LI Network
Published on: 09 September 2023 at 11:30 IST
The Supreme Court has issued a significant ruling clarifying the status of individuals under the Consumer Protection Act.
In a case involving the purchase of goods, the Court emphasized that buyers acquiring goods for self-employment purposes, with the intention of earning their livelihood, continue to be classified as ‘consumers’ under the law.
This ruling, delivered by a bench of Justices S. Ravindra Bhat and Aravind Kumar, underscores that individuals purchasing goods or services primarily for profit-making purposes, as evident from the transaction records, do not fall within the ‘consumer’ category, as defined in Section 2(1)(d) of the Consumer Protection Act, 1986.
The Court’s interpretation of the term “commercial purpose” highlights the importance of the purchaser’s motive.
The Court referred to the Explanation in Section 2(1)(d), inserted by the 1993 Ordinance/Amendment Act, which excludes certain purposes from being considered as “commercial.” Specifically, if the purchasers themselves use the goods to earn their livelihood through self-employment, they retain their status as ‘consumers.’
The Court cited the 2019 case of Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers and others, which emphasized that there is no rigid formula to determine whether a transaction is of a commercial nature.
Instead, it depends on the specific facts and circumstances of each case.
Regarding consumer complaints, the Court asserted that when a complainant claims to have purchased goods for the purpose of earning their livelihood, such complaints should not be summarily dismissed. Instead, the Consumer Court or Commission should evaluate the evidence presented by both parties based on their pleadings to determine whether the complainant qualifies as a ‘consumer.’
The case in question involved appellants who had booked a commercial space in a complex developed by M/s Vipul Ltd. When the developer failed to deliver the office space allotted to them, the appellants sought a refund through the National Consumer Disputes Redressal Commission (NCDRC).
The NCDRC dismissed the complaint, arguing that the appellants, who were engaged in business activities, did not qualify as ‘consumers’ under the Act.
In its analysis, the Supreme Court referred to the Act’s definition of ‘Consumer’ and clarified that individuals who obtain goods or services for large-scale profit-making activities are excluded from the definition.
The Court emphasized that Parliament intended to exclude those who purchase goods with the intent to engage in large-scale profit-making activities.
However, the Court noted that there is no fixed rule for determining consumer status, and it should be based on the specific facts of each case. In this case, the Court found that the appellants had expressly stated in their consumer complaint that they were acquiring office space for self-employment and to support their livelihood, not for resale or investment. Therefore, the NCDRC’s decision was erroneous.
As a result, the Supreme Court ordered the developer to refund the appellants’ amount with interest, considering the prolonged dispute and the fact that the office space had not been delivered as promised.
This ruling clarifies the distinction between consumers and non-consumers under the Consumer Protection Act, safeguarding the rights of individuals who purchase goods or services for self-employment and livelihood purposes.
Case Title: Rohit Chaudhary & Anr. vs M/s Vipul Ltd.