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PETITIONER: LAXMI ENGINEERING WORKS

       Vs.

RESPONDENT: P.S.G. INDUSTRIAL INSTITUTE

DATE OF JUDGMENT04/04/1995

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) MANOHAR SUJATA V. (J)

CITATION:  1995 AIR 1428            1995 SCC  (3) 583  JT 1995 (3)   433        1995 SCALE  (2)626

ACT:

HEADNOTE:

JUDGMENT: B.P.JEEVAN REDDY, J.: 1.   Leave granted.  Heard counsel for both  the parties. 2.   The definition of the expression " consumer" in  clause (d)  of Section 2 of the Consumer Protection Act,  1986  ex- cludes from its purview "a person who obtains such goods for resale  or for any commercial purpose".  The  question  that arises  in this appeal is what is the meaning and  ambit  of the   expression  "any  commercial  purpose"  in  the   said definition.   By Ordinance 24 of 1993 (which has since  been replaced  by  Amendment Act 50 of 1993) an  explanation  has been  added to the definition of the  expression  "consumer" with effect from 18.6.1993. The explanation reads: "For  the purposes of sub- 436 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".  The complaint herein was, however, made before the adding of the said explanation.  It would be appropriate to read the definition at this stage.               "(d) "consumer" means any person who,-               (i)   buys  any  goods,  for  a  consideration               which has been paid or promised or partly paid               and  partly promised, or under any  system  of               deferred payment and includes any user of such                             goods other than the person who buys such good s               for  consideration paid or promised or  partly               paid or partly promised or under any system of               deferred  payment when such use is  made  with               the  approval  of  such person  but  does  not               include  a person who obtains such  goods  for               resale or for any commercial purpose;or               (ii)[hires  or avails of] any services  for  a               consideration which has been paid or  promised

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             or  partly paid and partly promised, or  under               any  system of deferred payment  and  includes               any  beneficiary of such services  other  than               the  person  who  [hires  or  avails  of]  the               service for consideration paid or promised, or               partly paid and partly promised, or under  any               system of deferred payment, when such services               are availed of with the approval of the  first               mentioned person: " THE FACTUAL MATRIX: 3.   The   appellant,   Laxmi  Engineering   Works,   is   a proprietary   concern  established  under   the   Employment Promotion  Programme.   It is registered as  a  small  scale industry with the Directorate of Industries, Maharashtra and has  also  obtained financial  assistance  from  Maharashtra State Finance Corporation in the form of term loan amounting to Rs.22. 10 lakhs besides financial assistance from certain other  sources.   The  appellant placed an  order  with  the respondent-P.S.G. industrial institute for supply of PSG 450 CNC  Universal Turing Central Machine on May 28, 1990.   The appellant’s  case is that the respondent not  only  supplied the  machinery  six months beyond the  stipulated  date  but supplied  a defective machine.  Soon after it was  installed and  operated,  several  defects came  to  light  which  the appellant  brought to the notice of the respondent.  A  good amount of correspondence took place between the parties  and though  the respondent sent some persons to rectify the  de- fects,  the machine could not be put in proper  order.   The appellant  states  that he was suffering  serious  financial loss on account of the defective functioning of the  machine and  accordingly  he lodged a complaint (No.  116  of  1992) before   the   Maharashtra   Consumer   Disputes   Redressal Commission  claiming an amount of Rs.4,00,000/-  on  several courts from the respondent.  The respondent appeared  before the  State  Commission  and denied  the  appellant’s  claim. Inter alia, it raised an objection that since the  appellant has purchased the machine for commercial purposes he is  not a  consumer  within the meaning of the  said  expression  as defined in Section 2(d) of the Act.  The commission  allowed the  appellant’s claim partly, directing the  respondent  to pay  to the appellant a sum of Rs.2.48 lakhs within 30  days failing  which the said amount was to carry interest at  the rate  of  18%  per annum.  The respondent  filed  an  appeal before the National Commission which allowed the said appeal on 7th December, 1993 on the 437 only  ground  that  the appellant is  not  a  "consumer"  as defined  by  the  Act.  The  National  Commission  observed: "(F)rom  the facts appearing on record it is  manifest  that the  complainant is carrying on the business of  manufacture of machine parts on a large scale for the purpose of earning profit  and  significantly one single item of  machinery  in respect  of  which the complaint petition was filed  by  him before the State Commission itself is of the value of Rs. 21 lakhs and odd.  In the circumstances, we fail to see how the conclusion  can be escaped that the machinery,  in  question which  is  alleged  to  be defective  was  purchased  for  a commercial purpose.  Hence, the complainant is not  entitled to  be  regarded as a consumer and  the  complaint  petition filed   by  him  was  not  maintainable  before  the   State Commission.  He order passed by the State Commission is  set aside.   The complaint petition is dismissed." The  National Commission,  however,  observed that their  order  does  not preclude  the appellant from pursuing his remedy by  way  of ordinary civil suit.

