Important Definitions Under Consumer Protection Act

Important Definitions Under Consumer Protection Act | Overview

• Introduction
• Consumer
• Commercial Purpose
• Complaint
• Complainant
• Unfair Trade Practice
• Conclusion

This article intends to reflect upon the certain important definitions under Consumer Protection Act, and how the meaning and scope of those legal terms have been defined, understood and restricted through a series of cases. Consumer Protection Act is milestone legislation that took on the task of protecting consumer rights, covering multiple kinds of products and services.

Unlike the Consumer Protection Act, other acts like Food Preservation Act, the Drugs Act etc., were restrictive in nature as they focused specifically on only one good or service. The Consumer Protection Act has a widened ambit, with the intent to protect and serve the needs of vulnerable consumers.

With evolving legal contexts, an attempt has been made to update the legislation with the demands of the time. A consequence of which is that broader interpretations and new elements have been introduced in the 2019 Act to define these essential terms.

Introduction

This article helps understand the meaning of the essential terms in The Consumer Protection, with a comparison between the acts of 1986 and 2019 to analyze whether the understanding of these definitions has been broadened or restricted as per the changing contexts and an evolving legal structure.

Important Definitions Under Consumer Protection Act

1. Consumer
2. Commercial Purpose
3. Complaint
4. Complainant
5. Unfair Trade Practice

I. Consumer

Only a consumer can register a complaint, and to understand who can qualify as a consumer, we must look at Section 2(d) of the 1986 Act –

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

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 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.

Important Judgements

1. Dinesh Bhagat v. Bajaj Auto Ltd

In the case of Dinesh Bhagat v. Bajaj Auto Ltd[1]., one person purchased a scooter and immediately gave it to his friend. Since then, the friend was using that scooter and upon finding a fault with it, he filed a complaint against the seller. The seller contended that the friend of the buyer was not eligible to file a complaint under the Consumer Protection Act 1986, since he was not a consumer.

The Delhi State Commission was faced with a question of law- is the meaning of consumer restricted to only the ‘buyer’? It was finally held that since the friend was using the scooter with the consent of the buyer, he was a legitimate consumer under the scope of the Act.

2. S.P. Goel v. Collector of Stamps

To understand what constitutes ‘hiring of service’ and whether a Government employee, in his regular course of work, can be said to provide a service, as ‘service’ is understood under the Consumer Protection Act 1986, one can see the case of S.P. Goel v. Collector of Stamps[2].

Here, the complainant contended that a document had not been registered by the Sub-Registrar, for more than six years. The complainant sought compensation from the Sub Registrar and Collector and claimed to have undergone harassment at their hands. The National Commission held that the complainant was not a ‘consumer’ under the Act as this situation did not involve the complainant giving any consideration or ‘hiring of service’ because the government employee was simply doing the duty allotted to him as a part of the State mechanism.

It is also important to note that the Consumer Protection Act 2019 has expanded the definition of the term ‘Consumer’ in order to include individuals who engage in offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing. The 2019 Act introduces a new explanation to the term Consumer through Section 2(7) of the Act.[3]

3. Karnataka Power Transmission Corporation v. Ashok Iron Works Private Limited

In the case of, Karnataka Power Transmission Corporation v. Ashok Iron Works Private Limited[4] the question that arose was – whether corporate bodies can be sued under the Consumer Protection Act 1986. In this case, the Supreme Court gave a wider interpretation of the word ‘Person’ under Section 2(1)(m) of the Act by including Corporate Bodies into its purview.

The court took precedence from the case of Dilworth v. Commissioner of Stamps[5] where Lord Watson stated that the word “includes” though commonly used to enlarge the meaning of a word can alternatively be interpreted to say “mean and include”. This simultaneously creates an exhaustive explanation. The interpretation of the Act is subject to its text, context, and objective. The court declared that the section of the Act did not imply an exclusion of juristic persons from its purview and the definition has an inclusive nature.

The Court further went on to refer the case of Southern Petrochemical Industries[6] where a comparison was made between the term “supply” and “sale”. They held that both these terms have different meanings in context to the dispute on electricity, where under Section 2 (1)(d)(ii) of the Act, it would be a provision of service.

