Cover of March Final new - National Law School of India …clap.nls.ac.in/pdf/clap-nl4.pdfSC in State of U.P. & Others Versus Jeet S. Bisht & Anr., wherein the Hon’ble Supreme Court

MARCH OF

CONSUMER LAW AND PRACTICE

(Bi-Annual)

(Vol.III Issue 2)

July-December 2010

NEWSLETTER

Government of India

ISSN 0975-9700

For citation: 2010 March of Consumer Law and Practice, (Vol. No.II Issue No. 2)

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From Vice Chancellor's Desk

Editorial

Activities of CLP Chair

CLP Chair Publication

Updates on Consumer Law Cases

Articles

Web Alert!

Consumer Alert!

Contents ……….

Research Inputs & Editorial Assistant

Mr. AJAR RAB

CHIEF EDITORDr. ASHOK R. PATIL

Administrative Assistant

Ms. B.E. Pushpa Kadam

Chair on Consumer Law and PracticeNational Law School of India University,

Bangalore, Karnataka

Ministry of Consumer Affairs, Food & Public Distribution, Department of Consumer Affairs,

Government of India, New Delhi

Information is the currency of Democracy.

An alert and aware citizenery is the for

successful functioning of democracy.

National Law School of India University which has

become a true symbol for innovation and exploration

has been at the forefront in the important task of

fulfilling its mandate through legal awareness and

clinical legal education. The Chair on Consumer Law

and Practice, since its establishment, has been doing

exemplary work in making the consumers aware of

their rights and also their obligations. Sponsored by

Ministry of Consumer Affairs, the Chair on Consumer

Law and Practice has been bringing out the Consumer

Newsletter periodically to keep all the stakeholders up

to date with the developments in Law relating to

Consumer Protection.

I am sure the readers will find the current number

useful and fruitful.

Sine qua non

FROM THE

VICE CHANCELLOR'S

DESK

Prof. (Dr.) R Venkata RaoVice ChancellorNLSIU

During pre-independence and post independence up-to 1986, in India, the need for consumer protection was paramount in view of an ever-increasing population, lack of education, poverty, illiteracy, lack of information, traditional outlook of Indians to suffer in silence and also due to delay in justice, more court fees, advocate fees, more time consuming, complicated procedure for consumer to represent his case party in person before court etc.

Therefore the Consumer Protection Act, 1986 (CPA) has been enacted by the parliament specifically for consumers with the special object to promote some basic rights of consumers, namely the right to safety, to be informed of quality potency and purity of products, to access to variety of goods of competitive prices, to redressal of grievances and to consumer education. The CPA has covered all important aspects of the United Nations Guidelines for Consumer Protection.

Consumer Forums established under the CPA do not exercise jurisdiction upon each and every matter, rather the jurisdiction of the Consumer Forum can be invoked only on the matters/disputes where the consumer element is involved. As per Section 3 of the CPA, the provisions of the Act shall be in addition to and not in derogation to any other provisions of any other law for the time being in force. Having due regard to the scheme of the Act and purpose sought to be achieved to protect the interest of the consumers, better the provisions are to be interpreted broadly, positively and purposefully in the context to give meaning to additional/extended jurisdiction, particularly when Section 3 seeks to provide remedy under the Act in addition to other remedies provided under other Acts unless there is clear bar. So despite provisions for referring the dispute to arbitration in the certain Acts/Laws, the object and purpose of the CPA cannot be frustrated as the provisions of the CPA are in addition and not in derogation of any other law in force.

It is settled law that the law enacted by the Parliament cannot be changed or made useless by judicial

- FROM THE EDITORIAL BOARD-Dr. Ashok R. Patil

Associate Professor of LawChair on Consumer Law & Practice

THE CONSUMER PROTECTION ACT, 1986 IS A SPECIAL LAW

interpretation. The provisions of the enactments have to prevail over the judicial decisions. The question of interpretation comes only when the provisions of legislative enactments are either not clear, ambiguous or cannot depict the true meaning. When the provisions of the legislative enactments are plain, clear and unambiguous, then these cannot be negativated through judicial interpretation. Reliance can be placed upon various authorities of the Hon’ble Supreme Court of India on this point. The Hon’ble SC in State of U.P. & Others Versus Jeet S. Bisht & Anr., wherein the Hon’ble Supreme Court has specifically held that court cannot add or substitute word in a statute. By judicial verdict the court cannot amend the law made by the Parliament or State Legislature. It has been further held by the Hon’ble SC in the said authority that mere a direction of the Hon’ble SC without laying down any principle of law is not a precedent. It is only where the Hon’ble SC lays down a principle of law that will amount to a precedent. The courts are subordinate to law and not above the law.

