Consumer Protection Act

MET INSTITUTE OF COMPUTER SCIENCE
BUSINESS LAW
NEED FOR CONSUMER PROTECTION ACT IN AN ERA OF FREE COMPETITION WHERE CONSUMER IS A KING AND THEREFORE KING NEEDS PROTECTION
MET-PGDM DIV A Group 2
Bhavya Thakker Nikhil Desai Rachna Raichandani Jatann Khona Rohan Shah Neha Asher Ankita Medhi Pradeep Yadav Mithun Sagar Ankit Dani
The Consumer Protection Act, 1986
CONTENTS
1. 2. INTRODUCTION ............................................................................................................. 1 DEFINITIONS ................................................................................................................... 2 2.1 2.2 CONSUMER............................................................................................................... 2 PERSON...................................................................................................................... 3 INSTANCE OF PERSONS HELD AS CONSUMERS ...................................... 3 INSTANCES OF PERSONS NOT HELD AS CONSUMERS .......................... 3
2.2.1 2.2.2 2.3 2.4 2.5
TRADER ..................................................................................................................... 4 MANUFACTURER .................................................................................................... 4 RESALE AND COMMERCIAL PURPOSE ............................................................. 4
2.5.1CASE: Laxmi engineering works v/s P.S.G. Industrial Institute ................................... 6 2.6 2.7 2.8 2.9 COMPLAINANT ........................................................................................................ 7 COMPLAINT.............................................................................................................. 8 CONSUMER DISPUTE ............................................................................................. 8 SERVICE .................................................................................................................... 8
2.9.1 WHAT ARE TO BE HELD AS SERVICES? .......................................................... 9 2.9.2 WHAT ARE HELD NOT TO BE SERVICES?..................................................... 10 3. 4. UNFAIR TRADE PRACTICES ...................................................................................... 11 RESTRICTIVE TRADE PRACTICE ............................................................................. 14 4.1 DEFECTS ...................................................................................................................... 14 4.2 DEFICIENCY ................................................................................................................ 14 5. 6. RIGHTS OF CONSUMERS............................................................................................ 16 CENTRAL CONSUMER PROTECTION COUNCIL ................................................... 19 6.1 STATE CONSUMER PROTECTION COUNCILS (SCPCs) & DISTRICT CONSUMER PROTECTION (DCPCs) .............................................................................. 20 6.2COMPUTERISATION AND COMPUTER NETWORKING OF CONSUMER FORA: (CONFONET)...................................................................................................................... 20 6.2.1 6.2.2 7. OBJECTIVES .................................................................................................... 21 WEAKNESS:..................................................................................................... 22
The Consumer Guidance Society of India (CGSI) .......................................................... 23 7.1 Campaigns undertaken by CGIS ............................................................................... 27
7.1.1 Multi Media Publicity Campaign............................................................................ 27 7.1.2 in India International Trade Fair ............................................................................. 28 7.1.3 Joint Campaign ....................................................................................................... 29 7.1.5 The Future Roadmap............................................................................................... 29 8. CONSUMER DISPUTES REDRESSAL AGENCIES ................................................... 31 8.1 A COMPARITIVE STUDY .......................................................................................... 31 8.2 PROCESS UNDER CONSUMER PROTECTION ACT ............................................. 34 8.3 RELIEF OF THE COMPLAINT: .................................................................................. 34 8. COMPARISON OF LAWS ............................................................................................. 35 9.1 Republic of China (Taiwan)........................................................................................... 35 9.2 United Kingdom............................................................................................................. 35 9. CASE STUDIES .............................................................................................................. 36 10.1 CASE STUDY 1: McDonalds .................................................................................... 36 Case Study 2: Lilavati .......................................................................................................... 44 10. 11. AMenDMENTS OF CONSUMER PROTECTION ACT ........................................... 49 QUESTIONNAIRE ...................................................................................................... 51
NEED FOR CONSUMER PROTECTION ACT IN AN ERA OF FREE COMPETITION WHERE CONSUMER IS A KING AND THEREFORE KING NEEDS PROTECTION
THE CONSUMER PROTECTION ACT, 1986 1. INTRODUCTION Consumers till lately, were neglected totally by the manufactures, traders or businessmen. The producers and businessmen enjoyed a lot of dominance over the customers. This situation grew more and more, as lack of consumers accountability towards the manufacturers. Also that was the period when no foreign competition prevailed in India, which made the manufacturers finality for the consumers. Whenever the instances of the right of consumers being practiced on foreign soils were narrated, those just sounded like fairy tales to the Indians. Now, the caveat emptor rule namely let the buyer beware in sale of goods act 1930, sprout the root of consumer interest in consumer protection. There were acts such as prevention of food adulteration act, essential commodities act, drugs control act, etc. But these did not prove to be sufficient. But day by day the consumers started becoming aware about their rights as a consumer were being crushed. The consumer is a king, got recognition amongst the Indian people. Recognizing and exercising the rights of the consumer, makes the producer more creative and innovative. Producer had to then realize that the people are becoming more aware and expect the full value for their money whether he purchases tangible or intangible goods. Also a manufacturer taking responsibility of any defective of deficient goods or services provided to the consumer would cause a lot of improvement. All this would happen only if along with educating the consumer, it was very important that some inexpensive reliefs to be launched. United Nations passed the resolution of consumer protection in April 1985. For consumer safety and protection from health hazards, it was essential for this law to be present in developing countries. Finally in 1986 THE CONSUMER PROTECTION ACT was enacted in India. It was then amended by Consumer Protection Amendment Act 1993.
2. DEFINITIONS 2.1 CONSUMER The term consumer has been defined by Sec 2(d) of the Consumer Protection Act, 1986 as any person: (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 services 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 services 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 services for any commercial purposes. Consideration may have been paid or promised, or partly paid and partly promised. A person may also buy the goods or may hire or avail of the services under any system of deferred payment. Buying of goods and hiring of services has to be necessarily for a consideration. There should be a completed transaction of sale and purchase. Consideration could be in cash or in kind. A person claiming himself as consumer should satisfy, among others, three conditions, namely (i) the service should have been rendered to him, (ii) the service should be hired by him, and (iii) he should have paid the consideration for hiring the service. Caselet: The national commission, in a revision petition, filed by Mr. Bajpai, against dismissal of his appeal by Uttar Pradesh State Commission, alleging deficiency in the Central Government Health Scheme (CGHS) medical services, held that Consideration could be in cash or kind. The service, rendered by a government employee before retirement would 2
form the Consideration in kind for providing medical facilities to him or his family members even after retirement. 2.2 PERSON "Person" includes,(i) A firm whether registered or not; (ii) A Hindu undivided family; (iii) A co-operative society; (iv) Every other association of persons whether registered under the Societies Registration Act, 1860.
2.2.1 INSTANCE OF PERSONS HELD AS CONSUMERS 1. Bank Customers 2. Telephone Subscribers 3. Consumers of Electricity 4. A passenger travelling by train 5. A patient receiving medical treatment 6. A depositor of money 7. A beneficiary of services like a nominee of the insured 8. Persons allotted plots/houses by State Housing Boards 9. Nominee of a person insured under LIC 2.2.2 INSTANCES OF PERSONS NOT HELD AS CONSUMERS 1. A Client hiring services of an Advocate. E.g. When Ankit is hiring the services of an advocate, he is availing a person service and hence he is not a consumer. 2. Purchaser of a taxi. E.g. If Rohan purchases a taxi then he is not a consumer as it comes under a commercial use. He has the motive of making profit out of the purchase of a taxi. 3. Purchaser of shares or debentures for resale. E.g. Neha is buying shares with the intention of reselling them at a price. Neha is not a consumer as she bought the the goods with the intention of reselling.
4. Persons presenting documents for registration. E.g. Bhavya has present documents for registration for buying a new car. He is not a consumer because he hasnt used the car yet and before he uses the car he cannot file a complaint.
2.3 TRADER Sells goods. The person who actually sells the goods. Distributes any good for sale. Distribution of goods may or may not be making a profit out of the transaction. Manufacturer of goods for sale. The actual producer of the goods. Packer of goods. The entity or person who packages the good. The packer of the goods is most of the time the manufacturer.
Note: A middleman who brings together the buyer and seller and receives commission for the services rendered is not a trader. E.g. Real estate brokers, stock brokers, etc. The middleman is not a trader because he has not taken temporary or permanent ownership of the goods.
2.4 MANUFACTURER Makes or manufactures any goods or parts thereof. Assembles parts of the goods made or manufactured by others and claims the end product to be goods manufactured by himself. Puts his own mark on any goods aid or manufactured by any other manufacturer and claims such goods to be goods made or manufactured by him.
2.5 RESALE AND COMMERCIAL PURPOSE For the purposes of this clause, commercial purpose does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment.
A consumer, who does not buy the goods for his own consumption or use, but for resale, is excluded from the purview of the definition. When goods are sold in the original condition as bought, it is resale. When the manufacturer sells the goods to the whole seller who in turn sells the goods to the retailer, the whole seller will be excluded from the definition of the word consumer as he has bought the goods for resale or for commercial purpose. When the goods are not purchased for immediate final consumption, but for transfer, it is a re-sale. A mere transfer of goods without immediate final consumption could mean purchase of goods for resale or commercial purpose. Similarly, there has to be a direct nexus between the kind of goods purchased & sold. If the goods sold are converted for producing other goods or services, it is buying goods for commercial purpose or for resale. A person buying the goods for resale or commercial purpose, even if for consideration, is not a consumer. The act makes a solitary exception wherein it stipulates that he is still a consumer within the meaning of this Act who buys any goods or service for reselling it, but only if he is running a small business in which he himself only is employed. Thus, this Act of 1986 plainly disallows a transaction of Commercial purposes to be agitated before Consumer Courts. A Similar word Commercial transaction which ordinarily imports the alike meaning, seems to be confused with the same as Commercial purposes. In my considered view, both terms are not same, in as much as, Commercial transaction is a much wider term and Commercial purposes is relatively a term of limited import. A transaction would fall within the scope of Commercial purposes if the transaction is closely & inherently linked to the nature of business activity being carried out by the person alleging defect / deficiency in any goods or services. The nature of goods or services consumed though may aid in the commercial / business venture but goods or services so consumed must be clearly independent of the nature of commercial / business venture to be exempted from purview of Commercial purposes. Like a company buying raw material for making finished goods is not a Consumer within the meaning of Consumer Protection Act of 1986. However, a Company will be a consumer wherein if it buys office machineries like fax, printers & air conditioners because the company although 'consumes' that fax, printers & air conditioners, but they are purchased not for resale and although fax, printers aid in its 5
commercial activity but their commercial activity has nothing to do with the consumption of that fax, printers & air conditioners. The more illustrative example can be this one. A commercial venture engaged in Xeroxing business purchased one Xerox machine, is not a consumer within the meaning of this Act, for the Xerox machine purchased and nature of business activity being carried out are closely merged to each other. Similarly, a commercial venture engaged in some other business activity happens to purchase one Xerox machine for office purposes, is a consumer within the meaning of this Act, for his nature of commercial activity being carried out is distinct from nature of goods / services consumed. At the same time, a man purchasing a Xerox machine for earning his livelihood is still a consumer within the meaning of this Act of 1986. Thus, in every case of Complaint before Consumer Court, the test thus to identify a transaction whether suffering from Commercial purposes would be- (1) to objectively observe the nature of business activity being carried out by the Complainant; and (2) then to see the transaction which is alleged as defect / deficiency in any goods/ services. (3) If nature of business activity being carried out is independent of the nature of transaction alleged, then, in my view, the transaction is not suffering from Commercial purposes although the transaction may have all attributes of Commerce.
