The moment a person comes into this would, he starts consuming. He needs clothes, milk, oil, soap, water, and many more things and these needs keep taking one form or the other all along his life. Thus we all are consumers in the literal sense of the term. When we approach the market as a consumer, we expect value for money, i.e., right quality, right quantity, right prices, information about the mode of use, etc. But there may be instances where a consumer is harassed or cheated.
The Government understood the need to protect consumers from unscrupulous suppliers, and several laws have been made for this purpose. We have the Indian Contract Act, the Sale of Goods Act, the Dangerous Drugs Act, the Agricultural Produce (Grading and Marketing) Act, the Indian Standards Institution (Certification Marks) Act, the Prevention of Food Adulteration Act, the Standards of Weights and Measures Act, etc. which to some extent protect consumer interests. However, these laws require the consumer to initiate action by way of a civil suit involving lengthy legal process which is very expensive and time consuming.
The Consumer Protection Act, 1986 was enacted to provide a simpler and quicker access to redressal of consumer grievances. The Act for the first time introduced the concept of ‘consumer’ and conferred express additional rights on him. It is interesting to note that the Act doesn’t seek to protect every consumer within the literal meaning of the term. The protection is meant for the person who fits in the definition of ‘consumer’ given by the Act.
Now we understand that the Consumer Protection Act provides means to protect consumers from getting cheated or harassed by suppliers. The question arises how a consumer will seek protection ? The answer is the Act has provided a machinery whereby consumers can file their complaints which will be entertained by the Consumer Forums with special powers so that action can be taken against erring suppliers and the possible compensation may be awarded to consumer for the hardships he has undergone. No court fee is required to be paid to these forums and there is no need to engage a lawyer to present the case.
Following chapter entails a discussion on who is a consumer under the Act, what are the things which can be complained against, when and by whom a complaint can be made and what are the relief available to consumers.
Who is a consumer
1.2 Section 2(d) of the Consumer Protection Act says that consumer means any person who—
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment, and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment, and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person;
Explanation.—For the purposes of the sub-clause (i), “commercial purpose” does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment.
1.2-1 Consumer of goods - The provision reveals that a person claiming himself as a consumer of goods should satisfy that—
1-2-1a THE GOODS ARE BOUGHT FOR CONSIDERATION - There must be a sale transaction between a seller and a buyer; the sale must be of goods; the buying of goods must be for consideration. The terms sale, goods, and consideration have not been defined in the Consumer Protection Act. The meaning of the terms ‘sale’, and ‘goods’ is to be construed according to the Sale of Goods Act, and the meaning of the term ‘consideration’ is to be construed according to the Indian Contract Act.
1-2-1b ANY PERSON WHO USE THE GOODS WITH THE APPROVAL OF THE BUYER IS A CONSUMER - When a person buys goods, they may be used by his family members, relatives and friends. Any person who is making actual use of the goods may come across the defects in goods. Thus the law construe users of the goods as consumers although they may not be buyers at the same time. The words “....with the approval of the buyer” in the definition denotes that the user of the goods should be a rightful user.
Example : A purchased a scooter which was in B’s possession from the date of purchase. B was using it and taking it to the seller for repairs and service from time to time. Later on B had a complaint regarding the scooter. He sued the seller. The seller pleaded that since B did not buy the scooter, he was not a consumer under the Act. The Delhi State Commission held that B, the complainant was using it with the approval of A, the buyer, and therefore he was consumer under the Act.
1-2-1c ANY PERSON WHO OBTAINS THE GOODS FOR ‘RESALE’ OR COMMERCIAL PURPOSES’ IS NOT A CONSUMER - The term ‘for resale’ implies that the goods are brought for the purpose of selling them, and the expression ‘for commercial purpose’ is intended to cover cases other than those of resale of goods. When goods are bought to resell or commercially exploit them, such buyer or user is not a consumer under the Act.
Examples :
1. A jeep was purchased to run it as a taxi. The question was whether the buyer of the jeep was a consumer under the Act. The Rajasthan State Commission held that to use the jeep as a taxi with the object to earn profits was a commercial purpose, and therefore, the buyer/user was not a consumer within the meaning of the Act. [Smt. Pushpa Meena v. Shah Enterprises (Rajasthan) Ltd. (1991) 1 CPR 229].
2. L Ltd. purchased a computer system from Z. The computer system was giving constant trouble and Z was not attending it properly. L Ltd. filed a complaint against Z with the National Commission. Z contended that L Ltd. was not a consumer under the Act because computer system was used for commercial purposes. L Ltd. argued that computer system was not directly used of commercial purposes rather it was used to facilitate the work of the company. The Commission rejected the argument on the grounds that the system made part of the assets of the company, and its expenses were met by it out of business income. Thus the said purchase was a purchase for commercial purposes and L Ltd. was held not to be a consumer under the Act.
One thing is plain and clear from the decided cases that what is important to decide is - Whether a particular good is used for commercial purposes. If it is the buyer/user is not a consumer, and if it is not - the buyer/user is a consumer.
1.2-1d PERSON BUYING GOODS FOR SELF EMPLOYMENT IS A CONSUMER - When goods are bought for commercial purposes and such purchase satisfy the following criteria :
- the goods are used by the buyer himself;
- exclusively for the purpose of earning his livelihood;
- by means of self-employment,
then such use would not be termed as use for commercial purposes under the Act, and the user is recognised as a consumer.
