Intent and Reasons behind Consumer Protection Act 1986

By | June 24, 2020
Consumer Protection Act

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Intent and Reasons behind Consumer Protection Act 1986 | Overview

The intent and the reasons behind the Consumer Protection Act 1986 are analyzed and explained in this article. The aim of the Consumer Protection Act 1986 was to simply provide a greater sense of protection to the rights of the consumer. It introduces a widened sense of liability for the sellers. The Act brings within its scope the various grievances of different products and services. This makes the 1986 Act landmark legislation because, before this all, other consumer protection laws chose to deal with only one specific kind of product or service individually.

The reasons for the enactment of this legislation lies in the dire need to combat the exploitation that consumers were facing at the hands of the manufacturers, service providers and product sellers. The intent of this legislation was to prevent unfair trade practices, and it has been successful to a large extent in fulfilling its primary objective.

Introduction

The Consumer Protection Act 1986 was brought into force to create a quick and affordable mechanism for dispute redressal. Prior to this, the main form of redressal was to sue the seller. However, litigation is an expensive, time consuming and complex procedure. The cumbersome process of going to court restricted access to justice for the marginalized. Consumers that fell prey to fraud often chose to avoid purchasing from brands or shops in the future, instead of initiating action and demanding rightful compensation.

This Act sought to change that paradigm of exploitation and give consumers their due. This Act helped create a less formal process with limited paperwork, so it could be more accessible and inclusive. Those who were intimidated by the litigation process could now utilize this simpler mechanism to obtain justice.

Some of the fundamentals of the Consumer Protection Act are-

  • The Consumer Protection Act spans over the public, private and cooperative sector.
  • Unless an exemption is made by the Union government, the Consumer Protection Act is applicable for all the goods and services[1].
  • The Consumer Protection Act has been created with the intent to provide rightful compensation to the aggrieved customers, and that is reflected in the provisions of the Act.

United Nations and Guidelines for Consumer Protection

To understand the Consumer Protection Act, we must look at the background of the United Nations initiative for Consumer Protection since that was an inspiration and the starting point for the Indian legislation.

The United Nations has taken steps to improve the safeguards provided to consumers around the globe against malpractices resulting in injury by prescribing a minimum required standard for all manufacturers.  These include manufacturing and packaging of various commodities, tightening the punishments for those who indulge in such practices, providing certification for products such as jewellery, diamonds, gold, etc.

The role of the UN has been to promote cooperation amongst member nations pertaining to various issues. When it comes to consumer protection, the UN and its subsidiaries like General Agreement on Tariffs and Trade (GATT), the Organisation for Economic Cooperation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD), and the United Nations Commission on Transnational Corporations (UNCTC) have been actively involved over the years in safeguarding the interests of the consumers.[2]

On 9th April 1985, after consensus with the Economic and Social Council, the General Assembly of the United Nations adopted certain guidelines for consumer protection. The aim of these guidelines was to provide a framework for countries which was to be used as a guiding principle in elaborating and strengthening consumer protection policies and legislation to protect consumers while promoting international cooperation in this field.[3]

Rights of the Consumer

Certain statutory guarantees are granted to consumers through the Statement of Object and Reasons in the Consumer Protection Act 1986. They are present in the 2019 Act as well.[4]

i. The right to be protected

The Act imposes a positive duty on manufactures and distributors to comply with the general safety requirements at all times. These standards are published and updated by the relevant authorities.

Example: The Bureau of Indian Standards (BIS) and the International Standards Organization  (ISO) are institutes that regulate safety standards and provide validation to quality.[5]

ii. The right to be informed

The Act gives a right to the consumers to be informed about the quality, quantity, purity, standard and price of the goods or services. This right exists as a mechanism to protect the consumers against unfair trade practices such as false and misleading advertising as to the nature, use and quality of the product and limits the use of exaggerated statements in advertising so that the inherent quality of the product is not changed completely.

However, it is important to note that the victim claiming unfair trade practices can have locus standi in the Consumer Protection Forum if he is a consumer within the meaning of the Act. Other buyers would have to go to the Monopolies Commission under MRTP Act[6].

