CONSUMER PROTECTION

CHAPTER 12
CONSUMER PROTECTION
A consumer is said to be a king in a free market economy. The earlier approach of caveat emptor, which means “Let the buyer
beware”, has now been changed to caveat venditor (“Let the seller beware”). However, with growing competition and in an attempt
to increase their sales and market share, manufacturers and service- providers may be tempted to engage in unscrupulous,
exploitative and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding,
black-marketing etc.

Consumer: A ‘consumer’ is generally understood as a person who uses or consumes goods or avails of any service.

Under the Consumer Protection Act, a consumer is defined as:

(a) Any person who buys any goods for a consideration, which has been paid or promised, or partly paid and partly promised,
or under any scheme of deferred payment. It includes any user of such goods, when such use is made with the approval of the
buyer, but does not include a person who obtains goods for re-sale or any commercial purpose.
(b) Any person who hires or avails of any service, for a consideration which has been paid or promised, or partly paid and
partly promised, or under any system of deferred payment. It includes any beneficiary of services when such services are availed
of with the approval of the person concerned, but does not include a person who avails of such services for any commercial
purpose.

Consumer Protection: Consumer protection refers to protection of physical, economic and other interest of the consumers from
exploitation by the business community.

IMPORTANCE OF CONSUMER PROTECTION

From Consumers’ point of view
The importance of consumer protection from the consumers’ point of view can be understood from the following points:
(i) Consumer Ignorance: In the light of widespread ignorance of consumers about their rights and reliefs available to
them, it becomes necessary to educate them about the same so as to achieve consumer awareness.
(ii) Unorganized Consumers: Consumers need to be organised in the form of consumer organisations which would take
care of their interests. Though, in India, we do have consumer organisations which are working in this direction,
adequate protection is required to be given to consumers till these organisations become powerful enough to protect
and promote the interests of consumers.
(iii) Widespread Exploitation of Consumers: Consumers might be exploited by unscrupulous, exploitative and unfair
trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black-
marketing etc. Consumers need protection against such malpractices of the sellers.

From the point of view of Business

A business must also lay emphasis on protecting the consumers and adequately satisfying them. This is important because of the
following reasons:
(i) Long-term Interest of Business: Enlightened businesses realise that it is in their long-term interest to satisfy their
customers. Satisfied customers not only lead to repeat sales but also provide good feedback to prospective customers
and thus, help in increasing the customer -base of business. Thus, business firms should aim at long-term profit
maximisation through customer satisfaction.
(ii) Business uses Society’s Resources: Business organisations use resources which belong to the society. They, thus,
have a responsibility to supply such products and render such services which are in public interest and would not
impair public confidence in them.
(iii) Social Responsibility: A business has social responsibilities towards various interest groups. Business organisations
make money by selling goods and providing services to consumers. Thus, consumers form an important group among
the many stakeholders of business and like other stakeholders, their interest has to be well taken care of.
(iv) Moral Justification: It is the moral duty of any business to take care of consumer’s interest and avoid any form of
their exploitation. Thus, a business must avoid unscrupulous, exploitative and unfair trade practices like defective and
unsafe products, adulteration, false and misleading advertising, hoarding, black marketing etc.

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(v) Government Intervention: A business engaging in any form of exploitative trade practices would invite government
intervention or action. This can impair and tarnish the image of the company. Thus, it is advisable that business
organisations voluntarily resort to such practices where the customers’ needs and interests will well be taken care of.

