Consumer Protection: formula sheet

Key formulas

Consumer test

Consumer = buys goods or hires/avails services for consideration + not for resale or commercial purpose

Includes the user with the buyer's approval. Apply to the facts first.

Defect vs deficiency

Defect → goods; Deficiency → services

Defect covers quality, quantity, potency, purity, standard. Deficiency covers quality, nature, manner of performance.

Six consumer rights

Safety; Information; Choice; Be heard; Redressal; Consumer awareness

State all six when asked to list the rights.

Role of Central Authority (Section 10)

Regulates violation of consumer rights, unfair trade practices and false or misleading advertisements

Established by Central Government notification. Headquarters in the National Capital Region.

District Commission relief where loss to many unidentifiable consumers (Section 39(1)(k))

Minimum sum ≥ 25% of value of defective goods sold or service provided

Applies when a large number of consumers who are not conveniently identifiable suffer loss or injury.

Establishment

Central Government, by notification, from a date it specifies (Section 3(1))

The State Government establishes the State and District Councils, not the Centre, in the case of the District Council.

Nature

Advisory council (Section 3(2))

No adjudicating or enforcement power.

Chairperson

Minister-in-charge of the Department of Consumer Affairs, Central Government (Section 3(2)(a))

Other members are official or non-official, as prescribed.

Object

Advice on promotion and protection of consumers' rights under the Act (Section 5)

The Central Council's object is not limited to a State or district.

Meetings

At least 1 meeting every year (Section 4(1))

State Council and District Council: at least 2 every year (Sections 6(3) and 8(3)).

Meeting procedure

Time and place as the Chairperson thinks fit; procedure as prescribed (Section 4(2))

Quorum and similar details are in the rules, not the Act text given here.

State Council: establishment

Section 6(1): State Government, by notification, establishes the State Council for the State

Established by the State Government, not the Central Government.

State Council: nature and members

Section 6(2): advisory council = Minister-in-charge of Consumer Affairs (Chairperson) + prescribed official/non-official members + Central Government nominees (not exceeding ten)

Only the State Council has Central Government nominees.

State Council: objects

Section 7: render advice on promotion and protection of consumer rights under the Act within the State

Advice only. No adjudication.

District Council: establishment

Section 8(1): State Government, by notification, establishes a District Council for every District

One council for every district.

District Council: members

Section 8(2): advisory council = Collector (Chairperson) + prescribed official and non-official members

Collector is the Chairperson, by whatever name called.

District Council: objects

Section 9: render advice on promotion and protection of consumer rights under the Act within the district

Same object as the State Council, limited to the district.

Meetings

Sections 6(3) and 8(3): as and when necessary, not less than two meetings every year

Applies to both councils. Chairperson fixes time and place; procedure is prescribed.

Rule-making

Section 102(2)(c)-(f): State rules fix number of members, time, place and procedure

State Government makes these rules; the Central Government may frame model rules.

Establishment (s.10)

Central Government notification → Central Authority = Chief Commissioner + other Commissioners; HQ in NCR of Delhi

Purpose: regulate violations of rights, unfair trade practices and misleading ads; protect consumers as a class.

Investigation route (s.19, s.15)

Preliminary inquiry → prima facie case → investigation by Director-General or District Collector

Matter may be referred to another Regulator with report. The Investigation Wing is headed by a Director-General.

Recall order (s.20)

Sufficient evidence after investigation → recall or withdrawal of dangerous, hazardous or unsafe goods or services + reimbursement of price + discontinue unfair practices

Opportunity of being heard must be given first.

Direction on advertisement (s.21(1))

After investigation, ad false or misleading and prejudicial → order to trader, manufacturer, endorser, advertiser or publisher to discontinue or modify

Order specifies the manner and time.

Penalty on manufacturer or endorser (s.21(2))

First: up to ₹10,00,000. Each subsequent contravention: up to ₹50,00,000

These are maximum limits, not fixed amounts.

Endorser prohibition (s.21(3))

First: up to 1 year. Each subsequent contravention: up to 3 years

Applies to endorsing any product or service.

Penalty on publisher (s.21(4))

Person publishing or party to publication of a misleading ad: up to ₹10,00,000

Section 21(4) has no higher penalty for repeat contravention.

Defences (s.21(5), (6))

Endorser: due diligence to verify claims. Publisher: ordinary course of business, unless previous knowledge of the Authority's order

The s.21(5) defence applies to penalty under s.21(2) and (3).

Penalty factors (s.21(7))

Population and area affected; frequency and duration; vulnerability of class; gross revenue from sales due to the offence

Four factors. A hearing is required under s.21(8).

District Commission pecuniary limit

Consideration paid up to ₹1 crore → District Commission

Follows from the tier above starting above ₹1 crore. Do not quote a section number for this limit unless you are certain of it.