2.5.1 CASE: LAXMI ENGINEERING WORKS V/S P.S.G. INDUSTRIAL INSTITUTE Earlier, in the case of Laxmi Engineering Works vs. PSG Industrial Institute, the question relating to the status of a buyer of goods for resale or commercial purpose was considered at great length by the apex court. The brief facts of the case are: the appellant, i.e., Laxmi Engineering Works (appellant), was a proprietary concern who placed an order with the respondent, i.e., P S G Industrial Institute for supply of PSG 450 CNC Universal Turning Central Machine on 28 May.90. The appellants case was that the respondent not only supplied the machinery six months beyond the stipulated date but supplied a defective machine. Soon after it was installed and operated, several defects came to light which the appellant brought to the notice of the respondent. The appellant stated that he was suffering serious financial loss on account of the defective functioning of the machine and accordingly he lodged 6
a complaint before the Maharashtra Consumer Disputes Redressal Commission claiming an amount of Rs 400,000 on several counts from the respondent. The respondent, inter-alia, raised an objection that since the appellant had purchased the machine for commercial purposes he was not a consumer within the meaning of the said expression as defined in Sec. 2(1)(d) of the Act. The Commission allowed the appellants claim partly, directing the respondent to pay to the appellant a sum of Rs 2.48 lakhs within 30 days failing which they said amount was to carry interest at the rate of 18% per annum. The respondent filed an appeal before the National Commission which allowed the said appeal on 7 Dec.93 on the only ground that the appellant was not a consumer as defined by the Act. The National Commission observed that from the facts appearing on record it was manifest that the complainant was carrying on the business of manufacturing machine parts on a large scale for the purpose of earning profit. In the circumstances, the National Commission concluded that the machinery in question which was alleged to be defective was purchased for a commercial purpose. Hence, the complainant was not entitled to be regarded as a consumer and the petition filed by him was not maintainable before the Commission. Consequently, an appeal was filed before the Supreme Court by the complainant challenging the order of the National Commission. The Supreme Court, in the course of its judgement, also agreed with National Commission that the appellant had purchased the machinery or commercial purpose and hence was not covered under the purview of Consumer Protection Act.
2.6 COMPLAINANT A consumer i.e. the actual user of the products. Any voluntary consumer association registered under Companies Act, 1956 or under any other law for the time being in force. The Central Government or any State Government who or which makes a complaint (Sec. 2(1) (b)) One or more consumers, where there are numerous consumers having the same interest. 7
2.7 COMPLAINT A complaint is any allegation in writing made by a complainant that An unfair trade practice or a restrictive trade practice has been adopted by any trader; The goods bought by him or agreed to be bought by him, suffer from one or more defects; The service hired or availed of or agreed to be hired or availed of by him suffer from deficiency in any respect; A trader has charged for the goods mentioned in the complaint, a price in excess of the price fixed by or under any law for the time being in force, or displayed on the goods or on any package containing such goods; Goods which will be hazardous to life ad safety when used are being offered for sale to the public in contravention of the provisions of any law for the time being in force requiring traders to display information in regard to the contents, manner and effect of use of such goods.
2.8 CONSUMER DISPUTE On a complaint before the Consumers Redressal Forums against a person, who denies or disputes the allegations contained in the complaint a consumer dispute arises.
2.9 SERVICE According to Section 2 (o) of the Consumer Protection Act 1986, Service means service of any description which is made available to potential users. It includes the provision of facilities in connection with banking, finance, insurance, transport, processing, supply of electrical or other energy, boarding or lodging or both, housing construction, entertainment, amusement or the purveying (providing or supplying) of
news or other information. Service, however, does not include rendering of any service free of charge or under a contract of personal service.
This implies that service is any benefit that can be made available to potential users resulting in promotion of interests or happiness. The definition of the word, service defined under the Act is very wide and can include any type of service which can be contemplated. The facilities of services are Inclusive but not Exhaustive to include every type of service. Service of any nature hired for consideration whereby one person is obliged to perform duty to another connotes as a service under the ambit of the definition. Services maybe contractual, professional, public, domestic, legal, statutory, etc. Different types of services are illustrative in nature. For e.g. a medical treatment rendered by a doctor to a patient is a service. Service rendered by a Post and the Telegraph Department is a service covered under the Act. Similarly, insurance companies, borrowing from financial institutions, transport agencies, hiring of marriage halls, electric supply companies all render services. However, services rendered free of charge or under a contract of personal service is excluded from the definition. All kinds of derelictions of duty and negligence can and negligence can be bracketed under deficiency of service. For instance, default or negligence with regards to settlement of an insurance claim is a deficiency of service. However, nonpayment of insurance claim where the insurance company has sufficient reasons to decline a claim is not considered a deficiency of service. Late delivery of telegram, wrong disconnection of telephone connection, not working of telephone or telephone lying dead for unreasonable time is deficiency of service. 2.9.1 WHAT ARE TO BE HELD AS SERVICES? 1. Services rendered by the Insurance Company including the settlement of claims. 2. Services of supplying electricity
3. Services provided by transport agencies, hospital or nursing homes upon payment of requisite fees. 4. Hotel, lodging and boarding services 5. Supply of Food on board of Aircrafts. 2.9.2 WHAT ARE HELD NOT TO BE SERVICES? 1. Faulty or Medical treatment offered in the Government hospital 2. Services rendered by a private tutor since it is a contract of personal service 3. Service rendered by an employee to his employer since it is a contract of service focusing on master-servant relationship. 4. Provision of services by a medical practitioner free of charge to all its patients. 5. Services rendered by a Municipal Corporation, as payment of direct or indirect taxes by the general public is not a consideration paid for hiring of services. 6. Claim for compensation arising out of motor accident since such a claim cannot be said to be in relation to any service hired or availed by the consumer. 7. Any other service which is rendered gratuitously i.e. for which no consideration is paid.
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3. UNFAIR TRADE PRACTICES "Unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely; (1) The practice of making any statement, whether orally or in writing or by visible representation which, (i) Falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;(Lays Example) (ii)Falsely represents that the services are of a particular standard, quality or grade; Caselet: (ii) For a medical transcription course(Indian Institute of Medical Transcription), admissions were taken on the basis of the representation that the Institute was affiliated with the IIMT, which was allegedly promoted by and affiliated with Global Information Technology of USA. The Court held that the institute was luring students by false representation learning and earning by assured placement. The petitioner was held responsible for deficiency in service, and was liable to pay refund of fee with 7% interest. (iii) Falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods; Caselet: (iii) One of the world's oldest and leading luxury car manufacturer, Mercedes Benz has been slapped a fine of Rs 2 lakhs for selling a used demo car as new to a customer in Chennai. According to the National Consumer Disputes Redressal Commission, "Selling of used demo car without the knowledge of the customer amounts to an unfair trade practice within the Consumer Protection (CP) Act."
(iv) Gives false or misleading facts disparaging the goods, services or trade of another person. Caselet: Regaul vs. Ujala
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A television advertisement promoting Ujala liquid blue (Ujala) showed that 2-3 drops of Ujala were adequate to bring about striking whiteness in clothes, while several spoons of other brands were required. A lady holding a bottle of Ujala was looking down another bottle and exclaiming chhi, chhi,chhi! in disgust. The manufacturers of Regaul, a competing brand, approached the Commission with the contention that the advertisement was disparaging its goods. The bottle did not have any label. The Commission elaborated the meaning of the provision thus: In order to bring home a charge under Clasuse (x) of section 36A(1) it must be established that the disparagement is of goods, services or trade another. ...the words goods of another person have a definite connotation.
(3) Permits (a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole; (b) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest;
Horlicks Hidden Wealth Prize HMM Ltd., manufactured and marketed Horlicks. In September, 1985, it advertised a scheme called Hidden Wealth Prize Offer for the buyers in Delhi. A lucky purchaser of a bottle of Horlicks could find a coupon inside the bottle. The coupon indicated the prize. The prizes were to be claimed by 15th January, 1986. The MRTP Commission had held this to be an unfair trade practice as the system of getting the coupon was nothing but a lottery. According to the commission, only small fractions of the buyers of Horlicks could get the benefit of the said scheme. Most got nothing. The prices were many times costlier than the price of the bottle of the Horlicks, a fact on account of which the winning of the prize would be an overriding considering for the product in question. The Supreme Court, in its short judgment in 1998 commented that this was not a case of lottery as there was no:
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Judgement:...draw of lots or that a price was charged for participation in the draw......the fact that some bottles of Horlicks contained a slip of paper which entitled the buyer to a prize is not a lottery in the ordinary sense of word.
(3A) withholding from the participants of any scheme offering gifts, prizes or other items free of charge, on its closure the information about final results of the scheme. Explanation:. For the purposes of this sub-clause, the participants of a scheme shall be deemed to have been informed of the final results of the scheme where such results are within a reasonable time, published, prominently in the same newspapers in which the scheme was originally advertised;
LOCUS STANDI
A person seeking redressal of his complaint, must come within any of the four categories of the complainant, otherwise he has no locus standi to proceed with the case before the Consumer Redressal Forum. If any person, other than the person falling under any of the above four categories, files any complaint the same is liable to be dismissed on the ground that he has no locus standi. A public cause can be taken up by an association in the form of public interest litigation. Legal heirs/ representatives of a deceased consumer entitled to the estate of the deceased have a locus standi and can file a complaint. A nominee of a person insured under LIC has locus standi. A complaint must be made with the view to obtaining any relief provided under the Act.
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4. RESTRICTIVE TRADE PRACTICE
Restrictive trade practice means any trade practice which requires a consumer to buy, hire or avail any goods or services as a condition precedent for buying, hiring or availing of other goods and services. Thus no trader can put any precondition for the sale of particular type of goods or services if the consumer requires to buy hire or avail of the services of the other goods and services.
4.1 DEFECTS Defects means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or the standard which is require to be maintained by the trader by or under any law for the time being in the force or under any contract expressed or implied or as is claimed by the trades in any manner whatsoever in relation to any goods. It is for the complainant to establish that the goods mentioned in the complaint suffer from one or more defects.
Failure to deliver the full quantity as ordered is defect. Defect may be a major or superficial defect. Where the car sold was defective and up to the standard and quality the dealer was ordered to repair the car within two months and give fresh guarantee for the further period of one year.
4.2 DEFICIENCY
Deficiency means any fault, imperfection short coming 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 being undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service. It is for the complainant to establish that service is mentioned in the complaints suffer from deficiency in any respect.
Cases which are treated as Deficiency: 14
Lack of facilities promised by Housing Board is a Deficiency. The flight not taking off with in the reasonable time of the schedule departure can be held as negligence and Deficiency of service. Failure of the insurance company to settle the claim without sufficient cause is Deficiency. Failure of Railways to provide cushioned seats in 1st is the Deficiency of service.
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5. RIGHTS OF CONSUMERS The Consumer Protection Act, 1986, was enacted to provide for better protection of the interest of consumers. The Act seeks to promote and protect the rights of consumers such as: 1. Right to be protected against marketing of goods which are hazardous to life and property ;
2. Right to be informed about the quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices;
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3. Right to be assured, wherever possible, access to variety of goods at competitive prices;
4. Right to be heard and to be assured that customer interests will receive due consideration at appropriate forums;
5. Right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers.
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6. Right to consumer education.
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6. CENTRAL CONSUMER PROTECTION COUNCIL The central government has constituted/brought about/set up central consumer council which consisted of 150 members. These members include president and a member of National Commission or a State commission or a district forum, it depends upon the case.
Minister Incharge of consumer Affairs -Central Government

