In this article, Chirali Jain discusses Loopholes in the Consumer Protection Act, 1986 and how the Consumer Protection Bill, 2018 overcomes these loopholes.

On December 20, 2018, Lok Sabha passed the Consumer Protection Bill, 2018 which is an attempt to replace the entire Consumer Protection Act, 1986. The question is whether there was a need to replace the entire act? What were such lacunas that a three decade old legislation needs to be repaired? Whether such bill will be successful in solving such lacunas? The following questions shall be answered by understanding the Consumer Protection Act, 2018 closely.

The sole purpose of the act introduced in 1986 was to protect the interest of the consumers. It was a shift from caveat emptor to caveat venditor. It was neither punitive nor preventive in nature, but compensatory. The intention behind the act was to provide simple, speedy and inexpensive redressal to the consumers’. But a change or shift in the consumer’s mindset, development of technology, and delay by Consumer Courts have hinder the effect or purpose sought to be achieved by the said act. This lead to an urgent need on part of the government to enforce laws that could effectively check consumer frauds and provide necessary amendments in the various provisions of the Act so as to introduce a more successful mechanism.

Thus, in order to solve the shortcomings in the Act of 1986, the Consumer Protection Bill, 2018 was introduced in Lok Sabha this year. The bill takes into account a rapid changes in consumer market places, deals with misleading advertisement and most importantly online and teleshopping. The Bill was referred to a Standing Committee for necessary changes and was approved by Lok Sabha recently.

The Key highlights of the bill are-

1. It establishes a Central Consumer Protection Authority which acts a national level regulator. It shall deal with rights of consumers as a class. It shall deal with matters which are prejudicial to the interest of the public and the consumers and will possess the powers of search and seizure. It will play an investigative role head by Director General. Any unfair trade practice or misleading advertisement shall be construed more severely than before.

If CCPA has conducted an investigation and there are sufficient evidences to show violation or any prejudice has been caused to consumer rights or adoption of any unfair means, it may pass any such order within its powers that may be necessary, including (a) recalling of goods or withdrawal of services which are dangerous, hazardous or unsafe; (b) reimbursement of the prices of goods or services so recalled to purchasers of such goods or services; and (c) discontinuation of practices which are unfair and prejudicial to consumers’ interest. Also, it has powers to issue directions or penalize manufacturers or celebrity endorsers against any false or misleading advertisements or claims.

2. The bill contains provisions with respect to misleading advertisements which is defines as per Clause 2(28). Any person indulging in misleading advertisement can be attracted towards a penalty of Rs. 10 lakhs as per the directions of CCPA. It has attained a status of a punishable offence along with imprisonment for a term which may extend two 5 years and penalty of 50 lakhs.
3. There is a special provision for liability of endorsers. Endorsement is defined under Clause 2(18) as any message, verbal statement, demonstration, depiction of name, signature or any other identifiable characteristic of an individual or depiction of name or seal of any institution which makes the consumer believe that it reflects the opinion, finding or experience of the person making such endorsement is fraudulent shall be liable.

However, no liability will be attracted by the endorser if he has exercised due diligence and verify the claims made in the advertisements.

4. The Chapter IV of the bill deals with “product liability”, a much needed clause in CPA, 1986. It means responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto. But it will not include any harm caused on account of breach of warranty conditions or any commercial or economic loss.

The product liability claim can be brought by a complainant against a product manufacturer, product service provided as well as a seller exercising substantial control over designing, testing or modifying the product.

5. The Bill seeks to expand the definition of “deficiency” as per Clause 2(11) and include acts of negligence or omission or commission and deliberate withholding of relevant information which causes loss or injury to the consumer.
6. The present act lacks the provision of “unfair contract” which has been incorporated by the new bill. It’s a contract between a manufacturer or a trader and a consumer which leads to causing significant changes in the rights of the consumer. The Bill identifies six types of unfair contracts; (a) requiring manifestly excessive security deposits, (b) imposing any disproportionate penalty on the consumer, for the breach of contract, (c) refusing to accept early repayment of debts on payment of applicable penalty, (d) entitling a party to the contract to terminate such contract unilaterally, without reasonable cause, (e) permitting or has the effect of permitting one party to assign the contract to the detriment of the other party who is a consumer, without his consent, (f) imposing on the consumer any unreasonable charge, obligation or condition which puts such consumer to disadvantage.
7. The dispute can be referred to Mediation as an Alternative Dispute Redressal Mechanism and also there is a provision for setting up of Consumer Mediation Cell. If the parties at any step wants to settle their disputes through mediation, the court or the National Commission have the power to direct the parties by giving their written consent to resort to mediation.
8. Presently, the pecuniary jurisdiction of the District Forum is 20 lakhs and one Crore for State Commission but according to the current market trends, the Bill sought to raises the pecuniary jurisdiction. Now the District Commission shall deal with cases upto 1 crores, State Commission with cases upto 10 crores and National Commission with cases exceeding value of 10 crores.

ANALYSIS

Apart from the above mentioned provisions, various other provisions have been introduced in the Bill, 2018 that were absent in the 1986 Act. Thus, in totality, the Bill is an attempt to overcome all the shortcomings of the Act so as to provide a speedy justice and protect the interest of the consumers in a better manner.

But there are certain provisions in the Bill which needs to be addressed before it becomes an Act.

First such issues is with respect to composition of the Commissions as under the Bill. The Commission will be headed by a President and will comprise of other members however, the power of deciding the qualifications of these president has been vested with the Central Govt. whereas in the existing Act, 1986, the Commission shall be headed by a person qualified to be a judge and prescribed a minimum qualifications for it as well. The Bill provides only for non-judicial members as a part of the Commission and this would violate the doctrine of separation of powers between the executive and the judiciary. As these Commissions shall be adjudicating bodies, having only non-judicial members would take away the essence of this function.

Secondly, with respect to appointment of members of the Commission, according to the Bill, Central Government shall notify the method of such appointment. These Commissions are intended to be a body quasi-judicial body. This raises an issue of concern as to allowing the executives to appoint the members of the Commission would affect the independent functioning of the commission. Under the 1986 Act, such appointment is done by a selection committee which comprises of a judicial member necessarily.  There may be situations where government might be a party to the dispute itself and the when the dispute does before the Commission, the member is appointed by the government only.

Apart from the inconsistencies mentioned above, the Bill is a great attempt to achieve the said objective of protecting the interest of the consumers but these needs to be resolved in order to maintain the balance between the executive and judiciary and protect the basic structure of the Indian Constitution.