10. BCOM III-BE- 3C- consumer protection.pdf

CONSUMER PROTECTION ACT, 1986 INTRODUCTION A consumer is a user of goods and services. Any person paying forgoods and services which he uses is entitled to expect that the goods and services are of a nature and quality promised to him by the seller. The ea...

CONSUMER PROTECTION ACT, 1986 INTRODUCTION A consumer is a user of goods and services. Any person paying forgoods and services which he uses is entitled to expect that the goods and services are of a nature and quality promised to him by the seller. The earlier principle of "Caveat Emptor or "let the buyer beware which was prevalent has given way to the principle of "Consumer is King". The origin of this principle lie in the fact that in today's mass production economy where there is little contact between the producer and consumer, often sellersS make exaggerated claims and advertisements which they do not intend to fulil. This leaves the consumer in a difficult position with very fewavenues for redressal. The onset on intense competition also made producers aware of the benefits of customer satisfaction and hence by and large, the principle of "consumer is king" is now accepted. The need to recognise and enforce the rights of consumers is being understood and several laws have been made for this purpose. In India, we have the Indian Contract Act, the Sale of Goods Act, the Dangerous Drugs Act, the Agricultural Produce (Grading and Marketing) Act, the Indian Standards Institution (Certification Marks) Act, the Prevention of Food Adulteration Act, the Standards of Weights and Measures Act, the Trade and Merchandise Marks Act, etc. which to some extent protect consumer interests. However, these laws required the consumer to initiate action by way of a civil suit which involved lengthy legal process proving to be too expensive and time consuming for lay consumers. Therefore, the need for a more simpler and quicker access to redressal to consumer grievances was telt and accordingly, it lead to the legislation of the Consumer Protection Act, 1986. OBJECTS OF THE CONSUMER PROTECTION ACT, 1986 The preamble to the Act states that the Act is legislated to provide for better protection of the interests of consumers and for that purposes to make provision for the establishment of consumer councils another authorities for the settlement of consumer's disputes and for matters connected therewith. Rights of Consumer The basic rights of consumers as per the Consumer Protection Act (CPA) are : 1. The right to be protected against marketing of goods and services which are hazardous to life and property. price of 2. The right to be informed about the quality, quantity, potency, purity, standard and goods, or services so as to protect the consumer against unfair trade practices.  3. The right to be assumed, wherever possible, access to a varicty of goods and services at competitive prices. 4. The right to be heard and be assured that consumers' interests will reccive duc consideration at appropriate forums. 5. The right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers. 6. The right to consumer education. The CPA extends to the whole of India cxcept the State of Jammu and Kashmir and applies to all oo0ds and services unless otherwise notificd by the Central Government. DEFINITIONS OF IMPORTANT TERMS Before studying the provisions of the CPA, it is necessary to understand the terms used in the Act Letus understand some of the more important definitions. Complainant means : 1. Aconsumer; or 2. Any voluntary consumer association registered under the companies Act, 1956 or under any other law for the time being in force; or 3. The Central Government or any State Government, who of which makes a complaint; or 4. One or more consumers where there are numerous consumers having the same interest. Complaint means any allegation in writing made by a complainant that : 1. An unfair rade practice or a restricted trade practice has been adopted by any trader; 2. The goods bought by him or agreed to be ought by him suffer from one or more defects; 3. The services hired or availed of or agreed to be hired or availed of by him suffer from deficiency in any respect. 4. The trader has charged for the goods mentioned in the complaint a price èxcess 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. 5. 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; with a view to obtaining any relief provided by law under the CPA. Consumer means any person who : 1. 