UNIT 18 CONSUMER PROTECTION ACT BASIC FEATURES
Structure
18.0 Objectives
18.1 Introduction
18.2 Salient Features of the Act
18.2.1
Three Tier Redress Machinery
18.3 Certain Definitions
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Meaning of Consumer
18.3.2
Consumer Dispute
13.3.3 Defect
18.3.4 Deficiency
18.3.5
District Forum
18.3.6
Goods
18.3.7 Manufacturer
18.3.8 National Commission
18.3.9 Person
18.3.10 Restrictive Trade Practice
18.3.11 Service
18.3.12 Statecommission
18.3.13 Trader
18.3.14 Unfair Trade Practice
18.4 Let Us Sum Up
18.5
Key Words
18.6
Some Useful Books
18.7 Answers to Check Your Progress
After studying this unit, you should be able to:
identify basic features of Consumer Protection Act, 1986
understand the meanings of various terms and expressions used in the Act.
18.1 INTRODUCTION
In the earlier unit of Block 5 you have studied about the evolution of consumer protection laws
in India. Inspite of host of the legislations, none of them could be described as consumer
specific. They have been designed to provide reliefs in specific situations only. None of them,
for example, provided for rights of consumers, a separate judicial machinery for looking into
complaints. Caveat Emptor - Let the buyer beware continued to be the governing rule. The
helpless and harassed consumer did not really get effective remedies. Consumer remained the
king only in the literature on economics. The seller/manufacturer/supplier continued to roll the
roost.
With the enactment of Consumer Protection Act, 1986 the scenario has undergone a change.
Rights of consumers have been given a statutory recognitions. Three-tier grievance redressal
machinery at the District, State and National level has been constituted. Consumer is sought to
be installed as a king.
The Indian Parliament enacted this legislation in December, 1986. It came into force on April
15, 1987. By July 1987, all the provisions came into operation.
The object of the legislation, as the Preamble of the Act proclaims, is for better protection of
the interests of consumers. During the last few years preceding the enactment there was in this
country a market awareness among the consumers of goods and services that they were not
getting their money's worth and were being exploited by both traders and manufacturers of
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Coluumer Rotedon Act
Bmlc Features
consumer goods. The need for Consumer Redressal Fora was, therefore, increasingly felt.
Understandably, therefore, legislation \;as introduced and enacted with considerable
enthusiasm and fanfare as a path-breaking benevolent legislation intended to protect the
consumers from exploitation by unsc~pulousmanufacturers and traders of consumer goods. A
three tier for a comprising the District Forum, the state Commission came to be envisaged
under the Act for redressal of grievances of consumers.
Emboldened by the legislation, enacted in 1986, consumers have been flooding these
Redressal Agencies with petitions dead phones, malfunctioning television sets, delayed LPG
cylinder connections, losses due to strikes in banks and hospitals, medical malpractices, bad
pressure cookers, loss of agricultural crops due to power breakdowns, unkept promises and
what you have.
You, being a consumer, must know as you how the provisions of this Act can be used as
weapons in your armoury to fight your day-to-day battles in the market place.
18.2 SALIENT FEATURES OF THE ACT
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In this unit you will study the basic provisions of the Consumer Protection Act, 1986. The
detailed rights of the consumers and how can those rights be enforced (i.e., the various reliefs
available to consumers) shall be studied in the next unit.
Salient features of the Act are:
1)
The Act aims to provide better and all-round protection to consumers.
2) In terms of geographical application, it applies to the whole of India except the State of
Jammu and Kashmir.
3) It applies to all goods and services unless otherwise expressly notified by the Central
Government.
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4) It is indeed a very unique and highly progressive piece of social welfare legislation and is
acclaimed as the magna carta of Indian consumers. The Act has made the consumer
movement really going and more powerful, broad-based and effective and peopleoriented. In fact, the Act and its Amendment in 1993 have brought fresh hopes to the
beleaguered Indian consumer. This is the only law which directly pertains to market place
and seeks to redress complaints arising from it. Even prior to 1986, there were in force a
number of laws which could be interpreted in favour of the consumers. But, this Act is
most powerful piece of legislation the consumer has had before 1986. Its provisions are
very comprehensive and highly efficacious.
In fact, it provides more effective protection to consumers than any corresponding
legislation in force even in countries which are considered to be much more advanced.
