Holding

The Provident Fund scheme is a service under the Consumer Protection Act, 1986 and the employee/member is a consumer, so the Act applies and the appeal is dismissed.

Summary

Shiv Kumar Joshi, a member of the Employees' Provident Fund Scheme, complained before the District Consumer Forum that the Regional Provident Fund Commissioner delayed payment of his provident fund, alleging deficiency in service. The Commissioner appealed, arguing that the scheme was not a "service" under the Consumer Protection Act, 1986 and that Joshi was not a "consumer" because contributions and administrative charges were paid by the employer, not the employee, and that the Commissioner, as a part of the Central Government, could not be said to render a service. The Supreme Court held that the Provident Fund scheme is a service within the meaning of Section 2(1)(o) of the Act and that the employee/member is a consumer under Section 2(1)(d), as the scheme involves consideration (including administrative charges) and benefits the employee. The Court also rejected the contention that the Commissioner, though a government entity, does not render a service. Consequently, the appeal was dismissed and the order of the lower consumer commissions upheld.

Issues considered

The Employees' Provident Fund Scheme is a "service" within the meaning of Section 2(1)(o) of the Consumer Protection Act, 1986.
Whether a member/employee of the Provident Fund Scheme qualifies as a "consumer" under Section 2(1)(d) of the Act.
Whether the contributions and administrative charges constitute consideration, making the scheme chargeable.
Whether the Regional Provident Fund Commissioner, as a part of the Central Government, can be said to render a service within the meaning of the Act.
Whether the delay in payment of the provident fund amounts to deficiency in service under the Act.

Legislation cited

Consumer Protection Act, 1986s. 2(1)(d), s. 2(1)(o)
Employees Provident Fund & Miscellaneous Provisions Act, 1952s. 5, s. 6
Indian Contract Act, 1872s. 2(d)
Indian Trust Act, 1882s. 20

Subjects

Consumer Protection ActProvident FundServiceConsumerDeficiency in serviceAdministrative chargesConsiderationCentral GovernmentSupreme CourtAppeal

Judgment

.A REGIONAL PROVIDENT FUND COMMISSIONER
v.
SHIV KUMAR JOSHI

DECEMBER 14, 1999

B [S. SAGHIR AHMAD AND R.P. SETHI, JJ.]

Consumer Protection Act: 1986-Section 2(J)(o) & 2 (1) (d)-Provident
Fund Scheme, 1952-App/icability of the Act-On Provident Fund
C Commissioner-Held, applicable because the scheme is a service within
meaning of Section 2(J)(o), and the employee! the member of the scheme is
a consumer within the meaning of Section 2(J)(d) and the service is for
consideration, since the constitution of the scheme includes administrative
charges-Plea that employee/member of the scheme not 'consumer' within
the meaning of Section 2(l)(d) since administrative charges are not paid by
D employee and that the appellant being Central Government cannot be said
to be rendering service within the meaning of the Act-Pleas rejected, since
the administrative charge are in lieu of the membership of the employee and
no service is rendered to the employer under the scheme, which is framed for
the benefit of the employee-The appellant being separate and distinct entity
E from Central Government and not delegated with the sovereign powers of the
State, held to be rendering service.

Interpretation of Statute-To be given in such a way which serves_ the
purpose intended to be achieved keeping in view the objects of statute.

F Words & Phrases- 'Consideration', 'Service' and 'Consumer '-Meaning
of-In respect of Consumer Protection Act, 1986.

Respondent, a member of provident fund scheme, filed a complaint before
the District Consumer Disputes Redressal ~orum (District Forum), against
the appellant alleging deficiency in service and claimed damages, since there
G was some delay in payment of his provident fund by the appellant. District
Forum directed the appellant to pay interest on delayed payment and costs.
Appellants appeal to State Consumer Disputes Redressal Commission was
dismissed.

In appeal to this court, the appellant contended that the Consumer
H 294
REGIONAL PROVIDENT FUND COMMISSIONER v. S.K. JOSHI 295
Protection Act was not applicable, as the scheme could not be held to be a A
'service' within the meaning of Section 2(1)(o) and respondent is not
'consumer' within the meaning of Section 2(1)(d) of Consumer Protection
Act, because the contribution to the scheme was not for consideration and
the appellant was only the custodian of the funds passed to him, and the
employee cannot be said to be consumer within the meaning of Section 2(1)(d) B
also because the administrative charges were paid by the employer and not
the employee. It was further contended that the Central Government cannot
be held to be rendering 'service' within the meaning and scheme of the Act.

