case study on unfair trade practices in india

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...amendment) read as under: (4) Subject to the provisions of sub-section (3), all cases pertaining to unfair trade practices other than those referred to in...Consumer Disputes Redressal Commission. Section 66 of the Act was amended in the following terms: 'Provided further that all the cases relating to the unfair trade ...- "Provided that all investigations or proceedings relating to unfair trade practices pending before the National Commission, on or before the date on which the C...

...the Tribunal, as the case may be, in such manner as may be prescribed.(3) All cases pertaining to monopolistic trade practices or restrictive trade practices pending (including such ...of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) as it stood before its repeal;(4) Subject to the provisions of sub-section (3), all cases pertaining to...Act.Provided further that all the cases relating to the unfair trade practices pending, before the National Commission under this sub-section, on or before the date on which the...

...under section 12B of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) as it stood before its repeal.]……………………..... Trade Practices Act, 1969 (54 of 1969) as it stood before its repeal.]…………………..[(5) All cases pertaining to unfair trade practices referred to in... unfair trade practices . Relying upon the judgement of the Supreme Court in Saurabh Prakash v. Dlf Universal Ltd.., (2007) 1 SCC 228 the...

...Heard the complainant who appears in person. This petition has been filed alleging that the respondent (Ghaziabad Development Authority) has indulged in monopolistic/ unfair trade practices . The basic allegatio...-petitioner No. 27.In view of the background facts of the case, it cannot be said that there was any monopolistic or unfair trade practices involved. The proceedings are therefore closed...respective cases , the decision was taken to refund the amount. The case of the complainant, according to the respondent, is of a different nature. The facts of the case clearly disclose that so far as the...

...enforced, and any such penalty, confiscation or punishment may be imposed or made as if that Act had not been repealed.](3) All cases pertaining to monopolistic trade practices or restrictive ...section 12B of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) as it stood before its repeal](4) Subject to ... cases relating to the unfair trade practices pending, before the National Commission under this subsection, on or before the date on which the competition (Amendment) Bill, 2009 receives the assent...

...and the cases of restrictive and unfair trade practices pending before the erstwhile Commission stood transferred to this Tribunal, which was established under Section 53A of the 2002 Act and the...), second proviso was inserted to Section 66(4) of the 2002 Act for deemed transfer of the cases of unfair trade practices from the National Consumer Disputes Redressal Commission...respectfully prayed that(i) This Hon'ble Commission may be pleased to inquire into the unfair and restrictive trade practices indulged into by the Respondents in relation to the backing out...

...one of the many hundred other similar cases , where the Forum has found OP guilty of deficiency and unfair trade practices and cheating with consumers. The facts in this case clearly show that OP has...return Rs.7,91,786/- deposited with OP, with interest of 12% from the respective date of deposits and we award Rs.1 lakh as compensation for unfair trade practice adopted by OP and Rs.25,000/- for...

...and such labour practices on the part of the employers or the trade unions of employees, as mentioned in Schedules II, III and IV, could be prevented in appropriate cases by the courts concerned...employers, the trade unions of the employers and on the part of the workmen and trade unions of workmen, which are almost in pari materia with lists of unfair labour practices on the part of the employers, on...the part of the trade unions and general unfair labour practices on the part of the employers as found in Schedules II, III and IV of the Maharashtra Act. However, even the aforesaid amended...

...losses on account of unfair trade practices adopted by the respondent, hence he sought compensation from the respondent by filing an application under Section 12-B of the Monopolies and Restrictive...case of deficiency of services on the part of the respondent. As a result of such unfair trade practices , the applicant has not only been deprived of return on his investment made with the respondent... Trade Practices Act, 1969 (hereinafter referred to as “the Act”).4. In response to the notice issued under Section 12-B of the Act, the respondent filed its reply. The...

...of monopolistic, restrictive and unfair trade practices committed by any trader, undertaking or corporations. It was also felt by the Committee that such a power and its exercise by the Commission in appropriate ...limitation prescribed for a suit under the Limitation Act prior to the insertion of section 12B.2. Section 12B shall, however, have prospective operation in the case of unfair trade practices and shall, the...Act. We have already recommended that a separate chapter be included to deal with unfair trade practices like false representations and misleading advertisements. It is a well established principle of...

...National Consumer Disputes Redressal Commission. By an amendment made in 2009 vide Act 39 of 2009, second proviso was inserted in Section 66(4) for deemed transfer of the cases of unfair trade practices ...1. In this complaint filed under Section 36-A read with Section 36-B(a) and 36-D of the Monopolies and Restrictive Trade Practices Act, 1969 (for short, the ‘1969 Act’), which came to...:—a. Order an inquiry under Section 36-A read with Section 36-B (a) and 36-D of the Act and hold that the refusal to compensate the informant by the Respondent amounts to unfair trade ...

...degree of proof required to hold brokers/sub-brokers liable for fraudulent/manipulative practices under the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices ... practices and Section 15-J which lay down the factors to be taken into account while adjudging the quantum of penalty read as follows:“15-HA. Penalty for fraudulent and unfair trade ... practices .—If any person indulges in fraudulent and unfair trade practices relating to securities he shall be liable to a penalty of twenty-five crore rupees or three times the amount of profits made...

...Act. The learned counsel further points out that under Section 66(3) of the Act, all cases pertaining to monopolistic trade practices or restrictive trade practices pending before the Monopolies and Restri...its prayer, the complainant has prayed for ordering inquiry into unfair trade practices for not delivering the collaterals even after providing no dues certificate and having no charge thereby adopting...initiating enquiry into the unfair trade practices and the residuary prayer was for passing such orders as may be deem fit. During the pendency of this complaint, a Compensation Application under...

...enforced in 2009, the 1969 Act was repealed and the cases of restrictive and unfair trade practices pending before the erstwhile Commission stood transferred to this Tribunal, which was established...Amendment Act, 2009 (Act 39 of 2009), second proviso was inserted toSection 66(4) of the 2002 Act for deemed transfer of the cases of unfair trade practices from the...most respectfully prayed that (i) This Honble Commission may be pleased to inquire into the unfair and restrictive trade practices indulged into by the Respondents in relation to...

...the Commission framed the following issues for its consideration:1. Whether the respondent is or has been indulging in unfair trade practices as alleged in the compensation...application?2. Whether the applicant has suffered any loss or injury as a result of unfair trade practices and if so, the amount of compensation to which he may be...prohibited trade practices . The Commission observed: “ Unfair trade practices on the part of the respondent are manifest and need no further reiteration.” The Commission, however, referred to the...

...proceedings filed before the commencement of this Act.3. Sub-section (3) of section 66 of the Act, inter alia, provides that all cases pertaining to monopolistic trade practices or restrictive ...all cases pertaining to unfair trade practices other than those referred to in clause (x) of sub-section (1) of section 36A of the MRTP Act before the MRTPC shall, on or...machinery with them, certain further amendments are proposed to section 66 of the Act which, inter alia, contains that—(i) all the cases relating to unfair trade practices pending before...

... Practices Act,1969 came to be repealed and the Monopolies and Restrictive Trade Practices Commission established under Section 5(1) of the said Act stood dissolved as it is seen from ...,1969 and pending before the Monopolies and Restrictive Trade Practices Commission on or before the commencement of Competition Act,2002, shall be transferred to the National Commission constituted under the Consumer Protection ...respect of other provisions. 9. Under the erstwhile Monopolies and Restrictive Trade Practices Act,1969, unfair trade practice was defined to mean "in...

...this Hon'ble Forum be pleased to hold that the opposite parties (jointly and severally) have practised unfair trade practice towards the complainant and direct them (jointly and severally) to remove... unfair trade practice, practiced by them against the complainant;(b) This Hon'ble Forum be pleased to direct the opposite parties (jointly and severally) to...was thus, “ unfair trade practice”. He sought permission to remove “ unfair trade practice” and deficiencies in service and also to refund a sum of Rs 14 lakhs, the price of the vehicle and Rs 1,91,295...

...made by us in this order should be construed as expression of any final opinion on the issues that may arise for consideration in the main enquiries, namely, Unfair Trade Practices and Restrictive Trade ...any services or being indulged in the unfair trade practices or restrictive trade practice is also denied by them. According to them, neither there is any proper agreement executed between the parties...repelled and it was urged that the instant cause is an enquiry relating to unfair trade practices indulged in by the respondent and the jurisdiction of the Commission is in addition to the existing remedies...

