Consumer – Chit Fund Company – Whether a “consumer” and whether its “service” was for “commercial purpose” – Important questions – Landmark Judgment of the Supreme Court
The appellant – Registered Chit Fund Company & Service Provider – is engaged in the chit fund business.
The complainant made subscription in the chit fund for the value of Rs.1 lakh payable at Rs.2,500/- per month for 40 months.
In 1996, the Service Provider had stopped the chit business. The appellant refused to repay the subscription amount and on the contrary, alleged that it was adjusted pending dues of the complainant.
Initially, the High Court held that the complaints under the Chit Funds Act, 1982, were not maintainable and the complainant was directed to approach to approach the consumer forum.
In the consumer complaint, the Service Provider took an objection that it is not a “consumer” and the “service” was for “commercial purpose”.
Evolutionary history of the definition of “consumer” is traced by the Supreme Court from 1986 Act, 1993 Amendment Act, 2002 Amendment Act and 2019 Act and referred in para 14 of the judgment
HELD the onus to prove that the service was for commercial purpose is on the service provider and not on the complainant. This is in sync with the general principle embodied in Sections 101 and 102 of the Evidence Act that “one who pleads must prove”. Since it is always service provider who pleads that the service was for commercial purpose, the onus would have to be borne by it.
Judicial experience has shown that the service providers most often than not take up a plea in their written version that the service obtained / goods bought was for a commercial purpose. The contention was the burden of proof is on the complainant to prove that the service was for securing livelihood of complainant by means of self-employment. Therefore, the Supreme Court held that unless the burden of proof is properly cast on relevant party, the Consumer Forum would not be in a position to arrive at a proper decision.
Consumer Protection Act is a consumer – friendly and beneficial legislation intended to address grievances of consumers. Moreover, a negative burden cannot be placed on the complainant to show that the service was not a commercial purpose.
Judgment dated 10.5.2024 in Civil Appeal No…..of 2024 arising from SLP (Civil) No.15290 of 2021 of Shriram Chits (India) Private Limited Vs. Raghachand Associates with connected matters
