UNDERSTANDING THE CONSUMER PROTECTION ACT 2019

The Consumer Protection Act, 1986 was the product of the pre globalisation era. Post liberalization the Indian Market has grown with an unprecedented pace currently touching the $2.8 Trillion mark and is aspiring to cross the $ 5 Trillion mark by 2024. The aspirations of the customers and the choices available to the customers in India have also changed accordingly. India one of the fastest growing e commerce market with an expected market size of $ 84 billion by 2021. The emergence of global supply chains, rise in international trade and the rapid development of e-commerce have led to new delivery systems for goods and services and have provided new opportunities for consumers. Equally, this has rendered the consumer vulnerable to new forms of unfair trade and unethical business practices. With the high penetration of media and internet, misleading advertisements, tele-marketing, multi-level marketing, direct selling and e-tailing has posed new challenges to consumer protection. It was high time that the law for consumer protection is also changed to meet the requirements of the present economic situations and the market. The Consumer protection Act, 2019 which was notified on 9th of this month has endeavoured to cover the gaps under the existing framework in order to facilitate the requirements of the growing consumer market in India and to address the myriad and constantly emerging vulnerabilities of the consumer.

Who is a consumer?

The new Act gives a broader answer to the question as to who is a “Consumer”. It has outgrown the traditional concept of a physical market and has brought into its ambit the transactions happening in the e tail world. It now has included the customers of offline and online transactions made either through electronic means, teleshopping, multi-level marketing or direct selling. E commerce sites, online market places and online auction sites have also been expressly included under the scope of the Act. A broader definition given to the term ‘goods’, has in turn further outstretched the boundaries of the definition of a ‘consumer’.

Consumer’s Rights

Under the earlier Act the rights of the consumers were only found as a passing reference under the objects of the Consumer Protection Councils. The amended Act has defined six specific consumer’s rights including the right to -

1. be protected against marketing of goods and services which are hazardous to life and property;
2. be informed of the quality, quantity, potency, purity, standard and price of goods or services;
3. be assured of access to a variety of goods or services at competitive prices;
4. be heard and assured that the consumer’s interest will receive due consideration at appropriate fora;
5. seek redressal against unfair or restrictive trade practices; and
6. Consumer awareness.

Establishment of Central Consumer Protection Authority                   

The 2019 Act has created a Central Consumer Protection Authority (CCPA) as a regulatory body in the line of the other sector Regulators like TRAI, FSSAI etc.  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 inquiry or investigation into such violations.

 CCPA will carry out the following functions, including:

1. inquiring into violations of consumer rights, investigating and launching prosecution at the appropriate forum;
2. 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 Act;
3. issuing directions to the concerned trader/ manufacturer/ endorser/ advertiser/ publisher to either discontinue a false or misleading advertisement, or modify it;
4. imposing penalties; and
5. issuing safety notices to consumers against unsafe goods and services.

Pro active Steps to curb misleading Advertisements

Considering the ever increasing presence of media and its influence the new Act intends to cover all kinds of audio or visual publicity and representations made in electronic media, Internet and websites also under its ambit. It is a prevalent market practice to engage eminent personalities or celebrities for the endorsement of products. Such personalities are deployed to make advertisements which are often misleading by making unrealistic claims. However, when some unfair trade practices are exposed these celebrity endorsers are quick to disassociate themselves with the products/companies they were hitherto representing. It was felt that the existing laws are not deterrent enough to discourage manufacturers or publishers from using such personalities for misleading advertisements and hence some stringent provisions have been introduced under the 2019 Act to tackle misleading advertisement, as well as to fix liability on endorsers/celebrities.

Under the new Act CCPA may impose, in the case of a first time offence, 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.  An express responsibility has been thus imposed on the endorsers to exercise due diligence to verify the veracity of the claims made in the advertisement regarding the product or service that is being endorsed.

Unfair Contracts

In the present market scenario, there will several occasions where a consumer will have to execute a click wrap contract for making a purchase through an online marketplace or while availing an online service, including a financial service. Quite often these contracts are heavily one sided protecting the interest of the vendor or the electronic service provider and the consumer will not have any chances for negotiation or bargain for the modification of the terms of such contracts. Keeping in mind this dilemma of the present day consumers the 2019 Act enables them to seek remedy under the statute against such unfair contracts. To avoid any ambiguities as to what shall qualify as an “unfair contract”, the Act itself has provided a definition for the same. By virtue of Section 2(46) any contract which - 

1. Requires a consumer to make manifestly excessive security deposits for the performance of any contractual obligations;
2. Imposes a penalty for the breach of contract which is wholly disproportionate to the loss occurred;
3. Refuses to accept early repayment of debts on payment of applicable penalty
4. Entitles a party to a contract to terminate such contracts unilaterally without reasonable cause;
5. Enables a party to assign the contract to the detriment of the other party who is a consumer without his consent;
6. Imposes on a consumer any unreasonable charge, obligation or conditions which puts the consumer to a disadvantage,

shall be considered as an “unfair contract”.

All the complaints against the Unfair Contracts, where the value of goods or services paid as consideration does not exceed Rs. 10 Crores, will have to be filed before the State Consumer Dispute Redressal Commission. Complaints with respect to such contracts where the consideration exceeds Rupees Ten Crores will have to be preferred before the National Consumer Dispute Redressal Commission.

