The Consumer Protection Acts of 1986 and 2019 are benevolent legislations which are enacted by the Parliament for the benefit of Consumers in order to safeguard their interests. The word Consumer has been defined under the Consumer Protection Act, 1986 under Section 2(1)(d) and under Section 2(7) of the Consumer Protection Act, 2019. It has been clearly specified that a person would not be a Consumer in case the said Goods / Services are obtained for resale or for any commercial purpose.
Both of these sections in the old and the new Acts are pari materia and therefore only Section 2(1)(d) (of the 1986 Act) is being reproduced herein:
“(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;”
Therefore, on a bare perusal of the definition of a ‘Consumer’ under the Act of 1986, it is apparent that any person who avails the goods or services for a commercial purpose is not a Consumer and cannot take benefit under the Act. However, there is caveat to this exception which is provided under the Explanation to the definition of a Consumer that commercial purposes would not include a person who has availed such goods and services for the purpose of earning of livelihood by means of self-employment.
Hence, there is a twin test laid down under Section 2(1)(d) of the Act for a person who is indulging in a commercial transaction to be a consumer, viz.:
- The said goods or services must be obtained for earning his livelihood, and
- The said livelihood must be earned by means of self-employment, i.e. he employs himself and he is personally engaged in the activity of earning his livelihood.
Once a Consumer Complaint is filed by a Complainant / person before a Consumer Commission, the onus to prove that that the Complainant is a Consumer is on the Complainant. The National Consumer Disputes Redressal Commission (NCDRC) as well as the Hon’ble Supreme Court of India has time and again held that the onus is on the Complainant to lead evidence and substantial proof that such person is a Consumer and that such goods / services were not availed for a Commercial purpose.
A Division Bench of the NCDRC comprising of Hon’ble Mr. Justice Ajit Bharihoke and Mrs. Rekha Gupta had in the matter of Balbir Singh Randhawa v. DLF Universal Ltd., CC/402/2016 was posed a similar question that the Complainant was already gainfully employed and stated that he had booked a commercial property with a view to earn his livelihood by means of self-employment after shifting to India. The NCDRC holding against the Complainant concluded that the Complainant was not a Consumer within the Consumer Protection Act, 1986 and observed as follows:
“4. Learned counsel for the complainant has contended that case of the complainant is covered in the explanation to Section 2 (1) (d) of the Consumer Protection Act, 1986. In support of this contention he has drawn our attention to the averment in the complaint that the complainant booked the aforesaid premises with a view to earn livelihood by means of self-employment after retirement and shifting to India.
5. We do not find merit in the contention of the complainant. On reading of the explanation which gives restricted meaning to the term “Commercial Purpose” it is clear that the commercial purpose does not include the service availed by a person exclusively for earning livelihood by means of self-employment. Admittedly, the complainant is presently based at Abu Dhabi. On our query, learned counsel for the complainant has stated that the complainant is gainfully employed at Abu Dhabi. Therefore, it is clear that at the time of booking commercial plot the complainant was gainfully employed. Learned counsel for the complainant has contended that the complainant had booked commercial plot with a view to earn his livelihood by way of self-employment after retirement and shifting to India. No time frame has been given in the complaint. Therefore, the aforesaid vague averment in the complaint will not bring the case of the complainant within the ambit to Section 2 (1) (d) of the Consumer Protection Act, 1986.
6. In view of the discussion above, it is clear that the complainant has availed of services of the opposite party in relation to a commercial purpose. Therefore, he is not covered under the definition of “Consumer” and as such the complainant cannot maintain the consumer complaint. Complaint is accordingly rejected. The complainant, however, shall be at liberty to avail of his legal remedy by moving the appropriate Forum.” (emphasis supplied)
The Complainant in the abovementioned matter had thereafter approached the Hon’ble Supreme Court of India by way of a Civil Appeal filed under Section 23 of the Consumer Protection Act, 1986 and the Supreme Court declined to interfere with the order as they found no reason to do so. (Balbir Singh Randhawa through POA v. DLF Universal Ltd. & Anr., Civil Appeal Diary No. 16686 of 2016). Therefore, the order of the NCDRC in the abovementioned matter has attained finality.
