Taxmann's Consumer Protection Law & Practice

ACRONYMS CCPA

Central Consumer Protection Authority

CCPC

Central Consumer Protection Council

CPA

Consumer Protection Act, 2019

DCDRC

District Consumer Disputes Redressal Commission (District Commission)

GSTIN

Goods and Services Tax Identification Number

NCDRC

National Consumer Disputes Redressal Commission (National Commission)

OP

Opposite Party

PAN

Permanent Account Number (Income Tax)

SCDRC

State Consumer Disputes Redressal Commission (State Commission)

I-5

CHAPTER-HEADS PAGE

Acronyms

I-5

Contents

I-11

Table showing sections of Consumer Protection Act, 2019 & corresponding provisions of Consumer Protection Act, 1986

I-29

Table showing sections of Consumer Protection Act, 1986 & corresponding provisions of Consumer Protection Act, 2019

I-36

Table showing date of enforcement of sections of Consumer Protection Act, 2019

I-41

DIVISION ONE GUIDE TO CONSUMER PROTECTION ACT, 2019

BACKGROUND OF CONSUMER PROTECTION ACT, 2019

WHAT IS CONSUMER DISPUTE

DEFICIENCY IN SERVICE

UNFAIR CONTRACTS AND RESTRICTIVE AND UNFAIR TRADE PRACTICES

PRODUCT LIABILITY

CONSTITUTION OF CONSUMER DISPUTES REDRESSAL COMMISSION

PROCEDURAL ASPECTS OF CONSUMER DISPUTES REDRESSAL COMMISSION

I-7

CHAPTER-HEADS

I-8 PAGE

DIVISION TWO CONSUMER PROTECTION ACT, 2019

ARRANGEMENT OF SECTIONS

TEXT OF CONSUMER PROTECTION ACT, 2019

SUBJECT INDEX

DIVISION THREE RULES AND REGULATIONS FRAMED UNDER CONSUMER PROTECTION ACT, 2019

CONSUMER PROTECTION (CENTRAL CONSUMER PROTECTION COUNCIL) RULES, 2020

CONSUMER PROTECTION (CONSUMER DISPUTES REDRESSAL COMMISSIONS) RULES, 2020

I-9

CHAPTER-HEADS PAGE

CHAPTER-HEADS

I-10 PAGE

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION (REGISTRAR) RECRUITMENT RULES, 2023

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION (OTHER TERMS AND CONDITIONS OF SERVICE OF OFFICERS AND EMPLOYEES) RULES, 2023

GUIDELINES FOR PREVENTION AND REGULATION OF DARK PATTERNS, 2023

DIVISION FOUR CIRCULARS AND NOTIFICATIONS

NOTIFICATIONS ISSUED UNDER CONSUMER PROTECTION ACT, 2019

PRESS RELEASES

CIRCULARS

DIVISION FIVE TRIBUNALS REFORMS ACT, 2021

TRIBUNALS REFORMS ACT, 2021

CONTENTS PAGE

Acronyms

I-5

Chapter-heads

I-7

Table showing sections of Consumer Protection Act, 2019 & corresponding provisions of Consumer Protection Act, 1986

I-29

Table showing sections of Consumer Protection Act, 1986 & corresponding provisions of Consumer Protection Act, 2019

I-36

Table showing date of enforcement of sections of Consumer Protection Act, 2019

I-41

DIVISION ONE GUIDE TO CONSUMER PROTECTION ACT, 2019

BACKGROUND OF CONSUMER PROTECTION ACT, 2019 1.1

Introduction

1.3

1.2

Overall scheme of Consumer Protection Act, 2019

1.4

1.3

Validity of Consumer Protection Act

1.8

1.3-1 1.3-2 1.3-3

1.3-4 1.3-5 1.3-6 1.3-7 1.4

Liberal construction of Act as it is beneficial legislation Provisions in CPA are addition to and not in derogation of any other law Government or semi-Government body or local authority is as much amenable to Consumer Protection Act Sovereign functions not amenable to Consumer Protection Act Non-applicability of Consumer Protection Act, 2019 No concurrent jurisdiction to Commission Extra-territorial jurisdiction only in respect of practice in India

Constitutional Background of Consumer Protection Act I-11

1.8 1.9

1.10 1.10 1.11 1.12 1.13 1.13

CONTENTS

I-12 PAGE

WHAT IS CONSUMER DISPUTE 2.1

Consumer Disputes relating to goods and services 2.1-1

2.2

Dispute relating to land and immovable property is not covered

1.14 1.14

What is ‘Complaint’

1.14

2.2-1

1.15

No complaint for increase in prices

2.3

Complainant

1.16

2.4

Who is ‘Consumer’

1.16

2.4-1

Meaning of ‘Commercial Purpose’

1.18

2.4-2

Buyer of Machinery, equipment or goods for self employment is a ‘consumer’

1.19

2.4-3

Insurance company can file complaint in name of insured as his attorney holder or in joint name of insured and insurer, but not if the goods or service was for commercial purpose

1.20

2.4-4

Patients in Government hospital not consumers

1.21

2.4-5

Who is a ‘consumer’

1.21

2.4-6

Forum can decide whether a person is consumer

1.22

2.5

Defect in Goods 2.5-1

2.6

Shares before allotment and debentures are not ‘goods’

1.23 1.23

Deficiency in services

1.23

2.6-1

What is ‘service’

1.24

2.6-2

Contract of service and contract for service

1.24

2.6-3

Services covered under CPA

1.26

2.6-4

What is not ‘service’ under CPA

1.27

2.6-5

Deficiency in Service

1.29

2.7

Trader or service provider charging higher price

1.29

2.8

Hazardous goods or services are offered

1.30

2.9

Consumer Dispute

1.30

2.10

Opposite Party

1.30

2.10-1 Complaint against Government agencies - Employees can be personally liable

1.31

2.10-2 Principal not responsible for independent dealer

1.31

I-13

CONTENTS PAGE

2.10-3 Agent not personally liable for acts of principal

1.32

2.10-4 Master liable for acts of employee

1.32

2.10-5 Employer not liable if insurance premium deducted from salary but LIC is liable

1.33

DEFICIENCY IN SERVICE 3.1

What is ‘deficiency in service’

1.34

3.1-1

1.35

What is not deficiency in service

3.2

Deficiency in Airline services

1.37

3.3

Deficiency in Banking services

1.37

3.3-1

1.39

What is not deficiency in bank services

3.4

Deficiency in Courier services

1.40

3.5

Deficiency in Educational services

1.41

3.6

Deficiency in real estate services regarding sale of Flat/ plot/building/shop/apartment

1.41

3.7

Deficiency in Goods Carrier services

1.44

3.8

Deficiency in Insurance services

1.45

3.8-1

Effect of Full and final settlement receipt obtained

by Insurance company

1.47

3.8-2

Insurer liable if employee of insured acts in unauthorised way

1.49

3.8-3

Can Recovery from driver and owner be ordered if insurance company has no liability

1.49

3.8-4

No fault liability in case of motor accident

1.50

3.8-5

Third party liability is for social justice, it is statutory and not contractual

1.50

3.8-6

Insurer liable if he issues policy before encashment of cheque

1.52

3.8-7

Insurance claim cannot be repudiated on minor grounds

1.53

3.8-8

Insurance claim can be repudiated in certain cases

1.54

3.8-9

Insurer can recover amount for insured if there was breach of policy

1.58

3.8-10 No jurisdiction of Consumer Commission to decide Claim for road accident

1.58

CONTENTS

I-14 PAGE

3.9

3.8-11 How to calculate compensation to individual in case of insurance claim

1.58

Deficiency in Medical Services

1.59

3.9-1

1.67

Patients in Government hospital not consumers

3.10

Deficiency in Postal services

1.68

3.11

Deficiency in Railway services

1.69

3.12

Deficiency in Telephone Services

1.70

UNFAIR CONTRACTS AND RESTRICTIVE AND UNFAIR TRADE PRACTICES 4.1

Unfair contract 4.1-1

One sided contracts where bargaining power of parties is in-equal are against public policy and void

