LEGAL ASPECT OF BUSINESS

UNIT 5: CONSUMER PROTECTION ACT AND INTRODUCTION OF CYBER LAW

Prepared and presented by,N. Ganesha Pandian,Assistant professor,Madurai school of management,Madurai.

CONSUMER PROTECTION ACT,1986

INTRODUCTION

The consumer protection act, 1986 is one of the most beneficent legislations of recent times and it is intended to protect the legitimate interest of the consumers against traders, suppliers and etc.,

The consumer protection act is intended to protect the legitimate interest of the consumers against traders, suppliers etc.,

The consumer protection act 1986, has opened up a new era in the field of business in India

AIMS AND OBJECT OF THE CONSUMER PROTECTION ACT,1986

1. Better protection of interests of consumers

2. Protection of rights of consumers

i. right to be protected

ii. right to be informed

iii. right to be assured

iv. right to be heard

v. right to seek redressal

vi. right to consumer education

vii. right to healthy environment

3. Consumer protection council4. Quasi-judicial machinery for speedy redressal of

consumer disputes i. To give relief of a specific nature ii. To award wherever appropriate, compensation

to consumers

SALIENT FEATURES OF THE CONSUMER PROTECTION ACT,1986

1.Principle of compensation

i. District level

ii. State Level

iii. National level

2.Consumer councils

3. Goods and services are covered

4. Rights of consumers

5. Convenient procedures

6. Filing of compliant

7. Effective safeguard to consumer

8. Class action

9. Check on unfair trade practices

10. Inexpensive redressal machinery

11. Price

12. Social welfare legislation

NEED FOR CONSUMER PROTECTION1, Sellers dominate the market

2, sellers are known to adopt unfair trade practices like adulteration, using false weights and measures, making exaggerated claims about the quality of their products or services

3, Buyers do not have adequate education to evaluate products regarding their genuineness

4, Buyers are generally careless and indifferent to their own interest

5, Buyers do not feel strong enough to protect themselves. They prefer to accept defective goods rather than returning them

SHORT TITLE, EXTENT, COMMENCEMENT AND APPLICATION (SECTION 1)

DEFINITIONS1. Commercial purpose: commercial purpose means, “any purpose

whose primary objective is to make profit”

2. Complainant[section 2(1)(b)]: The section provides that complainant may be:

i. A consumer; or

ii. Any voluntary association registered under companies act 1956

iii. The central government or any state government

iv. One or more consumers where there are numerous consumers having same interest

v. In case death of consumer, a legal heir or representative

3. Complaint [section 2(1)(c)] – Complaint means “any allegations made in writing by a complaint that:

Unfair trade practices, defect in goods, defect in services, price variation, hazardous goods

4. Consumer dispute [section (1)(e)] – Consumer dispute means “ a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint”

5. “Defect” in goods [section 2(1)(f)] – Defect is defined as, “ any fault, imperfection, shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force or is claimed by the trader in any manner whatsoever in relation to nay goods”

6. Deficiency in service [section 2(1)(g)] – Deficiency means “any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance required to be maintained”

7. Goods [section 2(1)(i)]8. Manufacturer [section 2(1)(j)]9. Person [section 2(1)(m)]10. Service [section (1)(o)] – Service is defined to

mean, “service of any description which is made available to potential users and includes the provision of facilities in connection with service industry or other information”

11. Spurious goods [section 2(1)(oo)]12. Trader [section 2(1)(q)]

CONSUMER RIGHTS

i. right to be protected

ii. right to be informed

iii. right to be assured

iv. right to be heard

v. right to seek redressal

vi. right to consumer education

vii. right to healthy environment

CONSUMER DUTIES1. Duty to be careful2. Duty to insist on information3. Duty to inspect goods4. Duty to form association5. Duty to make complaint 6. Duty to aware of rights

CONSUMER DISPUTES Unfair trade practices [section 2(1)(r)] – 1. Misleading advertisement and False representation2. Bargain scale3. Offering gifts, prizes, etc., and conducting contests

or lottery 4. Not conforming to prescribed standards5. Hoarding or destruction of goods6. Manufacture of spurious goods

