Evaluation Report on Impact and Effectiveness of Consumer Protection Act, 1986 Project Directors Prof. Suresh Misra Dr. Sapna Chadah Dr. Mamta Pathania Project Team Dr. Amit Kr. Singh Shri Virendra Nath Mishra Shri Pankaj Kr. Singh Shri Ashutosh Dixit Dr. Yatish Mishra Sponsored by Conducted by Department of Consumer Affairs Centre for Consumer Studies Ministry of Consumer Affairs, Food Indian Institute of Public and Public Distribution Administration Government of India New Delhi PREFACE The Consumer Protection Act was enacted in 1986 for better protection of the consumers. The Act provides for the redressal of grievances and also the relief that the consumers are entitled to, apart from setting up councils to promote consumer welfare. The Act has been in operation for the last twenty five years and it was expected to provide relief to consumers and give a boost to the consumer movement in the country. An assessment of the working of the Act reveals a number of loopholes in its implementation. Even though the redressal mechanism has been established yet the justice delivery mechanism has not been able to provide relief to the much exploited consumers. Large numbers of complaints are pending in the three tier mechanism and the pendency is only growing. The complaints are not redressed within the stipulated time as a result the consumers are not approaching the forums to file complaints. Moreover, the capacity of the forums to deliver justice itself needs to be upgraded. Another major reason relates to the level of consumer awareness in the country about the existence of such legislation. As a result consumers are unaware of their rights. Perhaps this is one of the major drawbacks. After twenty five years of the Act being in operation, it is time to evaluate and assess its impact and effectiveness. The Department of Consumer Affairs, GoI has initiated this study on “Evaluation of the Impact and Effectiveness of Consumer Protection Act, 1986”. The Study has been entrusted to the Centre for Consumer Studies, Indian Institute of Public Administration, New Delhi. The Study covered 5 states 10 districts and 50 villages. To widen the scope of the study and also to get a true perspective more than 310 District Forums and 60 villages were covered. Apart from this large number of consumers from cross section of the society as well as complainants formed the bulk of the sample size. The Report presents a detailed analysis of the state of consumer protection and the effectiveness of the Consumer Protection Act. Various parameters have been used to get a clear picture of the existing ground realities and what ails the consumer movement in the country. It also presents a detailed analysis of the role of various stakeholders in promoting consumer welfare and the lacuna that exists in the policy and practice which needs to be filled up. We are confident that the analysis, findings and the recommendations of the study will go a long way in reframing consumer policies, programmes and strategies to provide better protection to the consumers and take the consumer movement forward. We will be happy to receive valuable comments about the report. New Delhi 14.1.2013 Prof. Suresh Misra Dr. Sapna Chadah Dr. Mamta Pathania Project Directors, IIPA i Centre for Consumer Studies, IIPA ACKNOWLEDGEMENTS We are thankful to the Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution, Government of India for sponsoring this study and providing all necessary support while the study was being conducted in various states. We are grateful to Shri. Pankaj Agrawala, Secretary, Department of Consumer Affairs, Shri Manoj Kumar Parida, Joint Secretary, Department of Consumer Affairs and other Officers for the support they extended to us during the study. We would also like to place on record our thanks to Shri Rajiv Agarwal, Former Secretary, Department of Consumer Affairs for his support and advice during the initial stages of the study. We are also indebted to various State Governments, Officers and Officials of the Food, Civil Supplies and Consumer Affairs Departments for their support. The Presidents and Members of various SCDRCs and the District Forums and other officials of the redressal agencies were very helpful and provided all the relevant data that was required to complete the study. The Registrar, Joint Registrar, Deputy Registrar and Assistant Registrar of the NCDRC were very helpful and provided all the required information to us. We are thankful to all