State Commission original jurisdiction

Consideration paid > ₹1 crore and ≤ ₹10 crore → State Commission (Section 47(1)(a)(i))

Lower limit is exclusive, upper limit is inclusive. The Central Government may prescribe another value.

National Commission original jurisdiction

Consideration paid > ₹10 crore → National Commission (Section 58(1)(a)(i))

Measured by consideration paid, not compensation claimed.

Unfair contracts

State: consideration ≤ ₹10 crore (Section 47(1)(a)(ii)); National: consideration > ₹10 crore (Section 58(1)(a)(ii))

Applies to complaints against unfair contracts.

Appeals

District → State (Section 47(1)(a)(iii)); State → National (Section 58(1)(a)(iii)); Central Authority → National (Section 58(1)(a)(iv))

Quote the appeal route in every answer.

Composition

District: President + at least 2 members (Section 28); State: President + at least 4 members (Section 42)

Upper limit of members is as prescribed with the Central Government.

Where to file before the State Commission

Opposite party's residence, business, branch or workplace; or cause of action (wholly or in part); or complainant's residence or workplace (Section 47(4))

If only some of several opposite parties are within the area, the State Commission's permission is needed.

Mediation cell

Every cell keeps: empanelled mediators, cases handled, record of proceedings, other information specified; quarterly report to its Commission (Section 74)

State Government sets up cells for District and State Commissions; Central Government for the National Commission and its Benches.

Bench difference of opinion

Majority decides; if equally divided, refer to the President. Opinion on the point within 1 month (State, Section 47(3)) or 2 months (National, Section 58(3))

Do not mix up the two time limits.

Quick revision

• Central, State and District Councils are advisory bodies; their object is to advise on promotion and protection of consumer rights.
• The Central Council is chaired by the Minister-in-charge of the Department of Consumer Affairs in the Central Government.
• The State Council is chaired by the Minister-in-charge of Consumer Affairs in the State Government; the Central Government may nominate up to ten other members.
• The District Council is chaired by the Collector of the district.
• State and District Councils must meet as and when necessary, but not less than two meetings every year.
• The Central Authority is established by the Central Government to regulate violation of consumer rights, unfair trade practices and false or misleading advertisements.
• The Central Authority consists of a Chief Commissioner and other Commissioners; its headquarters is in the National Capital Region of Delhi.
• The Central Authority may inquire suo motu, file complaints before Commissions, intervene in proceedings, issue safety notices and issue guidelines.
• The State Government may establish more than one District Commission in a district; each has a President and not less than two members.
• The State Commission ordinarily functions at the State capital and has a President and not less than four members; regional benches are allowed.
• The National Commission ordinarily functions at the National Capital Region and may have regional Benches.
• A consumer mediation cell is attached to each District Commission, State Commission and the National Commission with its regional Benches, and it files a quarterly report.

Common mistakes

• Treating every buyer as a consumer. Fix: Always test the purpose of purchase before concluding.
• Using defect and deficiency interchangeably. Fix: Defect is for goods. Deficiency is for services. Write this distinction explicitly.
• Saying the Central Council decides consumer complaints. Fix: Write 'advisory council' every time. Complaints go to the Commissions.
• Stating two meetings a year for the Central Council. Fix: Central: at least one a year. State and District: at least two.
• Saying the councils decide consumer complaints or award compensation. Fix: Remember that councils are advisory. Disputes go to the Commissions.
• Writing that the Central Government establishes the State Council. Fix: Both the State and District Councils are set up by the State Government by notification.
• Saying the Authority decides individual consumer complaints and awards compensation. Fix: The Authority acts for consumers as a class. Compensation and replacement orders come from the Commissions.
• Stating penalties as fixed amounts. Fix: Write 'may extend to' ten lakh rupees, and fifty lakh rupees for each subsequent contravention.
• Using the compensation claimed to decide the forum. Fix: Use the value of the goods or services paid as consideration, as the sections say.
• Treating ₹10 crore as the National Commission's floor. Fix: The National Commission hears complaints where consideration exceeds ₹10 crore. Exactly ₹10 crore goes to the State Commission.

Exam tips

• Begin each case answer with the definition, then apply it to the facts. Markers look for this order.
• Write the six rights as a short list and add one line of meaning to each.
• Keep defect, deficiency and unfair trade practice distinct. Give one example of each.
• Cite Section 10, 18, 19, 39 or 94 only for the points they cover, as given in the Act.
• End every case answer with a clear conclusion and the relief available.
• Write section numbers: 3 for establishment and composition, 4 for meetings, 5 for objects.
• Always use the word 'advisory' and add that the Council has no adjudicating power.
• Use a small comparison of Central, State and District Councils for chairperson and minimum meetings. It earns easy marks.