THE CONSUMER PROTECTION ACT 1986 : A VIEWPOINT

Author(s): I. C. Saxena
Source: Journal of the Indian Law Institute , July-September 1988, Vol. 30, No. 3 (July-
September 1988), pp. 321-331
Published by: Indian Law Institute

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NOTES AND COMMENTS

THE CONSUMER PROTECTION ACT 1986 : A VIEWPOINT

I Introduction

The effectiveness and enormous nature of consumer legislation is

summed up by mass media thus :

The Indian Consumer, like the French Peasantry under Louis IV,
is a much exploited lot taxed by the Government, fleeced by the
manufacturer, conned by the retailer....

Our four decades of legislation, the Government has spawned law

after law, 30 in all, promising fair play to the consumer. But the
Indian market knows but a few curbs.1

The latest in the series, is the Consumer Protection Act 1986.

Under the amended preamble, India is a Sovereign Socialist Secular
Democratic Republic wih the objective to secure to all its citizens social,
economic and political justice. Clauses ( b ) and (c) of article 39 of the Consti-
tution of India are particularly instructive. Thereunder the resources of
the country must subserve the common good and concentration of wealth
and means of production must not result in detriment to the common man.
Again article 3 9-A provides for equal justice and free legal aid so that
"opportunities for securing justice are not denied to any citizen by reason
of economic or other disabilities/'

II Unique features of the Consumer Protection Act

1. The Act applies to "all goods and services".2

2. The definitions of consumer, services and person need be noticed.
The terms "goods" and "unfair trade practice" have the same mean-
ings as in the respective parent Acts viz. the Sale of Goods Act 1930 and
the Monopolies and Restrictive Trade Practices (MRTP) Act 1969.
3. Provisions in section 2 (ii) and 12 ( b ) recognise the voluntary con-
sumer association as complainant. It may be made a member of the Central
Consumer Protection Council at the pleasure of the Central Government.

1. The Times of India, 1 June 1987, Jaipur ed.

2. The Consumer Protection Act, s. 1(4), 1986.

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 322 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 30 : 3

4. Sections 6 and 8 of the Act impose on the Central and st

the statutory duties to protect and promote the rights of the con
5. The Act envisages a three tier grievance redressai platf

i i i
District forum3 State commission National commission
(Value less than rupees (Value exceeds rupees (Value exceeds
one lakh ; one lakh but does not ten lakhs)
exceed rupees ten
lakhs)

Sections 10, 16 and 20 lay down the composition of district forum,

state commission and national commision respectvely. The president, in
the case of the district forum, has to be a person who is or has been or is
qualified to be a district judge, in the case of the state commission, present or
past judge of the High Court and in the case of the national commission,
present or past judge of the Supreme Court. A lady social worker in the case
of district forum and a woman in the case of commissions has to be one of
the members.

Ill Liability of the government

Unlike the MRTP Act , the Consumer Protection Act does not contain
any exemption in favour of the government or co-operative society or any
other sector. The Hon'ble Minister of Parliamentary Affairs and Minister
of Food and Civil Supplies while moving the Bill in the Rajya Sabha , tried
to dispel the fear that it shal not apply to government or public services.
He said that the Bill "shall apply to all goods and services and covers both
public, cooperative and private sectors"4. Nevertheless, the Hon'ble
Member; M.A. Baby in the Rajya Sabha expressed his fears: "My
doubt is whether services like transport, railways, telephones, communi-
# cation etc. will come within this definition or not. My demand is that those
also should come within the purview of this definition"5.
In an article6 it was opined :

The position in India is quite different, in that, 75 percent of

consumer products and nearly 100 percent of consumer services are
produced, operated and maintained by the Government sector.
Thus the Government becomes the main source of all consumer
problems.

3. Id. s. 11; see infra note 18.

4. Rajya Sabha Debates , vol. 140 : no. 21-27, col. 120 (2-10 Dec. 1986).
5. Id. at col. 128.
6. N.B. Grant, "Consumer Gets What He Deserves", The Hindustan Times,
15 October 1987, New Delhi.

