Consumer Protection Act

Aishwarya Vats
Assistant Professor[SS],UPES
• The Consumer Protection Act 1986 is a social welfare legislation
which was enacted as a result of widespread consumer protection
movement.
• Objective
• The main objective of CPA is to provide speedy and simple redressal
to consumer disputes.
• It is one of the benevolent pieces of legislation intended to protect
the consumers at large from exploitation
• Who is a Consumer? Sec. 2 (1) (d)
• Any person who:
• Buys any goods for a consideration which has been paid or will be paid.
• Hires or avails any service for a consideration which has been paid or will be paid.
• It does not include a person who obtains goods for resale or any commercial
purpose
• (42) "service" means service of any description which is made available to potential
users and includes, but not limited to, the provision of facilities in connection with
banking, financing, insurance, transport, processing, supply of electrical or other
energy, telecom, boarding or lodging or both, housing construction, entertainment,
amusement or the purveying of news or other information, but does not include
the rendering of any service free of charge or under a contract of personal service
• (33) "product" means any article or goods or substance or raw material or any
extended cycle of such product, which may be in gaseous, liquid, or solid state
possessing intrinsic value which is capable of delivery either as wholly assembled
or as a component part and is produced for introduction to trade or commerce,
but does not include human tissues, blood, blood products and organs;
• (34) "product liability" means the responsibility of a product manufacturer or
product seller, of any product or service, to compensate for any harm caused to
a consumer by such defective product manufactured or sold or by deficiency in
services relating thereto;
• (35) "product liability action" means a complaint filed by a person before a
District Commission or State Commission or National Commission, as the case
may be, for claiming compensation for the harm caused to him;
• One of the most significant additions to the 2019 Act is the proposal to establish Central
Consumer Protection Authority ("CCPA") so as to regulate, protect and enforce the interest
of the consumers and matters related to unfair trade practices.
• The CCPA has been provided with vast powers to inquire, investigate and take action
against violations of the 2019 Act. Another significant power the CCPA has been showered
with, is the power to take action and impose penalty against misleading and false
advertisement as well as against any endorser of such advertisement, which means the
CCPA can now initiate action against the celebrities who have endorsed such misleading
and false advertisement provided such celebrities failed to carry out any due diligence
before participating in such advertisements.
• The CCPA may impose a penalty of up to Rs.10 Lakhs for first violation and up to Rs.50
Lakhs on every subsequent violation on a manufacturer or an endorser, for a false or
misleading advertisement. In addition to this, such manufacturer or endorser may be
sentenced to imprisonment for upto two years.
• As far as the Consumer Redressal Forums are concerned, certain key changes have been
brought by the 2019 Act such as:-
• Territorial Jurisdiction – The 2019 Act now provides an added advantage to the consumers
by providing for filing of complaints where the complainant resides or personally works for
gain as against the 1986 Act which only provides for filing of complaint where the opposite
party resides or carry on business. This would help in removing the difficulties faced by the
consumers in seeking redressal of their grievances against businesses who may not have
an office or branch in their state.
• Pecuniary Jurisdiction – The 2019 Act also changed the pecuniary jurisdiction for the
District, State and National Commissions, respectively. The pecuniary limit for the District
Commission has been increased to up to Rs.1 Crore from up to Rs.20 Lakhs; for State
Commission it has been increased to up to Rs.10 Crores from up to Rs.1 Crore; and for
National Commission the pecuniary jurisdiction has been increased to over and above
Rs.10 Crores as against Rs.1 Crore in the 1986 Act.
• Alternate Dispute Resolution – Another provision introduced by the
2019 Act to ensure speedy resolution of disputes is to provide for
referring the disputes to mediation. As per the 2019 Act, the Consumer
Forum shall refer the matter to mediation on written consent of both
the parties. For this purpose, the 2019 Act also provides for
establishment of a consumer mediation cell by the respective State
Governments in each District Commission and State Commission as
well as at the National Commission by the Central Government.
• E-Complaints - The 2019 Act also provides for filing of Complaints
before the District Forums electronically in accordance with the rules
which are yet to be prescribed by the Government.
Who is a Consumer?
