India: Expansion Of The Scope Of The Term ‘Unfair Trade Practice’ By The Proposed 2011 Amendment To The Consumer Protection Act, 1986

Last Updated: 29 November 2013
Article by Kasturika Sen

Most Read Contributor in India, September 2016

Consumer Protection Amendment Bill 2011:

The Consumer Protection (Amendment) Bill, 2011 ('the Bill') was introduced in the Lok Sabha on December 16, 2011 by Mr. K.V. Thomas. It has been referred to by the Standing Committee on Food, Consumer Affairs and Public Distribution.2 The amendments can be broadly classified into two categories: one, widen the scope of the law by adding some new definitions and expanding the scope of some existing provisions; and two, structuring and strengthening the implementation machinery.

A key change that has been proposed by this amendment is the much desirable expansion of the scope of the term 'Unfair Trade Practice'. Unfair Trade Practice can be broadly described as the use of various deceptive, fraudulent or unethical methods to obtain business. According to the Consumer Protection Act 1986, clause (r) of sub-section (1) of Section (2) listed 10 activities which would constitute an unfair trade practice but through the proposed amendment, the definition of unfair trade practice is to be expanded to include the unforeseen modus operandi of traders as offences. It will allow the law to not specify every unfair practice in the law. 3

This is a significant step towards safeguarding the consumers who are fleeced by the sellers through various contracts or conditions which place them in "unequal bargaining capacity" or puts the seller in an unfair strong position. The 199th report of the Law Commission had suggested bringing about this change to bring the consumers on a stronger footing to challenge any unfair practice.4 To ensure this, a new concept of 'unfair contracts' was included in the proposed amendments with a view to provide for a definite concept through which the consumers can be safeguarded and a category is created which would amount to unfair contracts.

According to the Bill, the term 'unfair contracts' includes a contract which has one or more of the following clauses

excessive security deposit;

imposition of disproportionate penalty;

refusal to accept early repayment of debt and;

termination of contract without reasonable cause.5

Background to Unfair Trade Practice:

The concept of Unfair Trade Practice draws a parallel from the previously applicable Monopoly Restrictive Trade Practice (MRTP) Act, 1969 which has now been replaced by the Competition Act, 2002. Section 36A of the erstwhile Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act), where 'unfair trade practice' was defined as a trade practice, which, for the purpose of 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 oral, written or visible misrepresentations regarding standard, quality, status, condition usefulness and price of goods or services; false warranty, guarantee or promise regarding goods or services; disparaging of goods and services of another person; and false advertising and misrepresenting with regard to the gifts, prizes and offers in sale etc.6

But consequently, in the current Competition Act, there is no definition for the concept of unfair trade practices. In this situation it will be wrong to say that the concept is completely ignored, and hence it just has to be implicit that instead it is now categorized under other terms such as False Representation, False Offer, Price Scheme, Non-Compliance of prescribed standard, Hoarding etc of the Competition Act 2002.7

Therefore, it is apparent that there is a huge distance concept of Unfair Trade Practice as it was defined under the now-abolished Monopolies and Restrictive Trade Practices (MRTP) Act but finds no mention in the new Competition legislation.8 So it solely depends on the Consumer Protection Act for clarity of this term.

Changes proposed to Unfair Trade Practice:

When we look at the proposed expansion of the concept of Unfair Trade Practice in the 2011 Amendment Bill there is also an addition of three new clauses in the definition.

a) Failure to provide a bill, cash-memo or a receipt to a consumer will be deemed an unfair trade practice.

b) Failure to take back the goods or withdraw the services within a period of 30 days after the receipt of the goods by the consumer.

c) Disclosure of confidential personal information.9So in this way, the act of failing to issue a bill, cashmemo or a receipt would also constitute an Unfair Trade Practice and would in turn give the consumer a right to seek remedy for violation of such a right, and this privilege or protection was not given to the consumers earlier. The 2011 amendment also guarantees a right of return to the consumer and makes violation of this right an Unfair Trade Practice.

Necessity for expansion of the term:

We have seen the changes that are proposed to be made to the term, but to what end will they be effective. For this we need to look into the requirement for such a change and the need for which can be understood through the case of Akhil Bhartiya Upbhokta Congress vs Aggarwal Jewellers10where the respondent-jeweler issued cash memo which stated that in case of return of any of the products, only 80% value of the price will be returned. This consumer raised an objection to this condition, but the State Commission could not disallow the respondent-jeweler from having such a condition as there was no law which restricted this. But according to the proposed amendment, if the trader refuses or restricts the right to return the good or stops the service within 30 days, he would be liable for carrying on an unfair trade practice. Therefore, a requirement to improve the protection granted to consumers against unfair trade practices is gauged herein, which may be achieved by providing a wider scope to the term as proposed by the amendment.


The Consumer Protection Act and the Bill are designed so as to prevent any kind of trade that engage in unfair trade practices whether specified or not and more importantly provides for protection for the consumers who are subject to this trade. This amendment is a step towards the importance of recognition of the concept of unfair trade practice which shall not be neglected at any cost, especially with the Consumer Protection Act being the sole defining authority for it, where the term shall be given additional attention in its definition in order to protect all the requisite rights of consumers in order to avoid any ambiguities. For example, when we look into the right of return given to the consumers, we notice that this is only possible if the goods remain unused or if the service is continuous in nature. Whereas, in situations when the goods or services are used only once and are extinguished, there is no mention as to whether, on being unsatisfied, any facility or option for the money to be returned to the consumer is available. Even though there are still such questions which remain unanswered, we have to appreciate these changes being made in the Bill, as they bring to our attention the safeguards that need to be provided to the consumers against unfair trade practices.


1. 5th Year student of School of Law, Christ University.

2. Referred to protection-amendment-bill-2011-2123/

3. Sec c2 (1) (r) of Consumer Protection Act 1986

4. Referred to amendment-bill-2010/

5. Sec 2 (1) (s) of Consumer Protection Amendment Bill, 2011

6. Section 36A Monopoly Restrictive Trade Practice (MRTP) Act, 1969

7. Referred to ResearchReports/SanchitInt260811.pdf,

8. Referred to mrtpc-s--unfair-trade--practices-not-in-new-act-govttells- watchdog/791244/

9. Supra Note 1

10. I(2006)CPJ32(NC)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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