Laws related to the protection of consumers

Introduction

The consumer is called the king of the free-market economy. The economy now works on the principle of ‘caveat venditor,’ which means ‘let the seller beware.’ However, in the past few decades, due to cut throat competition in the market, sellers usually try to earn profit by engaging in unfair trade like adulteration, hoarding, black-marketing, and a few others. Thus, it is mandatory to ensure that the consumers are protected against such exploitative practices of the sellers.

Hence the government enacted the Consumer Protection Act of 1986, in order to provide speedy and inexpensive redress of consumers’ grievances. The Act also provides the setting up of three-tier machinery, consisting of the District Forum, State Commissions, and the National Commission. Along with these Acts, many other Acts like Sale of goods Act,1930; The Trade Marks Act,1999; The Competition Act, 2002; etc., were also introduced from time to time. Consumer Protection Act, 1986 was also amended in the year 2002 through the Consumer Protection Amendment Act, 2002.

This Act was then amended in the year 2019, through which a Central Consumer Protection Authority (CCPA) was established in which Central government would be appointing the members who will then keep an eye on these exploitative tactics of the seller and thus will protect the consumers’ rights.

Historical significance

In India, consumer protection laws have been in place for a long time. Prior to 1984, however, there was no effective protection of consumer interests. Only certain parts of consumer protection were addressed by legislation.

Furthermore, there was no centralized and efficient system for the implementation of these statutory provisions. In the market, there are many unethical commercial activities. In addition, customers were disorganized, and there was no meaningful voluntary customer participation organization. The true consumer revolution began in 1984.

Pre-1950

Prior to 1950, concerns of consumer protection were governed by the technical principles of English common law. The common law developed three main categories of law that are still important: (a) tort law, (b) contract law, and (c) fiduciary law. Suits in the courts are used to enforce the law.

1950-1986

Since the establishment of the Union Parliament in the year 1950, it has passed a number of laws that incorporate consumer protection protections. If a consumer failed to demonstrate that the laws applied, he was forced to seek relief under tort, contract, or fiduciary law. The following is an example of product-specific regulation including consumer protection components:

1. Drugs Control Act of 1950
2. Food Adulteration Prevention Act of 1954
3. Essential Commodities Act of 1955

1986

It was finally in the year 1986 when the Union Parliament passed the Consumer Protection Act, 1986 which seeks to protect and promote the interests of the consumers. The Act provides safeguards to Consumers against deficient services, unfair trade practices, defective goods, and other forms of their exploitation. The Act also provides the setting up of three-tier machinery, consisting of the District Forum, State Commissions, and the National Commission.

2019

The Consumer Protection Act of 1986 was lately amended in the year 2019 and introduced new provisions for E-commerce and direct selling, unfair contracts, alternative dispute resolution, and many more. Also, a Central Consumer Protection Authority (CCPA) was established in which Central government would be appointing the members who will then keep an eye on these exploitative tactics of the seller and thus will protect the consumers rights.

Relevance of consumer protection laws

Consumers play an essential role in the success of businesses and the economy as a whole. Consumer protection laws aim to regulate product and service quality while also protecting consumers’ interests so that they can make informed decisions.

The Consumer Protection Act, 1986 was revised with a new larger statute that went into effect in 2020, as well as new rules and regulations, in response to developments in industry and commerce around the world.

Along with these Acts, many other Acts like The Bureau of Indian Standard Act,1986; The Trade Marks Act,1999; The Competition Act, 2002; etc., were also introduced from time to time. Thus, enactment of all these laws helped in saving the consumers from the exploitative practices of the sellers.

Laws to protect consumers

The following laws have been enacted from time to time to ensure the protection of consumer rights in India.

The Consumer Protection Act, 1986 (COPRA):

• In this, consumer’s rights are protected, and users are made aware of their rights.
• They have constructed or established a three-tier structure to defend consumer rights, with District Forums, State Commissions, and National Commissions.

Indian Contract Act, 1972:

• They specify the terms under which the parties commit to delivering services to one other and agree on particular terms. A contract is formed that is binding on both parties.
• They safeguard the interests of the parties by ensuring that the contract is not broken and, if it is, that payment is paid.

The Sales of Good Act, 1930:

• To protect consumer rights in the event that the items offered to the consumer are not up to the promised standard and a false claim is made.

The Agricultural Produce Act, 1937:

• To apply the grading standard and, as a result, to monitor if standard checks are performed before issuing the grading. In this case, AGMARK is the new standard for agricultural products.

The Trade Marks Act,1999:

• This statute protects users against misleading markings that may mislead consumers and so defraud them on the basis of product quality.

The Bureau of Indian Standard Act 1986:

• The Bureau of Indian Standard Act ensures the quality of the product to be used by consumers is appropriate and has introduced the BIS Mark to certify the product’s quality, as well as a grievance cell to receive complaints about the product’s quality.

