Page 41 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes Consumer: ‘Consumer’ means any of the following persons:

1. A 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 i.e., in respect
of hire-purchase transactions. The term includes any other user of such goods when such
use is made with the approval of the buyer.
2. A person who hires or avails of any services for consideration which has been paid or
promised or partly paid and partly promised, or under any system of deferred payment.
The term includes any other beneficiary of such services with the approval of the fi rst

mentioned person.

Example: Byford Motors inserted an advertisement in newspapers stating that a person
booking a Premier Padmini car could enter into a contest in a lottery conducted by them. Under
it, a person who was successful in the draw could be entitled to two free tickets from New Delhi
to New York and back. Shri S.S. Srivastava was one of the persons who was successful in the
draw. He asked the dealers to give him the value of two tickets which was refused and he was
asked to produce two passports to enable them to book the tickets. Mr. Srivastava, however,

produced one passport immediately but the second after the end of the financial year. The dealer
refused to give the tickets on the ground that the accounts of the financial year had been closed

and they could not carry forward the liability of that year to the next financial year under the
provisions of the Income-tax Act and Rules.
The contention of the dealer is correct. Mr. Srivastava is not a consumer. He has received the car
for which he has paid and there is no complaint as to any defect therein. The announcement of free
air tickets to New York was an additional attraction attached to the sale which depended upon a
lottery draw. It is not an intrinsic part of the car sale deal for which he made the payment. Thus,
as far as the lottery was concerned, it could not be said that Mr. Srivastva was a consumer.

Consumer dispute [Sec.2(1)(c)]: It means a dispute where the person against whom a complaint
has been made, denies or disputes the allegations contained in the complaint.

Task S admitted his only infant son in a private nursing home. As a result of strong dose
of medicine administered by the nursing attendant, the child became mentally retarded. S
wants to make a complaint to the district forum seeking relief by way of compensation on
the ground that there was defi ciency in service by the nursing home. Does his complaint
give rise to a consumer dispute? Who is the consumer in the instant case? [Hint: Yes, this
complaint gives rise to a consumer dispute. S is a consumer who hires the services of the

nursing home. Also the infant is a beneficiary and therefore he is also a consumer.]
Defect [Sec.2(1)(f)]: A ‘defect’ is defined to mean any fault, imperfection or shortcoming in the

quality, quantity, potency, purity or standard which is required to be maintained by or under any
law for the time being in force or under any contract, express or implied, or as is claimed by the
trader in any manner whatsoever in relation to any goods.

Defi ciency: Parallel to ‘defect’ in case of goods, deficiency is relevant in case of services.
Accordingly, it is defined to mean any fault, imperfection, shortcoming or inadequacy in the

quality, nature and manner of performance which is required to be maintained by or under any
law for the time being in force or has been undertaken to be performed by a person in pursuance
of a contract or otherwise in relation to any service.

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