Does the 2019 consumer law cover commercial services? What courts say

The 2019 Act permits consumers to file complaints concerning commercial transactions that involve earning a livelihood through self-employment

Kavishri Healthcare, run by Swati Singh, became a franchisee of Culfit Healthcare under an agreement executed on July 20, 2024. Cultfit was described as a fitness chain company with the know-how and experience to set up a chain of fitness centres. The five-year franchise agreement contained termination and assignment clauses. It stipulated obligations and covenants regarding intellectual property rights and confidentiality. It also provided that any dispute would fall within the jurisdiction of the courts at Bengaluru.

 

Singh invested over ₹5 crore to set up and run a centre as a franchisee. However, disputes arose over alleged coercive tactics, financial accounting, revenue management, staffing, operations, advertising and marketing. A civil suit was also filed over certain disputes. 

Finally, Singh filed a consumer complaint before the National Consumer Disputes Redressal Commission (National Commission), alleging deficiency in service and unfair trade practice. 

Cultfit opposed the consumer complaint on the grounds that the services were commercial in nature and the complaint was not maintainable under the Consumer Protection Act. 

The National Commission observed that, in Shriram Chits (India) Private Limited vs Raghachand Associates, the Supreme Court had clarified that, under the old Consumer Protection Act of 1986, commercial services availed of to earn a livelihood through self-employment were covered under the Act, but this exemption is no longer available under the 2019 Act. 

The National Commission noted that the dispute raised multiple complex questions of fact and involved large-scale commercial transactions. It therefore concluded that the appropriate remedy lay before a competent commercial court and that the complaint fell beyond the scope of the Consumer Protection Act and was not maintainable before a consumer forum. 

Accordingly, by its order dated July 15, 2026, a Bench comprising Justice AP Sahi and Bharatkumar Pandya dismissed the complaint, holding that it was not maintainable under the Consumer Protection Act. The Bench, however, granted Singh the liberty to approach a competent court to resolve the disputes. 

What does the 2019 Act say? 

The reasoning appears incorrect, in my view, because the 2019 Act also permits consumers to file complaints concerning commercial transactions that involve earning a livelihood through self-employment. The Consumer Protection Act is a consumer-friendly and beneficial legislation intended to redress grievances. The Supreme Court held in National Insurance Co. Ltd. vs Harsolia Motors and Ors. (2023) 8 SCC 362 that a negative burden of proof cannot be imposed on the consumer. 

Moreover, the service provider is the party that pleads that the service was obtained for a commercial purpose. 

The Supreme Court held in Leelavathi Kirtilal Medical Trust vs Unique Shanti Developers (2020) 2 SCC 26; Cheema Engineering Services (1997) 1 SCC 131; and Paramount Digital Lab (2018) 14 SCC that the service provider bears the onus of proving its contention regarding commercial purpose. Only if the service provider provides evidence to show that services were availed of for commercial purposes, the consumer would be required to rebut that contention.

 

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The writer is a consumer activist