Table of Contents

PART – A

Q1. Define “Product Liability” claim.

Ans. A Product Liability claim under the Consumer Protection Act, 2019, is a legal action brought by a consumer to seek compensation for any harm, personal injury, illness, or property damage caused to them by a defective product or a deficient service. Under this provision, a consumer can hold a product manufacturer, product seller, or product service provider strictly liable for the harm caused, without the need to prove negligence or fraud.

Q2. What is the role of the Central Consumer Protection Authority?

Ans. The Central Consumer Protection Authority (CCPA) is a regulatory body established under the Consumer Protection Act, 2019, to promote, protect, and enforce the rights of consumers as a class. Its primary role is to investigate violations of consumer rights, recall unsafe goods, order refunds, and penalise false or misleading advertisements.

Q3. What is the primary objective of consumer protection councils?

Ans. The primary objective of Consumer Protection Councils is to promote and protect the rights of consumers within their respective jurisdictions. Established at the Central, State, and District levels, these councils act as advisory bodies that guide the government on consumer welfare and policy, rather than resolving individual legal disputes.

Q4. What is the penalty for “Spurious Goods”?

Ans. Penalty for spurious goods is as follows:

  1. Injury (Not amounting to grievous hurt): up to 1-year jail + fine up to Rs. 3 lakhs.
  2. Grievous Hurt: up to 7-years jail + fine up to Rs. 5 lakhs.
  3. Death: 7 years to life imprisonment + fine of not less than Rs. 10 lakhs.

Q5. What constitutes “Deficiency in Service” in public utilities?

Ans. Under Section 2(11) of the Consumer Protection Act, 2019, “Deficiency in Service” in means any fault, imperfection, shortcoming, or inadequacy in the quality, nature, or manner of performance required by law or contract.

In utilities like electricity, water, or transport, this specifically includes:

  1. Prolonged, un-notified service disruptions or supply failures without a valid reason.
  2. Erratic, inflated, or faulty billing along with a failure to rectify complaints.
  3. Extreme negligence, such as supplying contaminated drinking water or leaving high-voltage wires exposed.

Q6. Name the three-tier quasi-judicial machinery established for consumer disputes.

Ans. The three-tier quasi-judicial machinery established under the Consumer Protection Act, 2019 consists of:

  1. District Consumer Disputes Redressal Commission (District Commission)
  2. State Consumer Disputes Redressal Commission (State Commission)
  3. National Consumer Disputes Redressal Commission (National Commission)

Q7. Define the primary objective of the Motor Vehicles Act, 1988.

Ans. The primary objective of the Motor Vehicles Act, 1988, is to regulate and consolidate the law relating to road transport and motor vehicles in India to ensure road safety and public welfare. It aims to control vehicle registration, driver licensing, traffic regulations, insurance requirements, and provide swift compensation for road accident victims.

Q8. Define “No Fault Liability” principle.

Ans. The “No Fault Liability” principle is a legal provision where a claimant is entitled to receive financial compensation for death or permanent disablement resulting from a motor accident without having to prove any negligence, wrongful act, or default on the part of the vehicle owner or driver. Under Section 164 of the Motor Vehicles Act, 1988 (as amended in 2019), the statutory compensation amounts are fixed at ₹5 lakhs for death and ₹2.5 lakhs for grievous hurt.

Q9. Define “Medical Negligence”.

Ans. Medical Negligence is a breach of the legal duty of care by a healthcare professional, occurring when their treatment falls below the standard of a reasonably competent practitioner, directly causing injury or death to the patient.

Q10. Define “Service” under the Consumer Protection Act, 2019.

Ans. “Service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.

PART – B

Q11. How does a “Consumer Dispute” establish?

Ans. Under Section 2(8) of the Consumer Protection Act, 2019, a “Consumer Dispute” is defined as “a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint.”

Existence of a Valid “Consumer”

A dispute cannot legally exist unless the person raising it qualifies as a consumer under Section 2(7) of the Act. The individual must have:

  1. Bought goods or hired/availed of any service for a consideration (paid, promised, or partly paid).
  2. Utilised the goods or services for personal use, or exclusively for earning a livelihood through self-employment.
  3. Exclusion: Commercial use (buying items in bulk for resale or large-scale business profits) disqualifies a person from establishing a consumer dispute.

Presence of a Recognized “Opposite Party”

The grievance must be directed against a specific legal entity defined under the Act. This includes:

  1. Trader or Manufacturer: In cases regarding physical goods.
  2. Service Provider: In cases regarding commercial utilities, banking, insurance, or telecom.
  3. Product Seller: Including modern e-commerce platforms, marketplace entities, or direct sellers.

