role and scope of three tier redressal machinery

8/7/2019 role and scope of three tier redressal machinery

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UNIT 18 CONSUMER PROTECTIONACT-BASIC FEATURES

Structure18.0 Objectives18.1 Introduction18.2 Salient Features of the Act

18.2.1 Three Tier Redress Machinery18.3 Certain Definitions

8 1 Meaning of Consumer18.3.2 Consumer Dispute13.3.3 Defect18.3.4 Deficiency18.3.5 District Forum18.3.6 Goods18.3.7 Manufacturer18.3.8 National Commission18.3.9 Person18.3.10 Restrictive Trade Practice18.3.11 Service18.3.12 Statecommission18.3.13 Trader18.3.14 Unfair Trade Practice

18.4 Let Us Sum Up18.5 Key Words18.6 Some Useful Books18.7 Answers to Check Your Progress

After studying this unit, you should be able to:identify basic features of Consumer Protection Act, 1986understand the meanings of various terms and expressions used in the Act.

18.1 INTRODUCTIONIn the earlier unit of Block 5 you have studied about the evolution of consumer protection lawsin India. Inspite of host of the legislations, none of them could be described as consumerspecific. They have been designed to provide reliefs in specific situations only. None of them,for example, provided for rights of consumers, a separate judicial machinery for looking intocomplaints. Caveat Emptor- Let the buyer beware continued to be the governing rule. Thehelpless and harassed consumer did not really get effective remedies. Consumer remained theking only in the literature on economics. The seller/manufacturer/supplier continued to roll theroost.With the enactment of Consumer Protection Act, 1986 the scenario has undergone a change.Rights of consumers have been given a statutory recognitions. Three-tier grievance redressalmachinery at the District, State and National level has been constituted. Consumer is sought tobe installed as a king.The Indian Parliament enacted this legislation in December, 1986. It came into force on April15, 1987. By July 1987, all the provisions came into operation.The object of the legislation, as the Preamble of the Act proclaims, is for better protection ofthe interests of consumers. During the last few years preceding the enactment there was in thiscountry a market awareness among the consumers of goods and services that they were notgetting their money's worth and were being exploited by both traders and manufacturers of


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consumer goods. The need for Consumer Redressal Fora was, therefore, increasingly felt. ColuumerRotedonAc t-Understandably, therefore, legislation \;as introduced and enacted with considerable Bmlc Featuresenthusiasm and fanfare as a path-breaking benevolent legislation intended to protect theconsumers from exploitation by unsc ~p ul ou smanufacturers and traders of consumer goods. Athree tier for a comprising the District Forum, the state Commission came to be envisagedunder the Act for redressal of grievances of consumers.Emboldened by the legislation, enacted in 1986, consumers have been flooding theseRedressal Agencies with petitions dead phones, malfunctioning television sets, delayedLPGcylinder connections, losses due to strikes in banks and hospitals, medical malpractices, badpressure cookers, loss of agricultural crops due to power breakdowns, unkept promises andwhat you have.You, being a consumer, must know as you how the provisions of this Act can be used asweapons in your armoury to fight your day-to-day battles in the market place.

18.2 SALIENT FEATURES OF THE ACT- -In this unit you will study the basic provisions of the Consumer Protection Act, 1986. Thedetailed rights of the consumers and how can those rights be enforced (i.e., the various reliefsavailable to consumers) shall be studied in the next unit.Salient features of the Act are:1) The Act aims to provide better and all-round protection to consumers.2) In terms of geographical application, it applies to the whole of India except the State of

Jammu and Kashmir.3) It applies to all goods and services unless otherwise expressly notified by the Central

Government.4) It is indeed a very unique and highly progressive piece of social welfare legislation and is .

acclaimed as the magna carta of Indian consumers. The Act has made the consumermovement really going and more powerful, broad-based and effective and people-oriented. In fact, the Act and its Amendment in 1993 have brought fresh hopes to thebeleaguered Indian consumer. This is the only law which directly pertains to market placeand seeks to redress complaints arising from it. Even prior to 1986, there were in force anumber of laws which could be interpreted in favour of the consumers. But, this Act ismost powerful piece of legislation the consumer has had before 1986. Its provisions arevery comprehensive and highly efficacious.In fact, it provides more effective protection to consumers than any correspondinglegislation in force even in countries which are considered to be much more advanced.

