Q. What are the aims and objects of the CPA, 1986?

Describe the constitution, functions and the

procedure of District Forum under the CPA. What are
the provisions of appeal under the CPA and before
which authority an appeal lies against an order of an
agency? Explain the composition, jurisdiction, and
powers of State Consumer Forum (State Consumer
Redressal Commission) under CPA. Define and
discuss the word"consumer" and "service" under
CPA. Illustrate with cases.
Making money quickly is a very tempting proposition. Businesses, companies, shopkeepers, retailers, and sellers are
all interested in maximizing their profits. In doing so, very often they neglect the best interests of the buyer. Many
times, a buy gets a defective product, or a product that fails to perform as promised. Besides losing money put in
purchasing a product, some times, due to defects in the product, the buyer is injured as well. In all such cases, there
is a violation of a legal right of the buyer and he is entitled to sue the seller. Before enactment of the Consumer
Protection Act, 1986, filing a civil suit for damages was the only option available to an aggrieved buyer. However,
such a suit is very expensive and time consuming, because of which, buyers were not able to use this mechanism for
relatively smaller amounts. This gave a field day to the traders because making substandard products or not
delivering on promises was a cheap option to make quick money, after all, very few buyers would go to court. A
common man was completely helpless because of no control and penalty over unscrupulous sellers.

In this background, the CPA 1986 gave power in the hands of the buyer by allowing an easier and cheaper way to
redress their grievances, thereby holding the sellers accountable for their actions more often. It provides redress to a
consumer when the purchased product is defective or when there is a deficiency in service. The following are aims
and objectives of this act -

1. The most important objective of this act is to provide a fast and cheap way for consumers to hold the sellers
accountable for their products or services.
2. Justice to consumers.
3. Protection of consumers from fraudsters or companies selling substandard products and services.
4. Penalty to sellers for substandard product or service.
5. Check on sellers and service providers.

Besides the above objectives, Section 6 of CPA 1986 also provides certain rights as objectives to the consumers.
These are -

1. Right to be protected against goods that are hazardous or dangerous to life and property.
2. Right to be informed about the quality, quantity, potency, purity, standard and price or a product and service.
3. Right to competitive pricing.
4. Right to be heard and to be assured that consumer interest will receive due consideration at appropriate
forum.
5. Right to redressal against unfair trade practices and exploitation of consumers.
6. Right to consumer education.

It is a complete code in the sense that it provides complete details of the constitution and jurisdiction of the
commission and procedure for filing the complaint and appealing the decision. It does not depend on CPC and the
cases can be finalized completely under this act. In fact, as held in Ansal Properties vs Chandra Bhan Kohli 1991,
Consumer Disputes Redressal Agencies provide complete machinery for justice including a final appeal to the
Supreme Court and so are outside the scope of High Courts and HCs can't entertain writ petitions against their
judgments.

Under Section 9 of this act, three agencies are established to hear consumer complaints -

1. A Consumer Disputes Redressal Forum in each district (For amounts up to 20 Lakhs)

2. A Consumer Disputes Redressal Commission in each state. (For amounts from 20 Lakhs to 1 Cr)
3. A National Consumer Disputes Redressal Commission in the center. (For amounts above 1 cr)

District Forum
Composition (Section 10)
1. Each District Forum shall consist of -

a. A person who is, or who has been or is qualified to be, a District Judge, who shall be its President
b. two other members, one of whom shall be a woman, who shall have the following qualifications, namely -
1. be not less than thirty-five years of age,
2. posses a bachelor's degree from a recognized university,
3. be persons of ability, integrity and standing,
4. and have adequate knowledge and experience of at least ten years in dealing with problems
relating to economics, law, commerce, accountancy, industry, public affairs, or administration

1-A. Every appointment under sub-section (1) shall be made by the State Government on the recommendation of
selection Committee consisting of the following namely:

1. The President of the State Commission - Chairman,

2. Secretary, Law Department of the State - Member,
3. Secretary, in charge, of the Department dealing with Consumer affairs in the State - Member.

2. Every member of the District Forum shall hold office for a term of five years or up to the age of sixty-five years/
whichever is earlier:

3. The salary or honorarium and other allowances payable to, and the other terms and conditions of service of the
members of the District Forum shall be such as may be prescribed by the State Government.

