CONSUMER PROTECTION

INTRODUCTION

The consumer movement in India is as old as trade and commerce. In Kautilya‟s

Arthashastra, there are references to the concept of consumer protection against

exploitation by the trade and industry, short weighment and measures, adulteration and

punishment for these offences. However, there was no organized and systematic

movement actually safeguarding the interests of the consumers.

With the advent of the 20th century due to rapid industrialization and

multifaceted development in India after the Independence, there appeared a flood of

consumer goods and services in the Indian Market, which almost changed the

relationship between the consumer and the trader. Technological advancements in the

field of media led to flooding of advertisements of goods and services further worsening

the otherwise grim situation. Lack of consumer awareness, illiteracy, poverty, etc.

further led to the exploitation of consumers1.

Awareness of consumer rights varies in different regions in the country. It is very

poor especially among the population in rural and far-flung areas of the country.

Compared to the developed countries, the levels of consumer awareness in such a vast

country with a large population like India is much lower. This is rooted in economic

inequality, low levels of literacy and ignorance. Because of this, consumers are not able

to assert their rights and on many occasions are exploited by the trade and industry

and service providers. Protecting and promoting the welfare of consumers has thus

become one of the major concerns.

Globalisation and liberalisation of trade and business has resulted in many

products and services being available to the consumers. Growth in economy has

resulted in increase in the purchasing power of the middle class section, which is the

1 Consumers‟ Awareness about Rights and Grievance Redressal, by Dr. Durga Surekha, 2010, page 8-9

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largest segment of the population. This has necessitated giving high priority for the

protection of the consumers and promotion of responsible consumer movement in the

country2.

Modern technological growth and complexities of the sellers‟ techniques,

existence of a vast army of middlemen and unethical and untruthful advertisements

have aggravated the situation of consumer exploitation3. The consumer has to be

aware of his rights and play a key role. The success of consumerism is a strong function

of consumer awareness and to avoid exploitation consumer must become

knowledgeable4.

GOVERNMENT INITIATIVES

Consumer movement is a socio-economic movement which seeks to protect the

rights of consumers in relation to the goods purchased and services availed.

Government has been according high priority to better protect consumer interests. The

Department of Consumer Affairs, has initiated a number of steps to promote a

responsible and responsive consumer movement in the country. Such measures include

the use of multi-media campaign for promoting consumer awareness and encouraging

consumers' involvement through efforts of Government and Non-Governmental

Organizations and others.

The main objectives of the consumer protection programme are:-

(i) To create suitable administrative and legal mechanisms which would be within the easy reach of consumers and to interact with both Government and non-Governmental Organizations to promote and protect the welfare of the consumers.

(ii) To involve and motivate various sections of society including consumer organizations, women and youth to participate in the programme.

2 Report of the Working Group on Consumer Protection Twelfth Plan (2012-17), p.15 3 Consumers‟ Awareness about Rights and Grievance Redressal, by Dr. Durga Surekha, 2010, p.19 4 Ibid, p.21

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(iii) To generate awareness among consumers about their rights and responsibilities, motivate them to assert their rights so not to compromise on the quality and standards of goods and services and to seek redressal of their disputes in consumer fora, if required.

(iv) To educate the consumers as to be aware of their rights & social responsibilities5.

CONSUMER RIGHTS

The importance of consumer rights lies in their enforceability, which in turn

depends largely on level of consumer education and awareness. In other words, it is

not enough to have dynamic consumer laws in the country. There must be an equal

thrust on education of all citizens on the consumer rights available to them and the

mechanisms through which these rights, if violated can be redressed.

The rights of consumer which are being sought to be promoted and protected

through the legislative mandate available under the Consumer Protection Act, 1986

inter- alia include:

(a) The right to be protected against marketing of goods and 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 to protect the consumer against unfair trade practices;

(c) The right to be assured, wherever possible to access to variety of goods and services at competitive prices;

(d) The right to be heard and to be assured that consumers interests will receive due consideration at appropriate fora;

(e) The right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers; and

(f) The right to consumer education6.