Making a Formal “Complaint” based on Legal Faults

A dispute is initiated when a written complaint is prepared alleging one or more statutory faults. The complaint must explicitly charge the opposite party with:

  1. Defect in Goods: Any fault, imperfection, or shortcoming in the standard, purity, or quality of the item.
  2. Deficiency in Service: Any inadequacy or negligence in the performance of a service.
  3. Unfair or Restrictive Trade Practices: Deceptive methods like overcharging beyond the MRP, hoarding, or selling counterfeit products.
  4. Unfair Contracts: Terms that heavily disadvantage the consumer or demand excessive security deposits.

Direct Communication and “Denial” by the Opposite Party

This is the core event that formally establishes the dispute.

  1. The consumer files or serves the complaint notice to the manufacturer or seller.
  2. The Act of Denial: The opposite party must explicitly deny, reject, or dispute the allegations. If the trader accepts the fault and provides a total remedy immediately, no dispute is established. The dispute strictly comes into existence the moment the allegation is contested.

Institutional Filing within Pecuniary Jurisdictions

Once the denial occurs, the dispute must be filed in the correct tier of the Consumer Disputes Redressal Commission based on the exact value of the consideration paid:

  • District Commission: For values up to ₹50 lakhs.
  • State Commission: For values between ₹50 lakhs and ₹2 crores.
  • National Commission: For values exceeding ₹2 crores.

Adherence to the Limitation Period

A consumer dispute cannot be legally entertained or established if it is delayed beyond the statutory timeline. Under the Act, the complaint must be filed within two years from the exact date on which the “cause of action” (the defect, harm, or denial) first arose.

Q12. Discuss the deficiency in service due to medical negligence.

Ans. The apex court has pronounced the landmark judgement, “Indian Medical Association v. V.P. Shantha” with special reference to medical services under the CPA. Where medical services are covered under the definition of service, doctors and hospitals fall within the scope of summary jurisdiction of CPA for the grant of compensation and other relief provided by the act.

In this case, the apex court held that the person suffering any loss on account of any negligence or deficiency in such service includes rendering of consultation, diagnostics, and treatment, both medical and surgical. Professional men should possess certain degree of competence and they should exercise reasonable care in discharge of their duties. Medical practitioner doesn’t enjoy immunity and they can be sued in contract of tort on the ground that they have failed to exercise reasonable skill and care.

Components of Medical Negligence

There are 3 main components of medical negligence:

  1. Existence of legal duty
  2. Breach of legal duty
  3. Damage caused by such breach of duty
  1. Existence of legal duty – In any industry, professionals have a duty of care to uphold a certain level of care as determined by their specific field. Equally a healthcare professional is expected to meet a certain standard of care towards patients, where this standard will vary according to specific healthcare situation. Guidelines for the applicable standard of care in a given situation will take into account the medical professionals’ speciality, traditional medical practices and the skills and care that an average physician would provide in similar circumstances.
  2. Breach of the legal duty – The next element of deficiency in service that needs to be proved in medical negligence is breach of legal duty. To prove that there was a doctors’ professional duty of care, we must establish that the doctor failed to exercise the standard of care or skill that would commonly be exhibited by a similar doctor in that situation. This takes into account what specialised knowledge a doctor in that situation would have. Typically, this requires expert testimony from another medical professional to establish that a standard of care was not met in your case.
  3. Damage caused by such breach of duty – For a medical malpractice case to be successful, the personal injury will also have to prove that the victim was harmed by the medical negligence, leading to losses and expenses. For example: a doctor incorrectly diagnosing your condition could require you to seek additional medical treatment following the new issues caused by the mis-diagnosis, as well as any medical treatment for your original condition. If you have been negatively affected by the medical mal-practice, you are within your rights to fight to recover compensation in a medical mal-practice claim.

A medical professional or hospital shall be held liable for all actions against the patient where they have not taken proper standard of care and it has resulted in suffering on the part of the patient. The burden of proof shall lie on the complainant to prove the case of negligence. They have to first establish that there was a duty of care on part of the accused and that there was breach of such duty. (Note: Services rendered free of charged are excluded, unless the expenses are borne by an insurance company or employer.)

Bolam Test is as essential in determining medical negligence. It states that a doctor is not negligent if they acted in accordance with a practice accepted as proper by a responsible body of medical professionals.

Q13. Discuss “Hit and Run Motor Accident” cases. What is the special scheme for golden hour?

Ans. Under Section 161 of the Motor Vehicles Act, 1988, a "hit and run motor accident" is defined as an accident arising out of the use of a motor vehicle, where the identity of the vehicle cannot be ascertained despite reasonable efforts. Because the offending vehicle and its insurer are untraceable, the standard third-party insurance claim process cannot be followed.

