Holding

The appellant did not purchase the machine for his own livelihood by self‑employment and therefore is not a consumer under Section 2(d); the appeal is dismissed.

Summary

Laxmi Engineering Works, a small‑scale proprietary concern, bought a CNC universal turning machine from P.S.G. Industrial Institute and alleged it was defective, claiming Rs. 4 lakhs. The Maharashtra Consumer Disputes Redressal Commission allowed part of the claim, but the National Consumer Commission set it aside, holding the purchaser was not a consumer because the machine was bought for a commercial purpose. On appeal, the Supreme Court examined the meaning of "consumer" under Section 2(d) of the Consumer Protection Act, 1986, the scope of "commercial purpose", and the effect of the 1993 amendment explanation which excludes purchases made for self‑employment. The Court held that the explanation is merely clarificatory and applies to pending cases, and that whether a purchase is for a commercial purpose is a factual question. It found that the machine was not bought for the appellant’s own livelihood by self‑employment, so he was not a consumer, and dismissed the appeal.

Issues considered

The applicability of Section 2(d) of the Consumer Protection Act, 1986 to the appellant's purchase of the CNC machine
Whether the purchase was for a "commercial purpose" or for self‑employment/earning a livelihood
The legal effect and scope of the 1993 amendment explanation to Section 2(d)
The finality of orders passed by consumer forums and their reviewability in civil courts

Legislation cited

Consumer Protection Act, 1986s. 13, s. 15, s. 17, s. 18, s. 19, s. 21, s. 23, s. 24, s. 25, s. 2(d), s. 3, s. 9
Limitation Acts. 14
Societies Registration Act, 1860

Subjects

consumer definitioncommercial purposeself‑employmentConsumer Protection Actquasi‑judicial tribunalfinality of orderssmall scale industryCNC machine

Judgment

IA LAXMI ENGINEERING WORKS
·/ ,I \.I.,~, I • ,.. r 1" !' .·,
P.S.G. INDUSTRIAL INSTITUTE

.Af'~L 4, !.99~·
·'
B [B.P. JEEVAN REDDY AND SUJATA.V. MANOHAR, JJ.]

Consumer Protection Act; 19.86 :. , .. J

Section· 2(d)-<:onsumer-Definition of-Exclusion of Per.rons quyif!C
goods for resale and commercial purpose-A person who buys goods lllld UJf'e
C exclusively for earning his livelihood is not excluded from the de/inido,;,·~f
Consumer-'Commercial Putpose'-Determinati.Qn depem1.J:Mfuctl 'of each
case-{]niversal Turning Central Machine-Purchase for manufacture of
machine parts-Held on facts that purchase was not for earning livelihhod /Jy
means of self cmploymen~uyer Held noi Consumer.
D
Explanation to S.2(d) (As inserted by Amendment Act 50 of 1993~
Held clarificatory in nature and applicable to all pending proceedings-Held
Law is not changed by the Explanation.

Sections 3, 9, 13, 15, 17, 18, 19, 21, 23, 24 and 25.
E
Forums created undei-Nature of-Held Quasi Judicial Tribunals and
not Courts.

District Forums-State and National Consumer Commissions-Orders
passed by-Finality-{ssues decided by these forums cannot be adjudicated
F in Civil Cou1ts-They can be questioned only in the manner provided by the
Act.

Tde appellant-concern, a small scale industry established under the
Employment Promotion Programme, purchased one PSG 450 • CNC
Universal Turning Central Machine from tLe respondent for carrying on
G business of mannfactnre of machine parts. It filed a complaint in the
Maharashtra Consumer Disputes Redressal Commission against the
respondent and claimed an amount of Rs. 4 lakhs alleging that it had
suffered serious financial loss on account of defective functioning or the
machine. Subsequent to the filing or the complaint an Explanation was
H added to Section 2(d) or the Consumer Protection act, 1986 by Amendment
174
LAXMIENGG.v. P.S.G.INDL. 175
Act 50 of 1993 which stated that "for the purposes of such-clause (i) A
'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". The respondent contested the case stating that
the appellant purchased the machine for commercial use and it was not a
consumer within the meaning of S.2(d) of the Act. However, the Commis-
sion allowed the claim in part i.e. for Rs. 2.48 lakbs. On respondent's
B
appeal the National Consumer Commission held that the complainant
purchased the machinery for commercial purpose and it was carrying on
the business on a large scale for the purpose of earning profit, therefore
it was excluded from the purview of the definition of Consumer.
c
In appeal to this Court it was contended that (i) the appellant
purchased the machinery for the purpose of livelihood; therefore the
purpose for which the machine was purchased cannot be called a 'commer-
cial purpose'; (ii) the appellant cannot be said to be carrying on business
of manufacture of machine parts on a large scale.
D
Dismissing the appeal, this Court

HELD : 1. The definition of the expression 'consumer' in Section
2(d) of the Consumer Protection Act, 1986 does not include a person who
buys goods for resale or for any commercial purpose. The expression E
"resale' is clear enough. Controversy bas, however, arisen with respect to
meaning of the expression "commercial purpose". It is also not defined in
the Act. "Commercial" denotes "pertaining to commerce". It means "con-
nected with, or engaged in commerce; mercantile; having profit as the
main aim" whereas the word "commerce" means "financial transactions
especially buying and selling of merchandise, on a large scale". The F
National Commission appears to have been taking a consistent view that
where a person purchases goods "with a view to using such goods for
' carrying on any activity on a large scale for the purpose of earning profit"
be will not be a "consumer' within the meaning of Section2(d)(i) of the
Act. Broadly affirming the said view and more particularly with a view to G
obviate any confusion - the expression "large· scale" is not a very precise
)-- expression - the Parliament stepped in and added the explanation, to
Section 2(d)(i) by Amendment Act, 1993. The explanation excludes certain
purposes from the purview of the expression "commercial purpose" · a
case of exception to an exception. Therefore, a person who buys goods and
uses them himself, exclusively for the purpose of earning his livelihood, H
176 SUPREME COURT REPORTS [1995] 3 S.C.R.

