Cooperative Society Should Be Considered As Consumer Under Consumer Protection Act: NCDRC

Brief Facts of the Case

The complainant, a cooperative society registered under the Gujarat Cooperative Societies Act, 1961, is involved in collecting cotton from its members (farmers), processing it into bales, and selling it on behalf of its members without any profit motive. The society placed an order for a Hydraulic Automatic Revolving Double Box Press from the manufacturer, Vishwakarma Engineering Works, as per a quotation worth Rs. 32,00,080. After full payment, the press was installed, but the complainant found it did not match the specifications in the quotation. Instead of the specified press, a Hydraulic Manual single-box press was installed with a lower capacity. Despite repeated requests, the manufacturer neither replaced the press nor rectified the defects, leading the complainant to file a complaint before the State Commission of Gujarat. The State Commission dismissed the complaint, following which the complainant appealed before the National Commission.

Contentions of the Manufacturer

The manufacturer argued that the complainant, a cooperative society, stated in their complaint to the State Commission that they were involved in the business of belting cotton bales and purchasing and selling them for agricultural purposes. The State Commission dismissed the complaint, ruling that the complainant does not qualify as a consumer under Section 2(1)(d) of the Consumer Protection Act, 1986. It was argued that the State Commission also noted that the complainant did not claim that the machine was for self-employment or livelihood purposes, and since the cooperative society was engaged in business, it could not be considered a consumer.

Observations by the National Commission

The National Commission observed that in National Insurance Company vs. Harsolia Motors & Ors., the Supreme Court clarified that whether a transaction is for a commercial purpose depends on the facts and circumstances of each case. Furthermore, the Commission referred to Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, which held that a transaction is for a commercial purpose depending on its context and its dominant intention. The transaction may not be considered commercial if the primary intent is not profit-generating but personal use or self-employment. In Shriram Chits (India) Private Limited, the Court noted that proving whether a transaction is for a commercial purpose falls on the service provider. The complainant is not required to prove that the service was not for a commercial purpose unless the provider first shows it was. Additionally, the Commission cited Rohit Chaudhary & Anr. vs. Vipul Ltd., wherein the Court emphasized that whether a person is a consumer depends on the purpose for which the goods were purchased. If goods are bought primarily for personal use or for self-employment rather than for a large-scale profit-making activity, the buyer qualifies as a consumer.

The Commission allowed the appeal and concluded that the cooperative society, being a welfare organization rather than a profit-driven entity, should be considered a consumer under the Consumer Protection Act. The State Commission's dismissal of the complaint was deemed incorrect, leading to the order being set aside and the case being remanded for a fresh review on its merits.

Case Title: Jadar Group Coop. Jin Mill Limited Vs. Prakashchandra Suthar

Case Number: F.A. No. 833/2015