Amity Business School

MBA (M&S), Semester II

Legal Aspects of Business
Dr. Anshu Yadav

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Consumer Protection Act 1986

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 Consumer Protection Act,1986

• In order to provide for better protection of the interests of the

consumer the Consumer Protection Bill, .1986 was introduced in the
Lok Sabha on 5th December, 1986.

• The Consumer Protection Act 1986 is a social welfare legislation

which was enacted as a result of widespread consumer protection
movement.
 Objective

•The main objective of CPA is to provide speedy and simple redressal

to consumer disputes.
1) To promote and protect the rights of consumers
2) To be established Consumer Protection Council at the Central and
State level
3) To provide speedy and simple redressal to consumer disputes by
establishing consumer courts
Who is a Consumer? Sec. 2 (1) (d)
Any person who:

• Buys any goods for a consideration which has been paid or will be
paid.

• Hires or avails any service for a consideration which has been paid
or will be paid.

• It does not include a person who obtains goods for resale or any
commercial purpose
Rights of Consumer

Right to
Safety

Right to
Right to be
Consumer
Informed
Education
Rights of
Consumer

Right to Right to be
Redressal Heard
 Redressal Agency

The aims and objectives of the Act are achieved by

District Forum

State Commission

National Commission.
District Forum
• It shall consist of a person who is or has been or is qualified to be a
District Judge as its President,2 other members, one of whom
shall be a woman

• Every member of the District Forum shall hold office for a term of 5
years or up to the age of 65 years which ever is earlier

• It shall have jurisdiction to entertain complaints where the value of

the goods or services and the compensation, if any, claimed does
not exceed Rs.20 Lacs.
A District Forum shall have the powers
I. To remove the defect pointed out by the appropriate laboratory
from the goods in question
II. To replace the goods with new goods of similar description
which shall be free from any defect
III. To return to the complainant the price, or as the case may be,
the charges paid by the complainant
IV. To pay such amount as may be awarded by it as compensation
to the consumer for any loss or injury suffered by the consumer
due to the negligence of the opposite party
State Commission
•It is established by SG by notification

•It shall have jurisdiction to entertain complaints where the value of the
goods or services and compensation, if any, claimed exceeds Rs. 20
Lacs but does not exceed Rs.1 Crore and appeals against the orders of
any District Forum within the State.
National Commission
• It shall consist of a person who is or has been a Judge of the Supreme
Court, as its President. Not less than 4 and not more than such number
of members as may be prescribed and one of whom shall be a woman

• Every member of the National commission shall hold office for a term
of 5 years or up to the age of 70 years which ever is earlier.

• It shall have jurisdiction to entertain complaints where the value of the

goods or services and compensation, if any, the claim exceeds Rs. 1
Crore and appeals against the orders of any State Commission.
Appeal.-Any person, aggrieved by an order made
by the National Commission in exercise of its
powers may prefer an appeal against such
order of the Supreme Court within a period of
thirty days from the date of the order:
Limitation period. The District Forum, the State
Commission or the National Commission shall
not admit a complaint unless it is filed within two
years from the date on which the cause of action
has arisen

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 Definitions
1) "complainant" means-
(i) A consumer
(ii) Any voluntary consumer association registered
under the Companies Act,1956 or under any other
law for the time being in force
(iii) The Central Government or any State
Government; .
[(iv) One or more consumers, where there are
numerous consumers having the same interest
(v) In case of death of a consumer, his legal heir or
representative who or which makes a complaint;
 Definitions

Section 2 of The Consumer Protection Act, 1986, defines certain words

which are used in various sections.

