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Consumer Protection: Current Perspective and

Future Challenges in India

Narender Kumar

Assistant Professor, Faculty of Law, University of Delhi


This paper is an attempt to highlight the current position and future challenges regarding consumer protection in India. The court is to protect interest of consumer and to provide better protections to a consumer against the wrong doer. In 21st century, judiciary and National Commission mainly focused upon welfare of the society by giving effective remedies to weaker sections like consumer. Whether we look into consumer protection act, competition act, article 19(1)(g) of Indian constitution, industrial (development& regulation) act or any other legal provisions, the policy behind these provisions are the same i.e. “Protection of Consumer”. Part-1 is an introduction to Consumer Protection Act,1986, where Preamble definition of consumer under section 2(d) and rational behind section 2(1)(o) is focused with decided cases by Supreme Court. Part-2 focuses upon the Preamble, Anti-Competitive Agreements, Abuse of Dominant Positions, Power and Functions of Competition Commission of India. Under Competition Act, 2000 and future challenges, the rational is same i.e. to give priority to consumer rather only employer and traders. Part-3 refers to proactive role of National Commission or Judiciary to protect interest of consumer and to do natural justice. Part-4 refers to some future challenges which should be keeping into consideration regarding consumer protection. Part 5 refers to conclusion and suggestions.

Keywords: Consumer, Constitution, Commission, Competition, Judiciary, Welfare


Consumer Protection in Ancient period1

Since the discovery of consumer protection in Vedic period about 3200 B.C human values and ethical practices were considered of great values. Rulers felt that by regulating social conditions and economic life of people with reasonable restrictions on trade, interest of consumer can be better protected and also primary source of welfare. Among Dharma, most important texts are a) the Manu Smirti (800B.C -600 B.C), b) the Yajanavalkya Smriti (300B.C - 100 B.C.), c) the Narada Smirti (100 B.C- 200B.C), d) the Bruhaspati Smirti (200B.C- 400B.C), e) Katyayana Smirti (300B.C- 600B.C). The Manu Smirti is considered as the most important source of law and effective in its nature. Manu Smriti describes the social, political, and economic conditions of ancient society. During the ancient time, the king had power to create monopoly and put restrictions over exported goods. According to Manu “who behaved dishonestly to honest consumer must be liable”. Manu Smriti focused upon many consumers‟ matters, many of which remain of great concern in modern legal system. Kautilya Arthasastra describes the role of the state to regulate trade activity and to prevent crime against consumer. A director of trade was to monitor the entire market and its players. According to Kautilya “there was a fix time to return the purchased goods or payment of price, thereafter could not be returned. During Chandragupta‟s period trade practices were prevailed like goods could not be sold at the place of origin but they were to be carried to the appointed place (Panyasala), where dealer had to decide the quantity, quality and price etc. Every trader was required to take license to deal in the market. Easy access to justice including consumer protection was having great importance during that period and King was to decide the complaint of the town and village. The mobile and circuit courts worked at night when required.

Consumer Protection in Medieval Period and Modern Period

In the medieval period, the rulers played a vital role in consumer protection. During Muslim rules, a large number of units of weights were considered to protect interest of consumer. During Sultanate period, the prices



45 of goods were decided by local conditions. In Alauddin Khalji‟s period strict controls over the market was prevailed with price enforcement mechanism. There were also some provisions for punishments.

