Consumer Protection Act, 1986 Goods & Services

Objects of the Act Right to be protected against marketing of goods which are hazardous to life and property. Right to be informed about the quality, potency, standard, and price of goods to protect the consumer against unfair trade practices. Right to be heard and to be assured that customers’ interests will receive due consideration at appropriate forums. Right to seek redressal against unscrupulous exploitation of consumers. Right to consumer education. Consumer protection councils – Central & State.

Definitions Appropriate laboratory: It is recognized by Central & State governments, which carries out analysis or test of any goods with a view to determining whether such goods suffer from any defect. Complainant: One or more consumer or any voluntary consumer association registered under the Companies Act or the Central or any State Government who or which makes a complaint. Complaint: Any allegation in writing made by a complainant with a view to obtaining any relief provided by under this Act.

Consumer: Any person, who – (i) buys any goods for a consideration which has been paid or promised or partly paid or promised, or under any system of deferred payment. (ii) hires or avails of any service for a consideration which has been paid or promised or partly paid or promised, or under any system of deferred payment. For (i) ‘Consumer’ also includes any user other than buyer himself. It must involve some consideration. ‘Consumer’ does not include resale or commercial use of obtained goods. For (ii) ‘Consumer’ includes any beneficiary of services other than the person who hires or avails such services.

Consumer dispute – complaint denied or challenged Defect – fault, imperfection, or shortcoming in the quality, potency, purity, or standard Deficiency – fault, imperfection, or inadequacy in the quality, nature and manner of performance District Forum – Consumer Disputes Redressal Forum National Commission – National Consumer Disputes Redressal Commission Person – includes a firm, a HUF, a cooperative society, and AOPs State Commission – Consumer Disputes Redressal Forum

Service: It includes, provision of facilities in connection with banking, financing, insurance, transport, processing, electrical or other energy supply, boarding & lodging, house construction and plots by Housing & Development Board, entertainment and amusement, and telephone connection and facility by Telecom Department. ‘Service’ however does not include the rendering of any service free of charge or under a contract of personal service. Spurious – goods & services which are claimed to be genuine but they are actually not so. Trader – a person who sells, distributes, manufacturers, or a packer of any goods for sale.

Who is not a Consumer? A person obtaining goods for “resale” or for any “commercial purpose”; or Buys goods without Consideration; or Hires or avails any services without Consideration; or Uses the goods without approval of the person who has bought goods for consideration; or Is beneficiary of services w/o consent of the person who has hired the services for consideration; or Obtains service under a contract of personal service.

Resale and Commercial Purpose When the goods are re-sold in original condition as bought, it is a resale. When the goods are not purchased for immediate final consumption, but for transfer, it is resale. A person buying the goods for resale or commercial purpose, even if for consideration, is NOT a consumer.

Mr. A bought a TV set from an electronics store for using it at home. The TV was defective. Is Mr. A a consumer? Mr. A is a consumer as he buys a good for a consideration. Bhavesh bought a pressure cooker. In the first use itself while his wife was using it, the pressure cooker burst, hurting her. Is Bhavesh a consumer? Is his wife a consumer? Bhavesh is the consumer. His wife is also a consumer as per the provision: ‘…and includes any user of goods other than the buyer for consideration’.

Anand runs a laundry shop and he bought a washing machine. The same was installed in his shop. The machine was defective right from the day it was delivered. Is Anand a consumer? Anand is not a consumer as he is using the machine for consumer purpose. Balu is a distributor for computer accessories. He bought 100 pen-drives for selling to other computer vendors. Is Balu a consumer? Balu is not a consumer as he has obtained accessories for resale.

Anil bought cycles for the purpose of hiring to tourists visiting the area. Sunil was a tourist who had hired a cycle. The cycles were defective. The handle of the cycle broke, injuring Sunil. Are Anil and Sunil consumers? Anil is not a consumer. However, Sunil is a consumer as he availed service of hiring from Anil. Mr. Patel bought a laptop and gifted it to his son, Amit. Amit is a consultant who uses the laptop for his business. Are Mr. Patel and Amit consumers? Mr. Patel was a consumer when he bought the laptop. However, Amit is not a consumer as he is using it for commercial purpose.

Special Note on ‘Commercial Purpose’ Not buying for one’s own use is not necessarily buying for commercial purpose. For example, a purchaser of a cooler is a consumer, even if the cooler is installed at a bus-stand for the use of public free of charge. In a case, where a lady purchased a Xerox machine for the purpose of earning her livelihood, was held that it was not for commercial purpose and that she was a consumer. The Court should therefore be satisfied that there is NO large-scale commercial activity.

For example, Plying of a taxi is purchase of a taxi for commercial purpose. Commercial purpose is commerce, mercantile, having profit as the main aim. There should be profit or loss from further disposal. Commercial purpose include all business activities. In other words, where there is no profit motive or business gain, the purchase of goods is not for commercial purpose.

Extent of Consumer Protection While other legislation may be either punitive or preventive, the CPA compensates the consumer. The CPA gives the consumer an additional remedy besides those which may be available under existing laws. The CPA is a benevolent piece of legislation to protect a large body of consumers from exploitation.

Consumer Dispute On a complaint before the Consumer Redressal Forums against a person, who denies or disputes the allegations contained in the complaint a consumer dispute arises [Sec. 2(1) (c)]. Separate allegations may form separate disputes requiring separate finding on each dispute.

Who can be a Complainant? A Consumer; or Any voluntary consumer association registered under the Companies Act; or The Central or State Government; or One or more consumers, where there are numerous consumers having the same interest; or In case of death of consumer – his legal heir or representative.

What is a Complaint? A complaint is any allegation in writing by a complainant that – An “unfair trade practice” or a “restrictive trade practice” has been adopted by any trader or service provider; The goods bought or agreed to be bought suffer from one or more “defects”. The services hired or availed or agree to be hired or availed suffer from “deficiency” in any respect.

A trader or the service provider has charged for the goods or services mentioned in the complaint, “a price in excess” of the price fixed or displayed; Goods which will be “hazardous to life and safety” when used are being offered for sale to the public in contravention to any stipulated standards; Services which are hazardous to life and safety when used are being offered by service provider.

Unfair Trade Practice For which a trader, for promoting sale, use or supply of any goods or provision of services, adopts any unfair method or deceptive practice. Includes: A) The practice of making any statement, orally, written, or visually anything false or misleading. B) Permits the publication of any advertisement in any newspaper or otherwise, for sale or supply at a bargain price of goods/ services that are not intended to be offered for sale or supply at the bargain price.

Restrictive Trade Practices Trade practice which tends to bring about manipulation of price or; its conditions of delivery or; to affect flow of supplies in the market relating to goods or; services in such a manner as to impose on the consumers unjustified cost or restrictions.

Defects and Deficiency Defect means any fault, imperfection, or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by the trader under any law. It is for the complainant to establish that the goods mentioned in the complaint suffer from one or more defects.

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 the law. It is for the complainant to establish that services mentioned in the complaint suffer from deficiency in any respect. Examples: Lack of facilities by Housing Board is deficiency. Non-allotment of shares is not deficiency in service. Failure of insurance company to settle claim without sufficient cause is deficiency. Failure of Railways to provide cushioned seats in 1 st class is deficiency of service.