1.73

1.73

4.2

Trade Practice

1.75

4.3

Restrictive Trade Practice (RTP)

1.76

4.4 4.5

4.3-1

Restrictive Trade Practices (RTP) covered in the definition

1.76

4.3-2

Delay in supply of goods or provision of services

1.77

4.3-3

Tie-in Sales or full line forcing

1.77

4.3-4

Cases where practice held not restrictive

1.78

4.3-5

Rule of reason i.e. reasonable restriction permitted

1.79

4.3-6

Agreement in restraint of trade is void to that extent under Contract Act

1.80

Unfair Trade Practice (UTP)

1.84

4.4-1

1.84

Misleading act is Unfair Trade Practice (UTP)

Illustrations of UTP

1.85

4.5-1

False representation that the goods are of a particular standard, quality etc.

1.85

4.5-2

Falsely representation that service is of particular standard, quality or grade

1.88

4.5-3

Falsely representing second hand goods as new goods

1.90

4.5-4

False representation about sponsorship or benefits etc. of goods or services

1.91

I-15

CONTENTS PAGE

4.6

4.5-5

False representation that seller or supplier has sponsorship or affiliation etc.

1.92

4.5-6

False representation about usefulness of goods or services

1.92

4.5-7

False warranty or guarantee about performance, life etc. of goods

1.93

4.5-8

False promise to repair, maintain or replace goods

1.94

4.5-9

Misleading public about price of goods or services

1.94

4.5-10 Disparaging goods of another person

1.95

4.5-11 False representation about bargain price

1.98

4.5-12 Offering free gifts, prizes or contests and not disclosing full details

1.99

4.5-13 Offering goods not complying with standards of competent authority

1.101

4.5-14 Hoarding or destruction of goods to raise price

1.102

4.5-15 Manufacturing or offering spurious goods

1.102

4.5-16 Not issuing cash memo in prescribed manner

1.102

4.5-17 Refusing to take back defective goods or discontinue deficient services

1.103

4.5-18 Disclosing personal confidential information

1.103

Certain activities to be exempt from unfair trade practice

1.103

PRODUCT LIABILITY 5.1

Liability for harm caused by defective product

1.105

5.1-1

Product manufacturer and seller

1.105

5.1-2

Service Provider

1.106

5.1-3

Product Liability

1.107

5.2

Product liability action

1.107

5.3

Liability of product manufacturer

1.107

5.3-1

1.108

No fault liability of product manufacturer

5.4

Liability of product service provider

1.108

5.5

Liability of product sellers

1.109

5.6

Exceptions to product liability action

1.109

CONTENTS

I-16 PAGE

CONSTITUTION OF CONSUMER DISPUTES REDRESSAL COMMISSION 6.1

6.2

6.3

Three tier Consumer Disputes Redressal Commission 6.1-1

Vacancies or defects in appointment in Commission not to invalidate orders

1.112

6.1-2

Consumer Commission is ‘judicial authority’ but is not ‘Court’

1.112

6.1-3

Arbitration agreement is not a bar to redressal before Commission

1.113

6.1-4

Commission can and should entertain complex and intricate matters also

1.114

6.1-5

Consumer can approach civil court if consumer commission dismisses complaint

1.114

6.1-6

Jurisdiction of Civil Court restricted

1.115

6.1-7

Consumer Forums are subject to writ jurisdiction

1.115

District Commission

1.115

6.2-1

Vacancy in office of member of District Commission

1.116

6.2-2

Officers and other employees of District Commission

1.116

6.2-3

Qualifications, etc., of President and members of District Commission

1.116

6.2-4

Salaries, allowances and other terms and conditions of service of President and members of District Commission

1.117

Establishment of State Consumer Disputes Redressal Commission

1.117

6.3-1

Qualifications, etc., of President and members of State Commission

1.118

6.3-2

Salaries, allowances and other terms and conditions of service of President and members of State Commission

1.118

Officers and employees of State Commission

1.118

Provisions in respect of terms of appointment of President and members of State and District Commission

1.118

6.3-3 6.4

1.111

I-17

CONTENTS PAGE

6.5

6.6

6.7

Salary, allowances and other conditions of service of President and Members of State Commission and District Commission

1.123

Establishment of National Consumer Disputes Redressal Commission

1.128

6.6-1

Composition of National Commission

1.128

6.6-2

Qualifications, etc., of President and members of National Commission

1.129

6.6-3

Vacancy in office of President of National Commission

1.130

6.6-4

Other officers and employees of National Commission

1.130

6.6-5

Power of National Commission to make regulations

1.131

Finality of orders of Commission

1.132

6.7-1

Enforcement of orders of District Commission, State Commission and National Commission

1.132

6.7-2

Penalty for non-compliance of order of Commission

1.132

6.7-3

Appeal against order passed by Commission under section 72

1.133

6.8

Appeal to Supreme Court against order of National Commission

1.134

6.9

State Commissions and Addresses

1.134

PROCEDURAL ASPECTS OF CONSUMER DISPUTES REDRESSAL COMMISSION 7.1

Procedure before Commission

1.150

7.1-1

Fee for making complaints before Commission

1.150

7.1-2

Manner of filing complaints electronically

1.152

7.1-3

Time limit for filing complaint before Commission

1.152

7.1-4

Opposite Party

1.155

7.1-5

Service of notice, etc. by Commission

1.156

7.1-6

Powers of National Commission, State Commission and District Commission to call for or seize books, information

1.157

Credit of amount payable for loss or injury suffered by consumers who are not identifiable conveniently

1.158

7.1-7

CONTENTS

I-18 PAGE

7.2

7.1-8

Compensation can be awarded by Commission

1.158

7.1-9

Compensation from Government officer for mala fide action

1.161

7.1-10 Specific performance cannot be ordered

1.162

7.1-11 Power to set aside an ex parte order

1.162

7.1-12 Power to decide ancillary and related matters

1.162

7.1-13 Procedure for speedy trial before Consumer Commission

1.163

7.1-14 Code of Civil Procedure not applicable

1.163

Routine Procedures before Commission

1.164

7.2-1

Sitting Arrangements in Consumer Commission

1.164

7.2-2

Appearance in person or through agent or counsel

1.164

7.2-3

Dress code of President, members, complainant, OP, Counsel

1.164

7.2-4

Hearing hours of Commission

1.165

7.2-5

Cause List of Commission

1.165

7.2-6

Institution of complaints, appeals and revision petitions in specified number of sets

1.166

7.2-7

Nomenclature and serial number to be given to the complaints, appeals etc.

