Goods, Services and Other Important Definitions
It is apparent that the concepts of goods and services as well as defect and deficiency are at the core of consumer laws in India.
9.1 Goods—S. 2 (21)
Under Section 2(21) of the Consumer Protection Act, “goods” are broadly defined as “every kind of movable property,” covering all types of tangible items that can be relocated.
The definition also explicitly includes food items as specified under Section 3(1)(j) of the Food Safety and Standards Act, 2006, ensuring that consumables fall under consumer protection regulations.
9.2 Service—S. 2(42)
9.2.1 Overview
Under Section 2(42) of the Consumer Protection Act, “service” is broadly defined as any service made available to potential users.
The definition includes, but is not limited to, facilities related to banking, financing, insurance, transport, processing, energy supply, telecommunications, lodging, housing construction, entertainment, amusement, and information dissemination.
However, the law explicitly excludes services provided free of charge as well as those rendered under a contract of personal service, thereby limiting consumer remedies strictly to paid, non-personal service transactions.
9.2.2 Housing as a Service - Lucknow Development Authority v. M.K. Gupta
Driven by systemic issues in the real estate sector—such as delayed possession, unapproved sales, poor construction quality, and inflated costs—the legal protection of homebuyers has expanded significantly.
While remedies like the RERA Act, 2016 and IBC amendments protect buyers, they retain full rights to seek redressal under the Consumer Protection Act.
Housing and building services cover construction, allotment, registration, and quality standards; therefore, delays, poor workmanship, or misleading claims about amenities constitute deficiency in service and unfair trade practices.
This protection applies equally to private developers and public development authorities.
Lucknow Development Authority v. M.K. Gupta
In the landmark case Lucknow Development Authority v. M.K. Gupta, the Supreme Court of India established a broad interpretation of “service” under consumer law, ruling that housing construction performed for consideration inherently constitutes a service.
The Court clarified that construction disputes—such as delayed handovers, poor building materials, or structural defects like leaking roofs—represent a actionable deficiency in service and unfair trade practices rather than simple real estate disputes.
Crucially, the ruling held that public development authorities hold no sovereign immunity in housing activities, making them fully accountable before consumer commissions and liable to compensate citizens for harassment, loss, or oppressive administrative actions.
9.2.3 Healthcare - Indian Medical Association v. V.P. Shantha & others
In the landmark case Indian Medical Association v. V.P. Shantha, the Supreme Court established that medical consultation, diagnosis, and treatment fall directly within the definition of “service” under consumer protection law, provided they are not rendered completely free of charge to all patients or under an employer-employee contract of personal service.
The ruling established that hospitals operating on a paid or mixed-pay model—where some patients pay while others receive free care—are subject to consumer jurisdiction for all patients, including those who receive free treatment, use medical insurance, or have expenses covered by an employer.
Furthermore, the Supreme Court confirmed that Consumer Commissions have the authority to decide medical negligence disputes through summary proceedings, ensuring accessible legal remedies for victims of medical malpractice and procedural errors.
Jacob Mathew v. State of Punjab and Ors
The landmark case Jacob Mathew v. State of Punjab and Ors. plays a crucial role in determining the legal liability of medical professionals for acts or omissions of hospital authorities.
The ruling established the ‘Bolam Test’ as the legal touchstone for medical negligence, requiring doctors to be judged by the standards of reasonable professional competence.
The judgment also clarified the higher threshold for criminal liability in medical practice and reinforced the distinction between individual professional liability and broader institutional liability, as discussed in V.P. Shantha’s case.
Nivedita Singh v. Asha Bharti and Ors.
In Nivedita Singh v. Asha Bharti and Ors., the Supreme Court ruled that paying a nominal service charge to a government hospital does not constitute legal consideration paid to government doctors or nurses.
Relying on V.P. Shantha, the Court held that salaried medical officers act on behalf of the hospital administration; therefore, where healthcare services are free of charge, the treatment remains a free service outside the scope of Section 2(1)(o) of the Consumer Protection Act.
This principle remains relevant under the Consumer Protection Act, 2019, which continues to exclude free healthcare services from consumer claims.
