Indian Consumer Protection Laws

By Team Legal Helpline India, June 11, 2017

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Who is a Consumer?

The term consumer is defined in Section 2(d) of the Consumer Protection Act, 1986 in two parts, one in reference to a consumer who purchased the goods and the second in reference to a person who hires services. Thus the Act covers transactions for the supply of goods and rendering of services. So far as a buyer of goods is concerned the definition says that a consumer means a person who buys any goods for a consideration. This would have the effect of covering all kinds of transfer of goods for consideration whether in terms of money or other goods (barter or exchange) or services. The Sale of Goods Act, 1930 confines itself to sales for a money consideration and would not apply to a barter or exchange of goods unless the price is calculated in terms of money. It is not necessary that the consideration should be paid at once. It may be paid at once and thereby result in a cash sale. It is partly paid or partly promised or may have to be paid under some deferred system of payment, as for example, hire purchase, resulting in a credit sale. The term consumer also includes any person who uses the goods with the permission of the buyer though he is not himself a buyer. It is however expressly stated that the term consumer would not include a buyer who purchases for his trade. In other words, a consumer sale has to be distinguished from a trade sale. The Act says that the term consumer does not include a person who obtains goods for resale or for a commercial purpose. In England, also greater protection has been given to a consumer buyer. Under the Supply of Goods (Implied Terms) Act, 1973 a seller is not permitted in a consumer sale to exclude those terms which area implied in every contract of sale under the Sale of Goods Act, i.e., the requirement that goods must correspond with description, must be fit for the buyers purpose, must be of merchantable quality or must agree in bulk with the sample. The expression consumer sale is defined in that Act as a sale of goods (other than a sale by auction or by competitive tender) by a seller in the course of business where the goods (a) are of a type ordinarily bought for private use or consumption and (b) are sold to a person who does not buy or holds himself out as buying them in the course of business. In commercial sales, the exemption clauses are declared by that Act to be enforceable if it is fair and reasonable for the seller to rely on them. Thus the terms of a trade to trade sale or sales between traders would have to subject themselves to the criterion of reasonableness and fairness.

The second category of consumer is the hirer of services. The definition says that the term consumer includes a person who hires any services for a consideration. This would include all kinds of professional services, be it the routine services of a barber or the technical services of a highly qualified person. The world service has been defined in clause (o) of Section 2 as meaning the 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, board or lodging or both, entertainment, amusement or the purveying a news or other information. Free services or personal service under a contract have been excluded from the protective spell of the Act. Thus services must be of commercial nature in the sense that they must be on payment, which may be either in cash or kind and which may be made either at once or partly at once and partly on credit. Thus services may be rendered either wholly or partly on credit. In this category of consumer also any beneficiary of the services would be included though he is not hirer himself provided that he is using the services with the approval of the hirer.This is the type of consumer who has to be protected under this Act. The area of substantive protection is to be seen under the Sale of Goods Act, 1930 any other Acts applicable to goods or services. The Sale of Goods Act enables the buyer to reject goods if they do not correspond with their description. [In England it is now a penal offence to use false or misleading trade descriptions, vide. The Trade Descriptions Act, 1968 and 1972], or which are not fit for the buyers purpose or which are not of merchantable quality or which do not in their bulk agree with the sample. But the Sale of Goods Act defines only the substantive rights of the parties. It does not provide any special forum for redressal of consumer grievances. One has to go before the ordinary civil courts and face long delays, heavy court fee and lawyers tolls. What the Consumer Protection Act, does is that it gives a new forum which will be comparatively free from all these weaknesses. Court fee is not there; lawyers are not allowed and time-limit is set for disposal.

This is the type of consumer who has to be protected under this Act. The area of substantive protection is to be seen under the Sale of Goods Act, 1930 any other Acts applicable to goods or services. The Sale of Goods Act enables the buyer to reject goods if they do not correspond with their description. [In England it is now a penal offense to use false or misleading trade descriptions, vide. The Trade Descriptions Act, 1968 and 1972], or which are not fit for the buyers purpose or which are not of merchantable quality or which do not in their bulk agree with the sample. But the Sale of Goods Act defines only the substantive rights of the parties. It does not provide any special forum for redressal of consumer grievances. One has to go before the ordinary civil courts and face long delays, heavy court fee and lawyers tolls. What the Consumer Protection Act, does is that it gives a new forum which will be comparatively free from all these weaknesses. Court fee is not there; lawyers are not allowed and time-limit is set for disposal.