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4.   The learned counsel for the appellant submits that  the purpose  for which the appellant has purchased the said  ma- chine  cannot be called a "commercial purpose" and that  the appellant  cannot  certainly  be  said  to  be  carrying  on business of manufacture of machine parts "on a large  scale" for the purpose of earning profit.  Learned counsel  pointed out  that appellant is a small scale industry and  the  said machine  was  purchased by him for the  purpose  of  earning livelihood.  Learned counsel submitted that the appellant is a  proprietary concern of Shri Y.G.Joshi, who is  a  diploma holder  in  engineering and who proposed to  start  a  small scale   industry  with  financial  assistance  from   public financial   institutions  to  earn  his   livelihood.    The appellant  had  entered  into  an  agreement  with   Premier Automobiles  for  supplying certain parts required  for  the manufacture of cars by the said concern.  But for this,  the appellant has no other business, it is pointed out.  On  the other hand, the learned counsel for the respondent submitted that the purpose for which the appellant purchased the  said machine  is undoubtedly a commercial purpose as held by  the National  Commission  consistently  over  the  last  several years. THE ACT AND ITS SCHEME: 5.   After good amount of consultations with governments and international organisations, the Secretary General of United Nations  submitted draft guidelines for consumer  protection to the Economic and Social Council (UNESCO) in 1983.   After extensive discussions and negotiations among governments  on the  scope  and content of the guidelines, the  General  As- sembly  of  the United Nations adopted  the  guidelines  for consumer protection by consensus on 9th April, 1985 [General Assembly  Resolution NO.39/248]. The guidelines  issued  are placed   under   four  heads,  viz.,   objectives,   general principles, guidelines and international co-operation.  Para 1 under the head "objectives" bears reproduction.  It reads:                        "I OBJECTIVES               1.    Taking  into account the  interests  and               needs  of  consumers in  all  countries,  par-               ticularly   those  in  developing   countries,               recognizing   that   consumers   often    face               imbalances  in  economic  terms,   educational               level,  and bargaining power, and  bearing  in               mind  that consumer should have the  right  of                             access to non-hazardous prod-               438               ucts,  as well as the importance of  promoting               just,  equitable and sustainable economic  and               social   development,  these  guidelines   for               consumer   protection   have   the   following               objectives:               (a)To   assist  countries  in   achieving   or               maintaining  adequate  protection  for   their               population as consumers;               (b)To  facilitate production and  distribution               patterns  responsive to the needs and  desires               of consumers;               (c)To encourage high levels of ethical conduct               for  those  engaged  in  the  production   and               distribution   of   goods  and   services   to               consumers;               (d)To  assist  countries  in  curbing  abusive               business  practices by all enterprises at  the               national  and international levels  which  ad-               versely affect consumers;               (e)To  facilitate  the  development  of  inde-

