CHAPTER 11

CONSUMER PROTECTION ACT, 1986

Consumerism
Consumerism is a social movement seeking to augment the rights and powers
of the buyers in relation to sellers. Consumerism is the dedication of those activities
of both public and private organisations which are designed to protect individuals
from unfair trade practices. It is a collective movement of the consumers to protect
their interest. It is a social force to make the business more honest, efficient,
responsible and induce the government to adopt the necessary measures to protect
consumer interests by guaranteeing their legitimate rights.
Business practices which ignore consumer interests are basically linked with
the need for consumer protection. The objectives of profit maximisation and growth
are often emphasised. Therefore consumers are not only required to pay higher
prices, but also they get low quality goods. Adulteration, false weights and measures,
various types of manipulative and deceptive practices in the market necessitates
consumer protection.
The major reason for consumer exploitation in India is that consumers have not
organised themselves to have a powerful consumer movement. Moreover there lacks
alert agencies to secure redressal of their grievances.
Consumer protection
For effective consumer protection a practical response on the part of three
parties such as business, consumers and the government is essential. The business
comprising the producers and all the elements of the distribution channels has to pay
due regard to consumer rights. The consumers should accept consumerism as a
means of asserting and enjoying their rights. Consumerism should succeed in making
the business and the government more responsive to the rights of the consumers.
The government has to come to the rescue of the helpless consumer to prevent
him from being mislead, cheated and exploited. There are various legislative
measures for consumer protection. These include Law Adalats, Write Petition,
Ecomark system, Agricultural Produce (Grading and Marketing) Act 1937, MRTP
Act 1969, Bureau of Indian Standard Act 1986, Consumer Protection Act etc.
Consumer Protection Act, 1986
The Consumer Protection Act was passed in the year 1986. It came into force
st
on 1 July 1987. The Act recognizes the consumers rights. The central and state
level consumer protection councils are functioning in all states and union territories.
The Act aims at providing a better protection to the interest of consumers by the
establishment of such consumer councils.
The objective of the Act is to protect the interest of consumers. For this
purpose provision has been made for the establishment of consumer councils and
authorities for the settlement of consumers’ disputes and other matters connected
therewith.
Features of the Consumer Protection Act
1. It applies to all goods and services unless specifically exempted by the Union
government.
2. It covers all the sectors-private, public and co-operative.
3. Provisions of the Act are compensator in nature. The consumers get additional
remedies.
4. It ensures consumer rights.
5. It empowers consumers’ seeking discontinuance of certain unfair and restrive
trade practices or deficiencies or defects in services.
In 1993, exhaustive amendments have been made under this Act. The major
features of the provisions of Amended Act are the following:
1. Monetary Jurisdiction of District Forum, State and National Commission has
been further increased.
2. Presidents of these commissions have been empowered to constitute benches
with one or more members for the disposal of cases.
3. The state governments are required to establish District Consumer Protection
Councils – with district collector as chairman, to protect and promote the
consumer rights within the district.
Provisions of the Consumer Protection Act
1. Complaints can be given by the consumers to the authorities under this Act.
2. Complaints can be lodged and compensations can be claimed by consumers
with respect to
a. Fraudulent practices of traders and manufactuers.
b. Defective goods.
c. Deficiency of services including services in connection with banking,
financing, insurance, transport, supply of electricity and gas,
entertainment, house construction, medical services, boarding and
lodging etc.
3. There is a three tier judicial machinery to deal with consumer grievances and
disputes. They are District Forum, State Commission and National
Commission.
a. District Forum to deal with all complaints where the value of goods or
services and compensation claimed doesn’t exceed Rs. 20 Lakh (in
1987, it was one lakh)
b. State Commission to deal with cases where the value or claim for
compensation exceeds Rs. 20 Lakhs but doen’t exceed Rs. 1 crore (in
1987,) it was above Rs. 1 lakh and upto Rs. 10 lakhs).
c. National Commission to take up all cases exceeding the value of Rs. 1
crore (in 1987, it was more than Rs. 10 lakhs).
Definitions of important terms under Consumer Protection Act
1. Consumer [Sec. 2(1) (d)]
The term consumer means
a. One who buys goods or hires services for a consideration.
b. Any user of such goods with the approval of the buyer and the beneficiary
of services which is availed of with the approval of one who hires the
services and
c. Any one who uses goods bought or services hired exclusively for earning
livelihood by self employment.
