Consumer Protection Act with Special Emphasis on Monopolistic and Restrictive Trade Practices Act.

Author: Anubhav Sharma, B.A LL.B (Hons),2nd Year, Jagran Lakecity University, Bhopal. This article has been written by the author while pursuing the internship programme with us. Introduction Ancient Times Consumer Protection has been a part of Indian civilization, which is about 5,200 years old. Ruler used to establish many trade restrictions to protect the interest of the buyers. During the ancient times the Vedas, specifically Manu smriti, used to be the guiding principle, for the trade market. It put certain restrictions and punishment on the seller which were considered against the Dharma, the guiding principle of that time. In ancient times the prices of the goods were decided by the king, and the seller was supposed to sell their goods at that price only. Standardized weights and measures, and stamping of it on goods were, the practice used to be during the reign of Mauryan empire. The trader registration and obtaining of license was a common practice at that time. Medieval and Modern Times Alauddin Khilji[1] used to strictly control the market place[2]. Shop-keepers were punished for under weighing their goods. In the modern period, the Britishers replaced the old Indian traditional system and came up with their own laws[3]. They formulated the unified nation wise code and acts, to govern the markets. Some of them are Indian Contract Act of 1872, the Sales of Goods Act of 1930. The IPC,1860 also deals with crimes against consumers. IPC prescribes punishments for the false use weights and measures, the sale of adulterated food or drinks, the sale of noxious food or drink, and the sale of adulterated drugs[4].This article would talk about the role of Consumer Protection Act, with special reference to MRTP Act. Monopolies And Restrictive Trade Practices (MRTP) Act, 1969. Existence The MRTP Act, 1969, came after the recommendation of the Dutt Committee as, “A monopolies commission with necessary teeth should be established to deal with the problems of concentration of economic power or product monopolies.”[5] The basic purpose of this act was to ensure that concentration of economic power does not go in hands of few rich[6]. The basic motive of this act was to control monopolistic and restrictive trade practices. This act holds its validity, from Article 38[7] and 39[8] of the Indian Constitution, which speaks about promotion of welfare of the people and principles of policy to be followed by the State respectively. This act has been replaced by Competition Act 2002, with effect from September 1, 2009. The MRTP commission is also replaced by the Competition Commission of India. Objective. To control the big enterprises. The act made it compulsory for the big enterprises, to take the permission of the central govt., for any restructuring and takeover, if their assets exceed Rs. 20 crores. 2. To restrain Monopolistic trade practice. Under chapter IV[9] of the act, it specifies that, if the Central govt. feels that, the company is indulging in MTP[10], then it can refer the matter to the Commission for an inquiry and the Commission shall, after due inquiry, will send the report to the Central govt. 3. Ensure free flow of capital and goods. The act ensures that big firms do not restrict the capital flow and interrupt in the supply, to become a monopoly in the market. MRTP Commission. MRTP, Act also provided for the establishment of MRTP Commission which shall be a regulatory authority to deal with the offences under the MRTP, Act[11]. It was set up under section 5[12] of the Monopolies and Restrictive Trade Practices Act, 1969[13]. Some of its function were: -[14] 1. It was a quasi-judicial body. 2. Unfair trade practices and Restrictive trade practices, were the areas which were concerned with the MRTP Commission, and if the commission finds any unfair or restrictive trade practices then appropriate action was taken by the concerned commission. 3. In regard to monopolistic trade practices the Commission has power to inquire, if the reference is made to it by the Central Government or can take Suo moto action and submit the report to Central Government for further action. Landmark judgement on MRTP Act. 1. Tata Engineering and Locomotive Co. Ltd vs. Registrar of Restrictive Trade Practices Agreement.[15] Under this case the SC held that, territorial restriction does not amount to anti-competitive practice as it is meant for equal distribution of goods throughout the country[16]. But later this judgment was overruled by bringing an amendment in section 33[17], which made territorial restriction a part of restricted practices under MRTP Act. 2. Baroda Rayon Corporation Ltd.[18] In this case the manufacturers of the same line of production form an association to fix prices or terms of sale. These associations were involved in price fixing and, in these cases, the Commission passed a cease and desist order. The Consumer Protection Act, 1986. The enactment of MRTP, Act could not solve the problem of consumers[19]. To overcome the deficiencies of the MRTP act, the legislature drafted the Consumer protection act, 1986. The Act strives for protecting the Consumers, as well as providing inexpensive, simple and speedy redressal to them, and relief in terms of compensation or anything which seems to be reasonable to the aggrieved party. The act derives its power from the articles, 38[20],39[21],42[22],43[23], and 47[24] of the Indian constitution[25]. Features of the Act are: 1. The act covers both, i.e., goods and services. 2. It specifies for the Consumer redressal forum, each at district with compensation limit 20 Lakh, State with compensation limit 1 crore and at National level with compensation above 1 crore. 3. It specifies the time limit within which the complaint should be dismissed, the limit is 5 months with laboratory testing and 3 months without laboratory testing. 4. It covers all the sectors whether private, public or cooperative. Main Objectives of the Act are[26]: 1. Ensure fair, competitive and responsible markets that work well for consumers and promote ethical business practices. 2. To promote and protect the economic interests of consumers. 3. To improve access to information that consumers require, to make informed choices according to their individual needs. 4. To protect consumers from hazards to their well-being and safety. Similarities between both Acts The MRTP Act dealt with consumer rights in an incidental manner and the same goes with the consumer protection act. Both the acts put certain responsibility on the seller part. The MRTP act protects the consumer before he takes the goods or service and Consumer Protection Act protects him from the point he buys or takes the service. Both the acts are complementing each other. The one safeguard the consumer rights in the manufacturing, pricing, labeling and supplying level, while others protect after the goods or service is taken by the consumer and if there arises any deficiencies. Both, the acts speak about the remedy available to the consumer. Conclusion. Consumers have always been given an important place in the market, without them the trade won’t survive, the market would collapse and there would be no flow of money in the whole economy. Consumers act like a ground on which the whole market structure works. Consumers have always been given respect and protected, right from the ancient times and till today. There were various kinds of rules framed in each age to safeguard consumers. Traders were punished if they exploited consumers. In ancient times kings used to preside over the issues and followed the concept of Dharma. In medieval period Muslim rulers developed well organized markets, with standardized weights and measures. In modern times the Britishers framed codified laws to safeguard consumers, some of them followed by Indian govt., and new acts were enacted. But, the most important was the MRTP and Consumer protection act, which helped to fill the lacunas of the legal system concerning the protection of consumers. Reference
[1] Vol 1 S.R.Bakshi, Advanced History of Medieval India.