In one of the landmark judgments, the Hon’ble Supreme Court of India in Lucknow Development Authority v. M.K. Gupta, has observed that a legislation which is enacted to protect public interest from undesirable activities cannot be construed in such narrow manner as to frustrate its objective. It has been further observed in the said authority that any attempt to exclude services offered by statutory or official bodies to the common man would be against the provisions of the Act and spirit behind it. The Hon’ble Supreme Court of India has further observed that truly speaking it would be a service to the society if such bodies instead of claiming exclusion subject themselves to the Act and let their acts and omissions scrutinized, as public accountability is necessary for healthy growth of society.

In view of above reasons, CPA is not a general law, but a special law enacted for the better protection of the interests of the consumers.

3

Round Table Conference on ‘Strengthening Consumer Advocacy in Karnataka’ for Consumer

thActivists held on 13 November 2010, at hotel

Citadel, Bangalore

Final year B.A.LL.B.(Hons.) Students’ field visit to Legal Metrology

stDepartment on 21 August 2010

Final year B.A.LL.B.(Hons.) Students’ field visit to Bureau of Indian Standards

thDepartment, on 25 August 2010

CLP CHAIR ACTIVITIES CLP CHAIR PUBLICATION

by Chair Professor Dr. Ashok R. Patil

Fellowship

National Seminars / Conferences

Attended / Papers Presented

Book Review

lBook Review on “LEGAL SERVICES,

PUBLIC INTEREST LITIGATION & nd

PARA- LEGAL SERVICES”, (2 ed.,

2006). By Dr. S.S.Sharma, Central Law

Agency, Allahabad; Published in Journal

of Indian Law Institute, Vol.51, Oct-Dec

2009, No.4, p.547.

lAsian Law Institute Fellowship from

National University of Singapore for the th th

period 20 Sept 2010 to 20 October

2010. to conduct research on Consumer

Protection.

lThe CLP Chair NLSIU, U.S Consulate

General, Chennai, American Corner

Bangalore and the Exchange Visitors

Alumni Association jointly organised a

lecture/discussion on “Protecting The

Consumer” with Mr. Charles Bell,

Programs Director for Consumers Union,

Justice K.Ramanna, President, KSDRC

and Dr.Ashok R. Patil participated in

discussion on, July 21 at Bharatiya Vidya

Bhavan, Bangalore.

lPaper presented on “Dispute Redressal

System under COPRA” at the Workshop

conducted by Arabindo Womens College,

Bangalore on 13-09-2010.

lPaper presented in absentia on

“Consumer Right to Safe & Standard th

Food” on 24-9-2010 at the 5 Australian

Round Table Conference Consumer Law

which was organized by The University of

Western Australia.

4

5

CHAIR ON CONSUMER LAW AND PRACTICE, NATIONAL LAW SCHOOL OF INDIA UNIVERSITY, BANGALORE

Sponsored by Ministry of Consumer Affairs, Food & Public Distribution, Department of Consumer Affairs, Government of India, New Delhi

lPresented a paper on A Comparative Studyon “Consumer Protection throughMaintenance of Product Safety andStandards in India and Singapore at theSeminar 01-10-2010 at the NationalUniversity of Singapore.

lPaper Presented on ‘Consumer Protectionin ASIAN Countries’ at UnderwritersLaboratory, Singapore on 13-10-2010.

lPaper presented on “Insurance Laws ofRisk Management” for Managers of BharatElectronics Limited on 30-10-2010 atNLSIU International Training Centre.

lCLP Chair along with CREAT hasorganized Round Table on ‘StrengtheningConsumer Advocacy in Karnataka’ forconsumer activists on 13th November 2010at Hotel Citadel, Bangalore.

lParticipated in “Dispute Resolution inTelecom and Broadcasting Sectors”organized by Telcom Disputes Settlementand Appellate Tribunal at Bangalore on 20-11-2010.

lParticipated in a Seminar on “StudentsPresentations: How and Why?” on 06-10-2010 at the National University ofSingapore.

lOn National Consumer Rights Day GuestLecture was organised by CLP Chair andLecture was delivered by Shri. Anwar,Assistant Metrology Controller, Bangaloreon 20-12-2010 at NLSIU. On WeightsMeasures Act.

CLP Chair @ Media

Gyana Vani Radio Programme on 7 th June2010 from 5.05 p.m. to 6.05 p.m. atBangalore. This programe mainly covered theaspects of Drugs and Cosmetic issues andweights and measures laws, by Dr. AshokPatil.

