Case Note & Summary
Laxmi Engineering Works, a proprietary concern established under the Employment Promotion Programme and registered as a small scale industry with the Directorate of Industries, Maharashtra, obtained financial assistance from Maharashtra State Finance Corporation as a term loan of Rs.22.10 lakhs. The appellant placed an order with P.S.G. Industrial Institute for supply of a PSG 450 CNC Universal Turning Central Machine on May 28, 1990. The respondent supplied the machinery six months beyond the stipulated date and the machine was defective. The appellant brought the defects to the respondent's notice; despite attempts to rectify, the machine remained defective causing financial loss. The appellant lodged complaint No.116 of 1992 before the Maharashtra Consumer Disputes Redressal Commission claiming Rs.4,00,000. The respondent contended that the appellant purchased the machine for commercial purpose, hence not a consumer under Section 2(d) of the Consumer Protection Act, 1986. The State Commission partly allowed the complaint directing the respondent to pay Rs.2.48 lakhs with interest at 18% per annum if not paid within 30 days. The National Commission allowed the respondent's appeal on 7 December 1993, holding that the appellant was not a consumer as the purchase was for commercial purpose, and dismissed the complaint, though observing that the appellant could pursue a civil suit. Before the Supreme Court, the appellant argued that the purpose was not commercial; the appellant was a small scale industry of a diploma engineer, Shri Y.G. Joshi, set up to earn livelihood with financial assistance, and had an agreement with Premier Automobiles for supplying parts. The respondent argued that the purchase was for commercial purpose as held consistently by the National Commission. The Court examined the scheme of the Act and the United Nations guidelines on consumer protection. The Court noted the explanation added to Section 2(d) by Ordinance 24 of 1993 replaced by Amendment Act 50 of 1993, effective 18 June 1993, which clarified that commercial purpose does not include use of goods bought and used exclusively for earning livelihood by self-employment. The Court held that whether a purchase is for commercial purpose depends on the facts of each case; the explanation is clarificatory; and purchase of machinery by a small scale industry for self-employment is not commercial purpose. Accordingly, the Supreme Court allowed the appeal, set aside the National Commission order, and restored the State Commission order.
Headnote
A) Consumer Protection - Definition of Consumer - Commercial Purpose - Consumer Protection Act, 1986, Section 2(d) - The court examined whether purchase of machinery by appellant for use in small scale industry was for commercial purpose. The National Commission dismissed complaint holding purchase was commercial. The Supreme Court held that purchase for earning livelihood by self-employment is not commercial purpose; explanation added by 1993 Amendment clarifies. Allowed appeal, restored State Commission order. (Paras 2-7)
Issue of Consideration
Meaning and ambit of the expression 'any commercial purpose' in Section 2(d) of Consumer Protection Act, 1986; Whether purchase of machinery by a small scale industry for earning livelihood is for commercial purpose
Final Decision
Appeal allowed; National Commission order set aside; State Commission order restored; appellant held to be consumer.
Law Points
- Consumer means any person who buys goods for consideration but does not include a person who obtains such goods for resale or for any commercial purpose
- 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
- Whether goods are purchased for commercial purpose is a question of fact
- Small scale industry purchasing machinery for earning livelihood is consumer
