1. This is a Consumer Complaint filed under Consumer Protection Act, 1986 (for short, Act) by M/s Moradabad Infrastructure Development Pvt. Ltd. (hereinafter referred to as Complainant) against M/s Novo Impex & Anr. (hereinafter referred to as Opposite Party Nos.1 and 2).  The Complaint has been filed by Mr.Nitin Saxena, President, All India Consumer Education Society (Regd.), who got an authorization for filing the Complaint as Authorized Representative for Mr.Mohd. Iqbal Shamsi, an Authorized Person of the Complainant having its office at New Delhi.  The Complainant purchased one Waterjet Cutting Machine from Opposite Party No.2 through Opposite Party No.1 for installation at factory site in Moradabad and the said machine after its import and installation failed to perform properly.  The Complainant had purchased this machine with a view to fulfil a contractual obligation of Government of India and failure of machine led to breach of contract and financial and other losses.
2. The Complaint was objected to by the Opposite Parties on ground of maintainability citing the Orders of the Hon’ble Supreme Court in its various judgments including those of:-

1. Laxmi Engineering Works Vs. P.S.G. Industrial Institute 1995 SCC (3) 583;
2. Shrikant G. Mantri Vs. Punjab National Bank 2022 SCC OnLine SC 218.

3. Learned Counsel for both parties made submission on the maintainability of the Complaint.  Learned Counsel for the Opposite Parties submitted that Section 2 (1) (d) of the Consumer Protection Act, 1986 specifically excludes person, who obtained goods for service for any commercial purpose.  The explanation to the Section only excludes goods purchased by a person “used by him” or for “earning livelihood by self-employment”.  Learned Counsel submitted that the Complainant does not qualify for the exemption provided under the Act and as such cannot be treated as a consumer for the purposes of filing of Complaint.  The Complaint is liable to be dismissed on such ground.
4. Learned Authorized Representative of the Complainant submitted on affidavit that the Complaint is maintainable and that the Complainant is a consumer under the Act.  He is submitted that since the machine had not worked even a single day, hence the question of Complainant using the said machine for commercial purpose does not arise.  He cited following the Orders of the Hon’ble Supreme Court in support of his argument that the Complainant is a consumer:-

1. Sunil Kohli and Ors. Vs. Purearth Infrastructure Ltd., Civil Appeal No.9004-9005 of 2018 decided on 01.10.2019.
2. Rohit Chaudhary & Anr. Vs. M/s Vipul Ltd., Civil Appeal No.5858 of 2015 decided on 06.09.2023.

5. The main issue to be decided in this Complaint is whether the Complainant is a consumer under the Act.  It is fact that the Complainant had procured a high end Waterjet Cutting Machine required under a contractual obligation of the Complainant.  The question is whether the import of such high end machine is for commercial purpose or for earning livelihood.  In the Complaint or in the argument made, it is nowhere mentioned for what purpose this machine was imported.  This could be for the purpose of cutting stone, metal, fibre glass, glass, composites and many more.  The Complainant is a Private Incorporated Company.  However, its status has not been discussed in the Complaint or by the Authorized Representative.  If it is an Incorporated Company registered with the ROC, it also has Directors on Board, etc.  Lack of information in the Complaint about the Company as well as in the arguments of the Authorized Representative does not inspire confidence to show that the Company has not been engaged in some activity, which could be made out for earning of livelihood.  The fact remains that the purpose was to meeting contractual obligations.  This being a very vague submission and averment once again creates doubt in the mind.
6. At the outset, I would like to first quote certain Orders of the Hon’ble Supreme Court of India.  The first Order, which I would like to rely upon is the recent judgment of the Hon’ble Supreme Court in SLP (Civil) No.15290 of 2021 Shriram Chits (India) Pvt. Ltd. Vs. Raghachand Associates decided on 10.05.2024.  The relevant paragraphs are as under:-

13. Section 2 (7) of the Act defines a consumer to mean:
     

Section 2 (7) "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 service 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 service 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 service for any commercial purpose.

Explanation. For the purposes of this clause,-

(a) the expression "commercial purpose" does not include use by a person of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment;

(b) the expressions "buys any goods" and "hires or avails any services" includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing;

15. Structurally, there are three parts to the definition of a consumer. We can deconstruct Section 2(7)(i) as a matter of illustration.3 The first part sets out the jurisdictional prerequisites for a person to qualify as a consumer - there must be purchase of goods, for consideration. The second part is an 'exclusion clause' ['carve out'] which has the effect of excluding the person from the definition of a consumer. The carve out applies if the person has obtained goods for the purpose of 'resale' or for a 'commercial purpose'. The third part is an exception to the exclusion clause it relates to - Explanation (a) to Section 2(7) which limits the scope of 'commercial purpose'. According to the said explanation, the expression, 'commercial purpose' does not include persons who bought goods 'exclusively for the purpose of earning his livelihood, by means of self-employment'. The significance of this structural break down will be discussed shortly.

