Law of Torts Unit IV

The Consumer Protection Act

The Consumer Protection Act seeks to provide better protection of the interests of consumers. It aims to provide a speedy and simple redressal to consumer grievances. The Consumer Protection Act offers for the setting up of three-tier quasi-judicial machinery.

This machinery has been empowered to give relief of a specific nature and to award compensation to consumers. The Consumer Protection Act applies both to goods and services. It protects not only buyer but user in the case of goods and any beneficiary in case of services.

Several laws had been passed to protect consumers. The Contract Act, 1872, The Sale of Goods Act, 1930, The Agricultural Produce/Trading and Marking Act, 1937, The Drugs and Cosmetics Act,

1940, The Essential Commodities Act, 1955, The Preventions of Food Adulteration Act, 1954, The Monopolies and Restrictive Trade Practices Act, 1969, The Standards of Weights and Measures Act, 1976, etc., are examples of these laws.

It was; however, felt that there was need for a specific law for consumer protection. Therefore, The Consumer Protection Act, 1986 was passed.

OBJECTS

The Consumer Protection Act seeks to provide better protection of the interests of consumers. It aims to provide a speedy and simple redressal to consumer grievances. The Consumer Protection Act offers for the setting up of three-tier quasi-judicial machinery.

This machinery has been empowered to give relief of a specific nature and to award compensation to consumers. The Consumer Protection Act applies both to goods and services. It protects not only buyer but user in the case of goods and any beneficiary in case of services.

SALIENT FEATURES OF THE CONSUMER PROTECTION ACT, 1986

  1. Social Welfare Law : It is a highly progressive piece of social welfare legislation. It is acclaimed as the Magna Carta of Indian consumers. This is a unique law which directly pertains to consumers in the market place and seeks to redress complaints arising there from.
  2. Comprehensive Provisions and Effective Safeguards: Its provisions are very comprehensive. It provides effective safeguards to the consumers against various types of exploitation and unfair trade practices. In fact, it provides more effective protection to consumers than any other law in India.
  3. Special Consumer Courts: The Consumer Protection Act has created special consumer courts for enforcement of the rights of consumers.
  4. Three-Tier Grievance Redressal Machinery: The Consumer Protection Act provides for a threetier consumer grievance redressal machinery — District Forums at the base, the State Commission at the middle level and the National Commission at the apex level. The redressal machinery is quasijudicial in nature.
  5. Simple and Inexpensive : There are no complicated or elaborate procedures or other technicalities. The redressal machinery is merely to observe the principles of natural justice. No court fee any other charge is to be paid by the complainant. It is not mandatory to employ any advocate. The complainant can write his grievance- on a simple paper along with the name and address of the opposite party against whom the complaint is made.

Thus, the consumer protection Act provides a simple, convenient and inexpensive redressal of consumer grievances.

  1. Covers Goods and Services : The Consumer Protection Act covers both goods and services rendered for consideration by any person or organization including public sector undertakings and Government agencies. However, services rendered free of charge or under any contract of personal service are excluded. All suppliers of goods and services in private, public and cooperative sectors are covered under the Act.
  2. Time Frame : The Consumer Protection Act lays down time limits for the disposal of cases so as to provide speedy redressal of grievances.
  3. Class Action : The Consumer Protection Act allows filing of class action complaints on behalf of groups of consumers having common interest.
  4. Check on Unfair Trade Practices : The Consumer Protection Act also covers complaints relating to unfair trade practices. Thus, a consumer can protect against food adulteration, short weighting and overcharging, directly to the District Forums. The consumer can pick up a food sample from a shop, get it analyzed by a chemist and file a complaint on that basis.
  5. Check on Overcharging : The Consumer Protection Act also provides for complaints against charging in excess of the price of a product fixed by a law or rule and/or displayed on the packaged commodities.

THE BASIC FEATURES OF THE CONSUMER PROTECTION ACT, 1986

The Constitution of India, which is divided into different parts, has two very important parts . Part III Fundamental Rights and Part IV Directive Principles of State Policy. These two parts denote two important features of our constitution. The former denotes the existing and enforceable legal rights and the latter denotes the targeted social and economic goals which our founding fathers desired, our successive  governments to achieve.

That in pursuance of achieving one such goal, Consumer Protection Act came into force in the year 1986. That as per the preamble of the Act it was brought to provide for the better protection of the interests of consumers and for settlement of consumers’ disputes.

