National Commission Rules Cooperative Society Qualifies as Consumer Under Protection Act

August 17, 2024

The National Consumer Disputes Redressal Commission, led by Dr. Inder Jit Singh, ruled that the primary intent should be the key factor in determining a commercial purpose. The Commission further held that a cooperative society, being a welfare organization rather than a profit-driven entity, qualifies as a consumer under the Consumer Protection Act.

BRIEF FACTS OF THE CASE

The complainant, a cooperative society registered under the Gujarat Cooperative Societies Act, 1961, operates by collecting cotton from its member farmers, processing it into bales, and selling it on their behalf without any profit motive. The society ordered a Hydraulic Automatic Revolving Double Box Press from Vishwakarma Engineering Works, based on a quotation of ₹32,00,080. After making full payment, the press was installed, but the complainant discovered it did not meet the quoted specifications. Instead of the specified press, a Hydraulic Manual Single Box Press with a lower capacity was installed. Despite repeated requests, the manufacturer neither replaced the press nor corrected the defects, prompting the complainant to file a complaint with the Gujarat State Commission. The State Commission dismissed the complaint, leading the complainant to appeal to the National Commission.

CONTENTION OF THE MANUFACTURER

The manufacturer contended that the complainant, a cooperative society, had indicated in their complaint to the State Commission that they were involved in the business of processing and trading cotton bales for agricultural purposes. The State Commission dismissed the complaint, determining that the complainant did not qualify as a consumer under Section 2(1)(d) of the Consumer Protection Act, 1986. The Commission noted that the complainant did not assert that the machine was intended for self-employment or livelihood purposes. As the cooperative society was engaged in business activities, it was not considered a consumer under the Act.

OBSERVATION BY THE NATIONAL COMMISSION

The National Commission noted that in National Insurance Company vs. Harsolia Motors & Ors., the Supreme Court clarified that determining whether a transaction is for a commercial purpose depends on the specific facts and circumstances of each case. The Commission also referenced Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, which established that the nature of a transaction as commercial depends on its context and dominant intention. A transaction is not considered commercial if its primary intent is personal use or self-employment rather than profit. Additionally, in Shriram Chits (India) Private Limited, the Court highlighted that it is the service provider’s responsibility to demonstrate whether a transaction is for a commercial purpose. The complainant does not need to prove the non-commercial nature of the service unless the provider initially establishes it as commercial. Furthermore, the Commission cited Rohit Chaudhary & Anr. vs. Vipul Ltd., where the Court emphasized that a person is considered a consumer based on the purpose for which goods are purchased. If the goods are acquired primarily for personal use or self-employment rather than for profit-making activities, the buyer qualifies as a consumer.

The Commission upheld the appeal, determining that the cooperative society, as a welfare organization rather than a profit-driven entity, qualifies as a consumer under the Consumer Protection Act. The dismissal of the complaint by the State Commission was found to be incorrect, leading to the order being overturned and the case being remanded for a fresh review on its merits.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

Deem Conveyance, Family Matters, and Property Disputes.

Human and Civil Rights Campaigner

President Citizens Justice Forum https://citizensjusticeforum.in