CONSUMER
PROTECTION ACT – A TECHNICAL ANALYSIS
The need for consumerism has been primarily due to the
indifference of the business community. The main aim of all business is to
maximize profit. Consumers have not only been called upon to pay higher prices
but also have to settle at lower quality, spurious, duplicate and adulterated
products that are being sold through misleading and powerful advertisement
media. Hence, consumerism is required to protect consumer interest. The
producer has the power to design the product, distribute, advertise and price
it, but the consumer has only the power of not buying it. One may argue that
the producer runs his business with greater risks in spite of having several
rights, because the veto power remains with consumer. However the consumer
often feels that while he has the power of veto, he is not always fully
equipped to exercise that power. This situation may be the effect of lack of
information, too much indigestible information or even misinformation from one
or several competing producers. Consumerism is like any other social movement.
It has a big role to pay in the world of business and as such it has to be studied.
Consumer Acts/ legislation were firstly passed in Denmark in the
year 1947 which was then followed by the K in 1955. Till today 130 countries on
the world are having consumer acts/ legislation. The developing countries need
the strong consumer protection act.
The Consumer
Protection Act, 2019 ("New Act") heralds the beginning of a new era
of consumer rights in India that are in sync with new-age consumer
expectations. It carries forward the rich legacy of The Consumer Protection
Act, 1986 ("1986 Act") that was considered path-breaking at the time
of its enactment, but which was unable to meet the challenges of a rapidly
growing, sophisticated and inter-dependent market for goods and services.
The object of
the act is as follows:
• To Restore the
balance in the buyer-seller relations in the market place. TO undertake
programmes of consumer education.
• To protect and
promote the consumers interest. To organise consumer resistance against unfair
trade practices and create a strong public opinion in favour of fair trade
practices.
• TO safeguard
consumers right and to prevent the Prohibition of anti-competitive agreements;
Prohibition against abuse of dominant position; Advocacy of
competition policy and to prevent consumer exploitation
by unscrupulous traders.
INSIGHTS INTO THE CONSUMER PROTECTION ACT,
2019
Over the
years, new consumer protection laws were needed owing to the drastic change in
the manner market functions. There is rise in international trade, global
supply chains and rapid development of e-commerce. Further, India has also
witnessed the backlog of pending cases in the consumer courts. The new market
set-up has witnessed mis-leading advertisements, and a special check was needed
on direct selling and multi-level marketing. The New Act is aims to benefit
society at large.
The New Act
has brought in some major changes and provides for more protection to the
consumers in parametria to the earlier 1986 Act which can be seen from the
comprehensive definitions provided under Section 2 of the New Act and other new
sections added therein.
DEFINITIONS
Appropriate Laboratory : laboratory or an organization which is
·
recognized by the Central Government; or
·
recognized by a State Government, subject to
such guidelines as may be issued by the Central Government in this behalf; or
·
established by or under any law for the time
being in force, which is maintained, financed or aided by the Central
Government or a State Government for carrying out analysis or test of any goods
with a view to determining whether such goods suffer from any defect
Branch Office : any office or place of work described as a
branch
by the establishment; or
·
any establishment carrying on either the same or
substantially the
·
same activity carried on by the head office of
the establishment;
Central Authority : Central Consumer Protection
Authority
established
under section 10
Complaint : any
allegation in writing, made by a
complainant
for obtaining any relief
provided
by or under this Act which is:
·
an unfair
contract or unfair trade practice or a restrictive trade practice has been
adopted by any trader or service provider;
·
the goods
bought by him or agreed to be bought by him suffer from one or more defects;
·
the services hired or availed of or agreed to be
hired or availed of by him suffer from any deficiency;
·
a trader or a service provider, as the case may
be, has charged for the goods or for the services mentioned in the complaint, a
price in excess of the price of:
a) fixed by or under any law for the time
being in force; or
b) displayed on the goods or any package
containing such goods; or
c) displayed on the price list exhibited by