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5) It provides effective safeguards to the consumers against different types of exploitation
such as defective goods, unsatisfactory (or deficient) services and unfair trade practices.
18.2.1 Three-Tier Grievance Redressal Machinery
For enforcement of the rights of the consumers, the Act has created special consumer Courts.
As Act provides for a three-tier consumer grievance redressal machinery with the District
Forums at the base, the Slate Commission at the middle level and the National Commission at
the apex level. The State and national level bodies also function as appellate authorities. Any
verdict given by the National Commission can be challenged in the Supreme Court.
The cost of goods or services and compensation asked for is the criterion for filing the
complaint with the above Redressal Fora. The Redressal Fora constitute a quasi-judicial
machinery to provide speedy and simple redress to consumers.
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The Redressal Foras are not trammeled by any technicalities or rules of complicated or
eleborate procedure. They are merely to observe the basic rules of natural justice. No court fee
or any other charge is to be paid in respect of any complaint or petition of appeal or revision,
however high be the value of its subject matter.
Thus, the Act provides a simple, speedy and inexpensive redressal of consumer grievances
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Consumer Protection A C ~
The complaint need only set out the grievances in the simplest form and furnish the name and
address of the opposite party against whom the complaint is made. It may even be in the form
of a letter to the concerned Redressal Forum and no formalities of any type would be insisted
upon. Appearance may be by the complainant himself in person or by agent duly authorised by
him. It is not obligatory to engage any advocate. Thus, it is a far more convenient law for
consumers.
The definition of the expression 'service' in the Act in very wide and comprehensive. In fact,
it will take in service of any description rendered for consideration by any person or
organisation including public sector undertakings (PSUs) and Government agencies. However,
services rendered free of charge or under any contract of personal service, are excluded. Thus,
the following services do not fall within its ambit: (i) Health Services provided by
Government hospitals, (ii) Civic amenities provided by municipal authorities.
All suppliers of goods and services, both in the private and in the public sector and the
cooperative sector, are covered by the Act.
The hallmark of the Act is that it has set a time frame for the disposal of cases.
The Act allows filling of "class action" complaints on behalf of groups of consumers having
common interest.
The Act also covers complaints relating to unfair trade practices. Thus, a consumer can
directly protect against food adulteration, short weighing and overcharging, directly to the
District Forum. The consumer can pick up a food sample from a shop. get it analysed by a
chemist and file a complaint on that basis.
It also provides for complaints against charging in excess offie price of a product fixed by a
law or rule andlor displayed on the packaged commodities.
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To organise consumer resistance further and educate them, the Act also provides for the
formation of consumer protection councils in every State. These councils do not have any
legal authority under the Act but are meant to promote the cause of consumer protection and
cover the six consumer rights -right to safety, to be informed, to choose, to be heard, to
redress, and to consumer education.
Check Your Progress 1
Note:
i) Use the space below for your answers.
ii) Check your progress with the model answer given at the end of the unit.
1)
Briefly explain the salient features of the Consumer Protection Act, 1986.
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18.3 CERTAIN DEFINITIONS
A number of words and expressions have been used in the Act. These must be clearly
understood by you if you want tolmaster its various provisions. In the following paragraphs,
you would note their meanings.
18.3.1 Meaning of Consumer
Who is a Consumer?
Reliefs under the Act are available to consvmers only. Therefore, you must categorically know
the meaning of a consumer.
S.2 (1) (d) defines the term consumer. It means miy of the following persons:
i)
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A person who huys any goods for a consideration.
Consumer Prote~tionAcl.Basic Features
It also includes any user of such goods when such use is made with the approval of the
buyer. But it does not include a person who obtains such goods for re-sale or for any
commercial purpose. The Amendement Act, 1993 has added the following Explanation:
"Commercial purpose" does not include use by a consumer of goods bought and used by
him exclusively for the purpose of earning his livelihood, by means of a self-employment.
ii) A person who hires or avails of any services for a consideration.
It also includes any beneficiary of such services other than the person who hires or avails
of the services for consideration when such services are availed of with the approval of the
first mentioned person. The consideration for the purchase of goods or hiring or availing
of the services may have been paid or promised or partly paid and partly promised, or
under any system of deferred payment.
