Who Is a Consumer

In one line

A consumer is a person who buys goods or hires services for a consideration, or anybody using them with his approval, but not a person who buys for resale or for a commercial purpose.

In the wording a student can write in an exam: under section 2(7) of the Consumer Protection Act 2019 a consumer is any person who 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 with the approval of the buyer, but does not include a person who obtains the goods for resale or for any commercial purpose; and any person who hires or avails of any service for such a consideration, and any beneficiary of the service availing it with the approval of the person who hired it, but not a person who avails of a service for any commercial purpose.

The definition, taken apart

Two limbs. Goods, in sub-clause (i), and services, in sub-clause (ii). A complainant must fall in one of them.

Consideration is essential. It may be paid, promised, partly paid and partly promised, or under a system of deferred payment. A person who receives goods or services entirely as a gift is not a consumer.

The user and the beneficiary are included. A person who did not buy the goods is a consumer if he uses them with the buyer's approval, and a person who did not hire the service is a consumer if he is a beneficiary of it with the approval of the person who hired it. That is how a member of a family, or a patient whose treatment a relative paid for, gets standing.

Two exclusions. Buying for resale, and buying or availing for a commercial purpose.

The Explanation. Clause (a) provides that 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. Clause (b) provides that "buys any goods" and "hires or avails any services" include offline or online transactions through electronic means, by teleshopping, direct selling or multi-level marketing.

The commercial purpose exclusion, and the two cases on it

Facts. Laxmi Engineering Works v. P.S.G. Industrial Institute, (1995) 3 SCC 583, decided on 4 April 1995. A small-scale industrial unit bought machinery and complained to a consumer forum. The question was whether a purchase for use in a manufacturing business is a purchase for a commercial purpose, and what the Explanation added in 1993 does.

Held. Whether a purchase is for a commercial purpose depends on the facts of each case. Goods bought and used exclusively for earning a livelihood by self-employment are not bought for a commercial purpose, whatever the size of the machine, and this covers a person who works the machine himself, with or without the help of one or two others. But where goods are bought for a larger commercial venture, run with employed labour and for profit, the buyer is not a consumer. The Explanation is clarificatory and applies to pending matters.