RESTRICTIVE TRADE PRACTICES [SECTION 2(1)(NNN)]

“Restrictive trade practice means a trade practice which tends to bring about manipulation of price or its condition of delivery or to affect flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions”

CONSUMER PROTECTION COUNCILS

Central consumer protection council [section 4]

1. Establishment: Section 4 empowers the establishment of a Central consumer protection council

2. Membership: 1. Minister in charge of consumer affairs 2. Such no. of other official and non officials representing such interest

According to rule 3 of the consumer protection rules, 1987, the central council shall consists of 150 members as follows

1. The minister in charge of consumer affairs

2. The minister of state or deputy minister in the department of civil supplies

3. Minister-in-charge of consumer affairs in state

4. 8 MP’s, 5 from Lok sabha, 3 from Rajya sabha

5. The commissioner for SC and ST

6. Representatives from various organizations not exceeding 20

7. Representatives of the consumer organizations – not less than 35

8. Representatives of women – not less than 10

9. Representatives of farmers, trade and industries – not exceeding 20

10. Representatives of representing consumer interests – not exceeding 15

11. The secretary in the department of civil supplies

STATE CONSUMER PROTECTION COUNCIL [SECTION 7 & 8]

Establishment [section 7] Membership - 1. Minister in charge of

consumer affairs of state 2. Such no. of other official and non officials representing such interest

Meetings Time and place of meetings and procedure Objects of state council [section 8]

DISTRICT CONSUMER PROTECTION COUNCIL

Establishment [section 8-A] Membership – 1.The collector of the district

2. Such no. of other official and non officials representing such interest

Meetings Time and place of meetings and procedure Objects of state council [section 6(a) to (f)]

PROCEDURE FOR CONSUMER GRIEVANCE REDRESSAL

Who can file complaint under the Consumer protection act,1986

1. A consumer2. Any voluntary consumer association3. The central government 4. Any state government 5. One or more consumers having same

interest

DOCUMENTS FOR FILLING COMPLAINT

1. Complaint2. List of documents 3. Vakalatnama4. Application for condonation of delay (if any)5. Affadavit6. Documents 7. Application for injunction (if any)

PROCEDURE FOR COMPLAINT UNDER THE ACTEntitlement of file complaint

Recognized consumer Association

Procedure to be followed at District forum or state

commission

Limitation period for Filing of compliant

Procedure applicable to National commission

RECOGNIZED CONSUMER ASSOCIATION

A recognized consumer association means any voluntary consumer association registered under the companies act, 1956 or any other law for the time being in force

PROCEDURE TO BE FOLLOWED AT DISTRICT FORUM OR STATE

COMMISSION Section 13 lays down the procedure to be followed

1. Complaint copy sent to opposite party and directing him to reply within 30 days or 45 days

2. If opposite party admits the allegations, then complaint will be based on material on record

3. If opposite party denies – Relating to any goods sec13(1)(c)

Relating to goods not requiring testing – sec 13(2)(b)

PROCEDURE TO BE FOLLOWED AT NATIONAL COMMISSION

Section 22 lays down the procedure to be followed at the national commission

1. A complaint containing : a, Name description and address of complaint b, Name description and address of opposite party c, facts relating to complaint d, Documents in support e, The relief claim

2. National commission then follow procedure contained in sec13(1) & (2)

The commission shall decide as soon as possible within 3 months from date of receipt of notice by opposite party or 5 months where no testing or analysis req.

