Consumer commission act

2. LEARNING OUTCOMES
1. Context of the Consumer Protection Act, 1986 (CPA)
and its relations vis-à-vis other legislations.
2. Overview of CPA – its scope and remedies.
3. Consumer Dispute Redressal Forums and their
powers.

3. Syllabus
 Concept of consumer protection- consumer protection
under consumer protection act 1986 – definitions –
consumer – goods – service – defect – deficiency –
unfair trade practice – restrictive trade practice –
commercial service – Consumer safety - Public utility
services - Liability of Doctors and other professionals,
engineers, lawyers etc. Consumer dispute redressal
agencies – composition and jurisdiction – remedies,
and role of consumer protection councils.

4. Background to CPA
 Earlier the caveat emptor concept governed buyer-seller relations
i.e., buyer should be beware by examining the product and taking
all the risk in the product, unless there are circumstances from
which a warranty can be implied - by usage of trade or by statute
(e.g., Section 16 of the Sale of Goods Act, 1930).
 Today, producers and sellers are more organised while buyers are
unorganised. Therefore manufacturer has a special onus has to
provide defect free goods.
 Globally, the 1985 UN GA Resolution on Consumer Protection
Guidelines was the impetus behind CPA ( a central legislation).
 Legally, CPA follows from the concept of product liability and
negligence in tort.

5. Business environment giving rise to
CPA
 Wide array of goods and services
 Complexity of production and distribution
 Sophistication in advertising, marketing and selling
 No personal relationship between buyer and seller
 Increased mobility of consumer.

6. Some of the other laws
overlapping with the spirit of CPA
 Indian Penal Code, 1860 (e.g., Section 304 A) ;
 Indian Contract Act, 1872;
 Drugs Control Act, 1950;
 Competition Act, 2002;
 Indian Standards Institution (Certification Marks) Act,
1952;
 Standard of Weights and Measures (Enforcement) Act,
1985; and
 Sale of Goods Act, 1930.
= “punitive and preventive in
nature”

7. CPA, 1986
 Amended in 1991, 1993 (to enable filing of class action
complaints) and 2002.
 Structure
 Chapter 1 (Preliminary)
 Chapter 2 (Consumer Protection Councils)
 Chapter 3 (Consumer Redressal Agencies)
 Chapter 4 (Miscellaneous)

8. Who is a ‘Complainant’ ?
[Sec. 2(b) & 12]
 Consumer ( buys goods, hires services, for
consideration and includes beneficiary of the buyer).
See Section 2 (d)
 Voluntary Consumer Organisation (consumer does
not have to be a member of the org.)
 Central/State/ Union Territory Government (in the
interest of consumers)
 Joint applications by one or more consumers (class
action complaints)
 Legal representatives of a deceased consumer

9. Who is a consumer [Sec 2 (d)]
 The following conditions have to satisfied in order to qualify as a
consumer:
 the goods are bought for consideration i.e., there must be a sale
transaction between seller and buyer/ hires or avails of any
services;
 The person who uses the goods with the approval of the buyer is
also a consumer. Therefore rightful users are also consumers
and not just buyers;
 EXCLUSION: persons who obtain the good for resale or for
commercial purpose ( i.e., working with profit motive on a large
scale).
 INCLUSION: buyers, buying the good(s)/service(s) for earning
livelihood by means of self-employment (the buyer itself must use
the goods, the goods should be used exclusively for earning
livelihood).

10. CPA and Privity of Contract
 CPA does not insist upon privity of contract unlike in the
Daniels and Daniels v. R White and Sons, [1938] All ER 258
case, where a man bought a lemonade and shared it with
his wife. Both felll ill but she had no remedy for her injuries
due to the privity of contract requirement.
 The CPA does away with privity other than the need to
prove a lawful transaction. See Indian Oil Corporation v.
Consumer Protection Council, AIR 1994 SC 787 where “IOC
was held not liable when one of its distributors committed
irregularities in reference to a complainant” who had not
valid subscription voucher.

11. Examples
…of consumers
 Member of PF scheme
 Allotee of flat
 Purchaser of truck for self-employment
 Purchaser of computer for desktop printing
…of those who are not consumers
 Winner of a lottery game
 Purchaser of goods for large scale commercial activity
 Purchaser of industrial equipment

12. Recap
 Who is a consumer ?
 Can rightful users/beneficiaries also file complaints ?
 What the are the criteria used to determine
“commercial use” by the consumer ?
 What are the tests for determining what constitutes
“self-employment”?

