UNDERSTANDING THE CONSUMER PROTECTION BILL 2019
- The Consumer Protection Bill, 2019 was recently passed by the Lok Sabha which on clearance by the Parliament stands to repeal the Consumer Protection Act, 1986.
- The Consumer Protection Act, 1986 was enacted with the objective of providing better protection of the interests of the consumers, and is considered to be a watershed moment in the growth of consumer rights and the legal system.
- The said Act having done away with technicalities and cumbersome procedures, became an effective and a comparatively inexpensive and prompt tool for consumers to assert and enforce their rights.
- This made the consumers to have the confidence of taking large corporations to the various consumer fora.
- As such, the Bill, upon becoming effective and being notified as the prevalent Act, and consequently by repealing the 1986 Act, has big shoes to fill and must be able to provide for the same, or higher, ability to the consumers to protect and enforce their rights.
- The Lok Sabha has passed the Consumer Protection Bill 2019, which seeks to give enhanced protection to interests of consumers and timely settlement of their grievances.
Key Provisions of the Bill:
1.Definition of consumer:
- A consumer is defined as a person who buys any good or avails a service for a consideration. It does not include a person who obtains a good for resale or a good or service for commercial purpose.
- It covers transactions through all modes including offline, and online through electronic means, teleshopping, multi-level marketing or direct selling.
2. Rights of consumers:
- Six consumer rights have been defined in the Bill, including the right to
- Be protected against marketing of goods and services which are hazardous to life and property;
- Be informed of the quality, quantity, potency, purity, standard and price of goods or services;
- Be assured of access to a variety of goods or services at competitive prices
- Seek redressal against unfair or restrictive trade practices.
3.Central Consumer Protection Authority:
- The central government will set up a Central Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers.
- It will regulate matters related to violation of consumer rights, unfair trade practices, and misleading advertisements.
- The CCPA will have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into such violations.
4.CCPA will carry out the following functions, including:
- Inquiring into violations of consumer rights, investigating and launching prosecution at the appropriate forum.
- Passing orders to recall goods or withdraw services that are hazardous, reimbursement of the price paid, and discontinuation of the unfair trade practices.
- Issuing directions to the concerned trader/ manufacturer/ endorser/ advertiser/ publisher to either discontinue a false or misleading advertisement, or modify it
- Imposing penalties
- Issuing safety notices to consumers against unsafe goods and services.
5.Penalties for misleading advertisement:
- The CCPA may impose a penalty on a manufacturer or an endorser of up to Rs 10 lakh and imprisonment for up to two years for a false or misleading advertisement.
- In case of a subsequent offence, the fine may extend to Rs 50 lakh and imprisonment of up to five years.
6.Consumer Disputes Redressal Commission
- Consumer Disputes Redressal Commissions (CDRCs) will be set up at the district, state, and national levels.
7.A consumer can file a complaint with CDRCs in relation to:
- Unfair or restrictive trade practices;
- Defective goods or services
- Overcharging or deceptive charging
- The offering of goods or services for sale which may be hazardous to life and safety.
8.Jurisdiction of CDRCs:
- Complaints against an unfair contract can be filed with only the State and National Appeals from a District CDRC will be heard by the State CDRC.
- Appeals from the State CDRC will be heard by the National CDRC. Final appeal will lie before the Supreme Court.
- The District CDRC will entertain complaints where value of goods and services does not exceed Rs one crore.
- The State CDRC will entertain complaints when the value is more than Rs one crore but does not exceed Rs 10 crore.
- Complaints with value of goods and services over Rs 10 crore will be entertained by the National CDRC.
- Product liability means the liability of a product manufacturer, service provider or seller to compensate a consumer for any harm or injury caused by a defective good or deficient service.
- To claim compensation, a consumer has to prove any one of the conditions for defect or deficiency, as given in the Bill.
