Module 2

Need and evolution of CP laws; who is a consumer and case laws; commissions under the
act state, district, national (councils not required) only CP courts; specific causes of action
under CPA defective goods and case laws; deficiency in services and case laws (biggest
thing aan polum) multiple sectors airline, medical services, educational lawyer services;
unfair trade practice; product liability; intermediary liability; pricing of goods and services,
sale of hazardous goods (short answer qs); central CP authority, its powers authority,
mediation (short answer); offenses and penalties (4 or 5 provisions)

Introduction

The growth in independence of world economy and international character of business

practices has contributed to universal pressure on consumer rights, protection, and promotion
and consumer awareness. It is one among the important legislation in history of socio-economic
legislations. This comprehensive piece is enacted for protection of consumers and to safeguard
their interests.

The intention of the act is to provide for simple, speedy and inexpensive redressal for
consumers grievances and relief in specific nature and awarding compensation for appropriate
consumer. The act was mended to extend and cover its scope therefore judiciary too plays an
important character in enhancing the powers of redressal machinery for protection of rights of
consumers.

In this era, consumer protection is one of the greatest concerns of the world. The globalisation
is defined as converting national market into international one. The consumers should be
provided with best quality products and services. The consumer protection act is developed as
recognition of rights of the consumer protected against abuse and exploitation by service
providers. The idea of consumer protection exists in every judicial and social mechanism
whether modern or primitive. In India there is rapid increase of consumer services, goods and
distribution.

Industrial revolution has brought a big change in the human life. Regarding the products used
by them daily in the society of Laissez Faire, State used to intervene in lives of citizens rarely.
There were no good laws to exercise the rights of seller and buyer. There was the principle of
“Caveat Emptor” that is let the buyer beware was the rule in those days. The consumers were
exploited and abused by traders for making of profit at every point. In 1985 a resolution was
passed by UN General Assembly focussing on need for educating the consumers. It laid various
guidelines for betterment of consumers. Such guidelines were stimulating legislation
framework for all the countries.

In India, it is the Consumer Protection Act of 1986. The result of the enactment could be traced
by identification of consumer rights, giving cost effective and speedy redressal. The basic aim
of the act is to protect interests of consumers. To help address the new set of challenges faced
by consumers in the digital age, the Indian Parliament passed the landmark Consumer
Protection Act, 2019 which aims to provide timely and effective administration and settlement
of consumer disputes.

In India we have consumer protection in various administrative activity of local authorities.

Along with growth and strengthening of the movement, special laws in this area began in
1980s.it was followed by enactment of an act known as Consumer Protection Act, 1986.it
comprises a wide area of legislation with specified boundaries and parameters. The enactment
includes no. of legislations dealing with consumer protection.

Constitutional law: In it no explicit law is given but many provisions are given which directs
the provisions towards consumers’ interests. Generally, they are DPSP. Under sub clause (g) of
article 19 freedom of profession, trade etc is ensured by state and a citizen cannot be prevented.
But anyhow under article 19(2) no such right could be enforced in case where business is illegal
or dangerous. Regarding licence and permits to carry a business, granting licence cannot
depend on absolute discretion of administration and policies have to be laid to discretion and
have to be exercised judicially.

In Dr. Shivarao Shantaram Wagle and Others v. Union of India and Others, the Supreme Court
followed the same principle when it was invited to issue direction to the government to forbear
from releasing Irish butter for human consumption, which had been imported into India under
the EEC Grant-in-Aid for Operation Food Programme, on the ground of contamination by
Chernobyl nuclear fallout. In the matter the Supreme Court appointed a Committee of Experts
to give its opinion on the question whether milk and dairy products and other food products
containing man-made radio nucleus within permissible levels fixed by Atomic Energy
Regulatory Board on 27th August, 1987, are safe and/or, harmless for human consumption".
When the Committee found the butter in question to be safe and harmless for human
consumption, the Supreme Court declined to issue the restrictive orders regarding its release
for human consumption.

The Supreme Court followed in case of Vincent v. Union of India directions were imposed for
banning of import export of, manufacture, sale and distributing some drugs which had been
recommend to ban by the Drugs Consultative Committee. Supreme Court held that having
regard to the magnitude, complexity and technical nature of the injury involved in the matter
and keeping in view implications of the total ban on certain medicines it is clearly indicated
that a mere judicial proceeding is not sufficient on determination of such a matter.

The distribution of concepts related to product and service between state and centre are placed
under Concurrent List.

The expression ‘consumer’ in the common sense, means ‘all of us may be called
consumers, when we purchase some movable or immovable property or hire services for
various purposes.’ But in the present socio economic scenario, we find that the consumer is a
victim of many unfair and unethical tactics adopted in the market place. The untrained
consumer is no match for the businessman marketing goods and services on an organized basis
and by trained professionals. He is very often cheated in the quality, quantity and price of goods
and services. The consumer who was once the 'King of the market' has become the victim of
it. He is not supplied adequate information so as to the characteristics and performance of many
consumer goods and suffer due to unfairness of many one sided standard forms of contracts.
The modern economic, industrial and social development have made the notion of 'freedom of
contract' largely a matter of fiction and an empty slogan so far as many consumers are
concerned.

The caveat emptor- 'let the buyer beware' doctrine of the law concerning the sale of goods,
assumed that the consumer was responsible for protecting himself and would do so by applying
his intelligence and experience in negotiating the terms of any purchase. That principle may
have been appropriate for transactions conducted in village markets. In early times, the
consumer may have been able to protect himself since the products were less sophisticated and
could be inspected before purchase. But now the conditions have changed. Many modern goods
are technological mysteries. The consumer knows little or nothing about these highly
sophisticated goods. In real life, products are complex and of great variety and consumers and
retailers have imperfect knowledge. The principle of caveat emptor, thus, has ceased to be
appropriate as a general rule. The consumers need protection by law when goods fail to live up
to their promises or indeed cause injury.

With globalisation and development in the international trade and commerce, there has been
substantial increase of business and trade, which resulted in a variety of consumer goods and
services to cater to the needs of the consumers. In recent years, there has been a greater public
concern over consumer protection issues all over the world. Taking into account the interest
and needs of consumers in all countries, particularly those in developing countries, the
consumer protection measures should essentially be concerned with- (i) the protection from
hazards to health and safety; (ii) the promotion and protection of economic interests; (iii) access
to adequate information; (iv) control on misleading advertisements and deceptive
representation; (v) consumer education; (vi) effective consumer redress. The consumer
deserves to get what he pays for in real quantity and true quality.

History of the Act

The origin of consumerism could be traced from Ecclesiastes 5: 11 of the Old Testament in
which it was said, "when Possessions increase, so does the number of consumers, therefore
what good are they to their owners, except to look at them?". Then, the first consumer's
organisations were born in Denmark in 1947 and in Great Britain in 1955, where the
government created the "Consumer Council" in order to enable consumers to express
themselves on issues reserved to producers and traders. But actual "consumerism" started in
the US, where people like Ralph Nader led the movement for consumer rights. Fifty-eight years
ago, on 15 March 1962 (the day on which we celebrate World Consumer's Day), the then US
President John F. Kennedy presented a speech to the US Congress in which he said that, "If a
consumer is offered inferior products, if prices are exorbitant, if drugs are unsafe or worthless,
if the consumer is unable to choose on an informed basis, then his dollar is wasted, his health
and safety may be threatened and national interest suffers." Then he gave four basic consumer
rights, viz., right to safety, right to be informed, right to choose, and right to be heard. Later,
on 16 April 1985, UN General Assembly passed a resolution which is called "United Nations
Guidelines for Consumer Protection". This resolution added four more rights to John F.
Kennedy's four basic consumer rights, viz., right to satisfaction of basic needs, right to redress,
right to consumer education, and right to a healthy environment. On the lines of the above
eight-fold path for consumerism, Indian Parliament enacted Consumer Protection Act on 24
December 1986. (This day is celebrated as National Consumers Day in India.) This legislation
bestowed six rights to the consumers, vis-a-vis the right to protection against hazardous goods
and services, right to be informed, right to access to variety of goods, right to be heard, right to
get redressal and right to consumer education. To assure these rights, the law provided for
establishment of Consumer Councils and Consumer Forums at Districts, State and National
level. The 1986 Act became obsolete with the changing time. In 2015, the Consumer Protection
Bill was introduced in Lok Sabha. This Bill was examined by the Standing Committee on
Consumer Affairs, which gave its report in 2016. Based on the committee recommendations
the , Consumer Protection Bill, 2018 was introduced in January 2018 to replace the 2015
Consumer Protection Bill. While the 2018 Consumer Protection Bill was pending for
consideration in Parliament, the 16th Lok Sabha was dissolved and the Bill lapsed. Hence, in
the 17th Lok Sabha, the Consumer Protection Bill, 2019 was introduced, which was passed by
the Lok Sabha on 30 July 2019, and by the Rajya Sabha on 6 August 2019. On 9 August, 2019,
the President of India gave his assent to the Consumer Protection Bill, 2019, thereby, making
it the Consumer Protection Act, 2019. The provisiops of the Consumer Protection Act, 2019
came into force on 20 July 2020 and 24 July 2020 respectively, along with the rules and
regulations made thereunder.

Need for the consumer protection Act

Industrial revolution and development of international trade and commerce lead to a substantial
increase of business and trade. This resulted in a variety of consumer goods appearing in the
market to cater to the needs of the consumers. The modern methods of advertising influence
the mind of the consumers and a consumer is tempted to purchase the goods despite the
manufacturing defect or imperfection in the quality. There was also a possibility of deficiency
in the services rendered to the consumer. For the welfare of such consumers, to protect their
interest and to prevent their exploitation, Parliament enacted the Consumer Protection Act,
1986. The Act made provision for the establishment of Commissions for settlement of the
consumer disputes and matters connected therewith. The Commissions, under the Act, are
quasi-judicial bodies and they are supposed to provide speedy and simple redressal to consumer
disputes and for that purpose, they have been empowered to give relief of a specified nature
and in an appropriate way, to award compensation.

Transition from caveat emptor to caveat venditor

Technological revolution and globalisation have led to a significant increase in the number of
commercial transactions. The purchasing power of the consumers has increased manifold
resulting in a large number of retail purchases. Laws have been enacted to make it mandatory
for manufacturers to display the description of the product on the packaging cover. While the
consumers have the right to inspect the description of the product before making the purchase,
there are instances where the product conforms to its description but turns out to be of inferior
quality and incapable of fulfilling the purpose for which it was purchased.

The issue that arises in such cases is whether the consumer has the right to return the inferior
quality product or whether he is to bear the loss himself. The doctrine of caveat emptor states
that the consumer takes a risk of quality and effectiveness when he purchases a product and if
the product does not meet his expectations, then the consumer will himself be responsible for
the inferior quality product. The consumer is expected to make a reasonable examination of the
product’s quality and condition before making the purchase.

However, with time, the doctrine of caveat emptor was substituted by the doctrine of caveat
venditor. Thus, there was a paradigm shift from ‘let the buyer beware’ to ‘let the seller beware’.
This substitution was necessitated due to the changed circumstances of the modern world. The
principle of caveat emptor is no longer applied by the judges who are now more inclined
towards safeguarding the interests of the consumers.

The doctrine of caveat emptor evolved several decades ago and became a part of the common
law. However, with the growth of trade and commerce, several exceptions to this principle were
recognized by the policymakers. Gradually, the exceptions became more prominent and
significant than the rule itself.

The principle of caveat emptor reflects the view of 19th-century society towards consumers.
At that time, the interests of the businesses were prioritised over the interests of the consumers.
Thus, the law recognized the principle of caveat emptor and imposed a responsibility on the
buyer to examine the products before making the purchase. The purchaser is thus expected to
protect his interests and ensure that the quality and condition of the product fulfil his needs.

The first known case of caveat emptor is Chandelor v. Lupus (1603). In this case, the seller
bought a stone thinking it was a bezoar stone. The seller bought the stone thinking that it had
magical healing powers. However, the stone turned out to be fake. The seller filed a suit
claiming refund of the amount. However, the Court held that the seller had not undertaken any
implied warrant of the quality of the stone and the buyer was under a duty to examine the
product before purchase. Thus, the seller was under no liability to refund the amount.
The doctrine of caveat emptor is based on the principle that the buyer should examine the
product using his skill and judgment. If the buyer is satisfied with the condition and quality of
the product and believes that the product would aptly fulfil his requirements, then he should
purchase the product. However, once the buyer makes the purchase after examining the
product, he will have no subsequent right to return or reject the product or claim any damages
from the seller. The buyer would be responsible for his negligence.