Chaiman
Official and Non Official
Total Counts to 150 members
Minister Incharge - Civil Supplies

Chairman
Vice ChairMan
Deputy Minister Incharge of Consumer Affairs in Central Govt.
Members
8 Members from parliament 5 - LS + 3 - RS Secretary of Nation Commission fr Schedule caste and tribes
Representatives of Organisation/Consumer- (Not less than 35*) Representatives of Women - (Not less than 10*)
Members
Members
Representatives of Farmers,Trade and Industries - (Not exceeding than 20*)
Member Secretary
The Secretary in the department of Civil Supplies
SOME STATISTICS: 19
Sl. No. 1. 2. 3.
Name of Agency
Cases since
filed Cases disposed of Cases since inception 60504 440613 2736379 3237496 Pending 8961 100865 255959 365785
% total
of
inception National Commission 69465 State Commissions District Forum Total 541478 2992338 3603281
Disposal 87.10 81.37 91.45 89.85
6.1 STATE CONSUMER PROTECTION COUNCILS (SCPCS) & DISTRICT CONSUMER PROTECTION (DCPCS) The Act provides for the establishment of the Consumer Protection Councils at the National, State and District levels. While it is the responsibility of the Central Government to set up the Central Consumer Protection Council (CCPC), the responsibility for setting up the State Consumer Protection Councils (SCPCs) & District Consumer Protection Councils (DCPCs) rests with the State Governments. The state wise position regarding setting up of the SCPCs & DCPCs as available with this Department on the basis of information furnished by the States/UTs. The objectives of these councils are to help the respective governments in adopting and reviewing policies for promoting and protecting the rights of the consumers. The citizens and organizations representing different interest groups and having concern for consumers rights protection are members of these councils. The main objective of these councils is to promote and protect rights and interests of consumers in the society.
6.2COMPUTERISATION AND COMPUTER NETWORKING OF CONSUMER FORA: (CONFONET) Consumer Fora are being computerized and networked to enable dissemination of information leading to quicker disposal of cases. A project for Computerization and Computer Networking of Consumer Fora in the country, (CONFONET) was launched during the 10th Plan period at a cost of Rs. 48.64 crore. The project is being
implemented by the National Informatics Centre (NIC) on a turnkey basis. The CONFONET project has been extended to 11th Plan with a total outlay of Rs.25.69 crore. 20
In the extended period of project, stress is being laid upon continued HR support by means of Technical Support Personnel (TSP) and training for eventual adoption of the system by the Consumer Fora themselves. An expenditure of Rs. 8.89 crore has been incurred during 2010-11. Out of 629 locations being covered under the scheme 519 Consumer Fora are uploading cause lists while 450 Consumer Fora are uploading judgments.
6.2.1
OBJECTIVES
1. To empower consumers by making them aware about their rights and responsibilities. 2. To provide effective, inexpensive and speedy redressal system to
Consumers. 3. To strengthen the infrastructure on Consumer Fora through computerization and computer networking across the country. 4. To augment the infrastructure of enforcement machinery of Legal Metrology Department of States/UTs and implementation of The Legal Metrology Act, 2009. 5. To assist Consumers by giving advice and guidance in Consumer related issues through National Consumer Helpline and State Consumer Helpline functioning in States/UTs across the country. 6. To create avenues for Consumers for settlement of Consumer related cases through Mediation process involving Voluntary Organizations and settlement of Grievances. 7. To dispose of all Grievances and Complaints through a well established Grievances Redressal Mechanism The mandate of this Department is to undertake measures for consumer protection, by creating awareness among people, speedy dispute Redressal system and provide for quality products and services. Our stakeholders in this Mission are basically consumers themselves who need to be educated and re-educated, Business organizations who can do a lot by putting in place an in-house Consumer grievances redressal mechanism, and be responsive to consumers, and the various Consumer organizations and academic institutions and research organizations who can supplement the efforts of the Government and could be 21
vehicles for effective launch of a massive consumer movement in the country. Lastly we require the help of State governments in efficiently implementing various programmers at grassroots level.
6.2.2
WEAKNESS:
The Department is small one compared to the task it has at hand. All activities affect the consumer finally in some way or other. As per Allocation of Business there are different ministries undertaking activities which has a direct bearing on consumer. There is no mandatory system to get prior clearance of this department before any new scheme or project is initiated. Consumer protection is still of a lower priority among the State governments. As a result sufficient funds are not allocated for infrastructure and other recurring expenditure. This affects implementation of schemes.
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7. THE CONSUMER GUIDANCE SOCIETY OF INDIA (CGSI) Beginning: Since independence, India has been striving to develop and strengthen its industrial base in pursuit of Self-Sufficiency. However the consumer has been made to endure sub-standard products and services, adulterated foods, short weights and measures, spurious and hazardous drugs, exorbitant prices, hoarding of goods leading to artificial shortages, leading to black marketing and profiteering. This outrage energized nine ladies to organize a movement to fight for consumer rights. They formed Consumer Guidance Society of India (CGSI) to resist consumer exploitation of all forms. Highlights: 1) It is the earliest consumer organization in India, founded in 1966. 2) It was first to demand a Consumer Protection Act with consumer courts, which became a reality in 1986. 3) To date 70% of the thousands of complaints referred to CGSI have been redressed. 4) It established formal Product Testing in India. 5) It was first to publish monthly magazine Keemat highlighting information of importance of consumer. 6) It promotes consumer education, initiates training projects in rural areas; publicity drives, and represents consumer interest with Government and other bodies. 7) It received National Award for consumer Protection in 1991. 8) It is the only Indian Consumer Organization to be a council member of Consumer International for 25 years.
Legal Frame Work:
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It was the first consumer organization to demand special Consumer Court for redressal of Consumer Complaint in 1975. It handles consumer complaints and offers legal guidance to those wishing to file suits in Consumer Courts. In case of complaints are many against a particular party both sides are brought together to resolve the issue. It has handled over the years with 70% success complaints covering Medical/Surgical malpractices, negligence, insurance non payment, sub-standard drugs and medicines, defective house hold devices, poor quality foods and drinks, misleading advertisement claims and grievances concerning investments, telephones and electricity supplies. Product Testing: It established in 1977 facility of product testing. It first assessed the safety performance of domestic pressure stoves and found 2/3 rd of the samples failed safety measures. It also interacts with Indian Standard Institutions (ISI) regarding quality control of the products and services. Consumer Education for Schools / Colleges: It is working with like-minded educationist to formally introduce Consumer Education in school curriculum. After 2 years of inter actions, in 1994, the Maharashtra Education Board introduced Consumer Education at the 9th standard level progressively covering students from 4th standard upwards. Publications: Keemat now a 3-decade+ publication, the first consumer magazine in India, published monthly. It has also produced guides on subject like Electrical Appliances, Edible Oils, Pesticides, Food Adulteration, and Safety at Home, Safe Blood etc.
Pedestrian Wing:
24
To secure rights of pedestrian to walk in safety, constituting as they do the largest segment of traffic stream in our country. It crates awareness about the rights and responsibilities of Pedestrians. To spread awareness about importance of walking as a mode of transport and facilities its use for short distance transportation. To facilitate use of user friendly Public Transport and encourage its use by public. To fight proper orderly and safe traffic Management and conduct/handling of all related matters conducive to minimum vehicle pollution. To network and co-operate with all Government, Municipal and like-minded NGOs, Citizen groups working or engaged in transportation field. It also includes regular and continuous interactions with MCGM, traffic police, transport commissioner and RTOs at all levels. Consumer Complaints Why and How: Consumer who complains allows himself or herself to be brainwashed into believing that they are trouble makers. Consumers must not hesitate to complain about adulterations, substandard drugs and cosmetics, shoddy product quality, unsatisfactory after sales service etc. There is also the Package Commodities Act which insist that weights, price, date of manufacture and ingredients are marked on all packages. This Act as well as Agmark and ISI mark can be of substantial assistance in the fight for consumer rights. How to Complain: 1) Be sure the complaint is sound. 2) Present it politely, elicit co-operation. 3) 4) 5) Preserve cash memos and warranty card With these, first approach the retailer. He may have a valid explanation. If he is unresponsive, write to the manufacturer, quoting no. and date of cash and date
of Warranty card. 6) 7) Retain all originals; keep copies of your letters. In case of suspected Food and drug adulteration write to State health authorities. Retain
samples wherever possible. 25
8)
If products with ISI/AGMARK certification performs poorly write to the respective If there is no response, write to Consumer Guidance Society of India, Block J
agency, ISI certification guarantees free replacement. 9)
Mahapalika Marg, and Mumbai 400001. 10) Dont give up if your complaint is valid, stand your ground. 11) If a consumer organization is unable to get your complaint redressed, you may
complain to your District Consumer Dispute Redressal Forum. 12) Time and Place of the complaint. 13) Relief claimed by you should be in clear words replacement, / removal of defect or return of price, compensation for expenses incurred as well as physical/mental torture, if any. The claim amount should be within reasonable limits and Justifiable.
Where to Complain for Guidance and help: Complaints of representative nature may be filed by registered consumer organization like Consumer Guidance Society of India. For enquiries seek guidance from:
26