...S.P Kurdukar, J.— This appeal under Section 55 of the Monopolies and Restrictive Trade Practices Act, 1969 (for short “the Act”) is filed by the appellant challenging the legality and correctness of the judgm... unfair trade practices but merely enumerates them as trade practices . It is only when such trade practices result in causing loss or injury to consumers of such goods or services by elimi...restricting competition or even otherwise that they become “ unfair trade practices ”. The Legislature did not characterise the specified trade practice as unfair trade practices . Therefore...

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Unfair Trade Practices in India: Legal Framework Explained

This article on ‘Unfair Trade Practices in India: Legal Framework’ was written by Shriharshini Balachandar , an intern at Legal Upanishad.

Introduction

Unfair trade practices refer to activities or practices that are deceptive, fraudulent, or unfair in nature and carried out by businesses or individuals to gain an unfair advantage over their competitors. These practices can cause harm to consumers, competitors, or the market as a whole. In India, various laws govern unfair trade practices, including the Consumer Protection Act, 2019, the Competition Act, 2002, and the Indian Contract Act, 1872. We will discuss the legal framework for unfair trade practices in India and analyze some significant case laws related to the topic. This article deals with the concept and laws regulating Unfair trade practices in India.

Unfair Trade Practices: Definition

The term “unfair trade practise” (UTP) broadly refers to a trade practise that adopts any unfair method or unfair or deceptive practise that is prohibited by a statute or has been recognised as actionable under law or by a court judgement in order to promote the sale, use, supply of any goods or the provision of any service.

LEGAL FRAMEWORK IN INDIA

The consumer protection act, 2019.

The Consumer Protection Act, 2019 (CPA) is a comprehensive legislation that aims to protect the interests of consumers in India. The Act defines unfair trade practices as any deceptive or unfair practice that is made by a seller in connection with the promotion, sale, or supply of any goods or services. It also provides for the establishment of the Central Consumer Protection Authority (CCPA) which has the power to investigate and prosecute unfair trade practices. Furthermore, the CPA has also introduced strict penalties for violations of consumer rights.

The Act provides for imprisonment and hefty fines for entities found guilty of engaging in unfair trade practices. This has significantly deterred market players from engaging in such practices and has helped in promoting fair competition in the market.

In the case of Hindustan Unilever Ltd. v. State of Rajasthan , the Supreme Court of India held that the promotion of a product by claiming that it has a unique or special property without any scientific basis is a deceptive trade practice. In this case, Hindustan Unilever promoted its product, “Pepsodent Germicheck,” by claiming that it was “102% better” than other toothpaste brands, without providing any scientific evidence to support the claim. The Court held that such a claim was misleading and amounted to an unfair trade practice.

Another important case that dealt with unfair trade practices under the CPA is the case of Cadila Healthcare Ltd. v. Dr. Reddy’s Laboratories Ltd. In this case, Cadila Healthcare had challenged the marketing practices of Dr. Reddy’s Laboratories, alleging that the latter had engaged in unfair and deceptive trade practices by making false and misleading claims about the efficacy of its product. The Court held that such claims were in violation of the CPA and directed Dr. Reddy’s Laboratories to withdraw the advertisement and pay compensation to Cadila Healthcare.

The Competition Act, 2002

The Competition Act, 2002 (CA) is another important legislation that deals with unfair trade practices in India. The Act aims to promote competition in the market by prohibiting anti-competitive practices. The act aims to promote and sustain competition in the market and protect the interests of consumers. The Competition Commission of India (CCI) is responsible for enforcing the provisions of the act and has been given the power to investigate and penalize entities that engage in anti-competitive practices. Under the CA, unfair trade practices are defined as those practices that distort competition in the market or are likely to do so.

In the case of Maruti Suzuki India Ltd. v. Competition Commission of India , the Delhi High Court held that an agreement between two car manufacturers to fix the prices of their spare parts was an unfair trade practice. The Court held that such an agreement was anti-competitive in nature and violated the provisions of the CA.

Another important case that dealt with unfair trade practices under the CA is the case of Pfizer Ltd. v. Union of India . In this case, Pfizer had challenged the decision of the National Pharmaceutical Pricing Authority (NPPA) to cap the prices of its drug. The Supreme Court of India held that Pfizer had engaged in an unfair trade practice by charging exorbitant prices for its drug, which was essential for the treatment of a life-threatening disease. The Court held that such a practice was exploitative and went against the public interest.

The Indian Contract Act, 1872

The Indian Contract Act, 1872 (ICA) deals with the formation and enforcement of contracts in India. the Indian Contract Act, 1872 plays a significant role in promoting fair and ethical business practices in India. The act provides for the requirement of free consent, the performance and discharge of contracts, and the enforceability of contracts. The effective implementation of the act would require the active participation of all stakeholders, including consumers, market players, and the authorities responsible for enforcing the law. Under the ICA, a contract that involves fraud or misrepresentation is voidable at the option of the aggrieved party. Therefore, any unfair trade practice that involves fraud or misrepresentation can be challenged under the ICA.

In the case of A.V. Fernandez v. State of Kerala , the Supreme Court of India held that a seller who conceals material information about a product while selling it to a buyer is guilty of unfair trade practice. In this case, A.V. Fernandez had sold a car to the complainant without disclosing that the car had met with an accident in the past. The Court held that such a practice was fraudulent and amounted to an unfair trade practice.

Another important case that dealt with unfair trade practices under the ICA is the case of Indian Oil Corporation Ltd. v. Amritsar Gas Service . In this case, Indian Oil Corporation terminated the dealership agreement with Amritsar Gas Service on the ground that the latter had engaged in malpractices and had indulged in black marketing of LPG cylinders. The Court held that the termination of the agreement without any prior notice or opportunity of being heard was an unfair trade practice and went against the principles of natural justice.

Other relevant legislation

Apart from the above-mentioned legislations, various other laws in India address specific unfair trade practices. For instance, the Drugs and Cosmetics Act, of 1940 prohibits misleading advertisements for drugs and cosmetics. The Securities and Exchange Board of India (SEBI) has also issued regulations to curb insider trading and other unfair trade practices in the securities market.

Suggestions

• The government and regulatory bodies should work to increase awareness among consumers and businesses about the legal framework regarding unfair trade practices in India. This can be done through various mediums like seminars, workshops, and social media campaigns.
• There should be stricter enforcement of the existing laws, and the government should ensure that the regulatory authorities have the necessary resources to carry out their duties effectively. This will act as a deterrent to businesses engaging in unfair trade practices.
• The complaint filing process should be simplified and made more accessible to consumers. This will encourage more people to come forward and report instances of unfair trade practices.

Unfair trade practices are a menace that can harm consumers, competitors, and the market as a whole. Therefore, it is essential to have a robust legal framework to deal with such practices. These laws provide stringent penalties and compensation mechanisms to deter businesses from engaging in such practices.

Through the case laws discussed above, we can see that the courts in India have been vigilant in enforcing these laws and protecting the interests of consumers and competitors. It is essential for businesses to be aware of their obligations under these laws and to ensure that they do not engage in any unfair trade practices. In conclusion, the legal framework for unfair trade practices in India is robust, and the courts have been proactive in enforcing these laws to ensure a fair and competitive market.

• Yash Agrawal, Unfair Trade Practices in India: A Comparative Analysis Between the Competition and Consumer Laws, SSRN, 4 June 2020, available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3619075
• Study of Unfair Trade Practices in India, Lex Peeps, 17 July 2021, available at: https://lexpeeps.in/study-of-unfair-trade-practices-in-india/
• Raj Karn, Unfair Trade Practices, 4(3) International Journal of Law Management and Humanities (2021)

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India Corporate Law

One-sided contractual terms constitute unfair trade practice under consumer law in india.

INTRODUCTION:

A three-judge bench of the Supreme Court, in Ireo Grace Realtech Pvt. Ltd. v. Abhishek Khanna and Ors. [1] , has inter alia held that developers cannot compel apartment buyers to be bound by one-sided contractual terms. Finding such one-sided agreements oppressive, the Court has held that the same would constitute an unfair trade practice under the consumer laws in India.

The Department of Town and Country Planning had granted a licence to Precision Realtors Pvt. Ltd. i.e., Respondent No. 3, Blue Planet Infra Developers and Madeira Conbuild Pvt. Ltd., i.e. Respondent No. 4, to develop a vast housing project called “The Corridors” in Sector 67-A, Gurgaon, Haryana (the “ Project ”). Subsequently, the licence for construction was transferred to Ireo Grace Realtech Pvt. Ltd. (the “ Developer ”). The building plans of the Project were sanctioned by the Directorate of Town and Country Planning, Haryana, on July 23, 2013 (“ Sanctioned Building Plan ”).

