Restrictive Trade Practice | Law of Torts - CLAT PG PDF Download

Restrictive Trade Practice (RTP) [Sec. 2(41)]

Definition of 'Restrictive Trade Practice' under section 2(41) of the Consumer Protection Act, 2019 has two parts: definition and illustrations.

According to the Act, "restrictive trade practice" refers to a trade practice that aims to manipulate prices, delivery conditions, or the supply flow of goods or services in a way that imposes unjustified costs or restrictions on consumers.

The second part of section 2(41) provides two examples of restrictive trade practices:

1. Delay in Supply

• When a trader delays the supply of goods or services beyond the agreed period, leading or likely to lead to a price increase.
• For instance, if a consumer has to pay the price of goods on the delivery date or remuneration for a service on the date of service provision, and due to the trader's delay, there is a rise in price or remuneration.

2. Bundling of Goods or Services

• A trade practice that requires a consumer to buy, hire, or avail of certain goods or services as a condition for purchasing other goods or services.
• This practice, known as 'bundling,' forces consumers to take goods or services they do not need or are not interested in.

For example, a consumer may be required to purchase a specific item before being allowed to buy another item, or to avail of a particular service before being eligible for another service.

In summary, restrictive trade practices involve actions that manipulate prices or supply conditions, leading to unjustified costs or restrictions on consumers. The examples provided illustrate how delays in supply and bundling can impact consumers negatively.

Defective Goods [Sec. 2(1)(10)]

A consumer can file a complaint when encountering defective goods, which refers to any fault, imperfection, or shortcoming in the quality, quantity, potency, purity, or standard of the goods purchased. According to Sec. 2(10) of the Consumer Protection Act, a 'defect' is defined as any flaw or inadequacy in the goods that fails to meet the required standards set by law, contract, or the trader's claims.

For instance, if a product is supposed to be of a certain quality or quantity as per legal or contractual obligations, and it falls short of those standards, it is considered defective. The term 'defective' encompasses any such shortcomings in the goods.

Defect under the Consumer Protection Act

The definition of "defect" in the Consumer Protection Act is exhaustive, meaning it only covers the defects explicitly mentioned. Any defect not included in the definition will not be considered by Consumer Commissions.

Breaking down the definition, we have:

1. "Defect" refers to any fault, imperfection, or shortcoming in the quality, quantity, potency, or purity of goods.
2. The quality, quantity, etc., must have been required to be maintained by law, contract, or claims made by the trader.
3. The defect applies only to goods. If an item does not fall under the definition of 'goods,' no defect can be claimed.

For example, if A sells a stolen car to B and B wants to sue A for a defect in the car's title, B cannot do so under the Consumer Protection Act. This is because a defect in title does not constitute defective goods as per the Act.

Case Examples of Defects

• T. T. (Pvt.) Ltd. vs. Akhil Bhartiya Grahak Panchayat II: A pressure cooker that burst and caused injury was deemed to have a manufacturing defect.
• Ramesh Chandra vs. Commercial Tax Officer: The failure to provide a registration book with a jeep purchased by the complainant was considered a defect.
• Narayanan Vyankatkrishnan Iyengar vs. Shakti Foods: A soft drink found unfit for human consumption through a laboratory test was ruled defective.
• Farooq Hazi Ismail Saya vs. Gavabhai Bhesania: Electric household appliances not meeting ISI standards and being unsafe were deemed defective.
• Chitranjan Sahu vs. N. C. Jain II: When A supplied white marble to B, and the color changed later, B sued A for defective marble. The court held that A should have informed B that the marble would not retain its color. In the absence of such information, it was assumed that A implied the marble would keep its white color, and the color change constituted a defect under the Act.

Deficiency in Services [Sec. 2(11)]

When a consumer identifies a deficiency in a service, they have the right to file a complaint under the Consumer Protection Act. The key requirement is that the issue must fall within the definition of a service and must meet the criteria for deficiency as outlined in the Act.

Understanding 'Deficiency'

According to Sec. 2(11) of the Act, "deficiency" refers to any fault, imperfection, shortcoming, or inadequacy in the quality, nature, and manner of performance required by law or promised in a contract. It can arise from:

• Negligence or omission by the service provider causing harm to the consumer.
• Deliberate withholding of important information from the consumer.

Key Elements of Deficiency

• Fault or Inadequacy: A deficiency involves a fault, imperfection, or inadequacy in the service.
• Quality and Manner of Performance: The service must be assessed based on the quality, nature, and manner of its performance.

