Can the member of an Employee’s Provident Fund Scheme be considered a ‘Consumer’ and the duties performed by the Provident Fund Commissioner, a ‘Service’ under the Consumer Protection Act, 1986?

The question as to whether a member of the Provident Fund Scheme was a ‘Consumer’ as per the  definition below and whether the duties performed by the Provident Fund Commissioner a ‘Service’ came up before the Hon’ble Supreme Court in Regional Provident Fund Commissioner V/s Shiv Kumar Joshi, 1999.

A “consumer” as per Section 2(1) (d) of the Consumer Protection Act, 1986 is defined as someone who;

“(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised or under any system of the deferred payment and includes user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or any system of deferred payment, when such services are availed of with the approval of the first mentioned person.”

As per Section 2(1) (o) of the Consumer Protection Act, 1986 ” service” means;

“Service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board 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;”

The Court after perusing the definitions of ‘Services’ and ‘Consumer’ in various decisions of the Supreme Court, the Hon’ble Court opined that the duties performed by the Regional Provident Fund Commissioner were in fact ‘Services’ as defined under the Consumer Protection Act, 1986 and the members of the Provident Fund Scheme, ‘Consumer’s. The Hon’ble Court stated that, a member-employee avails of the services of the Regional Provident Fund Commissioner under the Scheme for a consideration – the administrative charges paid along with his contribution by the Company. Such administrative charges, as paid to the Regional Provident Fund Commissioner, were held to be in lieu of membership of the employee and the services rendered under the Scheme. Such services were therefore not rendered free of charge and were for a consideration.

The Hon’ble Supreme Court stated that;

“A perusal of the scheme clearly and unambiguously indicates that it is a ‘service’ within the meaning of Section 2(1) (o) and the member a ‘consumer’ within the meaning of Section 2(1) (d) of the Act. It is, therefore, without any substance to urge that the services under the scheme are rendered free of charge and, therefore, the scheme is not a ‘service’ under the Act. Both the State as well as National Commission have dealt with this aspect in detail and rightly came to the conclusion that the Act was applicable in the case of the scheme on the ground that its member was a ‘consumer’ under Section 2(1)(d) and the scheme was a ‘service’ under Section 2(1)(o).”

Therefore, the Court held that since the Regional Provident Fund Commissioner was providing ‘services’ and the members of the Scheme were ‘consumer’s within the definition of the Consumer Protection Act, 1986, a delay in release in provident fund dues by the former could invite action for deficiency in services.

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