Page 255 - DMGT306_MERCANTILE_LAWS_II

Mercantile Laws – II

Notes (iii) in addition to the purchaser(s) of goods, or hirer(s) or users of services, any beneficiary of
such services, using the goods/services with the approval of the purchaser or hirer or user
would also be deemed a consumer under the Act.
A purchase of goods can be said to be for a commercial purpose only if the goods have been
purchased for being used in some profit making activity on a large-scale, and there is close and
direct nexus between the purchase of goods and the profit-making activity. In Laxmi Engineering
Works v. P.S.G. Industrial Institute, Supreme Court held that the explanation to Section 2(1)(d) is
clarificatory in nature. It observed that whether the purpose for which a person has bought
goods is a commercial purpose is always a question of facts and to be decided in the facts and
circumstances of each case. 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 would yet be a
consumer. The Supreme Court further observed that if a person purchased a machine to operate
it himself for earning his livelihood, he would be a consumer. If such person took the assistance
of one or two persons to assist him in operating the machine, he would still be a consumer. But
if a person purchases a machine and appoint or engage another person exclusively to operate the
machine, then such person would not be a consumer.

Example: In Bhupendra Jang Bahadur Guna v. Regional Manager and Others (II 1995 CPJ 139),
the National Commission held that a tractor purchased primarily to till the land of the purchaser
and let out on hire during the idle time to till the lands of others would not amount to commercial
use.
In Laxmiben Laxmichand Shah v. Sakerben Kanji Chandan and others 2001 CTJ 401 (Supreme Court)
(CP), the Supreme Court held that the tenant entering into lease agreement with the landlord
cannot be considered as consumer under Section 2(1)(d) of the Act. Where there was no provision
in the lease agreement in respect of cleaning, repairing and maintaining the building, the rent
paid by tenant is not the consideration for availing these services and therefore, no question of
deficiency in service.

Example: In the case of Super Engineering Corporation (HUF) v. Sanjay Vinayak Pant (F.A.
No. 17/1991 decided on 10.12.1991) the National Commission observed that to determine whether
the goods had been purchased for a commercial purpose or not, had to be decided, after giving
the parties concerned to lead evidence on this point, whether the goods were to be used for
profit-making activity on a large scale or for use in small venture in order to make a living as
distinguished from large scale activity for profit.
The question as to whether the widow of the deceased policy holder was a consumer under the
Act was decided in the affirmative by the State Commission in Andhra Pradesh in the case of A
Narasamma v. LIC of India. The State Commission held that as the term consumer includes any
beneficiary of service other than the person who hires the services for consideration, the widow
being the beneficiary of services is a consumer under the Act entitled to be compensated for the
loss suffered by her due to negligence of the LIC.
Goods, in terms of Section 2(1)(i) has been defined to mean goods as defined in the Sale of Goods
Act, 1930. As per Section 2(7) of the Sale of Goods Act, 1930 Goods means every kind of movable
property other than actionable claims and money; and includes stock and shares, growing crops,
grass and things attached to or forming part of the land, which are agreed to be severed before
sale or under the contract of sale. Therefore, most consumer products come under the purview
of this definition.
In Morgan Stanley Mutual Fund v. Kartik Das (1994) 3 CLJ 27, the Supreme Court held that an
application for allotment of shares cannot constitute goods. It is after allotment, rights may arise

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