Dismissing the appeal, this Court

HELD: 1.1. The Provident Fund Scheme, clearly and unambiguously C
i!'dicate that the facilities provided by the scheme is a 'service' within the
meaning of Section 2(1)(o) and the member a 'consumer' within the meaning
o(Section 2(l)(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. (309-A-BJ D
1.2. The appellant 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 'service' for consideration but
also beneficiary, for whose benefits such services are hired. Even ifit is held E
that administrative charges are paid by the Central Government and no part
of it is paid by the employee, the services of the Provident Fund Commissioner
in running the scheme shall be deemed to have been availed of for consideration
h)' the Central Government for the benefit of employees who would be treated
as beneficiary within the meaning of that word used in the definition of F
consumer. [308-A-C)

Mis Spring Meadow Hospital & Anr. v. Harjo/ Ahluwalia through K.S.
and Anr. J. T., (1998) 2 SC 620, relied on.

1.3. It cannot be said that administrative charges are not payable by G
employee; therefore the employee cannot be held to be consumer within the
meaning of Section 2(l)(d) of the Consumer Protection Act. The
Administrative 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 could only be
deemed to be 'Consumer' for having made payments for administrative H
296 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A charges. Admittedly no service is rendered to the employer under the scheme
which is framed for the benefit of the employee. 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 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
B 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
C concessions admissible thereon for the time being payable to the employee.
. (304-F; 306-H; 307-A; 306-F]

1.4. If the contention of the appellant is accepted that 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 the scheme, the consequences
D 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
E objects of the Act (306-G-H)
1.5. 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, cannot be accepted. The Regional
Provident Fund Commissioner, under the Act and the scheme discharge
F 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. (307-H; 308-A)
1.6. The combined reading of the definitions of 'consumer' and 'service'
G under the Act and looking at the aims and objects for which the Act was
enacted, it is imperative that the words 'consumer' and 'service' as defined
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 the services for consideration shall be deemed to be a consumer
notwithstanding that the services were in connection with any goods or their ~
H user. Such services may b~ for any connected commercial activity and may
REGIONAL PROVIDENT FUND COMMISSIONER v. S.K. JOSHI [SETHI, J.] 297
also relate to the services as indicated in Section 2(l)(o) of the Act. A
(302-F-G-H)

Lucknow Development Authority v. MK. Gupta, (1994) 1 SCC 243;
Morgan Stanley Mutual Fundv. Kartick Das, (1994) 4 SCC 225; S.P. Goelv.
Collector ofStamps Delhi, (1996) 1 SCC 573 and State of Orissa v. Divisional
Manager LIC and Anr., (1996) 8 sec 655, referred to. B
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 411of1997.

From the Judgment and Order dated 30.1.96 of the National Consumer
Disputes Redressal Commission, New Delhi in R.P. No. 238 of 1994.
c
A.S. Nambiar, Hemant Sharma and Ms. Sushma Suri for the Appellant.

Ex-Parte for the Respondent.

The Judgment of the Court was delivered by

SETHI, J. The short but an important question of law to be decided D
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 perfonned by the Provident Fund Commissioner under the relevant E
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 F
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 G
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 19th August, 1992 and obtained the verification application. The claim of
the respondent was settled on 24th August, 1992. However, the respondent H
298 SUPREME COURT REPORTS (1999] SUPP. 5 S.C.R.

A filed a complaint before the District Consumer Disputes Redressal Forum,
Faridabad (hereinafter referred to as "the District Forum") on 26th August,
1992 alleging deficiency in service of the appellant and claimed damages to
the tupe 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 ·
B 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 Forum vide its order dated 4.11.1992 directed the appellant to pay
interest @ 18 per cent on delayed payment and costs of Rs. l ,000. Not
satisfied with the order of the District Forum, the appellant filed an appeal
before the State Consumer Disputes Redressal Commission, Haryana at
C Chandigarh (hereinafter referred to as "the State Commission'') under Section
15 of the Act. The appeal was dismissed by the State Commission on l.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.

