UNIT 18 CONSUMER PROTECTION ACT - BASIC FEATURES

Structure

18.0 Objectives

18.1 Introduction

18.2 Salient Features of the Act

18.2.1 Three Tier Redress Machinery

18.3 Certain Definitions

8 1 Meaning of Consumer 1 8.3.2 Consumer Dispute 13.3.3 Defect 18.3.4 Deficiency 18.3.5 District Forum 18.3.6 Goods 18.3.7 Manufacturer 18.3.8 National Commission 18.3.9 Person 18.3.10 Restrictive Trade Practice 18.3.11 Service 18.3.12 Statecommission 18.3.13 Trader 18.3.14 Unfair Trade Practice

18.4 Let Us Sum Up

18.5 Key Words

1 8.6 Some Useful Books

18.7 Answers to Check Your Progress

After studying this unit, you should be able to:

identify basic features of Consumer Protection Act, 1986

understand the meanings of various terms and expressions used in the Act.

18.1 INTRODUCTION

In the earlier unit of Block 5 you have studied about the evolution of consumer protection laws in India. Inspite of host of the legislations, none of them could be described as consumer specific. They have been designed to provide reliefs in specific situations only. None of them, for example, provided for rights of consumers, a separate judicial machinery for looking into complaints. Caveat Emptor - Let the buyer beware continued to be the governing rule. The helpless and harassed consumer did not really get effective remedies. Consumer remained the king only in the literature on economics. The seller/manufacturer/supplier continued to roll the roost.

With the enactment of Consumer Protection Act, 1986 the scenario has undergone a change. Rights of consumers have been given a statutory recognitions. Three-tier grievance redressal machinery at the District, State and National level has been constituted. Consumer is sought to be installed as a king.

The Indian Parliament enacted this legislation in December, 1986. It came into force on April 15, 1987. By July 1987, all the provisions came into operation.

The object of the legislation, as the Preamble of the Act proclaims, is for better protection of the interests of consumers. During the last few years preceding the enactment there was in this country a market awareness among the consumers of goods and services that they were not getting their money's worth and were being exploited by both traders and manufacturers of

consumer goods. The need for Consumer Redressal Fora was, therefore, increasingly felt. Coluumer Rotedon Act - Understandably, therefore, legislation \;as introduced and enacted with considerable Bmlc Features

enthusiasm and fanfare as a path-breaking benevolent legislation intended to protect the consumers from exploitation by unsc~pulous manufacturers and traders of consumer goods. A three tier for a comprising the District Forum, the state Commission came to be envisaged under the Act for redressal of grievances of consumers.

Emboldened by the legislation, enacted in 1986, consumers have been flooding these Redressal Agencies with petitions dead phones, malfunctioning television sets, delayed LPG cylinder connections, losses due to strikes in banks and hospitals, medical malpractices, bad pressure cookers, loss of agricultural crops due to power breakdowns, unkept promises and what you have.

You, being a consumer, must know as you how the provisions of this Act can be used as weapons in your armoury to fight your day-to-day battles in the market place.

18.2 SALIENT FEATURES OF THE ACT - -

In this unit you will study the basic provisions of the Consumer Protection Act, 1986. The detailed rights of the consumers and how can those rights be enforced (i.e., the various reliefs available to consumers) shall be studied in the next unit.

Salient features of the Act are:

1) The Act aims to provide better and all-round protection to consumers.

2) In terms of geographical application, it applies to the whole of India except the State of Jammu and Kashmir.

3) It applies to all goods and services unless otherwise expressly notified by the Central Government.

4) It is indeed a very unique and highly progressive piece of social welfare legislation and is .

acclaimed as the magna carta of Indian consumers. The Act has made the consumer movement really going and more powerful, broad-based and effective and people- oriented. In fact, the Act and its Amendment in 1993 have brought fresh hopes to the beleaguered Indian consumer. This is the only law which directly pertains to market place and seeks to redress complaints arising from it. Even prior to 1986, there were in force a number of laws which could be interpreted in favour of the consumers. But, this Act is

r most powerful piece of legislation the consumer has had before 1986. Its provisions are F very comprehensive and highly efficacious. 1

I i In fact, it provides more effective protection to consumers than any corresponding

legislation in force even in countries which are considered to be much more advanced. I

5) It provides effective safeguards to the consumers against different types of exploitation such as defective goods, unsatisfactory (or deficient) services and unfair trade practices.

