In this blog post, Vineet Kumar from National Law University of Odisha, and Mahelaka Abrar from Aligarh Muslim University provide a brief analysis of consumer protection laws in India and discusses in detail the Consumer Protection Act of 1986. It also discusses the recent consumer protection amendment act. 

Introduction

Humans have mastered the art of availing services that fulfill their daily needs. Our day-to-day lives revolve around exploiting the goods and services around us with an aim to lead a comfortable and hassle-free life. When we avail these amenities, we become ‘consumers’. The term effectively means that we consume the assets around us. We seem to have a peace with a fact, and, for the most part, are not ashamed of describing our society as a consumers’ society, even if, at times, we regret that many cherished things–especially human beings and human relations—are treated as just another consumer good; even if we are progressively aware of the danger that the aggregate effect of our peacefully enjoyed consumer practices may have on the environment and the working conditions of people living on the other side of the world.

Consumption is the process by which goods and services are, at last, put to final use by people.[1] In other words, it can be described as the end of the line of economic activities we undertake; that begins with an evaluation of available resources and involves the production of a variety of goods and services and their distribution or acquiring them. There are defined legal provisions adopted by every country in order to codify certain rules and norms regarding consumption. Thus, protecting the rights of those who are at both the ends of this consumption process, (One is the consumer and other is the distributor or seller.). A place or platform where the transactions take place between these two parties is referred to as a ‘market place’ in layman’s language. Goods and services are exchanged for some consideration, which is mostly, money. Though both are equally capable of wrongdoings to other, most of the discussion in the following sections is based upon the laws and regulations that have been specifically enacted and codified to protect the consumer who pays a certain amount of consideration with an aim that the commodity he is purchasing will satisfy his needs.

Historical Background of Consumer Rights

The concept of protection of rights of the consumers is not new; rather it is a practice that has been present in the society and various countries in one form or the other historically. The Old Testament mentions a form of consumer protection, and so does the Code of Hammurabi, but only in a mercantile perspective. An early form of movement in defense of consumers was born in the United States, where the bases for the birth and development of monopoly and oligopolistic capitalism had started.[2] The first consumer organizations were born in Denmark in 1947 and Great Britain in 1955 where the Government created the Consumer Council in order to enable consumers to express themselves on issues reserved to producers and traders.[3] But the real normative innovation came with the Single European Act; it modified the Treaty of Rome[4] by solidifying the role of the Economic and Social Committee, to whom were attributed powers to safeguard the consumers. Over the years, some important changes were made to the above-mentioned legislation that paved the way for a wider consumer policy. But despite these additions, it still lacked a solid foundation that allowed getting real consumer protection.

Historical Development in the International Scenario

U.S.A.

In the United States, swift industrialization after the end of the Civil War in 1865 led to unifications and incorporations and to the formation of trusts and cartels, which advanced a great deal by the 1880s. To check the concentration of corporate power and its impact on economic development, the Sherman Act was passed in the year 1890. The Act declared every contract, combination in the form of trust or otherwise or, conspiracy in restraint of trade or commerce, to be illegal.[5] Every party to any such contract, combination or conspiracy was made punishable with fine or imprisonments.[6] Though the Act seem to have an impact at the initial stages of its application, later on, it was realized that its scope did not extend to certain monopolistic and restrictive practices. In order to overcome this deficiency, two legislations were passed in 1914, i.e., the Federal Trade Commission Act and the Clayton Act.

The Federal Trade Commission Act established a new machinery referred to as the Federal Trade Commission which, together with the Department of Justice, was responsible for enforcement of all anti-trust legislations in addition to the setting up of this new enforcement agency.[7] Unfair methods and practises of competition were prohibited.

The Clayton Act was formulated specially to deal with the complications of mergers and to prohibit certain types of singular conduct which were beyond the reach of the Sherman Act. It declared four types of restrictive practices or device puce discrimination[8], exclusive dealing and tie-in contracts[9], interoperate share holdings[10] and interlocking of directorates[11], illegal attempts at circumvention of the Clayton Act resulted in passing of the Robinson Patman Act, 1936 which tightened up the law on price discrimination.

An essential step in this direction was taken by the United States of America, paving the way for consumer rights in the year 1962, when President John F. Kennedy of the United States of America called upon the U.S. Congress to accord its approval to the Consumer Bill of Rights.[12] The key elements that were recognized by the Bill were:

• Right to choice – Consumers must be provided free choice and alternatives when it comes to choosing commodities and services offered by various companies. The government emboldens this right of fair commerce by ensuring limits on price gouging, underselling, patent ownership, monopolies, and anti-trust.
• Right to information – Businesses must provide customers with accurate information, permitting them to make informed decisions about products and services. This includes correct packaging, advertising, and full disclosure of past issues.
• Right to safety – Consumers have the right to safeguard against merchandises that have caused physical harm (excluding automobiles). This right was formally enacted in 1972 and is enforced by the federal Consumer Product Safety Commission (CPSC). The CPSC has established product standards, testing regulations, and warning labels to assert consumer rights.
• Right to be heard – Consumers have the right to voice criticisms, grievances and concerns regarding company practices and products in order to make sure that their interests are not harmed by such practices. The U.S. Attorney General, the Federal Trade Commission (FTC) and the Better Business Bureau (BBB) represent only a few of the platforms in which consumers may be heard.

Later on, Right to consumer education was also added in the Bill. The President decided to call upon the Congress on the day of 15^th March 1962 and hence, we celebrate the day as World Consumer Day.

United Kingdom

United Kingdom witnessed a development in this field soon after World War II. Various legislations were enacted between the year 1948 and 1973, such as the Monopolies and Restrictive Practices Enquiry and Controls Act, 1948 amended by the Monopolies and Restrictive Practices Act, 1953, the Restrictive Trade Practices Act, 1968; the Resale Price Act, 1964; the Monopolies and Mergers Act, 1965 and the Fair Trading Act, 1973 to codify the redressal in case of complaints from consumers.

Amongst the above-enacted legislations, the Fair Trading Act, 1973 played a major role in developing a new and comprehensively organized market environment as it widened the scope and included in its purview the existing laws on monopolies and mergers, and restrictive trade practices. Further, this Act has a wide range of applicability to various players such as business, professionals, nationalized industries and public undertakings. Apart from these, the Consumer Protection Act, 1961 was enacted, which aimed at empowering the executive to promulgate regulations. Unfair Contracts Terms Act was enacted in 1977 to deal with the situation of the consumer being exploited by way of standard form of contracts.

Germany

A detailed anti-monopoly legislation was enacted in Germany in the year 1957, which was called an Act against Restraints of Competition Act.

Since then, it has seen a number of amendments. It does not make monopoly illegal but promotes the idea that such dominance in a market place must not be used to cause harm to others. In other words, the legislation states that there must be no abuse of the dominance that a monopoly enjoys in a market.

The Act also prohibits coercion, boycott, and discrimination, whether the one ejected by unilateral or concerted action of enterprises.[13]

United Nations and Guidelines for Consumer Protection

 Ever since its establishment, the United Nations has taken various steps aimed at providing safeguards to the consumers around the world against malpractices which result in any kind of injury to them by prescribing a minimum required standard to be strictly complied by in manufacturing and packaging of various commodities, tightening the punishments for those who indulge in such practices, providing certification for products such as jewellery, diamonds, gold, etc. The United Nations has been endeavoring to promote cooperation among the member nations on various issues. In the context of consumer protection in particular, the UN and its subsidiaries like General Agreement on Tariffs and Trade (GATT), the Organisation for Economic Cooperation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD), and the United Nations Commission on Transnational Corporations (UNCTC) have been actively involved over the years.[14]

On 9^th April 1985, after consensus with the Economic and Social Council, the General Assembly of the United Nations adopted certain guidelines for consumer protection. These guidelines are meant to provide the framework for countries, particularly for developing countries, to be used in elaborating and strengthening consumer protection policies and legislation to protect consumers and also promote international cooperation in this field.[15]

P.K. Majumdar[16] has discussed the objectives of these guidelines as follows:

• to support countries in achieving or sustaining adequate protection for their population as consumers;
• to facilitate production and distribution arrangements reactive to the needs and desires of consumers;
• to encourage high levels of virtuous conduct of those engaged in the production and dissemination of goods and services to consumers;
• to assist countries in restricting obnoxious business practices by all enterprises at the national and international levels which adversely affect consumers;
• to facilitate the development of self-governing consumers’ groups;
• to further international co-operation in the field of Consumer Protection; and
• to encourage the development of such market environments as to provide consumers with a greater choice at lower prices.