The Complaint Committee, Consumer Guidance Society of India, Block J Mahapalka Marg, Mumbai 400 001. The Council for Fair Business Practices, Great Western Building, 130/132 Shaheed Bhagat Singh Rd, opp Lions Gate, Mumbai 400 038. The Mumbai Grahak Panchayat Grahak Bhavan, Sant Dnyaneshwar Marg, Juhu Vile Parle, JVPD scheme, Mumbai 400038. 7.1 CAMPAIGNS UNDERTAKEN BY CGIS 7.1.1 Multi Media Publicity Campaign As part of the Multi Media publicity campaign, the activities being undertaken are: Publicity through print media using news paper advertisements, to educate the consumers about their rights and responsibilities. Publicity through electronic medium by telecast of video spots of 30 seconds duration on various consumer related issues such as Grievance Redressal system, MRP, ISI Hall-Mark, Alternate Dispute, Redressal system, weights and measures, Rights of Consumers etc. Issues pertaining to rural and remote areas have been given prominence in the various advertisement spots. Telecast of advertisement in North Eastern states in Regional languages of 20 seconds and 30 seconds duration on various consumer related issues such as M.R.P. (Maximum Retail Price), Short Measurement, Expiry date on medicine, adulteration, damaged product and redressal system.
The Department in consultation with the Department of Post has disseminated consumer awareness messages through Meghdoot Post cards to reach far-flung rural areas including North East States. A bigger plan of partnership with the Department of Posts to use the vast network of postal department for spreading the message of consumer awareness has been chalked out Calendars containing the message of consumer awareness are being displayed through the vast network of 1.55 lakhs post offices. The Department through Printed Literature is also creating awareness. A folder entitled "Consumer Awareness Mission" containing the salient features of Consumer Protection Act 1986, Consumer Resource kit as well pocket calendars and posters is being distributed during various events such as IITF, Nukkad Nataks and also through the State Governments at grass root level. The publicity material relating to consumer awareness has also been translated in regional languages and is 27
being disseminated to various State Governments. Nukkad Nataks are being performed in consultation with Song & Drama division of the Ministry of Information and Broadcasting . More than 1000 programmes in all the States/UTs have been organised to create awareness at grass root level. A pilot project National Consumer Help Line initiated can be accessed through a Toll Free Number 1800-11-4000 which is being operated by Delhi University for counselling the Consumers to redress their grievances. The timing of toll free number facility is available to consumers from 9-30 A.M. to 5-30 P.M. on all the working days (MondaySaturday). Through the various advertisements pertaining to Department of Consumer Awareness adequate publicity has been given to National Helpline so that the affected consumers could seek guidelines/counselling through the national helpline. In order to reach maximum number of consumers, the Department has telecast video spots containing consumer related information during the popular sports events such as Tri-series cricket tournament, Indo-Pak Series, Indo-Australia Series, Indo- England Cricket Series etc. India is a country with more than 70% population being under 35 years. The youngsters are using the internet in a big way for various purposes and also happen to be major consumers. Realizing this, a major initiative is being taken to spread consumer awareness through the online medium. The advertisements being brought out by the Department are also being displayed on the website of the Ministry www.fcamin.nic.in.
Advertisements are being carried in journals of Publication Division such as Yojana, Kurukshetra, Bal Bharti, Aajkal and their regional editions. Focussed articles on consumer awareness are being published in these magazines keeping in view their target readership. Employment News, the flagship publication of Publication Division, which is the largest selling career weekly of its kind occasionally publishes articles that are of interest to youngsters in keeping them informed about their rights. The advertisements of Department are also published regularly in Employment News/Rojgar Samachar so that the youth of the country are made aware of their consumer rights. 7.1.2 in India International Trade Fair Keeping in view the large number of visitors to India International Trade Fair, the Department displayed its activities through a stall in IIPA. Publicity material regarding main provisions of Consumer Protection, Standardisation, Weights & Measures, ISI, Hall Marking
28
and other issues of consumer interest was distributed free of cost. On the spot guidance was also given to consumers during the Trade Fair.
7.1.3 Joint Campaign 'Jago Grahak Jago' has become the focal theme through which issues concerning the functioning of almost all Government Departments having a consumer interface can been addressed. To achieve this objective joint campaigns have been undertaken/are being undertaken with a number of Government Departments. The Department had run a joint campaign with Bureau of Energy Efficiency to educate people about energy conservation by having awareness of the BEE star labels. A joint campaign with National Pharmaceuticals Product Authority is being devised to educate consumers about the various issues concerning pharma industry. Similarly, campaigns with Reserve Bank of India, FICCI, Ministry of Urban Development (for real estate sector) and HRD (for education sector) are being planned.
7.1.4 Special scheme on assistance to State Governments/UTs Considering the fact that active involvement of State Governments in awareness campaign is crucial in taking forward the movement to rural, remote and backward areas, State/UT Governments have been actively associated in expanding the area of consumer awareness. In fact the effectiveness of the scheme is enhanced by the involvement of States/UTs/PRIs. The provision for grant in-aid/support to States/UTs has been one of the key components of the Consumer awareness scheme. The Department of Consumer Affairs provided publicity material such as posters, audio, video, folders, calendars, and magazines etc. to the State Governments/UTs for distribution through panchayats in the rural areas. 7.1.5 The Future Roadmap The multi media publicity to educate consumers and make them aware about their rights will have a long lasting impact not only on the end consumers but also on the entire manufacturing and services sector. The scheme will go a long way in introducing greater accountability and transparency in the services provided by the public as well as private sector since the end user i.e. a consumer will be educated and aware enough to ask for best possible services in return of his hard earned money. 'Jago Grahak Jago' is thus an initiative 29
which empowers consumers by making them aware about their rights as well as the Grievance Redressal Mechanism.
30
8. CONSUMER DISPUTES REDRESSAL AGENCIES
1. District Forum: Set up by State Govt in each district. It my set up more than one forum in a particular district. It is at the base level. 2. State Commission: Set up by State Govt in the state. It is at a higher level. 3. National Commission: Set up by the Central Govt. It is at the top most level. This called as a Three Tier System
The above forum and commissions are not Civil Courts and the object of setting them is to provide inexpensive litigation (proceedings).
8.1 A COMPARITIVE STUDY DISTRICT FORUM Amount Compensation Cases -Deficiencies -Repair defect free of -Full refund -Replacement of Upto Rs. 20 Lakh STATE COMMISSION NATIONAL COMMISSION
Rs. 20 Lakh Rs. 1 Higher than Rs. Crore -Appeals District Forum 1 Crore from - Appeals from State Forum
charge -Office or branch in the -Actual partly or state reason fully
-Complaints transferred from one State to
Commission
another -Withdraw sale of a occurred within the product altogether -Except state -Discontinue/not repeat unfair/restrictive trade -Corrective practice. any &
Jammu Kashmir
- Ex-parte orders
31
advertisement President Who is or has been Must be a person Must be a person a District Judge. who is or has been who is or has a Judge of a High been a Judge of Court the Court Other Members Two other members At least two other At one must be a members, one of other whom shall be a one woman Term least four Supreme
members, of whom
woman
shall be a woman
Upto 5 years or 65 Upto 5years or 67 Upto 5 years or years of age, years of age, 70years of age, whichever earlier is
whichever is earlier
whichever is earlier
Compensation
50% Rs.2,50,000/-,
or 50% Rs.3,50,000/-,
or 50% Rs.5,00,000/-, whichever lesser
or
whichever is lesser
whichever is lesser
is
Disqualification
Convicted
and Convicted to sentenced for imprisonment
and Convicted to sentenced
and to
for membership sentenced appointment imprisonment an involving turpitude. Jurisdiction
for imprisonment for offence
offence an moral involving turpitude.
offence an
moral involving moral turpitude.
A complaint shall A complaint shall Circuit Benches: be instituted in the be instituted in the District within limits the of Forum State local within whose limits Commission the of local whose The National
Commission shall ordinarily 32
jurisdictiona. Opposite party resides or carries on business. b. Any of the opposite parties where there are than opposite party, resides carries business. c. The cause of action wholly or or more one
jurisdictiona. Opposite party resides or carries on business. b. Any of the opposite parties where there are than opposite party, resides carries business. c. The cause of action wholly or or more one
function at New Delhi or at such other place as the Central Government may notify in the
Official Gazette
partly arises.
partly arises.
33
8.2 PROCESS UNDER CONSUMER PROTECTION ACT
Preserve cash memos and receipts with date & warranty card
If relating to defects sample sent to analysis & testing
Summoning & Enforcement of Order
Draft a complaint & give to opposite party for explanation(30 days)
Lab shall report in 45 days & deposit for analysis has to be paid by complainant.
Appeal to state & national comission
Appearance of both the parties at the court
If defect found then remove or replace or compensation
Final hearing and enforcement of order
8.3 RELIEF OF THE COMPLAINT: District forum can order the defaulter company to correct deficiencies in the product to what is claimed. Repair defect free of charges. Replace product with similar or superior product. Issue a full refund or the price Pay compensation for damages Withdraw the sale of the product completely Discontinue or not repeat any unfair trade practice Issue corrective advertisement for any earlier misrepresentation
34
If the consumer is unsatisfied with the complaint, then he can appeal in the State Commission within a period of 30 days wherein the company against which the verdict has been given has to deposit 50% of the compensation to be paid or Rs2.5L whichever is less.
8. COMPARISON OF LAWS Consumer protection law or consumer law is considered an area of law that regulates private law relationships between individual consumers and the businesses that sell those goods and services. Consumer protection covers a wide range of topics, including but not necessarily limited to product liability, privacy rights, unfair business practices, fraud, misrepresentation, and other consumer/business interactions. Consumer protection laws deal with a wide range of issues including credit repair, debt repair, product safety, service and sales contracts, bill collector regulation, pricing, utility turnoffs, consolidation, personal loans that may lead to bankruptcy. 9.1 REPUBLIC OF CHINA (TAIWAN) Consumer Protection Law in the Republic of China (Taiwan) is the national special law which specifically protects the interests and safety of end-user using the products or services provided by business operators. Consumer Protection Commission of Executive Yuan serves as an ombudsman supervising, coordinating, reporting any unsafe products/services and periodically reviewing the legislation. 9.2 UNITED KINGDOM The United Kingdom, as member state of the European Union, is bound by the consumer protection directives of the EU. Domestic (UK) laws originated within the ambit