Collaborative Exercises

in Bangalore on 22

lFinal year students of B.A. LL.B.(Hons.)assisted Drugs Controller ofKarnataka, in inspection of 60 Blood Banks

rd and 23rd of July 2010.

lField visit to final year students of B.A.LL.B. (Hons.)to Legal MetrologyDepartment, Bangalore for practicalknowledge on 21-8-2010.

lMeeting with Consumer Association ofSingapore Manager Mr. Pillai on 14-10-2010 at CASE Office in Singapore anddiscussed on consumer protection inSingapore.

lMeeting with Registrars and Judges of theCourt of Appeal on 7-10-2010 & hadDiscussion on consumer Protection Issues.

lTrained High School students of KLEInternational School on “Consumer Rights”on 10-11-2010.

lDiscussion with Mr.J.C.Sekar, ManagingDirector, ASIAN Underwriters Laboratory,Singapore and other officers of UL on 8-12-2010 at NLSIU on Product SafetyStandards Issues.

Medical Negligence

Minor Margesh K. Parikh v. Dr. Mayur H.Mehta 2010(10)UJ4872(SC)

In an unfortunate incident of medicalnegligence, wherein despite the repeatedefforts of the parents to bring a possible case

l

LL.B. (Hons.) to Bureau of Indian StandardsDepartment, Bangalore for practicalknowledge on 25-8-2010

Field visit to final year students of B.A.

UPDATES ON CONSUMER LAW CASES

6



of gangrene to the attention of the doctor, theirone-and-a-half year old child was forced to losehis left leg below the knee, and was put intohardship and suffering for the rest of his lifethereafter. The Hon’ble Supreme Court viewedthe decision of the National Commission whichheld in favour of the doctor unfavourably, goingso far as to refer to its decision as havingresulted in “a failure of justice”. Further, theCourt viewed the concealment of theappellant’s case papers, which would revealcrucial information regarding the line oftreatment, for over six years, as well as thesignificant delay in obtaining an affidavit fromthe doctor, as a possible attempt to misleadthe Commission in making an informeddecision. “A professional may be held liablefor negligence on one of the two findings: eitherhe was not possessed of the requisite skillwhich he professed to have possessed, or, hedid not exercise, with reasonable competencein the given case.”

The court should have imposed costs for theconcealment of evidence and decided thecase on merits instead of remanding it to theState Commission. It just leads to more delayin justice.

Dr. V.N. Shrikhande v. Mrs. Anita SenaFernandes 2010(9)UJ4792(SC)

The Supreme Court, in a claim forcompensation filed after 9 years of surgeryheld that “In case of Medical Negligence“Cause of action’ does not accrue until thepatient learns of injury/harm or in the exerciseof reasonable care and diligence could havediscovered the act constituting negligence.”

The decision of the court sends a strongmessage against frivolous litigation andcomplainant sleeping over their rights.

Surendra Kumar Tyagi S/o Trilok ChandTyagi Ghaziabad v Jagat Nursing Homeand Hospital, Meerut and another 2010Indlaw NCDRC 259

The National Commission has held that incases of medical negligence and deficiencyin service, in treatment of a patient, damagesare to be quantified under two heads -pecuniary and non-pecuniary damages. Underthe first head, will be those damages, whichcan be quantified in terms of money i.e. actualexpenditure incurred by the patient -complainant in getting the treatment or in therectification of the deficient treatment, whichhe received as also for the resultant loss ofbusiness, etc. The non-pecuniary damageswould be for the physical and mental pain andsufferings of the patient - complainant onaccount of such faulty treatment.

Education

Maharshi Dayanand University v. SurjeetKaur

MANU / SC / 0485 / 2010

The National Commission stated thatimparting of education by the educationalinstitutions for consideration falls within theambit of service as defined under theConsumer Protection Act. The Supreme Courtset aside the impugned judgement, on groundsof non-competence of the district forum toentertain the complaint since Bihar SchoolExamination Board v. Suresh Prasad Sinhaclearly enunciated that services provided byeducational institutions cannot be broughtunder Consumer Protection Act.

The Supreme Court is right in upholding BiharExamination Board, as bringing educationalinstitutions under the ambit of consumerprotection would make administrative matterssubject to litigation and would cause a flood insuits to harass the administration.

Controller, Vinayak Mission Den.Col. andAnr. v. GeetikaKhare 2010(5) AWC5432(SC)

The complainant had secured admission to aBDS college but had to withdraw from the

7



same on account of lack of recognition of thesaid college and also other deficiencies, whichnot only caused inconvenience and mentalharassment but also resulted in the loss of anacademic year. The Supreme Court held thatthe refund of fee made by the University “metthe ends of justice” and there was norequirement for any further compensation tothe complainant.

The court should have dealt with the case in amore strict sense. Duping students by openingunrecognised universities and playing withtheir careers should be dealt with in a very strictmanner and exemplary damages should havebeen awarded.

