IN January this year, the Indian Institute of Public Administration (IIPA) released its evaluation report on the ‘Impact and effectiveness of the Consumer Protection Act’ (CP Act) in the country. Like the earlier report of the IIPA in 1994 and the report of the Comptroller and Auditor General in 2004 (Performance Audit Report No 14, 2004-2005), this report too drew a grim picture of the consumer justice system created under the Consumer Protection Act, 1986. Stating that its effectiveness was only marginal, the report placed blame on the inability of the consumer courts to deliver justice quickly and in a cost effective manner. (Executive Summary, major observations, page 9). Pointing to the poor compensation awarded by the consumer courts as another negative factor, the report warned that consumers were losing faith in this redress mechanism.

The report, which evaluated the impact of the CP Act through surveys of consumer courts in ten districts of five states (Karnataka, Gujarat, Uttar Pradesh, Odisha and Tripura), besides extensive interviews with various stakeholders, including complainants, put a figure on the extent of consumer exploitation in the country. While 43.4% of the consumers interviewed (sample survey of 2100 respondents in the ten districts) were recipients of substandard goods, 41.2% were victims of manufacturing defects, 55.4% had suffered on account of adulterated food, 35.3% from poor quality services and 36.8% were victims of false information given at the time of sale or through advertisements (unfair trade practice). In addition, 50.1% were victims of overcharging, and 47.4% of short weighing. (Executive Summary, page 16, IIPA report.)

So what did they do about these problems? Did they seek redress through the consumer courts provided for the purpose? A majority – 97% – did not go to the consumer court. Even though apathy and ignorance played a part, a large percentage of consumers said they did not seek the intervention of the consumer court because of four main reasons: delays in the adjudication process, complicated procedures adopted at these forums and the consequent cost involved in seeking adjudication (on account of engaging a lawyer), and the poor compensation awarded by consumer courts.

Strictly speaking, this is nothing new. The earlier reports of 1994 and 2004 that I have referred to had more or less stated the same things. Yet, the IIPA report of 2013 is most worrying because it reveals that even after 25 years there has been no improvement in the working of these courts. If anything, there is a further deterioration, thereby raising some very serious doubts about the possibility of reversing these trends.

 

Hailed as a path-breaking social welfare legislation, the Consumer Protection Act of 1986 basically recognizes six consumer rights and provides for an exclusive three-tier system of consumer grievance redress through District Consumer Disputes Redressal Forums (pecuniary jurisdiction: up to Rs 20 lakh) in each district of the country, besides State Consumer Disputes Redressal Commissions in each state capital (Over Rs 20 lakhs to Rs 1 core) and the National Consumer Disputes Redressal Commission (pecuniary jurisdiction: over Rs 1 crore) in New Delhi. Unlike the civil courts, these are quasi-judicial bodies that provide for resolution of consumer complaints through summary procedure based on the principles of natural justice. Through these tribunals, the law promises ‘simple and speedy’ redress for all consumer complaints pertaining to defective goods, deficient services, and unfair and restrictive trade practices. In addition to compensation, the courts can also award punitive damages and costs of litigation. There is no limit on the compensation award.

When first constituted, these tribunals really opened the floodgates of consumer litigation in the country. Till then, delays in the justice system and the prohibitive cost of litigation had kept consumers away from law courts, and the consumer courts were seen as a panacea for all consumer ills in the country. So from educational institutions and hospitals to banks and insurance companies, every service provider was mercilessly dragged to the tribunals for shoddy and negligent service. Retailers were taken to task for overcharging and under-weighing, manufacturers for substandard goods and sloppy after sales services; even civic authorities were harangued for their sloth and indifference. While the urban middle class was the predominant litigant, even the rural poor, particularly farmers, tested the system and won many a complaint against substandard seeds.

 

By and large, the consumer courts did not disappoint them on points of law and many landmark judgements passed by the apex consumer court were upheld by the Supreme Court, further fortifying consumer rights encapsulated in the law. In Lucknow Development Authority vs M.K. Gupta (CA no 6237 of 1990), the Supreme Court denounced the state-run land development agencies for their apathy and incompetence and said that consumers who were victims of such negligent service were entitled to compensation. (This applied to private builders too.) In Indian Medical Association vs V.P. Shantha (CA no 688 of 1993), it struck down the argument of the medical professionals that they cannot be held accountable under the CP Act.

