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NEED FOR CONSUMER PROTECTION ACT IN THE ERA OF FREE
COMPETITION WHERE CONSUMER IS THE KING, THEREFORE,
KING NEEDS PROTECTION
GROUP MEMBERS
ABBAS SABUWALA - 2 AJINKYA JOG - 4
AKANKSHA JAIN - 6 APOORVA AGHI- 8
ASHUTOSH PHADKE - 10 BARNALI CHAKRABORTY- 12
DIVESH MEHTA - 14 FORUM VORA - 16
GOKULNATH RAVISHANKAR - 18 VERNON PEREIRA - 56
SUBMITED TO
- Mr. ANANT AMDEKAR
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TABLE OF CONTENTS
TOPICS PAGE NO.
1. Introduction 3
2. Consumer Protection Act, 1986
Preamble
Silent features
Objects
Availability
5
3. Definition
Customer
Goods
Services
Complainant
Manufacturers
Trader
Consumer Dispute
Complaint
6
4. IRDA Regulation , 2000 14
5. Rights of Consumer 16
6. Procedure to file a complaint 18
7. Consumer Protection Council 19
8. Consumer Redressal Mechanism 20
9. Consumer Awareness 20
10. Caselet 26
11. E-commerce under CPA 30
12. Comparative Analysis 31
13. The Future consumer dilemmas 34
14. Recommendations & Suggestions 35
15. Business & Complaints 35
16. Case Study 37
17. Bibliography 46
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INTRODUCTION
India is an emerging economy and is transitioning into a “Hyper-competitive” economy. A
hypercompetitive economy is marked by a huge variety of products and fierce competition
amongst manufacturers of various industries. Each manufacturer is trying to get a
competitive advantage at any cost and would seek to gain that, even if it means
compromising on quality standards of products and services, disregarding social
responsibility. Therefore, the standards of quality for goods and services are in flux. If
stringent laws are not enforced, companies would leave no chance to exploit or mislead the
consumer.
Recent time has seen a shift in marketing concepts and the emphasis has switched from
production to customer satisfaction in terms of product development. However the primary
objective of businesses remains profit.
The “Consumer is the King” ideology has been flouted around much. But is the customer
really the king? The answer would be Yes and No. The consumers today, do indeed enjoy a
higher standard of living and have a lot of options for branded goods and services, however
markets are still dominated by the black market, especially in rural areas and there is a slack
in quality of goods and services.
Corporations are known to have cheated customers in the past by way of overcharging,
adulteration, hoarding of goods, adulteration, sale of spurious goods etc.
Development of Consumer Movement in India
One of the earliest consumer movements in India was the Dandhi march, led by Mahatma
Gandhi, when the British unfairly charged tax on salt. This was a big blow to Indian
consumers, who were united in their opposition to the British Raj.
The first sincere attempt to protect the interests of consumers started in 1966 by the
Consumer Guidance Society of India (CGSI). It was founded by nine women who fought
hard against sub-standard products, very high prices, hazardous drugs and never ending
shortage of goods. They recognized the need to create a body that addresses consumer
complaints. Their consistent pressure led to the formation of Consumer Protection Court in
1975 and eventually to the creation of the Consumer Protection Act 1986. CGSI is still
active and The Maharashtra State Government has entrusted CGSI to establish and manage
the Maharashtra State Consumer Helpline.
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Another institute that is still active and of considerable note in driving the Consumer
Protection Act is the Consumer Education and Research Centre (CERC). With the
consumer as its reason for existence, CERC began handling complaints of ordinary
consumers who could not take on the might of the business in Gujarat. It started giving legal
help and fought for a safe and strong financial market and clean environment.
Even before the Act of 1986 came into existence, there were quite a few laws that protected
consumer interests. Namely,
i. Essential Commodities Act 1955,
ii. Trade and Merchandise Marks Act 1958,
iii. Specific Relief Act, Drugs (Control) Act 1963,
iv. The Drugs and Cosmetics Act 1940,
v. The Indian Standards Institution (Certification Marks) Act 1952,
vi. Agricultural Produce (Grading and Marking) Act 1937,
vii. Standards of Weights and Measurements Act 1976,
viii. Prevention of Food Adulteration Act 1954 and above all the
ix. Indian Contract Act of 1872 and the
x. Sale of Goods Act 1930,
The above Acts provided remedies for the breach of provisions. However the cost and time
of legal action, discouraged wronged consumers to file complaints. The Indian consumer is
also less willing to complaint and steeped in illiteracy about his rights and legal
proceedings.
In an address to the Congress of the United States on 15th March 1962, U.S President John.
F. Kennedy said:
Consumers, by definition, include us all. They are the largest economic group in
the economy, affecting and affected by almost every public and private economic
decision. Two-thirds of all spending in the economy is by consumers. But they are
the only important group in the economy who are not effectively organized, whose
views are often not heard.
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This just goes on to show that the need for a separate Act solely dedicated to the rights of
the consumer was felt at some point or the other in almost all countries and this need
culminated into the introduction of the Consumer Protection Act,1986 in India.
Consumer Protection Act, 1986
The Consumer Protection Bill, 1986 was passed by both the Houses of Parliament and it
received the assent of the President on 24th December, 1986. It came on the Statute Book as
the Consumer Protection Act, 1986.
It is described as a unique legislation of its kind ever enacted in India to offer protection to
the consumers. The Consumer Protection Act of 1986 is claimed to have been designed after
an in-depth study of Consumer protection laws and arrangements in the following countries:
USA
UK
AUSTRALIA
NEW ZEALAND
INDIA
Consumer
Protection
Act, 1986
USA
Federal Trade
Commission Act, 1914
Consumer Product Safety
Act, 1972
UK
Supply of Goods Act,1973
Unfair Contract term,1977
Sale of Goods Act, 1979
AUSTRALIA
Trade Practices Act, 1979
NEW ZEALAND
Sale of Goods Act,
1908
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Preamble:
The Act aims to provide for better protection of the interests of consumers and for that
purpose to make provision for the establishment of consumer councils and other authorities
for the settlement of consumers’ disputes and for matters connected therewith.
Unlike other laws, which are punitive or preventive in nature - the provision of this Act are
compensatory in nature. The Act intends to provide simple, speedy and inexpensive
redressal to the consumers' grievances.
Salient features of the Act
Applies to all goods and services
Covers all sectors - private, public or co-operative
Confers certain rights on consumers
Envisages establishment of consumer protection councils at the Central and State
levels
Objects of the Act
To provide for better protection of interests of consumers
To establish consumer councils and redressal forums
To empower the Consumer Forums to settle consumers' disputes
Applicability
The Act in terms of geographical application extends to the whole of India except
the State of Jammu and Kashmir.
It applies to all goods and services, unless particularly mentioned by the Central
Government.
DEFINITIONS
Consumer:
(i) Buys any goods for a consideration which has been paid or promised or partly paid and
partly promised, or under any system of deferred payment and includes any user of such
goods other than the person who buys such goods for consideration paid or promised or
partly paid or partly promised, or under any system of deferred payment when such use is
made with the approval of such person, but does not include a person who obtains such
goods for resale or for any commercial purpose.
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(ii) hires or avails of any services for a consideration which has been paid or promised or
partly paid and partly promised, or under any system of deferred payment and includes any
beneficiary of such services other than the person who hires or avails of the services for
consideration paid or promised, or partly paid and partly promised, or under any system of
deferred payment, when such services are availed of with the approval of the first mentioned
person (but does not include a person who avails of such services for any commercial
purpose).
Explanation:
In every transaction, there are at least 2 individuals involved namely the buyer and the
seller.
'Commercial purpose' does not include use by a consumer of goods bought and used by
him and services availed by him exclusively for the purpose of earning his livelihood,
by means of self employment.
