Punjab Agriculture U... v. Uti Of India & Anr. ...

B.K Taimni, Member:— Complainant, Punjab Agriculture University had filed a complaint alleging deficiency in service on the part of the opposite parties UTI & Anr. Pleadings and evidence in this case are complete. When the case was being finally heard by a Bench of this Commission, the Ld. Counsel for the opposite parties, Mr. Amrendra Sharan, Learned Senior Counsel and Additional Solicitor General, raised the point with regard to the factum whether the complainant shall be covered within the definition of ‘consumer’ as spelled out in section 2(1)(d) of the Consumer Protection Act, 1986? The Ld. Counsel for the opposite parties cited the following three judgements of this Commission, in support of his above contention:—

i) Punjab University v. Unit Trust of India (OP No. 97/1994) decided on 17.10.06

ii) Sree Anantha Grameena Bank v. The Industrial Finance Corporation of India Ltd. - IV (2005) CPJ 10 (NC)

iii) Delhi Transport Corporation Employees Provident Fund Trust v. Orissa Small Industries Ltd. III (2007) CPJ 316 (NC).

The above-cited judgements according to him gave different versions, in the sense, that while the first cited judgement held the complainant to be a consumer, the other two judgements appeared at Sl. No. (ii) & (iii) above, held the complainants in these cases, not to be ‘consumers’, in view of which, the Ld. Bench, hearing this instant ‘Complaint’ referred this matter to the Hon'ble President of the Commission for constituting a larger Bench, to resolve the issue in question in view of differing views of this of this Commission in the above-referred to cases.

This case came up for hearing before a larger Bench on the limited point, whether in the given facts and circumstances of the case the complainant fall with the definition of ‘Consumer’ as defined in Consumer Protection Act, 1986 or not?

We heard the Ld. Counsel for the parties at considerable length and have gone through the extensive material filed by both the parties by way of written submissions.

It is the contention of the Ld. Counsel for the complainant that this Commission was correct in holding them to be a ‘consumer’ in OP No. 97/2004 decided by this Commission on 17.10.2006, between the same parties. According to him, the other two judgements cited by the opposite parties and referred to in the reference order of this Commission have no bearing on the issue in question, as the facts and circumstances of the case are entirely different. On the other hand, the Ld. Counsel for the Opposite Parties wishes to rely upon ‘explanation’ added after the amendment 15.03.03 to Section 2(i)(d)(ii) of the Consumer Protection Act, 1986, which reads as under:—

“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 purpose];

Explanation:— For the purpose of sub-clause (i). “commercial purpose” does not include use by a consumer of goods, bought and used by him and services availed by him exclusively for the purpose of earning his livelihood, by means of self-employment”

(emphasis supplied …added by way of amendment to the Act effective 15.3.2003)

According to him, the complainants invested money knowing fully well that the opposite party will invest them in equities/shares and this was done to earn profit by the complainant. This investment could not be said to be for ‘self-employment’ or ‘for earning his livelihood’, as per law laid down by the Hon'ble Supreme Court in the case of “Laxmi Engineering Works v. P.S.G Industrial Institute” [(1995) 3 SCC 583], wherein the Hon'ble Supreme Court held as under:—

“Several words employed in the explanation, viz, ‘use them by himself, exclusively for the purpose of earning livelihood’ and by means of ‘self-employment’ make the intention of the Parliament very clear, that the goods (or services) bought must be used by the buyer himself, by employing himself for earning his livelihood. The Hon'ble Supreme Court has further distinguished between a purchase made for livelihood as against a purchase made for ‘commercial purpose as follows: “A person who purchases an auto rikshaw to ply it himself on hire for earning his livelihood, a purchaser of a truck who purchases it for plying is as a public carrier by himself would be a consumer…As against this a person who purchases an auto rickshaw, a car or other machine to be plied exclusively by another person would not be a consumer.””

He also relied upon the judgement of this Commission in the case of “Sinco Textiles Pvt. Ltd. v. Greaves Cotton & Company Ltd.” [I (1991) CPJ 499], wherein the Hon'ble Supreme Court held as under:—

“in relation to transaction of purchase of goods, Parliament has excluded from the scope of the definition any person who obtains goods for resale or for any commercial purpose…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.”

