Protection for New Age Consumer: Consumer Protection Act,2019

The Authors are Annu Goyal and Amrita Sachidanandan are law graduates of Bharati Vidyapeeth (Deemed to be) University, Pune.

ABSTRACT

We live in an era were we here a lot that consumer is considered to be the king in the business. Consumers are the ones who help in the growth and expansion of the business. It is then when it was realised that the rights and interests of the consumers are to be rightly adhered and protected for the growth and expansion of the business. Over the period of time it was realised that a proper law should be enacted in order to protect the rights of the consumer against different kinds of unfair or unethical business strategy which was being practised.  

For the first time John F. Kennedy the then US President on March 15,1962 addressed the issue of consumer rights. Since then, March 15 is celebrated as World Consumer Rights day every year. In India, a legislature protecting the interest of the Consumer was enacted in 1986 known as Consumer Protection Act, 1986 but with the development of digital era the legislature felt the need to enact a new law to plug in the loopholes in the existing Act, as a result the Consumer Protection Act, 2019 was enacted. The Consumer Protection Act, 2019 came into force on 20^th July 2020. In this article the author tries to explain how the Consumer Protection Act, 2019 is better than the Consumer Protection Act, 1986 and how it is the way forward for a country like India. The author briefly explains in this article the new concepts which have been incorporated in the Consumer Protection Act.

INTRODUCTION

“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so.”

- Mahatma Gandhi

A Consumer plays a very important role in building and expanding the business of the seller. The dictionary meaning of a consumer is a “A person who purchases goods and services for personal use.”^[1] A Consumer is a person who purchases goods or avails services from product manufacturer or service provider or product seller for consideration for his/her personal use and not for manufacturing or resale. A consumer is considered as the King and the rights of the consumer should be protected and promoted. Section 2(7) of the Consumer Protection Act, 2019 defines “Consumer”.

“(i) 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

(ii) 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.”^[2]

In simple words the definition of the Consumer given in the Act states the following about who a consumer is.

Earlier, the maxim “Caveat Emptor” was used which meant let the Buyer be aware. In simple words the maxim stated that the onus is on the buyer to see before the goods/ services are purchased that they are in the proper condition. The buyer will assume the risk if the product/service fails to meet the expectation. Over the period of time it was realised that the maxim “Caveat Emptor” was violating the rights of the consumer and was favouring the seller even if any defective products were sold or deficient services were availed as there was no liability on them for selling such defective products. It was this one-sided protection granted to the vendor alone which brought in the realisation that the consumer should be considered as the king of the business and the rights of the consumers should be protected and promoted.

Now, the consumer is considered to be the king where they help the seller to build and expand their business. Today the maxim “Caveat Venditor” has been replaced by the maxim “Caveat Emptor”. The maxim “Caveat Venditor” means let the Seller be aware. In other words, it means that the Seller of the product should be aware of the kind of goods and services which are being sold by him, and in case of any defect or deficiency they will be held liable for the same.

EXAMPLE: If a person buys a television and after which he realises that the television has certain defects.

        CAVEAT EMPTOR                                           CAVEAT VENDITOR                

The buyer will be liable for such                           The Seller will be liable

defect or deficiency                                                  for defect or deficiency

WHAT IS CONSUMER PROTECTION?

Consumer protection basically refers to the protection and promotion of the rights of a consumer who buys certain goods or services from the open market. With the increase in growth of technology and ideas, the need for consumer protection has increased.

The shift in approach from “Caveat Emptor” to “Caveat Venditor” has brought into the picture a new concept termed as "Consumerism", which means any movement to protect and inform the consumers against defective goods and services or unsafe products or misleading/ fraudulent trade practices which are practised by the seller. Consumerism has both positive and negative impacts on society. The positive effect brought in by Consumerism is that it protects the rights and interest of the consumers by spreading awareness against unfair trade practices or any fraudulent/ misleading act. However, there are certain adverse effects that the concept of Consumerism has brought along in the sense that it has led to increase in demand because of the increased awareness which is resulting in a speedy depletion of the available resources. It also has a negative impact that with the increase in the demand the resources are being depleted.

