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Simple, inexpensive and speedy
justice, the main aim of the consumer protection THE more things change, the more they remain the same. Wading through some old files the other day, I happened to stumble upon some of my consumer columns written 25 years ago. As I turned the pages, I saw some angrily penned articles on state-run, monopolistic service providers who were treating consumers shabbily.
There was a story about a consumer who had to wait for 25 years to get a telephone connection; another one on how consumers dressed as mourners, had taken out a procession of ‘dead’ telephones to focus attention on the Telephone Department’s sloth and inefficiency in rectifying faults. The other heated issues included the time taken for the fructification of trunk calls booked through the telephone exchange, rude behaviour of operators, disturbances on the line, and inaccurate billing. Then there were stories on the long wait for LPG connections; on local transport services in Delhi breaking down frequently; of a passenger going to the court on this issue and getting a compensation of Rs 10, which was the amount that he had spent on going to office in an autorickshaw following the bus breakdown. These clips set me thinking on the course that consumer justice has taken over the past 25 years. As you would have discerned by now, those were the days when the State ran everything — from banks and insurance companies to airlines and hotels. And service providers exploited their monopolistic power to the hilt and rode roughshod over customers. The absence of competition made them complacent and lethargic; their performance was dismal, and their treatment of clients, disrespectful. The subsequent years saw two highly significant developments. While one was the constitution of courts under the Consumer Protection Act (CPA) that came into being in 1986, the other was the process of economic liberalisation set into motion by the government in 1991. Together, these two developments brought about a sea change in the life of consumers. While the CP Act gave them, for the first time, an exclusive system of consumer justice, the opening up of markets put an end to monopolies in the public as well as the private sector, and gave them, the choice that they always longed for — be it in the insurance sector or the telecommunication sector. Such courts opened the floodgates of consumer litigation in the country. There were cases against insurance companies, the Postal Department, electricity boards, housing boards, the Railways, airways, manufacturers, traders, stock brokers, doctors, lawyers, etc. In fact, anyone who provided defective goods and services was hauled up before the courts. The process of economic liberalisation, too, brought about some positive developments. Telecommunication services improved; even as tariffs came down. From the days of "booking a trunk call", people moved to an era of cellphones and Internet connections. Competition in the skies too brought down airfares, making air travel highly affordable. Let’s now move to 2009, and ask that crucial question: Have the developments of the last quarter century brought about a change in the status of the Indian consumer? Does the Indian consumer today command the kind of respect that he deserves from manufacturers and service providers? Sadly, the answer is in the negative.
In the manufacturing sector, too, consumers may have a wider choice of products and a better quality, but the abysmally poor after-sales service and complaint redress processes take away the pleasure of owning quality products. In fact, the biggest challenge that the customers in India face today is with regard to unfair trade practices. From bankers to insurers, builders to traders, almost every service provider is guilty of unfair trade practice. It could be in their advertising or marketing practices, or in the terms and conditions that they impose on buyers or in the services that they provide (unfortunately, we still do not have a law to protect people from unfair terms in consumer contracts). A look at the complaints received by the insurance and the banking Ombudsmen, in fact, throws light on some of these practices. Just on one issue — on banks levying charges without notice — the banking Ombudsmen in the country received as many as 3,740 complaints in 2007-2008. It is ironic that both the Monopolies and Restrictive Trade Practices Act and the Consumer Protection Act provide for protection against unfair trade practices. And the definition of UTP under both the laws is quite comprehensive. When the CPA came into existence, it was believed that the law, with its emphasis on "better protection" of consumers, would bring about the required transformation in the market place and promote a healthy respect for them among manufacturers and service providers. But, unfortunately, that has not happened. The reasons are several. First and foremost, the Act is not, and cannot be, a panacea for all consumer problems. It cannot be a substitute for poor implementation by states of various laws meant for the protection of buyers like the Standards of Weights and Measures Act, the Prevention of Food Adulteration Act, the Drugs and Cosmetics Act, or the Drugs and Magic Remedies (Objectionable) Advertisements Act. Nor can it replace an effective system of grievance redressal at the manufacturers’ and the service providers’ level. A court should, in fact, be the last resort for the redressal of complaints. But today the reality is that manufacturers and service providers have not put in place, processes that ensure satisfactory resolution of their customer complaints. As a result, consumer courts have become the first and the only system of grievance redress. (Except in the banking and the insurance sector, where the aggrieved can also approach the Ombudsmen) This puts a huge burden on the courts. As on May 14, 2009, these courts had registered a total number of 31,97,566 cases and disposed of 28,34,711 of them (88.65 per cent). Second, in countries like the US and Canada, the industry body-supported Better Business Bureaus offer independent, highly effective alternative dispute resolution mechanisms (ADRM) like