MAHARASHTRA NATIONAL LAW UNIVERSITY, MUMBAI
SOCIOLOGY III
FINAL DRAFT
SEMESTER III
TOPIC: CONSUMERISM IN INDIA
Submitted to: (Prof) Bijitha P.R Submitted by: Anugrah Joy
Roll No.- 2018-003
B.A.,LL. B, 2nd YEAR, III SEMESTER
Consumerism in India: A socio legal analysis
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Table of Contents
Introduction..................................................................................4
EVOLUTION OF CONSUMERISM..........................................6
Genesis of consumerism as a social movement...........................7
CONSUMREISM AND THE RULE OF LAW..........................8
HISTORICAL ANALYSIS OF CONSUMER RIGHTS............9
CONCLUSION..........................................................................15
References..................................................................................16
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Introduction
A person who buys goods and services is a consumer. The concept of buying and selling is as old
as human civilization. There was a time when goods and services would exchange among people
to fulfill their needs; such transactions were known as Barter Transactions. Barter Economy was
evident in Stone Age, Bronze Age and Iron Age. With the introduction of “money” barter
Economy transformed into monetary economy wherein goods and services were provided in
exchange of money or things as valuable as money. In order to become a consumer following
conditions needs to be fulfilled:– 1. A presence of need to purchase/ A desire to purchase, 2. A
presence of power to purchase, 3. Availability of goods/services desired, 4. Willingness of the
owner of goods and services to sale in exchange of monetary consideration.
Traditionally, consumers have been defined very strictly in terms of economic goods and
services wherein a monetary exchange is involved. This concept, over a period of time, has been
broadened. Some scholars also include goods and services where a monetary transaction is not
involved and thus the users of the services of voluntary organisations are also thought of as
consumers.1 This means that organisations such as UNICEF, CRY, or political groups can view
their public as “consumers.” The term consumer is used for both personal consumers and
organisational consumers and represents two different kinds of consuming entities. The personal
consumer buys goods and services for her or his personal use (such as cigarettes or haircut), or
for household consumption (such as sugar, furniture, telephone service etc.), or for just one
member of the family (such as a pair of shoes for the son), or a birthday present for a friend
(such as a pen set). In all these instances, the goods are bought for final use, referred as “end
users‟ or “ultimate consumers.”2 The other category of consumer is the organisational consumer,
which includes profit arid not-for-profit organisations. Government agencies and institutions
(such as local or state government, schools, hospitals etc.) buy products, equipment and services
required for running these organisations.3 Manufacturing firms buy raw materials to produce and
sell their own goods. They buy advertising services to communicate with their customers.
1
Batra Satish; Kazmi SHH, “Consumer behavior texts and cases” , p 5, Ed. 2nd, New Delhi, 2008
2
Ibid, p 5
3
Singh Dilraj, “Effects of tourism marketing strategies on consumer behaviour”,
http://www.rierc.org/marketing/paper92.pdf (Accessed on 14th Sept, 2015)
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Similarly, advertising service companies buy equipment to provide services they sell.
Government agencies buy office products needed for everyday operations.
It is often seen that the words consumer and customer are taken synonymously; however, there is
a difference between them. Anyone, for e.g. who regularly makes purchases from a store or a
company is termed as “customer” of that store or the company which simply means that every
customer is a consumer and every consumer is in one way or the other has a potential to become
a customer of one or the other outlet or service provider subject to his needs, desires and the
quality of goods and services he get from the concern outlet. A customer is also called client,
buyer, shopper or purchaser, usually used to refer to a current or potential buyer or user of the
products of an individual or organisation, called the supplier, seller, or vendor. 4 The word
customer is derived from “custom,” meaning “habit”; a customer is someone who frequented buy
from a particular shop, who made it a habit to purchase goods or services rather than elsewhere
and with whom the shopkeeper had to maintain a relationship to keep his or her “custom,”
meaning expected purchases in the future.
