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Purchaser Of Goods Is A Consumer If The Commercial Use Is By The Purchaser Himself For The Purpose Of Earning His Livelihood: SC [Read Judgment]

By LawStreet News Network      11 October, 2019 11:11 AM      0 Comments

The Supreme Court on October 1, 2019, in the case of Sunil Kohli & Anr. v. M/S Purearth Infrastructure Ltd., has reiterated that if the commercial use of goods is by the purchaser himself for the purpose of earning his livelihood by means of selfemployment, such purchaser of goods is a "consumer'".

A Bench comprising of Justice Uday Umesh Lalit, Justice Indira Banerjee and Justice M.R. Shah passed the ruling while hearing an appeal filed against the order passed by the National Consumer Disputes Redressal Commission which dismissed a complaint on the ground of maintainability.


In this case, the complainants are non-resident Indians presently residing in Denmark. They intend to shift to India. Thus with the intention to earn their livelihood they booked a shop. The complaint was filed alleging that the opposite party failed to deliver possession of the subject unit even years after the expiry of the stipulated date of delivery of possession. Disbelieving this version, the commission had observed that as the complainants had booked the commercial premises, it can be safely concluded that they had hired/availed of the services of the opposite party for commercial purpose, as such they are not the consumers as envisaged under Section 2 (1) (d) of the Consumer Protection Act, 1986.


In appeal, the bench observed that 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.

Referring to Section 2(1)(d)(i) of the Act and also the judgments in Laxmi Engineering Works v. P.S.G. Industrial Institute, (1995) 3 SCC 583; and, Cheema Engineering Services v. Rajan Singh, (1997) 1 SCC 131, the bench observed:

“As laid down by this Court in Laxmi Engineering Works, 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.”

In Laxmi Engineering Works, the matter was dealt with by this court as under:

“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'. In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other words, if the buyer of goods uses them himself, i.e., by selfemployment, for earning his livelihood, it would not be treated as a "commercial purpose" and he does not cease to be a consumer for the purposes of the Act. The explanation reduces the question, what is a "commercial purpose", to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to. The several words employed in the explanation, viz., "uses them by himself", "exclusively for the purpose of earning his livelihood" and "by means of self-employment" make 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 of words."

On the other hand, in Cheema Engineering Services, the court observed that:

“In other words, the Explanation excludes from the ambit of commercial purpose in sub-clause (i) of Section 2(1)(d), any goods purchased by a consumer and used by him exclusively for the purpose of earning his livelihood by means of self-employment. Such purchase of goods is not a commercial purpose. The question, therefore, is whether the respondent has been using the aforesaid machine for self-employment? The word "self-employment" is not defined. Therefore, it is a matter of evidence. Unless there is evidence and on consideration thereof it is concluded that the machine was used only for selfemployment to earn his livelihood without a sense of commercial purpose by employing on regular basis the employee or workmen for trade in the manufacture and sale of bricks, it would be for self-employment. Manufacture and sale of bricks in a commercial way may also be to earn livelihood, but "merely earning livelihood in commercial business", does not mean that it is not for commercial purpose. Self-employment connotes altogether a different concept, namely, he alone uses the machinery purchased for the purpose of manufacture by employing himself in working out or producing the goods for earning his livelihood. 'He' includes the members of his family. Whether the respondent is using the machine exclusively by himself and the members of his family for preparation, manufacture and sale of bricks or whether he employed any workmen and if so, how many, are matters of evidence. The burden is on the respondent to prove them.”

Therefore, allowing the appeal, the court held that the complainants are the “consumers” and the complaint is maintainable under the provisions of the Act. The court remitted the matter back to the National Commission to consider the other issues.

[Read Judgment]

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