Consumer Protection Act, 1986

The Consumer Protection Act, 1986 was enacted to provide a simpler and quicker
access to redress of consumer grievances. The Act seeks to promote and protects the
interest of consumers against deficiencies and defects in goods or services. It also
seeks to secure the rights of a consumer against unfair trade practices, which may be
practiced by manufacturers and traders.
The set-up of consumer forum is geared to provide relief to both parties, and
discourage long litigation. In a process called 'informal adjudication', forum officials
mediate between the two parties and urge compromise.

The Act applies to all goods and services unless specifically exempted by the Central
Government. It covers all the sectors whether private, public or cooperative.

This Act has provided machinery whereby consumers can file their complaints which
will be heard by the consumer forums with special powers so that action can be taken
against erring suppliers and the possible compensation may be awarded to consumer
for the hardships he has undergone.

The consumer under this law is not required to deposit huge court fees, which earlier
used to deter consumers from approaching the courts. The rigours of court procedures
have been replaced with simple procedures as compared to the normal courts, which
helps in quicker redressal of grievances. The provisions of the Act are compensatory in
nature.

Please remember, consumer courts provide redress only in cases of products or

services for personal use, defects in products used for commercial purposes are not
entertained.

Basic rights of consumers include:

1. Right to be protected against marketing of goods and services which are hazardous
to life and property.
2. Right to be informed about the quality, quantity, standard and price of goods or
services so as to protect the consumer against unfair trade practices.
3. Right to be assured, wherever possible, access to variety of goods and services at
competitive prices.
4. Right to be heard and to be assured that consumers interests will receive due
consideration at appropriate forums.
5. Right to seek redressal against unfair trade practices.
6. Right to consumer education.
 Consumer redressal forum
Under the Consumer Protection Act, every district has at least one consumer redressal
forum also called a consumer court. Here, consumers can get their grievances heard.
Above the district forums are the state commissions. At the top is the National
Consumer Disputes Redressal Commission in New Delhi.

A written complaint to the company is taken as proof that the company has been
informed. The complaint must be backed by copies of bills, prescriptions and other
relevant documents, and should set a deadline for the company to respond. Consumers
can also complain through a consumer organisation.

Claims of less than Rs. 5 lakh should be filed with district forum, claims of Rs. 5-Rs.
20 lakh directly with the state commission, and claims of more than Rs. 20 lakh with
the National Commission.

To file the complaint:

 Complaint is to be filed within two years of buying the product or using the service.
 Complaint needs to be in writing. Letters should be sent by registered post, hand-
delivered, by email or fax. Don't forget to take an acknowledgment.
 The complaint should mention the name and address of the person who is
complaining and against whom the complaint is being filed. Copies of relevant
documents must be enclosed.
 The consumer must mention details of the problem and the demand on the company
for redressal. This could be replacement of the product, removal of the defect, refund
of money, or compensation for expenses incurred and for physical/mental torture.
Please ensure that the claims are reasonable.
 You should preserve all bills, receipts and proof of correspondence related to the
case. Avoid using voice mail or telephone because such interactions are normally
difficult to prove.
 The complaint can be in any Indian language, but it is better to use English.
 There is no compulsion to hire a lawyer. Main cost consists of correspondence and
travelling to the consumer forum for the hearing
 Maintain a complete record of the emails and documents sent by you.

Appeal
Appeal is a legal instrumentality whereby a person not satisfied with the findings of a
court has an option to go to a higher court to present his case and seek justice. In the
context of consumer forums:
1. An appeal can be made with the state commission against the order of the district
forum within 30 days of the order which is extendable for further 15 days. (Section
15)
2. An appeal can be made with the National Commission against the order of the state
commission within 30 days of the order or within such time as the National
Commission allows. (Section 19)
3. An appeal can be made with the Supreme Court against the order of the National
Commission within 30 days of the order or within such time as the Supreme Court
allows. (Section 23)

Penalties
The consumer courts (district court, state commission and National Commission) are
given vast powers to enforce their orders. If a defaulter does not appear in court despite
notices and reminders, the court may decide the matter in his absence. The forum can
sentence the defaulter to a maximum of three years' imprisonment and impose a fine of
Rs. 10,000. Forums can issue warrants to produce defaulters in court. They can use the
police and revenue departments to enforce orders.

The rights of consumers needs to be protected since they avail services given by the
service providers based on trust and faith and thus it’s a necessity to keep a check on
the service providers for the sake of service recipient.
Differences between a Company and Partnership

The special features of a joint stock company can be well understood if we compare the
features of a company form of organization with that of a partnership firm. The
important points of distinction between the company and partnership are given below:

1. Definition
Any voluntary association of persons registered as a company and formed for the
purpose of any common object is called a company. But a partnership is the relation
between two or more individuals who have agreed to share the profits of a business
carried on by all or any of them acting for all. The partners are collectively called as a
firm.

2. Law
A company is regulated and controlled by the Companies Act. But a partnership firm is
regulated by the Partnership Act, 1932.

