BRF UNIT-4

CONSUMER PROTECTION LAW IN INDIA

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. 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.

DEFINITIONS

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. A 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.

5. 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.

Consumer: means any person who:

Consumer’ means any person who buys any goods but does not include a person who obtains such
goods or resale or for any commercial purpose or hires or avails of any services for a consideration, but
does not include a person who avails of such services for any commercial purpose. Commercial purpose
does not include use by a person of goods bought and used by him and services availed by him
exclusively for the purposes of earning his livelihood by means of self-employment

'Defect' or 'deficiency' means any fault, imperfection or shortcoming in quantity, potency, purity or
standard which is required to be maintained under any law or any contract.
'Restrictive trade practice' means any trade practice which requires a consumer to buy, hire or avail of
any goods or services as condition precedent to buying, hiring or availing of other goods or services.

Unfair trade practice’ means a trade practice which, for the purpose of promoting the sale, use or
supply of any goods, adopts any unfair method or unfair or deceptive practice, including any of the
following practice:

i)falsely represents that the goods are of a particular standard, quality, quantity, grade, Composition,
style or model;

(ii) falsely represents that the services are of a particular standard, quality or grade;

(iii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;

(iv) represents that the seller or the supplier has a sponsorship, approval or affiliation which such seller
or supplier does not have;

(v) makes a false or misleading representation concerning the need for or the usefulness of, any goods or
services;

Legislative history of consumer protection law in India

The legislative history of consumer protection law in India dates back to several decades, culminating in
the comprehensive Consumer Protection Act of 1986, which was later revised in 2019.

1. Pre-Independence Era

During British rule, laws such as the Indian Contract Act, 1872 and the Sale of Goods Act, 1930 primarily
governed consumer transactions. However, these laws were framed from a commercial perspective and
prioritized protecting business interests over individual consumers. They focused on regulating contracts
and the sale of goods but did not provide specific protection for consumers against unfair practices or
defective goods. Consumer rights as a concept were not well recognized, and there was no formal
mechanism to address consumer grievances at this time. Consumers had limited recourse and had to
rely on general contract law provisions for remedies.

2. Post-Independence Initiatives

After India gained independence in 1947, the government took steps to improve consumer protection,
recognizing the need for specific laws to address consumer rights. Some of the important post-
independence laws include:

Essential Commodities Act, 1955: This law was enacted to ensure the availability of essential
commodities at fair prices and prevent hoarding, black marketing, and profiteering. The Act empowered
the government to regulate the production, supply, and distribution of essential goods, safeguarding
consumers from exploitation during shortages.

Prevention of Food Adulteration Act, 1954: One of the earliest consumer protection laws aimed
specifically at public health. It prohibited the sale of adulterated food products and imposed stringent
penalties on those who engaged in the adulteration of food. This was critical in ensuring food safety, a
major consumer concern at the time.

Monopolies and Restrictive Trade Practices (MRTP) Act, 1969: This Act targeted the monopolistic
control and unfair trade practices that hurt consumers. It sought to prevent the concentration of
economic power and curbed restrictive and unfair business practices, such as misleading advertising
and deceptive marketing. However, the focus of the MRTP Act was on regulating businesses rather than
directly protecting consumer rights, leaving gaps in consumer protection.

Despite these laws, consumers were still largely vulnerable to exploitation. A lack of awareness and a
formal framework for consumer dispute redressal made it difficult for consumers to assert their rights.

3. Consumer Protection Act, 1986

The Consumer Protection Act of 1986 marked a significant milestone in Indian legislative history, as it
was the first comprehensive law dedicated solely to protecting consumer rights. This Act was
revolutionary because it shifted the focus toward consumer welfare, providing consumers with specific
legal rights and an easy process to seek redress for their grievances.

Key features of the 1986 Act included:

Consumer Rights: The Act recognized various rights for consumers, such as the right to safety, the right
to be informed, the right to choose, the right to be heard, and the right to seek redress.