D Taking us through the Employees Provident Fund Scheme, 1952, Shri
N.N. Goswamy, 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{l)(o) and the respondent No. I as 'consumer' within the meaning
of Section 2( I)(d) of the Act. It was urged that as the Provident Fund
Commissioner was the custodian of the funds passed to him and the
E 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 been paid or
F 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
G 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
H services other than the person who hires or avails of the services for
REGIONAL PROVIDENT FUND COMMISSIONER v. S.K. JOSHI [SETHI, J ) 299
consideration paid or promised, or partly paid and partly promised, or A
any system of deferred payment, when such services are availed of
with the approval of the first mentoned 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 B
other energy, board or lodging or both, 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 definition of consumer is wide and covers in its ambit not only the
goods but also services, bought or hired, for consideration. C
Such consideration be paid or promised or pa.rtly 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 aimed to protect the interests of a consumer as understood in commercial
D
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 E
commercial purposes have not been exclm;led. 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 F
Lucknow Development Authority v. MK. Gupta, [1994] I SCC 243 referred to
the meanings of the word "consumer" in various dictionaries and found that
the Act has opted for no less wider 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 G
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
hirer, 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 H
300 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

,A 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 protect
the economic interest of a consumer as understood in commercial
B 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 at 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 have to be removed and
c ·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:
D
" '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."
E
It was therefore urged that the applicability of the Act having been
confined to moveable goods only a complaint filed for any defect in
relation to immoveable goods such as a house or building or allotment
of site could not have been entertained by the Commission. The
submission does not appear to be well founded. The respondents
F were aggrieved either by delay in delivery of possession of house or
use of substandard material etc., and therefore they claimed 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
G 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. The words 'any' and 'potential' are
H. significant. Both are of wide amplitude. The word 'any' dictionarily
/
REGIONAL PROVIDENT FUND COMMISSIONER v. S.K. JOSHI [SETHI, J.] 301
means 'one or some or all'. In Black's Law Dictionary it is explained A
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 'any' in the context it has been
used in clause (o) indicates that it has been used in wider sense B
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
in existence at some future time, though not existing; for example, the
future product of rain or trees already planted, or the successive C
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 all
actual or potential users."
D
In Morgan Stanley Mutual Fund v. Kartick Das, [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 E
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 F
society, consumer remains the centre of gravity of all business and
industrial activity. He needs protection from the manufacturer,
producer, supplier, wholesaler and retailer."

This Court again in S.P. Goel v. Collector of Stamps, Delhi, [1996] 1 SCC 573
considered, with approval, the meaning and scope of the words "consumer", G
"service" and "deficiency in service".

In State of Orissa v. Divisional Manager, l/C and Anr., [1996] 8 SCC
655 this Court held:

"The only question is: whether the appellant is liable to pay H
302 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A compensation to Haribandhu Setha under the Act and whether the
claim is maintainable. Section 2(l)(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
B 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."

c 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 th.is Court in Indian Medical Assn. v. V.P.
D
.Shantha, [ 1995] 6 SCC 651. This Court had held 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,
E 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 by the doctor to his employer
would ·be excluded from the purview of the expression under section
2( I)(o) of the Act by virtue of the exclusionary clause in the said
F 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 objects for which the Act was enacted,
G it is imperative that the words "consumer" and "service" as defined 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
H to the services as indicated in Section 2( I)( o) of the Act.
REGIONAL PROVIDENT FUND COMMISSIONER v. S.K. JOSHI [SETHI, J.] 303

The Employees Provident Fund & Miscellaneous Provisions Act, 1952 A
. ~ (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 B
under Section 5 thereof which provides:

"5. Employees' Provident Fund Scheme.-{! ) 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 funds under this Act for employees or for any class of C
employees and specify the establishments or class of establishments
to which the said Scheme shall apply and there shall be established,
as soon as 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 D
constituted under Section 5A.

(lB) 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 E
its provisions shall take effect either prospectively or retrospectively
on such date as may be specified in this behalf 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 F
constituted under Section 5(a) of 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. In 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: G
"30. Payment of contributions-{ I) 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 thi~ Scheme referred to as H
304 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A 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
B 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 to pay both
the contribution payable by himself in respect of the employees directly
C employed by him and also in respect of the employees employed by
or through a contractor and also administrative charges.

Explanation-For 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
D 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.

E Obviously, it appears that as the payment of 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
F
of Section 2(l)(d) of the Act. In support of such a submission an affidavit
of Shri D.P. Sethi, Assistant Provident Fund Commissioner has been filed
wherein after reproduction of para 38 of the scheme it is submitted:

"That under para 30 of Employees' Provident Fund Scheme 1952,
G 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.

