Sterling Computer Ltd vs P Raman Kutty

THIS is an appeal against the order passed by the State Consumer Disputes Redressal Commission, Tamil Nadu at Madras by which it ordered the present appellant, Sterling Computers Ltd., which was opposite party in the complaint filed by the present respondent. P. Raman Kutty to pay to the complainant a sum of Rs. 1,86,461/ - with interest thereon at 18% per annum from 17th June, 1992 till repayment and take back the machinery supplied. The opposite party was also ordered to pay Rs. 25,000/ - as compensation to the complainant. Feeling aggrieved the opposite party has come before this Commission by way of this appeal.

THE complainant who is said to be a leading contractor evidenced interest in the purchase of a personal computer so that it would be advantageous to his profession which involves precision designs, specifications and details of execution. He placed order with the opposite party for one SIVA PC/AT -386 system and paid a sum of Rs. 1,86,461/ - under two cheques. The computer was agreed to be delivered by 29th June, 1992. The opposite party failed to deliver it within the time. In reply to the inquiries made by the complainant, he received evasive replies from the opposite party. The complainant issued a legal notice on 1st July, 1992 calling upon the opposite party to refund the amount with interest at 24% per annum. After receipt of the notice the opposite party delivered the computer to the complainant on 23rd July, 1992 which was not accompanied by software or accessories. Consequently, the system could not be commissioned and operated. Thereupon the complainant filed the complaint before the State Commission for refund of the amount with interest at 24% per annum. He also prayed for a compensation in the sum of Rs. 50,000/ -. The complaint was contested by the opposite party. While admitting the placing of the order for the computer system by the complainant it pleaded that delay in the supply of the system was due to non availability of certain essential components which go into the manufacture of AT -386 colour kit and the Business Grips Soft -ware was not available. It was averred that the delay was explained and the complainant was satisfied. The opposite party agreed to compensate the complainant by supplying one K.V.A. Krycard stabiliser worth about Rs. 6,000/ -. The computer hardware and stabiliser was delivered to the complainant on 23rd July, 1992 and the colour kit on 9th December, 1992 and they were accepted by the complainant without any protest. According to the opposite party the complainant cannot have any grievance.

BEFORE the State Commission the opposite party raised the contention that the complainant was not a consumer within the meaning of Section 2(1)(d)(i) of Consumer Protection Act, 1986 (for short the Act) as the computer system has been purchased for a commercial purpose. It was brought on record that the complainant was a contractor registered with the Tamil Nadu Housing Board, Madras Metropolitan Development Authority, Highways Department and other Government and quasi Government departments. However, on behalf of the complainant it was urged that he is also a consultant contractor by profession which involve preparation of precision designs and specifications and he purchased the personal computer system only for the purpose of his profession. The State Commission held that profession cannot be equated with commerce and since the complainant had purchased the computer system for his professional work, it cannot be said that he had purchased the system for a commercial purpose. Accordingly the State Commission held that the complainant was a consumer as defined in the Act. The State Commission further held that even if it is assumed that the complainant was not a consumer within the meaning of Section 2(1)(i) of the Act, he will certainly be a consumer under Section 2(1)(d)(ii) of Act in respect of the service rendered or to be rendered by the opposite party for the proper functioning of the computer system supplied by it during the period of warranty which the sale in question carried and thus failure on the part of the opposite party to see that the system worked satisfactorily during the period of warranty amounted to deficiency of service for which it was liable.

THE State Commission also held that the entire system was not supplied to the complainant. The averments of the opposite party that the Business Grip Software system and colour kit were delivered to the complainant was disbelieved. The State Commission, therefore, came to the conclusion that for want of delivery of those vital parts, the computer system supplied by the opposite party could not be commissioned and was lying inoperative with the complainant. Thus, the finding of the State Commission was that the computer system supplied to the complainant was defective and the failure to supply the necessary parts in commissioning the system amounted to grave deficiency of service and negligence. In view of the above findings the State Commission passed the impugened order. We have heard the learned Counsel for the parties and have gone through the record. We are clearly of the opinion that the finding of the State Commission that the complainant can be held to be a consumer under Section 2(1)(d)(ii) of the Act cannot be upheld. The computer system supplied to the complainant was defective from the date of its installation for want of vital parts for use in the proper working of the system. This is a case where defective goods have been supplied to the purchaser of goods.

