“One commodity mixed with another: must not be sold as pure, nor a bad one as good; not less as many, nor anything that is at hand or that is concealed.”

MANU SMRITI

CONSUMERPROTECTION ACT, 1986

The Preceding Acts

• Sales Of Goods Act (1930), established during British rule was the exclusive source of consumer protection.

• The Indian Penal Code of 1860 has a number of provisions to deal with crimes against consumers. It deals with offenses related to the use of false weights and measures, the sale of adulterated food or drinks, the sale of noxious food or drink, and the sale of adulterated drugs.

• The Essential Commodities Act of 1955, the Prevention of Food Adulteration Act of 1954 and the Standard of

Weights and Measures Act of 1976, the law of Torts & The Contract Act also protect consumers

•

Why a CPA then ?

• It is estimated that for about half a century from 1914 to 1965, only 613 tort cases came before the appellate courts.

• The traditional doctrine of negligence imposes heavy responsibility on the plaintiff to prove each of its required elements.

• The orthodox legal requirements under the law of torts and contracts forced the policy makers to craft specific legislation to protect consumers.

Objectives

• It is intended to provide justice which is “less formal, [and involves] less paper work, less delay and less [expense]”.

• It is known as the Poor Man’s Litigation• Commands the consumer’s support • User friendly• Cost Effective Tool

User Friendly & Cost Effective

• Suit can be filed both for defective products and deficient services

• Only a nominal fee has to be paid by the consumer• No need to send a legal notice to the opposing party• A simple letter to the Consumer Forum would initiate legal

action• No requirement of a lawyer, if the consumer can represent

himself.

Extent & Coverage Of The Act

• The Act applies to all goods and services unless specifically exempted by the Central Government.

• It covers all the sectors whether private, public or cooperative.

• The provisions of the Act are compensatory in nature.• The provisions of this Act are in addition to and not in

derogation of the provisions of any other law for the time being in force.

• The Act envisages establishment of Consumer Protection Councils at the Central and State

levels, whose main objects will be to promote and protect the rights of the consumers.

Structure of The Act

• 3 tier quasi judicial machinery at the National, State & District Levels

• National Consumer Disputes Redressal Commission - known as "National Commission" deals with complaints involving costs and compensation higher than Rs. 20 lakhs.

• State Consumer Disputes Redressal Commissions - known as "State Commission.

• District Consumer Disputes Redressal Forums - known as "District Forum.

Case :Spring Meadows Hospital and others vs. Harjol Ahluwalia

• Harjot, a minor was brought to the Spring Meadows hospital.

• Dr. Bhutani examined him and made the diagnosis that the patient is suffering from typhoid and prescribed medicines.

• Ms.Matthew, a nurse, wrote down the medicine name as “Inj. Lariago” and gave it to Mr.Ahluwalia.

• Mr.Ahluwalia brought the medicine from a nearby medical store and Ms.Bina Matthew injected Harjot

with it, who collapsed immediately upon receiving the dose.

The Case :Continued

• Dr.Dhananjay who was the Resident Doctor was called and he diagnosed that the patient is suffering from cardiac arrest.

• Harjot was later brought to AIIMS where it was found that irreparable damage had been done to his brain and he would survive only in a vegetative state.

• Harjot’s parents approached the Delhi State Consumer Commission for mental and asked for Rs.28 lakhs as

compensation.

The Ruling

• The cardiac arrest was caused by high dose of medicine.• The injection was to be given by Dr.Dhananjay, but he

allowed the nurse to give it. Thus, the court found him negligent.

• The nurse was found guilty of dereliction of duty and the hospital for employing unqualified people and entrusting the minor in their care.

• The Delhi State Commission awarded Rs.12.5 lakhs to the minor patient and Rs.5 lakhs to the parents.

•

The Contentious Issues

• Can the parents of the child be considered as consumers ?• Is the Commission under the CPA entitled to award the

compensation for the mental agony and suffering of the parents ?

• Whether compensation can be awarded to both the parents and the child or only to the person who has been the beneficiary of services (child) ?

Supreme Court Observed

• The parents and the child are both “consumers” as the definition of a consumer includes “beneficiary of services” which is different from the person who “hires the services”

• The Commission is fully justified in awarding compensation to both the parents and the child for the injury each one of them has sustained.

Consumer Protection Council

The Consumer Councils are created to advise and assist the consumers in seeking and enforcing their rights.

Chapter II of the consumer Protection Act comprising of Sections 4to 8 deals with Consumer Protection Councils.