Appropriate Laboratory : S. 2(1)(a) :

“Appropriate laboratory” means a laboratory or organisation :

I.Recognised by the Central Government

II.Recognised by a state government, subject to such guidelines as
may be prescribed by the Central Government in this behalf; or
III.Any such laboratory or organisation established by or under any law
for the time being in force, which is maintained, financed or aided by
the Central Government or a State Government for carrying out
analysis or test of any goods with a view to determining whether such
goods suffer form any defect.
Complainant S.2(1)(b) :

i.A consumer, or
ii.Any voluntary consumer association registered under the Companies
Act, 1956, or under any other law for the time being in force; or
iii.The Central Government or any State Government, who or which
makes a complaint;
iv.One or more consumers, where there are numerous consumers
having the same interest,
v.In case of death of a consumer, his legal heir or representative who
or which make a 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 in any
respect;
(iv) A trader or the service provider, as the case may be,
has charged for the goods or for the services
mentioned in the complaint, a price in excess of the
price fixed or displayed
• "consumer" means any person who-
(i) buys any goods for a consideration which has
been paid or promised or partly paid and partly
promised, or under any system of deferred
payment and includes any user of such goods
other than the person who buys such goods for
consideration paid or promised or partly paid or
partly promised, or under any system of deferred
payment when such use is made with the approval
of such person, but does not include a person who
obtains such goods for resale or for any
commercial purpose; or
any services for a consideration which has
been paid or
promised or partly paid and partly promised,
or under any system of deferred payment
and includes any beneficiary of such
services other than the person who hires
or avails of the services for consideration
paid or promised, or partly paid and partly
promised, or under any system of deferred
payment,
"consumer dispute" means a dispute where the
person against whom a complaint has been made,
denies or disputes the allegations contained in the
complaint
"defect" means any fault, imperfection or
shortcoming in the quality, quantity, potency, purity
or standard which is required to be maintained by
or under any law for the time being in force or
under any contract, express or implied or as is
claimed by the trader in any manner whatsoever in
relation to any goods;
• "deficiency" means any fault, imperfection,
shortcoming or inadequacy in the quality,
nature and manner of performance which
is required to be maintained by or under
any law for the time being in force or has
been undertaken to be performed by a
person in pursuance of a contract or
otherwise in relation to any service
"goods" means goods as defined in the Sale
of Goods Act, 1930
• "unfair trade practice" means a trade practice which,
for the purpose of promoting the sale, use or supply of
any goods or for the provision of any service, adopts
any unfair method or unfair or deceptive practice
including any of the following practices, namely;-
(1) the practice of making any statement, whether orally
or in writing or by visible representation which,-
(i) falsely represents that the goods are of a particular
standard, quality, quantity, grade, composition, style
or model;
(ii) falsely represents that the services are of a particular
standard, quality or grade;
iii)falsely represents any re-built, second-hand,
renovated, reconditioned or old goods as new goods;
(iv) represents that the goods or services have
sponsorship, approval, performance, characteristics,
accessories, uses or benefits which such goods or
services do not have;
(v) represents that the seller or the supplier has a
sponsorship or approval or affiliation which such seller
or supplier does not have;
(vi)makes a false or misleading representation
concerning the need for, or the usefulness of, any
goods or services;
(vii) gives to the public any warranty or
guarantee of the performance, efficacy or
length of life of a product or of any goods
that is not based on an adequate or proper
test thereof
(2) permits the publication of any
advertisement whether in any newspaper
or otherwise, for the sale or supply at a
bargain price, of goods or services that are
not intended to be offered for sale or
supply at the bargain price
(3) permits-
the offering of gifts, 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
(4) permits the sale or supply of goods intended to be
used, or are of a kind likely to be used, by consumers,
knowing or having reason to believe that the goods do
not comply with the standards prescribed by
competent authority relating to performance,
composition, contents, design, constructions, finishing
or packaging as are necessary to prevent or reduce
the risk of injury to the person using the goods
(5) permits the hoarding or destruction of
goods, or refuses to sell the goods or to
make them available for sale or to provide
any service, if such hoarding or
destruction or refusal raises or tends to
raise or is intended to raise, the cost of
those or other similar goods or services.
(6) Manufacture of spurious goods or
offering such goods for sale or adopting
deceptive practices in the provision of
services
Quasi judicial machinery:

Observe the principles of natural justice

Give reliefs

Impose penalties

The main object of these bodies is to provide speedy

and simple redressal to consumer disputes.
Complaint:

No stamp or court fee is needed.

