Full Judgment Text
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PETITIONER:
REGIONAL PROVIDENT FUND COMMISSIONER
Vs.
RESPONDENT:
SHIV KUMAR JOSHI
DATE OF JUDGMENT: 14/12/1999
BENCH:
S. Saghir Ahmad, R.P.Sethi
JUDGMENT:
The short but an important question of law to be
decided in this appeal is as to whether the provisions of
Consumer Protection Act, 1986 (hereinafter referred to as
’the Act’) can be invoked against the Provident Fund
Commissioner by a member of the Employees Provident Fund
Scheme? it has to be ascertained as to whether any such
member is a ’consumer* and the duties performed by the
Provident Fund Commissioner under the relevant scheme is a
’service’ within the meaning of the Act. If it is held that
such member is the ’Consumer and the facilities provided are
’services’, it has to be further considered as to whether
the delayed payment of the
provident fund to a member-employee amounts to
deficiency of service under the Act.
The facts leading to the filing of the present appeal
are that the respondent, who was a member of the Provident
Fund Scheme, applied to the Regional Provident Fund
Commissioner for the payment of his provident fund on 15th
July, 1992. It was found that the application filed was not
complete as required by Para 72(5)(d) of the Provident Fund
Scheme applicable in the case. The appellant forwarded the
application to the Respondent’s employer for verification in
terms of the said Para. The Inspector of the appellant is
also stated to have visited the factory, where the
respondent- employee was working, to impress upon the
employer to expedite verification of the application. The
appellant’s Area Inspector is stated to have personally gone
to the factory on 19^ August, 1992
. and obtained the verification application. The
claim of the respondent was settled on 24^ August, 1992.
However, the respondent filed a complaint before the
District Consumer Disputes Redressal Forum, Faridabad
(hereinafter referred to as "the District
I Forum") on 26th August, 1992 alleging deficiency in
service of the appellant and claimed damages to the tune of
Rs.65,000/- along with costs for the alleged delay in
payment of his provident fund. The appellant raised a
preliminary objection regarding the
jurisdiction of the District Forum on the ground that
the respondent was not a ’consumer’ and the facilities
provided by the scheme were not a ’service’. The District
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Forum vide its order dated 4.11.1992 directed the appellant
to pay interest @ 18% on delayed payment and costs of
Rs.1,000/-. Not satisfied with the order of the District
Forum, the appellant filed an appeal before the State
Consumer Disputes Redressal Commission, Haryana at
Chandigarh
(hereinafter referred to as "the State Commission’’)
under Section 15 of the Act. The appeal was dismissed by
the State Commission on 1.3.1994. The revision filed before
the National Consumer Disputes Redressal Commission, New
Delhi (hereinafter referred to as "the National Commission")
was dismissed vide the order impugned in this appeal.
Taking us through the Employees Provident Fund Scheme,
1952, Shri N.N. Gowswamy, Senior Advocate appearing for the
appellant submitted that the said scheme could not be held
to be a ’service’ within the meaning of Section 2(1)(o) and
the respondent No.l as ’consumer* within the meaning of
Section 2(1)(d) of the Act. It was urged that as the
Provident Fund Commissioner was the custodian of the funds
passed to him and the contribution to the Scheme was not for
consideration, the Act was not applicable.
Consumer under the Act has been defined as any person
who;
"(i) buys any goods for a consideration which has
Deer) paid or promised or partly paid and partly promised or
under any system of the daferred payment and includes user
of such goods other than the person who buys such goods for
consideration paid or promised or partiy paid or partiy
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
(i?) hires or avails of any services for a
consideration which has been paid or promised or partly p^d
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.
and "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,
entertainment, amusement or the purveying of news or other
information, but doss not include the rendering of any
service free of charge or under 9 contract of personal
service.
The definition of consumer is wide and covers in its
ambit not only the goods but also services, bought or hired,
for consideration.
