Legal Aspects of Business

Consumer Protection Act, 1986

Submitted By:
Akhil Rastogi 17021141008
Hursh Kesiraju 17021141044
Arun Kanade 17021141050
Kuldeep Singh 17021141055
Manpreet Dhanjal 17021141059
Consumer Protection Act, 1986 is an Act of the
Parliament of India enacted in 1986 to protect the interests
of consumers in India.

• The Act seeks to promote and protect the interest of consumers

against deficiencies and defects in goods or services.
• It also seeks to secure the rights of a consumer against unfair trade
practices, which may be practiced by manufacturers and traders.
• It covers all the sectors whether private, public or cooperative.
 HISTORY
• Ancient India
Dharma-sastras (“Dharma”) - social rules and norms
Derived from Vedas – the primary sources of law in India.
− the Manu Smriti (800 B.C. to 600 B.C.)
− the Yajnavalkya Smriti (300 B.C. to 100 B.C)
− the Narada Smriti (100 A.D to 200 A.D.)
− the Bruhaspati Smriti (200A.D. to 400 A.D.)
− the Katyayana Smriti (300 A.D. to 600 A.D).
− Kautilya’s Arthashastra
 Medieval and Modern Periods
• Medieval Period : Sultanate period, Alauddin Khalji
− Price enforcement mechanisms, shopkeepers punished for
underweighing
• Modern Period : British Regime
Unified nationwide modern legal system
− the Indian Contract Act of 1872
− the Sale of Goods Act of 1930
− the Indian Penal Code of 1860
− the Drugs and Cosmetics Act of 1940
− the Usurious Loans Act of 1918
− the Agriculture Procedure (Grading and Marketing Act) of 1937
 Objectives of Consumer Protection Act
The main objective of the Consumer Protection Act, 1986 is to protect the
interest and safeguard the rights of the consumers which are as follows:
• Right to be protected against the marketing of goods and services which are
hazardous to life and property.
• Right to be informed about the quality, quantity, potency, purity, standard and
price of goods or services so as to protect the consumer against unfair trade
practices.
• Right to be assured , wherever possible , access to a variety of goods and
services at competitive prices
• Right to be heard and to be assured that consumers' interests will receive due
consideration at appropriate forums
• Right to seek redressal against unfair trade practices and unscrupulous
exploitation of consumers
• Right to consumer education.
Caveat Emptor Quasi Contract Law
• While purchasing goods buyer must be very careful, at his own interest,
buyer has to select such goods only which are not of defective nature. In
case where buyer, negligently purchases defective goods, he cannot
repudiate the contract of sale. It is caveat emptor law.
Example: A case on this point is Ward Vs Hobbs. In this case a contract of
sale gets formed between A and B according to the terms of which A has
to sell an animal from his farm to B. Negligently B selects an animal which
has been suffering from some sickness a d later the animal dies. B sues A.
Court decides that B is negligent, he cannot blame the seller for his (A)
own negligence and therefore B cannot claim any compensation. Thus
caveat emptor rule protects the seller.
Who is a Complainant
• A consumer
• Any voluntary consumer association registered under the Companies
Act, 1956
• The Central Government or any State Government
• One or more consumers, where there are numerous consumers
having the same interest
• In case of death of a consumer, his legal heir or representative can
make a complaint
 Who is a Consumer?
• 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
− [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 8 [hires or avails of] 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 2 [but does not include a person who avails of such services
for any commercial purpose].
 Who is not a Consumer?
A person is not a consumer if he/she:
• purchases any goods or avails any service free of charge;
• purchases a good or hires a service for commercial purpose;
• avails any service under contract of service
 Grounds of Complaint
• Loss or damage due to Unfair or Restrictive Trade Practices
• Defect in Goods:
“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 time being Consumer Handbook 3 in force or under any contract, express or implied, or as is
claimed by the trader in any manner whatsoever in relation to any goods.
• Deficiency in Service:
“Deficiency” means any fault, imperfection shortcoming or inadequacy in the quality, nature and manner of performance which is
required to be maintained by or under any law for 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.
• Excess Pricing
Fixed by law / Displayed on Packaging / Displayed in Price List exhibited under law / Agreed between partners
• Unlawful sale of hazardous goods

• Restrictive Trade Practices:

− Delay in supply of goods or services to lead to rise in price.
− any trade practice which requires a consumer to buy, hire or avail of any goods or, as the case may be, services as condition
precedent to buying, hiring or availing of other goods or services
 Unfair Trade Practices
• False representation
− Quality, quantity, style or model of goods
− Renovated or re-built goods as new goods
− Seller does not have the required sponsorship or approval
− Goods or Services do not have the claimed use, usefulness or benefit
− Goods or Services do not have the claimed warranty / guarantee
− Quality or standards of services
• Price of product or service is misleading
• Offering gifts, prizes, etc. to lure customers with no intention of providing them.
• Selling goods which do not fall within the safety standards
• Hoarding or destroying goods, or refusing to sell with the intention of raising the cost
• Manufacturing or offering spurious goods or adopting deceptive practices in the provision of
services
Unfair Trade Practices
 Relief under Consumer Protection Act
• Repair of defective goods
• Replacement of defective goods
• Refund of the price paid for defective goods or service
• Removal of deficiency in service
• Refund of extra money charged
• Withdrawal of goods hazardous to life and safety
• Compensation for the loss or injury suffered by the consumer due to negligence of the opposite
party
• Adequate cost of filing and pursuing the complaint

