Court case(1995) 3 SCC 583

The appellant, Laxmi Engineering Works, bought a machine from the respondent, P.S.G. Industrial Institute, for use in its business, and complained that the machine was defective and had not performed as promised. It sought refund and compensation under the Consumer Protection Act 1986. The consumer fora held that the appellant had bought the machine for a commercial purpose and was therefore not a "consumer" within s. 2(1)(d), which (after the 1993 amendment) excluded a person who obtains goods for resale or for any commercial purpose but saved, by an Explanation, goods bought and used by a person exclusively for earning his livelihood by self-employment. The appellant appealed to the Supreme Court, arguing that a purchase for its own use in production, and not for resale, was not commercial.

B.P. Jeevan Reddy J. held that whether goods are bought for a commercial purpose is a question of fact to be decided in each case; it is not the value of the goods but the purpose to which they are put that decides. The object of the exclusion is to keep commercial transactions, which the ordinary civil courts can deal with, out of the consumer fora. The Explanation brings back into the definition a person who buys goods and uses them himself, exclusively, to earn his livelihood by self-employment. The Court gave illustrations: a person who buys a typewriter or a car for personal use is a consumer; so is one who buys a typewriter to earn his living by typing, or a car which he plies himself as a taxi; but a person who buys a number of typewriters or cars and employs others to run them for profit is not, being engaged in a commercial activity. On the facts the appellant was not a consumer. Since it had pursued the consumer remedy bona fide, the time spent there could be excluded under s. 14 of the Limitation Act if it filed a civil suit.