History of the Consumer Protection Act in India

Prior to the Consumer Protection Act there was no specific product liability theory in India or any legislation
which was made solely for protecting the interest of the consumer in India. In the absence of a statutory law,
courts were guided by the principles of justice, equity and good conscience and more than often guided by the
provisions of English Law.

Some of the laws which have protected the interest of the consumers against faulty products would include,
among others:

 The Indian Contracts Act 1872;

 The Sale of Goods Act 1930;
 The Drugs and Cosmetics Act, 1945; and
 The Prevention of Food Adulteration Act, 1954.
 The Monopolies and restrictive trade Practices Act.

Though these laws touched on product liability to some extent, none of them could lay a comprehensive legal
framework. These statutes were not able to identify a particular individual or entity in the supply chain against
whom a consumer could raise a complaint. Thus, it was the need of the hour to establish a statutory law which is
made only for protection the rights of the consumer and safeguard their interests.

A. What is meant by Consumer in law?

 The ancient man moved from place to place to hunt for food. He ate whatever he could find, such as fruits,
nuts, berries, sweet-roots and flesh of animals. He made use of wood and dry leaves from forests to make
free to keep himself warm and also to tenderize the meat he hunted. Today man has evolved into a seasoned
producer and consumer of a large variety of goods and services. At present some people produce the goods
and provide services required by others in exchange for money in a well-developed market system. Thus,
the concept of consumer, who may be described as a person buying a product or obtaining services from the
market for his own use or consumption has come into existence.

 Meaning: A consumer is defined as a person who buys goods and services and makes use of public utilities
as well as natural resources like air and water. In its most basic sense, it refers to those who use goods and
services for the satisfaction of their personal wants thus excluding buyers who purchase for manufacturing
purposes or for resale.

EXCEPTION- A person is not a consumer if he purchases goods for commercial or resale purposes.
However, the word "commercial" does not include use by consumer of goods bought and used by him
exclusively for the purpose of earning his livelihood, by means of self-employment.

 Definition: Section 2 (7) of the Consumer Protection Act, 2019 Define ‘Consumer’ as any person who—
 (i) buys any goods for a consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and includes any user of such goods other than the
person who buys such goods for consideration paid or promised or partly paid or partly promised, or
under any system of deferred payment, when such use is made with the approval of such person, but
does not include a person who obtains such goods for resale or for any commercial purpose; or
(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.

 In Spring Meadows Hospital vs. Harjit Ahuluwalia (1998), the Supreme Court held that a consumer would
mean a person who hires or avails of any services and includes any beneficiary. Therefore, when a young
child is taken to a hospital by his parents and treated by the doctor then the parents and the child would
come under the definition of a consumer.

B. Service

 Meaning: The word service forms the essential component under the Act. The Consumer dispute arises if
there is a deficiency of services under the Act. Section 2 (42) define ‘Service’ as
"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, insurance, 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;

 Characteristics of Services-
(i) Two party process – there has to be a service provider and service recipient. 
(ii) It has to be intangible and invisible, i.e., it cannot be seen or touched.
(iii) It has to be for a consideration – according to the Indian Contract Act, a contract without consideration
is void.
(iv) Merely may be made available, actual utilization not necessary. If made available, it would be
considered as service. It is not mandatory for the other party to use it. 
(v) It cannot be a personal service. 
(vi) It can be in any manner such as by rendering(doctor), by performing(mechanic), by providing, by
delivering(courier).

 Medical Facility as a Service

The doctor owes certain duties to the patient who consults him for illness. A deficiency in this duty results in
negligence. The Supreme Court in Parmanand Kataria vs. Union of India , stated that “every doctor, at the
governmental hospital or elsewhere, has a professional obligation to extend his services with due expertise for
protecting life”

In respect of services, the beneficiary of such service is also a consumer. According to Indian Medical
Association vs. V. P. Shanta case it was decided that medical practitioners are not immune from a claim for
damages on the ground of negligence. The patients who are rendered free service are the beneficiaries of the
services hired by the patients who paid for the services.