1.166

7.2-8

Scrutiny of complaint, appeal, petition and revision petition by Registrar

1.167

7.2-9

Issue of notice by Commission

1.168

7.2-10 Adjournment of hearing by Commission

1.168

7.2-11 Hearing by Benches, but President must be member of bench if complex question of law

1.169

7.2-12 Oral Arguments by applicant but filing written argument mandatory for counsel

1.169

7.2-13 Limitation period in filing application

1.169

7.2-14 Review of order by Commission by circulation without arguments

1.170

7.2-15 Appearance of Voluntary Consumer Organisations

1.170

7.2-16 Appearance by authorised agent but not touts

1.171

7.2-17 Provisions relating to Final order of Commission

1.171

7.2-18 Return on institution and disposal of cases to State and National Commission

1.172

I-19

CONTENTS PAGE

7.2-19 Preservation of records of Commission and return of extra sets

1.173

7.2-20 Certified copy of order of Commission or any document

1.173

7.2-21 Other provisions relating to procedure before Commission

1.174

7.3 Procedures relating to District Commission

1.175

7.3-1

Jurisdiction of District Commission about value of goods or services

1.175

7.3-2

Where complaint can be filed before District Commission

1.176

7.3-3

District Commission can function at places other than district headquarters

1.177

7.4

Who can file complaint before District Commission

1.177

7.5

Proceedings before District Commission

1.178

7.5-1

1.179

7.6

Reference to mediation by District Commission

Procedure to be followed by District Commission on admission of complaint

1.179

7.6-1

If above procedure cannot be followed or if complaint relates to services

1.181

7.6-2

Proceedings before Commission cannot be challenged on ground that natural justice was not followed

1.182

7.6-3

Personal hearing by Commission not mandatory unless asked for

1.182

7.6-4

Complaint to be disposed of by Commission within 3/5 months

1.183

7.6-5

Adjournment of hearing by District Commission restricted

1.183

7.6-6

District Commission can pass interim orders

1.183

7.6-7

District commission to have powers of Civil Court

1.183

7.6-8

Proceedings before District Commission are ‘judicial proceedings’

1.184

7.6-9

If Complaint is filed by one or more consumers, where there are numerous consumers having the same interest

1.184

7.6-10 Death of complainant

1.184

CONTENTS

I-20 PAGE

7.7

Order that can be passed by District Commission

1.184

7.7-1

Procedure if members differ on point/s

1.186

7.7-2

Signing of order of District Commission

1.186

7.7-3

Order should be a speaking order

1.186

7.8

Review by District Commission if error apparent on record

1.186

7.9

State Commission

1.187

7.9-1

Original and Appellate Jurisdiction of State Commission

1.187

7.9-2

State where complaint can be instituted before State Commission

1.188

7.10 Procedure applicable to State Commission for disposal of complaint

1.189

7.11 Appeal before State Commission against order of District Commission

1.190

7.11-1 Date of order means date of receipt of order

1.190

7.11-2 Provisions relating to Hearing of appeal by State Commission or National Commission

1.191

7.11-3 Procedure for filing and hearing of appeal before State Commission

1.191

Other provisions relating to State Commission

1.194

7.12-1 Furnishing of information by State Commission

1.194

7.12-2 Transfer of cases from one District Commission to another

1.194

7.12-3 Review by State Commission if error apparent from record

1.194

7.12-4 Experts to assist National Commission or State Commission

1.194

Administrative control of National Commission and State Commission over lower Commission

1.194

7.13-1 Furnishing of information by National and State Commission

1.195

7.13-2 Procedure for Administrative Control of NCDRC over State and District Commission

1.196

7.12

7.13

7.14 Procedures relating to National Commission 7.14-1 Original and Appellate Jurisdiction of National Commission

1.198 1.199

I-21

CONTENTS PAGE

7.14-2 Procedure applicable to National Commission to hear complaint

1.200

7.14-3 Manner of authentication of goods by National Commission for analysis and testing

1.200

Procedure in respect of complaints before National Commission

1.201

7.16 Appeal to National Commission against order of State Commission

1.203

7.16-1 Provisions for Appeals before National Commission

1.204

7.16-2 Procedure for filing and hearing of appeal before National Commission

1.205

7.16-3 Appeal to NCDRC against order in appeal (O-i-A) of State Commission if Substantial Question of Law

1.207

Other provisions relating to National Commission

1.209

7.17-1 Review by National Commission if error apparent on face of record

1.209

7.17-2 Power of National Commission to set aside ex parte orders

1.209

7.17-3 Transfer of cases by National Commission from one State to another

1.210

7.18 Appeal against Order-in-Original (O-i-O) of National Commission before Supreme Court

1.210

7.18-1 Manner of depositing amount while filing appeal before Supreme Court

1.210

7.15

7.17

MEDIATION 8.1 8.2

Purpose of mediation

1.211

8.1-1

1.211

Establishment of consumer mediation cell

Empanelment of mediators

1.212

8.2-1

Nomination of mediators from panel

1.212

8.2-2

Duty of mediator to disclose certain facts

1.213

8.2-3

Replacement of mediator in certain cases

1.213

8.3

Conducting the mediation

1.213

8.4

Procedure for mediation

1.213

8.5

Settlement through mediation

1.215

CONTENTS

I-22 PAGE

8.6

8.5-1

Recording settlement and passing of order by Commission after receipt of report of mediator

1.215

8.5-2

Hearing by Commission if mediation fails fully or partly

1.215

Provisions relating to empanelment of mediator and mediation procedure

1.216

8.6-1

Eligibility for empanelment as mediator

1.216

8.6-2

Disqualifications for empanelment as mediator

1.217

8.6-3

Interested person cannot be appointed as mediator

1.217

8.6-4

Procedure for empanelment of mediator

1.217

8.6-5

Removal of mediator by mediation cell

1.218

8.6-6

Fee of mediators

1.218

8.6-7

Training to mediator by mediation cell

1.219

8.6-8

Code of conduct by mediator

1.219

8.6-9

Procedure for Mediation proceedings

1.220

8.6-10 Immunity to mediator from civil and criminal liabilities and no summons

1.221

8.6-11 Report by mediation cell to Commission

1.222

CENTRAL CONSUMER PROTECTION AUTHORITY 9.1

Central Authority to regulate matters relating to consumer matters

1.223

9.2

Establishment of Central Consumer Protection Authority

1.223

9.2-1

Qualifications, method of recruitment, etc., of Chief Commissioner and Commissioners

1.224

9.2-2

Vacancy, etc., not to invalidate proceedings of Central Authority

1.224

9.2-3

Appointment of officers, experts, professionals and other employees of Central Authority

1.224

9.2-4

Procedure of Central Authority

1.225

9.2-4A Transaction of business by Central Consumer Protection Authority (CCPA)

1.226

9.2-5

Designation of any statutory authority or body to function as Central Authority

1.226

9.2-6

Grants by Central Government to Central Authority

1.227

9.2-7

Accounts and audit of Central Authority

1.227

I-23

CONTENTS PAGE

9.2-8 9.3

9.4

9.5 9.6

Furnishing of annual reports, etc. by Central Authority

Investigation Wing of Central Authority

1.228

9.3-1

Director General and other Officers

1.228

9.3-2

Power of District Collector to investigate

1.229

9.3-3

Complaints to authorities for violation of consumer rights, misleading advertisements etc.

1.229

Powers and functions of Central Authority Broad Powers of Central Authority for consumer protection

1.230

9.4-2

Power of Central Authority to refer matter for investigation to other Regulator

1.231

9.4-3

Power of Central Authority to recall goods, etc.