(17) Judicial experience has shown us that the service providers most often than not take up a plea in their written version that the service obtained/goods bought was for a commercial purpose. For, if they succeed in their plea, the complainant is excluded from availing any benefit under the Act. According to Section 11, the District Forum has jurisdiction to entertain complaints 'where the value of the goods or services and the compensation, if any, claimed does not exceed rupees twenty lakhs'. The expression 'complaint' is defined in Section 2(1)(7)(c) to mean any allegation made in writing by a complainant relating to certain enumerated subjects. A complainant is defined 2(1)(b) to mean a consumer, among other entities. Therefore, to file a complaint, one must be a complainant and for one to be a complainant, he must be a consumer. If a person fails to come within the definition of a consumer, he cannot be a complainant and therefore, such person cannot file a complaint under the Act.

19. Before we deal with the contention of Sri Shailesh Madiyal, it would be necessary to set out the manner in which consumer forums must decide technical pleas raised by service providers to the effect that the services obtained/goods bought was for a commercial purpose and, therefore, the complaint filed on behalf of such persons are not maintainable. The crucial step in deciding such pleas would turn on the manner in which the issues are framed. Unless the burden of proof is properly cast on the relevant party, the consumer forum would not be in a position to arrive at proper decision. Therefore, we proceed to provide some guidance on how the issues must be framed and the manner in which the evidence must be appreciated.

20. As we have shown above, the definition of consumer has three parts. The significance of deconstructing the definition into three parts was for the purpose of explaining on whom lies the onus to prove each of the different parts. There can hardly be any dispute that the onus of proving the first part i.e. that the person had bought goods/availed services for a consideration, rests on the complainant himself. The carve out clause, in the second part, is invoked by the service providers to exclude the complainants from availing benefits under the Act. The onus of proving that the person falls within the carve out must necessarily rest on the service provider and not the complainant. This is in sync with the general principle embodied in Section 101 and 102 of the Evidence Act that 'one who pleads must prove'. Since it is always the service provider who pleads that the service was obtained for a commercial purpose, the onus of proving the same would have to be borne by it. Further, it cannot be forgotten that the Consumer Protection Act is a consumer-friendly and beneficial legislation intended to address grievances of consumers. Moreover, a negative burden cannot be placed on the complainant to show that the service available was not for a commercial purpose.

21. Having held that the onus to prove that the service was obtained for a commercial purpose is on the service provider, we may clarify the standard of proof that has to be met in order to discharge the onus. The standard of proof has to be measured against a 'preponderance of probabilities'. The test to determine whether service obtained qualified as a commercial purpose is no longer res integra in view of this Court's decision in Lilavathi v. Kiritlal (supra). Para 19 sets out the principles on which it must be determined whether the onus of proving 'commercial purpose' has been properly discharged by the service provider.

7. The second Order, which I would like to rely upon is the recent judgment of the Hon’ble Supreme Court in Civil Appeal No.12322 of 2016 Lilavati Kirtilal Mehta Medical Trust Vs. Unique Shanti Developers & Ors. [(2020) 2 Supreme Court Cases 265 : (2020) 1 Supreme Court Cases (Civ) 320 : 2019 SCC OnLine SC 1466] decided on 14.11.2019.  The relevant paragraph is as under:-

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-to-business 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.

8. The third Order, which I would like to rely upon is the recent judgment of the Hon’ble Supreme Court in Civil Appeal No.11397 of 2016 Shrikant G. Mantri Vs. Punjab National Bank [(2022) 5 Supreme Court Cases 42 : 2022 SCC OnLine SC 218] decided on 22.02.2022.  The relevant paragraphs are as under:-

40. It could thus be seen that this Court has clearly held that the idea of enacting the said Act 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. It has been held that the entire Act revolves round the consumer and is designed to protect his interest. It provides for "business-to-consumer" disputes and not for "business-to-business" disputes. It has been held that forums/commissions provided by the said Act are 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.

41. In Laxmi Engg. Works, this Court, while considering the scope of the definition of the expression "consumer" with relation to Section 2 (1)(d)(i) of the said Act and the Explanation added by the 1993 Amendment Act, observed thus: (SCC pp. 591-93, para 11)

"11. Now coming back to the definition of the expression "consumer" in Section 2(d), a consumer means insofar 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 affirming the said view and more particularly with a view to obviate any confusion the expression "large scale" is not a very precise expression stepped in and added the Explanation to Section 2(d)(i) by Parliament 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 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". 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 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."

