2019 (10) TMI 1624 - SC - Indian Laws

Buyers held consumers under Section 2(1)(d) when premises booked for self-employment, not large-scale commercial use

SUNIL KOHLI & ANR. Versus M/s. PUREARTH INFRASTRUCTURE LTD.

SC held that the complainants qualified as 'consumers' under Section 2(1)(d) of the Consumer Protection Act, 1986. Relying on Laxmi Engineering Works, SC ... Maintainability of compllaint - Complainants were “consumers” for the purposes of Consumer Protection Act, 198 or not - whether the evidence on record is suggestive or indicative of the fact that the premises in question were booked by the complainants with the intention of self-employment or self-use? - HELD THAT:- As laid down by this Court in Laxmi Engineering Works [1995 (4) TMI 294 - SUPREME COURT], the explanation to Section 2(1)(d) of the Act clarifies that “in certain situations, purchase of goods for “commercial purpose” would not yet take the purchaser out of the definition of expression ‘consumer’. 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 is yet a ‘consumer’”. This Court went on to observe that what is “Commercial Purpose” is a question of fact to be decided in the facts of each case. The affidavit of evidence clearly points that the complainants wanted to dispose of the property in DENMARK and wanted to come down to Delhi to start a business. It is for this purpose that the premises in question were booked. The evidence also discloses that the Complainant no.1 was not employed any more in DENMARK and as a matter of fact, he was serving RED CROSS, a charitable organization. In the circumstances, it cannot be ruled that the case of the Complainants would not come within the definition of “consumer” as defined under the provisions of the Act. The view taken by the National Commission is set aside - The National Commission had confined itself to questions whether the complainants were ”consumers” or not, and, whether the dispute came within the parameters and provisions of the Act, and other issues, namely, whether the respondents were deficient in rendering services, and if so, whether any compensation would be payable? were not dealt with by the National Commission. Holding the Complainants to be “consumers” and the Complaint to be maintainable under the provisions of the Act, the matter remitted back to the National Commission to consider the other issues - appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED Whether the purchasers of a commercial shop, who asserted an intention to use the premises for self-employment and to earn their livelihood, fall within the definition of 'consumer' under Section 2(1)(d)(i) of the Consumer Protection Act, 1986, despite booking a commercial unit. Whether the National Consumer Disputes Redressal Commission was correct in dismissing the complaint as not maintainable solely on the ground that the purchasers had booked the premises for commercial purposes, without adjudicating other substantive issues (deficiency in service and compensation). 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Whether purchasers of a commercial shop who assert intention to use it for self-employment qualify as 'consumer' under Section 2(1)(d)(i). Legal framework: Section 2(1)(d)(i) defines 'consumer' as a person who buys goods for consideration, and expressly excludes a person who obtains such goods 'for resale or for any commercial purpose.' The statutory Explanation (added by the 1993 amendment) clarifies that purchase for 'commercial purpose' does not exclude a purchaser who uses the goods 'by himself exclusively for the purpose of earning his livelihood by means of self-employment.' Precedent treatment: The Court relied upon and followed the principles in Laxmi Engineering Works and Cheema Engineering Services. Laxmi Engineering Works characterized 'commercial purpose' by ordinary meaning and explained that the Explanation preserves purchaser-as-consumer status where the purchaser uses the goods himself for self-employment to earn livelihood. Cheema reiterated that 'self-employment' is a question of fact and the onus of proof lies on the party asserting self-employment; it also required factual inquiry into whether the use was exclusively by the purchaser (or family) or involved regular employment of others. Interpretation and reasoning: The Court examined the factual material filed by the purchasers - evidence of intention to sell foreign residence, move permanently, and start a distributorship/shop to earn livelihood; evidence that one purchaser had left employment and was engaged in voluntary work; and documentary indicia regarding distributorship rights and steps toward settlement. The Court held that the statutory Explanation reduces the question of 'commercial purpose' to a question of fact to be decided on evidence. Given the affidavits and documentary material indicating intent to use the premises for self-employment, the National Commission's finding that the booking was for commercial purpose was not sustainable. Ratio vs. Obiter: Ratio - where a purchaser of goods (including immovable commercial unit) demonstrates by admissible evidence that the purchase was intended to be used by the purchaser himself for earning livelihood by self-employment, such purchaser remains a 'consumer' within Section 2(1)(d)(i) despite the commercial nature of the goods. Obiter - illustrations explaining 'self-employment' from earlier precedents were applied to facts here but are explanatory rather than novel law. Conclusions: The Court concluded that the appellants' evidence sufficed to bring them within the Explanation to Section 2(1)(d)(i); therefore they qualify as 'consumers' and possess locus standi to maintain a complaint under the Act. The National Commission's contrary conclusion was set aside. Issue 2: Whether dismissal of the complaint as not maintainable on consumer-status alone, without deciding substantive questions of deficiency in service and compensation, was appropriate. Legal framework: Consumer fora must first determine whether a complainant falls within the statutory definition of 'consumer'; if yes, the forum must proceed to adjudicate substantive allegations (deficiency in service, unfair trade practice, and reliefs claimed) unless other procedural/tenability bars exist. Precedent treatment: The Court applied established approach that maintainability is a threshold issue but, once overcome, the forum must consider merits; prior decisions underscore that factual findings on maintainability should be based on evidence and not preclude adjudication of merits where consumer status is arguable and supported by material. Interpretation and reasoning: The National Commission confined itself to the maintainability issue and dismissed the complaint solely on the ground that the booking was for commercial purpose. The Court found that the National Commission did not adequately consider the appellants' evidence pointing to self-employment intent and therefore prematurely foreclosed consideration of substantive issues (deficiency, compensation, possession, accounting for funds). Because the threshold determination was erroneous, the dismissal precluding further enquiry into merits could not stand. Ratio vs. Obiter: Ratio - an erroneous factual finding on the threshold question of consumer status, when set aside, requires remand so that the forum may decide the remaining substantive issues; Obiter - observations about administrative delays and timeline for disposal are ancillary directions. Conclusions: The Court restored the complaint to the National Commission's file and remitted the matter for fresh consideration of the substantive issues (deficiency in service, unfair trade practice, compensation, delivery of possession and title, accounting for funds), directing expeditious disposal and indicating a preferable six-month timeline given the protracted nature of the dispute. Cross-references and operative outcome The Court followed and applied the legal tests articulated in Laxmi Engineering Works and Cheema Engineering Services regarding the Explanation to Section 2(1)(d)(i), treated the question of 'self-employment' as one of fact to be decided on evidence, found the record of intent sufficient to qualify the purchasers as 'consumers,' set aside the National Commission's maintainability dismissal, and remitted the case for adjudication of substantive claims. No costs were imposed and a direction for expeditious disposal was given.