No appeal has been prefer against the order passed by the national commission

PROCEDURE FOR FILING THE APPEAL Procedure in respect of goods where the

defect alleged requires no testing or analysis Procedure in respect of goods where the

defect alleged requires testing or analysis If the complaint relates to goods in respect of

which the aforesaid procedure cannot be followed or if the complaint relates to any service

TYPES OF CONSUMER REDRESSAL MACHINERY AND FORUMS

Consumer Redressal machinery and Forums under COPRA

District forumFor dealing cases involving up to Rs. 20

lac

National commissionFor dealing cases involving more than one

crore

State commissionFor dealing cases involving Rs. 20 lac and

less than one crore

COMPETITION ACT 2002

INTRODUCTION Indian government enhancing its thrust on globalization and opened

up its economy removing controls and resorting to liberalization The ambit of MRTP Act inadequate for fostering competition in the

market and eliminating anti-competitive practices in national and international trade, the government of India in October 1999 appointed a high level committee on competition policy and law (the Raghavan committee) to advise on the competition law

Acting on the report of the committee, the government enacted the new competition act,2002 which has replaced earlier MRTP act,1969

OBJECTIVES OF THE COMPETITION ACT1. To shift the focus from curbing monopolies to promoting competition.

2. To ensure fair competition in India by prohibiting trade practices which causes adverse effect on competition in markets within India.

3. To establish a quasi-judicial body to be called the Competition commission of India

4. To curb negative aspects of competition

5. To promote and sustain competition in market

6. To protect the interests of consumers

7. To ensure the freedom of trade carried on in India

8. To create a fund called competition fund

FEATURES OF COMPETITION ACT Competition commission of India (CCI) to be established Repeal of MRTP act and dissolution of MRTPC Pre-merger notification made optional Prohibition of abuse of dominance position Pending cases of MRTPS to be transferred to CCI Pending unfair trade practices to be covered under

Consumer protection Act, 1986 Competition fund to be created

MAJOR AREAS OF COMPETITION ACT,2002

Prohibition of anti-competitive agreements Prohibition against abuse of dominant

position Regulation of combinations Advocacy of competition policy

ANTI-COMPETITIVE AGREEMENTSSection 3 of the act provides

1. Determining sale price or purchase price directly or indirectly

2. Limiting or controlling production, supply, markets, technical development or investment

3. Sharing markets or resources of supply by territory, type, size or in any other manner

4. Bid rigging or collusive bidding

5. Tie- in arrangement

6. Exclusive supply agreement

7. Refusal to deal

8. Resale price maintenance

ABUSE OF DOMINANT POSITION According to section 4 of act, no enterprise shall abuse its dominant

position. An abuse of dominant position is said to occur when an enterprise:

1. Directly or indirectly imposes unfair or discriminatory purchase of selling prices on condition, including predatory prices;

2. Limits production, markets or technical development to the prejudice of consumers;

3. Indulges in action resulting in denial of market access

4. Makes the conclusion of contracts subject to acceptance by other parties

5. Uses dominance in one market to move into or protect other markets

DETERMINING MARKET DOMINANCE For the purpose of determining whether an enterprise enjoys dominant position

or otherwise, one or more of the following factors may be taken into account:

1. Market share

2. Size and resources of enterprise

3. Size and importance of competitors

4. Economic power of enterprise

5. Technical advantages enjoyed by firm

6. Dependence of consumers

7. Monopoly status

8. Entry barriers

9. Countervailing buying power

10. Market structure and size and relevant factors

REGULATION COMBINATIONS

Section 5 of the act stipulates that any person who proposes to enter into an agreement or combination shall give a notice to commission within 7 days

1. The board of directors of respective companies accepting a proposal of merger

2. The conclusion of negotiations of an agreement for an acquisition or acquiring control;

3. The execution of a joint venture agreement or shareholder agreement or technology agreement

COMPETITION COMMISSION OF INDIA Section 7 to 17 under chapter III provides for the

establishment, compositions, term, resignation, removal, restriction on the employment of chairperson, his salary and powers

1. Establishment of commission2. Composition of commission – not less two or

not more than ten appointed by central government

DUTIES OF COMPETITION COMMISSION OF INDIA

1. To eliminate practices having adverse effect on competition

2. To promote and sustain competition

3. To protect the interest of consumers

4. To ensure the freedom of trade carried on by other participants, in markets in India

5. To make inquires into certain agreements and dominant positions of enterprise and about combination

POWERS OF COMPETITION COMMISSION OF INDIA

Power to grant interim relief (sec 33) Power to award compensation (sec 34) Power of commission to regulate its own

procedure (sec 36) Review of orders of commission (sec 37) Rectification of orders (sec 38)