him by or under any law for the time being in force; or
d) agreed between the parties
·
the goods, which are hazardous to life and
safety when used, are being offered for sale to the public:
a) in contravention of standards relating
to safety of such goods as required to be complied with, by or under any law
for the time being in force;
b) where the trader knows that the goods so
offered are unsafe to the public
·
the services which are hazardous or likely to be
hazardous to life and safety of the public when used, are being offered by a
person who provides any service and who knows it to be injurious to life and
safety;
·
a claim for product liability action lies
against the product
·
manufacturer, product seller or product service
provider, as the case may be;
Consumer : • buys any goods for a consideration which
has been paid or promised or partly paid and partly promised, or under any
system of deferred payment and includes any user of such goods other than the
person who buys such goods for consideration paid or promised or partly paid or
partly promised, or under any system of deferred payment, when such use is made
with the approval of such person, but does not include a person who obtains
such goods for resale or for any commercial purpose; or
• hires or avails of any service for a
consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and includes any beneficiary
of such service other than the person who hires or avails of the services for
consideration paid or promised, or partly paid and partly promised, or under
any system of deferred payment, when such services are availed of with the
approval of the first mentioned person, but does not include a person who
avails of such service for any commercial purpose.
Defect : • Fault
or;
·
Imperfection or shortcoming in the quality,
quantity, potency, purity or standard which is required to be maintained by or
under any law for the time being in force or under any contract, express or
implied or as is claimed by the trader in any manner whatsoever in relation to
any goods or product
Deficiency : fault,
imperfection, shortcoming or inadequacy in the quality, nature and manner of
performance which is required to be maintained by or under any law for the time
being in force or has been undertaken to be performed by a person in pursuance
of a contract or otherwise in relation to any service and includes—
a) any act of negligence or omission or
commission by such person which
causes
loss or injury to the consumer; and
b)
deliberate withholding of relevant information by such person to the consumer
Electronic service provider : 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
Endorsement : any message, verbal
statement, demonstration; or
·
depiction of the name, signature, likeness or
other identifiable personal characteristics of an individual; or
·
depiction of the name or seal of any institution
or organization, which makes the consumer to believe that it reflects the
opinion, finding or experience of the person making such endorsement
Establishment : • advertising agency,
• commission agent,
• manufacturing,
• trading or any other commercial agency
which carries on any business, trade or profession or any work in connection
with or incidental or ancillary to any commercial activity, trade or
profession, or such other class or classes of persons including public utility
entities in the manner as may be prescribed
Express warranty : any material statement,
affirmation of fact, promise or
description relating to a product or service warranting that it conforms to
such material statement, affirmation, promise or description and includes any
sample or model of a product warranting that the whole of such product conforms
to such sample or model
Goods : Every
kind of movable property and includes "food" as defined in clause (j)
of sub-section (1) of section 3 of the Food Safety and Standards Act, 2006 (22)
"harm", in relation to a product liability, includes:
·
damage to any property, other than the product
itself;
·
personal injury, illness or death; mental agony
or emotional distress attendant to personal injury or
·
illness or damage to property; or
·
any loss of consortium or services or other loss
resulting from a harm referred to in sub-clause (i) or sub-clause (ii) or
sub-clause (iii), but shall not include any harm caused to a product itself or
any damage to the property on account of breach of warranty conditions or any
commercial or economic loss, including any direct, incidental or consequential
loss relating thereto
Injury : any
harm whatever illegally caused to any person, in body, mind or property
Manufacturer : a
person who:
·
(i) makes
any goods or parts thereof; or
·
(ii) assembles
any goods or parts thereof made by others; or
·
(iii) puts
or causes to be put his own mark on any goods made by any other person;