Examples: 1. If an individual buys a taxi and uses it for earning his livelihood, then
according to this Act, he is considered to be a 'consumer'.
2. However, if a businessman buys a fleet of taxis and employs people to drive them,
then he is not considered to be a 'consumer'.
GOODS
According to the Sale of Goods Act,1930, “Goods” means every kind of movable
property other than actionable claims and money; and includes stock and shares,
growing crops, grass, and things attached to or forming part of the land which are
agreed to be severed before sale or under the contract of sale. (Actionable claims means
claims which can be enforced by a legal action or a suit, example a book debt. A book
debt is not goods because it can only be assigned as per Transfer of Property Act but
cannot be sold. Same is case in the case of bill of exchange, promissory note etc.)
The term "paid or promised or partly paid or partly promised or under deferred
payment" means that just because the buyer of the goods has not made the payment in
full does not make him any less of a customer. He can still take the seller to court and
file a complaint under this Act.
Example: A customer buys a washing machine on EMI that needs to be paid for a
period of 5 months. Let us assume that in the very first month, it stops working. Now
even though he has not paid the seller in full, he is still very much, a customer and he
can sue the seller under this Act.
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The term "any other user of such goods when such use is made with the approval of the
buyer" refers to the kith and kin of the buyer or any such person who with his consent is
using it. For eg., If a father buys his son a bike, then although the son hasn't purchased
the bike himself, yet he is a consumer as he's using it with the consent of his father ie.
the buyer.
SERVICES
'Service' means service of any description which is made available to potential users
and includes the provision of facilities in connection with banking, financing, insurance,
transport, processing, supply of electrical or other energy, boarding or lodging or both,
housing construction, entertainment, amusement or the purveying of news or other
information, but does not include the rendering of any service free of charge or under a
contract of personal service. For instance, a system of deferred payment can be
observed in the case of a patron signing up for a spa treatment where he receives the
service first, and the payment is made later.
However, since any free service rendered free of charge doesn't come under the purview
of the Consumer Protection Act. A few years ago, there was a controversy with regards
to treatment at Government hospitals as to whether it constitutes a service within the
meaning of 'service' under the Act. There are some who believe that the treatment in
Government hospitals is actually not free as such as it is the taxpayer's money which
goes to fund these hospitals and if therefore a taxpayer seeks the treatment, he's paying
for the same, though indirectly. However, National Commission held that complaints
against government hospitals cannot be entertained under the Act that the person
receiving treatment in such hospitals is not a 'consumer' as the patient does not 'hire' the
services of the hospital; moreover the treatment provided is free of charge.
Caselet- Signet Corporation filed a complaint against the Municipal Corporation of
Delhi for failure to maintain a public drain properly. The National Commission held that
there was no arrangement of hiring of service for consideration as between the
Complainant and the Municipal Corporation of Delhi in regard to maintenance of public
drains passing in front of the petitioner's premises. The construction, maintenance and
cleaning of drain and drainage works and removal and disposal of filth, rubbish and
other polluted matters were works which the Corporation was required to undertake and
carry out in discharge of its statutory obligation. This was not a work to be performed
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by the Corporation under an arrangement of hiring of service for consideration entered
into between it and any private party.
COMPLAINANT
A complainant means any of the following
(1) A consumer
(2) Any registered voluntary consumer association
(3) The Central/State Government(s)
(4) Numerous consumers having the same interest
(5) In case of death of a consumer, his legal heir or representative
Explanation:
Any voluntary consumer association refers to any advocacy groups that seek to
protect people from corporate abuse like unsafe products, predatory lending, false
advertising etc.
Example- Consumer Guidance Society of India, The Consumers Eye India, United
India Consumer Association.
MANUFACTURER
A "manufacturer" means a person who --
(i) makes or manufactures any goods or parts
(ii) does not make or manufacture any goods but assembles parts made or
manufactured by others
(iii) puts or causes to be put his own mark on any goods made or manufactured by any
other manufacturer
Example- Many a times, companies outsource the manufacturing of certain non-critical
components to China. However, the company puts its mark on such products. Now if a
consumer files a complaint that the final product he purchased was defective and the
problem was found to be in the outsourced component, the company cannot wash his hands
of it as it has its mark on the outsourced component as well.
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TRADER
A 'trader' in relation to any goods means a person who sells or distributes any goods for sale
and hence includes the manufacturer and the packager, and where such goods are sold or
distributed in packaged form.
CONSUMER DISPUTE
'Consumer dispute' is a dispute where the person against whom a complaint has been made,
denies or disputes the allegations contained in the complaint.
However if the manufacturer or the seller admits the presence of a defect and takes
corrective measures, and the consumer is not forced to take him to court, then it is not a
'consumer dispute'.
COMPLAINT
'Complaint' means any allegation in writing made by a complainant that-
(i) An unfair trade practice or a restrictive trade practice has been adopted by (any
trader or service provider
(ii) The goods bought by him or agreed to be bought by him suffer from one or more defects
(iii) The services hired or availed of or agreed to be hired or availed of by him suffer from
deficiency
(iv) A trader or the service provider, as the case may be, has charged for the goods or for
the services, a price in excess of the price-
(a) Fixed by or under any law for the time being in force
(b) Displayed on the goods or any package containing such goods
(c) Displayed on the price list exhibited by him by or under any law for the time being
in force
(d) Agreed between the parties
(v) Goods which will be hazardous to life and safety when used, are being offered for
sale to the public-
(a) in contravention of any standard relating to safety of such goods as required to be
complied with, by or under any law for the time being in force
(b) if the trader could have known with due diligence that the goods so offered are
unsafe to the public
(vi) services which are hazardous or likely to be hazardous to life and safety of the
public when used, are being offered by the service provider which such person could have
known with due diligence to be injurious to life and safety;
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Explanation:
Unfair Trade Practice is a trade practice which for the purpose of promoting sales of goods
or the use of a particular service adopts any unfair or deceptive method. The following
unfair trade practices are recognized by this law-
1. Misleading advertisement and False Representation. The practice of making any
statement, whether orally or in writing or by visible representation which,-
(i) falsely represents that the goods are of a particular standard, quality, quantity, grade,
composition, style or model
(ii) falsely represents that the services are of a particular standard, quality or grade;
(iii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as
new goods;
(iv) represents that the goods or services have sponsorship, approval, performance,
characteristics, accessories, uses or benefits which such goods or services do not have;
(v) represents that the seller or the supplier has a sponsorship or approval or affiliation
which such seller or supplier does not have;
(vi) makes a false or misleading representation concerning the need for, or the usefulness
of, any goods or services;
(vii) gives to the public any warranty or guarantee of the performance, efficacy
or length of life of a product or of any goods that is not based on an adequate or proper test
thereof:
(viii) makes to the public a representation in a form that purports to be-
(a) a warranty/guarantee of any goods or services
(b) a promise to replace, maintain or repair an article or to repeat or continue a
service until it has achieved a specified result, if such purported warranty or
guarantee or promise is materially misleading or if there is no reasonable prospect
that such warranty, guarantee or promise will be carried out;
(c) materially misleads the public concerning the price at which the goods or services
are ordinarily sold or provided
(d) gives false or misleading facts disparaging the goods, services or trade of another
person.
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Explanation:
Misleading advertisements and False representation-
"Advertising may be described as the science of arresting human intelligence long enough
to get money from it"
-Stephan Leacock
‘Look younger…..use…age miracle cream....’
‘Increase your memory power……………’
‘Loan in 5 minutes……………’
‘Fairness creams that work in days……………’
Knowing of the fact that we are constantly surrounded by such advertisements, there is very
little need to empirically establish that there are misleading advertisements that are
telecasted in the electronic and print media every day.
