CA foundation Business Law all topics covered

Introduction –
Meaning of Partnership – Section 4
 Partnership = relationship between persons who have agreed to share the profits of a business
carried on by all or any of them acting for all.
 Persons, who have entered into partnership with one another are called individually ‘partners
 Firm’ is the collective of the partners.
 The ‘firm name’ is the name under which the business is carried on.
Important Points on firm’s name –
 The name of the firm should not be such which will misled or confuse the people with the
name of the firm which is already in existence.
 The name of the firm should not show patronage (connection) with the government.
 Partnership firm cannot use the word “Limited” as a part of its name.
Essential elements to constitute partnership firm –
Important Points –
Members of HUF carrying on family business together are not partners.
Burmese Buddhist Husband and wife doing business together are not partners.
Sharing of Profits is not the only evidence for partnership –
INDIAN PARTNERSHIP ACT, 1932
Indian Partnership Act, 1932 is applicable to whole of India.
Act was applicable from 1st October 1932 except for section 69 (effect of non registration) which
was applicable from 1st October 1933.
The Act is based on the English Partnership Act, 1890
• Atleast 2 parties. Persons must be competent to enter into a contract. Parties may be natural or
artificial
•Agreement between the parties. Agreement may be oral or in writing. It may be express or implied.
•Agreement must be to share the profits of the business; and
• Business must be carried on by all or any of them acting for all;

This means that of two person are only sharing profit then it does not means that they both are
partners.
Example –
1) A joint owner of a property sharing its return with the other owner does not make joint
owners partner.
2) “Arnab” a trader, owed money to X, Y& Z. He agreed to pay XY&Z out of the profits of his
business. Even if X, Y and Z will get their money from the property of Arnab, it does not make
them partner of Arnab
Minor as a partner of the firm – Section 30
1) Minor can become partner for the benefits of the partnership with the consent of all the
partners
2) For admitting minor as a partner, an agreement shall be executed through his guardian
Rights of minor in partnership firm Liabilities of minor in partnership firm
 Right to share profits of the firm
 Right to share property of the firm
 Right to inspect accounts of the firm
 Right to take copy of the accounts
 Minor is not personally liable
 However, share of minor in the firm
is liable
Election on majority –
a) On attaining majority, or
his obtaining knowledge that he had been admitted to the benefits of partnership;
whichever date is later, minor may within six months from such date give public notice that he has
elected to a partner in the firm or not.
b) If a minor fails to give such notice, he shall become a partner in the firm on the expiry of the said six
months.
Electionon majority –
If a minor elects to become a partner
His rights and liabilities will be similar
to those of a full-fledged partner.
He will be personally liable for all the
acts of the firm, done since he was first
admitted to the benefits of the
partnership.
His share of profits and property
remains the same as was before, unless
altered by agreement.
If a minor does not elect to become a partner-
1) his rights and liabilities shall continue to
be those of a minor up to the date on which
he gives public notice;
2) his share shall not be liable for any acts of
the firm done after the date of the notice;
and
3) he shall be entitled to sue the partners for
his share of the property.

Partnership Deed –
1) Written document which contains the mutual rights and obligations of partners is known as
partnership deed.
2) Partnership Deed is not mandatory.
3) However, it is advisable to have partnership deed in writing.
4) If there is partnership deed then each partner should have 1 copy.
5) If the firm is to be registered then a copy of the deed should be filed with the Registrar of Firms.
What are the contents of partnership deed?
Partnership deed should contain the following details –
- Firm name;
- Names and addresses of partners;
- Details of business of partnership;
- Address of business place;
- Profit sharing ratio
- Date of commencement of partnership firm;
- Duration of partnership firm;
- Amount of capital contribution;
- Salaries, commission and remuneration to partners;
- Rights of the partners;
- Liabilities of the partners;
- Details of retirement of partners;
- Provision for expulsion of a partner;
- Arbitration clause for the settlement of disputes.
Difference between Co-ownership and partnership –
Partnership Co-ownership
It arises from agreement It may or may not arise from agreement
Purpose of partnership is to carry business It may or may not involve carrying business
It involves profit and loss It may or may not involve profit or loss
Partners have mutual agency Co-owners do not have mutual agency
Persons who form partnership are called as
partners
Persons who own property jointly are called as
co-owner
A partner has a lien on the firm property. A co-owner has no lien on the property
Types of partnership –

Types of partners
1) Working partner or Active partner –
- Active partner contributes capital and also takes active part in the management of the firm.
- He bears an unlimited liability for the firm’s debts.
- He is known to outsiders.
- He shares profits of the firm.
- He is a full-fledged partner.
2) Sleeping or dormant partner –
- Only contributes capital;
- Does not take active part in the business;
- He shares in the profits or losses of the firm;
- His liability is unlimited;
- He is not known to the outsiders.
- A sleeping partner can retire from the firm without giving any public notice
3) Secret partner –
- Secret partner contributes capital;
- Takes active part in the business;
- He shares in the profits or losses of the firm;
- his connection with the firm is not known to the outside world.
4) Limited partner –
- The liability of such a partner is limited to the extent of his share in the capital and profits of
the firm.
- He does not take active part in the business;
- The firm is not dissolved in the event of his death, lunacy or bankruptcy.
5) Partner in profits only –
- Partners in profit only share in the profits of the firm but not in the losses;
Typesof partnership
Partnershipat will -
Partnership at will is a partnership formed for an
indefinite period. Time period of partnership is not
fixed nor specified.
1)Such type of partnership can continue for any
period of time depending upon the will of the
partners.
2)It can be dissolved by any partner by giving a
notice to the other partners of his desire to quit the
firm.
ParticularPartnership -
Particular Partnership is a partnership
formed for a specific time or for a specific
purpose.
Once the time is over or purpose is
achieved, it cease to exist

- He is not allowed take active part in the business;
- Such a partner is associated for his money and goodwill.
6) Nominal Partner –
- Nominal partner only lends his name and reputation for the benefit of the firm.
- He represents himself or knowingly allows himself to be represented as a partner
- Such type of partner neither contributes capital nor takes part in the management of
business.
- He does not share in the profits or losses of the firm.
- He becomes liable to outsiders for the debts of the firm.
Example –
Jalal, is not a partner but he tells Ramu that
he is a partner in a firm called Alpha
Enterprises. On this impression, Ramu sells
good worth ` 20,000 to the firm. Later on the
firm is unable to pay the amount. Ramu can
recover the amount from Jalal. Here, Jalal is a
partner by estoppels.
Partnership is a creation of contract – Section 5
 Partnership is created out of contract and not by status.
 The members of a Hindu Undivided Family carrying on a family business or a Burmese Buddhist
husband and wife, carrying on business as such, are not partners in such business.
Difference between Partnership firm and other forms of business –
Nominal partner can be of two types -
Partner by estoppels
A partnerby estoppelis someone who
is not a partnerof a firm, but allows
others to think that he is a partner,
through his behaviour or conduct
Partner by holding out.
A partnerby holdingout is someone
who is not a partnerof a firm, but
knowingly allows the firm to project to
others that he is a partnerof the firm
Example –
Alpha tells Ramu in the presence of Jalal that
Jalal is a partner in the firm of Alpha
Enterprises. Jalal does not deny it. Later on
Ramu gives a loan of ` 20,000 to Alpha
Enterprises on the basis of the impression
that Jalal is a partner in the firm. The firm
fails to repay the loan to Ramu. Jalal is s liable
to pay ` 20,000 to Ramu. Here, Jalal is a
partner by holding out.