He also cited the judgement of this Commission in the case of “Sree Anantha Grameena Bank v. The Industrial Finance Corporation of India Ltd.” [IV (2005) CPJ 10 (NC) : MANU/CF/0076/2005], wherein this Commission held as under:—

“The legislature intent, consequent to the amendment of 2(1)(d) appears to be quite clear that the intention and object of Consumer Protection Act, is to help a common person. A plain, reading of the ‘Explanation’ incorporated as a result of amendment effective from 15.3.2003, that unless the activity taken-up for earning the livelihood by means of self-employment, it will fall within the meaning of commercial activities. In our view, by no stretch of imagination, the return on the investment by a Bank to earn high rate of interest, could be said to be hiring the services for earning livelihood. As stated earlier, the intention obviously was to earn much higher rate of interest to improve the balance-sheet of the Bank, which transaction shall make it fall within the definition of ‘Commercial activities/purpose’, thus, ousting the jurisdiction of Consumer Forum, in view of which we are of the view that this complaint is not maintainable before a Consumer Forum in light of amendment to section 2(1)(d) of the Consumer Protection Act, 1986…Investment was for a commercial purpose, hence outside the jurisdiction of a Consumer Forum in view of which we hold the complainant not to be ‘consumer’ within its definition under CPA, 1986.”

He also wishes to rely upon the judgement of this Commission in the case of “Delhi Transport Corporation Employees Provident Fund Trust v. Orissa Small Industries” [III (2007) CPJ 316 (NC)- MANU/CF/0318/2005], wherein this Commission held as under:—

“bare reading of the explanation would show that unless the services is hired, or availed of for earning livelihood by means of self employment, it will fall within the meaning of ‘commercial activity’. Intention in investing hefty amount of Rs. 6 crores in the bonds issued by opposite party No. 1 by the complainant was to earn higher rate of interest of 13.75% p.a and this would obviously fall within the definition of ‘commercial purpose/activity’ within the meaning of said definition. By no stretch of imagination, the complainant can be said to be a consumer.”

In sum and substance his case is that, views of judgements of Hon'ble Supreme Court and of this Commission, i.e, “Sree Anantha Grameena Bank v. The Industrial Finance Corporation of India”, “Delhi Transport Corporation Employees Provident Fund Trust v. Orissa Small Industries” as well as in the case of “Laxmi Engineering Works v. P.S.G Industrial Institute” (supra), are squarely applicable in the present case, for the simple reason that since in the present case services of the OPs were not hired for ‘earning his livelihood’ of self-employment, hence this complaint would fall outside the definition of ‘Consumer’ as defined in Consumer Protection Act, 1986.

Having gone through the material on record and having heard the Ld. Counsel for the parties, we find that it is not in dispute that the investment was made by the Complainant in 1998 and on maturity the amount was received by the complainant in May, 2003, by which time the amendment to the Act had come effective from 15.03.03 Since this transaction has occurred in May, 2003, we are in no doubt that the case will be governed by the Amendment to Section 2(i)(d)(ii) of the Consumer Protection Act, 1986, which has already been reproduced earlier.

Arguments advanced by the Learned Senior Counsel for the Opposite party raise two issues for our consideration: firstly, the effect of the amendment to section 2(1)(d)(ii) alongwith amendment made in the ‘explanation’ and, secondly, reconciling/applicability of orders by the Commission referred to by the Ld. Senior counsel for the opposite party(supra).

Dealing with the first leg of the arguments advanced by the Ld. Sr. Counsel for the Opposite Party, having very carefully gone through the judgement of the Hon'ble Supreme Court in the case of “Laxmi Engineering Works v. P.S.G Industrial Institute” we observe that they also faced the same situation, vis-à-vis, amendment to section 2(1)(d) made in 1993 as has been brought out in the order itself. It was held by the Hon'ble Supreme Court in the cited case that the complaint was filed prior to the ordinance/amendment of 1993, section 2(i)(d)(ii) was amended by adding explanation which reads as follows:—

“Explanation:— For the purpose of sub-clause (i). “commercial purpose” does not include use by a consumer of goods, bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment.”