Therefore, to be a 'consumer' under the Act i)
the goods or services must have been purchased or hired or availed of for consideration
which has been paid in full or in part or under a system of deferred payment, i.e., in
respect of hire-purchase transactions;
, ii) goods purchased should not be meant for re-sale or for a commercial puypose. Thus, where
a vehicle has been purchased for the purpose of running it as a taxi, the purpose being
commercial the buyer shall not be a 'consumer' under the Act [Western India State Motors
v. Subhag Ma1 Meena and Others (1989)l. However, if the taxi is used by the buyer to earn
his livelihood, the buyer will be considered as a consumer.
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Any economic activity or transaction carried on with the motive of making profit would fall
under the term commercial purpose, irresp&fiCe of the scale of operations
In S. Pattahhiraman v. SP. ST. Palaniappan (Order dt. 3.5.1994), the National Commission
ruled that a chartered accountant who is in practice and who purchased a computer for being
installed in his office, cannot be regarded as a consumer under the Consumer Protection Act.
Are the following consumers?
I) Winner of a lottery
The question was considered in the case of Byford v. S.S. Srivastava [1993]. In this case
Byford Motors inserted an advertisement in newspapers stating that a person booking a
premier Padmini Car could enter into a contest in a lottery conducted by them. Under it a
person who was successful in the draw would be entitled to two free tickets from New Delhi to
New York and back. Shri S.S. Srivastava was one of the persons who was successful in the
draw. He asked the dealers, Mls. Byford Motors, to give him the value of two tickets which
was refused and he was asked to produce two passports to enable them to book the tickets. The
complainant, however, produced one passport immediately but the second after the end of the
financial year. M/s. Byford Motors refused to give the tickets on the ground that accounts of
the financial year had been closed and that they could not carry 'forward the liability of that
year to the next financial year under the provisions of the Income-Tax Act and Rules.
The Court held, that the complainant was not a consumer within the meaning of Sec.2 (1) (d)
of the Act. He had received the car for which he had paid and there was no complaint as to its
condition.
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Receiving air tickets to New York was an additional attraction attached to the sale, which
depended upon a lottery draw. It is not an intrinsic part of the contract deal for which payment
was made. Thus, as far as lottery was concerned, it could not be said that complainant was a
consumer who had hired any service for consideration and hence he had no right to get
redressal under the Act.
The complainant's argument that this would fall under unfair trade practice as in Sec. 36A(4)
of the MRTPAct, 1969, was also not accepted.
2) A person registering for gas connection
The National Commission in Mohindra Gas Enterprise v. Jagdish Poswal(1993) held that
registering for gas connection amounts to hiring of services. Reference was made to the
Manual of the Indian Oil Corporation which states that an LPG customer gets continuing or
recurring services like loan of the Corporation's equipment, delivery of refill cylinders,
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technical service for appliance bn leakage of equipment and so on. But can a person be upheld
as a consumer at the stage of registration or only when he signs subscriptions voucher and
makes deposit for LPG connection. To this, National Commission observed as follows:
Service as defined in sub-clause (0) of the sub-section (1) of Sec. 2 means "service of any
description which is made available to potential users". The consumer who hires a servcice has
been defined in clause (ii) of Section 2(1) of the Act, according to which it is not necessary that
consideration should be paid at the tin~eof hiring of service. If the transaction is supported by
consideration which has been paid or promised or partly paid or partly promised or under any
system of deferred payment, even then it will be a valid consideration for the hiring of the
service. The present case is one in which payment of part consideration was deferred till the
gas connection was released. Hence, a person becomes a consumer of LPG right at the time of
registration for an LPG connectjon.
3) Warranty of free service
In Visliwa Jyoti Printers v. MoliVls of India (1992) a warranty of free service for one year was
given at the time of sale of a printing machine. The seller of the machine contended that since
he was rendering free service for the maintenance of the machinery for one year under the
warranty, the buyer was not a 'consumer' under the Consumer Protection Act.
Held, the warranty was a part of the composite contract for supply of the printing machine and
its maintenance for a period of Qneyear. The consideration for service to be rendered under the
warranty is obviously included In the sale price of the machine. There could not be an
agreement, including warranty, without consideration. It was wrong to maintain that warranty
obligations were being rendered free of charge.
4) Passengers travelling by t@ns
In General Manager, Southern Railway v. Anand Prasad Sinha (1989), it was held that
passengers travelling by trains m payment of the stipulated fee charged for the ticket are
'consumers' and the facility of tfansportation by rail provided by the railway administration is
a 'service' rendered for consideriation as defined in the Act.