A by means of self-employment is within the definition of the expression
"consumer". It is not the valne of the goods that matters bot the purpose
to which the goods hough! are put to. The several words employed in the
explanation, viz., "uses them by himselr, "exclusively for the purpose of
earning his livelihood" and "by means of self-employment" make the
intention of Parliament abundantly clear, that the goods bought must be
B used by the buyer himself, by employing himself for earning his livelihood.
[178-C, 185-C, D, F, 186-B, Cl
Lucknow Development Authority v. M.K Gupta, [1994] 1 SCC 243
and Morgan Stanley Mutual Fund v. Kartick Das, [1994] 4 SCC 225, referred
to.
c
Synco Textiles Private Limited v. Greaves Cotton and Co. Ltd., (1991]
1 CPJ 499; Secretary, Consumer Guidance and Research Society of India v.
M/s. B.P.L. India Ltd., [1992] 1 CPJ 140 and Oswal Fine Arts v. M/s. H.M. T.
Madras, [1991] 1 CPJ 330, approved.
D
2. The Explanation added by the Consumer Protection (Amend- 1
ment) Act 50 of 1993 is clarificatory in nature and applies to all pending /
proceedings. It broadly affirms the decisions of the National Commission.
It merely ma!<es explicit what was implicit in the Act. It is not as if the
law is changed by the said explanation; it has been merely made clearer.
E [194-H, 188-F]
3. Whether the purpose for which a person has bought goods Is a
•commercial pnrpose" within the meaning of the definition of expression
"consl'mer" in Section 2(d) of the Act is always a question of fact to be
decided in the facts and circumstances of each case. Having regard to the J
F nature and character of the machine concerned in this case and the
material on record it must be held thai it is not goods which the appel-
lants pnrchased for use by himself exclusively for the purpose of earning
his livelihood by means of self-employment. [195-B, C]

4. The definition of the expression 'person" in section ~(m) as
G including a firm (whether registered or not), a Hindu undivided family, a
co-operative society or any other association of persons (whether
registered under the Sacieties Registration Act, 1860 or not) makes no
difference to the above interpretation. If a firm purchases the goods the
members of the firm should themselves ply, operate or use the goods
H purchased. Same would be the case of purchase by Hindn Undivided
LAXMI ENGG. v. P.S.G. INDL. 177
Family, co· operative society or any other association of persons. A
[186-H, 187-A)
5. A review of the provisions of the Consumer Protection Act dis-
closes that the quasi-judicial bodies/authorities/agencies created by the Act
known as District Forums, State Commissions and the National Commis·
sion are not Courts though vested with some of the powers ofa civil court. B
They are quasi-judicial tribunals brought into existence to render inexpen·
sive and speedy remedies to consumers. These forums/commissions were
not supposed to supplant but supplement the existing judicial system. The
idea was to provide an additional forum providing inexpensive and speedy
resolution of disputes arising between consumers and suppliers of goods C
and services. The idea was to help the cons11mers get justice and fair
treatment in the matter of goods and services purchased and availed by
them in a market dominated by large trading and manufacturing bodies.
In,deed, the entire Act revolves round the consumer and is designed to
protect his interesl The Act provides for "business-to-consumer" disputes
and not for "business-to-business" disputes. [184-D, E, G] D
6. From the provisions contained in Sections 13, 18 and 24, it is clear
that the orders of the District Forum, State Commission and National
Commission are final as declared in Section 24 and cannot be questioned
in a civil court. The issues decided by the said authorities under the Act
cannot be re- agitated in a civil court. The said provisions make it equally E
clear that the Forums/Commissions under the Act have jurisdiction to
determine whether the complainant before them is a consumer and
whether he has made out grounds for grant of relief. Even if the
Forum/Commission decides the said questions wrongly, their orders made
following the procedure prescribed in sub-sections (1) and (2) of Section
13 cannot be questioned in a civil court • except in situations pointed out F
in Dhulabhai's case. They can and must be questioned only in the matter
provided by the Act. [188-B to E]

Queen v. Commissioner for Special Purposes of the Income Tax, [1888)
21 QBD 313 and Dulabhai v. State of M.P., [1968) 3 SCR 662, relied on. G

)-.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4193 of
1995.

From the Judgment and Order dated 7.U.93 of the National Con-
sumer Disputes Redressal Commission, New Delhi, in F.A. No. 363 of H
....___,.

178 SUPREME COURT REPORTS (1995] 3 S.C.R.

A 1993.
V.N. Ganpule and D.M. Nargolkar for the Appellant.

Joseph Vellapally, V. Balachandran and S. Aravindh for the Respon-
dent.
B
The Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. Leave granted.

The definition of the expression "consumer" in clause ( d) of Section2
C of the Consumer Protection Act, 1986 excludes from its purview "a person
who obtains such goods for resale or for any commercial purpose". The
question that arises in this appeal is what is the meaning and ambit of the
expression "any commercial purpose" in the said definition. By Ordinance
24 of 1993 (which has since been replaced by Amendment Act 50 of 1993)
an explanation has been added to the definition of the expression "con-
D sumer" with effect from 18.6.1993. The explanation reads: "For the pur-
poses of sub-clause (i) "commercial purpose does not include use by a
11

consumer of goods bought and used by him exclusively for the purpose of
earning his livelihood, by means of self-employment". The complaint herein
was, however, made before the adding of the said explanation. It would be
E appropriate to read the definition at this stage.
"(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 )
F of deferred payment and includes any user of such gooc!s 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 co ..imercial purpose; or
G
(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
H service for consideration paid or promised, or partly paid and
!
'
. .
\r . . .
.. lAXMI E1:1GG. v.'P.S.G. INDL. [JEEVAN REDDY,J.] 179

partly promised, or under any system of deferred payment, when .. A
: sud~ senoces are availed of with the approval of the first mentioned
pe;son:" ' · .