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 (e.g., hire purchase or instalment sales) and includes any other user of such goods when such use is made with the approval of the buyer, but does not include a person who obtains such goods for resale or for any commercial purpose; or 2. Bires 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 when such services are availed of with the approval of the first mentioned person. For the purposes of these definitions "commercial purpose" does not include use by a consumer of 800ds bought and used by him exclusively for the purpose of earning his livelihood by means of self enployment. Goods means goods as defined in the Sale of Goods Act, 1930. Under that act, goods means every  BuSINESS ENVIRONMENT kind of movable property other than actionable claims and money and includes stocks and share. growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. Service is defined to mean service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processina supply of electrical or other energy, board or lodging or both, housing construction, entertainrnent amusement or the purveying of news or other information but does not include the rendering of any service free of charge or under a contract of personal service. Consumer dispute means dispute where the person against whom a complaint has been made denies or isputes the allegation contained in the complaint. Restrictive Trade Practice means any trade practice which requires a consumer to buy, hire. or availof any goods or as the case may be,services as a condition precedent for buying, hiring or availing of any other goods or services. Unfair Trade Practice means unfair trade practice as defined under the Monopolies and Restrictive Trade Practices Act. The MRPT Act has defined certain practices to be unfair trade practices. Defect means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained byor under any law for the time being in force or under any contract, express or implied, or as is claimed by the trade in any manner whatsoever in relation to any goods. Deficiency means any fault, imperfection or 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. REDRESSAL MACHINERY UNDER THE ACT CONSUMER PROTECTION CoUNCILS The interests of consumers are enforced through various authorities set up under the CPA. The CPA provides for the setting up of the Central Consumer Protection Council, the State Consumer Protection Council and the District Forum. CENTRAL CONSUMER PROTECTION COUNCIL The Central Government has set up the Central Consumer Protection Council which consists of the following members : (a) The minister-in-charge of Consumer Affairs in the Central Government who is its Chairman. and (b) Other official and non-official members representing varied interests. The Central Council consists of 150 members and its term is 3 years. The Council meets as and when necessary but at least one meetings held in a year. STATE CONSUMER PROTECTION COUNCIL The State Council consists of : (a) The Minister in charge of Consumer Affairs in the State Government who is its Chairmat:; and;  NSUN (b) Other official and non-official members representing varied interests. The State Council meets as and when necessary but not less than two meetings must be held every year. Redressal Machinery under the Act The CPA provides for a 3 tier approach in resolving consumer disputes. The District Forum has jurisdiction to entertain complaints where the value of goods/services complained against and the compensation claimed is less than Rs. 5 lakh, the State Commission for claims exceeding Rs. 5 lakh, but not exceeding Rs. 20 lakh and the National Commission for claims exceeding Rs. 20 lakhs. DIsTRICT FORUM district of the State. Under the CPA, the State Government has to set up a District Forum in each if it deems fit. Each District The government may establish more than one District Forum in a district Forurm consists of : Judge who shall be its (a) A person who is, or who has been, or is qualified to be a District President; (b) Two other members who shall be persons of ability, integrity and standing and have adequate problems relating to knowledge or experience of or have shown capacity in dealing withadministration, one of economics, law, commerce, accountancy, industry, public affairs or whom shall be a woman. Government on the Appointments tot he State Commission shall be made by the State Committee, the recommendation of a Selection Committee consisting of the President of the State Consumer Affairs. Secretary, Law Department of the State and the secretary in-charge of years, whichever Every member of the District Forum holds office for 5 years or upto the age of 65 giving notice in writing tothe isearlier and is not eligible for re-appointment. A member may resign byGovernment. State Government whereupon the vacancy will be filled up by the State of goods or services and the The District Forum can entertain complaints where the value addition to jurisdiction over compensation, if any, claimed is less than rupees five lakh. However, in pass orders against traders Consumer goods services valued upto Rs. 5 lakh, the District Forum also may deficient services provided the indulging in unfair trade practices, sale of defective goods or render turnover of goods or value of services does not exceed rupees five lakh. local limits of whose jurisdiction : Acomplaint shall be instituted in the District Forum within the voluntarily resides or carries on business (a) The opposite party or the defendant actually and institution of the complaint; or has a branch office or personally works for gain at the time of Or than one) actually and voluntarily (b) Any one of the opposite parties (where there are more works for gain, at the time resides or carries on businessor has a branch office or personally acquiescence in of institution of the complaint provided that the other opposite party/parties respect of such opposite such institution or the permission of the Forum is obtained in parties; or (c) The cause of action