Constitutional perspective

Though not explicitly stated, the notion of consumer justice pervades and reverberates throughout the Indian Constitution’s Preamble, DPSP, and Fundamental Rights. In the preamble, social, economic, and political fairness are discussed. It’s worth noting that justice is a genus, and consumer justice is one of its species.

Consumer justice also entails some safeguards for these members of society against various market operator malpractices and exploitative activities, the occurrence of which, in the end, has a negative impact on the individual in society. Consumer justice is a subset of economic justice, with the goal of creating “economic democracy” and a “welfare state.”

It’s a moniker for “distributive justice,” which is enshrined in the Indian Constitution’s Articles 38 and 39. It should be highlighted that distributive justice entails, among other things, the elimination of economic inequalities and the correction of injustices originating from transactions between unequal in society. Apart from that, the word “socialism,” which was added in the 42nd amendment, refers to form of governance in which the state controls all or part of the means of production.

The consumer’s rights are derived from the rights provided in Articles 14 and 19, and 21 of the Indian Constitution. Article 14 guarantees equality before the law, which is not only a constitutional right but also a necessary ingredient for transforming a state into a just and functional welfare state.

Because the Supreme Court has weakened the concept of locus standi in many circumstances, allowing groups to enforce the rights of the backward sections of society, Articles 32 and 226 are also important for protection of consumer.

Legal framework

The Consumer Protection Act, 2019, and the rules and regulations implemented under it govern the protection of consumer rights in India. Consumer Protection Act (E-Commerce), 2020, Consumer Protection Rules (Mediation), 2020, Consumer Protection Laws (Consumer Dispute Resolution Commissions), 2020, and Consumer Protection (General) Acts, 2020 are some of the laws and regulations created under the Consumer Protection Act.

As more and more poor practices by retailers were perpetrated, the consumer movement evolved as a response to consumer displeasure. For a great many years, when a customer was dissatisfied with a product or store, he avoided purchasing that product or ceased purchasing from that store.

Consumers were supposed to be responsible for exercising caution when acquiring goods or services. The legal framework in India also provides few rights to the consumers such as the Right to Safety, the Right to be informed, the Right to Choose, and a few others.

Organizations in India and around the world have worked for many years to create awareness. The Consumer Protection Act, of 1986 was a big step forward for the Indian government in 1986.

The following three are the redressal agencies to deal with consumer grievances under Consumer Protection Act:

District Forum:

To file a complaint, a customer should first approach the District Forum when value of goods, services and compensation claimed does not exceed Rs 1 crore. The District Forum consists of a President and two other members, one of whom should be a woman. If the aggrieved party isn’t satisfied with the decision of the District Forum, then they can appeal before State Commission within 45 days of the order.

State Commission:

A complaint can be filed at state commission when the value of goods, services and the compensation claimed to exceed Rs 1 crore but does not exceed Rs 10 crore. It consists of the President and four other members, one of whom should be a woman. If the aggrieved party isn’t satisfied with the decision, then they can appeal before the National Commission within 30 days of passing of order.

National Commission:

A complaint can be filed at National commission when the value of goods, services and the compensation claimed to exceed Rs 10 crore. It comprises of the President and four members, one of whom should be a woman. If the aggrieved party isn’t satisfied with the decision, then they can appeal to Supreme Court, but only those cases can be claimed where amount exceed Rs 10 crore, within 30 days of passing of the order.

Landmark cases

Sehgal School of Competition v. Dalbir Singh:[1]

The Court, in Sehgal School of Competition Vs. Dalbir Singh case, held that an institution’s refusal to refund payments is unfair trade conduct and that collecting single payment fees for the duration of the 2-year course is unlawful. The National Commission stated that non-refunding of fees after they have been paid is unfair trading conduct.

It cited UGC guidelines that said that even single class is not attended by the student a specific amount can be removed, as well as proportionate costs for hostel fees and other expenses, and the remaining amount can be repaid. In such circumstances, the State Consumer Forum stated that not only the balance of the price but also a larger recompense for legal fees and the anguish that the student had to endure might be obtained.

 Indian Medical Association v. V.P. Shantha and Others:[2]

The Court ruled that consumer forums in the District, State, and National levels has the right to call on medical experts, examine the evidence, and safeguard consumers’ interests. Doctors and hospitals who provide free services are not considered to be providing “service.”

The Consumer Protection Act will not apply in a government hospital if services are supplied free of charge. If, on the other hand, customers are offered for free to the impoverished, the Act will cover it as a service.

National Insurance Company Ltd. v. Hindustan Safety Glass Works Ltd. & Anr.:[3]

The National Commission ruled that the insured’s claim is actionable. It was also noted that the goods had already been insured at the time of the occurrence, and he had requested a claim the following day. It dismissed all of National Insurance’s arguments and ordered the insurance company to pay an amount of Rs. 21 05,803.89 plus interest at 9% per annum.