LEGAL PROTECTION TO CONSUMERS

The Indian legal framework consists of a number of regulations which provide protection to consumers. Some of these regulations
are as under.
1. The Consumer Protection Act, 1986: The Consumer Protection Act, 1986 seeks to protect and promote the interests of
consumers. The Act provides safeguards to consumers against defective goods, deficient services, unfair trade practices,
and other forms of their exploitation. The Act provides for the setting up of a three-tier machinery, consisting of District
Forums, State Commissions and the National Commission. It also provides for the formation of consumer protection
councils in every District and State, and at the apex level.
2. The Indian Contract Act, 1872: The Act lays down the conditions in which the promises made by parties to a contract
will be binding on each other. The Act also specifies the remedies available to parties in case of breach of contract.
3. The Sale of Goods Act, 1930: The Act provides some safeguards and reliefs to the buyers of the goods in case the goods
purchased do not comply with express or implied conditions or warranties.
4. The Essential Commodities Act, 1955: The Act aims at controlling production, supply and distribution of essential
commodities, checking inflationary trend in their prices and ensuring equal distribution of essential commodities. The Act
also provides for action against anti-social activities of profiteers, hoarders and black- marketers.
5. The Agricultural Produce (Grading and Marking) Act, 1937: The Act prescribes grade standards for agricultural
commodities and live- stock products. The Act stipulates the conditions which govern the use of standards and lays down
the procedure for grading, marking and packing of agricultural produce. The quality mark provided under the Act is known
as AGMARK, an acronym for Agricultural Marketing.
6. The Prevention of Food Adulteration Act, 1954: The Act aims to check adulteration of food articles and ensure their
purity so as to maintain public health.
7. The Standards of Weights and Measures Act, 1976: The provisions of this Act are applicable in case of those goods
which are sold or distributed by weight, measure or number. It provides protection to consumers against the malpractice
of under-weight or under-measure.
8. The Trade Marks Act, 1999: This Act has repealed and replaced the Trade and Merchandise Marks Act, 1958. The Act
prevents the use of fraudulent marks on products and thus, provides protection to the consumers against such products.
9. The Competition Act, 2002: This Act has repealed and replaced the Monopolies and Restrictive Trade Practices Act,
1969. The Act provides protection to the consumers in case of practices adopted by business firms which hamper
competition in the market.
The most important of these regulations is the Consumer Protection Act which provides for six consumer rights and helps
consumers in getting their grievances redressed for any shortcoming in the goods purchased or services availed.

THE CONSUMER PROTECTION ACT, 1986

The Consumer Protection Act (CPA) seeks to protect and promote the consumers’ interest through speedy and inexpensive
redressal of their grievances.
The scope of the Act is very wide. It is applicable to all types of undertakings, big and small, whether in the private or public
sector, or in the co-operative sector, whether a manufacturer or a trader, and whether supplying goods or providing services. The
Act confers certain rights to consumers with a view to empowering them and to protect their interests.

Consumer rights
The Consumer Protection Act provides for six rights of consumers. The consumer protection councils set up under the Act are
intended to promote and protect the various rights of consumers. These rights include the following:
1. Right to Safety: The consumer has a right to be protected against goods and services which are hazardous to life and
health. For instance, electrical appliances which are manufactured with substandard products or do not conform to the
safety norms might cause serious injury. Thus, consumers are educated that they should use electrical appliances which
are ISI marked as this would be an assurance of such products meeting quality specifications.
2. Right to be informed: The consumer has a right to have complete information about the product he intends to buy
including its ingredients, date of manufacture, price, quantity, directions for use, etc. It is because of this reason that the
legal framework in India requires the manufactures to provide such information on the package and label of the product.
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3. Right to Choose: The consumer has the freedom to choose from a variety of products at competitive prices. This implies
that the marketers should offer a wide variety of products in terms of quality, brand, prices, size, etc. and allow the
consumer to make a choice from amongst these.
4. Right to be heard: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or
a service. It is because of this reason that many enlightened business firms have set up their own consumer service and
grievance cells. Many consumer organisations are also working towards this direction and helping consumers in redressal
of their grievances.
5. Right to seek Redressal: The consumer has a right to get relief in case the product or service falls short of his expectations.
The Consumer Protection Act provides a number of reliefs to the consumers including replacement of the product, removal
of defect in the product, compensation paid for any loss or injury suffered by the consumer, etc.
6. Right to Consumer Education: The consumer has a right to acquire knowledge and to be a well-informed consumer
throughout life. He should be aware about his rights and the reliefs available to him in case of a product or service falling
short of his expectations. Many consumer organisations and some enlightened businesses are taking an active part in
educating consumers in this respect.

