If Goods Or Services Purchased For Profit Then Purchaser Is Not Consumer: SC

In a significant verdict, the Supreme Court on Thursday held that if any purchase of goods or services is for profit generation, then the purchaser cannot be held to be a consumer and consequently cannot pursue cases under the Consumer Protection Act. A bench of Justices JB Pardiwala and Manoj Misra, delivering the judgement in an appeal filed by M/s Poly Medicure Ltd, affirmed the findings of the State and National Consumer Disputes Redressal Commissions that the complaint filed by the company was not maintainable under the Act. It held that a company purchasing software to automate its business processes cannot be regarded as a "consumer" under the Consumer Protection Act, 1986, as such a transaction is for a "commercial purpose".

Authoring the verdict, Justice Manoj Misra referred to various judgements and said, "the transaction of purchase of goods/ services (i.e., software) had a nexus with generation of profits and, therefore, qua that transaction the appellant cannot be considered a consumer as defined in Section 2(1)(d) of the 1986 Act." If the transaction has a nexus with generation of profits, it would be treated as one for a commercial purpose, it said while dismissing the appeal of the firm. The appeal arose from a complaint filed by Poly Medicure Ltd, a manufacturer and exporter of medical devices, before the Delhi State Consumer Disputes Redressal Commission in 2019. The company had alleged deficiency in service by M/s Brillio Technologies Pvt Ltd, from which it had purchased a software product licence for streamlining its export-import documentation system.

Poly Medicure claimed that despite making full payment, the software did not function properly and sought a refund of the licence and development costs, along with 18 per cent interest. However, the SCDRC, in its order of August 19, 2019, dismissed the complaint on the ground that the company did not qualify as a "consumer" under the Consumer Protection Act, since the purchase was for a commercial purpose. The National Consumer Disputes Redressal Commission subsequently upheld the SCDRC's view in June 2020, prompting the appellant to approach the top court.