The provisions of the Act are specially declared to be in addition to and not in derogation of any other law for the time being in force. The Act provides a new remedy leaving the substantative rights to be the same as they were before. Under the pre-existing laws, the courts had sufficient power to provide remedies against defective goods and services. The courts had been active in the matter of consumers, particularly where the supplier is the Government itself or any of its agencies. The field of supply of electricity, telephone, hospitals, water, housing, transport, carriage and scores of other things is largely occupied by the public sector on a monopoly basis and this sector being free from the controls envisaged under the Monopolies Act, the consumer of the services of public undertakings becomes more vulnerable to exploitation. The High Court of Bombay provided relief to a telephone subscriber who was being coerced to pay a huge S.T.D. bill at a time when he had already dispensed with the S.T.D. facility. The statement of the Department that in spite of S.T.D. disconnection, it was possible to use it was described by the court as a bald statement. The telephone authorities were directed in another case to put back a telephone connection which they had wrongfully disconnected. The Gujarat High Court could not like the idea of the telephone department coming before it under an appeal against the orders of a District Judge directing reconnection of a telephone which had been disconnected wi5thout giving any opportunity to the subscriber to explain his position and dismissed the appeal.

An ad hoc compensation of Rs. 50,000 was directed by the Himachal Pradesh High Court to be paid to the dependents of persons who lost their lives by reason of being put on Nitrous Oxide instead of oxygen. Negligence was so grave that it spoke by itself of the callousness and indifference of the hospital authorities. A State Electricity Board was held liable to pay a sum of Rs. 25,000 by way of damages to a consumer whose supply of energy was disconnected for a period of three months causing him business loss.

Aims and Objectives of the Act

The Act is dedicated, as its preamble shows, to provide for better protection of the interests of consumer and for that purpose to made provision for the establishment of consumer councils and other authorities for the settlement of consumer disputes and for other connected matters. In thee statement of object and reasons it is said that the Act seeks to provide speedy and simple redressal to consumer disputes, a quasi-judicial machinery is sought to be set up at the District, State and Central levels. These quasi-judicial bodies will observe the principles of natural justice and have been empowered to give reliefs of a specific nature and to award, wherever appropriate, compensation to consumers. Penalties for non-compliance of the orders given by the quasi-judicial bodies have also been provided.

The Act seeks to protect the consumer in the following respects:

  1. The right to be protected against marketing of goods which area hazardous to life and property;
  2. The right to be informed about the quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practice.
  3. The right to be assure, wherever possible, access to variety of goods at competitive price.
  4. the right to be heard and to be assured that consumers interests will receive due consideration at appropriate forums;
  5. the right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers, and
  6. The right to consumer education.

Section 6 of the Act spells out these objects and charges the Central Council with the responsibility of attaining these objects. The section says that the objects of the Central Council shall be to promote and protect the rights of the consumer which have been listed in Section 6. They are as follows:

  1. Protection against Hazardous Goods

The Act says in the first place that the consumer has a right to be protected against the marketing of goods which are hazardous to life and property. While it is the concern of the Government and its authorities to prevent dangerous goods from finding their way into markets, the consumer is assured by this Act that if he has been victimized into purchasing goods which have injured his person or property, he will have a speedy and effective remedy under the redressal hierarchy constituted under the Act. For example, adulterated food is dangerous to life and weak cement is dangerous to life as well as to property.

The subject-matter of dangerous goods is generally taken care of under the law of trot. Since the time of Donoghue v. Stevenson where a bottle of drink sprang the remains of a dead-snail to the fright of the customer at a restraurant who had already taken a par of the contents aggravating her illness and the manufacturer was held liable to the distant user, it has become an established principle that a producer sending goods into the market would be liable to the ultimate user if his person or property is inured in the normal use of the goods. The decision has broadened the category of persons liable because the whole chain from the level of the producer up to the ultimate consumer is liable. It has also widened the range of persons to whom the liability is incurred. Further, in the words of Winfield, The principle has been extended from articles of food and drink and includes, inter alia, kiosks, tombstones, hair dye, industrial chemicals, lifts, motor cars, and pants. Likewise the term consumer includes the ultimate user of the article or anyone who is within physical proximity to it.

All such matters can now be taken up before the authorities constituted under the Act.

  1. Right to information

The consumer has been given the right to be informed by the producer about t5he quality, quantity, potency, purity, standard and prices of goods he buys. This is intended to save the consumer from unfair trade practices like false and misleading descriptions about the nature and quality of the goods, exaggerated statements about their power or potency, for example, that the hair oil is capable of promoting hair growth or preventing hair loss, where there is no such power to an appreciable extent, or that the medical preparation is capable of curing baldness or leucoderma, or that the goods are of some standard of purity which, for example, is indicated by the use of certification trade-marks like Agmark, I.S.I. or Woolmark when in fact the goods are not of that standard or purity. A misrepresentation as to price may occur, for example, in a concealed way in throwing open clearance, grand-clearance or reduction sales or in an offer of a free gift along with a particular product when, in fact, neither the prices are less than the original ones nor the so-called free-gift is really free.

In all cases of unfair trade practices, the consumer would have the option of either applying to the Monopolies Commission under the Monopolies and Restrictive Trade Practices Act, 1969 or to the Forums Constituted under the Consumer Act, 1986.

