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[Non-Reportable]

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 2109-2110 OF 2018 [Arising out of SLP (Civil) Nos. 23104-23105 of 2015]

M/s. Paramount Digital Color Lab & Ors. Etc.    ... Appellants

Versus

M/s. Agfa India Pvt. Ltd. & Ors. Etc.         ... Respondents

J U D G M E N T

Mohan M. Shantanagoudar, J.

Leave granted.  

2. These appeals are directed against the final Judgment and Order

dated  09.02.2015  passed  by  the  National  Consumer  Disputes

Redressal Commission, Circuit Bench at Lucknow (hereinafter referred

to as ‘the National Commission’) in First Appeal No. 194 of 2011 and

First Appeal No. 222 of 2011, whereby the National Commission, by a

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common order,  has dismissed the complaint filed by the appellants

and allowed the first appeal filed by the respondents.

3. Brief facts leading to these appeals are as follows:

In the year 2004, the appellants being unemployed graduates decided

to start a business of photography in partnership for self-employment

and for  their  livelihood,  for  which they  needed an advanced photo

processing,  developing  and  printing  machine.   The  appellants

contacted respondent No. 2 and enquired about the salient features

and  performance  of  “Agfa  Minilab  D-Lab.  1  Allrounder”  machine.

Respondent no. 3 was the then Managing Director and respondent No.

4  was  the  then  General  Manager,  Marketing  and  Sales  Consumer

Imaging Division, Agfa India Pvt. Ltd.   Both of them narrated several

special features of the machine and apprised that the machine delivers

excellent  quality with negative and the digital  technology with high

productivity;  they  also  assured  that  it  is  reliable  open  system

supported by Agfa’s unsurpassed service and supported network and

fully  equipped.   They  also  proposed  several  schemes  like  prompt

service and free supply of paper and chemicals etc.  They suggested

the purchase of the machine and sent a proposal by way of quotation.

Being impressed by the advice and suggestion of the respondents, the

appellants  borrowed  a  loan  from  the  Union  Bank  of  India  on

12.07.2004 and placed an order for the purchase of the said machine

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for which the appellants paid a sum of Rs.62,00,000/- towards the

cost of the machine and other collateral charges in advance.   It is the

case of the appellants that respondent Nos. 1 to 4, despite having the

knowledge  that  the  machine  which  contains  a  pre-loaded  software

does not work properly and is unworthy of acceptance, had unfairly

and carelessly sold the machine to the appellants on 05.08.2004 for

their financial gain, causing financial loss to the appellants. It did not

give satisfactory performance up to the marked standard, as narrated

and assured by the respondents.   Various technical, mechanical and

software problems were detected in the machine.  As per the contract,

the  machine  was  under  warranty  for  one  year  commencing  from

05.08.2004.  Since the performance of the machine was not up to the

marked standard and as the appellants found number of defects in

the product, such as existence of grains in the print etc., they made

complaints  to the  respondents for  the removal  of  defects;  but even

after several visits by the engineers of Agfa India Pvt. Ltd., as well as

the  engineers  of  the  developer  and  designer  mother  company,  the

machine was never made to run to its marked standard.   Ultimately,

the  engineers  of  the  company  vide  their  report  dated  30.11.2004

admitted that the pre-loaded software in the machine was still under

research and development and that the problems would be resolved by

the new software which was expected to be released in January, 2005.

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Thereafter also, the appellants repeatedly requested respondent No. 1

for the replacement of machine with another piece of machine, but the

respondents unfairly did not pay heed to the request of the appellants.

Though the warranty had expired on 05.08.2005 after a period of one

year, the defects in the machine could not be cured.

4. On 01.12.2005,  respondent No.  1,  through respondent  Nos.  2

and 4, informed the appellants about the transfer of the Consumer

Imaging Division to a newly created group of  companies under the

name and style of  “Agfa Photo India Pvt.  Ltd.”,  informed about the

insolvency of the Consumer Imaging Division of the mother Company,

and required advance payment for the requisite chemical as they had

to import the same, even after receiving and releasing the full cost of

“Agfa  Minilab  D-Lab.1  Allrounder”  machine  for  which  the  entire

amount was already paid to the respondents on 05.08.2004 as per the

package.  Neither was it mentioned to the appellants that they would

have to pay extra amount for the license key (password), nor was it

printed in the general conditions of sale and delivery or in the terms

and conditions provided to the appellants.    

5. Having  no  other  option,  the  appellants  issued  notice  on

12.04.2006 calling upon respondent Nos. 1 to 4 to pay compensation

for the loss and damages incurred and sustained by the appellants.  A

reply was issued by respondent Nos. 1 and 3.  However, respondent

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Nos. 2 and 4 did not reply.   Even in the reply sent by respondent Nos.