The slogans “the customer is king” or “the customer is god” or “the customer is always right”
indicate the importance of customers to businesses - although the last expression is sometimes
used ironically. Consumer is a backbone of economy. The growth of economy has always been
in correlation with the growth of purchasing power of consumer. Therefore, it is necessary for
Business World to give due respect to their customers by acknowledging their rights not merely
because they buy, but because they made them sale the sellable.
4
Hanson & Lott. “Externalities and Corporate Objectives in the World with Diversified Shareholders and
Consumers”, pp 5-6. Ed. 1995.
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EVOLUTION OF CONSUMERISM
The idea of consumerism was first conceived in USA around the beginning of this century. Since
USA has always been considered as the heaven of consumers it is pertinent to study the
evolution of consumerism in three distinct phases in purely American context as follows:5
1. AROUND 1900: The business firms dealing in meat packing were least concerned with the
consumers. Meat used to be sold in the unhealthiest manner. This affected the health of the
consumers. Even many other firms used to produce dangerous, unwanted products and drugs and
sell them to the consumers by adopting manipulative devices. Conscious and sensible became
disgusted with this sort of affairs and started campaign to preserve the interests of the consuming
public.
2. AROUND 1930: Consumerism assumed more importance because people in general became
more enlightened and concerned with the standards of good quality products. This was possible
on account of education, awareness and political consciousness. Although consumerism did not
become a serious public movement during this time, the Government came up with a legislation
called Miller-Tiching Act 1936 in order to regulate certain marketing malpractices.
3. AROUND 1960: It is in the sixties of this century consumerism became a very forceful social
movement. Late President Kennedy, in the year 1962, passed a legislation to protect the
consumers‟ rights particularly with regard to false advertising and unhealthy packaging of food
and other articles. The consumerism movement reached its height when a serious criticism was
leveled against the „un-safety‟ of automobile companies which caused death to many people.
The Government passed legislation on product safety compelling the automobile companies to
adopt safety methods. The Government also passed such other legislation to control pollution.
Business firms in the beginning criticized consumerism stating that they had been taking due
care in regard to product quality. But later on they started setting up consumer affairs cell to deal
with consumer disputes of allegations. However In the context of India, consumerism has been
active. A few years ago adulteration of food articles was sought to be presented by the food
Adulteration Act in India. Inspectorate departments were set up in all States of India to
5
Pillai, R.S.N., Bagavathi and Kala, S. (2010). Marketing Management (1st ed.). India: S. Chand & Company Pvt.
Ltd
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implement and supervise the way the Act was followed. To a certain extent, it has done good
because false weights and measures have been checked and food adulteration has been controlled
to a great extent. The major causes of consumerism in India have been identified as rising prices,
poor product performance and service quality, product shortages and deceptive
advertisingshortages and inflation. Government has been very responsive to the consumer needs
through legislative action. Economic discontent has been generated out of spiraling inflation.
Thus it has become necessary for the consumers to stand up for their rights through an effective
organization in order to redress the grievances.
Genesis of consumerism as a social movement
India has an ancient history of consumer protection. Consumer protection was part of its ancient
culture and formed the core of its administration. Kautilya's 'Arthasasthra' was the basic law of
ancient India and the same was strengthened with provisions to protect consumers. Sale of
commodities was organised in such a way that general public was not put to any trouble. If high
profits (for the ruler) put general public in trouble, then that trade activity was stopped
immediately. For traders, profit limit was to be fixed. Even for services timely response was
prescribed; e.g. for sculpturist, carpenter, tailor, washer man, rules for the protection of consumer
interest were given. Thus, for a washerman, it was said that he should return washed clothes in a
given time period, i.e., light colored ones in five days, blue dark colored in 6 days and silken,
woolen or embroidered in 7 days. Failing this they had to pay fine. The Superintendent of
Commerce was to supervise weights and measures. For shortfall in weighing measuring, sellers
were fined heavily. Weights and measures used in trade were manufactured only by the official
agency responsible for standardization and inspected every four months. Sellers passing off
inferior products as superior were fined eight times the value of articles thus sold. For adulterated
things, the seller was not only fined but also compelled to make good the loss. Indeed, the people
in different parts of the country today celebrate in different ways the dates dedicated to the
remembrance of ancient periods during which, it is believed, people's welfare was the first
concern of the rulers.6
6
Bung, Pooja, “Consumer Movement in India”http://www.scribd.com/doc/47406028/consumer-movement-
inindia#scribd (Accessed on 27th November, 2015)
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The majority of the consumers in advanced countries is well educated, well-informed and is in a
position to protect them. However, Indian situation is different from the Western, where
adequate production and proper distribution of products exist. In India, industries have not
achieved the level of affluence of technology and the existing markets of products run in
shortages, adulteration and black market prices. Indian people comparatively have less money at
their disposal.