13. Goods [Section 2 (i)]
 Means goods as defined in the Sale of Goods Act, 1930, i.e.,
 Moveable property other than actionable claims and money
and includes stocks and shares, growing crops and grass and
other things attached to the land which can be severed before
sale or under the contract of sale.
 Moveable property refers to property of every description
except land and things attached to the land or
permanently fastened to the land (immoveable
property).
 Actionable claim includes a claim to a debt or to any
beneficial interest in moveable property.

14. Therefore “goods” ……
must be movable.
 Things attached to or forming part of land which can
be severed satisfy the movable criteria.
 Money and actionable claims are not considered to be
“goods” for the purposes of CPA.

15. Examples of Goods
 Growing crops
 Securities as defined in the Securities Contract (Regulation) Act
1956 – cl (h) i.e., stocks, shares, bonds, debentures etc.
EXCLUSION
 Future Goods are excluded for the time being from this
definition. See the case of Morgan Stanley Mutual Fund v. Kartik
Das (1996) 4 SCC 433, where the applicant for allotment of
shares of a company was considered to be interested in future
goods and therefore having no rights under the CPA. However,
this position of law is likely to change in the future as other
legislations have recognised unalloted shares as a ‘good’.

16. Defect [Sec. 2 (f)]
 Fault
 Imperfection
 Shortcoming
In the
 Quality
 Quantity
 Potency
 Purity
 Standards
 Which is required to be maintained by or under any law for
the time being in force or under any contract express or implied
[from the facts and circumstances of a case], or as is claimed by
the trader in any manner whatsoever in relation to any goods.

17. Examples of Defective Goods
 Pressure cooker bursting and injuring user.
 Providing soft drink not fit for human
consumption.
 Rape seed oil adulterated with toxic substances.
 Selling electric household appliances which are
not in accordance with the standards
prescribed by ISI.
 Provisioning gas cylinder with excessive gas.
 Marble changing colour after polishing.

18. More about ‘Defect’
 In the case of a manufacturing defect both the dealer and
the manufacturer may be held liable (i.e., this is subject to
the terms and conditions under which a dealer was
appointed).
 Burden to ‘prove the defect’ rests on the consumer, though
he is not required to pinpoint the exact nature of the
defect.
 Improper handling of vehicle responsible for defects , the
complainant would not be entitled to relief – Escorts Ltd. v.
N K Dasappa (1995) NC.
 For a complaint to succeed there must be proof that
damage was caused during the warranty period – Sure
Marketing Services v. Leo D’Souza (1992) NC

19. More about ‘Defect’
 Jose Mampillil v. Premier Automobiles P Ltd. [2004] 1 CPJ 9
SC. A defective car delivered which had faults with piston
and other parts. Manufacturer and dealer jointly held liable
to repair.
 Hindustan Motors Ltd. v. N. Siva Kumar [2000] 10 SCC 654.
Where a defective car could not be replaced because the
model was no longer being manufactured, the SC ordered
refund of the money paid along with interest.
 Godrej & Boyce Mfg Co Ltd. v. Amar Singh Jain 1993 CCJ 127
Delhi. Sealed unit of refrigerator replaced 4 times during
warranty period. It was held that warranty period ought to
be automatically extended for a fresh period of 5 years after
every replacement of a part.

20. Exclusion clauses in Consumer
Sales
 Standard Terms and Conditions (STC)/ contractual
terms in fine print which intend to limit liability of a
seller or contract out of standard obligations such
“goods should be of merchantable quality” - these are
typically held to be invalid. However where a STC
limits liability, it will hold only if such terms and
conditions are brought to the specific notice of the
consumer (Skypak Agency v. K.K.K. Pillai, (1995) 1 CPJ
106 Ker, where such a limitation on liability clause
used by a courier company was held to be invalid).

21. Services [ Sec. 2 (o)]
“Service” means service of any description, which is
made available to potential users and includes, but not
limited to the provisions of the facilities in connection
with
1) banking 2) financing 3) insurance 4) transport
5) processing 6) supply of electrical or other energy
7) boarding or lodging or both 8) house construction
9) entertainment 10) amusement or
11) the purveying or new or other information
But does not include the rendering of any service free of
charge or under a contract of personal service.