2. Complainant [Sec. 2 (1) (b)]
A complainant can be:
i. A consumer
ii. Any voluntary consumer association registered under the Co’s Act 1956
or under any other Law in force for the time being or
iii. The central government or any state government which makes a
complaint.
A complainant is the one who makes a complaint. The government, need not
be a consumer as defined above, but can still make a complaint.
3. Complaint [Sec. 2(1) (c)]
A complaint means any allegation in writing made by a complainant that:
a. As a result of any unfair trade practice adopted by any trader, the
complainant has suffered loss or damage.
b. The goods mentioned in the complaint suffer from one or more defects.
c. The services mentioned in the complaint suffer from deficiency in any
respect.
4. Consumer dispute [Sec. 2(1) (e)]
A consumer dispute means a dispute where the person against whom a
complaint has been made, denies or disputes the allegations contained in the
complaint. So a consumer complaint doesn’t automatically become a
consumer dispute.
5. Person [Sec. 2(1) (m)]
Person includes a firm whether registered or not, a Hindu undivided family, a
co-operative society and every other association of persons whether registered
under the Societies Registration Act, 1860 or not.
6. Restrictive Trade Practices: [Sec. 2 (1) (nn)]
Restrictive Trade Practices means any trade practice which requires a consumer
to buy, hire or avail of any goods or as the case may be, services as a condition
precedent for buying, hiring or availing of other goods or services.
7. Service [Sec.2 (1) (o)]
‘Service’ means service of any description which is made available to potential
users and includes the provision of facilities in connection with banking,
financing, insurance, transport, processing, supply of electrical or other energy;
boarding or lodging or both, housing construction, entertainment, amusement
 or the purveying a news or other information. The term does not include the
rendering of any service free of charge or under a contract of personal service.
8. Trader [Sec. 2(1) (q)]
Trader in relation to any goods means a person who sells or distributes any
goods for sale and includes the manufacturer thereof and where such goods are
sold or distributed in package form includes the packer thereof.
9. Unfair Trade Practice [Sec. 2(1) (r)]
Unfair Trade Practice 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:
1. The practice of making any statement that –
a. Falsely represents that the goods or services are of a particular
standard, quality, quantity or composition.
b. Falsely represents any second hand, rebuilt or old goods as new
goods.
c. Represents that the goods or services have sponsorship, uses or
benefits which such goods or services do not have,
d. Represents that the seller has a sponsorship or approval which he
does not have,
e. Makes false or misleading representation consigning the usefulness
of any goods or services.
f. Gives to the public any guarantee of the performance or length of life
of a product.
g. Makes a promise to replace, maintain or repair an article without an
intention to do so.
h. Misleads the public consigning the price of a product or service and
i. Gives misleading facts discouraging the goods, services or trade of
another person.
2. Permits the publication of any advertisement for the sale or supply at a
bargain price, or the goods or services that are not intended to be offered for
sale at the bargain price.
3. Permits the offering of gifts or prizes with the intention of not providing
them as offered.
4. Permits the sale or supply of goods to be used by consumers, having reason
to believe that the goods do not comply with the prescribed standards.
5. Permits the hoarding or destruction of goods or refuses to sell the goods or
to make them available for sale if such destruction or refusal raises, the cost
of those or other similar goods.
10. Bargaining Price [sec. 2(1) (2)]
Bargaining price means a price that is stated in any advertisement to be a bargain
price, by reference to an ordinary price or otherwise, or a price that a person who
reads, hears or sees the advertisement, would reasonably understand to be a
 bargain price having regard to the prices at which the product advertised or like
products are ordinarily sold.
Consumer Protection Council
The Act provides for the establishment of a Central Consumer Protection
Council by the Central government and a State Consumer Protection Council in each
state by the respective state governments.
Central Consumer Protection Council
Formation (sec. 4)
The Central government may, by notification, establish a council to be known
as the Central Consumer Protection Council, with effect from such date as it may
specify in the notification. The Central Council shall consist of the minister in charge
of consumer affairs in the Central Government who shall consist of the minister in
charge of consumer affairs in the Central Government who shall be its chairman and
such number of other official or non official members representing prescribed interest.
The Central Council shall consist of 150 members. The term of the Council shall be
3 years. Any number may, by writing to the chairman, resign from the Central
Council. The vacancies so caused or otherwise shall be filled from the same
category by the Central Government.
