group 2 consumer protection act, 1986

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NEED FOR CONSUMER PROTECTION ACT IN THE ERA OF FREE COMPETITION WHERE CONSUMER IS THE KING, THEREFORE, KING NEEDS PROTECTION GROUP MEMBERS ABBAS SABUWALA - 2 AJINKYA JOG - 4 AKANKSHA JAIN - 6 APOORVA AGHI- 8 ASHUTOSH PHADKE - 10 BARNALI CHAKRABORTY- 12 DIVESH MEHTA - 14 FORUM VORA - 16 GOKULNATH RAVISHANKAR - 18 VERNON PEREIRA - 56 SUBMITED TO - Mr. ANANT AMDEKAR 1

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Page 1: Group 2 CONSUMER PROTECTION ACT, 1986

NEED FOR CONSUMER PROTECTION ACT IN THE ERA OF FREE

COMPETITION WHERE CONSUMER IS THE KING, THEREFORE,

KING NEEDS PROTECTION

GROUP MEMBERS

ABBAS SABUWALA - 2 AJINKYA JOG - 4

AKANKSHA JAIN - 6 APOORVA AGHI- 8

ASHUTOSH PHADKE - 10 BARNALI CHAKRABORTY- 12

DIVESH MEHTA - 14 FORUM VORA - 16

GOKULNATH RAVISHANKAR - 18 VERNON PEREIRA - 56

SUBMITED TO

- Mr. ANANT AMDEKAR

TABLE OF CONTENTS

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Page 2: Group 2 CONSUMER PROTECTION ACT, 1986

TOPICS PAGE NO.

1. Introduction 3

2. Consumer Protection Act, 1986

Preamble

Silent features

Objects

Availability

5

3. Definition

Customer

Goods

Services

Complainant

Manufacturers

Trader

Consumer Dispute

Complaint

6

4. IRDA Regulation , 2000 14

5. Rights of Consumer 16

6. Procedure to file a complaint 18

7. Consumer Protection Council 19

8. Consumer Redressal Mechanism 20

9. Consumer Awareness 20

10. Caselet 26

11. E-commerce under CPA 30

12. Comparative Analysis 31

13. The Future consumer dilemmas 34

14. Recommendations & Suggestions 35

15. Business & Complaints 35

16. Case Study 37

17. Bibliography 46

INTRODUCTION

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Page 3: Group 2 CONSUMER PROTECTION ACT, 1986

India is an emerging economy and is transitioning into a “Hyper-competitive” economy. A

hypercompetitive economy is marked by a huge variety of products and fierce competition

amongst manufacturers of various industries. Each manufacturer is trying to get a

competitive advantage at any cost and would seek to gain that, even if it means

compromising on quality standards of products and services, disregarding social

responsibility. Therefore, the standards of quality for goods and services are in flux. If

stringent laws are not enforced, companies would leave no chance to exploit or mislead the

consumer.

Recent time has seen a shift in marketing concepts and the emphasis has switched from

production to customer satisfaction in terms of product development. However the primary

objective of businesses remains profit.

The “Consumer is the King” ideology has been flouted around much. But is the customer

really the king? The answer would be Yes and No. The consumers today, do indeed enjoy a

higher standard of living and have a lot of options for branded goods and services, however

markets are still dominated by the black market, especially in rural areas and there is a slack

in quality of goods and services.

Corporations are known to have cheated customers in the past by way of overcharging,

adulteration, hoarding of goods, adulteration, sale of spurious goods etc.

Development of Consumer Movement in India

One of the earliest consumer movements in India was the Dandhi march, led by Mahatma

Gandhi, when the British unfairly charged tax on salt. This was a big blow to Indian

consumers, who were united in their opposition to the British Raj.

The first sincere attempt to protect the interests of consumers started in 1966 by the

Consumer Guidance Society of India (CGSI). It was founded by nine women who fought

hard against sub-standard products, very high prices, hazardous drugs and never ending

shortage of goods. They recognized the need to create a body that addresses consumer

complaints. Their consistent pressure led to the formation of Consumer Protection Court in

1975 and eventually to the creation of the Consumer Protection Act 1986. CGSI is still

active and The Maharashtra State Government has entrusted CGSI to establish and manage

the Maharashtra State Consumer Helpline.

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Another institute that is still active and of considerable note in driving the Consumer

Protection Act is the Consumer Education and Research Centre (CERC). With the

consumer as its reason for existence, CERC began handling complaints of ordinary

consumers who could not take on the might of the business in Gujarat. It started giving legal

help and fought for a safe and strong financial market and clean environment.

Even before the Act of 1986 came into existence, there were quite a few laws that protected

consumer interests. Namely,

i. Essential Commodities Act 1955,

ii. Trade and Merchandise Marks Act 1958,

iii. Specific Relief Act, Drugs (Control) Act 1963,

iv. The Drugs and Cosmetics Act 1940,

v. The Indian Standards Institution (Certification Marks) Act 1952,

vi. Agricultural Produce (Grading and Marking) Act 1937,

vii. Standards of Weights and Measurements Act 1976,

viii. Prevention of Food Adulteration Act 1954 and above all the

ix. Indian Contract Act of 1872 and the

x. Sale of Goods Act 1930,

The above Acts provided remedies for the breach of provisions. However the cost and time

of legal action, discouraged wronged consumers to file complaints. The Indian consumer is

also less willing to complaint and steeped in illiteracy about his rights and legal

proceedings.

In an address to the Congress of the United States on 15th March 1962, U.S President John.

F. Kennedy said:

Consumers, by definition, include us all. They are the largest economic group in

the economy, affecting and affected by almost every public and private economic

decision. Two-thirds of all spending in the economy is by consumers. But they are

the only important group in the economy who are not effectively organized, whose

views are often not heard.

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This just goes on to show that the need for a separate Act solely dedicated to the rights of

the consumer was felt at some point or the other in almost all countries and this need

culminated into the introduction of the Consumer Protection Act,1986 in India.

Consumer Protection Act, 1986The Consumer Protection Bill, 1986 was passed by both the Houses of Parliament and it

received the assent of the President on 24th December, 1986. It came on the Statute Book as

the Consumer Protection Act, 1986.

It is described as a unique legislation of its kind ever enacted in India to offer protection to

the consumers. The Consumer Protection Act of 1986 is claimed to have been designed after

an in-depth study of Consumer protection laws and arrangements in the following countries:

USA

UK

AUSTRALIA

NEW ZEALAND

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Preamble:

The Act aims to provide for better protection of the interests of consumers and for that

purpose to make provision for the establishment of consumer councils and other authorities

for the settlement of consumers’ disputes and for matters connected therewith.

Unlike other laws, which are punitive or preventive in nature - the provision of this Act are

compensatory in nature. The Act intends to provide simple, speedy and inexpensive

redressal to the consumers' grievances.

Salient features of the Act

Applies to all goods and services

Covers all sectors - private, public or co-operative

Confers certain rights on consumers

Envisages establishment of consumer protection councils at the Central and State

levels

Objects of the Act

To provide for better protection of interests of consumers

To establish consumer councils and redressal forums

To empower the Consumer Forums to settle consumers' disputes

Applicability

The Act in terms of geographical application extends to the whole of India except

the State of Jammu and Kashmir.

It applies to all goods and services, unless particularly mentioned by the Central

Government.

DEFINITIONS

Consumer:

(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.

(ii) 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

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beneficiary of such services 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 services for any commercial

purpose).

Explanation:

In every transaction, there are at least 2 individuals involved namely the buyer and the

seller.