arises, wholly or in part. STATE COMMISSION Disputes Redressal Commission by The Act provides for the establishment of the State Consumer  NMENT the State Government in the State by notification. Each State Commission shall consistof : (a) Aperson who is or has been is a judge of a High Court appointed by State Government 6x consultation with the Chief Justice of the High Court) who shall be its President: (b) Two other members who shall be persons of ability, integrity, and standing and have adegUabs knowledge or experience of, or have shown capacity in dealing with, problems, relating t economics, law, commerce, accountancy, industfy, public affairs or administration, on ot whom must be a women. Every appointment made under this shall be made by the State Government on the recommendation of aSelection Conmittce consisting of the President of the State Commission, Secretary Law Department of the State and Secretary in-charge of Consumer Affairs in the State. Every member of the District Forum holds office for 5 years or upto the age of 65 years, whichever Is earlier and is not eligible for reappointment. Amember may resign by giving notice in writing to the State Government where upon the vacancy will be filled up by the State Government. The State Commission can entertain complaints where the value of goods or services and the compensation, if any claimed exceeds Rs. 5 lakh but does not exceed Rs. 20 lakh; The State Commission also has the jurisdiction to entertain appeal against the orders of any District Forum within the State. The State Commission also has the power to call for the records and appropriate orders in any consumer dispute which is pending before or has been decided by any District Forum within the State if it appears that such District Forum has exercised any power not vested in it by law or has failed to exercise a power rightfully vested in it by law or has acted illegally or with material irregularity. NATIONAL COMMISSION The Consums Protection Act provides for the establishment of a National Consumer Disputes Redressal Commission. The National Commission shall consist of : (a) A person who is or has been a judge of the Supreme Court, to be appointed by the Central Government (in consultations with the Chief Justice of India) who willbe its President: (b) Four other members who shallbe persons of ability, integrity and standing and have adequate knowledge or experience of, or have shown capacity in dealing with, problems relating to economics, law, commerce, accountancy, industry, public affairs or administration, one of whom shall be a woman. Appointments shall be by the Central Government on the recommendation of a Selection Commitee consisting of a judge of the Supreme Court to be nominated by the Chief Justice of India, the Secretary in the Department of Legal Affairs and the Secretary in-charge of Consumer Affairs in the Government of India. Every member of the National Commission shall hold office for a term of five years or upto seventy years of age, whichever is earlier and shall to be eligible for reappointment. The National Commission shall have jurisdiction : (a) To entertain complaints where the value of the goods or services and the compensation, If any, claimed exceeds rupees twenty lakhs; (b) To entertain appeals against the orders of aný State Commission; and (c) To call for the records and pass appropriate orders in any consumer dispute which is pending before, or has been decided by any State Commission where it appears to the National Commission that such commission has exercised a jurisdiction not vested in it by law, or has  failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material iregulatrity. Complaints may be filed with the District Forum by : 1. The consumer towhom such goods are sold or delivered or agreed to be sold or delivered or such services provided or agreed to be avoided. 2. Any recognised consumer association, whether the consumer to whom goods sold or delivered or agreed to be sold or delivered or service provided or agreed to be provided, is a member of such associationor not. 3. One or more consumers, where there are numerous consumers having the same interest with the permission of the District Forum, on behalf of or for the benefit of, all consumers so interested. 4. The Central or the State Government. On receipt of a complaint, a copy of the complaint is to be referred to the opposite party, directing him togive his version of the case within 30 days. This period may be extended by another 15 days. If the opposite party admits the allegations contained in the complaint, the complaint will be decided on the basis of materials on the record. Where the opposite party denies or disputes the allegations or omits or fails to take any action to represent his case within the time provided, the dispute will be settled in the following manner : (i) In Case of Dispute Relating to any Goods : Where the complainant alleges a defect in the goods which cannot be determined without proper analysis or test of the goods, a sample of the goods shall be obtained from the complainant, sealed and authenticated in the manner prescribed for referring to the appropriate laboratory for the purpose of any analysis or test whichever may be necessary, So as