We have Consumer Protection Councils both at Centre level and State level.

Objects of the Councils [Sections 6 and 8]

• Right to safety – It is right to be protected against the marketing of goods and services which are hazardous to life and property.

• Right to information - It is right to be informed about the quality, quantity, potency, purity, standard and price of goods or services, with a view to protect the consumer against unfair

trade practices.

» Right to choose - The right to choose can be made meaningful by ensuring access to a variety

of goods and services at competitive prices.

Objects of the Councils (Contd.)

• Right to represent - It is right to be heard and to be assured that consumer’s interests will receive due consideration at appropriate forums.

• Right to redressal - It is a right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers.

• Right to education - The right to consumer education is a right which ensures that consumers are informed about the practices prevalent in the market and the remedies available to them.

Central Council

• Composition [Section 2 and rule 3] :

Members of the councils are selected from various areas of consumer interest, who are, when possible, leading members of state wide organisations representing segments of the consumer public so as to establish a broadly based and representative consumer council.

The Central Council shall consist of the following members not exceeding 150, namely :-

1. The Minister in-charge of Consumer Affairs in the Central Government who shall be the Chairman of the Central Council.

Central Council (Contd.)

2. The Minister of State (where he is not holding inde pendent charge) or Deputy Minister in-charge of Consumer Affairs in the Central Government who shall be the Vice-Chairman of the Central Council.

3. The Secretary in-charge of Consumer Affairs in the Central Government who shall be the member-secretary of the Central Council.

4. The Minister in-charge of Consumer Affairs in States

5. Eight Members of Parliament—five from the Lok Sabha and three from the Rajya Sabha.

6. The Secretary of the National Commission for Scheduled Castes and

Scheduled Tribes.

Central Council (Contd.)

7. Representatives of the Central Government Departments and autonomous organisations concerned with consumer interests—not exceeding twenty

8. Representatives of the Consumer Organisations or consumers—not less than thirty-five

9. Representatives of women—not less than ten.

10.Representatives of farmers, trade and industries—not exceeding twenty

11.Persons capable of representing consumer interest not specified above—not exceeding fifteen

Term - The term of the Council is three years.

Central Council (Contd.)

• Vacancy - Any member may, by writing under his hand to the Chairman of the Central Council, resign from the Council. The vacancies, so caused or otherwise, are filled from the same category by the Central Government and such person shall hold office so long as the member whose place he fills would have been entitled to hold office, if the vacancy had not occurred.

• Meetings of the Central Council [Section 5] -

Central Council is required to organise at least one meeting every year. In addition, it

may meet as and when necessary. Time and place of the meeting is decided by the Chairman of the council.

State Consumer Protection Councils [Section 7]

• Composition - The power to establish State Councils is with the States. The Act provides that the Minister in charge of consumer affairs in the State Government shall be the Chairman of the State Council. About the number and qualifications of the rest of the members, State is the deciding authority.

• Meetings - The State Council meet at least twice a year. In addition, it may meet as and when necessary. The council may meet at such time and place as the Chairman may think fit.

Procedure in regard to the transaction of its business is prescribed by the State

Government.

Working Groups (Rule 3)

• For the purpose of monitoring the implementation of the recommendations of the Central Council and to suggest the working of the Council, the Central Government may constitute from amongst the members of the Council, a Standing Working Group, under the chairmanship of the Member Secretary of the Council. The Standing Working Group shall consist of not exceeding 30 members and shall

meet as and when considered necessary by the Central Government.

REDRESSAL AGENCIES PROVIDED UNDER THE CONSUMER PROTECTION ACT

• The Consumer Protection Act provides for a 3 tier approach in resolving consumer disputes. There are three levels of consumer courts —

• 1. The district court, called the District Consumer Disputes Redressal Forum (District Forum)

• 2. The State Consumer Disputes Redressal Commission (State Commission)

• 3. At the national level, there is National Consumer Disputes Redressal Commission (National Commission).

DISTRICT FORUM (Section 10)

• It consists of 1 president and 2 other members (1 of whom is to be a woman).

• Every appointment of the president and members is made by the State Government on the recommendation of a selection committee consisting of the following —

a. The President of the State Commission – Chairman.

b. Secretary, Law Department of the State - Member.

c. Secretary in charge of the Department dealing with

consumer affairs in the State — Member

Continued…• Every member of the District Forum is to hold office for a

term of 5 years or up to the age of 65 years, whichever is earlier. However, he/she shall not be eligible for reappointment.

