Study of Unfair Trade Practices in India

Abstract

The moment a person comes into this world, he starts consuming goods or services. When we approach the market as the consumer, we expect not to be cheated or harassed by unscrupulous suppliers. In this article, the author defines unfair trade practices with the help of the Consumer Protection Act, 2019. The author also explains how the aggrieved consumer can get remedies and cites some cases

INTRODUCTION

The Government of India understood the need to protect the consumers from being cheated by suppliers. Several laws have been enact for this purpose. The Indian Contract Act, the Prevention of Food Adulteration Act, the Dangerous Drugs Act, the Sales of Goods Act, the Indian Standards Institution (Certification Marks) Act, etc., are remedial acts for aggrieved consumers. However, these laws involve a lengthy legal process which is very expensive and time-consuming because the consumer has to initiate action by way of a civil suit.

The Consumer Protection Act, 1986 was enacted to provide quicker and simpler access to redressal of consumer grievances. The Act provided machinery to aggrieved consumers. But the consumers have undergone a drastic transformation since the enactment of the Consumer Protection Act, 1986. Therefore, it has become inescapable to amend the Act to address the emerging vulnerabilities of the consumer. The CP Amendment Act, 2019 establishes an executive agency known as the Central Consumer Protection Authority. The task of prevention of or acting against unfair trade practices is vested in it.

What Are Unfair Trade Practices?

Under Section 2 (1) (r) of Consumer Protection Act, “Unfair Trade Practices” means a trade practice which, to promote the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice including any of the following given below, namely-

False or Misleading Representation-

Forms of false or misleading representation

When represents falsely the goods are of a particular standard, quality, quantity, grade, composition, style, or model.
When falsely represent that the services are of a particular standard, quality, or grade.
When falsely represents any re-built, second-hand, renovated, reconditioned, or old goods as new.
When acts that the goods or services have approval, performance, characteristics, sponsorship, uses, or benefits they do not have.
Represents that the supplier or the seller has compliance which such supplier or seller does not have.
Make misleading or false representations concerning the needs or the usefulness of any goods or services.
When gives the public any guarantee or warranty not based on the adequate or proper test.
When makes the public a misleading representation in a form that purports to be warranty or guarantee, a promise to replace, etc.
When false or misleading claims regarding the price of goods or services.
When false or misleading facts disparaging the goods, trade of another person, or services.

Bait Advertising and Bargain Price

When an advertiser permits the publication of any advertisement for the sale or supply at a bargain price of goods or services without intention to offer amounts the unfair trade practices

Conducting Promotional Contests and Offering Gifts and prizes

Offering gifts is a promotional stunt used to attract customers. Made an advertisement on a gift or prize without the intention of performing or creating the impression that something has been given or offered free of charge when it is wholly or partly covered by the amount charged, the transaction as a whole amount to unfair trade practices.

Prohibits any contest, lottery, game of chance, or skill for directly or indirectly promoting sales or any business interests.

The amendment act of 2002 added a new sub-clause 3(a) in section to include withholding of any information about final results of any scheme offering gifts, prizes, or other items to enlarge the definition of unfair trade practices.

Product Safety Standards

When permits the sale or supply of goods, knowing or having reason to believe that the goods do not comply with the standards prescribed by the competent authority amounts to unfair trade practice.

Hoarding and Destruction Of Goods

When if by permitting the hoarding or destruction of goods, or to make them available for the sale or refusal to sell the goods, or to provide any service, tends to raise or intended to raise the cost of those or other similar goods or services, amounts to unfair trade practices

Spurious Goods

The amendment act of 2002 added this clause to include manufacturing spurious goods or offering such spurious goods for sale or adopting deceptive practices in the services, which amounts to unfair trade practices.

When seller is not issuing bill or receipt or cash memo for the goods sold or services rendered in such manner as may be prescribed amounts to unfair trade practices.
Refuse to take back or withdraw defective goods and to refund the consideration
Disclosing any personal information to the third person of the consumer amounts to unfair trade practices.

Redressal against Unfair Trade Practices under the Consumer Protection Act

Consumer Disputes Redressal Agencies

The CP Act provides for three-tier Consumer Disputes Redressal Agencies.

At the district level, DCDRF – if the value of claims is up to 20 lakhs.
At the state level, SCDRC- if the value of claims exceeds 20 lakh but within one crore.
At the national level, NCDRC- if the value of claims exceeds one crore.

How to File a Complaint?

The consumer can file a complaint on plain paper.
For declaration, stamp paper did not require.
The complaint should contain the details of the complainant and the opposite party.
The consumer can file a complaint by himself or through his representative. Engaging a lawyer is not compulsory.
According to the value of the claim, the fees charged.

Reliefs available to consumers from consumer Forums

Either removal of defects from the goods or replacement of the goods.
To withdraw hazardous goods from sale.
To desist from offering services that are hazardous and to cease manufacture of such goods.
To issue corrective advertisements to neutralize the effect of misleading advertisements.
Award compensation for the loss or injury suffered by the aggrieved consumer.

Some Famous Cases of Unlawful Trade Practices

In HMM Ltd. Case

In this case, HMM Ltd. manufactured and marketed Horlicks advertised a scheme called Hidden Wealth Price Offer. In this scheme, if any lucky purchaser from Delhi found any coupon inside the bottle of Horlicks. Coupons contain prizes of five hotline color Television and other cash prizes.

The commission held this scheme under unfair trade practices as getting coupon is nothing but a lottery system. But the Supreme Court concluded that the coupons inside Horlicks bottles were not a lottery.

In Panasonic India Private Ltd. Case

In this case, Panasonic has launched a contest in which a person had to buy a Panasonic Television to enter the prize contest. The first prize winner has a chance to witness the Winter Olympics trip for two persons. The second prize was two Mini Hi-Fi systems with five CD Chargers, and the third prize was three Panasonic G-400 cellular phones with 500 consolation prizes.

Mantra Oil Products Private Ltd. v Oriental Insurance Corporation

In this case, the complainant alleged that he had booked a tractor with the respondent by depositing advanced money. But respondent delivers to others on a pick and choose basis and postponed the delivery to the appellant. Meanwhile, the price of the tractor goes up. The appellant received the tractor at an enhanced rate and suffered a loss. The respondent was held liable.

Ravinder Rai v Competent Motors Corporation Private Limited

In this case, the court held that if there is a delay in delivery because of the imposition of newly enhanced exercise duty, it is not unfair trade practice.

Buddhist Mission Dental College and Hospital v. Bhupesh Khurana

In this case, the court held that misrepresentation by a college about its affiliation with a university is an unfair trade practice.

Conclusion

Before purchasing any goods, should insist on getting all the information about the product or services because ignorance of consumers is mainly responsible for their exploitation especially in rural areas .Consumers should ideally purchase quality marked products such as ISI, AGMARK. The consumer should know their right and must exercise them. This awareness will enable them to desist from being prey to unfair trade practices.

Bibliography

https://gama.gov.in/ConsumerAwareness.aspx#:~:text=Means%20right%20to%20seek%20redressal,complaint%20for%20their%20genuine%20grievances.
http://ncdrc.nic.in/bare_acts/1_1_2.html
https://consumerhelpline.gov.in
The Consumer Protection Act,1986
Aggarwal, V.K. Law of Consumer Protection, New Delhi, 2016
The Consumer Protection Ammendment Act, 2019

This article is written by Megha Patel, a 2^nd year Law Student at the Mody University of Science and Technology, Laxmangarh, Rajasthan.

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