Although there were remedies in other laws like Contract Act, Sales of Goods Act, Torts, IPC and procedure prescribed in C.P.C. and Cr.P.C., the purpose o f enactment of Consumer Protection Act, 1986 was to provide specialized redressal to the consumer grievances.

That the Act provides for the Central Consumer Protection Council, State Consumer Protection Council and three tiers of the Consumer Redressal Authorities i.e. District Consumer Forum, State Consumer Commission and the National Consumer Commission.

The Councils were assigned with the job to promote and protect interest of the consumers at the Central and State levels and the redressal authorities  were established to provide speedy and simple remedy to consumer disputes through a quasi-judicial machinery.

That the proceedings before the District Consumer Forum, State Consumer Commission or the National Consumer Commission are deemed to be judicial proceedings. Further the District Consumer Forum is deemed to be a Civil Court headed by a person qualified to be a District Judge.

The territorial jurisdiction of the District Forum is the entire district and the current enhanced monetary jurisdiction is the dispute up to Rupees twenty lakhs.

That the State Consumer Commission has two jurisdictions i.e. original which is the territory of the entire state beyond Rupees twenty lakhs up to Rupees one crore and the Appellate Jurisdiction i.e. to hear the appeals against the judgments and orders of the District forums.

That the National Consumer Commission has two jurisdictions i.e. original which is the territory of the whole of India beyond Rupees one crore up to infinity and the Appellate Jurisdiction i.e. to hear the appeals against the judgments and orders of the State Consumer Commission.

That by the establishment of the specialized mechanism by the Act it was ensured that the ‘consumer’ can file a ‘complaint’ in case of any unfair trade practice,  defect in goods, deficiency in services or excess-pricing. Thus making it necessary to first understand the connotations of these words and/or phrases in the context of the Act.

Firstly, the consumer is defined by the Act as a person who buys or uses any goods or hires any services for money paid or promised.

Secondly, the complaint  means any allegation in writing made by the consumer against any unfair trade practice, defect in goods, deficiency in services or excess pricing.

One more thing note worthy is that the complaint can be lodged by consumer, registered consumer association, Central Government or State Government. Therefore the complaint can be lodged by not only the consumer himself but also by others, in representative capacity.

It is pertinent to note that consumer means any person who consumes the goods or services. Therefore making all human beings as consumers as long as they live. It is the consumer who is the center of the entire business and industry.

He needs to be protected from malpractices and exploitative deeds of market operators like the producer, supplier, whole-seller, dealer and retailer.

Interestingly, even the producer, supplier, whole-seller, dealer and retailer are somewhere also consumers when they are in their own personal life  consuming the goods or services.

Another important aspect to be noted is that the Act came into force with the objective to protect and promote the interest of the consumers in addition to the existing provisions for the same objective in other laws and statutes not in abrogation of the same.

That means that even after the promulgation of the Act other laws and statutes continue to be in force for the protection of the consumers’ interest.

That since inception in the year 1986 till now there has been a lot of changes and development in the law as well as the redressed system. The legal concepts have been enlarged and elaborated by wonderful judicial precedents.

Amendments have been brought to make it more effective. Though a lot is yet to be achieved, at least the steps in right direction had been taken has come a long way and is growing fast.

Authorities For Consumer Protection

It is established by the State Government which consists of the following members:

  • The Minister in charge of consumer affairs in the State Government – Chairman.
  • Such number of other official or non-official members representing such interests as may be prescribed by the State Government.
  • such number of other official or non-official members, not exceeding ten, as may be nominated by the Central Government.

The State Council is required to meet as and when necessary but not less than two meetings every year.

Consumer Disputes Redressal Agencies

Main article: Consumer Court

  • District Consumer Disputes Redressal Forum (DCDRF): Also known as the “District Forum” established by the State Government in each district of the State. The State Government may establish more than one District Forum in a district. It is a district level court that deals with cases valuing up to 2 million (US$31,000).
  • State Consumer Disputes Redressal Commission (SCDRC): Also known as the “State Commission” established by the State Government in the State. It is a state level court that takes up cases valuing less than 10 million (US$150,000)
  • National Consumer Disputes Redressal Commission (NCDRC): Established by the Central Government. It is a national level court that works for the whole country and deals with amount more than 10 million (US$150,000).

Objectives of Central Council

The objectives of the Central Council is to promote and protect the rights of the consumers such as:- a) – the right to be protected against the marketing of goods and services which are hazardous to life and             property.