The government should make an effort to ensure to improve the condition under which essential goods are offered to consumers, giving due regard to both price and quality. [17]

Development Of Consumer Protection Laws In India

Vedic Period

In ancient society, human relations with each other and with nature were guided by principles of the Dharma, which derived its origins from the Vedas. The belief system had put the Vedas on the top of everything and considered the word of the Vedas as the words of the God himself. Thus, it is safe to assume that the Vedas can be considered as the primary source of law in Indian society. To quote only a few: (i) Tell the truth, (ii) Never tell the untruth, (iii) Never hurt anyone and (iv) Perform the acts which are not forbidden.[18] An introspection to these prehistoric literature reveals various commands/dictates/injunctions/prescriptions regulating different phases of trade and activities affecting consumers and providing sanctions in the form of punishment or monetary sanction in the case of their violation.

The laws regarding weights and measures have been depicted in Kautilya’s Arthshastra. Similarly, Yajnavalkya also presented his views on these topics in Yajnavalkya-Samhita. Manu Smriti contains punishments for adulteration in these measures and weights. Provisions with regard to sale and purchase transactions are at the essence of the Yajnavalkya-Samhita, wherein rigorous rules have been prescribed for safeguard of the purchaser and provide him some time to evaluate the utility of goods purchased and allowing him to return such goods which he finds unsuitable or unworthy. The sale of samples is also regulated by “Yajnavalkya”, when he provided punishment to the trader who deceived a purchaser by showing a different article and changing it subsequently at the time of sale or delivery.[19] Another interesting fact about these ancient prescriptions is that they seem to have sensed the future requirements. This is evident from the fact that an elaborate mechanism regarding pricing policy and profit sharing ratio charged by the traders on the goods sold can be seen in the Yajnavalkya-Samhita.[20]

In order to protect consumers from such malpractices, “Yajnavalkya-Samhita” prescribed certain standard norms regarding deduction in weight due to wastage caused in making ornaments so that the goldsmith might refrain themselves from claiming great wastage and in case they did so, they were to be punished.[21]

Medieval Period

Albeit Ancient Hindu Law kept on overseeing Hindu masses especially in the field of individual law, the lawful standards of Muhammadan laws were engrafted in the Indian legal framework with the coming of Islam in India. The Holy Quran, which is the source of Islamic law mentions the problems faced by consumers today. It condemns the use of unjust weights and measures.

The problem of unwarranted rate of interest, charged by the sellers to the customers particularly in matters of purchase by hire, is a universal one, faced by all class of consumers all over the world. Laws have been passed to protect consumers from this jeopardy known as USURY. In India, the Usurious Loans Act, 1918 and the Hire-purchase Act, 1972, intend to protect the consumers from unjustified excessive rates of interest. Interestingly, the Holy Quran took up this matter seriously, and the practice of usury was condemned in the severest term.

During the ancient period “Vedas,” Code of “Kautilya”, “Manu Smriti”, “Yajnavalkya-Samhita”, “Narada Samriti”, and various other ancient codes contained provisions with a view to cater and protect the interests of the consumers and provided punishment in case of the violations of those provisions containing directives.[22] Efforts to protect consumers through laws were made in Ancient Hindu Codes and the “Holy Quran”. With the advent of British rule in India, the common law system of administration of justice was also implanted on the Indian soil and during 17th, 18th and first half of 19 centuries, the rights and interest of consumers were mainly regulated and protected by the common law of Tort or Law of Contracts.[23]

Pre-Independence

With the advent of the British rule, came different English legislations in India that aimed at protecting the interest of the public at large. These legislations did not exclusively talk about consumers per se but in application, indirectly covered their interests. In spite of these enactments, the principles of common law continued to govern the judgments of the Privy Council. In other words, it can be said that the principles of common law overshadowed the legislations, which were introduced in India by the British Empire. Interestingly enough, though these enactments were present in the society, there was no notable improvement in the economic and social position of the Indian people as consumers, as they kept suffering due to unfair trade practices of the foreigners and various malpractices present in the market.

The Indian Penal Code, enacted in the year 1860 contains the provisions that deal with “offence relating to weights and measures” under Chapter XIII.[24] Sec. 272 and 273 prescribe punishments for the offence of adulteration of food or drink. The Drugs and Cosmetics Act, 1940 played a crucial role in the regulation of import, manufacture, distribution and sale of adulterated or misleading drugs and cosmetics.

The Indian Contract Act enacted in the year 1872 governs the contractual aspects of transactions entered into by two parties. The essence of this legislation lies in the phrase “meeting of minds”. The lawmakers realized that “meeting of minds” is one such phenomenon, which you may not find in all the scenarios. When an individual purchases certain commodity form a distributor or seller, the entire gamut of the transaction entered into between them rests in the terms agreed to. The principles of contract govern the determination of rights and obligations of both the parties to a transaction.

Making a proposal by one person to the other creates the contractual relationship between two people.[25] Any agreement when entered into by the mutual consent of both the parties takes the form of a contract. In other words, in order to an agreement to qualify as a contract, both the parties must agree “to the same thing” and “in the same manner.”

Post-Independence

Post-independence, India has been more aware of the fact that the interest of the consumer is a priority in a democracy. No democracy can withstand if its consumers are unsatisfied or if they feel that their utility of the goods and services they are getting is not worth the consideration, or if they suffer injury due to malpractices prevalent in the society.

In the year 1954, the Prevention of Food Adulteration Act was enacted with an aim to curb the evils of adulteration of various harmful and toxic elements in the commodities. Though the Indian Penal Code already classified the act of “Adulteration of Drugs”[26], “Sale of Adulterated Drugs”[27], and “Sale of Drug as a Different Drug or Prescription”[28] as offences and provided punishment for them, the Prevention of Food Adulteration Act helped to strengthen the restrictions further. The following legislations were further enacted and are currently applicable which govern consumer laws in India:

• The Drugs (Control) Act, 1950;
• The Prevention of Food Adulteration Act, 1954.
• The Essential Commodities Act, 1955.
• The Monopolies and Restrictive Trade Practices Act, 1969.
• The Bureau of Indian Standard Act, 1986.
• The Consumer Protection Act, 1986.

 

Consumer Protection through The Constitution

The Constitution of India, which came into force on 26^th January, 1950 is the primary document that governs the legislative environment of the country by the virtue of its Articles, Schedules and Parts. The People of India have solemnly resolved, through the Constitution to secure fellow citizens. Justice–Social economic, political, Liberty of–thought, expression, faith and worship, Equality of–status and opportunity and to promote among them all Fraternity, thus, assuring dignity of the individual and the unity and integrity of the nation.[29]

In the words of W. Friedman, the constitution endeavors to establish a social service nation where, the state performs various functions such as protector, as a dispenser of social service, as an industrial manager, as an economic controller, as an arbitrator, etc.[30] Hence, although there is no exclusive usage of the word “consumer” in the Constitution, the expressions “social service”, is deemed to have taken consumer protection into its ambit. The well-known consumerist Ralph Nadar has equated the word “Consumer” with the word “Citizen”.[31] The phrase “All Citizens” necessarily includes the interest of different sections of people and various classes of consumers. Moreover, by virtue of Art. 14, all are treated equal in the eyes of law. In other words, all the manufacturers, traders, producers, distributors, etc., are to enjoy equal reward or when it comes to punishment, there can be no unequal treatment there too. It is now well established that under Art. 14 of the Constitution, no state monopoly could be arbitrary in its dealings with the consumer.[32]

Under Article 21 which guarantees right to life and personal liberty[33] denial of an essential service by the state might amount to violation of this right. Further, vide Art. 38, a consumer is entitled to enjoy constitutional protection. It reads:

“The state shall strive to promote the welfare of the people by securing and protecting, as effectively as it may, a social order in which justice, social, economic, and political, shall inform all the institution of the national life. Under clause (b) and (c) of Article 39, the state is duty bound to direct its policy towards securing the distribution of the ownership and control of the material resources of the community in such away as “to serve the common good”.[34]

Art. 42 and 43 further extends the duties of the State in this regard as the essence of the provisions lies in the fact that the State is responsible to provide equal and humane conditions for work to everyone and it must strive to build an economic legislation to make sure that the workers who constitute the bulk of consumers are provided a decent standard of living. Art. 46 deals with the consumers of educational services of the State and prohibits any kind of exploitation and injustice.