3. Registration
A company should be compulsorily registered under the Companies Act. Its formation is
very difficult. But registration of a partnership firm is not compulsory under the
Partnership Act. The firm is based on the partnership deed. Its formation is very easy.

4. Legal Position
A company is a body corporate and a legal person having a corporate personality
distinct from its members. The members are not liable for the acts of the company. But a
partnership has no legal existence distinct from its members. Partners are liable for the
acts of the firm.

5. Life Time
A company is a mere abstraction of law. So its existence is not affected by the change of
membership or death or insolvency of its members. But a partnership is a mere
aggregation of individuals. So the life of a partnership ends on the death or insolvency or
insanity of any one partner.

6. Liability
The maximum liability of the shareholders, in case of a limited company, is limited to
the face value of the shares purchased by them. In case of companies limited by
guarantee, the liability of the shareholders will be up to the amount guaranteed by them.
But in case of a partnership. the liability of the partners is unlimited. The partners are
jointly and severally liable for all the debts of the partnership firm.
7. Transferability of Shares
Shares of a company are freely transferable unless restricted by the Articles. But a
partner cannot transfer his share without the consent of all other partners.

8. Contract
A member of a company can enter into a contract with the same company. But a partner
of a firm cannot enter into contract with the same partnership firm.

9. Number of Members
A private company should have a minimum of 2 members and can have a maximum of
50 members. A public company should have a minimum of 7 members and there is no
maximum limit. But a partnership should have a minimum of 2 and can have a
maximum of 20 persons [10 in the case of banking business].

10. Audit
The accounts of a company should be audited by a qualified auditor. But in the case of a
partnership, the accounts need not be audited. Even though the partners decide to
arrange for the audit of their firm, the auditor need not be a qualified person. The
powers, duties and liabilities of an auditor of a company are regulated by the Companies
Act.

But in the case of a partnership audit, the duties are governed by the provisions of the
contract entered into by the partners with the auditor.

11. Implied Agency

In case of a company, a shareholder is not regarded as its agent in dealing with third
parties. But in case of a partnership, a partner is an agent of the firm and of all other
partners in dealing with third parties.

12. Good Faith

Since they are more in number, most of the shareholders of the company may not know
each other. We cannot expect that all the shareholders are just and honest to one
another. But in the case of a partnership, the partners know each other thoroughly. The
partnership agreement is based on utmost good faith. So the partners are to be just and
honest to one another.

13. Management
The management of a company is in the hands of a group of elected representatives of
the shareholders. Even this group finds it difficult to administer the day-to-day affairs of
the company. It is carried on mostly by salaried people. Such people cannot be expected
to take active part in the management as the owners.

But in the case of a partnership, the management is in the hands of the partners
themselves. They work in absolute sincerity. They can give personal attention to the
customers and thus strengthen the customer-firm relationship.
14. Decision-Making
In case of companies, taking decisions on important issues requires a fairly long time.
But in case of a partnership firm, quick decisions are possible.

15. Issue of Debentures

Joint stock company is the only business organization which is authorized to borrow
money through the issue of debentures. A partnership firm cannot issue debentures.

16. Restrictions
The outsiders who deal with a company should be aware of the provisions of its Articles
of Association. This is because, the restriction on directors affect the outsiders. But in
case of a partnership, restriction on any partner does not affect the outsiders. So they
need not be aware of the provisions of the partnership deed.

17. Secrecy
The companies have to file their documents, returns, reports, balance sheet, profit and
loss account etc. with the Registrar. Some of them are open to public. So, there is no
secrecy at all in case of companies. But in case of a partnership, the firm need not
prepare and file such documents. So its secrets are not leaked out. Outsiders cannot
know the in and outs of the firm.

18. Capital Formation

Even people with limited resources can become the shareholders of a big company. This
tempts them to save something out of their income for future. This is a green signal for
capital formation in the country. Such a capital formation is not possible in the case of a
partnership.

19. Dissolution
A company, being a creature of law, can only be dissolved as laid down by law. A
partnership firm, on the other hand, is the result of an agreement and can be dissolved
at any time by agreement.
Factors to be considered by the Commission while evaluating appreciable
adverse effect of Combinations on competition in the relevant market:

(a) actual and potential level of competition through imports in the market;

(b) extent of barriers to entry into the market;

(c) level of concentration in the market ;

(d) degree of countervailing power in the market;

(e) likelihood that the combination would result in the parties to the combination
being able to significantly and sustainably increase prices or profit margins;

(f) extent of effective competition likely to sustain in a market;

(g) extent to which substitutes are available or are likely to be available in the
market;

(h) market share, in the relevant market, of the persons or enterprise in a

combination, individually and as a combination;

(i) likelihood that the combination would result in the removal of a vigorous and
effective competitor or competitors in the market;

(j) nature and extent of vertical integration in the market;

(k) possibility of a failing business;

(l) nature and extent of innovation;

(m) relative advantage, by way of the contribution to the economic development,

by any combination having or likely to have appreciable adverse effect on
competition;

(n) whether the benefits of the combination outweigh the adverse impact of the
combination, if any.