(50) It is thus clear, that this Court has held that the question, as to 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-to-business transactions between commercial entities; that the purchase of the good or service should have a close and direct nexus with a profit-generating activity; intention or dominant purpose for the transaction and as to whether the same was to facilitate some kind of profit generation for the purchaser and/or their beneficiary. It has further been held that if the dominant purpose behind purchasing the good or service was for the personal use and the consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, then the question of whether such a purchase was for the purpose of "generating livelihood by means of self-employment" need not be looked into.

53. It could thus be seen, that when a person avails a service for a commercial purpose, to come within the meaning of "consumer" as defined in the said Act, he will have to establish that the services were availed exclusively for the purposes of earning his livelihood by means of self-employment. There cannot be any straitjacket formula and such a question will have to be decided in the facts of each case, depending upon the evidence placed on record.

54. In the present matter, it is not in dispute that the appellant was already engaged in the profession of stock-broker, much before he availed of service of the overdraft facility from the respondent Bank. It is also not in dispute that he was also acting as a stock-broker for the respondent Bank. It is also not in dispute that the appellant took the overdraft facility and also sought enhancement of the same from time to time in furtherance of his business as a stock-broker and for the purpose of enhancing the profits therein.

9. The fourth Order, which I would like to rely upon is the recent judgment of the Hon’ble Supreme Court in Civil Appeal Nos.5352-53 of 2007 National Insurance Company Limited Vs. Harsolia Motors & Ors. [(2023) 8 Supreme Court Cases 362 : 2023 SCC OnLine SC 409] decided on 13.04.2023.  The relevant paragraphs are as under:-

36. Thus, what is culled out is that there is no such exclusion from the definition of the term "consumer" either to a commercial enterprise or to a person who is covered under the expression "person" defined in Section 2(1)(m) of the 1986 Act merely because it is a commercial enterprise. To the contrary, a firm whether registered or not is a person who can always invoke the jurisdiction of the 1986 Act provided it falls within the scope and ambit of the expression "consumer" as defined under Section 2(1)(d) of the 1986 Act.

37. Applying the above principles to the present case, what needs to be determined is whether the insurance service has a close and direct nexus with the profit generating activity and 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. The fact that the insured is a commercial enterprise is unrelated to the determination of whether the insurance policy shall be counted as a commercial purpose within the purview of Section 2(1)(d) of the Act.

46. Thus, it can be concluded that in the instant case hiring of insurance policy is clearly an act for indemnifying a risk of loss/damages and there is no element of profit generation and still what has been expressed by this Court is illustrative; it will always be open to be examined on the facts of each case, as to the transaction in reference to which the claim has been raised has any close and direct nexus with profit generating activity.

10. Though, there are certain Orders of the Hon’ble Supreme Court where the definition of consumer has been expanded to include certain cases, which on the face of it appears to be for a commercial purpose but have been held to be of non-commercial purpose, which can be adjudicated under the Act, however, in this particular case, there is no iota of doubt that not only the Complainant is a commercial enterprises but purchase of such equipment for earning livelihood by means of self-employment does not arise as the transaction is procurement of the equipment for the purpose of meeting a contractual obligation where the question of earning profits is evident.  This view gets strengthened from the fact that in the Complaint, there is hardly any disclosure regarding the nature of the Complainant, its working and the exact purpose for purchase of the equipment.
11. In line with the Orders of the Hon’ble Supreme Court what is to be seen is 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.  Here the dominant intention and purpose is evidently for profit generation, more so, in view of no evidence do the contrary.
12. In this regard, I would like to rely on the illustrations given by the Hon’ble Supreme Court in National Insurance Company Limited Vs. Harsolia Motors & Ors. (Supra).  The illustrations make it clear when the items purchased are used for commercial purpose or non-commercial purpose.  For example an X-Ray Machine purchased by the Complainant and found defective is considered to be for a commercial purpose, whereas an EPBAX System for better management of the business of the Company for commercial purpose has no nexus to generate profits.  In this case, the Waterjet Cutting Machine is used for production of certain items, which are either supplied or sold and these products earn profit so this would make the dominant purpose as that for earning profit.  It cannot be for better management.

13. In view of the aforesaid, the Complaint is dismissed as not maintainable as the Complainant is not a consumer as defined under Section 2 (1) (d) of the Consumer Protection Act, 1986.