Establishment of Consumer Councils and Forums: It set up a three-tier system for consumer dispute
resolution—District Forums, State Commissions, and a National Commission. This system ensured that
consumers had easy access to justice and could approach the appropriate forum based on the value of
the goods or services involved in the dispute.

Simple Dispute Resolution Mechanism: The Act aimed to make the process of filing complaints
straightforward and cost-effective. It allowed consumers to file complaints directly in consumer forums
without the need for a lawyer, making the legal system more accessible to ordinary citizens.

This Act was a game-changer because it empowered consumers to challenge businesses and service
providers in cases of defective products, deficient services, and unfair trade practices. It also ensured
quicker resolutions than traditional court cases, which were often time-consuming and expensive.

4. Amendments and the Consumer Protection Act, 2019

While the Consumer Protection Act, 1986, provided a solid foundation for consumer rights, rapid
economic changes, technological advancements, and the growth of e-commerce exposed gaps in the
law. The rise of online shopping, increased product complexity, and the need for a faster dispute
resolution system highlighted the necessity of updating the 1986 Act.

The Consumer Protection Act, 2019, was enacted to modernize consumer laws and address these
challenges. Some key changes introduced by the 2019 Act are:
E-commerce Regulation: The 2019 Act specifically brought e-commerce platforms, online sellers, and
digital marketplaces within its ambit. Consumers could now file complaints against online businesses,
ensuring accountability for e-commerce transactions, which were previously outside the scope of the
1986 Act.

Central Consumer Protection Authority (CCPA): One of the most significant reforms under the new Act
was the creation of the CCPA. This body was empowered to take suo moto actions, conduct
investigations into consumer complaints, and initiate class-action lawsuits against violators of consumer
rights. It aimed to protect consumers from unfair trade practices, including misleading advertisements.

Product Liability: A new concept introduced in the 2019 Act, product liability holds manufacturers,
sellers, and service providers accountable for any harm caused by defective products or services.
Consumers can now seek compensation for injury or damage caused by faulty goods.

Mediation Cells: To promote quicker resolution of disputes, the 2019 Act introduced mediation as an
alternative dispute resolution mechanism. This ensures that consumer disputes can be resolved
amicably and without the need for prolonged litigation.

In addition to these reforms, the 2019 Act enhanced consumer rights and introduced stricter penalties
for unfair trade practices, ensuring more robust protection in a changing market environment.

The Consumer Protection Act of 2019 is a more consumer-friendly, forward-looking law designed to
address the realities of modern commerce, including digital and online transactions. It reflects India’s
commitment to safeguarding consumer rights in a fast-paced, globalized economy.

Objectives of consumer protection law in India

The objectives of consumer protection law in India are designed to safeguard the interests and rights of
consumers, ensure fair trade practices, and promote accountability among businesses. These objectives
are outlined in both the Consumer Protection Act of 1986 and the Consumer Protection Act of 2019. The
key objectives include:

1.Protection of Consumer Rights: One of the primary goals of consumer protection law is to safeguard
consumer rights. These include:

Right to Safety, Right to Information, Right to Choose, Right to be Heard, Right to Seek Redressal, Right to
consumer education.

2.Prevention of Unfair Trade Practices: The law aims to curb unfair trade practices that can deceive or
harm consumers. This includes practices such as:

False or Misleading Advertisements: Preventing companies from advertising products in a deceptive

manner.

Exploitation through Price Manipulation: Ensuring consumers are not overcharged or subjected to hidden
charges.

Hoarding and Black Marketing: Discouraging businesses from hoarding essential goods to manipulate
supply and demand, which would unfairly raise prices.
3.Ensuring Accountability of Manufacturers and Service Providers: A key objective of consumer
protection laws is to hold manufacturers, sellers, and service providers accountable for the quality and
safety of the goods and services they provide. The introduction of product liability in the 2019 Act
strengthens this, as it ensures that consumers can claim compensation for any injury or damage caused
by defective products.

