NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO.3020 OF 2003 Akhil Bhartiya Upbhokta Congress Petitioner Through: President Shri B.S.Sharma, Suit No.302, Transit Hostel, Mata Mandir, Bhopal. ` Versus M/s.Aggarwal Jewellers Respondent Through : Its Partner Shri Raj Mohan Agarwal, G-5, Jawahar Bhawan, T.T.Nagar, Bhopal. BEFORE: HONBLE MR. JUSTICE M.B. SHAH, PRESIDENT MRS. RAJYALAKSHMI RAO, MEMBER For the Petitioner : Mr. M.S. Ganesh,Sr.Advocate with (Amicus Curiae) Mr.Amit Gupta and Mr.Gautam Narayan, Advocates For the RBI : Mr. H.S. Parihar, Advocate For Respondent No.1 : Mr.Ajay Mishra, Sr.Advocate with Mr.Deepesh Joshi, Advocate For Union of India : Mr.Jos Chiramel and Mr.Debo K. Deori, Advocates Dated : 12th December, 2005 O R D E R
M.B. SHAH, J. PRESIDENT
The question in this petition
is: Whether the consumers/purchasers of ornaments of precious metal (gold)
should be left at the mercy of the traders who according to Bureau of Indian
Standards (BIS) report, sell 90% of articles which are not in conformity with
the purity declared in the bills /cash memos? This is stated on affidavit filed on
behalf of the BIS. Imagine the situation where the cash memos do not mention
anything about purity!
The
amount involved in the dispute is very small, but
the matter raises a vital question with regard to purity of ornaments of
a precious metal (gold). Petitioner- Akhil Bhartiya Upbhokta Congress, a Registered Consumer Organization
(Madhya Pradesh), has raised important
questions with regard to the right of consumers in regard to sale and purchase
of gold ornaments. It is contended that under Consumer Protection Act, 1986, consumers have
(i) the right
to be informed about the quality,
quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade
practice; (ii) the right to be heard and
to be assured that consumers interests
will receive due consideration at appropriate forums; and (iii) the right to
seek redressal against unfair trade practices or unscrupulous exploitation of
consumers.
It
is contended that unless there is a proper trade direction to declare the
purity/quality of the ornaments, illiterate or literate consumers are bound to
be exploited and there is large scale exploitation in such trade/business. Business in precious metal is increasing
day by day and the consumers are exploited to the fullest extent.
Considering the
importance of the issue involved and its
wide spread impact, notices were
issued to the (i)
Union of India, (ii) Reserve Bank of
India and (iii) Director General, Bureau
of Indian Standards, to find out any reasonable
method for protecting the consumers, who
customarily and traditionally purchase the golden ornaments.
Affidavit by Reserve Bank of India. On behalf of the Reserve Bank of India, an affidavit is filed by
the General Manager in the Reserve Bank of India, Department of External
Investments Operations, Central Office, Mumbai, wherein it is stated that
Reserve Bank of India has set up a
Standing Committee on Gold and Precious
Metals under the chairmanship of an Executive Director and comprising
Chief General Manager of Department of
External Investments and Operations (DEIO), Department of Banking Operations
and Development (DBOD), Exchange Control Department (ECD) (recently renamed as
Foreign Exchange Department (FED), an official each from the Ministry of
Commerce and Ministry of Finance, to
deliberate and advise the Government on emerging issues pertaining to
gold and precious metals. The Standing
Committee recommended that an organization with the relevant infrastructure and
competence should monitor and control the purity of gold jewellery
sold in India. As a result, in January 1999,
the BIS was designated by the Government of India as the agency to
evolve and operate the hallmarking scheme for gold jewellery. The BIS launched the hallmarking scheme for
gold jewellery on 11th April 2000. The main objective of the
hallmarking scheme for gold is to protect the public against the fraud of
adulteration and low caratage and to make
manufacturers maintain standards for fineness and purity. It is also pointed out that although the
hallmarking scheme has made some
headway, it was felt that the consumer
awareness level need to be improved and the Committee set up under the Chairmanship of the
Secretary (Ministry of Consumer Affairs) to examine the ways and means of securing consumer interest in the marketing
of gold products.
Affidavit by the Bureau of Indian Standards
(BIS).
