NATURE & EVOLUTION OF CONSUMER LAWS

Introduction
The importance of the Act lies in promoting welfare of the society by enabling the consumer to participate directly in the market
economy. It attempts to remove the helplessness of a consumer who faces powerful business, described as, a network of rackets
or a society in which, producers have secured power to rob the rest and the might of public bodies which are degenerating into
storehouses of inaction where papers do not move from one desk to another as a matter of duty and responsibility but for
extraneous consideration leaving the common man helpless, bewildered and shocked. The malady is becoming so rampant,
widespread and deep that the society instead of bothering, complaining and fighting against it, is accepting it as a part of life. The
enactment in these unbelievable yet harsh realities appears to be a silver lining, which may in course of time succeed in checking
the rot. [Lucknow Development Authority v. M.K.Gupta, 1994 (1) SCC 243]
The aforesaid law if implemented with diligence and force by all concerned, including the State Government, consumers of
justice would not be frustrated.
The present market scenario revels that instead of the consumer being a king, he is an object of exploitation. To prevent such
exploitation and to give relief to consumers, Consumer Protection Act, 1986 is enacted. One of the main objects of the Consumer
protection Act is the right to be protected against the marketing of goods and services which are hazardous to life and property.
The other object consists of that consumer is entitled to know about the quality, quantity, purity, standard and price of the goods
or services, and also to get redressal against unfair trade practices.
Nature and time changes, so changes the preference. There was a time when manufacturing and manufacturer had the upper hand.
Right from the day when Labour Legislation started, effort was made by various enactments to recognize the privileges of the
labour and the management. Nobody bothered about the segment of society which consumed the good manufactured by these
two. Consumer was always at the receiving end.
Judiciary in cases like Dongue v. Stevenson for the first time recognized the right of the consumer but for the first time Consumer
Protection Act gave statutory recognition to the right of consumers.
The act is confined to consumer of goods and also includes services therein which is called deficiency in services. The consumer
themselves are not aware of their rights under the Consumer protection Act. This effort now aims at to circulate and make people
aware of the rights when goods purchased therein suffers from deficiency or in services or in quality in supply.
Evolution of Consumer Laws
With the evolution of mankind from stone age to the present day social welfare stage, the relationship between the suppliers of
goods and services and the consumers has undergone radical changes. Earlier the production was for self-consumption which
gave place to the barter system and then to the exchange of goods and services through currency and lately by cheques and credit
and debit cards. The present day market system is most complex which is not only confined to the national level but has assumed
international character. Buyer Beware as a rule had been applicable for many years which implies that the buyer should buy the
goods and services after being satisfied that there is no defect in the title, quality or the quantity of the same.
This principle is however, not applicable to the full extent in the present day market system. Human wants for the goods and
services are unlimited whereas the resources for the production of these goods and services are scarce and therefore, the
economic theory has to decide how to use the scarce resources or means for obtaining the maximum satisfaction or utility for the
members of the society. Similarly every individual consumer has to decide how to get the maximum satisfaction from the
purchase of goods and services with his limited resources or means.

Laws in the Medieval and Modern Period
In the medieval period, consumer protection continued to be of prime concern of the rulers. During Muslim rule, a large number
of units of weights were used in India.During the Sultanate period, the prices used were determined by local conditions.During
the rule of Alauddin Khalji,strict controls were established in the market place.In those days, there was unending supply of grain
to the city and grain-carriers sold at prices fixed by the Sultan. There was a mechanism for price-enforcement in the market.
Similarly, shop-keepers were punished for under weighing their goods.
In the modern period, the British system replaced the age old traditional legal system of India. However, one of the outstanding
achievements of British rule in India was the formation of a unified nationwide modern legal system. During the British period,
the Indian legal system was totally revolutionized and the English legal system was introduced to administer justice. However, it
is important to note that the traditions and customs of the Indian legal system were not ignored. The law itself underwent
considerable adaptation. The British institutions and rules were combined with structural features [e.g. a system of separate
personal laws] and rules [e.g. Dharma, and local custom] which accorded with indigenous understanding. The borrowed elements
underwent more than a century and a half of pruning in which British localisms and anomalies were discarded and rules were
elaborated to deal with new kinds of persons, property and transactions. To administer justice, they were confronted with the
problem of the value suitable to attach in practice to the Indian traditions and customs.
Some of the laws which were passed during the British regime concerning consumer interests are: the Indian Contract Act of
1872, the Sale of Goods Act of 1930, the Indian Penal Code of 1860, the Drugs and Cosmetics Act of 1940, the Usurious Loans
Act of 1918, and the Agriculture Procedure (Grading and Marketing Act) of 1937. These laws provided specific legal protection
for consumers. For fifty-five years, the Sale of Goods Act of 1930 [SGA] was the exclusive source of consumer protection in
India. The SGA, drafted with precision, is an admirable piece of legislation.46 It is also praised as a Consumers Charter.
The main protection for the buyer against the seller for defective goods is found in Section 16 of the Act. It provides exceptions
to the principle of Caveat emptor (let the buyer beware) and the interests of the buyer are sufficiently safeguarded. Phrases
such as skill and judgment of the seller, reliance on sellers skill, and the test of merchantable quality provide effective
remedies to buyers. Courts interpreted these rules in the consumers favor. The SGA was the exclusive consumer legislation until
1986, with the passage of the Consumer Protection Act of 1986, designed to supplement the remedies already provided under the
SGA.
Consumer protection was also provided within Indias criminal justice system. The Indian Penal Code of 1860 has a number of
provisions to deal with crimes against consumers. It deals with offenses related to the use of false weights and measures, the sale
of adulterated food or drinks, the sale of noxious food or drink, and the sale of adulterated drugs.
The orthodox legal requirements under the law of torts and contracts forced the policy makers to craft specific legislation to
protect consumers. As a result, the Consumer Protection Act of 1986 was enacted with the objective of providing cheap, simple
and quick justice to Indian consumers.
Consumer Protection
Consumer protection is always a matter of great concern. In ancient India, effective measures were initiated to protect consumers
from crimes in the market place. Ancient law givers ably described various kinds of unfair trade practices and also prescribed
severe punishments for wrong doers. Mainly, acts of adulteration and false weights and measures were seriously dealt with. In
ancient India, the king was the supreme authority to render justice, but his authority was circumscribed by the rules of Dharma. In
the medieval period, some Muslim rulers developed well organized market mechanisms to monitor prices and the supply of
goods to the markets. During the British period, the modern legal system was introduced in India and many laws were enacted to
protect the interests of consumers generally. Today, the civil justice system is tainted with deficiencies that discourage the
consumer from seeking legal recourse. However, the Consumer Protection Act of 1986, which provides easy access to justice,
has brought a legal revolution to India as a result of its cost effective mechanisms and popular support. At the same time, these
mechanisms pose a great legal challenge to the traditional courts which conduct litigation in orthodox ways. In this age of
consumers, the regime of Indian consumer law will undoubtedly rule Indian markets and bestow a new phase on the existing
Indian legal structure with its strong ancient legal foundations.
Consumerism
One could be forgiven for thinking that consumerism was largely invented by Mr. Ralph Nader, the well-known American
Advocate. History of protection of Consumers rights by law has long been recognized dating back to 1824. Every year the 15th
of March is observed as the World Consumer Rights Day. On that day in 1962 President John F. Kennedy of U.S. called upon the
U.S. Congress to accord its approval to the Consumer Bill of Rights. They are (i) right to choice; (ii) right to information, (iii)
right to safety and (iv) right to be heard. President Gerald R. Ford added one more right i.e. right to consumer education. Further
other rights such as right to healthy environment and right to basic needs (Food, Clothing and Shelter) were added. In India we
have recently started celebrating 24
th
December every year as the National Consumer Rights Day.
In the history of the development of consumer policy, April 9, 1985 is a very significant date for it was on that day that the
General Assembly of the United Nations adopted a set of general guidelines for consumer protection and the Secretary General of
the United Nations was authorized to persuade member countries to adopt these guidelines through policy changes or law. These
guidelines constitute a comprehensive policy framework outlining what governments need to do to promote consumer protection
in following seven areas:
Physical safety;
Protection and Promotion of the consumer economic interest;
Standards for the safety and quality of consumer goods and services;
Distribution facilities for consumer goods and services;
Measures enabling consumers to obtain redress;
Measures relating to specific areas (food, water and pharmaceuticals) and
Consumer education and information programme.
