[2024] 6 S.C.R. 214 : 2024 INSC 403 Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates (Civil Appeal No. 6301 of 2024) 10 May 2024 [Pamidighantam Sri Narasimha and Aravind Kumar,* JJ.] Issue for Consideration Matter pertains to the maintainability of the complaint, whether the service obtained by the complainant was for a commercial purpose. Headnotes Consumer Protection Act, 1986 – s. 2(7) – Maintainability of complaint – Consumer complaint before the district forum alleging deficiency of service and seeking refund of amount from the opposite party – Instead of examining whether the service availed by complainant was for commercial purpose, the district forum determined whether the complainant fell within the definition of ‘person’ and holding that there was ‘deficiency in service’, ordered for refund of the claimed amount with interest – Said order upheld by forums below without examining the maintainability issue – Maintainability challenge before this Court, as to whether the service obtained by complainant was for commercial purpose:

Held: Onus to prove that the service was obtained for a commercial purpose is on the service provider – Standard of proof has to be measured against a ‘preponderance of probabilities’ – 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-explanation (a) to s. 2(7) to show that the service was obtained exclusively for the purpose of earning its livelihood by means of self-employment – Plea of the opposite party that the complainant has not pleaded nor proved that the service was obtained for earning his livelihood through the means of self employment, relates to the third part of the definition of consumer – Question of inquiring into the third part would only arise if the service provider succeeds in crossing the second part by discharging its onus and proving that * Author [2024] 6 S.C.R. 215 Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates 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

– On facts, opposite party merely pleaded in its version that the service was obtained for commercial purpose – No evidence led to probabilise its case other than merely restating its claim on affidavit – Plea without proof and proof without plea is no evidence in the eyes of law, thus, the matter dismissed. [Paras 21-23] Consumer Protection Act, 1986 – Technical pleas – Manner in which consumer forums must decide the pleas – Plea raised by service providers that the services obtained/goods bought was for a commercial purpose and, thus, the complaint filed on behalf of such persons not maintainable: Held: Such pleas are decided on the manner in which the issues are framed – Unless the burden of proof is properly cast on the relevant party, the consumer forum would not be in a position to arrive at proper decision – Thus, guidance provided on how the issues must be framed and the manner in which the evidence must be appreciated. [Para 19] Consumer Protection Act, 1986 – s. 2(7) – Definition of consumer – Deconstruction of s. 2(7)(i):

Held: There are three parts to the definition of a consumer – First part sets out the prerequisites for a person to qualify as a consumer-there must be purchase of goods, for consideration – 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’ – Third part is an exception to the exclusion clause, it relates to explanation (a) to s. 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’ – Significance of deconstructing the definition into three parts was for the purpose of explaining on whom lies the onus to prove each of the different parts – Onus of proving the first part-person had bought goods/availed services for a consideration, rests on the complainant himself – Carve out clause, in the second part, is invoked by the service providers to exclude the complainants from availing benefits under the Act – Onus of proving that the person 216 [2024] 6 S.C.R. Digital Supreme Court Reports

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 – Act is a consumer-friendly and beneficial legislation intended to address grievances of consumers – Negative burden cannot be placed on the complainant to show that the service available was not for a commercial purpose. [Paras 15, 20] Case Law Cited Laxmi Engineering Works [1995] 3 SCR 174 : (1995) 3 SCC 583; Leelavathi Kirtilal Medical Trust v. Unique Shanti Developers [2019] 14 SCR 563 : (2020) 2 SCC 265; Cheema Engineering Services [1996] Supp. 8 SCR 340 : (1997) 1 SCC 131; Paramount Digital Lab (2018) 14 SCC 81 – referred to. List of Acts Consumer Protection Act, 1986; Evidence Act, 1872. List of Keywords Maintainability of complaint; Deficiency of service; Service availed by complainant for commercial purpose; Definition of ‘person’; Refund of amount with interest; Service providers; Expression ‘complaint’; Definition of consumer; Onus to prove; Standard of proof; Preponderance of probabilities’; Earning livelihood by means of self-employment; Technical pleas; Burden of proof; Deconstruction of s. 2(7)(i) of the Consumer Protection Act; Exclusion clause’ [‘carve out’]; ‘resale’ or for ‘commercial purpose’; ‘One who pleads must prove’; Consumer-friendly and beneficial legislation; Negative burden.

Case Arising From CIVIL APPELLATE JURISDICTION: Civil appeal No. 6301 of 2024 From the Judgment and Order dated 10.03.2021 of the National Consumers Disputes Redressal Commission, New Delhi in RP No. 831 of 2020 With Civil Appeal Nos. 6302, 6303, 6304, 6305, 6306, 6307 and 6308 of 2024 [2024] 6 S.C.R. 217 Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates Appearances for Parties Shailesh Madiyal, Sr. Adv., Vaibhav Sabharwal, Ms. Divija Mahajan, Ms. Sunidhi Hegde, Ms. Sakshi Banga, Ms. Amisha Devi, Mrigank Prabhakar, Advs. for the Appellant. Gopal Sankaranarayanan, Sr. Adv., Ms. Anindita Mitra, Ms. Jhanvi Dubey, Advs. for the Respondent. Judgment / Order of the Supreme Court Judgment Aravind Kumar, J. 1. Leave granted. 2. The appellant (‘OP’/‘service provider’, used interchangeably) has challenged the order dated 10.03.2021 of the National Consumer Disputes Redressal Commission, New Delhi (NCDRC) in these appeals. The respondent (complainant) had successfully redressed its consumer grievance, originally, before the Principal Consumer Disputes Redressal for Bangalore Urban District, at Bangalore (‘District Forum’). The service provider was unsuccessful in upsetting the order of the District Forum before the State Consumer Disputes Redressal Commission, Bangalore (‘State Forum’) as well as the NCDRC. That is how this matter has come before us.