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 1988] CONSUMER PROTECTION ACT 1986 323

Decided cases against government in respect

dispel fears.7 An independent and impartial judicia
for fair play and justice, be it against government or
Furthermore, it is pertinent to note that section 1
ment (Protection) Act 1986, requires that "no cou
of an offence under the Act unless the person... ha
than sixty days... of the alleged offence and of h
complaint, to the Central Government...". This
does not exist in case of the Consumer Protection
Act is silent on the point. Thus immediate remedy
sumer against the goods supplied or serviced by th
Section 13 of the Act, dealing with the procedu
plaints, in respect of goods, cuts down delays to the
The Act also provides for appeal against the de
forum or state commission. It prescribes no fees.
fication) (8) a district forum in each district, so t
readily available at the door of the consumer. The c
complainant. A registered (recognised) voluntary
may not be a member, can take up his case. These
written complaints (requests) from customers wher
the concerned consumer cases and negotiate with the r
erring dealers. This is, indeed, a great facility and
consumer. Alongwith the Consumer Protection Bi
ment, the government moved amendment to a bun
subjects providing legal status to the recognised vo
ciations in those amendments to fileacomplaint for
According to a 1987 December news item9, only t
and the two states of Rajasthan and West Bengal t
consumer protection councils but not the grievanc
consumer councils have been set up in atleast 20 s
in the offing in more states and Union territories. In o
of the legislation will percolate to the masses only
wider in application and is given a fair trial.

IV Definitions

Under section (2) (m) of the Act, 'person' has not been used in the
strict juridical sense. But thereunder, it includes any firm, a Hindu undivided

7. See regarding services by telegraph department : Naresh Chandra Roy . Union of

India, A.I.R. 1987 Cal. 147; telephone services: Ram Niwas Singh v. District Manager,
Telephones , A.I.R. 1987 All. 314; railway toilet facilities: Ramanathsekhar v. Pandho
Padhaya , A.I.R. 1987 Bom. 98; bank services to customers : Cañara Bank v. Cañara
Sales Corpn., A.I.R. 1987 S.C. 1603.
8. S. 9 ( a ) of the Consumer Protection Act 1986.
9. Tiie Hindustan Times, 9 December 1987, New Delhi.
10. Id. 2 March, 1988.

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324 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 30 : 3

family, a co-operative society and lastly every other associati

Registration is not essential. The result is that all these per
consumers under the Act. This wide definition of person is i
of consumer protection and does not militate against any consum
The definition of consumer is crucial, since it determin
cation of the Act. Section 2 ( d ) defines the term consumer and
only sale of goods but also hired services.11
The following are the essentials of a consumer transanc

{a) Sabe of goods

1. There must be a sale transaction between two person

2. The sale must relate to goods.
3. There must be consideration and it can only be money
exchange of goods, nor partly money and partly goods.
4. The consideration may be paid at the time of the sale t
subsequently in one lump sum or by instalments.
5. The user of the goods, with the approval of the buye
consumer.

6. But a buyer who buys the goods for RESALE or for any
purpose is not a consumer.

(b) Hiring of services

1. The services rendered should be for consideration, i.e. money

consideration.

11. S. 2 (cl). "Consumer" means any person who,-

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

(ii) hires any services for a consideration which has been paid or promised or
partly paid and partly promised, or under any system of deferred payment and
includes any beneficiary of such services other than the person who hires the
services for consideration paid or promised, or partly paid and partly promised,
or under any system of deferred payment, when such services are availed of with
the approval of the first mentioned person.
Again section 2 (0) defines 'service' thus: -
"Service" means service of any description which is made available to potential
users and includes the provision of facilities in connection with banking, financing,
insurąnce, transport processing, supply of electrical or other energy, boaid or
lodging or both, entertainment, amusement or the purveying of news or other
information, but docs not include the rendering of any service free of charge or
under a contract of personal service.

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1988] CONSUMER PROTECTION ACT 1986 325

2. The services may be paid for at the time of the s

subsequently in one lumpsum or by instalments.
3. The beneficiary of services, with the approva
a consumer.

