CONSUMER PROTECTION - An Indian Perspective

THE CONSUMER PROTECTION ACT 2019

TIMELINE

Some of the laws which were passed during the British regime concerning consumer interests are:

The Indian Contract Act of 1872,

The Sale of Goods Act of 1930,

The Indian Penal Code of 1860,

The Drugs and Cosmetics Act of 1940,

These laws provided specific legal protection for consumers.

Consumer protection legislation enacted after India’s independence from Britain includes:

The Prevention of Food Adulteration Act, 1954

The Essential Commodities Act, 1955

The Monopolistic Restrictive And Unfair Trade Practises Act, 1969

The Standard of Weights And Measures Act, 1976

The Bureau of Indian Standards Act, 1986

The Consumer Protection Act, 1986

The Trade Marks Act, 1999

The Competition Act, 2002

In addition to the remedies under contract and criminal law, consumers have rights under tort law. Based on its numerous legal intricacies, however, tort law is not the ideal remedy for injured consumers in India. (For example, the traditional doctrine of negligence imposes a heavy responsibility on the plaintiff to prove each of its required elements.)

The Government, instead of bringing an amendment in the 1986 Act, enacted a new Act altogether to provide enhanced protection to the consumers taking into consideration the booming e-commerce industry and the modern methods of providing goods and services such as online sales, teleshopping, direct selling and multi-level marketing in addition to the traditional methods. 

The 2019 Act also deals with the technological advancements in the industry provides for easier filing of complaints and also imposes strict liability on businesses, including endorsers, for violating the interest of the consumers.

WHO IS A CONSUMER?

“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) hires or avails of any service 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 service other than the person who 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, but does not include a person who avails of such service for any commercial purpose.

(a) the expression "commercial purpose" does not include use by a person of goods bought and used by him exclusively to earn his livelihood, by means of self-employment;

(b) the expressions "buys any goods" and "hires or avails any services." includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing.

Landmark Cases

Laxmi Engineering Works vs P S G Industrial Institute (1995)

A large industrial set-up M/s Laxmi Engineering Works, filed a case in the Maharashtra State Commission (MSC) at Mumbai. The MSC awarded it Rs 2.48 lakh holding that it was a 'consumer’ of the machinery bought from M/s P.S.G. Industrial Institute. The matter went to the National Commission (NC) in appeal. The NC set aside the MSCs order saying the claimant company should move a civil suit for relief and held it was not entitled to invoke the CPA as it was in the business of manufacturing machine parts on a large scale for the purpose of 'earning profit’ and the value of a single piece of machinery used by this firm was Rs 21 lakh.

Laxmi Engineering filed an appeal in the Supreme Court, which upheld the NCs view that the CPA does not provide for business-to-business disputes. But the apex court also held that a self-employed person who buys and uses commercial goods to earn a livelihood is a consumer under the CPA.

It further said that if a person earned his livelihood by working on a typewriter or plying a taxi, or driving a truck, then he could benefit from the provisions of CPA. The Supreme Court thus held that it was not the value of the goods that mattered, but the purpose to which the goods bought were put. If the person did not use the goods but allowed them to be plied by others, he would not be a consumer.

M/S. Cheema Engineering Services vs Rajan Singh (1996)

The Hon'ble Supreme court discussed the term 'self-employment'. In this a particular case, the court was to decide on whether the respondent, who bought a brick manufacturing machine, would fall under the category of 'consumer'. The court explained that the issue comes down to whether the respondent had bought the machine for 'self-employment'.

The court further stated that:

"the word "self-employment" is not defined. Therefore, it is a matter of evidence. Unless there is evidence and on consideration thereof, it is concluded that the machine was used only for self-employment to earn his livelihood without a sense of commercial purpose by employing on a regular basis the employee or workmen for trade in the manufacture and sale of bricks, it would be for self-employment. Manufacture and sale of bricks in a commercial way may also be to earn a livelihood, but "merely earning a livelihood in commercial business", does not mean that it is not for commercial purpose. Self-employment connotes altogether a different concept, namely, he alone uses the; namely very purchased for the purpose of manufacture by employing himself in working out or producing the goods for earning his livelihood." Here 'him' was interpreted to include his family.