4.Simplifying Dispute Resolution: Consumer protection laws in India aim to provide consumers with a
simple, cost-effective, and speedy dispute resolution mechanism. The establishment of District Forums,
State Commissions, and the National Commission ensures that consumers can easily file complaints
and seek justice without the complexities of the traditional court system. The introduction of mediation
under the 2019 Act further simplifies this process by offering an alternative method of resolving disputes
amicably.

5.Promotion of Consumer Awareness: The law seeks to raise awareness among consumers about their
rights and available remedies. This includes:

Encouraging consumers to be vigilant and informed.

Promoting consumer education to help people make better purchasing decisions and avoid exploitation.

Facilitating campaigns and awareness programs by the government and consumer organizations.

6.Regulation of E-Commerce and Digital Transactions: With the rise of e-commerce and online
transactions, the Consumer Protection Act of 2019 extended protections to digital commerce. This
ensures that online retailers, digital marketplaces, and e-commerce platforms are held to the same
standards as traditional businesses. The law also provides consumers with the ability to file complaints
related to online purchases.

7.Establishment of the Central Consumer Protection Authority (CCPA): The 2019 Act established the
CCPA to proactively investigate consumer complaints, take suo moto action, and enforce regulations to
ensure the protection of consumer rights. This regulatory body works to monitor and penalize businesses
involved in unfair practices.

8.Encouraging Ethical Practices in Business: By enforcing stringent penalties for unfair trade practices,
defective products, and misleading advertisements, the consumer protection law aims to promote
ethical business practices. This ensures a fair and transparent marketplace where businesses must
comply with legal standards and act responsibly toward consumers.

9.Deterring Violations of Consumer Rights: The law introduces severe penalties for businesses that
violate consumer rights, engage in unfair trade practices, or supply unsafe goods. By imposing fines,
criminal charges, or imprisonment, the law acts as a deterrent, encouraging businesses to adhere to fair
practices and avoid exploiting consumers.

Consumer Rights in India

The Consumer Protection Act, 2019 enshrines various rights to empower consumers and protect them
from exploitation. These rights are essential in promoting consumer welfare and ensuring fair treatment
in the marketplace. Here are the key consumer rights in India, elaborated:

1.Right to Safety: This right protects consumers from products and services that could pose a risk to
their health or safety. It mandates that all goods and services must meet safety standards and be free
from any defects that could cause harm. For example, the Act requires manufacturers to ensure that food
products comply with safety regulations to prevent foodborne illnesses. Regulatory bodies such as the
Food Safety and Standards Authority of India (FSSAI) play a critical role in enforcing these standards.

2.Right to Information: Consumers have the right to receive clear and truthful information regarding the
products or services they purchase. This includes details about ingredients, usage instructions, expiry
dates, and pricing. The Act mandates that information provided should not be misleading, ensuring
consumers can make informed decisions. This right also encompasses access to accurate advertising,
labels, and warranties, helping consumers evaluate their options effectively.

3.Right to Choose: This right guarantees consumers access to a variety of goods and services,
promoting healthy competition among businesses. Consumers should not be restricted to limited
options or forced to buy unwanted products. It encourages a competitive marketplace where consumers
can choose from multiple suppliers and products based on their preferences and budget, fostering better
quality and innovation.

4.Right to be Heard: Consumers have the right to voice their complaints and concerns regarding
products and services. This right empowers consumers to participate in decision-making processes
affecting their interests. The law provides mechanisms for consumers to file complaints in consumer
forums, allowing their grievances to be considered and addressed. This ensures that consumer interests
are represented, and businesses are held accountable for their practices.

5.Right to Seek Redressal: Consumers have the right to seek legal remedies for unfair trade practices,
defective goods, or deficient services. The Consumer Protection Act establishes a structured mechanism
for dispute resolution through consumer courts (District, State, and National Commissions). Consumers
can file complaints without needing a lawyer, making the process accessible and affordable. This right
also includes receiving compensation for losses suffered due to defective products or inadequate
services.