3. The service provider is a registered Chit Fund company engaged in Chit business. Admittedly, the complainant had subscribed to certain chits in the said business. The subscription was made in the chit group 53005/Ticket No.9 for a chit value of Rs.1,00,000/- payable at the rate of Rs.2500/- per month for a period of 40 months. 4. It is the case of the complainant that the OP had illegally stopped the chit business in the year 1996. The complainant requested the OP to repay the chit amount deposited until stoppage of the business. The OP refused to re-pay the subscription amount since, according to it, the complainant owed certain dues to it and therefore, it adjusted the subscription amount against pending dues of the complainant. 5. Initially, the complainant sought to redress its grievance relating to non-refund of the subscription amount, before the authority 218 [2024] 6 S.C.R. Digital Supreme Court Reports constituted under the Chit Funds Act 1982.1 Thereafter, the OP filed WP No.22568/2012 with 9 other connected writ petitions against the order of the Additional Registrar. Whereas the Complainant also filed WP No.17045/2014 with 9 other connected writ petitions questioning the finding with regards to the maintainability under the Chit Funds Act. On 16.11.2015, the High Court directed the complainant to approach the Consumer Forum and held that said cases were not maintainable under the Chit Funds Act.

6. It is against this background that the complaint comes to be filed before the District Forum alleging that the illegal termination of the chit fund business and consequent non-refund of the subscription amount, resulted in deficiency of service. The prayer in the complaint was for a direction to be issued to the OP to refund Rs.18,750/- along with future interest at the rate of 18% p.a. 7. In the written version, the OP, apart from contesting the claim on merits, raised a preliminary objection that the complaint is not maintainable since the complainant does not qualify the definition of a ‘consumer’. According to the OP, the service obtained by the complainant was for a commercial purpose, and by that fact, the complainant would stand excluded from availing any remedy under the Consumer Protection Act, 1986. To demonstrate that the service was obtained for a commercial purpose, the OP relied on two circumstances: (a) the statement in the complainant that there was an ‘understanding between complainant and opposite party to promote chit business’; (b) findings2 of an internal audit conducted by the OP.

1 The complainant had filed 10 cases before the Assistant Registrar of Co-operative Societies i.e., Dispute No.1062/2004-05 to 1071/2004-05, for recovery of adjusted amount, whereunder the Assistant Registrar passed an award and directed the OP to pay the amount to complainant. Against the said order OP unsuccessfully challenged the orders in appeals before Additional Registrar of Co-operative Societies, Aliaskar Road, Bangalore, in appeal No.33/CAP/2009-10 to No.42/CAP/2009-10. The Additional Registrar directed the opposite party to pay the award amount on the ground that said chit groups did not come under the Chit Fund Act. 2 As per the Internal Audit, the Complainant held 1023 prized chits, and 1043 non-prized chits. The report also mentions various correspondences between the complainant and OP with regards to the increasing disparity between the total liability of the fund, and the paid-up value of the non-prized chits. As per the audit report, the balance liability amounted to Rs. 1.86 crores. It was stated that owing non-payment of outstanding arrears, the foreman in accordance with Section 28 and Section 29 of the Chit Fund Act is bound to remove the defaulted non-prized subscriber to keep the chit running, hence the defaulted non-prized tickets maintained by Complainant were removed, and the paid amounts were adjusted against arrears in the prized chits. [2024] 6 S.C.R. 219

Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates 8. Against the said pleadings available on record, the District Forum proceeded to frame the following issue: I. Whether the Complainant has proved the alleged deficiency in service by the Opposite Party? II. If so, to what relief the Complainant is entitled? 9. There was no specific issue framed on the preliminary question as to whether the complainant fell within the definition of consumer as understood under Section 2 (1) (d) of the Act of 1986. However, the District Forum did address itself, though incorrectly, to the objection of the OP that the complaint was not maintainable. Instead of examining whether the service availed on behalf of the complainant was for a commercial purpose, the District Forum determined whether the complainant fell within the definition of a “person” as defined in Section 2 (1)(m) of the Act. On merits, it found that there was, in fact, ‘deficiency in service’ and ordered for refund of the claimed amount with interest of 18% p.a. 10. In appeal, the State Forum has cursorily found that the District Forum was correct in concluding that there was deficiency in service, on merits. Nothing has been said, however, as regards the challenge to the maintainability of the complaint even though a specific ground was taken in the memorandum of appeal towards that end.

