Institute of Management Technology

2014-2016

Legal Environment of Business

Project Report
On
Title
Consumer Protection Act

Submitted To
Prof. G. K. Kwatra

Submitted By
Section A, Group 9,
Gupta Vatsal Vimalbhai -140201050
Harshit Dalmia-140201051
Himanshu Mittal-140201052
Himanshu Singh-140201053
Gautam Kumar Tangudu-140201049
Imad Ahmad Khan-140201054

CONTENT

INTRODUCTION

OBJECTIVES

THE CONSUMER PROTECTION ACT, 1986

CONSUMERS RIGHTS UNDER SECTION 6 OF CONSUMER PROTECTION ACT.

CONSUMER PROTECTION COUNCIL.

CONSUMER DISPUTE REDRESSAL AGENCIES.

CONSUMERS POINT OF VIEW

BUSINESS POINT OF VIEW

CONSUMER RESPONSIBILITIES

CASE STUDY

BIBLIOGRAPHY

THE CONSUMER PROTECTION ACT, 1986

INTRODUCTION
An individual who buys products or services for personal use and not for manufacture or resale.
A market is where buyers and sellers come together to engage in business. The Consumer
Protection Act 1986 is a law which was made to ensure a fair trade between a consumer and a
seller. The main objective of the law is to provide better protection to the interests of the
consumer and to make provisions for establishing various bodies for settlement of disputes
between consumers and sellers. Other than Jammu and Kashmir, it is applied everywhere else in
India.

To make sure that the interests of consumers are protected, the law ensures that judicial bodies
are set up at district, state and central levels and these judicial bodies are expected to provide
justice, give reliefs and impose penalties for non-compliance of orders given by the bodies.

The main objective of these bodies is to provide speedy and simple redressal to the disputes of
consumers.

OBJECTIVES
Following are the main objectives of this act:

To establish Consumer Protection Council at the Central and State level.

To provide speedy and simple redressal to consumer disputes by establishing consumer

courts.

To help countries in achieving or maintaining protection for their citizens as consumers.

To apply production and distribution patterns needed to fulfil the needs and desires of
consumers

To encourage high ethical conduct for people engaged in the production and distribution
of goods and services to consumers

To help countries in bringing down abusive business practices by various companies

which has great effect on consumers

To help in the development of independent consumer groups

To encourage the development of market conditions which provide consumers with more
choice at competitive prices.

THE CONSUMER PROTECTION ACT, 1986[1]

1. Short title, extent, commencement and application.

(1) This Act may be called the Consumer Protection Act, 1986. tc "1. Short title, extent,
commencement and application.(1) This Act may be called the Consumer Protection Act,
1986."
(2) It extends to the whole of India except the State of Jammu and Kashmir. tc "(2) It extends to
the whole of India except the State of Jammu and Kashmir."
(3) It shall come into force on such date1 as the Central Government may, by notification,
appoint and different dates may be appointed for different States and for different provisions of
this Act. tc "(3) It shall come into force on such date1 as the Central Government may, by
notification, appoint and different dates may be appointed for different States and for different
provisions of this Act."
(4) Save as otherwise expressly provided by the Central Government by notification, this Act
shall apply to all goods and services. tc "(4) Save as otherwise expressly provided by the Central
Government by notification, this Act shall apply to all goods and services."
2 Definitions.

(1) In this Act, unless the context otherwise requires,

1 [(a) appropriate laboratory means a laboratory or organisation

(ii) recognized by a State Government, subject to such guidelines as may be prescribed by the
Central Government in this behalf; or
(iii) any such laboratory or organisation established by or under any law for the time being in
force, which is maintained, financed or aided 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;]
2 [(aa) branch office means
(i) any establishment described as a branch by the opposite party; or
(ii) any establishment carrying on either the same or substantially the same activity as that
carried on by the head office of the establishment;]
with a view to obtaining any relief provided by or under this Act; 14 [ Explanation. For the
purposes of this clause, commercial purpose" does not include use by a person of goods bought
and used by him and services availed by him exclusively for the purposes of earning his
livelihood by means of self-employment;] Provided that where a defence is raised to the effect
that such warranty or guarantee is based on adequate or proper test, the burden of proof of such
defence shall lie on the person raising such defence;
(i) a warranty or guarantee of a product or of any goods or services; or
(ii) a promise to replace, maintain or repair an article or any part thereof or to repeat or continue
a service until it has achieved a specified result, if such purported warranty or guarantee or
promise is materially misleading or if there is no reasonable prospect that such warranty,
guarantee or promise will be carried out;
(b) complainant means
(i) a consumer; or
(ii) any voluntary consumer association registered under the Companies Act, 1956 (1 of 1956) or
under any other law for the time being in force; or
(iii) the Central Government or any State Government; or
3 [(iv) one or more consumers, where there are numerous consumers having the same interest;]
(c) complaint means any allegation in writing made by a complainant that
5 [(i) an unfair trade practice or a restrictive trade practice has been adopted by 6 [any trader or
service provider];]
(ii) 7 [the goods bought by him or agreed to be bought by him] suffer from one or more defects;