This and several other subsequent orders of the apex court as well as the apex consumer court (National Consumer Disputes Redressal Commission) have come to define the rights of patients in India. In other service sectors like insurance, banking, telecommunication, power supply and transport too, consumer courts played a pivotal role (and still continue to play) in protecting the rights of consumers.

However, even as these judgements strengthened consumer rights in the country, the delays in the adjudication process slowly began to weaken the consumer justice system. From the very beginning, the state governments were most reluctant to constitute consumer courts at the state (State Commission) and the district (district forums) levels as required under the law and did so only after a stern warning from the Supreme Court. In subsequent years too, their lack of interest in implementing the law and the low priority given to consumer protection was apparent in the delays in appointing adjudicating members, often resulting in closure (temporary) of these courts. The absence of adequate infrastructure for the smooth running of the tribunals only added to the delays.

 

While the apathy of the administration played its part in the poor implementation of the law, the complicated methodologies adopted by the adjudicating members, in contravention of the procedures laid down in the law and the repeated adjournments given at the behest of lawyers, only made matters worse. The insensitivity of the members to consumer suffering and the miserly compensation that they awarded, added to the misery of consumers who sought relief through these courts. Quick to take advantage of these pitfalls in the system were retailers, manufacturers and service providers, who found that by routinely appealing against the orders of the consumer courts, they could drag on the adjudication process for years and effectively discourage consumers from filing complaints.

A good example of how consumer courts complicate the process of adjudication is CERC vs New India Assurance Company (RP no 2721 of 2007). This was a simple case of an insurance company repudiating a claim pertaining to a damaged television set covered under the Householders Policy. Instead of filing the case himself, the policy holder had given the power of attorney to his parents to file the case. They in turn sought the help of a consumer organization and together the case was filed.

 

So all that the consumer court had to do was to see the facts of the case, hear both the parties or read both their versions and give its verdict. Instead of doing that, the District Consumer Forum, Ahmedabad Rural, went into a long legal debate (prompted by lawyers) on whether a power of attorney holder can file a case under the Code of Civil Procedure and dismissed the complaint on this ground! The consumer court at the state level to which the parents appealed, did no better and dismissed it on the same grounds.

As every adjudicating member knows, consumer courts are not bound by the Code of Civil Procedure and only have to follow the principles of natural justice to redress a complaint. Besides, in the initial years itself, the apex consumer court had made it clear that the spouse of a complainant can file a complaint, so also parents. Under the law, a consumer organization can also fight the case on behalf of a consumer. Yet, the consumer courts at the district and the state level thought it fit to dismiss the case, thereby violating the fundamental principles of consumer justice.

While setting aside the orders of the lower consumer court, the National Commission regretted that the courts were adopting procedures prescribed under the Civil Procedure Code as followed by civil courts and not the principles of natural justice as provided under the Consumer Protection Act.

In order to keep the procedure simple, the CP Act provides for adjudication of disputes at the district and the state level by a panel of one judicial (a retired judge) and two non-judicial members (one of whom is a woman). Yet, this combination has failed to achieve the objective because (a) either the non-judicial members are not assertive enough to ensure a simple procedure or (b) because the members are also former advocates, who tend to treat the consumer courts as a district court. According to the IIPA report, 44.3% of the members in the surveyed consumer courts were lawyers before they became members of the District Forums. (Educational Status of Members, page 80, IIPA Report, January 2013.)

 

Considering that the raison d’etre of these courts is speedy justice, the law should have specified a time limit for resolution of complaints in the very beginning, in 1986. However, this was not done. Eventually, when a time frame of three months for resolution of complaints (five months in case the complaint requires testing of goods) was mandated through an amendment in 2003, 17 years had gone by and the consumer justice system had borrowed some of the worst features of civil litigation in the country and thereby robbed consumers of swift justice.

A Performance Audit (Report no 14, 2004-2005) of the implementation of the Consumer Protection Act and Rules by the Comptroller and Auditor General of India (CAG) and an independent survey conducted at the instance of the CAG, showed that during 2000-2005, out of 85,780 cases disposed of by state commissions, only 20,669 were within 90 days. Similarly, of the 70,4489 cases disposed of by District Forums, only 22,5273 were within 90 days (Annexure 7 and 8 of the CAG audit report).

