THE COSUMER PROTECTION ACT, 1986

Introduction

The Consumer Protection Act, 1986 has been enacted to provide for the establishment of
consumer councils and other authorities for the settlement of consumers’ disputes and for
matters connected therewith. In fact, the basic motive of enacting this important Act is to
provide cheaper and speedy remedies to the consumers who are in disadvantageous position
in comparison with the traders who are well organized and rule the market.

The Consumer Protection Act, 1986’ extends to the whole of India except the State of Jammu
& Kashmir, and save as otherwise expressly provided by the Central Government, this Act
shall apply to all goods and services irrespective of the sources it has come i.e. whether it is
public, private, co-operative or Government [Section 1]. The Act has come into force on
15.4.1987*

Objects of the Act

The objects of the Act are as follows:

1. Better protection of interests of consumers. The Act seeks to provide for better protection
of the interests of consumers. For that purpose, the Act makes provision for the establishment
of Consumer Councils and other authorities for the settlement of consumer disputes and for
matters connected therewith.

2. Protection of rights of consumers. The Act seeks, inter alia, to promote and protect the
rights

of consumers such as—

a) The right to be protected against marketing of goods or services which are hazardous
to life and property ;

b) The right to be informed about the quality, quantity, potency, purity, standard and
price of goods or services so as to protect the consumers against unfair trade practices ;

c) The right to be assured, wherever possible, access to goods and services at

competitive prices ;

d) The right to be heard and to be assured that consumers' interest will receive due
consideration at appropriate forums ;

e) The right to seek redressal against unfair trade practices or restrictive trade practices
or unscrupulous exploitation of consumers ; and

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f) Right to consumer education.

3. Consumer Protection Councils. The above objects are sought to be) promoted and
protectedby the Consumer Protection Councils established at the Central and State levels.

4. Quasi-Judicial machinery for speedy redressal of consumer disputes. The Act seeks to
provide speedy and simple redressal to consumer disputes. For this purpose, there has been
set up a quasi-judicial machinery at the district, State and Central levels.

Important Definitions

COMPLAINANT Sec. 2(1) (13)

“Complainant” means-

(i) a consumer; or

(ii) any voluntary consumer association registered under the Companies Act, 1956 (1 of
1956). Or under any other law for the time being in force; or

(iii) the Central Government or any State Government, who or which makes a complaint;

(iv) one or more consumers, where there are numerous consumers having the same
interest

(v) in case of death of a consumer, his legal heir or representative*”

COMPLAINT Sec. 2(1) (C)

“Complaint” means any allegation in writing made by a complaint that-

(i) an unfair trade practice or a restrictive trade practice has been adopted by any trader;
or service provider*

(ii) the goods bought by him or agreed to be bought by him; sufferfrom one or more
defect;

(iii) the services hired or availed of or agreed to be hired or availed by him suffer from
deficiency in any respect;

(iv) a trader or the service provider has charged for the goods or for the service mentioned
in the complaint a price in excess of the price (a) fixed by or under any law for the time being
in force, (b) displayed on the goods or any package containing such goods, (c) displayed on
the price list exhibited by him, (d) agreed between the parties.

(v) Goods which will be hazardous to life and safety when used, are being offered for sale
to the public in contravention of any law for the time being in force.

(vi) service which are hazardous or likely to be hazardous to life and safety of the public
when used*”

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CONSUMER Sec. 2(1) (D)

‘Consumer’ means any person who:

(i) Consumer of goods buys any goods for a consideration which has been paid or
promised or partly paid and partly promised, or under any system of deferred payment and
includes any user of such goods other than the person who buys such goods for consideration
paid or promised or partly paid or partly promised, or under any system of deferred payment
when such use is made with the approval of such person, but does not include a person who
obtains such goods for resale or for any commercial purpose; or

(ii) Consumer of services hires or avails of any services for a consideration which has
been paid or promised or partly paid and partly promised, or under any system of deferred
payment and includes any beneficiary of such services other than the person who hires or
avails of the services for consideration paid or promised, or partly paid and partly promised,
or under any system of deferred payment, when such services are availed of with the approval
of the first mentioned person;”

Ingredients of a consumer
Transaction must be for a consideration- The consumer must be a person who has
purchased the goods, or hired or availed the services for a consideration. The consideration
may be in terms of money or exchange of goods or services. The consideration may be paid
or promised, or it may consist of a deferred payment such as hire purchase or a credit sale.

