Consumer Protection Act 1986

INDEX

v  Introduction

v  Objective

v  Definitions

v  Consumer Protection Councils

v  Objective of Consumer Protection Councils

v  Powers of Consumer  Disputes Redressal Agencies

v  Procedure of Complaints-Remadies-Appeal

v  Necessary norms required to be followed by every company.

v  Case Study.

v  Awareness for Consumers

v  Statistical al Data

v  Things to be remember

1        Introduction

The Consumer Protection Act 1986 was passed by the Indian Parliament to protect consumer rights and to redress consumer complaints and resolve consumer disputes.

Every individual is a consumer of goods and services and expects a fair deal against unfair exploitation.

This Consumer Protection Act applies to the whole of India except the State of Jammu and Kashmir and covers all goods and services purchased by the consumers and to all sectors — private, public and cooperative.

2        Objective

The objective of the Act is “to provide for better protection of the interests of consumers and for that purpose to make provisions for the establishment of Consumer Councils and other authorities for the settlement of consumer disputes and for matters connected therewith”. It protects the consumers from unfair trading or unfair trade practices.  The main objective of the Consumer Protection Act, 1986 is to protect the interest and safeguard the rights of the consumers which are :

Right to be protected against the marketing of goods and services which are hazardous to life and property.

Right to be informed about the quality, quantity, potency, purity, standard and price of goods or services so as to protect the consumer against unfair trade practices.

Right to be assured, wherever possible, access to a variety of goods and services at competitive prices.

Right to be heard and to be assured that consumers’ interests will receive due consideration at appropriate forums.

Right to seek redressal against unfair trade practices and unscrupulous exploitation of consumers

Right to consumer education. 

It is important to note that the Indian Consumer Protection Act is a social welfare legislation and has been designed to avoid technicalities, procedural delays, procedural requirement, court fees and costs.

3. Definitions {Sec. 2}

3.1       “consumer" means any person who—{Sec. 2(1)(d)}

(i)   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 {It explains about Consumer of Goods}

Bullet: A person who buys any article to sell it again does not covered 

            under this definition and not covered under the act. 

Bullet: If the article or goods is purchased to earn by making it as a tool will be called consumer.    Example:  If any person purchases a Jip and use it for self employment to earn his livelihood then the person will be considered as consumer provided that he himself drives the Jip not hired any person as driver to earn.

(ii)  hires or avails of any services for a consideration which has been paid or promised or partly paid and partly prom­ised, or under any system of deferred payment and includes any beneficiary of such services other than the person who 'hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purposes; {It explains about consumer of  services}

Explanation.— For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment; 

3.2       Analysis of Consumer: Consumer may be any person- Irrespective of Occupation, Age, Gender, Community, Religion provided that he/she is a natural personal not artificial.

3.3       Consideration is necessary: If consideration is not there, he/she will not be considered as consumer. Example: (i) If any person go for treatment to his friend doctor and takes treatment, it he feels or finds any deficiency in services rendered by his friend doctor, in this case that person will not considered as consumer as he does not pay.  (ii)  If any person brought any goods from market free of cost and he/she founds any manufacturing defect that person will not be considered as consumer because he bought that article without consideration.  Here consideration does not only mean it is paid if it is promised to be paid be treated as consumer.  Example: If any person gives his coat for dry-clean, in this case the person will pay when he will receive his washed coat at the time of delivery means here the person does not pay for service but bound to pay later.  At the time of delivery, it is found that the coat is damaged, the person will be considered as consumer as he is considered to pay/ready to pay.  Payment may be paid at a time or in instalment as well.

Bullet:- Consideration may be in any form viz. Money, service, Goods.

Bullet:-  Any person uses the goods/Services with the approval of the buyer is consumer (Beneficiary).   Example: If a person takes his son  for treatment to a doctor and if due to service of the doctor the condition of his son deteriorates, son and father both will be considered as consumer. 

Example: If a person purchases a hot water bottle for his wife and due to manufacturing defect, bottle bursts and his wife receives injury.  Here, wife and husband both will be treated as consumer.  Hence, beneficiary is also treated as consumer. 

3.4       User of promotional scheme is a consumer: Any promotional scheme to enhance sale of goods the buyer will be treated as consumer .

Bullet: If a mobile is  gifted free on purchase of Washing machine and if any manufacturing defect is detected in mobile phone which was gifted free of cost.  In this case the person will be treated as consumer for both Washing machine and Mobile.

