DR. SADHNA SHANKER, MEMBER

1.       These two appeals have been filed under section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as the ‘Act’) in challenge to the Order dated 25.04.2013 of the State Commission in complaint no. 09 of 2007 whereby the complaint was partly allowed.

2.       We have heard the learned counsel for Volvo India Pvt. Ltd. (hereinafter referred to as the ‘manufacturing company’); learned counsel for Alpha Technical Services Pvt. Ltd. (hereinafter referred to as the ‘dealer’) and the learned counsel for M/s Shri Krishna Construction and Transportation (hereinafter referred to as the ‘complainant’) and perused the record including the State Commission’s impugned Order dated 25.04.2013 and the memoranda of appeals.

3.       The matter was heard on 22.11.2023 and both the counsel for the appellants addressed the bench on the issue of maintainability of the complaint and the Order was reserved to first decide the issue of maintainability of the complaint.

4.       The brief facts of the case are that the complainant, through its proprietor Sh. Balbir Singh Kathaiat, had purchased an excavator machine from the manufacturing company through the dealer and the same was delivered on 15.04.2007 with the warranty of 2500 hours of operation or 12 months from its commissioning or 18 months from the date of invoice i.e. 20.03.2007, whichever falls earlier. The machine was being used for construction of road for Alaknanada Hydropower Project in Srinagar, Garhwal. It is alleged that after operating 67 hours, the machine stopped working on 16.07.2007. The complainant informed the dealer immediately on the same day over telephone. The dealer sent the engineer on 18.07.2007 on the construction site and the engineer found that the engine of the machine had failed, perhaps due to some manufacturing defect. The manufacturing company and the dealer told the complainant that they would replace the defective engine with a new one within a week. However, even after one week, the manufacturer company and the dealer neither replaced the defective engine nor contacted the complainant. The complainant again made a request for replacement but the manufacturing company and the dealer instead of replacement of engine, sent service engineer of the dealer on 27.07.2007 with a blank form in which columns, like “Service Report Project”, “Customer Complaint”, “Observation”, “Action Taken” etc. were printed. The said engineer got this form signed from the complainant on the pretext that the form was to be submitted for replacement of the engine. It is alleged that as the complainant was in urgent need of a new engine, he signed the said form relying on the version of the service engineer. The complainant was assured that the engine will be replaced within three or four days. But the manufacturing company and the dealer neither replaced the engine even after 12 to 13 days from 27.07.2007 nor contacted the complainant. On being asked by the complainant regarding replacement of the engine, it was informed to him through a letter faxed to him that the engine was damaged due to an accident at the time of loading and unloading of the machine and, as such, the damage was not covered under the warranty and was advised to contact the insurer of the machine in this regard.

5.       Being aggrieved, the complainant filed a complaint before the State Commission.

6.       The manufacturing company and the dealer contested the complaint by raising a preliminary issue that the complainant had purchased the machine for commercial purpose, therefore, he does not fall within the definition of ‘consumer’ as defined under Section 2(1)(d) of the Act and the complaint is not liable to be maintainable. It is further stated that due to accident during unloading, certain parts had been damaged and the warranty norms does not cover such eventuality.

7.       The State Commission vide impugned Order dated 25.04.2013 partly allowed the complaint and directed the manufacturing company and the dealer to pay, jointly or severally, an amount of Rs. 50,74,500/- against the cost of the excavator machine to the complainant together with interest at the rate of 6% per annum from the date of filing the complaint till the date of actual payment and Rs. 5,000/- towards litigation expenses.

8.       Aggrieved by the said Order of the State Commission, the manufacturing company and the dealer have filed the instant appeals before this Commission.

