Consumer Gai

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1 CONSUMER PROTECTION ACT 1986 HOW TO WIN YOUR CASE IN THE CONSUMER COURT by Jehangir Gai A PRESENTATION BY JEHANGIR GAI About the Author: Jehangir Gai has received the Government of India’s National Youth Award for Consumer Protection. He is a columnist who regularly writes on consumer issues in Times of India, Business Standard, and other newspapers and magazines.

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cons gai

Transcript of Consumer Gai

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CONSUMER PROTECTION

ACT 1986

HOW TO WIN YOUR

CASE IN THE

CONSUMER COURT

by Jehangir Gai

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About the Author:

Jehangir Gai has receivedthe Government ofIndia’s National YouthAward for ConsumerProtection. He is acolumnist who regularlywrites on consumerissues in Times of India,Business Standard, andother newspapers andmagazines.

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PREVENTION IS BETTER THAN CURE

CAVEAT EMPTOR: BUYER BEWARE

PREVENTIVE ASPECTS TO AVOID

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Never rely on the recommendation of any trader, as he is moreconcerned about his own profit than the quality of the product.

Sometimes a consumer is confused about which brand or model would suithis needs the best. Do your own research, ask friends or relatives, butnever depend on the trader or shopkeeper for advice. The chances are thathe will recommend a product where his profit margin is higher.

Precautions to be taken by a consumer:

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Ensure that you get a proper cash memo or invoice.

Many traders issue a “quotation” or an “estimate” instead of a cash memoor an invoice. Gullible consumers do not realize this. Or sometimes theconsumers too are at fault for wanting an item without a proper bill to avoidtax. No matter what the reason, when something goes wrong, the consumerdoes not have any proof to show that he had actually purchased the item.

Precautions to be taken by a consumer:

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Never sign any agreement blindly, relying on the explanation given by amarketing executive.

Marketing executives often misrepresent facts and misguide consumers toachieve their own marketing targets. They deliberately fail to explain thoseclauses which are detrimental to the interest of the consumer.Example 1: Marketing representatives of a particular share trading portal tell aprospective customer that the relationship manager will advise the customer how tomake profits through share trading. What he suppresses is that the customer isresponsible for all orders placed and the trading portal will not be held responsible forthe advice given by their manager.Example 2: Similarly, insurance companies sell policies which are not suitable to thecustomer’s needs. A 70 year old lady was sold a policy where a premium of Rs.3 lakhsper annum had to be paid over 20 year term, for realizing the benefits under the policy.

Precautions to be taken by a consumer:

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Do not sign any document without checking itscontents

For example, when a defective car is taken for repairs,the customer is usually made to sign the job card thatthe repairs have been carried out to his satisfactionwithout even allowing him to check the vehicle.

Precautions to be taken by a consumer:

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Insurance companies often ask unsuspecting and gullible consumers to submita fresh proposal form on the pretext that the original one is misplaced and thecompany wants to update its records. The fresh proposal is then misused toissued a fresh insurance policy on revised terms and conditions.

Precautions to be taken by a consumer:

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It is a common expectation that an insurance agent must render the service ofcollecting the premium from the insured client and pay the same to theinsurance company. This practice is commonly prevalent, though legally notvalid. If the agent forgets or does not deposit the premium with the insurancecompany, the policy lapses. The insurance company cannot be held liable.

The Supreme Court held that Regulation 8 (4) of the Life Insurance Corporationof India (Agents) Regulations, 1972 states that an agent does not have theauthority to collect any money or to accept any risk for or on behalf of the LIC.This condition is also incorporated in the letter of appointment issued to agents.Hence the agent does not have any express or implied authority to receivepremium on behalf of the LIC. Premium paid to the agent cannot be consideredas payment to the LIC. In case of default by the agent to deposit the premium,LIC would not be liable to settle the claim.

[Harshad J. Shah & Anr. v/s. LIC & Ors. – III (1997) CPJ 9 (SC)]

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An agent is NOT authorized to collect the premium from his client:

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Electric connection can be disconnectedeven for non-payment of a time-barredbill

AIR 1997 SC 1101 (Supreme Court)Swastic Industries v/s Maharashtra StateElectricity Board

You cannot live without power. So it is betteryou challenge any inflated bill rather thanwait for the electric company to file a casefor recovery against you.

