The practice of consumer protection is to prevent consumers from being exploited and harmed by unfair trade practices of businesses. The protection of consumers is laid down in legislation. No economy can flourish without the rights of the person being protected. A consumer is an essential actor of any economy as he is the one who buys or hires goods or services from the seller and successively boosts employment within the country. Indian Consumer Protection Act 1986 which was once enacted to provide timely relief to consumers affected with defective products and deficient services, apart from providing both legal as well as institutional framework for protection of consumer’s rights came under criticism for being ineffective on certain fronts. On the other hand, increase in the cases of unfair trade practices. The Government of India enacted Consumer protection Act 2019 to provide enhanced protection to the consumers taking into consideration the booming e-commerce industry and the modern methods of providing goods and services such as online sales, tele-shopping, direct selling and multi-level marketing in addition to the traditional methods. The main highlight of the Consumer Protection Act, 2019 is that it establishes a Central Consumer Protection Authority which acts as a regulatory body to “promote, protect, enforce consumer rights as a class.” A clear shift from Caveat emptor (let the buyer be aware) to Caveat venditor (let the seller be aware) can be seen in the new provisions as the unfair trade practices and fraud done by the seller will now be penalized. The objective of this article is to evaluate and discuss the certain changes which have been made under this Act as compared to its old counterpart. The new Act provide a simple and quick solution to consumers for their grievances against any deficiency in services or defects in goods.
“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”
The Indian Consumer Protection Act of 1986 despite being a socio-beneficial legislation had limitations in terms of sanctions. The Act was established to address the grievances of the consumer and to protect their interests. The old legislation failed to enlighten the developments in the market and digital technology in the country. The Indian Parliament, on 6 August 2019, passed the landmark Consumer Protection Bill, 2019, aimed at providing timely and effective management and resolution of consumer disputes. The Consumer Protection Bill, 2019 was introduced in Lok Sabha by the Minister of Consumer Affairs, Food and Public Distribution, Mr. Ram Vilas Paswan on July 8, 2019. The Consumer Protection Act, 2019 received the assent of the President of India on 9 August 2019 in the official gazette of India. The New Act entered into force on 20 July, 2020 and has replaced the Consumer Protection Act, 1986.1 Consumer Protection Act, 2019 is a law to protect the interests of the consumers. This Act provides safety to consumers regarding defective products, dissatisfactory services, and unfair trade practices. This law allows for the establishment of an authoritative body called the Central Consumer Protection Authority or CCPA. The concept of ‘Product Liability’ which covers within its ambit the product manufacturer, product service provider and product seller, for any claim for compensation. The basic aim of the Act is to save the rights of the consumers by establishing authorities for timely and effective administration and settlement of consumers’ disputes.2 The Act 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.
Who is Consumer?
The definition of “consumer” under section 2(1)(d) of the Consumer Protection Act, 1986 is wide enough to include not only person who hires or avails services, but also beneficiary of such services other than the person who hires or avails services. A person who buys goods and uses them himself exclusively for purpose of earning his livelihood by means of self- employment is a consumer.
A consumer is defined under Section 2(7) of the Consumer Protection Act, 2019, as a person who buys any goods or avails a service for a consideration. It doesn’t include a person who obtains a good for resale and good for service or commercial purposes. It covers transactions through all modes including offline, and online through electronic means, tele- shopping, multi- level marketing or direct selling.
Right of Consumers?
1. The most essential component of the new Act is undoubtedly the consumer’s rights under Section 2(9), which include:
2. The right to be protected against the marketing of the goods and services which are hazardous to life and property;
3. The rights to be assured, wherever possible, access to a variety of goods, products and services at competitive prices;
4. The right to be informed about the quality, quantity, potency, purity, standard and prices of goods, products and services, as the case may be, so as to protect the consumer against unfair trade practices;
5. The rights to be heard and to be assured that consumer’s interests will receive due consideration at appropriate;
6. The right to seek redressal against unfair or restrictive trade practices unscrupulous exploitation of consumers;
7. The right to consumer awareness.
Major changes of the new Act are highlighted
Establishment of the Central Consumer Protection Authority (CCPA)
The turning point with regard to this new Act is the establishment of Consumer Protection Councils at the Central, State and District levels and the introduction of a new in-house
machinery Central Consumer Protection Authority (CCPA) which will have wide powers of investigation including the power of search and seizure. The Central Authority has been granted wide powers to take suo- moto actions, recall products, order reimbursement of the price of goods/services and file class-action suits if a consumer complaint affects more than one individual. 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.
