A Proposed Paradigm Shift in the Consumer Protection Laws in India
Introduction
More than 30 years of law governing concerns of the customer is today
facing various issues due to emergence of global trade and rapid development of
e-commerce market. While the law has survived long but a mere survival has
raised various questions on the fulfilment of its objective and dire need of an
amendment or a replacement to fulfil the dynamic needs of the customer.
In furtherance to the same, in August 2015, a Consumer Protection Bill,
2015[1] (“2015 Bill”) was
presented before the Lok Sabha. This 2015 Bill was submitted to the Standing
Committee on Food, Consumer Affairs, and Public Distribution (“Standing
Committee”) for their perusal, who in turn submitted their report (“Report”)[2] on April 26, 2016. On review
of the Standing Committee Report, Ministry of Consumer Affairs and Food
Distribution on January 05, 2018 introduced the Consumer Protection Bill, 2018
(“ 2018 Bill”)[3]
after withdrawal of the 2015 Bill. This 2018 Bill was passed by the Lok Sabha
on December 12, 2018.
In this Article, Author has made an attempt to analyse the lacunas in
the Consumer Protection Act, 1986 and the changes brought in by the 2018 Bill.
Need for the 2018 Bill
The Consumer Protection Act, 1986 (“Act”) was
brought in with the intention to protect consumer’s interest and bring shift
from the then prevalent concept of Caveat Emptor[4]
to Caveat Venditor[5].
The Act regulated the Consumer market for both goods and services and
issues arising thereunder. However this market has undergone profound
transformation due to complexity of products and services dealt with, rise in
the international trade and business models and rapid encroachment of
e-commerce on the market. While these transformations are a welcome change for
the present world, same has greatly challenged the Act and its ambit.
Therefore, the Standing Committee felt a need to modernise the Act to address
the myriad and constantly emerging vulnerabilities of the consumer in the
market economy extant.[6]
Key Highlights of the 2018
Bill
Important inclusions and deletions of the
2018 Bill has been discussed below:
E-commerce:
The 2018 Bill has widened the scope of the application of consumer law by
modifying the definition of ‘consumer’ as per Clause 2(7) of the 2018 Bill.
Explanation to the Clause 2(7) states that the expressions ‘buys any goods’ and
‘hires or avails any services’ shall include offline transaction or online
transaction by way of electronic means. Further, it shall also be extended to
buying any goods or hiring or availing any services by teleshopping or direct
selling or multi-level marketing. ‘Direct
selling’ for the purpose of this 2018 Bill has been defined under Clause 2(13),
which shall mean marketing, distribution and sale of goods or provision of
services through a network of sellers, other than through a permanent retail
location, which seems to clearly cover all giant e-commerce retailers. Further,
e-commerce[7]
and electronic service providers[8]
have also been provided clear definitions to avoid ambiguity. While the Act
faced various difficulties with its implementation on various teleshopping and
online transactions, the 2018 Bill has removed any muddle on its applicability
in similar circumstances.
Consumer Rights:
The 2018 Bill has provided a clear definition of ‘consumer rights’ under Clause
2(9) wherein 6 rights have been enumerated namely:
- the right to be
protected against the marketing of goods, products or services which are
hazardous to life and property - the right to be informed
about the quality, quantity, potency, purity, standard and price of goods,
products or services, as the case may be, so as to protect the consumer against
unfair trade practices - the right to be assured,
wherever possible, access to a variety of goods, products or services at
competitive prices - the right to be heard
and to be assured that consumer’s interests will receive due consideration at
appropriate for a - the right to seek
redressal against unfair trade practice or restrictive trade practices or
unscrupulous exploitation of consumers; and - the right to consumer
awareness
While the above stated rights were recognised
by the Act as well, there existed no clear definition to it. Therefore, the
above rights have gained nature of a statutory right than that of being a
deemed right.
Deficiency:
2018 Bill provides for a wider definition to the word ‘deficiency’ as per
Clause 2(11) which shall include acts of negligence any act of negligence or
omission or commission or deliberate withholding of relevant information leading
to loss or injury to the consumer.
Central Consumer Protection Authority: The Act failed to provide for any regulator acting on behalf of the
consumers, however the 2018 Bill provides for establishment of a regulator
called as the Central Consumer Protection Authority (“CCPA”). CCPA shall be an
executive agency required to protect, promote and enforce rights of the
consumer as a class. CCPA has been provided with various powers under the 2018
Bill including but not limited to the following:
- To issue safety notices
to alert consumers against dangerous or hazardous or unsafe goods or services - To file complaint before
the Consumer Dispute Redressal Commissions (“Commission”) as the case may be; - To inquire or cause an
inquiry or investigation to be made into violations of consumer rights or
unfair trade practices - Pass orders to recall
goods or withdraw services, discontinue unfair practices, reimburse purchase
price paid by the consumer; and - To impose penalties for
false and misleading advertisement
Product Liability: The 2018 Bill has introduced the concept of product liability which
the Act was in dire need of. Product liability means the consumer can make the
manufacturer or the seller liable for defect in the product or deficiency in
service provided. The 2018 Bill provides for distinctive liability of a product
manufacturer, product service provider and product seller. The product
liability on a manufacturer can be considered to be of stricter in nature to
that of service provider and seller as the manufacturer shall be liable even if
he proves that he was not negligent or fraudulent in making the express
warranty of a product.
Unfair Trade Practices: The Act provides for unfair trade practices definition and the 2018
Bill only adds up three more of such practices in the definition. The 2018 Bill
states that practices such as not issuing of bill, refusing to withdraw
defective product, refusing to refund and disclosing of personal information
shall be considered as unfair trade practices.
