ACS-01

Assignment Code: Asst-2/ TMA-2/2019

Total Marks: 100
Answer all questions in each category. Write answers in your own words.
DCQ: Answer in about 500 words each. (2x20=40 Marks)

1. Discuss and define the term ‘Unfair Trade Practice’ along with decided case laws on
Misleading Advertisement and False Representation.
Answer- Unfair trade practice refers to the use of various deceptive, fraudulent or unethical
methods to obtain business. Unfair trade practices include misrepresentation, false advertising
or representation of a good or service, tied selling, false free prize or gift offers, deceptive
pricing and non-compliance with manufacturing standards. Such acts are considered unlawful
by statute via Consumer Protection Law, which opens up recourse for consumers by way of
compensatory or punitive damages. An unfair trade practice is sometimes referred to as a
"deceptive trade practice" or an "unfair business practice."

An unfair trade practice means a trade practice, which, for the purpose of promoting any sale,
use or supply of any goods or services, adopts unfair method, or unfair or deceptive practice.

Unfair practices may be categorized as under:

1.False Representation

The practice of making any oral or written statement or representation which:

Falsely suggests that the goods are of a particular standard quality, quantity, grade,
composition, style or model;

Falsely suggests that the services are of a particular standard, quantity or grade;

Falsely suggests any re-built, second-hand renovated, reconditioned or old goods as new
goods;

Represents that the goods or services have sponsorship, approval, performance,

characteristics, accessories, uses or benefits which they do not have;

Represents that the seller or the supplier has a sponsorship or approval or affiliation which he
does not have;

Makes a false or misleading representation concerning the need for, or the usefulness of, any
goods or services;

Gives any warranty or guarantee of the performance, efficacy or length of life of the goods, that
is not based on an adequate or proper test;

Makes to the public a representation in the form that purports to be-

a warranty or guarantee of the goods or services,

a promise to replace, maintain or repair the goods until it has achieved a specified result,

if such representation is materially misleading or there is no reasonable prospect that such

warranty, guarantee or promise will be fulfilled

Materially misleads about the prices at which such goods or services are available in the
market; or

Gives false or misleading facts disparaging the goods, services or trade of another person.

2.False Offer of Bargain Price-

Where an advertisement is published in a newspaper or otherwise, whereby goods or services

are offered at a bargain price when in fact there is no intention that the same may be offered at
that price, for a reasonable period or reasonable quantity, it shall amount to an unfair trade
practice.

The ‘bargain price’, for this purpose means-

the price stated in the advertisement in such manner as suggests that it is lesser than the
ordinary price, or

the price which any person coming across the advertisement would believe to be better than the
price at which such goods are ordinarily sold.

Free Gifts Offer and Prize Schemes

The unfair trade practices under this category are:

Offering any gifts, prizes or other items along with the goods when the real intention is different,
or

Creating impression that something is being offered free alongwith the goods, when in fact the
price is wholly or partly covered by the price of the article sold, or

Offering some prizes to the buyers by the conduct of any contest, lottery or game of chance or
skill, with real intention to promote sales or business.
4.Non-Compliance of Prescribed Standards

Any sale or supply of goods, for use by consumers, knowing or having reason to believe that the
goods do not comply with the standards prescribed by some competent authority, in relation to
their performance, composition, contents, design, construction, finishing or packing, as are
necessary to prevent or reduce the risk of injury to the person using such goods, shall amount
to an unfair trade practice.

5.Hoarding, Destruction, Etc.

Any practice that permits the hoarding or destruction of goods, or refusal to sell the goods or
provide any services, with an intention to raise the cost of those or other similar goods or
services, shall be an unfair trade practice.

Decided case laws - Ashok Ramniklal Tolat, a seventy-year-old man with a passion for
driving, wanted to buy a sports-utility vehicle (SUV) to make his dream trips to Ladakh, Kashmir
and Nepal with his wife. Impressed by Chevrolet Forester’s tagline, An SUV to beat all SUVs, he
bought the vehicle. He paid Rs 14 lakh and spent another Rs 2 lakh on it to prepare it for his
travels. As it turned out, within a few months the rains began in Mumbai and the supposed
offroader refused to wade through the water. It was then that Tolat doubted his vehicle’s
capabilities – specifically the all-terrain capabilities that the company brochure and ads had
claimed. Another surprise was in store: a service engineer showed Tolat the car manual in
which it was clearly stated that the vehicle was a ‘passenger car’.

Aggrieved, Tolat decided to complain against the company and what followed was a three-year
battle between a battery of lawyers representing General Motors and Tolat, who never hired a
lawyer.

