THE CONSUMER PROTECTION

ACT, 2019

DR C.L.BANSAL
 CHAPTER ONE
EVOLUTION OF CONSUMERISM
INTRODUCTION
The rise of consumerism is attributable to western appetite to explore the world to discover
countries which could be exploited politically, socially, and economically for prosperity of the
aristocrat classes. The medieval ages sea adventures by various persons like Marco Polo [Silk
Route to Asia, 1271-1295], Christopher Columbus [1451-1506], Vasco da Gama [1460-1524]-the
first European to reach India, Ferdinand Magellan [1480-1521], Francis Drake [1540-1596],
James Cook [1728-1779] were undertaken with the goal of occupation of territories and economic
exploitation of new-found places. Royalty must have financially assisted these adventures besides
patronising the establishment of Joint Stock Companies like East India Company and Dutch East
India Company for establishing trade relations and eventually to hobnob with local rulers to lay
hands on levers of administration. Keynesian economics advocated the orientation of monetary
and fiscal policies to encouraging consumers to spend more to boost investment, production, and
eventual employment. Argument was that emphasis on Savings harms the society as it comes at
the cost of future postponement of consumption that may hinder economic growth. Marketing,
advertising, and other promotional avenues should be used to induce people to avoid savings and
even seek credit for the sake of consumption. Producers should undertake planned obsolescence
to avoid competition and to create consumer demand for new products.

WHAT IS CONSUMERISM?

Consumerism is the Western ideology which has been the by-product of industrial
revolution whereby glut of production forced business firms to adopt strategies to build-
up social and economic structure in which customers could be encouraged to buy
everything regardless of whether or not they needed those articles. Consumers are more
often driven by lifestyle obsession rather than actual requirement where primary
objective is to achieve a sense of happiness and fulfillment through material possession.
Business firms tend to increase production to regularly introduce new products to the
market. Then efforts are made to create demand for these offerings through manipulative
advertising. As a consequence, consumers are encouraged to spend more on mindless
consumption. Eventually, this increased consumer spending leads to higher and still
higher profits and resultant economic growth of a nation. It is often referred to as a
consumerist movement, as it strives to safeguard consumer rights from over-marketing.

The ideology of ‘consumerism’ has been highlighted by Bernard Mandeville in his book
“The Fable of the Bees,” in which he described how commercialism drove people to buy
stuff to ensure they are in no way less than others. He also considered the increasing
willingness of consumers to buy luxury items as the reason behind the national
prosperity.

EXAMPLE:
A mobile manufacturing company developed a smartphone with advanced features
incorporated in it. The brand successfully created the demand for it in the market, making
customers excited. It led to more and more consumer spending.
A year later, the same brand came up with a new model with more additional
specifications. So, consumers disposed of their last phones and purchased this new model
with updated software and better configuration.
The brand knew how desperate people have become to up their lifestyles. Hence, it
created a desire in consumers to buy upgraded versions of its product almost every year.
The company is thus enable to make more money in the process.

PSYCHOLOGICAL ASPECTS OF CONSUMERISM

Human desires are the propelling forces of society which must be oriented to transform a human
from an individual to a consumer. Bring home the Message that acquisition of unique, and
expensive goods and the flaunting of one’s superiority will define one’s identity. Consumption
serves as a therapeutic treatment for one’s ills and is the road to salvation. Consumerism is
founded on following types of ideas:
• Ending is better than Mending,
• More stiches, less shall be the riches and lower the social prestige,
• Teach children that mending is anti-social,
• You cannot consume much if you sit still and read books,
• You are born to fulfil your desire than catering to needs.

PROS & CONS OF CONSUMERISM

Consumerism has contributed to the following:

I. Stimulation of global economy through rise in GDP,

II. Encouragement to business competition leading to production of high-quality products
and higher living standards,
III. Better opportunities to talented people due to increase in employment,
IV. Build up of brand names ensuring that only better- quality products and services can
survive.

Negative aspects of consumerism include:

I. Greater emphasis on material possessions as symbol of social and economic status giving
rise to unhealthy social tensions and unnecessary competition for one upmanship,

II. Adverse effect on moral & social values as people begin to strive to emulate those above
them failing which they may end up with anxiety and depression,

III. Damage to environment through industrial pollution, over-exploitation of natural

resources and waste disposal,

IV. Increase in reckless lending due to issue of credit cards by banks and encouragement by
government to borrow to acquire more of modern gadgets.

Runaway growth in consumption in the past 50 years is putting strains on the

environment never before seen.
STAGES IN THE EVOLUTION OF CONSUMERISM

The entrenchment of the tendency to acquire more and more has occurred over a long period of
time. The credit for spreading consumerism goes to the “developed countries of Europe and
America. The following have been the STAGES in the evolution of worldwide spread of
consumerism:
o AGE OF FRUGALITY [Early 17th Century],
o AGE OF DISCOVERY, RISE OF IMPERIALISM & INDUSTRIAL REVOLUTION
[17th Century],
o COLONIALIM,
o CAPITALISM & IMPERIALISM [18th Century],
o REDRAWING OF COLONIAL MAP,
o DECOLONISATION, and
o CONSUMERISM

1: Age of Frugality

During the 16th and 17th Centuries, world was largely agrarian with large mass of
population being poor and compelled to migrate from place to place in search of
livelihood. Feudal Social Structure of Europe albeit the entire world consisted of only
TWO Classes namely the Royalty and the land-owning Aristocrats, the rest being
‘peasantry.’ ‘Frugality’ was a compulsion for majority of the population which has to
keep their needs to the bare minimum. Settlors i.e., migrators had to grow their own food,
stitch their own clothes, build their own houses, make their own tools, and focus more on
repairs and re-use of goods. Frugality was a moral virtue and driven home in religious
discourses. Benjamin Franklin, the founding Father of American Constitution repeatedly
emphasized the dictum of being industrious and frugal i+n order to be rich, or “Beware of
little expenses; a small leak will sink a great ship,” Puritans, driven by spiritual principle,
favored productive work for the benefit of society and frowned upon consuming more
than necessity as an evil (Shi 1985).

2: Age of Discovery and Industrial Revolution [1750-1850]

During 1600, population in England was 4 million but by 1800, it has risen to over 9
million. Agricultural production was in surplus and capable of contributing to supply of
raw materials to factories. Industrial Revolution was ushered due to invention of
electricity, steam engine, and various machines along with development of techniques of
scientific management revolutionised industrial production. Increase in wealth and the
consequent rise of entrepreneurs led to the need for establishment of New Centres of
Consumption. With that objective in mind, various European countries like England,
Spain, Portugal encouraged the undertaking of sea adventures to discover colonies for
future economic exploitation. Towards that end adventurers like Marco Polo (Venice),
Columbus (Italian), Vasco da Gama (Portuguese), David Livingstone (British) and others
spread into various directions in the world. Ultimate purpose of such sea adventures was
to help their respective countries to set up colonies for procurement of raw materials,
precious metals, and for marketing the manufactured products. Another goal was to
ascertain the possibility of eventual Colonisation of those territories from the standpoint
of their amenability to political dominance. With the passage of time, a strong middle
class emerged in Europe and America which intensified consumerism.

3: Colonialism & Capitalism

The First Wave of colonialization was started by Portugal, Spain, and Ottoman Empire
after the age of discovery (exploration) whereby dominance was established over Africa,
Middle East, and Americas. In the Second Wave, Britain, France, Netherlands, and
Portugal took control of Asia. In the Third Wave known as New Imperialism, it was
decided at the Berlin Conference (1884-85) to divide Africa among Britain, France,
Germany, Portugal, Belgium, Italy and Spain [called ‘Scramble for Africa]. All the above
have been associated with the establishment of capitalistic hegemony and perpetuation of
European Feudalism. These factors eventually ushered into capitalism due to growth of
capital. Mercantile capitalism contributed to the strengthening of economic stranglehold
of European Nations over various nations of the world.

4:Imperialism

Imperialism denotes the dominance of a country or group of people over another. In Old
Imperialism, European nations explored the New World, established settlements in North
and South America, and Southeast Asia. They set up trading posts and gained foothold in
Africa and China and hobnobbed with local rulers to safeguard their economic interests.
Joint Stock Companies were set up to rule in the Colony as a proxy for the imperialist
power. Indentured Labour was a new method, akin to slavery, adopted by the imperialist
nations to recruit cheap labour to work in their agricultural fields at abysmally low wages
and under sub-human conditions. While European imperialists aimed at exploitation of
under-developed countries for natural resources through white superiority, the USA
adopted method of annexation, purchase, and war.

5: Redrawing of Colonial Map [1914-1918]

The First World War was about re-distribution of colonies among the victorious nations.
On the defeat of Germany, the Permanent Mandates Commission of the League of
Nations to review the administration of the various colonies which were under the control
of the Germany. It was decided that the ‘colonies’ which were unable to administer
themselves will remain under various European Nations overwatched by the League of
Nations. It implied that the subjugate countries will not have the right of self-
determination. During this period, vast reserves of crude oil were discovered in various
Middle East Countries igniting the interest of colonial masters to perpetuate their control
for some more time.

6:Decolonization [1945-99]

Decolonization denotes the dismantling of colonial empires through various political

movements undertaken by nationalists in Africa and Asia between the First & Second
World War. The goal was to end the era of western domination and to usher in self –
governments in the erstwhile colonial territories. Such transformation may be attributed
to the following factors:
i. Rise of Anti- Colonial Nationalism, Mass Politicization, & Mass Mobilization,
ii. Weakening of Colonial Powers due to the First & Second World Wars providing
opportunity for independence to many regions like French North Africa and India.
iii. Civil war in China, Negotiated Independence as in India, and Incomplete de-
colonization as in South Africa, Algiers, Vietnam were the form in which
relationships between ruling and the subjugated countries underwent change.

RISE OF MODERN CONSUMERISM

Acquisitive instincts in Britain began to erupt around 18th Century when the trend began
to shift from subsistence to consumption. There arose immense eruption of consumption
after 2nd World War among the then industrialised world and particularly the USA where
the nouveau rich who sought happiness in ‘acquisition and consumption’ [Leach (1993),
Land of Desire: Merchants, Power, and the Rise of New American Culture]. Labour
struggles of 19th Century were over and vast population could afford to enjoy pleasures of
life with reduced working hours. Then there came fears of ‘overproduction’ and lack of
‘consuming power’ among the populace leading to the need for spreading the “new
economic gospel of consumption” through propaganda and advertising. Charles Kettering
of General Motors in an article entitled “Keep the Consumer Dissatisfied” advocated
replacement of existing needs with new and more ones, and old products with new ones
due to invention of electricity, radios, vacuum cleaners, refrigerators, motor cars and so
on.
Emulation’ was another concept propagated to enhance consumption by suggesting to
the middle classes to emulate the consumption culture of the elite classes. The objective
was to develop and superimpose a new ‘social culture’ as integral part of American
cultural to help spread consumerism and thereby push up investment, employment, and
economic growth. Philip Kotler-the Marketing Guru has hailed ‘consumerism’ as a social
movement seeking to augment the rights and powers of consumers in relation to sellers.
Gradually, “consumerism” came to be associated with the public demand for providing
better product information, honest packaging and advertising, stoppage of marketing
malpractices, speedier and economical redressal of consumer grievances, etc. With the
passage of time, consumerism found place in public policy forcing the popular
governments to formulate appropriate laws for consumer welfare to curb the exploitation
of consumers.
 CHAPTER TWO
CONSUMER PROTECTION MOVEMENT
INTRODUCTION
There has been a tendency to equate ‘consumer movement’ with ‘consumerism’ which highlights
the role of contemporary consumer organizations and legislators in enacting consumer protection
laws, and entrusting its implementation to regulators besides teaching consumer policies in
educational institutions, and testing of products and services for their compliance with prescribed
standards. Consumer Movement is an effort to promote of consumer protection through an
organized social movement of advocating for the rights of consumers especially when these rights
are breached by corporations, governments and other organizations which provide products and
services to the consumers. Consumer Protection is linked with the following issues:
 Protection of Consumer Rights,
 Formation of Consumer Organizations for advocating the cause of consumer welfare,
 Helping consumer make better choices through provision of detailed product information
where public health and safety is an issue, and
 Redressal of Consumer Complaints and their effective enforcement.

CONCEPT OF CONSUMER PROTECTION MOVEMENT

Consumer Protection Movement is an effort to promote consumer protection through an

organized social movement especially when these rights are breached by unscrupulous
traders besides working towards organizing consumer resistance against unfair trade
practices, collaborating with governments to provide meaningful legislative system for
redressal of consumer complaints, and undertaking consumer education initiatives to
create strong public opinion in favour of adoption of fair-trade practices.

SCOPE & OBJECTIVES OF CONSUMER PROTECTION MOVEMENT:

a) Restoration of balance in buyer-seller relations which is currently skewed in favour of the

former.
b) Formation of Consumer Organizations for undertaking Consumer Advocacy to promote
consumer welfare,
c) Representation of Consumer Issues before governmental bodies to enable them to initiate
appropriate legislative action.
d) Undertaking programmes for Consumer Education to sensitize them about the ways and
the need to make informed market choice based on provision of detailed product
information by business organizations.
e) Redressal of Consumer Complaints and their effective enforcement.

THEORIES OF CONSUMER PROTECTION

There are the following theories of Consumer Protection:
o Expectation Theory,
o Theory of Individual Pluralism,
o Theory of Paternalism, and
o Commercial Nuisance Theory,
o Inequality of Negotiation Power theory

FOUR THEORIES OF CONSUMER PROTECTION

There are FOUR THEORIES of Consumer Protection, namely: Expectation Theory; Theory of
Individual Pluralism; Theory of Paternalism; Commercial Nuisance Theory; and Inequality of
Negotiation Power theory.

1: EXPECTENCY THEORY

Expectation Theory states that consumers expect to receive a fair deal from the vendor in terms
of price, quality, and safety of products and services failing which the vendor shall be held liable
for any injury caused to the consumer. Consumer satisfaction is a function of congruence between
expectation and perceived performance of the product. In case of dissonance, the consumers will
try to avoid dissonance by adjusting their perceptions of a certain product to bring it closer to
their expectations. Consumers can reduce the tension resulting from the discrepancy between
expectations and the product’s performance by adjusting either their expectations or product
performance perceptions.

2: THEORY OF INDIVIDUAL PLURALISM

Based on neoclassic rational choice theory, it is a non-interventionist theory centred on the nation
that the market has a self-correcting mechanism. People make decisions based upon stable and
consistent preferences’ and ‘optimally assess and acquire information, including information
about the risks and possible outcomes of the decisions involved. The survival instinct among
producers which is instilled by the mechanism of competition will ensure an efficient allocation
of resources. Given the stimulus of competition, resources will not be wasted. Production will
stand in equilibrium with consumption. The well- being of citizens will be promoted with
increase production and consumption which is the central thesis of ‘capitalism.’ Because the
market looks after itself, legislative intervention is frowned upon, except where there is a ‘market
failure.’
CRITICISM:
Behaviourial economists have criticized the theory on the belief that consumers do not always act
as time-consistent, rational utility maximizers. Market may fail to correct itself if aggregate
transaction costs comprising, information cost, negotiation cost, contracting costs, monitoring and
enforcement costs may be much more than cost of the product.

3: THEORY OF PATERNALISM

It advocates regulation of market to ensure that conduct of private traders do not stifle free trade
and competition due to existence of information asymmetry. Information asymmetry impacts
respective parties’ bargaining power. Typically, consumers will not have much information about
the quality of goods as the supplier, leading to information asymmetry and a process called
‘adverse selection’, whereby good products are driven out of the market by lower-quality (but
cheaper) products because the consumer is unable to assess the quality of the goods. There need
not be a direct correlation between increased information and increased consumer protection.
Even well-informed consumer may behave irrationally. There has come about a proliferation in
information due to introduction of new technology, products , marketing campaigns, etc.,
increasing information overload which normal person may not able to successfully process.

4: COMMERCIAL NUISANCE THEORY

Public Nuisance has traditionally been used to provide injunctive relief to protect a variety of
public interests including health, morality, safety, and convenience. The theory postulates that
fraudulent, unconscionable, and illegal practices by merchants not only offend law and ethics but
also impede efforts to alleviate poverty. Most of such cases may have to filed either in civil or
criminal courts which may discourage members of common public due to expenses or limitations
of time. Legislative and judicial efforts are needed to check unconscionable commercial practices
of taking advantage of the consumer’s physical or mental disability, ignorance, inability to
understand the language of a contract or in short exploiting the consumer’s vulnerabilities.

5: INEQUALITY OF NEGOTIATION POWER THEORY

According to this theory, in a Sales Transaction, a consumer is considered to stand in an
economically inferior position compared to Suppliers on account of lower bargaining position.
Supporting the above viewpoint, the ‘Exploitation theory’ advocated the need for protecting the
buyers due to the following reasons:
i. Buyer will have to buy goods/ services at prices set by increasingly large and powerful
business firms, and
ii. Buyers lack resources to check malpractices of Sellers due to small amount of purchase
and comparative capacity of the latter to exploit discrepancies in the knowledge of the
buyers due to complexities in the nature of goods and structural features of the markets.

Existence of competition in modern markets and State’s intervention through enactment of laws
for consumer protection, has contributed to protection of consumer interests.

CONSUMER ACTIVISM
Introduction
The word ‘Consumer’ represents the person who consumes goods or services that he has
purchased whereas the term ‘activism’ stands for an organized and collective movement of
consumers. The main object of the movement is to educate and unite consumers to persuade them
to fight for their common rights. In fact, it is a collective approach to deal with malpractices and
exploitative activities of business organizations in different economic sectors. There have been
different manifestations of Consumer Movement yet the following characteristics permeate
through all of these:

i. Consumption as an organized and coherent set of activities informed by the actions of

different organizations including consumer bodies,
ii. Consumption is actuated by a desire for transformation and is imbued with a mission,
iii. Consumers have certain rights which must be fought for their preservation else these will
be lost,
iv. Collective action must be substituted by individual actions to strengthen the movement,
v. Consumption is not merely a market-based transactions but based on moral values in the
sense that consuming can be good or bad,
vi. Consumption has implications for society, individuals, and environment.
DIFFERENT WAVES OF CONSUMER ACTIVISM

People consume for a variety of reasons and these reasons have evolved over the past few
centuries to arrive at the present stage. Consumption has moved from fulfilment of basic
needs to using it for flaunting socio-economic status to ultimately becoming a source of
amusement. It the medieval times it distinguished nobility from peasantry. Peasants have
to rely on subsistence and to somehow maximize nutrition. Such basic goal still subsists
in many of the under-developed countries.
Then there came about conspicuous consumption practiced by royalty, nobility,
aristocracy, and landlords. The three social groups of medieval times were distinguished
in their social status based on consumption styles. Over the past many years, several
different classes have emerged yet the method of distinction is the style of consumerism.

Over the years, there have been the following waves of Consumer Movement:

1: SELF-HELP CO-OPERATIVE MOVEMENT [1830-1929]

It was a working-class reaction to excessive prices and poor quality of goods during
industrialisation. The co-operatives were set up in opposition to local monopolists who
had conspired to push up prices of basic food items. In 1834, 500 local co-operatives
were set up in England. Profits were not distributed but used to set up production
facilities. Over the years, the co-operative movement spread all through the world
including the developed nations like the USA. The movement dies due to state repression
and internal weaknesses. Currently, 700 million persons are members of various co-
operatives in 100 countries.

2: SECOND WAVE: VALUE FOR MONEY CONSUMERISM

The oldest of such type of movement was the Consumer League formed in New York in
1891 as a reaction to large scale food adulteration. Sinclair’s novel ‘Jungle’ about
insanitary conditions in US Stockyards and meat packing units forced the government to
enact the Pure Food and Drugs Act, 1906. Later, Schlink, an author, founded Consumers
Research Inc to conduct consumer product testing which got split in 1936 leading to the
setting up of Consumers Union which insists on value for money by offering
authoritative information about marketplace, and products. Consumers of 1930s laid
emphasis on containment of large corporations and enabling consumers to take advantage
of the market through dissemination of information rather than undermining the markets
through co-operative action or political agitation and lobbying. Consumer Reports, US
has subscriber base of 5 million. The problem however is that the second wave has an
overwhelmingly middleclass orientation and has conservative approach to consumption.
But it has strong influence on business, government, and public.

3: THIRD WAVE OF NADERISM

Ralph Nader, a Harvard educated lawyer who contested for US Presidency highlighted
poor safety of automobiles causing loss of lives. He set up Centre for Study of
Responsive Law and Project for Corporate Responsibility in 1969 which has membership
of 29 organisations for defence of individuals against corporate giants. The common
goals of umbrella organisations set up under Nader’s leadership is to fight for individuals
against giant organisations, appeal to the Americans to be citizens not consumers. Its
persistent theme is to stand up for public rights. Consumers must be vested with various
rights and also discharge their responsibilities.

4: FOURTH WAVE: ALTERNATE CONSUMERS [1970- ]

It focusses on the following:
i. Green Consumerism i.e., consuming wisely in the interest of future generations
compelling companies to undertake environmental audit,
ii. Fair Trade Movement encouraging buying from producers to revive co-
operatives.

Overall, the common refrain of all these theories is to exhort consumer activists to unite
to reject anarchism in the market. The current focus of consumer activism is on animal
welfare, fair trade, ethical consumption and to translate consumerism into citizenship.

AGENCIES FOR CONSUMER PROTECTION

Introduction

Consumer protection can be accomplished through a variety of different means. The

specific methods of consumer protection adopted by a country are dependent on the
culture and norms prevalent in a given country. UNCTAD has highlighted the following
SIX Bodies which are often used to accomplish Consumer Protection goals:
i. Government Agencies,
ii. Statutory/non-statutory Standards Bodies,
iii. Ombudsmen,
iv. Professional and Industrial Associations1 ,
v. Consumer Associations, and
vi. Self- Regulation

1: Government Agencies
Government agencies provide the most direct and traditional form of consumer
protection. Government Agencies strive to achieve the goal of consumer protection
through imposition of obligations on market players ranging from simple disclosure
requirements to product bans to enable the emergence and maintenance of strong and
efficient markets. LIMITATIONS of intervention by Government Agencies include the
following:
i. Regulatory Capture’ i.e., the possibility of the regulator being overly or illegally
influenced by various lobbies or Pressure Groups,
ii. Possibility of Market Distortion due to improper regulation or over-regulation.
iii. Possibility of Regulatory Lag due to incapacity of government agencies to cope
with challenges posed due to increasing internationalization of markets.
iv. Jurisdictional issues and Appropriateness of Municipal Laws to e-commerce
transactions such as the determination about which country’s law would be
applicable and the State which should be approached for dispute resolution.
2: Consumer Associations

Consumer Associations are essential actors in the institutional framework for effective
consumer protection through the following:
i. Establishment of an apolitical and non-commercial forum to represent consumers’
concerns before the policy makers, and represent consumers in national and
international bodies for promotion of the goal of consumer welfare,
ii. Representation of concerns of un. under-represented groups of consumers such as
the illiterate, those residing in remote areas, and other vulnerable sections of
society,
iii. Enhancing the bargaining power of Consumers vis-a-vis powerful business
groups,
iv. Alerting the authorities about any unfair, restrictive, or illegal business practices,
v. Participation in the formulation of relevant statute(s) on consumer protection,
vi. Designing of Dispute Redressal Mechanisms, establishment of Mediation bodies,
carving out Codes of Practice, etc.
vii. Whistleblowing by Civil Society Organizations has been done to draw public
attention towards breach of any consumer laws, non-compliances with prescribed
Standards, and undertaking consumer advocacy for assertion of consumer rights.

3: ROLE OF CIVIL SOCIETY ORGANIZATIONS [NGOs]

Where consumer movement in nascent stage, NGOs come up to represent consumers’ interests to
by highlighting their preferences, priorities and concerns. Civil Society organizations participate
in decision-making processes at various government levels on behalf of the larger community of
consumers. Additionally, these organizations may monitor progress of settlement of claims filed
by aggrieved consumers against business firms for adopting unfair trade practice, restrictive trade
practices, unfair contracts, and various other malpractices. The have significant role in
strengthening consumer understanding about dispute avoidance and dispute resolution.
Additionally, these can participate in general consumer education, dispute resolution through
Class action or Public Interest Litigation on behalf of general community of consumers. Some of
such organizations have been witnessed in making available relevant information to consumers
about product safety incidents, food adulteration, counterfeit products; privacy and data
protection; price labelling; and health hazards arising from street food vending.

4:SELF-REGULATION IN CONSUMER PROTECTION

Self-regulation is constituted with the support of government agencies whereby

Industrial bodies or Merchants’ Associations are incentivized to work for consumer
welfare. Self-regulation may have a variety of forms and effectiveness of each may vary
from place to place, and industry to industry. For instance, Self-regulation could be
through delegation of governmental authority to industrial organizations to frame rules
relevant for consumer welfare. Another form could be the setting up of Grievance
Redressal Cells, Code of Conduct like those made by FICCI and CII to guide their
members in catering to consumer interests. Self-regulation tend to enjoy wider
acceptability and consequent ease in implementation, but these are susceptible to initial
hiccups due to doubts about its success by various parties.
5: STATUTORY & NON-STATUTORY STANDARD BODIES
These are governmental or non-governmental bodies which create consumer protection
standards for different industries or product categories. These standards may be either
statutorily enforceable or non-statutory i.e., left to the discretion of the concerned parties.
Most well-known Standards’ Body is the “International Organization for
Standardization” (ISO) whose output generally consists of non-statutory standards which
organizations may choose to follow at will. UNCTAD has acknowledged the role of
Standards Bodies in setting rules around “product safety” where these agencies often play
a prominent role. Standards set by these bodies need not be limited to direct consumer
protection but extend beyond that like the interoperability standards established by the
Institute of Electrical and Electronics Engineers (IEEE) 802.11 standard which pertains to
all devices using the Wi-Fi Protocol.

6:CONSUMER OMBUDSMAN
An ombudsman is a non-partisan, neutral, fact-finding person or office appointed by the
government to investigate complaints against private business firms or public
departments and hands out appropriate course of action for their redressal. Irrespective of
the sector to which an ombudsman may belong, his duty remains the same though the
type of grievances handled, and the nature of services provided may differ depending on
the nature of complaint. Depending on the applicable legal provisions, its decisions may
be binding or non-binding. Even if his decision is non-binding, it may typically carry
considerable weight. Primary role of the Consumer Ombudsman is to provide dispute
resolution between consumers and firms. According to UNCTAD “[t]he Consumer
Ombudsman is a… supervisory body with the task of ensuring that marketing methods
used by a business when selling goods or providing services conform to the law” (p. 94).
The Ombudsman investigates complaints and has wide latitude to rule beyond the legal
requirements if they judge the specifics of the transaction to go beyond “good industry
practice.” Lokpal and Lok-Ayukta Act, 2013 was enacted to establish Lokpal at the
Central Government level to inquire into cases of corruption at the highest level, both
political and administrative levels, and Lok-Ayukta in the States to perform the functions
of Ombudsman in India. Additionally, Sectoral Ombudsmen exist in various sectors like
banking, NBFCs, insurance, electricity, income tax, Local Self Government, etc.
Ombudsman may be entrusted with the authority for filing opt-out Class Action Lawsuits
on behalf of various parties with discretion to come out by taking permission of the
Competent Authority such as NCLT under the Companies Act. In India, there are
provisions for appointment of Public Sector Ombudsmen, but COPRA has not made any
such provision in view of the elaborate three-level quasi-judicial for economical and
speedier resolution of consumer complaints of all types.

7: INDUSTRY SELF- REGULATION OF CONSUMER PROTECTION

Industry self-regulation is the process whereby members of an industry, trade or sector of

the economy monitor their own adherence to legal, ethical, or safety standards, rather
than depending on an outside, independent agency such as a governmental regulator to
monitor and enforce those standards. The important way for consumer protection is the
voluntary imposition of self-regulation and discipline by the manufacturers and others
engaged in supplying and distributing goods and services. If they are self- enlightened,
they would pay due attention to the consumer rights. Self-regulatory initiatives also make
good business sense as it will minimize governmental intervention through legislation
and judicial control. In addition, developing and implementing self-regulatory initiatives
can improve an industry’s reputation and goodwill with the consumers. Much will
depend on participation by relevant stakeholders in designing, implementing, and
monitoring self-regulation.

Relevant Factors in Industry Self-regulation

i. Industry self-interest. Businesses are more likely to support ISR agreements

where there are clear benefits.
ii. Alignment of industry, government and consumer interests. Shared goals can
boost “buy-in”.
iii. Number of market players: A relatively small number of players can facilitate
management of ISR agreements.
iv. Market Coverage: The higher the level of participation in an ISR, the greater the
likely impact.
v. Homogeneity of Products: Product similarity can simplify ISR application.
vi. Nature and magnitude of consumer detriment: The more serious the potential
detriment, the more critical the need for high industry coverage and compliance. ·
vii. Competition: ISR agreements should not result in barriers to entry or facilitate
market-distorting collusion

FEATURES OF INDUSTRY SELF-REGULATION

i. Clarity and strength of objectives. This can encourage industry participation, and
facilitate impact assessments.
ii. Conformity of schemes with government policies. Conformity can strengthen and
reinforce support from government regulatory authorities.
iii. Legal basis. ISR agreements that aim at implementing laws and policies are likely
to win broad support.
iv. Leadership. Strong, independent ISR management can boost credibility and
effectiveness.
v. Leveraging industry knowledge in rule setting. Exploiting industry expertise can
improve outcomes and enhance industry support.
vi. Monitoring, transparency and public accountability. This is a key to building trust
and credibility in ISR agreements.
vii. Enforcement and sanctions. These disciplines are needed to encourage
compliance and build impose costs for those businesses which do not adhere to
the ISR agreements.
viii. Dispute resolution and redress (DRR). Providing consumers with DRR
mechanisms can build consumer trust, while providing a means for support
monitoring.
ix. Stakeholder participation. This can improve the quality of ISR agreements,
helping to ensure that key issues are identified and adequately addressed.
 x. Public awareness: This can enhance consumer use of ISR agreements and build
public pressure for adherence

CHAPTER THREE

LAW OF CONSUMER PROTECTION

INTRODUCTION
The concept of Consumer Protection was first introduced by John Fitzgerald Kennedy,  the
35th President of the United States on 15 th March 1962 when in his special speech to the
Congress, he spoke about the four basic rights of the consumer, namely: Right to Safety;
Right to be Informed; Right to be Heard, and Right to Choose. It sparked a deliberation and
subsequent legislation to protect consumers on 15 th March which is celebrated as the World
Consumer Rights Day. Ralph Nader has been another contributory to promotion of consumer
protection in his book “Unsafe at Any Speed” indicating the faulty design of automobiles.
The book led to a series of landmark laws that have prevented multiple motor vehicle
accidents thus curbing deaths and injuries and revolutionizing consumer protection in
America and eventually all over the world. As regards India, there existed a host of pre-
independence legislation dealing with various of business dealings. Though the country
adopted the Anglo-Saxon system of justice administration, the adoption of Constitution
impacted the functioning of socio-politico and economic systems in the country. Consumer
Protection Act, 1986 was passed to provide an extra layer of legislative protection to
consumers of goods and services against defects, deficiency in service, unfair trade practice,
restrictive trade practices, etc. Some of the existing laws dwelling on protection of buyers and
sellers included, the Contract Act, 1872; Sale of Goods Act, 1930; Essential Commodities
Act 195, law of Torts, etc. From the experience gained over a period of about 35 years from
the working of law of consumer protection, the Parliament finally overhauled and updated the
existing legislation to align it with the changes brought about by digitization of markets.
Some of the additional provisions included in the 2019 legislation relate to Unfair Contracts,
extension of applicability of provisions relating to Unfair Trade Practices to Misleading
Advertisements whereby liability may extend to publishers, advertisers and celebrities,
creation of Product liability and extending its scope to manufacturers, service providers,
sellers, etc. The Amended Legislation has now provided the facility of online registration of
complaints, settlement through mediators, establishment of a Central Consumer Protection
Authority to deal with misleading advertisements through investigation and punishment with
provision for payment of compensation and cease and desist from various malpractices.

NEED FOR THE LAW OF CONSUMER PROTECTION

Consumer is the real deciding factor for all economic activities. It is now universally
accepted that the extent of consumer protection is a true indicator of the level of progress
in a nation. Taking into account the interests and needs of consumers in all countries,
particularly those in developing countries, recognizing that consumers often face
imbalances in economic terms, educational level and bargaining power, and bearing in
mind that consumer should have the right of access to non-hazardous products, as well as
importance of promoting just, equitable and sustainable economic and social
development, the Secretary General, United Nations submitted draft guidelines for
consumer protection to the Economic and Social Council in 1983. Thereupon on an
extensive discussions and negotiations among various countries on the scope and content
of such impending legislation certain guidelines were arrived at. In line with the
international development on consumer protection, the Parliament enacted Consumer
Protection Act, 1986 provides a forum for speedy and simple redressal of consumer
disputes. The rights under the consumer protection flow from the rights enshrined in
Articles 14 to 19 of the Constitution of India.

CUSTOMERS VERSUS CONSUMERS: ALL CUSTOMERS ARE NOT

CONSUMERSs

From legal standpoint, all customers need not be consumers and hence there is the need
to understand the difference between these two terms.

CUSTOMER may be any person who buys goods or services for a price and for whatever
purpose i.e., sale, commercial purpose such as using the articles for manufacturing or for some
other purpose except self-consumption and he need not be the end user,

CONSUMER is one who buys goods or services for self-consumption and he is the end
user. Transactions by a Customer are governed by mutually agreed terms and Conditions
so that on breach thereof legal remedies can be obtained either through mutual
negotiations, or following formal or informal mechanisms as:

i. Formal Mechanisms consisting of ‘Commercial Courts’, or Lok Adalats,

ii. Informal Mechanisms consisting of various types of ‘Alternative Dispute
Resolution Mechanisms’ such as Arbitration, Mediation, Conciliation, etc’

Formal Remedies pursued in Commercial or Civil Courts are generally guided by the
Doctrine of Caveat Emptor which is inclined in favour of merchants and imposes
obligation on the customers to beware while making purchases.
By virtue of rule of ‘Caveat Emptor’, a trader may escape liability by proving lack of
taking appropriate degree of care in making the purchase of which the trader cannot be
assumed to have any knowledge.

RULE OF CAVEAT EMPTOR v. CAVEAT VENDITOR

Laissez faire model of economy was characterized by the policy of no-judicial

intervention in commercial matters. This policy was based on the presumption of
transactions being based on freedom of contract and equality of bargaining power.
The fundamental principle of the doctrine of Caveat emptor is the duty of the buyer to
check the quality and suitability of the product for his purpose. The rationale behind this
argument is that a Seller cannot be expected to be aware of the purpose for which a
buyer may have bought the goods & seller cannot be blamed in case goods fail to meet
buyer’s purpose,
For instance, In Waliis v Rusell (1902), it was held that a vendor does not even have the
duty to communicate the existence of latent defects in the goods unless buyer has made
inquiry to that effect. In fact, law put the onus on the buyer requiring him to examine the
goods for any defects therein for the sake of encouraging the growth of trade.

Similarly, in Ward v Hobbs 1878 US CA, some pigs were sold “with all defaults” though
the seller was aware of the pigs having been afflicted with typhoid. The Court held that
mere silence on seller’s part does not amount to misrepresentation and the duty to use
diligence lies on the buyer but not the seller.

Caveat Emptor has been incorporated in Section 16 of the SGA 1930 which provides that
“-----there is no implied warranty or condition as to quality or fitness for any particular
purpose of goods supplied under a contract of sale.” In India, the Principle of Caveat
Emptor has continued to protect sellers against buyers until the early 20th century where
the onus lay on the buyer to be careful while making purchases.
Chandelor v. Lopus (1603) is one of the oldest English cases typical of strictest
application of the doctrine of caveat emptor. In this case, a bezoar stone found from the
animals’ intestines and believed to have magical healing properties was bought for 100
pounds. The stuff sold was not bezoar stone. Buyer sued for recovery of the price. The
Court of Exchequer held that buyer has the duty to establish either of the following two
things:
(i) That the Seller knew the article not to be bezoar stone so that the case may be treated
as deceit, or
(ii) That the Seller has warranted the article to be bezoar stone in which case the seller
would be held liable for breach of warranty.
Since buyer could not prove either, his action against the seller failed.
Thus, judgment in Chandelor’s Case remained biggest hurdle in emergence of law of
Consumer Protection.

EXCEPTIONS TO THE DOCTRINE OF CAVEAT EMPTOR

The Rule of ‘Caveat Emptor’ is founded on the principle that freedom to contract makes
the buyer the master of his contract though the law would continue to safeguard his
interests. Caveat Emptor does not state that the buyer should “take chance’ but that “he
must be careful” while making purchases since both parties have equal bargaining power.
For this reason, the law of that time provided that here is no duty on the seller’s part to
ensure that the goods shall fit the particular purpose which the buyer had in his mind
unless the purpose of goods was evident from the very nature of the goods such as
purchase of hot water bottle [Priest v Last 1903 KB]. The enactment of the Sale of Goods
Act [SGA] has contributed to the dilution of the rigour of the rule of ‘Caveat emptor.’
The SGA has introduced certain ‘CONDITIONS & WARRANTIES’ which would be
available to any customer irrespective that there is no express contract to that effect
between the Seller and the Buyer.