Banking and Finance

Managing Director, Maharashtra StateFinancial Corporation and Ors. v. SanjayShankarsa Mamarde MANU/SC/0463/2010

The Supreme Court held the bank was right innon-disbursement of balance instalments ofloan. Upholding U.P. Financial Corporationand Ors. v. Naini Oxygen & Acetylene GasLtd., the court held that “a Corporation beingan independent autonomous statutory body....is free to act according to its own right.”

The court’s reasoning is in line with the lassiefaire philosophy. It also ensures enoughincentive for corporate houses to set up andfunction without excessive legalentanglements.

Defective Goods / Product Liability

Birla Technologies Limited v. NeutralGlass and Allied Industries Limited 2010Indlaw SC 1079

The Supreme Court held that the developmentof a software for a company amounts to‘goods’ and that such goods are purchasedfor commercial purpose of earning moreprofits. The decision seems be in line with the

strict interpretation of the statue. However, itleaves no recourse for the company for defectand deficiency except in contract law, whichdefeats the objective of the ConsumerProtection Act. For a strong liability regime tobe outlined, the remedy should be available tothe final consumer (whoever they might be).

Jagrut Nagrik and others v Proprietor,Baroda Automobiles Sales and Service,Vadodara, Gujarat and others 2010 IndlawNCDRC 252

The National Commission held that “ themanufacturer of the car as well as the salesand service dealer are liable to pay. However,if in the reckoning of the manufacturer, undersome agreement, the liability to pay is onlythat of the dealer alone on the strength of suchagreement it will be for them to work out theremedy for realization of the amount in casethe amount is recovered from them.”

This case strengthens product liability and isgreatly appreciated for creating a strict liabilityregime.

C.N. Anantharam v. Fiat India Ltd. and Ors.etc. MANU/SC/0979/2010

The complainant filed a complaint relating tonoise from the engine and the gear box, therewas no other major defect which made thevehicle incapable of operation, particularlywhen the engine was replaced with a new one.However, in addition to the directions given bythe National Commission, the Supreme Courtdirected that if the independent technicalexpert is of the opinion that there are inherentmanufacturing defects in the vehicle, thepetitioner will be entitled to refund of the priceof the vehicle and the lifetime tax and EMI alongwith interest @ 12% per annum and costs, asdirected by the State Commission.

The decision of the court is stronglyappreciated for upholding higher standards ofproduct liability in India. With the industrial

8



growth and numerous manufacturersproducing varied products, higher standardsare an imperative.

Airlines

Col. D. K. Kapur v. KLM Northwest Airlines

Indlaw 1 December 2010 NCDRC 290

The National Commission held KLM airlinesliable for deficiency in service in respect of amissing baggage piece of the petitioner. TheCommission held that “the mental andphysical harassment that a passenger, asenior citizen at that, would undergo when heis required, after so many hours of aninternational air journey, to collect hischecked-in baggage at the point of firstdisembarkation from such a flight in order toboard a connecting domestic leg of therouting to the final destination and finds oneof the checked-in baggage pieces missing,with no one from the international or thepartner air carrier available to lift theproverbial little finger to help him, wouldcertainly amount to “injury” within the meaningof the term under section 14 (1)(d) of the[Consumer Protection] Act, entitling him tocompensation.”

The judgment is greatly appreciated as in thepresent times, there has been a surge of airlinecompanies, however, there has not been anequal surge in the effective liability regime tohold airlines accountable. Very often,consumers are rendered helpless againstgross deficiency and negligence of airlinecompanies despite paying a huge amount forthe same.

Housing and Construction

Chandigarh Housing Board v Avtar Singhand others

MANU/SC/0749/2010

The National Commission has held that by

Limitation Act

The Union Of India v. Md. JasiruddinTalukdar on 3 June, 2010

High Court of Gauhati, Misc Case No. 62/2010

The Gauhati High Court has held that “Specialacts like Workmen’s Compensation Act,1951, Consumer Protection Act, 1956 andMotor Vehicles Act, 1988, are surveyed, it isfound that while making provisions for filingappeal/award against the order passed by theauthority, the legislature provided the powerto condone the delay in filing an appeal soprescribed for filing such appeal. Hence,Section 5 of the Limitation Act isinapplicable”.

making applications for allotment of land, the

Societies will be deemed to have hired or

availed the services of the Chandigarh

Administration and the Board in relation to

housing construction. “If the scheme had

been faithfully implemented and land had

been allotted to the Societies, their members

would have been the Actual and real

beneficiaries. Therefore, they were certainly

covered by the definition of ‘consumer’

under Section 2(1)(d)(ii), the second part of

which includes any beneficiary of the

services hired or availed for consideration

which has been paid or promised or partly

paid and partly promised. As a sequel to this,

it must be held that the members of the

Societies had every right to complain

against illegal, arbitrary and unjustified

forfeiture of 10% earnest money and non-

refund of 18% interest”

The judgment truly upholds the aims and

objectives of the Consumer Protection Act

and ensures that innocent consumers are

protected against unscrupulous land sharks

and arm-twisting agents and companies.