• A vacancy in the office of president or a member may occur after the expiry of his term, or by his death, resignation, or removal.

• The salary or honorarium and other allowances payable to, and the other terms and conditions of service of the members of the District Forum shall be such as may be

prescribed by the State Government. Different

States have made different rules in this regard.

RULES FOR REMOVAL

A president or member of a District Forum may be removed by the State Government, who -

a. has been adjudged an insolvent, or

b. has been convicted of an offence involving moral

turpitude, or

c. has become physically or mentally incapable of

performing his duties, or

d. has acquired such financial interest in the matter as would

prejudicially affect his functions as a president or member, or,

e. has abused his position so as to render his continuance to

office prejudicial to public interest.

STATE COMMISSION (Section 16)• State Commission consists of a president and two members one of whom is to be a woman.• President of a State Commission is appointed by the State Government after consultation with the Chief Justice of the High Court. Other members of the Commission are made by the State Government on the recommendation of a selection committee consisting of the following, namely -

a. President of the State Commission - Chairman.

b. Secretary of the Law Department of the State - Member.

c. Secretary, in charge of Department dealing with consumer affairs in

the State - Member.

Continued…

• Every member of the State Commission shall hold office for 5 years or up to the age of 67 years, whichever is earlier, and he shall not be eligible for re-appointment.

• Rules as to the vacancy related in the office of the president or any member are similar to those discussed in context of the members of the District Forum.

• The salary or honorarium and other allowances payable to, and the other terms and conditions of service of, the members of the State Commission shall be such as may be prescribed by the State Government.

NATIONAL COMMISSION (Section 20)

• The National Commission consists of a president and 4 other members (one of whom is to be a woman).

• The President is appointed by the Central Government after consultation with the Chief Justice of India, the appointment of other members of the Commission is made by the Central Government on the recommendation of a selection committee, consisting of –

a. a person who is a Judge of the Supreme Court, to be

nominated by the Chief Justice of India – Chairman.

b. the Secretary in the Department of Legal Affairs in the

Government of India – Member.

c. Secretary of the Department dealing with consumer affairs

in the Government of India – Member.

Continued…

• Before appointment, the president and member(s) of the National Commission have to take an undertaking that he does not and will not have any such financial or other interest as is likely to affect prejudicially his functions as such member.

• Every member of the National Commission is to hold office for a term of 5 years or up to the age of 70 years, whichever is earlier and is not eligible for re-appointment.

• A vacancy in the office of president or a member may occur

after the expiry of his term, or by his death,

resignation, or removal.

JURISDICTION

• The term jurisdiction may be defined as the authority or legal power to hear and decide the cases.

• A court may adjudicate only those matters which fall under its jurisdiction.

• The question of jurisdiction has to be considered with reference to the value, place, and nature of the subject matter.

• Jurisdiction of Consumer Forums (i.e., consumer courts) differ in terms of –

– Monetary value of Claims (Pecuniary Jurisdiction)– Geographical Areas (Territorial Jurisdiction)– Appellate Powers (Appellate Jurisdiction)

JURISDICTION – DISTRICT FORUM

• PECUNIARY JURISDICTION

District Forum entertains the cases where the value of claim is upto Rs. 5 Lakh. Where a claim exceed this limit, the matter is beyond the jurisdiction of the Forum.

Example : A filed a complaint with a District Forum claiming Rs. 6,00,000 as against a supplier of machinery. The complaint was rejected on the ground that it was beyond the jurisdiction of the District Forum. A revised his claim to Rs.4,99,999 and filed the plaint again with the same District Forum. The plaint was accepted and tried.

Continued…• TERRITORIAL JURISDICTION

Every District Forum has definite geographical limits within which it can exercise its jurisdiction. A case is supposed to fall within such territory when at the time of the institution of the complaint the party against whom the claim is made actually and voluntarily resides or carries on business or personally works for gain in that area.

Also, the cause of action, wholly or in part, arises in that area.

• APPELLATE JURISDICTION

District Forum is the lowest rung of the ladder of the consumer courts. Hence, no appeal lies in this court.

JURISDICTION – STATE COMMISSION

• PECUNIARY JURISDICTION

State Commission entertains the cases where the value of claim exceeds Rs.5 lacs but is upto Rs.20 lacs.

