Unit 4

Consumer Protection Act 1986

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.
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.
Reasons for consumer exploitation
 Lack of knowledge about the market
 Weak bargaining power
 Consumers are scattered all over. producers are organised
 No strong consumers movement
 Consumers are un-informed
 Consumers choice is often influenced by mass advertising and are often mislead

Definitions of Important Terms

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
Goods mean goods as defined in the Sale of Goods Act, 1930. Under that act, goods mean
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.

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.
OBJECTIVES
1. To provide protection to consumers.
2. Setting up of consumer protection councils at the central & state level.
3. Speedy settlement of consumer disputes.
4. To educate the consumers about their rights.
5. To protect against unfair trade practices by traders.

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.
Needs of Consumer Protection:
 Protection against the product. (Consumption Purpose)
 Protection against the unfair trade practices.
 Protection against Monopoly.
 Protection deceptive advertising. (False Advertising)
 Environment protection and developments.
 Provide adequate product knowledge.
 Consumer orientation.
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, Ag-mark, Wool mark, FPO, etc. For example, electric
iron must carry ISI mark.
Scope of Complaint :
Where the value of goods and services and claim for compensation:
 Claims not exceeding Rs. 20 lakhs – the Complaint will be filed with District Forum.
 Claims exceeding Rs. 20 lakhs – But within Rs.50 lakhs – Then Complaint will be filed
with Sate Commission.
 Claims exceeding Rs.50 lakhs – Then Complaint will be filed with National Commission.

