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Consumer Protection (Amendment) Act 2002

AS PASSED BY THE RAJYA SABHA ON THE 11TH MARCH, 2002

Bill No. XLII of 2001

Short title and commencement.

THE CONSUMER PROTECTION (AMENDMENT) BILL, 2002

A BILL further to amend the Consumer Protection Act, 1986.

BE it enacted by Parliament in the Fifty-third Year of the Republic of India as follows:-

1.(1) This Act may be called the Consumer Protection (Amendment) Act, 2002. Act, 2001.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

Amendment of section 2

2. In the Consumer Protection Act, 1986 (hereinafter referred to as the principal Act), in section 2, in sub-section (1), -

(1) in clause (b), after sub-clause (iv), the following sub-clause shall be inserted, namely :- “(v) in case of death of a consumer, his legal heir or representative;”;

(2) in clause (c), -

(i ) in sub-clause (i ) for the words “any trader”, the words “any trader or service provider” shall be substituted;

(ii) for sub-clauses (iv) and (v), the following sub-clauses shall be substituted, namely:- “(iv) a trader or the service provider, as the case may be, has charged for the goods or for the services mentioned in the complaint a price in excess of the price,-

(a) fixed by or under any law for the time being in force;

(b) displayed on the goods or any package containing such goods;

(d) agreed between the parties;

(v) goods which will be hazardous to life and safety when used are being offered for sale to the public,-

(A) in contravention of any standards relating to the safety of such goods as required to be complied with by or under any law for the time being in force;

(B) if the trader could have known with due diligence that the goods so offered are unsafe to the public;

(vi) services which are hazardous or likely to be hazardous to life and safety of the public when used, are being offered by the service provider which such person could have known with due diligence to be injurious to life and safety;”;

(3) in clause (d), –

(a)in sub-clause (ii) the following words shall be inserted at the end, namely:-

“but does not include a person who avails of such services for any commercial purposes”.

(b)for the Explanation the following Explanation shall be substituted, namely:-

Explanation – For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment”;

(4) for clause (j), the following clause shall be substituted, namely:-

‘(j) “manufacturer” means a person who –

(i) makes or manufactures any goods or part thereof; or

(ii)does not make or manufacture any goods but assembles parts thereof made or manufactured by others;or

(iii)puts or causes to be put his own mark on any goods made or manufactured by any other manufacturer;”

(5) for clause (nn), the following clauses shall be substituted, namely:---

(nn) “Regulation” means the regulations made by the National Commission under this Act;

(nnn) “restrictive trade practice” means a trade practice which tends to bring about manipulation of price or conditions of delivery or to affect flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions and shall include –

a. delay beyond the period agreed to by a trader in supply of such goods or in providing the services which has led or is likely to lead to rise in the price;

b. any trade practice which requires a consumer to buy, hire or avail of any goods or, as the case may be, services as condition precedent to buying, hiring or availing other goods or services,;

(6) in clause (o), for the words “users and includes the provision of”, the words “users and includes, but not limited to, the provision of” shall be substituted;

(7) after clause (o), the following clause shall be inserted, namely:- “(oo)spurious goods and services” mean such goods and services which are claimed to be genuine but they are actually not so;”

(8) in clause (r), -

(a) after sub-clause (3), the following sub-clause shall be inserted, namely:- “(3A) withholding from the participants of any scheme offering gifts, prizes or other items free of charge, on its closure the information about final results of the scheme.

Explanation.- For the purposes of this sub-clause, the participants of a scheme shall be deemed to have been informed of the final results of the scheme where such results are within a reasonable time, published, prominently in the same newspapers in which the scheme was originally advertised.”

(b) after sub-clause (5), the following sub-clause shall be inserted, namely:-

“(6) manufacture of spurious goods or offering such goods for sale or adopts deceptive practices in the provision of services."

Amendment of Section 4

3. In section 4 of the principal Act, in sub-section (1), for the words " The Central Government may” , the words "The Central Government shall” shall be substituted.

Amendment of Section 7

4. In section 7 of the principal Act, -

(a) in sub-section (1), for the words " The State Government may” , the words "The State Government shall” shall be substituted;

(b) in sub-section (1), after clause (b), the following clause shall be inserted, namely:- “(c) such number of other official or non-official members, not exceeding ten, as may be nominated by the Central Government.”

