Definition of Consumer

Legal provision

• Consumer Protection Act, 2019, section 2(7): defines consumer.
• Section 2(5): defines complainant.
• Section 2(42): defines service. It does not include the rendering of any service free of charge or under a contract of personal service.
• Section 2(16): defines e-commerce.
• Section 35: who may file a complaint.

Meaning and definition

Section 2(7) says that a consumer is any person who does either of two things.

1. Buys goods. He buys any goods for a consideration which has been paid or promised, or partly paid and partly promised, or under a system of deferred payment. The definition includes any user of the goods, other than the buyer, when the use is with the approval of the buyer. It does not include a person who obtains the goods for resale or for any commercial purpose.
2. Hires or avails of services. He hires or avails of any service for a consideration which has been paid or promised, or partly paid and partly promised, or under a system of deferred payment. The definition includes any beneficiary of the service, other than the hirer, when the service is availed with the approval of the hirer. It does not include a person who avails of a service for any commercial purpose.

Detailed explanation

Step 1: Consideration

• The consideration may be paid, promised, partly paid and partly promised, or paid in instalments.
• A person who has agreed to buy but has not yet paid in full is still a consumer. So is a hire-purchase buyer.
• If no consideration is given, the person is not a consumer, as the service would be free.

Step 2: Users and beneficiaries

• A family member who uses goods bought by another, with the buyer's approval, is a consumer.
• A beneficiary of a service, such as a passenger in a car hired by another, is a consumer when he uses it with the approval of the hirer.
• In Spring Meadows Hospital v. Harjot Ahluwalia, a nurse injected a minor patient without a sensitivity test, and he was left in a vegetative state. The Supreme Court held that both the child, as beneficiary of the service, and the parents, as the persons who hired it, are consumers. Each may be compensated on a different head.

Step 3: Commercial purpose

• A person who buys goods for resale is not a consumer. The same is true of a person who buys goods or hires services for a commercial purpose.
• The Explanation to section 2(7) says that commercial purpose does not include use of goods bought and used exclusively for earning a livelihood by self-employment. A man who buys an auto-rickshaw to drive himself is a consumer.
• In Laxmi Engineering Works v. P.S.G. Industrial Institute (1995), the Supreme Court held that whether goods were bought for a commercial purpose is decided on the facts of each case.
• In Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers (2019), the Supreme Court held that the dominant purpose of the transaction decides whether it is commercial.

Step 4: Online and offline buying

The Explanation also says that "buys any goods" and "hires or avails any services" include offline and online transactions through electronic means, teleshopping, direct selling or multi-level marketing. A person who orders on a mobile app is therefore a consumer.

Step 5: Services that are covered and not covered

• Service is of any description made available to potential users. It includes banking, financing, insurance, transport, supply of electrical or other energy, telecom, lodging, housing construction, and entertainment.
• It does not include a service rendered free of charge, or under a contract of personal service.
• In Indian Medical Association v. V.P. Shantha, the Supreme Court held that medical service for a fee is a service. Free treatment is excluded only if it is free to every patient at the hospital.
• In Lucknow Development Authority v. M.K. Gupta, the Supreme Court held that a statutory housing authority that builds and allots flats gives a service.
• In Bar of Indian Lawyers v. D.K. Gandhi, the Supreme Court held that an advocate's service is a contract of personal service, which the definition of service excludes. A complaint against an advocate is not maintainable.

Step 6: Who may complain

Section 2(5) defines a complainant. It includes these persons: a consumer; a registered voluntary consumer association; the Central or State Government; the Central Authority; one or more consumers with the same interest; the legal heir of a deceased consumer; and the parent or guardian of a minor consumer.

Don't confuse: a consumer and a complainant

Common mistakes

• Saying that only the person who paid is a consumer. A user or beneficiary with approval is also a consumer.
• Treating all business purchases as commercial purpose. Livelihood by self-employment is excepted.
• Forgetting that free services and personal service contracts are outside the Act.
• Saying that advocates and doctors are treated alike. Doctors for a fee are covered. Advocates are not.
• Mixing up consumer and complainant.

Apply it

Leading case laws

• Indian Medical Association v. V.P. Shantha (1995)

  Facts. Conflicting rulings on whether a doctor's or hospital's work is a service under the Act.

  Principle. Medical service for a fee is a service. Free care is excluded only if free to every patient. Contracts of personal service are excluded.

  Significance. Patients are consumers.

• Lucknow Development Authority v. M.K. Gupta (1994)

  Facts. A statutory housing authority argued that building and allotting flats was a sovereign function.

  Principle. It gave a service, and the flat buyer was a consumer.

  Significance. Public bodies can be opposite parties.

• Spring Meadows Hospital v. Harjot Ahluwalia (1998)

  Facts. A nurse injected a minor patient without a sensitivity test, leaving him in a vegetative state.

  Principle. The child, as beneficiary, and the parents, as the persons who hired the service, are both consumers.

  Significance. Beneficiaries and hirers can each claim.

• Bar of Indian Lawyers v. D.K. Gandhi (2024)

  Facts. A client sued his advocate before a consumer forum for deficiency in service.

  Principle. An advocate's service is a contract of personal service, so the complaint is not maintainable.

  Significance. Advocates are outside the Act.

How to write this answer in the exam

Key points to remember

• A consumer buys goods or hires services for a consideration, paid, promised or in instalments.
• A user or beneficiary with approval is a consumer.
• Resale and commercial purpose are excluded, except exclusive use for livelihood by self-employment.
• Free services and personal service contracts are outside the Act.
• Online and offline buying are covered.

Quick self-test

Related topics

• Rights of Consumers
• Defects in goods and deficiency in services
• Procedure for filing a consumer dispute