Law of Torts

LLB 1st Sem

Unit - IV: Consumer Protection

a. Basic Concepts: Consumer, Service, Goods

i.  Authorities for consumer protection

ii.  Remedies

b. Motor Vehicles Act

c. The Competition Act, 2002 -Prohibition of certain agreements, abuse of dominant position and
regulation of combinations

Consumer Protection

The Consumer Protection Act, 1986 has been enacted to provide for the establishment of consumer
councils and other authorities for the settlement of consumers’ disputes and for matters connected
therewith. In fact, the basic motive of enacting this important Act is to provide cheaper and speedy
remedies to the consumers who are in disadvantageous position in comparison with the traders who are
well organized and rule the market.

The Consumer Protection Act, 1986’ extends to the whole of India except the State of Jammu & Kashmir,
and save as otherwise expressly provided by the Central Government, this Act shall apply to all goods
and services irrespective of the sources it has come i.e. whether it is public, private, co-operative or
Government [Section 1]. The Act has come into force on 15.4.1987*

The objects of the Act are as follows:

1. Better protection of interests of consumers. The Act seeks to provide for better protection of
the interests of consumers. For that purpose, the Act makes provision for the establishment of
Consumer Councils and other authorities for the settlement of consumer disputes and for matters
connected therewith.

2. Protection of rights of consumers. The Act seeks, inter alia, to promote and protect the rights
of consumers such as—

a) The right to be protected against marketing of goods or services which are hazardous to life and
property ;

b) The right to be informed about the quality, quantity, potency, purity, standard and price of
goods or services so as to protect the consumers against unfair trade practices ;

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c) The right to be assured, wherever possible, access to goods and services at competitive prices ;

d) The right to be heard and to be assured that consumers' interest will receive due consideration
at appropriate forums ;

e) The right to seek redressal against unfair trade practices or restrictive trade practices or
unscrupulous exploitation of consumers ; and f) Right to consumer education.

3. Consumer Protection Councils. The above objects are sought to be) promoted and protectedby
the Consumer Protection Councils established at the Central and State levels.

4. Quasi-Judicial machinery for speedy redressal of consumer disputes. The Act seeks to provide
speedy and simple redressal to consumer disputes. For this purpose, there has been set up a quasi-
judicial machinery at the district, State and Central levels.

Who is a consumer?

According to Sec-2(1)(d) of the Act, a consumer is a person who purchases any goods or services or hires
or avails the services of some person for his own personal use and not for manufacturing or resale of
that good. For instance, a person purchasing wheat flour for his own personal use is a consumer but a
person purchasing wheat flour for baking bread which he is going to sell in his bakery shape is not a
consumer.

Rights and Duties of a Consumer

The Consumer Protection Act has recognised six rights of a consumer which are :

 Right to Safety
 Right to Information
 Right to Choose
 Right to be heard
 Right to Redressal
 Right to Consumer Education
Duties of a consumer
Every consumer right comes with the opposite duty. Right of one consumer is the duty of the
others. Accordingly, there are various duties such as:-

 On purchasing of goods or hiring of any services, it is the duty of the consumer to pay for
the same.
 While purchasing something it is his duty to check weights, balances, prices etc. and also to
give a careful reading to the labels.
 It is the duty of the consumer to update himself about the various consumer protection
schemes.

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  Duty to be careful while purchasing and not to fall in the trap of misleading information and
advertisements.
 It is the duty of the consumer to not purchase anything from the black markets.
 It is the duty of the consumer to be aware of his rights and duties and also spreading the
awareness of the same among others.
 It is the consumers’ duty to file a complaint if the goods which he purchased are defective.
 Each and every consumer should secure the bills of the goods purchased or the services
availed so that if in the future he finds the goods or services to be defective he can easily file
a complaint against the same and can prove it.
Major definitions
 Complaint– According to Sec-2(1)(c) any allegation made by the consumer regarding any
restrictive or unfair trade practice which the traders have adopted such as goods bought by
a consumer are defective, services hired or availed by him suffer some deficiency, trader has
charged an excessive price of the goods mentioned in the complaint, goods or services
which are hazardous to the life and property of the consumer has been offered for sale to
the public by the trader or the service provider.
 Consumer Dispute– according to Sec-2(1)(e) of the act it is a situation when a person denies
the allegations filed against him in a complaint.
 Person– according to Sec-2(1)(m) of the act the word person includes a registered or
unregistered firm, a Hindu undivided family, co-operative society and any other association
which is registered as a person under the Societies Registration Act of 1860.
 Service– according to Sec-2(1)(o) service means any description or any facility which is
provided to the potential users and is not rendered free of charge or under a contract of
personal service.

