Companies’ Ineligibility

 

 

 

JUSTICES J B Pardiwala and Manoj Misra at the Supreme Court have affirmed in the judgement of the case - M/s Poly Medicure Ltd. v. M/s Brillio Technologies Pvt. Ltd., on November 13, 2025, that both the State Commission as well as the National Commission were justified in holding that the goods/ services purchased/availed by the appellant were for a commercial purpose and therefore, the appellant is not a “consumer” as per section 2(1) (d) of the Consumer Protection Act, 1986. In this case, the complainant (appellant herein) has been an established company doing business ,which bought the product license to automate its processes. In such circumstances, the object of the purchase was not to generate self-employment but to organise its operations with a view to maximise profits. In the Court’s view therefore, the case of the complainant does not fall within the Explanation to section 2(1)(d) of the 1986 Act.

 

In the Supreme Court decision of the case -National Insurance Co. Ltd. v. Harsolita Motors and others (2023) 8 SCC 362, another decision relied upon by the appellant, the complainant, a commercial entity engaged in the business of selling vehicles, took fire insurance policy from the appellant, an insurance company, covering its office showroom, garage, machinery lying in the showroom premises, etc. The complainant’s case was that damages were sustained during Godhra riots and, therefore, the complainant was entitled to be indemnified under the policy of insurance. Aggrieved by the action of the Insurance Company, claiming deficiency in service, a complaint was filed. The Insurance Company took an objection that the complainant was not a consumer as per section 2 (1)(d) of the 1986 Act because its ultimate aim is to earn profits. The State Commission upheld the objection; against which the complainant filed an appeal before the National Commission.

 

The National Commission held that the expression used “for any commercial purpose” would mean that the goods purchased or services hired should be used in any activity directly intended to generate profit, but in a case where goods purchased or services availed are not intended to generate profit, it would not be a commercial purpose. Therefore, it was held, when a person takes an insurance cover for indemnification of actual loss suffered, the intention is not to generate profits. Consequently, the complainant would be a consumer. Upholding this view of the National Commission the Supreme Court observed: “39. Applying the aforesaid test, two things are culled out; (I) whether the goods are purchased for resale or commercial purpose; or (ii) whether the services are availed for any commercial purpose. 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 the Act of 1986. “40. Similarly, a hospital which hires services of a medical practitioner, it would be a commercial purpose, but if a person avails such services for his ailment, it would be held to be a non-commercial purpose. Taking a wide meaning of the words ‘for any commercial purpose’ it would mean that the goods purchased or services hired should be used in any activity directly intended to generate profit.

 

Profit is the main aim of commercial purpose, but in a case, where goods purchased or goods hired is an activity, which is not directly intended to generate profit, it would not be a commercial purpose.” What is finally culled out is that each case has to be examined on its own facts and circumstances and what is to be examined is whether any activity or transaction is for commercial purpose to generate profits and there cannot be a straight jacket formula which can be adopted and every case has to be examined on the broad principles which have been laid down by the Supreme Court. Based on Harsolita decision, the appellant’s counsel submitted that if the goods purchased or services availed for convenience/comfort or for better management of the business of the company , and the complaint is filed for compensation on account of defective supplies or deficient services, a consumer complaint would be maintainable. If the transaction has a nexus with generation of profits, it would be treated as one for a commercial purpose. Whether a transaction has nexus with generation of profits or not is to be determined on the facts of each case, by taking into consideration the nature of goods purchased or services availed and the purpose for it is purchased or availed. If upon consideration of all relevant factors, the picture that emerges is one which reflects that the object of the purchase of goods/services is to generate or augment profit, the same would be treated as for a commercial purpose.

 

The question that fell for consideration before the Supreme Court in Harsolita Motors decision was whether the insurance services availed were for commercial purpose or not. Insurance service by its very nature is to secure the insured against a prospective loss on account of unforeseen circumstances. Therefore, the dominant object of availing that service is not to generate profits but to secure oneself against unforeseen losses. In this context, the SC took the view that availing of insurance services would not be a transaction for a commercial purpose even though it may be a business to business transaction. In this case, not only the complainant is a commercial entity, the purchase of goods/services, that is, software from the respondent was with a view to automate the processes of the company which were linked to generation of profits inasmuch as automation of business processes is undertaken not just for better management of business but to reduce costs and maximise profits.

 

Thus, in the Court’s view , the transaction of purchase of goods/services had a nexus with generation of profits and, therefore, quo that transaction, the appellant cannot be considered a consumer as defined in section 2(1) (d) of the Act of 1986. In view of this discussion, the Supreme Court has considered opinion that both the State Commission and the National Commission were justified in holding that that the goods/services purchased/availed by the appellant were for a commercial purpose and, therefore, the appellant is not a “consumer” as per section 2(1)(d) of the Consumer Protection Act, 1986. In view of this legal position, the apex court dismissed the appeal as being without merit.