To protect victims, the Central Government operates a structured statutory scheme (fully updated under the Compensation to Victims of Hit and Run Motor Accidents Scheme). The fixed compensation amounts stand at:

  1. In case of Death: ₹2,00,000 (Two Lakh Rupees) paid to the legal heirs of the deceased.
  2. In case of Grievous Hurt: ₹50,000 (Fifty Thousand Rupees) paid directly to the victim.

Payments are disbursed from the Motor Vehicle Accident Fund (MVAF). The victim or their legal representative must submit a claim application to the Claims Enquiry Officer (typically the Sub-Divisional Officer or Tehsildar of the locality). The inquiry must be completed, and the sanction order passed within one month by the District Magistrate. Funds are transferred digitally via the General Insurance (GI) Council within 15 days of sanctioning.

Special Scheme for Golden Hour

Under Section 2(12A) of the Act, “Golden Hour” refers to the critical one-hour time period immediately following a traumatic road injury. Prompt medical care during this specific hour yields the highest likelihood of preventing death or mitigating long-term disability.

Following dynamic Supreme Court directives, the Ministry of Road Transport and Highways (MoRTH) officially rolled out the nation-wide Cashless Treatment Scheme under the legal mandate of Section 162 of the Act.

Key features of this special statutory scheme include:

  1. Financial Cap: Provides free, cashless medical treatment up to ₹1,500,000 (One Lakh Fifty Thousand Rupees) per victim per accident.
  2. Time Bounds: Covers medical costs up to a maximum cap of 7 days from the exact date of the accident.
  3. Stabilisation Protocols: Mandates designated hospitals to provide free stabilization treatment for up to 24 hours in non-life-threatening cases and up to 48 hours in life-threatening cases.
  4. Universality: Applicable to all categories of roads (National Highways, State Highways, local roads) and covers any road accident victim, regardless of their citizenship or income status.
  5. Integrated Tech Ecosystem: The scheme functions by seamlessly linking the eDAR (Electronic Detailed Accident Report) platform used by police authorities with the TMS 2.0 (Transaction Management System) portal managed by the National Health Authority (NHA) for seamless hospital reimbursements.

Q14. What is a “Misleading Advertisement”?

Ans. An “advertisement” is defined under Section 2(1) as any audio or visual publicity, representation, endorsement, or pronouncement made by means of light, sound, smoke, gas, print, electronic media, internet, or website, including notices, circulars, labels, wrappers, or invoices.

However, a “misleading advertisement” is specifically defined under Section 2(28) of the Act.

Under the Act, a misleading advertisement in relation to any product or service explicitly means any commercial presentation that:

  1. Falsely describes the product or service.
  2. Gives a false guarantee to consumers, or is likely to mislead them regarding the nature, substance, quantity, or quality of the item.
  3. Conveys an express or implied representation which, if made by the manufacturer, seller, or service provider, would constitute an unfair trade practice.
  4. Deliberately conceals critical or important information, leaving consumers with a skewed or deceptive impression

Violation of Fundamental Consumer Rights

A misleading advertisement actively compromises multiple statutory rights guaranteed under Indian consumer law:

  1. Right to be Informed: It denies consumers access to accurate data concerning quality, purity, potency, and price required to make an educated purchasing choice.
  2. Right to Safety: Exaggerated medical or structural claims (e.g., claiming a synthetic product is “100% herbal” or clinically tested when it isn't) can directly threaten a consumer’s physical safety.

Classification of Prohibited Ad Types (CCPA Guidelines)

To prevent market deception, the Central Consumer Protection Authority (CCPA) Guidelines specifically prohibit specific types of misleading setups:

  1. Bait Advertisements: Advertising goods or services at a highly enticing, unusually low price without any intention of stocking an adequate supply to satisfy the expected consumer demand.
  2. Surrogate/Indirect Advertisements: Promoting prohibited or restricted goods (such as tobacco or alcohol) by masquerading them as an entirely different, legally permissible product, such as soda water.
  3. Deceptive Free Claims: Labelling a product or service as entirely “free” when the consumer actually has to pay hidden costs beyond the mandatory delivery or minimal handling charges.

Legal Liabilities of Endorsers (Celebrities and Influencers)

Unlike previous legislation, the 2019 framework places joint accountability on the individuals promoting the product:

  1. Endorsers are legally mandated to conduct personal due diligence to verify the authenticity of the claims before appearing in an advertisement.
  2. If an endorser promotes a certified misleading advertisement, the CCPA can issue an order prohibiting them from making any further endorsements for up to one year on the first offence, and up to three years for subsequent violations.

