ONSUMER PROTECTION ACT, 1986

Transition from `Caveat emptor` to `Caveat vinditor`

A consumer is a user of goods and services. Any person paying for goods and services, which he
uses, is entitled to expect that the goods and services are of a nature and quality promised to him
by the seller. Only in 1932 it was firmly established by a House of Lords decision in Donoghue v.
Stevenson (the `snail in the ginger-beer `case) that manufacturers owed a duty to the ultimate
consumer to take care in making their goods where there is no likelihood of their being examined
before they reach the ultimate consumer. The origin of this judicial principle lie in the fact that in
today's mass production economy where there is little contact between the producer and
consumer, often sellers make exaggerated claims and advertisements, which they do not intend
to fulfill. This leaves the consumer in a difficult position with very few avenues for redressal. The
onset on intense competition also made producers aware of the benefits of customer satisfaction
and hence by and large, the principle of " consumer is king" is now accepted a transition from
the principle of `Caveat emptor` to `Caveat vinditor`.
Source of the Consumer Protection Act, 1986
The need to recognise and enforce the rights of consumers was recognised by the legislators for
quite some time now. In India, we have the Indian Contract Act, the Sale of Goods Act, the
Dangerous Drugs Act, the Agricultural Produce (Grading and Marketing) Act, the Indian Standards
Institution (Certification Marks) Act, the Prevention of Food Adulteration Act, etc which to some
extent protect consumer interests. However, these laws required the consumer to initiate action
by way of a civil suit, which involved lengthy legal process proving, to be too expensive and time
consuming for lay consumers. Therefore, the need for a more simpler and quicker access to
redressal to consumer grievances was felt.
On April 9, 1985 the UN General Assembly with due negotiations in the UN Economic
and Social Council (ECOSOC), adopted by consensus a set of guidelines on Consumer
Protection serving as a vital lobbying tool both nationally and
internationally. India being a constituent member of United Nations enacted the
Consumer Protection Act 1986 on 23rd May 1986.

The Act is in true essence public welfare legislation. The hall marks of that jurisdiction have rightly
been highlighted as the simplicity and inexpensive nature thereof, the summary procedure
provided for trials therein, and the expeditious disposal of the consumer dispute within a time
bound frame.

SOME IMPORTANT DEFINITIONS [SECTION 2]

Complaint - any allegation in writing made by a complainant with a view to obtaining any relief
provided by or under this Act.

Nature of complaint

(i) an unfair trade practice or a restrictive trade practice has beenadopted by any trader or service
provider

(ii) the goods bought by complainant suffer from one or more defects;

(iii) the services hired or availed of suffer from deficiency in any respect;

(iv) a trader or the service provider, has charged for the goods or for the services a price in excess of
the price
 (a) fixed by or under any law for the time being in force; (Ex telephony rates fixed by TRAI)

(b) displayed on the goods or any package containing such goods;

(c) displayed on the price list exhibited by him by (Ex Petrol, Diesel prices by Petrol pumps);

(d) agreed between the parties (contracted price) ;

(v) goods or services which will be hazardous to life and safety are being offered for sale to the
public,

Consumer - any person who

(i) buys any goods for a consideration, or

(ii) hires or avails of any services for a consideration;

It must be noted that a person who buys goods or avails services for commercial purposes is not a
consumer.

However, where a person buys goods or avails services exclusively for the purposes of earning his
livelihood by means of self-employment is a consumer.

The Act has not confined itself to the original hirer alone, but equally extended it to the
subsequent beneficiaries of the services as well.

CASE EXAMPLE

Parent who brings the child to hospital is 'consumer'. The child, who is beneficiary of the services is
also a consumer (Spring Meadows Hospital v. Harjot Ahluwalia)

Defect - any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard,

which is required under any law to be maintained by or

under any contract, express or implied or

as is claimed by the trader in any manner whatsoever in relation to any goods;

Goods - goods as defined in the Sale of Goods Act, 1930.

CASE EXAMPLE

Stocks and shares are included in the definition of the goods. In these circumstances the complaint in
regard to the shares lies before the District Forum. (LC Chandgotya V. Northern Leqsing and
Industries Ltd.)

