Consumer Protection Council, Rourkela
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informationmanagementservices         An article presented for the National Seminar on “Role of Consumer Dispute Redressal System in India: Issues, Challenges and Opportunities”, being organized by the Jawaharlal Nehru University, New Delhi, on 12th-13th March 2010.
                                                                         - Editor

Unfair Trade Practices can be eliminated
Chief Mentor
Consumer Protection Council, Rourkela



     It was the initiative of the United Nations, in 1985, which resulted in the promulgation of Consumer Protection Act, in our country.  The objectives of the Act are indeed laudable.  All the pamphlets and publicity that heralded the launch of the Act literally promised a great deal for the gullible consumer.  It was indeed an Act for time bound, speedy redressal of consumer grievances without spending a paise, as the cases were supposed to be processed without any court fee and consumers could appear in the consumer courts in person or through a Voluntary Consumer Association (VCA), without having to approach a qualified lawyer.  The consumer courts were supposed to function without the frills of the civil courts.  The expectations of the aam admi and even the knowledgeable consumers went sky high.  Overnight innumerable number of Voluntary Consumer Associations sprang up across the country as though there was a big bounty on offer.

         After the initial inertia, the District forums and State Commissions started functioning in many of the states, from 1990, thanks to the initiative taken by Sri H.D.Shourie, of Common Cause, who approached the Supreme Court, highlighting the indifference of the government.

        The initial euphoria of the common man turned into despair within a decade of the enactment of Act.  People, who had hitherto never approached a court, approached the District Forums as recommended by the consumer activists and the government.  To their horror they found that the fora manned by indifferent presiding members and steeped in cumbersome and inefficient civil court procedures were hardly equipped to redress the grievances of the litigants in a time-bound manner.  Adjournments were being given without any concern for the hapless consumer-litigant.  After all those painstaking efforts, what the consumer got was just peanuts, as the consumer fora were quite conservative, while awarding cost and compensation.  As a result of all these, overwhelming majority of consumers have become dispirited and disillusioned that they are contemplating to approach the consumer courts, only if the stakes are very high and a compromise is impossible.  The situation is somewhat similar to what has happened to the civil courts.  Instead, we notice that an increasing number of commercial and industrial organizations are utilizing the Consumer Courts for settling their Insurance and other disputes.

An anatomy of the malady

     Several factors contributed to this state of affairs:
1) Poor quality of the presiding members, especially the non-judicial members, mainly due to:
a) Very low compensation, in comparison to the high level of competency expected for adjudicating the disputes;
b) Appointing retired judicial officers, who lack the motivation or zeal for undertaking such assignments;
c) Political interference in the appointments; and
d) Appointing practicing lawyers as presiding officer of the Forum.
2) Inefficient and corrupt staff manning the fora;
3) Non-allocation of sufficient funds and inappropriate administrative controls;
4) The hangover of the civil court procedures and practices; and
5) Lack of commitment on the part of the government.

An approach for eliminating Unfair Trade Practices

      Laws and Rules alone cannot deliver the results.  It is the people (consumers) who can make the difference.  Unless we make the quasi-judicial system, formed under the Consumer Protection Act more effective and efficient, consumers will never feel encouraged to approach them.    So, the crux of the problem is that an average consumer should feel enthused and confident to approach a consumer court, when he encounters an Unfair Trade Practice. 

      Towards achieving a Consumer Oriented Redressal System, we have to address the following issues:
1) A jurisprudence for consumer protection
2) Changes needed in the CP Act & Rules
3) Alternate Disputes Redressal System & its integration into the Consumer Justice System
4) Orientation of Governmental Actions

(A) Consumer Protection Jurisprudence (?)

       The unjustifiable delays in disposing of consumer disputes amounting to even years, improper interpretation of the law, lack of empathy for the sufferings of the consumer, a paltry relief in terms of compensation and cost and even dismissal of the complaint petitions on flimsy grounds, are all quite common grievances among the consumer-litigants, who approach the consumer courts with lot of hope.  All these clearly indicate that there is a total lack of understanding of the CP Act among those who administer it.  In this context it will be quite appropriate to seriously consider the need for an appropriate jurisprudence, say, consumer protection jurisprudence, and implement it, fitting the objectives of the Consumer Protection Act.

       Herein we should clarify that this jurisprudence or interpretation and administration of the law, befitting the spirit of the landmark Consumer Protection Act.