Examples :
1. A buys a truck for plying it as a public carrier by himself, A is a consumer.
2. A buys a truck and hires a driver to ply it, A is not a consumer.
3. A has one cloth shop. He starts another business of a photocopier and buys a photocopy machine therefor. He hasn’t bought this machine exclusively for the purpose of earning livelihood. He is not a consumer under the Act.
Note : That this is an exception to the rule that a buyer of commercial goods is not a consumer under the Act.
The intention of the legislature is to exclude big business houses carrying on business with profit motive from the purview of the Act. At the same time it is pertinent to save the interests of small consumers who buy goods for self employment to earn their livelihood, like a rickshaw puller buying rickshaw for self employment, or a farmer purchasing fertilizer for his crops, or a taxi driver buying a car to run it as a taxi, etc.
Example : A was running a small type institute to earn his livelihood. He purchased a photocopy machine-canon NP 150. It proved defective. He sued the seller who contended that A is not a consumer under the Act as he purchased the photocopier for commercial use. The Commission held that by no stretch of imagination it can be said that the photocopier would bring large scale profits to A. It was a part of his small scale enterprise. He was construed as consumer under the Act.
However, if such a buyer takes assistance of two or more persons to help him in operating the vehicle or machine, etc., he does not cease to be a consumer.
Examples :
1. A buys a truck, ply it himself and hires a cleaner who accompany him all the time and at times drives also when A is busy otherwise, A is a consumer.
2. P, an eye surgeon, purchased a machine from R for the hospital run by him. The machine was found to be a defective one. R contended that P was not a consumer under the Act as the machine was bought for commercial purposes. The National Commission rejected this contention and held that P is a medical practitioner, a professional working by way of self employment by using his knowledge and skill to earn his livelihood. It was not proved by any evidence that P is running a huge hospital. Thus the purchase of machinery is in the nature of self employment. [Rampion Pharmaceuticals v. Dr. Preetam Shah (1997) I CPJ 23 (NCDRC)].
1.2-2 Consumer of services - A person is a consumer of services if he satisfy the following criteria :
1.2-2a SERVICES ARE HIRED OR AVAILED OF - The term ‘hired’ has not been defined under the Act. Its Dictionary meaning is - to procure the use of services at a price. Thus the term ‘hire’ has also been used in the sense of ‘avail’ or ‘use’. Accordingly it may be understood that consumer means any person who avails or uses any service.
Example : A goes to a doctor to get himself treated for a fracture. Here A is hiring the services of the doctor. Thus he is a consumer.
What constitutes hiring has been an issue to be dealt with in many consumer disputes. If it is established that a particular act constitutes hiring of service, the transaction falls within the net of the Consumer Protection Act, and vice-versa.
Examples :
1. A passenger getting railway reservation after payment is hiring service for consideration.
2. A landlord neglected and refused to provide the agreed amenities to his tenant. He filed a complaint against the landlord under the Consumer
Protection Act. The National Commission dismissed the complaint saying that it was a case of lease of immovable property and not of hiring services of the landlord. [Smt. Laxmiben Laxmichand Shah v. Smt. Sakerben Kanji Chandan [1992] 1 Comp. LJ 177 (NCDRC)].
3. A presented before the Sub-Registrar a document claiming it to be a will for registration who sent it to the Collector of Stamps for action. The matter remain pending for about six years. In the meantime A filed a complaint under the Consumer Protection Act alleging harrassment by the Sub-Registrar and Collector and prayed for compensation. The National Commission held the view that A was not a “consumer” under the CPA. Because there was no hiring of services by the complainant for consideration and because a Government official doing his duty as functionary of the State under law could not be said to be rendering a service to the complainant. [S.P. Goel v. Collector of Stamps (1995) III CPR 684 (SC)].
1.2-2b CONSIDERATION MUST BE PAID OR PAYABLE - Consideration is regarded necessary for hiring or availing of services. However, its payment need not necessarily be immediate. It can be in instalments. For the services provided without charging anything in return, the person availing the services is not a consumer under the Act.
Examples :
1. A hires an advocate to file a suit for recovery of money from his employer. He promises to pay fee to the advocate after settlement of the suit. A is a consumer under the Act.
2. A goes to a Doctor to get himself treated for a fracture. The Doctor being his friend charged him nothing for the treatment. A is not a consumer under the Act.
3. B issued an advertisement that a person could enter the contest by booking a Premier Padmini car. S purchased the car and thus entered the contest. He was declared as winner of the draw and was thus entitled to the two tickets from New Delhi to New York and back. S filed a complaint alleging that the ticket was not delivered to him. The National Commission held that S was not a consumer in this context. He paid for the car and got it. B was not liable so far as the contract of winning a lottery was concerned. [Byford v. S.S. Srivastava (1993) II CPR 83 (NCDRC)].
The Direct and Indirect taxes paid to the State by a citizen is not payment for the services rendered.
1.2-2c BENEFICIARY OF SERVICES IS ALSO A CONSUMER - When a person hires services, he may hire it for himself or for any other person. In such cases the beneficiary (or user) of these services is also a consumer.
Example : A takes his son B to a doctor for his treatment. Here A is hirer of services of the doctor and B is beneficiary of these services. For the purpose of the Act, both A and B are consumers.
Note : This is an exception to the rule of privity to the contract.
Note that in case of goods, buyer of goods for commercial purpose ceases to be a consumer under the Act. On the other hand, a consumer of service for commercial purpose remains a consumer under the Act.
