Consumer Protection Act | When Machine Is Used By Employees, It Can't Be Regarded As Purchase For 'Self-Employment' : Supreme Court

The Supreme Court recently held that when a product is bought to be utilised in an established commercial venture by the buyer's employees and not the buyer himself, the buyer cannot be considered a 'consumer' under the Consumer Protection Act 1986. 

The Court further observed that while a buyer using a product for 'self-employment' can be considered a 'consumer' under the Act, the facts of each case need to be examined. 

The bench of Justice AS Oka and Justice Ujjal Bhuyan was hearing a challenge against the order of the National Consumer Disputes Redressal Commission (NCDRC), which upheld the dismissal of the consumer complaint for non-maintainability. 

The petitioner had brought a machine viz. Model MPS GD 1212-300W HSLC Series Laser Cutting Machine and Bending Machine, by which the manufacturing of die could be done at cheaper cost and with more precision.

Due to certain defects and difficulty in the product's operation, the petitioner filed a complaint with the State Consumer Disputes Redressal Commission of Uttar Pradesh. 

The State Commission dismissed the complaint on the ground that since the product was being used as part of the petitioner's commercial activities, the petitioner cannot be considered as a 'consumer' under S. 2(1)(d) of the Consumer Protection Act, 1986. The plea was dismissed on the grounds of maintainability. 

Before the present bench, the counsel for the petitioner argued that the machine was used, though for commercial reasons, it was used largely for 'self-employment' purposes and the petitioner would come within the ambit of 'consumer'. 

The Counsel also placed reliance on the decision of the Apex Court in Paramount Digital Colour Lab and Ors. Vs. Agfa India Private Limited and Ors., where it was held that to determine if the product was used for self-employment, and not 'commercial purposes' , the facts of each case are to be examined. In the said case, the Court held that though the machine purchased had a commercial purpose, yet it was used for “self-employment”, considering that the use of the machine was by the consumer and the size of his business.

Distinguishing the above case from the present instance, the bench noted that presently the petitioner was running a commercial venture and the machine/ product was bought to expand his already settled business where he is not self-utilising the machine but getting the work done from his employees. The Court while upholding the impugned order,  observed : 

"In the case cited above i.e. Paramount Digital (supra), there were two unemployed graduate persons who had purchased the machine evidently for self-employment. But in the present case, the petitioner/complainant was already running a business as a commercial venture and admittedly, he had purchased the machine to expand his business. It is not a case where the petitioner was himself operating the machine, but he had employed workmen who were doing the job for him. Under these circumstances, no matter how small the venture is, it cannot be called 'self-employment' for the purposes of the Act and therefore, we find no scope to take a different view than the one taken by the State Commission and the National Commission. The Special Leave Petition is, accordingly, dismissed." 

The Court further clarified that "in case the petitioner moves a Civil Suit within four weeks from today, he would be at liberty to rely upon Section 14 of the Limitation Act, 1963 and the same shall be dealt with in accordance with law." 

AOR Somesh Chandra Jha appeared for the Petitioner. Advocates ERH Manjunath, Sanjay Jain AOR, Ruchika Bhan and Amber Jain appeared for Respondent. 

Case Details: VIRENDER SINGH v. M/S. DARSHANA TRADING CO. THR. ITS PROP. SANJAY SETH (DEAD) & ANR.| Special Leave to Appeal (C) No(s). 5510/2020

Citation : 2025 LiveLaw (SC) 359

Click here to read the judgment