The doctrine of caveat emptor has also been incorporated under Indian law through the Sale of
Goods Act, 1930 Section 16 of the Act states that when a product is sold under a contract of
sale, the law would not presume that the seller sold it under an implied warranty of fitness and
quality. It is the consumer who has to examine the quality of the product and satisfy himself
that the product is fit to meet his expectations and serve the purpose for which it is purchased.

So long as the seller does not commit any fraud and does not provide any express warranty for
the product’s condition or fitness, the buyer will have no remedy against the seller for any
defect in the product.

The doctrine of caveat emptor is based on the principle that consumers should fully examine
the products before making the purchase. They should be satisfied that the product will meet
their expectations. They will have no recourse against the seller if the products fail to stand up
to their desires. The doctrine of caveat emptor is essential to balance the information
asymmetry that exists between the buyer and the seller.

The analogy behind the formulation of this doctrine is that consumers should be aware of their
rights and should carry out reasonable examinations before purchasing any product. This
principle thus puts the onus on the consumers to protect their rights. Consumers are expected
to analyse and examine a product using their independent judgement and skill.

McKenzie v. Nagendra Nath (1919)

In McKenzie and Co. v. Nagendra Nath (1919), the defendants were car dealers who came to
know that the plaintiff was thinking of purchasing a car. The defendants approached the
plaintiff and represented to him that the Plymouth cars were of excellent quality and convinced
him to buy one of the Plymouth cars. However, subsequently, a defect was discovered in the
car. The plaintiff was asked to pay for the repair of the car.
The plaintiff filed a suit claiming damages for the defective car. The defendants pleaded that
the defect in the car could not be attributed to any fault in the manufacturing process. The defect
was due to the mishandling of the car by the defendant.

Applying Section 16(2), the Calcutta High Court observed that the present case involved a
seller who dealt with cars of a particular description and thus, there was an implied warranty
that the product must be of a merchantable quality. On the issue that the defect in the engine
was discovered after using the car for some time, the Court observed that where Section 16(2)
applies, any latent defect discovered subsequently would be deemed to have existed ab initio.
The only pre-requisite is that the defect should be of such a nature that, if discovered at the
time of the purchase of the product, would have made the product non-merchantable.

The Court observed that Plymouth cars do not usually develop the defects that were discovered
in the plaintiff’s car. Thus, the defect in the plaintiff’s car was due to faulty manufacturing.
Thus, the plaintiff was held entitled to claim damages due to the breach of the implied
warranty.

While originally the courts applied the doctrine of caveat emptor in a strict sense, it was
later accepted that the absolute application of this principle would be detrimental to trade and
commerce. A very high burden was being imposed on the buyer by requiring him to properly
examine the product before making the purchase in all cases.

In many cases, the buyers did not have the requisite skill or information to make a proper
examination. But the buyer nonetheless did not have any remedy against the seller in case any
latent defect in the product was discovered after making the purchase.

Moreover, the buyers often rely on the skill and judgement of the seller while making the
purchase. However, the doctrine of caveat emptor did not provide any remedy to the buyers
even where they made the purchase in good faith.

Due to these reasons, it was felt that the principle of caveat emptor should be diluted to a certain
extent so that the relationship between the buyer and seller could be made harmonious. A
relationship of trust also incentivizes and encourages commercial transactions.

The doctrine of caveat emptor leads to defective goods as it imposes an impediment in the
course of recovering damages for injury or loss caused by defective goods.
With the passage of time, the exception to the doctrine of caveat emptor became more relevant
and more valuable than the doctrine itself. This led to the evolution of the principle of caveat
venditor which finds its genesis in the exception to caveat emptor. The principle of caveat
venditor ensures that the seller can be held liable for any malpractice committed by him.

The principle of caveat venditor requires the seller to be cautious and imposes a liability on the
seller for all the hardships borne by the buyer due to the defective or faulty product.

The doctrine of caveat emptor has lost its relevance in the modern technological age. In today’s
age, there is stiff and neck-to-neck competition between large corporations to satisfy
consumers. One of the mechanisms employed by these corporations to please the consumers is
to sell the products with express conditions and warranties. Thus, the contract of sale itself
states that the consumers would be entitled to a replacement or refund if the product turns out
to be defective.

The doctrine of caveat emptor has also lost its relevance due to the enactment of the Consumer
Protection Act, 2019. The Consumer Protection Act clearly embraces the doctrine of caveat
venditor. Section 84 of the Consumer Protection imposes a liability on the manufacturer for
any defect in the manufacturing of the product or for any deviation from the prescribed
manufacturing standards. Moreover, if the product fails to meet the standards laid down by the
express warranty or the product does not contain proper instructions relating to its usage, then
the manufacturer would be held liable for any loss or injury suffered by the buyer.

In Smt.Rekha Sahu vs The Uco Bank (2013), the petitioner had purchased a plot through an
auction. However, later he found that there were certain encumbrances (electricity dues)
attached to the plot and filed a suit before the Court seeking a direction to the respondent
auctioneers to free the property from the encumbrances. The petitioner pleaded that as per the
sale certificate, the property was supposed to be free from all encumbrances. The auctioneers
relied on the doctrine of caveat emptor and pleaded that the petitioner should have made a
proper enquiry before purchasing the plot. However, the Allahabad High Court held that the
Indian jurisdprudence has witnessed a shift from the doctrine of caveat emptor to the doctrine
of caveat venditor. Thus, the auctioneers were liable to pay the electricity dues.
Who is a consumer?

Nearly a verbatim copy of the word "consumer" from Section 2(1)(d) of the old CP Act, 1986
has been made in this sub-section, with a further addition of an "explanation", which brings
purchases through electronic means or direct selling or multi-level marketing also under the
ambit of this sub-section.

Simply stated, a consumer is the one who either purchases a good or hires a service for
consideration, or, the one who uses the goods or avails the service with the permission of the
one who had either purchased the good or hired the service.

Here, an "explanation" is given, which specifies that if the goods are bought and used for the
purposes of self-employment, then it does not amounts to using that goods for a "commercial
purpose", because any person who uses the goods for a "commercial purpose" is not qualified
to be called as a "consumer" under this sub-section.

A further "explanation" to this sub-section envisages that purchase of goods or hiring of

services through any of the electronic modes or through direct-selling or through multi-level
marketing comes under expression "buys any goods" or "hires or avails any services".
Although, this "explanation" was not necessary, given the fact that a wider ambit to the word
"consumer" has been given by the judiciary, but still a clear meaning by the legislature by
explaining that even goods purchased or services hired electronically come within this sub-
section would reduce the interpretation-burden on the judiciary, because in this technological
era, a major chunk of consumer cases would come from electronic transactions.

The understanding of the word "consumer" is of paramount importance because it is a key

through which substantial remedies under this CP Act can be opened.

Illustrations:

(a) A, who booked certain goods from "Yaamazon", an online shopping portal, for a
consideration of ~ 500, finds that the goods that were booked got damaged during the course
of delivery by "Yaamazon". Here, as A has availed the service of "Yaamazon" by paying consid
eration, he comes under the definition of word "consumer" to file a complaint against
"Yaamazon".

(b) A booked a "watch" from "Yaamazon", with an intention of gifting it to his friend B. A paid
the amount for the watch and the address of B was given for "delivery of goods". Instead of
"watch", "Yaamazon" delivered a "bracelet" to B. Here, as the act of "Yaamazom" amounts to
"deficiency in service", either A or B can file a consumer complaint against "Yaamazon"
because, here A by paying the amount availed the service of "Yaamazon", and B, by agreeing
to use the "watch" with the consent of A, became a beneficiary of such service.

(c) M purchased a "T-shirt" from Z, a cloth shop, by paying the required consideration and took
a purchase bill for the same. C, M's friend, comes to M's house and uses the "T-shirt" by wearing
it for a party without the consent of M. C later finds that "T-shirt" purchased by M is torn from
the beginning and wants to file a consumer complaint against Z. Here, C is not a consumer, as
he has not used the "T-shirt" of M with M's permission.

In the case of Laxmi Engineering Works v. P.S.G. Industrial Institute, the Supreme Court
of India delved deeply into the interpretation of the terms "consumer," "self-employment," and
"commercial purpose" under the Consumer Protection Act, 1986. This case clarified the
distinction between goods or services used for personal livelihood versus those used for broader
commercial gains, determining whether a buyer can seek protection under consumer law.

In Laxmi Engineering Works v. P.S.G. Industrial Institute, the appellant, a manufacturer

producing machine parts on a large scale for profit, purchased a machine and later claimed the
machine was defective. When he filed a complaint as a "consumer," the Supreme Court ruled
he did not qualify as a consumer under the Act:

- Large-Scale Commercial Activity: The appellant was using the machine as part of a
large-scale, profit-oriented manufacturing business. This scale and purpose meant that
the purchase was for a commercial purpose, not for earning a personal livelihood.
- Exclusion from Consumer Protection: Since the appellant was using the machine as
part of a business to generate profit on a large scale, his claim did not meet the criteria
for self-employment or individual livelihood. The purchase was strictly commercial
and thus did not entitle him to protections under consumer law.

Whether a person would fall within the definition of ‘consumer’ or not would be a question of
fact in every case.

In the case of Paramount Digital Colour Lab v. AGFA India (P) Ltd., the Supreme Court
addressed whether two unemployed youths who bought a photo processing machine to start a
small photography business qualified as "consumers" under the Consumer Protection Act,
1986. The key issue was whether their business constituted a "commercial purpose" or fell
under "self-employment" intended to earn a livelihood.

The Court held that these two individuals could indeed be considered "consumers." Here’s
why:

1. Self-Employment: The youths used the machine for their own livelihood, rather than
as part of a large-scale, profit-driven business. Since they were directly involved in the
business, it was seen as self-employment.

2. Assistance for Operation: Although they had an operator and helper, the Court
observed that hiring minimal help for operating equipment does not disqualify someone
from being a consumer if the purpose remains self-sustenance.

3. Small Scale: The Court found that their activity was not a large-scale operation with
profit as the primary aim but rather a means to earn a modest income.

In Cheema Engineering Services v. Rajan Singh, the Supreme Court addressed whether
the purchase of a clay preparation and brick-making machine by the respondent was for "self-
employment" or a "commercial purpose". The distinction is crucial because only purchases
for self-employment can qualify a buyer as a "consumer" under the Consumer Protection Act,
thereby granting access to consumer rights and protections.

- Commercial Purpose Presumption: The Supreme Court ruled that, because "self-
employment" is not defined in the Act, it must be determined based on concrete
evidence. Simply stating that an activity is for earning a livelihood does not
automatically classify it as self-employment if the scale and purpose suggest
commercial intentions.
- Burden of Proof on Complainant: The complainant (the buyer of the machine) has
the responsibility to provide clear evidence to prove that the machine was bought for
self-employment rather than for commercial operations. Without this proof, a
presumption arises that the purchase was for commercial purposes, excluding the buyer
from consumer protections.

In Sanjay Bansal v. Vipul Ltd., the Supreme Court clarified this principle further:

- Avoiding Automatic Assumptions: The court cautioned against making assumptions

about the purpose of a purchase without evidence. Here, Sanjay Bansal had booked four
 flats, which led to a presumption that they were for resale or commercial gain. However,
the Court held that a mere presumption without evidence (an "ipse dixit") is insufficient
to deny consumer status.
- Importance of Evidence in Determining Purpose: The Court sent the case back to
the National Consumer Disputes Redressal Commission (NCDRC) for an evidence-
based decision. The court emphasized that the Consumer Commission must consider
the facts and evidence presented by both parties to establish whether the intent behind
a purchase is self-employment or commercial gain.

Purchase of Goods for Self-Use by a Commercial Entity

 Case: Lourdes Society Snehanjali Girls Hostel v. H&R Johnson (India) Ltd.

 Principle: A registered hostel society that purchases goods for use within its facility
(e.g., floor tiles) is a "consumer," even if it collects fees from students. Here, the
Supreme Court ruled that the hostel’s purchase of tiles was for the benefit of its
residents, not for resale or profit, thus it was not a "commercial purpose."

