Case Note & Summary
The appeal arose under the Consumer Protection Act, 1986, concerning a dispute between a seller of a brick-making machine and a purchaser. The appellant, M/s. Cheema Engineering Services, challenged the orders of consumer fora which had accepted the respondent, Rajan Singh, as a consumer under the Act. The central factual context was the purchase of a machine known as 'Brickman' used for clay preparation, brick moulding, brick drying, and brick burning. The respondent purchased the machine from the appellant. There was no dispute that goods were bought for consideration. The respondent claimed that the machine was used for earning his livelihood by self-employment, which would bring him within the consumption purpose exception under the Explanation to Section 2(1)(d). The consumer fora below accepted this claim without recording evidence. The main issue was whether the respondent's use of the machine was for self-employment and hence not for a commercial purpose, making him a consumer under Section 2(1)(d) as amended in 1993. The appellant contended that the machine was used for a commercial purpose, taking the respondent outside the definition of consumer. The respondent contended that the machine was used exclusively for earning his livelihood by self-employment through brick-making. The Supreme Court did not record detailed submissions but noted that the matter turned on evidence regarding employment of workmen and the nature of the brick-making activity. The Court examined Section 2(1)(d) and the Explanation. It held that the Explanation excludes from commercial purpose any goods bought and used by a consumer exclusively for earning livelihood by means of self-employment. However, self-employment is not defined and is a matter of evidence. The Court distinguished between earning livelihood through self-employment and earning livelihood in commercial business. Self-employment connotes that the purchaser alone uses the machinery by employing himself or family members to produce goods for earning livelihood, without employment of regular workmen for trade in manufacture and sale of bricks. Merely earning livelihood through commercial business does not mean it is not for a commercial purpose. Whether the respondent used the machine exclusively by himself and family or employed workmen were matters of evidence, and the burden was on the respondent to prove self-employment. The consumer fora had concluded without evidence that the respondent used the machine only for self-employment; this was erroneous. The Supreme Court set aside the orders of all the consumer fora and remitted the matter to the District Forum. The District Forum was directed to record evidence of the parties and dispose of the matter in accordance with law within six months from receipt of the order. No order as to costs.
Headnote
A) Consumer Protection - Definition of Consumer - Commercial Purpose Exclusion - Consumer Protection Act, 1986, Section 2(1)(d) and Explanation - The court examined whether the respondent, who purchased a Brickman machine for clay preparation, brick moulding, drying, and burning, fell within the definition of consumer. The Explanation to Section 2(1)(d) excludes goods used exclusively for earning livelihood by self-employment from the ambit of commercial purpose. Held that mere purchase for earning livelihood does not automatically exempt from commercial purpose; the use must be exclusively for self-employment by the consumer and family, without employment of regular workmen for trade in manufacture and sale of bricks. (Paras 1-4) B) Consumer Protection - Self-Employment - Meaning and Proof - Consumer Protection Act, 1986, Explanation to Section 2(1)(d) - Self-employment connotes that the purchaser alone uses the machinery by employing himself or family members to produce goods for earning livelihood; employment of regular employees/workmen for commercial brick manufacture would indicate commercial purpose. The question whether the machine was used exclusively for self-employment is a matter of evidence, and the burden is on the respondent to prove absence of commercial purpose. Held that consumer fora erred in concluding self-employment without evidence and remanded the matter to the District Forum for recording evidence. (Paras 5-6)
Issue of Consideration
Whether the respondent has been using the machine 'Brickman' for clay preparation, brick moulding, brick drying and brick burning, after purchasing the same from the appellant for earning his livelihood within the meaning of Explanation to section 2(1)(d) of the Consumer Protection Act, 1986?
Final Decision
The appeal was allowed. The orders of all the Tribunals were set aside. The matter was remitted to the District Forum, which was directed to record evidence of the parties and dispose of it in accordance with law within a period of six months from the date of receipt of the order. No costs.
Law Points
- Explanation to Section 2(1)(d) of Consumer Protection Act
- 1986 excludes goods used exclusively for earning livelihood by self-employment from commercial purpose
- Self-employment means the purchaser alone uses the machinery by employing himself and family members without employment of regular workmen for trade
- Whether a purchase is for self-employment or commercial purpose is a question of fact to be proved by evidence
- Burden of proving self-employment lies on the person claiming to be a consumer