6.Right to Consumer Education: This right emphasizes the importance of educating consumers about
their rights and responsibilities. Consumer education initiatives help individuals understand their rights,
make informed choices, and recognize unfair practices. Government agencies, NGOs, and consumer
organizations conduct awareness campaigns, workshops, and seminars to promote consumer literacy,
enabling consumers to navigate the marketplace effectively.

UN Guidelines on Consumer Protection

The UN Guidelines for Consumer Protection, originally adopted in 1985 and revised in 2015, provide a
framework for governments to implement consumer protection policies. These guidelines promote
consumer rights and welfare on a global scale. Here are the key principles elaborated:
1. Consumer Rights: The guidelines emphasize the recognition of fundamental consumer rights,
including the right to safety, information, choice, and redress. They encourage nations to adopt laws that
ensure these rights are upheld, promoting the concept of consumer empowerment and facilitating
access to justice for consumers.

2. Fair Trade Practices: The guidelines advocate for the elimination of unfair trade practices that can
deceive consumers. This includes strict regulation of advertising practices to prevent misleading claims
about products and services. Countries are encouraged to establish laws that penalize businesses for
false advertising and deceptive marketing tactics, ensuring transparency and honesty in commercial
practices.

3. Access to Goods and Services: The guidelines highlight the importance of ensuring that all
consumers, especially marginalized groups, have access to essential goods and services. This includes
promoting equitable pricing and availability of basic necessities, such as food, healthcare, and
education. Governments are urged to implement policies that protect consumers from price gouging and
ensure a fair market for essential products.

4. Consumer Education: The guidelines stress the need for ongoing consumer education programs to
inform individuals about their rights and responsibilities. This education should cover topics such as
consumer rights, product safety, financial literacy, and the significance of ethical consumerism. By
fostering informed consumers, the guidelines aim to create a more balanced marketplace where
consumers can advocate for their rights effectively.

5. Protection of Vulnerable Consumers: The guidelines emphasize the need to protect vulnerable
consumers, including children, the elderly, and people with disabilities, who may be more susceptible to
exploitation. This includes ensuring that products marketed to these groups are safe and appropriate and
that they have access to resources to understand their rights and seek redress.

6. Consumer Redressal Mechanisms: The guidelines advocate for the establishment of efficient
consumer redress mechanisms to address grievances. This includes creating accessible and transparent
systems for consumers to lodge complaints and seek compensation. Governments are encouraged to
facilitate alternative dispute resolution methods, such as mediation and arbitration, to resolve disputes
more amicably and swiftly.

7. International Cooperation: The guidelines promote collaboration among countries to enhance

consumer protection on a global scale. This includes sharing best practices, harmonizing laws, and
cooperating in cross-border consumer disputes. By fostering international cooperation, the guidelines
aim to create a more cohesive approach to consumer protection, addressing issues that transcend
national boundaries.

8. Sustainable Development: The guidelines recognize the importance of promoting sustainable

consumption and production patterns. This includes encouraging consumers to make choices that are
environmentally friendly and socially responsible. Governments are urged to support sustainable
practices and educate consumers about the impact of their purchasing decisions on the environment
and society.

9. Consumer Protection in E-Commerce: With the rise of digital commerce, the guidelines emphasize
the need to extend consumer protection measures to online transactions. This includes ensuring that e-
commerce platforms provide clear information, protect consumer data, and facilitate fair practices.
Governments are encouraged to develop specific regulations that address the unique challenges of
online shopping, ensuring that consumers have the same protections as they would in traditional retail
settings.

Three tier Grievance redressal Mechanism

District Forum

District Forum means a Consumer Disputes Redressal Forum. The State Government will establish a
District Forum in each district. The Forum shall consist of a President and two members. The President
of the Forum will be a person who has been or is qualified to be a district judge. More than one Forums
can be formed in a district. The two members shall be persons of ability, integrity and standing to
economics, law, commerce, accountancy, public affairs or administration.

–One of the members must be a woman. Every member shall hold office for 5 years or up to the age of
65 years, whichever is earlier. They are not eligible for reappointment.