Stringent Penal Penalties (Section 89)

Under Section 89 of the Act, publishing a false or misleading advertisement that compromises public interest is a punishable criminal offence:

  1. First Conviction: Imprisonment for a term extending up to 2 years AND a financial fine up to ₹10 lakhs.
  2. Subsequent Convictions: Imprisonment extending up to 5 years AND a financial fine up to ₹50 lakhs.

Corrective Remedial Orders

The Consumer Redressal Commissions and the CCPA possess wide-reaching administrative remedies to reverse market damage:

  1. They can order the immediate discontinuation or withdrawal of the offensive advertisement.
  2. They can mandate the manufacturer or agency to issue a corrective advertisement to effectively neutralise the psychological impact or misinformation spread by the original deceptive ad.

PART – C

Q15. Discuss the administrative and other powers of the Central Consumer Protection Authority.

Ans. The central government established the Central Consumer Protection Authority to regulate matters relating to violation of rights of consumers, unfair trade practices, and false or misleading advertisement which are pre-judicial to the interest of the public and the consumer, and to promote, protect, and enforce the rights of the consumers as a class, as a body corporate by the said name having perpetual succession and a common seal with power subject to the provisions of the act and the rules and regulations made thereunder, to acquire, hold and dispose of property, both movable and immovable and to contract, and shall by the said name, sue or be sued, having its headquarters at New Delhi. It shall have regional and other offices in any other place in India, as the central government may decide.

Composition of CCPA [Section 10(2)], CPA 2019:

The central authority shall consist of a chief commissioner and such number of other commissioners as may be prescribed to be appointed by the central government to exercise the power and discharge the functions under this act.

Qualification, Method of Recruitment etc. of chief commissioners and other commissioners (Section 11):

The central government may by notification make rules to provide for the qualification for appointment, method of recruitment, procedure for appointment, term of office, salaries and allowances, resignation, removal, and other terms and conditions of the service of the chief commissioner and other commissioners of the central authority.

Vacancy etc. not to invalidate proceedings of CCPA (Section 12):

No acts or proceedings of the central authority shall be invalid merely by the reason of: -

  1. Any vacancy in, or any defect in the constitution of the central authority.
  2. Any defect in the appointment of a person acting as chief commissioner or as a commissioner.
  3. Any irregularity in the procedure of the central authority.

Investigation Wing (Section 15):

  1. The Central Authority shall have an Investigation Wing headed by a Director-General for the purpose of conducting inquiry or investigation under this Act as may be directed by the Central Authority.
  2. The Central Government may appoint a Director-General and such number of Additional Director-General, Director, Joint Director, Deputy Director and Assistant Director, from amongst persons who have experience in investigation and possess such qualifications, in such manner, as may be prescribed.
  3. Every Additional Director-General, Director, Joint Director, Deputy Director and Assistant Director shall exercise his powers, and discharge his functions, subject to the general control, supervision and direction of the Director-General.
  4. The Director-General may delegate all or any of his powers to the Additional Director-General or Director, Joint Director or Deputy Director or Assistant Director, as the case may be, while conducting inquiries or investigations under this Act.
  5. The inquiries or the investigations made by the Director- General shall be submitted to the Central Authority in such form, in such manner and within such time, as may be specified by regulations.

Powers and functions of CCPA (Section 18):

The central authority or CCPA shall: -

  1. Protect, promote and enforce the rights of the consumers as a class, and prevent violation of consumers’ rights under this act.
  2. Prevent unfair trade practices.
  3. Ensure that no false or misleading advertisement is made of any goods or services which contravenes the provision of this act.
  4. Ensure that no person takes part in the publication of any advertisement which is false or misleading.

The central authority may, for any of the purposes aforesaid:

  1. Inquire or investigation to be made into violation of consumers’ rights or UTP, either suo moto or on receipt of a complaint.
  2. File complaint before the District Commission, State Commission, or Central Commission as the case may be.
  3. Intervene in any proceedings before the State Commission or National Commission, as the case may be, in respect of any allegation of violation of consumer rights.
  4. Recommend adoption of international practices on consumer rights to ensure effective enforcement of consumer rights.
  5. Undertake and promote research in the field of consumer rights.
  6. Spread and promote awareness on the consumer rights.
  7. Issue safety notices to alert consumers against dangerous or hazardous or unsafe goods.
  8. Advise the ministries and departments of the Central and State government on consumer welfare measures
  9. Issue necessary guidelines to prevent UTP and protect consumers’ interests.