5) It provides effective safeguards to the consumers against different types of exploitationsuch as defective goods, unsatisfactory (or deficient) services and unfair trade practices.

18.2.1 Three-Tier Grievance Redressal MachineryFor enforcement of the rights of the consumers, the Act has created special consumer Courts.As Act provides for a three-tier consumer grievance redressal machinery with the DistrictForums at the base, the Slate Commission at the middle level and the National Commission atthe apex level. The State and national level bodies also function as appellate authorities. Anyverdict given by the National Commission canbe challenged in the Supreme Court.The cost of goods or services and compensation asked for is the criterion for filing thecomplaint with the above Redressal Fora. The Redressal Fora constitute a quasi-judicialmachinery to provide speedy and simple redress to consumers.The Redressal Foras are not trammeled by any technicalities or rules of complicated oreleborate procedure. They are merely to observe the basic rules of natural justice. No court feeor any other charge is to be paid in respect of any complaint or petition of appeal or revision,however high be the value of its subject matter.Thus, the Act provides a simple, speedy and inexpensive redressal of consumer grievances


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Consumer ProtectionA C ~ The complaint need only set out the grievances in the simplest form and furnish the name andaddress of the opposite party against whom the complaint is made. It may even be in the formof a letter to the concerned Redressal Forum and no formalities of any type would be insistedupon. Appearance may be by the complainant himself in person or by agent duly authorised byhim. It is not obligatory to engage any advocate. Thus, it is a far more convenient law forconsumers.The definition of the expression 'service' in the Act in very wide and comprehensive. In fact,it will take in service of any description rendered for consideration by any person ororganisation including public sector undertakings (PSUs) and Government agencies. However,services rendered free of charge or under any contract of personal service, are excluded. Thus,the following services do not fall within its ambit: (i) Health Services provided byGovernment hospitals, (ii) Civic amenities provided by municipal authorities.All suppliers of goods and services, both in the private and in the public sector and thecooperative sector, are covered by the Act.The hallmark of the Act is that it has set a time frame for the disposal of cases.The Act allows filling of "class action" complaints on behalf of groups of consumers havingcommon interest.The Act also covers complaints relating to unfair trade practices. Thus, a consumer candirectly protect against food adulteration, short weighing and overcharging, directly to theDistrict Forum. The consumer can pick up a food sample from a shop. get it analysed by achemist and file a complaint on that basis.It also provides for complaints against charging in excess of fie price of a product fixed by alaw or rule andlor displayed on the packaged commodities.To organise consumer resistance further and educate them, the Act also provides for theformation of consumer protection councils in every State. These councils do not have anylegal authority under the Act but are meant to promote the cause of consumer protection andcover the six consumer rights -right to safety, to be informed, to choose, to be heard, to' redress, and to consumer education.CheckYour Progress 1Note: i) Use the space below for your answers.

ii) Check your progress with the model answer given at the end of the unit.1) Briefly explain the salient features of the Consumer Protection Act, 1986................................................................................................................................................

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...............................................................................................................................................18.3 CERTAIN DEFINITIONSA number of words and expressions have been used in the Act. These must be clearlyunderstood by you if you want tolmaster its various provisions. In the following paragraphs,you would note their meanings.18.3.1 Meaning of ConsumerWho is a Consumer?Reliefs under the Act are available to consvmers only. Therefore, you must categorically knowthe meaning of a consumer.S.2 (1 ) (d) defines the term consumer. It means miy of the following persons:i) A person who huys any goods for a consideration.


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Consumer Prote~tionAcl-.BasicFeatures

It also includes any user of such goods when such use is made with the approval of thebuyer. But it does not include a person who obtains such goods for re-sale or for anycommercial purpose. The Amendement Act, 1993 has added the following Explanation:"Commercial purpose" does not include use by a consumer of goods bought and used byhim exclusively for the purpose of earning his livelihood, by means of a self-employment.

ii) A person who hires or avails of any services for a consideration.It also includes any beneficiary of such services other than the person who hires or availsof the services for consideration when such services are availed of with the approval of thefirst mentioned person. The consideration for the purchase of goods or hiring or availingof the services may have been paid or promised or partly paid and partly promised, orunder any system of deferred payment.Therefore, to be a 'consumer' under the Act-

i) the goods or services must have been purchased or hired or availed of for considerationwhich has been paid in full or in part or under a system of deferred payment, i.e., inrespect of hire-purchase transactions;

, ii) goods purchased should not be meant for re-sale or for a commercial puypose. Thus, whereIa vehicle has been purchased for the purpose of running it as a taxi, the purpose being

commercial the buyer shall not be a 'consumer' under the Act [Western India State Motorsv. Subhag Ma1 Meena and Others (1989)l. However, if the taxi is used by the buyer to earnhis livelihood, the buyer will be considered as a consumer.

