Satish Chander Gupta vs Klick Nixon Limited

COMPLAINANT/petitioner is carrying on the business of Engineers, Consultants and Builders. As per the allegations made in the Complaint, the petitioner entered into an agreement with M/s. National Building Construction Corporation Limited (a Government of India Enterprise) for the construction of a single seater Hostel of 500 rooms at Sant Harchand Singh Longowal Institute of Engineering and Technology, Longowal, District Sangrur, Punjab. According to the terms of the contract and specifications, the external finish of the hostel building was cement based. The contract also specified the colours of the paint and its quality. It was specifically mentioned in the contract that the paint should be of super-snowcem quality. Accordingly, petitioner purchased 50 bags of super-snowcem for Rs. 40,703 on 13.7.1992 and 12 bags of the same on 11.8.1992 for Rs. 9,768.72 p. from M/s. Capital Building Stores, SCF No. 37, Sector-18C, Chandigarh/respondent No. 2, which is the authorized dealer of the manufacturer, i.e., M/s. Klick Nixon Limited, Snowcem Division, 69, Regal Building, Cannaught Circus, New Delhi/respondent No. l. According to the petitioner, he used the paint as per the instructions of the manufacturer but the use of the contents of different bags of snowcem showed wide variation in colour and shade. Petitioner brought these defects to the notice of the respondents but as he did not receive any reply, the petitioner filed the Complaint before the District Consumer Disputes Redressed Forum, Union Territory, Chandigarh (for short ''the District Forum'').

THE District Forum allowed the Complaint and directed the respondent to pay Rs. 90,027.94 p. along with interest @ 18% p.a. from the date of filing of the Complaint till realization.

AGGRIEVED by the Order passed by the District Forum, respondent filed an Appeal before the State Consumer Disputes Redressal Commission, Union Territory, Chandigarh (for short ''the State Commission''). The State Commission, relying upon the Judgment of Hon''ble the Supreme Court of India in Laxmi Engineering Works v. P.S.G. Industrial Institute, reported in II (1995) CPJ 1 (SC)=(1995) 3 SCC 583, reversed the Order passed by the District Forum holding that the Complaint filed by the petitioner was not maintainable as the petitioner had bought the snowcem for a commercial purpose and, therefore, was not a ''consumer'' within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986 (for short ''the Act''). That the petitioner did not fall in the Exception created by the Supreme Court in Laxmi Engineering Works case (supra), as he was not a self-employed person.

AGGRIEVED against the Order passed by the State Commission, petitioner filed the present Revision Petition, which was dismissed in limine by this Commission without assigning any reasons.

AGGRIEVED by the Order passed by this Commission, the petitioner filed Special Leave to Appeal before the Supreme Court, in which, leave was granted and the same was numbered as Civil Appeal No. 6151 of 2001. The aforesaid Civil Appeal came up for hearing before the Supreme Court on 26.2.2009. Supreme Court set aside the Order passed by this Commission by observing that even in the Order of affirmation, some reasons should have been recorded and, as no reasons were given while dismissing the Revision Petition, the impugned Order was set-aside and the case was remitted back to this Commission for a fresh decision in accordance with law.

PETITIONER-In-Person and the Counsel for the respondent have been heard at length.

THIS Complaint was filed in the year 1993. The word ''consumer'' was defined under Section 2(1)(d) of the Act, at the relevant time, to mean, 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 the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payments, when such services are availed of with the approval of the first-mentioned person. [Explanation: For the purposes of Sub-Clause (1), "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 above Explanation was added by Ordinance No. 24 of 1993 (w.e.f. 18.6.1993).

THIS Commission has been taking the consistent view that a person who purchases goods "with a view to use such goods for carrying on any activity on a large-scale for the purpose of earning profit", could not be a ''consumer'' within the meaning of Section 2(1)(d) of the Act. The Explanation to Section 2(1)(d) was added with effect from 18.6.1993, creating an exception to the effect that commercial purpose would 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 words "commercial purpose" and "uses them by himself exclusively for the purpose of earning his livelihood" "by means of self-employment" came-up for interpretation before the Supreme Court in Laxmi Devi''s case (supra). In paragraph 11 of the Judgment, the Supreme Court held as under: "11. 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 includes 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" (Collies 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-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 take the purchaser out of the definition of expression "consumer". If the commercial use is by the purchase 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."

[Emphasis supplied]

ILLUSTRATING by example, Supreme Court held that a person, who purchases an auto-rickshaw to ply it himself on hire for earning his livelihood or a person who purchases a truck for plying it as public carrier by himself or a person, who purchases a lathe machine or other machine to operate it himself for earning his livelihood, would be a consumer. But a person, who purchases an auto-rickshaw or a truck or a lathe machine or other machine, to be plied or operated by any other person, he would not be a consumer.

IN the present case, the petitioner was an Assistant Engineer with Punjab Irrigation Department and left his job to work as a Builder. According to him, he was self-employed person and was earning his livelihood from that profession. He had purchased the goods for self-employment and not for a commercial purpose. We do not find any substance in this submission. Petitioner is as a Builder and has executed .civil construction works for the last 35 years with various Government Departments, i.e., Military Engineering Services, Indian Telephone Industries Limited, etc. He has got the work executed through mistries and labourers and cannot be termed as self-employed person who works with his own hands to earn his livelihood. In the present case, the petitioner was entrusted with the work of construction of a single seater Hostel of 500 rooms at a cost of Rs. 2.5 crores. Respondent cannot be termed to be a self-employed person working with his own hands to earn his livelihood and, therefore, could not be held to be a ''consumer'' within the meaning of Section 2(1)(d) of the Act. Apart from this, there are large number of questions of fact involved, i.e., the number of rooms built, the area thereof, the quantity of material required, whether it was consumed according to the specifications or the quantity consumed itself was short. These questions cannot be decided without taking elaborate evidence.

FOR the reasons stated above, we do not find any substance in the Revision Petition and dismiss the same. The Order passed by the State Commission is upheld. There shall be no orders as to costs. Revision Petition dismissed.