Jurisdiction (Section 11)

1. Pecuniary Jurisdiction - Subject to other provisions of this Act, the District Forum shall have jurisdiction to
entertain complaints where the value of the goods or services and the Compensation if any, claimed does
not exceed rupees twenty lakhs.
2. Territorial Jurisdiction - A complaint shall be instituted in a District Forum within the local limits of whose
jurisdiction, -
1. The opposite party or each of the opposite parties, where there are more than one, at the time of
the institution of the complaint, actually and voluntarily resides or carries on business or has a
branch office, or] personally works for gain or
 2. Any of the opposite parties where there are more then one, at the time of the institution of the
complaint, actually and voluntarily resides, or carries on business or has a branch office, or
personally works for gain, provided that in such case either the permission of the District Forum is
given, or the opposite parties who do not reside, or carry on business or have a branch office, or
personally works for gain, as the case may be, acquiesce in such institution; or
3. The cause of action, wholly or in part arises.

For a complaint to lie in a district forum, at least a part of the transaction of the actual business must have occurred in
that district. In National Insurance Co vs Sonic Surgical 2003, a fire accident took place in Ambala and a part of
the claim was partly processed in Chandigarh. It was held that merely processing of claim in one place does not form
a ground to file a case in that district.

Functioning of a District Forum

Who can file a complaint (Section 12)
The following can file a complaint -

1. The consumer to whom the goods or services have been sold or are agreed to be sold.
2. Any recognized consumer association even if the consumer is not a member of the association. Recognized
means any voluntary association registered under Companies Act 1956 or any other law for the time being
in force.
3. One or more consumers, where there are numerous consumers all having same interest, with the
permission of district forum.
4. The state or central government.

The complaint must be accompanied with such amount of fee and payable in such manner as may be prescribed.
The forum may accept or reject the complaint. The complainant must be given an opportunity to be heard before
rejection. The acceptance or rejection will be decided in 21 days.

Procedure on admission of complaint (Section 13)

Upon acceptance of the complaint, the forum will send a copy to the opposite party within 21 days, who has to
respond with his version of the complaint within 30 days (extendable by 15 days). Upon receipt of the response, the
forum will give its decision. If no response is received, the forum will give and ex parte decision. An effort will be
made by the forum to make a decision within 3 months of date of receipt of notice by the opposite party where no
goods testing needs to be done or within 5 months otherwise.

Powers (Findings) of District Forum (Section 14)

If, after conducting the procedure in Section 13, the forum finds that there was a defect in the product or a deficiency
in service or that any of the allegations in the complaint are true, it can ask the opposite party to do any of the
following -

1. to remove the defect pointed out by an appropriate laboratory from the goods in questions.
2. to replace the goods with new goods of similar description which shall be free from any defect.
3. to return to the complainant the price or as the case may be, the charges paid by the complainant.
4. to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury
suffered by the consumer due to the negligence of the opposite party.
5. to discontinue the unfair trade practice or restrictive trade practice or not to repeat it.
6. not to offer the hazardous product for sale.
7. to cease manufacture of hazardous goods and to desist from offering services that are hazardous.
8. when injury has been suffered by may customer who are not easily identifiable, the opposite party may be
required to pay such sum as the forum deems fit.
9. to issue any corrective advertisement to neutralize the effect of any misleading advertisement.
10. to provide adequate costs to parties.

The District Forum also has the power to grant punitive damages in such circumstances as it deems fit.
The forum must take into account all the evidence and the documents produced by the parties and the order of the
forum should be a speaking order, which means that it should detail the reasons behind the order. In K S Sidhu vs
Senior Executive Engineer 2001, the complaint was dismissed by the District Forum by a non speaking order. It did
not discuss the evidence or the documents submitted before it and thus it was held that the order was unjust and fit to
be set aside.

Provisions for Appeal (Section 15)

From District Forum to State Commission (Section 15)
Any person aggrieved by an order by the District Forum may prefer an appeal against such order to the State
Commission within a period of 30 days from the date of the order. The state commission may entertain an appeal
after the expiry of the said period of 30 days if it is satisfied that there was sufficient cause for not filing it with in that
period. With the appeal, the appellant must deposit 50% of the amount that he is required to pay or 25000/-
(whichever is less).

From State Commission to National Commission (Section 19)

Any person aggrieved by an order by the State Commission may prefer an appeal against such order to the National
Commission within a period of 30 days from the date of the order. The commission may entertain an appeal after the
expiry of the said period of 30 days if it is satisfied that there was sufficient cause for not filing it with in that period.
With the appeal, the appellant must deposit 50% of the amount that he is required to pay or 35000/- (whichever is
less).

As per section 19-A, appeal to the State Commission or the National Commission shall be heard as expeditiously as
possible and an effort shall be made to dispose off the appeal within a period of 90 days from the date of admission.
If the appeal is disposed of after this time, the commission shall state the reasons for the delay.