9



Member Contest for Election

Smt. Umme Ammara v. State of U.P. andothers on 30 July, 2010

Civil Misc WP. No. 44552/2010

In this case, the petitioner applied to contestelections despite holding an office in theDistrict Consumer forum. After approval fromthe Hon’ble the Governor, the petitioner wasremoved as Member of the District ConsumerForum, Jyotiba Phule Nagar, on the ground thatshe contested the elections of the LegislativeAssembly of the year 2007, as an independentcandidate without disclosing in the nominationpaper, that she is holding the office. Thepetitioner contested that she sought approvalin the form of a letter from the chairman of thestate consumer forum, and only when she didnot receive any reply did she contest theelections. The Allahabad High Court held that,“The petitioner took a chance to contest theelections. There was no question of seekingguidance or permission for her to contest theelections, holding the office of a member ofDistrict Consumer Forum on full time basis,especially when the clear instructions werecirculated that no member (full time) of theConsumer Forum can contest the elections.The filing of nomination and taking part in theelections, in which the votes were cast in herfavour as a sitting full time member of theDistrict Consumer Forum, amounts to abuseof her position under Rule 3 (5) (e) of the U.P.Consumer Protection Rules, 1987, so as torender her continuance in office prejudicialto public interest. Her conduct clearly fellwithin the grounds on which she could beremoved from office.”

Reasoned Order

Kranti Associates Pvt. Ltd. and Anr. vs. Sh.Masood Ahmed Khan and Ors.

MANU/SC/0682/2010

In this case, the National Consumer Disputes

Redressal Commission dismissed theRevision Petition of the Appellants by justaffirming the order of the State Commission,without giving any reasons. Hence presentAppeal is filed. The Hon’ble Supreme Courtheld that, the National Commission a high-powered quasi-judicial forum for decidingdisputes between the parties. It is necessityof giving reason by a body or authority insupport of its decision had been emphasizedin many judicial precedents. The reasons mustreveal a rational nexus between the materialswhich are considered and the conclusionsreached. The quasi-judicial authority mustrecord reasons in support of its conclusionsas it not only serves the wider principle ofjustice. The National Commission ought to givereasons. The matter remand back to forumfor deciding the matter by passing a reasonedorder and Appeal allowed.

Jurisdiction of High Court

Om Prakash Saini vs. DCM Ltd. and Ors.

MANU/SC/0431/2010

In this case the Appellant invested in the FullySecured Debentures floated by RespondentNo. 1. On failure of Respondent No. 1 to paythe amount of maturity complaint was filed inState Consumer Disputes RedressalCommission which was allowed. TheRespondent No. 1 challenged the Order of theState Commission by filing an appeal underSection 21 of the 1986 Act, but withdrew thesame. Subsequently, Respondent No.1 fileda Writ Petition which was allowed by the HighCourt on the ground that the State Commissiondid not have the jurisdiction to entertain thecomplaint. Hence this appeal is filed beforeSupreme Court. Now the issue before SC wasWhether the High Court committed ajurisdictional error by entertaining the petitionfiled by Respondent No. 1 under Article 227 ofthe Constitution ignoring that Respondent No.1 had already availed the statutory remedy ofappeal. Hon’ble SC held that, CPA,1986 was

10



enacted by the Parliament for better protectionof the interest of consumers and a wholesomemechanism has been put in place foradjudication of consumer disputes. Theremedy of appeal available to a personaggrieved by an order of the StateCommission be treated as an effectivealternative remedy . The CPA,1986 is aspecial statute and a complete code in itself.In the present case, Respondent No. 1 hadavailed the alternative remedy available to itunder Section 21 by filing an appeal againstthe order of the State Commission but duringthe pendency of the appeal, Respondent No.1 chose to challenge the order of the StateCommission by filing a petition under Article227 of the Constitution, which was entertainedby the learned Single Judge on the basis ofthe assurance given by the Respondent thatthe appeal filed before the NationalCommission will be withdrawn. No reasonswere recorded as to why High Court thought itproper to make a departure from the rule thatthe High Court will not entertain a petition underArticle 226 or 227 of the Constitution if aneffective alternative remedy is available to theaggrieved person. Thus, during the pendencyof the appeal filed by Respondent No. 1 underSection 21 of the 1986 Act, the High Court wasnot at all justified in entertaining the petitionfiled under Article 227 of the Constitution andAppeal allowed.

