India: Maintainability Of Consumer Compliant When The Goods Are Meant For Commercial Purposes

Last Updated: 1 July 2013
Article by Vandana

Most Read Contributor in India, September 2016

After the amendment Act 62/2002 in the Consumer Protection Act, 1986, that came into force with effect from 15.03.2003, the definition of the expression "consumer" as defined in Section 2 of the Consumer Protection Act, 1986, was amended and it excluded from its purview a person who obtains such goods for resale or for any commercial purpose.

Further, an Explanation was added to the definition which reads that, "for the purpose of this clause "commercial purpose" does not include use by any person of goods bought and used by him and services availed by him exclusively for the purpose of earning his livelihood by means of self employment".

In Super Engineering Corporation Vs Sanjay Vinayak Pant & Anr [1992 CPJ (1) 95 NC], The Hon'ble National Commission observed that the intention behind the amendment of the Parliament is to deny the benefits of the Act to persons purchasing goods either for the purpose of resale or for the purpose of being used in profit making activity engaged on a large scale. Thus, the persons who purchase goods for consumption or use in the manufacture of goods or commodities on a large scale with a view to make profit, will all fall outside the scope of the definition of "consumer".

As far as the words "commercial purpose" and livelihood" are concerned neither of these terms have been defined under the Consumer Protection Act or under the Rules framed therein. Therefore, interpretation of these words is to be seen as per the facts of the case and the judgments as have been elucidated by the courts in a number of cases.

In Synco Textile Private Ltd Vs Greaves Cotton and Co Ltd (1991) 1 CPJ, the Court while emphasizing on the word "commercial purpose" laid down that "for any commercial purpose are wide enough to take in all cases where goods are purchased for being used in any activity directly intended to generate profit". Synco Textile's case implicates that "commercial purpose" should be distinguished from commercial organization or commercial activity.

While dealing with the ambit and the scope of the term "Commercial Purpose " the Hon'ble Supreme Court in Lakshmi Engineering works Vs PSG Industries, AIR 1995 SC 1428, has laid down the test of close and direct nexus with the commercial activity. The Court has further held that the explanation appended to Sec 2(d) (ii) reduces the question "what is a commercial purpose" to a question of fact to be decided in the facts of each case. The Court further held that 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 by himself" "exclusively for the purpose of earning his livelihood" and "by means of self employment" make the intention of the Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood.

The Court has further held that the purpose for which a person has bought goods is a commercial purpose within the meaning of definition of expression "consumer" in section 2(d) of the Act and is always a question of fact to be decided in the facts and circumstances of the case.

In Bhuperndra Guna Vs Regional Manager and others (II 1995 CPJ 139), the National Commission held that a tractor purchased primarily to till the land of the purchaser and let or on hire during the idle time to till the lands of others, would not amount to commercial use.

In Kalpavruksha Charitable Trust Vs Toshniwal Brothers (Bombay) Pvt Ltd 2000 (1) SCC 512 where the question involved was whether the appellant is a consumer within the meaning of Consumer Protection Act, 1986, and whether the goods in question were obtained by him for "re-sale" or for any "commercial purpose". The Hon'ble Supreme Court held that, since every patient who is referred to the diagnostic center and who takes advantage of the CT scan, etc has to pay for it and only ten percent patients are provided free service. That being so, the "Goods" (machinery) which are obtained by the appellants were being used for commercial purposes.

In C. P. Moosa - Vs. - Chowgle Industries Ltd 2001-CPJ-3- 9-NC ; 2001-CPR-2-92-NC ; the appellant had purchased EPBAX system for his hotel with warranty and annual maintenance contract. There was deficiency of service during warranty period and AMC period. The National Commission held that the case falls under Section 2(1) (d) (ii) and appellant entitled to compensation. In Super Computer Centre V. Globiz Investment Pvt. Ltd. III (2006) CPJ 265 (NC) where the complainant, a company, had purchased computer system along with related accessories from the opposite party. The intellifax machine, which was supplied with the computer, was not giving performance up to the mark and the same was defective. When the dispute went to the redressal forum under the COPRA, the opposite party contended that the complainant was not a consumer as the computer and the machine were purchased by the company for business purpose i.e. for commercial purpose. However, the defect in the machine was intimated to the opposite party within the warranty period. The National Commission held that the purchaser of the machinery would certainly be a consumer in respect of defect in machine during period of warranty. In Action Construction Equipment Ltd & Anr vs Bablu Mridha 4(2012)CPJ245(NC), the Hon'ble National Commission has said that the law on this point is well settled, that when a buyer takes the assistance of one or two persons to assist/help him in operating the machine, he does not cease to be a consumer. Since, in the present case also, respondent is having only two machines and same are being used by the respondent for earning his livelihood, by no stretch it can be said that respondent is engaged in commercial activities.


Thus by way of several judgments the Hon'ble Supreme Court and National Commission have clearly delineated the scenarios under which consumer compliant are maintainable even where the goods are meant for commercial purposes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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