Important Terms

Miss Kalyani Abhyankar

MISSION VISION CORE VALUES

CHRIST is a nurturing ground for an individual’s Excellence and Service Faith in God | Moral Uprightness
holistic development to make effective contribution Love of Fellow Beings
to the society in a dynamic environment Social Responsibility | Pursuit of Excellence
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Consumer Disputes
• Section 2(8) "consumer dispute " means a
dispute where the person against whom a
complaint has been made, denies or disputes
the allegations contained in the complaint;
• Illustration
• A filed a complaint against B for deficiency of
service and B denies the allegation, it forms a
consumer dispute in that case.
• In the above illustration, if B admits the
allegations, there is no consumer dispute as
allegations have been admitted by B.

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Direct Selling
• Section 2(13) of the Consumer Protection Act
• Section 2(13) "direct selling" means marketing,
distribution and sale of goods or provision of
services through a network of sellers, other than
through a permanent retail location;
• Central Government is empowered under CPA
2019 , Section 94 to take such measures as it is
necessary, to protect the interests and rights of
the consumers and also make rules in this
regard under Section 101(2)(zg).

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Section 2(16)- Ecommerce

• (16) "e-commerce" means buying or selling
of goods or services including digital
products over digital or electronic network;
• Eg Amazon, Flipkart, Snapdeal etc
• Buying goods through digital network.
• Or Hiring services over electronic network.
Eg Ola, Zomato,
• Department of Consumer Affairs has issued
Ecommerce Guidelines 2020.

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Illustrations
• A trader accumulates his stock of food
grains in order to increase the price of the
grains in the market so that he can sell it at
a higher price.
• In order to buy a television from trader X,
one needs to buy a table first.

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Endorsement
• Section 2(18) "endorsement", in relation to
an advertisement, means— (i) any message,
verbal statement, demonstration; or (ii)
depiction of the name, signature, likeness or
other identifiable personal characteristics of
an individual; or (iii) depiction of the name
or seal of any institution or organisation,
which makes the consumer to believe that it
reflects the opinion, finding or experience of
the person making such endorsement;

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• The CCPA has the power to bring the person advertising the product or
service, i.e. the endorser, under the penal provisions of the New Act for
false or misleading advertisements. An advertisement may be false or
misleading if the advertisement falsely describes a product or service,
or gives a false guarantee that misleads consumers as to the nature or
attributes of the product or service, or if the advertisement deliberately
conceals important information about the product or service.
• In October 2017, the Consumer Complaints Council formed by the
Advertising Standards Council of India (“ASCI”) found that the claims
of Hindustan Unilever Ltd (HUL) for its Lever Ayush soap stating that
it was “based on 5,000-year-old ayurved scriptures with 15 ayurvedic
herbs”, besides other claims, were inadequately substantiated and were
misleading. From time to time, false and misleading advertisements
have been pulled up by the ASCI and manufacturers/sellers have been
asked to modify or remove the advertisement from circulation to the
public.

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Liability of Endorsers under the New Act

• Brands and companies look at engaging celebrities to attract target

consumers, and for the consumers to have a top of the mind recall for
the brand and its product. Celebrities have often become synonymous
with the brands and products that they endorse. Social pressure on
celebrities endorsing brands has also been building up for some time
now. Several celebrities, including Shah Rukh Khan, John Abraham,
Ileana D’Cruz and Deepika Padukone faced the heat recently for having
endorsed fairness creams. The CCPA now holds the endorsers
accountable in case of a misleading advertisement that features them.
This enhanced scrutiny by the CCPA will lead to endorsers being
cautious of the brands they endorse. When the CCPA finds an
advertisement to be false or misleading it may issue directions in the
form of an order to the concerned manufacturer or endorser to
discontinue the advertisement or to modify the same within the
timeframe and manner specified in the order which is not prejudicial to
the interest of the consumer or in contravention with the consumer
rights.

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• The CCPA may levy a penalty of up to Rs.

10,00,000/- on the endorser of a false or
misleading advertisement, at first instance. On
further breach, the endorser may be liable for a
further penalty of up to Rs. 50,00,000/-. In
addition to the penalty, the CCPA may also
prohibit endorsers from endorsing any other
products or services for up to one year at first
instance. On subsequent breach by the
endorser, this period of prohibition may be
extended to up to three years.

