Consumer Protection Bill, 2019

Consumer Protection Bill, 2019

Consumer Protection Bill, 2019

The passing of the Consumer Protection Bill by the Lok Sabha in the ongoing session of Parliament is a welcome step. Originally brought out in 2015, the Bill was referred to a standing committee and later reintroduced in 2018, only to lapse with the end of the term of the earlier government. A lot has changed in the way goods and services are bought and sold since 1986 when the first Consumer Protection Act was enacted.

The Bill recognises this, bringing within its fold online sales, teleshopping, direct selling and multi-level marketing in addition to the traditional methods. The new law will apply to all goods and services, including sale or construction of homes or flats and telecom services. While the earlier law did cover unfair trade practices, the current one makes it more comprehensive. It also defines unfair contracts.

The Bill improves upon the Act of 1986 on a few counts. It provides for product liability action on account of harm caused to consumers due to a defective product or by a deficiency in services. Manufacturers, sellers or service providers are legally bound to compensate consumers for defects or deficiency. It envisages a regulatory authority known as the Central Consumer Protection Authority (CCPA) with powers of enforcement, unlike the existing Consumer Protection Councils which are only advisory bodies. The CCPA will have powers to initiate class-action including enforcing recall, refund and return of products. 

Considering that even consumer courts face piling up and a backlog of cases, there is now room for an alternative dispute resolution mechanism as the Bill sets up mediation cells attached to district forums, state and national commissions. Whether it is MS Dhoni in the Amrapali case or Amitabh Bachchan or Madhuri Dixit in the Maggi case, celebrities have drawn much flak for endorsing faulty goods and services. The Bill calls upon the endorsers to exercise due diligence before they plunge into advertisements. Failure to do so will attract a penalty of Rs10-50 lakh and/or a ban from further endorsements for a period of 1-3 years.

Features of the bill:

Rights of consumers:

Six consumer rights have been defined in the Bill, including the right to

(i) be protected against the marketing of goods and services which are hazardous to life and property

(ii) be informed of the quality, quantity, potency, purity, standard and price of goods or services

(iii) be assured of access to a variety of goods or services at competitive prices

(iv) seek redressal against unfair or restrictive trade practices.

Central Consumer Protection Authority: 

The central government will set up a Central Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers.  It will regulate matters related to violation of consumer rights, unfair trade practices, and misleading advertisements. The CCPA will have an investigation wing, headed by a Director-General, which may conduct enquiry or investigation into such violations.

CCPA will carry out the following functions, including: 

(i) inquiring into violations of consumer rights, investigating and launching prosecution at the appropriate forum 

(ii) passing orders to recall goods or withdraw services that are hazardous, reimbursement of the price paid, and discontinuation of the unfair trade practices, as defined in the Bill

(iii) issuing directions to the concerned trader/ manufacturer/ endorser/ advertiser/ publisher to either discontinue a false or misleading advertisement or modify it

(iv) imposing penalties

(v) issuing safety notices to consumers against unsafe goods and services.

Penalties for misleading advertisement: The CCPA may impose a penalty on a manufacturer or an endorser of up to Rs 10 lakh and imprisonment for up to two years for a false or misleading advertisement.  In case of a subsequent offence, the fine may extend to Rs 50 lakh and imprisonment of up to five years.

CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to one year. For every subsequent offence, the period of prohibition may extend to three years.  However, there are certain exceptions when an endorser will not be held liable for such a penalty.

Consumer Disputes Redressal Commission:

Consumer Disputes Redressal Commissions (CDRCs) will be set up at the district, state, and national levels.  A consumer can file a complaint with CDRCs in relation to 

(i) unfair or restrictive trade practices

(ii) defective goods or services

(iii) overcharging or deceptive charging

(iv) the offering of goods or services for sale which may be hazardous to life and safety.  

Complaints against an unfair contract can be filed with only the State and National   Appeals from a District CDRC will be heard by the State CDRC. Appeals from the State CDRC will be heard by the National CDRC.  The final appeal will lie before the Supreme Court.

Jurisdiction of CDRCs:

The District CDRC will entertain complaints where the value of goods and services does not exceed Rs one crore.  The State CDRC will entertain complaints when the value is more than Rs one crore but does not exceed Rs 10 crore.  Complaints with the value of goods and services over Rs 10 crore will be entertained by the National CDRC.

Product liability:

Product liability means the liability of a product manufacturer, service provider or seller to compensate a consumer for any harm or injury caused by a defective good or deficient service.  To claim compensation, a consumer has to prove any one of the conditions for defect or deficiency, as given in the Bill.

The Bill is commendable for its efforts to move further towards caveat venditor from the days of caveat emptor. Some areas may need more consideration, though. For one, since many sectors have their own regulators, duplication or clashes between CCPA and these bodies may arise. By not imposing judicial qualifications like in the Act of 1986 for members of the redressal body, the Bill indirectly allows the appointment of non-judicial members to the district/state and national commissions. Conflict of interest could arise when government nominees hear cases involving a government entity. Finally, easy access, simple process and time-bound resolution must be ensured.