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CONSUMER THE CONCEPT
QUESTION BANK
Q. 1. Define 'consumer'. What are the rights available to the consumer under the Consumer Protection Act, 2019?
Q.2. Who is a consumer according to the Consumer Protection Act, 2019? What changes were made in the term by the court decisions?
Q.3. Who is a consumer and who is not a consumer according to the Consumer Protection Act, 2019? Substantiate your answer with court decisions.
Q. 4. Define "Consumer" under Section 2(7). Explain who is not considered a consumer under the Act.
Q. 5. Elaborate on the statement: "The Consumer Protection Act applies to all goods and services unless specifically exempted by the Central Government."
Q.6. Critical Analysis of the definition of "Consumer" "A person buying goods for a commercial purpose is excluded from the definition of a consumer." Analyze this statement critically with reference to Section 2(7) of the CPA, 2019. Explain the "self-employment" exception with the help of landmark judicial precedents.
Q. 7. Define and explain "Unfair Trade Practice" under Section 2(47) of the Consumer Protection Act, 2019. What new categories of unfair trade practices (such as disclosure of personal information and refusal to take back defective goods) have been introduced by the 2019 Act?
Q. 8. Define "Product Liability" [Section 2(34)] and a "Product Liability Action" [Section 2(35)] as defined under Chapter I. How does Chapter I lay down the conceptual foundation for Chapter VI (Product Liability) of the Act?
SHORT NOTES
1. Consumer.
2. Statutory and Government services.
SYNOPSIS
I. βCONSUMERβ DEFINED (S.2 (7))-
II. WHO IS A CONSUMER?
(1) Consumer of Goods.
(a) Purchaser of goods-
(b) User of such goods-
(c) A person who buys goods to earn his livelihood-
(2) Consumer of Services-
(a) Hirer of services-
(b) Beneficiary-
III. WHO IS NOT A CONSUMER?
(1) Reseller or commercial purchaser-
(2) Purchaser without consideration.
IV. RIGHTS AVAILABLE TO THE CONSUMER.
I. βCONSUMERβ DEFINED (S.2 (7))-
Consumer means any person who-
(a) buy any goods- for consideration (which has been paid or promised or partly paid or partly promised, or under any system of deferred payment), and
(i) includes any user of such goods (other than the person who buys such goods) when such use is made with the approval of the buyer,
(ii) but does not include a person who obtains such goods for resale or commercial purposes.
(b) hires or avails any services for consideration (which has been paid or promised or partly paid and partly promised or under any system of deferred payment) and
(i) includes any beneficiary of such services. When such services are availed with the approval of the hirer.
(ii) but does not include a person who avails of such services for any commercial purpose.
Explanation.βFor 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" include offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing;
The concept of consumer is very important so far as the Consumer Protection Act is concerned. Therefore, it is defined thoroughly under S. 2 (7) of the Consumer Protection Act, 2019. Specifically, the explanation includes online modes also.
II. WHO IS A CONSUMER?
(1) Consumer of Goods.-
(a) Purchaser of goods-
The term 'consumer' is defined in two parts-
The first part contains consumers who purchase goods or use them. The second part refers to a person who hires services or is a beneficiary of them. As per the definition, the consideration may be paid in full, in part, or promised under a system of deferred payment.
In Lucknow Development Authority V/s. M.K. Gupta
The Supreme Court held that the term 'consumer' is a comprehensive expression. It extends to a person who buys any commodity to consume, either as eatables or otherwise, from a shop, business house, corporation, store, or fair-price shop to use for private or public services.
(b) User of such goods-
The definition is not confined to the purchaser of goods only, but it also covers the user of such goods with the purchaser's permission. So, in second place, the term consumer also includes the user of the goods, even though he himself is not the buyer.
(c) A person who buys goods to earn his livelihood-
Explanation (a) to S.2 (7) provides that 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. Thus, the purchaser of a rickshaw, though using it for commercial purposes, is a βconsumerβ under the definition because he uses it to earn his livelihood.
In Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers
Facts- The Lilavati Kirtilal Mehta Medical Trust (which runs the famous Lilavati Hospital in Mumbai) purchased 29 residential flats in Thane from the developer, Unique Shanti Developers, in 1995 for the residence of its nursing staff. The building had cracks and was found to be defectively built.
The Supreme Court clarified the "Direct Nexus Test." The Court held that to deny a complainant "consumer" status, it must be shown that the dominant purpose of purchasing the goods or availing the services was to directly generate profit. If the transaction has only an indirect or incidental relation to a commercial activity (e.g., a commercial hospital purchasing hostel flats for its staff nurses), it does not constitute a "commercial purpose."
(d) Purchaser through online transaction-
Explanation (b) to the definition explicitly includes person purchasing thrugh online transactions (e-commerce, direct selling, teleshopping, and multi-level marketing) within the definition of a consumer.
(2) Consumer of Services-
(a) Hirer of services-
Another category of consumer contains a person who hires any service for consideration.
In Kannan V. Shri S. M. M. Hospital
Held- a patient to whom services are not rendered gratuitously is a consumer.
Services would include all kinds of professional services, be it the routine service of a barber, doctor, advocate, contractor, etc., or any other commercial service.
(b) Beneficiary-
The term consumer also covers anyone who avails the services hired by another, with their approval.
III. WHO IS NOT A CONSUMER?
(1) Reseller or commercial purchaser-
The definition of a consumer provides that a person who obtains such goods for resale or for any commercial purpose is not a consumer.
However, it excludes from the ambit of the term 'commercial purpose' those who buy the goods to earn money through self-employment.