Example : S applied to Electricity Board for electricity connection for a flour mill. There was a delay in releasing the connection. S made a complaint for deficiency in service. He was held a consumer under the Act. - Shamsher Khan v. Rajasthan State Electricity Board (1993) II CPR 6 (Raj.).
Complaint
1.3 An aggrieved consumer seeks redressal under the Act through the instrumentality of complaint. It does not mean that the consumer can complain against his each and every problem. The Act has provided certain grounds on which complaint can be made. Similarly, relief against these complaints can be granted within the set pattern.
1.3-1 What constitutes a complaint [Section 2(1)(c)] - Complaint is a statement made in writing to the National Commission, the State Commission or the District Forum by a person competent to file it, containing the allegations in detail, and with a view to obtain relief provided under the Act.
1.3-2 Who can file a complaint [Sections 2(b) & 12] - At the outset it is clear that a person who can be termed as a consumer under the Act can make a complaint. To be specific on this account, following are the persons who can file a complaint under the Act :
(a) a consumer; or
(b) any voluntary consumer association registered under the Companies Act, 1956 or under any other law for the time being in force, or
(c) the Central Government or any State Government,
(d) one or more consumers, where there are numerious consumers having the same interest.
In addition to the above following are also considered as a consumer and hence they may file a complaint :
Beneficiary of the goods/services : The definition of consumer itself includes beneficiary of goods and services - K.B. Jayalaxmi v. Government of Tamil Nadu 1994(1) CPR 114.
Where a young child is taken to the hospital by his parents and the child is treated by the doctor, the parents of such a minor child can file a complaint under the Act - Spring Meadows Hospital v. Harjot Ahluwalia JT 1998(2) SC 620.
Legal representative of the deceased consumer : The Act does not expressly indicate that the LR of a consumer are also included in its scope. But by
operation of law, the legal representatives get clothed with the rights, status and personality of the deceased. Thus the expression consumer would include legal representative of the deceased consumer and he can exercise his right for the purpose of enforcing the cause of action which has devolved on him - Cosmopolitan Hospital v. Smt. Vasantha P. Nair (1) 1992 CPJ NC 302.
Legal heirs of the deceased consumer : A legal heir of the deceased consumer can well maintain a complaint under the Act - Joseph Alias Animon v. Dr. Elizabeth Zachariah (1) 1997 CPJ 96.
Husband of the consumer : In the Indian conditions, women may be illiterate, educated women may be unaware of their legal rights, thus a husband can file and prosecute complaint under the Consumer Protection Act on behalf of his spouse - Punjab National Bank, Bombay v. K.B. Shetty 1991 (2) CPR 633.
A relative of consumer : When a consumer signs the original complaint, it can be initiated by his/her relative - Motibai Dalvi Hospital v. M.I. Govilkar 1992 (1) CPR 408.
Insurance company : Where Insurance company pays and settles the claim of the insured and the insured person transfers his rights in the insured goods to the company, it can file a complaint for the loss caused to the insured goods by negligence of goods/service providers. For example, when loss is caused to such goods because of negligence of transport company, the insurance company can file a claim against the transport company - New India Assurance Company Ltd. v. Green Transport Co. II 1991 CPJ (1) Delhi.
1.3-3 What a complaint must contain [Section 2(1)(c)] - A complaint must contain any of the following allegations :
(a) An unfair trade practice or a restrictive trade practice has been adopted by any trader;
Example : A sold a six months old car to B representing it to be a new one. Here B can make a complaint against A for following an unfair trade practice.
(b) The goods bought by him or agreed to be bought by him suffer from one or more defects;
Example : A bought a computer from B. It was not working properly since day one. A can make a complaint against B for supplying him a defective computer.
(c) The services hired or availed of or agreed to be hired or availed of by him suffer from deficiency in any respect.
Example : A hired services of an advocate to defend himself against his landlord. The advocate did not appear every time the case was scheduled. A can make a complaint against the advocate.
(d) A trader has charged for the goods mentioned in the complaint a price in excess of the price fixed by or under any law for the time being in force or displayed on the goods or any package containing such goods.
Para 1.3
(e) Goods which will be hazardous to life and safety when used, are being offered for sale to the public in contravention of the provisions of any law for the time being in force requiring traders to display information in regard to the contents, manner and effect of use of such goods.
Example : A bought a tin of disinfectant powder. It had lid which was to be opened in a specific manner. Trader did not inform. A about this. While opening the lid in ordinary way, some powder flew in the eyes of A which affected his vision. Here A can make a complaint against the trader.
Note : The terms ‘unfair trade practice’, ‘restrictive trade practice’, ‘Goods’, ‘Defect’, ‘service’, ‘Deficiency’, ‘trader’, ‘Excess price’, and ‘Hazardous goods’ have been discussed in detail in the chapter separately.
1.3-4 Time frame within which a complaint can be filed - Section 24A of the Act provides that a consumer dispute can be filed within two years from the date on which the cause of action arises.
Since this provision was inserted in the Act in 1993, before that the Consumer Forums were following the Limitation Act, 1963, which says that a suit can be filed within three years after the cause of action arises.
The point of time when cause of action arises is an important factor in determining the time period available to file a complaint. There are no set rules to decide such time. It depends on the facts and circumstances of each case.
