Is Consumer Really The King In India

Is Consumer Really The King in India? Amartya Bag 1

Introduction Consumers are considered to be king in a free market; the sellers are guided by the will of a consumer. Webster's dictionary defines Consumerism as "the promotion of the consumer's interests" or alternately "the theory that an increasing consumption of goods is economically desirable". "Consumerism" is likely to dominate the Indian market in the coming years, thanks to the economic reforms in the present years and increased direct foreign investment in the retail sector. The transition will be from a predominantly "sellers market" to a "buyers market" where the choice exercised by the consumer will be influenced by the level of consumer awareness achieved. By "consumerism" we also mean the process of realising the rights of the consumer as envisaged in the Consumer Protection Act (1986) viz. right to safety, right to be informed, right to choose, right to be heard, right to redress, right to consumer education, right to satisfaction of basic needs and ensuring right standards for the goods and services for which one makes a payment. The big multinationals will leave no stone unturned to gain the attraction of the consumer and will try to gain a respectable market share. However, some of the companies try to engage in unscrupulous, exploitative and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black-marketing etc. The earlier approach of caveat emptor, which means “Let the buyer beware”, has now been changed to caveat venditor (“Let the seller beware”). There is an active need for having awareness on the consumer protection rights.

Evolution of Consumer Protection Rights in India The consumer movement in India is as old as trade and commerce. In Kautilya's Arthashastra, there are references to the concept of consumer protection against exploitation by the trade and industry, short weights and measures, adulteration and punishment for these offences. However, there was no organised and systematic movement actually safeguarding the interests of the consumers. Prior to independence, the main laws under which the consumer interests were considered were the Indian Penal Code, Agricultural Production, Grading and Marketing Act, 1937, Drugs and Cosmetics Act, 1940. Even though different parts of India exhibited different levels of awareness, in general, the level of awareness was pretty low. Indian consumer movement began with Passengers and Traffic Relief Association (PATRA) in Mumbai, in 1915. The growth from there has been incredible and the momentum of this growth started during the ‘60s. In 1969, Monopolies and Restrictive Trade Practices Act was enacted and MRTP commission was set up under the provision of the act. The act deals with cases of restrictive trade practices adversely affecting competition and with unfair trade practices arising largely out of false and misleading advertisements. After this act, consumer groups emerged. The emergence of the 1

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Amartya Bag, B.A. LL.B. (1 Semester), KIIT Law School, KIIT University, Bhubaneswar, Orissa. Email : [email protected]

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Consumer Education and Research Centre in Ahmedabad, in 1978, was a milestone in the consumer movement of India. It provided a thrust and a direction to the movement in terms of a result-oriented approach through effective uses of the law and the courts, and injecting professional inputs into the movement. In the 1980s was the time for the consumer rights and many consumer groups were formed by now in different parts of the country. In 1986 the Consumer Protection Act was enacted. In 1987, the Indian Standards Institute (ISI), which was started around 1947 as a membership society largely dominated by industries, was turned into a statutory corporation called the Bureau of Indian Standards with greater participation by consumer organizations thereafter. In 1993, the Consumer Protection Act was amended overcoming few limitations and making it more effective and inducing the concept of consumer courts. Three tier consumer courts at the nation, state and district level known as the District Consumer Dispute Redressal Forum, State Consumer Disputes Redressal Commission, and the National Consumer Disputes Redressal Commission respectively was established under the provision of the act. Consumer Welfare Fund was also created during that time. We have the Securities and Exchange Board of India, 1992, the Telecommunication Regulatory Authority of India, 1997, and the Central Electricity Regulatory Commission, 1998. Apart from these, a number of acts like Indian Contract Act, Sale of Goods Act, The Essential Commodities Act, The Agricultural Produce (Grading and Marking) Act, The Prevention of Food Adulteration Act, The Standards of Weights and Measures Act have been enacted by the Indian legislature from time to time to protect the interest of the consumer. The system has been considered as one of the best in the world in the matter of consumer protection.