When an advertisement for cooking oil says that using the said oil frees the user from heart
problems, then such an advertisement is misrepresenting the facts. Companies advertise
products highlighting health cures and drugs of questionable efficacy and health gadgets of
unknown values.
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Many of the canned/bottled juice, sherbet, wafer manufacturing companies do not
mention the ingredients used in it. For example, a reputed manufacturer offers many
types of sherbets which are artificially flavoured but the front side of the package has
big and attractive pictures of the fruit itself, creating misunderstanding amongst the
consumers. In many cases, though the product will have a warranty or will be under
annual maintenance contract (AMC), when a problem arises, the consumer is told that
certain parts will not be covered and they will have to pay. Example: Telecom service
providers fooled many customers by selling them Blackberry packages and selling
email packages separately, though they were later merged.
The IRDA (Insurance Advertisements) Regulations, 2000
The IRDA seeks to regulate and control every insurance advertisement that is issued by
the insurer or insurance agent.
For this purpose the insurer must develop a system of control over the content as well as
the method of dissemination of the information concerning the various policies and
schemes.
An advertisement issued by the insurer must not fall under the category of misleading or
unfair.
All these laws are responsible for quality control so that the consumers are not cheated.
In March 2014, to monitor misleading advertisements and to protect consumers'
interest, the consumer affairs department has formed an inter-ministerial monitoring
committee that can even give direction to drop such advertisements. The committee
shall "monitor misleading advertisement and unfair trade practices arising thereto
and suggest steps accordingly." It shall also identify and recommend appropriate
legislative measures. Moreover, the committee shall also suggest institutional measures
for intervention.
Caselet- In the case of Bhupesh Khorana vs Vishwa Buddha Parishad a class action suit was
filed by twelve students who had joined the BDS course offered by the Buddhist Mission
Dental College run by Vishwa Buddha Parishad. The students' complaint was that the
college, in its advertisement and prospectus inviting applications for the course, had
given the impression that it was affiliated to Magadh University, Bodh Gaya and recognized
by the Dental Council of India and was fully equipped to give the degree of Bachelor of
Dental Science. However, after joining the college and attending classes, the students found
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to their dismay that the annual examinations were not being held because the college was
neither affiliated to Magadh University, Bodh Gaya and nor recognised by the Dental
Council of India. As a result the students lost two precious academic years, but also spent
money on fees, hostel charges, etc. holding the college to be deficient the National
Commission directed it to refund the admission expenses of all the twelve students along
with interest of 12 percent.
Bargain Sales.
When goods or services are advertised to be sold at a price much lower than its original
price, it is said to be a bargain sale. However, if the seller of the good merely uses it as a
marketing strategy to grab attention and has no intentions of selling it at the quoted price
then according to the provisions of this Act, he can be sued. This is also the reason why
companies have '*Terms & Conditions apply' or '*Offer valid only till stocks last' written
on their advertisement.
Offering gifts, prizes etc.
1. The offering of gifts and prizes or other items with the intention of not providing them
as offered or creating impression that something is being given or offered free of charge
when it is fully or partly covered by the amount charged in the transaction as a whole.
2. Conducting any contest, lottery, game of chance or skill for boosting sales
Withholding of information about final results of scheme offering gifts etc.
The Amendment Act 2002 provided for this trade practice wherein withholding
information about final results of any such scheme on its closure is an unfair trade
practice. The participants of the scheme shall be deemed to have been informed of final
results of the scheme where such results are published in same newspaper in which
scheme was originally advertised, within a reasonable time period.
Not conforming to prescribed standards.
If the goods being sold do not comply with the standards prescribed by competent
authorities, then it amounts to an unfair trade practice. Drugs that are hazardous, banned
or beyond expiry date, electrical appliances with inadequate safety precautions, etc. Items
whose quality is far below the required standard, defective goods or duplicate goods.
Example: There are numerous products that seek to imitate branded goods.
Sale of helmets without ISI certification
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Hoarding or destruction of goods.
Hoarding or destruction of goods or refusal to sell goods in order to raise the price of
such goods amounts to an unfair trade practice. The same is applicable for services.
Example- In 2013, the prices of onions and tomatoes skyrocketed because of this
malpractice.
Manufacture of spurious goods.
The Amendment Act,2002 included the manufacturing of spurious goods and offering
them for sale under the provisions of the Consumer Protection Act.
2. Defect
In case of goods, any fault, imperfection or shortcoming in the quality, quantity, potency,
purity or standard that is required to be maintained by any law.
3. Deficiency
In case of services, any fault, imperfection or shortcoming in the quality, nature and
manner of performance that is required to be maintained by any law.
RIGHTS OF CONSUMERS
Right to Safety: Consumers must be protected against the immediate dangers of
buying goods, as well as, the long-term damages goods and services can cause them.
It is the responsibility of the manufacturer to give clear instructions about the use of
the product or service. For example firecrackers packages must provide clear
instructions of use and financial institutions must clearly state the risks involved in
trading securities or mutual funds.
Right to be Informed: The Manufacturer must clearly state adequate and accurate
information about the product or service. The consumer need to be given the facts
needed to make an informed choice, to be protected against dishonest or misleading
advertising and labelling. Examples of this can be seen on the back on any product,
where a list of contents or list of sensitive ingredients is present.
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Right to Choose: The consumer must have access to a variety of products and not
forced to choose a certain product because of lack of options. This right applies
particularly to industries where monopolists exploit consumer by charging them a
higher price and industries that force customers to buy their product. The decision
must lie with the customers.
Right to be Heard: The consumer must be able to voice his opinion and grievances
to the manufacturer, to the government and appropriate consumer protection
authorities. This is the central tenant of the Consumer protection Act. Today it is
mandatory to provide a Customer Care telephone number and an email address in
case of complaints.
Right to Seek Redressal: Following the right to be heard, it is equally important for
the consumer to be compensated for grievances caused to them. They should be
adequately compensated either by replacement of the product or refund. Today there
are various bodies that help consumers seek redressal, such as, CGSI,
www.consumercomplaints.in, Jago Grahak Jago, etc.
Right to Consumer Education: It means the right to receive knowledge and skill to
become an informed consumer, to know the rights and laws that empower
consumers. The consumer must be given access to such information via public as
well as private institutes. Special attention needs to be given to disadvantaged
consumers, such as senior citizens, physically and mentally challenged, etc
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PROCEDURE TO FILE A COMPLAINT
Content
•Clear, definite and precise
•Every complaint should have a heading
Details
•The name, address and description of the complainant
•The name, address and description of the opposite party
Facts
•Facts about the complaint and when and where the problem arose
•How opposite party is liable, accountable, answerable
•State how the case falls within the jurisdiction of the forum / commission
Document
•Documents in support of the allegations duly signed by the complainant
•For record purpose keep a copy of the complaint and all such documents
Benefits
•Don’t need a lawyer to file the petition or argue the case
•A complainant can choose to argue his/her own case
Entitled
•Entitled to claim the cost of the complaint from the opposite party
•The desired compensation should be mentioned in the complaint
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CONSUMER PROTECTION COUNCIL
CONSUMER REDRESSAL MECHANISM
Parameter Central Consumer
Protection Council
State Consumer
Protection Council
District Consumer
Protection Council
Members Chairman
No. of Official
& Unofficial
members
representing
interest of
consumer , as
prescribed
Chairman
No. of Official
& Unofficial
members(not
exceeding 10),
as prescribed
by State
Government
Chairman(Collecto
r of District)
No. of official &
Unofficial
members, as
prescribed by State
Government
Meeting At least 2 in a
year
Can be held as
& when
required
At least 2 in a
year
Can be held as
& when
required
At least 2 in a year
Can be held as &
when required
Time & Place As per the Chairman As per the Chairman As per the Chairman
Objectives Promote & Protect
rights of consumers
Promote & Protect
rights of consumers
within State
Promote & Protect rights of
consumers within District
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Parameter District Forum State Commission National Commission
Established
by
Central Government State Government State Government
Members President
2 other
members
1 woman
President
At least 2 other
members
1 woman
President
At least 4
members
1 woman
Term of
Office
5 years or up to the
age of 65 whichever
is earlier
Eligible for
reappointment
5 years or up to the age
of 67 whichever is
earlier
Eligible for
reappointment
5years or up to the age
of 70 whichever is
earlier
Not eligible for
reappointment
Value &
Compensat
ion
Up to 20lakhs 20lakhs to 1 crore 1 crore and above
Appeals Within district Against District
Forum
Within State
Against State
Commission
Re appeals To State Government
within 30days from
the date of order by
District Forum
To National
Commission within
30days from the date
of order by State
Commission
To Supreme Court
within 30days from the
date of order by
National Commission
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CONSUMER AWARENESS AND CONSUMER PROTECTION
Consumerism is a social and economic order and ideology that encourages the acquisition
of goods and services in ever-greater amounts.