An
affidavit has been filed by Mr.A.S. Jamkhindikar, who is working as Scientist E &
Director with Bureau of Indian Standards, wherein, he has, inter alia stated that :
a)
The Bureau of Indian Standards [BIS]
is a body corporate constituted under the BIS Act, 1986, for harmonious
development of the activities of standardization, marking and quality
certification of goods and for matters connected therewith or incidental
thereto. As such the functions of the
Bureau are, inter alia, to establish, publish and
promote in such manner as may be prescribed, the Indian Standard, in relation
to any article or process. Most of these
standards are voluntary in nature, whereas, the Central Government can, after
consulting the Bureau, in the public interest, and by publication in the
Official Gazette, notify any article or process, by way of mandatory
requirement, to conform to the Indian Standard, failing which penal
consequences as provided under the BIS Act, would automatically follow.
b)
The Bureau has so far established
more than 17,000 Indian Standards, out of which only approximately 100
standards are mandatory under various enactments and Government orders. As far as Hallmarking of Gold Jewellery is concerned, the same is optional. The BIS Precious Metal Sectional Committee
(MTD 10) has formulated and published the following Indian Standards on Gold
and Gold Alloys :
1. IS1417 Grades of Gold and Gold Alloys,
Jewellery / Artefacts Fineness and
Marking.
2. IS 1418 Assaying
Gold in Gold Bullion, Gold
alloys and Gold Jewellery/Artefacts
Cupellation (Fire
Assay Method).
3. IS 2790 Guidelines
for manufacture of 23, 22,
21, 18, 14 and 9 carat gold alloys.
4. IS 3095 Gold
solders for use in manufacture of
jewellery.
c)
At this stage it is worth mentioning
that the role and functions of the Bureau under the BIS Act 1986 as an
enforcement agency, are extremely limited to misuse of the Indian Standard Mark
under Section 11, misuse of the name of the Bureau under Section 12, failure to
comply with the mandatory requirement of Indian Standard and Mark under Section
14, and breach of the terms and conditions of licence
under Section 15, of the BIS Act. Hence
I do not admit the contention of the learned Amicus Curie as reproduced in the
order dated 28.04.2004 of this Honble Commission that it was the function of
the Bureau to provide for necessary rules and regulations so that the consumers
are not exploited by the traders by selling ornaments without disclosing its
purity. In fact the Bureau neither has
the powers to formulate any rules or regulations, or the enforcement machinery
or infrastructure to carry out any search and seizure operations, investigations,
arrests, recording of statements of witnesses etc. as are conferred on law
enforcing machinery of the State such as the Police force, except to the
limited extent of carrying out inspections and seizures as provided under the
Act, for which also the Bureaus Inspecting Officers have to rely heavily on
assistance from the Police.
d)
The Bureau had in press release,
marked Annexure E to the Submissions of the Amicus Curiae, referred to the
Convention on the Control and marking of Articles of Precious Metals signed in
1972 by some of the European countries (with some other European countries as
observers apart from Canada). The
objective of the Convention signed in Vienna by the European countries was to facilitate trade in precious metal
articles while at the same time maintaining fair trade and consumer protection
justified by the particular nature of these articles. For that purpose a Common Control Marks (CCM)
indicating fineness, was introduced.
Each member country agreed to allow goods marked with CCM to be imported
without further testing and marketing if such articles would normally qualify
for a domestic market.
e)
The Convention thus introduced the
first international hallmark ever. It
enabled national assay offices of the signatory countries to apply for a Common
Control Mark (CCM) to articles of gold, silver and platinum after they have
tested the fineness of the alloys used in the articles. However, the marking of articles of precious
metals with the CCM is carried out on a voluntary basis. Compulsory hallmarking is not required from
the contracting States to the Convention.
The purpose of the Convention was thus primarily to facilitate free
trade in the precious metals and articles made there from between member
countries, on account of the fact that earlier, different European legislations
on precious metals control hampered the cross border trade seriously.
f)
Government of India launched the Gold Bond Scheme in 1993.
Almost concurrently, a Committee within the RBI made a comprehensive set
of recommendations for an integrated national gold policy. One of the recommendations of the
Committee was that hallmarking of gold jewellery
should be introduced in the country at the earliest as a measure of consumer
protection. The Standing Committee
on Gold and Precious Metals in RBI, which is chaired by the Governor, RBI and
has participation from Ministries of Finance and Commerce of the Government of
India, in its 9th meeting held in January 1999 at Mumbai, identified
Bureau of Indian Standards (BIS) as the sole agency in India to operate
Hallmarking Scheme of Gold Jewellery.
