FEMA & CONSUMER PROTECTION 1

Foreign Exchange Management Act

• The Foreign Exchange Regulation Act of 1973 (FERA) in India was repealed on 1 June, 2000.

• It was replaced by the Foreign Exchange Management Act (FEMA), which was passed in the winter session of
Parliament in 1999.

• Enacted in 1973, in the backdrop of acute shortage of Foreign Exchange in the country, FERA had a controversial
27 year stint during which many bosses of the Indian Corporate world found themselves at the mercy of the
Enforcement Directorate (E.D.).

• Any offense under FERA was a criminal offense liable to imprisonment, whereas FEMA seeks to make offenses
relating to foreign exchange civil offenses.

• FEMA, which has replaced FERA, had become the need of the hour since FERA had become incompatible with
the pro-liberalisation policies of the Government of India.

• FEMA has brought a new management regime of Foreign Exchange consistent with the emerging frame work of
the World Trade Organisation (WTO).

• It is another matter that enactment of FEMA also brought with it Prevention of Money Laundering Act, 2002
which came into effect recently from 1 July, 2005 and the heat of which is yet to be felt as “Enforcement
Directorate” would be investigating the cases under PMLA too.

• Unlike other laws where everything is permitted unless specifically prohibited, under FERA nothing was
permitted unless specifically permitted. Hence the tenor and tone of the Act was very drastic.

• It provided for imprisonment of even a very minor offence. Under FERA, a person was presumed guilty unless he
proved himself innocent whereas under other laws, a person is presumed innocent unless he is proven guilty

Objectives and Extent of FEMA

• The objective of the Act is to consolidate and amend the law relating to foreign exchange with the objective of
facilitating external trade and payments and for promoting the orderly development and maintenance of foreign
exchange market in India

• FEMA extends to the whole of India. It applies to all branches, offices and agencies outside India owned or
controlled by a person who is a resident of India and also to any contravention there under committed outside
India by any person to whom this Act applies.

• Except with the general or special permission of the Reserve Bank of India, no person can deal in or transfer any
foreign exchange or foreign security to any person not being an authori zed person;

• make any payment to or for the credit of any person resident outside India in any manner; receive otherwise
through an authorized person, any payment by order or on behalf of any person resident outside India in any
manner; reasonable restrictions for current account transactions as may be prescribed.
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Difference between FERA and FEMA

1. The objective of FERA was to conserve foreign exchange and the objective of FEMA is to facilitate external trade
and payment and maintenance of forex market in India.

2. Violation of FERA was a criminal offence whereas violation of FEMA is a civil offence.

3. Offences under FERA was not compoundable, whereas Offences under FEMA are compoundable.

4. Citizenship was a criteria to determine the residential status of a person under FERA, while stay of more than
182 days in India is the criteria to decide residential status under FEMA

5. Almost all current account transactions are free, except a few

CONSUMER PROTECTION ACT OF 1986

Introduction

 Caveat emptor rule ( let the buyer beware) in sale of

goods act of 1930, sprout the root of consumer
interest protection.

 United nations passed resolution of consumer protection in april 1985

 In India 1986 was the enactment of consumer protection act

 Aimed at providing simple, quick, and cheaper protection of consumers interest

Objectives

 Better protection of interests of consumer protection of rights of consumers

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 Right to be protected against marketing of goods or services which are hazardous to life and
property

 To be informed about the quality, quantity, potency, purity, standard and price of goods or
services so as to protect the consumers against unfair trade practice

 The right to be assured, where ever possible, access to goods and services at competitive prices

 The right to be heard and to be assured that consumers interest will receive due consideration
at appropriate forums

 The right to seek redresses against unfair trade practices or restrictive trade practices or unscrupulous
exploitation of consumer

Scope of the Act

• Applies to whole of the state Exept the state of Jammu and Kashmir

• Applies to all type of goods and services, public utilities & public sector undertakings

• All types of complains relating to goods ,unfair trade practice

• Remedies under this act is same as those in other laws.

• A suit pending in civil court cannot be heard in consumer court.

Unfair trade practices

• [sec. 2(1) (r)]

• It means trade practices which a trader, 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

DEFICIENCY IN SERVICE

• Meaning

• Section 2(1) (g) of the Act provides that, “deficiency” means any fault, imperfection, shortcoming or inadequacy
in the quality, nature and manner of
performance which is required to be maintained by or under any law for the time being in force or has been
undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service

CONSUMER PROTECTION COUNCILS

District Level

State Level

Central Level
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The district consumer protection council

• Composition: The district forums consist of a Chairman and two other members one of whom shall be a woman.
The district forums are headed by the person of the rank of a District Judge.

• Jurisdiction: A written complaint can be filed before the District Consumer forum where the value of goods or
services and the compensation claimed does not exceed Rs. 20 lakh.

• Appeal: If a consumer is not satisfied by the decision of the District forum, he can challenge the same before the
State Commission, within 30 days of the order…

The State consumer protection council

• This is established by the state governments in their respective states.

• Chairman:-The minister in charge of consumer affairs of the state government.

• Composition: The State Commission consists of a President and not less then two and not more than such
number of members as may be prescribed, one of whom shall be a women. The Commission is headed by a
person of the level of High Court judge.

• Jurisdiction: A written complaint can be filed before the State Commission where the value of goods or services
and the compensation claimed exceeds Rs. 20 lakh but does not exceed Rs. One crore.

• Appeal: In case the aggrieved party is not satisfied with the order of the State Commission he can appeal to the
National Commission within 30 days of passing of the order.

The Central consumer protection council

• It is the apex body in the three tier judicial machinery set up by the government for redressal of consumer
grievances.

• Composition: It consists of a President and not less than four and not more than such members as may be
prescribed, one of whom shall be a woman. The National Commission is headed by a sitting or retired judge of
the Supreme Court.

• Jurisdiction: All complaints pertaining to those goods or services and compensation whose value is more than
Rs. one crore can be filed directly before the National Commission.

• Appeal: An appeal can be filed against the order of the National Commission to the Supreme Court within 30
days from the date of order passed.

• It may be noted that in order to attain the objects of the Consumers Protection Act, the National Commission
has also been conferred with the powers of administrative control over all the State Commissions by calling for
periodical returns regarding the institution, disposal and pending of cases and issuing instructions for adoption
of uniform procedures

OBJECTIVES
• To remove the defect pointed out by the appropriate laboratory from the goods in question;
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• To replace the goods with new goods of similar description which shall be free from any defect;

• To return to the complainant the price, or, as the case may be , the charges paid by the complainant;

• To pay such amount as may be awarded by its as compensation to the consumer for any loss or injury suffered
by the consumer due to the negligence of the opposite party;

• To remove the defects or deficiencies in the services in question ;

• To discontinue the unfair trade practice or the restrictive trade practice or not to repeat them;

• No to offer the hazardous goods from being offered for sale;

• To withdraw the hazardous goods from being offered for sale;

• To provide for adequate costs to parties