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             pendent consumer groups;               (f)To  further international co- operation  in               the field of consumer protection;               (g)To  encourage  the  development  of  market               conditions   which  provide   consumers   with               greater choice at lower prices.  " 6.   Under the head ’guidelines’ and under   the        sub- heading "E.  Measures enabling consumers to obtain redress", the following guidelines are set out:               "E.  Measures  enabling  consumers  to  obtain               redress               28.Government  should  establish  or  maintain               legal and/or administrative measures to enable               consumers   or,   as   appropriate,   relevant               Organisations to obtain redress through formal               or  informal procedures that are  expeditious,               fair,   inexpensive  and   accessible.    Such               procedures  should take particular account  of               the needs of low income consumers.               29.Governments     should    encourage     all               enterprises to resolve consumer disputes in  a               fair, expeditious and informal manner, and  to               establish   voluntary  mechanisms,   including               advisory  services  and  informal   complaints               procedures,  which can provide  assistance  to               consumers.               30.Information on available redress and  other               dispute-resolving  procedures should  be  made               available to consumers." 7.   In  the  following  year, i.e.,  1986,  our  Parliament enacted  the  present Act. (The United Kingdom  enacted  the Consumer  Protection Act in 1987.) The statement of  objects and  reasons  appended  to the Bill says that  the  Bill  is intended to provide for better protection of the interest of consumers  and  for that purpose to make provision  for  the establishment of consumer councils and other authorities for the  settlement of consumer disputes and for  other  matters connected therewith.  Para 4 of the Statement of Objects and Reasons reads:               "4. To provide speedy and simple redressal  to               consumer disputes, a quasi judicial  machinery               is sought to be set up at the district,  State               and  Central  levels.   These   quasi-judicial               bodies will observe the principles of  natural               justice  and  have  been  empowered  to   give               reliefs  of  a specific nature and  to  award,               wherever    appropriate,    compensation    to               consumers.   Penalties for non  compliance  of               the orders given by the quasi-judicial  bodies               have also been provided." 8.   The  Preamble  to the Act is practically  on  the  same lines.  It reads: 439               "An  act to provide for the better  protection               of  the  interests of consumers and  for  that               purpose    to   make   provision    for    the               establishment  of consumer councils and  other               authorities  for the settlement of  consumers’               disputes and for matters connected  therewith.               "                              (emphasis added) 9.   It  is significant to notice that in the  Statement  of Objects  and  Reasons as well as in the  Preamble,  the  new forums  which  the  Act was setting up are  referred  to  as quasi-judicial machinery" and as "authorities"  respectively

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but  not  as  courts.   The  Act  has  created  the  dispute resolution authorities at District, State and National level called   District  Forum,  State  Commission  and   National Commission.    Section  3  expressly  states   that   "(T)he provisions  of this Act shall be in addition to and  not  in derogation  of the provisions of any other law for the  time being in force." Chapter-Ill provides for "CONSUMER DISPUTES REDRESSAL AGENCIES." The use of the expression "agencies" is again   significant.    Section  9,   which   provides   for establishment of forums at three levels, reads thus:               "9.   Establishment   of   Consumer   Disputes               Redressal    Agencies.--   There   shall    be               established for the purposes of this Act-  the               following agencies. namely-               (a)   a  Consumer Disputes Redressal Forum  to               be  known as the "District Forum"  established               by   the  State  Government  with  the   prior               approval  of  the Central Government  in  each               district of the State by notification:               (b)   a Consumer Disputes Redressal Commission               to   be  known  as  the   "State   Commission"               established  by the State Government with  the               prior  approval of the Central  Government  in               the State by notification; and               (c)   a  National Consumer Disputes  Redressal               Commission   established   by   the    Central               Government by notification." 10.Section 13 prescribes the procedure to be followed by the District  Forum  on receipt of a complaint from  a  consumer involving  value  upto Rupees one lakh (after  amendment  in 1993, five lakhs).  Inter alia it provides that the District Forum  shall have the same powers as arc vested in  a  civil court under the Code of Civil Procedure, 1908 while trying a suit  in respect of matters specified therein.   Section  15 provides an appeal from the orders of the District Forum  to the   State   Commission.   Section  17   confers   original jurisdiction  also upon the State Commission in matters  the value  whereof exceeds Rupees one lakh but does  not  exceed Rupees  ten lakhs (after amendment 5 lakhs and 20 lakhs  re- spectively).  Section 18 provides that the procedure of  the State  Commission shall be the same as that of the  District Forum.  Section 19 provides an appeal from the orders of the State   Commission  (made  in  exercise  of   its   original jurisdiction)  to  the  National  Commission.   Section   21 confers  original jurisdiction upon the National  Commission as well where the value of the complaint exceeds Rupees  ten lakhs  (after amendment in 1993, twenty lakhs).  Section  24 declares  that  "(E)very order of a  District  Forum,  State Commission  or the National Commission shall, if  no  appeal has  been preferred against such order under the  provisions of  this Act, be final". (Section 23 provides an  appeal  to Supreme  Court  against the orders  of  National  Commission passed in exercise of its original jurisdiction.) Section 25 provides that 440 the  orders  of  the District Forum,  State  Commission  and National Commission shall be executed as if they are decrees or orders of a Court. 11. A review of the provisions of the Act discloses that the quasi-judicial  bodies/authorities/agencies created  by  the Act  known  as District Forums, State  Commissions  and  the National Commission are not courts though invested with some of  the  powers of a civil court.  They are  quasi  judicial tribunals  brought into existence to render inexpensive  and speedy  remedies  to consumers.  It is  equally  clear  that

