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Smart Summary

National Consumer Disputes Redressal Commission — Revision Petition No. 3811 of 2007

Factual and Procedural Background

The Rajasthan State Industrial Development and Investment Corporation Ltd. (petitioner) filed this revision petition against the order dated 14 August 2007 of the Rajasthan State Consumer Disputes Redressal Commission, Jaipur (State Commission). The State Commission had dismissed the petitioner's appeal and upheld the District Consumer Disputes Redressal Forum, Alwar's (District Forum) direction that the petitioner allot an industrial plot at the original rate of Rs. 440 per sq. mt.

The respondent-complainant (a partnership firm) applied on 29 March 2004 for allotment of an industrial plot measuring 4,000 sq. m. in Chopanki, Bhiwadi to establish a factory for manufacturing S.O. Dyes. The petitioner raised a preliminary legal objection that, following the 2002 amendment to the Consumer Protection Act which came into effect on 15 March 2003, persons who avail services for a commercial purpose do not fall within the Act's definition of "consumer"; accordingly, the dispute was said to be beyond the jurisdiction of consumer fora.

Legal Issues Presented

  1. Whether the allottee of an industrial plot for establishing a factory (for manufacturing S.O. Dyes) falls within the definition of "consumer" under section 2(d) of the Consumer Protection Act, 1986 as amended by the 2002 Amendment (effective 15 March 2003), or whether the allotment/service is a "commercial purpose" excluded from the definition.
  2. Whether the consumer fora had jurisdiction to entertain the complaint challenging cancellation of the allotment and/or the rate of developmental charges in the circumstances of this case.

Arguments of the Parties

Petitioner's Arguments

  • After the Amendment Act 62 of 2002 (effective 15 March 2003), the definition of "consumer" under section 2(d) excludes any person who hires or avails services for a commercial purpose; therefore the respondent-complainant—seeking allotment of land to set up a factory—is not a "consumer" and the consumer fora lack jurisdiction.

Respondent-Complaining Party's Arguments

  • The respondent-complainant contended that it is covered by the Consumer Protection Act and relied upon the judgment of the Hon'ble Supreme Court in "HUDA Vs. Seema Handa" (Vol. IV (2004) CPJ 6 (SC)) in support of its position that the complaint lies within the consumer fora.
  • The respondent asserted that the petitioner had malafidely, deliberately and illegally cancelled the allotment after receipt of the deposit.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
HUDA Vs. Seema Handa reported in Vol. IV (2004) CPJ 6 (SC) Cited by the respondent-complainant to support the proposition that the dispute could be entertained by consumer fora. The court held this reliance was misplaced: the cited decision concerned the rate at which interest was to be charged and not the question whether an allottee of an industrial plot for setting up a factory is a "consumer." The Supreme Court in that decision had also stated in para 8 that "this Order shall not be taken as a precedent in any other matter," and accordingly the court distinguished and declined to treat it as supportive authority on consumer status.

Court's Reasoning and Analysis

The court began by examining the statutory definition of "consumer" in section 2(d) of the Consumer Protection Act, 1986 as amended by Act 62 of 2002 (effective 15 March 2003). The amended definition excludes persons who buy goods or avail services for any "commercial purpose," except where goods/services are used exclusively for earning livelihood by self-employment.

The court then considered the nature of the respondent-complainant's proposed activity. It referred to the definition of "factory" in section 2(m) and "manufacturing process" in section 2(k) of the Factories Act to determine the intention and character of the enterprise described in the complaint. The respondent's stated intention was to set up a manufacturing unit for S.O. Dyes, which the court found to be aimed at earning profit rather than earning a livelihood by self-employment.

On this basis, the court concluded that the service obtained (allotment of the industrial plot) was for a commercial purpose and therefore fell outside the amended definition of "consumer." The court distinguished the respondent's reliance on HUDA vs. Seema Handa by noting that that case dealt with the rate of interest and not with whether an allottee of an industrial plot is a "consumer," and that the Supreme Court there had cautioned the order should not be taken as precedent in other matters.

Because the court determined the respondent-complainant was not a "consumer" within the Act after the amendment, it found the consumer fora lacked jurisdiction; consequently it did not consider the merits of issues such as developmental charges or payments.

Holding and Implications

Holding: The revision petition is accepted and the complaint is dismissed. There is no order as to costs.

Implications: The direct effect of the decision is that the District Forum and State Commission lacked jurisdiction to entertain the complaint because the allotment of an industrial plot for setting up a factory was held to be for a "commercial purpose" excluded from the definition of "consumer" by the 2002 amendment. The respondent-complainant was left with the option to seek relief, if so advised, from the appropriate civil court. The opinion does not announce any broader precedent beyond its application to the parties; the court expressly found the cited Supreme Court order in HUDA (supra) inapplicable on the central question of consumer status.

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    Rajasthan State Industrial Development And Investment Corporation Ltd. v. Diksha Enterprises

    NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

    NEW DELHI

    REVISION PETITION NO. 3811 OF 2007

    (Against the Order dated 14/08/2007 in Appeal No. 1718/2006 of the State Commission Rajasthan)

    1. RAJASTHAN STATE INDUSTRIAL DEVELOPMENT

    AND INVESTMENT CORPORATION LTD.

