CONSUMER PROTECTION

INTRODUCTION The consumer movement in India is as old as trade and commerce. In Kautilyas

Arthashastra, there are references to the concept of consumer protection against

exploitation by the trade and industry, short weighment and measures, adulteration and punishment for these offences. However, there was no organized and systematic movement actually safeguarding the interests of the consumers. With the advent of the 20th century due to rapid industrialization and multifaceted development in India after the Independence, there appeared a flood of consumer goods and services in the Indian Market, which almost changed the relationship between the consumer and the trader. Technological advancements in the field of media led to flooding of advertisements of goods and services further worsening the otherwise grim situation. Lack of consumer awareness, illiteracy, poverty, etc. further led to the exploitation of consumers1. Awareness of consumer rights varies in different regions in the country. It is very poor especially among the population in rural and far-flung areas of the country. Compared to the developed countries, the levels of consumer awareness in such a vast country with a large population like India is much lower. This is rooted in economic inequality, low levels of literacy and ignorance. Because of this, consumers are not able to assert their rights and on many occasions are exploited by the trade and industry and service providers. Protecting and promoting the welfare of consumers has thus become one of the major concerns. Globalisation and liberalisation of trade and business has resulted in many products and services being available to the consumers. Growth in economy has resulted in increase in the purchasing power of the middle class section, which is the
1

Consumers Awareness about Rights and Grievance Redressal, by Dr. Durga Surekha, 2010, page 8-9

2 largest segment of the population. This has necessitated giving high priority for the protection of the consumers and promotion of responsible consumer movement in the country2. Modern technological growth and complexities of the sellers techniques, existence of a vast army of middlemen and unethical and untruthful advertisements have aggravated the situation of consumer exploitation3. The consumer has to be aware of his rights and play a key role. The success of consumerism is a strong function of consumer awareness and to avoid exploitation consumer must become knowledgeable4.

GOVERNMENT INITIATIVES Consumer movement is a socio-economic movement which seeks to protect the rights of consumers in relation to the goods purchased and services availed. Government has been according high priority to better protect consumer interests. The Department of Consumer Affairs, has initiated a number of steps to promote a responsible and responsive consumer movement in the country. Such measures include the use of multi-media campaign for promoting consumer awareness and encouraging consumers' involvement through efforts of Government and Non-Governmental Organizations and others. The main objectives of the consumer protection programme are:(i) To create suitable administrative and legal mechanisms which would be within the easy reach of consumers and to interact with both Government and nonGovernmental Organizations to promote and protect the welfare of the consumers.

(ii) To involve and motivate various sections of society including consumer organizations, women and youth to participate in the programme.

2 3 4

Report of the Working Group on Consumer Protection Twelfth Plan (2012-17), p.15 Consumers Awareness about Rights and Grievance Redressal, by Dr. Durga Surekha, 2010 , p.19 Ibid, p.21

3 (iii) To generate awareness among consumers about their rights and responsibilities, motivate them to assert their rights so not to compromise on the quality and standards of goods and services and to seek redressal of their disputes in consumer fora, if required. (iv) To educate the consumers as to be aware of their rights & social responsibilities5.

CONSUMER RIGHTS The importance of consumer rights lies in their enforceability, which in turn depends largely on level of consumer education and awareness. In other words, it is not enough to have dynamic consumer laws in the country. There must be an equal thrust on education of all citizens on the consumer rights available to them and the mechanisms through which these rights, if violated can be redressed. The rights of consumer which are being sought to be promoted and protected through the legislative mandate available under the Consumer Protection Act, 1986

inter- alia include:

(a) (b) The right to be protected against marketing of goods and services which are hazardous to life and property; The right to be informed about the quality, quantity, potency, purity, standard and price of goods or services, as the case may be to protect the consumer against unfair trade practices; The right to be assured, wherever possible to access to variety of goods and services at competitive prices; The right to be heard and to be assured that consumers interests will receive due consideration at appropriate fora; The right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers; and The right to consumer education6.

(c) (d) (e) (f)

5 6

Department of Consumer Affairs, Annual Report, 2011-12, p.51 Op.cit Report of the Working Group, p.65

4 From all these rights, it is the right to consumer education that can be said to be of paramount importance, since this is the gateway through which all the rights can be secured. An aware consumer not only protects his own rights but also induces efficiency in the economy which enables a country to become globally competitive7.