–The District Forum shall have jurisdiction to entertain complaints where the value of goods or services
and compensation, if any claimed, does not exceed 20 lakh.

–Procedure on receipt of complaint: On receipt of the complaint, the District Forum will refer a copy of
complaint to the opposite party mentioned in the complaint, asking him to give his version of the
complaint. The reply should be given in 30 days to give his version. This period can be further extended
by 15 days. If the opposite party denies or disputes the allegations in the complaint or does not reply
within the time, the District Forum shall proceed to settle the dispute. The Act does not make mandatory
the personal hearing of complaint or opposite party, probably to expedite the disposal of cases.
–Procedure for filing complaint: Complaint can be sent by post or personally filed. Prescribed fees are
payable for filing complaint. Complaint should contain name, description and address of complainant
and opposite parties, facts relating to complaint, documents in support, and relief being claimed.

Powers of the District Forum, or orders that can be made: After conducting its Proceedings, if the
District Forum is satisfied that the goods complained against suffer from Any of the defects specified in
the complaint or that any of the allegations contained in the Complaint about the services are proved, it
shall issue an order to the opposite party directing Him to (do) one or more of the following things,
namely:

1.To remove the defect pointed out by the appropriate laboratory from the goods in question;

2.To replace the goods with new goods of similar description which 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 the negligence of the opposite party.

5. to remove the defects in goods 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 cease manufacture of hazardous goods and to desist from offering services which are hazardous in
nature;

10. to issue corrective advertisement to neutralize the effect of misleading advertisement at the cost of
opposite party responsible for issuing such misleading advertisement;

11.To provide for adequate costs to complainant,

Appeal against the order of District Forum: Any person aggrieved by an order made by the District
Forum may prefer an appeal against the order, to the State Commission within a period of 30 days from
the date of the order.

– The State Commission may entertain appeal after expiry of 30 days if it is satisfied that there was
sufficient cause for not filing it within 30 days.

–It has been provided that an appeal by a person, who is required to pay any amount in Terms of an order
of the District Forum, shall not be entertained by the State Commission Unless the appellant has
deposited fifty per cent of that amount or twenty-five thousand rupees, Whichever is less, in the
prescribed manner.

State Commission

State Commission called ‘State Consumer Disputes Redressal Commission’ is established in each State
by the State Government by way of a notification.
–The State Commission shall consist of a President who shall be a person who is or has been a judge of a
High Court.

–There shall be two other members who shall be persons of ability, integrity and standing, and have
adequate knowledge or experience in commerce, accountancy, industry, public affairs or administration
not below the age of 35 years. One of the members shall be a woman.

–Every member of the State Commission shall hold office for a term of five years or up to the age of 67
years, whichever is earlier, and shall not be eligible for re-appointment.

Jurisdiction of the State Commission: The State Commission shall have jurisdiction to entertain:

i)Complaints where the value of the goods or services and compensation, if any claimed, exceeds 20
lakh but does not exceed 1 crore.

ii)Appeals against the orders of any District Forum within the State.

iii)A complaint shall be instituted in a State Commission within the limits of whose jurisdiction the
opposite party or each of the opposite parties, where they actually and voluntarily resides, or carries on
business or has a branch office or personally works for gain.

The State Commission, on the application of the complainant or of its own motion may at any stage of
the proceeding, transfer any complaint pending before the District Forum within the State in the interest
of justice.

The State Commission shall ordinarily function in the State Capital but may perform its Functions at such
other places as the State Government may in consultation with the State Commission, notify in the
Official Gazette from time to time.

The State Commission has powers to call for the records and pass appropriate orders in any consumer
dispute which is pending before or has been decided by any District Forum Within the State, in cases
where is appears to the State Commission that such District Forum has exercised a jurisdiction not
vested in it by law, or has failed to exercise a Jurisdiction illegally or with material irregularity.

Similar procedure as that of District Forum: All the procedures, rules for disposal of complaints, etc.
which are applicable to District Forum, shall be applicable to State Commission, with such modifications
as may be necessary.

