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Whether commercial purpose oust Consumer Court Jurisdiction? [With recent case laws]

SCOPE OF DEFINITION OF CONSUMER :


Section 2(7) of Consumer Protection Act 2019 defines "Consumer"


Definition of Consumer Commercial Purpose not included.

When goods are purchased with the intent to resell or exploit them commercially, the buyer or user does not fall under the definition of a consumer according to the Act.


Example: A jeep was bought to operate it as a taxi service. The question arose whether the purchaser of the jeep qualified as a consumer under the Act. The Rajasthan State Commission determined that using the jeep as a taxi to generate profits constituted a commercial purpose, hence the buyer/user did not meet the criteria of being a consumer as per the Act (Smt. Pushpa Meena v. Shah Enterprises (Rajasthan) Ltd. (1991) 1 CPR 229).


It is evident from the aforementioned case that the crucial factor in determining consumer status is whether a particular good is utilized for commercial purposes. If so, the buyer/user is not classified as a consumer; if not, the buyer/user is recognized as a consumer.


WHAT IF - IT IS SELF-EMPLOYMENT?


A person purchasing goods for self-employment falls under the definition of a consumer under certain conditions:

  • The goods are utilized by the buyer themselves.

  • Solely for the purpose of earning their livelihood.

  • Through self-employment.

In such instances, the usage does not qualify as commercial purposes under the Act, and the user is acknowledged as a consumer.


Examples:

  • A purchases a truck to operate it as a public carrier personally; hence, A is considered a consumer

  • A purchases a truck and hires a driver for its operation; in this case, A is not deemed a consumer.

  • A owns a cloth shop and starts another business involving a photocopier. A buys a photocopy machine for this purpose. Since the machine wasn't solely purchased for earning a livelihood, A does not qualify as a consumer under the Act.


Rohit Chaudhary v. Vipul Ltd., 2023 SCC OnLine SC 1131 | RECENT CASE LAW ON POINT :


  • Definition of "Consumer": The Supreme Court interpreted the definition of "consumer" under Section 2(1)(d) of the Consumer Protection Act, 1986. It clarified that the Act excludes persons who obtain goods or services for resale or for any commercial purpose from the scope of being considered consumers.

  • Interpretation of "Commercial Purpose": The Court emphasized that the term "commercial purpose" extends beyond merely resale of goods. It encompasses cases where goods are purchased for large-scale profit-making activities. However, purchases made for earning livelihood by self-employment are considered exceptions and still fall within the definition of consumers.

  • Ordinary Meaning and Explanation: While considering the term "commercial purpose," the Court relied on its ordinary meaning, which pertains to commerce. It also noted that purchases made for commercial purposes, under certain circumstances, may still be considered within the definition of consumers, as per the Act's Explanation.

  • Case-Specific Determination: The Court emphasized that each case must be examined based on its specific facts and circumstances. It rejected the adoption of a "straight jacket formula" and underscored the need to assess the dominant purpose behind purchasing goods or services.

  • Finding in the Present Case: In the case at hand, the Court found that the appellants' intention behind purchasing the commercial space was for self-employment and to earn their livelihood. The Court disagreed with the conclusion reached by the National Consumer Dispute Redressal Commission (NCDRC) and held that the appellants indeed qualified as consumers under the Act. Consequently, it directed the respondent to refund the amount to the appellants with interest and litigation costs.


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