'Commercial purpose' does not include use by a consumer of goods bought and used by

him and services availed by him exclusively for the purpose of earning his livelihood,

by means of self employment.

Examples: 1. If an individual buys a taxi and uses it for earning his livelihood, then

according to this Act, he is considered to be a 'consumer'.

2. However, if a businessman buys a fleet of taxis and employs people to drive them,

then he is not considered to be a 'consumer'.

GOODS

According to the Sale of Goods Act,1930, “Goods” means every kind of movable

property other than actionable claims and money; and includes stock and shares,

growing crops, grass, and things attached to or forming part of the land which are

agreed to be severed before sale or under the contract of sale. (Actionable claims means

claims which can be enforced by a legal action or a suit, example a book debt. A book

debt is not goods because it can only be assigned as per Transfer of Property Act but

cannot be sold. Same is case in the case of bill of exchange, promissory note etc.)

The term "paid or promised or partly paid or partly promised or under deferred

payment" means that just because the buyer of the goods has not made the payment in

full does not make him any less of a customer. He can still take the seller to court and

file a complaint under this Act.

Example: A customer buys a washing machine on EMI that needs to be paid for a

period of 5 months. Let us assume that in the very first month, it stops working. Now

even though he has not paid the seller in full, he is still very much, a customer and he

can sue the seller under this Act.

The term "any other user of such goods when such use is made with the approval of the

buyer" refers to the kith and kin of the buyer or any such person who with his consent is

using it. For eg., If a father buys his son a bike, then although the son hasn't purchased

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the bike himself, yet he is a consumer as he's using it with the consent of his father ie.

the buyer.

SERVICES

'Service' means service of any description which is made available to potential users

and includes the provision of facilities in connection with banking, financing, insurance,

transport, processing, supply of electrical or other energy, 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. For instance, a system of deferred payment can be

observed in the case of a patron signing up for a spa treatment where he receives the

service first, and the payment is made later.

However, since any free service rendered free of charge doesn't come under the purview

of the Consumer Protection Act. A few years ago, there was a controversy with regards

to treatment at Government hospitals as to whether it constitutes a service within the

meaning of 'service' under the Act. There are some who believe that the treatment in

Government hospitals is actually not free as such as it is the taxpayer's money which

goes to fund these hospitals and if therefore a taxpayer seeks the treatment, he's paying

for the same, though indirectly. However, National Commission held that complaints

against government hospitals cannot be entertained under the Act that the person

receiving treatment in such hospitals is not a 'consumer' as the patient does not 'hire' the

services of the hospital; moreover the treatment provided is free of charge.

Caselet- Signet Corporation filed a complaint against the Municipal Corporation of

Delhi for failure to maintain a public drain properly. The National Commission held that

there was no arrangement of hiring of service for consideration as between the

Complainant and the Municipal Corporation of Delhi in regard to maintenance of public

drains passing in front of the petitioner's premises. The construction, maintenance and

cleaning of drain and drainage works and removal and disposal of filth, rubbish and

other polluted matters were works which the Corporation was required to undertake and

carry out in discharge of its statutory obligation. This was not a work to be performed

by the Corporation under an arrangement of hiring of service for consideration entered

into between it and any private party.

COMPLAINANT

A complainant means any of the following

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(1) A consumer

(2) Any registered voluntary consumer association

(3) The Central/State Government(s)

(4) Numerous consumers having the same interest

(5) In case of death of a consumer, his legal heir or representative

Explanation:

Any voluntary consumer association refers to any  advocacy groups that seek to

protect people from corporate abuse like unsafe products, predatory lending, false

advertising etc.

Example- Consumer Guidance Society of India, The Consumers Eye India, United

India Consumer Association.

MANUFACTURER

A "manufacturer" means a person who --

(i) makes or manufactures any goods or parts

(ii) does not make or manufacture any goods but assembles parts made or

manufactured by others

(iii) puts or causes to be put his own mark on any goods made or manufactured by any

other manufacturer

Example- Many a times, companies outsource the manufacturing of certain non-critical

components to China. However, the company puts its mark on such products. Now if a

consumer files a complaint that the final product he purchased was defective and the

problem was found to be in the outsourced component, the company cannot wash his hands

of it as it has its mark on the outsourced component as well.

TRADER

A 'trader' in relation to any goods means a person who sells or distributes any goods for sale

and hence includes the manufacturer and the packager, and where such goods are sold or

distributed in packaged form.

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CONSUMER DISPUTE

'Consumer dispute' is a dispute where the person against whom a complaint has been made,

denies or disputes the allegations contained in the complaint.

However if the manufacturer or the seller admits the presence of a defect and takes

corrective measures, and the consumer is not forced to take him to court, then it is not a

'consumer dispute'.

COMPLAINT

'Complaint' means any allegation in writing made by a complainant that-

(i) An 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

deficiency

(iv) A trader or the service provider, as the case may be, has charged for the goods or for

the services, a price in excess of the price-

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

(b) Displayed on the goods or any package containing such goods

(c) Displayed on the price list exhibited by him by or under any law for the time being

in force

(d) Agreed between the parties

(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 standard 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

(vi) services which are hazardous or likely to be hazardous to life and safety of the

public when used, are being offered by the service provider which such person could have

known with due diligence to be injurious to life and safety;

Explanation:

Unfair Trade Practice is a trade practice which for the purpose of promoting sales of goods

or the use of a particular service adopts any unfair or deceptive method. The following

unfair trade practices are recognized by this law-

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1. Misleading advertisement and False Representation. 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:

(viii) makes to the public a representation in a form that purports to be-

(a) a warranty/guarantee of any goods or services

(b) a promise to replace, maintain or repair an article 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;

(c) materially misleads the public concerning the price at which the goods or services

are ordinarily sold or provided

(d) gives false or misleading facts disparaging the goods, services or trade of another

person.

Explanation:

Misleading advertisements and False representation-

"Advertising may be described as the science of arresting human intelligence long enough

to get money from it"

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-Stephan Leacock

‘Look younger…..use…age miracle cream....’

‘Increase your memory power……………’

‘Loan in 5 minutes……………’

‘Fairness creams that work in days……………’

Knowing of the fact that we are constantly surrounded by such advertisements, there is very

little need to empirically establish that there are misleading advertisements that are

telecasted in the electronic and print media every day.

When an advertisement for cooking oil says that using the said oil frees the user from heart

problems, then such an advertisement is misrepresenting the facts. Companies advertise

products highlighting health cures and drugs of questionable efficacy and health gadgets of

unknown values.

Many of the canned/bottled juice, sherbet, wafer manufacturing companies do not

mention the ingredients used in it. For example, a reputed manufacturer offers many

types of sherbets which are artificially flavoured but the front side of the package has

big and attractive pictures of the fruit itself, creating misunderstanding amongst the

consumers. In many cases, though the product will have a warranty or will be under

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annual maintenance contract (AMC), when a problem arises, the consumer is told that

certain parts will not be covered and they will have to pay. Example: Telecom service

providers fooled many customers by selling them Blackberry packages and selling

email packages separately, though they were later merged.

The IRDA (Insurance Advertisements) Regulations, 2000

The IRDA seeks to regulate and control every insurance advertisement that is issued by

the insurer or insurance agent.

For this purpose the insurer must develop a system of control over the content as well as

the method of dissemination of the information concerning the various policies and

schemes.

An advertisement issued by the insurer must not fall under the category of misleading or

unfair.

All these laws are responsible for quality control so that the consumers are not cheated.

