National Consumer Disputes Redressal
Sakthi Engineering Works And Anr. vs Sri Krishna Coir Rope Industry Rep. By ... on 8 August, 2000
ORDER
Suhas C. Sen, J. (President)
1. This appeal is against the order passed by the Andhra Pradesh State Consumer Disputes Redressal Commission in which the complaint lodged by the Respondent herein M/s. Sri Krishna Coir Rope Industry was partly allowed and the Appellant- M/s. Shakthi Engineering Works was directed to pay a sum of Rs. 3,07,632/- being the value of a machinery t be paid by it to the Complainant with interest at 18% per annum from 1.4.92 till the date of realisation. A sum of Rs. 50,000/- towards compensation for loss of business and cost of Rs. 2000/- was also awarded. On behalf of the Appellant the contention has been raised that the complaint was misconceived because under the Consumer Protection Act goods purchased for commercial purpose could not be made a subject matter of dispute. This point was raised before the State Commission but rejected by holding:
"The complainant had purchased the disputed machinery for his livelihood and not for commercial purpose. In view of he explanation to Section 2(d) (ii) of Consumer Protection Act laying that for the purpose of sub-clause-I, commercial purpose does not include use by consumer of goods bought and used by him exclusively for the purpose of earning his livelihood by means of self-employment, we hold that the purpose of the disputed machine is not for commercial purpose."
2. It appears that the Complainant had purchased the machinery for producing coir rope for sale. It had obtained a loan form the State Financial Corporation under self-employment scheme. Andhra Pradesh State Financial Corporation paid the cost of the disputed machinery on behalf of the Complainant. On the basis of these undisputed facts it has been contended that it cannot now disputed that the machinery was bought for self-employment. It has been argued that merely by employing one or two persons for helping him the Complainant did not go out of the ambit of the explanation to Section 2(d)(ii) of the Consumer Protection Act.
3. It appears that the case has been heard at length on evidence by the State Commission. In the evidence before the State Commission the Complainant stated that he was a Commerce Graduate, he had no technical knowledge regarding the machine and had no qualification to that effect. He did not get any mechanical or technical training. He further stated:
"I have got medium property i.e. 5 acres land and 100 sheeps.....
To operate the machine 10 people are required. One man can operate the machine for other things i.e. collection ropes the total number required is 10 members..... On 4.4.92 the respondent company has erected that disputed machinery, Mr. K. Suryanarayana, S. Narayna and B. Rajasekhar are the persons who are having technical knowledge regarding the running of the coir Industry. I have maintained attendance registers for the workers as well as wages registers as per the a Factories Act. The names of the above said persons has been mentioned in the Attendance Register. I have no knowledge regarding the coverage of ESI as well as provident Fund. it is true I have no knowledge to administrate the industry or any knowledge technically to start the coir Industry..... Mr. Suryanarayana and S. Narayana were trained in the respondent company for a period of one month, and the company has issued a certificate stating that they can independently. operate the machine."
4. From the evidence given by the Complainant it appears that 10 people were required to operate the machine. It is also admitted that the Complainant has not himself got the technical training to run to machine. Mr. K. Suryanarayana, S. Narayna and B. Rajashekar the employees of the Complaint had technical knowledge regarding running of the coir industry. Surayanarayana, S. Narayna were trained by the Appellant herein M/s. Sakthi Engineering work to independently operate the machine and a certificate to that effect was issued by the appellant. Attendance Register as well as wage Register as per the Factories Act were maintained by the Complainant (Respondent herein) for the purpose of running his industry. From the facts stated herein above it does not appear that the machine was purchased for the purpose of self-employment. He does not know how to operate the machine for making ropes which he purchased, he had employed several persons to run the machine, two of them were specially trained for this purpose by the Appellant. He maintained attendance register for workers as well as the wage register in terms of the requirement of the Factories Act. In other words he had at least 10 employees at his role.
5. That apart in his deposition he said, "I have got medium property i.e. 5 acres land and 100 sheeps". Therefore, the Complainant had another source of income who was trying to set up another business for which he had no technical knowledge. He provided the capital and the technical expertise to run the machinery. About 10 persons were employed, 3 of the employees knew how to operate the machine, two of them got special training and a certificate from the Appellant Company. It is difficult to see how on these facts, it can be said that the Respondent-Complainant was an unemployed youth and had purchased the machinery for self-employment. On behalf of the Appellant reliance was placed on the judgment of the Supreme Court in the case of Laxmi Engineering Works. v. P.S.G. Industrial Institute reported as (1995)3 Supreme Court Cases 583. In that case Laxmi Engineering Works was a proprietory concern established under he Employment Promotion Programme. It was registered as a small-scale industry with the Directorate of Industries, Maharashtra. It had also obtained financial assistance form Maharashtra State Finance Corporation to purchase a machine which allegedly turned out to be defective. The scheme of the Act was examined by the Supreme Court in that case and it was observed:
"The Act provides for 'business-to-consumer' dispute and not for 'business-to-business' disputes. this scheme of the Act, in our opinion, is relevant to and helps in interpreting the words that fall for consideration in this appeal."