User of Electricity will be treated as Consumer (Judgement: Y.N. Gupta Vs DESU, 1992)

User of Telephone services will be treated as Consumer (Judgement: Dist. Manager, Telephone, Patna Vs Lalit Kumar Bajla, 1989).

User of free warranty Service is also treated as Consumer (Judgement: Vishwa Jyoti Printer Vs Molins of India, 1992).

Debenture holder is consumer (Central Bank of India Vs Tadepalli Padmaja and others, 2003)

Boarding & Lodging user will be considered as consumer

Entertainment or Amusement user will be treated as consumer

Educational institute use will be treated as consumer (Judgement: Kumari Seema Bhatia Vs Registrar, Rajasthan University, 1992)

3.5       Judgement: (Baby Anmol Mahajan Vs Videocon International, CAJ 2003, Pt-II, P.584, NC) : in this case company advertised for scratch card and scratch card awarded item will be gifted free of cost on purchase of goods.  In that scratch card, 5 kg gold was found and company denied to give 5 kg gold. National Commission ordered to provide 5 kg gold to the buyer.

Bullet: A person applied for gas connection will be treated as consumer.  However, has not received any goods or services inspite of he is a consumer.  If any kind of deficiency in service is noticed by the person he may claim for that. (Mahindra Gas Enterprises Vs Jagdish Poswald, 1993).

Bullet: Passengers travelling by Train will be treated as consumer (General Manger, Southern Railway Vs Anand Prasad Sinha, 1989)

A person taking flat or shop on rent is not a consumer. 

Winner of a lottery is not a consumer (Byford Vs S.S. Srivastava, 1993)

Bullet:- Consumer may be any person irrespective of occupation, age, gender community or religion etc.

3.6       "consumer dispute" means a dispute where the person against whom a complaint has been made, denies or disputes the allega­tions contained in the complaint.

3.7       "defect" means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force under any contract, express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods;

(g)     "deficiency" means any fault, imperfection, shortcoming or inade­quacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service;

(h)     "District Forum"  means  a  Consumer  Disputes  Redressal Forum established under clause (a) of section 9;

(i)     "goods" means goods as defined in the Sale of Goods Act, 1930 (3 of 1930);

3.8 The Consumer Protection Act, 1986 provides for the following rights to the consumers:

(a) Right to be heard and to be assured that consumers’ interests will receive due consideration at appropriate forum;

(b) Right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers; and

(c) Right to consumer education.

3.9       The Consumer Protection (Amendment) Act 1993 adds the following consumer rights:

(d) The right to be assured wherever possible, access to a variety of goods and services at competitive prices;

(e) The right to be informed about the quality, potency, purity, standard and price of goods (or services as the case may be) so as to protect the consumers against unfair trade practices; and

(f) The right to be protected against the marketing of goods (and services) which are hazardous to life and property.

3.10     Redressal Agencies:

Explanation of  various authorities set up under the Consumer Protection Act 1986.

4          Consumer Protection Councils:

The Act provides for setting up a Central Consumer Protection Council by the Central Government and State Consumer Councils by each state of India.   This act sets up 3-Tier consumer protection councils which are:

·         Central Consumer Protection Council

·         State Consumer Protection Council

·         District Consumer Protection Council

4.1       Central Consumer Protection Council:  The Central Consumer Protection Council shall consist of (1) the Minister in Charge of Consumer Affairs in the Central Government who shall be its chairman and such number of other official or non-official members representing such interests as prescribed.

It is required by the Act that Central Consumer Protection Council will meet as and when necessary. However, at least one meeting of the Central Council must be held every year. The objects of the council are to protect the rights of consumers and promote their interest as listed above from (a) to (f).

4.2       State Consumer Protection Council:  The State Consumer Protection Councils to protect consumer rights as per amendment in the Act in 1993 will consist of (1) the Minister in Charge of Consumer Affairs in the State Government concerned and members of other officials and non-officials representing such interests as may be prescribed by the State Governments. As in the case of the Central Council, the objects of State Councils will be to protect the rights of consumers as listed above from (a) to (f) within the State.

4.3       District Consumer Protection Council:  In the District Consumer Protection Council, the Collector of the district (by whatever name called), who shall be the chairman of it  and such number of other official and Non-Official members representating such interests as may be prescribed by the State Government.

