Corporations Aren’t ‘Consumers’ Under Consumer Protection Act for Business Software Purchases: Supreme Court

“Automation for Profit Is a Commercial Purpose…..Software That Streamlines Exports Is a Tool for Profit, Not Self-Employment: In a judgment that decisively clarifies the scope of “consumer” under the Consumer Protection Act, 1986, the Supreme Court on 13 November 2025, ruled that a company purchasing business automation software for internal operations does not qualify as a consumer under Section 2(1)(d) of the Act.

Delivering the decision, a Bench of Justice J.B. Pardiwala and Justice Manoj Misra held that when the dominant purpose of a transaction is to enhance operational efficiency and profits, the purchase is for a commercial purpose, and corporate entities cannot invoke consumer protection remedies for such contracts.

“Commercial Entities Cannot Hide Behind the Veil of Self-Use”: Supreme Court Denies Consumer Status to Software Buyer

The appellant, M/s Poly Medicure Ltd., engaged in the import and export of medical equipment, had filed a consumer complaint seeking refund of payments made to M/s Brillio Technologies Pvt. Ltd. for a licence to use the “Brillio Opti Suite” software. The software, according to the appellant, was defective and failed to serve its intended purpose of automating import/export documentation.

Claiming deficiency in service, the appellant approached the State Consumer Commission, which held the complaint not maintainable, reasoning that the purchase was for a commercial purpose, excluding the complainant from the definition of “consumer”. The National Consumer Disputes Redressal Commission (NCDRC) upheld this ruling. The matter then reached the Supreme Court.

“Dominant Purpose Test Must Prevail”: Automation Software Has Direct Nexus with Profit, Says Court

Rejecting the appellant's arguments, the Court underlined the dominant purpose test, stating:

“What is to be seen is the dominant intention or dominant purpose for the transaction – whether it is to facilitate some kind of profit generation for the purchaser and/or their beneficiary.”

Noting that the Brillio Opti Suite software was purchased for managing export documentation, shipment tracking, benefit claims under government schemes, and financial controls like duty drawback and forex management, the Court concluded:

“Automation of business processes is undertaken not just for better management of the business but to reduce costs and maximise profits.”

Such a nexus with profit-generation, the Court held, brings the transaction squarely within the commercial purpose exclusion under the Consumer Protection Act.

“Self-Employment Exception Doesn’t Apply to Corporations”: Supreme Court Clarifies Scope of Explanation to Section 2(1)(d)

The appellant had relied on the Explanation to Section 2(1)(d), which excludes from the “commercial purpose” bar those purchases made exclusively for earning livelihood by means of self-employment. The Court dismissed this claim, drawing a clear distinction:

“There is a difference between a self-employed individual and a corporation… where a company purchases software for automating its processes, the object is to maximise profits.”

Accordingly, the self-employment/livelihood exception cannot be stretched to cover corporate transactions, no matter how internal or self-contained the use may be.

“Business-to-Business Software Licences Are Not Consumer Transactions”: Court Clarifies B2B Dealings Fall Outside Consumer Jurisdiction

Noting that the Consumer Protection Act was designed for business-to-consumer (B2C) relationships, the Court emphasized that business-to-business (B2B) dealings, where goods or services are acquired to enhance enterprise efficiency and profit, are outside the intended legislative scope.

“The appellant is a company engaged in commercial activity of import/export… the goods/services purchased were to automate its business processes with a view to augment its efficiency and profits.”

Citing the Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers case, the Court reaffirmed that the identity of the purchaser or size of the transaction is irrelevant—what matters is the link to commercial activity.

“You May Be the End User, But Not a Consumer If the End Is Profit”: Court Distinguishes Between Use and Purpose

While the appellant argued that it was merely an end user and did not intend to resell or commercially exploit the software in itself, the Court clarified that use alone does not determine consumer status:

“Whether those goods/services are for self-use does not make a material difference where the objective is to automate business processes and augment profit.”

The Court distinguished Sunil Kohli v. Purearth Infrastructure Ltd., where the complainants were unemployed individuals who had purchased a shop to start a livelihood. In contrast, Poly Medicure Ltd. was an established business, purchasing the software not for livelihood but to grow profits.

Similarly, the Court noted that in Virender Singh v. Darshana Trading Co., it had already held that existing businessmen expanding commercial activity through purchases cannot invoke the self-employment exception.

Business Efficiency Tools Fall Within Commercial Purpose

The Court concluded: “The transaction of purchase of software had a nexus with generation of profits and, therefore, qua that transaction the appellant cannot be considered a consumer.”

Dismissing the appeal, the Court upheld the orders of the State Commission and the NCDRC, stating that the consumer complaint was rightly dismissed as not maintainable.

“The appeal lacks merit and is, accordingly, dismissed. There is no order as to costs.”

Date of Decision: 13 November 2025