JUDGMENT : Sunil Hali (Retd.), President Complainant is a body corporate with its Head Office at Pachpahar Road, Bhawanimandi. Chenab Textile Mills is one of its units which is based in Kathua (J&K) and engaged in the manufacturing of yarn. In the course of its business activity, vide Order No. CTM/PO/619 dated 24.01.2013, it placed an order for supply of one number Plate Type Hydro Extractor, which order was subsequently amended vide Order No. CTM/PO/619A dated 08.02.2013 for supply of 4 Point inertia Plate Type Visco Dampers Mounted Hydro Extractor as per the specifications and price given in the afore mentioned orders. As per the terms and conditions of the order dated 24.01.2013, besides referring to various terms and conditions, it provides for guarantee of one year from the date of supply. The guarantee clause reads as under: Guarantee: "Hydro extractor to be supplied by you will be guaranteed for proper design, no material and manufacturing defects and no premature worn out of parts and for its required performance for a period of 12 months from the date of installation. You will be liable to replace the defective units free of cost within 10 days from the date of our intimation regarding defects." 2. The said condition was carried forward in the subsequent amended order issued on 08.02.2013, As per the original order dated 24.01.2013 which was amended on 08.02.2013, the mode of payment was 10% in advance and 80% against exchange of dispatch documents and written confirmation that the hydro extractor dispatched is complete in all respects. 10% amount was payable after installation within a period of one month. The guarantee clause provides that the machine so supplied should be as per the proper specifications and design and there should be no manufacturing defect or premature worn out of parts for its required performance for a period of 12 months from the date of installation. In the event of any defect in the units/parts, the same would be replaced free of cost within 10 days from the date of intimation regarding the defects. 3. As per the terms and conditions set out, the complainant paid 10% in advance and thereafter paid an amount of Rs. 5,00,000.00 (rupees five lac only) vide Cheque No. 133743 dated 08.05.2013 and Rs. 4,22,500.00 (rupees four lac twenty two thousand five hundred only) vide Cheque No. 133744 dated 08.05.2013 drawn on Punjab National Bank. 3. As per the terms and conditions set out, the complainant paid 10% in advance and thereafter paid an amount of Rs. 5,00,000.00 (rupees five lac only) vide Cheque No. 133743 dated 08.05.2013 and Rs. 4,22,500.00 (rupees four lac twenty two thousand five hundred only) vide Cheque No. 133744 dated 08.05.2013 drawn on Punjab National Bank. Remaining 10% amount was paid after installation of the machine. As per the detail the complainant had paid an amount of Rs. 11,25,000.00 plus Rs. 22,000.00 on account of 'excise duty', i.e. a total of Rs. 11,47,500.00 (rupees eleven thousand forty seven thousand five hundred only), which is clearly visible from the Tax Invoice dated 26.04.2013 appended with the complaint as Annexure-E. 4. On the installation of the machinery, the representative Engineer of opposite parties visited the premises of the complainant for the purpose of commissioning of the 'hydro extractor'. It was detected by the representative engineer that the motor of the hydro extractor was totally damaged during the transit and complainant was requested to procure a new motor of 25 H.P. as reflected in the letter of the engineer dated 17.05.2013 appended with the complaint as Annexure-G. The motor was procured and installed in the factory by the complainant. On this being done, complainant requested the opposite parties to depute their technical engineer for installation of the hydro extractor. The engineer visited on 25.05.2013 and the process was completed on 27.05.2013 in presence of the Senior Manager Projects of the complainant-company. In their joint report submitted on 27.05.2013, it was observed that the machine is having 'higher vibrations and is under observation'. It was further observed that extra two numbers visco dampers are required to be installed. In this behalf a communication was addressed to the company for sending modified dampers. This communication was addressed by the complainant-company to the opposite parties. Despite reminders the non-complainant/company did not send the modified dampers. It was informed through the communication dated 04.09.2013 that on account of non supply of dampers, the company is suffering huge losses as the manufacturing activity of the company has come to a standstill. 5. After repeated reminders the opposite parties finally removed the old dampers and installed new dampers. As per the report submitted by their engineer deputed by the company, it is observed that 'there was still vibration during the cotton material hydro trial'. 5. After repeated reminders the opposite parties finally removed the old dampers and installed new dampers. As per the report submitted by their engineer deputed by the company, it is observed that 'there was still vibration during the cotton material hydro trial'. It was observed that the machine was not working satisfactory in so far as the cotton fiber is concerned. The complainant thereafter vide communication dated- 20.04.2014 informed the opposite parties that the dampers have been broken and requested for arranging the dispatch of new dampers and also to depute their engineer immediately to set right the problem. Photographs of the dampers were also sent to the opposite parties. 6. It is thereafter that the woes of the complainant started as the opposite parties failed to replace the dampers supplied by them, as a result of which the machinery could not function and resulted into losses to the complainant-company. Various reminders had been sent by the complainant, which were followed by legal notice issued on 25.07.2014. In the notice the complainant has claimed that the said machinery i.e. Plate Type Hydro Extractor be replaced and complainant be paid compensation of Rs. 25,00,000.00 (rupees twenty five lac only) along with interest. 