5 Department of Consumer Affairs, Annual Report, 2011-12, p.51 6 Op.cit Report of the Working Group, p.65

4

From all these rights, it is the right to consumer education that can be said to be

of paramount importance, since this is the gateway through which all the rights can be

secured. An aware consumer not only protects his own rights but also induces efficiency

in the economy which enables a country to become globally competitive7.

CONSUMER AWARENESS

In a world of information asymmetry the government has the responsibility to

redress this imbalance. In the Government of India, the Department of Consumer

Affairs is the focal point for different Departments and organizations to make the

consumers aware of market realities as well as the rights of the consumers and the

manner in which they can educate themselves and also enforce their rights.

Accordingly, the „Jago Grahak Jago‟ campaign has become immensely popular and is

now being used by several Departments to communicate with consumers8.

Increase in consumer awareness has propelled manufacturers and traders to

ensure quality service to consumers. Resultant to that number of cases filed in National

and State Commission have come down from total of 40,391 in the year 2007 to 22,101

in the year 2011. Similarly, number of cases filed in District Consumer Forums have also

come down from 1,53,738 to 78,440 during the same period9.

LEGISLATIVE MEASURES ON CONSUMER PROTECTION

CONSUMER PROTECTION ACT, 1986

One of the most important milestones in the area of consumer

protection/consumer movement in the country has been the enactment of the

Consumer Protection Act, 1986. This Act has been necessitated because the well-

organized sectors of manufacturers, traders and service providers with the knowledge

of market and manipulative skills often attempt to exploit the consumers, in spite of the

7 Ibid , p.66 8 Department of Consumer Affairs, Strategic Plan, 2011-15, p.13 9 Rajya Sabha, Unstarrred Question no.2524 dated 17.12.2012

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existence of various provisions of different laws for protecting their interests. Moreover,

the increase in population has resulted in enormous pendency and delay in disposal of

cases in the civil courts. . Hence, the Consumer Protection Act, 1986 was enacted to

better protect the interests of consumers. It is one of the most progressive and

comprehensive pieces of legislation and is umbrella legislation covering all goods and

services.

The Salient Features of the Act are as under:

(i) The Act provides for establishing three-tier consumer dispute redressal machinery at the national, state and district levels.

(ii) It applies to all goods and services.

(iii) It covers all sectors, whether private, public or any person.

(iv) The Act provides for relief of a specific nature and also for compensation to the consumer as appropriate.

(v) The Act also provides for setting up of Consumer Protection Councils at the Central, State and District levels, which are advisory bodies to promote and protect the rights of the consumers.

(vi) The provisions of the Act are in addition to and not in derogation of the provisions of any other law for the time being in force10.

Consumer Protection Act has been in operation for about 25 years. A number of

deficiencies and shortcoming in respect of its operation have come to light thereby

requiring Amendments on three occasions, still leaving scope for further improvements.

CONSUMER GRIEVANCE REDRESSAL

Consumers need an inexpensive and quick grievance redressal mechanism to

ensure that manufacturers and service providers are accountable for the price and

10 Op.cit Report of the Working Group, pp.15-16

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quality that the consumers are entitled to. Accordingly, it is necessary to provide

several methods of grievance redressal including those which are available in

accordance with the provisions of the Consumer Protection Act11.

Consumer Protection Act, 1986 enables the ordinary consumers to secure less

expensive and often speedy redressal of their grievances. The Act mandates

establishment of Consumer Protection Council at the Centre as well in each States and

District, with a view to promoting the consumer awareness. It also provides for a three-

tier structure of the National and State Commissions and District Forums for speedy

resolution of consumer disputes. At present there are 632 District Forums, 35 State

Commissions with the National Consumer Disputes Redressal Commission(NCDRC) at

the apex (Annexure-I). The provisions of this Act covers „goods as well as services‟.