THE CASE OPENS AT DISTRICT FORUM

Tolat filed a complaint at the district forum, Ahmedabad. His complaint included the copy of the
advertisement that he said influenced him into buying the vehicle in question. The attractive part
of the advertisement read thus: Introducing a world without borders, an SUV to beat all SUVs.
That's the new Chevrolet Forester. With the Power of 120 horses under its borne unique
All-Wheels (AWD), unmatched comfort and luxury by-road, off-road or no- road.

Tolat stated that he had visited the agents of the appellant and was given a book titled ‘For a
special journey called life’. He was assured that the vehicle offered for sale would help him
realise his dream. The brochure also assured that ‘the vehicle in question is an SUV to end all
SUVs’ and that it ‘will put the four corners of the earth within your reach… get you there in
unmatched comfort, by road, off-road or no road.’ He was also given a visual presentation of the
vehicle and a copy of the VCD. All these documents were shared with the district forum.
Tolat shared all purchase details and related documents with the forum, including the receipts of
the accessories worth Rs 191,295 that he had got fitted as well as vehicle insurance and
registration details. Tolat’s appeal to the court read: ‘…this Hon'ble Forum be pleased to hold
that the opposite parties (joint and severally) have practiced unfair trade practice, towards the
complainant and direct them (jointly and severally) to remove unfair trade practice, practised by
them against the complainant.’

The district consumer forum ordered in favour of complainant and directed the opposite parties
(jointly and severally) to refund the complainant a sum of Rs 14 lakh and Rs 191,295 (spent on
accessories) along with 18 per cent interest, from the date of payment to the complainant. The
company was asked to take the vehicle (which was parked at the company’s service centre
throughout the duration of the case) back from the complainant after refunding the money with
interest.

ORDER ALMOST REVERSED AT THE STATE FORUM

The said order was challenged by the opposite party before the Gujarat State Commission,
Ahmedabad. The Commission held that the vehicle had no mechanical or manufacturing defect,
but the advertisement that the car was an SUV amounted to ‘unfair trade practice’. Accordingly,
the complainant was held entitled to Rs 50,000 as compensation which included costs of
litigation. As for the appellant, the Commission directed them to not describe the vehicle in
question as an SUV in any form of advertisement, website, or other promotional literature. It
also directed them to make the correction in every communication and mention that the vehicle
in question was a passenger car.

Justifying the revision of compensation, the State Commission said: ‘…neither there is any
averment in the complaint about the suffering of punitive damages by the other consumers nor
the appellant was aware that any such claim is to be met by it. Normally, punitive damages are
awarded against a conscious wrongdoing unrelated to the actual loss suffered. Such a claim
has to be specially pleaded.’

OPENS AGAIN AT NATIONAL FORUM

Still aggrieved, Tolat did not hesitate in challenging the State Forum’s order at the National
Consumer Disputes Redressal Commission (NCDRC).

The challenge before the Commission was to understand the correctness or otherwise of the
order of the State Commission, setting aside the relief given by the district forum. After a
thorough review of the case, the National Commission ordered in favour of Tolat and directed
the company to refund a sum of Rs 1,250,000 (twelve lakh and fifty thousand rupees) to the
consumer. The Commission also asked the company to pay punitive damages for ‘unfair trade
practice’ in selling the said vehicle to about 260 consumers. Punitive damages of Rs 25 lakh
were calculated. Of this, Rs 5 lakh had to be paid to the complainant and the rest was to be
deposited at the Consumer Welfare Fund of the central government.
FINAL ACT AT THE SUPREME COURT: COMPENSATION PAID, PUNITIVE DAMAGES SET
ASIDE
General Motors challenged the jurisdiction of the National Consumer Forum at the Supreme
Court. Its appeal to the court read thus: ‘…the National Commission has gone much beyond its
jurisdiction in awarding the relief which was neither sought in the complaint nor before the State
Commission. We are thus of the view that to this extent the order of the National Commission
cannot be sustained.’

The company’s appeal stated that it accepted the concurrent findings recorded by the district
forum, the State Commission and the National Commission that an act of ‘unfair trade practice’
was committed by them and that they were based on adequate material on record. Hence, it did
not call for any interference on this by the Supreme Court.

At the same time, it pointed out that there was no claim before the National Commission for the
punitive damages, nor did the appellant have an opportunity to argue against such a claim.
Hence, it requested for that part of the order of the National Commission to be set aside.

The final operative order passed by the Supreme Court reversed the order of the National
Commission with regard to the punitive damages. The Supreme Court held: ‘…we are
conscious that having regard to the laudable object of the social legislation to protect the
interest of consumers, liberal and purposive interpretation has to be placed on the scheme of
the Act avoiding hyper-technical approach. At the same time, fair procedure is hallmark of every
legal proceeding and an affected party is entitled to be put to notice of the claim which such
affected party has to meet.

