Unfair Trade Practices by Coaching Institutes in India

Introduction

The emergence of coaching centres in India has been both a boon and a bane for students across the country. However, some of them provide helpful advice and assistance, others are involved in unfair trading practices that are taking advantage of students. The laws on consumer rights and protection are in force to protect the interests of students to enable them receive services as agreed on. One such case—Satyata vs. IAS Gurukul—throws a spotlight at the ways in which some coaching centres mislead and ensnare students and the legal redressal mechanism accessible to the victims.

This blog is intended to mostly elaborate on the case, and critique the judgement in it, but also to discuss the issue of unfair trade practices by coaching institutes and the legal remedies available to deal with it.

Unfair trade practices under Consumer Protection Legislation in India are as follows:

Unfair trade practices as provided in Section 2(47) of the Consumer Protection Act, 2019 are those activities performed by traders which are deceptive, misleading or fraudulent in connection with any business activity carried out by him for bonafide purposes concerning any product or service. In the context of coaching institutes, these practices may include:

• Misleading advertisement and endorsements

• Misrepresentation of the quality or standard of services offered

• Security and fraud risks, for example, inflated prices but failed to complete the advertised services.

• Not permitting refunds for services that were not utilised

• Lack of promised amenities such as experienced teachers or course manuals

It is inconceivable that such practices would benefit students, especially bearing in mind the stiff competition that prevails in civil service and other professional examinations. Even coaching centres manipulate the desires and fears of learners taking them for a ride when they join in large numbers expecting the coaching centres to deliver on some of their boasts that they may not in actual sense do.

The present case

More recently the case of Satyata vs. IAS Gurukul, a coaching institute for civil service examinations, has been held guilty of having placed fake advertisements and concocted brochures misleading the young aspirants. IAS Gurukul had assured quality faculty, personal guidance, and all round preparation for the civil services examination. It only became apparent that none of these promises were implemented when the complainant enrolled for the course.

In the first four months, the student had observed that the faculties which were teaching crucial subjects were not competent enough, and many essential parts of the course such as one on one mentoring and mock tests were absent. Regrettably appalled by the institute’s lack of response, she legally prosecuted the institute.

Facts of the case

Complainant’s enrollment: The complaint got registered with IAS Gurukul in November 2017 to take admission in the institution for “Full IAS Preparation Program” which cost INR 98,000. In the promotional kit of the institute including the brochure and the advertisements the following aspects were mentioned: 100% syllabus completion, personal attention, and daily one to one individual faculty counselling and highly qualified and experienced faculty team.

Discrepancies noted: The complainant claims that after attending classes for four months, she discovered that most of the information provided by the institute was false. Faculty requirements were unmet with respect to key subjects, and even personal tutorship as well as test series were missing.

Legal Notice & complaint: Due to the inability to receive a satisfactory response from IAS Gurukul, the complainant gave them the legal notice to refund the fee and offer INR15 lakh punitive damages in March 2018. She also lodged a criminal complaint but the matter was never pursued.

Institute’s defence: IAS Gurukul responded that the complainant had attended the classes for nine months and had withdrawn from the course due to personal reasons but demanded a refund after withdrawal. They dismissed any of such loopholes concerning the services they provided.

Issues 

• Whether IAS Gurukul company had indulged in misleading the public by advertising false and misleading information?

• Whether the complainant was legally eligible for refund back and in addition for the mental stress she suffered?

• Whether the complainant had never attended classes for nine months as had been alleged by IAS Gurukul?
  
  

Judgment

In the present complaint filed with the District Consumer Disputes Redressal Commission, Delhi, the complaint was upheld by the Commission. The Commission also stated that IAS Gurukul had resorted to unfair trade practices particularly in the kind of information that was given in the brochures and advertisements. The following key points emerged from the judgement:

Misleading advertisements: The Commission also realised that the advertisements of IAS Gurukul were misleading. However, the institute could not substantiate the claims that world-class faculty and individual attention were delivered as advertised.

Refund ordered: The Commission asked IAS Gurukul to refund INR 62,363 for the unutilised part of the course. This calculation was made together with the complainant who alleged to have attended only four months of a nine- month program.

Compensation: Besides the refund, the Commission also ordered payment of INR 15,000 to the complainant for mental harassment and the costs of the proceedings.

Commentary on the judgement

The ruling sheds light into the steadily worrying conductance of coaching institutes, many of which have turned into profit oriented institutes rather than being educational facilities for the growth of students. The Commission has focused on consumer protection laws as the means of putting pressure on such institutes to stop deceiving students with the pledges of their successful life.

The case makes precedence of other such cases which clearly states that coaching centres cannot demand high fees and deprive the students of the particular services they are supposed to provide. It also reaffirms the message that students as customers must be wary of the promotional practices of educational institutions and be willing to sue when the promises contained in those promotional messages are false.

Though the judgement is a welcome change, it also triggers further contemplation over increased stringency in policing coaching institutes. It is quite possible that a stronger paradigm exists to contain such unfair actions from growing rampant.

Process of filing a consumer forum case against a coaching institute

If you believe that a coaching institute has engaged in unfair trade practices, you can take the following steps to file a consumer case:

Gather evidence: Gather all the materials such as brochures, any advertisements or any communication related to the institute, fee receipts etc. Make sure that you have evidence of the institute’s claims and their inability to meet the same.

Serve a legal notice: Always serve the institute a legal notice with detailed complaints and demands before running to the consumer forum.

File a complaint: If the institute does not respond or if its response is unsatisfactory take up the complaint to the appropriate Consumer Disputes Redressal Forum. Cite all facts and state the prayer, this section should also present the result sought.

Attend hearings: This means that during trial preparation you must be ready to go to the court hearings and give evidence in support of your allegations.

Seek compensation: It is further possible to claim for a refund together with compensation for mental harassment, time lost, and cost of litigation.

Conclusion

The malpractices in coaching centres are dishonesty to the system of education and dismissal of trustworthiness to the students. The judgement in the Satyata vs. The IAS Gurukul case is an example that students can approach court and get justice in case organisations engage in misleading practices. Thus, absolutely, such cases suggest students ought to know their rights as stipulated under the Consumer Protection Act and act whenever those rights are infringed.

In case you find yourself in such a situation, you should consult a professional lawyer. They can help you with your case and also guide you to take appropriate steps.

FAQs

What are the unfair trade practices in operation by many coaching institutes? 

Generally anything which may be false, misleading and is used in such a manner that a student decides to join the premises of the institute, like the qualification of the faculty or tall claims to success are unfair trade practices.

Can I demand my money back in case the institute does not fulfil the expectations of the client? 

Of course, according to the category of consumer protection laws, you can be refunded for the lack of provision of services.

Is it obligatory to have an attorney in order to file a consumer complaint? 

However, the presence of a lawyer while filing a consumer complaint is not mandatory although it can prove useful.

What is the time taken on average to complete a consumer case? 

The duration taken in the determination of a case differs; however, the consumer courts should try to complete a case within a shorter time as compared with other courts.

What relief can I seek? 

You can recover fees paid, damages for mental harassment and expenses on institutional and legal proceedings.