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I 18.2.1 Three-Tier Grievance Redressal Machinery

For enforcement of the rights of the consumers, the Act has created special consumer Courts. As Act provides for a three-tier consumer grievance redressal machinery with the District Forums at the base, the Slate Commission at the middle level and the National Commission at the apex level. The State and national level bodies also function as appellate authorities. Any verdict given by the National Commission can be challenged in the Supreme Court.

The cost of goods or services and compensation asked for is the criterion for filing the complaint with the above Redressal Fora. The Redressal Fora constitute a quasi-judicial machinery to provide speedy and simple redress to consumers.

The Redressal Foras are not trammeled by any technicalities or rules of complicated or eleborate procedure. They are merely to observe the basic rules of natural justice. No court fee

I or any other charge is to be paid in respect of any complaint or petition of appeal or revision,

i however high be the value of its subject matter.

L Thus, the Act provides a simple, speedy and inexpensive redressal of consumer grievances

Consumer Protection A C ~ The complaint need only set out the grievances in the simplest form and furnish the name and address of the opposite party against whom the complaint is made. It may even be in the form of a letter to the concerned Redressal Forum and no formalities of any type would be insisted upon. Appearance may be by the complainant himself in person or by agent duly authorised by him. It is not obligatory to engage any advocate. Thus, it is a far more convenient law for consumers.

The definition of the expression 'service' in the Act in very wide and comprehensive. In fact, it will take in service of any description rendered for consideration by any person or organisation including public sector undertakings (PSUs) and Government agencies. However, services rendered free of charge or under any contract of personal service, are excluded. Thus, the following services do not fall within its ambit: (i) Health Services provided by Government hospitals, (ii) Civic amenities provided by municipal authorities.

All suppliers of goods and services, both in the private and in the public sector and the cooperative sector, are covered by the Act.

The hallmark of the Act is that it has set a time frame for the disposal of cases.

The Act allows filling of "class action" complaints on behalf of groups of consumers having common interest.

The Act also covers complaints relating to unfair trade practices. Thus, a consumer can directly protect against food adulteration, short weighing and overcharging, directly to the District Forum. The consumer can pick up a food sample from a shop. get it analysed by a chemist and file a complaint on that basis.

It also provides for complaints against charging in excess off ie price of a product fixed by a law or rule andlor displayed on the packaged commodities.

To organise consumer resistance further and educate them, the Act also provides for the formation of consumer protection councils in every State. These councils do not have any legal authority under the Act but are meant to promote the cause of consumer protection and cover the six consumer rights -right to safety, to be informed, to choose, to be heard, to ' redress, and to consumer education.

Check Your Progress 1

Note: i) Use the space below for your answers.

ii) Check your progress with the model answer given at the end of the unit.

1) Briefly explain the salient features of the Consumer Protection Act, 1986.

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18.3 CERTAIN DEFINITIONS

A number of words and expressions have been used in the Act. These must be clearly understood by you if you want tolmaster its various provisions. In the following paragraphs, you would note their meanings.

18.3.1 Meaning of Consumer

Who is a Consumer?

Reliefs under the Act are available to consvmers only. Therefore, you must categorically know the meaning of a consumer.

S.2 (1) (d) defines the term consumer. It means miy of the following persons:

i) A person who huys any goods for a consideration.

I I

Consumer Prote~tion Acl- .Basic Features

It also includes any user of such goods when such use is made with the approval of the buyer. But it does not include a person who obtains such goods for re-sale or for any commercial purpose. The Amendement Act, 1993 has added the following Explanation:

"Commercial purpose" does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of a self-employment.

ii) A person who hires or avails of any services for a consideration.

It also includes any beneficiary of such services other than the person who hires or avails of the services for consideration when such services are availed of with the approval of the first mentioned person. The consideration for the purchase of goods or hiring or availing of the services may have been paid or promised or partly paid and partly promised, or under any system of deferred payment.