2. Discuss in detail the remedies available for negligence in ‘Banking Service’.

Answer- The bankers are professionals, who hold themselves out as persons worthy of trust
and as persons of skill with respect to the money placed by the customers in their custody. They
, undertake to pay on consumer's cheques to the extent of money in their credit balance. The
failure to do so constitutes negligence and make them liable for damages including for injury to
the credit of the consumer.

The banks are liable for any forgery in the cheque committed by third persons. A bank which
makes a payment on a forged cheque, cannot make the customer liable except on the ground of
negligence imputable to the consumer. If the signatures of the customer on the cheque are not
genuine, there is no mandate on the bank to pay. In such a case, the question of any
negligence on the part of the customer, such as leaving of the cheque-book carelessly so that a
third party can easily get hold of it, can afford no defence to the bank. Similarly, if a bank fails to
carry out the instructions of a customer, it will be liable for negligence. For example, if a bank
issues a bank draft without authority in accordance with the customer's instructions against valid
cheques of the customer, owing to the fraud of the customer's servant, the bank will be liable in
damages in respect thereof.

i. The Usurious Loans Act, 1918 - With an object to prevent the Civil Courts from being used for
the purpose of enforcing harsh and unconscionable loans carrying interest at usurious rates,
and to give additional powers to courts to deal in certain cases with usurious loan of money or in
kind, the Usurious Loans Act,1918 was enacted on 22nd March, 1918. It empowers the courts
on the lines of Section 1 of the Money Lenders Act, 19.00 to reopen transactions by way of
money or loans in cases where the Court is satisfied (1) that the interest or other return is
excessive and (2) that the transaction is substantially unfair, -and after investigation of the
circumstances, both attendant and antecedent, to revise the transactions between the parties
and if necessary, reduce the amount payable to such sum as the Court, having regard to the
risk and all the circumstances of the case, may decide to be reasonable. Section 3 of the Act
provides for the re-opening of certain transactions.

A nationalised bank or a banking institution functioning under the provisions of the Banking Law
Relating to Protection of Regulation Act, 1949 and subject to the control of the Reserve Bank of
India as the apex Consumers of Various Services Bank has no free hand in relation to the
stipulation of interest on advances made by it to debtors and is bound by the periodical circulars
issued by the Reserve Bank of India regulating the rate of interest on lending and this would
constitute a special circumstance within the meaning of Explanation I to Sec. 3(1) of Usurious
Loans Act.

ii. The Banking Ombudsman scheme, 1995 -

The Banking Ombudsman Scheme, 1995 was framed by the Reserve Bank of India and is
applicable to all the business in India of every commercial bank (other than regional rural banks)
having place of business in India, whether such bank is incorporated in India or
outside India. The object of the scheme is to enable resolution of complaints relating to the
provision of banking services and to facilitate the satisfaction, or settlement of such complaints.
Under this scheme the Reserve Bank of India has to appoint one or more persons to be known
as the Banking Ombudsman to carry out the functions entrusted to him by or under the Scheme.
He is to hold office during the pleasure of the Governor of the reserve Bank of India. He is to be
a person of high standing in the legal, banking, financial services, public administration or
management sectors.

Under Clause 13 of the Scheme, regarding banking services, the Banking Ombudsman
authority will include:
a) all complaints concerning deficiency in service such as
i) non-payment inordinate delay in the payment or collection of cheques, drafts bills, etc.;

ii) non-acceptance, without sufficient cause, of small denomination notes tendered for any
purpose, and the charging of commission in respect thereof:

iii) non-issue of drafts to consumers and others;

iv) non-adherence to prescribed working hours by branches:

v) failure to honour guarantee letter of credit commitments by -banks;

vi) claims in respect of unauthorised or fraudulent withdrawals from deposits accounts, etc.;

vii) complaints pertaining to the operations in any saving, current or any other account
maintained by bank, such as delays, non-credit of proceeds to parties' accounts, non-payment
of deposit or non-observance of the Reserve Bank directives, if any, applicable to rate of
interest on deposits.

viii) complaints from exporters in India, such as delays in receipt of export proceeds, handling of
export bills, collection of bills, etc. provided the said complaint pertains to the Bank's operation
in India; and

ix) complaints from non-resident Indians having account in India in relation to their remittances
from abroad, deposits and other bank-related matters.

b) Complaints concerning loans and advances only in so far as they relate to:
i) non-observance of Reserve Bank directions on interest rates;
ii) delays in sanction non-observance of prescribed time schedule for disposal of loan
application; and
iii) non-observance of any other directions or instructions of the Reserve Bank, as may be
specified for this purpose, from time to time.