lliEFACnJAL MATRIX:.
:,J,~~': ·;·~l ._, i ~,_,,l;•J, ,-~-L ,{ :-, ,"·-, •< ··
B
. Th~ appdiant, Laxmi Engineering Works, is a proprietary concern
established under the Employment Promotion Programme. It is registered
as a small scale ind~stry with- the Directorate of lndusiries, Maharashtra
and has also obtained financial assistance from Mabarashtra State Finan-
cial Corporation in the _form of term loan ainounting to Rs. 22.10 lakhs
besides ;financial:' assistance. from' certain other'. sources. The appellant c
placed an order with the respondent-P.S.G. industrial institute for supply
of PSG A50 CNC Universal Turning Central Machine on May 28, 1990.
The appellant's case is, that the respondent not only supplied the machinery
six monthS beyond _the stipulated date but supplied a defective machine.
· Soon aftc~ it was installed and operated, several defects came to light which D
the appellant brought to the notice of the respondent. A good aniount of
correspondence. took place between the parties and though the respondent
sent some person5 to rectify the defects, the machine could not be put in
proper order. The appellaI!.t states that he was suffering serious financial
loss on aci:ount of the defective functioning of the machine and accordingly ·
he lodged a cOn:iplaint (No. U6of1992) before the Mabarashtra Consumer ' E
Disputes Redressal eommissiori claiming an amount of Rs. 4,00,000 on ·
several counts from the respondent. The respondent appeared before the ·
State Commission and denied the appellaJit•s claim: Inter alia, it raised an
'-... objection that since the appellant has purchased the machine for commer·
',cial plirposes he is not a consumer within the meaning of the said expres- F.
sio.1 as defined in Section 2(d) of the Act. The commission .allowed the ·
appellant;s .claim partly, directing the respondent to pay to the appellant a
sum of Rs. 2.48 lakhs within 30 days failing which the said amount was tci
carrY interest at the rate or" 18% per annum.
The respondent filed an
-aweal before the National Commission which allowed the said appeal on
7th December, 1993 on 'the only ground that the appellant is not a 'con- G
.. sumer' as defined by the Act. The National Commission observed: '(F)rom .
--._ ' -
··the facts appearing on record it is manifest that the complainant is carrying.
in the business of manufacture of machine parts on a large scale for the ·•
purpose ofearnmg profit and" significantly one single item of machinery in
respect of which the complaint petition was filed by him before the State , H
180 SUPREME COURT REPORTS [1995] 3 S.C.R.

A Commission itself is of the value of Rs. 21 lakhs and odd. In the cir-
cumstances, we fail to see how the conclusion can be escaped that the
machinery in question which is alleged to be defective was purchased for
a commercial purpose. Hence, the complainant is not entitled to be
regarded as a consumer and the complaint petition filed by him was not
maintainable before the State Commission . The order passed by the State
B Commission is set aside. The complaint petition is dismissed." The National
Commission, however, observed that their order does not preclude the
appellant from pursuing his remedy by way of ordinary civil suit.

The learned counsel for the appellant submits that the purpose for
C which the appellant has purchased the said machine cannot be called a
"commercial purpose" and that the appellant cannot certainly be said to be
carrying on business of manufacture of machine parts "on a large scale" for
the purpose of earning profit. Learned counsel pointed out that appellant
is a small scale industry and the said machine was purchased by him for
the purpose of earning livelihood. Learned counsel submitted that the
D appellant is a proprietary concern of Shri Y.G. Joshi, who is 'a diploma
holder in engineering and who proposed to start a small scale industry with I

financial assistance from public financial institutions to earn his livelihood. /
The appellant had entered into an agreement with Premier Automobiles
for supplying certain parts required for the manufacture of cars by the said
E concern. But for this, the appellant has no other business, it is pointed out.
On the other hand, the learned counsel for the respondent submitted that
the purpose for which the appellant purchased the said machine is undoub-
tedly a commercial purpose as held by the National Commission consis-
tently over the last several years.
}
F
THE ACT AND ITS SCHEME:

After good amount of consultations with governments and interna-
tional organisations, the Secretary General of United Nations submitted
draft guidelines for consumer protection to the Economic and Social
G Council (UNESCO) in 1983. After extensive discussions and negotiations
among governments on the scope and content of the guidelines, the
General Assembly of the United Nations adopted the guidelines for con-
sumer protection by consensus on 9th April, 1985 [General Assembly
Resolution No. 39/248]. The guidelines issued are placed under four heads,
H viz, objectives, general principles, guidelines and international co- opera-
LAXMIENGG. v. P.S.G. INDL [JEEVAN REDDY,J.] 181

lion. Para 1 under the head "objectives" bears reproduction. It reads : A

"I OBJECTIVES

1. Taking into account the interests and needs of consumers in all
countries, particularly those in developing countries, recognizing
that consumers often face imbalances in economic terms, educa- B
tional level, and bargaining power, and bearing in mind that
consumers should have the right of access to non-hazardouS""
products, as well as the importance of promoting just, equitable
and sustainable economic and social development, these guidelines
for consumer protection have the following objectives:
c
(a) To assist countries in achieving or maintaining adequate
protection for their population as consumers;

(b) To facilitate production and distribution patterns respon-
sive to the needs and desires. of consumers; D

I (c) To encourage high levels of ethical conduct for those
\.
engaged in the production and distribution of goods and services
to consumers;

( d} To assist countries in curbing ~ve business practices by E
all enterprises at the national and international levels which adver-
sely affect consumers;

(e) To facilitate the development of independent consumer
groups;
F
(I) To further international co-operation in the field of con-
sumer protection;

(g) To encourage the deYelopmcnt of market conditions which
provide consumers with greater choice at lower prices."
G
Under the head 'guidelines' and under the sub-heading "E.Measures
)--. enabling consumers to obtain redress", the following guidelines are set out:

"E. Measures enabling consumers to obtain redress

28. Government should establish or maintain legal and/or ad- H
182 SUPREME COURT REPORTS [1995] 3 S.C.R.

A ministrative measures to enable consumers or, as appropriate,
relevant organizations to obtain redress through formal or informal
procedures that are expeditious, fair, inexpensive and accessible.
Such procedures should take particular account of the needs of
low-income consumers.