Consumer responsibilities
1. Awareness or rights: A consumer must be fully aware of various rights available to him while purchasing the products
or availing of any services, such as right to safety, right to be informed, right to be heard, etc.,
2. Quality Conscious: A consumer must be cautious in respect of quality of the product like AGMARK, BIS, HALLMARK
etc., while purchasing.
3. Ready to lodge complaint: A consumer must file a complaint in the appropriate agency in case of any defect in the
product or deficiency in the service without considering the value involved in it.
4. Not to be misled by false advertisements: Normally the manufacturer / seller exaggerates the quality in their products,
but the consumer must compare the actual quality with that stated in the advertisement. He should not be misled through
false advertisement in order to safeguard his interest.
5. Demand for Cash Memo: The consumer must get a cash memo/ bill in respect of goods purchased or service availed. In
fact, a seller is bound to give a cash memo even though the buyer does not demand for it. It is a documentary evidence in
support of goods purchased or service availed.
6. Cautious Consumer: A consumer should be cautious while buying product or service in respect of its nature, price, date
of manufacture and its expiry, directions for using the product, precautions to be taken etc.
7. Selection of Goods: Consumer must choose only legal goods and services and discourage malpractices like smuggling,
hoarding, black marketing etc.
8. Consumer organisation: Consumers must form their own organisation to educate and protect their interests against mal-
practices of the manufacturers and sellers.
9. Protection or Environment: Consumer must have respect for the environment and avoid wasting of resources and protect
the environment.
10. Not to buy in hurry: A Consumer must not buy in hurry that means he should think thoroughly before buying any product
or service, with regards to quality, quantity, price, time of purchase etc.

Ways and means of consumer protection

There are various ways in which the objective of consumer protection can be achieved.
1. Self-Regulation by Business: Enlightened business firms realise that it is in their long-term interest to serve the customers
well. Socially responsible firms follow ethical standards and practices in dealing with their customers. Many firms have
set up their customer service and grievance cells to redress the problems and grievances of their consumers.
2. Business Associations: The associations of trade, commerce and business like Federation of Indian Chambers of
Commerce of India (FICCI) and Confederation of Indian Industries (CII) have laid down their code of conduct which lay
down for their members the guidelines in their dealings with the customers.
3. Consumer Awareness: A consumer, who is well informed about his rights and the reliefs available to him, would be in
a position to raise his voice against any unfair trade practices or unscrupulous exploitation. In addition to this, an
understanding of his responsibilities would also enable a consumer to safeguard his interests.
4. Consumer Organisations: Consumer organisations play an important role in educating consumers about their rights and
providing protection to them. These organisations can force business firms to avoid malpractices and exploitation of
consumers.
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5. Government: The government can protect the interests of the consumers by enacting various legislations. The legal
framework in India encompasses various legislations which provide protection to consumers. The most important of these
regulations is the Consumer Protection Act, 1986. The Act provides for a three-tier machinery at the district, state and
national levels for redressal of consumer grievances. The redressal mechanism under this three-tier machinery has been
explained hereunder.

Who can file a complaint?

A complaint before the appropriate consumer forum can be made by:
(i) Any consumer;
(ii) Any registered consumers’ association;
(iii) The Central Government or any State Government;
(iv) One or more consumers, on behalf of numerous consumers having the same interest; and
(v) A legal heir or representative of a deceased consumer.

Redressal agencies under the consumer protection act

Let us now see how the consumer grievances are redressed by the three- tire machinery under the Consumer Protection Act.

I. District Consumer Disputes Redressal Agency I Machinery:

The Act provides for the establishment of a District Redressal Agency in each district by the concerned State Government. It also
empowers the State Government to establish additional District Agencies within a district if necessary. The features of a District
Redressal Agency are as under:
a) Composition: Each District Forum consists of a committee of three persons - a President and two members out of whom,
one must be a woman, who are being nominated by the State government for a term of five years.
b) Qualification: The President should have the qualification to be of a District Judge, and out of the two members’ one
should be an eminent person from the field of education, trade or commerce with a bachelor’s degree.
c) Powers: Each District Redressal Agency is being given the powers of that of a civil court for enquiring into any complaint.
d) Jurisdiction: The District Redressal Agency is empowered to receive such complaints where the value of goods or
services and the compensation claimed is not exceeding Rs.20 lakhs.
e) Redressal Proceedings: Upon the receipt of the complaint, the agency serves a notice to the opposite party referred in the
complaint, such opposite party may be a seller, a distributor, or a manufacturer. If needed the agency further sends the
sample of goods for analysis and testing in a laboratory in respect of the defect raised in the complaint.
f) Remedy : Upon the report from the laboratory, if it is found that the product has some defect or there is some unfair trade
practice, the agency can direct the accused to:
i. remove the defect in the product, or ii. Replace the product, or
iii. Return the price of the product so paid by the complainant, or
iv. Compensate the loss suffered by the consumer,
g) Appeal: In case the verdict is not commensurate to either of the party, the unsatisfied party can appeal to State Commission
for more favourable justice within 30 days from the date of order given by the District Forum.