Continued Coverage under 2019 Act
In Medicos Legal Action Group v. Union of India, the Supreme Court affirmed that healthcare services remain governed by the Consumer Protection Act, 2019.
The Court rejected the claim that doctors should be exempt from consumer complaints based on parliamentary debates during the introduction of the 2019 Bill, holding that the term “service” under both the 1986 and 2019 Acts broadly encompasses medical care.
It further held that ministerial speeches cannot restrict clear statutory language.
Consequently, the principles established in Indian Medical Association v. V.P. Shantha apply ex proprio vigore under the 2019 Act, keeping healthcare providers accountable before consumer fora.
Bar of Indian Lawyers v. D.K. Gandhi, PS National Institute of Communicable Diseases
In Bar of Indian Lawyers v. D.K. Gandhi, the Supreme Court set aside an NCDRC order and held that legal services do not qualify as “service” under the Consumer Protection Act, 1986 or 2019.
The Court reasoned that legal representation is a “contract of personal service”, as clients exercise direct control over their advocates’ work and advocates owe fiduciary duties as agents.
Although the Bench initially referred V.P. Shantha for possible review, the larger Bench declined to reconsider it on November 7, 2024.
Thus, while lawyers remain exempt, medical services provided by doctors for a fee or charge continue to fall under the Consumer Protection Act, 2019.
9.2.4 Liability of Public Authorities - Ghaziabad Development Authority v. Balbir Singh
In the landmark case Ghaziabad Development Authority v. Balbir Singh, the Supreme Court established that statutory and public authorities fall under the jurisdiction of the Consumer Protection Act, 1986.
The Court held that such authorities are responsible for compensating citizens when public officials commit misfeasance, including arbitrary, negligent, or oppressive actions causing loss or injury.
By providing compensation for delayed, careless, or abusive exercise of official power, Consumer Fora act as a check against administrative overreach and bureaucratic runaround.
For consumer protection in educational settings, the text further refers to Section 20.6, Manu Solanki v. Vinayak Mission University.
9.3 Defect - S. 2 (10) and Deficiency - S. 2 (11)
Under Sections 2(10) and 2(11) of the Consumer Protection Act, the legal definitions of ‘defect’ in goods and ‘deficiency’ in services are established.
A ‘defect’ includes any flaw, imperfection, or substandard quality in physical products, such as faulty vehicle components or defective seeds, and may be inferred under res ipsa loquitur when products fail during normal use.
Conversely, ‘deficiency’ relates to services and covers any failure, negligence, or deliberate withholding of vital information causing physical, mental, or property harm.
Thus, while both protect consumers from substandard offerings, the consumer must provide timely evidence of defects and prove the alleged deficiency in service.
9.3.2.1 Internet/Telephone Services
Communication infrastructure forms a vital social and economic backbone, requiring users to make upfront equipment purchases, provide security deposits, or subscribe to usage-based plans.
Under Section 9.3.2.1, any individual paying for telephone or internet services qualifies as a consumer under the Consumer Protection Act.
Therefore, overbilling subscribers or abruptly disconnecting services without prior notice constitutes deficiency of service, allowing consumers to seek legal remedies and compensation through consumer courts.
9.3.2.2 Insurance Services
Under Section 9.3.2.2, insurance services are subject to consumer protection standards, where delayed claim settlements or charging higher premiums without explicit consent constitute deficiency of service.
The definition of a ‘consumer’ in insurance matters extends beyond the policy purchaser to include designated nominees or beneficiaries, giving them legal standing to seek remedies before consumer commissions.
9.3.2.2.1 Exclusions - Priya Paul case
In Bharti AXA General Insurance Co. Ltd. v. Priya Paul & Ors., the Supreme Court addressed the scope of insurance exclusion clauses after the insured died in a mid-air glider collision in Canada.
The insurer denied the personal accident claim, arguing that a two-seater glider was not a “standard aircraft” and the victim was not a “fare-paying passenger on regular airline services.”
The NCDRC and Supreme Court rejected these arguments, noting that gliders were recognized as aircraft and the policy did not define or expressly exclude general gliding, though it specifically excluded hand-gliding and paragliding.
Since the deceased paid a fixed fee for the commercial sightseeing ride, he qualified as a fare-paying passenger, making the exclusion invalid and entitling his family to the full policy benefit.