11. The NCDRC has agreed with the State Forum and District Forum on the merits of the issue and found no reason to interfere with the ‘well appraised detailed order’ of the District Forum. It noted that there was no necessity to reappreciate the evidence de novo since the forums below had properly appreciated the issue in dispute. On the maintainability issue, the NCDRC appears to have mirrored the approach of the District Forum. Instead of examining whether the service obtained by the complainant was for a ‘commercial purpose’, it examined the question of whether the complainant falls within the definition of ‘person’. Neither was such an objection raised by the OP in the version originally submitted before the District Forum nor was such a contention orally taken before the NCDRC. We fail to understand how the NCDRC failed to grasp the exact nature of the maintainability challenge. Be that as it may. 12. It is against the above backdrop that we are called upon to determine the present lis. Instead of remanding the matter back to the Consumer 220 [2024] 6 S.C.R. Digital Supreme Court Reports Forum we intend to decide the maintainability challenge here itself. The question that has eluded three judicial forums has now to be settled once and for all. That question simply is: Whether the service obtained by the complainant was for a commercial purpose? 13. Section 2 (7) of the Act defines a consumer to mean: Section 2 (7) “consumer” means any person who—

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or (ii) hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such service other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person, but does not include a person who avails of such service for any commercial purpose. Explanation.—For the purposes of this clause,— (a) the expression “commercial purpose” does not include use by a person of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment; (b) the expressions “buys any goods” and “hires or avails any services” includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing; [2024] 6 S.C.R. 221

Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates 14. The provision as it stands now (as extracted above) was not how it appeared when it was grafted in the original Act. The definition of ‘consumer’ has undergone textual amendments in 1993 and in 2002. For ease of reference, the evolutionary history of the provision from its origin until the 2019 Act is captured in the table below: Consumer The Consumer The Consumer Consumer Protection Act Protection Protection Protection Act 1986 (Amendment) (Amendment) 2019 Act, 1993 Act, 2002 “consumer” “consumer” “consumer” (7) “consumer” means any means any means any means any person person who,— person who,— person who,— who—

(i) buys any (i) buys any (i) buys any (i) buys any goods goods for a goods for a goods for a for a consideration consideration consideration consideration which has been which has which has been which has been paid or promised been paid or paid or promised paid or promised or partly paid and promised or or partly paid and or partly paid and partly promised, or partly paid partly promised, partly promised, under any system and partly or under any or under any of deferred payment promised, system of system of and includes or under deferred payment deferred payment any user of such any system and includes and includes goods other than of deferred any user of such any user of such the person who payment and goods other than goods other than buys such goods includes any the person who the person who for consideration user of such buys such goods buys such goods paid or promised goods other for consideration for consideration or partly paid or than the paid or promised paid or promised partly promised, or person who or partly paid or or partly paid or under any system of buys such partly promised, partly promised, deferred payment, goods for or under any or under any when such use consideration system of system of is made with the paid or deferred payment deferred payment approval of such promised or when such use when such use person, but does partly paid is made with is made with not include a person or partly the approval of the approval of who obtains such promised, such person, such person, goods for resale or or under but does not but does not for any commercial any system include a person include a person purpose; or of deferred who obtains who obtains (ii) hires or avails payment when such goods for such goods for of any service for such use is resale or for resale or for a consideration made with the any commercial any commercial which has been approval of purpose; or purpose; or paid or promised such person, (ii) [hires or (ii) hires or or partly paid and but does not avails of] any avails of any partly promised, or include a services for a services for a under any system of person consideration consideration deferred payment 222 [2024] 6 S.C.R.

Digital Supreme Court Reports who obtains which has been which has been and includes any such goods paid or promised paid or promised beneficiary of such for resale or partly paid and or partly paid and service other than or for any partly promised, partly promised, the person who commercial or under any or under any hires or avails of purpose; or system of system of the services for (ii)hires any deferred payment deferred payment consideration paid services for a and includes and includes or promised, or consideration any beneficiary any beneficiary partly paid and which has of such services of such services partly promised, or been paid or other than the other than the under any system of promised or person who person who deferred payment, partly paid [hires or avails hires or avails when such services and partly of] the services of the services are availed of with promised, for consideration for consideration the approval of or under paid or promised, paid or promised, the first mentioned any system or partly paid or partly paid person, but does of deferred and partly and partly not include a payment and promised, or promised, or person who avails includes any under any system under any system of such service for beneficiary of of deferred of deferred any commercial such services payment, when payment, when purpose.

other than such services are such services Explanation. —For the person availed of with the are availed the purposes of who hires the approval of the of with the this clause, — services for first mentioned approval of the (a) the expression consideration person. first mentioned “commercial paid or Explanation.— person but does purpose” does promised, or For the not include a not include use partly paid purposes of person who by a person of and partly sub-clause (i), avails of such goods bought promised, “commercial services for and used by him or under purpose” does any commercial exclusively for the any system not include use purpose. purpose of earning of deferred by a consumer Explanation.—For his livelihood, by payment, when of goods bought the purposes means of self-such services and used by of this clause, employment; are availed him exclusively “commercial (b) the of with the for the purpose purpose” does expressions “buys approval of the of earning his not include use any goods” and first mentioned livelihood, by by a person of “hires or avails person means of self- goods bought any services” employment; and used by him includes offline or and services online transactions availed by him through electronic exclusively for means or by the purposes teleshopping or of earning his direct selling livelihood by or multi-level means of self- marketing; employment; [2024] 6 S.C.R. 223

Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates 15. Structurally, there are three parts to the definition of a consumer. We can deconstruct Section 2(7)(i) as a matter of illustration.3 The first part sets out the jurisdictional prerequisites for a person to qualify as a consumer – there must be purchase of goods, for consideration4 . 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’. According to the said explanation, 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 significance of this structural break down will be discussed shortly. 16. The carve out existed as part of the original enactment. However, the Explanation to Section 2(7) was inserted by amendment in 1993.