NRI Booking a Shop for Livelihood

 Principle: An NRI who books a shop in India with the intention of earning a livelihood
through self-employment falls under the definition of "consumer." Here, the self-use
with the intent to sustain oneself economically qualifies as consumer use under the Act,
distinguishing it from commercial investments.

Beneficiary of an Insurance Policy as a Consumer

 Case: Canara Bank v. United India Insurance Co. Ltd.

 Principle: The Supreme Court held that the beneficiary of an insurance policy is a
"consumer" under the CP Act, even if they are not the direct purchaser of the policy. In
this case, farmers benefiting from an insurance policy issued by a bank were deemed
"consumers" since they stood to gain directly from the policy’s protections.

Prospective Investor is Not a Consumer

 Case: Morgan Stanley Mutual Fund v. Kartick Das

 Principle: The Supreme Court ruled that a prospective investor—someone who is

merely considering purchasing shares or units in a mutual fund—is not a "consumer."
 Shares do not exist as goods until they are allotted, and hence, a potential investor does
not have the status of a "consumer" under the CP Act.

Mere Willingness to Purchase Does Not Make One a Consumer

 Case: Rajeshwar v. Audi India

 Principle: The National Consumer Disputes Redressal Commission (NCDRC) held

that a person’s mere intention or willingness to purchase a product does not make them
a "consumer." A formal transaction involving the purchase or hiring of services must
take place for a person to gain consumer rights under the Act.

Purchaser of a Lottery Ticket is Not a Consumer

 Case: Satya Wati Goel v. State of Sikkim

 Principle: The Supreme Court held that purchasing a lottery ticket does not make one
a "consumer," as the transaction does not entail a guaranteed good or service. Lottery
participation is speculative, depending on chance rather than an enforceable service
obligation.

Landowner in Agreement with Builder is a Consumer

 Case: Faqir Chand Gulati v. Uppal Agencies (P) Ltd.

 Principle: A landowner who enters into an agreement with a builder to construct and
share built-up property qualifies as a "consumer." The Supreme Court held that the
landowner is entitled to consumer protections because they receive services
(construction) in exchange for the land, establishing a consumer-service provider
relationship.

No Consumer Status Without Privity of Contract

 Case: V. Kamala Rao v. A.P. State Consumer Disputes Redressal Commission

 Principle: Distinguishing from Faqir Chand Gulati, the Andhra Pradesh High Court
ruled that complainants in a sale agreement with a developer are not "consumers" of
the landowners when there is no direct contract (privity) between them. Consumer
status requires a direct contractual relationship with the service provider.

Self-Employment Purchaser as Consumer

In Madan Kumar Singh v. Distt. Magistrate, Sultanpur, a truck bought for "self-employment"
was held as an act of consumerism. The Supreme Court clarified that using the truck to earn a
livelihood (even if employing a driver) made the buyer a consumer since it directly impacted
his means of earning.

Pension Fund Contributor as Consumer:

In Regl. Provident Fund Commr. v. Bhavani, members of the Employees Provident Fund and
Family Pension Scheme were recognized as consumers. The Court held that members are
consumers since they contribute to and benefit from the scheme, which entails a service by the
Provident Fund Commissioner under the CP Act.

Non-Consumer Status of Government Employees for Pension Issues:

In Jagmittar Sain Bhagat v. Health Services, Haryana, the Court excluded government
employees from consumer status regarding delayed retirement benefits, reasoning that such
issues fall outside the CP Act's consumer jurisdiction.

Parents Filing for Minor Children: In Spring Meadows Hospital v. Harjol Ahluwalia, the
Court expanded "consumer" to include parents who hire services for their minor child’s benefit.
Both the child and the parent were considered consumers and could claim separate
compensation due to the service’s benefit to the child.

Beneficiary as Consumer:

In Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, a trust purchasing flats
for employee welfare was deemed a consumer. The Court clarified that purchases intended for
others' benefit without profit motive also fall under the definition of consumer.

Benefit-Based Consumer Status:

In cases like Chandigarh Housing Board v. Avtar Singh, even individuals indirectly involved
in housing schemes but availing services under permission were considered consumers due to
their status as scheme beneficiaries.

Non-Commercial Purchases for Employees:

In Punjab University v. Unit Trust of India, the Supreme Court ruled that investments made by
a university in a mutual fund for employees’ benefit (and not for profit) were not commercial
purposes, and the university qualified as a consumer.

Employee Use and Non-Commercial Purchases:

When a company buys goods for employees (e.g., a car for Directors), as in the hypothetical
scenario cited, it’s considered a consumer if the goods are purchased for employees' use and
not resale.

Farmers in Buyback Transactions as Consumers:

In Nandan Biomatrix v. S. Ambika Devi, a farmer entering a buyback contract with a seed
company was deemed a consumer, as the transaction was not for commercial gain but was
intended to facilitate agricultural production.

Lack of Privity of Contract Nullifying Consumer Status:

In ONGC v. Consumer Education Research Society, the Supreme Court denied consumer status
where there was no direct contract (privity of contract) between ONGC and claimants. This
case emphasized that, for consumer status under the CP Act, there must be a direct relationship
between the service provider and the beneficiary.

Commissions

I. District Forum or Commission

This section deals with the establishment of the District Consumer Disputes Redressal
Commission.

Sub-section (1) of Section 28 stipulates that the State Government shall, by notification,
establish a District Consumer Disputes Redressal Commission, to be known as District
Commission, in each district of the State. The State Government can establish more than one
District Commission in a district.

Sub-section (2) of Section 28 stipulates that each District Commission shall consist of-(a) a
President; and, (b) not less than two and not more than such number of members as may be
prescribed, in consultation with the Central Government. The State Governments are given the
rule-making power under Section 102(2)(g) for prescribing the number of members of the
District Commission for the purposes of this sub-section.

At least two persons—namely, the President and one member—must be present to conduct
day-to-day proceedings. If a member who initially sat for the case is unable to continue, the
President may proceed with another member. If the President and member disagree on a
decision, Section 39(3) allows them to refer the matter to another member to resolve the dispute
based on majority opinion. This setup ensures a balanced decision-making process, unlike the
previous Act (1986), where two members were only required for specific cases.

After a complaint is filed, the District Commission may either admit it or reject it. However,
the complainant must be heard before a rejection, ensuring adherence to principles of natural
justice. The Commission is expected to decide on the complaint’s admissibility within 21 days
of filing, promoting prompt processing. The Supreme Court in Anjaneya Jewellery v. New India
Assurance Co. Ltd. has confirmed that Commissions can dismiss complaints without notifying
the opposite party if they find them unfit to proceed.

If the District Commission does not make a decision on a complaint within 21 days, the
complaint is automatically deemed admitted. This is intended to prevent delays and ensure
cases proceed efficiently even if the Commission doesn’t act within the prescribed time.

Only disputes filed under the Consumer Protection Act, 2019 can be referred to mediation, as
the Act applies prospectively. This means consumer complaints pending under the previous
Consumer Protection Act, 1986, are generally not eligible for referral to mediation under the
2019 Act. If the District Commission believes a consumer dispute has the potential for
settlement, it can ask both parties to provide written consent within five days to proceed with
mediation. The Commission has the discretion to determine if a case is suitable for mediation,
meaning it can decide based on the specifics of each case.

The appeal against these orders can be made to the State Commission, which is a higher
authority than the District Commission but subordinate to the National Commission. The
appeal can be based on facts or law. However, the settled legal position is that new facts cannot
be introduced in an appeal—only the facts and legal arguments presented in the District
Commission should be addressed.
The appeal must be filed within 45 days from the date of the order passed by the District
Commission. If the appeal is filed after the 45-day period, the State Commission can still
accept it if the appellant provides a valid reason (sufficient cause) for the delay.

If the District Commission has ordered a party to pay any amount, the party must deposit 50%
of that amount before filing an appeal to the State Commission. The manner of deposit is
prescribed by the State Government under Section 102(2)(k) of the CP Act, 2019.

No appeal after mediation settlement. The Central govt has framed rules which lay down
specific procedure for filing appeals.

II. State of commission

The State Government is granted rule-making power under Section 102(2)(f) of the
Consumer Protection Act, 2019. This allows the State Government to issue rules regarding the
number of members in the State Commission, which can be adjusted according to the state's
needs and the number of cases that need to be handled.

The State Commission serves as a forum for hearing appeals against orders passed by the
District Commission. It plays a crucial role in the hierarchical structure of consumer dispute
redressal, ensuring that consumers have access to justice at both the local and state levels, and
ultimately, appeals can be escalated to the National Commission for resolution if necessary.

The Central Government has the authority to make rules regarding the qualifications,
recruitment process, term of office, and the procedure for the appointment, resignation, and
removal of the President and members of the State Commission.

At least one member or the President of the State Commission must be a woman.

The State Commission's jurisdiction, powers, and authority are exercised by Benches
constituted by the President of the Commission. A Bench may consist of the President and one
or more members, with the senior-most member presiding.

Appeal: An appeal lies from an order made by the State Commission in its original jurisdiction.
Appeals can be based on facts or law, and must be filed within 30 days from the date of the
order. The National Commission can condone delays if there is a sufficient cause.

If the appellant or their agent fails to appear, the appeal can be dismissed or decided ex parte.
Similarly, if the respondent fails to appear, the appeal will proceed ex parte. The appellant is
not allowed to raise new grounds unless permitted by the National Commission.
If the appellant has been directed by the District Commission to pay an amount, 50% of that
amount must be deposited before filing the appeal to the National Commission.

The section emphasizes that an appeal should be heard and disposed of as expeditiously as
possible, with a clear goal of disposing of it within 90 days from the date of admission. This
is in line with the CP Act, 2019's overarching goal to provide speedy justice to consumers.

Defect of goods

Under the CPA, Consumer Forums at the District, State and National level have been
specifically constituted to adjudicate claims of consumers for any “defect” in goods. A “defect”
has been defined in the Act as “any fault, imperfection or shortcoming in the quality, quantity,
potency, purity or standard which is required to maintained by or under any law for the time
being in force or under any contract, express or implied, or as is claimed by the trader (which
includes the manufacturer) in any manner whatsoever in relation to any goods.”

Illustrations:

(a) A mobile phone purchased by G from I, a mobile phone company suffers from technical
glitches. The mobile can be said to be "defective".

(b) A new book purchased by M, a consumer who purchased it from B, a book store company,
is torn from inside. The book is said to be "defective".

1. Tata Motors Ltd. v. Antonio Paulo Vaz (18 February 2021).

In this case, Vaz was sold a 2-year-old defective car by a dealer instead of a new car. Vaz
requested the dealer to either refund the money or replace the car but he didn’t do so. Vaz filed
a complaint against the manufacturer and dealer in the district Commission and the commission
held both of them equally liable. Manufacturers filed a revision of the case in the National
Commission and the court held that the Manufacturer is not liable for dealers’ fault unless the
Manufacturer’s fault is proved in cases.

2. Gurdial Chadha v. M/S Sugoi Motors Ltd. (31st January 2020).

In this case, Gurdial Chadha bought a car in the year 2017 which was not delivered as per
specifications given. But the petitioner filed the complaint in 2020 after the expiry of the
statutory period of two years under section 24A of the Consumer Protection Act. Therefore,
even if the car was defective or not as per specifications, the court couldn’t investigate the
same.
 When a new product, such as a vehicle, is sold, there is an implied contract that it is
free from defects and will maintain quality, quantity, potency, and standard. The NCDRC
(National Consumer Disputes Redressal Commission) observed this standard in the context of
vehicles, but the principle applies to all types of goods.

3. C.N. Anantharam v. Fiat India Ltd.

In this case, the complainant, Mr. C.N. Anantharam, purchased a Fiat Palio car from a
dealership. Soon after, he encountered several defects in the vehicle, including engine issues.
Despite repeated attempts to get the issues resolved, the dealership and Fiat India Ltd. failed to
provide adequate solutions. The complainant sought replacement or full refund of the amount
along with the interest for the “defect” in the engine of the vehicle.

The Supreme Court held that replacing a defective engine in a vehicle with a new engine was
sufficient rather than a full vehicle replacement. In a similar case, the NCDRC held that when
a vehicle had been used extensively (up to 90,000 km), a new vehicle replacement was not
warranted. Instead, defective parts could be repaired, with compensation awarded for the
inconvenience.

If a vehicle is consistently defective despite repairs and expert testing, the Consumer
Commission may order a full replacement or a refund, along with compensation. This decision
recognizes the consumer’s right to a defect-free product, particularly when repairs fail to
resolve the issue.