CONSUMER AWARENESS In a world of information asymmetry the government has the responsibility to redress this imbalance. In the Government of India, the Department of Consumer Affairs is the focal point for different Departments and organizations to make the consumers aware of market realities as well as the rights of the consumers and the manner in which they can educate themselves and also enforce their rights. Accordingly, the Jago Grahak Jago campaign has become immensely popular and is now being used by several Departments to communicate with consumers8. Increase in consumer awareness has propelled manufacturers and traders to ensure quality service to consumers. Resultant to that number of cases filed in National and State Commission have come down from total of 40,391 in the year 2007 to 22,101 in the year 2011. Similarly, number of cases filed in District Consumer Forums have also come down from 1,53,738 to 78,440 during the same period9.

LEGISLATIVE MEASURES ON CONSUMER PROTECTION

CONSUMER PROTECTION ACT, 1986

One

of

the

most

important

milestones

in

the

area

of

consumer

protection/consumer movement in the country has been the enactment of the Consumer Protection Act, 1986. This Act has been necessitated because the wellorganized sectors of manufacturers, traders and service providers with the knowledge of market and manipulative skills often attempt to exploit the consumers, in spite of the
7 8 9

Ibid , p.66
Department of Consumer Affairs, Strategic Plan, 2011-15, p.13 Rajya Sabha, Unstarrred Question no.2524 dated 17.12.2012

5 existence of various provisions of different laws for protecting their interests. Moreover, the increase in population has resulted in enormous pendency and delay in disposal of cases in the civil courts. . Hence, the Consumer Protection Act, 1986 was enacted to better protect the interests of consumers. It is one of the most progressive and comprehensive pieces of legislation and is umbrella legislation covering all goods and services. The Salient Features of the Act are as under: (i) The Act provides for establishing three-tier consumer dispute redressal machinery at the national, state and district levels.

(ii) It applies to all goods and services. (iii) It covers all sectors, whether private, public or any person. (iv) The Act provides for relief of a specific nature and also for compensation to the consumer as appropriate. (v) The Act also provides for setting up of Consumer Protection Councils at the Central, State and District levels, which are advisory bodies to promote and protect the rights of the consumers. (vi) The provisions of the Act are in addition to and not in derogation of the provisions of any other law for the time being in force10. Consumer Protection Act has been in operation for about 25 years. A number of deficiencies and shortcoming in respect of its operation have come to light thereby requiring Amendments on three occasions, still leaving scope for further improvements.

CONSUMER GRIEVANCE REDRESSAL Consumers need an inexpensive and quick grievance redressal mechanism to ensure that manufacturers and service providers are accountable for the price and
10

Op.cit Report of the Working Group, pp.15-16

6 quality that the consumers are entitled to. Accordingly, it is necessary to provide

several methods of grievance redressal including those which are available in accordance with the provisions of the Consumer Protection Act11. Consumer Protection Act, 1986 enables the ordinary consumers to secure less expensive and often speedy redressal of their grievances. The Act mandates establishment of Consumer Protection Council at the Centre as well in each States and District, with a view to promoting the consumer awareness. It also provides for a threetier structure of the National and State Commissions and District Forums for speedy resolution of consumer disputes. At present there are 632 District Forums, 35 State Commissions with the National Consumer Disputes Redressal Commission(NCDRC) at the apex (Annexure-I). The provisions of this Act covers goods as well as services. The goods are those which are manufactured or produced or sold to consumers through whole sellers and retailers. The services are in the nature of transport, telephone, electricity, housing, banking, insurance, medical treatment etc. If, the consumer is not satisfied by the decision of the District Forum, he can appeal to the State Commission and against the order of State Commission a consumer can appeal in the National Commission12. As per information made available by NCDRC, out of 38,73,772 cases filed in consumer fora at three-tier level since inception, 35,24,221 cases (almost 91%) have been disposed off (Annexure-II & III). To ensure speedy disposal of cases, State Government advised to avoid any delay in appointment of President and Members in Consumer Fora. In order to dispose of the pending cases, Circuit Benches from National Commission frequently visits the State. So far National Commission has held Circuit Bench sitting at Hyderabad, Bengaluru, Chennai, Pune, Kolkata, Ernakulam, Ahmadabad and Bhopal. Some of the

11 12

Op.cit Strategic Plan, p.12

NCRDC.nic.in

7 State Commissions also held Lok Adalats for speedy disposal of the cases13. Under the scheme of Strengthening Consumer Fora (SCF), financial assistance is provided to the States/Union Territories for strengthening infrastructure of building as well as nonbuilding assets14 (Annexure-IV). Scheme of Computerization and Computer Networking of Consumer Fora (CONFONET) was launched in March 2005. Under this scheme, the Consumer Fora at all the three-tiers throughout the country were to be fully computerised to enable access of information and quicker disposal of cases. The project is being implemented by the National Information centre (NIC) on a turnkey basis. The scheme has been extended during 11th Plan period with a total outlay of Rs.25.69 crores. During the year 2011-12 an amount of Rs.0.75 crores has been released to NIC for activities to be undertaken under CONFONET Project in the XIth Plan15.

