BIRLA TECHNOLOGIES LTD.versusNEUTRAL GLASS AND ALLIED INDUSTRIES LTD.

                 (2010) 15 (ADDL.) S.C.R. 1186


A                 BIRLA TECHNOLOGIES LTD.
                                v.
       NEUTRAL GLASS AND ALLIED INDUSTRIES LTD.
              (Civil Appeal No.10650 of 2010)
                      DECEMBER 15, 2010
B
           [V.S. SIRPURKAR AND T.S. THAKUR, JJ.]
                  .                                        .
        Consuf'flY Protection Act, 1986 - s.2(1)(d)(i) and
  s.2(1)(d)(ii) 1as amended] - Software modules .developed by
C appellant for respondent - Dispute between the parties -
  Respondent filed complaint against appellant alleging
  deficiency in services - Maintainability of the complaint -
  Held: The complaint was not maintainable, fi~tly, on the count
  that uls.2(1)(d)(i), goods were purchasecf\for commercial
D purposes and on the second count that sert>ices were hired
  or availed of for commercial purposes - It was nobody's case
  that the goods bought and used by the respondent and the
  services availed by respondent were exclusively for the
  purpose of earning the respondent's livelihood by means of
E self-employment - The complaint was not maintainable in
  toto.

       There was dispute between the parties as rega_rds
  the software modules developed by the appellant for the
  respondent. The respondent filed a complaint before the
F State Consumer Disputes Redressal Commission
  alleging deficiency in services by the appellant. The State
  Commission dismissed the complaint holding .that the
  respondent/ complainant was not a •consumer' within t~
  meaning of the Consumer Protection Act, 1986.
G
       The respondent/complainant filed appeal before the
  National Commission. The National Commission held that
  the software irrquestion amounted to sale of goods by
  the appellant to the respondent for commercial purpose
H                              1186
  BIRLA TECHNOLOGIES LTD. v. NEUTRAL GLASS 1187
          AND ALLIED INDUSTRIES LTD.
and as such the respondent would be excluded for being          A
considered as a 'consumer' under Section 2(1)(d)(i) of the
Act. However, the National Commission then proceeded
to hold that there was a warranty period of one year in
the year 2000 and as such since the complaint was filed
on 1.8.2000, i.e. prior to the amendment of Section             B
2(1)(d)(ii) by the Amendment Act, 2002, a person hiring or
availing of any services for a consideration was not
excluded even though the services were availed for any
commercial purpose, and thus the complaint could be
maintained before the consumer forum.                           c
    In the instant appeal, the appellant contended that a
basic error was committed by the National Commission
inasmuch as it proceeded on the basis that the complaint
was filed on 1.8.2000, which was prior to the amendment
of Section 2(1)(d)(ii) by the Amendment Act, 2002. The          D
appellant pointed out that the complaint in fact was filed
on 26.6.2003 i.e. after the amendment of the said Section,
which came on 15.3.2003.

    Allowing the appeal, the Court                              E
     HELD: In view of the findings of the National
Commission tllat the goods sold by the appellant to the
respondent/complainant amounted to 'goods' and that
such goods were purchased for commercial purpose of
earning more profits, there could be no dispute that even       F
the services which were offered had to be for the
commercial purpose. Nothing was argued to the contrary.
It seems that the whole error has crept in because of the
wrong factual observation that the complaint was filed on
1.8.2000. In that view, it has to be held that the complaint    G
itself was not maintainable, firstly, on the count that under
Section 2(1)(d)(i), the goods have been purchased for
commercial purposes and on the second count that the
services were hired or availed of for commercial
                                                                H
    1188 SUPREME COURT REPORTS [201 OJ 15 (ADDL.) S.C.lf.'


A purposes. The matter does not come even under the
  Explanation which was introduced on the same day i.e.
  on 15.3.2003 by way of tha amendment by the same
  Amendment Act, as it is nobody's case that the goods
  bought and used by the respondent and the services
B availed by the respondent were exclusively for the
  purpose of earning the respondent's livelihood by means
  of self-employment. In that view, it will have to be held
  that the co'Tlplaint itself was not maintainable in toto. The
  order of :.1e National Commission is set aside and the
c complaint is dismissed with costs assessed at
  Rs.50,000/-. [Paras 9, 10, 11] [1192-F-H; 1193-A-E]

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    10650 of 2010.

D       From the Judgment & Order dated 17.12.2009 of the
    National Consumer Disputes Redressal Commission, New
    Delhi in F.A. No. 218 of 2004.

       U.U. Lalit, Gaurav Pachnanda, Sidhant Goel, Renu Gupta
E (for Abhinav Mukerji) for the Appellant.

        Sidharth Bhatnagar (for T. Mahipal) for the Respondent.

