Shriram Chits (India) Private Limited vs Raghachand Associates 2024 INSC 403 – Consumer Protection Act -Consumer – Onus Of Proof

Consumer Protection Act, 1986; Section 2(1)(7)(c)- Definition of consumer has three parts- The first part sets out the jurisdictional prerequisites for a person to qualify as a consumer – there must be purchase of goods, for consideration. The second part is an ‘exclusion clause’ [‘carve out’] which has the effect of excluding the person from the definition of a consumer. The carve out applies if the person has obtained goods for the purpose of ‘resale’ or for a ‘commercial purpose’. The third part is an exception to the exclusion clause – it relates to Explanation (a) to Section 2(7) which limits the scope of ‘commercial purpose’- The expression ‘commercial purpose’ does not include persons who bought goods ‘exclusively for the purpose of earning his livelihood, by means of self-employment’ – The onus of proving the first part i.e. that the person had bought goods/availed services for a consideration, rests on the complainant himself. The carve out clause, in the second part, is invoked by the service providers to exclude the complainants from availing benefits under the Act. The onus of proving that the person falls within the carve out must necessarily rest on the service provider and not the complainant.Since it is always the service provider who pleads that the service was obtained for a commercial purpose, the onus of proving the same would have to be borne by it- A negative burden cannot be placed on the complainant to show that the service available was not for a commercial purpose- The standard of proof has to be measured against a ‘preponderance of probabilities’. The test to determine whether service obtained qualified as a commercial purpose – Referred to Leelavathi Kirtilal Medical Trust v. Unique Shanti Developers – (2020) 2 SCC 265-If and only if, the service provider discharges its onus of showing that the service was availed, in fact for a commercial purpose, does the onus shift back to the complainant to bring its case within the third part, i.e. the Explanation (a) to Section 2(7) – To show that the service was obtained exclusively for the purpose of earning its livelihood by means of self-employment – The question of inquiring into the third part will only arise if the service provider succeeds in crossing the second part by discharging its onus and proving that the service obtained was for a commercial purpose. Unless the service provider discharges its onus, the onus does not shift back to the complainant to show that the service obtained was exclusively for earning its livelihood through the means of self-employment. (Para 15, 20-23)

Pleadings – A plea without proof and proof without plea is no evidence in the eyes of law. (Para 23)

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