7. The opposite parties after being served did not choose to appear and contest this complaint. As per the order recorded by this Commission on 16.12.2014, it is clearly observed that despite service of notice, none appeared from the opposite-party nor any written version was filed despite expiry of statutory period. The story continues and the case proceeded without the presence of the opposite parties, who refused to appear before the Commission. The complainant in support of his contention has recorded the statement of Sh. Sunil Sharma, Attorney Holder by way of an affidavit and one Sh. Chander Sheikhar Khajuria, Project Manager. These witnesses have clearly deposed and supported the contention raised by the complainant in its complaint and all material particulars. They have stated that order was placed with the opposite parties/company for supply of hydro extractors and an amount of Rs. 11,47,500.00 was paid by the complainant. It is further stated by them that the motor installed in the factory was in damaged state, which was replaced by the complainant only after it was detected by the service engineer of the opposite parties. 11,47,500.00 was paid by the complainant. It is further stated by them that the motor installed in the factory was in damaged state, which was replaced by the complainant only after it was detected by the service engineer of the opposite parties. The inspection report submitted by the Engineer In-charge of the opposite parties and the representative of the company i.e. Project Manager, reflects that defects have been found in the dampers supplied by the opposite parties. Once the dampers were replaced on the request of the complainant but these fresh dampers supplied also proved to be defective, which were not replaced thereafter. It is stated that there was manufacturing defect in the hydro extractors, the visco dampers could not function properly. Despite reminders being sent by the complainant no steps were taken by the opposite parties to replace the hydro extractors nor the amount was refunded to the complainant and as a consequence of non-functioning of these hydro extractors the manufacturing activity of the complainant-company suffered huge losses. The complainant was subsequently compelled to order fresh hydro extractors from a different company, consequence of which is that the complainant-company has suffered huge loss in this behalf. 8. We heard the learned counsel for the complainant. The facts are not in dispute that the complainant had sought for supply of hydro extractors, for which an amount of Rs. 11,47,500.00 was paid to the opposite parties as per the terms and conditions set up in the initial order dated 24.01.2013. As per the inspection reports which are on the file, it is clearly reflected that the dampers installed in the hydro extractor did not function, as a result of which, no yarn could be processed. One set of dampers was replaced by the opposite parties/company and a fresh one was installed but as per the report dated 22.11.2013 these dampers also did not function. It was detected that there was a manufacturing defect in the hydro extractors, which resulted in the damage caused to the dampers. Various requests were made by the complainant to the opposite parties to either replace the above machine or refund the amount along with interest but a total silence was observed by the opposite parties. It is also clearly visible that despite notice issued by this Commission, the opposite parties failed to appear. Various requests were made by the complainant to the opposite parties to either replace the above machine or refund the amount along with interest but a total silence was observed by the opposite parties. It is also clearly visible that despite notice issued by this Commission, the opposite parties failed to appear. It clearly emerges that it is a case where the opposite parties have been deficient in providing service and it also attracts unfair trade practice. This is a bilateral agreement which binds both the parties and any breach in the conditions is required to be fulfilled by the defaulting party. It clearly emerges from the evidence as well as also from the contents of the complaint and the documents appended therewith that despite having received Rs. 11,47,500.00 the opposite parties have supplied the machinery which was not in proper condition. A defective hydro extractor was supplied, which was either to be replaced or the price amount to be refunded. 9. The aforementioned facts clearly indicate that the opposite parties were deficient in providing service to the complainant. There is one more aspect of the matter as to whether the present complainant is a 'consumer' or not. In order to appreciate this controversy, it is necessary to indicate as to who is a 'consumer'. 9. The aforementioned facts clearly indicate that the opposite parties were deficient in providing service to the complainant. There is one more aspect of the matter as to whether the present complainant is a 'consumer' or not. In order to appreciate this controversy, it is necessary to indicate as to who is a 'consumer'. As per the definition of the Consumer Protection Act, consumer has been defined as under: "(d) "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 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 services 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 services other than the person who avails or hires 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; [Explanation:-For the purposes of sub-clause (i), "commercial purpose" does not include use by a consumer of goods bought and used by him exclusively for the purposes of earning his livelihood, by means of self-employment."] 