Penalty

Shinto P. Kurian v. Shastha Haridas, on 17September, 2010

The Kerala High Court held that “Section 27of Consumer Protection Act states that wherea trader or a person against whom a complaintis made or the complainant fails or omits tocomply with any order passed by theConsumer Disputes Redressal Forum, suchtriable person or the complainant can beprosecuted as provided under Section 27(1)of Consumer Protection Act and when the

power is so exercised, the ConsumerDisputes Redressal Forum is deemed to betreated as a Judicial Magistrate of the FirstClass, having the powers conferred underCRMC 2891/10 6the Code of CriminalProcedure. If the power under Section 27 ofConsumer Protection Act is exercised inaccordance with law by the ConsumerDisputes Redressal Forum, the StateCommission or the District Forum, the DistrictForum or the State Commission shall bedeemed to be a Judicial Magistrate of theFirst Class and is competent to exercise thepower available under Section 319 of Codeof Criminal Procedure.”

Pre-Deposit for Appeal

Cholamandalam Investments v. Union ofIndia on 4 August, 2010

The Kerala High Court, in a case where thepetitioner challenged the validity of secondproviso to Section 15 of the ConsumerProtection Act, 1986, held that, “The secondproviso to Section 15 provides for pre-depositof 50% of the amount under challenge orRs.25,000/- whichever is less, formaintainability of the appeal. The Sectionobviously applies only in a case whereamount is not recovered or deposited inexecution proceedings before the CDRFagainst whose order appeal is filed. SinceCDRF is free to proceed for execution evenduring pendency of appeal, the appellantduring the pendency of appeal is free todeposit the amount before the CDRF underprotest. If deposit is made before CDRF, thenof course the payment before CDRF issufficient compliance of second proviso toSection 15 of the Act because second provisoapplies only in a case where amount is notdeposited before CDRF or recovered inexecution proceedings. Any otherinterpretation will lead to double deposit of thevery same amount which is not contemplatedunder the second proviso to Section 15 of theAct.”

11



Powers of Consumer Forums

L.Joseph Charlie v. The District Consumer

Disputes on 20 August, 2010

The above case challenged the powers of the

District forum to alter or review a judgment. The

Madras High Court held that, “as per the

scheme of the Consumer Protection Act, the

District Forum shall have all the powers of a

First Class Magistrate which includes the

restrictions on the power of the Magistrate as

provided in the Code of Criminal Procedure,

1973. It is needless to point out that under

Section 362 of the Code of Criminal

Procedure, the Magistrate has got no power

to alter or review any judgement or final order

passed thereby disposing of a case except,

the power to correct a clerical or arithmetical

error. This restriction imposed on the power

of the Magistrate is very much applicable to

the District Consumer Forum also and,

therefore, there can be no impediment to hold

that after imposing the punishment under

Section 27 of the Act, the District Forum has

got no power either to review or to alter the

said order of punishment.”

The Senior Superintendent of Post... v.

K.K.Abraham, Kaithakuzhiyil on 19

November, 2010

The High Court of Kerala, in a case which

sought quashing of an order passed by the

State Commission, the court held that there

are no provisions in the Consumer Protection

Act that may grant the power of review on the

commission, “ there is no case for the

petitioner that the Consumer Protection Act

confer power of review on the State

Commission. Therefore, the prayer in the writ

petition to quash the said order has to be

rejected”.

Articles on Consumer Law

COURIER COMPANY LIABILITY ANDTHE CONSUMER

When an individual decides to send aparticular item by courier, he does so basedon the consideration that he requires thefastest and safest method of conveyanceavailable in the market. Thus in instanceswhen the courier fails to live up to reasonablestandard of service he claims to offer, he canbe held liable for deficiency in service. Thisdeficiency in service most commonly manifestsin the following forms:

i) Loss of consignment. ( Blue Dart CourierService and Anr. v. Modern Wool Ltd.,Jaipur, (1993) 1 CTJ 851 NCDRC)

ii) Unreasonable delay in delivery ofconsignment. (Union of India v. MadhuGangrah, III (2003) CPJ 123 NC)

iii) Damaged to consignment during service.(United India Insurance Company Ltd.and Anr. v. Blue Dart Express Ltd . andAnr, CS(OS) NO. 78 OF 2002)

In order to limit their liability for the abovedeficiency or any negligence in carrying thegoods, it is common practice for couriers toinsert limitation of liability clauses in theircarrier agreements. The current position of lawwith regard to these clauses is such that it isthe duty of the consignor to bring to the noticeof the courier (declare) the value and/or natureof the goods being sent. If this duty is notcarried out, the courier cannot be held liableover and above their limited amounts (BharatiKnitting Company v. DHL Worldwide ExpressCourier Division of Airfreight Ltd., 1993(2)CPR 564, MSC).