In March 2014, to monitor misleading advertisements and to protect consumers'

interest, the consumer affairs department has formed an inter-ministerial monitoring

committee that can even give direction to drop such advertisements. The committee

shall "monitor misleading advertisement and unfair trade practices arising thereto

and suggest steps accordingly." It shall also identify and recommend appropriate

legislative measures. Moreover, the committee shall also suggest institutional measures

for intervention. 

Caselet- In the case of Bhupesh Khorana vs Vishwa Buddha Parishad a class action suit was

filed by twelve students who had joined the BDS course offered by the Buddhist Mission

Dental College run by Vishwa Buddha Parishad. The students' complaint was that the

college, in its advertisement and prospectus inviting applications for the course, had

given the impression that it was affiliated to Magadh University, Bodh Gaya and recognized

by the Dental Council of India and was fully equipped to give the degree of Bachelor of

Dental Science. However, after joining the college and attending classes, the students found

to their dismay that the annual examinations were not being held because the college was

neither affiliated to Magadh University, Bodh Gaya and nor recognised by the Dental

Council of India. As a result the students lost two precious academic years, but also spent

money on fees, hostel charges, etc. holding the college to be deficient the National

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Commission directed it to refund the admission expenses of all the twelve students along

with interest of 12 percent.

Bargain Sales.

When goods or services are advertised to be sold at a price much lower than its original

price, it is said to be a bargain sale. However, if the seller of the good merely uses it as a

marketing strategy to grab attention and has no intentions of selling it at the quoted price

then according to the provisions of this Act, he can be sued. This is also the reason why

companies have '*Terms & Conditions apply' or '*Offer valid only till stocks last' written

on their advertisement.

Offering gifts, prizes etc.

1. The offering of gifts and prizes or other items with the intention of not providing them

as offered or creating 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.

2. Conducting any contest, lottery, game of chance or skill for boosting sales

Withholding of information about final results of scheme offering gifts etc.

The Amendment Act 2002 provided for this trade practice wherein withholding

information about final results of any such scheme on its closure is an unfair trade

practice. The participants of the scheme shall be deemed to have been informed of final

results of the scheme where such results are published in same newspaper in which

scheme was originally advertised, within a reasonable time period.

Not conforming to prescribed standards.

If the goods being sold do not comply with the standards prescribed by competent

authorities, then it amounts to an unfair trade practice. Drugs that are hazardous, banned

or beyond expiry date, electrical appliances with inadequate safety precautions, etc. Items

whose quality is far below the required standard, defective goods or duplicate goods.

Example: There are numerous products that seek to imitate branded goods.

Sale of helmets without ISI certification

Hoarding or destruction of goods.

Hoarding or destruction of goods or refusal to sell goods in order to raise the price of

such goods amounts to an unfair trade practice. The same is applicable for services.

Example- In 2013, the prices of onions and tomatoes skyrocketed because of this

malpractice.

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Manufacture of spurious goods.

The Amendment Act,2002 included the manufacturing of spurious goods and offering

them for sale under the provisions of the Consumer Protection Act.

2. Defect

In case of goods, any fault, imperfection or shortcoming in the quality, quantity, potency,

purity or standard that is required to be maintained by any law.

3. Deficiency

In case of services, any fault, imperfection or shortcoming in the quality, nature and

manner of performance that is required to be maintained by any law.

RIGHTS OF CONSUMERS

Right to Safety: Consumers must be protected against the immediate dangers of

buying goods, as well as, the long-term damages goods and services can cause them.

It is the responsibility of the manufacturer to give clear instructions about the use of

the product or service. For example firecrackers packages must provide clear

instructions of use and financial institutions must clearly state the risks involved in

trading securities or mutual funds.

Right to be Informed: The Manufacturer must clearly state adequate and accurate

information about the product or service. The consumer need to be given the facts

needed to make an informed choice, to be protected against dishonest or misleading

advertising and labelling. Examples of this can be seen on the back on any product,

where a list of contents or list of sensitive ingredients is present.

Right to Choose: The consumer must have access to a variety of products and not

forced to choose a certain product because of lack of options. This right applies

particularly to industries where monopolists exploit consumer by charging them a

higher price and industries that force customers to buy their product. The decision

must lie with the customers.

Right to be Heard: The consumer must be able to voice his opinion and grievances

to the manufacturer, to the government and appropriate consumer protection

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authorities. This is the central tenant of the Consumer protection Act. Today it is

mandatory to provide a Customer Care telephone number and an email address in

case of complaints.

Right to Seek Redressal: Following the right to be heard, it is equally important for

the consumer to be compensated for grievances caused to them. They should be

adequately compensated either by replacement of the product or refund. Today there

are various bodies that help consumers seek redressal, such as, CGSI,

www.consumercomplaints.in, Jago Grahak Jago, etc.

Right to Consumer Education: It means the right to receive knowledge and skill to

become an informed consumer, to know the rights and laws that empower

consumers. The consumer must be given access to such information via public as

well as private institutes. Special attention needs to be given to disadvantaged

consumers, such as senior citizens, physically and mentally challenged, etc

PROCEDURE TO FILE A COMPLAINT

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Parameter Central Consumer

Protection Council

State Consumer

Protection Council

District Consumer

Protection Council

Members Chairman

No. of Official

& Unofficial

members

representing

interest of

consumer , as

prescribed

Chairman

No. of Official

& Unofficial

members(not

exceeding 10),

as prescribed

by State

Government

Chairman(Collecto

r of District)

No. of official &

Unofficial

members, as

prescribed by State

Government

Meeting At least 2 in a

year

Can be held as

& when

At least 2 in a

year

Can be held as

& when

At least 2 in a year

Can be held as &

when required

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required required

Time & Place As per the Chairman As per the Chairman As per the Chairman

Objectives Promote & Protect

rights of consumers

Promote & Protect

rights of consumers

within State

Promote & Protect rights of

consumers within District

CONSUMER PROTECTION COUNCIL

CONSUMER REDRESSAL MECHANISM

Parameter

District Forum State Commission National Commission

Established by

Central Government State Government State Government

Members President 2 other

members 1 woman

President At least 2 other

members 1 woman

President At least 4

members 1 woman

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Term of Office

5 years or up to the age of 65 whichever is earlierEligible for reappointment

5 years or up to the age of 67 whichever is earlierEligible for reappointment

5years or up to the age of 70 whichever is earlierNot eligible for reappointment

Value & Compensation

Up to 20lakhs 20lakhs to 1 crore 1 crore and above

Appeals Within district Against District Forum

Within State

Against State Commission

Re appeals

To State Government within 30days from the date of order by District Forum

To National Commission within 30days from the date of order by State Commission

To Supreme Court within 30days from the date of order by National Commission

CONSUMER AWARENESS AND CONSUMER PROTECTION

Consumerism is a social and economic order and ideology that encourages the acquisition

of goods and services in ever-greater amounts.

Consumerism in economic domain

In the domain of economics, Consumerism refers to economic policies placing emphasis on

consumption. In an abstract sense, it is the consideration that the free choice of consumers

should strongly orient the choice of what is produced and how, and therefore orient the

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economic organization of a society . Also this vote is not "one man, one voice", but "one

dollar, one voice", which may or may not reflect the contribution of people to society.

Role of mass production in consumerism:

The Industrial Revolution dramatically increased the availability of consumer goods,

although it was still primarily focused on the capital goods sector and industrial

infrastructure. Industrial sector included mining, steel, oil, transportation networks,

communications networks, industrial cities, financial centres etc.