In order to transform the constitutional mandates into reality and fulfill the aspirations of the people of India, several legislations have been enacted during the post independent era dealing with and protecting the rights of consumers and other interrelated persons.[35] So much so, the main enactments which directly deal with the safeguard of consumers need a close examination with a view to trace out the growth of consumer protection laws during the post-independent period through statutory measures and to assess the efficacy of the Protection being given thereunder to the consumers, individually or as a class or a group. Art. 47 of the Constitution imposed a duty upon the state to improve public health and keeping in view this mandate and to make drugs available at reasonable price to all the persons without any discrimination, the Drugs (Control) Act, 1950 was enacted, and it came into force on 7th April 1952.

Upon analyzing The Prevention of Food Adulteration Act, 1954 it can be pointed out that the legislation does not provide any remedy to consumer or group of consumers in the case of any injury or loss suffered by them due to use of such adulterated, misbranded or prohibited article of food covered under the “Prevention of Food Adulteration Act, 1954.”[36]

Consumer Protection Act, 1986

Currently being the principle legislation when it comes to the laws for consumer protection in India, the Consumer Protection Act was enacted in the year 1986 with an aim to provide more protection to consumers against the evil practices of the market. It effectively deals with the problems faced by an individual consumer and has no express provisions regarding “maintaining or increasing supplies of any essential commodity or for securing their equitable distribution, and availability at fair prices or dealing with persons indulging in hoarding and black-marketing of, and profiteering in, essential commodities and with the evil of vicious inflationary prices”.[37] The Act is seen as an attempt to remove the helplessness of consumers against the powerful and dominant players like the merchants and businessmen, often described as the “network of racketeers”.[38] This view was earlier presented by the Hon’ble Supreme Court of India in the matter of Lucknow Development Authority vs. M.K. Gupta.[39] The Act of 1986 came into force with effect from 1 July 1987 in the whole of India except the state of Jammu and Kashmir and is regarded as the Magna Carta in the field of consumer protection for checking the unfair trade practices and ‘defect in goods’ and ‘deficiencies in services’.[40]

The Consumer Protection Act establishes a legal framework for safeguarding the rights and interests and to accord socio-economic justice to the people of the Indian Republic.[41] The Court, in the matter of S.K. Abdul Sarkar vs. State of Orissa[42], held that:

“Through the enactment of this statute, an attempt has been made by the Indian Parliament to provide a speedy and cheap remedy by way of an alternative to the time-consuming and expensive process of civil litigation”.

The greatness of the Consumer Protection Act lies in its flexible legal framework, wider jurisdiction, and inexpensive justice. One can find in this legislation a mixture of principles of torts and contracts. Simply speaking, it is “a shorthand term to indicate all the many different aspects of the general law.”[43] Basically speaking, the CPA opens up the strict traditional rule of standing and allows consumers to proceed under the CPA.

Redressal Mechanism

The Act of 1986 prescribes for a quasi-judicial machinery for the purpose of redressal of consumer related disputes. The fundamental principles upon which the working of these quasi-judicial body rests are the principles of natural justice. Further, the Act empowers such bodies to give reliefs of specific nature and award appropriate compensation to the aggrieved party as they may find it fit in a particular case.

Chapter III of the Consumer Protection Act, 1986 deals with the following:

1. The establishment of three tier Consumer Disputes Redressal Agencies namely the District Forum, the State Commission and the National Commission.[44]
2. Composition of District Forum[45], the State Commission[46], and the National Commission.[47]
3. the jurisdiction of the District Forum[48], the State Commission[49], and the National Commission[50]

Jurisdiction of Consumer Forum

Originally, a consumer had the right to approach the District Forum with a complaint if the value of goods consumed or service rendered in the matter or dispute did not exceed Rs. 1, 00,000, whereas as per the COPRA, 1986, if the value of such goods and services exceeds Rs. 1, 00,000 but is less than Rs. 10, 00, 000, the complaint can be filed with the State Commission. The National Commission is the redressal forum for the consumer whose value of goods exceeds ten lakhs. By virtue of amendment in the year 1993, the pecuniary jurisdiction in the case of the District Forum was raised to five lakhs, five to ten lakhs for the State Commission and subsequently, the National Commission was given the power to deal with complaints where this value exceeded ten lakhs.

The Consumer Protection Act was subsequently amended by the Amendment Act of 2002 which came into force in 2003. It has virtually overhauled the structure of the Act.[51] As per the current position, the District Forum is empowered to hear cases involving goods and services of not more than rupees twenty lakhs. The range for State Commission is from rupees twenty lakhs to rupees one crores, and the National Commission has jurisdiction over cases where such value exceeds rupees one crores.

In the case of Gulab Hotchand Bhachandaney vs. Egypt Airlines & others[52], it was laid down by the National Commission that the Indian Consumer Protection Act, 1986 is not applicable to cases involving a cause of action arising outside India. In this case, complainant prayed for an award of compensation when the cause of action arose in Barcelona.

Further, as per Sec. 2(b)(iv), any consumer or any number of consumers are legally entitled to bring a class action against a trader if they have the same interest in the product used or service availed. The expression “same interest” is of utmost importance here and it can be deciphered that “the interest must be common to all, and they must have a common grievance against the trader”.[53] Such a dispute, will, therefore, be a representative suit by nature and hence, it will not be necessary that the parties should have the same cause of action or their rights should have been infringed in the same manner or the course of the same transaction.[54]

Under Sec. 21(b), the National Commission is empowered to call for records and pass appropriate orders in a dispute pending before the State Commission decided by any State Commission if the National Commission is satisfied that the State Commission:

• has exercised the jurisdiction which it was not entitled to, or
• has failed to exercise such jurisdiction which it was entitled to, or
• has exercised its jurisdiction illegally or with mate­rial irregularity

Provision of Appeal: If a party is not satisfied with the decision of the District Forum, an appeal can be filed against the order in the State Commission within a period of 30 days.[55] This period is same for filing an appeal against the decision of the State Commission in the National Commission. The Hon’ble Supreme Court of India acts as the Apex Redressal Body in the case of consumer disputes, and it can entertain an appeal within 30 days from the decision of the National Commission.

In certain cases, the State Commission may entertain an appeal filed after the period of 30 days if it is satisfied that a “sufficient cause” was present and it was the reason for the delay in filing such application.[56] In the matter of Agnes D’Mello vs. Canara Bank[57], the complainant deposited some jewelry with the bank and the bank lost it. But the bank did not inform the complainant and kept giving a false sense of hope. Due to this, the complainant could not file any complaint in the limitation period, and it was filed after the limitation period. The bank argued that the suit was not maintainable as limitation period has expired. The Commission reprimanded the bank and admitted the case.

In the matter of Mukund Lal Ganguly vs. Dr. Abhijit Ghosh[58], where the complainant got his eye operated by the doctor in the year 1989 and acquired a certificate of blindness in the same year on 18^th December. Still, in the hope of getting his eyesight back, he underwent an operation in the year 1992 and was discharged on the 21^st Jan. 1992. A complaint was filed by him against the doctor in the year 1994 for deficiency of services, which was challenged on the ground that more than two years have passed and thus arises no cause of action. The Commission held that here the cause of action for filing the complaint would arise after the second operation when A lost hope of recovery. Thus, the suit was held maintainable.