Consumerism in economic domain
In the domain of economics, Consumerism refers to economic policies placing emphasis on
consumption. In an abstract sense, it is the consideration that the free choice of consumers
should strongly orient the choice of what is produced and how, and therefore orient the
economic organization of a society . Also this vote is not "one man, one voice", but "one
dollar, one voice", which may or may not reflect the contribution of people to society.
Role of mass production in consumerism:
The Industrial Revolution dramatically increased the availability of consumer goods,
although it was still primarily focused on the capital goods sector and industrial
infrastructure. Industrial sector included mining, steel, oil, transportation networks,
communications networks, industrial cities, financial centres etc.
The advent of the department store represented a paradigm shift in the experience of
shopping. For the first time, customers could buy an astonishing variety of goods, all in one
place, and shopping became a popular leisure activity. While previously the norm had been
the scarcity of resources, the Industrial era created an unprecedented economic situation. For
the first time in history products were available in outstanding quantities, at outstandingly
low prices, being thus available to virtually everyone in the industrialized west.
Consumerism has long had intentional underpinnings, rather than just developing out of
capitalism.
Consumerism in 21st century :
Businesses have realized that wealthy consumers are the most attractive targets of
marketing. The upper class's tastes, lifestyles, and preferences trickle down to become the
standard for all consumers. The not so wealthy consumers can "purchase something new
that will speak of their place in the tradition of affluence". A consumer can have the instant
gratification of purchasing an expensive item to improve social status.
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Consumer Awareness:
Every individual is a consumer, regardless of occupation, age, gender, community or
religious affiliation. Consumer rights and welfare are now an integral part of the life of an
individual and we all have made use of them at some or the other point in our daily routine.
Consumer awareness is about making the consumer aware of his/her rights. It is a marketing
term which means that consumers are aware of products or services, its characteristics and
the other marketing P’s (place to buy, price, and promotion).Though the first consumer
movement began in England after the Second World War, a modern declaration about
consumer’s rights was first made in the United States of America in 1962, where four basic
consumer rights were recognized.
Every year 15th March is observed as "World Consumer Rights Day".
Issues and problems faced by Consumer today:
Globalization has made the world smaller by integrating the global markets. This has
exposed the consumers to the wide range of products and services available in the market. It
has, on one hand, given them a greater choice of products and brands with lower costs.
While, on the other hand, it has made consumers more and more quality consciousness and
aware of their rights. As a result, they are able to voice their concerns about various
problems and issues faced by them.
Adulteration of food substances by traders through addition of substances which are
injurious to health or removal of substances which are nutritious or by lowering their
quality standards
Misleading advertisements of goods and services in television, newspapers and
magazines to influence the consumers demand for the same
Variations in the contents filled in the package of goods
Improper delivery of after sales services
Supply of defective goods
Hidden price component
Use of deceptive or incorrect rates on products
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Use of false or non-standard weights and measures in supply of goods
Production of low quality goods in bulk quantities
Illegal fixation of Maximum Retail Price (MRP)
Selling above the MRP
Unauthorized sale of essential products like medicines, etc. beyond their expiry date to
ignorant consumers
Poor customer services
Non-compliance with the terms and conditions of sales and services
Supply of false or incomplete information regarding the product
Non-fulfilment of guarantee or warrantee etc.
Education and awareness of Consumers:
Protection and promotion of consumer's rights and interests is a vital function of the
Government of any economy. It is basically a social and political necessity and is essential
for all round progress of the country. In rapidly changing business environment and
emerging global markets, expectations of the people of the country for better services,
quality goods, availability of choices and value for money has been continuously rising.
CAMPAIGNS
Publicity through print media using news paper advertisements, to educate the
consumers about their rights and responsibilities
The Consumer awareness Department through Printed Literature is also creating
awareness. A folder entitled “Consumer Awareness Mission” containing the salient
features of Consumer Protection Act 1986, Consumer Resource kit as well pocket
calendars and posters is being distributed during various events such as IITF, and also
through the State Governments at grass root level
Nukkad Nataks are being performed in consultation with Song & Drama division of the
Ministry of Information and Broadcasting
Advertisements are being carried in journals of Publication Division such as Yojana,
Kurukshetra, Bal Bharti, Aajkal and their regional editions
23. 23
‘Jago Grahak Jago'
This programme has become the focal theme through which issues concerning the
functioning of almost all Government Departments having a consumer interface can
been addressed. To achieve this objective joint campaigns have been undertaken/are
being undertaken with a number of Government Departments. The Department had run
a joint campaign with Bureau of Energy Efficiency to educate people about energy
conservation by having awareness of the BEE star labels. A joint campaign with
National Pharmaceuticals Product Authority is being devised to educate consumers
about the various issues concerning pharmaceutical industry. Similarly, campaigns with
Reserve Bank of India, FICCI, Ministry of Urban Development and HRD are being
planned
Consumer helpline numbers:
National Toll Free No - 1800-11-4000
SMS can also be sent to - +918130009809
24. 24
OMBUDSMAN
An ombudsman or public advocate is usually appointed by the government or by
parliament, but with a significant degree of independence, who is charged with representing
the interests of the public by investigating and addressing complaints of maladministration
or a violation of rights. In some countries an Inspector General, Citizen Advocate or other
official may have duties similar to those of a national ombudsman, and may also be
appointed by a legislature. Below the national level an ombudsman may be appointed by a
state, local or municipal government. Unofficial ombudsmen may be appointed by, or even
work for, a corporation such as a utility supplier, newspaper, NGO, or professional
regulatory body.
Duties of an ombudsman:
Ombudsmen offer their services free of charge, and are thus accessible to individuals
who could not afford to pursue their complaints through the courts
They are committed to achieving redress for the individual
They are neutral arbiters and not advocates nor “consumer champions”
25. 25
They normally ask the body concerned and the complainant to try to resolve complaints
before commencing an investigation
They usually seek to resolve disputes without resort to formal investigations where this
is possible and desirable
Ombudsmen have the power to make recommendations which are binding on the bodies
in their jurisdiction unless successfully challenged through the courts
Ombudsman in India:
The Government of India has designated several ombudsmen sometimes called Chief
Vigilance Officer (CVO) for the redress of grievances and complaints from individuals in
the banking, insurance and other sectors being serviced by both private and public bodies
and corporations.
In India, the Ombudsman is known as the Lokpal or Lokayukta. An Administrative Reforms
Commission (ARC) was set up on 5 January 1966 under the Chairmanship of Morarji Desai.
It recommended a two-tier machinery: Lokpal at the Centre and one Lokayukta each at the
State level for redress of people's grievances. The central Government introduced the first
Lokpal Bill, Lokpal and Lokayuktas Bill in 1968, and further legislation was introduced in
2005. Final bill, after all the amendments, has been passed in Rajya Sabha on 17 December
2013 and passed in Loksabha on 18 December 2013.
