The Consumer Protection Act 1986

Dharmesh mishra (DM-05-019)Imran(DM-05-044)

Rupali jaiswal(DM-05-050)Vidwan (DM-05-067)

Abdul(DM-05-53)

Need for consumer protection act in an era where consumer is the king

"A consumer is the most important visitor on our premises. He is not dependent on us, we are on him. He is not an interruption to our work; he is the purpose of it. We are not doing a favour to a consumer by giving him an opportunity. He is doing us a favour by giving us opportunity to serve him”

- Mahatma Gandhi

The consumer protection act was passed in the year 1986 by the parliament of India

The main object of this law is to protect the consumer from the unfair trade practices by the traders.

This law came into force from 15th April, 1987 and extends to whole of India except the state of Jammu and Kashmir.

This law has given very clear definitions of goods, services, consumers, unfair trade practices etc.,,

Consumer according to [section 2(1)(d)] “consumer means any person who buys any goods for consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payments”.

Goods according to [section 2(7)] “Goods means every kind movable property other than actionable claims and money, and includes stocks and shares, growing crops grass and things attached to or forming part of land which are agreed to be served for the purpose of sale.

Introduction

Unfair trade practices according to sec 2(1)(r) defines the following trade practices as unfair trade practices.

a) falsely representing that the goods are of a particular standard, quality, grade, style, model, and composition when they are not so.

b) falsely representing the second hand, renovated, reconditioned and old goods as new goods.

c) representing that the goods or services have the sponsorship, approval, characteristics accessories, of a foreign company where there is no such sponsorship or collaboration.

d) making of false or misleading representation about the uses, benefits durability, efficiency, etc of the goods.

e) giving the guarantee or warranty of the performance, efficiency or length of a product or any goods which is not based on any adequate test or experience.

f) permitting the publication of any advertisement in any newspaper or otherwise for the sale of goods or services at a bargain price or discount etc.. Without any intention to do so.

Restrictive trade practices According to sec2(1) the restrictive trade practice means, any trade practice which requires a consumer to buy, hire or avail any of goods or services as the case may be, as a condition precedent of buying hiring or availing of other goods or services.

Example: A gas agency forcing a consumer to buy stove supplied by them compulsorily to get gas connection from their agency or company

The consumer protection act 1986 has granted six rights to the consumer against the unfair trade practices of the traders

Right to Protection Right of Information Right of Choice Right of Hearing Right of Redressal Right of Education

Rights of consumers

Central consumer protection council sec (4) central government nominates the members

The cabinet minister in charge of consumer affairs as its chairman

The members shall be from Loksabha, Rajyasabha, commissioner of scheduled castes and tribes department, representatives of consumer associations, farmer associations, traders associations, traders associations and women's associations

state consumer protection council sec (7) state government nominates all these members

The state council will have the minister of the state cabinet in charge of consumer affairs as its chairman

The members shall be from state council, consumer associations, traders and industrial associations, women's organizations

Consumer protection councils

FORUM & JURISDICTION Consumer Disputes Redressal Forums(District Forum) Claims less than or equal Rs.20 lacs.

Consumer Disputes Redressal Commissions(State Commission) Claim more than Rs.20 lacs & less than Rs.1 crore & appeals.

National Consumer Disputes Redressal Commission(National Commission)

Claim equal to Rs.1 crore & appeals

Consumers redressal agencies

Kishore Lal vs chairman, Employees State Insurance Corporation (ESIC).

Case study

In a recent order of the Supreme Court of India, Employees State Insurance hospitals have also been included in the ambit of justice given by Consumer Courts.

Lal, a workman covered under ESIC, took his wife to an ESIC hospital for complications arising out of diabetes. She was admitted in hospital, but her condition deteriorated prompting Lal to transfer her to a private hospital.

There it was known that both the diagnosis and treatment given to her was incorrect. Lal took his grievance to the district forum at Sonepat alleging deficiency of service.

The forum held that the services rendered by the ESIC were gratuitous in nature and hence not covered under CPA and dismissed the case.

When Lal took the matter to the State and National Commissions, the forums agreed that the ESIC service was not covered under the Act.

Case facts

Lal then took the matter to the Supreme Court by way of a Special Leave Petition (SLP).

He stated that as a person who contributed to the ESIC via his employer’s payment of the relevant fee, coupled with some deduction from his own salary, the services rendered by the ESIC were not ‘free of charge’ but arose out of consideration paid by him.

The ESIC on the other hand argued that the services rendered by the organization were free of charge, as the consumer did not pay any money for the treatment, and hence fell within the exception of the Consumer Protection Act, which states that free services were outside the purview of the Act.

It was further argued that under the ESIC Act, all disputes arising from services rendered to ESIC beneficiaries were to be adjudicated by the ESIC Courts and the consumer court thus had no jurisdiction to hear disputes regarding the same.