mediation and arbitration for quick decisions on complaints. "Come to BBB before you go to the court", says a blurb of BBB in the US. "Our business culture must utilise the benefits of voluntary arbitration and mediation as a positive and viable business practice." Such an ADRM would have reduced considerably the burden on the courts. But in India, trade and industry associations are reluctant to offer such solutions. One reason could be that they are not threatened by courts and, therefore, do not think it necessary to wean buyers away from consumer courts by providing an alternate system of redress. Two factors have, in fact, emboldened them: one is the low success rate of aggrieved persons approaching the courts (50 per cent); the other is the poor compensation doled out by courts to the affected party. Obviously, this has not made any dent in their pockets. Third, in India, the empowerment of customers is undeniably linked to the consumer justice system provided under the CPA. But this justice system has, unfortunately, failed to live up to its expectations. Take the case of 130 farmers from Maharashtra who filed a class action suit, seeking compensation for the loss of yield during the sowing season of 1993, on account of defective hybrid cottonseeds sold to them. They won the case, but it took 14 long years, during which time, 10 farmers had died — may be some of them committed suicide — (RP no 524 of 1997, decided on August 7, 2007) The consumer justice system, as envisaged under the CPA, was meant to help people get relief without the help of lawyers, and through simple summary procedure that would facilitate quick disposal of cases. But today, the entire process of adjudication has become so technical and complicated that the aggrieved feel that they can't fight a case without the help of a lawyer. And that renders the entire system of consumer justice expensive. A performance audit on the implementation of the CPA, undertaken by the Comptroller and Auditor General of India for the year 2000-2001 to 2004-2005 showed that 82 per cent of the expenditure by consumers in fighting cases before the courts had been on advocates. Ironically, courts have held that delay in the delivery of services constitutes deficiency, and clients are entitled to compensation for any loss or injury caused on account of such delays. But these courts themselves are guilty of undue delay in the settlement of cases. This, in fact, has weakened the very edifice of consumer justice in India and emboldened manufacturers and service providers. These courts are supposed to resolve a complaint within three months. But in reality, only 32 per cent of the cases are decided within that period. The reasons for such delays are many. First and foremost is the adjournments given at the behest of lawyers — an unhealthy practice that has been brought into the justice system by judicial members of courts and lawyers steeped in the lethargic civil justice system. Then there are other causes such as the inadequate number of consumer courts to tackle the burgeoning number of complaints. Delays by state governments in establishing more courts, in appointing members of these courts and in providing adequate support staff and necessary infrastructure have also contributed to delays. So also the deviation from the summary procedure prescribed under the law. Even though the civil procedure code is not applicable to proceedings before these courts, many of them resort to complicated procedures, thereby delaying the adjudication process and in the bargain, denying justice to the affected people. In the case of CERC vs New India Assurance Company (RP No 2721 of 2007), for example, a simple claim pertaining to a damaged television set covered under the householder’s policy dragged on for years because the district consumer disputes redressal forum, Ahmedabad (rural), went into a long legal debate on whether a power of attorney holder can file a case under the Code of Civil Procedure. Eventually, the case was dismissed because the father had the power of attorney on behalf of the son to fight the case. In the initial years itself, the apex consumer court had made it clear that the spouse and parents of a complainant can file a complaint. Yet, in this case both the district forum and the state commission dismissed the case, forcing the father to go all the way to the national consumer disputes redressal commission for justice. While introducing the Consumer Protection Bill of 1986 in Parliament, the government had explained that the law was compensatory and not penal in character. And this very nature of the law would limit the time taken for settling a dispute, while at the same time promoting a healthy respect for consumers among manufacturers, traders and service providers, the government had said. However, not only do the wheels of consumer justice move slowly, but at the end of it, the computation of damages by these courts in most cases is too conservative and meagre to be just. All this does not mean that the consumer justice system has failed and failed completely. The law, providing for a parallel system of consumer justice, is one of the best in the world and these courts have given relief to thousands of people. But for the law to be fully effective and serve the purpose for which it was enacted, simple, inexpensive and speedy justice ought to become the raison de’tre of these courts. And that has to be accomplished through stringent monitoring of the working of the courts. It is also necessary to create an infrastructure that would help consumers understand the law and file complaints without the help of lawyers. Only then will we see a different picture of consumer justice and empowerment in India.
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As
I said in the beginning, the more things change, the more they remain
the same. People now need not go to a bank and stand for hours in a
queue to draw money from their accounts. But there are still
innumerable complaints of ATMs not dispensing the money and banks
wrongfully deducting amounts from customers’ accounts and not
refunding the same. This is despite a clear mandate from the RBI to
reimburse the money in such cases within 12 days.