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Chapter - 21
THE CONSUMER PROTECTION ACT, 1986
The Consumer Protection Act, 1986, (hereinafter referred as the "Act") is
the most important legislation in the area of consumer protection. This is an
umbrella legislation which has widened the scope of seeking redressal of
grievances of consumers without affecting the common law remedies
available to them. In other words, the Act provides protection to consumers
in addition to and not in derogation of the provisions of any other law. 1
The Act is applicable to government as well as corporative and other sectors
and involves in the process all institutions—administrative, business, judicial
and the society at large. Though earlier, there were certain regulative
legislations dealing with various activities having a bearing on the consumer
protection, but this Act has attained prominence for being directlv and
specifically concerned with the subject.
The Act provides for the adoption of various possible measures for the
promotion and protection of the interest of consumers, mainly to desiderate
on their protection against marketing of hazardous goods, whether affecting
life or property. The most pragmatic feature of the Act is the recognition of
consumers' right to be informed about the quality, purity, standard and price
of goods and services, which is a potential device to prevent exploitation.
The Act enables taking up of measures for making available goods and
services at competitive prices and to prevent activities detrimental to such
measures. To improve the capability of consumers to get their rights better
secured, the Act contains provisions for the establishment of state and
central consumer councils for the advancement of consumer education. The
Act also provides for the establishment of separate machinery for the
settlement of consumer disputes in a speedier and effective manner. The
machinery is based on Consumer Disputes Redressal Fora (District Fora),
Consumer Disputes Redressal Commissions (State Commissions) and the
N a t i o n a l C o n s u m e r Disputes Redressal C o m m i s s i o n (National
C o m m i s s i o n ) . Their jurisdiction for the redressal of grievances of
consumers, resulting from exploitation by producers, suppliers and service
providers, has been specifically mentioned. All kinds of goods and services
are covered under the Act for remedial action unless the same have been
specifically exempted from the purview of the Act. To make available
consumer justice to the maximum number of people, the network of these
consumer fora/courts has been spread over the whole country and the cases

1. The Consumer Protection Act, 1986, sec. 3.


326 A TREATISE ON CONSUMER PROTECTION LAWS

decided by them are being regularly reported in special as well as general law
reporters.
The Act has now been operative for nearly two decades and the
decisions given by the consumer fora relate to most of the relevant areas of
consumer interest. Though the notion of consumer sovereignty is yet to take
its practical shape, very important principles of consumer jurisprudence
have been evolved to empower consumers to stand against exploitation by
business houses and seek protection from both defective goods as well as
deficiency in service. The unfortunate part of it is that these fora are getting
formalized as ordinary courts and fall pray to the evil of delay in disposal of
cases. The popularization of the consumer movement would definitely work
as a catalyst to attain the objectives of the Act at its earliest.

I. Objectives and the Legislative History


The first concrete effort to enact a comprehensive legislation for the
protection of the interests of consumers and to make provision for the
establishment of consumer councils and other authorities for the settlement
of consumers disputes was made in March, 1985, when the U N Guidelines
on Consumer Protection were being adopted in New York. A 28 member
National Consumer Protection Council consisting of various ministry
representatives — after two meetings, decided to convene a National
Workshop on Consumer Protection on March 11-15, 1985 with consumer
representations. Following this, a draft bill was discussed at another meeting
on January 20-21, 1986. Thereafter Consumer Protection Act, 1986 was
passed on December 17, 1986. It was notified in May 1987. 2 The Act
sought, inter alia, to promote and protect the rights of consumers such as: -
(a) the right to be protected against marketing of goods which are
hazardous to life and property;
(b) the right to be informed about the quality, quantity, potency,
purity, standard and price of goods to protect the consumer
against unfair trade practices;
(c) the right to be assured, wherever possible, access to an authority
of goods at competitive prices;
(d) the right to be heard and to be assured that consumer' interests
will receive due consideration at appropriate Fora;
(e) the right to seek redressal against unfair trade practices or
unscrupulous exploitation of consumers; and
(f) right to consumer education.

2. Consumer Unity & Trust Society, State ofIndian Consumer, prologue iii (2001).
CONSUMER PROTECTION ACT, 1986 327

In order to clarify certain procedural matters, the Act was amended in


1991 and provided that:
(a) every proceeding of the district forum shall be conducted by the
president and at least one member thereof sitting together;
(b) every order made by the district forum shall be signed by its
president and m e m b e r or members who conducted the
proceeding;
(c) where during a proceeding conducted by the president and a
member of the district forum they differ on any point or points,
the same shall be referred to the other member on such point or
points and the opinion of the majority shall be the order of the
district forum; and
(d) in the case of vacancy in the office of the president, the person
who is qualified to be appointed as president of the district
forum or the state commission may be temporarily appointed to
hold such office.
The Act was further amended by the C o n s u m e r P r o t e c t i o n
(Amendment) Act of 1993 seeking enlargement of the scope of areas
covered under the Act and to entrust more powers to the redressal agencies.
Accordingly, the Act, inter alia, sought to provide for:
(a) the enlargement of the scope of the Act so as to enable the
consumers to file class action complaints where such consumers
have a c o m m o n interest and to file complaints relating to
restrictive trade practices adopted by a trader;
(b) enabling 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;
(c) treating services relating to housing constructions as "services";
(d) constitution of selection committees for the selection of non-
judicial members of various redressal agencies;
(e) increasing the monetary jurisdiction of district fora/state
commissions;
(f) conferring additional powers on the redressal agencies by way of
awarding costs to the parties, for ordering removal of defects or
deficiency from good or services, and for empowering to recall
goods likely to endanger the safety of the public, etc.;
(g) imposing punishment on the complainant in case of frivolous or
vexatious complaints; and
(h) providing a limitation period of one year for filling complaints.
328 A TREATISE ON CONSUMER PROTECTION LAWS

Although the Act has provided valuable opportunity to consumers to


seek redressal of their grievances, the disposal of cases has not been fast
enough. Several bottlenecks and shortcomings have come to light in the
implementation of various provisions of the Act. With a view to achieve
quicker and effective disposal of consumer complaints and to widen the
scope of the Act, it was again amended by the Consumer Protection
(Amendment) Act, 2002. This amendment Act provided for:
(a) creation of Benches of the National Commission and State
Commissions as well as holding circuit Benches of these
Commissions;
(b) prescribing the period within which complaints are to be
admitted, notices issued and the complaints/appeals are to be
decided;
(c) restricting adjournments; and
(d) enhancing the pecuniary limits of jurisdiction of the consumer
fora so that the district fora are able to deal with complaints
involving value of goods or services and claims of compensation
up to Rs. 20 lakhs (against earlier limit of Rs. 5 lakhs), the State
Commissions from Rs. 20 lakhs upto Rs. 1 crore (as against
earlier limit of Rs. 5 lakhs upto Rs. 20 lakhs) and the National
Commission above Rs. 1 crore (as against earlier limit of above
Rs. 20 lakhs);

The amendment Act of 2002 also provides for:


(i) charging of fee in respect of complaints filed before the
consumer dispute redressal agencies;
(ii) depositing, either fifty per cent of the amount of compensation
or fine or the amounts specified in the Act before the admission
of appeal;
(iii) exclusion of services availed for commercial purposes from the
purview of the consumer dispute redressal agencies;
(iv) prescribing qualifications for members of the consumer dispute
redressal agencies;
(v) re-appointment of the president and members of the district
fora, State Commissions and the National Commission, for
another term of five years;
(vi) extending the provisions of the Act to service providers
indulging in unfair or restrictive trade practices or offering
services which are hazardous; and
(vii) bringing sale of spurious goods or services within the meaning of
unfair trade practices.
CONSUMER PROTECTION ACT, 1986 329

(viii) recovery of amounts ordered to be paid by the consumer


disputes redressal agencies as arrears of land revenue;
(ix) issuing of interim orders, wherever it is considered necessary;
(x) substitution of legal heirs or representatives as a party to the
complaint in the event of the death of the complainant or the
opposite party; and
(xi) compulsory establishment of consumer councils at district, state
and national levels.
These developments show that the Act has passed through a natural
phase of evolution and its scope has widened to cover more and more areas
of consumer concern.

II. Nature of Liability


The nature of liability under the Act is not strict liability but fault liability. A
detailed procedure for making complaints, the testing and analyzing goods,
to find out their defects, has.therefore, been laid down in the Act itself.3 In
that perspective the Act has retained the earlier pattern of liability of the
manufacturers and sellers and even the traditional defences to an)' action for
negligence are available to them.
Actually, under common law, the contractual liability for damage or loss
caused by a defective product or deficient service arises for breach of a
warranty or guarantee. The tortious liability arises on the failure of a person
to take care of a duty under the law as it is connected with 'negligence'. The
statutory liability arises on the breach of a statutory duty under some statute.
The concepts which affect the contractual liability are privity of contract and
breach of warranty. The doctrine of privity has effectively been used to
protect the manufacturers from liability in cases where they did not supply
the product directly to the consumer. In such cases, the retailers who have
nothing to do with the process of manufacture are made to suffer by
effecting repair, replacement or payment of damages. Another drawback in
contractual liability is that if the buyer has passed on the product to some
one else, may be a member of the family or friend, and the latter suffers loss
or injury due to a defect in the goods, no contractual action will lie for want
of privity. 4 This class of consumers is most likely to seek remedy under law
of torts. 3

3. Id., sec. 13.


4. T h e o n l y e x c e p t i o n t o this is that a h u s b a n d may r e c o v e r d a m a g e s for t h e
incapacitation or death of his wife on breach of warranty; see Priest v. List, (1903) 2
KB 148. See also S.K. Verma, "Liability for Defective and Dangerous Products", V
KULR 209, 233 (1998).
5. See W.V.H. Rogers, Winfield &Jolowics on Tort 340-341 (2002).
330 A TREATISE ON CONSUMER PROTECTION LAWS

In India, the manufacturers of products other than that of hazardous


products cafi still follow the system of guarantee to escape their liability.
They do so with a promise to replace or repair a defective product, within a
defined period of time on which the buyer undertakes not to claim damages
in the event of any injury which he may suffer as a result of the defect.
Where a contractual action is successfully pursued leading to the ultimate
responsibility of the manufacturer, there still remains an apprehension of the
chain of contracts between the manufacturer and the retailer getting broken
by the insolvency of a middle man or by some valid exemption clause.6 In
the United Kingdom (UK), section 5 of the Unfair Contract Terms Act,
1977 has rendered such exemption clauses, with respect to consumer sales,
ineffective. 7 This, however, does not affect the ordinary position with
respect to sale of goods. Hence, if the original buyer has resold the product
to the claimant, under section 14 of the Sale of Goods Act, 1979, there shall
be no implied condition of satisfactory quality or fitness for purposes in the
contract unless the sale has been in the course of the business. In India, the
Consumer Protection Act, 1986 gives consumers right to claim damages,
but, if the consumer has accepted that he will not hold the seller liable for
damages for a defect in the product in return for a guarantee, the condition
shall be valid. There is no specific law, which makes such a condition void.
Such a clause may, however, be declared as opposed to public policy under
section 23 of the Contract Act, 1872.
The advantage in initiating a contract-based remedy is that it does not
require proof of negligence of the seller. The liability is strict if the express
or implied warranty regarding performance of the goods has been violated

6. Ibid.
7. Section 5 of the Unfair Contract Terms Act, 1977 reads as follows:
5(1) In the case of goods of a type ordinarily supplied for private use or
consumption, where loss or damage-
(a) arises from the goods proving defective while in consumer use; and
(b) results from the negligence of a person concerned in the manufacture or
distribution of the goods,
liability for the loss or damage cannot be excluded or restricted by reference to any
contract term or notice contained in or operating by reference to a guarantee of the
goods.
(2) For these purposes -
(a) goods are to be regarded as "in consumer use" when a person is using
them, or has them in his possession for use, otherwise than exclusively for
the purposes of a business; and
(b) anything in writing is a guarantee if it contains or purports to contain some
promise or assurance (however worded or presented) that defects will be
made by complete or partial replacement, or by repair, monitory
compensation or otherwise.
(3) This section does not apply as between the parties to a contract under or in
pursuance of which possession or ownership of the goods passed.
CONSUMER PROTECTION ACT, 1986 331

by the seller or supplier of goods causing loss or injury to the buyer. In an


action for compensation, does not inquire into the reasonableness of the
conduct of the manufacturer or supplier but determine only whether the
warranty or guarantee has been breached.
The limitations of a contract-based remedy are that the manufacturer,
unless he is also the supplier of the defective goods, cannot be impleaded as
a defendant for lack of privity. The need is that in consumer transactions,
along w i t h retailers, the manufacturers should be made liable and
accountable to the user in an action for breach of warranty, by discarding
the privity doctrine. This approach would result into greater advantage to
the consumers because the manufacturers can foot the bill for damages
easily and can also take preventive steps for warding off injury at the
production and marketing stages.
It may be emphasized that earlier the law protected the manufacturers
on the basis of the assumption that if infinite suits were brought against
them for defects, they would be wiped out of existence. Consequently, the
b u r d e n was cast on the retailers even though they were in no way
responsible for the defects in products. Now it has been realized that the
manufacturer is a preferred target for he ought to take adequate care and
precaution in production by adopting the highest standards in the process of
manufacture. This is also appropriate in view of the better financial capacity
of the manufacturer. However, the manufacturer can be held liable under
the law of tort and not in contract.
Liability in tort arises primarily because the manufacturer or supplier has
been guilty of the breach of duty to exercise reasonable care. If the product
does not indicate the name and address of the manufacturer, the liability to
pay compensation falls upon the supplier who may be the distributor or a
retailer. Though suits based on tortuous liability are complex, yet a
successful plaintiff is able to recover damages. An outstanding advantage in
a remedy based on tort is that the beneficiary is not the buyer alone. Any
person who, in the ordinary course of events, is likely to suffer as a result of
the defect in goods used may be allowed to recover damages for injury or
loss. The actual sufferer may not be the buyer but could be a member of his
family or a friend or even a bystander, as has been established by the rule in
Donoghue v. Stevenson? Such a person can claim damages, and, in appropriate
situations, exemplary damages. The rule is, the greater the risk, the greater
the precautions that must be taken to obviate it, and liability fixed.9 Where
there is negligence, liability in tort for damages is available without any
classification of goods into dangerous chattel and "no-dangerous chattel". 10

8. (1932) AC 532.
9. Read v. /. Lyons & Co. (1947) AC 156.
10. Supra note 4 at 342.
332 A TREATISE ON CONSUMER PROTECTION LAWS

The greatest disadvantage of a tortuous action is that the onus of


proving negligence falls on the plaintiff. He has not only to show that the
law imposed a duty on the defendant but also that the duty of taking
reasonable care was owed to him. The cases falling covered by the doctrine
of res ipsa loquitor do not present any difficult problems in this regard as
many plaintiffs do not know the details of the manufacturing process of the
defendant or the precautions which ought to have been taken during the
process to make the product defect-free.
In an action based on tort, the trial is bound to be long drawn and
expensive. The reason for this is that the fault-based liability depends on
furnishing of the proof of the defendant's failure to exercise reasonable care.
Another reason for delay can be that the factual information in relation to
nature and quality of the product and of the process would have to be
obtained from the defendants, who are generally reluctant to cooperate. The
court may also allow the parties to produce expert evidence for better
understanding of technical details which is also time consuming. This can,
therefore, cause further delay in the disposal of the case. This exercise
results into a severe hardship because the victims of defective and unsafe
products are supposed to pull on with this process at a time when they are
already under desperation.
The manufacturers may also try to find escape routes from incurring
liability by pleading that the product was safe when it left the manufacturing
plant and the cause of the defect has been an act or omission of some other
person or an event beyond the control of the manufacturer. The may further
put forward the plea that the product was tampered by the distributor or
retailer and, therefore, they should be relieved of the liability. In such a
situation, the plaintiff may, in a suit for damaged regarding certain complex
products, join all such persons as parties whose acts or omissions might
have contributed to the injury, including manufacturer and designer. But no
such measure can help him if he has in some way contributed to the
accident himself.
From the practical point of view, in India, though the law of t o n s has
been granted validity under article 372 of the Constitution, the tort litigation
has been very sportive. The damages recovered under tort litigation are not
encouraging because of more cost involved and for delay in disposal. The
lawyers could encourage filing of claims in tort to recover exemplary
damages, sharing a part of them with the claimants. But this practice would
be against professional ethics.
The principles of liability under law of torts are relevant to actions
under the Consumer Protection Act, 1986. But the claimants would
preferably rely more on the Act than on the remedy under law of torts.
Since under section 14 of the C o n s u m e r P r o t e c t i o n Act obtaining
compensation for injury or loss caused by defective products is dependent
CONSUMER PROTECTION ACT, 1986 333

on proof of negligence, so the use of the principles of law of torts is


necessary in complaints filed before the consumer fora established under the
Act. This being the situation, it may be again noted, that there is an urgent
need to shift the position of liability under the Act from fault liability to
strict liability.
Though, with respect to nature of liability, there is a severe drawback in
the C o n s u m e r Protection Act, some other features of the Act, like
establishment of a separate machinery for redressal of consumer grievances
are quite appreciable.

III. Key Concepts


Under the Act, redressal of grievances is available to consumers with respect
to defects in goods and deficiencies in services as defined by the Act itself in
section 2. Therefore, to determine the entitlement of any person to any
remedy under the Act and to identify the goods and services with respect to
which the remedy may be claimed, reference has to be made to the
definitions of all the relevant terms and expressions given in the said
interpretation clause. Such important terms and expressions include,
"consumer", 11 "consumer dispute", 12 "goods",13 defect",14 "complaint", 15
"complainant", 16 "manufacturer", 17 "service",18 "deficiency",19 "trader", 20
"restrictive trade practice", 21 and "unfair trade practice".22 An explanation
of these terms and expressions is given below.

Consumer
The term "consumer" has been defined in section 2(l)(d) of the Act. It is in
two parts: (a) the first part defines the "consumer" with reference to 'goods'
and the second with reference to 'services'. According to this definition any
purchaser of goods and hirer of services for a consideration comes under
the purview of the definition of the consumer. It is not necessary that the
consideration should have already been paid for the goods or services in
q u e s t i o n . F o r qualifying as a consumer, mere promise to pay the

11. Id., sec. 2(l)(d).


12. Id., sec. 2(l)(e).
13. Id., sec. 2(l)(i).
14. Id., sec. 2(l)(f).
15. Id., sec. 2(l)(c).
16. Id., sec. 2(l)(b).
17. Id., sec. 2(1)0).
18. Id., sec. 2(l)(o).
19. Id., sec. 2(l)(g).
20. Id., sec. 2(l)(q).
21. Id., sec. 2(l)(nnn).
22. Id., sec. 2(l)(r).
334 A TREATISE ON CONSUMER PROTECTION LAWS

consideration is sufficient. So the purchaser of goods with deferred payment


can also be treated as consumer.
The users of goods and the beneficiaries of services other than the
actual purchasers or hirers, who use or avail them with the approval of such
purchasers or hirers have been expressly declared as consumers under the
definition of the consumer. Any person who purchases goods for resale or
any "commercial purpose" has been excluded from the meaning of the term
'consumer'. The expression "commercial purpose" has not been defined in
the Act. It has been left to be determined by judicial interpretation. It has,
however, been made clear that the use of goods and availing of services by
any person, exclusively for the purpose of earning livelihood by means of
self-employment does not amount to "commercial purpose".
Judicially it has been established that any purchase of goods for carrying
on business or any trading activity with the object of making profits is
obviously a purchase for "commercial purpose". In such cases there should
be a close and direct nexus between purchase of goods and making of the
profits. Accordingly, the National Commission has made it clear in the case
of M/s Abhinav Publishing India Pvt. Ltd. v. M/s Graphics & Print,23 that the
nature of investments in business is a relevant factor to be considered for
determining the purpose of buying goods or hiring services. If there are
huge investments and the prices involved in a transaction, it may be for
resale and profit making. Similarly, if the goods are purchased in the name
of a firm for the purpose of business that can indicate the purpose of the
purchase. Also, in Vijay Narayan Aggarwal v. M/s Chowgule Industries Ltd.,24
the National Commission has held that if a person is carrying on business
on a large scale and he purchases goods for earning profits, the purchase is
for commercial purpose and not as a consumer. O n the basis of this
principle, in M/s Exan Computers Ltd. v. Tagore Gracias Panji,25 the National
Commission has held that the purchase of a computer installed at the
residence of the complainant for self use was not for a commercial purpose
and the complainant was a consumer. The purchase of computer in this case
had not taken place with the purpose of carrying on business for profits but
for earning livelihood. Explaining the meaning of the term consumer, the
National Commission in M/S Cheema Engineering Services v. Rajan Singh,26
has established the rule that if any person purchases a machine for earning
his livelihood he should be treated as a consumer even if he takes assistance
of one or two persons to assist or help him in operating the machine. In this
case, the consumer had purchased a brick manufacturing machine for
earning his livelihood.

23. 1995(2) CPR 6 (NC).


24. 1993(2) CPJ 231 (NC).
25. 1994(3) CPR 651 (NC).
26. 1996(2) CPR 11 (NC).
CONSUMER PROTECTION ACT, 1986 335

In M/S Jay Kay Puri Engineers & Another v. M/S Mohan Breweries &
Distilleries Ltd.,27 the National Commission, while dealing with purchase of
goods with a warranty for maintenance, has held that in respect of the
services by any manufacturer or supplier, during the warranty period, the
purchaser should be deemed to be a consumer and entitled to claim
compensation. The complainant in such a case would be a consumer with
reference to both the goods as well as the services.
Being an umbrella legislation, it is natural that under the Consumer
Protection Act, the term "consumer" should be given a wider meaning
rather than a strict interpretation. Following this trend in Parsanath S.
Dhananka v. Nizam's Institute ofMedical Sciences and Others,2* the National
Commission, while dealing with the question of compensation to be
awarded to the parents of a minor child for their acute mental agony, care
and attention of the child because of defiant medical services, held that the
parents of the child had hired the services of the hospital and were
consumers entitled to compensation for any fault on the part of the hospital.
The Supreme Court, in M/S Spring Meadows Hospital and Another v. Harjal
Ahluwalia,29 has also held that the definition of 'consumer' is wide enough
and it includes not only the person who hires services but also the
beneficiary of such services other than the persons who actually hire such
services. Therefore, if a child is admitted for his treatment in a hospital,
both the child as well as his parents should be treated as consumers.
In general, any person or agency is a consumer if he or she purchases
any goods or hires services for a consideration. Even a person who has
availed the services rendered by any agency of the armed forces is also a
consumer. In Brig. KG. Kuthiala v. Army Welfare Housing Organisation,^ the
National Commission considered the question of jurisdiction of consumer
courts with respect to entertaining a complaint against the Army Welfare
Housing Organisation for deficiency in services. The Commission held that
since the Army Welfare Housing Organisation is engaged in the systematic
activity of construction of houses / flats for the benefit of members for
consideration, a complaining member would be a consumer with respect to
any defect in services rendered by the orgnisation. In this case, the Delhi
State Commission had taken the view that it had no mandate to entertain a
complaint against the Army Welfare Housing Organisation.

Consumer Dispute
For seeking remedy from a consumer forum there should be a "consumer
dispute". According to clause (e) of section 2(1) of the Act, a "consumer

27. 1996(1) CPR 102 (NC).


28. 1999 (1) CPR 42 (NC).
29. AIR 1998 SC 1801.
30. 1996 (2) CPR 162 (NC).
336 A TREATISE ON CONSUMER PROTECTION LAWS

dispute" comes into existence when the person against whom a complaint
has been made denies or disputes the allegations contained in the complaint.
Thus, there can be no consumer dispute if, after complaint is made, there is
no denial by the opposite party in respect of the allegations made in the
complaint. Denial of allegation in the complaint may be express or implied
from the conduct of the opposite party. Therefore, if the opposite party
omits or fails to respond to the assertions made by a complainant within the
time stipulated in the Act, a consumer dispute can be said to have arisen.
The consumer fora may proceed to adjudicate any consumer dispute in the
manner specified in section 13 of the Act.31 The dispute between the parties
must indeed be a bona fide consumer dispute. If it is not so, the complaint
would be liable to be dismissed.32

Goods
Any dispute which can be dealt under the Act should be regarding the goods
purchased or services rendered. The Act has defined the term goods under
section 2(l)(i) to have the same meaning as it has under section 2(7) of Sale
of Goods Act, 1930. Accordingly, the "goods" means "every kind of
movable property other than actionable claims and money, and includes
stock and share, growing crops, grass and things attached to or forming part
of the land which are agreed to be severed before sale or under the contract
of sale". Though the definition treats every kind of movable property as
goods but it has excluded 'actionable claims' and 'money' from its preview.
The things specially included in "goods" are 'stock and shares', 'growing
crops', 'grass' and 'anything attached to land but agreed to be severed from
it on sale'. In view of this, things like 'good will', 'copyright', 'trade mark',
'patents','gas and electricity',33 'motor vehicles',34 'ships', 35 'lottery tickets'
etc. have been treated as goods. It is quite immaterial that they may be
governed by special Acts instead of or in addition to the Sales of Goods Act.
In any case they are covered by the definition of goods in the Consumer
Protection Act.
Money, which is a legal tender, has been excluded from the definition of
goods because the price of goods is expressed in terms of money and can
not itself be the subject of sale. Any coins or notes which have ceased to be
a legal tender may be treated as goods.36 Foreign money can also be treated
as goods if it happens to be the subject of sale. In Vikas Sales Corpn. v.

31. See infra in this chapter the "Manner of making complaints".


32. S.R. Das Mills v. U.P. State Electricity Board, 1993 (1) CPJ 60 (NC).
33. Commissioner of Sales Tax, M.P. v. Electricity Board, AIR 1970 SC 732.
34. Stadium Finance Ltd. v. Robbins (1962) 2 QB 664.
35. Hooper v. Gumm (1867) 2 Ch App 282.
36. Moss v. Hancock (1899) 2 QB 111.
CONSUMER PROTECTION ACT, 1986 337

Commission of Commercial Taxes,37 import licences called REP Licences or


Exim Scripts have been held to be goods and not 'actionable claims'.
Article 2 of the EC Product Liability Directive, 1985 defines 'product'
as all movable, with the exception of primary agricultural products and
game, even t h o u g h i n c o r p o r a t e d into another movable or into an
immovable. The 'primary agricultural products' means the products of the
soil, of stock-farming and the fisheries, excluding products which have
undergone initial processing. The electricity has been expressly declared as a
product in this provision. 38
Under the Consumer Protection Act, 1986, the term 'product' has not
been defined. It, however, covered in all its connotations by the term
'goods' defined therein.

Service
The term "service" as defined in section 2(1)(o) of the Act has a very wide
connotation. It covers service of any description which may be made
available to any potential users. It includes the services, like banking,
financing, insurance, transport, processing, supply of electricity, housing
construction, boarding, lodging, entertainment, amusement and purveying of
news or other information. The definition excludes from its purview the
services rendered free of charge or under a contract of personal service.19 It
reads as follows: "service" 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.
The significance of this definition lies in the fact that any complaint to
initiate proceedings for redressal of grievances with respect to deficiencies in
services can be made only if such services are covered under the Act. So, it
is quite possible that on the touch-tone of section 2(l)(o), it may be found
that a particular service, though important, does not possess all the
ingredients of the definition of "service". So in any such case, even though
the service may be found deficient, a complaint would not be maintainable.
Thus, before initiating any proceedings before a consumer forum, it is
essential to ascertain at the outset whether or not the grievance of the
consumer pertains to a "service" as defined under the Act.4C

37. 1996 (2) SCC 106.


