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Judicial Interpretation of ‘Goods used for

Commercial Purposes’ under COPRA
By prathiksharavi - June 5, 2018

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In this article, Sahali Manna, pursuing Diploma in Entrepreneurship Administration and

Business Laws from NUJS, Kolkata discusses the judicial interpretation of ‘goods used for
commercial purposes’ under the Consumer Protection Act

Introduction
After the amendment in the Consumer Protection Act in 2002, the definition of ‘consumer’ has
been defined in Section 2. Any person purchasing goods for the purpose of resale and any
other commercial purpose has been excluded from the purview of “consumer”. But there are
several exceptions to this rule. Several judicial interpretations have been given to understand
the concept of “consumer” and “commercial purpose”.

Understanding the concept of “consumer”

Section 2(1)(d) of the Consumer Protection Act defines who is a consumer. A person must hire
or purchase any good or service for consideration which has been paid in full or in part. So, it
can be said that to become a ‘consumer’ under this Act:

The purchased good should not be used for reselling or any other commercial purposes.
In addition to this, any beneficiary of such purchased goods or hired services will also be
deemed to be a ‘consumer’ under this act.

Amendment Act 62/2002 in the Consumer Protection Act, 1982 excluded any person who hires
or purchases any goods for resale or for any other commercial purpose from the definition of
‘consumer’ as defined in Section 2 of the Act.

In the case of Super Engineering Corporation vs. Sanjay Vinayak Pant and Anr, the
Hon’ble National Consumer Commission observed that the intention of the Parliament behind
the amendment in the definition of ‘consumer’ is to deny those benefits to those individuals
who purchase goods for the purpose of resale or for making profit on a large scale.

What can be considered as commercial purpose?

The term “commercial purpose” and “livelihood” has not been defined in this Act but from the
above discussion commercial purpose may be considered when any good has been purchased
for resale or for any other profit-making activity in large scale.

Important Judicial Interpretations

In the case of Laxmi Engineering Works vs. P.S.G Industrial Institute, the Supreme
Court held that whether goods bought by a person are for a ‘commercial purpose’ is a question
of fact and it should be decided by taking into account all the facts and circumstances in each
case. The Supreme Court further observed that if the goods have been used by the purchaser
himself for commercial use then he would be considered to be a consumer under this Act but if
that person does not use the good himself and engages some other person to operate that
particular good then such person will not come under the ambit of the definition of
‘consumer’.

In Narasamma vs. LIC of India, the State Commission held that the widow of the deceased
policyholder is the beneficiary of the services. Hence, she must be compensated for the loss
caused by the negligence of the LIC, as a beneficiary of any service comes within the definition
of ‘consumer’ under this act.

Even if a machine is purchased for commercial purposes but the defect in the machine arises
within the warranty period then the purchaser of such machine would be a consumer as held
in Dr. Vijay Prakash Goyal vs. The Network Ltd.

The entire issue of the case was regarding replacement of an ultrasound scanner Model 2i2.
Which went out of order after installation and needed to be replaced. Despite the repeated
request to the respondent company they did not replace it and contested that the petitioner is
not a consumer under the consumer protection Act 1986. The National Commission held that if
a machine develops defect within warranty period the purchaser of the machine would be
consumer even if has been purchased for the commercial purpose.

C.P Moosa vs. Chowgle Industries Ltd.- in this case, appellant bought EPBAX system with
warranty and AMC (annual maintenance contract) for his hotel. There was a deficiency of
service during the warranty period and AMC period. The National Commission held that the
appellant is entitled to compensation as the case falls under Section 2 (1)(d).

Some similar scenario came up in the case of Super Computer Centre vs. Globiz
Investment Pvt. Ltd. In this case, along with some related accessories the complainant
company purchased computer system from the other party. The intellifax machine which has
been sent by the respondent part with the computer at the time of supply turned out to be
defective. In the redressal forum the opposite party contended that the complainant company
does not come under the definition of ‘consumer’ under COPRA hence, this complaint is not
maintainable, the National Commission held in this regard that even though the complainant
company bought the goods for commercial use the complaint is still maintainable as the defect
period has arisen within the warranty period and thus the purchaser company comes under
the definition of ‘consumer’ under this act.

In Action construction or Equipment Ltd & Anr vs. Bablu Mridha, the national
commission explained that if a purchaser takes help or assistance to operate a machine he will
still remain a ‘consumer’ under this act. In this case, the respondent had two machines by
which he used to maintain his livelihood and hence, it cannot be said that those machines
were used for business activities.
In a recent case of Vimal Mehra vs. Manager/ Managing Director, the national
commission remanded back the case to the state commission and decide the case on the
merits as in the first instance, the state commission rejected the complaint stating the Mehra
is not a ‘consumer’ under COPRA and the state commission also failed to observe that Mehra
had booked the shop for earning livelihood.

When Mehra appealed before the Hon’ble National Commission against the order of state
commission, the National Commission held that it is very wrong on the part of the State
Commission to reject the complaint at the threshold. Though the National Commission did not
express any view on “commercial purpose” or “livelihood” as these are the question of facts
and will be decided on the basis of evidence and pleadings of both the parties.

The bench of Justice D.K Jain and M. Shreesha, the National Commission remanded the
case back to the State Commission by its order dated Aug 2 to adjudicate the matter on the
merit as well as on the evidence by both the parties.

Concluding comments
Parliament excluded those people from the purview of the definition of ‘consumer’ who obtain
goods or services either for the purpose of reselling it or for any other commercial purpose. By
way of amendment in 2002 in the Consumer Protection Act, the definition of ‘consumer’ got
restricted to those buyers of goods who used it for ‘self-consumption’ and not for any other
economic activities. But there are exceptions to this rule:

A person who is a beneficiary of some service comes under the purview of the definition of
“consumer” under the Consumer Protection Act.
A person will fall within the ambit of “consumer” if any “defect” [‘defect’ can be any fault,
shortcoming, lack of proper performance, as explained in sec 2 (1)(f) of the Consumer
Protection Act ] comes up in the product within the warranty period even if the goods have
been bought for commercial usage or other profit-making activity.
Another exception to the rule is when goods and services are purchased to avail livelihood.

So, it can be said that every complaint involving commercial purposes cannot be observed by
the courts as not maintainable. Entire facts, circumstances, evidence of each case must be
considered for adjudicating any case, as circumstances of each case are different than the
other. Who is a “consumer” and what is “commercial purpose” is entirely a question of fact
that must be decided upon looking into certain circumstances and evidence.
By the way of some judicial interpretation, the courts and the National Commission have
drawn the scenarios and an understanding when consumer complaints will still be
maintainable even if it is meant for commercial purposes.

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