Unfolding "Commercial Purposes" as contemplated under the scheme of Consumer Protection Act of 1986.

This blog is originated in the felt need to educate myself as what transactions constitutes “Commercial purposes” within the meaning of Consumer Protection (CP)Act of 1986.

Section 2(1)(d) of CP Act 1986 stipulates who is a consumer within the meaning of this Act. Following all ingredients must be satisfied to show one is a Consumer of goods services within the meaning of this Act to qualify as a Complainant-

(1) that he is a person, natural or body corporate;
(2) that person buys any goods / services for a consideration or at price;
(3) that person may have paid, or promised to pay, or have partly paid and partly promised for that purchased goods / services;
(4) He is also a consumer who consumes the goods / services purchased above, with the consent of the original buyer;
(5) The goods / services purchased must not be for reselling it;
(6) The goods / services purchased must not be purchased in the regular course of his/ her commercial or business activity.

Therefore, Consumer is a person who buys any goods or avail any service at a price calculable in money terms or otherwise, including the one who uses that bought goods or service with the permission of that former buyer, but he is not a consumer, who though buys any goods or avail any service at a price, not for his consumption but for reselling it or buying it for commercial ends.

The act makes a solitary exception wherein it stipulates that he is still a consumer within the meaning of this Act who buys any goods or service for reselling it, but only if he is running a small business in which he himself only is employed.

Thus, this Act of 1986 plainly disallows a transaction of “Commercial purposes” to be agitated before Consumer Courts. A Similar word “Commercial transaction” which ordinarily imports the alike meaning, seems to be confused with the same as “Commercial purposes”. In my considered view, both terms are not same, inasmuch as, Commercial transaction is a much wider term and Commercial purposes is relatively a term of limited import.

A transaction would fall within the scope of “Commercial purposes” if the transaction is closely & inherently linked to the nature of business activity being carried out by the person alleging defect / deficiency in any goods or services.

The nature of goods or services consumed though may aid in the commercial / business venture but goods or services so consumed must be clearly independent of the nature of commercial / business venture to be exempted from purview of “Commercial purposes.

Like a company buying raw material for making finished goods is not a Consumer within the meaning of Consumer Protection Act of 1986.

However, a Company will be a consumer wherein if it buys office machineries life fax, printers & air conditioners because the company although 'consumes' that fax, printers & air conditioners, but they are purchased not for resale and although fax, printers aid in its commercial activity but their commercial activity has nothing to do with the consumption of that fax, printers & air conditioners.

The more illustrative example can be this one. A commercial venture engaged in Xeroxing business (Let me tell you that Xeroxing is a big business, if you have otherwise opinion) purchased one xerox machine, is not a consumer within the meaning of this Act, for the xerox machine purchased and nature of business activity being carried out are closely merged to each other. Similarly, a commercial venture engaged in some other business activity happens to purchase one xerox machine for office purposes, is a consumer within the meaning of this Act, for his nature of commercial activity being carried out is distinct from nature of goods / services consumed. At the same time, a man purchasing a xerox machine for earning his livelihood, is still a consumer within the meaning of this Act of 1986.

Thus, in every case of Complaint before Consumer Court, the test thus to identify a transaction whether suffering from “Commercial purposes” would be-
(1) to objectively observe the nature of business activity being carried out by the Complainant; and
(2) then to see the transaction which is alleged as defect / deficiency in any goods/ services.
(3) If nature of business activity being carried out is independent of the nature of transaction alleged, then, in my view, the transaction is not suffering from “Commercial purposes” although the transaction may have all attributes of Commerce.

The fact that legislature chooses its word very carefully cannot be lose sight of.

And arises another equally controversial issue that keep crops up time and again and I take leave to address it with my limited knowledge. First let me reproduce the relevant portion that needs to be expounded and unfolded here.

Explanation to the definition of Consumer as contained in section 2(1)(d).--
For the purposes of sub-clause (i), "commercial purpose" does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment;

Coming to the controversial issue – Who is that man who fits in the shoes of “....earning his livelihood, by means of self-employment”.

There are two terms here - “livelihood and Self employment” that needs to be understood in the literal sense of the common man. I have to turn the pages of Oxford & if necessary other authoritative dictionary to find out the literal meaning of these two terms.

Oxford Dictionary says – Self Employment is -- working for oneself as a freelance or the owner of a business rather than for an employer; and Livelihood is -- A means of securing the necessities of life.

Therefore, in my view, a Complainant alleging any defect or deficiency in any goods or services and claiming benefit of this Explanation part must satisfy two conditions:
(1) He must be carrying on some occupation or business venture; and
(2) By that occupation or business venture he merely able to manage the basic necessities of life.

The wisdom of our Parliamentarians in inserting this Explanation can never be lose sight of, and it is to protect a small man whose life and livelihood otherwise may be jeopardized by reason of defective goods / services he has purchased in the regular course of his occupation / business venture. That small man cannot be told to agitate his grievances before extremely procedurally complex, time consuming and expensive contemporary litigation in our traditional courts.

Sandeep Jalan
Advocate
Mumbai.

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Advocate

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