ABSTRACT: The Consumer Protection Act of India has been acknowledged world over
as a revolutionary piece of consumer protection legislation. It is simple and aims to
provide speedy and inexpensive redressal of consumer grievances besides providing for
promotion and protection of six rights of the consumer. The author, in this paper entitled
STATE OF CONSUMER PROTECTION LAW IN INDIA, has attempted to review
the functioning and implementation of the Consumer Protection Act in India during past
16 years. Although there is some interesting case law developed during this period for
protection of consumers, the government apathy and indifference has resulted into tardy
implementation of this benevolent legislation. The continuous monitoring by consumer
bodies and regular periodic review of the progress at regional and international level
alone can ensure effective consumer protection in the Region, according to the author.
STATE OF CONSUMER PROTECTION LAW IN INDIA
By
Shirish V. Deshpande
Mumbai Grahak Panchayat
India can perhaps boast of having one of the simplest and the best consumer protection
legislations in the world entitled “The Consumer Protection Act – 1986”. The Indian
Parliament passed this benevolent piece of legislation and the President of India gave his
assent to this law on 24th December 1986.
The Consumer Protection Act – 1986 (CPA for short) is a product of persistent efforts
made by Indian consumer organizations and the adoption of ‘UN Guidelines for
Consumer Protection’ by the Government of India. The passage of CPA by the Indian
Parliament must be regarded as a major landmark in the history of Indian consumer
movement.
Salient features of the Consumer Protection Act-1986 :

It is simple to understand. It has just 31 Sections.

It recognizes 6 Rights of the Consumer

It provides for Consumer Protection Council at the Centre and in each State
for promotion and protection of the six consumer rights

It provides for a 3-tier Redressal Mechanism (District Forum – State
Commission
- National Commission), popularly known as “Consumer
Courts”, to adjudicate consumer disputes. These are not Courts proper,
although they have all the powers of the Courts.

The District Forum can entertain claims upto Rs 500,000/-. The State
Commission is empowered to entertain claims from Rs 500,001 to Rs
20,00,000/-. The National Commission entertains claims above Rs
20,00,000/-. ( US 1 = Rs 50/- apprx)

The Procedure of these Consumer Courts is simple unlike complicated
procedure prescribed for Civil and Criminal courts

The Consumer need not engage an advocate to represent his case before the
Forum or the Commission. He can either appear in person or authorize any
other person ( not necessarily an advocate) to represent his case.

The proceedings in these Forum/Commissions are based on the principles of
“natural justice” and not based on the strict law of evidence.

The District Forum comprises of a President who is with judicial
background at the District level and two other Members who are persons of
eminence and standing in the society (one of them being a woman). The
State Commission too comprises of the President who is normally a retired
or a sitting High Court judge and the two other Members are persons of
eminence and standing in the society (one of them being a woman). The
National Commission is headed by the President who is a retired or a sitting
Supreme Court judge with 4 other Members (one of them Woman) who are
eminent
persons
from
the
society
with
good
academic
background/experience.

There is no Court Fee or Stamp Fee payable by the consumer for the
compensation he claims in his Complaint.

The Complaints are normally expected to be disposed of within 90 to 150
days from the date of admission.

There is only one Appeal provided and no Appeal against Appeal is
provided.

The strict penalty of imprisonment upto 3 years is provided for noncompliance of the Orders of the Forum and the Commissions. Similarly,
there is a provision to penalise the consumer for filing frivolous or vexatious
case.

