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Consumer Protection Act in India

CONSUMER PROTECTION ACT 1986 ( “CPA”) IN INDIA

The Consumer Protection Act, 1986 was enacted for better protection of the interests of consumers. The provisions of the Act came into force with effect from 15-4-87. Consumer Protection Act imposes strict liability on a manufacturer, in case of supply of defective goods by him, and a service provider, in case of deficiency in rendering of its services. The term “defect” and “deficiency”, as held in a catena of cases, are to be couched in the widest horizon of there being any kind of fault, imperfection or shortcoming. Furthermore, the standard, which is required to be maintained, in services or goods is not to be restricted to the statutory mandate but shall extend to that claimed by the trader, expressly or impliedly, in any manner whatsoever.

The salient features of the Act are:

(I) it covers all the sectors whether private, public, and cooperative or any person. The provisions of the Act are compensatory as well as preventive and punitive in nature and the Act applies to all goods covered by sale of goods Act and services unless specifically exempted by the Central Government;

(II) It enshrines the following rights of consumers:

(a) right to be protected against the marketing of goods and services which are hazardous to life and property; (b) right to be informed about the quality, quantity, potency, purity, standard and price of goods or services so as to protect the consumers against unfair trade practices; (c) right to be assured, wherever possible, access to a variety of goods and services at competitive prices; (d) right to be heard and to be assured that consumers’ interests will receive due consideration at the appropriate fora; (e) right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers; and (f) right to consumer education;

(III) The Act also envisages establishment of Consumer Protection Councils at the central, state and district levels, whose main objectives are to promote and protect the rights of consumers; (v) To provide a simple, speedy and inexpensive redressal of consumer grievances, the Act envisages a three-tier quasi-judicial machinery at the national, state and district levels. These are: National Consumer Disputes Redressal Commission known as National Commission, State Consumer Disputes Redressal Commissions known as State Commissions and District Consumer Disputes Redressal Forum known as District Forum; and

(IV) the provisions of this Act are in addition to and not in derogation of the provisions of any other law for the time being in force.

Definition of ‘Defect’ and ‘consumer’

Under the CPA, Consumer Forums at the District, State and National level have been specifically constituted to adjudicate claims of consumers for any “defect” in goods. A “defect” has been defined in Section 2(1) (f) of the Act as “any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to maintained by or under any law for the time being in force or under any contract, express or implied, or as is claimed by the trader (which includes the manufacturer) in any manner whatsoever in relation to any goods.”

It is important to mention herein that by virtue of Section 2 (1)(d) persons/entities who had purchased goods for ‘commercial purpose’ (other than those persons who have purchased goods for using them to earn their livelihood by means of self employment) are excluded from the scope of CPA; they cannot institute proceedings under the CPA even if there is any ‘defect’ in the goods purchased by them for using the goods for commercial purposes.

Purview of a ‘complaint’

According to the CPA, ‘Complaint’ means any of the following allegations made in writing by a complainant-

i. any unfair trade practice or a restrictive trade practice has been adopted by a trader,

ii. the goods hired or bought suffer from one or more defects

iii. The goods hired or availed of are deficient in any respect

iv. A trader has charged price in excess of price fixed by law or displayed on the goods or any package containing goods

v. 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 requiring traders to display information in regard to the contents, manner and effect or use of such goods.

Grant of Reliefs under CPA

On arriving at a finding of defect in the goods according to Section 14 CPA, the jurisdictional Consumer Forum may direct one or more of the following: (i) to remove the defect; (ii) to replace the goods with new goods of similar description which shall be free from any defect; (iii) to return to the complainant the price; (iv) to pay such amount as may be awarded as compensation to the consumer for the loss or injury suffered by the consumer due to the negligence of the opposite party; (v) to discontinue the unfair trade practice or the restrictive trade practice or not to repeat them; (vi) to cease and desist manufacture of hazardous goods; (vii) to pay such sums as orders if injury/loss is suffered by a large number of consumers not identifiable conveniently; (viii) to issue corrective advertisement for neutralizing effect of misleading advertisement; (ix) not to offer the hazardous goods for sale; (x) to withdraw the hazardous goods from being offered for sale; (xi) to provide for adequate costs to parties (the Complainant).

