Consumer Protection Act -1986 (Part - 1), Business Law | Business Law - B Com PDF Download

The Consumer Protection Act was passed by the Parliament in 1986 and it came into force from 1987. Its purposes to protect consumers against defective goods, unsatisfactory services, unfair trade practices, etc. The Act provides for three-tier machinery consisting of District Forum, State Commission and National Commission. It also provides for the formation protection councils in every state.

The consumers can file their complaints at the appropriate forum for quick redressal. The complaint may relate to defective refrigerator or TV set, non-functional telephone, lack of due cares in medical treatment and so on. Any service or product given free of charge is not covered by the Act.

Definitions of Important Terms

Before studying the provisions of the CPA, it is necessary to understand the terms used in the Act. Let us understand some of the more important definitions.

Complainant means:

1. A consumer; or

2. Any voluntary consumer association registered under the Companies Act, 1956 or under any other law for the time being in force; or

3. The Central Government or any State Government, who or which makes a complaint; or one or more consumers where there are numerous consumers having the same interest.

Complaint means any allegation in writing made by a complainant that:

1. An unfair trade practice or a restricted trade practice has been adopted by any trader.

2. The goods bought by him or agreed to be bought by him suffer from one more defects.

3. The services hired or availed of or agreed to be hired or availed of by him suffer from deficiency in any respect.

4. The trader has charged for the goods mentioned in the complaint a price excess. of the price fixed by or under any law for the time being in force or displayed on the goods or any package containing such goods.

Goods which will be hazardous to life and safety when used, are being offered for sale to the public in contravention of the provisions of any law for the time being in force, requiring traders to display information in regard to the contents, manner and effect of use of such goods; with a view to obtaining any relief provided by law under the CPA.

Consumer means any person who:

1. 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 (for example hire purchase or installment sales) and includes any other user of such goods when such use is made with the approval of the buyer, but does not include a person who obtains such goods for resale or for any commercial purpose; or

2. 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 when such services are availed of with the approval of the first mentioned person

For the purposes of this definition "commercial purpose" does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood by means of self-employment.

Goods mean goods as defined in the Sale of Goods Act, 1930. Under that act, goods means every kind of movable property other than actionable claims and money and includes stocks and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

Service is defined to mean service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board 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.

Consumer dispute means dispute where the person against whom a complaint has been made, denies or disputes the allegation contained in the complaint.

Restrictive Trade Practice means any trade practice which requires a consumer to buy, hire, or avail of any good or as the case may be, services as a condition precedent for buying, hiring or availing of any other goods or services.

Unfair Trade Practice means unfair trade practice as defined under the Monopolies and Restrictive Trade Practices Act. The MRTP act has defined certain practices to be unfair trade practices.

Defect 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 or implied, or as is claimed by the trade in any manner whatsoever in relation to any goods.

Deficiency means any fault, imperfection or shortcoming or inadequacy in the quality, 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. A consumer is a user of goods and services. Any person paying for goods and services, which he uses, is entitled to expect that the goods and services be of a nature and quality promised to him by the seller.

The earlier principle of "Caveat Emptor" or "let the buyer beware" which was prevalent has given way to the principle of "Consumer is King". The origins of this principle lie in the fact that in today's mass production economy where there is little contact between the producer and consumer, often sellers make exaggerated claims and advertisements, which they do not intend to fulfill. This leaves the consumer in a difficult position with very few avenues for redressal. The onset on intense competition also made producers aware of the benefits of customer satisfaction and hence by and large, the principle of “consumer is king" is now accepted.

Objects of the Consumer Protection Act, 1986

The preamble to the Act states that the Act is legislated to provide for better protection of the interests of consumers and for that purpose to make provision for the establishment of consumer councils and other authorities for the settlement of consumer's disputes and for matters connected therewith. The CPA extends to the whole of India except the State of Jammu and Kashmir and applies to all goods and services unless otherwise notified by the Central Government.

The basic rights of consumers as per the Consumer Protection Act (CPA) are:

1. Right to safety.

2. Right to be informed.

3. Right to choose.

4. Right to representation (or to be heard).

5. Right to seek redressal.

6. Right to consumer education.

1. Right to Safety :

It is the consumer right to be protected against goods and  services which is hazardous to health or life.

2. Right to be Informed:

The consumer has the right to be informed about   the quality, quantity, purity, standard and price of goods he intends to purchase. Therefore, the manufacture must mention complete information  about the product, its ingredients, date of manufacture, price, precaution  of use, etc. on the label and package of the product.

3. Right to Choose:

The consumer should be assured of freedom to choose from a variety of products at competitive prices. Every consumer wants to buy a product on his free will. There should be free competition in the market so that the consumer may make the right choice in satisfying his needs.

4. Right to Representation (or to be Heard):

The consumer has right to register dissatisfaction with any product and get his complaint heard. Most of the reputed firms have set up consumer service cells to listen to the consumer’s complaint and take appropriate steps to redress their grievances.

5. Right to Seek Redressal:

It is the right to seek redressal against any defect in goods or unfair trader suffered by the consumer. If the quality and performance of a product falls short of seller’s claims, the consumer has a right to certain remedies. The Consumer Protection Act requires that the product must be repaired, replaced or taken back by the seller as provided under the contract between the buyer and the seller.

6. Right to Consumer Education:

It means right of acquiring knowledge and being a well-informed consumer throughout his life. He should also be made aware of his rights and the remedies available through publicity in the mass media.

Consumer Responsibilities

(i) To provide adequate information to the seller: The consumer has the responsibility to provide adequate information about his needs and expectation to the sellers.

(ii) To exercise caution in purchasing: The consumer must try to get full information on the quality, design, utility, quantity, price, etc. of the product before purchasing it.

(iii) To insist on cash memo or receipt: The consumer must get a cash memo or receipt as a proof of purchase of goods from the seller. This would help him in making a complaint to the seller in case of any defect in the goods.

(iv) To file complaint against genuine grievance: The consumer must file a complaint with the seller or manufacturer about any defects or shortcoming in the products and services.

(v) To be quality conscious: The consumer should never compromise on the quality of goods. While making purchases, the consumers must look for standard quality certification marks such as ISI, Agmark, Woolmark, FPO, etc. For example, electric iron must carry ISI mark.

Redressal Machinery under the Act

Consumer Protection Councils

The interests of consumers are enforced through various authorities set up under the CPA. The CPA provides for the setting up of the Central Consumer Protection Council, the State Consumer Protection Council and the District Forum.

Central Consumer Protection Council

The Central Government has set up the Central Consumer Protection Council, which consists of the following members:

(a) The Minister in charge of Consumer Affairs in the Central Government who is its Chairman, and

(b) Other official and non-official members representing varied interests. The Central council consists of 150 members and its term is 3 years. The Council meets as and when necessary but at least one meeting is held in a year.

State Consumer Protection Council

The State Council consists of:

(a) The Minister in charge of Consumer Affairs in the State Government who is its Chairman, and

(b) Other official and non-official members representing varied interests. The State Council meets as and when necessary but not less than two meetings must be held every year.