II State Consumer Grievances Redressal Agency or State Commission:

The Act provides for the establishment of a State Commission at the state level to be situated in the state capital. The features of
a State Commission are as under:
a) Composition: A State Commission consists of a committee of 3 persons - a President and two members out of whom,
one must be a woman, who are being nominated by the State government for a term of 5 years.
b) Qualification: The President should have the qualification to be of a High Court Judge and members should possess
bachelor's degree and should have adequate knowledge and good experience in dealing with problems relating to
Economics, Commerce, Law, Accountancy, Public affairs, Administration etc.
c) Jurisdiction: It is empowered to receive such complaints where the value of goods or services and the compensation
claimed is exceeding Rs.20 lakhs but less than Rs. I crore and the appeals against the orders of any District Redressal
Agencies.
d) Redressal Proceeding: Upon the receipt of the complaint, the State Commission serves a notice to the opposite party
referred in the complaint. Such opposite party may be a seller, a distributor or a manufacturer. If needed the Commission
further sends the sample of goods for analysis and testing in a laboratory in respect of the defect raised in the complaint.
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e) Remedy: Upon the report from the laboratory, if it is found that the product has some defect or there is some unfair trade
practice, the Commission can direct the accused to:
i) Remove the defect in the product, or ii) Replace the product, or
iii) Return the price of the product so paid by the complainant, or
iv) Compensate the loss suffered by the consumer,
f) Appeal: In case the verdict is not commensurate to either of the party, the unsatisfied party can appeal to the National
Commission for more favourable justice within 30 days from the date of order given by the State Commission.

III National Consumer Grievances Redressal Agency or National Commission:

The Act provides for the establishment of a National Commission at the National level to be situated in the capital of the country.
The features of a National Commission are as under:
a) Composition: A National Commission consists of a committee of five persons - a President and four members including
one woman member, who are being nominated by the Central Govt. for a term of five years.
b) Qualification: The President should have the qualification to be of a Supreme Court Judge and members should possess
bachelor's degree and should have adequate knowledge and good experience in dealing with problems relating to
Economics, Commerce, Law, Accountancy, Public affairs, Administration etc.
c) Jurisdiction: It is empowered to receive such complaints: a) where the value of goods or services and the compensation
claimed is exceeding Rs. One crore. b) The appeals against the orders of any State Commission.
d) Redressal Proceeding: Upon the receipt of the complaint, the National Commission serves a notice to the opposite party
referred to in the complaint. Such opposite party may be a seller, a distributor, or a manufacturer. Ifneeded the Commission
further sends the sample of goods for analysis and testing in a laboratory in respect of the defect raised in the complaint.
e) Remedy : Upon the report from the laboratory, if it is found that the product has some defect or there is some unfair trade
practice, the Commission can direct the accused to:
i) Remove the defect in the product ii) Replace the product
iii) Return the price of the product so paid by the complainant
iv) Compensate the loss suffered by the consumer
f) Appeal: In case the verdict is not commensurate to either of the party, the unsatisfied party can appeal to the Supreme
Court for more favourable justice within 30 days of order given by the National Commission.

Relief Available
If the consumer court is satisfied about the genuineness of the complaint, it can issue one or more of the following directions to
the opposite party.
(i) To remove the defect in goods or deficiency in service.
(ii) To replace the defective product with a new one, free from any defect.
(iii) To refund the price paid for the product, or the charges paid for the service.
(iv) To pay a reasonable amount of compensation for any loss or injury suffered by the consumer due to the negligence of
the opposite party.
(v) To pay punitive damages in appropriate circumstances.
(vi) To discontinue the unfair/ restrictive trade practice and not to repeat it in the future.
(vii) Not to offer hazardous goods for sale.
(viii) To withdraw the hazardous goods from sale.
(ix) To cease manufacture of hazardous goods and to desist from offering hazardous services.
(x) To pay any amount (not less than 5% of the value of the defective goods or deficient services provided), to be credited
to the Consumer Welfare Fund or any other organisation/person, to be utilised in the prescribed manner.
(xi) To issue corrective advertisement to neutralise the effect of a misleading advertisement.
(xii) To pay adequate costs to the appropriate party.
Brings out some decided cases where a complaint was filed in a consumer court for defective goods and deficient services.