 Obligations of the Service Provider

 The service must be carried out with reasonable care and skill.
 The information said or written to the consumer is binding where the consumer relies on it. 
 The cost of the service must be reasonable.
 The service must be carried out within a reasonable time
 To provide services which conform to the warranty or the terms and conditions mentioned in
the contract.
 To provide services which are not faulty, imperfect, deficient or inadequate, or
 To provide adequate instructions and warning to prevent harm.

 Rights of the Service Seeker

 Right to get protection from the harmful or hazardous products.

 Right to get information about the service and the products.
 Right to know about the misleading advertisement.
 Right to get protection from Unfair Trade Practices.
 Right to get reasonable service.
 Right to seek redressal against any unfair practices.
 Right to be aware of the services.

C. Goods
 Section 2 (21) of the Act defines ‘goods’ "goods" means every kind of movable property and includes
"food" as defined in clause (j) of sub-section (1) of section 3 of the Food Safety and Standards Act, 2006;

 Section 2(7) of the Sale of Goods Act, 1930, defines ‘goods’ as - “Goods means every kind of movable property
other than actionable claims and money; and
includes  stock  and  shares,  growing  crops,  grass,  and   things  attached  to  orforming part of the land which
are agreed to be severed before sale or under the contract of sale.”
 The definition reveals that—
   (a)   Goods must be movable;
   (b)   Things attached to or forming part of land which can be severed satisfy the movability criteria;
   (c)   Actionable claim and Money have been specifically excluded from definition of goods.

 Obligation of the Seller of the goods

 The seller should sell only the genuine products.
 The seller should not be involved in unfair trade practices.
 The seller should not sell the product as any rate other than what is mentioned in the MRP.
 The seller should provide for warranties and guarantee and should abide by it.
 The seller should focus on the consumer needs.
 The seller should focus on the content and quality of the products.
 The seller should give full information of the product to the consumer.
 The seller should not indulge into false advertisement of the products.
 The seller should not sell spurious products.
 The seller should give bills and maintain proper records of the sales.

 Obligation of the Buyer of the goods.

 The buyer should only buy genuine products.
 The buyer should not pay more than the MRP mentioned on the product.
 The buyer should always take the bills of the products.
 The buyer should have all the information relating to the product.
 The buyer should have right to get the product replaced or refund in case of guarantee.

D. What is meant by defect in Goods?

 Definition: Section 2(10)- "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.

 This is an exhaustive definition. It means that the Act recognises only those defects which are covered by the
definition. Any type of defect not mentioned here will not be entertained by Consumer Forums. Moreover, the
defect has to be in relation to goods only, i.e., if an item does not fall within the definition of ‘Goods’, no defect
can be complained therein. However, the coverage of this definition is very wide.
 Case laws

 A Pressure Cooker burst and caused injury to the user. It was held to be a manufacturing defect - T.T.
(P.) Ltd. v. Akhil Bhartiya Grahak Panchayat II 1996.
  Failure to handover registration book along with jeep purchased by complainant is a defect . [Ramesh
Chandra v. Commercial Tax Officer 1993.

 Where laboratory test report showed that soft drink was not fit for human consumption, it was held
defective - Narayanan Vyankatkrishnan Iyengar v. Shakti Foods [1994]

E. What is meant by deficiency in Service?

 When a service is found deficient by a consumer, he can make a complaint under the Act. Thus, the prime
requirement is that the matter must fall within the definition of service, and it must entail a deficiency as per the
norms given by the Act.
 Definition: Section 2 (42) define ‘Service’ as "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, insurance, 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;
 The definition provides a list of eleven sectors to which service may pertain in order to come under the purview
of the Act. The list of these sectors is not an exhaustive one. Service may be of any description and pertain to any
sector if it satisfies the following criteria:

 service is made available to the potential users, i.e., service not only to the actual users but also to those who
are capable of using it.

 it should not be free of charge, e.g., the medical service rendered free of charge in Government hospital is
not a service under the Act;

 it should not be under a contract of personal service.

