1996 JTR(SC) 1819
1997 1 AllCJ 256 ; 1997 3 BomCR(SC) 36 ; 1997 88 CompCas 400 ; 1997 1 CTC 170 ; 1996 Supp JT 90 ; 1996 8 Scale 643 ; 1997 1 SCC 131 ; 1996 SCR 340 ; 1997 WBLR 238 ; 1997 KHC 3556 ; 1996 2 KLT(Online) 1212 ; 1997 1 Supreme 51
1997(1) Supreme 51
SUPREME COURT OF INDIA
K. Ramaswamy and G.B. Pattanaik, JJ.
M/s. Cheema Engineering Services -Appellant
versus
Rajan Singh -Respondent
Civil Appeal No. 14787 of 1996
(Arising out of SLP (C) No. 12837 of 1996)
Decided on 1-11-1996
Counsel for the Parties :
For the Appellant : C.S. Vaidyanathan, Sr. Advocate, Rajesh K. Sharma, Rakesh K. Sharma, Ms. Shalu Sharma, Advocates.
For the Respondent : B. Parthasarthy, Advocate.
IMPORTANT POINT
Merely earning livelihood in commercial business does not mean that it is not for commercial purpose, therefore, the word self employment , not defined in the Consumer Protection Act, is a matter of evidence.
Act Referred :CONSUMER PROTECTION ACT : S.2(1)(d)
(A) The Consumer Protection Act, 1986, specifically Section 2(1)(d) and its Explanation, governs the determination of whether a person qualifies as a consumer. Section 2(1)(d) defines a consumer as any person who buys goods for consideration, including users other than the purchaser, explicitly excluding those who obtain goods for resale or commercial purposes. The pivotal Explanation of 1993 carves out an exception, stating that use by a consumer of goods bought and used exclusively for earning a livelihood by means of self-employment does not constitute a commercial purpose. This case hinges on interpreting whether the respondents use of the purchased machine falls within this self-employment exemption or constitutes commercial activity.
(B) Key legal principles include: the distinction between self-employment and commercial purpose; the burden of proof lies on the party claiming protection; and the mere earning of livelihood does not automatically negate commercial character if the activity involves regular employees and a trade setup.
Facts of the case:
The respondent purchased a machine called "Brickman" from the appellant for clay preparation, brick moulding, drying, and burning to earn his livelihood. The core dispute is whether this use was for self-employment or a commercial venture involving employees.
Findings of Court:
The court found that the Tribunals erred in concluding that the use was solely for self-employment. It observed that questions regarding the use of the machine by the respondent alone or with family members, or the employment of workmen, were factual matters requiring evidence. The burden to prove exclusive self-employment rested on the respondent, which was not adequately discharged.
Issues:
Whether the respondent used the machine exclusively for self-employment within the meaning of the Explanation to Section 2(1)(d), thereby excluding the transaction from being a commercial purpose.
Ratio Decidendi:
The Explanation to Section 2(1)(d) excludes from commercial purpose goods used for earning livelihood by self-employment, but this defence fails if the respondent used employees or workmen, indicating a commercial scale. The onus is on the respondent to prove self-employment, and without such evidence, the commercial purpose is inferred.
Result:
The appeal is allowed, the orders of the Tribunals are set aside, and the matter is remitted to the District Forum to record evidence and dispose of the case within six months.
(A) The Consumer Protection Act, 1986, specifically Section 2(1)(d) and its Explanation, governs the determination of whether a person qualifies as a consumer. Section 2(1)(d) defines a consumer as any person who buys goods for consideration, including users other than the purchaser, explicitly excluding those who obtain goods for resale or commercial purposes. The pivotal Explanation of 1993 carves out an exception, stating that use by a consumer of goods bought and used exclusively for earning a livelihood by means of self-employment does not constitute a commercial purpose. This case hinges on interpreting whether the respondents use of the purchased machine falls within this self-employment exemption or constitutes commercial activity.
(B) Key legal principles include: the distinction between self-employment and commercial purpose; the burden of proof lies on the party claiming protection; and the mere earning of livelihood does not automatically negate commercial character if the activity involves regular employees and a trade setup.
Facts of the case:
The respondent purchased a machine called "Brickman" from the appellant for clay preparation, brick moulding, drying, and burning to earn his livelihood. The core dispute is whether this use was for self-employment or a commercial venture involving employees.
Findings of Court:
The court found that the Tribunals erred in concluding that the use was solely for self-employment. It observed that questions regarding the use of the machine by the respondent alone or with family members, or the employment of workmen, were factual matters requiring evidence. The burden to prove exclusive self-employment rested on the respondent, which was not adequately discharged.
Issues:
Whether the respondent used the machine exclusively for self-employment within the meaning of the Explanation to Section 2(1)(d), thereby excluding the transaction from being a commercial purpose.
Ratio Decidendi:
The Explanation to Section 2(1)(d) excludes from commercial purpose goods used for earning livelihood by self-employment, but this defence fails if the respondent used employees or workmen, indicating a commercial scale. The onus is on the respondent to prove self-employment, and without such evidence, the commercial purpose is inferred.
Result:
The appeal is allowed, the orders of the Tribunals are set aside, and the matter is remitted to the District Forum to record evidence and dispose of the case within six months.
ORDER
Leave granted.
We have heard learned counsel on both sides.
2. The only question for consideration is: whether the respondent has been using the machine "Brickman" for clay preparation, brick moulding, brick drying and brick burning, after purchasing the same from the appellant for earning his livelihood within the meaning of Explanation to Section 2(1)(d) of the Consumer Protection Act, 1986? Section 2(1)(d) reads as under :
" Consumer means any person who:-
(i) buys any goods for a consideration which has been paid or promised or 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 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 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."
3. If any goods are purchased for consideration, paid or promised or partly paid or under any system of deferred payment including any user of such goods other than the person who by such goods for the 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, the purchaser is the consumer within the meaning of the Act. But the Act provides for certain exceptions, namely, "does not include a person who obtains such goods for resale or for any commercial purpose; or..."
4. The Explanation to the definition of consumer has been added by way of an amendment in 1993 which reads as under :-
"Explanation.- For the purpose of sub-clause (i), "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."
5. 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 use 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 the evidence of the parties and dispose it of in accordance with law within a period of six months from the date of the receipt of this order.
6. The appeal is accordingly allowed. No costs.
Appeal accordingly allowed.
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