of them, but for their cooperation it would have been difficult to complete the study. We have no words to express our gratitude to various institutions, organisations, consumer activist, consumer experts, legal experts and the consumers of the five states who helped us and provided support in various forms to complete the study. But for their help and support the study would have not seen the light of the day. Apart from the field data, data, information, literature and useful material has been collected from various sources, we are thankful to all of them for their help. We would also like to place on record our thanks to Director, IIPA and other officers for their support in completing the study. We will be failing in our duty if we do not acknowledge the support extended by the Research Officers of the Centre for Consumer Studies, IIPA namely Dr. Amit Kr.Singh, Shri Virendra Nath Mishra, Shri Pankaj Kumar Singh, Shri Ashutosh Kumar Dixit and Dr. Yatish Mishra in completing the field work in time inspite of various problems in the field. We are also thankful to Shri Sandeep Kumar (Research Officer) and Ms. Kalyani Mishra and Shri Kapil Nagar (Field Investigators) for their help in collecting and compiling the data. We would like to thank Shri R.C.Mangla, Consultant, CCS for providing excellent administrative and financial support during the study. We are also thankful to Ms. Deepa, Ms. Hema and Mr. Anand Singh, for providing secretarial assistance and to Mr. Anoop and Mr. Dhara Ballabh Joshi for providing logistic support. Project Directors ii Centre for Consumer Studies, IIPA CONTENTS Preface i Acknowledgements ii List of Tables iv-vi List of Figures vii Executive Summary viii-xxix Chapter I Introduction 1-39 Chapter II Impact of Consumer Protection Act 40-75 (Perception of Consumers - Cross section) Chapter III Working of Consumer Redressal Mechanism 76-133 (Perception of the Members of the Consumer Foras) Chapter IV Effectiveness of the Grievance Redressal Mechanism 134-156 (Perception of the Complainants/Appellants) Chapter V Role of Various Stakeholders in Consumer Protection 157-192 (Central & State Governments, VCOs, Educational Institutions, Business & Trade) Chapter VI Findings and Recommendations 193-209 Annexures Annexure I Data on Functioning of the Consumer Foras 210-214 Annexure II Structure for Department of Consumer Affairs in the States 215-217 Annexure III Scrutiny Sheet for A Consumer Complaint Filed Before DCDRFs in 218-221 Maharashtra Annexure IV List of Persons Contacted by the Research Team 222-226 Annexure V Bagla Committee Report 227-237 Annexure VI Shenoy Committee Report 238-241 Annexure VII Recommendations on Role of Consumer Clubs in Promoting 242-249 Awareness & Education Annexure VIII Notifications for Conducting Examination for Appointment of Members 250-265 in DCDRFs in the States of A.P and Maharashtra iii Centre for Consumer Studies, IIPA List of Tables Table Title of Table No. 1.1 Total Number of Consumer Complaints Filed / Disposed since inception under Consumer Protection Law 1.2 Fee Structure Introduced by Third Amendment 1.3 Stratification Criteria of Sample 1.4 Sample Plan 1.5 Time Frame 1.6 List of Surveyed States, Districts, Blocks/Talukas and Villages 2.1 Age Group of the Consumers 2.2 Occupation of the Consumers 2.3 Education Level of the Consumers 2.4 Annual Income of the Consumers 2.5 Place of Purchase of Daily Goods 2.6 Inquiry into Various Aspects before Making Purchase 2.7 Insistence on Cash Memo/Bill while Purchasing Durables 2.8 Awareness about MRP and Bargaining on MRP 2.9 Awareness about Standard Marks and Labels 2.10 Consumers‘ Experience regarding Forms of Exploitation 2.11 Consumers Reaction against Exploitation 2.12 Knowledge about Consumer Protection Act 2.13 Level of Awareness among Consumers about Consumer Protection Act, 1986 (Socio – Economic Classification) 2.14 Source of Information about Consumer Protection Act 2.15 Who can file a Complaint in District Consumer Forum (Out of those who knew about CP Act, 1986) 2.16 Procedure Adopted to File Complaint in the District Forum (Out of those who filed complaint in DCF) 2.17 Reason for not filing complaint in District Forum (Out of those who did not file complaint in DCF) 2.18 Implementation of Orders of District Forums 2.19 Threat of CP Act and Response of Shopkeepers/Traders 2.20 Why Consumer Protection Movement is Not Successful 2.21 Agencies to be involved in Consumer Awareness Programme 2.22 Best Medium to Spread