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chapter

12
Consumer Protection
Banks Responsible for Failed
Transactions and No Cash in ATMs

In a landmark consumer forum judgement,


Learning Objectives now, if you do not get money from ATMs, it
would be considered as deficiency of services
After studying this chapter, on part of bank,.On May 4, 2017, a petition in
you should be able to: the Consumer Forum in Raipur was filed where
the complainant submitted photos and video
recording of three failed ATM transactions due
to non-availability of cash bank’s ATMs.
state the importance of con-
In front of the forum, the bank argued
sumer protection; that ATM runs with Internet connectivity, so
at the time when users use ATM, he/she is
not directly the bank client. Hence, if the said
briefly explain legal frame- money not withdrawn from the ATM, then it
work for consumer protec- cannot be termed as a deficiency in service.
tion in India; The forum rejected the bank’s logic
completely. The petitioner has presented
photo and video recording at the time of
withdrawal as evidence in front of forum.
describe consumer rights in
Forum acknowledged that the consumers at
India; various times go to ATM to withdrawn money
every time the message of ‘cash not available’
is the lack in service.
briefly describe the ways and The forum accepted the petition. After
means of consumer protec- hearing the arguments of both the parties, the
forum ordered that if the bank will not provide
tion; and ATM service to the customer, then it will be
considered a reduction in service Consumer
Forum imposed a fine of Rs. 2,500 on the bank
including Rs1,500 as compensation for mental
harassment and Rs1,000 for legal expenses
for non-availability of cash in its ATMs as
deficiency in bank services.
Source:http://dailypost.in/news/
consumer-forum-fines-sbi-ignoring-
customers/, 2017.

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Introduction cheated and is exposed to many risks


and health problems.
Each one of us is a consumer in one
Can business afford to ignore the
way or another. It is important for us
to be an aware and informed consumer interests of consumers? The market
of goods and services available to us in forces have changed from a seller
the market.The above case is just one market i.e., the earlier approach of
of the examples of the many problems caveat emptor which means Let the
that consumers face in the purchase, buyer beware, to a consumer market
use and consumption of goods and i.e., caveat venditor which implies
services. But, very few consumers Let the seller beware. A consumer
are aware of their rights given to is said to be a KING in the free
them by the Consumer Protection market economy. Hence, consumer
Act 2019. The Consumer Protection protection has significance for both
Act 20192019 has replaced the Act consumers and business alike. Under
1986 and seeks to widen its scope in the Consumer Protection Act 2019, the
addressing consumer concerns. Government of India has conferred a
Have you ever thought what legal protection to safeguard interests
would be the plight of consumers if of a consumer.
adequate protection is not provided
to them? With growing competition Importance of Consumer Protection
and in an attempt to increase The concept of consumer protection
their sales and market share,
is to safeguard the interests of the
manufacturers, sellers and service-
consumers. It adopts measures to
providers may be tempted to engage
protect consumers from unethical
in unscrupulous, exploitative and
malpractices by businesses and
unfair trade practices like defective
and unsafe products, adulteration, provide a swift redressal of their
false and misleading advertising, grievances with regard to:
hoarding, black-marketing, etc. 1. Sale of adulterated goods such as
This means that a consumer might adding inferior substances to the
be exposed to risks due to unsafe product being sold.
products, might suffer from bad 2. Sale of counterfeit goods such as
health due to adulterated food selling a product of lesser value
products, might be cheated because than the real product.
of misleading advertisements or sale
of spurious products, might have 3. Sale of sub-standard goods such
to pay a higher price when sellers as the sale of products that do
engage in overpricing, hoarding or not meet the prescribed quality
black-marketing, etc. As a result, standards.
consumer becomes unsafe, feels 4. Sale of duplicate goods.