Karnataka Power Transmission vs Ashok Iron Works Pvt. Ltd. (2009) – Can a company be treated as a person? Is electricity goods or service?

Under CPA, the definition of person "includes” a firm, a H.U.F, a Co-operative society and an association of persons. The word “include” means the list is illustrative and not exhaustive. The intent of the legislature has to be considered. Under the General Clauses Act, a company is also a person. The definition has to be interpreted widely. Accordingly, a company can also be a consumer entitled to file a complaint under the CPA.

Electricity may be goods for the purpose of Sales Tax, but under the CPA, it is defined to be a service.

Sunil Kohli & Anr. Vs M/s. Purearth Infrastructure Ltd.(2019)

The complainants were non-resident Indians who intended to shift to India. Thus with an intention to earn their livelihood, they booked a shop. The complaint was filed alleging that the opposite party failed to deliver the position of the subject unit even years after the expiry of the stipulated date of delivery of possession. Disbelieving this version, the Commission had observed that as the complainants had booked the commercial premises, it can be safely concluded that they had hired/availed of the services of the opposite party for a commercial purpose; as such, they are not the consumers as envisaged under the Consumer Protection Act.

In appeal, the bench observed that it cannot be ruled that the complainants' case would not come within the definition of the consumer as defined under the provisions of the Act.

GOODS

Means every kind of movable property and includes "food" as defined in clause (j) of sub-section (1) of section 3 of the Food Safety and Standards Act, 2006

Section 3(1)(j) in The Food Safety and Standards Act, 2006

(j) "food" means any substance, whether processed, partially processed or unprocessed, which is intended for human consumption and includes primary food, to the extent defined in clause (ZK) genetically modified or engineered food or food containing such ingredients, infant food, packaged drinking water, alcoholic drink, chewing gum, and any substance, including water used into the food during its manufacture, preparation or treatment but does not include any animal feed, live animals unless they are prepared or processed for placing on the market for human consumption, plants prior to harvesting, drugs and medicinal products, cosmetics, narcotic or psychotropic substances: Provided that the Central Government may declare, by notification in the Official Gazette, any other article as food for the purposes of this Act having regards to its use, nature, substance or quality.

SERVICE

Means service of any description which is made available to potential 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, telecom, boarding or lodging or both, 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.

CONTRACT OF PERSONAL SERVICE

A `contract for services' implies a contract whereby one party undertakes to render services, e.g. professional or technical services, to or for another in the performance of which he is not subject to detailed direction and control but exercises professional or technical skill and uses his own knowledge and discretion. A `contract of service' implies relationship of master and servant and involves an obligation to obey orders in the work to be performed and as to its mode and manner of performance. (SC in Indian Medical Association vs V.P. Shantha & Ors, 1995)

An employer cannot be regarded as a consumer in respect of the services rendered by his employee in pursuance of a contract of employment. By affixing the adjective `personal' to the word "service" the nature of the contracts that are excluded are not altered. The said adjective only emphasizes that what is sought to be excluded is personal service only. The expression "contract of personal service" in the exclusionary part of the Section must, therefore, be construed as excluding the services rendered by an employee to his employer under the contract of personal service from the ambit of the expression "service" (SC in Indian Medical Association vs V.P. Shantha & Ors, 1995)

It is no doubt true that the relationship between a medical practitioner and a patient carries within it a certain degree of mutual confidence and trust and, therefore, the services rendered by the medical practitioner can be regarded as services of personal nature, but since there is no relationship of master and servant between the doctor and the patient, the contract between the medical practitioner and his patient cannot be treated as a contract of personal service but is a contract for services and the service rendered by the medical practitioner to his patient under such a contract is not covered by the exclusionary part of the definition of `service’ (SC in Indian Medical Association vs V.P. Shantha & Ors, 1995)

In the matter of professional liability professions differ from other occupations for the reason that professions operate in spheres where success cannot be achieved in every case and very often, success or failure depends upon factors beyond the professional man's control. In devising a rational approach to professional liability which must provide proper protection to the consumer while allowing for the factors mentioned above, the approach of the courts is to require that professional men should possess a certain minimum degree of competence and that they should exercise reasonable care in the discharge of their duties. (SC in Indian Medical Association vs V.P. Shantha & Ors, 1995)

In general, a professional man owes to his client a duty in tort as well as in contract to exercise reasonable care in giving advice or performing services. Immunity from suit was enjoyed by certain profession on the grounds of public interest. The trend is towards the narrowing of such immunity, and it is no longer available to architects in respect of certificates negligently given and to mutual valuers. Earlier, barristers were enjoying complete immunity but now, even for them the field is limited to work done in court and to a small category of pre-trial work, which is directly related to what transpires in court.