Hindustan Unilever Ltd, or HUL, has named an ombudsman to deal with consumer
complaints that could spill over into the courts, in the first initiative of its kind by an Indian
company. HUL has about 200 cases registered against it in India. An average of four to five
cases are brought every year and the company hoped the appointment of an ombudsman
will result in a decline in that.
INTERESTING CASELETS
Tata Motors Pays Rs. 6.45 Lakh to Consumer for Faulty Indigo Car
In 2005, Consumer Education and Research Society (CERS), Ahmedabad, and Shah had
complained to the Ahmedabad District Consumer Disputes Redressal Forum (76/2005) that,
soon after the purchase, the car had revealed manufacturing defects. They had claimed
either replacement of the car or a full refund. The judgment directed Cargo Motors and Tata
Motors to replace Shah’s old Tata Indigo car with a new car of the same make and model; if
not so replaced within a month, the opposite parties shall pay him Rs. 4,59,583 with 9 per
26. 26
cent interest from the date of filing the complaint until the date of payment, Rs. 5,000 for his
mental agony and harassment, and Rs. 2,000 towards cost.
Ashish Jain vs Navrang Electronics on 28 April, 2011
The complainant purchased an AC from respondent worth Rs.26,300/-. After installation, it
did not work. On complaint being made, the respondent sent its technician for the repairs
who visited the house of the complainant several times but could not rectify the fault. The
District Consumer Forum dismissed the complaint on the ground that no documentary
evidence in support of the complaint had been filed. Even if the complainant has not filed an
affidavit in support of the fact that AC was not functioning, there is a clear statement of the
complainant in the complaint about the same. It is nowhere mentioned in The Consumer
Protection Act that, therefore appeal is allowed and both (Navrang Electronics and LG
Electronics) the respondents jointly and severally are liable to refund of Rs.26,300/- to the
complainant which was the price of the AC purchased by the complainant. Both the
respondents will further be liable for payment of Rs.30,000/- as compensation for
harassment. No interest is being awarded. The respondent will also be liable to costs which
is quantified as Rs.5,000/-. The respondents will be entitled to take back the AC sold by
them to the complainant. Copy of this order be sent to the parties free of cost. One copy of
the order be sent to the concerned District Forum and file be consigned to the record room
after needful is done.
United India Insurance Company ... vs Satish Chawla on 14 August, 2013
The complainant-Satish Chawla has filed the complaint under Section 12 of the Consumer
Protection Act, 1986 (in short 'the C.P. Act') for claiming Rs. 2,00,000/- on account of theft
committed in the insured premises situated at Textile Colony, Ludhiana. The complainant
lodged the claim of Rs. 2 lacs, however, he received a letter that his claim do not fall within
the purview of insurance policy as entry by scaling over the wall is not treated as forcible
entry. However, the claim of the complainant does not fall within the definition of burglary
within the insurance policy because entry in the premises by scaling over the wall cannot be
treated as forcible entry; Both the parties were allowed by the District Forum to lead their
evidence.
27. 27
With regard to the definition of burglary, the learned District Forum has relied upon the
judgment of Hon'ble Apex Court in which directions were given to all the insurance
companies to change the definition of burglary in their policy clauses because the ordinary
consumer is not able to understand the stringent meaning as given to the 'burglary' in the
policy but to no effect.
The appellant had deposited an amount of Rs. 25,000/- with this Commission at the time of
filing the appeal and Rs. 1,00,000/- in compliance with the order dated 8.5.2012. Remaining
amount shall be paid by the appellant to the respondent within 30 days from the receipt of
the copy of the order.
Tamil Nadu Electricity Board v/s Noida Chemicals, 17th June, 2009:
Tamil Nadu Electricity Board had placed purchase order for supply of Hydrate 2000kg @
Rs. 107/kg with Noida Chemicals dated 21/01/1992. Board tested the bulk supply by means
of taking samples on 10/07/1992 and found only 31.01% purity instead of 80% under the
purchase order. Several reminder, the Noida Chemicals to rectify the defects. Noida
Chemicals was not prepared either to replace the aforesaid defective items or to return the
advance amount
Board issued an advocate’s notice to the Noida chemicals calling upon it, to repay the
advance amount which was paid by the Tamil Nadu Electricity Board with 12% interest per
annum. Sue against the Noida Chemicals under the Consumer Protection Act. Noida
Chemicals filed a return statement that Tamil Nadu Electricity Board did not produce any
document to show the defect in purity or shortage in weight
According to the judgment Tamil Nadu Electricity Board was not to be considered as a
Consumer under the Consumer Protection Act because the said goods were purchased for
commercial purpose.
28. 28
Kishore Lal v/s Chairman, Employees State Insurance Corporation, 8th may 2007
Kishore Lal was insured with the Chairman, Employees State Insurance Corporation with
insurance. Kishore Lal’s wife was admitted in the ESI dispensary at Sonepaat for her
treatment for diabetes. The tests done revealed that his wife had been diagnosed incorrectly
in the ESI dispensary. The deterioration in the condition of his wife was a direct result of the
wrong diagnose
Kishore Lal filed a complaint under CPA. Compensation towards mental agony, harassment,
physical torture, pains, sufferings and monetary loss for the negligence of the authorities
Corporate raised certain preliminary objections as the complaint is not filed in the District
Consumer Forum and Sonepat, which is a govt. dispensary and the complainant cannot be
treated as a Consumer
As per our point of view Kishore Lal has not filed complete District Consumer Forum and
Sonepat is govt. dispensary so complainant cannot be treated as a consumer. So as per CPA
ESI is not liable to pay the amount to Kishore Lal
Union of India v/s Manoj H. Pathak, 1996
The complainant and his parents took their reserved seats in compartment of Gujarat
Express train. According to the complainant, about 10 to15 people entered their
compartment at Dadar and they were traveling without tickets. By force, they occupied the
reserved seats that belonged to the complainant and his parents. The complainant tried to
contact the conductor, police and the ticket checker but the group of hooligans attacked him.
This resulted in fracture of the complainant’s vertebral column, thereby leading to
permanent disability.
The railway administration’s defence was that law and order maintenance was the duty of
Ministry of Home Affairs. The National Commission held that this amounted to
carelessness on the part of the Railway administration. It was held that it is every
consumer’s right to be unharmed during a train journey. Any person(s) traveling in an
unauthorized way must be subjected to legal trial. In this case, the Railway administration
was held accountable for negligence in their services.
29. 29
Need for Consumer Protection in E-Commerce:
E-commerce, one of the fastest emerging trends in shopping is an unconventional method.
This is a very recent development in India and poses a lot of problems to consumers
shopping online. CAG (Comptroller and Auditor General of India) felt the need to actually
focus on this issue to see if the websites were consumer friendly and also to see if there were
adequate laws and redressal mechanisms in India to protect consumers shopping online.
CAG, therefore undertook a study, ‘E-commerce and Consumer Protection in India’ in
2002, to look at e-trading websites and how consumer friendly they were. In 2006, CAG
conducted a follow up study ‘Protecting consumer rights in e-commerce transactions’ to
look at laws and redressal mechanisms available to consumers
Protecting consumer rights in e-commerce transactions in India
India in the recent years has been experiencing an exponential growth in e- commerce.
While growth in the e-commerce industry is sweeping across the country, there appears to
be inadequate supervision (both governmental and non-governmental) and laws dealing with
quality control for these new companies and this is what makes the rapid growth alarming.
In light of the above negatives associated with e-commerce (specially with buying on the
Internet) and taking into consideration the rapid growth of this industry, it is important that
consumer groups in India take this problem seriously and come up with guidelines that can
be used to make shopping on the Internet a safe experience. These guidelines can feed into
the governmental process of making cyber laws to ensure that the issue of consumer welfare
and sovereignty during internet shopping is addressed.