Further, in the matter of Smt. Shikha Birla v. DLF Retailers Developers Ltd., CC/183/2012, a Division Bench of the NCDRC comprising of Hon’ble Mr. Justice J. M. Malik and Mr. Vinay Kumar, observed that the Complainant had not placed any pleadings or evidence to show that the shop purchased by her is exclusively for the purpose of her livelihood, by means of self-employment and accordingly dismissed the Complaint. The NCDRC also observed that the Complainant is silent about her occupation and for the first time in her affidavit submitted that she was working in as an Interior Designer in a firm owned by her father-in-law, which was already operating from some mall in Gurgaon. The Complainant also placed on record the ITR of both herself and of the Firm. However, the NCDRC was of the opinion that the said shop was purchased for commercial purposes and as such the Complainant is not a Consumer and hence the Complaint was dismissed.
Smt. Shikha Birla filed a Civil Appeal, titled as Shikha Birla v. DLF Retailers Developers Ltd., Civil Appeal No. D14329 of 2013, before the Hon’ble Supreme Court whereby the Hon’ble Supreme Court observed as follows:
“We have heard learned counsel for the appellant and carefully perused the record. The averments contained in paragraphs 2(A), 2(G), 2(N), 2(Q) of the complaint and paragraphs 3 to 5 of affidavit filed by her sometime in October, 2012 clearly show that the complainant had taken the disputed site from Mr. Ashwani Bahl who, in turn, had purchased the site for business purpose. It was neither the pleaded case of the appellant nor any evidence was produced by her before the National Commission to show that she had taken the site for earning livelihood. The National Commission took cognizance of all the facts and observed:
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In our view, the detailed reasons recorded by the National Commission for holding that the appellant does not fall within the definition of the term ’consumer’ under Section 2(1)(d) are correct and the order under challenge does not call for interference by this Court under Section 23 of the Act.” (Emphasis supplied)
Therefore, both the NCDRC as well as the Hon’ble Supreme Court did not entertain the Consumer Complaint since the Complainant was already gainfully employed and no pleadings / evidence was led by the Complainant to showcase that she was a Consumer and had booked the said shop for earning his livelihood by means of self-employment.
It needs to be mentioned herein that the said Complaint was dismissed by the NCDRC without even issuing notice to the Opposite Party / Developer. This makes it apparent that the onus is on the Complainant to prove that he / she is a Consumer as defined under the Consumer Protection Act and also the NCDRC / Consumer Fora / Commissions are not supposed to entertain the Consumer Complaints in a routine manner and in cases where the Complainant has prima facie obtained some goods or services which can be for commercial purpose, due enquiry must be made by the NCDRC / Consumer Fora / Commissions.
In another case before the NCDRC titled Ashok Thapar v. Supreme Indosaigon Associates, CC/31/2008 decided by a division bench comprising of Hon’ble Mr. Justice V. K. Jain and Mr. B. C. Gupta examined the entire proposition regarding a Complainant being a Consumer in detail. The relevant portion is being reiterated hereunder:
“6. In the context of the services of housing construction, the explanation comes into play if the following conditions are fulfilled:
(i) The complainant buys the property exclusively for the purpose of earning his livelihood and (ii) He employs himself i.e. he is personally engaged in the activity which is carried on in the aforesaid property.
Unless both these requirements stand fulfilled, the explanation does not come into play and the complainant cannot be said to be a consumer as defined in the Consumer Protection Act, 1986. In our opinion, if a person is already having income through an activity other than the activity which he proposes to undertake in the property purchased by him, he would not be a consumer since in such a case, it cannot be said that the property was purchased by him for the purpose of earning his livelihood, he already having income from other activities. If a person already owns a commercial property, such a person will not be a consumer as defined in the Act since in such a case, it cannot be said that the property is purchased by him for the purpose of earning his livelihood, he being already in possession of a premises which he is using or can use for earning his livelihood. If a person is not personally engaged in the activity which is carried in the said property, he will not be a consumer as defined in the Act because that will not be a case of self-employment which is a necessary requirement for attracting applicability of the explanation attached to Section 2(1)(d) of the Consumer Protection Act.
