SCOPE OF DEFINITION OF CONSUMER :
Section 2(7) of Consumer Protection Act 2019 defines "Consumer"
When goods are purchased with the intent to resell or exploit them commercially, the buyer or user does not fall under the definition of a consumer according to the Act.
Example: A jeep was bought to operate it as a taxi service. The question arose whether the purchaser of the jeep qualified as a consumer under the Act. The Rajasthan State Commission determined that using the jeep as a taxi to generate profits constituted a commercial purpose, hence the buyer/user did not meet the criteria of being a consumer as per the Act (Smt. Pushpa Meena v. Shah Enterprises (Rajasthan) Ltd. (1991) 1 CPR 229).
It is evident from the aforementioned case that the crucial factor in determining consumer status is whether a particular good is utilized for commercial purposes. If so, the buyer/user is not classified as a consumer; if not, the buyer/user is recognized as a consumer.
WHAT IF - IT IS SELF-EMPLOYMENT?
A person purchasing goods for self-employment falls under the definition of a consumer under certain conditions:
The goods are utilized by the buyer themselves.
Solely for the purpose of earning their livelihood.
Through self-employment.
In such instances, the usage does not qualify as commercial purposes under the Act, and the user is acknowledged as a consumer.
Examples:
A purchases a truck to operate it as a public carrier personally; hence, A is considered a consumer
A purchases a truck and hires a driver for its operation; in this case, A is not deemed a consumer.
A owns a cloth shop and starts another business involving a photocopier. A buys a photocopy machine for this purpose. Since the machine wasn't solely purchased for earning a livelihood, A does not qualify as a consumer under the Act.
TEST FOR DETERMINING FOR “COMMERCIAL PURPOSE” :
In Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti Developers and Others 3 (2020) 2 SCC 265 , Supreme Court culled out broad principles for determining whether an activity or transaction is for a “commercial purpose” or not, while holding that though no strait jacket formula could be adopted in every case.
“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-tobusiness 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 dominant purpose behind purchasing the good or service was for the personal use and consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, the question of whether such a purchase was for the purpose of “generating livelihood by means of self-employment” need not be looked into.”
M/s Daimler Chrysler India Pvt. Ltd. v. M/s Controls & Switchgear Company Ltd. 2024 LiveLaw (SC) 447 [July 2024]
Issue: Whether the purchase of a Mercedes car for a director's personal use, despite being made by a company, was for a "commercial purpose."
Supreme Court Ruling: The Court determined that the car was used personally by the director and his family, not for any profit-generating activity. Therefore, the purchase did not qualify as being for a commercial purpose, and consumer protection laws applied.
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