The factors responsible for legislations to protect consumers rights are as follows:
o rapidly increasing variety of goods and services which modern technology has made available;
o growing size and complexity of production and distribution system;
o high level of sophistication in marketing and selling practices, in advertising and other forms of production;
o removal of personal relationship of buyer and seller as a result of mass marketing methods; and
o consumers increased mobility.

Important Concepts of Consumer Protection Act, 1986
. Appropriate Laboratory:
Laboratory means a place equipped for experimental study in a science or for testing and analysis; broadly a place providing
opportunity for experimentation, observation, or practice in a field of study.
For the purpose of consumer protection, where the complainant alleges a defect in the goods which cannot be determined without
proper analysis or test of the goods, the District Forum shall obtain a sample of the goods from the complainant, seal it and
authenticate it in a manner prescribed, and refer the sample so sealed to the appropriate laboratory along with a direction that
such laboratory make an analysis or test, whichever may be necessary, with a view to finding out whether such goods suffer from
any defect alleged in the complaint or suffer from any other defect and to report its findings thereon to the District Forum within
a period of forty five (45) days of the receipt of the reference or within such extended period as may be granted by the District
Forum.
Now the question arises what we mean by appropriate laboratory according to the consumer protection act?
Appropriate laboratory means a laboratory or organization -
(i) Recognized by the Central Government
(ii) Recognized by a State Government, subject to such guidelines as may be prescribed by the Central Government in this behalf
(iii) Any such laboratory or organization established by or under any law for the time being in force which is maintained,
financed or aided by the Central Government or a State Government for carrying out analysis or test of any goods with a view to
determining whether such goods suffer from any defect.
The function of appropriate laboratory is to test or analyze the sub-standard, defective or adulterated goods and to give expert
opinion as to purity or standard of the goods under question.
2. Branch Office:
It is defined as (i) any establishment described as branch by the opposite party or (ii) any establishment carrying on either the
same or substantially the same activity as that carried on by the head office of the establishment. This expression branch office
with its definition has been inserted by the Consumer Protection (Amendment) Act, 1993 with effect from June 18, 1993
3. Complainant:
It is the complainant who makes complaint in consumer courts for remedy as to defects in goods or deficiency in services. The
Act includes the following groups of persons as complainant-
(a) A consumer; or
(b) Any voluntary consumer association registered under
The Companies Act, 1956
Any other law such as Societies Registration Act, 1980
Registered organizations under any other law for the time being in force
(c) The Central Government; or
(d) The State Government; or
(e) One or more consumers, where there are numerous consumers having the same interest; or
(f) Legal heirs or representative of deceased consumer.
The provisions of Consumer Protection Act makes remedy under the act simple and popular as here the consumers are the real
aggrieved persons for the purposes of the Act, but besides him other persons may also file complaint, as to general principle of
law that only an aggrieved person has locus standi to make complaint does not apply.
4. 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 anoe or more defects,
(iii) The services hired or availed of or agreed to be hired or availed of by him suffer from deficiency in any respect,
(iv) A trader or service provider has charged for the goods or for the services mentioned in the compliant, 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 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 to sale to the public-
(a) In contravention of any standards 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 with a view to
obtaining any relief provided by or under this Act.
Illustrations:
1. Loan was disbursed by Co-operative Bank in favour of opposite parties. Bank asked them to repay loan with interest as per the
terms of the agreement. Opposite parties became customer of the bank and as such were entitled to get service from the Bank.
There were discrepancies in the loan amount. Opposite parties can file complaint.
2. In the case of United India Insurance Co. v. Puspalaya Printers it was held by the Honble Apex Court of the country that
complaint is maintainable and the insurance company is liable to pay damages for the damage caused to building and printing
press of the complainant due to vibration from operation of bulldozer on road closed to building as the property was insured
against destruction or damage.
The complaint under the Consumer Protection Act, 1986 can be filed in person or can be sent by registered post.
5. Consumer:
A consumer means a person who buys goods or avails services against payment.
Goods may include consumable goods (like wheat flour, salt, sugar, fruits, etc.) or durable consumer goods (like television,
refrigerator, toaster, mixer, bicycle, etc.). Services that are paid for may include electricity, telephone, transport, theatre / cinema,
postal / courier, etc.
It is interesting to know that a beneficiary is also a consumer. For example, Sanjeev sent an important medicine by courier to
his sister, Nandini, who was ill. The courier reached late by 4 days due to which Nandinis health condition worsened. She had to
be taken to a city hospital for treatment and incurred heavy expenses. Later, being the beneficiary, she took up the issue with the
courier company.
A person who purchases goods for resale or for any commercial purpose does not come under the definition of consumer.
However, when a self-employed persons livelihood depends on his business, then he is considered a consumer.
A detailed study about this concept will be done in Module III
6. Consumer Dispute:
Consumer dispute means a dispute where the person against whom a complaint has been made, denies or disputes the allegations
contained in the complaint.
The conduct of examination, evaluation of answer books and declaration of result do not constitute consumer dispute because
such services are not availed for any consideration, was held in Joint Secretary, Gujrat Education Board v. Bharat Narottam
Thakur.
The following do not constitutes consumer dispute:
1) The dispute relating to civil matter
2) The subjudice matter
3) Disputes relating to immovable property
4) Breach of contract
5) Matters involving complex questions of law and fact.
6) Criminal proceeding
7) Services as to Sovereign nature
7. Defect:
To prove defect in any goods it should be proved that
i. there is any fault, imperfection or shortcoming;
ii. such fault, imperfection or shortcoming is in the quality, quantity, potency, purity or standard;
iii. which is required to be maintained by or under any law for the time-being in force or under any contract, express or implied;
iv. which is claimed by this trader in any manner whatsoever in relation to any goods.
8. Deficiency:
Deficiency in services means:
any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be
maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a
contract or otherwise in relation to any service.
The term service includes any service that is not rendered free of charge as per the decision in Lucknow Development Authority v.
M.K. Gupta
The term deficiency has been applied differently to different sectors; For example, in the banking sector, acts such as delay in
issuing a cheque book, non encashment of a cheque and delay have been held to be deficiency and whereas in the medical sector,
courts are not as liberal and count only gross negligence as deficiency. The courts have however been proactive in holding that
even departments such as the housing boards are liable for any deficiency in services rendered.
9. District Forum, State Commission, National Commission
The Consumer Protection Act provides for a 3 tier approach in resolving consumer disputes. There are three levels of consumer
courts
First, there is the district court, called District Consumer Disputes Rederessal Forum (District Forum),
Next comes the State Consumer Disputes Redressal Commission (State Commission),
At the national level, there is National Consumer Disputes Rederessal Commission (National Commission).
District Forum and State Commission are formed by States with the permission of the Central Government while the National
Commission is formed by the Central Government. These forums have not taken away the jurisdiction of the civil courts but have
provided an alternative remedy.
The Consumer Protection Act, 1986 has given powers to the Central and State Governments to make rules with regard to various
aspects of the consumer protection machinery. In our discussion, we have included the Consumer Protection Rules, 1987 made
by the Central Government, wherever required.
10. Goods
Any tangible commodity purchased by households to satisfy their wants and needs. Consumer goods may be durable or
nondurable. Durable goods (e.g., autos, furniture, and appliances) have a significant life span, often defined as three years or
more, and consumption is spread over this span. Nondurable goods (e.g., food, clothing, and gasoline) are purchased for
immediate or almost immediate consumption and have a life span ranging from minutes to three years.
The Consumer Protection Act does not define the term Goods It says that goods means goods as defined in the Sale of
Goods Act, 1930.
Section 2(7) of the Sale of Goods Act, 1930, defines goods as 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.
The definition reveals that
a) Goods must be movable;
b) Things attached to or forming part of land which can be severed satisfy the movability criteria;
c) Actionable claim and Money have been specifically excluded from definition of goods.
11. Manufacturer
Manufacturer means a person who
i. makes or manufactures any goods or parts thereof; or
ii. 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; or
iii. puts or causes to be put his own mark on any goods made or manufactured by any other manufacturer and claims such goods
to be goods made or manufactured by himself.
Thus manufacturer is a person, who either himself manufactures goods, or assemble any goods manufactured by others, or puts
his own mark or trade mark on the goods manufactured by others.
Examples:
A Ltd. were into manufacturing of Pressure Cookers. B bought a Cooker which burst out while using. B sued A Ltd. for
compensation. Here A Ltd. being manufacturer of the Cooker is liable for the loss.