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• Prior to the New Act, certain guidelines for

celebrities existed in ASCI’s Code for
Self-Regulation of Advertising Content in India
(“Code”), wherein celebrities were expected to have
knowledge of the Code and had to conduct their
own due diligence before endorsing a brand or
service; while also reiterating that it was the duty of
the advertiser and the advertising or other agencies
to make the celebrities aware of such guidelines,
including the Code. However, the Code being
voluntary self-regulatory in nature, does not provide
for any statutory penalties for celebrities appearing
in misleading or false advertisements.

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Misleading Advertisements
• Section 2(28) "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

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• (A)n advertisement can be said to be misleading

when such advertisement, in any way, either in
its wording or presentation deceives or is likely
to deceive the persons to whom it is addressed
or whom it reaches; or by reason of its deceptive
nature, is likely to affect their economic
behavior or for those reasons, injures or likely
to injure a competitor. However, not every
advertisement necessarily fall in the category of
misleading advertisement. It occurs when a
claim about a product or service is materially
false or misleading, in an attempt to persuade
the consumer to buy it”.

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• It is the duty of the Central Consumer Protection

Authority to ensure that no misleading
advertisement is made of any goods or services by
the manufacturer or seller or service provider. It
also has the power to impose a penalty up to Rs 10
lakhs for such false and misleading advertisement
and take such other steps to ensure that the
consumer is not misled by the manufacturer or
seller or the service provider. Besides this, and also
besides a consumer having an option of availing
remedy before the appropriate Consumer
Commissions, the manufacturer or service provider
who causes false or misleading advertisement shall
be punished with imprisonment for a term of up to
two years along with the fine up to Rs 10 lakhs.

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Illustrations
• (a) H, a malt-based drink manufacturing
company, describes in an advertisement that
the height of the person, who drinks its
malt-drink Z, will increase. But, this claim of H
is false and clinically not proved. This act of H
amounts to misleading advertisement.
• (b) V, an electronic devices manufacturer, in an
advertisement gives a guarantee that its mobile
phone B is a water-proof mobile device. If such
guarantee of V is false then it amounts to
misleading advertisement

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• (c) J, a garment store located at Mumbai, gives a

representation, through an advertisement in a local
newspaper by depicting the photograph of famous
cricketer S, along with its store name. Photograph of
S was given without his consent. This representation
by J constitutes an “unfair trade practice”, thereby
amounting to “misleading advertisement”.
• (d) P, a biscuit manufacturing company, in its
biscuit wrapper does not provide the information as
to the “date of manufacture” of its biscuit.
Mentioning the “date of manufacture” is an
important information, which a goods manufacturer
has to provide. This act of concealment by P is a
“misleading advertisement”.

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What are misleading advertisements?

• In Lakhanpal National Ltd. v. MRTP
Commission282, the Supreme Court laid down
the golden rules for seeing whether a particular
advertisement is misleading others or not, by
observing: [w]hen a problem arises as to
whether a particular act can be condemned as
an unfair trade practice or not, the key to the
solution would be to examine whether it
contains a false statement and is misleading
and further what is the effect of such a
representation made by the manufacturer on
the common man? Does it lead a reasonable
person in the position of a buyer to a wrong
conclusion?

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• The issue cannot be resolved by merely examining

whether the representation is correct or incorrect in
the literal sense. A representation containing a
statement apparently correct in the technical sense
may have the effect of misleading the buyer by using
tricky language. Similarly a statement, which may
be inaccurate in the technical literal sense can
convey the truth and sometimes more effectively
than a literally correct statement. It is, therefore,
necessary to examine whether the representation,
complained of, contains the element of misleading
the buyer. Does a reasonable man on reading the
advertisement form a belief different from what the
truth is? The position will have to be viewed with
objectivity, in an impersonal manner.

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• It is not possible to provide an exclusive list

of statements which may constitute
misleading representation, nor there can be
any straitjacket formula evolved thereof for
the said purpose. However, the statements
of the nature which are willfully made
knowingly false, or made recklessly   without
belief in its truth, and made with the
purpose to mislead or deceive will definitely
constitute a false or misleading
representation. In addition a failure to
disclose a material fact when a

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• duty to disclose that fact has arisen will also

constitute a misleading representation. Displaying
two nights/three days tour to the foreign country in
a voucher, but actually providing two nights/one
and a half day tour, is an unfair trade practice
leading to “misleading advertisement” under the CP
Act. An advertisement was given by the State Bank
of Patiala for auctioning of a house whose
possession was still with the mortgagor and not with
the bank. It was stated in the advertisement that the
possession of the property was with the bank. This
was considered to be misleading advertisement by
the NCDRC.

