The Hindu Business Line : All that glitters isn't gold

SHOULD purchasers of gold ornaments be left at the mercy of the traders? This was the question that the National Consumer Disputes Redressal Commission (NCDRC), New Delhi, decided on December 12, 2005, in the Akhil Bhartiya Upbhokta Congress (ABUC) vs Aggarwal Jewellers case.

Setting the context to the case was a report from the Bureau of Indian Standard (BIS) that 90 per cent of articles sold by the traders were "not in conformity with the purity declared in the bills /cash memos". Naturally, the NCDRC's order begins on a distressing note: "Imagine the situation where the cash memos do not mention anything about purity!"

Justice M.B. Shah, President of the Commission, and Rajyalakshmi Rao, Member, heard the case and noted that though the dispute involved a very small amount of Rs 2,700, the question raised was vital, since it was about purity of ornaments of a precious metal (gold).

ABUC had contended that under the Consumer Protection Act, 1986, consumers have (i) the right to be informed about the quality, quantity, potency, purity, standard and price of goods; (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.

"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," said the Congress. "Business in precious metal is increasing day by day and the consumers are exploited to the fullest extent."

The Commission had issued notices to the Union of India, the Reserve Bank of India (RBI) and the BIS, "to find out any reasonable method for protecting the consumers, who customarily and traditionally purchase the golden ornaments". RBI's affidavit spoke about its `Standing Committee on Gold and Precious Metals' to advise the Government `on emerging issues pertaining to gold and precious metals'.

One learns from the text of the Commission's order that the Standing Committee had recommended the monitoring and controlling of the purity of gold jewellery sold in India, through `an organization with the relevant infrastructure and competence'. In January 1999, the BIS was asked to evolve and operate the hallmarking scheme for gold jewellery; and in April 2000, the scheme was launched, "to protect the public against the fraud of adulteration and low caratage and to make manufacturers maintain standards for fineness and purity".

The BIS told the Commission that its standards were mostly `voluntary in nature', and that the Central Government had the power to 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". Of `more than 17,000 Indian Standards,' only around 100 standards are mandatory under various enactments and Government orders, said BIS. The standard on `Hallmarking of Gold Jewellery' is optional, said BIS.

It is gratifying to know that the BIS Precious Metal Sectional Committee has formulated the following standards on `Gold and Gold Alloys': IS1417 Grades of Gold and Gold Alloys, Jewellery / Artefacts - Fineness and Marking; IS 1418 Assaying Gold in Gold Bullion, Gold alloys and Gold Jewellery/Artefacts - Cupellation (Fire Assay Method); IS 2790 Guidelines for manufacture of 23, 22, 21, 18, 14 and 9 carat gold alloys; IS 3095 Gold solders for use in manufacture of jewellery.

However, the Bureau wasn't armed with any powers to make rules or regulations; nor did it have the enforcement machinery or infrastructure to carry out any search and seizure operations. Yet, in 2001-2002, the BIS worked jointly with reputed consumer organizations, in conducting a general market survey in eight major cities in India.

Posing as an ordinary consumer, the BIS staff 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." The BIS filed complaints before the MRTP Commission against 31 jewellers (in whose cases the purity was short by more than 15 per cent of the declared caratage).

The NCDRC observed, "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."

It conceded that there might 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 jewellers/gold-smiths to `emboss' a mark indicating fineness of the ornament."

The Commission said that `simplicitor awareness on the part of the consumer will not serve any purpose'. It is for the Government to see that the rights conferred under the Consumer Protection Act are not made illusory, it said.

In conclusion, the Commission said, "We appreciate the zeal with which the petitioner has taken up the genuine issue for the benefit of the consumers at large."

E&OE@TheHindu.co.in

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