In 2001 the study by CAG brought to light a number issues such as privacy of information,
provision of contract terms such as guarantees/warrantees, refunds, dispute settlement,
hidden costs and misleading information and other problems because this sector has been
free from any kind of regulation.
In 2006, CAG undertook a follow up study to look at consumer responses to online
shopping and problems they have faced in shopping online. A detailed analysis of the laws
prevailing in different countries showed that Indian laws are grossly inadequate to deal with
problems in online shopping, issues such as phishing, spamming etc.
30. 30
Ecommerce under Consumer Protection Act
To help customers, the government is planning to revamp the Consumer Protection Act in
the forthcoming winter session of Parliament to allow 'territory free' legal action against any
goods or service provider.
Under the law,
A consumer can initiate legal action against a seller only in the place where transaction
takes place.
The new provisions will cover both goods and service providers but only those that
operate physically from the Indian soil.
The new law would cover not just vendors in online space but also marketplace
providers such as Amazon and Flipkart.
Consumers will be able to approach their local consumer court against a service or a
goods provider who may be situated anywhere in the country. Any "unfair trade
practices" including a false claim could be challenged under the new law.
The vendor must allow a "cooling off" period where by the customer can change their
mind and cancel or return the order within 7 working days for most goods. Certain
exclusions do apply with items such as perishable and digital goods. The vendor must
inform your customers of their right to cancel their order with no loss other than return
postage and packing.
However, these are not applicable to 'business-to-business' transactions.
The department of industrial policy and promotion (DIPP) had taken up the issue of
regulation of e-commerce retailers with consumer affairs ministry. Brick-and mortar
retailers associations had represented to the DIPP after leading online sellers including
Flipkart and Amazon offered deep discounts to promote sales.
31. 31
Comparative Analysis of Consumer Protection Laws in Brazil, Malaysia
Country India Brazil Malaysia
Act Consumer
Protection Act
of 1986
Consumer Defence
Code 1991
Consumer
Protection Act
1999
Redressal
Agency
Consumer
Disputes
Redressal
Forums
Procon offices
(Procuradoria de
Proteção e Defesa do
Consumidor)
Tribunal for
Consumer
claims
Statistics
Cases Filed
since inception:
4,177,711 84,633
Cases Pending: 369,082 812
% of total
Disposal:
91.17% 99.04%
One major difference between the Brazil Law, Malaysian Act and the Indian Act is that
according to the Brazil and Malaysian laws, the conducts specified may amount to abuse
dominant position whereas according to the Indian Act the conducts specified shall amount
to abuse of dominance.
While the Indian Act specifically enumerates ‘practices resulting in denial of market access‘
and using dominant position in one market to enter into or protect, other relevant markets‘
32. 32
as conducts amounting to the abuse of dominance, they have not been mentioned in the
Brazil and Malaysian laws.
The Indian Competition Act states, “No Enterprise shall abuse its dominant position.
There are primarily three stages in determining whether an enterprise has abused its
dominant position. The first stage is defining the relevant market. The second is determining
whether the concerned undertaking /enterprise /firm is in a dominant position/ has a
substantial degree of market power/ has monopoly power in that relevant market. The third
stage is the determination of whether the undertaking in a dominant position/ having
substantial market power/ monopoly power has engaged in conducts specifically prohibited
by the statute or amounting to abuse of dominant position/ monopoly or attempt to
monopolize under the applicable law.
The Indian Competition Act defines dominant position as a position of strength, enjoyed by
an enterprise, in the relevant market in India, which enables it to -
(i) Operate independently of competitive forces prevailing in the relevant market
(ii) Affect its competitors or consumers or the relevant market in its favour
The Consumer Protection Act in Malaysia has been a runaway hit. The number of cases
raised with the Tribunal for Consumer Claims has continued to drop since 2011, indicating
the awareness of manufacturers to ensure the quality of their products and not to cheat
consumers. The number of cases filed in 2011 was 442 for claims amounting to RM2.6
million. They further dropped to 318 for claims amounting to RM1.8 million in 2012 and
went down to 266 for claims amounting to RM1.4 million in 2014.
Brazil also has one of the most complete Consumer Defence systems of the world, counting
with the support of several regulations and with 700 Procon offices throughout the country.
All Brazilians state capitals have at least one Procon office.
33. 33
India has to tackle the problems caused by a vast population and incumbent officers.
According to the regulation, the district forum is supposed to get rid of a minimum 75 cases
a month. However, the output is only 30 to 35 cases in most district forums. The system in
India is well established but it lacks awareness in rural India and more importantly it is the
people running the show who have failed the system. Judges take a long time to clear cases
and the numbers of pending ones keep piling up.
THE FUTURE CONSUMER DILEMMAS
There are a few challenges that the Government has to deal with the increasing awareness
amongst the consumers. In this Digital age, the “haves” utilizing the internet will stand an
advantage as compared to the “have notes” who are forced to stay offline. Future consumers
will have to make great sense of varied phenomena such as increasing subliminal
advertising, social networks, open economy. Marketers, today, use images and sound to
influence customer’s responses without the customer actually realizing it.
The rise of the concept of “consumerism” is an essential part of media-culture. The newly
emerging middle-class is a highly informed segment of people who are aware of the
different products. Also, the rise of brand awareness has widened the range of activities that
a company needs to perform to satisfy customer requirements. Companies are seeing a shift
in the focus form financial profits to ethical, social and environmental aspects.
In a provocative and insightful view of how emerging lifestyle and cultural changes are
likely to impact on future consumers, a safe and healthy lifestyle can be provided for future
consumers, by today’s consumers, policy makers and markets. Every company should strive
to work towards maintaining an ecological balance and sustainable development. This may
create a positive image in the minds of the consumer that the company is responsible
towards the environment.
34. 34
Recommendations and Suggestions
(i) Strengthening of the existing redressal mechanism to make it more efficient for
delivering speedier justice
(ii) Supplement the existing redressal system with an active ADR Mechanism.
(iii) Building a strong consumer information and advisory system.
(iv) Integrate State Consumer Helplines and Consumer Advice Centre to facilitate mediation
(v) Review of Consumer Protection Act 1986 and take adequate measures to plug loopholes
with a view to reduce delays and enhance its reach to new areas of consumer issues.
(vi) National Consumer Protection Agency.
HOWCORPORATES SHOULD HANDLE COMPLAINTS
“As chief executive you have to be aware that you’re communicating all the time, whetheryou mean
to or not. Everything you do and don’t do will be interpreted and you need to be aware of that.”
Remember
The complaining customer often wants to continue an existing relationship - despite the fact that
something is wrong. Therefore focus should be on maximizing the potential for complaint
management to reduce customer dissatisfaction and maximize customer advocacy.
Strategic Plan
Have a clear, flexible, welcoming and open policy for complaints
Train staff and management in complaints handling
Give these complaints enough priority
Ensure that you can process complaints through all modes – in person, by telephone, by mail, by
email
Set up processes to lodge and analyze complaints and share it with concerned department
35. 35
Operational Process and Actions
Thank the customer for complaining
Say that you are sorry that the problem arose as this is NOT an admission of guilt on your part,
it’s just good manners
Put yourself in the place of the customer (complaints are rarely personal)
Start with the view that the customer has a valid point
Get all the facts first (listen carefully)
Don’t leap straight to the “free gift route”
Correct the mistake
Learn from every complaint
Minimize reasons for complaints
Remember, it costs at least 5 times as much to gain a new customer than to keep an existing one
(so focus on the customer, not the complaint)
ALWAYS respond
Listen to your staff
Benefits ofGood Complaints Handling
Improved image/reputation
Increased profitability
Customer loyalty
Fewer customer “drop-outs”
Increased market share
A more realistic idea of customer satisfaction
Customers can be more satisfied after recovery
Improved awareness of importance of keeping customers satisfied
Better internal & external relationship
36. 36
CASE STUDY
Case 1:
Judgement gives Relief for Electricity Consumers in Mumbai
Problem:
BEST (electric supply) wanted to maintain monopoly to supply to retail customers.