A complaint can be hand written or typed.

Admitted if it is filed within two years from the date on which the
cause of action has arisen.

According to Three Tier System it is decided in which commission

or forum the hearing of case will be.
When can a consumer can launch a complain or What should be
the nature of complaint?

a) Any unfair trade practice adopted by the trader

b) Defective goods

c) Deficiency in service

d) Excess price charged by the trader

e) Unlawful goods sale, which is hazardous to life and safety

when used.
 PROCEDURE OF FILING
COMPLAINT:
1. Notice to the Opposite Party.
2. Prepare the consumer complaint in the required format
3. Get the complaint affidavit notarized through a notary. 4.
Submit the complaint and court fee to the receiving clerk in
the consumer court who will give you the date for admission
hearing and complaint reference number
5. On admission hearing, you would be informed whether
your case is fit for acceptance or not. If accepted, you will be
given the date for next hearing.
6. The court will send a notice & complaint copy to the
opposite party seeking reply within 30 days

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8.Where complaint alleges a defect in the goods
which cant be determined without proper analysis,
the forum/commission send it to the laboratory to
find out whether there is any defect in it or not?
9. The hearings will continue till the matter is
decided.
10. The complaint should be decided within 90
days

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HOW TO FILE A COMPLAINT?
Fee for Dist. Forum:- Up to Rs. 1 lakh-Rs. 100
Above Rs. 1 lakh but less than 5 lakh-Rs. 200
Above Rs . 5 lakh but less than 10 lakh-Rs. 400
Above Rs. 10 lakh but less than 20 lakh-Rs. 500
Relief to Consumers:
PENALTIES:If trader fails to follow the order then
he shall be punishable with min. 1 month up to
3yrs with fine of min. Rs.2000 up to Rs.10000
If frivolous complaint is filed then it shall be
dismissed & complainant is penalized to pay the
cost incurred buy opposite party (not more than 31
Rs.10000 )
Format of complaint:

Complaint are addressed (by post / courier) duly signed.

State date wise facts in the following format: (complaints by e-

mail not accepted)

Page one: Name, Address, Residence telephone, E-mail

address (Mandatory).
Membership fee of Rs. 300 or transaction number if paid
online.

Page two: Full name, registered address of the Opposite Parties,

telephone no’s, fax number and e-mail address.
Page three onwards: Complaint with date wise facts, refer to the
page numbers of the attached documents where ever required.

RELIEF: On the last page, mention what relief that you are
looking for against

Enclose: Only one set of Xerox copies of supporting documents.

(Which are disposed off and the documents after
discarded 6 months).

Enclose: One year membership subscription of Rs. 300 by draft

in favour of "ICRPC" payable at "Mumbai”.

Online payment: Send a request e-mail for online payment

procedure to
payment@consumergrievance.com.
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Councils

Central Council

State Council

District Council
 The District Consumer Protection
•
Council
It shall consist of the following members, namely:-

(a) the Collector of the district (by whatever name called), as its
Chairman; and
(b) such number of other official and non-official members as may
be prescribed by the SG

• The District Council shall meet at least twice in an year.

• The procedure will be set by SG

 The State Consumer Protection
Council
• It shall consist of the following members, namely:
(a) the Minister in-charge of consumer affairs in the SG as its
Chairman;
(b) such number of other official or non-official members as may be
prescribed by the State Government.

• The State Council shall meet at least twice in an year.

• The procedure will be prescribed by the SG

 The Central Consumer Protection
Council
• It shall consist of the following members, namely

• (a) the Minister in charge of Consumer Affairs in the CG as its

Chairman, and
(b) such number of other official or non-official members as may be
prescribed.

• The Council shall meet at least once an year.