The Consumer Protection Act, 1986 ?

CONSUMER PROTECTION ACT, 1986

Transition from `Caveat emptor` to `Caveat vinditor`

· A consumer is a user of goods and services. Any person paying for goods and services, which he uses, is entitled to expect that the goods and services are of a nature and quality promised to him by the seller. Only in 1932 it was firmly established by a House of Lords decision in Donoghue v. Stevenson (the `snail in the ginger-beer `case) that manufacturers owed a duty to the ultimate consumer to take care in making their goods where there is no likelihood of their being examined before they reach the ultimate consumer. The origin of this judicial principle lie in the fact that in today's mass production economy where there is little contact between the producer and consumer, often sellers make exaggerated claims and advertisements, which they do not intend to fulfill. This leaves the consumer in a difficult position with very few avenues for redressal. The onset on intense competition also made producers aware of the benefits of customer satisfaction and hence by and large, the principle of " consumer is king" is now accepted – a transition from the principle of `Caveat emptor` to `Caveat vinditor`.

Source of the Consumer Protection Act, 1986

· The need to recognise and enforce the rights of consumers was recognised by the legislators for quite some time now. In India, we have the Indian Contract Act, the Sale of Goods Act, the Dangerous Drugs Act, the Agricultural Produce (Grading and Marketing) Act, the Indian Standards Institution (Certification Marks) Act, the Prevention of Food Adulteration Act, etc which to some extent protect consumer interests. However, these laws required the consumer to initiate action by way of a civil suit, which involved lengthy legal process proving, to be too expensive and time consuming for lay consumers. Therefore, the need for a more simpler and quicker access to redressal to consumer grievances was felt.

· On April 9, 1985 the UN General Assembly with due negotiations in the UN Economic and Social Council (ECOSOC), adopted by consensus a set of guidelines on Consumer Protection serving as a vital lobbying tool both nationally and internationally. India being a constituent member of United Nations enacted the Consumer Protection Act 1986 on 23^rd May 1986.

· The Act is in true essence public welfare legislation. The hall marks of that jurisdiction have rightly been highlighted as the simplicity and inexpensive nature thereof, the summary procedure provided for trials therein, and the expeditious disposal of the consumer dispute within a time bound frame.

SOME IMPORTANT DEFINITIONS [SECTION 2]

· Complaint - any allegation in writing made by a complainant with a view to obtaining any relief provided by or under this Act.

Nature of complaint

(i) an unfair trade practice or a restrictive trade practice has been adopted by any trader or service provider

(ii) the goods bought by complainant suffer from one or more defects;

(iii) the services hired or availed of suffer from deficiency in any respect;

(iv) a trader or the service provider, has charged for the goods or for the services a price in excess of the price­

(a) fixed by or under any law for the time being in force; (Ex – telephony rates fixed by TRAI)

(b) displayed on the goods or any package containing such goods;

(c) displayed on the price list exhibited by him by (Ex – Petrol, Diesel prices by Petrol pumps);

(d) agreed between the parties (contracted price) ;

(v) goods or services which will be hazardous to life and safety are being offered for sale to the public,­

· Consumer - any person who­

(i) buys any goods for a consideration, or

(ii) hires or avails of any services for a consideration;

q It must be noted that a person who buys goods or avails services for commercial purposes is not a consumer.

q However, where a person buys goods or avails services exclusively for the purposes of earning his livelihood by means of self-­employment is a consumer.

q The Act has not confined itself to the original hirer alone, but equally extended it to the subsequent beneficiaries of the services as well.

CASE EXAMPLE

Parent who brings the child to hospital is 'consumer'. The child, who is beneficiary of the services is also a consumer (Spring Meadows Hospital v. Harjot Ahluwalia)

· Defect - any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard,

q which is required under any law to be maintained by or

q under any contract, express or implied or

q as is claimed by the trader in any manner whatsoever in relation to any goods;

· Goods - goods as defined in the Sale of Goods Act, 1930.

CASE EXAMPLE

Stocks and shares are included in the definition of the goods. In these circumstances the complaint in regard to the shares lies before the District Forum. (LC Chandgotya V. Northern Leqsing and Industries Ltd.)

NATIONAL INSURANCE CO. LTD. v. SKYGEMS [2002(1) SCALE 94].