Mediation : the process by
which a mediator mediates the consumer disputes;(26) "mediator" means
a mediator referred to in section 75
Misleading Advertisement : in relation to any product or service,
means an advertisement, which:
·
(i) falsely describes such product or service;
or
·
(ii) gives a false guarantee to, or is likely to
mislead the consumers as to
·
the nature, substance, quantity or quality of
such product or service; or
·
(iii) conveys an express or implied
representation which, if made by the manufacturer or seller or service provider
thereof, would constitute an unfair trade practice; or
·
(iv) deliberately conceals important
information;
Product Liability : the 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 elating thereto
Product Liability Action : a complaint filed by a person before a
District Commission or State Commission or National Commission, as the case may
be, for claiming compensation for the harm caused to him; (36) ""
means a person who—
Product Manufacturer : A person who makes:
·
makes any product or parts thereof; or
·
assembles parts thereof made by others; or
·
puts or causes to be put his own mark on any
products made by any other person; or
·
makes a product and sells, distributes, leases,
installs, prepares, packages, labels, markets, repairs, maintains such product
or is otherwise involved in placing such product for commercial purpose; or
·
designs, produces, fabricates, constructs or
re-manufactures any product before its sale; or
·
being a product seller of a product, is also a
manufacturer of such product;
Restrictive Trade Practice : a trade practice which tends to bring
about manipulation of price or its conditions of delivery or to affect flow of
supplies in the market relating to goods or services in such a manner as to
impose on the consumers unjustified costs or restrictions and shall include—
·
delay beyond the period agreed to by a trader in
supply of such goods or in providing the services which has led or is likely to
lead to rise in the price;
·
any trade practice which requires a consumer to
buy, hire or avail of any goods or, as the case may be, services as condition
precedent for buying, hiring or availing of other goods or services
Unfair Contract : A contract between a
manufacturer or trader or service provider on one hand, and a consumer on the
other, having such terms which cause significant change in the rights of such
consumer, including the following,
namely:
·
requiring manifestly excessive security deposits
to be given by a consumer for the performance of contractual obligations; or
·
imposing any penalty on the consumer, for the breach
of contract thereof which is wholly disproportionate to the loss occurred due
to such breach to the other party to the contract; or
·
refusing to accept early repayment of debts on
payment of applicable penalty; or
·
entitling a party to the contract to terminate
such contract unilaterally, without reasonable cause; or
·
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; or
·
imposing on the consumer any unreasonable
charge, obligation or condition which puts such consumer to disadvantage;
Unfair Trade Practice : a trade practice which, for the purpose
of promoting the sale, use or supply of any goods or for the provision of any
service, adopts any unfair method or unfair or deceptive practice
CENTRAL CONSUMER PROTECTION AUTHORITY
Ø The Central Government shall, by
notification, establish with effect from such date as it may specify in that
notification, a Central Consumer Protection Authority to be known as the
Central Authority to regulate matters relating to violation of rights of
consumers, unfair trade practices and false or misleading advertisements which
are prejudicial to the interests of public and consumers and to promote,
protect and enforce the rights of consumers as a class.
Ø The Central Authority shall consist of
a Chief Commissioner and such number of other Commissioners as may be
prescribed, to be appointed by the Central Government to exercise the powers
and discharge the functions under this Act.
Ø The headquarters of the Central
Authority shall be at such place in the National Capital Region of Delhi, and
it shall have regional and other offices in any other place in India as the
Central Government may decide.
POWERS OF
CENTRAL GOVERNMENT AUTHORITY
Ø (1) (a) protect, promote and
enforce the rights of consumers as a class, and prevent violation of consumers rights under this Act;
(b) prevent unfair trade practices and ensure that no person engages
himself in unfair trade practices; (c) ensure that no false or misleading advertisement is
made of any goods or
Ø Services which contravenes the
provisions of this Act or the rules or regulations made thereunder; (d) ensure that no person takes
part in the publication of any advertisement
which is false or misleading.