Example: A brand making a claim that their hair oil is capable of promoting hair growth or preventing hair loss where there is no such power to an appreciable extent.

iii. The right to choose      

The Act gives consumers the right to choose from a range of goods and services at competitive pricing.

The Central Council is charged with the responsibility of organizing the markets and the practices therein in such a way that the consumer is benefited from this organization which offers a wide range of products and services and at competitive prices. A consumer can truly enjoy the benefit of competitive pricing if the consumer has access to a wide variety of products and services as these are mutually inclusive.

iv. The right to be heard

The Act gives consumers the right to be heard at appropriate forums so that the interests of the consumers are given due consideration and these interests are protected against exploitation. This right exists as a principle of natural justice the Central Council is charged with the responsibility of assuring consumers that they would be heard by appropriate forums and will receive due attention and consideration from such forums.

v. The right to seek redressal

The Act gives consumers the right to seek redressal against unfair trade practices, restrictive trade practices or unscrupulous exploitation of consumers. These rights can be explained through the following illustrations.

Example: Mr. Sahni gave his car for servicing and received it back in 2 weeks. When he took the car out for a drive, he noticed that there hadn’t been any changes made to the car and in addition, the stereo had stopped working.

Mr. Sahni has the right to claim his money back from the car servicing company, as it did not render proper services, and to seek damages for his non-functioning stereo.[7]

vi. The right to consumer education

This right ties up with the previous rights as enunciated above which is essentially being aware, as consumers, of all the rights that are guaranteed under the Act. The rationale of having this right is to empower consumers to take action against exploitation by manufacturers and traders.

Example: The Consumer Protection Act has itself provided for setting up various councils which have the responsibility to provide proper education to consumers as to their rights and remedies.

The Limitations and shortcomings of the Consumer Protection Act 1986

The purpose of this Act was to safeguard the interests of the consumers while making a smooth transition from the principle of caveat emptor to caveat venditor principles. The Act was never intended to be punitive or preventive but rather, be compensatory in nature. The objectives of the Act are to facilitate easy, quick and cost-efficient redressal mechanism for the consumers. However, certain shifts in the mindset of the consumer along with technological developments, coupled with the delay by Consumer Courts have come in the way of achieving the objectives of the Act.

This interference pushed for a need to enforce laws that could effectively limit and address issues relating to consumer fraud while providing necessary changes to the provisions of the Act to protect consumers more effectively through a robust mechanism. [8]

Consequently, The Consumer Protection Bill, 2019 was passed by the Indian Parliament on Aug 06, 2019, and later on signed by the President of India. This New Act replaces the old Consumer Protection Act, 1986.

Analysis through Case Laws

To understand the true object and reasons of the Consumer Protection Act 1986, we can reflect at a series of case law to analyze how different judgments have upheld the core values of consumer protection, and at what point have the courts drawn a line for the same.

A key question that emerged in the legal context of consumer protection was whether or not professional services fall within the scope of the Act.

1. Indian Medical Association v. V.P. Shantha and others[9]

A dispute arose with regards to medical services being provided with inefficiently. The Supreme Court held that a medical profession fell within the purview of ‘services’ under section 2(1)(o) of the Act. The argumentative claim that a medical practitioner, being a professional and falling within the ambit of the Indian Medical Council Act makes them excluded from the CPA was rejected by the Supreme Court.

Token fees being taken for hospital administrative purposes would not include an otherwise free service within the purview of the definition of services. Any cost paid for services by an employer or an insurance firm has the same value as compared to a service paid for by a consumer.

Whilst the intent of the Act is to provide consumers with their rightful compensation, it is essential that sympathy should not influence compensation but be adjudicated based on the facts of that matter.

2. Nizam Institute of Medical Sciences v. Prasanth S. Dhananka & Ors[10]

In the present suit, a case of medical negligence was claimed by the complainant. During the course of a medical procedure, the patient suffered partial paralysis. The National Tribunal stated that there were lapses in various stages on behalf of the administration and majorly relied on the fact that the patient’s consent was not taken for the medical procedure after diagnosis was given.