of contract and tort but, with the influence of EU law, it is emerging as an independent area of law. In many circumstances, where domestic law is in question, the matter judicially treated as tort, contract, restitution or even criminal law. Consumer Protection issues are dealt with when complaints are made to the Director-General of Fair Trade. The Office of Fair Trading will then investigate, impose an injunction or take the matter to litigation. However, consumers cannot directly complain to the OFT. Complaints need to be made to Consumer Direct who will provide legal advice to 35
complainants, or re-direct the individual complaint to Trading Standards for investigation. Due to restrictions within the Enterprise Act 2002, individual complainants are unable to be told whether their case is being investigated or not. In very rare cases, Consumer Direct may direct a very large number of complaints to the OFT to be considered as a systemic complaint. The OFT can also be engaged by consumer groups e.g. The Consumers Association or the statutory consumer protection body - Consumer Focus - via a super complaint. The OFT rarely prosecute companies, however, preferring a light touch regulation approach. Consumer complaints against companies are not published, but investigation work, undertakings and enforcements are located at.Many of the consumer protection laws e.g. Distance Selling Regulations 2000 or Unfair Terms in Consumer Contracts Regulations 1999 (12 years ago) are actually UK implementations of EU directives. The OFT is one of the bodies responsible for enforcing these rules. This leads to a problem in that these examples of legislation are clearly designed to deal with individual complaints but the OFT will only deal with systemic complaints and will ignore individual complainants redirecting them back to Consumer Direct. The Office of Fair Trading also acts as the UK's official consumer and competition watchdog, with a remit to make markets work well for consumers, and at a local, municipal level by Trading Standards departments. General consumer advice can be obtained from Consumer Direct or via a local branch of the Citizen's Advice Bureau.
9. CASE STUDIES
10.1 CASE STUDY 1: MCDONALDS 36
WHERES THE BEEF? ITS IN YOUR FRIES! H.B. Bharti and Vegetarian Legal Action Network (VLAN) VS McDonalds In April 2001, fast food chain McDonalds got caught up in a debacle after it emerged that its US French fries contained natural beef extract. When this information was publicly disclosed, Hindus and vegetarians worldwide reacted with fury. They felt misled and cheated even though the company never explicitly claimed that its fries were suitable for vegetarians. A range of pressure groups, including the Vegetarian Legal Action Network (VLAN) and the Hindu interest group Shiv Sena, called for an investigation, a public apology and claimed damages from the company. McDonalds McDonalds is the largest and best -known fast food chain in the world with more than 30.000 restaurants in 121 countries and an annual turnover of more than 40 billion dollar. The corporations core business is expanding its franchises and services in a worldwide chain of restaurants. The corporation with the Golden Arches was founded by Ray Kroc in 1955. The McDonalds philosophy is: Quality, Service, Cleanliness and Value for money. The
corporation has grown large through large-scale standardization which enabled it to achieve extremely high levels of production efficiency and control over suppliers. The
McDonaldization of Society (Ritzer, 1993) is synonymous with the rationalization of society, low wages, flexible labour, no trade unions and uniformity. McDonalds also presents itself as a socially responsible corporate citizen. A lot of time, attention and money are invested in projects, employment opportunities for minorities, sponsoring, clean-up projects and helping children, for instance through the Ronald McDonald House charity. The environmental policy of McDonalds is based on the three Rs: Reduce, Reuse and Recycle. The corporations most significant competitors are Burger King and Wendys. McDonalds is listed on the Dow Jones Index.
Conflict Throughout the world, more than forty million people visit McDonalds each day. Half of the customers visit US establishments. Despite the fact that McDonalds is lauded worldwide for its CSR policy, the reputation of the company came under pressure in May 2001 due to 37
allegations of socially unaccountable conduct. The company became embroiled in a debacle surrounding its French fries. To the great displeasure of vegetarians and Hindus, it was revealed that US French fries contained a flavour enhancer made of beef extract. It seems that MacDonalds was not unaware of its customers preferences. In 1990, the fast food chain started using using vegetable oil in the wake of the criticism from consumers and public interest groups for its use of animal fats. Along with the switch to vegetable frying oil, McDonalds also undertook to offer customers a lowcholestrol item on the menu. In the 1970s and 1980s, McDonalds introduced meat-free and beef-free products, such as the chicken burger, vegetable burger and the fish burger so as to meet the needs of its vegetarian and Hindu customers. Rumour has it, however, that to compensate for the loss of (beef) flavour as a result of the switch to vegetable oil, it was decided to add natural beef flavouring to the fries during step one (pre-frying) of the preparation process. In his 270 page book, Fast Food Nation, Eric Schlosser gives a poetic account of the reasons and emotions that informed this decision (Schlosser, 2001). Competitors Wendys and Burger King, however, serve completely meat-free products. The controversy erupted when Hitesh Shah, a vegetarian of Indian origin working and living in Los Angeles, approached McDonalds headquarters to enquire after the oil that is used in cooking French fries. Shah learned that in the US, natural flavourings made from beef extract is added to the French fries at the factories were they are processed. According to the American Code of Federal Regulations set down by the Food and Drug Administration (FDA), natural flavourings need not be listed individually on product packaging. This practice of McDonalds is therefore sanctioned by American legislation. In April 2001, a furious Shah informed journalists at the newspaper India West. The result was a highprofilearticle Wheres the beef? Its in your French fries!. The issue turned out to be explosive for McDonalds. In the first week of May 2001, newspapers and television stations around the world covered the affair in all its detail.
H. B. Bharti and Vegetarian Legal Action Network (VLAN) In this case, H.B. Bharti, a lawyer from Seattle, took the initiative to file a lawsuit against McDonalds.The Vegetarian Legal Action Network (VLAN) also made its voice heard. The network was founded in 1999 when six vegetarian law students from George Washington 38
University became actively involved in the labeling practices of fast food restaurants and food and nutrition companies. The mission of VLAN is to protect the rights of vegetarians. During the course of the conflict, the Hindu political groups and parties Shiv Sena, Bharatiya JanataParty (BJP), and the Internet action group McSpotlight Network also voiced their viewpoint. The Seattle-based lawyer, H.B. Bharti, filed a lawsuit against McDonalds on behalf of two vegetarians and one Hindu. Almost immediately, the Vegetarian Legal Action Network (VLAN) sided with the claimants. Bharti subsequently received hundreds of telephone calls from concerned vegetarians. As a result, Bharti decided to file a class action lawsuit on behalf of all fifteen million vegetarians and one million Hindus in the US.The claim amounted to more than 450 million Euros. According to Bharti, McDonalds actions were in breach of the Washington Consumer Protection Act and have caused emotional stress in vegetarian and Hindu consumers. The fast food chain, he argued, had deliberately deceived vegetarians and Hindus. Moreover, since McDonalds had maintained for ten years that the ingredients in its fries were meatfree, consumers had lost all confidence in the corporation. According to the pressure groups, the company had manipulated the facts. On 4 May 2001, the Board of McDonalds openly admitted the use of beef extract in the Preparation of its fries. The Board also stated that the company had never claimed that the fries were suitable for vegetarians.
The objective of the switch to vegetable oil in 1990 was partly to increase the nutritional value of its fries and to make it suitable to a low-cholestrol diet. Moreover, the company acted completely in accordance with labelling legislation and, as it had announced in 1990, the fries are cooked in 100 percent vegetable oil in all restaurants. In Islamic and Hindu countries, McDonalds fully observed the (religious) dictates governing food preparation and consumption.
Demonstrations worldwide In the first week of May 2001, worldwide protest actions were organised against McDonalds. The Hindu interest group Shiv Sena held a demonstration in the Indian capital, 39
New Delhi and the destruction of Ronald McDonald dolls and restaurants in India, England and on the Fiji islands followed. In addition, hundreds of articles expressing outrage at McDonalds conduct were posted on Internet sites. Slowly but surely, the company came to epitomise deceitful marketing practices which created much suspicion and distrust among (potential) consumers. Civil society organisations in India demanded that their government shut down all 28 McDonalds restaurants. The Board of McDonalds attempted to appease the Indian population by declaring in national newspapers that all products, including fries, that are sold in Indian McDonalds restaurants are vegetarian and have always been. The company also launched extensive investigations and promised to provide truthful information in an open and transparent manner. The investigations by the FDA and the Brihanmumbai Municipal Corporation confirmed that McDonalds fries in India did not contain any beef extract.