  1. Right of Access to Variety

The Central Council as constituted under the Act has been charged with the responsibility of bringing about the organization of markets and market practices in such a way that tall dealers are supplied with a variety of goods for the benefit of the consumer and that the goods with a variety are being offered at competitive prices. It is only then that the consumer will have access to variety and will be able to enjoy the benefit of competitive prices. This would require a certain degree of liberty of shop-keepers in selecting and stocking goods of choice. Shopkeepers freedom in this respect is often curtailed by the abuse of monopoly power in the shape of monopolistic or restrictive trade practices. If a shopkeeper is making his customer helpless and is thereby leaving them with no choice but to buy goods of one kind only, the matter may be brought to the notice of the Monopolies Commission and the latter can examine whether the shopkeeper is himself tied up by a producer and, if so, the Commission may liberate him from the burden of his ties and restore to him his choice as to stock-in-trade. Now by virtue of Section 6(c) this power will be exercisable by the Central Council also.

  1. Right to due atte4ntion at appropriate Forums

The Central Council is in the fourth place, charged with the responsibility of assuring to consumer that they would be heard as of right by the appropriate forums and the consumer will receive due attention and consideration from such forums. Thus it is the duty of the council so to organise and composes the different forums under the Act that an aggrieved consumer is heard as of right and receives due consideration at the hands of the appropriate redressal forums.

  1. Unscrupulous Exploitation

The consumer has been given the right to seek redressal against unfair trade practices or unscrupulous exploitation. While the concept of unfair trade practices as defined in Section 36-A of the Monopolies and Restrictive Trade Practices Act, 1969 has already been explained in point no. 2 above where also there words occur, the concept of unscrupulous exploitation of the consumer is a new one in this section.

  1. Right to Consumer Education

It was observed in the preface of the 5th edition of this book that where the people do not exercise their legal remedies, the system of remedies tends to become rusted. Hence for the proper functioning of the legal system it is necessary that knowledge of the availability of a legal remedy should be so widely disseminated that people as a whole become conscious of their rights. This has been made one of the missions of the Consumer Protection Act, 1986 and the Central Council has been charged with the responsibility to provide to the people proper education in terms of their remedies under the Act. Once the people are rendered conscious of their power, they may, perhaps, feel energized to struggle against exploitation by manufacturers and traders. Peoples awareness is likely to prove a better tool for putting the trade on some level of discipline than tons of Government controls. Controlling hands and tools of the Government are easily corruptible. They often fail in their mission. But consciousness of the people as a whole, for every person is a consumer one way or the other, when aroused by proper consumer education, is likely to be above petty temptations and, therefore, more effective in its mission.AUTHORITIES UNDER THE ACT

AUTHORITIES UNDER THE ACT

Central Consumer Protection Council

The Central Government is required by the Act to establish by notification a Council to be known as the Central Consumer Protection Council (short form: Central Council). Its composition is as follows:

The Council shall consist of the following members, namely,–

(a) the Minister in charge of the Department of Food and Civil Supplies in the Central Government, who shall be its Chairman ; and

(b) The such number of other official or non-official members representing such interests as may be prescribed.

The membership has been thus left to the rule making power of the Government. The Consumer Protection rules were promulgated in 1987. The membership of the Council is given in Section 3 of the Rules. It is to be composed of the following 150 members:

  • The Chairman shall be the Minister-in-charge of the Department of Civil Supplies;
  • The Vice-Chairman shall be the Minister of State (where he is not holding independent charge) or Deputy Minister in the Department of Civil Supplies;
  • The Ministers of Food and Civil Supplies or Minister-in-charge of Consumer Affairs in State;
  • eight members of parliamentfive from the Lok Sabha and three from the Rajya Sabha;
  • the Commissioner for Scheduled Castes and Tribes;
  • representatives of the Central Government Departments autonomous organizations concerned with consumer interestsnot exceeding twenty;
  • representatives of the Consumer Organisations or consumersnot less than thirty-five;
  • representatives of womennot less than ten;
  • representative of farmers trade and industriesnot exceeding twenty;
  • persons capable of representing consumer interests not specified abovenot exceeding 15;
  • Secretary in the Department of Civil Supplies shall be the member secretary to the Central Council.

The term of the council is for three years.

A member can resign by submitting his written resignation to the Chairman. The vacancy would be filled from the category to which the resigning member belonged and also only for the period for which he would have continued.

Procedure of the Council

The Council has to observe the following procedure in regard to the transaction of its business.

Its meetings have to be presided over by the Chairman, or, in his absence by the Vice-Chairman and in his absence, the council shall elect a Chairman from among the members.

Meetings have to be called by giving ten days notice to the members in writing.

The notice must specify the place, day and hour of the meeting and a statement of the business to be transacted.

Its proceedings shall be valid notwithstanding any vacancy or any defect in its constitution.

The Council is authorized to constitute working groups from amongst its members who shall perform the functions delegated to them by the council and their findings have to be placed before the council for its consideration.

