Consumer Protection Act
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This article is written by Yashaswi Belani.

Introduction

A person who has bought goods and/or services for personal use against a consideration or promise of consideration is a consumer. The Act defines Consumer as, 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 “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.”

From the aforementioned definition, it can be said that a consumer is any person who buys and/or hires goods and/or services for some consideration. The transaction would include online as well as offline platform. The definition of goods and services was amended to include food and telecom, respectively.

The new Act was necessary to address the complaints of the consumer in the present regime, considering the shift from the local physical market to online platforms. The nature and types of contentions have now been changing and since the law is an organic animal, it had to modify.

Justice Chandrachud laid down that “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.” 

It is pertinent to mention that an object bought for personal use will not be covered under the purview of consumerism for the purpose of the Consumer Protection Act, 2019. However, an exception to this is self-employment.

If a person purchases an object for the purpose of earning his livelihood, it will be covered under the concept of consumerism under the Act. Example:

An auto driver, A buys an auto that he drives himself to earn his livelihood. If the auto has manufacturing defects within its warranty period, it will be covered under this Act. A has the right to approach the Consumer Commission.

Critical analysis

It was imperative to have an Act as comprehensive as the Consumer Protection Act, 2019 in order to address the grievances in the present age of digitization. This Act has clearly empowered the consumers and has depicted the rights and obligations, categorically and precise. The attempt of curtailing the unwarranted exploitation is evident from the enactment of the Act. 

Purpose & objective

The purpose and the objective of the 2019 Act is:

For example:

A placed an order for an i-phone on an e-commerce site. He received a soap in the shape of an i-phone. A will have the right to approach the Consumer Commission. The 2019 Act includes e-commerce platform also.

Complications

The everyday complications that are faced by the consumers or their counsels.

Advertisement

  • Advertisements are a trick to cause a consumerist desire in people
  • Prevention of Misleading Advertisements
  • Advertising Standards Council of India (ASCI) guidelines on celebrity advertising

Example:

A bought a policy from the online portal of Policybzaar for his car, wherein he was told that he can avail the added benefit of such nature that the cost of depreciation of his car will be reimbursed by the insurance company upon an accident. When A approached the insurance company for reimbursement, the insurance company denied, saying that there was no such provision.

The portal of Policybazaar had misguided the consumer, A. This constitutes a misleading advertisement and unfair trade practice as the terms and conditions of the policy were represented differently on Poliybazaar from that of the insurance company’s. This is against the ASCI guidelines.

Endorser

Winston Churchill has said, “Price of Greatness is responsibility” which is relevant here because

  • A product should be represented honestly and 
  • The endorser must conduct due diligence before advertising the product.

It is important to do so because celebrities have a significant influence on the general public. The influence is such that consumeristic desire will be created in the minds of people, therefore, the endorsers have to be mindful of their representation of products.

Some situations on the topic make the concept clearer :

  • Hero Xtreme 200r’

In the advertisement of Hero Xtreme 200r’, the endorser was riding the bike dangerously. It was a case of flouting the traffic rules. The ASCI Guidelines were not followed. Therefore, cognizance was taken against it.

  • Frankfinn Aviation Centre

The advertisement said that the said centre is claimed to be the No.1 institute. However, it was not substantiated with any comparative data or statistics. It was held to be a misleading advertisement by exaggeration. 

  • Lenskart Blue

The advertisement was such that the Blue cut lenses of the Lenskart company are so unique that they will protect the eyes from blue rays emitted from any digital device. There was no reliable evidence that all digital devices emit harmful blue rays. Neither was substantiated with any comparative data. Therefore, cognizance was taken against the company as well as the endorser.

  • Maggie Noodles Controversy

Through the case of Union of India v. Nestle India Ltd. & Anr, it was held that the lead and energy content in Maggi noodles and its tastemaker is more than the acceptable quantity. The company as well as the endorsers were held liable because even the endorsers have a duty towards the public at large, owing to their influence on the minds of people.

Product liability

Product Liability is the concept wherein the manufacturers, sellers/agencies that make the product available in the market and thereby to the consumers will be held liable for the injuries caused by the product. The comprehensiveness of the 2019 Act has made the behaviour of product liability very welcoming in nature. This, in turn, caused the evolution of the slogan from, “Consumer Beware!” to Let The Manufacturer/Seller Beware!”

This is a very important and crucial step taken by the government to protect the rights of the consumers. Now, by a mere defence of not being a part of the manufacturing process, a seller cannot escape the liability. 