  1. – the right to be informed about the quality, quantity, potency, purity, standard and price of goods or services, as the case may be so as to protect the consumer against unfair trade practices.
  2. – the right to be assured, wherever possible, access to a variety of goods and services at competitive
  • – the right to be heard and to be assured that consumer’s interests will receive due consideration at appropriate
  1. – the right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers; and
  2. – the right to consumer education. g) – the right against consumer exploitation.

Objectives of State Council

The objects of every State Council shall be to promote and protect within the State the rights of the consumers laid down in clauses (a) to (f) in central council objectives.

Jurisdiction of District Forum

  • – Subject to the other provisions of this Act, the District Forum shall have jurisdiction to entertain complaints where the value of the goods or services and the compensation, if any, claimed does not exceed rupees twenty lakhs.
  • – A complaint shall be instituted in a District Forum within the local limits of whose jurisdiction:-
    1. – the opposite party or each of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides or carries on business or has a branch office or personally works for gain, or
    2. – any of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides, or carries on business or has a branch office, or personally works for gain, provided that in such case either the permission of the District Forum is given, or the opposite parties who do not reside, or carry on business or have a branch office, or personally work for gain, as the case may be, acquiesce in such institution; or
    3. – the cause of action, wholly or in part, arises.

Jurisdiction of state council

1) Subject to the other provisions of this Act, the State Commission shall have jurisdiction:- a) – to entertain

i) – complaints where the value of the goods or services and compensation, if any, claimed exceeds rupees twenty lakhs but does not exceed rupees onecrore; and ii) – appeals against the orders of any District Forum within the State; and

b) – to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any District Forum within the State, where it appears to the State Commission that such District Forum has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally or with material irregularity.

Jurisdiction of National Council

  1. – Subject to the other provisions of this Act, the National Commission shall have jurisdiction—
    1. complaints where the value of the goods or services and compensation, if any, claimed exceeds rupees one crore; and
    2. appeals against the orders of any State Commission
  2. – to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any State Commission where it appears to the National Commission that such State Commission has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity.

 

1) – 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. 2) – Notwithstanding anything contained in sub-section (1), a complaint may be entertained after the period specified in sub-section (1), if the complainant satisfies the District Forum, the State Commission or the National Commission, as the case may be, that he had sufficient cause for not filing the complaint within such period: Provided that no such complaint shall be entertained unless the National Commission, the State Commission or the District Forum, as the case may be, records its reasons for condoning such delay.

Remedies Consumer Protection

Grievance redressal procedure

Every insurer shall have in place proper procedures and effective mechanism to address complaints and grievances of policyholders efficiently and with speed and the same alongwith the information in respect of Insurance Ombudsman shall be communicated to the policyholder along-with the policy document and as may be found necessary.

4.2.4 Claims procedure in respect of a life insurance policy

A life insurance policy shall state the primary documents which are normally required to be submitted by a claimant in support of a claim.

A life insurance company, upon receiving a claim, shall process the claim without delay. Any queries or requirement of additional documents, to the extent possible, shall be raised all at once and not in a piece-meal manner, within a period of 15 days of the receipt of the claim.

A claim under a life policy shall be paid or be disputed giving all the relevant reasons, within 30 days from the date of receipt of all relevant papers and clarifications required. However, where the circumstances of a claim warrant an investigation in the opinion of the insurance company, it shall initiate and complete such investigation at the earliest. Where in the opinion of the insurance company the circumstances of a claim warrant an investigation, it shall initiate and complete such investigation at the earliest, in any case not later than 6 months from the time of lodging the claim.

If a claim is ready for payment but the payment cannot be made due to any reasons of a proper identification of the payee, the life insurer shall hold the amount for the benefit of the payee and such an amount shall earn interest at the rate applicable to a savings bank account with a scheduled bank (effective from 30 days following the submission of all papers and information).

Where there is a delay on the part of the insurer in processing a claim for a reason other than the above, the life insurance company shall pay interest on the claim amount at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.

Claim procedure in respect of a general insurance policy

An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as may be allowed by the insurer.

On receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss claim, it shall be so done within 72 hours of the receipt of intimation from the insured.

Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a surveyor take more than six months from the date of his appointment to furnish his report.

If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report.

The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.

On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be. Upon acceptance of an offer of settlement by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is received by it.  

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