Earlier this year, the three-decade old Consumer Protection Act, 1986 (hereinafter referred as CPA, 1986) was replaced by the Consumer Protection Act, 2019 (hereinafter referred as CPA, 2019). The CPA, 2019 received the Presidential assent and was published in the Official Gazette on August 9, 2020.
Need for a new legislation
The Indian legislature did not amend the CPA, 1986 but replaces with the a new legislation for various reasons, such as:
The CPA, 1986 was attuned to the current market practices and players which are gaining prominence by leaps and bounds, such e-commerce, etc.
The CPA, 1986 was effected in cases of actual damage being caused and did not consider a per se application wherein a recourse is sought in situations where although an actual damage is not caused but prima facie the actions against the consumer seems to be unfair.
Moreover, in the era of judicial activism, the CPA, 1986 did not provide the appropriate consumer forums with the power to take up suo moto cognizance of cases of consumer disputes.
Section 6 of the CPA, 1986 recognized certain rights available to the Consumers. However, the aforesaid provision did not consider the evolution of rights of the consumers with time and hence was quite dated.
The procedure of consumers redressal under the CPA 1986 was not efficient as it lacked vesting the appropriate authorities with the power to pass interim relief ensuring the well being of the consumers.
Also, the CPA, 1986 held a very passive stand against the individuals dealing in hazardous goods when it should have dealt with the matter with stern steps.
Overview of CPA, 2019
The Central Government, vide notification dated July 15, 2020, brought into force certain provisions of the CPA 2019, relating to product liability, consumer protection councils, mediation etc. effective from July 20, 2020. Section 107 of the CPA 2019 was notified which repeals the Consumer Protection Act, 1986. The CPA, 2019 has been brought about with the vision to ensure protection of the rights of the consumer rights and efficient & time bound redressal of consumer disputes. The notable aspects of CPA, 2019 are as follows:
Section 2 (7) of CPA, 2019 defines the term “consumer” wherein it has been given a broader definition under the new act. A consumer has been defined as an individual who buys any good or hires any service through online and offline modes both.
The CPA, 2019 has also taken into consideration the concept of e-commerce and moreover, Section 94 of CPA, 2019 protects the consumers against any unfair trade practices in e-commerce and direct selling.
The CPA, 2019 defines the term product seller which is inclusive of concepts like ‘electronic service provider’ and also lists down public liability action under Section 86 of the act.
Section 3 of CPA, 2019 deals with establishment of Central Consumer Protection Council which is an advisory body on the issue of consumer disputes. Moreover, Section 10 establishes Central Consumer Protection Authority which holds power to conduct investigations into matters wherein complaints have been put forth by the consumers. The Central Consumer Protection Authority also holds the responsibility to regulate matters involving unfair trade practices and false or misleading advertisements. The appointments with respect to the Central Consumer Protection Authority are governed by the Central Government in consonance with Section 11 of the CPA, 2019.
The CPA, 2019 calls for establishment of Consumer Dispute Redressal Commission at district, state and national level wherein consumer complaints can be filled in cases of defective goods & services or unfair trade practices.
Section 18 of CPA, 2019 lists the powers of the central authority wherein it provides for protection, promotion and enforcement of consumer rights as its prime function. Section 21 specifically vests power to the central authority for issuing directions and penalties against false or misleading advertisements.
The Consumers are provided with multiple layered redressal mechanisms and under Section 24 of CPA, 2019 the aggrieved can appeal against the judgment of the central authority given under Section 20/21 of CPA, 2019.
In order to reach out to an amicable solution between the parties at the earliest, Section 37 of the act provides District Commission with the power to refer the matter to mediation.
In order to ensure that the order of the District, State and National Commission are strictly complied with. Section 72 provides for the penalty in case of non-compliance with the order of the District, State and National Commission.
Chapter V of the CPA, 2019 deals with the novel concept that has been introduced in the act i.e. Mediation. This Chapter stipulates for the process of mediation and the obligations on the part of the mediators.
