Who is a consumer?

A consumer is the one who purchases the product for his/her own
need and uses or consumes it.A consumer is one who is the decision
maker whether or not to buy an item at the store, or someone who is
influenced by advertisement and marketing. Every time someone
goes to a store and buys a shirt, toy, beverage or anything else, they
make a decision as a consumer. Consumer refers to any person who
purchases some goods for a consideration that has been either paid
or promised to pay or partly paid and partly promised.
A consumer cannot resell the good, product or service but can
consume it to earn his/her livelihood and self-employment. Any
single or group of person, other than the buyer who buys the
product or services, consumes the product by seeking his/her
permission falls under the category of a consumer. In simpler words,
the consumer can be termed as the end-user of the goods or
services.

Types of consumer
A service or product producing firm have to identify and classify the
different type of consumers when they target them with its product
to gain profits. Listed below are the different types of consumers

 Commercial Consumer- These type of consumers buy goods in

large quantity, not sure if they need the product or not. Also,
sometimes they associate special needs with their purchase
orders.
 Discretionary Spending Consumers- These type of consumers
have unique buying habits. Usually, they purchase a lot of
clothes and electronic gadgets.
 Extroverted Consumer- These type of consumers prefer brands
that are unique and become a loyal consumer once they gain
that trust as a customer for the brand.
 Inferior Goods Consumer- These types of consumers have low-
income and buy goods having low price.
 Importance of Consumer Protection from Businessmen’s point
of View!
 An analysis of marketing management has made it clear that
consumer is a king pin in the market. The producer should
produce goods keeping in mind the requirements of consumers
and satisfy the consumer but it is observed that this obligation
is neglected by some businessmen and they are involved in the
unfair practices such as supply of substandard quality,
adulteration etc. So there is need for consumer protection.
Hence consumer protection means protecting the interest of
consumer.

Consumer protection is very wide. It includes rights,

responsibilities and various remedies available to consumers. It
is not only beneficial for consumer but it is equally important
for businessmen also.

 1. Consumer Ignorance:
 Consumer protection provides information to the ignorant
customers regarding rights and remedies available to them. It
spreads awareness so that consumer can know about the
various redressal agencies where they can approach to protect
their interests.
 2. Unorganized Consumers:
 In developing countries like India, consumers are not organised.
There are very few consumer organisations which are working
to protect the interests of consumers. Consumer’s protection
encourages establishment of more consumer organisations.
Consumer protection provides power and rights to these
 organisations as these organisations can file case behalf of
customers.
 3. Widespread Exploitation of Consumers
 Although nowadays consumer is the king pin of market but
then also there is lot of exploitation of consumers as
businessmen use various unfair trade practices to cheat and
exploit consumers. Consumer protection provides safeguard to
consumers from such exploitation.
 Importance of Consumer Protection from Businessmen’s point
of View:
 Businessmen cannot survive for a long time by ignoring the
interest of consumer. They have to give due importance to
consumer if they want to prosper in competitive market.
Consumer protection provides following benefits to
businessmen:
 1. Long Term Interest of Business:
 After the liberalisation and globalisation the level of
competition has increased so much that not only internal but
business has to face international competition. In the race of
competition the businessmen can win and capture a big share
in the market only when they are able to satisfy its customers
by designing the products keeping in mind the requirements of
customers.
 The businessmen who ignore the interest and satisfaction of
customers lose their goodwill and clients. So it is in interest of
business itself to keep its customers satisfied.
 2. Businessman Uses Society’s Resources:
 Businessmen use the resources of society. They earn profit by
supplying goods and services to the members of society so it
 must do something for society. Businessmen are merely trustee
of resources; they must use these resources for the benefits of
consumers.
 3. Social Responsibilities:
 A businessman has social obligations towards various groups
and customer is one of the important groups. It is responsibility
of businessmen to provide quality goods at reasonable price.
Consumer protection guides businessmen to provide social
responsibilities.
 4. Moral/Ethical Justification:
 Traditionally ethics was part of profession only, but today
ethics is playing very important role in business also. The ethics
or a moral value practiced by the businessmen adds glory to
businessmen. In today’s environment business without ethical
value is not more than a criminal activity and no civil society
can tolerate and allow the existence of unethical business.
 5. Government Intervention:
 If businessmen want to avoid intervention of government then
they should not involve in unfair trade practices. Government
intervention may spoil the image of business. Businessmen
should voluntarily involve in the activities which protect the
interest of consumer.

