondent purchased
750 kgs of wet musli for sowing from the appellant, at the rate of Rs. 400/- per kg, and cultivated the same in her land – The appellant was to buy back the produce at a minimum price of Rs. 1000/- per kg from the respondent – The appellant failed to buy back her produce – Consequent to which, the respondent lodged a consumer complaint – The District Forum dismissed the complaint and held that the same was not maintainable since the respondent was not a ‘consumer ’ within the meaning of the Act, 1986 – The State Commission set aside the order passed by the District Forum and held that the respondent was a ‘consumer’ under the Act 1986 – The National Commission upheld the finding of the State Commission – On appeal, held: It is settled by the Supreme Court in the case of Laxmi Engineering that an agreement for buy back by the seed Company of the crop grown by a farmer cannot be regarded as a resale transaction and he cannot be brought out of the scope of being a ‘consumer’ under the Act, 1986 only on such ground – Even in the instant case, the fact that there was a buy back agreement for the musli crop would not bring the respondent outside the purview of the definition of ‘consumer ’ by rendering the buyback arrangement a resale transaction or being for a commercial purpose – The respondent had the freedom to sell her produce on the open market as well if she was able to obtain a better price – However, this aspect would not take away from the conclusion that the respondent had entered into an agreement for growing musli crop for the purpose of earning a livelihood, since an agriculturist would always have to sell his produce in order to earn his livelihood – Thus, there is no reason to interfere with the order passed by the National Commission affirming that the respondent is a ‘consumer’ within the meaning of Act, 1986.
Dismissing the appeals, the Court
HELD: 1. Notably, it was emphasized in the case of Laxmi Engineering that the employment of a few persons for the purpose of assistance in the activity carried out by the purchaser would not automatically render the commercial activity as not being for self-employment and for earning his livelihood; rather, this would have to be determined from the facts and circumstances of a given case. [Para 8.2][351-H; 352-A]
2. In the matter on hand, though the Appellant has sought to project that the Respondent were cultivating musli on a large scale and with a profit motive, this Court finds itself unable to conclude that the cultivation being undertaken was for a purpose other than for eking out a livelihood through self-employment. [Para 9][352-B]
3. In matters such as the one on hand, the agriculturist buys the foundation seeds from the seed company, or the company itself reaches out and requests the farmers to generate the seeds so that it may market the same. By accepting such an offer, and after purchasing the foundation seeds from the seed company, the agriculturist, with hard labour and sweat, produces seeds to be marketed by the seed company. Thus, the agriculturist is not reselling any product, but grows his own product by utilizing the foundation seeds. There cannot be any dispute that the agriculturist has to sell his product in the open market or to the seed company, as the case may be, in order to eke out his livelihood. In other words, the agriculturist sustains himself by selling his product. This cannot be termed as resale or activity in furtherance of a “commercial purpose” bringing him out of the purview of the definition of “consumer” under Section 2(d). Rather, it is purely for the purpose of earning his livelihood by means of self-employment. [Para 9.1][352-C-E]
4. It is amply evident in the case of Laxmi Engineering that an agreement for buyback by the seed company of the crop grown by a farmer cannot be regarded as a resale transaction, and he cannot be brought out of the scope of being a “consumer” under the 1986 Act only on such ground. Thus, even in the instant case, the fact that there was a buyback agreement for the musli crop would not bring the Respondent outside the purview of the definition of “consumer” by rendering the buyback arrangement a resale transaction or being for a commercial purpose. This Court hastens to emphasise that the fact situation herein diverges from Madhusudan to the extent that in the instant case, the Respondent had the freedom to sell her produce on the open market if she was able to obtain a better price. However, this aspect would not take away from the conclusion that the Respondent had entered into an agreement for growing the musli crop for the purpose of earning a livelihood, since an agriculturist would always have to sell his produce in order to earn his livelihood. [Para 10.1][354-B-D]
Laxmi Engineering Works v. PSG Industrial Institute (1995) 3 SCC 583 : [1995] 3 SCR 174 – relied on. Sakthi Sugars Ltd. Orissa v. Sridhar Sahoo, II (1999) CPJ 4 (NC) – held incorrect law.
Wimco Limited v. Ashok Sekhon, II (2008) CPJ 210 (NC) – distinguished.
Synco Textiles Pvt. Ltd. v. Greaves Cotton and Company Ltd. (1991) 1 CPJ 499; Oswal Fine Arts v. HMT (1991)
1 CPJ 330; Secretary, Consumer Guidance and
Research Society of India v. BPL India Ltd. (1992) 1 CPJ 140 (NC); Rajeev Metal Works v. Mineral & Metal Trading Corporation of India Ltd. (1996) 9 SCC 422 : [1995] 6 Suppl. SCR 118; National Seeds Corpn. Ltd. v. Madhusudan Reddy (2012) 2 SCC 506 : [2012] 2 SCR 1065; Fruit and Vegetables Project, New Delhi v. N. Shankar Reddy, III (1994) CPJ 163 (NC);
Narayanrao Chavan v. The National Seeds Corporation Ltd. [2012] SCC Online NCDRC 7 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.