Power of Central Authority to recall goods, etc. (Section 20):

Where the Central Authority is satisfied on the basis of investigation that there is sufficient evidence to show violation of consumer rights or UTP by a person, it may pass such order as may be necessary, including:

  1. Recalling of goods or withdrawal of services, which are dangerous or unsafe.
  2. Reimbursement of prices of goods or services.
  3. Discontinuation of practices which are unfair and pre-judicial to consumers’ interest.

Provided that the Central Authority shall give the person an opportunity of being heard before passing an order under this section.

Power to Impose Penalties (Section 21)

If an advertisement is found false or misleading, the CCPA can issue a penalty of up to ₹10 Lakh on manufacturers/endorsers, extending to ₹50 Lakh for subsequent violations.

The CCPA can ban an endorser of a misleading product from making any endorsements for up to 1 year (extending up to 3 years for subsequent offenses).

Search and Seizure (Section 22)

The Director-General or any authorized officer has the power to enter, search, and seize any document, record, or article relating to deceptive practices, exercising these powers in accordance with the provisions of the Code of Criminal Procedure, 1973.

Q16. Explain different unfair trade practices with the help of decided case laws.

Ans. The term ‘Unfair Trade Practices’ is defined under Section 2(47) of the CPA, 2019.

It refers to the use of various deceptive, fraudulent, or unethical methods to obtain business. Unfair business practices include misrepresentation, false advertising, tied/tie-in selling, deceptive pricing and non-compliance with manufacturing standards. Such acts are considered unlawful by statute through the consumer protection laws.

Unfair Trade Practices may be categorised under:

  1. False representation
  2. Bargain price
  3. Non-compliance of prescribed standard
  4. Falsification of trademark
  5. Unsafe and hazardous goods

False Representation:

The practice of making any written statement or representation which –

  1. Falsely suggest that goods are of a particular standard, quality, quantity, grade, composition and model.
  2. Falsely suggest any rebuilt, second-hand, renovated, re-conditioned, or old goods as new.
  3. Represents that the goods or services have sponsorship, approval, or affiliation which such goods or services do not have.
  4. Makes a false or misleading representation concerning the need for or usefulness of any goods or services.
  5. Gives to the public any warranty or guarantee of the performance, efficiency, or length of time of a product that is not based on an adequate or proper test.

Bargain Price:

Where an advertisement is published in a newspaper, whereby goods/services are offered at a bargain price, when in fact there is no intention that the same may be offered at that price for a reasonable period of time. It shall amount to an unfair trade practice.

Non-compliance of prescribed standard:

Any sale/supply of goods used by the consumer, having reason to believe that goods do not comply with the standard prescribed by some competent authority in relation to their performance, composition, content, design, packaging, as are necessary to prevent the risk of injury to the person using such goods shall amount to an unfair trade practice.

Falsification of Trademark:

Falsely applying of a trademark is said: -

  1. When a person deceptively applies the falsified trademark to goods/services or any packet which contains goods.
  2. When a person uses that package which has a false trademark or deceptively similar trademark of the proprietor for the purpose of packaging or wrapping of goods other than the real goods of the trademark.

Unsafe and Hazardous Product:

The term hazardous goods have not been defined in the act. The dictionary meaning of the term is dangerous or risky. However, the term is used in context of goods only. A person can make a complaint of he is not informed about the hazardous nature of the goods, but the same is not true in case of hazardous services. The rationale behind the provision is to ensure physical safety of the consumer. The law seeks to ensure that those responsible for bringing goods to the market, in particular supplier, importer, or retailer and the same should ensure that while in care, these goods are not rendered unsafe through improper handling or care.

Relevant Case Laws

1. Maruti Suzuki India Ltd. v. Rajiv Kumar Loomba (2009)

This is a landmark consumer protection case involving "unfair trade practices" under the Consumer Protection Act, 1986. It addresses whether a manufacturer can charge a consumer for equipment not provided under the guise of a "uniform pricing policy."

Facts of the Case:

The respondent (Loomba) purchased a Maruti car in Chandigarh. At the time, federal regulations required cars sold in the four major metros (Delhi, Mumbai, Kolkata, Chennai) to be fitted with catalytic converters to meet emission norms. This was not required in Chandigarh. The appellant (Maruti) charged the respondent the same price as metro customers, effectively charging an extra ₹7,000 for a catalytic converter that was not installed in his car. The District, State, and National Consumer Forums ruled in favour of the consumer, leading Maruti to appeal to the Supreme Court.