MCQ: Answer in about 250 words each. (4x10=40 Marks)

6. Highlight the difference between ‘Condition’ and ‘Warranty’.

Answer- Certain terms, obligations, and provisions are imposed by the buyer and seller while
entering into a contract of sale, which needs to be satisfied, which are commonly known as
Conditions. The conditions are indispensable to the objective of the contract. There are two
types of conditions, in a contract of sale which are:

Expressed Condition: The conditions which are clearly defined and agreed upon by the parties
while entering into the contract.
Implied Condition: The conditions which are not expressly provided, but as per law, some
conditions are supposed to be present at the time making the contract. However, these
conditions can be waived off through express agreement.

A warranty is a guarantee given by the seller to the buyer about the quality, fitness and
performance of the product. It is an assurance provided by the manufacturer to the customer
that the said facts about the goods are true and at its best. Many times, if the warranty was
given, proves false, and the product does not function as described by the seller then remedies
as a return or exchange are also available to the buyer i.e. as stated in the contract.

A warranty can be for the lifetime or a limited period.

The following are the major differences between condition and warranty in business law:
● A condition is an obligation which requires being fulfilled before another proposition
takes place. A warranty is a surety given by the seller regarding the state of the product.

● The term condition is defined in section 12 (2) of the Indian Sale of Goods, Act 1930
whereas warranty is defined in section 12 (3).

● The condition is vital to the theme of the contract while Warranty is ancillary.

● Breach of any condition may result in the termination of the contract while the breach of
warranty may not lead to the cancellation of the contract.

● Violating a condition means violating a warranty too, but this is not the case with
warranty.

● In the case of breach of condition, the innocent party has the right to rescind the contract
as well as a claim for damages. On the other hand, in breach of warranty, the aggrieved
party can only sue the other party for damages.

7. Discuss the important provisions of Drugs and Cosmetics Act, 1940.

Answer- In 1937 a Bill was introduced in the Central Legislative Assembly to give effect to the
recommendations of the Drugs Enquiry Committee to regulate the import of drugs into British
India. This Bill was referred to the Select Committee and the Committee expressed the opinion
that a more comprehensive measure for the uniform control of manufacture and distribution of
drugs as well as of imports was desirable. The Central Government suggested to the Provincial
Governments to ask the Provincial Legislatures to pass resolutions empowering the Central
Legislature to pass on Act for regulating such matters relating to control of drugs as fall within
the Provincial sp here. Provincial Governments got the resolution passed from the Provincial
Legislatures and sent them to the Central Government for getting through the Bill to regulate the
import, manufacture, distribution and sale of Drugs and Cosmetics. Thereupon the Drugs and
Cosmetics Bill was introduced in the Central Legislative Assembly.

STATEMENT OF OBJECTS AND REASONS

1. In order to give effect to the recommendations of the Drugs Enquiry Committee,, in so far as
they relate to matters with which the Central Government is primarily concerned, a Bill to
regulate the import of drugs into British India was introduced in the Legislative Assembly in
1937. The Select Committee appointed by the Legislative Assembly was of the opinion that a
more comprehensive measure providing for the uniform control of the manufacture and
distribution of drugs as well as of import was desirable. The Government of India accordingly
asked Provincial Governments to invite the Provincial Legislatures to pass resolutions under
section 103 of the Government of India Act, 1935, empowering the Central Legislature to pass
an Act for regulating such matters relating to the control of drugs as fall within the Provincial
Legislative List. Such resolutions have now been passed by all Provincial Legislatures.

2. Chapter II of the Bill establishes a Board of Technical Experts to advise the Central and
Provincial Governments on technical matters.

3. Chapter III provides for the control of the import of drugs into British India. The executive
power under this chapter will accordingly be exercised by the Central Government.

4. Chapter IV relates to control of the manufacture, sale and distribution of drugs and contains
the provisions which it is proposed should be enacted in exercise of the powers conferred by the
resolutions under section 103 of the Government of India Act passed by the Provincial
Legislatures. The executive power under Chapter IV will be exercised by the Provincial
Government.

5. The First Schedule prescribes the standards to be complied with by imported drugs and the
Second Schedule prescribes the standards to be complied with the drugs manufactured, sold or
distributed in India. The standards prescribed in the two Schedules are identical. The Central
Government will have power to amend the First Schedule, but power to amend the Second
Schedule will rest with Provincial Government.