CCPA will carry out the following functions, including:
i. inquiring into violations of consumer rights, investigating and launching prosecution at the appropriate forum;
ii. passing orders to recall goods or withdraw services that are hazardous, reimbursement of the price paid, and discontinuation of the unfair trade practices, as defined in the Bill;
iii. issuing directions to the concerned trader/ manufacturer/ endorser/ advertiser/ publisher to either discontinue a false or misleading advertisement, or modify it;
iv. imposing penalties, and;
v. issuing safety notices to consumers against unsafe goods and services.
The new move is undoubtedly beneficial to consumers, making them more powerful as there is going to be a complete shift of onus from buyer to manufacturer/advertiser. The objective of this article is to assess how the implementation of Consumer Protection Act 2019, which is in force from 24th July 2020 would affect these four pillars, namely; Manufacturers, Service Providers, Advertisers, Sellers (both Offline and Online) and Celebrity Endorsers of the integrated communication channel.
Pecuniary limits and other changes to consumer dispute redressal forums:
Although the three levels of consumer dispute redressal forums have been retained under the
Act but pecuniary limits of all three levels have been increased.
• District Commission (established under section 28) – Upto 1 crore (earlier 20 lakhs)
• State Commission (established under section 42) – 1 crore to 10 crores (earlier 20 lakhs to 1 crore)
• National Commission (established under section 53) – More than 10 crores (earlier more than 1 crore)
The District, State and National Commissions shall have the power to review any of the order passed by them if there is an error apparent on the face of the record, either of their own motion or on an application made by any of the parties within thirty days of such order (sections 40, 50 and 60)
Manufacturer’s liability on 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.
CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to one year. For every subsequent offence, the period of prohibition may extend to three years. However, there are certain exceptions when an endorser will not be held liable for such a penalty.
Consumer Disputes Redressal Commission:
Consumer Disputes Redressal Commissions (CDRCs) will be set up at the district, state, and national levels. A consumer can file a complaint with CDRCs in relation to:
i. unfair or restrictive trade practices;
ii. defective goods or services;
iii. overcharging or deceptive charging; and
iv. the offering of goods or services for sale which may be hazardous to life and safety.
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.
Jurisdiction of CDRCs
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.
The Consumer Protection Act, 2019 defines product liability as “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.”[Section 2(34)]. The consumer can claim compensation for any harm caused by a defective product manufactured by a manufacturer or serviced by a service provider or sold by a seller. 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.
For the manufacture or sale of adulterant/spurious goods, a competent court may impose a penalty. The penalties include:
• In first conviction—suspension of license issued to the person for a period of up to two years
• In second or subsequent conviction—cancellation of license.
Unfair Trade Practices
Section 2(46) of the new Consumer Protection Act of 2019, the concept of “unfair contract” is defined as, “contract between a manufacturer or trader or service provider on one hand, and a consumer on the other, having such terms which cause significant change in the rights of such consumer, including the following, namely: —
• Requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations; orImposing any penalty on the consumer, for the breach of contract thereof which is wholly disproportionate to the loss occurred due to such breach to the other party to the contract; or
• Refusing to accept early repayment of debts on payment of applicable penalty; or13
• Entitling a party to the contract to terminate such contract unilaterally, without reasonable cause; or
• Permitting or has the effect of permitting one party to assign the contract to the detriment of the other party who is a consumer, without his consent; or
• Imposing on the consumer any unreasonable charge, obligation or condition which puts such consumer to disadvantage.”
Unfair consumer contracts, such as these, are now covered by this Act, and a customer can submit a complaint in this regard. Many enterprises, particularly real estate developers, would benefit from this, as they frequently demand helpless consumers to sign unjust contracts and accept their standard terms before providing services.
i. It provides an Alternate Dispute Resolution mechanism of Mediation to simplify the adjudication process.
ii. A Consumer Commission will send a complaint to mediation if there is a scope for an early resolution and the parties agree.
iii. Mediation will take place in the Mediation Cells that will be constructed under the Consumer Commissions’ auspices.
iv. No appeal against settlement through mediation.
ALTERNATIVE DISPUTE RESOLUTION PROCESS
• It gives the State and District Commissions the authority to review their own order;
• It allows consumers to file complaints electronically and in Consumer Commissions that have jurisdiction over their area of residence;
• It allows video conferencing for hearing and deemed admissibility of complaints if the question of admissibility is not decided within the specified period of 21 days.
THE CONSUMER PROTECTION (E-COMMERCE) RULES, 2020
The Consumer Protection (E- Commerce) Rules, 2020 have been notified by The Ministry of Consumer Affairs, Food and Public Distribution on July 23, 2020, under the Consumer Protection Act, 2019, with an intent to prevent unfair trade practices in e-commerce and to protect the interest of the consumers and to ensure that there is transparency in the e-commerce platforms and also to further strengthen the regulations that govern the same.