The non-official members shall be entitled to first class to and fro railway fare and a daily allowance of Rs. 100 for attending meetings or for working in a working group. Members of Parliament shall be entitled t travelling and daily allowances as are admissible to them.

The resolutions of the council are of recommendatory nature.

The Council has to meet as and when necessary but not less than three meetings have to be held each year. The place of meeting is to be prescribed by the Chairman.

The objects of the Council are specified in Section 6 which are also the objects of the Act and which have already been noted.

State Consumer Protection Councils

Under Section 7 of the Act, State Governments are required to establish their respective Protection Councils. Rules as to composition etc. are to be prescribed by the State Governments. The objects of the State Consumer Protection Councils are described in Section 7 to be the same as those of the Central Council, namely, the points enumerated in Section 6.

Establishment

The following agencies are required to be established for the purposes of the Act.

  1. A Consumer Disputes Redressal Forum to be known as the District Forum. This is to be established by the State Government with the prior approval of the Central Government in each district of the State by means of a notification.
  2. A Consumer Disputes Redressal Commission to be known as the State Commission. This has also to be established by the State Government with the prior approval of the Central Government in the State by means of a notification.
  3. A National Consumer Dispute Redressal Commission to be established by the Central Government by means of a notification.

The Act thus envisages a hierarchy of three Redressal Forums:

District Forums

State Commissions

National Commission.DISTRICT FORUMS

DISTRICT FORUMS

Composition

A District Forum has to consist of:

(a) person who is or has been or is qualified to be a District Judge to be nominated by the State Government, to be its President;

(b) a person of eminence in the field of education, trade or commerce;

(c) a lady social worker.

Members of the District Forum hold office for a term of five years or up to the age of 85 years whichever is earlier and shall not be eligible for reappointment. A member may resign by submitting a written request to the State Government and the Government on accepting his resignation may fill the vacancy from among persons who belong to that category.

The State Government has to draft rules as to the salary or honorarium and other allowances payable to the members and also the terms and conditions of their service.

Jurisdiction of District Forums

District Forums enjoy jurisdiction to entertain complaints where the value of the goods or services and the compensation, if any, claimed is less than Rs. 1 lakh.

The territorial jurisdiction for the purpose of complaints is as follows:

  • complaint may filed at the place where the opposite party or each of the opposite parties actually and voluntarily resides or carries on business or personally works for gain, or
  • at the place where any of the opposite parties falls in the above category provided that in reference to others either permission of the District Forum is taken or they have acquiesced in the matter;
  • at the place where the cause of action wholly or in part arises.

Thus a complaint can be filed either at the place where each or whole number of the opposite parties reside or carry on business or at the place where the cause of action arises. In the case of manufactured goods, apart from the place of manufacture, the cause of action arises also at the place where the product is marketed.

Manner of making complaint

A complaint is defined in Section 2(c) as the making of any allegation in writing to the following effect:

  1. that as a result of any unfair trade practice adopted by any trader, the complainant has suffered loss or damage;
  2. that the goods mentioned in the complaint suffer from one or more defects;
  3. that the services mentioned in the complaint suffer from deficiency in any respect;
  4. that the trader has charged for the goods mentioned in the complaint a price in excess of the price fixed by or under any law for the time being n force or displayed in the goods or any package containing such goods.

Provided that the document has been submitted with a view to obtaining any relief provided by or under this Act.

The word complainant as defined in Section 2(b) means

  • a consumer;
  • any voluntary consumer association registered under the Companies Act, 1956 or under any other law for the time being in force;
  • the Central Government or any State Government, who or which makes a complaint.

A complaint in reference to any goods sold or delivered or services rendered may be filed with a District Forum by any of the following:

(a) by the consumer himself whom such goods have been sold or delivered or such service rendered;

(b) by any recognized consumer association even if the person who is the recipient of goods or services is not a member of the association. This clause would permit complaints as a matter of social service by dedicated social agencies described in the Act as recognized consumer associations; the process of recognition, as detailed in the Explanation appended to the section is that the association should be registered under any of the laws relating to the registration of associations or societies. The Explanation identies only the Companies Act and then says or any other law for the time being in force, e.g., the Societies Registration Act or the Cooperative Societies Act.

(c) by the Central or State Government.

Procedure on receipt of Complaint

The District Forum has to observe the procedure as detailed in Section 13. The first step on receiving a complaint is to refer a copy of the complaint to the opposite party directing him to give his version of the case within a period of 30 days. The Forum may extend the time for fifteen days but not beyond.

When the opposite party denies or disputes the allegations contained in the complaint or omits or fails to take any action to represent his case within 30 days or extended period of 15 days, a dispute arises. That is why a consumer dispute is defined in Section 2(e) as a dispute where the person against whom a complaint has been made denies or disputes the allegations contained in the complaint.

