The Consumer Protection Act, 1986 was enacted to provide simple and quick access to the redressal of consumer grievances. The concept of consumer was introduced through this act and was conferred with express additional rights. It is mentionable that the Act doesnt seek to protect every consumer within the literal meaning of the term. The protection is meant for the person who fits in the definition of consumer given by the Act.

This article deals with the scope of the definition of consumer apropos denial of service as per the terms of the Contributory Provident Fund Scheme in reference to the ruling of National Consumer Disputes Redressal Commission (Ncdrc) in the case of Shashi Shekhar vs Managing Director, Mada delivered in the year 2010. Before going into the details of the judgment, it is imperative to understand the concept of Consumer.

Consumer means any person who:

1. 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
   
   
2. hires or avails of any service 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 service 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, but does not include a person who avails of such service for any commercial purpose.

Explanation:

1. The expression commercial purpose does not include use by a person of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment;
   
   
2. The expressions buys any goods and hires or avails any services includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing;

Key ingredients to be defined as a Consumer in case of Goods:

There must be a sale transaction between a seller and a buyer; the sale must be of goods; the buying of goods must be for consideration. The meaning of the terms sale, and goods is to be construed according to the Sale of Goods Act, and the meaning of the term consideration is to be construed according to the Indian Contract Act. It is not necessary that the buyer of the goods and the consumer has to be the same person. The emphasis is on the user of the goods.

Therefore, if a person buys goods, they may be used by his family members, relatives, and friends. Any person who is making actual use of the goods may come across the defects in goods. The words ....with the approval of the buyer in the definition denotes that the user of the goods should be a rightful user. 1

Further, if any person who obtains the goods for resale or commercial purposes is not a consumer. The term for resale implies that the goods are brought for the purpose of selling them, and the expression for commercial purpose is intended to cover cases other than those of resale of goods. When goods are bought to resell or commercially exploit them, such buyer or user is not a consumer under the Act.

However, this interpretation is subject to a caveat. If any Person buying goods for self-employment then he is a consumer i.e. When goods are bought for commercial purposes and such purchase satisfy the following criteria: the goods are used by the buyer himself; exclusively for the purpose of earning his livelihood; & by means of self-employment, then such use would not be termed as use for commercial purposes under the Act, and the user is recognized as a consumer.

Key ingredients to be defined as a Consumer in case of Services:

Services are hired or availed of. The term hired has not been defined under the Act. Its Dictionary meaning is - to procure the use of services at a price. Thus the term hire has also been used in the sense of avail or use. Accordingly, it may be noted that consumer means any person who avails or uses any service for which Consideration must be paid or payable. Also, When a person hires services, he may hire it for himself or for any other person. In such cases, the beneficiary (or user) of these services is also a consumer.

There is a very thin line between the goods being used to earn Livelihood or for Commercial purpose and will depend on a number of factors and shall differ from case to case. The Courts, as would be seen from the case-law mentioned below, have been differentiating it from case to case. In Synco Textile Private Ltd Vs Greaves Cotton and Co Ltd (1991) 1 CPJ, the Court held that commercial purpose 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.

Synco Textiles case implies that commercial purpose should be distinguished from commercial organization or commercial activity. While dealing with the ambit and the scope of the term Commercial Purpose the Hon'ble Supreme Court in Lakshmi Engineering works Vs PSG Industries, AIR 1995 SC 1428, has laid down the test of close and direct nexus with the commercial activity.

The Court has further held that the explanation appended to Sec 2(d) (ii) reduces the question what is a commercial purpose to a question of fact to be decided in the facts of each case. The Court further held that it is not the value of the goods that matters, but the purpose to which the goods bought are put to. The several words employed in the explanation viz uses by himself exclusively for the purpose of earning his livelihood and by means of self-employment make the intention of the Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. 2

Similar issue has also been addressed in the case of Sterocraft V. Monotype India ltd, I (1991) CPJ 111 (112): 1991 CPC 42: 1993 (1) CLT 89 (NC); Saurabh Offset printers v. K.S.Gupta,II (2002) CPJ 441 (UP), Nav Bharat Press V Sahara Prime City Ltd, IV (2013) CPJ 227 (NC), Lohia Starlinger Ltd V. Zenith Computers Ltd, 1991 (1) CPR 389: I (1991) CPJ 145:1991 CPC 56:1993(1) CLT 262 (NC), Bimal Kumar Jain V. Maruti Udyog Ltd, Oswal Fine Arts V. H.M.T. Madras. 3

In the second segment of this article, we will analyze the ruling of National Consumer Disputes Redressal Commission (NCDRC) in the case of Shashi Shekhar vs Managing Director, Mada.