CONSUMER PROTECTION (AMENDMENT) BILL, 2011 Consumer Protection Act was earlier amended thrice by Act no.34 of 1991, Act no.50 of 1993 and Act no.62 of 2002. Amendment made in 1991 was mainly to incorporate provisions for the quorum of District Forum, appointing persons to preside over State Commissions/District Forums, in case of absence of President to enable the court function uninterruptedly16. In 1993, the Act was again amended to address the inadequacies in the coverage of the main Act. It aimed to plug loopholes and enlarge the scope of areas covered and interest more power to the redressal agencies under the Act17. In 2002, Act was again amended to facilitate quicker disposal of complaints, enhancing the capability of redressal agencies, strengthening them with more powers,

13 14

Lok Sabha, Unstarred Question no.3928 dated 18.12.2012 Rajya Sabha Unstarred Question no.2498 dated 17.12.2012 15 Op.cit Annual Report, 2011-12, p.54 16 Consumerism Global and Indian Perspectives by J.S. Panswar, Navin Mathur and Darshana R. Dave, 2006, p. 94 17 Consumer Protection Amendment Bill, 1993

8 streamlining the procedure and widening the scope of the Act to make it more functional and effective18. As a pro-active measure, in July 2004 a Working Group was set up to examine the provision of the Act and consider relevant amendment to make the Act more meaningful, functional and vibrant. A number of proposed amendments were circulated to all State Governments, concerned Central Ministries and NCDRC in July 2006. Revised proposed amendments were re-circulated in 2009 and in light of the comments received on the draft proposal, the Department of Consumer Affairs in consultation with the Ministry of Law and Justice formulated Consumer Protection (Amendment) Bill, 2010. In meantime some fresh additional comments of the Department of Financial Services were received on the proposed sections regarding unfair trade practice and unfair contract. These changes were got approved by the Ministry of Law and Justice and formed part of the draft proposal of Consumer Protection (Amemdment) Bill, 2011. The Bill was introduced in Lok Sabha on 16.12.2011. The Bill was referred to Standing Committee on Food, Consumer Affairs and Public Distribution on 26.12.201119. The Committee Report was presented in Lok Sabha on 19.12.2012. The main objectives of the proposed Bill are :(i) Widening the scope and amplifying the provisions of the Act.

(ii) Facilitating quicker disposal of complaints. (iii) Rationalising the qualifications and procedure of selection of the Presidents and Members of Consumer Fora. (iv) Strengthening penal provisions/enforcement orders of Consumer Fora20.

18 19

26th Report of Standing Committee on Food, Consumer Affairs on Consumer Protection (Amdt.) Bill, 2011, pp.1-2 20 Ibid, pp.5-8

Op.cit Report of the Working Group, pp.16-17

9 The Standing Committee Report on above Bill observed that a cooperative approach between Central and State Governments will result in uniform implementation of consumer protection laws and rules across all jurisdictions. The Committee also recommended Ministry to effectively implement consumer related programmes and policies in close co-ordination with the State Governments in the interest of consumers. A need for updation of the quality of goods and standards of services provided to consumers so as to conform to the international standard is also stressed upon. It also draws attention towards strong need to spread awareness in order to educate the consumer about their rights as provided under the Act. Committee recommended that Consumer Fora should be given power to grant punitive damages of not less than five times of the loss or compensation awarded to aggrieved consumer by the defaulting Companies21.

Future Roadmap As per the Strategic Plan of the Department of Consumer Affairs, the vision is to protect the rights and interests of consumers, to spread awareness about consumer rights, duties and responsibilities and to promote consumer welfare by strengthening consumer movement in the country. Active participation of State Governments, academic and research institutions, schools and voluntary organizations will be sought to create a vibrant consumer movement in the country. Strict parameters regarding consumer products will be developed and enforced along with regular monitoring of prices to ensure the sovereignty of consumers22. 12th Plan strategy and implementation plan: (i) Consumers need an inexpensive and quick grievance redressal mechanism to ensure that manufacturers and service providers are accountable for the price and quality that the consumers are entitled to. Accordingly, it is necessary to provide several methods of grievance redressal including those which are available in accordance with the provisions of the Consumer Protection Act.