CASE ON EXCEPTION TO RULE OF CAVEAT EMPTOR:

Ahmedabad Municipal Corporation v Haji Abdul Gafur Haji Hussenbhai 1971 AIR 1201
SC
Instant case is an exception to strict application of rule of Caveat Emptor in the sense that
a buyer cannot be required to be more cautious than necessary and does not give license
to the seller to throw caution to the winds:
FACTS: Appellant sued the respondent buyer to recover the property tax which was
outstanding against the property which had been purchased in a Court Sale in execution
of mortgage decree. Prior to making bid, buyer had made inquiries from the Official
Receiver about any pending dues against the property, but no information was s provided
about any pending house taxes, etc. Subsequently, the Municipal Corporation attached
the property for arrears of house tax against which the buyer sued the Corporation for
declaration arrears were not recoverable by sale of property,
ISSUE:
Can the auction purchaser be held liable on the ground of constructive knowledge of
existence of arrears of taxes under the rule of ‘caveat emptor’ despite his being a
transferee for consideration without notice?
JUDGMENT:
Under Section 100 of TPA, a charge is not enforceable against the transferee of a
property for consideration who has no notice of the charge except when there is an
express legal provision in the applicable Bombay Municipal Corporation Act, 1949. The
impugned Act merely provides for creation of charge but does not provide that the charge
is enforceable against the transferee of property for consideration. The contention by
Appellant that Section 100 of Transfer of Property Act does not apply to auction sales
and further that auction buyer is subject to all charges and encumbrances attaching to
judgment debtor. According to Section 3 of the Transfer of Property Act, a person is said
to have notice of fact when he has actual notice of a fact, or but for willful abstention or
gross negligence to make inquiry, he ought to have implied knowledge of the charge on
property.
There is no Principle of law which imputes constructive knowledge of outstanding taxes
and possibility of these taxes being in arrears. The respondent cannot be attributed with
constructive knowledge of existence of tax arrears for the following reasons. The buyer
could not have reasonably thought that the municipality did not care to recover the
arrears of taxes since a long time. The Municipal Corporation was far more negligent and
blameworthy than the respondent in allowing the arrears to accumulate. Though the
respondent made enquiries from the receivers, they did not give any intimation about the
arrears. The building was in the occupation of tenants and the rent was recovered by the
receivers. Moreover, there is a reasonable assumption that the municipal tax being a
charge on the property and given priority under Section 61 of Provincial Insolvency Act,
1920, must have been paid by the receivers.
Official Receivers while receiving rent from tenants did not discharge tax liability nor did
they provide information about non-payment of taxes to the purchaser in spite of
inquiries by him. Therefore, the case is not covered by the ‘doctrine of caveat emptor’
and attachment of property by municipality must be held to be illegal

RULE OF CAVEAT VENDITOR

Caveat Emptor has been appropriate for pre-industrial revolution markets characterized
by barter and face to face transactions where both the seller and the buyer were
considered to have the freedom of contract and an equal bargaining power. Gradually,
Rule of Caveat Venditor emerged through judicial discourse and with the realization that
the former was inconsistent with the law of equity.  Caveat Venditor meaning “let the
seller beware”, imposes a greater responsibility on the sellers of goods and services.
There is an implied warranty attaching to each product and the buyer need not perform
due diligence to check the quality of such products. Crafting of some of the rules like
merchantability, sale by description, and extension of implied warranties to sale of
specific as well as unascertained goods through the Sale of Goods Act 1930 has sounded
the death knell of doctrine of Caveat Emptor. The Rule of Caveat Venditor puts the onus
of proof on the sellers to ensure that buyer makes a reasonably informed choice and to
compensate for defective products. 

CUSTOMER’S REMEDIES UNDER THE SALE OF GOODS ACT, 1930

Prior to the promulgation of Law of Consumer Protection in 1986, the customers could
seek following types of remedies for any problem with the goods purchased:

(i). Self-help Remedies

These mainly consist of the right to set-off but sellers usually may exclude these by
inserting a provision in the contract which restricts the right of buyer to set off a claim
against the price payable for the goods supplied.

(ii). Remedies under the Sale of Goods Act 1930

The Sale of Goods Act, 1930 enables the aggrieved buyers of every kind i.e., whether
commercial or retail, to pursue their legal remedies against any problem with regard to
the goods sold only in the Civil or Commercial Courts. These courts are guided by the
Doctrine of Caveat Emptor in deciding the dispute which requires the buyer to be careful
while buying. It is no duty of the seller to guide the buyer as he is not aware of the
peculiar requirements of the buyer. So much so that the seller has no duty even to speak
and his silence cannot be construed as deceit.

(iii). Remedies under the Consumer Protection Act

The Law of Consumer Protection derives from the doctrine of Caveat Venditor.
According to this doctrine, a seller shall be obliged to guide the buyer in case the latter
depends on his skill and judgment. It particularly safeguards ‘consumers / beneficiaries
using goods / services for personal use, earning of livelihood, or self-employment.

PROTECTION THROUGH CONDITIONS & WARRANTIES UNDER THE SALE OF

GOODS ACT 1930

INTRODUCTION
At the time of making of a sale, the seller usually makes many representations about the
nature and quality of the goods to persuade the buyer to buy those. These representations
may be merely an expression of seller’s opinion and may not from a part of the contract.
At times, the seller’s representations may be relied upon by the intending buyer and may
form a part of the Contract of Sale and have legal implications. Representations forming
part of the contract are called ‘stipulations’ and may have different degrees of
importance.
According to Section 12(1) of SGA 1930, a stipulation in a contract od sale may be either
a ‘condition’ or a warranty’. A ‘stipulation’ which is the most important for formation of
contract is called a ‘condition’ as per Section 12(2) whereas a stipulation which is of
lesser importance for the formation of contract is called a ‘warranty’ and it is simply
collateral to the main purpose of the contract so that its breach gives the aggrieved only
the right to claim damages but not to repudiate the contract.

CONCEPT OF CONDITIONS & WARRANTIES UNDER THE SALE OF GOODS ACT

1930

CONDITION [Section 12(2) of SGA 1930]

A Condition is ‘a stipulation essential to the main purpose of the contract, the breach of
which gives rise to a right to treat the contract as repudiated’

EXAMPLE: A buyer asked the owner of a stable of horses to give him a horse which is
fit for participating in races and running at 50 Kms per hour. After purchase, the buyer
found the speed of horse as less than 30 Kms per hour. Buyer can repudiate the contract.

WARRANTY[Section 12 (3)]:
A Warranty is a ‘stipulation which is collateral to the main purpose of the contract, the
breach of which gives the buyer the right to claim damages but not the right to repudiate
the contract.’
EXAMPLE: A buyer asked for a quiet horse but the horse sold to him turned out to be
vicious. It was held in Hartley v. Hyman 1920 KB that buyer can only claim damages but
he has no right to repudiate the contract.

COMPARISON BETWEEN CONDITIONS & WARRANTIES

i. Condition is a stipulation which is essential to main purpose of contract whereas

‘Warranty’ is a stipulation which is collateral to the main purpose of the contract.

ii. Breach of a ‘Condition’ gives the aggrieved party the right to repudiate the
contract whereas the breach of a warranty merely gives the aggrieved party the
right to claim damages but without any right to repudiate the contract.

iii. Breach of Condition may be treated as a breach of warranty but it is not possible
to treat the breach of warranty as breach of condition

iv. A warranty cannot be upgraded as a condition but condition may descend to the
level of a warranty.

TREATMENT OF A STIPULATION AS A CONDITION OR WARRANTY

Whether a particular stipulation is a condition or a warranty may depend on its
interpretation notwithstanding the language used by the parties. Section 12(4) of SGA
1930 has provided that whether a particular stipulation is a condition or a warranty is a
matter of construction. A stipulation may be a warranty though called a condition.

CIRCUMSTANCES WHEN BREACH OF CONDITION SHALL BE TEATED AS

BREACH Of WARRANTY

i. EXPRESS WAIVER i.e., the buyer electing to treat a breach of condition as a

breach of warranty through an express provision to that effect in the contract
[Section 13 (1)]

ii. IMPLIED WAIVER BY OPTING TO TREAT BREACH OF CONDITION

AS BREACH OF WARRANTY by accepting the goods and choosing to
recover damages.

iii. Compulsory Treatment of Breach of Condition as Breach of Warranty

[Section 13 (2)]. It is generally the case where contract is not severable and the
buyer has accepted the goods, he can only claim damages [Wallis Sons & Wells
v. Pratt 1911 AC 394].

VARIOUS CONDITIONS & WARRANTIES IN A CONTRACT OF SALE

Conditions and Warranties in a contract of Sale may be either (i) Express, or (ii) Implied,

EXPRESS CONDITIONS & WARRANTIES are those agreed upon between the parties
at the time of formation of a contract.

IMPLIED CONDITIONS & WARRANTIES are those which the law assumes to have
been included in a contract of sale irrespective whether or not parties have expressly
included those in their contract.
Implied Conditions and Warranties are read into every contract unless these have been
specifically excluded by means of an express contract or from conduct of parties or by
usage of trade [Section 62]. In case of conflict between express and implied conditions
and warranties, the former shall prevail.

IMPLIED CONDITIONS & WARRANTIES IN A CONTRACT OF SALE

In terms of the Sale of Goods Act, the following are the Implied Conditions in a Contract
of Sale:
i. Condition as to Title [Section 14(1)(a)],
ii. Condition as to Description [Section 15].
iii. Condition as to Sample [Section 17(2)],
iv. Condition as to Sale by Sample & Description [Section 15]
v. Condition as to Quality or Fitness for Buyer’s Purpose [Section 16(1)].
 vi. Condition as to Merchantability [Section 16(2)],
vii. Condition as to Wholesomeness

1: Condition as to Title [Section 14(a)]

The term ‘Title’ means the ‘right to sell’ of the seller as follows:

(a) That the Seller has the right to sell in praesento in case of a ‘sale’, and
(b) That the Seller shall have the right to sell when the ownership in the goods is to pass
from seller to buyer in case of ‘agreement to sell’

EXAMPLE: A bought a secondhand car from a car dealer. Subsequently, the police
impounded the car being a stolen one. Held, there is breach of condition as to title and
hence the seller must refund the price [Rowland v. Divall 1923 KB]

There is difference between ‘right to sell’ and ‘right to pass property’ under a particular
trade name which if infringed will lead to seller losing his right to sell

EXAMPLE: Where goods are sold by infringing a trademark, it will also be a breach
of conditions as to title such as selling condensed milk by infringing ‘Nestle’ trademark
as held in Niblett v. Confectioner Materials Co 1921.

2: Condition as to Sale by Description [Section 15]

The rule is that a buyer cannot be compelled to buy a thing which is different from those
that have been agreed upon. Lord Balckburn observed that “if you contract to sell peas
you cannot compel the buyer to take beans” so that an old car cannot be sold by
describing it as new, or describing logs of wood of a particular thickness while actual is
substantially different.
Goods are said to have been sold by description when goods are described to be of a
particular kind, brand name, make , etc such as Basmati Rice, Desi Wheat, Champagne,
etc
The term ‘description’ has not been defined in the Act, but it may include the following:
(i) Where the buyer has seen the goods and relies upon the description, there will be a
breach if goods turn out to be something else such as in Beale v. Taylor 1967 WLR,
where a car was described as ‘Herald Convertible, 1961 Model’ but in actual it was made
by welding two different models, the rear being older one’

(ii) Description shall also include the ‘packing of goods’. Where packing does not
correspond with the one agreed upon as in Moore & Co v. Landover Co 1921 KB where
3000 Australian tins were sold in packets of 30 tins each, but substantial packets
contained 24 tins.

3: Condition as to Sale by Sample [Section 17(2)]

In case of Sale by Sample, the Implied condition is as follows:

(i) That the bulk shall correspond with the sample in quality,
EXAMPLE: In E&S Ruben Ltd v. Fair Bros 1949 KB, Rubber was sold as per sample
with delivery to be made in specific in specific length and width but actual measurement
did not match. Held there is breach of condition as to sample

(ii) That the buyer shall be given reasonable opportunity of examining the goods,

(iii)That the goods shall be free from any defect which would not be apparent on
reasonable examination of goods

EXAMPLE: In Drummond & Sons v. Van Ingen 1887 AC, mixed worsted coatings were
sold by sample. On delivery, it was found that owing to a latent defect, the suitings will
not be able to withstand ordinary wear and tear. Goods were thus not saleable. The defect
existed in the sample which was not discoverable on reasonable examination. Held there
is breach of condition as to sale by sample.

4: Condition as to Sale by Sample & Description [Section 15]

Where a Sale is made by Sample as well as Description, the implied condition is that the
goods supplied must correspond both with sample and description,
In case, goods correspond only with either of the agreed parameters, the buyer will have
the right to reject.

EXAMPLE:
A, agreed to supply ‘Long Staple Cotton’ equal to sample. The supplied matrial
corresponded with the Sample but on further inspection, the supply was not found to be
of ‘Long Staple Cotton’ but of ‘Western Madras Cotton’. Held that goods match the
sample but not the description and hence the buyer can reject the supply [Azemar v.
Carella 1867].
Similarly, in Nichol v. Godts 1854, N sold some oil described as ‘foreign refined
rapeseed oil’ warranted equal to sample. But the actual supply was found to be
adulterated with hemp oil. Since the supply did not match the description, buyer may
reject.

5: Condition as to Fitness or Quality [Section 16(1)]

Ordinarily, there is no implied condition as to fitness for any particular purpose which the
buyer may be having in his mind since the rule is ‘caveat emptor.’ However, it is an
implied condition that the goods shall be reasonably fit for the purpose the buyer wants
them if the following conditions are fulfilled:
I. The buyer lets the seller known, whether expressly or impliedly, the purpose for which
the goods are required,
II. The buyer relies on the skill and judgment of the seller, and
III. The seller deals in goods of that kind ij the ordinary course of business.
EXAMPLE: In Priest v. Last 1903 KB, a person bought a hot water bottle from a
chemist. While the wife of the buyer was using the bottle, it burst and injured the woman.
Held, the bottle was not fit for the purpose and hence the chemist is liable.
(iv). Where the goods are liable to multiple uses, the buyer must inform the specific
purpose for which he is purchasing else the seller will not be liable.

EXAMPLE : In Re Andrew Yule Co AIR 1932 Cal, a buyer bought ‘hessian cloth’ from
a cloth merchant. Such cloth was generally used for packing purposes but was not fit for
packing foodstuff due to its unusual smell. After purchase, buyer wanted to reject. Held,
he cannot as he never let the seller know the purpose of his use.

EXCEPTIONS TO CONDITION AS TO FITNESS OR QUALITY

The following are the exceptions to the rule enshrined in Section 16 of the sale of Goods
Act 1930 that there is no condition as to quality or fitness which the buyer may be having
in his mind:
(i) In case, the buyer does not disclose the special circumstances to the seller, the
condition as to fitness shall not apply.

EXAMPLE: In Griffiths v. Peter Conway Ltd 1939 All ER, a buyer bought a tweed coat
but got rashes on his skin due to ultra sensitive skin which was not disclosed to the seller.
The coat was fit for use for persons with normal skin. Held the condition as to fitness
does not apply.

Where purchase is made under a trade name or a patent without depending on the skill
and judgment of the seller, condition as to fitness will not be applicable.

EXAMPLE: Where a person bought a ‘Merrit’ sewing machine, he cannot complain as he

did not depend on the skill and judgment of the seller but on the trade name.

However, if the purpose of purchase is evident from the nature of goods, the purchase
under a trade name will not absolve the seller from his liability to comply with condition
as to fitness.
EXAMPLE: in Tramways C Ltd v. Fiat Motor Ltd 1910 KB, a buyer ordered Fiat
Omnibus Chassis. The machine did not function well. Held, the seller is liable as the very
name suggests that the machine is needed for heavy traffic.

6: CONDITION AS TO MERCHANTABILITY [Section 16(1)]

The Sale of Goods Act 1930 has not defined the term ‘merchantability’ ut it has been
judicially interpreted to mean the following:
i. If the goods are purchased for resale, these must be saleable under their ordinary
name’
ii. These must be resaleable at their full value. For instance, if cement has been
hardened by water, it will not be saleable at any value,
iii. The goods must be fit for their ordinary use such as a pen must write, a watch
must keep proper time.

EXAMPLE: In Wilson v. Rickett Cockerrel & Co 1954 QB, coke was bought from a coal dealer
which on burning caused explosion injuring the buyer. Held, seller is liable for breach of
condition as to merchantability.
EXAMPLE: In Morelli v Fitch and Gibbons 1928 KB, a person bought Stone’s Ginger wine
from the seller. When he tried to draw the cork with a cork-screw, the neck of the bottle came off
injuring the buyer. Held, there is breach of condition as to merchantability.

7: CONDITION AS TO WHOLESOMENESS [Section 16(2)]

This condition is applicable in the case of provisions and eatables. Such goods must not
only meet the description but must also be merchantable and wholesome.
Wholesomeness signifies that the goods shall be free from any defect which renders them
unfit for human consumption.
CASE: In Frost v. Aylesbury Dairy Co 1905 KB, some milk was purchased from a milk
dairy. After consuming the milk, wife of the buyer was afflicted with typhoid and died.
Held, the buyer shall be compensated as the milk was not fit for human consumption

8: CONDITION IMPLIED BY CUSTOM OR USAGE OF TRADE [Section 16(3)]

Implied condition as to quality or fitness for a particular purpose may be annexed or

attached by a custom or usage of trade. Application of certain customs and usages may be
a normal practice in certain types of businesses provided the custom is well established
and is not unreasonable and inconsistent with the express terms of the contract.
CASE: In Jones v. Bowden 1813 Taunt, there was a sale of certain drugs by auction. It is
the custom in auction to declare any “sea damage to the goods.” But no such declaration
was made in the instant case, subsequently, the buyer found the goods to be damaged by
sea water. Held, the buyer can reject the goods and claim refunds of the price.

EXPRESS & IMPLIED WARRANTIES IN A CONTRACT OF SALE

Express Conditions are the stipulations introduced in a contract of sale by means of a

mutual agreement between the seller and the buyer. On the other hand, ‘Implied
Warranties’ are ‘the stipulations which the law presumes to have been incorporated in
every contract of sale unless expressly excluded by means of specific provision to that
effect’. Implied warranties may also be excluded by the course of dealings between the
parties or customs and usages of trade [Section 62].
In case of conflict between the express and implied warranties, the former shall prevail
over the latter. There are following three implied warranties applicable to a contract of
sale:
1) Implied Warranty of quiet possession,
2) Implied Warranty of freedom from encumbrances,
3) Warranties implied by Customs of Trade.
1: Implied Warranty of Quiet Possession [Section 14(b)]
This warranty is a corollary to the ‘implied condition as to title.’ Under this warranty,
there is a presumption that the possession of the buyer will not be adversely affected by
any defect or deficiency in the title of the seller. It provides that if buyer’s right of
possession and enjoyment is disturbed by anyone having a superior title, the buyer shall
be entitled to claim damages from the seller.
For instance, in Mason v. Burmingham 1949 KB, a buyer purchased a second-hand
typewriter and spent some money on its repairs. While it was under use, it was
discovered to be a stolen property. The buyer had to return it to the true owner. Held that
the buyer can recover not only the price but also the expenses on its repair besides
compensation.

2: Implied Warranty of Freedom from Encumbrances [Section 14(b)]

According to this warranty, the goods shall be free from any charge or encumbrance in
favour of a third party not declared or known to the buyer at the time of or before the
making of contract. If subsequent to the making of contract of sale, it is discovered that
the goods are subject to a charge, the buyer shall be duty bound to discharge the same.
Additionally, the seller shall be bound to compensate the buyer for breach of warranty.
The buyer shall have no rights in case he was aware of the existence of the charge or
encumbrance at the time of making the contract and rather he shall be bound by such
encumbrance.
EXAMPLE: A pledged his watch with B, a lender of money from whom he had
borrowed some money. After a week, he (A) got possession of the watch from the lender
on some pretext and sold the same to C. The transaction between A & C is in breach of
implied warranty of freedom from encumbrances and C will have to return it to B. B can
seek compensation from A for breach of the implied warranty.

3: Implied Warranty of Disclosing Dangerous Nature of Goods

In case the goods sold are of a dangerous nature and likely to cause harm to an ignorant
buyer, he must warn the buyer thereof. On breach of this warranty, the seller shall
compensate the buyer for any injury caused to him due to dangerous nature of goods..

EXAMPLE: A buyer purchased a tin of disinfectant. The seller was aware of the lid
being defective. He was also aware that if the lid is opened without special care, it may
pose risk to the eyes or other body parts of the user. But he took no step to educate the
buyer about all these and the precautions to be taken. When the buyer opened the tin in a
normal way without taking any precautions, the contents of the powder flew into his eyes,
causing serious injury. Held. Seller is liable to pay damages to the buyer for breach of
implied warranty of disclosure of dangerous nature of the goods.

DIFFERENCE BETWEEN SALE OF GOODS ACT AND THE LAW OF CONSUMER

PROTECTION

The applicability of the law of Sale of Goods is subject to express agreement between the
parties whereas the provisions of the law of consumer protection apply ipso jure without
the need for any prior agreement between the parties.

The contracting have the discretion to exclude the application of nay of the legally
prescribed conditions and warranties to the contract of sale concluded between them. No
such discretion is vested in the parties to exclude the application of law of consumer
protection to their contract.
On breach of any of the expressly stipulated or implied conditions or warranties, the
aggrieved party can approach the appropriate civil or commercial court. Such
proceedings suffer from the drawback of being expensive and dilatory. In comparison, a
consumer can file a complaint about defect in goods, deficiency in services, unfair
contract, unfair or restrictive trade practice before a consumer protection body where he
resides or works for gain. The pursuit of remedies before consumer bodies are
economical and expeditious besides many other facilities.

The Proceedings in civil courts are governed by the rule of Caveat Emptor whereas those
before the consumer forum are carried out in accordance with the rule of Caveat
Venditor.

There is no provision for filing of ‘Class Action Suits’ in case of issues relating to sale of
goods whereas the law of consumer protection contains such provisions.
 CHAPTER FOUR

LAW OF CONSUMER PROTECTION

NEED FOR THE LAW ON CONSUMER PROTECTION

Consumers as a class constitute one of the largest economic group in any country. They
are both affected & have the capacity to affect almost any economic decision taken by
business firms as well as the government considering that two-third of the gross spending
in an economy is done by consumers. However, they are not effectively organized due to
which they remain exposed to exploitation by the unscrupulous. Since Constitution is the
grundnorm of the Indian legal system, its principal focus is to promote social, political
and economic justice. Accordingly, the consumer protection laws shall achieve the goal
of consumer protection and must also be consistent with the spirit i.e., mandate of the
Constitution. The philosophy of consumer justice is enshrined in the Preamble to the
Constitution, Fundamental Rights and the Directive Principles of State Policy of the
Indian Constitution. Consumer justice is one of its species of the larger genus of justice.
Thus, consumer justice is an integral aspect of social and economic justice which the
State is obligated to secure to its citizens.
Due to unequal bargaining position against manufacturers, traders, and sellers, the
Consumers need ‘distributive justice’ through assurance of economic equality in the
marketplace that may help establish an “economic democracy” and a “Welfare State”.
Articles 14, 19 and 21of the Constitution respectively provide for Equality before Law
and Equal Protection of Laws; Fundamental Rights; and Protection of Life and Liberty
respectively which are imperative for the emergence of an effective “Welfare State”. In
India, the “Right to Know” and the Right to Receive and Impart information” about
quantity, quality, potency, standard, purity and price of product are integral not only to
enjoyment of the Right to “freedom of speech and expression” under Article 19(1)(a) but
also for Consumer Protection. Articles 32 and 226 are also relevant for Consumer
Protection based on which the Supreme Court in S.P.Gupta v UOI 1987 has allowed the
public-spirited individuals or organizations to enforce the rights of the oppressed
consumers
Article 38(1) of the Directive Principles of State Policy obligate the State to promote
welfare of the people by securing a social order in which social, economic and political
justice shall inform all institutions of the national life. Article 39-A requires the state to
ensure that the legal system promotes justice based on equal opportunity and to provide
free legal aid by suitable legislation to ensure that opportunities for securing justice are
not denied to any citizen by reason of economic or other disabilities.  Though ‘Consumer
Protection’ does not occur in any of the three Lists [Union, State or Concurrent], yet
description of various items enable both the Central and State Governments to legislate
on the subject. Moreover, Union Government can legislate on any subject not included in
any of the three lists in terms of its ‘Residuary Powers’ conferred under Article 248 of the
Constitution. Entry 97 of the Union List enables the Parliament to legislate on any matter
not mentioned in the State List or Concurrent List.

Until the enactment of Consumer Protection Act, 1986, there was no specific legislation
to compensate the consumers for the wrongs done to them. The manufacturers and traders
reigned supreme for want of an effective consumer protection legislation. A need was,
therefore, felt to educate the consumers about their rights and to establish consumer
redressal forums for providing inexpensive and summary relief. The 1986 Act was
designed to conform with the United Nations Guidelines, 1985. Its objective has been to
lay down a simple, quicker, and cheaper mechanism for protection of consumers through
three-tier quasi- judicial redressal regime set up at the District, State and National level.
The onset of digital era has posed newer challenges due to online shopping, teleshopping,
e-commerce and multi-level marketing necessitating the reframing of the law conforming
to the new set of consumer expectations. Though digitization has provided several
benefits like easier access, availability of large number of choices, convenient shopping,
and safer payments, it has led to the creation of unique types of problems. Consumer
Protection Act, 2019 has replaced the three decade old law on the subject to provide for
enhanced protection to consumers in the wake of the booming e-commerce industry and
the modern methods of providing goods and services such as online sales, teleshopping,
direct selling and multi-level marketing in addition to the traditional methods. Besides
introducing changes in line with contemporary requirements, specific attention has been
paid to provide for timely and effective settlement of consumer disputes and related
matters.

PREAMBLE TO CONSUMER PROTECTION ACT 2019

Preamble to any legislation lays down the main objective (s) which a particular
legislation aims to achieve. The Consumer Protection Act, 2019 is a piece of benevolent
legislation intended to provide for better protection of the interests of consumers. The
Supreme Court has observed in J.J. Merchant v. Shrinath Chaturvedi (2002) 6 SCC 635
that one of the main objects of the Act is to provide speedy and simple redressal to
consumer disputes.

LEGAL PROTECTION OF CONSUMER RIGHTS

The law of consumer protection has been designed to protect the common man from
wrongs for which the remedy under the ordinary law had become illusory. According to
the Supreme Court, “The importance of the Act lies in promoting the welfare of the
society in as much as it attempts to remove the helplessness of a consumer which he faces
against powerful business described as a ‘network of rackets’ or a society in which
“producers have secured power to rob the rest”, and the might of public bodies which are
degenerating into storehouses of inaction”. [Lucknow Development Authority vs. M.K.
Gupta (1994), 1 SCC 243. Consonant with the aforesaid, the Preamble to the Consumer
Protection Act has provided for the achievement of the following objectives:
i. Protection of the interests of consumers, and
ii. To establish Authorities for timely and effective administration and settlement of
consumers' disputes, and
 iii. To deal with matters connected therewith or incidental thereto.
Accordingly, the Consumer Protection Act, 2019 is designed to provide for protection of
the interests of consumers against defective products, deficiency in services, unfair and
restrictive trade practices, unfair contracts, product liability of manufacturers, sellers and
service providers, and so on. For this purpose, a three-tier consumer disputes redressal
mechanism has been established at District, State and National levels. In addition,
various types of Advisory and Regulatory authorities have been set up to discharge
specific responsibilities. In Lucknow Development Authority v. M.K. Gupta (1994), the
Supreme Court had observed that the Act must be construed in favour of the consumer as
it is a social benefit legislation. From the definitions of various terms such as consumer,
service, trader, etc., the legislative intent seems to be to provide for a wider reach of the
Act. Most of the definitions are in two parts. One part is expandatory whereas the other is
explanatory. In the explanatory part, various expressions are designed to provide for a
wider amplitude. As a consequence, these expressions include things which otherwise
would have been beyond their natural import. In J.J. Merchant vs. Shrinath Chaturvedi
(2002) 6 SCC 635, it has been held by the Supreme Court that the Government or Semi-
government body or a local authority is as much amenable to the Act as any other body
rendering similar service. The test is not as to whether the person against whom
complaint is made is a statutory body but whether the nature of its duty and functions is
to provide service.

VARIUOS CATEGORIES OF CONSUMER RIGHTS

Protection against Hazardous Goods

A consumer has a right to be protected against the marketing of goods and services which
are hazardous to life and property. The UN Guidelines on Consumer Protection adopted
by the General Assembly in 1985 has advised the world governments to encourage the
adoption of appropriate measures including legal systems, safety regulations, national or
international standards including voluntary standards with obligation to maintain safety
records to ensure that use of products is safe. Vital safety information should be provided
to consumer by means of internationally prescribed symbols.in India, this responsibility
has been assigned to Bureau of Indian Standards [BIS]. There are laws such as Food
Safety and Standards Act 2006, Drugs and Cosmetics Act 1940 to protect consumers
from unsafe food products, drugs and cosmetics.

Right to Information
A consumer has the right to be informed about the quality, quantity, potency, purity,
standard and price of goods or services so as to protect himself against unfair and
restrictive trade practices like false description, exaggerated claims, unfair contracts, etc.
For instance, there has been a controversy about the use of sweat labour by Nike Shoe
Company which has been paying abysmally low wages to those manufacturing the shoes.
The provision of relevant information will enable consumers to make informed purchase
decisions. Such information to consumers can be provided inter alia by means of labels
containing information about composition, date of manufacture, expiry, and special
precautions while using or storing the product, nutritional information, etc.
Right of Choice i.e., Right of Access to variety of goods or services at competitive
prices.

In the absence of such choice of products, the market will be dominated by monopolists
who may sell their wares at unreasonable prices, create artificial shortage and hike the
prices, manipulate conditions of delivery and the like falling under the category of
restrictive trade practices. A wise consumer will prefer to make best use of money at his
disposal.

Right to be Heard in duly established Policy Formulation Bodies and Quasi-Judicial

Consumer Commissions
In case a consumer’s legal rights have been transgressed, he shall be enabled to make
complaint to specified administrative or quasi-judicial bodies. By virtue of this right, the
consumers’ viewpoints will be accommodated while building up a policy framework. His
problems will be heard by appropriate redressal forums. Consumers must also be
consulted by business firms in taking manufacturing decisions and in addressing their
grievances to Consumer Grievance Cells.

Right of Redressal
Solutions must be provided to various categories of consumer complaints. Such
complaints may be about unfair trade practices, restrictive trade practices, unfair
contracts, hazardous products, or unscrupulous exploitation of consumers. After the
consumer grievance has been brought to the notice of appropriate forum, it must be
settled by issuing appropriate orders for the removal of defect or deficiency, refund of
price, replacement of goods, honouring of the warranties, payment of compensation,
withdrawal of hazardous goods, etc.

Right to Consumer Education

This right is concerned with making the consumers conscious of their rights. The relevant
information may be provided through mass media, public campaigns, distribution of
information booklets or brouchers, making consumer education a part of school
curriculum, etc., In India, the task of creating awareness amongst the Indian consumers
has been assigned to the Central Consumer Protection Council.

OBJECTIVES OF THE CONSUMER PROTECTION ACT

i. To Protect and Strengthen the Rights of Consumers through generation of

consumer awareness about their rights,
ii. To establish Authorities such as Consumer Protection Authority for timely and
effective administration and Settlement of Consumer Disputes in a time bound
manner,
iii. To impose strict liabilities and penalties on product manufacturers, electronic
service providers, misleading advertisers,
iv. To set up inexpensive mechanism for Consumer Dispute Settlement through
quasi-judicial Consumer Commissions,
v. To submit disputes for settlement through Mediation if so resolved by the parties,
 vi. To provide for Product Liability of Product Manufacturer/Seller/Service Provider,
etc.
vii. To provide for Unfair Contracts, Unfair Trade Practices, Restrictive Trade
Practice,
viii. To provide regulations for Redressal of Consumer Complaints by e-commerce
firms within prescribed time limits.

FEATURES OF THE CONSUMER PROTECTION ACT

i. Consumers have been enabled to file Complaint at the place of their residence or
workplace i.e., where the consumer works for gain NOT the place where the
transaction took place. Under the previous legislation, the Consumer has to
approach the Consumer Forum of the place of residence or business place of the
Seller.
ii. The Act is now applicable to all modes of transactions whether offline or online
transactions, e-commerce, tele-shopping, multi-level marketing, etc.
iii. Pecuniary Jurisdiction of District, State, and National Commissions has been
respectively increased from Rupees 20 Lakh to Rs 50 Lakhs; from more than
Rupees 50 Lakh to Rupees 2 Crore, and of the National Commission to above
Rupees 2 Crore.
iv. Rights under the Act have been conferred on every consumer irrespective of his
income or social standing.
v. Simplification of Process of Consumer Dispute Adjudication has been done by
providing facility of e-filing of Complaint. There is no application fees for
complaints up to Rs 5 Lakh. But application fees shall be Rs 2000 for complaints
up to Rs 1 Crore, & it shall be Rs 6000 for cases up to Rs 10 Crore.
vi. Mediation Cells have been attached with all levels of Consumer Commissions. It
has been provided that no appeal can be made in case Settlement has been made
through Mediation.
vii. Central Consumer Protection Councils [CCPC] have been set up at the District,
State, and National levels to perform an advisory role for the purpose of
promotion and protection of consumer rights.
viii. Central Consumer Protection Authority [CCPA] has been set up for promotion,
protection, and enforcement of consumer rights and for that purpose it may issue
safety notices, order recall of goods, prevent unfair practices, reimburse purchase
price, impose penalties for false and misleading advertisements. CCPA’s
Investigation Wing headed by a Director General has been vested with the
authority to conduct investigations into certain violations. CCPA can impose
penalty against advertisers, endorsers, manufacturers for misleading
advertisements.
ix. Provisions have been made to obligate E-Commerce entities to provide
information to consumers about return of goods, refund, exchange, warranty &
guarantee, delivery and shipment, modes of payment, grievance redressal
mechanism, charge back, etc.
x. Power of Review of Orders has been conferred upon the District and State
Commissions.
 xi. Any amount standing to the Credit of Unidentifiable Consumers will be credited
to the Consumer Welfare Fund (CWF).
xii. It has been made obligatory for the State Commissions to furnish quarterly
information to the Central Government about vacancies, disposal and pendency of
cases and other matters. Moreover, the power to fix terms of appointment of
Presidents and Members has now been vested with the Central Government
xiii. Manufacturing, storing, selling, distributing or importing of products containing
adulterants and spurious goods is punishable with both fine of Rs ONE Lakh
which may extend to Rs 5 Lakhs besides imprisonment of up to 7 years depending
on the degree of harm, injury or grievous hurt caused.
xiv. Provision has been made for life imprisonment along with a fine of Rs 10 Lakh in
cases which have resulted in the death of any consumer with minimum term of
imprisonment in such cases shall be 7 years.
xv. Punishment for any vexatious searches and seizures by the Director General or
any other officer shall be punishable with imprisonment of up to ONE Year or
with fine which may extend to Rs 10,000 or with both.
xvi. Provision has been made to deal with Unfair Contracts that significantly and
unconscionably change consumer rights. The term Unfair Trade Practices has
been defined as ‘deceptive practices to promote the sale, use, supply of goods or
services and it shall include failure to issue bill or receipt, refusal to accept goods
returned within 30 days of sale, disclosure of personal information given in
confidence unless required by law or in public interest.
xvii. Provision has been made about ‘Product Liability’ along with recovery of
Compensation against Manufacturer, Service Provider, and Seller for any
manufacturing defect, design defect, deviation from manufacturing specifications.
xviii. non- honouring of express warranty, failing to contain adequate instructions for
correct use, or if the service provided is faulty, imperfect or deficient

SCOPE OF THE ACT

The Act may be regarded as a highly progressive social welfare legislation which
provides more effective protection to the consumers than any corresponding legislations.
The Act applies to the whole of India except the State of Jammu and Kashmir. It applies
to all types of goods and services, public utilities and public sector undertakings.
Complaints of all types whether relating to goods, services or unfair trade practices, etc
have been brought within the purview of the Act. The provisions of the Act are in
addition to and not in derogation of provision of any law for the time being in force. In
other words, the remedy under the Act is in addition to those available under other laws.
However, the Consumer Commission under the Act have not taken over the jurisdiction
of Civil Courts. A suit which is pending in a civil court cannot be heard by a consumer
forum. Similarly, if a dispute involves voluminous or complicated evidence, it may be
referred to a Civil Court.
The National Commission has observed that the forums under the Consumer Protection
Act are not to be construed as judicial authorities and the proceedings before them cannot
to be taken to be legal proceedings. Consumer forums have the power to adjudicate
disputes but they do not have the trappings of a court. Except conforming to the
principles of natural justice, consumer forum are not governed by the Evidence Act, or
the Civil Procedure Code except for certain limited purpose. The overall objective of
consumer protection legislation is to provide a simple, quick and easy remedy to
consumers under a three-tier quasi-judicial redressal agency established at the District,
State and National levels.

