NCERT Textbook - Consumer Protection Commerce Notes | EduRev

Business Studies (BST) Class 12

Created by: Nipuns Institute

Commerce : NCERT Textbook - Consumer Protection Commerce Notes | EduRev

 Page 1


LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES
After studying this chapter, you
should be able to:
Østate the importance of
consumer protection;
Ø briefly explain legal framework
for consumer protection in
India;
Ø describe consumer rights in
India;
Ø list out consumer responsibilities;
Ø briefly describe the ways and
means of consumer protection;
and
Ø describe the role of consumer
organisations and NGOs in
protecting consumers’ interests.
CHAPTER
12
C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER     P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION
M M M M MAHARASHTRA AHARASHTRA AHARASHTRA AHARASHTRA AHARASHTRA C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER C C C C COMMISSION OMMISSION OMMISSION OMMISSION OMMISSION
S S S S SLAPS LAPS LAPS LAPS LAPS F F F F FINE INE INE INE INE     OF OF OF OF OF R R R R RS S S S S O O O O ONE NE NE NE NE L L L L LAKH AKH AKH AKH AKH     ON ON ON ON ON
C C C C COCA OCA OCA OCA OCA C C C C COLA OLA OLA OLA OLA
The Maharashtra State Consumer
Commission has asked Coca Cola, one
of the international fizzy drinks
manufacturer, its bottler and
distributor to pay Rs one lakh in
damages to a consumer who found
impurities in a bottle of soft drink that
he had bought.
Chandrashekhar Paradkar, a
resident of Shankar Nagar area here,
filed a complaint with the Nagpur
district Consumer Grievances Fourm
seeking compensation of Rupees four
lakh after he found some solid objects
inside a sealed bottle of a soft drink.
He had bought six various brands of
the soft drink— two bottles each of
Mazaa, Coca Cola and Sprite from a
shop near his house.
Based on that, the District Forum
earlier gave a ruling after finding Coca
Cola, its bottlers Superior Drinks Pvt.
Ltd. and distributors Balaji Sales guilty
of supplying drinks unfit for human
consumption, which was upheld by the
State Consumer Commission.
The District Forum had found
objects resembling pieces of mosquito
repellent mats floating inside the sealed
bottle. Having conducted the tests by a
Public Health Laboratory, they found
the drink unfit for human consumption.
The District Forum came down
heavily on the company saying
2015-16(21/01/2015)
Page 2


LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES
After studying this chapter, you
should be able to:
Østate the importance of
consumer protection;
Ø briefly explain legal framework
for consumer protection in
India;
Ø describe consumer rights in
India;
Ø list out consumer responsibilities;
Ø briefly describe the ways and
means of consumer protection;
and
Ø describe the role of consumer
organisations and NGOs in
protecting consumers’ interests.
CHAPTER
12
C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER     P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION
M M M M MAHARASHTRA AHARASHTRA AHARASHTRA AHARASHTRA AHARASHTRA C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER C C C C COMMISSION OMMISSION OMMISSION OMMISSION OMMISSION
S S S S SLAPS LAPS LAPS LAPS LAPS F F F F FINE INE INE INE INE     OF OF OF OF OF R R R R RS S S S S O O O O ONE NE NE NE NE L L L L LAKH AKH AKH AKH AKH     ON ON ON ON ON
C C C C COCA OCA OCA OCA OCA C C C C COLA OLA OLA OLA OLA
The Maharashtra State Consumer
Commission has asked Coca Cola, one
of the international fizzy drinks
manufacturer, its bottler and
distributor to pay Rs one lakh in
damages to a consumer who found
impurities in a bottle of soft drink that
he had bought.
Chandrashekhar Paradkar, a
resident of Shankar Nagar area here,
filed a complaint with the Nagpur
district Consumer Grievances Fourm
seeking compensation of Rupees four
lakh after he found some solid objects
inside a sealed bottle of a soft drink.
He had bought six various brands of
the soft drink— two bottles each of
Mazaa, Coca Cola and Sprite from a
shop near his house.