Meeting of the Central Council
The Central Council shall meet as and when necessary but at least one meeting
of the council shall be held every year. It shall meet at such time and place as the
chairman may think fit and shall observe such procedure in regard to the transaction of
business as may be prescribed.
Objects of the Central Council
The objects of the Central Council are to promote and protect the rights of the
consumers such as –
(a) The right to be protected against marketing of goods and services which are
hazardous to life and property;
(b) The right to be informed about the quality, quantity, potency, purity standard and
price of goods and services so as to protect the consumer against unfair trade
practices;
(c) The right to be assured, wherever possible, access to a variety of goods at
competitive prices;
(d) The right to be heart and assured that consumer’s interests will receive due
consideration at appropriate forums;
(e) The right to seek redressal against unfair trade practices or unscrupulous
exploitation of consumers; and
(f) The fight to consumer education.
The State Consumer Protection Council
Formation (Sec. 7)
The State government may, by notification, establish with effect from such date
as it may specify in the notification, a council to be known as State Consumer
Protection Council (State Council). The State council shall consist of a chairman and
such number of official and non-official members representing prescribed interest as
may be specified by the State government. The minister in charge of consumer
affairs in the state government shall be its chairman. The other official or non
members are appointed by the state government.
Meeting of the State Council
The State Council shall hold at least two meetings every year. It shall meet at
such time and place as chairman may think fit and shall observe such procedure in
regard to the transaction of its business as may be prescribed by the State
Government.
Objects of the State Council
The objects of every State Council have been to protect the following rights of
the consumers.
(a) The right to be protected against marketing of goods and services which are
hazardous to life and property;
(b) The right to be informed about the quality, quantity, potency, purity, standard
and price of goods and services so as to protect the consumer against unfair
trade practices;
(c) The right to be assured, wherever possible, access to a variety of goods at
competitive prices;
(d) The right to be heard and assured that consumer’s interests will receive due
consideration at appropriate forums;
(e) The right to seek redressal against unfair trade practices or unscrupulous
exploitation of consumers; and
(f) The fight to consumer education.
Consumer disputes Redressal Agencies
The consumer protection Act provides for a three-tier consumer disputes
redressal system encompassing the district, state and national levels. Thus, there are
two levels of agencies in the state and one agency at the national level. In other
words, the Act provides for the establishment of consumer disputes redressal agencies
like District forum, State Commission and National Commission.
1.District Forum
District Forum means a consumer disputes redressal forum established under
class (a) of Section 9. A district Forum is established in each district of every State.
If the state government thinks fit, more than one District Forum may be established in
a district.
Composition
Each District Forum shall consist of a chairman and two members appointed by
the State government. District collector is the chairman of the District Forum of the
concerned district. One of the members is a person of eminence in the field of
education, trade or commerce and the other is a lady social worker.
Every appointment of the chairman and members of the Forum shall be made
by the state government on the recommendation of the selection committee. Every
member will hold office for a term of 5 years or upto the age of 65 years which ever is
earlier, and will not be eligible for re-appointment. A member may resign his office
in writing under his hand addressed to the State government. The vacancy so caused
may be filled by the appointment of a person possessing any of the qualification
mentioned above in relation to the category of the member who has resigned.
The salary or honorarium and other allowances payable to, and the other terms
and conditions of services of the members of the District Forum shall be such as may
be prescribed by the State government.
Jurisdiction of the District Forum
Subject tot he other provisions to this Act the District Forum shall have
jurisdiction to entertain complains where the value of the goods or services and the
compensation, if any, claimed does not exceed Rs. 5 lacks. A complaint shall be
instituted in a district forum within the local limits of whose jurisdiction:
a. The opposite party or parties at the time of the institution of the complaint resides
or carries on business.
b. Any of the opposite parties at the time of the institution of the complaint resides or
carries on business, provided that in such case either the permission of the District
forum is given or the opposite parties who do not reside or carry on the business,
as the case may be, acquiesce in such institution or
c. The cause of action, wholly or in part, arises.
Manner in which complaint shall be made
A complaint in relation to any goods sold or delivered or service provided or
agreed to be provided may be filed with a district forum y –
a. The consumer to whom such goods are sold or delivered or such service
provided.
b. Any recognised consumer association, whether the aggrieved consumer is a
member of such association or not.
c. One or more consumers, where there are numerous consumers having the same
interest or
d. The Central or State government.