After these preliminary steps the Forum has to follow the procedure prescribed in reference to goods in clauses (c) to (g) of Section 13(1) and in reference to services, the procedure prescribed by Section 13(2). In reference to goods the complaint may refer to some defect. The expression defect as explained in Section 2(f) means any fault, imperfection or shortcoming in the quality, quantity, purity or standard which is required to be maintained by any law for the time being in force or which the trader claimed that his goods possessed.

The word trader for this purpose means a person who sells or distributes any goods for sale and includes the manufacturer of those goods. Where goods are sold or distributed in packages, the word trader would include the packer also. The word manufacturer as defined in Section 2(j) means a person:

  • who makes or manufactures any goods of parts thereof;
  • who is not the manufacturer or maker of the whole product or any part of it, but claims to be the manufacturer of the end product by reason of the fact that he is assembling the parts into the end-product;
  • who puts or causes to be put his own mark on the goods so as to claim that they are manufactured by him though they are in fact manufactured by another person.

Thus manufacturer means a person who produces, or assembles or puts his trade name on the goods in question. A person who sends goods to his branch offices for distribution, his branch offices will not be regarded as the manufacturer though the goods may be sent in parts and they are put together into one whole at such branches.

If the alleged defect in the goods is such that it cannot be determined without proper analysis or test of the goods, the Forum should obtain a sample of the goods from the complainant. The same should be protected by sealing etc. and sent to a laboratory (appropriate for the purpose) with a direction that they should be tested for the alleged defect or for any other defect. The time allowed to the laboratory is 45 days though the District Forum has the power to grant an extension of time beyond 45 days. The Forum can demand from the complainant the requisite fee for the laboratory. On receiving the report from the laboratory, the Forum should forward a copy of it to the opposite party along with its remarks if any.

If any party disputes the correctness of the report or the correctness of the method of analysis, the Forum shall require him to submit his objections in writing. Before issuing any final order in the matter the Forum will provide an opportunity to both parties to present their views about the report.

Sub-section (2) prescribes the procedure where the goods are of such a nature or the circumstances are such that the above procedure cannot be followed or the subject-matter of the contract was the rendering of services. In such cases the District Forum will send a copy of the complaints to the opposite party directing him to give his version of the case within a period of 30 days or such extended period not exceeding 15 days as may be granted by the District Forum. Where the opposite party denies or disputes the allegations or omits or fails to take any action to represent his case, the Forum shall proceed to settle the dispute on the basis of allegations, counter allegations and the evidence produced by the par5ties in support of their case. Where the opposite party does nothing in response to the complaint, the matter may be decided on the basis of the evidence produced by the complaint.

The proceedings of the Forum in compliance with the procedure laid down by Section 13(1) and (2) are to be regarded as valid. Their validity cannot be questioned on the ground that the principles of nature justice have not been complied with.

For the purposes of its proceedings, the District Forums have been vested with the same powers as are vested in a civil court under the Code of Civil Procedure, 1908. Such powers are enjoyed by the Forum in respect of the following matters:

  • the summoning and enforcing attendance of any defendant or witness and examining the witness on oath;
  • the discovery and production of any document or other material object producible as evidence;
  • the reception of evidence on affidavits;
  • the requisitioning of the report of the concerned analysis or test from the appropriate laboratory or from any other relevant source;
  • issuing of any commission for the examination of any witness and
  • any other matter which may be prescribed.

Every proceedings before the District Forum shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code, 1860 [punishment for false evidence and intentional insult or interruption to public servant sitting in judicial proceeding]. The District Forum is also deemed to be a civil court for the puposes of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 [Prosecution for contempt and provisions as to offense affecting the administration of justice.]

Findings of the District Forum

If the Forum is convinced that the goods were really defective or that the complaint about the service is proved, the Forum shall have to order any of the following things to be done by the opposite party:

  • to remove the defect which has been pointed out by the laboratory ;
  • to replace the goods with new goods of similar description which should be free from any defect;
  • to return to the complainant the price of the goods or the charges for the services;
  • to pay to the complainant a sum of money by way of compensation for any loss or injury suffered by the consumer due to the negligence of the opposite party.

The order of the Forum shall be signed by all the members. In case of a difference of opinion, the order of the majority of the members shall be the order of the Forum.

Appeal

Any person aggrieved by an order made by the District Forum may prefer an appeal against such order to the State Commission. The period of 30 days from the date of the order is allowed for the purpose. The form and manner of appeal have been provided in the rules made under the Act. The State Commission has been empowered to entertain an appeal even after the expiry of 30 days if it is satisfied that there was a sufficient cause for not being able to file an appeal within the prescribed period.

STATE COMMISSIONS

Composition

The Commission which has to be constituted at State levels has to consist of the following members:

  • a person who is or has been a judge of a High Court. The appointment is to be made by the State Government. He will be the President of the Commission;
  • two other members, who shall be 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 them has to be a woman.

A sitting judge of a High Court can be appointed only in consultation with the Chief Justice of that High Court. The salary or honorarium, other allowances, conditions of service including tenure of office have been left to be provided in the Rules to be prescribed by the State Governments.