Consumer Awareness and Rights – a Ground Reality Even with so many milestones, the system is not perfect and there are still hurdles in providing justice to the consumer in some cases. In spite of having a separate ministry or department of consumer affairs at centre and in every state, the reality is that consumer loses the battle every time and bows before the big wigs that own the industries and rein the huge consumer market in India. The consumer is nothing but a crownless king; the real power lies in the hands of big multinationals and retail chains. Another reason may be the lack of awareness amongst the consumer about their rights. A recent study found that although the people have basic knowledge about the Weights and measures act but very few people have knowledge about the other laws like the Drug and cosmetic Act; Prevention of food adulteration, food product order, the essential commodity Act; Display of price order; prevention of black marketing and maintenance of supplies. It was also found in the survey that the males are much more aware about the consumer protection laws than the females. It was also found out that the people were not aware about organization working at district and national level. Out of total sample, 48 percent males and 20 percent females were aware of both consumer courts as well as consumer forum. Only 6 percent each of male and female respondents were aware about the sub- divisional magistrate (S.D.M.) office. Very few knew about the public supply office. Majority of respondents that is 50 percent males and 12 percent females were aware about the National Consumer Forum at Delhi. 2 percent males each were aware of consumer Guidance Society, Hyderabad and Consumer Forum Bombay. None of the female respondents were aware about Consumer Guidance Society and Forum. This survey shows how the consumers in India are unaware about their legal rights. Indian consumers want quantity not quality, they prefer to compromise rather than complain. Though charging of a good above the maximum retail price (MRP) is against the law, it is a very 2|Page

common observance that the seller tends to charge a good above the MRP. It is common that one has been charged above MRP for buying a bottle of mineral water at railway station or multiplexes. There are many goods which are sold in the market without much information about their quality, quantity and purity. In case of goods meant for mass consumption like, food, milk products, edible oil etc. the ingredients are not known. Manufacturers or producers seldom follow the safety regulations in the products like, lamps, batteries, footwear, electrical equipments, wires, cement, LPG cylinders, stoves, switches, plugs, sockets etc. leading to many fatal accidents. Adulteration of food is another major problem. Milk can contain detergent, refined oil, caustic soda or urea. Mustard oil can be adulterated with argemone oil and arhar dal with yellow colour. Vegetables and fruits are artificially coloured. Indiscriminate use of pesticides by farmers and untreated effluents by industries, have led to the problem of food contamination by pesticide residues and toxic heavy metals. The consumers are cheated by a section of sellers. The big multinational companies make a huge profit from whatever they sell; they try to gain the attention of an average consumer through catchy slogans and advertisements with Bollywood celebrities and cricket players as their brand ambassador to promote the goods. The consumer lured by the advertisement follows the preference of their silver screen idol blindly without knowing the ingredients of an article and suffers. Sometimes the sellers offers unrealistic schemes on anything ranging from soap to a two-wheeler or a computer, the consumer is deceived by these schemes offered by the manufacturers, who spend crores of rupees on their brand ambassadors. The poor consumer, who is caught-up in ‘buy-one, get one schemes’ hardly finds time to apply his mind that it is he who pays everything, even for those so-called free-gifts and gold coins that are used as marketing tools. The tragic part of all this is that at the time of purchasing the goods, the consumer is never shown the clauses of warranty, written in the microscopic fonts, with so many “conditions apply” mentioned in the foot-notes of these documents hidden somewhere in ‘owner’s manual’. The consumer gets this owner’s manual only after he makes the payment of the product he intends to purchase. However, a closer look at such ‘warranties’ makes one to ponder upon the fraud most of the companies commit with a consumer. Take an example of a two-wheeler or a four-wheeler purchased from any ‘reputed’ automobile company. The warranty says like this: “This warranty doesn’t apply to proprietary parts like tyres, tubes, battery, plastic items, bulbs, indicators, rubber components, grommets, ‘O’ rings, bellows etc.” Then what is left that comes under warranty? There is another fraud attached to such goods. A branded company uses and assembles the tyres and spare-parts of lesser known companies. The consumer hardly knows about this arrangement, as no such trade secrets are revealed through the advertisements by the brand ambassadors. The poor consumer, who intends to bring home the ‘leader’ from the firm of international fame, comes to know about such fraud only after the purchasing of the goods that is stuffed with low quality desi spare-parts. Now have a look at the warranty card provided with any electric or electronic goods item, including television sets, DVDs, computers etc. The consumer is again duped in the similar fashion. Here again, the hidden warranty speaks something like this: “In the event of damage on account of high or low voltage, fluctuation in current, lightening etc, the warranty is 3|Page