The new rules empower the central government to act against unfair trade practices in e- commerce, direct selling. They require e-tailers to facilitate easy returns, address customer grievances and prevent discriminating against merchants on their platforms. The rules will apply to all goods and services bought or sold over any digital platform; all models of e- commerce including marketplace and inventory models of e-commerce; all e-commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats; all forms of unfair trade practices across all models of e-commerce. The rules are equally applicable on the foreign registered e-commerce entity offering goods and services to consumers in India.
The term ‘e-commerce entity’ means “any person, who owns, operates or manages digital or electronic facility or platform for electronic commerce, but does not include a seller offering his goods or services for sale on a marketplace e-commerce entity”.
Duties of E-commerce entities
1. Appoint a nodal person of contact or an alternate senior designated functionary who is resident in India, to ensure compliance with the provisions of the Act.
2. Every e-commerce entity shall provide the following information in a clear and accessible manner on its platform, displayed prominently to its users, namely:–
• legal name of the e-commerce entity;
• principal geographic address of its headquarters and all branches;
• name and details of its website; and
• contact details like e-mail address, fax, landline and mobile numbers of customer care as well as of grievance officer.
3. No e-commerce entity shall adopt any unfair trade practice, whether in the course of business on its platform.
4. Every e-commerce entity shall establish an adequate grievance redressal mechanism having regard to the number of grievances ordinarily received by such entity from India.
5. Where an e-commerce entity offers imported goods or services for sale, it shall mention the name and details of any importer from whom it has purchased such goods or services, or who may be a seller on its platform.
6. No e-commerce entity shall impose cancellation charges on consumers cancelling after confirming purchase unless similar charges are also borne by the e- commerce entity, if they cancel the purchase order unilaterally for any reason.
7. No e-commerce entity shall manipulate the price of the goods or services offered on its platform in such a manner as to gain unreasonable profit by imposing on consumers any unjustified price having regard to the prevailing market conditions.
8. No e-commerce entity shall discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Act.
To protect the interests of consumers, mis-selling has been prohibited i.e selling goods and services entities selling goods or services by deliberate misrepresentation of information by such entities about such goods or services. To ensure that consumers are aware about the expiry date of the products they are buying on the e-commerce platform all sellers on marketplace e- commerce entities and all inventory e-commerce entities to provide best before or use before date to enable consumers to make an informed purchase decision.
To ensure that the domestic manufacturers and suppliers get a fair and equal treatment on the e-commerce platform it has been provided that where an e-commerce entity offers imported goods or services, it shall incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives to ensure fair opportunity to domestic goods.
Consumer complaints must be acknowledged within 48 hours of receipt, and the issue must be resolved within one month of receipt. They would also be required to establish a grievance officer to handle customer complaints. If the goods or services are defective, deficient, or delivered late, or if they do not meet the description on the platform, sellers cannot refuse to accept returns, withdraw services, or refuse reimbursements. The rules also ban e-commerce entities from modifying the pricing of goods or services in order to make a disproportionate profit.
Comparative Study: Consumer Protection Act 1986 & Consumer Protection Act 2019:
The amendment of 2019 to the Consumer Protection Act came after thirty-three years of the act being passed. Technology has progressed a lot in these years and while the older act tried to keep updated with small amendments. The repeal of the older act and the establishment of the 2019 act was much needed.
“The interest of the consumer has to be kept in the forefront and the prime consideration that an essential commodity ought to be made available to the common man at a fair price must rank in priority over every other consideration.” -Y.V. Chandrachud, J.
1. M/S Imperia Structures Ltd. v. Anil Patni and another21 on November 2, 2020, the Supreme Court dismissed an appeal against an order issued by the National Consumer Dispute Resolution Council in which the NCDRC’s jurisdiction to hear the complaint was challenged due to the registration under the Real Estate Regulation Act (RERA). The Supreme Court held that the remedies available under the Consumer Protection Act, 2019 are additional remedies over and above all other remedies available, including those made available under any special legislation, and that the existence of an alternative remedy is not a bar to the Consumer Protection Act, 2019 being considered.
2. The Apex court imposed a penalty of ?25,000 on the complainant trust that would be paid to the HDFC Bank, for this false litigation.
3. Brigade Enterprise Ltd. V. Anil Kumar Virmani22, the question before the bench of the Supreme Court was that can more than one consumer can institute a complaint under the Act. The Court answered to this question by citing the following example “a case where a residential apartment is purchased by the husband and wife jointly or by a parent or child jointly. If they have a grievanceagainst the builder, both of them are entitled to file a complaint jointly. Such a complaint will not fall under Section 35(1)(c) but fall under Section 35(1)(a). Persons filling such a complaint cannot be excluded from Section 2(5)(i) on the ground that it is not by a single consumer.”