In recent times, the consumer prefers to buy goods or avail services online because of the easy accessibility and availability of choices, however, only few sections of the society know the level of risk which is involved in such kind of transaction.  A large section of the society is not aware of the rights which a consumer has, which in turn helps the seller to take the advantage of such a situation. To protect the interest and rights of the consumers against any kind of fraudulent advertisement or unfair trade practices, it is the duty of the legislature to frame law to curtail such derogatory practices.

CONSUMER PROTECTION ACT IN INDIA

In India, Indian Contract Act 1872, Indian Partnership Act 1932, Sale of Goods Act 1930, The Drugs Act, 1940, The Drugs and Cosmetic Act 1940 were some of the legislations enacted by the British Government with the intent to protect the interest and rights of the consumers before the Independence. After Independence The Prevention of Food Adulteration Act 1954, The Standard of Weights and Measures Act 1976, The Bureau of Indian Standards Act 1986, The Monopolistic Restrictive and Unfair Trade Practises Act, 1969 were some of the legislations which were enacted by the Indian Government. However, there was no single consolidated act to protect the interest of the consumers.

So, the government enacted a consolidated Act for consumer protection in 1986 known as Consumer Protection Act, 1986 and which came into force on 1^st July 1987. The purpose of the Act was to “provide for the better protection of the interests of consumers and for that purpose to make provision for the establishment of consumer councils and other authorities for the settlement of consumers disputes”.^[3]

CONSUMER PROTECTION ACT, 2019

Over the period of time Indian government realised that Consumer Protection Act, 1986 was not was solving the purpose and a stringent law should be enacted to protect the interest and rights of the consumers for which Consumer Protection Act, 2019 was enacted. The Consumer Protection Act, 2019 comprises of 107 Sections and VIII Chapters and is applicable to whole of India. The purpose of enactment of CPA, 2019 is “to provide for protection of the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers' disputes and for matters connected”[4]. The intent of the legislature was to widen the scope of consumer protection which was earlier restricted to just goods and services under the Consumer Protection Act, 1986 but also to address the disputes and issues arising out of the growth of the virtual markets.

SOME IMPORTANT DEFINITION

Consumer Protection Act, 2019 has incorporated new definitions. For the better understanding of the Act let’s see some of the relevant definitions.

• E-Commerce: “means buying or selling of goods or services including digital products over digital or electronic network.”^[5]
• 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 (34 of 2006).”^[6]
• 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.”^[7]                                                  

• 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 relating thereto.”^[8]
• Unfair Trade Contract: “means 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: --

(i) requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations; or

(ii) 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

(iii) refusing to accept early repayment of debts on payment of applicable penalty; or

(iv) entitling a party to the contract to terminate such contract unilaterally, without reasonable cause; or

(v) 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

(vi) imposing on the consumer any unreasonable charge, obligation or condition which puts such consumer to disadvantage.                

CONSUMER PROTECTION COUNCILS

Chapter II of the Act talks about the Consumer Protection Councils which will be established either by the State Government or Central Government. Under the Act, Consumer protection Council shall be made at the following levels:

1. Central Consumer Protection Council[9]: Central Government will establish and shall consist of Minister-in-charge of Department of Consumer Affairs as Chairperson and such numbers as the government thinks fit.
2. State Consumer Protection Council[10]: established by State Government and shall consist of Minister-in-charge of Department of Consumer Affairs in the State Government as Chairperson and such members not exceeding 10.
3. District Consumer Protection Council[11]: State Government shall establish District Consumer Protection Council and it shall consist of Collector of the district as the Chairperson and such members as the government thinks fit.

CENRAL CONSUMER PROTECTION AUTHORITY

Government felt that there should be an administrative body which would look into the grievances of the Consumer. In Consumer Protection Act, 1986 the consumer had to file the complaint before the Commission in case of any grievance. In the Consumer Protection Act, 2019 Central Consumer Protection Authority hereinafter referred as (CCPA) has been established by the Central Government as an executive agency. CCPA is established to fill the institutional void that existed in the consumer regulatory regime. CCPA has the power to intervene to protect the consumer against any kind of unfair trade practice or unethical business practice.

