Cases Consumer protection Act 1986

1. Forum takes builder to task over delivery delay

KOCHI: The Consumer Disputes Redressal Forum in Kochi rejected the claim by a builder
that an apartment owner does not come under the purview of the Consumer Protection Act
and was not entitled for any relief for the delay in delivery.
The forum ordered the builder to pay a penalty to the apartment owner for the delay.
Dr Ginil Kumar, based in Kannur, entered into an agreement with DLF Southern Towns
Private Ltd to purchase an apartment in the eighth floor of the New Town Heights DLF with
car parking facility for Rs 32 lakh in Kakkanad in 2008. He paid Rs 6 lakh to the builder in
two installments the same year.
He availed a loan from the LIC Housing Finance in June 2008. A supplementary agreement
was entered into by the owner and the builder in 2009, agreeing that if the project was
delayed beyond December 2011, the builder would have to pay Rs 10 per sq ft per month as
compensation for the period of delay.
Kumar has paid a total of Rs 31. 22 lakh to the builder since 2008. The company has failed
to complete the construction of the apartment as agreed. But the builder has not paid the
compensation, forcing Kumar to approach the forum.
The builder claimed that the buyer had defaulted on payment.
But the forum, headed by A Rajesh, affirmed that housing construction was 'a service under
the purview of the Consumer Protection Act'. So, the contention of the builder that the
"complainant was not a consumer and the complaint not maintainable within the ambit of the
Act does not hold water".
The forum ordered the builder to pay a penalty of Rs 10 per sq ft per month from 2011 to the
actual date of delivery to Kumar. The builder also ordered the builder to pay Rs 10,000 for
legal proceedings at the forum.

2. You can sue companies for misleading advertisements, say

experts
MUMBAI: Consumer rights experts recently came together to explain how advertisements
from health drinks to innerwear to fairness lotions and creamsfool you and how you can
sue them under the Consumer Protection Act.
Elaborating on the damaging effects of misleading advertisements, M S Kamath of the
Consumer Guidance Society of India said, "Right from undergarment advertisements where
the model is shown as a person with superhuman powers to nutrient supplements for children
which claim to make them taller, one can take on manufacturers for making such unreal
claims."
He pointed out that fairness creams, which formed the biggest share of such controversial
advertisements, have social implications as they propagated the idea of promoting fair skin to
achieve success. "Fairness cream advertisements make several claims on how one can fetch
high-paying jobs and luck in even matrimony. They mislead consumers by telling them that

Cases Consumer protection Act 1986

without using their products one cannot get a good job or a suitable life partner. Consumers
need to take them on," Kamath prodded.
He claimed that in surveys conducted by the organization at least 60% of women
respondents had used such creams and 16% even admitted that it had reacted badly on their
skin.
Kamath suggested that there should be a regulatory agency to control and restrict such
misleading advertisements

3. Monetary claim pleas can be heard by consumer fora

Background: Consumer fora can deal with complaints pertaining to defective goods and
deficiency in services. A simple money claim is not maintainable under the Consumer
Protection Act and has to be filed in a regular civil court. But if the money claim can be
linked to a transaction relating to defective goods or deficiency in service, a consumer
complaint can be filed.
Case Study: Lallan Kumar had bought a pair of Bata shoes on November 25, 2003. Since
they were defective, he approached the shop. By mutual consent, the shoes were exchanged
for a pair of slippers. There was a price difference of Rs 50, as the shoes were priced at Rs
124.95, while the slippers cost Rs 74.95. The difference of Rs 50 was not handed over, but an
acknowledgement was given that this amount was refundable.
Kumar repeatedly approached the shop for a refund, but it was not paid. Ultimately, he filed a
complaint before the district forum against the shop owner, Ratan Kumar Mukherjee. He
claimed a refund of Rs 50 along with 12% interest and compensation of Rs 5,000.
The district forum considered it to be a case of recovery of money, without any deficiency in
service. It ruled that a complaint for a simple money claim would be beyond the purview of
the Consumer Protection Act, and the proper remedy would be to approach a civil court.
Since the complaint was dismissed, Lallan Kumar appealed to the Bihar state commission,
which concurred with the forum's order. The appeal was dismissed holding that the complaint
was not maintainable, as no deficiency in service or negligence had been alleged.
Undeterred, Lallan Kumar approached the national commission through a revision petition.
The commission observed that the issue to be determined was whether the claim for the
balance amount of Rs 50 is a simple claim for recovery of money, or a part of a consumer
dispute. It was noted that the dispute arose out of a transaction relating to purchase of shoes
which were defective, and exchanged for slippers which were of a lower value. Hence, the
origin of the dispute pertaining to the refund of Rs 50 was attributable to the purchase of
defective shoes, which is a consumer dispute.
In a judgment delivered by Suresh Chandra on behalf of the bench along with Justice V B
Gupta, the national commission observed that the consumer angle had been overlooked by
the district forum as well as the state commission. The dispute about refund of Rs 50 cannot
be treated as an isolated or standalone transaction but stems from the initial transaction for
purchase of shoes. Hence the failure to refund the amount would be a deficiency in service.
Accordingly, the commission held that the complaint was maintainable, and remanded the