Consumer Awareness 2.23 Source of ‗JAGO GRAHAK JAGO‘ Campaign 2.24 Know about Consumer Days 2.25 Knowledge about Dates of Consumer Days (Out of those who know the day) 3.1 Functional Status of State Commissions and District Forums 3.2 Vacant Positions in State Commissions and District Forums 3.3 Number of District Forums and Members covered under the Study 3.4 Age Group of the Members 3.5 Age Group of the Presidents 3.6 Educational Status of the Members 3.7 Previous Occupation of the Members 3.8 Nature of Previous Employment of the Members 3.9 Problem in Handling Complaints without Law Degree 3.10 Essential to know all the Legal Provisions/Procedures under CPA 3.11 Problems Faced in the Functioning by District Forums 3.12 Average Time Taken for the Disposal of Complaints 3.13 Reasons for Delay in Disposal of Consumers‘ Complaints Within the Prescribed Time Limit 3.14 Problems relating to Lab Testing Facilities 3.15 Nature of Problems Faced by the District Forums 3.16 Reason Why Consumers do not File Complaints 3.17 Issues Related to Functioning of DCDRF 3.18 Application of CPC & Evidence Act in Proceeding of District Forums iv Centre for Consumer Studies, IIPA 3.19 Role of NGOs & VCOs and Awareness about Consumer Rights 3.20 Perception of Forums about Involvement of Lawyers 3.21 Functioning of District Consumer Protection Councils 3.22 Quality and Honorarium to Members 3.23 Honorarium/Remuneration Being Paid to the Presidents & Members of State Commissions and Presidents & Members of District Forums 3.24 Suggestions for Increase of Honorarium (Views of Presidents) 3.25 Status of CONFONET Project in DCDRF 3.26 Problems in Computerization and Related Activities (Part I & Part II) 3.27 Participation in Training Programmes 3.28 Place of Training Attended by Presidents and Members 3.29 Assistance Released during 4 Years under Scheme of Strengthening of Consumer Fora (SCF) 3.30 Infrastructure Details of DCDRFs 3.31 Status of Information Communication Technology in District Forums 3.32 Cases Filed from Different Sectors ( Last Two Years) 3.33 Average Number of Complaints Filed in DCDRFs (Monthly) 3.34 Average Number of Cases Disposed in DCDRFs (Monthly) 3.35 Status of Cases in Sample DCDRFs 3.36 Year wise Case Status at Different Levels 3.37 Year Wise Case Status in DCDRFs 3.38 Area wise Percentage of Complaints Filed (Sampled DCDRFs) 3.39 Oldest Complaint Pending in District Forums 3.40 Time Taken to Dispose Cases in Last Two Years 3.41 Kind of Reliefs Granted by District Forums 3.42 Staff Strength in DCDRFs 3.43 Nature of Employment 3.44 Adequacy of Present Staff Strength in DCDRFs 3.45 Number of Staff Required in DCDRFs (Out of DCF those having inadequate staff) 3.46 Statement of Cases Filed / Disposed of / Pending in State Commissions 3.47 Infrastructure Available in SCDRCs 3.48 Number of Presidents and Members Interviewed from SCDRCs 3.49 Perception of Presidents and Members on Working of SCDRCs 3.50 Functioning of the SCDRCs 3.51 Why Consumers do not File Complaints 3.52 Involvement of Lawyers in the SCDRCs 3.53 Computerisation of SCDRCs 3.54 Extent of Support from the State Government 3.55 Level of Satisfaction with the Powers under CP Act 3.56 Status of Infrastructure in SCDRCs 3.57 Status of ICT Facilities in SCDRCs 3.58 Area wise Cases being Filed in SCDRCs 3.59 Classification of Cases of Last Two Years (2010-12) 3.60 Year wise Case Status in SCDRCs 3.61 National Consumer Disputes Redressal Commission Circuit Bench – 2005 to 2012 3.62 National Consumer Disputes Redressal Commission as on November, 2012 3.63 Year wise Status of Case in NCDRC 3.64 Statement of Original Petition Cases in National Consumer Disputes Redressal Commission 3.65 Statement of First Appeal Cases in National Consumer Disputes Redressal Commission 3.66 Statement of Revision Petition Cases in National Consumer Disputes Redressal Commission 3.67 Status of Manpower in NCDRC 3.68 Financial Implication Worked out by the NCDRC 3.69 Filing of Cases/ Day before Consumer Redressal Mechanism since Inception (1987) 3.70 Disposal of Cases/ Day by Consumer Redressal Mechanism since Inception (1987) 4.1 Background of the Complaints 4.2 Educational Status of Complainants v Centre for Consumer Studies, IIPA 4.3 Occupation of the Complainants 4.4 Annual Income of the Complaints 4.5 Source of Information about the District Forum (Only for District Forum Complainants) 4.6 Mode of Filing Complaints 4.7 Status of Complaints 4.8 Reasons for Dissatisfaction with the Redressal