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HELD THAT- A Person involved in buying goods or availing services for the purpose of earning his livelihood through self-employment would be within the scope of the definition of consumer.

An appeal was filed before Apex Court against the order of the National Consumer Disputes Redressal Commission (NCDRC) where the Commission had held that the appellant was not a consumer of the respondent bank.

BRIEF FACTS:

1. The appellant, a stockbroker by profession, had an account with Nedungadi Bank Limited.

2. The appellant had availed an overdraft facility from the Bank for an amount of 1.00 crore which was later enhanced to 5.00 crores.

3. On 17th March 2001, this limit was temporarily enhanced by an additional 1.00 crore.

4. Thereafter, the appellant’s account became irregular and he failed to regularize the same.

5. Resultantly, he was asked to pay around 6.00 crores along with interest.

6. The appellant advised the bank to sell his shares pledged as security.

7. The Bank recovered a part of the debt by the sale of shares and filed a recovery suit before the Debts Recovery Tribunal (DRC) for the remaining debt.

8. However, the appellant and the Bank agreed upon a one-time settlement and the bank issued a no objection certificate and withdrew the recovery proceedings.

9. The appellant also worked as the stockbroker of the bank.

10. After settlement, the appellant sought the release of the shares and the Bank initiated arbitration proceedings.

11. The respondents failed in the proceedings. Thereafter, the appellant filed an appeal before the National Consumer Dispute Redressal Commission seeking the release of the shares by the bank.

12. The Commission held that appellant was not a consumer under Section 2(1)(d) of the Act.

13. An Appeal against this order was filed before the Supreme Court of India.

THE DECISION OF THE SUPREME COURT

14. The appellant submitted that he had a dual relationship with the bank in the form of a consumer as well as a broker.

15. The appellants contended that his overdraft account was settled and the Bank had no legal reason to withhold the shares after the finality of the arbitration proceedings.

16. Furthermore, the appellants pleaded that the complainant was self-employed as a stockbroker and his overdraft account was for his self-employment purposes.

17. He relied on the case of Internet and Mobile Association of India vs. Reserve Bank of India, (2020) 10 SCC 274 and pleaded that bank services are essential for business.

18. The respondents, on the other hand, submitted that providing such a broad meaning to the definition of consumer would defeat the purpose of the Act which is meant to provide speedy justice to consumers.

19. The Court noted that any person who purchases a product for resale or commercial proposes is excluded from the definition of consumer.

20. By the 1993 Amendment, the Legislature expanded the scope of the section in such a manner so as to include persons who buy and use goods for earning their livelihood through self-employment within the definition of consumer.

21. Similarly, the 2002 amendment provided that while commercial services would not be within the ambit of Section 2(1)(d), a person availing services for livelihood purposes through self-employment would be considered to be a consumer.

A Person Purchase Goods or Services Exclusively For Self -Employment Is A Consumer SC

SECTION 2(1)(D) IN THE CONSUMER PROTECTION ACT, 1986

(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 purpose.

SECTION 2(7) OF THE CONSUMER PROTECTION ACT,2019 – “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;

22. The Court relied on the case of Laxmi Engineering Works vs. P.S.G. Industrial Institute, (1995) 3 SCC 583 to define the phrase ‘commercial purposes’ and held that it includes those activities which have profit as their primary aim.

23. However, in the present case, the relationship between the bank and appellant was purely business to business and the overdraft facility was used by the appellant to increase his income. The transactions between the appellant and the respondent bank were thus commercial in nature.

24. Hence the Court upheld the decision of the National Commission.

CONCLUSION: the Apex Court in deciding the case clearly said that a person purchasing goods or availailing services exclusively for the purpose of his livelihood by means of self-employment is a “ Consumer”. On the other hand a person purchasing goods or availing services for commercial purpose or earning profits is not a consumer under definition of consumer under the Consumer Protection Act, 1986( as amended by the Consumer Protection Act, 2019).

DISCLAIMER: the case law presented here is only for sharing information and knowledge with readers. The views are personal and should not be taken as professional advice. In case of necessity do consult with professionals.

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