2024 (7) TMI 538 - SC - Indian Laws

Interpretation of statute - purchase for commercial purpose within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986 or not - purchase of a vehicle/good by a Company for the use/personal use of its directors - HELD THAT - Ordinarily commercial purpose is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities. The purchase of the goods should have a close and direct nexus with a profit generating activity. It has to be seen whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary. If it is found that the dominant purpose behind purchasing the goods was for the personal use and consumption of the purchaser and/or their beneficiary, or was otherwise not linked to any commercial activity, the question of whether such a purchase was for the purpose of generating livelihood by means of self-employment need not be looked into. Again, the said determination cannot be restricted in a straitjacket formula and it has to be decided on case-to-case basis. Purchase of two cars for the use by its Whole-time Executive Directors as part of their perquisites - whether the high-priced luxurious car was purchased by the respondent no. 1 for its commercial purpose ? - HELD THAT - People do not purchase the high-end luxurious cars to suffer discomfort more particularly when they buy the vehicle keeping utmost faith in the supplier who would make the representations in the brochures or the advertisements projecting and promoting such cars as the finest and safest automobile in the world. The respondentcomplainant having suffered great inconvenience, discomfort and also the waste of time and energy in pursuing the litigations, the impugned order passed by the National Commission of awarding the compensation by directing the appellants to refund the purchase price i.e., Rs. 58 lakhs approx. to the respondent-complainant, and take back the car (vehicle) as such does not warrant any interference - having regard to the said offer made by the appellants, and having regard to the subsequent event of the respondent-complainant having retained and used the car in question for about seventeen years, we are of the opinion that the interest of justice and balance of equity would be met if the respondentcomplainant is permitted to retain the car in question and the appellant is directed to refund Rs. 36 lakhs instead of Rs. 58 lakhs as directed by the National Commission in the impugned order. Whether purchase of the car by the respondent no. 1 company for the use of the respondent no.2 i.e., its director would tantamount to purchase for commercial purpose? - HELD THAT - Incomplete disclosure or non-disclosure of the complete details with regard to the functioning of the airbags at the time of promotion of the car, has rightly been considered by the National Commission as the unfair trade practice on the part of the appellants, and awarded a sum of Rs. 5 lakhs towards it. The National Commission has also rightly balanced the equity by awarding Rs. 5 lakhs only towards the deficiency in service on account of the frontal airbags of the car having not deployed at the time of accident - Since the National Commission has considered in detail the evidence and the material on record adduced by the both the parties, the well-considered judgment dated 11th September 2017 passed by the National Commission does not warrant any interference. Appeal disposed off.

Summary

Issues Involved:
1. Whether the purchase of a vehicle by a company for the use/personal use of its directors amounts to a purchase for "commercial purpose" under Section 2(1)(d) of the Consumer Protection Act, 1986.
2. Whether the National Consumer Disputes Redressal Commission's orders regarding the replacement of a defective car and compensation for non-deployment of airbags were justified.

Issue-wise Detailed Analysis:

1. Definition of "Commercial Purpose":
The core issue was whether the purchase of a vehicle by a company for the use or personal use of its directors amounts to a purchase for "commercial purpose" under Section 2(1)(d) of the Consumer Protection Act, 1986. The court analyzed the definition of "consumer" and "commercial purpose" under the Act. It noted that the definition does not include a person who obtains goods for resale or any commercial purpose. The court referred to several precedents, including *Laxmi Engineering Works vs. P.S.G Industrial Institute (1995) 3 SCC 583*, which concluded that whether a purchase is for commercial purposes is a question of fact to be decided based on the circumstances of each case. The court reiterated that the dominant intention or purpose of the transaction must be examined to determine if it was for profit generation.

2. Civil Appeal No. 353 of 2008:
The appellant argued that the car was purchased for the personal use of the company's director and should be considered a commercial purpose. The court held that the onus to prove that the purchase was for commercial purposes lies with the opponent-seller. The court found no evidence that the car was used for commercial purposes or linked to any profit-generating activity. Thus, the purchase was not for a commercial purpose, and the complainant-company was entitled to file a complaint.

Regarding the defects in the car, the court reviewed the correspondence between the parties and the reports from engineers and local commissioners. It concluded that the car had an inherent defect of overheating, causing discomfort to passengers. The court upheld the National Commission's order directing the appellant to refund Rs. 36 lakhs instead of Rs. 58 lakhs, considering the car's usage for about seventeen years.

3. Civil Appeal Nos. 19536-19537/2017 and 2633/2018:
The issue was whether the non-deployment of airbags in a car purchased by a company for its director amounted to a deficiency in service and unfair trade practice. The court confirmed that the purchase was not for commercial purposes, as there was no evidence linking it to profit-generating activities.

On the merits, the court found that the airbags did not deploy during an accident, causing injuries to the director. The court noted that the owner's manual did not disclose the predetermined level for airbag deployment, constituting a deficiency in service and unfair trade practice. The National Commission's order awarding compensation of Rs. 5 lakhs for deficiency in service and Rs. 5 lakhs for unfair trade practice was upheld.

Conclusion:
The court concluded that the purchase of the car by the company for the use of its director was not for commercial purposes. It upheld the National Commission's orders regarding compensation for the defective car and non-deployment of airbags. The appeals were dismissed, and the appellant was directed to refund Rs. 36 lakhs to the respondent-complainant.