FACTS: The respondent, dealer in precious stones, had sent two parcels of emeralds by registered post duly insured to a consignee in London but the parcels did not reach their destination. The investigators appointed by the insurer confirmed that the parcels were either lost in transit or were stolen. The postal authorities admitted their liability and made payment of postal charges in respect of each parcel. The insured agreed to settle the claim. But the respondents insisted that the payment of the insured amount be made in Pound Sterling in London. The insurer denied its liability to pay the amount in Pounds sterling on the ground that the title in the goods had not passed to the consignee and that it (the respondent) continued to be the owner of the goods and so the payment could be made only in Indian Rupees.

The National Consumers Disputes Redressal Commission held that as the insurance policies clearly stated that the claim was payable at London and the insured value was in terms of Pounds Sterling the insurer should pay the amount in Pounds Sterling.

In appeal to the Supreme Court the respondent reiterated its claim that the insurance policy specifically stated that the amount was payable at London and that it should be paid only in Ponds Sterling at London and not in Indian rupees in India.

Allowing the insurer's appeal, the Supreme Court held:

DECISION AND REASONS: Having regard to the facts and circumstances the appellant could not be said to be liable to pay the insurance amount in Pounds Sterling.

From the correspondence between the parties it was evident that the consignee did not pay the value of the missing parcels to the respondent nor was there any evidence to show that the documents were endorsed in favour of the consignee and transferred to them. The title to the goods had not clearly passed to the consignee and the respondent consignor continued to be the owner having insurable interest in the goods.

The right of the buyer to claim the policy amount would arise when he obtained title to the property and produced the documents of transfer. This clearly showed that the title had not passed to the consignee in London. Under such circumstances the respondent was not entitled to receive the payment in Pounds Sterling. The National Commission erred in stating that the insurance amount was payable at London.

In Harjot Ahluwalia (Minor), Spring Meadows Hospital an unqualified nurse gave wrong intravenous injection to a minor child, due to which the minor child suffered irreparable brain damage. The child now has to live vegetative and helpless life forever, requiring lifelong care and attention. The doctor as well as the nurse was found to be negligent and compensation of Rs 12.50 lakhs to the child, plus Rs 5.00 lakhs to the parent (for mental agony) were awarded.

CONSUMER PROTECTION COUNCILS

· The objects of the Councils shall be to promote and protect the rights of the consumers including the right to consumer education.

Classification of Council	Central Consumer Protection Council [SECTION 4]	State Consumer Protection Council [SECTION 7]	District Council [SECTION 8A]
Estab. Authority Composition q Chairman q Other official or non-official members. Term Place of Council Meetings	Central Government ­ Minister in charge in the Cent. Govt. (i) 8 M.P.—5 from LS, 3 from RS. (ii) Secy.-National Comm. for SC & ST. (iii) 20 – Repr. Of Cent. Govt.& Autonomous Org. with consumer interests (iv) Registrar, National Consumer Disputes Redressal Commission (v) 35 - Consumer Orgns. (vi) 10 – Women (vii) 20 – Trade & Industry (viii) 15 – Persons for Consumer Interest Member-secretary -Secretary in-charge of Consumer Affairs in the Central Government. 3 years Delhi At least one meeting every year	State Government Minister in charge in the State Govt. (i) 8 – 5 MLA & 3MLC (ii) 10 – State Govt. Repr. (iii) 5 – Women Repr. (iv) 5 – Trade & Farmers Repr. (v) 1 – Persons for Consumer Interest. Generally 3 years State capital At least two meetings in a year	State Govt. Collector of the district (As per respective State Rules) Generally 3 years District HQ At least two meetings in a year.

