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Consumer under Consumer Protection Act, 2019

"The interest of the consumer has to be kept in the forefront and the prime consideration that an essential commodity ought to be made available to the common man at a fair price must rank in priority over every other consideration." - Y.V. Chandrachud, J. in Prag Ice & Oil Mills v. Union of India [i]

"An Act to provide for protection of the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers' disputes and for matters connected therewith or incidental thereto"

The long title of the new Consumer Protection Act, 2019 (2019 Act) in the least number of words explains the whole and sole purpose of the Act. While the Consumer Protection Act, 1986 had nearly the same long title, but being around three decades old, did not inculcate the needful things that would have solved the problems of the modern and technology-dependent consumers, which is why a need was felt to replace the whole Act with a new one and bring a fundamental change.

The Parliament passed the Consumer Protection Bill, 2019 on 06-08-2019 to replace the Consumer Protection Act, 1986. The President of India gave its accent to the 2019 Act on 09-08-2019 and the same came into force on 20-07-2020. The 2019 Act has been enacted for the purpose of providing timely and effective administration and settlement of consumer disputes and related matters.

Consumer Protection has always been a matter of great concern. In ancient India, effective measures were initiated to protect consumers from crimes in the market place. Ancient law-givers ably described various kinds of unfair trade practices and also prescribed severe punishments for wrongdoers. Mainly, acts of adulteration and false weights and measures were seriously dealt with.

In the medieval period, some Muslim rulers developed well-organized market mechanisms to monitor prices and the supply of goods to the markets. During the British period, the modern legal system was introduced in India and many laws were enacted to protect the interests of consumers generally.

Some of the laws which were passed during the British regime concerning consumer interests were: the Contract Act of 1872, the Sale of Goods Act of 1930, the Penal Code of 1860, the Drugs and Cosmetics Act of 1940, the Usurious Loans Act of 1918, and the Agriculture Procedure (Grading and Marketing Act) of 1937. These laws provided specific legal protection for consumers.

Today, the civil justice system is tainted with deficiencies that discourage the consumer from seeking legal recourse. However, the Consumer Protection Act of 1986, which provided easy access to justice, had brought a legal revolution in India as a result of its cost-effective mechanisms and popular support. However, with the gradual advancements in technology, the age-old 1986 Act was unable to keep up with the grievances of the modern consumer. Thus, a need was felt to substitute the old Act which resulted in the enactment of the Consumer Protection Act, 2019

Consumer under Consumer Protection Act, 2019
"Consumers, by definition, include us all," President John F. Kennedy offered his definition to the United States Congress on March 15, 1962. Consumer according to the Oxford Dictionary means "a person who purchases goods and services for personal use". However, within the meaning of Consumer Protection Act, 2019, a consumer has been defined in the following manner:

Who is a Consumer?
According to Section 2(7) of the Consumer Protection Act, 2019, "CONSUMER" means any person who:
  1. 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
     
  2. 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 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 this clause:
  1. the expression "commercial purpose" does not include use by a person of goods bought and used by him exclusively for the purpose pf earning his livelihood, by means of self-employment;
  2. the expression "buys any goods" and "hires or avails any services" includes offline or online transactions through electronic means or by teleshopping or direct selling or multilevel marketing.

Thus, if any person either:
  1. buys any goods for a consideration, or
  2. hires or avails of any services for a consideration is a consumer.

Consumer is a person
The term 'person' has been defined in sec 2(31) of the Act as including:
  1. an individual
  2. a firm whether registered or not;
  3. a Hindu undivided family;
  4. a co-operative society;
  5. an association of persons whether registered under the Societies Registration Act, 1860 (21 of 1860) or not;
  6. any corporation, company or a body of individuals whether incorporated or not;
  7. any artificial juridical person, not falling within any of the preceding sub-clauses;

Consumer of Goods

With regards to the Section 2(7)(i) consumer is a person, who buys any goods for consideration, wherein "goods" has been defined under Section 2(21) as-
every kind of movable property and includes "food" as defined in clause(j) of sub-section(1) of section 3 of the Food Safety and Standards Act, 2006 (34 of 2006)

Thus, every kind of:
  1. Movable property, and
  2. "food" as defined in clause (j) of sub-section(1) of section 3 of the Food Safety and Standards Act, 2006 is a goods.

There is no definition of movable property in Consumer Protection Act, 2019, however, movable property has been defined in the General Clauses Act to mean 'property of every description except immovable property'. The Registration Act defines movable property to include property of every description except immovable property, but including standing timber, growing crops and grass[ii].

Immovable property has been defined in s 3(26) of the General Clauses Act as- 'Immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to earth'.