(iii) 8 [the services hired or availed of or agreed to be hired or availed of by him] suffer from
deficiency in any respect;
9 [(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
10 [(v) goods 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;]
(d) consumer means any person who,
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and includes any user of such goods other
than the person who buys such goods for consideration paid or promised or partly paid or partly
promised, or under any system of deferred payment, when such use is made with the approval of
such person, but does not include a person who obtains such goods for resale or for any
commercial purpose; or
(ii) 12 [hires or avails of] any services for a consideration which has been paid or promised or
partly paid and partly promised, or under any system of deferred payment and includes any
beneficiary of such services other than the person who 12 [hires or avails of] the services for
consideration paid or promised, or partly paid and partly promised, or under any system of
deferred payment, when such services are availed of with the approval of the first mentioned
person 13 [but does not include a person who avails of such services for any commercial
purpose];
(e) consumer dispute means a dispute where the person against whom a complaint has been
made, denies or disputes the allegations contained in the complaint;
(f) defect 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
15 [under any contract, express or implied, or] as is claimed by the trader in any manner
whatsoever in relation to any goods;

(g) deficiency means any fault, imperfection, shortcoming or inadequacy in the quality, nature
and manner of performance which is required to be maintained by or under any law for the time
being in force or has been undertaken to be performed by a person in pursuance of a contract or
otherwise in relation to any service;
(h) District Forum means a Consumer Disputes Redressal Forum established under clause (a)
of section 9;
(i) goods means goods as defined in the Sale of Goods Act, 1930 (3 of 1930);
16 [(j) manufacturer means a person who
(i) makes or manufactures any goods or parts thereof; 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;]
15 [(jj) member includes the President and a member of the National Commission or a State
Commission or a District Forum, as the case may be;]
(k) National Commission means the National Consumer Disputes Redressal Commission
established under clause (c) of section 9;
(l) notification means a notification published in the Official Gazette;
(m) person includes,
(i) a firm whether registered or not;
(ii) a Hindu undivided family;
(iii) a co-operative society;
(iv) every other association of persons whether registered under the Societies Registration Act,
1860 (21 of 1860) or not;
(n) prescribed means prescribed by rules made by the State Government, or as the case may
be, by the Central Government under this Act;
17 [(nn) regulation means the regulations made by the National Commission under this Act;']
(a) delay beyond the period agreed to by a trader in supply of such goods or in providing the
services which has led or is likely to lead to rise in the price;
(b) any trade practice which requires a consumer to buy, hire or avail of any goods or, as the case
may be, services as condition precedent to buying, hiring or availing of other goods or services;]

(o) service means service of any description which is made available to potential 19 [users and
includes, but not limited to, the provision of] facilities in connection with banking, financing
insurance, transport, processing, supply of electrical or other energy, board or lodging or both,
20[housing construction,] entertainment, amusement or the purveying of news or other
information, but does not include the rendering of any service free of charge or under a contract
of personal service; 21 [oo] "spurious goods and services" mean such goods and services which
are claimed to be genuine but they are actually not so;]
(p) State Commission means a Consumer Disputes Redressal Commission established in a
State under clause (b) of section 9;
(q) trader in relation to any goods means a person who sells or distributes any goods for sale
and includes the manufacturer thereof, and where such goods are sold or distributed in package
form, includes the packer thereof;
22 [(r) unfair trade practice means a trade practice which, for the purpose of promoting the
sale, use or supply of any goods or for the provision of any service, adopts any unfair method or
unfair or deceptive practice including any of the following practices, namely:
(1) the practice of making any statement, whether orally or in writing or by visible representation
which,
(i) falsely represents that the goods are of a particular standard, quality, quantity, grade,
composition, style or model;
(ii) falsely represents that the services are of a particular standard, quality or grade;
(iii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new
goods;
(iv)represents that the goods or services have sponsorship, approval, performance,
characteristics, accessories, uses or benefits which such goods or services do not have;
(v) represents that the seller or the supplier has a sponsorship or approval or affiliation which
such seller or supplier does not have;
(vi) makes a false or misleading representation concerning the need for, or the usefulness of, any
goods or services;
(vii) gives to the public any warranty or guarantee of the performance, efficacy or length of life
of a product or of any goods that is not based on an adequate or proper test thereof:

CONSUMERS

RIGHTS

UNDER

SECTION

OF

CONSUMER

PROTECTION ACT.
The objects of the Central Council shall be to promote and protect the rights of the consumers
such as

(a)The right to be protected against the marketing of goods and services which are hazardous to
life and property.
Low quality medicines, goods made of low quality raw material and low quality consumable
food products, etc. The consumers have the right to safety against the loss of health and property
caused by such products.