Ratio Decidendi (Reasoning of the Court):

The Court held that while forums usually don't interfere in price setting, they have full authority to intervene when a consumer is billed for a specific item not supplied. Charging for a feature not included in the vehicle is inherently deceptive and falls squarely under "unfair trade practices." Even if a uniform pricing policy existed, applying it in a way that forces a customer to pay for "nothing" is arbitrary and violates the principle of equity under Article 14.

Decision:

The Supreme Court dismissed the appeal. It upheld the lower consumer court's order directing Maruti Suzuki to refund the excess amount (₹7,000) to the consumer along with interest and costs. The Court clarified that manufacturers cannot use "policy" as a shield to justify charging for unrendered services or unsupplied goods.

2. Pepsi Co. Inc. v. Hindustan Coca Cola Ltd. (2003)

This case concerns the legality of comparative advertising and the thin line between "puffing" (extolling one’s own goods) and "disparagement" (denigrating a competitor's goods). It arose from a series of commercials released by Coca-Cola that allegedly mocked Pepsi’s brand.

Key Issues Involved: Trademark infringement (using "Pappi" for Pepsi), Copyright infringement (copying the Roller Coaster commercial/theme), and disparagement of Pepsi's product as inferior.

The court found that Coca-Cola’s commercial was a "literal imitation" of Pepsi’s original Roller Coaster commercial, including similar character dress and setting. The appeal was partly accepted. The court restrained Coca-Cola from airing the specific commercials that mimicked Pepsi’s theme and infringed on their copyright. The ruling established that comparative ads cannot be used to copy a competitor's original creative expression, upholding that "the entire theme of the advertisement and the sequence of events" cannot be stolen.

3. CCPA v. Rapido (Roppen Transportation Services Private Limited) (2025) [Misleading Advertisement]

Context: The Central Consumer Protection Authority (CCPA) investigated advertisements for "Guaranteed Auto" and "Auto in 5 min or get ₹50". The "₹50" was actually "Rapido Coins" (valid only for bike rides, expiring in 7 days), not cash, and the T&C disclaimer was in unreadable font.

Verdict: The CCPA imposed a ₹10 lakh penalty, finding that the company overstated its service capability while concealing qualifying conditions, which misled consumers into using the platform. The authority also directed the platform to ensure that any consumer who availed the offer of “auto in five minutes or get ₹50”, and did not receive the promised ₹50, shall get the amount in full without any further delay or condition.

4. Irshad Rashid Dand vs. Physics Wallah Private Limited & Anr. (2026) [Non-refund of Fees]

The complainant paid ₹35,000 for a NEET coaching course, but Physics Wallah failed to provide access to the classes. The commission deemed the retention of fees without providing services as an "unfair trade practice" and a "deficiency in service".

The court ordered a refund of the ₹35,000 fee, plus ₹50,000 as compensation for academic loss/mental agony and ₹10,000 for litigation costs (totalling ₹95,000). The ruling serves as a notable precedent in 2026 regarding the accountability of ed-tech platforms under consumer protection laws.

Q17. Define deficiency in service in “Insurance Claims”.

Ans. Deficiency [Section 2(11)]: It means 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. Insurance is explicitly recognized as a service under Section 2(42) of the CPA, 2019.

Deficiency in Service:

  1. Delay in processing or settling a legitimate insurance claim.
  2. Arbitrary repudiation (rejection) of a claim without giving valid contractual reasons.
  3. Failure to provide clear reasons or an opportunity to be heard before rejecting a claim.
  4. Unreasonable deduction or under-settlement of the claim amount contrary to surveyor reports.
  5. Loss of policy documents or failure to issue regular renewal or bonus statements.

Insurance is an agreement between two parties, insurer, who indemnify (provides protection) the insured in case of any financial loss, according to the terms and conditions of the contract. If the insurance company defrauds or due to negligence of the company, the loss has been incurred by the insured, then the insurer can be sued.

CPA has the objective of providing cheap and expeditious redressal of grievance to the consumer affected by the non – performance on the part of the person providing services for a consideration.

  • Case: The Divisional Manager, LIC v. Uma Devi (1991) - It was held that the nominee of insured is a consumer and entitled to maintain dispute under CPA.

Insurance Policy with Personal Accident Benefit

In Bhagchand Jain v. LIC of India and another, the insured complainant suffered injuries when travelling by bus, which got hit by a truck. The claim was rejected on the ground that disability was not of total and permanent nature.

The District Forum solely relied upon the opinion of the medical board of medical college hospital and allowed the claim. However, the State Commission set aside the order. In the instant case, the medical board specifically mentioned in its report that the petitioner sustained multiple fractures of lower extremities and had developed permanent disability in totality.