Any economic activity or transaction carried on with the motive of making profit would fallunder the term commercial purpose, irresp&fiCe of the scale of operationsIn S. Pattahhiraman v. SP. ST. Palaniappan (Order dt. 3.5.1994), the National Commissionruled that a chartered accountant who is in practice and who purchased a computer for beinginstalled in his office, cannot be regarded as a consumer under the Consumer Protection Act.Are the following consumers?I) Winner of a lotteryThe question was considered in the case of Byford v. S.S. Srivastava [1993]. In this caseByford Motors inserted an advertisement in newspapers stating that a person booking apremier Padmini Car could enter into a contest in a lottery conducted by them. Under it aperson who was successful in the draw would be entitled to two free tickets from New Delhi toNew York and back. Shri S.S. Srivastava was one of the persons who was successful in thedraw. He asked the dealers, Mls. Byford Motors, to give him the value of two tickets whichwas refused and he was asked to produce two passports to enable them to book the tickets. Thecomplainant, however, produced one passport immediately but the second after the end of thefinancial year. M/s. Byford Motors refused to give the tickets on the ground that accounts ofthe financial year had been closed and that they could not carry 'forward the liability of thatyear to the next financial year under the provisions of the Income-Tax Act and Rules.The Court held, that the complainant was not a consumer within the meaning of Sec.2(1) (d)of the Act. He had received the car for which he had paid and there was no complaint as to itscondition.

. Receiving air tickets to New York was an additional attraction attached to the sale, whichdepended upon a lottery draw. It is not an intrinsic part of the contract deal for which paymentwas made. Thus, as far as lottery was concerned, it could not be said that complainant was aconsumer who had hired any service for consideration and hence he had no right to getredressal under the Act.The complainant's argument that this would fall under unfair trade practice as in Sec. 36A(4)of the MRTPAct, 1969, was also not accepted.2) A person registering for gas connectionThe National Commission in Mohindra Gas Enterprise v. Jagdish Poswal(1993) heldthatregistering for gas connection amounts to hiring of services. Reference was made to theManual of the Indian Oil Corporation which states thatan LPG customer gets continuing orrecurring services like loan of the Corporation's equipment, delivery of refill cylinders,

I?


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r onsumcr P~.otectionAc t technical service for appliance bn leakage of equipment and so on. But can a person be upheldas a consumer at the stage of registration or only when he signs subscriptions voucher andmakes deposit for LPG connection. To this, National Commission observed as follows:Service as defined in sub-clause (0) of the sub-section (1) of Sec. 2 means "service of anydescription which is made available to potential users". The consumer who hires a servcice hasbeen defined in clause (ii) of Section 2(1) of the Act, according to which it is not necessary thatconsideration should be paid at the tin~eof hiring of service. If the transaction is supported byconsideration which has been paid or promised or partly paid or partly promised or under anysystem of deferred payment, even then it will be a valid consideration for the hiring of theservice. The present case is one in which payment of part consideration was deferred till thegas connection was released. Hence, a person becomes a consumer of LPG right at the time ofregistration for an LPG connectjon.3) Warranty of free serviceIn Visliwa Jyoti Printers v. MoliVls of India (1992) a warranty of free service for one year wasgiven at the time of sale of a printing machine. The seller of the machine contended that sincehe was rendering free service for the maintenance of the machinery for one year under thewarranty, the buyer was not a 'consumer' under the Consumer Protection Act.Held, the warranty was a part of the composite contract for supply of the printing machine andits maintenance for a period of Qneyear. The consideration for service to be rendered under thewarranty is obviously included In the sale price of the machine. There could not be anagreement, including warranty, without consideration. It was wrong to maintain that warrantyobligations were being rendered free of charge.4) Passengers travelling by t@nsIn General Manager, Southern Railway v. Anand Prasad Sinha (1989), it was held thatpassengers travelling by trains m payment of the stipulated fee charged for the ticket are'consumers' and the facility of tfansportation by rail provided by the railway administration isa 'service' rendered for consideriation as defined in the Act.5) Subscribers of telephones ~ o u l dbe 'consumers' under the Act and accordingly are entitledto seek relief from Forums wherever necessary [Dist. Manager, Telephones, Patna v. LalitKumar Bajla (1989)l.6) User of electricity is a consuper. TheNational Commission in Y.N. Gupta v. DESU(decided on 16.11.1992) considdred a-complaintregarding the inflated electricity bills servedby DESU on the complainant. Id this case, DESU did not raise the bills in keeping with thecycle normally adopted. It also did not replace the defective meter. However, it issued a bill forRs. 1.06 lakhs for a period of 1 114 years. Thepower connection was also disconnected butrestored after a complaint with tke General Manager.The Natignal Commission ruled that the bills were casually prepared as much as the billsreflected consumption in the f ive digits instead of four digits. Moreover, DESU had no powerto raise bills upon a defective meter beyond six months under the Electricity Act, 1910. TheNational Commission concluded that there was deficiency in service on the part of DESU andawarded a compensation of Rs. 30,000 and costs of Rs. 5.000.