In the modern period, the British government changed the traditional legal system and introduce unified modern legal system to administration of justice. The traditions and customs were not ignored. The British legal system was mixture of personal law, rules, local customs etc. despite the challenges British and Indian legal system did not ignore protection of consumer. Some of the important laws were passed during British time concerning consumer interest are: the Indian Contract Act of 1872, the Sale of Goods Act of 1930, the drugs and Cosmetic Act of 1940, the Indian Penal Code of 1860, the Code of Civil Procedure of 1908 etc. the policy behind all laws is to give better protection to consumer. The Sale of Goods Act of 1930 (SGA) was the main source of consumer protection by protecting interest of buyer against seller for defective goods under section 16 of the Act and praised as “Consumer‟s Charter”. It was an exception to “Caveat emptor”. The SGA was the effective legislation until 1986 than the Consumer Protection Act of 1986 was introduced in addition to the SGA. The Consumer Protection Act was enacted after the Essential Commodities ct of 1955, the Prevention of Food Adulteration Act of 1954, the Standard of Weights and Measures Act of 1976 etc. Here the consumer is not required to prove any particular intention (mens rea), means there was strict liability for wrong doer and also try to look after public interest matters rather only to focus upon private issues. In addition to the remedies under contract and criminal law, a consumer may get effective remedies under tort law. The tort provides adequate remedies which are based upon discretion power of court. Still for cheap, simple, and quick justice, a specific legislation was required to be made for consumer and then the Consumer Protection Act was enacted in 1986 with certain objectives, which are given below.

The Consumer Protection Act, 1986 (CPA)

This Act is to highlights the effective provisions to protect Consumer. It applies to all goods and services. It applies to whole India except the State Jammu and Kashmir. The chapter 1, 2, 4 are introduced on April13, 1987 and chapter 3 on July 10, 1987. This Act referred to Consumer Protection (Amendment) Act 2002. The Amended Act came into force on March13, 20032. The Consumer Protection Act (CPA) was introduced in 1986, which talks about the specific relief to Consumer against the seller who behaved dishonestly. The preamble of the Act provides the better protection to Consumer and to establish Consumer Council with other authorities for settlement of dispute raised by Consumer under this Act. In this Act total chapters are 6 and 31 sections which specifically focus upon each and every aspect of Consumer. Section 2 is definition part where word consumer, complainant, consumer dispute, defect, deficiency etc have been explained broadly. Section 2(d) explains the meaning of „Consumer‟ under this Act, which suggests that any person a) who buys any goods and services for consideration which has been paid or promised or partly paid and partly promised…., b) who heir or avails of services for a consideration…..includes any beneficiary of such services, other than the person who heirs or avails of services for consideration, but does not include a person who avails of such services for any commercial purpose except self employment for livelihood.3

A Consumer should be well aware of all information relating to his good and services, which may be relating to Contract, Torts, Railways, Telephones, Post, Air travels, Insurance etc, the list is not exhaustive but whether the matter relating to consumer interest or not, will be decided by consumer forum/commission. Section 2(o) refers to definition of word “service” which means service of any description which is made available to potential user…etc, it is divided into two part i.e. inclusive part and exclusive portion. In inclusive part, some services are to be included; the list of services under this potion is not exhaustive, but based upon a test which is given by the Supreme Court of India in some cases like Lucknow Development Authority case and Indian Medical Association case etc. some of the services are given like medical services given by doctors, finance insurance, banking etc. On the other hand, exclusive part, where some services is to be excluded and cannot enforce under this Act.4

Some important rights of a consumer5 are


Dr. Raju J.K. & Mr. A Asifulla, Consumer Protection Act, 1986: Issues and Challenges, International

Journal of Emerging Research in Management &Technology, volume-2, issue-4, ISSN-2278-9359.






 The right to be protected against goods or services having adverse effect on consumer and society.

 The right to be informed about the quality, quantity, price etc of goods or services.

 The right to be assured about the price.

 The right to be heard

 The right to seek adequate remedies against unfair trade practices etc

 The right to be educated

Section 2(r) defines “Unfair Trade Practices” which means any practice which is against the interest of Consumer or Trade Practices. Broadly an interpretation may be taken that any service which adopt any unfair, deceptive, or unfair methods for promotion of trade. These services may be like a) making any statement oral or written or by visible representation etc which falsely represents particular standard, quality, quantity, style, model etc.6

The Objectives of the Act, 1986

1. To provide better protection to Consumer.

2. To establish Consumer Council/commission and other Authorities to decide the matter under this Act. 3. To prevent such practices this has an adverse effect on competition, Consumer or welfare of society. 4. To promote trade and ensure sustain completion in the relevant market etc.7

The Supreme Court of India tried to achieve the above mentioned objective in number of cases. But two cases which show the real interpretation taken by Supreme Court on word “Consumer” and “Service” are given below:

In Lucknow Development Authority vs. M.K. Gupta case8, a scheme was launched by Lucknow Development Authority (LDA) to solve the house problems of people. Authority invited applications from different - different groups of the society to purchase the flats. The Respondent (M.K. Gupta) applied in prescribed manner and a flat was allotted to him, accordingly he deposited 6132 Rupees on July 2, 1988 and 109975 Rupees deposited on 29 July 1988. The flat was registered on August 1988. On 30 November 1988, Appellant directed executive engineer to handover the flat to Respondent, but flat was not delivered due to some pending construction work. Now Respondent approached to Authority, but no effective action was taken and did not give the possession to him. Then he filed a complaint before District Forum, but still he did not get the possession and construction was incomplete. Then the state government on Feb.15, 1990 directed the appellant to pay (a) 12% annual simple interest (b) to handover possession without delay (c) If not possible to complete construction work then handover flat by April 5, 1990, and after determining deficiency in services estimate costs shall be refunded to the Respondent. But Appellant did not fulfil the order passed by the State Commission and filed an appeal against the order before National Commission on Jurisdiction issue but it was dismissed.

On the other hand (in cross appeal) Respondent‟s appeal was allowed and passed an order to pay Rupees 44615 as cost of completing construction work shall be paid to Respondent with Rupees 1000 as compensation etc. when the matter before Supreme Court, number of issues were raised like jurisdiction, defect or deficiency in services, unfair trade practise, power of commission to award compensation, public accountability etc. finally Supreme Court made it clear that here, under Consumer Protection Act, the main focus is upon the better protection to consumer first. In this case, the main issue is “deficiency in services” relating to House Construction work etc. so word “House Construction” is within the definition under section 2(1)(o) of this Act. Supreme Court made it clear that, if the service which is being provided is in favour of public at large or social welfare then that service would be inclusive part under section 2(1)(o), otherwise the purpose of the Act would not be served. Public Accountability must be their hence Commission has power to award compensation etc. the definition of word “service” is not exhaustive. If he services which affect the interest of consumer or society then, may be considered by court, just to do complete justice.


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47 In Indian Medical Association case9, number of writ petitions and Special leave petitions raised the main issue is relating to the “deficiency in services” which is being provided by professional doctors in hospital. Whether a medical practitioner can be regarded as rendering services under section 2(1)(o) of the Consumer Protection Act or not? This question has been considered by number of High Courts and National Consumer Dispute Redressel Agency. In Dr. A.S. Chandra vs. Union of India (1992), A.P. High Court held that service rendered for consideration by private medical practitioner, private hospitals, nursing homes must be considered as service under section 2(1)(o) of CPA. In Dr. C.S. Subramanian vs. Kumarasamy (1994) case, Madras High Court held that with different view, i.e. services given to patient by medical practitioner/ hospitals etc. by way of diagnosis & treatment (process of treatment & medical care), both medical and surgical would not fall under CPA, but paramedical services rendered by them would fall under section 2(1)(o) of CPA and a person who availing (getting benefits) such services would be consumer.

In Consumer Unity & Trust Society vs. State of Rajasthan (1992) case, National Commission held that medical treatment in Govt. Hospitals cannot be regarded as services under section 2(1)(o) of CPA or payment ( directly & indirectly) paid by public does not constitute consideration paid for hiring the services. In Cosmopolitan Hospitals vs. Vasantha P. Nair (1992) case, National Commission held that the activities of providing Medical Assistance for payment carried on by Hospitals & Members of Medical Profession falls within the meaning under section 2(1)(o) of CPA and in events of any „deficiency in services‟ in performance of such services, the aggrieved party can get the effective remedies under Consumer Protection Act by filling a complaint before consumer forum. The word “avails of” after the word hire under section 2(1)(d) and word “house construction” under section 2(1)(o) were inserted just to give wide interpretation. The definition of word “service” is divided into three parts but two are most important i.e. (a) inclusive part, where some types of services are included like banking, financing, insurance etc. (b) exclusionary part, where the services does not fall under section 2(1)(o) like any services which are “free of charges” or contract of personal services. Finally Supreme Court passed certain guidelines for medical profession which are strictly be followed and concludes that the services given by medical practitioner for consideration fall within the definition and the aggrieved person can get compensation whether he is consumer or any beneficiary etc. the policy behind the act is to protect interest of consumer and social welfare.