DIFFERENCE BETWEEN CONSUMER PROTECTION ACTS, 1986 AND 2019

1. SCOPE OF THE ACTS

The scope of the 1986 Act extended to all Goods & Services bought for ‘Consideration’ but NOT
without consideration. The 2019 Act has extended the scope further by including therein all types
of purchases whether made offline, online, multilevel marketing, etc.

2. FACILITY OF ONLINE FILING OF COMPLAINT

A consumer complaint can be filed both offline and online manner. Online
complaint can be filed by registering on the website of the National Consumer helpline
https://consumerhelpline.gov.in/.  For the purpose, a Complainant can register himself as
a consumer by filling in the required details such as name, email, contact number, and a
password. After registration, the consumer can log in with the help of log-in details and
passwords. After that, the consumer should click on ‘register your complaint’ and fill the
details of the complaint and upload the required documents. There are different grievance
portals in different sectors. After registering himself, the consumer may call on the
National Consumer Helpline number 1800-11-4000 or 14404 to register his complaint or
send a message on 8130009809. The Complainant can also register his grievance through
the NCH app, Consumer app or the UMANG app. The complainant will be provided with
a unique ID after registering the complaint. With the help of this unique id, the consumer
can track the status of his complaint. The required fee for the consumer complainant can
be paid through an online payment gateway.

3. MEDIATION FACILITY

Under the Consumer Protection (Mediation) Rules 2020, all levels of Consumer Disputes
Commissions have been required to constitute Mediation cells for hearing specified
categories of complaints. There was no such provision in the 1986 Act except for appeal
in the next higher level of Commission.

4. UNFAIR TRADE PRACTICE

2019 Act has widened the definition of unfair trade practices by including some
additional matters than those in the earlier Act.

5. ADDITIONAL PROVISIONS

In the 2019 Act, some new provisions have been added which did not exist in the earlier
law. These include provisions relating to product liability, class action suits, unfair
contracts, and establishment of Consumer Protection authority to investigate and deal
with misleading advertisements, celebrity endorsements, etc.

DEFINITION OF VARIOUS CONCEPTUAL TERMS

Introduction
The Act has comprehensively defined various important terms which have relevance for
implementation of various legal provisions.

CONCEPT OF CONSUMER [Section 2(7)]

In general, a consumer is someone who buys goods and services for self-consumption or
use by his family rather than for their further sale. Section 2(7) of the 2019 Act has
defined the term “Consumer” to mean “any person” who buys goods or avails any service
for a ‘consideration’ whether paid or promised or partly paid and partly promised, or
under any system of deferred payment.
The term ‘Buyer’ in the definition has been expanded to include the following:
i. Any user thereof with the permission of the buyer,
ii. Any beneficiary using the goods or services with the approval of the buyer, user
or hirer.
Moreover, the consideration for either the goods or services may be either paid, or
promised, or partly paid or promised; or provided under a system of deferred payment.
In Laxmi Engineering Works v. P.S.G. Industrial Institute 1995 SC, it has been held that a
Consumer Body is competent to adjudicate whether a person is a ‘consumer’ and whether
he has made ground for claiming relief under the act.

INGREDIENTS OF CONSUMER
The following are the essential ingredients of a ‘Consumer’:
1. Consumer may consist of any of the following categories of ‘Person’ as defined in
Section 2(31)and which includes the following in its ambit:
i. An individual,
ii. A Firm whether registered or not,
iii. A Hindu Undivided Family
iv. A Cooperative Society
v. An Association of Persons whether registered under the Societies Registration Act
1860 or not,
vi. Any corporation, company or body of individuals whether incorporated or not
[Karnatka Power Transmission Corporation v. Ashoka Iron Works Pvt Ltd 2009
SC],
vii. An artificial Juridical Person such as a deity or idol.

2. There must be a contract for purchase of goods or services:

Term “Goods” has been defined in Section 2(7) of Sales of Goods Act to mean every
kind of movable property such as the following:
 i. Stock and shares,
ii. Growing crops,
iii. Grass,
iv. Things attached to or forming part of land but agreed to be severed for the
purpose of or under a contract of sale.

However, the following are exceptions to ‘goods’:

i. Actionable Claims like Bill of Exchange or Promissory Note, and
ii. Money which is a ‘Medium of Exchange’ rather than ‘goods’
Supreme Court has held in Morgan Stanley Mutual Fund v. Kartik Das 1994 that shares
before allotment are not goods. Similarly, debentures are not goods [R.D.Goyal v.
Reliance Industries 2003 SC].

3. 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. Moreover, the consideration may be in any form i.e., paid or
promised, or partly paid or partly promised or it may consist of a deferred payment such
as hire purchase, credit sale, or on installment payment system.

4. There must be the existence of a contract between the seller and the buyer, i.e.,
Consumer
For the matter to fall within the scope of the Act, there must be a contract between a
consumer, i.e., the buyer, and the seller. However, under the comprehensive definition of
“consumer”, even a member of the family may be treated as a ‘consumer’ under the Act,
for any deficiency in service. It will be an exception to the rule of ‘stranger to contract or
stranger to consideration’. Where a claim under the Act has been brought by a family
member, it will not be competent for a trader to 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 as in Spring Meadows Hospital and Anr
vs. Harjot Ahluwalia through K. S. Ahluwalia & Anr Civil Appeal 7868 of 1997 decided
on 26-3-1998].

5. The Complaint of the Consumer must be about defect in goods, deficiency in

service, unfair contract, unfair or restrictive trade practice, etc.
In order to invoke the provisions of the Act, a transaction of sale or purchase must have
taken place and the complaint must relate to either a defect in the goods or charging of
excessive price by a trader or other issues falling within the purview of the Act. For
instance, in M.N. Narsimha Reddy vs. M.D. Maruti Udyog Ltd (F.A. 67 of 1990) a person
had booked a Maruti car through a dealer. Later, he was asked to deposit some more
money due to change in the procedure. His complaint was dismissed by the National
Commission as the applicant was not a ‘consumer’ under the Act. The Supreme Court
has held in Laxmiben Laxmichand Shah vs. Sakerben Kanji Chandan & Others 2001 CTJ
401 (SC) that a tenant entering into a lease agreement with the landlord, cannot be
considered a consumer under Section 2(1)(d).

6. Deemed Consumer:
The term ‘Consumer’ shall include a ‘beneficiary’ i.e., a person who uses the goods or
avail the services as a beneficiary with the approval of a purchaser or hirer for a
consideration. For instance, in K Appala Narsamma v LIC of India 2012 SC, the widow
of a deceased policy holder was held to be the beneficiary of the life insurance policy and
therefore entitled to claim compensation for death of her husband during employment at
the place of employment. Again, in Dinesh Bhagat v. Bajaj Auto Ltd 1997 NCDRC, a
friend of the purchaser of a car filed a complaint against the manufacturer company on
the ground of defect therein. The seller contended that the complainant has no locus
standi since he is not a buyer. The National Commission however held that a friend using
the goods with the approval of the buyer for consideration is entitled to file the complaint
as a ‘beneficiary’.
3-Member Bench of the Supreme Court has held in Oberai Forwarding Agency v. New
India Assurance Co. Ltd. AIR 2000 SC 855 that Insurance company is not the beneficiary
of services (of transporter in this case) and hence is not a ‘consumer’, even if the assignor
is made a co-complainant to the complaint. In Economic Transport
Organisation v. Charan Spinning Mills (2010) 4 SCC 114, a 5 judge Bench of the
Supreme Court has held that Insurance company can file complaint in the Consumer
Commission against transporter, in the name of insured as his attorney holder, or in joint
name of insured and insurer if there is subrogation cum assignment by the insured in
favour of insurer. Insurer cannot maintain complaint before the Consumer Commission in
its own name. However, if the service is for commercial purpose, Complaint cannot be
filed against the Carrier in view of amendment made to the consumer Protection Act
w.e.f. 15-3-2003. It was held that subrogation cum assignment is valid.

7: Purchase of goods or Services must be for the purpose of:

(i) Self -Consumption,
(ii) Private use,
(iii) Self- Employment, and
(iv) Earning of livelihood

EXCEPTIONS TO CONSUMER: WHO IS NOT A CONSUMER?

The term “consumer” shall not include the following:
(i). A Buyer of Goods/ Services without consideration such as gift, donation, charity, etc,
(ii). A person obtaining services under contract of personal service involving ’master-
servant relationship’,
(iii). A Person receiving treatment in a government hospital [Consumer Unity and Trust
Society v State of Rajasthan 1990 NCRDC],
(iv). Hiring services of an Advocate being a contract for personal service[K Rangaswamy
v. Java Vittal 1990 NCDRC],
(v) Purchaser of Shares for Resale,
(vi). Trust [Pratibha Prathisthan v. Manager Canara Bank 2017SC]
(vii). A person presenting documents for registration as the concerned officer performs
official duties and “does not render services for consideration”.
(viii) 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’. A purchase is said to be for a
commercial purpose if there is a direct nexus between purchase of goods and profit-
making activity. The 2019 Act has now included provisions to include within the
definition of ‘consumer’ persons who buy goods for self-consumption or private use, or
exclusively for the purpose of earning his livelihood by means of self-employment. For
instance, the purchase of a photocopier by a lady for earning her livelihood has been held
to be not for a commercial purpose [Secretary, Consumer Guidance and Research
Society of India vs. B.P.L. India Ltd. 1992(1) CPC 140 MC]. But the purchase of a
computer by a large commercial organization has been held to be for a commercial
purpose [HCL Ltd. vs. Krishna Nanu Naik and Sons & Anr 1993 CPJ II 174 NC].
Whether the purchase is for a commercial purpose is a question of fact to be decided on
the facts and circumstances of each case. For instance, a person buying goods for
manufacture of some other product is not ‘consumer’ as the goods were intended for
commercial purpose [Rajeev Metal Works v. MMTC AIR 1996 SC 1083]. Again, a
contractor buying computer for his profession is not a ‘consumer’ as the computer was
not bought for his personal use to earn livelihood [Sterling Computers Ltd. v. P Raman
Kutty, 1995 (NCDRC)].
Even where goods are purchased for commercial purpose, if there is a warranty for its
maintenance, the purchaser (a company in the instant case) will be regarded as a
consumer [J.K. Puri Engineers vs. Mohan Breweries & Distilleries Ltd. 1993].

INSTANCES OF ‘CONSUMERS’
Bank customers, telephone subscribers, consumers of electricity, a railway passenger, a
patient in hospital, a depositor, allottees of plots/house, nominees of insured, member of a
provident fund scheme [RPFC v. ShivKumar Joshi 2000 1 SCC 98], a purchaser of goods
for private consumption, a person buying goods exclusively for earning his livelihood by
means of self-employment (Laxmi Engg. Works v. P.S.G. Indl. Institute AIR 1995 SC
1428), the parents of a child patient (Spring Meadows Hospital v. Harjot Ahluwalia
(1998) (4) SCC 39), Members of Association or Cooperative Society (Dilip Bapat v.
Panchwati Coop Housing Society 1991(1) PR 27) will fall within the purview of a
‘customer’.

PERSONS WHO ARE NOT CONSUMERS

The following are the persons who do not fall within the definition of ‘Consumer’:
(i) A patient receiving medical treatment in a government hospital [Consumer Unity and
Trust Society vs. State of Rajasthan FA No 2/84]
(ii) A client of an advocate
(iii) A student hiring services of a private tutor
(iv). 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 (Syno Textiles v. Greaves Cotton Ltd. (1991) NC)
(v). A Tenant, [Laxmiben Laxmichand Shah v. Sakerben Kanji I(2001) SC]
(vi). A purchaser of shares/debentures for resale,
(vii). A person presenting documents for registration (S.P. Goel v. Collector of Stamps
AIR 1996 SC 839)
(viii). A government servant (State of Orissa v. Divisional Mgr LIC) AIR 1996 Sc 2519)
(ix) A person buying goods/ services without consideration
(x). A person using the goods/services without the approval of the person who has
obtained them for consideration
(xi). A person who obtains services under a contract of personal service.
(xii). A franchisee holding a STD/PCO booth is a licensee but not a final consumer
[Softpec Software v. Digital Equipment II (2002) CPJ 5 (NCDRC)].
(xiii). A Charitable Trust which is buyer of a diagnostic equipment for a charitable
dispensary if only a small percentage of patients are provided free services
[Kalpavruksha Charitable Trust v. Toshniwal Brothers AIR 1999 SC 3356]. 

However, the purchase of tractor for agriculture purpose is not a commercial purpose
[Madan Kumar Singh v. District Magistrate (2009) 9 SCC 79].
During warranty period, the manufacturer or dealer has to render free service though
goods may have been purchased for a commercial purpose (Maruti Udyog v. MS Hameed
Panaji 1992 (1) CPR 272).

COMPLAINANT [Section 2 (5)]

The person who can make a complaint before a Consumer Redressal Forum may be:
i. a consumer, or
ii. any voluntary consumer association registered under the Companies Act, 1956 or
under any other law for the time being in force, or
iii. the Central or State Government, or
iv. the Central Authority, or
v. one or more consumers, where there are numerous consumers having the same
interest, or
vi. in case of death of a consumer, his legal heir or representative.
vii. In case of consumer being a minor, his parent or legal guardian.

The persons falling within the ambit of Section 2(1)(b) are considered Complainants and
have a locus standi to file a complaint under the Act. A public cause can be taken up by
an association in the form of public interest litigation.

COMPLAINT [Section 2(6)]

It means a written allegation by a complainant for obtaining any relief under the Act that:
i. an unfair contract or “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, suffer from one or more
‘defects’.
iii. the services hired or availed or agreed to be hired or availed of 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 established by him or under any law for the time being
in force,
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:
a) in contravention of any standards relating to safety of such goods as required to be
complied with by or under any law for the time being in force,
b) where the trader knows that the goods so offered are unsafe to the public,
vi. the services which are hazardous or are likely to be hazardous to life and safety of the
public when used, are being offered by the service provider who knows it to be injurious
to life and safety.
vii. a claim for product liability action lies against the product manufacturer, product
seller or product service provider, as the case may be.

COMMENTS: In some cases, a Complaint may not be entertained as the issue may fall
within the business prerogative of the Opposite Party. Let us go through some of such
instances such as increase in prices of car by the manufacturer. It has been held that no
Complaint shall be maintainable in cases where no price has been statutorily fixed as
held in Maruti Udyog Ltd. v. Kodaikkanal Township (1993) (NCDRC). Similarly, no
complaint shall lie where increase in prices has been done after booking of car but before
maturity of booking [Mehsana Agro Auto v. Baldevbhai M Patel 2001 (NCDRC).
There can be no complaint against costing or pricing  since Consumer Commissions have
no jurisdiction to go into question of pricing of houses and flats in this case as held
in Gujarat Housing Board v. Akhil Bharatiya Grahak Panchayat 1996 (NCDRC) and
also in MP Housing Board v. Prahlad Kumar  1999 (NCDRC).
The charges for providing various banking services like issuing a cheque book are in the
realm of pricing and Consumer Commissions cannot adjudicate on questions of adequacy
or reasonableness of the amount of such charges which may be necessary to compensate
for modernizing of banking services [Archana Kamath v. Canara Bank 2003 SC]. On the
same ground, it was held in that the costing of flat is beyond the jurisdiction of Consumer
bodies [Major Loknath Juggi v. Bhopal Development Authority 2002 (NCDRC)]. Thus,
question of pricing a product or service does not fall within the purview of adjudication
of Consumer Disputes Redressal Agencies [State of Gujarat v. Rajesh Kumar Chimanlal
Barot (1996) 5 SCC 477].

VARIOUS CATEGORIES OF COMPLAINTS

The scope of various types of complaints under the above-mentioned provisions has been
analyzed below:

1: UNFAIR CONTRACT [Section 2(46)]

An ‘unfair contract’ means “a contract between a manufacturer or trader or service

provider on one hand, and a consumer on the other, having such terms which cause
significant change in the rights of such consumer, including the following, namely:--

(i) requiring manifestly excessive security deposits to be given by a consumer for the
performance of contractual obligations; or
(ii) imposing any penalty on the consumer, for the breach of contract thereof which is
wholly disproportionate to the loss occurred due to such breach to the other party to the
contract; or

(iii) refusing to accept early repayment of debts on payment of applicable penalty; or

(iv) entitling a party to the contract to terminate such contract unilaterally, without
reasonable cause; or

(v) permitting or has the effect of permitting one party to assign the contract to the
detriment of the other party who is a consumer, without his consent, or

(vi) imposing on the consumer any unreasonable charge, obligation or condition which
puts such consumer to disadvantage.

2: RESTRICTIVE TRADE PRACTICE [Section 2(41)]

The term "restrictive trade practice" means a trade practice which tends to bring about
manipulation of price or its conditions of delivery or to affect flow of supplies in the
market relating to goods or services in such a manner as to impose on the consumers
unjustified costs or restrictions and shall include--

(i) delay beyond the period agreed to by a trader in supply of such goods or in providing
the services which has led or is likely to lead to rise in the price,

(ii) any trade practice which requires a consumer to buy, hire or avail of any goods or, as
the case may be, services as condition precedent for buying, hiring or availing of other
goods or services.

3: UNFAIR TRADE PRACTICE [Section 2(47))]

"Unfair Trade Practice" means 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:--

(i) making any statement, whether orally or in writing or by visible representation

including by means of electronic record, which--

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

(b) falsely represents that the services are of a particular standard, quality or grade such
as an assertion about professional qualifications which one does not prosess. R vs. Breeze
(1973) 2 AII ER 1143]

Example: In Raghubir Singh Jain v. Ansal Housing and Construction, the area of the flat
was stated to be 872 sq. ft. and the price was paid accordingly. Subsequently, the allottee
was asked to pay for the super area equal to 1120 sq. ft. It was held to be an unfair trade
practice.
(c) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as
new goods,
(d) represents that the goods or services have sponsorship, approval, performance,
characteristics, accessories, uses or benefits which such goods or services do not have,
(e) represents that the seller or the supplier has a sponsorship or approval or affiliation
which such seller or supplier does not have as not conveying the fact about disaffiliation
of the educational institution to the candidates seeking admission to a program. It was
held to be an unfair trade practice [Alexander Educational Foundation vs. B.
Chandrasekaran (1995) 1 CPJ 141 Pondi].
(f) makes a false or misleading representation concerning the need for, or the usefulness
of, any goods or services,
(g) gives to the public any warranty or guarantee of the performance, efficacy or length of
life of a product or of any goods that is not based on an adequate or proper test thereof:
Provided that where a defense is raised to the effect that such warranty or guarantee is
based on adequate or proper test, the burden of proof of such defense shall lie on the
person raising such defense,
(h) makes to the public a representation in a form that purports to be--
(A) a warranty or guarantee of a product or of any goods or services such f ailing to attend
during warranty period and asking the buyer to enter into a service contract before the end of
warranty period. It was held to be an unfair trade practice [ Khandelwal Photostat & Type
Centre v. Kores India Ltd. (1993) 78 Comp Cas 22 MRTPC]; 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, if such purported warranty or
guarantee or promise is materially misleading or if there is no reasonable prospect that
such warranty, guarantee or promise will be carried out,
(i) materially misleads the public concerning the price at which a product or like products
or goods or services, have been or are, ordinarily sold or provided, and, for this purpose,
a representation as to price shall be deemed to refer to the price at which the product or
goods or services has or have been sold by sellers or provided by suppliers generally in
the relevant market unless it is clearly specified to be the price at which the product has
been sold or services have been provided by the person by whom or on whose behalf the
representation is made;
For instance, a stipulation in the agreement that consumer shall pay the price prevailing at
the time of delivery was held to be inconsequential [Om Prakash v. Asst Engr, Haryana
Agro Industries Corporation (1994) 3 SCC 504].
(j) gives false or misleading facts disparaging the goods, services or trade of another
person.
Explanation.--For the purposes of this sub-clause, a statement that is,--
(A) expressed on an article offered or displayed for sale, or on its wrapper or container;
or
(B) expressed on anything attached to, inserted in, or accompanying, an article offered or
displayed for sale, or on anything on which the article is mounted for display or sale; or
(C) contained in or on anything that is sold, sent, delivered, transmitted or in any other
manner whatsoever made available to a member of the public,
shall be deemed to be a statement made to the public by, and only by, the person who had
caused the statement to be so expressed, made or contained,
(ii) permitting the publication of any advertisement, whether in any newspaper or
otherwise, including by way of electronic record, for the sale or supply at a bargain price
of goods or services that are not intended to be offered for sale or supply at the bargain
price, or for a period that is, and in quantities that are, reasonable, having regard to the
nature of the market in which the business is carried on, the nature and size of business,
and the nature of the advertisement.

Example: Despite complainant’s having booked a tractor in advance and his name appearing as
first in the list of persons who had booked tractors, the respondent adopted a policy of
pick and choose in making delivery. In the meantime, the prices were increased and the
complainant received delivery at a higher price. The conduct of the respondent was held
to constitute an unfair trade practice. A stipulation in the agreement that consumer shall
pay the price prevailing at the time of delivery was held to be inconsequential [Om
Prakash v. Asst Engr, Haryana Agro Industries Corporation (1994) 3 SCC 504].

Explanation.--For the purpose of this sub-clause, "bargain price" means,--

(A) a price that is stated in any advertisement to be a bargain price, by reference to an
ordinary price or otherwise such as giving off season discount on fans on the basis of
their future prices and not the present prices, has been held to be an unfair trade practice
[Polar industries Ltd v. G.R Luthra (1987) Comp Cas. 805 MRTPC], or
(B) 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 the product
advertised or like products are ordinarily sold,
(iii) permitting--
(a) 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 as
in Society for Civil Rights vs. Colgate Palmolive (India) Ltd (1991) 72 Comp Cas 80
MRTPC where a scheme sponsored by Colgate Palmolive (India) Ltd induced the
contestants to buy a minimum of two Trigard toothbrushes to be able to participate in the
contest. The early-bird prizes to be awarded for entries received early had nothing to do
with any skill. It was held not to be in public interest.
b) the conduct of any contest, lottery, game of chance or skill, for the purpose of
promoting, directly or indirectly, the sale, use or supply of any product or any business
interest, except such contest, lottery, game of chance or skill as may be prescribed,
(c) withholding from the participants of any scheme offering gifts, prizes or other items
free of charge on its closure, the information about final results of the scheme.
Explanation: For the purpose of this sub-clause, the participants of a scheme shall be
deemed to have been informed of the final results of the scheme where such results are
within a reasonable time published, prominently in the same newspaper in which the
scheme was originally advertised,
(iv) permitting 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 the competent authority relating to performance,
composition, contents, design, constructions, finishing or packaging as are necessary to
prevent or reduce the risk of injury to the person using the goods,
(v) permitting the hoarding or destruction of goods, or refusal 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 services,
(vi) manufacturing of spurious goods or offering such goods for sale or adopting
deceptive practices in the provision of services,
(vii) not issuing bill or cash memo or receipt for the goods sold or services rendered in
such manner as may be prescribed,
(viii) refusing, after selling goods or rendering services, to take back or withdraw
defective goods or to withdraw or discontinue deficient services and to refund the
consideration thereof, if paid, within the period stipulated in the bill or cash memo or
receipt or in the absence of such stipulation, within a period of thirty days,
(ix) disclosing to other person any personal information given in confidence by the
consumer unless such disclosure is made in accordance with the provisions of any law for
the time being in force.

4: MISLEADING ADVERTISEMENT [Section 2(28))]

The term "misleading advertisement" in relation to any product or service, means an

advertisement, which--

(i) falsely describes such product or service; or

(ii) gives a false guarantee to, or is likely to mislead the consumers as to the nature,
substance, quantity or quality of such product or service; or

(iii) conveys an express or implied representation which, if made by the manufacturer or

seller or service provider thereof, would constitute an unfair trade practice; or

(iv) deliberately conceals important information

5: RESTRICTIVE TRADE PRACTICE [Section 2 (41)]

It means a trade practice which tends to bring about manipulation of price, or its
conditions of delivery or to affect flow of supplies in the market relating to goods or
services in such a manner as to impose on the consumers unjustified costs or restrictions
and shall include:
(a) delay beyond the period agreed to by a trader in supply of such goods or in providing
the services which has led or is likely to lead to rise in the prices.
(b) any trade practice which requires a consumer to buy, hire or avail or any goods or
services as a condition precedent to buying, hiring or availing of other goods or services.

COMMENTS: Where no pre-condition has been attached with the purchase and the
buyer is free to take either of the products without there being any tying up, there is no
restrictive trade practice. For instance, if a seller offers to sell a sofa for rupees 20,000
and a double bed for rupees 15,000 but anyone buying both may have it for rupees
30,000, he cannot be blamed for indulging in any restrictive trade practice.

6. DEFECT IN GOODS [Sec. 2 (10)]

Defect means “any fault, imperfection or shortcoming in the quality, quantity, potency,
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 is claimed by the trader in any
manner whatsoever in relation to any goods or product and the expression "defective "
shall be construed accordingly”.

7. DEFICIENCY IN SERVICE [Sec. 2 (11))]

Deficiency means “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 has been undertaken to be performed by a person in
pursuance of a contract or otherwise in relation to any services, including:
(i) any act of negligence or omission or commission by such person which causes loss or
injury to the consumer; and
(ii) deliberate withholding of relevant information by such person to the consumer.

COMMENT:
If the rendering of service of desired quality is beyond the control of the person
performing the service, he cannot be held guilty of deficiency of service. For instance, if
a promisor failed to supply water to the buyer for irrigation of his crops due to grid
failure, the promisor will not be liable for deficiency in service. However, if the supply of
power has occurred due to burning down of his transformer and the crops of the buyer are
thereby destroyed, the supplier shall be liable on the ground of ‘deficiency of
service’[Orissa Lift Irrigation Corporation Ltd v. Birakishore Raut 1991 NC].

8. SERVICE [Section 2 (42)]

Under Section 2 (42), “service means ‘service of any description which is made
available its potential users and includes but not limited to the provision of facilities in
connection with banking, financing, insurance, transport processing supply of electrical
and other energy, board or lodging or both, housing construction, 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”.
In Lucknow Development Authority v. M K Gupta AIR 1994 SC 787, it has been held that
any service which is for consideration and is not a contract of personal service is ‘service’
for the purpose of the Act. Accordingly, housing construction is service although related
to immovable property. It was held in Gujarat Housing Board v. Akhil Bharatiya Grahak
Panchayat (1996) (NCDRC) that providing houses is a ‘service’ and potential users’
mean those who are capable of using the service. Housing construction or building
activity carried out by a private or statutory body is service [Narne
Construction v. UOI (2012) 5 SCC 359].

SOME EXAMPLES OF DEFICIENCY IN SERVICE:

Deficiency in service means 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 has been undertaken to be performed by a
person in pursuance of a contract or otherwise in relation to any service. Failure to
maintain the quality of performance required by the law or failure to provide services as
per warranties given, by the provider of the service would amount to ‘deficiency’.
In Bank of Maharashtra v. Mrs. Jyoti Satya 2001 CIJ 352 (NCDRC), the National
Commission held that when the locker facility is provided by the bank, the relationship
between the bank and the hirer of a locker is not that of a landlord and tenant. In the
event of loss of contents of lockers as a result of burglary, the bank will be liable for
deficiency in its service.
Failure of the Housing Board to give possession of the flat after receiving the price and
registering it in favour of the allottee was held to be a deficiency in service [Lucknow
Development Authority v. Roop Kishore Tandon FN 54 /1990].
Failure of the railways to provide cushioned seats in the first-class compartments as per
specifications laid down by the Railway Board and to check unauthorized persons from
entering and occupying the seats, has been held to be a deficiency [N. Prabhakaran v.
GM, Southern Rly Madras 1992 CPJ 323(NC)]

Non-delivery of consignment by the courier has been held to be a deficiency [Skypack

Couriers Pvt Ltd vs. CERS & Ors 1992 CPJ 316 (NC) also in Smt. Inacia P.Carvalho v.
Desk to Desk Courier & Cargo Pvt Ltd 2003 CTJ 533 (CP) SCRDC].
Default or negligence in regard to settlement of an insurance claim would amount to
deficiency in service on the part of insurance company [Divisional Manager, LIC of India
v. Bhavanam Srinivas Reddy].
In Station Manager, Indian Airlines v. Dr Jiteswar Ahir (FA NO 270 of 1994 (NCRDC),
the removal of ladder of an aircraft while the passenger was disembarking and thereby
causing 10% permanent disability, has been held to amount to deficiency in service. The
National Commission had also observed that deficiency in service cannot be alleged
without attributing fault, imperfection, etc., which is required in pursuance of a contract
or otherwise in relation to a service. The burden of proving deficiency in service is upon
the person who alleged it.
In Union of India v. Nathmal Hansaria [F. A. NO 692 of 1993 (NDRC)], the fall of a
passenger from a running train while passing through the vestibule passage had been held
to be a deficiency is service and the deceased passenger held to be a consumer.
However, there may be some cases where based on factual situation, the Consumr body
may decide that failure to provide service is NOT a deficiency in terms of the legal
provision in this Act. For instance, in Mrs. Anumati v. Punjab National Bank (2003), it
was held by the National Commission that financial institutions have every right to
protect their interests and there shall be no deficiency in service if the bank takes a
conscious decision to adjust the fixed deposit of the joint holders against the loan taken
by a third party when the FDR has been mortgaged as guarantee for loan.

CONTRACT OF PERSONAL SERVICE VERSUS CONTRACT FOR

SERVICE:DIFFERENCE
Distinction between ‘contract of personal service’ is different from ‘contract for service’
is important from the standpoint of determination of applicability or otherwise of the
provisions of the law of Consumer Protection.
Contract for Service’ implies “a contract whereby a party undertakes to render services,
whether professional or technical, to another in the performance of which the party
rendering services is not subject to detailed direction and control by the other but uses it
own knowledge and discretion.”
On the other hand, the term ‘Contract of Service’ implies “relationship of master and
servant” in which the person employed is subject to obey orders/ commands of the master
in the work to be performed and the manner and mode of its performance. Employer
cannot be treated as a ‘consumer’ in respect of the services rendered by the employee. In
the Consumer Protection Act, the adjective ‘personal’ service has been used in the
context of ‘Contract of Personal Service’ in the exclusionary part of the definition
Contract of Personal Service has been excluded from the purview of the definition of
‘service’.
Supreme Court has distinguished ‘Contract for service’ from ‘Contract of service” in
Indian Merchants Association v. V P Santha 1995 in deciding whether the services of
medical practitioner can be considered as ‘service’ under the Consumer Protection Act
and held that for services rendered by a doctor in a hospital does not have ‘contract of
service’ as he does not get payment from the patient but from the employing hospital and
he cannot be held liable for ‘deficiency in service’.
Given below is the distinction between contract for Service and Contract for personal
Service.
Contract for Service’ implies “a contract whereby a party undertakes to render services,
whether professional or technical, to another in the performance of which the party
rendering services is not subject to detailed direction and control by the other but uses it
own knowledge and discretion.”
‘Contract of Service’ implies relationship of master and servant in which the person
employed is subject to obey orders/ commands of the master in the work to be performed
and the manner and mode of its performance. Employer cannot be treated as a
‘consumer’ in respect of the services rendered by the employee [Shivnandan
Sharma v. Punjab National Bank Ltd. AIR 1955 SC 404 and also in Chandi Prasad
Singh v. State of Uttar Pradesh AIR 1956 SC 149].
Under a “contract for service” a party undertakes to render some services like
professional or technical services to another without being subject to detailed direction
and control of the person engaging him and he can use his own knowledge and discretion.
There is relationship of principal and agent where the method to be adopted for rendition
of service is left to the agent.
Accordingly, in the absence of relationship of master and servant between the patient and
doctor is a contract for service and thus belongs to exclusionary part of the definition.
On the other hand, a “contract of service” implies “relationship of master and
servant” obligating the latter to obey orders of the master as to the mode and manner of
performance. Thus, contract of personal service falls outside the ambit of the expression
service since master can control the manner of rendering of services.
In Smt. Savita Garg v. National Heart Institute AIR 2004 SC 5088, it was held that
doctors who are staff of hospital are on ‘Contract of Service’, while empaneled doctors
whose services may be requisitioned from time to time by the hospital are regarded to fall
within the purview of ‘contract for service’. Hospital is controlling authority as observed
in Balaram Prasad v. Kunal Naha (2014) 1 SCC 384.
In short, in case of contract of service, the employer not only orders/requires what is to be
done but also directs as to how it shall be done, whereas in contract for service, the
master can only require as to what is to be done – Max Mueller Bhavan In re (2004) 138
Taxman 113 (AAR)
In the Consumer Protection Act, the adjective ‘personal’ service has been used in the
context of ‘Contract of Personal Service’ in the exclusionary part of the definition. In
other words, ‘contract of service’ is not covered by the provisions of the Consumer
Protection Act.
Those falling within the purview of Consumer protection Act from the standpoint of
‘dedficiency in service’ include inter alia services of advocate [Ram Ralsh Pal v. Smt
Ranjana 2002 NCRDC], acceptance of public deposits [Kalawati v. United Vaish 2002,
NCDRC], Regional Provident Fund Commissioner providing services under Employees
Provident Fund Act [RPFC v. Bhavani Mangat Ram (2008) 7 SCC], services provided by
Employees state Insurance Corporation [Kishore Lal v. Chairman, ESIC 2007 LLR 740],

CASE: Indian Medical Association v. V.P. Santha 1995 SC

The issue which fell for determination of the Supreme Court was as to whether service’
provided by a medical practitioner constitutes ‘contract for service’ OR ‘contract of
service’ and which of these shall fall within the purview of the term ‘service’ as defined
in the CPA.
JUDGMENT: Section 2(42) has defined the term ‘service’ to mean “any kind of service
which is made available to the consumers for their use for payment of consideration’. The
definition of the term ‘Service’ is both inclusive, and Exclusive. The inclusive part of
definition covers ‘any’ kind of service which has been availed by a potential consumer’.
In this part a large number of services have been included such as banking, insurance, e-
commerce, telecom, housing, electricity, transport, education, chit fund, etc. Exclusive
Part of definition is about services provided free, or as statutory duty such as house
taxpayer complaining about inadequate water supply, contract of service, etc. Services by
a medical practitioner working in a hospital. Nursing home providing free services will
not amount to ‘service’ under the Act

CONSUMER DISPUTE [Section 2(8))]

It means a dispute where the person against whom a complaint has been made denies the
allegations contained in the complaint.
For instance, where an insurance claim is repudiated by the insurance company, it
amounts to a consumer dispute. In a consumer dispute, an assertion is made by a party
which is repudiated by the other.
However, where a supplier undertook to supply a specified quantity of iron rods to a
buyer at a mutually agreed price but charged a higher price after delivering the goods, it
is not a ‘consumer dispute’ for the reason that the transaction is commercial in nature and
it a breach of contract that does not fall within the ambit of the Consumer Protection Act
but the law of contract.
 CHAPTER FIVE

ADVISORY & ADMINSTRATIVE AUTHORITIES UNDER THE

ACT
INTRODUCTION
The interests of consumers are sought to be promoted and protected under the Act inter
alia by establishment of Consumer Protection Councils at the Central, State and District
Levels. Under the new legislation, a regulatory authority known as Consumer Protection
Authority has also been set up to deal with misleading advertisements . Given below is
the description of various administrative, regulatory and quasi-judicial authorities set up
under the Consumer Protection Act, 2019:

CONSUMER PROTECTION COUNCILS & CENTRAL CONSUMER PROTECTION

AUTHORITY
The interests of consumers are sought to be promoted and protected under the Act inter
alia by establishing Consumer Protection Councils at the Central and State levels to
discharge advisory functions. In addition, there is a provision for the establishment of the
Central Consumer Protection Authority to function as a Regulatory Authority. With a
view to achieve the objectives enshrined in the Act, provision has been made to establish
Consumer Protection Councils at the Central, State, and District levels to act as an
advisory bodies. The Central Consumer Protection Council has been set up by the Central
Government by means of a notification with Union Minister in-charge of Consumer
Affairs as its Chairperson besides specified number of Official and Non-official
members. In the same manner, every State Government may set up a State Protection
Council and District Consumer Council for various districts. All these will have advisory
roles.

OBJECTIVES OF CONSUMER PROTECTION COUNCIL

(a). The right to be protected against marketing of goods and 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 as the case may be so as to protect the consumer against unfair
trade practices.
(c). The right to be assured wherever possible, access to a variety of 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 forum.
(e) The right to seek redressal against unfair trade practices or restrictive trade practices
or unscrupulous exploitation of consumers, and
(f) The right to consumer education.