(emphasis supplied)

In the present instance it is clear that what was hired by the complainant was ‘services’ and not ‘goods’. Be that as it may, the Hon'ble Supreme Court after dealing with proposed amendment of 1993 in detail, held as follows:—

“Now coming back to the definition of the expression ‘consumer’ in Section 2(d), a consumer means in so far as is relevant for the purpose of this appeal, (i) a person who buys any goods for consideration; it is immaterial whether the consideration is paid or promised, or partly paid and partly promised, or whether the payment of consideration is deferred; (ii) a person who uses such goods with the approval of the person who buys such goods for consideration (iii) but does not include a person who buys such goods for resale or for any commercial purpose. The expression “resale” is clear enough. Controversy has, however, arisen with respect to meaning of the expression “commercial purpose”. It is also not defined in the Act. In the absence of a definition, we have to go by its ordinary meaning. “Commercial” denotes “pertaining to commerce” (Chamber's Twentieth Century Dictionary); it means “connected with, or engaged in commerce; mercantile; having profit as the main aim” (Collins English Dictionary) whereas the word “commerce” means “financial transactions especially buying and selling of merchandise, on a large scale” (Concise Oxford Dictionary).

The National Commission appears to have been taking a consistent view that where a person purchases goods “with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit” he will not be a “consumer” within the meaning of Section 2(d)(i) of the Act. Broadly affirming the said view and more particularly with a view to obviate any confusion the expression large-scale” is not a very precise expression the Parliament stepped in and added the explanation to Section 2(d)(i) by Ordinance/Amendment Act, 1993. The explanation excludes certain purposes from the purview of the expression “commercial purpose” - a case of exception to an exception.”

It needs to be appreciated that in the cited judgement, the Hon'ble Supreme Court was dealing with ‘sale of goods’ but it was made clear in the cited judgement that post amendment what is ‘commercial purpose’ shall be governed by ‘the facts of each case’ which was also the view of this Commission in the judgement dated 17.10.06 passed in OP No. 97/2004. The amendment to section 2(1)(d)(ii) is being reproduced even at the cost of the repetition:—

“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 purpose];

Explanation:— For the purpose of sub-clause (i). “commercial purpose” does not include use by a consumer of goods, bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment”

The Hon'ble Supreme Court in the case of “Laxmi Engineering Works v. P.S.G Industrial Institute” [supra] had also to go into the same question and went on to observe that:—

“The Explanation is clarificatory:

Yet another clarification; the explanation, in our opinions is only explanatory; it is more in the nature of a clarification a fact which would become evident if one examines the definition (minus the explanation) in the context and scheme of the enactment. As indicated earlier, the explanation broadly affirms the decisions of the National Commission. It merely makes explicit what was implicit in the Act. It is not as if the law is changed by the said explanation, it has been merely made clearer.”

They also relied upon judgement of the Hon'ble Supreme Court in the case of “Lucknow Development Authority v. M.K Gupta. and observed as under:—

“In Lucknow Development Authority v. M.K Gupta. the question was whether a public authority engaged in constructing and selling houses can be said to be rendering a ‘service’ and whether the person purchasing such houses can be called a ‘consumer’ within the meaning of the said definition. While answering the question in the affirmative, a Bench of this Court (Kuldip Singh and R.M Sahai, JJ) also examined the scheme and object of the Act and the ambit of the definition of the expression ‘consumer’. The following observations are apposite: (SCC pp. 251 54, paras 2 and 3)

“To begin with the preamble of the Act, which can afford useful assistance to ascertain the legislative intention, it was enacted, ‘to provide for the protection of the interest of consumers’. Use of the word ‘protection’ furnishes key to the minds of makers of the Act. Various definitions and provisions which elaborately attempt to achieve this objective have to be construed in this light without departing from the settled view that a preamble cannot control otherwise plain meaning of a provision. In fact the law meets long-felt necessity of protecting the common man from such wrongs for which the remedy under ordinary law for various reasons has become illusory.