6. The Government of India have considered to what extent provision can be made to secure
the maintenance of unformity in standards and in other important matters in which uniformity is
desirable. They understand that it would be ultra vires of Central Legislature to assign to any
authority other than the Provincial Government's authority conferred by the Bill in respect of
matters falling within the Provincial Legislative field. For this reason it is not possible to assign
the power to fix standards and to make rules to any single authority. In order to assure that
before any action is taken due consideration is given to the desirability of maintaining uniformity,
provision has been made in Chapter VI for a single Technical Advisory Board which both
Central and Provincial Government will be required to consult before modifying the standards
set up by the Bill or before making rules under the Bill.

ACT 23 OF 1940

The Drugs and Cosmetics Bill was passed by the Central Legislative Assembly and it received
the assent of the Governor General on 10th April, 1940 and thus became the Drugs and
Cosmetics Act, 1940 (23 of 1940).

LIST OF AMENDING ACTS AND ADAPTATION ORDERS

1. The Repealing and Amending Act, 1949 (40 of 1949).

2. The Adoption of Laws Order, 1950

3. The part B States (Laws) Act, 1951 (3 of 1951).

4. The Drugs (Amendment) Act, 1955 (11 of 1955).

5. The Drugs (Amendment) Act, 1960 (35 of 1960).

6. The Drugs (Amendment) Act, 1962 (21 of 1962).

7. The Drugs and Cosmetics (Amendment) Act, 1964 (13 of 1964).

8. The Drugs and Cosmetics (Amendment) Act, 1972 (19 of 1972).

9. The Drugs and Cosmetics (Amendment) Act, 1982 (68 of 1982).

10. The Drugs and Cosmetics (Amendment) Act, 1986 (71 of 1986).

8. Discuss in brief the Consumer Disputes Redressal Agencies created under the
Consumer Protection Act, 1986.
Answer-​ Three Tier Consumer Grievances Machinery under the Consumer Protection Act!

1. District Forum:
District forum consists of a president and two other members. The president can be a retired or
working judge of District Court. They are appointed by state government. The complaints for
goods or services worth Rs 20 lakhs or less can be filed in this agency.

The agency sends the goods for testing in laboratory if required and gives decisions on the
basis of facts and laboratory report. If the aggrieved party is not satisfied by the jurisdiction of
the district forum then they can file an appeal against the judgment in State Commission within
30 days by depositing Rs 25000 or 50% of the penalty amount whichever is less.

2. State Commission:
It consists of a president and two other members. The president must be a retired or working
judge of high court. They all are appointed by state government. The complaints for the goods
worth more than Rs 20 lakhs and less than Rs 1 crore can be filed in State Commission on
receiving complaint the State commission contacts the party against whom the complaint is filed
and sends the goods for testing in laboratory if required.

In case the aggrieved party is not satisfied with the judgment then they can file an appeal in
National Commission within 30 days by depositing Rs 3500 or 50% of penalty amount
whichever is less.

3. National Commission:

The national commission consists of a president and four members one of whom shall be a
woman. They are appointed by Central Government. The complaint can be filed in National
Commission if the value of goods exceeds Rs 1 crore. On receiving the complaint the National
Commission informs the party against whom complaint is filed and sends the goods for testing if
required and gives judgment?

If aggrieved party is not satisfied with the judgment then they can file a complaint in Supreme
Court within 30 days.

10. Discuss the meaning of Consumer with the help of decided case laws.
Answer- Reliefs under the Act are available to consumers only. Therefore, you must
categorically know the meaning of a consumer. S.2 (1) (d) defines the term consumer. It means
miy of the following persons:
i) A person who buys any goods for a consideration. It also includes any user of such goods
when such use is made with the approval of the buyer. But it does not include a person who
obtains such goods for re-sale or for any commercial purpose. The Amendment Act, 1993 has
added the following Explanation: "Commercial purpose" does not include use by a consumer of
goods bought and used by him exclusively for the purpose of earning his livelihood, by means of
a self-employment.

ii) A person who hires or avails of any services for a consideration. It also includes any
beneficiary of such services other than the person who hires or avails of the services for
consideration when such services are availed of with the approval of the first mentioned person.
The consideration for the purchase of goods or hiring or availing of the services may have been
paid or promised or partly paid and partly promised, or under any system of deferred payment.