VARIOUS CATEGORIES OF CONSUMER PROTECTION COUNCILS

I: CENTRAL CONSUMER PROTECTION COUNCIL [Section 3]

Section 3 of the Act has empowered the Central Government to establish a Council to be
known as Central Consumer Protection Council consisting of the Union Minister of
Consumer Affairs as its Chairman and such number of other official and non-official
members representing such interests as may be prescribed not exceeding 10. These
members shall be nominated by the Central Government. The object of the Central
Council shall be to render advice on promotion and protection of the consumers' rights
under this Act. The Central Consumer Protection Council shall meet as and when
necessary, but at least one meeting of the Council shall be held at such time and place as
the Chairman may think fit. It shall adopt prescribed procedure for transacting its
business. The objects of the Central Consumer Protection Council will be to promote and
protect the rights of the Indian consumers in general within the territory of India. The
Central Council is the highest body to lie down and decide the policy of consumer
protection. Consumers’ interests mainly concern with

II: STATE CONSUMER PROTECTION COUNCILS

Section 6 has provided for the establishment of State Consumer Protection Councils by
the State Governments. The State Council shall be an Advisory Council consisting of a
Minister in charge of Consumer Affairs in the State Government as its Chairman and
such number of other official or non-official members representing such interests as may
be prescribed by the State Government, and ten nominees of the Central Government.
The State Council shall meet as and when necessary, but not less than two meetings shall
be held every year at such time and place as the Chairman may think fit. According to
Section 7, the objects of every State Council shall be to render advice on promotion and
protection of consumer rights under this Act within the State.

III: DISTRICT CONSUMER PROTECTION COUNCIL [Section 8-9]

In order to promote and protect the rights of consumers within the District, Section 8
provides for the establishment, in every district, of a District Consumer Protection
Council. It shall be set up by the respective State Governments to discharge an advisory
role. It shall consist of the Collector of the District as its Chairman and such number of
other official and non-official members representing such interests as may be prescribed
by the State Government. It shall meet as and when necessary but not less than two
meetings shall be held every year. The Chairman shall decide the time and place of the
meeting and it shall adopt the prescribed procedure in transacting its business.

CENTRAL CONSUMER PROTECTION AUTHORITY [Section 10-26]

Under Section 10, a Central Consumer Protection Authority shall be established by the
Central Government, by means of a notification to regulate matters relating to violation
of rights of consumers, unfair trade practices and false or misleading advertisements
which are prejudicial to the interests of public and consumers.
Additionally, it will have the authority to promote, protect and enforce the rights of
consumers as a class. It shall have Chief Commissioner and prescribed number of
Commissioners to discharge specified functions. The qualifications, method and
procedure of appointment, terms of appointment and remuneration etc., of these
functionaries shall be determined by the Central Government. The Central Authority shall
have an Investigation Wing headed by a Director General and others who shall undertake
investigation of a matter and submit report to the Central Authority.

POWERS & FUNCTIONS OF CONSUMER PROTECTION AUTHORITY

(i). To inquire or investigate into matters relating to violations of consumer rights or
unfair trade practices suo motu, or on a complaint received, or on a direction from the
central government.
(ii). To order recall goods or withdrawal of services that are “dangerous, hazardous or
unsafe.
(iii). To pass an order for refund the prices of goods or services so recalled to purchasers
of such goods or services; discontinuation of practices which are unfair and prejudicial to
consumer’s interest”.
(iv). To impose a penalty up to Rs 10 lakh, with imprisonment up to two years, on the
manufacturer or endorser of false and misleading advertisements. The penalty may go up
to Rs 50 lakh, with imprisonment up to five years, for every subsequent offence
committed by the same manufacturer or endorser.
(v). To ban the endorser of a false or misleading advertisement from making endorsement
of any products or services in the future, for a period that may extend to one year. The
ban may extend up to three years in every subsequent violation of the Act.
(vi). To file complaints of violation of consumer rights or unfair trade practices before the
District Consumer Disputes Redressal Commission, State Consumer Disputes Redressal
Commission, and the National Consumer Disputes Redressal Commission.

COMPOSITION

The Central Consumer Protection Authority shall consist of a Chief Commissioner as its
head and such number of other Commissioners (Presently TWO) as may be prescribed.
They shall be appointed by the Central Government to exercise the powers and discharge
the functions under this Act. The Head Office of the Central Authority shall be situated in
the National Capital Region of Delhi. It shall have Regional and Other offices in any
other place (s) in India as the Central Government may decide.

APPOINTMENT & QUALIFICATIONS OF CHIEF COMMISSIONER &

COMMISSIONER [Section 11]
The method of recruitment and qualifications of Chief Commissioner and Commissioners
shall be in accordance with the prescribed rules.  These rules shall provide for the
qualifications for appointment, method of recruitment, procedure for appointment, term
of office, salaries and allowances, resignation, removal and other terms and conditions of
the service of the Chief Commissioner and Commissioners of the Central Authority.
Section 12 has provided that vacancy in the office of any of these functionaries shall not
invalidate proceedings of Central Authority. Thus, no act or proceeding of the Central
Authority shall be invalid merely by reason of the following:
Any vacancy in, or any defect in the constitution of, the Central Authority; or
Any defect in the appointment of a person acting as the Chief Commissioner or as
Commissioner; or
Any irregularity in the procedure of the Central Authority not affecting the merits of the
case.
APPOINTMENT OF OFFICERS, EXPERTS, PROFESSIONALS AND OTHER
EMPLOYEES [Section 13]
The Central Government shall provide the Central Authority such number of officers and
other employees as it considers necessary for the efficient performance of its functions
under this Act. The salaries and allowances payable to, and the other terms and
conditions of service of, the officers and other employees of the Central Authority
appointed under this Act shall be such as may be prescribed.
The Central Authority may engage, in accordance with the procedure specified by
regulations, such number of experts and professionals of integrity and ability, who have
special knowledge and experience in the areas of consumer rights and welfare, consumer
policy, law, medicine, food safety, health, engineering, product safety, commerce,
economics, public affairs or administration, as it deems necessary to assist it in the
discharge of its functions under this Act.

PROCEDURE OF CENTRAL AUTHORITY [Section 14]

The Central Authority shall regulate the procedure for transaction of its business and
allocation of its business amongst the Chief Commissioner and Commissioners as may be
specified by regulations.
The Chief Commissioner shall have the powers of general superintendence, direction and
control in respect of all administrative matters of the Central Authority. However, it is
permissible for the Chief Commissioner to delegate such of his powers relating to
administrative matters of the Central Authority, as he may think fit, to any Commissioner
including Commissioner of a regional office, or any other officer of the Central
Authority.
REGULATORY ROLE OF CENTRAL CONSUMER PROTECTION AUTHORITY
Section 10(1), in Chapter III of the Consumer Protection Act has made provision for the
establishment of a ‘Central Consumer Protection Authority’ [CCPA] to regulate the
following matters:
i. Violation of Consumer Rights,
 ii. Unfair Trade Practices,
iii. False or Misleading Advertisements which are prejudicial to the interests of the
public and consumers, and
iv. Promotion & Enforcement of Rights of Consumers as a class.
v. CCPA has regulatory, investigative, and injunctive mandate compared with
advisory role conferred on the Central Consumer Protection Council.
vi. As opposed to inter se dispute between a consumer & a service
provider/manufacturer/seller; the regulatory role of the CCPA consists of
initiating action when the rights of consumers in general or as a class are being or
could be adversely affected
vii. Section 18 has provided that CCPA has the power to protect, promote and enforce
rights of ‘consumers as a class’.
INVESTIGATIVE ROLE OF CONSUMER PROTECTION AUTHORITY [Section 11]
Under Section 11 of the Act, the CCPA shall have a dedicated Investigation Wing headed
by a Director General with a hierarchy of enforcement officers comprised in a pyramidal
structure for reporting and conducting its duties. Inquiry and investigation can be made
by it in the following cases:
i. Violation of Consumer Rights,
ii. Unfair Trade Practices,
iii. False or Misleading Advertisements
In terms of Sections 17 & 19 of the Act, the right to conduct inquiry and investigation is
exercisable in the case of ‘prejudice to the public interest or to the interests of consumers
as a class i.e., cases involving multiplicity of claims or affecting interests of large number
of consumers.
It implies that inter se disputes between a consumer and a service
provider/manufacturer/seller which do not have ramifications on public interest or
consumers as a class would be the subject matter of adjudication before the Consumer
Commissions.

INVESTIGATION WING [Section 15]

The Central Authority shall have an Investigation Wing headed by a Director-General for
the purpose of conducting inquiry or investigation under this Act as may be directed by
the Central Authority. The Central Government may appoint a Director-General and such
number of Additional Director-General, Director, Joint Director, Deputy Director and
Assistant Director, from amongst persons who have experience in investigation and
possess such qualifications, in such manner, as may be prescribed.
Every Additional Director-General, Director, Joint Director, Deputy Director and
Assistant Director shall exercise his powers, and discharge his functions, subject to the
general control, supervision and direction of the Director-General.
The Director-General may delegate all or any of his powers to the Additional Director-
General or Director, Joint Director or Deputy Director or Assistant Director, as the case
may be, while conducting inquiries or investigations under this Act.
The inquiries or the investigations made by the Director- General shall be submitted to
the Central Authority in such form, in such manner and within such time, as may be
specified by regulations.
POWER OF THE DISTRICT COLLECTOR [Section 16]

The District Collector (by whatever name called) may, on a complaint or on a reference
made to him by the Central Authority or the Commissioner of a Regional office, inquire
into or investigate complaints regarding:
(i). Violation of Rights of Consumers as a class, on matters relating to violations of
consumer rights,
(ii). Unfair Trade Practices, and
(iii). False or Misleading Advertisements, within his jurisdiction.

He shall submit his report to the Central Authority or to the Commissioner of a Regional
office, as the case may be.

MANNER OF MAKING COMPLAINTS TO AUTHORITIES [Section 17]

A complaint relating to violation of consumer rights or unfair trade practices or false or

misleading advertisements which are prejudicial to the interests of consumers as a class,
may be forwarded either in writing or in electronic mode, to any one of the authorities,
namely, the District Collector or the Commissioner of regional office or the Central
Authority.
PROCEDURE OF IINQUIRY & INVESTIGATION BY CCP AUTHORITY [Sections 17 and 19]

There may be TWO Stages of Inquiry and investigation namely:

(i) Preliminary Investigation either suo motu if

(a) there exists a prima facie case u/s 19, or
(b) On receipt of Complaint u/s 17 to Commissioner / Deputy Collector who shall submit
Report to the Commissioner, or

(ii) On Direction by the Central Government

Thereupon, the Central Consumer Protection Authority shall issue direction for conduct
of investigation by either the (i) Investigation Wing, (ii) District Collector, or (iii)
Regulator.
For the purpose of investigation, the investigator may production of documents, etc and
it shall give an opportunity of hearing to the affected parties.

SEARCH & SEIZURE by DIRECTOR GENERAL /DISTRICT COLLECTOR [Section 22]

Power of search and seizure under Cr PC 1973 shall be exercised on existence of
‘reasons to believe’ violation of consumer rights, unfair trade practices, misleading
advertisement, etc. [Tata Chemicals Ltd v. Commissioner of Customs 2015 SC].

POWERS & FUNCTIONS OF CENTRAL AUTHORITY [Section 18]

The Central Authority shall discharge the following functions:
(a) To protect, promote and enforce the rights of consumers as a class,
(b) To prevent violation of consumers rights under this Act,
(c) To prevent Unfair Trade Practices,
 (d) To ensure that no person engages himself in unfair trade practices,
(e) To ensure that no false or misleading advertisement is made of any goods or
services which contravenes the provisions of this Act or the rules or regulations
made thereunder,
(f) To ensure that no person takes part in the publication of any advertisement which
is false or misleading.
The CCP Authority shall exercise the following powers [Section 18(2)]
(a) To inquire or cause an inquiry or investigation to be made into violations of consumer
rights or unfair trade practices, either suo motu or on a complaint received or on the
directions from the Central Government,
(b) To file complaints before the District Commission, the State Commission or the
National Commission, as the case may be,
(c) To intervene in any proceedings before the District Commission or the State
Commission or the National Commission, as the case may be, in respect of any allegation
of violation of consumer rights or unfair trade practices,
(d) To review the matters relating to, and the factors inhibiting enjoyment of, consumer
rights, including safeguards provided for the protection of consumers under any other law
for the time being in force and recommend appropriate remedial measures for their
effective implementation,
(e) To recommend adoption of international covenants and best international practices on
consumer rights to ensure effective enforcement of consumer rights,
(f) To undertake and promote research in the field of consumer rights,
(g) To spread and promote awareness on consumer rights,
(h) To encourage non-Governmental organizations and other institutions working in the
field of consumer rights to co-operate and work with consumer protection agencies,
(i) To mandate the use of unique and universal goods identifiers in such goods, as may be
necessary, to prevent unfair trade practices and to protect consumers' interest,
(j) To issue safety notices to alert consumers against dangerous or hazardous or unsafe
goods or service,
(k) To advise the Ministries and Departments of the Central and State Governments on
consumer welfare measures,
(l) To issue necessary guidelines to prevent unfair trade practices and protect consumers'
interest.
POWER OF CENTRAL AUTHORITY TO REFER MATTERS FOR INVESTIGATION TO
OTHER REGULATOR [Section 19]
Under Section 19(1), the Central Authority has been vested with the authority to refer
matter for investigation or to Other Regulator:
(a) After receiving any information, or
(b) On receipt of Complaint, or
(c) On receipt of directions from the Central Government, or
(d) Of its own motion.

PRELIMIARY INQUIRY BEFORE MAKING REFERENCE

Before making such reference, it shall conduct or cause to be conducted a preliminary
inquiry to ascertain as to whether there exists a prima facie case of violation of consumer
rights or any unfair trade practice or any false or misleading advertisement, by any
person, which is prejudicial to the public interest or to the interests of consumers. On the
basis of such investigation. If it is satisfied that there exists a prima facie case, it shall
cause investigation to be made by the Director- General or the District Collector.

REFERENCE OF MATTER TO THE CONCERNED REGULATOR [Section 19(2)]

Where, after Preliminary Inquiry, the Central Authority is of the opinion that the matter is
required to be dealt with by a Regulator established under any other law for the time
being in force, it may refer such matter to the concerned Regulator along with its report.
For the purposes of investigation under Section 19 (1), the Central Authority, the Director
General or the District Collector may call upon a person referred to in Section 19 (1) and
also direct him to produce any document or record in his possession.

POWER OF CENTRAL AUTHORITY TO RECALL GOODS [Section 20]

Where the Central Authority is satisfied on the basis of investigation that there is
sufficient evidence to show violation of consumer rights or unfair trade practice by a
person, it may pass such order as may be necessary, including—
(a) recalling of goods or withdrawal of services which are dangerous, hazardous or
unsafe,
(b) reimbursement of the prices of goods or services so recalled to purchasers of such
goods or services, and
(c) discontinuation of practices which are unfair and prejudicial to consumers’ interest:
Provided that the Central Authority shall give the person an opportunity of being heard
before passing an order under this section

POWER OF CENTRAL AUTHORITY TO ISSUE ORDERS ON PROOF OF VIOLATION OF

CONSUMER RIGHTS [Section 20]
Where the Central Authority is satisfied on the basis of investigation that there is
sufficient evidence to establish the violation of consumer rights or unfair trade practice
by a person, it may pass such order as may be necessary, including-
(i). Recalling of goods, or
(ii). Withdrawal of Services which are dangerous, hazardous or unsafe,
(iii). Reimbursement of Price of Goods or Services so recalled to purchasers of such
goods or services,
(iv). Discontinuation of Practices which are unfair and prejudicial to consumers' interest.
(v). Discontinuation of Advertisements,
(vi). Penalty for misleading advertisements,
(vii). Prohibitory order against endorser of misleading advertisements,
(viii). Penalty on publisher of misleading advertisements.
Non-compliance with the orders issued by the CCPA may entail criminal penalties in
terms of Section 88 of the Act.
Provided that the Central Authority shall give the person an opportunity of being heard
before passing an order under this section.

POWER OF CENTRAL AUTHORITY TO ISSUE DIRECTIONS & TO IMPOSE PENALTIES

AGAINST MISLEADING ADVERTISEMENTS [Section 21]
Where the Central Authority is satisfied after investigation that any advertisement is:
(a) False or misleading and is prejudicial to the interest of any consumer, or
(b) In contravention of consumer rights,
it may issue directions to the concerned trader or manufacturer or endorser or advertiser
or publisher, as the case may be, to discontinue such advertisement or to modify the same
in such manner and within such time as may be specified in that order.

POWER TO IMPOSE PENALTY [Section 21(2)]:

Notwithstanding the order passed under Section 21 (1), if the Central Authority is of the
opinion that it is necessary to impose a penalty in respect of such false or misleading
advertisement, by a manufacturer or an endorser, it may, by order, impose on
manufacturer or endorser a penalty which may extend to 10 lakh rupees which may
extend to 50 lakh rupees for any subsequent contravention.

POWER OF CENTRAL AUTHORITY TO PROHIBIT MAKING ENDORSEMENT

[Section 21 (3)]

Notwithstanding any orders given under Section 21(1) and 21(2), where the Central
Authority deems it necessary, it may prohibit the endorser of a false or misleading
advertisement from making endorsement of any product or service for a period which
may extend to one year. For every subsequent contravention, the prohibition on such
endorser from making endorsement in respect of any product or service may extend to
three years.

POWER TO IMPOSE PENALTY AGAINST PUBLISHER OF MISLEADING

ADVERTISEMENT [Section 21(4)]

Where the Central Authority is satisfied after investigation that any person has published
or is a party to the publication of a misleading advertisement, it may impose on such
person a penalty of up to 10 lakh rupees.

DEFENCES AGAINST PENALTIES [Section 21 (5) (6)]

No endorser shall be liable to a penalty under Sections 21 (2) and (3) if he has exercised
due diligence to verify the veracity of the claims made in the advertisement regarding the
product or service being endorsed by him.
Similarly, under Section 21(6), no publisher shall be liable to such penalty if he proves
that he had published or arranged for the publication of such advertisement in the
ordinary course of his business:
But no such defense shall be available to such person if he had previous knowledge of the
order passed by the Central Authority for withdrawal or modification of such
advertisement.

GROUNDS TO BE KEPT IN MIND WHILE TAKING ACTION UNDER SECTION 21

[Section 21(7)]
While determining the penalty under Section 21, the Authority shall have regard to the
following, namely:-
(a) the population and the area impacted or affected by such offence,
(b) the frequency and duration of such offence,
(c) the vulnerability of the class of persons likely to be adversely affected by such
offence; and
(d) the gross revenue from the sales effected by virtue of such offence.

Moreover, the Central Authority shall give the person an opportunity of being heard
before an order under this section is passed.

POWERS OF SEARCH AND SEIZURE ]Section 22]

For the purpose of conducting investigation after preliminary inquiry under Section 19 (1,
the Director-General or any other Officer authorized by him in this behalf, or the District
Collector, may, if he has any reason to believe that any person has violated any consumer
rights or committed unfair trade practice or causes any false or misleading advertisement
to be made, such Officer shall have the following powers:
(a) To enter at any reasonable time into any such premises and search for any document
or record or article or any other form of evidence and seize such document, record, article
or such evidence,
(b) To make a note or an inventory of such record or article; or
(c) To require any person to produce any record, register or other document or article.
Provisions of the Code of Criminal Procedure, 1973, relating to search and seizure shall
apply, as far as may be, for search and seizure under this Act .
Every document, record or article seized under Section 22(1) (a) or produced under 22(1)
(c) shall be returned to the concerned person within 21 days of such seizure or
production, as the case may be, after copies thereof or extracts therefrom certified by that
person, in such manner as may be prescribed, have been taken.
Where any article seized under Section 22 (1) are subject to speedy or natural decay, the
Director-General or such other officer may dispose of the article in such manner as may
be prescribed.

POWER OF CENTRAL GOVERNMENT TO DESIGNATE ANY STATUTORY

AUTHORITY/BODY TO FUNCTION AS CENTRAL AUTHORITY [Section 23]
The Designated Authority may be authorized to exercise the powers and perform the
functions of the Central Authority referred to in section 10.

APPEALS AGAINST ORDERS MADE UNDER SECTIONS 20, and 21

A person aggrieved by any order passed by the Central Authority under Sections 20 and
21 may file an appeal to the National Commission within a period of thirty days from the
date of receipt of such order.

MISCELLANEOUS [Sections 25-27]

GRANTS TO CENTRAL AUTHORITY:

Under Section 25, the Central Government may, after due appropriation by Parliament
may grants such sums of money as that Government may think fit for being utilized by
the Central Authority for the purposes of this Act.

ACCOUNTS & AUDIT [Section 26]

The Central Authority shall maintain proper accounts in such form and manner as may be
prescribed in consultation with the Comptroller and Auditor-General of India. These
accounts shall be audited by the Comptroller and Auditor-General of India at the cost of
the Central Authority. For the purpose of conducting audit, the Comptroller and Auditor-
General of India or any other person appointed by him shall have the right to demand the
production of books, accounts, connected vouchers and other documents and papers and
to inspect any of the offices of the Central Authority. A copy of audited accounts shall be
forwarded annually to the Central Government which shall cause the same to be laid
before each House of Parliament.
Under Section 27, the Central Authority shall annually furnish an annual report giving
full account of its activities during the previous year and such other reports and returns,
as may be directed, and copies of such report and returns shall be forwarded to the
Central Government. A copy of the annual report received under sub-section (1) shall be
laid, as soon as may be after it is received, before each House of Parliament.

3: Establishment of Consumer Dispute Redressal Agencies:

The Act provides for the establishment of a three-tier, quasi-judicial machinery at the
District, State and National levels to deal with consumer disputes and grievances. These
bodies are required to observe the basic rules of natural justice and are not bound by any
rules involving complicated or elaborate procedures.
 CHAPTER SIX
CONSUMER DISPUTES REDRESSAL AGENCIES

INTRODUCTION
Supreme Court highlighted the legal nature of proceedings conducted by the various
consumer dispute redressal agencies in Laxmi Engineering Works v. P.S.G Industrial
Works 1995, SC. In its judgment, it held that quasi-judicial bodies such as the Consumer
Commissions are not courts despite that these have been vested with some of powers of a
civil court. They are quasi-judicial tribunals functioning to render inexpensive and
speedy remedies to consumers. These Forums/Commissions are not supposed to supplant
but supplement the existing judicial system. The overall idea has been to provide an
additional forum providing inexpensive and speedy resolution of disputes arising between
consumers and suppliers of goods and services. These bodies are uninhibited by the
requirement of court fee or the formal procedures of a court. In Fair Air Engg Pvt Ltd v.
N.K.Modi 1996 SC, it was held that consumer forum may have jurisdiction
notwithstanding that other forum/court will also have jurisdiction to entertain the lis. In
the latest 2019 Act, these have been declared as judicial courts for the purpose of Indian
Penal Code. Any consumer can go and file a complaint in an Appropriate Forum so much
so that a complaint need not necessarily be filed by the Complainant himself. Any
recognized Consumers' Association can espouse his cause. Where large number of
consumers have a similar complaint, one or more can file a complaint on behalf of all.
Even the Central Government and State Governments can act on his/their behalf. The
objective is to help the consumers get justice and fair treatment in the matter of goods and
services purchased a hem in a market dominated by large trading and manufacturing
bodies. Indeed, the entire Act revolves round the consumer and is designed to protect his
interest. The Act provides for "business-to-consumer" disputes and not for "business-to-
business" disputes. The Orders given by the various Consumer Commissions are final
and cannot be re-agitated in a Civil Court,

CONSUMER DISPUTE REDRESSAL BODIES

The Consumer Protection Act, 2019 has set up a three-tier quasi-judicial redressal
machinery for expeditious and inexpensive settlement of consumer disputes. It is an
alternative to the ordinary process of instituting actions before a civil court. The three
redressal agencies are described below:

1. DISTRICT COMMISSION [Section 28]

Under Section 28 of the Act, the State Government shall establish a District Commission
in each District of the State by means of a notification. However, more than one District
Commission may be established in a district by the State Government if it deems fit.

Composition of District Commission

According to Section 28 (2), each District Forum shall consist of a President and not less
than two other members and not more than such number of members as may be
prescribed in consultation with the Central Government. Any person appointed as
President or, as the case may be, a member of the District Commission immediately
before the commencement of this Act shall hold office as such as President or, as the case
may be, as member till the completion of his term for which he has been appointed. In
case of vacancy in the Office of President or member of a District Commission, the State
Government may direct any other District Commission to exercise jurisdiction in respect
of that district and the President or Member of that District Commission shall exercise
the powers and discharge the functions in that capacity[Section 32(a)]

Qualifications etc., of the President & Members of the District Commission [Section
29]. 
The Central Government may, by notification, make rules to provide for the
qualifications, method of recruitment, procedure for appointment, term of office,
resignation and removal of the President and members of the District Commission.

Service Conditions of the President & Members [Section 30]

The salaries and allowances and other terms and conditions of service of the Officers and
employees shall be such as may be prescribed.

STAFF OF THE DISTRICT COMMISSION [Section 33]

The State Government shall provide the District Commission with such Officers and
other employees as may be required to assist the District Commission in the discharge of
its functions. The officers and other employees of the District Commission shall
discharge their functions under the general superintendence of the President of the
District Commission. The salaries and allowances payable to, and the other terms and
conditions of service of, the officers and other employees of the District Commission
shall be such as may be prescribed.

JURISDICTION OF DISTRICT COMMISSION [Section 34]

PECUNIARY JURISDICTION OF DISTRICT CONSUMER COMMISSION

Subject to the other provisions of this Act, the District Commission shall have
jurisdiction to entertain Complaints where the value of the goods or services paid as
consideration does not exceed 50 Lakh rupees. However, where the Central Government
deems it necessary so to do, it may prescribe such other value, as it deems fit.

How Shall Pecuniary Jurisdiction of a Consumer Commission to be calculated?

The real issue in determination of pecuniary jurisdiction of any Consumer Commission is
whether the amount of compensation sought by the plaintiff in computing shall be added
or not added for this purpose. This issue was considered by the Supreme Court in the
following case:
M/S. Pyaridevi Chabiraj Steels (P) Ltd. V. National Insurance Company Ltd, 2020
NC
FACTS:
In its complaint before the National Commission, the Complainant has sought financial
relief amounting to over Rs. 28 Crore for restoration of the company from the respondent
for ‘deficiency in service’ due to wrongful repudiation of its claim in entirety in
contravention of the terms of ‘Standard Fire and Special Perils Policy’ and delay in
settlement of loss and non-determination of loss sustained by manufacturing unit of the
Complainant. The Complainant has taken insurance policy of over Rs 28 Crore and then
she had further taken additional insurance coverage of Rs 13 Crore. Appellant’s factory
was gutted by rain water and entry of Ganges water caused substantial damage to the
building, plant and machinery, and stocks of the Complainant and timely information was
given to the insurance company. As Claim of the Company was rejected, it asked the
Insurance Company to give it copy of Survey Report. On no reply, a legal notice was
served on the Insurance Company.
ISSUE:
In view of payment by the Complainant of two premia of Rs 3.20 Lakh and Rs 1.24
Lakh, can the case fall within the Pecuniary jurisdiction of National Commission which is
beyond Rs 10 Crore of the amount of consideration which is much less in the instant
case?
JUDGMENT:
Under Section 21 (a)(i) of COPRA 1986, the National Commission had jurisdiction in
cases above Rs ONE crore whereas under Section 58(1)(a)(i) of 2019 Act, the limit of
Claims that NC can entertain has been hiked to beyond Rs 10Crore of the value of
consideration paid. Under the 1986 Act, the pecuniary jurisdiction was determined
according to value of goods/services and consideration as laid down by National
Commission in Ambrish Kumar Shukla & 21 Ors v. Ferrous Infrastructure Pvt Ltd
2017.
For example, if a person has purchased flat for Rs 60 Lakh and then in a Complaint he
seeks refund of that amount along with compensation of Rs 50 Lakh, his case will fall
within the pecuniary jurisdiction of National Commission which was Rs ONE Crore or
above. In laying down the jurisdiction of different Consumer Commissions under the
COPRA 2019, the Legislature has stipulated the ‘amount of consideration paid by the
Complainant’ instead of “total of consideration and claim for compensation’ in Sections
34(1),47(1)(a)(i), and 58(1)(a)(i) of the Act.
Thus, in determining the pecuniary jurisdiction of National Commission, only the amount
of consideration paid for the goods or services alone will be taken into consideration
NOT the aggregate value of consideration as also the amount of compensation. The
provision of the Act in this regard being clear, it does not need any interpretation as
prayed for.

Territorial Jurisdiction of District Commission [Section 34(2)]

A complaint shall be instituted in a District Commission within the local limits of whose
jurisdiction,-
(a) the opposite party or each of the opposite parties, where there are more than one, at
the time of the institution of the complaint, ordinarily resides or carries on business or has
a branch office or personally works for gain; or
(b) any of the opposite parties, where there are more than one, at the time of the
institution of the complaint, actually and voluntarily resides, or carries on business or has
a branch office, or personally works for gain, provided that in such case the permission of
the District Commission is given; or
(c) the cause of action, wholly or in part, arises; or
(d) the complainant resides or personally works for gain.
According to Section 34(3) The District Commission shall ordinarily function in the
district headquarters and may perform its functions at such other place in the district, as
the State Government may, in consultation with the State Commission, notify in the
Official Gazette from time to time.

MANNER OF MAKING COMPLAINTS TO DISTRICT COMMISSION: [Section 35]

A complaint, in relation to any goods sold or delivered or agreed to be sold or delivered
or any service provided or agreed to be provided, may be filed with a District
Commission by the following:
(a) the consumer,-
(i) to whom such goods are sold or delivered or agreed to be sold or delivered or such
service is provided or agreed to be provided; or
(ii) who alleges unfair trade practice in respect of such goods or service,
(b) any recognized voluntary consumer association registered under the law for the time
being in force as per the Explanation attached to Section 35, whether the consumer to
whom such goods are sold or delivered or agreed to be sold or delivered or such service
is provided or agreed to be provided, or who alleges unfair trade practice in respect of
such goods or service, is a member of such association or not,
(c) one or more consumers, where there are numerous consumers having the same
interest, with the permission of the District Commission, on behalf of, or for the benefit
of, all consumers so interested; or
(d) the Central Government, the Central Authority or the State Government, as the case
may be:
Provided that the complaint under this sub-section may be filed electronically in such
manner as may be prescribed. Moreover, the complaint shall be accompanied by
applicable amount of fees.

PROCEEDINGS BEFORE THE DISTRICT COMMISSION [Section 36] 

Every proceeding before the District Commission shall be conducted by the President of
that Commission and at least one member thereof, sitting together. However, if a
member, for any reason, is unable to conduct a proceeding till it is completed, the
President and the other member shall continue the proceeding from the stage at which it
was last heard by the previous member.
On receipt of a complaint made under Section 35, the District Commission may, by
order, admit the complaint for being proceeded with or reject the same but no rejection
shall be done without giving an opportunity of being heard to the Complainant.
Moreover, the admissibility of the complaint shall ordinarily be decided within 21days
from the date on which the complaint was filed. In case, the fate of the Complaint is not
decided within the specified period, it shall be deemed to have been admitted.

REFERENCE TO MEDIATION [Section 37]

At the first hearing of the complaint after its admission, or at any later stage, if it appears
to the District Commission that there exists elements of a settlement which may be
acceptable to the parties, except in such cases as may be prescribed, it may direct the
parties to give their written consent within 5 days to have their dispute settled by
Mediation in accordance with the provisions of Chapter V. Under Section 37 (2) Where
the parties agree in writing for settlement by mediation, the District Commission shall,
within 5 days of receipt of such consent, refer the matter for Mediation,

PROCEDURE ON ADMISSION OF COMPLAINT [Section 38]

The District Commission shall, on admission of a complaint, or in respect of cases
referred for mediation on failure of settlement by mediation, proceed with such
complaint.
Where the complaint relates to any goods, the District Commission shall refer a copy of
the admitted complaint, within 21days of its admission to the opposite party directing him
to give his version within 30 days or such extended period not exceeding 15 days as may
be granted by it. If the opposite either denies or disputes the allegations contained in the
complaint, or omits or fails to represent his case within the time given to him, the District
Commission may proceed as follows:
If the defect in the goods as alleged cannot be determined without proper analysis or test
of the goods, it shall obtain a sample of the goods from the complainant, seal and
authenticate it in the prescribed manner and send it to the appropriate laboratory for
making an analysis or test and send its findings to the District Commission within a
period of 45 days of receipt of the reference or within such extended period as may be
granted by it. Before any sample of the goods is referred to any appropriate laboratory,
the Complainant may be asked to deposit specified amount for payment to the
appropriate laboratory for conducting the analysis or test in relation to the goods in
question. A copy of the report from the appropriate laboratory shall be forwarded to the
opposite party. Any party may file written objections challenging either the correctness
of the findings or of the methods of analysis. For this purpose, the parties shall be given
opportunity of hearing.
If the aforesaid procedure cannot be followed in respect of the complaint admitted by it
under Section 36(2) if it relates to goods or if the complaint relates to any services, the
District Commission shall send a copy of the complaint to the Opposite Party requiring
him to give his version of the case within 30 days or such extended period not exceeding
15 days. If either the opposite party denies or disputes the allegations contained in the
complaint, or omits or fails to take any action to represent his case within the time given
by the District Commission, it shall proceed to settle the consumer dispute based on the
evidence produced by the Complainant and the Opposite party, or proceed to decide ex
parte based on the evidence produced by the Complainant, where the opposite party
omits or fails to take any action to represent his case within the time given by the
Commission. In case, the Complainant does not appear on the date of hearing, it may
decide the complaint on merits. For the relevant purpose, the District Commission may
direct an electronic service provider to provide such information, documents or records,
as may be specified in that order.
According to Section 38 (5), no proceedings undertaken in terms of Section 38 (2) and
Section 38(3) shall be called in question in any court on the ground of non -compliance
with the Principles of Natural Justice.
Hearings shall be done by the District Commission on the basis of affidavit and
documentary evidence though the same may be done through video conferencing in case
sufficient cause has been shown, and reasons therefor have been recorded in writing. The
District Commission shall endeavour to dispose of every complaint as expeditiously as
possible and preferably within a period of 3 Months from the date of receipt of notice by
opposite party where the complaint does not require analysis or testing of commodities
and within 5 Months if it requires analysis or testing of commodities.

Ordinarily, no adjournment shall be granted except for sufficient cause and the reasons
for grant of adjournment have been recorded in writing by the Commission. It will, be
competent for the District Commission to impose specified costs occasioned by the
adjournment as provided by regulations. It will be c

Interim Orders may be passed by the District Commission during the pendency of
proceedings if it is considered just and proper in the facts and circumstances of the case.

District Commission to be a Civil Court [Section 38(9)]

For the purposes of Section 38, the District Commission has been vested with the powers
of a Civil Court under the Code of Civil Procedure, 1908 while trying a suit in respect of
the following matters, namely:-
(a) the summoning and enforcing the attendance of any defendant or witness and
examining the witness on oath,
(b) requiring the discovery and production of any document or other material object as
evidence,
(c) receiving of evidence on affidavits,
(d) the requisitioning of the report of the concerned analysis or test from the appropriate
laboratory or from any other relevant source,
(e) issuing of commissions for the examination of any witness, or document; and
(f) any other matter which may be prescribed by the Central Government.

Proceedings before District Commission to be Judicial Proceedings [Section 38(10)]

Every proceeding before the District Commission shall be deemed to be a judicial
proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code, and the
District Commission shall be deemed to be a criminal court for the purposes of section
195 and Chapter XXVI of the Code of Criminal Procedure, 1973.
Under section 38 (12), in the event of death of a Complainant who is a consumer or of the
Opposite Party, the provisions of Order XXII of the First Schedule to the Code of Civil
Procedure, 1908 shall be applicable except that every reference therein to the Plaintiff
and the Defendant shall be construed as reference to a Complainant or the Opposite
Party, as the case may be.

LEGAL NATURE OF CONSUMER COMMISSION: IS CONSUMER COMMISSION A

COURT?
In Virendra Kumar Satyawadi v. State of Punjab 1955, Supreme court described the
features of a court by stating that a court has the duty to decide disputes in a judicial
manner and declare the rights of parties in a definitive judgment. Judicial adjudication
requires the parties to be heard in support of their claims and to produce evidence. The
dispute shall be decided in accordance with law by considering the evidence. An
authority or a tribunal would be considered a court only if it fulfils all these attributes.
The term ‘court’ must be interpreted in its generic sense. Consumer Protection Act vests
the redressal agencies with the power to decide consumer disputes following a summary
procedure and to decide the disputes just like a court. Whether or not the consumer forum
is a court is immaterial. What is relevant is that it exercises judicial power akin to a court
and can punish for its contempt.
Under Article 227, High Court can exercise jurisdiction over all courts [including
‘subordinate courts’] and Tribunals within its jurisdiction [S.K.Sarkar v. Vinay Chandra
Mishra 1980 SC]. Supreme Court in C. Venkatachalam v. Ajitkumar C. Shah and others
(2011) has held at that “……Consumer Fora constituted under the Consumer Protection
Act, 1986 have “trappings of a civil court” but “are not civil courts under the provisions
of the Code of Civil Procedure” [Jagjit Kumari v. Kailash Co-operative Housing (2005).
In Laxmi Engineering Works v. P.S.G. Industrial Institute (1995) 3 SCC 583, it was held
that consumer forum are quasi-judicial tribunals brought into existence to render
inexpensive and speedy remedies to consumers. It is equally clear that these
forums/commissions were not supposed to supplant but supplement the existing judicial
system.