The word ‘consumer’ is a comprehensive expression. It extends from a person who buys any commodity to consume either as eatable or otherwise from a shop, business house, corporation, store, fair price shop to use of private or public services. In Oxford Dictionary a consumer is defined as, ‘a purchaser of goods or services’. In Black's Law Dictionary it is explained to mean, ‘one who consumes’. Individuals who purchase, use, maintain, and dispose of products and services. A member of that broad class of people who are affected by pricing policies, financing practices, quality of goods and services, credit reporting, debt collection, and other trade practices for which State and Federal Consumer Protection Laws are enacted’. The Act opts for no less wider definition. It reads as under:

“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 and 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.

Explanation:— For the purpose of sub-clause (i). “commercial purpose” does not include use by a consumer of goods, bought and used by him and services availed by him exclusively for the purpose of earning his livelihood, by means of self-employment;’

It is in two parts. The first deals with goods and the other with services. Both parts first declare the meaning of goods and services by use of wide expressions. Their ambit is further enlarged by use of inclusive clause. For instance, it is not only purchaser of goods or hirer of services but even those who use the goods or who are beneficiaries of services with approval of the person who purchased the goods or who hired services are included in it. The legislature has taken precaution not only to define ‘complaint’, ‘complainant’, ‘consumer’, but even to mention in detail what would amount to unfair trade practice by giving an elaborate definition in clause ® and even to define ‘defect’ and ‘deficiency’ by classes (f) and (g) for which a consumer can approach the Commission. The Act thus aims to protect the economic interest of a consumer as understood in commercial sense as a purchaser of goods and in the larger sense of user of services.”

In the light of above, we are left in no doubt that explanation following 2(1)(d)(ii) of Consumer Protection Act, 1986 would be clarificatory in nature and does not supplant the meaning of word ‘consumer’, vis-à-vis, ‘Services’ as it appears in the main section, i.e, 2(1)(d)(ii) where exclusion clause will come into play if it is for ‘commercial’ purpose.

What does word ‘commercial’ denote? We like to reproduce here the word ‘commercial’ et-al:—

“K.J Aiyar's Judicial Dictionary

Commercial in ordinary parlance, means “engaged in commerce” and “commercialise” in Webster's Third New International Dictionary means:

“to engage in, conduct, practice, or make use of for profit-seeking purposes as distinguished from participation, practice, or use for spiritual or recreational purposes or for other non-pecuniary satisfactions.”

[Social S.G of Assissi Sisters V.K.S.E.B, (1988) 1 Ker LT 727 (733)]]”

The word ‘commercial’ is defined in the Concise Oxford Dictionary, New Edition, for the 1990 Ed. at page 227, as ‘having profit’ as a primary aim rather than artistic etc. value.

The expression ‘commercial’ should be construed broadly having regard to the manifold activities which are integral part of international trade today.

-action.— The words ‘Commercial action’ are stated to include, ‘any cause arising out of the ordinary transactions of merchants and traders and further ‘any cause relating to the construction of mercantile document, etc.

West's Legal Thesaurus/Dictionary

Commercial adj; Related to trade, traffic, or commerce in general (commercial transaction). Profit-making, business, mercantile, entrepreneurial, monetary, material, salable, business, industrial, financial, fiscal, economic, marketing, wholesale, retail, pecuniary, crass, explotive, profiteering.

Mitra's Legal & Commercial Dictionary

Commerce. Commerce is exchange or buying and selling of commodities on a large scale involving transportation from place to place. Webster's Ninth New Collegiate Dictionary. Commerce is the intercourse of nations in each other's produce and manufactures, in which the productions of one are given for those of another, and than re-exchanged with other nations for mutual benefit.

In a popular or narrower sense ‘commerce’ is sometimes used to refer to external trade or dealings with other countries, while ‘trade’ refers to internal trade, i.e, mutual traffic and dealing amongst citizens of the same State. Tomlin's Law Dictionary.

Commercial Causes. These are causes (or cases) that arise out of the transactions of merchants and traders, especially those relating to the construction of mercantile documents, export or import of merchandise, affreightment, insurance, banking and mercantile agency and mercantile usages.