BASIS FOR COMPARISON PARTNERSHIP FIRM COMPANY
Meaning When two or more persons agree to
carry on a business and share the
profits & losses mutually, it is known
as a Partnership firm.
A company is an association of persons
who invests money towards a common
stock, for carrying on a business and
shares the profits & losses of the
business.
Governing Act Indian Partnership Act, 1932 Indian Companies Act, 2013
How it is created? Partnership firm is created by mutual
agreement between the partners.
The company is created by incorporation
under the Companies Act.
Registration Voluntary Compulsory
Management of the
concern
Partners itself. Directors
Liability Unlimited Limited
Contractual capacity A partnership firm cannot enter into
contracts in its own name
A company can sue and be sued in its
own name.
Use of word limited No such requirement. Must use the word 'limited' or 'private
limited' as the case may be.
Legal formalities in
dissolution / winding up
No Yes
Separate legal entity No Yes
Mutual agency Yes No
Audit Audit is not compulsory Various types of audit are compulsory
Number of members Minimum required is two. Maximum
number is 100 subject to some
exceptions
Minimum number of members for a
private company is 2 and maximum
200. Minimum number of members
for a public limited company is 7 and
there is no limited for maximum.

BASIS FOR
COMPARISON
PARTNERSHIP LIMITED LIABILITY PARTNERSHIP (LLP)
Meaning Partnership refers to an arrangement
wherein two or more person agree to carry
on a business and share profits & losses
mutually.
Limited Liability Partnership is a form of
business operation which combines the
features of a partnership and a body
corporate.
Governed By Indian Partnership Act, 1932 Limited Liability Partnership Act, 2008
Registration Optional Mandatory
Charter
document
Partnership deed LLP Agreement
Liability Unlimited Limited to capital contribution, except in
case of fraud.
Contractual
capacity
It cannot enter into contract in its name. It can sue and be sued in its name.
Legal Status Partners are collectively known as firm, so
there is no separate legal entity.
It has a separate legal status.
Maximum
partners
100 partners No limit
Property Cannot be held in the name of firm. Can be held in the name of the LLP.
Perpetual
Succession
No Yes
Relationship Partners are agents of firm and other
partners as well.
Partners are agents of LLP only.
BASIS FOR
COMPARISON
Partnership Hindu undivided family
Relationship Relation subsists between the
partners.
It is a single person and it cannot have a
partnership by itself
Management All of the partners may involve in the
management
Karta of HUF is managing the business
Share of profit Partners can share profit as per the
agreement
No such sharing of profits in HUF
Property The properties even though in the
name of partnership firm belongs
to all partners
This business is a species of ancestral
joint property in which every member
of a family acquires

Authority Each partner is the agent of others It has implied authority to contract debts
and pledge the properties and credit of
the family for the ordinary purposes of
the family business
Dissolution Firm can be dissolved on the eve
of death of partner, retirement of
partner etc., unless otherwise than
agreed to in the agreement
The death of Karta will not lead to
the dissolution of the HUF business
Rights and Liabilities of Partners –
Duties of partners – Section 9
Rights of Partners –
 Every partner has a right to take part in the conduct of the business;
 Every partner , has a right of free access to all records, books and accounts of the business.
 the partners are entitled to share equally in the profits earned and shall contribute equally to
the losses sustained by the firm (however, this is subject to the contract)
 where a partner is entitled to interest on the capital subscribed by him, such interest shall be
payable only out of profits;
 a partner shall indemnify the firm for any loss caused to it by his willful neglect in the conduct of
the business of the firm.
 A partner has power to act in an emergency for protecting the firm from loss
 Every partner has a right to retire by giving notice where the partnership is at will
 Every partner has a right to continue in the partnership and not to be expelled from it
 Any difference, arising as to ordinary matters connected with the business, may be decided by a
majority of the partners, and every partner shall have the right to express his opinion before the
matter is decided.
 No change may be made in the nature of the business without the consent of all the partners;
Property of the firm –
1) The property of the firm includes all property and rights and interests in property, originally
brought into the stock of the firm or acquired by purchase for the firm and includes the goodwill
of the business – Section 14
to carry on the business of the firm to the greatest common advantage;
to be just and faithful to each other; and
to render true accounts and full information of all things affecting the firm, to any partner or his
legal representative
Every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the
business of the firm.

2) The property of the firm shall be held and used by partners exclusively for the purposes of the
business – Section 15
3) The property of the firm belongs to the firm and not to the individual partner or partners.
The ultimate test to determine the property of the firm is the real intention of the partners and the
Court can take into consideration the following facts:
(1) The source of the purchase money.
(2) The reason due to which the property was purchased or acquired.
(3) The object for which the property was purchased or acquired.
(4) The mode in which the property was obtained.
(5) The use of the property.
Partner to be agent of the firm – Section 18
1) Every partner is an agent of the firm and of other partners for the purpose of the business of the
firm.
2) Any act done by the partner binds the firm and all the partners in the firm.
3) However, following acts of the partner does not bind firm and other partners –
a) If any act was done by the partner for which he had no authority and the person with whom
he is dealing knows that he has no authority; or
b) The party with which the partner was dealing does not know or believe him to be a partner.
Authority of a Partner –
Implied Authority –
1) A partner acting on behalf of the firm has an implied authority to bind the firm.
2) The authority of a partner to bind the firm is called his ‘implied authority’
3) The implied authority of a partner does not give him power to –
a) submit a dispute relating to the business of the firm to arbitration;
b) open a banking account on behalf of the firm in his own name;
c) compromise or relinquish any claim or portion of a claim by the firm;
d) withdraw a suit or proceeding filed on behalf of the firm;
e) admit any liability in a suit or proceeding against the firm;
f) acquire immovable property on behalf of the firm;
g) transfer immovable property belonging to the firm; or
h) enter into partnership on behalf of the firm.
Authority of a partner
Express Authority -
When authority is given by words,
spoken or written the it is called as
Express Authority
ImpliedAuthority -
Act done in the normal course of
business and in a usual way and done
for the firm

Liability of a partner – Section 25
Every partner is liable, jointly and severally, for all acts of the firm done while he is a partner.
Rights of Transferee of a partner’s interest – Section 29
1) This section allows a partner to transfer his interest in the firm, either absolutely or by mortgage
or by the creation of a charge on such interest during the continuance of the firm.
2) The transferee who receives such interest in the firm, does not entitled to-
a) interfere in the conduct of the business; or
b) to require accounts; or
c) to inspect the books of the firm
3) Rights of the transferee –
a) Transferee is entitled to receive the share of profits of the transferring partners;
b) If the firm is dissolved or the transferring partner ceases to be a partner, the transferee is
entitled to receive the share of the assets of the firm to which the transferring partner is
entitled
Reconstitution of Firm –
Any change in the existing agreement / relationship of partnership amounts to reconstitution of a firm.
This results in change in the partnership agreement.
Expulsion of a partner – Section 33
 A partner cannot be expelled by majority of the partners.
 For a partner to be expelled, express power should be there in partnership agreement.
Death or Insolvency of a partner –
1) Where a partner in a firm is adjudicated (declared) as insolvent or is dead, he ceases to be a
partner immediately whether or not the firm is thereby dissolved.
2) The estate of a partner who dies, or who becomes insolvent, is not liable for partnership debts
contracted after the date of the death or insolvency.
3) However, estate of the partner will liable for debts incurred before death or insolvency.
Reconstitution of a partnership firm may take place in the following occasions-
Change in profit
sharing ratio of
the existing
partners
Admission of a
new partner
Retirement of
existing partner
Death of a
partner;
Amalgamation
of two
partnership
firm.