Judgement:
Mr. Guruprasad C. Shetty, is the consumer of electricity supplied by Brihanmumbai Electric
Supply and Transport Undertaking (BEST). Tata Power Company Limited is another
Distribution Licensee in Mumbai. The consumer wanted to switch over from BEST to Tata
Power Company Limited as its tariff rate was lesser than BEST’s rate. Therefore, the
consumer approached Tata Power Company and made a request to supply electricity to him
as he wanted to switch over from BEST to Tata Power Company Limited. Tata Power
Company Limited advised the consumer to approach BEST and seek permission for the use
of TATA’S distribution network. Only after which TATA would agree to supply electricity
to the consumer. In response to the aforesaid advice, the consumer approached BEST and
requested to grant such permission to get supply from Tata Power Company Limited, by
using the distribution network of BEST. However, BEST did not incline to grant such
permission to the consumer. Hence Mr. Shetty again approached Tata Power Company
Limited for the same who again expressed its inability to supply electricity to consumer in
the absence of the permission granted by BEST. Therefore, Mr. Shetty filed a petition
before the State Commission praying for the directions to the Tata Power Company Limited
to provide electricity supply to Mr. Shetty and in case of failure, Tata Power Company
Limited’s Distribution License be cancelled and compensation be paid to Mr. Shetty for
such failure to provide the supply of electricity.
The State Commission after hearing the parties including that of BEST passed the impugned
order giving the direction to the Tata Power Company Limited to follow Regulations of the
Maharashtra Electricity Regulatory Commission Regulation, 2005 and also in terms of his
license condition and to provide the electricity supply to the consumer and other consumers
by laying its own Distribution System Network within its entire area of supply. Feeling
aggrieved over this order, permitting the Mr. Shetty to get the supply from Tata Power
switching over from BEST, BEST has filed the Appeal before the Tribunal.
37. 37
The learned counsel for the BEST has raised the following contentions mainly questioning
the jurisdiction of the State Commission to enquire into the allegations contained in the
Petition filed by the consumer as against the Distribution Licensee. The State Commission
lacks jurisdiction to entertain any complaint from the consumer to inquire into the dispute
between the consumer and the Distribution Licensee praying for any direction regarding
extension of Distribution system and for payment of compensation in violating of the Act.
Even though this complaint which had been filed by the consumer invoking the Act, this
section does not confer the State Commission with any jurisdiction to enter into the dispute
between the consumer and the Distribution Licensee. The present dispute which is between
the consumer and the Distribution Licensee has to be resolved only by Grievance Redressal
Forum under the Act. In reply to these issues, the Learned Senior Counsel for the
Respondents submitted that the dispute is not between the consumer and the Distribution
Licensee on the billing dispute but, on the other hand, the State Commission had enquired
into the alleged violations and non-compliance of the licensing conditions of the
Distribution Licensee as complained by the consumer and, therefore, the State Commission
has got the jurisdiction to ensure proper compliance of the provisions of the licensing
conditions and as such the complaint filed by the consumer was maintainable. The main
grievance of the consumer before the State Commission was that he had applied to Tata
Power Company Limited for supply of electricity but the same was refused by the latter
merely on the ground that the consumer was unable to procure the No-Objection Certificate
from BEST even though the Consumer was living in the licensed area of BEST as an
existing consumer of BEST. The State Commission has given the direction to Tata Power
Company Limited to perform its universal service obligation and to comply with the
provisions of the Act and the concerned Regulations. The said direction is directed against
Tata Power Company Limited and this is with respect to and in the interest of the
Consumers generally. The State Commission had directed Tata Power Company Limited to
supply electricity to its consumers situated in the common area of supply of Tata Power
Company Limited as well as BEST as per the terms and conditions of the license of the
Distribution Licensee by laying down its own Distribution Network for giving supply. The
State Commission pointed out that the situation where two Distribution Licensees, namely,
Tata Power Company Limited and the BEST, operating in the same area of supply, are not
co-operating with the consumers who wish to exercise their choice of supplier.
38. 38
The choice of supplier and the open access are the main thrust of the Electricity Act, 2003.
According to the Consumer, the BEST is taking undue advantage of his alleged protection
purportedly under Act to hinder the exercise of choice of supplier by the complainant
consumer by not granting the No-Objection Certificate for switching over from BEST to
Tata Power Company Limited for availing the electricity supply at lesser tariffs and the Tata
Power Company also has not been supplying electricity on the pretext of failure to produce
the No Objection Certificate. Hence the consumer complained against Tata Power Company
Limited stating that Tata Power Company Limited has refused to supply electricity to the
consumer even though it is statutorily required to provide by laying down its own
Distribution System as required. This issue can be adjudicated upon only by the State
Commission under the provisions and not by the Grievance Redressal Forum. The State
Commission upheld the contention of BEST that BEST could not be compelled to share its
wide network with the Tata Power Company Limited. At the same time, the State
Commission ruled that Tata Power Company Limited was obliged to develop and maintain
efficient, coordinated and economical Distribution System in its area of supply.
Accordingly, a specific direction has been issued by the State Commission to Tata Power
Company Limited to supply electricity to its consumers situated in the common area of
supply of Tata Power Company Limited and BEST as per the Licensing Conditions by
laying down its own new Distribution Network for providing electricity supply to the
consumers on their request.
Summary of our Findings.
The consumer has the right of selecting who should be his supplier in case he has
more than one option.
The suppliers cannot harass the consumer and drag the consumer in their rivalry.
Merely on the grounds of No Objection Certificate a supplier cannot be denied his
right.
It’s the duty of the respective suppliers to provide necessary provisions to supply and
not depend on rivals or consumers for such matters.
39. 39
Case Reference:
Brihan Mumbai Electricity Supply & transport under taking Versus Maharashtra Electricity
Commission (MERC) & others Civil Appeal No. 4223 of 2012 in the Supreme Court of
India.
Case 2:
The Consumer Protection Council, Rourkela, a voluntary organisation, has filed this
complaint against the Indian Oil Corporation.
Problem:
A consumer complained that the Indane LPG refill received by him was short by 10kgs.
Brief:
In a landmark judgment, the National Consumer Disputes Redressal Commission, New
Delhi, has directed the Union Ministry of Petroleum and Ministry of Consumer Affairs to
ensure that all LPG marketing companies issue necessary instructions to distributors to
provide to deliveryman proper weighing scale for the purpose of weighing LPG cylinder in
the presence of customers, before delivery.
Judgement:
One of the consumers approached the Council in the first week of June, 2000 and
complained that the Indane LPG refill received by him was short by 1 kg. The Secretary,
M/s. R.W.C.C.S. Ltd. the gas dealer of IOC, Rourkela even after being informed failed to
give the replacement of the cylinder. The consumer could weigh the same as he was in
possession of spring balance. The complainant Council talked to the representative of
opposite party regarding the said complaint who agreed to replace the cylinder. But the
aforesaid consumer again informed the Council’s office that the replacement refill cylinder
which he received was short by 1 kg yet he had accepted the same. Disturbing information
was received that Indane LPG cylinders were being under-weighed and being aware that the
consumers had no facility to weigh the same; consumers were being taken for ride.
40. 40
A survey was conducted by the Voluntary Organization of the Council covering between
14th to 21st June, 2000 by visiting 48 households.
