IRRESPONSIBILITY IN CORPORATES

IRRESPONSIBILITY IN CORPORATES

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Does corporate power dominate corporate responsibility and respect for consumers?

Authored & Researched by

Ankit Banerjee (Chief Sub-Editor, CSR VISION)

The corporate sector in India has grown fast in the post liberalisation era bringing various products and services to the middle class, never thought of few years back. The major products and services include, the automobiles supported by easily available automobile loans, costly mobile phones backed by loan schemes, houses – flats backed by housing loans, land phones lines with internet facility from many private players offering many innovative plans – service offers. Increasing availability of products and services in the market, has provided choices to the consumers, it has at the same time created competition for the companies operating in the same market space.

Many times in the period of fast growth and competition, the companies are found to have pushed products and services through various promotional schemes exploiting the greed of the consumers. This has led to default in payment of dues of the company, both by wilful defaulters and consumers in genuine problems caused due to process errors and managerial failures. The process errors and managerial failures include, wrong billing, poor documentation, poor customer coordination etc. The deficiency could be from either side. But once a conflict starts, the consumer being an individual finds himself or herself very helpless against the might of the corporate giants. It is natural for a more powerful party in a conflict to bully the less powerful.

But in the era of “Corporate Responsibility and Sustainability”, it is not expected that the corporate houses would harass the consumers and refuse to pay their dues and / or demand from the consumer, what is not due.

A quick research found out that, the large companies and financial institutions, while unable to recover the dues as targeted had resorted to very harsh measures including intimidation, harassment of the consumersthrough “Collection Agents” appointed for the purpose, to collect the dues. A serious of media reports aboutintimidation of consumers in the hands of Collection Agents and the a large number of complaints from consumers and loan receivers, not necessarily the wilful defaulters, the RBI had come out in tear 1986 as a guideline to protect the consumers and loan receivers.

According to RBI guidelines, before sending a recovery agent, the bank is supposed to send a letter with a picture, name and phone number of the agent. The agent is also supposed to carry a copy of the letter when he comes. The consumer can ask for the letter. If they don’t have it, the consumer can refuse to entertain them. If they create a scene, the consumer can dial 100 and call the police control room.

Many times, in spite of all the protective systems, the conflict between the Consumers and the companies stay unresolved.In the blind rush towards improving economic bottom lines and managing a large corporate infrastructure, companies tend to forget that ‘Consumer Satisfaction’ is crucial for sustainable business and fight against the consumers.There are large numbers of consumers, who have felt harassed and exploited by the companies.

To protect the interest of consumers and deliver speedy justice, Consumer Courts have been set up all across India as per the Consumer Protection Act, 1986.
As per section 2(1) (c), of the Act, following may form the subject- matter of complaint-
1. An unfair trade practice or a restrictive trade practice adopted by any trader
2. Defect in the goods purchased
3. Deficiency in service
4. Over-charging of price

If, we look carefully, in to the above areas of subject matter under the act, they all reflect Corporate Irresponsibility.

The consumer courts are established at the National, State and District levels in India. Today, India has 586 district consumer forums and 34 state consumer forums.
The major industries attracting complaints from consumers,who top the listinclude, Automobile industry, Insurance industry, Telecom Industry, Housing industry. There are over 3.5 lakhs cases pending in such consumer courts, as per the government reports of 2013. Out of this, the maximum number of cases is pending in Uttar Pradesh, Maharashtra, Rajasthan and Gujarat.
It is noted that the Consumer Courts are unable to support the load of cases coming their way in absence of adequate physical infrastructure, adequate number of judges and other staff.

There seems to be a trend of companies lingering the cases through engagement of lawyers and refuse to close the cases by paying out small fines ordered by the District Consumer Forums and appeal against the lower court order in the higher court; State Consumer Forum, with the hope that the lonely consumer will not be able to continue chasing the case and get fed up and run away.

This is obviously an irresponsible corporate conduct towards Consumers, one of the primary stakeholders of business.
Select few cases spotted by us speaks volumes about the conduct of business houses, as presented below.

