CONSUMER PROTECTION MEASURES CHAPTER II 2.1 INTRODUCTION In India the need for consumer protection is increasing day-by-day due to population increase, poor supply and buyer s weak bargaining power. There have been a number of laws enacted by the Government to safeguard the interest of the consumers, such as The Essential Commodities Act, Trade and Merchandise Marks Act, the Drugs and Cosmetics Act, etc. (Garg, 1991). The consumer is in need of information and guidance helpful to take decision regarding the purchase and proper selection of goods. Consumer information is important for the economic interest of the consumer. It imparts to make the consumer perfect and competent for intelligent purchases. Consumer education makes the consumer aware of the deceptive marketing systems and unfair trade practices adopted by the traders. It helps the consumers to take wise decision for achieving real value for the money. It develops the confidence among the consumers and makes them competent to face the situation adequately. 2.2 CONSUMER LEGISLATIONS The Government has enacted different consumer legislations at requisite time and has amended many Acts according to situations so as to protect the consumer interests. Following are some of the important consumer legislations discussed in brief. (i) Indian Sale of Goods Act, 1930 This Act regulates the issues pertaining to contracts for the sale of goods, provides remedies in case of breach of contracts of sale, warranty and claims for damages. This is the basic Act governing the sales transactions between a buyer and seller (Kapoor, 2002). (ii) Agricultural Produce [Grading and Marking] Act, 1937 This Act covers unprocessed and semi-processed agricultural produce. Various commodities like food grains, ghee, vegetable oils, etc. are graded on the basis of certain parameters which include size of grain, foreign matter, insect infestation, fungus etc. A certificate mark particularly known as AGMARK is displayed on packages of acceptable grades of agro commodities. This scheme is compulsory for exports and voluntary for the domestic market. 9
(iii) Drugs and Cosmetics Act, 1948 This Act seeks to regulate import, manufacture, distribution and sale of medicines and cosmetics. Defective and sub-standard cosmetics may result in skin and other diseases; whereas sub-standard medicines may result in death. This Act ensures that the product conforms to the pharmacopial standards as well as to the information disclosed on the label. The Act is enforced through Food and Drugs Administration in each State. This Act also lays down that commonly required and life-saving drugs should be made available at reasonable price. (iv) Drugs and Magic Remedies Act, 1954 This Act prohibits publications or advertisements which may encourage ignorant consumers to resort to self-medication with harmful drugs and appliances. Misleading advertisements, making false claims or alleging to possess magic qualities and remedies for treatment of 52 notified diseases, are prohibited. (v) Prevention of Food Adulteration Act, 1954 This Act prohibits the production, distribution, storage and sale of adulterated, contaminated, misbranded food articles as well as foodstuff which is prepared, packed or stored under unhygienic conditions. Adulteration, likely to cause death is punishable up to life imprisonment. The State Governments and Union Territory administrations have been empowered under the Act to appoint food inspectors for enforcement of Act. (vi) The Essential Commodities Act, 1955 The Act enforces certain minimum stock limits in respect of essential commodities considered expedient by the Government from time to time with a view to prevent hoarding for profiteering. The Act also prescribes minimum discloser of information relating to stock and prices of drugs, iron, steel, coal, papers, petroleum etc. The violation of these provisions leads to punishments in the form of minimum imprisonment and fines. (vii) Standards of Weights and Measures Act, 1976 This Act prohibits manufacture, storage and use of non-standard weights and measures. The Standard Weights and Measures Rules (1977) make it mandatory for all packages meant for sale to indicate commodity, manufacturer or packer, net weight or 10
measure of the commodity, month and year of manufacture and unit sale price. Under the Act, inspectors are authorized to periodically stamp the implements (weights or measures) used for sale by businessmen, and also to conduct surprise inspections on the sites from time to time Shivkumar Giram. (2003). (viii) Bureau of Indian Standard Act, 1986 It replaces the Indian Standards Institution (ISI) Act, 1947, and deals with the preparation of standards for products, materials, processes and certification of industrial products which conform to ISI standards. ISI certification is mandatory for products involving health and safety, e.g. Vanaspati, Cement, Steel, Oil, Pressure stoves, LPG Cylinders etc. (Pillai and Bagavathi, 2007). Apart these legislations, there are various consumer legislations to protect and promote consumer interests, such as Drugs Control Act, 1950; Chit funds Act, 1982; Prize Chits and Money Circulation Schemes Act, 1970; Prize Competition Act; Water Prevention and Control of Pollution Act, 1974; Environment Protection Act, 1986; and Consumer Protection Act, 1986. 