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5. Use of malfunctioning weights and from various types of exploitation and


measures that lead to underweight should complain about it. Consumer
of products. protection has a wide scope. It not only
6. Black marketing and hoarding that includes educating consumers about
eventually leads to scarcity of the their rights and responsibilities, but
product and well as a rise in the also helps in getting their grievances
price of the same. redressed. It not only requires a judicial
machinery for protecting the interests
7. Overcharging a product, i.e.,
charging a product above its of consumers but also requires the
Maximum Retail Price. consumers to be united and form
themselves into consumer associations
8. Supplying of defective goods. for protection and promotion of their
9. Advertisements that are interests.
misleading, i.e., advertisements
that falsely claim a product or a From Consumers’ point of view
service to be shown as superior The importance of consumer protection
quality, grade or standard when from the consumers’ point of view can
not in real. be understood from the following
10. Supply of inferior services, i.e., points:
quality of service lesser than the (i) Consumer Ignorance: In the
condition agreed. light of widespread ignorance
of consumers about their rights
Need for Consumer Protection and reliefs available to them, it
The need for consumer protection arises becomes necessary to educate
from the need to protect consumers from them about the same so as to
the loss or injury or other prevailing achieve consumer awareness.
malpractices and to ensure: (ii) U n o r g a n i s e d C o n s u m e r s :
1. Physical safety of a consumer. Consumers need to be organised
2. Access to information. in the form of consumer
organisations which would
3. Corporate Social Responsibility
to provide quality and quantity of take care of their interests.
goods at fair prices. Though, in India, we do have
4. Consumer satisfaction. consumer organisations which
are working in this direction,
5. Social justice and Trusteeship
adequate protection is required
6. Survival and the Growth of
to be given to consumers till
businesses.
these organisations become
powerful enough to protect
That is why we as an informed consumer and promote the interests of
have to wake up and save our self consumers.

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Compensation for impurities in cold drinks

(iii) Widespread Exploitation of adequately satisfying them. This is


Consumers: Consumers might important because of the following
be exploited by unscrupulous, reasons:
exploitative and unfair trade (i) L o n g - t e r m I n t e r e s t o f
practices like defective and
Business: Enlightened
unsafe products, adulteration,
businesses realise that it is
false and misleading advertising,
in their long-term interest to
hoarding, black- marketing,
etc. Consumers need protection satisfy their customers. Satisfied
against such malpractices of the customers not only lead to
sellers. repeat sales but also provide
good feedback to prospective
From the point of view of Business customers and thus, help in
A business must also lay emphasis increasing the customer-base of
on protecting the consumers and business. Thus, business firms

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should aim at long-term profit would invite government


maximisation through customer intervention or action. This
satisfaction. can impair and tarnish the
(ii) Business uses Society’s image of the company. Thus,
Resources: Business it is advisable that business
organisations use resources organisations voluntarily resort
which belong to the society. to such practices where the
They, thus, have a responsibility customers’ needs and interests
to supply such products and will well be taken care of.
render such services which are
in public interest and would
The Consumer Protection Act, 2019
not impair public confidence in The Consumer protection Act 2019
them. seeks to protect and promote the
(iii) Social Responsibility: A consumers’ interest through speedy
business has social and inexpensive redressal of their
responsibilities towards various grievances. It extends to the whole of
interest groups. Business India. It is applicable to all types of
organisations make money by businesses whether a manufacturer
selling goods and providing or a trader and whether supplying
services to consumers. Thus, goods or providing servicesincluding
consumers form an important e-commerce firms. The Act confers
group among the many certain rights to consumers with a view
stakeholders of business and to empowering them and to protect
like other stakeholders, their their interests.
interest has to be well taken care
of. Who is A Consumer?
(iv) Moral Justification: It is the A ‘consumer’ is generally understood
moral duty of any business to as a person who uses or consumes
take care of consumer’s interest goods or avails of any service. Under
and avoid any form of their the Consumer Protection Act 2019,
exploitation. Thus, a business a consumer is a person who buys
must avoid unscrupulous, any goods or avails services for a
exploitative and unfair trade consideration, which has been paid
practices like defective and or promised, or partly paid and partly
unsafe products, adulteration, promised, or under any scheme of
false and misleading advertising, deferred payment. It includes any
hoarding, black marketing, etc. user of such goods or beneficiary of
(v) Government Intervention: A services if such use is made with the
business engaging in any form approval of the buyer. It applies to
of exploitative trade practices both offline and online transactions

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Protection against malpractices and exploitation

through electronic means or by services for resale or commercial


teleshopping or direct selling or purpose is nottreated as a consumer
multilevel marketing. However, any and is outside the scope of Consumer
person who obtains goods or avails Protection Act 2019.

