Company Buying Software To Enhance Efficiency And Profit Is Not A “Consumer” Under Consumer Protection Act; Supreme Court Dismisses Appeal In Software Licence Dispute
Kiran Raj
The Supreme Court Division Bench of Justice J.B. Pardiwala and Justice Manoj Misra held that a person purchasing goods or services for a commercial purpose linked to profit generation cannot be regarded as a consumer under the Consumer Protection Act, 1986. The Court upheld the dismissal of a consumer complaint filed by the appellant–software company against the respondent–seller for allegedly supplying a defective software licence intended to automate the appellant’s business processes. Observing that the transaction had a direct nexus with profit-oriented activities, the Bench ruled that business-to-business dealings of such nature fall outside the ambit of consumer protection. Consequently, the appeal was dismissed, and no order as to costs was made.
The case arose from a consumer complaint filed by a company engaged in the export and import of medical devices against a software firm. The complainant alleged that it had purchased a software licence called “Brillio Opti Suite” from the respondent to install and implement an export and import documentation system at its plant. It claimed that despite making full payment, the software failed to function properly. Alleging deficiency in service, the complainant sought refund of the licence cost and additional development charges, along with interest.
The respondent contested the complaint, asserting that the complainant was not a “consumer” under Section 2(1)(d) of the Consumer Protection Act, 1986, as the software was purchased for a commercial purpose. The State Consumer Disputes Redressal Commission, Delhi, held that the complaint was not maintainable because the transaction was for commercial use.
The complainant appealed before the National Consumer Disputes Redressal Commission, which dismissed the appeal and affirmed the State Commission’s decision. Before the Supreme Court, the appellant argued that the software was purchased for self-use and not for resale, asserting that it was not directly linked to profit generation. Relying on earlier decisions including Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers and Sunil Kohli v. Purearth Infrastructure Ltd., it contended that goods purchased for self-utilization could still qualify the purchaser as a consumer.
The respondent argued that the software was customized for managing export and import operations, including documentation, tracking consignments, and availing government benefits, which were all linked to profit-generating business functions. It maintained that the Act was not intended to cover business-to-business transactions and that the appellant’s purchase was inherently commercial.
The Bench observed that “ordinarily, commercial purpose is understood to include manufacturing or industrial activity or business-to-business transactions between commercial entities.” It stated 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.”
The Court remarked: “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 its/their beneficiary. If it is found that the dominant purpose behind purchasing goods or services is for personal use and consumption of the purchaser, or is otherwise not linked to any commercial activity, the question whether such purchase is for generating a livelihood by means of self-employment need not be looked into. However, where the transaction is for a commercial purpose then it might have to be considered whether it is for generating livelihood by means of self-employment or not.”
The Court stated: “the goods purchased by a self-employed individual for self-use for generating livelihood would fall within the explanation even if activity of that person is to generate profits for the purpose of its livelihood. But where a company purchases a software for automating its processes, the object is to maximise profits and, therefore, it would not fall within the explanation of Section 2(1)(d) of the 1986 Act.”
The Court held that “in the instant case, not only the complainant is a commercial entity, the purchase of goods/services (i.e., software) from the respondent was with a view to automate the processes of the company which were linked to generation of profit inasmuch as automation of business processes is undertaken not just for better management of the business but to reduce costs and maximise profits. Thus, in our view, the transaction of purchase of goods/services (i.e., software) had a nexus with 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 Bench held that “both the State Commission as well as the National Commission were justified in holding that the goods or services purchased or availed by the appellant were for a commercial purpose and therefore the appellant is not a ‘consumer’ as per Section 2(1)(d) of the 1986 Act. The appeal lacks merit and is, accordingly, dismissed. There is no order as to costs. Pending applications, if any, stand disposed of.”
Advocates Representing the Parties:
For the Petitioners: Mr. Shashank Garg, Adv. Mr. Divyakant Lahoti, AOR Ms. Kartik Lahoti, Adv. Ms. Praveena Bisht, Adv. Ms. Vindhya Mehra, Adv. Mr. Kumar Vinayakam Gupta, Adv. Ms. Mallika Luthra, Adv. Ms. Shreya Gokel, Adv. Ms. Nishtha Jain, Adv.
For the Respondents: Mr. Jayant Mehta, Sr. Adv. Mr. Ankur Sangal, Adv. Ms. Sucheta Roy, Adv. Mr. Raghu Vinayak Sinha, Adv. M/S. Khaitan & Co., AOR
Case Title: M/s Poly Medicure Ltd. v. M/s Brillio Technologies Pvt. Ltd.
Neutral Citation: 2025 INSC 1314
Case Number: Civil Appeal No. 6349 of 2024 Arising out SLP (C) No. 14306 of 2020
Bench: Justice J.B. Pardiwala, Justice Manoj Misra