Procedure for disposing of complaints
Procedure on receipt of complaint relating to goods
 a. Reference of complaints to opposite party: Refer a copy of the complaint to
the opposite party mentioned in the complaint directing him to give his version
of the case within a period of 30 days. (the District Forum may extent this
period to 45 days).
b. Deniel of allegation by opposite party: Where the opposite party denies or
dispute the allegations or fails to take any action within the time given, the
District Forum shall proceed to settle the dispute.
c. Referring samples to laboratory: If the defect in the goods cannot be
determined without proper test, the District Forum shall obtain a sample of the
goods from the complainant, and refer the sample to the appropriate laboratory
along with a direction to find out whether such goods suffer from any defect
alleged in the complaint.
d. Deposits of fees: Before the sample of the goods is referred to any laboratory,
the District Forum may require the complainant to deposit to the credit of the
forum such fees for laboratory test as may be specified.
e. Remittance of fees to laboratory: The District Forum shall remit the amount
deposited to its credit to the appropriate laboratory to carry out the test and on
receipt of the report form the laboratory the Forum shall forward a copy of the
report along with such remarks as the District Forum may feel appropriate to
the opposite party.
f. Objectives against the findings of the laboratory: If any of the party disputes
the correctness of the finding of the laboratory, the District Forum shall require
the opposite party or complainant to submit in writing his objections in regard
to the report.
g. Opportunity of being hard: The District Forum shall thereafter give a
reasonable opportunity, to the opposite party and the complainant, of being
heard.
Procedure on receipt of complaints relating to services
If the complaint relates to any service, the following is the procedure.
1. Refer a copy of such complaint to the opposite party directing him to give his
version of the case within a period of 30 days (the district forum may extent
this period to 45 days).
2. Where the opposite party, on receipt of the copy of the complaint denies or
dispute the allegation or fails to take any action to represent his case within the
specified time, the District Forum shall proceed to settle the consumer disputes
on the basis of evidence.
3. No proceedings complying with the procedure shall be called in question in any
court on the ground that the principles of natural justice have not been
complied with.
4. For this purpose the District Forum shall have the same powers as re vested in
a civil court in respect of the following matters:
a. Enforcing the attendance of any defendant or witness and examining the
witness on oath.
 b. The discovery and production of any document or other material object
producible as evidence.
c. The reception of evidence on affidavits
d. Requisitioning of the report of the concerned analysis or test from the
appropriate laboratory or other relevant source.
e. Issuing of any commission for the examination of any witness.
f. Any other matter which may be prescribed.
5. Every proceeding before the District Forum shall be deemed to be a judicial
proceeding within the meaning of sections 193 and 228 of the IPC.
6. Where the complainant is a consumer referred to in sec 2(i) (b) (v), the
provisions of rule 8 of order 1 of the Code of Civil Procedure shall apply.
Findings of the District Forum
(Remedies available to the complainant)
If after the proceedings is conducted, the District Forum is satisfied that the
goods or services suffer from any of the defects specified in the complaint, it shall
issue an order to the opposite party directing him to do one or more of the following
things. [Sec. 14 (i)]
a. To remove the defect pointed out.
b. To replace the goods with new goods of similar description.
c. To return to the complainant the price or as the case may be, the charges paid
by the complainant.
d. To pay such amount as may be awarded by it as compensation.
e. To remove the defects or deficiencies in the services in question.
f. To discontinue the unfair trade practices or restrictive practices or not to repeat
them.
g. Not to offer hazardous goods for sale.
h. To withdraw the hazardous goods from being offered for sale.
i. To provide for adequate cost to parties.
Appeal
Any person aggrieved by an order made by the District Forum may prefer an
appeal against such order to the State Commission with a period of thirty days from
the date of the order, in such form and manner as may be prescribed. (The State
commission may extent the period on reasonable grounds.)
2. State Commission
Each state commission will consist of a President, who shall be a person who is
or has been a judge of the High Court appointed by the state government and two
other members, who shall be persons having knowledge or experience of dealing with
problems relating to law, commerce, economics, industry, public affairs etc. (one of
whom shall be a woman).
No appointment of the President of the State Commission shall be made except
after consultation with the Chief Justice of the High Court. Every appointment of
members shall be made by the State government on the recommendation of a selection
committee consisting of president of the state commission (Chairman), Secretary of
the Law Department of the State (member), and Secretary in-charge of the department
dealing with consumer affairs in the state (member).