Rights of outgoing partners –
1) Outgoing partner may carry on a business competing with that of the firm.
Note –
- Outgoing partner cannot use the firm name.
- Outgoing partner cannot represent himself as carrying on the business of the firm
- Outgoing partner cannot solicit the customers of the partnership firm.
2) The outgoing partner of the representative of the deceased partner is entitled at the option-
a) to such share of the profits made since he ceased to be a partner; or
b) to interest at 6% per annum on the amount his share in the property of the firm.
Registration of the Firm –
For the purpose of registration a statement in the prescribed form containing the following details
should be submitted –
 the name of the firm;
 the place of business of the firm;
 the names of any other places where the firm carries on business;
 the date when each partner joined the firm;
 the names, in full, and permanent address of the partners; and
 the duration of the firm.
Statement shall be prepared and duly signed by all partners, or by their agents having authority.
Effect of non-registration – Section 69
The consequences of non-registration of a firm are as under –
 A partner cannot sue the partnership firm for his claims;
 The firm cannot sue any 3rd
party for any debts arising out of the contract;
 No partner can file a suit against other partners of the firm.
Note –
Third parties can file a suit against the firm to enforce their rights.
However, even if a firm is not registered, it allows following suits –
a) A suit for the dissolution of a firm
b) A suit for rendering of accounts of a dissolved firm
c) A suit for realisation of the property of a dissolved firm.
d) A suit or claim of set-off, the value of which does not exceed one hundred rupees,
e) A suit for the realisation of the property of an insolvent partner
Dissolution of a firm –

A) Dissolution by agreement – Section 40
A firm may be dissolved with the consent of all partners or in accordance with a contract
between the parties.
B) Compulsory dissolution – Section 41
a firm is dissolved –
1) If all the partners or of all the partners but one as insolvent; or
2) By the happening of any event which makes the business unlawful.
C) Dissolution on the happenings of certain contingencies – Section 42
A firm is dissolved –
a) if constituted for a fixed term, by the expiry of that term;
b) if constituted to carry out one or more adventures or undertakings, by the completion
thereof;
c) by the death of a partner; and
d) by the adjudication of a partner as an insolvent.
D) Dissolution by notice of partnership at will – Section 43
Where the partnership is at will, the firm may be dissolved by any partner giving notice, in
writing, to all the other partners, of his intention to dissolve the firm. The firm is dissolved as
from the date mentioned in the notice as the date of dissolution or, if no date is mentioned, as
from the date of the communication of then notice.
E) Dissolution by the court – Section 44
Court may direct dissolution of a firm on the following grounds –
 if a partner has become of unsound mind;
 if a partner has become permanently incapable of performing his duties as partner;
 if a partner is guilty of conduct which is likely to affect prejudicially the carrying on of
business, regarding being had to the nature of business;
 if a partner wilfully or persistently commits breach of agreements relating to-
a) the management of the affairs of the firm; or
b) the conduct of its business; or
c) otherwise so conducts himself in matters relating to the business that it is not
reasonably practicable for the other partners to carry on the business in partnership
with him;
 If a partner has in any way –
a) transferred the whole of his interest in the firm to a third party; or
b) has allowed his share to be charged; or
c) has allowed it to be sold in the recovery of the arrears of land revenue; or
Modes of Dissolution of a firm
Dissolution by
agreement
Compulsory
dissolution
Dissolution on
the happenings
of certain
contingencies
Dissolution by
notice of
partnership at
will
Dissolution by
the court

d) of any dues recoverable as arrears of land revenue due by the partner;
 the business of the firm cannot be carried on save at a loss; or
 on any other ground which renders it just and equitable that the firm should be dissolved.
Effect of Dissolution –
A) Continuing authority of partners –
1) Authority of the partners continues even after dissolution so long as is necessary to wind up
the business.
2) each partner has an equitable lien over the firm’s assets which he can apply to pay the debts
of the firm and to receive any amount due from partnership firm.
B) Continuing liability of partners –
1) Liability of partners continues till the public notice of dissolution is given.
2) Liability of partners continues for all things necessary for the winding up of the business. The
partners may complete unfinished transactions
Note –
This authority is only for winding up and not for new transactions.
C) Right to Return of Premium –
a) To buy entry into an existing firm, a new partner sometimes has to pay a premium to the
existing partners in addition to any investment of capital.
b) On dissolution, he is entitled to demand the return of a proportion of the premium if the
partnership was for a fixed term and was dissolved before the expiry of that term
c) However, in the following 3 cases, partner will not get the premium return –
1) Where the partnership was dissolved by agreement; or
2) misconduct of the party seeking return of the premium; or
3) death of a partner.
D) Settlement of Accounts on Dissolution (order of payment) –
a) Losses shall be paid first out of undistributed profits next out of capital, and lastly, if
necessary, by the partners individually in the profit sharing ratio.
b) The assets of the firm including the losses contributed by the partner as above shall be
applied in the following manner –
1) in paying outside creditors;
2) in repaying advances made by partners
3) in repaying capital to partners; and
4) if any amount is left then it shall be divided in PSR.
Loss due to insolvency of partners –
In case a partner is insolvent and is not able to contribute towards the deficiency, then –
a) The solvent partners will contribute only their share of deficiency in cash;
b) The available assets should be distributed among the solvent partners in proportion to their
capital.
Sale of Goodwill –
Where goodwill is sold the value is divisible among the partners in the same manner as they share
profits and losses.

Suit for Libel or Slander –
a) A firm is merely a collection of partners and cannot bring a suit for libel or slander.
b) Libel or slander against a firm means a libel or slander of its partners. Such partners themselves
or any one may file the suit for libel or slander
Rights in case of sale of goodwill -
Rights of buyer
a) represent himself in continuing
the business,
b) Buyer can use the firm name
c) Buyer can solicitthe former
customersand will restrictthe
seller of the goodwill from doing so.
Rights of seller
Seller may enter into
competition with the
purchaser unless he is
prevented by a valid restraint
clause in the contract of sale.

Important Definitions –
1) Advertisement – Section 2(1)
Advertisement means any –
 audio or visual publicity,
 representation,
 endorsement or
 pronouncement
made by means of light, sound, smoke, gas, print, electronic media, internet or website and
includes any notice, circular, label, wrapper, invoice or such other documents.
2) Complainant – Section 2(5)
Complainant means –
 a consumer; or
 any voluntary consumer association registered under any law; or
 the Central Government or any State Government; or
 the Central Authority; or
 one or more consumers, where there are numerous consumers having the same interest; or
 in case of death of a consumer, his legal heir or legal representative; or
 in case of a consumer being a minor, his parent or legal guardian.
3) Complaint – Section 2(6)
Complaint means any allegation in writing, made by a complainant for obtaining any relief
provided under the Consumer Protection Act, 2019, that –
a) an unfair contract or unfair trade practice or a restrictive trade practice has been adopted
by any trader or service provider;
b) the goods bought by him or agreed to be bought by him suffer from one or more defects;
c) the services hired or availed of or agreed to be hired or availed of by him suffer from any
deficiency;
d) a trader or a service provider has charged for the goods or for the services mentioned in the
complaint, a price in excess of the price –
- Fixed under any law; or
- displayed on the goods or any package containing such goods; or
- displayed on the price list exhibited by him by or under any law; or
- agreed between the parties;
e) the goods, which are hazardous to life and safety when used, are being offered for sale to
the public –
- in contravention of standards relating to safety of such goods as required to be
complied with
Consumer Protection Act, 2019

