The Consumer Protection Act, 2019: An overview

The key provisions of the Consumer Protection Act, 2019, have come into force on July 20, 2020. The Act received the assent of the President of India and was published in the official gazette on August 09, 2019, which replaced the three decade old Consumer Protection Act, 1986. 

 The Act introduces various provisons keeping in mind the new challenges faced by the consumer in the digital era. The Act aims to provide the timely and effective administration and settlement of consumer disputes. The key provisions as notified pertains to consumer protection councils, consumer disputes commission,  mediation, liability of services or products, the penalty for manufacturing, selling, distributing, spurious goods or products.  However, an entire chapter of the Act dealing  with a separate Consumer Protection Authority for advertisements, e-commerce rules for websites, and making celebrity endorsers liable yet to be notified.

 Further, the corresponding rules relating to qualification for appointment, method of recruitment, procedure of appointment, term of office, resignation and removal of the president and members of the State and District Commission, Salary, allowances and conditions of service of president and members of the State and District Commission, mediation procedure and rules governing Central Consumer Protection Councils are also been notified. 

The Act will strengthen the consumer rights, the scope of consumer grievances and provide ease in the process of filing complaints.  

The key features of the new Act are as follows:

Enhanced Pecuniary Jurisdiction

The key change under the new Act is that the jurisdiction will now be determined on the basis of ‘value of goods or services paid as consideration’ by the consumer not as per the relief claimed. The threshold for pecuniary jurisdiction under the new Act of the commissions stand revised i.e. District Commission: Upto Rs 1 crore from Rs 20 lacs; State Commission: Rs 1 crore to Upto Rs 10 crore and National Commission: Above Rs 10 crore. The increase in the pecuniary jurisdiction will reduce the backlog  of the Appellate forum and will prevent  frivolous complaints filed before the NCDRC directly bypassing  State and District forums.

Defined statutory rights of the Consumer

The definition of “consumer” has been expanded to include persons who engage in offline or online transactions through electronic means or by tele-shopping or direct selling or multi-level marketing.Under the Act,  the rights of the Consumer are defined for the first time, and given statutory protection which includes: Right to be protected against the marketing of goods, products or services which can be hazardous to life and property; Right to be informed about the quality, quantity, potency, purity, standard and price of goods, products and services; Right to be assured of access to goods, products and services at competitive prices; Right to be heard at appropriate forums; Right to seek redressal against unfair trade practices that are involved in exploitation of customers; and Right to consumer awareness.

Establishment of Central Consumer Protection Authority (CCPA)

 The Act establishes a regulatory authority, namely, the Central Consumer Protection Authority (CCPA), with wide powers of enforcement, having an investigation wing, headed by a Director-General, which may conduct an inquiry or investigation into consumer law violations.  The Authority has been granted wide powers to take suo-moto actions, recall products, order reimbursement of the price of goods/services, cancel licenses and file class action suits, if a consumer complaint affects more than one individual. However, the provisions relating to it is yet to be notified. 

Concept of ‘Product Liability’

Under the Act the concept of ‘Product liability’ has been introduced for the first time, wherein, the product manufacturer, product service provider and product seller, will be liable for any claim for compensation. It will deter manufacturers and service providers from delivering defective products or deficient services. A consumer can now claim compensation under a ‘product liability’ action for a ‘harm’ or ‘injury’ caused to him due to deficiency in a product or service.

Introduction of ‘Mediation’

Under the Act the provision of mediation, where, settlement of disputes is  possible  either  at the stage of admission of a complaint or at any later stage,  subject to consent of both the parties has been introduced.  A mediation cell is now attached to each District, State and National C o m m i s s i o n a n d its regional Benches for quick resolution. There will be no appeal against settlement through mediation.

Penalties for Misleading Advertisement & Endorsement

The CCPA may impose a penalty of up to INR 1,000,000 on a manufacturer or an endorser, for a false or misleading advertisement. The CCPA may also sentence them to imprisonment for up to 2 (two) years for the same.  In case of a subsequent offence, the fine may extend to INR 5,000,000 (Indian Rupees Five Million) and imprisonment of up to 5 (five) years. The CCPA can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to 1 (one) year. For every subsequent offence, the period of prohibition may extend to 3 (three) years. 

Adjudication & Power to nullify the ‘Unfair Contract’

 The Act comes with an added definition of ‘Unfair Contract’ which includes contracts 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 consumers. It includes any contractual terms which specify excessive security deposits(i.e. tenancy agreements), provide for unilateral termination (i.e. employment contracts) or assignment without consent of the other party etc.  The 1986 Act did not provide consumers with a single forum against such contracts. All cases relating to unfair contracts will be heard by the State and National Commission only. The Act empowered the State and National Commission to declare any terms of the contract, which is unfair to any consumer, to be null and void. 

 E- Commerce

The Act defines e-commerce as buying or selling of goods or services including digital products over digital or electronic networks.  The earlier Act did not specifically include e-commerce transactions in its ambit. The Central Government has been authorized to take measures and make rules to prevent unfair trade practices in ecommerce.

Power to Review:

The Act conferred the power of review to the District & State Commission of its own order. Under the old Act  only the National Commission was empowered to review its order for factual errors.

Mandatory deposit of Amount before Appeal

The Act has introduced a mandatory provision for the Appellant Party to deposit 50% of the amount ordered by the District, State or National forum before filing an appeal. Under the old Act the ceiling was of maximum of Rs. 25,000/- [for appeal to State Forum],  Rs. 35,000/. [For NCDRC] and Rs. 50,000/-. [Before the Supreme Court] which stands removed

Conclusion

The Act keeps in mind the protection to buyers not only from traditional sellers but also from the new e-commerce platforms. The Act emphasises on speedier adjudication of complaints by allowing electronic filings and notices by an aggrieved consumer. There was no provision for e-filing under the 1986 Act.  The New Act also contains enabling provisions for consumers for hearing and/or examining parties through video-conferencing, which is aimed to provide procedural ease and reduce inconvenience and harassment for the consumers. However, the procedure of the same is not yet notified by the Central Government.  Under the Act concept of deemed admissibility of complaints is also introduced, if the question of admissibility is not decided within the specified period of 21 days.  

The insertion of ‘Product Liability’ as a new ground for filing a complaint has been one of the significant additions to the Act. The Act  allows consumers to file complaints in the district commission where they reside or work for gain, which comes as a relief as earlier they were required to file a complaint in the area where the seller or service provider was located. 

The Act has widened the definition of ‘Unfair Trade Practices’ as compared to the 1986 Act which now includes within its ambit online misleading advertisements; the practice of not issuing bills/memo for the goods and services; failing to take back defective goods or deactivate defective services etc. The Act will also enable the consumers to drag the manufacturers, sellers or distributors who are found in dealing with adulterated and spurious products and claim compensation. However, the Act fails to prescribe any time limit to decide the complaint and appeal, the delay in deciding the consumer complaint is one of the major concerns by the Consumers, which is ignored under the Act.

The Consumer Protection Act, 2019 will prove a significant tool in protecting consumer rights in the country.

Vaibhav Choudhary, Founder & Managing Partner, YHprum Legal & Shruti Shrestha, Partner, YHprum Legal .

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