4. Samruddhi Co-operative Society Ltd. v. Mumbai Mahalaxmi Construction Ltd.23 the Supreme Court ruled out that failure on the part of the respondent to provide occupancy certificate is a deficiency in service on the part of the respondent and members of the appellant society are within their rights as consumers to claim compensation as a recompense for the consequent liability.
5. Sapient Corporation Employees Provident Fund Trust v. HDFC Bank Ltd. & Ors.24 The Apex court on 2nd November,2020 dismissed the appeal of Imperia structures limited Vs Anil Patni & Another against order passed by the National Consumer Dispute Resolution Council when the jurisdiction of NCDRC to entertain the complaint in view of the registration under the Real Estate Regulation Act (RERA) was subject matter of challenge The Apex Court held that it has constantly been held that the remedies available under the provisions of the Consumer Protection Act are additional remedies over and beyond those made available so under special statutes; and that the availability of a substitute remedy is no bar to entertaining a complaint under the Consumer Protection Act. This decision will be useful in all cases where builders do not provide flats, and it is recommended to file a complaint with the consumer forum in addition to Real Estate Regulation Act (RERA).
6. V.N. Shrikhande v. Anita Sena Fernandes25 It was determined that in cases of medical negligence, there is no straitjacket formula to determine when the consumer’s cause of action arose. In the face of such agony and pain, the respondent has been unable to provide a clear explanation for why she has not communicated with her doctor for the past 9 years. Negligence is simply the failure to exercise due care and also the lack of ethical and reasonable care that should be exercised specified happenings. The three components of negligence are as follows:
a) The defendant owes a duty of care to the plaintiff.
b) The defendant has breached this duty of care.
c) The plaintiff has suffered an injury due to this breach.
7. The respondent’s genuine claim for compensation is undermined by her long silence, and the Discovery Rule cannot be used to record a finding that the cause of action accrued to her in November 2002. As a result, the contested order was reversed, and the respondent’s complaint was dismissed. The appeal is allowed, and the parties must bear their own costs.
8. Indian Medical Assocation v. V. P. Shantha26 the Supreme Court held that decisively included the medical profession under Consumer Protection Act. After thee Indian Medical Association, the Consumer Protection Act includes all medical services offered by the private and government doctors and hospitals. It exempted only those hospitals and medical practitioners of such hospitals, which offer free services to all patients at all times. The issue before the three Judges bench of that Court was that whether the services of the medical practitioners and their service were within the ambit of Consumer Protection Act? The Supreme Court delivered the landmark judgement and held that the services of the medical profession are within the ambit of the word ‘service’ as defined under Section 2(1) (o) of the Consumer Protection Act and the medical practitioner can be held liable for negligence and also liable to pay compensation for the damage suffered by the victim.
9. Air India v. Geetika Sachdeva27 the Complainant Ms. Geetika Sachdeva, purchased an open air ticket from Air India. She informed the Air India of her intended to travel from London to Delhi on 07.12.2001 and in turn she was informed that her ticket was confirmed. She boarded an Air Canada Flight from Toronto on 06.12.2001 and reached London from where she was to board the flight for Delhi. However, at London, she was informed that the validity of her ticket had expired and she was denied boarding. She was all alone, was not having sufficient funds to buy another ticket. Anyhow, she manage money and purchased another ticket by Virgin Atlantic Airways and came to Delhi. Her baggage received after a long delay and she had to pay a sum of Rs. 665/- for the luggage. She filed a complaint before the District Forum. The District Forum allowed the complaint, directed the Air India, to pay a sum of Rs. 40,000/-, the price of the Air ticket, along with interest @ 9% p.a., till the date of payment. Compensation in the sum of Rs.1,00,000/- was also imposed for mental and physical torture and convenience, besides costs of litigation in the sum of Rs. 5,000/-. The State Commission dismissed the appeal filed by the petitioner.
In conclusion, Consumer Protection is a form of social action which will be designed to achieve the well-being of one or group of the society. It promotes adequate information about the products. So that consumer can take right decisions in purchasing right goods and services. The consumer markets have undergone huge transformation since the enactment of Consumer Protection Act 1986. The emergence of global supply chains, rise in the international trade and the rapid development of e- commerce leads to a new Act. The Consumer protection Act 2019 is a welcome change in favor of the consumers. Consumer protection is one of the most expansive area of law, as almost every facet of our society involves interaction by people in their capacity as consumers– food, housing, travel, banking, medicine, education, insurance, postal services, electricity, e-commerce etc. It focuses on providing timely and effective administration for settlement of consumer’s disputes and protection of their interests. It provides them with clearly defined rights and dispute resolution process which may enable them to resolve their grievances on a fast-track basis. The Consumer Protection rules set out a level playing field for all e-commerce players and are a significant step towards better digital governance.