Who is a ‘Consumer’ under Consumer Protection Act, 2019?

Consumer protection is an essential component of a fair marketplace. In India, the Consumer Protection Act, 2019 (“the Act”) lays down a robust legal framework to safeguard the rights and interests of consumers and provides mechanisms for the redressal of their grievances.

A central question in consumer law is – Who qualifies as a ‘consumer’ under the Act? The answer determines whether a person can seek remedies before consumer commissions. The definition is provided in Section 2(7) of the Act, but its interpretation has evolved through case law, including the important judgement in National Insurance Co. Ltd. v. Harsolia Motors & Ors.

This article explains the meaning, scope, and judicial interpretation of the term ‘consumer’ under the 2019 Act in a structured and easy-to-understand manner.

Statutory Meaning of ‘Consumer’

In simple terms, a consumer is an individual or group who purchases goods or hires services for their own personal use, and not for manufacturing, resale, or profit-making activities.

Definition under Section 2(7) 

Section 2(7) of the Consumer Protection Act, 2019 defines a consumer as:

• Any person who:
  • Buys any goods for consideration, or
  • Hires or avails any services for consideration.
• The consideration may be:
  • Paid in full
  • Paid in part
  • Promised to be paid
  • Paid under a system of deferred payment.
• The use of goods or services must be for personal use and not for resale or commercial purpose.

Explanation to the Definition of ‘Consumer’

The Act clarifies that the terms “buys any goods” and “hires or avails any services” also include:

• Transactions conducted through online means or electronic platforms.
• Direct selling.
• Teleshopping.
• Multi-level marketing arrangements.

This means that the definition has been widened to address modern modes of trade and ensure that e-commerce and telemarketing buyers are also protected.

Exclusion from the Definition of ‘Consumer’

A person is not a consumer under the Act if:

1. Goods are purchased for resale.
2. Goods or services are purchased for commercial purposes.

However, there is an important exception:

• If goods or services are used exclusively for the purpose of earning a livelihood by means of self-employment, the purchaser will still be considered a consumer.

Example:

• A person buying a car to drive as a taxi for his personal livelihood = Consumer.
• A company buying 10 cars for running a taxi business with hired drivers = Not a consumer.

Judicial Interpretation – The Harsolia Motors Case

In National Insurance Co. Ltd. v. Harsolia Motors & Ors., the Supreme Court examined whether a commercial enterprise could be a consumer.

Facts:

• Harsolia Motors and Rakesh Narula & Co. purchased fire insurance policies for ₹75,38,000/- and ₹90,00,000/- respectively.
  
• Goods were destroyed during the Godhra riots (2002).
• Claims:
  • Rakesh Narula’s claim partly allowed.
  • Harsolia Motors’ claim rejected.
• State Commission: Rejected the complaint, stating it was for “commercial purposes”.
• National Commission: Allowed the complaint.
• National Insurance Co.: Filed appeal before the Supreme Court.

Issues Before the Court

1. Can a commercial enterprise be a ‘consumer’ under the Act?
2. How should the term “commercial purpose” be interpreted?
3. Was the fire insurance policy directly linked to profit-making activities?

Supreme Court’s Observations

• The definition of consumer does not exclude a commercial enterprise merely because it operates for profit.
• What matters is the purpose for which the goods or services were purchased.
• The test:
  • Is the service/goods directly connected to the profit-generating activity?
  • Is the primary objective profit-making?

Interpretation of “Commercial Purpose”

• Commercial purpose = Any activity where the primary objective is to make a profit.
• Example:
  • A hospital hiring a doctor’s services for treating patients as part of its business → Commercial purpose.
  • An individual hiring a doctor for personal treatment → Not commercial purpose.

Application to Insurance

• Insurance is designed to indemnify loss, not generate profit.
• The Court held that fire insurance for business premises is not directly linked to generating profit; rather, it protects against potential losses.
• Therefore, such insurance may still fall within the definition of consumer if it is not part of a profit-making scheme.

Final Decision

• The Court remanded the matter to the State Commission for decision within one year.
• It clarified that the determination must be made case-by-case.

Key Principles Emerging from the Judgement

1. Commercial Enterprises Can Be Consumers: They are not automatically excluded.
2. Purpose Test: Profit-making intention determines exclusion.
3. Case-Specific Assessment: The same type of transaction may be commercial in one context and non-commercial in another.
4. Insurance as a Service:Generally considered not profit-oriented unless used in a manner directly tied to commercial gains.

Relationship Between ‘Person’ and ‘Consumer’

• Person (Section 2(1)(m)) includes:
  • Individuals
  • Firms (registered or unregistered)
  • Hindu undivided families
  • Companies
  • Co-operative societies
• A person becomes a consumer if they meet the conditions under Section 2(7).
• Therefore, a firm can be a consumer if the goods/services are for personal or non-commercial use.

The Self-Employment Exception

The law recognises that small-scale, self-employed individuals need protection:

• Goods/services used exclusively for earning livelihood by self-employment qualify under consumer.
• This ensures that individual entrepreneurs and small traders have access to remedies.

Examples for Better Understanding

Impact of the 2019 Act on E-Commerce and Digital Transactions

One of the significant changes brought in by the 2019 Act is the inclusion of modern modes of trade:

• E-commerce platforms
• Teleshopping networks
• Direct selling companies
• Multi-level marketing models

All these fall under the definition of consumer transactions, ensuring buyers are protected even in online and remote purchases.

Conclusion

The Consumer Protection Act, 2019 adopts a broad and progressive approach in defining a consumer.
While it continues to exclude transactions for resale or commercial purposes, it:

• Recognises self-employment exceptions.
• Brings digital and online buyers within its scope.
• Allows even commercial enterprises to seek protection when goods or services are for non-commercial use.

The Supreme Court’s interpretation in Harsolia Motors makes it clear that the key factor is the purpose of the transaction. A blanket exclusion for businesses is neither intended nor permissible. Each case must be assessed on its own facts to determine whether the transaction falls within the ambit of consumer protection.