Terms & Definitions


1. Complaint: Any allegation in writing made by the complainant for obtaining relief
w.r.t restrictive trade practice, defect in goods or deficiency in services provided,
overcharging of price or offer of goods or service injurious to life and safety.
2. Complainant: means one or more consumers, or any voluntary consumer
association, central or state government or the central authority or a legal heir
or legal representative or a parent or legal representative in case of a minor.
3. Spurious goods: Goods that are falsely claimed to be genuine.
4. Unfair trade practice: A trade practice for the purpose of promoting sale, use or
supply of any goods or service falsely represents its quality, standard, quantity,
composition, style or model.

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5. Restrictive trade practice: A trade practice which manipulates price or affect the
flow of supplies in the market relating to goods and services in such a manner
that an unjustified cost is imposed on the consumer.
6. Defect: Any fault, imperfection, shortcoming or inadequacy in quality, nature
and manner of performance in relation to goods or a product.
7. Deficiency: Any fault, imperfection, shortcoming or inadequacy in quality,
nature and manner of performance in relation to in relation to any service and
includes act of negligence or omission or commission or withholding relevant
information which causes loss or injury to the consumer.
8. Injury: Any harm illegally caused to any person in body, mind or property.
9. Product: Any article or goods or substance or raw material or any extended cycle
of such product either in gaseous , liquid or solid state possessing intrinsic
value capable of delivery either as assembled or a component produced or
manufactured to trade. It does not include human tissues, blood, blood products
and organs.
10. Product Seller: Any person in the course of business imports, sells, distributes,
leases, installs, prepares, labels, markets, repairs, maintains or otherwise
involved in placing the product for commercial use or a service provider.
11. Product Liability: Responsibility of a product manufacturer or seller of any
product or service to compensate for any harm caused to a consumer by defective
product manufactured or sold or by deficiency in services.

Consumer Rights an assurance of such products


meeting quality specifications.
The Consumer Protection Act 2019
2. Right to be informed: The
provides for six rights of consumers. consumer has a right to have
These rights include the following: complete information about
1. Right to Safety: The consumer the product he intends to buy
has a right to be protected including its ingredients, date
against goods and services which of manufacture, price, quantity,
are hazardous to life, health directions for use, etc. It is
and property. For example, because of this reason that the
electrical appliances which are legal framework in India requires
manufactured with substandard the manufactures to provide such
products or do not conform to information on the package and
the safety norms might cause label of the product.
serious injury. Thus, consumers 3. R i g h t t o b e a s s u r e d : T h e
are educated that they should consumer has the freedom to
use electrical appliances which access variety of products at
are ISI marked as this would be competitive prices. This implies

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that the marketers should offer a some enlightened businesses are


wide variety of products in terms taking an active part in educating
of quality, brand, prices, size, etc. consumers in this respect.
and allow the consumer to make
a choice from amongst these. Consumer Responsibilities
4. Right to be heard: The consumer The Consumer Protection Act empowers
has a right to file a complaint and to the consumer to fight against any
be heard in case of dissatisfaction unscrupulous, exploitative and unfair,
with a good or a service. It is restrictive trade practices adopted by
because of this reason that sellers. Consumer rights, by themselves,
many enlightened business firms cannot be effective in achieving the
have set up their own consumer objective of consumer protection.
service and grievance cells. Many Consumer protection can, in effect, be
consumer organisations are also achieved only when the consumers also
working towards this direction and understand their responsibilities.
helping consumers in redressal of A consumer should keep in mind
their grievances. the following responsibilities while
5. Right to seek redressal: The purchasing, using and consuming
consumer has a right to get relief goods and services —
against unfair trade practice (i) Be aware about various goods
of restrictive trade practices or and services available in the
unscrupulous exploitation in market so that an intelligent and
case the product or a service wise choice can be made.
falls short of his expectations.
(ii) Buy only standardised goods as
The Consumer Protection Act
they provide quality assurance.
2019 provides for redressal to the
Thus, look for ISI mark on
consumers including replacement
electrical goods, FPO mark on
of the product, removal of defect
food products, Hallmark on
in the product, compensation paid
jewelry, etc.
for any loss or injury suffered by
the consumer, etc. (iii) Learn about the risks associated
with products and services, follow
6. Right to Consumer Education:
manufacturer’s instructions and
The consumer has a right to
use the products safely.
acquire knowledge and to be a well
informed consumer throughout (iv) Read labels carefully so as to
life. He should be aware about his have information about prices,
rights and the reliefs available to net weight, manufacturing and
him in case of a product or service expiry dates, etc.
falling short of his expectations. (v) Assert yourself to ensure that
Many consumer organisations and you get a fair deal.

