Company Buying Software To Automate Business Processes Is Not A "Consumer" Under Consumer Protection Act

A Bench of Justices J.B. Pardiwala and Manoj Misra heard the appeal concerning whether a registered company that purchased a software licence to install and implement an export/import documentation system qualified as a “consumer” under Section 2(1)(d) of the Consumer Protection Act, 1986. The appeal arose from Consumer Complaint No. 515 of 2019 filed before the State Consumer Disputes Redressal Commission, Delhi, and successive dismissals by the State Commission and the National Consumer Disputes Redressal Commission.

The Court dismissed the appeal and held that the appellant company did not qualify as a “consumer” for the transaction in question because the purchase of the software had a direct nexus with profit‑generating commercial activity. The Court reiterated established principles for determining “commercial purpose” and observed that identity or transaction value was not conclusive; instead the “dominant purpose” had to be assessed. The Court, in its reasoning, observed: “What is clear from the above decision is that the identity of the person making the purchase, or the value of the transaction, is not conclusive to determine whether the transaction or activity is for a commercial purpose. What is to be seen is the dominant intention or dominant purpose for the transaction i.e. whether it is to facilitate some kind of profit generation for the purchaser(s) and/or their beneficiary.” The Court further noted that where a company purchased software “to automate the processes of the company which were linked to generation of profit… the appellant cannot be considered a consumer as per Section 2(1)(d) of the 1986 Act.”

Background The appellant, M/s Poly Medicure Ltd., a company engaged in import and export of medical devices, purchased a product licence for “Brillio Opti Suite” from the respondent, M/s Brillio Technologies Pvt. Ltd., intending to install and implement an export/import documentation system at its plant. The appellant alleged the software did not function properly and filed a consumer complaint seeking refund of the licence and development costs with interest, claiming deficiency in service. The respondent contested maintainability, arguing that the purchase was for a commercial purpose and that disputes under the 1986 Act were intended for business‑to‑consumer, not business‑to‑business, transactions.

The State Commission held the complaint not maintainable on the ground that the licence purchase was for a commercial purpose and thus the complainant was not a “consumer.” The National Commission affirmed that view. The Supreme Court reviewed the statutory definition of “consumer” in Section 2(1)(d) and the Explanation excluding goods obtained “for resale or for any commercial purpose,” while noting the carve‑out that “commercial purpose” did not include use of goods or services “exclusively for the purpose of earning his livelihood by means of self‑employment.”

Relying on precedents including Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, National Insurance Co. Ltd. v. Harsolia Motors, Sunil Kohli v. Purearth Infrastructure and Karnataka Power Transmission Corp., the Court reiterated broad principles: commercial purpose ordinarily included manufacturing/industrial activity or business‑to‑business transactions; the purchase must have a “close and direct nexus with a profit‑generating activity”; and facts of each case must determine the dominant purpose. The Court distinguished cases where goods were procured for self‑employment or non‑profit‑generating use and observed that a company automating its business processes seeks to reduce costs and maximise profits; thus the transaction had a nexus with profit generation. Consequently, the Court found both earlier fora justified in holding the appellant not to be a consumer.

The appeal was dismissed for lack of merit; there was no order as to costs and pending applications were disposed of.

Case Details: Case No.: Civil Appeal No. 6349 of 2024 (Arising out of SLP (C) No. 14306 of 2020) Case Title: M/s Poly Medicure Ltd. v. M/s Brillio Technologies Pvt. Ltd. Appearances: For the Petitioner(s): Counsel not indicated in the judgment For the Respondent(s): Counsel not indicated in the judgment