INTRODUCTION OF THE CONSUMER PROTECTION ACT

Consumer protection was not necessary when the world was younger and
communities smaller. In the lifestyle of those times unfair trade was almost
impossible. The industrial revolution and a shift of population from rural areas to
towns and anonymity of urban living gave plenty of scope for malpractices.

In our country, buyers have a very weak bargaining power and cannot assert their
right being heard. Consequently, manufacturers and traders are tempted to follow
diverse practices which turn out to be unfair to consumers. To check the onslaught on
consumers, a host of legislations were enacted. These include Sale of Goods Act,
1930; Essential Commodities Act, 1955; Prevention of Food Adulteration Act, 1954;
Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities
Act, 1980; Standards of Weights and Measures Act, 1956; Agricultural Products and
Grading and Marketing Act (AGMARK), 1937; Indian Standards Bureau Certification
Act, 1952; MRTP Act, 1969 etc.

Besides the applicability of the above legislations, the Consumer Protection Act, 1986
was enacted which was substantially amended by the Consumer Protection
(Amendment) Act, 1993 i.e. 18th June, 1993.

HISTRORICAL BACKGROUND OF CONSUMER RIGHTS

The concept of protection of rights of the consumers is not new; rather it is a practice
that has been present in the society and various countries in one form or the other
historically. The Old Testament mentions a form of consumer protection, and so does
the Code of Hammurabi, but only in a mercantile perspective. An early form of
movement in defense of consumers was born in the United States, where the bases
for the birth and development of monopoly and oligopolistic capitalism had started.
The first consumer organizations were born in Denmark in 1947 and Great Britain in
1955 where the Government created the Consumer Council in order to enable
consumers to express themselves on issues reserved to producers and traders. But
the real normative innovation came with the Single European Act; it modified the
Treaty of Rome by solidifying the role of the Economic and Social Committee, to who
were attributed powers to safeguard the consumers. Over the years, some important
changes were made to the above-mentioned legislation that paved the way for a
wider consumer policy. But despite these additions, it still lacked a solid foundation
that allowed getting real consumer protection.
 Consumer means any of the following persons
1. We need physical protection of the consumer, for example protection against
products that are unsafe or dangerous to his health and welfare.

2. Consumer wants protection against deceptive and unfair trade and market
practices.

3. Consumers protection is needed against all types of pollution so that they can
enjoy a healthy environment-free from water, air and food pollution.

4. Consumer protection is also needed against the abuse of monopolistic and

restrictive trade practices. Protection delayed is protection denied.

On the one hand consumers, particularly in India, are unorganized, illiterate and
ignorant, poor and backward, relatively uninformed and above all they still have the
traditional outlook and attitude to suffer in silence. On the other side, businessmen
and traders are organized, well-informed, intelligent and competent sellers. The
negative sides of our life have enabled unscrupulous businessmen to exploit
consumers in India. Consumers in modern markets are amateurs whereas the persons
confronting them are professional sellers. The consumer choice is influenced by mass
advertising and other promotional devices which make people want things which
neither they really need nor they can afford.

Consumerism demands due recognition of the following consumer rights

by the business as well as by the Government
1. Right to Safety: Consumer should have the right to protection of health and safety
against goods which are unsafe to life and health/services which are hazardous to life
and property that is appliances, flammable fabrics, dangerous toys, food additive,
food coloring, etc.

2. Right to be informed: It means right to be informed about quality, quantity,

potency, purity, standard and price of goods or services, as the case may be, so as to
protect the consumer against unfair trade practices. Consumers should be given all
the relevant facts about the product so that they can take intelligent decisions in
purchasing. Advertising and labeling on the package can provide objective
information to buyers.
3. Right to Choose: That is right to have access to variety of goods and services at
competitive prices. In case of monopolies, say, railways, telephones, etc., it means
right to be assured of satisfactory service. Free competition provides sample choice in
the selection of goods and services. It is expected from the manufacturers not to use
aggressive selling techniques to sell a particular product without giving the consumer
a chance to choose the best among alternatives products available.

4. Right to be heard: There should be a provision for standing machinery to ensure

feedback of information in business communication to listen to the genuine
grievances and complaints from the customers. Such a safety valve is necessary for
smooth flow of understanding between sellers and buyers. It can keep sellers duly
informed about consumer reactions and feelings.

