Consumer Protection Act 1986: Rights, Councils & Redressal
Unit 3: Consumer Protection Act, 1986
Objective and Application (Section 1)
1. Objective of the Consumer Protection Act, 1986
The Consumer Protection Act, 1986 was enacted to protect the interests of consumers and to provide them with a simple, speedy, and inexpensive redressal mechanism.
Main Objectives
- Protection of consumer rights
- To safeguard consumers against:
- Defective goods
- Deficient services
- Unfair trade practices
- Establishment of consumer redressal agencies
- District Consumer Disputes Redressal Forum
- State Consumer Disputes Redressal Commission
- National Consumer Disputes Redressal Commission
- Speedy and inexpensive justice
To provide a quasi-judicial mechanism avoiding complex court procedures.
- Promotion of consumer awareness
To educate consumers about their rights and remedies.
- Prevention of exploitation of consumers
To curb misleading advertisements, overpricing, and unsafe products.
2. Application of the Act (Section 1)
Section 1 – Short Title, Extent, and Commencement
Short Title: This Act may be called the Consumer Protection Act, 1986.
Extent (Application Area): It extends to the whole of India.
Commencement: The Act came into force on 15 April 1987.
Consumer Protection Act, 1986 — Definitions (Section 2)
1. Consumer [Section 2(1)(d)]
A consumer means any person who:
- (i) Buys goods for consideration (paid, promised, partly paid, or under deferred payment), but does not include a person who buys goods for resale or for a commercial purpose.
- (ii) Hires or avails services for consideration.
2. Complaint [Section 2(1)(c)]
A complaint means any allegation in writing made by a consumer regarding:
- Unfair trade practice
- Defective goods
- Deficiency in service
- Excess price charged
- Hazardous goods or services
3. Complainant [Section 2(1)(b)]
A complainant may be:
- A consumer
- Any recognized consumer association
- Central or State Government
- One or more consumers having the same interest
4. Goods [Section 2(1)(i)]
Goods have the same meaning as under the Sale of Goods Act, 1930, i.e., movable property.
5. Service [Section 2(1)(o)]
Service means service of any description made available to potential users, including:
- Banking
- Insurance
- Transport
- Housing construction
- Electricity
- Telecom
6. Defect [Section 2(1)(f)]
A defect means any fault, imperfection, or shortcoming in the quality, quantity, purity, or standard of goods.
7. Deficiency [Section 2(1)(g)]
A deficiency means any fault, imperfection, inadequacy, or shortcoming in the performance, nature, or manner of service.
8. Unfair Trade Practice [Section 2(1)(r)]
A trade practice which adopts unfair or deceptive methods, such as:
- False advertisement
- Misleading claims
- Hoarding
- Bargain sale fraud
9. Restrictive Trade Practice [Section 2(1)(nn)]
A trade practice which manipulates price or supply or causes unreasonable restrictions on consumers.
10. Consumer Dispute [Section 2(1)(e)]
A consumer dispute arises when the opposite party denies or disputes the allegations made in a complaint.
Consumer Protection Councils
Meaning: Consumer Protection Councils are advisory bodies established under the Act to promote and protect the rights of consumers.
They do not decide disputes; their role is promotional and advisory.
Objectives of Consumer Protection Councils
To promote and protect the following consumer rights:
- Right to safety
- Right to be informed
- Right to choose
- Right to be heard
- Right to seek redressal
- Right to consumer education
Types of Consumer Protection Councils
1. Central Consumer Protection Council (Section 4)
Establishment: Established by the Central Government.
Composition:
- Chairman: Minister in charge of Consumer Affairs (Central)
- Members: official members and non-official members representing consumers, industry, trade, etc.
2. State Consumer Protection Council (Section 7)
Establishment: Established by the State Government.
Composition:
- Chairman: Minister in charge of Consumer Affairs (State)
- Members from government, trade, and consumer organizations
3. District Consumer Protection Council (Section 8A)
Establishment: Established by the State Government at the district level.
Composition:
- Chairman: District Collector / Deputy Commissioner
- Members representing consumers and local authorities
Central Consumer Protection Council (Section 4)
1. Establishment (Section 4): The Central Consumer Protection Council is established by the Central Government. It is a statutory and advisory body.
2. Composition: The Council consists of the following members:
- Chairman: The Minister in charge of Consumer Affairs in the Central Government.
3. Meetings: The Council shall meet at least once a year. Meetings are held at such time and place as the Chairman may decide.