DIFFERENCE BETWEEN COURT & TRIBUNAL

It may be imperative to understand the difference between the court and a Tribunal.
While a Court is established by the State, a Tribunal is established through a Statue.Court
to have only judicial member, but Tribunal may have combination of Judicial and other
experts. Civil Courts are bound to observe the rules of procedure contained in the Civil
Procedure Code, but there is no such obligation on the Tribunals except to the extent
indicated in the Act itself.
SCOPE OF REMEDIES PROVIDED BY THE DISTRICT COMMISSION  [Section 39]
Where the District Commission is satisfied that the goods complained against suffer from
any of the defects specified in the complaint or that any of the allegations contained in the
complaint about the services or any Unfair Trade Practices, or claims for compensation
under Product Liability are proved, it shall issue any of the following directions to the
Opposite Party:-
(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 complainant the price, or the charges paid by the Complainant along
with specified interest thereon,
(d) To pay specified amount of Compensation to the consumer for any loss or injury
suffered by him due to the negligence of the opposite party though the District
Commission is also authorized to impose punitive damages in appropriate circumstances.
(e) To pay specified amount of Compensation in a Product Liability Action under
Chapter VI,
(f) To remove the defects in goods or deficiencies in the services in question,
(g) To discontinue the Unfair Trade Practice or Restrictive Trade Practice and not to
repeat them,
(h) Not to offer the hazardous or unsafe goods for sale,
(i) To withdraw the hazardous goods from being offered for sale,
(j) To cease manufacture of hazardous goods and to desist from offering services which
are hazardous in nature,
(k) To pay such sum as may be determined in case of loss or injury having been suffered
by a large number of consumers who are not identifiable conveniently yet the minimum
payable amount shall not be less than 25% of the value of such defective goods sold or
service provided to such consumers,
(l) To issue corrective advertisement to neutralize the effect of Misleading Advertisement
at the cost of the Opposite Party responsible for issuing such misleading advertisement,
(m) To provide for adequate costs to parties; and
(n) To cease and desist from issuing any Misleading Advertisement.

MANNER OF DEALING WITH DIFFERENCE ON ANY POINT BETWEEN

PRESIDENT & A MEMBER [Section 39(3)]
In any proceeding conducted by the President and a member and if they differ on any
point or points, they shall state the point or points on which they differ and refer the same
to another member for hearing on such point or points and the opinion of the majority
shall be the order of the District Commission. However, the other member shall give his
opinion on such point or points referred to him within a period of one month from the
date of such reference.

SIGNING OF ORDERS PASSED BY DISTRICT COMMISSION [Section 39(4)]

Every order made by the District Commission under Section 39 (1) shall be signed by the
President and the member who conducted the proceeding. However, in the case of a
majority order, it shall also be signed by the other member.
POWER OF REVIEW OF ITS OWN ORDERS BY THE DISTRICT COMMISSION
[Section 40].
The District Commission shall have the power to review any of the order passed by it if
there is an error apparent on the face of the record, either of its own motion or on an
application made by any of the parties within thirty days of such order.

APPEAL AGAINST ORDERS OF DISTRICT COMMISSION [Section 41]

Any person aggrieved by an order made by the District Commission may prefer an appeal
against such order to the State Commission on the grounds of facts or law within a period
of 45 days from the date of the order. In case of delay in filing the appeal, it will be
competent for the State Commission to entertain an appeal even after the expiry of the
prescribed period of 45 days provided the sufficient cause for not filing the appeal
within the prescribed period is shown to the satisfaction of the State Commission.

MANDATORY PRE-DEPOSITOF 50% OF THE AMOUNT ORDERED TO BE PAID BY

THE DISTRICT COMMISSION [Proviso to Section 41]
No appeal by a person, who is required to pay any amount in terms of an order of the
District Commission, shall be entertained by the State Commission unless the Appellant
has deposited f50% of that amount ordered to be paid.

NO APPEAL ON SETTLEMENT BY MEDIATION [Second Proviso to Section 41]

No appeal shall lie from any order passed under Section 81 (1) by the District
Commission pursuant to a Settlement by Mediation under Section 80.

STATE COMMISSION

CONSTITUTION [Section 42]:

The State Government shall establish a State Consumer Disputes Redressal Commission,
to be known as the State Commission in the State by means of a notification. it shall
ordinarily function at the State capital and perform its functions at such other places as
the State Government may in consultation with the State Commission notify in the
Official Gazette. It will be competent for the State Government to establish regional
benches of the State Commission, at such places, as it deems fit.
COMPOSITION
According to Section 42(3) each State Commission shall consist of a President and not
less than four or not more than such number of members as may be prescribed in
consultation with the Central Government.
The Central Government may, by notification, make rules to provide for the qualification
for appointment, method of recruitment, procedure of appointment, term of office,
resignation and removal of the President and Members of the State Commission [Section
43]. Under Section 44. the rules for salaries and terms and conditions of service may be
made by the State Government. In accordance with Section 46, the State Government
shall determine the nature and categories of Officers and employees who shall assist the
State Commission in the discharge of its functions.

JURISDICTION OF THE STATE COMMISSION [Section 47]

Pecuniary Jurisdiction
State Commission can entertain complaints where the value of goods or services and
compensation, if any claimed, exceeds Rs. 50 lakh but does not exceed Rs. Two Crore. It
can also entertain complaints against unfair contracts subject to value of Rs 2 Crore.

Appellate Jurisdiction
It can entertain appeals against the order of any District Commission within the State. But
no appeal by a person who has been required to pay any amount by an order of District
Commission shall be entertained unless the appellant has deposited 50 percent of the
amount ordered to be paid.

Supervisory or Revisional Jurisdictions

State Commission can call for the records and pass appropriate order in any consumer
dispute which is pending before or has been decided by any District Commission within
the State if it appears that such District Commission has exercised any jurisdiction not
vested in it by law or has failed to exercise a jurisdiction rightfully vested in it by law or
has acted in exercise of its jurisdiction illegally or with material irregularity.
The jurisdiction, power and authority of the State Commission may be exercised by
Benches thereof and a Bench may be constituted by the President with one or more
members as the President may deem fit.

Transfer of Cases (Section 48)

On the application of the complainant, or of its own motion, the State Commission may,
at any stage of the proceeding, transfer any complaint pending before the District Forum
to another District Forum within the State if the interests of justice so require.

Regional Benches [Section 47(2)]

The State Commission shall ordinarily function in the State Capital. But the State
Government may establish Regional Benches of the State Commission at any other place
in consultation with State Commission. Where the members of a Bench differ on any
point, the points shall be decided according to the opinion of the majority, if there is a
majority. In case the members are equally divided, they shall refer the point or points on
which they differ to the President who shall either hear the point or points himself or refer
those points for hearing by one or more of the other members which shall be decided
according to the opinion of the majority of the members who have heard the case,
including those who first heard it. The President or the other members, as the case may
be, shall give opinion on the point or points so referred within a period of one month
from the date of such reference.

PLACE OF FILING THE COMPLAINT

A complaint shall be instituted in a State Commission within the limits of whose
jurisdiction:
(a) the opposite party or each of the opposite parties, where there are more than one, at
the time of the institution of the complaint, ordinarily resides or carries on business or has
a branch office or personally works for gain; or
(b) any of the opposite parties, where there are more than one, at the time of the
institution of the complaint, actually and voluntarily resides, or carries on business or has
a branch office or personally works for gain, provided in such case, the permission of the
State Commission is given; or
(c) the cause of action, wholly or in part, arises; or
(d) the Complainant resides or personally works for gain.

APPEAL TO NATIONAL COMMISSION [Section 51]

As already stated, appeal against the orders of the State Commission may be filed in the
National Commission within a period 30 days from the date of order except where
sufficient grounds are shown for the delay to the satisfaction of the State Commission.
But admission of appeal is subject to deposit of 50% of the amount ordered to be paid by
the State Commission.
An Appeal shall also lie to the National Commission on any point involving substantial
question of law which shall be precisely stated in the Memorandum of Appeal. However,
it shall be competent for the National Commission to hear the Appeal on any other
substantial question of law for the reasons to be recorded in writing.
An Appeal shall also lie to the National Commission in case of an ex parte order passed
by the State Commission.
Ordinarily, no adjournment shall be granted by the State or National Commission unless
sufficient cause has been shown and reasons for granting the adjournment have been
recorded in writing by the relevant Commission.

NATIONAL COMMISSION [Sections 53-70]

Section 53 empowers the Central Government to establish the National Consumer
Disputes Redressal Commission which shall ordinarily function at the National Capital
Region and such other places as the Central Government may notify in consultation with
the National Commission. There may be Regional Benches of the National Commission.

Composition of the National Commission [Sections 54-55]

The National Commission shall consist of a President and not less than four and not more
than such number of Members as may by prescribed. The Central Government may make
rules as to qualifications appointment, term of office, salaries and allowances,
resignation, removal and other terms and conditions of service of the President and
members of the National Commission. However, the President and Members of the
National Commission shall hold office for such term as specified in the rules made by the
Central Government but not exceeding five years from the date on which he enters upon
his office and shall be eligible for re-appointment. No President or Members shall hold
office as such after he has attained the age of 70 years in case of the President, and the
age of 67 years in case of a Member. The salary and allowances or the other terms and
Conditions of service of President and members of the National Commission shall not be
varied to his disadvantage after his appointment.

Removal of President or Members

The Central Government may remove from office the President or any member if he:
i) has been adjudged an insolvent,
ii) has been convicted of an offence which, in Central Government’s opinion,
involves moral turpitude,
iii) has become physically, or mentally incapable of acting as President or member, or
 iv) has acquired such financial or other interest as is likely to affect prejudicially his
function as the President or member, or
v) has so abused his position as to render his continuance in office prejudicial to
public interest, or
vi) remains absent in three consecutive sittings except for reasons beyond his control.

The removal on any of the above grounds shall not be made except on an inquiry held by
Central Government in accordance with such procedure as it may specify on this behalf
and finds the President or a member to be guilty on such ground.

JURISDICTION OF THE NATIONAL COMMISSION [Sec. 20(1A)& 21]

(a). Monetary Jurisdiction: It can entertain complaints where the value of goods or
services and compensation, if any, claimed exceeds Rupees 2 Crore besides entertaining
cases relating to Unfair Contracts.

(b). Appellate Jurisdiction:

It can entertain appeals against the orders of any State Commission provided the
Appellant deposits 50% of the amount ordered to be paid by the State Commission. It
may hear Appeals against the orders passed by the Central Authority.

(c). Supervisory or Revisional Jurisdiction

It can call for records and pass appropriate orders in any consumer dispute which is
pending before or has been decided by any State Commission where it appears to the
National Commission that such State Commission has exercised a jurisdiction not vested
in it by law, or has failed to exercise jurisdiction so vested, or has acted in exercise of its
jurisdiction illegally or with material irregularity.
The jurisdiction, powers and authority of the National Commission may be exercised by
Benches thereof. A Bench may be constituted by the President with one or more
members as the President may deem fit. The Senior most member shall preside over the
Bench. Points of difference on any matter shall be decided by majority. In case, the
members are equally divided, they shall submit the points of difference to the President
who shall either hear the points himself or refer the same to one or more other members
and the decision shall be taken by majority including those who has first heard it.

(d). Administrative Powers of National Commission [Section 70]

National Commission shall lay down adequate standard in consultation with the Central
Government for providing better protection to the interests of Consumers and for that
purpose it shall exercise administrative control over State Commissions with regard to
following matters:
a) Monitoring performance of the State Commissions in terms of their disposal by calling
for periodical returns regarding the institution, disposal and pendency of cases,
(b) Investigating into any allegations against the President and members of a State
Commission and submitting inquiry report to the State Government concerned along with
copy endorsed to the Central Government for necessary action,
(c) Issuance of instructions regarding adoption of uniform procedure in the hearing of
matters, prior service of copies of documents produced by one party to the opposite
parties, furnishing of English translation of judgments written in any language, speedy
grant of copies of documents,
(d) Overseeing the functioning of the State Commission or the District Commission
either by way of inspection or by any other means, as the National Commission may like
to order from time to time, to ensure that the objects and purposes of the Act are best
served and the standards set by the National Commission are implemented without
interfering with their quasi-judicial freedom.

(2) For achieving the aforesaid objectives, there shall be a Monitoring Cell constituted by
the President of the National Commission to oversee the functioning of the State
Commissions from the administrative point of view.
(3) The State Commission shall have Administrative Control over all the District
Commissions within its jurisdiction in all matters referred to in Section 70(1).
(4) The National Commission and the State Commissions shall furnish to the Central
Government periodically or as and when required, any information including the
pendency of cases in such form and manner as may be prescribed.
(5) The State Commission shall furnish, periodically or as and when required to the State
Government any information including pendency of cases in such form and manner as
may be prescribed.

POWER AND PROCEDURES APPLICABLE TO NATIONAL COMMISSION [Section

59]
The provisions of Sections 35 to 39 shall be applicable to the disposal of complaints by
the National Commission. However, the National Commission shall have the power to
declare any terms of a contract which is unfair to any consumer to be null and void.
Under Section 60, the National Commission can review any order made by it if there is
an error apparent on the face of record either of its own motion or on an application made
by any of the parties within 30 days of the making of order. It also has the following
powers:
(i). To set aside ex parte orders on the application of aggrieved party (Section 61).
(ii).To transfer cases from one District Commission of one State to that of another State,
or from one State Commission to another either on the application of Complainant or of
its own motion in the interest of justice (Section 62).
(iii). To ask experts to assist State or National Commission on the application of the
Complainant or otherwise if it is of the opinion that it involves larger interests of
consumers (Section 66).

APPEALS TO SUPREME COURT AGAINST ORDERS OF THE NATIONAL

COMMISSION [Section 67]
A person aggrieved by an order of the national Commission passed in exercise of its
powers under Section 58 (1)(i) (ii) may prefer an appeal to the Supreme Court within 30
days of the order except where sufficient cause is shown for the delay. It is further
mandatory for the appellant to deposit 50% of the amount ordered to be paid by the
National Commission.

IMPLICATIONS OF NON-COMPLIANCE WITH ORDERS OF THE COMMISSION

[Section 72]
According to Section 72, punishment for non-compliance with any order passed by the
District, State or the National Commission shall be punishable with imprisonment of not
be less than one month, but which may extend to three years, or with fine of not less than
25.000 rupees, but which may extend to One lakh rupee, or with both. For this purpose,
the Commissions have the same powers as a Judicial Magistrate of First Class under the
Code of Criminal Procedure, 1973. Section 73 provides for filing of appeal against orders
passed under Section 72. The Appeal against orders passed under Section 72 shall lie,
both on facts and on law from those of the District Commission to the State Commission;
from the orders of the State Commission to the National Commission; and from the order
made by the National Commission to the Supreme Court but not to any other court.
Moreover, every appeal under Section 73 shall be preferred within a period of 30 days
from the date of order of the relevant Commission, as the case may be. However, the
State Commission, the National Commission, or the Supreme Court may entertain an
appeal after the expiry of the said period 

WHO CAN FILE COMPLAINT UNDER CONSUMER PROTECTION ACT, 2019

Under Section 35 of the Act, a complaint may be filed by any of the following:
(i). The consumer to whom the goods are sold or delivered, or agreed to be sold or
delivered, or service has been provided, or agreed to be provided, or who alleges unfair
trade practices in respect of such goods or services,
(ii). Any Voluntary Recognized Consumer Association regardless of whether the
consumer is a member of such association or not,
(iii). One or more consumers, where there are numerous consumers having the same
interest with the permission of the District Commission on behalf of or for the benefit of
all consumers so interested,
(iv). The Central Government, the State Government, or the Central Consumer Protection
Authority.
Under Section 34(2), a Complaint can be filed in the District Consumer Commission
under whose jurisdiction,
(i) the opposite party or each of the opposition parties, in case there are more than one,
normally resides, or carries on business, or have a branch or personally works for gain,
or 
(ii) any of the opposite parties ordinarily resides, or carries on business, or personally
works for gain provided, the permission of the District Commission has been taken, or. 
(iii) where the cause of action has arisen whether wholly or partly, 
(iv) Where the Complainant resides or personally works for gain. 
Every complaint shall be accompanied with the amount of fee which shall be payable in
the prescribed manner. The admissibility of the complaint shall ordinarily be decided
within 21 days of its receipt. However, the complaint shall not be rejected unless an
opportunity of being heard has been given to the complainant.
On admission of the complaint, it shall not be transferred to any other court or tribunal or
any other authority. In case a consumer cannot file the complaint due to ignorance,
illiteracy or poverty, any recognized consumer association may file a complaint.

LIMITATION PERIOD FOR FILING OF COMPLAINT [Section 69]

None of the Commissions shall admit a Complaint unless it has been filed within TWO
years from the date on which cause of action has arisen except on showing sufficient
cause for not filing the Complaint within the prescribed period. Moreover, it will be
incumbent on the relevant Commission to record reasons for condoning the delay. In
construing “sufficient cause”, the test of a reasonable man acting in normal circumstances
has to be applied. [Pradeep Kumar v. Assistant Finance Officer, Delhi Vidyut Board 2001
(1) CPR 9]

PROCEDURE ON RECEIPT OF COMPLAINT [Sec 13]

On receipt of complaint received under Section 35, the District Commission may admit
for being processed or reject the same after giving an opportunity of hearing to the Party.
Admissibility of Complaint shall be determined within 21 days of its filing failing which
it shall be deemed to have been admitted.
Reference to Mediation [Section 37]
If it appears to the District Commission that there exists an element of settlement, it may
direct the parties to give their written consent within 5 days for reference to mediation.
On receipt of their consent, they shall be referred to mediation in terms of Part V of the
Act.
Referring a copy of the Complaint to the Opposite Party [Section 38]
Within 21 days of admission of complaint relating to ‘goods’, a copy thereof shall be
referred to the opposite party mentioned in the complaint, directing him to file his version
of the case within 30 days or such extended period not exceeding 15 days.
If the opposite partly admits the allegations contained in the complaint or omits or fails to
take any action to represent his case within the time prescribed by the District
Commission, it shall proceed to settle the consumer dispute in the specified manner.
Reference of Sample for Testing and Analysis by the Laboratory
If the defect in the goods requires analysis, a sample of the goods shall be taken, sealed,
and authenticated and then sent to the appropriate laboratory at the cost of the
Complainant with direction to the laboratory to submit the findings within 45 days of
receipt of reference or the extended period as may be given by the Commission.
In case of any objection by either of the Party relating to the result of analysis or the
methods used, it shall be given an opportunity of hearing and appropriate orders shall be
passed under Section 39.
No proceeding shall be called in question in any court on the ground that principles of
natural justice have not been complied with. Efforts shall be made to dispose of the
complaint within 3 months of date of receipt of notice by Opposite party where no
laboratory analysis is required and within 5 months if laboratory analysis is required.
The District Commission has the power to issue interim orders as is just and proper in the
facts and circumstances of the case. For the purpose of enforcing attendance, discovery
and production of any document or evidence, issue of any commission for examination of
any witness, it shall have the powers of a Civil Court. Section 38(10) provides that every
proceeding before the District Commission shall be deemed to be judicial proceeding
within the meaning of Section 193 and 228 of the Indian Penal Code and the District
Commission shall be a judicial court for the purpose of Section 195 of Criminal
Procedure Code, 1973.
In the event of death of the Complainant or the Opposite Party , the provisions of Order
XXII of the First Schedule of the Civil Procedure Code 1908 shall be applicable.
The Commission shall proceed to settle the dispute on the basis of evidence provided by
the Complainant or the Opposite Party if the opposite party disputes the allegation.  On
the Opposite Party omitting to take any action, the matter may be decided ex parte. On
the other hand, if Complainant fails to show up, the dispute shall be decided on merits. If
it is inconvenient for the party to show up, hearing may be allowed to be held through
video conferencing for which the relevant Commission shall record the reasons for giving
such permission. Endeavour of the Commission must be to decide the matter
expeditiously i.e., within 3 Months if no analysis or testing is required, and 5 Months if
analysis and testing are required.

ARE TIMELINES OUTLINED IN THE PROCEDURE FOR MAKING COMPLAINT

MANDATORY?
CASE: New India Assurance Co ltd v. Hilli Multipurpose Cold Storage Pvt Ltd
2013 SC
FACTS:
Constitutional Bench of the Supreme Court in New India Assurance Co Ltd v. Hilli
Multipurpose Cold Storage Pvt Ltd has been concerned with deciding as to whether the
timelines mentioned in Section 13 (2) and (3) are mandatory or directory.
JUDGMENT:
Section 13(2) requires service of copy of complaint to opposite party within 30 days of
receipt of copy thereof with provision for extension of time by another 15 days. Failing
observance of these deadlines, the District Commission may proceed ex parte on the basis
of documents made available. There is no further provision for extension of time as
becomes evident from the clarification that once proceedings comply with this procedure,
the same cannot be questioned on the ground of non-compliance with principles of
natural justice. Moreover, every complaint shall be heard expeditiously with endevour
being to decide the Complaint within a period of 3 Months of receipt of notice by
Opposite Party or within 5 months if laboratory analysis is requisite. From the objectives
of the Act to decide the dispute expeditiously, it becomes clear that the provision is
mandatory not directory. The right to object to not having received the copy of complaint
is available on the first date itself and not thereafter as it may otherwise defeat the very
purpose of expeditious disposal of consumer disputes.

NATURE AND SCOPE OF REMEDIES UNDER THE ACT [Section 39]

In case the goods complained against suffer from any defect specified in the complaint,
or any of the allegations contained in the complaint about the services are proved, the
District/State Commission /National Commission may pass one or more of the following
orders:
(i). To remove the defects pointed out by the appropriate laboratory from all the goods in
question,
(ii). To replace the goods with new goods of similar description which shall be free from
any defect,
(iii). To return to the complainant the price or the charges paid by him,
(iv). To pay such amount as may be awarded by it as compensation to the consumer for
any loss or injury suffered by the consumer due to the negligence of the opposite party. It
has been held by National Commission in Consumer Unity and Society vs. Chairman,
Bank of Baroda (Petition No. 2 of 1998) that even if complainant has suffered loss, he
may not be entitled to compensation if he cannot prove negligence.
(v). To remove the defects in goods or deficiencies in the services in question,
(vi). To discontinue the unfair trade practice or the restrictive trade practice or not repeat
them,
(vii). Not to offer the hazardous goods for sale,
(viii). To withdraw the hazardous goods from being offered for sale,
(ix).To cease manufacture of hazardous goods and to desist from offering services which
are hazardous in nature,
(x).To pay such sum as may be determined if the loss or injury has been suffered by a
large number of consumers who are not identifiable conveniently provided that the
minimum amount so payable shall not be less than five percent of the value of such
defective goods sold or service provided, as the case may be, to such consumers. The
amount so obtained shall be credited in favour of such person and utilized in such manner
as may be prescribed,
(xi). To issue corrective advertisement to neutralize the effect of misleading
advertisement at the cost of opposite party responsible for issuing such misleading
advertisement,
(xii). To provide for adequate costs to the parties.
The National Commission has held in District Manager Telephones v. Dr. Tarun
Bahadur 1992 ICPJ47 NC that mere failure to make specific prayer for relief will be no
bar to the Consumer Forums taking cognizance of the same suo moto. The National
Commission has held in District Manager, Telephones vs. Munilal Brij Mohan (Revision
Petition No. 78/1992) that the Redressal Forums constituted under the Act do not have
the power to pass interim orders by way of injunction pending original proceedings

APPEALS [Sections 41, 51, 67]

Section 41 entitles a person aggrieved by an order of the District Forum to prefer an

appeal to the State Commission within 45 days of the order though the State Commission
may grant extension of sufficient grounds being shown.
Similarly, appeal against original orders of the State Commission may be made to the
National Commission within 30 days of the orders of the State Commission. However,
National Commission may grant extension on sufficient cause being shown.
The appeal against original orders of the National Commission may be made to the
Supreme Court within 30 days of the orders of the State Commission unless sufficient
cause is shown. Moreover, in all cases, the appeals shall be entertained only if 50% of the
amount ordered to be paid by the relevant Commission has been deposited in the
prescribed manner.
As for as possible, each of the Commission shall undertake hearing of the Appeal and
endeavour to dispose of the appeal within a period of 90 days of the admission. In case
the appeal is disposed after the prescribed period, it shall record in writing the reasons for
the same.

SECOND APPEAL BEFORE THE NATIONAL COMMISSION [Proviso to Section 51(3)]

Second Appeal can be preferred before the National Commission only on substantial
questions of law as set out in the Memorandum of Appeal. However, there can be only
one appeal against original orders of the National Commission [Section 67]
No Second Appeal may be made to the Supreme Court against Orders of the National
Commission which it may have passed in appeal against orders of the State Commission.
However, Supreme Court continues to have the authority to admit Special Leave Petition
under Article 136 of the Constitution.

NO APPEAL TO SUPREME COURT: WHEN SHALL APPEAL LIE TO THE SUPREME

COURT?
It needs to be noted that Appeal to the Supreme Court from an order of the National
Commission can lie only when such Order has been passed in exercise of its Original
Powers [C.S.Ratnam v. Union of India & Others 2001 Andhra],

WHEN CAN NO APPEAL LIE TO THE SUPREME COURT:

No appeal shall lie to the Supreme Court against an Order passed by the National
Commission in the course of execution proceedings u/s 71 of the Act [Ambience
Infrastructure Pvt Ltd v. Ambience Island Apartment Owners & Ors 2017 SC].
No Appeal shall lie to the Supreme Court from Orders passed by the National
Commission in Appeal filed before it against the State Commission Orders

MANDATORY PRE-DEPOSIT of 50% of amount ordered to be paid by State Commission

Before filing Appeal in the next higher Consumer Body [2nd proviso to section 51]

The object of mandatory pre-deposit of 50% of the amount ordered to be paid by the
State Commission before approaching the National Commission in appeal as per Proviso
to Section 51 is to prevent frivolous appeals. Compliance with this mandatory pre-appeal
deposit is imperative for appeal against the State Commission to be entertained by the
National Commission.
It is obligatory on the part of National Commission to assign reasons for granting
conditional stay against orders of the State Commission. The Proviso to Section 51 does
not bar the right of the National Commission to direct the Appellant to deposit the entire
amount as ordered by the State Commission as a condition precedent to grant of
Conditional Stay against orders of the State Commission. However, the National
Commission shall make a ‘speaking order’ citing reasons for such an order rather than
doing it mechanically.

CASE: MANOHAR INFRASTRUCTURE & CONSTRUCTIONS PVT. LTD v.

SANJEEV KUMAR SHARMA 2021 SC
FACTS: Appellants have deposited 50% of the amount ordered by the State Commission
but National Commissioned refused to stay the State Commission Orders unless entire
decretal amount is deposited. Aggrieved by this, Appellants have approached the
Supreme Court.
ISSUE: Are the National Commission Orders requiring deposit of the entire decretal
amount as a pre-condition for staying the orders of the State Commission valid?
JUDGMENT:
Supreme Court held that the requirement of pre-deposit of the decretal amount has no
nexus with grant of interim stay. Pre-deposit of 50% of decretal amount as ordained by
the 2nd Proviso to Section 51 is the minimum mandatory statutory requirement before
National Commission could consider the appeal. It does not take away the jurisdiction of
the National Commission to order deposit of the entire decretal amount or any amount
higher than 50% of the amount while entertaining pari materia an application for stay of
State Commission’s order as was the case in Shreenath Corp & Ors v. Consumer
Education and Research Society & Ors 2014 SCC.
Entertainment of Appeal’ and ‘Stay of Proceedings’ stand on different footings, at two
different stages. Pre-deposit has no nexus with the merits of the Appeal whereas ‘grant of
stay’ depends inter alia on prima facie case, balance of convenience, and irreparable loss
to the party seeking such stay. In case of request for ‘grant of stay order’ National
Commission can direct the deposit of the entire decretal amount subject to duty to assign
some cogent reasons therefor. It must also give a ‘speaking order’ explaining why
“conditional stay order” is being granted on condition of deposit of entire decretal
amount or any amount higher than 50% of the decretal amount. Such an order cannot be
passed mechanically and requires the giving of an opportunity of hearing to the
concerned parties as proof of application of mind by it. Finally, the Supreme Court
remanded back the matter to the National Commission to decide in the light of the above.

NO DISMISSAL OF APPEAL ON TECHNICAL GROUNDS

CASE: Smt. Savita Garg vs The Director, National Heart institute 2004 SC
FACTS:
The case involved death of Appellant’s husband from multiple organ failure due to
negligence by the doctors of the respondent hospital where patient was admitted by
IDPL, the Employer of the deceased. Respondent put its defence besides the objection
that the Complaint did not disclose any deficiency, the lack of jurisdiction of the
Commission and for non-impleading the attending doctors against whom negligence has
been alleged. The Commission dismissed the application on the ground of no-joinder of
the relevant parties. The Appellant then preferred appeal in the Supreme Court.
ISSUE: Is the dismissal of petition on ground of non-joinder of the treating doctor legally
correct?
JUDGMENT:
People visit private hospitals based on their reputation. In case their services are found to
be deficient, they must reimburse the patients. The instant petition has been dismissed on
the ground that treating doctor was not impleaded as a party. National Commission has
been vested with the powers of a Civil Court under the Act and every proceeding before
the District Commission shall be a judicial proceeding under Sections 193 and 228 of the
Indian Penal Code. Where there is more than one consumer, one of them can represent
the interest of all under Order1 Rule 8 of the CPC 1908.
Under the Consumer Protection Rules that have prescribed the procedure to be followed
by the National Commission, Complainant has to give the details of the Opposite Party.
The Appellant has not given the names of the attending doctors leading to the question
whether non-joinder of necessary parties can result in dismissal of the petition. Order 1
Rule 9 and 10 of the CPC do not provide that suit shall fail for non-joinder or mis-joinder
of necessary parties. Court has the power under Order 1 Rule 10(4) to give direction to
implead the necessary party. Even if parties fail to comply with the Order of the Court, it
cannot lead to dismissal of the original petition. The Consumer Forum is primarily meant
to provide better protection to the consumers than short circuit the matter or to defeat the
claim on technical grounds. Petitioner cannot be burdened with the responsibility of
finding names of all treating doctors.
Once the Claimant discharges the burden of proving negligence, the onus shits to the
hospital and doctors to prove that no negligence was involved in treatment. As regards
the argument that the doctors were having a ‘contract for service’ but not a ‘contract of
service’, it has been held by an English Court in Cassidy v. Ministry of Health [1951] 2
K.B. 343 that hospital authority shall be liable irrespective whether the doctors were
under either contract of service or contract for service. In Indian Medical Association v.
V.P.Shantha 1996 SC, it has been held that doctors and hospitals owe a duty to patients
and cannot get away in case of lack of care. Even the doctors in government hospitals
rendering free of charge services to patients will be liable under COPRA since expenses
of hospitals are defrayed from the Consolidated Fund of India constituted from taxes paid
by tax- payers. The protection of the Act cannot be held to be available to those who can
pay but not to those who cannot so afford. Once it is proved that patient died due to lack
of proper care and negligence, the burden lies on the hospital to justify that there was no
negligence rather than try to wriggle out by stating that petitioner has failed to implead
the attending doctor.

FINALITY OF ORDERS [Section 68]

Every order of a District Commission or the State Commission or the National
Commission, as the case may be, shall, if no appeal has been preferred against such order
under the provisions of this Act, be final.

ENFORCEMENT OF ORDERS OF DISTRICT, STATE & NATIONAL COMMISSION

[Section 71]
According to Section 71 of COPRA 2019, every order made by the District, State or
National commission shall be enforced in the same manner as that of a decree of a civil
court in terms of Order XXI, Civil Procedure Code, 1908. For the purpose, the award
holder shall make Execution Application under Section 71 to appropriate Commission for
the issuance of Execution Decree for the purpose of enforcement. Under Section 72 of
the Act, the Consumer Commission has been vested with the power to punish a person
not complying with its orders with imprisonment for not less than ONE MONTH, but
which may extend to 3 years, or with fine of Rs 25000 which may extend to Rs One
Lakh, or with both. Under Section 72(2), the District, State and National Commission
shall have the powers of Judicial Magistrate first Class.

POWER OF VARIOUS COMMISSIONS TO UNDERTAKE REVIEW OF THEIR

ORDERS [Sections 40, 50, and 60]
Each of the Commissions have the authority to review its Orders if there is an error
apparent on the face of the record, either of its own motion or on an application made by
any of the parties within thirty days of such order.

DISMISSAL OF FRIVOLOUS OR VEXATIOUS COMPLAINTS [Sec. 26]

Redressal agencies may dismiss a complaint which is found to be frivolous or vexatious.
The reasons for such dismissal shall be recorded in writing and the complainant shall be
required to pay to the opposite party such cost not exceeding Rs. 10,000 as may be
specified in the order.

A frivolous or vexatious complaint is motivated to harass the opposite party, is malicious,

without a cause and aimed at settling personal scores.

SOME DECIDED CASES

Fall in Electricity Voltage

In Kerala State Electricity Board v. Raveendran (2003), a machine in the plastic factory
of the complainant was damaged due to fall in electricity voltage. The National
Commission held it to be a deficiency in service and awarded compensation.
Highly inflated electricity bills and defective electricity meter:
In Y.N. Gupta v. DESU (1992), National Commission considered a complaint in which
the complainant was served with highly inflated bills amounting to Rs. 1.06 lakhs. These
bills were not raised in accordance with the cycle normally adopted. His defective meter
was also not replaced. The National Commission found it difficult to assimilate a
situation where a consumer could consume over a lakh units of electricity in a period
between 21st December 1988 to 25 March 1990. The bills were found to be casually
prepared. DESU has no power to raise bills upon a defective meter beyond six months
under the Electricity Act, 1910. There was held to be a deficiency in service on the part
of DESU.
Company installing air-conditioner in guest house: Whether the Act is applicable:
A company maintained a guest house for use of its managing director and other
executives. It got installed a central air-conditioning system in the guest house. But the
system did not function properly. On the complaint of the company, the opposite party
contended that since the complainant was a company working for gain, the guest house
was being used for commercial purpose. Hence, the company could not maintain an
action under the Act. This contention was, however, held to be wrong in J.K. Puri
Engineers v. Mohan Breweries and Distilleries Ltd. [First Appeal No. 32 of 1993 decided
on 15.02.1996 NCDRC]. The system was installed to provide comfort to company
officials during their visit to the city. It has no close or direct nexus with commercial
activity carried on by the company. Even where the goods are purchased for commercial
purpose, if there is a warranty for its maintenance, the purchaser becomes a ‘consumer’ in
respect of the services rendered or to be rendered by the manufacturer during the
warranty period. The complainant is therefore a consumer and the opposite party is guilty
of “deficiency in service”.
Failure to supply houses in time by a Housing Agency
A housing society was registered under the Societies Registration Act, 1860. It deposited
80 percent of the cost of flats to Ghaziabad Development Authority but there was no
progress in their completion even after seven years from the scheduled date. It was held
to be a deficiency in service and the GDA was directed to hand over the possession of
flats within three months of the order. [Engineers India Ltd. vs. Ghaziabad Development
Authority and Another 2001 CTJ 102 (CP) NCDRC]
Car Insurance
The insured of a motorcar paid the premium by cheque. The cheque was dishonoured for
want of funds in the account. Meanwhile, the car met with an accident and the insured
was killed. The insurance company repudiated the claim. Is the repudiation justified?
Held, the insurance company is justified in repudiation. Applying the principles
envisaged under Section 51, 52, and 54 of the Indian Contract Act, 1872 relating to
reciprocal promises, the insurer need not perform his part of the promise when the other
party fails to perform his part. [National Insurance Co. Ltd, vs. Seema Malhotra (2001)
2SC140]

EXERCISES:

State with reason whether the following statements are true or not:
(a) A person purchasing a machine to operate it for himself for earning his livelihood is a
consumer.
Hint: If the purpose of purchase is to use it for earning livelihood by means of self-
employment, the buyer would be a “consumer’. Laxmi Engineering Works v. P.S.G.
Industrial Institute.]
(b) Rendering of service by medical practitioner free of charge to all patients does not fall
within the definition of service under the Act.
Hint: Service rendered free of charge is excluded from the definition of service, Indian
Medical Association v. V.P .Sharma AIR 1996 SC 550]
(c) Non-allotment of share in not deficiency is service.
[Hint: Applicant for share is not a ‘consumer’ as there is no hiring of services. L.C.
Chandgotiya v. Northern Leasing and Industries Ltd. 1991 (2) CPJ19 Raj]
Problems
Large sums had been wrongly debited to the account of the complainant. The National
Commission returned the complaint on the ground that the issue involved intricate
questions of law and therefore the matter could not be resolved through a civil suit. Is the
decision justified and valid?
Ans. No, The Supreme Court has held in CCI Chambers Coop. Housing Society Ltd. v.
Development Credit Bank Ltd. (2003) that existence of complicated nature of questions
of facts and law is not a justifiable ground for rejection of complaint.
Deficiency in Service
The doctor who has treated a patient for three months issued a medical certificate only for
one month on the ground that the permission of Medical Board was needed for issuing a
certificate for over a month. The patient files suit on the ground of deficiency of service
u/s 2(1)(g). Will he succeed?
Ans. Yes. It was held by RSCDRC in Jangeer Singh v. Kochar Hospital II 2005 CPJ
223 that it was for the doctor to obtain the necessary permission. Failure to issue the
certificate constitutes deficiency in service.
The husband of the appellant died due to negligence of the doctors of the respondent
institute. Her complaint was dismissed by the National Commission on the ground that
attending doctors were not included as a party to the complaint. Decide.
Ans. Dismissal of appeal by National Commission on the technical ground of non-
joinder of necessary parties is not correct. It will not absolve the hospital of its
responsibilities [Savita Garg v. Director, National Heart Institute (2004) 4 Comp LJ 255
SC]
NON-ARBITRABILITY OF DISPUTES AMENABLE TO JURISDICTION OF
CONSUMER DISPUTES RESOLUTION BODIES

In A Ayyasamy v. A Parasivam& Ors. and Booz Allen Hamilton Inc. v SBI Home
Finance 2011 SC, it has been held that the arbitration Act cannot have an overriding
effect over other statutes which have specific remedies. Such a provision does not bar
oust the jurisdiction of the Consumer Court, it will continue to hold and enjoy the
jurisdiction irrespective of presence of an arbitration clause in the agreement. Supreme
Court has held in Lucknow Development Authority v. M.K.Gupta 1994 that consumer
protection legislation is a beneficial legislation which provides for expeditious and
inexpensive remedies to the aggrieved consumers. In Aftab Singh v. Emaar MGF Land
Limited 2018 , the Supreme Court has held that provisions of Arbitration and
Conciliation Act 1996 are not applicable to consumer courts as these are special courts
set up for public purpose. Remedies under law of consumer protection are not in
exclusion but in addition to the existing laws as held in National Seeds Corporation v.
M. Madhusudan Reddy 2012 SC. Supreme Court in its judgment in M/s Emaar MGF
Land Limited v Aftab Singh 2018 has rejected the arbitrability of consumer disputes for
the reason that the legislative intent of the Consumer Protection Act has been to provide
the consumers with an expeditious and cost- effective remedy. The law of Consumer
Protection is a benevolent legislation and if consumer disputes are made arbitrable, it
would result in grave injustice by forcing consumers to submit disputes to arbitration,
which is more expensive and cumbersome than approaching the consumer courts. In the
circumstances, a referral to arbitration would deprive consumers of a beneficial remedy,
statutorily conferred on them under the CPA. The object behind amendment to Section
8(1) of the Arbitration & Conciliation 1996 based on recommendations of the 246th
Report of Law Commission has been to minimize judicial intervention in consumer
disputes. When a consumer dispute is taken to a court, its duty is to ascertain the
existence of valid arbitration agreement. The law of arbitration cannot override special
remedies provided under specific statute with a substantial body of case law.