Therefore, to be a 'consumer' under the Act -

i) the goods or services must have been purchased or hired or availed of for consideration which has been paid in full or in part or under a system of deferred payment, i.e., in respect of hire-purchase transactions;

, ii) goods purchased should not be meant for re-sale or for a commercial puypose. Thus, where I

a vehicle has been purchased for the purpose of running it as a taxi, the purpose being commercial the buyer shall not be a 'consumer' under the Act [Western India State Motors v. Subhag Ma1 Meena and Others (1989)l. However, if the taxi is used by the buyer to earn his livelihood, the buyer will be considered as a consumer.

Any economic activity or transaction carried on with the motive of making profit would fall under the term commercial purpose, irresp&fiCe of the scale of operations

In S. Pattahhiraman v. SP. ST. Palaniappan (Order dt. 3.5.1994), the National Commission ruled that a chartered accountant who is in practice and who purchased a computer for being installed in his office, cannot be regarded as a consumer under the Consumer Protection Act.

Are the following consumers?

I) Winner of a lottery

The question was considered in the case of Byford v. S.S. Srivastava [1993]. In this case Byford Motors inserted an advertisement in newspapers stating that a person booking a premier Padmini Car could enter into a contest in a lottery conducted by them. Under it a person who was successful in the draw would be entitled to two free tickets from New Delhi to New York and back. Shri S.S. Srivastava was one of the persons who was successful in the draw. He asked the dealers, Mls. Byford Motors, to give him the value of two tickets which was refused and he was asked to produce two passports to enable them to book the tickets. The complainant, however, produced one passport immediately but the second after the end of the financial year. M/s. Byford Motors refused to give the tickets on the ground that accounts of the financial year had been closed and that they could not carry 'forward the liability of that year to the next financial year under the provisions of the Income-Tax Act and Rules.

The Court held, that the complainant was not a consumer within the meaning of Sec.2 (1) (d) of the Act. He had received the car for which he had paid and there was no complaint as to its condition.

. Receiving air tickets to New York was an additional attraction attached to the sale, which depended upon a lottery draw. It is not an intrinsic part of the contract deal for which payment was made. Thus, as far as lottery was concerned, it could not be said that complainant was a consumer who had hired any service for consideration and hence he had no right to get redressal under the Act.

The complainant's argument that this would fall under unfair trade practice as in Sec. 36A(4) of the MRTPAct, 1969, was also not accepted.

2) A person registering for gas connection

The National Commission in Mohindra Gas Enterprise v. Jagdish Poswal(1993) held that registering for gas connection amounts to hiring of services. Reference was made to the Manual of the Indian Oil Corporation which states that an LPG customer gets continuing or recurring services like loan of the Corporation's equipment, delivery of refill cylinders,

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r onsumcr P~.otection Act technical service for appliance bn leakage of equipment and so on. But can a person be upheld as a consumer at the stage of registration or only when he signs subscriptions voucher and makes deposit for LPG connection. To this, National Commission observed as follows:

Service as defined in sub-clause (0) of the sub-section (1) of Sec. 2 means "service of any description which is made available to potential users". The consumer who hires a servcice has been defined in clause (ii) of Section 2(1) of the Act, according to which it is not necessary that consideration should be paid at the tin~e of hiring of service. If the transaction is supported by consideration which has been paid or promised or partly paid or partly promised or under any system of deferred payment, even then it will be a valid consideration for the hiring of the service. The present case is one in which payment of part consideration was deferred till the gas connection was released. Hence, a person becomes a consumer of LPG right at the time of registration for an LPG connectjon.

3) Warranty of free service

In Visliwa Jyoti Printers v. MoliVls of India (1992) a warranty of free service for one year was given at the time of sale of a printing machine. The seller of the machine contended that since he was rendering free service for the maintenance of the machinery for one year under the warranty, the buyer was not a 'consumer' under the Consumer Protection Act.