 The expression ‘contract of personal service’ is not defined under the Act. In common parlance, it means - a
contract to render service in a private capacity to an individual. For example, where a servant enters into an
agreement with a master for employment, or where a landlord agrees to supply water to his tenant, these are the
contracts of personal service
 There is a difference between ‘contract of personal service’ and ‘contract for personal service’. In case of
‘contract of personal service’, the service seeker can order or require what is to be done and how it should be
done. Like a master can tell his servant to bring goods from a particular place. But in a ‘contract for personal
service’, the service seeker can tell only what is to be done. How the work will be done is at the wish of the
performer. Like when a person gives a suit to the tailor for stitching, he does not tell him which method he should
use to stitch it. ‘contract of personal service’ is excluded from the definition of service, ‘contract for personal
service’ is recognised as service under the Act.
 Example: A applied for electricity connection for his flour mill to Rajasthan State Electricity Board. The Board
delayed in releasing the connection. It was held deficient in performing service. Some other
sectors/professionals/services which are not specified in the definition of service but which have been considered
by the Consumer Forums as service sectors from time to time are listed below: Advocates, Airlines, Chartered
Accountants, Courier, Chit Fund, Education, Gas Cylinder/LPG, Medical services, Postal services, Railways,
 Investment related services, and Telephone services. Thus, the test is - whether the person against whom the
complaint is made performs a service for consideration which is sought by a potential user.

 Section 2 (11) "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;

 Reading the above definition by breaking it into elements, we get—

(a) “deficiency” means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of

performance.

Example: A boarded a train. The compartment in which he and his wife travelled was in a bad shape-fans not
working, shutters of windows were not working, rexin of the upper berth was badly torn and there were rusty
nails which caused some injuries to the wife of A. A made a complaint against the railway department. It
was held that the complaint constituted ‘deficiency in service’ and the compensation of Rs. 1500 was
awarded to A - General Manager, South Eastern Railway  v.  Anand Prasad Sinha I  1991
(b) Such quality and manner of performance of service should have been required to be maintained by or under
any law for the time being in force or undertaken to be performed by a person in pursuance of a contract or
otherwise.
 Example: A, the builder, promised under written agreement to provide a flat to B. Subsequently he
expressed his inability to give possession of the flat and entered into a fresh agreement to pay Rs. 9,51,000
to B in place of flat. A didn’t even pay this money. B sued A. The Commission held that since A had not
even paid the money as per subsequent contract, the rights of earlier contract can be involved by B. And that
there was a deficiency of service on the part of builders - Lata Construction v. Dr. Rameshchandra
Ramniklal Shah AIR 2000

c)   The deficiency must be in relation to a service - The words ‘....in relation to any service’ in the definition
signifies that the deficiency is always in terms of service. Thus, if the grievance pertains to a matter which
does not fall in the definition of service, the concept of deficiency would not apply.

           Example: A deposited Rs. 100 with B as application fee and executed bond for the purpose of drilling
tubewell. B did not drill the tubewell because it was not feasible. A alleged deficiency in service. It was held
that depositing Rs. 100 as application fee and executing a bond does not amount to hiring of services, thus
the deficiency of service cannot be complained of in the matter - Mangilal v. Chairman District Rural
Development Agency [1991]

F. Warranty
 A warranty provides a promise from one party to the other that certain conditions, such as the quality or life
span of a product, will be met. If the product doesn’t meet the conditions of the warranty, it can usually be
returned, repaired or replaced.

 Any promise about the quality, condition, or reliability of a product that a seller makes and that you rely upon
when buying a product can create a warranty or guarantee. A direct statement, either verbally or in writing,
promising that a product will meet specific expectations creates an express warranty. For example, if a car
salesperson promises a minimum gas mileage for a particular vehicle, they have created a warranty. However,
even though warrantees can be created orally, it’s smart to ask for them in writing as well, in order to create a
record of the merchant’s promise

 Section 2(20) of the Act defines "express warranty" means any material statement, affirmation of fact, promise
or description relating to a product or service warranting that it conforms to such material statement,
affirmation, promise or description and includes any sample or model of a product warranting that the whole of
such product conforms to such sample or model; The benefit of a warranty is that it normally protects you from
having to pay for repairs if the item breaks or becomes faulty within the period covered by the warranty.

 The purpose of warranty is

 Allocation of risk between buyer and seller.
 It encourages the seller to make all the necessary disclosure about the warranty.
 Allows the buyer to set purchase price.
 Enable the buyer to have protection through indemnities for known liabilities and in extreme
circumstances can withdraw acquisition.