It was further held in the matter of Wheels world vs. Dr. (Smt.) Janak Narendra[59] that ignorance of the law and particularly the provisions of the limitation cannot be regarded as a valid ground for condonation of delay in filing the appeal.

Enforcement of the orders of consumer dispute redressal agencies- Sec. 25 and Sec. 27 deal with enforcement of the orders passed by the Consumer Dispute Redressal Agencies and prescribe certain penalties in case these provisions are violated. The orders passed by a Consumer Dispute Redressal Agency is to be given the same value as is given to a decree passed by a Court in a suit. The inclusion of the term “complaint” in Sec. 27 vide an amendment to the Act in the year 1993 is regarded as an important development. In Rajani Gas Company vs. V.P.Jawalekar[60], it was held that the main purpose behind the provisions contained in Section 27 of the Act is to seek compliance with the orders passed by the Redressal Forum. Section 27 is in the way ‘a King Pin’ in the execution of the orders of the Redressal Agencies.

Further, the accepted position of law is that “so long as the cause of action is not barred under general law of limitation as on the date of institution of a consumer dispute before the redressal forum, the mere fact that the date of accrual of cause of action was prior to the date of coming into force of Chapter III of the Act is totally irrelevant”.[61]

Who Is A Consumer?

As per sec. 2(d) of the Act, ‘consumer’ has been defined as any person who:

• buys any goods 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 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
• 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 under any system of deferred payment, when such services are availed of with the approval of the first mentioned person.

In the matter of Dinesh Bhagat vs. Bajaj Auto Ltd., the Delhi State Commission was faced with a situation in which A purchased a scooter and since the purchase, it was in the possession of B. B took the scooter for repairs time to time. Later on, B had some complaints about the scooter and he sued the seller. The seller pleaded that since B did not purchase the scooter in the first place, they were not liable towards him under the Consumer Protection Act, 1986 as he was not the consumer. The Delhi State Commission held that B, the complainant was using it with the approval of A, the buyer, and therefore he was a consumer under the Act.[62]

In the matter of S.P. Goel vs. Collector of Stamps[63], the complainant filed a complaint under the Consumer Protection Act, 1986 when a document that he claimed to be a will was not registered for a period of six years by the Sub-Registrar, who had sent it to the Collector of Stamps for action. He alleged that he had faced harassment by the Sub-Registrar and Collector and prayed for compensation. The National Commission was faced with this interesting statement of facts, and it was decided that the complainant was not a “consumer” under the COPRA, 1986. The reason given was that there was no hiring of services by the Complainant for considera­tion and because a Government official doing his duty as func­tionary of the State under the law could not be said to be rendering a service to the complainant.

Commercial Purpose

Thus, only a “consumer” can file a complaint under the Consumer Protection Act, 1986 for injury caused to him by the actions of the seller or manufacturer or trader, but in order for a person to qualify as a “consumer”, he must not use goods for a “commercial purpose”.

In the matter of Meera Industries, Howrah vs. Modern Constructions, Howrah[64], it was held that:

“In so far as the purchase of goods, which is covered by Section 2(1)(d)(i) is concerned, a person who purchases goods for commercial purpose is not a consumer.”

This view was constantly upheld in various judgments, such as Kalpavruksha Charitable Trust vs. Toshniwal Brothers (Bombay) Pvt Ltd, where the question involved was if the appellant is a ‘consumer’ within the meaning of the COPRA, 1986 and whether the goods in question were obtained by him for “commercial purposes”. Hon’ble Supreme Court, deciding upon these issues ruled that since every patient who is referred to the diagnostic center and who takes advantage of the CT scan, etc., has to pay for it and only ten percent patients are provided free service. That being so, the “Goods” (machinery) which are obtained by the appellants were being used for commercial purposes.[65]

The point worth noting is that the expression “commercial purpose” and “livelihood” are not defined in the Consumer Protection Act, 1986 and hence, they are open to the wisdom of the Court to be interpreted as per the facts of the cases before it. Emphasizing on the term “commercial purpose,” the Apex Court has ruled that:

“For any commercial purpose are wide enough to take in all cases where goods are purchased for being used in any activity directly intended to generate profit.”[66]

Further, while dealing with the ambit and scope of this phrase, in the matter of Lakshmi Engineering Works vs. PSG Industries, the Apex Court laid down the “test of close and direct nexus with the commercial activity”. The court ruled that whether the act impugned would constitute a “commercial activity” is a question of fact and it is not the value of goods that matter, rather the purpose for which they are put.  The words employed in the explanation viz “uses by himself” “exclusively for the purpose of earning his livelihood” and “by means of self-employment” make the intent of the Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood.[67]

The National Commission has, in the matter of Bhupendra Guna vs. Regional Manager and others, where a tractor purchased primarily to till the land of the purchaser and let or on hire during the idle time to till the lands of others, did not think it fit to constitute a “commercial purpose.”

Coming to the term “resale”, it can be said that as per the Act, of goods are acquired for the purpose of resale in the market, the buyer of such goods cannot be said to be a consumer under this Act. Resale essentially means buying or purchasing commodities for selling them to others with a view to make profit out of the transaction. Thus, where a jeep was purchased to be used as a taxi, the buyer was held to be not a consumer under the Consumer Protection Act, 1986.[68]

Medical services are covered under the definition of “service” under the Act. Thus, a person rendering such services is amenable to the jurisdiction of the appropriate consumer redressal forum in case the person availing the services is aggrieved.[69]

In Jagdish Chand vs. Director, Sikkim State Lottery, it was held that a lottery ticket holder is not a consumer within the meaning of this Act.

Complaint

Under the Consumer Protection Act, 1986, the term “complaint” has been defined under Sec. 2(1) (c) as:

“An allegation made in writing by a complainant that-

• an unfair trade practice or a restrictive trade practice has been adopted by ⁶ [any trader or service provider
• the goods bought by him or agreed to be bought by him suffer from one or more defects
• the services hired or availed of or agreed to be hired or availed of by him] suffer from a deficiency in any respect
• a trader or the service provider, as the case may be, has charged for the goods or for the services mentioned in the complaint, a price in excess of the price
• fixed by or under any law for the time being in force
• displayed on the goods or any package containing such goods
• displayed on the price list exhibited by him by or under any law for the time being in force
• agreed between the parties
• goods which will be hazardous to life and safety when used are being offered for sale to the public”.

In a layman language, in case a consumer buys certain goods and is not satisfied by the quality of the goods, or has enough reason to believe that there has been adulteration in the product, or he has been given deficient goods, he can file a complaint against such seller, manufacturer or trader in an appropriate redressal forum as per the value of the goods. Similarly, in the case of services, if a consumer feels that he has been rendered deficient services, which has breached his trust, he can file a complaint against the service provider.

To file a complaint a person must qualify and fit in the definition of “consumer” under Sec. 2 of the COPRA, 1986. Further, it must be shown that the goods were brought or the services were availed for a consideration. For instance, in the matter of Smt. Laxmiben Laxmichand Shah vs. Smt. Sakerben Kanji Chandan[70], the complainant approached the National Commission with a complaint against the landlord because he refused to provide agreed amenities to the tenant. The National Commission rejected and dismissed the complaint on the grounds that it was a case of lease of immovable property and not of hiring services of landlord.