Medical practitioners do not enjoy any immunity, and they can be sued in contract or tort on the ground that they have failed to exercise reasonable skill and care. (SC in Indian Medical Association vs V.P. Shantha & Ors, 1995)

CONSIDERATION

Consideration is regarded as necessary for hiring or availing of services. The payment need not necessarily be immediate. It can be in instalments.

(For the services provided without charging anything in return, the person availing the services is not a consumer under the act).

Consideration may be:

Paid,

Promised,

Partly paid,

Partly promised,

Any system of deferred payment.

Contention: That a person who has been given free treatment by a government hospital, would not be a consumer. Argued that there was a consideration involved in this relationship. After all, it is people who pay taxes, which run the government establishments?

Supreme Court on taxes:

•            Taxes are imposed under statutory power without the taxpayer’s consent and the payment is enforced by law.

•            Tax is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of tax.

•            Tax is part of the common burden; the quantum of imposition upon the taxpayer generally depends upon his capacity to pay.

Supreme Court noted that there are three categories of hospitals:

•             Where services are rendered free of charge to everybody availing the said services;

•             Where charges are required to be paid by everybody availing the service; and

•             Where charges are required to be paid by persons availing services, but certain categories of persons who cannot afford to pay are rendered service free of charge.

The Consumer Protection Act will not come to the rescue of patients if the service is rendered free of charge or if they have paid only a nominal registration fee. However, if patients’ charges are waived because of their incapacity to pay, they are considered to be consumers and can sue under the Consumer Protection Act.

MEDICAL NEGLIGENCE

The Supreme Court in V. Krishnakumar vs State Of Tamil Nadu &Ors. on  July 1st, 2015 ordered one of the largest compensations in the country in a case of medical negligence – Rs.1.8 crore.

The Tamil Nadu government has to pay the sum to an 18-year-old girl who lost her vision at birth due to medical negligence at a government-run hospital.

The girl, who is now 18 years old, was born prematurely at the government hospital in Chennai's Egmore. But she was discharged from the hospital without a retinopathy test, a must for premature babies.

In the highest compensation awarded in a medical negligence case, the Supreme Court in Dr Balram Prasad Vs. Dr Kunal Saha & Ors.  on 24^th October 2013, asked a Kolkata-based hospital and three doctors to pay over Rs 11.41 crore, including interest, to a US-based Indian-origin doctor who lost his 29-year-old Child Psychologist wife during their visit to India fifteen years ago.

PRODUCT

Means any article or goods or substance or raw material or any extended cycle of such product, which maybe in gaseous, liquid, or solid-state possessing intrinsic value, which is capable of delivery either as wholly assembled or as a component part and is produced for introduction to trade or commerce, but does not include human tissues, blood, blood products and organs.

PRODUCT LIABILITY

This means the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by a deficiency in services relating thereto.

PRODUCT SELLER

In relation to a product, it means a person who, in the course of business, imports, sells, distributes, leases, installs, prepares, packages, labels, markets, repairs, maintains, or otherwise is involved in placing such product for commercial purpose and includes—

(i) a manufacturer who is also a product seller; or

(ii) a service provider,

But does not include—

(a) a seller of immovable property, unless such person is engaged in the sale of a constructed house or in the construction of homes or flats;

(b) a provider of professional services in any transaction in which the sale or use of a product is only incidental thereto, but furnishing of opinion, skill or services being the essence of such transaction;

(c) a person who—

(I) acts only in a financial capacity with respect to the sale of the product;

(II) is not a manufacturer, wholesaler, distributor, retailer, direct seller or an electronic service provider;

(III) leases a product without having a reasonable opportunity to inspect and discover defects in the product under a lease arrangement in which the selection, possession, maintenance, and operation of the product is controlled by a person other than the lessor.