9.       Learned counsel for the manufacturing company and the dealer have argued that the State Commission had erred in holding that the complainant was a ‘consumer’ in terms of explanation to Section 2(1)(d) of the Act. It is seen that in para 8 of its Order dated 25.04.2013, the State Commission has recorded as under:

“A preliminary objection raised by the opposite parties in the instant case is that the consumer complaint is not maintainable before this Commission under the provisions of the Consumer Protection Act, 1986. The plea taken by the opposite parties in this regard is that the machine in question was purchased by the complainant for commercial purpose. This argument is not tenable, because the dispute between the parties is with regard to the warranty conditions for the machine. Further, the Hon’ble National Commission, in the case of Amtrex Ambience Ltd. vs. M/s Al[ja Rados & Anr. ((1996) CPJ 324 (NC) has held that –

“This Commission has in several cases already taken the view where the allegations of the complainant was that there was malfunctioning of the machinery / equipment during the period of warranty when the manufacturer had undertaken to keep the machinery in good working condition, even if sold for commercial purpose, the purchaser will certainly be a consumer under Section 2(1)(d)(ii) in respect of services rendered or to be rendered by the seller for the proper functioning of the machinery / equipment, system during the period of warranty.”

Learned counsel for the manufacturing company and dealer has further submitted that the Explanation to section 2(1)(d) of the Act clearly provides that the consumer would not be regarded as using the goods for commercial purpose if he buys the goods and was being used by him exclusively for the purpose of earning his livelihood by means of self-employment. It has been further argued that instead of analyzing the issue, the State Commission incorrectly relied upon the case of Amtrex Ambience Ltd. vs. M/s Alpha Radios & Anr. I (1996) CPJ 324 to hold that the complaint was maintainable. It was further argued that before coming to the terms of warranty, the issue of maintainability of the complaint had to be dealt with. Further, it was argued that the decision relied on by the State Commission was not good law in view of the amendment of the definition of the ‘consumer’ which came into effect on 15.03.2003. The amendment added “but does not include a person, who avails of such services for any commercial purpose” to the section and thus excluded services rendered for commercial purpose from the protection under the Act. The case relied on was not relevant as it was a case after the amendment in the year 2003.To support the proposition that the complaint was not maintainable.  He relied upon the following decisions :

1. Cheema Engineering Services vs. Rajan Singh (1997) 1 SCC 131.
2. Ibhahim Khan vs. SREI Equipment Finance Pvt. Limited 2015 SCC Online NCDRC 1706
3. Vijai Earth Moving Equipment (P) Ltd. vs. V. d. Ramaraj 2015 SCC Online NCDRC 3285
4. Laxmi Engg. Works vs. P.S.G. Industrial Estate (1995) 3 SCC 583
5. Sunil Kohli & Anr. Vs. Pureearth Infrastructure Limited (2020) 12 SCC 235
6. Birla Technologies Limited vs. Neutral Glasa and allied Industries Limited (2011) 1 SCC 525
7. Sanjay D. Ghodawat vs. R. R. B. Engergy Ltd., C.C. No. 155 of 2008
8. Canon India Private Ltd. vs. Rajesh Kumar 2015 SCC Online NCDRC 3678
9. Telco vs. Gajanan Y. Mandrekar (1997) 5 SCC 507

10.     Learned counsel for the complainant has argued that the machine in question was purchased to earn his livelihood and not for commercial purpose and he relied upon the decision rendered in the case of Madan Kumar Singh (dead) through L.R. vs. District Magistrate, Sultanpur and others (2009) 9 SCC 79  wherein the Hon’ble Supreme Court had held as under:

“A further reading of the aforesaid definition of “consumer” makes it clear that Parliament wanted to exclude from the scope of the definition the persons, who obtains goods for resale and also those who purchase goods with a view to use such goods for carrying on any activity for earning. The immediate purpose as distinct from the ultimate purpose of purchase, 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 for a “commercial purpose” or not. Thus, buyers of goods or commodities for “self consumption” in economic activities in which they are engaged would be consumers as defined in the Act.”

11.     On the basis of above, in the facts of that case, it has been held that the appellant purchased a truck to earn his livelihood by means of self-employment. Even if he employed a driver to ply the truck would not loose the status of ‘consumer’.