II. Commercial Purpose

What disqualifies a buyer from being a consumer is if he has purchased that good or availed that service for commercial intent, and not for personal use.

Important Judgements

1. Meera Industries, Howrah v. Modern Constructions, Howrah

In the case of Meera Industries, Howrah v. Modern Constructions, Howrah[7], it was held that –

“In so far as the purchase of goods, which is covered by Section 2(1)(d)(i) is concerned, a person who purchases goods for commercial purpose is not a consumer.”

The disqualification from being a consumer is based on what the purpose of the goods is. If it is bought with commercial intent, that buyer is not a consumer. This perspective was upheld in multiple judgments.

2. Kalpavruksha Charitable Trust v. Toshniwal Brothers (Bombay) Pvt Ltd

In Kalpavruksha Charitable Trust v. Toshniwal Brothers (Bombay) Pvt Ltd[8], the question contemplated by the Supreme Court was whether the petitioner could be considered a ‘consumer’, depending on whether or not the goods had been purchased for ‘commercial purposes’.

It was held that since the patient who would get a CT scan, would have to pay for it, and the petitioner would receive a monetary benefit from it, the goods, i.e. CT machines had been purchased for a commercial intent.. Given that, the petitioner was not a consumer, under the Consumer Protection Act 1986 and therefore did not have grounds to file a complaint under this act.

However, the Consumer Protection Act 1986 has no definition designated for the terms ‘’commercial purpose’’ or ‘’livelihood’’. These terms are open to the interpretation of the Courts.

3. Synco Textile Private Ltd v. Greaves Cotton and Co Ltd

In the case of Synco Textile Private Ltd v. Greaves Cotton and Co Ltd[9] , the Supreme Court laid down that

“For any commercial purpose are wide enough to take in all cases where goods are purchased for being used in any activity directly intended to generate profit.”

III. Complaint

As per Section 2(1)(c) of the Consumer Protection Act, 1986, the definition of “complaint” is as given below –

“An allegation made in writing by a complainant that-

• an unfair trade practise or a restrictive trade practice has been adopted by any trader or service provider
• the goods bought by him or agreed to be bought by him suffer from one or more defects
• the services hired or availed of or agreed to be hired or availed of by him suffer from a deficiency in any respect
• a trader or the service provider, as the case may be, has charged for the goods or for the services mentioned in the complaint, a price in excess of the price
• fixed by or under any law for the time being in force
• displayed on the goods or any package containing such goods
• displayed on the price list exhibited by him by or under any law for the time being in force
• agreed between the parties
• goods which will be hazardous to life and safety when used are being offered for sale to the public”.

In simpler terms, when someone buys a product or avails a service, and they are unhappy with what they have purchased because it does not match the standard or quality that was promised or expected, they have the right to register a complaint.

The grounds for filing a complaint range from suspected fraud, adulteration of any sort, or an unfair practice committed. Depending on the facts of a case, the seller or the manufacturer or both can be held liable. The complaint is filed with the consumer dispute redressal agency, and one decides the correct forum based on the factors of pecuniary and territorial jurisdiction.

IV. Complainant

As per Section 2(b) and Section 12 of the Consumer Protection Act 1986, the following categories of people can register a complaint if other criteria are met –

• a consumer
• any voluntary consumer association registered under the Companies Act, 1956 or under any other law for the time being in force
• the Central Government or any State Government
• one or more consumers, where there are numerous con­sumers having the same interest.

The individuals who benefit from the goods and services, even if they are not direct buyers, will be considered consumers and have a right to file a complaint, under this Act.[10]

In the case of Spring Meadows Hospital v. Harjot Ahluwalia[11], it was said that the parents of a minor child can register a complaint under the Act since they are availing a service in the hospital.

Given the patriarchal culture of our nation where women have limited access to education and awareness of their legal rights, husbands have the authority to register and prosecute a complaint on behalf of their wife, under the Consumer Protection Act.[12]

V. Unfair Trade Practice

In simple terms, an unfair trade practice[13] essentially refers to a situation where the consumer may have been injured on account of the seller indulging in corruption, misrepresentation, hiding of significant information about the product sold, etc.