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(vi) Be honest in your dealings. (ix) Form consumer societies which


Choose only from legal goods would play an active part in
and services and discourage educating consumers and
unscrupulous practices like safeguarding their interests.
black-marketing, hoarding, etc. (x) Respect the environment. Avoid
(vii) Ask for a cash memo on purchase waste, littering and contributing
of goods or services. This would to pollution.
serve as a proof of the purchase
made.
Ways and Means of Consumer
Protection
(viii) File a complaint in an appropriate
consumer forum in case of a A consumers’ awareness about their
shortcoming in the quality of rights and responsibilities is just one
goods purchased or services of the ways in which the objective of
availed. Do not fail to take an consumer protection can be achieved.
action even when the amount There are other ways in which this
involved is small. objective may be achieved.

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1. Self-regulation by Business: India (FICCI) and Confederation of


Socially responsible firms follow Indian Industries (CII) have laid
ethical standards and practices down their code of conduct which
in dealing with their customers lay down for their members the
Good and ethical practices guidelines in their dealings with
encourage firms to realise that it the customers.
is in their long-term interest to 3. C o n s u m e r A w a r e n e s s : A
serve the customers in a rightful consumer, who is well-informed
manner. Many firms have set about his rights and the reliefs
up their customer service and available to him, would be in a
grievance cells to redress the position to raise his voice against
problems and grievances of their any unfair trade practices or
consumers. unscrupulous exploitation. In
2. Business Associations: The addition to this, an understanding
associations of trade, commerce of his responsibilities would also
and business like Federation of enable a consumer to safeguard
Indian Chambers of Commerce of his interests. In this regard, the

Mark of Bureau of Indian


Standards

Food Process Order Agmark

BIS Hallmark Eco-mark

Marks indicating quality in different products

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Department of Consumer Affairs, 5. Government: The government


GOI, has been undertaking can protect the interests of the
JagoGrahakJagocampaign, for consumers by enacting various
generating awareness among measures. For example, the GOI
consumers. has set up a toll-free national
consumer Helpline Number
4. C o n s u m e r O r g a n i s a t i o n s :
1800114000 for this purpose.
Consumer organisations play The legal framework in India
an important role in educating encompasses various legislations
consumers about their rights and which provide protection to
providing protection to them. These consumers. The most important of
organisations can force business these regulations is the Consumer
firms to avoid malpractices and Protection Act, 2019. The Act
exploitation of consumers. provides for a central authority

Consumer Awareness

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to regulate matters relating to to entertain complaints where


violation of rights of consumers, value of goods or services paid
unfair trade practices and false or as consideration does not exceed
misleading advertisements which one crore rupees. Either on the
are prejudicial to the interests first hearing or at any later stage,
of consumers. This is known it appears to district commission
as Central Consumer Protection that there exists elements of
Authority (CCPA). A three-tier settlement which may be
machinery at the district, state acceptable to the parties, it may
and national levels for redressal direct them to give their consent
of consumer grievances. for settlement of dispute through
mediation within five days. In case
R edressal A gencies U nder T he the parties agree for settlement
Consumer Protection Act by mediation and give written
consent, the district commission
For the redressal of consumer refers the matter for mediation
grievances, the Consumer Protection and the provisions relating to
Act 2019 provides for setting up of a mediation shall apply. However, in
three-tier enforcement machinery at the event of failure of settlement
the District, State, and the National by mediation proceeds with the
levels, known as the District Consumer complaint. If the complaint alleges
Disputes Redressal Commission, defect in goods which cannot
State Consumer Disputes Redressal be determined without proper
Commission, and the National analysis or test of goods, the
Consumer Disputes Redressal commission obtains the sample
Commission. They are briefly referred of goods, seal it and refer to the
to as the ‘District Commission’, ‘State appropriate authority for analysis.
Commission’, and the ‘National In case of services, the dispute
Commission’, respectively. While the is settled based on the basis of
National Commission is set up by evidence brought to its notice
the Central Government, the State by the complainant and can ask
Commissions and the District Forums for any required information
are set up, by the State Government. document or records from the
The Figure on redressal agencies service provider for settlement.
shows the hierarchical structure of
this three-tire machinery. If any of the parties are
not satisfied by the order of
Let us now see how the consumer District Commission can appeal
grievances are redressed by the three- against such order to the State
tire machinery: Commission on the grounds of
1. District Commission:District facts or law within a period of forty
commission has a jurisdiction five days from the date of order.

