SRI SATHYA SAI INSTITUTE OF HIGHER LEARNING PRASANTHINILAYAM CAMPUS SCHOOL OF BUSINESS MANAGEMENT ACCOUNTING AND FINANCE

CORPORATE AND TAX LAWS

CONSUMER PROTECTION ACT 1986 & WRITEUP ON CASE STUDY

SUBMITTED BY: SRINIVAS K 11514 II MBA (FINANCE)

Consumer Protection Act 1986

One commodity mixed with another: must not be sold as pure, nor a bad one as good; not less as many, nor anything that is at hand or that is concealed. MANU SMRITI Contents: CHAPTER I CHAPTER II CHAPTER III CHAPTER IV PRELIMINARY CONSUMER PROTECTION COUNCILS CONSUMER DISPUTES REDRESSAL AGENCIES MISCELLANEOUS

CHAPTER I PRELIMINARY 1. Short title, extent, commencement and application 2. Definitions 3. Act not in derogation of any other law

1. Short title, extent, commencement and application.(1) This Act may be called the Consumer Protection Act, 1986. (2) It extends to the whole of India except the State of Jammu and Kashmir. (3) It shall come into force on such date as the Central Government may, by notification, appoint and different dates may be appointed for different States and for different provisions of this Act. (4) Save as otherwise expressly provided by the Central Government by notification, this Act shall apply to all goods and services. 2. Definitions. Definitions of some important words used in the act are given in this section. Some of which are as follows appropriate laboratory branch office Consumer Complainant Complaint consumer dispute Defect Deficiency District Forum Goods Manufacturer National Commission

 Notification Person Prescribed Service State Commission Trader unfair trade practice 3. Act not in derogation of any other law.the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.

WHO IS A CONSUMER? Two kinds of consumer under the Act Consumer of goods buys or agrees to buy goods any user of such goods Consumer of services hires or avails any services any beneficiary of such service (Is company a consumer?) CONSUMERS NEED PROTECTION AGAINST Unfair trade practice

Restrictive trade practice Defects Deficiencies

UNFAIR TRADE PRACTICE : Adopting unfair methods or deception to promote sale, use or supply of goods or services e.g. Misleading public about price (e.g. bargain price when it is not so). Charging above MRP printed. Misleading public about anothers goods or services. Falsely claiming a sponsorship, approval or affiliation. Offering misleading warranty or guarantee. RESTRICTIVE TRADE PRACTICE Price fixing or output restraint re: delivery/flow of supplies to impose unjustified costs/restrictions on consumers. Collusive tendering; market fixing territorially among competing suppliers, depriving consumers of free choice, fair competition. Supplying only to particular distributors or on condition of sale only within a territory. Delaying in supplying goods/services leading to rise in price. Requiring a consumer to buy/hire any goods or services as a pre-condition for buying/hiring other goods or services.

DEFECTS 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 trader in any manner whatsoever in relation to any goods.

 DEFICIENCY 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 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.

Case study: Spring Meadows Hospital and others vs. Harjol Ahluwalia Harjot, a minor was brought to the Spring Meadows hospital. Dr. Bhutani examined him and made the diagnosis that the patient is suffering from typhoid and prescribed medicines. Ms.Matthew, a nurse, wrote down the medicine name as Inj. Lariago and gave it to Mr.Ahluwalia. Mr.Ahluwalia brought the medicine from a nearby medical store and Ms.Bina Matthew injected Harjot with it, who collapsed immediately upon receiving the dose. Dr.Dhananjay who was the Resident Doctor was called and he diagnosed that the patient is suffering from cardiac arrest. Harjot was later brought to AIIMS where it was found that irreparable damage had been done to his brain and he would survive only in a vegetative state. Harjots parents approached the Delhi State Consumer Commission for mental and asked for Rs.28 lakhs as compensation. The cardiac arrest was caused by high dose of medicine. The injection was to be given by Dr.Dhananjay, but he allowed the nurse to give it. Thus, the court found him negligent.