(b) The right of information about the quality, quantity, purity, standard and price of goods or
services, so as to protect consumer against unfair trade practices.
Consumer has the right to be provided with all the information on the basis of which he ca
decide to buy goods or services. All the properties and ingredients should be properly mentioned.
The MRP should be mentioned along with the expiry date on the product packing.

(c) The right to be assured, wherever possible, access to a variety of goods and services at
competitive prices. A consumer has the right to buy any goods or services which he intends to
choose from various goods or services available in the market. That is, no seller can influence his
choice in an wrong manner. The consumer has the sole right to decide which products he would
like to consume. If any seller denies the consumer of the choice, it will be considered as
interference in his right to choice.

(d) The right to be heard and to be assured that consumer's interests will receive due
consideration at appropriate forums. A consumer has the right that his complaint be heard. Under
this right, the consumer can file a complaint against all those things which interfere with any of
his rights. First, their rights mentioned above (Right to Safety, Right to be informed and Right to
choose) have relevance only if the consumer has the right to file his complaint against them.

These days, several large organisations have set up Consumer Service Cells with a view to
provide the consumer the right to be heard.
The function of the grievance redressal cell is to hear the complaints of the consumers and to
take adequate measures to redress them. Many daily newspapers have also special columns to
entertain the complaints of the consumers.

(e) The right to seek redressal against unfair trade practices or restrictive trade practices or
unscrupulous exploitation of consumers. This right provides compensation to the consumers
against unfair trade practice of the seller. For instance, if the quantity and quality of the product
do not match to those promised by the seller, the buyer has the right to claim compensation as
stated below.
Several grievance redressal options are available to the consumer by way of compensation, such
as free repair of the product, taking back of the product with refund of money, changing of the
product by the seller.

(f) The right to consumer education. Consumer education refers to making the consumer aware
of his rights and educating the consumer constantly with regard to the same. In other words,
consumers must be aware of the rights they enjoy against the loss of life, health or property they
suffer on account of goods and services purchased/consumed by them. Government and various
NGOs have taken several measures to educate the consumers and make them aware of their
rights.

CONSUMER PROTECTION COUNCIL.

Customer protection councils are the governing bodies which are established at national, state
and district levels. They promote and protect the rights of the customer.

THE CENTRAL CONSUMER PROTECTION COUNCIL.

(1) The Central Government may, by notification, establish with effect from such date as it may
specify in such notification, a council to be known as the Central Consumer Protection Council
(hereinafter referred to as the Central Council).

(2) The Central Council shall consist of the following members, namely,(a) the Minister in charge of consumer affairs in the Central Government, who shall be its
Chairman, and
(b) such number of other official or non-official members representing such interests as
may be prescribed.

(3) Meetings:
(a) The Central Council shall meet as and when necessary, but 1[at least one meeting] of the
council shall be held every year.
(b) The Central Council shall meet at such time and place as the Chairman may think fit and
shall observe such procedure in regard to the transaction of its business as may be prescribed.

THE STATE CONSUMER PROTECTION COUNCIL

(1) The State Government may, by notification, establish with effect from such date as it may
specify in such notification, a council to be known as the Consumer Protection Council
(hereinafter referred to as the State Council).

(2) The State Council shall consist of the following members, namely,-

(a) the Minister in-charge of consumer affairs in the State Government who shall be its
Chairman;
(b) such number of other official or non-official members representing such interests as
may be prescribed by the State Government.

(3)Meetings
(a) The State Council shall meet as and when necessary but not less than two meetings shall be
held every year.
(b) The State Council shall meet at such time and place as the Chairman may think fit and shall
observe such procedure in regard to the transaction of its business as may be prescribed by the
State Government.

DISTRICT CONSUMER PROTECTION COUNCIL

(1)The District Consumer Protection Council shall consist of the following members, namely:
(a) The Collector of the district ,who shall be its Chairman; and
(b) Such number of other official and non-official members representing such interests
as may be prescribed by the State Government.

(2) Meetings
(a)The District Council shall meet as and when necessary but not less than two meetings shall be
held every year.
(b)The District Council shall meet at such time and place within the district as the Chairman
may think fit and shall observe such procedure in regard to the transaction of its business as may
be prescribed by the State Government.

CONSUMER DISPUTE REDRESSAL AGENCIES.