2.3 CONSUMER PROTECTION ACT, 1986 The Consumer Protection Act (CPA) is of paramount importance in the series of Consumer Protection Statutes. The Consumer Protection Act, 1986 marks the growth of the enlightened consumer movement in the country. It intends to provide simple, speedy and inexpensive redressal to the consumer s grievances, particularly against unfair trade practices or unscrupulous exploitation of consumers. The Act seeks to provide for better protection of the interests of consumers and for the purpose, to make provision for the establishment of consumer councils and other authorities for the settlement of consumer disputes and for matters connected therewith. The Act was enacted in 1986 and came to force on September 1, 1987. The Act has been enacted after in-depth study of consumer protection laws and arrangements in the U.K., U.S.A., Australia and New Zealand. The Act seeks to promote and protect the rights of consumers such as (i) the rights to be protected against marketing of goods which are hazardous for life and property, (ii) the right to be informed about the 11
quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices, (iii) the right to be assured, where ever possible, access to an authority of goods at competitive prices, (iv) the right to be heard and to be assured that consumers interests will receive due consideration at appropriate forums, (v) the right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers and (vi) right to consumer education. These objects are promoted and protected by the consumer protection council to be established at the Centre and State levels. The Consumer Protection Act does not require any fee for instituting complaints up to a certain amount in the consumer court. It is expected to redress the cases within 90 days from its institution. The Act has a penalty provision and provides for imprisonment ranging from one month to three year and fine from Rs.2,000/- to Rs.10,000/- to punish the party who does not comply with the orders passed by the machinery. The practice for the stay orders is not entertained under the act. According to the Consumer Protection Act the consumer need not seek the services of advocates for pleading the case. The Act provides power to the judging panel to direct the trader and the manufacturer to remove the defect or replace the defective product by new one. The Act provides recommends for a woman representation on the judging panel. The Consumer Protection Act is of compensative nature instead of punitive as existing in other legislations. The Public Utility Services like Railway, Electricity, Telephone, Insurance etc. are also within the orbit of this Act. 2.4 JUDICIARY ENVIRONMENT Legal environment is the most important factor in protecting the interest of the consumers. If proper support of law does not exist, the consumer cannot be depended in the court of law. Three-tier quasi-judicial machinery is sought to be set up at the district, state and centre levels to provide speedy redressal to consumer disputes. At the national level, there will be a National Consumer Disputes Redressal Commission, known as the National Commission, at the state level, there will be Consumer Disputes Redressal Forums, known as State Commission and at the district level, there will be Consumer Disputes Redressal Forums, known as District Forums. The consumer courts has also got isolated judiciary set-up having High Court and the Supreme Court as higher authorities. 12
2.5 DEFINITIONS OF TERMS: ACCORDING TO CONSUMER PROTECTION ACT 1986 It is essential to know some important aspects of the Consumer Protection Act to understand the legality. The Consumer Protection Amendment Act, 1993, has given many definitions of various aspects related to the Consumer Protection Act such as appropriate laboratory, branch office, manufacturer, trader, member, etc. Following are some definitions discussed in detail which would help to understand the law. Complaint: Sec.2 [(1) (c)] Complaint means any allegations in written form made by a complainant on a trader who has adopted an unfair trade practice or restrictive trade practice while dealing with him, or the goods, bought by him or agreed to be bought by him, that suffer from one or more defects, or the services, hired or agreed to be hired or availed of by him that suffer from deficiency, defects or short comings, or a trader who has charged for the goods in question a price in excess to the price fixed by or under any law for the time being in force or displayed on the goods or any package in which it contained, or goods which are hazardous to life and safety when used are being offered for sale violating any law for the time being in force. Consumer: Sec. 2(1) (d) The word Consumer is generally used to denote a person who buys goods and services. Consumer means any person who, buys any goods for a consideration which has been paid or promised or partly paid or partly promised; or buys any goods under any deferred payment system; or is an user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised with the approval of original buyer. It does not include a person who obtains such goods for resale or, for any commercial purpose. It include the person who hires or avails of any services for consideration on which has been paid, or promised, or partly paid or partly promised; or hires any services under any deferred payment system; or includes any beneficiary of such services other than who hires or avails of the services for consideration paid or promised or partly paid or promised with the approval of first mentioned person. 13