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these  forums/commissions were not supposed to supplant  but supplement  the existing judicial system.  The idea  was  to provide an additional forum providing inexpensive and speedy resolution   of  disputes  arising  between  consumers   and suppliers  of goods and services.  The forum so  created  is uninhibited  by the requirement of court fee or  the  formal procedures  of  a  court.  Any consumer can go  and  file  a complaint.   Complaint need not necessarily be filed by  the complainant  himself, any recognized consumers’  association can  espouse his cause.  Where a large number  of  consumers have  a similar complaint, one or more can file a  complaint on  behalf  of all.  Even the Central Government  and  State Governments can act on his/their behalf The idea was to help the  consumers get justice and fair treatment in the  matter of  goods  and services purchased and availed by them  in  a market dominated by large trading and manufacturing  bodies. Indeed,  the entire Act revolves round the consumer  and  is designed  to  protect his interest.  The  Act  provides  for "business-to-consumer’  disputes and not  for  "business-to- business" disputes.  This scheme of the Act in our  opinion, is relevant to and helps in interpreting the words that fall for consideration in this appeal. SECTION 2(d)(i) AND THE EXPLANATION ADDED BY 1993  AMENDMENT ACT: 12.Now  coming  back  to the definition  of  the  expression ’consumer’ in Section 2(d), a consumer means in so far 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 commerce; mercantile;  having profit as the main aim" (Collins English Dictionary) whereas the word "commerce" means "financial transactions especially buying  and  selling  of  merchandise,  on  a  large  scale" (Concise   Oxford  Dictionary).   The  National   Commission appears  to have been taking a consistent view that where  a person purchases goods "with a view to using such goods  for carrying on any activity on a large scale for the purpose of earning  profit"  he  will not be a  "consumer"  within  the meaning of Section 2(d)(i) of the Act.  Broadly af- 441 firming  the said view and more particularly with a view  to obviate any confusion  the expression "large-scale" is not a very precise expression  the Parliament stepped in and added the  explanation to Section 2(d)(i)  by  Ordinance/Amendment Act,  1993.  The explanation excludes certain purposes  from the purview of the expression "commercial purpose" - a  case of  exception to an exception.  Let us elaborate:  a  person who  buys  a  typewriter  or a car and  uses  them  for  his personal use is certainly a consumer but a person who buys a typewriter   or   a  car  for  typing   others’   work   for consideration or for plying the car as a taxi can be said to be  using the typewriter/car for a commercial purpose.   The explanation  however clarifies that in  certain  situations, purchase  of  goods for "commercial purpose" would  not  yet

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take  the  purchaser  out of  the  definition  o  expression "consumer".   If  the  commercial use is  by  the  purchaser himself for the purpose of earing 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 self-  employment, 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  illus- trations would serve to emphasis 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. 13.It  is  argued by the learned counsel for  the  appellant that such a narrow construction may not be warranted by  the scheme and object of the enactment.  He says that there  may be  a widow or an old or invalid man who may have  no  other means of livelihood and who purchases an auto-rickshaw or  a car  or other machinery to be plied or operated  by  another person either on payment of consideration on a daily, weekly or  monthly basis or as a servant or agent.  While there  is certainly 442 some  logic in the said submission it cannot be accepted  in view of the language of the explanation.  We are also of the opinion  that the definition of the expression " person"  in Section  2(m)  as including a firm  (whether  registered  or not),  a Hindu undivided family, a co-operative  society  or any  other association of persons (whether registered  under the  Societies  Registration  Act, 1860  or  not)  makes  no difference to the above interpretation.  If a firm purchases the  goods, the members of the firm should  themselves  ply, operate or use the goods purchased.  Same would be the  case of  purchase by Hindu Undivided Family, cooperative  society or  any  other association of persons.   Reference  in  this behalf  may  be  made to the definition  of  the  expression "consumer" in Section 20(6) of the Consumer Protection  Act, 1987 of United Kingdom.  It reads thus:               who  might wish to be supplied with the  goods