4. Functions of the Central Consumer Protection Council
The main function is to promote and protect the rights of consumers, namely:
- Right to safety
- Right to be informed
- Right to choose
- Right to be heard
- Right to seek redressal
- Right to consumer education
5. Nature of the Council: It is a non-judicial and advisory body. It does not settle disputes. Its role is to advise and recommend consumer policies to the Central Government.
6. Importance: Helps in policy formulation for consumer protection, promotes consumer awareness at the national level, and coordinates with State and District Consumer Councils.
Section 6 – Objects of the Central Consumer Protection Council
The main object of the Central Consumer Protection Council is to promote and protect the rights of consumers.
Consumer Rights Recognized under Section 6
- Right to Safety
Protection against hazardous goods and services. Ensures safety of life and property.
- Right to be Informed
Right to receive correct information about quality, quantity, potency, purity, price. Protection against misleading advertisements.
- Right to Choose
Access to a variety of goods and services at competitive prices. Protection against monopolistic and restrictive trade practices.
- Right to be Heard
Consumer interests must be considered at appropriate forums with assurance that grievances receive due attention.
- Right to Seek Redressal
Right to seek fair settlement of genuine grievances. Includes compensation for defective goods, deficient services, and unfair trade practices.
- Right to Consumer Education
Right to acquire knowledge and awareness about consumer rights, legal remedies, and responsibilities of consumers.
State Consumer Protection Council (Sections 7 & 8)
A. Establishment: Established by the State Government. It is an advisory and promotional body (not a judicial authority).
B. Composition: Chairman: Minister in charge of Consumer Affairs in the State Government.
C. Meetings: Meets at least twice a year. Meetings are held at such time and place as decided by the Chairman.
D. Objects / Functions: Promote and protect consumer rights within the State, such as right to safety, information, choice, be heard, seek redressal, and consumer education. Advise the State Government on consumer protection policies.
District Consumer Disputes Redressal Forum (Sections 9 & 10)
A. Establishment: Established by the State Government in each district. It is a quasi-judicial body.
B. Composition:
- President: A person who is or has been a District Judge.
- Two Members, one of whom must be a woman.
C. Jurisdiction: The District Forum can entertain complaints where the value of goods/services and compensation claimed does not exceed ₹20 lakhs (under the 1986 Act). The opposite party resides, or carries on business, or the cause of action arises within the district.
D. Powers and Functions: To hear consumer complaints relating to defective goods, deficiency in services, and unfair or restrictive trade practices. Can order removal of defects, replacement of goods, refund of price, and compensation for loss or injury.
E. Appeal: Appeal against the order of the District Forum lies to the State Consumer Disputes Redressal Commission within 30 days.
Objects of Consumer Disputes Redressal Agencies
The Consumer Disputes Redressal Agencies were established to provide effective, speedy, and inexpensive justice to consumers.
Main Objects:
- Speedy redressal of consumer grievances: To ensure quick settlement of consumer disputes without long court procedures.
- Inexpensive justice: To reduce litigation costs and make justice accessible to all consumers.
- Protection of consumer rights: To protect consumers against defective goods, deficient services, and unfair and restrictive trade practices.
- Simple procedure: To provide a summary procedure without strict technicalities of civil courts.
- Award of relief and compensation: To grant remedies such as replacement of goods, refund of price, and compensation for loss or injury.
- Strengthening consumer confidence: To build trust in the market system by holding sellers and service providers accountable.
Establishment of Consumer Disputes Redressal Agencies
Three-tier consumer redressal machinery (Section 9):
- District Consumer Disputes Redressal Forum: Established by the State Government in each district. Handles cases up to ₹20 lakhs (1986 Act).
- State Consumer Disputes Redressal Commission: Established by the State Government. Handles cases above ₹20 lakhs and up to ₹1 crore. Hears appeals from District Forum.
- National Consumer Disputes Redressal Commission: Established by the Central Government. Handles cases above ₹1 crore. Hears appeals from State Commission.
Consumer Disputes Redressal Machinery (Sections 7–19)
1. State Consumer Disputes Redressal Commission (Sections 7–8)
A. Composition (Section 7): The State Commission consists of a President (a person who is or has been a Judge of a High Court) and members (minimum two; one member must be a woman).
B. Jurisdiction (Section 7):
- Original jurisdiction: Where value of goods/services and compensation claimed is more than ₹20 lakhs but not exceeding ₹1 crore.
- Appellate jurisdiction: Appeals against orders of District Forum.