Precautions to be taken by a consumer -Be vigilant about your rights – don’t depend on others for action

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UNIQUE FEATURES

OF

THE CONSUMER PROTECTION ACT

1986

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Who is a consumer?

A consumer is a person who —

buys any goods for consideration

uses such goods with the approval of person who hasbought those goods for consideration

hires or avails of any services for consideration

uses such services as a "beneficiary" with the approval ofperson who has hired those services for consideration

Consideration: It may be:

fully paid or partly paid, or

promised to be paid, or

payable under a system of deferred payment

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Exclusions

1. Goods purchased or services availed for commercialpurpose.

(Investment in real estate or trading in shares isconsidered commercial purpose.)

Exception: When the purchaser uses the goods or servicesfor earning his livelihood.

(A person who buys a taxi and drives it himself to earn hislivelihood is a consumer, WHERAS a person who buys a taxiand rents it out to someone else to drive is not a consumer).

2. Free goods or services

Exception: Patients in a hospital which has both paying aswell as free patients - the free patients are considered to bedeemed consumers whose charges are recovered from thepaying patients.

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Exclusions (continued)

3. Services under a contract of personal service,

when there is employer-employee or master-servant relationship,where the master can tell the servant what is to be done and how itis to be done.

As distinct from a contract for personal service,

such as rendered by professionals (doctors, lawyers, architects,Chartered Accountants, and even tailors) who exercise their ownskill, knowledge and expertise

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EVIDENCE

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Remember, the consumer forum is notaware of what has actually transpired, orwho is right and who is wrong. Merelybecause you say something does notmake it the gospel truth, even if it iscorrect. The forum has a duty to decidethe case on the basis of the evidencebefore it. So, even if the other sideagainst whom the complaint has beenfiled is absent, you have to produceevidence to substantiate your grievanceand justify the relief claimed by you.

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IEvidence: The success or failure of the case depends on evidence

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What is meant by evidence ?

In simple terms, evidence means proof.

A complaint has to be decided on the basis of the evidenceproduced by the contesting parties.

Evidence helps a court to decide which of the parties iscorrect.

Consumer forum follows a summary procedure. So, oralevidence is usually not recorded.

Hence it becomes necessary for proper documentation offacts through correspondence, which can be used asevidence.

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How do you build up evidence and preserve it?

Retain the bill, cash memo or invoice. Some shops issue acomputerized bill on thermal paper which fades after sometime, so make a photocopy.

Make sure that you obtain a proper bill or receipt orwhatever you purchase, and not a mere “quotation” or“estimate”.

Make sure that you deal with the manufacturer or theauthorized service centres. If the trader from who youpurchased a product, or any other unauthorized persontinkers with the product, it would invalidate the warranty /guaranty.

These days, companies appoint call centres to attend toservice and complaint calls. A complaint no. is usually givenfor tracking. Note down the complaint no. and the date forfuture reference, and preserve it at least till the warranty forthe product expires.

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How do you build up evidence and preserve it? (continued)

Retain a copy of the Job Card, Service Sheet, or any otherdocument that you sign. If this is not possible, at least notedown the reference no.

In case of any repeated fault, make it a point to write to themanufacturer or send an e-mail, recording the entiresequence, along with the relevant references and dates.

Example: Washing machine case

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PROCEDURE FOR FILING

CONSUMER COMPLAINTS

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Who can file a complaint:

Any person, including —

a firm whether registered or not;

a Hindu undivided family;

a co-operative society;

an association of persons whether registered under theSocieties Registration Act, 1860 or not;

a voluntary consumer organization on behalf of the consumer;

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How is a complaint to be filed ?

A complaint has to clearly set out:

o the name and address of the complaint

o the name and address of the opposite partiesagainst whom the complaint has been filed

o the details of the transaction

o the facts of the case

o the reason for the grievance and the attemptsmade to resolve it

o the nature of reliefs sought.

