TaxTMI 
TaxTMI 
2023 (4) TMI 1455
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.... Dr. (Mrs.) Vipin Gupta, AOR Mr. Nakul Dewan, Sr. Adv. Mr. Pradhuman Gohil, Adv. Mrs. Taruna Singh Gohil, AOR Ms. Ranu Purohit, Adv. Mr. Alapati Sahithya Krishna, Adv. Ms. Nooreen Sarna, Adv. Mr. Neil Chatterjee, Adv. Mr. Amit K. Nain, AOR Mr. P. I. Jose, AOR Ms. Bhabna Das, AOR JUDGMENT Rastogi, J. CIVIL APPEAL NO(S). 5352-5353 OF 2007 CIVIL APPEAL NO(S).5352-5353 OF 2007 1. The assail in the present appeals by special leave is to judgment and order passed by the National Consumer Disputes Redressal Commission (hereinafter "National Commission") dated 3rd December, 2004, whereby the National Commission, while reversing the finding of the Gujarat State Consumer Disputes Redressal Commission (hereinafter "State Commission"), regarding maintainability of the complaint filed at the instance of the respondent under the Consumer Protection Act, 1986 (hereinafter "Act, 1986") held that a person who takes insurance policy to cover the envisaged risk does not take the policy for the commercial purpose. Policy is only for indemnification of an actual loss and is not intended to generate profits and finally held that the respondent (insured) was a consumer as defined under Sectio....
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....he Commission recorded a finding that the expression used "for any commercial purpose" would mean that the goods purchased or services hired should be used in any activity directly intended to generate profit and profit is the main aim of commercial purpose, but in a case where goods purchased or services hired in an activity which is not intended to generate profit, it would not be a commercial purpose and held that a person who takes the policy of insurance to cover the envisaged risk, for indemnification of actual loss suffered is not ordinarily intended to generate profits and accordingly held that the respondent/complainant was a "consumer" under Section 2(1)(d) of the Act, 1986 and complaint filed at its instance is to be examined/decided by the State Commission on its own merits under the judgment impugned dated 3rd December, 2004, is a subject matter of challenge in appeal before this Court at the instance of the appellant insurance company. 6. While the notices were issued by this Court on 15th April, 2005, the operation and effect of the judgment impugned was stayed. In consequence thereof, the complaint filed at the instance of the respondent has not been examined by ....
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....le the claim before the Consumer Court seeking summary proceedings and the present disputes are not of a small disgruntled consumer who is seeking claim of an insurance for loss of mobile for personal use, or of autorickshaw driver seeking claim for expenses incurred for fixing a defective engine as that is covered for his livelihood. The instant dispute pertains to large scale business entities entering into commercial agreements with the insurance companies to protect the risks associated in carrying out their businesses. If they are being permitted to invoke the jurisdiction as a consumer under the Act, 1986, it will frustrate the very mandate of the legislative wisdom, pursuant to which this Act has been enacted. 13. Learned counsel further submits that the doctrine of election is not available to the litigant who is aggrieved by the insurance contract as Section 2(1)(d) of the Act, 1986 and Section 2(7) of the Consumer Protection Act, 2019 Act specifically exclude the provisions of services "for commercial purpose" from the ambit of consumer courts and the only remedy lies to the commercial courts under the Act, 2015. 14. Learned counsel submits that if contention to the....
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....lar eventuality i.e., fire, flood, etc., does not occur, then there is no question of encashment of policy cover, and if this happens what is payable is the risk amount against premium paid in advance. Under the circumstances, the insurance policy cover is being offered/purchased not basically to earn profit, but to cover the uninvited risk, hence, buying of policy cover is not for commercial purpose even if it is purchased by commercial enterprises and what is commercial purpose is well defined not only in several dictionaries but also in the judgments of this Court and submitted that it may be noticed that the Act, 1986 bars only a transaction for "commercial purpose" but it does not bar any commercial enterprise to be a consumer and hence the commercial enterprise can be a buyer/consumer and can enforce its rights as a consumer, provided immediate intent is to generate profit out of such transaction by the commercial enterprise, as held by this Court in Madan Kumar Singh (Dead) Through LR. v. District Magistrate, Sultanpur and Others [(2009) 9 SCC 79 (2009) 9 SCC 79]. 18. Learned counsel further submits that any transaction by commercial enterprises even without immediate int....
