LEGAL ASPECTS

OF BUSINESS
Dr. Shachi Yadav
 Consumer Protection Act,
2019
• Consumer Protection Act, 2019 is an Act of
the Parliament of India. It repeals and replaces
the Consumer Protection Act, 1986.
• The Consumer Protection Bill, 2019 was introduced in
the Lok Sabha on 8 July 2019 by the Minister of
Consumer Affairs, Food and Public Distribution, Ram
Vilas Paswan. It was passed by Lok Sabha on 30 July
2019 and later passed in Rajya Sabha on 6 August
2019.
• The bill received assent from President Ram Nath
Kovind on 9 August, and was notified in The Gazette of
India on the same date. The Act is expected to come into
effect by November 2019. 2
Difference Between CPA 1986
and CPA 2019

3
 Today’s Discussion:

• Background of consumer protection in

India.

• The Consumer Protection Act ,1986 and

it’s Provisions.

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 Laws Protecting Consumer Interests
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Some of the laws which were passed during
the British regime concerning consumer
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interests are:
• The Indian Contract Act of 1872,
• The Sale of Goods Act of 1930,
• The Indian Penal Code of 1860,
• The Drugs and Cosmetics Act of 1940,
• The Usurious Loans Act of 1918, and the
Agriculture Procedure (Grading and
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Marketing Act) of 1937.
 Laws Protecting Consumer Interests
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For a long time, the Sale of Goods Act of
1930 [SGA] was the exclusive source of
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consumer protection in India.

The SGA was the exclusive consumer

legislation until 1986, with the passage of
the Consumer Protection Act of 1986,
designed to supplement the remedies
already provided under the SGA.
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 Laws Protecting Consumer Interests
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Consumer protection was also provided
within India’s criminal justice system. The
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Indian Penal Code of 1860 has a number of

provisions to deal with crimes against
consumers.
It deals with offenses related to the use of
false weights and measures, the sale of
adulterated food or drinks, the sale of
noxious food or drink, and the sale of
adulterated drugs.
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 Consumer protection legislation
enacted after India’s independence
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Consumer protection legislation enacted

after India’s independence from Britain
include:
• The Essential Commodities Act of 1955,
• The Prevention of Food Adulteration Act
of 1954 and
• The Standard of Weights and Measures Act
of 1976.
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 The Consumer Protection Act ,1986
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The Indian legal system experienced a
revolution with the enactment of the
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Consumer Protection Act of 1986 [“CPA”],

which was specifically deigned to protect
consumer interests. The CPA was passed
with the following objectives.
It is intended to provide justice which is
“less formal, [and involves] less paper
work, less delay and less [expense]”.
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 The Consumer Protection Act ,1986
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However, the CPA simply gives a new
dimension to rights that have been
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recognized and protected since the ancient

period.
It is rightly said that “the present-day
concern for consumer rights . . . is not new
and that consumer’s rights like the right to
have safe, un-adulterated and defect-free
commodities at appropriate prices has been
recognized since ancient times.”
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 Objects of the Act
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• To provide for better protection of
interest of consumers.
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• To make provisions for the establishment

of Consumer Councils and other
authorities for the settlement of
consumer disputes.

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 CHAPTER 1(Sec 1-3) – PRELIMINARY:
1. Short title, extent, commencement and
application.—

(1 ) This Act may be called the Consumer Protection Act, 1986.

(2) It extends to the whole of India except the State of Jammu and
Kashmir.

(3) It shall come into force on such date as the Central Government
may, by notification, appoint and different dates may be appointed
for different States and for different provisions of this Act.

4) Save as otherwise expressly provided by the Central Government by

notification, this Act shall apply to all goods and services.

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 Sec 2: Definitions
• Consumer is one who

– Buys any goods for a consideration and

includes a hire-purchaser;
– Any user of such goods for consideration but
excludes one, who obtains for re-sale or for
commercial purposes;
– Hires a service for consideration and includes
a beneficiary of such service, if availed of
with the approval of the hirer.
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 CASE
• Raman bought an electric iron for using it at
home for his family. In the first use itself, while
his wife Rima was using it, there was a spark
from the iron, injuring Rima.

Is Raman a consumer? Is Rima a consumer?

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 CASE
• Anand runs a laundry shop. He bought a washing
machine from an electronics shop for using in
his shop. The machine was installed in his shop.
The machine was defective from the time it was
delivered.