Examples of Deficiency in Services

• General Manager, South Eastern Railway vs. Anand Prasad Sinha: A passenger complained about poor conditions in a train compartment, leading to injuries. The complaint was deemed a deficiency in service, and compensation was awarded.
• Poonam Verma vs. Ashwin Patel: A doctor faced allegations of providing incorrect treatment, constituting deficiency in service.

Timing of Deficiency

It is important to note that deficiency in service must occur during the performance of the service. Determining the commencement of service performance is crucial in this context.

Performance and Deficiency

In cases where a service provider fails to start the performance of a service, such as in Jaipur Metals & Electricals Ltd. vs. Laxmi Industries, the question of deficiency does not arise. Deficiency pertains to the actual performance of the service.

Legal Precedents

• Lata Construction vs. Dr. Rameshchandra Ramniklal Shah: A builder's failure to deliver a promised flat led to a complaint of deficiency in service.

In summary, deficiency in services under Sec. 2(11) of the Consumer Protection Act involves assessing faults, inadequacies, and the quality of service performance. Legal precedents illustrate various scenarios where deficiency was established, emphasizing the importance of service performance and contractual obligations.

Deficiency in Service: Key Points

When it comes to deficiency in service, there are important factors to consider. Here are the key points:

Deficiency in Service

• In the case of Mangilal vs. Chairman District Rural Development Agency, A deposited Rs. 100 with B as an application fee and executed a bond for drilling a tube well. When B did not drill the tube well due to feasibility issues, A claimed deficiency in service. However, it was determined that the deposit and bond did not constitute hiring of services, and therefore, deficiency in service could not be claimed.

Deficiency Due to Circumstances Beyond Control

• In normal situations, if a service is found deficient based on established criteria, it is deemed deficient, and compensation is awarded. However, there may be exceptional circumstances beyond the control of the service provider that prevent them from delivering the service of the expected quality, nature, and manner. In such cases, the service provider should not be held liable.
• For example, if A agreed to supply water to B for crop irrigation, but due to a power grid failure in the State, A was unable to obtain sufficient power to fulfill the service, A cannot be held responsible for deficiency in service. On the other hand, if the service provider is negligent, such negligence may not be excused under the guise of circumstances beyond control.

Orissa Lift Irrigation Corpn. Ltd. vs. Birakishore Raut

• In this case, A had agreed to supply water to B for irrigation purposes. However, A failed to fulfill this obligation due to a power breakdown caused by the burning of a transformer. As a result, B's crops were damaged, and he filed a complaint against A for providing deficient service. The National Commission ruled that it was A's responsibility to have the transformer repaired promptly. Since A was negligent in addressing this issue, he was held liable for the deficiency in service.

Charging Excessive Price

• A trader can be complained against for charging a price that exceeds the price: 1. fixed by law, 2. displayed on the goods, or 3. displayed on the package containing the goods.
• Examples:
  • If the government sets a control rate of milk at Rs. 15 per litre, and a trader sells it at Rs. 18 per litre, the trader is charging excessively.
  • If a one Kg. packet of salt displays a price of Rs. 4, and the trader starts selling it at Rs. 6 due to a market shortage, the trader is charging excessively.
• Complaints for excessive pricing cannot be made when the price is not fixed by law or not displayed on the goods or package.

Failure to Inform About Risk in Case of Hazardous Goods

• Definition: Hazardous goods refer to items that are dangerous or risky in nature. While the term is not explicitly defined in the Act, it is used to address consumer safety concerns.
• Applicability: Complaints regarding hazardous goods can be made if the consumer is not informed about the risks associated with the goods. This provision does not apply to hazardous services.
• Objective: The aim is to ensure the physical safety of consumers by making suppliers, exporters, importers, and retailers accountable for the proper handling and storage of goods. Consumers should be informed about the proper use of goods and the potential risks involved.
• Example: If a person buys an insecticide that is not properly labeled with safety information, and they suffer skin problems due to contact with the product, the supplier may be held liable under the Act.

Provision of Hazardous Services

• When a person offers services that are hazardous or potentially hazardous to public life and safety, and they are aware of the harmful nature of these services, it can lead to a consumer dispute under the Consumer Protection Act, 2019.
• The key elements are:
  • Service Provision: The individual or entity must be providing a service.
  • Awareness of Harm: The service provider must know that the service is injurious to life and safety.

Claim of Product Liability

• A consumer dispute arises when a claim for product liability is made against a product manufacturer, product seller, or product service provider.
• Product Liability: According to Section 2(34) of the Consumer Protection Act, product liability refers to the responsibility of a product manufacturer or seller to compensate for harm caused to a consumer by a defective product or by deficiency in services related to the product.
• Product Liability Action: As per Section 2(35), a product liability action is a complaint filed by an individual before a district commission, state commission, or national commission, seeking compensation for harm caused to them.