Based on that, the District Forum
earlier gave a ruling after finding Coca
Cola, its bottlers Superior Drinks Pvt.
Ltd. and distributors Balaji Sales guilty
of supplying drinks unfit for human
consumption, which was upheld by the
State Consumer Commission.
The District Forum had found
objects resembling pieces of mosquito
repellent mats floating inside the sealed
bottle. Having conducted the tests by a
Public Health Laboratory, they found
the drink unfit for human consumption.
The District Forum came down
heavily on the company saying
2015-16(21/01/2015)
BUSINESS STUDIES
370
in unscrupulous, exploitative and
unfair trade practices like defective
and unsafe products, adulteration,
false and misleading advertising,
hoarding, black-marketing etc. This
means that a consumer might be
exposed to risks due to unsafe
products, might suffer from bad health
due to adulterated food products,
might be cheated because of
misleading advertisements or sale of
spurious products, might have to pay
a higher price when sellers engage in
overpricing, hoarding or black-
marketing etc. Thus, there is a need
for providing adequate protection to
consumers against such practices of
the sellers. Let us now discuss the
importance of consumer protection.
I I I I IMPORTANCE MPORTANCE MPORTANCE MPORTANCE MPORTANCE     OF OF OF OF OF C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER
P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION
Consumer Protection has a wide
agenda. It not only includes educating
consumers about their rights and
responsibilities, but also helps in
getting their grievances redressed. It
not only requires a judicial machinery
for protecting the interests of
consumers but also requires the
consumers to get together and form
The above case is just one of the
examples of the many problems that
consumers might have to face in the
purchase, use and consumption of
goods and services. The case also
highlights the need for an appropriate
legal protection to be provided to
consumers to protect them from
various forms of exploitation from the
seller. Have you ever thought what
would be the plight of consumers if
adequate protection is not provided to
them? Can the present day businesses
afford to ignore the interests of
consumers? The area of consumer
protection has emerged as a very
important area of study having
significance for both the consumers
and businesses alike.
I I I I INTRODUCTION NTRODUCTION NTRODUCTION NTRODUCTION NTRODUCTION
A consumer is said to be a king in a
free market economy. The earlier
approach of caveat emptor, which
means “Let the buyer beware”, has
now been changed to caveat venditor
(“Let the seller beware”). However, with
growing competition and in an attempt
to increase their sales and market
share, manufacturers and service-
providers may be tempted to engage
multinational giants would not be allowed to have a free run and exploit a poor country
like India by manufacturing and marketing sub-standard products.
While giving its ruling, the District Forum relied upon the historic Donald versus
Stevenson case, wherein heavy compensation had been awarded to a consumer,
who had found rusted nails inside a bottle of ginger beer.
Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news
2015-16(21/01/2015)
Page 3


LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES
After studying this chapter, you
should be able to:
Østate the importance of
consumer protection;
Ø briefly explain legal framework
for consumer protection in
India;
Ø describe consumer rights in
India;
Ø list out consumer responsibilities;
Ø briefly describe the ways and
means of consumer protection;
and
Ø describe the role of consumer
organisations and NGOs in
protecting consumers’ interests.
CHAPTER
12
C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER     P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION
M M M M MAHARASHTRA AHARASHTRA AHARASHTRA AHARASHTRA AHARASHTRA C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER C C C C COMMISSION OMMISSION OMMISSION OMMISSION OMMISSION
S S S S SLAPS LAPS LAPS LAPS LAPS F F F F FINE INE INE INE INE     OF OF OF OF OF R R R R RS S S S S O O O O ONE NE NE NE NE L L L L LAKH AKH AKH AKH AKH     ON ON ON ON ON
C C C C COCA OCA OCA OCA OCA C C C C COLA OLA OLA OLA OLA
The Maharashtra State Consumer
Commission has asked Coca Cola, one
of the international fizzy drinks
manufacturer, its bottler and
distributor to pay Rs one lakh in
damages to a consumer who found
impurities in a bottle of soft drink that
he had bought.