B 29. Governments should encourage all enterprises to resolve con-
sumer disputes in a fair, expeditious and informal manner, and t-0
establish voluntary mechanisms, including advisory services and
informal complaints procedures, which can provide assistance to
consumers.
c 30. Information on available redress and other dispute- resolving
procedures should be made available to consumers.'

In the following year, i.e., 1986, our Parliament enacted the present
Act. {The United Kingdom enacted the Consumer Protection Act in
D 1987.) The statement of objects and reasons appended to the Bill says that
the Bill is intended to provide for better protection of the interest of )
consumers and for that purpose to make provisions for the establishment
of consumer councils and other authorities for the settlement of <:onsumer
disputes and for other matters connected therewith. Para 4 of the State-
E ment of Objects and Reasons reads :

'4. To provide speedy and simple redressal to consumer disputes,
a quasi-judicial machinery is sought to be set up at the district,
State and Central levels. These quasi- judicial bodies will observe )
the principles of natural justice and have been empowered to give
F reliefs of a specific nature and to award, wherever appropriate,
compensation to consumers. Penalties for non-compliance of the
orders given by the quasi- judicial bodies have also been provided.'

The Preamble to the Act is practically on the same lines. It reads:

G "An act to provide for the better protection of the interests of
consumers and for that purpose to make provisions for the estab-
lishment of consumer councils and other authorities for the settle-
ment of consumers' disputes and for matters connected therewith."

H (emphasis added)
\ J

IAXMJENGG.v. P.S.G.JNDL(JEEVANREDDY,J.) 183
. I ,
·. It is significant to .notice that in the Statement of Objects and A
-- ' ; ·'·' ,, .--·· : '- ,· "' .. '. •::,·" ,.,_,,.·.,, l\
Reasons .as.well as in the.Preamble, the
..',,'.)•'•.. .
new.forums.which
.
iJie,Act.was'
' ................j

-_; .:-~-~~~~1u?. ~ei ~~f~c~fe~}~-.~t.r_q~5:j~~~~ ~~.~~rY:i~~'"-~~~-~~t~9~~nes"
.;, ; f~~p1e,~iv,~~Y, ~u\D,~\\, ~.."?~; '.fh~. .;.~ ,h~,ff~~te~ the: ~p~t~ l~.~p,fo~ion
authonties at Distnct,. State and Nallonal level called Distnct Forum, State
5rl J • l '. ti j\J :: ' ·~ 1') • L,.· ! \!' ! • • : .<;•:I l') "· I. '. i:': I • -•: - . i ,- ' . ~I ·' . ";--.: f " ' • .,- ·' "'·'I l ' " l -~•'' ; _
, 1,..c'?~~~" ~d,..N,aU,o~~ ,,~o~;!'?n. :5ecllo.n, ,3,; ~~~e~~ly ,stat::~. ,that B
11
\ ; :.. :<~:~~ ,P~?&,~~F, P~,~ -~~lsJi&I. ~7. :~ -~~~~iq~_1 ~9; a.;1:~ -i~.Ptii~ ~~r~~~t!ona
,,, of Pf.~.P.~~Y.';?~ru.' .?,f ~y,,ot.~~r1 \a?:.fo,r, t~~.~~. !J~'l'g 'l'J?rc~.; 1 <;:hal'ter:HI
1
,;·f{~'j.~e,~f'/!~;~~~~-~~~R~~~~..~El),ll;~S1l-,A~E:,.'£!E~;:::1:1ie
. use, ()f..~he, exp~esSJon 1'agenoe~', ',IS ,agam s1gnifican.t- Sect10n .9,, which
-- - provides for establishment of foru{i;sat three levels, reads thus:
' ... .. . .. '. . c
· · · 9. Establishment of Consumer Disputes redressal Agencies. - There
shall be established for the purposes of this Act, the following
. agencies; namely:-. . .
!. I , . - . .. .·' ·•
/(a) ·a Consumer Disputes Redressal Forum_to be known as the · D
"District Forum" established by. the State Gov.ernment with -the
" prio~ approval of the Cenir.tl Governme~t in eachdistrict,~f,ihe
-~ ·' ' ' · ' ' ' ;--- '~ · ,_ <°'·:1 ·-.J , . ·- ''~ ·· r:·-!•: ·;'" 1-;"H~il)J
State by notificallon; : • . • , .... ,.. ; ...
. , ' ~. I .
(b) a Consumer Disputes Redressal Commission to be known as E
. the,'State Co~sion; established by the State Government with .
the. prior approval of the Central G~v~rnment in .the State by
.- no.tification; and

(c) a Natfonal Consumer Disputes Redressal Commission estab-
li.shed by the Central Government by notification.',

. .... Section 13-prescribes the procedure to be. followed ~Y the District
Forum on receipt of a complaint· from a consumer involving v;.iue up to
Rupees one lakh (after amendment in 1993, five lakhs} .. Inter alia it
P,ovides that th~ District Forum shall h~ve the same powers as vested in -~ G
a civil court under the Code of Civil Procedure, 1908 while trying a suit in
......._: ·respect of matters specified therein. Section 15 provides an appeal from
--/
the orders --~
of the District
.
Forum to the
' ·-
State Commission. .Section
.
17
. · . confers original jurisdiction also upon the State Commission in matter the •
. value wh~reof exceeds Rupees one. lakh but does .not exceed Rupees ten· "H
184 SUPREME COURT REPORTS [1995) 3 S.C.R.

A lakhs (after amendment 5 lakhs and 20 lakhs respectively). Section 18
provides that the procedure of the State Commission shall be the same as
that of the District Forum. Section 19 provides an appeal from the orders
of the State Commission (made in exercise of its original jurisdiction) to
the National Commission. Section 21 confers original jurisdiction upon the
B National Commission as well where the value of the complaint exceeds
Rupees ten lakhs (after amendment in 1993, twenty lakhs). Section 24
declares that "(E)vcry order of a District Forum, State Commission or the
National commission shall, if no appeal has been preferred against such
order under the provisions of this Act, be final". (Section 23 provides an
appeal to Supreme Court against the orders of National Commission
C passed in exercise of its original jurisdiction.) Section 25 provides that the
orders of the District Forum, State Commission and National Commission
shall be execut~d as if they are decrees or orders of a Court.