22. ‘Service’ Definition
 Main part – ‘service of any description’, ‘potential
users’
 Inclusive part – 11 sectors and now also includes
advocates, airlines, chartered accountants, courier, chit
fund, education, gas cylinder/LPG, medical services,
postal services, railways, investment related services,
and telephone services.
 Exclusion – “free of charge” & “contract of personal
service”

23. Exclusion - Free of Charge
 Doctors/Hospital providing ‘service’ free of charge to
everyone – excluded from the definition of ‘service’. Does
payment of token amount for registration alter this
position? Does payment of salary to doctors in such
hospital change this position ? Does the fact of being
a tax payer change this position
 Doctors/Hospital providing ‘service’ at a price, but those
whose cannot afford to pay are excused from payment –
included within the definition of ‘service’. Does the
payment for the service by the insurance
company/employer change this position?
 Doctors/Hospital - Jointly and severally liable i.e.,
concurrent acts leading to service deficiency.

24. Exclusion - Contract of (personal)
service
 Contract of (personal) services – implies a relationship of
master-servant. E.g. services of a civil servant, managing
agents of a company, professor in a university.
Contract for services – one party provides services
(professional or technical) to another party, the
performance of which is not subject to the supervision,
direction or control of the service recipient. The service
provider has discretion in how the service is provided. E.g.
services provided by doctors and lawyers (Vasanth P. Nair v.
Cosmopolitan Hospital [1991]).

25. Categories of Professionals
 Doctors - Indian Medical Association v. V.P. Shanta and
others, (1995) 6 SCC 651.
 Engineers
 Lawyers e.g., deficiency arising on account of negligent
advise, drafting or wrong filings. Adjournments on
account of lawyers strikes can be also termed
deficiency in service.
 Architects
 Chartered accountants

26. Deficiency [S. 2(1)(g)]
 Fault
 Imperfection
 Shortcoming Or
 Inadequacy
In the
 Quality
 Nature and Manner of performance
Which is required to be maintained by or under any law
for the time being in force

27. Examples of ‘Deficiency’
 Any act, omission or callousness would amount to deficiency if
the consumer gets less than the desired service.
 E.g., omission to provide life jackets, rescue personnel and other
mechanisms to rush victims during emergency can be termed
deficiency in service.
 E.g., Not taking care during medical operation, or operations
done by unauthorized personnel or without consent.
 Educational services – conflicting case laws on deficiency in
service.
 TEST - Deficiency has to be ascertained by examining the extent
of reasonable skill and care used by the service provider.

28. Examples of ‘Deficiency’
 Consumer Unity & Trust Society v. Chairman and
Managing Director, Bank of Baroda (1995) 2 SCC 150
 Depositors deprived of services of a bank due to strike
by bank employees.
 Held, though there was loss or damages to depositors,
bank was not negligent (i.e., bank is not guilty of
acting without reasonable care).

29. Lucknow Development Authority v.
M.K. Gupta - 1994 (1) SCC 243
 Issues – (1) Are statutory authorities liable under the COPRA for act or
omission relating to housing activity. (2) Is the provision of housing
construction activities a “service” ?
 Held :-
 “A government or semi-government body or a local authority is as much
amenable to the Act as any other private body rendering similar
service.” (Reason – the intent of COPRA).
 Also, “In any case the law has always maintained that the public
authorities who are entrusted with statutory function cannot act
negligently.”
 “the term (service) has a variety of meanings. It may mean any benefit
or any act resulting in promoting interest or happiness. It may be
contractual, professional, public, domestic, legal, statutory, etc. The
concept of service is very wide.”

30. Recap
 What were the issues in the Lucknow Development
Authority case and what was its holding.
 What are the exclusions to the definition of “service” ?
 Are professional services contracts of personal service
or contracts for services? Why ?
 Can the parents of minor patient be considered as
consumers and claim for compensation ?

31. Section 3
Act not in derogation of any
other law – The provisions of this
Act shall be in addition to and not
in derogation of the provisions of
any other law for the time being in
force.

32. Public Utility Services
 Electricity
 Telephone Services
 Railways
 Postal services

33. Public Utility Services – Issues of
Law
 Are they governed by a separate legislation and
therefore outside the jurisdiction of COPRA?
 Electricity - Officer, Jharkand State Electricity Board v.
M/s. Pinki Plastic (2008).
 Telephones - General Manager Telecom v. M. Krishnan,
(Ker. HC, 2003).
 Railways - Railways Claims Tribunal Act 1987 (s. 15)

34. Officer, Jharkand State Electricity Board v. M/s. Pinki Plastic (2008).
 Section 173 :
 Inconsistency in laws – Nothing contained in this Act
or any rule or regulation made thereunder or any
instrument having effect by virtue of this Act, rule or
regulation shall have effect in so far as it is inconsistent
with any other provisions of the Consumer Protection
Act, 1986 (68 of 1986) or the Atomic Energy Act, 1962
(33 of 1962) or the Railways Act, 1989 (24 of 1989).