Example : Mr.X in Mumbai bought a house from housing board for Rs. 4 lakh. Due to defect in the house, its wall fell down on the Mrs.X and she dies. Mr.X sues the Housing Board claiming Rs.18 lacs as compensation. This matter will lie with the State Commission of Mumbai.

Although the value of house is less than 5 lacs, the decisive factor regarding jurisdiction is the value of

claim.

Continued…• TERRITORIAL JURISDICTION

The Consumer Protection Act does not specifically provide for the territorial jurisdiction of the State Commission. Thus it is governed by the general principle of the law which are contained in section 20 of the Civil Procedure Code. Broadly these principles are on the similar lines on which the territorial jurisdiction of District Forum is based.

• APPELLATE JURISDICTION [SECTION 17(a)(ii)]

State Commission has power to adjudicate upon the appeals made against the order of the District Forums. Any person aggrieved by an order of the District Forum may prefer an appeal against such order within 30 days from the date of order.

Continued…• REVISIONAL JURISDICTION [SECTION 17(b)]

State Commission may pass appropriate orders in any consumer dispute which is pending before or has been decided by any District Forum within the State, where State Commission is of the view that the District Forum has -

- exercised jurisdiction which it was not entitled to, or

- failed to exercise such jurisdiction which it was entitled to, or

- exercised its jurisdiction illegally or with material irregularity.

JURISDICTION – NATIONAL COMMISSION

• PECUNIARY JURISDICTION

National Commission may entertain all the matters where the value of claim exceeds Rs. 20 lakh. It is the highest level of Consumer Forums.

• TERRITORIAL JURISDICTION

The territorial jurisdiction of the National Commission is whole of India except the State of Jammu & Kashmir. However, the Consumer Protection Act is applicable only if the cause of action arise in India. If the cause of action arises out of India, National Commission has no jurisdiction over the matter.

Example: Gulab Hotchand Bhagchandaney v. Egyptian Airlines III (1994)

Continued…• APPELLATE JURISDICTION

The National Commission has jurisdiction to entertain appeals against the order of any State Commission. The appeal may be made within 30 days from the date of the order of the State Commission.

• REVISIONARY JURISDICTION [SECTION 21(b)]

It is available to the National Commission in the cases where there has been wrongful, illegal, and improper exercise of jurisdiction or failure to exercise jurisdiction

on the part of State Commission.

Example: Kinetic Engineering Ltd. v. Samasi

Saunand [1993]

Procedure for Jurisdiction

• Consumer Forums function like Courts.• Composition is made to best represent

interests of Consumers.• Have specified jurisdictions.

What procedures do they adopt?• Section 13 – District Forum• Section 18 – State Commission• Section 22 - National Commission

Criteria for complaint

• Made with respect to goods and services.• To determine whether defective or not.• Need to test goods in concern.

Exception• Defect can be determined without technical

support.• Test is not feasible.

Conditions

• Where laboratory tests is required• Where no laboratory tests is required

Consumer is expected to do:• File individual copies to judges.• Specify essential information.• Provide supporting correspondence.• Specify compensation demanded.

Trigger

Procedure by District Forum (contd.)

• Where no laboratory test is required

Forum refers copy to opp. party

Opp. party acts ?

Opp. party denie

s ?

Settle dispute as per evidence by both parties

Settle dispute as per evidence by complainant

Yes

No

Decide the matter as per merits of case

Yes

No

Issue appropriate order

Procedure by District Forum• Where laboratory test is required

Forum refers copy to opp. party

Opp. party acts ?

Opp. party

denies ?

NoComplainant

deposit lab. fees

Forum sends sample to Lab.

Lab. reports findings to Forum

Sends to opp. party with remarks

Objecting party objects in writing

Yes

Opportunity of hearing

NoIssue appropriate

order

Yes

Procedure by National Commission• Prescribed by Consumer Protection Rules, 1987

• Framed by the Central Government

Complaint to contain following:– Name, description & address of complainant– Name, description & address of opposite party(ies)– Facts relating to complaint & when and whore it arose– Documents in support of allegations– Relief which complainant claims

• As far as possible follow Section 13 guidelines

Procedure by National Commission (contd.)• On the date of hearing, both parties or agents to appear

before commission.

• Complainant or agent fails to appear -– Dismiss the complaint or decide it on merits

• Opposite party or its agent fails to appear – – Decide the complaint ex parte

• Complaint will be decided within 3 months when no test or analysis is required.

• Complaint will be decided within 5 months when test or analysis is required.