A review of the provisions of the Act discloses that the quasi-
D judicial bodies/authorities/agencies created by the Act known as District
Forums, State Commissions and the National Commission are not courts
thoug:1 invested with some of the powers of a civil court. They are quasi- )
judicial tribunals brought into existence to render inexpensive and speedy ,I
remedies to consumers. It is equally clear that these forums/commissions
E were not supposed LO supplant but supplement the existing judicial system.
The idea was to provide an additional forum providing inexpensive and
~pcedy resolution of disputes arising between consumers and suppliers of
goods and services. The forum so created is wrinhibited by the requirement
of court fee or the formal procedures of a court. Any consumer can go and
F file a complaint. Complaint need not necessarily be filed by the com-
plainant himself; any recognized consumers' association can esponse his }
cause. Where a large number of consumers have a siniilar complaint, one
or more can file a complaint on behalf of all. Even the Central Government
and State Governments can act on his/their behalf. The idea was to help
the consumers get justice and fair treatment in the matter of goods and
G services purchased and availed by them in a market dominated by large
trading and manufacturing bodies. Indeed, the entire Act revolves round
the consumer and is designed to protect his interest. The Act provides for
"business-to-consumer11 disputes and not for '1>usiness-to-business11 dis-
putes. This scheme of the Act, in our opinion, is relevant to and helps in
H interpreting the words that fall for consideration in this appeal.
LAX!>'!! ENGG. v. P.S.G. INDL [JEEVAN REDDY,J.] 185

SECTION 2(d)(i) AND THE EXPLANATION ADDED BY 1993 A
AMENDMENT ACT:
.I
Now coming back to the definition of the expression 'consumer' in
Section 2(d), a consumer means in so far as is relevant for the purpose of
this appeal, (i) a person who buys any goods for consideration; it is
B
immaterial whether the cor.sideration is paid or promised, or partly paid
and partly promised, or whether the payment of consideration is deferred;
(ii) a person who uses such goods with the approval of the person who
buys such goods for consideration (iii) but does not includes a person who
buys such goods for resale or for any commercial purpose. The expression
"resale" is clear enough. Controversy has, however, arisen with ·respect to c
meaning of the expression "commercial purpose". It is also not defined in
the Act. In the absence of a definition, we have to go by its ordinary
meaning. "Commercial" denotes 11pertaining to commerce" (Chamber's
Twentieth Century Dictionary); it means "connected with, or engaged in
commerce; mercantile; having profit as the main aim' (Collins English D
Dictionary) whereas the word "commerce" means "financial transactions
especially buying and selling of merchandise, an· a large scale" (Concise
J Oxford Dictionary). The National Commission appears to have been taking
." a consistent view that where a person purchases goods "with a view to using
such goods for carrying on any activity on a large scale for the purpose of
earning profit11 he will not be a "consumer11 within the meaning uf section E
2(d)(i) of the Act. Broadly affirming the said view and more particularly
with a view to obviate any confusion - the expression "large- scale" is not a
very precise expression - the Parliament stepped in and added the explana-
tion to Section 2(d)(i) by Ordinance/Amendment Act, 1993. The explana-
1
tion excludes certain purposes from the purview of the expression F
. .(
"commercial purpose" - a case of exception to an exception. Let us
' elaborate: a person who buys a typewriter or a car and uses them for his
personal use is certainly a consumer but a person who buys a typewriter
or a car for typing others' work for consideration or for plying the car as
a taxi can be said to be using the typewriter/car for a commercial purpose.
The explanation however clarifies that in· certain situations, purchase of G
goods for "commercial purpose" would not yet take the purchaser out of
the definition of expression "consumer". If the commercial use is by the
).. purchase himself for the purpose of earning his livelihood by means of
self-employment, such purchaser of goods is yet a "consumer". In the
illustration gi,ven above, if the purchaser himself works on typewriter or H
186
\,SUPREME COURT REPORTS (1995)3S.C.R.
' ,I •

A plies the
.
car' as a taxi'himself,
'
he does•not cease to be a consumer. In other
, , , . , q .. , • · ; · 1 1 _ J ' " '
words, ff . the buyer of goods uses them himself, i.e., Jiy self-employment,
. " _,, . \ , .: . . '' ' '

for earning his livelihood, it would not be treated as a 'commercial pur-
.
pose'
,,
and he does not cease
.,,~_.,_ .• - _,,, ~
"''"¥··
to be a consumer for the purposes of the Act•
i,1 ,.,,-~,,,.,_,, "'dl.'lf - 1,.11 ,,~,:-:,-· ·.·•1.•f
,.

. The explanation reduces the question, what IS a 'commercial purpose', .to
.. B ' a question fa_~ b~ °d.i:d~.ed ih~ ~c~~1 0f ~l~J;'#s~'. ~\,is' ~6t
oi io "i: ,f ~f,~e tl,'.e
of the goods that matters but the purpose to which the. goods· bought are
\ . put to: The seveia(woi:d5 e~pioyed in tlid"eXi>tinati'.on;·riz:; •u's,Tthem'iJy .
.i -·-. .' , . . . . . . . '"" ., l· ... , ·--· .,.., ""l1 --.o•· '" ~:' J.,,- ·-1 ··•••• •f h~-- '"'.C'

•'hi.mself", 'exclusively for the purpose of earning his livelihood' and .~by
,_,,,. ,......... ,,-''•,I.,,~,.., .. _- ,. .. - .. ,tr'·'<> d-•r.-. -,·•• ,_,.,,.,,. ..,~c-'1 ··I••'
·means of self-employment' m:ike the intention of Parliament abundaritly
.-- ' ·-· .. 1···:·--·'··--·-···"''1""''·"(" --1···~?."'"''
clear, that the goods b6ught must be used by the buyer hinISelf, by employ-
C . ing himself for e3ming his liwlihood.. A more illusttatlons 'woUid serve few
.to emphasise what we say. A Person who .purchases an auto-rickshaw to .
· ply it hinlseli on hire for -earning. his livelihood would lie a consumer.
- ' Similarfy, a purchaser of a truck who purchases it for plying it as a public
earner by himself .
woJtld
• .
be a consumer." .
A person who ,
purchases
, •
a lathe
"I