5. Right to Get Redress: There should be prompt settlement of complaints and claims
lodged by aggrieved customers. This will ensure consumer confidence and provide
justice to buyers. Incidentally, it will also enhance seller’s goodwill and reputation. For
this purpose a number of consumer courts and agencies have been specifically set up.

6. Right to Receive After-Sale Service: It is essential in costly and durable goods i.e.,
mechanical and electrical/electronic appliances.

7. Freedom from Pollution: It is the latest addition to consumer bill of rights.

Community life should be free from various modes of pollution. This will enhance the
quality of human life. There are three alternative ways and means for consumer
protection in the market place:

1. Self-help that is, consumers’ unions.

2. Business, by self-regulation and by giving a fair deal to the retailers and consumers.

3. Government, by having special consumer legislation and its strict implementation.

Legislation ensures competition, provisions of information to buyers, and fair play
through regulation of unfair trade practices.

Self policing is far more superior to state policing in the field of marketing. It is in the
self-interest of the business itself. Government intervention takes place only to
protect the weaker party in the market (consumers) and to prevent its exploitation by
the stronger party (businessmen). “Absence of voluntary business correctives leads to
consumer legislation.” To provide simple, speedy and inexpensive redressed of
consumer grievances, the Act envisages three-tier quasi-judicial machinery at the
district, state and national levels. At the district level these are to be district fore as
the redressed for. The state government may, if it deems fit, establish more than one
district forum for a district. At the state level, there are to be similar redressed
commissions to be known as State Commissions and at the national level, there is a
National Consumer Disputes Redressed Commission to be known as National
Commission.

The law helps those who help themselves.

Hence consumerism is necessary. Self-regulation by business will minimize the need
for extensive government intervention. To supplement consumerism and self-
regulation, we have legislation to restore the balance of power in exchange
relationship between buyers and sellers. There is also a consensus of opinion that the
best interests of consumers can only be served through an effective cooperation
among consumers, businessmen and government and a broad consumer education
programmed.

If these correctives are actively adopted by all groups, it would indeed be a giant step
for consumers and the appropriate response to the phenomenon known as
consumerism.

The Need for Consumer Protection

Consumers are largely denied their due rights, especially in developing countries such
as India. The consumers are spread widely all over a country and are poor, illiterate
and are generally not aware of their rights, though their awareness has recently
increased. The manufacturers and suppliers of goods or services often exploit
consumers by adopting a number of unfair and restrictive trade practices. They often
merge and also form tacit cartels to raise prices for maximizing their profits at the
expense of consumers. For instance, in case of drugs manufacturers generally charge
high prices which are much above their cost of production. Some pharmaceutical
companies misuse their patent rights to exploit consumers. They therefore need
protection from unfair and restrictive trade practices of producers and suppliers of
goods or services.

Misleading advertising is another means by which the producers deceive the

consumers. Advertisement is of two types. One is informative advertisement which
informs the consumers about the availability of certain products at certain prices. This
is not objectionable as it provides information to the consumers. The other and highly
injurious practice by the suppliers, especially in India, is widespread practice of
adulteration of commodities. The adulteration by private sector can take place right
from the manufacturing point to the ultimate supplier of the products to the
consumers. It is due to the above practices of the manufacturers and suppliers which
have resulted in consumer protection movement and have forced the governments to
enact legislation to protect the consumers.

Important Methods of Consumer Protection

How to ensure consumer protection from unfair, restrictive, deceptive and
exploitative practices of manufacturers and suppliers?

The important ways for consumer protection are

1. Imposition of self-regulation and discipline by the manufacturers and suppliers of
goods and services for working in the interests of consumers.

2. The role of government which can enact laws for the protection of consumers and
make arrangements for their enforcement.

3. Voluntary organization of consumers to form groups such as NGO, cooperative

societies to safeguard the interests of consumers.

Voluntary Organization of Consumers to Protect their Rights

In some countries the consumers have organized themselves on a voluntary basis to
form consumer groups or councils. They are non-government organizations (NGOs) to
protect consumer rights.

These voluntary consumer groups or councils protect consumer rights in

the following ways
1. They issue leaflets providing information so as to educate consumers on matters
affecting them.

2. They have been pressing for proper labeling of the products with maximum price to
be charged, the contents of the product, especially drugs, side effects if any, of the
product etc.
3. Organizing movements against the malpractices of manufacturers and traders of
the products.