THE only question that needs to be considered is whether the goods were supplied to the complainant for a commercial purpose and, therefore, the case falls under the explanation clause of Section 2(1)(d)(i) which reads as under : (d) ''Consumer'' means any person who - ''buys any goods for a consideration which had 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''. ''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''.

The submission of the learned Counsel for the appellant is that the case falls under the explanation clause referred to above.

WE are of the opinion that the said argument has no force. In this respect reference can be made to the decision of the Supreme Court dated April 4,1995 passed in II (1995) CPJ 1 (SC), C.A. No. 4193 of 1995 (arising out of S.L.P. (C) No. 6290 of 1994) titled Laxmi Engineering Works v. P.S.G. Industrial Institute. The Supreme Court remarked in that case : ''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 profit'' he will not be a ''consumer'' within the meaning of Section 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 explanation to Section 2(d)(i) by Ordinance/Amendment Act, 1993. The explanation excludes certain purposes from the purview of the expression ''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 mat in certain situations, purchases of goods for ''commercial purpose'' would not yet take the purchaser out of the definition of expression ''consumer''. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self -employment, such purchaser of goods is yet a ''consumer''. In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other words, if the buyer of goods uses them himself, i.e., by self -employment, for earning his livelihood, it would not be treated as a ''commercial purpose'' and he does not cease to be a consumer for the purposes of the Act. The explanation reduces the questions, what is a ''commercial purpose'', to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought or put to. The several words employed in the explanation, viz., ''uses them by himself'', ''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 used by the buyer himself, by employing himself for earning his livelihood. A few more illustrations would serve to emphasis what we say. A person who purchases an auto -rickshaw to ply it himself on hire for earning his livelihood would be a consumer. Similarly, a purchaser of a truck who purchases it for plying it as a public carrier by himself would be a consumer. A person who purchases a lathe machine or 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 vehicle or machinery, he does not cease to be a consumer). As against this a person who purchases an auto -rickshaw, a car or a lathe machine or other machine to be plied or operated exclusively by another person would not be a consumer. This is the necessary limitation flowing from the expression ''used by him'', and ''by means of self employment'' in the explanation. The ambiguity in the meaning of the words ''for the purpose of earning his livelihood'' is explained and clarified by the other two sets of words''.

Yet another clarification; the Explanation, in our opinion is only explanatory; it is more in the nature of a clarification -a fact which would become evident if one examines the definition (minus the explanation) in the context and scheme of the enactment. As indicated earlier, the explanation broadly affirms the decisions of the National Commission. It merely makes 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 clear.''

The Supreme Court also referred to its observations in Morgan Stanley Mutual Fund v. Kartick Das (1994 (4) SCC 225).

''The consumer as the terms implies is one who consumes. As per the definition, a 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 consumers goods or services at the end of the chain of production. The comprehensive definition aims at covering every man who pays money as the price or cost of goods and services. The consumer deserves to get what he pays for in real quantity and true quality. In every society, consumer remains the centre of gravity of all business and industrial activity. He needs protection from the manufacturer, producer, supplier, wholesaler and retailer''.

The Supreme Court arrived at the following conclusions : ''We must, therefore, hold that (i) the explanation added by the Consumer Protection (Amendment) Act 50 of 1993 (Replacing Ordinance 24 of 1993) with effect from 18.6.93 is classificatory in nature and applies to all pending proceedings. (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. (iii) A person who buys goods and use them himself, exclusively for the purpose of earning his livelihood, by means of self employment is within the definition of the expression ''consumer''.''

It is not the case of the complainant that he was to use the computer system for his personal use to earn his livelihood. He is a contractor by profession and is registered with the various authorities. Thus, he seems to be having office and persons working in his office. It is not the case of the complainant that he was to work on the computer himself. He must have engaged some person to work on the computer system. Accordingly we hold that the computer system was purchased by the complainant for commercial purpose. Hence the complainant is not a consumer as defined in the Act. Accordingly we accept the present appeal and set aside the impugned order of the State Commission and dismiss the complaint, but without any order as to costs. Appeal allowed.