A Ltd. used to buy components and assemble computers therefrom. They were selling them under the brand name Rotal. B
bought a Rotal computer which turned out to be defective. Here B can hold A Ltd. Liable for the loss as they will be considered
manufacturer of Rotal computer under the Act.
It may be noted that where a manufacturer dispatches any goods or part thereof to any branch office maintained by him, such
branch office shall not be deemed to be the manufacturer even though the parts so despatcher to it are assembled at such branch
office and are sold or distributed from such branch office.
Example:
A Ltd. based in Delhi was having a branch office in Chennai. It used to send components of computers to its Chennai branch
which was assembling and selling them. B purchased a computer from Chennai branch which turned out to be defective. Here A
Ltd. is responsible for the loss, and not the Chennai branch.
12. Services
Services are hired or availed of The term hired has not been defined under the Act. Its Dictionary meaning is to procure the
use of services at a price. Thus the term hire has also been used in the sense of avail or use. Accordingly it may be
understood that consumer means any person who avails or uses any service.
Example: A goes to a doctor to get himself treated for a fracture. Here A is hiring the services of the doctor. Thus he is a
consumer.
What constitutes hiring has been an issue to be dealt with in many consumer disputes. If it is established that a particular act
constitutes hiring of service, the transaction falls within the net of the Consumer Protection Act, and vice-versa.
Example: A passenger getting railway reservation after payment is hiring service for consideration.
13. Trader
Trader has been defined to mean a person
i) Who sells or distributes any goods for sale; and
ii) Includes the manufacturer thereof; and
iii) Whereas such goods are sold or distributed in package form, include the packer thereof.
The distributor, seller, manufacturer and the packer are included in the term trader.
A complaint can be lodged in respect of defect in any goods against a trader who has sold the goods. The definition of trader
and manufacturer would show that it does not include employees of the trader or manufacturer.
14. Unfair Trade Practice
Competition in the market place, coupled with greed for increasing profits, has made many traders adopt unfair practices to the
detriment of consumers. To ascertain violation of consumer rights one must know the unfair trade practices followed by traders
and businessmen to promote their sale. Some of these practices include:
o False Representation
o When goods and services are not of stated standard and quality
o When second hand goods are sold as new
o When goods or services do not have the claimed use or benefit
o When the seller does not have the required approval or affiliation
o When products are guaranteed without proper test
o When the product price or the service gain is misleading
o When the goods, services or trade of another person are disparaged by false information.
Examples
a) Advertisement stating that flats were modern. When offered for possession found to be in dilapidated condition mislead and
misrepresented.
b) Disconnection of mobile phone even before the date when payment was due deficiency in service constituting UTP.
c) Financial Institutions offering exorbitant rates of Interest on FDs misleading
d) Bargain Selling when there is no bargain
A trader
o announcing an attractive bumper sale without indicating the quality of goods offered and when the sale is found to contain
damaged and soiled items
o promising discounts when such discounts are not available. Offering gifts, prizes, etc. to lure customers with no intention of
providing them.
Eg. Marketing of fans by announcing a scheme of prizes in the form of CD Players, TVs, etc. when the cost of the prizes are fully
or partly covered by the increase in the price of the fans.
o Conducting of any contest, lottery, etc. as a promotional gimmick
Eg: Promoting sales by offering prizes to purchasers by means of draw of lots with a view to allure prospective buyers.
o Selling goods which do not fall within the safety standards set up by competent authority.
Eg: Marketing of substandard gas stoves, LPG hose without confirming to the approved specifications.
o Hoarding or destroying goods with the intention of raising the cost of these or similar goods.
Eg: Certain products artificially kept in scarcity while other products are manufactured in greater number so as to manipulate
higher prices and also effect the flow of the supplies in the market in such a manner as to impose unjustified costs or restrictions
on the consumers.
o Manufacturing or offering spurious goods or adopting deceptive practices in the provision of services.
Eg: Selling of gold plated jewels as gold or promising to give a completed four storey building in three months, when
construction is yet to begin.

Who is a Consumer? Conceptual Overview
Consumer of Goods
Consumer of goods The provision reveals that a person claiming himself as a consumer of goods should satisfy that
i) Any Person who uses the Goods with the Approval of the Buyer is a Consumer
When a person buys goods, they may be used by his family members, relatives and friends. Any person who is making actual use
of the goods may come across the defects in goods. Thus the law construes users of the goods as consumers although they may
not be buyers at the same time. The words .with the approval of the buyer in the definition denotes that the user of the goods
should be a rightful user.
Illustration:
A purchased a motorbike which was in Bs possession from the date of purchase. B was using it and taking it to the seller for
repairs and service from time to time. Later on B had a complaint regarding the motorbike. He sued the seller. The seller pleaded
that since B did not buy the motorbike, he was not a consumer under the Act. The Delhi State Commission held that B, the
complainant was using it with the approval of A, the buyer, and therefore he was consumer under the Act.
ii) The Goods are Bought for Consideration
There must be a sale transaction between a seller and a buyer; the sale must be of goods; the buying of goods must be for
consideration. The terms sale, goods, and consideration have not been defined in the Consumer Protection Act. The meaning of
the terms sale, and goods is to be construed according to the Sale of Goods Act, and the meaning of the term consideration is
to be construed according to the Indian Contract Act.
iii) Person buying goods for self-employment is a Consumer
When goods are bought for commercial purposes and such purchase satisfy the following criteria
the goods are used by the buyer himself;
exclusively for the purpose of earning his livelihood;
by means of self-employment,
then such use would not be termed as use for commercial purposes under the Act, and the user is recognized as a consumer.
iv) Any Person who obtains the goods for resale or commercial purposes is not a Consumer
The term for resale implies that the goods are brought for the purpose of selling them, and the expression for commercial
purpose is intended to cover cases other than those of resale of goods. When goods are bought to resell or commercially exploit
them, such buyer or user is not a consumer under the Act.
Illustration:
A car was purchased to run it as a taxi. The question was whether the buyer of the car was a consumer under the Act. The
Rajasthan State Commission held that to use the car as a taxi with the object to earn profits was a commercial purpose, and
therefore, the buyer/user was not a consumer within the meaning of the Act. [Smt. Pushpa Meena v. Shah Enterprises
(Rajasthan) Ltd. (1991) 1 CPR 229].
M Ltd. purchased a computer system from P. The computer system was giving constant trouble and P was not attending it
properly. M Ltd. filed a complaint against P with the National Commission. P contended that M Ltd. was not a consumer under
the Act because computer system was used for commercial purposes. M Ltd. argued that computer system was not directly used
of commercial purposes rather it was used to facilitate the work of the company. The Commission rejected the argument on the
grounds that the system made part of the assets of the company, and its expenses were met by it out of business income. Thus the
said purchase was a purchase for commercial purposes and M Ltd. was held not to be a consumer under the Act.
One thing is plain and clear from the decided cases that what is important to decide is Whether a particular good is used for
commercial purposes. If it is the buyer/user is not a consumer, and if it is not the buyer/user is a consumer.
The intention of the legislature is to exclude big business houses carrying on business with profit motive from the purview of the
Act. At the same time it is pertinent to save the interests of small consumers who buy goods for self-employment to earn their
livelihood, like a rickshaw puller buying rickshaw for self-employment, or a farmer purchasing fertilizer for his crops, or a taxi
driver buying a car to run it as a taxi, etc.
Illustration:
X was running a small type institute to earn his livelihood. He purchased a photocopy machine-canon NP 150. It proved
defective. He sued the seller who contended that X is not a consumer under the Act as he purchased the photocopier for
commercial use. The Commission held that by no stretch of imagination it can be said that the photocopier would bring large
scale profits to X. It was a part of his small scale enterprise. He was construed as consumer under the Act.
However, if such a buyer takes assistance of two or more persons to help him in operating the vehicle or machine, etc., he does
not cease to be a consumer.
Illustration:
Preetam, an eye surgeon, purchased a machine from Rampion for the hospital run by him. The machine was found to be a
defective one. Rampion contended that Preetam was not a consumer under the Act as the machine was bought for commercial
purposes. The National Commission rejected this contention and held that Preetam is a medical practitioner, a professional
working by way of self-employment by using his knowledge and skill to earn his livelihood. It was not proved by any evidence
that Preetam is running a huge hospital. Thus the purchase of machinery is in the nature of self-employment.