10. The definition as revealed from section is in two parts one deals with the purchase of goods and other for providing service. The definition per-se is inclusive in its nature as the benefit is extended to those, who are authorized to use these goods by the purchaser. Therefore, if anybody, who comes within the definition of this, would be a 'consumer'. There is an exclusion clause, which takes away person from the definition of a consumer if the intended goods are for resale or for use for commercial purpose. Both the definitions are two distinct things. The ordinary meaning of resale needs no explanation as once the goods are resold that would take it away from the definition of consumer. There is an exclusion clause, which takes away person from the definition of a consumer if the intended goods are for resale or for use for commercial purpose. Both the definitions are two distinct things. The ordinary meaning of resale needs no explanation as once the goods are resold that would take it away from the definition of consumer. The use for commercial purpose has to be understood in the context of the definition of commercial purpose. The ordinary meaning of commercial denotes connected with or indicated in the commerce, where the profit is the main aim. It enjoins that any activity where a person purchases goods with a view to using such goods for carrying on any activity at a large scale for the purpose of earning profit. The only limitation placed in this is, there should be a direct nexus between the purchase of goods and the profit or loss from their further disposal. Such a direct nexus is absent when the goods or services are converted for producing other goods. 11. Now coming to the expression used in the explanation, it provides that if the consumer goods are bought and used by a purchaser exclusively for the purpose of earning his livelihood by means of self employment, same falls within the definition of expression "consumer". The ultimate purpose of it is that consumer should-be the ultimate user of such goods. The emphasis used in the explanation is that the goods must be used by the purchaser for himself. What it implies is that the goods so purchased must exclusively be used by the person for generating self employment. The exception cannot be invoked in case where the goods are being used by other person. If a person purchases a machine and uses it himself for producing goods, then he can be covered by the definition of consumer, he may employ some persons to operate the said machine but in case the machine is being utilized by a person other than the purchaser he cannot be covered by the definition of a consumer. Where a person purchases a truck and gives it on hire to some other person, he will be covered by the exceptional clause. Having said so, the question that calls for consideration in this case is as to whether the present complainant is involved in activity which is for commercial purpose. 12. Where a person purchases a truck and gives it on hire to some other person, he will be covered by the exceptional clause. Having said so, the question that calls for consideration in this case is as to whether the present complainant is involved in activity which is for commercial purpose. 12. The complainant is a company engaged in manufacturing of yarn. In the course of his business activity it placed an order for supply of one number Plate Type Hydro Extractor, which is used for the purpose of manufacturing the yarn. The said company is running under the exclusive control of the complainant, for which, he has employed some persons. Even though the manufacturing activity is at a very large scale as the end product is a yarn, which is sold in the market, it cannot be brought within the meaning of the commercial activity for the following reasons: (i) That the machine which has been purchased is ultimately goods, which is put to use for producing the ultimate product which is yarn. Therefore, there is no direct nexus between the purchase of the goods and the ultimate purpose of such product, which is sold as a yarn; (ii) Though the goods so used are done by the company by employing certain other persons and the control, of such operational machine is done by the company itself for earning its livelihood. 13. Thus, we find that the complainant is squarely covered by the definition of the Consumer Protection Act. The reliance has been placed on the judgment of the Hon'ble Supreme Court passed in Civil Appeal No. 4193 of 1995 titled Laxmi Engineering Works vs. P.S.G. Industrial Institute, relevant extract whereof is reproduced herein below: "B. Consumer Protection Act, 1986 Section 2(d)Consumer-A person who buys goods and uses them himself, exclusively of the purpose of earning his livelihood, by means of self employment-Is within the definition of the Expression "consumer"-Whether the purpose for which a person has bought goods is a "commercial purpose" within the meaning of definition of expression "consumer" in Section 2(d) of the Act-Is always a question of fact-To be decided in the facts and circumstances of each case." 14. We are of the considered view that the opposite parties/ company was bound to replace the hydro extractors, which they have failed to do. We are of the considered view that the opposite parties/ company was bound to replace the hydro extractors, which they have failed to do. As per the statement made by the learned counsel for the complainant, they have purchased a new hydro extractor from a different company so as to ensure that the manufacturing activity does not stop. Therefore, the only prayer of the complainant is to seek refund of the amount with interest @ 18% per annum. It is further claimed that the complainant be paid compensation with litigation expenses. 15. In view of this, we allow this complaint, direct the opposite parties to refund an amount of Rs. 11,47,500.00 along with interest @ 12% per annum from 27.05.2013 when the first inspection was conducted till its realization. The complainant is also entitled to compensation of Rs. 1,00,000.00 (rupees one lac only) on account of loss suffered by it. The litigation expenses of Rs. 25,000.00 (rupees twenty five thousand only) are also to be paid by the opposite parties. The aforesaid amount be paid within a period of two months from the date of the order. The amount be paid directly to the complainant or be deposited in this forum.