NATIONAL INSURANCE CO. LTD. v. SKYGEMS [2002(1) SCALE 94].

FACTS: The respondent, dealer in precious stones, had sent two parcels of emeralds by registered
post duly insured to a consignee in London but the parcels did not reach their destination. The
investigators appointed by the insurer confirmed that the parcels were either lost in transit or were
stolen. The postal authorities admitted their liability and made payment of postal charges in respect of
each parcel. The insured agreed to settle the claim. But the respondents insisted that the payment of
the insured amount be made in Pound Sterling in London. The insurer denied its liability to pay the
amount in Pounds sterling on the ground that the title in the goods had not passed to the consignee
and that it (the respondent) continued to be the owner of the goods and so the payment could be
made only in Indian Rupees.

The National Consumers Disputes Redressal Commission held that as the insurance policies clearly
stated that the claim was payable at London and the insured value was in terms of Pounds Sterling
the insurer should pay the amount in Pounds Sterling.

In appeal to the Supreme Court the respondent reiterated its claim that the insurance policy
specifically stated that the amount was payable at London and that it should be paid only in Ponds
Sterling at London and not in Indian rupees in India.

Allowing the insurer's appeal, the Supreme Court held:

DECISION AND REASONS: Having regard to the facts and circumstances the appellant could not be
said to be liable to pay the insurance amount in Pounds Sterling.

From the correspondence between the parties it was evident that the consignee did not
pay the value of the missing parcels to the respondent nor was there any evidence to
show that the documents were endorsed in favour of the consignee and transferred to
them. The title to the goods had not clearly passed to the consignee and the respondent
consignor continued to be the owner having insurable interest in the goods.

The right of the buyer to claim the policy amount would arise when he obtained title to
the property and produced the documents of transfer. This clearly showed that the title
had not passed to the consignee in London. Under such circumstances the respondent
was not entitled to receive the payment in Pounds Sterling. The National Commission
erred in stating that the insurance amount was payable at London.

In Harjot Ahluwalia (Minor), Spring Meadows Hospital an unqualified nurse gave

wrong intravenous injection to a minor child, due to which the minor child suffered
irreparable brain damage. The child now has to live vegetative and helpless life forever,
requiring lifelong care and attention. The doctor as well as the nurse was found to be
negligent and compensation of Rs 12.50 lakhs to the child, plus Rs 5.00 lakhs to the
parent (for mental agony) were awarded.

CONSUMER PROTECTION COUNCILS

The objects of the Councils shall be to promote and protect the rights of the consumers including the
right to consumer education.

Classification of Central Consumer State Consumer Protection District Council

Council Protection Council[SECTION 7]
Council[SECTION 4] [SECTION 8A]

Estab. Authority Central Government State Government State Govt.

Composition Minister in charge in the Cent. Minister in charge in the State Govt. Collector of the district
Govt.
 Chairman (i) 8 M.P.5 from LS, 3 from RS. (i) 8 5 MLA & 3MLC (As per respective State Rules)

Other official or non- (ii) Secy.-National Comm. for SC & (ii) 10 State Govt. Repr. Generally 3 years
official members. ST.
(iii) 5 Women Repr. District HQ
Term (iii) 20 Repr. Of Cent. Govt.&
Autonomous Org. with (iv) 5 Trade & Farmers Repr. At least two meetings in a year.
Place of Council consumer interests
(v) 1 Persons for Consumer
Meetings (iv) Registrar, National Consumer Interest.
Disputes Redressal
Commission Generally 3 years

(v) 35 - Consumer Orgns. State capital

(vi) 10 Women At least two meetings in a year

(vii) 20 Trade & Industry

(viii) 15 Persons for Consumer

Interest

Member-secretary -Secretary in-

charge of Consumer Affairs in the
Central Government.

