Chapter 09 The Consumer Protectio Act 1986Document Transcript
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 quot;
consumer is kingquot; 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 23rd 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;
It must be noted that a person who buys goods or avails services for commercial purposes is not a consumer.
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.
The Act has not confined itself to the original hirer alone, but equally extended it to the subsequent
beneficiaries of the services as well.
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,
which is required under any law to be maintained by or
under any contract, express or implied or
as is claimed by the trader in any manner whatsoever in relation to any goods;
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Goods - goods as defined in the Sale of Goods Act, 1930.
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
CONSUMER PROTECTION COUNCILS
The objects of the Councils shall be to promote and protect the rights of the consumers including the right to
Classification of Central Consumer State Consumer Protection District Council
Council Protection Council Council [SECTION 7] [SECTION 8A]
Estab. Authority Central Government State Government State Govt.
Chairman Minister in charge in the Cent. Minister in charge in the State Govt. Collector of the district
or (i) 8 M.P.—5 from LS, 3 (i) 8 – 5 MLA & 3MLC (As per respective State Rules)
(ii) 10 – State Govt. Repr.
for SC & ST. (iii) 5 – Women Repr.
(iii) 20 – Repr. Of Cent. (iv) 5 – Trade & Farmers
Govt.& Autonomous Repr.
Org. with consumer
(v) 1 – Persons for Consumer
(iv) Registrar, National
(v) 35 - Consumer Orgns.
(vi) 10 – Women
(vii) 20 – Trade & Industry
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IIPM 56 CH. – 9 CONSUMER PROTECTION ACT
(viii) 15 – Persons for
Term Generally 3 years
Member-secretary -Secretary in-
Place of Council District HQ
charge of Consumer Affairs in the
Meetings At least two meetings in a year.
Generally 3 years
At least two meetings in a year
At least one meeting every year
CONSUMER DISPUTES REDRESSAL AGENCIES
Appellate Authority National Consumer State Commission District Forum
Disputes Redressal [SECTION 16] [SECTION 10]
President Judge of the Supreme Court to be Judge of the High Court to be District Judge to be appointed by
appointed by the Cent. Govt. in appointed by State Govt. in the State Govt. in consultation
consultation with the Chief Justice consultation with Chief Justice of with the Chief Justice of State
of India. High Court. High Court. who shall be its
Members (persons of 4 (1 Woman) – Appointed by 2 (1 Woman) – Appointed by State
ability, integrity and Cent. Govt. on the Govt. on the recommendation of a
standing and have 2 (1 Woman) – Appointed by
recommendation of a selection selection committee
adequate knowledge or State Govt. on the
experience) recommendation of a selection
5 years` or 70 years` (whichever 5 years or 67 years (whichever
5 years or 65 years (whichever
Jurisdiction (i) Complaints - value of the goods Complaints - value of the goods or
Complaints - value of the goods or
or services and compensation, if services and compensation, if any,
services and compensation, if
any, claimed exceeds Rs. One claimed exceeds Rs. 25 lakhs upto
any, claimed upto Rs. 25 lakhs.
crore and Rs. One Crore.
The concerned State within which
(ii) Appeals against the orders of
either of parties actually and
any State Commission.
voluntarily resides or carries on
business or has a branch office or
Penalty personally works for gain.
Imprisonment up to 3 years` with Imprisonment up to 3 years` with or
Imprisonment up to 3 years` with
Time limit for completion or without fine upto Rs. 10,000 without fine upto Rs. 10,000
or without fine upto Rs. 10,000
of hearing 90 days` or 150 days` (in case of 90 days` or 150 days` (in case of
90 days` or 150 days` (in case of
Judicial Powers/Interim lab. Tests) lab. Tests)
Relief Vested with powers of 1st Class Vested with powers of 1st Class
Vested with powers of 1st Class
Summary Trial Judicial Magistrate Judicial Magistrate
Principal Bench New Delhi; Circuit Bench State Capital
Appellate Authority District HQ
Supreme Court within 30 days` National Commission within 30
State Commission within 30 days`
with 50% of award money. days` with 50% of award money or
with 50% of award money or Rs.
Rs. 35,000 (whichever less).
25,000 (whichever less).
State Capital; Circuit Bench at
Enforcement power other cities.
Limitation period As arrears of Land & Revenue As arrears of Land & Revenue
As arrears of Land & Revenue
2 years` from the cause of action. 2 years` from the cause of action
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?
If the cost of goods or service and compensation asked for is:
up to Rs. 25.00 lakhs - District Forum.
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IIPM 57 CH. – 9 CONSUMER PROTECTION ACT
more than Rs. 25.00 lakhs and up to Rs. 1 crore - State Commission.
more than Rs. 1 crore - National Commission.
A model form has been provided for filing of the complaint for the convenience of the consumer.
The complaint/reply should be supported with affidavit of party and witnesses, if any.
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.
LECTURES BY PROF. S N GHOSH