The Act of 1986, vide Sec. 2(b) and Sec. 12, allows the following persons or class of persons to file a complaint before the appropriate redressal forum:

• a consumer
• any voluntary consumer association registered under the Companies Act, 1956 or under any other law for the time being in force
• the Central Government or any State Government
• one or more consumers, where there are numerous con­sumers having the same interest.[71]

Apart from the above listed category of persons, the beneficiary of goods and services are also included in the definition of consumers and thus have a right to file a complaint.[72] In a case where a young child was taken to hospital by his parents and the doctor treats the child, the parents of such a minor child can file a complaint under the Act.[73] Further, regarding the scope of who can file a complaint under the Act, in the matter of Cosmopolitan Hospital vs. Smt. Vasantha P. Nair, it was held that;

“The Act does not expressly include the legal representative of a deceased consumer in its scope. But, by the operation of law, the legal representatives get clothed with the rights, status and personality of the deceased. Thus the expression consumer would include legal representative of the deceased consumer and he can exercise his right for the purpose of enforcing the cause of action which has devolved on him”.[74]

When a consumer signs the original complaint, it can be initiated by his/her relative.[75] “In the Indian conditions, women may be illiterate, educated women may be unaware of their legal rights, thus a husband can file and prosecute complaint under the Consum­er Protection Act on behalf of his spouse”.[76]

Whereas, the Act makes it clear that the legal heirs of a deceased consumer are included within its ambit and can also file a complaint.[77] An essential element that completes the transaction between a consumer and a seller is the the aspect of consideration. Consideration can be understood as the monetary value which a consumer pays to the seller or manufacturer or trader in exchange of his goods, or a consumer pays to the service provider in case he avails his services. To demand a remedy under the Consumer Protection Act, the consideration in a transaction must have been paid or should be payable. It can be in instalments or in a lump sum.

In the matter of Byford v. S.S. Srivastava, following set of facts occurred:

B (Bryford) issued an advertisement inviting people to enter into the contest by booking a Premier Padmini car. S (Srivastava) purchased the car as per the advertisement, thus, entering into the contest. He won the contest and thus was entitled to get two tickets from New Delhi to New York and back. S, after sometime filed a complaint against B alleging that no ticket was delivered to him.

Deciding upon the above facts, the National Commission rejected the contention of S, ruled that he was not a consumer in this context. He paid for the car and got it. B was not liable so far as the contract of winning a lottery was con­cerned.[78]

What a complaint must contain­: This question has been answered in the Consumer Protection Act, 1986 under Sec. 2(1)(c), which states that:

“A complaint must contain any of the following allegations:

• An unfair trade practice or a restrictive trade prac­tice has been adopted by any trader
• The goods bought by him or agreed to be bought by him suffer from one or more defects
• The services hired or availed of or agreed to be hired or availed of by him suffer from deficiency in any respect
• A trader has charged for the goods mentioned in the complaint a price in excess of the price fixed by or under any law for the time being in force or displayed on the goods or any package containing such goods
• Goods which will be hazardous to life and safety when used, are being offered for sale to the public in contravention of the provisions of any law for the time being in force requir­ing traders to display information in regard to the contents, manner, and effect of use of such goods”.

When a complaint cannot be filed: Firstly, a complaint cannot be filed unless the complainant satisfies the criteria for being a “consumer” under the Consumer Protection Act, 1986. Further, if a complaint is on behalf of the public, which consists of unidentifiable consumers, it will not stand in the court.

In Consumer Education and Research Society, Ahmedabad v. Indian Airlines Corporation, New Delhi, a complaint was filed keeping a newspaper report as its basis, alleging that the passengers were travelling by flight no. 1C-401 from Calcutta to Delhi on 13^th May 1989 were made to stay at the airport when the flight got delayed by 90 minutes, thus causing great inconvenience to the passengers. It was held that such a complaint cannot be said to be viable as it was a general complaint. No specific person, who was traveling by the said flight, came forward to authorize the complaint.

Similarly, a complaint by an individual on behalf of the general public is not permitted.[79]

If the complainant is found to be an unregistered association, the complaint will not be entertained in the redressal forum. An illustration in this regard can be the case of Gulf Trivandrum Air Fare Forum vs. Chairman & Managing Director, Air India[80], where the complainant was an association which was formed outside India and not registered in India. It was held that since the complainant was not a voluntary association registered under the laws of India, it does not have a locus standi under clause (d) of Sec. 2(1) to file a complaint. Hence the complaint was not entertained.

If a complainant files a complaint against any person or party to recover some amount as compensation with the motive of indulging in speculative litigation taking unjustified advantage of the fact that no court fee was payable under the Consumer Protection Act, the complaint so filed will not make a case and is liable to be dismissed on the ground of being frivolous and vexatious.[81]

Unfair Trade Practice

In layman terms, a practice can be said to be unfair if it involves injury to some person by way of corruption, misrepresentation, suppression of material information about the goods or services provided, adulteration, etc. The Monopolistic and Restrictive Trade Practices Act, 1969 contains detailed study on almost every aspect and effect of unfair trade practices. Under the Consumer Protection Act, 1986 Sec. 2(r) lays down the definition of the “unfair trade practices”.

Under the Monopolistic and Restrictive Trade Practices Act, 1969, false misrepresentation, a false offer of bargain price, non-compliance to prescribed standards, hoarding and destruction have been expressly included in the ambit if unfair trade practices.

An important element of an unfair practice is “injury to the consumer”. An injury must be caused as a result or the injury so caused must have a nexus with the goods purchased or services availed by the consumer. Also, it should be of a substantial nature and not a very minute one.

“The independent nature of the consumer injury criterion does not mean that every consumer injury is legally “unfair,” however. To justify a finding of unfairness the injury must satisfy three tests. It must be substantial; it must not be outweighed by any countervailing benefits to consumers or competition that the practice produces, and it must be an injury that consumers themselves could not reasonably have avoided”.[82]

In re Glaxo Ltd and Capsulation Services Ltd, there were allegations on the Company manufacturing a drug named ‘phexin’ that it was manufactured by capsulation. And the logo of the company was showing the logo of Glaxo prominently on the packing strip and name of Capsulation written in small print, thereby giving the impression that Phexin is being manufactured by Glaxo. On inquiry, it was revealed that the drug was manufactured by and packaged by Capsulation under the guidance and knowledge of Glaxo. The Commission held that the important element of ‘injury’ was absent and even if the practice may fall under the category of ‘unfair practice,’ it will not be counted as one.

The injury must not be overshadowed by any counterweighing consumer or competitive benefits that the sales practice also produces. Most business practices demand a mixture of economic and other costs and benefits for buyers. A seller’s failure to present complex methodological data on his product may lessen a consumer’s ability to choose, for instance, but may also reduce the preliminary price he must pay for the article.

The “Monopolistic Restrictive and Unfair Trade Practices Act, 1969” suffers with a deficit that it provides for diversity of proceedings for the same act of contravention viz., before the “Monopolistic Restrictive and Unfair Trade Practices commission and the session court. And astonishingly, no right is given even to the Monopolistic Restrictive and Unfair Trade Practices Commission to refer the matter of infringement to, or file a complaint in, the Court of Session for opening criminal action against the guilty person.[83]

 

The Minute Details

There are minute details that must be in the knowledge of common people so that they have a strong case at their end. These details include:

• How to file a consumer complaint and initiate a consumer case.
• How to move from one forum to another or from a lower level redressal authority to a higher level.
• What are the important documents required?
• What are the different situations occurring in a case?

Procedure for Filing a Complaint

A complaint can be filed by a complainant against the seller, manufacturer, or dealer of goods which are defective or against the provider of services if they are deficient in any manner whatsoever. An unfair trade practice or restrictive trade practice can also invite complaint.[84]

People or group of people falling in the following categories are eligible to file a complaint:

1. A consumer to whom the goods are sole or are agreed to be sold or service has been rendered or agreed to be provided.
2. A firm, irrespective of it being registered or unregistered.
3. An individual.
4. A Hindu undivided family.
5. An association of persons or a cooperative society.
6. State Government or Central Government.
7. Legal heirs of the consumer if he/she is deceased.

Having proof along with your complaint is an essential point and makes your case stronger since the beginning. Copies of documents like cash memo, receipts, agreements, copy of the bill of the goods bought, warranty and guarantee documents and also a copy of the written complaint and notice made to the trader requesting him to rectify the product, etc., are to be submitted along with the complaint. The complainant is required to file three copies of the complaint, together with enclosures, for official purpose plus copies for the number of Opposite Parties. In case the transaction took place on an online platform, the consumer must contain with him prints of the information exchanged via e-mails, the record exchanged via e-mails.