CONSUMER DISPUTES REDRESSAL AGENCIES

Appellate Authority	National Consumer Disputes Redressal Commission [SECTION 20]	State Commission [SECTION 16]	District Forum [SECTION 10]
Composition q President q Members (persons of ability, integrity and standing and have adequate knowledge or experience) q Term Jurisdiction Penalty Time limit for completion of hearing Judicial Powers/Interim Relief Summary Trial Principal Bench Appellate Authority Enforcement power Limitation period	Judge of the Supreme Court to be appointed by the Cent. Govt. in consultation with the Chief Justice of India. 4 (1 Woman) – Appointed by Cent. Govt. on the recommendation of a selection committee. 5 years` or 70 years` (whichever earlier) (i) Complaints - value of the goods or services and compensation, if any, claimed exceeds Rs. One crore and (ii) Appeals against the orders of any State Commission. Imprisonment up to 3 years` with or without fine upto Rs. 10,000 90 days` or 150 days` (in case of lab. Tests) Vested with powers of 1st Class Judicial Magistrate Enabled; New Delhi; Circuit Bench Supreme Court within 30 days` with 50% of award money. As arrears of Land & Revenue 2 years` from the cause of action.	Judge of the High Court to be appointed by State Govt. in consultation with Chief Justice of High Court. 2 (1 Woman) – Appointed by State Govt. on the recommendation of a selection committee 5 years or 67 years (whichever earlier). Complaints - value of the goods or services and compensation, if any, claimed exceeds Rs. 25 lakhs upto Rs. One Crore. Imprisonment up to 3 years` with or without fine upto Rs. 10,000 90 days` or 150 days` (in case of lab. Tests) Vested with powers of 1st Class Judicial Magistrate Enabled State Capital National Commission within 30 days` with 50% of award money or Rs. 35,000 (whichever less). State Capital; Circuit Bench at other cities. As arrears of Land & Revenue 2 years` from the cause of action	District Judge to be appointed by the State Govt. in consultation with the Chief Justice of State High Court. who shall be its President; 2 (1 Woman) – Appointed by State Govt. on the recommendation of a selection committee 5 years or 65 years (whichever earlier). Complaints - value of the goods or services and compensation, if any, claimed upto Rs. 25 lakhs. The concerned State within which either of parties actually and voluntarily resides or carries on business or has a branch office or personally works for gain. Imprisonment up to 3 years` with or without fine upto Rs. 10,000 90 days` or 150 days` (in case of lab. Tests) Vested with powers of 1st Class Judicial Magistrate Enabled District HQ State Commission within 30 days` with 50% of award money or Rs. 25,000 (whichever less). As arrears of Land & Revenue 2 years` from the cause of action

PROCEDURE OF FILLING COMPLAINT

· Who can file a complaint?

(i) A Consumer.

(ii) Any registered Voluntary Consumer Organization.

(iii) The Central or State Government.

(iv) One or more consumers on behalf of numerous consumers who are having the same interest.

· When a complaint can be filed?

A complaint can be filed in writing if: -

a. Consumer has suffered loss or damage as a result of any unfair Trade Practice.

b. The goods purchased suffer from any defect;

c. The trader has charged a price in excess of the price displayed or fixed by any law for the time being in force;

d. The goods hazardous to life and safety are being offered for sale to public.

e. The services hired or availed of, suffer from any deficiency.

· Where a complaint can be filed?

q If the cost of goods or service and compensation asked for is:

up to Rs. 25.00 lakhs - District Forum.

more than Rs. 25.00 lakhs and up to Rs. 1 crore - State Commission.

more than Rs. 1 crore - National Commission.

q A model form has been provided for filing of the complaint for the convenience of the consumer.

q The complaint/reply should be supported with affidavit of party and witnesses, if any.

APPEAL/REVISION

· Any party aggrieved form the final order of District Forum may appeal to State Commission within 30 days. Similarly, any party aggrieved from the final order passed in original complaint decided by the State Commission may appeal to National Commission within 30 days.

· Order passed by National Commission in complaint filed before it is appeal able in Supreme Court within 30 days. Appeal may be preferred as per model form along with certified copy of order.

· Any order, which is not final order, may be challenged in revision before higher respective Commission.








ANOTHER  ANSWER OF THIS ACT



In business, consumers occupy a very important place. The producers produce goods on the basis of tastes, likings, preferences etc. of the consumers. Consumer is the central point around which business activities revolves. Inspite of great importance of consumers they may be the victims of immoral businessmen. An important aspect is that there is lack of knowledge on the part of consumers and they are not organized as opposed to the sellers who are well informed and organized. To protect the consumers from unscrupulous businessmen and to provide easy remedy for their complaints, the Consumer Protection Act was passed in the year 1986. The Act extends to the whole of India except the State of Jammu and Kashmir. After completion of this unit you will be able to understand some important definitions under this Act as well as the various provisions under which consumers are given wide legal power to resolve their complaints. We will also discuss the various consumer forums created under this Act as redressal agencies for consumer grievances along with the procedure of filing a complaint in consumer forums, consumer protection councils, penalties for not complying with the orders of forums etc.

The Act has been passed to protect the interests of consumers and to establish the consumer councils and other authorities to settle the consumers’ disputes and other related matters. Before discussing the provisions of this Act, it is better to have an idea about the different terms used in this Act like, consumer, consumer dispute etc. In this section, we will discuss some of the definitions as given by this Act which is essential to interpret the provisions of the Act. Let us begin with the definition of ‘consumer’.
Consumer
According to Section 2 (1) (d) of the Act ‘consumer’ means any person who
i. Buys any goods for a consideration, which has been paid or promised or partly paid and partly promised. It also includes
a) User of such goods who is using the goods with permission of the buyer or
b) Person who has obtained goods under any system of deferred payment. Person who has obtained goods for resale or for commercial purposes is not covered under this section.
ii. Hires or avails any services for a consideration, which has been paid or promised or partly paid and partly promised. It also includes
a) Beneficiary of services who has availed the services with approval of the person who has hired the services

b) A person who has hired or availed services under any system of deferred payment.