The goods are those which are manufactured or produced or sold to consumers

through whole sellers and retailers. The services are in the nature of transport,

telephone, electricity, housing, banking, insurance, medical treatment etc. If, the

consumer is not satisfied by the decision of the District Forum, he can appeal to the

State Commission and against the order of State Commission a consumer can appeal in

the National Commission12.

As per information made available by NCDRC, out of 38,73,772 cases filed in

consumer fora at three-tier level since inception, 35,24,221 cases (almost 91%) have

been disposed off (Annexure-II & III).

To ensure speedy disposal of cases, State Government advised to avoid any

delay in appointment of President and Members in Consumer Fora. In order to dispose

of the pending cases, Circuit Benches from National Commission frequently visits the

State. So far National Commission has held Circuit Bench sitting at Hyderabad,

Bengaluru, Chennai, Pune, Kolkata, Ernakulam, Ahmadabad and Bhopal. Some of the

11 Op.cit Strategic Plan, p.12 12 NCRDC.nic.in

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State Commissions also held Lok Adalats for speedy disposal of the cases13. Under the

scheme of “Strengthening Consumer Fora” (SCF), financial assistance is provided to the

States/Union Territories for strengthening infrastructure of building as well as non-

building assets14 (Annexure-IV).

Scheme of Computerization and Computer Networking of Consumer Fora

(CONFONET) was launched in March 2005. Under this scheme, the Consumer Fora at all

the three-tiers throughout the country were to be fully computerised to enable access

of information and quicker disposal of cases. The project is being implemented by the

National Information centre (NIC) on a turnkey basis. The scheme has been extended

during 11th Plan period with a total outlay of Rs.25.69 crores. During the year 2011-12

an amount of Rs.0.75 crores has been released to NIC for activities to be undertaken

under CONFONET Project in the XIth Plan15.

CONSUMER PROTECTION (AMENDMENT) BILL, 2011

Consumer Protection Act was earlier amended thrice by Act no.34 of 1991, Act

no.50 of 1993 and Act no.62 of 2002. Amendment made in 1991 was mainly to

incorporate provisions for the quorum of District Forum, appointing persons to preside

over State Commissions/District Forums, in case of absence of President to enable the

court function uninterruptedly16. In 1993, the Act was again amended to address the

inadequacies in the coverage of the main Act. It aimed to plug loopholes and enlarge

the scope of areas covered and interest more power to the redressal agencies under

the Act17. In 2002, Act was again amended to facilitate quicker disposal of complaints,

enhancing the capability of redressal agencies, strengthening them with more powers,

13 Lok Sabha, Unstarred Question no.3928 dated 18.12.2012 14 Rajya Sabha Unstarred Question no.2498 dated 17.12.2012 15 Op.cit Annual Report, 2011-12, p.54 16 Consumerism Global and Indian Perspectives by J.S. Panswar, Navin Mathur and Darshana R. Dave, 2006, p. 94 17 Consumer Protection Amendment Bill, 1993

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streamlining the procedure and widening the scope of the Act to make it more

functional and effective18.

As a pro-active measure, in July 2004 a Working Group was set up to examine

the provision of the Act and consider relevant amendment to make the Act more

meaningful, functional and vibrant. A number of proposed amendments were circulated

to all State Governments, concerned Central Ministries and NCDRC in July 2006.

Revised proposed amendments were re-circulated in 2009 and in light of the comments

received on the draft proposal, the Department of Consumer Affairs in consultation with

the Ministry of Law and Justice formulated “Consumer Protection (Amendment) Bill,

2010. In meantime some fresh additional comments of the Department of Financial

Services were received on the proposed sections regarding unfair trade practice and

unfair contract. These changes were got approved by the Ministry of Law and Justice

and formed part of the draft proposal of Consumer Protection (Amemdment) Bill, 2011.

The Bill was introduced in Lok Sabha on 16.12.2011. The Bill was referred to Standing

Committee on Food, Consumer Affairs and Public Distribution on 26.12.201119.