17. Judicial experience has shown us 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. For, if they succeed in their plea, the complainant is excluded from availing any benefit under the Act. According to Section 11, the District Forum has jurisdiction to entertain complaints ‘where the value of the goods or services and the compensation, if any, claimed does not exceed rupees twenty lakhs’. The expression ‘complaint’ is defined in Section 2(1)(7)(c) to mean any allegation made in writing by a complainant relating to certain enumerated subjects. A complainant is defined 2(1)(b) to mean a consumer, among other entities. Therefore, to file a complaint, one must be a complainant and for one to be a complainant, he must be a consumer. If a person fails to come within the definition of a consumer, he cannot be a complainant5 and therefore, such person cannot file a complaint under the Act. 3 The logic can be identically extended to Section 2(7)(ii) 4 The consideration may have been paid or partly paid or agreed to be paid in future. 5 Complainant is defined under Section 2 (1) (b) of the Act. A complainant means – (i) a consumer; or (ii) any voluntary consumer association registered under the Companies Act,1956 or under any other law for the time being in force; or (iii) the Central Government or any State Government, who or which makes a complaint. 224 [2024] 6 S.C.R.

Digital Supreme Court Reports 18. In the facts of the instant case, the OP had raised a plea in its version that the complainant does not satisfy the definition of consumer since the service was obtained for a commercial purpose. Sri Shailesh Madiyal, learned Senior Advocate for the OP has argued vehemently that the complainant has not pleaded let alone prove that the services availed by it was for securing the livelihood of the complainant by means of self-employment. According to Sri Shailesh Madiyal, the onus to prove that services were availed for earning livelihood rests on the complainant. In support of his submission, he has relied on Laxmi Engineering Works – (1995) 3 SCC 583; Leelavathi Kirtilal Medical Trust v. Unique Shanti Developers – (2020) 2 SCC 265; Cheema Engineering Services (1997) 1 SCC 131 and; Paramount Digital Lab (2018) 14 SCC 81.

19. Before we deal with the contention of Sri Shailesh Madiyal, it would be necessary to set out the manner in which consumer forums must decide technical pleas raised by service providers to the effect that the services obtained/goods bought was for a commercial purpose and, therefore, the complaint filed on behalf of such persons are not maintainable. The crucial step in deciding such pleas would turn on the manner in which the issues are framed. Unless the burden of proof is properly cast on the relevant party, the consumer forum would not be in a position to arrive at proper decision. Therefore, we proceed to provide some guidance on how the issues must be framed and the manner in which the evidence must be appreciated.

20. As we have shown above, the definition of consumer has three parts. The significance of deconstructing the definition into three parts was for the purpose of explaining on whom lies the onus to prove each of the different parts. There can hardly be any dispute that 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. This is in sync with the general principle embodied in Section 101 and 102 of the Evidence Act that ‘one who pleads must prove’. Since it is always the service [2024] 6 S.C.R. 225 Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates 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. Further, it cannot be forgotten that the Consumer Protection Act is a consumer-friendly and beneficial legislation intended to address grievances of consumers.6 Moreover, a negative burden cannot be placed on the complainant to show that the service available was not for a commercial purpose.

21. Having held that the onus to prove that the service was obtained for a commercial purpose is on the service provider, we may clarify the standard of proof that has to be met in order to discharge the onus. 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 is no longer res integra in view of this Court’s decision in Lilavathi v. Kiritlal (supra). Para 19 sets out the principles on which it must be determined whether the onus of proving ‘commercial purpose’ has been properly discharged by the service provider. 22. 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.

23. In this background, we must consider the plea of Sri Shailesh Madiyal that the complainant has not pleaded nor proved that the service was obtained for earning his livelihood through the means of self-employment. His argument relates to the third part of the definition of consumer. 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. In the facts of this case, the OP has merely pleaded in its version that the service was obtained 6 National Insurance Co. Ltd. v. Harsolia Motors and Ors. (2023) 8 SCC 362. 226 [2024] 6 S.C.R. Digital Supreme Court Reports for a commercial purpose. No evidence has been led to probabilise its case other than merely restating its claim on affidavit. It is now well too settled that a plea without proof and proof without plea is no evidence in the eyes of law. 24. We do not wish to address ourselves to the merits of the issue since three Forums have concurred in their finding that there was proved deficiency of service. 25. Accordingly, we dismiss the appeals. Headnotes prepared by: Nidhi Jain Result of the case: Appeals dismissed.