Thus the consumer may be a person who have bought or agreed to buy, paid consideration for goods or hired or agreed to hire and paid consideration for service in regard to the subject matter of proceedings before forum. The status of consumer is not restricted as a buyer of goods or hirer of services, but extended to the person who uses the goods or avails the services with the permission of original buyer or hirer. It is not necessary that the whole or part of consideration has been paid even promise of payment for purchases of goods or hiring of services is sufficient to fulfill the requirement of law. A person who obtains goods for resale or commercial purpose is excluded from the definition of consumer. The exception applicable to the goods purchased for commercial purpose is not applicable in the case of any goods on which grievance is made about rendering of after sale services during the warranty period. There is no bar of commercial purpose as regarding the services even though the goods are purchased for commercial purpose. The same ideology is applicable for the cases on unfair trade practices adopted by the traders while performing business even for commercial purpose too. Despite the inclusion and exclusion of consumer for commercial purpose, it is permitted to agitate disputes relating to hired services like Telephone, Postal Service, Telegraphs, Transportations, Banking and Insurance and so on. Considering the overall meaning of the consumer, consumer may be any person male or female, rich or poor, trader, manufacturer, owner, builder, contractor, doctor, student, etc. Consumer Dispute: Sec. 2(1) (e) Consumer dispute means a dispute where the person against whom a complaint has been made denies or disputes the allegation contained in the complaint. Consumer dispute is the dispute between two persons; one of them is consumer, who has a right to lodge complaint in the respective office of consumer dispute redressal agencies for his dissatisfaction. Such dispute may be for the defect in goods or deficiency in services which leads to monetary loss, physical or mental agony to him. Consumer Protection Act empowers the consumer to claim for the losses and compensation. Defect: Sec. 2(1) (f) Defect means any fault, imperfections or shortcoming in the quality, quantity, potency, purity or standard of the goods required to be maintained by or under any law 14
for the time being in force. Moreover, sometimes manufacturer claims in writing form from the traders about the relevancy of its standard and utility. Person Sec.2 (1) (m) Under the Consumer Protection Act, the person is defined comprehensively, which included not only individuals but the group of persons and or institutions also. It includes a firm whether registered or not, a Hindu undivided family, A Co-operative society and every other association of person whether registered under the Societies Registration Act 1860. Restrictive Trade Practice [RTP] Sec 2(1) (nn) While marketing the product, deceiving trend in the attitude of traders or dealers is increasing day-by-day. In that respect they try to adopt restrictive trade practices such as, imposing certain conditions for purchasing a particular goods or availing of services and offering illusory schemes stating that excess or extra goods are offered at original price only or free gifts are offered. Fact remains that prices of such goods are increased with such offer for its recovery, Restrictive Trade Practices as per the Consumer Protection Act is known as tie-up arrangements by which trader disposes of goods not saleable or much in demand in the market by tying them to the goods or services which are in great demand. Service Sec.2 (1) (o) Service means any service offered by the dealer in anticipation of contract to the consumer. The Consumer Protection Act in contrast, defines service in a more comprehensive manner as: Service accepts any description which is made available to potential users, and includes the services of banking, financing, insurance, transport, processing, supply of electrical or other energy, housing construction, boarding or lodging or both, entertainment, amusement or purveying of news or other information. State Commission: Sec.2 (1) (p) State Commission means a Consumer Disputes Redressal Commission established in State under clause (b) of Sec.9 15