Ø (2) Without prejudice to the generality
of the provisions contained in sub-section (1), the Central Authority
may, for any of the purposes aforesaid,
(a) inquire or cause an inquiry or investigation to be made into
violations of consumer rights or unfair trade practices, either suo motu or
on a complaint received or
Ø on the directions from the Central
Government; (b) file complaints before the District Commission, the
State Commission or the National Commission, as the case may be, under this
Act; ) intervene in any proceedings
before the District Commission or the State
Ø Commission or the National Commission,
as the case may be, in respect of any allegation of violation of consumer rights or unfair
trade practices;
Ø (d) review the matters relating
to, and the factors inhibiting enjoyment of, consumer rights, including
safeguards provided for the protection of consumers under
Ø any other law for the time being in
force and recommend appropriate remedial measures for their effective
implementation; (e)
recommend adoption of international covenants and best international practices
on consumer rights to ensure effective enforcement of consumer rights;
Ø (f) undertake and promote
research in the field of consumer rights; (g) spread and promote
awareness on consumer rights; (h) encourage non-Governmental
organizations and other institutions working
Ø in the field of consumer rights to
co-operate and work with consumer protection agencies; (i) mandate the use of unique
and universal goods identifiers in such goods, as may be necessary, to prevent
unfair trade practices and to protect consumers' interest;
JURISDICTION
OF COMMISSIONS : RULES 2022
Ø Jurisdiction of District Commission.
Subject to the other provisions of the Act and in pursuance of proviso to
sub-section (1) of section 34 of the Act, the District Commission shall have
jurisdiction to entertain complaints where the value of the goods or services
paid as consideration does not exceed fifty lakh rupees. [Section 34 complaint,
section 40 review, section 41 appeals]
Ø Jurisdiction of State Commission.
Subject to the other provisions of the Act and in pursuance of proviso to
sub-clause (i) of clause (a) of sub-section (1) of section 47, the State
Commission shall have jurisdiction to entertain complaints where the value of
the goods or services paid as consideration exceeds fifty lakh but does not
exceed two crore rupees. [Section 47 complaint, section 50 review, section 51
appeal]
Ø Jurisdiction of National Commission.
Subject to the other provisions of the Act and in pursuance of proviso to
sub-clause (i) of clause (a) of sub-section (1) of section 58, the National
Commission shall have jurisdiction to entertain complaints where the value of
the goods or services paid as consideration, exceeds two crore rupees. [section
58 complaint ,section 60 review ,section 67 appeals]
Executions of
orders of the Commissions
Ø Every order made by a District
Commission, State Commission or the National Commission shall be enforced by it
in the same manner as if it were a decree made by a Court in a suit before it
and the provisions of Order XXI of the First Schedule to the Code of Civil
Procedure, 1908 shall, as far as may be, applicable, subject to the
modification that every reference therein to the decree shall be construed as
reference to the order made under this Act.
Ø Section 72 (1) Whoever fails to comply with any order made by the District
Commission or the State Commission or the National Commission, as the case may
be, shall be punishable with imprisonment for a term which shall not be less
than one month, but which may extend to three years, or with fine, which shall
not be less than twenty-five thousand rupees, but which may extend to one lakh
rupees, or with both.
Ø (2) Notwithstanding anything contained in the
Code of Criminal Procedure, 1973, the
District Commission, the State Commission or the National Commission, as
the case may be, shall have the power of a Judicial Magistrate of first class
for the trial of offences under sub-section (1), and on conferment of
such powers, the District Commission or the State Commission or the National
Commission, as the case may be, shall be deemed to be a Judicial Magistrate of
first class for the purposes of the Code of Criminal Procedure, 1973.
Ø (3)
Save as otherwise provided, the offences under sub-section (1)
shall be tried summarily by the District Commission or the State Commission or
the National Commission, as the case may be.