Chandrashekhar Paradkar, a
resident of Shankar Nagar area here,
filed a complaint with the Nagpur
district Consumer Grievances Fourm
seeking compensation of Rupees four
lakh after he found some solid objects
inside a sealed bottle of a soft drink.
He had bought six various brands of
the soft drink— two bottles each of
Mazaa, Coca Cola and Sprite from a
shop near his house.
Based on that, the District Forum
earlier gave a ruling after finding Coca
Cola, its bottlers Superior Drinks Pvt.
Ltd. and distributors Balaji Sales guilty
of supplying drinks unfit for human
consumption, which was upheld by the
State Consumer Commission.
The District Forum had found
objects resembling pieces of mosquito
repellent mats floating inside the sealed
bottle. Having conducted the tests by a
Public Health Laboratory, they found
the drink unfit for human consumption.
The District Forum came down
heavily on the company saying
2015-16(21/01/2015)
BUSINESS STUDIES
370
in unscrupulous, exploitative and
unfair trade practices like defective
and unsafe products, adulteration,
false and misleading advertising,
hoarding, black-marketing etc. This
means that a consumer might be
exposed to risks due to unsafe
products, might suffer from bad health
due to adulterated food products,
might be cheated because of
misleading advertisements or sale of
spurious products, might have to pay
a higher price when sellers engage in
overpricing, hoarding or black-
marketing etc. Thus, there is a need
for providing adequate protection to
consumers against such practices of
the sellers. Let us now discuss the
importance of consumer protection.
I I I I IMPORTANCE MPORTANCE MPORTANCE MPORTANCE MPORTANCE     OF OF OF OF OF C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER
P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION
Consumer Protection has a wide
agenda. It not only includes educating
consumers about their rights and
responsibilities, but also helps in
getting their grievances redressed. It
not only requires a judicial machinery
for protecting the interests of
consumers but also requires the
consumers to get together and form
The above case is just one of the
examples of the many problems that
consumers might have to face in the
purchase, use and consumption of
goods and services. The case also
highlights the need for an appropriate
legal protection to be provided to
consumers to protect them from
various forms of exploitation from the
seller. Have you ever thought what
would be the plight of consumers if
adequate protection is not provided to
them? Can the present day businesses
afford to ignore the interests of
consumers? The area of consumer
protection has emerged as a very
important area of study having
significance for both the consumers
and businesses alike.
I I I I INTRODUCTION NTRODUCTION NTRODUCTION NTRODUCTION NTRODUCTION
A consumer is said to be a king in a
free market economy. The earlier
approach of caveat emptor, which
means “Let the buyer beware”, has
now been changed to caveat venditor
(“Let the seller beware”). However, with
growing competition and in an attempt
to increase their sales and market
share, manufacturers and service-
providers may be tempted to engage
multinational giants would not be allowed to have a free run and exploit a poor country
like India by manufacturing and marketing sub-standard products.
While giving its ruling, the District Forum relied upon the historic Donald versus
Stevenson case, wherein heavy compensation had been awarded to a consumer,
who had found rusted nails inside a bottle of ginger beer.
Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news
2015-16(21/01/2015)
CONSUMER PROTECTION
371
themselves into consumer associations
for protection and promotion of their
interests. At the same time, consumer
protection has a special significance for
businesses too.
From Consumers’ point of view From Consumers’ point of view From Consumers’ point of view From Consumers’ point of view From Consumers’ point of view
The importance of consumer
protection from the consumers’ point
of view can be understood from the
following points:
(i) (i) (i) (i) (i) C C C C Consumer Ignorance: onsumer Ignorance: onsumer Ignorance: onsumer Ignorance: onsumer Ignorance: In the light
of widespread ignorance of
consumers about their rights and
reliefs available to them, it becomes
necessary to educate them about the
same so as to achieve consumer
awareness.
(ii) (ii) (ii) (ii) (ii)     Unorganised Consumers: Unorganised Consumers: Unorganised Consumers: Unorganised Consumers: Unorganised Consumers: Con-
sumers need to be organised in the
form of consumer organisations which
would take care of their interests.
Though, in India, we do have consumer
organisations which are working in this
direction, adequate protection is
required to be given to consumers till
these organisations become powerful
enough to protect and promote the
interests of consumers.