Note- The policy which is followed by Supreme Court in these decisions, only to give priority to consumer and to protect their interest. Main objective is to provide effective and adequate remedies to consumer.

Role of Competition Act to Protect Interest of Consumer

The object of Preamble is to protect interest of consumer, economic growth, stop practices having adverse effect on competition and its players (competitors) and to create healthy competition in relevant market.10 The policy behind article 38, 39, 47 etc (Directive Principles of State Policy) is to create balance among material resources and wealth to raise the standard of living. The right to practice whether it is provided by constitution of India or CCI, hereinafter called Competition Commission of India Act 2002is subject to reasonable restrictions which may be imposed in public interest11.The provisions relating to Anti –Competitive Agreement and Abuse of Dominant Position etc played effective role since may 20, 2009.12

“Anti Competitive Agreement” means an agreement which is having adverse effect on completion and consumer. Such agreement (section 2(b)) covers an arrangement or understanding or an action taken by competitors. Broadly an interpretation may be taken that no written agreement is required to impose liability but even such arrangement which are created by competitors and having adverse effect on society and consumer, would also be included under section 2(b). And section 3 says expressly that if an enterprise,




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48 association of enterprise etc enters into an agreement to put certain restrictions on production, supply, distribution, sale etc and which create an adverse effect or likely to cause an appreciable effect on market and its consumers, shall be void. This provision expressly says that if any agreement which is entered by some competitors and which is anti to competition act or consumer or welfare, shall be void. Here the policy is to provide better protection to consumer and other players in the market rather only competitors itself. Some conduct of the competitors are covered under hard core cartels like price fixation, restrictions on production level, allocation of market, bid rigging etc amount to hard core cartels and expressly prohibited13.

The abuse of dominant position is expressly defined under section 4 of CCI, which means acquiring the economic strength by which any industry, enterprises etc can dominate or influence other players in the market. Mere possessing dominant position is not prohibited but, its abuse is prohibited. This means if an enterprise having dominant position and cause adverse effect on other competitors and market or interest of market affected, by its conduct etc, such kind of economic strength/ dominant position is against the competition policy14.

The Substantive test is to check an adverse effect on market or other competitors or consumer. Section 4 expressly prohibits unfair or discriminatory conditions imposed by any enterprises or group. Three steps are to be considered to determine abusive conduct like (1) to check relevant market (2) assessment of dominance of such enterprises etc (3) its abusive conduct. Apart from above factors, the Competition Commission of India (CCI) is to consider under section 19(4) following items like

 Market shares

 Size and importance of competitors

 Economic power & commercial advantages over competitors

 Vertical integration & sale and service network

 Dependence of consumers

 Legal monopoly or dominant position etc

Than CCI after considering the above factors and if it is satisfied than it shall pass the directions to Director General (D.G.) to conduct an inquiry or investigation and to submit a report to the commission. The commission has all power like a civil court under civil procedure code to issue summons, enforce attendance of any person as it required beside power to search and seizure etc. section 27 talks about the power of CCI, after conducting an inquiry it may pass certain orders like15.

 To discontinue or not to re-entry

 To modify an agreement

 May pass certain directions & payment of costs

 May impose penalty etc

Section 28 refers to division of enterprise. Section 33 talks about an interim order which may be passed by CCI during pendency of case and may restrain any party not to continue etc. Section 53A refers to an appeal before Supreme Court within 60 days against an order or direction or decisions of Commission under relevant provisions of the act16.

The Supreme Court passed a land mark judgment on September 09, 2010, in “Competition Commission of India v. Steel Authority of India Limited” and held that the essence of the Act and policy behind its provisions must be protected i.e. protection of consumer. The Supreme Court has given is actual interpretation on some provisions and on power of CCI & Appellate tribunal etc. the main focus is still to protect the interest of consumer17.