Aman buys a truck ply it himself and hires a cleaner who accompany him all the time and at times drives also when Aman is
busy otherwise, Aman is a consumer.
Consumer of Services
A person is a consumer of services if he satisfies the following criteria:
a) Beneficiary of services is also a consumer
When a person hires services, he may hire it for himself or for any other person. In such cases the beneficiary (or user) of these
services is also a consumer.
Illustration:
A takes his son B to a doctor for his treatment. Here A is hirer of services of the doctor and B is beneficiary of these services. For
the purpose of the Act, both A and B are consumers.
Note that in case of goods, buyer of goods for commercial purpose ceases to be a consumer under the Act. On the other hand, a
consumer of service for commercial purpose remains a consumer under the Act.
Illustration:
Suraj applied to Electricity Board for electricity connection for a flour mill. There was a delay in releasing the connection. Suraj
made a complaint for deficiency in service. He was held a consumer under the Act.
b) Services are hired or availed of
The term hired has not been defined under the Act. Its Dictionary meaning is to procure the use of services at a price. Thus
the term hire has also been used in the sense of avail or use. Accordingly it may be understood that consumer means any
person who avails or uses any service.
Illustration:
Akshay goes to a doctor to get himself treated for a fracture. Here Akshay is hiring the services of the doctor. Thus he is a
consumer.
What constitutes hiring has been an issue to be dealt with in many consumer disputes. If it is established that a particular act
constitutes hiring of service, the transaction falls within the net of the Consumer Protection Act, and vice-versa.
Illustration:
I) A passenger getting railway reservation after payment is hiring service for consideration.
II) A landlord neglected and refused to provide the agreed amenities to his tenant. He filed a complaint against the landlord under
the Consumer Protection Act. The National Commission dismissed the complaint saying that it was a case of lease of immovable
property and not of hiring services of the landlord. [Smt. Laxmiben Laxmichand Shah v. Smt. Sakerben Kanji Chandan[1992] 1
Comp. LJ 177 (NCDRC)].
c) Consideration must be paid or payable
Consideration is regarded necessary for hiring or availing of services. However, its payment need not necessarily be immediate.
It can be in installments. For the services provided without charging anything in return, the person availing the services is not a
consumer under the Act.
Illustration:
Banti hires an advocate to file a suit for recovery of money from his employer. He promises to pay fee to the advocate after
settlement of the suit. Banti is a consumer under the Act.
Riya goes to a Doctor to get herself treated for a fracture. The Doctor being her friend charged her nothing for the treatment. Riya
is not a consumer under the Act.
Jyoti issued an advertisement that a person could enter the contest by booking a Premier Padmini car. Arun purchased the car and
thus entered the contest. He was declared as winner of the draw and was thus entitled to the two tickets from Mumbai to Europe
and back. Arun filed a complaint alleging that the ticket was not delivered to him. The National Commission held that Arun was
not a consumer in this context. He paid for the car and got it. Jyoti was not liable so far as the contract of winning a lottery was
concerned.
The Direct and Indirect taxes paid to the State by a citizen is not payment for the services rendered.
Illustration:
Jitendra was paying property tax for his house to the local corporation. This corporation was responsible for proper water supply
to the premises under its work area. Jitendra raised a consumer dispute over the inadequacy of water supply by the corporation.
The National Commission held that it was not a consumer dispute as water supply was made by the corporation out of its
statutory duty and not by virtue of payment of taxes by Jitendra.


Unfair Trade Practices
Unfair Trade Practice
In the United States of America, Unfair Trade Practice means a trade practice declared by a federal trade commission to be an
unfair method of competition pursuant to power given it by a legislative act designed to curb dishonesty, misrepresentation, and
unethical and monopolistic business practices contrary to public policy and good morals in the business community
Unfair trade practice being practiced by the organized sector of traders, manufacturers and businessman on the unorganized,
innocent and poor consumers is the basic challenge of the day and it is the duty of the government, the consumer activists and the
voluntary consumer organizations or associations to check the same.
The detailed definition of Unfair Trade Practice is given in the Consumer Protection Act, 1986 as amended by the Consumer
Protection (Amendment) Act. 1993. It means a trade practice which, for the purpose of promoting the sale, use or supply of any
goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following
practices, namely:-
a) False or misleading representation,
b) Bargain price
c) Offering of gifts, prize, contest etc.
d) Non-compliance of product safety standard.
e) Hoarding or destruction of goods.
The practices mentioned above are dealt in detail in the next section.
1. False Representation
The practice of making any statement, whether oral or written or by verbal representation which:
i) falsely suggests that the goods are of a particular standard, quality, grade, composition, style or model.
ii) falsely suggests that the services are of a particular standard or quality or grade.
iii) falsely suggests any re-bullet, second-hand, renovated or reconditioned or old goods as new goods.
iv) represents that the goods or services has sponsorship, approval, performance, characteristics, accessories, uses or benefits
which such goods or services do not have represents that the seller or the supplier has a sponsorship or approval or
v) affiliation which such seller or supplier does not have.
vi) makes a false or misleading representation concerning the need for or usefulness of any goods or services;
vii) gives a warranty or guarantee as to the durability, performance or efficacy of the goods which is not based upon adequate or
proper tests. the burden of proof will lie upon him to show that the goods were adequately and properly tested.
viii) makes to the public a representation in a form that looks like a guarantee or warranty, or a promise to replace, maintain or
repair the goods until they achieve a specified result, and the representation is materially
ix) misleading or there is no reasonable prospect that the guarantee etc. contained in the representation shall be carried out.
x) materially misleads the public about the prices at which such goods or services are available in the market.
xi) gives false or misleading facts disparaging the goods, services or trade of another person.
The mode of representation or statement to the public may be by any method. It will be enough if the statement comes to the
knowledge of a buyer of those goods etc. therefore, says that the representation may appear on the article, or on its wrapper or
container, or on anything attached to, inserted in or accompanying the articles or on anything on which the article is mounted. An
advertisement for sale of holiday resorts held out promises as to appreciation both in terms of value and rent and offered free
holiday for ever comparing them with commercial complexes like those in Connaught Place, the promises and comparisons
were found to be false, the Commission prohibited any further portrayal of the advertisement. The claim of another advertiser as
to cure for Leuckoderma was restrained because the treatment offered was neither medically sound, nor the clinic was being
attended by a world renowned doctor, as represented. An advertisement offering high rate of interest and secured investment
without proof of supporting facts as to financial base etc. has been restrained.
2. False Offer of Bargain Price
The second category is in clause (2). It includes the publication of an advertisement in a newspaper or otherwise by which goods
or services is offered at a bargain price when in fact this is not the intention or they are not intended to be offered at that price for
a reasonable period or reasonable quantity. The bargain price for the purposes of this provision means the price stated in the
advertisement in such manner as suggests that it is lesser than the ordinary price or a price which the person coming across the
advertisement would believe to be better than the price at which such goods area ordinarily sold. An announcement for sale of
textiles at a throw away prices, which were not verifiable because neither the quality of the goods was mentioned nor their prices,
has been held by the Commission to be unfair. An advertisement of off season discount on fans calculated in reference to future
and not present prices has been held to be unfair. In determining which cases to select for formal action, the Federal Trade
Commission (U.S.A.) places a high priority on those matters which relate to the basic necessities of life, and to situations in
which the impact of false and misleading advertising, or other unfair and deceptive practices, falls with cruelest impact upon
those least able to survive the consequencesthe elderly and the poor. Often the type of false advertising attached by the F.T.C.
is designed to make prospective purchasers believe they will be getting a good deal in terms of price if they buy the product in
question.
Illustration:
A seller of goods was ordered to refrain from advertising its product for sale by use of a rice comparison in which its actual price
was compared to a higher regular price or a manufacturers list price. The Commission ruled that it was deceptive to refer to
regular price unless the defendant had usually sold the items at the price recently in the regular course of business. Also it was
held deceptive to refer to the manufacturers list price when that list price was not the ordinary and customary retail sales price
of the items in the locality..In ordering enforcement of the Commissions cease and desist order, the Court of Appeals said:
We do not understand the Commission to hold that use of the term manufacturers price list is unlawful per rather it is
unlawful only if it is not the usual and customary retail price in the area.