Adequate cost is also provided to the complainant for pursuing his
complaint before the Forum/Commission.
Looking at the above features of the law, one can certainly say that this is an ideal piece
of consumer protection legislation. However, the law is, after all, not an ornamental piece
to beautify the statute of the country but supposed to be an instrument to do justice to the
community. The efficacy of any law has to be tested on the basis of the success it has
achieved in attaining the objective behind such law. The avowed objective of the Indian
Consumer Protection Act – 1986 is “to provide for BETTER PROTECTION OF THE
INTERESTS OF CONSUMERS”. The passage of almost 16 years after introduction of
the CPA is a period long enough to judge its efficacy.
It is a matter of regret that the Consumer Protection Act – 1986 was in fact a non-starter.
After the Parliament passed this Act, the Central Government and various state
Governments did not take any action to set up Consumer Protection Councils and the 3tier Redressal machinery (Consumer Courts). It is only after Public Interest Litigation
(PIL) filed by consumer groups like Common Cause from Delhi and CERC from
Ahmedabad in the Supreme Court, the Central and State Governments were forced to set
up District Fora, State Commissions and the National Commission. Thus it was not
before 1989 – almost three years after the passage of the Act - that each District in India
had a District Forum in its place. The Supreme Court gave important directions to the
Central and all state Governments in this PIL and emphasised that it is the responsibility
of the Governments to ensure that the Consumer Fora and the Commission are not only
set up but that they function effectively and efficaciously.
However, once the Fora and the Commissions were set up, the consumers in India really
saw some very encouraging and inspiring results. There were several cases where
individual consumers, without any guidance and assistance from lawyers, fought their
own battles in these Consumer Courts and sought justice against all powerful private
companies, public undertakings and even the government monopoly giants like Life
Insurance, Railways and Telephone Departments. The judgement given by the Consumer
Courts awarding compensation sent shock waves in government monopoly sectors and
they were forced to pull up their socks and take cognisance of the consumers’ grievances.
For the first time in India, government monopoly giants realized that there is some one
called “the Consumer” who matters, thanks to the Consumer Protection Act.
Some of the landmark judgments and how the consumers fought them with their limited
resources are worth mentioning. Here is a landmark case of a middle-class retired teacher
Mrs. Neela Raje from Pune (Maharashtra state) who had deposited a sum of Rs 30,000/with a Company in a Fixed Deposit for a period of 3 years. On completion of a 3 year
period, she sought her money back with applicable interest. However, the Company
started giving evasive replies instead of refunding her amount with interest. She therefore
filed a Complaint in Pune District Forum seeking refund of her Deposit amount with
interest and compensation. The Company opposed the claim on technical ground that she
is an “investor” and not a “consumer” as defined under the Consumer Protection Act.
Unfortunately, the Forum upheld the objection and dismissed her complaint. She then
approached Mumbai Grahak Panchayat (MGP) with a question whether the Investor is
not a Consumer? Realizing the gravity of the issue, the MGP challenged the decision
before the State Commission and strongly pleaded that the Investor is a “ Consumer’ as
defined under the Consumer Protection Act. However, despite persuasive arguments by
the MGP even the State Commission endorsed the Pune Forum’s decision to dismiss the
Complaint. The determined lady, sent all her papers to the National Commission in Delhi
including the arguments submitted by the MGP and informed the National Commission
that she cannot afford to go to Delhi to attend the hearing and the case be decided in her
absence on the basis of written arguments submitted before the State Commission.
Happily, the National Commission went through her written submissions, heard the
Advocate of the Opposite Party
and gave a landmark decision of far-reaching
consequence that the Investor is indeed a “Consumer” as defined under the Consumer
Protection Act. It is this judgement that has now given millions of aggrieved investors
access to Consumer Courts to seek relief from unscrupulous investment companies.
In yet another case of Public Importance filed by Mr. H. D. Shourie of Common Cause,
the National Commission gave an important ruling that if the consumers suffer any
losses on account of illegal strike in any public utility, the concerned Trade Union will be