In revision petition, the National Commission held that the State Commission committed legal error by not taking into consideration the report of the medical board, and rejecting certificate issued by the doctor and the order passed by the District Forum.

Beneficiary of Insurance Policy Are Consumer, even if they are not Party to the Contract

Case: Canara Bank V. United India Insurance Co. Ltd. & Ors. (2020)

In this case, the farmers had kept their farm product (Byadgi chilly crops) in a cold storage facility (Sreedevi Cold Storage), financed by loans from Canara Bank. The cold storage, which was insured by United India Insurance, experienced a massive fire on January 13–14, 2014, destroying the produce.

The insurance company rejected the claims, arguing that the goods were not covered and that the farmers were not the insured parties. In response to the objection made by the farmers over the insurance company’s denial of claim, the State and the National Consumer Forum awarded redressal. The insurance company argued in its appeal that there was no privity of contract between the farmers and the insurance company. Because the cold storage company, not the farmers purchased the policy, they cannot be referred to as “consumers”.

The bench of Justice S. Abdul Nazeer and Justice Deepak Gupta made references to the definition of consumer under Section 2(d) (CPA, 1986) / 2(7) (CPA, 2019) of the act and noted that it was very broad and included not only the person who hires or avails the services for consideration, but also the beneficiary of those services is considered as a consumer.

In light of these facts, the bench decided that the beneficiaries who can profit from the insurance that the insured has purchased, are included in the concept of the consumer. According to CPA, a recipient of the services who is not the insured, is considered a consumer. The Supreme Court affirmed that farmers holding warehouse receipts are beneficiaries of the insurance service provided to the cold storage and have the right to claim insurance, making them "consumers" under the Consumer Protection Act. The insurance company was ordered to pay the claim amount, which would first be applied to satisfy the farmers' loan dues with Canara Bank.

Importance of Consumer Protection and Insurance Services

Anybody who purchases goods or services for their own consumption without planning to resell is considered a consumer. Together, these individuals make up the largest economic group and are impacted by practically every economic decision made by the public and private sectors. Listening to their needs and complaints is essential. Insurance can be thought of as a contract in which one party deposits a particular amount and the other agrees to pay the other back for specific types of losses, should they arise. Any nation's economy greatly benefits from a robust and growing insurance industry. The demand for consumer protection has grown as a result of the insurance industry's expansion and sophisticated marketing and sales techniques. Insurance falls under Entry 47 of List I (Union List) in the Seventh Schedule of the Constitution of India.

Mostly these consumers are layman and lack understanding of important jargons and end up in problems. These customers frequently struggle to comprehend the insurance's terms and conditions and have trouble interacting with big businesses. Both public and private entities are involved in the insurance industry. A lack of standard operating standards could result in consumers spending the majority of the insurable amount in legal proceedings and engaging in protracted legal battles with large insurance companies. This is the point at which consumer protection becomes necessary. Consumers’ interests are safeguarded and their right to consumer remedy is granted under the IRDAI Act and the Consumer Protection Act of 2019. It would give customers rights to shield them from unfair business practices and fraud when they purchase insurance.

Q18. Discuss the position of third party beneficiary under the Consumer Protection Act, 2019.

Ans. The Consumer Protection Act, 2019 is a beneficial and welfare-oriented legislation enacted to provide speedy and effective redressal to consumers against defective goods, deficient services, unfair trade practices, and misleading advertisements. Unlike the traditional law of contracts, which follows the doctrine of privity of contract, the Consumer Protection Act adopts a broader approach by extending protection to third-party beneficiaries. A person who is not a direct party to the contract may still be regarded as a “consumer” if he or she is the beneficiary of the goods or services with the approval of the purchaser.

Statutory Position under the Consumer Protection Act, 2019

Section 2(7) of the Consumer Protection Act, 2019 defines a consumer as a person who buys goods or hires or avails services for consideration. The definition expressly includes:

  1. Any user of goods, other than the buyer, provided such use is made with the approval of the buyer; and
  2. Any beneficiary of services, other than the person who hired or availed the services, provided such services are availed with the approval of the person who hired them.

Thus, the Act recognizes third-party beneficiaries as consumers and grants them the right to seek remedies under the Act.

Position of a Third-Party Beneficiary

The Consumer Protection Act departs from the strict doctrine of privity of contract. A third-party beneficiary need not be a contracting party to maintain a consumer complaint. If a person receives the benefit of goods or services with the consent or approval of the purchaser, such person acquires the status of a consumer and is entitled to approach the Consumer Commission.

Accordingly, a third-party beneficiary can file a complaint for:

  • Defective goods;
  • Deficiency in services;
  • Unfair trade practices;
  • Restrictive trade practices;
  • Product liability claims; and
  • Misleading advertisements, wherever applicable.

