UNFAIR TRADE PRACTICES IN INDIA

INTRODUCTION:

The unfair trade practice is a business practice, when a manufacturer uses unfair method or any fraudulent and deceptive methods, to promote his sale or services, which are prohibited by a statute or any law. In simpler terms illegal methods used by the employer to increase his profit by cheating the customers, through misleading information regarding price, quality etc. At present in India Consumer Protection Act, 2019 governs unfair trade practice. Until 2002, Metropolitan and Restrictive Trade Practices Act , 1969 was followed in cases of unfair trade practices. This Act was repealed in the year 2002, by the Competition Act, 2002 and therefore all the cases of unfair trade Practices which MRTPC Act was dealing with was transferred to Competition commission (CCI) for adjudication. But there was no provision in Competition Act, regarding unfair trade practices, hence all the cases came under the jurisdiction of Consumer Protection Act, 1986, which is currently replaced by Consumer Protection Act, 2019.


DEFINITION OF UNFAIR TRADE PRACTICES:

Section 2(47) of the Consumer Protection Act, 2019 defines the term unfair trade practices. It states that “unfair trade practice means a trade practice which, for the purpose of the promoting the sale, use or supply of any goods or for the provision of any services, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely”, and specifies the unfair trade practices. These can be classified as under:


False Representation:

It states that any person/ business which makes the practice of any oral or written statements or representations of the following will be Unfair trade practice:

• When suggests falsely that goods are of particular standard quality, quantity, grade, composition, style or model.

• When falsely suggests that the services are of particular standard quality or quantity or grade.

• Falsely represent any old , rebuild or second hand goods as a new one.

• Falsely represents that goods or services have sponsorship or approval, performance, characteristics, accessories, uses or benefits which they do not have.

• Represents falsely that the seller has any sponsorship or affiliation.

• When makes a false misleading presentation about the usefulness or need for any goods or services.

• Provides any warranty or guarantee about the performance or efficiency or length of life of goods that is not based on proper test.

• If a promise is made which is materially misleading, regarding to replace, maintain or repair the goods , where such promises are not reasonable to fulfil.

• Misleads about the price of the goods or services, available in market.

• Gives false or misleading facts disparaging the goods services or trade of another person.


False offer of Bargain Price:

It is a practice when an advertisement is published in a newspaper or otherwise it states that goods or services are offered at bargain prices, but in reality there is no such intention to offer the same to offer or for a reasonable period or reasonable quantity it may amount to unfair trade practice. The bargaining price here means :

• The price which is stated in the advertisement which may suggest that the price is actually the lesser than the ordinary price.

• Any person who sees the advertisement believes that the price is actually better than the price which they are ordinary sold.


Free Gift Offer and Prize scheme:

Unfair trade practices can also include gifts and prize schemes, the business offer to the customers with ulterior motive. This may include when:

• When gifts, prizes or any other items are offered along with the goods under which intention is different, or

• Representing that something is given for free but in actual the cost or part of the cost is being charged.

• Offering any prizes by conducting contest, lottery or any game of chances to the buyers but with the real intention was to promote sales or business.


Non-compliance of Prescribed Standards:

When any goods are sold or supplied to the customer which does not adhere with the standards prescribed by the competent authority, with regards to its performance, packaging, finishing, content, design etc, in order to prevent risk and injury of the consumer using it, then such a practice shall amount to Unfair Trade practice.


Hoarding or destruction:

Any person practicing any activity that permits the hoarding or destruction of goods or refusing to sell the goods , with the intention to increase the price of the good in future or increase the price of similar goods future is shall be an unfair trade practice.

ROLE OF JUDICIAL JUDGEMENTS:

Any person, who is subjected to unfair trade practice, can get remedied under the Consumer Protection Act, under which there are Consumer forum which have been set up for speedy redressal and remedy. As per the act, there are three commissions set up at district, state and central level, which are District Dispute Redressal commission, State Dispute Redressal Commission and National Dispute Redressal commission. This courts have the jurisdiction to try the cases on Unfair trade and practices. Along with them, people can also approach, district, High Court or Supreme court for the same.

Judiciary time to time have given judgements by interpreting the laws, and expanding the ambit for the unfair trade practices in India. Therefore judiciary plays a very significant role, as the scope of unfair trade practices is very wide and it can only be possible for judiciary to address them, as a statute can not incorporate all the practices. Some of the judgements are: In case of Mr. Supriyo Ranjan Mahapatra v. Amazon Centre Development Centre India Pvt Ltd, commission held that cancelling a confirmed order amount to unfair trade practice, and directed Amazon to pay Rs. 40,000 as the compensation. In Baglekar Akash Kumar v. More megastore Retail Limited case, the forum held that supermarkets which charge for carry bags that have the logo of the company will be considered Unfair trade practices. Further in case of Yash Raj Films (P) Ltd v. Afreen Fatima Zaidi, the commission held that it is unfair trade practice, if a song included in trailer is excluded from the movie. Therefore the NCRDC directed the respondent to pay compensation.

In case of Ireo Grace Real Tech Pvt Ltd v. Abhishek Khanna and others, the supreme court held that incorporation of one sided and unreasonable clauses in Apartment Buyer’s Agreement constitutes an unfair trade practice. Further, unfair trade in pharmaceutical sector was held in case Pooja Toy v. Krishna Bhattacharya, where the respondent had been altering the original labels with new one extending the star of expiry. Many such decisions are provided by courts and consumer forums, which helps in evolving the laws on unfair trade practice.


CONCLUSION:

Consumers have been exploited by the Unfair Trade Practices followed by the business/manufacturers, such as false representation about the quality, content, standard of care, designing, packaging etc. To safeguard the consumers from such exploitation, in India there is a statute administrating such unfair trade practice. Many consumers does not know about such rights provided to them. Hence educating consumers, is very important regarding these rights available to them, and different forums they can approach. As ultimately the consumer is able to keep a check in all this unfair trade practices in the initial stage.



This article is written by Sahana S of Kristu Jayanti College of Law.

Recent Posts

See All

Introduction Section 262 defines one person company as meaning a corporation which has only one person as a member section 3(1)(c) provides for incorporating such a company by saying that a company ma

Introduction- Concept of Corporate veil or ‘Veil of incorporation’ A company after its incorporation gets a separate legal personality i.e it gets artificial personhood which is an identity distinct f