        The Judgment of the Court was delivered by

        V.S. SIRPURKAR, J. 1. Leave granted.
F
        2. This appeal is filed against the judgment passed by
  National Consumer Disputes Redressal Commission
  (hereinafter called 'the National Commission" for short),
  allowing the First Appeal filed by the respondent herein holding
G that the complaint filed by the respondent herein was tenable
  relating to its grievance about the deficiency of service, under
  Section 2(1 )(d)(ii) of The Consumer Protection Act, 1986
  (herein after called "the Act" for short) as amended.

H       3. The appellant had sent a detailed proposal for
 BIRLA TECHNOLOGIES LTD. v. NEUTRAL GLASS 1189
AND ALLIED INDUSTRIES LTD. [V.S. SIRPURKAR, J.]

developing certain computer software for the respondent at a         A
cost of Rs.36 lacs on 11.2.1998. This proposal was accepted
by the respondent who sent the letter of intent indicating its
intention to entrust the appellant with the development of the
said software. On 1.4.1998, the respondent sent a purchase
order to the appellant regarding the terms and conditions at         B
which the appellant was to develop the software for the
respondent. That software was to take care of (1) Financial
Accounting, (2) Production, (3) Marketing, (4) Purchase, (5)
Stores/Inventory, (6) Fixed Assets, and (7) Pay Roll and
 Personnel System. The appellant wrote to the respondent on          c
 3.2.1999 informing that the Stores and Purchase Modules had
 been installed in the respondent's office on 1.2.1999. The
 appellant wrote on 4.2.1999 to the respondent that since the
 respondent's requirements for the Marketing Module had gone
 up considerably in comparison with what had been initially          D
 agreed between the parties, the appellant would require
 additional 250 man hours to complete. On 26.2.1999, the
 appellant informed the respondent that three Modules had been
 successfully installed, they being, (1) Stores, (2) Purchase, and
 (3) Production. Again on 17.3.1999, the appellant confirmed         E
 that even the Financial Accounting Module was also
 successfully installed. Further, the appellant wrote to the
 respondent that in view of the additional requirements of the
 respondent, it would require 350 man hours more. On
 30.3.1999, the appellant informed the respondent that the
 changes suggested by the respondent had been successfully           F
 carried out. The appellant informed the respondent again that
  due to the addition of 48 new functions to the Marketing
  Module, the estimation for the Module had gone up by 45 man
  days, costing an additional Rs.60,000. On 7.4.1999 and
  13.4.1999, the appellant informed that the Stores and Purchase     G
  Module and Financial Accounting and Marketing Modules were
  also installed respectively on those dates and sought for their
  feedback. Thereafter, there was a lot of correspondence
  between the parties as regards the work of the said software
  and in respect of the different Modules. It seems, at times, the   H
    1190 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R


A   respondent/complainant expressed its satisfaction over the
    working of the Modules. All this happened in the last months of
    1999 and in January, 2000. It seems that till February, 2000,
    the payment of the appellant was not released requiring the
    appellant to write to the respondent for the same. The
B   respondent thereafter started compla,ining about the working of
    some Modules. In the month of September, 2000, the
    respondent placed a fresh purchase order with the appellant
    for enhancement of the Production Module, ori which the
    appellant requested the respondent to clear the outstanding
c   dues which were not cleared till then. The appellant again wrote
    to the respondent for payment in the month of April, 2001

       4. The disputes started taking ugly shape and the
  respondent started complaining about the working of various
  Modules. On 15.4.2002, the respondent wrote a let'.er to the
D appellant identifying the problems with various Modu1es of the
  sofuvare, which letter was replied to by the appellant. There was
  then lot of correspondence between September, 2002 and
  March, 2003 as regards the Modules supplied. The respondent,
  however, sent a legal notice to the appellant through its
E Advocate on 4.4.2003, wherein it alleged deficiency in services
  rendered by the appellant with respect to all seven Modules
  developed by the appellant. There was another legal notice sent
  by hand and ultimately a complaint against the appellant came
  to be filed on 26.6.2003 before the State Consumer Disputes
F Redressal Commission (hereinafter called "the State
  Commission" for short). The appellant, by way of its reply to the
  complaint, raised a preliminary objection that the respondent/
  complainant was not a 'consumer' within the meaning of the Act
  and also sought the decision on this preliminary objection as
G an issue. A rejoinder was sent to this reply.