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             for his own private use or consumption;               (b)   in  relation to any services or  facili-               ties,  means any person who might wish  to  be               provided  with  the  services  of   facilities               otherwise   than  for  the  purposes  of   any               business of his; and               (c)   in relation to any accommodation,  means               any  person  who  might  wish  to  occupy  the               accommodation otherwise than for the  purposes               of any business of his:" 14.  This  definition  is  undoubtedly  narrower  than   the definition in our Act.  The English Act requires that to  be a  consumer in relation to any goods, a person must put  the goods   for   his   own   private   use   or    consumption. Notwithstanding this difference in definition, the object of both  the enactments appears to be the same, to protect  the consumer  from the exploitative and unfair practices of  the trading and manufacturing bodies and to provide him with  an easily  accessible,  inexpensive and speedy remedy  for  the wrong suffered by him. THE NATURE AND POWERS OF THE AUTHORITIES CREATED BY THE ACT: 15.  Having  dealt with the meaning of the  expression  ’any commercial  purpose’  in Section 2(d) in the  light  of  the scheme  of  the enactment, it may be necessary to  append  a clarification to obviate any confusion.  Section 24 declares that  "(E)very  order of a District Forum,  the  State  Com- mission  or the National Commission shall, if no appeal  has been  preferred against such order under the  provisions  of this Act, be final".  This Section has to be read along with sub-section  (3) of Section 13.  Section 13  prescribes  the procedure to be followed by the District Forum on receipt of a complaint.  Sub-section (3) of Section 13 says that  "(N)o proceedings  complying with the procedure laid down in  sub- section (1) and (2) shall be called in question in any Court on  the ground that the principles of natural  justice  have not  been  complied  with."  By virtue  of  Section  18  the procedure   prescribed  in  Section  13  applies  to   State Commission as well.  From the above provisions, it is  clear that the orders of the District Forum, State Commission  and National Commission are final as declared in Section 24  and cannot  be questioned in a civil court.  The Issues  decided by the said authorities under the Act cannot be  re-agitated in a civil court.  The said provisions make it equally clear that  the  Forums  created by the Act  fall  in  the  second category of Tribunals mentioned in The Queen v. Commissioner for Spe- 443 cial  Purposes  of the Income-tax, (1888) 21 Q.B.D.  313  at P.319)   which  decision has been  repeatedly  affirmed  and applied   by   this  Court   which  means   that   the   Fo- rums/Commissions   under  the  Act  have   jurisdiction   to determine   whether  the  complainant  before  them   is   a "consumer" and whether he has made out grounds for grant  of relief  Even  if  the  Forum/Commission  decides  the   said questions wrongly, their orders made following the procedure prescribed in sub-sections (1) and (2) of Section 13  cannot be  questioned  in  a civil court -  except  of  course,  in situations  pointed out in Dhulabhai v. State of M.P.  (1968 (3)  S.C.R. 662). They can and must be questioned,  only  in the manner provided by the Act. THE EXPLANATION IS CLARIFICATORY: 16.  Yet  another  clarification; the  Explanation,  in  our opinion  is only explanatory; it is more in the nature of  a clarification   a  fact which would become  evident  if  one examines  the  definition  (minus the  explanation)  in  the