It is seen that the profit-making attitude of the business failed to discharge social responsibilities
of maintaining fair price, quality of goods and providing services etc. In short, consumerism is an
outcome of sufferings and exploitation of consumers, and some businessmen, aim to make
abnormal profit, which is at the cost of consumers‟ safety and health. However, it has been
accepted and agreed that “A consumer is a king of the Market,” but in fact he is not. The
majority of the Indian problems relating to consumers are adulteration, artificial scarcity, and
unreasonable prices. There are different religious customs, traditions and languages in India; and
about three-fourth of the population live in rural areas, where cultivation is still the major source
of livelihood, and there is wide disparity of income of people. Majority of the people, who are
most illiterate, have low income. To save or protect themselves, against exploitative practices of
trade, consumerism has emerged and has been accepted as a defensive force to safeguard the
interest of the customers. From historical studies it can be understood that the modern consumer
society in India emerged in the late eighteenth century and intensified throughout the nineteen
century. During the period of British Raj the change in the concept of consumption was
propelled by the growing middle-class who embraced new ideas about luxury consumption and
the growing importance of fashion as an arbiter for purchasing rather than necessity, however,
the population of such kind people was very less but it has indeed laid down the foundation of
consumerism in India which was destine to become a political and economic necessity for the
reproduction of capitalist competition for markets and profits and also a tool of exploitation.
CONSUMREISM AND THE RULE OF LAW
Consumer protection laws are designed to ensure fair trade competition and the free flow of
truthful information in the marketplace. The laws are designed to prevent businesses that engage
in fraud or specified unfair practices from gaining an advantage over competitors and may
provide additional protection for the weak and those unable to take care of themselves.
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Consumer Protection laws are a form of government regulation which aim to protect the rights of
consumers. Consumer needs legal protection to safeguard their interests against the arbitrary
practices of business houses, in other words it refers to the measures adopted for the consumers
from unscrupulous and unethical malpractices prevailing in the market prima facie rules not buy
the consumers but the business houses. Before understanding the legal protection mechanism
available for consumers, it is necessary to understand the nature of malpractices prevalent in the
market: 1. Sale of duplicate goods, 2. Sale of adulterated goods i.e. adding something inferior to
the product being sold, 3. Sale of spurious goods i.e. selling something of little value instead of
the real product. 4. The sale of substandard good i.e. sale of goods which do not confirm to
prescribed quality standards. 5. Use of false weights and measures leading to underweight. 6.
Hoarding and black-marketing leading to scarcity and rise in price. 6. Charging more than
maximum retail price fixed for the product. 7. Supply of defective goods. 7. Misleading
advertisements 8. Supply of inferior services.
In the good olden days the principle of ‘Caveat emptor’, which meant buyer beware governed the
relationship between seller and the buyer. In the era of open markets buyer and seller comes face
to face, seller exhibited his goods, and buyer thoroughly examined them and then purchased
them. It was assumed that he would use all care and skill while entering into transaction. The
maxim relieved the seller of the obligation to make disclosure about the quality of the product.