38. See also S.K. Verma, supra note 4 at 214.
39. Id., Sec. 2(l)(o).
40. For case law see infra in this chapter "Judicial Contribution".
338 A TREATISE O N CONSUMER PROTECTION LAWS

Defect and deficiencies


The redressal of grievances under the Act can be claimed only for "defects"
in goods or "deficiency" in services. Therefore, the Act has defined these
terms clearly to explain the nature of defects and deficiencies on the basis of
which proceedings can be initiated. Section 2(l)(f) defines "defect" as
follows: "defect" means any fault, imperfection or shortcoming in the
quality, quantity, potency, purity or standard which is required to be
maintained by or under any law for the time being in force or under any
contract, express or implied, or as is claimed by the trader in any manner
whatsoever in relation to any goods.
The definition, therefore, covers any fault, imperfection or shortcoming
in the quality, quantity, potency, purity or standard of goods. The standard
which can be insisted upon should be as is required to be maintained under
any law, contract or usage or practice in a trade. The legislature has given
the widest amplitude to the term 'defect'. It is not confined by the narrow or
technical limitations or meaning. It covers every kind of fault, imperfection
or short-coming which may be related to the quality, quantity, potency,
purity or standard of the goods.41
Similarly, the term "deficiency" has been defined in section 2(l)(g) of
the Act and has been given a broad meaning. It includes any fault,
imperfection, shortcoming or inadequacy in the quality, nature and manner
of performance in rendering any service required to be maintained under
any law or contract or otherwise.42

Restrictive trade practices


Under the Consumer Protection Act, the redressal of grievances can be
claimed even against "restrictive" as well as "unfair" trade practice. The Act,
therefore, covers both these terms is explicit terms. The expression
"restrictive trade practice" has been defined as any trade practice which
tends to bring about manipulation of price of goods or services or their
conditions of delivery or flow of supplies. 43 The definition treats certain
practices specifically as unfair trade practices. For example, if a trader makes
a delay in the supply of goods or providing services beyond the agreed
period leading to rise in the prices, that would be a restrictive trade
practice.44 Likewise, if any consumer is required to buy or hire any goods or
services as a condition precedent for buying or hiring of other goods or
services that would also be an unfair trade practice.45 The incorporation of
the concept of "restrictive trade practice" in the Act in these explicit terms

41. Ibid.
42. Ibid.
43. Supra note 1, sec. 2(l)(nnn).
44. Id., see 2 (l)(nnn)(a).
45. Id., see 2(l)(nnn)(b).
CONSUMER PROTECTION ACT, 1986 339

provides a significant mechanism for the protection of consumers from day-


to-day exploitative measures used by traders against them.

Unfair trade practices


In c o m p a r i s o n to the definition of "restrictive trade practice", the
expression "unfair trade practice" has been defined in the Act in a more
detailed manner. 46 The definition declares any unfair or deceptive method
or practice used for promoting sale or supply of goods or services at the
detriment of the consumers as an unfair trade practices. Different types of
unfair trade practices have been mentioned in section 2(l)(r) in separate
clauses. These include making of a statement by any means which may
falsely represent:
(i) that the goods provided are of a particular standard, quality,
quantity, grade, composition, style or model;
(ii) that the services rendered are of a particular standard, quality or
grade;
(iii) that any goods are new which are basically rebuilt, second-hand,
renovated, reconditioned or old goods;
(iv) that the goods or services have a particular sponsorship,
approval or affiliation, performance, characteristics, accessories,
uses or benefits;
(v) that any goods or services are useful for a particular purpose.

The unfair trade practices also include:


(i) giving of a warranty for any goods or services to public not
supported by adequate or proper test;
(ii) making a false promise to replace, maintain or repair an article or
continue service until it has achieved a particular result;
(iii) making of false claims regarding price of goods or services; or
(iv) falsely representing any facts disparaging the goods, services or
trade of another person.
Making advertisements for sale or supply at a bargain price of goods or
services but not actually intended to be offered at that price is under the Act
an unfair trade practice. 47 "Bargaining price", for this purpose, has been
defined as the price that has been stated in any advertisement to be the
bargain price, by reference the ordinary price or the price that a person may
reasonably u n d e r s t a n d to be the bargain price in terms of the
advertisement. 48

46. Id., sec. 2(l)(r); see for the text of the definition Appendix - XI.
47. Id., sec. 2(r)(2).
48. Id., Explanation t o sec. 2(r)(2)(a)&(b).
340 A TREATISE ON CONSUMER PROTECTION LAWS

The other unfair trade practices which have been mentioned in this
definition and are now becoming very common are:
(a) offering of gifts or prizes with the intention of actually not
providing them and covering them fully or partly by the amount
charged in the transaction; 49
(b) conduct of contests, lotteries, games of chance or skill to
promote sale, use of supply of the product or business interest;
50

(c) withholding final results or information about any gifts or prizes


offered in connection with some transaction; 51
(d) sale or supply of goods complying with the prescribed standards
with respect of content, composition, design, finishing or
packaging; 52
(e) hoarding or destruction of goods or refusal t o sell goods or
provide services intended to raise their cost; 53
(f) manufacture or sale of spurious goods; 54 and
(g) adopting deceptive practices in the provision of services. 55
The 'spurious goods and services' means such goods which are claimed
to be genuine but they are actually not so. 56
In the Mantora Oil Products (P) Ltd. v. Oriental Insurance Co. Ltd.,37 it was
held by the National Commission that the "unfair trade practice" defined in
the Act not only relate to purchasing of goods but also to hiring of services.
In Mukesh Jain v. V.K. Gupta38 a complaint had been filed alleging unfair
trade practice on the part of banks. Rejecting the view that the unfair trade
practices relate only to goods, the National Commission held that the unfair
trade practices relate to both goods and services. About unfair trade practice
in services an important decision was taken by the National Commission in
Akhil Bhartiya Grahak Panchayat v. Secretary Sbarda Bhawan Education Society.39
In this case an institute had admitted students in excess of sanctioned
number in violation of the approval they had obtained from the concerned
authorities and those students could not be granted registration. The

49. Id., sec. 2(r)(3)(a).


50. Id., sec. 2(r)(3)(b).
51. Id., sec. 2(r)(3-A).
52. Id., sec. 2(r)(4).
53. Id., sec. 2(r)(5).
54. M , sec. 2(r)(6).
55. Ibid.
56. Id., sec. 2(oo).
57. 1991 (1) CPJ 326 (NC).
58. 1992 (2) CPJ 493 (NC).
59. 1994 (2) CPJ 283 (NC).
CONSUMER PROTECTION ACT, 1986 341

National Commission, accordingly held that the activity of admitting


students in addition to the approved quota by any institution amounts to an
unfair trade practice.
About unfair trade practices relating to goods, the Supreme Court in Om
Prakash v. Assistant Engineer, Haryana Agro Industries Corporation Ltd.,60 has
held that if a trader intentionally delays delivery of any goods to the
consumers that amounts to unfair trade practice. In this case the delivery
had been made to other purchasers who were below in the priority list and,
as a result of the delay, the complainant had suffered some loss. Another
representative case is Proprietor United Biscuits (P) Ltd. v. Ramananda Pande.61
In this case the complainant purchased a packet of biscuits on which weight
was printed as 200 gms., whereas actual weight was 180 gms. The Orissa
State Commission rightly held that this was an unfair trade practice and the
manufacturer was held liable. It is thus, well established that the term unfair
trade practice concerns both goods as well as services.

IV. Consumer Protection Councils

Central Consumer Protection Council


For the promotion and protection of consumers, the Consumer Protection
Act, inter alia, provides for the establishment of consumer councils at the
central and state levels. Section 4 of the Act empowers the central
government to establish the Central Consumer Protection Council with the
Minister-in-Charge of Consumer Affairs in the central government as its
chairman. There have to be other official or non-official members, as may
be prescribed in this behalf, keeping in view the diverse interests which need
to be represented in the Central Council.
The Central Council should meet at least once in a year. The date and
place for the meeting of the Central Council is to be fixed by the chairman.
According to section 6 of the Act, the objects of the Central Council are to
promote and protect the following rights of the consumers:
(a) the right to be protected against the marketing of goods and
services which are hazardous to life and property;
(b) the right to be informed about the quality, quantity, potency,
purity, standard and price of goods or services, so as to protect
the consumers against unfair trade practices;
(c) the right to be assured, wherever possible, access to a variety of
goods and services at competitive prices;
(d) the right to be heard and to be assured that consumer's interests
will receive due consideration at appropriate forums;

60. 1994 (2) CPJ 1 (SC).


61. 1997 (1) CPJ 294 (Ori).
342 A TREATISE ON CONSUMER PROTECTION LAWS

(e) the right to seek redressal against unfair trade practices or


restrictive trade practices or unscrupulous exploitation of
consumers; and

(f) the right to consumer education.

State Consumer Protection Councils


Section 7 makes provision for the establishment of consumer protection
councils in states with the same objects, within the states as have been laid
down in section 6 of the Act for the Central Council. The chairman of a
state consumer protection council would be the Minister-in-charge of the
Consumer Affairs in the state government who would have the power to
call the meetings of the council and decide the time and venue for the
meetings. As in the Central Council there should be such other official and
non-official members as the state government may prescribe representing
various related sectors. The central government may also nominate certain
official or non-official members to the state council, not exceeding ten. The
state consumer council should meet at least twice in a year. The procedure
to be observed by the state councils in regard to the transaction of business
may be prescribed by the state government.
District Consumer Protection Councils
In 2002, two new sections, sections 8A and 8B have been inserted in the Act
which empower the state government to establish for every district a
consumer protection council. 62 The collector of the district concerned
should be the chairman of the council.63 The state government concerned is
authorized to appoint the other members, official and non-official, keeping
in view various interests which need to be represented at the council. Each
district council is supposed to meet at least twice in a year. The time and
venue of the meetings is to be fixed by the chairperson. The procedure to be
followed by the district councils may be laid d o w n by the state
government. 6 4 The objects of each district council are to promote and
protect the rights of consumers within the concerned district. 65

V. Consumer Disputes Redressal Machinery


Section 9 of the Act provides for the establishment of a three-tier consumer
dispute redressal system: (a) the Consumer Disputes Redressal Fora (District
Fora) to be established in each district by the state government, (b) the
Consumer Disputes Redressal Commission (State Commission) to be

62. Id., sec. 8A(1).


63. Id., sec. 8A(2).
64. Id., sec. 8A(2)(b).
65. Id., sec. 8B.
CONSUMER PROTECTION ACT, 1986 343

established in each state by the state government, and (c) the National
Consumer Dispute Redressal Commission (NCDRC) to be established by
the central government. The Act contains detailed provisions about the
composition, jurisdiction and procedure to be followed by these fora.

District Forum

Composition
Each district forum is to consist of a president and two other members. The
president should be a person who has been or is qualified to be a district
judge. 66 Out of the other two members, one member must be a women.
Each member should be a person of not less than thirty-five years of age,
possessing a bachelor's degree from a recognized university, and be a person
of ability, integrity and standing, having adequate knowledge and experience
of at least ten years in dealing with problems relating to economics, law,
commerce, accountancy, industry, public affairs or administration. 67 As
regards disqualifications for appointment as a member of a district forum, a
person cannot be so appointed if he has been convicted and sentenced to
i m p r i s o n m e n t for an offence involving moral t u r p i t u d e , or is an
undischarged insolvent or is of unsound mind or has been removed or
dismissed from the service of the government or a body corporate owned or
controlled by the government. Any person having financial or other interest
likely to affect prejudicially his functions as a member of the district forum
can also not be appointed as a member. The state government may
prescribe any other disqualifications for such appointments.
A member of the district forum can hold office for a term of five years
or up to the age of sixty-five years, whichever is earlier. A member can be
re-appointed if he fulfils the qualifications and other conditions for
appointment. The appointments to the district forum are made by the state
government on the recommendation of a selection committee. The
President of the State Commission may be the chairman of the selection
committee and the secretaries of the law department and the depanment of
consumer affairs in the state as the members. If the president of the state
commission is, by reason of absence or otherwise, unable to act as the
chairman of the selection committee, the state government can refer the
matter to the chief justice of the concerned high court for nominating a
sitting judge of that high court to act as chairman.
O n the resignation of a member, any person having the qualifications
required for the membership of his/her category in the forum may be
appointed as a member in place of the outgoing member. 68

66. Id., sec. 10(a).


67. Id., sec. 10(l)(b).
68. Id., proviso to sec. 10(2).
344 A TREATISE ON CONSUMER PROTECTION LAWS

Jurisdiction
The pecuniary as well as territorial jurisdiction of a district forum is specified
in section 11 of the Act. As per enhancement of the pecuniary jurisdiction
of the forum by the Consumer Protection (Amendment) Act, 2002, a
complaint can be instituted in a district forum when the value of the goods
or services and the compensation is up to rupees twenty lakhs.69 Earlier this
limit of jurisdiction was rupees five lakhs.
As regards the territorial jurisdiction of the district forum, a complaint
can be filed before a district forum within whose jurisdiction the opposite
pany 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. If there are more than one opposite parties, the
complaint can be filed in a district forum on the basis of residence or place
of business of any of them, after the district forum has given permission for
that or the other opposite parties have agreed to that. 70
A complaint can also be instituted in a district forum within the local
limits of whose jurisdiction the cause of action has, wholly or in part,
arisen.71

Manner of making complaints


A complaint in relation to any goods or services may be filed with a
district forum by any of the following:
(a) the consumer himself;
(b) any recognized consumer association;
(c) one or more consumers;
(d) the central government; or
(e) the state government. 72
Earlier, a complaint could be made without paying any fee. By the
amendment Act of 2002, provision regarding payment of fee has been
inserted in the Act. The amount of fee for each complaint would be as may
be prescribed by the central government. 73 On receipt of a complaint, the
district forum may allow the complaint to be proceeded or may reject it.74
But a tomplaint can be rejected only after giving the complainant an
opportunity of being heard.73

69. Id., sec. 11(1).


70. Id., sec. ll(2)(a)and(b).
71. Id., sec. ll(2)(c).
72. Id., sec. 12(1).
7}. Supra note 1, sec. 12(2).
74. Id., sec. 12(3).
75. Id., proviso to sec. 12(3).
CONSUMER PROTECTION ACT, 1986 345

Any consumer forum may dismiss a complaint as frivolous or vexatious.


If the complainant does not come to the forum with clean hands and
conceals important facts, the complaint should be dismissed with reasons
recorded in writing and with costs not exceeding rupees ten thousand, 76
To avoid delay in proceedings, the admissibility of the complaint should
be decided within twenty-one days from the date of receiving the complaint.
Once the complaint is allowed by a district forum, it can proceed with the
complaint in accordance with the provisions of the Act and the admitted
complaint cannot be transferred to any court, tribunal or authority set up by
or under any other law.77

Procedure on admission of complaint


After admitting a complaint the district forum has to refer a copy of the
admitted complaint within twenty one days of its admission to the opposite
party. The opposite party should be directed to give its version of the case
within a period of thirty days or an extended period not exceeding fifteen
days. 7 8 If the opposite party denies or disputes the allegations of the
complainant or does not give any reply to allegations, the district forum, has
to proceed with the settlement of the consumer dispute. 79

Analysis of samples
In any case of defect in goods, if the defect cannot be determined without
proper analysis or test, a sample of the defective goods should be taken and
referred to the appropriate laboratory for that purpose. The appropriate
laboratory should give its report within forty five days or within such
extended period as may be granted by the district forum. 80 Before referring
the sample to the appropriate laboratory, the complainant may be required
to deposit to the credit of the forum the fee prescribed for the testing of the
sample. The fee deposited is to be sent to the laboratory for carrying out the
necessary analysis or test. 8 1 On the receipt of the report from the
laboratory, a copy of it should be sent by the district forum to the opposite
party alongwith its remarks. 82
In case any of the parties disputes the correctness of the findings or the
method of analysis or test adopted by the appropriate laboratory, such an
objection would have to be submitted in writing.83 Thereafter, such a party

76. Id., sec. 26.


77. Id. proviso to sec. 12(4).
78. Id. sec. 13(l)(a).
79. Id. sec. 13(l)(b).
80. Id. sec. 13(l)(c).
81. Id. sec. 13(l)(d).
82. Id. sec. 13(l)(e).
83. Id. sec. 13(l)(f).
346 A TREATISE ON CONSUMER PROTECTION LAWS

would be given a reasonable opportunity of being heard and accordingly the


decision on the complaint would be reached.84
If a dispute relates to goods in respect of which such a procedure of
testing is not needed to be followed or the dispute relates to the services,
the district forum may refer a copy of the complaint to the opposite p a n y
for its version of the case, to be submitted within a period of thirty days or
an extended period not exceeding fifteen days. 85 If the opposite party
denies or disputes the allegations contained in the complaint, the district
forum may proceed to settle the dispute on the basis of evidence brought to
its notice by the complainant and the opposite party. 86 If the opposite
party omits or fails to take any action to represent its case within the time
given by the forum, it may proceed to settle the dispute ex-parte on the basis
of evidence brought to its notice by the complainant. 87 If the complainant
fails to appear on the date of hearing before the district forum, it may either
dismiss the complaint for default or decide it on merits. 88 The proceedings
of the forum carried on in accordance with this procedure cannot be
questioned in any court of law on the ground of principles of natural
justice.89
For expeditious disposal of the complaints, the district forum has to
make an endeavour to decide a complaint within three months from the
date of receipt of notice by opposite party. The complaints involving
analysis or testing of samples should be decided within five months from
such date. 90 Any adjournment during the proceedings can be granted only
for a 'sufficient cause' and after recording the reasons for that in writing
with costs occasioned by the adjournment. In case a complaint cannot be
disposed of within the specified period, the district forum would have to
record the reasons for delay in writing at the time of disposing of the
complaint. 91
The district forum may pass necessary interim orders if it is found just
and proper in the light of the facts and circumstances of a case. 92 The
proceedings before a district forum are deemed as judicial proceedings. 93

84. Id., sec. 13fl)(g).


85. Id., sec. 13(2).
86. W.,sec. 13(2) and 13(2) b(l).
87. Id., sec. 13(2)(b)(ii).
88. Id., sec. 13(2)(c).
89. Id., sec. 13(3).
90. Id., sec. 13(3A).
91. Id., proviso to sec. 13(3A).
92. Id., proviso to sec. 13(3B).
93. Id., sec. 13(5).
CONSUMER PROTECTION ACT, 1986 347

In case the complainant or the opposite party dies during the pendency
of the proceedings, his/her legal representatives can be impleaded in his/her
place as parties. 94
To conduct the proceedings, the district forum has the same powers as
that of a civil court while trying a suit, which include:95
(a) the summoning and enforcing the attendance of any defendant
or witnesses and examining the witnesses on oath;
(b) the discovery and production of any document or other material
object as evidence;
(c) the reception of evidence on affidavits;
(d) the requisitioning of the report of the concerned analysis or test
from the appropriate laboratory or from any other relevant
source;
(e) issuing of any commission for the examination of any witness;
and
(f) any other matter which may be prescribed by the government.

Nature of relief granted by the district forum


If the district forum finds that the goods complained against suffer from
any of the defects specified in the complaint or the deficiency in service has
been established, it can direct the opposite party: 96
(a) to remove the defect in goods;
(b) to replace the goods with new goods of similar description free
from defects;
(c) to return to the complainant the price or the charges paid by
him;
(d) to pay compensation to the consumer for loss or injury suffered
due to the negligence of the opposite party;
(e) to remove the deficiencies in services;
(f) to discontinue an unfair trade practice or the restrictive trade
practice Or not to repeat them;
(g) to desist from offering hazardous goods for sale;
(h) to withdraw the hazardous goods having been offered for sale;
(i) to stop manufacture of hazardous goods and offering hazardous
services;

94. Id., sec. 13(7).


95. Id., sec. 13(4).
96. Id, sec. 14(1).
348 A TREATISE ON CONSUMER PROTECTION LAWS

(j) to direct the opposite party to pay any determinate sum in case
of loss or injury suffered by a large number of consumers who
are not identifiable conveniently;97
(k) to issue corrective advertisements to neutralize the effect of any
misleading advertisement at the cost of the opposite party
responsible for issuing such misleading advertisement;
(1) to provide for adequate costs to parties.
The proceedings of the district forum should be conducted by the
president alongwith at least one member of the forum. 98 If a member is
unable to continue with the proceedings upto completion, the president and
any other member should continue the proceeding from the stage at which
the previous member discontinued.99

Appeal
Any person aggrieved by an order of the district forum can prefer an appeal
against such order before the state commission within a period of thirty days
from the date of order.100 The state commission may, however, entertain an
appeal after the given period of thirty days on the ground of sufficient cause.
According to the amendment Act of 2002 an appeal against an order of the
district forum can be entertained by the state commission only after the
appellant has deposited fifty percent of the amount payable under that order
or twenty five thousand rupees, whichever is less.101

State Commission

Composition
Above the district forum, in the hierarchy of consumer redressal agencies, is
the state commission established in each state by the state government
consisting of a president and at least two other members, one of them
should be a woman. The president of the state commission must be a
person who has been a judge of a high court. 102 The chief justice of the
concerned high court must be consulted on making such appointment. The
qualifications as well as the disqualifications for the members of a state
commission are the same as those prescribed for a member of the district

97. Id., proviso to sec. 14(l)(hb): the amount so determined should not be less than
five percent of the value of detective goods sold or defective service rendered. The
amount so obtained should be credited in favour of the persons who have suffered
the loss and be utilized in the manner prescribed under the rules.
98. Id, sec. 14(2).
99. Id., proviso to sec. 14(2)(b).
100. Id., sec. 15.
101. Id., proviso to sec. 15.
102. Id., sec. 16(1).
CONSUMER PROTECTION ACT, 1986 349

forum. They are appointed by the state government on the recommendation


of a selection committee consisting of the president of the state commission
and secretaries of the law department and the department of consumer
affairs in the state. 103 If the president of the state commission is by reason
of absence or otherwise, unable to act as chairman of the selection
committee, the state government may refer the matter to the chief justice of
the concerned high court for nominating a sitting judge of that high court to
act as chairman. 104 The members having a judicial background should not
exceed half of the total strength of a state commission.
Every member of the state commission can hold office for a term of
five years or upto the age of sixty-seven years, whichever is earlier. 10 '
Before the appointment, the president and each member of the state
commission has to ensure that he does not and will not have any financial or
other interests as are likely to prejudicially affect his functions as such a
president or member. This is so, because any interest in the transactions
involved in disputes can influence the judgment of the concerned forum.

Jurisdiction
Each state commission has three types of jurisdiction: (i) original
jurisdiction, (ii) appellate jurisdiction, and (iii) revisional jurisdiction. The
original jurisdiction of the state commission refers to the power of
entertaining complaints directly. This depends upon the pecuniary and
territorial limits of each commission. As per the latest amendment of 2002,
a state commission can entertain complaints directly on matters in which the
value of goods or services and the compensation exceeds rupees twenty
lakhs but does not exceed rupees one crore. 106 As regards the territorial
jurisdiction, a complaint can be instituted in a state commission within the
limits of whose jurisdiction 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.107 In case
there are more than one opposite parties who, at the time of the institution
of the complaint, reside or carry on business-within the jurisdiction of
different state commissions, the complaint can be filed in any of these
commissions with the permission of that commission or after there has been
acquiescence of the other parties. 108 Complaint can also be filed in a
commission within the limits of whose jurisdiction the cause of action,
wholly or in part, has arisen.109

103. Id, sec. 16(1A).


104. Id., proviso to sec. 16(1A).
105. Id., sec. 16(3).
106. Id., sec. 17(l)(a)(i).
107. Id., sec. 17(2)(a).
108. Id, sec. 17(2)(a) and 17(2)(b).
109. Id., sec. 17(2)(c).
350 A TREATISE ON CONSUMER PROTECTION LAWS

Ordinarily, the state commission functions in the state capital but may
also perform its functions at any other place, as the state government may
notify in consultation with the state commission. 110
Appeal against an order of the state commission may be preferred to the
National Commission within a period of thirty days from the date of the
order.111 The National Commission may, however, entertain an appeal even
after the expiry of that period on the ground of 'sufficient cause'. An appeal
may not be entertained by the National Commission unless the appellant has
deposited fifty per cent of the ordered amount or rupees thirty five
thousand, whichever is less.112
To ensure quick disposal of complaints, state commissions and the
National Commission have been required to hear the appeals expeditiously
with an endeavour to finally dispose of each appeal within a period of ninety
days from the date of its admission. Adjournment should be granted only if
there is a sufficient cause for that and the reasons thereof should be
recorded in writing. 113 Orders for payment of costs can also be made for
granting adjournments. Furthermore, it has been made mandatory for a state
commission and the National Commission that they should record in
writing the reasons for delay in disposal of an appeal beyond a period of
ninety days.114
The state commissions enjoy supervisory powers over the district
forums. 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 a district forum to another district forum within
the state if the interest of justice so requires. 115
The state commissions may call the records of any consumer dispute
pending before or decided by any district forum within its limits of
jurisdiction if it appears to the commission that the district forum has
exercised a jurisdiction not vested in it by law or has failed to exercise
jurisdiction so vested in it. This power can also be exercised if the state
commission feels that the district forum has acted in exercise of its
jurisdiction illegally or with material irregularity.
The revisional jurisdiction may be exercised by a state commission,
either suo motu or on the application of a party. The revisionary power of
the state commission can be exercised only in matters pertaining to the
jurisdiction of a district forum. Any error in the judgment of the district

110. M.sec. 17B.


111. Id., sec. 19.
112. Ibid.
113. Id., sec. 19A.
114. Id., proviso to sec. 19A.
115. M.secs. 17A and 24B(2).
CONSUMER PROTECTION ACT, 1986 351

forum which does not have any relation to jurisdiction cannot be made a
ground of revision.

National Commission

Composition
The National Consumer Disputes Redressal Commission is established by
the central government. It consists of a president and four other members.
One of the members has to be a woman. The president of the National
C o m m i s s i o n can be a person who has been a judge of the Supreme
Court. 116 He is to be appointed by the central government in consultation
with the Chief Justice of India. 117 The qualifications and disqualifications
prescribed for the members are the same as those for the members of a state
commission. 118 A member of the National Commission can hold office for
a term of five years or upto the age of seventy years, whichever is earlier.119
Re-appointment, wherever possible, is allowed.120
The appointment of the members takes place on the recommendation
of a selection committee consisting of a judge of the Supreme Court
nominated by the Chief Justice of India (as Chairman of the selection
committee) and the secretaries in the department of legal affairs and the
department of consumer affairs, government of India (as members).
- The jurisdiction, powers and authority of the National Commission may
be exercised by its Benches.121 The president may constitute the Benches of
the National Commission with one or more members. 122 In case of any
difference of opinion on any issue in a dispute the decision is taken
according to the opinion of the majority. In case the members are equally
divided, they may make a reference on that to the president, who may either
hear the issue himself or refer the case for hearing by one or more of the
other members. In that case the decision would be taken according to the
opinion of the majority of the members who have heard the case, including
those who first heard it. 123

Jurisdiction
The National Commission is vested with original, appellate and revisional
jurisdictions. Under the original jurisdiction, the National Commission is

116. Id, sec. 20(a).


117. Id., proviso to sec. 20(a).
118. Id., sec. 20(1) clause (b).
119. Id., sec. 20(3).
120. Ibid.
121. Id., sec. 20(1-A)(i).
122. Id., sec. 20(1-A)(ii).
123. Id., sec. 20(1-A)(iii).
352 A TREATISE ON CONSUMER PROTECTION LAWS

empowered to entertain complaints where the value of goods or services


and the compensation claimed exceeds rupees one crore. 124 The National
Commission can entertain complaints from any where in India. It can also
entertain appeals against the order of any state commission.
The National Commission may call the records of any consumer dispute
which is pending before or has been decided by any state commission, if it
appears to the National Commission that the state commission has
exercised a jurisdiction not vested in it by law. It can exercise such powers
also in cases whose a state commission has failed to exercise a jurisdiction
vested in that or has acted in the exercise of its jurisdiction illegally or with
material irregularity. The National Commission can exercise this power
either suo motu or on the application of either party.
In deciding the complaints, the National Commission has to follow the
same simple procedure as is followed by the fora below.125 It has the power
to review any of its orders if there is an error apparent on the face of the
record. 126 Where the order is passed by the National Commission exparte,
the aggrieved party may apply to the Commission to set aside the said order
in the interest of justice.127
The National Commission enjoys the power to transfer any complaint
pending before a district forum of one state to another district forum of any
other state or before one state commission to another state commission. 128
Ordinarily the National Commission functions at New Delhi but it may
perform its functions at any such other place as the central government may
notify in consultation with the National Commission. 129
If the president of a district forum or state commission or of the
National Commission is not able to perform his functions for any reason,
his functions would to be performed by the senior-most member of the
respective agency.130 In case a retired judge of a high court is a member of
the National Commission, such member would preside over the National
Commission in the absence of the president of that Commission. 131 If there
are more than one such members, the senior most of t h e m w o u l d
preside. 132
Any person aggrieved by an order made by the National Commission
may prefer an appeal against such order to the Supreme Court within a

124. Id., sec. 21(a)(1).


125. Id, sec. 22(1).
126. Id., sec. 22(2).
127. Id., sec. 22A.
128. Id., sec. 22B.
129. Id., sec. 22C.
130. Id., sec. 22D.
131. Id., proviso to sec. 22D.
IV Ibid.
CONSUMER PROTECTION ACT, 1986 353

period of thirty days from the date of the order. The Supreme Court may
entertain an appeal even after the expiry of thirty days if it is satisfied that
there was a sufficient cause for not filing it within the stipulations period. 1 "
An appeal may be entertained by the Supreme Court only after the appellant
has deposited fifty percent of the ordered amount or rupees fifty thousand,
whichever is less.