The Supreme Court dismissed the appeal and upheld the ruling of the National Commission. They held that the removal of the tumour was deferred through discussion which is stated on the record and therefore an implied consent cannot be inferred in such situations.

The Court held the view of having a balance between the inflated demands of a victim and an unreasonable claim of the opposition when it came to finding suitable compensation. Sympathy towards victims should not be grounds to be considered when it comes to deciding adequate compensation.

The compensation awarded was for the pain and suffering that the appellant had undergone amounting to ten lakhs, for the expenses of a driver-cum-attendant for thirty years amounting to seven lakhs and twenty thousand, for nursing care amounting of fourteen lakhs and forty thousand and physiotherapy expenses of thirty years amounting to ten lakhs and eighty thousand along with interest of 6% was also granted.

Whist the primary objective of the Act is to ensure Consumer Protection, it also strives to draw a balance so that the sellers and manufacturers are not exploited under the pretence of consumer rights. It is also important to maintain the sanctity and seriousness of the Consumer Dispute Redressal Agencies, and for that, it is essential to avoid and discourage petty unnecessary and trivial claims. In order to achieve that, the Courts have decided to impose a penalty for frivolous consumer claims.

3. Sapient Corporation Employees Provident Fund Trust v. HDFC &Ors.[11]

HDFC bank was dragged to court for debiting money from an account holder without his permission. The National Commission held that the execution of such an action was due to an order from a statutory authority and prior notice was given to the complainant. The National Commission reiterated the fact that such safeguards need to be in place against frivolous complaints. Using this reason, the complainant was fined twenty-five thousand under the Act for bringing a suit which lacked seriousness or sufficient grounds.

In this case, the Court ordered for compensation to the complainants because of the appeal being frivolous in nature.

4. Delhi Development Authority v D.C. Sharma[12]

In the present case, a situation of double allotment of land by the Delhi Development Authority took place. The State Commission refuted the claims of the defendant who stated that the allotment of the plot was withheld due to non-payment of costs by the complainant. The land records gave evidence that the plot was already allocated to another party. An award was passed against the DDA to either provide another plot of the same description with the same conditions of value or pay an increased premium on the value of the property.

The National Commission dismissed the revise petition for lack of infirmity. A further award of 5 lakhs was ordered as compensation against the DDA for indulging in unfair trade practices and harassment of the plaintiff for over 18 years.

Conclusion

The intent and reasons of the Consumer Protection Act are rooted in the need to ensure a safe and educated atmosphere for consumers to practice their rights. It has been created with the objective of ensuring that consumers do not face any exploitation or fraud and that sellers and manufacturers are held accountable and to the high standard of quality that they promise the buyers.

Consumer Protection laws are essential to protect the forces of the economy- the buyers themselves, especially in a country like ours where awareness and access to education are restricted, which enables the sellers and manufacturers from getting away with a large degree of exploitative trade practices. 


[1] Section 1(4) of the Consumer Protection Act 2019

[2] S.K.B. Asante “United Nations International Regulation of Transnational Corporations” Journal of World Trade Law, vol. 13, (No. 1), January-February 1979, pp. 55-56

[3] Gurbax Singh, Law of Consumer Protection, Jaipur, Bharat Law Publications, 1993, p. 8

[4] Section  2(9) of the Consumer Protection Act 2019

[5] ‘Understand The Basics Of Consumer Protection Law – Ipleaders’ Available Here accessed 19 June 2020

[6] The Monopolies And Restrictive Trade Practices Act, 1969

[7] Supra, note 5

[8] Ibid

[9]Indian Medical Association v V.P. Shantha and others,  AIR 1996 SC 550

[10]Nizam Institute of Medical Sciences v Prasanth S. Dhananka & Ors, MANU/SC/0803/2009

[11] Sapient Corporation Employees Provident Fund Trust v HDFC & Ors., MANU/CF/0656/2012

[12] Delhi Development Authority v D.C. Sharma, MANU/CF/0053/2014


  1. History and Development of Consumer Protection Laws in India
  2. Law of Torts; Notes, Case Laws And Study Material