Similarly it is the duty of the courier to bring tonotice of the consignor any limitation (ofliability) clauses that might exist in their termsof service. (M/s Tata Chemicals v . Skypak

12



Couriers Pvt. Ltd., II(2002) CPJ 24 NC).Moreover there is also a duty on part of thecourier to ensure that there is an explicitacceptance of the terms and conditions via asignature or otherwise ( Oriental Fire &General Insurance Co. Ltd. v. New SurajTransport Co. Pvt. Ltd., AIR 1985 All 136). Ifeither of these duties is not fulfilled, thelimitation of liability clauses is liable to beannulled.

Consumers are therefore advised to carefullyread the terms of service before hiring aparticular courier. It is also advisable to alwaysfill in a description of the consignment in thespace provided and to declare the value ofgoods being sent.

By: Tarun Krishnakumar, First year studentof BA.LL.B(Hon), NLSIU, Bangalore

HOLDING EBAY LIABLE

eBay as an online shopping format hasundoubtedly brought a revolution in the worldof shopping, but has also challengedconsumer protection at different levels. Ebayhas been involved in legal conflicts which haveprimarily revolved around instances of abuseof consumer interests like frauds beingcommitted on its online auction in the form ofbid shilling, manipulation of the rating system,misrepresentation of the attributes of the itemsdisplayed, failure in delivery and payment ofthe product and also cases of identity thieves.eBay which comes within the meaning of onlineintermediary as per Section 2 clause (w) ofthe Information Technology Act 2008, for abuseof interests of sellers and buyers.

In landmark cases like Gentry v. eBay, 99Cal.App.4th 816 (2002) and Grace v. eBayInc. CA2/3, (in the Court of Appeal of the Stateof California), eBay has not been found liableon ground of being an intermediary, thushaving no role in the agreement of sale andpurchase of items which is entered between

the seller and the buyer. Moreover since eBayis an intermediary who provides a platform forsellers and buyers to interact it cannot be heldliable for the information posted on its websiteas it is essentially third party user information.Another line of argument for not holding eBayliable is the presence of the user agreement(which establishes its position as a hosting-service provider) which is supposed to havean overriding effect thus absolving eBay of anyliability in consumer protection cases. This hasbeen the line of reasoning behind judgmentsin the above-mentioned cases which did notfind fault with eBay.

An exception to this has been the Evagora v.eBay Australia & New Zealand PtyLimited,2001] VCAT 49, where eBay was heldliable for loss suffered by the plaintiff onaccount of misrepresentation of items. Theinternet auction website can be held liablewhere the seller or the buyer has beendefrauded provided its conduct wasmisleading, and it created a wrong impressionin the mind of the consumer regarding thesafety of the auction process. However thisjudgment has remained more of an exceptionrather than the rule thus clearly not helping thecause of protection of consumer interests.

In order to analyse the level and extent of liabilitythat can be imposed on eBay, it is imperativeto look into the line of reasoning adopted incases like Rolex v. eBay, Bundesgerichtshof(Federal Court of Justice) (April 19, 2007),

LVMH v. eBay, Tribunal de commerce[T.C.P.][court of trade] Paris, June 30, 2008;Lancome Parfurms et beaute v . eBayInternational AG [2009] EWHC 1094 (Ch) andTiffany (NJ) Inc. and Tiffany and Company,v. Ebay, INC, 576 F.Supp.2d 463 (2008), whichhave considered the imposition of liability oneBay when action of its users resulted incopyright infringement of third parties. In thesecases, the principle as established is this thateBay can be held liable if it had ‘actual

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knowledge’ which basically means specificknowledge of the particular infringing contentand despite having knowledge of the same ifeBay did not take any step towards curbingsuch activity. Thus the law is that ebay cannotbe expected to monitor the vast multitude oftransactions that occur on its platform but canbe held liable if it had specific and actualknowledge of the infringement (like sale ofcounterfeit items) by the seller.

It is proposed that the same rule of liability aslaid down in actions arising out of copyrightinfringement should be incorporated whiledealing with cases involving consumerprotection. Even in a consumer protectioncase that deals with the redress of grievancesof individual consumers and buyers, eBayshould be held liable if it has specificinformation or reasonable knowledge ofmisrepresentations of the items listed on theonline auction website, if it has actualknowledge regarding improper behaviour ofthe sellers in the past, and fake accounts ofbuyers and sellers and despite having actualknowledge, failed to take actions. The logicbehind holding eBay liable under suchcircumstances is that eBay was in a positionto prevent such wrong from taking place in thefirst place, and therefore if it knowingly fails todo so then it can be construed that eBayplayed a role in such wrong actions and acertain degree of secondary liability should beimposed on eBay for their registered user’sconduct.