4. The services mean services of any description inc

nected with banking, financing, insurance, transport p
electrical or other energy, board or lodging or both, en
ment or the purveying of news or other services. The
wide that it would include service of any kind, whether re
ment or governmental instrumentality or non-governm
relating to supply of water, electricity, telephone and p
within the term services.12
5. But the term 4 'service" does not include free services or services
without payment nor does, it include "a contract of personal service."13
This phrase, however, has not been defined or explained in the Act.
The Specific Relief Act, 1963, also does not use this phraseology. In section
14 (b) of this latter Act there is a mention that a contract cannot be speci-
fically enforced if it is "so dependent on the personal qualifications or voli-
tion of the parties, or otherwise from its nature is such, that the court cannot
enforce specific performance of its material terms". Are the two expressions
synonymous? Probably, every contract of personal service will be found in
the specific relief expression. The Consumer Protection Act thus throws
out of its consideration a large segment of consumer differences. That
a refrigerator, newly bought, will be serviced only by X, a technician in the
company, during the warranty period is doubtless, a contract of personal
service, although not made with X.
The Act intends to deal only with the routine rut of cases and not with
peculiar cases, depending upon personal factors, which include complicated
situations or technical considerations. Thus a contract to perform a surgical
operation, paint a picture, deliver a lecture or supervise the construction of a
house will not be attracted by the Act. That other party to the contract is
not a consumer in these cases.

Another important factor is whether the term services should be used

in relation to the goods or independent thereof so as to include even services
connected with the sale of immovable property. As stated earlier, the Act
applies, unless expressly excepted to "all goods and services". This expres-
sion uses the term "all". Also the term service is without the pre-fix "their".
Furthermore, the term service, as defined in the Act "means service of any
description". Thus the terms goods and services are independent of each
other. The services, may not relate to goods. They may arise in connection

12. See s. 159 of the Indian Contract Act 1872, relating to restoration of goods
lent gratuitously.
13. S 2 (o) of the Consumer Protection Act 1986.

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326 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 30 : 3

with sale of immovable property. The only condition is that s

paid, and not rendered free-of-charge. The following may be

A clarification given on the applicability of the Consumer P

tection Act to housing activities makes interesting read
Housing was not covered, according to the views of the
Ministry. But if housing activities amounted to render
services, then it was covered, for example, houses given by D
Development Authority on lease and those given by housin
societies under lease would be covered as these bodies were ren-
dering services incidental to the provisions of the law.14

The point is not free from doubt. Particularly, when relief under the
Act cannot be obtained for the parent issue i.e. sale of immovable property.
Will the issues of housing services be not so complicated, minute and techni-
cal as to consume large chunk of time of the redressai forums which
consist of non-law persons also ? And how decisions by these instrumenta-
lities be a bar for decisions by the ordinary courts of the country ?
The question whether or not a person is a consumer is vital for the
application of the Act. Therefore, the following fanciful situations may be
taken for an imaginative exercise of the statutory term "consumer", pro-
viding answers with reasons :
(a) A agrees to buy from B his goods for money, Here A is not a
consumer. There is no consumer relationship unless A actually buys the
goods. Agreement is a premature stage The definition uses the present
tense verb buys and not the noun buyer or seller. In section 2(1) of the Sale
of Goods Act 1930, the term buyer means a person who buys or agrees to
buy. Similarly, in section 2(13) of the Act, seller means a person who sells
or even agrees to sell goods. These definitions, however, are inapplicable
because the Consumer Protection Act carefully and deliberately avoids
their use.

( b ) A buys goods of B, takes delivery, but does not pay the conside-
ration (money) immediately. He agrees to pay money by instalments. A
is a consumer because immediate payment of consideration (price) is not
necessary. The Act does not use the term price or money, instead it uses
consideration. It is not understood why the Act adopted this course, when
both the Transfer of Property Act, 1882 and the Sale of Goods Act 1930,
dealing with sale of immovable property and goods respectively avoided the
term consideration and used the term price for money.
(c) A exchanges his table with four cane chairs of B. A or B is not a
consumer because none of them is a buyer. It would be relevant to note the
defintions of sale of immovable property and exchange in sections 54 and
118 of the Transfer of Property Act respectively. Sale results in

14. The Indian Express , 3 July 1987, New Delhi.

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1988] CONSUMER PROTECTION ACT 1986 327

transfer of ownership for a price, paid or promised to

both the things are money or none of the things is mon
In Income-tax Commissioner, A . P. v. M. & G.
Ramaswami delivering the judgment of the court, p
tinction between sale and exchange thus :

Section 2(10) of the Sale of Goods Act defines "pric

the money consideration for a sale of goods. The
money consideration is therefore an essential elem
saction of sale. If the consideration is not money b
valuable consideration it may be an exchange or bar
sale.16

Thus the well-established juridical distinction between sale and ex-

change has been preserved by the Act.
(d) A is a retailer and buys goods for resale. Here A is not a con-
sumer. The business aspect of the sale is not protected. The retailer, thus,
is left at the mercy of the general law of the country.
(e) A factory buys raw material to make commercial goods for sale.
Here the factory is not a consumer and is not protected as such under the
Act.