    HEAD OFFICE, UIDYOG BHAWAN,

    TILAK MARG,

    JAIPUR - 302005 ...........Petitioner(s) Versus

    1. M/S. DIKSHA PARTICULARS

    26, BANARSAI DASS ESTATE,

    CIVIL LINES,

    DELHI - 110054 ...........Respondent(s)

    BEFORE:

    HON'BLE MR. JUSTICE B.N.P. SINGH, PRESIDING MEMBER HON'BLE MR. S.K. NAIK, MEMBER

    For the Petitioner : Mr. Gautam Gupta, Advocate for Mr. Aditya Madan, Advocate For the Respondent : Mr. K.R. Chawla, Advocate

    Dated : 09 Jul 2010

    ORDER

    This revision petition is by the Rajasthan State Industrial Development and Investment Corporation Ltd., challenging the order dated 14th of August, 2007 of the Rajasthan State Consumer Disputes Redressal Commission, Jaipur (State Commission for short), by which the State Commission, while dismissing the appeal of the petitioner, held that there was no legal infirmity in the order passed by the District Consumer Disputes Redressal Forum, Alwar (District Forum for short) directing the petitioner to allot the industrial plot at the original rate of Rs.440/- per sq. mt. Admittedly, the respondent-complainant, which is a partnership firm, applied for the allotment of an industrial plot admeasuring 4000 sq. mtrs. in Chopanki, Bhiwadi for the purpose of establishing a factory for the manufacturing of S.O. Dyes on 29th of March, 2004. Without going into the details and the dispute raised with regard to the rate of developmental charges, it may be stated that the petitioner has raised a point of law, contending that the allotment is related to the allocation of an industrial plot for setting up of a factory for the manufacturing of S.O. Dyes. Referring to the definition of a 'consumer' under section 2(d) of the Consumer Protection Act, 1986, learned counsel for the petitioner has contended that after the amendment of the Act during 2002, which came into effect from 15th of March, 2003, any person who hires or avails of any service for a consideration for commercial purpose would not fall within the definition of a 'consumer'. The present case pertains to the allotment of an industrial plot for the purpose of setting up of a factory and, therefore, the learned counsel contends that the dispute is clearly outside the purview of the consumer fora. Learned counsel for the respondent-complainant in response to this objection has submitted that the respondent-complainant is fully covered under the Consumer Protection

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    Act, 1986, as amended, and is also covered by the definition of a 'consumer' as mentioned in the Act because the petitioner had malafidely, deliberately and in illegal manner cancelled the allotment of the plot in question after having received the deposit. He has referred to the judgment of the Hon'ble Supreme Court in the case titled "HUDA Vs. Seema Handa" reported in Vol. IV (2004) CPJ 6 (SC) in support of his contention. Since a preliminary objection has been raised on the point of law, it would be appropriate to first deal with this objection. Section 2 of the Consumer Protection Act, 1986, dealing with definitions, in sub-clause (d) defines a 'consumer' as under :- "(d) "consumer" means any person 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 availed by him exclusively for the purposes of earning his livelihood by means of self-employment" (emphasis added) It is clear from this provision that after the Amendment Act 62 of 2002, which came into effect from 15th of March, 2003, any person who buys any goods or avails any service for a consideration, if it relates to a commercial purpose, except on the ground of earning his livelihood by means of self employment, would not fall within the definition of a 'consumer' and, therefore, any such dispute would not be a consumer dispute and the consumer fora would have no jurisdiction to entertain any complaint for such dispute. In the case in hand, the respondent- complainant in his complaint states that he applied for an industrial plot of 4000 square meters for the purpose of setting of a factory for manufacturing S.O. Dyes. For proper adjudication of the matter, it is necessary to refer to the definition of 'factory', which as per section 2(m) of the Factories Act reads as under:- "factory" means any premises including the precincts thereof (i) …. (ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on. Further, the 'manufacturing process' is defined under Section 2(k) of the Factories Act, which reads as under :- (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or … (ii) … (iii) … (iv) … (v) …" A plain reading of these provisions make it clear that the intention of the respondent-complainant is far from earning any livelihood by self-employment but is purely intended to set up a manufacturing unit to earn profit. Thus, it is clear beyond any pale of doubt that the service obtained even for a consideration from the petitioner is for a commercial purpose and the dispute does not fall within the domain of consumer fora. Insofar as the judgment of Hon'ble Supreme Court in the case of HUDA vs Seema Handa (supra) relied upon by the respondent-complainant is concerned, the dispute therein was with reference to the rate at which interest was to be charged and not whether allottee of an industrial plot for setting up of a factory was a

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    'consumer' under the Consumer Protection Act, 1986. Besides, even on that limited issue the Hon'ble Supreme Court in the concluding para 8 has stated that "We clarify that this Order shall not be taken as a precedent in any other matter …..". Reliance of the respondent- complainant on this judgment is misplaced. Since the respondent-complainant is not a consumer and the fora below could not have entertained the complaint, it is not necessary for us to consider the other aspects such as the rate of developmental charges and payment etc. Under the circumstances, the revision petition is accepted and the complaint is dismissed, with no order as to cost. However, the respondent-complainant is left with the option to seek his remedy, if so advised, from the appropriate civil court.

    ......................J

    B.N.P. SINGH

    PRESIDING MEMBER

    ......................

    S.K. NAIK

    MEMBER

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    Rajasthan State Industrial Development And Investment Corporation Ltd. v. Diksha Enterprises
    (Jul 9, 2010)