It was with the emergence of the free market economy that the concept of “consumer is king”, widely followed and accepted. The 20th century was marked by the advent of consumerism where there were frequent trade wars and conflicts between market share holders with a constant need to be better than the rest. This resulted in stiff competition with the traders resorting to unfair trade practises & manipulating the customers and took advantage of the lack of knowledge of the purchasers.
Soon, there was a need to put an end to this and that gradual shift was noted with the growing prominence of the notion “caveat venditor” meaning “Let the buyers beware” instead of previously accepted “caveat emptor” meaning “Let the Sellers beware”. –The establishment of Caveat Venditor held the seller responsible for any defective goods sold or for any unfair services rendered.
The leading case of Donoghue v Stevenson is considered to be the landmark judgment for laws relating to product liability where the manufacturer was held liable for the court for the presence of snail in ginger beer. This was a hallmark in cases relating to consumer protection opening floodgates and called for the need of legislations to take care of the consumers and to protect their interests.
Consumer protection, however, was found not to be limited just to one single legislation but involved amendments and reissuing of multiple such statutes as that of the Sale of Goods Act, 1930, Essential Commodities Act, 1955 and the Competition Act, 2002 being the few of those many legislations which promoted the concept of ‘Consumerism’.
Consumer protection is now restricted not just to the protection of rights but also to the promotion of consumer interests and to encourage legislations keeping in mind the welfare of the people and in furtherance of their multifarious interests.
Under Consumer Protection Act, 1986 (COPRA), Consumer Councils were set up at the Centre, State and District levels with appellate and pecuniary jurisdiction. Cases over 1 crore came under the Centre council and cases between 20 Lakhs to 1 Crore were discussed in the State council and anything below that were in the District Levels.
After signing the United Nations General Assembly Resolution No. 39 of 248, in 1985 India found the need to draft a legislation to protect the interest of the consumers.. All the remedies available to the consumers before then were mainly punitive in nature & not compensatory. Due to the high cost of litigation, consumers were never really benefitted and the whole long-drawn legal process became a non-profitable one. This called for the need of a legislation that would provide compensation as well and thus came into being, the Consumer Protection Act, 1986.
The development of a nation is often measurred by multiple parameters ; and economic well-being invariably becomes a crucial parameters. This involves transactions and other dealings and at one end of such trades, are the consumers whose rights ought to be protected. Hence, it was important for a country like India to have legislations that dealt with promotion of interests of consumers and thus came about the legislation of Consumer Protection Act, 1986.
With the rapid expansion in trade and commerce, the traders had an unfair upper hand over the consumers and this was a direct consequence of industrialisation.Consumers had little or no knowledge about the rights available to them and hence were pushed to a disadvantage.
But, it was only in 1986 that the law-makers of the nation decided to structure and streamline the efforts made towards protecting consumers’ interests and stressed for the need of a welfare legislation in the form of the Consumer Protection Act, 1986.
The introduction of the COPRA in 1986 was to protect the interests of the consumers and to safeguard their rights as well. It provided a multi-dimensional approach to promote consumer interests which included spreading of awareness and establishment of consumer councils. This provided a platform for the consumers to settle consumer disputes. It also envisioned this to be a medium that would facilitate a faster and efficient way for redressal.
The aim and objective along with the purpose for which the act was established, is explained under Section 6, 8 and 8B of the Consumer Protection Act, 1986. Section 6 goes on to detail the rights which the act aims to protect and lists them as:
- Right to safety of life and property from hazardous goods.
- Right to information about the quality, quantity, potency, purity, standard and price of goods and services so as to protect consumers against unfair trade practices.
- Right to choice as to variety of goods and services.
- Right to be heard and representation and to be assured that consumer interests will receive due consideration at appropriated platform.
- Right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers.
- Right to consumer education
The rights enshrined in Section 6 of the act were considered to be inalienable and was determined not to be squashed in between any unfair trade practices and helped any prudent consumer in their course of redressal.
Classification The Actdetermined that in case of any violation of these rights, complaints could be raised and the act provided various provisions which defined what ‘complaints’ were and who all were entitled to raise those. Section 2 (1) (b) of the act placed the ‘complainants’ into 5 categories:
- A consumer;
- Any voluntary consumer organization registered under the companies’ act, 1956 or under any other law for the time being in force;
- The central government or the state government;
- One or more consumers or class action suit
- Legal heir of the consumers
Section 2 (1)(c) further goes on to define what all can constitute a ‘complaint’ and inclusively defines all issues against which the consumers can have a cause of action.
VCOs The act was amended twice in both 1993 and 2002. The 1993 amendment was significant with respect to how it gave an opportunity to Voluntary Consumer Organisations (VCOs) to file Public Interest Litigations on behalf of a large number of consumers using a combined reading of both the provisions of Section 2(1)(b)(iv) and Section 2(1)(b)(ii).