9.3.2.2.2 Prior Medical Illness and Knowledge - Manmohan Nanda case
In Manmohan Nanda v. United India Assurance Co. Ltd., the Supreme Court addressed the illegal repudiation of an overseas medical insurance claim after the policyholder suffered a cardiac event in the US requiring stenting.
The insurer denied coverage due to undisclosed pre-existing Type-II Diabetes and hyperlipidemia.
Reversing the NCDRC, the Court held that uberrimae fidei (utmost good faith) requires disclosure only of known health conditions, and the insured had no prior knowledge of hyperlipidemia.
It further held that vague unanswered questions do not amount to willful suppression, the insurer must prove a direct nexus between the pre-existing condition and the emergency, and ambiguous exclusion clauses must be interpreted in favour of the policyholder under contra proferentem.
Carter v. Boehm
The contract of insurance is based on the principle of utmost good faith (uberrimae fidei), requiring both the insured and insurer to act in good faith and make proper disclosures.
The insured must disclose all material facts known to him, but is not required to disclose facts he did not know or could not reasonably have known.
The insurer must also properly assess the proposal and inform the insured of the policy terms.
If a proposal form contains a blank column and the insurer issues the policy after accepting the premium, it cannot ordinarily later use that omission to repudiate the claim.
Similarly, where a medical condition is disclosed, medically examined, and accepted by the insurer, the same condition cannot ordinarily be used later for repudiation.
The contra proferentem rule provides that genuine ambiguity in an insurance policy may be interpreted in favour of the insured, as the policy is generally drafted by the insurer.
In the present case, the insured had disclosed his DM-II condition, was under treatment, and the relevant medical reports were available to the insurer before issuing the policy.
Therefore, there was no suppression of a material fact, and the insurer could not rely on the pre-existing-condition exclusion to repudiate the claim.
Thus, where a sudden illness or ailment is not expressly excluded, the insurer is required to indemnify the insured for covered expenses.
9.3.2.3 Healthcare and Medical Services
The legal standards governing medical negligence under Indian law are reflected in precedents such as Jacob Mathew v. State of Punjab and Spring Meadows Hospital v. Harjot Ahluwalia.
Medical negligence requires three essential elements: a legal duty of care, breach of that duty, and resulting damage or harm.
Although courts traditionally relied on the Bolam Test, it is now treated as an evolving guideline of evidence rather than an unyielding rule of law.
A simple difference in diagnosis or reasonable error of judgment does not constitute negligence; actionable negligence arises only when no reasonably competent medical professional exercising ordinary care would have made the same choice or omission.
In Spring Meadows Hospital, treatment without prior testing and the absence of basic emergency equipment, including an oxygen cylinder, caused irreparable brain damage, establishing hospital deficiency and resulting in compensation to the victim and family.
9.3.2.3.2 Homeopathy Doctor Prescribing Allopathy Medicine
The legal consequences of medical practitioners practicing outside their licensed discipline are illustrated in Poonam Verma v. Ashwin Patel and Ors.
In this case, a doctor registered only to practice Homeopathy prescribed allopathic medicine to a patient who later died.
The court held that the practitioner had a statutory duty to restrict his practice to Homeopathy, and prescribing allopathic drugs without the required qualifications or authorization breached his duty of care.
Such unauthorized cross-practice was held to constitute negligence per se, making the doctor civilly liable to compensate the victim’s spouse for the loss of life.
9.3.2.3.3 Test of Negligence and Available Facilities - Bijoy Sinha Roy (D) by L.R. v. Biswanath Das & Ors.
In Bijoy Sinha Roy v. Biswanath Das & Ors., the Supreme Court distinguished between a doctor’s surgical judgment and the duty to select adequate medical facilities.
A patient with high blood pressure and anemia underwent a hysterectomy at a nursing home without an ICU and later died after being transferred to another facility.
The Court held that the decision to operate was a matter of professional judgment and did not constitute negligence, as doctors are judged by ordinary reasonable skill, not the highest possible expertise.