18.3.2 ConsumerDisputeAccording to Section 2(1) (c), C~nsIlmerdispute means a dispute where person against whom acomplaint has been made, denieg or disputes the allegations contained in the komplaint.18.3.3 DefectAccording to Section 2(1) (c), Cbnsumer Protection Act, 1986, as amended hy the AmendmentAct, 1993, a '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 for the timebeing in force or under any contract, express or implied, or as js claimedby the trader in anymanner whatsoever in relation ta any goods.A ration shop s~pplie da ration $-holder napwe& oil adulterated with known toxicadulterants.Thecomplainant,an#his family, as result of that rapeseed oil consumption


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suffered severely. H e was attacked w ith paralysis o f lower limbs and inspite of prolonged Consumer I1rotection~ c t--treatment he did not recover fully. His wife, inspite of medical treatment, was not able to carry Basic Feature.,on her ordinary avo cation as housewife because of ailment. His two daughters and a son, allgrowing children were also affected and medical report was that they had severe attack. Theireducational carrier was doomed . Considering all these facts, the Comm ission awarded a sum ofRs. 1,50 ,000/- to the com plainan t and R s. 50,0001- for his wife and Rs. 25,0001- to each of thechildren result ing in awarding of toal of Rs. 2,75,000/- (Barsad Ali vs. ~ a h a ~ i n gDirector,West Bengal Essential Com modities S upplies Corp. 1993,CCJ 476).18.3.4 Deficiencyparallel to 'defect' in case of goods, 'deficiency' is relevant in case of services. Th e expressionin defined under Section 2(1) (g ) of the C onsumer Protection Act, 1986. It ineans any fault,imperfection, shortcoming o r inadequacy in the quality, nature and manner of performancewhich is required to be maintained by o r under any law for the time being in force or otherwisein relation to any service.A nu mber of judicial decisions on deficiency o f service are available. Som e of these are beinggiven here under:I ) Main a Devi B airalia v. Life Insurance Corpo ratidn of Iadia (decided by the NationalComm isison on 11 S.1 99 3). In this case, Maina Devi's husband took a life insurance policy forRs. 50,00 0. Before the second premium fell due, he died due to sudden illness. The claim madeby Smt. Maina D evi, the widow o f the insured, was not entertained for as long as 1 4 years. Itwas only when she got her miseries published in newspapers and certain MPs took up thcmatter in Parliament that she w as sent a cheque for Rs. 50,310.On a su it before National Com missio n, it was held that the Corporation had been highlynegligent in the performance of its services. Smt. Maina D evi, the complainant, had sufferedhardship and loss o n accou nt of deficiency in service. She was held entitled to interest a 12 p.a.from the date of expiry of 3 months from the date of death of assured till the amount was paidto her. The Com missio n also awarded her compensation Rs. 15,000 for mental torture andharassment.2) Telecom District Ma nager v. Um esh Chand ra Patnaik (decided on 15.3.1993). In this case ,the complainant had alleged that he w as not receiving telephone bills regularly and therefore o naccount of non-paym ent of s om e bills his telephone had been disconnected.Held, in the absence of any provision'in the Telegraph Act, on the basis of the rules requiringthat telephone bills should be despatched by registered post, the Department could not be saidto have comm itted any deficiency in service.3) Skypack Couriers Pvt. Ltd. & Ano ther v. MIS. Anupama Bagla (1992). In this case, non-delivery o l a vidco cassette by a cour ier service company resulting in the complainant losing ,admission to the desired college was held to be 'deficiency' in service as the conlplainant wasput to serious hardship and loss by reason of the neglect and failure on the part of the courier todeliver the article entrusted to them for carriage. Accordingly, com pensation of Rs. 10,000 was .warded to the complainant.4) In Lucknow D evelopment Authority v. Roop Kishore Tandon (1990), the failure on thepart of a Housing Board to glve possession of the flat after receiving the price and afterregistering it in favour of the allottee was held to be deficiency in service.5) Airpak C ouriers (India) Pvt. Ltd. V. S. Su resh (decided o n 11.3.1993). A consignment ofimportant papers was handed over to the courier MIS. Airpak Co uriers Pvt. Ltd. The.consignment d id not reach its destination. Th e State Commission held it to be a case ofdeficiency in service and granted a compensation of Rs. 1 lakh for the loss. dIn appeal, the appellant contended that the consignor agreed to the terms and conditions of thecourier that its liability was limited and restricted to Rs. 100 ohly, that according to IAT9regulations no impo rtant documents were to be sent through courier service and since theconsignment was lost in transit, they were liable to the extent of Rs. 10 0 only as damages. Th econsignor was bound to disclose the nature of contents before sending the consignrqent and thevalue of the consignment was not specially stated in the column assigned for it in theconsignment note.