Insertion of new sections 8A and 8B

The District Consumer Protection Council.

Objects of the District Council

5. After section 8 of the principal Act, the following sections shall be inserted, namely:-

“ 8A(1) The State Government shall establish for every district by notification a council to be known as the District Consumer Protection Council with effect from such date as it may specify in such notification.

(9) The District Consumer Protection Council (hereinafter referred to as the District Council) shall consist of the following members, namely:-

The Collector of the district (by whatever name called), who shall be its Chairman, and such number of other official and non-official members representing such interests as may be prescribed by the State Government.

(10) The District Council shall meet as and when necessary but not less than two meetings shall be held every year.

(4) The District Council shall meet at such time and place within the district as the Chairman may think fit and shall observe such procedure in regard to the transaction of its business as may be prescribed by the State Government.

8B. The objects of every District Council shall be to promote and protect within the district the rights of the consumers laid down in clauses (a) to (f) of section 6.”.

Amendment of Section 10

6. In section 10 of the principal Act, -

(i) in sub-section (1) for clause (b), the following clause shall be substituted, namely:-

“(b) two other members one of whom shall be a woman, who shall have the following qualifications, namely:-

(i) be not less than thirty-five years of age,

(ii) possess a bachelor’s degree from a recognised university,

(iii) be persons of ability, integrity and standing, and have adequate knowledge and experience of at least ten years in dealing with problems relating to economics, law, commerce, accountancy, industry, public affairs or administration:

Provided that a person shall be disqualified for appointment as a member if he

(a) has been convicted and sentenced to imprisonment for an offence, which, in the opinion of the State Government involves moral turpitude; or

(b) is an undischarged insolvent; or

(d) has been removed or dismissed from the service of the Government or a body corporate owned or controlled by the Government; or

(e) has, in the opinion of the State Government, such financial or other interest as is likely to affect prejudicially the discharge by him of his functions as a member; or

(f) has such other disqualification as may be prescribed by the State Government,”;

( ii )in sub-section (1A), the following proviso shall be inserted, namely:-

“Provided that where 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 High Court for nominating a sitting Judge of that High Court to act as Chairman”;

( iii )for sub-section (2), the following sub-section shall be substituted, namely:-

“(2) Every member of the District Forum shall hold office for a term of five years or upto the age of sixty-five years, whichever is earlier.

Provided that a member shall be eligible for re-appointment for another term of five years or upto the age of sixty-five years, whichever is earlier, subject to the condition that he fulfills the qualifications and other conditions for appointment mentioned in clause (b) of sub-section (1) and such re-appointment is also made on the basis of the recommendation of the Selection Committee:

Provided further that a member may resign his office in writing under his hand addressed to the State Government and on such resignation being accepted, his office shall become vacant and may be filled by appointment of a person possessing any of the qualifications mentioned in sub-section (1) in relation to the category of the member who is required to be appointed under the provisions of sub-section (1A) in place of the person who has resigned:

Provided also that a person appointed as the President or as a member, before the commencement of the Consumer Protection (Amendment) Act, 2002, shall continue to hold such office as President or member, as the case may be, till the completion of his term.”.

(iii) in sub-section (3), the following proviso shall be inserted, namely:-

“Provided that the appointment of a member on whole-time basis shall be made by the State Government on the recommendation of the President of the State Commission taking into consideration such factors as may be prescribed including the work load of the District Forum”.

Amendment of Section 11

7. In section 11 of the Principal Act, in sub-section (1), for the words “does not exceed rupees five lakhs”, the words “does not exceed rupees twenty lakhs” shall be substituted.

Substitution of new section for section 12.

Manner in which complaint shall be made.

8. For section 12 of the principal Act, the following section shall be substituted, namely:-

“12.(1) A complaint in relation to any goods sold or delivered or agreed to be sold or delivered or any service provided or agreed to be provided may be filed with a District Forum by –

(a) the consumer to whom such goods are sold or delivered or agreed to be sold or delivered or such service provided or agreed to be provided;

(b) any recognised consumer association whether the consumer to whom the goods sold or delivered or agreed to be sold or delivered or service provided or agreed to be provided is a member of such association or not; one or more consumers, where there are numerous consumers having the same interest, with the permission of the District Forum, on behalf of, or for the benefit of, all consumers so interested; or the Central or the State Government.