g)
Bureau of Indian Standards,
launched its long term scheme in Hallmarking to encourage the voluntary
hallmarking of gold jewellery in April 2000. Known as BIS Certification Scheme for
Hallmarking of Gold Jewellery, it is backed by
Reserve Bank of India, with four declared objectives, namely –
1. Protection of the consumer against irregular gold quality;
2. Support for export of gold jewellery;
3. Development of gold based financial products to assist in mobilizing
dormant gold reserves in private hands;
and
4. Development of India as a reliable gold market center commensurate with its status as the
words largest national gold market.
h)
BIS Hallmarking scheme is based on
the technical criteria set by the international Convention on the Control and
Marking of Articles of Precious Metals (Vienna Convention, 1972), though India is not a contracting party to the Vienna Convention. The scheme is voluntary, and there is no
obligation on Certified Jewellers to hallmark all the
gold jewellery that they retail, fabricate or
wholesale. The BIS Scheme involves the
recognition of independent entities and organizations to act as Assaying and
Hallmarking Centres, and the certified jewellers who can use the centers for hallmarking purposes. During the last four years BIS has recognized
17 Hallmarking centers (in 10 cities) and certified
over 750 Jewellers.
Although most Certified Jewellers are
retailers, manufactures and wholesalers are also certified. Plain gold Jewellery
has been hallmarked since June 2000, and gold jewellery incorporating diamonds since September 2001.
i)
In the latter half of 2001/ beginning of 2002, the Bureau jointly with
reputed consumer organizations, carried out a general market survey in 8 major
cities in India, and purchased jewellery articles
from 15 jewellers in each city, and sent the same for
testing at the MMTC Assaying Centre, New Delhi.
Out of total 120 samples, only 14 confirmed to the purity declared by
the Jeweller in the bills/cash memos issued to the
official of the Bureau who had purchased the jewellery
article, posing as an ordinary consumer.
The Bureau in the circumstances, filed complaints initially against 31 Jewellers spread all over the country in whose cases the
purity was short by more than 15% of the declared caratage,
before the MRTP Commission, New Delhi which took cognizance of the complaints
and issued notices to the concerned Jewellers.
To
contain and control the alarming situation in the jewellery
trade in the country, the Government of India, Ministry of Consumer Affairs
constituted a Committee, which had held its meeting on 22.09.2003 when it was decided to collect data on various aspects. The Terms of Reference are as
under:
(i) Ways and Means to cover the gold jewellery
transacted in Rural Areas which may be around 60-70% of the total trade.
(ii) Creation of infrastructure with
respect to availability of Hallmarking Centres at least one in each City/District of the country
(as compared to 17 centres throughout the country at
present)
(iii) Appropriate
legislation under which Hallmarking can be made mandatory, if so required.
(iv) Identification of suitable enforcing/implementing Agency in the country.
(v) Incentives for
encouraging Jewellers to join the
Hallmarking Scheme.
(vi) Ways and means of bringing consumer awareness about
benefits of purchasing hallmarked jewellery.
Further,
in the report of dated 13.4.2004 of Bureau of Indian Standards, it is stated that :
Culturally, the Indian people have a great fascination for
gold. It should be recognized that in India, in common with other Asian Countries, gold has a very important role
in our cultural heritage. Gold is considered as a commodity, and not a product.
Any form of gold is equal to any other form of gold. It is viewed to be
homogenous and indistinguishable, having no brand or expiry date. As a result,
gold demand is not price-elastic. Rather it is prosperity elastic that is,
increments in household income are generally matched by purchases of more gold.
It is further stated that the Indian consumer is very often
a victim of irregular metal quality. A
buyer, for instance, will be told that he has bought gold of 22 carats. When he goes to sell or exchange it, he
discovers that the gold is actually only of 18 carats and many customers have
lost money in this way. In India the emphasis is on high caratage jewellery. It has
been further stated that on taking cognizance of these aspects the RBI
Standing Committee on Gold and Precious Metals opined that introduction of a
Hallmarking System would not only protect the public from fraud, but also
assist exports of jewellery. There is a reference to Convention on the
Control and Marking of Articles of Precious Metals singed 1972 by number of
countries. The objective of the
convention was to facilitate trade in precious metal articles while at the same
time maintaining fair trade and consumer protection justified by the particular
nature of these articles.
Submissions
There is no
other affidavit filed on behalf of the Union of India. Mr. Jos Chiramel, the learned counsel appearing on behalf of the Union of India submitted that under the Consumer
Protection Act, the Commission cannot give
direction to the Central Government to have
hallmarking or direct the Central
Government to frame rules so as to
control irregular business in the precious metal.