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context and scheme of the enactment.  As indicated  earlier, the  explanation  broadly  affirms  the  decisions  of   the National  Commission.   It merely makes  explicit  what  was implicit  in the Act.  It is not a.-, if the law is  changed by the said explanation; it has been merely made clearer. RELEVANT DECISIONS: 17.In Lucknow Development Authority v. M.K. Gupta (1904  (1) SCC  243).  the  question was  whether  a  public  authority engaged in constructing and selling houses can be said to be rendering a Services and whether the person purchasing  such houses can be called a "consumer" within the meaning of  the said  definition.   While  answering  the  question  in  the affirmative,  a  Bench  of  this  court  (Kuldip  Singh  and R.M.Sahai,JJ.)  also examined the scheme and object  of  the Act  and  the  ambit of the  definition  of  the  expression "consumer".  The following observations arc apposite:               "To  begin with the preamble of the Act  which               can afford useful assistance to ascertain  the               legislative  intention,  it was  enacted,  ’to               provide for the protection of the interest  of               consumers’.   Use  of  the  word  ’protection’               furnishes  key to the minds of makers  of  the               Act.  Various definitions and provisions which               elaborately attempt to achieve this  objective               have  to  be construed in this  light  without               departing  from the settled view that  a  pre-               amble  cannot control otherwise plain  meaning               of  a provision.  In fact, the law meets  long               felt  necessity of protecting the  common  man               from  such wrongs for which the  remedy  under               ordinary  law for various reasons  has  become               illusory.......  The  word  ’consumer’  is   a               comprehensive  expression.  It extends from  a               person  who  buys  any  commodity  to  consume               either  as eatable or otherwise from  a  shop,               business house, corporation, store, fair price               shop to use of private or public services.  In               Oxford Dictionary a consumer is defined as, "a               purchaser  of goods or services".  In  Black’s               Law  Dictionary it is explained to mean,  "one               who consumes.  Individuals who purchase,  use,               maintain,   and   dispose  of   products   and               services.   A  member of that broad  class  of               people  who arc affected by pricing  policies.               financing  practices,  quality  of  goods  and               services,  credit reporting. debt  collection,               and other trade practices for which State  and                             Federal consumer Protection Laws are  enacted. "               The Act opts for no less wider definition.  It               reads as under:               444                "  consumer’ means any person who, -               (i)buys  any goods for a  consideration  which               has  been paid or promised or partly paid  and               partly  promised,  or  under  any  system   of               deferred payment and includes any user of such               goods  other  than the person  who  buys  such               goods  for consideration paid or  promised  or               partly  paid or partly promised, or under  any               system  of deferred payment when such  use  is               made  with  the approval of such  person,  but               does  not  include a person who  obtains  such               goods   for  resale  or  for  any   commercial               purpose, or

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             (ii)hires  or  avails of any  services  for  a               consideration which has been paid or  promised               or  partly paid and partly promised, or  under               any  system of deferred payment  and  includes               any  beneficiary of such services  other  than               the person who hires or avails of the services               for consideration paid or promised, or  partly               paid  and partly promised or under any  system               of  deferred  payment when such  services  are               availed  of  with the approval  of  die  first               mentioned person;               [Explanation.-- For the purposes of  subclause               (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;]"               It  is  in two parts.  The  first  deals  with               goods and the other with services.  Both parts               first   declare  the  meaning  of  goods   and               services  by use of wide  expressions.   Their               ambit is further enlarged by use of  inclusive               clause.    For  instance,  it  is   not   only               purchaser  of goods or hirer of  services  but               even  those  who  use the  goods  or  who  are               beneficiaries of services with approval of the               person  who purchased the goods or  who  hired               services arc included in it.  The  legislature               has  taken  precaution  not  only  to   define               ’complaint’,  ’complainant’,  ’consumer’   but               even to mention in detail what would amount to               unfair  trade practice by giving an  elaborate               definition  in clause (r) and even  to  define               ’defect’  and ’deficiency’ by clauses (f)  and               (g)  for  which a consumer  can  approach  the               Commission.  The Act thus aims to protect  the               economic interest of a consumer as  understood               in  commercial sense as a purchaser  of  goods               and in the larger sense of user of services." 18.In  Morgan Stanley Mutual Fund v. Kartick Das  (1994  (4) SCC 225), a Bench of this     Court (M.N.Venkatachaliah, CJ, S.Mohan   and  Dr.A.S.Anand,JJ.) stated the meaning  of  the expression "consumer" in the following words:               "The consumer as the terms implies is one  who               consumes.  As per the definition, consumer  is               the one who purchases goods for private use or               consumption.    The   meaning  of   the   word               ’consumer’  is  broadly stated  in  the  above               definition   so  as  to  include  anyone   who               consumes  goods or services at the end of  the               chain   of  production.    The   comprehensive               definition aims at covering every man who pays               money  as  the  price or  cost  of  goods  and               services.   The consumer deserves to get  that               he pays for in real quantity and true quality.               In every society, consumer remains the  centre               of  gravity  of all  business  and  industrial               activity.    He  needs  protection  from   the               manufacturer,  producer, supplier,  wholesaler               and retailer.  " 19.It  must, however, be said that in both the above  cases, the  question  arising herein was not in issue.   In  Morgan Stanley, the question was whether a prospective investor  in the  shares of a company is a "consumer" as defined in  Sec- tion 2(f).  It was held that he was not. 445