3. Schemes Offering Gifts, etc.
The third category of unfair trade practice includes in it fold the offering of any gifts, prizes or other items along with the goods
when the real intention is different or giving the impression that something is being offered free of price along with the goods
when in fact the price is wholly or partly covered by the price of the article sold, or some prizes are offered to the buyers by the
conduct of some lottery or chance game when the real aim is promotion of sales or business. The Commission has also restrained
what is called bait and switch promotion. In this method a product is advertised at a low price only as a bait to capture the
interest of the consumer and then switch his attention to another product which the advertiser really desired to sell from the
beginning. The Monopolies and Restrictive Trade Practices Commission restrained a prize scheme which was designed to boost
the sale of cycles during the rainy season when sales would otherwise be sluggish. The Commission advised the producer that
instead of baiting customers like that he should have given them the benefit of price reduction. The Commission was of the view
that though apparently the scheme was to confer a benefit upon some consumers who would be selected by chance; it was
injurious to the interest of consumers as a whole inasmuch as it would deprive them of the benefit of competition which is offered
by an affluent market.
3. Non-compliance of Prescribed Standards
The fourth category of unfair trade practices includes cases where goods are sold for use by consumer knowing or having reason
to believe that they do not comply with standards prescribed by some competent authority. The prescribed standard may relate to
performance, composition, contents, design, and construction, finishing or packing as are necessary to prevent or reduce the risk
of injury to the person using the goods.
4. Hoarding, Destruction or Refusal
The fifth and the last category of unfair trade practices include cases of hoarding, destruction of or refusal to sell, goods or
services. Clause (5) says that a practice will be unfair if it permits the hoarding or destruction of goods, or refusal to sell the
goods or to provide any services if such conduct is intended to raise or has the effect of raising the cost of those or other similar
goods or services.
Monopolies and Restrictive Trade Practice
On a careful analysis of unfair trade practice defined in section 36A of the Monopolies and Restrictive Trade Practice, it is quite
clear that the trade practice which is undertaken by the Company for the purpose of promoting the sale, use or supply of any
goods or for the provision of any service/s adopts one or more following practices and thereby causes loss or injury to the
consumers of such goods or service whether by eliminating or restricting competition or otherwise would amount to unfair trade
practice.
The expression unfair trade practice contained in clause (r) of sub-section (1) of section 2 of the Act applies not only to the sale
or supply of any goods but also to the provision of any service.
Illustration:
A real estate firm Unitech Ltd. had been held guilty of resorting to unfair trade practice by a consumer forum and the forum
directed to pay a customer Rs 6.6 lakh for making illegal demands from him after he booked a flat with it and paid the booking
amount. The District Consumer Disputes Redressal Forum, in its order, observed that the firm and its agent made unjustified
demands from the customer and also threatened to forfeit his deposited money. Amrit Lal Chawla had booked a flat for Rs 5.5
lakh in a residential project, Unitech Verve at Greater Noida, launched by the firm. Chawla alleged the company sent letters
arbitrarily increasing the rate of the flat from the initially agreed upon rate under the contract and when he cancelled the booking
and asked for refund of his deposited amount from the company, it threatened to forfeit the same. The action of the Unitech Ltd
and its agent in raising the illegal demands from time to time and then refusing to refund the booking amount is clearly
unjustified and amounts to unfair trade practice by them. The forum directed the firm and its agents jointly and severally to
refund to the complainant the sum of Rs 5.5 lakhs along with a compensation of Rs 1,00,000 for physical and mental agony
suffered and Rs 10,000 as the litigation cost. The forum observed that Unitech Ltd failed to show as to how they had raised
demands at higher rate than what was agreed upon as it chose not to contest the complaint despite a notice.
Caveat Emptor replaced by Caveat Venditor
In the early law, the doctrine of caveat emptor (let the buyer beware) was the philosophy of the law of sales. Today it has been
replaced by let the seller beware. As a result of this change of legal philosophy, business is heavily regulated on behalf of the
consuming public. The consumer must get what he is told he is getting. Where, by any method whatsoever, a belief is created in
the minds of consumers as to some quality or utility of goods or services, and they actually fall short of those standards, this will
be unfair to consumers. As a part of the statutory framework of consumer protection programme, such a method has been
regarded by the act as unfair trade practice. This is so because the primary theme of the provision is to protect the consumer from
the business community.
Inquiry into Unfair Trade Practice
The Commission may inquire into any unfair trade practice
Upon receiving a complaint from any trade association, consumer or a registered consumer association, or
Upon reference made to it by the Central Government or State Government
Upon an application to it by the Director General or
Upon its own knowledge or information.
Relief Available
After making an inquiry into the unfair trade practice if the Commission is of the opinion that the practice is prejudicial to the
public interest, or to the interest of any consumer it may direct that-
I. The practice shall be discontinued or shall not be repeated;
II. The agreement relating thereto shall be void in respect of such unfair trade practice or shall stand modified.
III. Any information, statement or advertisement relating to such unfair trade practice shall be disclosed, issued or published as
may be specified
IV. The Commission may permit the party to carry on any trade practice to take steps to ensure that it is no longer prejudicial to
the public interest or to the interest of the consumer.
However no order shall be made in respect a trade practice which is expressly authorized by any law in force. The Commission is
empowered to direct publication of corrective advertisement and disclosure of additional information while passing orders
relating to unfair trade practices.

Defects in Goods & Commodities
Goods & Commodities
Goods means goods as defined in the Sale of Goods Act, 1930, wherein it has been defines to mean every kind of movable
property other than actionable claims and money and includes stocks and shares, growing crops, grass and things attached to or
forming part of the land which are agreed to be served before sale or under the contract of sale.
Thus as per clause (7) of Section 2 of the Sale of Goods Act, 1930, goods mean
a) Every kind of movable property other than actionable claims and money and
b) Includes
i) Stocks and shares
ii) Growing crops, grass and things attached to or forming part of the land which are agreed to be served before sale or under the
contract of sale.
The definition of the goods has been enlarged by the inclusion clause used in the definition. However it must be borne in mind
that the non-supply of goods or delay in supply of goods in not a defect in the goods in respect of which alone a grievance can
be agitated before the various for a constituted under the Act.
In relation to transactions of purchase of goods Parliament has excluded from the scope of the definition any person who obtains
goods for resale or for any commercial purpose. Since cases of resale have been separately referred to, it becomes obvious that
the words for any commercial purpose are intended to cover cases other than those of resale of the concerned goods. The words
for any commercial purpose are wide enough to take in all cases where goods are purchased for being used in any activity
directly intended to generate profit.
Hazardous Goods
The term Hazardous Goods has not been defined in the Act. The dictionary meaning of the term is dangerous or risky.
However, the term is used in context of goods only, i.e., a person can make a complaint if he is not informed about the
hazardous nature of the goods but the same is not true in case of hazardous services.
The rationale behind this provision is to ensure physical safety of the consumers. The law seeks to ensure that those responsible
for bringing goods to the market, in particular, suppliers, exporters, importers, retailers and the like should ensure that while in
their care these goods are not rendered unsafe through improper handling or storage.
Consumers should be instructed in the proper use of goods and should be informed of the risks involved in intended or normally
foreseeable use. Vital safety information should be conveyed to consumers.
Illustration:
Anil bought an insecticide from Vikash. Vikash did not inform Anil that touching this insecticide with bare hands can create skin
problem. Anil, while using the insecticide came in contact with it and suffered from skin problem consequently. Here Vikash can
be held liable under the Act.
Defect
Section 2(1)(f) of the Act provides that, 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 of the time being in force under any contract, express
or implied or as is claimed by the trader in any manner whatsoever in relation to any goods.
This is an exhaustive definition. It means that the Act recognizes only those defects which are covered by the definition. Any
type of defect not mentioned here will not be entertained by Consumer Forums. Moreover the defect has to be in relation to
goods only, i.e., if an item does not fall within the definition of Goods, no defect can be complained therein.
Illustrations:
A) In T.T. (P.) Ltd. v. Akhil Bhartiya Grahak Panchayat II [1996] CPJ 239 NC a Pressure Cooker burst and caused injury to the
user. It was held to be a manufacturing defect.
B) Laboratory test report showed that soft drink was not fit for human consumption, it was held defective Narayanan
Vyankatkrishnan Iyengar v. Shakti Foods [1994] 2 CPJ 652 (Mah.)
C) Electric household appliances which are not in accordance with the standards prescribed by ISI, being unsafe are defective
Farooq Hazi Ismail Saya v. Gavabhai Bhesania (1991) 2 CPJ 452 (Guj.)