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....ectively and inefficiently for reasons which are not necessary to be stated. 23. The importance of the Act lies in promoting welfare of the society by enabling the consumer to participate directly in the market economy. A scrutiny of various definitions such as "consumer", "service", "trader", "unfair trade practice" indicates that legislature has attempted to widen the ambit and reach of the Act. Each of these definitions are in two parts, one explanatory and the other inclusive. The explanatory or the main part itself uses expressions of amplitude indicating clearly its wide sweep within its ambit to widen such things which otherwise would have been beyond its natural import. 24. The provisions of the Act, 1986 thus have to be construed in favour of the consumer to achieve the purpose of enactment as it is a social benefit-oriented legislation. The primary duty of the Court/Commission while construing the provisions of such an Act is to adopt a constructive approach subject to that it should not do violence to the language of the provisions and is not contrary to attempted objective of the enactment. 25. Section 2(1)(d) defines "consumer", Section 2(1)(m) defines "a pers....
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....any deficiency in service, a consumer is one who buys any goods or hires any service. The term "consumer" has, thus, been defined to mean a person who is - (a) a buyer, or (b) with the approval of the buyer, the user, of the goods in question, or (c) a hirer or person otherwise availing, or (d) with the approval of such aforesaid persons, the beneficiary, of the service or services in question With the condition super added that such buying of the goods or hiring or availing of any such service, is for a consideration, - (i) paid, or (ii) promised, or (iii) partly paid or promised, or (iv) covered by any system of deferred payment. 27. However, 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 livelih....
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....sion "Consumer" by an amendment, ruled that such explanation is clarificatory in nature and taking note of the explanation added by the amendment Act, 1993 extensively examined the definition of the term "consumer" as under :- "11. Now coming back to the definition of the expression 'consumer' in Section 2(d), a consumer means insofar as is relevant for the purpose of this appeal, (i) a person who buys any goods for consideration; it is immaterial whether the consideration is paid or promised, or partly paid and partly promised, or whether the payment of consideration is deferred; (ii) a person who uses such goods with the approval of the person who buys such goods for consideration; (iii) but does not include a person who buys such goods for resale or for any commercial purpose. The expression 'resale' is clear enough. Controversy has, however, arisen with respect to meaning of the expression "commercial purpose". It is also not defined in the Act. In the absence of a definition, we have to go by its ordinary meaning. 'Commercial' denotes "pertaining to commerce" (Chamber's Twentieth Century Dictionary); it means "connected with, or engaged in ....
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....ake the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. A few more illustrations would serve to emphasise what we say. A person who purchases an auto-rickshaw to ply it himself on hire for earning his livelihood would be a consumer. Similarly, a purchaser of a truck who purchases it for plying it as a public carrier by himself would be a consumer. A person who purchases a lathe machine or other machine to operate it himself for earning his livelihood would be a consumer. (In the above illustrations, if such buyer takes the assistance of one or two persons to assist/help him in operating the vehicle or machinery, he does not cease to be a consumer.) As against this a person who purchases an auto-rickshaw, a car or a lathe machine or other machine to be plied or operated exclusively by another person would not be a consumer. This is the necessary limitation flowing from the expressions "used by him", and "by means of self-employment" in the explanation. The ambiguity in the meaning of the words "for the purpose of earning his livelihood" is explained and clarified by the other two sets....
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....rinciples that were culled out for determination whether the activity or transaction is for a commercial purpose, held as under: "19. To summarise from the above discussion, though a strait 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 purpose. It has to be seen whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary. 19.4. If it is found that the....
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....2(1)(m) of the Act, 1986 merely because it is a commercial enterprise. To the contrary, a firm whether registered or not is a person who can always invoke the jurisdiction of the Act, 1986 provided it falls within the scope and ambit of the expression "consumer" as defined under Section 2(1)(d) of the Act, 1986. 37. Applying the above principles to the present case, what needs to be determined is whether the insurance service has a close and direct nexus with the profit generating activity and whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary. The fact that the insured is a commercial enterprise is unrelated to the determination of whether the insurance policy shall be counted as a commercial purpose within the purview of Section 2(1)(d) of the Act. 38. In the case of Karnataka Power Transmission Corporation and Another v. Ashok Iron Works Private Limited [(2009) 3 SCC 240], this Court while answering the question in the affirmative observed : "17. It goes without saying that interpretation of a word or expression must depend on the text and the context. T....