Examples :
1. A got his eye operated by B in 1989. He got a certificate of blindness on 18th December, 1989. He was still in hope of gaining his sight and went from second operation in 1992 and was discharged on 21-1-1992. He filed a complaint against B on 11-1-1994. B opposed on the ground that more than 2 years were over after 18-12-1989, thus the complaint is not maintainable. The Commission held that here the cause of action for filing the complaint would arose after the second operation when A lost entire hope of recovery. Thus the suit is maintainable - Mukund Lal Ganguly v. Dr. Abhijit Ghosh III 1995 CPJ 64.
2. A house was allotted on 1-1-1999. Defects appeared in the house on 10-1-1999. Here the cause of action will arise on 10-1-1999.
It may be noted that these time frames are not absolute limitations. If the Consumer Forum is satisfied that there was sufficient cause for not filing the complaint within the prescribed period, it can entertain a complaint beyond limitation time. However the Forum must record the reasons for condonation of delay.
Example : A deposited some jewellery with a bank. Bank lost it. Bank kept giving her false sense of hope to retrieve the jewellery, and thus A was put in a state of inaction. Later on when A filed a suit on the Bank, it claimed that the suit was not maintainable as the limitation time after the cause of action arose has lapsed. The Commission reprimanded the bank and admitted the case - Agnes D’Mello v. Canara Bank [1992] I CPJ 335 (NCDRC).
1.3-5 Relief available against complaint [Sections 14 and 22] - A complainant can seek any one or more of the following relief under the Act:
(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, as the case may be, the charges paid by the complainant;
(d) 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;
(e) to remove the defects or deficiencies in the services in question;
(f) to discontinue the unfair trade practice or the restrictive trade practice or not to repeat it;
(g) not to offer the hazardous goods for sale;
(h) to withdraw the hazardous goods from being offered for sale;
(i) to provide from adequate costs to complainant.
1.3-6 When a complaint cannot be filed - A complaint on behalf of the public which consists of unidentifiable consumers cannot be filed under the Act.
Example : A complaint was filed on the basis of a newspaper report that passengers travelling by flight No. 1C-401 from Calcutta to Delhi on May 13, 1989 were made to stay at the airport and the flight was delayed by 90 minutes causing great inconvenience to the passengers. It was held that such a general complaint cannot be entertained. No passenger who boarded that plane came forward or authorised the complainant to make the complaint - Consumer Education and Research Society, Ahmedabad v. Indian Airlines Corporation, New Delhi (1992) 1 CPJ 38 NC.
A complaint by an individual on behalf of general public is not permitted - Commissioner of Transport v. Y.R. Grover 1994 (1) CPJ 199 NC.
An unregistered association cannot file a complaint under the Act.
Example : The complainant was an association formed in the Gulf and was unregistered in India. It was held that since the petitioner was not a voluntary organization registered under any law in force in India, cannot come within clause (d) of section 2(1) of the Act and hence can’t file a complaint - Gulf Trivendrum air Fare Forum v. Chairman & Managing Director, Air India 1991 (2) CPR 129.
A complaint after expiry of limitation period is not permitted. A complaint cannot be filed after the lapse of two years from the date on which the cause of action arise unless the Forum is satisfied about the genuineness of the reason for not filing complaint within the prescribed time.
Example : A supplied defective machinery to B on 12-1-1998. B filed a suit against A on 10-3-2001. It was not admitted before the Forum for the reason that the time available to make complaint lapsed.
1.3-7 Dismissal of frivolous and vexatious complaints - Since the Act provides for an inexpensive procedure (Court fees is not charged in consumer complaints under the Act) for filing complaints, there is a possibility that the Act is misused by people for filing vexations claims. To discourage frivolous and vexatious claims, the Act has provided that such complaints will be dismissed and the complainant can be charged with the costs not exceeding Rs. 10,000.
Example : A filed a complaint against B to recover compensation of
Rs. 55,99,000 with the motive of indulging in speculative litigation taking undue advantage of the fact that no court fee was payable under the Consumer Protection Act. The National Commission held that the complainant has totally failed to make a case against B, and dismissed the complaint as frivolous and vexatious imposing Rs. 10,000 as costs to A - Brij Mohan Kher v. Dr. N.H. Banka I 1995 CPJ 99 NC.
Unfair Trade Practice and Restrictive Trade Practice
1.4 We have discussed that a consumer can make a complaint when an unfair or a restrictive trade practice is followed by a trader. What can be termed as an unfair or a restrictive trade practice is another question of law.
1.4-1 What is an Unfair Trade Practice - The Act says that, “unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provison of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely—
(1) The practice of making any statement, whether orally or in writing or by visible representation which—
(i) falsely represents that the goods are of particular standard, quality, quantity, grade, composition, style or model;
(ii) falsely represents that the services are of a particular standard, quality or grade;
(iii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;
(iv) represents that the goods or services have sponsorship, approval performance, characteristics, accessories, uses or benefits which such goods or services do not have;
(v) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;
(vi) makes false or misleading statement concerning the need for, or the usefulness of, any goods or services;
(vii) 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;
(viii) makes to the public a representation in a form that purports to be a warranty or guarantee of a product or of any goods or services; or 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 perported 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;
(ix) 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 other representation is made;
(x) gives false or misleading facts disparaging the goods, services or trade of another person.
Note : A statement is said to be made to public when it 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, by the person who had caused the statement to be so expressed, made or contained.
(2) Permits the publication of any advertisement whether in any newspaper or otherwise, 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.
Note : “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, or
(b) a price that a person who reads, hears or sees the advertisement, would reasonably understand to be bargain price having regard to the prices at which the product advertised or like products are ordinarily sold.