21 22

Ibid, pp.10-11 Op.cit Report of the Working Group, p.24

10 Thus, mediation or in-house grievance redressal should be tried, but without giving up the right of the consumer to obtain legal redress ; (ii) Amendment of Consumer Protection Act to make it more effective and tuned to reducing the backlog of cases. (iii) Of recent there has been derogation or poaching on the jurisdiction of Consumer Protection Act in some of the areas due to the orders passed by the Courts. Such loopholes in the Act should be plugged through appropriate amendments to the Act and Rules. (iv) Computerisation and Networking of consumer fora across the country so that consumers can file complaints and access their case status online. (v) Setting up counselling and a mediation mechanism at pre-litigation stage and so as to reduce the burden of consumer courts and resolve disputes through out of court settlements. (vi) Provision of adequate infrastructure to Consumer fora so as to make them function effectively. (vii) Moving from manual system to computer based system to bring in more efficiency and transparency. (viii) Provision for monitoring the performance of functioning of District Fora by developing dynamic MIS Reports on the performances related to total no. of cases filed/ disposed and other related performance indicators. (ix) Provision of funds for the annual maintenance of confonet hardware items like computers, ups, replacement of ups batteries etc. under the Scheme on Strengthening Consumer Fora23.

Conclusion The prospect of the consumer justice system in our country appears to be bright in view of the proactive policy, schemes / programmes adopted by the Government. However, the present drive and direction need to be supplemented by adopting

23

Op.cit Report of the Working Group, p.27

11 different channels of redressal. And there is a dire need for the State Governments to give deserving priority to Consumer welfare and gear up themselves to meet the challenges thrown up by market economy. Involvement of trade and industry, civil society organizations and above all consumer themselves are vital for betterment of consumer welfare in the years to come24.

24

Op.cit Report of the Working Group, p.37

12
Annexure-I STATEMENT REFERRED TO REPLY TO PART (b) OF LOK SABHA UNSTARRED QUESTION NO. 3928 FOR 18.12.2012 REGARDING ASSISTANCE FOR CONSUMER FORA INFORMATION REGARDING FUNCTIONAL/NON-FUNCTIONAL (STATE COMMISSIONS/DISTRICT FORUMS) (as on 04.12.2012) Whether SC No. of District Functional Non-functional As on Functional or Fora Nonfunctional Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 29 1 16 27 38 2 16 2 1 10 2 30 21 12 2 22 30 14 1 48 40 9 7 8 8 31 1 20 37 4 30 4 75 13 29 1 13 27 38 2 16 2 1 10 2 30 19 12 2 16 30 14 1 48 40 9 7 8 8 31 1 20 37 4 22 4 75 12 0 0 3 0 0 0 0 0 0 0 0 0 2 0 0 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8 0 0 1 30.09.2012 31.3.2006 30.09.2012 31.12.2011 30.09.2012 30.09.2012 30.09.2012 31.03.2011 31.03.2011 30.09.2012 30.09.2012 30.09.2012 30.09.2012 30.09.2012 31.03.2009 30.09.2011 30.09.2012 31.12.2010 30.09.2012 30.09.2012 30.06.2011 31.12.2008 30 11.2011 31.12.2010 31.12.2011 30.06.2012 30.09.2011 30.09.2012 30.06.2012 31.12.2011 30.09.2012 30.09.2012 30.09.2012 31.10.2012

SI.. No. States

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Andhra Pradesh A & N Islands Arunachal Pradesh Assam Bihar Chandigarh Chattisgarh Daman & Diu Dadra & Nagar Haveli Delhi Goa Gujrat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Lakshadweep Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Pondicherry Punjab Raj as than Sikkim Tamil Nadu Tripura Uttar Pradesh Uttaranchal

13
35 West Bengal TOTAL Yes 21 632 21 612 0 20 30.06.2012

Annexure-II
STATEMENT REFERRED TO REPLY TO PART (d) TO (f) OF LOK SABHA) UNSTARRED QUESTION NO. 3928 FOR 18.12.2012 REGARDING ASSISTANCE FOR CONSUMER FORA Total Number of Consumer Complaints Filed / Disposed since inception Under Consumer Protection Law

(as on 04.12.2012)
SI. No. Name of Agency Cases filed since inception Cases disposed of since inception Cases Pending %of total Disposal Remarks

1. 2. 3.

