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An Overview of Tort and Consumer Protection

15 min read

By Jalaj Tokas

Published On: November 12, 2021 at 14:35 IST

Introduction

The concern regarding the protection of the rights and interests of consumers dates back to the law on civil liability, which remains effective and applicable till date. The concern for protecting the rights and interests of consumers may be located under Tort Law, which is equally effective and enforceable even now. As a matter of fact, it is an ever growing branch of law and has constantly developed and the area covered in its ambit is continuously increasing.[i]

Consumer safety is one of the rudimentary reasons for courts’ ubiquitous implementation of strict liability and negligence tenets to product design, manufacture, warnings and sale. The paramount objective of the consumer protection regime is to protect against service deficiencies and defects in goods.[ii]

Therefore, this article tries to throw light on the relationship between Tort Law and Consumer Protection while tracing the historical relevance of Consumer Protection and delving into its nature and various other aspects.

Introduction to Tort

The word ‘tort’ derives its etymological meaning from the Latin word ‘tortum’, which means ‘to twist’. It connotes towards an unlawful conduct that is twisted and crooked in nature. It is equivalent to the English term ‘wrong’. In other words, it indicates a conduct that adversely affects the legal right of other individuals and is thus considered a ‘wrong’.

Some of the imperative definitions are as follows:

According to Section 2(m) of Limitation Act, 1963: Tort means a civil wrong which is not exclusively a breach of contract or breach of trust.”

According to Salmond, “A tort is a civil wrong for which the remedy is action in common law for unliquidated damages and which is not exclusively a breach of contract or breach of trust or other equitable obligation.”

While the violation of contractual right already has a clear remedy that arises from the contract itself, but the violation of rights that are available to all of us in general don’t have a clear remedy because unlike a contract there is no explicit legal relationship between the two parties in question. Such violations are generally called wrongs and it is for such wrongs that the law of torts has been developed.[iii]

More importantly, if there is a transgression of a right, there must be a way to compensate or restore the right. The maxim ‘Ubi jus ibi remedium’ clearly addresses and deals with it. If loosely translated, it means that ‘where ever there is a right, there is a remedy.’ Indeed it holds true as a right has no value if there is no way to enforce it. These individual rights are primarily called rights in rem.[iv]

Thus, it can safely be said that tort is an act while the law of tort is the branch of law that provides some relief to the injured person who apparently suffered from a tortious act. Therefore, for a healthy society to exist, it is necessary that it becomes free of anti-social elements and that individuals have freedom to exercise their rights without them being restricted by others.

How is Tort different from Crime?

TortCrime
Tort is basically the infringement of an individual’s private right. It is a civil wrong that affects the interest of an individual.Crime on the other hand is a breach of public rights and duties affecting the society at large. It largely deals with the impact of social harms on the moral fabric of the society.

In Torts, the intention becomes irrelevant to hold a person accountable for civil wrongs. The existence of mens rea (Guilty mind) becomes immaterial in the case of Torts.In crime, intention is absolutely important. Mens rea is an essential which completes a crime and plays an vital role to hold a person responsible for the crime committed.
The ultimate objective of law of torts is to compensate the injured party by compensating him/her by the wrongdoer.However, crime serves the purpose of acting in the interest of the society by punishing the offender. The criminal is punished by the state with the aim of deterring him from committing it again.  
The parties in a suit, deciding tortious liability, only includes individuals. Hence, the involvement of State is out of question.In case of crime, the state is always a party. This is because the state takes an action against the wrongdoer as crime constitutes a public wrong.
Tortious Liability is decided by the magnitude of harm caused to the aggrieved.In crime, while deciding the quantum of punishment, 3 factors are taken into accounts, namely:
A) The character of the wrongdoer, including past criminal records(if any).
B) Motive of Wrongdoer.
C) Magnitude of harm caused.
In tort action is brought by an injured party and the tort-feasor is sued in a civil court.In crime, the proceedings are conducted in a criminal court in the name of the state and the wrongdoer is punished by the state.

Distinction between Law of Torts and Law of Contract

TortContract
In tort, no privity exists or is needed as harm is always inflicted against the will of the party injured.In contracts, privity of contract always exists between the two parties. It clearly mentions that no stranger to a contract can sue either of the parties henceforth.
In case of torts, minors can be sued and damages are paid out of his property.In contract, minority is a good defence as a minor’s contract is void-ab-initio and no rule of estoppel applies
A tort is inflicted without or against the consent of the party i.e., the obligation arises without any consent.In a contract, legal obligation is created with the consent of both the parties i.e., consent is the essence of a contract.
Mistake is not a defence under Torts, even if it  is an innocent one.However, a contract entered into by the parties by mistake is void ab initio.
Tort is a violation of a right in Rem. i.e., rights available against the world at large.In case of contract, it is violation of a right in personam i.e., a right available and enforceable against a particular person.
Under Torts, a person owes a duty to the community at large, which is fixed by law.However in case of a contract, the duties and obligations are fixed owed to a definite party according to the will and consent of the parties.
In torts, motive is often taken into considerationIn contract, the motive stands to be irrelevant.
In torts, damages awarded may be real, exemplary, unliquidated or contemptuous.
Justice can also be attained by fairly compensating the injured for his injury and exemplary damages may also be awarded to the victim in addition.
In Bhim Singh Vs State of J & K and Others[v] – the plaintiff was awarded exemplary damages for violation of his rights enshrined under Article 21.
In contract real and liquidated damage was awarded. Exemplary damages are rarely awarded.  