1.231

Powers of Search and seizure

1.232

9.5-1

1.233

Vexatious search

Power of Central Authority to issue directions and impose penalties against false or misleading advertisements Penalty for non-compliance of direction of Central Authority 9.6-2 Appeal against order of Central Authority Punishment for false or misleading advertisement 9.7-1

9.8

1.229

9.4-1

9.6-1

9.7

1.228

Guidelines for Prevention of Misleading advertisements and endorsements

Power of Central Authority to make regulations

1.233 1.235 1.236 1.236 1.236 1.237

OFFENCES AND PENALTIES 10.1 Penalties under Consumer Protection Act

1.238

10.1-1 Penalty for non-compliance of direction of Central Authority

1.238

10.2

Punishment for false or misleading advertisement

1.238

10.3

Punishment for manufacturing for sale or storing, selling or distributing or importing products containing adulterant

1.238

10.4 Punishment for manufacturing for sale or storing or selling or distributing or importing spurious goods

1.240

10.5

Cognizance of offence by court

1.241

10.6

Vexatious search

1.241

CONTENTS

I-24 PAGE

10.7 Compounding of offences

10.8

1.241

10.7-1 What is compounding?

1.242

10.7-2 Procedure for compounding by Central Authority

1.243

Manner of crediting penalty

1.244

CONSUMER PROTECTION COUNCILS 11.1 Purpose of Central, State and District Council

11.2

11.1-1 Consumer rights 11.1-2 Constitution of Central Consumer Protection Council Procedure for meetings of Central Council 11.2-1 Constitution and composition of Central Council

11.3 State Consumer Protection Councils 11.4 District Consumer Protection Council

1.245 1.245 1.246 1.246 1.246 1.247 1.248

REGULATION OF E-COMMERCE 12.1 Consumer rights and e-commerce

1.249

12.1-1 What is e-commerce

1.250

12.1-2 Various models of e-commerce business

1.250

12.1-3 How e-commerce business operates

1.250

12.2 Applicability of e-commerce rules to e-commerce entity

1.251

12.2-1 E-commerce entity

1.252

12.2-2 Seller and Product Seller

1.252

12.3

Duties of e-commerce entity

1.253

12.4

Liabilities of marketplace e-commerce entities

1.256

12.4-1 Display of information by marketplace e-commerce entity on its website

1.256

12.4-2 Compliance by marketplace e-commerce entity with provisions of Information Technology Act

1.258

12.5 Duties of sellers on marketplace

1.260

12.5-1 Seller to appoint grievance officer, proper advertisements and furnish details

1.261

12.5-2 Supply of information by seller to e-commerce entity for display on its website

1.261

I-25

CONTENTS PAGE

12.6 Duties and liabilities of inventory e-commerce entities

1.262

12.7

1.264

Penalty for violation of e-commerce Rules

DIRECT SELLING AND MULTI LEVEL MARKETING 13.1

13.2

Regulation of direct selling and prohibition of Multi-level marketing (Pyramid Scheme)

1.265

13.1-1

What is direct selling

1.266

13.1-2

Direct seller

1.266

13.1-3

Direct selling entity

1.266

Mandatory maintenance of records by Direct Selling Entity

1.267

13.2-1

Obligations of direct selling entity

1.267

13.2-2

Furnishing of information by direct selling entity on its website

1.268

13.2-3

Unfair Trade Practice not to be done by direct selling entity

1.269

13.2-4

Compliance with declarations under Legal Metrology Act

1.270

13.2-5

Protection of sensitive personal data

1.270

13.2-6

Grievance redressal mechanism

1.270

13.2-7

Grievance Redressal Officer

1.270

13.2-8

Nodal Officer of direct selling entity to ensure compliance with law

1.271

13.2-9

Dealing with complaints of consumers

1.271

13.2-10 Record of direct sellers to be maintained by direct selling entity

1.271

13.2-11 Information of direct seller to be given to consumer

1.271

13.2-12 Advertisement of products and services to give details

1.272

13.2-13 No false representation about goods or services

1.272

13.2-14 Liability about authenticity of goods or services

1.272

13.2-15 Direct Selling Entity to ensure compliance of rules by direct seller

1.272

13.2-16 Publishing information about delisted direct sellers

1.272

CONTENTS

I-26 PAGE

13.2-17 Direct Selling Entity to be Partner in National Consumer Helpline

1.272

Obligations of direct seller

1.273

13.3-1 Prohibitions applicable to direct seller

1.274

13.4 Duties of direct selling entity and direct seller

1.274

13.3

13.4-1 Prohibitions applicable to direct selling entity or direct seller

1.277

13.4-2 Compliance with all laws including tax laws

1.278

13.4-3 No offer for reduction in price, if consumer refers prospective customers

1.278

13.5

Bankrupt, criminal or person of unsound mind not to be engaged in the business of direct selling

1.278

13.6

Application of e-commerce rules

1.278

13.7

Monitoring by State Government of direct selling entity and direct sellers

1.279

13.8 RBI Regulations relating to direct selling entity prevail over Consumer Protection (Direct Selling) Rules

1.279

13.9

Prohibition of Pyramid Scheme and money circulation scheme

1.279

13.9-1 Prohibition of Pyramid Scheme (multi-level marketing)

1.279

13.10 Money Circulation Scheme

1.281

13.11 Punishment for Contravention of rules relating to direct selling

1.281

OTHER PROVISIONS OF CONSUMER PROTECTION ACT 14.1

Repeal and savings of Consumer Protection Act, 1986

1.282

14.2 Presidents, members, Chief Commissioner, Commissioner and certain officers to be public servants

1.282

14.3 Protection of action taken in good faith

1.283

14.4

Power to give directions by Central Government

1.283

14.5

Act not in derogation of any other law

1.283

14.6 Power of Central Government to make rules

1.283

14.7 Power of State Government to make rules

1.284

I-27

CONTENTS PAGE

14.8 Rules and regulations to be laid before each House of Parliament and State Legislature

1.284

14.9

1.285

Power to remove difficulties

1.287

SUBJECT INDEX

DIVISION TWO CONSUMER PROTECTION ACT, 2019

Arrangement of sections

2.3

Text of Consumer Protection Act, 2019

2.9

Subject Index

2.63

DIVISION THREE RULES AND REGULATIONS FRAMED UNDER CONSUMER PROTECTION ACT, 2019 Consumer Protection (Central Consumer Protection Council) Rules, 2020

3.3

Consumer Protection (Consumer Disputes Redressal Commissions) Rules, 2020

3.9

Consumer Protection (General) Rules, 2020

3.23

Consumer Protection (Mediation) Rules, 2020

3.27

Consumer Protection (Salary, Allowances and Conditions of Service of President and Members of the State Commission and District Commission) Model Rules, 2020

3.31

Consumer Protection (Qualification for Appointment, Method of Recruitment, Procedure of Appointment, Term of Office, Resignation and Removal of the President and Members of the State Commission and District Commission) Rules, 2020

3.37

Consumer Protection (E-Commerce) Rules, 2020

3.45

Consumer Protection (Consumer Commission Procedure) Regulations, 2020

3.55

Consumer Protection (Administrative Control over the State Commission and the District Commission) Regulations, 2020

3.67

Consumer Protection (Mediation) Regulations, 2020

3.71

Central Consumer Protection Authority (Allocation and Transaction of Business) Regulations, 2020

3.79

CONTENTS

I-28 PAGE

Central Consumer Protection Authority (Annual Report) Rules, 2021 Central Consumer Protection Authority (Procedure for Engagement of Experts and Professionals) Regulations, 2021 Consumer Protection (Search and Seizure and Compounding of offences by the Central Authority and Crediting of Penalty) Rules, 2021 Central Consumer Protection Authority (Form of Annual Statement of Accounts and Records) Rules, 2021 Consumer Protection (Direct Selling) Rules, 2021

Consumer Protection (Jurisdiction of the District Commission, the State Commission and the National Commission) Rules, 2021 Central Consumer Protection Authority (Submission of Inquiry or Investigation by the Investigation Wing) Regulations, 2021 National Consumer Disputes Redressal Commission (Group ‘C’ Posts) Recruitment Rules, 2022 Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 National Consumer Disputes Redressal Commission (Registrar) Recruitment Rules, 2023 National Consumer Disputes Redressal Commission (Other Terms and Conditions of Service of Officers and Employees) Rules, 2023

3.83

3.91

3.99 3.107 3.115

Guidelines for Prevention and Regulation of Dark Patterns, 2023

3.127

3.131 3.137 3.153 3.163

3.169 3.177

DIVISION FOUR CIRCULARS AND NOTIFICATIONS

Notifications issued under Consumer Protection Act, 2019

4.3

Press releases

4.6

Circulars

4.26

DIVISION FIVE TRIBUNALS REFORMS ACT, 2021

Tribunals Reforms Act, 2021

5.3

WHAT IS CONSUMER DISPUTE

The jurisdiction of Consumer Disputes Redressal Commission is invoked when a ‘complaint’ has been filed by ‘complainant’.