- where the trader knows that the goods so offered are unsafe to the public;
f) the services which are hazardous or likely to be hazardous to life and safety of the public
when used, are being offered by a person who provides any service and who knows it to be
injurious to life and safety;
4) Consumer –
Note –
 Consumer does not includes a person who buys goods or avails service for commercial purpose.
 “Commercial purpose” does not include use by a person of goods bought and used by him exclusively
for the purpose of earning his livelihood, by means of self-employment
 “buys any goods” and “hires or avails any services” includes offline or online transactions through
electronic means or by teleshopping or direct selling or multi-level marketing.
Important Points (from past case laws) –
1) Whether a person purchasing the machine is a consumer?
a) If a person purchased a machine to operate it himself for earning his livelihood, he would be a
consumer.
b) If such person took the assistance of one or two persons to assist him in operating the machine, he
would still be a consumer.
c) But if a person purchases a machine and appoint or engage another person exclusively to operate
the machine, then such person would not be a consumer.
2) Whether a person purchasing the machine for tilling land and letting out during idle time a
consumer?
a) a tractor purchased primarily to till the land of the purchaser and let out on hire during the idle time
to till the lands of others would not amount to commercial use and such person will be consumer.
3) Whether the widow of the deceased policy holder is a ‘consumer?
a) The term ‘consumer’ includes any beneficiary of service other than the person who hires the
services for consideration, the widow being the beneficiary of services is a ‘consumer’
4) Tenant entering into lease agreement with the landlord –
a) Tenant entering into lease agreement with the landlord cannot be considered as consumer if e
there was no provision in the lease agreement in respect of cleaning, repairing and maintaining the
Consumer means a
person who
Buys goods; or
For consideration paid or
promised or partly paid partly
promised or under any system of
deferred payment and includes
any user of such goods when such
use is made with the approval of
such person
Avail services
For consideration paid or
promised or partly paid partly
promised or under any system of
deferred payment and includes
any beneficiary of such service
when such services are availed of
with the approval of the first
mentioned person

building, the rent paid by tenant is not the consideration for availing these services and therefore,
no question of deficiency in service.
5) Defect – Section 2(10)
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 or under any contract or as is
claimed by the trader in any manner whatsoever in relation to any goods or product.
6) Deficiency – Section 2(11)
Deficiency means any fault, imperfection, shortcoming or inadequacy in the quality, nature and
manner of performance which is required to be maintained by or under any law or has been
undertaken to be performed by a person in pursuance of a contract in relation to any service
and includes –
a) any act of negligence or omission or commission by such person which causes loss or injury
to the consumer; and
b) deliberate withholding of relevant information by such person to the consumer.
7) Misleading Advertisement – Section 2(28)
Misleading Advertisement, means an advertisement, which –
a) falsely describes product or service; or
b) gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance,
quantity or quality of such product or service; or
c) conveys an express or implied representation which, if made by the manufacturer or seller
or service provider thereof, would constitute an unfair trade practice; or
d) deliberately conceals important information.
Consumer Rights –
the right to be protected
against marketing of
goods and services which
are hazardous to life and
property
the right to be informed
about the quality,
quantity, potency, purity,
standard and price of
goods, or services so as
to protect the consumer
against unfair trade
practices;
the right to be assured,
wherever possible, access
to variety of goods and
services at competitive
prices;
• the right to be heard
and to be assured that
consumers interests will
receive due consideration
at appropriate forums;
the right to seek
redressal against unfair
trade practices or
restrictive trade practices
or unscrupulous
exploitation of
consumers; and
right to consumer
awareness.

Consumer Protection Council –
Central Consumer
Protection
Council
About Central Council –
 The Central Government has the power to establish the Central Consumer
Protection Council to be known as the Central Council.
 The Central Council shall be an advisory council
 Chairperson of central council shall be Minister-in-charge of the Department of
Consumer Affairs in the Central Government.
 Central council will have such number of other official or non-official members
representing such interests as may be prescribed.
Meeting of Central Council –
 The Central Council shall meet as and when necessary, but at least one meeting
of the Council shall be held every year.
 The Central Council shall meet at such time and place as the Chairperson may
think fit
Objective of Central Council –
 The objects of the Central Council shall be to render advice on promotion and
protection of the consumers’ rights under the Act.
State Consumer
Protection
Councils
About State Council –
 Every State Government empowers to establish a State Consumer Protection
Council for such State to be known as the State Council.
 The State Council shall be an advisory council
 Chairperson of state council shall be Minister-in-charge of Consumer Affairs in
the State Government
 State council will have such number of other official or non-official members
representing such interests as may be prescribed.
 State council shall also have such number of other official or non-official
members, not exceeding ten, as may be nominated by the Central Government.
Meeting of State Council –
 The State Council shall meet as and when necessary but not less than two
meetings shall be held every year.
 The State Council shall meet at such time and place as the Chairperson may
think fit
 The objects of every State Council shall be to render advice on promotion and
protection of consumer rights under the Act within the State.
District Consumer
Protection
Council
About District Council –
 The State Government empowers to establish for every District a District
Consumer Protection Council to be known as the District Council.
 The District Council shall be an advisory council
 Chairperson of the District Council shall be Collector of the district.

 District council shall have such number of other official and non-official
members representing such interests as may be prescribed.
Meeting of State Council –
 The District Council shall meet as and when necessary but not less than two
meetings shall be held every year.
 The District Council shall meet at such time and place within the district as the
Chairperson may think fit
 The objects of every District Council shall be to render advice on promotion and
protection of consumer rights under the Act within the district
Central Consumer Protection Authority (CCPA)
Establishment of
CCPA – Section 10
Central Government has the power to establish a Central Consumer Protection
Authority to be known as the Central Authority
Role of Central
Authority
 To regulate matters relating to –
a) violation of rights of consumers,
b) unfair trade practices and
c) false or misleading advertisements
which are prejudicial to the interests of public and consumers
 to promote, protect and enforce the rights of consumers as a class.
Composition of
Central Authority
The Central Authority shall consist of a Chief Commissioner and such number of
other Commissioners as may be prescribed
Headquarters and
offices of Central
Authority
The headquarters of the Central Authority shall be at Delhi, and it shall have regional
and other offices in any other place in India as the Central Government may decide.
Vacancy, etc., not to
invalidate
proceedings of
Central Authority
No act or proceeding of the Central Authority shall be invalid only because of –
 any vacancy in, or any defect in the constitution of, the Central Authority; or
 any defect in the appointment of a person acting as the Chief Commissioner
or as a Commissioner; or
 any irregularity in the procedure of the Central Authority not affecting the
merits of the case.
Appointment of
officers, experts,
professionals and
other employees of
Central Authority –
Section 13
1) The Central Government shall provide the Central Authority such number of
officers and other employees as it considers necessary for the efficient
performance of its functions under this Act.
2) The salaries and allowances payable to, and the other terms and conditions
of service of, the officers and other employees of the Central Authority
appointed under this Act shall be such as may be prescribed.
3) Central Authority also have the authority to appoint any expert or
professionals of integrity and ability, who have special knowledge and
experience in the areas of consumer rights and welfare, consumer policy,
law, medicine, food safety, health, engineering, product safety, commerce,
economics, public affairs or administration, as it deems necessary to assist it
in the discharge of its functions under this Act.

Investigation Wing
of Central Authority
About Investigation wing –
1) The Central Authority shall have an Investigation Wing
2) Investigation wing shall be headed by a Director General
3) The purpose of investigation wing is to conduct inquiry or investigation
under this Act as may be directed by the Central Authority
Appointment by CG –
 The Central Government may appoint a Director General and such number
of Additional Director General, Director, Joint Director, Deputy Director and
Assistant Director, from amongst persons who have experience in
investigation and possess such qualifications, in such manner, as may be
prescribed.
 Every Additional Director General, Director, Joint Director, Deputy Director
and Assistant Director shall exercise his powers, and discharge his functions,
subject to the general control, supervision and direction of the Director-
General.
Note –
The Director General may delegate all or any of his powers to the Additional
Director General or Director, Joint Director or Deputy Director or Assistant
Director, while conducting inquiries or investigations under this Act.
Powers and
functions of Central
Authority – Section
18
Central Authority has the power to –
 protect, promote and enforce the rights of consumers as a class,
 prevent violation of consumers rights under this Act;
 prevent unfair trade practices
 ensure that no person engages himself in unfair trade practices;
 ensure that no false or misleading advertisement is made of any goods or
services which contravenes the provisions of this Act or the rules or
regulations
 ensure that no person takes part in the publication of any advertisement
which is false or misleading.
For the above purpose Central Authority has the following powers –
 inquiry or investigation to be made into violations of consumer rights or
unfair trade practices, either suo motu or on a complaint received or on the
directions from the Central Government;
 file complaints before the District Commission, the State Commission or the
National Commission, as the case may be, under this Act;
 intervene in any proceedings before the District Commission or State
Commission or National Commission, in respect of any allegation of violation
of consumer rights or unfair trade practices;
 undertake and promote research in the field of consumer rights;
 spread and promote awareness on consumer rights;
 encourage NGOs and other institutions working in the field of consumer
rights to co-operate and work with consumer protection agencies;
 issue safety notices to alert consumers against dangerous or hazardous or
unsafe goods or services;

