Law Specialised Courses: Consumer Law
S. Reghu Kumar, 19 Jan 2018

The Consumer Protection Act, 1986 is a special legislation intended to protect consumers in India against the exploitation of manufacturers, traders and providers of service by supply of defective goods or by deficiency in service resulting in loss to the consumer. The main features of the Consumer Protection Act is the empowerment of the consumers by making them aware about their rights and responsibilities, provision for effective, inexpensive and speedy redress system to consumers, provision for the three-tier system– District Forum, State Commission and National Commission.

With the advent of Consumer Protection Act and the creation of three-tier redress machinery the principle of ‘Caveat Emptor’, which means ‘let the buyers beware’, has transformed into ‘Caveat Vendetor’, which means ‘let the seller beware’.

Who is a Consumer?

The 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 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

  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 other than the person who 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 but does not include a person who avails of such services for any commercial purpose;

  3. A person who buys goods or avails services exclusively for the purposes of earning his livelihood by means of self-employment alone shall qualify as a consumer otherwise he will fall under the exclusion commercial purpose. If the goods and services are availed for commercial purpose, then he does not qualify the definition of consumer and he cannot institute the complaint before a fora constituted under the Consumer Protection Act.

Select statues that apply to Consumer Protection Act

  • Indian Contract Act 1872

  • Sale of Goods Act 1930

  • The Forensic Law

  • Drugs and Cosmetics Act 1940

  • Prevention of Food Adulteration Act 1954

  • Essential Commodities Act 1955

  • Standards of Weights and Measures Act 1976,

  • The Drugs and Magic Remedies (Objectionable Advertisements) Act 1954

  • Indian Penal Code 1860

  • Criminal Procedure Code 1973

  • Indian Evidence Act 1872

  • The Limitation Act 1963

  • The Food Safety and Standards Act 2006

  • Carriage by Air Act 1972

  • Carriage by Road Act 2007

What do Goods mean?

Goods mean ‘Goods’ as defined in the Sale of Goods Act, 1930. The mandatory requirement to be a consumer is that the goods must be purchased for consideration. It implies that the persons who purchase goods free of cost will not come within the definition of a consumer as defined under the Act. The terminology used in the definition is consideration, which has not been defined under the Act, and hence the definition of consideration as defined under the Indian Contract Act has to be adopted. The consideration if promised or partly paid also will bring in the person within the ambit of a Consumer. 

Another category is the user of goods with the approval of the person who buys the goods also qualifies the definition of a consumer. Hence a person other than the one who purchases the goods also qualifies the definition of a consumer.

What does Service mean?

The term “Service” under Section 2 (1) (o) means service of any description which is made available to potential users and includes, but not limited to, 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;  “spurious goods and services” means such goods and services which are claimed to be genuine but they are actually not so.

Under the definition of Service it is imperative that the hiring of service shall be for consideration to qualify as a consumer. Free service availed will not fetch the status of a consumer. The term consideration has not been defined under the Consumer Protection Act and hence the definition of consideration under the Indian Contract Act has to be adopted.

What do the State/ Government as a ‘Service’ provide?

The functions of the State have to be divided into sovereign functions and ordinary commercial activities. In respect of sovereign functions by way of collection of taxes like property tax and other taxes, it cannot be said that the local bodies are rendering any services in respect of which taxpayer can maintain a complaint under that.

When they resort to commercial activity services in respect of such commercial activity may relate to service in respect of which certainly the statutory authority is amenable to the jurisdiction of the Consumer Protection Act.

“…The standard of duty to care in medical services may be inferred after factoring in the stature of the doctors concerned as also the hospital; the premium stature of services available to the patient certainly raise a legitimate expectation…” reads the case order of The Hon’ble Supreme Court in Malay Kumar Ganguly Vs Dr. Sukumar Mukherjee & Ors.

The pecuniary jurisdiction of the three-tier redress mechanism–

  1. District Consumer Disputes Redressal Forum – not to exceed Rs. 20 lakhs.

  2. State Consumer Disputes Redressal Commission – not to exceed Rs. 1 crore.

  3. National Consumers Disputes Redressal Commission – exceeding Rs. 1 crore.

The reliefs that can be granted under the Consumer Protection Act are enumerated in Section 14 of the Consumer Protection Act wherein it can order to remove defects, replace goods with new goods, to refund the price or charges of the goods and to order compensation and it has got the power to grant punitive damages also in certain cases.

There is another species of cases, which originate from allegation of unfair trade practice, which is defined as “…a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice...”  

Penal provisions

The important facet of the Consumer Protection Act is the penal provision which can be invoked when a trader or a person against whom a complaint is made fails or omits to comply with any order made by the District Forum, the State Commission or the National Commission, as the case may be, such trader or person shall be punishable with imprisonment for a term not be less than 1 month but which may extend to 3 years, or with fine which shall not be less than Rs. 2,000 but may extend to Rs.10,0000, or with both.

While exercising the penal provision, the fora constituted under the Consumer Protection Act shall have the power of a Judicial Magistrate of first class. This is for the first time a statutory body other than the criminal court has been vested with the power to convict and sentence a defaulter. The moment the penal provisions are invoked the fora transforms into a Magistrate Court. This provision has been introduced for execution of the orders of the fora.

Select instances where ‘Deficiency in Service’ can be questioned

  • Financing 

  • Banking 

  • Insurance 

  • Telephones 

  • Housing and construction activity 

  • Defects to vehicles 

  • Defects to equipment 

  • Railway services and airline services 

  • Medical Services and Treatment 

  • Medical Negligence Cases

Need for more focus in curriculum

In law colleges the study of Consumer Protection Act has been given only a subsidiary status. The peculiarity of this law is that there will be application of the Indian Contract Act 1872 and a number of other Acts like the Sale of Goods Act 1930 (See Box).

The students will have to get first acquainted with these statutes. On the practical side they must participate or actively involve themselves in the conduct of cases before the Fora. More focus or importance has to be bestowed to these aspects.

Job prospects

With the introduction of the Consumer Protection Act, the number of cases against traders, manufacturers, financing agencies et al have increased manifold. There is a continuous search of law officers to exclusively deal with the consumer cases by companies. Hence gaining proficiency in Consumer Law has to be given precedence and prominence in the curriculum. Presently only low priority is given to this branch which requires a drastic change.

*The author is a Consumer Law Expert

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