[2024] 6 S.C.R. 214 : 2024 INSC 403 Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates (Civil Appeal No. 6301 of 2024) 10 May 2024 [Pamidighantam Sri Narasimha and Aravind Kumar,* JJ.] Issue for Consideration Matter pertains to the maintainability of the complaint, whether the service obtained by the complainant was for a commercial purpose. Headnotes Consumer Protection Act, 1986 – s. 2(7) – Maintainability of complaint – Consumer complaint before the district forum alleging deficiency of service and seeking refund of amount from the opposite party – Instead of examining whether the service availed by complainant was for commercial purpose, the district forum determined whether the complainant fell within the definition of ‘person’ and holding that there was ‘deficiency in service’, ordered for refund of the claimed amount with interest – Said order upheld by forums below without examining the maintainability issue – Maintainability challenge before this Court, as to whether the service obtained by complainant was for commercial purpose:

Held: Onus to prove that the service was obtained for a commercial purpose is on the service provider – Standard of proof has to be measured against a ‘preponderance of probabilities’ – 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-explanation (a) to s. 2(7) to show that the service was obtained exclusively for the purpose of earning its livelihood by means of self-employment – Plea of the opposite party that the complainant has not pleaded nor proved that the service was obtained for earning his livelihood through the means of self employment, relates to the third part of the definition of consumer – Question of inquiring into the third part would only arise if the service provider succeeds in crossing the second part by discharging its onus and proving that * Author [2024] 6 S.C.R. 215 Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates 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

– On facts, opposite party merely pleaded in its version that the service was obtained for commercial purpose – No evidence led to probabilise its case other than merely restating its claim on affidavit – Plea without proof and proof without plea is no evidence in the eyes of law, thus, the matter dismissed. [Paras 21-23] Consumer Protection Act, 1986 – Technical pleas – Manner in which consumer forums must decide the pleas – Plea raised by service providers that the services obtained/goods bought was for a commercial purpose and, thus, the complaint filed on behalf of such persons not maintainable: Held: Such pleas are decided on the manner in which the issues are framed – Unless the burden of proof is properly cast on the relevant party, the consumer forum would not be in a position to arrive at proper decision – Thus, guidance provided on how the issues must be framed and the manner in which the evidence must be appreciated. [Para 19] Consumer Protection Act, 1986 – s. 2(7) – Definition of consumer – Deconstruction of s. 2(7)(i):

Held: There are three parts to the definition of a consumer – First part sets out the prerequisites for a person to qualify as a consumer-there must be purchase of goods, for consideration – 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’ – Third part is an exception to the exclusion clause, it relates to explanation (a) to s. 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’ – Significance of deconstructing the definition into three parts was for the purpose of explaining on whom lies the onus to prove each of the different parts – Onus of proving the first part-person had bought goods/availed services for a consideration, rests on the complainant himself – Carve out clause, in the second part, is invoked by the service providers to exclude the complainants from availing benefits under the Act – Onus of proving that the person 216 [2024] 6 S.C.R. Digital Supreme Court Reports

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 – Act is a consumer-friendly and beneficial legislation intended to address grievances of consumers – Negative burden cannot be placed on the complainant to show that the service available was not for a commercial purpose. [Paras 15, 20] Case Law Cited Laxmi Engineering Works [1995] 3 SCR 174 : (1995) 3 SCC 583; Leelavathi Kirtilal Medical Trust v. Unique Shanti Developers [2019] 14 SCR 563 : (2020) 2 SCC 265; Cheema Engineering Services [1996] Supp. 8 SCR 340 : (1997) 1 SCC 131; Paramount Digital Lab (2018) 14 SCC 81 – referred to. List of Acts Consumer Protection Act, 1986; Evidence Act, 1872. List of Keywords Maintainability of complaint; Deficiency of service; Service availed by complainant for commercial purpose; Definition of ‘person’; Refund of amount with interest; Service providers; Expression ‘complaint’; Definition of consumer; Onus to prove; Standard of proof; Preponderance of probabilities’; Earning livelihood by means of self-employment; Technical pleas; Burden of proof; Deconstruction of s. 2(7)(i) of the Consumer Protection Act; Exclusion clause’ [‘carve out’]; ‘resale’ or for ‘commercial purpose’; ‘One who pleads must prove’; Consumer-friendly and beneficial legislation; Negative burden.

Case Arising From CIVIL APPELLATE JURISDICTION: Civil appeal No. 6301 of 2024 From the Judgment and Order dated 10.03.2021 of the National Consumers Disputes Redressal Commission, New Delhi in RP No. 831 of 2020 With Civil Appeal Nos. 6302, 6303, 6304, 6305, 6306, 6307 and 6308 of 2024 [2024] 6 S.C.R. 217 Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates Appearances for Parties Shailesh Madiyal, Sr. Adv., Vaibhav Sabharwal, Ms. Divija Mahajan, Ms. Sunidhi Hegde, Ms. Sakshi Banga, Ms. Amisha Devi, Mrigank Prabhakar, Advs. for the Appellant. Gopal Sankaranarayanan, Sr. Adv., Ms. Anindita Mitra, Ms. Jhanvi Dubey, Advs. for the Respondent. Judgment / Order of the Supreme Court Judgment Aravind Kumar, J. 1. Leave granted. 2. The appellant (‘OP’/‘service provider’, used interchangeably) has challenged the order dated 10.03.2021 of the National Consumer Disputes Redressal Commission, New Delhi (NCDRC) in these appeals. The respondent (complainant) had successfully redressed its consumer grievance, originally, before the Principal Consumer Disputes Redressal for Bangalore Urban District, at Bangalore (‘District Forum’). The service provider was unsuccessful in upsetting the order of the District Forum before the State Consumer Disputes Redressal Commission, Bangalore (‘State Forum’) as well as the NCDRC. That is how this matter has come before us.