[2] Irfan Habib, The Price Regulations ‘Ala’ Uddin Khilji – A Defence of ‘Za’ Barani, in Money and the Market in India, 1100-1700 (Sanjay Subrahmanyam ed., 1998). [3] Arpit Jain, Unfair Trade Practices India, under Consumer Protection Act”, “Slide Share” (May 02, 2020, 15:24 PM), [4] Yash Raj, Historical Trends of Consumer Protection Laws in India, Indian Journal of Law and Public Policy (May 02, 2020, 16:18 PM), [5] Dutt Committee, GKTODAY (May 02, 2020, 16:48 PM), [6] License Raj, IDA Act and Other Policies Till 1991, GKTODAY (May 02, 2020, 16:55 PM), [7] INDIA CONSTITUTION Article 38.

[8]INDIA CONSTITUTION Article 39. [9] Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, Chapter IV, Act of Parliament, 1969 India.

[10] Monopolistic Trade Practices. [11] Shreyaa Chaturvedi, Monopolies and Restrictive Trade Practices Act, 1970, iPleaders (May 02, 2020, 17:13 PM) [12] Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, Section 5, Act of Parliament, 1969 India.

[13]Monopolies and Restrictive Trade Practices Act 1970, GKTODAY, (May 02, 2020, 15:26 PM),

[14] Ibid.

[15] Tata Engineering and Locomotive Co. Ltd vs. Registrar of Restrictive Trade Practices Agreement. (1977 AIR 973, 1977 SCR (2) 685).

[16] Supra n.11.

[17] Monopolies and Restrictive Trade Practices Act, 1969, Section 33, Act of Parliament, 1969 India. . [18] Registrar of Restrictive Trade Practices vs Baroda Rayon Corporation Ltd. And others., 1976 46 CompCas 192 NULL order date 6/8/1976. [19] Venkata Subrahmanyam Voruganti, Competition law and its implementation in India – a report, BUSINESS LAW ( May 02, 2020, 17:56 PM),




[24]INDIA CONSTITUTION Article 47. [25]Refer Constitution of India, 1950. [26]Purpose of the Consumer Protection Act, Vuk’uzenzele (May 02, 2020, 18:24 PM), Disclaimer: Views and opinions as expressed in the Research Articles are solely of the author and any member of the core team of the website shall not be liable for the same.

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