New Delhi, Nov 14 (UNI) The Supreme Court has held that a company purchasing software to organise or automate its business processes cannot claim the status of a “consumer” under the Consumer Protection Act, 1986.
A Bench comprising Justice JB Pardiwala and Justice Manoj Misra ruled that transactions undertaken to streamline or enhance commercial operations fall squarely within the exclusion of “commercial purpose” under Section 2(1)(d) of the 1986 Act, thereby disentitling such purchasers from invoking consumer remedies.
The ruling came in an appeal filed by Poly Medicure, a medical device exporter and importer, which had approached the Court after both the Delhi State Consumer Disputes Redressal Commission and the National Consumer Disputes Redressal Commission (NCDRC) rejected its complaint.
In 2019, Poly Medicure purchased a licence for the software “Brillio Opti Suite” from Brillio Technologies, alleging later that the software malfunctioned. The company filed a consumer complaint seeking a refund of the licence fee and development costs with interest, claiming deficiency of service.
The State Consumer Commission dismissed the complaint in August 2019, holding that the software was acquired to further the company’s commercial activities, rendering it ineligible to be treated as a consumer. The NCDRC upheld the decision in June 2020.
Poly Medicure contended that it had bought the software for “self-use” as an end user, with no intention to resell it, and that software obtained solely for internal functioning should not be treated as a commercial transaction.
It relied on earlier rulings protecting individuals who purchase goods for a livelihood through self-employment.
The Bench observed that although companies may file consumer complaints, they must first show that the goods or services were not purchased for a commercial purpose. The key question, the Court said, was whether the software had a nexus with the company’s business profits.
After examining its functions, creating export documents, tracking consignments, managing foreign exchange, and handling statutory benefits, the Court concluded that the software directly facilitated Poly Medicure’s business operations.
It clarified that precedents involving self-employed individuals did not apply to incorporated entities using software to automate business activities. The “dominant purpose” test, the Court said, must guide the analysis.
Automation aimed at saving time, reducing costs, and improving efficiency ultimately contributes to profit, it said. Therefore, the purchase of such software is inherently commercial.
“The transaction of purchase of goods/services (i.e., software) had a nexus with the generation of profits and, therefore, qua that transaction the appellant cannot be considered a consumer as defined in Section 2(1)(d) of the 1986 Act,” the Court noted.
The Supreme Court upheld the orders of the State and National Commissions and dismissed the appeal.
