Report No. 199

Consumer Protection Act, 1986

In early years when welfare legislations like the Consumer Protection Act, 1986 did not exist, the maxim caveat emptor (let the buyer beware) governed the market. Now with the opening of global markets, economies and progressive removal of restrictions on international trade, there is increasing competition among manufacturers which has benefited consumers in the form of improvement in quality of goods and services. Now the maxim caveat emptor has been replaced by (let the seller beware). In spite of various provisions providing protection to the consumer in different enactments like CPC 1908, Indian Contract Act 1872, Sale of Goods Act 1930, etc. very little could be achieved in the area of consumer protection.

Though the MRTP Act, 1969 has provided relief to the consumers, yet it became necessary to protect consumers from exploitation and to save them from adulterated and substandard goods and deficient services and unfair business practices. The Consumer Protection Act, 1986 (CPA) was thus framed to protect consumers from unfair and undesirable practices of business community. The Act came into force in 1987 and was further amended from time to time.

The preamble of the Act shows that it is "an Act to provide for better protection of the interest of consumers and for that purpose, to make provision for establishment of consumer councils and other authorities for the settlement of consumer disputes and for matters connected therewith."

When Act was enacted in 1986, it did not originally contain the definition of 'unfair trade practice'. The concept of unfair trade practice was, however, interpreted according to definition of unfair trade practice, given in the MRTP Act of 1969. However, in 1993, section 2(1)(r) incorporated an exhaustive definition of 'unfair trade practice' as given under section 36A of MRTP Act, as amended in 1984 with a view to making Consumer (Protection) Act, 1986 a self-contained Code and is reproduced as under:

(r) "unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of goods or for the provision 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 a 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 a false or misleading representation 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;

Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;

(viii) makes to the public a representation in a form that purports to be-

(i) a warranty or guarantee of a product or of any goods or services; or

(ii) 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 purported 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 the presentation is made;

(x) gives false or misleading facts disparaging the goods, services or trade of another person.

Explanation - For the purposes of clause (1), a statement that 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; shall be deemed to be a statement made to the public by, and only 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.

Explanation - For the purpose of clause (2), '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 a bargain price having regard to the prices at which the product advertised or like products are ordinarily sold;

(3) permits -

(a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating the 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;

(b) the conduct of any contest, lottery, game of chance of 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, construction, 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.

(6) Any reference in this Act to any other Act or provision thereof which is not in force in any area to which this Act applies shall be construed to have a reference to the corresponding Act or provision thereof in force in such area.

Under the above Act of 1986, there is a three tier set up to enquire into the allegation of unfair trade practice with each of three Authorities having its own original pecuniary jurisdiction.

The complaint lies before the District Forum where the value of goods or services and for compensation claimed does not exceed rupees five lakhs. The District Forum after the proceedings are conducted under section 13, is satisfied that the goods complained against suffer from any of the defects specified in the complaint about the services are proved, it shall issue an order to the opposite party directing him to either remove the defect pointed out to replace the goods with new ones, to remove the defects or deficiencies in services in question, to return to the complainant the price, to pay such amount as compensation for any loss suffered, to discontinue the unfair trade practice or the restrictive trade practice, or not to repeat them, etc.

Section 14 deals with the reliefs which the District Forum is authorized to give to the aggrieved consumer. The District Forum has to record its satisfaction as regards the defects in goods, deficiency in service, etc. It is only after recording such satisfaction that the District Forum can give direction in respect of the reliefs which it grants to consumers. The District Forum shall issue orders to discontinue the unfair trade practice or the restrictive trade practice or not to repeat them.