‘Injury to the consumer’ is a crucial aspect and needs to be established, to prove that unfair trade practice has been committed. The injury has to be an outcome of the products purchased or service availed.

To understand this further, one can look at the instance of re Glaxo Ltd and Capsulation services Ltd[14]. In this case, the allegation was that Glaxo packaged a drug with its own brand name printed in prominence and the name of the actual company manufacturing that drug was mentioned in extremely small space.

The intention was to pass off that product as if it were created by Glaxo Ltd. It was held that in the absence of any ‘injury’, even if the practice was unfair in nature, it cannot be taken as an ‘unfair trade practice’ under the Consumer Protection Act 1986.

Unfair Trade Practice cannot have said to occur in a situation where there is a genuine mistake committed by the seller which lacks fraudulent intent, or where the respondent can prove that he did due diligence and took sufficient precautions on his part, to avoid that error.

The 2019 act shed light on the definition of Unfair Trade Practice by broadening its ambit. The three new additions that qualify as unfair trade practices, as per Section 2(47) of the Consumer Protection Act 2019 are –

1. online misleading or deceptive advertisements;
2. refusal to issue bill/memo for the products and services;
3. refusal to take back defective goods or deactivate defective services and return the amount within the designated time period in the bill or memo or within 30 days in the absence of such stipulation; and disclosing personal information of a consumer unless such disclosure is in accordance with the law.

Recent Amendments

With the advent of the Consumer Protection Act 2019, two new concepts have been introduced as grounds for registering a complaint. They are both linked to Unfair Trade Practice. They are –

1. Unfair Contract – the complainant can challenge a contract that is heavily favouring the seller and is drafted in such a way that it is bound to disadvantage the consumer.[15]
2. Product Liability – As per Section 2(35) of CPA 2019, product liability entails holding the manufacturer liable for any defect or damage present in the goods that have harmed the consumer. Before 2019 Act, there was no specific law to address this issue.

Conclusion

Consumers are often victims of deceit at the hands of companies and sellers and in order to secure them, the government has enacted the Consumer Protection Act 2019. However, in the absence of consumers being vigilant and educated about their rights, all of these efforts go in vain. The government needs to ensure education and awareness amongst all sections of the society in order to achieve consumer protection as a reality beyond legislation.

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[1] Dinesh Bhagat v. Bajaj Auto Ltd. (1992) III CPJ 272

[2] S.P. Goel v. Collector of Stamps (1995) III CPR 684 (SC)

[3] Rishi R, ‘Nishith Desai Associates: New Consumer Protection Law In India: Broadening The Horizon’ (Nishithdesai.com, 2019), Available Here accessed 18 June 2020

[4] Karnataka Power Transmission Corporation v Ashok Iron Works Private Limited, AIR2009SC1905

[5] Dilworth v. Commissioner of Stamps 1899 AC 99. | Sambasivaraju v. M.V.S.R. Chandrayya Chetty and Ors. (22.04.1966 – APHC) : MANU/AP/0048/1967

[6]Southern Petrochemical Industries Corpn. Ltd. and Anr. v. British Airways World Cargo MANU/CF/0410/2006

[7] Meera Industries, Howrah v. Modern Constructions, Howrah R.P. No.1765/07

[8] Kalpavruksha Charitable Trust v. Toshniwal Brothers (Bombay) Pvt Ltd 2000 (1) SCC 512

[9] Synco Textile Private Ltd v. Greaves Cotton and Co Ltd (1991) 1 CPJ

[10] K.B. Jayalax­mi v. Government of Tamil Nadu 1994(1) CPR 114.

[11] Spring Meadows Hospi­tal v. Harjot Ahluwalia JT 1998(2) SC 620

[12] Punjab National Bank, Bombay v. K.B. Shetty 1991 (2) CPR 633

[13] Section 2(r) of the Consumer Protection Act 1986

[14] Furtado R, ‘All You Need To Know About Consumer Protection Laws In India – Ipleaders’ (iPleaders, 2016), Available Here accessed 17 June 2020

[15] Section 46 of the Consumer Protection Act 2019

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1. Law of Torts; Notes, Case Laws And Study Material
2. History and Development of Consumer Protection Laws in India