Purchaser Of Goods For Commercial Use By Himself For Earning Livelihood By Self-Employment Is Consumer U/s. 2(d) Of Consumer Protection Act- Supreme Court

A two-judge Bench of Justice S. Ravindra Bhat and Justice Aravind Kumar held that, "... 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 would continue to be a ‘consumer’." The Court also held that if the dominant purpose of purchasing the goods or services is for a profit motive and this fact is evident from record, such purchaser would not fall within the four corners of the definition of ‘consumer’. "On the other hand, if the answer is in the negative, namely if such person purchases the goods or services is not for any commercial purpose and for one’s own use, it cannot be gainsaid even in such circumstances the transaction would be for a commercial purpose attributing profit motive and thereby excluding such person from the definition of ‘consumer’", the Court held.

The appellants intended to purchase a commercial space, which was promoted by the respondent. They agreed to purchase shares in an office unit from the original allotees and made the required payments. The respondent recorded the transfer of ownership and issued receipts and an allotment letter.

However, a dispute arose when the respondent unilaterally changed the allotted unit and demanded a buyer's agreement. The appellants approached the Commission seeking a refund and interest, contending that they were consumers under the Act.

Advocate Digendra Sharma appeared for the Appellants and Advocate M.R. Shamshad appeared for the Respondents.

The appellants asserted that they purchased the commercial space solely for self-employment and not for resale or profit. They contended that the delay in delivering possession, unilateral changes, and the respondent's actions have caused mental agony, justifying compensation.

The respondent argued that the appellants did not meet the definition of 'consumer' under the Act, as they were already engaged in a business when they purchased the commercial space. They contended that the property was not exclusively bought for the purpose of earning livelihood through self-employment.

The Supreme Court noted that the National Consumer Disputes Redressal Commission considered whether the appellants qualified as "consumers" under the Consumer Protection Act and ruled that the appellants did not qualify as consumers, based on the statement of the first appellant, who was involved in the business of caustic soda and property investment. However, the definition of "consumer" in Section 2(1)(d) of the Act excludes those who obtain goods or services for resale or commercial purposes.

The Court clarified that the term "commercial purpose" was not explicitly defined in the Act and should be understood in its ordinary sense, referring to activities related to commerce, trade, and profit. The Court also noted that an explanation in the Act indicated that purchases for personal use with the aim of earning livelihood by means of self-employment still fell within the definition of "consumer."

Examining the facts, the Court found that the appellants had specifically mentioned in their complaint that they were seeking office space for self-employment and to earn their livelihood. The statement made by the first appellant during the Commission's proceedings did not negate this claim. Therefore, the Commission's conclusion that the appellants were not consumers was erroneous.

The Court also considered the delay in possession of the office space and the unilateral changes in the agreement. It directed the respondent to refund the amount of Rs. 51,10,117/- received from the appellants with interest at a rate of 12% per annum, taking into account the appreciated value of the asset and litigation costs of Rs. one lakh.

The Court allowed the appeal, set aside the Commission's order, and directed the respondent to refund the amount with interest and litigation costs.

Cause Title: Rohit Chaudhary & Anr. v. M/s Vipul Ltd., [2023INSC807]

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