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2. S t a t e C o m m i s s i o n : I t i s Relief Available
established by the respective Where District or State or National
state government and ordinarily Commission is satisfied about defect
function at the state capital. State in goods, or deficiency in services on
Commission has a jurisdiction any unfair trade practice or claim for
to entertain complaints where compensation under product liability,
value of goods and services paid issues an order:
as consideration exceeds one
(i) To remove the defect in goods or
crore but does not exceed ten
deficiency in service.
crore rupees. If any of the parties
are not satisfied by the order of (ii) To replace the defective product
State Commission can appeal with a new one, free from any
against such order to the National defect.
Commission within a period of (iii) To refund the price paid for the
thirty days of such order. product, or the charges paid for
3. National Commission: The the service.
National Commission has (iv) To pay a reasonable amount of
t e rrit o rial ju risd ictio n o ver compensation for any loss or
the whole country. National injury suffered by the consumer
Commission has a jurisdiction due to the negligence of the
to entertain complaints where opposite party.
value of goods or services paid as (v) To pay punitive damages in
consideration exceeds ten crores appropriate circumstances.
of rupees. If any of the parties
(vi) To discontinue the unfair/
are not satisfied by the order of
restrictive trade practice and not
National Commission can appeal
to repeat it in the future.
against such order to the Supreme
Court of India within a period of (vii) Not to offer hazardous goods for
thirty days of such order. sale.

Setting up of Consumer Mediation Cell


The Chapter V of the Consumer Protection Act of 2019 provides
for a mediation process for settlement of disputes at three levels
- National, State and District with all three being attached to the
respective commissions. It is a new provision in the Act 2019
as an alternate mechanism to ensure faster aspeedydispute
settlements by respective commissions.

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(viii) To withdraw the hazardous organising training programmes,


goods from sale. seminars and workshops.
(ix) T o c e a s e m a n u f a c t u r e o f (ii) Publishing periodicals and
hazardous goods and to desist other publications to impart
from offering hazardous services. knowledge about consumer
(x) Compensate for any loss or injury problems, legal reporting, reliefs
suffered by consumer under available and other matters of
product liability action and interest.
withdraw hazardous products (iii) C a r r y i n g o u t c o m p a r a t i v e
from being offered for sale etc.
testing of consumer products
However, every order of a district in accredited laboratories to test
commission, the state commission or relative qualities of competing
the national commission is deemed brands and publishing the
final if no appeal for such order is test results for the benefit of
made by any of the parties involved
consumers.
in dispute.
(iv) Encouraging consumers to
Role of Consumer Organisations strongly protest and take an
And Ngos action against unscrupulous,
In India, several consumer exploitative and unfair trade
organisations and non-governmental practices of sellers.
organisations (NGOs) have been set (v) Providing legal assistance to
up for the protection and promotion consumers by way of providing
of consumers’ interests. Non- aid, legal advice etc. in seeking
governmental organisations are non- legal remedy.
profit organisations which aim at
promoting the welfare of people. They (vi) Filing complaints in appropriate
have a constitution of their own and consumer courts on behalf of the
are free from government interference. consumers.
Consumer organisations and NGOs (vii) Taking an initiative in filing
perform several functions for the cases in consumer courts in the
protection and promotion of interest interest of the general public,
of consumers. These include: not for any individual.
(i) Educating the general public (viii) Consumer unity and Trust
about consumer rights by Society (CuTS), Jaipur.
Key Terms