Such consideration be paid or promised or partly paid
or partly promised under any system of deferred payment and
includes any beneficiary of such person other than the
person who hires the service for consideration. The Act is
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aimed to protect the interests of a consumer as understood
In commercial sense of the term as ’purchaser of goods’ and
in larger sense ’user of services’. The important
characteristic of goods and service under the Act is that
such goods are supplied at a price to cover the costs which
consequently result in profit or income to the seller of
goods or provider of service. The definition excludes a
person who obtains such goods for re-sale or for any
commercial purposes. However, the services hired for
consideration even for commercial purposes have not been
excluded. A reference to the definition of ’service’
unambiguously indicates that the definition is not
restrictive and includes within its ambit such services as
well which are specified therein. However, services hired
or availed, which are free of charge, or under a contract of
personal service, have specifically been excluded. This
Court in Lucknow Development Authority vs. M.K. Gtipta
1(1994) 1 SCO 243 referred to the meanings of the word
"consumer" in various dictionaries and found that the Act
has opted for no less voider definition than those mentioned
in dictionaries. Referring to the definition of the
"consumer" the Court held:
"....It is in two parts. The first deals with goods
and the other with services. Both parts first declare the
meaning of goods and services by use of wide expressions.
Their ambit is further enlarged by use of inclusive clause.
For instance, it is not only purchaser of goods or hire, of
services but even those who use the goods or who are
beneficiaries of services with approval of the person who
purchased the goods or who hired services are included in
it. The legislature has taken precaution not only to define
’complaint’, ’complainant’, ’consumer’ but even to mention
in detail what would amount to unfair trade practice by
giving an elaborate definition in clause (r) and even to
define ’defect’ and ’deficiency’ by clauses (f) and (g) for
which a consumer can approach the Commission. The Act thus
aims to proisct the economic interest of a consumer as
understood in commercial sense as a purchaser of goods and
in the larger sense of user of services. The common
characteristics of goods and services are that they are
supplied ai a price to cover the costs and general profit or
income for the seller of goods or provider of service. But
the defect in one and the deficiency in other may havs to be
removed and compensated differently. The former is.
normally, capable of being replaced and repaired whereas the
other may be required to be compensated by award of the just
equivalent of the value or damages for loss. ’Goods’ have
been defined by clause (i) and have been assigned the same
meaning as in the Sale of Goods Act, 1930 which reads as
under:
" ’goods’ means every kind of movable property other
than actionable claims and money; and includes stocks and
shares, growing crops, grass and things attached to or
forming part of the land which are agreed to be severed
before sale or under the contract of sale."
It was therefore urged that the applicability of the
Act having been confined to movebale goods only a complaint
filed for any defect in relation to immoveable goods such as
a house or building or allotment of site
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could not have been entertained by the Commission.
The submission does not appear to be well founded. The
respondents were aggrieved either by delay in delivery of
possession of house or use of substandard material etc. and
therefore they daimed deficiency in service rendered by the
appellants. Whether they were justified in their complaint
and if such act or omission could be held to be denial of
service in the Act shall be examined presently but the
jurisdiction of the Commission could not be ousted (sic
merely) because even though it was service it related to
immoveable property."
and while dealing with the meaning of the word
"service" this Court held:
"The main clause itself is very wide. It applies to
any service made available to potential users. Trie words
’any’ and ’potential’ are significant. Both are of wide
amplitude. The word ’any’ dictionarily means ’one or some
or all’. In Black’s Law Dictionary it is explained thus.
"word ’any’ has a diversity of meaning and may be employed
to indicate ’all’ or ’every’ as well as ’some’ or ’one’ and
its meaning in a given statute depends upon the context and
the subject matter of the statute". The use of the word
’an/ in the context it has been used in clause (o) indicates
that it has been used in wider sense extending from one to
all. The other word ’potential’ is again very wide. In
Oxford Dictionary it is defined as ’capable of coming into
being, possibility’. In Black’s Law Dictionary it is
defined as "existing in possibility but not in act.