Jurisdiction

Following types of jurisdiction have been conferred on the State Commission:

  1. To entertain complaints where the value of the goods or services and compensation, if any claimed exceeds Rs. 1 lakh but does not exceed Rs. 10 lakhs.
  2. To entertain appeals against the orders or any District Forum within the State.
  3. To call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any District Forum within the State. This power an be exercised only where it appears to the State Commission that the District Forum has exercised a jurisdiction which is not vested in it by law, or has failed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally or with material irregularity.

Procedure

The procedure prescribed for the working of District Forum by Section 12, 13 and 14 the rules framed under those sections, with suitable modifications is also applicable to State Commissions.

Appeals

The original jurisdiction of the State Commission is in terms of the monetary value of the dispute, namely, a dispute between the values of Rs. 1 lakh to Rs. 10 lakhs. A person aggrieved of an order of the State Commission in respect of this jurisdiction can prefer an appeal to the National Commission. Thirty days period from the order of the State Commission is allowed for carrying the matter before the National Commission. A late appeal may also be entertained provided that the Commission is satisfied that there was a sufficient cause for not preferring an appeal within the prescribed period.

Composition of the National Commission

The National Commission is to be composed of:

  • a person who is or has been a judge of the Supreme Court. He is to be appointed by the Central Government. He will be the President of the Commission.
  • four other members who should be persons of ability, integrity and standing and have adequate knowledge or experience of, or having shown capacity in dealing with, problems relating to economics, law, consumer, accountancy, industry, public affairs or administration, one of whom shall be a woman.

If a sitting judge of the Supreme Court is to be appointed as the President of the National Commission, it should be done with consultation of the Chief Justice of the Supreme Court. The salary, allowance etc. and other terms and conditions of service of the members of the Commission have been provided in the rules made under the section.

Jurisdiction of the National Commission

The original jurisdiction of the National Commission is to entertain complaints where the value of the goods or services and compensation claimed exceeds Rs. 10 lakhs.

The appellate jurisdiction is to entertain appeals against orders of any of the State Commissions.

The supervisory jurisdiction of the National Commission is the power 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 the State Commission has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction vested in it by law or has acted in the exercise of its jurisdiction illegally or with material irregularity.

Procedure of the National Commission

The working procedure is the same as that of the Forum under Section 13(4) and (5) and for the rest it has been prescribed by the Central Government under its rule making power.

Appeals

From any decision of the National Commission an appeal lies to the Supreme Court. Thirty days time from the date of the order is allowed for the purpose. The Supreme Court may permit an appeal even after the expiry of the prescribed period if there was a sufficient cause for not being able to file an appeal within time.

Finality of Orders

Where no appeal has been preferred, the orders of a District Forum, a State Commission and those of the National Commission shall be final.

Enforcement of Orders

The orders of a District Forum, State Commission and those of the National Commission are enforceable in the manner of an order or decree made by a Court in a civil suit. If the above authorities are not able to execute their orders, they can send them to a civil court for execution. The Civil Court which has jurisdiction for the purpose is the court of the place, in the case of a company, where the registered office of the company is situated and, in the case of any other person, the place where that person voluntarily resides or carrier on business or personally works for gain. The court to decree or order sent to it for execution.

Dismissal of frivolous or vexatious complaints

All the three judicial organs constituted under the Act, namely, District Forums, State Commissions and the Central Commission, have the power to dismiss a complaint which appears to have been filed frivolously or with a view to cause vexation.

Penalties

A trader or a person against whom a complaint is made is supposed to carry out the order of the District Forums, State Commissions or the National Commission. Any failure in this respect would entail the penalties are imprisonment for a minimum period of one month while the maximum can go up to three years. In the alternative, a fine ranging from a minimum of Rs. 1,000 to a maximum of Rs. 10,000. Both the penalties can also be inflicted. All the above authorities have also been empowered to impose less than the minimum prescribed both in respect of fine or imprisonment provided that the deciding authority is convinced that the circumstances of the case so require.

Miscellaneous provisions

Chapter IV of the Act contains some miscellaneous provisions.

Section 28 gives protection to action taken in good faith. The members of District Forums, State Commissions and National Commission and officers acting under their directions are protected against liability to any suit, prosecution or other legal proceedings for orders made in good faith and the execution of such orders.

Section 29 empowers the Central Government to remove difficulties in the implementation of the provisions of the Act. Since this power was exercisable for a period of two years only from the date of the commencement of the Act and that period being already expired, the power has already ceased to be effective.

Section 30 confers upon the Governments [both Central and State] in their respective spheres power to make rules.

Section 31 requires that the rules made and enforced under the Act shall be laid before each House of Parliament, while it is in session, for a total period of thirty day, and, thereafter, the future of the rules will be as determined by the Parliament. State Governments have to follow the same procedure in respect of rules drafted and enforced by them.