CASE: EMAAR MGF LAND LIMITED v. AFTAB SINGH 2018 SC

FACTS: The Appellant had purchased land in Mohali (Punjab)to set up and develop an
integrated township in which the respondent had made a buyer’s agreement for purchase
of a villa. The Buyer’s Agreement contained an ‘arbitration clause’ providing for
Settlement of disputes between parties under the 1996 Act. On a dispute arising between
the parties, the respondent filed a complaint against the appellant in National
Commission. The Appellant pleaded that the dispute is liable to arbitration in consonance
with the terms of the Buyer’s Agreement. National Commission held that the present
dispute was non-arbitrable and in terms of the overall architecture of the 1986 Act and
Court-evolved jurisprudence, dispute cannot be referred to arbitration. Aggrieved by the
judgment, the appellant filed an appeal in the Delhi High Court which was dismissed on
the ground of its not being the appropriate Appellate Court. The matter than came up
before the Supreme Court
ISSUE: Is a Consumer Dispute amenable to arbitration?
JUDGMENT:
Rejecting the Appeal, the apex court ruled that consumer disputes are not arbitrable, the
SC gave the following arguments: In Lucknow Development Authority v. M.K.Gupta
1994, Supreme Court adverted to the Preamble to the Consumer Protection Act which
provides that it has been enacted for protecting the interests of consumers. The Preamble
furnishes the key to legislative intent. Section 3 of the Act has provided that the
provisions of this Act shall be in addition to and not in derogation of the provisions of
any other law for the time being in force. Noticing the object and purpose of the Act as
well as Section 3, Supreme Court has held in Secretary Thirumurugan Co-operative
Agricultural Credit Society v. M. Lalitha (dead) through LRs & others, (2004) 1 SCC that
quasi-judicial forum have been set up to give relief including compensation to the
consumers. The provisions of the Act are to be construed widely and must relieve the
consumers of cumbersome arbitration proceedings except where consumer forum decide
otherwise. Similar argument was taken in National Seeds Corp v. M. Madhusudan Reddy
2012 SC where the SC rejected the argument that Seeds Act 1966 shall prevail and oust
the jurisdiction of the District Consumer Forum. Proceedings under the COPRA are
special proceedings which must continue notwithstanding arbitration agreement between
the parties. The same is the case with dishonour of a cheque where despite arbitration
agreement between the parties, the matter must be put to a criminal court. Arbitration is
adjudication by a private fora and it is competent for the legislature to reserve certain
categories of proceedings for public fora as a matter of public policy. Consequently,
where a dispute is non-arbitrable, the Court in which the suit is pending will refuse to
refer the parties to arbitration notwithstanding an arbitration agreement between the
parties. Some of the disputes kept out of the purview of arbitration inter alia include,
matrimonial disputes, criminal offenses, guardianship, testamentary matters, grant of
probate, tenancy, etc. All the aforementioned are rights in rem exercisable against the
world at large as against a right in personam which is available against a specific
individual. Generally, all disputes relating to rights in personam are liable to arbitration
whereas rights in rem are adjudicated by judicial authorities. Certain non-arbitrable
disputes include, IPRs, anti-trust, insolvency, winding up, patents, bribery, corruption,
fraud, criminal matters, etc. In cases where special remedies have been provided and
opted for as in the instant case, judicial authority can refuse to refer the dispute to
arbitration. Therefore, rejection of Appellant’s appeal by the National Commission is
upheld

NATURE AND SCOPE OF REMEDIES UNDER THE ACT [Section 39]

In case the goods complained against suffer from any defect specified in the complaint,
or any of the allegations contained in the complaint about the services are proved, the
District/State Commission /National Commission may pass one or more of the following
orders:
(i). To remove the defects pointed out by the appropriate laboratory from all the goods in
question,
(ii). To replace the goods with new goods of similar description which shall be free from
any defect,
(iii). To return to the complainant the price or the charges paid by him,
(iv). To pay such amount as may be awarded by it as compensation to the consumer for
any loss or injury suffered by the consumer due to the negligence of the opposite party. It
has been held by National Commission in Consumer Unity and Society vs. Chairman,
Bank of Baroda (Petition No. 2 of 1998) that even if complainant has suffered loss, he
may not be entitled to compensation if he cannot prove negligence.
(v). To remove the defects in goods or deficiencies in the services in question,
(vi). To discontinue the unfair trade practice or the restrictive trade practice or not repeat
them,
(vii). Not to offer the hazardous goods for sale,
(viii). To withdraw the hazardous goods from being offered for sale,
(ix).To cease manufacture of hazardous goods and to desist from offering services which
are hazardous in nature,
(x).To pay such sum as may be determined if the loss or injury has been suffered by a
large number of consumers who are not identifiable conveniently provided that the
minimum amount so payable shall not be less than five percent of the value of such
defective goods sold or service provided, as the case may be, to such consumers. The
amount so obtained shall be credited in favour of such person and utilized in such manner
as may be prescribed,
(xi). To issue corrective advertisement to neutralize the effect of misleading
advertisement at the cost of opposite party responsible for issuing such misleading
advertisement,
(xii). To provide for adequate costs to the parties.
The National Commission has held in District Manager Telephones v. Dr. Tarun
Bahadur 1992 ICPJ47 NC that mere failure to make specific prayer for relief will be no
bar to the Consumer Forums taking cognizance of the same suo moto. The National
Commission has held in District Manager, Telephones vs. Munilal Brij Mohan (Revision
Petition No. 78/1992) that the Redressal Forums constituted under the Act do not have
the power to pass interim orders by way of injunction pending original proceedings

APPEALS [Sections 41, 51, 67]

Section 41 entitles a person aggrieved by an order of the District Forum to prefer an

appeal to the State Commission within 45 days of the order though the State Commission
may grant extension of sufficient grounds being shown.
Similarly, appeal against original orders of the State Commission may be made to the
National Commission within 30 days of the orders of the State Commission. However,
National Commission may grant extension on sufficient cause being shown.
The appeal against original orders of the National Commission may be made to the
Supreme Court within 30 days of the orders of the State Commission unless sufficient
cause is shown. Moreover, in all cases, the appeals shall be entertained only if 50% of the
amount ordered to be paid by the relevant Commission has been deposited in the
prescribed manner.
As for as possible, each of the Commission shall undertake hearing of the Appeal and
endeavour to dispose of the appeal within a period of 90 days of the admission. In case
the appeal is disposed after the prescribed period, it shall record in writing the reasons for
the same.

SECOND APPEAL BEFORE THE NATIONAL COMMISSION [Proviso to Section 51(3)]

Second Appeal can be preferred before the National Commission only on substantial
questions of law as set out in the Memorandum of Appeal. However, there can be only
one appeal against original orders of the National Commission [Section 67]
No Second Appeal may be made to the Supreme Court against Orders of the National
Commission which it may have passed in appeal against orders of the State Commission.
However, Supreme Court continues to have the authority to admit Special Leave Petition
under Article 136 of the Constitution.

NO APPEAL TO SUPREME COURT: WHEN SHALL APPEAL LIE TO THE SUPREME

COURT?
It needs to be noted that Appeal to the Supreme Court from an order of the National
Commission can lie only when such Order has been passed in exercise of its Original
Powers [C.S.Ratnam v. Union of India & Others 2001 Andhra],
WHEN CAN NO APPEAL LIE TO THE SUPREME COURT:
No appeal shall lie to the Supreme Court against an Order passed by the National
Commission in the course of execution proceedings u/s 71 of the Act [Ambience
Infrastructure Pvt Ltd v. Ambience Island Apartment Owners & Ors 2017 SC].
No Appeal shall lie to the Supreme Court from Orders passed by the National
Commission in Appeal filed before it against the State Commission Orders

MANDATORY PRE-DEPOSIT of 50% of amount ordered to be paid by State

Commission Before filing Appeal in the next higher Consumer Body [2 nd proviso to
section 51]

The object of mandatory pre-deposit of 50% of the amount ordered to be paid by the
State Commission before approaching the National Commission in appeal as per Proviso
to Section 51 is to prevent frivolous appeals. Compliance with this mandatory pre-appeal
deposit is imperative for appeal against the State Commission to be entertained by the
National Commission.
It is obligatory on the part of National Commission to assign reasons for granting
conditional stay against orders of the State Commission. The Proviso to Section 51 does
not bar the right of the National Commission to direct the Appellant to deposit the entire
amount as ordered by the State Commission as a condition precedent to grant of
Conditional Stay against orders of the State Commission. However, the National
Commission shall make a ‘speaking order’ citing reasons for such an order rather than
doing it mechanically.

CASE: Manohar Infrastructure & Constructions Pvt Ltd v. Sanjeev Kumar

Sharma 2021 SC
FACTS: Appellants have deposited 50% of the amount ordered by the State Commission
but National Commissioned refused to stay the State Commission Orders unless entire
decretal amount is deposited. Aggrieved by this, Appellants have approached the
Supreme Court.
ISSUE: Are the National Commission Orders requiring deposit of the entire decretal
amount as a pre-condition for staying the orders of the State Commission valid?
JUDGMENT: Supreme Court held that the requirement of pre-deposit of the decretal
amount has no nexus with grant of interim stay. Pre-deposit of 50% of decretal amount as
ordained by the 2nd Proviso to Section 51 is the minimum mandatory statutory
requirement before National Commission could consider the appeal. It does not take
away the jurisdiction of the National Commission to order deposit of the entire decretal
amount or any amount higher than 50% of the amount while entertaining pari materia an
application for stay of State Commission’s order as was the case in Shreenath Corp &
Ors v. Consumer Education and Research Society & Ors 2014 SCC.
Entertainment of Appeal’ and ‘Stay of Proceedings’ stand on different footings, at two
different stages. Pre-deposit has no nexus with the merits of the Appeal whereas ‘grant of
stay’ depends inter alia on prima facie case, balance of convenience, and irreparable loss
to the party seeking such stay. In case of request for ‘grant of stay order’ National
Commission can direct the deposit of the entire decretal amount subject to duty to assign
some cogent reasons therefor. It must also give a ‘speaking order’ explaining why
“conditional stay order” is being granted on condition of deposit of entire decretal
amount or any amount higher than 50% of the decretal amount. Such an order cannot be
passed mechanically and requires the giving of an opportunity of hearing to the
concerned parties as proof of application of mind by it. Finally, the Supreme Court
remanded back the matter to the National Commission to decide in the light of the above.

NO DISMISSAL OF APPEAL ON TECHNICAL GROUNDS

CASE: Smt. Savita Garg vs The Director, National Heart institute 2004 SC

FACTS:
The case involved death of Appellant’s husband from multiple organ failure due to
negligence by the doctors of the respondent hospital where patient was admitted by
IDPL, the Employer of the deceased. Respondent put its defence besides the objection
that the Complaint did not disclose any deficiency, the lack of jurisdiction of the
Commission and for non-impleading the attending doctors against whom negligence has
been alleged. The Commission dismissed the application on the ground of no-joinder of
the relevant parties. The Appellant then preferred appeal in the Supreme Court.
ISSUE: Is the dismissal of petition on ground of non-joinder of the treating doctor legally
correct?
JUDGMENT:
People visit private hospitals based on their reputation. In case their services are found to
be deficient, they must reimburse the patients. The instant petition has been dismissed on
the ground that treating doctor was not impleaded as a party. National Commission has
been vested with the powers of a Civil Court under the Act and every proceeding before
the District Commission shall be a judicial proceeding under Sections 193 and 228 of the
Indian Penal Code. Where there is more than one consumer, one of them can represent
the interest of all under Order1 Rule 8 of the CPC 1908.
Under the Consumer Protection Rules that have prescribed the procedure to be followed
by the National Commission, Complainant has to give the details of the Opposite Party.
The Appellant has not given the names of the attending doctors leading to the question
whether non-joinder of necessary parties can result in dismissal of the petition. Order 1
Rule 9 and 10 of the CPC do not provide that suit shall fail for non-joinder or mis-joinder
of necessary parties. Court has the power under Order 1 Rule 10(4) to give direction to
implead the necessary party. Even if parties fail to comply with the Order of the Court, it
cannot lead to dismissal of the original petition. The Consumer Forum is primarily meant
to provide better protection to the consumers than short circuit the matter or to defeat the
claim on technical grounds. Petitioner cannot be burdened with the responsibility of
finding names of all treating doctors.
Once the Claimant discharges the burden of proving negligence, the onus shits to the
hospital and doctors to prove that no negligence was involved in treatment. As regards
the argument that the doctors were having a ‘contract for service’ but not a ‘contract of
service’, it has been held by an English Court in Cassidy v. Ministry of Health [1951] 2
K.B. 343 that hospital authority shall be liable irrespective whether the doctors were
under either contract of service or contract for service. In Indian Medical Association v.
V.P.Shantha 1996 SC, it has been held that doctors and hospitals owe a duty to patients
and cannot get away in case of lack of care. Even the doctors in government hospitals
rendering free of charge services to patients will be liable under COPRA since expenses
of hospitals are defrayed from the Consolidated Fund of India constituted from taxes paid
by tax- payers. The protection of the Act cannot be held to be available to those who can
pay but not to those who cannot so afford. Once it is proved that patient died due to lack
of proper care and negligence, the burden lies on the hospital to justify that there was no
negligence rather than try to wriggle out by stating that petitioner has failed to implead
the attending doctor.

FINALITY OF ORDERS [Section 68]

Every order of a District Commission or the State Commission or the National
Commission, as the case may be, shall, if no appeal has been preferred against such order
under the provisions of this Act, be final.

EXECUTION OF ORDERS OF THE COMMISSION

CONSUMER COMMISSION ORDERS MUST BE EXECUTED AS DECREE OF A
CIVIL COURT:
According to section 71 of COPRA 2019, every order made by the District, State or
National commission shall be enforced in the same manner as that of a decree of a civil
court in terms of Order XXI, Civil Procedure Code, 1908. For the purpose, the award
holder shall make Execution Application under Section 71 to appropriate Commission for
the issuance of a Execution Decree for the purpose of enforcement.Under Section 72 of
the Act, the Consumer Commission has been vested with the power to punish a person
not complying with its orders with imprisonment for not less than ONE MONTH, but
which may extend to 3 years, or with fine of Rs 25000 which may extend to Rs One
Lakh, or with both. Under Section 72(2), the District, State and National Commission
shall have the powers of Judicial Magistrate first Class.

POWER OF VARIOUS COMMISSIONS TO UNDERTAKE REVIEW OF THEIR

ORDERS [Sections 40, 50, and 60]
Each of the Commissions have the authority to review its Orders if there is an error
apparent on the face of the record, either of its own motion or on an application made by
any of the parties within thirty days of such order.

DISMISSAL OF FRIVOLOUS OR VEXATIOUS COMPLAINTS [Sec. 26]

Redressal agencies may dismiss a complaint which is found to be frivolous or vexatious.
The reasons for such dismissal shall be recorded in writing and the complainant shall be
required to pay to the opposite party such cost not exceeding Rs. 10,000 as may be
specified in the order.

A frivolous or vexatious complaint is motivated to harass the opposite party, is malicious,

without a cause and aimed at settling personal scores.

SOME DECIDED CASES

Fall in Electricity Voltage

In Kerala State Electricity Board v. Raveendran (2003), a machine in the plastic factory
of the complainant was damaged due to fall in electricity voltage. The National
Commission held it to be a deficiency in service and awarded compensation.
Highly inflated electricity bills and defective electricity meter:
In Y.N. Gupta v. DESU (1992), National Commission considered a complaint in which
the complainant was served with highly inflated bills amounting to Rs. 1.06 lakhs. These
bills were not raised in accordance with the cycle normally adopted. His defective meter
was also not replaced. The National Commission found it difficult to assimilate a
situation where a consumer could consume over a lakh units of electricity in a period
between 21st December 1988 to 25 March 1990. The bills were found to be casually
prepared. DESU has no power to raise bills upon a defective meter beyond six months
under the Electricity Act, 1910. There was held to be a deficiency in service on the part
of DESU.
Company installing air-conditioner in guest house: Whether the Act is applicable:
A company maintained a guest house for use of its managing director and other
executives. It got installed a central air-conditioning system in the guest house. But the
system did not function properly. On the complaint of the company, the opposite party
contended that since the complainant was a company working for gain, the guest house
was being used for commercial purpose. Hence, the company could not maintain an
action under the Act. This contention was, however, held to be wrong in J.K. Puri
Engineers v. Mohan Breweries and Distilleries Ltd. [First Appeal No. 32 of 1993 decided
on 15.02.1996 NCDRC]. The system was installed to provide comfort to company
officials during their visit to the city. It has no close or direct nexus with commercial
activity carried on by the company. Even where the goods are purchased for commercial
purpose, if there is a warranty for its maintenance, the purchaser becomes a ‘consumer’ in
respect of the services rendered or to be rendered by the manufacturer during the
warranty period. The complainant is therefore a consumer and the opposite party is guilty
of “deficiency in service”.
Failure to supply houses in time by a Housing Agency
A housing society was registered under the Societies Registration Act, 1860. It deposited
80 percent of the cost of flats to Ghaziabad Development Authority but there was no
progress in their completion even after seven years from the scheduled date. It was held
to be a deficiency in service and the GDA was directed to hand over the possession of
flats within three months of the order. [Engineers India Ltd. vs. Ghaziabad Development
Authority and Another 2001 CTJ 102 (CP) NCDRC]
Car Insurance
The insured of a motorcar paid the premium by cheque. The cheque was dishonoured for
want of funds in the account. Meanwhile, the car met with an accident and the insured
was killed. The insurance company repudiated the claim. Is the repudiation justified?
Held, the insurance company is justified in repudiation. Applying the principles
envisaged under Section 51, 52, and 54 of the Indian Contract Act, 1872 relating to
reciprocal promises, the insurer need not perform his part of the promise when the other
party fails to perform his part. [National Insurance Co. Ltd, vs. Seema Malhotra (2001)
2SC140]

EXERCISES:

State with reason whether the following statements are true or not:
(a) A person purchasing a machine to operate it for himself for earning his livelihood is a
consumer.
Hint: If the purpose of purchase is to use it for earning livelihood by means of self-
employment, the buyer would be a “consumer’. Laxmi Engineering Works v. P.S.G.
Industrial Institute.]
(b) Rendering of service by medical practitioner free of charge to all patients does not fall
within the definition of service under the Act.
Hint: Service rendered free of charge is excluded from the definition of service, Indian
Medical Association v. V.P .Sharma AIR 1996 SC 550]
(c) Non-allotment of share in not deficiency is service.
[Hint: Applicant for share is not a ‘consumer’ as there is no hiring of services. L.C.
Chandgotiya v. Northern Leasing and Industries Ltd. 1991 (2) CPJ19 Raj]
Problems
Large sums had been wrongly debited to the account of the complainant. The National
Commission returned the complaint on the ground that the issue involved intricate
questions of law and therefore the matter could not be resolved through a civil suit. Is the
decision justified and valid?
Ans. No, The Supreme Court has held in CCI Chambers Coop. Housing Society Ltd. v.
Development Credit Bank Ltd. (2003) that existence of complicated nature of questions
of facts and law is not a justifiable ground for rejection of complaint.
Deficiency in Service
The doctor who has treated a patient for three months issued a medical certificate only for
one month on the ground that the permission of Medical Board was needed for issuing a
certificate for over a month. The patient files suit on the ground of deficiency of service
u/s 2(1)(g). Will he succeed?
Ans. Yes. It was held by RSCDRC in Jangeer Singh v. Kochar Hospital II 2005 CPJ
223 that it was for the doctor to obtain the necessary permission. Failure to issue the
certificate constitutes deficiency in service.
The husband of the appellant died due to negligence of the doctors of the respondent
institute. Her complaint was dismissed by the National Commission on the ground that
attending doctors were not included as a party to the complaint. Decide.
Ans. Dismissal of appeal by National Commission on the technical ground of non-
joinder of necessary parties is not correct. It will not absolve the hospital of its
responsibilities [Savita Garg v. Director, National Heart Institute (2004) 4 Comp LJ 255
SC]
NON-ARBITRABILITY OF DISPUTES AMENABLE TO JURISDICTION OF
CONSUMER DISPUTES RESOLUTION BODIES

In A Ayyasamy v A Parasivam& Ors and Booz Allen Hamilton Inc. v SBI Home
Finance 2011 SC, it has been held that the arbitration Act cannot have an overriding
effect over other statutes which have specific remedies. Such a provision does not bar
oust the jurisdiction of the Consumer Court, it will continue to hold and enjoy the
jurisdiction irrespective of presence of an arbitration clause in the agreement. Supreme
Court has held in Lucknow Development Authority v. M.K.Gupta 1994 that consumer
protection legislation is a beneficial legislation which provides for expeditious and
inexpensive remedies to the aggrieved consumers. In Aftab Singh v. Emaar MGF Land
Limited 2018 , the Supreme Court has held that provisions of Arbitration and
Conciliation Act 1996 are not applicable to consumer courts as these are special courts
set up for public purpose. Remedies under law of consumer protection are not in
exclusion but in addition to the existing laws as held in National Seeds Corporation v.
M. Madhusudan Reddy 2012 SC. Supreme Court in its judgment in M/s Emaar MGF
Land Limited v Aftab Singh 2018 has rejected the arbitrability of consumer disputes for
the reason that the legislative intent of the Consumer Protection Act has been to provide
the consumers with an expeditious and cost- effective remedy. The law of Consumer
Protection is a benevolent legislation and if consumer disputes are made arbitrable, it
would result in grave injustice by forcing consumers to submit disputes to arbitration,
which is more expensive and cumbersome than approaching the consumer courts. In the
circumstances, a referral to arbitration would deprive consumers of a beneficial remedy,
statutorily conferred on them under the CPA. The object behind amendment to Section
8(1) of the Arbitration & Conciliation 1996 based on recommendations of the 246th
Report of Law Commission has been to minimize judicial intervention in consumer
disputes. When a consumer dispute is taken to a court, its duty is to ascertain the
existence of valid arbitration agreement. The law of arbitration cannot override special
remedies provided under specific statute with a substantial body of case law.

CASE: EMAAR MGF LAND LIMITED v. AFTAB SINGH 2018 SC

FACTS: The Appellant had purchased land in Mohali (Punjab)to set up and develop an
integrated township in which the respondent had made a buyer’s agreement for purchase
of a villa. The Buyer’s Agreement contained an ‘arbitration clause’ providing for
Settlement of disputes between parties under the 1996 Act. On a dispute arising between
the parties, the respondent filed a complaint against the appellant in National
Commission. The Appellant pleaded that the dispute is liable to arbitration in consonance
with the terms of the Buyer’s Agreement. National Commission held that the present
dispute was non-arbitrable and in terms of the overall architecture of the 1986 Act and
Court-evolved jurisprudence, dispute cannot be referred to arbitration. Aggrieved by the
judgment, the appellant filed an appeal in the Delhi High Court which was dismissed on
the ground of its not being the appropriate Appellate Court. The matter than came up
before the Supreme Court
ISSUE: Is a Consumer Dispute amenable to arbitration?
JUDGMENT:
Rejecting the Appeal, the apex court ruled that consumer disputes are not arbitrable, the
SC gave the following arguments: In Lucknow Development Authority v. M.K.Gupta
1994, Supreme Court adverted to the Preamble to the Consumer Protection Act which
provides that it has been enacted for protecting the interests of consumers. The Preamble
furnishes the key to legislative intent. Section 3 of the Act has provided that the
provisions of this Act shall be in addition to and not in derogation of the provisions of
any other law for the time being in force. Noticing the object and purpose of the Act as
well as Section 3, Supreme Court has held in Secretary Thirumurugan Co-operative
Agricultural Credit Society v. M. Lalitha (dead) through LRs & others, (2004) 1 SCC that
quasi-judicial forum have been set up to give relief including compensation to the
consumers. The provisions of the Act are to be construed widely and must relieve the
consumers of cumbersome arbitration proceedings except where consumer forum decide
otherwise. Similar argument was taken in National Seeds Corp v. M. Madhusudan Reddy
2012 SC where the SC rejected the argument that Seeds Act 1966 shall prevail and oust
the jurisdiction of the District Consumer Forum. Proceedings under the COPRA are
special proceedings which must continue notwithstanding arbitration agreement between
the parties. The same is the case with dishonour of a cheque where despite arbitration
agreement between the parties, the matter must be put to a criminal court. Arbitration is
adjudication by a private fora and it is competent for the legislature to reserve certain
categories of proceedings for public fora as a matter of public policy. Consequently,
where a dispute is non-arbitrable, the Court in which the suit is pending will refuse to
refer the parties to arbitration notwithstanding an arbitration agreement between the
parties. Some of the disputes kept out of the purview of arbitration inter alia include,
matrimonial disputes, criminal offenses, guardianship, testamentary matters, grant of
probate, tenancy, etc. All the aforementioned are rights in rem exercisable against the
world at large as against a right in personam which is available against a specific
individual. Generally, all disputes relating to rights in personam are liable to arbitration
whereas rights in rem are adjudicated by judicial authorities. Certain non-arbitrable
disputes include, IPRs, anti-trust, insolvency, winding up, patents, bribery, corruption,
fraud, criminal matters, etc. In cases where special remedies have been provided and
opted for as in the instant case, judicial authority can refuse to refer the dispute to
arbitration. Therefore, rejection of Appellant’s appeal by the National Commission is
upheld
 CHAPTER SEVEN
GROUNDS OF COMPLAINTS UNDER THE CONSUMER
PROTECTION ACT

Introduction
Under the Act, Complaints based on the following grounds may be filed by the consumer
with the Consumer Dispute Redressal Commissions at different levels:
i. Defect in Goods,
ii. Deficiency in Service,
iii. Unfair Contract,
iv. Unfair Trade Practice, and
v. Restrictive Trade Practice,
vi. False and Misleading Advertisement,
vii. Product Liability.

These are described below:

1: DEFECT IN GOODS
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 is claimed by the trader in
any manner whatsoever in relation to any goods. Non-fulfilment of any of the standards
or requirements laid down under any law for the time being in force or as claimed by the
trader in relation to any goods will fall under the ambit of defect. Therefore,
contravention of any of the provisions of enactments such as the Drugs & Cosmetics Act,
1950, , the Prevention of Food Adulteration Act, 1955, the Indian Standards Institution
(Certification Marks) Act, 1952 etc. or any rules framed under any such enactment or
contravention of the conditions or implied warranties under the Sale of Goods Act, 1930
in relation to any goods have also been treated as a defect under the Act. Fault,
imperfection or shortcoming in quality, quantity, potency, purity or standard as claimed
by the trader in any manner whatsoever in relation to goods is to be determined with
reference to the warranties or guarantees expressly given by a trader.
2: DEFICIENCY IN SERVICE
Deficiency in service means 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 has been undertaken to be performed by a
person in pursuance of a contract or otherwise in relation to any service. Failure to
maintain the quality of performance required by the law or failure to provide services as
per warranties given, by the provider of the service would amount to ‘deficiency’.
In Divisional Manager, LIC of India v. Bhavanam Srinivas Reddy, the National
Commission observed that default or negligence in regard to settlement of an insurance
claim (on allegation of suppression of material facts, in this particular case) would
constitute a deficiency in service on the part of the insurance company and it will be
perfectly open for the aggrieved consumer to approach the Redressal Forums to seek
appropriate relief.
In Jaipur Metals and Electrical Ltd. v. Laxmi Industries, the National Commission held
that a reading of Section 2(1)(g) of the Act shows that deficiency must pertain to the
‘performance’ in terms of quality, nature and manner to be maintained or had been
undertaken to be performed in pursuance of a contract.
In Punjab National Bank v. K.B. Shetty (First Appeal No. 7 of 1991 decided on 6th
August, 1991), ornaments kept in the banks locker were found lost though the certificate
recorded by the custodian of the bank on the day the customer operated the locker stated
that all lockers operated during the day have been checked and found properly locked.
The National Commission upholding the decision of the State Commission, held the bank
guilty of negligence and therefore, liable to make good the loss. However, failure to
provide nursing and financing facilities to a small-scale industry which consequently
became sick cannot be said to constitute ‘deficiency in service’ as in matters of grant or
withholding of further advances and insisting on margin money, banks may exercise their
discretion and act in accordance with their best judgement after taking into account
various relevant factors.
Therefore, the proper forum to agitate such grievances is a civil court (Special Machines
v. Punjab National Bank, Original Petition No. 32/1989 decided on 22.12.1989; M.L.
Joseph v. SBI: O.P. No. 2/1989 decided on 31.8.1989). It has also been held by National
Commission in the case of Mrs. Anumati v. Punjab National Bank (2003 CTJ 921 (CP)
(NCDRC) that financial institutions have every right to protect their interests by taking
conscious decisions. There shall be no deficiency in service where the bank takes
conscious decision to adjust the fixed deposit of the joint holders against the loan taken
by a third party when the FDR has been mortgaged as guarantee for loan. Failure of a
Housing Board to give possession of the flat after receiving the price and after registering
it in favour of the allottee was held to be ‘deficiency in service’ in the case of Lucknow
Development Authority v. Roop Kishore Tandon F.N. No. 54/1990 decided on
10.10.1990.
Cancellation of train services by the railways due to disturbance involving violence so as
to safeguard the passengers as well as its own property was held by the National
Commission as not constituting ‘deficiency in service’ on the part of the Railway.
[Dainik Rail Yatri Sangh (Regd.) v. The General Manager, Northern Railway - I (1992)
CPJ 218 (NC)]. Failure of the Railways to provide cushioned seats in the first class
compartments as per specifications laid down by the Railway Board and to check
unauthorised persons from entering and occupying first class compartments was held to
be ‘deficiency’ [N. Prabhakaran v. GeneralManager, Southern Railway, Madras - I
(1992) CPJ 323 (NC).
In Union Bank of India v. Seppo Rally OY (1999) 35 CLA 203, the Supreme Court held
that delay in payment of an unconditionally guaranteed amount by a bank in India to a
non-resident in Finland in foreign currency cannot be attributed to any deficiency in the
service of the bank when the banks stand is that the delay is caused by the failure of a
bank in Finland, to which the remittance was to have been made under the nonresidents
instructions to reply to the Indian Banks valid query in this connection and the RBI took
time to grant the necessary permission to make the remittance.

3: RESTRICTIVE TRADE PRACTICE [Section 2(41)]

According to Section 2(41) of COPRA 2019, ‘restrictive trade practice’ means a trade
practice which tends to bring about manipulation of prices or its conditions of delivery
or to affect flow of supplies in the market relating to goods or services in such a manner
as to impose on the consumers unjustified costs or restrictions. It shall include-
(i) delay beyond the period agreed to by a trader in supply of such goods or in providing
the services which has led or is likely to lead to rise in the price,
(ii) any trade practice which requires a consumer to buy, hire or avail of any goods or, as
the case may be, services as condition precedent for buying, hiring or availing of other
goods or services.

Manipulation of Prices
Thus, the adoption of restrictive trade practice is done with the objective of manipulation
of Prices as found in DGIR v. Sumitomo Corporation 2004. In this case, the
investigations by the MRTP Commission found that prices quoted by Japanese Company
and their Indian Agents were identical for 8 items for which global tenders had been
floated by SAIL and there existed a nexus between the tendering parties. However, no
action was taken.

Manipulation of Conditions of Delivery

It is done to affect the flow of supplies in the market of goods or services in such a
manner as to impose on consumers unjustified costs or restrictions. It shall include the
following:
(a). Delay beyond period agreed to by the trader of goods/ services which has led or is
likely to lead to rise in prices,
(b). Any trade practice which requires a consumer to buy, hire, or avail any service/
goods as a condition precedent for buying, hiring, or availing of other goods or services.

TESTS OF RESTRICTIVE TRADE PRACTICE

RESTRICTIVE CLAUSES IN AN AGREEMENT: MAHINRA & MAHINDRA v. UOI 1979 SC
FACTS:
It was a case under the MRTP Act wherein Registrar, Restrictive Trade Agreements
found certain clauses of Agreement between the Appellant and its Distributors to be
restrictive trade practices. It was contested by the Appellant on the ground that mere
requirement of registration of distribution agreement with the RTA did not amount to
admission of appellant’s part of clauses in the agreement being restrictive. Non
acceptance of the order passed by RTA showed that appellant did not acquiesce nor could
it be construed as estoppel against him.
ISSUE:
How to ascertain whether a trade practice is ‘restrictive’ or not?
JUDGMENT:
Ascertainment of restrictive nature of trade practice is to be done by applying rule of
reason and by reference to following THREE TESTS:
i. Facts or features peculiar to that particular business to which restraint is applied
ii. Condition before and after imposition of restraint, and
iii. Reason for imposing restraint & purpose sought to be achieved
Not every practice which retrains ought to be considered restrictive. If a trade practice
merely regulates and thereby promotes competition, it will not be fall within the ambit of
the definition though it may be restrictive to an extent,
Issue of a practice being ‘restrictive’ is not theoretical to be decided on a doctorinal priori
reasoning but by undertaking inquiry as to whether it has or may have the effect of
preventing, distorting or restricting competition. Actual or probable effect of the
restriction on the competition must be taken into account so that if it produces or is
reasonably likely to produce the prohibited statutory effect, it shall be held to constitute
restrictive trade practice. Not every trade practice which is in restraint can be construed
as a restrictive trade practice [TELCO v. Registrar, RTA 1977 SC]. Provisions relating to
restraint of trade must be interpreted by applying the ‘Rule of Reason’ as suggested by
the US Supreme Court in Standard Oil Company v. US (1872) from which the Indian
legislation has drawn. Burden of proving that clauses in the distributorship agreement
purportedly imposing restriction on territory, area, or market or providing for exclusive
dealership amount to preventing or distorting competition lie on the RTA. The impugned
Agreement did not contain any ‘restrictive trade practice’

COLLECTIVE PRICE FIXING AS A RESTRICTIVE TRADE PRACTICE

1: COLLECTIVE PRICE FIXATION

It covers all types of agreements regulating the terms and conditions between sellers and
buyers and is known as ‘concert’. Such cooperation between sellers is designed to
promote sectional interests, destroy competition, and harm public interest such as
stockists and retailers boycotting a particular manufacturer unless their ‘margins’ are
increased and the latter gives in failing which his inventory cost will go up with eventual
fall in profits. It may take the shape of allocation of territories, grant of
commissions/discounts, terms of warranty in addition to fixation of prices. Such kind of
cartelization tend to remove price competitions to the detriment of customers for the
reason that there exist a few dominant players in the oligopolistic market having
standardized and undifferentiated products.
PRICE PARRALLELISM
It is the precursor of concert as witnessed in Alkali & Chemical Corporation of India Ltd
and Bayer India Ltd [RTP Enquiry No 21/1981] and in the absence of any evidence
which may justify increase in prices, any price increase may be considered to be “price
fixation”.
TYPES OF COLLECTIVE PRICE FIXATION
Price Fixation may be of the following TWO types:
(a). Horizontal Price Fixing between competitors of a particular product like it was
witnessed in RRTA v. Alkali Mfrs Association of India 1981 in which the Association by
means of circulars had been fixing and revising the prices. It defended its action by
arguing that members were free to sell at prices lower than those recommended. There
was glut of caustic soda and recommendation of prices was a restrictive trade practice.
(b). Vertical Price Fixing involves an agreement between all the participants in the
supply chain such as manufacturers, distributors, retailers, etc to set a minimum or
maximum price like automobile manufacturers and dealers,
Proof of ‘Price Fixation’ is difficult since the process is undertaken in private meetings or
phone calls to avoid any paper trail. In Canada, big companies like Walmart Canada,
Loblaws Companies. Sobeys, Metro Inc., and Giant Tiger Stores were found to resort to
price fixing and these companies were made to agree to issue compensation vouchers to
customers.
CASE: GHAI ENTERPRISES LTD v. KWALITY ICE CREAMS [RTP Enq No
18/1983]
FACTS:
allegation against the respondents was they were fixing prices of ice creams in concert in
the union Territory of Delhi to which the reply was that they being new entrant were
merely following the prices fixed by other respondent i.e., Kwality Ice Creams. It was
also shown that average cost of production of the respondent was lower by 10 to 15%
compared with that of the other respondent. Market share of both the respondents was
80% of the entire market.
DECISION: RTA held that the fact of respondent being a new player, there is no reason
for it to quote identical prices. Even introduction of new flavours, incentives and schemes
was done simultaneously. Both respondents were having inter-connection or interest in
each other and identity of prices of large number of ice creams was not fortuitous nor just
price parallelism. There existed a planned policy of maintenance of parallel prices for the
mutual benefit of both the parties. This kind of practice is characteristic of oligopolistic
market and may exist even without concerted alignment between the concerned firms.
Both parties were held to indulge in ‘restrictive trade practice’.