 Breach of Warranty

If there is a breach of warranty then the buyer can seek for damages. The buyer is being compensated for the
loss. They are put in the position in which they would have if the breach would not be done. In our Consumer
Protection (CP) Act, breach of warranty is unfair trade Practice. To claim for damages the buyer has to prove
that:

 The warranty is untrue and breach has been done.

 Loss or damage is been suffered by the buyer.
 The loss caused is because of breach of warranty.
 The loss is not too remote i.e. it could have easily been foreseeable.
 They have taken reasonable steps to mitigate loss.

Section 84-86 of the Act deals with the liability of the Manufacturer in case of breach of the warrant
Section 84 –The product manufacturer shall be liable in a product liability action.
Section 85- A product service provider shall be liable in a product liability action in case of breach of warranty.
Section 86 - A product seller who is not a product manufacturer shall be liable in a product
liability action.

G. Guarantee

 A guarantee is an agreement from the manufacturer confirming that they will repair or replace an item if
something goes wrong within a certain amount of time after you buy it. Household products like electrical
appliances and furniture often come with a guarantee.

 Guarantee is a commitment made by the manufacturer to the buyer. Just like a guarantor stand behind a
loan the manufacturer stands behind the product. If a product under guarantee is of low quality, it will be
either repaired/replaced, or the money paid will be refunded to the buyer

 Essentials of Guarantee
 It should be unconditional Guarantee
 It should be beneficial to the consumer
 It should be easy to understand and communicate.
 Easy to invoke and collect
 It should contain elements that are important to customer.
 Examples: Guarantee

A food maker ‘guarantees’ the quality of a packaged food and may refund the customer if the general
quality or flavour fails to satisfy.
This isn’t an explicit promise because, if the food is past its expiration date, the food maker is unlikely to
offer a refund

The consumer Protection Act does not define the Guarantee as such but it lays down that, the breach of
guarantee of a product of services amounts to unfair trade practices under section 2 (47) of the said act.

H. What is meant by spurious goods and services?

 Under Section 2 (43) of the Act, "spurious goods" means such goods which are falsely claimed to be
genuine;

 Spurious product is those products which have a look like name identity, colour, pattern, design and could
have same identical name. They are counterfeit or fake product. These are products that are similar in
shape, size and colour to the prominent brands. Manufacturers of such spurious brands mostly ride
piggyback on the advertising campaign of larger players and establish their own brand in the region. The
 packaging is similar to that of established brands, and youmay have a ‘Viggo’ instead of a ‘Vicco’ or a
‘Pomes’ instead of a ‘Ponds’.

 Why Spurious Goods are manufactured?

 The major motivation of such companies is only making profit and not safe products.
 They are more inclined towards the packaging and not the content and quality of the products.
 The Products are sold at a lesser value than the original product.
 Long supply chain
 Huge gap in demand and supply

 Measures to Counter Spurious Products

 Putting up 3-d Holograms on the product.
 Printing the bar codes across the products.
 Laws on piracy and copying.
 Government should keep an eye on such kind of illegal activities being manufactured in the factory.
 Public awareness as to identify which products are genuine.
 More promotion campaigns for the genuine products.
 Buying of the products from a genuine retailer.

 Types of spurious goods.

Spurious goods are of two types –

 counterfeit products- Counterfeit products are fake products that bear identical name of product/
packaging/graphics/colour scheme and even same name and address as the genuine manufacturer.
Someone produces these to look exactly like real products other than the legal owner of the real
products, trademarks and product packaging.  Sometimes it is becoming more and more difficult to tell
which is the real "Ponds" talcum powder and "Clinic Plus" shampoo from the fake products.
 Pass-off products use similar sounding or are similar in spelling (for example "Luk" for "Lux", "510"
for "501", "Saveena" for "Sabeena", "Sun Max" or "Super Master" i.e. they spell alike and look alike.
They use similar type of packaging or colour or designs.  They come out with the motive of misleading
and cheating ordinary consumers who are uneducated or in a hurry in purchasing products.
 Section 91 of the Consumer Protection Act, 2019 – Punishment for manufacturing or for sale or for
storing or selling or distributing or importing spurious goods.
If the product has not caused grievous hurt then - imprisonment for a term which may extend to one
year and with fine which may extent to three lakh rupees.
If the product has caused grievous hurt – imprisonment for a term which may extend to seven years and
with fine which may extend to five lakh rupees.
In case of death - imprisonment for a term which shall not be less than seven years, but may extend to
imprisonment for life and with fine which shall not be less than ten lakh rupees
 In Time Warner Inc. vs. Lokesh Srivastava & Anr   2006 the defendant started publishing a
magazine TIME ASIA SANSKARAN whose cover was similar to that of TIME magazine. It gave
an impression that the first mentioned magazine is an Indian edition of world-famous TIME
magazine. In this case also all the above-mentioned reliefs were granted.
In Microsoft Corporation vs Mr. Kiran And Anr 2007.  Microsoft alleged selling of counterfeit
products by the defendant. The defendant sold pirated versions of Microsoft’s operating systems.
The court awarded compensatory damages of Rs. 5 lakhs, costs and permanent injunction against
the defendant.