The Sanctioned Building Plan contained a detailed set of terms and conditions, which inter alia included provisions for fire safety and environmental clearance. Clause 3 of the Sanctioned Building Plan required clearance from the fire authority to be submitted within 90 days from the date of issuance of the Sanctioned Building Plan. Further, Clause 17(iv) of the Sanctioned Building Plan required the Developer to obtain a no objection certificate from the Ministry of Environment & Forests, before commencing construction of the Project.

The Developer opened booking for the apartments in 2013. On August 7, 2013, Respondent No. 1, an apartment buyer, was allotted a 2 BHK apartment in Tower-C of the Project. Similar allotment letters were issued to various other apartment buyers in the housing Project.

The environmental clearance granted by the Ministry of Environment & Forest Government of Haryana on December 12, 2013, required the Developer to submit a copy of the fire safety plan, approved by the fire department, before the commencement of the Project.

Thereafter, the Developer approached the Commissioner, Municipal Corporation, Gurgaon, for issuance of a no objection certificate for the firefighting scheme of the Project.  The approval for the said scheme was granted on November 27, 2014.

Thereafter, the apartment buyers vide letter dated March 25, 2014, received a copy of the apartment buyer’s agreement (“ ABA ”) with a construction linked payment plan.

The terms and conditions of the ABA inter alia provided that (i) the apartment buyers would be required to deposit 20% of the sale consideration within 45 days of booking of the apartment and that the same would be deemed to constitute the earnest money; (ii) in case of a delay in payment of an instalment, the apartment buyer would be required to pay Interest @ 20% per annum on every delayed payment; (iii) in case the allottee failed, ignored or neglected to take possession of the apartment in accordance with the ‘Notice of Possession’, the allottee would be liable to pay ‘Holding Charges’ on the super area @ Rs. 7.5 per sq. ft. per month; (iv) in case the Developer failed to offer possession by the end of the grace period i.e., 42+6 months, it would be liable to pay delay compensation @ Rs. 7.5 per sq. ft. of the super area for every month of delay (which works out to approximately 0.9% to 1% interest per annum); (v) the delay compensation would be payable to the allottee only if the termination was ‘validly opted’; (vi) the delay compensation was limited to a fixed period of 12 months only, and no other claim whatsoever, whether monetary or otherwise, was payable by the Developer; (vii) the allottee would be deemed to have waived all its claims in respect of the area, specifications, quality, construction, any other provision in the apartment against the Developer upon taking possession of the apartment; (viii) in case the allottee neglected or failed to make timely payments as stipulated in the agreement, or failed to exercise the options offered by the Developer, the Developer could terminate the agreement and forfeit the earnest money; (ix) upon such termination, the Developer would be under no obligation, except to refund the amounts already paid by the allottee, without any interest. Such amount would be payable after forfeiture and deduction of the earnest money, interest on delayed payments, brokerage/commission/charges, service tax and other amounts due and payable to it. The principal amount after the aforesaid deductions would be refunded at an uncertain future date i.e. after the Developer had sold the apartment allotted to the allottees; (x) the allottees could cancel the agreement, solely in the event of a clear and unambiguous failure of the warranties of the Developer. In such a scenario, the allottee would be entitled to a refund of the instalments actually paid, along with an interest @ 8% p.a. within a period of 90 days from the date of determination to this effect. No other claim, whatsoever, monetary or otherwise would lie against the Developer.

On December 27, 2017, Respondent No. 1 filed a consumer complaint before the National Consumer Disputes Redressal Commission (“ National Commission ”), inter alia seeking refund of sale consideration along with an interest of 20% per annum, on account of inordinate delay in completion of construction and obtaining occupation certificate on part of the Developer.

Respondent No. 1 inter alia submitted that (i) the Developer had invited applications from the public for booking flats in the Project, by misrepresenting that all necessary approvals/ pre-clearances with respect to the constructions had already been obtained from the respective authorities; (ii) the Developer had misrepresented that the Project would have a 90-meters motorable access road approaching the Project from Junction 63A to 67A; (iii) the apartment buyers were induced to book apartments on false representations made by the Developer that construction of the Project would be completed within 42 months from the collection of the initial booking amount.

The Developer filed its reply to the consumer complaint, submitting that there was no delay in offering possession of the apartments on its part and hence, the complaint was premature and liable to be dismissed. Similar complaints in relation to the Project were filed by various other apartment buyers before the National Commission. These batch of consumer complaints were decided by the National Commission vide judgment and order dated March 28, 2019. The National Commission inter alia directed refund of the amounts deposited by the apartment buyers in the Project on account of the inordinate delay in completing the construction and obtaining the occupation certificate. Aggrieved by the said decisions, the Developer filed appeals Under Section 23 of the Consumer Protection Act, 1986 (“ 1986 Act ”).

ARGUMENTS ADVANCED:

The Developer inter alia submitted that (i) the period of 42 months for handing over possession would commence only after the conditions mentioned in the Sanctioned Building Plan were fulfilled; (ii) delays were inevitable in large development projects, where multiple towers were being constructed; (iii) the finding recorded by the National Commission — that the clauses of the ABA were one-sided and unfair — was illegal and without jurisdiction, under the 1986 Act. It was only under the Consumer Protection Act, 2019 (“ 2019 Act ”), which came into effect on July 20, 2020, that the State Consumer Forum and the National Commission were conferred with the power to declare contractual terms that were unfair to consumers as null and void. Such power did not exist under the 1986 Act.

Apartment Buyers inter alia submitted that (i) the building plans were approved on July 23, 2013, and the Developer was required to hand over possession of the apartments within a period of 42 months from the date of approval, which expired on January 22, 2017; (ii) Several homebuyers had undertaken loans to pay the instalments, on which interest up to 7.90% was being paid. On account of the inordinate delay, which had occurred, they were unable to pay further instalments and insisted on refund of the amounts paid; (iii) The ABA contained one-sided clauses, which were not final and binding on the apartment buyers and would constitute an unfair trade practice.

The Court observed that the factum of delay on part of the Developer in completing the construction and making the offer of possession was undisputed. Upon perusing the terms of the ABA, the Court found that the same were wholly one-sided and were entirely loaded in favour of the Developer, and against the allottee at every step. It held that the terms of the ABA were oppressive and unreasonable and the same would constitute an unfair trade practice under the 1986 Act.

The Court further observed that whilst an “unfair contract” had been defined under the 2019 Act, and powers had been specifically conferred on the State Consumer Fora and the National Commission to declare contractual terms, which are unfair, as null and void, such statutory recognition of the said power was implicit under the 1986 Act. The Court categorically held that the Developer could not compel the apartment buyers to be bound by the one-sided contractual terms contained in ABAs.

To decide on the issue of whether the apartment buyers were bound to accept the offer of possession made by the Developer where the occupation certificate had been issued, along with the payment of delay compensation, or were entitled to terminate the ABA, the Court categorised the allottees into two broad categories. Category A comprised apartment buyers whose allotments fell in Phase 1 of the Project, where the Developer has been granted occupation certificate, and the offer of possession had been made. Category B comprised apartment buyers whose allotments fell in Phase 2 of the project, where the occupation certificate had not been granted so far. The Developer had made an alternate offer of allotment of apartments to Category B apartment buyers, in Phase 1 of the Project.

Regarding Category A, the Court found that such allottees (except the allottee(s) who had filed an application under the Insolvency and Bankruptcy Code, 2016) were obligated to take possession of the apartments since the construction was completed, and possession was offered on June 28, 2019, after the issuance of the occupation certificate on May 31, 2019. The Court, however, directed the Developer to pay delay compensation to such allottees as per the ABA.

With regard to the allottee that had filed an application under the Insolvency and Bankruptcy Code, 2016, the Court directed the Developer to refund the amount deposited by him, along with interest.

In case of category 2 allottees, it was held that such allottees were entitled to refund of the entire amount deposited by them, along with compensation and interest. The Court also observed that Category B allottees were not bound to accept the Developer’s alternate offer on account of the inordinate delay in completing the construction of the towers where units were previously allotted to them. The Court observed that the occupation certificate was still not available (even as on date of the judgment) and the same clearly amounted to deficiency of service. The Court observed that the allottees could not be made to wait indefinitely for possession of the apartments allotted to them, nor could they be bound to take the apartments in Phase 1 of the Project.