 The nurse was found guilty of dereliction of duty and the hospital for employing unqualified people and entrusting the minor in their care. The Delhi State Commission awarded Rs.12.5 lakhs to the patient and Rs.5 lakhs to the parents. Can the parents of the child be considered as consumers? Is the Commission under the CPA entitled to award the compensation for the mental agony and suffering of the parents? Whether compensation can be awarded to both the parents and the child or only to the person who has been the beneficiary of services (child)? The parents and the child are both consumers as the definition of a consumer includes beneficiary of services which is different from the person who hires the services The Commission is fully justified in awarding compensation to both the parents and the child for the injury each one of them has sustained. CHAPTER II CONSUMER PROTECTION COUNCILS 4. The Central Consumer Protection Council 5. Procedure for meetings of the Central Council 6. Objects of the Central Council 7. The State Consumer Protection Councils 8. Objects of the State Council 8A.The District Consumer Protection Council minor

4. The Central Consumer Protection Council.(1) The Central Government shall, by notification, establish with effect from such date as it may

specify in such notification, a Council to be known as the Central Consumer Protection Council (hereinafter referred to as the Central Council). (2) The Central Council shall consist of the following members, namely: (a) The Minister in charge of the consumer affairs in the Central Government, who shall be its Chairman, and (b) Such number of other official or non-official members representing such interests as may be prescribed. 5. Procedure for meetings of the Central Council.(1) The Central Council shall meet as and when necessary, but at least one meeting of the Council shall be held every year. (2) The Central Council shall meet at such time and place as the Chairman may think fit and shall observe such procedure in regard to the transaction of its business as may be prescribed. 6. Objects of the Central Council.the objects of the Central Council shall be to promote and protect the rights of the consumers such as, (a) The right to be protected against the marketing of goods and services which are hazardous to life and property; (b) The right to be informed about the 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; (c) The right to be assured, wherever possible, access to a variety of goods and services at competitive prices; (d) The right to be heard and to be assured that consumer's interests will receive due consideration at appropriate forums; (e) The right to seek Redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers; and

(f)

The right to consumer education.

7. The State Consumer Protection Councils.- (1) The State Government shall, by notification, establish with effect from such date as it may specify in such notification, a Council to be known as the Consumer Protection Council for..................... (Hereinafter referred to as the State Council). (2) The State Council shall consist of the following members, namely: (a) The Minister incharge of consumer affairs in the State Government who shall be its Chairman; (b) Such number of other official or non-official members representing such interests as may be prescribed by the State Government. (c) Such number of other official or non-official members, not exceeding ten, as may be nominated by the Central Government. (3) The State Council shall meet as and when necessary but not less than two meetings shall be held every year. (4) The State Council shall meet at such time and place as the Chairman may think fit and shall observe such procedure in regard to the transaction of its business as may be prescribed by the State Government. 8. Objects of the State Council. The objects of every State Council shall be to promote and protect within the State the rights of the consumers laid down in clauses (a) to (f) of section 6. 8A. (1) The State Government shall establish for every district, by notification, a council to be known as the District Consumer Protection Council with effect from such date as it may specify in such notification. (2) The District Consumer Protection Council (hereinafter referred to as the District Council) shall consist of the following members, namely: (a) the Collector of the district (by whatever name called), who shall be its Chairman; and

(b) such number of other official and non-official members representing such interests as may be prescribed by the State Government. (3) The District Council shall meet as and when necessary but not less than two meetings shall be held every year. (4) The District Council shall meet at such time and place within the district as the Chairman may think fit and shall observe such procedure in regard to the transaction of its business as may be prescribed by the State Government. 8B. the objects of every District Council shall be to promote and protect within the district the rights of the consumers laid down in clauses (a) to (f) of section 6. CHAPTER IV MISCELLANEOUS 28. Protection of action taken in good faith 28A.Service of notice, etc. 29. Power to remove difficulties 29A.Vacancies or defects in appointment not to invalidate orders 30. Power to make rules 30A.Power of the National Commission to make regulations 31. Rules and regulations to be laid before each House of Parliament

28. Protection of action taken in good faith. No suit, prosecution or other legal proceedings shall lie against the members of the District Forum, the State Commission or the National Commission or any officer or person acting under the direction of the District Forum, the State Commission or the National Commission for executing any order made by it or in respect of anything which is in good faith done or intended to be done by such member, officer or person under this Act or under any rule or order made there under.

28A. Service of notice, etc. - (1) All notices required by this Act to be served shall be served in the manner hereinafter mentioned in sub-section (2). (2) The service of notices may be made by delivering or transmitting a copy thereof by registered post acknowledgment due addressed to opposite party against whom complaint is made or to the complainant by speed post or by such courier service as are approved by the District Forum, the State Commission or the National Commission, as the case may be, or by any other means of transmission of documents (including FAX message). (3) When an acknowledgment or any other receipt purporting to be signed by the opposite party or his agent or by the complainant is received by the District Forum, the State Commission or the National Commission, as the case may be, or postal article containing the notice is received back by such District Forum, State Commission or the National Commission, with an endorsement purporting to have been made by a postal employee or by any person authorized by the courier service to the effect that the opposite party or his agent or complainant had refused to take delivery of the postal article containing the notice or had refused to accept the notice by any other means specified in sub- section (2) when tendered or transmitted to him, the District Forum or the State Commission or the National Commission, as the case may be, shall declare that the notice had been duly served on the opposite party or to the complainant : Provided that where the notice was properly addressed, pre-paid and duly sent by registered post acknowledgment due, a declaration referred to in this sub-section shall be made notwithstanding the fact that the acknowledgment has been lost or mislaid, or for any other reason, has not been received by the District Forum, the State Commission or the National Commission, as the case may be, within thirty days from the date of issue of notice. (4) All notices required to be served on an opposite party or to complainant shall be deemed to be sufficiently served, if addressed in the case of the opposite party to the place where business or profession is carried and in case of complainant, the place where such person actually and voluntarily resides.

