CONSUMER PROTECTION ACT

CHAPTER 9

CONSUMER PROTECTION ACT, 1986

Transition from `Caveat emptor` to `Caveat vinditor`

· A consumer is a user of goods and services. Any person paying for goods and services, which he uses, is entitled to expect that the goods and services are of a nature and quality promised to him by the seller. Only in 1932 it was firmly established by a House of Lords decision in Donoghue v. Stevenson (the `snail in the ginger-beer `case) that manufacturers owed a duty to the ultimate consumer to take care in making their goods where there is no likelihood of their being examined before they reach the ultimate consumer. The origin of this judicial principle lie in the fact that in today's mass production economy where there is little contact between the producer and consumer, often sellers make exaggerated claims and advertisements, which they do not intend to fulfill. This leaves the consumer in a difficult position with very few avenues for redressal. The onset on intense competition also made producers aware of the benefits of customer satisfaction and hence by and large, the principle of " consumer is king" is now accepted – a transition from the principle of `Caveat emptor` to `Caveat vinditor`.

Source of the Consumer Protection Act, 1986

· The need to recognise and enforce the rights of consumers was recognised by the legislators for quite some time now. In India, we have the Indian Contract Act, the Sale of Goods Act, the Dangerous Drugs Act, the Agricultural Produce (Grading and Marketing) Act, the Indian Standards Institution (Certification Marks) Act, the Prevention of Food Adulteration Act, etc which to some extent protect consumer interests. However, these laws required the consumer to initiate action by way of a civil suit, which involved lengthy legal process proving, to be too expensive and time consuming for lay consumers. Therefore, the need for a more simpler and quicker access to redressal to consumer grievances was felt.

· On April 9, 1985 the UN General Assembly with due negotiations in the UN Economic and Social Council (ECOSOC), adopted by consensus a set of guidelines on Consumer Protection serving as a vital lobbying tool both nationally and internationally. India being a constituent member of United Nations enacted the Consumer Protection Act 1986 on 23^rd May 1986.

· The Act is in true essence public welfare legislation. The hall marks of that jurisdiction have rightly been highlighted as the simplicity and inexpensive nature thereof, the summary procedure provided for trials therein, and the expeditious disposal of the consumer dispute within a time bound frame.

SOME IMPORTANT DEFINITIONS [SECTION 2]

· Complaint - any allegation in writing made by a complainant with a view to obtaining any relief provided by or under this Act.

Nature of complaint

(i) an unfair trade practice or a restrictive trade practice has been adopted by any trader or service provider

(ii) the goods bought by complainant suffer from one or more defects;

(iii) the services hired or availed of suffer from deficiency in any respect;

(iv) a trader or the service provider, has charged for the goods or for the services a price in excess of the price­

(a) fixed by or under any law for the time being in force; (Ex – telephony rates fixed by TRAI)

(b) displayed on the goods or any package containing such goods;

(c) displayed on the price list exhibited by him by (Ex – Petrol, Diesel prices by Petrol pumps);

(d) agreed between the parties (contracted price) ;

(v) goods or services which will be hazardous to life and safety are being offered for sale to the public,­

· Consumer - any person who­

(i) buys any goods for a consideration, or

(ii) hires or avails of any services for a consideration;

q It must be noted that a person who buys goods or avails services for commercial purposes is not a consumer.

q However, where a person buys goods or avails services exclusively for the purposes of earning his livelihood by means of self-­employment is a consumer.

q The Act has not confined itself to the original hirer alone, but equally extended it to the subsequent beneficiaries of the services as well.

CASE EXAMPLE

Parent who brings the child to hospital is 'consumer'. The child, who is beneficiary of the services is also a consumer (Spring Meadows Hospital v. Harjot Ahluwalia)

· Defect - any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard,

q which is required under any law to be maintained by or

q under any contract, express or implied or

q as is claimed by the trader in any manner whatsoever in relation to any goods;

· Goods - goods as defined in the Sale of Goods Act, 1930.