5) Subscribers of telephones ~ o u l dbe 'consumers' under the Act and accordingly are entitled
to seek relief from Forums wherever necessary [Dist. Manager, Telephones, Patna v. Lalit
Kumar Bajla (1989)l.
6) User of electricity is a consuper. The National Commission in Y.N. Gupta v. DESU
(decided on 16.11.1992) considdred a-complaintregarding the inflated electricity bills served
by DESU on the complainant. Id this case, DESU did not raise the bills in keeping with the
cycle normally adopted. It also did not replace the defective meter. However, it issued a bill for
Rs. 1.06 lakhs for a period of 1 114 years. The power connection was also disconnected but
restored after a complaint with tke General Manager.
The Natignal Commission ruled that the bills were casually prepared as much as the bills
reflected consumption in the five digits instead of four digits. Moreover, DESU had no power
to raise bills upon a defective meter beyond six months under the Electricity Act, 1910. The
National Commission concluded that there was deficiency in service on the part of DESU and
awarded a compensation of Rs. 30,000 and costs of Rs. 5.000.
18.3.2 Consumer Dispute
According to Section 2(1) (c), C~nsIlmerdispute means a dispute where person against whom a
complaint has been made, denieg or disputes the allegations contained in the komplaint.
18.3.3 Defect
According to Section 2(1) (c), Cbnsumer Protection Act, 1986, as amended hy the Amendment
Act, 1993, a '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 or under any contract, express or implied, or as js claimed by the trader in any
manner whatsoever in relation ta any goods.
napwe& oil adulterated with known toxic
A ration shop s~pplieda ration $-holder
adulterants. The complainant, an# his family, as result of that rapeseed oil consumption
Consumer I1rotection~ c -- t
Basic Feature.,
suffered severely. He was attacked with paralysis of lower limbs and inspite of prolonged
treatment he did not recover fully. His wife, inspite of medical treatment, was not able to carry
on her ordinary avocation as housewife because of ailment. His two daughters and a son, all
growing children were also affected and medical report was that they had severe attack. Their
educational carrier was doomed. Considering all these facts, the Commission awarded a sum of
Rs. 1,50,000/- to the complainant and Rs. 50,0001- for his wife and Rs. 25,0001- to each of the
children resulting in awarding of toal of Rs. 2,75,000/- (Barsad Ali vs. ~ a h a ~ i Director,
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West Bengal Essential Commodities Supplies Corp. 1993, CCJ 476).
18.3.4 Deficiency
parallel to 'defect' in case of goods, 'deficiency' is relevant in case of services. The expression
in defined under Section 2(1) (g) of the Consumer Protection Act, 1986. It ineans 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 otherwise
in relation to any service.
A number of judicial decisions on deficiency of service are available. Some of these are being
given here under:
I) Maina Devi Bairalia v. Life Insurance Corporatidn of Iadia (decided by the National
Commisison on 11S.1993). In this case, Maina Devi's husband took a life insurance policy for
Rs. 50,000. Before the second premium fell due, he died due to sudden illness. The claim made
by Smt. Maina Devi, the widow of the insured, was not entertained for as long as 14 years. It
was only when she got her miseries published in newspapers and certain MPs took up thc
matter in Parliament that she was sent a cheque for Rs. 50,310.
On a suit before National Commission, it was held that the Corporation had been highly
negligent in the performance of its services. Smt. Maina Devi, the complainant, had suffered
hardship and loss on account of deficiency in service. She was held entitled to interest a 12 p.a.
from the date of expiry of 3 months from the date of death of assured till the amount was paid
to her. The Commission also awarded her compensation Rs. 15,000 for mental torture and
harassment.
2) Telecom District Manager v. Umesh Chandra Patnaik (decided on 15.3.1993). In this case,
the complainant had alleged that he was not receiving telephone bills regularly and therefore on
account of non-payment of some bills his telephone had been disconnected.
Held, in the absence of any provision'in the Telegraph Act, on the basis of the rules requiring
that telephone bills should be despatched by registered post, the Department could not be said
to have committed any deficiency in service.