Apology In a mea culpa on 24 May 2001, the Board of McDonalds issued an apology for the misunderstanding and confusion that was created by the unclear information about its French fries in American restaurants.The company maintained that it never intended to mislead American citizens into thinking that the fries were appropriate to a vegetarian lifestyle. This announcement could not prevent the lawsuit which Bharti, with the support of a great number of opinion organisations, had been preparing for a long time. In its apology, McDonalds added that it would review its labelling policy. The recipe would not be altered, but beef source would be inlcuded in the list of ingredients. Since the debacle, a comprehensive list of French Fries ingredients fries can now be found on the website of McDonalds US: Potatoes, partially hydrogenated soybean oil, natural flavor (beef source), dextrose, sodium acid pyrophosphate (to preserve natural color). Cooked in partially hydrogenated vegetable oils, (may contain partially hydrogenated soybean oil and/or partially hydrogenated corn oil and/or partially hydrogenated canola oil and/or cottonseed oil and/or sunflower oil and/or corn oil). TBHQ and citric acid added to help preserve freshness. Dimethylpolysiloxane added as an anti-foaming agent. While McDonalds took steps to enhance transparency, issued an apology and adopted a new labelling policy, but it refrained from modifying the ingrendients of French fries produced in the US. In the meantime, a wide range of American Hindus and vegetarians 40
signed up for the lawsuit due to the (emotional) suffering inflicted on them. In a press release of 1 June 2002, the Board once more expressed its mea culpa regarding the confusion it created. Bharti was pleased with the outcome. According to Bharti, no one would be able to remember how much McDonalds eventually paid out in ten years time. The public apology and the disclosure of product information, however, would totally transform the manner in which food companies engage with consumers in future, especially since McDonalds is the market leader and other companies would have to follow suit. In the last 100 years, no other mega-corporation has paid millions of dollars and apologized, admitted wrongdoing, and agreed to disclose ingredients which they had been hiding for years. This is an unheard of result in this country.
Demonstrable indicators of reputational damage
Consumer market Given the number of vehement reactions to and demonstrations against McDonalds, it can be assumed that the corporation sustained significant reputational damage on its consumer market. One would expect sales, particularly among vegetarians and Hindus, to have
dropped. The first quarter of 2001 displayed declining figures, just like the beginning of 2002. Competitors such as KFC and Wendys, on the other hand, displayed positive figures. The Board of McDonalds attributed this to lower exchange rates and concerns about BSE and foot and mouth disease in Europe.
Capital market The issue arose at an unfavourable time for McDonalds. Sales were already under pressure due to low exchange rates and concerns about BSE, swine fever and foot and mouth disease in Europe.In examing the price movements of the McDonalds share on the Dow JonesIndex a period of five weeks was selected: 25 April to 31 May 2001. During this period, the debacle was publicised, the application for a lawsuit was submitted and the Board of McDonalds issued its aplogies. The price movements of the McDonalds share on the Dow Jones Index for this period can be seen in the figure below. 41
McDonald's (Dow Jones) In the first week of May 2001, when there were an abundance of reports on the issue in the media, the share price declined by almost 4,5 per cent. In the second week, the share price recovered to its former level. Indeed, in the third and fourth weeks of May, the share price rose steadily. On the day of the apology (24 May 2001) the share price increased by 1,7 per cent, while the DJ Index registered an increase of merely 0,15 percent. In general, it can thus be maintained that there was a significant response on the capital market, even if it was only at the outset of the debacle. Aterwards, the share price recovered markedly, possibly assisted by the apology issued by the Board of McDonalds.
Labour market Data on the labour market for McDonalds USA are difficult to obtain. This is partly due to the fact that McDonalds is a loosely structured franchise corporation and to obtain data, it must be collected from each individual franchise. This, coincidentally, is a deliberate human resources policy of McDonalds, who employs a large flexible work force who are paid relatively low wages. Given that it is a decentralised organisation (with a central image created through a corporate brand), the human resources policy is less vulnerable to reputational damage on the labour market. McDonalds Netherlands reported that it did not experience negative impacts in recruitment or on staff.
Demonstrable indicators of disciplining The attitude the management of McDonalds adopted once threatened by lawsuits can be described as one of bridging, McDonalds undertook several (disciplining) initiatives to manage the issue. In India, McDonalds launched extensive investigations into the preparation method of fries served in its Indian restaurants. The Board apologised for the confusion it created. McDonalds reviewed its labelling policy for the sake of clarity. Extensive information on all product ingredients has been added on the corporate website and in restaurants. A Dietary Practice/Vegetarian Advisory Panel was established to give advice on guidelines 42
and restrictions on vegetarian products. As a result of the lawsuit, McDonalds decided to donate 10 million dollars to, among others, Hindu and vegetarian organisations that are involved in charitable and educational projects. On 14 April 2002, McDonalds published its first global Social Responsibility Report as part of a new strategy of openness and transparency. In the compilation of the report, the GRI guidelines were used as guiding principle.
Outcome Interests: In this case, it is unclear whose interests were acceded to most. McDonalds disclosed information in an open and transparent manner. It is clear and widely known that beef extract is used in fries for the American market. Hindus and vegetarians felt that they had been misled when they were put on the sidelines ten years ago. Only time will tell whether the donation of 10 million dollars is sufficient to restore trust
Resolving the case: The issue is resolved insofar it can be assumed that vegetarians and Hindus will avoid McDonalds (French fries) in the US. With respect to transparency on labels, FDA legislation has remained unchanged. In most countries, the misunderstanding was cleared up. In its core markets, McDonalds is not willing to adjust to the demands of specific consumer groups. Clear and transparent information - but no change in the preparation method. The VLAN has insisted that the FDA change US legislation on public disclosure of product ingredients. The FDA rejected the demand. According to the founder of the VLAN, James Pizzirusso, McDonalds said they are complying with the law in terms of disclosing their ingredients, but they should go beyond the law.
The aftermath: In June 2002, McDonalds finally issued a public apology for failing to communicate clearly to consumers. In addition, the Board launched a number of new initiatives so that greater care is taken in handling these mattes in future. The company also made a commitment to communicate clearly about sensitive issues in future. At present, extensive lists of ingredients can be consulted on the website of the worlds largest fast food chain. In 43
2002, the corporation is still in the moral spotlight regarding issues such as the alleged use of child labour in China for the production of games for Happy Meals and animal welfare on McDonalds cattle ranches.
The pastures that have been made available for cattle grazing in Argentina and the forest that is being burned for the same purpose in Brazil, are sure to elicit strong criticism (Werner and Weiss, 2002). In Europe, these issues do not seem to impact negatively on public opinion. Global concern around obesity and the responsibility of corporations is this issue. The company plans to phase out its super size portions. McDonald's super size option has been targeted by critics as contributing to a growing obesity crisis in the developed world. In relation to this McDonalds has faced a lawsuit in February 2003 on the alleged responsibility for causing obesity. The company says the suit, engaged in 'deceptive practices' in its promotion and advertising. Besides this, McDonalds is no.2 on the popular boycott list, just a slight bit more popular then ExxonMobil. A positive sign is that in March 2004, Fortune magazine listed McDonald's among the top ten companies for social responsibility on its annual list of America's Most Admired Companies.
CASE STUDY 2: LILAVATI S U N D AY, F E B R U A R Y 1 3 , 2 0 11 Medical negligence at its heights: Hospital throws patient into coma, serves Rs 3 crore bill: What was the case? Hyderabad: In a country where thousands die each day due to their inability to access an expensive health care system, (we seek) to advance the frontiers of specialised medical care boasts the Mumbai-based Lilavati Hospital in its introduction to prospective patients. Going by the hospitals tall promise of philanthropy, how much do you think the authorities 44
would charge from a patient, who slipped into coma due to negligence of its medical staff? Rs 10 lakh, Rs 50 lakh or Rs 1 crore? Hold your breath, Lilavati believes Rs 3 crore is not a huge bill to be served on the family of the coma patient, who has been undergoing treatment for the last two years for no fault of hers. The hospital has slapped a bill for Rs 3 crore on the family of Nazma Alam Khan of Hyderabad. Nazma slipped into coma minutes after she was administered anaesthesia for hysterectomy at Lilavati hospital in September 2008. Ever since she has been in what doctors call vegetative state. It was a clear cut case of medical negligence but the hospital has been issuing bills at frequent intervals much to the chagrin of her family. The last time the hospital served a bill was for Rs 1.5 crore. The latest bill is reportedly for Rs 3 crore. Nazmas family including son and daughter have been put to a lot of mental agony in the last two years and the now the bill for Rs 3 crore has only further compounded their suffering. Nazmas family members are not willing to talk about the case. But it is learnt that they are fighting a legal battle against the hospital authorities for medical negligence. Efforts by this correspondent to contact the authorities at Lilavati hospital failed. Strangely enough the government has double yardsticks for hospitals run by it and by private individuals or corporate bodies. One can bring pressure on the government and seek disciplinary and penal action against doctors and other medical staff involved in medical negligence, besides seeking monetary compensation, if something goes wrong in government hospitals. But in the case of private hospitals, one has to go through the long process of fighting it out legally in a consumer court. Unless medical negligence is proved by the complainant, consumer courts cannot deliver justice to the victim. This is a complete case of medical negligence on the part of the treating doctors, especially the anaesthesia team of the hospital. Also stating that a healthy woman goes for a routine hysterectomy and slips into coma after anaesthesia argues Dr Ramesh Reddy, chairman of Andhra Pradesh Medical Council. Her family can either approach consumer forum and file a petition, or approach Maharashtra Medical Council and based on prima facie negligence on part of the treating doctors, a 45