I. What is meant by unfair trade practice?

 Section 2(47) The Act defines Unfair trade Practice. In short Unfair trade practice can be categorized as
under-
 False representation of goods and services in regard with the standard and quality
 False offer of bargain price
 Free gifts offer and prize schemes
 Noncompliance of prescribed standards
 Hoarding, destruction etc.
 Illustrations of Unfair Trade Practices:
 A dress has been used for 2 months and is now being sold by a seller as a new dress.
 The battery of a mobile phone is guaranteed to work well for one year but wears away in a month.
 A geyser that is not ISI approved has an ISI mark.
 A table of Rs. 500 is sold online with Rs. 600 delivery charge, but the good is claimed by the seller to
be free of cost.
 Remedies
 Removal of the defect pointed out by the appropriate laboratory from the goods.
 Replacement of the goods with the new goods of similar description, which are free from similar
defects.
 Refund to the complainant.
 Compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of
the opposite party.
 Removal of the defects or deficiencies in the services in question;
 Discontinuation of the unfair trade practice or the restrictive trade practice or not to repeat.
 Not to offer the hazardous goods for sale.
 Withdrawal the hazardous goods from being offered for sale and
 To provide for adequate costs to parties.

In re Chloride India Ltd., the respondent is the manufacturer of batteries, which was fitted on Rajdoot Motor
Cycles, which carry 12 months warranty. The battery supplied to the complainant developed trouble during the
warranty period. The defective battery was however, not repaired or replaced within reasonable time. The
respondent was held to have indulged in unfair trade practice.
Section 89 of the Act- Punishment for false or misleading advertisement.

Section 94 – The Central Government may take such measures to prevent the unfair trade practices.

J. Who is not a consumer?

 Under the consumer Protection Act, 2019 the person who does not come under the definition of consumer
under Section 2(7) is not a consumer for the purpose of this Act.
 A person is not a consumer if he/she:
 purchases any goods or avails any service free of charge;
 purchases a good or hires a service for commercial purpose;
 avails any service under contract of service

 Contract of Service – It implies a relationship of a master and servant and involves to obey the order in the
works to be performed and as to its mode and manner of performance. This does not come within the
purview of CP Act.
 Contract for Service – It implies a contract whereby one party undertakes to render services e.g., profession
or technical services to or for another in the performance of which, he is not subject to detailed direction
and control but exercises professional skills and uses his own knowledge and decisions.
 Any person who obtains the goods for resale or for commercial purposes is not a consumer - The term ‘for resale’ implies that

the goods are brought for the purpose of selling them, and the expression ‘for commercial purpose’ is intended to
cover cases other than those of resale of goods. When goods are bought to resell or commercially exploit them,
such buyer or user is not a consumer under the Act.
  Example-  A jeep was purchased to run it as a taxi. The question was whether the buyer of the jeep was a
consumer under the Act. The Rajasthan State Commission held that to use the jeep as a taxi with the object to
earn profits was a commercial purpose, and therefore, the buyer/user was not a consumer within the meaning of
the Act. [Smt. Pushpa Meena  v.  Shah Enterprises (Rajasthan) Ltd.  (1991)
 In Raj Kumar vs. S. C. Verma, 2001 it was held that persons buying goods either for resale or for use in
large scale profit-making activity would not be 'consumers' entitled relief under the Act.