ROLE OF CONSUMER ORGANISATIONS AND NGOS

In India, several consumer organisations and non-governmental organisations (NGOs) have been set up for the protection and
promotion of consumers’ interests. Non- governmental organisations are non- profit organisations which aim at promoting the
welfare of people. They have a constitution of their own and are free from government interference. Consumer organisations and

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NGOs perform several functions for the protection and promotion of interest of consumers. These include:
(i) Educating the general public about consumer rights by organising training programmes, seminars and workshops.
(ii) Publishing periodicals and other publications to impart knowledge about consumer problems, legal reporting, reliefs
available and other matters of interest.
(iii) Carrying out comparative testing of consumer products in accredited laboratories to test relative qualities of competing
brands and publishing the test results for the benefit of consumers.
(iv) Encouraging consumers to strongly protest and take an action against unscrupulous, exploitative and unfair trade
practices of sellers.
(v) Providing legal assistance to consumers by way of providing aid, legal advice etc. in seeking legal remedy.
(vi) Filing complaints in appropriate consumer courts on behalf of the consumers.
(vii) Taking an initiative in filing cases in consumer courts in the interest of the general public, not for any individual.

Some of the important consumer organisations and NGOs engaged in protecting and promoting consumers’ interests
include the following.
(i) Consumer Coordination Council, Delhi
(i) (ii)Common Cause, Delhi
(ii) Voluntary Organisation in Interest of Consumer Education (VOICE), Delhi
(iii) Consumer Education and Research Centre (CERC), Ahmedabad
(iv) Consumer Protection Council (CPC), Ahmedabad
(v) Consumer Guidance Society of India (CGSI), Mumbai
(vi) Mumbai Grahak Panchayat, Mumbai
(vii) Karnataka Consumer Service Society, Bangalore
(viii) Consumers’ Association, Kolkata
(ix) Consumer Unity and Trust Society (CUTS), Jaipur

Questions
Part - A
1) State any one unfair trade practice of manufacturers and service providers by which consumers are exploited.
2) State any one regulation which provides legal protection to the consumers.
3) In which year the Consumer Protection Act was enacted?
4) Who is Consumer?
5) Name any one redressal machinery/agency set up under Consumer Protection Act to redress consumer grievances.
6) What is the monetary limit of claim in District Consumer Disputes Redressal Forum?
7) State the monetary limit of claim in State Consumer Disputes Redressal Commission.
8) What is the monetary limit of claim in National Consumer Disputes Redressal Commission?
9) Name any one Consumer Organisation/NGO engaged in protecting and promoting consumers’ interests.

Part - B
10) What is Consumer Protection?
11) State any two reasons to emphasise the importance of consumer protection from Consumers’ point of view.
12) State any two reasons to emphasise the importance of consumer protection from the point of view of Business.
13) Write any two Consumer Rights.
14) Who can file a complaint before the appropriate consumer forum? (Any two)

Part - C
15) Explain any four Rights of consumers.
16) State any four responsibilities of consumers while purchasing, using and consuming goods and services.
17) Explain any four ways in which the objective of consumer protection can be achieved.
18) State any four directions which can be issued by the consumer court to the opposite party.
19) State any four functions of Consumer Organizations and NGOs for the protection and promotion of consumer interests.

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Practical Oriented Question
As an exploited consumer, write a complaint letter to your nearest District Consumer Forum claiming reasonable
redressal.

To,
The Chairman,
District consumer disputes redressal agency,
Name of the place xxx.

Sir,
Sub: Request for seeking relief in respect of defective mobile instrument.

As an aggrieved consumer, I would like to state that I purchased a mobile instrument from a dealer on 01-05 -2014 and now it is
not working properly. Therefore, I would like to write the letter of complaint against the party mentioned below by giving following
details along with defective mobile instrument seeking for the relief in the said transactions.

1. Name and address of complaint: Nagendra

No.40, College Road,
Bangalore.

2. Details of complaint: 1. Battery is not charging.

2. Non-receiving of signals.

3. Name and address of the opposite party: Bangalore mobile sale company.
K. R Road, Bangalore.

4. Documents submitted: 1. Purchase bill.

2. Warranty card.

5. Relief claimed: 1. Replace the mobile

2. Return the price paid.

Thanking you, yours faithfully

Sd/- [Nagendra]

Place: Bangalore
Date: 01.07.2019

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