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CONSUMER OF GOODS
Q.1. What is âgoodsâ under the Consumer Protection Act, 2019? Discuss who is a consumer of goods and who is not.
SHORT NOTES
1. Defect.
2. Price fixation
3. Product liability.
SYNOPSIS
Goods-
I. âGoodsâ Defined (S.2 (21)):-
Definition of Food as per Food Safety and Standards Act, 2006 (S. 3 (1) (j)-
II. Important Elements of the definition-
1. Every Kind of Movable Property-
2. Explicit Inclusion of "Food"-
3. Inclusion of Digital and Electronic Products-
4. Practical Application of the definition of "Goods" vs. "Commercial Purpose"-
5. Special Exclusions and Judicial Interpretations of "Goods"
III. Consumer of Goods (discussed in earlier topic)-
IV. Defect in goods S. 2 (10)-
(a) Definition (S. 2(10)-
(b) Standard of purity, quality, quantity, and potency-
(c) Statutes prescribing Standards-
(i) Case of Adulteration of food.
(ii) Defect in engineering goods-
(d) Defect in electrical goods-
(e) Procedural Requirement: Expert Analysis under Section 38(2)(c)-
V. Crucial Addition: Product Liability (Chapter VI)-
1. Definition of âProduct Liabilityâ (Section 2(34))-
2. Who can be held liable?
a. Product Manufacturer (Section 84)-
b. Product Service Provider (Section 85)-
c. Product Seller (Section 86)-
3. Exceptions to Product Liability Action (Section 87)-
a. Misuse or Alteration:
b. Pre-existing Knowledge:
c. Under the Influence:
d. Obvious Dangers:
Notes
1. PRICE and Restrictive Trade Practice-
(a) Price Fixation in a Competitive Market-
(b) Restrictive Trade Practice-
(c) Administrative Price Fixation-
(d) Overcharging and Maximum Retail Price (MRP)-
Goods-
The concept of "goods" is fundamental to consumer protection jurisprudence. The Consumer Protection Act (CPA), 2019, modernises this definition to reflect contemporary trade, digital commerce, and public health standards.
I. âGoodsâ Defined (S.2 (21)):-
The concept of âgoodsâ is very important; therefore, the Consumer Protection Act, 2019 defines it as "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.
Definition of Food as per Food Safety and Standards Act, 2006 (S. 3 (1) (j)-
"Food" means any substance-
(i) whether processed, partially processed or unprocessed,
(ii) which is intended for human consumption and includes-
(1) primary food to the extent defined in clause (zk),
(2) genetically modified or engineered food or food containing such ingredients,
(3) infant food, packaged drinking water, alcoholic drink, chewing gum, and
(4) any substance, including water used into the food during its manufacture, preparation or treatment
(iii) but does not include any
(a) animal feed, live animals (unless they are prepared or processed for placing on the market for human consumption),
(b) plants prior to harvesting,
(c) 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 regard to its use, nature, substance or quality;
The definition of "goods" has been modernised to reflect contemporary trade, digital commerce, and public health standards.
II. Important Elements of the definition-
1. Every Kind of Movable Property-
The bedrock of the definition remains aligned with Section 2(7) of the Sale of Goods Act, 1930.
a. Scope: It encompasses all tangible, physical products that can be moved from one place to another (e.g., electronics, automobiles, clothing, furniture, and consumer durables).
b. Exclusions: It excludes immovable property (like land or constructed buildings, though construction services are covered under the definition of "services") and money or actionable claims.
2. Explicit Inclusion of "Food"-
Unlike the older 1986 Act, the 2019 Act explicitly incorporates "food" as defined under the Food Safety and Standards Act (FSSA), 2006.
Significance of the inclusion- This inclusion brings clarity to consumer litigation involving adulterated food, substandard groceries, and transactions on food delivery platforms. It bridges the gap between consumer safety and food safety standards under a single, actionable consumer forum.
3. Inclusion of Digital and Electronic Products-
While Section 2(21) uses the phrase "movable property," the broader architectural framework of the CPA 2019 explicitly includes digital assets.
Under Section 2(16), "e-commerce" is defined as the buying or selling of goods or services, including digital products, over digital or electronic networks.
Consequently, software, e-books, downloadable media, and other electronic records bought for consideration are treated as "goods" under modern consumer jurisprudence.
4. Practical Application of the definition of "Goods" vs. "Commercial Purpose"-
While the definition of "goods" is broad, the right to seek redressal under the CPA 2019 depends on the purpose for which they are acquired.
Under Section 2(7), a person who buys goods is considered a "consumer" unless they obtain those goods for resale or for a commercial purpose.
The Self-Employment Exception: If a person purchases goods exclusively for the purpose of earning their livelihood by means of self-employment, it is not deemed a "commercial purpose," and they retain their status as a protected "consumer" under the Act.