The advent of the department store represented a paradigm shift in the experience of

shopping. For the first time, customers could buy an astonishing variety of goods, all in one

place, and shopping became a popular leisure activity. While previously the norm had been

the scarcity of resources, the Industrial era created an unprecedented economic situation. For

the first time in history products were available in outstanding quantities, at outstandingly

low prices, being thus available to virtually everyone in the industrialized west.

Consumerism has long had intentional underpinnings, rather than just developing out of

capitalism.

Consumerism in 21 st century :

Businesses have realized that wealthy consumers are the most attractive targets of

marketing. The upper class's tastes, lifestyles, and preferences trickle down to become the

standard for all consumers. The not so wealthy consumers can "purchase something new

that will speak of their place in the tradition of affluence". A consumer can have the instant

gratification of purchasing an expensive item to improve social status.

Consumer Awareness:

Every individual is a consumer, regardless of occupation, age, gender, community or

religious affiliation. Consumer rights and welfare are now an integral part of the life of an

individual and we all have made use of them at some or the other point in our daily routine.

Consumer awareness is about making the consumer aware of his/her rights. It is a marketing

term which means that consumers are aware of products or services, its characteristics and

the other marketing P’s (place to buy, price, and promotion).Though the first consumer

movement began in England after the Second World War, a modern declaration about

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consumer’s rights was first made in the United States of America in 1962, where four basic

consumer rights were recognized.

Every year 15th March is observed as "World Consumer Rights Day".

Issues and problems faced by Consumer today:

Globalization has made the world smaller by integrating the global markets. This has

exposed the consumers to the wide range of products and services available in the market. It

has, on one hand, given them a greater choice of products and brands with lower costs.

While, on the other hand, it has made consumers more and more quality consciousness and

aware of their rights. As a result, they are able to voice their concerns about various

problems and issues faced by them.

Adulteration of food substances by traders through addition of substances which are

injurious to health or removal of substances which are nutritious or by lowering their

quality standards

Misleading advertisements of goods and services in television, newspapers and

magazines to influence the consumers demand for the same

Variations in the contents filled in the package of goods

Improper delivery of after sales services

Supply of defective goods

Hidden price component

Use of deceptive or incorrect rates on products

Use of false or non-standard weights and measures in supply of goods

Production of low quality goods in bulk quantities

Illegal fixation of Maximum Retail Price (MRP)

Selling above the MRP

Unauthorized sale of essential products like medicines, etc. beyond their expiry date to

ignorant consumers

Poor customer services

Non-compliance with the terms and conditions of sales and services

Supply of false or incomplete information regarding the product

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Non-fulfilment of guarantee or warrantee etc.

Education and awareness of Consumers:

Protection and promotion of consumer's rights and interests is a vital function of the

Government of any economy. It is basically a social and political necessity and is essential

for all round progress of the country. In rapidly changing business environment and

emerging global markets, expectations of the people of the country for better services,

quality goods, availability of choices and value for money has been continuously rising.

CAMPAIGNS

Publicity through print media using news paper advertisements, to educate the

consumers about their rights and responsibilities

The Consumer awareness Department through Printed Literature is also creating

awareness. A folder entitled “Consumer Awareness Mission” containing the salient

features of Consumer Protection Act 1986, Consumer Resource kit as well pocket

calendars and posters is being distributed during various events such as IITF, and also

through the State Governments at grass root level

Nukkad Nataks are being performed in consultation with Song & Drama division of the

Ministry of Information and Broadcasting

Advertisements are being carried in journals of Publication Division such as Yojana,

Kurukshetra, Bal Bharti, Aajkal and their regional editions

‘Jago Grahak Jago'

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This programme has become the focal theme through which issues concerning the

functioning of almost all Government Departments having a consumer interface can

been addressed. To achieve this objective joint campaigns have been undertaken/are

being undertaken with a number of Government Departments. The Department had run

a joint campaign with Bureau of Energy Efficiency to educate people about energy

conservation by having awareness of the BEE star labels. A joint campaign with

National Pharmaceuticals Product Authority is being devised to educate consumers

about the various issues concerning pharmaceutical industry. Similarly, campaigns with

Reserve Bank of India, FICCI, Ministry of Urban Development and HRD are being

planned

Consumer helpline numbers:

National Toll Free No - 1800-11-4000

SMS can also be sent to - +918130009809

OMBUDSMAN

An ombudsman or public advocate is usually appointed by the government or by

parliament, but with a significant degree of independence, who is charged with representing

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the interests of the public by investigating and addressing complaints of maladministration

or a violation of rights. In some countries an Inspector General, Citizen Advocate or other

official may have duties similar to those of a national ombudsman, and may also be

appointed by a legislature. Below the national level an ombudsman may be appointed by a

state, local or municipal government. Unofficial ombudsmen may be appointed by, or even

work for, a corporation such as a utility supplier, newspaper, NGO, or professional

regulatory body.

Duties of an ombudsman:

Ombudsmen offer their services free of charge, and are thus accessible to individuals

who could not afford to pursue their complaints through the courts

They are committed to achieving redress for the individual

They are neutral arbiters and not advocates nor “consumer champions”

They normally ask the body concerned and the complainant to try to resolve complaints

before commencing an investigation

They usually seek to resolve disputes without resort to formal investigations where this

is possible and desirable

Ombudsmen have the power to make recommendations which are binding on the bodies

in their jurisdiction unless successfully challenged through the courts

Ombudsman in India:

The Government of India has designated several ombudsmen sometimes called Chief

Vigilance Officer (CVO) for the redress of grievances and complaints from individuals in

the banking, insurance and other sectors being serviced by both private and public bodies

and corporations.

In India, the Ombudsman is known as the Lokpal or Lokayukta. An Administrative Reforms

Commission (ARC) was set up on 5 January 1966 under the Chairmanship of Morarji Desai.

It recommended a two-tier machinery: Lokpal at the Centre and one Lokayukta each at the

State level for redress of people's grievances. The central Government introduced the first

Lokpal Bill, Lokpal and Lokayuktas Bill in 1968, and further legislation was introduced in

2005. Final bill, after all the amendments, has been passed in Rajya Sabha on 17 December

2013 and passed in Loksabha on 18 December 2013.

Hindustan Unilever Ltd, or HUL, has named an ombudsman to deal with consumer

complaints that could spill over into the courts, in the first initiative of its kind by an Indian

company. HUL has about 200 cases registered against it in India. An average of four to five

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cases are brought every year and the company hoped the appointment of an ombudsman

will result in a decline in that.

INTERESTING CASELETS

Tata Motors Pays Rs. 6.45 Lakh to Consumer for Faulty Indigo Car

In 2005, Consumer Education and Research Society (CERS), Ahmedabad, and Shah had

complained to the Ahmedabad District Consumer Disputes Redressal Forum (76/2005) that,

soon after the purchase, the car had revealed manufacturing defects. They had claimed

either replacement of the car or a full refund. The judgment directed Cargo Motors and Tata

Motors to replace Shah’s old Tata Indigo car with a new car of the same make and model; if

not so replaced within a month, the opposite parties shall pay him Rs. 4,59,583 with 9 per

cent interest from the date of filing the complaint until the date of payment, Rs. 5,000 for his

mental agony and harassment, and Rs. 2,000 towards cost.