Therefore, to be a 'consumer' under the Act -

i) the goods or services must have been purchased or hired or availed of for consideration
which has been paid in full or in part or under a system of deferred payment, i.e., in respect of
hire-purchase transactions;

ii) goods purchased should not be meant for resale or for a commercial purpose. Thus, where a
vehicle has been purchased for the purpose of running it as a taxi, the purpose being
commercial the buyer shall not be a 'consumer' under the Act [Western India State Motors vs.
Subhag Meena and Others (1989)l. However, if the taxi is used by the buyer to earn his
livelihood, the buyer will be considered as a consumer. Any economic activity or transaction
carried on with the motive of making profit would fall under the term commercial purpose,
irrespective of the scale of operations In S. Pattabhiraman vs P. ST. Palaniappan (Order dt.
3.5.1994), the National Commission ruled that a chartered accountant who is in practice and
who purchased a computer for being installed in his office, cannot be regarded as a consumer
under the Consumer Protection Act.

Are the following consumers?

I) Winner of a lottery

The question was considered in the case of Byford v. S.S. Srivastava [1993]. In this case
Byford Motors inserted an advertisement in newspapers stating that a person booking a
premier Padmini Car could enter into a contest in a lottery conducted by them. Under it a person
who was successful in the draw would be entitled to two free tickets from New Delhi to New
York and back. Shri S.S. Srivastava was one of the persons who was successful in the draw.
He asked the dealers, Mls. Byford Motors, to give him the value of two tickets which was
refused and he was asked to produce two passports to enable them to book the tickets. The
complainant, however, produced one passport immediately but the second after the end of the
financial year. M/s. Byford Motors refused to give the tickets on the ground that accounts of the
financial year had been closed and that they could not carry 'forward the liability of that year to
the next financial year under the provisions of the Income-Tax Act and Rules.

The Court held, that the complainant was not a consumer within the meaning of Sec.2 (1) (d) of
the Act. He had received the car for which he had paid and there was no complaint as to its
condition.

Receiving air tickets to New York was an additional attraction attached to the sale, which
depended upon a lottery draw. It is not an intrinsic part of the contract deal for which payment
was made. Thus, as far as lottery was concerned, it could not be said that complainant was a
consumer who had hired any service for consideration and hence he had no right to get
redressal under the Act. The complainant's argument that this would fall under unfair trade
practice as in Sec. 36A(4) of the MRTPAct, 1969, was also not accepted.

2) A person registering for gas connection -

The National Commission in Mohindra Gas Enterprise v. Jagdish Poswal(1993) held that
registering for gas connection amounts to hiring of services. Reference was made to the
Manual of the Indian Oil Corporation which states that an LPG customer gets continuing or
recurring services like loan of the Corporation's equipment, delivery of refill cylinders, technical
service for appliance bn leakage of equipment and so on. But can a person be upheld as a
consumer at the stage of registration or only when he signs subscriptions voucher and makes
deposit for LPG connection. To this, National Commission observed as follows: Service as
defined in sub-clause (0) of the sub-section (1) of Sec. 2 means "service of any description
which is made available to potential users". The consumer who hires a service has been defined
in clause (ii) of Section 2(1) of the Act, according to which it is not necessary that consideration
should be paid at the time of hiring of service. If the transaction is supported by consideration
which has been paid or promised or partly paid or partly promised or under any system of
deferred payment, even then it will be a valid consideration for the hiring of the service. The
present case is one in which payment of part consideration was deferred till the gas connection
was released. Hence, a person becomes a consumer of LPG right at the time of registration for
an LPG connection.

3) Warranty of free service

In Vishwa Jyoti Printers vs MolyVos of India (1992) a warranty of free service for one year was
given at the time of sale of a printing machine. The seller of the machine contended that since
he was rendering free service for the maintenance of the machinery for one year under the
warranty, the buyer was not a 'consumer' under the Consumer Protection Act. Held, the
warranty was a part of the composite contract for supply of the printing machine and its
maintenance for a period of One year. The consideration for service to be rendered under the
warranty is obviously included In the sale price of the machine. There could not be an
agreement, including warranty, without consideration. It was wrong to maintain that warranty
obligations were being rendered free of charge.

4) Passengers travelling by trains- In General Manager, Southern Railway v. Anand Prasad

Sinha (1989), it was held that passengers travelling by trains m payment of the stipulated fee
charged for the ticket are 'consumers’ and the facility of transportation by rail provided by the
railway administration is a 'service' rendered for consideration as defined in the Act.
5) Subscribers of telephones could be 'consumers' under the Act and accordingly are entitled to
seek relief from Forums wherever necessary [Dist. Manager, Telephones, Patna v. Lalit Kumar
Bajla (1989)l.