To this effect, the consumer protection act 1986which is a social legislation, should beinterpreted in a broader manner to provideredress to consumers at every level. Thewrongful actions of the actual seller or thevendor of eBay will be completely covered bythe consumer protection legislation but theliability of eBay will not be covered by this actand eBay would escape liability. Theresearcher considers that some degree ofliability should be imposed on the intermediary

if it allows misrepresentations of listed itemsor in any way permits wrong actions to becommitted through its website; despite beingin possession of ‘actual knowledge’ of thesame. For this purpose, the researcherconsiders that the principle of liability forintermediary as elucidated in section 79 and81 of the Information Technology Act, 2008should be read into the Consumer ProtectionAct 1986. Since the Consumer DisputesRedressal Forums cannot apply the InformationTechnology Act 2008 while trying cases, itinevitably means that an online intermediarylike eBay cannot be held liable under thejurisdiction of the consumer courts in Indiawhich is not exactly favourable to the interestsof the consumers whose interests the actseeks to protect and the consumer will haveto proceed under the Information TechnologyAct 2008 in another court to proceed againsteBay.

Hence the researcher believes that thereshould be a certain harmonious interpretationbetween the statutes and the ConsumerProtection Act 1986 should be amended toreflect the growing importance of the role ofonline intermediaries in the sphere of the onlineconsumer transactions and the principles laiddown under the Information Technology Act,2008 should be taken into account.

By: Pragya Vats , First year student ofBA.LL.B(Hon), NLSIU, Bangalore

Article Alert !

It’s All About The Principal: PreservingConsumers’ Right Of Rescission Under TheTruth In Lending Act, North Carolina LawReview, December, 2010.

The Exclusion of Consumer Rights in Online Auctions — Is an Online, Auction Really an Auction at All?, by Trish O’Sullivan, New Zealand Business Law Quarterly, December, 2010,

14



Breaking Down Financial Reform :A Summary

of the Major Consumer Protection Portions of

the Dodd-Journal of Consumer & Commercial

Law Fall, 2010

Frank Wall Street Reform and Consumer

Protection Act, by Linda Singer , Zachary Best

, Journal of Consumer & Commercial Law;

2010

WEB ALERT !

Consumer Unity & Trust Society (CUTS)

CUTS established in 1984, which is a non-

profit, non-governmental organisation working

on public interest issues. The vision of CUTS

mainly to create a consumer sovereignty in

the framework of social justice and equality,

within and across borders. The important

programmes of CUTS is

lConsumer Protection

lInternational Trade & Development

lCompetition, Investment & Economic

Regulation

lHuman Development

lConsumer Safety

CUTS has five dedicated programme centres

and seven resource centres in India. CUTS has

a well-developed and reader-friendly web site:

www.cutsinternational.org

CUTS has been creating awareness among

consumers in rural areas to and suitably

empower the rural community to seek justice.

It facilitated consumer awakening at the

grassroots by strengthening the capacity of

networkers in few selected blocks in rural area.

CUTS continues help the small investors

community to aware of their rights and

available redressal mechanisms, besides

suitably educating them to protect their rights

and empowering them to become effective

investors.

Ever since its inception, CUTS has been

pursuing consumer issues and community-

based action programmes at the grassroots

level. In pursuit of this policy, CUTS CHD was

established in the year 1991, in Senti village,

Chittorgarh, Rajasthan. The Centre’s Mission

is: ‘To be an innovative centre for strategic

interventions to raise the living standards of

people’.

To confer a distinct identity to CUTS’ work on

competition, investment and regulatory issues

as well as to take it forward in a more cogent

manner, CUTS CCIER was established in

2003. The Centre’s Mission is: ‘Promoting fair

markets to enhance consumer welfare and

economic development’.

A consumer is entitled to safe goods, services

and environment, as they affect her/his life

directly. Feeling the need for more focused

action in the area of consumer safety, CUTS

CRC was established at Kolkata in 1987 and

Safety Watch as an independent programme

in 1993. It has been working simultaneously

on grassroots economic development as well.

The Mission of the Centre is: ‘To work in

association with other Centres to ensure

consumer sovereignty and economic equality,

within and across borders’.

To know more about CUTS go surfing

…………………..www.cutsinternational.org

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To,

From :Chair on Consumer Law and PracticeNational Law School of India University,Post Box No. 7201, Nagarabhavi,Bangalore - 560 242., Karnataka, India.Phone : 080-23160532, 23397526 (Dir) Fax : 080-23160532Email : [email protected] Website : www.nls.ac.in

Documents

Cover of March Final new - National Law School of India …clap.nls.ac.in/pdf/clap-nl4.pdfSC in State of U.P. & Others Versus Jeet S. Bisht & Anr., wherein the Hon’ble Supreme Court