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DEFINITIONS OF CONSUMER, GOODS AND SERVICES

Introduction

The Indian Constitution mandates that every individual should be treated equally without any discrimination, except as provided therein. In a market, both buyers and sellers enjoy equal rights and have equal obligations. But, with respect to their protection against defects, the seller had more privilege under the Indian law. The maxim, caveat emptor, means “let the buyer beware” saved sellers from negligence and ignorance. The principle mandates the buyers to be responsible while purchasing. So, if a seller sells any defective product, it is the buyer who needs to be careful and if he fails, then he can’t seek any relief thereafter.

The doctrine of caveat emptor was viewed as an encouragement to manipulate buyers. Despite several legal provisions in a number of statutes including the Indian Contract Act, the Code of Civil Procedure, the Sale of Goods Act, etc., there was no visible impact. This led to the enactment of the Consumer Protection Act in 1986 with the chief aim of protecting consumers against exploitation.

The Consumer Protection Act, 1986

The Consumer Protection Act was enacted as a social welfare oriented legislation. It intends to provide better protection to the consumers by meditating and settling the consumer disputes. Since its commencement in 1986, the scope of the Act is widening to make it more strong and effective. This Act is not only concerned with mere buyers and sellers, but includes all those who are engaged in providing and receiving goods, services and even some facilities. The intention of this statute is to make the goods/service provider more objective and care taking. So, this encourages the provision of better and efficient goods and services with vigilance on both sides.

The latest acknowledged amendment was done in 2019 which replaced the 1986 Act. It has a total of 107 Sections, as per the 2019 Amendment Act. Section 2 of the Act gives the meanings of different words and expressions. The Act provides for the establishment of Consumer Protection Councils and Central/State Consumer Protection Authorities. It also proposes the setting up of various commissions at the Centre, State and District Levels. There are many other features of this Act including the Consumer Mediation Cell, the Product Liability Action, etc.

Important Definitions (Section 2)

1. Consumer

Section 2(7) of the Consumer Protection Act defines a consumer in the following words:

“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.”

Comments:

In Morgan Stanley Mutual Fund v. Kartika Das (1994), the Supreme Court had defined “consumer” in the following words: “A consumer, as the term implies, is one who consumes. As per the definition, a consumer is the one who purchased goods for private use or consumption. The meaning of the word is broadly stated to include anyone who consumes goods or services at the end of the chain of production. The comprehensive definition aims at covering every man who pays money as the price or cost of the goods and services.”

The following persons were held as consumers:

  • Student is a consumer of service of the educational institution (Sushant Yuvraj Rode v. Shri Ramdeobaba Engineering College, 1993)
  • Land owner is a consumer and builder is service provider (Surjit Kumar Banerjee v. Rameswaram, 2009)
  • A patient is a consumer
  • Subscriber of telephone (Union of India v. Mrs. S. Prakash, 1991)
  • Customer of a bank
  • A person who travels in train after buying ticket from the Railway counter
  • A person who hires catering services for marriage

Persons not held as consumers under the Act:

  • A lottery Ticket holder (Jagdish Chand v. Director, Sikkim State Lottery, 1994)
  • Applicant seeking allotment of shares (H. G. Bhatia v. ABC Computers Pvt. Ltd., 1994)
  • An Insurance Company (Savani Road Lines v.Sundaram Textiles Ltd, 2001)
  • Persons buying goods for resale or profit making purposes (Raj Kumar v. SC Verma, 2001)
  • An agent or assignee who is not a beneficiary of any service (New India Assurance Co. Ltd. v. B. N. Sainami, 1997)
  • Person presenting document for registration (S. P. Goel v. Collector of Stamps, Delhi, 1996)
  • Buyers of goods without consideration, that is, free of charge.

2. Goods

Section 2(21) defines goods that reads- "goods" means 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.

Comments:

Thus, growing crops, stocks, shares, and things attached to or that form a part of the land which can be severed are “goods”. Money and actionable claims are not considered as goods.

3. Services

Section 2(42) defines service in the following words- "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, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;

Comments:

The word “potential” in the section intends to extend the application of the section to not only the actual users but also to those who are capable of using it: Lucknow Development Authority v. M. K. Gandhi, 1994)

Medical services are covered under the definition of “services”: Indian Medical Association v. V.P. Shantha &Ors., 1996


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