Appeal against the order of State Commission: Any person aggrieved by an order made by the State
Commission may prefer an appeal against such order, to the National Commission within 30 days from
the date of the order. The National Commission may entertain an appeal after the expiry of 30 days if it is
satisfied that there was sufficient cause for not filing it within 30 days.

An appeal by a person who is required to pay any amount in terms of an order of the State Commission,
shall not be entertained by the National Commission unless the appellant has deposited fifty percent of
the amount or rupees thirty-five thousand, whichever is less.

National Commission
National Commission called ‘National Consumer Disputes Redressal Commission’ has been set up by
the Central Government by notification.

National Commission consists of a President and four other members. The President shall be a person
who is or has been a Judge of the Supreme Court. The members shall be persons of ability, integrity and
standing and have adequate knowledge or experience in problems relating to economics, law,
commerce, accountancy, industry, public affairs or administration.

One of the members shall be a woman. The age of the members should not be less than thirty-five
years and they should possess a bachelor’s degree from a recognised university.

Every member of the National Commission shall hold office for a term of five years or up to the age of 70
years, whichever is earlier and shall not be eligible for re-appointment.

– Jurisdiction of the National Commission: The National Commission shall have Jurisdiction to
entertain:

i)Complaints where the value of the goods or services and compensation, if any claimed, exceeds 1
crore; and

ii)Appeals against the orders of any State Commission.

The National Commission has powers to call for the records and pass appropriate orders In any
consumers dispute which is pending before or has been decided by any State Commission where it
appears to the National Commission that such State 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.

Appeal against the order of National Commission: Any person aggrieved by an order made by the
National Commission may prefer an appeal against such order, to the Supreme Court within a period of
30 days from the date of the order.

The Supreme Court may entertain An appeal after the expiry of 30 days if it is satisfied that there was
sufficient cause for not filing it within 30 days. Provided further that no appeal by a person who is required
to pay any amount in terms of an order of the National Commission shall be entertained by the Supreme
Court unless that person has deposited in the prescribed manner fifty per cent, of that amount or
rupees fifty Thousand, whichever is less.

Finality of Orders: Every order of a District Forum, the State Commission, or the National Commission
shall, if no appeal has been preferred against such order under the provision of this Act, be final.

Limitation Period: The District Forum, the State Commission or the National Commission shall not
admit a complaint unless it is filed within 2 years from the date on which the cause of action has arisen.

A complaint may be entertained after the period of two years, if the complainant satisfies the Distric
Forum, the State Commission or the National Commission, as the case may be, that he had sufficient
cause for not filing the complaint within such period:

Provided that no such complaint shall be entertained unless the National Commission.
the State Commission or the District Forum, as the case may be, records its reasons for condoning such
delay.

Administrative Control: (1) The National Commission shall have administrative control over all the State
Commissions in the following matters, namely:

(i) Calling for periodical return regarding the institution, disposal tendency of cases;
(ii) issuance of instructions regarding adoption of uniform procedure in the hearing of Matters.
(iii) Generally overseeing the functioning of the State Commissions or the District Forum to ensure
that the objects and purposes of the Act are best served without in any way interfering with
their quasi-judicial freedom.

(2) The State Commission shall have administrative control over all the District Forum within its
jurisdiction in all matters.

Dismissal of frivolous or vexatious complaints: Where a complaint instituted before the District
Forum, the State Commission or, as the case may be, the National Commission, is found to be frivolous
or vexatious, it shall, for reasons to be recorded in writing, dismiss the complaint and make an order that
the complainant shall pay to the opposite party such cost, not exceeding ten thousand rupees, as may
be specified in the order.

Penalties: Where a trader or a person against whom a complaint is made for the complainant, 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 or complainant shall be punishable with

imprisonment for a term which shall not be less than one month but which may extend to three years,
or with fine which shall not be less than two thousand rupees but which may extend to ten thousand
rupees, or with both.