Administrative Control
The National Commission enjoys the administrative control over all the
state commissions in the matter of calling for periodical returns regarding
the institution, disposal and pendency of cases. Following of uniform
p r o c e d u r e s in hearing by state commission also falls under the
administrative control of the National Commission. The National
Commission may generally keep observing the working of the state
commissions and the district forums for their proper functioning.134 In the
same way the state commissions enjoy administrative control over all district
forums within their jurisdiction.135

Compliance of Orders
The provisions regarding compliance of orders apply both to interim orders
as well as other orders. In case an interim order made under this Act is not
complied with, the relevant forum may order the attachment of the property
of the contravening person. 136 If non-compliance continue for a period
exceeding three months, the property attached may be sold by the forum
and out of the proceeds thereof damages may be awarded to the
complainant and the balance amount paid to the parties entitled thereto. 1 - 7
Whenever any amount becomes due to any person under an order made by
a forum under the Act, he can make an application to the district forum for
the issuance of a certificate in that regard to the collector of the district to
recover the same as arrears of land revenue. 138
The redressal agencies at all levels have the power to impose penalty on
any opposite party for its failure to comply with any of their orders. The
person responsible for such a failure may be punished with imprisonment
from one month to three years or with a fine of rupees two to ten thousand,
or with both. 139

133. Id, sec. 23.


134. Id., sec. 24B(i) to (iii).
135. Id., sec. 24B(2).
136. Id., sec. 25(1).
137. Id., sec. 25(2).
138. Id., sec. 25(3).
139. Id, sec. 27.
354 A TREATISE ON CONSUMER PROTECTION LAWS

For the trial of offences, these fora have the powers of a judicial
magistrate of first class and may t r y the offences under the Act
summarily.140
Appeal against any order of the district forum regarding non-
compliance may be preferred before the state commission and appeal
against the order of the state commission may be preferred before the
N a t i o n a l C o m m i s s i o n . Appeal against any order of the N a t i o n a l
Commission may be preferred to the Supreme Court. 1 4 1 The limitation
period for filing appeals is thirty days from the date of the order. 142 On
showing 'sufficient cause', the appellate forum may entertain an appeal even
after the prescribed time period. 143

VI. Judicial Contribution


A large number of complaints are being brought before the consumer fora
against sellers and service providers by complainants suffering losses or
injury in different forms. The number of cases and their nature reflect that
consumers are invariably facing exploitation at the hands of all kinds of
suppliers of goods and service providers. The cases that are coming before
the consumer fora relate to defects in goods and deficiencies in services in
banking, insurance, transport, electricity, housing, medicine, telephone,
education, air lines services and so on. The main trend in consumer dispute
resolution is pro-consumer. To have a closer look on the process we make a
study of the illustrative cases on the subject in separate categories.

A. Defects in Goods
Many cases have been decided under the Consumer Protection Act, 1986
granting relief to complainants on account of the supply of defective goods
by the suppliers/manufacturers. The judicial pronouncements cover almost
every kind of product necessary for life, like agricultural appliances, electrical
appliances, vehicles and other goods. For example, in M/s Kerala Agro
Machinery Corporation Ltd. v. Bijoy Kumar Roy',144 the Supreme Court held the
opposite party liable to compensate the complainants on account of defects
in a power tiller. This is the common trend followed by the consumer fora
regarding defective agricultural machinery. In JNPAgro Systems Pvt. Ltd. v. K
K]ose,w the district forum granted relief to the complainant who was sold

140. Id., sec. 27(3).


141. Id., sec. 27A(1) (a) to (c).
142. Id., sec. 27A{3).
143. Id., proviso to sec. 27A(3).
144. 2002(2) CPR 107 (SC); in this case, though the complainant was entitled to
compensation, but his claim failed because of bar of limitation.
145. 2002 (1) CPJ 19 (NC).
CONSUMER PROTECTION ACT, 1986 355

by the dealer a defective agricultural machinery, and the State Commission,


following the pro-consumer policy, upheld the district forum's order. The
National Commission also refused to interfere with the decision of the fora
below and upheld the view that for any defect in agricultural machinery the
complainant can claim relief under the Act.
M a t t e r s w i t h respect to air-conditioners have also come for
consideration before the consumer fora. In Harmohinder Singh v. Anil
Sehgal,146 the complainant had purchased an air-conditioner from an
authorised dealer. After sometime, it was found that the compressor of the
air-conditioner was not working properly. The dealer argued that since the
original sealed compressor was supplied and he, not being manufacturer of
the compressor, could not be held liable. On examination of the materials,
the National Commission found that the dealer had withheld the original
materials and the compressor used in the air-conditioner supplied by him
was not original, but second hand and repaired. The Commission, therefore,
held that in such circumstances, the dealer could not avoid his liability
simply on the ground that he was not the manufacturer.
In R.K. Kapur v. R.N. Mittal,U7 the complainant, who was the president
of State Commission purchased an air conditioner which did not work
during the season. O n making a complaint, the district forum awarded
compensation in favour of the complainant. Aggrieved with the order of
the district f o r u m , the opposite party filed an appeal in the State
Commission which was passed on by that to the National Commission for
hearing. The National Commission after hearing the parties reduced the
amount of compensation as was awarded by the district forum.
As regards cars, the rust formation has been held as a defect. 148
Embossing of a wrong engine number on identification plate of a car is also
a defect.149 If a car meets an accident, it does not amount to defect unless a
mechanical defect in the car is proved to be responsible for the accident. In
Wheels World and Sipani Automobiles Ltd. v. Tejinder Singh Grewal,1*0 the
complainant purchased a diesel car from a dealer. Within two days of
delivery, certain vital defects were noticed in it for the removal of which the
car remained in the w o r k s h o p . The repairs could, however, not be
satisfactory and the complainant approached the manufacturer who replaced
the engine. The State Commission held that the manufacturer and dealer
were jointly as well as severally liable to refund the price of the car with
interest at the rate of 18 per cent per annum. O n appeal, the National

146. 1999 (1) CPR 101 (NC).


147. 1996 (2) CPR 78 (NC).
148. E. Bhagvandas v. Sunderam Motors & the Premier Automobiles, 1991 (1) CPR 318 (AP).
149. JD Sharma v. Maruti Udyog Ltd, 1991 (1) CPJ 126 (Har).
150. F.A.No. 605/93 & 31/94, decided on 16.12.1994.
356 A TREATISE ON CONSUMER PROTECTION LAWS

Commission upheld the decision of the State Commission.


Non-possession of relevant documents of a vehicle is also a defect.
Accordingly, in Ramesh Chandra Biswal v. Commercial Tax Officer,151 the failure
of the seller to handover the registration book of the vehicle purchased by
the complainant along with the vehicle was held by the Orissa State
Commission to be a defect.
In a case relating to computers, Essen Computers Ltd. v. Jagrat Grahak
Sardar Chbatralaya,152 to establish liability to pay compensation or to grant
any other appropriate relief, the district forum ordered that it be proved by
evidence, whether a computer never worked from the beginning or the same
became defective due to misuse. Looking into the matter, the Gujarat State
Commission observed that this procedure can be adopted in the absence of
any expert evidence or test report of any other well-known computer
company. If expert evidence or a test report can be made available then that
would be the proper way to establish the truth about the matter. Similarly, in
Sabeena Cycle Emporium v. Thajesh Ravi, M Rm,153 the Kerala State
Commission has held that if the breakage of the cycle was found to have
taken place due to inherent manufacturing defect, the compensation would
be accordingly granted in such a case, but to establish whether wrong
assembly causing breakage in the cycle-frame was a defect must be
ascertained on the basis of expert opinion.
In B.H. Kerudi (Dr.) v. M.D.S. Mima & Co.154 the National Commission
held that any defect occurring during the warranty period is covered by the
maintenance contract. For example, in this case a staple pin machine did not
work properly, the complainant was held entitled to refund of the price with
interest.
In Farook Haji Ismail Saya v. Gavabhai Bhesania,155 it has been held by the
Gujarat State Commission that the electric household appliances, which are
not in accordance with the ISI standard, being unsafe and having electrical
hazard, cannot be permitted to be manufactured and allowed to be used for
domestic purposes as the same would be defective within the meaning of
section 2(l)(f). In Maurya Enterprises v•. Kone Elevator India Ltd.,156 an elevator
became practically useless requiring major repairs within a short span of five
years, the Gujarat State Commission directed the suppliers to repair the
defect at its own cost.

151. 1993 (3) C P R 182 (Ori).


152. 1993 (2) C P R 420 (Guj).
153. 1992 (2) C P R 246 (Ker).
154. 2002 (3) CPJ 299 (NC).
155. 1991 (2) C P R 191 (Guj).
156. 1996 CPJ 174 (Kara).
CONSUMER PROTECTION ACT, 1986 357

In Tinkle Bells Enterprises v. State ofRajasthan,157 EPBX System was


damaged during the warranty period. The opposite party claimed that such
a damage was due to voltage fluctuations and not due to any manufacturing
defect and agreed to provide a constant voltage transformer (CVT). O n this
the local dealer installed his own voltage stabilizer there. Not satisfied with
this the complainant brought the matter before the State Commission,
which examined the matter at length and held that there was deficiency in
service. This order of the State Commission was challenged by the opposite
party before the National Commission. But, directing the opposite party to
refund the cost of the EPBX system with interest, the National Commission
upheld the decision of the State Commission. In Namrata Ashok Kumar Jain
v. Industrial Engineers,1*8 a defective domestic flour mill had been supplied to
the complainant. Taking a note of the defects the Maharashtra State
Commission directed to refund its price along with interest at the rate of 18
per cent per annum.
In Godrej & Boyce Manufacturing Co Ltd. v. Amarsingh Jain,159 the sealed
unit of a refrigerator was required to be changed four times during five
years. The Delhi State Commission extended its warranty for a period of
five years. The failure of a grinder motor within warranty period has been
held by the Tamil Nadu State Commission in Sarvana Steel Furniture v. A
Shahbudeen,160 a defect for the repairs of which the suppliers were held
liable.
Lack of care in filling and maintaining gas cylinders has resulted into
many fatal incidents damaging people around. Therefore, in Dayanand A
Avasare v. Bharat Petroleum Corporation Ltd.,161 a gas cylinder with excessive
filling of gas has been held to be defective and in B.G. Bhaskar v. Kartikb Gas
Agencies,,62 it has been opined that if it is proved that fire broke out at a
place by leakage in a gas cylinder, the gas cylinder would be considered as
defective.
The West Bengal State Commission dealt with the issue of adulterated
edible oil in Barsad Ali v. M D West Bengal Essential Commodities Supply
Corporation Ltd.163 In this case, the adulterated rape seed oil with toxic
substances, had caused paralysis of the limbs and other disabilities of the
c o m p l a i n a n t . This was accordingly considered a defect for which
compensation was awarded to each victim, ranging from Rs. 25,000 to Rs.
1,00,000.

157. 2003 (1) CPJ 71 (NC).


158. 1992 (2) CPJ 848 (Mah).
159. 1993(1) CPR 47 (Del).
160. 1991 (2) CPR 382 (TN).
161. 1993 (1) CPR 278 (Mah).
162. 1993 (1) CPR 477 (Karn).
163. 1993 (1) CPR 217 (WB).
358 A TREATISE ON CONSUMER PROTECTION LAWS

The Andhra Pradesh State Commission, in Cheethirala Pullaiah Sons v.


Alavalapati Chandra Reddy,164 while considering a complaint regarding
defective seeds has held it maintainable and granted compensation at the
rate of Rs. 2,000 per -acre of land in which the seeds were sown. In this case,
the poor quality of the seeds was proved by the local agriculture officer/
commissioner after proper analysis.
With respect to soft drinks, in Narayanan Vyankatkrishnan Iyengar v.
Shakti Foods,165 where the laboratory test report showed that the soft drink
was not fit for human consumption, the Maharashtra State Commission
directed its manufacturer to pay cost of the soft drink and Rs.500 as
compensation. But, in Union ofIndia v. Chairman, Madras Provincial Consumer
Association,166 the sale of curd-bhat without drinking water in satchet by the
railways was not held by the National Commission to render the curd-bhat
defective. The drinking water had been supplied in satchet with vegetarian
and non-vegetarian meals. The National Commission, however, issued
direction to the railways to supply drinking water with curd-bhat.
Taking a practical view of this, in Consumer Education & Research Society v.
Godrej Soaps Ltd.,167 the Gujarat State Commission has held that if a
particular chemical, which is a constituent of a hair dye, does not exceed the
percentage standard prescribed for it under Drugs and Cosmetics Rules,
there would be no defect in the hair-dye.
Even quality of sandals has become a subject of consumer litigation. In
Maheshbhai Parikh v. Proprietor/Partner, Chudasma Foot Wear168 it was proved
that sandals were not of standard quality and were defective and, therefore,
required to be returned to the seller. The Gujarat State Commission ordered
full refund of the purchase price.
Relief has been claimed by consumers also for defects in objects ranging
from scooters to staple pin machines. In S.L.N. Auto Service Station v. Herald
Alfred Lewis,169 a scooter was found defective during the warranty period.
The Karnataka State Commission held the complainant eligible for not only
cost of parts and labour charges for carrying out repairs but also for
damages for mental agony and hardship. Likewise, in Auto Skills v. Yuva

164. 1993 (2) CPR36 (AP);see also Ashok Kumar Tomar v. National Seeds Corporation Ltd,
2000 (2) CPJ 167 (Del.); Maharashtra Hybrid Seeds Co Ltd v. Annapureddy Vijender
Reddy, 2002 (3) CPJ 283 (NC); National Seeds Corporation Ltd. v. Nemmipati Nagi
Reddy, 2003(1) CPJ 241 (NC); Shyam Beej Bhandar v. Dana Singh, 2003 (1) CPJ 263
(NC).
165. 1994 (2) CPJ 652 (Mah); see also IICL Ltd v.RS Saluga, 1995 (3) CPJ 186 (MP).
166. 1992 (2) CPJ 524 (NC).
167. 1991(1) CPR 454 (Guj).
168. 1992 (1) CPR 105 (Guj).
169. 1992(1) CPR 493 (Karn).
CONSUMER PROTECTION ACT, 1986 359

Lekhak Abhyan,170 a sofa set was found defective within a short period of
five months and was taken back for the purpose of removing defects. The
Manarashtra State Commission held it as defect for the purpose of grant of
compensation. Injitendra Panchal v. Rajest Dhanjibhai Shah,171 the staple pin
machine did not work properly, the complainant was held entitled to refund
of the price with interest.
Quality of tractors and televisions has also become the subject of
claiming relief under the Consumer Protection. In Bhoop Singh v. Surendra
Agro Centre,172 a complainant had purchased a tractor and the engine of the
tractor was found defective. The district forum found that the tractor was
satisfactorily repaired and was in proper working order. It also found that
the complainant had not preserved evidence in the form of bills nor did he
produce any evidence in respect of defects. Facts also showed that he had
not chosen to avail free services which were mentioned in the maintenance
book and had used tractor in violation of warranty terms. Accordingly, the
State Commission dismissed the appeal. However, in VST Tiller Tractors Ltd
(Chairman) v. Jamuna Singh,173 the tractor was required to be frequently sent
for repairs and the complainant was deprived of use of the tractor. The
National Commission held that the opposite party should have replaced the
tractor or refunded the price rather than engaging the complainant in
continuous rounds of litigation.
In Solidaire India Ltd. v. B A Mohan Kumar,174 a complaint was filed
about defect in a television set, in respect of the failure of the picture tube.
The Kerala State Commission opined that such a defect must be ascertained
by an expert after proper test. Thus, complainant was required to either to
adduce expert evidence or request the district forum to get the television
tested by an expert. The report was to be obtained to ascertain the life span
of the picture tube and to see whether the picture tube had become
defective due to any inherent manufacturing defect. In another case,
Dynavision Ltd v. Sudhakara Kamat,175 the original picture tube was lying with
the m a n u f a c t u r e r for a long time. District forum agreed w i t h the
complainant that, by passage of time, the picture tube must have become
damaged and directed the manufacturer to fix a new picture tube in good
condition free of cost. In case the original picture tube was not available in
India, the forum directed that the manufacturer must fix in the said
television a picture tube of equal quality and standard as that of the original
picture tube. Besides defects, the Kerala State Commission took into

170. 1991 (2) CPR 39 (Mah).


171. 2003 CPJ 162 (NC).
172. 1993 (2) CPR 519 (Har).
173. 2003(1) CLD 490 (NC).
174. 1992 (1) CPJ 177 (Ker).
175. 1991 (2) CPR 265 (Ker).
360 A TREATISE ON CONSUMER PROTECTION LAWS

account also the factors of mental strain caused to the complainant and
unnecessary expenses incurred by him in the proceedings and awarded him
a compensation of Rs. 2,000. In one more case, Rose Mary Chakrapani v.
Santosh Agency,176 occurrence of defect during guarantee period was
considered as unfair trade practice and the manufacturer was asked to
replace the picture tube and repair the television set. In Uma v. Aggrellwus
and Co.,177 the television set developed black spots on its picture tube, may
be by seepage of dust and carbon. This defect was not removed by the
opposite party claiming that the phenomenon of dust is common to all
brands of television with no adverse effect on the life of the picture tube.
Rejecting this contention, the Delhi State Commission directed the opposite
party to replace the television set with a new one.

B. Defects in Services

Banking
The banking is one of the important services which has been expressly
covered under section 2(l)(o) of the Consumer Protection Act, 1986.178
The purpose of express inclusion of banking in the definition of service is
that any kind of disruption in such an important service sector can not only
create hardship for consumers but also have severe economic repercussions
on .the nation. This fact has been well recognized by court also and the
remedy has been extended to any kind of deficiency in payment of interest
on overdraft, charging of interest at leading rate, wharfage, demurrage,
defects in demand draft, wrongful crediting of an amount, delay in crediting,
improper maintenance of lockers, passing of forged cheques etc.
In Consumer Unity & Trust Society, Jaipur v. Chairman and Managing Director,
Bank o/Baroda, Calcutta and Another,179 there was an illegal strike resorted to
by the employees of the bank during the pendency of conciliation
proceedings in contravention of section 22 of the Industrial Disputes Act,
1947 and the nature of the agitation and demonstration carried on by them
was such as to effectively prevent ingress from the premises of the branches
of the bank in the State of West Bengal. The complainants put forward a
claim for the loss caused to them during the strike period. The question
before the National Commission was that whether a banking company
which had been forced to suspend its business operations on account of an
illegal strike by its employees, could be held liable to pay compensation to
the account holders for the inconvenience and loss caused to them during
the period of the strike. The National Commission held that when the

176. 1994 (1) CPR 42 (WB).


177. 1993 (1) CPR 647 (Del).
178. Id., sec. 2(l)(o).
i 7 9. (1995) 2 SCC 150.
CONSUMER PROTECTION ACT, 1986 361

suspension of the business was caused on account of an illegal strike it could


not be said that the inconvenience, loss or injury caused to the consumers
was due to the negligence of the bank. The Supreme Court, on appeal
against the order of the National Commission gave a very wide connotation
to the words 'service of any description' in the definition of 'service' under
section 2(o) and widened the ambit of the section and extended it to all
banking activities but did not hold the bank liable to pay compensation to its
customs in the present case. The court observed that even though the
depositors were deprived of the service of the bank due to strike the
shortcoming in the service by the bank did not arise due to any failure on
the part of the bank in performing its duties or discharging its obligations as
required by law. Thus, the bank escaped liability because the depositors were
prevented to avail the service of the bank not because of any deficiency on
the part of the bank but due to strike resorted to by the employees who
almost physically prevented the bank from functioning.
This approach could be discouraging for the consumer movement in
India but in the subsequent cases, the trend has been consumer friendly.
Accordingly, in State Bank ofIndia v. Jiya Lai Kamboj (Dr.I180 it has been held
that the banking service is actually a service for consideration and when a
bank is appointed to handle public issue of a company, the bank renders
service to the company for a consideration.
An important case decided on banking service, in which the bank
a u t h o r i t i e s had used harassment tactics to extract bribe from the
complainants, is Mike's Private Ltd. v. State Bank ofBikaner and Jaipur.m In
this case, the preliminary inspection and review of the complainant's
application for bank finance was completed and it was agreed in principle
that a credit of Rs. 60 lakh could be sanctioned. For sanctioning the credit,
the bank manager demanded bribe and following a trap, he was caught red-
handed, while taking bribe. Thereafter, employees of the bank started
harassing the complainant. Cheques issued by the complainant were
maliciously dishonoured because of which it failed to avail valuable export
orders. Eventually, the complainant had to sell its immovable properties and
shift to a rental building. It also had to retrench several of its employees. On
considering the matter, the National Commission held that there was
deficiency in b a n k ' s services and the complainant was entitled to
compensation.
Besides the general practice of issuing cheques, the consumers
sometimes give stop-payment instruction to banks. In Bank of India v.
Mukesh Kumar Shukla (Dr.),1S2 the responsibility of the bank to follow the

180. 1996 (4) CJ 460 (Del).


181. 1995 (2) CPJ 97 (NC).
182. 1993 (1) CPJ 41 (MP); also see Arun Sameer Associates Pvt. Ltd. v. Regional Manager,
State Bank of India 1994(1) CPR 480 (Punj).
362 A TREATISE ON CONSUMER PROTECTION LAWS

stop-payment instructions has been held by Madhya Pradesh State


Commission as a matter relevant to assess deficiency in the banking service.
So, whenever, a customer gives stop-payment instructions, his intention is
that the bank should countermand the payment. It is, therefore, obligatory
for bankers to follow such instruction and ensure that no payment is made
in respect of a cheque for which stop-payment instructions are received
from the customer. If a bank makes payment against countermanding
instructions that would amount to deficiency in its services and cannot
defend any action for damages on the ground that the c u s t o m e r ' s
instructions were not followed by the bank due to inadvertence or bonafide
mistake.
In Bhandari Co-operative Bank Ltd. v. Dilip Madhukar Kambli,m the bank
debited an amount to the customer's account in respect of purchase of a
machine for which loan was sanctioned by the bank. The debit was made by
the bank without the written instructions from the customer. The bank
argued that the machine had been purchased by the complainant from the
supplier who was recommended to him by the bank official. But the
M a h a r a s h t r a State C o m m i s s i o n held that the b a n k ' s m a k i n g such
unauthorised debit amounted to deficiency of service.
In Balraj (R) v. The Manager Grindlays Bank,184 the Tamil Nadu State
Commission found that the complainant had requested his bank to transfer
his money to another branch of the same bank. While the bank complied
with the complainant's request, credit advice was sent to some other branch,
not requested by the complainant. This was regarded by the Commission as
negligence on the part of the bank which amounted to deficiency in its 4
service.
In the present times, when trevellers cheques have become the
instruments of popular case during travel, the banks are supposed to extend
positive cooperation to consumers in case of loss of such cheques. In Central
Bank of India v. Parveen Nayak,1*5 the bank issued travelers cheques to the
complainant with printed instructions that in case of loss of the cheques,
bank should be informed about the loss. Unfortunately, the travelers
cheques of the complainant were stolen. He informed the bank about the
loss, but the complainant's claim based on the loss was not allowed by the
bank. Considering the matter, the district forum directed the bank to pay to
the complainant the principle amount with 12 per cent interest per annum
and also Rs. 2,000 by way of damages for deficiency in bank's service. The
bank appealed against the order of the district forum and contended that the
complainant had not lodged any FIR. The Bihar State Commission turned

183. 1992 (1) CPJ 68 (Mah).


184. 1993 (2) CPJ 652 (TN).
185. 1992 (2) CPJ 129 (Bihar).
CONSUMER PROTECTION ACT, 1986 363

down this contention, observing that the bank was deficient in its service
and upheld the decision of the district forum.
In American Express Bank Ltd., Travel Related Services v. Rajesh Gupta,186
the bank refused to give to the complainant refund for the loss of traveler's
cheques as it found serious discrepancies in his statement. It was found that
on earlier two occasions, the complainant had got refund of traveler's
cheques which were encashed. The National Commission held that as the
refused claim was rejected after holding proper inquiry and investigation, the
same did not constitute deficiency in service.
Failure on the part of a bank to commute a specified part of pension to
the credit of a customer is clearly a deficiency in service. In K.T. Shivaiah
(Dr.) v. Canara Bank,1*7 the complainant was sanctioned a monthly pension
out of which some part was commuted. The commuted part of pension was
not credited by the bank to the customer's account. It was held by the
National Commission that such conduct of the bank was deficiency in its
service.
The bank's failure to pay insurance premium on behalf of a customer in
time has been held by the National Commission a deficiency in service. In
United India Insurance Co. Ltd. v. Satrugan Sharma188, under the hypothecation
agreement, the customer had entrusted the bank with the task of making
payment of insurance premium before the expiry of the insurance cover.
The bank failed to do so and, therefore, the National Commission held that
such a failure was deficiency in service.
An issue regarding refusal of the bank to return title deeds to a
customer was considered by the National Commission in the case of Dosen
Chemicals Pvt. Ltd. v. United Bank ofIndia.1*9 In this case, after receiving the
whole amount of loan due from the complainant, the bank refused to return
the title deeds of a property which were required by him to obtain loan from
another bank to complete the complainant's building complex. The National
Commission held that there was gross deficiency in service and awarded
compensation with interest and costs.
N o bank can stop operation of an a m o u n t on the basis of the
instruction of another bank. In Dr. Purushattam Nagar v. Zonal Manager, UCO
Bank,190 the bank stayed the operation of the personal account of the
complainant as per telephone instructions from the other bank. A
complaint was filed by the complainant in the State Commission against the
bank. The State Commission partly allowed the complaint regarding

186. 2000 (1) CPR 22 (NC).