As
against this, Mr. M.S. Ganesh, the learned Senior Counsel submitted that under the Consumer Protection Act, any
voluntary consumer association registered under the Companies Act, 1956 [Section 2(b)ii], is
entitled to file a complaint; and the
complaint can be, inter alia, for unfair
trade practice [Section 2(c)(i)]. Therefore, appropriate relief is required to be
granted.
Findings
Affidavits
filed on behalf of the BIS and the RBI in terms reveal that the hallmarking of the gold jewellery to protect the consumers is the
necessity. However, there are various
difficulties with regard to the introduction of hallmarking. The highlighted portion reveals that out
of 120
samples of gold ornaments, only 14
conformed to the purity declared by the jeweller in the bills/cash memos issued to the
official of the Bureau who had purchased the
jewellery articles posing as an ordinary consumer. If this is the position it certainly
indicates that approximately
90% of the jewellery sold is
not as per the specification
mentioned in the cash memo or the bill. If that is the situation
one has to imagine what would be the fate of the ordinary consumers who are
spread over all the country, and, who as a matter of customarily practice or for investment purposes,
purchase golden ornaments.
It is also submitted that a
Committee within the RBI made a comprehensive set of recommendations which included that
hallmarking of gold jewellery should be introduced in the country at the earliest as a measure
of consumer protection. Bureau of Indian
Standards has also launched a scheme for
voluntary hallmarking so as to protect consumers against irregular trade in golden
ornaments and as a support for
export of gold jewellery. This was
also in recognition of the fact that India was a reliable gold
market center for export also.
Despite this, it was pointed out that it was not possible to have the hallmarking mandatory without the required infrastructure. It was also
suggested that in such cases, action under Consumer Protection Act, 1986, can
be initiated against the seller if the purity of the ornament purchased by the
consumer is not of the same purity/standard as is mentioned in the bill.
However, it is admitted that considering the
alarming state of affairs throughout the country with regard to false
representation/misrepresentation and other unfair trade practices indulged in
by jewelers, consumer is at a
disadvantage, but the
powers, functions and jurisdiction of
the Fora under the Consumer Protection
Act, 1986 to deal with the nature of the
case, may be clarified by a detailed and exhaustive order.
From
the statements made in the affidavit filed on behalf of the Government it is
apparent that a large scale unfair trade practice in sale or purchase of
precious jewellery is prevailing. Consumers are at
the mercy of the jewelers. It is for the Government to protect such consumers.
One of the main objectives of the Consumer Protection Act, 1986, is to see that
consumer gets information with regard to quality, quantity, potency, purity,
standard and price of the goods. This object of the Act is apparently
frustrated. There may be some difficulties with regard to hallmarking. But,
there cannot be any difficulty in issuing directions or notifications, for the
time being, till the hallmarking is made compulsory, to the jewelers/gold-smiths to embsoss
a mark indicating fineness of the ornament. This would give an opportunity to
the consumer to know its purity. Subsequently, at the time of sale or return of
such ornaments, the consumer can bargain the repurchase price on the basis of
purity mentioned thereon. Further, if
the ornament is not of the same purity/quality as per the mark, then it becomes
easy for the Consumer Fora to pass
appropriate order. Undoubtedly, it is for the
Government to see that the rights
conferred under the Consumer Protection
Act are not made illusory.
However,
we accept the contention of the learned counsel for the Union of India that reliefs, which can be granted under the provisions of
Section 14 of the Act, are limited. No doubt Section 14(f) empowers the Fora to issue an order directing the opposite party to discontinue unfair
trade practice, but it would be difficult for us to grant such relief
in general terms. Hence the same
is not granted.
In this view of the matter we only observe that it is for the
Government to protect the consumers and we, at this stage, would not pass any
order in general terms as prayed for. We
accept the contention that we are having limited jurisdiction. Hence, we leave it to the discretion of the
Government to take appropriate action so as to give relief to the consumers as
a whole and not to leave them to be victims of unfair trade practice. We add that for various reasons simplicitor
awareness on the part of the consumer
may not serve any purpose, and, in most of the cases, consumers, for various difficulties, are avoiding to
approach the Consumer Fora.