2: REFUSAL TO DEAL
It deals with vertical agreements between a manufacturer/seller and buyer whereby the
buyer undertakes not to sell the goods obtained from the seller to a particular person or
class of persons. In the alternative, the manufacturer / seller agrees not to sell his goods to
anyone else other than the buyer or class of buyers. It covers all of the following:
Horizontal Agreements in the nature of “cartel” among sellers to not sell to particular
person (s) AND amongst buyers to NOT buy from particular person except from a few
[Bombay Cotton Waste Merchants Association RTP Enquiry 541/1987] forbidding
purchases from non-members of Association. Also, in re All India Organisation of
Chemists and Druggists to boycott Burroughs Welcome (India) Ltd ],
Vertical Agreements between manufacturer, Seller and buyer to make the sale to
particular person(s). For instance, there may be agreement between manufacturer and raw
material supplier wherein former agrees to buy only from a particular raw material
supplier.
Whether or not refusal to deal is a restrictive trade practice will depend on its effect on
competition and whether it results in or is likely to foreclose markets to competition or to
coerce dealers to adopt practices which they may not otherwise adopt

3: EXCLUSIVE DEALINGS
Exclusive dealing is strategy adopted by the dominant sellers to prevent the buyer from
dealing with competitor’s goods other than those of the seller. The object of exclusive
dealings is to foreclose any possibility of competition thereby affecting competition in the
relevant market. Such Agreement obligates sellers to sell only to certain buyers, or
obligate the buyers to buy only from specified sellers, the overall impact of these type of
dealings is to have prejudicial effect on public interest.
Exclusive dealing is a barrier to entry especially in markets with imperfect competition
such as those characterized by oligopoly where there is product and price differentiation,
Such arrangements may NOT be held to be restrictive if their impact on competition is
remote [Delhi Cloth & General Mills Co Ltd, RTP Enq. No.22/ 1976].
In DGIR v. STUDDS ACCESSORIES PVT LTD [RTP ENQUIRY 331/1988, respondents
were engaged in the manufacture of safety helmets, side-boxes and accessories. In the
Dealers Agreement, it was provided that no dealer shall, without prior written permission
of the respondent, engage in or promote the sales of any products manufactured or
marketed by any other person, firm, or company which are identical to or which in any
manner directly or indirectly compete with the product of the company. The MRTPC
declared the Exclusive Dealing clause in the Agreement to be a restrictive of trade and
hence void.
Similarly, in Additional DGIR v. Aryavaidya Pharmacy [RTP ENQUIRY 88/1985,
Respondents were engaged in the manufacturing of Ayurvedic medicines with their
business spread over South India, Delhi and Mumbai with 22 branches, and 227 agents.
The agents were bound by the condition that they cannot deal with the products
manufactured by others or by themselves. The argument for such restriction was to
protect their goodwill and to prevent adulteration with spurious products. However,
respondents were unable to meet more than 30% of the demand for their products in the
country.
ISSUE: Is the Agreement with Agents etc restrictive amounting to restrictive trade
practice?
JUDGMENT: Respondents’ trade practice of exclusive dealing was not only restrictive
of competition but also obstructive of flow of supplies in the market relating to goods and
ancillary services in a manner as to impose on the consumers unjustified restrictions and
costs.
4: Territorial allocation/ Restriction on output
Territorial Restriction by a manufacturer or supplier requires his dealers to sell the
products only in the allocated area so as to reduce costs or to bring about equitable
distribution of the product. Such allocation is not a restrictive trade practice as is
generally done in ‘Agency Agreement’ in which the Principal allocates the area of his
agents to keep check on competition [Nothland Rubber Mills Ltd, RTP Enquiry No.
1227/1987].
However, if allocation of territory is done to kill competition or to create monopoly, it
will be a ‘restrictive trade practice’ as was held in DGIR v. Voltas 1999 MRTPC that
limiting the area of a dealer by manufacturer through agreement is prejudicial to public
interest and hence a restrictive trade practice.
Whether or not an Agreement is in the nature of restrictive trade practice will depend on
the true construction of the agreement as a whole
5: Tie-up sales & Full line forcing
Tie-up Sales /Tying up Arrangement involve the forcing the buyer to buy one or more
other articles as a condition precedent to buying a particular commodity ( called main or
tying item) such as while issuing gas cylinder requiring the buyer to also buy a gas stove
from the gas dealer [Director General v. Ghotane Gas Agency Kolhapur RTP Enq
308/1988]. This makes the buyer to forego free choice between competing products,
In full line forcing, the buyer is compelled by the supplier to buy not only the product one
wants but the entire range of products kept by the supplier. Such practice is restrictive
trade practice irrespective of the value of the tied product because it eliminates or reduces
the competition for the tied product.
In Bennet Coleman & Co Ltd 1979, the MRTPC has held that merely charging combined
rates for advertisement in all editions of the newspaper does not result in tying up or full
line forcing as it does not cause any detriment to the party,

6: RESALE PRICE MAINTENANCE [RPM]

RPM is the practice of setting of horizontal restriction on the price of a particular product
by the supplier below which the dealers may not resell. Goods amenable to RPM are
proprietary goods or branded goods for which the manufacturer issues a List Price clearly
specifying that prices indicated in the list are maximum and distributors etc are free to
sell below the specified price [DG, MRTPC v. Food Specialities Ltd, RTP Enq.
No.123/1985]. It has been held in DG v. Jetking Electronics Ltd, RTP Enq. No.
1451/1987 that the issuing of price list without giving any option to seller to charge
prices lower than those mentioned will make it a ‘restrictive trade practice’. RPM is
different from ‘Direct Resale Price Maintenance’ (DRPM) by the manufacturer which
runs retail outlets which sell a particular product at specified prices.
When Resale Price is enforced, price becomes uniform at all points of resale irrespective
of the difference in distance of location, character, quality of services and different
demands on the resources of the wholesaler or retailer,

Prohibition of Minimum Resale Price Maintenance

There is a prohibition on notifying to dealers or otherwise publish on any goods or in
relation to goods that the price mentioned is the ‘minimum price’ which may be charged
on the resale of the goods in India. General Prohibition against minimum resale price
maintenance is also applicable to patented articles or articles made under a Trademark.

EXCEPTION TO PROHIBITION ON MINUM RESALE PRICE MAINTENANCE

There will be no impact on the validity of any term or condition of a license granted by
the proprietor, licensee, or assignee of a patent or trademark in so far it regulates the price
of any patented article as between themselves.
Government may grant exemption to any particular class of goods from the provision of
minimum resale price maintenance if it is satisfied that in its absence the quality of goods
shall be substantially reduced to the detriment of consumers or prices of goods or
availability of services would be reduced to public detriment.

CHAPTER EIGHT

CLASS ACTION SUITS

CONCEPT OF CLASS ACTION SUIT

Class Action is a distinct yet necessary component of contemporary civil dispute
resolution systems providing for a similar resolution in cases involving commonality of
grievances, parties, and reliefs sought. In it, it is permissible for any or some of the
persons from the said group to initiate proceedings before the forum of appropriate
territorial or pecuniary jurisdiction. Class action is a kind of representative suit wherein
adjudicatory bodies can decide claims of similarly placed persons. Class Action prevents
filing of multiple proceedings and provides expeditious, economical, and efficient
decision to the common grievances of the group. Similar remedy exists in the form of
writs filed in the Supreme Court and High Courts under Articles 32 and 226 of the
Constitution. Public Interest Litigation (PIL) is another similar remedy. While Writs and
PIL can generally be filed only by the aggrieved person, Class Action may be initiated in
the form of a representative by a party on behalf of others who have a common
grievance. Thus, Class Action can be initiated only by a party having locus standi to
maintain proceedings.

WHO CAN FILE CLASS ACTION SUIT?

Section 35 (1) provides for the making of a Class Action complaint relating to goods sold
or agreed to be sold or services provided or agreed to be provided to the District
Commission. Class Action can be filed by the following:
(a) The consumer,
(b) Any recognized voluntary registered consumer association irrespective whether a
consumer is or is not its member,
(c) One or more consumers where there are numerous consumers having the same
interest with the permission of the District Commission, on behalf of or for the benefit of
all consumers so interested, or
(d). The Central Government/Authority or the State Government, as the case may be,
(e). In the event of death of a consumer, his legal heir or representative.
The Complaint shall be filed in electronic form with fees as prescribed.

WHERE TO FILE CLASS ACTION SUIT?

Class actions must be brought in the appropriate court having territorial and pecuniary
jurisdiction over the matter. Class Action may be filed against the following:
(a). Manufacturers,
(b). Service Providers,
(c). Retailers, and
(d). E-commerce firms
Furthermore, the Act has provided for the establishment of Central Consumer Protection
Authority (CCPA) to investigate certain class action cases involving the following even
before the issue is put to the appropriate consumer forum:
(a). Violation of Consumer rights,
(b). Unfair Trade Practices, or
(c) Deceptive or Misleading Advertisements.
The PERIOD FOR FILING CLASS ACTION is 2 years from the date of arising of the
cause of action.

REASONS FOR FILING CLASS ACTION

Often the smallness of individual claims dampens the spirit of the concerned person (s) to
confront the wrong doer for reasons of likely waste of time and money. Collective Action
called ‘class action’ by the injured parties allows not only the aggregation of individual
claims but adds to their bargaining power particularly when they are opposed to a party
of huge financial means. Plaintiffs in class action can pool resources, evidence, experts,
and also share the expenses. Class action strengthens the hands of the complainants since
togetherness provides not only provided insurance against uncertainties of various types
but also emboldens the affected members. Sharing of expenses between litigants reduces
the financial burden, enhances the net amounts of recoveries, and dispenses with the need
for undue dependence on various State authorities.

IMPORTANT FACTORS IN CLASS ACTION

Class Action is dependent on following four factors namely:

(a).Identification of Class Members who are basically those aggrieved by the
wrongdoing,
(b). Aggregation of Claims to be put to forum as a representative suit.
(c) Lawyers’ Incentivization i.e., instead of clients approaching the lawyer, it is the
other way around in the sense that lawyers approach the clients in class action as their
contingency fees is linked with the amount of claim-bigger the amount of claim, greater
the fees.
(d). Third Party Funding of the Class Action enables assessment of the Suit from the
angle of its winnability and adds to the probability of winning the case which will
otherwise remain a guessing game. Amount obtained through success of the case may be
shared with the third-party funder or the advocate who has contracted to take over the
case only on that ground

INGREDIENTS OF CLASS ACTION

National Commission in Ambrish Kumar Shukla & Ors v Ferrous Infrastructure Pvt Ltd
2017 has laid down the following to be the essential ingredients of class action suit under
the Consumer Protection Act:
i. The interest of the persons on whose behalf the claim is brought must be
common, covering an adequate proportion of the aggrieved class, or
ii. There must be a common grievance which the petitioners are seeking to get
addressed.
iii. The defect or deficiency in the goods purchased, or the services hired or availed
of by them should be the same for all the consumers,
iv. The complaint must have been filed on behalf of or for the benefit of all the
persons having such a community of interest so that a complaint on behalf of only
some of them will not be maintainable.
v. No group of Firms, Society or Association can file such a complaint unless it
itself is a consumer under the Consumer Protection Act.

OBJECTIVES OF CLASS ACTION

 To provide common relief in cases meeting the test of oneness of interest of the
complainants against the same person;
 To provide common relief to all those involved on merits without the need for all
of them to file individual cases in various adjudicatory bodies,
 To enable the parties to get expeditious and economical remedy on the common
issue (s) / grievance faced by all the members of the group,
 To obviate the possibility of conflicting judgments on the same issue emanating
from different fora,

REMEDIES IN CLASS ACTION SUITS

o To remove the defect pointed out by the appropriate laboratory from the goods in
question,
o To replace the goods with new goods of similar description which shall be free
from any defect,
o To refund the price, or the charges paid by the complainant with such interest
thereon as may be decided,
o To pay compensation for any loss or injury suffered by the consumer due to the
negligence of the opposite party,
o To grant punitive damages in such circumstances as it deems fit,
o To remove the defects in goods or deficiencies in the services in question,
o To discontinue the unfair trade practice or restrictive trade practice and not to
repeat them,
 o Not to offer the hazardous or unsafe goods for sale,
o To withdraw the hazardous goods from being offered for sale,
o To cease manufacture of hazardous goods and to desist from offering services
which are hazardous in nature,
o To pay such sum as may be determined in case loss or injury has been suffered by
large number of consumers who are not identifiable conveniently.

CASE ON CLASS ACTION SUITS [Section 35 read with Section 59 to Section 41]

Anjum Hussain v Intellicity Business Park Pvt Ltd 2019 SC

FACTS:
Case relates to failure of the respondent builder to deliver possession of office space
within the stipulated period to the Appellant and various others. Since the space in
dispute involved commercial space, the issue was whether all the concerned parties are
‘consumers’ having taken the space for earning their livelihood by way of self-
employment. In the absence of specific averments in the form of individual affidavits, the
mere giving of General Power of Attorney in favour of the Appellant cannot be taken to
mean that Appellant had personal knowledge of the purpose of booking of space by other
petitioners. National Commission held that in the wake of these facts, all complainants
cannot be considered to have taken the space for earning livelihood as held by Supreme
Court in Janki Vashdeo Bhojwani v. Indus Bank Ltd 2005 SC 439 and hence the case
was dismissed. Against this finding, the Appellant has approached the Supreme Court.

ISSUE: Is the National Commission justified dismissal of the case on the ground of
absence of production of clear proof of all parties having taken shops for self-
employment?
JUDGMENT: NC is of the view that to maintain the case as class action complaint, it
needs to be shown that all complainants had booked the space solely for earning
livelihood by means of self-employment. The primary object of provision on ‘Class
Action’ is to facilitate the decision on a matter in which large number of consumers are
interested without the need to file individual actions. These words must receive an
interpretation which subserve the objectives of the Act. The use of the words ‘persons
having the same interest’ used by the Legislature means ‘on behalf of or for the benefit
of all consumers so interested’. Oneness of interest is akin to “common grievance against
the same person” and consequently having community of interest against the same
provider. National Commission has lost sight of these principles so clearly laid down in
various decisions. Consequently, the Supreme Court set aside the decision of the National
Commission but referred the matter to the National Commission for appropriate decision.

CASE: AMBRISH KUMAR SHUKLA & 21 OTHERS v. FERROUS

INFRASTRUCTURE (P) LTD 2016 [National Commission}
ISSUE: Whether a class action complaint filed under Section 12(1)(c) of the Consumer
Protection Act on behalf of or for the benefit of only some of the numerous consumers
having a common interest or a common grievance, is maintainable?
Is it imperative for the complaint to act on behalf of or for the benefit of all the
consumers having a common interest or a common grievance against same person (s)?”
JUDGMENT: National Commission held that it is not imperative that the “cause of
action” should be the same for all consumers. The requirement is the “sameness of
interest” NOT the sameness of cause of action. Oneness of interest is akin to common
grievance against the same party. For instance, where many consumers file complaint
against the same party seeking delivery of possession of flats or refund of money, they
must be held to have common grievance i.e., failure of the builder to make timely
delivery of the possession of flats. In the absence of common remedy, the aggrieved
parties will be compelled to file separate suits leading to multiplicity of suits.

CASE: SOBHA HIBISICUS CONDOMINIUM v. MD, SOBHA DEVELOPERS

LTD & ORS 2020

FACTS: Appeal has been made in the Supreme Court by the members of a condominium
against rejection of the case by the NCRDC on the ground of its neither being a consumer
u/s 2(1)(d) nor a voluntary consumer association under Section 12(1) of the Consumer
Protection Act 1986.
ISSUE: Do the Appellants have any locus standi under the Act to file the suit?
JUDGMENT: Section 12 (1)(b) of COPRA 1986 permits any recognized consumer
association registered under the Companies Act or any other Act (in this case, the
Karnataka Apartments Act 1972] to file a complaint irrespective whether or not the
consumer to whom goods/ services have been provided is a member of the association.
According to the NCRDC, the Appellants are members of the Sobha Hibisicus
Condominium which has been set up under the mandatory provisions of Karnataka
Apartments Act 1972. The Act is designed to provide ownership of an individual
apartment in a building but does not amount to formation of any kind of voluntary
association for the purpose of COPRA. U/S 12(d). Rejecting the NCRDC decision, the
Supreme Court held that it is erroneous to hold that Section 12 (1)(d) read with
Explanation to this Section, permits a voluntary consumer association to file complaint
on behalf of a single consumer but not on behalf of several consumers having similar
cause of action. If a recognized consumer association is made to file multiple complaints
in respect of several consumers having a similar cause of action, that would defeat the
very purpose of registration of a society or association as it would result only in
multiplicity of proceedings without serving any useful purpose.Hence, matter is remitted
back to NCRDC to keep these views in mind and decide the issue on merits and pass
appropriate orders.
 CHAPTER TEN

MEDIATION IN CONSUMER DISPUTES

CONCEPT OF MEDIATION
Mediation is a non-adversarial mechanism concerned with resolution through a neutral
facilitator who assists the parties in reaching a mutually agreeable solution to a given
issue. The exact role of mediator is to assist the parties in identifying the issues, reducing
misunderstandings, clarifying priorities, exploring areas of compromise, generating
alternative options and presenting them to parties for their consideration. Mediation
employs more flexible process than rigidly prescribed procedure as the disputes do not
involve complex questions of law and hold potential for amicable resolution. The thrust
of mediation is to provide opportunity to the parties to converse, negotiate, and reach an
amicable compromise. Mediator constantly implores the parties of their duty to reach a
solution rather than forcing his own viewpoints on them. If there appears a ray of hope,
he may encourage them to work a little more on the problem to get out of the woods.

LEGAL PROVISION FOE MEDIATION

In India, mediation may be initiated in the following FOUR ways:
(i) Making a Provision for Mediation –either ad hoc or institutional mediation, in the
mainframe Contract, or
(ii) Reference to Mediation by a Judicial Court in terms of Section 89 of Civil Procedure
Code 1908, or
(iii) Mediation under Section 37 of Consumer Protection Act 2019, or
(iv). Mandatory pre-litigation mediation under Section 12-A of Commercial Courts Act.
(v). Judicial Settlement by Lok Adalat under the Legal Services Authority Act 1987.
MEDIATION UNDER SECTION 89, CIVIL PROCEDURE CODE 1908
In Salem Advocates Bar Association v. Union of India 2005, the Supreme Court
constituted a Committee to enable better implementation of Section 89 of Civil Procedure
Code, 1908 to enable expeditious dispensation of justice. The Committee drafted the
Model Mediation Rules, 2003 to serve as a model for various High Courts. Under Section
89, Civil Procedure Code 1908, the Civil Court may suggest to the parties to a dispute to
explore the possibility of its resolution through mediation, arbitration or conciliation by
means of an agreement. If the parties evince interest, the Court may formulate a Scheme
of Settlement and give it to the parties for their observation. Based on receipt of parties’
observations, it may re-formulate the Scheme under Order 10 rule 1-A of Civil Procedure
Code, 1908 and refer the parties inter alia to mediation. Initiative for reference of a
dispute to mediation may be taken by the court suo motu or at the request of the parties to
dispute.
Need for Mediation under Consumer Protection Act
There are TWO ways to reduce judicial backlog i.e.,
(a). By expediting the adjudication process, or
(b). By preventing the disputes from coming to the judicial courts by making reference to
various Alternative Dispute Resolution mechanisms like arbitration, conciliation, and
mediation.
So far, the resolution of Consumer disputes is considered to be adversarial in nature being
subject to various rules and procedures. The final resolution of a dispute at times may
require the parties to go through three levels of adjudication i.e., adjudication by the
District Commission followed by appeal in the State Commission and then if need be
with a further appeal to the National Commission. At times, the matter may end up in the
apex court. The entire process may prove to be both time consuming and expensive
which is in contradistinction to the objectives of the COPRA. Some of the Consumer
disputes may be a typical David pitted against Goliath where a small party may be pitted
against a MNC having deep pockets and the outcome of the dispute may be a foregone
conclusion beforehand. Thankfully, the 2019 Act has provided for mediation as a process
before adjudication by various levels of Consumer Commissions.

MEDIATION of CONSUMER DISPUTES UNDER CONSUMER PROTECTION ACT,

2019
Chapter V in Section 2 (25) of the Consumer Protection Act 2019 has provided for and
defined ‘mediation’ of consumer disputes as “a process by which a mediator mediates a
consumer dispute. Chapter V has provided for constitution of Mediation Cells at the level
of District, State and National Commissions. Section 37 provides that at the first hearing
of the complaint after its admission, or at any later stage, if it appears to the District
Commission that there exists elements of a settlement which may be acceptable to the
parties, except in such cases as may be prescribed, it may direct the parties to give their
written consent within five days, to have their dispute settled by mediation in accordance
with the provisions of Chapter V. Under S 37(2) provides that where the parties give their
written consent for settlement by mediation, the District Commission shall, within five
days of receipt of such consent, refer the matter for mediation. The process of Mediation
shall be governed by provisions of Chapter V relating to mediation. To bring about
settlement through mediation, the Act has made it incumbent on the relevant Consumer
Protection Commission to explore the possibility of a consumer dispute through
mediation. Under to Consumer Protection Act, at the first hearing of the Complaint after
its admission, or at any later stage, if it appears to the District Commission that there
exists elements of a settlement which may be acceptable to the parties, except in such
cases as may be prescribed, it may direct the parties to give their written consent within
five days to have their dispute settled by mediation in accordance with the provisions of
Chapter V. The entire essence of mediation lies in its voluntary nature. However, in
situations where in one party agrees to go for mediation with court direction and if other
party is reluctant, this might severely affect the party autonomy as forced mediation is
adversarial to the right of choice legally conferred on the consumer. Only when the
Commission realizes that the instant complaint is amenable to mediation, it may direct
the parties to in terms of Section1 (37) to send their written consent to undergo mediation
within 5 days. Upon the receiving consent, the Forum shall send the Complaint to
Mediation Cell within 5 days.

COMPLAINTS THAR ARE NOT AMENABLE TO SETTLEMENT BY MEDIATION

The following complaints cannot be settled through the process of mediation according to
Consumer Protection (Mediation) Rules, 2020 –

(i). All those matters are related to Medical Negligence which had resulted in either
grievous hurt or death.
(ii). Matters relating to defaults or offences for which Applications for compounding of
offenses has been made,
(iii). Cases involving serious and specific allegations of fraud, fabrication of documents,
forgery, impersonation, coercion,
(iv). Cases relating to prosecution for Criminal and Non-compoundable Offences,
(v). Cases involving Public Interest or the interest of numerous persons who are not
parties before the Commission.

Other than the above-mentioned cases, the Appropriate Commission may choose not to
refer a lis pendens to mediation if it does not find any scope of a settlement which may be
acceptable to the parties, or mediation is otherwise not appropriate having regard to the
circumstances of the case and the respective positions of the parties.
There is a bar on Arbitration or Judicial proceedings of a dispute after reference thereof
to Mediation.

Constitution of Consumer Mediation Cell

Section 74 empowers the State Government to establish a consumer mediation cell which
shall be attached to each of the District Commissions and State Commissions of that
State. Further the Central Government also empowers to establish a Consumer Mediation
Cell to be attached to the National Commission and each of the regional Benches. A
consumer mediation cell shall consist of such persons as may be prescribed. Every
consumer mediation cell shall maintain–
(a) List of Empaneled Mediators,
(b) List of cases handled by the cell,
(c) Record of Proceeding, and
(d) Any other information as may be specified by regulations.
Every Consumer Mediation Cell shall submit a quarterly report to the District
Commission, State Commission or the National Commission to which it is attached, in
the manner specified by regulations.

MEDIATOR IMMUNITY
Mediator shall not be liable for any action taken by him in good faith during the
mediation proceedings.
EMPANELMENT OF MEDIATORS
Section 75 (1) of the Act provides that for the purpose of mediation, the National
Commission or the State Commission or the District Commission, as the case may be,
shall prepare a panel of the mediators to be maintained by the consumer mediation cell
attached to it, on the recommendation of a Selection Committee consisting of the
President and a Member of that Commission. The qualifications and experience required
for empanelment as mediator, the procedure for empanelment, the manner of training
empaneled mediators, the fee payable to empaneled mediator, the terms and conditions
for empanelment, the code of conduct for empaneled mediators, the grounds on which,
and the manner in which, empaneled mediators shall be removed or empanelment shall
be cancelled and other matters relating thereto, shall be such as may be specified by
regulations.

TERM OF MEDIATOR’S APPOINTMENT

The tenure of the panel of mediators would be valid for a period of five years. A
Mediators shall be eligible to be considered for re-empanelment for another term subject
to such conditions as may be specified by regulations. Mediator shall disclose his
impartiality i.e., any personal, professional, financial interest in the outcome of dispute,
or circumstances which may give rise to any justifiable doubts as to his independence or
impartiality.
VENUE OF MEDIATION [Clause 75]
Mediation shall be held in the Consumer Mediation cell attached to the various consumer
Courts Clause 76 provides that it shall be the duty of the mediators to disclose certain
facts.
Nomination of Mediators from Panel
Section 76 states that the District Commission, the State Commission or the National
Commission shall, while nominating any person from the panel of mediators referred to
in section 75, consider his suitability for resolving the consumer dispute involved
Duty of Mediator to Disclose Certain Fact
According to the Section 77 of the Act, it shall be the duty of the mediator to disclose–
(a) any personal, professional or financial interest in the outcome of the consumer
dispute,
(b) the circumstances which may give rise to a justifiable doubt as to his independence or
impartiality; and
(c) such other facts as may be specified by regulations.

Replacement of Mediator in Certain Cases

Section 78 of the Act provides that where the District Commission or the State
Commission or the National Commission, as the case may be, is satisfied, on the
information furnished by the mediator or on the information received from any other
person including parties to the complaint and after hearing the mediator, it shall replace
such mediator by another mediator.

MEDIATION PROCEEDINGS: Procedure for Mediation

The parties shall mutually decide the appointment of a person as mediator failing which
the duty shall be discharged by the relevant Consumer Commission on the application of
the parties involved in the dispute. Section 79 states that process of mediation shall be
held in the Consumer Mediation Cell attached to the District Commission, the State
Commission or the National Commission, as the case may be. Where a consumer dispute
is referred for mediation by the District Commission or the State Commission or the
National Commission, as the case may be, the mediator nominated by such Commission
shall have regard to the rights and obligations of the parties, the usages of trade, if any,
the circumstances giving rise to the consumer dispute and such other relevant factors, as
he may deem necessary and shall be guided by the principles of natural justice while
carrying out mediation. The mediator so nominated shall conduct mediation within such
time and in such manner as may be specified by regulations.
MEDIATION PROCEDURE
Mediation shall be done in terms of ‘Principles of Natural Justice’ and fair play without
any need to follow rules contained in Civil Procedure Code 1908.
Section 80(1) provides that pursuant to mediation, if an agreement is reached between the
parties with respect to all of the issues involved in the consumer dispute or with respect to
only some of the issues, the terms of such agreement shall be reduced to writing and
signed by the parties to such dispute or their authorized representatives.
According to Consumer Protection (Mediation) Regulations 2020, the entire Mediation
process shall stand terminated on expiry of three months from the date of first appearance
before the mediator unless the time for completion of mediation is extended by the
Consumer Commission, in which case it shall stand terminated on expiry of such
extended time. The Agreement reached between parties is then sent to the Commission in
a sealed cover. If no agreement is reached the reasons stating so must be accordingly sent
to the Commission.
Section 80(2) states that the mediator shall prepare a Settlement Report of the settlement
and forward the signed agreement along with such report to the concerned Commission
Where no agreement is reached between the parties within the specified time or the
mediator is of the opinion that settlement is not possible, he shall prepare his report
accordingly and submit the same to the concerned Commission.
Recording Settlement and Passing of Order
According to Section 81(1) the District Commission or the State Commission or the
National Commission, as the case may be, shall, within 7 days of the receipt of the
Settlement Report, pass suitable order recording such settlement of consumer dispute and
dispose of the matter accordingly. Section 81(2) provides that where the consumer
dispute is settled only in part, the District Commission or the State Commission or the
National Commission, as the case may be, shall record settlement of the issues which
have been so settled and continue to hear other issues involved in such consumer dispute.
Where the consumer dispute could not be settled by mediation, the District Commission
or the State Commission or the National Commission, as the case may be, shall continue
to hear all the issues involved in such consumer dispute.
STATE TO BEAR MEDIATION EXPENSES including the fee of the mediator, costs of
administrative assistance, and other such expenses that may arise,
REFUND OF APPLICATION FULL APPLICATION FEE PAID TO CONSUMER COMMISSION
on Settlement before the Mediator [Rule 5, Consumer Protection (Mediation Rules) 2020
DUTY OF PARTIES TO MAINTAIN CONFIDENTIALTY OF PROCEEDINGS
The parties shall maintain confidentiality of the mediation proceedings and not share any
information, document, proposal, admissions made, views expressed during the
proceedings. The mediator shall not communicate with the Consumer Commission
during the pendency of mediation proceedings.
TERMINATION OF MEDIATION PROCEEDINGS shall occur within 3 months of first
appearance before the mediator unless period is extended by the Consumer Commission.
FINALITY OF MEDIATOR’s ORDERS in the sense that decision of the mediator shall be
binding on both the parties. No party can raise any dispute about the decision delivered
by the mediator. There is no provision for the making of appeal against the mediator’s
decision. The settlement finalized before the Mediator shall be enforceable against legal
representatives of the deceased party.
According to Section 80(2), either on failure of parties to reach Settlement or on
Mediator’s opinion no settlement is possible, he shall forward a Report to the
Commission whereupon the Consumer Commission shall pass suitable orders within 7
days of receipt of Mediator’s Report.

Role of Mediator
The most significant role of the mediator is to resolve the dispute between the parties. To
achieve that, the mediator has to understand the perspective of both the parties and try to
convince each party to understand the other’s point of view as well, while respecting his
(i.e., the party) own view. The mediator initially listens to each parties perspective and
tries to understand them and further help the parties by assisting them to understand the
other parties perspective, finding out the main dispute, trying to reduce the clash as much
as he can and finally helping both the parties to come into a mutual conclusion as much
as both can. The mediator’s main responsibility is to make the parties to reach a
conclusion with the objective of settlement of the dispute within a stipulated period.
 CHAPTER ELEVEN
PRODUCT LIABILITY UNDER THE LAW OF CONSUMER
PROTECTION

Introduction
Modern markets for goods and services have undergone drastic transformation due to the
advent of global supply chains, development of e-commerce, increased variety of
products, new delivery systems, etc. all these developments have rendered the consumers
vulnerable to newer forms of unethical and fraudulent practices including misleading
information. In India, the wake-up call for crafting formal law on ‘Product Liability’
arose after an air crash in India of the flight from Bombay to Banglore leading to the
death of 92 passengers and 4 crew members. The plane crash occurred due to its touching
ground at least 2300 feet before the beginning of runway. When the case came up before
the Karnataka High Court, the respondent objected to its jurisdiction on the ground of
absence of any law in India on product liability. Hence, Texas was suggested as a better
jurisdiction. However, the Karnataka High Court rejected the argument and proceeded to
decide the issue in accordance with common law ground of causation and negligence
rather than ‘product liability’. The same has been the approach in deciding Charan Lal
Sahu v. UOI (1989) SC. Much later, the Government of India introduced provisions on
Product Liability through the Consumer Protection Act, 2019. Thus, the law of Product
Liability has originated from the Common Law concept of Caveat venditor, i.e., ‘let the
seller beware".
Under the Sales of Goods law, product-liability is based on the principle of making
representations by the seller provided the consumer proves the existence of ’privity of
contract’ [Frederickson v. Hackney, 198 N.W. 806 (Minn. 1924). By virtue of rule of
‘Privity of Contract”, a buyer can sue the Seller for ”negligence” as the transaction has
been made by placing reliance on representations made by the sellers about the product.
In fact, the product liability claims had been made in India under the provisions of
various laws such as that of contracts, Sale of Goods, or the Indian Penal Code. In the
absence of any provision on product liability in the Consumer Protection Ac in 1986, the
situation did not witness any change in the situation. However, the inclusion of product
liability provisions in the 2019 Act has however brought about a sea change which has
been discussed in the present Chapter.

Meaning of Product
According to Section 2(33) of the Consumer Protection Act, 2019, the term “product"
means the following:
“Any article or goods or substance or raw material or any extended cycle of such
product, which may be in gaseous, liquid, or solid state possessing intrinsic value which
is capable of delivery either as wholly assembled or as a component part and is produced
for introduction to trade or commerce, but does not include human tissues, blood, blood
products and organ”.
INGREDIENTS OF THE DEFINITION OF ‘PRODUCT’:
On analysis, it becomes evident that the definition of the term ‘product’ is both inclusive
and exclusive as follows

A: INCLUSIVE PART OF DEFINITION provides as follows:

(i). Product may consist of an article, substance or raw material or any extended cycle of
such product,
(ii). It may be in any form such as gaseous, liquid or solid state,
(iii). It must possess ‘intrinsic value’, and
(iv). It must be capable of delivery in any of the following ways:
(a). As wholly assembled, or
(b). As a commercial part, or
(c) It may have been produced for introduction to trade or commerce
B: EXCLUSIVE PART OF THE DEFINITION provides that a product shall not include the
following:
(a). Human tissues,
(b). Blood, or Blood Products, and
(c) Organs

CONCEPT OF PRODUCT LIABILITY

According to Section 2(34) of the Act, the term ‘Product Liability’ shall mean “the
responsibility of a product manufacturer or product seller, of any product or service, to
compensate for any harm caused to a consumer by such defective product manufactured
or sold or by deficiency in services relating thereto.”

PARTIES LIABLE FOR PRODUCT LIABILITY

Legally, Product Liability shall devolve upon the following THREE Parties:
a) Product Manufacturer,
b) Product Seller,
c) Product Service Provider.

GROUNDS FOR PRODUCT LIABILTY

The Product liability shall arise from any harm caused to a consumer from:
a. Manufacture or Sale of Defective Product , or
b. Deficiency in Service relating to the Product.