Data Protection

The Act has brought in an aspect of Data Protection also under the scope of the Act by making any disclosure of personal information given in confidence by a consumer an unfair trade practice, unless such disclosure has been made in accordance with the provision of any law at the time being in force.

Product Liability

The New Act has introduced the concept of product liability into its ambit and brings within its scope, the product manufacturer, product service provider and product seller, for any claim for compensation. The term ‘product seller’ is defined to include a person who is involved in placing the product for a commercial purpose and as such would include e-commerce platforms as well. The plea that e-commerce platforms merely act as ‘platforms’ or ‘aggregators’ will not hence forth be accepted as a valid defense in consumer disputes. There are increased liability risks for manufacturers as compared to product service providers and product sellers, considering that under the New Act, manufacturers will be liable in product liability action even where he proves that he was not negligent or fraudulent in making the express warranty of a product. Certain exceptions have been provided under the New Act from liability claims, such as, that the product seller will not be liable where the product has been misused, altered or modified.

Modified Disputes Redressal Mechanism

The District Consumer Forum has been revamped as District Consumer Disputes Redressal Commission with a significant increase in its monetary jurisdiction. Under the 2019 Act the District Commission has been empowered to determine matters upto a value of Rupees One Crore. A similar increase has been brought in with respect to the monetary jurisdiction of the State Commission and the National Commission also.

Forum	PecuniaryJurisdiction  (Under 2019 Act)	Pecuniary Jurisdiction   (Under 1986 Act)
District Consumer Disputes Redressal Commission	Upto Rupees One Crore	Upto Rupees 20 Lakhs
State Consumer Disputes Redressal Commission	More than Rs One Crore upto Rupees Ten Crores	Above Rs Twenty Lakhs upto Rs One Crore
National Consumer Disputes Redressal Commission	More than Rupees Ten Crores	Above Rupees One Crore

However the amended Act has moved away from the traditional approach for computing the pecuniary jurisdiction. The earlier Act was considering, for the purpose of determining pecuniary jurisdiction, the ‘value of the goods or services and the compensation, if any claimed’. Whereas the provisions of the 2019 Act is considering the value of the goods or services paid as consideration in ascertaining the pecuniary jurisdiction. It therefore is giving emphasis to the actual consideration paid and not the total value of the goods or services. This may be relevant and shall make a serious difference in transactions like a real estate purchase where the purchaser might have made payment of only a percentage of the total value in terms of the construction agreement. The present position thus enables a purchaser of a flat to approach the District Commission, (where the consideration paid is less than Rupees One Crore) and shall obviate the hardship of travelling all the way to the State Capitals to depose before the State Commission.  

Place of Filing of Complaints

Unlike the current practice of filing of complaints at the place of purchase or where the seller has its registered office address the New Act provides flexibility to the consumer to file complaints with the jurisdictional consumer forum located at the place of residence or work of the consumer.  This provision assumes importance in the light of the fact that the Act has brought the electronic transactions especially the e commerce transactions also within its ambit where the service provider or seller may be situated at any corner of the world.       

Resolution through Alternate Dispute Resolution

The New Act provides for mediation as an Alternate Dispute Resolution mechanism. The 2019 Act has introduced into its framework a remedy by way of Mediation where an option shall be provided to the parties either at the time of admission or even at a later stage to resolve the dispute by way of mediation.  A Consumer Mediation Cell has been created under the Act for this purpose attached to the District, State and National Commissions. Any agreement or settlement reached through such mediation shall be recorded and no appeal shall lie against such an order.

Digitalisation of the Proceedings

Taking into consideration of the changed market conditions the Act is now providing for the e filing of complaints and online payment of the fees. Further as a measure for avoiding delays and also as an effort to reduce the hardships of the parties the new Act is providing for hearing and/or examining parties through video-conferencing. 

Power of Review

Under the existing framework the aggrieved parties did not have any recourse other than filing an appeal to the State or National Commission to set right the errors made in the order of the District Forum /State Commission. Under the 2019 Act the District and State Commissions have been vested with the power to review its own Orders where an application is filed for within 30 days of such Order.

Appeals

The amended Act has raised increased the window for preferring an appeal against the order of the District Commission from 30 days to 45 days which shall be aiding the consumers particularly those who are illiterate or are residing in remote areas to prefer an appeal against the decision of the District Commission.

Even though the window for preferring an Appeal against the Order of the State commission has remained the same i.e., within a period of 30 days from the date of Order an implied restriction has been placed on the power of the National Commission to condone any delay.

The 1st Proviso to Section 19 dealing with Appeals before the National Commission under the old Act goes like “Provided that the National Commission may entertain an appeal after the expiry of the said period of thirty days if it is satisfied that there was a sufficient cause for not filing it within that period”.

It can be seen that under this framework, condonation of delay was the rule and refusal to condone any delay involved was considered as an exception. However a subtle change has been brought into the language by modifying this proviso in the following manner under Section 51 of the new Act reversing this position:

 “Provided that the National Commission shall not entertain the appeal after the expiry of the said period of thirty days unless it is satisfied that there was sufficient cause for not filing it within that period.”

This change might have been brought in considering the fact that the District and State Commissions have been vested with the power of Review. It is pertinent to note that the new Act specifically provides that an appeal shall lie to the National Commission from any order passed in appeal by any State Commission, if the National Commission is satisfied that the case involves a substantial question of law.