D . machine or
I.
other .
machine to
'
operate it himself .
for earning his livelihood
..•.
would be a consumer. (In the above illustrations, if such buyer takes the
assistance of one or two persons to assist/help him in operating the v~hicie
or machinery, he "does not cease to be aconsumer.) As against this aperson
• + •• " "_, • • • ... ,, ' -- • '" ' • ' ..... • " ,. • • d· , ... , .• >"l

• . - - ~'-•·•·•--• 11··" " ·' - "' • • . .,,,. ' t j.--.1·: I
who purchases an auto-rickshaw, a car or a lathe machine or other machine
to be plied or operated exclusively by'auother pers~n\voUJd 'iiot be'; a -
E .coiisumer. This is the necesSaiY lifilitatioti nciWing' lh'e. expressions from
'used by him\ and "by' means ofself~empioy,;,ent' iii. the"explanatioiLThe
. ambiguity in the meaning of the words ~for the piirpose of eammg .his
livelihood'.is explained and clarified by ~be other two sets of words. . . '
/ \ • • '• , • :· •• - ' - \ I • . ,_ ' ' '- • ! \' ' '' . •• ' ;·.

'-... F _It is argued by the learned counsel for the appellant that such a
·,narrow construction may not bl' warranted by the scheme and object of the
e,;actment. ·He says that there .;,,,y be a widow or an old· or invalid man
. "who may have no other means of livelih~od and who purc~es an auto-
ricksh3w or ~ car or other machinery to be plied or operated by another
person· either on payment of consideration on a drufy, weekly or monthly
G , b~is- or as a servant or agent. While there is certainly some logic in the
said submission it . cannot be . accepted in \ie~ of the .language of the
explanation. We are also of the opinion that the definition of the expression
---,_•person' in Section 2(m) as includmg a firm(whether_registered or not), a
Hindu undi\ided family, a co- operative society or any other association of •
H. persiins (w_hether registered under tbe Societies Registration Act, 1860 or
LAXMI ENGG.' v. P.S.G. INDL. [JEEVAN REDDY, J.] 187
not) makes no difference to the above interpretation. If a firm purchases A
the goods, the members of the firm should themselves ply, operate or use
the goods purchased·. ·Same would be the case of purchase by Hindu
Undivided Family, co-operative society of any other association of persons.
Reference in this behalf may be made lo the definition of the expression
"consumer" in Section 20(6) of the Consumer Protection Act, 1987 of B
United Kingdom. II reads thus:

""Consumer" - (a) in relation lo any goods means any person who
might wish lo be supplied with the goods for his own private use
or consumption;

(b) in relation to any services or facilities, means any person who
c
might wish to be provided with !hi) services of facilities otherwise
than for the purposes of any business of his; and

(c) in relation to any accommodation, means any person who might
wish to occupy the accommodation otherwise than for the purposes D
of any business of his;"

This definition is undoubtedly narrower than the definition in our
j
Act. The English Act requires that to be a consumer in relation to any
goods, a person must put the goods for his own private use or consumption.
Notwithstanding this difference in definition, the object of both the enact- E
ments appears to be the same, to protect the consumer from the exploita-
tive and unfair practices of the trading and manufacturing bodies and to
provide him with an easily accessible, inexpensive and speedy remedy for
the wrong suffered by him.
F
THE NATURE AND POWERS OF THE AUTHORITIES
CREATED BY THE ACT:

Having dealt with the meaning of the expression 'any commercial
purpose' in Section 2(d) in the light of the scheme of the enactment, it may
be necessary to append a clarification to obviate any confusion. Section 24 G
declares that "(E)very order of a District Forum, the State Commission or
the National Commission shall, if no appeal· has been preferred against
such order under the provisions of this Act, be final". This Section has to
)...
be read along with sub-section (3) of Section 13. Section 13 prescribes the
procedure t<J be followed by the District Forum on receipt of a complaint. H
188 SUPREME COURT REPORTS (1995] 3 S.C.R.

A Sub-section (3) of Section 13 says that "(N)o proceedings complying with
the procedure laid down in sub- section (1) and (2) shall be called in
question in any Court on the ground that the principles of natural justice
have not been complied with." By virtue of Section 18 the procedure
prescribed in Section 13 applies to State Commission as well. From the
B above provisions, it is clear that the orders of the District Forum, State
Commission and National Commission are final as declared in Section 24
and cannot be questioned in a civil court. The issues decided by the said
authorities under the Act cannot be re- agitated in a civil court. The said
provisions make it equally clear that the Forums created by the Act fall in
the second category of Tribunal mentioned in The Queen v. Commissioner
C for Special PUTposes of the Income-tax, (1888] Q.B.D. 313 at P.319 - which
decision has been repeatedly affirmed and applied by this Court - which
means that the Forums/Commissions under the Act have jurisdiction to
determine whether the complainant before them i' a "consumer" and
whether he has made out grounds for grant of relief. Even if the
D Forum/Commission decides the said questions wrongly, their orders made
following the procedure prescribed in sub-sections (1) and (2) of Section
13 cannot be questioned in a civil court - except of course, in situations
pointed out in Dhulahhai v. State of M.P., (1968] 3 S.C.R. 662. They can
and must be questioned only in the manner provided by the Act.
J
E
THE EXPLANATION IS CLARIFICATORY:

Yet another clarification; the Explanation, in our opinion is only
explanatory; it is more in the nature of a clarification - a fact which wonld
F become evident if one examines the definition (minus the explanation) in
the context and scheme of the enactment. As indicated earlier, the explana-
tion broadly affirms the decisions of the National Commission. It merely
;nakes explicit what was implicit in the Act. It is not as if the law is changed
by the said explanation; it has been merely made clearer.