3. The service provider is a registered Chit Fund company engaged in Chit business. Admittedly, the complainant had subscribed to certain chits in the said business. The subscription was made in the chit group 53005/Ticket No.9 for a chit value of Rs.1,00,000/- payable at the rate of Rs.2500/- per month for a period of 40 months. 4. It is the case of the complainant that the OP had illegally stopped the chit business in the year 1996. The complainant requested the OP to repay the chit amount deposited until stoppage of the business. The OP refused to re-pay the subscription amount since, according to it, the complainant owed certain dues to it and therefore, it adjusted the subscription amount against pending dues of the complainant. 5. Initially, the complainant sought to redress its grievance relating to non-refund of the subscription amount, before the authority 218 [2024] 6 S.C.R. Digital Supreme Court Reports constituted under the Chit Funds Act 1982.1 Thereafter, the OP filed WP No.22568/2012 with 9 other connected writ petitions against the order of the Additional Registrar. Whereas the Complainant also filed WP No.17045/2014 with 9 other connected writ petitions questioning the finding with regards to the maintainability under the Chit Funds Act. On 16.11.2015, the High Court directed the complainant to approach the Consumer Forum and held that said cases were not maintainable under the Chit Funds Act.

6. It is against this background that the complaint comes to be filed before the District Forum alleging that the illegal termination of the chit fund business and consequent non-refund of the subscription amount, resulted in deficiency of service. The prayer in the complaint was for a direction to be issued to the OP to refund Rs.18,750/- along with future interest at the rate of 18% p.a. 7. In the written version, the OP, apart from contesting the claim on merits, raised a preliminary objection that the complaint is not maintainable since the complainant does not qualify the definition of a ‘consumer’. According to the OP, the service obtained by the complainant was for a commercial purpose, and by that fact, the complainant would stand excluded from availing any remedy under the Consumer Protection Act, 1986. To demonstrate that the service was obtained for a commercial purpose, the OP relied on two circumstances: (a) the statement in the complainant that there was an ‘understanding between complainant and opposite party to promote chit business’; (b) findings2 of an internal audit conducted by the OP.

1 The complainant had filed 10 cases before the Assistant Registrar of Co-operative Societies i.e., Dispute No.1062/2004-05 to 1071/2004-05, for recovery of adjusted amount, whereunder the Assistant Registrar passed an award and directed the OP to pay the amount to complainant. Against the said order OP unsuccessfully challenged the orders in appeals before Additional Registrar of Co-operative Societies, Aliaskar Road, Bangalore, in appeal No.33/CAP/2009-10 to No.42/CAP/2009-10. The Additional Registrar directed the opposite party to pay the award amount on the ground that said chit groups did not come under the Chit Fund Act. 2 As per the Internal Audit, the Complainant held 1023 prized chits, and 1043 non-prized chits. The report also mentions various correspondences between the complainant and OP with regards to the increasing disparity between the total liability of the fund, and the paid-up value of the non-prized chits. As per the audit report, the balance liability amounted to Rs. 1.86 crores. It was stated that owing non-payment of outstanding arrears, the foreman in accordance with Section 28 and Section 29 of the Chit Fund Act is bound to remove the defaulted non-prized subscriber to keep the chit running, hence the defaulted non-prized tickets maintained by Complainant were removed, and the paid amounts were adjusted against arrears in the prized chits. [2024] 6 S.C.R. 219

Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates 8. Against the said pleadings available on record, the District Forum proceeded to frame the following issue: I. Whether the Complainant has proved the alleged deficiency in service by the Opposite Party? II. If so, to what relief the Complainant is entitled? 9. There was no specific issue framed on the preliminary question as to whether the complainant fell within the definition of consumer as understood under Section 2 (1) (d) of the Act of 1986. However, the District Forum did address itself, though incorrectly, to the objection of the OP that the complaint was not maintainable. Instead of examining whether the service availed on behalf of the complainant was for a commercial purpose, the District Forum determined whether the complainant fell within the definition of a “person” as defined in Section 2 (1)(m) of the Act. On merits, it found that there was, in fact, ‘deficiency in service’ and ordered for refund of the claimed amount with interest of 18% p.a. 10. In appeal, the State Forum has cursorily found that the District Forum was correct in concluding that there was deficiency in service, on merits. Nothing has been said, however, as regards the challenge to the maintainability of the complaint even though a specific ground was taken in the memorandum of appeal towards that end.