Deemed consumer- The term ‘consumer’ shall include those who use the goods or
avail the services as a beneficiary with the approval of a purchaser or hirer for a
consideration.

Purchase must not be for resale and commercial purpose-A person purchasing goods
or hiring services for resale or for a commercial purpose shall be outside the purview of
definition of a ‘consumer’. Explanation to section 2(10 (d) has clarified that the term
‘commercial purpose’ does not include the use by a consumer of goods for consumption or
private use, or exclusively for the purpose of earning his livelihood by means of self-
employment. Whether the purchase is for a commercial purpose is a question of fact to be
decided on the facts and circumstance of each case.

There must be the existence of a contract between the seller and the buyer, i.e,
consumer u/s 2(1) (d) – But under the comprehensive definition of ‘consumer’ even a
member of the family may be treated as a consumer under the act, in the case of an action by
a member of the family for any deficiency in service. In such a case, the concerned trader
cannot claim the absence of privity of contract. On this basis, the national commission had
awarded compensation to both the minor and her parents on the ground of a wrong diagnosis.
{Spring Meadows Hospital and Another v/s Harjot Ahluwalia through K.S. Ahluwalia &
Another civil Appeal 7868 of 1997 decided on 26-3-1998}.

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Instances of consumers- Bank customers, telephone subscribers, consumers of electricity, a
railway passenger, a patient in the hospital, a depositor, allottees of plots/house, nominees of
insured, a purchaser of goods for private consumption, a person buying goods exclusively for
earning livelihood by means of self-employment are all consumers.

Persons who are not consumers-

A patient receiving medical treatment in a Government hospital.

A client of an advocate.

A student hiring services of a private tutor.

· A person who obtains goods for ‘resale’ or for ‘commercial purpose’ such as
purchaser of taxi,

purchase of generator by a company for its use for commercial production.

A tenant.

A purchaser of shares and debentures for resale.

A Government servant.

A person buying goods or services without consideration.

A person who obtains services under a contract of personal services.

Unfair Trade Practice

Introduction: - The object of the consumer protection Act, 1986 is to provide for better
protection of the interests of consumers and for the settlement of consumers disputes and any
matter connected therewith provisions have been also made in the Act to protect the interests
of consumers from unfair trade practices relating to both purchase of goods as well as
rendering of services.

According to Section 2(1) (r), the term ‘Unfair Trade Practice’ shall have the same meaning
as in Section 36A of the Monopolies and Restrictive Trade Practices Act, 1969. It may occur
in relation to both purchase of goods or rendering of services. It is said to occur when a trade
adopts any unfair method or deceptive practice for the purpose of promoting the sale, supply
or use of any goods or for the provision of any services. The following six categories of
practices have been declared as unfair trade practices.

False Representation and Misleading Advertisements- As to standards of goods or services. It

consists of a written, oral or visible representation which falsely represents the goods to be of
particular standards, quality, quantity, grade, composition or model etc.

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 It may also consist of falsely representing any rebuilt, second-hand, renovated or
reconditioned goods as new.

Making false representation as to sponsorship, approval, etc. {Example- Ther bfact

about disaffiliation of the educational institution was not conveyed to the candidates seeking
admission to a programme. “Alexander Educational Foundation v/s Chandrasekaran (1995) 1
CPJ 141 Pondicherry”.

Misleading representation concerning the need for usefulness, etc., of any goods or
services- It may consist of giving the public any warranty or Guarantee of performance, etc.
of any goods that is not based on adequate or proper test, or misleading promise to replace,
maintain or repair an article, etc.

Misrepresentation as to price.

Disparagement of goods, services or trade of others.

False offer of Bargain price – It means a price that is stated in any advertisement to be
a bargain price by reference to an ordinary price or otherwise, or a price that a person who
reads, hears or sees the advertisement, would reasonably understand to be a bargain price
having regard to the prices at which like products are sold.

Offer of Gifts, prizes, etc.

Withholding any scheme.

Sale or supply of goods not complying with prescribed standard- The prescribed
standards may relate to performance, composition, contents, design, packaging, etc. as are
necessary to prevent or reduce the risk of injury to the person using the goods.