6) User of electricity is a consumer. The National Commission in Y.N. Gupta v. DESU

(decided on 16.11.1992) considered a-complaint regarding the inflated electricity bills served by
DESU on the complainant. Id this case, DESU did not raise the bills in keeping with the cycle
normally adopted. It also did not replace the defective meter. However, it issued a bill for Rs.
1.06 lakhs for a period of 14 years. The power connection was also disconnected but restored
after a complaint with the General Manager. The National Commission ruled that the bills were
casually prepared as much as the bills reflected consumption in the five digits instead of four
digits. Moreover, DESU had no power
to raise bills upon a defective meter beyond six months under the Electricity Act, 1910. The
National Commission concluded that there was deficiency in service on the part of DESU and
awarded a compensation of Rs. 30,000 and costs of Rs. 5.000.

SCQ: Answer in about 50 words each (4x5=20 Marks)

11. Write a note on ‘Duties of Consumers as a Corollary to Consumer Right’.
Answer- Every right has a corresponding duty, the right of an individual is the duty of another.
For instance, if an individual has the right to be safe from the purchase of hazardous goods
correspondingly the seller had the duty to not sell goods which pose a threat to the consumers.
Thus, a consumer has the following duties-

Duty to pay for the services or goods purchased or used. However, if a client decides not to pay
for the services, here is what u can do.

To check weights, balances, prices etc. and read the labels carefully.

To update oneself about the various schemes of consumer protection.

Duty not to fall in the trap of misleading information and advertisements.

Not to buy goods from black markets.

To be an ethical consumer and procure the bills, receipts etc. for the good and services
purchased. If a consumer fails to take them then he/she might find it difficult to file a complaint
and prove the defect in the good.

Duty to gain knowledge about consumer rights and duties and to spread awareness about the
same.

Duty to file a complaint in case there is a defect in the good or service so purchased.

12. Discuss in brief the important provisions of ‘Sale of Good Act, 1930’.
Answer- The Sale of Goods Act, 1930 governs the contracts relating to sale of goods. It applies
to the whole of India except the State of Jammu & Kashmir. The contacts for sale of goods are
subject to the general principles of the law relating to contracts i.e. the Indian Contract Act. A
contract for sale of goods has, however, certain peculiar features such as, transfer of ownership
of the goods, delivery of goods rights and duties of the buyer and seller, remedies for breach of
contract, conditions and warranties implied under a contract for sale of goods, etc. These
peculiarities are the subject matter of the provisions of the Sale of Goods Act, 1930.

A contract of goods is a contract whereby the seller transfers or agrees to transfer the property
to goods to the buyer for a price. There may be a contract of sale between one part-owner and
another [Sec. 4(1)]. A contract of sale may be absolute or conditional [Sec 4(2)].

The term ‘contract of sale’ is a generic term and includes both a sale and an agreement to sell.

Sale and agreement to sell: when under a contract of sale, the property in the goods is
transferred from the seller to the buyer, the contract is called a ‘sale’, but where the transfer of
the property in the goods is to take place at a future time or subject to some conditions
thereafter to be fulfilled, the contract is called an ‘agreement to sell’ [Sec. 4(3)]. An agreement to
sell becomes a sale when time elapses or the conditions, subject to which the property in the
goods is to be transferred are fulfilled [Sec. 4(4)].

ESSENTIAL ELEMENTS OF A CONTRACT OF SALE

Two parties: there must be 2 distinct parties i.e. a buyer and a seller, to affect a contract of sale
and they must be competent to contract. ‘Buyer’ means a person who buys or agrees to buy
goods [Sec. 2(1)]. ‘Seller’ means a person who sells or agrees to sell goods [Sec. (13)].

Goods: there must be some goods the property in which is or is to be transferred from the seller
to the buyer. The goods which form the subject-matter of the contract of sale must be movable.
Transfer of immovable property is not regulated by the Sale of Goods Act.

Price: Price is an essential ingredient for all transactions of sale and in the absence of the price
or the consideration, the transfer is not regarded as a sale. The transfer by way of sale must be
in exchange for a price. It has been held that price normally means money. The price can be
paid fully in cash or it can be partly paid and partly promised to be paid in future. The price can
be fixed by the agreement between the parties before the conveyance of the property

Transfer of general property: There must be a transfer of general property as distinguishes from
special property in goods from the seller to the buyer. For e.g. if A owns certain goods he has
general property in the goods. If he pledges them with B, B has special property in the goods.

Essential elements of a valid contract: All essential elements of a valid contract must be present
in the contract of sale.

13. Discuss a case law against Misleading Advertisement.

Answer- Ashok Ramniklal Tolat, a seventy-year-old man with a passion for driving, wanted to
buy a sports-utility vehicle (SUV) to make his dream trips to Ladakh, Kashmir and Nepal with his
wife. Impressed by Chevrolet Forester’s tagline, An SUV to beat all SUVs, he bought the
vehicle. He paid Rs 14 lakh and spent another Rs 2 lakh on it to prepare it for his travels. As it
turned out, within a few months the rains began in Mumbai and the supposed offroader refused
to wade through the water. It was then that Tolat doubted his vehicle’s capabilities – specifically
the all-terrain capabilities that the company brochure and ads had claimed. Another surprise
was in store: a service engineer showed Tolat the car manual in which it was clearly stated that
the vehicle was a ‘passenger car’.