While deciding the amount of interest payable by the Developer, the Court observed that the delay compensation specified in the ABA (approximately 0.9% to 1% interest per annum), on the amount deposited by the apartment buyer, could not be accepted as being adequate compensation for the delay in the construction of the Project. On the other hand, the Court also observed that the claim of the apartment buyers for payment of compound interest @ 20% per annum had no nexus with the commercial realities of the prevailing market. To balance the competing interest of both parties, the Court, in the interest of justice and fair play, fixed the interest @ 9% simple interest per annum. While arriving at this figure, the Court specifically took cognizance of the prevailing market conditions because of the Covid-19 pandemic and its impact on the construction industry.

CONCLUSION:

In keeping with its progressive and consumer centric view, the Supreme Court has ensured that parties in unequal bargaining positions are placed on an equitable footing. The Court has also kept in mind the commercial realities of the construction industry and the prevailing financial impact of the pandemic on the said sector. It has sought to strike a harmonious balance between the competing interests of the apartment buyers and developers, thereby giving necessary impetus to economic development and social welfare at large.

[1] AIR 2021 SC 437

Laws Relating To Unfair Trade Practices In India

Unfair trade practices are as old as the exchange itself. But, the lawful instrument to control these practices took its own time to settle. In spite of the fact that the courts from the earliest starting point were fast to ensure the out of line or deceiving conduct in dicta [1] , Judicially forced impediments and functional contemplation of time and cost limited these solutions for narrow conditions. The delicacy displayed towards unfair practices of doubtful probity was established throughout the entire existence of business sectors and fairs in medieval Britain, In which trust was neither given nor expected [2] .

An unfair Trade practice implies an exchange practice, for the promotion of advancing any deal, embraces uncalled for strategy, or then again unjustifiable or beguiling practice. Unfair trade Practice envelops a wide cluster of tortes, all of which include financial aspects injury welcomed on my tricky or improper lead. The legitimate hypotheses that can be affirmed incorporate cases, for example, prized formula misappropriation, unreasonable rivalry, bogus promoting selling, what’s more, weakening. Unreasonable exchange practices can emerge in any field of innovation and as often as possible show up regarding the more conventional licensed innovation cases of patent, trademarks, and copyright encroachment.

What is Unfair Trade Practice

The expression of unfair trade practices can be characterized as any business practice or act that is beguiling, false, or makes injury a customer. These practices can incorporate acts that are regarded unlawful, for example, those that abuse Consumer Protection law. A few instances of unfair trade practices techniques are the false portrayal of a decent or administration; false unconditional present or prize offers; false promoting; or deceptive pricing. [3]

Authorities and Agencies for Unfair Trade Practices

1. district forum.

A district forum is eastablished in the district. where a consumer can file a complaint whenever he feels he is misguided, his rights are violated or he is deceived by any manufacturer or seller. Then he can file a complaint District forum which is the lowest forum in the redressal hierarchy and it deals with cases of the amount below 20lakhs.

2. State Commission

State commissions have been set up at the state levels by ideals of sec. 16 of the consumer protection Act. There are 35 state commissions at present in India. State commissions can engage all the issues where the estimation of administrations or merchandise surpasses Rs. 20 lakhs, however, doesn’t go past Rs. 1 crore. In the event that the case is over one crore, at that point, it doesn’t fall under its jurisdiction.

3. National Commission

A national consumer dispute redressal commission is organized by the central government under the Consumer Protection Act. It is termed as an apex court because it oversees the functioning and regulation of the state commissions and district forum also.

4. Supreme Court

If any individual isn’t happy with the Judgment given by the national commission can make a bid in the Supreme Court. There is a strategy for documenting an appeal against the request for a national commission. An appeal can be made with the Supreme Court against the request for national commission inside 30 days from the date of request and this period can be reached out for an additional 15 days. Supreme Court engages the intrigue just when the litigant has stored in the endorsed way half of that sum or fifty thousand whichever is less

5. Competition Commission of India

Competition Commission of India is a body corporate and autonomous element having a typical seal with the ability to go into contracts and to sue in its name. It is to comprise of an executive, who is to be helped by at least two, and a limit of ten, different individuals

Case law related to the Unfair Trade Practice

In re Lakhanpal National Ltd. v. MRTP Commission , it was affirmed before the Commission that:

• The appealing party organization was fabricating NOVINO (dry cell) batteries as a team with M/s. Mitsushita Electric Modern Organization of Japan, and not with National Panasonic of Japan utilizing their methods, as promoted by it: and
• The representation that NOVINO batteries are produced in joint endeavor or in a joint effort with National Panasonic is false and deceiving.

The MRTP Commission held it to be deluding however the Supreme Court reversed the statement by saying: There is no other organization with the name ‘national’ or ‘panasonic’ and there is no degree for any disarray on that score. Where the reference is being made to the standard of the quality, it isn’t material in the case of assembling organization is shown by its precisely right name or by its depiction regarding its items. We, in this manner, hold that the incorrect depiction of the assembling organization in its notices being referred to doesn’t pull in sec 36A of the Demonstration, despite the fact that we would hurry to include that it would be progressively appropriate for the litigant organization to give the full realities by alluding to Mitsushita Ltd. by its right name and further expressing that its items are known by the names ‘national’ and ‘panasonic’ [4] .

The MRTP Commission & the transfer of its judicial functions:

Influenced by its colonial experience, a newly independent India adopted an economic policy which subjected almost all areas of economic activity to State regulation and as a consequence, a handful of groups or business houses came to be entrenched with concentrated economic power. [5] In order to address this issue, the Monopolies and Restrictive Trade Practices Act, 1969 (‘MRTP Act’), was enacted, which was the first piece of legislation in the field of competition law in the country. The primary aim of the act was to control monopolies by prohibiting monopolistic and restrictive trade practices. [6] The Act also provided for the appointment of an investigative branch which was to be headed by a Director-General, and for the constitution of a permanent body called the Monopolies and Restrictive Trade Practices Commission (‘MRTP Commission’), appointed by the Central Government.

The unfair trade policy of the countries mainly covers laws relating to the regulation of fees of professional bodies. It provides the person with the basic knowledge of its rights, exploitations etc to handle consumer problems in a proper manner with laws. From the above conversation obviously buyers are constantly exposed to control and non-control out of line exchange, for example, imposing business model circumstances vicious rivalry, inadequate quality, distortion and so forth. The superb essentialness of purchaser is that age, competency, the sufficiency of mind isn’t important. The word purchaser likewise incorporates affiliations [7] .

It incorporates false representations, bogus proposal of deal value, unconditional presents offers and prize plans resistance of endorsed principles and so on. There are some lawful cures are accessible in India for uncalled for exchange rehearses. These are expulsion of deformities, substitution of merchandise, discount of value, grant of remuneration, evacuation of lack in administration, cessation of uncalled for exchange work on, halting of deal and withdrawal of perilous products, installment of sufficient cost and so on. Close to these cures The Competition Commission of Act, 2002 and consumer protection Act, 1986 assume a crucial job insecurity of customer rights if there should be an occurrence unfair exchange rehearses in India.

[1] American Wash Board Co v. Saginaw Mfg. Co, 103f 281 (6th cir,1900)

[2] Developments in the Law : Deceptive Advertising 80 Harv. L. Rev. 1013 (1967).

[3] https://www.winston.com/en/legal-glossary/unfair-trade-practices.html last visited on june 13th 2020

[4] http://www.legalservicesindia.com/article/1861/Unfair-Trade-Practice-in-India.html last visited on june 14, 2020

[5] See the Harris School, Economic Reform in India, January, 2006, available at http://harris. uchicago.edu/sites/default/files/IPP%20Economic%20Reform%20in%20India.pdf. (Last visited on November 3, 2016).

[6] Statement of Objects & Reasons of The Monopolies and Restrictive Trade Practices Act, 1969.

[7] http://www.consumersinternational.org.consumer_movement

This Article Written by khushboo, Student of Geeta Institute of Law.

Also Read – Comparative Analysis of US and EU and Indian Competition Laws

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India: Growing Incidences Of Unfair Trade Practices In India

The term "Unfair Trade Practice" does not have a universal standard definition. However, the term Unfair Trade Practice broadly refers to any fraudulent, deceptive or dishonest trade practice; or business misrepresentation of the products or services that are being sold; which is prohibited by a statute or has been recognised as actionable under law by a judgement of the court. However, the Indian statute dealing with the term is Consumer Protection Act, 1986.