Thus, every property except immovable property and including standing timber, grass and grass is a movable property. Herein, standing timber refers to trees fit for the purpose of building or repairing houses[iii]. This is an exception to the general rule that growing trees are immovable property[iv]. In English law this would refer to oak, ash, elm trees[v].

In India, neem, shisham trees[vi], babul trees[vii] or teak trees[viii] have been held to standing timber. It has been held in some decisions that if trees are of the categories referred above, they are standing timber, irrespective of when they are intended to be cut[ix].It has recently been held by the Supreme Court that electricity is a movable property[x]. However, a fruit bearing tree would not be standing timber, and would be classified as immovable property[xi]; however, where mango trees ae used for building or repairing houses, it may be considered as immovable property[xii].

Growing crop have been held to include all vegetable growths, which have no existence apart from their produce such as pan leaves[xiii] and sugarcane[xiv].

Under Food Safety and Standards Act, 2006 s 3(1)(j) 'food' as been defined as- any substance, whether processed, partially processed or unprocessed, which is intended for human consumption and includes primary food to the extent defined in clause (zk), genetically modified or engineered food or food containing such ingredients, infant food, packaged drinking water, alcoholic drink, chewing gum, and any substance, including water used into the food during its manufacture, preparation or treatment but does not include any animal feed, live animals unless they are prepared or processed for placing on the market for human consumption, plants, prior to harvesting, drugs and medicinal products, cosmetics, narcotic or psychotropic substances:
  • Provided that the Central Government may declare, by notification in the Official Gazette, any
  • other article as food for the purposes of this Act having regards to its use, nature, substance or quality;

Thus, as aforementioned anything that is a movable property and 'food' under the meaning of s 3(1)(j) of Food Safety and Standards Act, 2006 can be categorised as goods.

Buyer of Goods for a consideration
The 'buyer of goods for a consideration' is a consumer. There must be a sale transaction between a seller and a buyer; the sale must be of goods; the buying of goods must be for consideration and the consideration has to be paid immediately or promised or partly paid and partly promised, or under any system of deferred payment. The term consideration has not been defined in the Consumer Protection Act. Therefore, the meaning of the term 'consideration' is to be construed according to the Indian Contract Act.

Furthermore, in view of the technological developments 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 multilevel marketing.

The Act, unlike the Sale of Goods Act, 1930[xv], does not insist on money consideration only. Transactions of transfer for services, or barter or exchange will come within the purview of the Act.

In Motor Sales and Service v. Renji Sabastian[xvi], the complainant booked a Hero Honda for consideration. His turn was ignored. The dealer was ordered to give him the vehicle at the price on the day of his turn for the same and to pay him compensation of Rs. 500 in addition.

Any person who uses a good with the approval is a consumer
When a person buys goods, that may be used by his family members, relatives and friends or aquaintances upon approval from the buyer. The Act aims to extend protection available to a consumer under the Act to the users of the goods and services who may not have bought it. Thus the law construe users of the goods as consumers although they may not be buyers at the same time[xvii]. The words "....with the approval of the buyer" in the definition denotes that the user of the goods should be a rightful user, and should not be the one who has obtained the good by unlawful means.

Purchaser for re-sale or commercial purpose
The term 'for resale' implies that the goods are brought for the purpose of selling them, and the expression 'for commercial purpose' is intended to cover cases other than those of resale of goods. According to Section 2(7)(i), the term "consumer" does not include a person who obtains such goods for resale or for any "commercial purpose", where the expression "commercial purpose" does not include people who purchase goods solely fot the purpose of earning livelihood by means of self-employment.

Thus, when goods are bought for commercial purposes and such purchase satisfy the following criteria:
  1. the goods are used by the buyer himself;
  2. exclusively for the purpose of earning his livelihood;
  3. by means of self-employment,
Then such use would not be termed as use for commercial purposes under the Act, and the user is recognised as a consumer. Thus, if a person purchases a taxi, or a photostat machine, or a sewing machine or any other goods which are to be used by him exclusively for the purpose of earning his livelihood by means of self-employment, that will not be deemed to be commercial purpose. Such a person will be considered as consumer under the Consumer Protection Act.

Examples:
  1. A buys a truck for plying it as a public carrier by himself, A is a consumer.
  2. A buys a truck and hires a driver to ply it, A is not a consumer.
  3. A has one cloth shop. He starts another business of a photocopier and buys a photocopy machine therefor. He hasn't bought this machine exclusively for the purpose of earning livelihood. He is not a consumer under the Act.
The intention of the legislature is to exclude big business houses carrying on business with profit motive from the purview of the Act. At the same time it is pertinent to save the interests of small consumers who buy goods for self employment to earn their livelihood, like a rickshaw puller buying rickshaw for self employment, or a farmer purchasing fertilizer for his crops, or a taxi driver buying a car to run it as a taxi, etc.