It needs to be noted that in addition to the provisions on product liability under the
Consumer Protection Act, there are many sector specific laws forming part of the legal
framework governing the subject such as Sale of Goods Act 1930; Drugs Control Act
1950

DOCTRINE OF STRICT PRODUCT LIABILITY UNDER LAW OF TORTS

The Rule of Strict Product Liability has originated from the Doctrine of Strict Liability
which attaches liability without the need for the plaintiff to prove fault as had been the
case in English Case of Rylands v. Fletcher (1868) LR. In this case, the defendants got a
reservoir constructed on their land containing disused mines which were however not
properly sealed by the contractors. On filling water in the reservoir, it gushed through and
damaged the defendant’s mineshafts down below. The Court of Exchequer held the
defendant liable on the ground that if a person collects things which are likely to cause
mischief in case these escape, he shall be liable on the ground of Strict Liability as he
undertook construction without proper caution resulting in harm to the Plaintiff. But there
are certain exceptions to application of the rule of Strict liability such as fault on the part
of plaintiff, loss due to act of God or a third party, or where the act has occurred with the
consent of the plaintiff based on the rule ‘volenti non-fit injuria’. If there are no
exceptions to ‘strict liability’, it will be a case of ‘absolute liability’.
Thus, the law of tort (civil wrong) has reinforced the shortcomings in “the Principle of
Negligence” under the law of contract through imposition of the “Principle of Strict
Liability” against the seller to protect consumer interest. “Negligence” is the lack of
reasonable care by the seller as evidenced by defective design or failure to give
appropriate warnings about the manner of using the goods. The essential elements of
Strict Product liability under the Law of Torts are as follows:-
i. That the defendant was the manufacturer or the supplier,
ii. That the product was inherently defective,
iii. That the defect in the product existed when it left the defendant's possession,
iv. That the defect in the product caused the injury and damage to the Plaintiff or to
his property,
v. That the plaintiff's injury resulted from a use of the product that was reasonably
foreseeable to the defendant.
The Rule of Strict Liability will not apply in the absence of physical and monetary injury
i.e., where no blood has been spilled as held by Texas Court of Appeal in Indelco Inc. v.
Hanson Industries.
However, seller may escape liability by showing contributory negligence on buyer’s part,
subsequent alteration in the product, misuse of product, undue delay in contacting the
seller, etc. Sellers may also counter application of strict liability against them through
disclaimers on liability of the product or putting caps on their liability etc. For instance,
in MacPherson v. Buick Motor Co 1916, wooden wheel of the bike collapsed injuring the
plaintiff. The wheel was not manufactured by the defendant though it had fitted the same.
Defendant denied liability as the bike has been bought from a dealer. However, court
held the defendant liable on the ground of negligence even if it did not have privity of
contract with the plaintiff buyer.
Eventually, Strict Product Liability has evolved to make the Manufacturer, Seller, Service
Provider “Strictly Liable” regardless of intention or exercise of reasonable care for any
injury or property damages to the consumers, users and bystanders. In other words, for a
product liability claim under the law of consumer protection, it is sufficient for the
plaintiff to allege that product is defective without any need to prove that the
manufacturer has been guilty of breach of duty of care. Product liability is a statutory
liability without any limit on the extent of liability. Section 87 of the CPA has itself
envisaged some specific exceptions against product liability

NATURE OF PRODUCT LIABILITY UNDER CONSUMER PROTECTION ACT, 2019

Liability of Product Manufacturers and Product Sellers is a  ‘statutory Liability created
by the legislature through the inclusion of appropriate provisions in the Consumer
Protection Act, 2019 in respect of any defective product. Such strict liability arises from
the very fact of product being defective & there is no need to prove actual negligence by
the consumer. Such liability is derived from the concept of ‘Caveat Venditor’ which
obligates the vendor to beware and to compensate the buyer for any harm caused to him
by the product. Product liability shall attach to both ‘goods’ as well as ‘services’ provided
in relation to the goods supplied, unless specifically excluded by the Central Government
by means of a notification.
EXCLUSIONS FROM PRODUCT LIABILITY shall include the following:
a. Human tissues, blood, blood products and organs,
b. Services rendered free of charge or under a contract of personal service.
However, free services attached to the product will fall within the purview of product
liability claim
SCOPE OF PRODUCT LIABILITY UNDER CONSUMER PROTECTION ACT
Product Liability in terms of the Act is about the “Legal liability of a Company or
Manufacturer to compensate the buyer of a product for harm/injury suffered by him from
use of a defective good or from deficiency in service”.
Section 2(22) has defined ‘harm’ to mean the following:
a. Damage to any property, other than the product itself,
b. Personal injury, Illness or Death,
c. Mental agony or Emotional Distress alongside personal injury or illness, or
damage to property, or
d. Any loss of Consortium or Services or other loss resulting from a harm referred to
in sub-clauses (i) to (iii).
EXAMPLES OF PRODUCT LIABILITY
A person bought a car seat for his/her child, but the safety straps became loose while the
child was in the seat while the car was in motion causing him injuries due to his getting
separated from the seat. For the injury, the car seat company may be held liable for
“design defect” and he would need to recall the product.
However, if the injury occurred due to malfunctioning of a buckle in the seatbelt due to
the manufacturer having substituted a good quality buckle for a cheaper one, the product
liability shall be that of the “manufacturer” on the ground of a manufacturing defect.
In addition, if there was no clear warning by the manufacturer that the child must be
carefully seated so that it does not slip out of the belt in the event of an accident or
sudden impact, then the manufacturer could be liable for faulty warning.
Under the Act, a breach of warranty in case of a product would be called a factor
responsible for causing ‘harm’.
EXCEPTIONS TO ‘HARM’ FOR THE PURPOSE OF PRODUCT LIABILITY
Harm for the purpose of product liability shall not include the following:
a. Any Harm caused to a product itself, or
b. Any Damage to the property on account of breach of warranty conditions or,
c. Any Commercial Loss or Economic Loss,
d. Any Direct, Incidental or Consequential Loss relating thereto

INJURY [Section 2(23)

Section 2 (23) has defined "injury" to mean ‘any harm whatever illegally caused to any
person in body, mind or property.

PARTIES LIABLE FOR PRODUCT LIABILITY

Under the Act, Product Liability shall devolve upon the following THREE Parties
namely: Product Manufacturer, Product Seller, and Product Service Provider. The
Product liability shall arise from any harm caused to a consumer from either of the
following:
(i) Defective Product Manufactured or Sold, or
(ii) Deficiency in Service relating to the product.
As to who shall be held liable in any given case under Section 2(35) of Consumer
Protection Act, 2019 will depend on the facts and circumstances of each case for
claiming compensation for the harm caused.

1: Liability of Product Manufacturer [Section 2(36)]

Section 2(36) has defined ‘product manufacturer’ to include every party connected with
the sale process within the scope of the definition. Accordingly, ‘product manufacturer’
has been defined to mean a person who: 
(a) makes any product or parts thereof; or 
(b) assembles parts thereof made by others; or 
(c) puts or causes to be put his own mark on any product made by any other person; or 
(d) makes a product and sells, distributes, leases, installs, prepares, packages, labels,
markets, repairs, maintains such product or is otherwise involved in placing such product
for commercial purpose; or 
(e) designs, produces, fabricates, constructs or re-manufactures any product before its
sale; or 
(f) being a product seller of a product, is also a manufacturer of such product.

A Product Manufacturer shall be liable for the following:

A: Manufacturing Defect as in Greenman v Yuba Power Products Inc 1963 in which the
plaintiff bought a gadget along with some attachments to use it as a lathe. While using, a
piece of wood flew towards his head causing serious injuries. He sued both the retailer
and the manufacturer for breach of warranty and the Court ruled in favour of the plaintiff
on the ground of ‘defect in the design’.
CASE: Greenman v. Yuba Power Products, Inc. 1963 SC of California
FACTS:
In it, the plaintiff bought a gadget called ''Shopsmith,'' which was a combination power
tool that could be used as a saw, drill, and wood lathe. The plaintiff watched a
demonstration about the manner of working of Shopsmith which was done by a retailer.
The Plaintiff buyer also studied the brochure prepared by the Manufacturer. Eventually,
plaintiff purchased the machine along with necessary attachments to use Shopsmith as a
lathe. After working with the lathe several times without difficulty, one day the machine
suddenly threw a piece of wood which stuck him in the head inflicting serious injuries.
Plaintiff sued both the manufacturer and the retailer for product liability on the ground of
defect.
ISSUE: Is the Manufacturer liable for compensating the Plaintiff despite that plaintiff did
not serve a timely notice within the period of warranty?
JUDGMENT:
Plaintiff produced evidence to show that his injuries were the result of defect in design
and construction of the instrument called ‘Shopsmith’. The contention of the Defendant
was that the Plaintiff had failed to give him notice of breach of warranty within a
reasonable time as provided in the Civil Code. The Court rejected this argument as
inappropriate in an action by injured consumers against manufacturers. Argument of
expiry of reasonable time was held to be an unfair “booby-trap” for the unwary. Even if
Plaintiff’s claim for breach of warranty were time- barred, he will still be helf liable on
the ground of Strict Liability. The following were the grounds for holding the
Manufacturer liable:
i. Manufacturer has placed a product on the market,
ii. He was aware that the product will be used without inspection for defects,
iii. There exited a defect, and
iv. There has resulted an injury.
Thus, the Supreme Court of California held liable every entity involved in the Chain of
Distribution such as Manufacturer, Distributor, Retailer and so on for the injuries caused
to the Plaintiff due to defect in the goods. It needs to be noted that in addition to the
provisions on product liability under the Consumer Protection Act, there are many sector
specific laws forming part of the legal framework governing the subject such as Sale of
Goods Act 1930; Drugs Control Act 1950

B: Defective Design arising from the following:

a. Non-conformance i.e., deviation from to Manufacturing Specifications,
b. Non-compliance with Express Warranty given by manufacturer regardless of
whether the manufacturer was not negligent, fraudulent in making such express
warranty.
C: Failure to provide adequate instructions of correct usage to prevent any harm or
any warning arising from improper or incorrect usage.

CASE: Maruti Udyog v Susheel Kumar Gabrotra 2006 SC

FACTS:
The appellant had purchased a Maruti Car from the respondent. After its delivery, he
noticed that the clutch of the car was not functioning properly and created jerks besides
unusual noises in the engine. Upon inspection by an engineer, he was advised that the
engine will begin to function properly after covering certain mileage. But no change
could be found, and the defect continued. At that, he filed a case against the seller and the
manufacturer.
JUDGMENT: Court ordered the replacement of the car on the ground of manufacturing
defect. Moreover, the car was in the warranty period.

2: LIABILITY OF PRODUCT SERVICE PROVIDER [Section 85]

Under Section 2 (38), term ‘Product Service Provider’ means a person who provides a
service in respect of any product. Section 85 has made the Product Service Provider
liable for the following:
a. Providing service which was faulty/ imperfect / deficient / inadequate in quality,
nature or manner of performance as required under any law or in terms of any
contract,
b. Committing an act of Omission / Commission/ Negligence,
c. Conscious withholding of any information which led to a harm,
d. Failure to issue adequate instructions or warnings to prevent harm.

e. Non-conformance of Service with Express Warranty or the terms and conditions

mentioned in the contract.

3: LIABILITY OF PRODUCT SELLER WHO IS NOT A MANUFACTURER

[Section 86]
According to Section 2(37), "product seller", in relation to a product, means a person
who, in the course of business, imports, sells, distributes, leases, installs, prepares,
packages, labels, markets, repairs, maintains, or otherwise is involved in placing such
product for commercial purpose and includes-
(i) a manufacturer who is also a product seller; or
(ii) a service provider, but does not include-
(a) a seller of immovable property, unless such person is engaged in the sale of
constructed house or in the construction of homes or flats,
(b) a provider of professional services in any transaction in which, the sale or use of a
product is only incidental thereto, but furnishing of opinion, skill or services being the
essence of such transaction,
(c) a person who-
(i). acts only in a financial capacity with respect to the sale of the product,
(ii). is not a manufacturer, wholesaler, distributor, retailer, direct seller or an electronic
service-provider,
(iii). leases a product, without having a reasonable opportunity to inspect and discover
defects in the product, under a lease arrangement in which the selection, possession,
maintenance, and operation of the product are controlled by a person other than the
lessor.
A Product Seller may be liable in a product liability action in following cases:
 i. It has substantial control over the designing, testing, manufacturing, packaging or
labelling of a product that caused harm,
ii. It has altered or modified the product and such alteration / modification was a
substantial factor in causing the harm,
iii. Product does not conform to the express guarantee given by the product seller
independently of that given by the manufacturer,
iv. Product has been sold by the product-seller, but identity of its manufacturer is
either not known, or service of notice/ legal process/ warrant cannot be affected
on the Product Manufacturer, or the Product Manufacturer is either not subject to
Indian law or an order cannot be enforced against the product manufacturer,
v. There has been failure of exercise of reasonable care by the product seller in
assembling, inspecting or maintaining such product; or
vi. Failure to pass on the warnings/ instructions of the product manufacturer
regarding the dangers involved in improper usage of the product while selling
such product and such failure was the proximate cause of the harm.

FOUR TYPES OF PRODUCT LIABILITY CLAIMS

Under Section 84 of the CPA, a Consumer can bring claims against the following 4-types
of defects in the product:

1: Manufacturing Defects
These arise from missing any part due to negligence during the manufacturing process
such as a mistake in the assembly line causing an automobile to malfunction. A
manufacturing defect’ occurs when "the product departs from its intended design even
though all possible care was exercised in its preparation and marketing”. If a poorly
manufactured product leaves the factory and causes injury to someone while being used
for any of its intended purposes due to manufacturing defect, the manufacturer shall be
held liable. A victim of manufacturing defect may recover compensation for hospital
bills, continuing medical care, loss of wages, etc. It does not matter that the manufacturer
was careful when designing products, choosing materials, creating the assembly line, and
issuing quality assurance guidelines. Liability for ‘manufacturing design’ is based on
‘Malfunction Doctrine’ i.e., the injury has resulted from manufacturing defect ruling out
any other factor such an accident happening despite all things begin alright, it may be
attributed to malfunction of brakes.
In India, Manufacturing or Design Specifications are regulated by special legislations in
limited categories of products such as the following:
i. Bureau of Indian Standards Act 2016 and the Rules and the Notifications issued
thereunder have prescribed minimum standards for some products like Cement,
Electrical Appliances, Processed Foods etc.
 ii. Drugs and Cosmetics Act 1950 and Rules thereunder govern Pharmaceutical
products.
Where certain types of goods are not mandatorily regulated, guidance may be sought
from specific legislations to ascertain the standards to be followed by manufacturers,
The excuse that a product has complied with the Standards included in the
Manufacturer’s own Manual may not lead to inference that such product is incapable of
causing harm. The liability for manufacturing defects falls in the category of ‘Strict
Liability’ as held in Greenman v. Yuba Power Products, Inc 1963, the California SC
regardless of exercise of great care though US Courts have held to the contrary [In re
DePuy Orthopaedics Inc. Pinnacle Hip Implant Product Liability Litigation, Texas
District Court 2017].

CASE ON MANUFACTURING DEFECTS: JOHNSON & JOHNSON’s HIP IMPLANT

J&J’s Acetabular Surface Replacement (ASR) hip implant was sold by DePuy in India,
the wholly-owned subsidiary of Johnson and Johnson. DePuy issued a voluntary recall of
its ASR™ XL Acetabular Hip System and DePuy ASR™ Hip Resurfacing System, and
globally recalled these implants in 2010, including from India. It was done after a British
Study found the models to have higher failure rates, which means there was a higher
chance of patients requiring a revision surgery to replace them. A Health Ministry Expert
Committee set up in 2017 found the design of hip implants to be faulty making these
potentially toxic to customers. Eventually, Company recalled these implants from 4700
patients and also agreed to pay compensation from Rs 33 lakhs to 1.3 Crore depending on
age etc. Compensation was however paid only to those who had approached the Courts
since there is no legal provision for manufacturer liability for manufacturing defects.

2: DESIGN DEFECT
It result in an entire set of product becoming incapable of performing the required
functions. This does not arise from any mistake during the manufacturing stage but while
creating the blueprint of the product. A company’s liability for a design defect arises
when there is a foreseeable risk posed by the product while it was being manufactured for
its intended purposes. In a case based on design defect, the plaintiffs may have to show
that the “risk” could have been reduced or avoided by the adoption of a reasonable
alternative design and doing so was:
i. Technically Feasible i.e., manufacturer had the ability to do so;
ii. Economically Feasible i.e., the cost of alternative design would not have been
costly based on comparative cost-benefit analysis of comparison of additional cost
of alternative design with estimated costs of damage arising from faulty design
after factoring in medical cost and cost of lawsuits against the manufacturer; and
iii. Workability of Product i.e., on adoption of the modification, there would not have
been any adverse effect on its performance.
Consumer Commissions while determining issues relating to defect in design, etc., must
bear in mind whether minimum standards laid down in relevant laws have been observed
by the concerned parties. If the defect is due to a design flaw and not a manufacturing
defect, the court may apply the rules of ordinary negligence than ‘Strict Liability.
In Ji Chang Son, et al. v. Tesla, Inc 2017 [California Central Court], a software defect
was alleged to cause unintended acceleration, and eventual crash. The plaintiff alleged
that it was manufacturer’s legal duty to create ‘fail-safe’ mechanism that would stop the
acceleration. Tesla attributed it to human error and protested against any strict liability.
The Court however, dismissed the claim on the ground that safety features have been
designed to increase safety but not to avoid accident and that the Plaintiff had not made
any mention of design defect in its Complaint.
It may be noted that in case of defective design, some level of negligence must be shown
for the right of compensation to accrue.
Types of Claims against Design Defect
There may be the following types of Claims on the ground of ‘design defect’:
a. Negligence Claim based on Conduct of Manufacturer i.e., knowledge on the
part of manufacturer at the time of manufacture of product about the likely risks
associated with it.
b. Strict Liability Claim based on the theory that a Manufacturer shall be liable
from the time he places a product in the market which poses unreasonable risk
such as knives or fireworks so that he may held liable regardless of his being
careful.
c. Consumer Expectation Test is relevant where the risk posed by a product
exceeds the expectations of an ordinary consumer though there may be wide
variations in such expectations.

3: MARKETING DEFECTS
Marketing Defects arise from negligence of the Seller while selling the product in the
market such as not giving proper instructions to the consumer on how to exactly use the
product whereby customer incurs damage. Manufacturers and Service Providers are
responsible for providing inter alia written and oral statements that do not detract from
the quality or safety of the offering. They are also responsible for ensuring that the
written or oral statements made by them do not confuse the customer and lead him into
doing something that may result in injury, damage, or loss. Under Product Liability, a
consumer may hold the manufacturer, Selelr or Service Provider liable for any damages
sustained by him as a result of things that a manufacturer or producer have either said or
not said. Some of these may include the following: 
 Failure to warn i.e., informing the consumer through labels etc about the risks
involved in using the product, side effects, precautions to be taken etc.
 Inadequate instruction for use,
 Misinformation i.e., providing information that does not adequately reflect the
manner of use and precautions to be taken.
Liability may be fixed against those writing instruction manual, those fixing labels,
marketing personnel, etc
4: BREACH OF WARRANTY
Breach of Warranty occurs when the product fails to last and function properly during the
stated period of warranty. Under Product Liability Law, breach of warranty claims may
arise when manufacturers, suppliers, or retailers commit breach of their express or
implied warranties given to the consumer. Liability will arise even when a product is not
unreasonably unsafe or has failed to live up to a safety standard expressly or impliedly
promised by the manufacturer or seller. Express warranties mean warranties agreed upon,
stated or published outright. Implied” warranties are those introduced by law on its own
providing that products will perform as would reasonably be expected  and where the
seller knew that a consumer needed a product for a specific purpose

WHO MAY MAKE PRODUCT LIABILITY CLAIM?

A Product liability claim before a Consumer Commission may be made by any of the
following:
a. The ‘Consumer’ to whom the goods are sold except for commercial buyers but
including those who have bought goods for earning livelihood or for for self-
employment,
b. Any recognized Consumer Association,
c. One or more consumers, where there are numerous consumers having the same
interest, with the permission of the consumer forum deciding the case; (class
action), or
d. Central Government,
e. CCPA on its own or on receipt of complaint wherein Director General shall
conduct the investigation, or
f. State Government suo moto.

In the case of foreign product manufacturer (exporter) who is not subject to Indian law,
the Indian party (importer) may make appropriate arrangements with its counterpart to
indemnify the consumer in India against product liability claim.

DETERMINATION OF PRODUCT LIABILITY IN CASE WHERE SEVERAL

MANUFACTURERS ARE ASSOCIATED WITH MANUFACTURE OF A PRODUCT

It has been held in Mrs. Rashmi Handa and Ors. v. OTIS Elevator Company (India) Ltd
& Ors I (2014) CPJ 344 (NC) that the apportionment of liability in case of multiple
manufacturers would be determined on a case-to-case basis. In such cases, the
Commission would examine which component caused the defect, and whether adequate
instructions/warnings were provided for proper use. Such approach would be relevant in
cases involving white goods and automobiles where different components are
manufactured by different manufacturers. In previous product liability cases where
multiple parties were involved (though not multiple manufacturers), the courts have tried
to determine which party was responsible for the defect in the goods.
However, if liability is not liable to be fixed onto any one particular party, all parties may
be held jointly and severally liable [Bhopal Steels v Govind Lal Sahu & Others III (2008)
CPJ 89 NC.

PRODUCT LIABILITY IN ONLINE SHOPPING

With the advent of online shopping consumers are getting more defrauded. Orders are
placed online yet product delivered is different from that ordered or the product otherwise
caused harm to the consumer due to supplier’s failure to give warnings on the product
body. It is true that in online shopping the liability on the defendant increases since the
consumer had no chance of examining the product beforehand except for depending upon
the seller that the product sold will work properly and will not cause any harm to the
consumer. But the problem in online shopping is that it becomes difficult to hold the
opposite party liable. In the case of online shopping, the product deliverer is also to be
considered.

DEFENSES OF PRODUCT SELLER AGAINST PRODUCT LIABILITY CLAIMS

[Section 87]
Product Seller can raise following defenses in case of product liability claim [Section 87]:
a. The complainant is not a ‘consumer’ under the CPA 2019 as the complainant has
either obtained the goods for resale, commercial purposes or has availed a product
free of charge.
b. Even if the product was defective, no ‘harm’ has been caused to a consumer from
the use of the defective product
c. There has been misuse of the product or it has been altered or modified at the time
of the harm.

DEFENSES AVAIABLE TO PRODUCT MANUFACTURER AGAINST

PRODUCT LIABILITY CLAIMS [Section 87]
Product Manufacturer shall not be liable for failure to provide adequate warning or
instructions in the following cases:
a. The product was purchased by an employer to whom warnings or instructions has
been provided,
b. The product was sold as a component or material to be used in another product
and necessary warnings or instructions were given, and the harm had been caused
by use of the end product in which such component or material was used.
c. The product was liable to be used by or under the supervision of an expert who
had been given necessary warnings or instructions for usage of such product
d. The complainant was under the influence of alcohol or any prescription drug
which had not been prescribed by a medical practitioner While using the product,
e. Such instructions or warnings are obvious or commonly known to a
user/consumer which he ought to have known in view of characteristics of the
product.
 CHAPTER TWELVE
E-COMMERCE UNDER THE LAW OF CONSUMER PROTECTION

INTRODUCTION
Electronic commerce, commonly abbreviated as e-commerce, is the action of buying and
selling products or services through electronic information systems such as computer
networks particularly the World Wide Web, or internet. A variety of technologies are
used to facilitate e-commerce including electronic funds transfer (EFT) which facilitates
the electronic exchange of money, online transaction processing (OTP) which handles the
data entry and retrieval for transaction processing and electronic data interchange (EDI)
which is responsible for processing orders, warehouse stock control and order tracking
(Turban, et al., 2009).

CONCEPT OF E-COMMERCE
E-Commerce refers to a mechanism that mediates transactions to sell goods and services
through electronic exchange. Foundation of e-commerce and its growth is greatly
dependent on building up trust between online buyers and sellers which is largely a
function of enactment of appropriate laws that may contribute to trust enhancement. Law
promotes e-commerce by working to reduce trust deficit i.e., vulnerability of a party to
exploitation in a contractual relationships. Lack of trust between the contracting parties
may arise for several reasons such as weak or one-sided contract, low legal protection,
possibility of business failure, efficacy of technological solutions, privacy protection,
transaction transparency, delays in delivery or payment or both, etc. World Economic
Forum’s Guidelines 2019 have encouraged various countries to frame appropriate
regulations to ensure data privacy, safety of online transactions and building up trust and
thereby to contributed to popularizing e-commerce. In India, the Consumer Protection (E-
commerce) Rules, 2020 have been formulated to address the e-commerce challenges.

Section 2(16) of the Act has defined ‘e-commerce’ as the buying or selling of goods or
services including digital products over digital or electronic network.

The term ‘electronic service provider’ has been defined under Section 2(17) of the Act to
mean ‘a person who provides technologies or processes to enable a product seller to
engage in advertising or selling goods or services to a consumer and includes any online
market-place or online auction sites’.

E-COMMERCE ENTITIES
Consumer Protection (E-Commerce) Rules, 2020 have been enacted under the Consumer
Protection Act 2019 to apply to all types of e-commerce entities including those which
though not established in India, systematically sell goods and services to consumers in
India. The object of these Rules is to regulate the operations of e-commerce entities in
India in a fair and transparent manner and to protect the rights and interest of consumers.
These Rules are applicable to the following types of E-Commerce Entities, namely:
Marketplace Entities, and Inventory-based E-Commerce Entities, which provide digital
products or services to the consumer.
A Marketplace E-Commerce Entity means an e-commerce entity which provides an
information technology platform on a digital or electronic network to facilitate
transactions between buyers and sellers such as Amazon, Flipkart.
Inventory based E-Commerce Entity’ is an e-commerce entity which owns inventory
of goods & services and sells goods and services directly to the consumers and includes
single brand retailers and multichannel single brand retailers.
E-commerce entity will also include the following:
(a) Any entity engaged by an e-commerce entity for the fulfilment of orders,
(b). Any Related Party as defined under the Companies Act, 2013, of an e-commerce
entity.
Thus, the e-commerce entities shall include all categories of entities such as Sellers,
Distributors, and Logistic Partners engaged by the above-mentioned Operators to help
execute orders placed by customers on electronic portal or mobile based application.

APPLICABILITY OF E-COMMERCE RULES 2020

E-Commerce Rules are applicable to:
(a) All goods and services bought or sold over digital or electronic network including
digital products,
(b) All models of e-commerce, including marketplace and inventory models of e-
commerce,
(c) All e-commerce retail, including multi-channel single brand retailers and single brand
retailers in single or multiple formats; and
(d) All forms of unfair trade practices across all models of e-commerce.

OBJECTIVE OF E-COMMERCE RULES

E-Commerce Rules require the e-commerce entities to adhere to the guidelines contained
therein. These guidelines are aimed at regulating inter-alia various matters such as price
manipulation; compulsory display of details related to country of origin of the product,
return, refund, exchange, warranty, delivery and shipment; assurance of quality control to
enable the consumers make an informed decision at a pre-purchase stage. The overall
object of the Rules is to protect the rights and interest of the consumers and prevent
unfair trade practices, fraudulent transactions, and sale of counterfeits. Non-compliance
with the E-Commerce Rules by any e-commerce entity will be construed as violation of
the Consumer Protection Act, 2019 and will attract penal provisions contained therein.

A: OBLIGATIONS OF E-COMMERCE ENTITIES

An E-Commerce entity shall be organized as a company under the relevant Companies

Act of 1956 or 2013 or be incorporated as a foreign company as per the provisions of
Companies Act, 2013, or it may be a company with an office, branch or agency outside
India owned or controlled by a person resident in India as per the provisions of the
Foreign Exchange Management Act, 1999.

(i) Obligation to require Sellers listed on its platform to give an undertaking to

disclose certain information:
Every marketplace e-commerce entity shall obtain an undertaking from the Sellers to
ensure giving of accurate descriptions, images, and other content pertaining to goods or
services on their platform which shall corresponds with the appearance, nature, quality,
purpose and other general features of such good or service . The details of the information
to be provided by these Sellers shall inter alia include, business name, whether registered
or not, payment methods, refund, exchange, warranty, guarantee, delivery, grievance
redressal, main parameters for determining ranking of goods, etc.

(ii). Duty to disclose terms and conditions governing relationship of E-Commerce

Entity with the Sellers and differentiated treatment which it gives or might give to
sellers of goods and services of the same category.

(iii). Duty to maintain record of all relevant information allowing for identification of
Sellers who have repeatedly offered goods or services that have previously been removed
or access to which has been disabled.
(iv). Not to refuse to take back goods or withdraw services, refuse to refund if goods are
defective, spurious, or services are deficient or not matching the features advertised, or
goods or services are delivered late.
(v). To display the following information about the Seller on its platform or website:
(a). All legally prescribed contractual information such as total price in single figure of
any good or service, along with the breakup price for the good or service, showing all the
compulsory and voluntary charges such as delivery charges, postage and handling
charges, conveyance charges and the applicable tax, as applicable all mandatory notices
and information provided by applicable laws, and the expiry date of the good being
offered for sale, where applicable,
(b). All relevant details about the goods and services offered for sale by the seller
including country of origin which are necessary for enabling the consumer to make an
informed decision at the pre purchase stage the name and contact numbers,
(c) Designation of the grievance officer for consumer grievance redressal or for reporting
any other matter,
(d). Name and details of importer, and guarantees related to the authenticity or
genuineness of the imported products,
(e) Accurate information related to terms of exchange, returns, and refund including
information related to costs of return shipping in a clear and accessible manner relevant
details related to delivery and shipment of such goods or services, and any relevant
guarantees or warranties applicable to such goods or services.
(f). Not to impose any cancellation charges on the consumers unless similar charges are
also borne by such entity, if they cancel the purchase order unilaterally for any reason.
Other Duties:
a. To have a prior written contract with the respective e-commerce entity,
b. To appoint a grievance officer for consumer grievance redressal and ensure that
the grievance officer acknowledges the receipt of any consumer complaint within
forty-eight hours,
c. To redresses the complaint within one month from the date of receipt of the
complaint,
d. To ensure that the advertisements for marketing of goods or services are
consistent with the actual characteristics, access and usage conditions of such
goods or services,
e. To provide to the e-commerce entity Seller’s legal name, address of its
headquarters and all branches, the name and details of its website, its e-mail
address, customer care contact details such as fax, landline, and mobile numbers
and where applicable, its GSTIN and PAN details

B: OBLIGATIONS OF SELLERS LISTED WITH MARKETPLACE-ENTITY

(i) No adoption of Unfair Trade Practices in the course of offer on e-commerce platform.
(ii). Not to falsely represent itself as a consumer and post reviews on goods or services or
misrepresent the quality of goods/services.
(iii). Not to refuse to take back goods or withdraw or discontinue services purchased or
agreed to be purchased or refuse to refund consideration, if paid, if such goods or services
are defective, deficient or spurious, or if such goods or services are delivered late from
the stated delivery schedule, other than late delivery due to force majeure event.
(iv). To have a written contract with the respective marketplace e-commerce entity on
whose platform they propose to undertake or solicit sale or offer their goods or services.
(v). To ensure that the advertisements for marketing of their goods or services are
consistent with the actual characteristics, access and usage conditions of such goods or
services.
(vi) To provide e-commerce entity with their legal name, geographic address of its
headquarter and branches, the name and details of its website, e-mail address, customer
care contact details, its GSTIN and PAN details.
C: DUTIES OF INVENTORY E-COMMERCE ENTITIES:

i. To certify that the inventory of goods or services dealt with are owned by the
entity operating the platform and it is liable for the goods or services available
therein.
ii. To provide information relating to return policy, delivery and shipment, payment
methods, mandatory notices under applicable laws, total price of the goods or
services offered along with their break-up, consumer grievance redressal
mechanism, etc. to enable the consumer to make an informed decision before
purchasing the goods or services.
iii. Not to falsely represent as a consumer and post reviews about goods and services
or misrepresent quality,
iv. To ensure that the advertisements for marketing of goods or services are
consistent with the actual characteristics, access and usage,
v. Not to refuse to take back goods, or withdraw or discontinue services purchased
or agreed to be purchased or refuse to refund consideration, if paid, if such goods
or services are defective, deficient or spurious, etc.

PROHIBITION ON FLASH SALES BY E-COMMERCE ENTITIES

MEANING OF FLASH SALES

A flash sale is a short-term discount or promotion on products offered by ecommerce
stores, typically lasting for less than 24 hours. The goal of a flash sale is to entice online
shoppers to impulse buy, increase brand awareness and customer loyalty, and compel
shoppers to check out other non-sale products listed on the site. A sale would be termed a
flash sale only if it is operational for a pre-determined period, on selective goods or
services or otherwise, to draw large number of consumers. Benefits of Flash Sales consist
in their contribution in help ecommerce firms get rid of excess inventory and stabilize the
existing inventory. Generally, flash sales attract large audience to the site and incentivize
viewers to purchase non-sale products, as well.
There is a prohibition on Mis-selling which means a deliberate misrepresentation of
information by e-commerce entities about such goods or services as suitable for the user
who is purchasing them
CASE: Amazon Sellers Pvt Ltd v. Vishwajit Tapia Nabha, Punjab State Consumer
Commission 2019

FACTS:
The Complainant was supplied with an old mobile instead of a new one as per the order
and the vendor refused to replace it. Appellant refused to take any action on the ground
that it was merely an online marketplace provider where independent third-party sellers
can list their products for sale. Being only a facilitator, it has no control on the transaction
which takes place on its portal. The Contract of Sale on the website is a bipartite contract
b/w the Seller and the Customer. Complaint is liable to be dismissed on the ground of
misjoinder of parties. Moreover, under the terms of sale, the jurisdiction is vested in the
Courts at Delhi, complaint was not made within 15 days, even on personal visit the
customer simply asked for replacement of charger etc. District Forum has partly held in
favour of the Complainant. Matter then came up in Appeal before the State Commission.

ISSUE:
Are the contentions of the Appellant that it is merely a facilitator of online transactions
which have actually taken place between the listed vendor and the customer for which no
liability can attach to him?

JUDGMENT: The mobile booking was done on the Appellant’s website at Patiala and
mobile was delivered to him at Nabha and hence the District Forum has the jurisdiction
on the Complaint.
Commission agreed that the Appellant is an Intermediary and has no role in the
harassment and causing of loss to the Complainant. Online marketplace Company earns
revenue each time a consumer clicks and visits on its website in accordance with the
terms and conditions by the online portal company and the sellers for a consideration. It
is the duty of the intermediary to verify the bona fides of the seller selling products.
Intermediaries has been defined under Section 2(w) of the IT Act, 2000 and the
IT(Intermediary Guidelines) Rules, 2011 providing Safe Harbour Protection subject to
restrictions mentioned in Section 79 (2) and (3) of the IT Act. Online marketplace
operator portals are responsible for infringements carried out by the users on their
platform. In the instant case, the products sold are stored and sold by the online platform
provider obliging it to ensure that products sold are genuine.
The sellers sell products on Amazon in two ways i.e., by listing, packing, shipping and
deliveing directly to consumers; and by oping to list on Amazon using "Fulfilled by
Amazon" (in short "FBA") service. In the instant case, the Seller has opted for the Second
alternative of (FBA) service wherein Amazon does not break open the seal of the product
but has a mechanism to ensure that the products are genuine. In this case, the Appellant
did not present itself leading to case to be decided ex parte yet its liability arises from
being a representative/ agent of the Seller, not merely an intermediary, and is also liable
for contributory infringement. National Commission has held in Emerging India Real
Assets Pvt. Ltd. & Anr. Vs Kamer Chand & Anr. 2016 that it was bounden duty of the
facilitator to ensure that goods sold through any individual are manufactured as per
quality standard so that if the goods found not up to the mark, online portal through
which goods were purchased, cannot escape its liability. Appellant was fined with Rs
7375 besides order to collect the faulty mobile from Respondent’s residence and then
deliver a new one instead.
CASE 2: HELLO TRAVELS v. HARISH JAIN 2020 NCRDC

FACTS:
The Complainant had booked a tour package for Rs. 61,200/- with the Travel Agency
through the Travel Portal by paying an advance of Rs. 20,000/ but failed to receive the
hotel vouchers and other documents. Despite complaint. Neither was advance money
refunded nor was his mail attended upon. District Forum decided against the Appellant,
and the Appeal to the State Commission was dismissed. Appeal was then made to the
National Commission.
ISSUE:
Is there any flaw in the decisions of the two forum?
JUDGMENT:
National Commission did not find any flaw in the decisions of the forum below and held
the Appellants guilty of deficiency in service, unfair trade practice and subjecting the
respondent to unnecessary litigation. It ordered the Travel Agency and the Travel Portal
to jointly and severally, pay Rs. Ten Thousand each a besides compensation of Rs 7000
for litigation expenses and with further compensation of Rs 10,000. The travel portal
raised objection for being made jointly liable with the Travel Agency on the ground of
absence of privity with the Complainant. Rejecting the argument, the National
Commission held the Travel Portal did not provide its service gratis to various travel
agencies listed with it.
A customer availing services of any travel agency listed with the Portal will assume that
the latter must have done due diligence while allowing listing to various travel agencies.
The Travel Portal would be both responsive as well as responsible for deficient services
and / or unfair and deceptive acts committed through its website. Both the Travel Portal
and the Travel Agency are liable for deficiency in service, and unfair trade practice under
the relevant sections of the COPRA. Accepting an advance of Rs. 20,000/-, then reneging
on honouring its commitment, wrongly and unlawfully retaining the advance, ignoring
the correspondence and not addressing the Complainant's righteous protests promptly and
dutifully, are decidedly unfair and deceptive. On failure to comply, the District Forum
was ordered to execute the orders and to impose penalties as provided under the Act.