Redressal Mechanism

The Consumer Protection Act proposes three-tier redressal mechanism: quasi-judicial machinery at the
National, state and district level. The jurisdiction of each consumer redressal forum has been described
under this act.

District Consumer Disputes Redressal Forum

Each and every district has a District Consumer Disputes Redressal Forum. According to Sec-11 of this
act, this forum has the jurisdiction to entertain complaints and disputes only where the value of the
goods or services and the value of the compensation claimed does not exceed Rs 20 Lakhs. The District
Forum shall have the same powers as that of a civil court in the following matters:

 In the summoning and enforcing of attendance of any defendant or witness

 In examining the witness on an oath
 In receiving the evidence on affidavit
 In any other matter which may be prescribed

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  Demanding of the report of concerned analysis or test from the appropriate laboratory or from
any other authorized relevant source.
 In discovering and producing any document or other material objects which are producible as
evidence in the forum.

The District forum shall consist of a President i.e. the head of the commission who is or has been or is
qualified to be a district judge and two other members possessing a bachelors degree from a recognized
university and one of them shall be a woman.

The members of a commission shall be the persons of ability, integrity and standing and have adequate
knowledge and experience regarding the field of a consumer. Each and every member of the district
forum shall either hold the office for a term of 5 years or up to the age of 65 years, whichever is earlier.

State Consumer Disputes Redressal Commission

Each and every State has a State Commission. According to Sec-17 of the act, the pecuniary jurisdiction
of a State Commission for entertaining complaints or issues where the value of goods or services and
the value of the compensation claimed exceeds Rs. 20 Lakhs but is less than Rs. 1 crore.

The State Commission shall consist of a President and the other two members. The President shall be a
person who is or has been qualified to be a Judge of High Court and the other two members shall be
possessing a bachelors degree from a recognized university. Out of two members, one shall be a
woman.

The members of a commission shall be the persons of ability, integrity and standing and have adequate
knowledge and experience regarding the field of a consumer. Each and every member of the district
forum shall either hold the office for a term of 5 years or up to the age of 67 years, whichever is earlier.

National Consumer Disputes Redressal Commission

The National Commission was instituted in 1988. It is headed by a sitting or retired Judge of the Supreme
Court of India. The present President of the commission is Justice R.K. Agrawal who is a former Judge of
the Supreme Court of India. According to Sec-21 of the act, the pecuniary jurisdiction of a National
Commission for entertaining complaints or issues where the value of goods or services and the value of
the compensation claimed is more than Rs. 1 crore.

The National Commission has been constituted with various powers such as:

 It has the powers of administrative control over all the State Commissions. It can call all the
State Commissions or any one of them for periodical returns regarding the institution, disposal
and pendency of cases.
 It can adopt a uniform procedure in the hearing of the matters.
 It can provide a speedy grant of copies of documents to the parties.
 It also has a general power of overseeing the functioning of the State Commissions and the
District Forums.

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  It has the power of providing prior service of the copies of the documents produced by one
party to the opposite parties.

In addition to the President of the commission, it shall consist of 4 other members, out of which at least
one shall be a woman. All of these members shall fulfil the following conditions to be able to qualify as a
member in the National Commission:

 Their age should not be less than 35 years of age.

 They shall be possessing a bachelors degree from a recognized university.
 They shall be a person of ability, integrity and standing and have adequate knowledge and
experience regarding the field of a consumer.
 Every member of the commission shall hold office for a term of 5 years or up to the age of 70
years whichever is earlier.

