BUSINESS LAW

Module-4: Consumer Protection Act, 1986

The Consumer Protection Act aims to safeguard consumers' interests by providing legal recourse for
grievances related to defective goods, deficient services, and unfair trade practices. It establishes a
framework for resolving disputes and addressing consumer exploitation, ensuring fairness in commercial
transactions.

Definition of the terms:

1. Consumer: According to Section 2(1)(f) of the Consumer Protection Act, 1986 (India), a consumer is
defined as:

"Consumer" means any person who-

(i) 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 them, provided such use is with the approval of the buyer;

(ii) 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 them, provided such use is with the approval of the person
who hires or avails of the services.

2. Consumer dispute: According to Section 2(1) (f) of the Consumer Protection Act, 1986, a
consumer dispute is defined as a dispute where the person against whom a complaint has been made
denies or disputes the allegations contained in the complaint. In simpler terms, when a consumer files
a complaint regarding defective goods, deficient services, overcharging, or any unfair trade practice,
and the seller or service provider does not accept the allegations and contests the claim, it leads to a
consumer dispute. The existence of a consumer dispute is essential for the consumer forums (District,
State, or National Commission) to intervene and provide legal remedies to the consumer. A complaint
alone does not amount to a dispute unless it is challenged by the opposite party.

3. Defect: According to Section 2(1) (f) of the Consumer Protection Act, 1986, the term "defect"
means any fault, imperfection or shortcoming in the quality, quantity, potency, purity, or standard of
goods that is required to be maintained by or under any law for the time being in force, or under any
contract, or as claimed by the trader in any manner whatsoever. In simple terms, a defect refers to
anything that makes a product inferior or unfit for use compared to what was promised or expected by
the consumer. For example, if a consumer buys a refrigerator that does not cool properly, or a food
product that is contaminated or expired, these would be considered defects under the Act.

4. Deficiency: The term "Deficiency" is defined under Section 2(1) (g) of the Consumer Protection
Act, 1986. It refers to any fault, imperfection, shortcoming, or inadequacy in the quality, nature, or
manner of performance of any service that is required to be provided by law or has been promised
under a contract. In other words, if a service provider fails to deliver services as expected, or performs
them poorly, it amounts to a deficiency. This can apply to services like banking, insurance, medical
treatment, education, transport, or electricity supply. For example, if a hospital fails to provide timely
 medical attention, or a courier company delays the delivery of an urgent package, such lapses are
considered as deficiency in service under the Act.

5. Service: According to Section 2(1)(o) of the Consumer Protection Act, 1986, the term "service"
refers to any activity or facility that is made available to potential users for consideration. This
includes a wide range of services, such as banking, insurance, transport, electricity supply, medical
treatment, housing construction, entertainment, education, and amusement. However, the term
"service" excludes services rendered free of charge or under a contract of personal service (like
employer-employee relationships). It also does not include any activity that is undertaken by a person
to meet their own personal needs (like cooking for them). In essence, services under this Act are those
that are provided for a price or any other form of consideration, whether tangible or intangible, to
satisfy the needs of a consumer.

6. Unfair trade Practice: According to Section 2(1) (r) of the Consumer Protection Act, 1986,
"unfair trade practice" refers to any fraudulent, deceptive, or misleading practices used by sellers,
manufacturers, or service providers to promote the sale of goods or services. These practices include
false advertising, misleading representations, misbranding, false claims about the quality, quantity, or
benefits of goods or services, or creating a false impression of the price of a product. Additionally,
offering gifts, prizes, or other items with the intention of not providing them as promised, or
manipulating the price or quality of goods/services to deceive consumers, also falls under the category
of unfair trade practices. In essence, unfair trade practices are those that mislead, deceive, or
manipulate consumers into purchasing goods or services under false pretences, thus violating their
rights to fair treatment and informed decision-making.

Rights of consumer under the Act:

1. Right to Safety:

 Consumers have the right to be protected against the marketing of goods and services that
are hazardous to their life and property.
 This includes the right to protection from unsafe products and services.

2. Right to be Informed:

 Consumers have the right to be provided with adequate information about the goods or services
they are purchasing, including ingredients, quality, quantity, price, and risks involved.
 The right to know about the product's or service's quality, quantity, potency, purity, standard, and
price.

3. Right to Choose: Consumers have the right to access a variety of products and services at
competitive prices, ensuring that they are not forced to buy goods or services that are not suitable
for their needs.
4. Right to be Heard:

 Consumers have the right to have their grievances heard and to seek redressal for complaints.
 This includes the right to file complaints and seek remedies in cases of unfair trade practices.
 5. Right to Redressal:

 Consumers have the right to seek compensation for misrepresentation, defect in goods or
services, or for any harm caused by the product or service.
 This right includes obtaining relief for any injury or loss suffered due to unfair practices.

6. Right to Consumer Education:

 Consumers have the right to be educated about their rights, how to file complaints, and how to
be aware of consumer protection laws.
 It encourages consumers to be informed and aware of the products, services, and their rights in
the marketplace.