Naturally and probably expected to come existence at some
future time, though not existing; for example, the future
product of gain or trees already planted, or the successive
future instalments or payments on a contract or engagement
already made." In other words service which is not only
extended to actual users but those who are capable of using
it are covered in the definition. The clause is thus very
wide and extends to and or ail actual or potential users."
In Morgan Stanley Mutual Fund v. Kartick Pas [(1994)
4 SCC 225 the definition of "consumer’ was explained as:
"The consumer as the term implies is one who consumes.
As per the definition, consumer is the one who purchases
goods for private use or consumption. The meaning of the
word ’consumer’ is broadly stated in the above definition so
as to include anyone who consumes goods or services at the
end of the chain of production. The comprehensive
definition aims at covering every man who pays money as the
price or cost of goods and services. The consumer deserves
to get what he pays for in real quantity and true quality,
in every society, consumer remains the centre of gravity of
ail business and industrial activity. He needs protection
from the manufacturer, producer, supplier, wholesaler and
retailer." i
This Court again in S.P. Goel vs. Collector of
Stamps Delhi 1(1996) 1 SCC 573 considered, with approval,
the meaning and scope of the words "consumer", "service" and
"deficiency in service".
In State of Orissa vs. Divisional Manager. LIC &
Another [(1996) 8 SCC 655 this Court held:
"The only question is: whether the appellant is
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liable to pay compensation to Haribandhu Setha under the Act
and whether the claim Is maintainable. Section 2(1)(o) of
the Act defines ’services’ as under: "services" 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 a news or other information, but
does not
include the rendering of any service free of charge or
under a contract of personal service."
A reading of the definition would indicate that the
services contemplated thereunder alone are the services
within the meaning of the Act except excluded services
mentioned thereunder. The excluded services are "service
free of charge or under a contract of personal service".
The concept of contract of personal service was considered
in a recent Judgment of this Court in Indian Medical
Assn.vs. V.P. Shantha (1995) 6 SCC 651. This Court had
he’d therein that the expression "personal service" has a
well-known legal connotation and has been construed in the
context of the right to seek enforcement of such a contract
under the Specific Relief Act, 1963. For that purpose, a
contract of personal service has been held to cover a civil
servant, the managing agents of a company and a professor in
the University. There can be a contract of personal service
if there is relationship of master and servant between a
doctor and the availing of his services and in that event
the services rendered fay the doctor to hi’s employer would
be excluded from the purview of the expression under section
2(1)(o) of the Act by virtue of the exclusionary clause in
the said definition. The other excluded service is service
rendered free of charge."
The combined reading of the definitions of "consumer"
and "service" under the Act and looking at the aims and
object for which the Act was enacted, it is imperative that
the words "consumer" and "service" as denned under the Act
should be construed to comprehend consumer and services of
commercial and trade oriented nature only. Thus any person
who is found to have hired services for consideration shall
be deemed to be a consumer
notwithstanding that the services were in connection
with any goods or their user. Such services may be for any
connected commercial activity and may also relate to the
services as indicated in Section 2(1 )(o) of the Act.
The Employees Provident Fund & Miscellaneous
Provisions Act, 1952 (hereinafter referred to as "the
Provident Fund Act") has been enacted to provide for the
institution of provident fund, pension and deposit linked
insurance funds for employees working in factories and other
establishments. Section 2(h) defines "fund" to mean the
provident fund established under the Scheme. "Scheme" means
the Employees Provident Fund Scheme framed under Section 5
thereof which provides:
"5. Employees’ Provident Fund Scheme.(1 ) The
Central Government may, by notification in the Official
Gazette, frame a scheme to be called the Employees’
Provident Fund Scheme for the establishment of provident
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funds under this Act for employees or for any class of
employees and specify the establishments or class of
establishments to which the said Scheme shall apply and
there shall be established, as soon 33 may be after the
framing of the scheme, a Fund in accordance with the
provisions of this Act and the Scheme.
(IA) The Fund shall vest in, and be administered by,
the Central Board constituted under section 5A.
(IB) Subject to the provisions of this Act, a scheme
framed under sub-section (1) may provide for all or any of
the matters specified in Schedule II.
