Consumer forums aren't for everyone

Goods and services provided without any consideration are out of ambit of Consumer Protection Act; investors, too, cannot approach a forum

Approaching consumer forums can get tricky at times. In cases where the law is not clearly defined, each forum takes a different call depending on circumstances of the case. Recently, the National Consumer Disputes Redressal Commission (NCDRC) gave an order that brought the government’s free medical services within the ambit of the Consumer Protection Act. The central government rushed to the Supreme Court and got a stay on the NCDRC’s order.

“Anything absolutely free, without consideration, is out of the ambit of Consumer Protection Act. But if there’s a government hospital which admits patients for paid medical service and gives free treatment as well, those receiving free treatment can still approach consumer form in case of negligence or deficiency of service. In such a case, it is assumed that the paid customers are subsidising the cost for those receiving free treatment,” says Jehangir Gai, a lawyer who specialises in consumer cases. Similarly, employees of a public sector unit can take the company’s hospitals to consumer court though the treatment is free. Here, the medical treatment offered is in exchange for services, and it is also part of the employee benefits programme.

In one case, a flyer had problems with the food served by an airline. He went to the consumer court for deficiency of service. The carrier argued that as food is free, the consumer forum should not admit the case. But the forum ruled that the pricing for the meal is built into the air fare and the flyer should be compensated. In another case, a customer’s car was damaged in the valet parking of a restaurant and he approached the consumer court for compensation. The restaurant said it was a free service and cost of the food does not change depending on the customer’s transport. But the forum ruled in favour of the consumer.

In a consumer forum, an individual usually faces problems when he can be classified as an investor. If a person is a share trader, for example, he may not get relief from a consumer forum against a broker. The same holds true if an investor approaches the consumer forum against a mutual fund house. In the past, consumer forums have ruled that sale and purchase of shares is a purely commercial activity and the only motive is to earn profits.

It also means that while a person can approach a forum against a life insurance company for term plans but not for investment-cum-insurance products. If a person had done fixed deposits with a bank or a company, the outcome might differ depending on the view a president (judge) takes. “One of the things that the forum also sees is whether goods are bought with the intention to sell and earn a profit on them. In such situation, the activity is considered commercial,” says Abhilash Panickar, founder, Entrust Legal Services. 

To defend themselves, developers many times argue in consumer forums that the buyer is an investor if the latter has more than one house. The outcome of such arguments depends on the view a forum takes. But experts say that individuals usually buy a house or two for their children and court understands this. A person may have two sons of marriageable age and buys two houses for each of them. Such purchases don’t make them investors.

You cannot approach the consumer forum if...

• The services or goods are taken without any consideration
• You are a stock or mutual fund investor
• You buy products with an intention to sell it for profit
• If your property is purely for investment purpose
• If goods and services are used for commercial activity or at a place of business