For example:
(i) The Act provides for deciding the case ex parte (sec. 13(2)(b)(ii)) when the opposite party fails to turn up even after of service of notice, based on evidences.  This provision needs to be carried out ruthlessly if the consumers are to be dispensed justice within the stipulated timeframe.  This will also enhance the image of the consumer courts that these bodies mean business and they cannot be taken lightly.  Further, such ex parte orders should not be allowed to be questioned in the appellate bodies (higher Commissions), unless such an appeal is made on a question of law.  Our past experience reveals that the consumer courts are, in general, reluctant to pass ex parte orders and the opposite party is invariably given ample opportunity to respond, putting the consumer-litigant to avoidable hardship.

(ii) When the consumer–litigant files a case in the District Forum, the Act provides for either dismissing the complaint for default or deciding it on merits (sec. 13(2)(c)).  Since, in several cases the consumer-litigant is approaching the Forum for a small quantum of relief and they are also finding it difficult to attend the proceedings, the Consumer Courts, unless it is unavoidable, they should, in a consumer friendly manner, decide the matter (case) on merit, even if the petitioner fails to appear.  It is generally found that the Forums prefer to dismiss the case, when the consumer-litigant is not present.  (In our own case, Consumer Protection Council, Rourkela vs Lohia Machines Ltd., OP No. 30 of 1990, NCDRC, though the author himself was attending the case, spread over half a dozen sittings, representing the Council, and on behalf of over 1500 consumers, on the fateful last date of hearing, due to very heavy delay of the one of the prestigious trains, could reach the Commission only by 4 PM.  Though the concerned official in the NCDRC appreciated the problem and the same was communicated to the then President of the NCDRC, that did not reflect in the final order.  All our efforts went in vain; there was no mention about Council’s extra-ordinary efforts and the computer generated data sheets, which could be a model for any NGO interested to approach consumer courts, for public at large; and the Council was not awarded any cost, though the other complainant received Rs. 15,000/-)

(iii) Similarly there is confusion regarding applicability of the Consumer Protection Act to the services provided by certain service providers like telecom.  Though instances of such nature have already been discussed and have been ruled that the Act will be applicable irrespective of Departmental Tribunals being made available for redressal of grievances.  Another major area of concern is regarding the execution of the Orders.
Hence, in the interest of enhancing the effectiveness of the Consumer Protection Act and safeguarding the consumers, all the relevant issues of the Act which require a different approach than that dictated by conventional jurisprudence should be studied in detail and the necessary changes can be notified.

(B) Need for certain changes in the CP Act & Rules 

        To make the consumer disputes redressal machineries more efficient, certain changes have to be made in respect of:
(i) Eligibility criterion of the President of the District Forum (sec. 10(1)(a))
(ii) Salary & allowances payable to the members of the State Commission (sec. 16(2))
(iii) Sitting of Circuit Benches, in different notified cities (sec. 22C)
(iv) Fee for making complaints before District Forum (sec. 9A of CP Rules)
(v) Credit of the fine into the Consumer Welfare Fund (sec. 10A(1) of CP Rules)
(vi) Limiting the appearance of lawyers.

(i) Eligibility criterion to become a President of District Forum

      As per sec. 10(1)(a) of the Act, any person who is qualified to be a district judge can be made the President of a District Forum.  As per this provision, a lawyer with an experience of 10 years in the Bar can be appointed as the President of a District Forum.  There are two issues which are likely to have an adverse impact on such appointments. 

       Since the President of a District Forum is a tenure job and the remunerations are also meager, it is likely that only those without good practice will opt for such an appointment.  Further, such an appointee as the President of a Forum, after completion of his term, is likely to go for practice, unless he is reappointed for a similar assignment.  In such an eventuality, the President who is to adjudicate disputes based on arguments of the lawyers with whom he has to work again as a fellow-advocate is not likely to remain unaffected mentally/emotionally, while he is considering their arguments as the presiding officer.  So, one of the prerequisites of a neutral presiding officer of the Forum is getting compromised. 

      Justice Balakrishna Eradi, Founder President of NCDRC, while addressing a Consumer Protection Seminar, at Puri, Orissa, succinctly observed that practicing lawyers should not be appointed as the President of a District Forum, for the above explained reasons.  (In Orissa and other States such appointments are being made even today.)

      Hence sec. 10(1)(a) should be amended as “a person who is, or has been a District Judge, appointed by the State Government, who shall be its President.”

(ii) Salary & Allowances of Members of State Commissions

     As per sec. 16(2) of the Act, salary and allowances payable to the members of the State Commission shall be as prescribed by the State Government.  While in case of the President, who happens to be from the High Court, he continues to get the benefits of a High Court judge, whose compensation is decided by the Central Government, with the approval of the Parliament, as they belong to the higher judiciary.  Whereas, the non-judicial members get their salary and other allowances, as prescribed by the State Government.  The package offered by the States are quite low, even if we compare with that of other state government officials, not to talk of the remuneration of a High Court judge. 

