AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1017
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....rding to the State Commission, the complainant (appellant herein) was not a "consumer" as per Section 2(1)(d) of the Consumer Protection Act, 1986 [1986 Act]. 2. Aggrieved by the State Commission's order, the appellant filed First Appeal No. 1977 of 2019 before the National Consumer Disputes Redressal Commission, New Delhi [NCDRC] which was dismissed, vide order dated 15.06.2020, affirming the order of the State Commission. 3. The issue which falls for our consideration is whether in respect of the goods purchased/services availed, the appellant would qualify as a "consumer" as defined in Section 2(1)(d) of the 1986 Act. Facts 4. The complainant (appellant herein), a company incorporated and registered under the Companies Act, 1956, filed a consumer complaint before the State Commission claiming, inter alia, that, - it is engaged in export and import of medical devices and equipment; with an intent to install and implement an export/ import documentation system at its plant, it sought a software; in connection therewith, it purchased a product licence of "Brillio Opti Suite", a software, from the respondent; requisite payment for the purchase was made, but the software ....
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....t, such a purchaser would be a consumer. Based on those decisions, learned counsel for the appellant contended that since the appellant had purchased the software for installing and implementing an export/ import documentation system for self-use as an end user thereof, and not for resale or transfer or conversion in any manner, the appellant would qualify as a consumer and, therefore, the view to the contrary taken by the State Commission as well as NCDRC is against the law and liable to be set aside. Submissions on behalf of respondent 10. Per contra, on behalf of the respondent, it was submitted that the software "Brillio Opti Suite" is admittedly for carrying out professional activities. The software is customized to provide support to the appellant in managing its business affairs by performing various functions such as Export Document Set, Clubbing/Spitting SAP Sales Documents, Clubbing of Bill of Exchange, Advance Payment/FIRC, CHA Charges Tracking, Duty Drawback (All Industrial rate), Letter of Credit Management, Container Indents and Tracking, Export Credit Guarantee Corporation (ECGC) Policy Management, Export Packing Credit Handling, FOREX Forward Cover Management.....
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....ommercial purpose] Explanation.- For the purposes of this clause, "commercial purpose" does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment;" (Emphasis supplied) 12. Sub-clause (i) of Clause (d) of sub-section (1) of Section 2 of the 1986 Act in simple terms provides that "consumer" means any person who buys any goods for a consideration. However, it excludes from its purview a person who obtains such goods for resale or for any commercial purpose. Sub-clause (ii) of Clause (d) of sub-section (1) of Section 2 in simple terms provides that a person who hires or avails of any services for a consideration shall also be a consumer provided such services are not for any commercial purpose. Explanation to clause (d) of sub-section (1) of Section 2 of 1986 Act carves out an exception by clarifying that commercial purpose does not include use by a person of goods bought and used or/ and services availed by him exclusively for the purpose of earning his livelihood by means of self-employment. 13. In Karnataka Power Transmission Corporation and An....
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.... 15. As to when an activity or transaction of purchase of goods or services availed can be understood as for a commercial purpose, this Court, in Lilavati Kirtilal Mehta Medical Trust (supra), after considering number of decisions, culled out broad principles for its determination. The relevant paragraphs of the said decision are extracted below:- "19. To summarize from the above discussion, though a straight-jacket formula cannot be adopted in every case, the following broad principles can be culled out for determining whether an activity or transaction is "for a commercial purpose": 19.1 The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, "commercial purpose" is understood to include manufacturing/ industrial activity or business-to-business transactions between commercial entities. 19.2 The purchase of the good or service should have a close and direct nexus with a profit-generating activity. 19.3 The identity of the person making the purchase or the value of the transaction is not conclusive to the question of whether it is for a commercial purpos....
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....th the opposite party. The allegations in the complaint were that the complainants had paid instalments to the opposite party and despite full payment, the opposite party failed to deliver possession. Consequently, complainants sought compensation and delivery of possession. The opposite party therein contested the proceedings by claiming that the complainants had booked the shop for commercial purpose therefore they cannot be termed "consumer". In the light of earlier decisions of this Court in Laxmi Engineering Works v. P.S.G. Industrial Institute 11 (1995) 3 SCC 583 and Cheema Engineering Services v. Rajan Singh (1997) 1 SCC 131, this Court considered the evidence on record to determine whether the premises were booked by the complainants with an intention of self-employment / self-use. Upon finding that the complainant(s) were not employed any more in foreign land and had disclosed their desire to come to India to start a business, this Court held them to be consumer(s). 20. The decision in Sunil Kohli (supra) will not be of help to the appellant as that was a case of unemployed individual(s) who had booked a shop for self-employment; whereas, in the case on hand, the appell....
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.... and the National Commission." 22. In the case on hand also, the complainant had been an established company doing business which bought the product license to automate its processes. In such circumstances, the object of the purchase was not to generate self-employment but to organize its operations with a view to maximise profits. In our view therefore, the case of the complainant does not fall within the Explanation to Section 2(1)(d) of the 1986 Act. 23. In National Insurance Co. Ltd. v. Harsolia Motors and Ors (supra), another decision relied by the appellant, the complainant, a commercial entity engaged in the business of sale of vehicles, took fire insurance policy from the appellant, an insurance company, covering its office, showroom, garage, machinery lying in the showroom premises, etc. The complainant's case was that damages were sustained during Godhra riots and, therefore, the complainant was entitled to be indemnified under the policy of Insurance. Aggrieved by action of the insurance company, claiming deficiency in service, a complaint was filed. The Insurance Company took an objection that the complainant was not a consumer as per Section 2(1)(d) of the 1986 A....
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....ial purpose. 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. 41.1 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 Bros. (Bombay) (P) Ltd. 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. 41.2. In Rajeev Metal Works v. Mineral & Metal Trading Corpn. of India Ltd., 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 Cou....
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...., more particularly paragraph 42, what becomes clear is that if the transaction has a nexus with generation of profits, it would be treated as one for a commercial purpose. The examples of purchase of refrigerator, television or air-conditioner cited in paragraph 39 (supra), as one not relating to generation of profit, makes the position clear. These products/ goods are for comfort having no direct nexus to generation of profits. But if a transaction has nexus with generation of profits, it would be for a commercial purpose. However, whether a transaction has nexus with generation of profits or not is to be determined on the facts of each case by taking into consideration, inter alia, the nature of the goods purchased or services availed and the purpose for which it is purchased or availed. If upon consideration of all relevant factors the picture that emerges is one which reflects that the object of the purchase of goods/ services is to generate or augment profit, the same would be treated as for a commercial purpose. 26. Besides above, the question that fell for consideration before this Court in Harsolia Motors (supra) was whether the insurance services availed were for comme....