        5. By its order dated 4.3.2004, the State Commission
  accepted the appellant's preliminary objection and dismissed
  the complaint. The respondent/complainant, therefore, filed First
H Appeal No. 218 of 2004 before the National Commission. By
 BIRLA TECHNOLOGIES LTD. v. NEUTRAL GLASS 1191
AND ALLIED INDUSTRIES LTD. [V.S. SIRPURKAR, J.]

its order dated 17 .12.2009, which is impugned here, the A
National Commission reversed the order of the State
Commission and held that the 'goods' purchased by the
respondent from the appellant were being used by the
respondent for a commercial purpose, and, therefore, the
respondent was not a 'consumer' within the meaning of Section B
2(1)(d)(i) of the Act. However, the National Commission further
held that notwithstanding such findings, the respondent was
entitled to maintain a complaint under the Act with respect to
the deficiency in service during one year warranty period with ·
respect to said goods relying on Section 2(1 )(d)(ii) of the Act.  c
      6. We have gone through the impugned judgment, wherein
there is a clear cut finding that the software in question
amounted to sale of goods by the appellant to the respondent
for commercial purpose and as such the respondent would be
excluded for being considered as a 'consumer' under Section        D
2(1)(d)(i) of the Act. However, the National Commission then
proceeded to hold that there was a warranty period of one year
in the year 2000 and as such since the complaint was filed on
1.8.2000, i.e. prior to the amendment of Section 2(1 )(d)(ii) by
the Amendment Act, 2002, a person hiring or availing of any        E
services for a consideration was not excluded even though the
services were availed for any commercial purpose. In that view,
it proceeded to hold that if there was any deficiency in service
during the warranty period, the complaint could be maintained
before the consumer forum for the said purpose. For this, the      F
National Commission relied on its judgment in Meera
Industries, Howrah Vs. Modern Constructions, Howrah passed
in R.P. No. 1765 of 2007.

      7. Shri U.U. Lalit, learned Senior Counsel appearing on      G
behalf of the appellant pointed out that there is a basic error
committed by the National Commission inasmuch as it has
proceeded on the basis that the complaint was filed on
1.8.2000, which was prior to the amendment of Section
2(1 )(d)(ii) by the Amendment Act, 2002. Shri Lalit pointed out    H
    1192 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R


A   that the complaint in fact was filed on 26.6.2003 i.e. after the
    amendment of the said Section, which came on 15.3.2003. The
    learned Senior Counsel, therefore, submitted that even if there
    was any service which was hired from the appellant in view of
    the finding of the National Commission that the goods
B   themselves were purchased from the appellant for commercial
    purposes, there would be no question of the service being
    included in Section 2(1 )(d)(ii) particularly in view of the
    amendment. The learned Senior Counsel pointed out that the
    service offered by the appellant was only for proper working of
c   the Modules which were included in the software and as such
    was for commercial purpose. He, therefore, pointed out that the
    order of the National Commission holding the complaint
    maintainable to the extent of services offered is clearly
    incorrect, as it proceeds on the wrong assumption that the
    complaint was filed on 1.8.2000 i.e. before 15.3.2003 when the
0
    amendment was made to Section 2(1 )(d}{ii).

          8. Shri Sidharth Bhatnagar, learned Counsel appearing on
    behalf of the respondent could not dispute this proposition and
    fairly accepted that the complaint was in fact filed on 26.6.2003
E   i.e. much after the amendment to Section 2(1)(d)(ii), by which
    the following words were added:-

         "but does not include a person who avails of such services
         for any commercial purpose."
F       9. In view of the findings of the National Commission that
  the goods sold by the appellant to the respondent/complainant
  amounted to 'goods' and that such goods were purchased for
  commercial purpose of earning more profits, there could be no
  dispute that even the services which were offered had to be
G for the commercial purpose. Nothing was argued to the contrary.
  It seems that the whole error has crept in because of the wrong
  factual observation that the complaint was filed on 1.8.2000. In
  that view, it has to be held that the complaint itself was not
  maintainable, firstly, on the count that under Section 2(1 }{d)(i),
H the goods have been purchased for commercial purposes and
 BIRLA TECHNOLOGIES LTD. v. NEUTRAL GLASS 1193
AND ALLIED INDUSTRIES LTD. [V.S. SIRPURKAR, J.]
on the second count that the services were hired or availed of A
for commercial purposes. The matter does not come even
under the Explanation which was introduced on the same day
i.e. on 15.3.2003 by way of the amendment by the same
Amendment Act, as it is nobody's case that the goods bought
and used by the respondent herein and the services availed 8
by the respondent were exclusively for the purpose of earning
the respondent's livelihood by means of self-employment. In that
view, it will have to be held that the complaint itself was not
maintainable in toto.

      10. However, the National Commission has observed that C
if the respondent/complainant choose to file a suit for relief
claimed in those proceedings, they can do so according to law
and in such a case, they can claim the benefit of Section 14 of
the Limitation Act to exclude the period spent in prosecuting
proceedings under the Act while computing the period of D
limitation prescribed for such a suit.

     11. Shri Lalit, learned Senior Counsel did not assail this
observation. We, therefore, do not wish to interfere with that
observation. However, we observe that the parties may avail       E
of the remedies available to them in accordance with law. The
appeal is allowed. The order of the National Commission is set
aside and the complaint is dismissed with costs assessed at
Rs.50,000/-.

B.B.B.                                        Appeal allowed.     F