D) Deepak sold a stolen car to Prabhu. Prabhu wanted to sue Deepak for defect in the title of the car. Here Prabhu cannot sue
Deepak under the Consumer Protection Act as the defect in title of goods would not constitute defective goods as defined under
the Act.

Deficiency in Services
Services
The main purpose of the Consumer Protection Act is to compensate the consumers for defective goods and in respect of
deficiency in service. The term has a variety of meanings, depending upon the context or the sense in which it is used. Service
means duty or labour to be rendered by one person to another, the former being bound to submit his will to the direction and
control of the latter.
Thus, service is not only extended to the actual users but also to those consumers who are capable of using it. The clause is very
wide and extends to any or all actual or potential users. So, not only the actual buyer of goods but also those persons who are
likely to buy the goods are consumers of services.
What is Service?
Section 2(1)(o) of the Act provides that 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, board or loading 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.
The definition provides a list of eleven sectors to which service may pertain in order to come under the purview of the Act. The
list of these sectors is not an exhaustive one. Service may be of any description and pertain to any sector if it satisfy the following
criteria:
service is made available to the potential users, i.e., service not only to the actual users but also to those who are capable of using
it.
it should not be free of charge, e.g., the medical service rendered free of charge in Government hospital is not a service under the
Act;
it should not be under a contract of personal service.
When we talk about service under the Consumer Protection Act, we take it as a regular commercial transaction. Thus the
services rendered under the contract of personal service are specifically excluded from the definition.
The expression contract of personal service is not defined under the Act. In common parlance, it means a contract to render
service in a private capacity to an individual.
Illustration:
Where a servant enters into an agreement with a master for employment,
Where a landlord agrees to supply water to his tenant,
These are the contracts of personal service. The idea is that under a personal service relationship, a person can discontinue the
service at any time according to his will, he need not approach Consumer Forum to complaint about deficiency in service.
There is a difference between contract of personal service and contract for personal service. In case of contract of personal
service, the service seeker can order or require what is to be done and how it should be done. Like a master can tell his servant to
bring goods from a particular place. But in a contract for personal service, the service seeker can tell only what is to be done.
How the work will be done is at the wish of the performer. Like when a person gives a suit to the tailor for stitching, he does not
tell him which method he should use to stitch it.

Deficiency in Service
A complaint under the Act can be made only when there is a defect in the goods or deficiency in services. The term deficiency
means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to
be maintained by or under any law in force at that time or has been undertaken to be performed by a person in pursuance of a
contract or otherwise in relation to any service.
The definition is very wide and comprehensive. It also covers the inadequacy in the quality. The nature and manner of service
may be
a) as is required to be maintained by or under any law for the time being in force or
b) which has been undertaken to be performed by a person in pursuance of a contract which may be expressed or implied.
Illustration:
Case of excessive billing for telephone services,
negligent treatment by medical practitioners, a mistaken diagnosis,
failure of railway administration in checking entry of unauthorized persons in a reserved compartment etc.etc.
Factors to ascertain the deficiency in rendering the service are
Inefficiency,
Lack of due care,
Absence of bonafides,
Rashness,
Haste or omission.
It is important to note that deficiency will arise only when an activity is a service as defined by the Act. Therefore, if the
activity is not a service, one cannot allege any deficiency in service under the act.
Inability to render service owing to reasons wholly beyond the control of the opposite party to render service would not constitute
deficiency in service. Deficiency in service connotes willful non-performance of a service which otherwise ought to be
performed or the denial of a service which is not so denied to others placed in similar circumstance.
The following are the instances that may be noted for a better understanding of the deficiency in services:
Medical Services:
Medical services including paramedical, diagnostic and surgical services come under the purview of services. A mistaken
diagnosis may amount to deficiency in service. Similarly, negligence of doctors in operations, prescribing medicines, running
nursing homes and hospitals and negligence in providing nutritious food and other facilities would amount to deficiency in
medical services.
Illustration:
The Honble Supreme Court dealt with a case where a medical practitioner who operated a patient left a mop (towel) inside the
abdomen while conducting sterilization operation. The Honble Court found that the negligence in leaving the mop in the
deceaseds abdomen during the operation led ultimately to her death. The Honble Apex Court held that a Diploma holder in
Homoeopathy is under statutory duty to practice in Homeopathy and that he should not enter the field of any other system of
medicine like Allopathy. A person who does not have knowledge of a particular system of medicine but practises in that system
is a quack and a mere pretender to medical knowledge or skill. His conduct amounted to an actionable negligence particularly as
the duty of care.
Transport Services
The carriage of goods or passengers by airlines, railways, buses, taxies, trucks and autos is a service under the Act. In fact
transport is included in the definition of service under the Act. Thus, any kind of deficiency pertaining to the said services would
be a deficiency in service.
Illustration:
The National Commission held that failure of the railway administration in checking entry of unauthorized persons in reserved
compartments is a deficiency in service.
When a confirmed and okayed ticket is issued in favour of a person by Airways Authorities, failure to provide him a seat in the
flight when he reports himself at the airport in time would be negligence on the part of the Airways Authorities and therefore, it
would be a clear case of deficiency in service under the Act. Similarly defect in the food supplied to the passengers, would be
regarded as a deficiency in service.
Persons traveling by air are consumers. Therefore, if their baggage is not delivered to them at destination or if it is accidentally
sent back to the place of boarding and the same is delivered after a few days, it amounts to negligence on the part of Airways
Authority. Hence it would be a case of deficiency in service.
Where there was a delay in flight and the passengers were requested by the Airways Authority to wait, but the complainant
passenger took chance and went out on some work by which time the flight had been announced and took off without the
complainant. It would not be a case of deficiency in services.
Not providing the berths to senior citizens in a railway coach when they were holding reserved tickets as they were occupied by
unauthorized persons, would be a clear case of deficiency in service on the part of Railways.
Insurance Services
The Insurance companies may cause deficiency in services when they fail to identify the insured regarding loss, or they fail to
make the payment to the nominee appointed or fail to settle the claim under the insurance policy within a reasonable period of
time. Service under an Insurance Policy can arise only after the occurrence of the contingency viz., the maturity of policy or the
death of insured. Where a claim is paid and received in full and in final settlement there would be no deficiency in service and no
relief against Insurance Companies can be granted under the Consumer Protection Act.
Illustration:
In a significant judgment, the Honble Supreme Court held that an Insurance Agent has no authority to receive premium on
behalf of L.I.C. and that any such payment made to the Agent cannot be regarded as payment to the insurer. Where, under an
agreement made between the employer and L.I.C., the premium payable by the employer should be deducted every month from
the salary of employee and to be transmitted to the L.I.C., the employer though collected the premium from the employees salary
did not remit the same to the L.I.C., the L.I.C. would be responsible for paying the insurance amount on the death of the
employee.
Repudiation of the insurance claim by the Insurance Company on the ground that the driver was not holding a valid driving
license at the time of accident could not be termed as deficiency in service or negligence on the part of the insurance company.
The Insurance companies must settle or repudiate the insurance claims within a reasonable period of time which would be
construed as a period of 3 months. Any delay beyond that would be a deficiency of service.
In certain cases, upon the death of the insured person, his or her legal heirs fight for the insured amount. If there is a dispute as to
who are the legal heirs or representatives of the insured policy holder, the Insurance Company would be justified in insisting
upon a succession certificate being produced from the competent court. However, if there is no dispute as to the legal heirs or
legal representatives, the Insurance Company cannot insist on production of succession certificate. If it does, the same would be a
deficiency in service.
Housing Construction
Till the Amendment made during 1993 to the Act, housing construction was not one of the services contained within the
definition of service under the Act. As a result the Honble Supreme Courts land mark decision in Lucknow Development
Authority v. M. K. Gupta, the Parliament has inserted housing construction under the Act. Thus, where a Housing Board uses
poor quality of material for construction or does not provide basic amenities like roads, schools, lifts or parks etc., as promised
under the scheme or contract of sale or allotment, it would amount to deficiency in service. The delay in handing over the
possession of the flat, even after payment of total amount would be deficiency in service. Same would be the case where the
builder of a house uses substandard material in construction of a building or makes a false representation about the condition of
the house. Allotment of developed site under any particular scheme prepared for a particular purpose would come within the
definition of service.
Deficiency in service due to circumstances beyond control
In normal course, if the service is found deficient as per the above criteria, it is held deficient and the compensation is awarded.