G RELEVANT DECISIONS:

In Lucknow Development Authority v. M.K Gupta, (1994] 1 SCC 243,
the question was whether a pubic authority engaged in constructing and .(
selling houses can be said to be rendering a "service" and whether the
H ;Jerson purchasing such houses can be called a "consumer" within the
LAXMI ENGG. ~· P.S.G. INDL [JEEVAN REDDY, J.] 189
ll':eaning of the said definition. While answering the question in the affirm- A
alive, a Bench of this court (Kuldip Singh and R.M. Sahai, JJ.) also
examined the scheme and object of the Act and the ambit of the definition
I
of the expression 'consumer'. The following observations are apposite:

"To begin with the preamble of the Act which can afford useful
B
assistance to ascertain the legislative intention, it was enacted, 'to
pr_ovide for the protection of the' interest .of consumers'. Use of
the words 'protection' furnishes key to the minds of makers o_f the
Act. Various definitions and provisions which elaborately attempt
to achieve this objective have to be construed in this light without
departing from the settled view· that a preamble cannot control
c
otherwise plain meaning of a provision. In fact, the law meets long
felt necessity of protecting the common man from such w'rongs for
which the remedy under ordinary law for various reasons has
become illusory..... The word 'consumer' is a comprehensive ex-
pression. It extends from a person who buys any commodity to D
consume either as eatable or otherwise from a shop, business
house, corporation, store, fair price shop io use of orivate or public
.J
services. In Oxford Dictionary a- consumer is defined as, "a pur-
\
chaser of goods or services". In Black's Law Dictionary it is
explained to mean, 'one who consumes. Individuals who purchase, E
use, maintain, and dispose of products and services. A member of
that broad class of people who are affected by pricing policies,
financing practices, quality of goods and services, credit reporting
debt collection and other trade practices for which State and·
Federal Consumer Protection Laws are enacted." The Act opts for F
) no less wider definition. It reads as under:
'·
''
"'consumer' means any person wh_o, -

(i) buys any goods for consideration which has been paid or G
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 H
190 SUPREME COURT REPORTS [1995) 3 S.C.R.

A person who ohtains such goods for resale or from 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
B
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;
c
(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;]'
D
It is in two parts. The first deals with goods and the other with
services. Both parts first declare the meaning of goods and services (
by use of wide expressions. Their ambit is further enlarged by use ,)
of inclusive clause. For instance, it is not only purchaser of goods
E or hire of services but even those who use the goods or who are
beneficiaries of services with approval of the person who pur-
chased the goods or who hired services are included in it. The
legislature has taken precaution not only to defmc 'complaint,
'complainant', 'consumer' but even to mention in detail what would
F amount to unfair trade practice by giving an elaborate definition
in clause (r) and even to define 'defect' and 'deficiency' by clauses i
(!) and (g) for which a consumer can approach the Commission.
The Act thus aims to protect the economic interest of a consumer
as understood in commercial sense as a purchaser of goods and
G in the larger sense of user of services."

In Mcrgan Stanley Mutual Fund v. Kaftick Das, (1994) 4 SCC 225, a
Bench of this Court (M.N. Venkatachaliah, CJ, S. Mohan and Dr. A.S.
Anand, JJ.) stated the meaning of the expression "consumer" in the follow- ·'°'
H ing words:
LAXMI ENGG. v. P.S.G. INDL. [JEEVAN REDDY,J.] 191
11
The consumer as the terms implies is one who consumes. As per A
I the definition, consumer is the one who purchases goods for private
use or consumption. The meaning of the word 'consumer' is
broadly stated in the above definition so as to include anyone who
consumes goods or services at the end of the chain of production.
The comprehensive definition aims at covering every man who pays B
money as the price or cost of goods and services. The consumer
deserves to get what he pays for in real quantity anrl true quality.
In every society, consumer remains the centre of gravity of all
business and industrial activity. He needs protection from the
manufacturer, producer, suppliers, wholesaler and retailer."
c
It must, however, be said that in both the above cases, the question
arising herein was not in issue. In Morgan Stanley, the question was whether
a prospective investor in the shares of a company is a 'consumer" as defined
in Section 2(f). It was held that he was not.
D
Reference to the decisions cited by the learned counsel for the
-"\ parties would be in order at this stage. In Synco Textiles Private Limited· v.
Greaves Cotton and Co. Ltd., (1991] 1 CPJ 499, the appellant purchased
from the respondent three generating sets at a total cost of Rs. 5,53,000 for
use in his factory. His case was that the generating sets supplied by the
respondent-company were defective and that on that account he suffered
E
substantial business losses. He applied to the State Commission for
recovery of the cost of the machines as well as a sum of Rupees four lakhs
by way of damages. The State Commission first took up the question

--z. whether the complainant can be called a "consumer' as defined in the Act.
(The case arose before the explanation was added by the 1993 Amendment F
Act.) The State Commission held that since the generators were purchased
by the appellant for generating electricity in its factory to be used for
operating the machinery in the factory for the purpose of commercial
production, the appellant cannot be called a "consumer'. When the matter
came to the National Commission by way of appeal, Balakrishna Eradi, J.,
G
President, dealt with the meaning of-the words 'for any commercial pur-
}._ pose" in the following words (majority opinion):

"Since cases of resale have been separately referred to, it becomes
obvious that the words "for any commercial purpose" are intended
to cover cases other than those of resale of the concerned goods. H
-
192 SUPREME COURT REPORTS [1995] 3 S.C.R.
A The words "for any commercial purpose" are wide enough to take
in all cases where goods are purchased for being used in any
activity directly intended to generate profit. According to the
meaning given in standard dictionaries, the. expression
'commercial' means-

B "connected with, or engaged in commerce; mercantile; having
proiit as the main aim" (See Collins English Dictionary).