The District Forum, the State Commission or the National Commission, as the case may be, if it is
satisfied that the circumstances of any case so require, impose a sentence of imprisonment or fine, or
both, for a term lesser than the minimum term and the amount lesser than the minimum Amount
specified in this section.

THREE-TIER MECHANISM FOR PROTECTING AND PROMOTING CONSUMER RIGHTS

The Consumer Protection Act provides for the following three-tier mechanism for protecting and
promoting the rights of the consumers:

1. The Central Consumer Protection Council: The Central Consumer Protection Council called
‘Central Council’ is established by the Central Government by notification.

The Council shall consist of a Chairman who shall be the Minister incharge of consumer affairs in the
Central Government. There shall be such number of other official or non-official members representing
such interests as may be prescribed by the Central Government.

The Council shall meet as and when necessary, but at least one meeting of the Council shall be held
every year.(Section 5).
Objects of the Central Council: The objects of every Central Council shall be to promote and protect
the following rights of the consumers within the State:

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 interest 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.

2. The State Consumer Protection Council: The State Consumer Protection Council called ‘State
Council’ is established by the State Government by notification.[Section 7(1)]

Composition

The State Council shall consist of a Chairman who shall be the minister incharge of consumer affairs in
the State Government.

There shall be such number of other official or non-official members representing such interests as may
be prescribed by the State Government and such number of other official or non-official members, not
exceeding ten, as may be nominated by the Central Government.

Meetings : The State Council shall meet as and when necessary, but not less than two meetings shall
be held every year.

The District Consumer Protection Council: The District Consumer Protection Council To be known as
‘District Council’ is established by the State Government for every district by notification.

The District Council shall consist of a Charmian who shall be the Collector of the district.

There shall be such number of other official and non-official members representing such interests as
may be prescribed by the State Government. T

he District Council shall meet as and when necessary but not less than two meetings shall be held
every year. The District Council shall meet at such time and place within the district as the Chairman
may think fit.

Role of Supreme Court in CPA with important case laws

1. Final Appellate Authority:

The Supreme Court functions as the last court of appeal in consumer disputes. When a consumer or
company is dissatisfied with the decision of the National Consumer Disputes Redressal Commission
(NCDRC), they can approach the Supreme Court. Its role as the final appellate body ensures that there is
a platform for the highest form of justice in consumer cases. The Court’s decisions in these appeals are
binding, meaning they can change or uphold previous rulings. This ensures uniformity in consumer
protection, as consumers can seek redress beyond lower forums.

2. Judicial Interpretation of the CPA:

One of the Court’s most significant roles is interpreting the Consumer Protection Act. The CPA, like any
law, can be subject to multiple interpretations. The Supreme Court steps in when there’s ambiguity,
especially when consumer rights conflict with business interests. Through its judgments, the Court
clarifies definitions and rules under the Act, such as what constitutes “deficiency in service,” the
meaning of “unfair trade practices,” and the scope of “consumer.” These interpretations guide lower
courts and protect consumers by preventing misinterpretations that could favor businesses unfairly.

3. Widening the Scope of CPA:

The Supreme Court has progressively expanded the application of the CPA beyond just private entities.
Initially, there was uncertainty over whether government bodies, public utilities, and medical services fell
within the scope of the Act. The Court has ruled in various cases that public authorities and government
services also come under the CPA’s jurisdiction. For example, housing authorities, medical services, and
even municipal services have been brought under the law’s purview. This broadening has empowered
more consumers to file complaints against a wide range of service providers, both public and private.

4. Safeguarding Consumer Rights:

The Supreme Court ensures that consumer rights are not just theoretical but practically enforceable. The
Court takes a strong stand in favor of consumers in cases of exploitation, defective goods, or
substandard services. It ensures that businesses or service providers cannot exploit technicalities in the
law to escape liability. By holding companies and public bodies accountable, the Supreme Court ensures
that consumers get justice, compensation, and sometimes punitive damages when they are wronged. It
plays a proactive role in deterring unfair trade practices, ensuring ethical business conduct across
industries.