liable to compensate the consumers for losses suffered on account of such illegal strike.
In a historic case filed by the Mumbai Grahak Panchayat, the National Commission
directed an errant scooter manufacturing company LML to refund, along with penal
interest, the Deposits of more than 400,000 consumers who had cancelled their scooter
bookings.
The Supreme Court, in another test case, held that medical services are also covered
under the Consumer Protection Act and the patients who pay consideration to the Doctors
/ Hospitals are the “ consumers” under the Consumer Protection Act. Although the CPA
excludes free services from its purview, the Supreme Court also ruled that a poor patient
receiving free medical service from any Government or Municipal Hospital will also be
regarded as a Consumer if such hospital has even a small paying ward.
However, the case which will always be remembered by Indian consumers is the
Lucknow Development Authority v/s M.K.Gupta , wherein the Supreme Court laid down
the principle of Individual Accountability of officials and employees working in Public
Utilities and Government Undertakings. In this landmark judgement, the Supreme Court
observed that the Public Utilities and Government Undertakings will keep paying the
compensation to the aggrieved consumers as directed by the consumer courts for the acts
of omissions and commissions by their officials and employees. But these Undertakings
will eventually recover this huge loss from the consumers by increasing the fees , rates or
tariffs. As a result, the system will continue to rot. The Supreme Court therefore directed,
that in all such cases where Public Utilities or Government Undertakings are required to
pay compensation to the consumers, at least some part of such compensation must be
recovered from those officials / employees found responsible for such acts of omissions
and commissions. Based on this significant judgement, many Consumer Courts directed
the officials and employees from Life Insurance Corporation, Mahanagar Telephone
Nigam Ltd. , Indian Railways etc. to recover compensation awarded from the defaulting
employees. As a result, these monopoly giants under the Government control were forced
to organise training programmes for their employees / officials to promote “ Customer
Satisfaction” . It will thus be seen that the Consumer Protection Act not only provided
relief to the aggrieved individual consumers, but also became instrumental in correcting
the entire system in the marketplace by making it customer oriented.
It must also be mentioned that it is not only the Public Undertakings but even the Private
Sector took a serious note of the existence of the Consumer Protection Act and the
judgements delivered by the Consumer Courts and the Supreme Court. The big industrial
houses including the multi-national companies, who had hitherto cared little for the
unorganised and weak consumer , became sensitive to the consumer grievances and
started taking steps to set up in-house Consumer Grievance Cells as envisaged by the UN
Guidelines for Consumer Protection.
Thus, it can be safely said that the Consumer Protection Act truly empowered the weak
and unorganised Indian consumer to fight injustice and exploitation by the organised and
often all-powerful business lobby.
However, in spite of this inspiring and stimulating case-law developed under the
Consumer Protection Act, the implementation of the Act is far from satisfactory. The
consumer courts have, no doubt , come to the rescue of the aggrieved Indian consumers.
But, the speedy and inexpensive remedy as envisaged under the Consumer Protection Act
has remained a distant dream. Although the Act expects disposal of the complaints within
3 to 5 months , in many metropolitan cities, complaints are pending for 3 to 5 years ! The
Government apathy and indifference is the most important factor contributing to such
delay. In Maharashtra, the government did not make appointments of the Presidents and
Members of the Consumer Fora and as a result, 27 out of the 34 District Fora came to
standstill in 1997 which forced the Mumbai Grahak Panchayat to file a Public Interest
Writ Petition in the Mumbai High Court. The 1997 performance of the Government was
repeated in the year 2002 when the fresh appointments for the Presidents and the
Members became due. The infrastructural facilities such as staff, stationary , furniture ,
decent accommodation for the Courts etc. are often denied by the Government which
adversely affects the smooth and efficient functioning of the Consumer Courts in
Maharashtra. It is understood that the story is no different in many other states in India.
Inadequacy of funds is often given as a reason for the Government’s failure to provide
infrastructural facilities or timely appointments of the Presidents and the Members of the