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.... It does not appear to us to admit of any doubt that company is a person within the meaning of Section 2(1)(d) read with Section 2(1)(m) and we hold accordingly." 39. Applying the aforesaid test, two things are culled out; (i) whether the goods are purchased for resale or for commercial purpose; or (ii) whether the services are availed for any commercial purpose. The two-fold classification is commercial purpose and non-commercial purpose. If the goods are purchased for resale or for commercial purpose, then such consumer would be excluded from the coverage of the Act, 1986. For example, if a manufacturer who is producing product A, for such production he may be required to purchase articles which may be raw material, then purchase of such articles would be for commercial purpose. As against this, if the same manufacturer purchases a refrigerator, television or air-conditioner for his use at his residence or even for his office has no direct or indirect nexus to generate profits, it cannot be held to be for commercial purpose and for afore-stated reason he is qualified to approach the Consumer Forum under the Act, 1986. 40. Similarly, a hospital which hires services of a medi....
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....iv). The complainant is a private limited company running a diagnostic clinic and alleges that X-ray 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. 42. Thus, what is finally culled out is that each case has to be examined on its own facts and circumstances and what is to be examined is whether any activity or transaction is for commercial purpose to generate profits and there cannot be a straight-jacket formula which can be adopted and every case has to be examined on the broad principles which have been laid down by ....
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....h the submission made on behalf of the appellant that if insurance claims are covered under the Act, 1986, then virtually all insurance matters will come within the purview of the Act, 1986 and this will render the Act, 2015 nugatory. In our view, both these Acts have different scope and ambit and have different remedial mechanism, are in different sphere having no internal co-relationship. 48. Consequently, the appeals are without substance and accordingly dismissed. No costs. 49. Let the State Commission may adjudicate the complaint of the respondents on its own merits in accordance with law and since it is an old matter, be decided expeditiously as possible, but in no case later than one year. 50. Pending application(s), if any, shall stand disposed of. CIVIL APPEAL NO(S).5354 OF 2007 - (United India Insurance Company Limited v. M/s Diwakar Goiram Porkhayat) 51. The present appeal is directed against the order passed by the National Commission dated 3rd December, 2004 holding that the insurance policy taken by the respondent (commercial unit) in the facts of the case was only to indemnity the loss which the respondent/complainant has suffered and the transaction i....
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....2 - National Insurance Co. Ltd. v. M/s Ankur and Another. 59. The judgment under appeal is dated 15th December, 2010 passed by the National Commission. 60. Brief facts of the case are that the respondent is engaged in the business of garments in wholesale, who took a standard fire and peril policy effective for the period from 6th January, 2006 to 5th January, 2007 for a total sum of Rs. 60,00,000/ -. There was a fire on 28th December, 2006 resulting in damage to the factory of the respondent. The appellant appointed spot surveyor, M/s Apex Surveyors Pvt. Ltd. for final survey, who submitted its report on 22nd December, 2008 assessing the loss to the tune of Rs. 53,17,790/- after deducting salvage amount of Rs. 1 lakh and factoring sound stock being saved after the fire at Rs. 51,969/ -. The appellant claimed that the respondent has failed to submit certain documents to the assessor and, therefore, assessment on such basis could be treated as void. In the meanwhile, SARFAESI proceedings were initiated against the respondent by Canara Bank (secured creditor). 61. While the claim of the respondent was being processed, the respondent filed a complaint before the State Commiss....
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....no.2) were availed to send the invoice, bills of lading, surveyor's certificate, bills of exchange, phytosanitary certificate and other related documents (four documents) to the buyer's banker in Italy. Respondent no.2 engaged the services of the appellant to get export documents delivered to the buyer's banker in Italy which in turn engaged services of a courier company (respondent no.3). The export documents were lost in transit. 68. Respondent no. 1 filed a consumer complaint before the State Commission against the appellant, respondent no. 2 and respondent no.3. The complaint was dismissed on the premise that respondent no. 1 is not a consumer as defined under Section 2(1)(d) of the Act, 1986 by an order dated 10th December, 2013, that became the subject matter of challenge at the instance of respondent no.1 in appeal before the National Commission relying on the judgment in Laxmi Engineering Works (supra) and taking note of the judgment in the case of M/s Harsolia Motors, the National Commission recorded a finding that the dispatch of papers by the bank which were lost in transit and never received by the Italian buyer per se is not related to generate any profi....