Chapter III of the Act deals with the CCPA. Section 10 of the Act gives the power to the Central Government to establish Central Consumer Protection Authority which is also known as Central Authority. It will regulate matters relating to violation of consumer rights due to any unfair trade practices or misleading or false advertisement published and to protect and promote the consumers interests.

Powers and Functions of Central Authority[12]

• Protect, promote and enforce the consumer rights
• Prevent any kind of unfair trade practices
• Ensure that no false advertisement is published
• Ensure that no misleading advertisement is made in contravention of provisions of the Act
• File Complaints before different Commissions
• Inquire or investigate into a complaint made against violation of consumer rights
• Intervene into the proceedings of Commissions
• Review any matter before it
• Promote and undertake research
• Adopt any international convention in regard to consumer protection
• Educating and spreading awareness about Consumer rights
• Issue guideline to prevent any kind of unfair trade practice
• Issue safety notices
• Advise the CG and SG
• Encourage NGO to cooperate in this regard
• Mandate the use of universally identified goods

While exercising the powers and performing its functions as mentioned in Section 18 of the Act, the Central Authority will establish an Investigating Wing to conduct investigation and inquiry which will be headed by the Director General. Government felt that the Central Authority will not be able to work properly if the investigation wing is not established. During an investigation where the Central Authority thinks that the case should be referred to any Regulator in such case the matter will be referred to such Regulator. Regulators like Food Safety Standards Authority of India (FSSAI), Central Electricity Regulatory Commission (CERC) and other regulators are standard setting bodies. As per the Consumer Protection Act, 2019 Central authority has the power to refer u/s 19 of the Act the matter to such regulators when required. Such provision was not present in the earlier Act. The Central Authority has the power to recall the goods, search and seize any goods and to impose penalty against any false/misleading advertisement.

Any person who is aggrieved by the order of the Central Authority may appeal to the National Commission within 30 days from the date of such order.

CONSUMER DISPUTE REDRESSAL COMMISSION

Chapter IV of the Act deals with the establishment of Consumer Dispute Redressal Commission at District level, State level and at National level. The jurisdiction of each Redressal Commission is clearly mentioned in the Act. The Consumer Protection Act, 2019 has changed the pecuniary jurisdiction and territorial jurisdiction of the District level, State level and National level Commission. It was felt by the Government that change in the pecuniary jurisdiction will help the poor consumers. Earlier where the consumer had to go to the State Commission if the value of the goods/ services exceeded INR 20 Lakhs as per the Consumer Protection Act, 1986 will now not be required to go to State Commission as per the new Act if the value of goods or services does not exceed INR 1 Crore. Let’s understand the working of each redressal briefly.

1. District Consumer Dispute Redressal Commission

The State Government shall establish District Consumer Dispute Redressal Commission which will also be known as District Commission. The commission shall consist of the President and not less than 2 members. District Commission shall have jurisdiction where the value of goods or services in the complaint does not exceed INR 1 Crore. A complaint can be filed before the District Commission either by the Consumer or by any registered association of consumers or Central Government or State Government or Central Authority or more than one consumer when the interest of the consumers are the same.

A Complaint shall be instituted where-

• Cause of Action took place
• Where the Complainant does business/ resides
• Where the opposite party resides or their place of business

Any person who is aggrieved by the order of the District Commission can file an appeal before the State Commission on the question of fact as well on law within 45 days from date of passing of the order. The person making an appeal has to deposit 50% of the amount in the manner prescribed.

2. State Consumer Disputes Redressal Commission

The State Government shall establish a State Consumer Dispute Redressal Commission which will also be known as State Commission. The State commission shall consist of a President and not less than 4 members. State Commission shall have jurisdiction where the value of goods or services in the complaint exceeds INR 1 Crore but does not exceed INR 10 Crore or the value of complaint of Unfair Contract exceeds INR 1 Crore but does not exceed INR 10 Crore or against any order of District Commission or calls for records where the State Commission thinks that the District Commission does not have the jurisdiction/ exceeds the jurisdiction given in the Act.

The State Commission may review any order made by it within 30 days from the date of order if the error is apparent. Any person who is aggrieved by the order of the State Commission can file an appeal before the National Commission within 30 days from date of passing of the order on question of law. The person making an appeal has to deposit 50% of the amount in the manner prescribed. Appeal filed before State or National Commission shall be disposed of within 90 days from the date of receipt of such order.