CASE EXAMPLE

Stocks and shares are included in the definition of the goods. In these circumstances the complaint in regard to the shares lies before the District Forum. (LC Chandgotya V. Northern Leqsing and Industries Ltd.)

NATIONAL INSURANCE CO. LTD. v. SKYGEMS [2002(1) SCALE 94].

FACTS: The respondent, dealer in precious stones, had sent two parcels of emeralds by registered post duly insured to a consignee in London but the parcels did not reach their destination. The investigators appointed by the insurer confirmed that the parcels were either lost in transit or were stolen. The postal authorities admitted their liability and made payment of postal charges in respect of each parcel. The insured agreed to settle the claim. But the respondents insisted that the payment of the insured amount be made in Pound Sterling in London. The insurer denied its liability to pay the amount in Pounds sterling on the ground that the title in the goods had not passed to the consignee and that it (the respondent) continued to be the owner of the goods and so the payment could be made only in Indian Rupees.

The National Consumers Disputes Redressal Commission held that as the insurance policies clearly stated that the claim was payable at London and the insured value was in terms of Pounds Sterling the insurer should pay the amount in Pounds Sterling.

In appeal to the Supreme Court the respondent reiterated its claim that the insurance policy specifically stated that the amount was payable at London and that it should be paid only in Ponds Sterling at London and not in Indian rupees in India.

Allowing the insurer's appeal, the Supreme Court held:

DECISION AND REASONS: Having regard to the facts and circumstances the appellant could not be said to be liable to pay the insurance amount in Pounds Sterling.

From the correspondence between the parties it was evident that the consignee did not pay the value of the missing parcels to the respondent nor was there any evidence to show that the documents were endorsed in favour of the consignee and transferred to them. The title to the goods had not clearly passed to the consignee and the respondent consignor continued to be the owner having insurable interest in the goods.

The right of the buyer to claim the policy amount would arise when he obtained title to the property and produced the documents of transfer. This clearly showed that the title had not passed to the consignee in London. Under such circumstances the respondent was not entitled to receive the payment in Pounds Sterling. The National Commission erred in stating that the insurance amount was payable at London.

In Harjot Ahluwalia (Minor), Spring Meadows Hospital an unqualified nurse gave wrong intravenous injection to a minor child, due to which the minor child suffered irreparable brain damage. The child now has to live vegetative and helpless life forever, requiring lifelong care and attention. The doctor as well as the nurse was found to be negligent and compensation of Rs 12.50 lakhs to the child, plus Rs 5.00 lakhs to the parent (for mental agony) were awarded.

CONSUMER PROTECTION COUNCILS

· The objects of the Councils shall be to promote and protect the rights of the consumers including the right to consumer education.

Classification of Council	Central Consumer Protection Council [SECTION 4]	State Consumer Protection Council [SECTION 7]	District Council [SECTION 8A]
Estab. Authority Composition q Chairman q Other official or non-official members. Term Place of Council Meetings	Central Government ­ Minister in charge in the Cent. Govt. (i) 8 M.P.—5 from LS, 3 from RS. (ii) Secy.-National Comm. for SC & ST. (iii) 20 – Repr. Of Cent. Govt.& Autonomous Org. with consumer interests (iv) Registrar, National Consumer Disputes Redressal Commission (v) 35 - Consumer Orgns. (vi) 10 – Women (vii) 20 – Trade & Industry (viii) 15 – Persons for Consumer Interest Member-secretary -Secretary in-charge of Consumer Affairs in the Central Government. 3 years Delhi At least one meeting every year	State Government Minister in charge in the State Govt. (i) 8 – 5 MLA & 3MLC (ii) 10 – State Govt. Repr. (iii) 5 – Women Repr. (iv) 5 – Trade & Farmers Repr. (v) 1 – Persons for Consumer Interest. Generally 3 years State capital At least two meetings in a year	State Govt. Collector of the district (As per respective State Rules) Generally 3 years District HQ At least two meetings in a year.

