India: Consumer Protection Bill 2018 – Salient Features In Brief

Last Updated: 22 January 2018
Article by S.S. Rana & Co. Advocates

The Consumer Protection Bill, 2017 which was approved by the Union Cabinet last year (as already discussed in our previous titled "India: The Union Cabinet Approves The Consumer Protection Bill, 2017"1, dated January 15, 2018) is reportedly2 scheduled to be taken up during this Budget session, which is to commence tentatively from January 29, 2018, as there is a need to update the Consumer Protection Act, 1986 (hereinafter referred to as the 'Act'). The Consumer Protection Bill, 2018 (hereinafter referred to as the 'Bill') is slated to be the next big thing for the consumers. The said Bill was originally drafted in 2015 and placed before the Lok Sabha (Lower House) in 2016 and subsequently sent to the Standing Committee on Food and Consumer Affairs. The Bill is important because the new Bill is expected to completely overhaul the current laws stipulated under the Consumer Protection Act, 1986.

The Consumer Protection Bill, 2018 proposes the following new amendments:

  • The Pecuniary Jurisdiction of the Consumer Disputes Redressal Agencies have been revised. As per the rules, the jurisdiction of the District Forums has now been extended to INR 10 Million from the earlier limit of INR 2 Millions. Similarly, the State Forums can now entertain complaints where the value of dispute exceeds INR 10 Million, but does not exceed INR 100 Million. Finally, the National Forums can now entertain complaints where the value of the disputes exceeds INR 100 Million. The three-tier structure for adjudicating consumer disputes still remains in the form of district forums, state and national commissions but with enhanced values at each level, considering the current market realities.
  • Any manufacturer or service provider who causes a false or misleading advertisement to be made which is prejudicial to the interest of consumers shall be punished with imprisonment for a term which may extend to two years and with fine which may extend to INR 1 Million, for the first offence; and for every subsequent offence, be punished with imprisonment for a term which may extend to five years and with fine which may extend to INR 5 Million. It also provides for prosecution of celebrities endorsing products with misleading claims, including fines.
  • Establishment of a Central Consumer Protection Authority, whose task is to promote, protect and enforce the rights of consumers; make interventions when necessary to prevent consumer detriment arising from unfair trade practices and to initiate class action including enforcing recall, refund and return of products, etc. This fills an institutional void in the regulatory regime extant.
  • Introduction of the concept of product liability action, i.e., of affixing liability on a manufacturer or producer and even a product seller in certain specified circumstances for any personal injury, death or property damage caused to a consumer resulting from defects in manufacture, construction, design, formula, preparation, assembly, testing, service, warning, instruction, marketing, packaging, or labelling of any product.
  • Exclusive provisions have been proposed for reference of a dispute to Mediation as an Alternate Dispute Resolution Mechanism. The Bill states that if it appears to the Consumer Forum that there exist elements of a settlement which may be acceptable to the parties, it may direct the parties to give in writing consent to have their dispute settled by mediation in accordance with the provisions of the Act. The Bill further provides for the establishment of Consumer Mediation Cell and also enumerates the procedure for mediation.
  • The Bill also proposes for a complaint to be filed electronically. Also, the admissibility of the complaint shall ordinarily be decided within 21 days from the date on which the complaint was filed. If it is not decided within 21 days, the complaint shall be deemed accepted.
  • The Bill further proposes that if the party is found guilty of adulteration and results in the death of a consumer, the offender is liable with imprisonment for a term which shall not be less than 7 years, but which may extend to imprisonment for life and with fine which shall not be less than INR 1 Million.
  • Liability on manufacturers and service providers, online and offline, will not be primarily limited to any consumer who buys goods or avails service but towards all consumers i.e., introducing the idea of class action suits to the masses and allowing a majority of consumers to gain benefit at once. Although, the consumers still have the rights to file a class action suit under section 12(1) (C) of the Consumer Protection Act, 1986.
  • To address emergence of global supply chains, rapid development of e-commerce and to tackle misleading advertisements, telemarketing, multi-level marketing and direct selling the Bill also attempts to define e-commerce. At the same time, it endeavors to empower the Centre to make rules for preventing unfair trade practices in online trade.
  • The Bill also proposes classification of six contract clauses as 'unfair'. These contracts maybe between a manufacturer or trader or service provider on one hand, and a consumer on the other. 'Unfair' covers terms such as (i) payment of excessive security deposits; (ii) disproportionate penalty for a breach; (iii) unilateral termination without reasonable cause; (iv) conditions or charges or obligations which puts the consumer at a disadvantage.
  • While majority of the amendments are pro consumer, the bill has also proposed to enhance the penalty to minimize baseless and false complaints from Rs.10,000 to Rs.50,000.

The Bill promises a fresh and a positive new change for Consumers and a step ahead in the area of consumer protection laws and is likely to be proposed in the budget session.

Footnotes

1 Available at: http://ssrana.in/Admin/UploadDocument/IP%20Updates/Consumer-Protection-Bill-passed-by-Indian-Cabinet.htm

2 "Paswan Cautions Misleading Firms", dated January 17, 2018, Mail Today http://epaper.mailtoday.in/1507782/Mail-Today/Mail-Today-Issue-January-17,-2018#page/6/1

For further information please contact at S.S Rana & Co. email: info@ssrana.in or call at (+91- 11 4012 3000). Our website can be accessed at www.ssrana.in

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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