Consumers Act Fails To Define Commercial Purpose – Times of India – 22-Dec-2014

December 27, 2014 - Uncategorized

The Consumer Protection Act excludes services for “commercial purpose” from its purview, but does not define this term. This has lead to chaos as the term is being interpreted differently by different judges and there is no consistency. Hence, outcome of the case has no judicial certainty and depends on the luck of the party. Surprisingly, even the proposed amendments do not address this issue. Case Study 1: Delhi Public School had filed a complaint against Uttar Haryana Bijli Vitran Nigam Ltd, saying that despite it regularly paying its electric bills, the latter had suddenly sent a demand memo on February 12, 2011, for Rs 15,16,046 retrospectively assessed from August 2008. The Nigam challenged the jurisdiction of the consumer forum and justified the demand, contending that the meter was running slow and registering only one-third the actual consumption. The forum allowed the complaint, but in appeal, the state commission reversed the order, holding that the supply was for commercial purpose. The school approached the national commission in revision. By a October 29 order, the national commission held the complaint to be maintainable, observing that the school was not using power to manufacture any goods. Though the connection is non-domestic, it would not amount to commercial purpose as the supply was used for electrification of the school premises. Case Study 2: Puran Murti Education Society in Kami Village at Sonepat had a dispute regarding the supply of electricity to it. It filed a complaint before the Sonepat district forum, which ruled in the society’s favour. In appeal, the Haryana state commission set aside the order as the society could not be termed a consumer. The society approached the national commission in revision. It argued that the connection was being used for a social cause and not for commercial purpose. Rejecting the contention, the national commission observed that the connection was being used for P M College of Engineering and Polytechnic run by the society. Students were being charged fees. It concluded that even though the connection was a non-domestic one, it was being used for commercial purpose, and hence not maintainable.

Case Study 3: Lourdes Society, which is registered under the Societies Registration Act as well as the Trusts Act, runs Snehanjali Girls Hostel in Surat. It filed a consumer complaint regarding the tiles purchase for the hostel. The manufacturer questioned the jurisdiction of the forum, contending that the tiles were purchased for commercial purpose. The forum observed the society is running an hostel. Though fees are being charged from students, the running of a hostel could not be considered a business or profit-making activity. The forum concluded that it was not a commercial activity and held the complaint to be maintainable. The Gujarat state commission upheld this order. In revision, the national commission set aside the order and held that running of an hostel and charging the inmates was a commercial activity. Merely because this activity was conducted by a trust would not make any difference. Accordingly, it held that the complaint was beyond the ambit of the Consumer Protection Act.

Conclusion: Amendment to the Consumer Protection Act should incorporate a definition for “commercial purpose” so that there is uniformity in interpretation. Since the Act is meant to empower consumers, it would be ideal to keep the redressal forum open only to individual consumers and exclude business houses clogging the redressal mechanism with business-to-business disputes.


Times of India

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