Factual Summary of the Case

1. The petitioner Shri. Shashi Shekhar was the employee of the respondent. Under the scheme of Contributory Provident Fund, 12 % of his salary was being deducted by his respondent employer each month and was being deposited along with an equal amount required to be contributed by them in a savings bank provident fund account being maintained by the respondent for each one of the employees. Under the scheme, an employee was entitled to avail non-refundable loan after putting in 20 years of service, which was restricted to only three occasions and limited to 75% of the total amount of the Contributory Provident Fund.
    
2. The respondent had earlier sanctioned a non-refundable loan of Rs.60,000/- for the purpose of construction of his house during the year 1996, when he later applied for the sanction of a non-refundable loan for Rs.1 Lakh for the purpose of higher education of his children, the respondent sanctioned and paid only Rs.50,000/-. Since, according to him, there was a balance of Rs.2,35,028/- as on November 2000 and 75% of which works out to Rs.1,76,271/- there was absolutely no reason as to why his request for sanction of a sum of Rs.1 Lakh was reduced to 50%, which amounted to deficiency in service.
    
3. It was also placed on record that though the employer has deducted the employee contribution but failed to submit the same to the credit of savings bank provident fund account along with its own contribution i.e. employer contribution.
    
4. The matter was raised before the district forum which issued a ruling in the favour of petitioner which was overturned by the Jharkhand State Consumer Disputes Redressal Commission, Ranchi (State Commission for short).

Observations of NCDRC

1. As per the Scheme and rules thereunder an employee was entitled to avail non-refundable loan after putting in 20 years of service, which was restricted to only three occasions and limited to 75% of the total amount of the Contributory Provident Fund.
    
2. The plea of employer/respondent that the savings bank account passbook of the petitioner-complainant did not reflect the balance as claimed by the complainant cannot be accepted on its face value since the respondent/opposite party have failed to deposit not only the employees contribution which was recovered from the salary but have also failed to deposit their part of the contribution for which the complainant could not have been denied his entitlement to receive a nonrefundable loan.
   
   Here it is essential to mention that NCDRC has laid emphasis on the balance accrued rather than the actual balance as reflected in the passbook, due to contributory failure on part of the employer/respondent to deposit the requisite amount as required under the scheme of provident fund.
    
3. Operation of the employees provident fund scheme is a service within the meaning of Consumer Protection Act, 1986 and a member beneficiary under the scheme would be a consumer thereunder. Reliance has been placed in the case of Regional Provident Fund Commissioner v/s. Shiv Kumar Joshi [2000 AIR 331] 4, wherein it was decided that:
   ……. A perusal of the scheme clearly and unambiguously indicate that it is a service within the meaning of Section 2(1)(o) and the member a consumer within the meaning of Section 2(1)(d) of the Act. It is.. therefore, without any substance to urge that the services under the scheme are rendered free of charge and, therefore, the scheme is not a service under the Act. Both the State as well as National Commission has dealt with this aspect in detail and rightly came to the conclusion that the Act was applicable in the case of the scheme on the ground that its member was a consumer under Section 2(1)(d) and the scheme was a service under Section (1)(o)…….
   
   NCDRC allowed the revision petition and restore the order of the District Forum.

The above discussion provides a detailed insight into the definition of consumer along with its application by the authorities while determining the applicability of the Consumer Protection Act in case scheme for provident fund. We have not touched upon the concept of deficiency in service, as the same has been covered in the previous article.

End-Notes:

1. www.ncdrc.nic.in
2. Law of consumer protection in India, Orient Publication, Pg.237
3. Law of consumer protection in India, Orient Publication, Pg.240
4. Indiakanoon.org/doc/932857/