As a result buyer is being misled, duped and deceived day in and day out. Mahatma Gandhi, the
father of nation, attached great importance to what he described as the “poor consumer”, who
according to him should be the principal beneficiary of the consumer movement. He said: “A
Consumer is the most important visitor on our premises. He is not dependent on us we are on
him. He is not an interruption to our work; he is the purpose of it.
HISTORICAL ANALYSIS OF CONSUMER RIGHTS
History of protection of Consumer‟s rights by law has long been recognised dating back to 1824.
Every year the 15th of March is observed as the World Consumer Rights Day. On that day in
1962 President John F. Kennedy of U.S. called upon the U.S. Congress to accord its approval to
the Consumer Bill of Rights. They are:7
7
http://www.consumereducation.in/PDFs/VOLUME1revised.pdf
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(i) Right to choice
(ii) Right to information
(iii) Right to safety and
(iv) Right to be heard.
President Gerald R. Ford added one more right i.e. right to consumer education. Further
other rights such as right to healthy environment and right to basic needs (Food,
Clothing and Shelter) were added.8 In India we have recently started celebrating 24th
December every year as the National Consumer Rights Day. In the history of the
development of consumer policy, April 9, 1985 is a very significant date for it was on
that day that the General Assembly of the United Nations adopted a set of general
guidelines for consumer protection and the Secretary General of the United Nations was
authorized to persuade member countries to adopt these guidelines through policy
changes or law. These guidelines constitute a comprehensive policy framework
outlining what governments need to do to promote consumer protection in following
seven areas:
i. Physical safety;
ii. ii. Protection and Promotion of the consumer economic interest;
iii. iii. Standards for the safety and quality of consumer goods and services;
iv. iv. Distribution facilities for consumer goods and services;
v. v. Measures enabling consumers to obtain redress;
vi. Measures relating to specific areas (food, water and pharmaceuticals) and
vii. Consumer education and information programme. Before moving in the
direction of consideration of provisions of the regime of Consumer protection,
perhaps it would be better to summarize the factors responsible for legislations to
protect consumer‟s rights. These factors are as follows:
1. Rapidly increasing variety of goods and services which modern technology has
made available;
2. Growing size and complexity of production and distribution system;
3. High level of sophistication in marketing and selling practices, in advertising and
other forms of production;
8
0C. Venkatachalam vs Ajitkumar C. Shah & Ors on 29 August, 2011 http://indiankanoon.org/doc/1399474/
9|Page
4. Removal of personal relationship of buyer and seller as a result of mass marketing
methods; and
5. Consumers‟ increased mobility.
Considering the abovementioned important factors which have been adversely
impacting on the basic rights of consumers the “Regime for Consumer Protection” came
into being.
1. THE CONSUMER PROTECTION ACT 1986: Enactment of Consumer protection
Act 1986 was one of the most important steps taken to protect the interest of consumer.
The provision of act came into force from July 1, 1987. The main features of this Act
are:
(i) This act has provided various rights and responsibilities to consumers.
(ii) It provides safeguard to customers against defective goods, deficient‟s, services,
unfair trade practices and other forms of their exploitation.
(iii)The act has provided three tier redressal agencies where consumer can file
complaints. These are District forum, State Commission and National Commission.
2. THE CONTRACT ACT 1872: The Indian Contract Act, 1872 9 is formed to bind
people on their promises made in a contract. The Act also provides remedies available to
parties in case of breach of contract. This Act has specified basic principles by which an
agreement becomes a contract. This Act contains important provisions relevant to
consumer interest, though, in remedial aspects the scope of the Act is limited because of
the concept of privity of contract. Hence, the third party cannot seek remedy generally
under the Act which leads to the exclusion of large number of consumers from the
purview of the Act. In spite of such limitations, the Act is important from the consumer
perspective. In this respect judiciary has played an important role in protecting the
interest of the consumers. Section 2710 of Indian Contract Act, 1872 declares that
agreement in restraint of trade is void. This serves consumer interest by promoting
9
Singh Avtar, Contract and Specific Relief ,(Eastern Book Co., Lucknow, 10 thEd.2008)
10
Sec. 27 of Indian Contract Act, 1872: Every agreement by which any one is restrained from exercising a lawful
profession, trade or business of any kind, is to that extent void.