• According to Section 2(7) of the Consumer Protection Act, 2019,
"CONSUMER" 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 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
• [When a person buys goods, that may be used by his family members, relatives
and friends or acquaintances upon approval from the buyer.
• The Act aims to extend protection available to a consumer under the Act to the
users of the goods and services who may not have bought it.
• [Thus the law construe users of the goods as consumers although they may not
be buyers at the same time]
• 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 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 this clause:
the expression "commercial purpose" does not include use by a person of goods bought and
used by him exclusively for the purpose pf earning his livelihood, by means of self-employment;
• the expression "buys any goods" and "hires or avails any services" includes offline or online
transactions through electronic means or by teleshopping or direct selling or multilevel
marketing.
•
Thus, if any person either:

• buys any goods for a consideration, or

• hires or avails of any services for a consideration is a consumer.
• Purchaser for re-sale or commercial purpose
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.
• According to Section 2(7)(i), the term "consumer" does not include a person who obtains such goods for resale or
for any "commercial purpose", where the expression "commercial purpose" does not include people who
purchase goods solely fot the purpose of earning livelihood by means of self-employment.

Thus, 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. Thus, if a person purchases a taxi, or a photostat machine, or a sewing machine or any other goods
which are to be used by him exclusively for the purpose of earning his livelihood by means of self-employment,
that will not be deemed to be commercial purpose. Such a person will be considered as consumer under the
Consumer Protection Act.
• A buys a truck for plying it as a public carrier by himself, A is a consumer.
• A buys a truck and hires a driver to ply it, A is not a consumer.
• 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.
• 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.
• Anant Raj Agencies v. TELCO ,
• the company purchased a car for the private use of a director of the
company. The car had serious defects and it stopped working
altogether.
• The complainant claimed the replacement of the car or the refund of
price with interest.
• It was held that the car had not been purchased for the profit making activity
of the company on large scale. There was no nexus between the purchase of
the car and profit making activity of the company. The complainant was a
consumer and the complaint was admissible under the C.P.A.
• In Sterling Computer Ltd. v. P. R. Kutty, the complainant purchased a
computer for his personal use, which was to be used by his office staff for the
purpose of business. The complainant was a contractor by profession. The
computer was not being used to earn his livelihood. The computer did not
work properly from the very beginning. The National Commission held that
the computer was purchased for commercial purpose and the complainant
was not a consumer. The complaint was, therefore, dismissed.
Rights of Consumer
District Forum [Establishment-S.28]
• It shall consist of a person who is or has been or is qualified to be a District Judge as its President,2
other members, one of whom shall be a woman
• Every member of the District Forum shall hold office for a term of 5 years or up to the age of 65
years which ever is earlier
• It shall have jurisdiction to entertain complaints where the value of the goods or services and the
compensation, if any, claimed does not exceed Rs.20 Lacs. [ increased to 1 crore, under 2019
Amendment]
• District Forum A District Forum shall have the powers
• I. To remove the defect pointed out by the appropriate laboratory from the goods in question
• 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, or as the case may be, the charges paid by the
complainant
• IV. 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
State Commission [Establishment-S.42]
• It is established by State Government by notification
• It shall have jurisdiction to entertain complaints where the value of
the goods or services and compensation, if any, claimed exclaims
exceeds Rs. 20 Lacs but does not exceed Rs.1 Crore[increased to
claims exceeding 1 crore but less than 10 crore, under 2019
Amendment] and appeals against the orders of any District Forum
within the State.
• Each State Commission shall consist of— (a) a President; and (b) not
less than four or not more than such number of members as may be
prescribed in consultation with the Central Government.
National Commission [S.52 and 53]
• It shall consist of a person who is or has been a Judge of the Supreme
Court, as its President. Not less than 4 and not more than such number
of members as may be prescribed and one of whom shall be a woman
• Every member of the National commission shall hold office for a term
of 5 years or up to the age of 70 years which ever is earlier.
• It shall have jurisdiction to entertain complaints where the value of
the goods or services and compensation, if any, the claim exceeds Rs. 1
Crore[increased to claims exceeding 10 crore, under 2019
Amendment] and appeals against the orders of any State Commission.
