The Consumer Protection Act, 2019
The Consumer Protection Act, 2019 (hereinafter “the Act”) was introduced in the Lok Sabha by Mr. Ram Vilas Paswan, the Minister of Consumer Affairs, Food and Public Distribution, on 08.07.2019.
The Consumer Protection Bill, 2019 was passed by the Lok Sabha on 30.07.2019 and the Rajya Sabha on 06.08.2019. It was notified in the Official Gazette on 09.08.2019 as the Consumer Protection Act, 2019, No. 35 of 2019.
The Act came into force on 20.07.2020 and replaces the three decade old Consumer Protection Act, 1986.
The object of the Act is:
“To provide for protection of the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers’ disputes and for matters connected therewith or incidental thereto”
The Act proposes a slew of measures and tightens the existing rules to further safeguard consumer rights. The law seeks to revamp the process of the administration and the settlement of consumer disputes by imposing strict penalties for adulteration and misleading advertisements by firms.
The Act replaces Consumer Protection Act, 1986 and enforces consumer rights and provides a mechanism for redressal of complaints regarding defect in goods and deficiency in services.
KEY FEATURES OF THE ACT
The Act has been introduced while keeping in mind the new set of challenges and issues faced by the consumers in modern times owing to the digitization of the marketplace and the diversity of the goods and services that are being provided to the consumers.
The Act aims to provide a systematic and approachable platform to the consumer for redressal of disputes. It is an outcome of the ever-changing facets of the commerce and digitization of the consumer’s marketplace which has witnessed a new set of consumer expectations as well.
Even though the Consumer Protection Act of 1986 also provided for a mechanism for consumer grievance redressal, it was lacking in terms of keeping up with the modern digitized and electronic era. The Act aims to fill in the lacunae present in the Act of 1986.
Further, the Act provides for the following rights of the Consumer:
1. To be protected against marketing of goods and services that are hazardous to the life and property;
2. Be Informed of the quality, quantity, potency, purity, standard and price of goods or services;
3. Be assured of access to a variety of goods or services at competitive prices; and
4. Seek redressal against unfair or restrictive trade practices.
ENFORCEMENT OF PROVISIONS OF THE ACT
A. Inclusion of e-commerce customers as “Consumer”
The Act has revised the definition of “Consumer” to include those who make purchases online. This is a major aspect that has been incorporated to bring the e-commerce market within the ambit of the Act and ensure Consumer protection therein.
The Act now defines ‘Consumer’ as follows:
Section 2. (7) “consumer“ means any person who—
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such service other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person, but does not include a person who avails of such service for any commercial purpose.
Explanation.—For the purposes of this clause,—
(a) the expression “commercial purpose” does not include use by a person of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment;
(b) the expressions “buys any goods” and “hires or avails any services” includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing;
B. “Food” has been added to the definition of “Goods” under the Act
The Act now defines “Goods” as under:
Section 2. (21) “goods” means every kind of movable property and includes “food” as defined in clause (j) of sub-section (1) of section 3 of the Food Safety and Standards Act, 2006;
C. “Telecom” has been added to the definition of “Services” to bring telecom service providers within the ambit of the Act.
The Act now defines “Services” as under:
Section 2. (42) “service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;
D. New definition of “Product Liability”
The Act introduces a new concept of Product Liability whereby the manufacturers and the sellers of products or services have been made responsible to compensate for any harm caused to a consumer by defective products, manufactured or sold, or for deficiency in services.
The said concept is defined as under:
“Section 2. (34) “product liability” means the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto;”
E. New definition of “Unfair Trade Practice”
The Act introduces a specific broad definition of Unfair Trade Practices under Section 2. (47) and defines it as a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice and provides an inclusive list of such practices.
The said list includes sharing of personal information given by the consumer in confidence, unless such disclosure is made in accordance with the provisions of any other law, false representation of goods standards, usefulness, characteristics, benefits, etc.
JURISDICTION OF THE CONSUMER COMMISSIONS AND ESTABLISHMENT OF CENTRAL CONSUMER PROTECTION AUTHORITY
A. Consumer Disputes Redressal Commissions
This will be set up as quasi-judicial bodies at the District, State and National levels for adjudicating consumer complaints. These Commissions shall be presided by members to be appointed by the Central Government. Appeals from the District and State Commissions will be heard at the next level and from the National Commission by the Supreme Court.
It also establishes Consumer Protection Councils at the district, state and national levels to render advisory on consumer protection.