In Delhi, Mumbai and other important cities voluntary consumer organizations came
into existence in sixties and seventies when prices of goods rose very high to resist
the hike in prices by traders arbitrarily. The idea of Super Bazaar on cooperative
principles emerged from this price resistance movements of consumers. Besides, an
organization named ‘Common Cause’ established by late. Mr. H.D. Shourie and based
in Delhi did a very useful work in protecting the rights of consumers. Consumer
cooperative movement also started to protect the consumers against the
malpractices and traders of goods. A consumer cooperative is a voluntary association
of consumers formed to promote their interests. The consumers enhance their
bargaining power as against traders and manufacturers.

The consumer cooperatives protect the consumers in the following ways

1. since these cooperatives purchase commodities in bulk and generally directly from
the manufacturers they are able to provide goods to the consumers at reasonable
prices.

2. Secondly, the consumers themselves control the cooperatives. They are therefore
assured of standard quality and unadulterated goods.

3. Correct weights and measures are used by the cooperative societies and therefore
consumers are saved from any deception in this regard.

4. In India consumer cooperatives are especially engaged in distributing essential

commodities at controlled prices.

Despite the efforts of voluntary organizations to protect consumers and safeguard

their legitimate rights, these voluntary organizations have not succeeded much in
protecting consumers. Their growth has been limited mainly to house building
societies. Other voluntary cooperative societies work at the level of distributing goods
and are able to eliminate malpractices of middlemen. But, the real problem is to save
the consumers from monopolistic, unfair and restrictive trade practices of
manufacturers of goods and services and misleading advertisements by them to
exploit the consumers.
 Government Role in Consumer Protection
The government can play an important role for protection of consumers. It can enact
various legislations for protection of consumers. According to the UN Guidelines for
Consumer Protection, “the government role in consumer protection is vital and finds
expression through policy making legislations and establishment of institutional
authority for its enforcement. To provide a legal basis for its enforcing basic consumer
rights every country needs to have irreducible minimum of consumer protection
legislation covering physical safety, promotion and protection of consumers’
economic interests, standards for the safety and quality of goods and services,
distribution facilities, redress, education and information programmes. Governments
also require the necessary machinery to enforce such legislation.” In both the
developed and developing countries the governments have taken several measures
to protect consumers. Laws relating to cooperative societies have been enforced in
India for quite some time now. Besides, consumers have been sought to be protected
by enactment of several laws by government. The important laws have been passed
by the government to protect consumers and uphold their rights.

These laws include:

(1) Prevention of Food Adulteration Act, 1954,

(2) The Essential Commodities Act, 1985,

(3) Agricultural Produce (Grading and Marketing) Act,

(4) Drugs Control Act,

(5) Drugs and Cosmetics Act,

(6) Standards of Weights and Measures Act,

(7) Drugs and Magic Remedies (Objectionable Advertisement) Act,

(8) Water (Prevention and Control of Pollution) Act,

(9) Prevention of Black Marketing and Maintenance of Essential Commodities Act, and

(10) Air (Prevention and Control of Pollution) Act.

Above all, in 1986, the Indian government passed Consumer Protection Act. Under it
the consumers have the right to approach appropriate consumer forum or
commission set up under the Act to get their complaints redressed. In what follows
we will explain the provisions of Consumer Protection Act 1986.

Consumer even if the goods were purchased for commercial purpose

A simple reading of Sec. 2(1)(d) states that a person who buys or uses the goods for
‘commercial purpose’ is not a consumer within the meaning if Consumer Protection
Act, 1986. But there are certain exceptions which allow even the person who bought
the goods for resale, or commercial purpose to file a complaint in the appropriate
redressed forum. This exception is in the way of a ‘warranty’. If the goods so
purchased are found to be defective in the ‘warranty period,’ the buyer can file a
complaint if the goods are not repaired even after repeated requests.

In C. P. Moosa vs. Chowgle Industries Ltd. the appellant had purchased EPBAX system
for his hotel with warranty and annual maintenance contract. There was a deficiency
of service during the warranty period and AMC period. The National Commission held
that case falls under Section 2(1)(d)(ii) and appellant entitled to compensation.

In the matter of Dr. Vijai Prakash Goyal vs. the Network Limited the National
Commission held that purchaser of a machine would be a consumer if the defect in
machine develops within warranty period even though the machine was purchased
for the commercial purpose.

