Handbook on

Consumer Law

Published by

The Legal Services Clinic

National Law School of India University, Bangalore

Karnataka, India

Foreward

The Legal Services Clinic of the National Law School of India University was formed with the twin mandate of providing free legal aid, and of spreading legal awareness. Apart from this, the student-run committee takes up projects which it feels are socially relevant, and are the need of the hour. The Clinic fulfils its mandate of spreading legal awareness through multiple legal literacy programmes and the publication of a newsletter about contemporary socio-legal issues. The publication of this Handbook on Consumer Law is also an addition to the Legal Services Clinic’s body of work in the area of spreading legal awareness.

Consumer Protection is a crucial area of law, and I am happy that the students have taken it up as the subject matter of a handbook aimed at educating the public. Consumer law is an area we all interact with in one way or the other, and awareness regarding consumer rights is crucial at a time when every provider of goods and services is driven by profits and results in consumer rights being overlooked. Hence, the bringing out of a handbook elucidating the substantive and procedural aspects of the Consumer Protection legal regime in India is a timely move. The language used in the handbook is simple, and is sure to be extremely user-friendly. I laud the members and volunteers for Legal Services Clinic for their attempts in making this handbook a reality.

Professor Ashok Patil

Chair on Consumer Law and Practice

Faculty Advisor, Legal Services Clinic, NLSIU

Preface

We are all consumers of goods and services. When a consumer approaches the market, he or she expects quality and value for money in every product purchased or service availed of. The consumer protection movement arose as a response to instances of consumers being cheated or harassed by providers of these goods and services. The consumer protection regime is an acknowledgment by the state that consumers need to be protected from unscrupulous practices of goods and service providers.

In India, the consumer protection regime was already in effect through provisions in the Sale of Goods Act, Indian Contract Act, the Prevention of Food Adulteration Act, and so on. However, seeking redressal against grievances under these laws was a lengthy process, and so the Consumer Protection Act, 1986, came into being. It sought to protect consumers, and provide them a simple and speedy redressal mechanism to ease their hardships.

This Handbook covers both substantive and procedural aspects of the Consumer Protection Act, and its various chapters deal with definitions, institutions and authorities under the Act. It also carries chapters on broader aspects of the consumer protection movement, such as deficiency in services and misleading advertisements. The Handbook also contains a chapter dealing exclusively with important case law. It is suggested that this Chapter may be referred to for using precedent and better understanding. Finally, the last chapter contains a template of a consumer complaint so that consumers may be able to draft their own complaints using that.

The handbook has been written in simple language. The idea behind the endeavour of bringing it out is to bridge the gap between law on paper and in practice. We seek to empower the common man with information about their rights and procedure to enforce them. We hope we have been successful in this endeavour, and that the handbook proves to be useful to those it is aimed at helping.

The Legal Services Clinic

2013-2015

Table of Contents

Foreward

Preface

Introduction to Consumer Rights and Consumer Protection Act

Authorities and Institutions Under The Consumer Protection Act, 1986

Whom do we approach for help?

Redressal Against Deficiency in Service

Misleading Advertisements

Landmark Decisions on Consumer Rights

Sample Draft Complaint Form

List of Contributors

Disclaimer: This Module/Booklet is merely informational in nature and is not a formal legal opinion rendered by practicing advocates. The Legal Services Clinic (LSC) is a committee run by law students of the National Law School of India University, Bangalore. The information provided is after research by students on legal issues and not a formed legal opinion. The Legal Services Clinic is not liable for any damage, directly or indirectly, resulting from such information.

Copyright © 2014 by The Legal Services Clinic-NLSIU: All rights reserved. This book or any portion thereof, may not be reproduced or used in any manner whatsoever, without due credits to the authors and the Legal Services Clinic, NLSIU.

Chapter I

Introduction to Consumer Rights and Consumer Protection Act

We are all users of goods and services every day. We travel on buses or trains, visit the doctor, buy books, have a haircut, watch television. By consuming these goods and availing these services, we become consumers.

In 1986, Consumer Protection Act, a social-welfare legislation was enacted with a view to provide for the better protection of the interests of the consumers. It aims to promote consumer rights, ensure simple, speedy and inexpensive redressal of consumer’s grievances and it has provisions for establishment of consumer councils and other authorities for settlement of consumer disputes and matter therewith connected.