Remedies available under the Act

The Consumer Protection Act provides consumers with various remedies. Following are the remedies
available under the act:

 Removal of Defects– if the consumer after conducting a proper test by using the product finds
the product to be defective then the authority can pass an order of removing the defects in the
product.
 Replacement of goods
 Refund of the price paid by the consumer while purchasing the product.
 Award of Consumption– a consumer can demand compensation from the trader or service
provider if because of his negligence the consumer has suffered some physical or any other loss.
 Removal of Deficiency in Service– the authority can pass orders for removal of the deficiency if
there is any deficiency in delivery of the service, for instance, if the consumer has applied for a
loan and has fulfilled all the formalities but the bank is making unnecessary delay in sanctioning
the loan, then the court can pass orders to sanction the loan.
 Discontinuance of Unfair/ Restrictive Trade Practice– if a complaint is filed by the consumer
against any unfair trade practice in the market, the authority can order an immediate
withdrawal of such practice and can also pass an order for banning such trade practice.
 Stopping of sale of hazardous goods
 Withdrawal of hazardous goods from the market.
 Payment of the adequate cost

Motor Vehicles Act

The Motor vehicle Act, 1988, consolidated and rationalized various laws regulating road transport. The
Act came into force with effect from 1st of July 1989.

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After the coming into force of the M.V. Act, 1988, Government received a number of representations
and suggestions from the state Governments, transport operators and members of public regarding the
inconvenience faced by them because of the operation of some of the provisions of the present Act. A
review committee was, therefore, constituted by the Government in March, 1990 to examine and
review the 1988 Act.

The review committee in its recommendations also incorporated the suggestions given by the Supreme
Court in its judgement in the case of “M.K. Kunhimohammed v/s P.A. Ahmed kutty (1987) 4 SCC, 284.

It pertains to raise the limit of compensation payable as a result of motor accidents in respect of death
and permanent disablement in the event of there being no proof of fault on the part of the person
involved in the accident and also in Hit and run motor accidents and to remove certain disparities in the
liability of the insurer to pay compensation depending upon the class or type of vehicles involved in the
accident. Overall the whole objective of the Act is to provide adequate compensation in case of a motor
vehicle accident arising in a public place causing death or disablement to the public. It provides for a
special Tribunal dealing in all cases of M.V. accidents called M.V. Tribunal.

A right which was otherwise available under common law for damages against a tort feasor was
incorporated in motor vehicle act for speedy or expeditious outcome and remedy. (Surendra Kaur vs.
Dharam Singh, AIR, 1985 Delhi 72).

In cases of death or injuries in a motor vehicle accidents compensation may also be claimed u/s 160 of
the act. The act also applies even in cases of injuries not causing death and also to damage to property
(section 110 (1)).

The main object of the act is to provide a speedy remedy instead of a civil suit as is required under Fatal
Accidents Act, 1855. Fatal Accident act is narrower in this sense that it only provides for compensation
only to certain dependents of the deceased and does not apply unless death is caused. The question of
liability of the parties, which was governed by the “Law of Torts” is unaffected by the act. As to the
principles of measures of damages under this act the amount is to be determined as appears to the
tribunal to be just to canalize this wide discretion certain rules have been made, they are:

1. The amount of compensation must be reasonable and must be assumed with moderation.

2. Regards must be had to awards in comparable cases.

3. The sum awarded should, to a considerate extent, be moderate.

Case Law: Vinod Kumar Shrivastava vs. Mitra Vohra, AIR 1970, M.P., 172.

While fixing the amount of compensation/damages the tribunal should ascertain and determine under
different heads pecuniary and non-pecuniary damages awarded. (The S.C. in Sheikhpura Transport Co.
vs. N.I.T Insurance Co. AIR 1971, S.C. 1624 followed in “Babu Singh vs. Champa Devi AIR, 1974 All. 90)

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Held that for fixing compensation u/s 168 of the Motor Vehicle Act, 1988 and (section 110 of M.V. Act,
193) the general principle is that the balance of loss and gain to a dependent must be ascertained.

Liability without fault

1. Liability u/s 140: With the increase in number of accidents and insurance facilities there has been
recent trends toward liability without fault so that an innocent victim should not be left without remedy
because every person has a right to safety and security of his person irrespective of fault or negligence
or carelessness or efficient functioning of the motor vehicle.