Unfair Contracts:
There is no provision of unfair contract in the Act. 2018 Bill states that an
unfair contract shall mean a contract between a manufacturer or trader or
service provider and a consumer having such terms which leads to significant
change in the rights of the consumer. The 2018 Bill provides for six types of
unfair contracts and it is pertinent to note that any complaint against such
kind of contract can be filed with the State or National Commission.
Penalties:
2018 Bill increases the penalty for non-compliance from the one that existed in
the Act. The Penalty under the Act ranged from INR two thousand to ten
thousand, whereas under the 2018 Bill it has been increased to INR Twenty five
thousand to One Lakh. This change has been brought in to increase the
deterrence among the defaulters.
Alternate Dispute Redressal Mechanism: 2018 Bill has brought in a stark change by introducing mediation as a
dispute redressal mechanism for settling of consumer disputed. 2018 Bill
provides for setting up of a consumer mediation cell at the Commissions for
speedy and amicable disposal of the matters.
Jurisdiction of Commissions: The Pecuniary Jurisdiction of the District Commission has been
increased from entertaining complaints where value of goods or services paid as
consideration did not exceed twenty lakhs to that of one crore rupees. Further,
under the Act the State Commission was permitted to entertain complain for a
value exceeding twenty lakhs but not exceeding one crore. However under the
2018 Bill the pecuniary jurisdiction has been advanced to complaints of value
exceeding one crore but not exceeding ten crore. The National Commission
jurisdiction has increased from complaint values of more than one crore to
complaint values of more than ten crores.
Territorial Jurisdiction: The 2018 Bill has also modified the territorial jurisdiction of the
District and State Commission. As per the Act, in determining the local limits
of a Commission for filing of complaint the residence or carrying of business
by the opposite parties or the place of cause of action. However, 2018 Bill has
included the place of residence of the complainant and place where the
complainant personally works for gain for determining the territorial
jurisdiction of the Commission, thereby making it a wider and an easier
approach.
Misleading Advertisement: The 2018 Bill unlike the Act provides for a definition of misleading
advertisement and also provides for a penalty for any person indulging in such
activity.
Endorsement and its implication: The Act did not extend its application and restrictions on
endorsement of any product and thereby to the endorser. However, recently India
witnessed various customers being provided defective product or deficient
services as the customers purchased or availed the same under the influence of
the endorser. Therefore, 2018 Bill provides a clear definition for endorsement
which states for certain types of activities makes the consumer to believe that
it reflects the opinion, finding or experience of the person making such
endorsement. Further an endorser of a misleading or false advertisement may be
subject to penalty as well under the 2018 Bill. Further, a prohibition or ban
on the endorser could also be imposed by the authorities from endorsing any
product or service for a period which may range from one year to three year.
However, endorser can escape its liability under the 2018 Bill if he/she had
exercised due diligence to verify the veracity of the claims made in the
advertisement or when such an advertisement was published not as an endorser
but as an ordinary course of his/her business.
Violation
of Principle of Separation of Powers
Provision claiming to gain the most attention
in the 2018 Bill is the composition of the Commissions. The Act provided for a
person qualified to be a district judge, high court judge and Supreme Court
judge to be eligible to head the District Commission, State Commission and
National Commission respectively. However, the 2018 Bill states that the
Commission shall be headed by a ‘President’ whose qualification shall be
determined by the Central Government. In the absence of any minimal judicial
qualification, it leaves the composition of the Commission to the mercy of the
Central Government who could also end up having non-judicial members on the
Commission. It is pertinent to note that the Commissions have been provided
with the powers akin to that of civil court. Therefore, while the power to
determine the composition could have been provided to the Central Government,
the legislative should have enumerated minimum judicial qualification to ensure
the functionality of the Commission is intact.
Conclusion The proposed 2018 Bill seems to be an earnest attempt in augmenting the scope of the existing law to achieve the objective of safeguarding the interest of the customers given the paradigm shift of the market from its indigenous practice towards e-commerce. Further, the 2018 Bill also spreads its claws on the celebrities acting as endorser thereby ensuring deemed responsibility on the celebrities to act diligently. The proposed 2018 Bill widens its wing with regard to its ambit and ability to resolve the present day aggrieved customers. However, it faces limitation with regard to the challenges faced with respect to the conflict of separation of power as analysed above. Therefore, the conclusion of failure or success of this 2018 Bill is a pre-mature question to answer and the legal fraternity awaits Rajya Sabha’s views on the same.
Contributed By – Sindhuja Kashyap
Associate – Corporate
[1] http://www.prsindia.org/uploads/media/Consumer/Consumer%20Protection%20bill,%202015.pdf
[2] http://www.prsindia.org/uploads/media/Consumer/SCR-%20Consumer%20Protection.pdf
[3] http://www.prsindia.org/sites/default/files/bill_files/Consumer%20Protection%20Bill%2C%202018.pdf
[4] Caveat Emptor is a legal
maxim which means ‘Let the buyer take care’
[5] Caveat Venditor is
a legal maxim which means ‘Let the seller beware’
[6] Para 1.5 of the
Standing Committeee Report; http://www.prsindia.org/uploads/media/Consumer/SCR-%20Consumer%20Protection.pdf
[7] Clause 2(16) of the
2018 Bill states that “e-commerce” means buying or
selling of goods or services including digital products over digital or
electronic network
[8] Clause 2(17) of the 2018 Bill states that “electronic service provider” means a person who provides technologies or processes to enable a product seller to engage in advertising or selling goods or services to a consumer and includes any online market place or online auction sites
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