Decision

It was further argued that under the ESIC Act, all disputes arising from services rendered to ESIC beneficiaries were to be adjudicated by the ESIC Courts and the consumer court thus had no jurisdiction to hear disputes regarding the same.

The court held that when an employee gets the benefits of a service that arises from his employment, such service is part of his terms of employment and cannot be labeled ‘free’.

The SC held that the ESIC Act did not envisage cases of medical negligence being filed before it and the CPA was the act to which any consumer could turn for relief of his grievances.

The matter was remanded back to the district forum, Sonepat for fresh determination of the case on merits.

Order from the supreme court

Can a company file a complaint under the Consumer Protection Act(CPA)? And would it be entitled to get the same reliefs as an individual?

Karnataka Power Transmission Corporationv/s consumer

Can a Company claim compensation for mental tension and harassment?

Synco Textiles Pvt Ltd Vs Greaves Cotton & Co. Ltd (1991) CPJ 499

The National Commission observed the main determinants of character of a transaction – whether it is for a commercial purpose or not are immediate purpose as distinct from the ultimate purpose

Buyers of goods or commodities for self consumption were held to be consumers.

A purchase of goods could be said to be for a commercial purpose only if two conditions were satisfied, namely

A) The goods must have been purchased for being used in some profit making activity on a large scale

B) There should be close and direct nexus between the purchase of goods and the profit-making activity.

Isaac Mathew v/s maruthi udyog LTD;

In the case , a maruthi car was repaired, renovated and sold as a new one. The district forum declared it as an unfair trade and ordered to be replaced

Kailash kumari v/s Narendra Electronics;

In this case, kailash kumari purchased a T.V set from Narendra Electronics which was defective she asked for a replacement but the shop manager refused to. So kailash kumari went to the district forum. It was ordered that the T.V set must be replaced and the compensation must be paid for the stress the party has gone through

Indian CPA casesCase#1 Redressal filed against: Indian Airlines Issue: not allowing passenger to board

the flight despite the fact that the passenger had flight tickets booked

Compensation: Rs. 10,000Case#2 Redressal filed against: United

Breweries Ltd Issue: presence of protein impurity in

beer Compensation: Rs. 5,000Case#3 Redressal filed against: Shoe crafts Issue: Sale of faulty camera from the

grey market with mismatch in serial number on guarantee card

Compensation: Rs.3033

Foreign CPA cases Redressal filed against: SlimAmerica,

Inc Issue: false advertising claims about a

health product (dieting, slimming) Compensation: $8.3 million (Rs.32.3

crores)Case#2 Redressal filed against:Christiana

Hospital Issue: wrong medication leading to

death of patient Compensation:$1.6 million (Rs.6.2

crores)Case#3 Redressal filed against: Trans Union Issue: misrepresentation of identity

and inappropriate credit record upload Compensation:$ 800,000 (Rs.3.1 crores)

How does International consumer protection differ from Indian consumer protection?

An advertisement which is potentially misleading or literally false is deceptive.

Potentially misleading ads are difficult to evaluate because miscomprehension may often occur.◦ Miscomprehension is a problem for firms because the

audience does not understand the message being delivered.

Deceptive Advertising

Deception

Jago Grahak JagoAn Advertisement issued by the Government of India in public interest

What made the government spread awareness about the consumer law?

• Rising cases of duping of consumers

•Political interest of ruling party

•Common consensus in Parliament

To remove the defect pointed out by the appropriate laboratory from the goods in question

To replace the goods with new goods of similar descriptions which shall be free from any defect

To return to the complainant the price, or as the case may be,, the charges paid by the complainant

To pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party

To discontinue the unfair trade practices or the restrictive trade practice or not to repeat them.

Not to offer the hazarodus goods for sale To withdraw the hazardous goods being offered for sale

Relief that may be granted under the ACT

Inadequate awareness Burden on law and order machinery - additional load Delays in the judicial system Deficiency in existing laws

Punishment not enoughLoopholes - bonafide belief by re-seller

No Nodal agency to exclusively deal with the Issue. No Single window for investigation/enforcement

Drawbacks of the existing system

Make the forums more consumer friendly Regular product testing Free legal counseling Conduct workshops in schools, colleges, village panchayats and in offices Encourage consumer clubs Research on issues on consumer concern Publish regular articles on current scenarios to keep the consumer updated with malicious

practices Levy heavy charges on those found guilty under the consumer protection act. Strict norms for advertisements and their promises Regular check on authenticity of the claims made in the advertisements The brand ambassadors should be equally held liable if the brand they promote fails to

keep up with its claims. Rolling back of distributed banned goods Compensation for product side effects Routine inspection of plant, storage, manufacturing, logistics and distribution and upload of

data for public usage MIS information upload for public usage Real sales info, bad product report, quality check results about product uploaded for public

usage

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