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SUPREME COURT OF INDIA
Mr. B.P. Jeevan Reddy & Mrs. Sujata V. Manohar, JJ.
LAXMI ENGINEERING WORKS—Appellant
versus
P.S.G. INDUSTRIAL INSTITUTE—Respondent
Civil Appeal No. 4193 of 1995—Decided on 4.4.1995
Held: The Explanation, in our opinion is only explanatory; it is more in the nature of a clarification - a fact which would become evident if one examine the definition (minus the explanation) in the context and scheme of the enactment. As indicated earlier, the explanation broadly affirms the decisions of the National Commission.
It merely makes explicit what was implicit in the Act. It is not as if the law is changed by the said explanation; it has been merely made clearer.
(para 12)
(ii) Consumer Protection Act, 1986 - Section 2 (1) (d) - Consumer - Definition - Expression any commercial purpose - Meaning and ambit - Held, whether purpose for which a person has bought goods is a commercial purpose within meaning of definition of expression consumer is always a question of fact to be decided in facts and circumstances of each case.
Held: A consumer means in so far as is relevant for the purpose of this appeal, (i) a person who buys any goods for consideration; it is immaterial whether the consideration is paid or promised, or partly paid and partly promised, or whether the payment of consideration is deferred;
(ii) a person who uses such goods with the approval of the person who buys such goods for consideration (iii) but does not include a person who buys such goods for resale or for any commercial purpose. The expression "resale" is clear enough. Controversy has, however, arisen with respect to meaning of the expression "commercial purpose". It is also not defined in the Act. In the absence of a definition, we have to go by its ordinary meaning. "Commercial" denotes "pertaining to commerce" (Chambers Twentieth Century Dictionary); it means "connected with, or engaged in commerce; mercantile; having profit as, the main aim" (Collins English Dictionary) whereas the word "commerce" means "financial transactions especially buying and selling of merchandise, on a large scale" (Concise Oxford Dictionary). The National Commission appears to have been taking a consistent view that where a person purchases goods "with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit" he will not be a "consumer" within the meaning of Section 2 (d) (i) of the Act. Broadly affirming the said view and more particularly with a view to obviate any confusion - the expression "large-scale" is not a very precise expression - the Parliament stepped in and added the explanation to Section 2 (d) (i) by Ordinance/Amendment Act, 1993. The explanation excludes certain purposes from the purview of the expression "commercial purpose" - a case of exception to an exception. (Para 8)
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 live1ihood by means of self-employment, such purchaser of goods is yet a "consumer". (Para 8)
The explanation reduces the question, what is a "commercial purpose" to a question of fact to be decided in the facts of each case. 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 them by himself, "exclusively for the purpose of earning his livelihood" and "by means of self-employment" make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. (Para 8)
(iii) Consumer Protection Act, 1986 - Section 2 (1) (d) - Consumer - Expression commercial purpose - A person who buys goods and use them himself, exclusively for purpose of earning his livelihood, by means of self-employment is within definition of expression consumer.
(Paras 8 & 14)
(iv) Consumer Protection Act, 1986 - Section 2 (1) (d) - Consumer - Expression commercial purpose - Purchase of Universal Turning Central Machine by a proprietary concern established under Employment Promotion Programme - Defective functioning of machine - Complaint against - Whether maintainable before a consumer forum? - (No) - Whether complainant is a consumer? - (No).
(Paras 3, 14 & 15)
Result: Appeal dismissed.
IMPORTANT POINTS
1. A person who buys goods and use them himself, exclusively for the purpose of earning his livelihood, by means of self-employment is within the definition of the expression consumer in Section 2 (1) (d) of the Consumer Protection Act.
2. The explanation added by the Consumer Protection (Amendment) Act 50 of 1993 with effect from 18.6.1994 is clarificatory in nature and applies to all pending proceedings.
Mr. B.P. Jeevan Reddy, J.— Leave granted. The definition of the expression “consumer” in clause (d) of Section 2 of the Consumer Protection Act, 1986 excludes from its purview “a person who obtains such goods for resale or for any commercial purpose”. The question that arises in this appeal is what is the meaning and ambit of the expression “any commercial purpose” in the said definition. By Ordinance 24 of 1993 (which has since been replaced by Amendment Act 50 of 1993) an explanation has been added to the definition of the expression “consumer” with effect from 18.6.1993. The explanation reads: “For the purposes of Sub-clause (i) “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”. The complaint herein was, however, made before the adding of the said explanation. It would be appropriate to read the definition at this stage.
“(d) “consumer” means any person who, -
(i) 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 and includes any user of such goods other than the person who buys such goods for consideration 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 but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) [hires or avails of] any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who [hires or avails of] the service for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person:”
THE FACTUAL MATRIX:
2. The appellant, Laxmi Engineering Works, is a proprietary concern established under the Employment Promotion Porgramme. It is registered as a small scale industry with the Directorate of Industries, Maharashtra and has also obtained financial assistance from Maharashtra State Finance Corporation in the form of term loan amounting to Rs. 22.10 lakhs besides financial assistance from certain other sources. The appellant placed an order with the respondent-P.S.G. Industrial Institute for supply of PSG 450 CNC Universal Turning Central Machine on May 28, 1990. The appellant’s case is that the respondent not only supplied the machinery six months beyond the stipulated date but supplied a defective machine. Soon after it was installed and operated, several defects came to light which the appellant brought to the notice of the respondent. A good amount of correspondence took place between the parties and though the respondent sent some persons to rectify the defects, the machine could not be put in proper order. The appellant states that he was suffering serious financial loss on account of die defective functioning of the machine and accordingly he lodged a complaint (No. 116 of 192) before the Maharashtra State Consumer Disputes Redressal Commission claiming an amount of Rs. 4,00,000/- on several counts from the respondent. The respondent appeared before the State Commission and denied die appellant’s claim inter alia, it raised an objection that since the appellant has purchased the machine for commercial purposes he is not a consumer within the meaning of the said expression as defined in Section 2(d) of the Act. The Commission allowed the appellant’s claim partly, directing the respondent to pay to the appellant a sum of Rs. 2.48 lakhs within 30 days failing which the said amount was to carry interest at the rate of 18% per annum. The respondent filed an appeal before the National Commission which allowed the said appeal on 7th December, 1993 on the only ground that the appellant is no
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