12.     The issue for our consideration is as to whether in the facts and circumstances of the case, the complainant is a ‘consumer’ or not as per the definition under section 2(1)(d)(ii) of the Act.

As per Section 2(1)(d) of the Act, the definition of ‘consumer’ is as follows:

(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 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

(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 the first mentioned person [but does not include a person who avails of such services for any commercial purposes];

Explanation.— For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment; 

13.     In this case it is seen that the complainant was a sole proprietorship of Mr. Balbir Singh Kathaiat. In the complaint, it has been pleaded that “the complainant is engaged in the business of construction, earth filling, excavation, dam projects, quarries etc. This is the source of livelihood of the complainant. As a requirement for his work, the complainant placed purchase order in dispute for his livelihood.” Further, it has been stated that the complainant was at the relevant time engaged in the road construction under the Alaknanda Hyropower Project in Srinagar, Garhwal where the disputed machine was used for the purpose of earth digging.

From the above, it is clear that there is no such averment in the pleadings that the machine was acquired exclusively for the purpose of earning his livelihood by means of self-employment. It has been clearly stated that the machine was acquired for his business work.

14.     In the case of Cheema Engineering Services v. Rajan Singh (1997) I SCC 131, the Hon’ble Supreme Court deciphered the meaning of self-employment as used in the Explanation to Section 2(d). It was held 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 self-employment 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, the Tribunals were not right in concluding that the respondent is using the machine only for self-employment and that, therefore, it is not a commercial purpose. The orders of all the Tribunals stand set aside. The matter is remitted to the District forum. The District Forum is directed to record evidence of the parties and dispose it of in accordance with law within a period of six months from the date of receipt order.”

Further, in the case of Laxmi Engineering Works vs. P.S.G. Industrial Institute (supra), the Hon’ble Supreme Court has held that the purpose for which a person has bought goods is a “commercial purpose” within the meaning of the definition 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.

In the case of Ibhahim Khan vs. Srei Equipment Finance Pvt. Ltd. (supra), this Commission was dealing with a similar situation wherein the petitioner had purchased a crane. Holding that the petitioner had failed to prove that the crane was being used solely to earn his livelihood by way of self-employment, the order of the State Commission holding that the petitioner was not a consumer was upheld.

In the case of Vijay Earth Moving Equipment (P) Ltd. vs. D. Ramaraj 2015 SCC Online NCDRC 3285, this Commission observing that the excavator was purchased by the complainant for its business purpose and that there was no averment in the complaint that the excavator was purchased by him solely for the purpose of earning livelihood by means of self-employment, held that the complainant was not a consumer.

15.     In the present case, the proprietor in its complaint has admitted that it is engaged in the business of construction, earth moving etc. and for its business work, it had ordered the machine in question. Although it has been stated that it is a source of livelihood of the complainant but it has not been averred that it was for the purpose of self-employment. It is seen that the complainant was engaged in road construction work for which the machine had been purchased. It is quite clear that the complainant is engaged in business and has purchased the machine for his business because road construction work cannot be done through self-employment. It is seen from the case relied on by the complainant that the Hon’ble Supreme Court has drilled out the definition of ’consumer’ to look at the ultimate purpose of the purchase and sale and it having a direct nexus with profit and loss would be a determinance of the character of transaction.

16.     Applying the same logic, we are of the view that the purchase of excavator by the complainant, who is admittedly in the business of construction, earth filling and dam projects, while undertaking construction of a road under a hydropower project, is not for self-employment and definitely falls within the purview of ‘commercial purpose’.

17.     In view of the above, we are of the view that the complainant is not a consumer as defined under section 2(1)(d) read with Explanation of the Act and the complaint is not maintainable.

18.     Accordingly, both the appeals are allowed and the Order dated 25.04.2013 of the State Commission is set aside. Consequently, the complaint is dismissed.