3. National Consumer Disputes Redressal Commission

The Central Government shall establish a National Consumer Dispute Redressal Commission which will also be known as National Commission. The commission shall consist of a President and not less than 4 members. National Commission will have the jurisdiction where the value of goods or services in the complaint exceeds INR 10 Crore or the value of complaint of Unfair Contract exceeds INR 10 Crore or against any order of State Commission or against any order of Central Authority or calls for records where the National Commission thinks that the State Commission does not have the jurisdiction/ exceeds the jurisdiction given in the Act.

The National Commission may review any order made by it within 30 days from the date of order if the error is apparent. Any person who is aggrieved by the order of the National Commission can file an appeal to the Supreme Court within 30 days from date of passing of the order.

MEDIATION

In the Consumer Protection Act, 2019 a new Chapter on Mediation has been introduced.  Mediation is one mode of Alternative Dispute Resolution where a third party helps the parties in settling the dispute. Over the period, mediation has been used as a mode of dispute resolution mechanism for speedy disposal of the case. The main aim of introduction of mediation is to resolve the consumer dispute in a speedy manner as this process is less lengthy and is also not bound by the rigours of procedures as compared to traditional court methods. The government wants that the mediation should be promoted for faster disposal of the matter. In Afcons Infrastructure Ltd v. Cherian Varkey Construction Co. (P) Ltd[13], the Supreme Court held that all the cases related to commerce, trade, consumer dispute or contract could be mediated.

Chapter V of the Act deals with the provisions of Mediation between the parties. The Consumer Protection Act, 2019 has incorporated the provision of mediation u/s 37 when a complaint is filed before the District Commission. The District Commission at any time during the proceedings or after the first hearing of the case thinks that a settlement could be reached between the parties and if the parties agree for such settlement then in such a case the complaint shall be forwarded for mediation.

The State Government will establish a Mediation cell which will be attached to each District Commission and State Commission and at Central level the Central Government shall establish a Mediation cell which will be attached to National Commission. Mediators shall be following the principles of natural justice during the mediation proceedings. If during such proceeding if any settlement agreement has been reached by the parties with respect to some issues of the complaint or all the issues, such agreement shall be reduced to writing and signed by the parties. Mediator shall prepare a settlement report which shall be signed by the mediator and forwarded to the concerned Commission. In case no settlement agreement can be reached between the parties in such a case the mediator shall record the reasons why settlement was not reached between the parties and forward such report to the concerned Commission. If the matter is settled it shall be recorded as settled and where the matter is not settled between the parties the concerned Commission shall continue to hear the matter.

Bijoy Sinha Roy v. Biswanath Das and Ors[14], in this case the Supreme Court laid down the guidelines for speedy disposal of the consumer dispute and the use to Alternative Dispute Mechanism mode for disposal of consumer dispute matters. The Apex Court also emphasised on Section 89 of Civil Procedure Code, 1908 and clarified that the said provision is applicable to Civil Court but the Consumer Forum cannot be excluded from the applicability of Sec 89 of Civil Procedure Code, 1908.

PRODUCT LIABILITY

Product liability is a new concept which has been introduced in the Consumer Protection Act, 2019. Product liability means the responsibility of the seller of goods or that of service provider to compensate in case of any injury or harm caused to the consumer due to the defective goods sold or deficiency in services. The basic purpose of the Government was to provide a legal recourse against any kind of injury or death which is caused due to any defective product or deficient services. Earlier the maxim “Caveat Emptor” was practiced which imposed the liability on the buyer to be aware of the goods/ services which are to be purchased. With the globalisation and technological development, it was realised that the rights of the consumers should be protected against any kind of unfair or unethical business practices. Due to which there was a shift from “Caveat Emptor” to “Caveat Venditor”. “Caveat Venditor” means let the seller be aware. According to this maxim the liability is upon the seller to ensure that the goods or services are being sold as per the prescribed standards and if there is any kind of deficiency or defect the seller will be liable and responsible to compensate the consumer. Product liability is a concept which is based on the maxim “Caveat Venditor”.

