State of Consumer Protection in Nepal

By Mihir K. Thakur, Pro Public, Kathmandu

(Abstract: The Consumer Protection Act of Nepal ensures six consumer rights out of eight rights
accepted globally. Short descriptions have been made about the various enforcement agencies
created under the law. The access to redress for compensation can be claimed either by the
aggrieved consumer or consumer organization in his/her behalf. But only the government
officers can do filing of a case for prosecution and punishment. There is six members
Compensation Tribunal for each 75 districts. In actual practice, the implementation level of the
Act is very poor in Nepal.)
1. Scope of Consumer Protection Laws:
Since the General Assembly of the United Nations, on April 9, 1985, unanimously adopted a set
of general guidelines for consumer protection, it became the matter of prime concern to all
consumers of the world, whether rich or poor to look at their national laws from internationally
recognized standards. Indeed, the credit goes to Consumer International (CI) for its tireless effort
in persuading the world community and the United Nations to recognize eight basic rights of the
consumer. These rights include the right to basic needs, the right to safety, the right to be
informed, the right to choose, the right to be heard, the right to redress, the right to consumer
education and the right to a healthy environment. Since the "legitimate needs " of consumers as
stipulated in the UN guidelines, there has been even greater demand for strong constitutional
protection for consumers. The constitutions of at least 24 countries worldwide provide for
consumer protection. Of these, the countries in Asia with constitutional protection for consumers
are South Korea, China, the Philippines, Vietnam, Cambodia and Thailand. 1 It is argued that a
strong constitutional framework for consumer's protection compels government to be more
accountable towards the consumers. Therefore, it is imperative that consumer rights should be
protected, mutually balanced and reconciled in the national constitution. Human rights are the
birthrights of all human beings and it is in this connection that a holistic human rights conception
be accorded to consumer protection.

Though, the Constitution of the Kingdom of Nepal promulgated after the peoples movement in
1990 did not expressly provide consumer protection, it has recognized the people as sovereign
power of the nation and has granted every citizen fundamental right to demand and receive
information on any matter of public interest. The Directive Principles and State Policy endorsed
by the Constitution aspires to promote a just system in all aspects of national life, including
social, economic and political, while at the same time protecting the lives, property and liberty of
people pursuing the principles of openness. The fundamental economic objective of the state as
enunciated in the Constitution is to transform the national economy by making necessary
arrangements for the equitable distribution of economic gains on the basis of social justice.
Similarly, the state is directed under the Constitution to pursue a policy of raising the standard of
living of the general public through the development of basic needs such as education, health,
housing and employment.2 All of these constitutional provisions have the sole objective to
protect the life and security of the consumer either directly or indirectly.
After long struggle and advocacy by the consumer organizations and civil society for a separate
and comprehensive consumer protection law based on UN guidelines, the Nepalese Parliament
finally enacted Consumer Protection Act in the year 1998. Before the enactment of the Consumer
Protection Act, some laws, still in existence, have objective to protect the interests of the
consumer in many ways. Among such laws, the Food Act of 1966 is the oldest legislation in the
field of consumer protection. The basic objectives of this Act are to safeguard the health and
comfort of the consumer, to prevent the adulteration of the food stuffs with undesirable elements,
to prohibit the change of any originalities of the food and to maintain quality standard of food.
The Act has strictly prohibited selling, distributing, storing and producing such food staple that
is under quality or adulterated or harmful to human health.
The Standard Metrology Act of 1968 protects the right of consumers by ensuring standard weight
based on metric system and quantity in every commercial transaction. The Act empowers the
authorities to check equipment of metrology used in commercial practices as per the standard.
Similarly, Black Market and Some other Social Crime and Punishment Act of 1975 protects
consumers from black marketing and hoarding of essential commodities. The Nepal Standard
(Certification Mark) Act of 1980 regulates a comprehensive quality control system within the

manufacturing organization. The certification mark scheme under the Act has brought quality
awareness among Nepalese consumers and producers alike.
With the objective of maintaining the health of consumers, offering facilities and economic
benefits, maintaining the quality of goods and services, controlling the inflation, caused by
monopoly and unfair trade practices, making arrangements to establish institutions for
facilitating consumer complaints and redressing grievances, the Consumer Protection Act 1998
has been enacted and promulgated.3 This Act includes 30 Sections and it is the specific and
comprehensive legislation protecting the rights of consumer as well as restricting unfair trade
practices to some extent. The scope of the Consumer Protection Act may be summarized in the
following sub-headings:
Guarantee of Consumer Rights: Section 6 of Act assures and recognizes six rights of the
consumer out of eight rights recognized globally. The Act has not included right to basic needs
and the right to a healthy environment.4 The Act has guaranteed the following rights to
consumers:
(i)