Pertaining to commerce: mercantile" (See Chamber's Twentieth
Century Dictionary)
c The meaning of the expression 'commerce' as given in the dic-
tionaries is :

''exchange of merchandise, especially, on a large scale' (See the
Concise Oxford Dictionary)
D
"interchange of merchandise on a large scale between nations or
individuals: extended trade or traffic' (See Chambers Twentieth j·
Century Dictionary)

Going by the plain dictionary meaning of the words used in the
E definition section the intention of Parliament must be understood
to be to exclude from the scope of the expression 'consumer' any
person who buys goods for the purpose of their being used in any
activity engaged on a large scale for the purpose of making profit.
As already indicated since resale of the goods has been separately
F and specifically mentioned in the earh'l:r portion of the definition
clause, the words "for any commerce purpose' must be understood
as covering cases other than those of resale of the goods. It is thus
obvious that Parliament wanted to exclude from the scope of the
definition not merely persons who obtain goods for resale but also
those who purchase goods with a view to using such goods for
G carrying on any activity on a large scale for the purpose of earning
profit. On this interpretation of the definition clause, persons
buying goods either for resale or for use in large scale profit making
activity will not be 'consumers' entitled to protection under the act.
It seems to us clear that the intention of Parliament as can be
H gathered from the definition section is to deny the benefits of the
LAXMI ENGG. v. P.S.G. INDL [JEEVAN REDDY, J.] 193
Act to persons purchasing goods either for purpose of resale or A
j: for the purpose of being used in profit making activity engaged on
a large scale. It would thus follow that cases of purchase of goods
for consumption or use in the manufacture of goods or com-
modities on a large scale with a view to make profit will all fall
outside the scope of the definition. It is obvious that Parliament
intended to restrict the benefits of the Act to ordinary consumers B
purchasing goods either for their own consumption or even for use
. i in some small venture which they may have embarked upon in
a.J- order to make a living as distinct from large scale manufacturing
or processing activity carried on for profit. In order that exclusion
clause should apply it is however 'necessary that there should be ac
close nexus between the transaction of purchase of goods and the
large scale activity carried on for earning profit.'

"' One of the members of the Commission, Sri Y. Krishan, however,
took a different view. The learned Member was of the opinion that:
D

-\ ' ....the word used in Sec.2(1)(d)(i) 'for commercial purpose' have
to be given a precise and restrictive meaning: commercial purpose
has to be distinguished from commercial production and commer-
cial activity. The sub-section 2(1)(d)(i) and (ii) of the Consumer
Protection Act have to be interpreted harmoniously. The inter- E
pretation of the words 'commercial purpose' in Sec.2(1)(d)(i) must
be logical and equitable so as to avoid patent anomalies and
inconsistencies in the application of the law. Viewed in this back-
·ground, the various tests.for determining whether the goods have
1·, been purchased for a commercial purpose would be:
~
F
(i) the goods are not for immediate final consumption but that
there is only transfer of goods, i.e., resale.

(ii) there should be a direct nexus between the purchase of goods
and the profit or loss from their further disposal. Such a direct
nexus is absent when the goods or services are converted for G
producing other goods or services. After conversion there is no
J..- direct nexus between the kind of goods purchased and the kind of
goods sold.

(iii) there is nexus of form and kind between the goods purchased H
194 SUPREME COURT REPORTS (1995) 3 S.C.R.
A and the goods sold. Such a direct nexus of form and kind ceases
when the goods undergo transformation or conversion.

In brief the immediate purpose as distinct from the ultimate
purpose of purchase, the sale in the same form or after conversion
and a direct nexus with profit or loss would be the determinants
B of the character of a transaction-whether it is of " "commercial
purpose" or not. Thus buyers of goods or commodities for "self
consumption" in economic activities in which they are engaged
would be consumers as defined in the Act."

C Secretary, Consumer Guidance and Research Society of India v. Mis.
B.P.L. India Ltd., (1992] 1 CPJ 140, follows and affirms the decision in
Synco Textiles and another decision in Oswal Fines Arts v. M/s. H.M. T.
Madras, [1991J 1 CPJ 330. In this case, one Mrs. Shanta Manuel had
purchased one paper copier from the respondent and installed the same
in her premises. The National Commission dealt with the case in the
D following words:

"In the case now before us, it is clearly established by the materials )
on record that the purpose of the purchase of the paper copier by
Mrs. Shanta Manuel was only to enable to earn her livelihood by
the process of self employment. Such being the factual position
E
Mrs. Shanta Manuel cannot be said to have purchased the
machine for a 'commercial purpose' inasmuch as the basic pre-
requisite of large scale trading or business activity for purpose of
making profit is totally absent. We hold that the view concurrently
expressed by the District Forum and the State Commission that
F the complainant is ncn 'consumer' entitled to invoke the jurisdiction
of the consumer forum is incorrect and the said finding will stand
1
set aside.'

Though rendered earlier to the 1993 Amendment, these decisions are
G broadly in accord with the amended definiti00.

CONCLUSIONS:

We must, therefore, hold that (i) the explanation added by The
Consumer Protection (Amendment) Act 50 of 1993 (replacing Ordinance
H 24 of 1993) with effect from 18.6.1993 is clarificatory in nature and applies
LAXMIENGG. v. P.S.G. INDL. [JEEVAN REDDY, J.] 195

to all pending proceedings. A
J
(ii) Whether the purpose for which a person has bought goods is a
"commercial purpose" within the meaning of the definition of expression
"consumer" in Section 2(d) of the Act is always a question of fact to be
decided in the facts and circumstances of each case.
B
(iii) A person who buys goods and use them himself, exclusively for 1
the purpose of earning his livelihood, by means of self-employment is
within the definition of the expression "consumer".

So far as the present case is concerned, we must hold (in agreement
with the National Commission), having regard to the nature and character C
of the machine and the material on record that it is not goods which the
appellant purchased for use by himself exclusively for the purpose of
earning his livelihood by means of self-employment, as explained
hereinabove.
D
.( The appeal accordingly fails and is dismissed but without costs. If the
·, appellant chooses to file a suit for the relief claimed in these proceedings,
he can do so according to law and in such a case he can claim the benefit
of Section 14 of the Limitation Act to exclude the period spent in prosecut-
ing the proceedings under the Consumer Protection Act, while computing E
.the. period of limitation prescribed for such a suit.

T.N.A. Appeal dismissed.