35. Electricity Act
 Section 174 :
 Act to have overriding effect – Save as otherwise
provided in section 173, the provisions of this Act shall have
effect notwithstanding anything inconsistent therewith
contained in any other law for the time being in force or in
any instrument having effect by virtue of any law other than
this Act.
 Section 175 :
 Provisons of this Act to be in addition to and not in
derogation of other laws – The provisions of this Act are
in addition to and not in derogation of any other law for the
time being in force.

36. Conclusion in Pinki case
 .(i). The intention of the Parliament is not to bar the
jurisdiction of the consumer fora under the CP Act. The
Electricity Act also impliedly does not bar the jurisdiction of the
consumer fora ;
 .(ii). On the contrary, it saves the provisions of Consumer
Protection Act, 1986, Atomic Energy Act, 1962 and the Railways
Act, 1989 ;
 .(iii). By non-obstante clause, it has been provided that if
anything in the Electricity Act, Rules or Regulations is
inconsistent with any provisions of the Consumer Protection
Act, it shall have no effect ; and
 .(iv). Provisions of the Electricity Act are in addition to and not
in derogation of any other law for the time being in force. The act
supplements the existing redressal forum, namely, the Consumer
Fora.

37. Extract from Pinki Plastic Case
 “The trend of the decisions is that the jurisdiction of
the Consumer Forum should not and would not be
curtailed unless there is an express provision
prohibiting the Consumer Forum to take up the
matter which falls within the jurisdiction of civil
court or any other forum as established under
some enactment.”

38. Unfair Trade Practice – Background
 UTP provisions of the Act protect the consumer from
undesirable practices of the business community. Closely
related to fraud and misrepresentation under the Indian
Contract Act, 1872.
 Also present as a concept in the Competition Act, 2002
(previously MRTP Act,1969).
 Lakhanpal National Ltd v. MRTP Commission (1989, SC) –
Producer of batteries working in collaboration Mitsushita
Ltd. states what amounts to an UTP
 “False statement [different from the truth]…which is
misleading…what is the effect of such a statement on the
common man.”

39. Unfair Trade Practice [Sec. 2 (1) (r)]
 False Representation
 False Offer of Bargain Price
 Schemes Offering Gifts, Prizes etc.
 Non-compliance with prescribed standards
 Hoarding, Destruction or Refusal
 Spurious Goods, Deceptive Practices in the provision
of Services

40. False Representation[Sec. 2 (1) (r)
(1)]
 Falsely representing on quality, standard, quantity, or representing old
goods as news goods. (e.g., Opel Astra case - Vinoo Bhagat v. General
Motors).
 Falsely represents that the goods or services have sponsorship,
approval, performance etc. (e.g., Ayurvedic clinic providing cures !).
 Falsely represents that the seller has sponsorship or approval or
affiliation. (e.g., false claim as to foreign university affiliation; Usha
company’s products carried ISI mark).
 Makes a misleading statement concerning the usefulness of the goods.
(e.g., exaggerated claims about the benefits of investment)
 Makes warranties or guarantees which are not based on proper tests or
are misleading. (e.g., promised after-sales support not delivered)
 Mislead the public as to the price (e.g., sq. feet of flat hiked).
 Makes false statements disparaging the goods/services/trade of
another.

41. False Offer of Bargain Price [Sec. 2
(1) (r) (2)]
 False advertisements of bargain price (discounts)
when there is no intent to offer them, or they are not
offered for reasonable time and in reasonable quantity.
 In order to establish that a valid “bargain price” exists,
an ordinary price (regular price) has to be first
established.
 Ex. actual discount cannot be ascertained, or is
calculated with reference to future prices, or without
mention of quality of goods.

42. Examples
 Polar Industries Ltd. v. G.R. Luthra (1987) 61 Comp Ca
805 MRTPC – an advertisement alleging off season
discount on fans held to be false since such discount
was calculated with reference to future and not present
prices.

43. Schemes offering gifts, prizes etc.
[Sec. 2 (1) (r) (3)]
 Offering to provide gifts etc when it is not intended to
be provided; or
 Creating an impression that a good/service is being
sold for free when its costs are covered elsewhere; or
 Through a game of chance or skill which is primarliy
for promoting the sale of the good or service; and
 Not informing participants about the results of
scheme.