Liability of seller

  • Earlier, the sellers used to take the defence of having no active role in the manufacturing or the model of the product. Therefore, no liability arose on them. This paradigm that was bound to change was made possible through the 2019 Act. Nowadays, if the seller has substantive control over the product, s/he would be held liable.
  • When a seller gives an express warrant in his individual capacity and does not conform with it, he shall be held liable for the breach.

Product service provider

Example:

A software engineer bought a laptop with a hard drive of a reputed company. The hard drive had technical issues because which the software engineer approached the company for recovery of data. The company requested him to deliver the hard drive to a courier company. The courier company had lost the drive containing data worth lakhs.

The consumer complaint was admitted and the manufacturer plus the service provider were made a party to the suit.

Exceptions

There are exceptions to every concept, product liability is no alien to it. The exceptions can be enlisted as –

  • The product was misused, altered or harmed by the consumer at the time of the harm.

For example: A car caught fire because the engine was modified by the owner.

  • The product was purchased by the employer for the workplace and specific instructions were given. However, those instructions were not followed. In such a case, the consumer will not be entitled to any compensation

For example: A bought a xerox machine for his workplace. He was instructed to plug the machine in a power switch of 15V only. However, he plugged the machine in a normal switch of 5V. The machine started showing defects and depreciated because of inconsistency with instructions. The seller or the manufacturer will not be liable.

  • Products that require supervision but such supervision was not undertaken by the consumer.

Hierarchy of the consumer commission with its jurisdiction

Notes:

  • Appeal: An appeal has to be filed within 45 days of receiving the award of the suit from the District Consumer Redressal Commission. However, the appeal has to be on the point of law. Additionally, 50% of the received award has to be deposited with the Court.
  • Judicial Review: The provision of judicial review was not available in the 1986 Act but the 2019 Act categorically provides the option of judicial review. However, such an exercise has to be judiciously followed when the error is apparent on the face of the record.
  • Territorial Jurisdiction: Under Section 34(2)(d) of the Consumer Protection Act, 2019, a suit can be filed in a District Commission within the local limits of the complainant’s place of residence or place of business affairs as well. It is not necessary to file the complaint in local limits of the other party or their place of business affairs.

Unfair contracts

The conditions that are unjust, arbitrary, and do not stand at foot with equity are considered to be unfair, rendering the contract as UNFAIR CONTRACT. It is covered under section 2(46) of the Consumer Protection Act, 2019.

In other words, the terms under the contract that are contrary to the fundamentals of good faith and cause substantial disproportionality in the rights and the obligations of the parties that in turn are a detriment to the consumer will constitute an Unfair Contract. Some examples are:

  • Imposing Unreasonable Charge

A builder takes instalments of 5 lakhs from people every 3 months and charges a heavy penalty of 2% amount of instalment per day from the people who default in paying even one instalment or delay by just a day or so. On the other hand, he does not deliver the flat to the customers on time. This penalty charged would be undue, unjust, and unreasonable.

  • Excessive Security Deposit

Rakesh wanted to rent a car from Jhoom Car Services for 2 days. The Service provider asked for a security deposit of 7 lakhs with frivolous terms and conditions. Had Rakesh had that much money, he would have probably just bought a car. However, such excessive security deposit amounts to an unfair contract.

  • Refusal to accept early repayment of debt

On several occasions, the banks refuse to accept early payment of loan or charge penalty upon that as well which is prejudicial in nature.

  • Unilateral termination of the contract

A contract is enforced with the consent of all the parties and shall be terminated also according to all the parties to the contract, only. A unilateral termination is unfair and in contravention with the basics of a contract.

Unfair trade practice

The activities are so unfair in nature that the ultimate consequence is the damage of the interest of the consumers. The need of pointing such issues is to highlight that transparency plays a very crucial role in the market.

Process

The proceedings under the Consumer Protection Act, 2019 are summary proceedings and The Code of Civil Procedure, 1908 has no binding on the Act. Whenever there is a violation of rights of a consumer or there is an instance of unfair trade practice or misleading advertisements, that too in such a way that it caused prejudice to the interest of a class of consumers, the complaint can be filed before the Commission. 