Held, the warranty was a part of the composite contract for supply of the printing machine and its maintenance for a period of Qne year. The consideration for service to be rendered under the warranty is obviously included In the sale price of the machine. There could not be an agreement, including warranty, without consideration. It was wrong to maintain that warranty obligations were being rendered free of charge.

4) Passengers travelling by t@ns

In General Manager, Southern Railway v. Anand Prasad Sinha (1989), it was held that passengers travelling by trains m payment of the stipulated fee charged for the ticket are 'consumers' and the facility of tfansportation by rail provided by the railway administration is a 'service' rendered for consideriation as defined in the Act.

5) Subscribers of telephones ~ o u l d be 'consumers' under the Act and accordingly are entitled to seek relief from Forums wherever necessary [Dist. Manager, Telephones, Patna v. Lalit Kumar Bajla (1989)l.

6) User of electricity is a consuper. The National Commission in Y.N. Gupta v. DESU (decided on 16.11.1992) considdred a-complaint regarding the inflated electricity bills served by DESU on the complainant. Id this case, DESU did not raise the bills in keeping with the cycle normally adopted. It also did not replace the defective meter. However, it issued a bill for Rs. 1.06 lakhs for a period of 1 114 years. The power connection was also disconnected but restored after a complaint with tke General Manager.

The Natignal Commission ruled that the bills were casually prepared as much as the bills reflected consumption in the f ive digits instead of four digits. Moreover, DESU had no power to raise bills upon a defective meter beyond six months under the Electricity Act, 1910. The National Commission concluded that there was deficiency in service on the part of DESU and awarded a compensation of Rs. 30,000 and costs of Rs. 5.000.

18.3.2 Consumer Dispute

According to Section 2(1) (c), C~nsIlmer dispute means a dispute where person against whom a complaint has been made, denieg or disputes the allegations contained in the komplaint.

18.3.3 Defect

According to Section 2(1) (c), Cbnsumer Protection Act, 1986, as amended hy the Amendment Act, 1993, a 'defect' means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force or under any contract, express or implied, or as js claimed by the trader in any manner whatsoever in relation ta any goods.

A ration shop s~pplied a ration $-holder napwe& oil adulterated with known toxic adulterants. The complainant, an# his family, as result of that rapeseed oil consumption

suffered severely. He was attacked with paralysis of lower limbs and inspite of prolonged Consumer I1rotection ~ c t -- treatment he did not recover fully. His wife, inspite of medical treatment, was not able to carry Basic Feature.,

on her ordinary avocation as housewife because of ailment. His two daughters and a son, all growing children were also affected and medical report was that they had severe attack. Their educational carrier was doomed. Considering all these facts, the Commission awarded a sum of Rs. 1,50,000/- to the complainant and Rs. 50,0001- for his wife and Rs. 25,0001- to each of the children resulting in awarding of toal of Rs. 2,75,000/- (Barsad Ali vs. ~ a h a ~ i n g Director, West Bengal Essential Commodities Supplies Corp. 1993, CCJ 476).

18.3.4 Deficiency

parallel to 'defect' in case of goods, 'deficiency' is relevant in case of services. The expression in defined under Section 2(1) (g) of the Consumer Protection Act, 1986. It ineans any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or otherwise in relation to any service.

A number of judicial decisions on deficiency of service are available. Some of these are being given here under:

I ) Maina Devi Bairalia v. Life Insurance Corporatidn of Iadia (decided by the National Commisison on 11 S.1993). In this case, Maina Devi's husband took a life insurance policy for Rs. 50,000. Before the second premium fell due, he died due to sudden illness. The claim made by Smt. Maina Devi, the widow of the insured, was not entertained for as long as 14 years. It was only when she got her miseries published in newspapers and certain MPs took up thc matter in Parliament that she was sent a cheque for Rs. 50,310.

On a suit before National Commission, it was held that the Corporation had been highly negligent in the performance of its services. Smt. Maina Devi, the complainant, had suffered hardship and loss on account of deficiency in service. She was held entitled to interest a 12 p.a. from the date of expiry of 3 months from the date of death of assured till the amount was paid to her. The Commission also awarded her compensation Rs. 15,000 for mental torture and harassment.

