Supreme Court Rules in Favor of Consumers in Interpretation of “Commercial Purpose” under Consumer Protection Act

LI Network

Published on: 11 September 2023 at 11:32 IST

The Supreme Court of India recently addressed a critical issue concerning the interpretation of the term “Commercial Purpose” as defined in Section 2(1)(d) of the Consumer Protection Act, 1986.

The Court’s decision clarified that the appellants should be considered ‘consumers’ under the Act, overturning the National Consumer Disputes Redressal Commission’s dismissal of their complaint on the grounds of maintainability.

In a two-judge bench comprising Justice S. Ravindra Bhat and Justice Aravind Kumar, the Court ruled, “if the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods would continue to be a ‘consumer’.” However, if the primary motive of purchasing goods or services is for profit, then the person would not fall under the definition of ‘consumer.’

The case involved appellants who intended to purchase commercial space for self-employment, not resale or profit.

They encountered a dispute with the respondent, who unilaterally changed the allotted unit and demanded a buyer’s agreement. The appellants sought a refund and interest, claiming that they qualified as consumers under the Act.

The respondent argued that the appellants were not consumers because they were already engaged in a business when they made the purchase and that the property was not exclusively bought for the purpose of earning a livelihood through self-employment.

The Court emphasized that the term “commercial purpose” was not explicitly defined in the Act and should be understood in its ordinary sense, relating to activities associated with commerce, trade, and profit.

It noted that purchases made for personal use with the intention of earning a livelihood through self-employment still fall within the definition of “consumer.”

Upon examining the facts and the appellants’ claim that they sought office space for self-employment and livelihood, the Court concluded that the Commission’s decision was incorrect. It ruled in favor of the appellants, directing the respondent to refund the amount paid by the appellants with interest and litigation costs.

In summary, the Supreme Court’s decision in this case underscores the importance of considering the purpose behind purchasing goods or services when determining whether an individual qualifies as a ‘consumer’ under the Consumer Protection Act.

The Court’s interpretation provides protection to individuals who acquire goods for self-employment and livelihood, even if the motive includes commercial aspects.

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