11. The NCDRC has agreed with the State Forum and District Forum on the merits of the issue and found no reason to interfere with the ‘well appraised detailed order’ of the District Forum. It noted that there was no necessity to reappreciate the evidence de novo since the forums below had properly appreciated the issue in dispute. On the maintainability issue, the NCDRC appears to have mirrored the approach of the District Forum. Instead of examining whether the service obtained by the complainant was for a ‘commercial purpose’, it examined the question of whether the complainant falls within the definition of ‘person’. Neither was such an objection raised by the OP in the version originally submitted before the District Forum nor was such a contention orally taken before the NCDRC. We fail to understand how the NCDRC failed to grasp the exact nature of the maintainability challenge. Be that as it may. 12. It is against the above backdrop that we are called upon to determine the present lis. Instead of remanding the matter back to the Consumer 220 [2024] 6 S.C.R. Digital Supreme Court Reports Forum we intend to decide the maintainability challenge here itself. The question that has eluded three judicial forums has now to be settled once and for all. That question simply is: Whether the service obtained by the complainant was for a commercial purpose? 13. Section 2 (7) of the Act defines a consumer to mean: Section 2 (7) “consumer” means any person who—

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or (ii) hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such service other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person, but does not include a person who avails of such service for any commercial purpose. Explanation.—For the purposes of this clause,— (a) the expression “commercial purpose” does not include use by a person of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment; (b) the expressions “buys any goods” and “hires or avails any services” includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing; [2024] 6 S.C.R. 221

Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates 14. The provision as it stands now (as extracted above) was not how it appeared when it was grafted in the original Act. The definition of ‘consumer’ has undergone textual amendments in 1993 and in 2002. For ease of reference, the evolutionary history of the provision from its origin until the 2019 Act is captured in the table below: Consumer The Consumer The Consumer Consumer Protection Act Protection Protection Protection Act 1986 (Amendment) (Amendment) 2019 Act, 1993 Act, 2002 “consumer” “consumer” “consumer” (7) “consumer” means any means any means any means any person person who,— person who,— person who,— who—

(i) buys any (i) buys any (i) buys any (i) buys any goods goods for a goods for a goods for a for a consideration consideration consideration consideration which has been which has which has been which has been paid or promised been paid or paid or promised paid or promised or partly paid and promised or or partly paid and or partly paid and partly promised, or partly paid partly promised, partly promised, under any system and partly or under any or under any of deferred payment promised, system of system of and includes or under deferred payment deferred payment any user of such any system and includes and includes goods other than of deferred any user of such any user of such the person who payment and goods other than goods other than buys such goods includes any the person who the person who for consideration user of such buys such goods buys such goods paid or promised goods other for consideration for consideration or partly paid or than the paid or promised paid or promised partly promised, or person who or partly paid or or partly paid or under any system of buys such partly promised, partly promised, deferred payment, goods for or under any or under any when such use consideration system of system of is made with the paid or deferred payment deferred payment approval of such promised or when such use when such use person, but does partly paid is made with is made with not include a person or partly the approval of the approval of who obtains such promised, such person, such person, goods for resale or or under but does not but does not for any commercial any system include a person include a person purpose; or of deferred who obtains who obtains (ii) hires or avails payment when such goods for such goods for of any service for such use is resale or for resale or for a consideration made with the any commercial any commercial which has been approval of purpose; or purpose; or paid or promised such person, (ii) [hires or (ii) hires or or partly paid and but does not avails of] any avails of any partly promised, or include a services for a services for a under any system of person consideration consideration deferred payment 222 [2024] 6 S.C.R.

Digital Supreme Court Reports who obtains which has been which has been and includes any such goods paid or promised paid or promised beneficiary of such for resale or partly paid and or partly paid and service other than or for any partly promised, partly promised, the person who commercial or under any or under any hires or avails of purpose; or system of system of the services for (ii)hires any deferred payment deferred payment consideration paid services for a and includes and includes or promised, or consideration any beneficiary any beneficiary partly paid and which has of such services of such services partly promised, or been paid or other than the other than the under any system of promised or person who person who deferred payment, partly paid [hires or avails hires or avails when such services and partly of] the services of the services are availed of with promised, for consideration for consideration the approval of or under paid or promised, paid or promised, the first mentioned any system or partly paid or partly paid person, but does of deferred and partly and partly not include a payment and promised, or promised, or person who avails includes any under any system under any system of such service for beneficiary of of deferred of deferred any commercial such services payment, when payment, when purpose.

other than such services are such services Explanation. —For the person availed of with the are availed the purposes of who hires the approval of the of with the this clause, — services for first mentioned approval of the (a) the expression consideration person. first mentioned “commercial paid or Explanation.— person but does purpose” does promised, or For the not include a not include use partly paid purposes of person who by a person of and partly sub-clause (i), avails of such goods bought promised, “commercial services for and used by him or under purpose” does any commercial exclusively for the any system not include use purpose. purpose of earning of deferred by a consumer Explanation.—For his livelihood, by payment, when of goods bought the purposes means of self-such services and used by of this clause, employment; are availed him exclusively “commercial (b) the of with the for the purpose purpose” does expressions “buys approval of the of earning his not include use any goods” and first mentioned livelihood, by by a person of “hires or avails person means of self- goods bought any services” employment; and used by him includes offline or and services online transactions availed by him through electronic exclusively for means or by the purposes teleshopping or of earning his direct selling livelihood by or multi-level means of self- marketing; employment; [2024] 6 S.C.R. 223

Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates 15. Structurally, there are three parts to the definition of a consumer. We can deconstruct Section 2(7)(i) as a matter of illustration.3 The first part sets out the jurisdictional prerequisites for a person to qualify as a consumer – there must be purchase of goods, for consideration4 . 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’. According to the said explanation, 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 significance of this structural break down will be discussed shortly. 16. The carve out existed as part of the original enactment. However, the Explanation to Section 2(7) was inserted by amendment in 1993.

