Unfair trade practice under the consumer protection act

Section 2 [( r) “unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely;-


(1) the practice of making any statement, whether orally or in writing or by visible representation which,-

(i) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;

(ii) falsely represents that the services are of a particular standard, quality or grade;

(jii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;

(iv) represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;

(v) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;

(vi)makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;

(vii) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof:


Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;


(viii) makes to the public a representation in a form that purports to be-

(i) a warranty or guarantee of a product or of any goods or services; or

(ii) a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified

result, if such purported warranty or guarantee or promise is materially misleading or if there is no reasonable prospect that such warranty, guarantee or promise will be carried out;

(ix) materially misleads the public concerning the price at which a product or like products or goods or services, have been or ‘are, ordinarily sold or provided, and, for this purpose, a representation as to price shall be deemed to refer to the price at which the product or goods or services has or have been sold by sellers or provided by suppliers generally. in the relevant

market unless it is clearly specified to be .the price at which the product has been sold or services have been provided by the person by whom or on whose behalf the representation is made;

(x) gives false or misleading facts disparaging the goods, services or trade of another person.


Explanation.-For the purposes of clause (1), a statement that is-

(a) expressed on an article offered or displayed for sale, or on its wrapper or container; or

(b) expressed on anything attached to, inserted in, or accompanying, an

article offered or displayed for sale, or on anything on which the article is mounted for display or sale; or

(c) contained in or on anything that is sold, sent, delivered, transmitted or in any other manner whatsoever made available to a member of the public,

shall be deemed to be a statement made to the public by, and only by, the person who had caused the statement to be so expressed, made or contained;

(2) permits the publication of any advertisement whether in any newspaper or otherwise, for the sale or supply at a bargain price, of goods or services that are not intended to be offered for sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature of the advertisement.


Explanation.-For the purpose of clause (2), “bargaining price” means-

(a) a price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise, or

(b) a price that a person who reads, hears or sees the advertisement, would reasonably understand to be a bargain price having regard to the prices at which the product advertised or like products are ordinarily sold;


(3) permits-

(a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged ,in the transaction as a whole; the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest;

(3A) withholding from the participants of any scheme offering gifts, prices or other items free of charge on its closure the information about final results of the scheme.


Explanation : for the purpose of this sub clause, the participants of a scheme shall be deemed to have been informed of the final results of the scheme where such results are within a reasonable time published, prominently in the same newspaper in which the scheme was originally advertised;)

(4) permits the sale or supply of goods intended to be used, or are of a kind likely to be used, by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by competent authority relating to performance, composition, contents, design, constructions, finishing or packaging as are necessary to prevent or reduce the risk of injury to the person using the goods;

(5) permits the hoarding or destruction of goods, or refuses to sell the goods or to make them available for sale or to provide any service, if such hoarding or destruction or refusal raises or tends to raise or is intended to raise, the cost of those or other similar goods or services.]

(6) Manufacture of spurious goods or offering such goods for sale or adopting deceptive practices in the provision of services;)


(2) Any reference in this Act to any other Act or provision thereof which is not in force in any area to which this Act applies shall be construed to have a reference to the corresponding Act or provision thereof in force in such area.



(i) Persons buying goods either for re-sale or for use in large scale profit making activity will not be `consumers’ entitled to protection under the Act; Raj Kumar v. S.C. Verma, 2001 (1) CPR 437

(ii) The government servants and the staff of the Accountant General Office of the Comptroller and Auditor General maintains the records of provident fund of government servants, issue slips of deposits of fund and on retirement final payments are made to the subscribers. The government servants and the staff of the Accountant General in discharging their duties does not render any service for consideration, nor hiring of any service is

involved hence, maintenance of General Provident Fund Accounts does not fall within the meaning of `service’; Hari Vallabh Vijay v. Administration Officer, 2001 (1) CPR 529.

(iii) When the National Commission as a matter of fact, recorded the findings as to the discharge of the liability of the carrier, the Supreme Court did not interfere on the issue; Saddler Shoes Pvt. Ltd. v. Air India, (2001) 8 SCC


(iv) The insurance company is not a consumer. Hence the consumer complaint by insurance company is not maintainable; Savani Road Lines v. Sundaram Textiles Ltd., AIR 2001 SC 2630

(v) The repudiation of the claim by the Insurance Company on the ground that the driver was not holding a valid driving license at the time of the accident could not be termed as deficiency in service or negligence on the part of the Insurance Company within the meaning of section 2 (g) of the Act; New India Assurance Co. Ltd. v. Smt. Pushpa YashwantGhatge, I996NCJ 195.

(vi) Medical services are covered under the definition of “service”. Service includes rendering of consultation, diagnosis and treatment, both medical and surgical; Indian Medical Association v. VP. Shantha, 1995 SCALE 273.

(vii) “Contract of personal service” has to be distinguished from a “contract for personal service”. In the absence of relationship of master and servant between the patient and the medical practitioner, the service rendered by a

medical practitioner to the patient cannot be regarded as service rendered under a contract of personal service. It is “contract for personal services”. Wherever, there is relationship like that of master and servant it is a “contract of personal service” and is excluded from the purview of the Act; Indian Medical Association v. VP. Shantha, 1995 SCALE 273.