What is Consumer Protection?

As per Section 2(7) of the 2019 Act, a consumer denotes a person who buys goods or avails any service for a consideration and includes any user except for the person who has availed such services or goods for the purpose of resale or commercial use.

The Oxford Dictionary denotes a ‘consumer’ as a person who becomes the purchaser of goods or other services. In other words, a ‘consumer’ is a person who purchases some property, whether movable or immovable, or hires any service at his discretion.

But in the present socio economic scenario, we find that a consumer is a victim of many unfair and unethical tactics adopted in the marketplace. Therefore, a gullible consumer stands no chance against a businessman, who markets goods and services on an organised basis, and hence the consumer often ends up getting exploited.

The consumer who was once popularly known as the ‘King of the market’ has now become a victim of it. He is not supplied with adequate information so as to the characteristics and performance of many consumer goods and suffer due to unfairness of many one sided standard forms of contracts.

Modern times and advanced practices have changed the notion of ‘freedom of contract’ largely, and have made it a matter of fiction and concern for many consumers. The consumers need protection by law when goods fail to live up to their promises or indeed cause injury.

Historical Evolution of Consumer Protection

The present-day awareness about consumer rights is not new as consumer rights, including pure and unadulterated commodities at appropriate prices, trace their roots to ancient times. Rulers back then felt the need of the welfare of their people and considered it to be a major area of concern. They gave importance on formulating the social conditions as well as the economic life of the people; hence establishing embargoes in order to protect the delight of the buyers.

Manu Smriti lays down the socio-economic conditions of ancient societies. Manu contemplates and writes on ethical trade practices which were prevalent in those times. A code of conduct for traders was especially mentioned and offenders were tried and subsequently punished for crimes against buyers. A mechanism to control prices and punish wrongdoers is also vividly mentioned. It also adds that the rates for the purchase and sale of goods were decided by the King.

Though its primary concern is with matters of practical administration, consumer protection occupies a prominent place in Arthasastra. It describes the role of the State in regulating trade and its duty to prevent crimes against consumers. During this period, numerous measures were taken to maintain the official standards of weights and measures.[vi]

Thus, the State shouldered a laborious task of protecting its consumers against unjust prices and fraudulent transactions. The king was the epitome of justice. These illustrations highlight the importance of regulating the wrongs of the market to safeguard the interests of the consumers prevalent in Ancient society. Moreover, it reflects how efficient the regulating provisions of the market were at that time.

Thus, consumer protection during the medieval era recommenced to be of utmost concern to the rulers. Strict regulations were established in the marketplace, there was a mechanism for price-enforcement in the market and shop-keepers were punished for under weighing their goods.[vii]

While in the colonial period, Britishers introduced a unified law for entire India in relation to consumer protection. These laws were combined with separate rules like the concept of Dharma and local custom and various personal laws.

In spite of the challenges tackled by Indian Law in integrating the British and Indian legal systems, the moral fabric of modern Indian Law is unmistakably Indian in its outlook and operation and consumer protection is not an exception to this perception.[viii] Some of the prominent laws which were enacted during the colonial regime concerning the subject matter include the the Sale of Goods Act of 1930, the Indian Contract Act of 1872, the, Drugs and Cosmetics Act of 1940, Agriculture Procedure (Grading and Marketing Act) of 1937 and the Indian Penal Code of 1860. These laws provide specific legal protection for consumers.

Consumer Protection Act, 1986

The Indian legal system underwent transformation with the enactment of the Consumer Protection Act of 1986 which was specifically formulated to protect the interests of the consumers. The Consumer Protection Act, 1986 was enacted with the objective to make justice less formal for the consumers which involves less paper work and gives justice with minimum delay.

It was enacted to provide simple yet quick redressal to consumer grievances. The Act encourages to protect the consumer interests against defects and deficiency in goods and services. It also seeks to secure the rights of a consumer against unfair trade practices, which may be practiced by manufacturers and traders. The Act applies to all goods and services unless specifically exempted by the Union Government and covers all sectors, whether private, public, or cooperative.[ix]

The consumers, under this law, are now not required to pay high sums of legal fees as it earlier used to deter consumers from approaching the courts. Hence, the hardships of court procedures have been replaced with simple procedures which helps in quicker redressal of the grievances. The Consumer Protection Act thus provides redress to a consumer where the goods purchased are defective or the services provided are subject to some deficiency.