REMEDIES OF THE CONSUMER UNDER MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 1969

UNFAIR TRADE PRACTICES

Definition of Unfair Trade Practice

The chapter of the original Act dealing with restrictive trade practices has been supplemented by the amendment of 1984 by adding Part B to it. This part is designed to deal with unfair trade practices.

Section 36-A explains what unfair trade practice means for the purposes of the Act. The main purpose of the provisions is to afford some measure of protection to the ultimate consumers of goods or users of services. The consumer must get what he is told he is getting. Where, by any method whatsoever, a belief is created in the minds of consumers as to some quality or utility of goods or services, and the goods actually fall short of those standards, this will be unfair to consumers. As a part of the statutory framework of consumer protection programme, such a method has been regarded by the Act as an unfair trade practice. Such methods are listed in the section. The section says that where the methods stated in the section are adopted for the purpose of promoting the sale, use or supply of any goods or for the provision of any services and thereby some loss or injury is caused to the consumer of such goods or services, it is an unfair trade practice, whether the purpose is achieved by eliminating or restricting competition or otherwise. This is so because the primary theme of the provisions is to protect the consumer from the business community. The provisions became necessary because the provisions of the Contract Act, 1872 relating to Fraud and Misrepresentation and those of the Sale of Goods Act, 1930 relating to Conditions and Warranties have not been able to give adequate protection to consumers against deceptive trade practices. This is true primarily because of the high cost and long delays of litigation.

The practices mentioned in the section are grouped in five categories:

  1. False Representation

The practice of making any statement, whether oral or written or by verbal representation which:

  • falsely suggests that the goods are of a particular standard, quality, grade, composition, style or model;
  • falsely suggests that the services are of a particular standard or quality or grade;
  • falsely suggests any re-bullet, second-hand, renovated or reconditioned or old goods as new goods;
  • represents that the goods or services has sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;
  • represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;
  • makes a false or misleading representation concerning the need for or usefulness of any goods or services;
  • gives a warranty or guarantee as to the durability, performance or efficacy of the goods which is not based upon adequate or proper tests; the burden of proof will lie upon him to show that the goods were adequately and properly tested;
  • makes to the public a representation in a form that looks like a guarantee or warranty, or a promise to replace, maintain or repair the goods until they achieve a specified result, and the representation is materially misleading or there is no reasonable prospect that the guarantee etc. contained in the representation shall be carried out;
  • materially misleads the public about the prices at which such goods or services are available in the market;
  • gives false or misleading facts disparaging the goods, services or trade of another person.

The mode of representation or statement to the public may be by any method. It will be enough if the statement comes to the knowledge of a buyer of those goods etc. therefore, says that the representation may appear on the article, or on its wrapper or container, or on anything attached to, inserted in or accompanying the articles or on anything on which the article is mounted. An advertisement for sale of holiday resorts held out promises as to appreciation both in terms of value and rent and offered free holiday for ever comparing them with commercial complexes like those in Connaught Place, the promises and comparisons were found to be false, the Commission prohibited any further portrayal of the advertisement. The claim of another advertiser as to cure for Leuckoderma was restrained because the treatment offered was neither medically sound, nor the clinic was being attended by a world renowned doctor, as represented. An advertisement offering high rate of interest and secured investment without proof of supporting facts as to financial base etc. has been restrained. An Institute organized by some private persons under the name of Indian Institute of Management Studies offered coursed leading to Diplomas. The Commission restrained the advertisement because diplomas can be conferred only by an Authority created by law.

  1. False offer of Bargain Price

The second category is in clause (2). It includes the publication of an advertisement in a newspaper or otherwise by which goods or services are offered at a bargain price when in fact this is not the intention or they are not intended to be offered at that price for a reasonable period or reasonable quantity. The bargain price for the purposes of this provision means the price stated in the advertisement in such manner as suggests that it is lesser than the ordinary price or a price which the person coming across the advertisement would believe to be better than the price at which such goods area ordinarily sold. An announcement for sale of textiles at a throw away prices, which were not verifiable because neither the quality of the goods was mentioned nor their prices, has been held by the Commission to be unfair.

An advertisement of off season discount on fans calculated in reference to future and not present prices has been held to be unfair.

In determining which cases to select for formal action, the Federal Trade Commission (U.S.A.) places a high priority on those matters which relate to the basic necessities of life, and to situations in which the impact of false and misleading advertising, or other unfair and deceptive practices, falls with cruelest impact upon those least able to survive the consequencesthe elderly and the poor. Often the type of false advertising attached by the F.T.C. is designed to make prospective purchasers believe they will be getting a good deal in terms of price if they buy the product in question. For example, a seller of goods was ordered to refrain from advertising its product for sale by use of a rice comparison in which its actual price was compared to a higher regular price or a manufacturers list price. The Commission ruled that it was deceptive to refer to regular price unless the defendant had usually sold the items at the price recently in the regular course of business. Also it was held deceptive to refer to the manufacturers list price when that list price was not the ordinary and customary retail sales price of the items in the locality..In ordering enforcement of the Commissions cease and desist order, the Court of Appeals said: We do not understand the Commission to hold that use of the term manufacturers price list is unlawful per se; rather it is unlawful only if it is not the usual and customary retail price in the area.