(3) Permits 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; or 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;
(4) Permits 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 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;
(5) Permits the hoarding or destruction of goods, or refuses 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.
The Government understood the need to protect consumers from unscrupulous suppliers, and several laws have been made for this purpose. We have the Indian Contract Act, the Sale of Goods Act, the Dangerous Drugs Act, the Agricultural Produce (Grading and Marketing) Act, the Indian Standards Institution (Certification Marks) Act, the Prevention of Food Adulteration Act, the Standards of Weights and Measures Act, etc. which to some extent protect consumer interests. However, these laws require the consumer to initiate action by way of a civil suit involving lengthy legal process which is very expensive and time consuming.
The Consumer Protection Act, 1986 was enacted to provide a simpler and quicker access to redressal of consumer grievances. The Act for the first time introduced the concept of ‘consumer’ and conferred express additional rights on him. It is interesting to note that the Act doesn’t seek to protect every consumer within the literal meaning of the term. The protection is meant for the person who fits in the definition of ‘consumer’ given by the Act.
Now we understand that the Consumer Protection Act provides means to protect consumers from getting cheated or harassed by suppliers. The question arises how a consumer will seek protection ? The answer is the Act has provided a machinery whereby consumers can file their complaints which will be entertained by the Consumer Forums with special powers so that action can be taken against erring suppliers and the possible compensation may be awarded to consumer for the hardships he has undergone. No court fee is required to be paid to these forums and there is no need to engage a lawyer to present the case.
Following chapter entails a discussion on who is a consumer under the Act, what are the things which can be complained against, when and by whom a complaint can be made and what are the relief available to consumers.
Who is a consumer
1.2 Section 2(d) of the Consumer Protection Act says that consumer means any person who—
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment, and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment, and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person;
Explanation.—For the purposes of the sub-clause (i), “commercial purpose” does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment.
1.2-1 Consumer of goods - The provision reveals that a person claiming himself as a consumer of goods should satisfy that—
1-2-1a THE GOODS ARE BOUGHT FOR CONSIDERATION - There must be a sale transaction between a seller and a buyer; the sale must be of goods; the buying of goods must be for consideration. The terms sale, goods, and consideration have not been defined in the Consumer Protection Act. The meaning of the terms ‘sale’, and ‘goods’ is to be construed according to the Sale of Goods Act, and the meaning of the term ‘consideration’ is to be construed according to the Indian Contract Act.
1-2-1b ANY PERSON WHO USE THE GOODS WITH THE APPROVAL OF THE BUYER IS A CONSUMER - When a person buys goods, they may be used by his family members, relatives and friends. Any person who is making actual use of the goods may come across the defects in goods. Thus the law construe users of the goods as consumers although they may not be buyers at the same time. The words “....with the approval of the buyer” in the definition denotes that the user of the goods should be a rightful user.
Example : A purchased a scooter which was in B’s possession from the date of purchase. B was using it and taking it to the seller for repairs and service from time to time. Later on B had a complaint regarding the scooter. He sued the seller. The seller pleaded that since B did not buy the scooter, he was not a consumer under the Act. The Delhi State Commission held that B, the complainant was using it with the approval of A, the buyer, and therefore he was consumer under the Act.
1-2-1c ANY PERSON WHO OBTAINS THE GOODS FOR ‘RESALE’ OR COMMERCIAL PURPOSES’ IS NOT A CONSUMER - The term ‘for resale’ implies that the goods are brought for the purpose of selling them, and the expression ‘for commercial purpose’ is intended to cover cases other than those of resale of goods. When goods are bought to resell or commercially exploit them, such buyer or user is not a consumer under the Act.
Examples :
1. A jeep was purchased to run it as a taxi. The question was whether the buyer of the jeep was a consumer under the Act. The Rajasthan State Commission held that to use the jeep as a taxi with the object to earn profits was a commercial purpose, and therefore, the buyer/user was not a consumer within the meaning of the Act. [Smt. Pushpa Meena v. Shah Enterprises (Rajasthan) Ltd. (1991) 1 CPR 229].
2. L Ltd. purchased a computer system from Z. The computer system was giving constant trouble and Z was not attending it properly. L Ltd. filed a complaint against Z with the National Commission. Z contended that L Ltd. was not a consumer under the Act because computer system was used for commercial purposes. L Ltd. argued that computer system was not directly used of commercial purposes rather it was used to facilitate the work of the company. The Commission rejected the argument on the grounds that the system made part of the assets of the company, and its expenses were met by it out of business income. Thus the said purchase was a purchase for commercial purposes and L Ltd. was held not to be a consumer under the Act.
One thing is plain and clear from the decided cases that what is important to decide is - Whether a particular good is used for commercial purposes. If it is the buyer/user is not a consumer, and if it is not - the buyer/user is a consumer.
1.2-1d PERSON BUYING GOODS FOR SELF EMPLOYMENT IS A CONSUMER - When goods are bought for commercial purposes and such purchase satisfy the following criteria :
- the goods are used by the buyer himself;
- exclusively for the purpose of earning his livelihood;
- by means of self-employment,
then such use would not be termed as use for commercial purposes under the Act, and the user is recognised as a consumer.
Examples :
1. A buys a truck for plying it as a public carrier by himself, A is a consumer.
2. A buys a truck and hires a driver to ply it, A is not a consumer.
3. A has one cloth shop. He starts another business of a photocopier and buys a photocopy machine therefor. He hasn’t bought this machine exclusively for the purpose of earning livelihood. He is not a consumer under the Act.