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What are the documents to be filed along with thecomplaint ?

A complaint must be accompanied by all supportingdocuments such as

o proof of purchase

o proof of defects / deficiency / unfair tradepractice / restrictive trade practice

o correspondence with the trader and manufactureror service provider

o affidavit in support of the complaintA P

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Other requirements for filing a complaint:

The complaint must be preceded by a short synopsisgiving the gist of the dispute in a few sentences.

The complaint must have an index, giving the details ofthe annextures and all the pages must be consecutivelynumbered.

For complaints to the District Forum and StateCommission, 3 identical sets of the complaint have to befiled + 1 set for each opposite party against whom thecomplaint has been filed + 1 set for the complainant toargue his matter.

In case the complaint is to be filed before the NationalCommission, one additional set has to be filed.

Each set of the complaint must be put in a separate fileand submitted along with the court fees.

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Where must the complaint be filed?

District Forum upto Rs. 20 lakhs

State Commissionover Rs. 20 lakhs upto Rs. 1 crore

National Commission over Rs. 1 crore

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1. Pecuniary Jurisdiction:

2. Territorial Jurisdiction:

The jurisdiction of the consumer forum does not depend onwhere the complainant resides. The place of residence or workof the opposite party determines to jurisdiction of the consumerforum.

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Court fees payable for filing complaints:

Claims upto Rs. 1 lakh

Rs. 100/-(nothing payable for those who arebelow Poverty Line and holdingAntyodaya Anna Yojana Cards)

Claims over Rs. 1 lakhs uptoRs. 5 lakhs

Rs. 200/-

Claims over Rs. 5 lakhs uptoRs. 10 lakhs

Rs. 400/-

Claims over Rs. 10 lakhs uptoRs. 20 lakhs

Rs. 500/-

Claims over Rs. 20 lakhs uptoRs. 50 lakhs

Rs. 2,000/-

Claims over Rs. 50 lakhs uptoRs. 1 crore

Rs. 4,000/-

Claims over Rs. 1 crore Rs. 5,000/-

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Procedure followed by the consumer forum:

The complainant is first heard on the maintainability of thecomplaint, viz.

where it is a consumer dispute,

whether it has been filed in time (limitation is 2 years)

whether the dispute falls within the territorial andpecuniary jurisdiction of the consumer forum.

Notice is then issued to the opposite parties.

Opposite parties have to file their reply (version) within30 days of receipt of notice. Only one extension of 15 days islegally permissible.

Both parties have to file their affidavits by way of evidence.

Written arguments are then filed by both the parties, andthereafter the complaint is also orally argued.

The case is decided by an order.

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Time frame for deciding disputes:

The Consumer Protection Act stipulates that disputes must bedecided within 90 days days. However, if the dispute requireslaboratory testing of goods, it the complaint must be decided within150 days.

The ground reality is that due to a huge backlog of cases, it takeson an average anything between three to five years for a complaintto be decided in urban cities.

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Appeals:

Any party who is aggrieved or unhappy with the order cango in appeal to the higher forum with 30 days.

Enforcement / Implementation of the order:

In case of non-compliance of the order, an application canbe made to the forum pointing out that the order has notbeen complied with. The Forum can order the attachment ofthe property of the trader / service provider, and can also besentence him to imprisonment for disobedience. The penaltyis imprisonment upto three years, or a fine which uptoRs.10,000/- or both.A

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SOME INTERESTING CASELAWS

TO HELP

UNDERSTAND YOUR RIGHTS

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Insurance company cannot exclude ailments at the time of renewal ofthe policy:

Insurance companies cannot exclude ailments at the time of renewalof a mediclaim policy, refuse its renewal or load the premium (unlesspermitted under the terms of the original policy).

United India Insurance Co. Ltd. v/s Mohanlal Aggarwal and connected matters – Gujarat High Court

Insurance company cannot refuse to release the undisputed claimamount to coerce an insured into giving full and final discharge /satisfaction. Such pressure tactics are illegal.