CONSUMER DISPUTES REDRESSAL AGENCIES

Appellate Authority	National Consumer Disputes Redressal Commission [SECTION 20]	State Commission [SECTION 16]	District Forum [SECTION 10]
Composition q President q Members (persons of ability, integrity and standing and have adequate knowledge or experience) q Term Jurisdiction Penalty Time limit for completion of hearing Judicial Powers/Interim Relief Summary Trial Principal Bench Appellate Authority Enforcement power Limitation period	Judge of the Supreme Court to be appointed by the Cent. Govt. in consultation with the Chief Justice of India. 4 (1 Woman) – Appointed by Cent. Govt. on the recommendation of a selection committee. 5 years` or 70 years` (whichever earlier) (i) Complaints - value of the goods or services and compensation, if any, claimed exceeds Rs. One crore and (ii) Appeals against the orders of any State Commission. Imprisonment up to 3 years` with or without fine upto Rs. 10,000 90 days` or 150 days` (in case of lab. Tests) Vested with powers of 1st Class Judicial Magistrate Enabled; New Delhi; Circuit Bench Supreme Court within 30 days` with 50% of award money. As arrears of Land & Revenue 2 years` from the cause of action.	Judge of the High Court to be appointed by State Govt. in consultation with Chief Justice of High Court. 2 (1 Woman) – Appointed by State Govt. on the recommendation of a selection committee 5 years or 67 years (whichever earlier). Complaints - value of the goods or services and compensation, if any, claimed exceeds Rs. 25 lakhs upto Rs. One Crore. Imprisonment up to 3 years` with or without fine upto Rs. 10,000 90 days` or 150 days` (in case of lab. Tests) Vested with powers of 1st Class Judicial Magistrate Enabled State Capital National Commission within 30 days` with 50% of award money or Rs. 35,000 (whichever less). State Capital; Circuit Bench at other cities. As arrears of Land & Revenue 2 years` from the cause of action	District Judge to be appointed by the State Govt. in consultation with the Chief Justice of State High Court. who shall be its President; 2 (1 Woman) – Appointed by State Govt. on the recommendation of a selection committee 5 years or 65 years (whichever earlier). Complaints - value of the goods or services and compensation, if any, claimed upto Rs. 25 lakhs. The concerned State within which either of parties actually and voluntarily resides or carries on business or has a branch office or personally works for gain. Imprisonment up to 3 years` with or without fine upto Rs. 10,000 90 days` or 150 days` (in case of lab. Tests) Vested with powers of 1st Class Judicial Magistrate Enabled District HQ State Commission within 30 days` with 50% of award money or Rs. 25,000 (whichever less). As arrears of Land & Revenue 2 years` from the cause of action

PROCEDURE OF FILLING COMPLAINT

· Who can file a complaint?

(i) A Consumer.

(ii) Any registered Voluntary Consumer Organization.

(iii) The Central or State Government.

(iv) One or more consumers on behalf of numerous consumers who are having the same interest.

· When a complaint can be filed?

A complaint can be filed in writing if: -

a. Consumer has suffered loss or damage as a result of any unfair Trade Practice.

b. The goods purchased suffer from any defect;

c. The trader has charged a price in excess of the price displayed or fixed by any law for the time being in force;

d. The goods hazardous to life and safety are being offered for sale to public.

e. The services hired or availed of, suffer from any deficiency.

· Where a complaint can be filed?

q If the cost of goods or service and compensation asked for is:

up to Rs. 25.00 lakhs - District Forum.

more than Rs. 25.00 lakhs and up to Rs. 1 crore - State Commission.

more than Rs. 1 crore - National Commission.

q A model form has been provided for filing of the complaint for the convenience of the consumer.

q The complaint/reply should be supported with affidavit of party and witnesses, if any.

APPEAL/REVISION

· Any party aggrieved form the final order of District Forum may appeal to State Commission within 30 days. Similarly, any party aggrieved from the final order passed in original complaint decided by the State Commission may appeal to National Commission within 30 days.

· Order passed by National Commission in complaint filed before it is appeal able in Supreme Court within 30 days. Appeal may be preferred as per model form along with certified copy of order.

· Any order, which is not final order, may be challenged in revision before higher respective Commission.