In Anant Raj Agencies v. TELCO [xviii], the company purchased a car for the private use of a director of the company. The car had serious defects and it stopped working altogether. The complainant claimed the replacement of the car or the refund of price with interest. It was held that the car had not been purchased for the profit making activity of the company on large scale. There was no nexus between the purchase of the car and profit making activity of the company. The complainant was a consumer and the complaint was admissible under the C.P.A.

In Sterling Computer Ltd. v. P. R. Kutty [xix], the complainant purchased a computer for his personal use, which was to be used by his office staff for the purpose of business. The complainant was a contractor by profession. The computer was not being used to earn his livelihood. The computer did not work properly from the very beginning. The National Commission held that the computer was purchased for commercial purpose and the complainant was not a consumer. The complaint was, therefore, dismissed.

Consumer of services
According to section 2(7)(ii), any person who hires services for a consideration is a consumer, wherein "service" has been defined under sec. 2(42) as:
"service" means service of any description which is made available to potential users and includes but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, entertainment, amusement or the purveying a news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.

The aforementioned definition is not a comprehensive one and can be extensively used by the court.

Services are hired or availed of:
The term 'hired' has not been defined under the Act. Its dictionary meaning is - to procure the use of services at a price. Thus the term 'hire' has also been used in the sense of 'avail' or 'use'. Accordingly it may be understood that consumer means any person who avails or uses any service.

What constitutes hiring has been an issue to be dealt with in many consumer disputes. If it is established that a particular act constitutes hiring of service, the transaction falls within the net of the Consumer Protection Act, and vice-versa.

Examples:
  1. A passenger getting railway reservation after payment is hiring service for consideration.
     
  2. A landlord neglected and refused to provide the agreed amenities to his tenant. He filed complaint against the landlord under the Consumer Protection Act. The National Commission dismissed the complaint saying that it was a case of lease of immovable property and not of hiring services of the landlord. [Smt. Laxmiben Laxmichand Shah v. Smt. Sakerben Kanji Chandan[xx]]
     
  3. A presented before the Sub-Registrar a document claiming it to be a will for registration who sent it to the Collector of Stamps for action. The matter remain pending for about six years. In the meantime A filed a complaint under the Consumer Protection Act alleging harrassment by the Sub-Registrar and Collector and prayed for compensation. The National Commission held the view that A was not a "consumer" under the CPA. Because there was no hiring of services by the complainant for consideration and because a Government official doing his duty as functionary of the State under law could not be said to be rendering a service to the complainant. [S.P. Goel v. Collector of Stamps[xxi]].
     
Consideration for service necessary
To enable a consumer to bring an action, he must have availed the services for a consideration. The consideration may be either paid or promised or partly paid and partly promised or under any system of deferred payment. A person hiring banking services for consideration is a consumer. Thus, if the depositor of a Fixed Deposit Receipt in a Bank applied for a premature encashment and the same was delayed, the depositor was a consumer entitled to file a complaint as such [xxii].

In Mumbai Grahak Panchayat v. Andhra Pradesh Scooters Ltd.[xxiii], the complainant made an advance deposit of Rs. 500 with the respondent for booking a scooter. The complainant was not given the refund of the deposit when he demanded the same as per his contract with the opposite party. It was held that the failure to refund amounted to rendering the service defectively within the meaning of section 2(10) of the Act. The complainant was a consumer, and entitled to relief asked for by him.

In Union of India v. Mrs. S. Prakash[xxiv], it has been held that the subscriber of a telephone is a consumer as the rental charges paid to the Central Government is the consideration for the services rendered by the Tele-Communication Department- The Consumer Forum, therefore, has full jurisdiction to entertain complaint in the matter.

The Direct and Indirect taxes paid to the State by a citizen is not payment for the services rendered [xxv].

Service without consideration
According to section 2(7)(ii), the consumer must hire any services "for a consideration".
Section 2(42) also stipulates that service does not include the rendering of any service free of charge. When the services are rendered without consideration, the complaint cannot be entertained in a consumer forum.

Thus, when the Housing Board of Naval Personnel is established to promote suitable services to its members free of charge, no member can bring an action as a consumer, for any deficiency in the apartments allotted to him[xxvi].

In Sri A. Srinivasa Murthy v. Chairman, Bangalore Development Authority[xxvii], the question which arose was, as to whether a tax payer could be considered to be a consumer in respect of specific service rendered by an authority. In this case, the complainant, who paid house tax including the health cess, brought an action against the Bangalore Development Authority for having failed to check the menace of stray dogs, and claimed compensation for a dog bite.

It was held by the Karnataka SCDRC, Bangalore that there is no quid pro quo between the tax paid and the general duty of the Bangalore Development Authority, the complainant is not a consumer within the meaning of Section 2(7)(ii) of the Act and, therefore, his complaint has to be dismissed.