Cases Consumer protection Act 1986

dispute in the consumer forum for adjudication.
Impact: This judgment will come to the aid several consumers whose are seeking a refund of
their money, especially those who are claiming a refund from builders for cancellation of
bookings of flats.

4. Consumers Act fails to define commercial purpose

The Consumer Protection Act excludes services for "commercial purpose" from its purview,
but does not define this term. This has lead to chaos as the term is being interpreted
differently by different judges and there is no consistency. Hence, outcome of the case has no
judicial certainty and depends on the luck of the party. Surprisingly, even the proposed
amendments do not address this issue.
Case Study 1: Delhi Public School had filed a complaint against Uttar Haryana Bijli Vitran
Nigam Ltd, saying that despite it regularly paying its electric bills, the latter had suddenly
sent a demand memo on February 12, 2011, for Rs 15,16,046 retrospectively assessed from
August 2008. The Nigam challenged the jurisdiction of the consumer forum and justified the
demand, contending that the meter was running slow and registering only one-third the actual
consumption. The forum allowed the complaint, but in appeal, the state commission reversed
the order, holding that the supply was for commercial purpose. The school approached the
national commission in revision.
By October 29 order, the national commission held the complaint to be maintainable,
observing that the school was not using power to manufacture any goods. Though the
connection is non-domestic, it would not amount to commercial purpose as the supply was
used for electrification of the school premises.
Case Study 2: Puran Murti Education Society in Kami Village at Sonepat had a dispute
regarding the supply of electricity to it. It filed a complaint before the Sonepat district forum,
which ruled in the society's favour. In appeal, the Haryana state commission set aside the
order as the society could not be termed a consumer. The society approached the national
commission in revision. It argued that the connection was being used for a social cause and
not for commercial purpose. Rejecting the contention, the national commission observed that
the connection was being used for P M College of Engineering and Polytechnic run by the
society. Students were being charged fees. It concluded that even though the connection was
a non-domestic one, it was being used for commercial purpose, and hence not maintainable.
Case Study 3: Lourdes Society, which is registered under the Societies Registration Act as
well as the Trusts Act, runs Snehanjali Girls Hostel in Surat. It filed a consumer complaint
regarding the tiles purchase for the hostel. The manufacturer questioned the jurisdiction of the
forum, contending that the tiles were purchased for commercial purpose. The forum observed
the society is running as hostel. Though fees are being charged from students, the running of
a hostel could not be considered a business or profit-making activity. The forum concluded
that it was not a commercial activity and held the complaint to be maintainable. The Gujarat
state commission upheld this order. In revision, the national commission set aside the order
and held that running of as hostel and charging the inmates was a commercial activity.
Merely because this activity was conducted by a trust would not make any difference.
Accordingly, it held that the complaint was beyond the ambit of the Consumer Protection Act,
thus not maintainable.

Cases Consumer protection Act 1986

Conclusion: Amendment to the Consumer Protection Act should incorporate a definition for
"commercial purpose" so that there is uniformity in interpretation. Since the Act is meant to
empower consumers, it would be ideal to keep the redressal forum open only to individual
consumers and exclude business houses clogging the redressal mechanism with business-tobusiness disputes.
Source: www.timesofindia.com