• Appeal to SC [ Section-73]
The District Consumer Protection Council
• It shall consist of the following members, namely:-
• (a) the Collector of the district (by whatever name called), as its
Chairman; and
• (b) such number of other official and non-official members as may be
prescribed by the SG
• The District Council shall meet at least twice in an year.
• The procedure will be set by SG
The State Consumer Protection Council
• It shall consist of the following members, namely:
• (a) the Minister in-charge of consumer affairs in the SG as its
Chairman;
• (b) such number of other official or non-official members as may be
prescribed by the State Government.
• The State Council shall meet at least twice in an year.
• The procedure will be prescribed by the SG
The Central Consumer Protection Council
• It shall consist of the following members, namely
• (a) the Minister in charge of Consumer Affairs in the CG as its
Chairman, and
• (b) such number of other official or non-official members as may be
prescribed.
• The Council shall meet at least once an year.
• In 1995, the Supreme Court delivered a historic decision in Indian
Medical Association v VP Shantha which brought the medical profession
within the ambit of a ‘service’ as defined in Section 2(1)(o) of the
Consumer Protection Act, 1986, and clarified earlier conflicting decisions
regarding this issue given by various High Courts and Consumer Forums.
• This decision redefined the relationship between patients and medical
professionals as contractual and recognized the right of patients to file a
complaint under the Consumer Protection Act for injuries sustained in
the course of medical treatment.
• Patients were provided with an alternative, inexpensive and speedy
remedy for adjudication of medical negligence claims.
• Issues Involved
• Whether a medical practitioner, hospital, or nursing home can be
regarded as rendering ‘service’ under Section 2(1)(o) of the Consumer
Protection Act, 1986?
• Under what circumstances can the service render at a
hospital/nursing be regarded as ‘service’ under Section 2(1)(o) of the
Consumer Protection Act, 1986?
• Issue 1. Whether a medical practitioner, hospital, or nursing home
can be regarded as rendering ‘service’ under Section 2(1)(o) of the
Consumer Protection Act, 1986?
• The Supreme Court keeping in mind the wide amplitude of the
definition of `service’ in the main part of Section 2(1)(o), held in the
affirmative. It brought the medical profession within the ambit of a
‘service’ as defined in Section 2(1)(o) of the Consumer Protection Act,
1986
• Issue 2. Under what circumstances can the service render at a hospital/nursing be regarded as
‘service’ under Section 2(1)(o) of the Consumer Protection Act, 1986?
• Holding that the definition of ‘service’ is wide enough to include services rendered by medical
practitioners, the Supreme Court proceeded to consider the exclusionary part of Section 2(1)(o).
• The exclusionary part excludes services rendered (i) free of charge; or (ii) under a contract of
personal service.
• Concerning (i), it held that doctors and hospitals/nursing homes who render service without any
charge to every person availing the service would not fall within the ambit of the Act.
• This would fall in the exclusionary part of the definition of service. However, medical services
rendered on payment of consideration are included under Section 2(1)(o).
• The Court further considered a situation where free medical services are provided to only those
persons who cannot afford to pay off them, and held that such services would undoubtedly fall
within the ambit of the Act since these expenses are met out of the income received from paying
patients.
Overview of 2019 Amendment
• Act altogether provides enhanced protection to the consumers taking into consideration the
booming e-commerce industry and the modern methods of providing goods and services such as
online sales, tele-shopping, direct selling and multi-level marketing in addition to the traditional
methods.
• The 2019 Act has brought in some major changes ,which can be seen from the comprehensive
definition provided for the term 'Consumer' and 'Unfair Trade Practice'.
• The 2019 Act expands the scope of the definition of Consumer so as to include the consumers
involved in online transactions and it now squarely covers the E-commerce businesses within its
ambit.
• The 2019 Act has also widened the definition of Unfair Trade Practices as compared to the 1986
Act which now includes within its ambit online misleading advertisements; the practice of not
issuing bill/memo for the goods and services; failing to take back defective goods or deactivate
defective services and refund the amount within the stipulated time mentioned in the bill or
memo or within 30 days in the absence of such stipulation; and disclosing personal information of
a consumer unless such disclosure is in accordance with law.