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.
Redressal Machinery under the Act
The CPA provides for a 3-tier approach in resolving consumer disputes. The District Forum
has jurisdiction to entertain complaints where the value of goods / services complained against and
the compensation claimed is less than Rs. 20 lakhs, the State Commission for claims exceeding
Rs. 20 lakhs but not exceeding Rs. 1crore and the National Commission for claims exceeding Rs.1
crore.
District Forum
Under the CPA, the State Government has to set up a district Forum in each district of the
State. The government may establish more than one District Forum in a district if it deems fit.
Each District Forum consists of:
(a) A person who is, or who has been, or is qualified to be, a District Judge who shall be its
President
(b) Two other members who shall be persons of ability, integrity and standing and have
adequate knowledge or experience of or have shown capacity in dealing with problems
relating to economics, law, commerce, accountancy, industry, public affairs or
administration, one of whom shall be a woman.
Appointments to the State Commission shall be made by the State Government on the
recommendation of a Selection Committee consisting of the President of the State Committee, the
Secretary - Law Department of the State and the secretary in charge of Consumer Affairs
Every member of the District Forum holds office for 5 years or up to the age of 65 years,
whichever is earlier and is not eligible for re-appointment. A member may resign by giving notice
in writing to the State Government whereupon the vacancy will be filled up by the State
Government.
The District Forum can entertain complaints where the value of goods or services and the
compensation, if any, claimed is less than rupees twenty lakhs. However, in addition to jurisdiction
over consumer goods services valued up to Rs.20 lakhs, the District Forum also may pass orders
against traders indulging in unfair trade practices, sale of defective goods or render deficient
services provided the turnover of goods or value of services does not exceed rupees twenty lakhs.
A complaint shall be instituted in the District Forum within the local limits of whose
jurisdiction-
(a) The opposite party or the defendant actually and voluntarily resides or carries on business
or has a branch office or personally works for gain at the time of institution of the
complaint; or
(b) Any one of the opposite parties (where there are more than one) actually and voluntarily
resides or carries on business or has a branch office or personally works for gain, at the
time of institution of the complaint provided that the other opposite party/parties
acquiescence in such institution or the permission of the Forum is obtained in respect of
such opposite parties; or
(c) The cause of action arises, wholly or in part.
State Commission
The Act provides for the establishment of the State Consumer Disputes Redressal
Commission by the State Government in the State by notification.
Each State Commission shall consist of:
(a) A person who is or has been a judge of a High Court appointed by State Government (in
consultation with the Chief Justice of the High Court) who shall be its President;
(b) Two other members who shall be persons of ability, integrity, and standing and have
adequate knowledge or experience of, or have shown capacity in dealing with, problems
relating to economics, law, commerce, accountancy, industry, public affairs or
administration, one of whom must be a woman.
Every appointment made under this is made by the State Government on the recommendation
of a Selection Committee consisting of the President of the State Commission, Secretary -Law
Department of the State and Secretary in charge of Consumer Affairs in the State.
Every member of the District Forum holds office for 5 years or up to the age of 65 years,
whichever is earlier and is not eligible for re-appointment. A member may resign by giving notice
in writing to the State Government whereupon the vacancy will be filled up by the State
Government.
The State Commission can entertain complaints where the value of goods or services and the
compensation, if any, exceeds Rs. 20 lakhs but does not exceed Rs. 1crore.
The State Commission also has the jurisdiction to entertain appeal against the orders of any
District Forum within the State
The State Commission also has the power to call for the records and appropriate orders in any
consumer dispute which is pending before or has been decided by any District Forum within the
State if it appears that such District Forum has exercised any power not vested in it by law or has
failed to exercise a power rightfully vested in it by law or has acted illegally or with material
irregularity.
National Commission
The Central Government provides for the establishment of the National Consumer Disputes
Redressal Commission. The National Commission shall consist of: -
(a) A person who is or has been a judge of the Supreme Court, to be appoint by the Central
Government (in consultation with the Chief Justice of India) who be its President;
(b) Four other members who shall be persons of ability, integrity and standing and have
adequate knowledge or experience of, or have shown capacity in dealing with, problems
relating to economics, law, commerce, accountancy, industry, public affairs or
administration, one of whom shall be a woman
Appointments shall be by the Central Government on the recommendation of a Selection
Committee consisting of a Judge of the Supreme Court to be nominated by the Chief Justice of
India, the Secretary in the Department of Legal Affairs and the Secretary in charge of Consumer
Affairs in the Government of India.
Every member of the National Commission shall hold office for a term of five years or up
to seventy years of age, whichever is earlier and shall not be eligible for reappointment.
The National Commission shall have jurisdiction:
(a) To entertain complaints where the value of the goods or services and the compensation, if
any, claimed exceeds rupees one crores:
(b) To entertain appeals against the orders of any State Commission; and
(c) to call for the records and pass appropriate orders in any consumer dispute which is pending
before, or has been decided by any State Commission where it appears to the National
Commission that such Commission has exercised a jurisdiction not vested in it by law, or
has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction
illegally or with material irregularity.
Complaints may be filed with the District Forum by:
1. The consumer to whom such goods are sold or delivered or agreed to be sold or delivered
or such service provided or agreed to be provided
2. Any recognized consumer association, whether the consumer to whom goods sold or