3) Skypack Couriers Pvt. Ltd. &Another v. MIS. Anupama Bagla (1992). In this case, nondelivery o l a vidco cassette by a courier service company resulting in the complainant losing ,
admission to the desired college was held to be 'deficiency' in service as the conlplainant was
put to serious hardship and loss by reason of the neglect and failure on the part of the courier to
deliver the article entrusted to them for carriage. Accordingly, compensation of Rs. 10,000 was
warded to the complainant.
4) In Lucknow Development Authority v. Roop Kishore Tandon (1990), the failure on the
part of a Housing Board to glve possession of the flat after receiving the price and after
registering it in favour of the allottee was held to be deficiency in service.
5) Airpak Couriers (India) Pvt. Ltd. V. S. Suresh (decided o n 11.3.1993). A consignment of
important papers was handed over to the courier MIS. Airpak Couriers Pvt. Ltd. The.
consignment did not reach its destination. The State Commission held it to be a case of
deficiency in service and granted a compensation of Rs. 1 lakh for the loss.
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In appeal, the appellant contended that the consignor agreed to the terms and conditions of the
courier that its liability was limited and restricted to Rs. 100 ohly, that according to IAT9
regulations no important documents were to be sent through courier service and since the
consignment was lost in transit, they were liable to the extent of Rs. 100 only as damages. The
consignor was bound to disclose the nature of contents before sending the consignrqent and the
value of the consignment was not specially stated in the column assigned for it in the
consignment note.
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Consumer ProtectionAct
Held, if the documents which were sent were of great value, the consignor ought to have
insured them. No such sep was taken nor was its value disclosed in the consignment note. It
was not clear why the consignor could not have sent duplicate copies of the lost documents
when the loss came to light.
The compensation awarded by the State Commission was not justified. Since there had been
deficiency of service, a sum of Rs. 100 only was awarded.
6) Indian Oil Corporation Ltd. v. Venkataraman (decided on 18.12.1992). In this case, the
State Commission as well as the National Commission held that the supply of a gas cylinder
with a defective value and the failure of the distributor's supplyman to check the defect at the
time of delivery amounted to deficiency of scrvice. Accordingly, the Indian Oil Corporation
was held liable to compensate for loss of life and injury resulting from fire caused by the
leakage from the defective value. A sum of Rs. 1,50,000 was awarded.
7) State Bank of India v. N. Raveendran Nair (decided on 3.8.i992). A demand draft of
Rs. 98,000 was issued by the State Bank of Travancorc on the State Bank of India, Surat. When
presented at the drawee branch, the payment was refused on the ground that under the
signature of one of the persons signing the draft, (accountant), the capacity to which he signed
the same was not mentioned. Held, the refusal amounted to deficiency in service and the bank
should be held liable for the inconvenience and consequent loss to the payee of the draft.
18.3.5 District Forum
District forum means a consumer Disputes Redressal forum established under clause (a) of
Section 9 (Sec. 2 (1) (h)).
Section 9 (a) in this regard provides that there shall be established for the purposes of the
Consumer Protection Act a
Disputes Redressal Forum to be known as the District
Forum established by the Stae Government in each district of the State by notification. The
State Government may, if it deems fit, establish more than one District forum in a district.
consumer
18.3.6 Goods
Goods under this Act shall have the same meaning as assigned to them under the sale of goods
Act, 1930 (Sec. 2(7) (i)).
Accordingly, Goods means every kind of movable property other than actionable claims and
money; and includes stock and shares, growing crops, grass and things attached to or fonning
part of the land which are agreed to be served before sale or under the contract of sale (Sec. 2
(7) of the Sale of Goods Act, 1930).
Are Shares before allotment goods?
The Supreme Corut in Morgan Stanly Mutual Fund v. Kartick Das (1994) 4 (Supreme Court
Cases 225), observed that till the allotment of shares takes place, 'the shares do not exist'.
Therefore, they can never be called goods.. .it is after allotment, rights may arise as for the
contract (Articles of Asskiation of Company), but certainly not before allotment.
18.3.7 Manufacturer
Sec. 2 (1) (1) of the Act define's'the expression 'manufacturer' to mean any of the following
persons:
i)
A person who makes or manufactures any goods or part thereof.
ii) A person who does not make or manufacture any goods but assembles parts thereof made
or manufactured by others and claims the end-product to be goods manufactured by
himself. But, where a manufacturer despatches any goods or part thereof to any branch
office maintained by him, such branch office shall not be deemed to be manufacturer even
though the parts so despatched to it are assembled at such branch ofice and are sold or
distributed from such branch office.
