LexOrates

The Consumer Protection Act, 1986

Author, Javed Razack, Advocate

To fulfill the objects of the Act the Central Government has established the Central Consumer Protection Council, and the State governments have established the District forums and the State Consumer protection Council in their respective states. A complaint may be made by either the consumer, the government, a recognised consumer society or by one or more consumers having a common interest, within two years of the grievance arising.

A few instances when such a complaint may be made include losses caused to a consumer as a result of unfair trade practice, defect in goods, deficiency in services, charging in excess of price displayed etc. Once the complaint has been received the other party will be asked to give their version of the case. If the matter pertains to defective goods, the same may be sent to a laboratory for testing. If it relates to a service matter then both parties shall be asked to produce evidence in support of their claims. If the authority is convinced that the complaint is valid then it may order the producer to remove the defect, replace the goods, return the price paid by the consumer, or pay an amount to the consumer as compensation for any loss or injury suffered. An appeal may be made against such orders to the next highest authority If a trader or any person against whom an order has been made, fails to comply with the order then they may be fined or imprisoned. On the other hand if a complaint is found to be frivolous or malicious then the complainant may be fined.

One of the major developments in the Consumer protection Act has been with respect to whether services provided by the medical profession, especially when it is a free service as in the case of government hospitals can fall under the act. It had been argued that technically such professions do not provide any contracts ‘for services’. The courts however keeping in mind the fact that the Act was intended to protect consumers have held that all professional services whether free or paid for would render a person a consumer under the Act.

The procedures under the Act and under the Commissions are relatively simpler and more informal than under normal litigation. In fact any consumer can appear before the commission and need not even hire a lawyer to argue one’s case. Despite the simple procedures there have not been too many consumer cases in India unlike the United States where the courts are filled with consumer grievances.  One of the reasons for this fact has been the lack of adequate consumer awareness of their rights in India and the seemingly intimidating structure of courts and the legal profession. However to its credit, it must be said the Consumer Protection Act remains one of those rare laws which allows for a speedy and simple protection of the rights of ordinary people, and judicious use of the same would foster a greater consumer movement in India in this age where the market is flooded with more products but not necessarily more information.

Q. How is my right as a consumer protected under the Consumer Protection Act?

A. The rights of the consumers are invoked in the Indian Legal System through the mechanism provided in the Consumer Protect Act (CPA). The CPA provides for establishment of Consumer Protection Councils – Advisory and recommendation bodies The Consumer Protection Councils exist at the National, State and District Level. They are basically advisory bodies who meet at least 3 times a year to discuss and review consumer protection measures and issues. Two thirds of the members of these councils are non-official including representatives of women and consumer organisations. Redressal Forums – Courts The CPA provides for a three-tier quasi judiciary machinery at the national, state and district levels. The District Forum has jurisdiction to entertain complaints where the value of goods / services complained against and the compensation claimed is less than Rs. 5 lakhs, the State Commission for claims exceeding Rs. 5 lakhs but not exceeding Rs. 20 lakhs and the National Commission for claims exceeding Rs. 20 lakhs.

Q. Where should one complain?

A. If the value of the services and compensation asked for is a. < Rs 5 lakhs then one can complain to the District Forum at the District Headquarter, b. > 5 lakhs and within Rs. 20 lakh the complaint can be filed before the concerned State Commission at the State Capital. c. >20 lakhs the complaint can be filed before the National Commission. If the consumer is not satisfied with the Judgment of the District Forum, he/she can file and appeal to the State Commission. Similarly, appeal against an order of a State Commission lies before the National Commission. Appeal against an order of the National Commission has to be filed before the Supreme Court of India.

Q. What is method of filing a complaint?

A. A complaint shall be instituted in the District Forum within the local limits of whose jurisdiction the opposite party (or any one of the opposite parties where there are more than one) or the defendant actually and voluntarily resides or carries on business, or has a branch office or personally works for gain at the time of institution of the complaint provided that the other opposite party/parties acquiescence in such institution or the permission of the Forum is obtained in respect of such opposite parties; or the cause of action arises, wholly or in part.

Who is a consumer?

All of us are consumers of goods and services.