Class Action Section 2(1)(b)(iv) allows one or more consumers to file a class action suit which proved to be the medium for multiple consumers with a common cause to come together and raise their query before the concerned body of justice. This provision was further exemplified and the amendment came about in the wake of the 1993 case of Mumbai Grahak Panchayat v Lohia Machines Limited.
Mumbai Grahak Panchayat v Lohia Machines Limited
More than 100 people had registered for the purchase of scooters from LML and had paid the registration fees of 500 Rupees.
After promising the delivery of the scooters within a specific time, the consumers cancelled their registration and called for the refund of the registration fees upon non-delivery of the scooters.
A class-action suit was filed on behalf of all the aggrieved consumers and by virtue of the introduction of claims under PIL as well, people who had not filed the class action suit were also entitled to receive the compensation and the court ordered the compensation to the tune of 400 million rupees and took care of the interests of the consumers.
National Seeds Corporation v M. Madhusudhanan Reddy
Section 2(1)(d) of the act explained as to who all would fall under the ambit of the definition of ‘consumers’. In the case of National Seeds Corporation v M. Madhusudhanan Reddy, the definition of a consumer under Section 2(1)(d)(i) was expanded in order to include farmers and reinforced its role as a welfare legislation.
This case also helped clear the fog regarding the interpretation of Section 3 of the legislation. It was decided here that the objective of the Consumer Protection Act was to offer compensatory relief in addition to any other provision in another act existing at that time. It was specifically emphasised that the provisions in COPRA would only be in addition and never in derogation to the laws that existed during that time.
There were multiple such instances over the years that proved time and again that the Consumer Protection Act, 1986 was a welfare legislation with provisions included in order to protect and promote the interests of the consumers. The various amendments made both in 1993 and 2002, kept in mind the interests of the people and the widening of the scope of a class action suit under Section 2(1)(b)(iv) was symbolic of that intention.
In addition to the protection of consumer interests, there is an added burden on the legislation to facilitate methods so as to improve awareness amongst the consumers. They also have a responsibility to enable speedy justice to the consumers in distress. In order to bring this about, there were groups of organisations called the VCOs that were formed. These VCOs acted as platforms that would make sure that the voices of the consumers were heard and they were well represented.
Section 2(1)(b)(ii) of the legislation gives the VCOs a locus standi to represent the consumers in their cause of action. It is the constant interference of the VCOs that encourage such manufacturers and traders to provide a certain level of quality in their productions and thereby, increases the standard of consumption.
By virtue of such constant checks enforced on the traders, the stigma of monopoly is also thereby abolished providing a scope for competition in the free market with everyone trying to outsmart the other in terms of quality of goods and services.
By means of judicial activism, such VCOs are often able to influence the decisions made by the consumers’ courts and courts in order to favour the people and their interests. A writ petition issued by VOICE called for the intervention of the Supreme Court which made laws on adulteration more stringent and strict and try to diminish the loopholes.
This was exemplary of the power that VCOs had in asserting authority and affecting the decisions made by the parliament in favour of the interests of the consumers.
Even though there are numerous benefits that VCOs bring to the table, there are often multiple problems that the VCOs face in their course of addressing the concerns of the consumers. Due to the lack of awareness amongst the consumers, there are very few occasions where people approach the VCOs asking them to take up their cause.
But this was solved by the 1993 amendment which gave VCOs the right to file PILs on behalf of a large class of consumers who were aggrieved but did not have any means to redressal.
Then arose the problem of funding and added on to the list of challenges faced by the VCOs. Even though the VCOs were to funded by the Consumer Welfare Fund found in 1992, it does not quite solve the problem of accessibility to people who are generally illiterate and often end up being victimised at the hands of the traders who get the better of them.
Due to lack of sufficient funds, the VCOs are often forced to turn to the Government for help. This leads to biases.
VCO which is supposed to work as an organisation aimed at protecting consumer interests often end up favouring the Government in cases where it is at fault due to its dependency on the Government for funds.
Despite all these challenges that the VCOs face, there are a plethora of services that they have on offer, the chief of them being, the promotion of right to representation and the right to information. But there is of course a long way to go in consumer protection and there is a whole array of things which needs improvement and deserves attention.
General Manager Telecom, BSNL v Krishnan
In the 2009 case of General Manager Telecom, BSNL v Krishnan, the jurisdiction of the consumer forum was challenged.
The point of contention was as to whether the consumer had a course of action under Section 7B of the Indian Telegraph Act or under the Consumer Protection Act, 1986.