The Consumer protection Act provides three tier structures for redressal of complaints under the
act. The consumer disputes redressal agencies are established at district, state and national levels.

District Forum

Established by State Government in each district by notification in Official Gazette.

Consists of President and Two members. President will be one who has been, or is

qualified to be a District Judge, and is appointed by the State Government on recommendation of

a Selection Committee.

More than one forums can be formed in a district.

In the absence of a President, the senior most member will discharge duties of President.

Only complaints where the value of goods or services and the compensation claimed is

not more Rs. 20 lakhs.

Jurisdiction

a)

When the opposite party or all opposite parties actually reside or carry on business or

works or gain or has a branch office there.

b)

When one of the opposite parties actually resides or carries on business or personally

works for gain or has a branch office; provided other opposite parties who do not reside or carry
on business acquiesce the institution of complaint. (i.e. they do not raise any objection)

c)

Where cause of action, wholly or in part, arose.

State Commission

Established by State Government, by way of notification.

President of State Commission is appointed by State Government in consultation with

Chief Justice of High Court.

Jurisdiction

a)

Original Jurisdiction : Where the value of goods and compensation, if any, claimed

exceeds Rs.20 lakhs but not more than Rs.100 lakhs

b)

Apellate Jurisdiction : Against the orders of the district forum within that State.

c)

Revisional Jurisdiction : Call for records and pass appropriate orders in any consumer

dispute that is pending or has been decided by District Forum, if the State Commission is of the
view that District Forum is exercising jurisdiction not vested in it, or not exercising the
jurisdiction.

National Commission

Established by Central Government by notification under Section 9 of CPA.

Consists of a President and not less than 4 and not more than 9 members, atleast one of

whom must be a Woman.

Jurisdiction

a)

Original Jurisdiction : Where the value of goods and compensation, if any, claimed

exceeds Rs. 100 lakhs

b)

Apellate Jurisdiction : Appeals against the original orders of the State Commission

c)

Revisional Jurisdiction : Call for records and pass appropriate orders iin any consumer

dispute, which is pending or has been decided by any State Commission, if it appears to National
Commission that i.) State Commission is exercising jurisdiction not vested in it or ii.)State
Commission is not exercising the jurisdiction vested in it. iii.) State Commission has acted in its
jurisdiction illegally or with material irregularity.

CONSUMERS POINT OF VIEW

This Act has had a very positive impact on consumers. This Act has given the consumer the
power to challenge any wrong doing by the organizations. Because of this, the businessmen will
not involve himself in any unfair trading practices and the quality of the goods will be better.
This will result in healthy competition in the market and thus customers get goods at competitive
prices for themselves. It also creates a sense of security among the consumers.

BUSINESS POINT OF VIEW

Ethics in business play a very important role. And providing quality goods at reasonable prices is
an ethical and moral thing to do for a businessman. This also adds to the glory of an organization
and helps in gaining the trust of the consumers. If a consumer is unsatisfied and lodges a
complaint against the company, the brand name of company gets affected. In order to avoid such
kind of problem, as a CEO of the company one should be aware of this act and should make sure
that it is being followed by the company.

CONSUMER RESPONSIBILITIES
In addition to this Act, the consumers also should take some responsibility upon themselves to
stop this exploitation. They should not only know their rights but should also exercise them
whenever required. The consumers should also not get carried away by the advertisements as
they are often exaggerated. They should know the correct features of the products and services
and the proper uses of that product instead of going according to the advertisements. The
consumer should always ask for a cash bill as it is a proof that he has purchased the goods. The
consumers should be aware of black marketing of goods and should choose only legal goods &
services.

CASE STUDY
Cadbury was in the news when a student discovered a wasp in his Cadbury Dairy Milk bar.
20 year old Jake Keating of Liverpool, a construction management student at Liverpool John
Moores University, claimed that he found a dead wasp inside his chocolate bar which he had
bought in the city centre.
He said: I was in the city centre when I unwrapped the bar and found this wasp inside. We kept
the bar all day because I thought we should send it back. It was a whole wasp - it wasnt like a
bit of it, it still had both wings and the sting as well, which could still hurt someone I think.
Cadburys sent someone round on Friday to collect it.
A Cadbury spokesman said: This certainly sounds unpleasant for Mr. Keating and we have
asked for the bar to be returned to us. Once we have the bar back we will carry out an
investigation to see where and when this could have occurred.
The occurrence of such kind of event led to a bad image of such a big company, thus this
incident portrays the importance of service to be provided to customers.He kept the bar, took a
photograph of it and contacted Cadbury.

BIBLIOGRAPHY
[1]: http://www.ncdrc.nic.in/1_1.html