(iii) Widespread Exploitation of (iii) Widespread Exploitation of (iii) Widespread Exploitation of (iii) Widespread Exploitation of (iii) Widespread Exploitation of
Consumers: Consumers: Consumers: Consumers: Consumers: Consumers might be
Compensation for impurities in cold drinks
2015-16(21/01/2015)
Page 4


LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES
After studying this chapter, you
should be able to:
Østate the importance of
consumer protection;
Ø briefly explain legal framework
for consumer protection in
India;
Ø describe consumer rights in
India;
Ø list out consumer responsibilities;
Ø briefly describe the ways and
means of consumer protection;
and
Ø describe the role of consumer
organisations and NGOs in
protecting consumers’ interests.
CHAPTER
12
C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER     P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION
M M M M MAHARASHTRA AHARASHTRA AHARASHTRA AHARASHTRA AHARASHTRA C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER C C C C COMMISSION OMMISSION OMMISSION OMMISSION OMMISSION
S S S S SLAPS LAPS LAPS LAPS LAPS F F F F FINE INE INE INE INE     OF OF OF OF OF R R R R RS S S S S O O O O ONE NE NE NE NE L L L L LAKH AKH AKH AKH AKH     ON ON ON ON ON
C C C C COCA OCA OCA OCA OCA C C C C COLA OLA OLA OLA OLA
The Maharashtra State Consumer
Commission has asked Coca Cola, one
of the international fizzy drinks
manufacturer, its bottler and
distributor to pay Rs one lakh in
damages to a consumer who found
impurities in a bottle of soft drink that
he had bought.
Chandrashekhar Paradkar, a
resident of Shankar Nagar area here,
filed a complaint with the Nagpur
district Consumer Grievances Fourm
seeking compensation of Rupees four
lakh after he found some solid objects
inside a sealed bottle of a soft drink.
He had bought six various brands of
the soft drink— two bottles each of
Mazaa, Coca Cola and Sprite from a
shop near his house.
Based on that, the District Forum
earlier gave a ruling after finding Coca
Cola, its bottlers Superior Drinks Pvt.
Ltd. and distributors Balaji Sales guilty
of supplying drinks unfit for human
consumption, which was upheld by the
State Consumer Commission.
The District Forum had found
objects resembling pieces of mosquito
repellent mats floating inside the sealed
bottle. Having conducted the tests by a
Public Health Laboratory, they found
the drink unfit for human consumption.
The District Forum came down
heavily on the company saying
2015-16(21/01/2015)
BUSINESS STUDIES
370
in unscrupulous, exploitative and
unfair trade practices like defective
and unsafe products, adulteration,
false and misleading advertising,
hoarding, black-marketing etc. This
means that a consumer might be
exposed to risks due to unsafe
products, might suffer from bad health
due to adulterated food products,
might be cheated because of
misleading advertisements or sale of
spurious products, might have to pay
a higher price when sellers engage in
overpricing, hoarding or black-
marketing etc. Thus, there is a need
for providing adequate protection to
consumers against such practices of
the sellers. Let us now discuss the
importance of consumer protection.
I I I I IMPORTANCE MPORTANCE MPORTANCE MPORTANCE MPORTANCE     OF OF OF OF OF C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER
P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION
Consumer Protection has a wide
agenda. It not only includes educating
consumers about their rights and
responsibilities, but also helps in
getting their grievances redressed. It
not only requires a judicial machinery
for protecting the interests of
consumers but also requires the
consumers to get together and form
The above case is just one of the
examples of the many problems that
consumers might have to face in the
purchase, use and consumption of
goods and services. The case also
highlights the need for an appropriate
legal protection to be provided to
consumers to protect them from
various forms of exploitation from the
seller. Have you ever thought what
would be the plight of consumers if
adequate protection is not provided to
them? Can the present day businesses
afford to ignore the interests of
consumers? The area of consumer
protection has emerged as a very
important area of study having
significance for both the consumers
and businesses alike.