Also, for every defective product manufactured by a product manufacturer or serviced by a product service provider or sold by a product seller Section 82 of the CPA, 2019 provides for compensation under a product liability action. In furtherance to the same Section 85 & 86 of CPA, 2019 deals with the liability of product service provider and product sellers respectively.
The CPA, 2019 also holds a strict stance against adulteration and stipulates punishment for manufacturing, sale or storing, selling or distributing or importing products containing adulterant. Section 90 of the CPA, 2019 provides for suspension of the license of the wrongdoer in the first instance and cancellation of license on any further complains.
Consumers have had numerous complaints of spurious goods in the past and in order to cater to that the CPA, 2019 under Section 91 provides for the punishment for manufacturing for sale or for storing or selling or distributing or importing spurious goods. In case of a grievous hurt is caused to the consumer then in that case the wrongdoer can be subject to 7 year of imprisonment or a fine amounting upto Rs 15,00,000 (approx USD 20,000).
The CPA, 2019 has rightly addressed the issues of unfair trade practices in e-commerce and direct selling. Section 94 of CPA, 2019 provides for the measures to prevent unfair trade practices in e-commerce and direct selling have been provided. Section 94 of CPA, 2019 leaves room for the central government to make rules in order to mitigate the consumer disputes triggered through e-commerce.
Lastly, the CPA, 2019 also provides the state governments and national commission with the power to make rules with respect to regulation of consumer disputes.
Key Highlights of CPA, 2019
Authorities established under CPA, 2019
The CPA, 2019 provides for establishment of certain institutions that did not exist beforehand, in order to ensure that the consumers are adequately protected. In view of the objective of protection of consumers Section 3 of CPA, 2019 provides for establishment of the Central Consumer Protection Council. Further, Section 10 of CPA, 2019 provides for the establishment of Central Consumer Protection Authority which holds power to conduct investigations into matters wherein complaints have been put forth by the consumers. The Central Consumer Protection Authority also holds the responsibility to regulate matters involving unfair trade practices and false or misleading advertisements. The appointments with respect to the Central Consumer Protection Authority are governed by the central government in consonance with Section 11 of the CPA, 2019.
Simplified Dispute Resolution Process
The adjudication process has been simplified, as well. CPA, 2019 provides for e-filling of complaints of the consumers and videoconferencing of hearings before the appropriate forum. Moreover, under CPA 2019 a matter is deemed to be admissible after 21 days of filling unless communicated otherwise by the appropriate authority. Lastly, the CPA, 2019 also provides the State and District Commission with the power to review their own orders.
Regulation of E-commerce and Direct selling
CPA, 2019 regulates the e-commerce and direct selling under Chapter VIII. Section 94 provides for measures to prevent unfair trade practices in e-commerce and direct selling. Penalties have been stipulated under Section 94 for any unfair trade practices in the e-commerce sector. Moreover, the e-commerce entities are mandated to provide for information as return policy, refund policy, grievance redressal mechanism, payment methods, security of payment methods, country of origin of the product etc. as well. Moreover, the e-commerce entities also have to adhere to the timeline stipulated under CPA, 2019 in case of any consumer complaint.
Introduction of the concept of Product Liability
Section 82 in CPA, 2019 provides a basis for the claim in case of a defective product manufactured by a product manufacturer or serviced by a product service provider or sold by a product seller. Moreover, Section 83 stipulates for a product liability action wherein action can be claimed in cases of non-adherence with the stipulated standard of the good. A product manufacturer can be held liable in case of the product bearing manufacturing defect, defect in terms of design and in case of the product not being in conformity with the prescribed standards. Further, a product manufacturer will be held liable in a product liability action even if he proves that he was not negligent or fraudulent in making the express warranty of a product.