(2) A scheme framed under sub-section (1) may provide
that any of its provisions shall take effect either
prospectively or retrospectively on such date as may be
specified in this behaif in the Scheme."
Section 5(d) authorises the Central Government to
appoint a Central Provident Fund Commissioner who is the
Chief Executive Officer of the Central Board constituted
under Section 5(a) or the Provident Fund Act. Section 6
provides that the contributions to the Scheme shall be made
by the employer to the Fund at the rates specified therein
from the wages of the employee along with his own equal
contribution" exercise of the powers conferred by Section 5
of the Provident Fund Act, the Central Government framed
Employees Provident Fund Scheme. 1952. Para 30 of the
Scheme provided:
"30. Payment of contributions(1) The employer shall,
in the first instance, pay both the contribution payable by
himself (in this Scheme referred to as the employer’s
contribution) and also, on behalf of the member employed by
him directly or by or through a contractor, The contribution
payable by such member (in this Scheme referred to as the
member’s contribution).
(2) In respect of employees employed by or through a
contractor, the contractor shall recover the contribution
payable by such employee (in this Scheme referred to as the
member’s contribution) and shall pay to the principal
employer the amount of member’s contribution so deducted
together with an equal amount of contribution (in this
scheme referred to as the employer’s contribution) and also
administrative charges."
(3) It shall be the responsibility of the principal
employer io pay both the contribution payable by himself in
respect of the employees directly employed by him and also
in respect of the employees employed by or through a
contractor and also administrative charges.
ExplanationFor the purposes of this paragraph the
expression "administrative charges" means such percentage of
the pay (basic wages, dearness allowance, retaining
allowance, if any. and cash value of food concessions
admissible thereon) for the time being payable to the
employees other than an excluded employee, as the Central
Government may in consultation with the Central Board and
having regard to the resources of .the Fund for meeting its
normal administrative expenses fix.
Obviously, it appears that as the payment of
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contribution includes the payment of administrative charges,
the Scheme appears to be for consideration.
Mr.A.S. Nambiar, Senior Advocate, who later appeared
for the appellant submitted that as no part of the
administrative charges is payable by the employee, he
(employee) cannot be held to be a ’consumer’ within the
meaning of Section 2(1)(d) of the Act. In support of such a
submission an affidavit of Shri D.P. Sethi, Assistant
Provident Fund Commissioner has been Tiled ^wherein after
reproduction of para 55 of the scheme it is submitted:
’That under para 30 of Employees’ Provident Fund
Scheme 1952, employer is liable to pay both the
contributions as well as administrative charges but under
para 38 the employer is authorised to deduct the
employee’s share of contribution from his wages,
consequently leaving employer’s share as well as
administrative charges payable by employer himself.
That according to above scheme provisions it is the
employer who is responsible to pay administrative charges
and not the member. Following the above provisions of law
the Central Board of Trustees is recovering administrative
charges only from employer and not from members."
Such a submission which apparently appears to be
attractive, when analysed in depth, is without substance
and, if accepted, is likely to defeat the purpose and object
of the Act as also the scheme framed under it. The word
’consideration’ has not been defined either under the scheme
or the Act. Black’s Law Dictionary defines ’consideration’
thus: Consideration is not to be confounded with motive,
consideration means something which is of value in the eye
of the law, moving from the plaintiff, either or benefit of
the plaintiff or of detriment to the defendant. In volume
17 of Corpus Juris Secundum (pp.420-421 and 425) the import
of ’consideration’ has been described thus: Various
definitions of consideration are to be found in the
textbooks and judicial opinions. A sufficient one, as
stated in Corpus Juris and which has been quoted and cited
with approval is, ’a benefit to the party promising, or a
loss or detriment to the party to whom the promise is
made....". At common law every contract not under seal
requires a consideration to support it, that is,
as shown in the definition above, some benefit to the
promisor, or some loss or detriment to the promisee...