Consumer Protection Act, 2019

The Consumer Protection Act, 1986 was revised and formulated after more than three decades and was replaced by the Consumer Protection Act, 2019. The Act came into force on 20th July 2020 and it aims at revamping the settlement and administration process by imposing stricter penalties on offenders. The Consumer Protection Act, 2019 has thus been enacted with an aim to widen the scope of consumer rights which would now also cover the field of e-commerce, direct selling, tele-shopping and other multi levels of marketing in this age of digitalization.

S. No.BasisConsumer Protection Act, 1986Consumer Protection Act, 2019
1.JurisdictionComplaints could be filed in a consumer court nearby the seller’s office. Complaints can now be filed in a consumer court nearby the complainant’s residence or workplace.
2.Admissibility of ComplaintComplaints were earlier to be decided within twenty-one days. But, its enforceability remained under question.Complaints are still decided within twenty-one days. But, if the issue is not resolved within the stipulated time, then the complaint shall be deemed to have been admitted.
3.Ambit of the definitionAll goods and services excluding free and personal services.Includes all goods and services, including telecom and all modes of transactions.
4.Product liabilityNo Provision was included. Only the cost of the product was awarded. To seek compensation a separate suit in a civil court.Claims for product liability can now be made against the  manufacturer, service provider or the seller. Compensation can be asked by proving any one of the several specified conditions in the Act.
5.Unfair contractsNo Provision was includedDefined as contracts that cause significant change in consumer rights.
6.RegulatorNo Provision was includedThis Act establishes the Central Consumer Protection Authority (CCPA) to safeguard the rights of consumers.
7.Pecuniary jurisdiction of CommissionsDistrict: Up to Rs 20 lakh State: Between Rs 20 lakh and up to Rs 1 croreNational:  Above Rs 1 crore.District: Up to Rs 1 croreState: Between Rs 1 crore and up to Rs 10 crores.National:  Above Rs 10 crores.
8.Composition of CommissionsDistrict: Was previously headed by any current or former District Judge and two members. State:  Was previously headed by any current or former High Court Judge and two members. National:  Was previously headed by any current or former Supreme Court Judge and by four members back then.District:  It is now headed by a president and at least 2 members.State:  Is now headed by a president and four members. National:  Headed by a president and at least four members
9.AppointmentThe Selection Committee recommended members for all the Commissions.The Central Government now appoints members through notification.  
10.Alternate dispute redressal mechanismNo Provision was included.Mediation cells are now attached to the District, State, and National Commissions
11.PenaltiesIf a person didn’t comply with orders of the Commissions, he was subjected to imprisonment between one month and three years or fine between Rs 2,000 to Rs 10,000, or both. If a person doesn’t comply with the orders of the Commission, the person may end up facing imprisonment up to three years, or a fine not less than Rs 25,000 which could extend up to Rs 1lakh, or even both in some cases. 

It can be inferred that the Consumer Protection Act, 2019 entails a better degree of security to the consumer vis-à-vis the Act of 1986. However, for the 2019 Act to be truly effective in ensuring the protection of consumers, the implementation of the legislation is the fundamental determining factor. That is yet to be seen, given how recent the 2019 Act is.

Law of Tort and Consumer Protection

Under the ambit of common law, tortious remedies are made available to consumers additionally to the numerous laws protecting consumers.

Contractual remedies are not provided under the ambit of torts because no privity of contract exists between the parties, namely the consumer and seller. Nevertheless, remedies are available to the consumers specifically against offenders who committed the wrong.

The roots of tortious remedy dates back as early as the Donoghue Vs Stevenson[x] case, which struck the principle that a producer owes a reasonable duty of care to the consumer of his product and allowed the consumer to bring an action against the manufacturer. It further ensured that the consumer was entitled to damages for any loss that may arise from the following circumstances-

  • On grounds of negligence on the part of the defendant.
  • Where the defendant has defrauded the plaintiff; or where he has committed a wilful act.
  • An aggrieved can recover damages for the fraud that the defendant commits.

Landmark Judgements

  • Manjeet Singh Vs National Insurance Company Ltd. & Others[xi] – The insurance company was asked to pay.

In this case the consumer had purchased a vehicle under a Hire Purchase agreement and got it insured by the National Insurance Company. An issue arose when the driver of the truck gave a passenger a lift as the passenger brutally assaulted the driver and fled away with the truck. However, the company citing the grounds of breach of terms of the insurance policy rejected the claim of compensation

Judgment

The Supreme Court ruled that the driver was not at fault. It considered  it as a breach of the policy, but not as a fundamental breach which could terminate the insurance policy. The insurance company was asked to pay 75% of the insured amount along with 9% interest p.a. along with Rs. 1,00,000 as compensation to the victim.