State commission deals with all complaints where the value or compensation
claim more than Rs . 20 lakhs but less than Rs. 1 crore.
Appeals against the orders of any District Forum within the State can be made
with the State Commission.
The salary and other allowances of the members of the state commission shall
be prescribed by the State government. Every member of the State Commission
shall hold office for a term of 5 years or upto the age of 65 years, which ever is earlier
and shall not be eligible for reappointment.
Jurisdiction of the State Commission (sec. 17)
Subject to the other provisions the state commission shall have jurisdiction:
a. To entertain, complaints, where the value of the goods or services and
compensation if any claimed exceeds Rs. 2,00,000 but does not exceed Rs. 1
crore and appeals against the orders of the District Forum within the state.
b. To call for the records and pass appropriate orders in any consumer dispute
which is spending before or has been decided by any district Forum within the
State.
Procedure
For the disposal of complaints by the District Forum shall with necessary
modification, be applicable to the disposal of disputes by the State commission.
Appeals
Any person aggrieved by an order made by the State Commission in exercise
of its powers may prefer an appeal against such order to the National Commission
within a period of 30 days from the date of the order. However, the National
Commission may entertain an appeal after the expiry of the said period.
3.National Commission
Establishment (sec. 20)
National Commission will consist of:
a. A person who is or has been a judge of the Supreme Court to be appointed by a
central government, as its president.
No sitting judge of the supreme court can be appointed except after
consultation with the chief justice of the Supreme Court.

b. Four other members having adequate knowledge and experience or have shown
capacity in dealing with problems relating to economics, law, commerce,
 accountancy, industry, public affairs or administration (one of whom shall be a
women).
The salary and other allowances to the members of the commission and the
other terms and conditions of service will be such as may be prescribed by the
central government.
Every member of the National Commission shall hold office for a term of 5
years or upto the age of 70 years, which ever is earlier and shall not be eligible for
reappointment.
Jurisdiction of National Commission
Subject tot he other provision the National Commission shall have:
a. To entertain, complaints, where the value of the goods or services and
compensation if any claimed exceeds Rs. 1 crore and appeals against the orders
of any State Commission.
b. To call for the records and pass appropriate orders in any consumer dispute
which is spending before or has been decided by any State Commission.
Procedure applicable to National Commission
The National Commission shall in the disposal of any complaints or any
proceedings before it, have
a. The power of a civil court specified in sec. 13 (4-6)
b. The power to issue an order to the opposite party directing him to do any one or
more of the things stated in sec.14(i) and follow such procedure as may be
prescribed by the Central government.
Appeal
Any person aggrieved by an order made by the National Commission in
exercise of its power may prefer an appeal against such order to the Supreme Court
within a period of 30 days from the date of order. However, the Supreme Court may
entertain an appeal after the expiry of 30 days.
Finality of Orders (sec. 24)
Every order of the District Forum, the State Commission or the National
Commission shall be final unless an appeal has been preferred against such an order
under the provisions of this Act.
Limitation period
The District Forum, the State Commission or the National Commission shall
not admit a complaint if it is not filed within two years from the date on which the
cause of auction has arisen. However, this may be extended on reasonable grounds.
No such complaint shall be entertained if the National Commission or State
Commission or District Forum, does not record the reason for making such a delay.

QUESTIONS
Short Answer Questions (2 marks)
1. What is consumerism?
2. Define consumer.
3. Define complainant.
4. Define consumer dispute.
5. Define service.
6. Define complaint.
7. Define restrictive trade practice
8. What is unfair trade practice?
9. What is beginning price?
10. Explain the constitution of District Forum
11. Explain the constitution of State Commission.
12. Explain the constitution of National Commission.
Short Answer Questions (5 marks)
1. Explain the features of Consumer Protection Act, 1986.
2. Explain the provisions of Consumer Protection Act.
3. What are the objects of Central Consumer Protection Council?
4. Explain the objects of the State Consumer Protection Council?
5. Explain the constitution and jurisdiction of State Commission.
6. What are the remedies available to the complainant?
Essay Questions (20 marks)
1. Explain the consumer disputes redressal agencies and their functions.
2. Explain the procedure of disposing of complaints by the District Forum.
3. Write an essay on National Commission.
4. Write an essay on State Commission.