(Constituted under Section 9 of The Consumer Protection Act, 1986)

Date of Decision: 09.03.2009

Appeal No. FA-09/63

(Arising out of Order dated 19.09.2008 passed by the District Consumer Forum(Central), Maharana Partap Bus Terminal, Mezzanine Floor, Kashmere Gate, Delhi in Complaint No. 689/07)

M/s. Patel Roadways Ltd. … Appellant

(Now changed to Patel Integrated Through

Logistics Limited), Mukti Bodh,

Regional Office: E-2, Advocate

Caxton House,

Jhandewalan Extension,

Opposite New Cycle Market,

New Delhi-110055.


M/s. Golcha International Pvt. Ltd. … Respondent

Through Sh. Dhanraj Golcha(Director),

511/1, 2nd Floor, Katra Ishwar Bhavan,

Khari Baoli, Delhi-110006.


Justice J.D. Kapoor … President

Ms. Rumnita Mittal … Member

1. Whether Reporters of local newspapers be allowed to see the judgment?

2. To be referred to the Reporter or not?

Justice J.D. Kapoor, President (Oral)

1. On account of having delivered two consignments less by 432 kgs. to the consignee, the appellant has been vide impugned order dated 19.09.2008 passed by the District Forum directed to pay the cost of the consignment amounting to Rs. 45,000/- with interest @ 9% from 09.03.07 till realization, Rs. 5,000/- as compensation and Rs. 3,000/- as cost of litigation.

2. The impugned order has been assailed through this appeal mainly on the premise that the respondent does not come within the definition of a consumer as he had booked this consignment with the appellant for commercial purpose. To appreciate the contention of the counsel for the appellant, the relevant facts need to be stated, in brief, these are as under :-

Respondent had booked two consignments of Cloves weighing 10192 kgs. for delivery at Delhi Office. Appellant issued two consignments notes No. 8010961 and No. 8010962 dated 27.02.07. The respondent paid a sum of Rs. 45,346/- being transportation charges. The consignments were loaded by appellant in truck bearing No. MP 06E 6304. The appellant delivered the consignment to respondent on 09.03.07. During the delivery, respondent found that appellant delivered the consignment by less 432 kgs. The respondent pleaded that most of the bags were received with the side open condition and in hand stitched condition whereas the supplier had delivered the goods in machine-stitched condition. The respondent pleaded that value of 432 kgs. of Cloves is about Rs. 1,30,000/-. The respondent thus suffered huge financial loss because of short delivery. The respondent wrote several letters to appellant but it did not care to reply the same. It also pleased that besides the loss of Rs. 1,30,000/-, the respondent is entitled for compensation of Rs. 5,00,000/- alongwith cost of litigation. The respondent prayed for directions to appellant to pay a sum of Rs. 7,50,000/- with interest, cost and compensation.

3. In support of his contention that the respondent was engaged in commercial activities and therefore had booked this consignment for commercial purpose and a person who engages services for a commercial purpose does not come within the definition of consumer as defined by Section 2(1)(d) of the Consumer Protection Act, the learned counsel for the appellant has relied upon the following decisions of the National Commission :

(i) Raba Contel Pvt. Ltd. Vs Printek & Ors.

Vol. 11995 CPJ 51

(ii) Bangal Mills Stores Supply Co. Vs Nedungadi Bank Limited

Vol – IV 2004 CPJ 351

(iii) Panvij Biotec Nigeria Ltd. Vs National Container Line

Vol – IV 2004 CPJ 80, Delhi

4. Recently the National Commission has dealt with this proposition threadbare in Harsolia Motors Vs. National Insurance Co. Ltd. wherein the decision of Supreme Court rendered in First Appeal No. 159/04 dated 03.12.04 was also discussed. It was held that unless a person purchases goods or hires service for trading that is for further sale to earn profit, he cannot be held to have purchased goods or hired services for commercial purpose.

5. Before adverting to the observation of the National Commission in the aforesaid case, we first advert to a definition of a ‘consumer’ as provided by Section 2(1)(d) (ii) of the Consumer Protection Act, 1986 which is as under :-

[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 purpose 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;]

6. The word ‘service’ has been defined by Section 2(1)(o) of the Consumer Protection Act is as under :-

“service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing insurance, transport, processing, supply of electrical, or other energy, board of lodging or both, [housing construction] entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.”

A ‘person’ has been defined by Section 2(1)(m) of the Consumer Protection Act, 1986 as under :-

(i) a firm whether registered or not;

(ii) a Hindu undivided family;

(iii) a co-operative society;

(iv) every other association of persons whether registered under the Societies Registration Act, 1860 (21 of 1860) or not;

7. As is apparent from the aforesaid definitions, the service of transportation comes within the definition of ‘service’ as defined by Section 2(1)(o). Thus any person which includes any firm hiring or availing these services comes within the ambit of consumer as defined by Section 2(1)(d)(ii).

