Define livelihood' and self- employment' in consumer law
The amendment has resulted in the complaints of many small or average sized entrepreneurial ventures getting dismissed.
Why does anything ‘commercial’ have ‘a touch me not’ effect in consumer law? For 17 years, the Consumer Protection Act did not discriminate between individuals and commercial entities in its definition of the term ‘consumer’ under Section 2(1)(d). The only requirement was that the goods or services should involve consideration, or in layman’s terms, payment. The Supreme Court had reaffirmed a level playing field for all buyers or recipients of service in Vimal Chandra Grover Vs Bank of India, in which it labelled the bank’s stance that the complainant was not a consumer as “an argument in desperation.”
In 2002, an amendment to the Act which came into effect in 2003, placed defective products or deficient services “for any commercial purpose”, beyond the pale of the statute. The logic was presumably to restrict a beneficial legislation to individuals to seek relief on payment of a fixed and nominal forum fee slab as opposed to the regular court fee that is linked to the value of the suit. The change was in sub clause (d) (i) in Section 2 with the words “but does not include a person who avails of such services for any commercial purpose.” In the amended explanation of “commercial purpose”, the use of goods bought and services availed by a person “exclusively for the purposes of earning his livelihood by means of self-employment” have not been included.
That's a legal web of ambiguity. Why have the terms “livelihood” and “self employment” not been defined? Many commercial ventures are a form of self employment and for livelihood! The rationale seems to have been to keep out big business players from avoiding hefty court fee to resolve their disputes and cluttering consumer fora. The negligible court fee is the only upside as despite the statutory timeline, consumer cases today take as long as those in regular courts. When the district forum, State and National Commissions have a clear pecuniary jurisdiction of twenty lakh, one crore and above one crore, the law makers could have easily linked turnover, based on tax returns, to oust big corporate entities from the consumer jurisdiction, instead of blanket commercial apartheid.
The amendment has resulted in the complaints of many small or average sized entrepreneurial ventures getting dismissed. The maintainability of the complaints in consumer cases are invariably decided at the final hearing. Service providers now cite the amendment to wriggle out of complaints, defeating the purpose of the statute.
So if a firm buys an air conditioner, it is deemed a ‘commercial purpose’. What about the warranty on that product? Due to the ‘original sin’ of being a commercial transaction, a dispute over this service will not be entertained by a consumer forum! In a case about the sale of generators, the National Consumer Disputes Redressal Commission in Sanjay D.Ghodawat Vs RBR Energy Ltd held that if “a customer buys goods for a commercial purpose and avails of services attached to the goods in the nature of warranty, he cannot be considered to be a consumer even for the purpose of services during the warranty period in view of the amendment.” It is a different matter that this involved a 73 crore sale! Why can’t the ‘commercial purpose’ bar come with a cap on the value of the transaction?
What about installation of an elevator in a business premises? The Chandigarh State Commission in Otis Elevator Co. Vs Paul Merchants Ltd ruled that “being a commercial entity, it had availed of the services for installation and commissioning of the elevator for furthering and advancing its business, with an intent to generate profits, and did not fall within the definition of a consumer.” What if the elevator was used not for customers of the business but for the exclusive use of the owners and management staff? Are we to infer that merely because an elevator is installed in an office, even if it is for personal use, the commercial tag gets attached to it?
What about a businessman buying a car for his personal use? If it is bought in his firm's name but registered as a private vehicle, would that push it outside the purview of the Consumer Protection Act? Strangely, under Section 2(1)(m) (i) a 'person' includes a firm, whether registered or not.
On the legislative intent of the word 'include' in laws and amendments, the Supreme Court in Peerless General Finance and Investment Company opined that it was to enlarge the meaning of words or phrases, or to add meaning about which there might be some dispute and to bring under one nomenclature, all transactions possessing similar features but going under different names. The Supreme Court in Karnataka Power Transmission Corporation Vs Ashok Iron Works harped on “the text and the context.” It explained that sometimes the context may suggest that the word ‘includes’may have been designed to imply “means”.
The setting is crucial and must be viewed on a case by case basis without a straitjacket formula to bar all cases that carry a “commercial” angle. A luxury sedan purchased by a textile merchant will in all probability be meant for personal use and not to ferry sarees and dhoties! A cash-pick up service availed from a bank by a business establishment is for safety, to avoid loss and not for profit. Transactions must be viewed distinctly and not holistically as an extension of overall business activity.
(The writer is an advocate at the Madras high court, columnist & author)