- Revisional jurisdiction: Can call for records of District Forum if it acted illegally or with material irregularity.
2. District Consumer Disputes Redressal Forum (Sections 9–15)
A. Composition (Section 10): President (a person who is or has been a District Judge) and two members, one of whom must be a woman.
B. Jurisdiction (Section 11):
- Monetary jurisdiction: Complaints where value of goods/services and compensation claimed does not exceed ₹20 lakhs.
- Territorial jurisdiction: Opposite party resides or carries on business, or cause of action arises within the district.
C. Procedure on Receipt of Complaint (Section 13): Complaint admitted and copy sent to opposite party. Opposite party must reply within 30 days (extendable by 15 days). If defect in goods, sample sent for testing in a laboratory. Parties are given opportunity of hearing. Decision is taken on the basis of evidence and records.
D. Findings / Reliefs (Section 14): If complaint is proved, District Forum may order removal of defects, replacement of goods, refund of price, payment of compensation, discontinuance of unfair trade practice, and withdrawal of hazardous goods.
E. Appeal (Section 15): Appeal against District Forum order lies to the State Commission and must be filed within 30 days.
3. State Commission – Procedure and Appeals (Sections 16–19)
A. Procedure (Section 18): State Commission follows the same procedure as District Forum (Section 13).
B. Findings (Section 17): Can pass similar relief orders as District Forum: refund, replacement, compensation, removal of defects.
C. Appeal (Section 19): Appeal against State Commission order lies to the National Commission. Appeal must be filed within 30 days.
National Commission (Sections 20–23)
1. Establishment of National Commission (Section 20): The National Consumer Disputes Redressal Commission (NCDRC) is established by the Central Government. It is the highest consumer redressal authority under the Consumer Protection Act, 1986.
2. Composition (Section 20): The National Commission consists of a President (a person who is or has been a Judge of the Supreme Court of India) and members (minimum four; at least one member shall be a woman). Members are appointed by the Central Government.
3. Jurisdiction of National Commission (Section 21):
- A. Original jurisdiction: Complaints where the value of goods or services and compensation claimed exceeds ₹1 crore.
- B. Appellate jurisdiction: Appeals against orders of the State Consumer Disputes Redressal Commission.
- C. Revisional jurisdiction: Can call for records and pass orders if the State Commission exercised jurisdiction not vested in it, failed to exercise jurisdiction, or acted illegally or with material irregularity.
4. Procedure of National Commission (Section 22): The National Commission follows the same procedure as District Forum (Section 13). It has powers of summoning witnesses, receiving evidence on affidavits, and issuing commissions for examination.
5. Appeal Against Orders of National Commission (Section 23): Appeal against the order of the National Commission lies to the Supreme Court of India. Appeal must be filed within 30 days from the date of the order. The Supreme Court may allow delay if sufficient cause is shown.
Provisions of the Consumer Protection Bill, 2018
- Consumer Protection Councils: Establishment of Central, State, and District Consumer Protection Councils. Objective: Promotion and protection of consumer rights.
- Consumer Disputes Redressal Commissions: The Bill provides a three-tier redressal system: District Commission, State Commission, National Commission.
- Pecuniary Jurisdiction (as per Bill):
- District Commission: Up to ₹1 crore
- State Commission: ₹1 crore to ₹10 crore
- National Commission: Above ₹10 crore
- Central Consumer Protection Authority (CCPA) (New Provision): Establishment of CCPA with powers to protect consumer rights, prevent unfair trade practices, order recall of unsafe goods, and impose penalties on misleading advertisements.
- Product Liability: Introduced product liability provisions. Manufacturers, sellers, and service providers can be held liable for defective products or services. Compensation available for injury, death, and property damage.
- Unfair Trade Practices Expanded: Includes false or misleading advertisements, non-issuance of bills, refusal to take back defective goods, and disclosure of consumer personal data.
- Mediation as an Alternate Dispute Resolution: Provision for mediation cells attached to consumer commissions; encourages speedy and amicable settlement.
- E-commerce Regulation: Special provisions to regulate e-commerce platforms with mandatory disclosures: seller details, product information, grievance redressal mechanism.
- Simplified Complaint Filing: Consumers can file complaints at their place of residence; online filing of complaints allowed.
Negotiable Instruments Act, 1881 – Section 1
Short Title: This Act may be called the Negotiable Instruments Act, 1881.
Extent: It extends to the whole of India.