5. Special Exclusions and Judicial Interpretations of "Goods"
Shares and Securities: In Morgan Stanley Mutual Fund v. Kartick Das
The Supreme Court held that a prospective investor applying for allotment of shares is not a "consumer" because shares do not become "goods" until they are actually allotted.
Lottery Tickets as Actionable Claims: In Sunrise Associates v. Govt. of NCT of Delhi , The Constitution Bench of the Supreme Court confirmed that lottery tickets represent "actionable claims" (a right to participate in a draw) and are generally excluded from the definition of goods. However, under the CPA 2019, restrictive or unfair trade practices associated with lottery schemes remain actionable.
III. Consumer of Goods (discussed in earlier topic)-
IV. Defect in goods S. 2 (10)-
a) Definition of âdefectâ (S. 2(10)-
The complaint under the Consumer Protection Act can only be made if the goods purchased suffer from one or the other form of âdefectâ.
As per S. 2 (10) the term âdefectâ means-
(i) Any fault, imperfection, or shortcoming,
(ii) In the quality, quantity, potency, purity, or standard
(iii) Which is-
(1) Either required to be maintained by or under any law for the time being in force, or
(2) Under any contract, (express or implied,) or
(3) As is claimed by the trader in any manner whatsoever in relation to any goods.
The definition of 'defect' is wide enough to include any fault, imperfection, or shortcoming in the quality, quantity, potency, purity, or standard of goods.
In Jose Philip V/s. M/s Premier Automobile Ltd
Facts- In the instant case, the defective car was sold as a brand-new car, and the dealer did not take any action to repair it after the defect was brought to his notice. From the material on record, it is clear that the car was defective at the time of delivery. Furthermore, the dealer acknowledged that the piston rings were also defective.
The Supreme Court held that the purchaser was entitled to have the car repaired at a reputed garage at the dealerâs/manufacturer's cost. Additionally, the court awarded âš40,000 for mental agony and âš50,000 as litigation costs.
(b) Standard of purity, quality, quantity, and potency-
Where the quality, quantity, potency, purity, or standard of goods is not in accordance with the law or promise made by the trader, the goods will be deemed defective. Many laws determine such standards, such as the Drugs and Cosmetics Act, 1940, the Drugs (Control) Act,1950, the Food Safety and Standards Act (FSSA), 2006, the Essential Commodities Act, 1955, the Legal Metrology Act, 2009, the Bureau of Indian Standards Act, 2016, etc. These legislations provide standards, quality, quantity, etc., of several goods. Where the goods do not fulfil the requirements of these legislations, they will be defective for the purpose of the Consumer Protection Act, Agmark, ISI, etc..
(c) Statutes prescribing Standards-
Several Acts have prescribed standards for food and drugs, engineering and electrical goods, etc. These Acts are the Drugs and Cosmetics Act.1940, Drugs (Control) Act, 1950, the Food Safety and Standards Act, 2006, Essential Commodities Act.1955, Legal Metrology Act, 2009, Bureau of Indian Standards Act, 2016, etc.
(i) Case of Adulteration of food.
In Tulsiram V/s. State of Madhya Pradesh
The Supreme Court held that selling adulterated goods, such as a mixture of two edible oils without a proper declaration, renders the vendor liable, irrespective of whether the mixture had a clinically proven injurious effect on health.
(ii) Defect in engineering goods-
In S. Elhence V. M/s. Raghomal Nahar Singh (Pvt) Ltd
Facts: A newly purchased scooter failed to deliver the mileage officially prescribed by the manufacturing company, forcing the consumer to incur excessive fuel costs.
Held: The National Commission held that if the vehicle failed to deliver the performance standards claimed (running 40 km per liter of petrol), the dealer/manufacturer must take the vehicle back and refund its value.
(d) Defect in electrical goods-
If a consumer durable (such as a smart TV or refrigerator) fails to function properly within its warranty period, the manufacturer/dealer is legally bound to repair or replace the defective components (e.g., motherboards or compressors) free of charge. If the defect is persistent and irreparable (a "lemon product"), the consumer is entitled to a brand-new replacement unit or a full refund.
(e) Procedural Requirement: Expert Analysis under Section 38(2)(c)-
Where a complainant alleges a defect in goods which cannot be determined without proper analysis or test of the goods, the District Commission must obtain a sample of the goods from the complainant, seal it, and refer it to an "appropriate laboratory" with a direction to find out whether such goods suffer from any defect.
In Tata Motors Ltd. v. Rajesh Tyagi
The National Commission emphasized that a consumer cannot demand a total replacement of a vehicle or a refund of the purchase price unless a manufacturing defect is established through an expert report from an appropriate laboratory as mandated under the Act. Thus, the burden of proof lies on the consumer to prove the defect.