HARM

Harm", in relation to product liability, includes—

(i) damage to any property, other than the product itself;

(ii) personal injury, illness or death;

(iii) mental agony or emotional distress attendant to personal injury or illness or damage to property; or

(iv) any loss of consortium or services or other loss resulting from harm referred to in sub-clause (i) or sub-clause (ii) or sub-clause (iii),

but shall not include any harm caused to a product itself or any damage to the property on account of breach of warranty conditions or any commercial or economic loss, including any direct, incidental or consequential loss relating thereto.

INJURY

“Injury" means any harm whatever illegally caused to any person, in body, mind or property.

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 under any contract, express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods or product and the expression "defective" shall be construed accordingly.

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 and includes—

(i) any act of negligence or omission or commission by such person which causes loss or injury to the consumer; and

(ii) deliberate withholding of relevant information by such person to the consumer;

COMPLAINT

This means any allegation in writing made by a complainant for obtaining any relief provided by or under this Act, that—

(i) an unfair contract or unfair trade practice or a restrictive trade practice has been adopted by any trader or service provider;

(ii) the goods bought by him or agreed to be bought by him suffer from one or more defects;

(iii) the services hired or availed of or agreed to be hired or availed of by him suffer from any deficiency;

(iv) a trader or a 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—

(a) fixed by or under any law for the time being in force; or

(b) displayed on the goods or any package containing such goods; or

(c) displayed on the price list exhibited by him by or under any law for the time being in force; or

(d) agreed between the parties;

(v) the goods, which are hazardous to life and safety when used, are being offered for sale to the public—

(a) in contravention of standards relating to the safety of such goods as required to be complied with, by or under any law for the time being in force;

(b) where the trader knows that the goods so offered are unsafe to the public;

(vi) the services which are hazardous or likely to be hazardous to life and safety of the public when used, are being offered by a person who provides any service and who knows it to be injurious to life and safety;

(vii) a claim for product liability action lies against the product manufacturer, product seller or product service provider, as the case may be;

Complainant

Complainant" means—

(i) a consumer; or

(ii) any voluntary consumer association registered under any law for the time being in force; or

(iii) the Central Government or any State Government; or

(iv) the Central Authority (Central Consumer Protection Authority); or

(v) one or more consumers, where there are numerous having the same interest; or

(vi) in case of death of a consumer, his legal heir or legal representative; or

(vii) in the case of a consumer being a minor, his parent or legal guardian;

CONSUMER DISPUTES REDRESSAL COMMISSIONS  (CDRC)

Final appeal lies in the Supreme Court

IMPORTANT

·         A consumer dispute can be filed within two years from the date on which the cause of action arises.

·         There is no court fees to be paid to file a complaint in a CDRC.

·         Further, a complainant/opposite party can present his case on his own without the help of a lawyer or employ any person other than a lawyer.

·         http://ncdrc.nic.in/

Finding of the District CDRC

If, after the proceeding conducted under, the District CDRC is satisfied that the goods complained against suffering from any of the defects specified in the complaint or that any of the allegations contained in the complaint about the services are proved, it shall issue an order to the opposite party directing him to do one or more of the following things, namely:--

(a) to remove the defect pointed out by the appropriate laboratory from the goods in question;
(b) to replace the goods with new goods of similar description which shall be free from any defect;

(c) to return to the complainant the price, or, as the case may be, the charges paid by the complainant;
(d) to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party.

(e) to remove the defects or deficiencies in the services in question;
(f) to discontinue the unfair trade practise or the restrictive trade practice or not to repeat them;

(g) not to offer the hazardous goods for sale;
(h) to withdraw the hazardous goods from being offered for sale;
(i) to provide for adequate costs to parties. 

Overlap with other Laws

The provisions of the Consumer Protection Act shall be in addition and not in derogation of the provisions of any law for the time being in force.

 

(Derogation = the perception or treatment of someone or something as being of little worth).