Act applies to all goods and services - Save as otherwise expressly provided by the Central Government, by notification, this Act shall apply to all goods and services - Section 1(4) of Consumer Protection Act, 2019.

Dispute regarding immovable property is not consumer dispute, as there is no sale of ‘goods’ or ‘services’ for consideration. However, dispute can be raised about service in connection with immovable property.

Land is not movable and hence not ‘goods’. Hence disputes regarding sale/allotment of land are outside purview of CPA. (Krishan Baldev Gupta v. Haryana State Development Corpn. (1993) II CPJ 191 (NCDRC).

In Shaila Construction v. Nainital Lake Development III (1996) CPJ 11 (NCDRC), it was held that there is no hire of services when there is outright sale of immovable property. However, there can be deficiency in service and complaint can be lodged.

“Complaint” means any allegation in writing, made by a complainant for obtaining any relief provided by or under this Act, that— (i) an unfair contract or unfair trade practice or a restrictive trade practice has been adopted by any trader or service provider.

1.14

1.15

WHAT IS COMPLAINT

Para 2.2

(ii) the goods bought by him or agreed to be bought by him suffer from one or more defects. (iii) the services hired or availed of or agreed to be hired or availed of by him suffer from any deficiency. (iv) a trader or a service provider, as the case may be, has charged for the goods or for the services mentioned in the complaint, a price in excess of the price— (a) fixed by or under any law for the time being in force; or (b) displayed on the goods or any package containing such goods; or (c) displayed on the price list exhibited by him by or under any law for the time being in force; or (d) agreed between the parties. (v) the goods, which are hazardous to life and safety when used, are being offered for sale to the public - (a) in contravention of standards relating to safety of such goods as required to be complied with, by or under any law for the time being in force (b) where the trader knows that the goods so offered are unsafe to the public. (vi) the services which are hazardous or likely to be hazardous to life and safety of the public when used, are being offered by a person who provides any service and who knows it to be injurious to life and safety. (vii) a claim for product liability action lies against the product manufacturer, product seller or product service provider, as the case may be - Section 2(6) of Consumer Protection Act, 2019.

Unfair contract, unfair practices and product liability - Issues relating to clause (i) an unfair contract or unfair trade practice or a restrictive trade practice and clause (vii) claim for product liability are discussed in other chapters.

In a case where manufacturer increased the selling price of car, it was held that complaint is not maintainable as complaint can be lodged only in cases where price is fixed under any law and price is charged above the statutory price. -Maruti Udyog Ltd. v. Kodaikkanal Township (1993) 10 CLA 15 (NCDRC).

In Brig B S Gill v. Maruti Udyog Ltd. (1996) 4 CTJ 105 (NCDRC) also, it was held that no complaint is maintainable in case of increase of price of motor car after booking but before maturity of the booking

Para 2.4

WHAT IS CONSUMER DISPUTE

1.16

- same view in Mehsana Agro Auto v. Baldevbhai M Patel I(2001) CPJ 28 (NCDRC).

No complaint against costing or pricing - Consumer Forums have no jurisdiction to go into question of pricing (of houses and flats in this case) - Gujarat Housing Board v. Akhil Bharatiya Grahak Panchayat (1996) 2 Comp LJ 378 (NCDRC) * Gujarat Housing Board v. Datania Amritlal (1993) III CPJ 351 (NCDRC) * MP Housing Board v. Prahlad Kumar III (1999) CPJ 37 (NCDRC).

Charges fixed by Banks for providing various services like issuing a cheque book are in the realm of pricing. Forum cannot adjudicate on questions of adequacy or reasonableness of the amount charged for the services rendered or to be rendered - Indian Banks’ Association v.

Archana Kamath 1 (1995) CPJ 75 (NCDRC) - view confirmed in Archana Kamath v. Canara Bank 2003(2) SCALE 61.

Consumer forum cannot go into reasonableness of pricing of services.

Cost or pricing of services cannot be looked into. - Maharashtra State Electricity Board v. Sheshrao (1995) 5 CTJ 680 (NCDRC). - - Costing of flat is beyond jurisdiction of FORA - Major Loknath Juggi v. Bhopal Development Authority III (2002) CPJ 154 (NCDRC).

Mere question of pricing a product or service does not fall within the purview of adjudication of Consumer Disputes Redressal Agency decision of NCDRC confirmed in State of Gujarat v. Rajesh Kumar Chimanlal Barot (1994) 4 Comp LJ 1 (SC) = (1996) 5 SCC 477.

Complaint can be filed by ‘complainant’.

“Complainant” means - (i) a consumer; or (ii) any voluntary consumer association registered under any law for the time being in force; or (iii) the Central Government or any State Government; or (iv) the Central Authority; or (v) one or more consumers, where there are numerous consumers having the same interest; or (vi) in case of death of a consumer, his legal heir or legal representative; or (vii) in case of a consumer being a minor, his parent or legal guardian - Section 2(5) of Consumer Protection Act, 2019.

As per Section 2(7) of Consumer Protection Act, 2019, “Consumer” means any person who—

1.17

WHO IS CONSUMER

Para 2.4

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or (ii) hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such service other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person, but does not include a person who avails of such service for any commercial purpose.

Explanation.—For the purposes of this clause,— (a) the expression “commercial purpose” does not include use by a person of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment (b) the expressions “buys any goods” and “hires or avails any services” includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing - Explanation to Section 2(7) of Consumer Protection Act, 2019.

Direct selling - “direct selling” means marketing, distribution and sale of goods or provision of services through a network of sellers, other than through a permanent retail location - Section 2(13) of Consumer Protection Act, 2019.

Seller is not a consumer - A seller of goods is not a ‘consumer’ as purchaser is not supposed to provide any service to seller - Larsen & Toubro Ltd. v. SCDRC AIR 1998 Cal 313.

Franchise is not consumer - Franchise holder who is maintaining STD/PCO office is licensee of the grantor of franchiser. The service is really provided by franchiser and not by franchise to final consumer. The franchisee is not consumer - General Manager, Madras Telephones v. R Kannan I (1994) CPJ 14 (NCDRC). Franchisee of computer training institute is not a consumer. - Softpec Software v.

Digital Equipment II (2002) CPJ 5 (NCDRC).

Para 2.4

WHAT IS CONSUMER DISPUTE

1.18

Tenant is not consumer - A tenant is not consumer when landlord has not agreed to render any service to tenant in lease agreement. Laxmiben Laxmichand Shah v. Sakerben Kanji I(2001) CPJ 7 (SC) confirming Laxmiben Laxmichand Shah v. Sakerben Kanji I(1992) CPR 74 (NCDRC).