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iii) A penon who puts or causes to be put his own mark on any goods made or manufactured
by any other manufacturer and goods and claims such goods to be goods made or
manufactured by himself.
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Conarmer Protection Act
Basic Feahves
18.3.8 National Commission
'National Commission' means the National Consumer Dispute Redressal Commission
established under clause (c) of Section 9 [Sec. 2(1) (k)l.
Section 9 (c) provides that there shall be established for the purpose of this Act a National
Consumer Disptues Redressal Commission established by the Central Government by
notification. The Government vide powers conferred upon it under the said clause established a
National Commission in 1987.
18.3.9 Person
As per Sec. 2(1) (m), 'person' includes:
i)
a firm, whether registered or not;
ii) a Hindu undivided family;
iii) a Cooperative Society;
iv) every other association of persons whether registered under Societies Registration Act, or
not.
18.3.10 Restrictive Thde Practice
'Restrictive trade practice', as per Sec. 2(1) (nn) means any trade practice which requires a
consumer to buy, hire or avail of any goods or, as the case may be, services as a condition
precedeat for buying, hiring or availing of other goods or services.
Thus, compelling a consumer to buy insurance cover while purchasing a vehicle, or insisting
on purchase of gas-stove as a pre-condition to release gas connection shall be a restrictive trade
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practice.
18.3.11 Service
Section 2 (1) (0)provides that Service means service of any description which is made
available to potential users and includes the provision of facilities in connection with banking,
financing, insurance, transport, processing, supply of electrical or other energy, boarding or
lodging or both, housing cohstruction, entertainment, amusement or the purveying of news or
other information, but does not include the rendering of any service free of charge or under a
contract of personal service.
Are the services rendered by Government hospitals free of charge?
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A controversy has been raised with regard to treatment at Government hospitals as to whether
it constitutes a service within the meaning of service under the Act. There are some who
believe that the treatment in Government hospitals is actually not free inasmuch as it is the
taxpayer's money which goes to fund these hospitals and, if therefore a taxpayer seeks the
treatment, he is paying for the same though indirectly. However, National Commission in
Consumer Unity and Trust Society (CUTS) v. State of Rajasthan, (1989) held that complaints
against government hospitals cannot be entertained under the Act on the ground that person
receiving treatment in such hospitals is not a consumer as the patient does not hire the services
of the hospital; moreover, the treatment provided is free of charge, and therefore, it does not
amount to 'service'. It further observed that this was their interpretation within the scope of the
Act and if the Leigslature intended otherwise, the Act ought to be amended suitably. Rowever,
service rendered by doctors in private hospitals for consideration would come under the
purview of service (Cosmopolitan Hospitals v. Smt. Vasantha P. Nair 1992).
18.3.12 State Commission
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It means a Consumer Disputes Redressal Commission established in a State under clause (b) of
Sec. 9 (Sec. 2(1) (p)), Clause (b) of Sec. 9 provides that there shall be established for the
purpose of this Act a Consumer Disputes Redressal Commission to be knowh as the State
Commission established by the State Government in the State by notification in the official
Gazette.
Consumer Pmtection,Act
A trader in relation to any goods means a person who sells or distributes any goods for sale and
includes the manufacturer thereof. Where such goods are sold or distributed in package form,
the expression trader shall include the packer of those goods [Sec. 2(1) (q)].
18.3.14 Unfair lkade Prgctice
Somewhat similar to the definition of unfair trade practice under the MRTPAct, clause (r) of
sub-section (1) of Section (2) of the Consumer Protection Act defines the expression unfair
trade practice. It is defined to mean a trade practice which, for the purpose of promoting the
sale, use or supply of any goods or for the provision of any service adopts any unfair method or
unfair or deceptive practice including any of the following practices, namely:
1)
The practice of making any statement, whether orally or in writing or by visible
representation which-
i)
falsely represents that goods are of a particular standard, quality, quantity, grade,
composition, style or model;
ii)
falsely represents that the services are of a particular standard, quality or grade;
iii)
falsely represents any rebuilt, second hand, renovated, reconditioned or old goods as new
goods;
iv)
represents that the goods or services have sponsorship, approval, performance,
characteristics, accessories, uses or benefits which such goods or services do not have;
v)
represents that the seller or the supplier has a sponsorship or approval or affiliation which
such seller or supplier does not have;
vi)
makes a false or misleading representation co~cerningthe need for, or the usefulness of,
any goods; or services;
vii)
gives to the public any warranty or guarantee of the performance, efficiency or length of
life of a product or of any goods that is not based on an adequate or proper text thereof.