STROUD's JUDICIAL DICTIONARY

Commercial (1) Commercial action includes any clause arising out of the ordinary transactions of merchants and traders and, without prejudice to the generality of the foregoing words, any cause relating to the constructions of a mercantile document, the export or import of merchandise, affreightment, insurance, banking, mercantile agency and mercantile usage

(2) An incorporated canal company whose profits arose from tolls, was held a ‘commercial company’, or a company associated for “commercial purposes,” and, as such, liable to become bankrupt under Joint Stock Companies Act 1844.

THE LAW LEXICON

Commercial Purpose- The word ‘commercial purposes’ would, therefore, cover an undertaking the object of which is to make a profit out of the undertakings.”

Having gone through the meaning of word ‘commerce’, ‘commercial’, with reference to above, we are left in no doubt that the word ‘commercial purpose’ would cover an undertaking, the objective which is to make a ‘profit’.

It cannot be any one's case that the complainant had invested the funds from the funds available with them under CPF, GPF and Pension Fund contributed by the employees of the complainant university, for earning profit. The University would not under any circumstance become the beneficiary of such a return on investment. It is the group of employees, who had contributed towards CPF, GPF and Pension Fund, who would benefit ensuring their ‘livelihood-security’, after they retire from the service. It was for the betterment of their employees, that such an investment was made, and it is to be made clear that no benefit by way of profit was to accrue to the complainant, improving its balance-sheet, in view of which and in the light of definition of the word ‘commerce’ given above, under no circumstances, the petitioner could be said to be indulging any ‘commercial’ activity, thus excluding him from the definition of ‘Consumer’ as enshrined in Consumer Protection Act, 1986.

It is his case that it is the nature of investment which will determine whether the activity is commercial or not? We are in full agreement with the Ld. Senior Counsel on this point, except that, we hold that investment was made by the University for improving the ‘livelihood security’ of their employees who would be left with better ‘financial security’, after retirement. This investment shall not under any circumstances fall under the word ‘commercial’ as per meaning of the word ‘commercial’ reproduced earlier. The only judgement relied upon by the Ld. Senior Counsel, namely, Sinco Textiles Pvt. Ltd. v. Greaves Cotton & Company as also in the case of ‘Morgan Stanley Mutual Fund v. Kartick Das.' [(1994) 4 SCC 225] also will have no bearing on the merits of the point at issue. While the former judgement dealt with purchase of goods and not services, the latter dealt with the question of prospective buyers of shares. These are not the facts of the case in hand and thus, shall have no bearing to influence the point at issue before us.

Coming to the second leg of the argument of the Ld. Sr. Counsel of OP, we are of the view that his reliance on the judgement of this Commission in “Sree Anantha Grameena Bank v. The Industrial Finance Corporation of India Ltd.” is mis-placed for the simple reason that in this case it was clearly held:—

“Be that as it may, the purpose of investing in the Non-convertible Bonds, was to earn average interest @13% p.a This cannot be said to be the duty/investment, as envisaged in the Statement of Objects and Reasons for setting up the Regional Rural Bank. This clearly was done to improve its balancesheet, that is, to earn profit. This, in no way was associated or germane with the activities for which the Regional Rural Banks were incorporated.”

(emphasis supplied)

This fairly distinguishes the facts of the case in hand with the facts in the cited judgment. Investment made in the case in hand was not to earn profit or to improve the balance-sheet of the University.

We are also unable to support the finding returned by this Commission in the case of ‘Delhi Transport Corporation Employees Provident Fund Trust v. Orissa Small Industries” for the simple reason that the order is too cryptic and has not dealt with legal issue or the law on the subject laid down by the Hon'ble Supreme Court or for that matter by National Commission as also what does word ‘commercial’ mean?

In view of the above discussion we see no merit in the objections raised by the OP UTI, that the complainant cannot be said to a ‘consumer’ within the definition of section 2(1)(d)(ii) of the Consumer Protection Act, 1986.

In the aforementioned circumstances, we fully support the order passed by this Commission in the case of “Punjab Agriculture University v. UTI” decided on 17.10.96 which held that the complainant under the Consumer Protection Act, 1986 against the UTI for deficiency in services by it is maintainable and we uphold this view to be the view of this Commission.

Reference is decided accordingly and the case be now placed before the Bench dealing with the OPs, for deciding the case on merits after hearing the parties, for which fresh notice be issued to the parties.