5          Consumer Disputes Redressal System:

 

Under the Consumer Protection Act 1986 Three-tier consumer disputes redressal system at the District, State and National levels has been set up.

Thus the Act provides for establishing the following consumer redressal agencies:

·         District Consumer Forum in each district of a state set up by the State  

            Government.

·         State Consumer Commission in each state set up by each State.

·         National Consumer Commission set up by the Central Government.

Composition of Consumer Redressal Agencies:

According to Consumer Protection Act 1986 each District Consumer Forum set up in each district of a State shall consist of a person who is or has been or is qualified to be a district judge. This person will work as president of the district consumer forum.  Two eminent members who have adequate knowledge and experience and have the ability in dealing with problems concerning law, commerce, economics, accountancy, industry, public affairs or administration and one of whom shall be a lady member, especially who is a social worker.  Every member of a District Forum shall hold office for a term of 5 years or upto the age of 65 years whichever is earlier.

A District Forum has the jurisdiction to deal with the complaints where the value of good or service and the compensation claimed, if any, does not exceed Rs. 20 lakh (as per amendment in the Act in 2002). A complaint by consumers will be filed in a District Forum in case when the opposite party or each of the opposite party if there are more than one resides or carries on business within the district concerned at the time of filing the complaint or any one of the party (if there are more than one) residing or carrying on business in the district at the time of the filing of the complaint if the district forum grants permission for this.

The State Consumer Commission shall consist of:

(1) A person who is or has been a judge of a high court appointed by the State Government,

(2) Two other members of high standing and eminence who have adequate knowledge or experience concerning the problems relating to law, commerce, economics, industry, public administration etc. one of whom shall be a woman.

The State Consumer Commission as per the amendment of the Act in 2002 shall have the jurisdiction to entertain complaints where the value of goods or services and compensation claimed if any exceeds Rs. 20 lakh but is not more than Rs. 1 crore.

The State Consumer Commission will also entertain appeals against the orders of District Forums within the State. Besides, the State Consumer Commissions have been authorized to call for the records and give appropriate orders in case of any consumer dispute pending before the District Forum within the State or has been decided by it if the State Commission finds that a District Forum has exercised a power not vested in it by the Act or has failed to exercise a power or jurisdiction vested in it or acted illegally in exercise of its powers.

The National Consumer Commission will consist of:

(a) A person who is or has been a judge of the Supreme Court and is appointed by the Central Government in consultation with Chief Justice of India. He will also work as president of the national commission,

(b) Four other members of eminence having good knowledge or experience and ability to deal with the problems relating to commerce, economics, law, industry, public affairs or administration and one of whom shall be a woman.  Every member of the National Commission  shall  hold office for the term of 5 years or upto the age of 70 years whichever is earlier..

National Consumer Commission has the jurisdiction:

(1) To entertain complaints where the value of goods or services and compensation claimed if any is, according to Amendment Act 2002, one crore or more;

(2) National Commission is authorized to hear appeals against the order of any State Consumer Commission;

(3) The Central Commission has the right to call for the records from the State Commissions.

It is important to note that all forums, commissions appointed under the Consumer Protection Act are in substantial matters not different from the ordinary civil courts. They are quasi-judicial tribunals created to render speedy justice

Remedial Action:

It may be noted that a complaint to a redressal agency may be filed by:

(a) An individual, consumer;

(b) Recognized consumer association,

(c) More than one consumers who have the same interest; and

(d) The State or Central Government. The complaint to a redressal agency must be in relation to goods sold or delivered or service provided to the complainant.

If the redressal agency is convinced that any of the allegations in the complaint filed before it is true, it shall issue an appropriate order to the opposite party.

This order may be any of the following types:

1. To remove the defect if found to be true by the appropriate laboratory from the good in question;

2. To replace the defective goods with the new goods of the same type free from the defects;

3. To return to the complainant price of the defective good or charges paid by him;

4. To pay the compensation to the complainant as may be decided by the redressal agency for the loss suffered by him;

5. To remove the defects or deficiencies in the service rendered to the individuals;

6. To stop the unfair or restrictive trade practice or give undertaking not to repeat in future;

7. Not to supply hazardous goods;

8. To withdraw the hazardous goods being offered for sale; and

9. To give adequate costs to the parties in question.

Penalties:

The Consumer Commissions are authorized to impose penalties on trader or person against whom complaint is made if he fails to comply with the order of the redressal agency. The penalty or punishment may involve imprisonment for a period not more than 3 years or a fine of not more than 10 thousand rupees or both.