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ConsumerProtectionAct Held, if the documents which were sent were of great value, the consignor ought to haveinsured them. No such sep was taken nor was its value disclosed in the consignment note. Itwas not clear why the consignor could not have sent duplicate copies of the lost documentswhen the loss came to light.The compensation awarded by the State Commission was not justified. Since there had beendeficiency of service, a sum of Rs. 100 only was awarded.6) Indian Oil Corporation Ltd. v. Venkataraman (decided on 18.12.1992). In this case, theState Commission as well as the National Commission held that the supply of a gas cylinderwith a defective value and the failure of the distributor's supplyman to check the defect at thetime of delivery amounted to deficiency of scrvice. Accordingly, the Indian Oil Corporationwas held liable to compensate for loss of life and injury resulting from fire caused by theleakage from the defective value. A sum of Rs. 1,50,000 was awarded.7) State Bank of India v. N. Raveendran Nair (decided on 3.8.i992). A demand draft ofRs. 98,000 was issued by the State Bank of Travancorc on the State Bank of India, Surat. Whenpresented at the drawee branch, the payment was refused on the ground that under thesignature of one of the persons signing the draft, (accountant), the capacity to which he signedthe same was not mentioned. Held, the refusal amounted to deficiency in service and the bankshould be held liable for the inconvenience and consequent loss to the payee of the draft.18.3.5 District ForumDistrict forum means a consumer Disputes Redressal forum established under clause (a) ofSection 9 (Sec. 2 (1) (h)).Section 9 (a) in this regard provides that there shall be established for the purposes of theConsumer Protection Act a consumer Disputes Redressal Forum to be known as the DistrictForum established by the Stae Government in each district of the State by notification. TheState Government may, if it deems fit, establish more than one District forum in a district.18.3.6 GoodsGoods under this Act shall have the same meaning as assigned to them under the sale of goodsAct, 1930 (Sec. 2(7) (i)).Accordingly, Goods means every kind of movable property other than actionable claims andmoney; and includes stock and shares, growing crops, grass and things attached to or fonningpart of the land which are agreed to be served before sale or under the contract of sale (Sec. 2(7) of the Sale of Goods Act, 1930).AreSharesbefore allotmentgoods?The Supreme Corut in Morgan Stanly Mutual Fund v. Kartick Das (1994) 4 (Supreme CourtCases 225), observed that till the allotment of shares takes place, 'the shares do not exist'.Therefore, they can never be called goods.. .it is after allotment, rights may arise as for thecontract (Articles of Asskiation of Company), but certainly not before allotment.18.3.7 ManufacturerSec. 2 (1) (1) of the Act define's'the expression 'manufacturer' to mean any of the followingpersons:i) A person who makes or manufactures any goods or part thereof.ii) A person who does not make or manufacture any goods but assembles parts thereof made- or manufactured by others and claims the end-product to be goods manufactured by