OFFENCES AND PENALTIES Contravention of orders of commission (section 42) – one year

term in civil prison or 10 lac rupees or both Penalty for failure to comply with directions of commission and

director general (section 43) – Rs one lac for each day during such failure continues

Penalty for making false statement or omission to furnish material information (sec 44) – Not less than 50 lac to on crore

Penalty for offences in relation to furnishing of information (section 45) – extended to 10 lac

COMPETITION LAW RELATING TO CONSUMER PROTECTION

Some of the objectives like: 1. Static efficiency2. Dynamic efficiency3. Competition laws can be used to attain

consumer welfare4. Result in satisfaction in trade

CYBER LAWS

INTRODUCTION Cyber law is a generic term which refers to

all the legal and regulatory aspects of internet and the world wide web

The growth of cyber space has resulted in the development of a new and highly specialized branch of law called CYBERLAWS –Laws of the Internet and the world wide web

CYBER LAWS IN INDIA In may 2000, both the houses of the Indian

parliament passed the information technology bill. The bill received the assent of the president in August 200 and came to be known as the Information technology Act, 2000.

This Act aims to provide the legal infrastructure for e-commerce and a framework so that legal sanctity is accorded to all electronics records

HIGHLIGHTS OF THE ACT Chapter II of act specifically stipulates that any

subscriber may authenticate an electronic record by affixing his digital signature

Chapter III of the act details about Electronic governance Chapter IV of the act gives a scheme for regulation of

certifying authorities Chapter VII of the act details about the scheme of things

relating to Digital signature certificate

Chapter IX of the act talks about Penalties and adjudication for various offences

Chapter X of act talks of the establishment of cyber regulations appellate tribunal

Chapter XI of act talks about various offences and the said offences shall be investigated only by a police officer

The act also provides for the constitution of the Cyber Regulations advisory committee

The best way to enforce internet copyright is through the Digital millennium copyright act

ADVANTAGES OF CYBER LAW1. IT act 2000 attempts to change outdated law and provides ways to deal

with cyber crimes

2. The Act has proposed a legal framework for the authentication and origin of electronic records/ communications through digital signature

3. E-mail would be a legal and valid form of communication in context of e-business

4. Digital signatures have been given legal validity and sanction in the act

5. The act allows government to issue notification on the web – e-governance

6. IT act also addresses the important issues of security

7. The remedy provided by the act is in the form of monetary damages not exceeding rs. One crore

DISADVANTAGES OF CYBER LAW The law misses out completely the issue of Intellectual property

rights, copyrighting, trade marking, or patenting of electronic information and data

The law even stays silent over regulation of electronic payment gateway and segregates the negotiable instrument from the applicability of IT act

The act empowers DSP to look up into the investigations and filing of charge sheets

The IT act is silent on filming anyone’s personal actions in public and then distributing it in e-form

INFORMATION TECHNOLOGY ACT, 2000

INTRODUCTION E-commerce is fast growing form of carrying out business

transactions. Any business transaction has to pass through several stages to be

given effect to. Each stage consists of various types of exchange consists of various

types of exchanges between two sides:

1. Information

2. Documents

3. Goods

4. Services

5. Money , etc.,

OBJECTIVES OF IT ACT 2000 To grant legal recognition for transaction carried-out by means of

electronic data interchange .

To give legal recognition to digital signature for authentication of any

information.

To facilitate electronic filing of documents.

To facilitate electronic storage of data.

To facilitate and give legal sanction to electronic fund between bank

and financial institution.

To give legal recognition for keeping books of account by bankers in

electronic form.

FEATURES OF THE IT ACT, 2000

Electronic contracts have been made legally valid if made through

‘secure electronic communication’.

Legal recognition has been granted to digital signature.