 

Overlap with other Laws

Section 6 of the Indian Post Office Act, 1898:

‘The government shall not incur any liability by reason of the loss, misdelivery or delay of, or damage to, any postal article in the course of transmission by post, except in so far as such liability may in express terms be undertaken by the Central Government as hereinafter provided; and no officer of the Post Office shall incur any liability by reason of any such loss, misdelivery, delay or damage, unless he has caused the same fraudulently or by his wilful act or default.

When Speed post was introduced, the Post Rules 1933 were amended: ‘in the event of loss of a Speed Post article or loss of contents or damage to the contents, compensation shall be double of Speed Post charges paid or Rs.1,000/- whichever is less’

Mrs Helen Wallia v Cathay Pacific Airways Limited (2002)

Loss of baggage-airlines offers $20 for 32 kilos lost-passenger claims Rs.24,63,885 + Interest @18%

The Carriage by Air Act 1972: In the carriage of registered baggage and of cargo, the liability of the carrier is limited to $20 francs per kilogram unless the passengers or consignor had made, at the time when the package was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires.

The limits of liability specified in rule 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with the knowledge that the damage would probably result; provided that in the case of such act or omission of a servant or agent, it is also proved that he was acting within the scope of his employment. 

A literal interpretation will be to ask if another law has provided on the same aspect to which the Consumer Protection Act is being applied. If it has, the Consumer Protection Act should not be applied as it would be nullifying or taking away from the other Act and it would be in ‘derogation of the provisions’ of that Act.

If the other Act, however, has not provided on that aspect, the Consumer Protection Act should be applied as it is ‘in addition to’ the other law. 

Unfair Trade Practice

“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:—

(i) making any statement, whether orally or in writing or by visible representation including by means of electronic record, which—

(a) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;

(b) falsely represents that the services are of a particular standard, quality or grade;

(c) falsely represents any re-built, second-hand, renovated reconditioned or old goods as new goods;

(d) represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;

(e) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;

(f) makes a false or misleading representation concerning the need for, or the usefulness of any goods or services;

(g) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that are not based on an adequate or proper test thereof:

Provided that where a defence is raised to the effect that such warranty or guarantee is based on an adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;

(h) makes to the public a representation in a form that purports to be—

(A) a warranty or guarantee of a product or of any goods or services; or

(B) 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;

(i) materially misleads the public concerning the price at which a product or like products or goods or services, have been or are, ordinarily sold or provided, and, for this purpose, a representation as to price shall be deemed to refer to the price a which the product or goods or service has or have been sold by sellers or provided by suppliers generally in the relevant market unless it is clearly specified to be the price at which the product has been sold or services have been provided by the person by whom or on whose behalf the representation is made;

(j) gives false or misleading facts disparaging the goods, services or trade of another person.

Explanation.—For the purposes of this sub-clause, a statement that is,—

(A) expressed on an article offered or displayed for sale, or on its wrapper or container; or

(B) expressed on anything attached to, inserted in, or accompanying, an article offered or displayed for sale, or on anything on which the article is mounted for display or sale; or

(C) contained in or on anything that is sold, sent, delivered, transmitted or in any other manner whatsoever made available to a member of the public,

shall be deemed to be a statement made to the public by, and only by, the person who had caused the statement to be so expressed, made or contained;

(ii) permitting the publication of any advertisement, whether in any newspaper or otherwise, including by way of electronic record, for the sale or supply at a bargain price of goods or services that are not intended to be offered for sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature of the advertisement.

Explanation.—For the purpose of this sub-clause, "bargain price" means,—

(A) a price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise; or

(B) a price that a person who reads, hears or sees the advertisement would reasonably understand to be a bargain price having regard to the prices at which the product advertised or like products are ordinarily sold;

(iii) permitting—

(a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating the impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole;

(b) the conduct of any contest, lottery, a game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest, except such contest, lottery, a game of chance or skill as may be prescribed;

(c) withholding from the participants of any scheme offering gifts, prizes or other items free of charge on its closure, the information about final results of the scheme.