himself. But, where a manufacturer despatches any goods or part thereof to any branchoffice maintained by him, such branch office shall not be deemed to be manufacturer eventhough the parts so despatched to it are assembled at such branch of ice and are sold ordistributed from such branch office.iii) A penon who puts or causes to be put his own mark on any goods made or manufactured

by any other manufacturer and goods and claims such goods to be goods made ormanufactured by himself.


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18.3.8 National Commission'National Commission' means the National Consumer Dispute Redressal Commissionestablished under clause (c) of Section 9 [Sec. 2(1) (k)l.Section 9 (c) provides that there shall be established for the purpose of this Act a NationalConsumer Disptues Redressal Commission established by the Central Government bynotification. The Government vide powers conferred upon it under the said clause established aNational Commission in 1987.18.3.9 PersonAs per Sec. 2(1) (m), 'person' includes:i) a firm, whether registered or not;ii) a Hindu undivided family;iii) a Cooperative Society;iv) every other association of persons whether registered under Societies Registration Act, or

not.18.3.10 Restrictive Thde Practice'Restrictive trade practice', as per Sec. 2(1) (nn) means any trade practice which requires aconsumer to buy, hire or avail of any goods or, as the case may be, services as a conditionprecedeat for buying, hiring or availing of other goods or services.Thus, compelling a consumer to buy insurance cover while purchasing a vehicle, or insistingon purchase of gas-stove as a pre-condition to release gas connection shall be a restrictive tradepractice. \

18.3.11 ServiceSection 2 (1)(0)provides that Service means service of any description which is madeavailable to potential users and includes the provision of facilities in connection with banking,financing, insurance, transport, processing, supply of electrical or other energy, boarding orlodging or both, housing cohstruction, entertainment, amusement or the purveying of news orother information, but does not include the rendering of any service free of charge or under acontract of personal service.Are the services renderedby Government hospitals free of charge?A controversy has been raised with regard to treatment at Government hospitals as to whetherit constitutes a service within the meaning of service under the Act. There are some whobelieve that the treatment in Government hospitals is actually not free inasmuch as it is thetaxpayer's money which goes to fund these hospitals and, if therefore a taxpayer seeks thetreatment, he is paying for the same though indirectly. However, National Commission in

r Consumer Unity and Trust Society (CUTS) v. State of Rajasthan, (1989) held that complaintsagainst government hospitals cannot be entertained under the Act on the ground that personreceiving treatment in such hospitals is not a consumer as the patient does not hire the services

1: of the hospital; moreover, the treatment provided is free of charge, and therefore, it does notamount to 'service'. It further observed that this was their interpretation within the scope of theAct and if the Leigslature intended otherwise, the Act ought to be amended suitably. Rowever,service rendered by doctors in private hospitals for consideration would come under thepurview of service (Cosmopolitan Hospitals v. Smt. Vasantha P. Nair 1992).18.3.12 State Commission

L

It means a Consumer Disputes Redressal Commission established in a State under clause (b) ofSec. 9 (Sec. 2(1) (p)), Clause (b) of Sec. 9 provides that there shall be established for thepurpose of this Act a Consumer Disputes Redressal Commission to be knowh as the StateCommission established by the State Government in the State by notification in the officialGazette.

Conarmer Protection Act-Basic Feahves


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Consumer Pmtection,Act

A trader in relation to any goods means a person who sells or distributes any goods for sale andincludes the manufacturer thereof. Where such goods are sold or distributed in package form,the expression trader shall include the packer of those goods [Sec. 2(1) (q)].18.3.14 Unfair lkade PrgcticeSomewhat similar to the definition of unfair trade practice under the MRTPAct, clause (r) ofsub-section (1) of Section (2) of the Consumer Protection Act defines the expression unfairtrade practice. It is defined to mean a trade practice which, for the purpose of promoting thesale, use or supply of any goods or for the provision of any service adopts any unfair method orunfair or deceptive practice including any of the following practices, namely:1) The practice of making any statement, whether orally or in writing or by visiblerepresentation which-i) falsely represents that 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 rebuilt, 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 whichsuch seller or supplier does not have;vi) makes a false or misleading representation co~cerningthe need for, or the usefulness of,any goods; or services;vii) gives to the public any warranty or guarantee of the performance, efficiency or length of