I I I I INTRODUCTION NTRODUCTION NTRODUCTION NTRODUCTION NTRODUCTION
A consumer is said to be a king in a
free market economy. The earlier
approach of caveat emptor, which
means “Let the buyer beware”, has
now been changed to caveat venditor
(“Let the seller beware”). However, with
growing competition and in an attempt
to increase their sales and market
share, manufacturers and service-
providers may be tempted to engage
multinational giants would not be allowed to have a free run and exploit a poor country
like India by manufacturing and marketing sub-standard products.
While giving its ruling, the District Forum relied upon the historic Donald versus
Stevenson case, wherein heavy compensation had been awarded to a consumer,
who had found rusted nails inside a bottle of ginger beer.
Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news
2015-16(21/01/2015)
CONSUMER PROTECTION
371
themselves into consumer associations
for protection and promotion of their
interests. At the same time, consumer
protection has a special significance for
businesses too.
From Consumers’ point of view From Consumers’ point of view From Consumers’ point of view From Consumers’ point of view From Consumers’ point of view
The importance of consumer
protection from the consumers’ point
of view can be understood from the
following points:
(i) (i) (i) (i) (i) C C C C Consumer Ignorance: onsumer Ignorance: onsumer Ignorance: onsumer Ignorance: onsumer Ignorance: In the light
of widespread ignorance of
consumers about their rights and
reliefs available to them, it becomes
necessary to educate them about the
same so as to achieve consumer
awareness.
(ii) (ii) (ii) (ii) (ii)     Unorganised Consumers: Unorganised Consumers: Unorganised Consumers: Unorganised Consumers: Unorganised Consumers: Con-
sumers need to be organised in the
form of consumer organisations which
would take care of their interests.
Though, in India, we do have consumer
organisations which are working in this
direction, adequate protection is
required to be given to consumers till
these organisations become powerful
enough to protect and promote the
interests of consumers.
(iii) Widespread Exploitation of (iii) Widespread Exploitation of (iii) Widespread Exploitation of (iii) Widespread Exploitation of (iii) Widespread Exploitation of
Consumers: Consumers: Consumers: Consumers: Consumers: Consumers might be
Compensation for impurities in cold drinks
2015-16(21/01/2015)
BUSINESS STUDIES
372
exploited by unscrupulous, exploitative
and unfair trade practices like defective
and unsafe products, adulteration,
false and misleading advertising,
hoarding, black-marketing etc.
Consumers need protection against
such malpractices of the sellers.
From the point of view of From the point of view of From the point of view of From the point of view of From the point of view of
Business Business Business Business Business
A business must also lay emphasis on
protecting the consumers and adequately
satisfying them. This is important
because of the following reasons:
(i) Long-term Interest of Business: (i) Long-term Interest of Business: (i) Long-term Interest of Business: (i) Long-term Interest of Business: (i) Long-term Interest of Business:
Enlightened businesses realise that it
is in their long-term interest to satisfy
their customers. Satisfied customers
not only lead to repeat sales but also
provide good feedback to prospective
customers and thus, help in
increasing the customer-base of
business. Thus, business firms should
aim at long-term profit maximisation
through customer satisfaction.
(ii) Business uses Society’s (ii) Business uses Society’s (ii) Business uses Society’s (ii) Business uses Society’s (ii) Business uses Society’s
Resources: Resources: Resources: Resources: Resources: Business organisations use
resources which belong to the society.
They, thus, have a responsibility to
supply such products and render such
services which are in public interest
and would not impair public confidence
in them.
(iii) (iii) (iii) (iii) (iii)     Social Responsibility: Social Responsibility: Social Responsibility: Social Responsibility: Social Responsibility: A business
has social responsibilities towards
various interest groups. Business
organisations make money by selling
goods and providing services to
consumers. Thus, consumers form an
important group among the many
stakeholders of business and like
other stakeholders, their interest has
to be well taken care of.
(iv) Moral Justification: (iv) Moral Justification: (iv) Moral Justification: (iv) Moral Justification: (iv) Moral Justification: It is the moral
duty of any business to take care of
consumer’s interest and avoid any form
of their exploitation. Thus, a business
must avoid unscrupulous, exploitative
and unfair trade practices like defective
and unsafe products, adulteration,
false and misleading advertising,
hoarding, black marketing etc.