Ashish Jain vs Navrang Electronics on 28 April, 2011

The complainant purchased an AC from respondent worth Rs.26,300/-. After installation, it

did not work. On complaint being made, the respondent sent its technician for the repairs

who visited the house of the complainant several times but could not rectify the fault. The

District Consumer Forum dismissed the complaint on the ground that no documentary

evidence in support of the complaint had been filed. Even if the complainant has not filed an

affidavit in support of the fact that AC was not functioning, there is a clear statement of the

complainant in the complaint about the same. It is nowhere mentioned in The Consumer

Protection Act that, therefore appeal is allowed and both (Navrang Electronics and LG

Electronics) the respondents jointly and severally are liable to refund of Rs.26,300/- to the

complainant which was the price of the AC purchased by the complainant. Both the

respondents will further be liable for payment of Rs.30,000/- as compensation for

harassment. No interest is being awarded. The respondent will also be liable to costs which

is quantified as Rs.5,000/-. The respondents will be entitled to take back the AC sold by

them to the complainant. Copy of this order be sent to the parties free of cost. One copy of

the order be sent to the concerned District Forum and file be consigned to the record room

after needful is done.

United India Insurance Company ... vs Satish Chawla on 14 August, 2013

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The complainant-Satish Chawla has filed the complaint under Section 12 of the Consumer

Protection Act, 1986 (in short 'the C.P. Act') for claiming Rs. 2,00,000/- on account of theft

committed in the insured premises situated at Textile Colony, Ludhiana. The complainant

lodged the claim of Rs. 2 lacs, however, he received a letter that his claim do not fall within

the purview of insurance policy as entry by scaling over the wall is not treated as forcible

entry. However, the claim of the complainant does not fall within the definition of burglary

within the insurance policy because entry in the premises by scaling over the wall cannot be

treated as forcible entry; Both the parties were allowed by the District Forum to lead their

evidence.

With regard to the definition of burglary, the learned District Forum has relied upon the

judgment of Hon'ble Apex Court in which directions were given to all the insurance

companies to change the definition of burglary in their policy clauses because the ordinary

consumer is not able to understand the stringent meaning as given to the 'burglary' in the

policy but to no effect.

The appellant had deposited an amount of Rs. 25,000/- with this Commission at the time of

filing the appeal and Rs. 1,00,000/- in compliance with the order dated 8.5.2012. Remaining

amount shall be paid by the appellant to the respondent within 30 days from the receipt of

the copy of the order.

Tamil Nadu Electricity Board v/s Noida Chemicals, 17th June, 2009:

Tamil Nadu Electricity Board had placed purchase order for supply of Hydrate 2000kg @

Rs. 107/kg with Noida Chemicals dated 21/01/1992. Board tested the bulk supply by means

of taking samples on 10/07/1992 and found only 31.01% purity instead of 80% under the

purchase order. Several reminder, the Noida Chemicals to rectify the defects. Noida

Chemicals was not prepared either to replace the aforesaid defective items or to return the

advance amount

Board issued an advocate’s notice to the Noida chemicals calling upon it, to repay the

advance amount which was paid by the Tamil Nadu Electricity Board with 12% interest per

annum. Sue against the Noida Chemicals under the Consumer Protection Act. Noida

Chemicals filed a return statement that Tamil Nadu Electricity Board did not produce any

document to show the defect in purity or shortage in weight

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According to the judgment Tamil Nadu Electricity Board was not to be considered as a

Consumer under the Consumer Protection Act because the said goods were purchased for

commercial purpose.

Kishore Lal v/s Chairman, Employees State Insurance Corporation, 8th may 2007

Kishore Lal was insured with the Chairman, Employees State Insurance Corporation with

insurance. Kishore Lal’s wife was admitted in the ESI dispensary at Sonepaat for her

treatment for diabetes. The tests done revealed that his wife had been diagnosed incorrectly

in the ESI dispensary. The deterioration in the condition of his wife was a direct result of the

wrong diagnose

Kishore Lal filed a complaint under CPA. Compensation towards mental agony, harassment,

physical torture, pains, sufferings and monetary loss for the negligence of the authorities

Corporate raised certain preliminary objections as the complaint is not filed in the District

Consumer Forum and Sonepat, which is a govt. dispensary and the complainant cannot be

treated as a Consumer

As per our point of view Kishore Lal has not filed complete District Consumer Forum and

Sonepat is govt. dispensary so complainant cannot be treated as a consumer. So as per CPA

ESI is not liable to pay the amount to Kishore Lal

Union of India v/s Manoj H. Pathak, 1996

The complainant and his parents took their reserved seats in compartment of Gujarat

Express train. According to the complainant, about 10 to15 people entered their

compartment at Dadar and they were traveling without tickets. By force, they occupied the

reserved seats that belonged to the complainant and his parents. The complainant tried to

contact the conductor, police and the ticket checker but the group of hooligans attacked him.

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This resulted in fracture of the complainant’s vertebral column, thereby leading to

permanent disability.

The railway administration’s defence was that law and order maintenance was the duty of

Ministry of Home Affairs. The National Commission held that this amounted to

carelessness on the part of the Railway administration. It was held that it is every

consumer’s right to be unharmed during a train journey. Any person(s) traveling in an

unauthorized way must be subjected to legal trial. In this case, the Railway administration

was held accountable for negligence in their services.

Need for Consumer Protection in E-Commerce:

E-commerce, one of the fastest emerging trends in shopping is an unconventional method.

This is a very recent development in India and poses a lot of problems to consumers

shopping online. CAG (Comptroller and Auditor General of India) felt the need to actually

focus on this issue to see if the websites were consumer friendly and also to see if there were

adequate laws and redressal mechanisms in India to protect consumers shopping online.

CAG, therefore undertook a study, ‘E-commerce and Consumer Protection in India’ in

2002, to look at e-trading websites and how consumer friendly they were. In 2006, CAG

conducted a follow up study ‘Protecting consumer rights in e-commerce transactions’ to

look at laws and redressal mechanisms available to consumers

Protecting consumer rights in e-commerce transactions in India

India in the recent years has been experiencing an exponential growth in e- commerce.

While growth in the e-commerce industry is sweeping across the country, there appears to

be inadequate supervision (both governmental and non-governmental) and laws dealing with

quality control for these new companies and this is what makes the rapid growth alarming.

In light of the above negatives associated with e-commerce (specially with buying on the

Internet) and taking into consideration the rapid growth of this industry, it is important that

consumer groups in India take this problem seriously and come up with guidelines that can

be used to make shopping on the Internet a safe experience. These guidelines can feed into

the governmental process of making cyber laws to ensure that the issue of consumer welfare

and sovereignty during internet shopping is addressed.

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In 2001 the study by CAG brought to light a number issues such as privacy of information,

provision of contract terms such as guarantees/warrantees, refunds, dispute settlement,

hidden costs and misleading information and other problems because this sector has been

free from any kind of regulation.

In 2006, CAG undertook a follow up study to look at consumer responses to online

shopping and problems they have faced in shopping online. A detailed analysis of the laws

prevailing in different countries showed that Indian laws are grossly inadequate to deal with

problems in online shopping, issues such as phishing, spamming etc.

Ecommerce under Consumer Protection Act

To help customers, the government is planning to revamp the Consumer Protection Act in

the forthcoming winter session of Parliament to allow 'territory free' legal action against any

goods or service provider.

Under the law,

A consumer can initiate legal action against a seller only in the place where transaction

takes place.

The new provisions will cover both goods and service providers but only those that

operate physically from the Indian soil.

The new law would cover not just vendors in online space but also marketplace

providers such as Amazon and Flipkart.

Consumers will be able to approach their local consumer court against a service or a

goods provider who may be situated anywhere in the country. Any "unfair trade

practices" including a false claim could be challenged under the new law.