Types and Characteristics of Promissory Notes (Section 4)
Promissory Note – Section 4
Definition (Brief): A promissory note is an instrument in writing containing an unconditional promise, signed by the maker, to pay a certain sum of money to, or to the order of, a certain person, or to the bearer of the instrument.
Characteristics of a Promissory Note
- In writing: Must be in writing (handwritten, typed, or printed).
- Unconditional promise to pay: The promise to pay must be absolute, not conditional.
- Signed by the maker: The maker must sign the promissory note.
- Certain sum of money: The amount payable must be definite and certain.
- Certain parties: There must be a maker (person who promises to pay) and a payee (person to whom payment is made).
- Payable in money only: Payment must be in legal money, not in goods or services.
- Payable on demand or after a fixed time: It may be payable on demand, or at a fixed or determinable future time.
- No bank involvement as drawee: Unlike a cheque, it is not drawn on a bank.
Types of Promissory Notes
- Demand promissory note: Payable on demand. No specific maturity date mentioned. Example: “I promise to pay ₹10,000 on demand to A.”
- Time promissory note: Payable after a fixed period or on a specific future date. Example: “I promise to pay ₹10,000 to A after three months.”
- Simple promissory note: Contains a simple promise to pay money.
- Conditional promissory note: Payment depends on a condition. Not a valid promissory note under Section 4. Example: “I promise to pay ₹5,000 if I pass the exam.”
- Joint promissory note: Made by two or more persons jointly promising to pay.
- Bearer promissory note: Payable to the bearer of the instrument (subject to legal restrictions).
Bill of Exchange (Section 5)
Definition: According to Section 5 of the Negotiable Instruments Act, 1881, a Bill of Exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.
Essential Elements / Characteristics
- In writing: Must be in writing.
- Unconditional order to pay: It contains an order, not a promise, and must be unconditional.
- Signed by the drawer: Must be signed by the drawer (person who makes the bill).
- Three parties involved: Drawer (person who draws the bill), Drawee (person who is directed to pay), Payee (person who receives payment). (Drawer and payee may be the same person.)
- Certain sum of money: The amount payable must be definite.
- Payable in money only: Payment must be in money, not in goods or services.
- Payable on demand or after a fixed period: May be payable immediately or after a certain time.
- Acceptance by drawee: Must be accepted by the drawee to become enforceable.
Types of Bills of Exchange
- Inland bill: Drawn and payable in India.
- Foreign bill: Drawn in one country and payable in another.
- Demand bill: Payable on demand.
- Time bill: Payable after a fixed period.
- Trade bill: Drawn in respect of a trade transaction.
- Accommodation bill: Drawn without consideration to help someone financially.
Cheque (Sections 6–15)
1. Definition of cheque (Section 6): A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
A cheque is always drawn on a bank and is payable on demand.
2. Essential Characteristics of a Cheque
- In writing
- Unconditional order to pay
- Drawn on a bank
- Payable on demand only
- Certain sum of money
- Signed by the drawer
- Payee must be certain
3. Types of Cheques
A. On the basis of crossing
- Open cheque: Can be encashed at the bank counter.
- Crossed cheque (Sec 123–131): Payment only through a bank account.
B. On the basis of payment
- Bearer cheque: Payable to bearer.
- Order cheque: Payable to a specified person.
C. On the basis of date
- Ante-dated cheque: Date earlier than issue date.
- Post-dated cheque: Date later than issue date.
- Stale cheque: Presented after 3 months (as per banking practice).
4. Meaning of Certain Expressions (Sections 7–9)
- Drawer (Sec 7) – Person who draws the cheque
- Drawee (Sec 7) – Bank on which cheque is drawn
- Payee (Sec 7) – Person to whom payment is made
- Holder (Sec 8) – Person entitled to possession
- Holder in due course (Sec 9) – Bona fide holder for value
5. Capacity of Parties (Section 11)
Every person capable of contracting can draw, endorse, and negotiate a cheque.
6. Consideration (Section 13)
A cheque is presumed to be made for consideration.
7. Negotiation of Cheque (Sections 14–15)
Section 14 – Negotiation: Transfer of cheque to another person to make him the holder.
Section 15 – Endorsement: Signing on the cheque for the purpose of negotiation.
Parties to a Promissory Note
A promissory note involves two main parties:
- Maker: The person who makes the promissory note. He promises to pay the amount. He is the debtor. His liability is primary and absolute.
- Payee: The person to whom the amount is payable. He is the creditor. He receives the money.
Other Possible Parties
3. Endorser: A person who transfers the promissory note.