The process is as follows –

  • Before anything, a legal notice has to be served to the opposite party. This will ensure if the opposite parties are willing to settle the issue.
  • Through various portals that are available online or through a written mode, the consumer can file a complaint.
  • On the first date of hearing, called the admission hearing, it is argued before the judge explaining to him the cause of action and how :
  1. the complainant is covered under the ambit of the consumer;
  2. the complaint is covered under the ambit of the Act;
  3. the complainant’s rights have been violated and that the opposite party conducted an unfair act or there was a deficiency in their services;
  4. Complainant is entitled to compensation; etc.
  • Upon satisfaction, the judges accept the submission of the complainant and thereby issue a notice to the opposite parties to file a reply within 30 days of receiving the documents and to appear before the Commission.
  • At the next stage, the complainant can file a rejoinder, if required.
  • Then after, at the stage of evidence, the complainants present all the evidence like, WhatsApp chats, e-mails, call recordings, bills, receipts, or any other relevant documents of evidential value. On the next date, the opposite party presents its evidence.
  • Henceforth, the case will be listed for arguments.

RERA [Real Estate (Regulation and Development) Act, 2016]

We have a different legislation for the issues pertaining to the real estate sector. This gives rise to a question that in case of infringement of rights of consumers with regards to real estate, the consumers have to approach the tribunal under the RERA, 2016 or commission under the Consumer Protection Act, 2019.

The Supreme Court and the Delhi High Court have laid down that:

  1. The consumer has the right to choose his forum. S/he can file a suit before the tribunal RERA or before the Consumer Commission.
  2. However, the complaint cannot be filed in both the fora at the same time.
  3. Most importantly, the consumer cannot switch to another forum after receiving the award from one, irrespective of the award being favourable or unfavourable. This is in accordance with the Principle of Res Judicata.

Arbitration clause

It is a common practice that agreements and contracts have the arbitration clause for the purpose of dispute resolution mechanism. This gives rise to the question, whether the arbitration clause in a contract can debar a consumer from approaching the Consumer Commission. It is imperative to mention herein that despite an arbitration clause, the consumer can approach the Commission. 

Mediation

The 2019 Act has attempted to award redressal to the consumers in a much expeditious and efficient manner. for this purpose, the process of Mediation is introduced under chapter V of The Consumer Protection Act, 2019. Under this provision, the parties can mediate and solve their matters before approaching the commission. Upon successful mediation, the terms are converted into a written form.

However, if the parties have reached a partial solution, the Commission can chalk down the solved issues and continue the hearing of the unsolved statements of issues. It goes without saying that if no solution is reached by the process of mediation, the commission would note down the statement of issues and proceed with the hearing.

Conclusion

For the purpose of conclusive understanding, it is important to go through a few case laws–

  • Horlicks Ltd. v. Zydus Wellness Products Ltd.

In this case, the Delhi High Court issued an interim order wherein Zydus was restrained from advertising where Complan was compared with Horlicks. The reasoning behind the order was that the advertisement was misleading and disparaging.

  • Dabur (India) Ltd. v. Colortek (Meghalaya) (P) Ltd.

The Delhi High Court held that an advertisement will be covered under the purview of Article 19(1)(g) as everyone has the freedom of speech and expression. As far as the advertisement is concerned with glorifying its products, it is within the grey areas. However, it does not imply that the advertisement can be misleading, disparaging, or deceptive in nature.

  • Connaught Plaza Restaurants Ltd. v. Kapil Mitra 

The complainant filed a complaint against the scheme, “Mc Donald’s Mein Khao Har Bar Prize Le Jao” because he was not allowed to avail the benefit of the scheme without subsequently spending another sum of INR 20/-. Moreover, the winners were not revealed to the participating customers. The complainant prayed to hold this scheme as unfair trade practice. The National Consumer Dispute Redressal Commission awarded compensation of INR 30,000/- and cost INR 70,000/- respectively. 

  • Ernakulam Medical Centre v. P.R. Jayasree

The Hon’ble Tribunal in this matter held that deficiency in service will also cover a situation wherein the dead body is released by a hospital to an unrelated person.

  • Union of India v. N.K. Srivastava

In this case, the Supreme Court held the Safdarjung Hospital liable to compensate the complainant with the amount of INR 2,00,000/- that was in accordance with the award granted by the State Consumer Dispute Redressal Commission because of medical negligence.

From the content under the various above-mentioned heads, it is safe to conclude that the 2019 Act has strengthened the rights of a consumer.

References

  1. Consumer Protection Act, 1986, No. 68, Acts of Parliament, 1986.
  2. Consumer Protection Act, 2019, No. 35, Acts of Parliament, 2019
  3. Real Estate (Regulations and Development) Act, 2016, No. 16, Acts of Parliament, 2016.
  4. Guidelines for Celebrities in Advertising, (Advertising Standards Council of India), 2017
  5. SCC Blog
  6. SCC Online Database
  7. Manupatra
  8. JStor

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