CONSUMER PROTECTION COUNCILS

Consumer protection councils have been set up at national, state and district levels. Their
object is to protect rights of consumers. Provisions with regard to consumer protection
councils are contained in the consumer protection act wide section 4 to 8.(Section 8-A as
inserted by the consumer protection (Amendment) Act, 2002, which provides for District
consumer council)

I The Central consumer protection Council–

1. Establishment of this council by a notification of the central government.

2. Central govt. nominates govt. and private members from different department and
sectors.

3. At present there are 150 members in the council.

4. Chairman of the council is central government food & civil supplies minister.
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5. 3 years term of office of council.

6. If any post of the council falls vacant, it shall be filled up by a same cadre member.

7. 3 meetings are compulsory in a year time and place is fixed by chairman.

8. Main object of council is to expand and protect the rights of consumers.

9. Protection against fatal advertisement of goods/for human life services.

10. Protection against improper trade transaction and service.

11. As far as possible, a right of satisfaction about the various qualities.

12. A right of belief and confidence on goods & services.

13. A right of compensation against mis-behaviour in restricted trade policies.

14. A right of consumer education.

II The State consumer protection council –

1. Establishment of this council by notification of state government.

2. Chairman of the council is state minister of food and civil supplies.

3. State government nominated government or private member from different sectors.

4. There must be at least two meetings in a year or arrange according to convened any
time.

5. Time and place of meetings shall be fixed by the chairman.

6. Object of council is to protect the interest and rights of consumer in state which is
same central council.

III. The District consumer protection council- (Section 8-A)

1. Establishment of this council in every district by a notification of state Government.

2. The collector of the district shall be its chairman and he will be assistate by such
number of other officials and non- official members having such interest as may be
prescribed by the state Government.

3. The District council shall meet as and when necessary but not less than two meetings
shall be held every year.

4. It shall meet at such time and place within the district as decided by the chairman and
shall observe such procedure as may be prescribed by the state Government.

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5. The object of every district council shall be to promote and protect within the district
the rights of the consumers as laid down in section 6 of the Act.(Section 8-B, inserted by
2002 amendment).

Consumer Disputes Redressal Agencies

Three-Tier Redressal System

Introduction

The object of the Consumer Protection, 1986, is to provide better protection to consumers. To
secure this object, the Act intends to provide simple, speedy and inexpensive redressal to the
consumers’ grievances. For this purpose, the Act provides for the establishment of three-tier
quasi-judicial machinery at the District, State and National levels. The three consumer
disputes redressal agencies at the different levels are as under:

1. Consumer Disputes Redressal Forum to be known as District Forum at the District

level.

2. Consumer Disputes Redressal Commission to be known as State Commission at the

State level.

3. National Consumer Disputes Redressal Commission to be known as National

Commission at the National level.

ESTABLISHMENT OF AGENCIES

DISTRICT FORUM

The ‘District Forum’ is the short name of the Consumer Disputes Redressal Forum
established in the District under Section 9(a) of the Consumer Protection Act, It is the
redressal agency to deal with the complaints of the consumers at the District level.

1. Composition of the district forum

The District Forum is a body of three persons appointed by the State Government. The
qualifications of the President and other members are as follow:

(a) President: A person who is, or has been or is qualified to be, a District Judge shall be
the President of the District Forum.

(b) Other Member: A part from the President, the District Forum shall consist of two
other members one of whom shall be a woman. The qualification for appointment of other
members are:

(i) He/She must not be less than 36 years of age.

(ii) He/She must possess a bachelor’s degree from a recognised university.

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(iii) He/She must be a person of ability, integrity and standing and have adequate
knowledge and experience of at least 10 years in dealing with problems relating to
economics, law, commerce, accountancy, industry, public affairs or administrations.

2. Appointment of members of District Forum: The appointment of the President and of

the members shall be made by the State Government on the recommendation of the selection
committee consisting of (a) the President of the State Commission, (b) Secretary, Law
Department of the State, and (c) Secretary, in charge of the Department dealing with
consumer affairs in the State.

3. Disqualifications of members :

a) If he has been convicted and sentenced to imprisonment for an office, which, in the
opinion of the State Government, involves moral turpitude, or

b) If he is an undercharged insolvents, or

c) If he is of unsound mind and stands so declared by a competent court, or

d) If he has been removed or dismissed from the services of the Government or a body
corporate owned or controlled by the Government,

4. Tenure of office of the members of the District Forum

A person may act as a President or a member of the District Forum for 5 years or up to the
age of 65 years, whichever is earlier. Thus, in any case, a person cannot hold the office of the
President or that of the member beyond the age of 65 years.

5. Vacancy in the office of the District Forum

The officer of the President or of any member of the forum may become vacation on his
attaining the age of sixty-five years.

