Salient features of the Consumer Protection Act, 1986

In one minute

The Consumer Protection Act, 1986 gave Indian consumers a cheap and quick remedy outside the civil courts. Its main features are the Consumer Protection Councils, a three-tier forum of District Forum, State Commission and National Commission, a list of reliefs, and a limitation period of two years.

In exams, this topic is asked as "state the salient features of the Consumer Protection Act, 1986". The trap is to mix its features with those of the 2019 Act that replaced it.

Legal provision

• Section 1: the Act extends to the whole of India except Jammu and Kashmir. It applies to all goods and services unless the Central Government provides otherwise.
• Section 2: definitions, including consumer, complainant, defect, deficiency, unfair trade practice and restrictive trade practice.
• Section 3: the Act is in addition to, and not in derogation of, any other law.
• Sections 4 to 8B: Central, State and District Consumer Protection Councils.
• Section 9: establishment of the District Forum, the State Commission and the National Commission.
• Sections 11, 17 and 21: pecuniary jurisdiction of each agency.
• Section 14: findings and reliefs of the District Forum.
• Sections 15, 19 and 23: appeals.
• Sections 24A, 25, 26 and 27: limitation, enforcement of orders, frivolous complaints and penalties.

Meaning and definition

The Act was passed in 1986 to provide for better protection of the interests of consumers and for the settling of consumer disputes. It was amended several times, notably in 1991, 1993 and 2002. The Consumer Protection Act, 2019 replaced it, and the 2019 Act came into force in July 2020.

Detailed explanation

Step 1: Wide application

• It applies to all goods and all services, public or private, unless the Central Government exempts them.
• Section 3 makes the remedy additional. A consumer can still use a civil court or other law.

Step 2: Consumer rights

The Act protected the right to safety, to be informed, to choose, to be heard, to seek redress and to consumer education. These rights are to be promoted by the Consumer Protection Councils. See the note on rights of consumers.

Step 3: Consumer Protection Councils

• The Central Council is advisory. Its chair is the Minister in charge of Consumer Affairs, and it must meet at least once a year (sections 4 to 6).
• Each State has a State Council, advisory in nature, which meets at least twice a year (sections 7 and 8).
• A District Council, chaired by the Collector and meeting at least twice a year, was added by the 2002 amendment (sections 8A and 8B).
• Their object is to render advice on promotion and protection of consumer rights.

Step 4: Three-tier agencies

• A District Forum in each district, a State Commission in each State, and the National Commission in the country (section 9).
• The agencies are quasi-judicial bodies. They follow a summary procedure and are not bound by the technical rules of a civil court.

Step 5: Jurisdiction by value

• The District Forum hears complaints where the value of the goods or services and the compensation claimed does not exceed Rs 20 lakh (section 11).
• The State Commission hears complaints above Rs 20 lakh and up to Rs 1 crore, and appeals from the District Forum (section 17).
• The National Commission hears complaints above Rs 1 crore, and appeals from the State Commission (section 21).
• A complaint is filed where the opposite party resides, carries on business or works for gain, or where the cause of action arises.

Step 6: Procedure

• A copy of the admitted complaint is sent to the opposite party, who must give his version within 30 days, extendable by up to 15 days (section 13).
• If a defect in goods needs testing, a sample goes to an appropriate laboratory, which must report within 45 days.
• Both parties get a reasonable opportunity of being heard.

Step 7: Reliefs

Section 14 allows the agency to order the opposite party to do one or more of the following:

• remove the defect, or replace the goods;
• return the price paid;
• pay compensation for loss or injury caused by negligence, including punitive damages in a fit case;
• remove deficiencies in services;
• discontinue an unfair trade practice or a restrictive trade practice, and not repeat it;
• withdraw hazardous goods, and stop making hazardous goods or offering hazardous services;
• pay a sum, of at least five per cent of the value of the defective goods or services sold, where a large number of consumers who cannot be easily identified suffered loss;
• issue a corrective advertisement at the opposite party's cost;
• pay adequate costs to the parties.

Step 8: Appeals

• From the District Forum to the State Commission within 30 days (section 15).
• From the State Commission to the National Commission within 30 days (section 19).
• From the National Commission to the Supreme Court within 30 days (section 23).
• A person ordered to pay must deposit 50 per cent of the amount, or Rs 25,000, Rs 35,000 or Rs 50,000 respectively, whichever is less, before appealing.
• A late appeal can be heard if there is sufficient cause.

Step 9: Limitation, enforcement and penalties

• A complaint must be filed within two years of the cause of action, unless the delay is condoned for sufficient cause (section 24A).
• An order that is not appealed is final (section 24).
• A frivolous or vexatious complaint is dismissed with costs of up to Rs 10,000 (section 26).
• Failure to obey an order is punishable with imprisonment of one month to three years, or a fine of Rs 2,000 to Rs 10,000, or both (section 27).
• The agencies have the powers of a Judicial Magistrate of the first class to try these offences.

• Supreme CourtAppeal from the National Commission within 30 days
  • National CommissionAbove Rs 1 crore, and appeals from the State Commission
    • State CommissionRs 20 lakh to Rs 1 crore, and appeals from the District Forum
      • District ForumUp to Rs 20 lakh

Don't confuse: the 1986 Act and the 2019 Act

Point	1986 Act	2019 Act
Names of agencies	District Forum, State Commission, National Commission	District, State and National Commissions
Regulator	None	Central Consumer Protection Authority
Product liability	No separate chapter	Chapter VI
Mediation	None	Chapter V
E-commerce, e-filing	Not covered	Covered

Common mistakes

• Giving 2019 Act features, such as the Central Consumer Protection Authority, as features of the 1986 Act.
• Saying that the Act applied to Jammu and Kashmir. It did not, as passed.
• Forgetting that the remedy is additional under section 3.
• Mixing the three value limits.
• Forgetting the pre-deposit for appeals.

Apply it

Leading case laws

• Lucknow Development Authority v. M.K. Gupta (1994)

  Facts. A statutory housing authority argued that building and allotting flats was a sovereign function, so it could not be taken to a consumer forum.

  Principle. The Supreme Court disagreed and gave "deficiency in service" a purposive reading.

  Significance. The Act is beneficial legislation and is read widely.

• Indian Medical Association v. V.P. Shantha (1995)

  Facts. Conflicting rulings on whether medical work is a service under the Act.

  Principle. Medical work for a fee is a service, except care that is completely free.

  Significance. Shows the wide application of the Act.

How to write this answer in the exam

Key points to remember

• Three tiers: District Forum (up to Rs 20 lakh), State Commission (up to Rs 1 crore), National Commission (above Rs 1 crore).
• Remedy is additional to other laws (section 3).
• Limitation is two years (section 24A).
• Appeal period is 30 days at each level, with a pre-deposit.
• Failure to obey an order: imprisonment of one month to three years, or a fine, or both.

Quick self-test

Related topics

• Consumer Protection Act,2019
• Redressal Machinery under the Consumer Protection Act
• Consumer Disputes Redressal Commissions: Jurisdiction and Powers