(v) (v) (v) (v) (v) Government Intervention: Government Intervention: Government Intervention: Government Intervention: Government Intervention: A
business engaging in any form of
exploitative trade practices would
invite government intervention or
action. This can impair and
tarnish the image of the company.
Thus, it is advisable that business
organisations voluntarily resort to
such practices where the customers’
needs and interests will well be taken
care of.
In view of the above, the government
of India has enacted several regulations
designed to provide adequate protection
to consumers. We shall now discuss
some of these regulations.
L L L L LEGAL EGAL EGAL EGAL EGAL P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION     TO TO TO TO TO C C C C CONSUMERS ONSUMERS ONSUMERS ONSUMERS ONSUMERS
The Indian legal framework consists of
a number of regulations which provide
protection to consumers. Some of these
regulations are as under.
1. The Consumer Protection Act, 1. The Consumer Protection Act, 1. The Consumer Protection Act, 1. The Consumer Protection Act, 1. The Consumer Protection Act,
1986: 1986: 1986: 1986: 1986: The Consumer Protection Act,
1986 seeks to protect and promote the
interests of consumers. The Act
provides safeguards to consumers
2015-16(21/01/2015)
Page 5


LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES
After studying this chapter, you
should be able to:
Østate the importance of
consumer protection;
Ø briefly explain legal framework
for consumer protection in
India;
Ø describe consumer rights in
India;
Ø list out consumer responsibilities;
Ø briefly describe the ways and
means of consumer protection;
and
Ø describe the role of consumer
organisations and NGOs in
protecting consumers’ interests.
CHAPTER
12
C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER     P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION
M M M M MAHARASHTRA AHARASHTRA AHARASHTRA AHARASHTRA AHARASHTRA C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER C C C C COMMISSION OMMISSION OMMISSION OMMISSION OMMISSION
S S S S SLAPS LAPS LAPS LAPS LAPS F F F F FINE INE INE INE INE     OF OF OF OF OF R R R R RS S S S S O O O O ONE NE NE NE NE L L L L LAKH AKH AKH AKH AKH     ON ON ON ON ON
C C C C COCA OCA OCA OCA OCA C C C C COLA OLA OLA OLA OLA
The Maharashtra State Consumer
Commission has asked Coca Cola, one
of the international fizzy drinks
manufacturer, its bottler and
distributor to pay Rs one lakh in
damages to a consumer who found
impurities in a bottle of soft drink that
he had bought.
Chandrashekhar Paradkar, a
resident of Shankar Nagar area here,
filed a complaint with the Nagpur
district Consumer Grievances Fourm
seeking compensation of Rupees four
lakh after he found some solid objects
inside a sealed bottle of a soft drink.
He had bought six various brands of
the soft drink— two bottles each of
Mazaa, Coca Cola and Sprite from a
shop near his house.
Based on that, the District Forum
earlier gave a ruling after finding Coca
Cola, its bottlers Superior Drinks Pvt.
Ltd. and distributors Balaji Sales guilty
of supplying drinks unfit for human
consumption, which was upheld by the
State Consumer Commission.
The District Forum had found
objects resembling pieces of mosquito
repellent mats floating inside the sealed
bottle. Having conducted the tests by a
Public Health Laboratory, they found
the drink unfit for human consumption.
The District Forum came down
heavily on the company saying
2015-16(21/01/2015)
BUSINESS STUDIES
370
in unscrupulous, exploitative and
unfair trade practices like defective
and unsafe products, adulteration,
false and misleading advertising,
hoarding, black-marketing etc. This
means that a consumer might be
exposed to risks due to unsafe
products, might suffer from bad health
due to adulterated food products,
might be cheated because of
misleading advertisements or sale of
spurious products, might have to pay
a higher price when sellers engage in
overpricing, hoarding or black-
marketing etc. Thus, there is a need
for providing adequate protection to
consumers against such practices of
the sellers. Let us now discuss the
importance of consumer protection.