delivered or agreed to be sold or delivered or service provided or agreed to be provided, is
a member of such association or not
3. One or more consumers, where there are numerous consumers having the same interest
with the permission of the District Forum, on behalf of or for the benefit of, all consumers
so interested
4. The Central or the State Government. On receipt of a complaint, a copy of the complaint
is to be referred to the opposite party, directing him to give his version of the case within
30 days. This period may be extended by another 15 days. If the opposite party admits the
 allegations contained in the complaint, the complaint will be decided on the basis of
materials on the record. Where the opposite party denies or disputes the allegations or omits
or fails to take any action to represent his case within the time provided,
The dispute will be settled in the following manner:
In case of dispute relating to any goods: Where the complaint alleges a defect in the goods
which cannot be determined without proper analysis or test of the goods, a sample of the goods
shall be obtained from the complainant, sealed and authenticated in the manner prescribed for
referring to the appropriate laboratory for the purpose of any analysis or test whichever may be
necessary, so as to find out whether such goods suffer from any other defect. The appropriate
laboratory' would be required to report its finding to the referring authority, i.e. the District Forum
or the State Commission within a period of forty- five days from the receipt of the reference or
within such extended period as may be granted by these agencies.
Limitation period for filing of complaint:
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.
However, where the complainant satisfies the District Forum / State Commission, that he had
sufficient cause for not filing the complaint within two years; such complaint may be entertained
by it after recording the reasons for condoning the delay.
Powers of the Redressal Agencies:
The District Forum, State Commission and the National Commission are vested with the
powers of a civil court under the Code of Civil Procedure while trying a suit in respect of the
following matters: -
1. The summoning and enforcing attendance of any defendant or witness examining the
witness on oath;
2. The discovery and production of any document or other material producible as evidence;
3. The reception of evidence on affidavits:
4. The requisitioning of the report of the concerned analysis or test from the appropriate
laboratory or from any other relevant source;
5. Issuing of any commission for the examination of any witness; and
6. Any other matter which may be prescribed.
Under the Consumer Protection Rules, 1987, the District Forum, Commission and the National
Commission have the power to require any person: -
(i) to produce before, and allow to be examined by an officer of any authorities, such books
of accounts, documents or commodities as may be required and to keep such book,
documents etc. under its custody for the purposes of the Act;
(ii) To furnish such information this may be required for the purposes to any officer so
 specified.
They have the power to:
(i) To pass written orders authorizing any officer to exercise power of entry and search of any
premises where these books, papers, commodities, or documents are kept if there is any
ground to believe that these may be destroyed, altered, falsified or secreted. Such
authorized officer may also seize books, papers, documents or commodities if they are
required for the purposes of the Act, provided the seizure is communicated to the District
Forum / State Commission / National commission within 72 hours. On examination of such
documents or commodities, the agency concerned may order the retention thereof or may
return it to the party concerned.
(ii) To issue remedial orders to the opposite party.
(iii) To dismiss frivolous and vexatious complaints and to order the complainant to make
payment of costs, not exceeding Rs. 10,000 to the opposite party.
Remedies Granted under the Act:
The District Forum / State Commission / National Commission may pass one or more of
the following orders to grant relief to the aggrieved consumer: -
1. To remove the defects pointed out by the appropriate laboratory from goods in question;
2. To replace the goods with new goods of similar description, this shall be free from any
defect;
3. To return to the complainant the price, or, as the case may be, the charges paid by the
complainant;
4. To pay such amount as may be awarded by it as compensation to the consumer for any loss
or injury suffered by the consumer due to negligence of the opposite party;
5. To remove the defects or deficiencies in the services in question;
6. To discontinue the unfair trade practice or the restrictive trade practice or not to repeat
them;
7. Not to offer the hazardous goods for sale:
8. To withdraw the hazardous goods from being offered for sale:
9. To provide for adequate costs to parties.
Appeals:
Any person aggrieved by an order made by the Forum may prefer an appeal to the State
Commission in the prescribed form and manner. Similarly, any person aggrieved by any original
order of the State Commission may prefer an appeal to the National Commission in the prescribed
form and manner. Any person aggrieved by any original order of the National Commission may
prefer an appeal to the Supreme Court.
 All such appeals are to be made within thirty days from the date of the order provided that
the concerned Appellate authority may entertain an appeal after the said period of thirty days if it
is satisfied that there was sufficient cause for not filling it within that period. The period of 30 days
is to be computed from the date of receipt of the order by the appellant.
Where no appeal has been preferred against any of the orders of the authorities, such orders
would be final. The District Forum, State Commission or National Commission may enforce
respective orders as if it was a decree or order made by a Court and in the event of their inability
to execute the same; they may send the order to the Court for execution by it as if it were a Court
decree or order.
Penalties:
Failure or omission by a trader or other person against whom a complaint is made or the
complainant to comply with any order of the State Commission or the National Commission shall
be punishable with imprisonment for a term which shall not be less than one month but which may
extend to 3 years, or with fine of not less than Rs. 2,000 but which may to Rs. 10000 or with both.
However, if it is satisfied that the circumstances of any case so requires, then the District
Forum or the State Commission or the National Commission may impose a lower fine or a shorter
term of imprisonment.