The Supreme Court in its recent judgment held that if such machines are purchase for a commercial purpose was not a “consumer” for the purpose of the Act, 1986 and "a person who is engaged in commercial activities has purchased goods or availed of service for his personal use or consumption or for the personal use of a beneficiary and such purchase is not linked to their ordinary profits generating activities or for creation of self­employment, such a person may still claim to be a consumer."

The Court said that for the purposes of deciding whether the case is covered by the Consumer Protection Act or not a "transaction in reference to which the claim has been filed" is relevant.

While deciding a batch of petitions the bench of Justice Ajay Rastogi and CT Ravikumar held that " the word “consumer” so defined does not include a person, who, in case of goods obtains such goods for resale or for any commercial purpose, or who, in case of service, avails of such services, for any commercial purpose. An explanation appended to the above definition states that the expression “commercial purpose” does not include the use by the buyer of such goods or the person availing such service or services, exclusively for the purpose of earning his livelihood by means of self­employment."

Defining the meaning of "person" the court held that " Section 2(1)(m) defines “person” and includes a firm, whether registered or not, apart from other categories without any distinction, big or small.  So, as “services" defined under Section 2(1)(o) includes banking, insurance and if there is deficiency in service in the matter of banking/insurance, etc., subject to the fact that he is a consumer under Section 2(1)(d), remedy is always available to such a consumer to invoke   the jurisdiction of the Act, 1986."

41. In other words, to make it further clear, let us have certain illustrations,  as to whether the  transaction  falls for commercial purpose or whether the complainant can be held to be a “consumer” within the scope and ambit of Act, 1986.

(i) A CT scan machine was purchased by a Charitable Trust and that was found to be defective, the question raised whether the machinery was purchased for a commercial purpose and whether the appellant was a consumer. From the narration of facts, this Court in Kalpavruksha Charitable Trust v. Toshniwal Brothers (Bombay) Pvt. Ltd. and Another [(2000) 1 SCC 512] held that the machine was purchased by the Charitable Trust for commercial purpose as every person who takes a CT scan has to pay for it and the services rendered are not free and thus the Trust was not a consumer.

(ii). In  Rajeev   Metal  Works and   Others   v.   Mineral  &   Metal Trading Corporation of India Ltd. [(1996) 9 SCC 422], a manufacturer imported raw material through statutory authority that acted as a canalizing agency for manufacture and sale of the finished product.  The appellant approached the National Commission alleging that the respondent had not supplied the required quantity demanded by the appellant. This Court held that the purchase was for a commercial purpose and the manufacturer was not a “consumer” for the purpose of the Act, 1986.

(iii). The bank which had taken bankers indemnity insurance policy from the insurance company and suffered loss owing to some of transactions in one of its branches, raised an insurance claim stating that it is owing to dishonesty of Branch Manager and the claim was repudiated by the insurance company stating that the alleged loss was because of some dishonesty of the Branch Manager and this being for commercial purpose, may not be a consumer.

(iv). The complainant is a private limited company running a diagnostic clinic and alleges that X­ray machine purchased by the complainant from the opposite party was defective.  If an objection is raised that as machine was purchased for commercial purpose and the complainant cannot be said to be a consumer as defined under the   Act,   1986 as he has been employed for commercial purpose and has been carrying out business for profit indeed the complainant is not a consumer under the Act, 1986.

(v). A company purchased the EPBX system for the better management of the business of the company for commercial purpose and the complaint filed for alleged supply of defective system may not be covered by the explanatory clause of Section 2(1).

(d) of the Act, 1986 as the transaction has no nexus to generate profits.

Case Details:-

CIVIL APPEAL NO(S).5352­5353 OF 2007
NATIONAL INSURANCE CO. LTD.  ….APPELLANT(S)
VERSUS
HARSOLIA MOTORS AND OTHERS ….RESPONDENT(S)

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