 advise the Ministries and Departments of the Central and State
Governments on consumer welfare measures;
 recommend adoption best international practices on consumer rights to
ensure effective enforcement of consumer rights;
 issue necessary guidelines to prevent unfair trade practices and protect
consumers’ interest
Power of Central
Authority to refer
matter for
investigation or to
other Regulator –
Section 19
1) Central Authority may, after receiving any information or complaint or
directions from the Central Government or of its own motion will conduct a
preliminary inquiry as to whether there exists a prima facie case of violation
of consumer rights or any unfair trade practice or any false or misleading
advertisement, by any person, which is prejudicial to the public interest or to
the interests of consumers and if it is satisfied that there exists a prima facie
case, it shall cause investigation to be made by the Director General or by
the District Collector.
2) If after preliminary inquiry the Central Authority is of the opinion that the
matter is to be dealt with by a Regulator established under any other law for
the time being in force, it may refer such matter to the concerned Regulator
along with its report.
Power of Central
Authority to recall
goods – Section 20
If Central Authority is satisfied on the basis of investigation that there is sufficient
evidence to show violation of consumer rights or unfair trade practice by a person
then it may pass following orders –
- recalling of goods or withdrawal of services which are dangerous, hazardous
or unsafe;
- reimbursement of the prices of goods or services so recalled to purchasers of
such goods or services; and
- Discontinuation of practices which are unfair and prejudicial to consumers’
interest.
Note –
Central Authority shall give the person an opportunity of being heard before
passing an order under this section.
Power of Central
Authority to issue
directions and
penalties against
false or misleading
advertisements –
Section 21
1) If the Central Authority is satisfied after investigation that any advertisement
is false or misleading and is prejudicial to the interest of any consumer or is
in contravention of consumer rights, it may order to discontinue such
advertisement or to modify the same
2) If the Central Authority is of the opinion that it is necessary to impose a
penalty in respect of such false or misleading advertisement, by a
manufacturer or an endorser, it may, by order, impose on manufacturer or
endorser a penalty which may extend to 10 lakh rupees
3) The Central Authority may, for every subsequent contravention by a
manufacturer or endorser, impose a penalty, which may extend to 50 lakh
rupees.
4) Where the Central Authority deems it necessary, it may, by order, prohibit
the endorser of a false or misleading advertisement from making
endorsement of any product or service for a period which may extend to 1
year.
5) Central Authority may, for every subsequent contravention, prohibit such
endorser from making endorsement in respect of any product or service for
a period which may extend to 3 years.

6) Where the Central Authority is satisfied after investigation that any person is
found to publish, or is a party to the publication of, a misleading
advertisement, it may impose on such person a penalty which may extend
to 10 lakh rupees.
Note –
 No endorser shall be liable to a penalty, if he has exercised due diligence to
verify the validity of the claims made in the advertisement regarding the
product or service being endorsed by him.
 No person shall be liable to such penalty if he proves that he had published
or arranged for the publication of such advertisement in the ordinary
course of his business:
Provided that no such defence shall be available to such person if he had
previous knowledge of the order passed by the Central Authority for
withdrawal or modification of such advertisement.
 While determining the penalty, Central Authority will consider following
factors –
 the population and the area impacted or affected by such offence;
 the frequency and duration of such offence;
 the vulnerability of the class of persons likely to be adversely
affected by such offence; and
 the gross revenue from the sales effected by virtue of such offence.
Search and seizure –
Section 22
After preliminary inquiry, DG or District collector has reason to believe that any
person has violated any consumer rights or committed unfair trade practice or
causes any false or misleading advertisement to be made then it shall –
 enter into any such premises and search for any document or record or
article or any other form of evidence and seize such document, record,
article or such evidence
 make a note or an inventory of such record or article; or
 require any person to produce any record, register or other document or
article.
Maximum Period of seizure = 20 days
Note –
1) Where any article seized are subject to speedy or natural decay, the
Director General or such other officer may dispose of the article in such
manner as may be prescribed
2) If the complaint alleges a defect in the goods which cannot be determined
without proper analysis or test of the goods, obtain a sample of the goods
from the complainant, seal it and refer the sample so sealed to the
appropriate laboratory along with a direction that such laboratory to make
an analysis or test, whichever may be necessary, with a view to finding out
whether such goods suffer from any defect alleged in the complaint or
from any other defect and to report its findings thereon to the District

Commission within a period of 45 days or within such extended period as
may be granted by it
Vexatious Search – The Director General or any other officer who knows that there are no reasonable
grounds for so doing, and yet–
a) searches, or causes to be searched any premises; or
b) seizes any record, register or other document or article,
shall, for every such offence, be punished with imprisonment for a term which may
extend to 1 year, or with fine which may extend to 10,000 rupees or with both.
Appeal –
Section 24
A person aggrieved by any order passed by the Central Authority under sections 20
and 21 may file an appeal to the National Commission within a period of 30 days
from the date of receipt of such order.
Product Liability –
What is product liability?
Product liability is the responsibility of a product manufacturer or product seller, of any product or
service, to compensate for any harm caused to a consumer by such defective product manufactured or
sold or by deficiency in services.
Against whom product liability action can be taken? – Section 83
Reason for bringing product liability action –
Action may be brought for any harm caused to him on account of a defective product.
Liability of Product Manufacturer – Section 84
product manufacturer shall be liable in a product liability action, if –
product liability action may be brought by a
complainant against
a product manufacturer; or a product service provider; or a product seller

Liability of Product Service Provider – Section 85
Service provider shall be liable in a product liability action, if –
Liability of Product Sellers – Section 86
product seller who is not a product manufacturer shall be liable in a product liability action, if –
the product contains a manufacturing defect; or
the product is defective in design; or
there is a deviation from manufacturing specifications; or
the product does not conform to the express warranty; or
the product fails to contain adequate instructions of correct usage to prevent any harm or any warning
regarding improper or incorrect usage.
A product manufacturer shall be liable in a product liability action even if he proves that he was not negligent or
fraudulent in making the express warranty of a product.
the service provided by him was faulty or imperfect or deficient or inadequate in quality, nature or
manner of performance which is required to be provided by or under any law for the time being in force,
or pursuant to any contract or otherwise; or
there was an act of omission or commission or negligence or conscious withholding any information
which caused harm; or
the service provider did not issue adequate instructions or warnings to prevent any harm; or
the service did not conform to express warranty or the terms and conditions of the contract.