automatically null and void.” Is a consumer responsible for the high or the low voltage that is supplied by the electric department? Again, in case of refrigerators or air conditioners, the companies claim that they will not be responsible for the “leakage in the gas”, for which extra money is to be paid. Further, similar conditions prevail in case of automobiles, which say that there will be no replacement on rubber or plastic items, notwithstanding the fact that the ACs or fridges are mostly made of such stuff. If there is no warranty on such items, then what is the warranty all about? Just to deceive the Indian consumer who simply purchases the goods thinking that the same can be repaired or replaced within the warranty period while remaining ignorant of the basic difference between ‘guarantee’ and ‘warranty’. And when any aware consumer dares to challenge such ‘self-made clauses’ in the court of law in the event of any defect in the goods within the warranty period, he comes across with another problematic clause in the warranty that reads like this: “This contract is effective at a place where the company has a manufacturing unit (say at Mumbai) and claims if any, shall be made only before the courts having the jurisdiction in Mumbai and no claims shall be made outside Mumbai, notwithstanding that the refrigerator, two-wheeler, TV etc may have been sold or delivered or any stipulation or commitment in respect thereof may have been made elsewhere.” Have another look at clause in warranty: “This warranty is in vogue only for a period of 12 months from the date of purchase.” The fact is that ACs or fans remain off for at least six months a year in most parts of the country. Yet another clause says that if a machine has been negligently used, then the company is not responsible for the damages.

Despite the existence of consumer forums at various levels, many people are compelled to go to the courts seeking remedies. In India sellers try to corner and catch the consumers on wrong foot in the courts of law by putting the onus of damage on to the consumer, declaring him an ‘untrained’ to operate the consumer goods, while arguing the cases through highly paid advocates. And the poor consumer, who is already depressed on account of having purchased a defective item, thinks twice before moving consumer protection forums or NGOs for the redressal. Can he afford to hire the services of a good advocate to fight the case against such multinational companies who have a turnover in crores of rupees per year? And then such forums too show inability at times to help the consumer, after going through the cunningness hidden in every ‘term and condition’ written in the ‘owner’s manual’. One wonders, who has authorised such companies to incorporate all such conditions that suit only them and not the consumer. The concerned ministry aware of all this deceit and yet, the consumer is far from being the king. Why? For one, he is averse to be a litigant and prefers to suffer in silence. For another, the courts are so over-burdened with cases, majority being trivial, that justice is invariably delayed, if not denied. The Consumer Courts were created with an objective to dispose the cases within a very short span of time, but the ground reality is that the case remains without trial for many years, thus defying the very objective of its establishment. Presently, the courts are located at district headquarters. This prevents consumers of far-flung areas, particularly in big states like Uttar Pradesh and Madhya Pradesh, from approaching the courts for

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justice. A more disparate distribution of the redressal machinery is desirable. The cumbersome procedure for filing a case adds to the burden of a consumer in the process of getting justice.

Conclusion Consumers have the social responsibility of exposing the manufacture/supplier or the service provider for resorting to illegal trade practices. Unethical notings like “Goods once sold will never be taken back” are in sharp contrast to the practice in some of the developed countries, where the sellers declare; “In case you are not fully satisfied with our product, you can bring the same to us within a month for either replacement or return of your money.” This is the result of consumer consciousness. Consumers have to realize their role and importance. The consumer movements can be winner movements only with our active involvement by knowing our rights and enforcing them. Formation of consumer associations in every town would be the first step in this path. It requires a voluntary effort involving the participation of one and all. If the consumers remain passive, they will continue to be exploited. It is necessary that consumers take action with solidarity to get a fair deal and timely redressal. An alert consumer is a safe consumer! There is need for a fresh look at the machinery already set up to protect consumer interests. Establishment of more number of mobile consumer courts and fast track consumer courts to resolve minor issues should be done to make the judgement procedure fast. In the coming years, every consumer in his own interest has to realise his role and importance in the right perspective. In a competitive economic environment the consumer has to exercise his choice either in favour of or against the goods and services. His choice is going to be vital and final. He should realise his importance and prepare himself to exercise his rights with responsibility. It is very often stated "Customer is sovereign and consumer is the King." If that is really so, why do we have the Consumer Protection Act? Why is there a need for protecting the King? Should it not be rightly called "Consumer Sovereignty Act"? It is for the consumers to decide. After all the dictum in democracy is, the citizens get a government they deserve. Similarly the consumers in society get a position in the market depending upon what they do or do not do. It is agreed on all hands that "consumer empowerment" in India has a long way to go. This is the right time to act.

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