The key features of CONSUMER PROTECTION ACT, 2019

The significant highlights of the CPA act are as follows:

1. Establishment of the Central Consumer Protection Authority (CCPA) The act

has the provision of the Establishment of the CCPA which will protect, promote
and enforce the rights of consumers. The CCPA will regulate cases related to
unfair trade practices, misleading advertisements, and violation of consumer
rights. The CCPA will have an investigation wing, headed by a Director-General,
which may conduct inquiry or investigation into consumer law violations. The
CPA has been vested with wide powers to take suo-moto actions, recall
products, order reimbursement of the price of goods/services, cancel licenses
and file class action suits, if a consumer complaint affects more than a single
individual.
2. Penalties for\Misleading Advertisements The bill contains provisions with
respect to misleading advertisements which is defines as per Clause 2(28) of
the Act. The New Act fixes liability on endorsers considering that there have
been numerous occurrences in the recent past where consumers have fallen
prey to unfair trade practices under the influence of celebrities acting as brand
ambassadors. In such cases, it becomes important for the endorser to take the
onus and exercise due diligence to verify the veracity of the claims made in the
advertisement to refute liability claims. 

3. Unfair Trade Practices The Act introduces a specific broad definition of Unfair
Trade Practices, which also includes sharing of personal information given by
the consumer in confidence, unless such disclosure is made in accordance with
the provisions of any other law. Misleading advertisements are also under the
ambit of ‘Unfair Trade Practices’ in the new act. 

4. Product liability Product liability is a significant aspect introduced in this bill

that would work to the advantage of the consumers. Under the provisions of
this bill, a manufacturer or a service provider would be required to compensate
the consumer in case of any loss or injury due to a manufacturing defect in the
product or a poor service. This is distinguishable from the existing provision
where only the cost of the product was compensated by the manufacturer or
the service provider and not the cost of the loss or injury as in the current
proposal.  The product liability claim can be brought by a complainant against a
product manufacturer, product service provider as well as a product seller
exercising substantial control over designing, testing or modifying the product.
However, it will not include any harm caused on account of breach of warranty
conditions or any commercial or economic loss. the product seller will also
cannot be made liable where the product has been misused, altered or
modified. 

5. Covering E-Commerce transactions With the expansion of technologies and

living style, there has been increasing buying and selling of things on online
platforms (like Amazon, Flipkart, eBay). The New act successfully throws a cloak
of protection to the transactions made online.  The definition of a consumer
now includes within its ambit any person who buys any goods, whether
through offline or online transactions, electronic means, teleshopping, direct
selling or multi-level marketing.
6. Enabling E-Complaints/hearings through video conferences Unlike the
previous Act, the new Act enables consumers to file E-complains sitting right at
their homes. The electronic filing of complaints and hearing via video
conferences have disentangled and resolved a lot of complexities faced by the
consumers during the procedures of filing, going to courts and engaging in time
consuming documents. Moreover, in contrast to consumer filing complaint in
the jurisdiction where seller falls, the new Acer enables consumers to file
complaint from anywhere or from where the consumer resides.

7. Provision for Mediation If the consumers wish to resolve the dispute outside
the court, there is a provision for Mediation as well. The dispute can be
referred to Mediation as an Alternative Dispute Redressed Mechanism. There is
also a provision for setting up of Consumer Mediation Cell. This provision would
ease the existing burden of zillions of cases on courts and enable quicker
disposal of cases at hand.

8. Revised Pecuniary Jurisdiction The new Act has enhanced the pecuniary
jurisdiction of Consumer Courts at various levels. The District Commission shall
now entertain with cases where value of goods and services paid are up to 1
crores, State Commission with cases up to 10 crores and National Commission
with cases exceeding the value of 10 crores.

CONCLUSION
The law of Consumer Protection is intricate, spans various
jurisdictions, and can be constantly changing.  Despite all this, a law
student or new attorney can better understand the field by following
the tips identified in this Research Guide.  When researching in this
field, remember the value of beginning research online for free.  If no
valuable search results are returned, then only some time has been
lost.  If, however, a researcher quickly identifies the applicable
statute or regulation through the online search, time and cost can be
saved.  Likewise, secondary sources (specifically, on-point treatises)
are critical to navigating the large amount of authority in this area of
the law; these should be consulted.  Follow up with traditional
methods of legal research to see how the identified statute or
regulation has been construed by courts of the applicable jurisdiction.