187. 1992 (1) CPJ 253 (NC).
188. 1999 (1) CPJ 1 (NC).
189. 2003 (1) CPJ 214 (NC).
190. 1994 (1) CPJ 162 (NC).
364 A TREATISE ON CONSUMER PROTECTION LAWS

operation of the account but declined to give direction for the return of the
amount and declare the withdrawals and transfers as illegal. In appeal before
the National Commission, the Commission held that the action of the bank
amounts to deficiency in service and the complainant was entitled to full
relief.
A bank cannot stop operation of an account on its own. In Prem G's
International v. Central Bank ofIndia,191 the complainant was a private trust
and the bank account of the trust was opened in 1979 through its managing
trustee. In 1991, the operation of the said bank account was stopped by the
bank contending that the formalities were not complied with by the
complainants. The Delhi State Commission held that it was deficiency in
service on the part of the opposite party.
Not paying the full amount of the sanctioned loan or an adequate and
timely working capital is deficiency in service. In Kamal Nagpal v. State Bank
of India,192 a loan of Rs. 85,000 was sanctioned by the bank in favour of the
complainant, but only a sum of Rs. 50,000 was actually paid to him. The
balance amount was not paid. The Jammu and Kashmir State Commission
held that the bank was liable for deficiency in service. Accordingly, in Urmila
Bhargawa v. Punjab and SindBank,193 the complainant alleged deficiency in
service on the part of bank in not providing adequate and timely working
capital in accordance with settled terms. The National Commission upheld
this contention and declared that it was deficiency in service.
In State Bank ofHyderabad v. Shri Balri Lingam,X9A the appellant bank had
undertaken to provide financing facilities to the unemployed youth. When
the complainants approached the bank, it agreed to make available its
services for a consideration in the form of interest and issued a consent
letter in that regard. On the basis of the consent letter given by the bank, the
complainants purchased the land and c o m m e n c e d the necessary
constructions for their work. They also withdrew margin money sanctioned
to them by the district backward classes service cooperative society on the
basis of the consent letter and deposited that amount in the bank. Ultimately
the bank refused to render the financing facilities. O n this the National
Commission held that the complainants had acted on the promise made by
the bank which subsequently refused to perform the agreed services to the
detriment of the complainants. Thus, the services which the appellant bank
had undertaken to perform suffered from deficiency.
In the Special Officer, Yelayapalim Primary Co-operative Credit Society No. 46,
Kodavalur Mondal, Nellore District v. Koreti Chandra Reddy, &Anr.,}95 the

191. 1995 (2) CPJ 222 (Del).


192. 1995 (2) CPJ 342 (J&K).
193. 1994 (2) CPJ 42 (NC).
194. 1991 (l)CPR 148 (NC).
195. 1991 (l)CPR 371 (AP).
CONSUMER PROTECTION ACT, 1986 365

complainant was the member of the cooperative credit society and was
entitled to avail its services. He applied for loan, which was sanctioned in his
favour and also the amount of loan was released. As regards recovery, he
paid back the entire principal amount but did not pay the interest as the
state government had waived the interest on the loan amount. However,
when he again applied for loan, it was not granted, instead the society
demanded payment of the interest payable on the loan taken by him earlier.
The matter came for consideration before the Andhra Pradesh State
Commission which held that there was deficiency in services rendered by
the society to the complainant. He was, therefore, held entitled to proceed
against the society.
Failure to credit an amount received by a bank to customer's account
within reasonable time is deficiency in service. In Arjun Lai Aggarwal v. State
of Bank of India and Ore.,196 an amount was remitted by telegraphic transfer
for transmission to the complainants account. The amount was duly
received by the bank with firm instructions to credit it to the complainant's
account. The complainant was not paid the said amount for six months and
there was thus a delay of six months in transmitting the amount even
though the quickest method available for transferring the amount was used,
apparently for an urgent need. The State Commission held that in the
context of a telegraphic transfer remittance, a delay of six months for
reaching out the amount to its recipients is clearly a deficiency in the
banking service.
In Sovintorg (India) Pvt. Ltd. v. State Bank ofIndia,197 a cheque deposited
by the complainant was collected by the bank but was not credited to the
complainant's account for more than seven years. The bank contended that
it was to be adjusted against margin money for bank guarantee. The
National Commission observed that the delay was inordinate and the
amount was not credited even after the expiry of the bank guarantee. The
Commission held that there was a grave deficiency in service of bank which
caused serious damage to complainant's business. Accordingly, the
Commission awarded compensation for harassment and damage suffered by
the complainant in its business.
In Nagbhushana Rao (P) v. Union Bank ofIndia,m the complainant had
invested certain amount in deposit reinvestment certificate. Due to pressing
financial need, he wanted to encash the certificate before maturity.
Accordingly, he submitted the certificate for encashment several times.
However, for more than one year, the certificate could not be encashed. On

196. 1994 (l)CPR 610 (Har).


197. 1992 (1) CPR 833 (NC); also see Laxmicband v. Indore Improvement Trust, AIR 1975
SC 1303.
198. 1991 (1) CPJ 197 (AP).
366 A TREATISE ON CONSUMER PROTECTION LAWS

this the Andhra Pradesh State Commission observed that the bank was at
fault in not encashing the certificate for a long period and the quality, nature
and manner of performance of bank's service was hopelessly inadequate. It
was accordingly held that the bank was guilty of deficiency in banking
service.
In B.H. Canara Bank v. K.R. Hanumantha Rao,199 the complainant gave
three cheques to the bank for realising the amount and crediting in his
saving bank account but the said amount was not credited to his account
c o n t e n d i n g that the said cheques were lost. The Karnataka State
Commission held that the assertion of the bank that the said cheques were
lost itself shows that the bank was negligent in dealing with those cheques.
The bank was even unable to state the stage at which those cheques were
lost. Hence, it was not possible to know whether the amount of the said
cheques was realised by the bank or not. Therefore, the bank was held guilty
of deficiency in service, as the complainant, who had deposited the cheques
with the bank, could not be made to suffer on account of the negligence of
the employees of the bank.
Any amount should be credited by the bank to an account as instructed
by the customer. In Harisaran Abbott v. The Zonal Manager, Bank ofIndian and
Ors.,200 clear instructions were given by the complainant to the bank that
certain remittances were to be credited to the account of the complainant as
a beneficiary and not to the account of the firm of which he was a partner.
So, there were no instructions to the bank to credit the said amount to the
account of firm of which he was a partner. In spite of this the bank credited
the amount to the account of the firm. The complainant alleged that it was
deficiency in service on the part of the bank, putting him to huge financial
losses. The Maharashtra State Commission held that the bank had acted
contrary to the instructions of the consumer which had put the complainant
to loss of interest on the deposited amount for a considerable period.
Therefore, this was a case of obvious deficiency in the service directly
resulting from the negligence of the bank. Accordingly, the complainant was
held entitled to the relief he had claimed.
Negligence in comparing signature is also deficiency in service. In Abdul
Razak v. South Indian Bank201 huge sums were w i t h d r a w n from the
customer's account on the basis of forged signature. The N a t i o n a l
Commission held that the bank was liable to pay to the complainant the
fraudulently withdrawn amount with interest.
A bank's failure to prevent passing of forged cheques is deficiency in
service. In Prakash R. Shenai v. Syndicate Bank202 the complainant's five

199. 1992 (l)CPR 318 (Knt).


200. 1994 (1) CPR 856 (Mah).
201. 2003 (1) CLD 227 (NC).
202. 1994 (1) CPR 582 (Mah).
CONSUMER PROTECTION ACT, 1986 367

cheques were forged and it was repeatedly pointed out by him to the
opposite party that because of the forgery committed by its employees he
has been p u t to a high financial loss. The opposite party instead of
investigating the grievances of the complainant tried to justify the passing of
cheques after due verification of the specimen signature of the complainant
from the bank's record. The complainant filed a complaint on the matter in
the M a h a r a s h t r a State C o m m i s s i o n for deficiency in service. The
Commission held that when the complainant disputed his signature on the
cheques, it was the duty of the bank to re-verify the signature and refer the
matter to the handwriting expert for his opinion, so that the truth could be
found out. O n the contrary the opposite party tried to cover the lapse
committed by their own employees who passed the forged cheques. The
attitude of the opposite party has been clearly that of non-cooperation with
the complainant as regards the finding out the truth and to understand his
complaint properly. As a result of the forgery, the complainant's amount has
been embassled which constitutes deficiency in service on the part of the
bank.
Improper maintenance of lockers is a deficiency in service. In Punjab
National Bank v. KB. Shetty20i a complaint was made by the customer about
loss of jewellery from his locker due to negligence of bank officials. The
bank took the plea that the customer had left open the locker which could
be n o t i c e d o n l y after fifty days. It was observed by the N a t i o n a l
Commission that even if the locker was left open by the customer's mistake,
it was surprising that the fact went unnoticed by the bank officials for
almost fifty days. It was held that the loss of jewellery from the locker was
due to bank's negligence.
In Mihirkumar Mukherjee v. United Bank of India (Branch Manager),204 the
National Commission took the view that any increase in the rent of the
locker does not amount to deficiency in banking service and the increase in
locker rent does not require corresponding increase in service. Since the
increase in locker rent is necessitated due to the increase in the cost of
maintenance, staff salary and other incidental expenses like rent of
accommodation, there is no deficiency in service or unfair trade practice
particularly when the increase in locker rent is not only for the complainant
but for all hirers. Since the relationship between the bank and the
complainant in respect of the agreement for locker hire is that of a licenser
and a licensee, the bank is authorised to increase the locker rent.
Issuing of unsigned demand draft by the bank has been held as a
deficiency in service. In Malati Bhat v. State Bank of India,205 an engineering

203. 1994 (2) CPR 636 (NC); also see R.G. Srivastava v. UCO Bank, 1994 (3) CPR 117
(Del).
204. 2002 (2) CPJ 38 (NC).
205. 1992 (2) CPJ 352 (NC).
368 A TREATISE ON CONSUMER PROTECTION LAWS

diploma student sent his examination fees by draft. The draft was returned
by the postal department to the complainant along with application on the
ground that the same was not signed by the bank manager. Due to bank's
negligence, the student lost six months of his student career. The district
forum held that the bank was negligent in issuing demand draft and awarded
compensation of rupees thirty thousand. O n appeal by the bank, the
Karnataka State Commission reduced the compensation to rupees twenty
thousand. Against this appeal the complainant moved the National
Commission, which set aside the State Commission's order and restored the
order of the district forum.
In N. Raveendran Nair v. Branch Manager, State Bank oflndia,20b two
officials had put that their signatures on the demand draft and the specimen
signature number of one of the officials was also inserted. The other
officials made a slip in putting his signature and the draft and for that reason
the draft was dishonoured. The complainant alleged that it was deficiency in
service. The Kerala State Commission, considering the matter, held that for
an omission committed by one of the employees of a bank, the customer
should not suffer. Since a demand draft is an instrument issued by one
branch of a bank to another branch or to the associate bank, if there has
been a lapse or an omission committed by the officials of the bank the
customer should not be put to difficulties. The dishonour of the draft made
by the opposite party was, therefore, wrongful. There is no doubt that the
service rendered by the opposite party was a defective service.
In Tarun Kumar Kanaiyalal v. Punjab National Bank, Bhuj,107 a draft
prepared by the Punjab National Bank payable by Gulf Bank in Kuwait was
dishonoured. The lapse leading to the dishonour was some matter relating
to the internal management of the issuing bank. The National Commission
allowed the complaint holding that the complainant was not concerned with
the internal management problems of the bank. Since he had deposited the
money with the bank by way of a fixed deposit through exchange, the bank
was bound to return the same on maturity or on request for premature
payment. The complainant was, therefore, held entitled to his money back
together with contractual interest.
In Bhupendra Kumar Nana Lai Rajguru v. The State Bank oflndia,20s the
draft was purchased by the complainant from State Bank of India branch at
Baroda and was payable at Calcutta. Unfortunately, when the educational
institution sent the draft for collection, it was found that the draft was on
the printed paper of the State Bank of India and was also according to the
bank duly signed by the branch manager but the signature of the teller was

206. 1991 (2) CPR 45 (Ker)


207. 1991 (2) CPJ 409 (Guj).
208. 1992 (2) CPR 324 (Guj).
CONSUMER PROTECTION ACT, 1986 369

not there. Therefore, the Calcutta branch of the State Bank of India
dishonoured the draft; with the result the complainant could not appear in
the examination. Consequently, one year of the complainant was spoiled and
the Gujarat State Commission held that it was a clear case of deficiency in
service and negligence.
A bank cannot retain the bank guarantee amount beyond reasonable
time. In H.C.L. Ltd. v. Bank of India,209 the respondent bank failed to make
the payment of bank guarantee amount in favour of the complainant.
Consequently, the complainant served a notice on the bank to make the
payment of the amount in terms of the guarantee. On negative response of
the bank, several reminders were given by the complainant but the amount
was not paid. Thereafter, the complainant filed the complaint in the Delhi
State Commission but during the pendency of the complaint the respondent
paid the amount. The commission observed that according to the terms of
the guarantee the amount should have been paid when the bank was called
to do so. When the complainant sent notice to the bank to make payment, it
became the duty of the bank to make the payment within a reasonable
period of time. But the payment was made by the bank after four years and
fifteen days and during this period the money was utilised by the bank. The
State Commission accordingly held the bank liable to pay interest on the
amount for the period of delay.
In Chandra mani Sarangi and Anr. v. Central Bank ofIndia,-10 complainants
deposited two fixed deposit amounts with the opposite party. One was for
five years and other was for ten years. The grievance of the complainant was
that inspite of maturity the amount was not paid. The opposite party stated
that the complainant was a guarantor for loans to various persons for which
he had deposited the two certificates as evidence of release. The Onssa State
Commission found that the complainant was a guarantor in two disputed
cases regarding which judgments were given by the court. The judgments
disclosed that the claims of the bank in those suits which included claims
against complainant as guarantor had been dismissed. Dates of loans in
other suits or dates of filing of any other suits were not disclosed by the
bank. The Commission, accordingly accepted the submission of the
complainant that the cases about loans given to other persons in respect of
which he was guarantor were dismissed by the court. Once the two suits had
been dismissed and no appeal was filed, the Commission held that the
deposited amounts, due to the complainant, should not remain with the
opposite party.

209. 1992 (l)CPR 291 (Del).


210. 1992 (3) CPJ 249 (On).
370 A TREATISE ON CONSUMER PROTECTION LAWS

In Patel Kantilal Kevaldas Gavada v. Manager, Dena Bank,2u the


complainant was having a saving bank account with the respondent bank.
He obtained FDR which was pledged for Gujarat State T r a n s p o r t
Corporation as security deposit. Interest on the FDR was payable to the
complainant as per agreement with the said corporation. Accordingly, the
bank credited to the saving bank account of the complainant the accrued
interest. Later, on the instruction from the corporation to the bank, the said
a m o u n t of interest was debited to the saving bank account of the
complainant and credited to the account of the said corporation. The
complainant challenged it before the Gujarat State Commission. The
Commission held that the corporation might have given instructions but
once the payment had been made to the complainant in accordance with the
instructions previously issued by the corporation, the bank was not justified
in reversing the entry. The bank is, therefore, liable to the complainant for
the deficiency in services and to give him again the credit of the amount
wrongly debited from his account with interest from the date when the entry
was reversed. The bank was also directed to pay costs to the complainant.
In M/s Sakthivadivalu & Sons v. Bank of India & Ors.,2U the complainant
issued a cheque drawn on the opposite party which was dishonoured by
them for the reason that a third party had represented to them that the same
amount had been deposited into the account of the complainant by
oversight. The Tamil Nadu State Commission held that no banking
institutions should poke nose into others affairs. It is not the business of the
bank holding a customer's money in the customer's accounts to enter into
or adjudicate upon the claims of the third party. Even if a person had
deposited his ill-gotten wealth in a bank, the bank must h o n o u r its
commitment to the depositor and clear his cheques unless the bank itself
has a claim against the depositor or unless there is an interdiction under the
authority of law. In this case the opposite party had tried to dabble in the
dispute between the complainant and the third party and defaulted to clear
the cheque for about seventeen days. This was a clear case of deficiency in
service and negligence.
In Janak M Cbandan v. Ahmed Nager Sahakan Bank Ltd.,21-' the customer
had pledged certain ornaments against loan given by the bank. He failed to
repay the loan even after the expiry of the stipulated period. The bank
issued public notice proposing auction of the ornaments. The customer
made a conditional offer to the bank that he was prepared to pay to the
bank the due amount if the bank was prepared to return the ornaments
within 48 hours of such payment. The bank did not agree to return the
ornaments. The customer complained that there was deficiency in bank's

211.1992 (1) CPR 544 (Guj).


212.1992(2)CPR288(TN).
213. 1993(1) CPR 153 (NC).
CONSUMER PROTECTION ACT, 1986 371

service. The National Commission held that the question of deficiency in


bank's service could arise only if the customer had made repayment of the
loan with the stipulated time. Payment after the expiry of the mortgage
period did not entitle him to complain about the deficiency. Similarly, in Indo
Steel v. Central Bank ofIndia™ the National Commission followed the view
that the bank's taking possession of securities to protect its interest in
respect of huge amount of outstanding overdraft is not deficiency.
Whenever a customer approaches any bank with a request to grant
credit facility, the established principle is that the bank has to evaluate such
request by applying credit appraisal norms within the framework of the
credit policy of the Government of India. 215 Following this principle, in
Devidas Kale v. Bank ofMaharashtra ,2xb the Maharashtra State Commission
has held that the bank's denial to provide credit facility on the ground of
credit norms does not constitute deficiency in service. Similarly, bank's
refusal to provide loan due to credit restriction is not deficiency. 217 In a
number of cases,218 the National Commission has held that the complaints
regarding bank's failure to provide finance cannot be made subject-matter of
adjudication under the Consumer Protection Act. In Corporation Bank v.
Somenath Gupta,219 it was made explicitly clear by the National Commission
that a consumer forum cannot direct a bank to grant loans. For example, if
the credit facilities are discontinued by a bank due to accumulated losses of
the complainant exceeding several times its share capital, there can be no
claim on the bank for deficiency in service.220
The Prakesh R Shenai v. Canara Bank,221 insurance policy were pledged
with the bank with the condition that the premium would be paid by the
complainant. There was, therefore, no compulsion for the bank to pay such
premium and, on his failure to pay, make corresponding increase in the
amount due from the complainant. Though the premium notices were
issued at the bank's address and since the bank did not pay the premium
because of which the insurance policies lapsed, the bank could not be held
liable for deficiency in service.

214. 2002 (3) CPJ 152 (NC).


215. Tropical Food & Pharmaceutical Ltd. v. State Bank ofHyderabad, O.P. Nos. 35-38 of
1991 dated December 10, 1991 (NC).
216. 1993(2) CPR 206 (Mah).
217. UCO Bank v. R. Subhramaniyan, 1993 (1) CPR 554 (Pondicherry); also see Krishna
Construction Pvt. Ltd. v. Andhra Bank, 1992 (1) CPR 434.
218. Special Machines v. Punjab National Bank 1991 (1) CPR 52 (NC); A.R. Narayan v.
United Commercial Bank 1992 (1) CPR 301 (NC); and Ashok Prabhakar v. State Bank
of India, 1993 (1) CPR 103 (NC).
219. 1999 (3) CPJ 44 (NC).
220. State Bank ofIndia v. A.G.I. Switches, 1992 (2) CPR 38 (NC).
221. 2003(1) CPJ 131 (NC); Canara Bank v. Naresh Kumar Jain. 2002 (3) CPJ 13 (NC).
372 A TREATISE ON CONSUMER PROTECTION LAWS

In Indumati Pal v. Punjab & Sind Bank,212 the complainant was the
m o t h e r of a deceased customer, w h o on the death of the customer
requested the concerned bank for disbursement of the deposits in her
favour. The bank wanted that a succession certificate should be obtained so
that the bank can consider the question of disbursement of the deposits
made by the deceased. When the complainant wanted the amount in deposit
for which she got a succession certificate, the bank did not disclose the same
to her. As a result she was deprived of getting the legitimate amount in the
custody of the bank. The Orissa State Commission directed the opposite
party to furnish the amount available with it in the account of the deceased
to the complainant within seven days from the date of receipt of the order,
by registered post at its own cost.
In Nowsheen Jahan v. Tamil Nadu Electricity Board,223 the complainant's
father had placed fixed deposit in 1975 in the joint name of himself and the
complainant for one year payable to either or survivor. In 1975, the
complainant was minor. Her father died within one year of placing the fixed
deposit. She attained majority in 1987. It was only in 1991 that the
complainant became aware of the existence of the fixed deposit while going
through some old papers. She claimed the amount of FDR with interest.
The bank agreed to pay the amount of FDR with interest only for one year,
as there was no request for renewal. The district forum and the Tamil Nadu
State Commission dismissed the complaint. O n appeal the National
Commission, held that the complainant should be paid the amount of FDR
with nine per cent per annum interest up to the time the complainant
attained majority and thereafter at five per cent interest per annum because
the bank had kept the money for all these years.
The bank was not held guilty of deficiency in service where the
complainant was himself at fault. In State Bank of India v. Mokinder Singh,224
the complainant was defaulter in respect of a huge outstanding balance of
his loan. Hence, the bank refused to issue the N O C in his favour. The
complainant filed a complaint in the district forum claiming deficiency in
service. The district forum and the State Commission allowed damages but
the National Commission set aside the order allowing damages by the
district forum and the State Commission.
From the above illustrative cases, it has become obvious that the case
law on banking services has developed to cover many issues relevant to
securing the benefit of consumers in different ways. Such an approach
would help in improving the system of banking as well as in extending more
and more protection to consumers.

111. 1992 (3) CPJ 651 (Ori).


223. 2002 (3) CPJ 105 (NC).
224. 2002(3) CPJ 275 (NC).
CONSUMER PROTECTION ACT, 1986 373

Insurance
Insurance, like banking, is an important service sector specifically covered
under the definition of "service" in section 2(l)(o) of the Consumer
Protection Act. The insurance schemes have multiplied over the years to
cover various types of risks to life and property. Since 'insurance' has been
included in the definition of service, any deficiency in the services of an
insurance company would enable the aggrieved party to make complaint for
redressal of its grievances under the Act. 22 '
The protection granted under the Act is, of course, very wide and
extends to all the cases of unilateral repudiation of the insurance contract by
the insurer, delay in settlement of claims, breach of terms of the policy and
all other actions affecting the interests of the insured. The consumer fora
can adjudicate any dispute regarding such matters. Even if there is unilateral
repudiation of the insurance contract by the insurer, jurisdiction of
consumer fora to conduct adjudication of the complaint is not affected. The
rationale behind this proposition was explained by the National Commission
in LIC of India, A.P. v. Shree Bhavanam Srimvas Reddy22b that if the unilateral
repudiation of an insurance contract is held to oust the jurisdiction of the
consumer fora, such an interpretation may lead to abuse and grave public
mischief. The insurance company has to satisfy the court that the
repudiation is justified. It may be printed out that the Insurance Act also
provides for remedy of grievances arising out of repudiation but the
unilateral repudiation of an insurance contract cannot take away the
jurisdiction from the consumer fora to seek remedy for the loss suffered due
to deficiency. Further, in terms of section 3 of the Consumer Protection
Act, the provisions of the Act are in addition to and not in derogation of
any other law. In this view of the matter, a consumer forum cannot be
debarred from investigating the unilateral repudiation of the claim.
The inordinate delay in the settlement of insurance claims either due to
negligence or unexplained delay on the part of the surveyor of the insurance
company amounts to deficiency in service. This preposition was followed by
the National Commission in National Insurance Co. Ltd. v. M/s Lai Cbandjain
& Sons217 and M/S Tanawala Synthetic Textile Ltd. v. Oriental Insurance Co.
Ltd.,~s and held that a long delay of more than three years on the part of an
insurance company in deciding the claim of the insured is a deficiency in
service. Similarly, In M/S United India Insurance Co. Ltd. v. Mrs. Pooja
Gyanchandra Joshi,229 the National Commission held that the settlement of a

225 UmediLal Aggarwal v. United India Assurance Co. Ltd., 1991(1) CPR 34 (R,ij).
226 1991 (2)CPJ 189 (NC).
227 1997(1) CPR 108 (NC).
228 1996 (2) CPR 53 (NC).
229 1996 (2) CPR 149 (NC).
374 A TREATISE ON CONSUMER PROTECTION LAWS

claim by any insurance company on the plea of belated report of the


surveyor amounts to deficiency in service. In this case, the claim of the
complainant against the insurance company was for loss of stock of
readymade garments. The State Commission accepted the complaint and
declared the complainant entitled to the claim. The National Commission
also upheld the view of the State Commission.
In New India Assurance Co. Ltd. v. M/S Sakar Iran Industries,230 the
complainant had taken a burglary and house breaking insurance policy.
During the insurance period, theft took place in his factory and the
insurance company refused the claim. The complainant, alleging deficiency
in the service of the insurance company, complained before the State
Commission for remedy. The Commission directed the opposite party to
pay to the complainant compensation along with interest. O n appeal the
National Commission upheld the order of the State Commission.
While determining liability, it is obligatory to find out the fault of the
insurance company. If the company is not at fault, no remedy can be
claimed against it. In MCD/DESU v. Basanti Devi & Another, 231 the
National Commission has held that if an insurance policy, taken by an
employee under salary deduction scheme lapses due to fault on the part of
the employer in remitting premium deducted from the salary, the employer
is liable for deficiency in service and not the insurance company. In such a
case the employer can be directed to pay the amount of insurance policy to
the complainant.
Any insurance company has to pay the claim as per the terms of the
policy. The National Commission has held in Ozma Shipping Company v.
Oriental Insurance Co. Ltd.,232 that an insurance company cannot be justified
in assessing and paying lower amount than the amount agreed in the policy.
Taking a similar view in Oriental Insurance Co. Ltd. v. Padmanabha Acharya,2^
where FIR was registered in respect of dacoity in a shop and challan was filed
after investigation, the National Commission held that refusal of a claim on
the ground that no dacoity took place was unjustified. The company was
held liable to satisfy the claim as per agreed terms of the policy. The
National Commission has held that an insurance company is liable to pay
repair cost to a complaint as agreed. 234 Any failure to pay in the settled
terms would make the company guilty of deficiency in service.

230, 1996 (2) CPR 187 (NC).