If a sterilization operation is done free of cost and moreover incentive money is paid to those taking the benefit of the service, a person availing such facility is not a consumer.
Hence, no complaint can be made in such a case[xxviii].

Examinee-Not a Consumer
In Bihar School Examination Board v. Suresh Prasad Sinha[xxix], the Supreme Court ruled that school education board was not a 'service provider' and a student who took an examination was not a 'consumer' within the meaning of the section 2(7)(ii) of the Consumer Protection Act, 2019.

The Court explained that the Board was a statutory authority whose function was to conduct school examination. This statutory function involving different stages was a non-commercial function. Participation of a student in the general examination was not a availment of the service by a student and the fee paid was not the consideration for the availment of the service.
However, coaching institutions are included within the ambit of 'service providers' for the purposes of the Consumer Protection Act, 2019.

As,in arecent matter of FIITJEE Ltd. v. Vikram Seth , 2019, the Hon'ble Chandigarh State Commission, upheld the decision of the District Forum and granted compensation to the aggrieved student towards refund of fees for not availing services of the institution. The Forum held that when the student does not avail the services of an institute, it is bound to refund the fees received by it. Not doing the same amounts to unfair trade practices and deficiency in services.

End-Notes:
  1. (1978) 3 SCC 459
  2. Seeni Chettiar v. Santhanathan (1897) ILR 20 Mad 58.
  3. Krishnarao v. Babaji (1900) ILR 24 Bom. 31.
  4. Sukry v. Goondakul (1872) 6 Mad HCR 71.
  5. See Halsbury's Laws of England, 3rd edn, vol 17, p 624.
  6. Nanhe Lal v. Ram Bharose (1938) ILR All 115; Baijnath v. Ramdhar (1963) All LJ 33, AIR 1963 All 214.
  7. Ram Kumar v. Krishna Gopal AIR 1946 Oudh 106.
  8. Kunhikoya v. Ahmed Kutty AIR 1952 Mad 39.
  9. See Krishnarao v. Babaji (1900) ILR 24 Bom. 31; Rameshwar Singh Bahadur v. Basudev Singh AIR 1923 Pat 95; Ibadullah v. Lachmi Naraian 93 IC 358; Nanhe Lal v. Ram Bharose (1938) ILR All 115; Baijnath v. Ramdhar (1963) All LJ 33, AIR 1963 All 214.
  10. State of Andhra Pradesh v. National Thermal Power Corpn Ltd. (2002) 5 SCC 203.
  11. Alisaheb v. Mohidin (1911) 13 Bom LR 874; Katwani v. Ram Adhin (1912) 10 All LJ 516; Sakharam v. Vishram (1895) ILR 19 Bom 207; Moti Singh v. Deoki Singh 160 IC 779.
  12. Nahanchand v. Modi (1907) ILR 31 Bom 183
  13. Atmaram v. Doma (1897) 11 CPLR 87
  14. Kalka v. Chandan (1888) ILR 10 All 20
  15. See Sec. 2(10), Sales of Goods Act, 1930
  16. 1991 C.P.R. 158 (Kerala); Also see Debojit Ghosh v. Balaram Bhasak, III (1995) C.P.J. 296; Mohan Sharma v. Chandigarh Batting Co., I (1994) C.P.J. 453.
[xvii] Dinesh Bhagat v. Bajaj Auto Ltd.(1992) III CPJ 272
[xviii] (1996) C.P.J. 268 (Delhi)
[xix] (1996) C.P.J. 118 (N.C.)
[xx] (1999) 1 Comp. LJ 177 (NCDRC)
[xxi] (1995) III CPR 684 (SC)
[xxii] P. Nagabhushana Rao v. Union Bank of India, 1991 (1) C.P.J. 352.
[xxiii] 1991 (1) C.P.R. 603; Also see Surinder Singh v. M.G. Panaji, 1991 (1) C.P.R. 500.
[xxiv] 1991 (1) C.P.R. 307.
[xxv] Mayor, Calcutta Municipal Corporation v. Tarapada Chatterjee (1994) 1 CPR 87 (NCDRC)
[xxvi] CDR V. Joshna v. The D.G., Air Force Naval Housing Board, 1991 (2) C.P.J. 371; Similarly, when medical service in a Government hospital not hired for consideration, no complaint under the Act can lie. Smt. Ram Kali v. Delhi Administration, 1991 (1) C.P.J. 309.
[xxvii] (1991) C.P.J. 657.
[xxviii] Smt. Ram Kali v. Delhi Administration, 1991 (1) C.P.J. 309.
[xxix] A.I.R. 2010 S.C. 93.

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