Concept of Consumer of Goods and Services under Consumer Law

The Consumer Protection Act, 2019 (CPA, 2019) is the primary legislation in India aimed at safeguarding the rights of consumers. It provides protection against unfair trade practices, defective goods, and deficient services, ensuring that consumers can seek redressal when their rights are violated.

One of the most fundamental aspects of the law is the definition of the term “consumer”. The Act recognises consumers of both goods and services, but lays down specific conditions to determine who qualifies as a consumer. This distinction is vital, as only those falling within the definition can seek remedies under the Act.

Consumer of Goods

Under the CPA, a consumer of goods is defined with reference to certain conditions. The provisions are interpreted in conjunction with the Sale of Goods Act, 1930 for the terms “sale” and “goods” and with the Indian Contract Act, 1872 for the term “consideration”.

A person claiming to be a consumer of goods must satisfy the following requirements:

Goods Bought for Consideration

• There must be a sale transaction between a seller and a buyer.
• The goods must be purchased for a price or some form of consideration.
• Consideration can be paid in full, in part, or promised to be paid at a later date.

Example: Purchasing a television set from a retailer for ₹30,000 constitutes a transaction where the buyer is a consumer.

User with the Buyer’s Approval

The definition of consumer extends beyond the actual buyer.

• If goods are used by family members, relatives, or friends with the buyer’s permission, they are also considered consumers.
• This ensures that rightful users who face defects in goods can seek redressal even if they were not direct buyers.

Case Law: In Dinesh Bhagat v. Bajaj Auto Ltd. (1992), A bought a scooter which was used by B with A’s approval. When defects were found, B filed a complaint. The Delhi State Commission held that B was a consumer under the Act.

Note: This is an exception to the rule of privity of contract, where normally only parties to a contract can sue.

Exclusion: Goods for Resale or Commercial Purposes

A person who obtains goods for resale or for commercial purposes is not considered a consumer.

• Resale: Buying goods for selling them again.
• Commercial Purpose: Using goods to generate profit on a business scale.

Case Examples:

1. Smt. Pushpa Meena v. Shah Enterprises (Rajasthan) Ltd. (1991) – A jeep purchased to run as a taxi was considered a commercial purchase, hence the buyer was not a consumer.
2. L Ltd. v. Z – A computer system bought to facilitate company operations was considered part of commercial activity, so L Ltd. was not a consumer.

Key Test: If goods are used for profit-driven commercial activity, the user is not a consumer.

Exception: Goods for Self-Employment

A significant exception exists for small-scale users:
If goods are purchased:

1. For use by the buyer himself.
2. Exclusively for earning livelihood.
3. By means of self-employment.

Then, it is not considered commercial use, and the person qualifies as a consumer.

Examples:

• A truck driver purchasing a truck to drive himself = consumer.
• A truck owner hiring a driver to run it = not consumer.
• A photocopier purchased for an existing large shop = not consumer.

Case Law: Rampion Pharmaceuticals v. Dr. Preetam Shah (1997) – A medical practitioner bought a machine for use in his hospital. The National Commission held it was for self-employment and not a large-scale commercial purpose, so he was a consumer.

Note: Even if the buyer takes assistance from one or two helpers, he does not lose consumer status if the primary use remains self-employment.

Consumer of Services

The CPA also recognises consumers of services. Section 2(42) of the 2019 Act defines “service” as any service made available to potential users for consideration, including banking, insurance, transport, electricity, housing, entertainment, and others, but excluding services provided free of charge or under a contract of personal service.

Hiring or Availing of Services

• The word “hire” means to procure the use of services for payment.
• A consumer is one who hires or avails of services, either for himself or for another person.

Examples:

• Consulting a doctor for treatment.
• Booking a railway ticket.

Case Law: In Smt. Laxmiben Laxmichand Shah v. Smt. Sakerben Kanji Chandan (1992), a tenant sought action against a landlord for failure to provide amenities. The Commission held it was a lease, not hiring of services under the CPA.

Consideration Must Be Paid or Payable

• Payment for the service can be upfront or in instalments.
• Free services do not qualify as consumer transactions.

Examples:

• Hiring an advocate with fees payable after case settlement = consumer.
• Getting free medical treatment from a friend = not consumer.

Case Law: In Byford v. S.S. Srivastava (1993), a car purchase included a contest to win tickets. The court held the contest prize was not part of the consumer contract, as the consideration was for the car, not for the lottery.

Taxes are not consideration: Payment of taxes to the State is not hiring of service. For instance, water supply by a municipal corporation from tax revenue is a statutory duty, not a service rendered for consideration (Mayor, Calcutta Municipal Corporation v. Tarapada Chatterjee).

Beneficiary of Services

• The beneficiary for whom the service is hired is also considered a consumer.
• This is another exception to the privity of contract rule.

Example: A father hiring a doctor for his son makes both the father (hirer) and the son (beneficiary) consumers.

Commercial Purpose in Services

• A crucial difference from goods:
  • Goods bought for commercial purposes → not consumer.
  • Services hired for commercial purposes → still consumer.

Case Law: In Shamsher Khan v. Rajasthan State Electricity Board (1993), electricity for a flour mill was delayed. The court held the mill owner was a consumer, even though the service was for a commercial activity.

Exceptions to the Definition of Consumer

The CPA excludes certain situations from its scope:

• Free services: No payment for the service.
• Statutory duties: Services provided as a legal obligation, not for consideration.
• Contracts of personal service: Master-servant relationships are excluded (as opposed to principal-agent contracts).

Key Differences between Consumer of Goods and Consumer of Services

Conclusion

The concept of a consumer under the CPA, 2019 is both inclusive and specific. While it seeks to protect the interests of genuine buyers and service users, it consciously excludes large-scale commercial buyers from its ambit, except in cases of self-employment for livelihood.

For goods, the law draws a strict line at commercial use, while for services, even commercial activities are protected. The inclusion of beneficiaries under both goods (with approval) and services ensures that rightful users are not left without remedy.