V. Crucial Addition: Product Liability (Chapter VI)-
The CPA, 2019, newly introduced a dedicated framework for Product Liability (Sections 82 to 87), which significantly strengthens the consumer's position when dealing with defective goods:
1. Definition of âProduct Liabilityâ (Section 2(34))-
"Product liability" means the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto.
2. Who can be held liable?
a. Product Manufacturer (Section 84)-
Liable if the product has a manufacturing defect, design defect, deviates from specifications, or fails to contain adequate instructions for usage.
b. Product Service Provider (Section 85)-
Liable for deficient, negligent, or unsafe service execution.
c. Product Seller (Section 86)-
Liable if they exercised significant control over designing/testing, modified the product causing harm, or failed to pass on safety warnings from the manufacturer.
3. Exceptions to Product Liability Action (Section 87)-
A product seller or manufacturer cannot be held liable in a product liability action under the following circumstances:
a. Misuse or Alteration: The product was misused, altered, or modified by the consumer at the time of harm.
b. Pre-existing Knowledge: The product was purchased by an employer for use at a workplace, and the employer was warned of the dangers but failed to pass those warnings to the employee.
c. Under the Influence: The consumer was under the influence of alcohol or prescription drugs not prescribed by a medical practitioner while using the product.
d. Obvious Dangers: The product is something that is commonly known to be inherently dangerous (e.g., a sharp knife), and the user should have reasonably known the risks.
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Notes
1. PRICE and Restrictive Trade Practice-
Section 2(10) of the Sale of Goods Act, 1930 defines âPriceâ as the money consideration for a sale of goods.
(a) Price Fixation in a Competitive Market-
In a competitive market, the price of goods or services is determined naturally by the forces of demand and supply. This price-fixation mechanism is automatic: when demand is high and supply is low, prices rise; conversely, when demand is low and supply is high, prices fall. When demand and supply are in balance, prices settle at a specific equilibrium level. Thus, in competitive markets, market forces organically determine prices. Healthy market competition benefits consumers by driving down costs while encouraging higher-quality products.
(b) Restrictive Trade Practice-
However, the manipulation of prices by associations of traders or service providers to eliminate competition and exploit consumers remains a major challenge in a market economy.
Under Section 2(41) of the Consumer Protection Act, 2019, a "restrictive trade practice" is defined as any trade practice that tends to bring about the manipulation of price, or its conditions of delivery, or to affect the flow of supplies in the market in such a manner as to impose unjustified costs or restrictions on consumers. This includes practices such as withholding or delaying the supply of goods to artificially raise prices, or forcing a consumer to buy a bundle of goods/services as a condition precedent to buying what they actually want.
Furthermore, horizontal price-fixing (acting in concert or forming cartels) is strictly prohibited under Section 3 of the Competition Act, 2002 (which replaced the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969). The Competition Commission of India (CCI) is empowered to inquire into and penalise such anti-competitive agreements. Courts and regulatory authorities regularly condemn collusive price-fixing, recognising it as prima facie anti-competitive, as it artificially inflates costs and severely harms consumer welfare.
(c) Administrative Price Fixation-
In the interest of the general public, the Essential Commodities Act, 1955, provides rules for the control of the production, supply, distribution, and pricing of trade and commerce. The primary objective of the Act is to curb inflationary trends and ensure the equitable distribution of essential commodities. To achieve this, the Act empowers the Government to directly fix the prices of essential commodities, overriding the market forces of demand and supply.
Specifically, Sections 3(1) and 3(2)(c) of the Act empower the Government to fix ex-factory, wholesale, and retail prices. The specific prices mandated by the Government depend upon its administrative assessment of the prevailing market situation.
(d) Overcharging and Maximum Retail Price (MRP)-
Charging a price higher than the Maximum Retail Price (MRP) printed on the package constitutes an "unfair trade practice" under Section 2(47) of the CPA 2019.
The Hotel/Restaurant Exception:
In Federation of Hotel and Restaurant Associations of India (FHRAI) v. Union of India
The Supreme Court clarified that hotels and restaurants charging above MRP for mineral water/drinks as part of their composite "service" (ambience, seating, service) do not violate the Legal Metrology Act or the CPA, as it constitutes a service rather than a simple sale of goods.
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References-
1. Consumer Protection Act, 2019-
https://matsuniversity.ac.in/data1/study_materials/mats_school_of_law/CPA%20bilingual%20notes.pdf
2. Advancing Consumer Rights in India
https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2077618®=3&lang=2
3. Need of the Consumer Protection Act, https://adjuvalegal.com/consumer-protection-act/
4. Evolution of Consumer Protection Law in India
5. History of the Consumer Movement in India
6. THE CONSUMER PROTECTION ACT, 2019
https://ncdrc.nic.in/bare_acts/CPA2019.pdf