In this article, Nidhisha Garg analyses the Consumer Protection Bill, 2018.

Abstract

The Consumer Protection Bill, 2018 (hereinafter the Bill) was passed by the Lok Sabha on the 20^th of December’ 18. It seeks to replace the Consumer Protection Act, 1986 (hereinafter the Act). This article aims to draw out the salient features of the same and analyze them.

Background

Earlier, two attempts had been made for bringing about a change in the way consumer disputes are dealt with, one in 2011 and another in 2015, but both went futile for reasons like the dissolution of the House or lack of majority. Finally, the current Bill, which was introduced in the Houses of the Parliament in January 2018, has been passed by the Lower House but is yet attain the approval of the Upper House.

Salient Features

One of the most striking features of the Bill is that it provides for a structured system of bodies possessing a gamut of powers, thus, providing for possibly all the available mechanisms of grievance redressal to a potential aggrieved.

• Consumer Dispute Redressal Commission

These are to be set up in the nature of quasi-judicial bodies at the district, state and national levels. They may exercise all powers which have been vested upon a principal civil court of ordinary jurisdiction, under the Civil Procedure Code, 1908. Authority has been delegated upon the Central Government to appoint their members. The Commissions at all the three levels are to be headed by a President. Whereas the District Commission shall consist of 2 members, there shall be 4 members each at the Commissions at the upper levels. Appeals shall lie from a Commission at one level to the next as per hierarchy and finally, an appeal shall lie to the Supreme Court from the National Commission. The powers of the Commissions include but are not restricted to:

• The higher Commissions have authority to decide whether a contract term is unfair or not, and if answered positively, to declare, either the term or the entire contract, as null and void.
• The Commissions shall have the power to order for restraining continuing unfair and restrictive trade practices.

• Central Consumer Protection Authority

This is a Regulatory body to be constituted at the Centre for enforcement of consumer rights. It has the power to issue notifications specifying safety standards, confiscate goods, order for the reimbursement of the consumer by the vendor and penalize them for including deceptive statements and promises in their advertisements. The previous Act did not contain any provision for any such authority.

• Consumer Protection Council

These are to be set up at the district, state and national level, with Ministers-in-charge for Consumer affairs as heads for the latter two bodies and the District Collector overseeing the District Council. They shall tender advice for the promotion and protection of consumer rights.

• Mediation Centers

The Commission may refer a matter for an amicable settlement to any of the mediation cells at the District, State, and National levels if it deems necessary.

Apart from these bodies, there are several other novel definitions in the Bill, when compared to the Act. Some of them are as under:

Section 2(46) of the Bill defines “unfair contract” as “a contract between a manufacturer or trader or service provider on one hand, and a consumer on the other, having such terms which cause a significant change in the rights of such consumer…..”.

Section 2(47) defines an “unfair trade practice” as “a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice and includes: (i) making a false statement regarding the quality or standard of a good or service; (ii) selling of goods not complying with standards; (iii) manufacture of spurious goods; (iv) non-issuance of a receipt for a good or service sold…..”

Section 2(41) defines a “restrictive trade practice” to mean “a trade practice which tends to bring about manipulation of price or its conditions of delivery or to affect flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions and shall include…..”

Analysis

The Executive has been given the power to appoint members to the Commission. This may be in contravention to the principle of separation of powers which is also a basic structure doctrine. Also, in certain cases where the government is itself the service provider, for example, the monopoly of the government respecting the provision of railway services. Such an adjudication may go against the principles of natural justice (no one can be a judge in his own cause). This must especially be understood in light of the fact that the demand for passage of the Bill was strengthened during the Rafale controversy, in which case the government in office was itself a party. This also implies a compromise with the independence of the adjudicatory authority.

Also, no qualification has been specified for the appointment of members to the Commission. Since the commissions are to perform adjudicatory functions, it would be much appreciated if the same is discharged by members of the judiciary.

A problem quite evident with the Protection Councils is that the Bill does not specify to whom these bodies are to advise.  Even if we assume they are to advise the Central Government, there remains considerable ambiguity on the question of whether their advice is binding or not.

However, not all aspects related to the bill are deplorable. In fact, the majority of the provisions are capable of being considered as harbingers of a new face to the consumer grievance jurisprudence in India. Previously, under the Act, consumer forums would cause substantial delays in resolving consumer disputes, the average time for a dispute being about a year. The Bill seeks to improve the condition by providing that endeavor shall be made to dispose of a dispute within three months, however, the same may be extended to five months if the dispute requires any kind of analysis, investigation, testing of the product etc.

Under the Bill, a consumer may impose liability on a manufacturer, seller, or service provider, for any defect in a product or deficiency in service. In addition, compensation may also be claimed for any personal or proprietary damage that may have been suffered by the consumer. For example, a person may sue an airline company if it cancels the flight for want of a reasonable cause and without any suitable reparation. The damage need not be restricted to material injuries but may even be in the nature of mental agony or emotional harm.

The Bill also seeks to widen the scope of pecuniary jurisdiction of the District Commissions from 20 lakhs to 1 crore and that of the State Commissions from 1 crore to 10 crores.   Moreover, the Bill also provides for resolution of disputes by resort to alternative mechanisms like Mediation, which provision was absent in the Act. The Act lacks any definition for the terms unfair contracts, unfair and restrictive trade practices. Another provision of the Bill which is welcome is that it seeks to impose liability for misleading advertisements.  Additionally, even though a limitation of two years has been prescribed, the same can be done away with on recording reasonable cause.

Conclusion

Another feature of the Bill, which the author finds very endearing is the fact that the Bill seeks to impose strict liability on the endorsers of harmful products. As a result, celebrities can be brought to book for endorsing harmful products, especially those that are consumable and directly affect the health of the purchasers. The legislature was especially keen on introducing these after the Maggi noodles controversy and was thus quick enough to provide for it the same in the 2015 bill itself, which has rightfully been retained by the Standing Committee of the Parliament in the 2018 Bill as well. Clause 21 of the Bill provides that the liability of the endorser is at par with that of the manufacturer, that is, up to 10 lakh rupees, which may extend to 50 lakhs in case of subsequent faults. The authorities may even restrain them from being involved in the endorsement of any product until one year after the first fault, and up to three years for subsequent faults. This is appreciated since as of now there exist only sparse and scattered provisions across the 1986 Act, the Indian Penal Code, 1860 and the Food Standards and Safety Act.

Notwithstanding the abovementioned provisions, which are much appreciated by the author, the most promising change that the Bill seeks to bring about is to extend its scope, by express mention, to online modes of transactions such as teleshopping and electronic commerce. The provision shows the inclination of the legislators to make the subsequent enactment accommodative of contemporary trends in consumer behavior. With the growing popularity of e-commerce websites, it is only essential that the central legislation dealing with consumer grievance take into account all possible modes through which a consumer may be wronged.