Consumer Protection Act

This article is written by Abanti Bose, studying at Amity University Kolkata, India. The article discusses in detail the objectives, essential provisions, changes incorporated and landmark case laws under the Consumer Protection Act, 2019.

This article has been published by Sneha Mahawar.

Introduction

Consumer protection is the practice of safeguarding buyers of goods and services against unfair practices in the market. It refers to the steps adopted for the protection of consumers from corrupt and unscrupulous malpractices by the sellers, manufacturers, service providers, etc. and to provide remedies in case their rights as a consumer have been violated.

In India, the protection of the rights of the consumers is administered by the Consumer Protection Act, 2019. The Consumer Protection Act, 2019 was introduced to replace the Consumer Protection Act, 1986. The new Act contains various provisions which incorporate the challenges faced by modern and technology-dependent consumers. The Act also contains various provisions for the protection and promoting the rights of the consumers. 

Meaning of the word ‘consumer’

A consumer is an individual or group of individuals who purchase goods and services for their own personal use and not for the purpose of manufacturing or resale. Section 2(7) of the Consumer Protection Act, 2019 defines a consumer as any person who buys goods or services in exchange for consideration and utilises such goods and services for personal use and for the purpose of resale or commercial use. In the explanation of the definition of consumer, it has been distinctly stated that the term ‘buys any goods’ and ‘hires or avails any services’ also includes all online transactions conducted through electronic means or direct selling or teleshopping or multi-level marketing.

Need for the Consumer Protection Act, 2019

The Consumer Protection Act, 2019 was enacted by the Indian legislature to deal with matters relating to violation of consumer’s rights, unfair trade practices, misleading advertisements, and all those circumstances which are prejudicial to the consumer’s rights. The intention of the Parliament behind enacting the Act was to include provisions for e-consumers due to the development of technology, buying and selling of goods and services online have considerably increased during the last few years.

The Act seeks to provide better protection of the rights and interests of the consumers by establishing Consumer Protection Councils to settle disputes in case any dispute arises and to provide adequate compensation to the consumers in case their rights have been infringed. It further provides speedy and effective disposal of consumer complaints through alternate dispute resolution mechanisms. The Act also promotes consumer education in order to educate the consumer about their rights, responsibilities and also redressing their grievances.

Objective of the Consumer Protection Act, 2019

The main objective of the Act is to protect the interests of the consumers and to establish a stable and strong mechanism for the settlement of consumer disputes. The Act aims to:

  1. Protect against the marketing of products that are hazardous to life and property.
  2. Inform about the quality, potency, quantity, standard, purity, and price of goods to safeguard the consumers against unfair trade practices.
  3. Establish Consumer Protection Councils for protecting the rights and interests of the consumers. 
  4. Assure, wherever possible, access to an authority of goods at competitive prices.
  5. Seek redressal against unfair trade practices or unscrupulous exploitation of consumers.
  6. Protect the consumers by appointing authorities for timely and sufficient administration and settlement of consumers’ disputes.
  7. Lay down the penalties for offences committed under the Act.
  8. Hear and ensure that consumers’ welfare will receive due consideration at appropriate forums in case any problem or dispute arises.
  9. Provide consumer education, so that the consumers are able to be aware of their rights.
  10. Provide speedy and effective disposal of consumer complaints through alternate dispute resolution mechanisms.

What are consumer rights under Consumer Protection Act, 2019

There exist six rights of a consumer under the Consumer Protection Act, 2019. The rights of the consumers are mentioned under Section 2(9) of the Act, which are as follows:

  1. The right of a consumer to be protected from the marketing of goods and services that are hazardous and detrimental to life and property.
  2. The right of a consumer to be protected against unfair trade practices by being aware of the quality, quantity, potency, purity, standard and price of goods, products or services.
  3. The right of a consumer to have access to a variety of goods, services and products at competitive prices.
  4. The right to seek redressal at respective forums against unfair and restrictive trade practices.
  5. The right to receive adequate compensation or consideration from respective consumer forums in case they have been wronged by the seller.
  6. The right to receive consumer education.

