The new Consumer Protection Act, 2019 has been enforced repealing the existing pre-globalisation era Consumer Protection Act, 1986.
The new law is not old wine in a new bottle. It brings structural and procedural reforms to the existing law. An attempt has also been made to minimise the inadequacies of the previous Act.
The 1986 Act was introduced in India's transforming market place. The archaic law was focused on providing safeguards considering the conventional mode of doing business. Post 1986, the style and extent of business have expanded in directions which was inconceivable three decades ago. New age marketplace has changed completely with the advent of internet and technology. It has made consumers vulnerable to new threats of exploitation, heightening the need for a new consumer law. The 1986 Act could never anticipate consumer courts adjudicating over over e-commerce transactions. Multi-level market, Direct Selling and E-Retailing are some of the (provisions?) that are under the ambit of the new Act. With the expansion of jurisdiction to e-commerce transactions and express inclusion of "e-commerce", laws applicable to direct selling has been applicable to the e-commerce transactions under the new Act. The Consumer Protection (E-commerce) Rules, 2020, further elucidates the right and liabilities involved in e-commerce. The reach of the Act has been extended not only to goods and services but also to digital products bought or sold over digital network. More importantly the protection granted to Indian consumers is not only from an Indian E-commerce entity, but also from a foreign entity which offers services to Indian consumers. The Rules to the act ensure more transparency in E-commerce and mandates availability of quick grievance redressal mechanism within the e-commerce entity. The Rules require an e-commerce entity to display all information as set out under Rule 3, in a clear and accessible manner at the appropriate place on the platform. Rule 6 carves out the duties of a seller on marketplace, which includes his/her duty to take back goods/withdraw services and refund the consideration if such goods/services are not up to the standard promised, advertised or agreed upon.
"Product Liability" was never defined in the Indian Statutes, introduction to the consumer jurisprudence under Sections 82-87 of the Act, have made the consumers more secure and warrants higher diligence on the part of the manufacturer or the seller. A product liability action can be filed against a 'product manufacturer' or a 'product service provider' or a 'product seller' seeking compensation for the harm caused. The liabilities have been defined in such a broad way as to include all possible scenarios and no loopholes are left out. Product liability is now extended to service providers and sellers along with manufacturers. which means e-commerce sites cannot escape as aggregators anymore.
By virtue of 2019, Act, the State and National Commission are empowered to declare a contract as 'unfair'. In a scenario where terms of the contract change the rights of the consumers significantly, such contracts can be held null and void. This provision is a bliss for the consumers of real estate industry, where consumers have no remedy with consumer courts regarding the unfair contract/agreement executed.
One of the key features of the new law is establishment of Central Consumer Protection Authority and Consumer Protection Councils. The Authority has been set up to promote, protect, and enforce the rights of consumers as a class. The Central Authority to some extent is similar to the Federal Trade Commission established in the USA. The authority is empowered to issue safety notices, pass orders to recall goods, prevent unfair and restrictive trade practices; reimburse purchase price paid; and impose penalties for false and misleading advertisements. Under Section 18, the authority can take Suo Motu actions to inquire or investigate, violations of consumer rights or unfair trade practices. Also, the authority can not only file consumer complaints but also intervene in any proceedings before the consumer commission. The Consumer Protection Council established under Chapter II of the Act is an advisory body with the objective to advice on promotion and protection of consumers' rights under this Act.
Every trade/business expands with "advertisements", also advertisements are the first trap for consumers. The new Act will make the service providers, manufacturers as well as the sellers more cautious in the way they advertise to lure consumers. As per the new law, for false and misleading advertisements, a penalty of up to Rs 10 lakh may be imposed on a manufacturer or an endorser. For a subsequent offence, the fine may extend up to Rs 50 lakh. The manufacturer can also be punished with imprisonment of up to two years, which may extend to five years in case of every subsequent offence. Under Section 21 Central Authority can also prohibit the endorser of a misleading advertisement from endorsing any particular product or service for a period of up to one year. Further, for each subsequent offence, the period of prohibition may be extended to three years, subject to few exceptions detailed out in the Act itself.
Under 1986 Act the courts were a bit far from the reach of the consumers; with the enactment of new Act, the legislature has made consumers courts much more accessible and consumer friendly. In earlier Consumer Protection Act, 1986, a single point access to justice was provided, which was time consuming. As per the new law, now a consumer can institute a consumer complaint at the place of her/his residence. This is a fitting move considering the rise in e-commerce purchases, where the seller could be located anywhere. Under Chapter V of the Act, dispute resolution through mediation has been introduced, which ensures speedy justice to a consumer. Mediation will be held in Mediation Cells to be established under the aegis of the Consumer Commissions. However, there will be no appeal against settlement through mediation.
Most importantly, the expansion of pecuniary jurisdiction of all the consumer commissions have made consumer courts more approachable and grants a consumer more opportunity to test her/his case at multiple levels before ultimately presenting it before the Supreme Court. At the lowest level, the District Consumer Commission has jurisdiction to entertain complaints if the amount paid is up to R. 1 crores.
Under the 2019 Act all consumer courts have also the power of review its own order, which safeguards consumers from unnecessary hassle. Further, the introduction of e-filing and provision for e-hearing has undoubtedly reduced the litigation cost of a consumer. There are several suggestions forwarded by the Standing Committee, which still needs consideration. However, the nature of our legal system, rigid as well as flexible paves the way to bring appropriate changes, through the course of time, as and when required.
Seema Sundd is partner and Mr. Rituraj Srivastav and Mr. Prabhat Ranjan Associates
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