1  and 3,  they  did  not  give  a  proper  explanation  inasmuch as  the

business  of  the  Consumer  Imaging  Division  was  transferred  to

respondent No.  3.   Thereafter,  the appellants approached the State

Consumer  Disputes  Redressal  Commission,  U.P.  at  Lucknow

(hereinafter referred to as ‘the State Commission’) by filing Complaint

Petition  No.  7  of  2007,  which  came  to  be  allowed  in  part  on

21.02.2011.    The State Commission held respondent Nos. 2 and 4

responsible  for  unfair  trade  practice  and  directed  payment  of

compensation on account  of  loss,  mental  and physical  torture  and

expenses of the complainants.     

6. Aggrieved by the judgment of the State Commission allowing the

complaint  in part,  the appellants preferred First  Appeal  No.  194 of

2011 before the National Commission at New Delhi.  The appellants

mainly  contended  that  the  State  Commission  was  not  justified  in

holding  that  only  respondent  Nos.  2  and  4  were  responsible  for

payment of cost of machine along with ancillary charges etc.    

7. Similarly, respondent Nos. 2 and 4 also preferred First Appeal

No.  222  of  2011  before  the  National  Commission  on  23.05.2011

raising various grounds including the ground that the appellants did

not  come within the  definition of  “Consumer” under the Consumer

Protection Act, 1986 (hereinafter referred to as the ‘Act’), read with the

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Consumer  Protection (Amendment)  Act,  2002.     By  the  impugned

judgment dated 09.02.2015, the National Commission dismissed the

First Appeal No. 194 of 2011 filed by the appellants and allowed the

First Appeal No. 222 of 2011 filed by the respondents.    

8. Respondents,  though served  in  these  appeals,  have  chosen to

remain absent.   

9. Heard  learned  counsel  for  the  appellants  and  perused  the

records.   It  is  relevant  to  note  that  no  relief  has  been claimed as

against respondent No. 5.    Having gone through the judgment of the

National Commission, it is clear that though a number of points arose

for consideration, it did not choose to decide the same for remanding

the matter, since it felt that the complaint itself was not maintainable

and that the matter has been pending for long.  The State Commission

not only held that the complaint was maintainable, but also proceeded

on merits and held in favour of the appellants.

10. The National Commission on evaluation of the material on record

and after hearing the parties concluded that the complainants are not

“consumers”  as  envisaged  under  Section  2(1)(d)  of  the  Consumer

Protection Act and hence the Act is not applicable.    Thus, the only

question  to  be  decided  before  us  in  this  matter  is  whether  the

appellants are “consumers” as envisaged under Section 2(1)(d) of the

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Act. The relevant provision of the Act defines the word “consumer” as

under:   

“2(1)(d) “consumer” means any person who,— (i)   buys any goods for a consideration which

has been paid or promised or partly paid and partly  promised,  or  under  any  system  of deferred payment and includes any user of such goods  other  than  the  person  who  buys  such goods  for  consideration  paid  or  promised  or partly  paid  or  partly  promised,  or  under  any system of deferred payment, when such use is made  with  the  approval  of  such  person,  but does  not  include  a  person  who  obtains  such goods for resale or for any commercial purpose; or

(ii)  hires  or  avails  of  any  services  for  a consideration which has been paid or promised or  partly  paid  and  partly  promised,  or  under any system of  deferred payment and includes any beneficiary of such services other than the person  who hires  or  avails  of  the  services  for consideration paid or promised, or partly paid and  partly  promised,  or  under  any  system of deferred  payment,  when  such  services  are availed  of  with  the  approval  of  the  first mentioned person but does not include a person who avails of such services for any commercial purpose;

Explanation.- For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services  availed  by  him  exclusively  for  the purposes of earning his livelihood by means of self-employment.”

11. In this case, since the appellants have purchased the machine,

Section 2(1)(d) of the Act is applicable.  “Consumer” as defined under

Section 2(1)(d) of the Act does not include a person who obtains goods

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for a “commercial purpose”. The Explanation supplied to Section 2(1)

(d)  clarifies  that  “commercial  purpose”  does  not  include  use  by  a

person of goods bought and used by him and services availed by him

exclusively  for  the  purposes  of  earning  his  livelihood  by  means  of

“self-employment”.  If both these provisions are read together, it leads

to  the  conclusion  that  if  a  person  purchased  the  goods  for

consideration not for any commercial purpose, but exclusively for the

purposes  of  earning  his  livelihood  by  means  of  “self-employment”,

such purchaser will come within the definition of “consumer”.   If a

person purchases the goods for a “commercial purpose” and not for

the purposes of earning his livelihood by means of “self-employment”,

such purchaser will not come within the definition of “consumer”. It is

therefore clear, that despite “commercial activity”, whether a person

would  fall  within  the  definition  of  “consumer”  or  not  would  be  a

question  of  fact  in  every  case.  Such  question  of  fact  ought  to  be

decided in the facts and circumstances of each case.  