General unfair trade practices may include unfairly refusing a transaction, discriminating against a transacting party, unfairly excluding competitors, unfairly soliciting customers, unfairly coercing customers, trading with a transacting party by unfairly taking advantage of one's bargaining position, trading under terms and conditions which unfairly restrict business activities of a transacting party, disrupting business activities of another enterprise, and unfair provision of capital, assets, manpower, etc (Unfair assistance).

In India, till 2002, the Monopolies and Restrictive Trade Practices Act (MRTP), which was enacted to prevent monopolies and restrictive trade practices, was the foremost legislation to deal with unfair trade practices in the country. The MRTP Act was repealed giving way to the Competition Act, 2002, thus transferring all the pending cases in the MRTPC to Competition Commission of India (CCI) for adjudication from the stages they were in. However, no provision to deal with unfair trade practice was incorporated in the Competition Act and thus this was, instead, given effect under Consumer Protection Act, 1986 (COPRA) which was already dealing with unfair trade practices. Section 2(1)(r) of COPRA defines unfair trade practice as: "a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice , including any of the following practices, namely:—

• falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;
• falsely represents that the services are of a particular standard, quality or grade;
• falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;
• represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;
• represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;
• makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;
• gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof

In the recent past, the prevalence of Unfair Trade Practice has been on a rise and various instances have come to light bringing the issue at hand in discussion. In a recent case where Big Bazar, a departmental store declared Republic Day as Mega Savings Day, which led to an unmanageable consumer rush. To restrict entry to legitimate purchasers, the store came up with a scheme of issuing an entry coupon of Rs 50. The government of Gujarat filed a complaint before the district forum alleging that Big Bazar had adopted unfair and restrictive trade practices by collecting Rs 1, 95,000 from the sale of the 3,900 coupons. The issue to be decided was whether the imposition of an entry fee amounts to an unfair or restrictive trade practice? Upholding the Government's contention, the Forum held that if the crowd was uncontrollable, the store should have called the police, but had no right to refuse entry or impose an entry fee. The Forum directed Big Bazar to pay the amount collected along with the interest. Big Bazar appealed the order in State Consumer Disputes Redressal Commission, which rejected the appeal. Big Bazar then approached the National Consumer Redressal Commission in revision. The store contended that it had the right to restrict customer entry to the store. It also argued that the purpose of the coupons was to regulate the crowd of customers, and no unfair trade practice had been adopted. The National Commission concluded that Big Bazar had not indulged in unfair or restrictive trade practice. It held that an entry fee does not bring about a manipulation in the price of a product or service, but merely regulates customer crowd. The practice is prevalent worldwide, and is permissible.

In another case, leading real estate firm Unitech Ltd. has been held guilty of resorting to "unfair trade practice" by a consumer forum and directed to pay a customer Six Hundred Sixty Thousand Indian Rupees for making "illegal demands" from him after he booked a flat with it and paid the booking amount. The District Consumer Disputes Redressal Forum, in its order, observed that the firm and its agent made "unjustified" demands from the customer and also threatened to forefeit his deposited money.

Another case dealt with SpiceJet being directed by a consumer forum to pay One Hundred Thousand Indian Rupees to a passenger for not allowing all members of his family to board the plane despite having confirmed tickets and making them travel on two different flights while returning to Delhi from Goa. The East District Consumer Disputes Redressal Forum noted that it was "cruelty" on the part of SpiceJet to split the family into two groups especially when they had children with them and held it guilty of unfair trade practice .

The awareness among consumers in today's modernized world is giving way to consumers ascertaining the rights provided to them under Consumer Protection Act and seeking redressal against the unfair trade practice. The prospect of the consumer justice system in our country appears to be bright in view of the provisions available in the Indian statutes and legislation and various proactive policies, schemes/programmes being adopted by the Government. Involvement of trade and industry, civil society organizations and above all consumer themselves is vital to keep a check on the practice of unfair trade in the years to come.

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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Unfair, Manipulative and Fraudulent Trade Practices in the Indian Securities Market

Published by riju chowdhury on 01/08/2021 01/08/2021, introduction:.

The securities market is a section of the financial market, where securities transactions have been conducted. As with any other financial market, the securities market is prone to scams, fraud and illegal activities. The Indian securities market involves millions of active investors, who are investing and making money through trading every day. Therefore, controlling and preventing any scams or frauds in the market is of vital importance to safeguarding the interests of all  ​investors in the securities market.

Due to the growth of the securities market in the Indian economy in 1992, the Government of India established a regulatory agency which is known as the Securities and Exchange Board of India (SEBI) to manage the market. The Securities and the Exchange board of India (SEBI) were assigned the following duties:

• Protecting the investors’ benefits in the securities market.
• Regulating the operation of the securities market.
• Promoting and developing the securities market.
• Regulating internal transactions of the company

Unfair, Manipulative and Fraudulent Trade Practices

According to the Securities and Exchange Board of India’s Prohibition of Fraudulent and Unfair Trade Practices in accordance to the Securities Market Regulations, 2003, “Fraud includes any act, expression, omission or concealment committed whether in a deceitful manner or not by a person or by any other person with his connivance or by his agent while dealing in securities in order to induce another person or his agent to deal in securities, whether or not there is any wrongful gain or avoidance of any loss [1] ”.

Prohibition of Fraudulent, Manipulative and Unfair Trade Practices

The Securities and Exchange Board of India (SEBI) is responsible for forbidding any manipulative, fraudulent, or unfair practices in the securities market. SEBI created a unique regulation prohibiting manipulative, fraudulent, and unfair trade practices in Chapter II (4) of the 2003 regulation [2] after encountering numerous unfair practices and frauds affecting the securities market.

The following regulations are:

• No one shall directly or indirectly participate in fraud related to the sale, purchase or negotiation of securities;
• No one shall use any manipulation or deception to violate the provisions of the law ; 
• No one shall adopt any plan, Equipment or strategies to deceive securities-related transactions.
• Dealing with securities for the purpose of exaggerating or causing value fluctuations is not allowed, but it must only be used for the transfer of ownership.
• No one shall pay any person money or the equivalent of money for the purpose of processing securities for the purpose of causing volatility or inflation.
• Manipulation of securities prices is not allowed.
• No false information is allowed to allow individuals to process securities.
• Do not deal with securities without intention to comply with or change ownership. 
• No one should deal with stolen or forged securities.

Regulations for Intermediaries [3] (Stockbrokers, Sub-Brokers, Etc.)

Intermediaries, such as stockbrokers and sub-brokers, are also subjected to SEBI regulations which are:

• No broker should promise someone a price, and if there is a price change in the future, they are not allowed to benefit from that change.
• Intermediaries must not provide any information that cannot be verified, and must not allow someone to use unverified information to process securities.
• Part of the truth or part of information should not be used for advertising. This information is misleading and affects people’s behaviour in dealing with securities.
• Brokers are not allowed to deal with exaggerated securities on behalf of persons with senior brokerage intentions.
• No intermediary should avoid reporting securities transactions on someone’s behalf.
• The false purchase or sale of securities on the stock market is not allowed.
• No broker should encourage or recommend a person to use a superior broker as motivation to trade certain securities.
• No intermediary should falsify or be prior to any document, such as contracts.
• Intermediaries should not sell or buy securities in advance Future orders from the company or clients this is called preventive behaviour.
• Spreading false news to induce the purchase and sale of securities.

Any violation of the preceding statements would be considered illegal. If any of these breaches are committed by an individual or a firm, SEBI would examine the matter and take appropriate action against the offender. SEBI will investigate who is involved in such illegal activities.

Types of Unfair Trade Practices

Unfair trade practice denotes any unfair method or unfair or deceptive practice used to promote the sale, usage, or supply of any goods or the provision of any service by a trade practice or a business practice.

False Representation

The act of making any statement or representation, whether orally or in writing, that:

• Falsely implies that the goods are of a specific quality, amount, grade, composition, style, or model.
• Any re-built, second-hand restored, reconditioned, or old products are falsely represented as new goods;
• Indicates sponsorship, approval, performance, qualities, accessories, uses, or benefits not found in the items or services
• Gives any promise or assurance about the goods’ performance, efficacy, or life span that isn’t based on a sufficient or proper test;
• Intentionally misleads the public regarding the prices at which such goods or services are accessible.

False ‘Bargain Price’ Offer

Unfair Trade Practices occur when an advertisement is published in a newspaper or elsewhere in which products or services are offered at a bargain price when there is no intention of the same being given at that price for a reasonable period of time or in a reasonable quantity. For this context, the term “bargain price” refers to —

• The price is indicated in the advertisement in such a way that it appears to be lower than the usual price, or
• The price that everyone who sees the advertisement would believe is lower than the price at which such things are normally sold.

