Consumer Protection Act, 1986: ss. 2(1)(d), 2(1)(d)(i), 2(1)(d)(ii) – Appellant was a stock-broker by profession – He was also acting as stock broker for respondent bank – Appellant took overdraft facility from respondent-bank and also sought enhancement of the same from time to time in furtherance of his business as stock broker and for enhancing profit – Whether the appellant had availed the services of the respondent for ‘commercial purpose’ and therefore he was not a consumer as envisaged under s.2(1)(d) of the Act – Held: Ordinarily, “commercial purpose” is understood to include manufacturing /industrial activity or business-to-business transactions between commercial entities and that the purchase of the good or service should have a close and direct nexus with a profit-generating activity – What is relevant is the dominant intention or dominant purpose for the transaction and as to whether the same was to facilitate some kind of profit generation for the purchaser and/or their beneficiary – The relations between the appellant and the respondent was purely “business to business” relationship – The transactions would clearly come within the ambit of ‘commercial purpose’ – Therefore, it cannot be said that the services were availed exclusively for the purposes of earning his livelihood by means of self-employment – Appellant was not consumer under s.2(1)(d) of the Act.
Consumer Protection (Amendment) Act, 1993: Object of the Amendment Act – Held: To enable the consumers, who are selfemployed, to file complaints before the redressal agencies, where goods bought by them exclusively for earning their livelihood, suffer from any defect – By the 1993 Amendment Act, insofar as services are concerned, wherever the word “hires” was used, the same was substituted by the word “hires or avails of” – By the 1993 Amendment Act, insofar as s. 2(1)(d)(i) is concerned, an Explanation was provided to the effect that ‘commercial purpose’ does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood by means of self-employment. Dismissing the appeal, the Court
HELD:1.1 Section 2(1)(d) of the Consumer Protection Act,1986 is in two parts. Section 2(1)(d)(i) of the said Act deals with buying of goods. A person who buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment would be a consumer within the meaning of Section 2(1)(d)(i) of the said Act. It also includes any user of such goods other than the person who buys such goods for a consideration, which has been paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person. However, Section 2(1)(d)(i) of the said Act excludes a person who obtains such goods for resale or for any commercial purpose. Section 2(1)(d)(ii) of the said Act is with respect to hiring of services. According to it, the term ‘consumer’ means any person who hires any services for a consideration, which has been paid or promised or partly paid and partly promised, or under any system of deferred payment. It also included any beneficiary of such services other than the person who hires the services as is provided under Section 2(1)(d)(i) of the said Act. [Paras 24 & 25][957-C-F]
1.2. In order to plug the loopholes and enlarge the scope of areas covered, the legislature brought certain amendments to the Act by the Consumer Protection (Amendment) Act, 1993. One of the objects of the said Act was to enable the consumers, who are self- employed, to file complaints before the redressal agencies, where goods bought by them exclusively for earning their livelihood, suffer from any defect. By the 1993 Amendment Act, insofar as services are concerned, wherever the word “hires” was used, the same was substituted by the word “hires or avails of”. By the 1993 Amendment Act, insofar as Section 2(1)(d)(i) is concerned, an Explanation was provided to the effect that ‘commercial purpose’ does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood by means of self-employment. [Paras 27 & 28][958-A-B, E-F]
1.3 By the 2002 Amendment Act, the legislature has done two things. Firstly, it has kept the commercial transactions, insofar as the services are concerned, beyond the ambit of the term ‘consumer’ and brought it in parity with Section 2(1)(d)(i), wherein a person, who bought such goods for resale or for any commercial purpose, was already out of the ambit of the term ‘consumer’. The second thing that the legislature did was that even if a person availed of the commercial services, if the services availed by him were exclusively for the purposes of earning his livelihood by means of self-employment, he would still be a ‘consumer’ for the purposes of the said Act. Thus, a person who availed of services for commercial purpose exclusively for the purposes of earning his livelihood by means of self- employment was kept out of the term ‘commercial purpose’ and brought into the ambit of ‘consumer’, by bringing him on par with similarly circumstanced person, who bought and used goods exclusively for the purposes of earning his livelihood by means of self-employment. It could thus be seen that the legislature’s intent is clear. If a person buys goods for commercial purpose or avails services for commercial purpose, though ordinarily, he would have been out of the ambit of the term ‘consumer’, by virtue of Explanation, which is now common to both Sections 2(1)(d)(i) and 2(1)(d)(ii), he would still come within the ambit of the term ‘consumer’, if purchase of such goods or availing of such services was exclusively for the purposes of earning his livelihood by means of self-employment. [Para 31][960-B-F]
2. The question as to 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; that the purchase of the good or service should have a close and direct nexus with a profit-generating activity; that the identity of the person making the purchase or the value of the transaction is not conclusive for determining the question as to whether it is for a commercial purpose or not. What is relevant is the dominant intention or dominant purpose for the transaction and as to whether the same was to facilitate some kind of profit generation for the purchaser and/or their beneficiary. If the dominant purpose behind purchasing the good or service was for the personal use and the consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, then the question of whether such a purchase was for the purpose of “generating livelihood by means of self-employment” need not be looked into. [Para 42][967-D-G]
3. In the present case, the Commission has come to a finding that the appellant had opened an account with the respondent-Bank, took overdraft facility to expand his business profits, and subsequently from time to time the overdraft facility was enhanced so as to further expand his business and increase his profits. The relations between the appellant and the respondent is purely “business to business” relationship. As such, the transactions would clearly come within the ambit of ‘commercial purpose’. It cannot be said that the services were availed “exclusively for the purposes of earning his livelihood” “by means of self-employment”. If the interpretation as sought to be placed by the appellant is to be accepted, then the ‘business to business’ disputes would also have to be construed as consumer disputes, thereby defeating the very purpose of providing speedy and simple redressal to consumer disputes. Therefore there is no error in the findings of the Commission. [Paras 47 and 48][969-B-E]
Laxmi Engineering Works v. P.S.G. Industrial Institute (1995) 3 SCC 583 : [1995] 3 SCR 174 – relied on. Internet and Mobile Association of India v. Reserve Bank of India (2020) 10 SCC 274 : [2020] SCR 297; Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers and Others (2020) 2 SCC 265 : [2019] 14 SCR 563; Paramount Digital Colour Lab and Others v. AGFA India Private Limited and Others (2018) 14 SCC 81; Sunil Kohli and Another v. Purearth
Infrastructure Limited (2020) 12 SCC 235; CBI, AHD, Patna v. Braj Bhushan Prasad and Others (2001) 9 SCC 432 : [2001] 3 Suppl. SCR 627; Cheema
Engineering Services v. Rajan Singh (1997) 1 SCC 131: [1996] 8 Suppl. SCR 340; Kalpavruksha Charitable Trust v. Toshniwal Brothers (Bombay) Pvt. Ltd. and Another (2000) 1 SCC 512 : [1999] 3 Suppl. SCR
619 – 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.
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