Commercial Purpose Defined

The above amendment has been further supported by a Supreme Court verdict in the case Laxmi Engineering Works versus P.S.G. Industrial Institute decided on April 4, 1995. A large number of self-employed people benefit from this ruling. The court has clearly held here that a person who buys goods and uses them himself, exclusively to earn his livelihood, by means of self-employment, is within the definition of the expression 'consumer as defined in CPA. Consequently, the self-employed are entitled to seek damages under the CPA from the sellers of faulty machinery and gadgets being used for their livelihood.

The case was as follows: a large industrial set-up M/s Laxmi Engineering Works filed a case in the Maharashtra State Commission (MSC) at Mumbai. The MSC awarded it Rs 2.48 lakh holding that it was a 'consumer of the machinery bought from M/s P.S.G. Industrial Institute. The matter went to the National Commission (NC) in appeal. The NC set aside the MSCs order saying the claimant company should move a civil suit for relief and held it was not entitled to invoke the CPA as it was in the business of manufacturing machine parts on a large scale for the purpose of 'earning profit and the value of a single piece of machinery used by this firm was Rs 21 lakh.

Laxmi Engineering filed an appeal in the Supreme Court which upheld the NCs view that the CPA provides for business-to-business disputes. But the apex court, also held that a self-employed person who buys and uses commercial goods to earn a livelihood is a consumer under the CPA.

It further said that if a person earned his livelihood by working on a typewriter or plying a taxi or driving a truck, then he could benefit from the provisions of CPA. The Supreme Court thus held that it was not the value of the goods that mattered but the purpose to which the goods bought were put to. If the person did not himself use the goods but allowed them to be plied by others, then he would not be a consumer.