to find out whether suh goods suffer from any other defect. The appropriate laboratory would be required to report its findings to the referring authority, i.e..the District orumor the State Commission within a period of forty-five days from the receipt of the reference or within such extended period as may be granted by these agencies. Appropriate Laboratory means a laboratory or organisation : (i) Recognised by the Central Government; (ii) Recognised by a State Government, subject to such guidelines as may be prescribed by the Central Government (ii) Any such laboratory or organisation established by or under any law for the time beign force, which is maintained, fiananced or aided by the Central Government or a State Government for carrying out analysis or test of any goods with a view to determining whether such goods suffer from any defect. The District Forum/State Commission may require the complainant to deposit with it, such amount as may be specified towards payment of fees tothe appropriate laboratory for carrying out the tests.On receipt of the report, a copy thereof is to be sent by District Forum/State Commission to the opposite party alongwith its own remarks. In case any of the party disputes the correctness of the methods of analysis/test adopted by the appropriate laboratory, the concerned party will be required to submit his objections in writing in regard to the report. After giving both the parties a reasonable opportunity of being heard and to present their objections, if any, the District Forum/State Commission shall pass appropriate order. (ii) In case of Dispute Relating to Goods not Requiring Testing or Analysis or Relating to Services :Where the opposite party duiies or disputes the allegations contained in the complaint within the time given by the District Forum/State Commission, it shall dispose of the complaint on the basis of  evidence tendered by the parties. In case of failure by the opposite party to represent his case within th. prescribed time, the complaint shall be disposed of on the basis of evidence tendered by the complain LIMITATION PERIOD FOR FILING OF CoMPLAINT The District Forum, the State Commission, or the National Commission shall not admit a complai unless it is filed within two years from the date on which the causeof action has arisen. However, wher the complainant satisfies the District Forum/State Commission, that he had sufficient cause for no filing the complaint within two years, such complaint may be entertained by it after recording the reasons for condoning the delay. PowERs OF THE REDRESSAL AGENCIES The District Forum, State Commission and the National Commission are vested with the powers of a Civil Court under the Code of Civil Procedure while trying asuit in respect of the following matters : 1. The summoning and enforcing attendance of any defendant or witness examining the witness on oath; 2. The discovery and production of any document or other material producible as evidence; 3. The reception of evidence on affidavits; 4. The requisitioning of the report of the concerned analysisor test from the appropriate laboratory or fromn any other relevant source; 5. Issuing of any commission for the examination of any witness; and 6. Any other mnatter which may be prescribed. Under the Consumer Protection Rules, 1987, the District Forum, Commission and the National Commission have the power to require any person : (i) To produce before, and allow to be examined by an officer of any authorities, such books of accounts, documentsor commodities as may be required and to keep such book, documents etc. under its custody for the purposes of the Act. (ii) To furnish such information which may be required for the purpose, to any officer SO specified. They have the power to : () To pass written orders. authorising any officer to exercise power of entry and search of any is any premises where these books, papers, commodities, or documents are kept if there secreted. ground to believe that these may be destroyed, multiliated, altered, falsified or Such authorised officer may also seize books, papers,documents or commodities if they are communicated to the District required for the purposes of the Act, provided the seizure is examination of such Forum/State Commission/National Commission within 72 hours, On retention thereof or may documents or commodities, the agency concerned may order the return it to the party concerned. (ii) To issue remedial orders to the opposite party. the complainant to make paymen (iii) To dismiss frivolous and vexatious complaints and to order of costs, not exceeding Rs. 10,000 to the opposite party. Remedies Granted under the Act Commission may passone or more of the followins The District Forum/State Commission/National orders to grant relief to the aggrieved consumer : 1. To remove the defects pointed out by the appropriate laboratory from goods in question, 2. To replace the goods with new goods of similar description which shall be free from any defect; 3. To return to the complainant the price, or, as the case may be, the charges paid by the complainant; 4. Topay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to negligence of the opposite party: 5. To remove the defects of deficiencies in the services in question; 6. To