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Companies as Consumers: A Step Towards a Fairer Market

In India, the Consumer Protection Act of 1986 serves as a fundamental safeguard for consumer rights in India, it gives right and power to its citizens and provides relevant remedies in case of low standard product or inadequate services. The Consumer Protection Act functions as a strong mechanism, by ensuring protection against unfair practices by manufacturers or service providers. The consumer protection act gives various right to its consumers such as Right to know before buy, right to replacement or Right to get compensation for faulty goods or poor services. By implementing this act, it provides fairness and transparency to buy goods or avail services. The consumer protection act also set up trust among consumers and protects their rights.

The most important feature of this act that it provides remedies to consumers in case of unfair treatment or violation of consumers rights by seeking legal aid through court and filing complains with consumer protection forums.

Overall, consumer protection act of 1986 gives consumers a better experience to buy goods and services by promoting fair competition and consumer confidence.

Formerly there was an uncertainty regarding the interpretation of term 'person' within the scope of consumer protection act, which leads to question that whether the companies are eligible to file a suit if they face any issues with the products or services they have avail.

But recently in the case of Kozyflex Mattresses (P) Ltd. v. SBI General Insurance Co. Ltd., 20-03-2024 the supreme court has clarified that Corporate entities are part of 'persons' as defined in consumer protection act 2019. This decision gives companies the right to utilize the consumer protection act and approach the consumer courts regarding faulty goods or services.

The court reasoned that the aim of consumer protection act is to safeguard the rights of consumers, therefore term 'person' in consumer protection act should also be applicable to artificial persons like corporate entities, so that corporate entities can also seek redressal under this act.

Initially National Consumer Dispute Redressal Commission (NCDRC) Has Dismissed The Complaint Kozyflex Mattresses On Two Ground:

  1. As Kozyflex Mattresses is a company therefore it was not considered as consumer according to consumer protection act 1986
  2. The National consumer dispute redressal commission (NCDRC) stated that the insurance policy is for commercial purpose and not for consumer purpose and therefore it beyond the jurisdiction.
The confusion about inclusion of companies as consumer in consumer protection act in India is due to the perception of definition of 'consumers' under the consumer protection act. Initially consumer protection act focused on the rights of individual consumer who buys and sell product.

However, as business practices are boosting now a day the question raised that whether companies should be considered as consumers under consumer protection act of India, there are arguments on both side.

Arguments in favor of companies being considered as consumers:

  • Protection to small business entities: Sometimes companies or small business entities may suffer unfair trade practices by large companies and service providers. Small businesses may not have the sufficient resources to fight back against large business entities. By including corporate entities in the definition of consumers, it can safeguard the rights of small businesses.
  • Protection of investments: Companies significantly invest in goods and services; this act can ensure that they get fair value for their investment by protecting them from unfair trade practices.

Argument against companies being considered as consumers:

  • Individual consumer: Traditionally, the consumer protection act was meant to safeguard the rights of individual consumers who may have less bargaining power as compared to companies.
  • Unfair advantages: It is quite possible that companies may misuse the act to gain unfair advantages in disputes over other businesses.

By adding companies in the definition of consumers indicates positive towards more robust consumer protection act. By safeguarding companies especially small business from unfair trade practices and gives them right to seek redressal for issue like defective goods and services.

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