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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