Right to protection of life, health and property from harmful consumer goods,

(ii)

Right to be informed about price, quantity and quality of consumer goods in order to
be protected from mal-business practices,

(iii)

Right to choose the goods and services at competitive prices,

(iv)

Right to be assured on hearing by appropriate authority on consumer protection ,

(v)

Right to hearing and compensation, and

(vi)

Right to consumer education

Obligation of Manufactures: Section 9 of the Act ensures right to safety by directing every
producer to mention basic information about the consuming products. The manufacturers are
under statutory obligation to mention the following information in the label of each product:
(a) Name, address and registration number of manufacturing company.
(b) Composition, quantity and weight of products like food and medicines.
(c) Standard mark of certification if given to the product.
(d) Method of consumption and any side effects of the product.
(e) Price, batch number, date of manufacturing and expiry date of product.

(f) Products guarantee and guarantee time limit of products like electronics hardware and
machinery parts.
(g) Preventive and security measures necessary for any inflammable and hazardous
products.
Restrictions on Lower Qualities Goods and Services: Section 10 of the Act restricts the
following activities:
(a) Production, selling, exports and import of any sub-standard goods.
(b) Duplicating any product to cheat consumers.
(c) Selling of sub-standard or lower quality goods in the form of standard goods.
(d) Unfair commercial transactions such as false or misleading advertisement of the use,
utility or effectiveness of any goods or services.
(e) Manufacturing and selling of any goods or services injurious to the health of
consumers.
Prohibition on Unfair Trade Practices: Section 7 of the Act prohibits the creation of
circumstances that would lead to any adverse impact in the market or in demand, supply or price
of goods or services, through collusion, by fixing quotas, hoarding and by creating an artificial
scarcity of goods and services. This provision assures consumers of quality goods and services at
reasonable prices, as the producers/traders are debarred from forming any kind of collusion.
Section 8 of the Act empowers His Majesty's Government (HMG) to formulate policy regarding
the standard of goods or services, price determination and arrangement of supply. Section 8(1)
(b) of the Act empowers the government to control monopoly and unfair trade practices, which
could adversely affect the consumer. To this end, the Act further mentions that the government
should prepare a work plan for monitoring, preventing and controlling such activities.
Sever Punishments System: The Act imposes severe punishments to any wrongdoer violating
Consumer Protection Act. Section 18 of the Act deals with the punishment as follows:
(a) Maximum of 3 years imprisonment or Rupees 50,000(Rupees 78 is equal to US$ 1)
fine or both in case of creating circumstances that leads to any adverse impact in the
market or in demand, supply or price of goods or services, through collusion, by
fixing quotas, hoarding and by creating an artificial scarcity of goods and services.

(b) Maximum of 2 years imprisonment or Rupees 30, 000 fine or both in case of violating
obligation to mention name, address and registration number of manufacture
company in the label of products.
(c) Maximum of 3 year's imprisonment or Rupees 50,000 fine or both in case of
manufacturing, selling, exports and import of lower quality goods.
(d) Maximum of 5 years imprisonment or Rupees 100000 fine or both in case of
duplicating any product, selling of goods in guise of standard goods and unfair
commercial transactions like false or misleading advertisement of the use, utility or
effectiveness of any goods or services.
(e) Maximum of 14 years imprisonment or Rupees 500000 fine or both in case of
consuming any goods or services that may cause serious hazard to life.
(f) Maximum of 10 years imprisonment or Rupees 500000 fine or both in case of
serious injury to any parts of the body that may cause permanent damage.
(g) Maximum of 5 years imprisonment or Rupees 300000 fine or both in case of other
injury to health.
2. Enforcement Agency : The Consumer Protection Act and Regulation have created many
enforcement agencies to protect the rights and interests of consumers in different ways. Here
is the short description of these enforcement agencies.
a. His Majesty's Government: HMG is under statutory duty to conduct investigation on any
circumstances leading to any adverse impact on the rights and interests of consumer. There
is wide discretionary power on the government to prosecute any manufacturer, dealer,
agent, person or corporate body if found guilty of violating the provisions of consumer
protection laws.
b. Ministry of Supply: Ministry of Supply is the chief enforcement agency for consumer
protection laws. The Consumer Protection Regulation of 1999 has given it many kinds of
rights and duties to protect the interest of consumers in different ways. The Ministry in
collaboration with the Consumer Protection Council has legal duty to implement
consumer education and awareness programmes even through educational institution's