Security procedures for electronic records and digital signatures have

been laid down.

Recognition has been granted to the right of licensed certifying

authorities to issue digital signature certificates.

The controller is to act as repository of all digital signature certificates.

To facilitate e-governance, provisions have been included to build the required system.

Various types of computer related crimes have been defined and stringent penalties provided under this act.

A procedure has been laid down under the act for appointment of adjudicating officers for holding enquires.

A provision has been made under the act for the establishment of cyber regulatory appellate tribunal and appeal can be made in high court.

SCOPE AND APPLICABILITY OF IT ACT 2000 A negotiable instrument (other than cheque) as defined in

section 13 of negotiable instrument act 1881 A power of attorney as defined in section1A of the power of

attorneys act,1882 A trust defined as defined in sec3 of the Indian trusts act 1882 A will as defined in clause (h) of section 2 of the Indian

succession act 1925 Any contract for the sale or conveyance of immovable property Any such class of documents or transactions as may be

notified by the central government

DEFINITIONS (SECTION 2) Access [section 2(1)(a)] Addressee [section 2(1)(b)] Asymmetric crypto system [section 2(1)(f)] Certification practice statement [section 2(1)(h)] Communication device [section (1)(ha)] Computer [section 2(1)(i)] Computer network [section 2(1)(j)] Computer resource [section 2(1)(k)] Computer system [section 2(1)(l)]

CONTD… Cyber café [section 2(1)(na)] Cyber security [section 2(1)(nb)] Data [section 2(1)(o)] Electronic form [section 2(1)(r)] Electronic gazette [section 2(1)(s)] Electronic record [section 2(1)(t)] Electronic signature [section 2(1)(ta)] Electronic signature certificate [section 2(1)(tb)] Function [section 2(1)(u)]

CONTD… Information [section 2(1)(v)] Intermediary [section 2(1)(w)] Key pair [section 2(1)(x)] Originator [section 2(1)(za)] Private key [section 2(1)(zc)] Public key [section 2(1)(zd)] Subscriber [section 2(1)(zg)] Verify [section 2(1)(zh)]

DIGITAL AND ELECTRONIC SIGNATURES Digital signature means authentication of any

electronic record by a subscriber by means of an electronic method or procedure in accordance with section 3

Section 3 provides that any subscriber may authenticate an electronic record by affixing his digital signature. The authentication of the electronic record shall be affected by the use of asymmetric crypto system and hash function which envelop and transform the initial electronic record into another electronic record

DUTIES OF SUBSCRIBERS Generating key pair [section 40] Acceptance of digital signature [section 41] Control of private key [section 42]

ELECTRONIC GOVERNANCE - MODELCommunity

management system

Infrastructure management

system

Knowledge management

system

Transition management

system

E-Governance

OBJECTIVES OF E-GOVERNANCE Build services around citizen’s choice Make government more accessible Facilitate social inclusion Provide information responsibly Use government resources effectively Reduce government spending Deliver online services Involve citizen in the governing process

SIGNIFICANCE OF ELECTRONIC GOVERNANCE Record-keeping and reduction in files Automation of processes Effective co-ordination, supervision and integration Elimination of hierarchy and delay Change towards transparent and accountable

administration culture Better quality and effective delivery of public services Citizens empowerment Helps in taking strategic decision at appropriate time

ELECTRONIC RECORD Meaning of electronic record Attribution of electronic record Acknowledgement of receipt Time and place of dispatch and receipt of

electronic record Usual place of residence Controlling and certifying authority

CYBER CRIMES Data diddling Internet time theft Salami slicing Virus attack Phreaking Pornography Cloning Carding Piggy-backing or shoulder-

surfing(ATM fraud) Social engineering Mail bombing Dumpster diving Software piracy Identity theft Spoofing Phishing Sniffing

INTRODUCTION OF INTELLECTUAL PROPERTY RIGHTS

INTRODUCTION Every kind of intellectual property is in nature of

intangible property. IP is the creation of human intellect. It refers to

the ideas, knowledge, invention, innovation , creativity and etc.,

It is similar to property whether it is movable or immovable. The rights relating to intellectual property is called “Intellectual property rights”

TRADE RELATED INTELLECTUAL PROPERTY RIGHTS (TRIPS) Seven categories of intellectual property rights:1. Trade secrets2. Integrated circuits3. Geographical indications4. Industrial design5. Copyright6. Trademarks7. Patents

COPYRIGHTS - MEANING Copyrights gives protection for the

expression of an idea and not for the idea itself.