life of a product or of any goods that is not based on an adequate or proper text thereof.However, where a defenct: is raised to the effect that such warranty or guarantee is basedon adequate or proper test, the burden of proof of such defence shall lie on the personraising such defence;

viii) makes to the public a repiesentation in a form that purports to be, -a) a warranty or gurantee of a product or of any goods or services; orb) a promise to replace, maintain or repair an article or any part thereof or to repeat orcontinue a service until it has achieved a specified result,c) If such purported wahanty or gurnntee or promise is materially misleading or if thereis not reasonable prcvspect that such warranty, guarantee or promise will be camed

out;ix) materially misleads the public concerning the price at which a product or like products or agoods or services, have been or are, ordinarily sold or provided;x) gives false or misleading1 facts disparaging the goods, services or trade of another person.Case Law on Misleading Advertisement and False Representation &Since the concept of 'unfair trade practice' under the Consumer Protection Act is quite new,case-law under the Act is not yet available. But the expression has been eseentially used in thesame sense as under the MRTPAct. Therefore, some cases decided by the MRTP Commission,on the subject, may be considered with advantage.i) Acupressure Therapy Health Centre (1986).The respondents in this case weremanufacturing acupresslsre sandals which they claimed were designed to improve blood

circulation, and keeping the users healthy by walking daily on the chappals for 8 minutesevery morning and evening before meals. The respondents also claimed thatWHO hasapproved of this therapy, When the matter was referred to the All India Institute ofMedical Sciences, it was very clearly stated by way of medical opinion that there was noproven evidence in modern medical literature that acupressure helps treat any ailment.


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and that the scicnce of acupressure was not accepted even in developed countries. Even Consumer P rotection Act-the WHO disclaimed any approval having been granted to the use of such sandals. Bafk FealurFurther, on thc box containing the chappals, it was mentioned that the sandals were not tobe used for more than ten minutes and that heart and blood pressure patients shouldconsult the doctor before using them, but these facts were not mentioned in theadvertisement. The MRTP Commission held that the facts of acupressure thereby werefalse and misleading. According, injection was issues restraining the respondent fromgiving out advertisements containing misleading facts. (ii) DG (I& R), New Delhi v.Principal, Kathiar Medical College, Pa tna (1989). Director General filed anapplication suo mot0 against Principal, Kathiar Medical College, which was registeredunder the Societies Registration Act. It was alleged that the respondent had been givingwrong impression in his publicity material that the college was authorised and equippedto impart medical education leading to M.B.B.S. degree. The college was actually neitherrecognised by the Medical Council of India nor atfiliated to any University.

The Com~nissionheld it to be a case of misleading advertisment amounting to unfair tradeiii) In Snowhite Clothiers (1986), the respondent issues adveitisements promising discountsup to 50% upon stating in the advertisements "Drop in for unbelievable bargain in men's,ladies and children wear". The Commission ruled that the advertisements weremisleading in that the normal price was not shown, the bargain sale period was notindicated- 'till stocks last' was held a vague tenn.iv) !n Panama Textiles, Bombay (1987), the dealer was found to have conducted thebargain in the name and style 'ZAPATA' at YWCA, Ashoka Road, New Delhi and atNDMC Hall Punchkuin Road, New Delhi. In the impugned 'bargain sale', the said dealerwas found to have sold spurious/sub-standard suiting, etc. falsely claiming that to be ofwell-known brands manufactureh by M/s Ra~nondWoollen Ltd., Grasim Industries Ltd.,M/s Bombay Dyeing, etc. Held the delaer had indulged in an unfair trade practice.2) Pennits -

i) The offering of gifts, prizes or other items with the intention of not providing themas offered or creating impression that something is being given or offered free ofcharge when it is fully or partly covered by the amount charged in the transaction asa whole;ii) the co ~d uc tof any context, lottiery, game of chance or skills, for the purpose ofpromoting, directly or indirectly, the sale, use of supply of any product or anybusiness interest.