A person who buys goods for resale or commercial purposes or avails services for commercial purposes is specifically excluded from definition of ‘consumer’.

For example, a person buying one truck or tempo or sewing machine or one computer will be eligible under this section. However, if a person buys two typewriters, out of which one is used by a person employed by him, he will not be eligible under CPA as person buying goods for resale or commercial purposes is not a consumer.

A share broker taking bank overdraft is availing services for commercial purpose – Shrikant G Mantri v. Punjab National Bank (2022) 5 SCC 42.

In Laxmi Engineering Works v. P.S.G. Industrial Institute 1995 AIR SCW 2114 = AIR 1995 SC 1428 = (1995) 3 SCC 583 = 84 Comp Cas 121 (SC), has defined the word ‘commercial’ as connected with or engaged in commerce having profit as the main aim. Any person buying goods for purpose of being used in any activity on a large scale for making profit is not a ‘consumer’.

University buying mutual fund for investing provident fund amount for sole benefit of employees is not for ‘commercial purpose’. ‘Commercial purpose’ must be interpreted considering facts and circumstances of each case - Punjab University v. Unit Trust of India (2015) 2 SCC 669.

In Kalpavruksha Charitable Trust v. Toshniwal Brothers 1999 AIR SCW 3732 = AIR 1999 SC 3356 = (1999) 4 Comp LJ 427 (SC), it was held that a charitable trust is not a consumer if it has purchased machinery for its diagnostic centre, when only 10% patients are provided free service and charges are levied on remaining patients.

Thus, the use is for ‘commercial purpose’ and hence it is not a ‘consumer’.

A person purchasing truck for self-employment, appointing a driver to ply the said truck is still a ‘consumer’ - Madan Kumar Singh v.

District Magistrate (2009) 9 SCC 79.

1.19

WHO IS CONSUMER

Para 2.4

Person buying goods for manufacture of another product is not ‘consumer’ as the goods were intended for commercial purpose Rajeev Metal Works v. MMTC 87 Comp Cas 315 = (1996) 2 Comp LJ 193 (SC) = AIR 1996 SC 1083 Contractor buying computer for his profession is not a ‘consumer’ as the computer was not bought for his personal use to earn livelihood - Sterling Computers Ltd. v. P Raman Kutty (1995) 3 CPR 495 = LW 50.3-1996 - CS March 96 (NCDRC).

Purchaser of diesel generating set for installation in factory is not a consumer - Madhu Chawla v. R K Engineering Co. LW 52.3-1996 - CS March 96 (NCDRC) Buyer of EPBAX for better management of his business is not a ‘consumer’. - Catvision Products Ltd. v. Pragati Computers (P.) Ltd. LW 53.3-1996 CS March 96 (NCDRC).

Electronic telephone system purchased for nursing home is for commercial purpose - Larsen & Toubro v. Phophale Nursing Home II(1992) CPJ 366 (NCDRC).

In Kores (India) Ltd. v. Samir Purkayastha (1996) 4 CTJ 579 (NCDRC), it was held that if intention is to earn substantial profit (and not mere earning livelihood), the purchase will be for commercial purpose.

(Xerox machine in this case). In Sakthi Engineering Works v. Sri Krishna Coir Rope Industry III(2000) CPJ 13 (NCDRC), it was held that purchase of machine when buyer did not have technical knowledge and 10 people were required to operate machine is purchase for ‘commercial purpose’.

In Sarat Equipments v. Interuniversity Consortium (1997) 5 CTJ 854 (NCDRC), it was held that equipment bought by an educational institution for use by students cannot be said to be for commercial purpose even where certain amount of fees is charged to students for allowing use of equipment.

Frequent breakdown in power supply of Electricity Board to the factory manufacturing yarn are not covered under CPA, as though ‘electricity’ is ‘goods’, power supply is for commercial purpose only.

Shree Mfg. Co. Ltd. v. ADSDRC (1993) II CPJ 874 (APSDRC).

2.4-2 Buyer of Machinery, equipment or goods for self employment is a consumer The buyer of machine will be treated as ‘consumer’ only if he operates it directly and not through labour/employees, e.g. person purchasing

Para 2.4

WHAT IS CONSUMER DISPUTE

1.20

auto-rickshaw to ply it himself or a person purchasing truck for plying it as public carrier by himself or a person purchasing typewriter to type other’s work for consideration would be a ‘consumer’. (He will be consumer, even if he takes assistance of one or two persons to assist/ help him in operating the vehicle or machinery).

In Cheema Engg Services v. Rajan Singh 88 Comp Cas 400 (SC) = (1997) 1 SCC 131 = (1997) 1 Comp LJ 70, it was held that ‘self employment’ means the person or his family alone should use the machinery. Burden is on him to prove the same. - . - . - Commercial purpose would mean employing on regular basis the employee or workman for trade.

Medical practitioner buying ultrasound scanner for use by using his skill for earning his livelihood is a ‘consumer’ - Kody Elcot Ltd. v. Dr. C P Gupta LW 51.3-1996 - CS March 96 (NCDRC). Eye surgeon purchasing machine for hospital run by him is consumer, as it is required for using his professional skill, when he is not running a big hospital. - Rampion Pharmaceuticals v. Dr. Preetam Shah (1997) I CPJ 23 (NCDRC).

Civil contractor buying truck for self-occupation is a consumer Telco v. Gajanan Mandrekar III (1996) CPJ 123 (NCDRC).

Purchase of copier machine by partnership firm to earn livelihood by partners by self employment is covered under CP Act - Remington Rand v. Pioneer Typewriter (1996) 2 CTR 112 (NCDRC) * Vijay Narain v. Chougule Industries II(1993) CPJ 231 (NCDRC).

2.4-3 Insurance company can file complaint in name of insured as his attorney holder or in joint name of insured and insurer, but not if the goods or service was for commercial purpose If insurer pays the compensation to the insured person, it gets a ‘letter of subrogation’ in favour of insurance company. Right to recover compensation (from transporter or any other person) are assigned to Insurance Company.

However, in Oberai Forwarding Agency v. New India Assurance Co. Ltd. 2000 AIR SCW 436 = 2000(2) SCC 407 = 100 Comp Cas 591 = AIR 2000 SC 855 (SC 3 member bench), it was held that Insurance company is not the beneficiary of services (of transporter in this case) and hence is not a ‘consumer’, even if the assignor is made a cocomplainant to the complaint.

1.21

WHO IS CONSUMER

Para 2.4

This decision was considered by Constitution bench in Economic Transport Organisation v. Charan Spinning Mills (2010) 4 SCC 114 (SC 5 member bench). It was held that Insurance company can file complaint in Consumer Court against transporter, in the name of insured (as his attorney holder) or in joint name of insured and insurer, if there is subrogation cum assignment by insured in favour of insurer. Insurer cannot in its own name maintain complaint before Consumer Court. However, if service is for commercial purpose, complaint cannot be filed against the carrier in view of amendment made to the consumer Protection Act w.e.f. 15-3-2003. It was held that subrogation cum assignment is valid. It was observed that section 9 of Carriers Act does lay down that a carrier is liable even if there was no negligence on his part. The carrier can avoid the liability if he established that the loss, damage or non-delivery was due to an act of God or circumstances beyond his control. It was held that section 9 is applicable even when complaint is filed before Consumer Court.