(/) A buys a wooden sofa set for the household which is used by
members of the family, friends, visitors. Are these users (with consent of
the buyer) consumers under the Act? Here the users with permission are
consumers. The consent may be express or implied. It should exist at the
time of the use.

(g) A buys from D a wooden sofa set which is stolen by B and C

used by them and their visitors. Are the thieves and the visitors, consum
These persons are not consumers because there is no consent to use th
by the owner (buyer).
(A) A lifts a pressure cooker from a shop and sells the same to B
buys the same in good faith for value. Is B a consumer to be entit
claim a relief from A ? B is not a consumer because he did not buy f
person who had a clear title and a right to sell. The transaction is no
There is no sale in law, Hence no consumer protection. The Supreme
has held : "illegally married women not entitled to alimony."17
(i) A gifts a T.V. set to his son on his birthday after buying it i
market. Are the son and his viewers of T.V. set, consumers as aga
and A's seller to claim compensation for the defects in the article
gift does not create a consumer relationship either between the donor an

15. A.I.R. 1968 S.C. 200.

16. Id . at 202.
17. The Indian Express , 31 January 1988, Ahmedabad.

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328 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 30 : 3

donee or between the original seller and the donee, not as it i

saction. It would be different if the son and his viewers are mere users
with A's permission and there is no transfer.
(J) The son sells the above T.V. set to C which is used by C, his family
members, friends and visitors. Are C and these viewers, consumers under
the Act ? Yes. There is a sale transaction between son and C and viewers
are permitted users.
(k) The dog uses the food which is bought by his master for it. (The
dog is not a person. The Act does not create here a new cause of action).
The dog has no consumer protection.
V Service situations

(a) A buys woollen cloth and gives it to a tailor to stitch a suit out of it
for his (A's) son for a fee of rupees five hundred. Here both A and his son
are consumers. The son is a beneficiary with permission of A.
(i b ) The tailor does not charge for the stitching of the suit in the above
case. Here because of absence of consideration, the tailor does not become
liable to A or A's son for the defective services.
(c) A pays to a medical doctor for attending to patients in his charitable
clinic. Are A and the patients in the clinic, consumers? Here patients are
beneficiaries of paid services. So A and the patients are consumers.
( d ) The medical doctor acts without any consideration or fee in the
above case. Here because of absence of consideration, the doctor is liable
neither to A nor to the patients. The consumer relationship is absent.
(e A, under a contract of personal service, massages B's body, cuts his
hair, tutors him or escorts him to a hospital, or a beauty parlour makes
bridal make-up. Here A or the beauty parlour is not liable because services
are performed under a contract of personal service.
(/) A launders B's clothes, cooks food for him or writes his letters for
money consideration under a contract. Here the answer depends upon the
question whether these or any of these are contracts of personal service.
The phrase "contract of personal service" requires a clear-cut inter-
pretation. These illustrations are intended to explain the scope of the defi-
nition of consumer and show the legal rights available to an aggrieved buyer.
The definition seems to be the original effort of the drafters and does not find
a parallel in the English Consumer Protection Act 1961. It would be
worthwhile to refer to the English Consumer Protection Act of 1987 which
contains the definition of consumer in section 20 for purposes of part-Ill.
Consumer :

(a) in relation to any goods, means any person who might wish
to be supplied with the goods for his own private use or
consumption,

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1988] CONSUMER PROTECTION ACT 1986 329

( b ) in relation to any services or facility means an

might wish to be provided with the services or fa
wise than for the purposes of any business of
(c) in relation to any accommodation means any
might wish to occupy the accommodation otherw
the purpose of any business of his.