However there may be abnormal circumstances beyond the control of the person performing service. If such circumstances
prevent a person from rendering service of the desired quality, nature and the manner, such person should not be penalized for the
same.
Illustration:
A undertook to supply water to B for irrigation of crops. Due to power grid failure of the State, A could not get sufficient power
to perform the service. Here A cannot be held liable for deficiency in service.
However, negligence on the part of performer may not be excused under the cover of circumstances beyond control.
Illustration:
Rakesh agreed to supply water to Sachin for irrigation of crops. He failed to do so because of a power breakdown due to burning
of transformer. As a result crops damaged. Sachin sued Rakesh for providing deficient service. The National Commission held
that it was duty of Rakesh to get the transformer repaired immediately. Since he was negligent in doing so, he is liable for the
deficiency in service.
Enforcement of Consumer Rights
Meaning and Concept
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. Every year15th March is observed as World Consumer Rights Day.
A responsible consumer is one who ensures value for the money spent on the purchase of goods or services, and makes the other
fellow-consumers aware of their rights and responsibilities. A responsible consumers actions or choices do not affect the rights
and responsibilities of the other-fellow consumers. In other words, any responsible consumer must not act in a selfish manner for
getting short term pleasure or profit.
In short, the components of the consumers responsibilities include:
recognition of ones power and ability to control ones own consumption practices.
creation of an environment friendly life-style, or what is known as green consumer life-style.
awareness of accountability for ones actions and purchase decisions
capacity for rationale thought
being a watchdog over the activities of the industries and businesses
demanding the standards and quality of the products.

Consumer Protection Councils
Krishna, an engineer by profession shifted to Delhi. He bought a computer from Jitendra, a dealer who gave him all guarantees
and warranties. The moment he plugged in the computer, some noise came and the computer was shut down. He called up
Jitendra, but got no response from him. After making many calls to him, he understood that he was cheated of his money.
Krishna could have gone to courts, but knowing the lengthy and expensive procedures involved, he preferred not to initiate any
action against Jitendra. One day while watching television he came across a programme on consumer protection. Krishna got
interested in it and noted the address of consumer council which was sponsoring the programme. Thereafter he contacted the
Council and talked about his computer affair. The Council made him aware that there is a speedy and inexpensive way to assert
his right as a consumer, and that where and how a complaint can be filed for that, and that he need not hire an advocate for the
suit, and assured him of any assistance he may need for the same.
The Consumer Councils are created to advise and assist the consumers in seeking and enforcing their rights. We have Consumer
Protection Councils both at Centre level and State level, that is one Central Council and many State Councils.
These councils work towards the promotion and protection of consumers. They make investigations and give publicity to the
matters concerning consumer interests, take steps towards furthering consumer education and protecting consumer from
exploitation, advice the Government in the matter of policy formulation keeping consumer interest as pivotal concern, etc.
While deciding about the composition of these councils, the State keeps in mind that it should have proper representation from all
the possible areas affecting consumer interests. Again the rules as to when should these councils meet, what should they aim at,
how they conduct their business are framed by the Government with a view to balance the efficacy and practicability of its
business.
Objects of the Councils
There is one basic thought that consumer needs to be protected. Another thought is how he can be protected? Definitely, there
has to be some agency to work towards this protection. The Act has provided for constitution of Consumer Councils for this
purpose.
Now, when we say that these councils are there to protect the consumers, a question arises consumers are protected against
what? Thus the Act has detailed some rights of consumers which need to be protected by the councils. These are:
i) Right to safety
It is right to be protected against the marketing of goods and services which are hazardous to life and property.
Unsafe goods may cause death or serious injury to the user due to defective ingredients, defective design, poor workmanship, or
any other reason. At times safety hazards are found due to absence of proper instructions to use the product. Thus it is to be
ensured that
Manufacturers and traders ensure that the goods are safe for the users, in case of hazardous goods, they give clear instructions
as to mode of use, consumer is informed of the risk involved in improper use of goods, vital safety information is conveyed to
consumers.
Manufacturers or distributors who become aware of the unforeseen hazards after the goods are supplied must inform the
authorities and the public in order to forewarn consumers about such hazards.
Where a product is found such as is likely to be hazardous even when properly used, traders should either recall it and modify
the same, or replace it with a new product, or adequately compensate for it.
ii) Right to information
It is right to be informed about the quality, quantity, potency, purity, standard and price of goods or services, with a view to
protect the consumer against unfair trade practices.
Adequate information is very important in order to make a right choice. In our country, however, consumers do not get adequate
comparative information about the quality, quantity, potency, purity, standard and price of different kinds of goods or services
which are available. As a result buying decisions become difficult. Therefore consumers need to be given maximum information
about the wide variety of competing goods available in the market.
iii) Right to choose
The right to choose can be made meaningful by ensuring access to a variety of goods and services at competitive prices.
Fair and effective competition must be encouraged so as to provide consumers with the widest range of products and services at
the lowest cost.
iv) Right to represent
It is right to be heard and to be assured that consumers interests will receive due consideration at appropriate forums.
The Consumer Protection Act, 1986 has well taken care of this right by making available the instrumentality of Redressal
Forums. Every consumer has a right to file complaint and be heard in that context.
v) Right to redressal
It is a right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers.
When consumers are wronged in a market place transaction, appropriate and adequate redress must be available. The Act has
ensured this right by establishing Consumer Forums and recognizing restrictive and unfair trade practices as a ground to make a
complaint.
vi) Right to education
The right to consumer education is a right which ensures that consumers are informed about the practices prevalent in the market
and the remedies available to them.
For spreading this education, media, or school curriculum, or cultural activities, etc. may be used as a medium.
Note that the Central Councils object is to ensure these rights of the consumers throughout the country while the State Councils
look to ensure these rights to consumers within their territories.
Central Council
Members of the councils are selected from various areas of consumer interest, who are, when possible, leading members of
statewide organizations representing segments of the consumer public so as to establish a broadly based and representative
consumer council.
The Consumer Protection Act has authorized the Central Government to make rules as to the composition of the Central Council.
Accordingly, the Central Government has provided that the Central Council shall consist of the following members not exceeding
150, namely :
i) the Minister in-charge of Consumer Affairs in the Central Government who shall be the Chairman of the Central Council;
ii) the Minister of State (where he is not holding independent charge) or Deputy Minister in-charge of Consumer Affairs in the
Central Government who shall be the Vice-Chairman of the Central Council;
iii) the Secretary in-charge of Consumer Affairs in the Central Government who shall be the member-secretary of the Central
Council;
iv) the Minister in-charge of Consumer Affairs in States;
v) eight Members of Parliamentfive from the Lok Sabha and three from the Rajya Sabha;
vi) the Secretary of the National Commission for Scheduled Castes and Scheduled Tribes;
vii) representatives of the Central Government Departments and autonomous organizations concerned with consumer interests
not exceeding twenty;
viii) representatives of the Consumer Organizations or consumersnot less than thirty-five;
ix) representatives of womennot less than ten;
x) representatives of farmers, trade and industriesnot exceeding twenty;
xi) persons capable of representing consumer interest not specified abovenot exceeding fifteen;
State Consumer Protection Councils (State Councils)
The power to establish State Councils is with the States. The Act provides that the Minister incharge of consumer affairs in the
State Government shall be the Chairman of the State Council. About the number and qualifications of the rest of the members,
State is the deciding authority.
For the purpose of monitoring the implementation of the recommendations of the Central Council and to suggest the working of
the Council, the Central Government may constitute from amongst the members of the Council, a Standing Working Group,
under the chairmanship of the Member Secretary of the Council. The Standing Working Group shall consist of not exceeding 30
members and shall meet as and when considered necessary by the Central Government.
Consumer Forums
Skand, a resident of Delhi district, took his son Santosh to a doctor for eye treatment. Due to negligence of the doctor, Santosh
lost sight of his left eye. Ram filed a suit against the doctor in District Forum claiming Rs. 4 lakh as compensation. The District
Forum dismissed his complaint on the ground that negligence of the doctor could not be proved.
Skand appealed to Delhi State Commission against this order. State Commission also upheld the decision of District Forum. Now
Skand approached the National Commission and made an appeal therein. Skand knew that after National Commission also, he is
still left with an option to approach the Supreme Court against the order of the Commission. However, the National Commission
decided in favour of Skand.