Copyrights are similar to patents in establishing ownership and protection for creative endeavor but they pertain to intellectual property

The Copyright only prevents the copying of the content but not the subject matter

VIRTUAL MATTERS UNDER COPYRIGHTS PROTECTION1. Photographs2. Poems3. Books4. Motion pictures5. Computer punch

cards6. Choreographic

works7. Paintings8. Articles

9. Music10. Audio – Visual works 11. Microfilms12. Sculptures13. Stories14. Sound recordings15. Periodicals16. Pantomimes17. And etc

OBJECTS OF COPYRIGHT Copyrights ensure certain minimum safeguards

of the rights of authors over their creations, thereby protecting and rewarding creativity

Indian Copyrights act,1957The copyright act,1957 protects original literary,

dramatic, musical and artistic works and cinematographic works and sound recordings

Copyrights protect the expressions not the ideas

CLASS OF WORKS Section 13(1) – provision of copyrights Artistic work – section 2(b) Dramatic work Literary work – Section 2(o) Computer program – section 2(ffc) & 2(ffb) Musical work – section 2(p)& 2(ffa) Cinematograph films Sound recordings Section 2(xx)

TERM/DURATION AND REGISTERATION OF COPYRIGHTS After publication, until 60 years from the beginning of the calendar

year or next following year which the author dies The register of copyrights maintained in copyright office of the

Department of education consists of 6 parts

1. Literary works

2. Musical works

3. Artistic works

4. Cinematograph films

5. Sound recordings

6. Computer program, tables and compilations, including computer databases

TRADE MARKS The brand name, label or logo of a company can be

registered as a Trade marks Once it is registered then it is protected against the

misuse by third parties The registered trademark is a valuable property, which

can be transferred or sold or licensed to third party The trademark act 1999, governs this and law

encourages registration of trademark, as registration confers on the owner as exclusive right to use the mark

MEANING Service mark: it means service of any

description which is made available to potential users and includes the provision of services in connection with business in any industrial or commercial matter.

Good trade marks: Any device or word which has no direct reference ton the quality or character of the goods or services is a good trade mark

TRADE MARKS NOT REGISTERABLE No trademark shall be registered in respect

of goods, descriptive of goods or a service which is identical with or deceptively similar to trademark which is already registered

Descriptive words, surnames and geographical names are not register able

PROCEDURE FOR REGISTRATION The application is filed The application is examined by the

trademarks office and objections The marks is advertised in Trademarks

journal and is open to opposition by third party

The registration certificate is issued in 4-6 months

CONTD… Requirements for making an application Revocation of registration Duration, removal and restoration and

registration

REMEDIES IN CASE OF BREACH/OFFENCES AND PENALTIES RELATING TO TRADEMARKS

Falsifying the trademarks Falsely apply a trademarks Making or possessing instruments for falsifying trademarks Applying false trade description Applying false indication of country of origin Tampering with an indication of origin already applied to goods Selling goods falsely marked Removing piece goods Falsely representing a trademark registered Falsely describing a place of business as connected with the

trademark office Falsification of entries in register

PATENT ACT

MEANING OF PATENT A patent is, “an exclusive right granted by a

country to the owner of an invention to make use, manufacture and market the invention provided the invention satisfies certain conditions stipulated in law

CONCEPTS Characteristics of patent Indian patent act 1970 Invention Non patentable inventions Application for patents Registration of patents Revocation of patents [section 64,66 and 85] Remedies for infringement [section 108] Grant of patent Term of patent

THE END