However, where a defenct: is raised to the effect that such warranty or guarantee is based
on adequate or proper test, the burden of proof of such defence shall lie on the person
raising such defence;
viii) makes to the public a repiesentation in a form that purports to be, a)
a warranty or gurantee of a product or of any goods or services; or
b) a promise to replace, maintain or repair an article or any part thereof or to repeat or
continue a service until it has achieved a specified result,
c)
If such purported wahanty or gurnntee or promise is materially misleading or if there
is not reasonable prcvspect that such warranty, guarantee or promise will be camed
out;
ix)
materially misleads the public concerning the price at which a product or like products or
goods or services, have been or are, ordinarily sold or provided;
x)
gives false or misleading1facts disparaging the goods, services or trade of another person.
Case Law on Misleading Advertisement and False Representation
Since the concept of 'unfair trade practice' under the Consumer Protection Act is quite new,
case-law under the Act is not yet available. But the expression has been eseentially used in the
same sense as under the MRTPAct. Therefore, some cases decided by the MRTP Commission,
on the subject, may be considered with advantage.
i)
Acupressure Therapy Health Centre (1986). The respondents in this case were
manufacturing acupresslsre sandals which they claimed were designed to improve blood
circulation, and keeping the users healthy by walking daily on the chappals for 8 minutes
every morning and evening before meals. The respondents also claimed that WHO has
approved of this therapy, When the matter was referred to the All India Institute of
Medical Sciences, it was very clearly stated by way of medical opinion that there was no
proven evidence in modern medical literature that acupressure helps treat any ailment.
a
&
and that the scicnce of acupressure was not accepted even in developed countries. Even
the WHO disclaimed any approval having been granted to the use of such sandals.
Further, on thc box containing the chappals, it was mentioned that the sandals were not to
be used for more than ten minutes and that heart and blood pressure patients should
consult the doctor before using them, but these facts were not mentioned in the
advertisement. The MRTP Commission held that the facts of acupressure thereby were
false and misleading. According, injection was issues restraining the respondent from
giving out advertisements containing misleading facts. (ii) DG (I & R), New Delhi v.
Principal, Kathiar Medical College, Patna (1989). Director General filed an
application suo mot0 against Principal, Kathiar Medical College, which was registered
under the Societies Registration Act. It was alleged that the respondent had been giving
wrong impression in his publicity material that the college was authorised and equipped
to impart medical education leading to M.B.B.S. degree. The college was actually neither
recognised by the Medical Council of India nor atfiliated to any University.
The Com~nissionheld it to be a case of misleading advertisment amounting to unfair trade
iii)
In Snowhite Clothiers (1986), the respondent issues adveitisements promising discounts
up to 50% upon stating in the advertisements "Drop in for unbelievable bargain in men's,
ladies and children wear". The Commission ruled that the advertisements were
misleading in that the normal price was not shown, the bargain sale period was not
indicated - 'till stocks last' was held a vague tenn.
iv)
!n Panama Textiles, Bombay (1987), the dealer was found to have conducted the
bargain in the name and style 'ZAPATA' at YWCA, Ashoka Road, New Delhi and at
NDMC Hall Punchkuin Road, New Delhi. In the impugned 'bargain sale', the said dealer
was found to have sold spurious/sub-standard suiting, etc. falsely claiming that to be of
well-known brands manufactureh by M/s Ra~nondWoollen Ltd., Grasim Industries Ltd.,
M/s Bombay Dyeing, etc. Held the delaer had indulged in an unfair trade practice.
2)
Pennits i)
The offering of gifts, prizes or other items with the intention of not providing them
as offered or creating impression that something is being given or offered free of
charge when it is fully or partly covered by the amount charged in the transaction as
a whole;
ii) the co~ductof any context, lottiery, game of chance or skills, for the purpose of
promoting, directly or indirectly, the sale, use of supply of any product or any
business interest.
4)
Permits the sale or supply of goods intended to be used, or are of a kind likely to be used,
by consumers, knowing or having reason to believe that the goods do not comply with
the standards prescribed by competent authority relating to performance, composition,
contents, design, construction, finishing or packaging as are necessary to prevent or
reduce the risk of injury to the person using the.goods.