The vendor must allow a "cooling off" period where by the customer can change their

mind and cancel or return the order within 7 working days for most goods. Certain

exclusions do apply with items such as perishable and digital goods. The vendor must

inform your customers of their right to cancel their order with no loss other than return

postage and packing.

However, these are not applicable to 'business-to-business' transactions.

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The department of industrial policy and promotion (DIPP) had taken up the issue of

regulation of e-commerce retailers with consumer affairs ministry. Brick-and mortar

retailers associations had represented to the DIPP after leading online sellers including

Flipkart and Amazon offered deep discounts to promote sales.

Comparative Analysis of Consumer Protection Laws in Brazil, Malaysia

Country India Brazil Malaysia

Act Consumer

Protection Act

of 1986

Consumer Defence

Code 1991

Consumer

Protection Act

1999

Redressal

Agency

Consumer

Disputes

Redressal

Forums

Procon offices

(Procuradoria de

Proteção e Defesa do

Consumidor)

Tribunal for

Consumer

claims

Statistics

Cases Filed

since inception:

4,177,711 84,633

Cases Pending: 369,082 812

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% of total

Disposal:

91.17% 99.04%

One major difference between the Brazil Law, Malaysian Act and the Indian Act is that

according to the Brazil and Malaysian laws, the conducts specified may amount to abuse

dominant position whereas according to the Indian Act the conducts specified shall amount

to abuse of dominance.

While the Indian Act specifically enumerates ‘practices resulting in denial of market access‘

and using dominant position in one market to enter into or protect, other relevant markets‘

as conducts amounting to the abuse of dominance, they have not been mentioned in the

Brazil and Malaysian laws.

The Indian Competition Act states, “No Enterprise shall abuse its dominant position.

There are primarily three stages in determining whether an enterprise has abused its

dominant position. The first stage is defining the relevant market. The second is determining

whether the concerned undertaking /enterprise /firm is in a dominant position/ has a

substantial degree of market power/ has monopoly power in that relevant market. The third

stage is the determination of whether the undertaking in a dominant position/ having

substantial market power/ monopoly power has engaged in conducts specifically prohibited

by the statute or amounting to abuse of dominant position/ monopoly or attempt to

monopolize under the applicable law.

The Indian Competition Act defines dominant position as a position of strength, enjoyed by

an enterprise, in the relevant market in India, which enables it to -

(i) Operate independently of competitive forces prevailing in the relevant market

(ii) Affect its competitors or consumers or the relevant market in its favour

The Consumer Protection Act in Malaysia has been a runaway hit. The number of cases

raised with the Tribunal for Consumer Claims has continued to drop since 2011, indicating

the awareness of manufacturers to ensure the quality of their products and not to cheat

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consumers. The number of cases filed in 2011 was 442 for claims amounting to RM2.6

million. They further dropped to 318 for claims amounting to RM1.8 million in 2012 and

went down to 266 for claims amounting to RM1.4 million in 2014.

Brazil also has one of the most complete Consumer Defence systems of the world, counting

with the support of several regulations and with 700 Procon offices throughout the country.

All Brazilians state capitals have at least one Procon office.

India has to tackle the problems caused by a vast population and incumbent officers.

According to the regulation, the district forum is supposed to get rid of a minimum 75 cases

a month. However, the output is only 30 to 35 cases in most district forums. The system in

India is well established but it lacks awareness in rural India and more importantly it is the

people running the show who have failed the system. Judges take a long time to clear cases

and the numbers of pending ones keep piling up.

THE FUTURE CONSUMER DILEMMAS

There are a few challenges that the Government has to deal with the increasing awareness

amongst the consumers. In this Digital age, the “haves” utilizing the internet will stand an

advantage as compared to the “have notes” who are forced to stay offline. Future consumers

will have to make great sense of varied phenomena such as increasing subliminal

advertising, social networks, open economy. Marketers, today, use images and sound to

influence customer’s responses without the customer actually realizing it.

The rise of the concept of “consumerism” is an essential part of media-culture. The newly

emerging middle-class is a highly informed segment of people who are aware of the

different products. Also, the rise of brand awareness has widened the range of activities that

a company needs to perform to satisfy customer requirements. Companies are seeing a shift

in the focus form financial profits to ethical, social and environmental aspects.

In a provocative and insightful view of how emerging lifestyle and cultural changes are

likely to impact on future consumers, a safe and healthy lifestyle can be provided for future

consumers, by today’s consumers, policy makers and markets. Every company should strive

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to work towards maintaining an ecological balance and sustainable development. This may

create a positive image in the minds of the consumer that the company is responsible

towards the environment.

Recommendations and Suggestions

(i) Strengthening of the existing redressal mechanism to make it more efficient for

delivering speedier justice

(ii) Supplement the existing redressal system with an active ADR Mechanism.

(iii) Building a strong consumer information and advisory system.

(iv) Integrate State Consumer Helplines and Consumer Advice Centre to facilitate mediation

(v) Review of Consumer Protection Act 1986 and take adequate measures to plug loopholes

with a view to reduce delays and enhance its reach to new areas of consumer issues.

(vi) National Consumer Protection Agency.

HOW CORPORATES SHOULD HANDLE COMPLAINTS

“As chief executive you have to be aware that you’re communicating all the time, whether you mean

to or not.  Everything you do and don’t do will be interpreted and you need to be aware of that.”

Remember

The complaining customer often wants to continue an existing relationship - despite the fact that

something is wrong. Therefore focus should be on maximizing the potential for complaint

management to reduce customer dissatisfaction and maximize customer advocacy.

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Strategic Plan

Have a clear, flexible, welcoming and open policy for complaints

Train staff and management in complaints handling

Give these complaints enough priority

Ensure that you can process complaints through all modes – in person, by telephone, by mail, by

email

Set up processes to lodge and analyze complaints and share it with concerned department

Operational Process and Actions

Thank the customer for complaining

Say that you are sorry that the problem arose as this is NOT an admission of guilt on your part,

it’s just good manners

Put yourself in the place of the customer (complaints are rarely personal)

Start with the view that the customer has a valid point

Get all the facts first (listen carefully)

Don’t leap straight to the “free gift route”

Correct the mistake

Learn from every complaint

Minimize reasons for complaints

Remember, it costs at least 5 times as much to gain a new customer than to keep an existing one

(so focus on the customer, not the complaint)

ALWAYS respond

Listen to your staff

Benefits of Good Complaints Handling

Improved image/reputation

Increased profitability

Customer loyalty

Fewer customer “drop-outs”

Increased market share

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A more realistic idea of customer satisfaction

Customers can be more satisfied after recovery

Improved awareness of importance of keeping customers satisfied

Better internal & external relationship

CASE STUDY

Case 1:

Judgement gives Relief for Electricity Consumers in Mumbai

Problem:

BEST (electric supply) wanted to maintain monopoly to supply to retail customers.

Judgement:

Mr. Guruprasad C. Shetty, is the consumer of electricity supplied by Brihanmumbai Electric

Supply and Transport Undertaking (BEST). Tata Power Company Limited is another

Distribution Licensee in Mumbai. The consumer wanted to switch over from BEST to Tata

Power Company Limited as its tariff rate was lesser than BEST’s rate. Therefore, the

consumer approached Tata Power Company and made a request to supply electricity to him

as he wanted to switch over from BEST to Tata Power Company Limited. Tata Power

Company Limited advised the consumer to approach BEST and seek permission for the use

of TATA’S distribution network. Only after which TATA would agree to supply electricity

to the consumer. In response to the aforesaid advice, the consumer approached BEST and

requested to grant such permission to get supply from Tata Power Company Limited, by

using the distribution network of BEST. However, BEST did not incline to grant such

permission to the consumer. Hence Mr. Shetty again approached Tata Power Company

Limited for the same who again expressed its inability to supply electricity to consumer in

the absence of the permission granted by BEST. Therefore, Mr. Shetty filed a petition

before the State Commission praying for the directions to the Tata Power Company Limited

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to provide electricity supply to Mr. Shetty and in case of failure, Tata Power Company

Limited’s Distribution License be cancelled and compensation be paid to Mr. Shetty for

such failure to provide the supply of electricity.