Consumer Courts. However, a careful study has revealed that more often than not, it is
the lack of interest on part of the Government rather than the lack of funds, which is at
the root of this problem. Many leading consumer bodies have to spend their time to
pressurise the government through the intervention of the High Courts and the Supreme
Court to ensure functioning of the Consumer Courts.
It must be mentioned that every small delay in disposal of aggrieved consumer’s
complaint protects the unscrupulous opposite party and delays justice to the consumer.
This is contrary to the letter and spirit of the Consumer Protection Act. The long delays
witnessed in the consumer courts have led to widespread frustration among the aggrieved
consumers.
The Consumer Protection Act also provides for Consumer Protection Councils at the
Centre and State levels. These councils comprising of representatives of the consumer
bodies, Trade and Industry , the Government etc. are meant to recommend the Central
and State Governments, policies and measures to be adopted to promote and protect the 6
Consumer Rights recognised under the Act. Unfortunately, even on this front , the
performance of various State Governments is miserable. At the State level, at least 2
meetings every year, of such Consumer Protection Councils are mandatory under the Act.
However, in Maharashtra, which is supposed to be one of the more progressive states in
India, no Council Meeting was convened by the Government during the last 4 years ; and
it is only after the MGP raising the issue in the High Court, the Government recently
convened the Council meeting which was more of an eye-wash. It is learnt that the
situation in other states is also equally bad. The Consumer Protection Council as
envisaged under the Act, is an effective platform where Consumer bodies, Trade &
Industry and the Government can deliberate and collaborate to work out Consumeroriented Policies. Unfortunately, the potential of this effective platform remains
unutilised.
This sorry state of affairs of the Consumer Protection Act in India has forced the
Consumer bodies to vigorously campaign for amendments in the Consumer Protection
Act. Unfortunately, even here the indifference and the apathy of the Government is writ
large on the amendment bill now pending in the Parliament for more than two years. The
CPA Amendment Bill –2000 provides for some welcome changes in the Act and the bill
is now expected to be passed by the Parliament in November 2002.
The proposed amendment bill seeks to enhance the pecuniary jurisdiction of the District
Forum from Rs. 500,000 to
Rs. 20,00,000. Such an enhancement of Pecuniary
Jurisdiction will ensure closer access at the district level itself, for the aggrieved
consumers for claims upto Rs. 200,000. The amendment also makes the frequent
adjournments more difficult by penalising the parties seeking such adjournments. The
Forum and Commission will be required to give reasons if they fail to dispose off the
complaints within 3 to 5 months. The amendment bill provides for a nominal fee to be
paid by the consumers. More importantly, the bill provides sufficient powers to the
Consumer Fora and Commissions to execute their orders and enforce compliance. A
major shortcoming in the existing Act is sought to be removed by empowering the Fora
and Commissions to give interim reliefs to the aggrieved consumers.
It is hoped that with the passage of the CPA Ammendment Bill, the Consumer Protection
Act in India will become a more effective and more meaningful instrument to protect and
promote consumer interests. Of course, Consumer bodies will have to continue to play
their role as watchdog bodies to monitor the effective implementation of this benevolent
piece of legislation.
At the Regional or International level, it is necessary to have a periodic review of the
state of Consumer Protection policies and law in respective countries. This will also
facilitate sharing of experiences and exchange of views and ideas to ensure that the UN
Guidelines for Consumer Protection no more remain a mirage but turn into a concrete
reality for millions of consumers.
The proposed Asian Conference on Consumer Protection, Competition Policy and Law is
therefore a right step, in the right direction at a right time.
*
*
*
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Contact Information:
Name:
MR SHIRISH V. DESHPANDE
Title :
Advocate
Organization:
Mumbai Grahak Panchayat
Designation :
Managing Committee Member, In-charge of Consumer Protection
Title of Paper :
STATE OF CONSUMER PROTECTION LAW IN INDIA
Mailing Address: Grahak Bhavan, Sant Dnyaneshwar Marg, Vile Parle (West),
MUMBAI 400 056 (INDIA)
Phone/Fax
: 91 22 628 8624 / 91 22 625 0916
E mail
: mgp@bom5.vsnl.net.in / shirish50@yahoo.com