There is a sufficient consideration for a promise if there
is any benefit to the promisor or any detriment to the
promisee. It may be laid down as a general rule. in
accordance with the definition given above, that there is a
sufficient consideration for a promise if there is any
benefit to the promisor or any loss or detriment to the
promisee. The gist of the term ’consideration’ and its
legal significance has been clearly summed up in Section
2(d) of the Contract Act which defines ’consideration’ thus:
When, at the desire of the promisor, the promisee or any
other person has done or abstained from doing, or does or
abstains from doing, or promise to door to abstain from
doing, something such actor abstinence or promise is called
a consideration for the promise. Webster’s Third New
Intenational Dictionary (Unabridged) defines
’consideration’ as: Something that is legally regarded as
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the equivalent or return given or suffered by one for the
act or promise of another.
In Sonia Bhatia v. State of U.P. & Ors. [1981 (2)
SCC 585] it was held:
"From a conspectus, therefore, of the definitions
contained in the dictionaries and the books regarding a gift
or an adequate consideration, the inescapable conclusion
that follows is that ’consideration’ means a reasonable
equivalent or other valuable benefit passed
on by the promisor to the promisee or by the
transferor to the transferee."
A perusal of the scheme unambiguously shows that it is
for consideration which is applicable to all those factories
and establishments covered under the Act and the scheme who
are required to become a member of the Fund under the
scheme. Para 26 provides that every employee employed in
connection with any work of the factory or other
estabishment to which the scheme applies other than an
excluded employee, shall be entitled and required to become
a member of the Fund from the date the said para comes into
force in such factory or the establishment. The scheme
provides for the Board of Trustees, the appointment, power
of Commissioner and other staff of Board of Trustees,
membership of the Fund, contribution, etc. Chapter V deals
with contribution. The employer who is otherwise not a
member of the scheme is obliged to contribute under the
scheme at the rates specified therein of the basic wages,
dearness allowance including cash value of any food
concession and repairing allowances, if any., payable to
each employee to whom the scheme applies. The contribution
of the employee has to be equal to the contribution payable
by the employer in respect of such employee. The words ’in
respect of are significant as they indicate the liability of
the employer to pay his part
of the contribution in consideration of the employee
working with him. But for the employment of the employee
there is no obligation upon the employer to pay his part of
the contribution to the scheme. The administrative charges,
as required to be paid under para 30 of the scheme are also
paid for consideration of the employee being the member of
the scheme. It is Immaterial as to whether such charges are
deducted actually from the wages of the employee or paid by
his employer in respect of the employee-member of the scheme
working for such employer. The administrative charges are
further required to be determined having regard to the basic
wages, the dearness allowance, retaining allowance, if any,
and cash value of food concessions admissible thereon for
the time being payable to the employee. If the contention
of the appellant is accepted ttiat as no part of the
administrative charges are deducted from the actual wages of
the employee, he cannot be deemed to be hiring the services
of scheme, the consequences of such an interpretation shall
frustrate the object of the Act and the scheme as in that
event no obligation can be cast upon the employer to pay
contributions which are equal to the contribution payable by
the employee along with the administrative charges. The
scheme has to be given such an interpretation which serves
the purpose intended to be achieved by it keeping in view
the objects of the Act. The admini»trative
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charges are in lieu of the membership of the employee
and for the services rendered under the scheme. It cannot
be held that even though the employee is the member of the
scheme, yet the employer would only be deemed to be a
’consumer’ for having made payments of the administrative
charges. Admittedly, no service is rendered to the employer
under the scheme which is framed for the benefit of the
employee under Sections 5, 6 and 7 of the Act. Chapter VII
provides for administration of the Fund. Accounts and
Audit. A separate account called "Central Administration
Account" for recording of administration expenses of the
Fund is required to be kept under Para 49. Para 52 deals
with the investment of monies belonging to employee’s
provident fund and provides that such monies be deposited in
the Reserve Bank or the State Bank of India or in such other
scheduled banks as may be approved by the Central Government
from time to time or be invested subject to the directions