The State Commission after hearing the parties including that of BEST passed the impugned

order giving the direction to the Tata Power Company Limited to follow Regulations of the

Maharashtra Electricity Regulatory Commission Regulation, 2005 and also in terms of his

license condition and to provide the electricity supply to the consumer and other consumers

by laying its own Distribution System Network within its entire area of supply. Feeling

aggrieved over this order, permitting the Mr. Shetty to get the supply from Tata Power

switching over from BEST, BEST has filed the Appeal before the Tribunal.

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The learned counsel for the BEST has raised the following contentions mainly questioning

the jurisdiction of the State Commission to enquire into the allegations contained in the

Petition filed by the consumer as against the Distribution Licensee. The State Commission

lacks jurisdiction to entertain any complaint from the consumer to inquire into the dispute

between the consumer and the Distribution Licensee praying for any direction regarding

extension of Distribution system and for payment of compensation in violating of the Act.

Even though this complaint which had been filed by the consumer invoking the Act, this

section does not confer the State Commission with any jurisdiction to enter into the dispute

between the consumer and the Distribution Licensee. The present dispute which is between

the consumer and the Distribution Licensee has to be resolved only by Grievance Redressal

Forum under the Act. In reply to these issues, the Learned Senior Counsel for the

Respondents submitted that the dispute is not between the consumer and the Distribution

Licensee on the billing dispute but, on the other hand, the State Commission had enquired

into the alleged violations and non-compliance of the licensing conditions of the

Distribution Licensee as complained by the consumer and, therefore, the State Commission

has got the jurisdiction to ensure proper compliance of the provisions of the licensing

conditions and as such the complaint filed by the consumer was maintainable. The main

grievance of the consumer before the State Commission was that he had applied to Tata

Power Company Limited for supply of electricity but the same was refused by the latter

merely on the ground that the consumer was unable to procure the No-Objection Certificate

from BEST even though the Consumer was living in the licensed area of BEST as an

existing consumer of BEST. The State Commission has given the direction to Tata Power

Company Limited to perform its universal service obligation and to comply with the

provisions of the Act and the concerned Regulations. The said direction is directed against

Tata Power Company Limited and this is with respect to and in the interest of the

Consumers generally. The State Commission had directed Tata Power Company Limited to

supply electricity to its consumers situated in the common area of supply of Tata Power

Company Limited as well as BEST as per the terms and conditions of the license of the

Distribution Licensee by laying down its own Distribution Network for giving supply. The

State Commission pointed out that the situation where two Distribution Licensees, namely,

Tata Power Company Limited and the BEST, operating in the same area of supply, are not

co-operating with the consumers who wish to exercise their choice of supplier.

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The choice of supplier and the open access are the main thrust of the Electricity Act, 2003.

According to the Consumer, the BEST is taking undue advantage of his alleged protection

purportedly under Act to hinder the exercise of choice of supplier by the complainant

consumer by not granting the No-Objection Certificate for switching over from BEST to

Tata Power Company Limited for availing the electricity supply at lesser tariffs and the Tata

Power Company also has not been supplying electricity on the pretext of failure to produce

the No Objection Certificate. Hence the consumer complained against Tata Power Company

Limited stating that Tata Power Company Limited has refused to supply electricity to the

consumer even though it is statutorily required to provide by laying down its own

Distribution System as required. This issue can be adjudicated upon only by the State

Commission under the provisions and not by the Grievance Redressal Forum. The State

Commission upheld the contention of BEST that BEST could not be compelled to share its

wide network with the Tata Power Company Limited. At the same time, the State

Commission ruled that Tata Power Company Limited was obliged to develop and maintain

efficient, coordinated and economical Distribution System in its area of supply.

Accordingly, a specific direction has been issued by the State Commission to Tata Power

Company Limited to supply electricity to its consumers situated in the common area of

supply of Tata Power Company Limited and BEST as per the Licensing Conditions by

laying down its own new Distribution Network for providing electricity supply to the

consumers on their request.

Summary of our Findings.

The consumer has the right of selecting who should be his supplier in case he has

more than one option.

The suppliers cannot harass the consumer and drag the consumer in their rivalry.

Merely on the grounds of No Objection Certificate a supplier cannot be denied his

right.

It’s the duty of the respective suppliers to provide necessary provisions to supply and

not depend on rivals or consumers for such matters.

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Case Reference:

Brihan Mumbai Electricity Supply & transport under taking Versus Maharashtra Electricity

Commission (MERC) & others Civil Appeal No. 4223 of 2012 in the Supreme Court of

India.

Case 2:

The Consumer Protection Council, Rourkela, a voluntary organisation, has filed this

complaint against the Indian Oil Corporation.

Problem:

A consumer complained that the Indane LPG refill received by him was short by 10kgs.

Brief:

In a landmark judgment, the National Consumer Disputes Redressal Commission, New

Delhi, has directed the Union Ministry of Petroleum and Ministry of Consumer Affairs to

ensure that all LPG marketing companies issue necessary instructions to distributors to

provide to deliveryman proper weighing scale for the purpose of weighing LPG cylinder in

the presence of customers, before delivery.

Judgement :

One of the consumers approached the Council in the first week of June, 2000 and

complained that the Indane LPG refill received by him was short by 1 kg. The Secretary,

M/s. R.W.C.C.S. Ltd. the gas dealer of IOC, Rourkela even after being informed failed to

give the replacement of the cylinder. The consumer could weigh the same as he was in

possession of spring balance. The complainant Council talked to the representative of

opposite party regarding the said complaint who agreed to replace the cylinder. But the

aforesaid consumer again informed the Council’s office that the replacement refill cylinder

which he received was short by 1 kg yet he had accepted the same. Disturbing information

was received that Indane LPG cylinders were being under-weighed and being aware that the

consumers had no facility to weigh the same; consumers were being taken for ride. 

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A survey was conducted by the Voluntary Organization of the Council covering between

14th to 21st June, 2000 by visiting 48 households.

The survey revealed: 

1. As against the net weight of 14.2 kgs of LPG, the consumers on an average were getting

only 12.74 kgs (10.3% and 1.46 kg. less)

2. Only 12.5% of the refill cylinders weighed were within the tolerance range of 150 grams

or less, as prescribed in 2nd Schedule of the Standards of Weights & Measures (Packaged

Commodities Rules)

3. Consumers were losing on an average Rs.24/- per refill of Indane as per the price

prevailing at that time. 

Seeing the huge collective financial loss of consumers and the need to tackle the problem,

the Complainant Council wrote to the Director (Legal) Metrology, Govt. of India,

Department of Consumer Affairs with its copy to the Chairman, I.O.C.