However, choosing a facility without an ICU, when post-operative complications were reasonably foreseeable and ICU-equipped facilities were available nearby, amounted to actionable negligence, and ₹5 lakhs compensation was awarded.
The Court also emphasized independent medical opinion before criminal proceedings against doctors and encouraged video conferencing and ADR for faster dispute resolution.
9.3.2.4 Transport Services
Transportation infrastructure, comprising railways, roadways, and aviation, serves as a primary lifeline in India, enabling passenger transit and commercial goods movement across the country.
Modern digital tools have streamlined access by allowing users to book fares, make payments, and track live statuses of flights, trains, buses, and cabs online.
However, poor service delivery often gives rise to consumer grievances, including lost or damaged luggage, flight or train delays and cancellations, delayed refunds, and arbitrary deductions from refund amounts.
9.3.2.4.1 Delayed Trains and Missed Travel Connections - Sanjay Shukla case
In Northern Western Railway and Ors. v. Sanjay Shukla, the Supreme Court held that an unexplained train delay constitutes an actionable deficiency of service under consumer protection law.
The passenger and his party missed their onward flight to Srinagar because their train arrived four hours late, despite a four-hour buffer, forcing them to hire a private taxi.
The consumer forums awarded compensation for missed airfare, taxi costs, hotel bookings, legal expenses, and mental distress.
Dismissing the Railways’ appeal, the Supreme Court held that without concrete evidence showing the delay was beyond its control, the Railways remain liable for damages.
The Court emphasized that passenger time is valuable and public transport authorities must maintain modern standards of efficiency and operational accountability.
9.3.2.5 Courier and Postal Services
Under Indian law, courier and postal service failures are governed by general contract law and the Consumer Protection Act, which provides supplementary legal remedies.
Senders must accurately describe and address parcels sent through speed post or private courier services.
Once the service provider takes custody of a shipment, any loss or failure to transport it properly constitutes a deficiency of service.
This protection applies where valid consideration is involved, whether the delivery fee is prepaid or agreed to be paid upon transport or receipt.
9.3.2.6 Educational Services
Education forms the core foundation of individual development and societal progress, having immense social, cultural, and economic importance and being protected under constitutional rights.
However, intense competition for quality education has led to widespread commercialization, where profit-seeking and monopolistic practices often overshadow the actual goal of teaching life skills and knowledge.
These issues persist because parents and guardians are willing to bear significant financial burdens for their children’s future.
From a legal standpoint, educational institutions owe a duty of service to students; administrative failures, such as assigning incorrect marks or failing to issue an admit card and thereby preventing a student from taking examinations, constitute an actionable deficiency in service.
9.3.2.6.1 Education, Educational Institutes and Service - Manu Solanki case
In Manu Solanki v. Vinayak Mission University, the NCDRC considered whether educational institutions and their activities fall under the Consumer Protection Act after a dental college admitted students without proper university affiliation or regulatory approval.
The Bench examined whether pre-admission processes, extracurricular activities, hostel facilities, and vocational training constitute “Core Education”.
It held that private coaching centres are not formal educational institutions, so their services and trade practices are subject to Consumer Forum jurisdiction.
However, formal educational institutions, including their admission processes, vocational courses, and co-curricular activities, are exempt from the Consumer Protection Act, resulting in dismissal of complaints for lack of maintainability.
Due to the significant impact on student rights, the matter was admitted in appeal by a three-judge Bench of the Supreme Court in October 2020.
9.3.2.7 Real Estate/Housing Services
If a housing service is abandoned half-way or there are patent/latent defects in the promised service, it constitutes a deficiency in service.
9.2.2.7.1 Delay in Handing Possession is Deficiency in Service - Pioneer Urban Land and Infrastructure Limited case
This principle was highlighted in Pioneer Urban Land and Infrastructure Limited v. Govindan Raghavan & Ors., where the builder failed to obtain an Occupancy Certificate (OC) and deliver possession within the stipulated period of 39 months plus a 180-day grace period.
After the buyer filed a consumer complaint for non-delivery, the builder secured the OC nearly three years late and issued a possession letter.
However, due to the prolonged delay, the buyer had purchased an alternate residence and requested a full refund.