Is Anand a consumer?

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 JUDGEMENT: SUPREME COURT
• The explanation reduces the question, what is a
"commercial purpose", to a question of fact to
be decided in the facts of each case. It is not
the value of the goods that matters but the
purpose to which the goods bought are put to.
The several words employed in the explanation,
viz., "uses them by himself", "exclusively for the
purpose of earning his livelihood" and "by means
of self-employment" make the intention of
Parliament abundantly clear, that the goods
bought must be used by the buyer himself, by
employing himself for earning his livelihood. …
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 Cont…
• A person who purchases an auto-rickshaw to ply
it himself on hire for earning his livelihood
would be a consumer. Similarly, a purchaser of
a truck who purchases it for plying it as a public
carrier by himself would be a consumer. A
person who purchases a lathe machine or other
machine to operate it himself for earning his
livelihood would be a consumer.

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 Cont…
• As against this a person who purchases an auto-
rickshaw, a car or a lathe machine or other
machine to be plied or operated exclusively by
another person would not be a consumer. This is
the necessary limitation flowing from the
expressions "used by him", and "by means of
self-employment" in the explanation. The
ambiguity in the meaning of the words "for the
purpose of earning his livelihood" is explained
and clarified by the other two sets of words.

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 Deficiency - Service
• ‘Deficiency’ means
– a fault, imperfection, shortcoming or inadequacy in
quality, nature, or manner of performance than is
required.
• ‘Service’ includes
– service in connection with banking, financing,
insurance, transport, processing, supply of electrical
and other energy, boarding or lodging, housing
construction, entertainment, amusement or
purveying of news and other information
– but does not include any service free of charge or
under a personal contract.

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 What is a Complaint?
• An allegation in writing by a complainant that:

– An unfair or restrictive trade practice is practiced by

trader or service provider

– Goods bought or to be bought or services hired or to

be hired suffered from any deficiency

– Trader or service provider has charged excess price

– Goods and services are hazardous or are likely to be

hazardous to life and safety.
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 Who is a complainant?
• A consumer
• Any voluntary consumer association registered
under the Companies Act or any other law
• Central or State Government, if it makes a
complaint
• One or more consumers having same interest
• In case of death of a consumer, his legal heir or
representative.

A Consumer Dispute arises when a

complaint is denied or disputed.
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 Unfair Trade Practice
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"unfair trade practice" means a trade practice
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which, for the purpose of promoting the sale, use
or supply of any goods or for the provision of any
service, adopts any unfair method or unfair or
deceptive practice.

(1) the practice of making any statement, whether

orally or in writing or by visible representation
which,
(i) falsely represents that the goods are of a
particular standard, quality, quantity, grade,
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 Unfair Trade Practice
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(ii) falsely represents that the services are
of a particular standard, quality or grade;
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(iii) falsely represents any re-built, second-

hand, renovated, reconditioned or old
goods as new goods;
(iv) represents that the goods or services
have sponsorship, approval, performance,
characteristics, accessories, uses or
benefits which such goods or services do
not have;
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 Unfair Trade Practice
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(v) represents that the seller or the supplier
has a sponsorship or approval or affiliation
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which such seller or supplier does not have;

(vi) makes a false or misleading representation
concerning the need for, or the usefulness of,
any goods or services;
(vii) gives to the public any warranty or
guarantee of the performance, efficacy or
length of life of a product or of any goods that
is not based on an adequate or proper test
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thereof;
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 Unfair Trade Practice
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(viii)makes to the public a representation in a
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form that purports to be—
(i) a warranty or guarantee of a product or of any
goods or services; or
(ii) a promise to replace, maintain or repair an
article or any part thereof or to repeat or
continue a service until it has achieved a specified
result, if such purported warranty or guarantee or
promise is materially misleading or if there is no
reasonable prospect that such warranty,
guarantee or promise will be carried out;
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 Unfair Trade Practice
(ix) materially misleads the public concerning the price at
which a product or like products or goods or services, have
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been or are, ordinarily sold or provided, and, for this

purpose, a representation as to price shall be deemed to
refer to the price at which the product or goods or
services has or have been sold by sellers or provided by
suppliers generally in the relevant market unless it is
clearly specified to be the price at which the product has
been sold or services have been provided by the person by
whom or on whose behalf the representation is made;