V.N. Shrikhande v. Anita Sena Fernandes:[4]

The case was dismissed by the Supreme Court due to procedural and evidentiary issues. When the nurse worked at the same hospital where the surgery took place, the court ruled. Why hadn’t she contacted the doctor in the previous nine years? When the respondent’s abdomen was discovered to have a gauge, prompt treatment may have been done without having the respondent to pay. She, on the other hand, elected to take pain relievers. Her prolonged quiet was enough to dismiss the complaint, and she was not entitled to any monetary compensation.

International scenario

Organization for economic cooperation and development (OECD):

The OECD addresses a wide range of consumer issues through its Committee on Consumer Policy (CCP). It has its consumer policy which tries to improve market performance by protecting consumers from deceptive or misleading commercial tactics as well as dangerous products.

Consumers that are empowered encourage businesses to innovate, resulting in increased competitiveness and productivity. As a result, the CCP contributes to the OECD’s main goal of attaining the highest sustainable economic growth and enhancing living standards in OECD nations and around the world.

United nations conference on trade and development (UNCTAD):

The main aim of UNCTAD’s program is to promote sustainable development through international trade. It provides advice and seeks to strengthen capacity and help in trade negotiations, trade in goods and services, competition law, and climate change.

The goal of UNCTAD’s competition and consumer policy work is to guarantee that partner countries benefit from enhanced competition, private sector investment in critical industries, and improved consumer welfare.

E.U. Consumer Protection Cooperation Network (CPC):

The CPC is a gathering of national bodies meant for enforcing consumer protection legislation across the European Union (E.U.), Iceland, and Norway. They collaborate to share information and investigate any violations of consumer law in order to defend consumers’ collective interests.

ASEAN coordinating committee on consumer protection (ACCCP):

The organization promotes consumer protection in Southeast Asia. Its main objectives include Providing accurate information and remedies to customers, preventing rogue merchants and unfair commercial activities, and ensuring that only safe items are placed on the market.

Consumers International:

It is a non-profit organization that was founded in 1960 to campaign for a safe, and sustainable future for all consumers in an increasingly global competitive marketplace dominated by multinational businesses.

Consumers International collaborates with its members and partners around the world to empower and advocate consumers’ rights, ensuring that they are treated securely, fairly, and honestly.

RECOMMENDATIONS

The major problems that were seen in Consumer Protection Act, 1986 was related to lack of any provisions for protection of consumers from online transactions, e-commerce and other frauds that rose with the age of digitalization. But these major problems were solved in the Amended Consumer Protection Act, 2019. But still a few things need to be done in order to make these laws a perfect success:

1. The major reason of why consumers is not able to get reliefs is because of the lack of awareness. Most of the consumers are not aware about various redressal agencies to deal with the consumer grievances. Hence the government should organize seminars, workshops and training programmes to spread the awareness about consumer protection laws.
2. The government has taken laudable initiative by setting up Central Consumer Protection Authority (CCPA) to promote, protect and enhance consumer rights. But the government is still unclear about its functioning. Hence, it is necessary for the government to make sure that proper functions related to investigations and inquiries are made. Also, there should not be any ambiguity between the role of Chief Commissioner while considering the search and seizure functions.
3. Another flaw that is seen is in the implementation of the above-mentioned provisions. The consumer cannot be a king in real sense if above provisions are not implemented.

References:

1. Kadiyala Sridevi & Arkaj Kumar, Evolution of consumer protection laws in India – part 1 Dvara Research Blog, https://www.dvara.com/research/blog/2012/03/23/evolution-of-consumer-protection-laws-in-india-part-1/
2. Mir Adil Rashid, Comparison between consumer protection act 1986 and Consumer Protection Act, 2019 Lawwithin (2021), https://www.lawwithin.com/post/comparison-between-consumer-protection-act-1986-and-consumer-protection-act-2019
3. A study on Consumer Protection … – nus – faculty of law, , https://law1.nus.edu.sg/asli/pdf/WPS023.pdf
4. Editor, Consumer Protection Jurisprudence: A constitutional perspective Rostrum’s Law Review (2018), https://journal.rostrumlegal.com/consumer-protection-jurisprudence-a-constitutional-perspective/#:~:text=The%20rights%20of%20the%20consumer,just%20and%20effective%20welfare%20state
5. Consumer protection around the world, News RSS, https://icpen.org/consumer-protection-around-world
6. Top 7 consumer protection act cases, legitquest, https://www.legitquest.com/legal-guide/top-7-consumer-protection-act-cases

This article has been authored by Tanishka Sai Bablani, a student at the Indian Institute Of Management, Rohtak.