2) Telecom District Manager v. Umesh Chandra Patnaik (decided on 15.3.1993). In this case, the complainant had alleged that he was not receiving telephone bills regularly and therefore on account of non-payment of some bills his telephone had been disconnected.

Held, in the absence of any provision'in the Telegraph Act, on the basis of the rules requiring that telephone bills should be despatched by registered post, the Department could not be said to have committed any deficiency in service.

3) Skypack Couriers Pvt. Ltd. &Another v. MIS. Anupama Bagla (1992). In this case, non- delivery o l a vidco cassette by a courier service company resulting in the complainant losing , admission to the desired college was held to be 'deficiency' in service as the conlplainant was put to serious hardship and loss by reason of the neglect and failure on the part of the courier to deliver the article entrusted to them for carriage. Accordingly, compensation of Rs. 10,000 was . warded to the complainant.

4) In Lucknow Development Authority v. Roop Kishore Tandon (1990), the failure on the part of a Housing Board to glve possession of the flat after receiving the price and after registering it in favour of the allottee was held to be deficiency in service.

5) Airpak Couriers (India) Pvt. Ltd. V. S. Suresh (decided o n 11.3.1993). A consignment of important papers was handed over to the courier MIS. Airpak Couriers Pvt. Ltd. The. consignment did not reach its destination. The State Commission held it to be a case of deficiency in service and granted a compensation of Rs. 1 lakh for the loss. d

In appeal, the appellant contended that the consignor agreed to the terms and conditions of the courier that its liability was limited and restricted to Rs. 100 ohly, that according to IAT9 regulations no important documents were to be sent through courier service and since the consignment was lost in transit, they were liable to the extent of Rs. 100 only as damages. The consignor was bound to disclose the nature of contents before sending the consignrqent and the value of the consignment was not specially stated in the column assigned for it in the consignment note.

Consumer Protection Act Held, if the documents which were sent were of great value, the consignor ought to have insured them. No such sep was taken nor was its value disclosed in the consignment note. It was not clear why the consignor could not have sent duplicate copies of the lost documents when the loss came to light.

The compensation awarded by the State Commission was not justified. Since there had been deficiency of service, a sum of Rs. 100 only was awarded.

6) Indian Oil Corporation Ltd. v. Venkataraman (decided on 18.12.1992). In this case, the State Commission as well as the National Commission held that the supply of a gas cylinder with a defective value and the failure of the distributor's supplyman to check the defect at the time of delivery amounted to deficiency of scrvice. Accordingly, the Indian Oil Corporation was held liable to compensate for loss of life and injury resulting from fire caused by the leakage from the defective value. A sum of Rs. 1,50,000 was awarded.

7) State Bank of India v. N. Raveendran Nair (decided on 3.8.i992). A demand draft of Rs. 98,000 was issued by the State Bank of Travancorc on the State Bank of India, Surat. When presented at the drawee branch, the payment was refused on the ground that under the signature of one of the persons signing the draft, (accountant), the capacity to which he signed the same was not mentioned. Held, the refusal amounted to deficiency in service and the bank should be held liable for the inconvenience and consequent loss to the payee of the draft.

18.3.5 District Forum

District forum means a consumer Disputes Redressal forum established under clause (a) of Section 9 (Sec. 2 (1) (h)).

Section 9 (a) in this regard provides that there shall be established for the purposes of the Consumer Protection Act a consumer Disputes Redressal Forum to be known as the District Forum established by the Stae Government in each district of the State by notification. The State Government may, if it deems fit, establish more than one District forum in a district.

18.3.6 Goods

Goods under this Act shall have the same meaning as assigned to them under the sale of goods Act, 1930 (Sec. 2(7) (i)).

Accordingly, Goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or fonning part of the land which are agreed to be served before sale or under the contract of sale (Sec. 2 (7) of the Sale of Goods Act, 1930).

Are Shares before allotment goods?

The Supreme Corut in Morgan Stanly Mutual Fund v. Kartick Das (1994) 4 (Supreme Court Cases 225), observed that till the allotment of shares takes place, 'the shares do not exist'. Therefore, they can never be called goods.. .it is after allotment, rights may arise as for the contract (Articles of Asskiation of Company), but certainly not before allotment.