Chapter VI of the Act deals with product liability. Product Liability will apply where the complainant claims for compensation for the harm caused by the defective product manufactured or serviced by the provider or sold by product seller. Product liability action can be brought up against the product manufacturer or service provider or product seller by the complainant. A product action liability cannot be claimed where the product has been misused, altered or modified at the time of harm. A product manufacturer shall not be liable for any harm if the instructions are common or obvious. The Act clearly provides the liability of product manufacturer, service provider and product seller. In  A.S. Mittal v. State of U.P [15], in this case the Supreme Court held that if the question of law relating to product liability is involved, in such a case the court will decide the matter on the facts of the case and the evidence presented before the court.

ANALYSIS AND CONCLUSION

“Customers Don’t Expect You to Be Perfect but They Expect You to Fix Things When They Go Wrong”

– Donald Porter

The consumer is considered the king which emphasizes the consumer’s interest. Over the period of time consumer rights and consumerism has gained importance. In India, during the Ancient time Vedas were followed by the majority of the people. Vedas clearly mentioned provisions to protect the interest of the consumers and punishment if the same was not adhered.

Historically the maxim “Caveat Emptor” prevailed which meant let the buyer be aware. The onus was on the buyer but gradually with time the maxim “Caveat Emptor” was replaced by “Caveat Venditor” as it was realised that a consumer will not be able to identify any inherent defect or deficiency. As per the maxim “Caveat Venditor” the onus shifted from the buyer to the seller.

In India, the first Act which was enacted with the purpose of protecting the interest and rights of the consumer was Consumer Protection Act, 1986.  The Act established a 3-tier consumer dispute grievance mechanism. The purpose was to protect the rights and interest of the consumers by educating the consumers about their rights. In India, if compared to other developed countries there are very few provisions which protect the interest of the consumers. Whereas in countries like the USA there are a number of self-regulating bodies in order to protect the interest of the consumers. In developed countries the consumers are very active and aware about their rights and if such rights are violated legal actions are taken against the same. In a country like India there is a lack of awareness of the consumer rights among the consumers. Consumers are not aware about their rights which the law has given them. However, government has started taking steps to make the people aware the people about their rights by introducing programmes to educate the consumers against the unfair trade practices being followed by the seller. One of such programme was Jago Grahak Jago is was a positive imitative which was introduced by the government. It was a nation-wide programme with the aim to spread awareness on the various issues with respect to consumer rights and their responsibilities. The programme was launched in 2005.

In this digital era, we all have witnessed a drastic change in the trading, marketing and the method of conducting business. In the present times the business is conducted through online mode. As the Consumer Protection Act, 1986 did not cover the e-commerce activities, the government realised the need to change the Act. To enact a new Act, India took reference from the Consumer Protection Act in USA, UK, and many other countries. In the end the government enacted all together a new Consumer Act known as Consumer Protection Act, 2019 which will repeal the Consumer Protection Act, 1986. The basic purpose of the new Act was to widen the scope of the Consumer Protection in India for which new concepts were introduced such as e-commerce, product liability, mediation, Central Authority, liability for false or misleading advertisement. The pecuniary and territorial jurisdiction of the Commission has also been increased.

With the establishment of the Central Authority under the new Act, it will act as a regulatory body which will intervene whenever the consumer’s rights are violated. Central authority will also have an investigation wing which will help the authority in investigating and to conduct inquiry into the matter. Central authority can also refer the matter to the regulator wherever it thinks fit. The concept of mediation has also been introduced which will help in faster disposal of the cases. At present more than 4 lakh consumer complaints are pending, thus in order to dispose the case faster mediation is introduced and will serve as one of the best methods to settle the dispute. Product liability is also introduced under the new Act. The concept of the product liability is based on the maxim “Caveat Venditor” i.e., the onus is on the seller if any harm is caused to the consumer due to any defective product or deficient services. The definition such as e-commerce, misleading advertisement, unfair contract are some which have been added to the new Act. It would be right to say that the Consumer Protection Act, 2019 is the way ahead for a country like India with the basic purpose of protecting the rights and interest of the consumer against all kinds of unfair and unethical business practise.

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