Claims of defects must be backed by evidence; without it, a product cannot be deemed
defective. For vehicles, proving the defect typically requires concrete evidence like inspection
reports.

Until and unless the alleged defective consumable product (in this case, it was Bisleri company
water) is tested in a laboratory, the finding of the product being defective cannot be ruled out
by the Consumer Commissions.

The defects in a newspaper to constitute it as “defective goods” must pertain to the quality of
its paper and printing. It cannot relate to the contents of the newspaper; its news and views and
the manner of their display constitute a "service" which a newspaper renders to its readers.

4. Hindustan Motors Ltd. V Malwa Engg. Corpn. 2001

Where the motor car developed defects and the seller refused to accept any liability because
the defects developed after the warranty period, it was held that the fact that the car required
massive repairs showed that the material supplied was defective. The seller was directed to
completely overhaul and repair the car and to pay Rs. 50,000 as compensation.

5. Godrej soaps Ltd v. Dr Vijay Govind Sarpotdar

The complaint was against the supply of a defective machine. The state Commission directed
refund of the cost of the machine along with interest and compensation of Rs. 1,00,000 and Rs
25,000 for mental agony. The National Commission did not agree with this approach and held
that after the award of compensation, a further award for interest and mental agony was not
necessary.

Deficiency in services

Service is any benefit availed by the consumer which is not tangible. Every day we all humans
hire different services. Term service is defined under Section 2(42) of the Consumer Protection
Act,2019. These services include facilities related to banking, financing, processing, insurance,
telecom, transport, etc. A service provided will be counted as a service only when it is in paid
form. Service doesn’t include any free service.

In literal terms, deficiency means inadequacy. Term deficiency is defined under section 2(11)
of the Consumer Protection Act,2019. It means any imperfection, limitation, fault and
insufficiency in the nature, manner and quality of performance, required to be maintained by
or under any law or in pursuance of a contract or otherwise concerning any service.

Under the Consumer Protection Act, 1986 (specifically in Section 2(1)(g)), "deficiency" was
defined as any fault, imperfection, or shortcoming in the quality, quantity, purity, or potency of
a service provided by a service provider. This definition was intended to protect consumers
from substandard services that fail to meet the promised or expected standards. While this
definition has largely been retained in the updated Consumer Protection Act, 2019, two
additional clauses have been added to further specify the meaning of "deficiency."

The deliberate concealment or withholding of essential information by a service provider is

also considered a "deficiency in service." For instance, if a provider withholds information that
could affect the consumer's decision to use a service, this act of omission is seen as a failure in
their duty to inform, thus constituting a deficiency.
 Illustration:

- A customer buys a ticket for an AC bus. But AC of the bus does not work, which is a
deficiency of service.

- Inappropriate treatment done by a doctor leading to an increase in patient’s suffering

is the deficiency in service.

Whenever there is any sort of deficiency in services, the customer is exploited which results in
his loss of money. Any kind of negligence or omission or commission can cause injury to
consumers.

1. Amitabh Dasgupta v. United Bank of India (19th February 2021) Banking

In this case, Mr. Dasgupta, along with his mother, was a joint locker holder at the United Bank
of India. The bank, without any prior notice or justification, broke open the locker, allegedly
due to non-payment of dues, even though the dues had been cleared. The Commission held that
the bank had acted negligently and awarded compensation to Mr. Dasgupta.

Under this case, the Supreme Court issued some guidelines on allotting and operating of lockers
and the court held that banks will be liable under the Consumer Protection Act for deficiencies
in locker services.

The bank appealed the decision to the Supreme Court of India. The Supreme Court upheld the
Commission's order and further emphasized the responsibilities of banks as bailees of their
customers' belongings. The Court directed the bank to pay additional compensation to Mr.
Dasgupta and ordered the Reserve Bank of India (RBI) to frame guidelines for the management
of bank lockers.

The term "deficiency in service" in the context of consumer law refers to any failure,
imperfection, or shortcoming in the quality or standard of services provided by a service
provider, as well as any act of negligence that results in a loss to the consumer.

If a service provider cannot perform due to reasons entirely beyond their control (e.g., natural
disasters, unforeseen emergencies), it does not count as "deficiency in service." In these cases,
the inability to provide the service is not due to negligence or a fault of the provider.

2. Supt. of Post Office v. Jambu Kumar Jain Carriage

Acts performed in compliance with statutory provisions are not deficiencies in service.
The respondent, Jambu Kumar Jain, had purchased Indira Vikas Patras (IVPs) from the post
office. Unfortunately, he lost these IVPs. Despite reporting the loss to the police and requesting
the post office to stop payment on the maturity of the lost IVPs, the post office refused to do
so.

Mr. Jain filed a complaint with the District Consumer Disputes Redressal Commission, which
ordered the post office to pay the maturity amount of the lost IVPs. The post office appealed
this decision to the State Commission, which upheld the order. Subsequently, the post office
filed a revision petition with the National Consumer Disputes Redressal Commission
(NCDRC). The court held that adhering to statutory rules does not amount to deficient service.

If a consumer uses a product for a long period and then encounters issues, claiming a
defect in a replacement product provided for free does not amount to a deficiency in service.
Continuous and prolonged use of a good before a problem arises suggests the issue may not be
due to service failure.

3. Punjab Urban Planning & Development Authority v. Kanwaljit Singh Ahluwalia

The Supreme Court ruled that if an authority halts construction on a plot without valid
justification, it amounts to a deficiency in service. The interruption directly impacts the
consumer's rights and causes unnecessary hardship.

If a property developer delivers a flat or plot with a smaller area than promised in the
agreement, this constitutes a deficiency in service. Such a shortfall fails to meet the contractual
specifications.

When a consumer agrees to pay additional construction costs due to price increases, this does
not amount to a deficiency in service, as the consumer has consented to the revised terms.

1. Airline services
 Express Travels v. M R Shah

Two couples booked tickets through Express Travels for a honeymoon trip to Kulu-Manali.
Due to a scheduling error, their flight departed earlier than the time mentioned on the tickets,
causing significant inconvenience and distress to the couples. They had to travel by road,
enduring a long and arduous journey through a region with security concerns.
The couples filed a complaint with the Gujarat State Consumer Disputes Redressal
Commission, seeking compensation for the mental agony and financial loss suffered. The
Commission upheld the complaint and awarded compensation to the couples.

Where flight times were changed but no information was provided to the complainant
passenger, both the travel agent and airlines were held to be deficient in service. They were
jointly and severally liable to compensate the passenger for his loss and costs.

Medical service

 Kusum Sharma v. Batra Hospital and Medical Research Centre

A surgery was performed for removal of abdominal tumor. The procedure adopted by the doctor
performing the surgery was supported by expert opinion. Negligence could not be attributed to
the doctor. The court said that the medical professionals are not unnecessarily to be harassed
or humiliated so that they can perform their duties without fear and apprehension. An
application cannot be filed against hospitals and medical personnel for extracting uncalled
compensation.

The Supreme Court ruled that a doctor is not negligent as long as they perform their duties with
reasonable skill and competence. A doctor choosing one acceptable course of treatment over
another, even if there are multiple options, does not constitute negligence if the choice is
aligned with medical standards.

 Om Prakash Lokre v Registrar, Christian Medical College & Hospital

The case was that of serious surgery. But even so it was performed in the general ward instead
of in the operation theatre. The senior doctor and Head of the Department were not present.
Many pre-operation procedures were not done. The deficiency in procedure resulted in 75%
permanent disability and impairment which was not likely to take any improvement.
Compensation of Rs. 5,00,000/- was awarded.

Education

 Khurana v Vishwa Buddha Parishad

Where the defendants granted admission to students on the basis that their dental college was
a recognised institution, whereas in fact it was not so, it was held that this was a deficiency in
service. The fee paid was ordered to be refunded and compensation of Rs 20,000 was awarded
to each of the complainants.
  Manu Solanki v Vinayak Mission

Manu Solanki and other students filed a complaint against Vinayaka Mission University,
alleging that the university had engaged in unfair trade practices and deficiency in service by
providing false assurances about the recognition of their medical degrees. The case hinged on
whether the Consumer Protection Act, 1986, applies to educational institutions. The Act is
designed to protect consumer rights and redress grievances against service providers.

The Supreme Court, in a landmark judgment, clarified that while the core academic activities
of an educational institution may not be considered a "service," ancillary services such as
admissions, fee collection, and hostel facilities can be subject to consumer protection laws.

Non-recognition of the degree due to lack of approval from relevant authorities was deemed
a deficiency in service. The university had failed in its responsibility to offer a course that was
recognized by regulatory bodies, directly impacting the student's career prospects.

Legal services

Not under CPA. 2007 NCDRC decision appeal may 14 this year.

Contract of personal service which is excluded under service.

Central Consumer Protection Authority

Section 10

The CCPA has to regulate the matters pertaining to the violation of consumer rights, unfair
trade practices and false or misleading advertisements. It shall also promote, protect and
enforce the rights of the consumers as a class. It would be apt to note down that earlier, under
the old CP Act, 1986, the power to protect and promote the rights of the consumer was
conferred upon the “Consumer protection councils”, which are now reduced to be mere
advisory bodies.

Shall consist of Chief Commissioner and such number of other Commissioners as may be
prescribed.

Headquarters shall be in the National Capital Region of Delhi. Shall have regional and other
offices in any other places as the central government may decide.

The Chief Commissioner holds the highest administrative authority within the Central
Authority, overseeing its operations and administration. Additionally, the Chief Commissioner
can delegate administrative duties to any subordinate officer as needed, promoting efficiency
and flexibility in managing day-to-day affairs.

States that all business transactions of the Central Authority will proceed under the direction
of the Chief Commissioner. Grants the Chief Commissioner authority to allocate specific tasks
and business responsibilities among himself and the other Commissioners, providing flexibility
and clarity in job roles. Requires that any decision made by the Central Authority must be
published on its official website, ensuring transparency. However, if a decision is classified as
“confidential,” it will be exempt from public disclosure. Mandates that every decision and
directive by the Central Authority should be documented in writing and preserved as a formal
record, reinforcing accountability and ensuring that a clear record exists for reference.

Investigation wing

The Central Consumer Protection Authority (CCPA) was established under the Consumer
Protection Act (CP Act) 2019 to safeguard consumer rights and investigate potential violations
of these rights by traders or service providers.

The Investigation Wing is established to conduct inquiries or investigations as required under

the CP Act, 2019. This wing’s role is to help the Central Authority uncover the truth regarding
consumer rights violations. The Investigation Wing is led by the Director-General, and it can
only act under the direction of the Central Authority as specified under Section 19(1).

The Central Government has the authority to appoint key positions within the Investigation
Wing, including the Director-General, Additional Director-Generals, Directors, Joint Directors,
Deputy Directors, and Assistant Directors.

Once appointed, officers such as the Additional Director-General, Directors, Joint Directors,
Deputy Directors, and Assistant Directors operate under the overall control and supervision of
the Director-General. This subsection reinforces a chain of command, ensuring that all
investigative work aligns with the Director-General’s directions and oversight.

The Director-General holds the power to delegate any or all of their responsibilities to
subordinate officers when conducting inquiries or investigations under the CP Act. This
flexibility is essential in distributing tasks and enhancing efficiency within the Investigation
Wing. After completing an investigation, the Director-General must submit the report to the
Central Authority.
Any consumer or complainant can file a complaint regarding violations of consumer rights,
unfair trade practices, and false or misleading advertisements directly before the District
Collector. This provides an accessible mechanism for addressing consumer grievances at the
district level, beyond the Central Authority or Consumer Commissions. Upon receiving a
complaint, the District Collector has the discretion to inquire or investigate into the matter. The
investigation could involve gathering evidence or questioning the concerned parties (e.g.,
traders, service providers, manufacturers).

The District Collector may also investigate matters referred to them by the Central Authority
or the regional branch of the Central Authority. These could involve violations related to
consumer rights or unfair trade practices that the Central Authority believes require local
investigation.