Note : That this is an exception to the rule that a buyer of commercial goods is not a consumer under the Act.
The intention of the legislature is to exclude big business houses carrying on business with profit motive from the purview of the Act. At the same time it is pertinent to save the interests of small consumers who buy goods for self employment to earn their livelihood, like a rickshaw puller buying rickshaw for self employment, or a farmer purchasing fertilizer for his crops, or a taxi driver buying a car to run it as a taxi, etc.
Example : A was running a small type institute to earn his livelihood. He purchased a photocopy machine-canon NP 150. It proved defective. He sued the seller who contended that A is not a consumer under the Act as he purchased the photocopier for commercial use. The Commission held that by no stretch of imagination it can be said that the photocopier would bring large scale profits to A. It was a part of his small scale enterprise. He was construed as consumer under the Act.
However, if such a buyer takes assistance of two or more persons to help him in operating the vehicle or machine, etc., he does not cease to be a consumer.
Examples :
1. A buys a truck, ply it himself and hires a cleaner who accompany him all the time and at times drives also when A is busy otherwise, A is a consumer.
2. P, an eye surgeon, purchased a machine from R for the hospital run by him. The machine was found to be a defective one. R contended that P was not a consumer under the Act as the machine was bought for commercial purposes. The National Commission rejected this contention and held that P is a medical practitioner, a professional working by way of self employment by using his knowledge and skill to earn his livelihood. It was not proved by any evidence that P is running a huge hospital. Thus the purchase of machinery is in the nature of self employment. [Rampion Pharmaceuticals v. Dr. Preetam Shah (1997) I CPJ 23 (NCDRC)].
1.2-2 Consumer of services - A person is a consumer of services if he satisfy the following criteria :
1.2-2a SERVICES ARE HIRED OR AVAILED OF - The term ‘hired’ has not been defined under the Act. Its Dictionary meaning is - to procure the use of services at a price. Thus the term ‘hire’ has also been used in the sense of ‘avail’ or ‘use’. Accordingly it may be understood that consumer means any person who avails or uses any service.
Example : A goes to a doctor to get himself treated for a fracture. Here A is hiring the services of the doctor. Thus he is a consumer.
What constitutes hiring has been an issue to be dealt with in many consumer disputes. If it is established that a particular act constitutes hiring of service, the transaction falls within the net of the Consumer Protection Act, and vice-versa.
Examples :
1. A passenger getting railway reservation after payment is hiring service for consideration.
2. A landlord neglected and refused to provide the agreed amenities to his tenant. He filed a complaint against the landlord under the Consumer
Protection Act. The National Commission dismissed the complaint saying that it was a case of lease of immovable property and not of hiring services of the landlord. [Smt. Laxmiben Laxmichand Shah v. Smt. Sakerben Kanji Chandan [1992] 1 Comp. LJ 177 (NCDRC)].
3. A presented before the Sub-Registrar a document claiming it to be a will for registration who sent it to the Collector of Stamps for action. The matter remain pending for about six years. In the meantime A filed a complaint under the Consumer Protection Act alleging harrassment by the Sub-Registrar and Collector and prayed for compensation. The National Commission held the view that A was not a “consumer” under the CPA. Because there was no hiring of services by the complainant for consideration and because a Government official doing his duty as functionary of the State under law could not be said to be rendering a service to the complainant. [S.P. Goel v. Collector of Stamps (1995) III CPR 684 (SC)].
1.2-2b CONSIDERATION MUST BE PAID OR PAYABLE - Consideration is regarded necessary for hiring or availing of services. However, its payment need not necessarily be immediate. It can be in instalments. For the services provided without charging anything in return, the person availing the services is not a consumer under the Act.
Examples :
1. A hires an advocate to file a suit for recovery of money from his employer. He promises to pay fee to the advocate after settlement of the suit. A is a consumer under the Act.
2. A goes to a Doctor to get himself treated for a fracture. The Doctor being his friend charged him nothing for the treatment. A is not a consumer under the Act.
3. B issued an advertisement that a person could enter the contest by booking a Premier Padmini car. S purchased the car and thus entered the contest. He was declared as winner of the draw and was thus entitled to the two tickets from New Delhi to New York and back. S filed a complaint alleging that the ticket was not delivered to him. The National Commission held that S was not a consumer in this context. He paid for the car and got it. B was not liable so far as the contract of winning a lottery was concerned. [Byford v. S.S. Srivastava (1993) II CPR 83 (NCDRC)].
The Direct and Indirect taxes paid to the State by a citizen is not payment for the services rendered.
1.2-2c BENEFICIARY OF SERVICES IS ALSO A CONSUMER - When a person hires services, he may hire it for himself or for any other person. In such cases the beneficiary (or user) of these services is also a consumer.
Example : A takes his son B to a doctor for his treatment. Here A is hirer of services of the doctor and B is beneficiary of these services. For the purpose of the Act, both A and B are consumers.
Note : This is an exception to the rule of privity to the contract.
Note that in case of goods, buyer of goods for commercial purpose ceases to be a consumer under the Act. On the other hand, a consumer of service for commercial purpose remains a consumer under the Act.
Example : S applied to Electricity Board for electricity connection for a flour mill. There was a delay in releasing the connection. S made a complaint for deficiency in service. He was held a consumer under the Act. - Shamsher Khan v. Rajasthan State Electricity Board (1993) II CPR 6 (Raj.).