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competition and restricting monopolistic tendencies. Consumer can also claim protection
of their interests under Section 73 and 74 of the Act, dealing with compensation for the
loss or damage, by breach of contract or may have recourse to alternative remedies
available under the Specific Relief Act, 1963. Earlier, the Act contained provisions
about sale of goods in Sections 76 -123. They were found inadequate to look into the
whole law on sale of goods. A new enactment was passed in 1930, namely the Sale of
Goods Act, 1930 to serve the purpose of regulating the sale of goods.
3. THE SALE OF GOODS ACT 1930: Sale of Goods Act, 1930 provides for the
settlement of consumer and seller disputes. This Act has changed the principles of
'Caveat Emptor' casting a responsibility on the seller to offer mercantile goods. This act
provides safeguard and relief to customers in case goods are not complying with the
expressed conditions and warranty.
4. THE ESSENTIAL COMMODITIES ACT 1955: This act is formed to control
production, supply and distribution of essential commodities. It checks inflation and
ensures smooth and equal supply of these goods. It also checks black marketing,
hoarding.
5. THE AGRICULTURAL PRODUCE (GRADING AND MARKING) ACT 1937:
This act is formed to assure quality of agricultural products. This Act provides grade
standards for agricultural commodities. The quality mark which is supplied by this act is
“AGMARK.” This mark is given only when goods are produced by following minimum
standards.
6. THE PREVENTION OF FOOD ADULTERATION ACT 1954: This Act is formed
to check Adulteration of food articles and ensure their purity so that the health of general
public can be maintained.
7. THE STANDARD OF WEIGHTS AND MEASURES ACT 1976: This Act provides
protection to consumers against malpractices of underweight, under measure. The
provision of this Act is applicable on those goods which are sold or distributed by
weight and measure.
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8. THE TRADE MARK ACT 1999: This Act prevents the use of fraudulent marks on
products. This act is introduced in place of trade and merchandise mark act 1958.
9. THE COMPETITION ACT 2002: This Act is related to monopolies and restrictive
trade practices Act 1969. This Act is formed to encourage healthy competition and
protect consumers from companies which hamper competition.
10. THE BUREAU OF INDIAN STANDARD ACT 1986: This Act is formed to
provide special marks to products which fulfill some minimum quality standards. The
common mark issued under this Act is ISI mark. This act has set up a grievance cell
where consumer can make a complaint about a product which is not up to a quality mark
and are having ISI mark.
11. THE INDIAN PENAL CODE, 1860 The notable provisions for consumer protection
adopted in India are found in the Indian Penal Code, 1860.11 This is the most relevant
Act for the prevention of food adulteration. Sections 272 13 and 273 14of IPC, 1860
dealing with the offences affecting public health, made certain offences like adulteration
of food or drink, making it noxious, and sale of noxious food or drink, punishable with
six months imprisonment or with fine up to one thousand rupees or with both. Section
274 to 276, made the offences of adulteration of drugs intended for sale, sale of
adulterated drugs and sale of drugs as a different drug, or preparation, punishable with
similar sentence. Sections 264 15 and 267 of the Code, made punishable, the fraudulent
use of false instruments for weighing, and fraudulent use, possession and making and
selling of false weights and measures publishable with imprisonment extendable to one
year or with fine or with both. Section 479 to 489 deals with the fraudulent and
misleading description of articles of trade and fake packages. Section 486 covers
offences pertaining to counterfeit trademark. The offence of public nuisance has been
defined under Section 268, in general, to mean an act or illegal omission which may
cause any common injury, danger or annoyance to the public or people in general.
Further Section 269 to 278 deals with certain specific categories of public nuisance.
