Unit - 3
Consumer Protection Law
Who is a Consumer? [Sec 2(1)(d)]
A "consumer" means any person who
1. Buys any goods for a consideration. Any user of such goods when 1 such use is made with the approval of a person who buys goods for consideration.
2. Hires or avails of any services for a consideration. Any beneficiary of such services when such services are availed of with the approval of the person who hires or avails of any services for a consideration.
3. But does not include a person who avails of such services for any commercial purpose. (Commercial purpose does not include purchase of goods or hiring of services for earning livelihood by means of self. employment.)
Consideration has been paid or promised or partly paid and partly promised, or under any system of deferred payment. There has to be a sale transaction for consideration.
Who is not a Consumer?
A person is not a consumer if he -
1. Buys any goods without a consideration. Any user of such goods when such use is made without the approval of person who buys goods for consideration.
2. Hires or avails of any services without a consideration. Any beneficiary of such services for consideration when such services are availed of, without the approval of the person who hires such services for consideration.
3. Obtains the goods for resale or commercial purpose.
4. Obtains the service under a contract of personal service.
The rights of consumers under this Act are:
(a) the right to be protected against the marketing of goods 2[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 1[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, access to a variety of goods and services at competitive prices;
(d) the right to be heard and to be assured that consumers' interests will receive due consideration at appropriate forums;
(e) the right to seek redressal against unfair trade practices 1[or restrictive trade practices] or unscrupulous exploitation of consumers; and
(f) the right to consumer education.
The Central Consumer Protection Council
(1) The Central Government may, by notification, establish with effect from such date as it may specify in such notification, a council to be known as the Central Consumer Protection Council (hereinafter referred to as the Central Council). (2) The Central Council shall consist of the following members, namely, -
(a) the Minister in charge of 1[consumer affairs] in the Central Government, who shall be its Chairman, and
(b) such number of other official or non-official members representing such interests as may be prescribed.
(1) The Central Council shall meet as and when necessary, but 1[at least one meeting] of the council shall be held every year.
(2) The Central Council shall meet at such time and place as the Chairman may think fit and shall observe such procedure in regard to the transaction of its business as may be prescribed.
(a) the right to be protected against the marketing of goods 2[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 1[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, access to a variety of goods and services at competitive prices;
(d) the right to be heard and to be assured that consumers' interests will receive due consideration at appropriate forums;
(e) the right to seek redressal against unfair trade practices 1[or restrictive trade practices] or unscrupulous exploitation of consumers; and
(f) the right to consumer education.
The State Consumer Protection Councils
(1) The State Government may, by notification, establish with effect from such date as it may specify in such notification, a council to be known as the Consumer Protection Council (hereinafter referred to as the State Council).
(2) The State Council shall consist of the following members, namely, -
(a) the Minister in-charge of consumer affairs in the State Government who shall be its Chairman;
(b) such number of other official or non-official members representing such interests as may be prescribed by the State Government.
(3) The State Council shall meet as and when necessary but not less than two meetings shall be held every year.
(4) The State Council shall meet at such time and place as the 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.
The objects of every State Council shall be to promote and protect within the State the rights of the consumers laid down in clauses (a) to (f) of section 6.
The District Protection Council (Sec. 8A)
the State Government shall establish for every district a district consumer protection council. It shall consist of the following members namely:
(a) the collector of the district, who shall be its chairman, and
(b) search number of other official and non-official members representing such interest as may be prescribed by the State Government.
The District Council shall meet as and when necessary but not less than two meetings shall be held every year. the District Council shall meet at such time and place within the district as the chairman may think fit and shall observe search procedure in regard to the transaction of its business as may be prescribed by the State Government.
1. District Forum:
District forum consists of a president and two other members. The president can be a retired or working judge of District Court. They are appointed by using state government. The complaints for goods or services worth Rs 20 lakhs or less can be filed in this agency. The agency sends the goods for testing in laboratory if required and gives decisions on the basis of facts and laboratory report. If the aggrieved party is not cosy by the jurisdiction of the district forum, then they can file an appeal against the judgment in State Commission inside 30 days by depositing Rs 25000 or 50% of the penalty amount whichever is less.
2. State Commission:
It consists of a president and two other members. The president must be a retired or working decide of high court. They all are appointed by state government. The complaints for the goods really worth more than Rs 20 lakhs and less than Rs 1 crore can be filed in State Commission on receiving complaint the State commission contacts the party against whom the complaint is filed and sends the goods for testing in laboratory if required. In case the aggrieved party is not satisfied with the judgment then they can file an appeal in National Commission within 30 days by depositing Rs 3500 or 50% of penalty amount whichever is less.