Complaint
1.3 An aggrieved consumer seeks redressal under the Act through the instrumentality of complaint. It does not mean that the consumer can complain against his each and every problem. The Act has provided certain grounds on which complaint can be made. Similarly, relief against these complaints can be granted within the set pattern.
1.3-1 What constitutes a complaint [Section 2(1)(c)] - Complaint is a statement made in writing to the National Commission, the State Commission or the District Forum by a person competent to file it, containing the allegations in detail, and with a view to obtain relief provided under the Act.
1.3-2 Who can file a complaint [Sections 2(b) & 12] - At the outset it is clear that a person who can be termed as a consumer under the Act can make a complaint. To be specific on this account, following are the persons who can file a complaint under the Act :
(a) a consumer; or
(b) any voluntary consumer association registered under the Companies Act, 1956 or under any other law for the time being in force, or
(c) the Central Government or any State Government,
(d) one or more consumers, where there are numerious consumers having the same interest.
In addition to the above following are also considered as a consumer and hence they may file a complaint :
Beneficiary of the goods/services : The definition of consumer itself includes beneficiary of goods and services - K.B. Jayalaxmi v. Government of Tamil Nadu 1994(1) CPR 114.
Where a young child is taken to the hospital by his parents and the child is treated by the doctor, the parents of such a minor child can file a complaint under the Act - Spring Meadows Hospital v. Harjot Ahluwalia JT 1998(2) SC 620.
Legal representative of the deceased consumer : The Act does not expressly indicate that the LR of a consumer are also included in its scope. But by
operation of law, the legal representatives get clothed with the rights, status and personality of the deceased. Thus the expression consumer would include legal representative of the deceased consumer and he can exercise his right for the purpose of enforcing the cause of action which has devolved on him - Cosmopolitan Hospital v. Smt. Vasantha P. Nair (1) 1992 CPJ NC 302.
Legal heirs of the deceased consumer : A legal heir of the deceased consumer can well maintain a complaint under the Act - Joseph Alias Animon v. Dr. Elizabeth Zachariah (1) 1997 CPJ 96.
Husband of the consumer : In the Indian conditions, women may be illiterate, educated women may be unaware of their legal rights, thus a husband can file and prosecute complaint under the Consumer Protection Act on behalf of his spouse - Punjab National Bank, Bombay v. K.B. Shetty 1991 (2) CPR 633.
A relative of consumer : When a consumer signs the original complaint, it can be initiated by his/her relative - Motibai Dalvi Hospital v. M.I. Govilkar 1992 (1) CPR 408.
Insurance company : Where Insurance company pays and settles the claim of the insured and the insured person transfers his rights in the insured goods to the company, it can file a complaint for the loss caused to the insured goods by negligence of goods/service providers. For example, when loss is caused to such goods because of negligence of transport company, the insurance company can file a claim against the transport company - New India Assurance Company Ltd. v. Green Transport Co. II 1991 CPJ (1) Delhi.
1.3-3 What a complaint must contain [Section 2(1)(c)] - A complaint must contain any of the following allegations :
(a) An unfair trade practice or a restrictive trade practice has been adopted by any trader;
Example : A sold a six months old car to B representing it to be a new one. Here B can make a complaint against A for following an unfair trade practice.
(b) The goods bought by him or agreed to be bought by him suffer from one or more defects;
Example : A bought a computer from B. It was not working properly since day one. A can make a complaint against B for supplying him a defective computer.
(c) The services hired or availed of or agreed to be hired or availed of by him suffer from deficiency in any respect.
Example : A hired services of an advocate to defend himself against his landlord. The advocate did not appear every time the case was scheduled. A can make a complaint against the advocate.
(d) A trader has charged for the goods mentioned in the complaint a price in excess of the price fixed by or under any law for the time being in force or displayed on the goods or any package containing such goods.
Para 1.3
(e) Goods which will be hazardous to life and safety when used, are being offered for sale to the public in contravention of the provisions of any law for the time being in force requiring traders to display information in regard to the contents, manner and effect of use of such goods.
Example : A bought a tin of disinfectant powder. It had lid which was to be opened in a specific manner. Trader did not inform. A about this. While opening the lid in ordinary way, some powder flew in the eyes of A which affected his vision. Here A can make a complaint against the trader.
Note : The terms ‘unfair trade practice’, ‘restrictive trade practice’, ‘Goods’, ‘Defect’, ‘service’, ‘Deficiency’, ‘trader’, ‘Excess price’, and ‘Hazardous goods’ have been discussed in detail in the chapter separately.
1.3-4 Time frame within which a complaint can be filed - Section 24A of the Act provides that a consumer dispute can be filed within two years from the date on which the cause of action arises.
Since this provision was inserted in the Act in 1993, before that the Consumer Forums were following the Limitation Act, 1963, which says that a suit can be filed within three years after the cause of action arises.
The point of time when cause of action arises is an important factor in determining the time period available to file a complaint. There are no set rules to decide such time. It depends on the facts and circumstances of each case.
Examples :
1. A got his eye operated by B in 1989. He got a certificate of blindness on 18th December, 1989. He was still in hope of gaining his sight and went from second operation in 1992 and was discharged on 21-1-1992. He filed a complaint against B on 11-1-1994. B opposed on the ground that more than 2 years were over after 18-12-1989, thus the complaint is not maintainable. The Commission held that here the cause of action for filing the complaint would arose after the second operation when A lost entire hope of recovery. Thus the suit is maintainable - Mukund Lal Ganguly v. Dr. Abhijit Ghosh III 1995 CPJ 64.