(x) gives false or misleading facts disparaging the goods,

services or trade of another person.
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 Restrictive Trade Practice
“restrictive trade practice” means a trade practice which
tends to bring about manipulation of price or conditions
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of delivery or to affect flow of supplies in the market

relating to goods or services in such a manner as to
impose on the consumers unjustified costs or restrictions
and shall include—
(a) delay beyond the period agreed to by a trader in
supply of such goods or in providing the services which
has led or is likely to lead to rise in the price;
(b) any trade practice which requires a consumer to buy,
hire or avail of any goods or, as the case may be, services
as condition precedent to buying, hiring or availing of
other goods or services;
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 Machinery under the Act

• Central Consumer Protection Council

– to be established by Central Government
• State Consumer Protection Council
– to be established by State Government
• District Consumer Protection Council
– to be established by State Government for
every district

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 Councils ( Chapter II)

Central Council

State Council

District Council

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# District State National

1 It shall consist of the It shall consist of the It shall consist of the

following members, following members,
following members, namely:- namely:-
namely:-
(a) the Minister in-charge (a) the Minister in charge
(a) the Collector of the of consumer affairs in of Consumer Affairs in
district (by whatever the SG as its the CG as its
Chairman; and Chairman, and
name called), as its
Chairman; and (b) such number of other (b) such number of other
official or non-official official or non-official
(b) such number of other members as may be members as may be
official and non-official prescribed by the prescribed.
State Government.
members as may be
prescribed by the SG
2 The District Council shall The State Council shall The Council shall meet at
meet at least twice in an meet at least twice in an least once an year.
year. year.
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3 The procedure will be set The procedure will be
 Objects of the Central Council.
• The objects of the Central Council shall be to promote
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and protect the rights of the consumers such as,—
(a) the right to be protected against the marketing of goods and
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services which are hazardous to life and property;

(b) the right to be informed about the quality, quantity, potency,
purity, standard and price of goods or services, as the case may
be so as to protect the consumer against unfair trade practices;
(c) the right to be assured, wherever possible, access to a variety
of goods and services at competitive prices;
(d) the right to be heard and to be assured that consumer's
interests will receive due consideration at appropriate forums;
(e) the right to seek redressal against unfair trade practices or
restrictive trade practices or unscrupulous exploitation of
consumers; and
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(f) the right to consumer education.
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 Consumer Dispute Redressal
Agency( Chapter III)

The aims and objectives of the Act are achieved by

District Forum

State Commission

National Commission.

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# District State National

1 President A person who is/ has A person who is or has A person who is/ has
been qualified to be been a Judge of a been a Judge of the
a District Judge as High Court, appointed Supreme Court, as its
its President. by the SG, as its President.
President.
2 Members In addition, two No less than two, and No less than 4 & no
other members. No more than such more than such no.
number of members, of members as may
as may be prescribed. be prescribed.
3 Mandatory One of the members One of the members One of the members
Member shall be a woman. shall be a woman. shall be a woman.
4 Term Term of 5 years or up Term of 5 years or up Term of 5 years or up
to the age of 65 years to the age of 67 years to the age of 70 years
which ever is earlier. which ever is earlier. which ever is earlier.
5 Jurisdiction Claims does not Claims exceeding Rs. Claims exceeding Rs.
Rights exceed Rs.20 Lakhs 20 Lacs but does not 1 Cr.
exceed Rs.1 Cr.
6 Appellate Appeals against the Appeals against the
orders of any District orders of any State
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Forum within the Commission
State
 A District Forum shall have the powers

I. To remove the defect pointed out by the appropriate

laboratory from the goods in question
II. To replace the goods with new goods of similar description
which shall be free from any defect
III. To return to the complainant the price, or as the case may
be, the charges paid by the complainant
IV. To pay such amount as may be awarded by it as
compensation to the consumer for any loss or injury
suffered by the consumer due to the negligence of the
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opposite party
 REFERENCES

Page 35

• Kautilya-The Arthashastra 385

(L.N.Rangarajan ed., Penguin books India,
1992)
• S.R.Bakshi, Advanced History of Medieval
India Vol. 1 287 (2003).
• The Consumer Protection Act, No. 68 of
1986; India Code (1986)

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 QUESTIONS??

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