3 years

Delhi

At least one meeting every year

CONSUMER DISPUTES REDRESSAL AGENCIES

Appellate Authority National Consumer State Commission District Forum

Disputes Redressal
Commission [SECTION 16] [SECTION 10]

[SECTION 20]

Composition Judge of the Supreme Court to Judge of the High Court to be District Judge to be appointed by
be appointed by the Cent. appointed by State Govt. in the State Govt. in consultation
President Govt. in consultation with the consultation with Chief Justice of with the Chief Justice of State
Chief Justice of India. High Court. High Court.who shall be its
Members(persons of ability, President;
integrity and standing and 4 (1 Woman) Appointed by 2 (1 Woman) Appointed by
have adequate knowledge or Cent. Govt. on the State Govt. on the 2 (1 Woman) Appointed by
experience) recommendation of a selection recommendation of a selection State Govt. on the
committee. committee recommendation of a selection
Term committee
5 years` or 70 years` (whichever 5 years or 67 years (whichever
 Jurisdiction earlier)
Penalty (i) Complaints - value of the
goods or services and
Time limit for completion of compensation, if any, claimed
hearing exceeds Rs. One crore and
Judicial Powers/Interim (ii) Appeals against the orders of
Relief any State Commission.
Summary Trial Imprisonment up to 3 years` with
or without fine upto Rs. 10,000
Principal Bench
90 days` or 150 days` (in case of
Appellate Authority lab. Tests)
Enforcement power Vested with powers of 1stClass
Judicial Magistrate
Limitation period
Enabled;
New Delhi; Circuit Bench
Supreme Court within 30 days`
with 50% of award money.
As arrears of Land & Revenue
2 years` from the cause of
action.
PROCEDURE OF FILLING COMPLAINT
Who can file a complaint?
(i) A Consumer.
(ii) Any registered Voluntary Consumer Organization.
(iii) The Central or State Government.
(iv) One or more consumers on behalf of numerous consumers who are having the same interest.
When a complaint can be filed?
A complaint can be filed in writing if: -
a. Consumer has suffered loss or damage as a result of any unfair Trade Practice.
b. The goods purchased suffer from any defect;
earlier).
Complaints - value of the goods
or services and compensation, if
any, claimed exceeds Rs. 25
lakhs upto Rs. One Crore.
Imprisonment up to 3 years` with
or without fine upto Rs. 10,000
90 days` or 150 days` (in case of
lab. Tests)
Vested with powers of 1stClass
Judicial Magistrate
Enabled
State Capital
National Commission within 30
days` with 50% of award money
or Rs. 35,000 (whichever less).
State Capital; Circuit Bench at
other cities.
As arrears of Land & Revenue
2 years` from the cause of action
5 years or 65 years (whichever
earlier).
Complaints - value of the goods
or services and compensation, if
any, claimed upto Rs. 25 lakhs.
The concerned State within
which either of partiesactually
and voluntarily resides or carries
on business or has a branch
office or personally works for
gain.
Imprisonment up to 3 years` with
or without fine upto Rs. 10,000
90 days` or 150 days` (in case of
lab. Tests)
Vested with powers of 1stClass
Judicial Magistrate
Enabled
District HQ
State Commission within 30
days` with 50% of award money
or Rs. 25,000 (whichever less).
As arrears of Land & Revenue
2 years` from the cause of action
c. The trader has charged a price in excess of the price displayed or fixed by any law for the time
being in force;

d. The goods hazardous to life and safety are being offered for sale to public.

e. The services hired or availed of, suffer from any deficiency.

Where a complaint can be filed?

Ifthe cost of goods or service and compensation asked for is:
up to Rs. 25.00 lakhs - District Forum.
more than Rs. 25.00 lakhs and up to Rs. 1 crore - State Commission.
more than Rs. 1 crore - National Commission.
A model form has been provided for filing of the complaint for the convenience of the consumer.
The complaint/reply should be supported with affidavit of party and witnesses, if any.
APPEAL/REVISION
Any party aggrieved form the final order of District Forum may appeal to State Commission within 30
days. Similarly, any party aggrieved from the final order passed in original complaint decided by
the State Commission may appeal to National Commission within 30 days.
Order passed by National Commission in complaint filed before it is appeal able in Supreme Court
within 30 days. Appeal may be preferred as per model form along with certified copy of order.
Any order, which is not final order, may be challenged in revision before higher respective
Commission.