National Commission State Commissions District Forums TOTAL

78471 589771 3205530 3873772

68241 495717 2960263 3524221

10230 94054 245267 349551

86.96% 84.05% 92.35% 90.98%

14

Aneexure-III
(as on 30.06.2012)

YEAR-WISE FILING & DISPOSAL OF CONSUMER CASES IN STATE COMMISSIONS

States 2007 Filed Andhra Pradesh A & N Islands Arunachal Pradesh Assam Bihar Chandigarh Chattisgarh D & N Haveli/ Daman &Diu Delhi Goa Gujrat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Lakshadweep Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Pondicherry Punjab Rajasthan Sikkim Tamilnadu Tripura Uttar Pradesh 2101 N.A. 7 26 780 1228 728 10 1541 136 2565 3570 2180 321 820 2685 449 2 3101 4708 N.A. 23 22 N.A. 1238 26 1716 3204 1 2777 85 3181 Disp. 2061 N.A. 5 19 766 1090 710 8 2475 93 1618 1792 1935 200 268 3294 864 1 2706 3153 N.A. 5 21 N.A. 1613 5 1303 5213 1 91 82 3293 2008 Filed 2014 N.A. 3 146 616 2376 962 0 1464 90 2428 2274 1508 182 583 3149 463 0 3250 4673 N.A. 22 21 N.A. 1122 48 1742 3196 0 1039 68 2832 Disp. 1595 N.A. 4 20 755 1448 451 0 1859 177 1739 2134 1521 236 515 3105 1632 0 3201 3935 N.A. 4 25 N.A. 573 34 1926 4604 2 933 121 3569 2009 Filed 1485 N.A. 0 79 720 783 891 4 1359 75 2248 1923 1694 211 448 4610 834 2 2764 3839 N.A. 11 9 N.A. 1216 19 2020 2887 4 566 71 2733 Disp. 1446 N.A. 0 194 717 1127 1232 0 1129 121 2516 3906 1789 236 418 4500 1684 2 1962 3783 N.A. 6 9 N.A. 1136 25 1791 3902 0 309 63 2161 2010 Filed 1579 N.A. 0 73 700 575 843 0 N.A. 78 N.A. 2013 1722 259 368 5569 792 0 2880 3532 N.A. N.A. 12 N.A. 840 9 2339 3535 3 1056 53 2760 Disp. 1024 N.A. 0 133 389 1061 1109 0 N.A. 65 N.A. 4201 1689 286 435 3056 1545 0 2228 3645 N.A. N.A. 12 N.A. 1725 12 1681 3201 6 1180 57 6998 2011 Filed 1240 N.A. N.A. N.A. N.A. 537 815 N.A. N.A. 54 N.A. 1826 1357 260 242 4405 N.A. N.A. 1986 1475 N.A. N.A. N.A. N.A. 871 14 2056 3200 2 1371 109 N.A. Disp. 377 N.A. N.A. N.A. N.A. 737 758 N.A. N.A. 25 N.A. 7202 1183 280 363 4238 N.A. N.A. 1709 169 N.A. N.A. N.A. N.A. 1192 30 1627 3155 3 2014 86 N.A. 2012 Filed 539 N.A. N.A. N.A. N.A. 292 321 N.A. N.A. 19 N.A. 861 629 N.A. N.A. 1400 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 1051 N.A. N.A. N.A. N.A. N.A. Disp. 35 N.A. N.A. N.A. N.A. 288 393 N.A. N.A. 83 N.A. 3215 915 N.A. N.A. 1565 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 89 N.A. N.A. N.A. N.A. N.A.

15
Uttarakhand West Bengal 453 707 115 983 290 502 289 694 242 769 391 825 482 967 330 743 281 N.A. 310 N.A. 113 N.A. 128 N.A.

TOTAL

40391

35783

37063

37101

34516

37380

33039

36811

22101

25458

5225

6711

Source: Rajya Sabha Starred Question no.311 dated 3.9.2012.

16 Annexure-IV

Financial Assistance for Strengthening Consumer Fora (SCF) Scheme During 2011-1225

Sl. No. 1. 2. 3. 4. 5. 6.

State/UT Kerala Punjab Sikkim Nagaland Tamil Nadu West Bengal

Released Amount (Rs. in lacs) 15.00 44.40 12.50 260.25 196.79 148.21

25

Rajya Sabha Unstarred Question No.2498 dated 17.12.2012

17