The assignee of insurance policy, when policy was assigned after its validity only to recover loss suffered on short landing of goods, is not a beneficiary of service required to be rendered by insurer. Hence, he is not a consumer. If the policy had been assigned during the course of validity, it could perhaps be said that assignee had beneficial interest. - New India Assurance Co. Ltd. v. Sainani (1997) 92 Comp Cas 426 = 1997 AIR SCW 2956 = AIR 1997 SC 2938 = (1997) 6 SCC 383 = (1997) 3 Comp LJ 380. - followed in Savani Roadlines v. Sundaram Textiles 2001 AIR SCW 2555 = 106 Comp Cas 659 = 38 SCL 738 = (2001) 3 Comp LJ 376 (SC).

Patients availing medical treatment in Government hospital are not consumers and facility offered in Government hospitals cannot be regarded as service hired for consideration. The small charges paid are for general purposes of the State and not for any specific service.

Thus, the service is not ‘hired’ by the patient. However, in case of demonstrable negligence, civil suit is possible. Consumer Unity Trust Society v. State of Rajasthan - decided on 15-12-89 (1991) CPR 241 (NCDRC) - confirmed by Supreme Court.

Some decided cases will clarify the legal position.

Para 2.4

WHAT IS CONSUMER DISPUTE

1.22

Land owner is consumer in respect of agreement with builder/ promoter/developer - In Faqir Chand Gulati v. Uppal Agencies (2008) 15 STT 296 (SC), land owner had agreement with builder termed as ‘collaboration agreement’ or ‘joint venture agreement’. However, land owner had absolutely no say in matter of development, construction or sale of flats. It was held that this is not ‘joint venture’. If there is no joint control, it is not a joint venture. Hence, land owner is ‘consumer’ within the meaning of ‘Consumer Protection Act’.

Railway Passenger - It has been held that railway passenger travelling on payment of fare is a ‘consumer’ - GM, South Eastern Railways v. Anand Prasad Sinha (1991) I CPJ 10 (NCDRC). In District Manager, Telephones v. Lalit Kumar Bajlal (1992) 1 CPJ 189 (NCDRC), it was held that subscriber to telephone is ‘consumer’. In Union Bank v.

Seppo Rally Oy - II (1996) CPJ 128 (NCDRC), it was held that beneficiary of a bank guarantee is a consumer.

Potential consumer is also a consumer - In Tele-Communication Dept. v. Shanmugham Chemical Industries LW 149.9-1995 - CS Sept.

95, (NCDRC), it was held that a potential consumer is as good as consumer, within the scope of CPA. Parent who bring the child to hospital and the child both are consumers - Parent who brings the child to hospital is ‘consumer’. The child, who is beneficiary of the services is also a consumer — Spring Meadows Hospital v. Harjot Ahluwalia (1998) 4 SCC 39 = AIR 1998 SC 1801 = 1998 AIR SCW 1590 = 92 Comp Cas 797 = (1998) 2 Comp LJ 228 (SC).

Allottees of house - Allottees of house by Housing Board are ‘consumers’ - UP Avas Gram Vikas Parishad v. Garima Shukla (1991) 1 CPJ 1 (NCDRC) - also in Gujarat Housing Board v. Akhil Bharatiya Grahak Panchayat - (1996) 2 Comp LJ 378 (NCDRC).

Person obtaining water from Water supply authority - A person obtaining water from a Government agency and paying water bills for the water supplied (and not ‘water tax’) is a consumer - Nagrik Parishad v. Garhwal Jal Sansthan 1998 AIR SCW 3944. [However, if water tax is levied, the person availing service will not be a ‘consumer’].

In Laxmi Engineering Works v. P.S.G. Industrial Institute 1995 AIR SCW 2114 = (1995) 3 CTJ 289 = AIR 1995 SC 1428 = (1995) 3 SCC 583

1.23

DEFICIENCY IN SERVICES

Para 2.6

= 84 Comp. Cas. 121 (SC), it has been held that Consumer Forums have power to decide whether a person is a consumer and whether he has made grounds for relief.

Complaint can be filed if the goods bought by him or agreed to be bought by him suffer from one or more defects [clause (ii) of definition of complaint ].

“Goods” means every kind of movable property and includes “food” as defined in section 3(1)(j) of the Food Safety and Standards Act, 2006 - Section 2(21) of Consumer Protection Act, 2019.

Defect - “defect” means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force or under any contract, express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods or product and the expression “defective” shall be construed accordingly - Section 2(10) of Consumer Protection Act, 2019.

In Morgan Stanley Mutual Fund v. Kartik Das (1994) 74 Taxman 409 = (1994) 1 SCL 19 = (1994) 2 CTJ 385 = 81 Comp. Cas. 318 (SC) = (1994) 4 SCC 225 = 1994 AIR SCW 2801 (SC 3 member bench), Hon. Supreme Court have held that shares before allotment are not goods, as shares do not exist before allotment is made. To constitute a ‘consumer’, there must be transaction of goods. Hence, a prospective investor cannot be regarded as a ‘consumer’ under CPA. In R D Goyal v. Reliance Industries (2003) 1 SCC 81 = 40 SCL 503 = 113 Comp Cas 1 (SC), it was held that debenture is not ‘goods’.

Similarly, shares before allotment are not goods.

Complaint can be lodged if the services hired or availed of or agreed to be hired or availed of by him suffer from any deficiency [clause (iii) of definition of complaint ].

Service - “Service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insur-

Para 2.6

WHAT IS CONSUMER DISPUTE

1.24

ance, transport, processing, supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service - Section 2(42) of Consumer Protection Act, 2019.

Deficiency - “deficiency” means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service and includes - (i) any act of negligence or omission or commission by such person which causes loss or injury to the consumer; and (ii) deliberate withholding of relevant information by such person to the consumer - Section 2(11) of Consumer Protection Act, 2019.

Injury - “injury” means any harm whatever illegally caused to any person, in body, mind or property - Section 2(23) of Consumer Protection Act, 2019.

In Lucknow Development Authority v. M K Gupta (1994) 1 SCC 243= 1994 AIR SCW 97 = AIR 1994 SC 787 = 80 Comp. Cas. 714 (SC) = (1994) 1 Comp LJ 1 (SC), it has been held that any service which is for consideration and is not a contract of personal service is ‘service’ for purposes of the Act. In this case, it was held that housing construction is service, although related to immovable property. It was held that ‘potential users’ mean those who are capable of using the service. followed in Gujarat Housing Board v. Akhil Bharatiya Grahak Panchayat - (1996) 2 Comp LJ 378 (NCDRC), where it was held that providing houses is a ‘service’.

Assurance of development of infrastructure/amenities etc. to customers of plots is a service. Housing construction or building activity carried out of a private or statutory body is service - Narne Construction v. UOI (2012) 5 SCC 359.

Contract of personal services are excluded from definition of ‘service’.

NCDRC in Cosmopolitan Hospitals v. Vasantha P Nair I (1992) CPJ 302 (NCDRC) had held that medical services are covered under CPA. The

1.25

DEFICIENCY IN SERVICES

Para 2.6

reason is - there is difference between ‘contract for service’ and ‘contract of service’. In contract of service, the master can order or require what is to be done and how it is to be done. This is a ‘contract of personal service’ and hence is out of purview of CPA as the master can always dispense with service of servant and hence no occasion would arise for him to complain about service of the servant. However, in ‘contract for service’, the person cannot order what is to be done or how it is to be done e.g. lawyer-client relationship will fall in this category. Services rendered in professional category would fall in this category, e.g. when a person gives cloth to a tailor for stitching a suit, the service rendered is in the course of his profession and not under contract of personal service. Thus, service of doctor is covered under the definition of service, as it is ‘contract for service’ and not ‘contract of service’.