      It is suggested that the salary and allowances of the Members of the State Commission should be prescribed by the Central Government.  Such a step will help in eliminating the anomalies in respect of different State Commissions and it can be expected that the salaries as prescribed by the central government will be consistent with those of the National Commission.  It is also pertinent to note that the presiding members of the State Commissions, who are supposed to be doing the same job in different states are not being paid uniformly, which in itself is an anomaly.  Though the suggested change could entail additional expenditure for the state government, it will help to motivate competent persons to come forward and offer their services for such positions.

      Accordingly, it is suggested that sec. 16(2) may be amended as: “as may be prescribed by the Central Government.”

(iii) Sitting of Circuit Benches

      Though provision has been made for constituting circuit benches in 11 cities, other than New Delhi, by the National Commission (sec. 22C), it is noticed that such circuit benches are holding their hearings only in a few of those 11 cities every year.  This means that the same city will get an opportunity once in several years, for hosting the Circuit Bench.  In a consumer friendly way, the circuit benches should function in all the cities, in at least those already notified, at least once in a year, unless it is found that there are not enough cases to hold a sitting in a particular city at least for a week. 

      Accordingly sec. 22C needs to be amended by inserting a clause at the end: “…..from time to time.  Such a sitting of the National Commission in major cities shall be done at least once in a year, unless the number of cases to be disposed do not justify holding a sitting in the city for at least 5 days.”

(iv) Withdrawal of fee for complaints up to Rs. 1 lakh

      Filing of a case in the consumer court and processing it has remained un-remunerative.  Since our interest is to encourage consumers to fight for their rights, it will be quite appropriate if the charges for all the cases up to Rs. 1 lakh are waived.  Necessary changes will have to be made in the Table sec. 9A, of CP Rules.

(v) Benefits of fine awarded should be given to the VCA/litigant

      This seminar has been convened with the noble objective of eradicating the unfair trade practices prevalent in the market.  Such an objective will be best served, if and only if, there are strong deterrents against such misadventures. 

     Though the Act has made provision for filing complaints by an individual consumer or a group of consumers, who are affected by a common issue (defective good or deficient service (sec. 2(1)(b)(iv)) and has empowered the District Forum (sec. 14(hb)) to award a minimum of 5% of the value of such defective goods sold or deficient services provided, CP Rule 10A(1) requires the money so awarded to be credited to the Consumer Welfare Fund. 

     Is it not a fact that unfair trade practices have become quite rampant and are prospering unchecked in spite of the awareness that is being created among the general public? 

     Is it also not an accepted fact that the resources of the government machineries are overstretched and in many cases they may not even have the necessary wherewithal to identify and take up such cases affecting a huge population?

     Is it also not true that overwhelming majority of the individuals do not have the technical competence or the legal abilities or even the required information to comprehend such unfair trade practices and to proceed against them?

     It is in this context, the role of Voluntary Consumer Associations (VCAs) will have to be seen.  At least some of them will be able to develop the competencies to unravel the unfair trade practices and also to fight against such cases.  But, even in such instances, if such an enterprise and initiative of a VCA is not getting compensated sufficiently, all the wishful thinking of those who enacted the Act will remain only a dream.

     Though provisions do exist for awarding punitive damages (sec. 14(d)) and for adequate cost to the parties (sec. 14(i)), seldom the compensation and cost awarded by the Consumer Courts have been found inspiring.

     It is a sad truth that overwhelming majority of the VCAs are struggling to survive as the financial resources they are able to muster through voluntary contributions are quite meager.  It is because of this ground reality that the ones which are able to make a meaningful existence are the ones which receive support from international funding agencies, or from individual patrons and well wishers, as in the case of our organization, Consumer Protection Council, or the government, to a lesser extent.

     It is in this context the Consumer Protection Rule 10A(1) has to be viewed.  This rule shall have to be amended so as to allow the fine imposed under sec. 14(hb) to be credited to the VCA or the individual or the group of consumers and to be utilized in a manner (like, to create a Trust and to utilize the amount for Consumer Protection activities) as prescribed by the National Commission.

     This is bound to spur all those who identify and are able to take up the matter legally, to proceed against such Unfair Trade Practices.  After all, prosecuting of such cases involve quite a good amount of research, time and other resources.  Once such initiators are assured that they would be rewarded once their work delivers the result, in terms of exposing an Unfair Trade Practice and bringing relief to huge number of consumers, there are bound to be more takers for such initiatives.  It is my strong view that an award of one incentive of this nature can help to mobilize the VCAs and public in an effective manner. 

     Can there be any better deterrent than this?