Consumer Protection (Amendment) Bill, 2002 Some of the alteration in definitions

Complainant will now also include the legal heir or representative of the consumer, in case of his death

Complaint may be filed against a trader as well as service provider for adopting deceptive practices in provision of services

Consumers do not include persons who obtained goods for commercial purposes are under the Act

persons who avail of services for commercial purpose will fall outside the scope of consumers under the Act

Some of the alternation in definitions..Continued…

Goods that were considered hazards to health and safety when used were specified under law and some were even exempt if the legal requirements of display of warning were met with (the classic example being cigarettes)

The modified definition of Manufacturer seems to include any manufacturer of goods and parts; assembler of goods and parts and the person who puts or causes to be put, his mark on any product

Regulation has been defined to mean the regulations made by the National Commission under the Act

Continued…..The expanded definition of 'restrictive trade practice' as not only including tie-up sales but also delay beyond period agreed to for provision of goods or services that has led to or is likely to lead to a rise in prices was included in the Ordinance of 1993 and has been given effect to under the Act

The definition of services has already been interpreted as wide and inclusive, the specific services mentioned in the definition were only examples and many more have since been added by the consumer courts

spurious goods and services are those that are claimed to be genuine and are actually not so

Unfair trade practice' will now also include withholding from the participants of any scheme offering gifts, prizes or other items free of charge

Jurisdiction Value of a compliant before the District Forum or pecuniary

jurisdiction has been expanded to a sum of rupees twenty lakh

Value of complaints before the State Commission – in the range that exceeds rupees twenty lakh but not rupees one crore compared to the earlier five lakh to twenty lakh

The place of residence or of carrying on business or where cause of action arose etc. will have a bearing on which State Commission suit is instituted

Aggrieved parties may appeal to the State Commission from the District Forum and to the National Commission from the State Commission

Appeals

The Bill inserts a second proviso to S 15

Any person who is required to pay any amount under the orders of the forum will not be allowed to go on appeal unless he deposits 50% of the said amount or Rs. 25,000, whichever is less with the District Forum

There is no provision for second appeal if a party succeeds before the District Forum and fails before the State Commission

Enforcement

The Bill amends both S 25 and S 27. S 25 is to be substituted with a new section that declares an order for attachment may be made against the property of a person failing to abide by interim orders passed by the District Forum, State or National Commission

The proviso to S 27 is omitted. The District Forum, State or National Commission shall be deemed to be and have the powers conferred on the Judicial Magistrate First Class under the Code of Criminal Procedure, 1973 and will so function in spite of anything contained therein

MiscellaneousS 18 A of the Act that dealt with vacancy of office of the President is omitted

New S 28 A lays down provisions for serving of notices, etc

S 30 now allows the Central Government to make rules for the efficient enforcement of the Act

Some major loopholes of the Act still left unplugged by the 2002 Amendments

One of the biggest achievements of the Consumer Protection (Amendment) Act, 2002, was the conferment of First Class Magistrate’s powers to the Consumer Forums or CommissionsThe main problem regarding the above empowerment

and the relevant provision is the fact that the Gazette notification for the conferment of First Class Magistrate’s powers to the Consumer Forums or Commissions is still not issued. Thus it is practically impossible for the Forums or Commissions to exercise this power conferred by the Act

Loopholes..Continued…• Another lacuna present in the amended Act is the relatively

softer approach adopted by the Act towards the judgment debtor in its certain provisions

• Another important confusion is created by the amended S.25 of the Act

Problems resolved by ammendment

• Amendment to Section 11 enhances the jurisdiction of the District Forum to entertain complaints where the value of the goods or services and the compensation claimed does not exceed rupees twenty lakhs. This will be more convenient for the complainants and also reduce the number of complaints filed with the State Commission and National Commission

• Section 12 is substituted to provide that every complaint filed with the District Forum shall be accompanied with such amount of fee as may be prescribed

Continued…• The amendments to section 13 require the District Forum

to refer a copy of the admitted complaint within twenty-one days from the date of its admission to the opposite party to give his version within the prescribed time. It also provides the much needed provision for ex parte order as well as dismissal of complaint on non-appearance of complainant

• New section 19A provides that endeavour shall be made to dispose of appeals filed before the State Commission or the National Commission within ninety days from the date of admission

Refernces

• http://www.legalserviceindia.com/articles/coon.htm

• http://ncdrc.nic.in/1_1.html#_Hlk149662503

• http://www.legalserviceindia.com/articles/consumer_avantika.htm