Consumer Protection Act 1986 | Onus Of Proving That Service Was Availed For 'Commercial Purpose' Is On Service Provider : Supreme Court

In an important ruling relating to consumer protection law, the Supreme Court on Friday (May 10) set out the manner in which the consumer fora must decide technical pleas raised by service providers against the maintainability of the consumer complaints on the ground that goods/services were availed by the consumer for the commercial purposes.

Affirming the decision of the National Consumer Dispute Redressal Commission (“NCDRC”), the bench comprising Justices P.S. Narasimha and Aravind Kumar observed that unless it is proved by the service provider that the goods/services were availed for the commercial purpose by the consumer, the service provider cannot dispute about the maintainability of the consumer complaint.

The Consumer Protection Act 1986 bars the maintainability of the consumer complaint against the service providers if the services are availed by the consumer for the commercial purpose; however, the law carves out an exception that the complaint would be maintainable against the services availed by the consumer for the commercial purpose if the goods/services are availed by the consumer 'exclusively for the purpose of earning his livelihood, by means of self-employment'.

In the present case, the consumer complaint was filed by the respondent/consumer demanding the return of the subscription amount from the chit fund company/appellant when the appellant closed the business. The appellant contended that the consumer complaint wasn't maintainable since the respondent/consumer had availed the goods/services from the appellant for a commercial purpose.

Rejecting the appellant's contention, the Judgment authored by Justice Aravind Kumar examined the definition of the consume under Section 2(7) of the Consumer Protection Act 1986. It was noted that the definition has three parts.

The first part of the definition puts the onus of proving that the person had bought goods/availed services for consideration, on the complainant/consumer himself.

The second part carves out an exception that goods purchased or services availed for commercial purposes are not covered under the Act. The onus of proving this fact is on the service provider and not the complainant.

"The carve out clause, in the second part, is invoked by the service providers to exclude the complainants from availing benefits under the Act. The onus of proving that the person falls within the carve out must necessarily rest on the service provider and not the complainant. This is in sync with the general principle embodied in Section 101 and 102 of the Evidence Act that 'one who pleads must prove'. Since it is always the service provider who pleads that the service was obtained for a commercial purpose, the onus of proving the same would have to be borne by it. Further, it cannot be forgotten that the Consumer Protection Act is a consumer-friendly and beneficial legislation intended to address grievances of consumers. Moreover, a negative burden cannot be placed on the complainant to show that the service available was not for a commercial purpose."

Once, the service provider satisfies the second part, then the third part of the definition puts an onus on the complainant to prove that the services availed by him weren't for the commercial purpose but exclusively to earn his livelihood.

"If and only if, the service provider discharges its onus of showing that the service was availed, in fact for a commercial purpose, does the onus shift back to the complainant to bring its case within the third part, i.e. the Explanation (a) to Section 2(7) – to show that the service was obtained exclusively for the purpose of earning its livelihood by means of self- employment."

Testing the parameters in the present case, the court found that the service provider/appellant didn't satisfy the second part of the definition to prove that the consumer/respondent had availed the services for commercial purposes.

“The question of inquiring into the third part will only arise if the service provider succeeds in crossing the second part by discharging its onus and proving that the service obtained was for a commercial purpose. Unless the service provider discharges its onus, the onus does not shift back to the complainant to show that the service obtained was exclusively for earning its livelihood through the means of self-employment. In the facts of this case, the OP (service provider) has merely pleaded in its version that the service was obtained for a commercial purpose. No evidence has been led to probabilise its case other than merely restating its claim on affidavit. It is now well too settled that a plea without proof and proof without plea is no evidence in the eyes of law.”, the court said.

Based on the above premise, the court dismissed the appeal while upholding the impugned order which noted that there was a deficiency of service on the part of the appellant/service provider.

Counsels For Petitioner(s) Mr. Shailesh Madiyal, Sr. Adv. Mr. Vaibhav Sabharwal, Adv. Ms. Divija Mahajan, Adv. Mr. Divija Mahajan, Adv. Ms. Sunidhi Hegde, Adv. Ms. Sakshi Banga, Adv. Ms. Amisha Devi, Adv. Mr. Mrigank Prabhakar, AOR

Counsels For Respondent(s) Mr. Gopal Sankaranarayanan, Sr. Adv. Ms. Anindita Mitra, AOR Ms. Jhanvi Dubey, Adv.

Case Title: SHRIRAM CHITS (INDIA) PRIVATE LIMITED EARLIER KNOWN AS SHRIRAM CHITS (K) PVT. LTD VERSUS RAGHACHAND ASSOCIATES

Citation : 2024 LiveLaw (SC) 368

Click here to read/download the judgment