2. A house was allotted on 1-1-1999. Defects appeared in the house on 10-1-1999. Here the cause of action will arise on 10-1-1999.
It may be noted that these time frames are not absolute limitations. If the Consumer Forum is satisfied that there was sufficient cause for not filing the complaint within the prescribed period, it can entertain a complaint beyond limitation time. However the Forum must record the reasons for condonation of delay.
Example : A deposited some jewellery with a bank. Bank lost it. Bank kept giving her false sense of hope to retrieve the jewellery, and thus A was put in a state of inaction. Later on when A filed a suit on the Bank, it claimed that the suit was not maintainable as the limitation time after the cause of action arose has lapsed. The Commission reprimanded the bank and admitted the case - Agnes D’Mello v. Canara Bank [1992] I CPJ 335 (NCDRC).
1.3-5 Relief available against complaint [Sections 14 and 22] - A complainant can seek any one or more of the following relief under the Act:
(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, as the case may be, the charges paid by the complainant;
(d) 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;
(e) to remove the defects or deficiencies in the services in question;
(f) to discontinue the unfair trade practice or the restrictive trade practice or not to repeat it;
(g) not to offer the hazardous goods for sale;
(h) to withdraw the hazardous goods from being offered for sale;
(i) to provide from adequate costs to complainant.
1.3-6 When a complaint cannot be filed - A complaint on behalf of the public which consists of unidentifiable consumers cannot be filed under the Act.
Example : A complaint was filed on the basis of a newspaper report that passengers travelling by flight No. 1C-401 from Calcutta to Delhi on May 13, 1989 were made to stay at the airport and the flight was delayed by 90 minutes causing great inconvenience to the passengers. It was held that such a general complaint cannot be entertained. No passenger who boarded that plane came forward or authorised the complainant to make the complaint - Consumer Education and Research Society, Ahmedabad v. Indian Airlines Corporation, New Delhi (1992) 1 CPJ 38 NC.
A complaint by an individual on behalf of general public is not permitted - Commissioner of Transport v. Y.R. Grover 1994 (1) CPJ 199 NC.
An unregistered association cannot file a complaint under the Act.
Example : The complainant was an association formed in the Gulf and was unregistered in India. It was held that since the petitioner was not a voluntary organization registered under any law in force in India, cannot come within clause (d) of section 2(1) of the Act and hence can’t file a complaint - Gulf Trivendrum air Fare Forum v. Chairman & Managing Director, Air India 1991 (2) CPR 129.
A complaint after expiry of limitation period is not permitted. A complaint cannot be filed after the lapse of two years from the date on which the cause of action arise unless the Forum is satisfied about the genuineness of the reason for not filing complaint within the prescribed time.
Example : A supplied defective machinery to B on 12-1-1998. B filed a suit against A on 10-3-2001. It was not admitted before the Forum for the reason that the time available to make complaint lapsed.
1.3-7 Dismissal of frivolous and vexatious complaints - Since the Act provides for an inexpensive procedure (Court fees is not charged in consumer complaints under the Act) for filing complaints, there is a possibility that the Act is misused by people for filing vexations claims. To discourage frivolous and vexatious claims, the Act has provided that such complaints will be dismissed and the complainant can be charged with the costs not exceeding Rs. 10,000.
Example : A filed a complaint against B to recover compensation of
Rs. 55,99,000 with the motive of indulging in speculative litigation taking undue advantage of the fact that no court fee was payable under the Consumer Protection Act. The National Commission held that the complainant has totally failed to make a case against B, and dismissed the complaint as frivolous and vexatious imposing Rs. 10,000 as costs to A - Brij Mohan Kher v. Dr. N.H. Banka I 1995 CPJ 99 NC.
Unfair Trade Practice and Restrictive Trade Practice
1.4 We have discussed that a consumer can make a complaint when an unfair or a restrictive trade practice is followed by a trader. What can be termed as an unfair or a restrictive trade practice is another question of law.
1.4-1 What is an Unfair Trade Practice - The Act says that, “unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provison of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely—
(1) The practice of making any statement, whether orally or in writing or by visible representation which—
(i) falsely represents that the goods are of particular standard, quality, quantity, grade, composition, style or model;
(ii) falsely represents that the services are of a particular standard, quality or grade;
(iii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;
(iv) represents that the goods or services have sponsorship, approval performance, characteristics, accessories, uses or benefits which such goods or services do not have;
(v) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;
(vi) makes false or misleading statement concerning the need for, or the usefulness of, any goods or services;
(vii) 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;
(viii) makes to the public a representation in a form that purports to be a warranty or guarantee of a product or of any goods or services; or 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 perported 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;
(ix) 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 other representation is made;
(x) gives false or misleading facts disparaging the goods, services or trade of another person.
Note : A statement is said to be made to public when it 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, by the person who had caused the statement to be so expressed, made or contained.
(2) Permits the publication of any advertisement whether in any newspaper or otherwise, 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.
Note : “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, or
(b) a price that a person who reads, hears or sees the advertisement, would reasonably understand to be bargain price having regard to the prices at which the product advertised or like products are ordinarily sold.
(3) Permits 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; or 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;
(4) Permits 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 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;
(5) Permits the hoarding or destruction of goods, or refuses 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.
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