Significance of the Bill:
1.Multiple Point of access to Justice
- However, it is also relevant to note that, what is different from the 1986 Act, is that the Bill also grants jurisdiction to the relevant district commission / state commission where the Complainant resides or personally works for gain.
- This becomes especially beneficial for consumers, since consumers would no longer be required to file and pursue the complaint where the seller / service provider is located, which has significant time and cost implications on the complainant. The said provision also becomes relevant since e – commerce and e – transactions are on the rise and the service providers / sellers could have their registered offices anywhere else in the world.
2.Wide Jurisdiction for the Regulator
- The applicability of the 1986 Act is mainly for such persons who would qualify as ‘consumers’, as such to require any action under the 1986 Act, the threshold requirement that has to be fulfilled is that the impacted party qualify as a ‘consumer’.
- But importantly, the language provided in Section 10 of the Bill makes the Authority responsible to regulate matters which are prejudicial to the interest of the ‘public’ in addition to the interest of the consumer.
- However, in light of the language used in the Bill, the scope of intervention seems to have been increased to bring within the fold all such acts and practices which can be considered to be against public interest, and which may be affecting the market / people as a whole.
3.Product Liability Clause and Penal Consequences
- The Bill introduces the concept of product liability for a defective product, and brings within its scope the product manufacturer, the product service provider and a product seller. The bill intends for this chapter VI to apply to every claim for compensation under a product liability action.
- Interestingly the term “product seller” has been defined broadly enough to include “a person who … is involved in placing such product for commercial purpose”.
- As such, the bill can be read to bring within the scope even the e –commerce platforms, which have so far taken the defence of being ‘aggregators only’.
Issues with the Bill
1.Recognition and Treatment of Unfair Contracts
- In a much – needed move, for consumers, the Bill recognizes and addresses the menace of unilateral and unfair contracts.
- It has been held in number of judgments of the Supreme Court as well as of the National Commission that courts will not enforce any will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power.
- However, equally there are sufficient precedents where courts have upheld the clauses of a contract keeping in view the sanctity of a contract and party autonomy.
- Therefore, whether a clause is unfair, and whether the consumer fora can strike down such a clause has been an oft – repeated argument and this has not been addressed.
2.Cost Factored in For Assessment
- However, what is interesting in terms of the pecuniary jurisdiction, is the specific language employed in the Bill.
- Pertinently, such a clause in the 1986 Act was stated as: “where the value of the goods or services and compensation, if any, claimed,”. Whereas in the Bill, the language of the provision is as follows: “where the value of the goods and services paid as consideration…”
- Therefore, firstly the compensation being claimed by the complainant does not seem to factor in the assessment of the pecuniary jurisdiction. But more importantly, the phrase ‘paid as consideration’ would seem to imply that the pecuniary jurisdiction is determined by what has been actually paid already by the complainant and not the total value of the good / service.
- The Bill does not address the fundamental problem of protracted and complicated litigation, the bane of consumer forums constituted under the Consumer Protection Act of 1986. Instead, it provides an alternative to the consumer forums, in the form of mediation.
- The Bill does provide for a regulator, but there is no proper focus on the duties of the regulator.
- Even the definition of ‘consumer rights’ in the Bill is not simple and straight forward, so that consumers at least know what their entitlements are.
Additional Suggestions that can be incorporated:
- Provision for resolving the cases within 90 days should be incorporated.
- Provision for Consumer education and proper awareness building measures.
- Lessons to be learnt:
- Several countries like Canada, Estonia have devised advertisement regulations for unhealthy foods targeted at children
- Countries such as the UK, Ireland and Belgium have specifically banned celebrity endorsement of unhealthy foods. The impact of such restrictions has been reported to be significant.
- The emergence of global supply chain, rise in global trade and rapid development of e-commerce have led to a new delivery system for goods and services and also provided new options and opportunities for consumers.
- Misleading ads, tele-marketing, multi-level marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive intervention to prevent consumer detriment.
- Thus, the new bill is the step in the right direction in addressing these issues.