Bid Rigging

Bid rigging is illegal to conduct in which two or more competing parties work together to decide the winner of a bidding procedure. When bidders work together, the bidding process is harmed, and the outcome might be a rigged price that is greater than what would have been obtained through a free market, competitive bidding process. Bid rigging can occur in any field where commercial contracts are issued through a competitive bidding procedure, such as car and home auctions, construction projects, and government procurement contracts.

A cartel is a group of producers of a product or service who have formed a formal agreement to manage supply and influence prices. In other words, a cartel is a group of normally autonomous businesses or countries that act as if they were a single manufacturer, allowing them to set prices for goods and services without any competition. Cartels are competitors in the same business who strive to decrease competition by agreeing on a pricing control strategy. Cartels use tactics like supply reduction, price-fixing, collusive bidding, and market carving. In the majority of places, cartels are regarded as illegal and promoters of anti-competitive behaviour. Because of higher prices and a lack of transparency, cartel activities damage consumers.

How to Report Unfair Trade?

Investor complaints against Trading Members of the Exchange or listed firms are handled by the Exchange’s Investor Services Cell. Investors might file their complaints in the format given by the Exchange, along with supporting documents, either electronically through the website www.nseindia.com [4] or by mailing their complaints to the nearest investor care centre.

Insider Trading

A connected individual or someone in possession of or with access to such unpublished price sensitive knowledge is referred to as an insider. Insider trading is defined as a practice in which people who, as a result of their work, have access to otherwise non-public information that can be critical in making investment decisions engage in trading of a company’s securities. In other terms, insider trading refers to dealing with a company’s securities using undisclosed information about the company’s performance or other concerns. In simple words, it can be defined as dealing in a business’s securities on the basis of specific proprietary information about the company that is not disclosed or is present in the public domain, i.e. unpublished price sensitive information.

Insider trading has three fundamental components:

1. Material non-public information must exist.

2. This information must come from an inside source and be in the hands of a few people.

3. These individuals must trade securities based on material non-public information they possess.

Penalties for Insider Trading

On January 15, 2015, the Securities and Exchange Board of India (SEBI) adopted the SEBI (Prohibition of Insider Trading) Regulations, 2015. The main objective of this regulation is to prevent the abuse of transactions that have undisclosed price-sensitive information. Therefore, it is important whether the person making business decisions owns such information, and not the person who owns the ownership of the operation and owns such information.

The following are the penalties for insider trading

• Insiders who violate the 2015 regulations are subject to a penalty of Rs. 25 crores or three times the amount of profit made from insider trading, whichever is higher, as well as imprisonment for a term of up to ten years or a fine of up to 25 crores, or both, as per section 15G and 24 of the SEBI Act.
• According to section 11(c) (6) of the SEBI act, any person who refuses to cooperate in any SEBI investigation into insider trading without justification is punishable by imprisonment for a term of up to one year, a fine of up to Rs. 1 crore, or both, as well as a further fine of up to Rs. 5 lakhs for each day of such non-cooperation.
• SEBI is also empowered under section 11(4) (b) of the SEBI Act to issue instructions to such insiders not to deal in the concerned securities in any particular manner, to prohibit him from disposing of the concerned securities, to declare the concerned transaction(s) of securities null and void, and to restrain the insider from communicating or counselling anyone to deal in securities.
• If an insider violates section 195 of the Companies Act, 2013, he or she may be sentenced to five years in prison, a fine of not less than five lakhs rupees but not more than twenty-five crore rupees, or three times the amount of profits made from insider trading, whichever is higher, or both.

Case Laws Related to Unfair Trade Practices

Securities exchange board of india vs. rakhi trading private limited [5].

The Supreme Court ruled that the transactions were deceptive and unfair. The traders’ activities were determined to be in breach of PFUTP Regulations 3 (a), 4 (1), and 4 (2) (a) by the Court, and the appeals were dismissed. Apart from the fact that they aided the disputed transactions, there was no proof that the brokers acted in breach of the PFUTP Regulations. The SEBI was unable to establish negligence or connivance on the side of the brokers, according to the report. The issue of the transactions constituting an act of tax planning was not raised in the SCN or by the AO, hence the Court did not rule on it.

Godfrey Philips India Ltd v Ajay Kumar [6]

The lawsuit was filed against the tobacco company’s allegedly deceptive advertisement. The product was marketed as “red & White,” with the slogan “Red &White smokers are one of a kind.” The package also featured a photograph of star Akshay Kumar, as well as a line describing the dangers of smoking. The complainant claimed that the image of a famous celebrity promoting the tag lined cigarette provides the idea that the cigarette can perform acrobatics similar to those performed by the actor. As a result, the customer’s attention would be drawn away from the warning. The complaint was dismissed in district court since it had also been filed in civil court. The case was taken to the National Commission, where the appellants claimed that there was no evidence of any harm or loss as a result of the advertisement. The National Commission ruled that the complainant could not submit since he was not acting on behalf of a volunteer organization. The appeal was granted with no costs attached.

N. Ravindranath Kamath v. Spice Communications Ltd [7]

Spice Communications Ltd. approached Kamath and gave him a form and a pamphlet with a map of Karnataka on it, indicating that the tower would be built in Virajpet. On the basis of such assurance, Kamath filled out an application for the connection and paid them Rs. 3,100/-. The cost of the SIM card was Rs. 6,800/-. Spice Communications was unable to install the tower, and Kamath was unable to use his cell phone from Virajpet despite being charged Rs. 22/- each day. On the map of Karnataka included in the brochure, it was said that it will be completed by mid-99. The tower was not built by Spice Communications because it was not economically viable. Kamath was paid a total of Rs. 30,000/- plus Rs. 10,000/-, and the Commission ruled that this was an unfair trade practice.

Consumer Guidance Society v. Amway India Enterprises [8]

Amway Enterprises is a company that sells a variety of consumer goods and nutritional supplements. It was discovered that several Amway items were misbranded and adulterated. Nutrilite Protein and Amway Madrid Safad Musli, for example, featured lower-quality components than those listed on the label. Amway was found to have used unfair business practices and was fined, as well as ordered to remove their misbranded items and renew their marketing, based on the findings.

Pooja Roy v. Krishnango Bhattacharya [9]

 M/s Kasko India, a wholesale license drug dealer, was charged with modifying the manufacturer’s original labels and pasting new printed labels to extend the expiration date and distributing counterfeit medications. In the pharmaceutical industry, this was regarded as an unfair trading practice.

It is vital to keep any market free of frauds, illicit activities, unjust and manipulative behaviours in order for it to thrive and grow consistently throughout time. This is also true in the securities market. The Securities and Exchange Board of India (SEBI) has taken every step feasible to ensure long-term growth and protect the people who invest in the securities market. Due to India’s population and the vast number of investors entering the market, there is a higher chance of frauds taking advantage of a big number of investors, and India also lags behind other industrialized countries in terms of cybersecurity. Because most securities are now handled through online platforms, applications, and other means, SEBI should establish cybersecurity guidelines and a cybersecurity wing to protect the securities market from any potential cyber hacking, thereby safeguarding and guiding the securities market in India toward development.

References:

[1] https://www.sebi.gov.in/acts/futpfinal.html

[2] https://www.sebi.gov.in/acts/pfutpregu.pdf

[3] https://www.sebi.gov.in/legal/regulations/may-2021/securities-and-exchange-board-of-india-intermediaries-regulations-2008-last-amended-on-may-05-2021-_38453.html

[4] https://www.nseindia.com/

[5] SEBI v. Rakhi Trading (P) Ltd. [on 8 February, 2018 CIVIL APPEAL  NO. 1969  OF 2011]

[6] Godfrey Philips v Ajay Kumar [AIR 2008 SC 1828]

[7] N. Ravindranath Kamath v. Spice Communication Ltd. [(2006) (4) CPJ 67 NC]

[8] Consumer Guidance Society v. Amway India Enterprises[(2007) C.C 140 of 2007]

[9] Pooja Roy v. Krishnango Bhattacharya [(2008) C.R.R 2796 of 2008 Calcutta H.C]

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Study of Unfair Trade Practices in India

The moment a person comes into this world, he starts consuming goods or services. When we approach the market as the consumer, we expect not to be cheated or harassed by unscrupulous suppliers. In this article, the author defines unfair trade practices with the help of the Consumer Protection Act, 2019. The author also explains how the aggrieved consumer can get remedies and cites some cases  

INTRODUCTION 

The Government of India understood the need to protect the consumers from being cheated by suppliers. Several laws have been enact for this purpose. The Indian Contract Act, the Prevention of Food Adulteration Act, the Dangerous Drugs Act, the Sales of Goods Act, the Indian Standards Institution (Certification Marks) Act, etc., are remedial acts for aggrieved consumers. However, these laws involve a lengthy legal process which is very expensive and time-consuming because the consumer has to initiate action by way of a civil suit.