Conditions for Recognition as a Third-Party Beneficiary

To qualify as a consumer under Section 2(7), the following conditions must be fulfilled:

  1. The goods or services must have been purchased or hired for consideration.
  2. The complainant should be using the goods or availing the services with the approval of the purchaser.
  3. The transaction should not be for resale or commercial purposes, except where covered by the self-employment exception.
  4. The complainant must have suffered loss or injury due to the defect or deficiency.

Landmark Judicial Decisions

Canara Bank v. United India Insurance Co. Ltd. & Ors. (2020)

This is one of the leading decisions explaining the concept of a third-party beneficiary under consumer law.

Facts: Farmers stored their Byadgi chilli crops in Sreedevi Cold Storage, which had obtained insurance coverage from United India Insurance Co. Ltd. The crops were financed through loans advanced by Canara Bank. A devastating fire destroyed the stored produce. The insurance company rejected the claims on the ground that the insurance policy was taken by the cold storage company and not by the farmers. Therefore, according to the insurer, there was no privity of contract between the farmers and the insurance company.

The State and National Consumer Commissions granted relief to the farmers. The insurance company appealed before the Supreme Court.

Issue: Whether the farmers, who were not parties to the insurance contract, could be treated as consumers under the Consumer Protection Act.

Held: The Supreme Court, speaking through Justice S. Abdul Nazeer and Justice Deepak Gupta, held that the definition of "consumer" under Section 2(d) of the Consumer Protection Act, 1986 (now Section 2(7) of the Consumer Protection Act, 2019) is intentionally broad. It includes not only the person who hires the service but also the beneficiary of that service.

The Court observed that the farmers were the intended beneficiaries of the insurance policy because the policy covered the agricultural produce stored in the warehouse. Therefore, despite the absence of direct contractual privity, they were consumers entitled to maintain complaints under the Act.

The Supreme Court directed the insurance company to pay the claim amount, which was to be first adjusted towards the farmers' outstanding loan dues payable to Canara Bank.

Significance:

It recognised beneficiaries of insurance services as consumers. It reaffirmed that consumer protection legislation overrides the strict doctrine of privity, and expanded the rights of third-party beneficiaries under the Consumer Protection Act.

Spring Meadows Hospital v. Harjol Ahluwalia (1998)

Facts: A minor child suffered serious injuries due to medical negligence in a hospital. The child’s parents had hired the medical services and paid the hospital charges.

Held: The Supreme Court held that not only the parents who paid for the treatment but also the child receiving the treatment was a consumer under the Consumer Protection Act. The child was the direct beneficiary of the medical services and therefore entitled to claim compensation.

Significance:

  • Established that beneficiaries of medical services are consumers.
  • Confirmed that even a minor patient can maintain a complaint through guardians.
  • Expanded the concept of beneficiary under consumer law.

The Divisional Manager, LIC v. Uma Devi (1991)

In this case, the Consumer Forum recognized that insurance services are not confined only to the policyholder. Where the benefit of the insurance policy is intended for nominees or legal beneficiaries, such beneficiaries can invoke the provisions of the Consumer Protection Act in case of deficiency in service by the insurer.

Significance:

Beneficiaries under insurance contracts can seek remedies under consumer law; consumer rights are not restricted solely to the contracting policyholder.

Practical Illustrations

The following persons may qualify as third-party beneficiaries under the Consumer Protection Act:

  1. A wife using a refrigerator purchased by her husband.
  2. Children receiving educational or medical services paid for by their parents.
  3. A patient receiving treatment paid for by an employer.
  4. A passenger travelling on a ticket purchased by another person.
  5. Farmers whose agricultural produce is insured through warehouse or cold-storage insurance policies.
  6. Nominees or beneficiaries under insurance policies in appropriate circumstances.

Conclusion

The Consumer Protection Act, 2019 significantly widens the concept of a consumer by including third-party beneficiaries within its protection. Section 2(7) expressly recognizes beneficiaries of goods and services, thereby relaxing the traditional doctrine of privity of contract. The Supreme Court has consistently adopted a liberal interpretation in decisions such as Canara Bank v. United India Insurance Co. Ltd. (2020), Spring Meadows Hospital v. Harjol Ahluwalia (1998), LIC v. Uma Devi (1991), and Lucknow Development Authority v. M.K. Gupta (1994). These judgments establish that beneficiaries who receive the benefit of goods or services with the purchaser's approval are entitled to seek redress under the Consumer Protection Act. The law thus fulfils its objective of ensuring effective, accessible, and comprehensive consumer protection.