Section 140 of the Motor Vehicle Act, 1988 provides that where death or permanent disablement of any
person results from an accident arising of the use of a motor vehicle or motor vehicles, the owner or
owners shall jointly or severely be liable to pay compensation in respect of such death or disablement.
The amount of compensation has been fixed at Rs. 50,000 in case of death w.e.f. 1994 and Rs. 25,000 in
case of disablement.

Section 140 does not create any new right or liability. It is a beneficial provision in the nature or interim
relief and part of liability created by the general provisions of the act. An insurer cannot be absolved of
liability to satisfy award passed u/s 140 if vehicle is insured.

In any claim of compensation u/s 140 claimed shall not be revive to plead established that the death or
disablement in respect of which the compensation has been claimed was due to any wrongful act,
neglect or default of the owner of the vehicle or any other person or the person died or disabled or of a
victim claim for the compensation under any other law shall not be defeated because of compensation
revived u/s 140 but amount of compensation under any other law shall be reduced from the amount
payable u/s 140 or u/s 163 of the act.

Section 141 where compensation is payable in both the sec 140 and 163 A, person responsible must first
pay u/s 140 and if compensation u/s 163 is more than what is payable u/s 140 then he shall pay the
remaining amount.

2. Section 140 is dependent of section 166:It is independent of section 161(hit and run case), section
163A (compensation under structural formula) or section 166(fault liability).

Special provisions for compensation in case of hit and run motor accidents, section 161 to 163 of the
M.V. Acts, 1988, provides for compensation in cases of hit and run motor accidents, that is, cases in
which identity of motor vehicle or vehicle causing accidents cannot be traced.

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Section 161 provides G.I.C of India and the insurance companies carrying on general insurance business
in India shall provide for compensation in cases of death or grievous hurt resulting from hit and run
motor accidents. Death compensation amount fixed to a sum of Rs. 25,000 and amount fixed for
grievous hurt is sum of Rs. 12,500.

U/ s 162:provided that if compensation or other amount in liable of claim for compensation is paid
under any other section of Motor vehicle Act, 1988 or any other law. The amount paid u/s 161shall be
refunded to the insurer.

U/s 163: provides or authorities central govt. to make a scheme specifying the manner in which the
scheme shall be administered by G.I.C.

3. Compensation on structured formula basis sec 163A (1994 amendment):Section 163A (1)
provides for the compensation in case of death or permanent disablement or indicated in the second
schedule.

Section 163A(2) for any under sub sec (1) of this act: the claim shall not be required to plead or establish
that the death or permanent disablement was due to wrongful act or neglect or default of the owner of
the vehicle or any other person. It is also liability without fault. Sub-sec (3) provides that keeping in view
the cost of living the central govt. may from time to time award the schedule by notification in the
official Gazette.

The purpose of enacting this new provision was to give instant relief to the victim, because the fledged
trial u/s 166 takes number of years which sometimes makes the life of the victim or the dependents
miserable and makes the mockery of justice.

4. Section 163B (Amendment act of 1994): provides that where a person is entitled to claim
compensation u/s 140 as well as u/s 163A, he shall file the claim under any one section and not under
both.

Claim tribunals and award of compensation

A new forum i.e.; Motor Accidents Claim Tribunal has been created by the M.V. Act for cheaper and
speedier remedy to the victims of the accidents of the motor vehicles.

It excludes the jurisdiction of civil courts (sec 175) and unlike civil courts in this tribunal there is no
necessity of payment of advelorem court fee.

It can follow summary procedure

An appeal lies directly to high court against the decision of the tribunal(sec 173).

It lays down self-contained code of procedure for adjudication of claims. It does not lay down any
substantive law, and the claim tribunal has still to look to the substantive law of torts or acts like Fatal
Accident Act, 1855.

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It is the duty of the state govt. to establish or constitute one or more motor accidents claim tribunals by
way of notification in the official Gazette, for such area as may be notified.

It shall consist of such number of members as the state govt. may think fit to appoint where there are
two or more members one of them will act as chairman (who has been a judge of H.C. or D.S.).

Matters of adjudications by the tribunals: According to sec 165, the claim tribunals are constituted for
the purpose of adjudicating upon claims for compensation:

1. In respect of accidents arising out of the use of motor vehicle and,

2. Involving:

a. the death or bodily injury to the person.

b. damage to any property of third party so arising, or

c. both.