“Self-employment” necessarily includes earning for self. Without

earning generally there cannot be “self-employment”. Thus, if a person

buys and uses the machine exclusively for the purposes of earning his

livelihood by means of “self-employment”, he definitely comes within

the definition of  “consumer”.  In the matter  on hand, the quality of

ultimate production by the user of the machine would depend upon

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the skill of the person who uses the machine. In case of exigencies, if a

person trains another person to operate the machine so as to produce

the final product based on skill and effort in the matter of photography

and  development,  the  same  cannot  take  such  person  out  of  the

definition of “consumer”.

12. In  the  case  of  Madan  Kumar  Singh  (Dead)  v.  District

Magistrate,  Sultanpur  and  Ors.,  (2009)  9  SCC 79,  the  appellant

therein  had  bought  a  truck  in  an  auction-sale  for  a  consideration

which was paid by him. It was bought to be used exclusively for the

purposes  of  earning  his  livelihood  by  means  of  self-employment.

However,  there was inordinate delay in delivering possession of the

truck  and  relevant  documents  to  the  appellant  therein  and  in

confirming  the  auction  in  his  favour.  Possession  of  the  truck  was

ultimately  delivered  to  him  during  the  pendency  of  his  complaint

before the District Forum. This Court held that the purchase of the

truck by the appellant therein would be covered by the Explanation to

Section  2(1)(d)  of  the  Act.  In  the  said  matter,  the  appellant

emphatically  stated that  he  had bought  the  said  truck to  be  used

exclusively by him for the purposes of earning his livelihood by means

of self-employment. It was categorically observed by this Court that

even if he was to employ a driver for running the truck, it would not

have  changed  the  matter  in  any  case,  as  even  then  the  appellant

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would have continued to earn his livelihood from it and of course, by

means of self-employment.

13. Thus, in our considered opinion, each case ought to be judged

based on the peculiar facts and circumstance of that case. Whether

the  assistance of  someone is  required to  handle  the  machine,  is  a

question  of  fact  and  necessity?  Ultimately,  if  it  is  purely  for  a

“commercial purpose” and not for “self-employment”, the complainant

may not get the benefit of the Explanation to Section 2 (1)(d) of the

Act. The buyers of the goods or commodities for “self-consumption” in

economic activities in which they are engaged would be “consumers”

as defined in the Act. Furthermore, there is nothing on record to show

that  the  appellants  wanted  to  use  the  machine  in  question  for

purposes other than “self-employment”.   

Therefore, the point to be considered is whether the appellants

have purchased the machine in question for “commercial purpose” or

exclusively for the purposes of  earning their livelihood by means of

“self-employment”.     There  cannot  be  any  dispute  that  the  initial

burden is on the appellants to prove that they fall within the definition

of “consumer”.   It is pertinent to mention that respondent No. 4, who

is a contesting party, did not choose to file a counter affidavit before

the State Commission.  In other words, he did not deny any of the

claims made by the appellants.    None of the parties have led their

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evidence.    Based  on  the  material  on  record  before  the  State

Commission,  it  proceeded to decide on merits.   As the litigation is

being  fought  since  2006  in  different  Forums,  we  do  not  wish  to

remand  the  matter,  particularly,  when  there  is  sufficient  material

available on record for arriving at the conclusion.  

14. The word “purchaser” means and includes members of his family

also.  The machine in question was purchased by two partners; both

were  unemployed  graduates.     They  started  a  firm  namely  M/s.

Paramount  Digital  Color  Lab  at  Varanasi,  U.P.   afresh.     The

appellants have specified that they are unemployed graduates; they

planned to start a business of photography for self-employment and

for their livelihood, for which they contacted respondent Nos. 2 & 4,

which means that  they had not  planned to  start  their  business  of

photography till they planned to purchase the machine in question.

Having  felt  the  need  of  the  machine  in  question,  they  contacted

respondent  No.  1  and  enquired  about  the  salient  features  and

performance of the “Agfa Minilab D-Lab.1 Allrounder” machine.  Being

impressed by the advice and suggestion made by respondent Nos. 2 &

4,  appellants  borrowed  a  loan  from  the  Union  Bank  of  India  on

12.07.2004 and placed an order for the purchase of the said machine

and paid by draft an amount of Rs.62,00,000/- towards the cost of the

machine along with freight and collateral charges.   It is the case of the

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appellants that they purchased the machine with the fond hope and

belief  that  it  would  give  good  results  and  that  they  would  earn  a

handsome amount by which their basic needs of livelihood would be

fulfilled and that the family of the appellants will survive smoothly.