The Consumer Protection Act provides for a 3 tier approach in resolving consumer disputes. There are three levels of consumer
courts
First, there is the district court, called District Consumer Disputes Rederessal Forum (District Forum),
Next comes the State Consumer Disputes Redressal Commission (State Commission),
At the national level, there is National Consumer Disputes Redressal Commission (National Commission).
District Forum and State Commission are formed by States with the permission of the Central Government while the National
Commission is formed by the Central Government. These forums have not taken away the jurisdiction of the civil courts but have
provided an alternative remedy.
The Consumer Protection Act, 1986 has given powers to the Central and State Governments to make rules with regard to various
aspects of the consumer protection machinery. In our discussion, we have included the Consumer Protection Rules, 1987 made
by the Central Government, wherever required.
This decentralized system helps the consumers who are aggrieved to approach the appropriate fora. These quasi-judicial bodies
will observe the principles of natural justice and have been empowered to give reliefs of a specific nature and to award
compensation wherever appropriate. Penalties for non-compliance of the orders given by the quasi-judicial bodies have also been
provided. The services of these consumer fora cover all public, private business and service sector which includes Banking,
Finance, Insurance, Transport, Electricity, Telecommunications, Entertainment and so on. These fora have been expanding their
jurisdiction in the best interest of consumers.
District Forum
The State Government is empowered to establish a Consumer Disputes Redressal Forum known as District Forum at each
district. The State Government can establish more than one District Forum in a district, in case the necessity is felt. The District
Forum is the lowest in the hierarchy of the three-tier quasi-judicial system. Prior to the Amendment made to the Act during 1993,
the State Government was empowered to establish a District Forum only with the approval of the Central Government. However
the same requirement has been omitted in the 1993 amendment. As a result, the State Governments have been authorized to
establish District Fora, on their own, without the interference of the Central Government.
Jurisdiction of the District Forum
The District Forum has jurisdiction to entertain complaints where the value of goods, services and compensation claimed (if
any)
1. Does not exceed Rs. 20 lakhs
2. A complaint can be filed in the District Forum in whose territorial jurisdiction the opposite party or parties, at the time of filing
of complaint, actually and voluntarily resides, carries on business, has a branch office or personally works for gain.
3. If any of the opposite parties does not voluntarily reside or carry on business or have a branch office or personally works for
gain, the District Forum should grant permission to it. The opposite party should get the consent of such an institution.
4. The complaint can also be filed before the District Forum in whose jurisdiction the cause of action, wholly or in part arises.

State Commission
The State Commission called State Consumer Disputes Redressal Commission is the second in the hierarchy of the three-tier
quasi-judicial system established under the Act. The State Commission is to be established by every State Government by issue
of a notification to be published in the Official Gazette. It has both the original as well as appellate jurisdictions.
Jurisdiction of the State Commission
Subject to the other provisions of the Act, the State Commission shall have jurisdiction to entertain complaints where the value of
the goods or services and compensation, if any, claimed exceeds rupees twenty lakhs but does not exceed rupees one crore. There
is no direct provision under the Act that deals with the territorial jurisdiction of the State Commission. A State Commission can
exercise its original, appellate or territorial jurisdiction only in respect of the disputes arising within the State.
The State Commission is empowered to entertain appeals against the order of any District Forum within the State. An aggrieved
party may prefer an appeal against the order of a District Forum within 30 days of that order to the State Commission. The State
Commission has the power to revise the orders passed by the District Forum. An order passed by the District Forum can be
challenged in an appeal before the State Commission only. Similarly an order passed by the State Commission can be appealed
only before the National Commission.
Any person aggrieved by an order made by the State Commission in exercise of its powers conferred may prefer an appeal
against-such order to the National Commission within a period of thirty days from the date of the order in such form and manner
as may be prescribed. Provided that the National Commission may entertain an appeal after the expiry of the said period of thirty
days if it is satisfied that there was sufficient cause for not filing it within that period.
National Commission
The Act provides for the establishment of the National Commission by the Central Government by notification. It is the highest
consumer disputes redressal forum among the three tiers established under the Act.
The National Commission consists of
i) a chairman; and
ii) four other members
appointed by the Central Government. The chairman must be either a retired or serving judge of the Supreme Court and his
appointment must be made in consultation with the Chief Justice of India.
A perusal of the rules and provisions makes it very clear that the Government intended to secure independence of the
Commission. Before assuming the office, the members of the commission have to give an undertaking that they do not and will
not have any financial or other interests capable of affecting their functions. It is gratifying to note that the President or any
Member is debarred from holding any office for five years after ceasing to hold such office, in any organization which was a
party before the National Commission during his tenure. Any person contravening this provision would be committing an offence
under the Act.
Jurisdiction of the National Commission
Subject to the other provisions of this Act, the National Commission shall have jurisdiction to entertain
i) complaints where the value of the goods or services and compensation, if any, claimed exceeds rupees one crore; and
ii) appeals against the orders of any State Commission; and
iii) to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by
and State Commission where it appears to the National Commission that such State Commission has exercised a jurisdiction not
vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with
material irregularity.

How to become a Smart Consumer?
Consumer Rights under the Act
- To know about the quality, quantity, and price of the goods and/or services being paid for
- To be heard and be assured that your interest will receive due consideration
- To seek legal redressal against unfair or restrictive trade practices
- To be protected against the sale of goods and services which are hazardous and spurious to life and property
- To be assured wherever possible, of access to a variety of goods and services at competitive prices
- To consumer education
Responsibilities as a Consumer
- To get full information regarding quality and price before making any purchase
- To be careful about false and/or misleading advertisements
- To purchase goods having ISI marks, Agmark,, etc. and for safety and quality
- Obtain proper receipt/cash memo for purchase made and guarantee/warranty card duly-stamped and signed by the seller
- Approach the appropriate forum for redressal of consumer grievances
- Ensure date of manufacturing, expiry date, maximum retail price etc.
- No one can sell more than MRP
After You Buy
What you do after you buy can be as important as what you do before you buy. These steps will help you avoid as well as deal
with any problems that might pop up.
Save all papers that you get with your purchase. Keep all contracts, sales receipts, manuals and warranty documents.
Ensure that the Warranty card is stamped with the seal of the Service provider, date of purchase, term of warranty period. Any
cards without these details render the warranty null and void.
Read and follow product and service instructions. The way you use or take care of a product might affect your warranty rights.
Contact Trader before taking Action
One thing that always be kept in mind that before approaching Consumer For a trader must be communicated about the defects in
goods or deficiency. Such thing must be done at the earliest opportunity and do not get late in this matter.
Sometimes negotiation is successful. So try to negotiate and if nothing is coming out then think for action but do not beg from the
trader.
Filing a Complaint
Complaint can be sent by post or personally filed. Normally, four copies of complaint are required to be submitted, out of which
one is forwarded to the opposite party. Complaint can be filed and signed by complainant or his authorized agent.
Complaint Form
The Act does not prescribe any specific form for filing a complaint. A well-drafted complaint should be in the following format.
Name and address of complainant
Name and address of opposite party / parties
Background of complaint
Defect / Deficiency / Observed
Efforts made by complainant to sort out the grievance
Proofs in support of complaint
Jurisdiction
Limitation
Relief claimed
Place, date and signature
Admission of Complaint
On receipt of complaint the District Forum may, by order, allow the complaint to be proceeded with or rejected. Before rejecting
a complaint, an opportunity of being heard has to be given to the complainant.
Procedure on Receipt of a Complaint
On receipt of the complaint, the District Forum will first decide on admissibility of the complaint within 21 days. If it is admitted,
a copy of the complaint will be sent to the opposite party mentioned in the complaint within 21 days, asking him to give his
version of the complaint. The reply should be given within 30 days. This period can be further extended by 15 days. The forum
shall proceed to settle the dispute if the opposite party devices or disputes the allegations in the complaint or does not reply
within the time.
Remedies Available to Consumer
a) To remove the defect pointed out by the appropriate laboratory from the goods.
b) To replace the goods with the new goods of similar description, which are free from similar defects.
c) To return the price or the charges paid by the complainant
d) To pay such amount as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of
the opposite party.
e) To remove the defects or deficiencies in the services in question;
f) To discontinue the unfair trade practice or the restrictive trade practice or not to repeat.
g) Not to offer the hazardous goods for sale.
h) To withdraw the hazardous goods from being offered for sale and
i) To provide for adequate costs to parties.