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• In Buddhist Mission Dental College and Hospital v.

Bhupesh Khurana, the advertisement specifically
highlighted that the appellant-college is a premier dental
college of Bihar established and managed by the Vishwa
Buddha Parishad under Article 30 of the Constitution of
India. It was also mentioned that the said institution, i.e.
“The Buddhist Mission Dental College and Hospital” was
under the Magadh University, Bodh Gaya, Patna and was
also recognised by the Dental Council of India, New
Delhi. At the time of admission Rs 1 lakh was taken in
cash from each student for which no receipt was given to
them. It was later on found that the college was neither
affiliated to Magadh University nor it was recognised by
the Dental Council of India besides being most
ill-equipped both in terms of faculty and infrastructure.
The SC held it to be misleading advertisement. .

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Spurious Goods
• The sixth category of unfair trade practice has been laid down
in clause (vi) of Section 2(47). Whoever permits the
manufacturing of “spurious goods” is said to adopt an “unfair
trade practice”. The expression “spurious goods” has been
defined under Section 2(43), CP Act, 2019. Besides the remedy
available to the consumer to claim compensation before the
Consumer Commissions, the new CP Act, 2019 has provided for
penal punishment also, where any person, who manufactures
or stores or sells or distributes or imports any “spurious goods”,
which causes either injury or grievous   hurt or death of the
consumer, shall be punished with imprisonment for term
ranging from one year to life imprisonment under Section 91,
CP Act, 2019.
• Illustration for spurious goods -R manufactures a drug/tablet,
which is similar to “Crocin” and falsely claims it as “Crocin
tablet”. This act of R is called as manufacturing of “spurious
goods”. Hence, R is said to adopt an “unfair trade practice”.

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Not issuing Bills

• The seventh category of unfair trade practice has
been laid down in clause (vii) of Section 2(47). It
was a new insertion in the new CP Act, 2019, which
was not there under the old CP Act, 1986. If any
trader or service provider does not issue the bill or
cash memo or receipt for the goods sold or services
rendered in such manner as may be prescribed, then
he is said to adopt an “unfair trade practice”. The
trader or service provider may provide the bill, but
he should provide it as the Central Government
prescribes by making the rules by exercising its
powers as conferred under Section 101(2)(c), CP
Act, 2019. And, as per Rule 5 of the Consumer
Protection (General)

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• Rules, 2020, (1) Every invoice, bill, cash memo or receipt for goods sold or
services rendered, issued by a seller shall have the following minimum
particulars, namely — (a) The name and address of the seller; and, (b) a
consecutive serial number not exceeding sixteen characters, in one or
multiple series, containing letters or numerals or special characters (hyphen
or dash, and slash, symbolised as “-” and “/” respectively) and any
combination thereof, unique for a financial year; and, (c) the date of its issue;
and, (d) the name of the consumer; and, (e) the description of goods or
services; and, (f) the quantity, in case of goods; and, (g) the shipping address,
where applicable; and, (h) the taxable value and discounts; and, (i) the rate of
tax; and, (j) the signature of the seller or his authorised representative; and,
(k) the customer care number or e-mail ID, where available; and, (l) the total
price in single figure, along with the breakup price showing all the
compulsory and voluntary charges, such as delivery charges, postage and
handling charges, conveyance charges and the applicable tax. But, if such
invoice, bill, cash memo or receipt is issued by a seller in electronic form, the
signature of the seller is not required. Rule 5(2) has further clarified that the
serial number on the invoice, bill, cash memo or receipt to be issued by a
seller shall not be altered, removed, replaced, or erased under any
circumstances.

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• Inclusion of this clause is very important,

because it is the consumer’s right to be
informed about the price of the product or
service, which he/she is purchasing or
hiring. A proper bill would also give the
consumer a documentary evidence to prove
in the Consumer Commissions that he has
purchased the product or hired the services
from the particular trader or service
provider.

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