What are unfair trade practices under Consumer Protection Act, 2019

Section 2(47) of the Consumer Protection Act, 2019 defines the term ‘unfair trade practices’ which include:

  1. Manufacturing spurious goods or providing defective services.
  2. Not issuing cash memos or bills for the goods purchased or services rendered.
  3. Refusing to take back or withdraw the goods or services and not refunding the consideration taken for the purchase of the goods or services.
  4. Disclosing the personal information of the consumer.

Changes incorporated in Consumer Protection Act, 2019

The changes that were incorporated with the enactment of the Consumer Protection Act, 2019 are:

  1. The District Commissions will have the jurisdiction to entertain complaints where the value of the goods, services or products paid as consideration to the seller does not exceed 50 lakh rupees. 
  2. State Commissions will have the jurisdiction to entertain complaints where the value of the goods, services or products paid as consideration to the seller exceeds 50 lakh rupees but does not exceed two crore rupees.
  3. The National Commission will have the jurisdiction to entertain complaints where the value of the goods, services or products paid as consideration to the seller exceeds two crore rupees.
  4. The Act further states that every complaint concerning consumer dispute shall be disposed of as expeditiously as possible. A complaint filed under this Act shall be decided within the period of three months from the date of receipt of notice by the opposite party in the cases the complaint does not require analysis or testing of the goods and services and within a period of 5 months, if it requires analysis or testing of the goods and services.
  5. The Consumer Protection Act, 2019 also facilitates the consumers to file complaints online. In this regard, the Central Government has set up the E-Daakhil Portal, which provides a convenient, speedy and inexpensive facility to the consumers all over India so that they are able to approach the relevant consumer forums in case of any dispute arises.
  6. The Act lays down the scope for e-commerce and direct selling.
  7. The Consumer Protection Act, 2019 lays down provisions for mediation and alternative dispute resolution so that the parties are able to dispose of the case conveniently without going through the trouble of litigation.
  8. The Consumer Protection Act, 2019 contains provisions for product liability, unfair contracts and it also includes three new unfair trade practices. In contrast, the old Act just stated six types of unfair trade practices.
  9. The Act of 2019 acts as the advisory body for the promotion and protection of consumer rights.
  10. Under the Consumer Protection Act, 2019 there is no scope for selection committees, the Act authorises the Central Government to appoint the members.

Therefore, with the changes in the digital era, the Indian Parliament enacted and brought the Consumer Protection Act, 2019 in force to include the provisions for e-commerce as digitalization has facilitated convenient payment mechanisms, variety of choices, improved services, etc. 

Essential provisions of Consumer Protection Act, 2019

The essential provisions of the Consumer Protection Act, 2019 are:

Consumer Protection Councils

The Act establishes consumer protection councils to protect the rights of the consumers at both the national and state levels.

Central Consumer Protection Council

Under Chapter 2 Section 3 of the Consumer Protection Act, 2019 the Central Government shall establish the Central Consumer Protection Council which is known as the Central Council. It is an advisory body and the Central Council must consist of the following members;

  1. The Minister-in-charge of the Department of Consumer Affairs in the Central Government will be appointed as the chairperson of the council, and
  2. Any number of official or non-official members representing necessary interests under the Act.

The Central Council may meet as and when necessary, however, they must hold at least one meeting every year. The purpose of the Central Council is to protect and promote the interests of the consumers under the Act.

State Consumer Protection Councils

Every state government shall establish a State Consumer Protection Council known as the State Council having jurisdiction over that particular state. The State Council acts as an advisory body. The members of the State Council are:

  1. The Minister-in-charge of the Consumer Affairs in the State Government will be appointed as the chairperson of the council, 
  2. Any number of official or non-official members representing necessary interests under the Act, and
  3. The Central Government may also appoint not less than ten members for the purposes of this Act.