29. Power to remove difficulties.(l) If any difficulty arises in giving effect to the provisions of this Act, the (Central Government may, by order in the official Gazette, make such provisions not inconsistent with the provisions of this Act as appear to it to be necessary or expedient for removing the difficulty : Provided that no such order shall be made after the expiry of a period of two years from the commencement of this Act (2) Every order made under this section shall, as soon as may be after it is made be laid before each House of Parliament (3) If any difficulty arises in giving effect to the provisions of the Consumer Protection (Amendment) Act, 2002, the Central Government may, by order, do anything not inconsistent with such provisions for the purpose of removing the difficulty: Provided that no such order shall be made after the expiry of a period of two years from the commencement of the Consumer Protection (Amendment) Act, 2002. (4) Every order made under sub-section (3) shall be laid before each House of Parliament. 29A. Vacancies or defects in appointment not to invalidate orders.No act or proceeding of the District Forum, the State Commission or the National Commission shall be invalid by reason only of the existence of any vacancy amongst its member or any defect in the constitution thereof. 30. Power to make rules. - (1) The Central Government may, by notification, make rules for carrying out the provisions contained in clause (a) of sub-section (1) of section 2, clause (b) of sub-section (2) of section 4, sub-section (2) of section 5, sub-section (2) of section 12, clause (vi) of sub-section (4) of section 13, clause (hb) of sub-section (1) of section 14, section 19, clause (b) of sub-section (1) and subsection (2) of section 20, section 22 and section 23 of this Act. (2) The State Government may, by notification, make rules for carrying out the provisions contained in clause (b) of sub-section (2) and sub-section (4) of section 7, clause (b) of sub-section (2) and sub-section (4) of section 8A, clause (b) of sub-

section (1) and sub-section (3) of section 10, clause (c) of sub-section (1) of section 13 clause (hb) of sub-section (1) and sub-section (3) of section 14, section 15 and clause (b) of sub-section (1) and sub-section (2) of section 16 of this Act. 30A. Power of the National Commission to make regulations - (1) The National Commission may, with the previous approval of the Central Government, by notification, make regulations not inconsistent with this Act to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such regulations may make provisions for the cost of adjournment of any proceeding before the District Forum, the State Commission or the National Commission, as the case may be, which a party may be ordered to pay. 31. Rules and regulations to be laid before each House of Parliament - (1) Every rule and every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation. (2) Every rule made by a State Government under this Act shall be laid as soon as may be after it is made, before the State Legislature. Case study: Union of India v. Manoj H. Pathak, (1996) II CPR 132 (NDRC) the complainant and his parents took their reserved seats in compartment of Gujrat Express train. According to the complainant, about 10 to 15 people entered their compartment at Dadar and they were traveling without tickets.

 By force, they occupied the reserved seats that belonged to the complainant and his parents. The complainant tried to contact the conductor, police and the ticket checker but the group of hooligans attacked him. This resulted in fracture of the complainants vertebral column, thereby leading to permanent disability. The railway administrations defense was that law and order maintenance was the duty of Ministry of Home Affairs. The National Commission held that this amounted to carelessness on the part of the Railway administration. It was held that it is every consumers right to be unharmed during a train journey. Any person(s) traveling in an unauthorized way must be subjected to legal trial. In this case, the Railway administration was held accountable for negligence in their services.

Amendments Proposed:
The Government has introduced Consumer Protection (Amendment) Bill, 2011, in Lok Sabha on December 16, 2011, to facilitate quicker disposal of cases and to widen and amplify the scope of some of the provisions of the Act. On line filing of consumer complaints Payment to be made for non-compliance of the order Powers to District Forum Powers to State Government in selection process Increase of age in the appointment Experience for members Powers to National Commission / State Commission to direct any one to assist the case Monitoring system of pending cases

JAI SAI RAM