Powers

Protection and Promotion of Consumer Rights

Prevention of Unfair Trade Practices

Prevention of False or Misleading Advertisements

Prevention of Participation in False or Misleading Advertisements

Recalling Goods or Withdrawal of Services

Reimbursement of Prices

Discontinuation of Unfair Practices

Right to be heard

Power to Discontinue or Modify Advertisements

Imposition of Penalty

Prohibition of Endorsers

Penalty for Persons Involved in Publication: The Central Authority can impose a penalty of
up to ₹10 lakh for false or misleading advertisements, but this penalty applies only to
manufacturers or endorsers. If there is a subsequent contravention, the penalty can increase
to ₹50 lakh per violation.
Due Diligence Defense for Endorsers

Defense for Publishers

Powers of Search and Seizure: Director-General or District Collector have the authority to
enter any premises if they believe that a violation of consumer rights, unfair trade practices, or
false/misleading advertisements has occurred.

Functions

Inquiry and Investigation

Filing Complaints

Intervention in Proceedings

Review of Consumer Rights and Other Laws

Recommendation of International Practices

Promoting Research on Consumer Rights

Spreading Consumer Awareness

Encouraging NGO Cooperation

Mandating Unique Goods Identifiers

Issuing Safety Notices

Advising Government Ministries

Issuing Guidelines to Prevent Unfair Trade Practices

- Appeal to National Commission.

1. Unfair Trade Practices

Unfair trade practices refer to deceptive, fraudulent, or unethical actions by businesses intended
to mislead consumers or gain an unfair advantage. The Consumer Protection Act, 2019 in India
addresses these practices to safeguard consumer interests.

Examples of Unfair Trade Practices:

  False Advertising: Misleading advertisements that misrepresent product features,
benefits, or quality (e.g., advertising a product as "100% natural" when it contains
synthetic ingredients).

 Misleading Prices: Showing exaggerated discounts or misleading offers, such as fake

“limited-time offers.”

 Bait and Switch: Advertising a product at a low price to attract customers, only to switch
it with a higher-priced item once they show interest.

 False Claims of Warranty: Offering deceptive warranties or guarantees that don’t cover
common issues or have hidden conditions.

Case Law Example:

 Hindustan Coca-Cola Beverages Pvt. Ltd. v. Subodh Prasad (2005): A consumer found
foreign objects in a Coca-Cola bottle. The National Consumer Disputes Redressal
Commission (NCDRC) held Coca-Cola accountable, highlighting that
misrepresentation of quality is an unfair trade practice.

2. Product Liability

Product liability is the legal responsibility of manufacturers, sellers, and service providers to
compensate consumers if a product causes harm due to defects. Under the Consumer Protection
Act, 2019, Indian law now recognizes product liability as a distinct cause of action.

Key Components of Product Liability:

 Manufacturing Defect: The product deviates from its intended design or production,
resulting in harm (e.g., a batch of defective brake systems in cars).

 Design Defect: The product’s design itself is flawed and unsafe, even if manufactured
correctly (e.g., a smartphone design prone to overheating and exploding).

 Failure to Warn: Not providing adequate instructions or warnings on product usage,

leading to consumer injury (e.g., medication without side-effect warnings).

Case Law Example:

  Consumer Unity & Trust Society v. State of Rajasthan (1992): In a case where a person
died from defective surgical equipment, the Supreme Court emphasized the importance
of product liability for defective goods, setting a precedent for consumer protection.

3. Intermediary Liability

Intermediary liability refers to the legal responsibility of online platforms or intermediaries

(such as e-commerce websites, social media platforms, etc.) for content or goods sold by third-
party users. In India, the Information Technology Act, 2000 governs intermediary liability, with
amendments and rules to address specific responsibilities.

Key Points on Intermediary Liability:

 Safe Harbor Protection: Under Section 79 of the IT Act, intermediaries can claim
immunity from liability for third-party content if they follow due diligence and do not
knowingly participate in wrongful acts.

 Due Diligence and Content Moderation: Intermediaries must actively monitor and
remove illegal or harmful content once notified, to retain immunity.

 Consumer Protection: E-commerce platforms must ensure that listed products meet
quality standards and that sellers are genuine, as intermediaries can face liability if they
knowingly facilitate unfair trade.

Case Law Example:

 Shreya Singhal v. Union of India (2015): The Supreme Court ruled that intermediaries
are only required to take down content upon receiving a court order or notification from
a government authority, reinforcing that platforms are not directly liable for all user-
uploaded content.

4. Pricing of Goods and Services

The pricing of goods and services is subject to legal regulations to ensure fair practices,
transparency, and protect consumers from exploitation. Several laws and guidelines regulate
the pricing and marketing of goods in India.

Key Regulations for Pricing:

  MRP (Maximum Retail Price): The Legal Metrology Act, 2009 mandates that goods
sold to consumers display an MRP that includes all taxes, ensuring that consumers pay
a standardized, fair price.

 Dual Pricing Prohibited: Selling the same product at different prices to different
consumers is generally prohibited, except in cases justified by logistics or conditions
set by the government.

 GST (Goods and Services Tax): Businesses must disclose GST on products or services,
helping consumers understand the final price breakdown.

 Anti-Profiteering Clause: This clause under GST law prevents businesses from
exploiting consumers by charging excessive prices when tax reductions or cost
reductions apply.

Example

 If a store sells a soft drink above the printed MRP, it would be in violation of the Legal
Metrology Act, and consumers could file a complaint against the store for overcharging.

Case Law Example:

 State of Rajasthan v. Hindustan Sugar Mills Ltd. (1988): This Supreme Court case
emphasized transparency in pricing, reinforcing that companies cannot charge hidden
costs beyond the displayed price.

5. Sale of Hazardous Goods

The sale of hazardous goods requires stringent regulatory compliance, as such goods can pose
risks to health, safety, or the environment. The Consumer Protection Act, 2019 and other laws
like the Environmental Protection Act and Drugs and Cosmetics Act govern the sale and
handling of these goods.

Key Points for Sale of Hazardous Goods:

 Safety Standards: Hazardous goods, including chemicals, drugs, pesticides, or

inflammables, must meet safety standards and certifications before being marketed.
  Warning Labels: Hazardous products must have warning labels and instructions for safe
handling to inform consumers of risks (e.g., chemicals labeled with proper usage and
disposal instructions).

 Regulation of Sale: Hazardous goods often require special licenses for sale, and non-
compliance can lead to penalties, product recalls, or criminal liability.

 Ban on Certain Products: Some hazardous goods that pose a severe risk (e.g., toxic
cosmetics, unapproved drugs) are outright banned from sale to protect consumers.

Case Law Example:

 Consumer Education and Research Centre v. Union of India (1995): The Supreme Court
directed that harmful products must not only display adequate warnings but should be
restricted in sale if they pose a significant threat to public health, underscoring the need
for robust regulation of hazardous goods.

Offences and Penalties

 Motor Vehicles Act

Evolution and need for this legislation; licensing and rules surrounding the driver's
licensing; registration of vehicles and its rules; insurance especially third-party insurance
and its incidental rules (145 to 152); liability under MVA (fault and no-fault); prohibited
acts under the MVA (110-134); offences and penalties under the MVA (177-203)

Evolution and need for this legislation

The Motor Vehicle Act of 1988 regulates all the essential components of road transport
vehicles. It took effect on July 1, 1989, covering various laws relating to traffic laws, vehicle
insurance, motor vehicle registration, controlling permits, and penalties. The Act of 2019 dealt
with the issuance of licences and permits related to motor vehicles, established standards for
motor vehicles, and imposed penalties for violations of these provisions.

The Motor Vehicle Act comes within the ambit of the law of torts. The law of torts is based on
the Latin maxim ubi jus, ibi-remedium, i.e., where there is a right, there is a remedy. This
maxim brings into play the concepts of damage and compensation. At this point, the idea of
compensating and giving damages comes into action. The Motor Vehicle Act, 1988, is
considered a law of welfare aiming to provide relief to those injured in an accident. While
the Motor Vehicle Act of 1939 initially consolidated all motor vehicle legislations, it required
frequent amendments to stay updated. With the progression of advancements in road transport
technology, the expansion of the road network, and changes in passenger transport patterns, a
comprehensive revision of the Act became necessary to address new developments related to
motor vehicles and its rules and regulations.

The main objective of the Act of 1988 is to provide relief to innocent road users who often,
through no fault of their own, become victims of accidents and struggle to receive the
compensation they deserve. Under this Act, beyond the laws relating to licensing and
registration, various other aspects of road transport vehicles are also covered.

Motor insurance is one of the most important mandatory laws. The motor vehicle should at
least have third-party insurance in order to register and drive a vehicle on Indian roads. The Act
of 2019 introduces stricter penalties for driving a vehicle without a licence, including a fine of
Rupees Two Thousand, three months of imprisonment, and community service for first-time
offenders, and a fine of Rupees Four Thousand for repeated offenders.
Objectives of the Act of 1988:

- Implementing strict procedures for issuing licences and determining their validity
period;
- Ensuring road safety by regulating the transportation of hazardous and explosive
materials and enforcing pollution control measures;
- Manage the rapid increase in the number of personal and commercial vehicles in the
country;
- Increase the amount of compensation available to the victims of hit-and-run accidents;
- Remove the time limit for traffic accident victims to file compensation claims.

The Motor Vehicles Act, 1988 is a comprehensive enactment in respect to various matters
relating to traffic safety on the roads and minimization of road accidents. The Act came into
force from 1 July 1989. It replaced Motor Vehicles Act, 1939, which earlier replaced the first
such enactment Motor Vehicles Act,1914.

The Act provides in detail the legislative provisions regarding licensing of drivers/ conductors,
registration of motor vehicles, control of motor vehicles through permits, special provisions
relating to State transport undertakings, traffic regulations, insurance, liability, offences and
penalties etc.

There are various rights created for claiming compensation in case of any death or bodily injury
caused in an accident arising out of the use of motor vehicles.

By the Motor Vehicles (Amendment) Act, 1994, inter alia, amendments were made for make
special provisions under sections 66 & 67, provided that vehicles operating on eco–friendly
fuels shall be exempted from the requirements of permits and also the owners of such vehicles
shall have the discretion to fix fares and freights for carriage of passengers and goods. The
intention in bringing the said amendments was to encourage the operation of vehicles with such
eco- friendly fuels.

Over the years, judiciary has not only been called upon time to time to interpret these statutory
provisions and apply them to different facts and situations, but also to lay down various legal
principles for assessing compensation. The Motor Vehicles Act, 1988, does not provide any
guidelines for the identification of the items of loss to be compensated, nor does it lay down
any criteria for the compilation of the quantum of compensation for each item of loss.
Overview of the Evolution of the MVA

The Motor Vehicles Act in India, initially enacted in 1914 during the British era, has undergone
numerous amendments to adapt to the nation’s changing transportation landscape. The Act
initially aimed to regulate the burgeoning use of motor vehicles on Indian roads, which was
limited to a small population. In 1939, a significant update aimed at structuring road safety,
vehicle registration, and licensing marked the Act’s early efforts to standardize road usage and
enforcement measures. However, as India gained independence and motor vehicle ownership
expanded exponentially, the need for more robust legislation became evident. This led to the
1988 Motor Vehicles Act, which introduced mandatory insurance, penalties for traffic
violations, and road safety guidelines.

Over the years, the Act has been amended to address the growing complexities of modern road
systems, improve road safety, and promote responsible driving practices. The amendments in
2019, for example, marked a milestone with stringent penalties for traffic violations, stricter
DUI laws, and an emphasis on digital enforcement through CCTV and automated surveillance
systems. Some of the key changes in the 2019 amendment included:

1. Enhanced Penalties: Heavier fines for violations like drunk driving, speeding, and
seatbelt infractions aimed to instill better road discipline.

2. Protection of Good Samaritans: Individuals helping accident victims were granted

legal protection from procedural hassles.

3. Strict Licensing Process: Increased scrutiny in issuing licenses, aiming to improve

road discipline and reduce reckless driving.

4. Road Safety Measures: Higher fines for violations by minors, mandatory vehicle
recall for defects, and steps toward safer infrastructure.

These changes were not only aimed at regulating motor vehicle usage but also intended to
support a more responsible driving culture.