The distinction between ‘contract of service’ and ‘contract for service’ has been fully upheld by Supreme Court in Indian Medical Association v. V P Shantha (1995) 6 SCC 651 = (1996) 1 Comp LJ 15 = 1995 AIR SCW 4463 = AIR 1996 SC 550 = (1995) 3 CTJ 969 = 86 Comp Cas 806 (SC 3 member bench). In this case, it was held that ‘contract for services’ implies a contract whereby one party undertakes to render services e.g. professional or technical services to or for other in the performance of which he is not subject to detailed direction and control but exercises professional or technical skill and uses his own knowledge and discretion. However, a ‘contract of service’ implies a relationship of master and servant and involves an obligation to obey orders in the work to be performed and as to its mode and manner of performance - similar views in Shivnandan Sharma v. Punjab National Bank Ltd. AIR 1955 SC 404 * Chandi Prasad Singh v. State of Uttar Pradesh AIR 1956 SC 149 * Dhrangadhra Chemical Works v.

State of Saurashtra AIR 1957 SC 264.

In Dhrangadhra Chemical Works v. State of Saurashtra AIR 1957 SC 264, it was observed, the principles according to which the relationship as between employer and employee or master and servant has got to be determined are well settled. The test which is uniformly applied in order to determine the relationship is the existence of a right of control in respect of the manner in which the work is to be done. A distinction is also drawn between a contract for services and a contract of service and the distinction is put in this way - ‘In the one case, the master can order or require what is to be done, while in other case, he can not only order or require what is to be done but how itself it shall be done. - - Prima facie test for the determination of the

Para 2.6

WHAT IS CONSUMER DISPUTE

1.26

relationship between master and servant is the existence of the right of master to supervise and control the work done by the servant not only in the matter of directing what work the servant is to do but also the manner in which he shall do his work. - - Test of control is not one of universal application. There are many contracts in which the master could not control the manner in which the work was done’.

In Smt. Savita Garg v. National Heart Institute AIR 2004 SC 5088 = (2004) 8 SCC 56 = 2004 AIR SCW 5820, it was held that doctors who are staff of hospital are on ‘contract of service’, while doctors on panel whose services are requisitioned from time to time by hospital are on ‘contract for service’. Hospital is controlling authority of both - quoted with approval in Balaram Prasad v. Kunal Naha (2014) 1 SCC 384.

In short, in case of contract of service, the employer not only orders/ requires what is to be done but also directs as to how it shall be done, whereas in contract for service, the master can only require as to what is to be done - Max Mueller Bhavan In re (2004) 138 Taxman 113 (AAR) Personal services are not covered - Personal services are outside the purview of CPA. In State of Orissa v. LIC - AIR 1996 SC 2519 = 1996(8) SCC 655 = (1996) 87 Comp Cas 881 = 1996 AIR SCW 3129, it was observed that ‘personal service’ covers civil servants and professors in University.

In Centre for Research & Ind. Development v. Madan Lal Sahni (19961) PLR 594 (P&H HC DB) also, it was held that consumer forum cannot decide disputes arising out of contract of appointment of personal service.

Following services are held to have been covered Professional services are covered - Since doctors are covered under CPA, it can be safely presumed that other professionals like Engineers, Architects, Chartered Accountants, Cost Accountants, Advocates, Company Secretaries will be covered.

Services of Advocate - In Srimati v. UOI AIR 1996 Mad HC DB 427 = (1997) 94 Taxman 322 (Mag.), it was held that advocates are covered under Consumer Protection Act. - same view in K Vishnu v. NCDRC (2000) CLA-BL Supp 340 (AP HC DB). In Ram Ralsh Pal v. Smt. Ranjana II (2002) CPJ 118 (NCDRC), it was held that non-appearance of lawyer in court or tribunal having been engaged and charging his

1.27

DEFICIENCY IN SERVICES

Para 2.6

fee could itself be deficiency in service. [In this case, absence of lawyer due to strike of lawyers was highly depreciated].

Accepting deposit from public is service - Accepting deposit from public agreeing to pay interest is ‘service’. If interest and principal is not paid on due dates, it is deficiency of service and Consumer forums can issue orders for payment of outstanding dues. - Neela Vasant Raje v. Amogh Industries 1993(3) CPJ 261 (NCDRC) - similar views in K Kasi Annapurna v. Smt. Vemuri Bharathi - (1996) 8 SCL 5 (NCDRC) = (1996) CPT 3 (NCDRC) * Kalawati v. United Vaish I (2002) CPJ 71 (NCDRC).

Share broker services covered - Share brokers sell and purchase shares. They provide the service and charge commission for the same.

Hence, their services are covered under CPA. - Indravadan Choksy v.

Hitesh Dineshchandra Mali (1994) 1 SCL 92 (GSCDRC- Gujarat State).

Provident Fund services under EPF Act covered - Regional Provident Fund Commissioner (RPFC) is providing service under Employees Provident Fund Act. Hence, RPFC is liable for deficiency in service. However, subscriber under State General Provident Act/ Rules is not a ‘consumer’ as the Accountant General who is maintaining the accounts, is discharging a statutory function. - RPFC v. Shiv Kumar Joshi 1996 LLR 641 = (1996) 4 CTJ 805 (NCDRC) - confirmed in RPFC v. Shiv Kumar Joshi (2000) 1 SCC 98 = 1999 AIR SCW 4456 = 99 Comp Cas 347 = AIR 2000 SC 331 = 2000 LLR 217 = 24 SCL 46 (SC) - followed in RPFC v. Bhavani Mangat Ram (2008) 7 SCC 96 = 2008 LLR 661 = AIR 2008 SC 2957.

ESIC services covered - In Kishore Lal v. Chairman, ESIC 2007 LLR 740 = 80 SCL 108 (Mag) (SC 3 member bench), it has been held that medical service rendered by ESIC is ‘service’ and consumer forums have jurisdiction to adjudicate dispute between insured and ESIC.

Some decisions will be useful.

Service matters not covered - Disputes relating to government service matters are not covered. Government service is not ‘consumer’ in relation to Government. He cannot approach Consumer forum for grievance in respect of retirement benefits - Jagmittar Sain Bhagat v. Director, Health Services (2013) 10 SCC 136.

CONSUMER PROTECTION LAW & PRACTICE AUTHOR PUBLISHER DATE OF PUBLICATION

: TAXMANN'S EDITORIAL BOARD : TAXMANN : JANUARY 2024

EDITION ISBN NO NO. OF PAGES BINDING TYPE

: : : :

2024 Edition 9789357784405 672 PAPERBACK

Rs.1295 | USD 47

DESCRIPTION This unique book comprises concise commentary & statutes on Consumer Protection Laws in India.

This book is helpful for professionals, scholars, and anyone interested in the intricacies of consumer protection laws in India.

The Present Publication is the Latest 2024 Edition and has been amended upto 31st December 2023. This book is authored/edited by Taxmann's Editorial Board, with the following noteworthy features: • [Compact Comprehensive Commentary] on the Consumer Protection Act, in 275+ Pages • [Compilation of Amended & Updated text of the Consumer Protection Laws] which includes: o Consumer Protection Act, 2019 o 20+ Rules & Regulations framed under the Consumer Protection Act 2019 o Circulars & Notifications, and Press Releases o Tribunal Reforms Act, 2021 • [Tabular Presentation] of the following: o Tables showing sections of the Consumer Protection Act, 2019 & corresponding provisions of the Consumer Protection Act, 1986 o Tables showing sections of the Consumer Protection Act, 1986 & corresponding provisions of the Consumer Protection Act, 2019 o Tables showing the date of enforcement of sections of the Consumer Protection Act, 2019

Buy Now