The Consumer Protection Amendment Act 2002:

The Consumer Protection Act 1986 held great hopes for the helpless consumers who have been denied fair deal by the unscrupulous producers or traders. In the implementation of Consumer Protection Act 1986 some deficiencies in the Act were noticed. Therefore, some important amendments were made in the Act by Consumer Amendment Act 2002. With this amendment all the redressal agencies (District Forums, State Consumer Commissions and Central Consumer Commission) have been given the powers of a judicial magistrate of a first class for trial of offences within their jurisdiction, subject of course to the right of appeal from a lower redressal agency to a higher one.

The important changes made by the Consumer Protection Amendment Act 2002 are the following:

1. Both MRTP Act and Consumer Protection Act deal with unfair and restrictive trade practices. Amendment made in Consumer Protection Act in 2002 has clarified that the expression ‘restrictive trade practices’ will also include delay in supply of goods or services and rise in prices in the mean time.

2. Provisions regarding unfair trade practices have been made more stringent. It is now provided that if the representations contained in an advertisement for the sale or supply of a good or service are misleading, the advertiser can be held responsible for taking corrective steps at his own cost apart from other obligations.

3. The District Forums would be able to deal with cases involving the payment of compensation of Rs. 20 lakhs against the pre-existing Rs. 5 lakhs. Similarly, the State Consumer Commissions can now deal with cases involving compensation up to Rs. 1 crore while National Consumer Commission can deal with cases involving compensation of Rs. 1 crore or more instead of pre-existing Rs. 25 lakhs.

4. In the event of the death of the complainant, amendment in the Act in 2002 now provides for substitution of his legal representatives. Surviving legal representatives can file a complaint or get substitution in place of the existing one.

5. In regard to goods hazardous to life or safety of the public, traders supplying goods will be liable if it can be proved that the supplier could have known with due care that the goods or services supplied were hazardous to the public. Besides, liability of suppliers of spurious products and services is made clear in the Amendment Act 2002.

6. An important amendment relates to the meaning of expression ‘manufacturing’. Manufacturing has now been defined to include merely assembling parts of goods made by others or putting one s own mark on any good manufactured by others.

7. Amendment Act 2002 makes the restrictive trade practices more stringent by including under it trade practice which tends to the manipulation of price or the conditions of delivery of goods or affect the flow of supplies of goods in the market in a manner that imposes undue costs or restrictions on the consumers. Restrictive trade practice also includes delay in the delivery of goods beyond the period agreed to by the traders or delay in providing services when such delay is likely to lead to rise in their prices.

8. According to an important provision in the 2002 Amendment Act, in trading or commerce of goods or services misleading or deceptive conduct of traders or suppliers would be treated as unfair trade practice. Those who make misleading or false representation luring consumers to buy goods or services would fall within unfair trade practice and would be held liable. Under the Consumer Protection Amendment Act 2002 the consumers who are lured to enter into such a contract would be entitled to get the damages.

Similarly, Amendment Act 2002 also covers the unfair treatment to the consumers who have suffered by being lured in the schemes offering gifts, concessional prices or some items free of charge depending on the official results of a particular scheme. This amendment provides remedy to the consumers who might be unfairly treated in such schemes by requiring the promoter to disclose proper information regarding the results of a scheme by appropriate timely publication of results in newspapers, etc.

Proposed Amendments in Consumer Act, 2010:

The Cabinet has given clearance to the proposed amendments to the Consumer Protection Act which is likely to be passed by the parliament in winter session of 2010. These amendments seek to make the consumer protection law more responsive to consumer complaints through quicker disposal of cases. The proposed amendments have widened the scope of the law, specified time limit for quicker disposal of cases and rationalized qualifications for appointment of members of consumer forums at the state and national level.

Evaluation of Consumer Protection Act:

Consumer Protection Act with amendments made in it in 2002 is a quite comprehensive piece of legislation that seeks to protect the consumers against unfair and exploitative practices of manufacturers. Consumer awareness in India is now fast growing. As a result, the number of complaints by the end of 2002 before District Forums had been about 14 lakhs, that before State Commissions 2 lakhs and that before National Commission about 21,000 all of which amount to the total of about 162,100.