CASE: 1
• COMPLAINANT: Mr. P. Gopal.
• CASE NO. – CC 827/13 ( Delhi State Consumer Court, ITO )
• CASE FILED AGAINST: SREELEATHERS
•ABOUT SREELEATHERS : Sreeleathers, located in Connaught Place, New Delhi, is an established footwear and accessories seller.
• CASE HISTORY: Mr. P. Gopal a retired Defence Section Officer, bought a pair of shoes from ‘SreeLeathers’ in Connaught Place for Rs 450/-. The shoes bought had a warrantee of 6 months. But the heel of the shoes toreaway in two months. When approached, the company refused to honour the warrantee. Being frustrated, he filed the complaint against the company on 14th October, 2013 at the District Consumer Forum. The District Consumer Forum ordered the company to pay Rs. 2000 to the complainant, Mr.Gopal. The case hearing has already taken place 8 times.
• Sreeleather did not pay within the stipulated period. Mr.Gopal, finally filed an execution petition against SreeLeather on 14th of October 2013.
By avoiding to honour the warrantee, and by refusing to comply with the order of the state court , the company here is reflecting a conduct , which is not business like, simply because Rs. 450 and / or Rs. 2000 is much less than the cost of managing a court case, cost of goodwill and allied costs put together.
NEXT HEARING & EXPECTATIONS OF THE COMPLAINANT: 26th of April 2014. P. Gopal expects that Sreeleathers should respond to the court notice so that he would receive justice. P. Gopalbelieves that this time if, Sree Leather does not appear before the court, the court will issue an arrest warrant.
The above case facts do not present a responsible corporate conduct. Our effort to contact Sree Leather to get their side of the story was not responded.

CASE: 2
• COMPLAINANT: Mr.Dinesh Aggrawal
• CASE NO: – CC/971/11 ( State Court )
• CASE FILED AGAINST: LEVIS
• ABOUT LEVIS: Levi Strauss & Co. also known as Levi’s, founded in the year 1853 by Levi Strauss. It is a privately owned American clothing firm which is famous universally for its denim jeans. The company employs a staff of around 10,500 people. Its headquarters are in San Francisco, California, U.S. It has 2800 company operated store.
• CASE HISTORY: Mr.Dinesh Aggrawal purchased a pair of slippers from Levis, but it tore within 10 days. Therefore, a notice was sent to the company on 9th July, 2011. After refusal to appear on the court on 25th September, 2013, Levis, the second notice was sent as a bailable warrant to the Levis. As per rule, if Levis does not appear before the court, non-bailable warrant would be issued.
After 6 hearings, the complainant wants justice which has been pending since 3 years. Levis has not sent a representative to appear before the court of law which makes their case murkier.
This indicates disrespect of Levis towards the court’snotice / orders, which does not reflect a responsible conduct.Here too, our effort to contact Levis to get their side of the story was not responded.

Like the above cases, there are over 3.5 lakh cases pending in various consumer courts in India under different categories of corporate failures as presented in the law;
1. An unfair trade practice or a restrictive trade practice adopted by any trader
2. Defect in the goods purchased
3. Deficiency in service
4. Over-charging of price

It is common knowledge wrong billing in credit cards, phone – mobile bills , defect in automobiles or houses etc are common consumer complaints by consumers against large companies.
It has been observed through a review of a few cases that the cost of fighting a case with a consumer, including the administrative cost, cost of lawyer fees etcis more than the amount of fine imposed by the consumer courts. In spite of this, the companies have been continuing with cases and going for appeals etc, may be with the hope that the poor consumer will fail to hold un to his patience and expenses and give up. This may be induced by the departmental objective of the legal department of a company , which may be disconnected from the organisational objectives, which include consumer satisfaction. Many times, the allied departments like billing, technology, legal etcin large companies stay dis-connected from each other and bound by their own departmental objectives ,which make them act against the objective of the company and cause consumer dis-satisfaction.

The attitude of legal departments in the large companies need be consumer friendly and follow responsible business principles, to be clearly laid down by the top management of the corporations. The country is looking up to the corporate leaders for a better tomorrow through better products , services as well as a responsible corporate conduct. They need to act and guide their legal team to serve the consumers and not the narrow departmental interest.
Hope the corporate leaders listen and work for larger good of the corporate and consumer!!!

About the author

CSR VISION
CSR VISION is India’s ( probably world’s ) first monthly magazine in print devoted to CSR and Sustainable Development for bringing together all stakeholders of SUSTAINABLE DEVELOPMENT at a global and local levels and act as a platform for promoting strategic CSR and sustainable development practices through dissemination of information and knowledge.