The Committee Report was presented in Lok Sabha on 19.12.2012.

The main objectives of the proposed Bill are :-

(i) Widening the scope and amplifying the provisions of the Act.

(ii) Facilitating quicker disposal of complaints.

(iii) Rationalising the qualifications and procedure of selection of the Presidents and Members of Consumer Fora.

(iv) Strengthening penal provisions/enforcement orders of Consumer Fora20.

18 Op.cit Report of the Working Group, pp.16-17 19 26th Report of Standing Committee on Food, Consumer Affairs on Consumer Protection (Amdt.) Bill,

2011, pp.1-2 20 Ibid, pp.5-8

9

The Standing Committee Report on above Bill observed that a cooperative

approach between Central and State Governments will result in uniform implementation

of consumer protection laws and rules across all jurisdictions. The Committee also

recommended Ministry to effectively implement consumer related programmes and

policies in close co-ordination with the State Governments in the interest of consumers.

A need for updation of the quality of goods and standards of services provided to

consumers so as to conform to the international standard is also stressed upon. It also

draws attention towards strong need to spread awareness in order to educate the

consumer about their rights as provided under the Act. Committee recommended that

Consumer Fora should be given power to grant punitive damages of not less than five

times of the loss or compensation awarded to aggrieved consumer by the defaulting

Companies21.

Future Roadmap

As per the Strategic Plan of the Department of Consumer Affairs, the vision is to

protect the rights and interests of consumers, to spread awareness about consumer

rights, duties and responsibilities and to promote consumer welfare by strengthening

consumer movement in the country. Active participation of State Governments,

academic and research institutions, schools and voluntary organizations will be sought

to create a vibrant consumer movement in the country. Strict parameters regarding

consumer products will be developed and enforced along with regular monitoring of

prices to ensure the sovereignty of consumers22.

12th Plan strategy and implementation plan: -

(i) Consumers need an inexpensive and quick grievance redressal mechanism to ensure that manufacturers and service providers are accountable for the price and quality that the consumers are entitled to. Accordingly, it is necessary to provide several methods of grievance redressal including those which are available in accordance with the provisions of the Consumer Protection Act.

21 Ibid, pp.10-11 22 Op.cit Report of the Working Group, p.24

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Thus, mediation or in-house grievance redressal should be tried, but without giving up the right of the consumer to obtain legal redress ;

(ii) Amendment of Consumer Protection Act to make it more effective and tuned to reducing the backlog of cases.

(iii) Of recent there has been derogation or poaching on the jurisdiction of Consumer Protection Act in some of the areas due to the orders passed by the Courts. Such loopholes in the Act should be plugged through appropriate amendments to the Act and Rules.

(iv) Computerisation and Networking of consumer fora across the country so that consumers can file complaints and access their case status online.

(v) Setting up counselling and a mediation mechanism at pre-litigation stage and so as to reduce the burden of consumer courts and resolve disputes through out of court settlements.

(vi) Provision of adequate infrastructure to Consumer fora so as to make them function effectively.

(vii) Moving from manual system to computer based system to bring in more efficiency and transparency.

(viii) Provision for monitoring the performance of functioning of District Fora by developing dynamic MIS Reports on the performances related to total no. of cases filed/ disposed and other related performance indicators.

(ix) Provision of funds for the annual maintenance of confonet hardware items like computers, ups, replacement of ups batteries etc. under the Scheme on Strengthening Consumer Fora23.

Conclusion

The prospect of the consumer justice system in our country appears to be bright

in view of the proactive policy, schemes / programmes adopted by the Government.

However, the present drive and direction need to be supplemented by adopting

23 Op.cit Report of the Working Group, p.27

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different channels of redressal. And there is a dire need for the State Governments to

give deserving priority to Consumer welfare and gear up themselves to meet the

challenges thrown up by market economy. Involvement of trade and industry, civil

society organizations and above all consumer themselves are vital for betterment of

consumer welfare in the years to come24.