Also, certain fee has to be paid along with the complaint. This is a nominal amount prescribed by the redressal forum according to the amount of compensation claimed. It is to be paid via postal order or a demand draft. Following is the required fee to be paid as per the compensation claimed:

Up to Rs. 1,00,000	Rs. 100
Rs. 1,00,000 to Rs. 5,00,000	Rs. 200
Rs. 5,00,000 to Rs. 10,00,000	Rs. 400
Rs. 10,00,000 to Rs. 20,00,000	Rs. 500
Rs. 20,00,000 to Rs. 50,00,000	Rs. 2000
Rs. 50,00,000 to Rs. 1 Crore	Rs. 4000

The issues and timeline of events must be clearly stated in the complaint. The complaint is instituted in the proper forum within the period of two years from the date of cause of action.[85] The complaint so filed must contain the relief sought, or compensation demanded as prayer at the end of it.

Appearance: The complainant has an option to either be present to file the case and during the hearing period or send an authorized representative to the district or state consumer court. Unlike Indian judicial courts, there is no need to hire a lawyer to represent the complainant, as you can fight the case yourself.[86]

Format of complaint

• At the top, there should be the complaint cause title, for instance, “Hon’ble Mumbai District Consumer Redressal Forum”.
• Next section should contain the name of the complainant and name of opposite party against whom such complaint is filed. For instance,

Complainant: Mr. Sumit Kumar

Opposite Party: M/s ABC Pvt. Ltd.

• Next, comes the heading of the complaint which should be in the form of “Complaint under Sec. 12(a) of the Consumer Protection Act, 1986”. It must contain the provision of the Consumer Protection Act, 1986 under which the complainant is approaching the forum.
• Next, comes the details of the complainant such as residential address, contact details, etc. And along with this, similar details of the opposite party, including their office address, name, description, contact details.
• Next section should have in-depth details about the dispute you have with the seller. It should briefly mention about when and where the dispute arose.
• The complaint must contain reasons as to why the acts of the seller are wrong and how is it responsible for the loss or harm suffered by the complainant. There must be a reasonable nexus between the actions of the accused party and harm suffered by the complainant.
• Next, comes the compensation or relief claimed by the complainant. In most cases, this relief is in the form of monetary compensation, which can include damages, refunds, interests and litigation costs.

Second complaint: It has been held recently that a second complaint can be filed with the consumer forum, but the pre requisite is that firstly, it should be filed within the period of limitation and secondly, it can be filed only if the Rules don’t prohibit it. Supreme Court, has ruled that second complaint to a Consumer District Forum is maintainable if relevant Consumer Protection Rules do not expressly prohibit it.[87] This view of SC has overruled what was held by National Commission. Prior to this National Commission was of the view that a second complaint to the District Forum under the Consumer Protection Act, 1986 would not be maintainable when the first complaint was dismissed for default or non-prosecution.[88]

Apex Court in the recent judgment referred to the case of New India Assurance Co. Ltd. vs.  R.  Srinivasan[89] wherein it was held that:

“If there is no provision in the Consumer Protection rules, parallel to the provision contained in Order 9 Rule 9(1) CPC which contains  a  prohibition that if a suit is dismissed in default of the plaintiff under Order  9  Rule 8, a second suit on the same cause of action would not lie. That being  so, the rule of the prohibition contained in  Order  9  Rule  9(1)  CPC  cannot be extended to  the proceedings before  the  District  Forum or  the  State Commission”.

 Filing an Appeal

The Consumer Protection Act provides a chance to file an appeal in case the parties are not satisfied with the decision of the redressal forum.

• An appeal can be filed against the order of the District Forum within 30 days of the passing of the order. The limitation period may be extended off the appeal filed after such period contains a ‘sufficient ground’ for the delay caused. In such cases, the application for condonation of delay must be filed with an affidavit setting out adequate reasons for the delay. The time period prescribed for filing appeal remains the same at all levels.
• If the applicant has to pay any compensation as per the order of the District Forum, then the State Commission will entertain the appeal only if the appellant deposits 50 percent of that amount or Rs. 25,000/- whichever is less with it.[90]
• If a person appeals against the order passed by the State Commission to the National Commission and he is the party who has to pay the compensation, then the appellant will have to deposit 50 percent of the amount or Rs. 35,000/-, whichever is less with the National Commission.
• If the appellant wants to appeal against the order of the National Commission to the Supreme Court of India, and he is the party who had to pay compensation as per the National Commission’s order, then his appeal will be entertained by the Supreme Court only if he deposits in a prescribed manner 50 percent of that amount or Rs. 50,000/-, whichever is less.[91]

Sec. 13 of the Consumer Protection Act, 1986 governs the process to be followed by the District Forum in case it receives a complaint. It also prescribes when the Forum can collect samples of the impugned goods. Further, before any sample of the goods is referred to any appropriate laboratory under clause (c) of Sec. 13, the District Forum may require the complainant to deposit to the credit of the Forum such fees as may be specified, for payment to the appropriate laboratory for carrying out the necessary analysis or test in relation to the goods in question.[92]

Ex-Parte Situation

An ex-parte judgment is the one passed in the absence of one of the parties to the suit or case. In other words, if one of the parties fail to appear in the Court or redressal forum, even after multiple summons, the court may decide the case in the absence of such a party and in favor of the other party who is present before the Court. It is a point of common sense that if a party is not capable of being present in the court for the purpose of the hearing, such party must provide sufficient grounds for being absent and must appear in the next hearing. The courts generally, in the interest of justice provide a second and third opportunity to the party which fails to appear, by the way of summons. But if even after the summons, the party does not appear and fails to provide any sufficient ground for absence, the Court or redressal forum has the authority to decide the matter in ex-parte.

Setting aside ex-parte orders: Obviously, the party against whom such ex-parte order has been passed is not barred by law to file an appeal against such order. He is eligible to file an appeal within the provide limitation period.

On careful analysis of the provisions of the Act, it is abundantly clear that the Tribunals are creatures of the Statute and derive their power from the express provisions of the Statute. The District Forums and the State Commissions have not been given any power to set aside ex parte orders, and power of review and the powers which have not been expressly given by the Statute cannot be exercised.[93] The legislature opted to give the National Commission power to review its ex parte orders. Before the amendment, against the dismissal of any case by the Commission, the consumer had to rush to this Court. The amendment in Section 22 and introduction of Section 22-A was done for the convenience of the consumers.

What if I don’t have a lawyer?

As discussed earlier, a consumer can initiate a case in the redressal forum without a lawyer or a legal representative. In other words, you don’t need a lawyer to file a case in consumer case or a redressal forum. As a common man, there is no special requirement to hire a lawyer unless the case involves a property of very high monetary value. Even a lawyer at lowest level might charge a hefty amount for a case. Also, as Gaurang Damani, an electrical engineer, who has won several public interest litigations fighting cases on his own, points out, a complainant knows the nitty-gritty of the case better than a lawyer. A lawyer also handles several cases at the same time and may appear to be dispassionate about your case. Many a time, lawyers send their juniors for the hearing.[94]

Mediation

As a common practice, the redressal forum might suggest or refer a consumer case for mediation so that it is sorted outside the court and parties come to a consensus. As per the Delhi Government, “Mediation is a voluntary process in which an impartial and neutral mediator tries to bring together the disputant parties to arrive at a mutually agreeable solution. The parties to the dispute have an opportunity to vent their grievances and feelings and thereafter work out the solutions to meet their interests”.[95] The job of a mediator is not to impose a sanction or penalty on either or the parties, but to facilitate and create a favorable environment which enables the parties to reach an amicable settlement.

Both consumer and seller are eligible to approach the mediation center on their own regarding a dispute. If the parties are unable to reach a satisfactory arrangement, they are free to approach the Court, with the order of the mediation center.