It is important to note that Consumer Protection Act is additional law protecting consumers but not a derogation of any other laws which protect consumers. Services or goods provided by those dealing in information technology, electronic commerce (E-Commerce) are also liable under the Consumer Protection Act apart from the Act governing Telecommunication Regulatory Authority of India (TRAI) which regulates not only transactions between competing providers of telecommunication services but also regulate them to protect consumer interests.

Similarly, the Consumer Protection Act is in addition to MRTP Act which also tries to protect the interests of consumers by controlling monopolistic and restrictive trade practices. According to G.L. Sanghi, “The tribunals created under the Consumer Protection Act are in substantial matters not different from the ordinary civil courts. They are quasi-judicial tribunals created to render inexpensive and speedy justice. They provide additional remedies through the newly created forums”.

A Comprehensive Act:

The Consumer Protection Act is quite a comprehensive legislation. Under the Consumer Protection Act not only manufacturers and suppliers of goods but also of such services as insurance providers, medical treatment, lending and recovery of bank loans also come within the purview of the Act. A few such important cases are worth explaining.

Consumer Protection Act and Medical Practitioners:

The applicability of Consumer Protection Act to medical practitioners is a highly complicated issue and the case relating to it went even up to the Supreme Court of India. In defence of medical practitioners it was argued that their services are excluded category being services under “Control of Personal Services”. Supreme Court rejected these arguments and brought medical practitioners, hospitals and nursing homes where services are rendered for valuable consideration under the purview of Consumer Protection Act.

Doctors and hospitals committing medical negligence have therefore become liable and damages for medical negligence can be claimed from them. Though this has created fear and concern among medical practitioners and private hospitals but this will help in preventing medical negligence on the part of doctors and hospitals.

It has been widely reported in the media about medical negligence, for example, of operating a wrong eye, removing a kidney of a person without his consent, leaving screw, scissors and a towel in the abdomen of a patient, giving a wrong injection leading to the death of a patient. For all these acts of negligence compensation can be claimed from doctors and hospitals and also penalties can be imposed on them.

In an important case Supreme Court held that a medical practitioner may be liable if there was a negligence in respect of diagnosis and/or treatment given to a patient provided it can be demonstrated that the negligent act was not based on reasonable and responsible information as to the kind and quality of treatment.

Insurance Companies and Consumer Protection Act:

One of the important categories where Consumer Protection Act has been usefully applied is the claims against insurance companies. Many insurance companies (including public sector insurance companies) often deny medi-claims to the insurers on one pretext or the other.

Generally insurance companies deny claims for damages to the insurers that they did not disclose the pre-existing disease they were suffering from at the time of getting insured. In many cases consumer commissions have rejected the arguments of insurance companies and have awarded damages to the insurers and require insurance companies to fulfill their contractual obligations.

In a recent case of accident claim the United India Insurance Company denied to pay the damages on a car which met with an accident on the ground that it was being plied without the ‘fitness certificate’ as required under the Motor Vehicles Act. In this case in Nov. 2007, National Consumer

Commission held that the insurance companies, if the terms of the policy were not breached, cannot refuse to entertain claims on the pretext that the insured violated some other laws or conditions “as the insurance is a matter of contract between the two parties.”

Recovery of Bank Loans and Consumer Protection Act:

The wide applicability of Consumer Protection Act can be understood from the recent judgment of the State Consumer Commission of Delhi which slapped a fine of Rs. 55 lakhs on ICICI Bank for trying to recover a vehicle loan by hiring musclemen. The goons of recovery agent of the bank forcibly dragged out a youth from the car, beat him up with iron rods and left him bleeding and drove away with the vehicle. Justice J.D. Kapoor, president of the commission, said, “We hold ICICI Bank guilty of the grossest kind of deficiency in service and unfair trade practice for breach of terms of contract of hire-purchase/loan agreement by seizing the vehicle illegally.”

Conclusion:

In view of the above usefulness and wide applicability of Consumer Protection Act, Mr. G.L. Sanghi is right in concluding, “In each and every area involving sale of goods and services for valuable consideration a consumer stands protected. The polarity of this law is unlimited. Its machinery is effective and awesome to the delinquent trader with solace to the consumer. As experience grows further improvements will un-doubtetedly make this remedy more and more useful”.