H That according to above scheme provisions, it is the employer who
REGIONAL PROVIDENT FUND COMMISSIONER v. S.K. JOSHI !SETHI. J.) 305

is responsible to pay administrative charges and not the member. A
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 B
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 for benefit of the C
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 .... ". D
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 E
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 F
doing, or promise to do or to abstain from doing, something such act or
abstinence or promise is called a consideration for the promise. Webster's
., Third New International Dictionary (Unabridged) defines 'consideration' as:
Something that is legally regarded as the equivalent or return given or suffered
by one for the act or promise of another.
G
In Sonia Bhatia v. State of UP. and 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 t~at
'consideration' means a reasonable equivalent or other valuable benefit H
306 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A 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 ...
B under the scheme. Para 26 provides that every employee employed in
connection with any work of the factory or other establishment 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 esta.blishment. The scheme provides for the Board of
C 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
D 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
E 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
F 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 that as no part of the administrative charges are
deducted from the actual wages of the employee, he cannot be deemed to be
G 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.
H The administrative charges are in lieu of the membership of the employee and
\
, REGIONAL PROVIDENT FUND COMMISSIONER~, SK JOSHI [SETHI, J,) 307

for the, services rendered under the scheme. It cannot be held that even A
though the employee j~ the member of the scheme, yet the' employer would
only, b~ deemed to be a 'consumer' f~r having made payments of the
administrative charges. Admittedly, no service is rendered to the employer
u~der the s~he~e which is· framed for the benefit of the employee under
and
Sections 5,'6 7 ofthe Act. Chapter VII provides for administration of the
F~nd, Accounts and A,udit. A separate account called '.'Central Administration B
Account". for recording of administration expenses of the Fund is required to
b~ kept under Para 49. Para 52 deals with the investrneni of monies belonging
to employee's provident fund and provides that such monies be deposited
in the Reser¥e-Bank. or the Staie Bank of India or in such other scheduled
banks. as may, be approved by the Central Government from time to _time or C
be invested subject to the,dire_ctions 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. All expenses incurred in respect of,
and loss,. if any/arising from, any in~estrne~t shall be cha~ged to the Fund.
Para 53 .provjde~ ihat the Fund not including the. administration account shall
be except with the p~evious sanction ofihe Central Gove~rnent be expanded D
for any, purpo;e' other than the payment of the sums standing to the credit
of individual member of the Fund or to their n~minees or heirs or legal
representatives in. aC'cordance wiih the p~~·visicins of the scheme. All expenses
relating to, the administration of the Fund ~eluding those incurred cm Regional
C~mmittee are to be made from .the Fund in terms of para 54 of the scheme. E
Simiiarly all expenses of administration of Fund· includi~g the fees and
aliciwances of the trustees of the Central B~ard and salaries, leave ~djoining
time allo'wance travelling and cornpensatory 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 F
stationery and forms incurred in respect' of the Central Board, cost and all
expenses incurred in connection with the construction of office and staff
quarters- shall be met from the Administration Account of the Fund. The
member of the scheme is entitled only to the interest determined as per para
60. Chapter VIII deals with nominations, payments and withdrawals from the G
Fund.
--- --
_-....>,.We cannot accept the argument"_that the Regional Provident Fund
Cc:>mrnissioner,_being <;entral Govem~ent, cannot_be heJd to be rendering ,.
'service' wiLiin the meaning and scheme of the Act. The Regional Provident
Fund Commissioner, under the Act and the scheme discharges statutory H
308 SUPREME COURT REPORTS (1999] SUPP. 5 S.C.R.

A 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~ere free of charge. The definition of
B "consumer" under the Act includes not only the person who hires the 'services'
for consideration but also 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 part of it is paid by the employee, the services of the
Provident Fund Commissioner in running the scheme shall be deemed to have
C been availed of for consideration by the Central Government for the benefit
of employees who would be treated as beneficiary within the meaning of that
word used in the definition of consumer. This Court in Mis. Spring Meadow
Hospital and Anr. v. Harjo! Ahluwalia through K.S. Ahluwalia and Anr., JT
(1998) 2 SC 620, to which one ofus (Saghir Ahmad. J) was a party has already
held that the "consumer" means a person who hires or avails of any services
D 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'.
E 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( l )(d). In the said clause a consumer would mean a person who hires
F 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
G 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
H Section 2(1 Xd)(ii) of the Act and as such can claim compensation
REGIONAL PROVIDENT FUND COMMISSIONER v. S.K. JOSHI [SETHI, J.] 309

under the Act". A
A perusal of the scheme clearly and unambiguously indicate that it is
a 'service' within the meaning of Section 2(l)(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 B
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 ).

No ground is, therefore, made out for interference with the impugned C
order. The appeal is ac€0rdingly dismissed, as no one appeared on behalf of
the respondent, without any order as to costs.

KKT. Appeal dismissed.