6. Jurisdiction of the District Forum

The District Forum has the jurisdiction to entertain complaints where the value of the goods
or services and the compensation, if any, claimed does not exceed rupees 20 lakhs.

The limit has been enhanced from Rs. 5 lakhs by the Consumer Protection (Amendment) Act
2002

PROCEDURE ON RECEIPT OF COMPLAIN SECTION-13

The district forum has to observe the procedure mentioned in section. It may be summarized
as follows-

I. Reference of complaint to opposite party – Whenever the district forum receives a

complaint, relating to a goods, it should refer a copy of the complaint to the opposite party. It
must be given within 30

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days of receiving the complaint. However, it may be extended by a further period not
exceeding 15 days.

II. On refusal or dispute by opposite party – When the opposite party, on receipt of a
complaint, refusal/disputes the allegations contained in the complaint or fails to take any
action within the time given by the district forum, the forum shall proceed to settle the
consumer dispute in the following manner –

1. Reference of sample to laboratory

2. Deposit of fees

3. Forwarding of report to opposite partly

4. Objection by any of the parities.

5. Reasonable opportunity to parties of being heard and issue order.

{Who can complaint in the district forum}

A complaint in relation to any goods sold or delivered or any serviced provided may be filed
with a district forum by –

1. Consumer of goods/service

2. Any recognized consumer association.

3. Central or state government

For the purpose of this section “recognized consumer association” means any voluntary
consumer association registered under the companies Act 1956 or any other law for the time
being in force (Sec. 12)

Power of the District forum –

The district forum shall have the same power as are vested in a civil court under the code of
civil procedure, 1908 while typing a suit in respect of the following matter, namely-

1. The summoning and enforcing attendance of any defendant or witness and examining
the witness on oath.

2. The discovery and production of any document or other material object producible as
evidence.

3. The reception of evidence on affidavits

4. The requisitioning of the report of the concerned analysis or test from the appropriate
laboratory or form any other relevant source.

5. Issuing of any commission for the examination of any witness and

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6. Any other matter which may be prescribed.

Every proceeding before the district forum shall be deemed to be a judicial proceeding within
the meaning of Sec. 193 and 228 of the Indian Penal code; 1860 and the District forum shall
be deemed to be a civil court for the purposes of Sec. 195 and chapter XXVI of the code of
criminal procedure 1973.

Findings of the District forum (Sec. 14)

If the district forum is satisfied that the goods suffer from any of the defects specified in the
complaint or that any of the allegations contained in the complaint about the services are
proved, it shall issue an order to the opposite party directing him to take one or more of the
following things namely-

a) To remove the defect pointed out by the appropriate laboratory from the goods in
question.

b) To replace the goods with new goods of similar description which shall be free from
any defect.

c) To return to the complaint the price or as the case may be the charge paid by the
complaint.

Appeal (Sec. 15) Any person aggrieved by an order made by the District Forum may prefer
an appeal against such order to the state commission within a period of 30 days from the date
of the order. The state commission may entertain an appeal after the expiry of this period of
30 days if it is satisfied that there was sufficient cause for not filing the appeal within that
period. But no appeal by a person, who is required to pay any amount in term of an order of
the District Forum, shall be entertained by the State commission unless the appellant has
deposited in the prescribed manner 50 percent of that amount or Rs. 25,000, whichever is
less.

STATE COMMISSION

‘State Commission’ is the short name given to the Consumer Disputes Redressal Commission
established in the State under Section 9(b) of the Consumer Protection Act, 1986 [Section]
2(1) (p). It is the redressal agency to deal with the complaints of the consumers at the State
level.

Composition of the State Commission

Section 16(1) makes the following provisions regarding the qualifications of the President
and other members:

(a) President: A person who is or has been a judge of a High Court shall be the President
of the State Commission.

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(b) Other members: Apart from the President, the State Commission shall consist of two
other member one of whom shall be a woman. The qualifications for appointment of the other
member are:

(i) He/She must not be less than 35 year of age.

(ii) He/She must possess a bachelor’s degree from a recognized university.

(iii) He/She must be a person of ability, integrity and standing and have adequate
knowledge or experience of at least 10 years in dealing with problems relating to economics,
law, commerce, accountancy, industry, public affairs or administration.