An important aspect of this definition is that those persons who buy goods for commercial purposes are not considered as ‘consumer’ under this Act. But if a person buys goods for self- employment that will not be treated as commercial purpose and therefore, that person will be considered as ‘consumer’ under this Act. Therefore, a ‘consumer’ under this Act will include person-

1.who buys any goods for personal use or avails services for consideration;
2.who uses such goods or services with the permission of the buyer;
3.who obtains goods or avail services on deferred payment basis;
4.who obtains goods for self- employment.

Consumer Dispute
According to Section 2 (1)(e) of the Act, ‘Consumer Dispute’ means a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint.

If the person agrees to the complaint, there is no consumer dispute.

Complainant
According to Section
2 (1) (b) complainant means
i. a consumer; or
ii. any voluntary consumer association registered under the Companies Act or under any other law for the time being in force; or
iii. the Central Government or any State Government, who or which makes a complaint
iv. one or more consumers, where there are numerous consumers having the same interest.

v. in case of death of a consumer, his legal heirs or representative, who or which makes a complaint.
From the definition of ‘complainant’ it is clear that an individual consumer as well as consumer associations can make a complaint.
Defect
According to Section 2 (1) (f) of the Act, ‘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 is claimed by the trader in any manner whatsoever in relation to any goods.
Deficiency
According to Section 2 (1) (g) of the Act, ‘deficiency’ means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard that is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.

Services
Section 2 (O) of the Act defines ‘services’ as
“Service of any description, which is made available to potential users and includes any provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying a news or other information, but does not include rendering of any service free of charge or under a contract of personal service.”

REDRESSAL AGENCIES UNDER THE ACT
 Goods
‘Goods’ under this Act has the same meaning as per the Sale of Goods Act, 1930, which we have discussed in unit 2 (Sale of Goods Act, 1930).

n the above section, you have come across certain definitions of the Act. It has already been mentioned that this particular Act has been passed to protect the consumers and for that purpose certain agencies will be established under the Act. In this section, we will discuss the redressal of agencies.

The Act provides for the establishment of three consumer forums at three levels i.e.
1.District Forum at district level
2.State Consumer Disputes Redressal Commission at state level
3.National Commission at the national level.

Let us first discuss district forum-

District Forum
A District Forum will be established in each district and the responsibility of establishing district forums lies with the respective State Governments.

Jurisdiction of District Forum
The district forum has jurisdiction to decide consumer disputes where the value of goods and services and the compensation claimed does not exceed Rs. 20 lakhs.

Composition of District Forum
According to the provisions of the Act, each district forum shall consist of–
1.a President, who has been or is qualified to be a district judge; and

2.two other members, one of whom must be a woman. The members shall be of not less than 35 years of age ; possess a bachelor degree from a recognized university and persons of ability, integrity and standing having knowledge or experience of problems relating to economics, law, commerce, accountancy, industry, public affairs or administration.

The salary and other terms and conditions of the job of the members are prescribed by the State Government.

Tenure of the members
All the members of district forum shall be in office for 5 years or up to the age of 65 years, whichever is earlier. Any member can resign his office by addressing the letter to State Government.

3.State Consumer Disputes Redressal Commission
The State Consumer Disputes Redressal Commission or State Commission is established by the State Governments in the respective states by notification [ section 9(b)].
Jurisdiction of State Commission
The State Commission has original jurisdiction to decide consumer disputes where the value of goods and services and the compensation claimed exceed Rs. 20 lakhs but does not exceed Rs. 1 crore.
The Commission has appellate jurisdiction against the orders of the district forums within the state.

Revisional jurisdiction empowers the Commission to call for records and pass appropriate orders in any consumer dispute that is pending or has been decided by district forum, if the State Commission is of the view that district forum is exercising jurisdiction not vested in it or not exercising the jurisdiction.

Composition of the State Commission
According to the provisions of the Act, each State Commission shall consist of –

1.a President, who has been or is qualified to be a judge of High Court; and
2.two other members, one of whom must be a woman [section 10(1)]. The members shall be persons of ability, integrity and standing having knowledge or experience of problems relating to economics, law, commerce, accountancy, industry, public affairs or administration.

