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TMI Blog2019 (11) TMI 1824X X X X Extracts X X X X X X X X Extracts X X X X ..... a socialist economy, wherein the ethos dictates that employers are obligated to make provisions for the welfare of their employees. No doubt, welfare measures undertaken by employers may increase workers health and efficiency, and therefore improve the employing entity s overall productivity. However this is a duty to be shared by all employer organisations and not merely those looking to increase their productivity/profits. This obligation exists irrespective of how much profit or turnover the organization generates in a year, though the degree to which it extends may differ depending upon the financial capacity of the employer - if in all such cases the third party service-provider disclaims liability before consumer forums on the ground that the hirer of the service is engaged in trade and commerce, it will open a Pandora s box wherein the employer as well as the employees will not have any remedy. This would defeat the object of providing a speedy remedy to consumers, as outlined in the provisions of the 1986 Act. Further, setting such a precedent may discourage employers from undertaking to provide any facilities for their employees. Hence, it is necessary to clarify that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of these the Appellant/complainant trust took possession of 29 flats for provision of hostel facilities to nurses employed by Lilavati Hospital, which is run by the Appellant trust. 29 agreements to sell were executed in respect of each flat on 25.11.1995, which were registered on 16.3.1996, and entire consideration amount was paid for the same. The architect issued completion certificate in respect of the flats on 17.2.1997. The flats were used for the purpose of hostel facilities till 2002. However, within 2-3 years of completion of the project, because of alleged poor building quality, the structure became dilapidated. The appellant vacated the flats in 2002 and since 2004, the flats are lying unused. In the meanwhile, an interim Board of Trustees was constituted by this Court by order dated 21.5.2014 in SLP No. 3772/2014, which is a separate litigation concerning dispute over control of the appellant trust between different groups of trustees. The aforesaid interim Board of Trustees called for a structural report from M/s Raje Consultants, which submitted their report in September 2015 finding that the cost of repairs would be more than the cost of reconstruction. The appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son who (i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or (ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who 'hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purposes. Explanation. For the purposes of this clause, commercial purpose does not include use by a person of goods bought and used by him and services avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ran Suri argued that under the Explanation to Section 2(1)(d), only goods and services availed exclusively for the purpose of earning livelihood by self-employment are excluded from the ambit of commercial purpose . In the present case, the hostel facilities in the flats constructed by Respondent No. 1 were for the purpose of providing comfortable accommodation to the nurses, which in turn would increase their efficiency and lead to provision of better services to the hospital. Hence the flats were indirectly connected to the commercial purpose of increasing profits for the hospital. Such a purchase would not fall in the category of earning livelihood by self-employment . Learned senior counsel relied on this Court s decisions in Laxmi Engineering (supra), Cheema Engineering Services v. Rajan Singh, (1997) 1 SCC 131, and Kalpavruksha Charitable Trust v. Toshniwal Brothers (Bombay) Pvt. Ltd., (2000) 1 SCC 512, to buttress her argument. 4. Taking into account the material on record and the relevant jurisprudence on this issue, we are of the considered opinion that the purchase of flats by the Appellant for the purpose of providing hostel facilities to the hospital nurses does not qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which the goods bought are put to. The several words employed in the explanation, viz., uses them by himself , exclusively for the purpose of earning his livelihood and by means of self-employment make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. (emphasis supplied) In the aforementioned discussion in Laxmi Engineering, this Court relied upon Synco Textiles Pvt. Ltd. v. Greaves Cotton and Company Limited, (1991) 1 CPJ 499. In Synco Textiles, a 4 Member-Bench of the National Commission headed by V. Balakrishna Eradi J., expounded upon the meaning of the term commercial purpose , prior to the insertion of the Explanation clause to Section 2(1)(d) of the 1986 Act: 3 The words for any commercial purpose are wide enough to take in all cases where goods are purchased for being used in any activity directly intended to generate profit 4. Going by the plain dictionary meaning of the words used in the definition section the intention of Parliament must be understood to be to exclude from the scope of the expression 'consumer' any person who buys goods for the purpose of thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit-making activity but, on the contrary, the appellants purchased the machine for their own utility, personal handling and for their small venture which they had embarked upon to make a livelihood. The same is distinct from large-scale manufacturing or processing activity carried on for huge profits. There is no close nexus between the transaction of purchase of the machine and the alleged large-scale activity carried on for earning profit. Since the appellants had got no employment and they were unemployed graduates, that too without finances, it is but natural for them to raise a loan to start the business of photography on a small scale for earning their livelihood. Therefore this Court in Paramount Digital Colour Lab (supra) held that the purchase of a machine for appellants photography business, which was a small-scale business meant for earning their livelihood, would not be interpreted as being for a commercial purpose. 5. It is true that the aforementioned decisions were rendered in the context of deciding whether the goods or services availed of in the facts of those cases were for a commercial purpose or exclusively for the purpose of self-employment. This does not me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t employers are obligated to make provisions for the welfare of their employees. No doubt, welfare measures undertaken by employers may increase workers health and efficiency, and therefore improve the employing entity s overall productivity. However this is a duty to be shared by all employer organisations and not merely those looking to increase their productivity/profits. This obligation exists irrespective of how much profit or turnover the organization generates in a year, though the degree to which it extends may differ depending upon the financial capacity of the employer. Hence private corporate bodies such as the Appellant trust may engage the services of third parties for the purpose of providing perquisites to their employees. For example, an employer may book flight tickets or train tickets for an employee so as to facilitate their travel in the ordinary course of business. If any negligence occurs resulting in injury to the employee or their property, the airline/railway company cannot disclaim liability on the ground that the activity was carried out for a commercial purpose . As discussed earlier, if in all such cases the third party service-provider disclaims liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant was generating any surplus from occupying the flats or engaging in buying and selling of flats. It may be the case that provision of comfortable hostel facilities to the nurses, generates a feeling of gratitude and loyalty towards their employer and improves their overall efficiency, which indirectly results in the hospital gaining more repute and therefore generating more income. However, this is a matter of conjecture and there is no direct causal chain which can be drawn between provision of accommodation to hospital employees and increase in the Appellant s profits. The decision in Kalpavruksha Charitable Trust (supra), relied upon by the Respondents, does not support them inasmuch as it was on a different set of facts. In that case, this Court held that the purchase of CT scan machines by a diagnostic centre would be included within the meaning of commercial purpose . There is an apparent direct nexus between the purchase of the machines, medical equipment, etc. and the running of a diagnostic centre/hospital. The present case does not involve any such purchase. Further, applying the dominant purpose test, it cannot be said that the provision of such hostel facilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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