They might have started the business with the help of one operator

and  helper.   Of  course,  in  Paragraph  14  of  the  complaint,  the

appellants have used the words “Operators and Helpers”.  This portion

of the complaint has been highlighted by the National Commission to

conclude that the appellants were using the machine with the help of

third parties for commercial purposes inasmuch as they themselves

were  not  using  the  machine  personally.    Such  averment  by  the

appellants in the complaint appears to be an exaggerated version with

a view to get more compensation.   One such stray sentence will not

tilt the balance against the appellants.   The material needs to be seen

in its entirety and not in isolation. Since there is nothing on record to

show that they wanted the machine to be installed for a commercial

purpose  and  not  exclusively  for  the  purposes  of  earning  their

livelihood by means of self-employment, the National Commission was

not  justified  in  concluding  that  the  appellants  have  utilised  the

services of an operator or a helper to run a commercial venture.   One

machine does not  need many operators or helpers to complete  the

work entrusted.  Since the appellants were two partners, they must

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have been doing the work on their own, of course, may be with the aid

of a helper or an operator.     The machine would not have been used

in  a  large-scale  profit-making  activity  but,  on  the  contrary,  the

appellants  purchased  the  machine  for  their  own  utility,  personal

handling and for their small venture which they had embarked upon

to  make  a  livelihood.  The  same  is  distinct  from  large-scale

manufacturing  or  processing  activity  carried  on  for  huge  profits.

There is no close nexus between the transaction of purchase of the

machine  and the  alleged  large-scale  activity  carried  on  for  earning

profit.   Since the appellants had got no employment and they were

unemployed graduates, that too without finances, it is but natural for

them to raise a loan to start the business of photography on a small

scale for earning their livelihood.

15. The  material  discloses  that  respondent  no.  1  company  was

dissolved in the year 2005.  Prior to this dissolution, respondent no. 2

was the Managing Director of respondent No. 1 and respondent no. 4

was the General Manager of respondent No. 1.  The respondent Nos. 2

and  4  collectively  talked  with  the  appellants  and  finalised  the

agreement along with the assurance that the machine is up to the

marked standard and that repairs, if any, would be rectified free of

cost,  apart  from  other  things  assured.   Respondent  No.  3  is  the

subsequent company which has taken over from respondent No. 1 in

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the year 2005.  The said company also did not come to the aid of the

appellants either by replacing the machine or by rectifying the major

defects,  consequent  upon which the  appellants  have  suffered huge

losses.  Anybody can visualise the loss sustained by the appellants

inasmuch as they had obtained a loan with the promise to pay interest

to  respondent  No.  5 bank for  purchasing  the  machine.   Therefore,

respondent Nos. 2, 3 and 4 are collectively liable to make good the loss

of the appellants.  

16. In view of the same, it cannot be said that the appellants do not

fall within the definition of the term “consumer”, as envisaged under

Section 2(1)(d) of the Act.  Hence, the impugned judgment and order

dated 09.02.2015 passed by the National Commission is liable to be

set  aside  and the  judgment  dated 21.02.2011 passed by  the  State

Commission is restored, with the clarification that respondent Nos. 2

to 4 are jointly and severally liable to make good the loss, as directed

by the State Commission.  The appeals are allowed accordingly.   

…………….…………………………..J. [KURIAN JOSEPH]

………………………………………….J. [MOHAN M. SHANTANAGOUDAR]

New Delhi, February 15, 2018.

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ITEM NO.1501               COURT NO.5               SECTION XVII                S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS Petition(s)  for  Special  Leave  to  Appeal  (C)   No(s). 23104-23105/2015 M/S. PARAMOUNT DIGITAL COLOR LAB & ORS. ETC.      Petitioner(s)                                 VERSUS M/S. AGFA INDIA PVT. LTD. & ORS. ETC.              Respondent(s) Date  :  15-02-2018  These  petitions  were  called  on  for  Judgment today. For Petitioner(s)   Mr. Rohit Singh, AOR                     Mr. Ajay Kumar Srivastava, AOR

Mr. Dhirendra Kumar, Adv.                      For Respondent(s)                       

Hon'ble  Mr.  Justice  Mohan  M.  Shantanagoudar  pronounced  the non-reportable Judgment of the Bench comprising Hon'ble Mr. Justice Kurian Joseph and His Lordship.   

Leave granted.   The appeals are allowed. Pending Interlocutory Applications, if any, stand disposed of.

(JAYANT KUMAR ARORA)                              (RENU DIWAN)    COURT MASTER                                ASSISTANT REGISTRAR

(Signed non-reportable Judgment is placed on the file)