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20.Reference  to the decisions cited by the learned  counsel for  the parties would be in order at this stage.  In  Synco Textiles Private Limited v. Greaves Colton and Co.Ltd. (1991 (1)  CPJ 499), the appellant purchased from  the  respondent three generating sets at a total cost of Rs.5,53,000/ -  for use  in his factory.  His case was that the generating  sets supplied  by the respondent-company were defective and  that on that account he suffered substantial business losses.  He applied to the State Commission for recovery of the cost  of the machines as well as a sum of Rupees four lakhs by way of damages.   The State Commission first took up  the  question whether  the  complainant  can be  called  a  "consumer"  as defined  in the Act. (The case arose before the  explanation was  added by the 1993 Amendment Act.) The State  Commission held  that  since  the  generators  were  purchased  by  the appellant  for generating electricity in its factory  to  be used  for  operating the machinery in the  factory  for  the purpose  of commercial production, the appellant  cannot  be called  a "consumer".  When the matter came to the  National Commission   by   way  of  appeal,   Balakrishna   Eradi,J., President, dealt with the meaning of the words "for any com- mercial purpose" in the following words (majority opinion):               "Since  cases of resale have  been  separately               referred to, it becomes obvious that the words               "for  any commercial purpose" are intended  to               cover cases other than those of resale of  the               concerned   goods.    The   words   "for   any               commercial purpose" are wide enough to take in               all cases where goods are purchased for  being               used  in  any activity  directly  intended  to                             generate  profit.   According  to  the  meanin g               given in standard dictionaries, the expression               commercial’ means-               "connected  with,  or  engaged  in   commerce.               mercantile;  having profit as the  main  aim,,               (See Collins English Dictionary).               "Pertaining  to  commerce:  mercantile"   (See               Chamber’s Twentieth Century Dictionary)               The  of the expression ’commerce’ as given  in               the dictionaries is:               "exchange  of  merchandise, especially,  on  a               large   scale"   (See   the   Concise   oxford               Dictionary)               "interchange  of merchandise on a large  scale               between nations or individuals: extended trade               or  traffic" (See Chambers  Twentieth  Century               Dictionary)               Going  by the plain dictionary meaning of  the               words  used  in  the  definition  section  the               intention of Parliament must be understood  to               be to exclude from the scope of the expression               ’ consumer’ any person who buys goods for  the               purpose  of their being used in  any  activity               engaged  on a large scale for the  purpose  of               making  Profit.   As already  indicated  since               resale  of the goods has been  separately  and               specifically mentioned in the earlier  portion               of  the definition clause, the words "for  any               commerce   purpose"  must  be  understood   as               covering cases other am those of resale of the               goods.  it  is thus  obvious  that  Parliament               wanted  to  exclude  from  the  scope  of  the               definition not merely persons who obtain goods               for  resale but also those who purchase  goods

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             with  a view to using such goods for  carrying               on any activity on a large scale for the  pur-               pose  of  earning profit.  On  this  interpre-               tation  of  the  definition  clause,   persons               buying  goods either for resale or for use  in               large  scale  profit   activity  will  not  be               ’consumers’  entitled to protection under  the               Act.  It seems to us clear that the  intention               of  Parliament  as can be  gathered  from  the               definition section is to deny               446               the benefits of the Act to persons  purchasing               goods either for purpose of resale or for  the               purpose   of  being  used  in  profit   making               activity  engaged on a large scale.  It  would               thus  follow that cases of purchase  of  goods               for  consumption or use in the manufacture  of               goods  or commodities on a large scale with  a               view to make profit %ill all fall outside  the               scope  of the definition.  It is obvious  that               Parliament  intended to restrict the  benefits               of  the Act to ordinary  consumers  purchasing               goods either for their own consumption or even               for  use in some small venture which they  may               have  embarked upon in order to make a  living               as distinct from large scale manufacturing  or               processing activity carried on for profit.  In               order that exclusion clause should apply it is               however necessary that there should be a close               nexus  between the transaction of purchase  of               goods and the large scale activity carried  on               for earning profit.  " 21.One  of  the members of the  Commission,  Sri  Y.Krishan, however,  took a different view.  The learned Member was  of the opinion that:               "......  the word used in Sec.2(l)(d)(i)  "for               commercial purpose" have to be given a precise               and  restrictive meaning:  commercial  purpose               has   to  be  distinguished  from   commercial               production and commercial activity.  The  sub-               section  2(1)(d)(i) and (ii) of  the  Consumer               Protection   Act   have  to   be   interpreted               harmoniously.  The interpretation of the words               "Commercial purpose" in Sec.2(l)(d)(i) must be               logical  and equitable so as to  avoid  patent               anomalies  and  inconsistencies  in  the   ap-               plication  of the law.  Viewed in  this  back-               ground.  the  various  tests  for  determining               whether  the goods have been purchased  for  a               commercial purpose would be:               (i)   the  goods are not for  immediate  final               consumption but that there is only transfer of               goods. i.e., resale.               (ii)  there  should be a direct nexus  between               the  purchase of goods and the profit or  loss               from  their further disposal.  Such  a  direct               nexus is absent when the goods or services are               converted   for  producing  other   goods   or               services.  After conversion there is no direct               nexus between the kind of goods purchased  and               the kind of goods sold.               (iii) there is nexus of form and kind between the               goods purchased and the goods sold.      Such               a  direct nexus of form and kind  ceases  when               the    goods   undergo    transformation    or