44. Examples
1. Wimco v. Liberty Match Co. (1991) 70 Comp Cas 620 Guj. – here
competitor was able to establish loss of revenue since the gift coupon
scheme started operation in Ahmedabad. Therefore it is a UTP.
2. Society for Civic Rights v. Colgate Palmolive (India) Ltd. (1991) 72
Comp Cas 80 MRTPC – purchase of triguard toothbrushes allowing
one to take a chance on early bird prizes. The court held that
“anything which deprived the consumers of their money in order to
get something which they did not need was a device for promoting
sales at public cost.”
3. Achal Kumar Galhotra v. Byford Motors, (19910 72 Comp Cas 702
MRTPC – offer of free car stereo recovered by increasing the
registration charges was a scheme involving UTP.
4. FTC v. Mary Carter Paint Co., 382 US 46 (1965) – Mary Carter never
had a history of selling one can of paint therefore it was false to
advertise that it was selling one can of “free” paint, when through out
its practice it had only marketed twin cans.

45. Non-compliance with prescribed
standards [Sec. 2 (1) (r) (4)]
 Standards relating to performance, composition,
contents, design, construction, finishing and
packaging as are necessary to prevent or reduce the
risk of injury to the person using the good.
 Procter & Gamble Home Products case (1997).

46. Hoarding, Destruction or Refusal
[Sec. 2 (1) (r) (5)]
 Hoarding; or
 Destruction; or
 Refuses to sell the goods or to make them available for
sale
 If this conduct raises or has the effect of raising the
cost of those or other similar goods or services.

47. Manufacture of Spurious Goods
[Sec. 2 (1) (r) (6)]
 Manufacturing or offering spurious goods for sale.
 Spurious goods is defined in Section 2 (1) (oo) as goods
which are claimed to genuine but are actually not.

48. Restrictive Trade Practice [Sec. 2
(1) (nnn)]
 Trade practices which tend to bring about
 Manipulation of prices or conditions of delivery; or
 Flow of supply into the markets relating to those goods
 In such manner as shall impose on consumers
unjustified costs or restrictions (ex. of choice)
 Ex. Delaying the supply to take advantage of a hike in
prices or bundling goods/services.
 EX. Mandatorily bundling a vehicle insurance policy
with the car purchase without giving the purchaser a
choice of who to insure with OR bundling a particular
brand of gas stove with a gas connection.

49. Consumer Protection Dispute
Redressal Forums
 Quasi judicial forums provides simple, quick and
cheaper remedies
 Not bound by strict rules of evidence and procedure.
 Express hearing of a complaint ( 3 months – 5 months).
 Only a nominal fee ( no court fees).
 Can fight the case oneself or through authorise
agent/advocate.

50. Grounds for making a complaint
[ Sec. 2 (c) ]
 Defects in the goods bought or agreed to be bought
 Deficiency in services
 Charging excess price (in excess of legal rules, marked
price etc.)
 Providing hazardous goods without safety standards
 Adopting unfair trade practices(falsely representing
the goods) or restrictive trade practice (e.g., delay in
provisioning the goods leading to hike in prices).

51. Consumer Protection Dispute Redressal Forums
(Jurisdiction)
District Forum /
Commission
President and 2
members
Where the value of the
goods or services and the
compensation, if any
claimed,
Does not exceed Rs. 20
lakhs
Where the
cause of
action wholly
or in part
arises, or
where the
opposite
party
voluntarily
or actually
resides or
carries on
business or
has a branch
office or
personally
works for
gain.
State Commission
President and 2
members
Rs. 20 lakhs and above but
not exceeding One Crore
National
Commission
President and
minimim of 4
members
Above One Crore

52. Remedies (Section 14)
 Replacement of the goods;
 Refund of the price paid;
 Award of compensation for the loss or injury suffered;
 Discontinue and not to repeat unfair trade practice or restrictive trade
practice;
 not to offer hazardous goods for sale;
 to withdraw hazardous goods from sale;
 to cease manufacture of hazardous goods and desist from offering services
which are hazardous in nature;
 if the loss or injury has been suffered by a large number of consumers who are
not identifiable conveniently, to pay such sum (not less than 5% of the value of
such defective goods or services provided) which shall be determined by
Forum;
 to issue corrective advertisement to neutralise the effect of misleading
advertisement;
 to provide adequate costs to parties.

53. Consumer Protection Councils
 OBJECTIVE -“to help the respective governments in
adopting and reviewing policies for promoting and
protecting the rights and interests of the consumers.”
 composition of these consumer councils are broad
based i.e., a body representing public-private
partnernsip ( official and non-official members).
 Pls read Section 4 – 8 B.