The survey revealed:
1. As against the net weight of 14.2 kgs of LPG, the consumers on an average were getting
only 12.74 kgs (10.3% and 1.46 kg. less)
2. Only 12.5% of the refill cylinders weighed were within the tolerance range of 150 grams
or less, as prescribed in 2nd Schedule of the Standards of Weights & Measures (Packaged
Commodities Rules)
3. Consumers were losing on an average Rs.24/- per refill of Indane as per the price
prevailing at that time.
Seeing the huge collective financial loss of consumers and the need to tackle the problem,
the Complainant Council wrote to the Director (Legal) Metrology, Govt. of India,
Department of Consumer Affairs with its copy to the Chairman, I.O.C.
A letter was received from the General Manager, IOC, Orissa State Office informing that
everything was fine and that the joint survey utilising the spring balance was not correct
though the opposite party, Sri B. Mintz, Asstt. Manager (LPG) never objected for utilising
the spring balance as its reliability was checked with Standard Weights and was found error
free. Despite letter sent to Director, Legal Metrology, Govt. of India, Department of
Consumer Affairs, once again informed the developments and soliciting his clarification
regarding usage of spring balance, but no reply had been received. The Chairman, General
Manager and Sr. Manager (LPG) of opposite parties, Orissa were repeatedly requesting to
the Council to visit their LPG Bottling Plant at Balasore, in Orissa as they were keen to
impress that everything was proper at their end. However, the visit was arranged on 26th
August, 2000 between 12.30 to 2.00 PM. In the complaint, it was found that the process of
setting the weight is obviously prone for human error due to:
1. Very short time which is available to the operator for making the adjustment.
2. Watching the rotary movement of the machine constantly can result in enormous strain to
the eyes as well as to the mind.
3. The tare weight at times is not legible on the refill and hence error in reading the same.
In the Carousel Machine if the tare weight is not set correctly, then the refill could take more
or less LPG depending on whether the error is setting the tare weight is positive or negative.
Hence, after the Carousel Machine, the filled Cylinders are individual tested in an on-line
electronic Weighing Machine. Here again the process is done manually. The operator has to
41. 41
note the weight stencilled on the refill and cross check with the digital display of the
Weighing Machine, when a refill is selected for weighment. In this machine (Electronic
Weighing Machine) the no load reading is set as (-) 14.2 kg. so that when a refill is weighed
it displays the weight of the empty refill (tare weight). So whenever the variation is beyond
acceptable levels the operator instructs his colleague standing nearby to divert the cylinder
for weight adjustment. Then the concerned operator diverts the Cylinder for weight
adjustment. The whole process has to be completed within 2.5 seconds so that there is no
hold up in the line.
Thus the whole process of filling and checking of the weighment involving unreliable and
cumbersome manual operations is inherently error prone and cannot ensure appropriate
quantity to the consumers."
Six refills were checked by the Secretary of the Council and 3 were found underweight by
0.5 kg to 1 kg. By letter dated 30th August, 2000, the Council informed the Director, Legal
Metrology, Govt. of India, Deptt. of Consumer Affairs, Chairman, IOC as well as others and
requested the Director, Legal Metrology and others to take appropriate action about this
problem so that the consumers might get right quantity of LPG in the Indane refills.
Repeated and persistent requests initially did not bring about any desired result. Ultimately,
the Secretary of the Council raised these issues during the Central Consumer Protection
Council Meeting held on 8th November; 2000.The representatives of the Ministry of
Petroleum & Natural Gas who were present in the meeting assured that they would do the
needful.
The complainant Council once again did a random survey of weight of LPG refills in the
Rourkela Steel Township, during April-June, 2001. The summary of the Survey Report is as
under:
Total number of refills weighed/No. of households covered – 56
No. of refills found within the tolerance range of (-) 150 gms. – 18 (32.1%)
No. of refills found beyond the permissible error of (-) 150 gms. - 38 (67.9%)
42. 42
On the aforesaid basis, the Council found that in as many as 67.9% of refills were found
underweight to the tune of 0.89 kg. The overall refills found under weighed by 0.54 kg.
resulting in a loss of about Rs.10/- per refill to the consumer at the present rate of Rs.253/-
per refill, sold at Rourkela. Balasore Bottling Plant was producing about 25,000 refills per
day. Thus, assuming 300 working days per year, the Bottling Plant is producing 75,00,000
refills per year. Thus the plant was inflicting a loss of Rs.7.5 crores (Rs. 10 x 75,00,000) on
the consumers per year. The estimate of LPG bottling plants in the country was about 100
and as per the Manager of the Balasore Bottling Plant, all the plants worked on similar
technology and process. IOC alone would be getting unduly enriched to the tune of Rs.750
crores per year. Similarly, Bharat Petroleum and Hindustan Petroleum must also be getting
unduly enriched if they were running similar bottling plants.
In the light of the aforesaid facts to get the grievance redressed, the complainant Council
ultimately filed a complaint on 26.6.2001 seeking following reliefs:
a. Immediately make necessary changes in their bottling plants and Carousel Machines so
that they may fill right quantity of LPG in the refills.
b. Check the weight of each of the Indane LPG refill at the doorstep of the household, in
presence of the consumer, before they are delivered to the consumer so as to ensure that
14.2 kg. of LPG is delivered, till the requisite changes are made in their Bottling Plants.
c. Pay a sum of Rs.5,000/- to each of the 104 consumers listed in this petition.
d. Pay 1% of the amount unduly collected in a year from the consumers through under-
weight cylinders, from across the country, to the Complainant Council, so that it may use
the fund for doing more such surveys, studies and consumer protection activities.
e. Pay the Complainant Council a sum of Rs.50,000/- towards the cost of this petition; and
f. Any other orders deemed necessary.
43. 43
Case of I.O.C.:
The Chairman, IOC and other officials of the IOC, opposite party filed their joint reply and
contested the matter.
In this regard, they (GM, IOC) relied upon the measures suggested to the Under Secretary,
Govt. of India, Ministry of Energy,(Deptt. of Petroleum), Shastri Bhavan, New Delhi about
use of weighing balance which reads as under:
"We are fully in agreement about protecting the interest of consumers in respect of
delivering correct quantity of product. However, equipping the deliverymen with portable
spring balance would not serve the desired purpose as they cannot be depended upon to give
accurate weight, especially with passage of time and that too for weighing LPG cylinders
whose gross weight would be around 30/32 kgs. The Oil Industry has, however, taken
measures to have weighing scales provided in distributors’ godown, where every filled
cylinder is required to be weighed for correct weight before despatch to customers.
Moreover, Oil Companies have an arrangement to replace cylinders found to be
underweight so that the distributors are not put to loss and are not induced to pass on
underweight cylinders to consumers on this account."
As per submissions made, the Ld. Addl. Solicitor General, Mr. Vikas Singh, so far as the
bottling plants are concerned, the investment of huge amount of more than 250 crores was
likely to be involved for modernisation. For about 120 bottling plants and 145 number of
filling systems were required to be modernized as per the recommendations of the
Committee.
The Committee decided the complaint with the following directions:
1. The Ministry of Petroleum is given four years time as prayed for, in terms of the
submissions.
2. The Ministry of Petroleum as well as the Ministry of Consumer Affairs shall ensure that
all Marketing Companies do issue necessary instructions that the Distributors will provide to
deliveryman proper weighing scale for the purpose of weighing LPG Gas Cylinder in the
presence of customers and they will give it due publicity by publishing the same in the
vernacular language of each and every State as well as in English and Hindi in newspapers
apartment from giving similar type of advertisement in TV for information of the
consumers.
44. 44
The Committee directed the Indian Oil Corporation to pay a sum of Rs.50,000/- to the
Complainant-Council to meet the expenses incurred by it in protecting the interest of
consumers and to continue to protect the interest of the consumers, within a period of four
weeks.