petition can be filed for violation of code of medical ethics. Post enquiry by a team of experts from the MC, if negligence is proved, a criminal case can be filed under Section 304 of the IPC, he adds. Rights of Patients The World Health Organization has recognized patients rights as part and parcel of human rights. Supreme Court has declared that medical treatment is a service and hence falls under the purview of the Consumer Protection Act, 1986. As consumers, patients or their relatives have every right to demand information from the doctor/hospital concerned. 1. Patient has the right to information. He must be told about all the facts regarding the illness, the procedure to be undertaken and the risk involved, if any 2. Patient has the right to access his or her medical records, investigative reports etc. 3. Patients enjoy the right to know about the doctor or doctors attending him or her, like doctors qualification, whether any case of medical negligence is pending, doctors expertise in the given field and the number of successful and failed cases. In USA hospitals make it a point to include medical negligence cases, if any, in the profile of their panel doctors. 4. Patients enjoy their right to confidentiality about their treatment and the medical problem. 5. Patients have right to compensation in case of medical negligence.
THE PATIENT AS A CONSUMER Traditionally, patients in India have unquestioning trust in their doctors. Most doctors deserve it. But in some cases, medical negligence has resulted in severe harm physical, mental and financial. In addition, unqualified practitioners have brought suffering to gullible patients. Doctors have been liable to prosecution in civil court, but few malpractice victims sue for compensation, fearing years (even decades) of costly litigation. Fortunately, in 1995 the Supreme Court decreed the medical profession to be a "service" under the Consumer Protection Act; 1986.It set aside a writ Petition challenging the same by the Indian medical Association. 46
WHAT IS MEDICAL NEGLIGENCE? Medical negligence is defined as a failure to exercise reasonable skill and care in diagnosis and treatment as per the prevalent standards as that particular point of time. An aggrieved patient who believes that he is a victim of medical negligence can now approach the Consumer Courts for fair compensation, and expect results in a relatively shorter period of two to three years. The procedure is comparatively simple and inexpensive.
A PATIENT'S PRECAUTIONS UNDERGOING OR PLANNING MEDICAL TREATMENT: 1. Make sure you have told all relevant facts to the doctor before deciding any treatment. Also discuss with your doctor the cost of the treatment. 2. Please seek clarification for all the doubts regarding
diagnosis/treatment/investigation. 3. During the treatment, If you are not satisfied with any aspect and/or have doubts, seek clarification from the doctor. 4. Keep all receipts/prescriptions/reports/discharge cards safely and keep extra photo copies. After treatment clarify all doubts regarding bills/payments etc before discharge. 5. In case of a death during the treatment, if you are not satisfied with the cause of death, demand a post mortem examination and get copies of the entire Indoor Case Record. This is the right of every patient/legal heir. 6. It is necessary and correct to discuss with the concerned doctor all the doubts before resorting to any legal action. Many of the complications/delays/mishaps in any medical treatment can be genuine.
The following constitute Medical Negligence under the Consumer Protection Act: The human body and the way it functions or tends to malfunction are extremely complex and difficult to fathom. In fact, even the most experienced medical practitioners may fail to detect 47
the true nature of a disease or condition. The Consumer Protection Act considers this while determining the accountability of a medical practitioner when such a case of negligence arises. Consequently, a medical practitioner can only be held liable for a diagnosis if his mistake was a result of absence of reasonable skills, knowledge and care expected on his part. This means that if the doctor adheres to the reasonable standards of patient care as per the required professional standards, then he/she cannot be held guilty of negligence. Doctors Mistaken Diagnosis Amount to Negligence: A mistaken diagnosis is not necessarily a wrong diagnosis. A case was filed against the doctor for wrong diagnosis as the patient was treated for orchitis instead of torsion testis. The doctor, however, claimed that he had diagnosed the disease on the basis of symptoms described by the patient. Further, no facilities were there at that time to effectively detect torsion testis. Hence, the court passed a verdict in the doctors favour, despite a case of wrong diagnosis. Remember, the peculiarities of a case are considered by courts. The following amount to Deficiency in Medical Services: Deficiency in medical services is the most common ground for claiming medical negligence damages. The Consumer Protection Act identifies the following grounds as medical service deficiency: Inadequacy in Diagnostic or Treatment Procedures. Lack of Preparation for an Operation. Failure to Sterilize Properly.
Interpretation:
Najma Alam Khan was stable before operating. She was being operated for hysterectomy. This could be regarded as medical negligence in lack of preparation of an operation.
Hence, the Act is empowered to derecognize doctors under its jurisdiction in this case.
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10.
AMENDMENTS OF CONSUMER PROTECTION ACT
1. To enlarge the scope of the Act so as to enable the consumers to file class action complaints where such consumers have a common interest and to file complaints relating to restrictive trade practices adopted by a trader; 2. To enable the consumers who are self employed to file complaints before the redressal agencies where goods bought by them exclusively for earning their livelihood, suffer from any defect; 3. To add services relating to housing constructions; 4. To enable filing of class complaints on behalf of groups of consumers having the same interest; 5. To provide for the constitution of selection committees for the selection of nonjudicial members of various redressal agencies; 6. To increase the monetary jurisdiction of District Forums/State Commission/National Commission; 7. To confer additional powers on the redressal agencies by way of awarding costs to the parties, for ordering removal of defects or deficiencies from services, and for empowering to recall of goods likely to endanger the safety of the public, etc; 8. To impose punishment on the complaint in cases of frivolous or vexatious complaints; and 9. To provide for a limitation period of one year for filing complaints. The Act applies to all goods and services, except if otherwise provided by the Central Government by Notification. The law is designed in such a way that it serves the interests of the consumers. Consumer Education and redressal of consumer grievances are the two aspects of the Act. It proves to be like an assurance to the consumers that any unreasonable 49
loss suffered would be compensated taking this law into account, so that this increases the responsibility of the manufacturer, trader, supplier or businessman.
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11.
QUESTIONNAIRE
1. Are you aware about any legal protection to consumers? Yes No
2. While purchasing a product do you go through the ingredients of the product, its expiry date and other relevant details about the products? Yes No
3. Have you ever felt cheated while purchasing a particular product or service? Yes No
4. Is it easy to file a complaint? Yes No
5. Through which means do you file a complaint? States Human Rights Commission Local Police Consumer Blocks Consumer Websites All of the above Dont Know
6. Can you file a complaint in consumer forum on your own without appointing a lawyer? Yes 51
No Dont Know
7. Are services included within the purview of Consumer act? Yes No Dont Know
8. If you avail any goods for business purpose, would you come under the consumer protection act? Yes No Dont Know
9. Have you ever witnessed a Consumer Awareness campaign? Yes No If yes, which one can you recall?
__________________________________________________________________________ _ 10. Do you think that consumer protection act is doing justice to the consumers? Yes No
Analysis: Our analysis which involved examining the awareness of the Consumer Protection Act amongst the general consumers consisted a sample size of 50 individuals. These respondents 52
were broadly in the age groups of 22- 42 years from various backgrounds like media, banking, services, businessmen, education, etc and included both males and females so as to have a diversified understanding. The response to the survey led us to the following findings: Approximately, 86% of the respondents are aware about the legal protection available to the consumers. This may portray a very rosy picture on the outset but in fact, this is at a very shallow level of understanding prevailing among the respondents. It was surprising to know that 82% had the presence of mind and awareness to do a thorough examination of the product before making the final purchase. Amongst these, there were only few people who actually concentrated on the ingredients depending upon the nature of the product. More emphasis was given to the expiry date. 56% of our respondents claimed to have been cheated after purchasing the product or while availing the service. Even after being cheated it was shocking to know that only 18% of the respondents have actually complained about it. On further examination it was found that many people found the entire process of filing a complaint, undergoing the entire legal procedure was very time consuming hence leading to farfetched complications and also loss of time and money. There were few more amusing statistics whereby it was found that only 30% of the respondents would approach the Consumer Blocks for lodging a complaint and as many as 34% of the respondents would go forward with the aid of the Consumer websites. The fact that the in depth knowledge pertaining to the entire act is still not extensively known to the consumers was judged by the fact that only 40-55% of the respondents possessed the understanding of filing a complaint in the consumer forum without the assistance of a lawyer. Also statistics say that only 52% of the respondents are aware of inclusion of services within the purview of the Act. 40% of respondents have a misconception that purchase of goods for business purposes are included in the Act. Further clarity pertaining to the lack of transparency in connection to the Consumer Protection Act was brought to light by the result that only a mere 34% of the respondents could recall any consumer awareness campaign despite extensive government efforts to make 53
the common individuals realise their rights as a consumer. They were able to recollect the Jaago Grahak Jaago campaigns initiated but were not able to link it with the existence of the Consumer Protection Act. To sum it up though about 54% of the respondents reposed their faith in the Consumer Protection Act; some more efforts are required at the end of both the consumers and the government to ensure that the statement of Customer is the King of the Market prevails.
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12.
BIBLOGRAPHY
1. 2. 3. 4. 5. 6. 7.
Legal concepts of Business Business Law - Wadhwani cgsiindia.org Business Law in Capsule form - Bulchandani www.consumerlaw.in www.confonet.in www.wikipedia.org/wiki/consumer_protection_act_of_1986
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MET INSTITUTE OF COMPUTER SCIENCE