The Need for the MVA

India, with its vast road network and high vehicle density, faces significant challenges in road
safety and traffic management. The high rate of road accidents—among the highest in the
world—demands stringent enforcement to ensure safe transportation. The Motor Vehicles Act
serves several critical needs:
 1. Regulation and Standardization: The Act creates a uniform framework for licensing,
vehicle registration, and inspection. This helps streamline processes and ensure that
vehicles on the road meet minimum safety and emissions standards.
2. Road Safety: With penalties in place, the Act is a deterrent against reckless driving,
driving under the influence, and other offenses that endanger lives. The provisions
encourage better behavior on the roads and address various accident-causing factors.
3. Environmental Concerns: Emission norms have been introduced and tightened
through the Act, crucial in combating urban pollution.
4. Liability and Compensation: The Act outlines the responsibilities of drivers and
vehicle owners, making insurance compulsory and establishing compensation
mechanisms for victims in cases of accidents.
5. Public Transport and Ridesharing: With increasing use of public transport and shared
mobility options, the Act establishes guidelines for the operations of taxis, buses, and
rideshare vehicles, ensuring safe and regulated usage.

Relevance of the MVA today

In the context of 21st-century challenges, the Motor Vehicles Act remains relevant but requires
continuous updates to adapt to the latest developments. Rapid urbanization, an increase in
private vehicle ownership, and the emergence of electric vehicles and smart transportation
systems necessitate new provisions. Digital tools, like automated traffic management systems,
can enhance the Act's effectiveness in enforcing regulations. Here are some ways in which the
Act holds contemporary significance:

1. Adaptation to Technological Advancements: Automated vehicles and electric vehicle

regulations are emerging domains that require policy inclusion. The Act’s adaptation to
these technologies can help regulate new transport modes while ensuring safety and
compliance.
2. Enhanced Road Safety: With a growing number of vehicles and a high road accident
rate, India’s road safety requires sustained, stringent enforcement.
3. Public Health: Rising pollution levels in cities increase the importance of emission
standards, encouraging the transition to green vehicles through regulatory oversight.
4. Promotion of Shared Mobility: The rise of ride-sharing and micro-mobility services
requires updated regulations to ensure these platforms operate within a safe and
structured framework.
Way forward for the MVA

To align with modern transportation trends and effectively address road safety challenges, the
Motor Vehicles Act can evolve in the following ways:

1. Integration of Technological Innovations: With advancements in AI and IoT,

integrating these technologies into traffic enforcement can enhance road monitoring.
Automatic number plate recognition (ANPR), speed cameras, and data-driven analytics
can improve enforcement and deter violations.

2. Regulation for Autonomous and Electric Vehicles: As autonomous vehicles (AVs)

and electric vehicles (EVs) become more prevalent, the Act should provide specific
guidelines for manufacturing, safety standards, and on-road behavior for these vehicles.

3. Data-Driven Policy Making: Using data analytics to monitor and evaluate accident-
prone areas, peak traffic hours, and violation trends can support more efficient and
targeted policy interventions.

4. Improved Licensing Procedures: Incorporating rigorous practical tests and mandatory

driving education programs could reduce unskilled drivers, thus lowering accident
rates.

5. Focus on Public Awareness and Behavioral Change: While enforcement is critical,

awareness programs and campaigns for behavioral change are equally essential. Public
outreach can encourage a culture of safe and responsible driving.

6. Promotion of Eco-Friendly Transport: Encouraging a shift to cleaner, more

sustainable forms of transport by providing incentives for EV purchases and
establishing standards for fuel emissions can reduce urban pollution and promote
sustainable practices.

The Motor Vehicles Act continues to be foundational for India’s road transport regulations,
ensuring safety, legal clarity, and environmental responsibility. Through periodic updates and
the incorporation of digital and policy-driven innovations, the Act can address future
challenges in India's transportation ecosystem.
 Licensing and rules surrounding the driver's licensing

It is mandatory under the Motor Vehicles Act to have a valid driving license and it should be
registered under the Act. Under the Act, the civil proceedings happen in the Claims Tribunal
and criminal proceedings in Magistrate. The changes in road transport technology, the pattern
of passengers, developments in the road network in the country are all taken into consideration
by this Act.

A driving license in India is an essential document for car/bike owners and drivers. It is a legal
document that permits one to drive a specified vehicle. Driving any vehicle without a license
can land you in the zone of troubles, including monetary compensations and disqualifications.
It is the most important document which a car driver should own. In case, you are pulled over
by a police officer, the first and foremost thing he will ask is to show your license. Without it,
there is no right to operate a vehicle on public roadways. This is a universally accepted form
of personal identification because it contains contact info and a picture for identification. In
case, the driver met with an accident, the first thing we can do is to find the license to identify.
The name and address will help the people to locate and contact family members to inform
them and the hospital staff can use this information on the driver’s license to begin the
admission process.

Section 2(10) of the MVA defines the term ‘driving license’ which means the license issued by
a competent authority under Chapter II authorizing the person specified therein to drive,
otherwise than as a learner, a motor vehicle or a motor vehicle of any specified class or
description. Section 2(19) defines ‘learner’s license’, means the license issued by a competent
authority under Chapter II authorizing the person specified therein to drive as a learner, a motor
vehicle or a motor vehicle of any specified class or description.

Section 3: Necessity of driving license

This section mandates that:

 Only licensed individuals can drive: No person is permitted to drive any motor vehicle
in a public space unless they hold an effective driving license specifically authorizing
them to drive that vehicle class.

 Special license requirements for transport vehicles: To drive transport vehicles,

excluding motor cabs or motorcycles hired for personal use, a driver must possess a
license that expressly allows them to operate transport vehicles.
  Exemptions for learners: Conditions may be set by the Central Government allowing
persons learning to drive to be exempt from the need for a valid driving license, as long
as they meet prescribed conditions.

From this section begins Chapter II titled ‘Licensing of Drivers of Motor Vehicles’.
Section 3(1) states that no person shall drive a motor vehicle in any public place unless he
holds an effective driving licence issued to him authorizing him to drive the vehicle.
Whereas clause (2) states that the conditions subject to which (1) shall not apply to a person
receiving instructions in driving a motor vehicle shall be such as may be prescribed by the
Central Government.
So we see that clause (1) provides for the need to have a license to drive a motor vehicle and
gives special authorization to drive a transport vehicle. It is said that what vehicle is specified
in the license, only that vehicle can be driven. The next clause empowers the Central
Government to prescribe conditions subject to which a vehicle may be driven by a person
receiving instructions in driving.

Section 4: Limit in connection with driving motor vehicles

This section specifies minimum age requirements for drivers:

 General minimum age: To drive a motor vehicle, an individual must be at least 18

years old.

 Motorcycles with limited engine capacity: Motorcycles with engines under 50cc can
be driven by individuals aged 16 or older.

 Age for transport vehicles: The minimum age for driving transport vehicles is 20
years.

 License issuance restrictions: Driving or learner’s licenses are only issued to those
eligible by age and vehicle class under this section.

Section 5: Responsibility of owners of motor vehicles

This section places liability on the owners of motor vehicles:

 Owners must ensure compliance: It is the responsibility of the vehicle owner or the
person in charge to prevent anyone who does not meet the requirements of Section 3
(license requirement) or Section 4 (age restriction) from driving their vehicle.
  Legal accountability: If a vehicle owner or the person in charge allows an unqualified
individual to drive, they may be held liable for contravening these provisions.

Section 6: Restrictions on the Holding of Driving Licenses

This section details limitations on holding multiple licenses:

 No duplicate licenses: A person cannot possess more than one driving license at a time,
except for a learner’s license or a license issued under Section 18 (relating to licenses
for differently-abled individuals).

 Restriction on sharing licenses: A driver cannot allow someone else to use their
driving or learner’s license.

 Addition of vehicle classes: Licensing authorities may expand the classes of vehicles
that an existing license holder is permitted to drive if they meet necessary requirements.

Section 7: Restrictions on the Granting of Learner's Licenses for Certain Vehicles

This section specifies rules for issuing learner’s licenses:

 Prerequisite experience for transport vehicles: To apply for a learner’s license for a
transport vehicle, an individual must have held a license to drive a light motor vehicle
for at least one year.

 Special conditions for minors: Individuals under 18 need written consent from their
legal guardian to receive a learner’s license for a motorcycle without gears.

Section 8: Grant of Learner’s License

This section outlines the process for obtaining a learner’s license:

 Eligibility criteria: Any individual who meets the age and disqualification
requirements of Section 4 and is not barred from holding a license may apply for a
learner’s license.

 Application requirements: Applicants must apply through the licensing authority in

the jurisdiction of their residence or training institution, paying the required fee and
submitting documents as prescribed by the Central Government.

 Medical and fitness certification: The application must include a medical certificate
attesting to the applicant’s fitness unless the license is for a non-transport vehicle.
  Health restrictions: The licensing authority may refuse a learner’s license if the
applicant has a condition that could endanger public safety while driving. However, an
exception exists for invalid carriages if the applicant can safely operate such a vehicle.

 Learner’s test requirement: Applicants must pass a prescribed test to the satisfaction
of the licensing authority before receiving a learner’s license.

 Special issuance and exemptions: The Central Government may allow certain
exemptions, and licenses issued before the Act came into force will be considered valid
for all motorcycles regardless of gear specifications.

This section deals with the grant of a learner’s license. Learners license is issued during
the course of learning to drive the car. We have to pass the learners’ test to get this license.
After that, we will have another test which should be taken within 6 months after which we
will get a valid driving license.
According to this Act, a person under the age of 18 years shall not drive a motor vehicle at
any public place and no learner’s license or driving license shall be issued to any person to
drive a vehicle of the class to which he has made an application unless he is eligible to drive
that class of vehicle. According to (1) of section 8, “Any person who is not disqualified under
section 4 for driving a motor vehicle and who is not for the time being disqualified for
holding or obtaining a driving license may apply to the licensing authority having jurisdiction
in the area-
i) in which he resides and
ii) in which the driving school or establishment where he intends to receive instruction in
driving a motor vehicle is situated.
The next clause talks about the application for a learner’s license. (2) Every application shall
be in such form and shall be accompanied by such documents and with such fee as may be
prescribed by the Central Government.
The need for a medical certificate for application is stated in the next clause.
(3) Every application shall be in such form and shall be accompanied by a medical certificate
in the form prescribed by the Central Government and signed by a registered medical
practitioner.
(4) If the applicant suffers from any disease or disability which is likely to cause the driving
of the specified vehicle as mentioned in the license, to be a source of danger to the general
public or passengers, the licensing authority shall refuse to issue such a license.
Section 9: Grant of Driving License

This section provides the procedure and requirements for obtaining a driving license:

 Application process: Eligible individuals not disqualified from holding a license may
apply to the licensing authority in their area of residence or training for the issuance of
a driving license.

 Tests and exemptions: Applicants must pass a prescribed driving test unless they
provide proof of a previously held valid license for the same vehicle class, issued within
five years, or if they hold an international license that meets specific Indian
requirements.

 Medical fitness: Applicants must provide a medical certificate if necessary, especially

for transport vehicles, confirming that they are fit to drive and free from any condition
that may pose a danger.

 Minimum qualifications for transport vehicles: For transport vehicle licenses,

applicants need certain educational qualifications and a driving certificate from a
recognized training institution.

 Re-examination for unsuccessful candidates: Applicants who fail the driving test
may retake it after seven days. However, failing the test three times requires a wait of
60 days before retesting.

 Vehicle-type competency: The test must be conducted with a vehicle type relevant to
the license category.

 Special conditions and license denials: The authority can refuse a license if the
applicant has a history of criminality, substance abuse, or a previously revoked license,
with appeals allowed within 30 days of refusal.

This section deals with the grant of a driving license. The first and second clauses are similar
to that of section 8. The third clause is added through the 1994 Amendment. It states that if the
applicant passes the test prescribed by the Central Government, then the driving license may
be issued provided that such test is not necessary if the applicant produces proof to show that
he or she had previously held a license to drive that class of a vehicle and the period or gap
between the date of application and date of expiry does not exceed 5 years.

Section 10: Form and Contents of Licenses to Drive

This section dictates the format and information included on a learner’s or permanent driving
license:

 Form and details: The Central Government prescribes the license form, which should
state the license type and the vehicle classes it authorizes the holder to drive.

 Vehicle classes: Licenses specify authorized vehicle categories, including motorcycles

(with and without gear), light motor vehicles, transport vehicles, and specialized
vehicles like road rollers or specific motor vehicle types.