Mechanism 4.9 Following Prescribed Time Limit 4.10 Satisfaction with the Progress of Complaint 4.11 Appeal Filed in Higher Commission 4.12 Behaviour of the Staff of the Forums/Commissions 4.13 Response about Engaging Lawyer 4.14 Level of Satisfaction with the Service of Lawyers 4.15 Frequency of Visit to the Forum/Commission 4.16 Hearing of Complaints and Punctuality of Members 4.17 Perception about the VCOs 4.18 Setting up Free Consumer Guidance Cells 4.19 Facing Harassment in the Forums 4.20 Would you file a Complaint Again if Necessary 4.21 Perception about Decisions Based on Merit 4.22 Time Taken for First Hearing after Receipt of Notice 4.23 Average Number of Hearings Conducted to Dispose of Complaints Average Number of Adjournments Granted by the Forums/Commissions in Disposal of 4.24 Complaints 4.25 Average Time Taken in Disposal of Complaints 5.1 State-wise Consumer Clubs in Schools 5.2 Amount sanctioned to the State/U.T. for Consumer Clubs 5.3 Grants Released under the Consumer Helpline Scheme 5.4 Current Occupancy/Position of the Presidents and Members of Surveyed SCDRCs 5.5 Current Occupancy/Position of Presidents and Members of Surveyed District Forums 5.6 Constitution of SCPCs/DCPCs in the States 5.7 Current Status of State Consumer Protection Councils & District Consumer Protection Councils of the Selected States/Districts 5.8 Consumer Awareness Activities in the Selected States vi Centre for Consumer Studies, IIPA List of Figures Table No. Title of Figures 1.1 Sample Plan 2.1 Gender of the Respondents 2.2 Awareness about Standard Marks and labels (Grand Total) 2.3 Consumers‘ Experience regarding Forms of exploitation 2.4 Consumers Reaction against Exploitation (Grand Total) 2.5 Awareness about Consumer Protection Act, 1986 2.6 Knowledge about Six Rights given under Consumer Protection Act, 1986 2.7 Are Consumer Well Protected by Laws in India? 2.8 Is Consumer Protection Act Well Implemented? 2.9 Does Consumer Protection Act Favour only Consumers? 2.10 Awareness about District Consumer Forum 2.11 Ever Filed a Complaint in the District Forums 2.12 Reason for not Filing Complaint in District Forum 2.13 Prefer Settlement through Mediation 2.14 Awareness about District Consumer Protection Council 2.15 Need for Consumer Awareness Programme 2.16 Seen/Heard ‗JAGO GRAHAK JAGO‘ Campaign 2.17 Area wise Penetration of ‗JAGO GRAHAK JAGO‘ 2.18 Awareness about CPA,1986 among those who have Seen/Heard ‗JAGO GRAHAK JAGO‘ Campaign 2.19 ‗JAGO GRAHAK JAGO‘ is Informative 2.20 Awareness about the National Consumer Helpline/CORE Centre 2.21 Consumer Approached NCH/CORE for Help 3.1 Disposal of Complaints within Stipulated Time of 3/5 Months 3.2 Do you Have Funds to Educate the Consumer? 3.3 Level of Computer Literacy 3.4 Area wise Percentage of Complaints Filed 4.1 Type of Cases Filed 4.2 Adopted Other Modes of Complaint Redressal before Approaching the District Forums 4.3 Satisfaction with the Functioning of Redressal Mechanism 4.4 Satisfaction with the Procedure Adopted by Forums/Commissions 4.5 Proceedings under Sections 25 & 27 4.6 Average Time Taken to Disposal of Complaints in DCDRFs & SCDRFs 5.1 Percentage of Schools having Consumer Clubs 5.2 State wise Distribution of Consumer Clubs in India 5.3 Implementation of Consumer Club Scheme in India A.1.1 Information Regarding Functional/Non-Functional Fora A.1.2 Information Regarding Vacancy Positions in the State Commissions and District Forums A.1.3 Statement of Cases Filed / Disposed of / Pending in the National Commission and State Commissions A.1.4 Statement of Cases filed/disposed of/pending in District Fora (Update on 18.09.2012) vii Centre for Consumer Studies, IIPA EXECUTIVE SUMMARY 1 Background Confident, informed and empowered consumers are the backbone of a vibrant economy. The business of any manufacturer, service provider, trader or retailer depends on and flourishes with consumers‘ demand. In fact, business starts with consumer and ends with consumer satisfaction. Inspite of this, consumers are a vulnerable lot and are being exploited in various forms like overcharging, black-marketing, adulteration, short weights and measures, misleading advertisements, poor quality of services, dubious sale purchase agreements and other deceptive practices. In a country like India, where a substantial number of the people are living below the poverty line, having high level of unemployment and poor literacy level; most of them do not have adequate information about goods and