Exceptions to Product Liability Action – Section 87
1) A product liability action cannot be brought against the product seller if, at the time of harm, the
product was misused, altered, or modified.
2) In any product liability action based on the failure to provide adequate warnings or instructions,
the product manufacturer shall not be liable, if –
a) the product was purchased by an employer for use at the workplace and the product
manufacturer had provided warnings or instructions to such employer;
b) the product was sold as a component or material to be used in another product and
necessary warnings or instructions were given by the product manufacturer to the
purchaser of such component or material, but the harm was caused to the complainant by
use of the end product in which such component or material was used;
c) the product was one which was legally meant to be used or dispensed only by or under the
supervision of an expert or a class of experts and the product manufacturer had employed
reasonable means to give the warnings or instructions for usage of such product to such
expert or class of experts; or
d) the complainant, while using such product, was under the influence of alcohol or any
prescription drug which had not been prescribed by a medical practitioner.
Note –
A product manufacturer shall not be liable for failure to instruct or warn about a danger which is
obvious or commonly known to the user or consumer of such product or which, such user or
consumer, ought to have known, taking into account the characteristics of such product.
Mediation –
Establishment of Consumer Mediation Cell – Section 74
1) About Consumer Mediation Cell –
he has exercised substantial control over the designing, testing, manufacturing, packaging or labelling of
a product that caused harm; or
he has altered or modified the product and such alteration or modification was the substantial factor
in causing the harm; or
he has made an express warranty of a product independent of any express warranty made by a
manufacturer and such product failed to conform to the express warranty made by the product
seller which caused the harm; or
the product has been sold by him and the identity of product manufacturer of such product is not
known, or if known, the service of notice or process or warrant cannot be effected on him or he is
not subject to the law which is in force in India or the order, if any, passed or to be passed cannot be
enforced against him; or
he failed to exercise reasonable care in assembling, inspecting or maintaining such product or he did not
pass on the warnings or instructions of the product manufacturer regarding the dangers involved or
proper usage of the product while selling such product and such failure was the proximate cause of the
harm.

a) Section 74 empowers the State Government to establish a consumer mediation cell to be
attached to each of the District Commissions and the State Commissions of that State.
b) Central Government also empowers to establish a consumer mediation cell to be attached
to the National Commission and each of the regional Benches.
2) Every consumer mediation cell shall maintain –
a) a list of empanelled mediators;
b) a list of cases handled by the cell;
c) record of proceeding; and
d) any other information as may be specified by regulations.
3) Every consumer mediation cell shall submit a quarterly report to the District Commission,
State Commission or the National Commission to which it is attached.
Empanelment of Mediators – Section 75
1) For the purpose of mediation, the National Commission or the State Commission or the District
Commission, as the case may be, shall prepare a panel of the mediators to be maintained by the
consumer mediation cell attached to it, on the recommendation of a selection committee.
2) Selection Committee consists of the President and a member of that Commission.
3) The panel of mediators shall be valid for a period of 5 years, and the empanelled mediators
shall be eligible to be considered for re-empanelment for another term.
Note –
The qualifications and experience required for empanelment as mediator, the procedure for empanelment,
the manner of training empanelled mediators, the fee payable to empanelled mediator, the terms and
conditions for empanelment, the code of conduct for empanelled mediators, the grounds on which, and the
manner in which, empanelled mediators shall be removed or empanelment shall be cancelled and other
matters relating thereto, shall be such as may be specified by regulations.
Duty of Mediator to Disclose Certain Fact – Section 77
It shall be the duty of the mediator to disclose –
- any personal, professional or financial interest in the outcome of the consumer dispute;
- the circumstances which may give rise to a justifiable doubt as to his independence or
impartiality; and
- such other facts as may be specified by regulations.
Replacement of Mediator in Certain Cases – Section 78
Where the District Commission or the State Commission or the National Commission, as the case may
be, is satisfied, on the information furnished by the mediator or on the information received from any
other person including parties to the complaint and after hearing the mediator, it shall replace such
mediator by another mediator.
Procedure for Mediation – Section 79
1) Mediation shall be held in the consumer mediation cell attached to the District Commission, the
State Commission or the National Commission.
2) Where a consumer dispute is referred for mediation by the District Commission or the State
Commission or the National Commission, as the case may be, the mediator nominated by such

Commission shall have regard to the rights and obligations of the parties, the usages of trade, if
any, the circumstances giving rise to the consumer dispute and such other relevant factors, as
he may deem necessary and shall be guided by the principles of natural justice while carrying
out mediation.
3) The mediator so nominated shall conduct mediation within such time and in such manner as
may be specified by regulations.
Settlement through Mediation – Section 80
1) Pursuant to mediation, if an agreement is reached between the parties with respect to all of the
issues involved in the consumer dispute or with respect to only some of the issues, the terms of
such agreement shall be recorded in writing, and signed by the parties to such dispute or their
authorised representatives.
2) Mediator shall prepare a settlement report of the settlement and forward the signed agreement
along with such report to the concerned Commission.
3) Where no agreement is reached between the parties within the specified time or the mediator
is of the opinion that settlement is not possible, he shall prepare his report accordingly and
submit the same to the concerned Commission.
Recording Settlement and Passing of Order – Section 81
 The District Commission or the State Commission or the National Commission, as the case may
be, shall, within seven days of the receipt of the settlement report, pass suitable order recording
such settlement of consumer dispute and dispose of the matter.
 Where the consumer dispute is settled only in part, the District Commission or the State
Commission or the National Commission, as the case may be, shall record settlement of the
issues which have been so settled and continue to hear other issues involved in such consumer
dispute.
 Where the consumer dispute could not be settled by mediation, the District Commission or the
State Commission or the National Commission, as the case may be, shall continue to hear all the
issues involved in such consumer dispute.
District Consumer Disputes Redressal Commission –
Topic Explanation
Establishment of
District
Commission –
Section 28
 SG has the power to establish a District Consumer Disputes Redressal Commission,
to be known as the District Commission, in each district of the State.
 State Government may also establish more than one District Commission in a
district.
Composition of
District
Commission –
Each District Commission shall consist of–
a) a President; and
b) not less than two and not more than such number of members as may be
prescribed, in consultation with the Central Government.
Qualifications of
President and
members of
District
Commission
The Central Government may, by notification, make rules to provide for the –
a) qualifications,
b) method of recruitment,
c) procedure for appointment,
d) term of office,

e) resignation and removal
of the President and members of the District Commission.
Jurisdiction of
District
Commission
(Cases to be
handled by
District
Commission) –
Section 34
District Commission shall have jurisdiction to entertain complaints where the value of the
goods or services paid as consideration does not exceed 1 crore rupees.
District commission where case to be filed –
A complaint shall be instituted in a District Commission within the local limits of whose
jurisdiction –
 the opposite party or each of the opposite parties, where there are more than
one, at the time of the institution of the complaint,
a) ordinarily resides or
b) carries on business or
c) has a branch office or
d) personally works for gain; or
 any of the opposite parties, where there are more than one, at the time of the
institution of the complaint,
a) actually, and voluntarily resides, or
b) carries on business or
c) has a branch office, or
d) personally works for gain,
provided that in such case the permission of the District Commission is given; or
 the cause of action, wholly or in part, arises; or
 the complainant resides or personally works for gain.
Who may file
complaint? –
Section 35
1) Consumer –
a) to whom such goods are sold or delivered or agreed to be sold or delivered or
such service is provided or agreed to be provided; or
b) who alleges unfair trade practice in respect of such goods or service;
2) More than 1 consumer –
More than 1 consumer where there are numerous consumers having the same
interest, with the permission of the District Commission on behalf of all the
consumers
3) Consumer Association –
Any recognised consumer association, whether the consumer to whom such goods
are sold or delivered or agreed to be sold or delivered or such service is provided
or agreed to be provided, or who alleges unfair trade practice in respect of such
goods or service, is a member of such association or not;
4) The Central Government, the Central Authority or the State Government, as the
case may be.
Note –
Complaint may be filed electronically in prescribed manner.
Proceedings
before District
Commission –
Section 36
A) Who shall conduct Proceedings –
a) Every proceeding before the District Commission shall be conducted by the
President of that Commission and at least one member, sitting together.
b) Where a member, for any reason, is unable to conduct a proceeding till it is
completed, the President and the other member shall continue the proceeding
from the stage at which it was last heard by the previous member.