Findings on Facts:
The
case of the complainant is that he had paid Rs.2,700/-
on 16.12.1997 for purchasing a gold ring
having purity of 23 carat. For that purpose, respondent jeweller had issued a cash memo. However, on the cash memo there was an endorsement to
the effect that in case of return
of the ornament, 80% value of the price shall be refunded. Complainant, therefore protested against such cash memo by
contending that it is in violation of the provisions of the Consumer Protection
Act, 1986 and the Monopolies Restrictive Trade Practice Act, 1969. To the said letter, the jeweller
replied on 2.1.1998 that the statement made by the complainant that the purity of
the gold used in the ring was only of 18.4 carat was incorrect and that the
purity of the gold was 23 carat. It was
also stated that even though the purity is 23 carat, 80% of the value of the ring was to be
refunded because the remaining 20% is
copper and other alloys as the same is used
as connecting material (tanka). Hence,
complainant filed complaint case No.15/99 before the District
Forum, Bhopal contending that jeweller was adopting
unfair trade practice. Similar ring was also
sold to one Mr. K.L. Pandey
and Ms. Urmila Pandey.
The
District Forum allowed the complaint and directed the jeweller
to supply 23 carat new ring to Mr.B.S.Sharma and Mr.K.L.Pandey in place of the old one and to pay a compensation of Rs.5000/- to Mr. B.S. Sharma. It also directed the jeweller
to abandon all kinds of unfair trade practices in future with a direction to
mention exact purity of the ornament in the cash memo sold by him.
Against
that order the jeweller preferred appeal No.1630/2001 before the State
Commission. By the impugned order dated 10th July, 2003, the State Commission allowed the appeal by observing that repurchase of
the ring at 80% of its value of the gold was not indicative of purity of gold.
While making golden ornaments some addition of other metal is necessary. In addition to this, labour
charges are required to be added and the ornaments become ready for sale after proper polish. Therefore, the order of the District Forum was neither
practical nor lawful.
Petitioner has challenged the aforesaid order passed by the State
Commission by filing this revision.
Shri Ajay Mishra, leanred
Senior Counsel, appearing on behalf of the respondent submitted that the order passed by the State
Commission is just and proper. A small
ring was purchased by the complainant.
He further submitted that the
purity of gold ring was 23 carat but in addition the amount was charged for inputs like labour
charges, sales tax, cost of
unrecoverable linkage used to
make ornament, labour required to be paid for
refining and reclaiming gold, wastage or impurity developed due to use and
exposure of the metal. It was pointed
out that the complainant has agreed to the
condition that the respondent/jeweler
would repurchase the article at 80% of its value and that it does not mean that the gold used
for manufacturing the ring was of 18.4 carat i.e. 80% of 23 carat. 20% of the sale value was to be deducted at the time
of repurchase from the consumers for meeting the charges as mentioned above. It is also pointed out that even petitioner has filed an alleged
testing report dated 27.4.2000 issued by the Gwalior Bullion Laboratory wherein the purity of
gold was shown as 21 carat. No
doubt, the respondent has disputed the
aforesaid report by stating that a small portion of the ring purchased by B.S.
Sharma was tested and that the contents
of the entire ring was not tested, no affidavit of the person who gave the
report was filed. No report was obtained
by the District Forum as contemplated under Section 13(1)(c) of the Consumer Protection
Act.
Considering
the cash memo, it appears that the jeweller
has not stated that the golden ring which was sold, was of 80% purity. The bill only mentions that the article which
was sold would be purchased at 80% of its price. This may be because of labour charges and other expenses are excluded while
repurchasing the ring. Secondly, the
test report upon which the complainant relies, reveals that the gold was having 21 carat
(87.5%) purity. In this view of the matter, the order passed by the State
Commission on facts only requires some modification.
In
the result, the impugned order passed by the State Commission is partly
modified. In exercise of power under Section 14(f) of the Consumer
Protection Act, it is directed that in future respondent-jeweller shall emboss a mark indicating its quality/purity
before selling the ornaments.
Secondly,
we observe that simplicitor awareness on the
part of the consumer will not serve any
purpose. Therefore, till the hallmarking
is made compulsory, Government can issue appropriate directions under the
provisions of various Acts, to see that before sale of the gold/precious
articles, it should contain its own identification mark of quality/purity.
With
these directions, the petition is disposed of. There shall be no order as to
costs.
We
appreciate the zeal with which the petitioner has taken up the genuine issue
for the benefit of
the consumers at large. We also
appreciate the assistance rendered and pains taken by Amicus Curiae-learned
Senior Counsel, Mr. M.S. Ganesh and others.
Sd/-
J.
(M.B.SHAH)
PRESIDENT
Sd/-
(RAJYALAKSHMI
RAO)
MEMBER