The Consumer Protection Act, 1986 was enacted to provide quicker and simpler access to redressal of consumer grievances. The Act provided machinery to aggrieved consumers. But the consumers have undergone a drastic transformation since the enactment of the Consumer Protection Act, 1986. Therefore, it has become inescapable to amend the Act to address the emerging vulnerabilities of the consumer. The CP Amendment Act, 2019 establishes an executive agency known as the Central Consumer Protection Authority. The task of prevention of or acting against unfair trade practices is vested in it.

What Are Unfair Trade Practices?

Under Section 2 (1) (r) of Consumer Protection Act, “Unfair Trade Practices” means a trade practice which, to promote the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice including any of the following given below, namely-

• False or Misleading Representation-

Forms of false or misleading representation

• When represents falsely  the goods are of a particular standard, quality, quantity, grade, composition, style, or model.
• When falsely represent that the services are of a particular standard, quality, or grade.
• When falsely represents any re-built, second-hand, renovated, reconditioned, or old goods as new.
• When acts that the goods or services have approval, performance, characteristics, sponsorship, uses, or benefits they do not have.
•  Represents that the supplier or the seller has compliance which such supplier or seller does not have.
• Make misleading or false representations concerning the needs or the usefulness of any goods or services.
• When gives the public any guarantee or warranty not based on the adequate or proper test.
• When makes the public a misleading representation in a form that purports to be warranty or guarantee, a promise to replace, etc.
• When false or misleading claims regarding the price of goods or services.
• When false or misleading facts disparaging the goods, trade of another person, or services.
• Bait Advertising and Bargain Price

When an advertiser permits the publication of any advertisement for the sale or supply at a bargain price of goods or services without intention to offer amounts the unfair trade practices

• Conducting Promotional Contests and Offering Gifts and prizes

Offering gifts is a promotional stunt used to attract customers. Made an advertisement on a gift or prize without the intention of performing or creating the impression that something has been given or offered free of charge when it is wholly or partly covered by the amount charged, the transaction as a whole amount to unfair trade practices. 

Prohibits any contest, lottery, game of chance, or skill for directly or indirectly promoting sales or any business interests.

The amendment act of 2002 added a new sub-clause 3(a) in section to include withholding of any information about final results of any scheme offering gifts, prizes, or other items to enlarge the definition of unfair trade practices.

• Product Safety Standards

When permits the sale or supply of goods, knowing or having reason to believe that the goods do not comply with the standards prescribed by the competent authority amounts to unfair trade practice.  

• Hoarding and Destruction Of Goods

When if by permitting the hoarding or destruction of goods, or to make them available for the sale or refusal to sell the goods, or to provide any service, tends to raise or intended to raise the cost of those or other similar goods or services, amounts to unfair trade practices

• Spurious Goods

The amendment act of 2002 added this clause to include manufacturing spurious goods or offering such spurious goods for sale or adopting deceptive practices in the services, which amounts to unfair trade practices.

• When seller is not issuing bill or receipt or cash memo for the goods sold or services rendered in such manner as may be prescribed amounts to unfair trade practices.
• Refuse to take back or withdraw defective goods and to refund the consideration
• Disclosing any personal information to the third person of the consumer amounts to unfair trade practices.

Redressal against Unfair Trade Practices under the Consumer Protection Act

• Consumer Disputes Redressal Agencies

The CP Act provides for three-tier Consumer Disputes Redressal Agencies.

• At the district level, DCDRF – if the value of claims is up to 20 lakhs.
• At the state level, SCDRC- if the value of claims exceeds 20 lakh but within one crore.
• At the national level, NCDRC- if the value of claims exceeds one crore.
• How to File a Complaint?
• The consumer can file a complaint on plain paper.
• For declaration, stamp paper did not require.
• The complaint should contain the details of the complainant and the opposite party.
• The consumer can file a complaint by himself or through his representative. Engaging a lawyer is not compulsory. 
• According to the value of the claim, the fees charged.
• Reliefs available to consumers from consumer Forums
• Either removal of defects from the goods or replacement of the goods.
• To withdraw hazardous goods from sale.
• To desist from offering services that are hazardous and to cease manufacture of such goods.
• To issue corrective advertisements to neutralize the effect of misleading advertisements.
• Award compensation for the loss or injury suffered by the aggrieved consumer.

Some Famous Cases of Unlawful Trade Practices

• In HMM Ltd. Case

In this case, HMM Ltd. manufactured and marketed Horlicks advertised a scheme called Hidden Wealth Price Offer. In this scheme, if any lucky purchaser from Delhi found any coupon inside the bottle of Horlicks. Coupons contain prizes of five hotline color Television and other cash prizes.

The commission held this scheme under unfair trade practices as getting coupon is nothing but a lottery system. But the Supreme Court concluded that the coupons inside Horlicks bottles were not a lottery.

• In Panasonic India Private Ltd. Case

In this case, Panasonic has launched a contest in which a person had to buy a Panasonic Television to enter the prize contest. The first prize winner has a chance to witness the Winter Olympics trip for two persons. The second prize was two Mini Hi-Fi systems with five CD Chargers, and the third prize was three Panasonic G-400 cellular phones with 500 consolation prizes. 

• Mantra Oil Products Private Ltd. v Oriental Insurance Corporation 

In this case, the complainant alleged that he had booked a tractor with the respondent by depositing advanced money. But respondent delivers to others on a pick and choose basis and postponed the delivery to the appellant. Meanwhile, the price of the tractor goes up. The appellant received the tractor at an enhanced rate and suffered a loss. The respondent was held liable.

• Ravinder Rai v Competent Motors Corporation Private Limited

In this case, the court held that if there is a delay in delivery because of the imposition of newly enhanced exercise duty, it is not unfair trade practice.

• Buddhist Mission Dental College and Hospital v. Bhupesh Khurana 

In this case, the court held that misrepresentation by a college about its affiliation with a university is an unfair trade practice.

Before purchasing any goods, should insist on getting all the information about the product or services because ignorance of consumers is mainly responsible for their exploitation especially in rural areas .Consumers should ideally purchase quality marked products such as ISI, AGMARK. The consumer should know their right and must exercise them. This awareness will enable them to desist from being prey to unfair trade practices. 

Bibliography

• https://gama.gov.in/ConsumerAwareness.aspx#:~:text=Means%20right%20to%20seek%20redressal,complaint%20for%20their%20genuine%20grievances.
• http://ncdrc.nic.in/bare_acts/1_1_2.html
• https://consumerhelpline.gov.in
• The Consumer Protection Act,1986
• Aggarwal, V.K. Law of Consumer Protection, New Delhi, 2016
• The Consumer Protection Ammendment Act, 2019

This article is written by Megha Patel, a 2 nd year Law Student at the Mody University of Science and Technology, Laxmangarh, Rajasthan.

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The new guidelines to prevent unfair trade practices

Syllabus: Government policies and interventions for development in various sectors and issues arising out of their design and implementation, trade practices etc

Source: The Hindu

• On July 4, the Central Consumer Protection Authority (CCPA) announced five guidelines to prevent unfair trade practices and to protect consumer interests regarding the levy of service charges in hotels and restaurants.
• The guidelines are in addition to the Center’s 2017 guidelines which prohibit the levy of service charges on consumers by hotels and restaurant s, and terms the charging for anything other than “the price displayed on the menu card along with the applicable taxes” without “express consent” of the customer as “unfair trade practices”.

New Guidelines:

• Prohibition from levying extra charges: Hotels or restaurants are prohibited from levying extra charges automatically or by default in the bill or by any other name.
• No forced service charges: Also, they are not allowed to force service charges , and must clearly inform the consumers that service charges are voluntary, optional, and at their discretion .
• No restriction on entry based on service charges: Hotels and restaurants are no longer allowed to restrict entry or services based on the collection of service charges.
• No addition of service charges and GST on total: Hotels cannot add service charges to their bills and charge GST on the total.
• It is entirely up to the consumer to decide whether or not to tip.
• If a consumer enters a restaurant or orders something, the restaurant policy cannot require them to tip.
• Unfair trade practice: Guidelines now consider charging a customer other than the price of food items displayed on the menu along with applicable taxes, as an unfair trade practice’ under the CPA.