1. Appointment of members of State Commission

The appointment of the President shall be made by the State Government after consultation
with the Chief Justice of the High Court of the State. And the appointment of the other
members shall be made by the State Government on the recommendation of the selection
committee consisting of (a) President of the State Commission, (b) Secretary of the Law
Department of the State and (c) Secretary, in charge of Department dealing with consumer
affairs in the State.

2. Disqualification of members

These disqualifications are the same as already discussed the District Forum.

3. Tenure of office of the members of the State Commission

The President or the member of the State Commission shall hold office for a term of 5 years
or up to the age of 67 year, whichever is earlier. Thus, in any case, a person cannot hold the
office of President or that of a member beyond the age of 67 years.

4. Jurisdiction of the State Commission

(a) Pecuniary jurisdiction: The State Commission has the jurisdiction to entertain
complaints where the value of the goods or services and compensation, if any, claimed
exceeds rupees 20 lakhs but does not exceed rupees one crore.

(b) Appellate jurisdiction: Any person aggrieved by an order made by the District Forum
may prefer an appeal to the State Commission with a period of 30 days from the date of the
order.

5. Appeal (Sec.19) ) Any person aggrieved by an order made by the state commission
may prefer an appeal against such order to the National commission within a period of 30
days from the date of the order. The National commission may entertain an appeal after the
expiry of this period of 30 days if it is satisfied that there was sufficient cause for not filing
the appeal within that period. But no appeal by a person, who is required to pay any amount
in term of an order of the State commission, shall be entertained by the National commission

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unless the appellant has deposited in the prescribed manner 50 percent of that amount or Rs.
35,000, whichever is less.

NATIONAL COMMISSION

The ‘National Commission’ is the short name given to the National Consumer Disputes
Redressal Commission established in the country under Section 9(c) of the Consumer
Protection Act, 1986.

Legal provision relating to District forum

1. Composition of the National Commission

The ‘National Commission’ is a body of minimum five persons appointed by the Central
Government. Legally, the National Commission shall consist of a President and at least four
other members.

(a) President: A person who is or has been a judge of the Supreme Court shall be the
President of the National Commission. Thus, only the sitting or retired judges of the Supreme
Court are eligible for appointment as President.

(b) Other members: A part from the President, the National Commission shall consist of
at least four other members one of whom shall be a woman. The qualifications for
appointment of other members are:

(i) He/She must not be less than 35 year of age.

(ii) He/She must possess a bachlor’s degree from a recognised university.

He/She must be a person of ability, integrity and standing and have adequate knowledge or
experience of at least 10 years in dealing with problems relating to economics, law,
commerce, accountancy, industry, public affairs or administration.

2. Appointment of the members of the National Commission [Section 20(1) (a) (b):

The appointment of the President shall be made by the Central Government after consultation
with the Chief Justice of India .The appointment of the other four members shall be made by
the Central Government on the recommendation of the selection committee consisting of (a)
sitting judge of the Supreme Court, (b) Secretary in the Department of Legal Affairs,
Government of India, (c) Secretary of the Department dealing with consumer affairs in the
Government of India

3. Disqualification of members

These disqualifications are the same as already discussed in case of members of District
Forum and of State Commission. Any other disqualification may also be prescribed the
Central Government.

4. Tenure of office of the members of the National Commission

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The President or the members of the National Commission shall hold the office for a term of
5 year or up to the age of 70 years, whichever is earlier. Thus, in any case, a person cannot
hold the office of President or that of a member beyond the age of 70 years.

5. Jurisdiction of the National Commission

(a) Pecuniary jurisdiction: The National Commission has the jurisdiction to entertain
complaints where the value of the goods or services and compensation, if any claimed
exceeds rupees 1 crore

.Prior to the Consumer Protection (Amendment) Act, 2002, the National Commission had the
jurisdiction where the value of this claim exceeded rupees twenty lakhs.

(b) Appellate jurisdiction: The National Commission also has the appellate jurisdiction to
entertain appeals against the order of any State Commission.

Appeal (Sec.23) ) Any person aggrieved by an order made by the National commission may
prefer an appeal against such order to the Supreme court within a period of 30 days from the
date of the order. The Supreme Court may entertain an appeal after the expiry of this period
of 30 days if it is satisfied that there was sufficient cause for not filing the appeal within that
period. But no appeal by a person, who is required to pay any amount in term of an order of
the National commission, shall be entertained by the Supreme Court unless the appellant has
deposited in the prescribed manner 50 percent of that amount or Rs. 50,000, whichever is
less.

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