Trader: Sec.2 (1) (Q) Trader means a person who sells the goods. Under the Consumer Protection Act the meaning of trader has been defined comprehensively as trader means any person who sells the goods or distributes any goods for sale, or manufactures the goods or packs the goods, prints his name or mark on package and claims as a manufacturer in the case where goods requires packages. Unfair Trade Practice: Sec.2 (1) (r) Under the Consumer Protection amendment Act- 1993, unfair trade practice has been defined comprehensively as when a trader or manufacturer adopts any unfair method or deceptive practice for sales promotion, the use or supply of goods or provision of services, includes making any statement orally or in writing or by visible representation which includes false representation that goods are of a particular standard, quality, grade & composition; or false representation that services are of particular standard, quality or grade; or falsely selling old goods as new goods with reconditioning, renovating or re-building; or false representation for sponsorship or approval or affiliations; or misleading representation regarding the need or usefulness of any goods or services; or giving any warranty or guarantee regarding performance or life of any goods without having provision of proper testing facilities, publication of misleading advertisement, offering illusory prizes, gifts or other items claiming as these are offered free of charges, conducting any contest, lottery, game of chance or skill, for sales promotion and hoarding or destruction of goods or refusal to sell the goods with intention to raise the prices or cost of those goods or similar goods or services. Limitation Period: Sec.24 (A) The District Forum, the State Commission or the National Commission are excepted to admit a complaint within two years from the date on which course of action has taken place. Penalties (Sec.27) Where a trader or a person against whom a complaint is made or complainant fails or omits to comply with any order made by the District Forum, the State Commission or the National Commission, consumer courts have power under Sec.27 of Consumer Protection Act 16
to punish the concern persons with the imprisonment for up to three years, or impose with fine minimum two thousand but not more than ten thousand or with both. 2.6 CONSUMER PROTECTION COUNCIL The Consumer Protection Act, 1986, envisages establishment of Consumer Protection Council at the Central and the State levels to promote and protect the rights of the consumers. These councils are supposed to be the apex body to lay down the policy for the better implementation of the provisions of the Act. The Central Consumer Protection Council The council consists of 150 members, including the minister in charge of the Department of Food and Civil supplies in the Central Government, as its chairman. The State Consumer Protection Council The council shall consist of such number of members as may be specified by the State Government by notification from time to time. The State Government would appoint the Minister in charge of the Department of Food and Civil Supplies in the State as chairman of the council. 2.7 CONSUMER DISPUTES REDRESSAL AGENCIES The Consumer Protection Act has established a three tier structure for redressal of consumer disputes. The redressal machinery consists of the following agencies, a) Consumer Disputes Redress Forum known as the District Forum b) Consumer Disputes Redress Commission known as the State Commission. c) National Consumer Disputes Redress Commission known as the National Commission. (i) DISTRICT FORUM Each District forum consists of a President and two other members and one of them should be women. The President has been or is qualified to be a District Judge. The two members are persons of ability, standing and integrity and have adequate knowledge or experience or have shown capacity in dealing with problem relating to Economics, Law, Commerce, Accountancy, Industry, Public affairs or Administration. 17
(ii) STATE COMMISSION State Commission consists of three members. One of them is the president and one of the members should be women. The two other members are persons of ability, integrity, and standing and have adequate knowledge or experience or have shown capacity in dealing with problem relating to Economics, Law, Commerce, Accountancy, Industry, Public affairs or Administration. (iii) NATIONAL COMMISSION The President is appointed by the Central Government after consultation with the Chief Justice of India. The other members are appointment by the Central Government on the recommendation of a selection committee consisting of: a person who is Judge of the Supreme Court, nominated by the Chief Justice of India and Secretary of the Department dealing with consumer affairs in the Government of India. 2.8 PROCEDURE FOR MAKING COMPLAINTS BEFORE THE DISTRICT FORUM / STATE COMMISSION The various steps involved in filing complaints in Consumer Court, from the view point of the consumer are given below. 1. The consumer has to collect and keep ready all the evidence needed. 2. The written complaint with sufficient number of copies containing the details referred should be kept ready. Before filing the written complaint the consumer can approach the seller or opposite party and get his views in writing about the complaint to be made. 3. If the person is acting on behalf of another the necessary permission to act as agent should have been obtained. 2.9 CONCLUSION This chapter made an attempt to throw some lights on those Acts which are operating in India for the protection of Consumer Interest. In addition to this, this section presented the birds eye view of the Consumer Protection Act 1986. 18
REFERENCES Garg. O.P. (1991). The Consumer Protection Act, 1986, Delhi, Vinod Publishing House, pp.17-26 Kapoor. N.D (2002). Business Law, New Delhi, Sultan Chant & Sons, pp: 65-74 Shivkumar Giram. (2003). Consumer Protection and Redressal Machinery in India, Mumbai, Himalaya Publishing House, pp.7-89 Pillai and Bagavathi. (2007). Business Law, New Delhi, Sultan Chand & Sons, pp: 63-98 19