3. National Commission:
The national commission consists of a president and four members one of whom shall be a woman. They are appointed by Central Government. The complaint can be filed in National Commission if the value of goods exceeds Rs 1 crore.
If aggrieved party is not satisfied with the judgment, then they can file a grievance in Supreme Court within 30 days.
Basis | District Commission | State Commission | National Commission |
Composition | It consists of a president and two other members. | It consists of a president and two other members. | It consists of a president and four other members. |
Who can be a President | A working or retired judge of District Court. | A working or retired judge of High Court. | A working or retired judge of Supreme Court. |
Appointment of President | The president is appointed by the state government on the recommendation of the selection committee. | The president is appointed by the state government after consultation with the chief justice of the High Court. | The president is appointed by the central government after consultation with the chief justice of India, |
Jurisdiction | In 1986, it had jurisdiction to entertain complaints where the value of goods or services does not exceed Rs 5, 00,000 but now the limit is raised to 20 lakhs. | In 1986, it had jurisdiction to entertain complaints when the value of goods or services exceeds Rs 5,00,000 and does not exceed Rs 20,00,000 but now it is raised to more than Rs 20,00,000 and up to Rs1 crore. | In 1986, it had jurisdiction to entertain complaints where the value of goods or services exceeds Rs 20 lakhs but now the limit is raised and it entertains the complaints of goods or services where the value exceeds Rs 1 crore. |
Appeal against orders | Any person who is aggrieved by the order of District Forum can appeal against such order to State Commission within 30 days and by depositing Rs 25000 or 50% of the penalty amount whichever is less. | Any person who is aggrieved by the order of State Commission can appeal against such order to National Commission within 30 days and by depositing Rs 35000 or 50% of penalty amount whichever is less. | Any person who is aggrieved by the order of the National Commission can appeal against such order to Supreme Court within 30 days and by depositing 50% of penalty amount but only cases where value of goods or services exceeds Rs 1 crore can file appeal in Supreme Court. |
Step 1
Send a notice to the construction company/ developer, before filing a formal complaint. It is important for the consumer to give notice to the opposite party regarding the deficiency in service or unfair practice. This is to see if the other party is willing to offer the compensation to make the good the loss suffered by the consumer. If the developer refuses or neglects the notice, the you can approach the consumer court.
Step 2
Submit a formal complaint under the Consumer Protection Act, 1986. You need not hire a lawyer for filing the suit. Fill this complaint form and submit it to the commission. On a plain paper, mention the details of the complainant and the opposite party. Otherwise, you can consult consumer grievance redressal forums which also help consumers in filing and forming petition at nominal charges. One such non-governmental organization is International Consumer Rights Protection Council.
The consumer should file the complaint in the district forum which has under its jurisdiction the other party's residence or office of profit or the area where the project is located.
Step 3
You have to submit the fee through a demand draft. The consumer forum follows difference jurisdiction to entertain complaint:
Fee details
For district forums
For state forums
For the National Commission
A standard amount of Rs 5,000
Types of defaults you can complain against
The Forum may order that the defect is removed. For example, if your fridge is not working properly the Forum may order the Company people to repair the fridge.
2. Replacement of goods.
The Forum may order the replacement of goods. For example, if the complainant has purchased a washing machine, it is not working satisfactorily even after the repair as it has a serious manufacturing defect the Forum may order replacement of the washing machine with a new one.
3. Refund of the price.
In certain cases, the Forum may order refund of the price. For example, if the complainant has purchased a T.V. It is not working properly there is no clarity of image, there is distortion of pictures etc. It has been proved that there is no improvement even after the repairs then the Forum may order refund of price.
4. Award of compensation to Consumer for any loss or injury.
In deserving cases the Forum can award compensation to the complainant for any loss or injury. For example, if a doctor has purchased a sonography machine and it is found to be defective then the Forum may award compensation to the doctor for the loss he has suffered.
5. Removal of deficiency in service
An automobile dealer who is required to provide free services to customers fails to provide free services or failed to provide service thereafter can be directed to provide service in addition to a direction to compensate towards mental and physical strain/torture of the customer. Similarly, a bank or an insurance company can be taken to task in case they fail to fulfill their obligation.
6. To discontinue Unfair Trade Practice/Restrictive Trade Practice
A manufacturer or trader who advertises his goods (the quality, quantity, purity or standard of his product) or his services (quality, standard, manner of performance) either falsely or in exaggerated manner may be called upon to prove the same and failing which an order may be passed stopping such publication of advertisement apart from compensation for the same. For instance, ad war between Colgate and Palmolive may attract such an order.