This chapter briefly deals with the objectives and application of the Consumer Protection Act, 1986 and the issues of who is a consumer, when can protection under the Consumer Protection Act be availed, what are consumer rights and the reliefs available.

Objectives of Consumer Protection Act, 1986

  • The Consumer Protection Act, 1986 (hereinafter ‘Act’) endeavours to provide a simple, speedy and inexpensive redressal of consumer grievances.
  • The provisions of the Act which protect consumer rights are compensatory, preventive and punitive in nature.
  • The Act envisages a three-tier quasi-judicial machinery at the national, state and district levels to provide these remedies.
  • The Act also envisages establishment of Consumer Protection Councils at the central, state and district levels, whose main objectives are to promote and protect the rights of consumers.

Application of the Act

  • The Consumer Protection Act covers all the sectors whether private, public, cooperative or any person.
  • The provisions of this Act cover ‘goods’ as well as ‘services’ unless specifically exempted by the Central Government. The goods are those which are manufactured or produced and sold to consumers through wholesalers and retailers. The services are in the nature of transport, telephone, electricity, housing, banking, insurance, medical treatment, etc.
  • Section 3 of the Act specifically states that it is in addition to and not in derogation of any other law. The Supreme Court has in many cases[1] interpreted the above provision to mean that the remedies provided under the Act are in addition to the remedies provided under other statutes. It has been further held that if forums under the Act as well as another are approached, then it is for the appropriate authority to permit the parties to opt between the consumer forum and the other forum, depending on the facts and circumstances of the case.

Who is a consumer?

The word “consumer” has been defined in the Act and it means any person who buys any goods or services for consideration (price). A consumer is not confined only to taking action against the direct purchaser but also includes any other person who buys goods for consideration when such use is made with the approval of the buyer. Therefore, a daughter who uses the TV bought by her parents is also consumer of the TV. The consideration can be paid immediately, or promised to paid or partly paid and partly promised.

However, if a person obtains goods for resale, or goods or services for any commercial purpose, that person is not a consumer. For instance, if cyber-café buys multiple computers for use at the cyber-café then the proprietor of the cyber café is not a consumer. If the computers are defective, he does not have a remedy under the Act. He can take action against the manufacturer through other laws though. However, “commercial purpose” does not include use by a person of goods or services availed by him exclusively for the purposes of earning his livelihood by means of self-employment. The intention of the legislature is to exclude big business houses carrying on business with profit motive from being counted as consumers under the Act. At the same time it protects 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 – they are still “consumers” within the meaning of the Act. See Chapter VI for caselaws on this point.

Rights of the Consumer

The Consumer Protection Act sets out many different rights of consumers. They are mentioned in Section 6 of the Act. They are as follows:

a) the right to be protected against the 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 or services, as the case may be so as to protect the consumer against unfair trade practices;

c) the right to be assured, wherever possible, an access to a variety of goods and services at competitive prices;

d) the right to be heard and to be assured that consumer's interests will receive due consideration at appropriate forums;

e) the right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers; and

f) the right to consumer education.

These rights are actively promoted by the Consumer Protection Councils at the Central, State and District Levels.

When can protection under Consumer Protection Act be availed?

An aggrieved consumer seeks redressal under the Act through the means of a complaint. It does not mean that the consumer can complain against his each and every problem. The Act has provided certain grounds on which complaint can be made. Similarly, relief against these complaints can be granted within the set pattern. The Consumer Protection Act protects consumers against the following:

  • If the goods purchased by a consumer suffer from any defect(s).
  • If the services availed of by a consumer suffer from any deficiency.
  • When the price paid by a consumer is in excess of the price displayed on the goods or when the price is in excess of the price fixed under any law in force.
  • Goods, which will be hazardous to life and safety, when used, are being offered for sale to the public in contravention of the provisions of any law.
  • An unfair or restrictive trade practice adopted by any trader or service provider:

What are the reliefs that consumers may obtain?