A learner’s license and driving license shall contain information as prescribed by the Central
Government. But if a driving license is issued under Section 18, then the situation changes.
Section 18 talks about the licenses to drive motor vehicles belonging to the Central
Government. In such situations, it shall specify the class or description of the vehicle which
the driver is entitled to drive and the period for which he is entitled. The authority which issues
this license shall request the State Government to furnish information respecting the person as
that Government may at any time require. So according to Section 10, both learner’s license
and driving license should express the vehicle which he is entitled to drive, namely, Motorcycle
with gear and without gear, the invalid carriage which is usually referred to the vehicles used
by disabled people, light motor vehicle and motor vehicle of a specified description.

Section 11: Additions to Driving License

This section allows drivers to apply to expand their license to additional vehicle classes:

 Application process: License holders who are eligible can apply to add new vehicle
classes to their existing license. Applications should include specified fees and
documents.

 Compliance with Section 9: The procedure for adding classes follows the same rules
as for issuing a new license, including competency tests.

Section 14: Validity of Licenses

This section specifies the duration of learner’s and driving licenses:

 Learner’s license validity: Learner’s licenses are valid for six months from the date of
issue.
  Driving license validity for transport vehicles: These licenses are valid for three
years, except for transport vehicles carrying hazardous materials, which have a one-
year validity and require an annual refresher course.

 Other licenses: If the holder is under 50, the license is valid for 20 years or until they
turn 50, whichever is earlier. For those aged 50 or older, licenses are valid for five years.

 Grace period: A grace period of 30 days post-expiry allows for continued validity
during the renewal process.

Section 15: Renewal of Driving Licenses

This section outlines the process for renewing driving licenses:

 Timely renewal: License renewals should be applied for within 30 days of expiry to
retain the original issuance date. Late applications result in the renewal date marking
the new effective date.

 Medical certification: Applicants over 40 or those applying to renew a transport

vehicle license must submit a medical certificate confirming their fitness to drive.

 Fees: Different fees apply depending on whether the renewal application is submitted
on time or delayed beyond 30 days.

 Five-year limit on late renewals: If a license expires and remains inactive for over five
years, a new driving test may be required for renewal.

 Inter-authority communication: Renewing authorities must inform the original

issuing authority when a license renewal is processed by a different authority.

This is one of the most important sections regarding licensing. It talks about the renewal of the
driving licenses. The licensing authority should receive the application for renewal of the
license within 30 days after its expiry. If the applicant has attained forty years of age, a medical
certificate should be attached along with the application. The second clause states that the
application for renewal should be made in such form as prescribed by the Central Government.
The fee payable for the renewal is as prescribed by the Central Government. If the application
is given more than five years after the expiry of the license, then the licensing authority has the
option to refuse the renewal of the driving license. But if the applicant passes the test of
competence as referred under section 9, the renewal can take place. According to the last clause
of this section, if the issuing authority is not the one who renewed the driving license, then the
applicant shall intimate the fact of renewal to the authority to the issuing authority.

Section 16: Revocation of Driving License on Grounds of Disease or Disability

This section allows licensing authorities to revoke a license if the holder is deemed medically
unfit:

 Medical review: If the authority suspects a license holder’s health may affect driving
safety, it can request a medical certificate.

 Revocation process: Upon confirmed health concerns, the authority may revoke the
license, notifying the original issuing authority if different.

The licensing authority can at any time revoke a driving license on grounds of disease or
disability. The medical certificate in the same form as prescribed under section 8 must be
attached if the licensing authority has reasonable grounds to believe that the holder of the
license is, by virtue of any disease or disability, unfit to drive a motor vehicle and the authority
which revoked it, is not the issuing authority, it shall bring to notice this fact of revocation to
the issuing authority.

Section 18: Driving Licenses for Motor Vehicles Belonging to the Central Government

This section sets out rules for issuing driving licenses to individuals who drive vehicles owned
or controlled by the Central Government:

 Special licenses for government vehicles: Individuals over 18 can be issued licenses
to drive Central Government vehicles used solely for government purposes, particularly
for defense, and not related to commercial activities.

 License specifications: Such licenses are valid nationwide, specifying the class of
vehicle and the license’s validity period.

 Restrictions on license usage: The license issued under this section allows the holder
to drive only the specific government vehicles and does not authorize them to drive
other motor vehicles.

 Information sharing with state governments: The issuing authority can share
information on license holders with state governments as requested.

Section 19: Power of Licensing Authority to Disqualify or Revoke Licenses

This section provides licensing authorities the power to disqualify individuals from holding a
license or to revoke a license for various reasons:

 Grounds for disqualification or revocation: A license can be revoked or

disqualification imposed if the license holder:

o Is a habitual criminal, drunkard, or drug addict under the Narcotic Drugs and
Psychotropic Substances Act, 1985.

o Has used a vehicle to commit a serious offense.

o Has demonstrated dangerous driving behavior.

o Obtained a license through fraud or misrepresentation.

o Committed acts likely to cause danger or nuisance to the public, as prescribed

by the government.

o Refused required testing or is underage and no longer under a guardian’s care

who initially provided consent for the license.

 Process for disqualification or revocation: The authority must provide the driver a
chance to be heard before making any disqualification or revocation order.

 Return and endorsement of license: The disqualified driver must surrender the license
immediately, with the licensing authority retaining or marking the license with the
disqualification or revocation.

 Appeal process: Affected individuals can appeal the order within 30 days to a
prescribed authority, which can alter or overturn the decision as deemed fit.

This section is of utmost importance as it states the powers of the licensing authority to
disqualify from holding a driving license. Disqualifying a person means he or she is not
permitted from driving or possessing a valid license. It is like a form of suspension. If the
authority knows that the holder of the driving license is a criminal or a habitual drunkard, it
can disqualify the license. The license can also be disqualified, if he has obtained the said
license by fraud or misrepresentation, has committed an act likely to cause nuisance or danger
to the public as said by the Central Government, or is a habitual addict to any narcotic drug as
mentioned under the Narcotic Drugs and Psychotropic Substances Act. The main difference of
this section from Section 20 is that the former is a disqualification by the licensing authority
whereas the latter is by the courts. For Section 20, the reasons for disqualification can be from
the evidence and hearing of parties. It is a comprehensive evaluation of all courts

Section 20: Power of Court to Disqualify

This section allows courts to impose disqualification from holding a driving license as part of
a sentence for certain offenses:

 Disqualification in case of conviction: Courts can declare an individual disqualified

from driving specific or all classes of vehicles if they are convicted of an offense under
the MVA or an offense involving a motor vehicle.

o First-time and repeat offenses: Disqualification for first or second offenses

under Section 183 (speed limits) may be avoided, but repeat or serious offenses
mandate disqualification for a set period.

o Mandatory disqualification for serious offenses: Courts must disqualify

offenders for at least one month for offenses under Sections 132 (disobeying
orders of police officers), 134 (duty of driver in case of accident), and at least
six months for offenses under Section 185 (driving under the influence of
alcohol or drugs).

o Longer disqualification for repeated offenses: If an individual is convicted of

certain repeat offenses (e.g., dangerous driving, unauthorized vehicle use), they
may be disqualified for up to five years.

 Testing requirements: The court may also require that the convicted person pass a
driving competence test again before the disqualification period ends, ensuring they
meet safety standards.

 Appellate power over disqualification: If an appeal is filed against a conviction, the

appellate court has the authority to review and modify any disqualification order
associated with that conviction, even if no appeal lies against the conviction itself.

Section 21: Suspension of Driving License in Certain Cases

This section mandates the suspension of driving licenses for individuals who have been
previously convicted of dangerous driving and are involved in another incident involving
serious harm:
  Automatic suspension on registration of a case: If a driver with a prior conviction for
dangerous driving (as per Section 184) is involved in an incident resulting in death or
grievous injury due to alleged dangerous driving, their license is automatically
suspended:

o For six months from the date the case is registered by the police, or

o Until acquittal or discharge if the driver is acquitted or discharged before six

months have elapsed.

 Court notification and endorsement: Once the license suspension is initiated, the
police officer handling the case must notify the relevant court. The court will then:

o Take possession of the driving license,

o Endorse the suspension on the license, and

o Inform the licensing authority (which issued or last renewed the license) about
the suspension.

 Cancellation of suspension upon acquittal: If the driver is acquitted or discharged,

the court will cancel the suspension endorsement on the license.

 Restriction during suspension: While suspended, the driver is prohibited from

holding or applying for any license for that specific vehicle class until the suspension
period ends.

Section 22: Suspension or Cancellation of Driving License on Conviction

This section allows the court to take stricter actions, including canceling a license if the
individual is convicted of severe offenses:

 Suspension or cancellation upon conviction: If a driver, previously convicted of

dangerous driving under Section 184, is again convicted for causing death or grievous
harm through dangerous driving:

o The court can choose to suspend or cancel the license concerning the specific
vehicle class involved in the incident, for a duration it deems appropriate.

 Repeat offenses for driving under the influence (Section 185): If a driver, previously
convicted for driving under the influence of alcohol or drugs (Section 185), is convicted
again for the same offense, the court is required to cancel their driving license.
  Custody and endorsement by the court: When a license is canceled or suspended:

o The court takes custody of the license and marks it with the cancellation or
suspension endorsement.

o The license is then sent to the issuing or renewing authority, which will retain
the license in its safe custody.

o For suspended licenses, the driver may apply for the license’s return after the
suspension period ends.

 Conditions for license return: Before the license is returned post-suspension, the
driver must:

o Pass a fresh driving competency test, as outlined in Section 9(3), and

o Provide a medical certificate, as specified in Section 8(3), confirming fitness to

drive.

 Debarment from specific vehicle classes: If a license to drive a particular class or type
of vehicle is canceled or suspended, the driver is barred from holding or applying for a
license for that class as long as the cancellation or suspension remains in force.

Changes brought about in the amended Act

The Motor Vehicles Act, 1988 was amended on 9th August 2019. The new Rules wanted to
prevent individuals from violating traffic rules. So for this purpose, they have introduced heavy
fines for over-speeding, drunken driving, and driving without a valid license.

There were changes in few sections of the 1988 Act. Section 8 which talks about the grant of
learner’s license has been modified. Now, an eligible person can apply for this license in any
of the licensing authority of the state. The fee and other expenses can be paid through electronic
media and also the issuance of the learner’s license in electronic form. Also, the condition of
having ‘minimum educational qualification as may be prescribed by the Central Government’
for obtaining a license has been removed. When the applicant does not pass the driving test
even after doing it 3 times, in addition to his disqualification to re-appear for the test before the
expiry of a period of sixty days from the date of the last test. For that, the person should
complete a remedial driver training course from any school or establishment. Then, Section 15
talks about the renewal of the driving license. The renewal is made either one year prior to the
date of expiry or within one year after the date of expiry. Furthermore, if the application is
made one year after the driving license has expired, the renewal shall be refused. The power of
licensing authority to disqualify from holding a driving license or revoke the license is
mentioned in Section 19. Even the fine for driving without a valid license is increased from
Rs.500 to Rs.5000. (Section 181) and fine for unauthorized use of vehicles without a license is
increased from Rs.1000 to Rs.5000.

Registration of vehicles and its rules

The core objective of Chapter IV is to ensure that every motor vehicle operating on public
roads is registered, identifiable, and conforms to safety and emission standards. It regulates the
registration process, conditions for temporary registration, transfer of ownership, renewal, and
cancellation of registration. This helps authorities maintain vehicle records and trace vehicles
in case of accidents or criminal activities.

Section 39: Necessity for Registration

 Mandates that no person may drive or permit a vehicle to be driven in any public place
without valid registration.

 Unregistered vehicles are prohibited on roads to ensure all vehicles are recorded in the
national database.

Section 40: Registration Where Vehicle is Subject to Control

 Specifies that registration must be carried out by the registering authority in the
jurisdiction where the owner ordinarily resides or where the vehicle is kept.

Section 41: Registration, Renewal, and Marking of Motor Vehicles

 Describes the procedures for registration, including assigning a registration number,

valid for the vehicle’s lifetime unless canceled or transferred.

 The Amendment Act introduced Vehicle Registration Certificates (VRCs) as digital

records accessible across states.

 Registration validity for transport vehicles: The 2019 Amendment mandates that
transport vehicles renew their registration every 15 years and every 5 years thereafter.

Section 42: Special Permit for Vehicles Temporarily at Place Other than Residence

 Allows temporary registration for vehicles used temporarily outside their registered
state, such as commercial vehicles crossing state borders.
  Temporary registration may be valid for up to one month, extendable by registering
authority approval.

Section 43: Temporary Registration

 Enables temporary registration for new vehicles pending permanent registration, valid
for a maximum of one month.