B) Power of DC –
a) On receipt of a complaint, the District Commission may admit the complaint
for being proceeded with or reject the same.
b) A complaint shall not be rejected unless an opportunity of being heard has
been given to the complainant.
C) Period within which complaint shall be accepted –
a) Complaint shall be accepted within 21 days from the date on which the
complaint was filed.
b) Where the District Commission does not decide the issue of admissibility of
the complaint within 21 days, it shall be deemed to have been admitted.
Reference to
mediation –
Section 37
 At the first hearing of the complaint after its admission, or at any later stage, if it
appears to the District Commission that there exists elements of a settlement
which may be acceptable to the parties then it may direct the parties to give in
writing, within 5 days, consent to have their dispute settled by mediation.
 Where the parties agree for settlement by mediation and give their consent in
writing, the District Commission shall, within 5 days of receipt of such consent,
refer the matter for mediation
Procedure on
admission of
complaint –
Section 38
A) When DC will proceed with the complaint?
a) On admission of complaint; or
b) If case was referred to mediation then on failure of settlement through
mediation.
B) Procedure to be followed when complaint relates to any goods –
1) Send a copy of complaint to the opposite party within 21 days of admission.
2) Direct the opposite party to give his version of the case within a period of 30
days or such extended period not exceeding 15 days
3) if the opposite party on receipt of a complaint –
a) denies or disputes the allegations contained in the complaint, or
b) omits or fails to take any action to represent his case within the time given
by the District Commission,
DC will then proceed to settle the consumer dispute in the following manner –
if the complaint alleges a defect in the goods which cannot be determined
without proper analysis or test of the goods, obtain a sample of the goods
from the complainant, seal it and authenticate it and refer the sample so
sealed to the appropriate laboratory along with a direction that such
laboratory to make an analysis or test, whichever may be necessary, with a
view to finding out whether such goods suffer from any defect alleged in the
complaint or from any other defect and to report its findings thereon to the
District Commission within a period of 45 days of the receipt of the reference
or within such extended period as may be granted by it;
4) Before any sample of the goods is referred to any appropriate laboratory, DC
will require the party to deposit with the commission such fees as may be
specified, for payment to the appropriate laboratory for carrying out the
necessary analysis or test in relation to the goods in question.
5) DC will then remit the amount to the appropriate laboratory to enable it to
carry out the analysis or test and on receipt of the report from the appropriate

laboratory, it shall forward a copy of the report along with such remarks as it
may feel appropriate to the opposite party;
6) if any of the parties disputes the correctness of the findings of the appropriate
laboratory, or disputes the correctness of the methods of analysis or test
adopted by the appropriate laboratory, then DC will direct the opposite party
or the complainant to submit in writing his objections with regard to the
report made by the appropriate laboratory;
7) DC will give both the parties an opportunity of being heard.
C) Procedure to be followed when complaint relates to any services or where
complaint relates to goods but procedure under point B cannot be followed –
1) Direct the opposite party to give his version of the case within a period of 30
days or such extended period not exceeding 15 days.
2) if the opposite party on receipt of a complaint –
a) denies or disputes the allegations contained in the complaint, or
b) omits or fails to take any action to represent his case within the time given
by the District Commission,
DC will then proceed to settle the consumer dispute in the following manner –
a) if the opposite party denies or disputes the allegations contained in the
complaint –
on the basis of evidence brought to its notice by the complainant and the
opposite party, or
b) where the opposite party omits or fails to take any action to represent
his case within the time given by the Commission –
ex parte on the basis of evidence brought to its notice by the complainant.
3) Decide the complaint on merits if the complainant fails to appear on the date
of hearing
D) Other Important Points –
a) Proceedings conducted according to points B and C mentioned above shall not
be called in question in any court on the ground that the principles of natural
justice have not been complied with.
b) Every complaint shall be heard by the District Commission on the basis of
affidavit and documentary evidence placed on record.
c) where an application is made for hearing or for examination of parties in
person or through video conferencing then DC may allow it on sufficient cause
being shown and after recording its reasons in writing.
d) DC has the power to pass interim orders during the pendency of the
complaint.
E) Time within which proceedings shall be completed –
a) where the complaint does not require analysis or testing of commodities –
within a period of 3 months from the date of receipt of notice by opposite
party
b) if the complaint requires analysis or testing of commodities –
within five months of receipt of notice by opposite party

c) no adjournment shall ordinarily be granted by the District Commission unless
sufficient cause is shown and the reasons for grant of adjournment have been
recorded in writing by the Commission
d) if DC resolves the complaint after the maximum time allowed then it shall
record the reasons in writing for the delay.
F) Powers of DC –
District Commission shall have the same powers as are vested in a civil court under
the Code of Civil Procedure, 1908 while trying a suit in respect of the following
matters –
(a) the summoning and enforcing the attendance of any defendant or witness and
examining the witness on oath;
(b) requiring the discovery and production of any document or other material
object as evidence;
(c) receiving of evidence on affidavits;
(d) the requisitioning of the report of the concerned analysis or test from the
appropriate laboratory or from any other relevant source;
(e) issuing of commissions for the examination of any witness, or document; and
(f) any other matter which may be prescribed by the Central Government.
Note –
Every proceeding before the District Commission shall be deemed to be a judicial
proceeding
Findings of
District
Commission –
Section 39
Where the District Commission is satisfied that –
 the goods complained against suffer from any of the defects specified in the
complaint; or
 that any of the allegations contained in the complaint about the services or any
unfair trade practices is correct; or
 claims for compensation under product liability are proved
Then it shall issue an order to the opposite party directing him to do one or more of the
following –
a) to remove the defect pointed out by the appropriate laboratory from the goods in
question;
b) to replace the goods with new goods of similar description which shall be free
from any defect;
c) to return to the complainant the price or the charges paid by the complainant
along with such interest on such price or charges as may be decided;
d) to remove the defects in goods or deficiencies in the services in question;
e) to discontinue the unfair trade practice or restrictive trade practice and not to
repeat them;
f) not to offer the hazardous or unsafe goods for sale;
g) to withdraw the hazardous goods from being offered for sale;
h) to cease manufacture of hazardous goods and to desist from offering services
which are hazardous in nature;
i) 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

j) to pay such amount as may be awarded by it as compensation in a product
liability action
k) to pay such sum as may be determined by it, if it is of the opinion that loss or
injury has been suffered by a large number of consumers who are not identifiable
conveniently. it may be noted that the minimum amount of sum so payable shall
not be less than25% of the value of such defective goods sold or service
provided, as the case may be, to such consumers;
l) to issue corrective advertisement to neutralise the effect of misleading
advertisement at the cost of the opposite party responsible for issuing such
misleading advertisement;
m) to provide for adequate costs to parties; and
n) to cease and desist from issuing any misleading advertisement.
Note –
 If there is difference in opinions of president and a member then they shall state
the point or points on which they differ and refer the same to another member for
hearing on such point or points and the opinion of the majority shall be the order
of the District Commission.
 The other member shall give his opinion on such point or points referred to him
within a period of one month from the date of such reference.
 Every order made by the District Commission shall be signed by the President and
the member who conducted the proceeding.
Review by District
Commission in
Certain Case –
Section 40
DC has the power to review any of the order passed by it if there is an error apparent on
the face of the record, either of its own motion or on an application made by any of the
parties within 30 days of such order
Appeal against
order of District
Commission –
Section 41
1) Any person aggrieved by an order made by the District Commission may prefer an
appeal against such order to the State Commission within a period of 45 days.
2) State Commission may entertain an appeal after the expiry of the said period of
forty-five days, if it is satisfied that there was sufficient cause for not filing it within
that period
Conditions for appeal before State Commission (SC) –
1) For making appeal to SC, person who is required to pay any amount in terms of an
order of the District Commission shall first deposit 50% of the amount in the
manner as may be prescribed
2) Appeal cannot be made if the parties have already agreed for settlement through
mediation.
State Consumer Disputes Redressal Commission –
Topic Explanation
Establishment of
State Commission
– Section 42
SG has the power to establish a State Consumer Disputes Redressal Commission, to be
known as the State Commission, in the State
Composition of SC
–
Each State Commission shall consist of –
a) a President; and