Explanation.—For the purpose of this sub-clause, the participants of a scheme shall be deemed to have been informed of the final results of the scheme where such results are within a reasonable time published, prominently in the same newspaper in which the scheme was originally advertised;

(iv) permitting the sale or supply of goods intended to be used, or are of a kind likely to be used by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by the competent authority relating to performance, composition, contents, design, constructions, finishing or packaging as are necessary to prevent or reduce the risk of injury to the person using the goods;

(v) permitting the hoarding or destruction of goods, or refusal to sell the goods or to make them available for sale or to provide any service, if such hoarding or destruction or refusal raises or tends to raise or is intended to raise, the cost of those or other similar goods or services;

(vi) manufacturing of spurious goods or offering such goods for sale or adopting deceptive practices in the provision of services;

(vii) not issuing bill or cash memo or receipt for the goods sold or service rendered in such manner as may be prescribed;

(viii) refusing, after selling goods or rendering services, to take back or withdraw defective goods or to withdraw or discontinue deficient services and to refund the consideration thereof, if paid, within the period stipulated in the bill or cash memo or receipt or in the absence of such stipulation, within a period of thirty days;

(ix) disclosing to other person any personal information given in confidence by the consumer unless such disclosure is made in accordance with the provisions of any law for the time being in force.

*"spurious goods" means such goods which are falsely claimed to be genuine

Holding of Contests & Schemes

HMM Limited vs DG(IR) MRTP Commission (1998) – Lucky purchaser of a bottle of Horlicks could find a coupon inside the bottle – coupon indicated prize – MRTP Commission held that this was an unfair trade practice as the system of getting the coupon  was nothing but a lottery – only a fraction of buyers could get the benefit – prizes many times costlier than the price of a bottle of Horlicks.

Supreme Court held that this was not a case of a lottery as there was no: ‘… draw of lots or that a price was charged for participation in the draw. The fact that some bottles of Horlicks contained a slip of paper which entitled the buyer to a prize is not a lottery in the ordinary sense of the word’

Godrej GE Appliances Ltd vs Whirlpool of India Limited (1992) – Scratch a gift scheme

The commission observed: ‘In this case also, there is no draw of lots, nor any price charged for participation in the scheme. Each participant got the value for his or her money and, in addition, stood a chance for winning a prize.’

While some purchasers of Horlicks in the ‘Hidden Wealth Prize Offer’ did not get any prize, in the ‘Scratch a Gift Scheme’, every purchaser under the scheme would get gifts though of varied values.

The Whirlpool case was on an even sounder foundation than the Horlicks case

…something is offered free….

*Society of Catalysts v. (1) Star Plus (2) Bharti Airtel Ltd (2008)

The ‘Har-Seat-Hot-Seat’ contest on the 3^rd Avatar of KBC, wherein Airtel received 58 million SMS at Rs.2.40 per SMS, amounting to Rs.13.92 crs, prizes given out amounted to Rs. 2 lakhs per episode, i.e. Rs. 1.04 crs

Fined Rs. 1 cr, being 14% of profits made over and above the normal profit of Rs. 4.76 crs

 

RESTRICTIVE Trade Practice

“Restrictive trade practice" means a trade practice that tends to bring about manipulation of price or its conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions and shall include—

(i) delay beyond the period agreed to by a trader in the supply of such goods or in providing the services which have led or is likely to lead to rising in the price;

(ii) any trade practice which requires a consumer to buy, hire or avail of any goods or, as the case may be services as a condition precedent for buying, hiring or availing of other goods or services;

CONSUMER PROTECTION COUNCILS

The Consumer Protection Act 2019 empowers the Central Government to establish a Central Consumer Protection Council consisting of the Minister in charge of consumer affairs in the Central Government as its Chairman and such number of other official and non-official members representing such interests as may be prescribed.

Similarly, the state government shall also, by way of a notification establish a state consumer protection council at the state level and a District Consumer Protection Council for every district in the state.

CENTRAL CONSUMER PROTECTION AUTHORITY

The CCPA, introduced in the new Act, aims to protect the rights of the consumer by cracking down on unfair trade practices and false and misleading advertisements that are detrimental to the interests of the public and consumers.

The CCPA will have the powers to inquire or investigate into matters relating to violations of consumer rights or unfair trade practices suo motu, or on a complaint received, or on a direction from the central government.