 The Amendment Act allows for a more streamlined process by introducing digital
tracking for temporary registrations.

Section 44-46: No Ownership Transfer Without Registration

 Mandates vehicle owners to update registration records upon transferring ownership to

ensure accurate ownership details in the database.

 When transferring vehicles between states, the owner must re-register the vehicle in the
new state within a specified period (12 months as per the 2019 Amendment).

Section 47: Transfer of Ownership Due to Death

 Provides guidelines for transferring ownership in the event of the owner’s death,
requiring legal heirs or claimants to notify the registering authority.

Section 49-50: Transfer, Renewal, and Issuance of Fitness Certificates

 Emphasizes the renewal of fitness certificates for transport vehicles and mandates
compliance with fitness standards.

 With the Amendment, fitness certificates can be revoked if a vehicle fails to meet safety
standards, improving road safety.

Section 52: Alteration in Vehicle

 Restricts unauthorized alterations to a vehicle after registration, including changes to

its structure or fuel type.

 2019 Amendment: Introduced a provision allowing modifications for converting

vehicles to electric vehicles (EVs) or vehicles meeting BS-VI emission standards.

Section 53: Suspension of Registration

  The registering authority has the power to suspend a vehicle’s registration if it is found
in an unsafe condition or violates registration rules.

 The Amendment Act strengthened this by adding provisions for suspending registration
due to severe violations like frequent traffic violations or failure to meet pollution
standards.

Section 55: Cancellation of Registration

 A vehicle’s registration can be canceled if it is permanently damaged, dismantled, or no

longer in operational condition.

 The 2019 Amendment Act added provisions for automatic cancellation if the vehicle
fails to renew its fitness certificate.

Impact of the 2019 Amendment Act on Vehicle Registration

The Motor Vehicles (Amendment) Act, 2019 brought significant changes, focusing on
digitalization, accountability, and safety:

 Digitization of Records: The amendment mandates digital VRCs and vehicle

databases, allowing easy verification across states.

 National Register for Vehicles: Established a central database for vehicle records
accessible by all RTOs, facilitating easy transfer, record updates, and verification.

 Automated Fitness Testing: The amendment introduced technology-driven fitness

testing centers, promoting transparency and ensuring unbiased assessments of vehicle
roadworthiness.

 Tighter Penalties: For non-compliance with registration rules, fitness renewal, and
pollution control, the amendment introduced higher penalties to deter violations.

 Simplified Ownership Transfers: The interstate transfer process was made easier with
mandatory NOCs and extended timelines for re-registration, supporting hassle-free
relocation of vehicles across states.

Liability under MVA (fault and no-fault)

The cases of motor accidents constitute a major bulk of tort cases in India. To prevail in a suit
generally, a victim must also demonstrate that the injurer has breached a duty he owe to the
victim. When an injurer breaches a legal duty he is said to be “at fault’or negligent. Breach of
a duty is caused by doing something which a reasonable man should do under the
circumstances.

The rule of negligence with the defence of contributory negligence holds injurer liable if and
only if he was negligent and the victim was not. In India, this rule requires proportional sharing
of liability when both parties were negligent. That is, the compensation the victim receives gets
reduced in proportion to his or her negligence.

The rule of strict liability always holds the injurer liable irrespective of the care taken by the
two parties.

Before 1988 for motor vehicle accidents liability of injurer was predominantly fault based
liability. However, the 1988 amendment to the Act brought in an element of strict liability. The
following provision (section. 140) was introduced in the amendment:

“where death or permanent disablement of any person has resulted from an accident arising out
of the use of the motor vehicle or motor vehicles, the owner of the vehicle shall, or, as the case
may be, the owners of the vehicles shall, jointly and severally, be liable to pay compensation
in respect of such death or disablement in accordance with the provisions of this section.”

In simple terms, this amendment implied that the injurer or the insurance company of the injurer
has to pay a certain amount as compensation to the victim irrespective of whose fault it is.

The Act was further amended in 1994. As a result of this amendment, liability of injurer became
even stricter. According to section 163-A:

“Notwithstanding anything containing in this Act or any other law for the time being in force,
the owner of the motor vehicle or the authored insurer shall be liable to pay in the case of death
or permanent disablement due to accident arising out of the use of the motor vehicle,
compensation as indicated in the second schedule, to legal heirs or the victim s the case may
be.”

The claimant shall not be required to plead or establish that the death or permanent disablement
was due to any wrong full act or neglect or default of the owner of the vehicle or the vehicles
concerned or any other person.

While filing the damage awards (i.e the liability payments to be made by the injurer to the
victim), courts should take into account the entire loss suffered by victim. A court may entitle
the victim to over or under compensation. Such court errors can cause various effects
depending upon the liability rule in force.

Motor Vehicles Act,1988, however, recognizes limited ‘no fault liability’ but only in the cases
of death and permanent disablement. While deciding on compensation, courts have applied
rule of negligence with defence of contributory negligence. For instance, if the liability is
limited to Rs. 50.000 in the case of death and Rs.25,000 in the case of permanent disablement.
Such compensation can be claimed without establishing any negligence on the part of owner
or the driver of the vehicle. The compensation claimed exceeding the amount can prevail only
if negligence is proved.

Fault liability requires that the victim (or their legal representatives) prove that the accident
occurred due to the negligence or fault of the driver. The burden of proof lies on the claimant
(victim or their representative) to show that the accident resulted from the negligence or fault
of the driver. The court decides the amount of compensation based on the extent of damage or
injury, taking into account factors like income, dependents, and medical costs. The driver or
vehicle owner may argue contributory negligence or that the victim was partially at fault, which
could reduce the compensation amount.

For example, if a driver hits a pedestrian due to reckless driving and the pedestrian files a claim
under fault liability, they must prove the driver’s negligence (e.g., speeding, ignoring signals).
If they succeed, the driver or insurance company is liable to pay for the damages.

No-fault liability allows victims or their families to receive immediate compensation without
needing to prove fault or negligence on the part of the driver. This provision is designed for
speedy and simplified compensation. Having fixed compensation for death and permanent
disability.

No defenses; liability is automatic. Immediate relief without delay for the victim.

Third party insurance

Motor Vehicles Act makes the insurance of Motor Vehicles compulsory. The owner of every
motor vehicle is bound to insure his vehicle against third party risk. The insurance Company
covers the risk of loss to the third party by the use of the motor vehicle. Thus if there is
insurance against the third party risk, the person suffering due to the accident (third party)
caused by the use of motor vehicle may recover compensation either from the owner or the
driver of the vehicle, or from the insurance company, or from them jointly. The policy of
Insurance issued by an authorized insurer is;

1) To insure the person or class of person’s specified in the policy.

2) Insurer is liable to the extent specified in section 147(2)

3) Liable for death, or bodily injury to any person, or damage to property of third party, or
bodily injury to any passenger of a Public Service Vehicle.

It is well settled that where the contract of insurance covers the risk of third party but not that
of the owner or pillion rider of a two wheeler, the liability of the insurance company, in case of
this nature, is not extended to a pillion rider of the vehicle.

In Oriental Insurance Co. Ltd. v. Sudhakaran ,the deceased was travelling as a pillion rider on
a scooter, when she fell down and succumbed to the injuries sustained by her. In terms of
section 147 of the Motor Vehicles Act,1988, it is imperative for the owner of the vehicle to take
a policy of the insurance in regard to reimbursement of the claim to third party while it is from
other risks. The question involved here was, whether the pillion rider on a scooter would be a
third party within the meaning of section 147. Holding that the pillion rider in a scooter was
not to be treated as a third party when the accident had taken place owing to rash and negligent
riding of the scooter and not on the part of the driver of another vehicle, the apex court held
that the legal obligation arising under section 147, could not be extended to injury or death of
the owner of the vehicle or the pillion rider.

In M/s. Godavari Finance Co. v. Degala Satyanarayanamma, referring to the opening words
“unless the context otherwise requires”, in section 2(30) of 1988 Act, the Apex Court ruled: “In
case of motor vehicle which is subject to a Hire-Purchase Agreement, the financer cannot
ordinarily be treated to be the owner. The person in possession of the vehicle, and not the
financer being the owner, would be liable to pay damages for the motor accident.”

Liability is transferred with the transfer of certificate of insurance, as mentioned under section
157 of Motor Vehicles Act,1988. It reads as:

“Trasnfer of certificate of insurance. –

1. Where a person in whose favour the certificate of insurance has been issued in
accordance with the provisions of this Chapter transfer to another person the
ownership of the another vehicle in respect of which such insurance was taken
 together with the policy of insurance relating thereto, the certificate of insurance
and the policy described in the certificate shall be deemed to have been
transferred in favour of the person to whom the motor vehicle is transferred with
effect from the date of its transfer.

[Explanation. – For the removal of doubts, it is hereby declared that such deemed transfer shall
include transfer of rights and liabilities of the said certificate of insurance and policy of
insurance.]

Remedies

1. Injunction

An injunction is a judicial order that restrains a person from beginning or continuing an action
that threatens or invades the legal rights of another. Injunctions are typically issued by courts
to prevent irreparable harm or damage to rights that cannot be adequately remedied by
monetary compensation. In Indian law, injunctions are broadly categorized into temporary,
permanent, mandatory, and restrictive injunctions, each serving a unique purpose in
safeguarding rights.

a) Temporary injunction

A temporary injunction (also known as an interim injunction) is granted to maintain the status
quo and prevent harm until the court reaches a final decision. It is generally sought during the
pendency of a case and ceases once the final order or judgment is passed. Temporary
injunctions are crucial to avoid irreparable harm that could occur if the court waited for a full
trial before acting.

Example: A landlord filing a case against a tenant for unauthorized construction on rented
premises may seek a temporary injunction to prevent further construction until the court
decides the case.

The Supreme Court held that a temporary injunction could only be granted when there was a
substantial chance of success for the plaintiff’s case, irreparable damage in the absence of the
injunction, and a favorable balance of convenience.

b) Permanent injunction

A permanent injunction (or perpetual injunction) is a final court order that permanently
prohibits a party from engaging in specific actions. Once granted, it provides long-term
protection of rights by preventing a defendant from engaging in conduct that would infringe
upon the rights of the plaintiff. Permanent injunctions are generally issued at the conclusion of
a trial when the court has thoroughly examined the evidence and arguments.

Example: A permanent injunction may be issued to prevent a factory from discharging toxic
waste into a river permanently, following a determination that such discharges harm public
health and the environment.

The Supreme Court issued a permanent injunction restraining the defendant from encroaching
on the plaintiff’s land, asserting that property rights are protected from unauthorized
interference.

c) mandatory injunction

A mandatory injunction compels a party to perform a specific act to correct a wrong or fulfill
an obligation. Unlike other types of injunctions, which generally prohibit actions, a mandatory
injunction requires affirmative action to restore the plaintiff’s rights or prevent harm.

Ex: A court may issue a mandatory injunction ordering a construction company to remove a
structure that encroaches on someone else’s property.

The Supreme Court laid down guidelines for granting mandatory injunctions, including the
requirement of a strong prima facie case, potential serious prejudice to the plaintiff, and
irreparable injury if the injunction is not granted.

d) restrictive injunction

A restrictive injunction prevents a party from carrying out a specific act that would violate
the rights of another. This type of injunction, sometimes called a prohibitory injunction,
restrains the defendant from doing something harmful to the plaintiff’s rights or interests.

Ex: A court may grant a restrictive injunction to prevent a former employee from sharing a
company’s trade secrets or confidential information with competitors.

The court issued a restrictive injunction prohibiting the defendant from broadcasting or
distributing pirated copies of the plaintiff’s copyrighted music, protecting intellectual property
rights.

2. Specific restitution
In tort law, specific restitution is a remedy aimed at restoring the plaintiff’s original condition
by ordering the return of something wrongfully taken or retained. Unlike monetary damages,
which aim to compensate for harm through financial means, specific restitution directly returns
an item or asset to its rightful owner. Specific restitution is primarily concerned with undoing
the wrongful act and placing the plaintiff back in the position they would have been in if the
tort had not occurred.

Specific restitution is commonly sought in cases of conversion, trespass to goods, wrongful

detention, and other scenarios where the defendant has interfered with the plaintiff's possession
or property rights.

For example, if a person wrongfully takes possession of a valuable item belonging to another
(conversion), the court may order them to return it to the rightful owner.