The claim tribunal has jurisdiction to entertain claims for compensation when an accident arises out of
the use of motor vehicle. The use of the vehicle may have been either in a public place or a private place
[liability of insurer u/s 147 in public place].

Competition Act

In the wake of liberalization and privatization that was triggered in India in early nineties, a realization
gathered momentum that the existing Monopolistic and Restrictive Trade Practices Act, 1969 ("MRTP
Act") was not equipped adequately enough to tackle the competition aspect of the Indian economy.
With starting of the globalization process, Indian enterprises started facing the heat of competition from
domestic players as well as from global giants, which called for level playing field and investor-friendly
environment. Hence, need arose with regard to competition laws to shift the focus from curbing
monopolies to encouraging companies to invest and grow, thereby promoting competition while
preventing any abuse of market power.

Competition: meaning and benefits

Competition is a situation in market, in which sellers independently strive for buyer’s patronage to
achieve business objectives. Competition and liberalization, together unleash the entrepreneurial forces
in the economy. Competition offers wide array of choices to consumers at reasonable prices, stimulates
innovation and productivity, and leads to optimum allocation of resources.

Abuse of market and need for new law

In an open market economy, some enterprises may undermine the market by resorting to anti-
competitive practices for short-term gains. These practices can completely nullify the benefits of

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competition. It is for this reason that, while countries across the globe are increasingly embracing
market economy, they are also re-inforcing their economies through the enactment of competition law
and setting up competition regulatory authority.

In line with the international trend and to cope up with the changing realities India, consequently,
enacted the Competition Act, 2002 (hereinafter referred to as "the Act"). Designed as an omnibus code
to deal with matters relating to the existence and regulation of competition and monopolies, the Act is
intended to supersede and replace the MRTP Act. It is procedure intensive and is structured in an
uncomplicated manner that renders it more flexible and compliance-oriented. Though the Act is not
exclusivist and operates in tandem with other laws, the provisions shall have effect notwithstanding
anything inconsistent therewith contained in any other law.

ANTI-COMPETITIVE AGREEMENTS

The departure is reflected in section 3 of the Act, which states that enterprises, persons or associations
of enterprises or persons, including cartels, shall not enter into agreements in respect of production,
supply, distribution, storage, acquisition or control of goods or provision of services, which cause or are
likely to cause an "appreciable adverse impact" on competition in India. Such agreements would
consequently be considered void.

The species of agreement which would be considered to have an ‘appreciable adverse impact" would be
those agreements which:

 Directly or indirectly determine sale or purchase prices;

 Limit or control production, supply, markets, technical development, investment or provision of
services;
 Share the market or source of production or provision of services by allocation of inter alia
geographical area of market, nature of goods or number of customers or any other similar way
 Directly or indirectly result in bid rigging or collusive bidding.

Further, the agreements, which are entered into in respect of various intellectual property rights and
which recognize the proprietary rights of one party over the other in respect of trademarks, patents,
copyrights, geographical indicators, industrial designs and semi conductors have been withdrawn from
the purview of "anti competitive agreements". The inherently monopolistic rights created in favour of
bona fide holders of various forms of intellectual property have been treated as sacrosanct.

ABUSE OF DOMINANT POSITION

Section 4 of the Act enjoins, "no enterprise shall abuse its dominant position". Dominant position is the
position of strength enjoyed by an enterprise in the relevant market, which enables it to operate
independently of competitive forces prevailing market, or affect it’s competitors or consumers or the
relevant market in it’s favour. There shall be an abuse of dominant position if an enterprise indulges into
the below mentioned activities:

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 Directly or indirectly imposing discriminatory conditions in the purchase or sale of goods or
service, or setting prices in the purchase or sale (including predatory pricing) of goods or
services;
 Limiting or restricting the production of goods or provision of services or market therefore; or
limiting technical or scientific development relating to goods or services to the prejudice of
customers;
 Indulging in practice or practices resulting in the denial of market access
 Making conclusion of contracts subject to acceptance by other parties of supplementary
obligations, which has no connection with the subject of such contract;
 Utilization of the dominant position in one relevant market to enter into, or protect, another
relevant market.

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