A consumer under the act is:

“One who buys any goods, hires any service or services for consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment.

Note: A person is not a consumer if he purchases goods for commercial purpose or resale purpose. However, a person is consumer if he purchases goods for the purpose of earning his livelihood by means of self-employment.

Many acts enacted earlier are in force, whether enforced or not. Under any of these acts, one can seek redressal through the courts of law. But, ‘Consumer Protection Act’ (Act 68 of 1986) provides for redressal through specially-constituted agencies at different levels

A glimpse of the provisions is presented herein below

1.      It provides for the notification of Central and State Consumer Protection Councils by the respective governments with a view to protect the rights of consumers such as,

  • the right to be protected (against hazardous goods)
  • the right to be informed (about quality, quantity, against unfair trade practices, etc)
  • the right to be heard (of complaints),
  • the right to seek redressal (through appropriate agencies), and
  • the right to consumer education

2.      To promote and protect the rights of the consumers with regard to defective goods, deficient services, overcharging or any unfair trade practices (as defined under MRTP ACT 1969). It includes false statement on quantity or grade of goods/services, false claims to sponsorship, making false and misleading promises on the articles, false projection of the needs for or usefulness of goods/services, giving warranty on products not based on adequate or proper test, and the like, whether made orally or in writing or by visible representation.

Who can a file a complaint?

  • A consumer (As above)
  • Any registered voluntary consumer organisation
  • The Central Government
  • The State Government

When can a complaint be filed?

Under the Act, a complaint can be made in writing in the following circumstances:

  • If you have suffered loss or damage as a result of any unfair trade practices adopted by the trader.
  • If the services hired/availed of suffer from deficiencies in any respect.
  • If you have been charged a price in excess of the price displayed or fixed by or under any law for the time being in force.
  • If, the goods hazardous to life and safety, when used.

How can you file?

The complaint is to be filed within two years from the date on which cause of action has arisen

There is no fee for filing a complaint. Even an affidavit does not need stamp papers. A complaint can be sent by post or presented in person by complaint or his authorised agent.

Usually the Forums Require 3-5 copies of complaint.

What information should a complaint contain?

Complaint should contain the following information:

  • Name and complete address of complainant
  • Name and complete address of the opposite party or parties as the case may be.
  • Date of purchase/service obtained.
  • Amount paid for consideration.
  • Items of goods with quantities/nature of service.
  • Whether the complaint relate to unfair trade practice/defective goods’ deficient service/charging excess price.
  • Copies of bills/vouchers/receipts and copies of correspondence made, if any.
  • The relief sought-Under the Act.

Remedies

The forums/Commissions can order the following relief:

  • Removal of defects from the goods
  • Replacement of the goods
  • Refund of the price paid.
  • Award of compensation for the loss or injury suffered.
  • Removal of defects or deficiencies in the services.
  • Discontinuance of unfair trade practices/restrictive trade practices and directing not repeating them.
  • Withdrawal of the hazardous foods from being offered for sale.
  • Award for adequate costs to practice.

Appeals against

District Forum ————– Within 30 days —— In State Commission

State Commission ——— Within 30 days —— National Commission

National Commission —— Within 30 days —— Supreme Court

There is no fee for filing appeals in the State and National commissions.

Procedure is the same as that complaint except that the application has to be accompanied by the copies of the orders appealed against with reasons for filing appeals.

Why the Consumer Protect Act?

Because a consumer has a RIGHT to

  • SAFETY
  • INFORMATION
  • CHOOSE
  • BEHEARD
  • REDRESSAL
  • CONSUMER EDUCATION

CONSUMER ….. COMMERCIAL PURPOSE ….  A DETAILED CASE STUDY

Consumer Protection Act can be described as common mans civil court. The Act is designed to make available cheap and quick remedy to a consumer.

The object of the act is to protect the consumer forum the exploitative and unfair trade practices to provide inexpensive, easily accessible and speedy remedy. Basically consumer protection is a social beneficial legislation.

Consumer protection Act is a beneficial legislation intended to confer some speedier remedy from being exploited by unscrupulous traders.

The main object of the act is to provide for better protection of interests of consumer.