8. There is a distinction between the commercial activity and a commercial purpose. Any organization or any firm or business house engaged in commercial activity falls within the definition of a consumer if it hires or avails any of the services as defined by Section 2(1)(o) for its own use. As observed by National Commission it is only when a person hires or avails such services as referred above for further trading i.e. for further sale and if such services are rendered to a third person to earn profit only then purpose of service comes within the ambit of commercial activity and not commercial purpose.

9. Had it been so, then services of insurance transport or marine insurance would have been brought outside the ambit of ‘service’. But it is not so. The observations made by the Bench of the National Commission presided by Hon’ble President or so, are clear and unambiguous and are as under :-

“The only question requiring decision in these appeals is whether insurance policy taken by commercial units could be held to be hiring of services for commercial purpose and thereby excluded from the purview of the Consumer Protection Act, 1986.

From the aforesaid definitions it can be held that :-

(a) A person is a consumer who buys any goods for consideration and also include user of such goods;

(b) Who hires any services for consideration and includes beneficiary of such services.

To this wide definition there are exclusions:

(i) It excludes a consumer who obtains such goods for resale or for any commercial purpose;

(ii) It also excludes a person who avails of services of any description –

(a) free of charge; or

(b) under a contract of personal service; and

(c) for any commercial purposes.

The judicial dictionary meaning of the words ‘commercial purpose’ which is as under:-

“The word commercial according to the Oxford Dictionary means viewed as a matter of profit and loss. The word “purpose” means “object which is in view or for which is made” ; “aim” “amend”. The word “commercial purposes” would, therefore, cover an undertaking the object of which is to make a profit out of the undertakings.

According to Oxford dictionary, it means “viewed as a matter of profit or loss.”

The word “commercial” is defined in the Concise Oxford Dictionary, New Edition of the 1990, at page 227, the word “commercial” is defined as ‘having profit as a primary aim rather than artistic etc. value.’

He submitted that the contract of insurance is contract of indemnity and therefore, there is no question of ‘commerce’ in obtaining insurance coverage. For this purpose, he has referred to discussion on ‘Contract Indemnity’ in New Insurance Law, by Brij Nandan Singh, which is as under:-

Para 19 : “Contract of indemnity: ‘The very foundation in my opinion of every rule which has been applied to the insurance law is that the contract of insurance contained in a fire or marine policy is a contract of indemnity and of indemnity only and that this means that the assured in the case of loss against which the policy has been made, shall be fully indemnified but never more than fully indemnified. That is the fundamental principle of insurance.

“the principle that a contract of assurance except life assurance and insurance against accident) is a contract of indemnity, leads the insured to be interested in the preservation of the thing insured and the desire for the happening of the event insured against becomes remote.”

At the outset, it is to be stated that an insured who takes the insurance policy cannot trade or carry on any commercial activity with regard to the insurance policy taken by him. Under Sec. 3 of the Insurance Act, 1938, no person is permitted to carry on business of insurance unless he obtains a certificate of registration from the Insurance Recovery and Development Authority.

Further, hiring of services of the Insurance Company by taking insurance policy by Complainants who are carrying on commercial activities cannot be held to be a commercial purpose. The policy is taken for reimbursement or for indemnity for the loss which may be suffered due to various perils. There is no question of trading or carrying on commerce in insurance policies by the insured. May be that insurance coverage is taken to commercial activity carried out by the insured.

Therefore, the two-fold classification is commercial purpose and non-commercial purpose.

If the goods are purchased for resale or for commercial purpose then such consumer would be excluded from the coverage of Consumer Protection Act, 1986. Such illustration could be that a manufacturer who is producing one product ‘A’ for such production he may be required to purchase articles, which may be raw-material, then purchase of such articles would be for commercial purpose. As against this, the same manufacturer if he purchases a refrigerator, a television or an air-conditioner for his use at his residence or even in his office, it cannot be held to be for commercial purpose and for this purpose he is entitled to approach the consumer forum under the Act.

In this view of the matter, a person who takes insurance policy to cover the envisaged risk does not take the policy for commercial purpose. Policy is only for indemnification and actual loss. It is not intended to generate profit.”

10. What is material is to consider whether the services of transportation was availed for the purpose of delivering the consignment to a third person or to any other person or not. So mush so, even the respondent was the direct beneficiary as the services availed by the respondent also comes within the definition of service as defined by Section 2(1)(d)(ii) of the Consumer Protection Act.

11. Reliance placed by the learned counsel for the appellant is highly misplaced particularly in view of the latest decision of the National Commission in Harsolia Motors Vs National Insurance Co. Ltd. 1(2005) CPJ 27 (NC) which was based upon the judgment of the Supreme Court.

12. In view of the foregoing reasons and the view taken by us, the appeal is dismissed.

13. The impugned order shall be complied with within one month from the date of receipt of this order.

14. Bank Guarantee/FDR, if any furnished by the appellant, be returned forthwith.

15. A copy of this order as per the statutory requirements be forwarded to the parties free of charge and also to the concerned District Forum and thereafter the file be consigned to Record room.

16. Announced on 9th day of March, 2009.

(Justice J.D. Kapoor)


(Rumnita Mittal)