From National Commission to Supreme Court(Section 23)

Any person aggrieved by an order made by the National Commission in exercise of its power conferred by sub-clause
(i) of clause (a) of section 21, may prefer an appeal against such order to the Supreme Court within a period of thirty
days from the date of the order. Provided that the Supreme Court may entertain an appeal after the expiry of the said
period of thirty days if it is satisfied that there was sufficient cause for not filing it within that period. Provided Further
that no appeal by a person who is required to pay any amount in terms of an order of the National Commission shall
be entertained by the Supreme Court unless that person had deposited in the prescribed manner fifty per cent. of that
amount or rupees fifty thousand, whichever is less.]

State Commission
Composition (Section 16)
1. Each State Commission shall consist of -
a. a person who is or has been a Judge of a High Court, appointed by the State Government, who shall be its
President :
Provided that no appointment under this clause shall be made except after consultation with the Chief
Justice of the High Court;
b. two other members, who shall be persons of ability, integrity and standing and have adequate knowledge or
experience of, or have shown capacity in dealing with problems relating to economics, law, commerce, accountancy,
industry, public affairs or administration, one of whom shall be a woman :
Provided that every appointment made under this clause shall be made by the State Government on the
recommendation of a selection committee consisting of the following, namely :-
(i) President of the State Commission - Chairman,
(ii) Secretary of the Law Department of the State - Member,
(iii) Secretary, in charge of Department dealing with consumer affairs in the State - Member.

2. The salary or honorarium and other allowances payable to, and the other terms and conditions of service of the
members of the State Commission shall be such as may be prescribed by the State Government.

3. Every member of the State Commission shall hold office for a term of five years or up to the age of sixty-seven
years, whichever is earlier and shall not be eligible for re-appointment.

4. Notwithstanding anything contained in sub-section (3), a person appointed as a President or as a member before
the commencement of the Consumer Protection (Amendment) Act, 1993, shall continue to hold such office as
President or member, as the case may be, till the completion ] of his term.

Jurisdiction (Section 17)

1. Pecuniary Jurisdiction - Subject to other provisions of this Act, the State Commission shall have
jurisdiction to entertain complaints where the value of the goods or services and the Compensation, if any,
claimed exceeds rupees 20 lakhs but does not exceed rupees 1 crore.
2. Territorial Jurisdiction - It can entertain appeals against the orders of any District Forum of the state.

As per section 17 A , on the application of the complainant or of its own motion, the State Commission may, at any
stage of the proceeding, transfer any complaint pending before the District Forum to another District Forum within the
State if the interest of justice so requires.

Procedure (Section 18)

The provisions of sections 12, 13 and 14 and the rules made there under for the disposal of complaints by the
District Forum shall, with such modifications as may be necessary, be applicable to the disposal of disputes by the
State Commission.

National Commission
Composition (Section 20)
1. The National Commission shall consist of-
a. a person who is or has been a Judge of the Supreme Court, to be appointed by the Central Government, who
shall be its President
Provided that no appointment under this clause shall be made except after consultation with the Chief Justice
of India
b. not less than four, and not more than such number of members, as may be prescribed, and one of whom shall
be a woman, who shall have the following qualifications, namely:-
(i) be not less than thirty-five years of age;
(ii) possess a bachelor's degree from a recognized university; and
(iii) be persons of ability, integrity and standing and have adequate knowledge and experience of at least ten
years in dealing with problems relating to economics, law, commerce, accountancy, industry, public affairs or
administration:

Provided that not more than fifty per cent, of the members shall be from amongst the persons having a judicial
background

Provided also that every appointment under this clause shall be made by I. Central Government on the
recommendation of a Selection Committee consisting the following, namely:-
(a) a person who is a Judge of the Supreme Court, to be nominated by the Chief Justice of India - Chairman:
(b) the Secretary in the Department of Legal Affairs in the Government of India - Member;
(c) Secretary of the Department dealing with consumer affairs in the Government of India - Member;

Jurisdiction (Section 21)

Subject to the other provisions of this Act, the National Commission shall have jurisdiction -
(a) to entertain -
 (i) complaints where the value of the goods or services and compensation, if any, claimed exceeds rupees
twenty lakhs; and
(ii) appeals against the orders of any State Commission; and
(b) to call for the records and pass appropriate orders in any consumer dispute which is pending before or has
been decided by any State Commission where it appears to the National Commission that such State Commission
has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in
the exercise of its jurisdiction illegally or with material irregularity.

Power and Procedure (Section 22)

The National Commission shall, in the disposal of any complaints or any proceedings before it, have -
(a) the powers of a civil court as specified in sub-sections (4), (5) and (6) of section 13;
(b) the power to issue an order to the opposite party directing, him to do any one or more of the things referred to
in clauses (a) to (i) of sub-section (1) of section14, and follow such procedure as may be prescribed by the Central
Government.