Chapter XIX of IPC, deals with offences 'of criminal breach of contract of service',
making especially punishable the breach of a contract to attend on and supply wants of
11
The Indian Penal Code, Bare Act with comments, case law, (All India Reporter P. Ltd, Nagpur, 2008)
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helpless persons', is very much relevant for consumer safety or persons incapable to do
so themselves, because of 'youth, or of unsoundness of mind, or of a disease or bodily
weakness'.
12. LAW OF TORTS In spite of various legislations related to consumer protection the
Common Law remedies under Law of trots are still available to consumers in India.
Under the law of torts, liability may be imposed on the manufacturer, supplier, importer,
distributor or retailer or two or more of them together. The foundation this approach is
seen in the case of Donoghue Vs Stevenson.12
13. AGRICULTURAL PRODUCTS (GRADING AND MARKING) ACT, 1937 This is
an area specific legislation that provides for quality certification popularly known as
"AGMARK" for agricultural commodities. The certification scheme is voluntary for
domestic, but mandatory for export purpose.
14. DRUG AND COSMETIC ACT, 1940 This is an area specific legislation having a
purpose to regulate the production, trade, distribution, import and export of drugs and
cosmetics which are up to the required standards but also being sold under misbranding.
15. THE CENTRAL EXCISE ACT, 1944 This Act empowers the Central Government
to provide for remission of duty of excise leviable on any excisable goods which are
found to be deficient in quantity due to any natural cause.15
16. CAPITAL ISSUES CONTROL ACT, 1947 The main object of this Act is to
channelize resources in planned direction on priority basis and also to protect the
innocent investors.
12
Donoghue (or McAlister) v Stevenson, [1932] All ER Rep 1; [1932] AC 562; House of Lords
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CONCLUSION
The efficient and effective program of Consumer Protection is of special significance to the
modern consumer driven economy. If both the producers/ providers and consumers realize the
need for co-existence, adulterated products, spurious goods and other deficiencies in services
would become a thing of the past. Every consumer in his own interest has to realize his role and
importance in the right perspective. In a competitive economic environment the consumer has to
exercise his choice either in favour of or against the goods and services. His choice is going to
be vital and final. He should realize his importance and prepare himself to exercise his rights
with responsibility. After all the dictum in constitutional democracy, the citizens get a
government they deserve. Similarly the consumers in society get a position in the market
depending upon the choices they exercise. It is agreed on all points that “consumer
empowerment” in India has a long way to go. This is the right time to act to prepare for the new
era of “Consumerism”. As the poet P.B Shelley puts it – “If winter comes, can spring be far
behind?”
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References
1. Batra Satish; Kazmi SHH, “Consumer behavior texts and cases” , p 5, Ed. 2nd, New
Delhi, 2008
2. Bung, Pooja, “Consumer Movement in
India”http://www.scribd.com/doc/47406028/consumer-movement-inindia#scribd.
3. Donoghue (or McAlister) v Stevenson, [1932] All ER Rep 1; [1932] AC 562; House of
Lords
4. Hanson & Lott. “Externalities and Corporate Objectives in the World with Diversified
Shareholders and Consumers”, pp 5-6. Ed. 1995.
5. Sec. 27 of Indian Contract Act, 1872: Every agreement by which any one is restrained
from exercising a lawful profession, trade or business of any kind, is to that extent void.
6. Singh Avtar, Contract and Specific Relief ,(Eastern Book Co., Lucknow, 10 thEd.2008)
7. Singh Dilraj, “Effects of tourism marketing strategies on consumer behaviour”,
http://www.rierc.org/marketing/paper92.pdf
8. The Indian Penal Code, Bare Act with comments, case law, (All India Reporter P. Ltd,
Nagpur, 2008)
9. 0C. Venkatachalam vs Ajitkumar C. Shah & Ors on 29 August, 2011
http://indiankanoon.org/doc/1399474/
10. Pillai, R.S.N., Bagavathi and Kala, S. (2010). Marketing Management (1st ed.). India: S.
Chand & Company Pvt. Ltd
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