Sunday, February 23, 2014

CAN COMPANY BE CONSUMER?


Understanding who is Consumer
A. Definitions
Following definitions under the Consumer Protection Act, 1986 (“CPA”) require our attention.
1.            Section 2(1)(b) the definition of the "complainant" means:
(i) A consumer; or
(ii) Any voluntary consumer association registered under the Companies Act, 1956 (1of 1956) or under any other law for the time being in force; or
(iii) The Central Government or any State Government,
(iv) One or more consumers, where there are numerous consum­ers having the same interest;
(v) In case of death of a consumer, his legal heir or representative; who or which makes a complaint; 

2.            Section 2(1) (d) states that the definition of "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 purposes;

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; 

3.            Section 2(1) (m) states that the "person" includes,—
(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;

B. Jurisprudence
In Karnataka Power Transmission Corpn. vs. Ashok Iron Works Pvt. Ltd[1] the apex court held that a company can be a consumer and can maintain a complaint under the CPA.
Fact of the Case: The complainant before the forum below was a private limited company that has applied for the supply for electricity from the State Electricity Board(“SEB”). The company herein was engaged in the manufacturing the iron ore products. There was delay in supply of electricity by the SEB for which the company approached the consumer forum for relief.
Orders of Forum below: The District Forum on the ground that the company is not a consumer dismissed the complaint of the Complainant.  However, the State Commission of Karnataka set the said order aside. KTPC challenged the order of the State Commission before National Commission. It was dismissed in view of its decision dated November 23, 2001, in the case of M/s. Welmelt Steel Cast Pvt. Ltd. v. Karnataka State Electricity Board. Thereafter the matter came before Supreme Court.
Argument of the Appellant: The question that was under consideration before Supreme Court was whether a private limited company is a ‘person as contemplated under Section 2(1)(d) of the CPA? The contention of the learned counsel for the KPTC is that
(i) The definition of “persons” specified and enumerated in Section 2(1)(m) are the only categories of persons covered by that clause and a company incorporated under the Companies Act is not covered thereunder.
(ii) The learned counsel submited that a company is excluded from the definition of ‘person’ since the object of the CPA which is to provide an affordable remedy to individuals or four categories of collectivities or associations of individuals which may constitute legal entities for suing or being sued.
(iii) According to learned counsel, the companies incorporated were never intended to be covered by the CPA because they could always pursue the ordinary remedy provided in law.
(iv) The learned counsel also submitted that the word “includes” must be read as “means”. In this regard, the learned counsel placed reliance upon two decisions of this Court namely; (1) The South Gujarat Roofing Tiles Manufacturers Association and Anr. v. The State of Gujarat and Anr. [(1976) 4 SCC 601] (2) Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and Ors. ((1987) 1 SCC 424).
The ratio of the judgment with regard to the definition of “Consumer” is based on the following reasons:
Definition of Consumer: The definition of “consumer” can be ascertained from section 2(1)(d) read with section 2(1)(m) of the CPA. The definition of the word “include” in section 2(1)(m) of the CPA is important to ascertain the meaning of consumer. The ratio of the judgment emerged from the following deliberation:
(a) Meaning of Word Include: Lord Watson in Dilworth v. Commissioner of Stamps[2] made the following classic statement:
“The word “include” is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word “include” is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to “mean and include”, and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions.”
(b) Intention of the Legislature: Dilworth (supra) and few other decisions came up for consideration in Peerless General Finance and Investment Co. Ltd. [Citation is not provided] and this Court summarized the legal position that inclusive definition is used by the Legislature;
(A) To enlarge the meaning of words or phrases so as to take in the ordinary, popular and natural sense of the words and also the sense which the statute wishes to attribute to it;  
(B) To include meaning about which there might be some dispute;
(C) To bring under one nomenclature all transactions possessing certain similar features                                         but going under different names.
 It goes without saying that interpretation of a word or expression must depend on the text and the context. The resort of the word ‘includes’ by the Legislature often shows the intention of the Legislature that it wanted to give extensive and enlarged meaning to such expression. Sometimes, however, the context may suggest that word ‘includes’ may have been designed to mean “means”. The setting, context and object of an enactment may provide sufficient guidance for interpretation of word ‘includes’ for the purposes of such enactment.
(c) Definition of “Person” under CPA: Section 2(1)(m) which enumerates four categories defined in afore going para or not while defining ‘person’ cannot be held to be restrictive and confined to these four categories as it is not said in terms that ‘person’ shall mean one or other of the things which are enumerated, but that it shall ‘include’ them.
(d) Definition of “Person” under General Clauses Act: The General Clauses Act, 1897 in Section 3(42) defines ‘person’:
“Person shall include any company or association or body of individuals whether incorporated or not.”
Section 3 of the CPA upon which reliance is placed by learned counsel for KPTC provides that the provisions of the Act are in addition to and not in derogation of any other law for the time being in force. This provision instead of helping the contention of KPTC would rather suggest that the access to the remedy provided to the CPA is an addition to the provisions of any other law for the time being in force. It does not in any way give any clue to restrict the definition of the ‘person’.
(e) Definition is Exhaustive: Section 2(1)(m), is beyond all questions, an interpretation clause, and must have been intended by the Legislature to be taken into account in construing the expression ‘person’ as it occurs in Section 2(1)(d). While defining ‘person’ in Section 2(1)(m), the Legislature never intended to exclude a juristic person like company. As a matter of fact, the four categories by way of enumeration mentioned therein is indicative, categories (i), (ii) & (iv) being unincorporate and category (iii) corporate, of its intention to include body corporate as well as body un-incorporate. The definition of ‘person’ in Section 2(1)(m) is inclusive and not exhaustive. It does not appear to us to admit of any doubt that company is a person within the meaning of Section 2(1)(d) read with Section 2(1)(m) and we hold accordingly.
Conclusion
Therefore, from the bare reading of the CPA and judgment, it can be safely concluded that the company is a consumer and their complaint is maintainable before Consumer Forum.
 ****************
This is an informatory article by Ms. Jyoti S. who is a Partner, Legal Imperials. She is Head Litigation, Arbitration and Corporate Advisory. She handles the consumer related disputes of the firm.











[1] Civil Appeal No. 1879 of 2003 with civil appeal No. 7784 of 2002 decided on 09-02-2009,
[2] (1899) AC 99

No comments:

Post a Comment