The State Councils must hold at least two meetings every year. 

District Consumer Protection Council

Under Section 8 of the Act, the state government shall establish a District Consumer Protection Council for every district known as the District Council. The members of the District Council are:

  1. The collector of that district will be appointed as the Chairperson of the District Council, and
  2. Any other members representing necessary interests under the Act.

Central Consumer Protection Authority

The Central Government shall establish a Central Consumer Protection Authority which is known as the Central Authority under Section 10 of the Consumer Protection Act, 2019, to regulate matters relating to violation of the rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of the public and consumers and to promote, protect and enforce the rights of consumers. The Central Government will appoint the Chief Commissioner and the other Commissioners of the Central Authority as required under the Act.

The Central Authority must have an ‘Investigative Wing’ under Section 15 of the Act to conduct an inquiry or investigation. The investigative wing must comprise of the Director-General and the required number of Additional Director-General, Director, Joint Director, Deputy Director and Assistant Director possessing the required experience and qualifications to carry out the functions under this Act.

Functions and duties of the Central Authority

The functions and responsibilities of the Central Authority are laid down in Section 18 of the Act which includes;

  1. To protect and promote the rights of the consumers as a class and to prevent violation of consumer rights,
  2. To prevent unfair trade practices,
  3. To ensure no false or misleading advertisements regarding any goods or services are promoted,
  4. To ensure no person takes part in false or misleading advertisements,
  5. Inquire or investigate in cases of violation of consumer rights or unfair trade practices.
  6. File complaints before the National, State or District Commission as the case may be,
  7. To review matters relating to the factors hindering the enjoyment of consumer rights.
  8. To recommend the adoption of international covenants and best international practices concerning consumer rights 
  9. Promote research and awareness of consumer rights.
  10. Lay down necessary guidelines to prevent unfair trade practices and protect the interests of the consumers.

Furthermore, the Central Authority also has the power to investigate after receiving any complaint or directions from the Central Government or of its own motion in cases where there is an infringement of consumer rights or unfair trade practices are carried out. And if the Central Authority is satisfied that infringement of consumer rights or unfair trade practices has occurred then it may:

  • Recall the goods or services which are hazardous and detrimental to the consumers,
  • Reimburse the prices of the goods and services to the consumers, and 
  • Discontinue the practices that are prejudicial and harmful to the consumers.

Under Section 21 of the Act, the Central Authority is authorised to issue directions to false and misleading advertisements which may extend to ten lakh rupees. While determining the penalty of the offence the Central Authority must keep in mind factors such as; the population affected by the offence, frequency of the offence and gross revenue from the sales of such product. The Central Authority can also direct search and seizure for the purposes of this Act and in that case the provisions of the Criminal Procedure Code, 1973 will apply. 

Consumer disputes redressal commission

The state government shall establish a District Consumer Disputes Redressal Commission, known as the District Commission in each district of the state under the Consumer Protection Act, 2019. The District Commission shall comprise of a President and not less than two members prescribed by the Central Government. 

Section 34 of the Act authorises the District Commission to entertain complaints where the value of the goods or services paid as consideration does not exceed one crore rupees. The complaint relating to goods and services can be filed to the District Commission by the consumer, recognized consumer association, Central Government, Central Authority, State Government, etc. 

Section 36 states that all the proceedings before the District Commission shall be conducted by the President and at least one member of the commission.

Mediation

Chapter 5 Section 74 of the Consumer Protection Act, 2019 states that a Consumer Mediation Cell shall be established by the Central Government at the national level and every state government shall establish Consumer Mediation Cell exercising within the jurisdiction of that state. The mediator nominated to carry out the mediation shall conduct it within such time and in such manner as may be specified by regulations.

Section 75 of the Act talks about the empanelment of the mediators. It states the qualifications, terms and conditions of service, the procedure for appointing, and the fee payable to the empanelled mediators. 

