COS5407CM

ECONOMIC AND
COMMERCIAL LAW - II
 Consumer Protection Act
Enacted by the Parliament in 1986 came into force on
1/July 1987.
The main objectives of the Act are to provide better and
all round protection to consumers and effective
safeguards against different types of exploitation such as
defective goods, deficient services and unfair trade
practices.
It also makes provisions for simple, speedy and
inexpensive machinery for redressal of consumer's
grievances
Act applies to whole of India except Jammu and Kashmir.
Totally VI chapters in the Act.
 Salient Features
• It applies to all goods, services and unfair trade
practices unless specifically exempted by the
Central Government.
• It covers all sectors-private, public or co-operative.
• It provides for establishment of consumer
protection councils at the central, state and district
levels to promote and protect the rights of
consumers and a three-tier quasi-judicial machinery
to deal with consumer's grievances and disputes.
• It provides a statutory recognition to the six rights
of consumers.
 Chapter – I Definitions
“Appropriate laboratory” means
i) recognized by the Central Government or by the
State Government, under the guidelines of the
Central Government; or
ii) any such laboratory or organization established by
or under any law for the time being in force, which is
maintained, financed by the Central Government or a
State Government for carrying out analysis or test of
any goods with a view to determining whether such
goods suffer from any defect;
“Complainant” means— One who makes a compliant
i) a consumer;
ii) any voluntary consumer association registered
under the Companies Act, 1956 or under any other
law for the time being in force;
iii) the Central Government or any State Government,
who or which makes a complaint;
iv) one or more consumers, where there are numerous
consumers having the same interest;
v) in case of death of a consumer, his legal heir or
representative;
“complaint” means - any allegation (claim / charge) in
writing made by a complainant that:
i) an unfair trade practice or a restrictive trade
practice has been adopted by any trader or service
provider;
ii)the goods bought by him or agreed to be bought by
him suffer from one or more defects;
iii) the services hired or availed of or agreed to be
hired or availed of by him suffer from deficiency in any
respect;
iv) a trader or the service provider, as the case may
be, has charged for the goods or for the services
mentioned in the complaint, a price in excess of
the price:
a) fixed by or under any law for the time being in
force;
b) displayed on the goods or any package
containing such goods;
c) displayed on the price list exhibited by him by
or under any law for the time being in force;
d) agreed between the parties;
v) goods/service which will be hazardous to life and
safety when used are being offered for sale to the
public:
a) in contravention of any standards relating to
safety of such goods as required to be complied with,
by or under any law for the time being in force;
(b) if the trader could have known with due
diligence that the goods so offered are unsafe to the
public;
with a view to obtaining any relief provided by or
under this Act;
“consumer dispute” means a dispute where the
person against whom a complaint has been
made;
“defect/deficiency” means any fault, imperfection
or shortcoming in the quality, quantity, potency,
purity or standard which is required to be
maintained by or under any law for the time
being in force or under any contract, express or
implied as is claimed by the trader in any manner
whatsoever in relation to any goods/service;
“manufacturer” means a person who—
i) makes or manufactures any goods or parts; or
ii) does not make or manufacture any goods but
assembles parts thereof made or manufactured by
others; or
(iii) puts or causes to be put his own mark on any
goods made or manufactured by any other
manufacturer;
BUT
any goods or part to any branch office maintained by
manufacturer, such branch office shall not be deemed
to be the manufacturer even though the parts so
dispatched at such branch office.
“person”(self)
“restrictive trade practice” means a trade practice
which bring about exploitation of price or to affect
flow of supplies in the market relating to goods or
services in such a manner as to impose on the
consumers unjutified costs or restrictions
“service” means banking, financing, insurance,
transport, processing, supply of electrical or other
energy, board or lodging or both, housing
construction, entertainment, amusement but does
not include the rendering of any service free of charge
or under a contract of personal service;
Illustrations of Restrictive Trade Practices:
• A trader accumulates his stock of food grains in
order to increase the price of the grains in the
market so that he can sell it at a higher price.
• In order to buy a television from trader X, one
needs to buy a table first.
“Unfair trade practice” means
An unfair trade practice refers to that malpractice of a
trader that is unethical or fraudulent.
These practices cause an inconvenience or grievance
to consumers.
it is a trade practice carried out for the promotion of
sale.
It is the distribution or utilisation of any good or
service by adopt a misleading method or practice.
The following practices fall under unfair trade
practice:
1. An oral or written statement or visible
representation that:
– Falsely represents a good or service to be of a
particular standard, quality, grade and so on.
– Falsely represents any re-built, second-hand,
reconditioned, renovated or old goods as new.
– Represents that a good or service has sponsorship,
approval, uses, benefits and so on which they do
not have. The same could apply to the seller or
service provider.
– Makes a misleading or false representation
regarding the need and usefulness of any good or
service.
– Provides to the public any warranty or guarantee of
the performance of the length of the life of the
product. A service can be continued till deemed
satisfactory.
– Gives a misleading image of the good, service or
trade like the price of the product.
For the above clauses, any statement made via
expression by sellers on the wrapper or container of
the item can qualify for unfair trade practice. The
information of the product is also placed inside the
item.
2. An advertisement published in any newspaper or
other means of communication to the general
public may also result in unfair trade practice if the
price communicated is misleading or a bargain
price. This means that an unfair trade practice
would be when a normal individual on reading,
hearing or seeing the advertisement would think to
be a bargain price as compared to the product’s
ordinary sale price.
3. Wrongful or deceitful permissions or expressions
like:
– Offer gifts, prizes and so on without any intention of
actually fulfill the expression.
– Put across a product as free of charge when it is
actually not as the cost is being covered partly or
wholly in the transaction amount.
– Conduct games of chance or skill like the lottery in
order to promote a particular product directly or
indirectly.
– Not grant participants of a scheme their prize by
close the information about the final results of the
scheme.
4. Allow the sale of products, have reason to believe
that the product is not up to the standards of a
competent authority. This could be in terms of
design, contents, packaging, etc.
5. Permit the hoarding or destruction of products with
the intention of raising the prices of the goods.
Illustrations of Unfair Trade Practices:
• A dress has been used for 2 months and is now
being sold by a seller as a new dress.
• The battery of a mobile phone is guaranteed to
work well for one year but show offs away in a
month.
• A product that is not ISI approved has an ISI mark.
• A headset of Rs. 800/- is sold online with Rs. 900
delivery charge, but the good is claimed by the
seller to be free of cost.
 Unfair Trade Practice Vs. Restrictive Trade
Practice
• An unfair trade practice is the
deceitful and misleading
representation of goods and
services which shows a false
image of the product.
Information regarding utility,
quality and standard, style of
goods and services may be
twisted under this practice.
• when traders try to
change the flow of money
in the market in order to
maximize their profits and
to gain an upper hand in
the market competition.
Here, independent sellers
hike their collective
profits by limits the
supply by controls sales
prices or the prices of
purchased inputs.