For instance, if a person is already engaged in business in a premises owned by him and he purchases yet another property for carrying a different or even the same business, he will not be a consumer as defined in the Act. If a professional such as a Doctor, a Chartered Accountant or an Advocate already owns a premises where he is undertaking his professional activity, he will not be a consumer as defined in the Act, if he purchases yet another property for undertaking the same or a different professional activity. On the other hand, if a person carrying a business or engaged in a profession does not own any commercial premises and buys a commercial premises for carrying the same activity, he would be a consumer as defined in the Act provided he is personal engaged in the business or profession which is carried in the said premises, and that business or profession is the only source of his livelihood. A Doctor, Architect, Advocate or a Chartered Accountant who does not own any commercial space, would therefore, be a consumer if he purchases such a space and personally undertakes the same professional activity therein. If however, he already owns an office space and buys another office space, he will not be a consumer as defined in the Act.
To take yet another example, if a person employed in a service, purchases a commercial property for the purpose of earning his livelihood after his retirement by starting his own business or profession in the said commercial property, he would be a consumer as defined in the Act since the activity which he would be carrying in the said commercial property would be the only source of his livelihood after his retirement from service.
6. If a person does not own a commercial space but is otherwise earning and he purchases a commercial space for carrying an activity different from the activity which is the source of his existing income, he will not be a consumer as defined in the Act since in such a case, it cannot be said that the proposed commercial property will be exclusively for the purpose of earning his livelihood, his sustenance not being dependent upon the new activity which he seeks to carry in the premises in question. That would be the position even if such a person is to get personally engaged in the activity which he is planning to start in the subject premises.
7. When this matter came up for hearing on 24.08.2015, we directed the complainant to file an affidavit disclosing therein the following information:
(i) In which business/profession/vocation, the complainant was engaged at the time of booking the flats in question and since when he was engaged in such a business/profession/vocation.
(ii) What was the income of the complainant in the financial year 2003-2004, 2004-2005 and 2005-2006.
(iii) What were the commercial premises, if any, owned or occupied by the complainant in any capacity whatsoever, at the time the flats in question were booked as well as at the time this complaint was filed.
On perusing the affidavit filed by the complainant in terms of our above referred direction, we found that it did not strictly comply with the said order. Therefore, vide order dated 07.09.2015, we directed him to file a supplementary affidavit disclosing therein the following information:
- Whether he owned or occupied any commercial property anywhere in the country at the time the flats in question were booked or at the time this complaint was filed.
- Whether any firm in which the complainant was a partner at the relevant time or any company in which he was a Director at the relevant time owned or occupied any commercial property anywhere in the country at the time the flats in question were booked or at the time this complaint was filed.
- Whether the HUF of which the complainant was a Member, owner or occupied any property other than first floor of Luxmi Commercial Complex, Bombay and Shop No. 77, WTC, Bombay, at the time the flats were booked or at the time this complaint was filed.