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49 Note: The policy behind CCI is to protect interest of consumer, other competitors in the market so that a healthy competition may be created and which would help in growth and development of economy. The rights of an enterprise or group etc are subject to interest of consumer and welfare of society.

Some Important Judgments in Favour of Consumer Protection

In “Karnataka Power Transmission Corporation Vs. Ashok Iron Work Private Limited”18

case, decision on January 22, 2009, Apex Court held that word a „company‟ is also covered under the definition of „person‟ in Consumer Protection Act. The court relied upon the English court decision in Dilworth v commissioner of Stamps [(1899) AC 99] and checked the policy behind it or intension of legislation, i.e. to give wide interpretation to this word. The court also referred section 3(42) of General Clause Act, which defined a „person‟ to include a company etc, also went to check section2 (1)(m) of CPA, a third category i.e. co-operative society was corporate, which highlight the intention of legislation to include bodies corporate as well as incorporated. The definition of „consumer‟ under Section 2(d) also includes a company. The court also cleared that the supply of electricity by corporation to consumer was not sale of goods within section2(d) of CPA, relied upon the decision in „Southern Petrochemical Industries Co. Ltd Vs. Electricity Inspector & ETIO & others‟ [(2007) 5 SCC 447], in which court held that supply of electricity covered under section 2(1)(d)(ii) [i.e. hiring or availing of any services] as service under section 2(1)(0) also include service of any description like connection with supply of electrical or other energy. The definition of deficiency of services under section 2(1) (o) is not exhausted. Therefore, a case of deficiency of services would fall under section 2(1) (g) and the court rejected the contention of appellant that „service‟ in section 2(1) (o) was limited to providing facilities in connection with electricity.

In “HDFC Bank Limited Vs. Balwinder Singh”19

case, (decision on March16, 2009), the National Commission held that the act of bank or its recovery agents i.e. forcible repossession of hypothecated vehicle and causing physical harassment was completely against the law. For causing physical harassment and mental trauma to complainant, district form directed the bank to pay compensation to complainant of rupees 4 lakh for repossession of vehicle etc and the State Commission also confirmed the order in appeal. The National Commission was shocked that bank had hired musclemen directly to recover loan etc. the Commission also considered the State Commission‟s order under which it had observed that the letter produced by bank, which showed that he complainant voluntarily handing over the the vehicle was unreliable and no notice was sent to complainant. Broadly it may be observed that the bank did not communicate the matter to complainant before taking possession. The Commission relied upon the decision in “Citicorp Maruti Finance Limited Vs. Vijayalaxmi [III (2007) CPJ 161 (NC)] where it strongly criticised such practices. The Commission dismissed the petition and award Rs. 25,000 as exemplary costs.

In “Arvind Shah (Dr.) Vs. Kamlaben Kushwaha”20

case, (decision on April 04, 2009), the Commission held that the Doctors are duty bound to take proper care while treating any patient with due care. The complainant son was died due to Medical Negligence of doctor, the State Commission awarded to complainant a compensation of Rs. 5 lakh with interest and costs. The National Commission also observed that the doctor was guilty on his part as he did not maintained the proper record of treatment etc. finally the National Commission held that the death of patient was due to Negligence and award a compensation of Rs. 2.5 lakh along with interest.

In “Medical Superintendent, St. Gregorious Mission Hospital Vs. Jessy & Another”21

case, (Decision on May 04, 2009), the District Form awarded Rs. 2.75 lakh along with interest to complainant and decided the