There exists no clear pronouncement of the Supreme Court (the apex court in India) till date on whether the liability under the CPA is strict or fault based. However, failure to conform to the standards required under any law, contract or representations of the trader are sufficient to constitute a defect. Furthermore, under Section 14 of the CPA as explained hereinabove, it is only the remedy of compensation that requires the claimant to necessarily prove negligence. In the case of Abhaya Kumar Panda v. Bajaj Auto [(1991) 2 CPJ 644], the Orissa State Commission directed repair of the goods, even though there was no intentional defect. Thus, the defence of no negligence may not be accepted by Consumer forums.

Validity of Limitation of liability clauses

Contractual liability has a role to play in product liability claims under the CPA. Courts in India have upheld limitation of liability clauses, which parties have specifically agreed to in the contract as recognized by the Supreme Court in Bharathi Knitting Company v DHL Worldwide Express Courier (1996) 4 SCC 704. However, such clauses may be struck down if found to be unconscionable in nature. In Maruti Udyog v. Susheel Kumar Gabgotra, [(2006) 4 SCC 644], the manufacturer of the vehicle had stipulated a warranty clause limiting its liability to merely repair the defects found if any. In view of this clause, the Supreme Court reversed the findings of the National Commission to replace the defective goods and held that the liability of the manufacture was confined to repairing the defect. Compensation was, however, awarded for travel charges to the complainant, which was incurred due to the fault of the car manufacturer.

Applicability of other laws

Section 3 of the CPA provides that the Act is in addition to and not in derogation of any other law. The Supreme Court in Secretary, Thirumurugan Co-operative Agricultural Credit Society v. M. Lalitha, [(2004) 1 SCC 305] has interpreted the above provision to mean that the remedies provided under the CP Act are in addition to the remedies provided under other statutes. Hence, the fact that a remedy is specifically provided for under another statute would not necessarily oust the jurisdiction of the appropriate authority under the CP Act. It has been further held that if forums under one statute and the CP Act are approached, then it is for the appropriate authority to permit the parties to opt between the consumer forum and the other forum, depending on the facts and circumstances of the case.

Establishment of Consumer forums

At present, there are 34 State Commissions, one in each State/UT and 571 district fora besides the National Commission. The state governments are responsible to set up the district fora and the State Commissions. States have been empowered to establish additional District Forum and also additional members in the State Commission to facilitate constituting benches and also for holding circuit benches. The Central Government is empowered to establish the National Commission. It has been empowered to appoint additional members to facilitate creation of more benches and holding of circuit benches. The second bench of the National Commission started functioning from 24 September 2003. The government is monitoring the disposal of cases by the consumer courts through National Commission. As per the current statistics, since its inception and up to 5.9.2008 , 2559451 cases were filed out of which 2327035 cases were disposed of by the District forums in various states of India .

Jurisdiction under Consumer Protection Act 1986

The District Forum has the jurisdiction to entertain complaints where the value of the goods or services and the compensation , if any, claimed, is less than INR 50,000. A State Commission has the jurisdiction to entertain complaints where the value of the goods or services and the compensation , if any, claimed exceeds 500,000 rupees but does not exceed 2 million rupees. It is also appellate forum for orders of the District forum. The National Commisssion has the jurisdiction to entertain complaints where the value of goods and services and the compensation exceeds two million rupees and also hears the appeals against the orders of the State Commission.

Period of limitation

A complaint is only admitted by any of the competent forums under CPA if it is filed within two years from the date on which the cause of action has arisen but it may be entertained after the said period after recording its reasons for condoning such delay , if the complainant satisfies that he had a sufficient cause for not filing the complaint within period of two years .

Procedure to file a complaint

A complaint can be filed in a District Forum or as per pecuniary jurisdiction in another forum within local limits of whose jurisdiction the opposite party or any of the opposite parties resides or carries on business, or has a branch office or personally works for gain.

Class actions

Under CPA Section 2 (1) (b) permits filing of a complaint by a consumer, any voluntary consumer association registered under companies Act 1956 or under any other law, the State government or Central Government, one or more consumers where number of consumers have same interest, incase of death of a consumer , his legal representative may ,make a complaint.

Penalty under Section 27 CPA

According to CPA ,where a trader or the complainant fails to comply with an order made by the relevant consumer forum , such person is liable to a punishment with imprisonment for a term which is not less than one month but which may extend to three years or with fine of not less than two thousand rupees but which may extend to ten thousand rupees or with both

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