4) Permits the sale or supply of goods intended to be used, or are of a kind likely to be used,by consumers, knowing or having reason to believe that the goods do not comply withthe standards prescribed by competent authority relating to performance, composition,contents, design, construction, finishing or packaging as are necessary to prevent orreduce the risk of injury to the person using the.goods.Thus, sale of helmets without IS1 certification will amount to an unfair trade practiceunder this clause.

5 ) Permits the hoarding or destruction of goods, or refuses to sell the goods or to make themavailable for sale or to provide any service, if such hoarding or destruction or refusalraises or tends to raise or is intended to raise, the cost of those or other similar goods orservice.No relief to consumers in the case of unfair trade practice and restrictive trade practice. In thecase of these two practices, all that the District Forum may order is to discontinue them, or notto repeat them.The Act does not provide for:i) any relief to the consumers who have suffered as a result of such practices.i any penal action for the practices, or their repetition later on.It may be mentioned that section 128 of the MRTPAct, 1969 makes a provision for payment ofcompensation in such types of cases.


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Consumer Protection Act Check Your Progress 2Note: i) Use the space below for your answers.

ii) Check your progress with the model answers given at the end of the unit.1) What in your opinion are theathree most important features of the Consumer Protection

Act, 1986.

2) State, if the following are the consumdrs under the Consumer Protection Act, 1986:i) Purchase of a sewing machine for earning her livelihood.ii) A person registered for gas-connection but before allotment of the same.iii) User of electricity

...............................................................................................................................................3) Are the following 'goods' under the Consumer Protection Act, 1986:

i) Growing cropsii) Shares before allotment

...............................................................................................................................................4) Shall the following scrvices be covered under Consumer Protection Act, 1986:

i) The services rendered by the doctors of A11 India Institute of Medical Sciences.ii) Services rendered by doctors of a nursing home.iii) Professional services of a lawyer engaged by a client.iv) Services rendered hy a lawyer appointed on a salary by a company.

18.4 LET US SUM UPThe Consumer Protection Act, 1986 is a consumer specific legislation designed to provide forspeedy and inexpensive remedy to the consumers. The Act for the first time gives statutoryrecognition to the rights of the consumers. Three-tier redressal machinery at the District, State


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and the National level has been constituted. The Act offers remedies to consumers not only inrespect of defects in goods or deficiencies in services but also for overcharging and a host ofunfair and restrictive trade practices.

Consumer Protection Act-Basic Features

18.5 KEY WORDSForum (Fora): Any place for public discussion.Natural Justice: Justice, based on the innate morale sense.

18.6 SOM E USEFUL BOOKSRam J. Markin, 1980 : Marketing, New York.Francis Cherumilan, 1991 : Business and Government, New York.P.K. Majumdar, 1995 : Law of Consumer Protection in India, New Delhi.

18.6 ANSWERS OF CHECK YOUR PROGRESS EXERCISESCheck Your Progress 11) Seee section 18.2Check Your Progress 21) The three most important features of the Consumer Protection Act, 1986 are:

a) This is first legislation of its kind inasmuch as it provides for reliefs against differentkinds of exploitation including defective goods, unsatisfactory or deficient services,restrictive and unfair practices.

b) The Act provides for speedy and inexpensive redressal of grievances throughthree-tier machinery at the District, State and National level.It is an Act which also provides for inexpensive method of seeking relief. No courtfee or any other charge is to be paid. Moreover, the consumer can argue his own case.Engaging an advocate is not necessary.

c) This Act gives statutory recognition to the right of consumers.2) i) Yes..Purchase of sewing machine for earning livelihood is not a purchase forcommercial purpose.

ii) Yes. See Mahindra Gas Enterprises v. Jagdish Poswd(1992).iii) Yes. Refer to the National Commission decision in Y.N. Gupta v. DESU (1992).

3) i) Yes. See definition of 'goods'.i ii) Yes. See decision of the Supreme Court in Morgan Stanley Mutual Fund v. Kartick

Das (1994)- 4) i) No. Refer to National Commission decision in consumer Unity and Trust Society v.State of Rajasthan (1989).

ii) Yes. (Cosmopolitan Hospitals v. ~ m t .Vasantha P. Nair).iii) Yes. Such services cannotbe regarded as personal services and thus are not exempted.iv) No. See National Coqmission decision in A.C. Modagi v. Cross well-Tailor(1991).

role and scope of three tier redressal machinery

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