A consumer even if the goods were purchased for commercial purpose

A simple reading of Sec. 2(1)(d) states that a person who buys or uses the goods for ‘commercial purpose’ is not a consumer within the meaning if Consumer Protection Act, 1986. But there are certain exceptions which allow even the person who bought the goods for resale, or commercial purpose to file a complaint in the appropriate redressal forum. This exception is in the way of a ‘warranty’. If the goods so purchased are found to be defective in the ‘warranty period,’ the buyer can file a complaint if the goods are not repaired even after repeated requests.

In C. P. Moosa vs. Chowgle Industries Ltd.[96] the appellant had purchased EPBAX system for his hotel with warranty and annual maintenance contract. There was a deficiency of service during the warranty period and AMC period. The National Commission held that case falls under Section 2(1)(d)(ii) and appellant entitled to compensation.

In the matter of Dr. Vijai Prakash Goyal vs. The Network Limited[97], the National Commission held that purchaser of a machine would be a consumer if the defect in machine develops within warranty period even though the machine was purchased for the commercial purpose.

Further, recently in a case, the complainant, a company, had purchased a computer system along with related accessories from the opposite party. The intellifax machine, which was supplied with the computer, was not performing up to the mark and the same was defective. When the dispute went to the redressal forum under the COPRA, the opposite party contended that the complainant did not qualify as a consumer as the company purchased the computer and the machine for business purpose, i.e., for commercial purpose. However, the defect in the machine was intimated to the opposite party within the warranty period. The National Commission held that the purchaser of the machinery would certainly be a consumer in respect of defect in the machine during the period of warranty.[98]

Loopholes of CPA, 1986

The very purpose of the act introduced in 1986 was to protect the interest of the consumers. It was a transit from caveat emptor to caveat venditor principles. It was neither punitive nor preventive in nature, but merely compensatory. The objective behind the act was to provide easy, speedy and cheap redressal to the consumers. But a change or shift in the consumer’s mindset, development of technology, and delay by Consumer Courts have obstructed the desired effect or purpose sought to be achieved by the said act. This necessitated the need on part of the government to enforce laws that could effectively check consumer frauds and provide necessary amendments in the various provisions of the Act so as to inaugurate a more successful robust mechanism which could dispense justice to consumers and value their rights.

Perceiving the existing scenarios, a need for change was felt. Consequently, The Consumer Protection Bill, 2019 was passed by the Indian Parliament on Aug 06, 2019, and later on signed by the President of India. This new act replaces the old Consumer Protection Act, 1986.

Consumer Protection Act (CPA), 2019

The new Consumer Protection Act effectively replaces the nearly three decade old Act and tried to mold itself to live up to the expectations of a digitalized-modern-consumer. Set below is the key features of the Act but before that let’s throw some light on the rights of consumer as defined by the Act.

Rights of Consumers

The new act has defined some rights of the consumers. They include six rights which are as follows:

• Right to be protected against the marketing of goods, products or services which can be hazardous to life and property
• Right to be informed about the quality, quantity, potency, purity, standard and price of goods, products and services
• Right to be assured of access to goods, products and services at competitive prices.
• Right to be heard at appropriate forums
• Right to seek redressal against unfair trade practices that are involved in exploitation of customers
• Right to consumer awareness

The key features of CPA, 2019

The significant highlights of the CPA act are as follows:

1. Establishment of the Central Consumer Protection Authority (CCPA)

The act has the provision of the Establishment of the CCPA which will protect, promote and enforce the rights of consumers. The CCPA will regulate cases related to unfair trade practices, misleading advertisements, and violation of consumer rights. The CCPA will have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into consumer law violations. 

The CCPA has been vested with wide powers to take suo-moto actions, recall products, order reimbursement of the price of goods/services, cancel licenses and file class action suits, if a consumer complaint affects more than a single individual.

2. Penalties for\Misleading Advertisements

The bill contains provisions with respect to misleading advertisements which is defines as per Clause 2(28) of the Act. The New Act fixes liability on endorsers considering that there have been numerous occurrences in the recent past where consumers have fallen prey to unfair trade practices under the influence of celebrities acting as brand ambassadors. In such cases, it becomes important for the endorser to take the onus and exercise due diligence to verify the veracity of the claims made in the advertisement to refute liability claims. 

The CCPA may impose a penalty of up to INR 1,000,000 on a manufacturer or an endorser, for a false or misleading advertisement and imprisonment for up to 2 years for the same. In the 1986 act, the onus of that was only on the manufacturers and the service providers only. Under section 21(2) of the 2019 Act, the commission could even levy a fine of fifty lakhs of the endorser continues to advertise false information about the products even after getting a notice issued by the consumer. The CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to 1 year. For every subsequent offence, the period of prohibition may extend to 3 years.  This is expected to make the brand ambassadors exercise due diligence on the veracity of the claims being made about a product or a service before choosing brands to endorse.

3. Unfair Trade Practices

The Act introduces a specific broad definition of Unfair Trade Practices, which also includes sharing of personal information given by the consumer in confidence, unless such disclosure is made in accordance with the provisions of any other law. Misleading advertisements are also under the ambit of ‘Unfair Trade Practices’ in the new act. 

4. Product liability

Product Liability is a significant aspect introduced in this bill that would work to the advantage of  the consumers. Under the provisions of this bill, a manufacturer or a service provider would be required to compensate the consumer in case of any loss or injury due to a manufacturing defect in the product or a poor service.

This is distinguishable from the existing provision where only the cost of the product was compensated by the manufacturer or the service provider and not the cost of the loss or injury as in the current proposal. 

The product liability claim can be brought by a complainant against a product manufacturer, product service provider as well as a product seller exercising substantial control over designing, testing or modifying the product.

However, it will not include any harm caused on account of breach of warranty conditions or any commercial or economic loss. the product seller will also caanot be made liable where the product has been misused, altered or modified. 

5. Covering E-Commerce transactions

With the expansion of technologies and living style, there has been increasing buying and selling of things on online platforms (like Amazon, Flipkart, ebay) . The New act successfully throws a cloak of protection to the transactions made online.  The definition of a consumer now includes within its ambit any person who buys any goods, whether through offline or online transactions, electronic means, teleshopping, direct selling or multi-level marketing.

6. Enabling E-Complaints/hearings through video conferences

Unlike the previous Act, the new Act enables consumers to file E-complains sitting right at their homes. The electronic filing of complaints and hearing via video conferences have disentangled and resolved a lot of complexities faced by the consumers during the procedures of filing, going to courts and engaging in time consuming documents. Moreover, in contrast to consumer filing complaint in the jurisdiction where seller falls, the new Acr enables consumers to file complaint from anywhere or from where the consumer resides.

7. Provision for Mediation

If the consumers wish to resolve the dispute outside the court, there is a provision for Mediation as well. The dispute can be referred to Mediation as an Alternative Dispute Redressal Mechanism. There is also a provision for setting up of Consumer Mediation Cell. This provision would ease the existing burden of zillions of cases on courts and enable quicker disposal of cases at hand.

8. Revised Pecuniary Jurisdiction

The new Act has enhanced the pecuniary jurisdiction of Consumer Courts at various levels. The District Commission shall now entertain with cases where value of goods and services paid are upto 1 crores, State Commission with cases upto 10 crores and National Commission with cases exceeding the value of 10 crores.

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References:

[1] Consumption and the Consumer Society, Neva Goodwin, Julie A. Nelson, Frank Ackerman and Thomas Weisskopf, Global Development And Environment Institute Tufts University Medford, MA 02155 http://ase.tufts.edu/gdae

[2] G. Alpa, “Il Diritto dei Consumatori”, Bari, 1995, p. 12

[3] F. Silva, A. Cavaliere, “I diritti dei consumatori e l’efficienza economica, in “La tutela del consumatore  tra mercato e regolamentazione”, a cura di F. Silva, Roma, 1996, p.12

[4] Accessed at: http://www.bankepedia.org/index.php/it/129-italian/t/22858-trattato-di-roma-enciclopedia

[5] Sec. 1, Sherman Act, 1890

[6] Ibid, Sec. 2

[7] Federal Trade Commission Act, 1914, Section 2

[8] Clayton Act, 1914, Sec. 2

[9] Id, Sec. 3

[10] Id, Sec. 8

[11] Id, Sec. 8

[12] The American Presidency Project, Accessed at: http://www.presidency.ucsb.edu/ws/?pid=9108

[13] Monopolies Inquiry Commission Report (1965) p. 154.