6. Consumer is the Purpose of Business:

The basic purpose of business is to create more and more customers
and retain them and businessmen can create more customers only
by satisfying the customers and protecting the interest of consumer.
The customer is the foundation of business.
Consumer Protection Act 1986
The industrial revolution and the development in the
international trade and commerce has led to the vast expansion of
business and trade, as a result of which a variety of consumer goods
have appeared in the market to cater to the needs of the consumers
and a host of services have been made available to the consumers
like insurance, transport, electricity, housing, entertainment, finance
and banking. A well organised sector of manufacturers and traders
with better knowledge of markets has come into existence, thereby
affecting the relationship between the traders and the consumers
making the principle of consumer sovereignty almost inapplicable.
The advertisements of goods and services in television, newspapers
and magazines influence the demand for the same by the consumers
though there may be manufacturing defects or imperfections or
short comings in the quality, quantity and the purity of the goods or
there may be deficiency in the services rendered. In addition, the
production of the same item by many firms has led the consumers,
who have little time to make a selection, to think before they can
purchase the best. For the welfare of the public, the glut of
adulterated and sub-standard articles in the market have to be
checked. In spite of various provisions providing protection to the
consumer and providing for stringent action against adulterated and
sub-standard articles in the different enactments like Code of Civil
Procedure, 1908, the Indian Contract Act, 1872, the Sale of Goods
Act, 1930, the Indian Penal Code, 1860, the Standards of Weights
and Measures Act, 1976 and the Motor Vehicles Act, 1988, very little
could be achieved in the field of Consumer Protection. Though the
Monopolies and Restrictive Trade Practices Act, 1969 arid the
Prevention of Food Adulteration Act, 1954 have provided relief to
the consumers yet it became necessary to protect the consumers
from the exploitation and to save them from adulterated and sub-
standard goods and services and to safe guard the interests of the
consumers. In order to provide for better protection of the interests
of the consumer the Consumer Protection Bill, 1986 was introduced
in the Lok Sabha on 5th December, 1986. 
 
STATEMENT OF OBJECTS AND REASONS 
The Consumer Protection Bill, 1986 seeks to provide for better
protection of the interests of consumers and for the purpose, to
make provision for the establishment of Consumer councils and
other authorities for the settlement of consumer disputes and for
matter connected therewith.
2. It seeks, inter alia, to promote and protect the rights of
consumers such as-
 
(a)       the right to be protected against marketing of goods
which are hazardous to life and property;
(b)       the right to be informed about the quality, quantity,
potency, purity, standard and price of goods to protect
the consumer against unfair trade practices;
(c)        the right to be assured, wherever possible, access to an
authority of goods at competitive prices;
(d)       the right to be heard and to be assured that consumers
interests will receive due consideration at appropriate
forums;
(e)       the right to seek redressal against unfair trade practices
or unscrupulous exploitation of consumers; and
(f)        right to consumer education.
 
3. These objects are sought to be promoted and protected by
the Consumer Protection Council to be established at the Central and
State level.
4. To provide speedy and simple redressal to consumer
disputes, a quasi-judicial machinery is sought to be setup at the
district, State and Central levels. These quasi-judicial bodies will
observe the principles of natural justice and have been empowered
to give relief of a specific nature and to award, wherever
appropriate, compensation to consumers. Penalties for
noncompliance of the orders given by the quasi-judicial bodies have
also been provided.
5. The Bill seeks to achieve the above objects.
 

Consumer Protection Act 2019

 The Consumer Protection Bill, 2019 was introduced in Lok
Sabha by the Minister of Consumer Affairs, Food and Public
Distribution, Mr. Ram Vilas Paswan on July 8, 2019. The Bill
replaces the Consumer Protection Act, 1986.  Key features of
the Bill include:
 
 Definition of consumer: A consumer is defined as a person who
buys any good or avails a service for a consideration.  It does
not include a person who obtains a good for resale or a good or
service for commercial purpose.  It covers transactions through
all modes including offline, and online through electronic
means, teleshopping, multi-level marketing or direct selling.
 