It is the duty of the mediator to disclose certain facts such as; any personal, financial or professional in the result of the consumer dispute, the circumstances giving rise to their independence or impartiality and any other necessary information for the protection of consumer rights.

Product liability

Under Section 83 of the Act, a product liability action may be brought by a complainant against a product manufacturer, product service provider or product seller. 

Liability of product manufacturer

A product manufacturer will be held liable in a product liability action under the  following circumstances:

  • The product contains manufacturing defects.
  • The product is defective.
  • There is a deviation from manufacturing specifications.
  • The product does not conform to the express warranty.
  • The product fails to contain adequate information for proper usage.

Liability of product service provider

A product service provider will be held liable in a product liability action under the  following circumstances:

  • The service provider will be responsible when the service provided by them is faulty or imperfect.
  • There was an act of negligence on their part.
  • The service provider failed to issue adequate instructions and warnings for the services.
  • The service provider failed to conform to the express warranty or terms and conditions of the contract.

Liability of product seller

A product seller will be held liable in a product liability action under the  following circumstances:

  • They altered or modified the product which resulted in being detrimental to the consumer.
  • They failed to exercise reasonable care in assembling, inspecting or maintaining such product
  • They exercised substantial control over the product which resulted in causing harm to the consumer.

Exceptions to product liability

There are certain exceptions to product liability action mentioned in Section 87 of the Act, such as;

  • The product was altered, modified or misused by the consumer,
  • A consumer cannot bring product liability action when the manufacturer has given adequate warnings and instructions for the use of the product,
  • The manufacturer would not be liable in case of a product liability action for not warning about any danger that is commonly known to the general public.

Offences and penalties under Consumer Protection Act, 2019

The offences and penalties listed under this Act are mentioned as follows.

  1. Punishment for false and misleading advertisements: Under Section 89 of the Act any manufacturer or service provider who promotes false or misleading advertisements will be punished with imprisonment for a term that may extend to two years and with fine that may extend to ten lakh rupees.
  2. Punishment for manufacturing, selling, distributing products containing adulterants: Under Section 90 of the Consumer Protection Act, 2019 any person who sells, manufactures, distributes products containing adulterants shall be penalised in case of the following circumstances;
  • If the adulterated product does not cause any injury to the consumer then the term for imprisonment will extend to a period of six months and fine which may extend to one lakh rupees,
  • If the product containing adulterant causes injury not amounting to grievous hurt then the term for imprisonment will extend to a period of one year and fine which may extend to three lakh rupees,
  • If the product containing adulterant causes injury amounting to grievous hurt then the term for imprisonment will extend to a period of seven years and fine which may extend to five lakh rupees,
  • If the product results in causing death to the consumer then the term for imprisonment will be for a period of seven years which may extend to life imprisonment and fine not less than ten lakh rupees.
  1. Punishment for manufacturing, selling, and distributing spurious products: Section 91 states that any person who sells, manufactures, or distributes spurious products shall be punished for such acts.

How do consumers benefit from Consumer Protection Act, 2019

The Consumer Protection Act, 2019 is a significant piece of legislation brought as it is beneficial for the consumers. The Act widens the scope of protection regarding the rights and interests of consumers. 

  1. Unfair contracts: The Act introduced ‘unfair contract’ under Section 2(46) of the Act, which includes contracts requiring excessive security deposits to be given by the consumer for the performance of contractual obligations. However, the inclusion of unfair contracts in the Act would enable the consumer to file complaints in such cases and would also keep the fraudulent businesses in check.
  2. Territorial jurisdiction: The Act enables the consumers to file complaints where the complainant resides or personally works for gain thus it would benefit the consumers in seeking redressal for their grievances when their rights have been violated.
  3. False and misleading advertisements: The Act defines the term ‘false and misleading advertisements’ and also lays down strict penalties for such acts or omissions.
  4. Product liability: The term ‘product liability’ has been defined by this Act, which states that it is the duty of the product manufacturer, service provider or seller to compensate for any harm caused to a consumer by such defective product manufactured or service provided to the consumer.
  5. Mediation and alternative dispute resolution: The Act enables the consumer to opt for mediation and alternative dispute resolution mechanisms for speedy and effective settlement of consumer disputes.
  6. E-filing of complaints: The Act also facilitates e-filling of the complaints and seeking video conference hearings by the Commission. Thus, providing convenient means for the consumers to voice their grievances.