Redressal mechanisms:

• They may request the concerned hotel or restaurant to remove the service charge from the bill
• May lodge a complaint on the NCH, which works as an alternate dispute redressal mechanism at the pre-litigation level
• Call 1915 or through the NCH mobile app.
• Complaint against unfair trade practice with the Consumer Commission electronically through nic.in. for its speedy and effective redressal.

Insta Links:

Consumer Protection Act, 2019

Practice Questions:

Q. Which of the following consumer rights is/are defined by Consumer Protection Act 2019?

• Right to Safety.
• Right to Choose.
• Right to seek Redressal.
• Right to Consumer Education.

Select the correct answer using the codes given below:

a. 1, 2 and 4 only

b. 1 and 4 only

c. 2 and 3 only

d. 1, 2, 3 and 4

Justification:

Six consumer rights have been defined in the act:

• Right to be Informed.
• Right to be heard.

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Dikshita More

Concept of Unfair Trade Practices under Consumer Protection Act, 2019

Coverage of this Article

Introduction:.

-The term "Unfair Trade Practice" broadly refers to any dishonest, dishonourable, or deceptive trade behaviour, as well as commercial deception of goods or services that are continuously sold, that is prohibited by law or has been determined to be significant under the law by a court judgement. 

Meaning and Concept of Unfair trade practice:

-By contrasting the provisions of the Competition and Consumer Laws enacted in response to the issue, the article also analyses the idea of unfair business practises in India. In addition to analysing the theoretical foundation and the inconsistent interpretations of "consumer welfare" with regard to unfair trade practises that are included in both pieces of legislation, this research article intends to emphasise the situation of UTPs in India.

Unfair Trade Practices in Various Sectors:

-There has never been an end to the rivalry between suppliers of brand-name and generic drugs. These competitions would eventually turn negative and result in a number of instances of unfair business practises in the pharmaceutical industry. It is well known that the pharmaceutical industry has a significant impact on doctors' prescribing behaviours when they are in charge of the patient, who is the final user of the drug in question. Promotion and knowledge must be distinguished from one another. A medical representative may have precompetitive impacts while informing doctors about new medications and their benefits and efficacy.

-The tobacco company's contested advertising was the target of the lawsuit. The product was oversubscribed under the name "red &White," along with the phrases "Red &White smokers are one of a kind."

Conclusion:

-Huge sellers frequently subject consumers to unethical commercial tactics, and consumers fall victim to their ruthless economic rivalry.

The term "Unfair Trade Practice" broadly refers to any dishonest, dishonourable, or deceptive trade behaviour, as well as commercial deception of goods or services that are continuously sold, that is prohibited by law or has been determined to be significant under the law by a court judgement. One common example of unfair commercial tactics is the illegitimate rejection of any form of group action, deceptive consumer solicitation, disruption of competitors' company operations, and competitor exclusion. Wherever there is fierce competition in the modern business and startup environment, entrepreneurs dare to utilise unethical trade tactics to gain the upper hand. They may gain from this in the short term, but in the long run, the organisation and ultimately the entire industry and society are affected. The products' lies might take many different forms. The sellers may also suffer unintended financial losses as a result of the unfair business activities, which can invite a variety of torts.

The phrase unfair trade practises defined in Section 2(47) of the Consumer Protection Act , 2019. It says that-

1. Producing counterfeit goods or offering inferior services.

2. Failing to send invoices or cash memos for the products or services received.

3. Refusing to accept the goods or services back or withdraw them and failing to reimburse the payment made for them.

4. Disseminating the consumer's private information.

The term "unfair trade practise" (UTP) broadly refers to a trade practise that adopts any unfair method or unfair or deceptive practise that is prohibited by a statute or has been recognised as actionable under law or by a court judgement in order to promote the sale, use, supply of any goods or the provision of any service.

By contrasting the provisions of the Competition and Consumer Laws enacted in response to the issue, the article also analyses the idea of unfair business practises in India. In addition to analysing the theoretical foundation and the inconsistent interpretations of "consumer welfare" with regard to unfair trade practises that are included in both pieces of legislation, this research article intends to emphasise the situation of UTPs in India.

The evolution of UTPs in MRTP, Consumer and Competition Act, the repeal of the MRTP Act, various actions taken under the Sachar Committee and the Raghavan Committee, the establishment of the Competition Commission of India (CCI) and the Competition Act, 2002, the position of UTPs in Consumer and Competition laws, and the rationale behind their incorporation into Consumer Laws are all further topics that will be covered in detail in this article.

Pharmaceutical Sector-

There has never been an end to the rivalry between suppliers of brand-name and generic drugs. These competitions would eventually turn negative and result in a number of instances of unfair business practises in the pharmaceutical industry. It is well known that the pharmaceutical industry has a significant impact on doctors' prescribing behaviours when they are in charge of the patient, who is the final user of the drug in question. Promotion and knowledge must be distinguished from one another. A medical representative may have precompetitive impacts while informing doctors about new medications and their benefits and efficacy.

Food Sector:

Concerns over the quality and quantity of food products, as well as unfair trade practises, have spread around the world. Almost everyone has heard of instances of chemicals being intentionally added, such as additives and adulterants, to products during production, processing, packing, and storage in order to conceal inferior goods, contaminate products or generate unauthorised profits. Such unethical and unfair business actions are extremely dangerous since they pose a serious hazard to consumers' health. In May, during a raid at a store of a mango dealer in Pune, Food and Drug Administration (FDA) authorities took 500 weight unit mangoes worth Rs. 25,000 that were being aged with the use of a chemical called calcium carbide. Under the restrictions of the Food Adulteration Act, the use of inorganic compounds to artificially ripen food is illegal.

Insurance Sector:

People view insurance as a crucial area of the financial services sector, and the number of insurance customers is steadily rising. As customers grow, so does the issue of unfair business practises in this industry. Insurance is a guarantee that the customer will be able to get a certain benefit or compensation for a loss or injury in the case of a future contingent occurrence. A lack of commission would result in a failure to fulfil that commitment or a delay in doing so. Consequently, it can be seen that a lot of dependence is put on the public's confidence in the delivery of the created assurances in the insurance industry. Businesses frequently use alluring offers to entice customers, but then try to increase their commitment. They have a number of extensive exclusion and exemption clauses that are helpful to large businesses.

• Godfrey Philips India Ltd v. Ajay Kumar

The tobacco company's contested advertising was the target of the lawsuit. The product was oversubscribed under the name "red &White," along with the phrases "Red &White smokers are one of a kind." The packet also featured an image of the star Akshay Kumar and a paragraph outlining the negative effects of smoking. The petitioner felt certain that showing a prominent celebrity endorsing a cigarette with a tag on it would give people the impression that they had the power to pull out such actions. And this can make the buyer lose interest in the warning. Because the complaint was also filed in civil court, the district forum rejected it. When the case was brought before the National Commission, the appellants argued that there was no evidence of any harm or disaster brought on by the advertising. The National Commission had ruled that the litigant was not authorised to file because the case was not being brought on behalf of a volunteer organisation. The allurement was permitted without charge.

• N. Ravindranath Kamath v. Spice Communications Ltd 

According to a map of Karnataka supplied by WHO, the tower would be built in a neighbourhood known as Virajpet. Kamath filled out an application for the affiliation based on their assurance and paid them Rs. 3,100. A sim card worth Rs. 6,800 was given out. Despite being charged a total of Rs. 22/- per day, Kamath was unable to use the mobile phone from Virajpet because Spice Communications was unable to construct the tower. for more information, please contact Chris. The tower was not built by Spice Communications because it was not economically feasible. Kamath received a combined payment of Rs. 30,000 along with Rs. 10,000, and the Commission determined that this was an unfair trading practise.

Huge sellers frequently subject consumers to unethical commercial tactics, and consumers fall victim to their ruthless economic rivalry. Due to customers learning about their rights under the Consumer Protection Act and pursuing recourse against unfair business practises, consumers in today's modernised world are paying more attention. Given the options available in Indian statutes and legislation and the numerous proactive policies and programmes being implemented by the government, the future of the system of consumer justice in our nation appears promising. The cluster of uneducated consumers needs to be made aware of their rights so they can protect themselves from monopolists' unjust business activities. The government should take steps to inform people about the several complaint procedures they can use if their legal rights as a customer are violated.

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