6. Bearing this principle in mind the Supreme Court examined the meaning of the 'consumer' as provided in Section 2(d) of the Act in which it was specifically laid that a consumer will not include person who buys such good for resale or for any commercial purpose and explanation was added to the expression' commercial' purpose. When amendment was made in 1993 an explanation to the definition of he consumer was added. The effect of this explanation is that even though a person who purchasers goods for commercial purpose will not be a consumer within the meaning of the Act yet he will be treated as a consumer if the goods bought by him are used by him exclusively for the purpose of his earning livelihood by means of self-employment. The important words used in this explanation are "used by him exclusively", i.e. for the purpose of earning his livelihood and 'by means of self-employment'. If a person is not exclusively using the goods for the purpose of earning his livelihood he will not be able to get benefit of this explanation, as in this case the Respondent-complainant has got 5 acres of land and also cattle. He has means of his earning livelihood. If he is supplementing that by another line of business, it cannot be said that he is earning his livelihood form this venture of producing coir.
7. Further difficulty is that the livelihood has to be earned' by means of self-employment'. The source by means of self-employment literally means that livelihood will be earned by employing the consumer own efforts and not by employment of any other persons. 'Self-employment' negates employment of any other person. The rigour of this Section was softened by the Supreme Court in the case of Laxmi Engineering Works by holding that if a person has employed himself in running a machine with the help of one or two other persons it will be still a case of 'self-employment'. But the important thing is that the person concerned must engage himself in the activity which generates his livelihood. It will not do if he merely acts in a supervisory position.
8. The Supreme Court has administered this position by some illustrations:
"Let us elaborate: a person who buys a typewriter or a car and uses them for his personal use is certainly a consumer but a person who buys a typewriter or a car for typing others work for consideration or for plying the car as a taxi can be said to be using the typewriter/car for a commercial purpose. The explanation however clarifies that in certain situations , purchase of goods for' commercial purpose' would not yet take the purchaser out of the definition of expression 'consumer. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods is yet a 'consumer'. In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other words, if the buyer of goods uses them himself, i.e. by self-employment for earning his livelihood, it would not be treated as a 'commercial purpose' and he does not cease to be a consumer for the purposes of the Act. The explanation reduces the question, what is a 'commercial purposes' to a question, what is a 'commercial purpose,' to a question of act 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".
9. The Supreme Court went on to observe:
"It is argued by the learned counsel for the appellant that such a narrow construction may not be warranted by the scheme and object of the enactment. He says that there may be a widow or an old or invalid man who may have no other means of livelihood and who purchases an auto-rickshaw or a car or other machinery to be plied of consideration on a daily, weekly or monthly basis or as a servant or agent. While or monthly basis or as a servant or agent. While there is certainly some logic in the said submission it cannot be accepted in view of he language of the explanation. we are also of the opinion that the definition of the expression 'person' in Section 2(m) as including a firm (whether registered or not), a Hindu Undivided Family, a cooperative society or any other association of persons (whether registered under the Societies Registration Act, 1860 or not) makes no differences to the above interpretation. If a firm purchases the goods, the members of the firm should themselves ply, operate or use the goods purchased. Same would be the case of the purchase by Hindu Undivided Family, cooperative society or any other association of persons".
10. Bearing in mind the principles laid down by the Supreme Court, it we examine this case well find that the Respondent-Complainant is proprietory concern. The proprietor himself does not run the machine. He has employed trained personnel to run to the machine. The number of employees according to the Complainant is 6 or 7 but he maintains attendance register of employees and wage register as required by the Factories Act. That means he is complying withe the provisions of Factories Act. He can be required to do so only if the strength of his employees is 10 or more. Therefore, we are of the view that this case could not be entertained by the State Commission. The plea that it was a small scale industry and loan was obtained under Self-employment Scheme etc., will be of no avail because the facts are very much similar to the facts decided by the Supreme Court in Laxmi Engineering Works. Thereto the Appellant as registered as a Small Scale Industry and was established under Employment Promotion Programme of .the State of Maharashtra. The Supreme Court dismissed the case of the Complainant but observed that if the Complainant choose to file a suit for relief claimed in the complaint, "he can do so according to law and in such a case he can claim the benefit of Section 14 of the Limitation Act to exclude the period spent in prosecuting the proceedings under the Consumer Protection Act, while computing the period of limitation prescribed for such a suit".
11. We are also of the view that the appeal will have to be allowed. The order of the State Commission is set aside and the complaint is dismissed. The Complainant may seek other relief in accordance with law and he can apply for exclusion of the period spent in prosecuting the case under the Consumer Protection Act while computing period of limitation for institution of any suit or other proceedings.
12. Before parting with the case, we must refer to two judgments cited by the Respondents, (i) Kalyan Kumar Sen v. National Small Industries Corporation Ltd.- I(1997) CPJ 546 where it was held in held in that case that the Complainant had purchased a machine for commercial purpose but only for earning his livelihood by self-employment. He had to be treated as a consumer on those facts, (ii) the other case of Dunlop India Limited and Anr. v. Kashi Knat Mishra and Anr.-I(2000) CPJ 453 where it was found that the complainant had established type repairing unit for earning his livelihood. There was no finding in these two cases that the Complainant had employed people to run the machine and he himself was not engaged in running of the machine. In other words, there was no finding that the Complainant had not employment himself for running the machine by which he earned his livelihood.
13. The appeal, therefore, is allowed and the complaint is dismissed. The Respondent-Complainant will be at liberty to seek remedy in accordance with law in some other forum.