Now the recent IIPA report reveals an even gloomier picture. As per its survey, only 10.2% of the complaints were decided within three months, while 17.8%, within five months. Similarly 41.6% took more than five months while 30.4%, more than a year. And it’s not even as if a large number of consumers are filing complaints before these forums. The IIPA survey found that in 40% of the district consumer forums, less than 15 cases were filed per month. As on 6 March 2013, the total number of complaints filed before all the consumer courts in the country (from the time of their inception) was 39,22,435. The percentage of disposal is 90.97 and a total of 35,4092 cases are pending (website of the union ministry of consumer affairs).

 

From the very beginning it was obvious that businesses (in the private as well as the public sector) misused the appeal provisions in the law to prolong the process of adjudication, thereby harassing and discouraging consumers from filing complaints before the consumer courts. Yet, the forums did nothing to curb such practices. It’s only in recent times that the National Consumer Commission has chastised businesses on this issue in a few cases and imposed punitive damages on them – but this is again a case of too little, too late.

The Branch Manager, SBI vs Nirakar Sahoo ( Revision Petition no 1055 of 2002) makes sad reading. On the failure of a bank to release the loan sanctioned to buy a truck under the Pradhan Mantri Rozgar Yojana in 1998, Sahoo, an unemployed youth, knocked at the doors of the consumer court. Instead of complying with the order of the District Forum to release the loan, the bank filed an appeal before the State Commission and again, ignoring the order of the commission, filed a revision petition before the National Commission. By the time the commission took up the case after a delay of five years, the scheme had been discontinued. So even though the apex consumer court commented on how public sector banks scuttled welfare programmes meant for the needy, it did not ask the bank to release the loan or pay punitive damages. It awarded the poor youth a grand compensation of Rs 10,000.

 

Another weakness in the law that is exploited by trade is the provision for appeal (Section 27 A) under the penalty clause. Take the case of Bhausaheb Devram Patil, who in 1993 decided to take his complaint about a defective television set for redress to the consumer court, believing the process to be quick and simple. Despite the notice being served, the retailer did not bother to appear. Now in such situations, the mandate is clear – decide the case ex-parte (Section 13(2)(b)(ii) of the CP Act). But the District Forum did not follow the procedure prescribed under the law. It adjourned the case several times to give the retailer an opportunity to appear. Eventually, in 1994, it passed an ex-parte order directing the opposite party to either repair the set or refund its price (no compensation! ). The retailer ignored that too, forcing the complainant to file an execution petition. On 20 August 1998, the forum sentenced Kishore D. Patel to undergo simple imprisonment for three months and pay a penalty of Rs 5000.

When the court was about to enforce this order, the retailer suddenly woke up and filed an appeal before the Maharashtra State Consumer Disputes Redressal Commission against the execution of the order. The State Commission, in response, thought it fit to reverse the original order of the District Forum itself! So this time the consumer was forced to file a revision petition before the apex consumer court. The National Commission, in its order dated 30 May 2006, held that the Maharashtra State Commission had no jurisdiction to pass such an order. It therefore set it aside and directed the District Forum to give a chance to the dealer to comply with its order; failing this, implement the execution order, the Commission said. (Bhausaheb Devram Patil vs Kishore D. Patel, RP no 580 of 1999)

So 13 years after he first filed the complaint, Bhausaheb Devram Patil had still not got the relief! I do not know what happened to this case later, but one can certainly say that the relief would not be worth 13 years (or even more) of waiting because all that the forum had ordered was repair of the set or refund of its price! Either option would be worthless. Is it any wonder that the consumer protection law has not brought about any significant attitudinal change in manufacturers or service providers towards consumers and their rights?

 

While introducing the Consumer Protection Bill of 1986 in Parliament, the government had explained that the law was compensatory and not penal in character. And this very nature of the law would limit the time taken for settling a dispute, while at the same time promoting a healthy respect for consumers among manufacturers, traders and service providers, the government had said.