The Consumer Protection Act, 1986

2.2.1 2.2.2 2.3 2.4 2.5

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

4. RESTRICTIVE TRADE PRACTICE

Cases which are treated as Deficiency: 14

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

3. Right to be assured, wherever possible, access to variety of goods at competitive prices;

The Consumer Protection Act, 1986

6. Right to consumer education.

The Consumer Protection Act, 1986

Minister Incharge of consumer Affairs -Central Government

Official and Non Official

Total Counts to 150 members

Minister Incharge - Civil Supplies

Deputy Minister Incharge of Consumer Affairs in Central Govt.

Representatives of Farmers,Trade and Industries - (Not exceeding than 20*)

The Secretary in the department of Civil Supplies

The Consumer Protection Act, 1986

Disposal 87.10 81.37 91.45 89.85

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

Legal Frame Work:

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

samples wherever possible. 25

The Consumer Protection Act, 1986

agency, ISI certification guarantees free replacement. 9)

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986

8. CONSUMER DISPUTES REDRESSAL AGENCIES

charge -Office or branch in the -Actual partly or state reason fully

-Complaints transferred from one State to

The Consumer Protection Act, 1986

or 50% Rs.5,00,000/-, whichever lesser

and Convicted to sentenced for imprisonment

and Convicted to sentenced

for membership sentenced appointment imprisonment an involving turpitude. Jurisdiction

for imprisonment for offence

offence an moral involving turpitude.

moral involving moral turpitude.

Commission shall ordinarily 32

The Consumer Protection Act, 1986

The Consumer Protection Act, 1986