UNIT 4- PART B

CONSUMER PROTECTION ACT, 1986

INTRODUCTION
The Consumer Protection Act, 1986, was enacted by the Parliament to safeguard the interests
of consumers. It came into force in 1987 with the primary objective of protecting consumers
against defective goods, deficient services, and unfair trade practices.
Need for the Consumer Protection Act
The Act was necessary due to various challenges faced by consumers, such as:
 Information Asymmetry(lack)
Consumers often lack the technical knowledge to judge the quality or safety of
products and services, leading to unfair exploitation.
 Rising Instances of Unfair Trade Practices
With increasing competition and advertising, there were growing cases of false
advertising, substandard goods, and overcharging.
 Complex Legal System
Prior to the Act, consumers had to approach civil courts, which were time-consuming
and expensive. There was a need for a specialized, fast-track mechanism.
 Growing E-commerce and Digital Transactions
The rise in online purchases brought new challenges like data privacy, non-delivery,
fake reviews, and return issues, making consumer protection even more vital
(especially addressed in CPA, 2019).
 Vulnerable Consumers
Children, illiterate people, and rural consumers are more likely to fall victim to
deceptive practices, hence the need for legal safeguards.
Objectives of the Consumer Protection Act
 The Consumer Protection Act was enacted with the following main objectives:
 To Protect Consumer Rights
Safeguard consumers against exploitation through defective goods, deficient
services, and unfair trade practices.
 To Provide a Simple and Speedy Redressal Mechanism
Establish a three-tier dispute redressal machinery (District, State, National) to
address consumer complaints in an efficient and cost-effective manner.
 To Promote and Protect the Interests of Consumers
Ensure that consumer interests are given priority and legal backing in a marketplace
often dominated by powerful businesses.
 To Ensure Fair Trade Practices
Prevent practices like misleading advertisements, false claims, black marketing,
and hoarding.
  To Make Consumers Aware of Their Rights and Responsibilities
Promote consumer education and awareness so that people can make informed
choices and demand fair treatment.
 To Encourage Consumer Participation
Strengthen consumer organizations and encourage active consumer involvement in
policy formulation and enforcement.
Definition of important terms-
Consumer [sec 2(1)(d)]
It means any person who:
• 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
• Consumer also includes any user of such goods other than the buyer himself
• It does not include a person who obtains the goods for resale or any commercial purpose.
Consumer Dispute [sec(1)(e)]
It means a dispute where the person against whom a complaint has been made, denies or
disputes allegations contained in the complaint.
Defect [sec2(1)(f)]
It means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or
standard which is required to be maintained by or under any law for the time being in force or
under any contract, express, implied or as claimed by the trader in any manner whatsoever in
relation to any goods.
Deficiency[sec2(1)(g)]
It means any fault, imperfection, shortcoming or inadequacy in the quantity, nature and
manner of performance which is required to be maintained by or under any law for the time
being in force or has been undertaken to be performed by a person in pursuance of a contract
or otherwise in relation to any service
Goods[sec2(1)(i)]
Goods means every kind of movable property other than actionable claims and money, and
includes stock, shares, growing crops, grass and things attached to or forming part of land
which are agreed to be severed before sale or under the contract of sale.
"e-commerce " means buying or selling of goods or services including digital products over
digital or electronic network
Unfair Trade Practice-Sec2(47)
An unfair trade practice refers to practices defined under the Monopolies and Restrictive
Trade Practices (MRTP) Act, such as:
 False advertising,
  Misleading representations,
 Hoarding,
 Sale of substandard goods or services,
 Offering gifts or prizes with no intention of providing them, etc.
Restrictive Trade Practice-Section 2(1)(n)
A restrictive trade practice refers to a situation where a seller compels a consumer to buy,
hire, or avail of one good or service as a precondition for buying, hiring, or availing of
another good or service.
Basic Rights of Consumers under the Consumer Protection Act, 1986
1. Right to Safety
o Consumers have the right to be protected against the marketing of goods and
services that are hazardous to life and health.
o Example: Electrical appliances should meet safety standards to prevent
accidents.
2. Right to be Informed
o Consumers have the right to be informed about the quality, quantity,
potency, purity, standard, and price of goods or services.
o Manufacturers must provide complete and accurate information on product
labels and packaging, including:
 Ingredients
 Date of manufacture and expiry
 Price
 Usage instructions and precautions
3. Right to Choose
o Consumers have the freedom to choose from a variety of products and services
at competitive prices.
o No consumer should be forced into buying a particular product or brand.
4. Right to be Heard
o Consumers have the right to express their concerns or complaints and be
heard in decision-making forums.
o Consumer grievances must be given due consideration and addressed
properly.
5. Right to Seek Redressal
 o Consumers can seek compensation or remedies against:
 Unfair trade practices
 Defective goods
 Deficient services
o They can file complaints in District Forums, State Commissions, or the
National Commission as applicable.
6. Right to Consumer Education
o Consumers have the right to acquire knowledge and skills to become
informed buyers.
o Public awareness programs and educational initiatives help consumers
understand their rights and responsibilities.
CONSUMER DISPUTE REDRESSAL MACHINERY
The Consumer Protection Act, 1986, established a three-tier quasi-judicial system to
provide simple, speedy, and inexpensive redressal of consumer grievances.

Three-Tier Structure

Level Jurisdiction (Claim Amount) Authority Type

District Forum Less than ₹20 lakhs District Level

State Commission ₹20 lakhs to ₹1 crore State Level

National Commission Above ₹1 crore National Level

1. District Forum
 Establishment:
Set up by the State Government in each district. More than one District Forum may
be established in a district if needed.
 Composition:
o President: A person who is, or has been, or is qualified to be a District Judge.
o Two Members: Persons of integrity and standing, with knowledge or
experience in law, economics, commerce, accountancy, industry, public
affairs, or administration.
 One member must be a woman.
 Term of Office:
 o Each member holds office for 5 years or until they attain the age of 65 years,
whichever is earlier.
 Jurisdiction:
o Can entertain complaints where the total value of goods or services and the
compensation claimed is less than ₹20 lakhs.
2. State Commission
 Establishment:
Set up by the State Government in the respective states.
 Composition:
o President: A person who is or has been a Judge of a High Court.
o Two or more members (as prescribed by the State Government), who:
 Are persons of integrity, ability, and standing.
 Have adequate knowledge or experience in law, commerce,
economics, accountancy, industry, public affairs, or
administration.
 At least one member must be a woman.
 Term of Office:
o Members hold office for 5 years or until the age of 67 years, whichever is
earlier.
 Jurisdiction:
o Can entertain complaints where the value of goods/services and
compensation claimed is more than ₹20 lakhs but not exceeding ₹1 crore.
o Can hear appeals against the orders of any District Forum within the state.
o Can call for records and pass appropriate orders in any consumer dispute
pending or decided by a District Forum within the state.
3. National Commission
 Establishment:
Set up by the Central Government.
 Composition:
o President: A person who is or has been a Judge of the Supreme Court.
o Four or more members (as prescribed by the Central Government), who:
 Are persons of ability, integrity, and standing.
  Have adequate knowledge or experience in law, commerce,
economics, accountancy, industry, public affairs, or
administration.
 At least one member must be a woman.
 Term of Office:
o Members hold office for 5 years or until the age of 70 years, whichever is
earlier.
 Jurisdiction:
o Can entertain complaints where the value of goods/services and
compensation claimed is above ₹1 crore.
o Can hear appeals against the orders of any State Commission.
o Has the power to review and revise decisions made by State Commissions.