[14] S.K.B. Asante “United Nations International Regulation of Transnational Corporations” Journal of World Trade Law, vol. 13, (No. 1), January-February 1979, pp. 55-56

[15] Gurbax Singh, Law of Consumer Protection, Jaipur, Bharat Law Publications, 1993, p. 8

[16] P.K. Majumdar, Law of Consumer Protection in India, New Delhi : orient Publishing Company, 1997, pp. 1522-1523

[17] V.K. Agarwal, Consumer Protection in India (1989) at p. 24

[18] Taitriya 1 11 cited in M. Rama Jois Legal and Constitutional History of India

[19] CHAPTER-II HISTORICAL DEVELOPMENT OF CONSUMER PROTECTION LAW, www.shodhganga.com

[20] Ibid

[21] Yajnavalkya-Samhita op. cit. note 9, Shloka 178 at p. 370

[22] Manu VIII : 309 See, K.P. Jayaswal at pp. 158-159

[23] Harijan May 4, 1935, quoted in the Wisdom of Gandhi 49 (1967) Philosophical Library New York

[24] Sec. 264-267, The Indian Penal Code, 1860

[25] The Indian Contract Act, 1872 Section 2(a)

[26] Sec. 273, The Indian Penal Code, 1860

[27] Sec. 274, The Indian Penal Code, 1860

[28] Sec. 275, The Indian Penal Code, 1860

[29] The Preamble, Constitution of India, 1950

[30] W. Friedmann, Law in Changing Society (Abridged Edition 1959) at p. 378

[31] Ralph Nadar as cited in Ross Cranston, Consumer and the Law 1978 p. 378

[32] R.D. Shelly v. International Airport Authority of India, AIR 1979 S.C. 1628

[33] Bandhua Mukti Morcha v. International Air Port Authority of India, AIR 1979

[34] Art. 38, The Constitution of India, 1950

[35] CHAPTER-II HISTORICAL DEVELOPMENT OF CONSUMER PROTECTION LAW, www.shodhganga.com

[36] D.N. Saraf “Legal Regulation of Pesticides problems and Perspectives” in C.E.R.C. Publication” – Pesticides Residues in foods, 1969, p. 221

[37] Supra Note 35

[38] Commentry on Consumer Protection Act, J.N. Barowalia, (4^th edn., 2010), Universal Law Publishing Co., pp 15, 16

[39] AIR 1994 SC 787 (790)

[40] J.N BAROWALIA, COMMENTARIES ON CONSUMER PROTECTION ACT, 1986, 13-15(2000)

[41] Hans Raj Arora and Avinash Dhamir, Consumer Relief for the Consumer in Grief, PUNJABI UNIVERSITY LAWJOURNAL, Vol. II, 236 (2008)

[42] .K .Abdul Sarkar v. State of Orissa, CPJ II (1991)

[43] Bill Thomas, The Legal Framework of Consumer Protection, in Marketing and the Consumer Movement 49 (Jeremy Mitchell ed., 1978)

[44] The Consumer Protection Act, 1986, Section 9

[45] Ibid, Section10

[46] Ibid, Section16

[47] Ibid, Section 20

[48] Ibid, Section 11

[49] Ibid, Section 17

[50] Ibid, Section 21

[51] AVTAR SINGH, LAW OF CONSUMER PROTECTION (PRINCIPLES AND PRACTICE), v (2005)

[52] Gulab Hotchand Bhachandaney vs. Egypt Airlines & others (Consumer Protection Reports 1993 (3) Page 385 National Commission)

[53] Civil Pricedure, C.K. Takwani, (Lukhnow, Ed. 2006) Eastern Book Company, p.124

[54] Tamil Nadu Housing Board vs. Ganapati, (1990) 1 SCC 608

[55] Sec. 15

[56] Sec. 15 (proviso)

[57] Agnes D’Mello v. Canara Bank [1992] I CPJ 335 (NCDRC)

[58] Mukund Lal Ganguly v. Dr. Abhijit Ghosh III 1995 CPJ 64

[59] Wheels world v. Dr. (Smt.) Janak Narendra, CPJ II (1991) 557

[60] CPJ II (1992) 786

[61] S.Elhence v. Raghomal Nahar Singh (P) Ltd.,CPJ I (1991) 327

[62] Dinesh Bhagat v. Bajaj Auto Ltd. (1992) III CPJ 272

[63] S.P. Goel v. Collector of Stamps (1995) III CPR 684 (SC)

[64] R.P. No.1765/07

[65] Kalpavruksha Charitable Trust vs. Toshniwal Brothers (Bombay) Pvt Ltd 2000 (1) SCC 512

[66] Synco Textile Private Ltd vs. Greaves Cotton and Co Ltd (1991) 1 CPJ

[67] Lakshmi Engineering works Vs PSG Industries, AIR 1995 SC 1428

[68] Smt. Pushpa Meena v. Shah Enterprises (Rajasthan) Ltd. (1991) 1 CPR 229

[69] Indian Medical Association vs. V.P. Shantha, 1995 SCALE 273

[70] Smt. Laxmiben Laxmichand Shah vs. Smt. Sakerben Kanji Chandan, [1992] 1 Comp. LJ 177 (NCDRC)

[71] Sec, 12, Consumer Protection Act, 1986

[72]  K.B. Jayalax­mi v. Government of Tamil Nadu 1994(1) CPR 114.

[73] Spring Meadows Hospi­tal v. Harjot Ahluwalia JT 1998(2) SC 620

[74] (1) 1992 CPJ NC 302

[75] Motibai Dalvi Hospital v. M.I. Govilkar 1992 (1) CPR 408

[76] Punjab National Bank, Bombay v. K.B. Shetty 1991 (2) CPR 633

[77] Joseph Alias Animon v. Dr. Elizabeth Zachariah (1) 1997 CPJ 96

[78] Byford v. S.S. Srivastava (1993) II CPR 83 (NCDRC)

[79] Commissioner of Transport v. Y.R. Grover 1994 (1) CPJ 199 NC

[80] 1991 (2) CPR 129

[81] Brij Mohan Kher v. Dr. N.H. Banka I 1995 CPJ 99 NC

[82] Unfair Trade Practice In India, Lydia Kerketta (Accessed at: http://www.legalservicesindia.com/article/article/unfair-trade-practice-in-india-1861-1.html)

[83] The MRTP (Recognition of Consumers Association) Rules 1987

[84] http://www.delhistatecommission.nic.in/filing_procedure.htm

[85] http://www.consumerhelpindia.com/procFillingCase.html

[86] http://www.complaintind.in/how-to-file-complaint-in-consumer-court.html

[87] Indian Machinery Company vs. M/s. Ansal Housing & Construction Ltd.

[88] http://www.livelaw.in/second-complaint-to-consumer-forum-maintainable-if-consumer-rules-do-not-prohibit-it-sc/

[89] New India Assurance Co. Ltd. vs.  R.  Srinivasan, (2000)  3  SCC  242

[90] http://accommodationtimes.com/guidelines-to-filing-an-appeal-under-the-consumer-protection-act-1986/

[91] Ibid

[92] Sec. 13(d), The Consumer Protection Act, 1986

[93] Rajeev Hitendra Pathak & Ors vs. Achyut Kashinath Karekar & Anr, 2012(1)BomCR160

[94] http://www.business-standard.com/article/pf/fight-your-own-consumer-case-116060500710_1.html

[95] http://delhi.gov.in/wps/wcm/connect/doit_ddrs/DELHI+DISPUTES+RESOLUTION+SOCIETY/Home/About+Mediation

[96] C. P. Moosa vs. Chowgle Industries Ltd. 2001-CPJ-3-9-NC

[97] IV (2005) CPJ 206 NC

[98] Super Computer Centre vs. Globiz Investment Pvt.Ltd,. III (2006) CPJ 265 (NC)