1. Monetary Limit
The National Consumer Disputes Redressal Commissions will hear complaints where the dispute value is worth more than Rs. 10 crores.
The State Consumer Disputes Redressal Commissions will hear complaints where the disputed value is more than Rs 1 crore but less than Rs 10 crores.
While the District Consumer Disputes Redressal Commissions will entertain complaints when the value of goods or service is up to Rs 1 crore.
2. Appeal Provisions
Appeals from the State Commission to the National Commission can only be made where they involve substantial questions of law.
Further, appeals from the National Commission to the Supreme Court can only be made wherein the Complaint originated in the National Commission.
The jurisdiction of the Consumer Commissions has also been expanded to allow complaints to be made where the complainant resides or personally works for gain.
Previously, in terms of the 1986 Act, it could have been where complaints had to be instituted where the opposite party resides or conducted business, or where the cause of action arose.
This eases the burden on the consumers and makes the grievance redressal process a lot more effective and approachable by the general consumer, who will now be able to institute complaints at the district level where they reside and will not have to travel to other parts of the Country to pursue their complaints.
B. Central Consumer Protection Authority
The Act provides for the establishment of a regulatory authority called the Central Consumer Protection Authority which will have wide powers of enforcement.
The Authority will also have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into consumer law violations.
The Authority will regulate cases related to unfair trade practices, misleading advertisements, and violation of consumer rights. The Authority has also been provided with widespread powers to file class action suits, if a consumer complaint affects more than a single individual.
INCLUSION OF PENAL CONSEQUENCES AND LIABILITY FOR PRODUCTS
The Central Consumer Protection Authority will have the power to impose fines on the endorser or manufacturer up to 2-year imprisonment for misleading or false advertisement.
Further, repeated offenses, may attract a fine of Rs 50 lakh and imprisonment of up to 5 years. There is also a provision to prohibit the misleading advertiser from endorsing that particular product or service for a period of one year.
The Act allows a person to make a claim of product liability against a manufacturer, seller, or service provider for any defect in a product or deficiency in a service.
A claim for compensation may be made for any harm caused, including:
1. property damage;
2. personal injury, illness, or death;
3. mental agony or emotional harm accompanying these conditions.
ALTERNATIVE DISPUTE RESOLUTION
The Act provides for mediation as an Alternate Dispute Resolution after admission of the Complaint or even at a later stage of the complaint proceedings in the District Commission. The Act provides for referral to Mediation within 5 days of receiving due consent of the parties to settle the matter through alternate means.
If the mediation proceedings fail to determine or resolve the issues between the parties, then the District Commission will be authorised to take up the complaint for its redressal as per the procedure prescribed in the Act.
The Consumer Protection Act, 2019 has been passed with the motive to modernise the Consumer Protection Act, 1986 which has been repealed. The object of both the acts remains the same, i.e., to safeguard of the “Consumer” and his rights.
The Act has widened the scope of the rights of the consumers, the catena of goods and services as well as the modes of availing such goods and services. Additionally, the Act has allowed the incorporation of all those entities that were not previously included under the previous Act and were thus, beyond the bounds of a regulatory law.
It has modernised the legislation at par with the developments in the e-commerce industry as well as the digitisation of the marketplace that the consumer is now exposed to.
The Act has also put in place a proper structure for the implementation of its provisions and has put in place a much for accessible and categorical grievance redressal mechanism which provides for ample amount of safeguards against exploitation of the provisions of this Act both by and against the modern day Consumer.
However, there has been a considerable overlap between the investigative wing and the search and seizure functions of the District Collector that may lead to a potential conflict of interest. This authority has been empowered to order for recall of goods, reimburse price paid for goods and services, as well as issue directions and penalize manufacturers and endorsers for misleading advertisements. Yet, the appeals against such orders can only be preferred before the National Commission and the factors on which the National Commission may hear such appeals remain unclear.
The ambiguity regarding the continuation and the transfer of the cases pending before the Consumer courts currently depending on the pecuniary jurisdiction will result in further delays.
The Act is another step towards the modernisation of the dated legislations of our Democracy by implementation of legislations that are better suited to the diverse and ever changing socio-economic dimensions of the modern world that could not have been anticipated, by any stretch of imagination by the drafters of these dated legislations.
The real test for this Act remains in the actual implementation of its provisions for encouraging and ensuring that the modern day consumer has a safeguarded and better standing against exploitation.
Its time when companies have to revisit their sales policy, product liability, documents, distributors arrangement, supply chain,etc., again in a holistic manner before it is too late as the newly enacted act makes customer as king in a pragmatic manner.