− Limitation period - (l) The District Forum, the State Commission or the National Commission
shall not admit a complaint unless it is filed within two years from the date on which the cause
of action has arisen.
− Penalties - Imprisonment for a term which shall not be less than one month but which may
extend to three years, or with fine which shall not be less than two thousands rupees but
which may extend to ten thousand rupees, or both
Rights of Consumer
• Right to Safety – Hazardous goods & services
• Right to be Informed – About the quality, quantity, potency, purity,
standard and price of goods
• Right to Choose – Access to variety of goods and services at
competitive price
• Right to be heard - due consideration at appropriate forums.
• Right to seek Redressal – Right to seek redressal against unfair trade
practices or unscrupulous exploitation of consumers
• Right to Consumer Education –Right to acquire the knowledge and
skill to be an informed consumer throughout life.
 Procedure to file a complaint
• Complaint is to be filed within two years of buying the product or using the service.
• The complaint should mention the name and address of the person who is complaining and
against whom the complaint is being filed. Copies of relevant documents must be enclosed.
• The consumer must mention details of the problem and the demand on the company for
redressal. This could be replacement of the product, removal of the defect, refund of money, or
compensation for expenses incurred and for physical/mental torture. Please ensure that the
claims are reasonable.
• You should preserve all bills, receipts and proof of correspondence related to the case. Avoid using
voice mail or telephone because such interactions are normally difficult to prove.
• The complaint can be in any Indian language.
• There is no compulsion to hire a lawyer. Main cost consists of correspondence and travelling to
the consumer forum for the hearing.
• Maintain a complete record of the emails and documents sent by you.
Necessary Norms Required To Follow
By Every Company
THINGS TO REMEMBER
• Always insist on Cash Memo.
• Look for the "BEST BEFORE” or “EXPIRY DATE” when buying goods or
medical products.
• Always look for STANDARD MARKS like ISI, FPO, AGMARK, etc.
• DO NOT pay more than MRP.
• Always fight for YOUR RIGHTS.
• In the consumer forum, THE CONSUMER IS ALWAYS STRONG.
 Case Laws
Patel Roadways Limited vs Birla Yamaha Limited
• Date of Judgement March 28,2000

• Respondent - M/s. Birla Yamaha Limited

• Appellant - M/s. Patel Roadways Limited

• The respondent M/s. Birla Yamaha Limited had booked a

consignment ( containing 267 generator sets at Ghaziabad
in the State of Uttar Pradesh) with the appellant M/s. Patel
Roadways Limited for transportation.
• The freight charges were duly paid by them to Patel Roadways and
further necessary lorry receipt was issued by the carrier, in favour of
the Respondent.

• The goods booked by the respondent were destroyed in a fire which

took place in the godown of the appellant shortly after booking of the
consignment.

• The respondent made a claim for the value of the goods, for refund
of freight charges and compensation for loss.
• The respondent filed a petition before the National Consumers
Disputes Redressal Commission in 1994.

• The respondent claimed Rs. 56,00,799/- along with interest. The said
sum comprised of Rs. 50,78,231/- as cost of 267 generator sets, Rs.
22,568/- as freight charges and Rs. 5,00,000/- as general and special
damages on account of harassment and undue loss of time.

• The complaint was that the carrier had accepted the responsibility of
transportation of the consignment along with safe delivery of goods,
that it failed to do.
• Thus there was a deficiency in the services of the carrier.

• Patel Roadways Limited pleaded that the consignments were lost in

fire which was an accident beyond their control, and therefore, there
was no deficiency in their services and the complaint was not
correct.

• The Court (after examining the facts and circumstance of the case)
dismissed the case.
 Oriental Insurance Co. Ltd. vs Shri Mohanlal Agarwalla

• Date of Judgement 18 January 2003

• Respondent - Shri Mohanlal Agarwalla
• Appellant - Oriental Insurance Co. Ltd.

• Respondent insured his residence-cum-office for Rs.1,00,000 and

household goods etc. for Rs.25,000 with the Appellant.

• There was a flash flood which caused damage to the building and
household goods of the Respondent and hence he lodged a Claim with
the Appellant for a sum of Rs.50,900 towards renovation of building and
Rs.25,000 for loss of household goods and personal effects.
• After conducted the survey and assessing the damages the
Appellant offered a sum of Rs.20, 276 to the respondent which he
accepted.

• Later the respondent filed a Complaint Petition before the District

Forum alleging negligence and deficiency of service on part of the
appellant.

• The appellant challenged the maintainability of the complaint on

the ground that the person who signed the complaint, Shri
Kanhaiyalal Agarwalla, had no locus standi to the institute.
• As he had not hired the service and that as a third party he had no
authority under the Consumer protection Act to file the complaint
and that he did not come within the purview of the definition of
consumer under section 2(1) (b) and section 12 of the Act.

• Further they contended that the sum of Rs.20, 276 had already
been paid to the Insured as full and final settlement of the claim
and the insured has also executed a valid discharge slip and
hence no consumer disputes survived.

• The court concluded that the appeal is totally devoid of merits and
hence dismissed it.
 New India Assurance Company Limited v Abhilash
Jewellery

• Date of Decision: 22.01.2009

• Complainant(Abhilash Jewellery): had taken a jeweller's block

policy, lodged a claim with the opposite party(NIAC) for loss of
gold ornaments.

• NIAC refused the claim on grounds that loss occurred when gold
was in custody of an apprentice who was not an employee.
• The policy stipulated that for indemnification of the loss, the
property insured had to be "in the custody of the insured, his
partner or his employee“.

• However, The National Commission allowed the complaint holding

that an apprentice was an 'employee' (Kerala Shops and
Commercial Establishments Act defined an 'employee' to include
an 'apprentice‘).

• Hence, The court allowed the appeal