Additional Provisions under the Consumer Protection Act, 2019:

 Consumer Disputes Redressal Commission: The Act establishes District, State, and National
Consumer Disputes Redressal Commissions (CDRCs) to resolve consumer disputes quickly and
effectively.
 E-commerce Regulations: The Act has provisions to protect consumers purchasing goods and
services through e-commerce platforms.
 Unfair Trade Practices: The Act prohibits unfair trade practices such as false advertising,
deceptive pricing, and fraudulent schemes.

Consumer Redressal Agencies

Consumer Redressal agencies are legal bodies established to resolve disputes between consumers and
businesses or service providers in a fair and efficient manner. These agencies are crucial for the protection
of consumer rights and play a significant role in addressing grievances related to defective products,
deficient services, unfair trade practices, and other consumer-related issues. Under the Consumer
Protection Act, 2019, India has set up a multi-tier system of Consumer Disputes Redressal Agencies at
the District, State, and National levels to address consumer complaints.

1. District Consumer Disputes Redressal Commission (DCDRC)

 Jurisdiction: The District Commission is the first level of redressal for consumer grievances. It
deals with complaints where the value of the goods or services in question does not exceed ₹1
crore.
 Composition: It is typically composed of a President (a retired District Judge) and two other
members, one of whom should be a woman.
 Functions:

 The District Commission addresses consumer complaints regarding defective products,

deficiency in services, unfair trade practices, and similar issues.
 It has the power to order compensation, replacement, repairs, and other remedies.
 The District Commission is empowered to order the business or service provider to cease
the unfair trade practice or provide appropriate compensation to the consumer.

2. State Consumer Disputes Redressal Commission (SCDRC)

 Jurisdiction: The State Commission is the second level of redressal and handles complaints that
exceed the monetary value of ₹1 crore but are less than ₹10 crore. It also hears appeals against the
decisions made by the District Commissions.
 Composition: The State Commission consists of a President (who is a retired High Court Judge)
and two other members (at least one of whom should be a woman).
  Functions:

 The State Commission can address complaints related to defective goods, deficiency in
services, and unfair trade practices.
 It also hears appeals from the District Commissions and can either confirm, modify, or set
aside their decisions.
 It has the authority to award compensation and other remedies similar to those of the
District Commission.

3. National Consumer Disputes Redressal Commission (NCDRC)

 Jurisdiction: The National Commission is the highest level of redressal. It deals with complaints
where the value of the goods or services in question exceeds ₹10 crore. It also handles appeals
against the decisions of the State Commissions.
 Composition: The NCDRC is headed by a President (who is a retired Supreme Court Judge) and
four other members.
 Functions:

 The National Commission has the same powers as the State and District Commissions but
at a national level.
 It can resolve complex or high-value consumer disputes.
 It also serves as an appellate body for decisions taken by the State Commissions.
 It has the authority to issue orders for refunds, compensation, or the cessation of unfair
trade practices.

Powers and Functions of Consumer Redressal Agencies

 Investigation: Consumer Redressal agencies can investigate the complaints filed by consumers.
They can summon business representatives, require them to submit relevant documents, and even
inspect goods and services involved in the complaint.
 Awarding Compensation: The agencies can award compensation for the loss or damage suffered
by the consumer due to defective goods or services.
 Imposing Penalties: In cases of unfair trade practices or non-compliance with orders, the
agencies can impose penalties or fines on the business or service provider.
 Settlement of Disputes: The agencies try to settle disputes through a more informal mediation or
conciliation process before moving on to a formal hearing. This allows for quicker resolution.
 Issuing Directives: The agencies can direct the business to stop unfair trade practices, withdraw
misleading advertisements, correct warranties, and provide adequate compensation to the
consumers.

Filing a Complaint

Consumers can file complaints with the appropriate consumer redressal agency based on the value of the
goods/services and the jurisdiction of the agency. The process typically involves:

 Complaint Submission: The consumer can file a written complaint to the appropriate
Commission (District, State, or National).
 Hearing: Once the complaint is registered, a date for hearing will be set. The consumer and the
respondent (business or service provider) are both allowed to present their cases.
 Decision: The Commission issues its judgment, which may include orders for compensation,
replacement, repair, or refund, and may also penalize the business or service provider.
Appeals Process

 If a consumer is dissatisfied with the decision made by the District or State Commission, they can
appeal to the higher Commission (State or National, respectively).
 The National Commission’s decision is final, but it is possible to file an appeal in the Supreme
Court of India within 30 days of the order.

Online Filing of Complaints: To make the consumer redressal process more accessible, the National
Consumer Helpline (NCH) and various State-level online portals allow consumers to file complaints
online. The Consumer Protection Act, 2019 has also paved the way for e-commerce complaints, which
means consumers can file complaints related to online transactions as well.

Consumer Protection Councils: In addition to the redressal agencies, the Central Consumer Protection
Council (CCPC) and State Consumer Protection Councils are advisory bodies that aim to promote and
protect consumer rights, raise awareness about consumer issues, and work on consumer welfare.