PENALTIES FOR MISLEADING ADVERTISEMENT

The CCPA may impose a penalty of up to INR 1,000,000 (Indian Rupees One Million) on a manufacturer or an endorser for a false or misleading advertisement. The CCPA may also sentence them to imprisonment for up to 2 (two) years for the same.

In case of a subsequent offence, the fine may extend to INR 5,000,000 (Indian Rupees Five Million) and imprisonment of up to 5 (five) years.

The CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to 1 (one) year.

For every subsequent offence, the period of prohibition may extend to 3 (three) years.

The Act fixes liability on endorsers considering that there have been numerous instances in the recent past where consumers have fallen prey to unfair trade practices under the influence of celebrities acting as brand ambassadors. In such cases, it becomes important for the endorser to take the onus and exercise due diligence to verify the veracity of the claims made in the advertisement to refute liability claims.

PROVISION FOR ALTERNATE DISPUTE RESOLUTION (ADR)

The Act provides for mediation as an Alternate Dispute Resolution mechanism, making the process of dispute adjudication simpler and quicker.

The State Government shall establish, by notification, a consumer mediation cell to be attached to each of the District Commissions and the State Commissions of that State.

The Central Government shall establish, by notification, a consumer mediation cell to be attached to the National Commission and each of the regional Benches.

PRINCIPAL  & AGENT RELATIONSHIP

Indian Airlines V S. N Seth (1997)

Travel Agent - travel by air - confirmed tickets issued by authorised travel agent of Indian Airlines - no flight on the date indicated in the air ticket - liability of Indian airlines as principal- held liable.

State Commission awarded him compensation of Rs.10,000/-, Rs.1,210/- being the price of the air ticket with interest @ 18% per annum being the refund of the price of the ticket and Rs.500/- as costs, National Commission added Rs.2,000 as cost. (Indian airlines had offered a letter of apology and 2 complimentary tickets, which was refused by Seth. Seth had claimed Rs. 5 lacs in damages.)

DELAY IN DELIVERY OF POSSESSION OF APARTMENT

Kunj Behari Mehta V Ansal Properties & Industries Ltd (2000)

Can a builder after agreeing to deliver the possession within a stipulated time, raise the contention that as the price of the flat/property has gone up, it should not be directed to pay any compensation or to pay compensation at a reduced rate for delay in delivering the possession of the property?

‘In the view of the commission, such contention of any builder is unjustified and unreasonable because after the sale of the property, all the benefits accrue to the purchaser and not to the vendor. In any case, if such contention is accepted, the builders/contractors would earn crores of rupees by delaying the delivery of the possession of the flat/property for months together for one reason or the other.’

dyspepsia – imperfect or painful digestion - is a disease?

LIC V Smt. Chandra Kanta Lohande (2003)

The issue to be decided in this case is whether dyspepsia – imperfect or painful digestion - is a disease, which has to be mentioned in the proposal form of the LIC? Simple The answer to the question is ‘NO’ as dyspepsia is not a disease in itself.

Further, in this matter, the main ground of repudiation is that the assured did not disclose the aforesaid disease he was suffering from. In support, it was stated that assured had taken medical leave. Western Coal Fields is a government-owned public sector undertaking. In government departments and undertakings, employees have the habit of exhausting all types of leave like casual leave, medical leave and earned leave. The first casualty is casual leave, which is exhausted first, then medical leave, which cannot be accumulated beyond a particular limit, nor it can be encashed. Hence, they are liberally taken. But that should not be used as a ground for arriving at a conclusion that assured was suffering from some serious ailment, which required notice.

VALET PARKING

Hotel Hyatt Regency V Atul Virmani (2004)

The issue involved in this case is if the keys of the car given by the customer of a Five Star Hotel for parking to the uniformed valet of the hotel is stolen whether the Five Star Hotel is responsible for making good the loss to the consumer.

·         Car insured against third party claim but not for theft.

·         Rs. 900 charged for entry to the discotheque.

·         Notice of disclaimer printed on the docket in small letters.

·         “Beware giving car keys to the valet of this hotel does not ensure the safety of your car, Management is not responsible for theft of the car”, the board suggested by the Judge!