18.3.7 Manufacturer

Sec. 2 (1) (1) of the Act define's'the expression 'manufacturer' to mean any of the following persons:

i) A person who makes or manufactures any goods or part thereof.

ii) A person who does not make or manufacture any goods but assembles parts thereof made - or manufactured by others and claims the end-product to be goods manufactured by himself. But, where a manufacturer despatches any goods or part thereof to any branch office maintained by him, such branch office shall not be deemed to be manufacturer even though the parts so despatched to it are assembled at such branch ofice and are sold or distributed from such branch office.

iii) A penon who puts or causes to be put his own mark on any goods made or manufactured by any other manufacturer and goods and claims such goods to be goods made or manufactured by himself.

18.3.8 National Commission

'National Commission' means the National Consumer Dispute Redressal Commission established under clause (c) of Section 9 [Sec. 2(1) (k)l.

Section 9 (c) provides that there shall be established for the purpose of this Act a National Consumer Disptues Redressal Commission established by the Central Government by notification. The Government vide powers conferred upon it under the said clause established a National Commission in 1987.

18.3.9 Person

As per Sec. 2(1) (m), 'person' includes:

i) a firm, whether registered or not;

ii) a Hindu undivided family;

iii) a Cooperative Society;

iv) every other association of persons whether registered under Societies Registration Act, or not.

18.3.10 Restrictive Thde Practice

'Restrictive trade practice', as per Sec. 2(1) (nn) means any trade practice which requires a consumer to buy, hire or avail of any goods or, as the case may be, services as a condition precedeat for buying, hiring or availing of other goods or services.

Thus, compelling a consumer to buy insurance cover while purchasing a vehicle, or insisting on purchase of gas-stove as a pre-condition to release gas connection shall be a restrictive trade practice.

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18.3.11 Service

Section 2 (1) (0) provides that Service means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, boarding or lodging or both, housing cohstruction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.

Are the services rendered by Government hospitals free of charge?

A controversy has been raised with regard to treatment at Government hospitals as to whether it constitutes a service within the meaning of service under the Act. There are some who believe that the treatment in Government hospitals is actually not free inasmuch as it is the taxpayer's money which goes to fund these hospitals and, if therefore a taxpayer seeks the treatment, he is paying for the same though indirectly. However, National Commission in

r Consumer Unity and Trust Society (CUTS) v. State of Rajasthan, (1989) held that complaints against government hospitals cannot be entertained under the Act on the ground that person receiving treatment in such hospitals is not a consumer as the patient does not hire the services

1: of the hospital; moreover, the treatment provided is free of charge, and therefore, it does not amount to 'service'. It further observed that this was their interpretation within the scope of the Act and if the Leigslature intended otherwise, the Act ought to be amended suitably. Rowever, service rendered by doctors in private hospitals for consideration would come under the purview of service (Cosmopolitan Hospitals v. Smt. Vasantha P. Nair 1992).

18.3.12 State Commission L

It means a Consumer Disputes Redressal Commission established in a State under clause (b) of Sec. 9 (Sec. 2(1) (p)), Clause (b) of Sec. 9 provides that there shall be established for the purpose of this Act a Consumer Disputes Redressal Commission to be knowh as the State Commission established by the State Government in the State by notification in the official Gazette.

Conarmer Protection Act - Basic Feahves

Consumer Pmtection,Act

A trader in relation to any goods means a person who sells or distributes any goods for sale and includes the manufacturer thereof. Where such goods are sold or distributed in package form, the expression trader shall include the packer of those goods [Sec. 2(1) (q)].