Laxmi Engineering Works v. P.S.G. Industrial Institute
This is the most authoritative case on this subject. Though decided under the 1986 Act, its principles are fully active under the 2019 Act.
Facts: The appellant purchased a generator-operated machine (monoblock pump) to manufacture machine parts. A defect arose, and the manufacturer argued that Laxmi Engineering was a commercial entity. However, the machine was very costly and was to be used for large-scale production. Therefore, even though the Supreme Court held that the petitioner was not a consumer allowed him to file a civil suit for the breach of contract and for providing a defective machine.
The Supreme Court Ruling: The Court laid down clear guidelines:
(i) Whether a purpose is "commercial" is a question of fact to be decided on a case-by-case basis.
(ii) If a person purchases a machine to operate it himself with the help of his family members to earn his livelihood, he is a consumer.
(iii) Conversely, if he purchases it to deploy workers, scale up production, and run a business on a large scale, he is not a consumer.
(2) Purchaser without consideration.
The person who purchases goods or avails services without paying any consideration for them is not a consumer.
In Gordhandas K. Thakkar V/s. Life Insurance Corporation
Facts- The policy has lapsed on the grounds of non-payment.
Held- The Insurance Company is not liable to pay compensation.
IV. RIGHTS AVAILABLE TO THE CONSUMER.
A. Consumer Rights (S. 2 (9)-
S. 2 (9) of the Act, in its object, sought to give the following six general rights to the consumer-
- The right to be protected against the marketing of goods and services which are hazardous to life and property;
- the right to be informed about the quality, quantity, potency, purity, standard, and price of goods or services to protect the consumer against unsafe trade practices.
- The right to be assured, whether possible, access to various goods and services at competitive prices.
- The right to be heard and assured that the consumer's interest will receive due consideration at appropriate forums.
- the right to seek redressal against unfair trade practices, restrictive trade practices, or unscrupulous exploitation of consumers, and
- the right to consumer education.
b. Reliefs/ Orders the Consumer Commission can pass (S. 39)-
If a complaint is proved, the Commission can order the opposite party-
(1) To remove defects from the goods or deficiencies in services.
(2) To replace defective goods with new, defect-free goods.
(3) To refund the price or charges paid by the consumer.
(4) To pay compensation for any loss or injury suffered due to negligence.
(5) To discontinue unfair or restrictive trade practices.
(6) To withdraw/cease selling hazardous goods.
(7) To pay adequate costs to the complainant.
Thus, the Commission, through the above orders, protects the rights of the consumer.
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NOTE
STATUTORY AND GOVERNMENT SERVICES
Synopsis
a) Services provided without consideration-
b) Electricity Board liability:-
c) Telephone Services:-
d) Postal Services:-
STATUTORY AND GOVERNMENT SERVICES:-
The persons purchasing goods or availing of services provided by the statutory and government authorities are also consumers. No exemptions to the statutory or Government authority is granted by the Consumer Protection Act. However, the requirements abovementioned in the definition of βconsumerβ must be complied with. Thus, the Government Hospitals, Insurance Companies, Gas providing Companies, Post offices, Telephone departments, etc., are, in several cases, held liable by the consumer court.
a) Services provided without consideration-
In the Indian Medical Assn. V/s. V.P. Shantha
Held- Services rendered at a Government Hospital where no charge whatsoever is made from any person availing the services and all patients (rich and poor) are given free service is outside the purview of the Consumer Protection Act. However,
In S. Sharma V. The State of U.P.
Facts: - A wife of a person who has undergone a vasectomy operation remained pregnant due to a negligent operation by a doctor.
Held: -that the State is liable. It is because a doctor has not taken reasonable care and caution while performing the operation.
b) Electricity Board liability:-
In several cases, the Electricity Department is held liable for negligent disconnection, overbilling, non-repair, etc.
In Hariyana S.E.B. V/s. T.R. Poultry Farm
FactsβThe transformer supplying electricity to the complainant's poultry farm had burned. However, for the next 25 days, it could not be replaced or repaired; consequently, the poultry farm's electricity remained unsupplied. In consequence, 3080 birds from the poultry farm died.
The Court held that compensation of Rs. 75000 was allowed.
c) Telephone Services:-
In several cases, the Telecom Department is held liable for negligent disconnection, overbilling, non-repair, etc
In Union of India V/s. Nilesh Agrawal
The State Commission held that the complainant, a subscriber, is a 'consumer' and the telephone service provided by the Telecom Department is a 'service' for which he pays rent. Hence, overbilling the telephone is a 'deficiency in service. '
d) Postal Services:-
In several cases, the Postal Department is held liable for the non-delivery of letters, non-delivery of speed post articles, non-payment of the amount of National Saving Certificates, etc.
In Sub-Post Master, Rewari V/s. Vinod Kumar Saxena
FactsβThe complainant sent a Rs. 400 money order, which was misdelivered to someone other than the addressee. The appellant contended that under S. 48 of the Indian Post Office Act, 1898, an exemption was granted from any suit or legal proceedings in respect of the wrong payment of a money order caused by incorrect or incomplete information given by the remitter as to the name and address of the payee.
The State Commission held the Post Department liable.
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References-
1. Consumer Protection Act, 2019
https://blog.ipleaders.in/consumer-protection-act-2019-2/
2. Consumer Protection Act 2019, Features, Provisions, Government Initiatives. https://vajiramandravi.com/current-affairs/consumer-protection-act-2019/
3. Consumer Protection Act, 2019
https://matsuniversity.ac.in/data1/study_materials/mats_school_of_law/CPA%20bilingual%20notes.pdf
4. Consumer Protection Act, 2019
https://en.wikipedia.org/wiki/Consumer_Protection_Act,_2019
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