The salary and other terms and conditions of the job of the members are prescribed by the State Government.

Tenure of the members
All the members of State Commission shall be in office for 5 years or up to the age of 67 years, whichever is earlier. Any member can resign his office by addressing the letter to the State Government [section 16(3)].

National Commission
The Central Government has established a National Commission at national level to redress consumer disputes [section 9( c)].

Jurisdiction of National Commission
The National Commission has original jurisdiction to decide consumer disputes where the value of goods and services and the compensation claimed exceed Rs. 1 crore.

The National Commission has appellate jurisdiction against the original orders of any State Commission.
The National Commission has revisional jurisdiction to call for records and pass appropriate orders in any consumer dispute that is pending or has been decided by any State Commission, if the National Commission is of the view that the State Commission is exercising jurisdiction not vested in it or not exercising the jurisdiction.

Composition of the National Commission
According to the provisions the Act, the National Commission shall consist of –
1. a President, who has been or is qualified to be a judge of Supreme Court; and
2.four other members, one of whom must be a woman. The members shall be not less than 35 years of age, posses a bachelor’s degree from a recognized university and persons of ability, integrity and standing having knowledge or experience of problems relating to economics, law, commerce, accountancy, industry, public affairs or administration. Provided that not more than fifty percent of the member shall be from amongst the persons having a judicial background (section 20).

The salary and other terms and conditions of the job of the members are prescribed by the Central Government.

Tenure of the members
All the members of the National Commission shall be in office for 5 years or up to the age of 70 years, whichever is earlier [section 20(2)]. Any member can resign his office by addressing the letter to the Central Government.

Appeal against original orders of National Commission can be made with Supreme Court.
 
 POWERS OF REDRESSAL AGENCIES

1.These redressal agencies have the powers of civil court like,
a. summoning and enforcing attendance of witnesses and examining the witness on oath;
b. discovery and production of any document or other material as evidence;
c. receiving evidence on affidavits;
d. requisitioning report of test or analysis from concerned laboratory;
e. issuing commission for examination of witnesses;
f. any other matter that may be prescribed by Central or State Government by rules.

2.The redressal agencies have the power to require a person to produce before them books of account, documents or commodities.
3.The agencies can authorize a person to seize books of account, documents or commodities required for purposes of the Act.
4.The agencies have no power to declare any statutory order as illegal. 

PROCEDURE OF FILING A COMPLAINT

Here, we will go through the procedure of filing a complaint in the consumer forums. A complaint can be filed by a complainant. We have already come across the definition of ‘complainant’. The complainant can file the complaint within two years from the date on which the cause of the dispute arose. However, the consumer forums i.e. District Forum, State Commission or National Commission can accept any complaint even after such period, if sufficient cause exists for such delay.

On receipt of a complaint, the District Forum/ State Commission/ National Commission sent a copy of the complaint to the opposite party. The opposite party is asked to give his reply within 30 days, which can further be extended by another 15 days.

If the nature of defect in goods is such that it can not be properly determined without laboratory testing, the redressal agency will sent the defected goods to the appropriate laboratory.

If no laboratory testing is required in respect of the complaint, then the redressal agency will decide the case on the basis of the evidence submitted by the complainant and the opposite party.

If the complaint is made to the District Forum i.e. when the value of goods and services and the compensation claimed does not exceed Rs. 20 lakhs and if any of the party to the complaint is not satisfied with the order given by the Forum, then the aggrieved party can make an appeal within 30 days against such order to the State Commission. However, the State Commission can extend the period if sufficient cause exist for not filing the appeal within 30 days. The order made by the State Commission in respect of the appeal is final and no further appeal can be made against the order of the State Commission to the National Commission.

If a complaint is directly filed with the State Commission i.e. where the value of goods and services and the compensation claimed exceed Rs. 20 lakhs but does not exceed Rs. 1 crore, then an appeal against the order of the State Commission can be made to the National Commission. In such cases, the order of the National Commission is final and no further appeal can be made.
If a complaint is directly made to the National Commission i.e. where the value of goods and services and the compensation claimed exceed Rs. 1 crore, then an appeal against the order of the National Commission can be made to the Supreme Court.

let us know
In filing a complaint, the complainant can personally file the complaint or it can be sent by post. The complaint must contain names and addresses of the complainant and the opposite party, facts relating to complaint, documents in support of such complaint and compensation being claimed. The complainant is not required to pay any fee.
If the opposite party fails to give a written reply, he can make an oral representation of his case.