The complainant has filed another affidavit in compliance of the direction given by us. On a conjoint reading of the affidavits filed by the complainant, we find that the complainant has been in the business of real estate since 1976 and his income in the years 2003-04 to 2005-06 was Rs. 2,63,600/-, Rs. 1,65,605/- & Rs. 7,80,203/- respectively. The complainant owned two commercial properties in Mumbai which he gave to the HUF of his father, of which he is a member, in the year 1989 so that the same could be used for the benefit of his children. One of those properties is on long lease with LIC and the other one was sold out in the year 2011. The affidavits further show that though the complainant does not personally own any commercial property anywhere in the country, he was Director in as many as three companies namely Thapar Properties Pvt. Ltd., Regency Properties Pvt. Ltd. and Rajdhani Properties Pvt. Ltd. which are operating from his residence. It would thus be seen that though neither the complainant nor any company in which he is Director, owns a commercial property, the complainant had sufficient income at the time flats in question were booked by him with the opposite party. Since the complainant was already having sufficient income at the time commercial flats in question were booked by him, it cannot be said that he had booked the aforesaid flats exclusively for the purpose of earning his livelihood. The very fact that the complainant was having sufficient income at the relevant time by itself rules out acquisition of these flats for the purpose of earning his livelihood. Since the complainant was seeking to use these three commercial flats as his personal office, it appears that the activity which he was seeking to carry in the aforesaid commercial flats would have been different from the activity from which he was having substantial income at the time the flats in question were booked by him. This is not his case that he will carry, in the office spaces booked by him, the same activity, which was the source of his income at the time of booking. Therefore, in our opinion, the complainant cannot be said to be a consumer as defined in Section 2(1)(d) of the Consumer Protection Act.” (emphasis and underline supplied)
The abovementioned judgment has been reproduced to a great extent since the observations made by the NCDRC should be read and understood by everyone as it completely illustrates in what cases a person would be said to be a Consumer. The illustrations and examples that are given in the Ashok Thapar judgment are not exhaustive and the fact that whether a Complainant will be a Consumer under the Act, will be considered in light of the facts and circumstances of each case. It is important to note that no appeal was filed against the order in Ashok Thapar, and hence this judgment has also attained finality.
Another relevant judgment of the NCDRC is Puneet Singh v. Aerens Entertainment Zone Pvt. Ltd., CC/1069/2015, which was delivered by a division bench of the NCDRC comprising of Hon’ble Mr. Justice Ajit Bharihoke and Mrs. Rekha Gupta wherein the NCDRC held that the Complainant was working at the time of booking the commercial premises and therefore the Complainant could not be considered to be a Consumer. The NCDRC further goes on to observe that it is immaterial whether the Complainant as working whether full time or only for two days and that the real question is whether she was employed and earning her livelihood.
However, the Puneet Singh judgment of the NCDRC has been challenged by way of a Civil Appeal before the Hon’ble Supreme Court in case titled Puneet Singh v. Aerens Entertainment Zone Pvt. Ltd., Civil Appeal Diary No. 786 of 2016, notice in which was issued on 18.01.2016 and the same is pending adjudication before the Hon’ble Supreme Court.
On a perusal of the Ashok Thapar case, it is apparent that the NCDRC can and has the power to ask the Complainant to submit an affidavit requiring details of all his / her material particulars with reference to the number of properties, both commercial and person owned by such person and also the source of livelihood etc. to ascertain whether such Complainant is a Consumer or not.
Since the proceedings in a Consumer Commission are summary in nature, there is no oral evidence being led in the proceedings. Therefore, ascertaining whether a Complainant is a Consumer or not is particularly quite difficult for the Opposite Party / Respondent in such cases. In fact, personal details, particulars and information of a Complainant is also very difficult to get hold of for a Opposite Party. Therefore, it is always advisable for the Opposite Party to file interrogatories in all the matters wherein there is a doubt with respect to the Complainant not being a Consumer. By filing an Application for interrogatories, the personal details of the Complainant will have to be furnished before the Consumer Commission, which will entail the Consumer Commission to ascertain whether such Complainant is a Consumer or not. In fact, in several cases, which include transactions of a commercial nature, the Consumer Commissions as a routine and procedural step, before issuing notice to the Opposite Party, directs such Complainant to file an affidavit wherein material personal particulars are required to be submitted before the Commission. Once the Complainant files the Affidavit and the Consumer Commission is satisfied that the Complainant has discharged his onus, the Commission then issues notice to the Opposite Party.
Therefore, on a bare perusal of the abovementioned judgments / cases decided by the NCDRC and the Hon’ble Supreme Court that a Complainant who obtains goods or services for a commercial purpose and is gainfully employed at the time of booking / obtaining such goods or services, cannot take the benefit of the explanation, provided in the definition of Consumer in the Consumer Protection Act and such Complaint filed by such person is liable to be dismissed.