[III (2009) CPJ 5 SC] , available at


[III (2009) CPJ 40 (NC)], available at


[III (2009) CPJ 121], available at


[III (2009) CPJ 61 (NC)], available at


50 Negligence on the part of Hospital. The contention was made by the Hospital that it is not possible to look after any patient for 24 hours, but after considering the facts and circumstances of the case, the Commission found that when the patient hung himself in empty ward, nobody noticed him even the staff nurses or ward boy etc, but co-patient did. They did not perform their duty properly and in this special case (alcoholic psychosis treatment for de-addiction of drugs) where they are treating a patient like him, they should have taken extra care but they failed. The Commission relied upon the Supreme Court decision in M.S. Grewal Vs. Deep Chand Sood [II (2001) ACC 540 (SC)] and held that there was negligence on the part of Hospital. In “Narinder Kumar Suneja Vs. R.K. Goel”22

case, (Decision on May 14, 2009), the Commission relied upon a decision in “D.K. Gandhi Vs. M. Mathias [III (2007) CPJ 337 (NC)] in holding that deficiency in services by lawyer was covered under the CPA. The District Form found that the act of petitioner to retain fee where he did not perform his duty was not proper. A lawyer does not have any right to retain fee without doing his duty. A complaint was made by complainant to State Bar Council only regarding his Misconduct. Finally the Commission determined the deficiency in services by lawyer also would be covered under CPA.

Note: these are only few cases, which highlighted the essence of CPA. The policy which is taken by National Commission or Supreme Court to decide the matter relating to consumer protection is clear that to provide better protection to a consumer with adequate relief. The main object is to do natural and complete justice to consumer and also have to check the impact of these decisions on society at large.


On the basis of above decisions, an interpretation may be taken that the National Commission and Judiciary are playing great role to protect consumer interest, but still there are number of things which should be taken into consideration. In 21st century, the society should be more conscious regarding their rights as well as duties. Some challenges are highlighted like23

 A consumer should be more conscious regarding their rights and duties under CPA.

 Consumers should organise together to develop strength so that they would be able to protect their rights by them self, rather only to depend upon mechanism.

 Punishment for harsh activity done by wrong doer should be specifically mentioned so that a wrong doer think twice before doing any act against interest of consumer.

 Awareness programme should be organised at all level like rural, urban, school, colleges etc so that the society become more conscious and aware regarding CPA.

 Disposal process should be more fast and speedy as the numbers of cases are still pending before it. District Forums should play proactive role to Natural Justice within minimum time period.

 The section 2(1)(o) should be more clear reading „deficiency in services‟ so that a consumer and consumer forum can directly check whether a service would fall under it or not, because this problem is faced by National Commission as well as by Supreme Court in number of cases like lucknow development Authority case, Indian Medical Association case etc24.

Note: The above challenges, which are highlighted, may be justified with the help of following “Statistical Data”. This shows the current situation in India regarding Consumer protection. The figure shows that the District Forum, State Commission and Nation Commission are doing their job properly, but still there are some problems which put obstacles that‟s why there are number of cases are still pending before them. The Figure shows that approximate 91.40% of Total cases are decided, which is a good sign of progress, but on the other hand the cases which are pending before District Forum are approximate 269833, before State


[III (2009) CPJ 35 (NC)], available at


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51 Commission are 89181, where pending cases before National Commission are approximate 10566. An interpretation may be taken on the behalf of it that they should play their role more actively and there should be speedy Justice. The second things in this figure shows that the total number of cases are filed i.e. approximate 4299095, it means that the society is not properly aware or conscious regarding their rights and duties. The Act (CPA) is not only to protect rights of a consumer, but the essence of CPA is to eliminate the root of any problem which may be faced by any consumer only than the main object would be achieve i.e. Welfare of Society25.


The rationale behind to introduce CPA is to give better protection to a consumer with adequate remedies. This may be seen under constitutional provisions like article 14, 19(1) (g) read with article 19(6), 47 etc and


National Commission

Cases Filed since inception- 93860 Cases Disposed -83294

Cases Pending-10566 % of total Disposal- 88.74% Fees for filing case- Above

1 crore, only Rs. 5000

State Commission

Cases Filed Since Inception-672486

Cases Disposed-583305 Cases Pending-89181 % of Total Disposal- 86.74%

Fees for Cases Up to 20lakh-50lakh= Rs. 2000

50lakh-1crore=Rs. 4000

District Forum Cases filed since inception-3532749

Cases Disposed-3262916 Cases Pending-269833 % of Total Disposal- 92.36%