Section 22A. Power to set aside ex parte orders - Where an order is passed by the National Commission ex parte
against the Opposite party or a complainant, as the case may be, the aggrieved party may apply to the Commission
to set aside the said order in the interest of justice.

Section 22B. Transfer of cases - On the application of the complainant or of its own motion, the National
Commission may, at any stage of the proceeding, in the interest of justice, transfer any complaint pending before the
District Forum of one State to a District Forum of another State or before one State Commission to another State
Commission

Who is Consumer?
As per Section 2 (1) (d) of CPA 1986 - "Consumer" means any person who, -
(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 wo avails of such services for any commercial purpose;

Based on this definition, the following are essential elements of a Consumer -

1. Buys goods or Hires Services - Physical products such as Car, TV, Utensils etc as well as intangible services
ranging from Hair Cutting Saloon to Banking etc. are both valid purchases for being a consumer. The scope of
services is quite wide and more and more things are coming into its ambit slowly. For example, in the landmark case
of Indian Medical Association vs VP Shantha and others 1995, SC held that patients treated by a medical
professional is also a consumer of medical services and is covered by CPA.

2. For consideration - To be a consumer, paying consideration is a must. However, consideration may be an

immediate payment or a promise of future payment in full or in part. It can also be any arrangement of deferred
payments. Further, unlike in Sale of Goods Act, consideration need not only be in the form of money but transaction
of services, exchange or barter is also valid. In Motor Sales & Service vs Renji Sebastian 1991, the complainant
booked a motor cycle to be delivered on a given date for a consideration. His turn was ignored. The dealer was
ordered to give him the motorcycle for the price of that date and also 500/- as compensation.

3. For personal Use - The goods or service must be bought for personal use. Originally, a person who bought a
product or a service for commercial use was not considered a consumer but after the amendment in 1993, use of
such goods for making a livelihood is accepted. Thus, a self employed person who buys a Photocopy machine for
his own shop is a consumer. However, goods must not be bought for resale.
In Anant Raj Agencies vs TELCO 1996, a company bought a car for personal use of a director of the company. It
was held that since the car was bought for personal use and not for commercial use or for making a profit on a large
scale, the company was a consumer.

4. Use by the purchaser or any body else - It is not necessary that only the purchaser of the goods or services be
the user. Anybody who uses the goods or services with due permission of the purchaser, is also a consumer. Thus, in
a landmark case of Spring Meadows Hospital vs Harjot Ahluwalia AIR 1998, SC held that the parents of the child
who was treated by the hospital were hirers of the service while the child was the beneficiary and thus both were
consumers.

What is a Service?
As per Section 2 (1) (o) "Services" means service of any description which is made available to potential users and
includes, but not limited to, the provision of facilities in connection with banking, Financing insurance, transport,
processing, supply of electrical or other energy, board or lodging or both, housing construction entertainment,
amusement or the purveying of news or other information, but does not include the rendering of any service free of
charge or under a contract of personal service;

Based on this definition, the scope of services is quite wide. It will not be an exaggeration to says that any thing for
which a customer pays and that is not a physical product is a service. Cinema halls, Health clubs, University, College,
are all service providers.
In the landmark case of Indian Medical Association vs VP Shantha and others 1995, SC held that patients treated
by a medical professional is also a consumer of medical services and is covered by CPA.
In Union of India vs Mrs S Prakash 1991, Telephone facility was held as a service and the telephone rental paid by
the consumer was the consideration for the service.

The service must be a paid service. Free or non-profit services do not fall under this category and claims cannot be
made regarding such services under the CPA. In A Srinivas Murthy vs Chairman, Bangalore Development
Authority 1991, the question before the court was whether a tax payer is a consumer or not. A person, who paid
house tax, was bitten by a stray dog and he sued Bangalore Development Authority for not taking care of the menace
of stray dogs. It was held that there was no quid pro quo between the tax and the services rendered by BDA. The
removal of stray dogs was a voluntary action of BDA and was done free of cost. Thus, the complainant was not a
consumer and removal of dogs was not a service under this act.

Just like a defect, which renders a product not as useful as promised, there can be a deficiency in service, which
render a service not as useful as promised at the time of sale. CPA 1986 allows consumers of services to take action
against service providers for compensating for the deficiency in the promised service. As per section 2(1)(g),
"Deficiency" means any fault, imperfection, shortcoming 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 been
undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.
Thus, in Mahanagar Telephone Nigam vs Vinod Karkare 1991, when a complaint with the telephone dept. was
pending for more than six months, it was held to be a deficiency in service.

In Indian Airlines vs S N Singh 1992, a metallic wire was present in the food given to a traveler because of which
his gums were hurt. He was awarded 2000 Rs as compensation for deficiency in service.