 Rights of consumers: Six consumer rights have been defined in
the Bill, including the right to: (i) be protected against
marketing of goods and services which are hazardous to life
and property; (ii) be informed of the quality, quantity, potency,
purity, standard and price of goods or services; (iii) be assured
of access to a variety of goods or services at competitive prices;
and (iv) seek redressal against unfair or restrictive trade
practices.
 
 Central Consumer Protection Authority: The central
government will set up a Central Consumer Protection
 Authority (CCPA) to promote, protect and enforce the rights of
consumers.  It will regulate matters related to violation of
consumer rights, unfair trade practices, and misleading
advertisements.  The CCPA will have an investigation wing,
headed by a Director-General, which may conduct inquiry or
investigation into such violations.
 
 CCPA will carry out the following functions, including:
(i) inquiring into violations of consumer rights, investigating and
launching prosecution at the appropriate forum; (ii) passing
orders to recall goods or withdraw services that are hazardous,
reimbursement of the price paid, and discontinuation of the
unfair trade practices, as defined in the Bill; (iii) issuing
directions to the concerned trader/ manufacturer/ endorser/
advertiser/ publisher to either discontinue a false or misleading
advertisement, or modify it; (iv) imposing penalties, and; (v)
issuing safety notices to consumers against unsafe goods and
services.
 
 Penalties for misleading advertisement: The CCPA may impose
a penalty on a manufacturer or an endorser of up to Rs 10 lakh
and imprisonment for up to two years for a false or misleading
advertisement.  In case of a subsequent offence, the fine may
extend to Rs 50 lakh and imprisonment of up to five years.
 
 CCPA can also prohibit the endorser of a misleading
advertisement from endorsing that particular product or
service for a period of up to one year. For every subsequent
offence, the period of prohibition may extend to three years. 
However, there are certain exceptions when an endorser will
not be held liable

For such a penalty.

 
  Consumer Disputes Redressal Commission: Consumer Disputes
Redressal Commissions (CDRCs) will be set up at the district,
state, and national levels.  A consumer can file a complaint with
CDRCs in relation to: (i) unfair or restrictive trade practices; (ii)
defective goods or services; (iii) overcharging or deceptive
charging; and (iv) the offering of goods or services for sale
which may be hazardous to life and safety.  Complaints against
an unfair contract can be filed with only the State and
National   Appeals from a District CDRC will be heard by the
State CDRC.  Appeals from the State CDRC will be heard by the
National CDRC.  Final appeal will lie before the Supreme Court.
 
 Jurisdiction of CDRCs: The District CDRC will entertain
complaints where value of goods and services does not exceed
Rs one crore.  The State CDRC will entertain complaints when
the value is more than Rs one crore but does not exceed Rs 10
crore.  Complaints with value of goods and services over Rs 10
crore will be entertained by the National CDRC.
 
 Product liability: Product liability means the liability of a
product manufacturer, service provider or seller to compensate
a consumer for any harm or injury caused by a defective good
or deficient service.  To claim compensation, a consumer has to
prove any one of the conditions for defect or deficiency, as
given in the Bill.

KEY POINTS OLD ACT NEW ACT

PECUNIARY District forum (upto 20 lacs) State District forum (upto 1 crore)State commission
JURISDICTION commission (from 20 lacs to 1 (from 1 crore to 10 crore)National commission
 crore)National commission (from
1 crore and above) (from 10 crore and above)

MRP/PURCHASE Earlier MRP was a criteria to Now discounted price/ actual purchase price
PRICE decide pecuniary jurisdiction is criteria

TERRITORIAL
JURISDICTION Where seller has office Where complainant resides or works

Central Consumer protection authority to be

REGULATOR No such provision formed

Court can refer for settlement through

MEDIATION No such provision mediation (Section 80)

Earlier 30 days period for appeal

against the order of District
forum (Section 15)Earlier 50% or
25,000 whichever is less is to be Now it is 45 days (Section 41)Now 50% of
APPEAL deposited award amount