as the Central Government may from time to time give in
securities mentioned or referred to in Clauses (a) to (d) of
Section 20 of the Indian Trust Act., 1882. Ail expenses
incurred in respect of, and loss, if any. arising from, any
investment shall be charged to the Fund. Para 53 provides
that the Fund not including the administration account shall
be except with the previous sanction of the Central
Government be expanded for any purpose other than the
payment of the sums standing to the credit of
individual member of the Fund or to their nominees or heirs
or legal representatives in accordance with the provisions
of the scheme. All expenses relating to the administration
of the Fund including those incurred on Regional Committee
are to be made from the Fund in terms of para 54 of the
scheme. Similarly all expenses of administration of Fund
including the fees and allowances of the trustees of the
Central Board and salaries, leave and joining time
allowance. travelling and compensatory allowances,
gratuities and compassionate allowances, pensions,
contributions to provident fund and other benefit fund
instituted for the officers and employees of the Central
Board, the cost of audit of the accounts, legal expenses and
cost of all stationery and forms incurred in respect of the
Central Board, cost and ali e>i"-n^es incurred in connection
with the construction of office ana staff quarters shall be
met from the Administration Account of the Fund. The member
of the scheme is entitled oniy to the interest determined as
per para 60. Chapter VIII deals with nominations, payments
and withdrawals from the Fund.
We cannot accept the argument that the Regional
Provident Fund Commissioner, being Central Government,
cannot be held to be rendering ’service’ within the meaning
and scheme of the Act. The Regional Provident Fund
Commissioner, under the Act and the
scheme discharges statutory functions for running the
scheme. It has not, in any way, been delegated with the
sovereign powers of the State so as to hold it as a Central
Government, being not the authority rendering the ’service’
under the Act. The Commissioner is a separate and distinct
entity, it cannot legally claim that the facilities provided
by the ’scheme’ were not "service" or that the benefits
under the scheme being provided were free of charge. The
definition of "consumer" under the Act includes not only the
person who hires the ’services’ for consideration but also
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the beneficiary, for whose benefit such services are hired.
Even if it is held that administrative charges are paid by
the Central Government and no pad of it is paid by the
employee, the services of the Provident Fund Commissioner in
running the scheme shall be deemed to hsve been availed of
for consideration by the Central Government for the benefit
of employees who wouid be treated as beneficiary within the
meaning of that word used in the definition of consumer.
This Court in M/s.Sprinq Meadown Hospital & Anr. vs.
Harjol Ahluwalia through K.S. Ahluwalia & Anr. [JT 1998
(2) SC 620, to which one of us (Saghir Ahmad.J) was a party
has already held that the "consumer" means a person who
hires or avails of any services and includes any beneficiary
of such service other than the person who hires or avails
the services. The Act gives comprehensive definition of
’consumer’
who is the principal beneficiary of the legislation
but at the same time in view of the comprehensive definition
of the term "consumer" even a member of the family of such
’consumer’ was held to be having the status of ’consumer’.
In an action by any such member of the family of beneficiary
of the service it will not be open for a trader to take a
stand that there was no privity of contract. In this regard
this Court specifically held:
"In the present case. we are concerned with clause
(ii) of Section 2(1)(d). In the said clause a consumer
would mean a person who hires or avails of any services and
includes any beneficiary of such services other than the
person who hires or avails of the services. When a young
child is taken to a hospital by his parents and the child is
treated by the doctor, the parents would come within the
definition of consumer having hired the services and the
young child would also become a consumer under the inclusive
definition being a beneficiary of such services. The
definition clause being wide enough to include not only the
person who hires the services but also the beneficiary of
such- services which beneficiary is other than the person
who hires the services, the conclusion is irresistible that
both the parents of the child as well as the child would be
consumer within the meaning of Section 2(1 )(d)(ii) of the
Act and as such can claim compensation under the Act"
A perusal of the scheme clearly and unambiguously
indicate 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
(1)(o).
No ground is, therefore, made out for interference
with the impugned order. The appeal is accordingly
dismissed, as no one appeared on behalf of the respondent,
without any order as to costs.
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