231. 1995 (2) CPR 25 (NC).
232. 2001 (2) CPJ 44 (NC).
233, 2002 (3) CPJ 365 (NC).
234. Oriental Insurance Co. Ltd. v. New Manglore Port Trust, 2002 (2) CPJ 1 (NC); see also
Xeii- India Assurance Co. Ltd. v. Subhash Kumar Jain, 2002 (2) CPJ 50 NC.
CONSUMER PROTECTION ACT, 1986 375

Delay in making payment of a claim has been simply held as deficiency


in service. 235 In such cases of deficiency, proper interest on the withheld
claims should be paid to the complainants. 236 Further, compensation for
financial loss and mental stress may also be allowed in such cases. 237 In
National Insurance Co. Ltd. v. Nagendra Prasad Singh,238 a claim had been
made in respect of a taxi which was met with an accident. The insurance
company appointed surveyors and several inspections were conducted. The
claim was not settled on the ground that the vehicle was met with the
accident on a rout on which it had no permit to run. The matter remained
unresolved between the parties for one reason or the other. Then the
dispute came for settlement before the Bihar State Commission which held
that such an attitude of the insurance company showed deficiency in service
and compensation was awarded to the complainant. In Harminder Singh v.
United India Insurance Co. Ltd.239, after the claim was made, the insurance
company did not attend that for four years. Thereafter, when the complaint
was made in the Orissa State Commission, the insurance company asked the
complainant to give information about the place where the vehicle would be
available for inspection. It was accordingly held that there was deficiency in
service. Such a delay beyond reasonable period of time has been again held
by the National Commission, in Col. Bhim Singh v. Regional Manager, National
Insurance Co.240 to constitute deficiency in service. To escape liability the
delay should be cogently explained by the insurance company. Delaying the
settlement of a claim for a long time even after the report has been
submitted by the surveyors appointed by the company amounts to gross
deficiency in service. 241
An interesting issue of mediclaim policy has been favourably considered
by the consumer fora in New India Assurance Co. Ltd. v. Ambalal Chandulal
Shah.-*2 In this case, while taking the mediclaim policy, the complainant had
disclosed in the proposal that he was mildly hypertensive. In spite of that he
was issued the policy which was also renewed later. Meanwhile, the
complainant underwent coronary angiography and was thereafter admitted
for coronary by-pass surgery, but his claim for reimbursement of expenses

235. Padmasri Tobacoo Co. v. New India Assurance Co. Ltd., 2002 (2) CPJ 96 (NC); New
India Assurance Co. Ltd. v. Mrs. Inderjeet Kaur, 2002 (3) CPJ 238 (NC); Motilal Meghwat
v. United India Insurance Co. Ltd., 1995 (2) CPJ 38. V.M. Parmarv. United India
Insurance Co. Ltd., 1993 (2) CPJ 813 (Guj).
236. S. Vellinayagam & Co. v. New India Assurance Co. Ltd., 1992 (1) CPR 808 (NC).
237. Bihar State Sugar Corporation Ltd. v. State Bank of India, 2003 (1) CPJ 261 (NC);
Birendra Mohan PD Sinba v. New India Insurance Co. Ltd.,(l992) 1 CPJ 225 (Bihar).
238. 1993 (2) CPJ 1030 (Bihar).
239. 1992 (1) CPR 332 (Ori).
240. 1992 (1) CPR 439 (NC).
241. S.K. Lakhotia v. National Insurance Co. Ltd., 1994 (1) CPR 43 (WB).
242. 2003 (1) CPJ 237 (NC).
376 A TREATISE ON CONSUMER PROTECTION LAWS

was repudiated by the insurance company. On considering the complaint,


the district forum allowed the compensation even though the insurance
c o m p a n y had remained absent despite repeated notices. The State
Commission and National Commission refused to interfere with the
decision of the district forum.
All the above cases indicate that the machinery for the settlement of
consumer disputes is working in accordance with the spirit of the legislation
and is protecting the consumer interest to the optimum possible.

Transport
The term "transport", specifically included in the definition of "service" in
section 2(l)(o) of the Act, has received a fairly wide connotation by
consumer courts to include various kinds of means of transport. Since
railway administration provides transport facility to public for a charge, it is
a service rendered for "consideration" and covered by the definition of
service under the Act. Carriage of goods by railway is, therefore, service
within the meaning of the term under the Act, irrespective of the purpose,
i.e., business or personal. Likewise, transport facility provided by airlines,
state roadways and private transport companies are all covered under the
definition of service. A courier has been held to be in the same position as a
carrier, and therefore, falls within the scope of the definition under the Act.
The inclusion of transport service in the definition of 'service' under the
Act has a great socio-economic objective to achieve. The fact is that even
after compulsory motor insurance and nationalization of insurance business,
the people of the poor classes, suffering losses due to deficiency in transport
services, were getting deprived of speedy and efficient redressal of
grievances."4' After the inclusion of "transport" in the definition of service,
consumers are increasingly feeling concerned about their legal rights with
respect to transport companies and deficiency in service of these companies.
The service rendered by railways has been a subject for consideration
before consumer fora in many cases. In Ms. B. Pushpakanthi & Anr v. General
Manager-Southern Railway,244 an old couple reserved two berths for their
journey and they obtained confirmed reservation for the return journey. On
their return journey, they found that their name were missing from the
reservation chart. The old couple had to face much inconvenience in their
journey. They filed an appeal in the district forum for directing the railway
authorities to refund the fare and compensation for the hardship which they
had faced. The district forum directed refund of fare and cost apart from
Rs.10,000 as compensation. The opposite party filed an appeal in the State
Commission. The State Commission reversed the order of the district forum

243. Concord of'India Insurance Co. Ltd. v.Smt. Nirmala Devi, AIR 1979 SC 1966.
244. 2001(1) CPR 124 (NC).
CONSUMER PROTECTION ACT, 1986 377

stating that reserved accommodation is not a guaranteed. The complainants


appealed to the National Commission. It struck down the decision of the
State Commission and confirmed that there was deficiency in service on the
part of railway authorities.
Similarly, in Anil Gupta v. General Manager, Northern Railways,2*5 the
c o m p l a i n a n t s could not board the train due to non-availability of
accommodation, though they had got confirmed reservation tickets. Even
the name of the complainants was not in the reservation chart. Inspite of
the repeated requests and enquiries, they were not accommodated. It was
held by the National Commission that the fault for not providing the
reserved accommodation lay with the railway authorities or its staff not
performing their duties efficiently. The public cannot be supposed to suffer
for such negligence on the part of the railways or its staff and accordingly
held the complainants entitled to compensation.
In Sree Valson v. The Kerala State Road Transport Corporation,246 the
complaint brought before the district forum a fascinating case alleging
deficiency in service on the part of the transport corporation. The
complainant traveled in the bus of the corporation and gave a note of Rs. 50
to the conductor who issued him a ticket of Rs.7. The conductor was not
possessing the balance amount, and therefore, made an endorsement on the
ticket requiring the petitioner to collect Rs. 43 form the office of the
corporation. The petitioner visited the office several times but he was not
given the refund. The petitioner filed a complaint in the district forum
which directed the corporation to refund him Rs. 43 and also awarded Rs.
500 as compensation. O n appeal by the corporation the State Commission
refused the compensation. Against the order of dismissal of the complaint,
the complainant filed again an appeal in the National Commission. The
National Commission considered the award of compensation of Rs. 500 as
correct and observed that the State Commission should not have interfered
with the order of the district forum.
T h e t r a n s p o r t agencies are b o u n d to maintain safe custody of
consignments entrusted to them. In International Airport Authority ofIndia v.
M/s Solidaire India Ltd.2*7 the complainant was a manufacture of television
sets and other electronic goods for which it imported certain parts of the
goods from abroad. The airport authority took the custody of some goods
which were being imported and at the time of clearance, it was found that
the packages were in a tampered condition. The complainant alleged before
the State Commission that the opposite party had not performed its service
of keeping the consignment safely and there was negligence and deficiency

245. 1991 (1) CPR 327.


246. 2001(3) CPR 100(NC).
247. 1999 (1) CPR 17 (NC).
378 A TREATISE ON CONSUMER PROTECTION LAWS

in services on its part. The State Commission held that the complainant was
entitled to recover the loss from the opposite party. The oppose party filed
an appeal in the N a t i o n a l C o m m i s s i o n against the order of State
Commission. T h e National Commission upheld the decision the State
Commission. Regarding the contention that the complainant was not
entitled to damages as he needed the goods for a commercial purpose, the
Commission observed that a consumer who hires or avails of any service for
consideration is entitled to compensation and the question whether services
availed of were for commercial purpose or not was of no consequence.
In East India Transport Agency v. Jagdish Bbai M. Chandan,2^ the
complainant had booked a goods vehicle with the transport agency for
carrying a consignment but was informed that the consignment caught fire
and all the goods booked were destroyed. He filed a compliant in the State
Commission that there was deficiency in service and claimed compensation
for the loss suffered by him. The State Commission allowed the complaint
and directed the opposite party to pay value of goods with running interest.
Aggrieved by the order of the State Commission, the opposite party filed an
appeal in the National Commission which upheld the decision of the State
Commission observing that the appellant agency was rightly held liable for
loss.
In Kamlesh Sharma v. Rajasthan State Road Transport Corporation,249 the
complainant and her husband travelled by a delux bus of Rajasthan State
Road Transport Corporation (RSRTC). During journey, the bus was looted
and the complainant's husband was killed. It was held by the Rajasthan State
Commission that it was a part of the duty of the RSRTC to provide safe and
secure journey to its passengers. The incident of loot and killing was
accordingly regarded as a deficiency in service. The State Commission
observed that in such cases, during the night journey, night guards must be
provided, otherwise it would amount to deficiency in service.250
The transport agencies are liable for safety of passengers also. In The
Station Manager, Indian Airlines and Others v. Dr. Jiteswar Ahir,2il the
complainant along with some other medical officers boarded the aircraft. He
was told by the official of the opposite party to disembark from the aircraft
to identify the luggage. He stepped out on the stair, the ladder was suddenly
removed as a result he sustained injuries. The complainant claimed
c o m p e n s a t i o n for negligence and deficiency in service. T h e State
Commission held that there was negligence on the part of staff the opposite

248. 1996 (1) CPR 126 (NC).


249. 1992 (2) CPR 75 (Raj).
250. Kiisnmbanjitendrabbaijanifali v. Gujarat State Transport Corporation 1996 (2) CPR 430
(Guj).
251. 1996(1) CPR 152 (NC).
CONSUMER PROTECTION ACT, 1986 379

party and, therefore, awarded compensation. Against the order of the State
Commission, the appeal filed by the opposite party in the National
Commission was dismissed by the Commission and upheld the findings of
the State Commission.
As regards delivery of consignments, the National Commission has
observed that the transporters are under an obligation to deliver any
consignment to the consignee only after receiving the relevant documents of
title to the goods. Accordingly, in Careway Transport of India v. Kushal Tea
Company,2^2 it has been held that there is no justification for the transporters
to hand over consignor's goods to the consignee without obtaining
documents of the title unless there are specific instructions to this effect
from the consigner.
Taking reasonable care of passengers is also obligatory for the transport
agencies. In General Manager, APSRTC v. R. Anjinerullu,1^ the complainant
was a physically handicapped person. He was traveling by Andhra Pradesh
State Road Transport Corporation (APSRTC) bus. He got down from the
bus for call of nature after informing the driver. When he returned, the bus
had left with his luggage. He filed a complaint against APSRTC claiming the
value of the luggage and compensation. The Andhra Pradesh State
Commission observed that the driver of the bus left without properly
ascertaining whether the complainant had got into the bus. The Commission
held that the driver of the bus was guilty of negligence and it was a clear
case of deficiency in service.
Regarding passenger care, in General Manager, Southern Railway, Madras v.
N. Prabahkaran,25* the National Commission has held that if the railway is
charging from the passengers first class fare and does not provide cushioned
seats as per the specifications laid down by the Railway Board, it amounts to
deficiency in service.
The above case law shows that if complaints about transport services
are frequently filed and disposed of by the redressal agencies without delay,
the travel would become safer and comfortable ensuring safety of the
luggage and the consignment also.

Electricity
Supply of electricity for domestic and industrial use is also as per express
provisions of section 2(l)(o) of the Act a "service". Being service,-" but a

252. 2002 (2) CPJ 17 (NC); A. V. Thomas & Co. Ltd. v. Meridian Apparel, 1999 (2) CPJ 1
(NC); MPRoadlmes v. MangatRam, 2001 (1) CPJ 30 (Punj).
253. 1993 (2) CPR 99 (AP).
254. 1992 (1) CPJ 323 (NC).
255. It may not, therefore, constitute goods; see Haryana State Electricity Board v. Dincsh
Kumar, 1991 (2) CPJ 88 (Har). For certain purposes, however, the electricity has
been treated as goods; see supra note 33.
380 A TREATISE ON CONSUMER PROTECTION LAWS

person receiving supply of electrical energy for consideration can invoke


jurisdiction of the consumer fora.256 In many cases, it has been contended
that the complainants were not consumers because electricity was goods and
since its use was for commercial purpose, so the user was excluded from the
definition of "consumer". This argument has been continuously rejected by
the consumer fora by holding that under the Act supply of electric energy is
a service. 257
Virtually, the suppliers of electricity are expected to exhibit due fair play
and care. In P.H. Sehgal and Subhash Gaggal v. Delhi Vidhyut Board,258 an
inspection of the complainants premises had been carried out by the
opposite party (the DVB officials) during which they claimed to have found
that the connected load of electricity was more than the sanctioned load and
the half seals in the meter were tampered. On this the complainants were
made to pay the FAE bill. The complainant stated that the board had
neither provided them any show cause notice n o r given t h e m any
opportunity to personal hearing. Moreover, the previous consumption
pattern was also not considered. Only on the threat of disconnection and
lodging of FIR, they were forced to deposit the said amount of FAE bill
and, therefore, they filed a complaint in the district forum.
The district forum held that in this case no presumption of theft could
be raised by the opposite party simply on the basis of tampered half seals. If
the connected load was more than the sanctioned load, it could be due to
overloading and not necessarily due to theft. Moreover, no evidence was
available that the meter was defective as contended by the Board. In view of
this, the board was held liable for deficiency in service and was directed to
quash the FAE bill and refund the amount deposited by the complainant
with interest. Compensation was also awarded in favour of the complainant.
The State and National Commissions upheld the decision of the district
forum.
In Haryana State Electricity Board v. Jai Forging & Stampings (P) Ltd. ,259 the
complainant was an owner of industrial concern receiving electric supply
under three connection. One of the meters went out of order and the matter
was reported to the Board for replacement of the meter. The Board did not
replace the said meter and the complainant diverted the electric supply
through another meter. This was noticed by the vigilance staff of the Board
and the Board imposed a penal charge of Rs. 99,863 on the complainant,

256. Suresh Nayak v. Chairman, Kamataka Electricity Board, 1993 (3) CPJ 1575 (Kant).
257. Sub-Divisional Officer, Haryana State Electricity Board v. Sita Ram, 1993 (2) CPR 232
(Har.). Also see Malhan Garments v. SDO, Punjab State Electricity Board, 1993 (2) CPR
288 (Punj); Amardas Thareja v. Delhi electricity Board, 1993 (1) CPJ 137 pel).
258. 2002 (1) CPJ (NC).
259. 1996 (2) CPR 30 (NC).
CONSUMER PROTECTION ACT, 1986 381

charging him for re-sale of electricity. He was made to pay a sum of Rs.
5000 at the first instance to restore him electricity. Later, the Superintendent
Engineer - Appellate Authority relieved him of the charge of resale of
electricity because all the meters belonged to the same consumer but he was
charged with some more dues about restoration and reconnection measures.
Because of these hardships the complainant approached the Haryana State
Commission. The State Commission ordered payment of Rs. 40,000 as on
account of loss and Rs. 5,000 as compensation in favour of the complainant.
The Board filed an appeal in the National Commission which dismissed the
appeal and confirmed the order of the State Commission.
Another case regarding wrongful disconnection of electricity is Haryana
State Electricity Board v. TanujRashi Paultry Farm,2b0 which was about a non­
resident Indian entrepreneur. In this case, the meter of the electric
connection of the complainant was burnt but not replaced, because he did
not meet the illegal demands of the concerned staff of the Board. Looking
to the absurdity of the demand, the Haryana State Commission held that
there was deficiency in service and allowed a relief for harassment and other
business loss to the complainant. The National Commission upheld the
order of the State Commission and further directed to pay costs to the
complainant.
Delay in providing the sanctioned additional load also amounts to
defining in service. In Executive Engineer, O&M, Tamil Nadu v. Electricity
Board and Others, V.K.R. Mani,2^1 the complainant was running an industry
for which he needed additional electric supply. He applied for the additional
load and remitted the earnest money. After verifying all the relevant facts,
the Board passed an order sanctioning the supply of additional load for the
complainants industrial unit. The complainant subsequently paid for
estimated cost of the work also. Then, with dishonest intentions, the Board
wrongly disconnected the additional load and asked the complainant to
deposit an amount to restore the connection. The complainant paid the
amount under protest but the Board failed to restore the connection. The
complainant claimed that because of violations committed by the Board he
suffered huge financial losses. The Tamil Nadu State Commission, while
considering the matter, found that there was a delay of nearly 20 months for
giving connection after sanctioning of the additional load and this exhibited
gross deficiency of service and negligence on the part of the opposite party
and granted compensation in favour of the complaint. In an appeal filed by
the Board, the National Commission upheld the decision of the State
Commission and observed that the unexplained delay in providing additional
load, which had already been sanctioned, was a deficiency in service.

260. 1996 (1) CPJ 160 (NC).


261. 1995(3)CPR319(NC).
382 A TREATISE ON CONSUMER PROTECTION LAWS

Failure to reconnect electricity supply after disconnection is deficiency


in service. In P. Jagadeesan v. Tamil Nadu Electricity Board,lbl the petitioner
was having a small shop, having electricity connection for over ten year
p r i o r t o the date of disconnection of electricity. The supply was
disconnected to him to allow the convoy of the Chief Minister to pass along
the road without obstruction. After the said purpose was served the Board
refused to reconnect the supply to the shop. The complainant approached
the district forum praying that a direction be given to the Board to
reconnect the electricity supply to the premises. H e also claimed
c o m p e n s a t i o n for the period during which the line had remained
disconnected. The application was allowed by the district forum and it
directed the Board to restore the electric supply to the petitioner's premises
and also to pay compensation to the complainant. An appeal was filed by
the Board before the Tamil Nadu State Commission. The Commission set
aside the order of the district forum. Thereafter, the complainant filed a
revision petition in the National Commission, which set aside the order of
the State Commission and restored the order passed by the district forum,
upholding the complainant's right to restoration of electricity supply as well
as the compensation.
Unreasonably delay in shifting electric connection from one tube well to
another is deficiency in service. In Jaipur Vidyut Viteran Nigam Ltd. v. Ram
Khiladi,2bi the complainant applied for shifting of electric connection from
one tube well to another and no action was taken by the opposite party
regarding that for four years. Contrary to the request made to the opposite
party, it issued to the complainant a bill for alleged theft and towards the
cost of shifting of the connection. The district forum held it as a deficiency
in service and awarded a compensation of Rs. 1000 to the complainant. It,
however, did not quash the bill for shifting of the connection. The
complainant filed appeal before the Rajasthan State Commission for
quashing of the bills and allowing enhancement of the compensation. The
State Commission took note of the deficiency in service on the part of the
petitioner and allowed the appeal with costs of Rs. 2500. It also directed that
inquiry be held against the erring officials who were negligent and guilty of
dereliction of their duties. The National Commission held that the award of
compensation prima facie was grossly inadequate and the complainant was,
therefore, entitled to enhanced compensation which the commission itself
proposed to be fixed at Rs. 50,000.
In Swastic Industries v. Maharashtra, 5.£.6., 264 supplementary bill had
been issued by the electricity board to the complainant who paid it under
protest but filed a complaint against it before the Maharashtra State

262. 1997 (2) C P R 235 (NC).


263. 2002 (2) C P R 99 (NC).
264. AIR 1997 SC 1101.
CONSUMER PROTECTION ACT, 1986 383

Commission. The Commission allowed the complaint and held that the
claim was barred by limitation of 3 years. The Supreme Court rejected the
contention of limitation period and held that the Board had exercised the
power of disconnecting supply when the consumer had neglected to pay the
bill for additional sum. The Board had a right to do so without recourse to
the right to file a suit to recover the due sum. The court further observed
that the right to file a suit is a matter of option. The mere fact that there was
a right given to the Board to file a suit and with respect to which limitation
has been prescribed, could not take away the right of the Board to
discontinue supply of electricity on default in paying charges. The Supreme
Court clarified that there could be deficiency in service if there had been
negligence or collusion by the subordinate staff in not properly recording
the meter reading or allowing pilferage to consumers which would be
deficiency in service under the Consumer Protection Act.
Failure to replace the burnt out meter of a poultry farm,265 disruption
of electricity supply to an orange-garden due to theft of wire, 266 refusal of a
new connection to a factory unless the outstanding arrears of the existing
connection were cleared,267 and an effort to recover arrears for a period of
eight year from a factory due to slow running of the meter, without recourse
to the prescribed procedure have all been declared as matters of deficiency
in service. 268
Causing loss due to sparking from electric wires is a deficiency in
service. In Assistant Executive Engineer Sub-Division No. 11, Karnataka State
Electricity Board v. Sri Neelkanta Gouida Siddanagouda Patil,2^ the complainant
claimed damages for loss of sugarcane crops, coconut trees and chikku trees
which had got burnt due to sparking from the electric wires passing over the
field of the complainant. The sparking wires were providing electricity to the
pump set of the complainant for irrigation purposes. The district forum on
the basis of the material on record allowed the complaint holding that there
was deficiency in service on the part of the Electricity Board and awarded a
compensation of Rs. 1,50,000 in favour of the complainant. Feeling
aggrieved by the order of the district forum, the Board as well as the
complainant filed appeals before the Karnataka State Commission, which
upheld the order of the district forum. However, again aggrieved by the
order of the State Commission, the Board filed a revision petition before the
National Commission, which also got dismissed. Thus, failure of the Board
to connect wires in proper position, which caused damage to the crops of

265. H.S.E.B. v. Tanuj Rashi Poultry Farm, 1996 (2) CPJ 15 (NC).
266. Mahadeo B. Gulhane v. M.S.E.B., 1995 (3) CPJ 1991 (Mah).
267. Rasi Engg. Works v. Commissioner, Coimbatore Corpn., 1995 (3) CPJ 15 (NC).
268. RasiEngg. Works v. Commissioner, Coimbatore Corpn.,1995 (3) CPJ 15 (NC).
269. 2002 (2) CPR 61 (NC).
384 A TREATISE ON CONSUMER PROTECTION LAWS

the complainant, who was also consumer of electricity, was, therefore, held
as a deficiency in service on the part of the Board.
The opinion that if there is a failure on the part of an Electricity Board
in maintaining the lines in a proper condition that amounts to deficiency in
service has been followed in Karnataka Electricity Board now known as
Karnataka Power Transmission Corporation Ltd. & Anr. v. Smt. Sharavva &
Ors.,270 also. In this case a livewire had snapped from the electric pole
supplying electricity to the pump set irrigating the fields of the victim
resulting into his death. The family, complaining deficiency in service in not
supplying electricity properly and safely and causing death of their bread
earner, filed a complaint for damages. The district forum found that the
power line which fed the pumpset of the deceased was loose and hung very
low and it was precariously connected to the poles on either side. The power
line was broken at various places and mended shoddily. The district forum
awarded compensation in favour of the complainants with interest from the
date of the complaint. The Electricity Board went in appeal before the
Karnataka State Commission which examined the matter in depth and
dismissed the appeal. Aggrieved by the order of the State Commission also
the Board approached the National Commission. The National Commission
confirming the decisions of the fora below held that the failure on the part
of the board in maintaining electricity line in a proper condition and
snapping up of the livewire from pole, which was supplying electricity to
pump set of the deceased who died on account of electrocution, amounts to
deficiency in service and entitles the legal heirs of the deceased to claim
compensation. The revision petition was accordingly dismissed by the
National Commission.
In Neelkamal Industries v. M.P. Electricity Board,271 the petitioner had a
small-scale industry and the premises of the industry were visited by the
officers of the board who found that the meter was faulty and that one
phase was not giving reading on the meter. Thereafter, bills were sent to the
petitioner for payment. Feeling aggrieved by this, the petitioner filed a
complaint. The complaint was dismissed by the district forum with costs
and so was the appeal before the M.P. State Commission. Before the
National Commission, the petitioner raised a plea that if the meter is found
faulty, the respondent could not issue a supplementary bill without referring
the matter to the electrical inspector which had been admittedly not done in
the present case. Accordingly, the revision petition was accepted and the
orders of the district forum as well as State Commission were set-aside. It
was thus established that the supplementary bill could be issued only after
obtaining report from the Electrical Inspector. It was further held that if the

270. 2002 (2) CPR 73 (NC).


271. 2002 (1) CPR 190 (NC).
CONSUMER PROTECTION ACT, 1986 385

a m o u n t of the bill had already been recovered, credit should be given to the
respondent for the a m o u n t and that should be adjusted in the future bills.
A n u m b e r of other cases have been decided by the fora about deficiency
in supply of electricity services and some standards have been laid d o w n in
this regard. Accordingly, a person w h o has applied for a connection and has
fulfilled the formalities, including deposit of the required amount of fee can
c o m p l a i n about the delay in giving him the connection. 2 7 - But w h e r e the
applicant has deposited only the earnest m o n e y with an application without
fulfilling other formalities, he would be only an intending consumer and not
a consumer.-71
After t a k i n g a cumulative view of the decisions, it can be found that
raising arbitrary demands for exorbitant amounts by billing and enforcing
t h e m t h r o u g h t h r e a t of d i s c o n n e c t i o n has been held t o be deficiency in
service. Sending of bills w i t h o u t taking meter readings and not considering
the genuine grievances of the consumers have been held t o be a deficiency
and c o m p e n s a t i o n has been a w a r d e d in such cases for m e n t a l agony. 2 7 4
T h e r e is also deficiency in service if the s u p p l y is disconnected for non­
p a y m e n t and the m a t t e r is not referred to arbitration in spite of repeated
r e q u e s t s . 2 7 3 T h e non-service of bills at the a p p o i n t e d time as per billing
cycle and harassing the consumer with heavy arrears bills, charging late fee
wrongfully and n o t m a i n t a i n i n g correct meters a m o u n t to deficiency in
service entitling the c o n s u m e r t o claim redress. 2 7 6 Denial of t w o separate
c o n n e c t i o n s in t h e same p r e m i s e s and c l u b b i n g t h e load for r a i s i n g a
d e m a n d o n the ground that t w o connections could not be given in the same
premises is also deficiency in service. 2 7 7
Raising of bills o n average c o n s u m p t i o n is also questionable. So, if the
m e t e r has n e i t h e r s t o p p e d r e c o r d i n g the c o n s u m p t i o n n o r has b u r n t or
c e a s e d t o f u n c t i o n , t h e bill c a n n o t be raised o n t h e basis of a v e r a g e
c o n s u m p t i o n for succeeding m o n t h s . 2 7 8 In Haryana S.E.B. v. Jawabar Lai
Singla,-7^ additional bill was sent on the basis of average consumption after
t w o years of sending the original bill on the basis of suspicion expressed in

272. Consumer Protection Council TamilNadu v. T.N.E. B., 1992 (2) CPJ 761 (TN); and
Shamsher Singh Khan v. Rajasthan S.E.B., 1993 (2) CPR 6 (Raj).
273. Additional Chief Engineer v. Ramlingan, 1993(2) CPJ 225 (NC).
274. CM. Manjrekar v. Dv. Eng. Maharashtra Electricity Board, 1991 (1) CPR 452 (Mah);
and West Bengal S.E.B. v. TPS Factory, 1993 (3) CPR 448 (WB).
275. M.S. Salvasckaran (Smt.)v. Executive Engineer Orissa S.E.B., 1991(2) CPR 197, 198
(On).
276. Y.N. Gupta v. Desu, 1993 (1) CRJ 27,28 (NC); Punjab SEB v. Satish Kumar, 1999 (2)
CPJ 359.
277. Hnd.
278. M.P. Pandya v. State ofRajasthan, 1997 (3) CPR 363 (Raj); and D.K. Industries v. Sub-
dmswnal Officer, 1998(3) CPR 135 (Chd).
279. 1993 (1) CPJ 335 (Bar).
386 A TREATISE ON CONSUMER PROTECTION LAWS

arr audit report because the low consumption recorded in the original bill
suggested some tampering with the meter or the supply by the consumers. It
was held to be deficiency in service.
Disconnecting the supply of a consumer on account of arrears due from
another consumer, even if related to the former, is deficiency in service.- 80
So, disconnecting the supply of a consumer on account of unpaid arrears of
his m o t h e r or any other relation amounts to deficiency in service and
v i o l a t i o n of l a w . 2 8 1 Regarding n e w occupants of a p r e m i s e s , if the
conditions of supply provide that an intending consumer can be asked to
pay up the arrears of electricity c o n s u m p t i o n charges of the o u t g o i n g
occupant of a premises, it can be used by the Electricity Board as a pre-
condition for reconnection or grant of a new connection. 2 8 2
If the electricity is disconnected even after payment of the dues in
arrears, there is deficiency in service. 283 Similarly, delay in reconnecting the
s u p p l y , even after p a y m e n t of arrears and r e c o n n e c t i o n charges, is a
deficiency in service. 284 If disconnection is effected prior to the last date of
payment, there is deficiency in service. 285 Unreasonable delay in changing
the name of the consumer in records, inspite of repeated requests and
completion of formalities, is deficiency in service. 286
T h e r e is thus a catena of judicial p r o n o u n c e m e n t s w h i c h can be
f o l l o w e d to the best advantage of the consumers of electricity and for
making the electricity supply system better.