18.3.14 Unfair lkade Prgctice

Somewhat similar to the definition of unfair trade practice under the MRTPAct, clause (r) of sub-section (1) of Section (2) of the Consumer Protection Act defines the expression unfair trade practice. It is defined to mean a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:

1) The practice of making any statement, whether orally or in writing or by visible representation which-

i) falsely represents that goods are of a particular standard, quality, quantity, grade, composition, style or model;

ii) falsely represents that the services are of a particular standard, quality or grade;

iii) falsely represents any rebuilt, second hand, renovated, reconditioned or old goods as new goods;

iv) represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;

v) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;

vi) makes a false or misleading representation co~cerning the need for, or the usefulness of, any goods; or services;

vii) gives to the public any warranty or guarantee of the performance, efficiency or length of life of a product or of any goods that is not based on an adequate or proper text thereof. However, where a defenct: is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;

viii) makes to the public a repiesentation in a form that purports to be, -

a) a warranty or gurantee of a product or of any goods or services; or

b) a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified result,

c) If such purported wahanty or gurnntee or promise is materially misleading or if there is not reasonable prcvspect that such warranty, guarantee or promise will be camed out;

ix) materially misleads the public concerning the price at which a product or like products or a goods or services, have been or are, ordinarily sold or provided;

x) gives false or misleading1 facts disparaging the goods, services or trade of another person.

Case Law on Misleading Advertisement and False Representation &

Since the concept of 'unfair trade practice' under the Consumer Protection Act is quite new, case-law under the Act is not yet available. But the expression has been eseentially used in the same sense as under the MRTPAct. Therefore, some cases decided by the MRTP Commission, on the subject, may be considered with advantage.

i) Acupressure Therapy Health Centre (1986). The respondents in this case were manufacturing acupresslsre sandals which they claimed were designed to improve blood circulation, and keeping the users healthy by walking daily on the chappals for 8 minutes every morning and evening before meals. The respondents also claimed that WHO has approved of this therapy, When the matter was referred to the All India Institute of Medical Sciences, it was very clearly stated by way of medical opinion that there was no proven evidence in modern medical literature that acupressure helps treat any ailment.

and that the scicnce of acupressure was not accepted even in developed countries. Even Consumer Protection Act - the WHO disclaimed any approval having been granted to the use of such sandals. Bafk Fealur

Further, on thc box containing the chappals, it was mentioned that the sandals were not to be used for more than ten minutes and that heart and blood pressure patients should consult the doctor before using them, but these facts were not mentioned in the advertisement. The MRTP Commission held that the facts of acupressure thereby were false and misleading. According, injection was issues restraining the respondent from giving out advertisements containing misleading facts. (ii) DG (I & R), New Delhi v. Principal, Kathiar Medical College, Patna (1989). Director General filed an application suo mot0 against Principal, Kathiar Medical College, which was registered under the Societies Registration Act. It was alleged that the respondent had been giving wrong impression in his publicity material that the college was authorised and equipped to impart medical education leading to M.B.B.S. degree. The college was actually neither recognised by the Medical Council of India nor atfiliated to any University.

The Com~nission held it to be a case of misleading advertisment amounting to unfair trade

iii) In Snowhite Clothiers (1986), the respondent issues adveitisements promising discounts up to 50% upon stating in the advertisements "Drop in for unbelievable bargain in men's, ladies and children wear". The Commission ruled that the advertisements were misleading in that the normal price was not shown, the bargain sale period was not indicated - 'till stocks last' was held a vague tenn.

iv) !n Panama Textiles, Bombay (1987), the dealer was found to have conducted the bargain in the name and style 'ZAPATA' at YWCA, Ashoka Road, New Delhi and at NDMC Hall Punchkuin Road, New Delhi. In the impugned 'bargain sale', the said dealer was found to have sold spurious/sub-standard suiting, etc. falsely claiming that to be of well-known brands manufactureh by M/s Ra~nond Woollen Ltd., Grasim Industries Ltd., M/s Bombay Dyeing, etc. Held the delaer had indulged in an unfair trade practice.

2) Pennits -

i) The offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole;

ii) the co~duct of any context, lottiery, game of chance or skills, for the purpose of promoting, directly or indirectly, the sale, use of supply of any product or any business interest.

4) Permits the sale or supply of goods intended to be used, or are of a kind likely to be used, by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by competent authority relating to performance, composition, contents, design, construction, finishing or packaging as are necessary to prevent or reduce the risk of injury to the person using the.goods.