  1. Schemes offering Gifts, etc.

The third category of unfair trade practice includes in it fold the offering of any gifts, prizes or other items along with the goods when the real intention is different or giving the impression that something is being offered free of price along with the goods when in fact the price is wholly or partly covered by the price of the article sold, or some prizes are offered to the buyers by the conduct of some lottery or chance game when the real aim is promotion of sales or business.

The Commission has also restrained what is called bait and switch promotion. In this method a product is advertised at a low price only as a bait to capture the interest of the consumer and then switch his attention to another product which the advertiser really desired to sell from the beginning. The Monopolies and Restrictive Trade Practices Commission restrained a prize scheme which was designed to boost the sale of cycles during the rainy season when sales would otherwise be sluggish. The Commission advised the producer that instead of baiting customers like that he should have given them the benefit of price reduction. The Commission was of the view that though apparently the scheme was to confer a benefit upon some consumers who would be selected by chance, it was injurious to the interest of consumers as a whole inasmuch as it would deprive them of the benefit of competition which is offered by an affluent market.

  1. Non-compliance of prescribed standards

The fourth category of unfair trade practices includes cases where goods are sold for use by consumer knowing or having reason to believe that they do not comply with standards prescribed by some competent authority. The prescribed standard may relate to performance, composition, contents, design, construction, finishing or packing as are necessary to prevent or reduce the risk of injury to the person using the goods.

  1. Hoarding, Destruction or Refusal

The fifth and the last category of unfair trade practices includes cases of hoarding, destruction of or refusal to sell, goods or services. Clause (5) says that a practice will be unfair if it permits the hoarding or destruction of goods, or refusal to sell the goods or to provide any services if such conduct is intended to raise or has the effect of raising the cost of those or other similar goods or services.

Inquiry by Commission

The Commission can start an inquiry into an alleged unfair practice in the following cases:

(1) on receiving a complaint from any trade or consumers association having a membership of at least 25 persons or form 25 or more consumers; the complaint should state the facts;

(2) on receiving a reference from the Central or any State Government;

(3) on receiving an application from the Director General;

(4) upon its own knowledge or information.

Where a complaint is made by consumers or a consumers organization the commission is required by Section 36-C, before proceeding against any body, to ask the Director General to conduct a preliminary investigation about the complaint so as to satisfy itself that the complaint is genuine and really deserved to be inquired into.

Powers of the Commission

Where upon an inquiry the Commission finds that the practice in question is prejudicial to public interest or to the interest of any consumer or consumers generally, the Commission can pass orders of the following kind:

(1) that the practice shall be discontinued on shall not be repeated;

(2) that the agreements connected with an unfair trade practice shall be void or shall stand nullified; the order may also take care of the consequential matters.

The Commission has the alternative power to ask the person concerned that he should so moderate his dealings as no longer to cause prejudice to public or consumer interest. The Commission may set a time limit for compliance of its orders. If the orders are not carried out, the Commission may exercise its other powers under the section.

The order of the Commission cannot deal with any trade practice which has been authorized by any law for the time being in force. Subject to this exception, however, the Commission and Director General will have the same powers in reference to an unfair trade practice as they have in respect of restrictive trade practices.

Power to award Compensation

The power to award compensation has also been conferred by the amendment of 1984. Before this amendment, where any violation of the Act caused damage, such as damage caused by a restrictive trade practice, a separate suit had to be filed to recover compensation for the same. Now the Commission itself can award compensation in such cases, though the right to file a separate suit for the purpose is not taken away.

The section says that where any monopolistic, restrictive or unfair trade practice has caused damage, to any Government, or trader or consumer, an application may be made asking for compensation and the Commission may award such compensation as it may think appropriate. Where any such loss or damage is caused to a number of persons having the same interest, compensation can be claimed, with the permission of the Commission, by any of them on behalf of all of them. For this purpose the provisions of Rule 8 of Order 1 of the first Schedule of the Civil Procedure Code, 1908 will become applicable. The Commission enquires into the allegations in the application and may then pass a decree for compensation. Where the applicant has already obtained a decree from a civil court for the same loss or damage, the amount of that decree shall be set off against the decree passed by the Commission and the decree shall be executable for the balance.

Enforcement of Orders

Temporary injunctions issued by the Commission under Section 12-A and decree for compensation under Section 12-B are enforceable in the same manner as if it were a decree passed by a civil court. If the Commission finds that it is not able to execute its orders it may refer them to the civil court having jurisdiction over the undertaking or the persons against whom the order is passed.

Under the amended Act, now the Consumer courts have independent power of execution of its orders like the civil courts.

IMPORTANT: We have an expert in-house team for all legal services on consumer laws, call us at 011-2335 5388 or mail us the details for any such services.

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