Aggrieved, Tolat decided to complain against the company and what followed was a three-year
battle between a battery of lawyers representing General Motors and Tolat, who never hired a
lawyer.

THE CASE OPENS AT DISTRICT FORUM

Tolat filed a complaint at the district forum, Ahmedabad. His complaint included the copy of the
advertisement that he said influenced him into buying the vehicle in question. The attractive part
of the advertisement read thus: Introducing a world without borders, an SUV to beat all SUVs.
That's the new Chevrolet Forester. With the Power of 120 horses under its borne unique
All-Wheels (AWD), unmatched comfort and luxury by-road, off-road or no- road.

Tolat stated that he had visited the agents of the appellant and was given a book titled ‘For a
special journey called life’. He was assured that the vehicle offered for sale would help him
realise his dream. The brochure also assured that ‘the vehicle in question is an SUV to end all
SUVs’ and that it ‘will put the four corners of the earth within your reach… get you there in
unmatched comfort, by road, off-road or no road.’ He was also given a visual presentation of the
vehicle and a copy of the VCD. All these documents were shared with the district forum.

Tolat shared all purchase details and related documents with the forum, including the receipts of
the accessories worth Rs 191,295 that he had got fitted as well as vehicle insurance and
registration details. Tolat’s appeal to the court read: ‘…this Hon'ble Forum be pleased to hold
that the opposite parties (joint and severally) have practiced unfair trade practice, towards the
complainant and direct them (jointly and severally) to remove unfair trade practice, practised by
them against the complainant.’

The district consumer forum ordered in favour of complainant and directed the opposite parties
(jointly and severally) to refund the complainant a sum of Rs 14 lakh and Rs 191,295 (spent on
accessories) along with 18 per cent interest, from the date of payment to the complainant. The
company was asked to take the vehicle (which was parked at the company’s service centre
throughout the duration of the case) back from the complainant after refunding the money with
interest.

14. Discuss the manner of taking cognizance of PIL.

15. Discuss in brief the concept and ‘structure of an Organisation’.

16. Discuss in brief the structure and purpose of Consumer International (CI).
Answer- Consumer International (CI) is the only global voice for the consumers. CI is the world
confederation of consumer groups. It serves the consumers’ interest beyond the limits and
boundaries of the states. CI’s functions are transnational and trans boundary. It was established
in 1960 with its name as International Organization of Consumers Union (IOCU) by the national
consumer organizations who wanted to create cross border consumer campaigns and share
knowledge. The founder of IOCU was Elizabeth Schadee, who was the first director of United
Kingdom’s Consumer Associations. Later on, when the activities became wider and
membership increased, IOCU changed its name to Consumer International (CI) in 1995.
Purpose and objective of CI: The very slogan of CI is the “Global Voice of Consumers”. With its
member organizations, CI aims to build powerful international consumer movement to help,
protect and empower consumers everywhere. The central functions of CI are to meet the basic
rights of the consumers.
Beginning of Consumerism in the World: March 15,is celebrated as an international consumer
rights day. On March 15, 1962 former US president John F. Kennedy declared the consumers
rights for the first time. On this day, the former US president delivered his historic speech in the
Congress and outlined his vision of consumer rights. Therefore March 15, 1962 is considered as
the day of the beginning of consumerism in the world. In his historic speech, President John F.
Kennedy outlined his vision of consumer rights .He stated that consumer by definition include us
all. They are the largest economic group, affecting and affected by almost every public and
private economic decisions. Yet they are the only important group, whose views are not often
heard. In this speech the former president extolled four basic rights of the consumer. These
basic rights came to be known as Consumer Bill of Rights.

Structure of CI
CI consists of the organs which are discussed herein under.
a) The General Assembly
The General Assembly consists of the full members of CI. Normally it holds a general meeting in
every three years.
b) The Council
The Council is made up of those members who are directors of CI. The Council meets at least
once within seven days prior to the meeting of the General Assembly and at least once
subsequent to the meeting of the General Assembly.
c) The Executive
The Executive consists of the following officers of CI;
The President
The Vice President
An Honorary Secretary
An Honorary Treasurer
Up to four members of the Council nominated by the officers and appointed by the Council.
The Executive meets at such times as it decides or at least twice a year.
d) Such working parties or committees as may from time to time be established under
provisions of the articles of CI.