Now all provision applicable to direct seller

E-COMMERCE Earlier no specific mention has been extended to e-commerce

Earlier DCF did not have the

REVIEW power to review Now DCF has power to review

Section 49(2) and 59(2) of the new act gives

power to the State Commission and NCDRC
respectively to declare any terms of contract,
UNFAIR TERMS which is unfair to any consumer, to be null
AND CONDITIONS No such provision and void

District consumer forumState

consumer forumNational
Consumer Dispute Redressal District commissionState commissionNational
AUTHORITY Commission Consumer Dispute Redressal Commission

COMPOSITION OF
STATE
COMMISSION President and 2 other members President and 4 other members

Consumer Cases
CASE 1

New India Assurance Company Limited v Abhilash Jewellery [III

(2009) CPJ 2 (SC)]

Date of Decision: 22.01.2009

The complainant/respondent, who had taken a jeweller's block
policy, lodged a claim with the opposite party insurer for loss of gold
ornaments. The insurer repudiated the claim on the ground that the
loss occurred when the gold was in the custody of an apprentice,
who was not an employee (because the policy stipulated that for
indemnification of the loss, the property insured had to be "in the
custody of the insured, his partner or his employee"). The National
Commission allowed the complaint holding that an apprentice was
an 'employee' since section 2(6) of the Kerala Shops and Commercial
Establishments Act (as well as some other statutes) defined an
'employee' to include an 'apprentice'. The Supreme Court, however,
held that the word 'employee' in the contract of insurance
mentioned had to be given the meaning in common parlance. The
definition in the local Act, including an 'apprentice' in the category of
'employee', was only a 'legal fiction', which is a concept in law and
could not be applied to an insurance contract. The Court, therefore,
allowed the appeal.

RIGHT VIOLATED: Right to be Informed was violated in this case

because the accused did not disclose all the true information to the
complainant insurance company.

REDRESSAL MECHANISM: The National Commission.

OUTCOME: The employee was charged with extremely careless

behaviour and a penalty was levied.

CASE 2
HDFC Bank Limited v Balwinder Singh [III (2009) CPJ 40 (NC)]

Date of Decision: 16.03.2009

The complaint was of the bank, or its loan recovery agent, employing
musclemen to take forcible repossession of the hypothecated vehicle
and thus causing physical harassment and mental trauma to the
complainant. The District Forum allowed the complaint and directed
the bank to pay compensation of Rs. 4 lakh for repossessing the
vehicle in this manner and reselling it to a third party. The State
Commission confirmed the order in appeal. Dealing with the bank's
revision petition, the National Commission expressed shock that the
bank had hired musclemen directly or through its recovery agents to
recover the loan/repossess the vehicle. The Commission also
referred to the State Commission's order, which had observed that
the alleged letter produced by the bank purporting to the
complainant voluntarily handing over possession of the vehicle was
unreliable and that no notice was given to the complainant at the
stages of repossession and sale of vehicle. In dismissing the petition,
the Commission relied upon its judgment in Citicorp Maruti Finance
Limited v S. Vijayalaxmi [III (2007) CPJ 161 (NC)] where it had strongly
deprecated such practices.

RIGHT VIOLATED: The Right to Choose and the Right to Seek

Redressal were violated in this case as the bank’s officers did not give
the complainant a choice and used show of physical force when the
complainant tried to seek redressal.

REDRESSAL MECHANISM: The District Forum and The State

Commission.

OUTCOME: The Commission dismissed the petition and awarded

Rs.25,000/- as exemplary costs in this case.