Housing and construction


Initially the definition of term "service" under the Consumer Protection Act
did not included the term "housing construction", but it was specifically
included therein by the Consumer Protection (Amendment) Act, 1993.
Accordingly, various housing and development boards engaged in the
business of providing housing by acquiring land, developing sites and
constructing houses thereon are clearly covered by the Act and the)- can be
held liable for any deficiency. 287

280. W.B.S.E.B. v. BimalBihariMandal, 1993(1) CPR 393 (WB).


281. Ramesh Prasadv. M.P.E.B., 1995 (1) CPJ 488; Kamla Devi v. P.S.E.B., (1998), CPJ
404 (Punj).
282. Rajasthan S.E.B. v. Mec Shot Blasting Equipment (P) Ltd. 1997 (2) CPR 35 (NC); Delhi
Vidyut Board v. Smt. Pushpa Devi Jain, 1998 (3) CPJ 102 (Del); and Ram Pal Singh v.
Haryana S.E.B., 1998(2) CPJ 108 (Har).
283. M.P.S.E.B. v. Amar Singh, 1998 (2) CPJ 52 (MP).
284. 5. Narayanswamy v. T.N.E.B., 1992 (2) CPR 573 (TN).
285. Assistant Accounts Officers. N. Tunmansheshwar Rao, 1997(31) CPJ 559 CAP.
286. Kamlesh Gaur v. D.E.S. U., 1992 (1) CPJ 1195.
287. L'.P. Awas Evam Vikas Parishad (U.P. Housing Development Board) v. Garima ShukLi,
1991, CPR 387 (NC).
CONSUMER PROTECTION ACT, 1986 387

Prior to the 1993 amendment, the Supreme Court had held in the case
oi Lucknow Development Authority v. M.K. Gupta,2SS that the housing activity is
a service and was covered by the main part of the definition. In that
decision, the Supreme Court had observed that the entire purpose of
widening the definition was to include in it not only day to day buying and
selling activities but even such other activities which were not commercial in
nature, as long as they give some benefit to consumers. Therefore, the
activity of the development of land and allotment of flats/plots falls within
the definition of "service" in section 2(l)(o). 289 But, accordingly to the
Gujarat State Commission, the allotment of a shop does not amount to
hiring of service within the meaning of section 2(l)(o). 290
It is now well settled that the housing development schemes announced
by any development authority are "service" and, therefore, the consumer
fora have jurisdiction to adjudicate in the matters connected therewith. In
Jatinderdev Singh Musafir v. Ludhiana Improvement Trust,291 the complainant's
father was allotted by the opposite party a plot at the reserved price payable
in installments. After the death of the father the plot was transferred in the
name of the complainant. After the entire consideration was deposited in
installments, the complainant requested for the possession of the allotted
plot for which consideration had been paid. The opposite party stated that
it was not possible for them to deliver the possession of the allotted plot for
which consideration had been paid. It allotted to the complainant another
plot of 500 sq. yards and called upon him to deposit additional amount,
which he deposited. The complainant claimed that he was entitled to
another plot of 500 sq. yard as he had deposited amount for 1000 sq. yards.
The district forum, while considering the complaint held that the opposite
party had resorted to clear unfair trade practice and also committed
deficiency in service. O n appeal by the opposite party, the Punjab State
Commission held that the complainant waived his right, if any, qua
allotment of 1000 sq. yards of plot by accepting the alternative plot of 500
sq. yards on higher price and that it is not within the jurisdiction of the fora
to go into the pricing pattern of the plot. The case came up for hearing
before the National Commission. The National Commission allowed the
revision petition and set aside the order of the State Commission restoring
the order of the district forum.
Delay in delivering the possession of a flat/house amounts to deficiency
in service. In V.L. Bhanukumar v. Dega Sundara Rama Reddy & Others,297 a

288. 1996 (1) CPR 569 (SC).


289. See Sukumar H. Mehta (Dr.) v. Akmedabad Housing Board 1991 (1) CPJ 37 (NC).
290. Commissioner, Municipal Corporation v. Rajesh Singh 1992 (1) CPR 343 (Guj).
291. 1997 (1) CPR 137 (NC).
292. 1996 (1) CPR 68 (NC).
388 A TREATISE ON CONSUMER PROTECTION LAWS

c o m p l a i n t had been originally filed before the Tamil N a d u State


Commission which was returned by it for presentation to the National
Commission as the valuation of the relief claimed was found to be beyond
its pecuniary jurisdiction. In this case, the opposite party tried to defend
action for delay in the completion of a flat on the ground that the
complainant wanted additional work to be done in the flat. The main
question for consideration, therefore, was whether the delay in the
completion of the flat was caused due to the additional work sought to be
done at the instance of the complainant. The Commission held that there
was clear deficiency as well as imperfection in the services rendered by the
opposite party to the complainant who had hired those services by paying
full price of the flat in advance. The Commission ordered that the opposite
parties shall pay to the complainant interest till the possession of the flat
was delivered.
Claiming higher prices for agreed constructions after settlement
provides a good cause to complainants for action. In The Executive Engineer
and Administrative Officer, TNHBv. S.Jacob,293 the complainant was allotted
a house and he paid its full cost and took possession. The opposite party
directed the respondent to pay a further sum towards the difference
between the tentative cost and the final cost. According to the complainant,
this claim was unjust and untenable. Moreover, the opposite party failed to
execute the deed of sale for nearly 6 years. A complaint filed by the
complainant before the district forum was dismissed by the forum, but in
appeal the Tamil Nadu State Commission held that the failure of the
opposite party to execute the sale deed for 6 years after making the full
payment amounts to gross deficiency in service and set aside the order of
the district forum. The opposite party filed the revision petition against the
order of the State Commission in the National Commission. The National
Commission dismissed the revision petition and confirmed the order of the
State Commission.
Failure to construct houses and, therefore, their non-delivery is another
area of concern. In Wg. Cmdr. R.J. Darukhanawala v. Manjit Singh,294 the
complainant entered into an agreement with the opposite party for purchase
of a site and to construct a house thereon by the opposite party. The
opposite party had agreed to construct the house and to handover
possession of the same to the complainant within 12 months from the date
of agreement. But, in spite of the continuous and repeated requests of the
complainant the opposite party did not construct the houses nor delivered
the possession of any house to him. Therefore, the complainant filed a
complaint seeking peaceful possession of the premises or an alternative

293. 1996 (2) CPR 160 (NC).


294. 1996(2) CPR 1 (NC).
CONSUMER PROTECTION ACT, 1986 389

a c c o m m o d a t i o n in the same vicinity. O n these facts, the N a t i o n a l


Commission held that the failure of the builder to construct and deliver
possession of the house in terms of an agreement was deficiency in service.
Failure to start work on a proposed plan of construction is also
deficiency in service. In M/S Ajay Enterprises Ltd. v. Dr. Vinod Kumar
Bhargava and Another,295 the proposed building was to be completed within a
stipulated period and possession of the flats was to be given to the
purchasers. The complainant, one of the purchasers visited the site and
found there that no construction had been started on the proposed site.
Thereupon, the complainant requested the opposite party to give him a two
bed-room flat at another place and the money already paid by him and the
interest thereon be adjusted towards the price of the flat. On the failure of
the opposite party to do so, he requested them to refund the amount paid
by him with interest. Pursuant to the request, some portion of the amount
was refunded to him but the balance amount was not paid. Thereupon, the
complainant filed a complaint before the Delhi State Commission for
issuing a direction to the opposite party to pay him the principal amount
along with interest, cost of traveling and damages. The Commission took
the view that since the opposite party had utilized the amount deposited by
the complainant with them, he was entitled to claim interest on that amount.
Aggrieved by the order, the opposite party filed an appeal before the
National Commission contending that they urged upon the complainant that
he could be allotted three bed-room flat in lieu of his original booking. The
National Commission held that if a person has booked a two bed room flat
and was asked to take a three bed room flat costing higher price, it cannot
be said that the builder rightly exercised discretion to allot another flat to
the complainant. This was, therefore, held to be deficiency in service on the
part of the builder.
In Manohar B. Ghosalkar v. Trimurti Associates,296 the complainants and
opposite parties entered into an agreement for construction of flats and the
complainants paid 20 per cent of the agreed cost of construction. It was
resolved that the balance amount would be paid at different stages of the
construction. The development of the plot, however, started after a period
of two years and the opposite party demanded a further increased rate from
the complainants. O n this they filed a complaint before the Maharashtra
State Commission alleging deficiency of service and praying that the
opposite parties be directed to accept from them the balance amount and
give them possession of the flats. The State Commission directed the
opposite parties to refund to the complainants the amount already paid with
interest of 18 per cent per annum from the date when the amount was

295. 1995(2) CPR 235 (NC).


296. 1996 (2) CPR 76 (NC).
390 A TREATISE ON CONSUMER PROTECTION LAWS

deposited till the date of realization. The National Commission taking a view
of the whole scenario held that the failure on the part of the builder to
construct and deliver possession of flats in terms of agreement was a
deficiency in service. It directed the~opposite p a r t y to pay to the
complainants the amount deposited by them within three months with 18
per cent interest and also allowed compensation for mental agony and
suffering.
In M/S Sousa & Sons Realty Constructions and Developers & Another v.
Sandur Udyog Pvt. Ltd.,297 the opposite party entered into an agreement with
the complainant to place them in possession of flats for a consideration. It
was agreed that if the opposite party failed to give possession within the
agreed period, a sum of Rs. 500 would be paid to the complainant as
damages per day. O n the breach of the terms by the opposite party, the
complainant sent a legal notice to it claiming possession of the flat and
damages. When there was no compliance, a complaint was filed in the Goa
State Commission. The State Commission allowed the complaint and
directed the opposite party to pay to the complainant interest at the rate of
18 per cent per annum on the total contribution, compensation and cost of
the complaint. In an appeal before the National Commission, it held that the
delay in handing over of the possession of the flats by three and a half years
amounted to deficiency in service.
In Smt. Pushpa Pathania v. The Rajasthan Housing Board,™ the
complainant applied for a house to the opposite party which was allotted to
her and she took its possession. Before taking the possession she told the
officers of the opposite party that the house was incomplete and it was not
fit for living. She was falsely assured that the remaining work of the house
would be completed within a month or two. The district forum held that as
there were defects in the house the opposite p a r t y should get the
shortcoming and defects in the house removed within three months or in
default to pay Rs. 40,000/- to the complainant who would herself remove
the defects. The opposite party filed on appeal in the Rajasthan State
Commission which accepted the appeal and dismissed the complaint. In a
revision petition before the National Commission, the Commission held
that even if a consumer has taken the possession of an allotted house,
giving a declaration that the house was complete in all respects, the
complainant cannot be stopped from raising disputes about defects which
could not be visible immediately.
In M/S Sambhavana Builders (P) Ltd. & Others v. Mrs. Sudha Pillai,299 the
opposite party formulated a scheme for construction of certain flats and

297. 1996(2) CPR 84 (NC).


298. 1995(1) CPR 323 (NC).
299. 1995 (2) CPR 260 (NC).
CONSUMER PROTECTION ACT, 1986 391

informed the complainants that they had undisputed title and possession
over the land and had all the clearance required under the law for
commencing construction of flats. The complainant was also enrolled as a
member on payment of money and she applied for a three bed-room flat in
a proposed building. After sometime the opposite party informed its
members that they were awaiting a letter for the conversion of the land
from the authorities. Thereupon, the complainant asked for the refund of
money paid by her with interest, but only the money deposited was returned
to her, withholding the interest due on that. The district forum directed the
opposite party to pay her interest on the money she had deposited by way of
damages. But the opposite party filed appeal before the Delhi State
Commission which expressed the view that the district forum was right in
granting interest and compensation to the complainant. Then the opposite
party filed a revision petition before the National Commission, but the
National Commission also dismissed his petition and held that the collection
of huge amount of money by the builder from various persons on the basis
of mis-representation was an unfair trade practice and deficiency in service.
All these decisions lay down a clear rule declaring any kind of failure in
delivering possession of a house to a complainant as deficiency in service,
t h u s , m a k i n g him entitled to recovery of the deposited money and
compensation and interest thereon.
To strengthen the position of consumers, the consumer fora have in
certain cases exercised their powers not only to award compensation but
also direct the opposite party to allot the house/flat to a complainant. This
was held by the National Commission in Harbans Singh v. Rajasthan Housing
Board.300 In this case, the complainant got himself registered with the
housing board for allotment of a house. He deposited the seed money and
installments within the stipulated time but he was neither given the
allotment letter nor possession of the house. The complainant alleged that
there was deficiency in service and filed a complaint in the district forum.
The forum held the board guilty of deficiency in service and directed it to
deliver the possession of the house for the complainant. The board filed an
appeal before the State Commission. The order of district forum was
modified by the State Commission observing that the forum could award
only compensation and could not direct the allotment of a house. Aggrieved
by the order of the State Commission, the complainant came in appeal to
the National Commission, which directed the board to allot the house to the
complainant on the price already deposited by him.
In Capt. C.P. Gupta v. Joint Secretary, Department ofLocal Government,301 the
complainant was allotted a plot on the basis of payment of instalments.

300. 1996(2) CPR 122 (NC).


301. 1996 (3) CPR 35 (NC).
392 A TREATISE ON CONSUMER PROTECTION LAWS

After paying the final installment he requested for the registration of the
plot in his name. He was told that the same plot had been allotted to some
one else. Thereafter, another plot was allotted to him but he was directed to
pay difference in price alongwith interest as penalty for not depositing the
enhanced amount in time. The amount was deposited by the complainant
under protest. Even then the plot was not registered in his name. The State
Commission found gross deficiency on the part of the opposite party and
directed them to pay to the complainant the originally deposited amount
plus the amount deposited later with interest. The complainant, besides
getting this relief, insisted on the allotment of the original plot which had
been allotted to someone else. The National Commission, however, directed
transfer of another specified plot in his name and refund of extra amount
charged from the complainant. N o interest was made payable on that
account, observing that the new plot and the refund of the extra money
would be enough to compensate the harassment and hardship caused to the
complainant.
In Smt. Govindra Khurana & Another v. M/S Satya Sai Apartments (P) Ltd.
& Another?®2 the complainant booked one basement-cum-ground floor flat.
Later, it was agreed that in lieu of that the complainant would purchase
from the opposite party the flat on the second floor. A draft agreement in
this respect was finalized and the complainant made payments to the
opposite party by account payee cheques for about five months. After that
he found that the pace of construction slowed down and later there was
total stoppage of the work. Due to this delay the next instalment was not
paid by him. The complainant made repeated requests to the opposite party
for signing a fair deal agreement but no response was received from them.
The opposite party, therefore, showed no commitment and responsibility to
construct the flat and handover its possession to the complainant.
Consequently the complainant brought the matter before the National
Commission. The National Commission held that the builders had
commited deficiency in service in not completing construction of the flats.
They were accordingly directed to deliver the possession of the flat to the
complainant within a month for the date of the order.
In M.K. Gupta v. Lucknow Development Authority?®7' there was delay in
handing over possession of house due to internal managerial problems of
the opposite party, the complainant was held by the National Commission
entitled to immediate possession and c o m p e n s a t i o n on account of
harassment, mental agony and torture suffered by him due to failure of the
opposite party in handing over possession even after full payment.
Non-delivery of flats due to the intervention of a civil court cannot
defend the builder from liability. In M/s Ketan Consultants Pvt. Ltd. v. Sanjay
302. 1996 (2) CPR 143 (NC).
303. 1992 (1) CPJ 66 (NC).
CONSUMER PROTECTION ACT, 1986 393

P. Bansal,i04 the opposite party agreed to build the flat and also to deliver
the possession within 18 months. They could not deliver possession within
the stipulated time due to stay granted by the civil court. Proper course for
them was to return the money to the complainants. Having failed to do so,
Commission directed refund of the deposit to the complaints with interest.
The National Commission held that the complainant was also entitled to
compensation for harassment.
If a development authority fails to deliver possession of a flat due to
mistake of its officials, the buyer of the flat is not liable to pay enhanced
price of the other flat allotted to him to amend such a mistake. This was
held by the Delhi State Commission in Amur Singh v. Delhi Development
Authority. On the other hand, the buyer was held entitled to compensation
for delay in delivery by way of interest of 15 per cent per annum on the
amount deposited by him for original flat until the alternative flat was
allotted.305 However, in Amrit Lai Chum v. Shimla Development Authority,306
the State Commission held that the enhancement in the price cannot be
challenged if it was given in the brochure containing the particulars of the
construction and sufficient indication was given about the possible
e n h a n c e m e n t . In L.D.A. v. B.S. Sethi, 307 the cost mentioned in the
brochure was enhanced after eight years which was found even higher than
the cost d e t e r m i n a t i o n at the time of enhancement. The N a t i o n a l
Commission considered such escalation as an arbitrary exercise of power by
the development authority. It directed refund of the excess over the price
mentioned in the brochure to the complainant with interest. In M.D. Hegde
(Dr.) v. Karnataka Housing Board,m the cost of the flat was escalated after 14
years of the execution of the sale deed. The National Commission directed
the opposite party to execute the sale deed without further demand. In V.K.
Kathuria v. DDA,i09 the price of the flats was increased regarding which a
circular had been issued. The complainant was allotted a flat prior to the
date of the circular. The National Commission held that the circular was not
to have retrospective effect and accordingly directed refund of the excess
price with interest.
In Ludhiana Improvement Trust v. Kulwant Kaur (Smt.),310 the complainant
was entitled to a plot of land measuring 500 square yards. Many others who

304. 2001 (1) CPR 47 (NC).


305. 1993 (1) CPR 541 pel); see also Bihar State Housing Board v. Prw Ranjan Roy, 1996
(1) CPR 157 (NC).
306. 1992 (2) CPJ 1049 (HP).
307. 2002 (3) CPJ 4 (NC).
308. 2002 (3) CPJ 227 (NC); Housing Board Haryana v. Haryana Board Colony Welfare
Association, 2002 (1) CPJ 70 (NC).
309. 2002 (3) CPJ 132 (NC).
310. 2001 (CPJ) 1(NC).
394 A TREATISE ON CONSUMER PROTECTION LAWS

had deposited the earnest money at that time were allotted the flats. The
claim of the complainant was ignored. It was held by the N a t i o n a l
Commission that the complainant cannot be directed to pay the higher price
under the new rules because the allotment of the complainant was made
under old rules.
Providing amenities in new localities is now becoming an important
activity for builders and it is essential that the housing boards should
provide all the amenities which have been promised to the consumers. If a
housing board does not provide amenities, like schools, roads, 311 or other
such amenities mentioned in brochures, such as health club, swimming pool,
playground, jogging trail, mini golf club, it would be guilty of deficiency.312
Same is the case with delivery of possession of flats in a dilapidated
condition without basic amenities, like sewerage, water supply and
electricity.313
In Dorothy Pearson, Hotel Aldea Abelo (Mrs.) v. Virebur Frederick Souza
Title?1* the complainant had paid money to the opposite party to get
electricity and water connection and for the furnishing of the flat. O n its
failure to do so, the opposite party was directed by the Commission to give
to the complainant the occupancy certificate within seven days to enable
him to take these connections immediately and further directed the opposite
party to furnish the flat to the extent of the amount paid by the complainant
in that regard.
Additional amount cannot be demanded for water connection if the
agreement provides for such amenities in the flat. The N a t i o n a l
Commission, finding such terms in the agreement, in Alliance Builders Pvt.
Ltd. v. B. Ananda Ranga Rao,ns directed the builder to complete the whole
work that was left incomplete and the builder was also held liable for
compensation and interest, for not being p r o m p t . In Vice-Chairman
Hyderabad Development Authority v. Keerthi Varson,316 the possession of the
house was given to the complainant but the electricity supply was not
provided for more than two years. The State Commission held that it
amounts to deficiency in services.

311. The Chandersekharpur Housing Board Colony v. State of Orissa, 1992 (1) CPR 58 (Ori);
see also Sneh Chadda (Smt.)v. Delhi Development Authority, 1991 (1) CPR 532 (NC).
312. ChandereshKumarv. Skipper India Ltd., 1992 (1) CPJ 349 (Del); see also UP Avas
Evam VikasParishadv. Garima Shukla, 1991 (1) CPJ 1 (NC); Avkash Enterprises v.
Consumer Protection Council, 2003 (1) CPJ 211 (NC); Amritsar Improvement Trust v.
Sanjay Kumar, 2002 (1) CPJ 107 (NC).
313. Delhi Development Authority v. ShantiDevi, 2000 (3) CPR 152 pel).
314. 2002 (3) CPJ 257.
315. 2002 (3) CPJ 345 (NC).
316. 1996 (2) CPJ 190 (AP).
CONSUMER PROTECTION ACT, 1986 395

Cases regarding installation of lifts have also come for consideration


before the consumer fora. In V.L. Bhanukumar v. Dega Sundara Kamma
Reddy?17 the housing board delayed the installation of lifts and in handing
over the possession of flats to the allottees who had paid full price of the
flats. The National Commission held that it was deficiency in service.

Medicine
The Consumer Protection Act, 1986 has made speedier remedy available in
cases of medical negligence. This represents a radical change on the remedy
which was available under the law of torts. Since the law of tons dealt with
civil wrongs, it was difficult for patients and their relatives to get speedy
redressal in cases of medical negligence. Cases have been decided on the
subject ranging from lack of sufficient qualification to lack of care on the
part of doctors. Any doctor working without having sufficient quaUfication
to treat a patient amounts to negligence in service. This was emphasized by
the Supreme C o u r t in Poonam Verma v. Ashwin Patel?n in which a
homeopath doctor, without ascertaining the blood sugar, administered
intravenous glucose to a patient suffering from blood sugar because of
which his condition deteriorated and ultimately died. The doctor was not
possessing the required qualification in allopathic medicine. The doctor was,
therefore, held to be negligent in his service and a compensation of Rs. 3
lakhs was awarded in favour of the complainant with costs worth Rs. 30,000.
In Sr. Louis (Dr.) v. Cannolil Pathumma?19 the doctor was not a specialist
in gynaecology but "M.D. (Gyn.)" was mentioned on the broad with the
object of creating an impression that the doctor possessed a post-graduate
degree in gynaecology. The doctor admitted a patient in the hospital for
delivery who developed some complications at the time of delivery, which
eventually led to the death of the child and the patient. The National
Commission allowed a complaint for medical negligence holding that the
service rendered by the hospital was deficient.
An important case on exploitation of the general public by medical
practitioners in Nadiya v. Fathima Hospital?2® In this case, the complainant
aged 15 years, a student of Class VIII having a height of 135 cms., tempted
by an advertisement claiming increase in a person's height, got admitted to
the hospital for surgery for increasing her height. She was assured an
increase of 10 cms. in her height within six months by surgery, for a charge
of Rs. 32,000. The surgery was conducted and ring fixators were fixed on

317. 1996 (1) CPJ278 (NC); See also Kanbiayalal Mathur v. Rajastban Housing Board, 1991
(1) CPR 188 (NC).
318. 1996 (2) CPJ 1(SC).
319. 1993 (1) CPJ 30 (NC); also see A Naram Rao v. G Ramaknshnan Reddy (Dr.), 1993
(l)CPJHO(NC).
320. 2002 (1) CPJ 190.
396 A TREATISE ON CONSUMER PROTECTION LAWS

her legs, which had to be adjusted every six hours. The girl was discharged
from the hospital with instruction to get the X-ray done every 15 days. But
on her discharge from the hospital, to her utter dismay, she found her left
leg short by 1 1 / 2 inches, and, therefore, she could not walk. H e r pain
increased and a number of meetings were held with the doctor. The ring
fixators were also removed and the plaster was applied. Operation and skin
grafting was conducted on her left foot but still that stood shorter and she
was bed-ridden. The Commission after considering the complaint held that
the hospital and the doctor were negligent and deficient in their service and
directed them to pay Rs. 5 lakhs with costs amounting to Rs. 2,000 to the
complainant and also directed the concerned insurance company to
indemnify the opposite party to the extent of amount covered by the policy.
Similarly, in Dr. A. Saibaba Goud. v. Mrs. L. Thomasi21, the complainant
got her right eye operated and, after the operation, she complained of pain
in the eye. The complainant contended that the doctor did not pay heed to
the problem and discharged her 'forcibly', prescribing some pain killers. This
aggravated the problem leading to the loss of vision in the right eye. She
filed a complaint at the district forum claiming compensation of Rs. 1 lakh
for the loss of sight and rupees twenty five thousand as compensation for
the mental agony. However, the doctor refuted the allegation. The district
forum held that it was deficiency in service and directed the doctor to pay
rupees fifty thousand towards compensation for the loss of vision and
mental agony suffered by the complainant. Doctor filed an appeal before the
State commission, claiming his innocence. The State commission dismissed
the appeal with costs Rs. 2000 and upheld the order of the district forum.
In Dr. K.Mahabola Bhat & Anr v. K.Krishna and others322, wife of the
complainant consulted the opposite party for termination of pregnancy. She
was admitted in their nursing home and was operated upon when she lost
her life during the operation. On this a complaint was filed before the State
C o m m i s s i o n for compensation and the C o m m i s s i o n awarded a
compensation of Rs. 2,01,000 to the petitioner. Against the order of the
State Commission, the opposite party filed an appeal in the National
Commission. Considering the facts, the National Commission also held the
opposite party guilty of deficiency in service and upheld the decision of the
State Commission.
In Indian Medical Association v. V.P. Santha32i, the husband of the
complainant died in a private hospital. She filed a complaint before the State
Commission alleging negligence on the part of the hospital leading to the
death of her husband and claiming a compensation for the loss suffered by

321. 2002 (l)CPJ 211.