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             conversion.               In  brief  the immediate purpose  as  distinct               from  the  ultimate purpose of  purchase,  the               sale in the same form or after conversion  and               a  direct nexus with profit or loss  would  be               the   determinants  of  the  character  of   a               transaction-whether  it  is of  a  "commercial               purpose"  or  not.  Thus buyers  of  goods  or               commodities   for   "self   consumptions"   in               economic activities in which they arc  engaged               would be consumers as defined in the Act." 22.  Secretary,  Consumer Guidance and Research  Society  of India v. M/s.  B.P.L. India Lid. (1992 (1) CPJ 140), follows and  affirms  the  decision in Synco  Textiles  and  another decision  in Oswal Fine Arts v. M/ s. H.M. T.  Madras  (1991 (1) CPJ 330).  In this case, one Mrs.Shanta Manuel had  pur- chased  one paper copier from the respondent  and  installed the  same  in her premises.  The National  Commission  dealt with the case in the following words:               "In  the  case now before us,  it  is  clearly               established  by the materials on  record  that               the  purpose  of  the purchase  of  the  paper               copier by Mrs.Shanta Manuel was only to enable               to earn her livelihood by the               447                process  of self employment.  Such being  the               factual  position Mrs.Shanta Manuel cannot  be               said  to  have  purchased the  machine  for  a               ’commercial  purpose’  inasmuch as  the  basic               prerequisite   of  large  scale   trading   or               business activity for purpose of making profit               is  totally  absent.  We hold  that  the  view               concurrently  expressed by the District  Forum               and the State Commission that the  complainant               is  not ’consumer’ entitled to invoke the  ju-               risdiction of the consumer forum is  incorrect               and the said finding will stand set aside. 23.Though  rendered  earlier to the  1993  Amendment,  these decisions are broadly in accord with the amended definition. CONCLUSIONS: 24.We  must, therefore, hold that (i) the explanation  added by  The  Consumer  Protection (Amendment)  Act  50  of  1993 (replacing Ordinance 24 of 1993) with effect from  18.6.1993 is  clarificatory  in  nature and  applies  to  all  pending proceedings. (ii)Whether the purpose for which a person has bought  goods is  a "commercial purpose" within the meaning of  the  defi- nition  of expression "consumer" in Section 2(d) of the  Act is always a question of fact to be decided in the facts  and circumstances of each case. (iii)A   person  who  buys  goods  and  use  them   himself, exclusively  for the purpose of earning his  livelihood,  by means  of  self employment is within the definition  of  the expression "consumer". 25.So far as the present case is concerned we must hold  (in agreement  with the National Commission), having  regard  to the nature and character of the machine and the material  on record  that it is not goods which the  appellant  purchased for  use by himself exclusively for the purpose  of  earning his  livelihood  by means of self employment,  as  explained hereinabove. 26.The appeal accordingly fails and is dismissed but without costs.   If  the appellant chooses to file a  suit  for  the relief claimed in these proceedings, he can do so  according to  law  and  in such a case he can  claim  the  benefit  of

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Section 14 of the Limitation Act to exclude the period spent in prosecuting the proceedings under the Consumer Protection Act, while computing the period of limitation prescribed for such a suit. 449