b) not less than 4 or not more than such number of members as may be prescribed in
consultation with the Central Government.
Qualifications,
etc., of President
and members of
State Commission
a) qualifications,
d) term of office,
of the President and members of the State Commission.
Jurisdiction of
State Commission
– Section 47
State Commission shall have jurisdiction to entertain complaints –
a) where the value of the goods or services paid as consideration exceeds rupees 1
crore but does not exceed 10 crore rupees.
b) complaints against unfair contracts, where the value of goods or services paid as
consideration does not exceed ten crore rupees;
c) appeals against the orders of any District Commission within the State; and
Note –
 SC shall also has the power to call for the records and pass appropriate orders in
any consumer dispute which is pending before or has been decided by any District
Commission within the State where it appears to the State Commission that such
District Commission has exercised a jurisdiction not vested in it by law, or has
failed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction
illegally or with material irregularity.
 jurisdiction, powers and authority of the State Commission may be exercised by
Benches constituted by the President with one or more members as the President
may deem fit.
Jurisdiction
where case
should be filed –
State commission where case to be filed –
A complaint shall be instituted in a District Commission within the local limits of whose
jurisdiction –
 the opposite party or each of the opposite parties, where there are more than
one, at the time of the institution of the complaint, ordinarily resides or carries on
business or has a branch office or personally works for gain; or
 any of the opposite parties, where there are more than one, at the time of the
institution of the complaint, actually and voluntarily resides, or carries on business
or has a branch office, or personally works for gain, provided that in such case the
permission of the State Commission is given; or
 the cause of action, wholly or in part, arises; or
 the complainant resides or personally works for gain.
Procedure
applicable to
State Commission
–
Section 49
1) Provisions relating to complaints under sections 35, 36, 37, 38 and 39 shall, with
such modifications as may be necessary, be applicable to the disposal of
complaints by the State Commission
2) The State Commission may also declare any terms of contract, which is unfair to
any consumer, to be null and void.
Review by State
Commission in
Certain Case –
Section 50
SC has the power to review any of the order passed by it if there is an error apparent on
parties within thirty days of such order.

Appeal to
National
Commission –
Section 51
1) Any person aggrieved by an order made by the State Commission may prefer an
appeal against such order to the National Commission within a period of 30 days.
2) National Commission may entertain an appeal after the expiry of the said period of
30 days, if it is satisfied that there was sufficient cause for not filing it within that
period
Conditions for appeal before State Commission (SC) –
 For making appeal to NC, person who is required to pay any amount in terms of an
order of the State Commission shall first deposit 50% of the amount in the manner
as may be prescribed
 Appeal cannot be made if the parties have already agreed for settlement through
mediation.
 An appeal shall lie to the National Commission from any order passed in appeal by
any State Commission, if the National Commission is satisfied that the case
involves a substantial question of law.
 An appeal may lie to the National Commission from an order passed ex parte by
the State Commission.
Hearing of appeal
by State
Commission or
National
Commission –
Section 52
 An appeal filed before the State Commission or the National Commission shall be
heard and disposed within a period of 90 days from the date of its admission.
 Adjournment shall not ordinarily be granted by the State Commission or the
National Commission unless sufficient cause is shown and the reasons for grant of
adjournment have been recorded in writing by such Commission.
 In the event of an appeal being disposed of after the period so specified, the State
Commission or the National Commission, shall record in writing the reasons for the
same at the time of disposing of the said appeal
National Consumer Disputes Redressal Commission –
Topic Explanation
Establishment of
National
Commission –
Section 53
CG has the power to establish National Consumer Disputes Redressal Commission, to be
known as the National Commission.
Composition of
NC – Section 54
National Commission shall consist of–
a) a President; and
b) not less than 4 and not more than such number of members as may be prescribed.
Qualifications,
etc., of President
and members of
National
Commission –
Section 55
a) qualifications,
d) term of office,
of the President and members of the National Commission.
Tenure of office –
a) President and members of the National Commission shall hold office for a
maximum period of 5 years and shall be eligible for reappointment.

b) President or members shall not hold office as such after he has attained such age
as specified in the rules made by the Central Government which shall not exceed –
1) in the case of the President, the age of 70;
2) in the case of any other member, the age of 67 years
Jurisdiction of
National
Commission –
Section 58
National Commission shall have jurisdiction to entertain complaints –
1) where the value of the goods or services paid as consideration exceed 10 crore
rupees.
2) complaints against unfair contracts, where the value of goods or services paid as
consideration exceeds ten crore rupees;
3) appeals against the orders of any state commission; and
4) Appeals against the orders of the Central Authority
Note –
 NC shall also has the power to call for the records and pass appropriate orders in
any consumer dispute which is pending before or has been decided by any State
Commission where it appears to the National Commission that such District
Commission has exercised a jurisdiction not vested in it by law, or has failed to
exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally
or with material irregularity.
 Jurisdiction, powers and authority of the National Commission may be exercised
by Benches constituted by the President with one or more members as the
President may deem fit.
Procedure
Applicable to
National
Commission –
Section 59
1) Provisions relating to complaints under sections 35, 36, 37, 38 and 39 shall, with
such modifications as may be considered necessary, be applicable to the disposal
of complaints by the National Commission.
2) National Commission may also declare any terms of contract, which is unfair to any
consumer to be null and void.
Review by
National
Commission in
Certain Cases –
Section 60
NC has the power to review any of the order passed by it if there is an error apparent on
parties within thirty days of such order
Power to set
aside ex parte
Orders –
Where an order is passed by the National Commission ex parte, the aggrieved party may
make an application to the Commission for setting aside such order.
Appeal against
Order of National
Commission –
Section 67
1) Any person, aggrieved by an order made by the National Commission may prefer
an appeal against such order to the Supreme Court within a period of 30 days from
the date of the order.
2) Supreme Court may entertain an appeal after the expiry of the said period of thirty
days if it is satisfied that there was sufficient cause for not filing it within that
period.
3) No appeal by a person who is required to pay any amount in terms of an order of
the National Commission shall be entertained by the Supreme Court unless that
person has deposited 50% of that amount in the manner as may be prescribed.
Miscellaneous –

Experts to Assist National Commission or State Commission – Section 66
Where the National Commission or the State Commission, on an application by a complainant or
otherwise, is of the opinion that it involves the larger interest of consumers, it may direct any individual
or organisation or expert to assist the National Commission or the State Commission.
Limitation Period – Section 69
 District Commission, the State Commission or the National Commission shall not admit a
complaint unless it is filed within two years from the date on which the cause of action has
arisen.
 However, complaint may be entertained if there was sufficient cause.
Enforcement of Orders of District Commission, State Commission and National Commission –
Section 71
Every order made by a District Commission, State Commission or the National Commission shall be
enforced by it in the same manner as if it were a decree made by a Court in a suit before it.
Penalty for Noncompliance of Order – Section 72
Whoever fails to comply with any order made by the District Commission or the State Commission or
the National Commission, shall be punishable with imprisonment for a term which shall not be less than
1 month, but which may extend to 3 years, or with fine, which shall not be less than twenty-five
thousand rupees, but which may extend to one lakh rupees, or with both.
Appeal against Order Passed under Section 72 – Section 73
1) An appeal shall lie, both on facts and on law from–
(a) the order made by the District Commission to the State Commission;
(b) the order made by the State Commission to the National Commission; and
(c) the order made by the National Commission to the Supreme Court.
2) Every appeal shall be preferred within a period of 30 days from the date of order of a District
Commission or a State Commission or the National Commission, as the case may be.
3) Appeal may be enterainted even after expiry of 30 days if there is sufficient cause.
4) Appeal shall not lie before any court, from any order of a District Commission or a State
Commission or the National Commission.

CA foundation Business Law all topics covered

Recommended

Recommended

More Related Content

Similar to CA foundation Business Law all topics covered

Similar to CA foundation Business Law all topics covered (20)

Recently uploaded

Recently uploaded (20)

CA foundation Business Law all topics covered