5. Setting Precedents for Lower Courts:

As the highest court, the Supreme Court’s decisions act as precedents, which means that the judgments
it passes must be followed by the District, State, and National Consumer Commissions. This helps in
standardizing the interpretation and application of the CPA across India. For example, once the Court
rules on the interpretation of a particular provision in the Act, all lower courts must follow that
interpretation in future cases. This creates uniformity and ensures that consumers across different
regions and cases are treated fairly and consistently.

6. Judicial Review of Consumer Protection Laws:

The Supreme Court exercises the power of judicial review, where it can strike down or modify laws, rules,
or regulations that conflict with the Constitution or fundamental rights of consumers. It ensures that any
legislation passed under the CPA must meet constitutional standards and must not violate the rights of
consumers. For instance, if a new law or policy unfairly limits the rights of consumers to claim
compensation, the Supreme Court can review and amend such provisions, ensuring consumer rights are
protected at all times.

Most Important Case Laws

1. Lucknow Development Authority vs. M.K. Gupta (1994)

Citation: 1994 SCC (1) 243

This case set a precedent by extending the CPA to include government services. M.K. Gupta had filed a
complaint against the Lucknow Development Authority for delaying the possession of a flat and charging
an additional amount for it. The authority argued that they were not liable under the CPA because they
were a government body. However, the Supreme Court ruled that any service provider, whether private or
government, is covered under the Act if there is a deficiency in service. The judgment widened the
definition of “service” and provided relief to consumers dealing with public sector services, holding them
accountable for negligence or delays in providing services.

2. Indian Medical Association vs. V.P. Shantha (1995)

Citation: AIR 1996 SC 550

In this landmark case, the Supreme Court ruled that medical services would be covered under the CPA.
The case was filed by a patient who alleged medical negligence. Medical professionals and hospitals had
earlier argued that medical services were not included in the definition of “services” under the CPA. The
Court rejected this argument, stating that healthcare is a service, and any deficiency in this service
makes medical professionals liable under the CPA. This case brought a major sector—healthcare—
within the ambit of consumer law and empowered patients to seek compensation for medical
malpractice or negligence.

3. National Insurance Co. Ltd. Vs. Hindustan Safety Glass Works Ltd. (2017)

Citation: Civil Appeal No. 3883 of 2007

This case dealt with the issue of unjust rejection of an insurance claim. The insurance company had
denied the claim citing minor technical issues, but the Supreme Court ruled that such actions were
unfair. The judgment reinforced that insurance companies cannot exploit technicalities to deny legitimate
claims. This ruling ensured that insurance companies must act in good faith and fulfill their obligations,
providing much-needed protection to consumers from arbitrary claim rejections. The Court emphasized
the principle that insurance policies must be interpreted in favor of the insured when ambiguities arise.

4. Ambrish Kumar Shukla vs. Ferrous Infrastructure Pvt. Ltd. (2016)

Citation: Consumer Case No. 97 of 2016

In this case, the Supreme Court clarified the jurisdiction of consumer forums based on the monetary
value of the claim. The Court held that the total value of goods or services, along with the compensation
sought, determines which forum a consumer can approach. For instance, if the claim is worth more than
₹1 crore, the National Commission has jurisdiction. This judgment helped clarify where consumers
should file their complaints and prevented jurisdictional confusion in cases involving high-value claims,
especially in disputes involving real estate and infrastructure.

5. Sonic Surgical vs. National Insurance Company (2010)

Citation: Civil Appeal No. 1560 of 2004

This case involved the denial of an insurance claim on the grounds that the insured had delayed notifying
the insurer about the loss. The Supreme Court ruled that such delays, if reasonable, should not be used
as a pretext to deny claims. The Court emphasized that insurance companies should focus on the
substance of the claim rather than on minor technicalities. This judgment protected consumers from
arbitrary rejections based on procedural delays, ensuring that genuine claims are honored, reinforcing
the fairness and accountability of insurance companies towards their customers.