It was ruled in favour of the former. This called for a broad expansion of the scope of Section 3 of the Consumer Protection Act and was further clarified in the 2012 case of J. Subramanian v M/s. Bharti Airtel where in it was held that the provisions in COPRA would be in addition and not in derogation to the provisions of any other act existing at that time.
The Consumer Protection Act, 1986 was enacted as a statute so as to initiate better protection of the consumers and also to enable adjudication of consumer disputes. It was further envisioned to act as an effective alternative remedy.
In the case of Buddhist Mission Dental College v Bhupesh Khurana, capitation fees were paid under the belief of false advertisement when the students availed the services of a college which offered attractive facilities and prospects on paper but failed to materialise in reality.
It was found in this case that none of the facts mentioned were true and hence considered the advertisements to be misleading. The final judgment was given to the tune of considering imparting of education to be a service which was reaffirmed with the paying of fees and was ruled that the inability to offer the services advertised constitute deficiency of services and hence determined the cause of action for the consumers and expanded the scope of Section 2(1)(d).
Deputy Registrar v Ruchika Jain
The case of Deputy Registrar v Ruchika Jain, distinguished and differentiated between the services rendered by the educational institutions in terms of imparting education and conducting exams.
As previously determined, the provision for educational facilities were considered under the ambit of ‘services’ as defined under the act while that of conducting exams was considered to be a statutory function.
It was therefore held that a student appearing for the exams could not be considered to be a consumer within the meaning of Section 2(1)(b) read along with Section 2(1)(o) as they had not hired or availed the services of the educational institutions.
This decision was further reaffirmed in the 2009 judgment of Bihar School Examination v Suresh Prasad Sinha which also held that the conducting of exams did not come under the definition of ‘services’ as explained in the act but was merely a statutory function.
Spring Meadows Hospital v Harjol Ahluwalia
Due to the medical negligence of the staff of a hospital, a child had died and it was contested before the court in the case of Spring Meadows Hospital v Harjol Ahluwalia, as to whether the parents of the child had a cause of action against the hospital.
It was ruled in favour of the parents by expanding the definition of the ‘consumer’ as under Section 2(1)(d) of the Consumer Protection Act, 1986.
It was held that when the child was taken to the hospital to avail the services of the hospital, they would fall under the definition of a ‘consumer’ as they were a beneficiary of the services. Both the parents and the child were to be included and thus both were entitled to compensation.
This principle was further reinstated in the case of Indian Medical Association v V.P. Shantha where 12 major conclusions of the judgment were highlighted with ample emphasis being laid on the definition of ‘service’ as under Section 2(1)(o) of the COPRA. This helped to clear the fog regarding the inclusion of the services rendered at hospitals and nursing homes under the definition as mentioned in Section 2(1)(o) of the act.
There were numerous judgments over the years that dealt with protecting the interests of the consumers and thereby, affixed the role of COPRA as a welfare legislation. All these rulings could be bracketed under different headings including education, medical sector, real estate etc. This showed the pervasive nature of the relevance of the COPRA legislation in all walks of free market economy which involved purchase of goods and the rendering of services.
Lack of consumer awareness and the existence of consumers as an unorganised sector are problems that continue to plague the Capitalistic economy. It gives the traders an unfair advantage over the purchasers who are subjected to further market risks. This often leads to the widespread exploitation of consumers and this is where COPRA as a legislation becomes crucial.
In order to protect the long term interests of businessmen and also to keep Government intervention at minimum, it is important for the Government to raise their quality of goods and services and provide an appreciable standard of materials and services to the consumer. The Consumer Protection Act, 1986 is merely a legislation which tries to keep a check on these multiple aspects relating to the promotion of interests of consumers.
Product liability laws existed without a structure internationally up until the judgment of Donoghue v Stevenson and it was only after 1932 that the momentum for the protection of consumer interests picked up and there has been no turning back since then. Even though there were multiple legislations including the Sale of Goods Act, 1930 and Essential Commodities Act, 1955 that existed even then, it was only after that the establishment of COPRA that consumer rights and its protection in India were structured and streamlined in India.
The efficient redressal mechanism linked with this legislation is a highlight and with the establishment of the District Forum, State Commission and the National Commission, speedy justice is ensured. There is also a certain level of autonomy granted to each of these institutions and their linked to each other by means of appeal.
Consumer education and the protection of their interests form the essence of the objective of this legislation. In order to bring this about, the accessibility should be improved by a lot more participation in the rural areas. This is where the role played by VCOs becomes very important.
These organisations often act as platforms where people can raise their concerns and seek redressal. People who are often unaware of the complexities of such proceedings can always approach the VCOs to carry their interests forward.
There are a lot of questions which are yet to answered when it comes to consumer protection and the role played by both the consumers and the Government. We, as consumers, do have the added responsibility to be aware about our rights and to make sure we are not subjected to any unfair trade practises.