services they are using. They are exposed to unfair, unethical market practices of some dishonest businesses. A combination of new technologies and globalization of the world economy has further aggravated the problem. The revolution in electronic media in 21st century along with globalisation and liberalisation has transformed market practices. It has led to vast expansion of business with a variety of goods and services to cater to the needs of the consumers which have left the consumers further confused and bewildered. In such a scenario consumer protection is a socio- economic programme to be pursued by the government as well as the business as the satisfaction of the consumers is in the interest of both. In this context, the government, however, has a primary responsibility to protect the consumers‘ interests and rights through appropriate policy measures, legal structures and administrative framework. Consumer protection ensures that consumers receive information that will allow them to make informed decisions and are not subject to unfair and deceptive practices, have access to recourse mechanisms to resolve disputes when transactions go awry, and are able to maintain privacy of their personal information. At its heart, the need for consumer protection arises from an imbalance of power, information and resources between consumers and their service providers, placing consumers at a disadvantage. Consumer protection aims to address these market failures and imbalances. In fact, Government of India has enacted different legislations to safeguard consumers‘ interests from time to time. However, except for the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, all the other Acts were mainly punitive and preventive in nature. Inspite of these Acts the viii Centre for Consumer Studies, IIPA consumers did not have an effective mechanism or institutional arrangement for speedy and inexpensive redressal of their grievances. Moreover, lack of an effective popular consumer movement isolated the consumer and his plight only increased. Hence recognizing the need for equipping a consumer, to be vigilant and empowered with respect to his rights, the Indian Parliament enacted the Consumer Protection Act in 1986. The Consumer Protection Act is a very unique and highly progressive piece of social welfare legislation and the provisions are intended to provide effective and efficient safeguards to the consumers against various forms of exploitations and unfair dealings. It is a handy weapon for consumers to ensure accountability of producers of goods and providers of services. It provides for setting up a three tier redressal mechanism and disposal of complaints in a time frame. However, the success of the consumer movement depends upon the level of awareness among the consumers at large about their rights and remedies available to them and also the effectiveness of the redress mechanism in providing quick and inexpensive justice to the consumers. The law can only give certain rights to the consumers, but its functioning and implementation largely depends on the awareness and efforts of the consumers and other stakeholders. The Act has been in operation for the last 25 years, but there are deficiencies and shortcoming in respect of its effective implementation and operation. The purpose of the three tier quasi-judicial structure was to give quick and inexpensive justice to the consumers; however, the machinery is riddled with many problems making it difficult for the complainant to get justice in the prescribed time. The problem is further aggravated by the low level of awareness among the consumers. Even after 25 years of the consumer movement, concerns are being raised regarding the level of awareness of the consumers‘ inspite of many steps taken at the central and state government level to generate awareness among the masses. It‘s time to evaluate the impact and effectiveness of the Consumer Protection Act and take remedial measure aimed at strengthening the consumer movement. Therefore, on the request of the Department of Consumer Affairs, GoI, the Centre for Consumer Studies, Indian Institute of Public Administration, New Delhi conducted an Evaluation study on “Impact and Effectiveness of Consumer Protection Act, 1986” to suggest policy guidelines to make the Act effective and beneficial to the consumers. The present study has been conducted in five states of India which are located in five different ix Centre for Consumer Studies, IIPA