(viii)A licensee to run a phone is not a consumer; Techno combine Associates v. Union of India, I (1994) CPJ 481: 1994 (I) CPR 298.

(ix) A lottery ticket holder is not “consumer” within the ambit of the definition of “consumer” under the Act; Jagdish Chand v. Director, Sikkim State Lottery, 1994 (I) CPR213.

(x) Applicant who merely applies for allotment of shares is not a consumer; HG Bhatia v. ABC Computers Pvt. Ltd., 1994 (I) CPR 316.

(xi) The beneficial consumer jurisdiction cannot be extended to lotteries and wagering transactions or consequential rights flowing from void contracts; Jagdish Chandv. Director, Sikkim State Lotteries, 1994 (I) CPR 213. ,.

(xii) If somebody does not perform his part of the contract, it amount/! to deficiency in service; Smt. Ramala Roy v. Rabindra Nath Sen, 1994 (I) CPR 66.

(xiii) The agreement for hypothecation does not create the ownership right, and as such no complaint can be maintained for deficiency in service; Jayantial Keshavlal Chauhan v. The National Insurance Co. Ltd., 1994 (I) CPR 390.

(xiv) Undue delay in declaration of examination result is obviously deficiency in service; Secretary,Board of School Education, Haryana v. Mukesh Chand, 1994 (I) CPR 269.

(xv) The student is a consumer of service of educational institute; Sushant Yuvaraj Rode v; Shri Ramdeobaba Engineering College, 1993 (III) CPR 624.

(xvi) A person who receives medical treatment in a Government hospital is not a consumer under the Act; Consumer Unity & Trust Society v. State of Rajasthan, (1991) I CPR 241. However, the State Commission of Orissa held that a patient is a Consumer being the beneficiary of services in as much as the State Government is paying the consideration amount in the form of salary to the doctors aI)d hospital staff; Smt. Sukanti Behera v. Dr. Sashi

Bhusan Rath, II (1993) CPJ 633.

  1. Act not in derogation of any other law.- The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force;



(i) The remedy provided under the Act is in addition to the provisions of any other law for the time being in force. The provisions of this Act give the consumer an additional remedy besides those that may be available under other existing laws; The Consumer & Citizens Forum v. Karnataka Power

Corporation, 1994 (I) CPR 130.

(ii) When a case is pending in a court in which full evidence is to be recorded the Forums constituted under the Consumer Protection Act, 1986 should not entertain the complaint with respect to the same cause of action; Hanuman Prasad v. The New India Assurance Co. Ltd., I (1994) CPJ I (NC).

(iii) It is nowhere laid down that whenever the examination and cross-examination is involved, the proper forum for adjudication of the dispute is only Civil Court; S.K. Lakhotia v. National Insurance Co. Ltd., 1994 (I) CPR 43.

(iv)It is authoritatively settled that the arbitration clause is not a bar to the entertainment of the complaint by the Redressal Agency constituted under the Act, even if the arbitration provision has been laid down in a statute; Ram Nath v. Improvement Trust, Bathinda, 1994 (I) CPR 357.


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  • s. Gopalakrishnan says:

    May I request you , my , friends on the legal fraternity, kindly enlighten me, whether charging for depreciation when one buy or sell gold Jewellery is not unfair? If so how can we counter it? Pl reply , thanking u

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  • sanjeev says:

    Sir if a Trader from Rajesthan and He purchase goods from Haryana and there is Mention on Bill that Subject to Karnal Juridiction only and there is dispute of money matter mean rajesthan has to take bank mony fom Haryana supplier can he file the case in Rajesthan Consumer Court.

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  • Renu says:

    I entered into an agreement with a builder whose registered office is in Delhi and sales office is in Gurgaon regarding a property under construction in Neemrana, Rajasthan. Now the Builder has served offer of possession letter and demanding more money for the enhanced Super Area under the garb of the agreement that the super area is subject to increase or decrease. But the Agreement was specific about the super area. Please tell me know the remedy. zb

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  • prabhakar says:

    I have secured loan from private bank and I requested for Agreement copy of the loan suspecting higher rate of interest after paying some E.M.I “s. I have not received any reply I stopped payments.

    The Bank handed over all affairs to another Bank. The present Bank harassing me for payment of Rs. 40,000/- immediately stating that NON BAILABLE WARRANT OF HIGH COURT. In fact the Bank Staff itself causing harassment one person calls me as High Court staff, and given cell no of Bank Advocate,and another staff as staff of Local Branch. All three Bank staff harassing in the name of High Court. I came to know that they are misrepresenting in the name of High court.

    Please advice me to file an cases ” unfair Trade Privacy Consumer Act.” another criminal case for harassing me from 11 A.M to 4 P.M in the name of High Court based on recorded calls.

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  • bacsigioi says:

    Thanks for sharing your thoughts about AdvocateJi. Regards

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  • chorwacja…

    hello!,I love your writing so so much! proportion we keep up a correspondence extra approximately your post on AOL? I need an expert in this area to unravel my problem. Maybe that is you! Looking forward to peer you….

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  • Vikram Singh

    Sir, one of our consumer case has not been in our favour from the State Commission. We have decided to file an Appeal before the National Consumer Disputes Redressal Commission, New Delhi. Kindly inform us the name and address of advocate suitable to file the appeal and fight our case for UNFAIR TRADE PRACTICE.

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