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Section 97: Manner of crediting penalty

Consumer Protection Act • Official Statutory Text & Practice Guide

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Act 2019
Section 96 All 107 Sections of Consumer Protection Act Section 98

Legal Commentary & Landmark Judgments: Section 97

Section 97 directs that all sums realized by way of penalties imposed by consumer commissions or under Chapter VII shall be credited to the Consumer Welfare Fund or other prescribed statutory accounts.

  • Earmarked Penal Receipts: Mandates that all financial penalties collected under the Act are segregated from general administrative revenues and credited to the Consumer Welfare Fund.
  • Promotion of Consumer Interests: Ensures that financial penalties extracted from errant corporations are deployed for funding consumer awareness campaigns, testing laboratories, and consumer advocacy organizations.
  • Central Executive Account Oversight: Authorizes the Central Government to prescribe rules regulating the maintenance, audit, and disbursement of credited penalty funds.
Key Landmark Precedents:
  • Mafatlal Industries Ltd. v. Union of India (1997) 5 SCC 536: A 9-Judge Constitution Bench recognized the constitutional validity of the Consumer Welfare Fund, holding that sums originating from economic exploitation of consumers must be utilized for broad consumer protection purposes.
  • Indian Council for Enviro-Legal Action v. Union of India (2011) 8 SCC 161: The Supreme Court held that punitive and compensatory amounts recovered in public interest matters must be directed to designated welfare funds to advance public welfare.
Courtroom Practice & Strategic Litigation Guidance:

In class-action complaints or matters involving unfair trade practices affecting thousands of unidentified consumers, include a specific prayer requesting that substantial punitive damages be awarded and directed for credit to the Consumer Welfare Fund under Section 97.

Section 96 All 107 Sections of Consumer Protection Act Section 98