NCDRC Rules Cooperative Society as Consumer Under Consumer Protection Act

August 16, 2024

The National Consumer Disputes Redressal Commission (NCDRC), led by Dr. Inder Jit Singh, determined that the primary intent of a transaction should be considered to assess whether it serves a commercial purpose. It further ruled that a cooperative society, functioning as a welfare organization rather than a profit-oriented entity, qualifies as a consumer under the Consumer Protection Act.

Case Summary

The complainant, a cooperative society registered under the Gujarat Cooperative Societies Act, 1961, is engaged in collecting cotton from its farmer members, processing it into bales, and selling it on their behalf without making a profit. The society ordered a Hydraulic Automatic Revolving Double Box Press from Vishwakarma Engineering Works for ₹32,00,080. After paying in full and having the press installed, the society discovered that the press did not match the specifications in the quotation. Instead, a Hydraulic Manual single-box press with lower capacity was installed. Despite numerous requests for a replacement or correction, the manufacturer did not address the issue. Consequently, the complainant filed a complaint with the State Commission of Gujarat, which dismissed the case. The complainant then appealed to the National Commission.

Manufacturer’s Arguments

The manufacturer contended that the cooperative society, involved in cotton bale belting and purchasing and selling for agricultural purposes, did not qualify as a consumer under Section 2(1)(d) of the Consumer Protection Act, 1986. The State Commission had ruled that since the cooperative society was engaged in business activities and did not claim that the machine was for personal use or livelihood, it did not fit the consumer definition.

Observations by the National Commission

The National Commission referred to precedents to determine whether a transaction is commercial. In National Insurance Company vs. Harsolia Motors & Ors., the Supreme Court clarified that whether a transaction is commercial depends on the specific facts and circumstances of the case. The Commission also cited Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, which established that a transaction’s commercial nature is based on its context and primary intent. If the primary intent is not profit but personal use or self-employment, it may not be deemed commercial. Additionally, the Shriram Chits (India) Private Limited case highlighted that the burden of proving whether a transaction is for commercial purposes falls on the service provider, not the complainant. In Rohit Chaudhary & Anr. vs. Vipul Ltd., the Court emphasized that a person’s status as a consumer depends on the purpose of the goods’ purchase. Goods bought primarily for personal use or self-employment, rather than large-scale profit-making, qualify the buyer as a consumer.

The Commission allowed the appeal, ruling that the cooperative society, as a welfare organization rather than a profit-driven entity, should be considered a consumer under the Consumer Protection Act. The State Commission’s dismissal of the complaint was deemed incorrect, and the case was 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