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Aapka Consultant Judgment Series- In this series, we are providing case analysis of Landmark Judgments of Hon’ble Supreme Court of India.

Laxmi Engineering Works v. P.S.G. Industrial Institute

AIR 1995 SC 1428

JUDGES: B.P. Jeevan Reddy and S.V. Manohar

Date of Decision: 04-04-199


Laxmi Engineering Works (appellant) placed an order with the respondent for supply of PSG 450 CNC Universal Turning Central Machine. As soon as it was installed and operated after a delay of six months, several defects came to light which the appellant brought to the notice of the respondent. Appellant filed a case in the Consumer forum, which was opposed by the respondent on the ground of being not covered under the definition of the consumer as given under section 2 (d) of the Consumer Protection Act because Appellant purchased the machines for commercial purposes. Respondent Succeeded in the lower forums.


What is the meaning and ambit of the expression “any commercial purpose” as used in section 2(d) of the Act?


By Ordinance 24 of 1993, an explanation has been added to the definition of the expression “consumer”. The explanation reads: “For the purposes 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”.

According to Section 2(d), a consumer means, in so far as this case is concerned, (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 includes 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.

“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” (Collies English Dictionary) whereas the word “commerce” means “financial transactions especially buying and selling of merchandise, on a large scale” (Concise Oxford Dictionary). The Parliament 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. The explanation reduces the question, what is a “commercial purpose”, to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to. The several words employed in the explanation, viz., “uses them by himself’, “exclusively for the purpose of earning his livelihood” and “by means of self-employment” make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood.


The meaning of the phrase “Commercial Purpose” is always a debatable question to be decided on the basis of facts and circumstances of each case. A person who buys goods and uses them himself, exclusively for the purpose of earning his livelihood, by means of self-employment is within the definition of the expression “consumer”. Court decided that Appellant purchased the goods not for earning his livelihood, therefore not to be covered by the provisions of the Act.

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