Introduction of the process of Mediation
CPA, 2019 provides for Mediation as an alternative dispute resolution mechanism. Section 74 provides for establishment of Consumer Mediation Cell which would function under the guidance of consumer commission and aid the parties to reach out to an amicable solution. The matters to the mediation would be referred by the Consumer Commission and there lies no appeal against the settlement reached at through mediation. Section 79 provides for the procedure which outlines the process of mediation under the act wherein the mediation has to take place in a consumer mediation cell attached with the District, State or National Commission. Moreover, the mediation process shall be conducted in line with the time and manner as specified by the regulation. Section 80 further stipulates for a settlement report to be prepared by the mediator in case a settlement is reached at.
Liability of endorser/advertiser
CPA, 2019 provides for penalties against false or misleading advertisements not just against manufacturers, traders, advertisers and publishers, but also against endorsers of these products. The Central Authority holds the power to impose a fine of Rs. 10,00,000 (approx. USD 13,333) for the first occasion of violation and a fine extending up to Rs.50,00,000 (approx. USD 66,667) for every ensuing contravention. Moreover, the Central Authority can also go ahead with banning of such endorser for a period of one year for the first instance and period extending up to three years for every subsequent contravention. However, in cases of the endorser being able to prove that they acted diligently penalty might be waived off depending upon the facts of the case.
Increase in Pecuniary Jurisdiction
CPA, 2019 has also increased the scope of pecuniary jurisdiction of the forums under it. CPA, 2019 provided that where the value of goods and services paid is up to Rs. 1,00,00,000 (approx. USD 133,333), the jurisdiction lies with the District Commission. If the value is above Rs. 1,00,00,000 (approx. USD 133,333) but does not exceed Rs 10,00,00,000 (approx. USD 1,333,333) the State Commission has the jurisdiction to entertain such matters. Any claims above Rs 10,00,00,000 (approx. USD 1,333,333) shall lie before the National Commission. Moreover, in order to determine pecuniary jurisdiction under the CPA, 1986 the value of goods as well as the compensation amount sought was considered, however under the CPA, 2019 only the value of the goods is considered in order to ascertain the pecuniary jurisdiction.
Conclusion
The CPA, 2019 has considered the changing nature of the market and consumer dynamics and has therefore, incorporated novel concepts to address the current requirement such as that of e-commerce, introducing product liability in order to ensure adequate protection to the consumers, etc. The regulation of e-commerce is a vital step taking into account the fact that large number of consumers have now moved towards using online platforms for buying goods and availing services. This has been further accelerated due to the current Covid-19 pandemic as well. Further, the liberal scope provided to the definition of unfair trade practices is progressive. Furthermore, the disclosure of consumer information as a means of unfair trade practice is a welcome move as it is of uttermost importance in times when an underlying emphasis is made on data privacy.
Mediation as a mode of dispute resolution and the introduction of product liability are also noteworthy. Further, the establishment of the different authorities under CPA, 2019 ensures that adequate weightage is provided towards protection of the interests of the consumers.
However, there are certain areas that may need a relook taking into consideration the objective of consumer welfare. Section 51(1) of CPA, 2019 states that if any person is aggrieved by the State Commission’s order then it may prefer an appeal before the National Commission within the 35 days, and no appeal would be entertained if the appellant hasn’t deposited 50% of the amount awarded to him involved in the matter. The fixation of deposition amount to 50% of the award amount can discourage the whole objective of the act as a consumer being dissatisfied with the award amount might not consider an appeal and rather be content with the relief that has already been provided with.
Overall, the changes brought about by the CPA, 2019 is in line with the aspect of protection of rights and interests of the consumers in wake of the recent developments. The legislation aims to come up with entitlements for the consumers which will empower and help them in protecting their rights through various mechanisms provided in the act. The government through enactment of this act aims at creating an effective consumer redressal mechanism wherein consumer complaints are dealt with in a time bound manner.
– Naman Dubey & Anupam Prasad
Naman is a fourth-year student of law at the Institute of Law, Nirma University, Ahmedabad and is currently interning at the Firm. The Firm acknowledges and expresses gratitude for the efforts put in by Naman towards this AP Law Series write up.