However, the computation of damages by these courts in most cases is too conservative and meagre to be just and too small to have any salutary effect on the opposite party. In Lucknow Development Authority vs M.K. Gupta (CA no 6237 of 1990) the Supreme Court had said that compensation should serve the dual purpose of recompensing the individual while simultaneously bringing about a qualitative change in the attitude of manufacturers and service providers. But for that to happen, compensation should be large enough to make an impact.

Take the case of Sau Madhuri vs Dr Rajendra and Ors (FA no 600 of 1993, decided on 29-8-1996). Here, the doctors at a nursing home in district Amravati, Maharashtra, resorted to performing a caesarean section to deliver Madhuri’s child, but left behind a pair of artery forceps in her abdomen. Worse, even when Madhuri went back with complaints of severe pain in the abdomen and got admitted to the hospital, doctors could not detect the problem. Eventually, as her health deteriorated, another doctor who was consulted, identified the problem and removed, in addition to the forceps, five feet of her intestine which had got entwined around the forceps and turned gangrenous.

The Maharashtra State Commission directed the doctors to bear the cost of Madhuri’s medical expenses and pay a compensation of Rs 2000 for the physical and mental suffering undergone by her! The National Commission before which she filed an appeal, did only slightly better – it raised it to Rs 10,000.

 

In order to deliver justice, the adjudicating members also need to be sensitive to the plight of consumers in the country, the difficult circumstances under which some of them fight for their rights. The case of Shankar Prasad vs Peerless General Finance Investment Company (RP no 535 of 535 of 1994), is a good example. The young man’s father had died at Sadar Hospital, Barh, from injuries that he had received from falling down the stairs. Because of the delay on the part of the hospital in responding to queries from the insurer, Prasad’s claim was rejected. When he turned to the consumer courts for help, they failed to see his circumstances (illiterate and poor) and rejected his complaint on the ground that the photocopies were not accompanied by an affidavit and he had also not offered to produce witnesses to corroborate the evidence! In response to his revision petition, the National Commission chided the lower consumer courts for their insensitivity, but remanded the case back to the District Forum.

 

This brings us to the vital question: has the law that was supposed to promote consumer rights and strengthen the consumer movement in the country, hopelessly failed? Or is it possible to bring about some course correction even at this stage?

To be fair, I must say that several attempts have been made by the Union Ministry of Consumer Affairs to strengthen and speed up the adjudication process. But unfortunately, the efforts have been too little, too late. Even though delays in the process of justice were a nagging problem from the very beginning, it was only in 2003 that substantial amendments were brought in to speed up the process of consumer justice. Through these amendments, provisions to discourage adjournments and appeals were introduced, so also a specific time-line for the disposal of cases. But these measures failed to have the desired results because by then, the malaise had become too deep-rooted.

The consumer justice system had borrowed processes and systems from the civil courts that were inimical to speedy justice and absorbed them to such an extent that it was not easy to change. Besides, some of the provisions, such as those that prohibited adjournments, were so weak that they gave ample scope for violation. Even now, an attempt is being made to plug several lacunae in the law and strengthen it. The amendments are currently before the Parliament.

Course correction at age 26 is not easy, but not impossible, provided there is political will to do so. First and foremost, there should be stringent monitoring of the proceedings to ensure strict compliance of the law by the adjudicating members. This would prevent repeated adjournments given at the behest of lawyers and adoption of complicated procedures. Side by side, there should be legal researchers to assist the adjudicating members, thereby reducing their dependence on lawyers for case laws and judgements of the Supreme Court. Similarly, provision of consumer assistants at all consumer courts would ensure that consumers fight the case on their own, without the assistance of lawyers. For small value complaints (up to one lakh rupees) advocates should be strictly prohibited. These measures would not only bring down the cost of redressal for consumers, but also reduce the dominance of lawyers in these courts.

 

It is also extremely important to sensitize those who sit in judgement – both judicial and non-judicial members – to the plight of consumers in the country and the need for a more just and liberal calculation of compensation that is in tune with the basic concept of consumer protection embodied in the law. Training programmes for bureaucrats and parliamentarians should include visits to these courts and discussions with consumers on the problems that they face, so that they give consumer justice the importance that it deserves. In short, every effort must be made to ensure that the consumer justice system lives up to its mandate – simple, speedy, inexpensive and effective justice.