Need for Consumer Redressal Agencies

1. Protection of Consumer Rights: Consumers are often vulnerable to exploitation due to:

 Defective Products: Consumers may purchase goods that are substandard, broken, or otherwise
defective.
 Deficient Services: Services may not meet the promised standards or may be delayed or
incomplete.
 Unfair Trade Practices: Businesses may engage in misleading advertisements, false claims, or
unethical pricing strategies.

Redressal agencies ensure that consumers can seek justice when their rights are violated and hold
businesses accountable for their practices. This protection is vital to maintaining trust and fairness
in the marketplace.

2. Consumer Empowerment: Many consumers may not be aware of their rights or how to seek redress
when they face issues with products or services. Redressal agencies empower consumers by:

 Providing them with a platform to file complaints.

 Offering legal remedies such as compensation, refunds, repairs, or replacements.
 Educating consumers about their rights and available protections.

With consumer redressal agencies, consumers can confidently approach the authorities to resolve their
issues rather than suffering in silence or being exploited.

3. Speedy and Accessible Justice: The judicial system can be slow and expensive, and many consumers
might not have the time or resources to pursue lengthy litigation. Consumer redressal agencies provide:

 Quick Resolution: These agencies are specifically designed to resolve consumer disputes in a
faster, more efficient manner than regular courts.
 Simplified Process: The process of filing complaints is simpler, making it accessible to ordinary
consumers who may not have legal expertise.
 No Need for Lawyers: In many cases, consumers can represent themselves without needing a
lawyer, which makes the process more affordable and less intimidating.
4. Reduction of Unfair Trade Practices: The existence of consumer redressal agencies creates an
environment of accountability. Businesses are more likely to engage in ethical practices and provide high-
quality products and services when they know that consumers have an accessible platform to seek redress.
This helps in:

 Deterrence: The threat of penalties, fines, and corrective actions discourages businesses from
engaging in fraudulent, deceptive, or unethical practices.
 Regulation of E-commerce: In the modern digital economy, e-commerce transactions have risen
dramatically. Consumer redressal agencies can address grievances related to online purchases,
including issues like faulty products, late delivery, and scams.

5. Consumer Confidence and Market Transparency: The availability of consumer redressal agencies
builds trust in the marketplace. When consumers know they have an effective way to seek redress, they
are more likely to:

 Make Informed Purchases: Consumers are more confident in purchasing goods and services
knowing that there is a mechanism for resolving any issues they may face.
 Participate Actively in the Economy: A strong consumer protection system encourages
consumers to spend, thus driving the economy forward.

Additionally, businesses that provide high-quality goods and services are less likely to engage in
deceptive practices when they know that redressal agencies are actively monitoring the market.

6. Access to Legal Remedies without Cost Barriers: Many consumers, especially from lower-income
groups, may not have the financial resources to pursue legal action in regular courts. Consumer redressal
agencies allow consumers to:

 Access Justice without Financial Burden: Filing a complaint is often free or requires minimal
fees, unlike regular court cases that may involve high costs.
 Claim Compensation: If the consumer has suffered losses due to defective products or deficient
services, they can claim compensation or refunds without the need for expensive legal fees.

7. Promoting Fair Competition: When businesses are held accountable by consumer redressal agencies,
there is a greater emphasis on fair competition. This helps to:

 Level the Playing Field: Ethical businesses are rewarded for providing quality goods and
services, while those engaging in dishonest practices are penalized.
 Enhance Product and Service Standards: To avoid complaints and legal consequences,
businesses are encouraged to maintain higher standards of quality and customer service.

8. Encouraging Compliance with Consumer Protection Laws: The existence of redressal agencies
encourages businesses to comply with consumer protection laws, which may include:

 Proper Labelling: Products must be labelled correctly with information about ingredients,
warnings, expiration dates, etc.
 Fair Advertising: Ads should not be misleading or deceptive.
 Proper Warranty/Guarantee: Businesses must adhere to promises regarding the repair,
replacement, or return policies.

The agencies also ensure that any violations of consumer laws are addressed promptly, encouraging
businesses to respect consumer rights and comply with the law.
9. Handling Complex Consumer Disputes: As products and services become more complex, disputes
may arise that are difficult to resolve through informal means. Consumer redressal agencies help in cases
where:

 Technical Expertise is Required: Some disputes, like those involving technical or medical
products, may require specialized knowledge. These agencies are equipped to handle such issues
by involving experts.
 Cross-Jurisdictional Issues: With the rise of e-commerce and online services, consumers may
face issues with companies located in different states or countries. Consumer redressal agencies
offer mechanisms to handle such complaints across jurisdictions.

10. Promotion of Ethical Business Practices: By holding businesses accountable and ensuring that they
are answerable to consumers, redressal agencies promote corporate social responsibility. Companies are
encouraged to:

 Offer better customer service.

 Ensure product safety and quality.
 Engage in transparent and honest marketing practices.