I I I I IMPORTANCE MPORTANCE MPORTANCE MPORTANCE MPORTANCE     OF OF OF OF OF C C C C CONSUMER ONSUMER ONSUMER ONSUMER ONSUMER
P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION
Consumer Protection has a wide
agenda. It not only includes educating
consumers about their rights and
responsibilities, but also helps in
getting their grievances redressed. It
not only requires a judicial machinery
for protecting the interests of
consumers but also requires the
consumers to get together and form
The above case is just one of the
examples of the many problems that
consumers might have to face in the
purchase, use and consumption of
goods and services. The case also
highlights the need for an appropriate
legal protection to be provided to
consumers to protect them from
various forms of exploitation from the
seller. Have you ever thought what
would be the plight of consumers if
adequate protection is not provided to
them? Can the present day businesses
afford to ignore the interests of
consumers? The area of consumer
protection has emerged as a very
important area of study having
significance for both the consumers
and businesses alike.
I I I I INTRODUCTION NTRODUCTION NTRODUCTION NTRODUCTION NTRODUCTION
A consumer is said to be a king in a
free market economy. The earlier
approach of caveat emptor, which
means “Let the buyer beware”, has
now been changed to caveat venditor
(“Let the seller beware”). However, with
growing competition and in an attempt
to increase their sales and market
share, manufacturers and service-
providers may be tempted to engage
multinational giants would not be allowed to have a free run and exploit a poor country
like India by manufacturing and marketing sub-standard products.
While giving its ruling, the District Forum relied upon the historic Donald versus
Stevenson case, wherein heavy compensation had been awarded to a consumer,
who had found rusted nails inside a bottle of ginger beer.
Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news Source: http://www.indlaw.com/guest/news
2015-16(21/01/2015)
CONSUMER PROTECTION
371
themselves into consumer associations
for protection and promotion of their
interests. At the same time, consumer
protection has a special significance for
businesses too.
From Consumers’ point of view From Consumers’ point of view From Consumers’ point of view From Consumers’ point of view From Consumers’ point of view
The importance of consumer
protection from the consumers’ point
of view can be understood from the
following points:
(i) (i) (i) (i) (i) C C C C Consumer Ignorance: onsumer Ignorance: onsumer Ignorance: onsumer Ignorance: onsumer Ignorance: In the light
of widespread ignorance of
consumers about their rights and
reliefs available to them, it becomes
necessary to educate them about the
same so as to achieve consumer
awareness.
(ii) (ii) (ii) (ii) (ii)     Unorganised Consumers: Unorganised Consumers: Unorganised Consumers: Unorganised Consumers: Unorganised Consumers: Con-
sumers need to be organised in the
form of consumer organisations which
would take care of their interests.
Though, in India, we do have consumer
organisations which are working in this
direction, adequate protection is
required to be given to consumers till
these organisations become powerful
enough to protect and promote the
interests of consumers.
(iii) Widespread Exploitation of (iii) Widespread Exploitation of (iii) Widespread Exploitation of (iii) Widespread Exploitation of (iii) Widespread Exploitation of
Consumers: Consumers: Consumers: Consumers: Consumers: Consumers might be
Compensation for impurities in cold drinks
2015-16(21/01/2015)
BUSINESS STUDIES
372
exploited by unscrupulous, exploitative
and unfair trade practices like defective
and unsafe products, adulteration,
false and misleading advertising,
hoarding, black-marketing etc.
Consumers need protection against
such malpractices of the sellers.
From the point of view of From the point of view of From the point of view of From the point of view of From the point of view of
Business Business Business Business Business
A business must also lay emphasis on
protecting the consumers and adequately
satisfying them. This is important
because of the following reasons:
(i) Long-term Interest of Business: (i) Long-term Interest of Business: (i) Long-term Interest of Business: (i) Long-term Interest of Business: (i) Long-term Interest of Business:
Enlightened businesses realise that it
is in their long-term interest to satisfy
their customers. Satisfied customers
not only lead to repeat sales but also
provide good feedback to prospective
customers and thus, help in
increasing the customer-base of
business. Thus, business firms should
aim at long-term profit maximisation
through customer satisfaction.