24 Op.cit Report of the Working Group, p.37

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Annexure-I

STATEMENT REFERRED TO REPLY TO PART (b) OF LOK SABHA UNSTARRED QUESTION NO. 3928 FOR

18.12.2012 REGARDING ASSISTANCE FOR CONSUMER FORA

INFORMATION REGARDING FUNCTIONAL/NON-FUNCTIONAL (STATE

COMMISSIONS/DISTRICT FORUMS)

(as on 04.12.2012)

SI.. No. States Whether SC Functional or Nonfunctional

No. of District Fora

Functional Non-functional As on

1 Andhra Pradesh Yes 29 29 0 30.09.2012

2 A & N Islands Yes 1 1 0 31.3.2006

3 Arunachal Pradesh Yes 16 13 3 30.09.2012

4 Assam Yes 27 27 0 31.12.2011

5 Bihar Yes 38 38 0 30.09.2012

6 Chandigarh Yes 2 2 0 30.09.2012

7 Chattisgarh Yes 16 16 0 30.09.2012

8 Daman & Diu Yes 2 2 0 31.03.2011

9 Dadra & Nagar Haveli Yes 1 1 0 31.03.2011

10 Delhi Yes 10 10 0 30.09.2012

11 Goa Yes 2 2 0 30.09.2012

12 Gujrat Yes 30 30 0 30.09.2012

13 Haryana Yes 21 19 2 30.09.2012

14 Himachal Pradesh Yes 12 12 0 30.09.2012

15 Jammu & Kashmir Yes 2 2 0 31.03.2009

16 Jharkhand Yes 22 16 6 30.09.2011

17 Karnataka Yes 30 30 0 30.09.2012

18 Kerala Yes 14 14 0 31.12.2010

19 Lakshadweep Yes 1 1 0 30.09.2012

20 Madhya Pradesh Yes 48 48 0 30.09.2012

21 Maharashtra Yes 40 40 0 30.06.2011

22 Manipur Yes 9 9 0 31.12.2008

23 Meghalaya Yes 7 7 0 30 11.2011

24 Mizoram Yes 8 8 0 31.12.2010

25 Nagaland Yes 8 8 0 31.12.2011

26 Orissa Yes 31 31 0 30.06.2012

27 Pondicherry Yes 1 1 0 30.09.2011

28 Punjab Yes 20 20 0 30.09.2012

29 Raj as than Yes 37 37 0 30.06.2012

30 Sikkim Yes 4 4 0 31.12.2011

31 Tamil Nadu Yes 30 22 8 30.09.2012

32 Tripura Yes 4 4 0 30.09.2012

33 Uttar Pradesh Yes 75 75 0 30.09.2012

34 Uttaranchal Yes 13 12 1 31.10.2012

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35 West Bengal Yes 21 21 0 30.06.2012

TOTAL 632 612 20

Annexure-II

STATEMENT REFERRED TO REPLY TO PART (d) TO (f) OF LOK SABHA) UNSTARRED

QUESTION NO. 3928 FOR 18.12.2012 REGARDING ASSISTANCE FOR CONSUMER FORA

Total Number of Consumer Complaints Filed / Disposed since inception Under Consumer

Protection Law

(as on 04.12.2012) SI. No.

Name of Agency Cases filed since inception

Cases disposed of since inception

Cases Pending

%of total Disposal Remarks

1. National Commission 78471 68241 10230 86.96%

2. State Commissions 589771 495717 94054 84.05%

3. District Forums 3205530 2960263 245267 92.35%

TOTAL 3873772 3524221 349551 90.98%

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Aneexure-III

(as on 30.06.2012)

YEAR-WISE FILING & DISPOSAL OF CONSUMER CASES IN STATE COMMISSIONS

States 2007 2008 2009 2010 2011 2012

Filed Disp. Filed Disp. Filed Disp. Filed Disp. Filed Disp. Filed Disp.