Consumer protection Consumer Rights Consumer Responsibilities


Redressal mechanism Mediation

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SUMMARY

Importance of Consumer Protection: From the point of consumers, consumer


protection is important because consumers are ignorant, unorganised and
exploited by sellers. Consumer Protection is also important for a business
because (i) It is in the long-term interest of business, (ii) Business uses
society’s resources, (iii) It is a social responsibility of business, (iv)It has moral
justification, (v) It avoids government intervention in the functioning of business.
Legal Protection to Consumers: The Indian legal framework consists of a
number of legislations which provide protection to consumers. These include
(i) The Consumer protection Act, 1986, (ii) The Indian Contract Act, 1872, (iii)
The Sale of Goods Act, 1930, (iv) The essential Commodities Act,1955, (v) The
Agricultural produce (Grading and Marking) Act, 1937, (vi) The prevention of
Food Adulteration Act, 1954, (vii) The Standards of Weights and Measures Act,
1976, (viii) The Trade Marks Act, 1999, (ix) The Competition Act, 2002,(x) The
Bureau of Indian Standards Act, 1986.
Consumer Rights: The Consumer Protection Act, 1986, provides for six
consumer rights. These are: (i) Right to safety, (ii) Right to be informed, (iii)
Right to choose, (iv) Right to be heard, (v) Right to seek redressal,(vi) Right to
consumer education.
Consumer Responsibilities: In addition to exercising his rights, a consumer
should also keep in mind his responsibilities while purchasing, using and
consuming goods and services.
Ways and Means of Consumer Protection: There are various ways in which
the objective of consumer protection can be achieved. These Include (i) Self
regulation by business, (ii) Business associations, (iii) Consumer awareness,
(iv)Consumer organisations, (v) Government.
Redressal Agencies under the Consumer Protection Act: The Consumer
Protection Act provides for setting up of a three-tier enforcement machinery at
the District, State, and the National levels. They are referred to as the ‘District
Forum’, ‘State Commission’, and the ‘National Commission’. There are various
reliefs available to a consumer under the Act. The appropriate consumer court
may pass an order for removal of defect in goods, replace a defective product,
refund the price of the product, pay compensation for the loss suffered, etc.
Consumer Organisations and NGOs: In India, several consumer organisations
and non-governmental organisations (nGOs) are playing an active role in
protection and promotion of consumers’ interests.

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EXERCISES

Very Short Answer Type


1. Under which consumer right does a business firm set up consumer
grievance cell?
2. Which quality certification mark is used for agricultural products?
3. What is the jurisdiction of cases that can be filed in a State Commission?
4. State any two relief available to consumers under CPA.
5. Name the component of product mix that helps the consumer to exercise
the right to information.

Short Answer Type


1. Enumerate the various Acts passed by the Government of India which help
in protection of consumers’ interests.
2. What are the responsibilities of a consumer?
3. Who can file a complaint in a consumer court?
4. FSSAI (Food Safety and Standards Authority of India) has made a proposal
for hotels and other food outlets to declare the kind of oil/fat used in cooking
each of the food items on their menus. Name and explain the Consumer
Right being reinforced by this proposal.
5. Who is a consumer as per CPA?

Long Answer Type


1. Explain the importance of consumer protection from the point of view of
a business.
2. Explain the rights and responsibilities of consumer?
3. What are various ways in which the objective of consumer protection can
be achieved?
4. Explain the redressal mechanism available to consumers under the
Consumer Protection Act, 2019
5. Explain the role of consumer organisations and NGOs in protecting and
promoting consumer’s interest.
6. Mrs. Mathur sent a jacket to a laundry shop in January 2018. The jacket
was purchased at a price of `4,500. She had previously sent the jacket
for dry cleaning with Shine Dry Cleaners and the jacket was cleaned well.
However, she noticed that her jacket had white discoloration marks when

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she collected the jacket this time. On informing the dry cleaner, Mrs.
Mathur received a letter confirming that discolouration indeed appeared
after the jacket was dry cleaned. She contacted the dry cleaner multiple
times and requested for compensation for discoloured jacket but to no
avail.
Upon Consumer court’s intervention, Shine Dry Cleaners agreed to
compensate Rs. 2,500 to Mrs. Mathur for the discoloured jacket.
(a) Which right was exercised by Mrs. Mathur at the first instance.
(b) Name and explain the right which helped Mrs. Mathur to avail the
compensation.
(c) State which consumer responsibility has been fulfilled by Mrs. Ma-
thur in the above case.
(d) State any other two responsibilities to be assumed by the consum-
ers.

Project work
1. Visit a consumer organisation in your town. List down the various functions
performed by it.
2. Collect some newspaper cuttings of some consumer cases and the rulings
given therein.

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Note

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