News

October 15, 2019

Purchaser of goods for commercial purpose for earning his livelihood by means of self-employment is deemed to be a consumer: SC


[ by Legal Era News Network ]

A Supreme Court bench of Justices Uday Umesh Lalit, Indira Banerjee and M.R. Shah ruled that if the commercial use of goods by the purchaser himself is for the purpose of earning his livelihood by means of self- employment, such purchaser of goods is deemed to be a consumer.

The complainants who were non-resident Indians settled in Denmark wished to come down and settle in India permanently. They purchased a shop in Delhi in order to carry out business. However, the opposite party (builder) failed to transfer possession of the said premises within the stipulated period even after payment of the whole of the consideration. The complainants filed a complaint in the consumer court. The opposite party challenged the maintainability of the suit in the consumer forum arguing that the shop was meant for commercial purposes and thereby stating that the complainants were not consumers.

The National Consumer Disputes Redressal Commission (NCDRC) held that the complainants were given rights of distribution of products in India but had not undertaken the distribution business for quite a long time. Therefore the genuineness of the certificates produced by the complainants was doubted. Further the NCDRC declined to accept the plea of the complainants that they had booked the subject premises with the intention to open a shop for running a distributorship of products with a view to earn livelihood by means of self-employment. The NCDRC thus rejected the case of the complainants stating that they did not fall within the explanation to the definition of term “Consumer”.

On appeal, the questions that were posed for consideration before the Supreme Court were: whether or not the complainants were consumers for the purposes of the Act, and, whether the complaint was maintainable.

The Court relied on judgment delivered in Laxmi Engineering Works, where the explanation to Section 2(1)(d) of the Consumer Protection Act, 1986 (the Act) clarifies that in certain situations, purchase of goods for commercial purpose would not 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. The Court had observed that what is ‘Commercial Purpose’ is a question of fact to be decided in the facts of each case.

The Apex Court cited illustrations such as “where 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.”

The Court noted that the NCDRC had confined itself to questions whether the complainants were consumers or not, and, whether the dispute came within the parameters and provisions of the Act. Other issues, namely, whether the respondents were deficient in rendering services, and if so, whether any compensation would be payable were not dealt with by the NCDRC.

The Supreme Court set-aside the view taken by the NCDRC and the matter was remitted back to the NCDRC to dispose the matter as early as possible.

View Full Judgement




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