17. Judicial experience has shown us 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. For, if they succeed in their plea, the complainant is excluded from availing any benefit under the Act. According to Section 11, the District Forum has jurisdiction to entertain complaints ‘where the value of the goods or services and the compensation, if any, claimed does not exceed rupees twenty lakhs’. The expression ‘complaint’ is defined in Section 2(1)(7)(c) to mean any allegation made in writing by a complainant relating to certain enumerated subjects. A complainant is defined 2(1)(b) to mean a consumer, among other entities. Therefore, to file a complaint, one must be a complainant and for one to be a complainant, he must be a consumer. If a person fails to come within the definition of a consumer, he cannot be a complainant5 and therefore, such person cannot file a complaint under the Act. 3 The logic can be identically extended to Section 2(7)(ii) 4 The consideration may have been paid or partly paid or agreed to be paid in future. 5 Complainant is defined under Section 2 (1) (b) of the Act. A complainant means – (i) a consumer; or (ii) any voluntary consumer association registered under the Companies Act,1956 or under any other law for the time being in force; or (iii) the Central Government or any State Government, who or which makes a complaint. 224 [2024] 6 S.C.R.

Digital Supreme Court Reports 18. In the facts of the instant case, the OP had raised a plea in its version that the complainant does not satisfy the definition of consumer since the service was obtained for a commercial purpose. Sri Shailesh Madiyal, learned Senior Advocate for the OP has argued vehemently that the complainant has not pleaded let alone prove that the services availed by it was for securing the livelihood of the complainant by means of self-employment. According to Sri Shailesh Madiyal, the onus to prove that services were availed for earning livelihood rests on the complainant. In support of his submission, he has relied on Laxmi Engineering Works – (1995) 3 SCC 583; Leelavathi Kirtilal Medical Trust v. Unique Shanti Developers – (2020) 2 SCC 265; Cheema Engineering Services (1997) 1 SCC 131 and; Paramount Digital Lab (2018) 14 SCC 81.

19. Before we deal with the contention of Sri Shailesh Madiyal, it would be necessary to set out the manner in which consumer forums must decide technical pleas raised by service providers to the effect that the services obtained/goods bought was for a commercial purpose and, therefore, the complaint filed on behalf of such persons are not maintainable. The crucial step in deciding such pleas would turn on the manner in which the issues are framed. Unless the burden of proof is properly cast on the relevant party, the consumer forum would not be in a position to arrive at proper decision. Therefore, we proceed to provide some guidance on how the issues must be framed and the manner in which the evidence must be appreciated.

20. As we have shown above, the definition of consumer has three parts. The significance of deconstructing the definition into three parts was for the purpose of explaining on whom lies the onus to prove each of the different parts. There can hardly be any dispute that 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. This is in sync with the general principle embodied in Section 101 and 102 of the Evidence Act that ‘one who pleads must prove’. Since it is always the service [2024] 6 S.C.R. 225 Shriram Chits (India) Private Limited Earlier Known as Shriram Chits (K) Pvt. Ltd v. Raghachand Associates 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. Further, it cannot be forgotten that the Consumer Protection Act is a consumer-friendly and beneficial legislation intended to address grievances of consumers.6 Moreover, a negative burden cannot be placed on the complainant to show that the service available was not for a commercial purpose.

21. Having held that the onus to prove that the service was obtained for a commercial purpose is on the service provider, we may clarify the standard of proof that has to be met in order to discharge the onus. 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 is no longer res integra in view of this Court’s decision in Lilavathi v. Kiritlal (supra). Para 19 sets out the principles on which it must be determined whether the onus of proving ‘commercial purpose’ has been properly discharged by the service provider. 22. 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.

23. In this background, we must consider the plea of Sri Shailesh Madiyal that the complainant has not pleaded nor proved that the service was obtained for earning his livelihood through the means of self-employment. His argument relates to the third part of the definition of consumer. 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. In the facts of this case, the OP has merely pleaded in its version that the service was obtained 6 National Insurance Co. Ltd. v. Harsolia Motors and Ors. (2023) 8 SCC 362. 226 [2024] 6 S.C.R. Digital Supreme Court Reports for a commercial purpose. No evidence has been led to probabilise its case other than merely restating its claim on affidavit. It is now well too settled that a plea without proof and proof without plea is no evidence in the eyes of law. 24. We do not wish to address ourselves to the merits of the issue since three Forums have concurred in their finding that there was proved deficiency of service. 25. Accordingly, we dismiss the appeals. Headnotes prepared by: Nidhi Jain Result of the case: Appeals dismissed.