Tag Archives: Commercial Purpose

Consumer – Definition of

In Laxmi Engineering Works v. P.S.G. Industrial Institute, (1995) 3 SCC 583, while dealing with the connotative expanse of the term “consumer” in the unamended definition, the Court considering the Explanation added by the Consumer Protection (Amendment) Act, 1993 ruled that the said Explanation is clarificatory in nature and applied to all pending proceedings. Further proceeding, the Court held that:

“…….(ii) Whether the purpose for which a person has bought goods is a “commercial purpose” within the meaning of the definition of expression ‘consumer’ in Section 2(d) of the Act is always a question of fact to be described in the facts and circumstances of each case.

(iii) A person who buys goods and uses them himself, exclusively for the purpose of earning his livelihood, by means of self-employment is within the definition of the expression ‘consumer’.

In Kalpavruksha Charitable Trust v. Toshniwal Brothers (Bombay) Pvt. Ltd., 1999 (37) ALR 814, reiterating the principles stated in Laxmi Engineering Works v. P.S.G. Industrial Institute, (1995) 3 SCC 583, the Court ruled whether a person would fall within the definition of “consumer” or not would be a question of fact in every case. In the said case, the National Commission had already returned a finding that the appellant therein was not a “consumer” as the machinery was installed for commercial purpose. An argument was advanced that the activity of , a charitable institution, though commercial in nature, was a part of charitable activity. For the said purpose, reliance was placed on CIT v. Surat Art Silk Cloth Manufacturers Association, (1980) 2 SCC 31. The two judge Bench distinguished the said verdict on the ground that it was a decision rendered under the Income Tax Act. It was also urged there that if the dominant object of the trust or institution is charitable, the activity carried on by it would not be treated as an activity for profit. To bolster the said submission, the authority in CIT v. FICCI, (1981) 3 SCC 156, was commended to the Court but the same was not accepted on the foundation that the verdict was in the context of Income Tax Act.  Eventually the Court held thus:

“In the instant case, what is to be considered is whether the appellant was a “consumer” within the meaning of the Consumer Protection Act, 1986 and whether the goods in question were obtained by him for “resale” or for any “commercial purpose”. It is the case of the appellant that every patient who is referred to the Diagnostic Centre of the appellant and who takes advantage of the CT scan, etc. has to pay for it and the service rendered by the appellant is not free. It is also the case of the appellant that only ten percent of the patients are provided free service. That being so, the “goods” (machinery) which were obtained by the appellant were being used for “commercial purpose.” Bunga Daniel Babu v. Sri Vasudeva Constructions, 2016 (118) ALR 901.

Leave a comment

Filed under Consumer, Uncategorized