(vi) Limiting the appearance of lawyers

     A broad consensus emerged that to enable effective functioning of consumer courts, appearance of lawyers should be minimized.  It is widely felt by the consumer groups that the appearance of the lawyers for all cases were not desirable and that they should appear only in cases involving finer questions of law and as desired by the Forum.  Somehow this amendment did not come through during the last amendments, introduced in 2002.  In the interest of making the consumer courts consumer friendly, this change will have to be introduced.

(C) Alternate Disputes Redressal (ADR) Systems 

      Alternate Disputes Redressal Systems are in place in many of the well managed companies.  In a way the VCAs have also been taking up such initiatives.  As a matter of fact, in our organization (Consumer Protection Council, Rourkela) we started taking up individual complaints in 1987 or so.  Having handled thousands of complaints, we always give the first opportunity to the opposite party to intervene and sort out the matter.  This we find as an effective and efficient way of redressing consumer grievances.  We were venturing to approach the consumer courts when we failed to elicit the appropriate response from the opposite party and we find the merits of the case warrant such an action.  That is why our success rate in consumer courts (District Forum, State Commission and National commission) have been very high (more than 90%), of the fifty and odd cases that we pursued.

      To make the ADR initiatives more meaningful and relevant, the initiatives of the VCA will need to be embedded in the Act; i.e., if the opposite party is not amenable to reason when systematic approaches were made by the VCA or the concerned individual, the consumer courts will have to give weightage while deciding punitive damages, compensation and cost.  Such an approach is likely to give more weightage and teeth to such ADR Systems, followed by the VCAs and in turn can substantially reduce the need for approaching the consumer courts.  In this context, the procedure to be followed by the ADR systems can be prescribed/standardized through the Act, Rules and Regulations.

(D) Orientation of Governmental Actions

     The governments, both at the centre and the states have an important role to play for the effective and efficient performance of the quasi-judicial bodies, formed under the Consumer Protection Act.  It is in this context, you have to consider sec. 4, 5, 6, 7 & 8 of the Consumer Protection Act.
When the CP act came into being, one of the important noticeable activities of the Central Government had been the constitution of the Central Consumer Protection Council (CCPC).  For less than a decade or so, the Council met regularly, at least thrice in a year and gave a good opportunity for interaction and exchange of ideas.  Sri A.K.Antony, who was the then Minister for Food, Civil Supplies and Consumer Affairs, during his term gave sufficient attention to this activity.  It was at his initiative that the then Prime Minister, Sri P.V.Narasimha Rao, attended one of the CCPC meetings.  These consultations, in fact, kept up the momentum on consumer protection initiatives as all the stakeholders, namely, the state Ministers, officials of the Union and state governments, President of the NCDRC and the Voluntary Consumer Associations assembled in one place.  It is rather because of such an opportunity, this author had highlighted the plight of the Rourkela residents who had to travel to Sundargarh, a place 100 km away for attending the District Forum, since the District Forum for Rourkela was to be located in the District Headquarters, at Sundargarh.  Since more than 90% of the cases of the District Forum, used to be from Rourkela, the responsive Minister of the State and the proactive Secretary of the Orissa Government, hearing my appeal in the CCPC meeting, where they were also present, took immediate steps for constituting a District Forum, at Rourkela.

     Unfortunately, the union government’s initiative in the last decade or so, has been totally lacking.  There was some initiative at least till Sri Wajahat Habibullah headed the Department of Consumer Affairs.

     The government was to take its initiative of providing the real momentum for safeguarding the consumer rights, other than giving only advertisements, “Jago Grahak Jago”.


      It is a fact that the Consumer Disputes Redressal Mechanism has failed considerably to meet the general expectations of the common man and consumer activists.  This is more so when one considers the avowed objectives of the Consumer Protection Act, which aims to provide speedy redressal of consumer grievances, in an inexpensive manner.

      Major reasons for this malady are:
• Lack of understanding of this Social Welfare legislation among those who administer the Act;
• Certain shortcomings in the Act and the associated Rules;
• Non-existence of suitably devised Alternate Dispute Redressal (ADR) System, which is integrated with the Consumer Justice System; and
• The deteriorating governmental initiative to consult the stake holders, for a meaningful strengthening of the Disputes Redressal System.

     Our experience over the past two decades, clearly indicate the need for:

  1. A separate Consumer Jurisprudence;
  2. Making necessary amendments to the Act and the Rules; (Some of these have been suggested above.  For example: Sufficient reward for NGOs, which take well meaning initiatives, as provided under Sec. 14(hb), against Unfair Trade Practices, affecting large number of consumers.)
  3. A well devised ADR System and to incorporate the work done therein to decide punitive damages; and
  4. A proactive role by the government for strengthening the quasi-judicial bodies formed under the CP Act.

     All these should help in realizing “Consumer is the King”!


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