A letter was received from the General Manager, IOC, Orissa State Office informing that

everything was fine and that the joint survey utilising the spring balance was not correct

though the opposite party, Sri B. Mintz, Asstt. Manager (LPG) never objected for utilising

the spring balance as its reliability was checked with Standard Weights and was found error

free. Despite letter sent to Director, Legal Metrology, Govt. of India, Department of

Consumer Affairs, once again informed the developments and soliciting his clarification

regarding usage of spring balance, but no reply had been received. The Chairman, General

Manager and Sr. Manager (LPG) of opposite parties, Orissa were repeatedly requesting to

the Council to visit their LPG Bottling Plant at Balasore, in Orissa as they were keen to

impress that everything was proper at their end. However, the visit was arranged on 26th

August, 2000 between 12.30 to 2.00 PM. In the complaint, it was found that the process of

setting the weight is obviously prone for human error due to: 

1. Very short time which is available to the operator for making the adjustment. 

2. Watching the rotary movement of the machine constantly can result in enormous strain to

the eyes as well as to the mind.

3. The tare weight at times is not legible on the refill and hence error in reading the same. 

In the Carousel Machine if the tare weight is not set correctly, then the refill could take more

or less LPG depending on whether the error is setting the tare weight is positive or negative.

Hence, after the Carousel Machine, the filled Cylinders are individual tested in an on-line

electronic Weighing Machine. Here again the process is done manually. The operator has to

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note the weight stencilled on the refill and cross check with the digital display of the

Weighing Machine, when a refill is selected for weighment. In this machine (Electronic

Weighing Machine) the no load reading is set as (-) 14.2 kg. so that when a refill is weighed

it displays the weight of the empty refill (tare weight). So whenever the variation is beyond

acceptable levels the operator instructs his colleague standing nearby to divert the cylinder

for weight adjustment. Then the concerned operator diverts the Cylinder for weight

adjustment. The whole process has to be completed within 2.5 seconds so that there is no

hold up in the line. 

Thus the whole process of filling and checking of the weighment involving unreliable and

cumbersome manual operations is inherently error prone and cannot ensure appropriate

quantity to the consumers." 

Six refills were checked by the Secretary of the Council and 3 were found underweight by

0.5 kg to 1 kg. By letter dated 30th August, 2000, the Council informed the Director, Legal

Metrology, Govt. of India, Deptt. of Consumer Affairs, Chairman, IOC as well as others and

requested the Director, Legal Metrology and others to take appropriate action about this

problem so that the consumers might get right quantity of LPG in the Indane refills.

Repeated and persistent requests initially did not bring about any desired result. Ultimately,

the Secretary of the Council raised these issues during the Central Consumer Protection

Council Meeting held on 8th November; 2000.The representatives of the Ministry of

Petroleum & Natural Gas who were present in the meeting assured that they would do the

needful. 

The complainant Council once again did a random survey of weight of LPG refills in the

Rourkela Steel Township, during April-June, 2001. The summary of the Survey Report is as

under: 

Total number of refills weighed/No. of households covered – 56 

No. of refills found within the tolerance range of (-) 150 gms. – 18 (32.1%) 

No. of refills found beyond the permissible error of (-) 150 gms. - 38 (67.9%) 

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On the aforesaid basis, the Council found that in as many as 67.9% of refills were found

underweight to the tune of 0.89 kg. The overall refills found under weighed by 0.54 kg.

resulting in a loss of about Rs.10/- per refill to the consumer at the present rate of Rs.253/-

per refill, sold at Rourkela. Balasore Bottling Plant was producing about 25,000 refills per

day. Thus, assuming 300 working days per year, the Bottling Plant is producing 75,00,000

refills per year. Thus the plant was inflicting a loss of Rs.7.5 crores (Rs. 10 x 75,00,000) on

the consumers per year. The estimate of LPG bottling plants in the country was about 100

and as per the Manager of the Balasore Bottling Plant, all the plants worked on similar

technology and process. IOC alone would be getting unduly enriched to the tune of Rs.750

crores per year. Similarly, Bharat Petroleum and Hindustan Petroleum must also be getting

unduly enriched if they were running similar bottling plants. 

In the light of the aforesaid facts to get the grievance redressed, the complainant Council

ultimately filed a complaint on 26.6.2001 seeking following reliefs: 

a. Immediately make necessary changes in their bottling plants and Carousel Machines so

that they may fill right quantity of LPG in the refills.

b. Check the weight of each of the Indane LPG refill at the doorstep of the household, in

presence of the consumer, before they are delivered to the consumer so as to ensure that

14.2 kg. of LPG is delivered, till the requisite changes are made in their Bottling Plants.

c. Pay a sum of Rs.5,000/- to each of the 104 consumers listed in this petition.

d. Pay 1% of the amount unduly collected in a year from the consumers through under-

weight cylinders, from across the country, to the Complainant Council, so that it may use

the fund for doing more such surveys, studies and consumer protection activities.

e. Pay the Complainant Council a sum of Rs.50,000/- towards the cost of this petition; and 

f. Any other orders deemed necessary.

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Case of I.O.C.:  

The Chairman, IOC and other officials of the IOC, opposite party filed their joint reply and

contested the matter.

In this regard, they (GM, IOC) relied upon the measures suggested to the Under Secretary,

Govt. of India, Ministry of Energy,(Deptt. of Petroleum), Shastri Bhavan, New Delhi about

use of weighing balance which reads as under: 

"We are fully in agreement about protecting the interest of consumers in respect of

delivering correct quantity of product. However, equipping the deliverymen with portable

spring balance would not serve the desired purpose as they cannot be depended upon to give

accurate weight, especially with passage of time and that too for weighing LPG cylinders

whose gross weight would be around 30/32 kgs. The Oil Industry has, however, taken

measures to have weighing scales provided in distributors’ godown, where every filled

cylinder is required to be weighed for correct weight before despatch to customers.

Moreover, Oil Companies have an arrangement to replace cylinders found to be

underweight so that the distributors are not put to loss and are not induced to pass on

underweight cylinders to consumers on this account." 

As per submissions made, the Ld. Addl. Solicitor General, Mr. Vikas Singh, so far as the

bottling plants are concerned, the investment of huge amount of more than 250 crores was

likely to be involved for modernisation. For about 120 bottling plants and 145 number of

filling systems were required to be modernized as per the recommendations of the

Committee. 

The Committee decided the complaint with the following directions: 

1. The Ministry of Petroleum is given four years time as prayed for, in terms of the

submissions. 

2. The Ministry of Petroleum as well as the Ministry of Consumer Affairs shall ensure that

all Marketing Companies do issue necessary instructions that the Distributors will provide to

deliveryman proper weighing scale for the purpose of weighing LPG Gas Cylinder in the

presence of customers and they will give it due publicity by publishing the same in the

vernacular language of each and every State as well as in English and Hindi in newspapers

apartment from giving similar type of advertisement in TV for information of the

consumers.

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The Committee directed the Indian Oil Corporation to pay a sum of Rs.50,000/- to the

Complainant-Council to meet the expenses incurred by it in protecting the interest of

consumers and to continue to protect the interest of the consumers, within a period of four

weeks. 

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BIBLIOGRAPHY

http://www.cutsinternational.org/CART/pdf/

Study_on_the_Status_of_Law_Enforcement_for_Misleading_Advertisements_in_In

dia.pdf

http://judis.nic.in/supremecourt/helddis.aspx

http://www.consumeradvice.in/Download/

TATA_Motors_PayPenalty_Faulty_IndigoCar.pdf

http://indiankanoon.org/doc/7145703/

http://indiankanoon.org/doc/19123360/

http://lex-warrier.in

www.ncdrc.nic.in/1_1.html

www.nationalconsumerhelpline.com

www.jagograhakjago.com

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