Landmark case laws

Horlicks Ltd. v. Zydus Wellness Products Ltd. (2020)

In this case, both parties are manufacturers of nutritional drinks, however, Zydus advertised a television commercial trivialising the products of Horlicks Ltd. The commercial was being telecasted in various languages including English, Tamil and Bengali. Therefore, the Delhi High Court relied on various judgments on misleading advertisements, disparagement and law governing the publication of advertisements on television and held that the advertisement is disparaging as it does not provide any concrete proof regarding the quality of the product. Further, electronic media leaves an impression on the minds of the viewers thus, these types of advertisements would not only be detrimental to the consumers but also the complainant would suffer irreparable damage. 

A famous judgement relied on by Delhi High Court while deciding this case is Pepsi Co. Inc. v. Hindustan Coca Cola Ltd., 2003 where the Delhi High Court held that there are certain important factors that are to be kept in mind in case of disparagement which are; manner of the commercial, intent of the commercial and storyline of the commercial.

Veena Khanna v. Ansal Properties & Industries Ltd, NCDRC (2007)

In this case, the complainant offered to purchase a flat from the respondent which the respondent agreed to deliver on 1.6.1999 through a letter. However, the flat was not constructed within the specified date and hence it was not delivered. For such deficiency in services, the complainant demanded the refund of the deposited amount with interest at the rate of 18% pa which was refused by the opposite party. 

The National Commission observed that due to delays in construction and delivery of possession it is quite difficult for a consumer to purchase a flat at market price. The National Commission stated that it is the duty of the State Commission to direct the builders to deliver the possession of the flat as soon as it is completed and the complainant should be awarded suitable compensation for the delay in construction. The complainant just claimed the refund amount before the State Commission, but the case was pending before the commission for five years and during that time there was a tremendous rise in the market prices of the immovable property. The National Commission further stated that it was the duty of the State Commission to direct the respondents to deliver the possession of the flat or any other flat of equivalent size to the complainant with appropriate compensation, due to the delay in delivering the possession within the specified time. Or, adequate compensation ought to have been provided to the complainant so that they could purchase a new flat of the same size at the prevailing market rate in that same locality.

Sapient Corporation Employees v. Hdfc Bank Ltd. & Ors. (2012)

In this case, a consumer complaint was filed by Sapient Corporation Employees Provident Fund Trust against HDFC bank Ltd. The complainant claimed that OP-Bank has committed deficiency of services by debiting the account of the Complainant. The court in this case held that there was no deficiency of service on the part of OP-bank and the arguments contented by the complainant are baseless. A behaviour that conforms to the direction of regulatory authority cannot be said to be negligence or service deficiency.

Conclusion

The Consumer Protection Act, 2019 is a modified piece of legislation that offers the consumers a great variety of benefits and rights to protect them from unfair trade practices, false or misleading advertisements, etc. The Act enables the consumers to seek alternative dispute resolution mechanisms and mediation so that the parties can opt for speedy and effective settlement of consumer disputes. The scope of e-filing of complaints and e-consumers in the Act portrays forward-thinking in part of the legislature. Furthermore, the Act also introduced new terms such as product liability, unfair contracts, etc. thereby widening the scope of protection of consumer rights and enabling the consumers to file complaints when their rights have been violated under the Act.

Thus, the inclusion of the provisions in this fills up the lacunae in the Consumer Protection Act, 1986. The enactment of the Act was paramount and it changed the ambit of protecting the rights of consumers in the country. 

References


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