Thus, sale of helmets without IS1 certification will amount to an unfair trade practice
under this clause.
5)
Permits the hoarding or destruction of goods, or refuses to sell the goods or to make them
available for sale or to provide any service, if such hoarding or destruction or refusal
raises or tends to raise or is intended to raise, the cost of those or other similar goods or
service.
No relief to consumers in the case of unfair trade practice and restrictive trade practice. In the
case of these two practices, all that the District Forum may order is to discontinue them, or not
to repeat them.
The Act does not provide for:
i)
any relief to the consumers who have suffered as a result of such practices.
i
any penal action for the practices, or their repetition later on.
It may be mentioned that section 128 of the MRTPAct, 1969 makes a provision for payment of
compensation in such types of cases.
Consumer ProtectionAct Bafk Fealur
Consumer Protection Act
Check Your Progress 2
Note:
i) Use the space below for your answers.
ii) Check your progress with the model answers given at the end of the unit.
1) What in your opinion are theathree most important features of the Consumer Protection
Act, 1986.
2) State, if the following are the consumdrs under the Consumer Protection Act, 1986:
i)
Purchase of a sewing machine for earning her livelihood.
ii)
A person registered for gas-connection but before allotment of the same.
iii) User of electricity
...............................................................................................................................................
3) Are the following 'goods' under the Consumer Protection Act, 1986:
i)
Growing crops
ii) Shares before allotment
...............................................................................................................................................
4)
Shall the following scrvices be covered under Consumer Protection Act, 1986:
i)
The services rendered by the doctors of A11 India Institute of Medical Sciences.
ii) Services rendered by doctors of a nursing home.
iii) Professional services of a lawyer engaged by a client.
iv) Services rendered hy a lawyer appointed on a salary by a company.
18.4 LET US SUM UP
The Consumer Protection Act, 1986 is a consumer specific legislation designed to provide for
speedy and inexpensive remedy to the consumers. The Act for the first time gives statutory
recognition to the rights of the consumers. Three-tier redressal machinery at the District, State
and the National level has been constituted. The Act offers remedies to consumers not only in
respect of defects in goods or deficiencies in services but also for overcharging and a host of
unfair and restrictive trade practices.
18.5 KEY WORDS
Forum (Fora): Any place for public discussion.
Natural Justice: Justice, based on the innate morale sense.
18.6 SOME USEFUL BOOKS
Ram J. Markin, 1980 : Marketing, New York.
Francis Cherumilan, 1991 : Business and Government, New York.
P.K. Majumdar, 1995 : Law of Consumer Protection in India, New Delhi.
18.6 ANSWERS OF CHECK YOUR PROGRESS EXERCISES
Check Your Progress 1
1) Seee section 18.2
Check Your Progress 2
1)
The three most important features of the Consumer Protection Act, 1986 are:
a) This is first legislation of its kind inasmuch as it provides for reliefs against different
kinds of exploitation including defective goods, unsatisfactory or deficient services,
restrictive and unfair practices.
b) The Act provides for speedy and inexpensive redressal of grievances through threetier machinery at the District, State and National level.
It is an Act which also provides for inexpensive method of seeking relief. No court
fee or any other charge is to be paid. Moreover, the consumer can argue his own case.
Engaging an advocate is not necessary.
c) This Act gives statutory recognition to the right of consumers.
2)
i)
Yes..Purchase of sewing machine for earning livelihood is not a purchase for
commercial purpose.
ii) Yes. See Mahindra Gas Enterprises v. Jagdish Poswd(1992).
iii) Yes. Refer to the National Commission decision in Y.N. Gupta v. DESU (1992).
3)
i
-
i)
Yes. See definition of 'goods'.
ii) Yes. See decision of the Supreme Court in Morgan Stanley Mutual Fund v. Kartick
Das (1994)
4)
i)
No. Refer to National Commission decision in consumer Unity and Trust Society v.
State of Rajasthan (1989).
.
P. Nair).
ii) Yes. (Cosmopolitan Hospitals v. ~ m tVasantha
iii) Yes. Such services cannot be regarded as personal services and thus are not exempted.
iv) No. See National Coqmission decision in A.C. Modagi v. Cross well-Tailor(1991).
Consumer Protection Act Basic Features