The NCDRC ruled that a homebuyer cannot be compelled to accept delayed possession when the agreed construction deadline has long passed, leading the builder to challenge the ruling before the Supreme Court.
Fortune Infrastructure v. Trevor D’Lima
In dismissing the builder’s appeal, the Supreme Court ruled that inordinate delay in handing over flat possession constitutes a clear deficiency of service, and home-buyers cannot be forced to wait indefinitely.
They are entitled to cancel the agreement, receive a full refund, and claim compensation.
Reaffirming Lucknow Development Authority v. M.K. Gupta, the Court clarified that paid construction services by builders fall under Section 2(o) of the Consumer Protection Act, 1986.
Since the builder obtained the Occupancy Certificate nearly two years after the agreed deadline, the buyer was justified in rejecting belated possession.
The Court also struck down one-sided, unfair standard-form builder-buyer agreements, where buyers have no choice but to “sign on the dotted line,” treating such practices as deceptive and non-binding under Section 2(r).
Citing Bangalore Development Authority v. Syndicate Bank, the Court upheld the NCDRC’s decision to award refund with interest, recognizing the financial strain on buyers who must service loans during prolonged construction delays.
9.2.2.7.2 Failure to obtain Occupancy Certificate is a deficiency in service - Samruddhi Co-operative Housing Society Ltd case
In Samruddhi Co-operative Housing Society Ltd. v. Mumbai Mahalaxmi Construction Pvt Ltd., the Supreme Court ruled that a builder’s failure to obtain an Occupancy Certificate (OC) constitutes a deficiency in service under consumer protection law.
The builder handed over flats without an OC, preventing residents from obtaining standard municipal water and electricity connections and forcing them to pay higher utility charges and taxes.
Although the NCDRC initially dismissed the complaint as a time-barred money recovery suit, the Supreme Court held that non-provision of an OC is a “continuing wrong” and remains actionable as long as the failure persists.
Reaffirming that builders must convey clear titles along with the OC and compensate buyers for inflated taxes caused by the delay, the Court remanded the matter to the NCDRC for decision on its merits.
9.3.2.8 Financial/Banking Services
Banks and other financial institutions are liable for deficiency in service if they wrongfully dishonour cheques or allow fraudulent withdrawals from the ATMs and lockers, etc.
While there are many laws and rules governing Banks/Financial Institutions, the Consumer Fora has jurisdiction to deal with their deficiency in service and unfair trade practices, if any.
9.3.2.8.1 Locker Contents - Amitabha Dasgupta case
In Amitabha Dasgupta v. United Bank of India & Ors., the Supreme Court addressed a bank’s liability for wrongfully breaking open a customer’s locker despite rent being paid, reallocating it to another customer, and returning an unsealed envelope missing 5 of the original 7 gold ornaments.
The Court clarified that although claims regarding missing locker contents may require civil court evidence or proof of bailment, banks cannot disown their overall responsibility by claiming ignorance of the contents.
Under Consumer Protection laws, banks owe an independent duty of care to safely maintain and operate locker systems, prevent unauthorized access, and protect against theft.
Breaking open a locker without valid cause or advance notice constitutes gross deficiency in service.
The Supreme Court awarded compensation and litigation costs and directed the RBI to establish uniform locker regulations within six months, including access logs, advance written notice, independent witnesses, inventory creation, continuous physical security, IT data privacy, and no contracting out of the bank’s baseline duty of care.
9.3.2.8.2 Any service availed from Bank covered under Consumer Protection Laws - Arun Bhatiya case
In Arun Bhatiya v. HDFC Bank & Ors., a father and son maintained a joint Fixed Deposit account. When the father requested encashment into his individual account, the son instructed the bank not to transfer the funds to any individual account.
Despite this stop-instruction, the bank processed the transfer.
Although the State Consumer Commission recognized that the joint funds were improperly credited to a single account, it refused to hear the case, treating it as a private father-son dispute for the civil court.
Reversing this decision, the Supreme Court held that “service” and “deficiency” under the Consumer Protection Act, 1986 are broad terms covering banking services of any description, depending on the facts of each case.
The Court affirmed that anyone availing banking services qualifies as a consumer and can seek remedies through Consumer Fora for improper banking practices, regardless of underlying family relationships.