(ii) Business uses Society’s (ii) Business uses Society’s (ii) Business uses Society’s (ii) Business uses Society’s (ii) Business uses Society’s
Resources: Resources: Resources: Resources: Resources: Business organisations use
resources which belong to the society.
They, thus, have a responsibility to
supply such products and render such
services which are in public interest
and would not impair public confidence
in them.
(iii) (iii) (iii) (iii) (iii)     Social Responsibility: Social Responsibility: Social Responsibility: Social Responsibility: Social Responsibility: A business
has social responsibilities towards
various interest groups. Business
organisations make money by selling
goods and providing services to
consumers. Thus, consumers form an
important group among the many
stakeholders of business and like
other stakeholders, their interest has
to be well taken care of.
(iv) Moral Justification: (iv) Moral Justification: (iv) Moral Justification: (iv) Moral Justification: (iv) Moral Justification: It is the moral
duty of any business to take care of
consumer’s interest and avoid any form
of their exploitation. Thus, a business
must avoid unscrupulous, exploitative
and unfair trade practices like defective
and unsafe products, adulteration,
false and misleading advertising,
hoarding, black marketing etc.
(v) (v) (v) (v) (v) Government Intervention: Government Intervention: Government Intervention: Government Intervention: Government Intervention: A
business engaging in any form of
exploitative trade practices would
invite government intervention or
action. This can impair and
tarnish the image of the company.
Thus, it is advisable that business
organisations voluntarily resort to
such practices where the customers’
needs and interests will well be taken
care of.
In view of the above, the government
of India has enacted several regulations
designed to provide adequate protection
to consumers. We shall now discuss
some of these regulations.
L L L L LEGAL EGAL EGAL EGAL EGAL P P P P PROTECTION ROTECTION ROTECTION ROTECTION ROTECTION     TO TO TO TO TO C C C C CONSUMERS ONSUMERS ONSUMERS ONSUMERS ONSUMERS
The Indian legal framework consists of
a number of regulations which provide
protection to consumers. Some of these
regulations are as under.
1. The Consumer Protection Act, 1. The Consumer Protection Act, 1. The Consumer Protection Act, 1. The Consumer Protection Act, 1. The Consumer Protection Act,
1986: 1986: 1986: 1986: 1986: The Consumer Protection Act,
1986 seeks to protect and promote the
interests of consumers. The Act
provides safeguards to consumers
2015-16(21/01/2015)
CONSUMER PROTECTION
373
against defective goods, deficient
services, unfair trade practices, and
other forms of their exploitation. The
Act provides for the setting up of a
three-tier machinery, consisting of
District Forums, State Commissions
and the National Commission. It also
provides for the formation of consumer
protection councils in every District
and State, and at the apex level.
2. The Indian Contract Act, 1872: 2. The Indian Contract Act, 1872: 2. The Indian Contract Act, 1872: 2. The Indian Contract Act, 1872: 2. The Indian Contract Act, 1872:
The Act lays down the conditions in
which the promises made by parties to
a contract will be binding on each other.
The Act also specifies the remedies
available to parties in case of breach of
contract.
3. 3. 3. 3. 3. The  The  The  The  The Sale of Goods Act, 1930: Sale of Goods Act, 1930: Sale of Goods Act, 1930: Sale of Goods Act, 1930: Sale of Goods Act, 1930: The
Act provides some safeguards and
reliefs to the buyers of the goods in case
the goods purchased do not comply
with express or implied conditions or
warranties.
4. The Essential Commodities Act, 4. The Essential Commodities Act, 4. The Essential Commodities Act, 4. The Essential Commodities Act, 4. The Essential Commodities Act,
1955: 1955: 1955: 1955: 1955: The Act aims at controlling
production, supply and distribution of
essential commodities, checking
inflationary trend in their prices and
ensuring equal distribution of essential
commodities. The Act also provides for
action against anti-social activities of
profiteers, hoarders and black-
marketers.
Protection against malpractices and exploitation
2015-16(21/01/2015)
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