Section 2(1)(d) of The Consumer Protection Act, 1986 II

Court has to look at dominant purpose for which purchase is made in order to decide whether it was for a ‘commercial purpose’. We are of considered opinion, purchase of flats for purpose of providing hostel facilities to hospital nurses does not qualify as meant for a ‘commercial purpose’. Though ‘commercial purpose’ as referred to under Section 2(1)(d) has nowhere been defined, this Court has expounded upon it based on its lateral dictionary meaning in various decisions.

Recently, a Two-Judge Bench of this Court, comprising of one of us, in Paramount Digital Colour Lab., (2018) 14 SCC 8 has re-emphasized, importance of there being a ‘close nexus’ between purpose for which good or service is availed of and a large-scale profit activity in order to classify such a transaction as commercial in nature. Ultimately, whether or not an activity is meant for a ‘commercial purpose’ will depend upon facts and circumstances of each case.

With regard to goods and services availed of by employers for benefit of their employees, it is particularly important to note, we live in a socialist economy wherein ethos dictates, employers are obligated to make provisions for welfare of their employees. No doubt, welfare measures undertaken by employers may increase workers’ health and efficiency, and therefore improve employing entity’s overall productivity. However this is a duty to be shared by all employer organizations and not merely those looking to increase their productivity/profits. This obligation exists irrespective of how much profit or turnover the organization generates in a year, though the degree to which it extends may differ depending upon the financial capacity of the employer.

The flats were not occupied for undertaking any medical/diagnostic facilities within the hospital but for accommodating the nurses employed by the hospital. Moreover, the flats were being provided to the nurses without any rent. It may be the case, provision of comfortable hostel facilities to nurses, generates a feeling of gratitude and loyalty towards their employer and improves their overall efficiency, which indirectly results in the hospital gaining more repute and therefore generating more income. However, this is a matter of conjecture and there is no direct causal chain which can be drawn between provision of accommodation to hospital employees and increase in profits. Hence, the provision of hostel facilities to nurses so as to facilitate better medical care is a positive duty enjoined upon the hospital so as to maintain beneficial effects of curative care efforts undertaken by it. Such a duty exists irrespective of the surplus or turnover generated by the hospital, and hence is not even remotely related to the object of earning profits or for any commercial use as envisaged under Section 2(1)(d).

Hon’ble Justice Mohan M. Shantanagoudar, Lilavati Kirtilal Mehta Medical Trust v. M/s. Unique Shanti Developers, [Civil Appeal No. 12322 of 2016].


If a person buys goods for a ‘commercial purpose’ or avails services for a ‘commercial purpose’, he would still come within ambit of ‘consumer’, if purchase of such goods or availing of such services was exclusively for purposes of earning his livelihood by means of self-employment. Lilavati Kirtilal Mehta Medical Trust v. M/s. Unique Shanti Developers, (2018) 14 SCC 81 held, question as to whether a transaction is for a ‘commercial purpose’ would depend upon facts and circumstances of each case.

Hon’ble Justice B.R. Gavai, Shrikant G. Mantri v. Punjab National Bank, [Civil Appeal No. 11397 of 2016] decided on 22.02.2022.


Harsolia Motors, engaged in business of sale of vehicles, took a fire insurance policy. A complaint was instituted for compensation of damage caused post-­Godhra. Harsolia’s insurance policy was hiring of services for a ‘commercial purpose’? It will always depend upon facts and circumstances of each case, as was considered by this Court in Lilavati Kirtilal Mehta Medical Trust v. M/s. Unique Shanti Developers, (2020) 2 SCC 265. Harsolia Motors being a commercial enterprise is unrelated to determination of whether its insurance policy shall be counted as a ‘commercial purpose’ and our answer is in negative. There is no element of profit generation. Harsolia is a ‘consumer’.  

Hon’ble Justice Ajay Rastogi, National Insurance Co. Ltd. v. Harsolia Motors, [Civil Appeal Nos. 5352­-5353 of 2007] decided on 13.04.2023.