CASE 3
Malka Tarannum v Dr. C. P. Gupta [III (2009) CPJ 49 (NC)]

Date of Decision: 20.04.2009

The District Forum allowed the complaint of the complainant that
there was negligence in applying (the first) plaster cast on the
complainant's daughter's fractured hand, which led to the need to
apply the plaster for the second time. In appeal, the State
Commission dismissed the complaint and also held that the
complainant was not a consumer since he was not charged any fee
for the treatment. In revision, the National Commission held that
application of the plaster for the second time did not imply medical
negligence on the first occasion since application of POP slab (also
known as temporary cast) was a normal procedure adopted in the
first instance whenever there was swelling at the site of the injury.
Relying on the Supreme Court decision in Jacob Mathew v State of
Punjab and Another [(2005) 6 SCC 1], the Commission observed that
the doctor who had applied the plaster in the first instance was a
senior orthopaedic specialist with considerable experience and the
complainant could not dispute his professional decision on the basis
of mere allegations, without any expert evidence. The Commission
also rejected the complainant's husband's contention that he was a
consumer since he was covered by the Supreme Court decision
in Laxman Thamappa Kotgiri v G.M., Central Railway and
Others and that receiving free medical treatment was part of the
terms and conditions of his service. It held that the complainant took
no such plea before the Fora below and no evidence was produced.
RIGHT VIOLATED: According to the complainant, the Right to Safety
was violated in this case but it was later decided by the court that no
right was violated because the complainant was not able to produce
substantial evidence to prove the other party guilty.

REDRESSAL MECHANISM: The District Forum and The National

Commission.
OUTCOME: The complainant lost the case due to lack of evidence.

CASE 4
Medical Superintendent, St. Gregorious Mission Hospital v Jessy and
Another [III (2009) CPJ 61 (NC)]

Date of Decision: 04.05.2009

The District Forum awarded Rs. 2.75 lakh along with interest to the
complainants, viz., the wife and daughter of the deceased since the
opposite party hospital had been negligent in not providing due care
on account whereof the deceased who was undergoing alcoholic
psychosis treatment for de-addiction of drugs, had committed
suicide by hanging in the hospital. In its revision petition, the hospital
contended that it was impossible to provide 24-hour service to look
after the affairs and needs of each patient. The National Commission
held that the patient was allowed to move away on his own from his
ward into an empty ward without being noticed by the nurses and
ward boys. The patient hung himself with lungi which was not
noticed by the staff but the co- patients. As per the hospital's own
evaluation, the hospital staff should have taken extra care to deal
with such a patient but the required degree of care was not
exhibited. The Commission relied upon the Supreme Court judgment
in M.S. Grewal v Deep Chand Sood [II (2001) ACC 540 (SC)] and held
there was negligence. Relying upon cross-examination of the Medical
Superintendent, the Commission held that the complainant wife was
not instructed to be continuously with her husband as alleged and
that the instruction in the Nurses Daily Record, being in a different
ink, was a manipulation.
RIGHT VIOLATED: The Right to Safety was violated in this case
because the Doctors and Hospital Staff did not take care of the
patient and were negligent resulting in the patient committing
suicide.

REDRESSAL MECHANISM: The District Forum and The National

Commission.

OUTCOME: Proper evidence was produced from the complainant’s

side and was rewarded Rs.2,75,000.

CASE 5
Sehgal School of Competition v Dalbir Singh [III (2009) CPJ 33 (NC)]

Date of Decision: 30.04.2009

The complainant sought refund from the opposite party's coaching
school after only one year of the two-year course on the ground that
the coaching was not up to the mark. The District Forum directed
refund of the fees and the opposite party's appeal was dismissed. In
revision, the petitioner contended that payment of lump sum fees
for two years was a condition (of the contract) that and no part of
the fees could either be refunded or transferred under any
circumstances. The Commission held that this condition was one
sided and biased in favour of the opposite party, against natural
justice and not a fair trade practice. The Commission also rejected
the opposite party's plea that in Homeopathic Medical College and
Hospital, Chandigarh v Miss Gunita Virk [I (1996) CPJ 37 (NC)] it was
held that Consumer Fora did not have jurisdiction to declare any rule
in the prospectus of any institution as unconscionable or illegal.
Referring to its recent decision in Nipun Nagar v. Symbiosis Institute
of International Business [I (2009) CPJ 3 (NC)], it observed that the
Commission had held that (under certain circumstances) it was
unjust to collect fees for the total period of the course and dismissed
the petition.
RIGHT VIOLATED: The Right to be Informed was violated in this case
because the complainant was not informed about the terms and
conditions of the institution’s fee policy.

REDRESSAL MECHANISM: The District Forum.

OUTCOME: The fee was refunded to the complainant.