(2) Every complaint filed under sub-section (1) shall be accompanied with such amount of fee and payable in such manner as may be prescribed.

(3) On receipt of a complaint made under sub-section (1), the District Forum may, by order, allow the complaint to be proceeded with or rejected:

Provided that a complaint shall not be rejected under this section unless an opportunity of being heard has been given to the complainant:

Provided further that the admissibility of the complaint shall ordinarily be decided within twenty-one days from the date on which the complaint was received.

(4) Where a complaint is allowed to be proceeded with under sub-section (3), the District Forum may proceed with the complaint in the manner provided under this Act:

Provided that where a complaint has been admitted by the District Forum, it shall not be transferred to any other court or tribunal or any authority set up by or under any other law for the time being in force.

Explanation.- For the purpose of this section “recognised consumer association” means any voluntary consumer association registered under the Companies Act, 1956 or any other law for the time being in force”.

Amendment of Section 13

9. In section 13 of the principal Act, in sub-section(1) ,-

(a) in the marginal heading, for the words “Procedure on receipt of complaint”, the words “Procedure on admission of complaint” shall be substituted;

(b) in sub-section (1) –

(i) in the opening portion, for the words “on receipt of a complaint”, the words “on admission of a complaint” shall be substituted;

(ii) for clause (a), the following clause shall be substituted, namely:-

“(a) refer a copy of the admitted complaint, within twenty-one days from the date of its admission to the opposite party mentioned in the complaint directing him to give his version of the case within a period of thirty days or such extended period not exceeding fifteen days as may be granted by the District Forum,”;

(i) in the opening portion, for the words “complaint received” the words “the complaint admitted” shall be substituted;

(ii) in clause (b), in sub-clause (ii), for the words “on the basis of evidence” the words “ex parte on the basis of evidence” shall be substituted;

(iii) after clause (b), the following clause shall be inserted, namely:-

“(c) where the complainant fails to appear on the date of hearing before the District Forum, the District Forum may either dismiss the complaint for default or decide it on merits.”;

(d) after sub-section (3), the following sub-sections shall be inserted, namely:-

“(3A) Every complaint shall be heard as expeditiously as possible and endeavour shall be made to decide the complaint within a period of three months from the date of receipt of notice by opposite party where the complaint does not require analysis or testing of commodities and within five months if it requires analysis or testing of commodities :

Provided that no adjournment shall be ordinarily granted by the District Forum unless sufficient cause is shown and the reasons for grant of adjournment have been recorded in writing by the Forum:

Provided further that the District Forum shall make such orders as to the costs occasioned by the adjournment as may be provided in the regulations made under this Act.

(3B) Where during the pendency of any proceeding before the District Forum, it appears to it necessary, it may pass such interim order as is just and proper in the facts and circumstances of the case.”;

(e) after sub-section (6), the following sub-section shall be inserted, namely:-

“(7) –In the event of death of a complainant who is a consumer or of the opposite party against whom the complaint has been filed, the provisions of order XXII of the first schedule to the Code of Civil Procedure, 1908 shall apply subject

to the modification that every reference therein to the plaintiff and the defendant shall be construed as reference to a complainant or the opposite party, as the case may be”.

Amendment of Section 14

10. In section 14 of the principal Act, -

(i) in sub-section (1), -

(a) in clause (d) the following proviso shall be inserted, namely :-

“ Provided that the District Forum shall have the power to grant punitive damages in such circumstances as it deems fit.”;

(b)in clause (e), for the words “remove the defects” the words “remove the defects in goods” shall be substituted;

(c)after clause (h), the following clauses shall be inserted, namely:-

(ha) to cease manufacture of hazardous goods and to desist from offering services which are hazardous in nature;

(hb) to pay such sum as may be determined by it if it is of the opinion that loss or injury has been suffered by a large number of consumers who are not identifiable conveniently:

Provided that the minimum amount of sum so payable shall not be less than five percent of the value of such defective goods sold or service provided, as the case may be, to such consumers:

Provided further that the amount so obtained shall be credited in favour of such person and utilized in such manner as may be prescribed”;

(hc) to issue corrective advertisement to neutralize the effect of misleading advertisement at the cost of the opposite party responsible for issuing such misleading advertisement,”;

(ii) in sub-section (2), for the proviso, the following proviso shall be substituted, namely:-

“Provided that where a member, for any reason, is unable to conduct a proceeding till it is completed, the President and the other member shall continue the proceeding from the stage at which it was last heard by the previous member,”.