322. 2000(3) C P R 137 (NC).
323. 1992 (2) CPJ 302 (NC).
CONSUMER PROTECTION ACT, 1986 397

her. The hospital raised objection that the woman was not a 'consumer'
under the Act as her husband only had availed of the medical services of the
hospital and the service provided by the medical professionals and health
care organizations was not a commercial service and was exempted under
the last category specified in the definition of service, namely, "service
provided under the personal contact of service". The State Commission
rejected the contention of the opposite party, ruling that the complainant
being a legal heir to the deceased husband was a consumer and fully entitled
to claim any compensation for the death of her husband. The Commission
ruled that the medical service is not exempted under the category of "service
provided under personal contract of service" and the negligence on the part
of the hospital amounted to deficiency in medical service. The Commission
awarded a compensation of Rs. 3.59 lakhs to the widow of the deceased.
In appeal against the State C o m m i s s i o n ' s order, the N a t i o n a l
Commission also rejected the contention of the opposite party that the
medical service was a personal service exempted under the Act. In this
judgment the National Commission upheld the right of the consumer to
seek redressal before the consumer courts for any negligence or deficiency
in the service rendered by the medical professionals or hospitals for a fee.
The Commission also recognized locus standi to the nearest relation of the
patient to seek compensation in the event of his death.
The order of the National Commission was challenged by the opposite
party before the Supreme Court. 324 The court, in its historical judgment,
held that the medical practitioners are not immune from the claim for
damages on the ground of negligence even if they are governed by the
Indian Medical Council Act, 1956. The fact that the medical practitioners
are governed by the Indian Medical Council Act, 1956 and are subject to the
disciplinary control of the Medical Council can be no solace to a person who
has suffered due to negligence and that does not affect the right of any such
sufferer to seek redress under the Consumer Protection Act. The Supreme
Court laid down the following basic propositions in this case:
1. Service rendered to a patient by a medical practitioner (except
where the doctor renders service free of charge to every patient
or under a contract of personal service), by way of consultation,
diagnosis and treatment, both medicinal and surgical, would fall
within the ambit of 'service' as defined in Section 2(l)(o) of the
Act.
2. The fact that medical practitioners belong to the medical
profession and are subject to the disciplinary control of the
Medical Council of India a n d / o r State Medical Councils
constituted under the provisions of the Indian Medical Council

324. See Indian Medical Association v. V.P. Santha, 1995 (6) SCC 651.
398 A TREATISE ON CONSUMER PROTECTION LAWS

Act, 1956 would not exclude the services rendered by t h e m from


the ambit of the C o n s u m e r Protection Act, 1986.
3. A "contract of personal service" has t o be distinguished from a
"contract for personal services". In the absence of a relationship
of m a s t e r a n d s e r v a n t b e t w e e n t h e p a t i e n t a n d m e d i c a l
practitioner, the service rendered by a medical practitioner to the
patient cannot be regarded as service rendered u n d e r a 'contract
of p e r s o n a l service'. Such service is service r e n d e r e d u n d e r a
" c o n t r a c t for p e r s o n a l s e r v i c e s " a n d is n o t c o v e r e d b y
exclusionary clause of the definition of 'service' c o n t a i n e d in
section 2(l)(o) of the Act.
4. T h e expression "contract of personal service" in section 2(1)(o)
of the Act cannot be confined t o contracts for e m p l o y m e n t of
domestic servants only and the said expression would include the
e m p l o y m e n t of a medical officer for the p u r p o s e of r e n d e r i n g
m e d i c a l service t o the e m p l o y e r . T h e service r e n d e r e d b y a
m e d i c a l officer t o h i s e m p l o y e r u n d e r t h e c o n t r a c t of
employment would be outside the purview of 'service' as defined
in section 2(l)(o) of the Act.
5. S e r v i c e r e n d e r e d free of c h a r g e b y a m e d i c a l p r a c t i t i o n e r
a t t a c h e d t o a h o s p i t a l / n u r s i n g h o m e o r a m e d i c a l officer
e m p l o y e d in a h o s p i t a l / n u r s i n g h o m e w h e r e such services are
rendered free of charge to everybody, w o u l d not be 'service' as
defined in section 2(l)(o) of the Act. T h e p a y m e n t of a t o k e n
a m o u n t for registration p u r p o s e only at the h o s p i t a l / n u r s i n g
h o m e would not alter the position.
6. Service rendered at a n o n - g o v e r n m e n t h o s p i t a l / n u r s i n g h o m e
where n o charge whatsoever is made from any person availing of
the service and all patients (rich and poor) are given free service
is outside the purview of the expression 'service' as defined
in section 2(1)(o) of the Act. T h e p a y m e n t of a t o k e n a m o u n t
for registration purpose only at the hospital/nursing home would
not alter the position.
7. Service rendered at a n o n - g o v e r n m e n t h o s p i t a l / n u r s i n g h o m e
where charges are required to be paid b y the persons availing of
such services falls within the purview of the expression 'service'
as defined in section 2(1)(o) of the Act.
8. Service rendered at a n o n - g o v e r n m e n t h o s p i t a l / n u r s i n g h o m e
w h e r e charges are required t o be paid b y p e r s o n w h o are in a
p o s i t i o n t o p a y a n d p e r s o n s w h o c a n n o t afford t o p a y are
rendered service free of charge would fall within the ambit of the
e x p r e s s i o n ' s e r v i c e ' as defined in s e c t i o n 2 ( l ) ( o ) of t h e A c t
CONSUMER PROTECTION ACT, 1986 399

irrespective of the fact that the service is rendered free of charge


to persons who are not in a position to pay for such services.
Free service, w o u l d also be 'service' and the recipient a
'consumer' under the Act.
9. Service rendered at a government hospital/health c e n t e r /
dispensary where no charge whatsoever is made from any person
availing of the services and all patients (rich and poor) are given
free service - is outside the purview of the expression 'service' as
defined in section 2(l)(o) of the Act. The payment of a token
amount for registration purpose only at the hospital/nursing
home would not alter the position.
10. Service rendered at a government hospital/health center/
dispensary where services are rendered on payment of charges
and also rendered free of charge to other persons availing of
such services would fall within the ambit of the expression
'service' as defined in section 2(1)(o) of the Act, irrespective of
the fact that the service is rendered free of charge to persons
who do not pay for such service. Free service would also be
'service' and the recipient a 'consumer' under the Act.
11. Service rendered by a medical practitioner or hospital/nursing
home cannot be regarded as service rendered free of charge, if
the person availing of the service has taken an insurance policy
for medical care whereunder the charges for consultation,
diagnosis and medical treatment are borne by the insurance
company and such service would fall within the ambit of 'service'
as defined in section 2(l)(o) of the Act.
12. Similarly, where, as a part of the condition of service, the
e m p l o y e r bears the expenses of medical t r e a t m e n t of an
employee and his family members dependent on him, the service
rendered to such an employee and his family members by a
medical practitioner or a hospital/nursing home would not be
free of charge and would constitute 'service' under section
2(l)(o)oftheAct.
The above propositions have clarified the position with respect to
liability of various medical treatment agencies for deficiency in service.
Some more cases explaining the nature of deficiency in medical service
have been decided by consumer fora. These cases refer to surgical
operations, inefficient treatment, lack of care etc. Accordingly, incomplete
preparations and non-availability of apparatus for an operation has been
held as a deficiency in service. In Devendra Kumar Sharma v. Post Graduate
Institute of Medical Education & Research,325 the wife of the complainant was

325. 2002 (1) CPJ 351.


400 A TREATISE ON CONSUMER PROTECTION LAWS

taken to a hospital for treatment for which an urgent operation was


prescribed by the doctors. On the commencement of the operation, the
skull of the patient was cut and removed for clipping the aneurysm with
clippers but the same had to be abandoned due to the non-availability of the
drill machine and the operation had to be repeated. According to the
complainant, this act amounted to carelessness and negligence on the part of
the doctors. Since the operation would not have been left incomplete if
adequate arrangements regarding the drill machine had been made and the
necessity to operate the patient twice could have been avoided. According to
the opposite party, the consent for the risk involved in the surgery was
already taken from the complainant. However, this was held not affecting
the plea for negligence. In the opinion of the State Commission, the
aforesaid consent could not affect a plea for negligence. It was further
contended by the opposite party that though there was negligence in not
ensuring the availability of a functional drill machine at the time of the first
operation, the same could not be established as the cause for the death of
the patient. But that was not accepted as a valid defence. Therefore, the
amount of compensation of Rs. 2 lakhs besides costs of Rs. 5,000 were
awarded in the case with respect to the first operation.
In P.P. Ismail v. Mrs. K.K. Radba,i2k the complainant was admitted to
hospital on account of a fracture sustained on the lower part of her leg
which was operated upon by the doctors. She was discharged from the
hospital with the advice to take bed rest but the problem remained there.
Second operation was performed by the doctors and the leg was put in
plaster. A complaint for compensation was filed by the complainant before
the State Commission. The Commission held the opposite party liable in
respect of the claim of compensation raised by the complainant and
awarded a compensation of Rs. 2 lakhs in her favour. Aggrieved by the
order of the State Commission appeal was filed by the opposite party in
the National Commission. The National Commission, refusing any kind of
interference with the order of the State Commission, held that the
commission had taken into account all the relevant circumstances for
awarding the compensation and it was just and reasonable.
Making available contaminated blood to a patient leading to infection is
deficiency in service. In Sh. Harish Kumar v. Sunil Blood Bank,327 the
complainant purchased blood for his wife from the opposite party's blood
bank. The blood was contaminated and it contained Hepatitis B virus. The
complainant's wife suffered from viral Hepatitis B which was later
communicated by her to her husband. Due to defective and contaminated
blood both the complainant and his wife suffered for a few months. The

326. 1997 (2) CPR 171 (NC).


327. 1991 (l)CPJ 645 (Del).
CONSUMER PROTECTION ACT, 1986 401

complaint was filed in the State Commission for supplying contaminated


blood. The State Commission held the opposite party guilty of supplying
contaminated blood to the complainant and a sum of Rs. 20,000 was
awarded as damages to the complainant for ill health and discomfort caused
to him and his wife.
If it is proved that the hospital or the doctor has taken all available steps
to treat a patent, there would be no ground for holding deficiency in service.
In.Md. Aslam v. Ideal Nursing Home & Ors.,ils the grievance of the
complainant was that adequate care was not taken while operating and
treating his deceased wife, as a result of which she expired. The opposite
party contended that all possible steps were taken and there was no
negligence on their part t h o u g h the patient died. The Orissa State
Commission held that if it is shown that all available steps have been taken
in a case and there has been no negligence either on the part of the nursing
home or on the part of the attending doctors, the claim on the basis of
deficiency in service cannot stand.
Thus, from the above cited illustrative cases, it is clear that in the case
of medical negligence various aspects of the subject have been covered,
laying down the norms which provide a basis for further development of the
laws to extend relief to all possible cases of deficiency in medical service.

Telephone
Telephone service is one of the important segment of public service in
which complaints are fluently received. Most of the complaints deal with
excess billing and disconnection without notice. 3 2 9 For example, in
Department of Telecommunications v. Smt. Radha Tewari,330 the complainant filed
a complaint before the district forum against the excessive billing by the
t e l e p h o n e d e p a r t m e n t . She claimed that her telephone had been
disconnected and not reconnected for two years, resulting in physical,
mental and financial loss to her. The opposite party contended that the
phone was disconnected for non-payment of dues. The district forum held
it to be a case of deficiency in the service and allowed a compensation of Rs.
3,000 for the loss suffered and Rs.1,000 as cost of proceedings. Aggrieved
with the order, the telecommunication department preferred an appeal
before the State Commission contending that the complainant had already
been provided rebate on the bills in question. Moreover, they alleged that
the complainant had the STD facility with dynamic lock facility and since
the rebate had already been provided during the pendency of the complaint,

328. 1991 (l)CPJ 619 (Ori).


329. Some of the cases have been given in Chapter 17 above dealing with the Telegraph
Act, 1885.
330. 2002 (1) CPJ 42 (NC).
402 A TREATISE ON CONSUMER PROTECTION LAWS

the appeal had become infructous. The Commission observed that the facts
that the bills were later on reduced and rebate was granted t o the
complainant during the pendency of the case showed clearly that there was
deficiency in service. Since, the opposite party had failed to explain how the
bill amount was exaggerated, the Commission affirmed the order of the
district forum admitting the claim of the complainant for deficiency in
service.
The position of a consumer who has not received the bill but his
telephone has been disconnected has been explained by the National
Commission in Anuvibhagiya Adhikari, Telephones & Anr. v. Firm Vilayat
Hussain.331 In this case, the complainant's telephone had been disconnected
for non payment of a bill. The complainant alleged that he did not receive
the bill, and, therefore, obtained a duplicate bill and deposited the bill
amount. But reconnection of the telephone was not ordered before the
realization of reconnection charges, which were ultimately deposited by the
complainant and the telephone was restored. Considering the matter, the
district forum held that since the bill was not received by the complainant,
disconnection for the non-payment of the bill was a deficiency in service. It
ordered return of the amount of reconnection charges to the complainant
alongwith compensation and cost of the proceedings. The State
Commission upheld the order of the district forum. The matter came in
appeal before the National Commission. The question before the National
Commission was whether telecom department should sent the bill or if bill
is not received is it also the duty of the subscriber to collect the bill. The
National Commission held that the complainant after disconnection kept
waiting for a long period of one year and after obtaining the duplicate bill
deposited the amount of the bill and reconnection charges. The conduct of
the complainant reveals that he was not vigilant for which no blame can be
t h r o w n on the telephone department for award of c o m p e n s a t i o n .
Therefore, while maintaining the order of the district forum of return for
the amount of reconnection charges and cost, the order for payment of
compensation was set aside.
Not attending the telephone of a complainant after it has become non­
functional is a deficiency in service. In MTNL v. Mohd. Sbakir,ii2 the
telephone of the complainant was non-functional for fifteen months despite
numerous complaints made to the opposite party. Besides this, he continued
to pay* the raised bills every two months. The district forum held the
opposite party guilty of deficiency in service and directed it to pay a sum of
Rs. 25,000 to the complainant as compensation, in addition to the litigation
costs of Rs. 500. Feeling aggrieved with the order, the opposite party filed

331. 2002(1) CPR 260 (NC).


332. 2002 CPJ 19.
CONSUMER PROTECTION ACT, 1986 403

an appeal before the State Commission, contending that the amount


awarded as compensation was exorbitant. The Commission, however,
observed that in the present days the telephone is no more a luxury and seen
in any context, it is neither a luxury nor a comfort but a necessity. So, the
district forum had cogent reasons for awarding a compensation of Rs.
25,000 in favour of the complainant. Upholding the order of the district
forum, the Commission, therefore, dismissed the appeal with no order as to
costs.
The National Commission has in certain cases asked for recovery of
compensation from officials responsible for deficiency in service. In Distt.
Engineer, Telecommunication Deptt. and Another v. Roshan LalAggarwal,333 the
complainant was having two telephone connections, one in the mill
premises and other at his residence. There was an outstanding bill in
respect of telephone charges installed in the mill. As bill for mill's telephone
was not paid, the telephone department disconnected both the telephones.
Therefore, the complainant filed an application in the district forum for
compensation. The district forum held the disconnection as valid. Aggrieved
by the order, the complainant filed an appeal in the State Commission. The
State Commission set aside the order of the district forum and observed that
the disconnection of the telephone was arbitrary. Against the order of the
Rajasthan State C o m m i s s i o n opposite party moved the N a t i o n a l
Commission. The National Commission upheld the order of the State
Commission directed that the compensation for the complainant should be
recovered from the emoluments of the concerned officials for which
purpose the responsibility may be fixed after due enquiry by the department.
Another case in this regard is Tele Communication Deptt. and Others v.
M/S Shanmugan Chemical Industries.334 In this case, the complainant, a
partnership firm, applied for a telephone connection through their manager
who was holding a power of attorney executed in his favour. After more
than three years, a procedural lacunae was pointed out by the opposite party
that the application should have been signed by the managing director of the
complainant partnership firm. Based on this procedural lacunae, the
telephone department did not take any step to provide the complainant with
a telephone connection, even overlooking their priority. A complaint was
filed by the complainant firm in the State Commission which directed the
telecom department that a phone connection be given to the factory of the
respondent within three months and also awarded compensation. Against
this order the telecom department filed an appeal in the N a t i o n a l
Commission, which reduced the amount of compensation given by the State
Commission and ordered that the said amount should be recovered from

333. 1996 (2) CPR 148 (NC).


334 1995(2) CPR 201 (NC).
404 A TREATISE ON CONSUMER PROTECTION LAWS

the emoluments of the officials who were found to have been responsible
for this mischief.
The above stated norms developed by the consumer fora for a better
working of the telephone system are appreciable but their impact on the
functioning of the telephone service has not been so far as expected.
Initiative on the part of consumers to proceed against the service providers
can improve the situation.

Education
After the passage of the Consumer Protection Act, 1986, a number of
complaints came before the consumer fora against lapses of educational
institutions in various aspects of their services. There have been complaints,
inter alia, regarding wrong allotment of roll numbers, delay in declaration of
results, admission in excess of the allotted quota. Since educational
institutions are becoming commercialized, there are also complaints coming
up regarding mis-representation about their affiliation to various universities
and professional institutions when in fact, there is no such affiliation.
The National Commission considered the matter of admissions
exceeding the approved quota in Sonal Matapurkar v. S. Niglingappa
Instituted In this case, admissions were made by the dental institute over
and above the sanctioned seats as a result of which the students were not
allowed to appear in the examination by the university. Since the students
had paid huge donations and had also made investment of time and energy,
the National Commission held that there was deficiency in service and the
complainants were entitled to refund of the donation and compensation
with interest and cost of the proceedings.
In Akhil Bhartiya Grahak Panchayat v. Secretary Sbarda Bhawan Education
Society,-J6 the complainants before the State Commission were the students
of D. Pharmacy course run by the opposite party. They were admitted to the
college in July 1987 and passed the final examination in 1989. But the
students could obtain registration, after qualifying in the D. Pharmacy
course, only in 1991. They had to suffer for two years without being able to
do pharmacy work due to the fact that the college had admitted students in
excess of the authorized number of admissions. The students claimed that
there was deficiency in the service on the part of the management of the
college. They claimed compensation of Rs. 2 lakhs for each for the loss
sustained by them due to delay in getting registration as pharmacists
including mental torture, humiliation and traveling expenses. The State
C o m m i s s i o n dismissed the complaint but on appeal the N a t i o n a l

335. 1997(2) CPJ 5 (NC); also see D.A. V. Institute ofPhysiotherapy v. Miss Navleen Kaur,
1998(1) CPC 254 (Punjab).
336. 1994 (2) CPR 283 (NC).
CONSUMER PROTECTION ACT, 1986 405

Commission held that there was unfair trade practice as well as deficiency in
service on the pan of the college authorities. The Commission set aside the
order of the State Commission and allowed the appeal.
In Abel Pacheco Gracias v. Principal Bharti Vidyapith College of Engineering^7
the Maharashtra State Commission has explained that a student is essentially
a consumer of services of an educational institution. Therefore, a college
cannot appropriate the fees when there is no service. If the college insists on
collecting fees payed by a student, without imparting education, it would
amount to deficiency in service.
Considering the question, whether delay in declaration of results of an
examination is deficiency in service, in Biren Kumar Jagdev v. Controller of
Examination, Utkal University,3ii the Orissa State Commission has held that
delay in the publication of results of an examination falls within the ambit of
the matters relevant for determining deficiency in service. In Secretary, Board
of School Education Haryana, Bhiwani v. Mukesh Chand ofPalwal,339 the
respondents result was declared after a period of one year and eight months
of the scheduled time. The Haryana State Commission held that there was
erratic functioning on the part of the opposite party and it had a callous
attitude towards its students, which is deficiency in service on its part.
Failure to inform candidates about the dates of viva voice examination is
deficiency in service. In Rajinder Singh Saluja v. Datapro Information
Technology,™ the complainant had joined the institution of the opposite
party as a student for the training of advanced diploma in computer
software system analysis and design. The complainant alleged that the date
of viva voice was not communicated to him and due to that lapse he lost a
valuable year of his career and suffered financial losses also. T h e
Maharashtra State Commission held that there was negligence on the part of
the opposite party, therefore, the complainant deserved compensation.
Delay in issuing certificates is also deficiency in service. In V. Murugesan
v. Registrar, University of Madras?*1 the complainant applied for a degree
certificate, but it was issued to him only after a decade. The Tamil Nadu
State Commission held that there was deficiency in service on the part of
the university observing that since the university was lethargic and
indifferent in issuing the certificates, the complainant should be awarded Rs.
10,000 as compensation.

337. 1992 (1) CPJ 105 (Mali); also see AkhilBhartiya Grahak Panchayat Pune v. Principal,
JNF's AGPMMedical College, 1994 (1) CPJ 370 (Mat).
338. 1992 (2) CPJ 307 (Ori).
339. 1994 (1) CPR 269 (Har).
340. 1992(3) CPJ 170 (Mali).
341. 1993 (1) CPR 190 (TN).
406 A TREATISE ON CONSUMER PROTECTION LAWS

Wrong declaration of results by a university also amount to deficiency in


service. In Mabarshi Dayanand University Rohtak v. Shakuntala Chaudhary,342
the complainant had appeared in the supplementary examination conducted
by the University. When the result of the respondent was declared in the
university gazette, the particulars of the complainant were incorrectly
recorded. Aggrieved thereby, the complainant filed a complaint in the
district forum. The district forum took the view that the material errors and
omissions in the declaration of the complainant's result were of a serious
nature which could affect the career of a young student. It awarded
compensation of Rs. 1000 to the complainant. The University preferred an
appeal against the order of the district forum in the H a r y a n a State
Commission. The Commission held that an incorrect declaration or
publication of a candidate's result was an imperfection or shortcoming in
the performance of the duty, which the university had undertaken.
Whenever it fails or defaults in the said duty of care, it cannot escape the
consequences thereof on the mere general plea of the large number of
examinees and inevitable quantum of paper work involved.
Declaration of re-evaluation results of a university examination after
success in supplementary examination has been held by the Karnataka State
Commission as deficiency in service. In Registrar (Evaluation) Bangalore
University v. Mrs. Parida Ansari,w the complainant's son appeared for B.Sc.
2 nd year examination in April, 1991 and the result of this examination was
declared as failed in one of the subjects. The complainant applied for re-
evaluation in respect of that paper. After the re-evaluation, her son was
declared as passed in that paper, but the result was declared in January,
1992. Meanwhile, the complainants son had taken the supplementary
examination held in the month of October 1991 and was declared as
"passed" in the supplementary examination in the same month, i.e., January,
1992. On his seeking relief, the district forum held that there was deficiency
in service rendered by the opposite party and awarded compensation of Rs.
5,000 to the complainant. The Karnataka State Commission upheld the
decision of the district forum in appeal because there was deficiency in the
service of the university and accordingly dismissed the appeal.
A wrongful representation by an educational institution that it is an
affiliated institution is a deficiency in service. In Director, Himachal Institute of
Engineering & Technology v. Anil Kumar Gupta & Ors.,w the institute was not
having affiliation to the Council of Technical Education, but it claimed to be
a recognized institution with the government. The complainant applied for
admission and he was admitted to the course. Later he came to know about
the wrongful representation by the institute about its recognition and filed a

342. 1993 (1) CPR 272 (Har).


343. 1993 (2) CPR 345 (Km).
344. 1994(1) CPR 182 (HP).
CONSUMER PROTECTION ACT, 1986 407

complaint before the district forum. After analyzing the evidence the district
forum held that the institute was not recognized by All India Council of
Technical Education and that without such recognition the appellant
institute was not entitled to make admission to the course. The forum thus
held this amounting to 'deficiency in service' and the complainant was
awarded an amount of Rs. 25000 by way of damages for the loss suffered
and cost of the proceedings. O n appeal the Himanchal Pradesh State
Commission held that the institute was guilty of deficiency in service but in
the complaint there was no specific allegation that the complainant suffered
a loss because of such deficiency. The appeal was partly accepted and the
order of the district forum awarding compensation was set aside. The
decision of the State Commission is clearly not in tone with the consumer
jurisprudence.
Preponement of examination does also amount to deficiency in service.
In Manas Kumar Panda v. Vice Chancellor, Berhampur University?^ the
petitioner had filled up his examination form with the required fee. The
examination was scheduled to be held on April 15,1992, but it was changed
to April, 14,1992 for which the examinee could not sit in the examination.
The Orissa State Commission held that the action taken was arbitrary and
there was deficiency in service. The examination could have been postponed
to any other day and that would not have created inconvenience to any
student.
The position with respect to refund of fees on discontinuation of a
student has been explained by the National Commission in R.C. Dixit v.
Principal, St. Paul's school.*46 In this case, the complainant's daughter was
admitted in school on payment of various fees and the security deposit.
Since there was n o p r o p e r arrangement in the school for teaching
economics, the complainant withdrew his daughter and put her in another
s c h o o l . T h e c o m p l a i n a n t sought full refund of fees on which the
Commission took the view that since the withdrawal from the school was
voluntary, admission fees and monthly tuition fees were not refundable.
However, the examination fees and security deposit were fully refundable.
The annual maintenance, sports and library fees were held refundable after
proportionate deduction.
In S. Venkatapathy v. The Principal, Adhiyaman College ofEngineering^1 the
college selected the complainants for admission to the degree course and
received a fee of Rs. 7,000 from each of them at the time of their admission.
Subsequently, the complainants were admitted to various colleges in the city
and they applied to the college in which they had been admitted first for

345. 1994 (1) CPR 608 (Ori).


346. 2002 (3) CPJ 5 (NC).
347. 1993 (1) CPR 595 (TN).
408 A TREATISE ON CONSUMER PROTECTION LAWS

transfer certificates. The college agreed to issue transfer certificates only if


the complainants gave an undertaking that they would not claim refund of
the fee. The complainants were accordingly coerced to give such
undertakings. Later, the complainants claimed again the refund and also
compensation. The matter was considered by the Tamil N a d u State
Commission which held that an undertaking taken by coercion was not valid
in law and could not confer any right on the opposite party to refuse refund
of fees. So, the refusal of the opposite party to refund the fees paid by the
complainants was unjust, illegal and reflected gross deficiency in service.
Accordingly, each of the complainants was declared entitled to claim the
amount, which had been paid to the college, alongwith interest.
Thus, the education sector has been rightly pervaded by the consumer
movement surfacing the areas of deficiency in it, in an appreciable manner.

Postal service
Postal services, a traditionally well established mode of communication in
India, are availed by public on payment of specific charges. Accordingly, any
deficiency in postal service can be covered under the Consumer Protection
Act. Matters of deficiency in service regarding various aspects of postal
service are genuinely coming before consumer fora for consideration and
redressal of grievances. Some of the cases explaining the nature of
deficiency in service and approach of the redressal agencies are given here to
make the position clear. Misappropriation of money and mis-delivery of mail
are the most c o m m o n lapses on the part of the postal service. So
misappropriation of demand drafts by the postman is one of the matters
making the postal service guilty of deficiency in service. In Union of India v.
D. Venkaiah,348 a demand draft had been sent through a registered letter
which was stolen by the postman and the amount was misappropriated after
opening account in the name of the addressee. The Andhra Pradesh State
Commission held the postal department guilty of deficiency in service and
both the postman and the bank were held liable to pay the amount of the
draft to the complainant.
Delay in the delivery of a money order can also make the postal service
chargeable for deficiency. In Surinder Singh v. Post Master General,2*9 there
was delay in delivery of telegraphic money order and the delay was caused
by the negligence of the employees of the post office. The opposite party
claimed immunity from liability but the Goa State Commission rejected their
claim and held them liable for deficiency.
Mis-delivery of a money order also testamounts to deficiency in service.
In Sub-post Master, Rewari v. Vinod Kumar Saxena,ii0 a money order sent by

348. 1998 (1) CPJ 393 (AP).


349. 1991 (l)CPR 430 (Goa).
350. 1996 (1) CPR 444 (Har).
CONSUMER PROTECTION ACT, 1986 409

the complainant was misdelivered and to escape liability the concerned sub-
post master contended that under section 48 of the Indian Post Office Act,
1898 exemption was granted from suit or legal proceeding in respect of
wrong payment of money order due to incorrect or incomplete information
given by the sender regarding name and address of the payee. It was also
contended that the said exemption also covered delay in payment of money
order caused by accidental neglect, omission or mistake of any officer of the
post office or for any cause other than fraud or willful neglect or default of
such officer. The matter was considered by the Haryana State Commission,
which turned down this plea observing that the object of the said exemption
was to protect the staff of post office against inadvertent bonafide mistake in
discharging duties and that the said exemption does not give blanket
i m m u n i t y to the officers of postal department who may have acted
negligently.
Similarly, if a registered letter is wrongly delivered, that would amount
to deficiency in service. In Sr. Suptd. of Post Office v. Mrs. Pushpavati v.
Kanekar,i51 another important case decided by the Goa State Commission, a
registered letter was delivered by the postman to the grand daughter-in-law
of the addressee. The complaint was filed in the State Commission alleging
deficiency in service as the service letter was n o t received by the
complainant. The Commission held that the delivery of the registered letter
to person other than the addressee amounts to deficiency in service.
The Tamil Nadu State Commission has extended the remedy under the
Act to cases of tampering a parcel also. In M/s K.K.E. Amalgamations v. The
Post Master General,3*2 the complainant deposited a parcel with the opposite
party for transportation and delivery. The parcel, which was insured,
contained a silk saree. The parcel was tampered with and the addressee
refused to accept it. The Commission held that there was deficiency in
service on the part of the opposite party and the complainant was entitled to
costs of the goods and compensation.
The delivery of an envelop back to the sender after proper posting has
been held in the case of Koku Rajendraprasad v. Union ofIndia,?*3 as deficiency
in service. In this case, the complainant posted a envelop with complete
addresses of the addressee and the sender. The envelop was properly
stamped and the words "application for admission to M.A./M.Sc./MCA"
were printed in bold letters. In spite of that the envelope was misdelivered
back to the sender. The Andhra Pradesh State Commission held that it was
a clear case of gross negligence, callous indifference and sheer dereliction of

351. 1992 (3) CPJ 235 (Goa).