Thus the Consumer Protection Act has many reli

nising and encouraging voluntary consumer associ
discretion to nominate them as members on the con
cils, making the government (seller of goods or su
without exception, providing speedy remedy to the
sent) in addition to the buyer, obligating the Cen
protection councils to protect consumers' interests
spreading consumer's awareness and consumer educ
decisions without much delay with provision for a
It is interesting to note that under section 4 (d)
Authorities Act 1987, the National Services Legal Auth
authority) has the function to "take necessary steps
litigation with regard to consumer protection...".
This is direct involvement of the Central governm
movement in the country in the public or social in
Sheela Barge v. Union of India ,18 the Supreme Court h
bringing a public interest litgation has no right to wit
the 'rights' of such person "must necssarily b
"interests" of those for whose benefit the action is

VI Conclusions

The Consumer Protection Act is not a panacea for all ills. It needs to
be geared up to serve the consumer better and remove some islands of con-
fusion from it :

1. The implementation of the Act is in the offing. The consumer protec-

tion councils (CPC) have been formed at the Centre and in at-least 20 states
and Union territories. The redressai bodies in each district have yet to
function. The Centre must stress on the states to impelent the Act through
a financial dialogue with them. Under section 4 (2) ( b ), the quantum of
representation of the non-official members in the Central Consumer Protec-
tion Council depends upon the will of the government. The position in the
states is still worse. Under section (2) of the Act dealing with the State
Consumer Protection Council, there is no mention at all of the non-official

18. A.I.R. 1988 S.C. 2211.

19. Id. at 2215.

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330 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 30 : 3

representation (including of voluntary consumer associations). T

grave omission. Without the public participation and co-ope
enlightened citizens, the state council Will not yield encouragin
While it is hoped that in actual practice, the state council wi
non-official representation also, it is suggested that the Act sh
suitably amended to provide for non- official represengation al
state level.

3. The definition of consumer should be amended to drop t

consideration and substitute it by the term "money" or "price"
unnecessary confusion on the point.
4. The definition of service should explicitly include or exclude h
services. It would be better to exclude housing services, so that
dressai bodies may concentrate on more important aspects of c
daily needs, without going into complicated matters of land-cu
disputes.
5. The pecuniary jurisdiction of the district forum under sec
of the Act is "less than rupees one lakh" while that of the state comm
the next higher body, in the hierarchy under section 17 "exceeds rup
lakh." Thus the jurisdiction of the claim of "rupees one lakh
uncovered. This is an unforeseen lacuna. Section 11 should ac
be amended. The Hon'ble Minister had said in the Parliament. "Th
in the District will have original jurisdiction to redress consumer com
upto a claim amount of Rs. 1 lakh, the State Commission upto an
Rs. 10 lakhs and the National Commission for any claim for
above Rs. 10 lakhs."20

6. It appears that all orders of the district forums are appealable,

irrespective of the value of the claim. It is submitted that orders granting
relief to the tune of rupees one thousand be made unappealable, except in
the case of goods where the laboratory report is challenged on merits by the
trade. Service cases will thus be saved from appeal in specified cases.
Again, grounds of second appeal are not provided. Is there no second
appeal V
7. Consumer protection is provided in cases of "unfair trade prac-
tices" also. This expression has the same meaning as in section 36- A of the
MRTP Act. One can only hope that the two quasi-judicial bodies under the
two different Acts of Parliament do not create conflicting decisions and
unhappy situations.
It is essential that the Consumer Protection Act should operate in full
swing as early as possible, so that its benefits percolate to the poor consumers.
The Act must be given a fair trial and co-operation by all concerned so that
economic justice becomes cheaper and quickly available.

20. Supra note 4.

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 1988] CONSUMER PROTECTION ACT 1986 331

So, I chirp in my own humble words:

Consumer Protection is our need
In fact, that is our creed.
Writing on the wall do we read
New paths of joy consumer will tread.!

/. C. Saxerta*

*M.A. LL.M., J.S.D. (Cornell). Formerly Professor of Law and Principal, Uni-
versity Studies in Law, Jaipur. Emeritus Fellow (U.G.C.), based at University Studies
in Law, Jaipur.
Most of the illustrations relating to consumer and services mentioned in this paper
were both first used and explained by the author at a Seminar on Consumer Protection
which was led by him at the University School of Law, Gujarat University, Áhmedábad
on 30th January, 1988. In the original form this paper was intended to be used at a
Seminar on Consumer Protection in the Faculty of Law, Delhi University, Delhi.

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