OFFENCES AND
PENALTIES
COMPOUNDING
OFFENCES
Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974) and subject to the provisions of section 96 of the
Act, any offence committed for the first time punishable under sections 88 and
89 of the Act may, either before or after the institution of any prosecution,
be compounded by an officer so authorized by the Chief Commissioner
E-COMMERCE ENTITY
Where an e-commerce entity is a company incorporated under the
Companies Act, 1956 (1 of 1956) or under the Companies Act, 2013 (18 of 2013)
or a foreign company covered under clause (42) of section 2 of the Companies
Act, 2013 (18 of 2013) or an office, branch or agency outside India owned or
controlled by a person resident in India as provided in sub-clause (iv) of
clause (v) of section 2 of the Foreign Exchange Management Act, 1999 (42 of
1999), it shall appoint a nodal officer or an alternate senior designated
functionary who is resident in India, to ensure compliance with the provisions
of the Act or the rules made thereunder.
DIRECT SELLING OBLIGATIONS
• if a company, be incorporated under the Companies Act, 2013
(18 of 2013) or if a partnership firm, be registered under the Partnership Act,
1932 (9 of 1932) or if a limited liability partnership, be registered under the
Limited Liability Partnership Act, 2008 (6 of 2009);
• have a minimum of one physical location as its registered
office within India
• make self-declaration to the effect that it has complied
with the provisions of these rules and is not involved in any Pyramid Scheme or
money circulation scheme
• maintain proper and updated website with all relevant
details of that entity, including the documents or records specified in rule 4,
the self-declaration specified in clause (c), contact information which is
current and updated, details of its nodal officer, grievance redressal officer,
its management, products, product information, price and grievance redressal
mechanism for consumers;
• own, hold or be the licensee of a trademark, service mark or
any other identification mark which identifies that entity with the goods or
services to be sold or supplied, but shall not give commissions, bonus or
incentives on sale of goods or services of which it is not the owner, holder or
licensee of trademark, service mark or other identification marks;
• obtain all applicable trade registrations and licenses,
including Permanent Account Number and Goods and Services Tax Registration;
• get all information provided by it on its website duly
certified by a Company Secretary.
LATEST
JUDGMENTS :
u Amitabh
Dasguta Versus Union Bank of India, 2021 Legal Eagle (SC) 89 : 2021 AIR(SC) 1193 : Bank
cannot act on its whims and wishes
u Vodafone Idea
Cellular Ltd Versus Ajay Kumar Agrawal, 2022 Legal Eagle (SC) 217 : SCC 2022 (2) 118
: Companies cannot charge extra amount. Service, Arbitration, No Fault
u Ibrat Faizan
Versus Omaxe Buildhome Private Limited: 2022 Legal Eagle (SC) 552: Section 227 of Constitution is applicable and High Court Has jusrisdiction
to try and entertained a petition.
u Pioneer Urban
land and Infrastructure Ltd Versus Govindam Raghavan, 2019
Legal Eagle (SC) 397 : SCC-2019 (5) 725 : Refund of the amount paid can be asked
u Ireo Grace
Realtech Pvt Ltd Versus Abhishekh Khanna, 2021 Legal Eagle
(SC) 12 : AIR(SC) 2021-0-437: Delay Compensation, Force Majeure
u Emaar MGF Land
Ltd Versus Aftab Singh, 2018 Legal Eagle (SC) 1091 : 2019(12) SCC
751: Arbitration cannot be invoked .
CONCLUSION :
The New Act
also deals with the technological advancements in the industry provide for
easier filing of complaints and also imposes strict liability on businesses
including endorsers for violating the interest of the consumers.
Unlike the
other acts which are punitive or preventive , the provisions of the Act are
compensatory. This is a very unique and highly progressive piece of Social
Welfare Legislation. The provisions of the Act are intended to provide
effective and efficient safeguards to consumers against various types of
exploitations and unfair dealings.
The New Act prima-facie
is much more consumer-friendly than the 1986 Act as it also includes the
current industry trends of e-commerce.
Certainly 2019
Act is a positive step towards reformation, development, and enhancing consumer
rights. The real test for the New Act is in its implementation and some leeway
needs to be given for it to actualize the relief for the consumers.
Akshay Arun Deshmukh
Advocate
Committee Member,
Advocates Association of
Western India
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