352. 1994 (3) CPJ 371 (TN)
353. 1991 (1) CPR 299 (AP); see also Union of India v. Monika Tandon, 1995 (2) CPJ 20
(NQ.
410 A TREATISE ON CONSUMER PROTECTION LAWS

duty of the postal department in performing its functions.


An embracing situation was faced by the complainant in Post Master
General, Tamil Nadu v. Colvin Jacob,334 when he entrusted invitation cards to
postal clerk for franking and dispatch, but he did not dispatch them.
Defending action on this, it was contended on behalf of the post master that
the complainant was not entitled to any compensation by virtue of section 6
of the Post Office Act giving exemption in cases of loss of postal articles.
Negating this contention, the National Commission held that this was not a
case of loss of postal articles after they were duly posted or a case of delay
or damage in delivery. It was a case where the postal articles were not
dispatched at all. The Commission accordingly awarded compensation for
wastage of food and for mental pain and agony caused to the complainant.
The remedy by redressal agencies covers payments of saving certificates
also. Therefore, the delay in payments on account of National Saving
Certificates (NSC) also amounts to deficiency in service. In Ram Krishan v.
Sub Post Master, Uttam Nagar (Delhi),355 the complainant applied for payment
of N S C . The post office was supposed to get the signature of the
complainant verified and complete other formalities within a reasonable
time. But the verification was completed by the post office after a delay of
one month and 22 days. On these facts, the Delhi State Commission held
the complainant entitled to damages. Similarly, delay in payment of Indra
Vikas Patra on maturity, amounts to deficiency in service.-136
As in other services, the approach of courts in the disposal of matters
related to postal services is expectedly positive and pro-consumer.

Liquified Petroleum Gas (LPG)


The Liquefied Petroleum Gas (LPG) is an item of daily use in house holds
as well as industrial establishments. The responsibility of proper and safe
distribution of the LPG cylinders lies upon the dealers. The liability for
defects/deficiency may be on the distributors as well as the manufactures.
Some illustration case would explain the approach adopted by the courts for
setting question of liability and compensation.
In Aklesh Kumar Bansal v. Flame Gas Services357 the complainant received
a defective gas cylinder and the mechanic who was sent to attend the
complainant was not properly trained. He pressed the cylinder nozzle with
screwdriver for few minutes as a result of which the gas leaked out and
spread around which caught fire. This led to a serious accident in which the

354. 1994 (3) CPJ 85 (NC).


355. 1992 (1) CPR 628 Pel); see also Senior Superintendent v. Smt. Kamal Kbosla, 1998 (1)
CPC 168 (Punj).
356. Subbasb Chandra Pn/sty v. Sub-Post Master Belabad, 1993 (3) CPJ 1442 (On).
357. 1993 (1) CPR 434 (Raj).
CONSUMER PROTECTION ACT, 1986 411

c o m p l a i n a n t ' s wife died. T h e Rajasthan State C o m m i s s i o n held that it was


deficiency in service and awarded compensation.
In Dayanand A. Avasare v. Bharat Petroleum Corporation Limited,^ the
c o m p l a i n a n t was having t w o connections of L P G for domestic use. T h e r e
was some p r o b l e m in the burning of the gas, therefore, the mechanic of the
suppliers was called. After examining the gas cylinder and b u r n e r he said
that the L P G cylinder was excessively filled with gas. T h e mechanic pressed
the pin of t h e cylinder and ejected the excessive gas in the k i t c h e n itself.
After some time he advised the wife of the complainant to light the burner.
W h e n the stove was lighted, suddenly fire broke out as a result the wife of
the complainant received serious b u r n injuries, due to which she died in the
h o s p i t a l . T h e c o m p l a i n a n t alleged t h a t t h e s u p p l i e r s w e r e g u i l t y for
providing defective goods and deficiency in service. T h e Maharashtra State
C o m m i s s i o n , u p h o l d i n g the c o n t e n t i o n of the c o m p l a i n a n t held t h a t an
L P G cylinder c o n t a i n i n g gas above the permissible limit is defective and
f r o m t h e p o i n t of v i e w of safety t h e r e was deficiency in s e r v i c e . T h e
suppliers were accordingly, directed to pay compensation for the loss and
injury suffered by the complainant.
Failure t o re-check a gas cylinder, w h i c h is m a n d a t o r y for s u p p l y of
c o o k i n g gas c y l i n d e r s , a m o u n t s t o deficiency in service. In Indian Oil
Corporation Ltd. v. Venkataraman^9 a gas cylinder was supplied b y the
opposite party w i t h o u t checking the same at the time of the delivery. W h e n
the cylinder was c o n n e c t e d t o the stove, it burst causing serious damage.
U p o n t h e c o m p l a i n a n t seeking compensation, the N a t i o n a l C o m m i s s i o n
held that there was clear deficiency in service due t o failure t o recheck the
cylinder.
In M/s Ideal Stones v. L.S. Lalitha,ib0 there was an L P G connection in
the name of the complainants son and fire broke out at his house because of
defects in the cylinder. As a result, complainant's husband and the mechanic
of t h e gas d i s t r i b u t o r r e c e i v e d i n j u r i e s . It was h e l d b y t h e N a t i o n a l
C o m m i s s i o n that the cause of the accident was the supply of defective gas
cylinder, the valve and the regulator. It was, therefore, deficiency in service
w i t h negligence and the complainant was entitled t o compensation even if
the L P G c o n n e c t i o n was in the name of her son.
In Arjun Singh v. Thanesar Gas Agency?bl the complainant was denied the
L P G c o n n e c t i o n o n the g r o u n d that he was residing outside the municipal

358. 1993 (1) CPR 278 (Mah); See also Shivani Shekhar Parlekar v. Bharat Petroleum
Corporation Ltd., 1995 (2) CPJ 412 (Mah.); and Sharda Ben v. Gujarat Gas Supplier.
1992 (1) CPJ 225 (NC).
359. 1993(1) CPJ 218 (NC).
360. 1992 (1) CPJ 62 (NC); see also M/s Kartik Agencies v. K. Raj Kumari, 1993 (3) CPJ
278 (NC).
361. 2002 (1) CPJ 270 (NC).
412 A TREATISE ON CONSUMER PROTECTION LAWS

limits. The complainant proved that his area was within municipal limits. It
was held by the National Commission that there was gross deficiency in the
service and the complainant was entitled to damages and cost for the non-
supply of LPG connection.
With respect to LPG, the consumer fora have settled some more norms.
According to these, if the gas cylinder were supplied with much delay and
that too not at the residence of the complainant, it would amount to
deficiency in service.362 Releasing of a LPG connection to a wrong person
out of turn is also deficiency in service. This has been held in Monilisa Gas
Service v. Rajesb Kumar Puran Chand Shah,%3 where the complainant was an
applicant for LPG connection and he was not provided the gas connection
on his turn as the same had been delivered to a wrong person. Denial of the
connection was held as deficiency in service.
In the area of LPG gas supplies the norms of safety need to be enforced
very strictly as have been done in the above mentioned uses.

Air Travels
Complaints are coming before the consumer fora regarding grievances of air
travelers because of various kinds of deficiencies in service of the Airlines.
In Indian Airlines v. S.N. Sinha,ib4 a complaint was filed by a traveller for
compensation on the ground that a sharp metallic wire came in the mouth
of the complainant alongwith rice and curry served as a part of the dinner by
the Airlines. When the matter came before the National Commission, it
observed that the provision of food is one of the amenities provided to the
passengers in return for payment of the fare for the journey and it forms an
essential part of the services rendered by the Airlines for consideration. Any
defect in the food supplied must, therefore, be regarded as a deficiency in
service rendered by the Airlines. The complainant was, thus, held entitled to
compensation for the inconvenience and mental shock caused to him on the
metallic wire pressing against his gum while consuming the rice and curry.
Mistake of the agent of any Airlines is relevant for determining
deficiency in service. In K. Santbilajan (Dr.) v. Malaysia Airlines?*" an
approved travel agent sold a ticket to the complainant and due to his
mistake, the ticket number was not confirmed. This made the complainant
to overstay at Singapore. The Tamil Nadu State Commission observed that
the complainant must have been put to mental pain and agony at the time of
his departure and subsequently during stay at Singapore. It awarded Rs.
25,000 as compensation apart from cost of the new ticket bought by the

362. National Forum for Consumer Education v. Patel Gas Agency. 1994 (2) CP] 161 (Mah).
363. 1994 (l)CPJ 478 (Guj).
364. 1992(1)CPJ62(NC).
365. 1994 (l)CPR 274 (TN).
CONSUMER PROTECTION ACT, 1986 413

complainant, airport tax, boarding and lodging expenses incurred a


Singapore due to overstay and interest at 18 per cent from the date of
complaint till payment.
Misplacing of an unused ticket by the airlines is a deficiency in service.
In Sita World Travel India Ltd. v. YVSS Murthy,ihb the complainant purchased
an air ticket but he did not use the ticket for journey. He surrendered the
unused open ticket and demanded refund. Ticket was lost in the custody of
the Air India or the Sita World Travel Ltd. The district forum directed the
opposite party to pay to the complainant the cost of the ticket alongwith
interest. Aggrieved by the order of the district forum the opposite party filed
an appeal before the State Commission. The Commission found that there
was a delay of eight months in processing refund of the unused Air India
ticket, after the same was surrendered and, therefore, held that there was
negligence and deficiency in services of both, the Air India as well as its
agent.
In the Station Manager, Indian Airlines v. B.B. Das?67 the complainant had
a confirmed booking and the time of the flight was mentioned in the ticket.
When the complainant reported at the airport, he was informed that the
flight was delayed by five hours. The complainant again reported as per the
time mentioned by the airline officers. However, the flight eventually
departed three hours late. Looking to the inconvenience caused by such a
delay in flights, the National Commission held that there was a deficiency in
service of the Airlines and its staff. It observed, of course, the Airlines has a
power to reschedule the flights but such power should not be randomly
used. Any other way to exercise this power would be considered as
negligence which causes inconvenience, hardship and mental tension which
is a ground for liability,368 both jointly and severally with the travel agent.369
Compelling a passenger holding valid boarding card to vacate his seat
and alight from aircraft to provide seat to another passenger amounts to
deficiency in service. In Indian Airlines Corporation v. Abdul Majid,i70 the
complainant was a waitlisted passenger. His waitlisted ticket was confirmed
and boarding card was given to him allotting specific seat number. After be
boarded the aircraft and occupied his seat, he was compelled to vacate his
seat and leave the aircraft in humiliating circumstances. Though the action
was taken for providing a seat to another passenger with a confirmed ticket
on the same flight, it was held as deficiency in service of the Airlines.

366. 1993 (2) CPR 183 (AP).


367. 1992 (1) CPR 183 (NC).
368. Patel Ramubkai Shankarlal v. Indian Airlines, 1991 (1) CPR 422 (Guj).
369. Express Travel v. MR Shah, 2002 (2) CPJ 39 (TN).
370. 1993 (2) CPJ 251 (NC).
371. CbandiPrasadBbattv. British Airways, 2003 (1) CPJ 169 (NC); and see AsoRajinder
Paljaimi (NRI) v. Secretary, Union ofIndia, 2003 (1) CPJ 24 (NC).
414 A TREATISE ON CONSUMER PROTECTION LAWS

T h e National Commission, in Unik Traders v. France Air Pvt. Ltd.,"71


o b s e r v e d in similar c i r c u m s t a n c e s t h a t t h e failure t o p r o v i d e seat t o a
confirmed ticket holder was deficiency in service. The Commission held that
t h e c o m p l a i n a n t was e n t i t l e d t o o n e d a y ' s h o t e l a c c o m m o d a t i o n a n d
c o m p e n s a t i o n with interest. 1 7 - Similarly, in Air India Ltd. (Manager) v. A.
Moideen Kittty,-7'' the complainant despite having confirmed ticket, was not
provided a seat, as a result he lost his job. Compensation was allowed to the
complainant by the State Commission. T h e National C o m m i s s i o n upheld
the compensation awarded by the State C o m m i s s i o n as gross deficiency in
service was p r o v e d in the case. T o prevent occurrence of such a situation,
the State Commission, has directed in M/s Arrow Journey v. Shn Ganesh Bhujal
and Ors.,'74 t h a t t h e airlines s h o u l d give a w i d e c i r c u l a t i o n t o a n y
i n f o r m a t i o n regarding cancellation of flights. A n y failure t o do so w o u l d
a m o u n t to negligence and deficiency in service.
A n i m p o r t a n t case of deficiency in service o n t h e part of airlines is
Indian Airlines v. Rajesb Kumar.-17' In this case, the respondent had purchased
a ticket to travel from Lucknow to Delhi. T h e flight was scheduled to start
from L u c k n o w at 2 p.m. The flight got delayed and could only take off from
L u c k n o w only at 6.50 p.m. The complainant's case was that there was not
only delay in the operation of the flight in question but also failure o n the
part of the Indian Airlines staff at L u c k n o w A i r p o r t to provide necessary
facilities such as lunch, tea, etc. to the awaiting passengers of the delayed
flight. By t h i s , his wife, w h o was also t o t r a v e l w i t h h i m , d e v e l o p e d
w e a k n e s s a n d b e c a m e i n d i s p o s e d . After t h e c o m p l a i n a n t and his wife
traveled t o Delhi by the delayed flight, which landed at Delhi at about 7.50
p . m . , his wife expired there on the next day. T h e c o m p l a i n a n t , therefore,
filed a c o m p l a i n t against t h e I n d i a n A i r l i n e s b e f o r e t h e D e l h i S t a t e
C o m m i s s i o n , seeking to recover a sum of Rs. 5 lakhs from the o p p o s i t e
p a r t y as c o m p e n s a t i o n for t h e i r r e p a r a b l e loss s u l f e r e d by h i m in
consequence of the death of his wife. T h e State C o m m i s s i o n held thai the
o p p o s i t e party was not liable for p a y m e n t of any c o m p e n s a t i o n tor the
unfortunate death ol the wife of the complainant, but a sum oi Rs. 2000 was
ordered to be paid for loss of time. Aggrieved by this direction the Indian
A i r l i n e s filed t h e appeal in the N a t i o n a l C o m m i s s i o n . T h e N a t i o n a l
Commission held that Airlines could not be held liable for delay in operating
a flight. It stated that u n d e r section 5(e) of N o n - I n t e r n a t i o n a l C a r n a g e
(Passenger and Baggage) Regulation of 1980, the airline c o r p o r a t i o n is not
liable for damages occasioned by delay in the carriage of passengers o r
baggages because this is an essential condition in the contract. Consequently,

372. 20C3 (1) CPJ 65 (NC).


373. 2CC3 (3) CPR 30 (NC).
374. 1992 (i) CPR 183 (NC).
375. 1991 (1) CPR 46 (NC).
', ()NSUMER PROTECllON ACT, 1986 415

a passenger would be bound by it unless it is proved by adequate evidence


that the delay in carriage was caused by reason of some gross negligence of
the airlines. The Commission did not take into account the difficulties
encountered by consumers in obtaining relevant information from the
Airlines having not only monopoly of service but exclusive control over the
facts leading to the delay.
The question whether a newspaper report would be admissible as
evidence in cases for redressal of grievances was considered by the National
Commission, in Consumer Education & Research Society, Ahmedabad v. Indian
Airlines Corporation, New Delhi?7b Considering the issue, the Commission
held that the general complaint based on third person's version in
newspaper reports cannot be entertained by the consumer fora. In this case
the complainant, a registered consumer society, filed a complaint on the
basis of a newspaper report that due to delay of VVIP arrival, departure of
the flight was delayed and inconvenience and hardship was caused to
passengers. The complainant had alleged that the Airlines, having monopoly
on air services, was functioning arbitrarily and delays and cancellation of
flights had been a frequent occurrence which caused great inconvenience to
passengers and also loss of valuable time.
In Syndicate Tours and Travels v. Consumer Education and Research Society, the
National Commission held that providing a non-confirmed air ticket,
representing it to be confirmed, by a travel agent is a blatant deficiency in
service. 377
In N.D. Patnaik v. Vayudoot Limited?78 four tickets were purchased by
the complainants. The tickets were confirmed and were marked with the
status "OK." Though all the four complainants possessed the confirmed
tickets only two of them were allowed to travel by the flight. The confirmed
tickets were shown to the traffic assistant at the airport, even then he
refused to permit the other two complainants to travel by the flight. The
Andhra Pradesh State Commission held that these facts clearly establish the
deficiency in service rendered by the opposite parties.
In Anil Kumar Sanyal v. Jet Airways?7** the complainant purchased
confirmed air ticket, but due to the over booking of passengers, he was not
allowed to board. It was held by the National Commission that it amounts
to deficiency in service. Opposite party was directed by the commission to
pay compensation to the complainant on account of mental agony and
harassment. In/«£erg/o£e Air Transport v. Dr. Charanjit Singh BahniwaP80 the

376. 1991 (1) CPJ 38 (NC).


377. 2003(3) C P R 32 (Megh).
378. 1992 (1) C P R 460 (AP).
379. 1998 (1) CPJ 383 (WB).
380. 1998 (3) CPJ 84 (Chd).
416 A TREATISE ON CONSUMER PROTECTION LAWS

air ticket of the complainant was confirmed but the flight was not provided
because of which he took an alternative flight. The Chandigarh State
Commission awarded him refund of the fare alongwith compensation.
In Mohinder Singh -Sethi v. Indian Airlines,m the complainant was issued a
confirmed ticket on the day when there was no scheduled flight. He filed a
complaint for deficiency in service in the district forum. The district forum
dismissed the complaint. On appeal the State Commission, Chandigarh
observed that this was deficiency in service because of issuance of a ticket
on a day when it was known that no flight was operating on that day. The
Commission, therefore, set aside the order of the district forum and the
opposite party was held liable to pay compensation to the complainant.
In Dr. Mrs. Lalitha Kumar v. British Airways,387 an agent soled the air
tickets of the opposite party on its behalf to the complainant on the
payment of additional charges for confirmation. The ticket were shown with
'OK' status instead of a "wait listed" or "chance ticket" status. It was held
by the National Commission that the negligence or deficiency of service was
in wrongly selling an "OK" ticket to the complainant instead of a "wait
listed" ticket. Since the capacity of the passengers in every flight is limited
and when tickets are issued to prospective passengers, the availability of
seats is verified. In case of non-availability of seats only a "wait listed" ticket
is issued and the passenger has to take his chance if and when there is any
cancellation or confirmation. There is, therefore, no question of payment of
additional charge of confirmation. Such a thing does not arise at all.
In Air India v. Yohgendra Hira Lai Parekh383 the complainant purchased
air ticket for both ways from an agent. On the ticket no return date was
mentioned and no seat was, therefore, provided. The National Commission
held that the Airlines is not responsible for the mistake of its agent.
In the Commercial Manager, Indian Airlines, Calcutta, v. S.N. Mukherjee?M
the respondent purchased two full tickets and a half ticket to travel by air
from Bombay to Calcutta. He lost the tickets but before that he had
preserved their xerox copies and informed the Airlines besides making a
G.D. Entry at the police station about the loss. Even then the Airlines
authorities paid no attention to his request for allowing him to travel by the
scheduled flight and insisted him to. purchase three fresh tickets for traveling
by the same plane. The W,est Bengal State-Commission rejected the
contention of the Airlines and held that the complainant suffered pecuniary
loss as well as harassment because of illegal insistence on the part of the
appellant in making the respondent pay air fares twice for a single flight.

381. 2002 (1) CPJ 500 (Chd).


382. 1992 (2) CPR 10 (NC).
383. 1996 (2) CPJ 116 (NC).
384. 1992 (2) CPR 66 (WB).
CONSUMER PROTECTION ACT, 1986 417

Such illegal realization of the double fare by the Airlines for a singly journey
amounts not only to a serious deficiency in its service but also to a highly
unfair trade practice.
Delay in delivery of baggage by airlines can also be treated as deficiency
in service. In Manickam (Mrs.) @ Sivabagiam (Mrs.) v. Air Lanka Ltd./83 the
complainant had handed over her baggage to the Airline at Colombo to be
carried to Madras. However, the same was delivered after five days because
before loading the baggage at Colombo, the tag fastened to the baggage had
come off leading to the problem of identification. The Tamil Nadu State
Commission held that not properly fastening the baggage tag, which caused
delay, amounted to deficiency in service.

Miscellaneous
Various other cases, covering diverse consumer interests, have been decided
by the consumer fora and need to be highlighted to activate the consumers
for seeking relief on the basis of the principles laid down in these cases. In
a case regarding swimming pool management, Prakash H Sadekar v.
Dombivali Gymkhana,^ the complainant's 13 year old daughter was admitted
for learning swimming on the payment of coaching charges. She drowed in
the 7 feet deep swimming pool of the opposite party and no help came forth
for fifteen-twenty minutes after the incident. The complainant filed a
complaint in the Madras State Commission for compensation. The
Commission observed that it was a mandatory duty of the swimming pool
authorities to have adequately trained guards to meet any disaster. The
Commission found that the coach available at the time of the incident was
grossly negligent and the water of the pool was also found not clean but
t u r b i d . O n these facts the opposite party was held liable to pay
compensation of Rs. 1 lakh for loss of life and Rs. 30,000 for mental shock.
The National Commission has extended the jurisdiction of consumer
courts to municipalities with respect to the activity of supply of water also.
In Asst. Engineer, Department ofPHED v. Banwan Lai,™7 houses of the
complainants were located at the far end of the colony, where due to lack of
necessary pressure, water could not reach in reasonable quality. For this
deficiency in municipal service, compensation of Rs.lOOC was awarded by
the National Commission to each complainant with costs.
Mistake on the part of forest authorities regarding maintenance of
elephants properly to prevent damage to people is deficiency in service. In
Mayi Gowda v. State of Karnataka,388 during the elephant ride for which

385. 1999 (2) CPJ 674 (TN).


386. 2000 (1) CPR 327 (Mad).
387. 2003 (2) CPJ 14 (NC).
388. 2003 (1) CPJ 243 (NC).
418 A TREATISE ON CONSUMER PROTECTION LAWS

charges were paid, the forest guard failed to prevent miscreants from
pricking the elephant due to which the elephant became panicky. As the
cradle was loosely tied, it tilted and the complainant who was seized by the
elephant lost both the eyes due to injuries. This showed negligence of the
forest department in not taking precautionary measures. The complainant
was, therefore, held entitled to compensation for permanent disability.
Cases regarding pension and provident fund have also been brought
under the purview of the Consumer Protection Act. In Regional Provident
Fund Commissioner v. Rahuma Beevi (Smt.),389 the National Commission has
held that the non-payment of pension to a person entitled to it is deficiency
in service. On default the opposite party is liable to pay pensionary benefits
with arrears. In Assistant Provident Fund Commissioner, Thiruvanathapuram v. Alt
Akbar^90 the pension was refused to the complainant on the ground of
dispute about his date of birth. The National Commission accepted the
certificate issued by the registrar of births and deaths as the proof of the
birth and held the opposite party liable to sanction the pension with interest
on arrears.
Similarly, non-payment of GPF deposits is also deficiency in service. In
M.K, Sangal v. The Accountant General391 the complainant was a regular sub­
scriber to the GPF. After his retirement the opposite party did not pay him
the deposits although a number of reminders were sent from time to time.
Therefore, the complainant approached the Delhi State Commission with a
prayer that the respondents be directed to issue the authorization slip
regarding his GPF account payable at Delhi alongwith compensation on
account of harassment and mental agony caused to him. The State
Commission held that the non-payment of provident fund amount is
deficiency in service and directed issuance of the authorization slip in
favour of the claimant in respect of the entire amount of GPF to his credit
alongwith interest. Compensation for mental agony was granted by the
Commission and directed the opposite party to pay to the complainant Rs.
10000 as damages.
Loss caused due to improper maintenance of cold storage is also
covered by the provision regarding deficiency in service. In a case of its own
kind, Dharrna Pal & Others v. Chawla Cold Storage of fugadhari,^- the
complainant hired the service of a cold storage for storing potato seeds. He
deposited the bags containing seeds in the cold storage after proper receipt
and paid the rental charges. However, when the complainant brought out

389. 2003 (1) CPJ 81 (NC).


390. 2003 (1)CPJ36(NC).
391. 1992 (2) CPR 5 (Del); see also Comptroller and Auditor General of India v. Sbivkant
SbankarNaik, 2003(1) CPJ 276 (NC).
392. 1992 (3) CPJ 152 (Har.).
CONSUMER PROTECTION ACT, 1986 419

the bags of seeds from the cold storage, he found that the same had already
germinated and were wholly unfit for sowing in the fields. A complaint was
filed in the Haryana State Commission for granting relief which held that the
complainant had admittedly hired the services of the cold storage for
consideration and there was a glaring deficiency in rendering the services as
well as negligence.
Same is the case with deficiency in maintenance of cinema halls. In Mrs.
Sharda Sharma v. Fida Films and Hotel Co. Pvt. Ltd.,393 the complainant
accompanied by her two children and a friend were watching the cinema
show in the theater owned by the opposite party. While they were watching
the cinema, the ceiling fan in the theater fell off and struck the complainant
on her head causing injuries. The complainant alleged that the service
rendered by the opposite party was deficient as a result of which she had
suffered the injuries and loss. Therefore, the complainant claimed Rs.2 lakh
as compensation. The Maharashtra State Commission held that the
management was responsible for not maintaining the electric fans in safe
and proper working order and for this negligence, they were responsible.
The above study of the case law reveals that mostly the complaints have
been decided in favour of the complainants and denial of the relief has taken
place very rarely. This is also obvious that the relief has been denied only in
those cases in which either the grievance was not established or the
complainant was found himself at fault. Generally the grant of the has been
in the form of compensation, removal of defects in goods or replacement of
goods and refund of the amount involved in a transaction with interest on
the ground of non-performance by the opposite party.
Filing of appeals under the Act has been very frequent. The district fora
have generally allowed the complaints and in most of the cases the State
Commissions and the National Commission have upheld the decisions of
the district fora. Surprisingly, in many cases, where the State Commissions
had altered the findings and decisions of the district fora, the National
Commission has restored those decisions. This shows that the district fora
are well connected with the consumer cause.
Time taken for disposal of cases has been usually much more than 90
days, which is the statutory period fixed by the Act. The reason for this is
larger number of complaints coming before the for a, limited time of
hearings, legal technicalities involved in the matters, engagement of
advocates and long time taken to make available the evidence. To provide
speedy consumer justice is, therefore, a goal yet to be achieved.
The measures to attain the objective of speedier remedy to consumers
should include the joint involvement of the voluntary organizations,

393. 1994 (1) CPR 848 (Mah).


420 A TREATISE ON CONSUMER PROTECTION LAWS

manufacturers and suppliers and the service providers in the process of


consumer protection. This can make possible reduction in the number of
complaints and help in making the extra-judicial settlement of the consumer
disputes more effective.

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