7. Award cost to the parties
The Forum can award cost to the parties. The complainant can claim the cost that he has incurred towards legal advice, travelling, postage etc. from the Opposite party.
It may be noted that if it is proved that the complainant has filed a frivolous or vexatious complaint the complainant may be ordered to pay up to Rs 10,000/- to the opposite party and the Forum may dismiss the complaint under section 26 of the C.P. Act. This section has been incorporated in the Act to curb frivolous and vexatious complaints. For example, if the complainant files a complaint against a doctor without any reasonable grounds just to harass the doctor and extract money from him then the Forum can dismiss the complaint and order that the complainant should pay Rs 10,000/- to the doctor for filing the frivolous complaint.
Appeal against the Order the order of District Forum lies to State Commission. Appeal has to be filed within a period of 30 days from the date of receipt of the Order. Similarly, an appeal against the order of State Commission has to be filed before National Commission. Final Appeal against Order of National Commission lies to Supreme Court.
The National Commission shall, in the disposal of any complaints or any proceedings before it, have-
(a) The power of a Civil Court as specified in sub-sections (4), (5) and (6) of sec. 13;
(b) The power to issue an order to the opposite party directing him to do any one or more of the things referred to in Cl. (a) to (I), of sub- section (I) of sec. 14, and follow such procedure as may be prescribed by the Central Government.]
Unfair trade practices refer to the use of various deceptive, fraudulent, or unethical methods to obtain business. Unfair business practices include misrepresentation, false advertising or representation of a good or service, tied selling, false free prize or gift offers, deceptive pricing, and noncompliance with manufacturing standards. Such acts are considered unlawful by statute through the Consumer Protection Law, which opens up recourse for consumers by way of compensatory or punitive damages. An unfair trade practice is sometimes referred to as “deceptive trade practices” or “unfair business practices.”
Understanding Unfair Trade Practices
Unfair trade practices are commonly seen in the purchase of goods and services by consumers, tenancy, insurance claims and settlements, and debt collection. Most states’ unfair trade practices statutes were originally enacted between the 1960s and 1970s. Since then, many states have adopted these laws to prevent unfair trade practices. Consumers who have been victimized should examine the unfair trade practice statute in their state to determine whether they have a cause of action.
Unfair trade practices are commonly seen in the purchase of goods and services by consumers, tenancy, insurance claims and settlements, and debt collection.
In the United States, unfair trade practices are addressed in Section 5(a) of the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” It applies to all individuals engaged in commerce, including banks, and sets the legal standard for unfair trade practices, which may be deemed unfair, deceptive, or both. Below are lists of unfair and deceptive practices as per the rule:
Unfair Practices
An act is unfair when it meets the following criteria:
Deceptive Practices
An act or practice is deceptive when it meets the following criteria:
Examples of Unfair Trade Practices in Insurance
Unfair trade practices can happen in any industry but are significant enough to prompt the National Association of Insurance Commissioners (NAIC) to issue guidance related to the sale of insurance products. The NAIC defines unfair trade practices in the following ways:
The NAIC considers a deceptive trade practice to be any of the above acts coupled with the conditions below:
The Competition Act, 2002 was enacted by the Parliament of India and governs Indian competition law. It replaced the archaic The Monopolies and Restrictive Trade Practices Act, 1969. Under this legislation, the Competition Commission of India was established to prevent the activities that have an adverse effect on competition in India.[1][2] This act extends to whole of India except Jammu and Kashmir.
It is a tool to implement and enforce competition policy and to prevent and punish anti-competitive business practices by firms and unnecessary Government interference in the market. Competition laws is equally applicable on written as well as oral agreement, arrangements between the enterprises or persons.
The Competition Act, 2002 was amended by the Competition (Amendment) Act, 2007 and again by the Competition (Amendment) Act, 2009.
The Act establishes a Commission which is duty bound to protect the interests of free and fair competition (including the process of competition), and as a consequence, protect the interests of consumers. Broadly, the Commission's duty is:
To prohibit the agreements or practices that have or are likely to have an appreciable adverse effect on competition in a market in India, (horizontal and vertical agreements / conduct);
To prohibit the abuse of dominance in a market;
To prohibit acquisitions, mergers, amalgamations etc. between enterprises which have or are likely to have an appreciable adverse effect on competition in market(s) in India.
In addition to this, the Competition Act envisages its enforcement with the aid of mutual international support and enforcement network across the world.
References:
1.Commercial Law by John. A. Chamberlain
2. Business Law by B.B. Dam
3. Business Law – N D Kapoor, SChand
4. Business Law – Pathak, Tata Mc GrawHill
5. Legal frame work, Oxford.