curriculums. It formulates policy regarding quality, price, and supply system of goods and
services.
c. Consumer Protection Council: The Consumer Protection Council is the highest body
under the Chairmanship of the Minister of Supply to make policies and recommend
appropriate work plan and actions to protect the rights of the consumers as per specified
under the Consumer Protection Act. The other members of the Council include various
Secretaries of HMG such as Ministry of Supply, Industry, Agriculture, Home Affairs and
Commerce. Three representatives from NGOs working in consumer protection area and
two women activists are nominated in the Council by HMG. The Council formulates
comprehensive programmes and policies regarding consumer protection and recommend
HMG for appropriate actions.
d. Inspector: The Inspector supervises the market and supply system so that consumer can
get standard goods and services in reasonable price.

HMG appoints Inspectors or

authorize any officer to discharge the function of Inspector. The qualification of Inspector
is fixed under Consumer Protection Regulation that requires Bachelors degree in either of
following disciplines namely chemistry, pharmacy, public health, law, and market
management. Of the total 75 administrative districts, every district has one Inspector but
there is no uniformity in the appointments of Inspectors. For example, the Department of
Commerce supervises four districts including three districts of Kathmandu valley.
Department of Standards and Metrology supervises four districts. District Small Industries
Office supervises 17 districts and the Assistant Chief District Officer supervises rest of the
districts. The Inspector has power under the Consumer Protection Act to supervise,
investigate and search any place if he believes that goods and services provided are
contrary to the law. It has power to prosecute the accused before the District Court after
consulting the Public Prosecutor.
e. Department of Standards and Metrology: Department of Standards and Metrology is the
national standard body of Nepal created under Standard Metrology Act. It is operating a
certification scheme and carries out conformity certification by means of a mark of
conformity are called the Nepal Standard certification mark. Any entity which carries out
this mark with the standard number written around in a specific way signifies that the

entity is in compliance to Nepal standard with respect to characteristic mentioned in the

particular number of the standard. The quality of such entities is guaranteed and if a
customer finds any defect or deviation in the characteristics of the entity from that
specified in the standard, may complain to the Department. The Department upon
investigation if finds the complain to be genuine arranges for the replacement of the
defective entity by a conforming one.
f. Department of Food Technology and Standard Control: The Department of Food
Technology and Standard Control looks after the quality of national food products and
food products imported from third countries. It has statutory duty under the Food Act to
control adulterated food products and provide consumers the best quality food products.
The quality standard has been fixed in 54 food items such as milk and milk products,
edible fats and oils, fruit vegetables products, spices, tea, biscuits etc.
g. Monitoring Committee: The Consumer Protection Regulation establishes two separate
Monitoring Committee at the central and local level in order to supervise and monitor the
supply of goods or services, their prices, quality standard and purity. The central level
committee comprises of 11 members from different government Departments, consumer
organizations and it is headed by the Joint-Secretary of the Ministry of Supply. The district
level committee comprises six members from various sectors and the Chief District
Officer heads it.
3. Access to Redress Mechanisms: Section 22 of the Consumer Protection Act gives every
consumer right to demand compensation for losses caused due to using any goods or
services. The complaint for compensation can be lodged by any consumer organization on
behalf of the consumer too. The time limit for filing complaint is 35 days from the date of
losses caused to the consumer. The complaint is filed in the Compensation Tribunal.
Similarly, the Consumer Protection Regulation provides time limit of 7 days for filing
complaint for any act-committed contrary to the provisions of Consumer Protection Act and
Regulation that has infringed consumer rights and interests. In such complaint, the
complainer consumer or consumer organization has to mention the name and address of the
wrong doer person or organization, details of losses caused or possible losses, defects in
goods or services received and relevant evidences.