Amendment of Section 15

11. In section 15 of the principal Act, after the first proviso, the following proviso shall be inserted, namely:-

“Provided further that no appeal by a person, who is required to pay any amount in terms of an order of the District Forum, shall be entertained by the State Commission unless the appellant has deposited in the prescribed manner fifty percent of that amount or twenty five thousand rupees, whichever is less.”.

Amendment of Section 16

12. In section 16 of the principal Act, -

(a) in sub-section (1), for clause (b) and proviso there under, the following clause shall be substituted, namely:-

“(b) not less than two and not more than such number of members, as may be prescribed, one of whom shall be a woman, who shall have the following qualifications, namely:-

(i) be not less than thirty-five years of age,

(ii) possess a bachelor’s degree from a recognised university, and

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

Explanation:- For the purposes of this clause, the expression “persons having judicial background” shall mean persons having knowledge and experience for at least a period of ten years as a presiding officers at the district level court or any tribunal at equivalent level:

Provided further that a person shall be disqualified for appointment as a member if he -

(a) has been convicted and sentenced to imprisonment for an offence, which, in the opinion of the State Government involves moral turpitude; or

(b) is an undischarged insolvent; or

(d) has been removed or dismissed from the service of the Government or a body corporate owned or controlled by the Government; or

(e) has in the opinion of the State Government, such financial or other interest, as is likely to affect prejudicially the discharge by him of his functions as a member; or

(f) has such other disqualification as may be prescribed by the State Government.,”.

(j) after sub-section (1) the following sub-sections shall be inserted, namely:-

“(1A) Every appointment under sub-section (1) shall be made by the State Government on the recommendation of a Selection Committee consisting of the following members:-

(i) President of the State Commission Chairman

(ii) Secretary of the Law Department of the State……. Member

(iii) Secretary incharge of the Department

dealing with Consumer Affairs in the State…. Member;

Provided that where 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 High Court for nominating a sitting Judge of that High Court to act as Chairman.

(1B) (i) The jurisdiction, powers and authority of the State Commission may be exercised by Benches thereof.

(ii) A Bench may be constituted by the President with one or more members as the President may deem fit.

(iii) If the members of a Bench differ in opinion on any point, the points shall be decided according to the opinion of the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and make a reference to the President who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more or the other members and such point or points shall be decided according to the opinion of the majority of the members who have heard the case, including those who first heard it.”;

(d) for sub-sections (3) and (4), the following sub-sections shall be substituted, namely:-

“(3) Every member of the State Commission shall hold office for a term of five years or upto the age of sixty-seven years, whichever is earlier:

Provided that a member shall be eligible for re-appointment for another term of five years or upto the age of sixty-seven years, whichever is earlier, subject to the condition that he fulfills the qualifications and other conditions for appointment mentioned in clause (b) of sub-section (1) and such re-appointment is made on the basis of the recommendation of the Selection Committee:

Provided further that a person appointed as a President of the State Commission shall also be eligible for re-appointment in the manner provided in clause (a) of sub-section (1) of this section.

Provided also that a member may resign his office in writing under his hand addressed to the State Government and on such resignation being accepted, his office shall become vacant and may be filled by appointment of a person possessing any of the qualifications mentioned in sub-section (1) in relation to the category of the member who is required to be appointed under the provisions of sub-section (1A) in place of the person who has resigned.

(4) Notwithstanding anything contained in sub-section (3), a person appointed as the President or as a member, before the commencement of the Consumer Protection (Amendment) Act, 2002, shall continue to hold such office as President or member, as the case may be, till the completion of his term.”.

Amendment of Section 17.

13. Section 17 of the principal Act shall be re-numbered as sub-section (1) and in sub-section (1) as so re-numbered –

(i ) in clause (a), in sub-clause (i), for the words “exceeds rupees five lakhs but does not exceed rupees twenty lakhs”, the words “exceeds rupees twenty lakhs but does not exceed rupees one crore” shall be substituted;

(ii) after sub-section (1) as so re-numbered, the following sub-section shall be inserted, namely:-

“(2) A complaint shall be instituted in a State Commission within the limits of whose jurisdiction, -

(a) the opposite party or each of the opposite parties, where there are more than one, at the time of the institution of the