discontinue the unfair trade practice of the restrictive trade practice of not to repeat them; 7. Not to offer the hazardous goods for sale; 8. To withdraw the hazardous goods from being offered for sale; 9. To provide for adequate costs to parties. APPEALS Any person aggrieved by an order made by the Forum may prefer an appeal to the State Commission in the prescribed form and manner. Similarly, any person aggrieved by any original order of the State Commission may prefer an appeal to the National Commission in the prescribed form and manner. Any person aggrieved by any original order of the National Commission may prefer an appeal to the Supreme Court. Alsuch appeals are to be made within thirty days from the date of the order provided that the concerned Appellate authority may entertain an appeal after the said period of thirty days if it is satisfied that there was sufficient cause for not filing it within that period. The periodof 30 days is to be computed from the date of receipt of the order by the appellant. Where no appeal has been preferred against any of the orders of the authorities, such orders would be final. The District Forum,State Commission or NationalCommission may enforce respective orders as if it were a decree or order made by a court and in the event of their inability to execüte the sarme, they may send the order to the court for execution by it as if it were a Court decree or order. PENALTIES Failure or omission by a trader or other person against whom acomplaint is made or the omplainant to comply with any order of the State Commission or the National Commission shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to 3 years, or with fine of not less than Rs. 2,000 but which may extend to Rs. 10,000 or with both. However, if it is satisfied that the circumstances of any case so requires, the District Forumor the State Commission or the National Commission may impose a lower fine or a shorter term of imprisonment. IMPORTANT CONSUMER LAW CASES 1. Highly inflated electricity bills and defective electricity meter in the case of Y. N. Gupta vs. DESU, the National Commission considered a complaint regarding the inflated electricity bills served by DESU on the complainant. In this case, DESU did not raise bills in keeping with the cycle normally adopted. It also did not replace the defective meter. However, it slapped the bills for over Rs. 1.06 lakhs for a period from 21st December 1988 to 25th March 1990. The power connection was also disconnected but restored after making a complaint to the General Manager. The National Commissionruled that it was difficult to envisage asituation where the consumer  could have utilized over 1 lakh units of electricity and expect a poor consumer to pay bills of over a lakh rupees.The National Commission ruled that the bills were casually prepared. DESU did not have the authority to raise bills upon a defecative meter beyond six months under the Electricity Act, 1910. In these circumstances the National Commission concluded that there Was deficiency in services on the part of DESU and award a compensation of Rs. 30,000 and costs of Rs. 5,000. 2. Failure to deliver houses by the housing board is deficiency in service. In the case of S.P Dhavaskar v/s Housing Commissioner, Karnataka Housing Board and Vice Versa, the complainant had made a deposit of Rs. 1.66 lakhs with the Housing Board for a house proposed to be built by the Board. He wastold that the construction be completed within two years from March, 1987, In March, 1992 he was informed that he construction was not up tothe expécted level because of the use of lowcost technology and that the houses constructed developed distress and might not long and suggested that the complainant might take back the amount of deposit without interest or opt for a new house in lieu of the house already allotted.The complainant made a claim of Rs. 4.65 lakhs, which was rejected. The State Commission held that the act of the Housing Board amounted to a deficiency in service and returning deposit amount without interest was unreasonable and ordered payment of interest at 18% p.a. In appeal, the National Commission upheld the order of the State Commission. 3. Removal of ladder of an aircraft while disembarking by the passenger amounts to deficiency in service. In the case of Station Manager, Indian Airlines vs. Dr. Jiteswar Ahir, the National Commission held that removal of ladder while a passenger was disembarking, leading to injury to the passenger amounted to deficiency in service. The conmplainant after he was seated on the plane, was intimated by announcement that part of his luggage was lying on the ground unidentified. He moved towards the door and finding that the ladder was in place, tried to get down. But before he could get his entire body on the ladder, the ladder was moved as a result of which he fell to the ground and sustained injuries. The passenger demanded compensation of Rs. 10 lakhs from the Airline. The Airline was willing to paýRs. 40,000, which was the maximum amount payable under the Carriage by Air Act, 1972. The State Commission ordered a compensation oft Rs. 4 lakhs and Rs. 1 lakh for mental agony and distress plus costs. The National Commission upheld the order of the State Commission.