1. K.L. Malhotra v/s Oriental Insurance Co. Ltd. & Anr.[I (2003) CPJ 107 (NC)]

2. Abhay Neelawarne v/s New India Assurance Co. Ltd. & Anr. – [II (2008) CPJ 261 (NC)]A

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An insurance company cannot arbitrarily refuse to renew a policy orunilaterally change the terms and conditions:

Insurance companies are willing to accept premium so long as the policy isprofitable. The minute the company feels that the policy is likely to becomeonerous, it does not want to renew the policy or wants to incorporateconditions and exclusions which are detrimental to the insured. This is notpermissible.

Renewal cannot be refused:The Supreme Court has held that an insurance company is bound to actfairly and reasonably. Renewal cannot be refused on irrelevant andextraneous considerations or in an arbitrary manner.

Renewal to be on identical terms:The Supreme Court has held that a renewal of an insurance policy meansrepetition of the original policy. When renewed, the policy is extended onidentical terms. By renewal, the old policy is revived and the obligationsunder the old policy are extend for a further period. It may be that onrenewal, a new contract comes into being, but the said contract is on thesame terms and conditions as that of the original policy.

[Biman Krishna Bose v/s United India Insurance & Anr. –[III (2001) CPJ 10 (SC)]

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IA claim under a Mediclaim Policy CANNOT be rejected merely because itis not filed within the prescribed period:

Even though a mediclaim policy covers post-hospitalization treatment upto60 days, the policy usually provides that a claim should be lodged within30 days of discharge. This would require two separate claims to be filed forone hospitalization – the first claim for pre-hospitalization diagnostic testand hospitalization; and a second claim for post-hospitalization treatmentand follow-up. If a person lodges one composite claim at the end of thetreatment, it is rejected on the ground that the claim was not lodged within30 days of discharge. Such a rejection is not correct.

The Maharashtra State Commission has held that the condition regardingthe time limit is not mandatory, but merely directory to facilitate promptscrutiny of the claim. Hence this clause cannot be used to the detriment ofthe insured. The repudiation of the claim on this ground is not justified.

[New India Assurance Co. Ltd. v/s Mr. Nanasaheb HanumantJadhav & Ors. – 2005 (2) CPR 24].

Similarly, the National Commission has held claims should be settled onmerits and not rejected on a technical plea of not having been lodgedwithin 30 days.

[State of Maharashtra v/s ICICI Lombard General Insurance Co.Ltd. – Interim order dated 20.08.2008 in ComplaintNo. 27 of 2008].

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IRevised uniform definition of pre-existing disease:

The General Insurance Council (GIC) has formulated a uniform definitionfor pre-existing diseases. This would be applicable to all medical insurancepolicies, new as well as those renewed after 1.6.2008. It lays down:

“Uniform Definition of Pre existing diseases and related exclusionwordings.

Pre-existing disease definition: Any condition, ailment or injury orrelated condition(s) for which you had signs or symptoms, and /or were diagnosed, and / or received medical advice /treatment,within 48 months prior to your first policy with us.

Exclusion wording: Benefits will not be available for anycondition(s) as defined in the policy, until 48 months ofcontinuous coverage have elapsed, since inception of the firstpolicy with us.”

The National Commission held that even those diseases which werepre-existing when the cover incepts for the first time would automaticallystand covered when the policy has been in force for over 48 months.

[New India Assurance Co. Ltd. v/s Vasant Rao –II (2006) CPJ 113 (NC)]

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IThe award of the Insurance Ombudsman is not binding on the insured –A consumer who is not satisfied with the award can approach theconsumer forum:

The National Commission has observed that the Ombudsman is appointedby the Government / Industry and his role is merely to act as a counselorand mediator. If mediation fails, then the Ombudsman can make an awardwhich he thinks is fair. The insurance company is bound to comply with theaward only if the consumer communicates his agreeability to accept theaward. Thus, it is upto the consumer to choose whether or not to acceptthe award of the Ombudsman. A consumer was not satisfied with theOmbudsman's decision, he would be entitled to approach the consumerforum.

[Kamleshwari Prasad Singh v/s National Insurance CompanyLimited - 2005 (1) CPJ 107 (NC)]

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IA humourous true life consumer case:

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THANK YOUA P

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