The District Forum / State Commission can order the following reliefs:

  • To remove the defects in the goods pointed out
  • To replace the goods
  • To return to the complainant the price of the goods
  • To pay such amount of compensation for the loss or injury suffered by the consumer.
  • To remove the defects or deficiency in the services
  • To discontinue the unfair trade practice or not to repeat it
  • To withdraw the hazardous goods from being offered for sale
  • To provide the cost of expenditure incurred by the complainant

Chapter II

Authorities and Institutions Under The Consumer Protection Act, 1986

The Consumer Protection Act, 1986 provides for several quasi-judicial bodies for the purpose of promoting and protecting interests of the consumer under a three-tier approach, namely the District Fora, the State Commissions and the National Commission [Under Section 9 to 18, 18-A, 19 to 23, 24-A, 24-, 25, 26 and 27]. These are not the same as the normal civil courts since they constitute separate statutory bodies giving alternate remedies. But they work on a similar basis observing the same principles of natural justice, being empowered to give relief and whenever possible impose penalties for not adhering to the orders of the bodies. These bodies have been constituted with the objective of providing speedy redressal to consumer disputes.

The Act not only elaborates on many important aspects of the aforementioned judicial authorities such as jurisdiction, limitation, compensation, quorum and so on, but also on other institutions such as the Consumer Protection Councils [Section 4, 5, 6, 7 and 8] and the Consumer Welfare Fund. However, these are features and institutions that the common man may not be able to easily identify with and hence, it is important to understand what they signify.

Before filing a complaint and going to these courts, a legal notice is to be served by any authorized lawyer on behalf of the client, or the client himself to the opposite party for giving them the last opportunity to settle the matter out of court. This is necessary because courts are already over burdened with numerous matters. Further, it communicates the intention of the complainant in clear terms to the opposite party and acts as a legal warning that if the matter is not resolved and the grievances of the consumer are not addressed within a specified period of time, the consumer would have no option other than moving proceedings before the consumer courts.

District Forum

The District Consumer Disputes Redressal Forum (DCDRF) functions at the district level and is formed by the State Government in most of the districts with the permission of the Central Government (Section 9). Under Section 10 of the Act, the forum consists of one President and two members, operating for a term of 5 years, or till they reach the age of 65 years, whichever is earlier. The President must have the same qualifications as that of a District Judge. The other two members must be above the age of 35 years, with the ability to judge a matter with integrity, a basic bachelor’s degree from a recognized university and necessary knowledge and experience of at least 10 years in the fields of law, commerce, economics, public affairs, accountancy, industry or public administration and the problems within, for a socio-economic understanding of matters. The Act also mentions insanity, insolvency and conviction for a crime as the grounds of disqualification. All these appointments are made by the State Government as recommended by a selection committee. Further, at least one of the members must be a woman so as to ensure gender justice. The salary for these members is also prescribed by the State Government.

Section 11 of the Act deals with the jurisdiction of the district forum. Jurisdiction is basically the power of any court to hear and decide on matters, which means that the court can only entertain cases which fall under its jurisdiction. Pecuniary jurisdiction deals with monetary features or the financial value of claims for the goods and/or services, and compensation if any. The district fora only handle cases where the claim is of value less than Rs. 20,00,000/- (Rupees twenty lakhs). As for territorial jurisdiction, the district forum can hear matters where the opposite parties at the time of the complaint carry on business, reside, personally work for profit, or operate branches within the same geographical locations as that of the forum, or the area where the cause of action arises. Here “cause of action” means those events which have given the consumer the right to file a complaint before the dispute redressal agencies. Appellate jurisdiction deals with the jurisdiction of the courts to hear and decide matters on appeal from the courts below. However, the district fora, being the lowest level of authority (trial level), do not have any appellate jurisdiction. At the time of writing, there are 604 district forums in the country.

State Commission

This body is formally known as the State Consumer Disputes Redressal Commission (SCDRC). It is also established by the State Government with the consent of the Central Government (Section 9). It is composed of a President and minimum two members, although in several commissions more than two members are appointed owing to the need for a greater bench to handle a larger jurisdiction. One of these members must also compulsorily be a woman. The President should have been a High Court Judge, and can be appointed after consultation with the Chief Justice of India. Though the same criterion for the member of the district forums apply to the members of this commission as well, at least 50% of the members must be having experience of at least 10 years in the judiciary. The members are appointed by the State Government following the recommendations of the Selection Committee. The term for holding office cannot exceed five years from appointment or the age of 67 years, whichever is earlier. The salary is to be decided by the State Government (Section 16). As for pecuniary jurisdiction, the State Commission must redress all grievances with claims amounting to more than Rs. 20,00,000/- (Rupees twenty lakhs) and up to Rs. 1,00,00,000 (Rupees one crore). A complaint can be filed at when the opposite parties or any one of them reside, or carry on businesses directly or through branches, work for personal gain within those limits, or where the cause of action arose within its limits.