4. Consumer Claims Tribunals: Section 23 of the Consumer Protection Act constitutes

Compensation Tribunal in each administrative district. The Tribunal is headed by the Chief
District Officer and other members comprises District Government Attorney, District
Medical Officer, one representatives from any district level consumer organization, one
representatives from local Chamber of Industry and Commerce and an Officer appointed by
the government as member secretary. It hears compensation claim by any aggrieved
consumer or consumer organization on his/her behalf. The complaint is to be made under
prescribed form as specified in the Consumer Protection Regulation and it must include the
name and address of the wrong doer, details of losses caused, details of defects in goods or
services received, relevant evidences in support of the claim and amount of compensation
claimed. The Tribunal has power to issue seven days notice to the defendant for the reply in
writing. It has mandatory duty under Consumer Protection Regulation to decide the matter
within 15 days after receiving reply from the defendant or after the expiry of time limit of
reply given to the defendant. Before arriving at the decision, it can examine witness and
receive expert opinion. The decision of the Tribunal is collectively made and attendance of
President of the Tribunal is must for every decision. In case of split, the majority opinion
shall be the decision of the Tribunal. In case of ties, the opinion of the President of the
Tribunal shall be final. The Tribunal can award necessary compensation to the aggrieved
consumer after doing real evaluation of the losses. It can also fine Rupees 1000 for any
complaint intended for malafide intention.
5. Consumer Protection in Practice: Despite comprehensive consumer protection laws in Nepal,
the consumers have been still widely victimized. Various factors are responsible for this sad
situation. The first important factor is the reluctant attitude of the government agencies to
implement the law in true spirit. The second factor is lack of awareness among consumers
about their rights. Absolute majority of consumers is poor and illiterate. They do not care
about the quality of goods. The number of consumer protection organizations is very limited
and has limited resources to meet the wide challenges. Nepal being landlocked country and
open border has also some disadvantage of low quality goods at high price.
Consumers do not want to complain against any goods or services despite defects identified.
It is simply because of lack of speedy justice. Pro Public has a very bitter experience about

the delayed justice in one case it filed on the behalf of a victim demanding compensation for
medical negligence. Pro Public filed a case in the Compensation Tribunal in August 1999 on
behalf of Shirjana KC, a 14 year old girl who suffered severe side effects in her eye and face
due to the medical negligence of a doctor. A rupee 18,00000 has been claimed against the
doctor under the Consumer Protection Act. The case has been heard several times but not
decided till date. The law prescribes to settle compensation claim within 15 days after
receiving defendants reply or the expiry of the time given to defendants to reply.
Government owned corporations in Nepal provides many goods and services to consumers.
But they do not fully comply with the requirements as per the consumer protection laws.
Government schools are free of charge in principle but in practice they charge fee and other
amounts. The quality of government schools is lowering down. There are mushrooming
nursing homes but inaccessible to common people and the government hospitals are models
for negligence and unsatisfactory services. Safe drinking water has become another vigorous
problem. Even the capital is deprived of the clean and hygienic drinking water, although
consumers are paying charge to government owned Water Supply Corporation. The problem
of drinking water was brought before the Supreme Court but the court could not recognize
the rights of the consumers. However, it ruled that it is the duty of state to provide fresh and
safe drinking water to the people. 5 The tariff of electricity is increasing without rational
grounds but there is no remedy available to consumers. In short, lack of good governance and
pervasive corruption in government departments has created many problems to consumers to
enjoy their rights.
References

AP CONSUMER VOL.27 1/2002 p.5

Article 25 & 26, Constitution of Kingdom of Nepal,1990

Preamble, Consumer Protection Act, 1998
4
The Supreme Court of Nepal in Surya Prasad Sharma Dhungel v. Godawari Marble Industries (1995) has ruled that right
to healthy environment is a fundamental right to life.
5
Prakash Mani Sharma v. Council of Ministers( Writ No. 2237/2046 )
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