CONSUMER:

The intention and object of the Consumer Protection Act, is to provide a speedy remedy and for better protection of interests of consumer.

The Consumer Protection Act, 1986 has defined the term CONSUMER. Only the complainant who falls under the definition of Consumer can be benefited through Consumer Protection Act. Hence the definition of CONSUMER is of much importance to determine the applicability of the Act.

CONSUMER AS DEFINED U/SEC 2(1)(d) OF THE ACT:

“Consumer” means any person who-

Buys any goods for a consideration which has been paid or promised or partly paid and partly promised, under any system of deferred payment, and includes any user of such goods 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.

Explanation: “commercial purpose” does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment;]

DEFINITON OF CONSUMER COVERS

  • One who buys goods for a consideration for personal use
  • One who obtains goods on hire purchase or lease
  • One who uses such goods with the permission of buyer of goods
  • One who buys goods exclusively for purpose of earning his lively hood as self employment
  • One who hire/ avails of any services for a consideration
  • One who uses the services with permission of person who has hired the services
  • One who obtains the services on deferred payment basis

COMMERCIAL PURPOSE:

We can observe from the definition of consumer that a person who obtains goods for resale or for commercial purpose is not covered. Such person is not a consumer and he cannot be benefited through Consumer Protection Act.

The act has also clearly given an explanation in regard to commercial purpose.

The act provides that a person who bought goods for self employment will be eligible as “Consumer”.

Example: A person buying one truck or tempo or sewing machine or one computer will be considered as consumer for the purpose of this act.

But if a person buys 2 typewriters, out of which one is used by a person employed by him, he will not be eligible under CPA as person is buying the goods for resale or commercial purposes is not a consumer.

MEANING AND INTERPRETAION OF THE TERM “COMMERCIAL PURPOSE” ….. ESTABLISHED CASE LAWS:

As for the interpretation of term commercial purpose in the

Western India State Motors Vs Subhag Mal Meena & others

(Appeal No. 12/89, order dated 8.11.1989 it was held by the National Commission that a vehicle purchased for the purpose of running as taxi was undoubtedly a purchase for commercial purpose.

Any economic activity or transaction carried on with the motive of making profit would fall under the term “Commercial Purpose”.

Synco Textiles Pvt Ltd Vs Greaves Cotton & Co. Ltd (1991) CPJ 499

The National Commission observed the main determinants of character of a transaction – whether it is for a commercial purpose or not are immediate purpose as distinct from the ultimate purpose

Buyers of goods or commodities for self consumption were held to be consumers.

A purchase of goods could be said to be for a commercial purpose only if two conditions were satisfied, namely

A) The goods must have been purchased for being used in some profit making activity on a large scale

B) There should be close and direct nexus between the purchase of goods and the profit-making activity.

Laxmi Engineering Works V P S G Industrial Institute (1995 3 SCC 583 SUPREME COURT)

It was held that explanation to sec 2(1)(d) was of clarificatory in nature. It further observed that whether the purpose for which a person had bought goods was commercial purpose was always a question of facts and to be decided in the facts and circumstances of each case.

If the commercial use was by the purchaser himself of earning his livelihood by means of self employment such purchaser of goods would yet be a consumer.

The Supreme Court further observed that if a person who purchased a machine to operate it himself for earning his livelihood, he would be a consumer. But if a person purchases a machine and appoint or engage another person exclusively to operate the machine, then such person would not be a consumer.

Bhuperndra Guna Vs Regional Manager and others (II 1995 CPJ 139)

The National Commission held that a tractor purchases primarily to till the land of the purchaser and let or on hire during the idle time to till the lands of others would not amount to commercial use.

Super Engineering Corporation Vs Sanjay Vinayak Pant Kores (India) Ltd Vs Samir Purkayastha (1996) 4 CTJ  579

National Commission, in a given case a farmer had purchased seeds from a party. The seeds did not germinate. The other party took the plea that I was not a consumer. Whether purchase of seeds for the purpose of agriculture is purchase for commercial purpose?

Purchase made for agriculture is not for commercial purpose. Therefore, the complainant is a consumer and entitled to seek redressal of his grievance in a Consumer Court against the party which supplied defective seed to him.