Andhra Pradesh 2101 2061 2014 1595 1485 1446 1579 1024 1240 377 539 35

A & N Islands N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Arunachal

Pradesh 7 5 3 4 0 0 0 0 N.A. N.A. N.A. N.A.

Assam 26 19 146 20 79 194 73 133 N.A. N.A. N.A. N.A.

Bihar 780 766 616 755 720 717 700 389 N.A. N.A. N.A. N.A.

Chandigarh 1228 1090 2376 1448 783 1127 575 1061 537 737 292 288

Chattisgarh 728 710 962 451 891 1232 843 1109 815 758 321 393

D & N Haveli/

Daman &Diu 10 8 0 0 4 0 0 0 N.A. N.A. N.A. N.A.

Delhi 1541 2475 1464 1859 1359 1129 N.A. N.A. N.A. N.A. N.A. N.A.

Goa 136 93 90 177 75 121 78 65 54 25 19 83

Gujrat 2565 1618 2428 1739 2248 2516 N.A. N.A. N.A. N.A. N.A. N.A.

Haryana 3570 1792 2274 2134 1923 3906 2013 4201 1826 7202 861 3215

Himachal

Pradesh 2180 1935 1508 1521 1694 1789 1722 1689 1357 1183 629 915

Jammu &

Kashmir 321 200 182 236 211 236 259 286 260 280 N.A. N.A.

Jharkhand 820 268 583 515 448 418 368 435 242 363 N.A. N.A.

Karnataka 2685 3294 3149 3105 4610 4500 5569 3056 4405 4238 1400 1565

Kerala 449 864 463 1632 834 1684 792 1545 N.A. N.A. N.A. N.A.

Lakshadweep 2 1 0 0 2 2 0 0 N.A. N.A. N.A. N.A.

Madhya Pradesh 3101 2706 3250 3201 2764 1962 2880 2228 1986 1709 N.A. N.A.

Maharashtra 4708 3153 4673 3935 3839 3783 3532 3645 1475 169 N.A. N.A.

Manipur N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Meghalaya 23 5 22 4 11 6 N.A. N.A. N.A. N.A. N.A. N.A.

Mizoram 22 21 21 25 9 9 12 12 N.A. N.A. N.A. N.A.

Nagaland N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Orissa 1238 1613 1122 573 1216 1136 840 1725 871 1192 N.A. N.A.

Pondicherry 26 5 48 34 19 25 9 12 14 30 N.A. N.A.

Punjab 1716 1303 1742 1926 2020 1791 2339 1681 2056 1627 1051 89

Rajasthan 3204 5213 3196 4604 2887 3902 3535 3201 3200 3155 N.A. N.A.

Sikkim 1 1 0 2 4 0 3 6 2 3 N.A. N.A.

Tamilnadu 2777 91 1039 933 566 309 1056 1180 1371 2014 N.A. N.A.

Tripura 85 82 68 121 71 63 53 57 109 86 N.A. N.A.

Uttar Pradesh 3181 3293 2832 3569 2733 2161 2760 6998 N.A. N.A. N.A. N.A.

15

Uttarakhand 453 115 290 289 242 391 482 330 281 310 113 128

West Bengal 707 983 502 694 769 825 967 743 N.A. N.A. N.A. N.A.

TOTAL 40391 35783 37063 37101 34516 37380 33039 36811 22101 25458 5225 6711

Source: Rajya Sabha Starred Question no.311 dated 3.9.2012.

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Annexure-IV

Financial Assistance for Strengthening Consumer Fora (SCF) Scheme During 2011-1225

Sl. No.

State/UT Released Amount (Rs. in lacs)

1. Kerala 15.00

2. Punjab 44.40

3. Sikkim 12.50

4. Nagaland 260.25

5. Tamil Nadu 196.79

6. West Bengal 148.21

25 Rajya Sabha Unstarred Question No.2498 dated 17.12.2012

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