Thus, sale of helmets without IS1 certification will amount to an unfair trade practice under this clause.

5 ) Permits the hoarding or destruction of goods, or refuses to sell the goods or to make them available for sale or to provide any service, if such hoarding or destruction or refusal raises or tends to raise or is intended to raise, the cost of those or other similar goods or service.

No relief to consumers in the case of unfair trade practice and restrictive trade practice. In the case of these two practices, all that the District Forum may order is to discontinue them, or not to repeat them.

The Act does not provide for:

i) any relief to the consumers who have suffered as a result of such practices.

i any penal action for the practices, or their repetition later on.

It may be mentioned that section 128 of the MRTPAct, 1969 makes a provision for payment of compensation in such types of cases.

Consumer Protection Act Check Your Progress 2

Note: i) Use the space below for your answers. ii) Check your progress with the model answers given at the end of the unit.

1) What in your opinion are theathree most important features of the Consumer Protection Act, 1986.

2) State, if the following are the consumdrs under the Consumer Protection Act, 1986:

i) Purchase of a sewing machine for earning her livelihood.

ii) A person registered for gas-connection but before allotment of the same.

iii) User of electricity

............................................................................................................................................... 3) Are the following 'goods' under the Consumer Protection Act, 1986:

i) Growing crops

ii) Shares before allotment

............................................................................................................................................... 4) Shall the following scrvices be covered under Consumer Protection Act, 1986:

i) The services rendered by the doctors of A11 India Institute of Medical Sciences.

ii) Services rendered by doctors of a nursing home.

iii) Professional services of a lawyer engaged by a client.

iv) Services rendered hy a lawyer appointed on a salary by a company.

18.4 LET US SUM UP The Consumer Protection Act, 1986 is a consumer specific legislation designed to provide for speedy and inexpensive remedy to the consumers. The Act for the first time gives statutory recognition to the rights of the consumers. Three-tier redressal machinery at the District, State

and the National level has been constituted. The Act offers remedies to consumers not only in respect of defects in goods or deficiencies in services but also for overcharging and a host of unfair and restrictive trade practices.

Consumer Protection Act - Basic Features

18.5 KEY WORDS

Forum (Fora): Any place for public discussion.

Natural Justice: Justice, based on the innate morale sense.

18.6 SOME USEFUL BOOKS

Ram J. Markin, 1980 : Marketing, New York.

Francis Cherumilan, 1991 : Business and Government, New York.

P.K. Majumdar, 1995 : Law of Consumer Protection in India, New Delhi.

18.6 ANSWERS OF CHECK YOUR PROGRESS EXERCISES

Check Your Progress 1

1) Seee section 18.2

Check Your Progress 2

1) The three most important features of the Consumer Protection Act, 1986 are:

a) This is first legislation of its kind inasmuch as it provides for reliefs against different kinds of exploitation including defective goods, unsatisfactory or deficient services, restrictive and unfair practices.

b) The Act provides for speedy and inexpensive redressal of grievances through three- tier machinery at the District, State and National level.

It is an Act which also provides for inexpensive method of seeking relief. No court fee or any other charge is to be paid. Moreover, the consumer can argue his own case. Engaging an advocate is not necessary.

c) This Act gives statutory recognition to the right of consumers.

2) i) Yes..Purchase of sewing machine for earning livelihood is not a purchase for commercial purpose.

ii) Yes. See Mahindra Gas Enterprises v. Jagdish Poswd(1992).

iii) Yes. Refer to the National Commission decision in Y.N. Gupta v. DESU (1992).

3) i) Yes. See definition of 'goods'. i

ii) Yes. See decision of the Supreme Court in Morgan Stanley Mutual Fund v. Kartick Das (1 994)

- 4) i) No. Refer to National Commission decision in consumer Unity and Trust Society v. State of Rajasthan (1989).

ii) Yes. (Cosmopolitan Hospitals v. ~ m t . Vasantha P. Nair).

iii) Yes. Such services cannot be regarded as personal services and thus are not exempted.

iv) No. See National Coqmission decision in A.C. Modagi v. Cross well-Tailor (1991).