  • National Insurance Company Ltd. Vs Hindustan Safety Glass Works Ltd. & Others[xii] – The Court ordered the company to compensate.

In this case the insurance company refused to make good to the respondent of a damage caused to victim. It was pleaded on the basis of one of the conditions of the policy which stated that the National Insurance could not be held liable for the loss especially after 12 months of the event and hence could not be asked to make good for the loss or damage to the insured. 

Judgment 

The National Commission held the injured person’s claim as actionable under law. It also added that the goods were insured at the time of event and the claim for the same was made the very next day. The Court ordered the company to compensate for an amount of Rs. 21,00,100 on an interest rate of 9% per annum.

  • Karnataka Power Transmission Corporation (KPTC) Vs Ashok Iron Works Private Limited[xiii] – A private company came well within the definition of a ‘Person.’

The respondents, a private company which manufactured iron, had applied for seeking electricity from the Karnataka Power Transmission Corporation (hereinafter KTPC) for efficiently increasing its iron production. However, the supply didn’t begin until ten months later, as agreed upon earlier, despite of paying charges and obtaining confirmation for the supply of the energy as demanded. This delay resulted in a huge loss for the iron company. legal argument by KTPC was that. They argued that the company was engaged in procuring iron and used it for commercial consumption which is excluded under the Act.  It was also argued that the complainant was not a `person’ as specified under Section 2(1)(m) of the Act, 1986.

Judgment

The Supreme Court rejected the plea which sought the complaint as unmaintainable as per the Consumer Protection Act, 1986. It held that a private company came well within the definition of a ‘Person.’ It was also held that the supply of electricity was covered under the purview of ‘service.’ And in this case, there was a deficiency in services provided.

Conclusion

The courts in India are ready to amend laws in order to provide any injured person with a remedy, especially where there are no statutory coverages. It is a subject which is approximating law to the legal ideal that ‘wherever there is a wrong there must be a remedy.’ To an injured person, the whole colossal legal system is a failure if his issues remain unredressed. Therefore, it is important to instil a sense of trust among the public about the justice system as nothing is capable of bringing about more social satisfaction in the society than the care shown to an aggrieved person, particularly when he needs it the most.

While, the Law of torts, in-general, acts as a caretaker of private and social wrongs, its knowledge therefore becomes important not only to the educated, but also to the general public. To widen the field of consumer protection law, another important piece of social legislation has been added to it, which is known as the Consumer Protection Act. 

The Consumer Protection Act, 1986 simply adds a new dimension to the ambit of consumer rights that have been recognized and protected ever since ancient times. The Consumer Protection Act, 1986 has thus received wide recognition in India by ensuring easy and inexpensive access to justice for its consumers. The Consumer Protection Act, 1986 has been widely accepted by the purchasers because of its cost-effectiveness and convenience amongst others. 

 ABOUT THE AUTHOR

Jalaj Tokas is a second Year Law student pursuing B.A.LLB from University School of Law and Legal Studies, GGSIPU, New Delhi. He is a life-long learner is self driven towards his ambitions. He strongly believes that expectations are premeditated disappointments and strives not just to be successful but more importantly to be of value.

Edited by: Aashima Kakkar, Associate Editor, Law Insider


[i] Santhakumar Raja, “Nature and Definition of Tort- Law of Torts” (last visited on October 31, 2021).

[ii] Sarah Olson and Anne Kimball, “The Limits on the Use of Tort Law To Encourage Consumer Safety” (last visited on October 31, 2021).

[iii] LawPage- Notes and Articles for Law Students (last visited on October 31, 2021).

[iv] Law of Torts and Consumer Protection, Universal Law Classes (last visited on October 31, 2021).

[v] Bhim Singh Vs State of J&K AIR 1986 SC 494.

[vi] A. Rajendra Prasad, “Historical Evolution of Consumer Protection and Law in India” (last visited on October 31, 2021).

[vii] Namrata S., “Consumer Protection in India”, Business Management Ideas (last visited on October 31, 2021).

[viii] Yash Bishnoi, “Consumer Protection”, Academike, (last visited on October 31, 2021).

[ix] Consumer Protection, Rajasthan Registration Centre (last visited on October 31, 2021).

[x] Donoghue Vs Stevenson [1932] AC 562.

[xi] Manjeet Singh Vs National Insurance Company Ltd. & Others AIR 2017 SC 5795.

[xii] National Insurance Company Ltd. Vs Hindustan Safety Glass Works Ltd. & Others AIR 2017 SC 1900.

[xiii] Karnataka Power Transmission Corporation (KPTC) Vs Ashok Iron Works Private Limited AIR 2009 SC 1905.