Introduction

The markets of the modern world have changed rapidly in the recent past with the availability of a plethora of goods and modes of services. The booming e-commerce market, especially in the context of a pandemic ridden world, where a major part of the world population has learnt and started to rely on online methods of buying and selling, is simply one of the examples of how the market has changed in the recent times. Similarly, advertisements in recent times have evolved in ways that is worth appreciating. Along with this evolvement, there has been a recent trend of malicious practice of false advertising with claims that the product or the service in reality do not fulfil. This massive transformation in markets have made the consumers vulnerable to various unfair practices that does not comes under the garb of ethical business practices. Due to the nature of these newly emerging problems, it was felt necessary to bring about changes in the old act by the different stakeholders involved. The consumer protection act, 2019 came into force on July 20, 2020 superseding the approximately three decades old Consumer Protection Act of 1986, which although was amended several times, was not able to tackle the challenges of modern day economics emerging in India. The 2019 act is made to fulfil the redressal demands faced by the consumers in the contemporary market.

Important features of the 2019 Act:

The legislative intent of the new act is made sufficiently clear from a bare reading the act, in which the paramount importance has been given towards the protection of consumers and their interests by including many new provisions within the statutory requirements. The judicial doctrines that have been propounded over the years also seems to have shaped the formulation of the new act, for timely administration and efficient dispute settlement mechanisms along with more stringent enforcement of consumer rights.

Expansion of definitions

• Consumer

First and foremost, in the new Act, under Section 2(7), explanation (b)[1], the definition of who is a ‘consumer’ has been expanded. The scope of who is a consumer now whoever participates- buys any goods or avails any services in any online or offline transaction. This is a part of the endeavor of the government to bring about accountability of the sellers towards the consumers in the e-commerce platforms, which has also been defined under Section 2(16) of the new act[2].

• Consumer Rights

There has also been an important addition of a definition of ‘consumer rights’ under section 2(9)[3], something which was strikingly absent in the old 1986 Act. Judicial decisions over the years had pointed out several deficiencies in the old act. Accordingly, changes have been incorporated in the new act, such as the addition of an all-encompassing consumer rights’ definition. Legislative intent to remedy any lacuna present in the statute is made clear here. The Government has also released the new E-Commerce rules, 2020, applicable to all e-commerce platform either registered in India or registered elsewhere and offering services and selling products in India. This is a much needed and welcome change to the Consumer Protection Act, in a digitalised world, ensure consumer protection on all platforms.

• Goods

The definition of ‘goods’ has been expanded to include ‘every kind of movable property’ thereby including ‘food’ as is defined under section 2(7)(ii)(b) of the Food Safety and Standards Act, 2019[4]. The previous definition was the same as the one as mention in the Sale of Goods Act, 1930.

• Deficiency

There has been an expansion of the scope of what comes under deficiency defined under section 2(11) of the new Act[5]. Incorporation of things like negligence, imperfection, inadequacy, purposely withholding information from the consumer or failing to do or doing any such acts which in turn causes injury or harm to the consumer will be considered as deficiency. This greatly effects another new concept introduced in the act called product liability, which will be discussed later in the paper. The new act has been made to make all the people associated with a product or service to be accountable on all aspects to a consumer, making the consumer the king. 

Consumer Protection Council

Chapter II of the act deal lays down rules regarding the Central Consumer Protection Council, State Consumer Protection Council and the District Consumer Protection Council. The number of members that would make up the councils, the number of times the councils will meet and the nature and role of the councils, has all been enshrined in the first half of the act.  

Central Consumer Protection Authority

One of the new features of the 2019 Act, is the introduction of a Central Consumer Protection Authority (CCPA). Section 10[6] lays down a definition for this Central Authority. The Consumer Protection Authority will act as a central adjudicatory forum for all consumer grievances, to promote, enforce and educate people about consumer rights in particular, as specifically enshrined under section 18[7] as the duties of the Central Authority, under Chapter III of the CPA. This was previously, not a part of the 1986 Act. The Act also grants investigative powers to the Central Authority by the establishment of an Investigation Wing, headed by the Director-General under section 15(1) of the act[8]. An investigation by the Central Authority may either be conducted on the basis of a complaint received or even on suo motu grounds (Section 18(2)(a))[9]. The Central Authority has also been given the power to take actions against violations of the CPA and impose penalty when required. Section 20 of the Act[10] lists down the number of things that the Central Authority may do if after the investigation conducted by them, proves guilt. The legislative intent of constituting the Central Authority as an important adjudicatory forum is made abundantly clear from section 88 of chapter VII of the ac[11]t where non-compliance with the directions of the Central Authority may result in imprisonment, fine, or both.

Revised Pecuniary jurisdictions

Chapter IV of the Act lays down the rules for Consumer Dispute Redressal Commission. Key changes in this section includes a revision of the pecuniary limits of the courts. Pecuniary limits under the 2019 act has been increased. Now, the District Consumer Forum claims cannot exceed more than Rs.1 crore, as established under section 34 of the Act[12]. State Consumer Commission claims cannot be more than 10 crores, as stated under section 47(1)[13] and the National Commission will handle cases worth 10 crores and above, as stated under section 58(1) of the 2019 Act[14]. In regards to the valuation of the claim for the purpose of determining jurisdiction, only the value of goods and services will be taken into account and not the damages being asked for. It was further clarified in the recent judgement of the National Commission, where it was decided that a consumer must choose a court having the pecuniary jurisdiction of the value of the goods and services availed or bought.

 Alternate Dispute Resolution-Mediation

The 2019 act has taken steps to make dispute settlement processes easier and more efficient by the establishment of alternate dispute resolution like mediation, as defined under section 2(11) of the act[15]. Chapter V of the act under section 74[16] directs the setting up of a consumer mediation cell to be attached to the District Commissions and the State Commissions of the state and another with the National Commission. This is a welcome move since the earlier act did not provide for any alternative means of settling disputes and even small disputes would take a long time to get decided upon, creating a problem of backlog of cases. This option is only available to the parties if both of them consent to submit their case to the mediation centre. This is therefore, not a mandatory procedure that is imposed on anybody.

Product Liability

Product Liability is another new and important feature added to the CPA of 2019 under Chapter VI. Defined under section 2(34)[17], it seeks to bring into its ambit the liability of a product manufacturer, product service provider and product seller, in cases of disputes put forth by consumers for the purposes of getting compensation. There is thus a visible shift from the general consensus of more importance given to the principle of ‘Caveat Emptor’ (let the buyer beware) under the Sale of Goods Act to the lesser stressed upon principle of ‘Caveat Vendetor’ (let the seller beware), now making manufacturers conscious about the fact that they will be punished if the consumer of their product faces any sort of inconvenience from the use of their products. The Consumer Protection Act, has laid down a detailed scheme of Section 84[18] of the act lists down the instances when a product manufacturer will be held liable, section 85[19] lists down instances when a product service provider will be held liable and section 86[20] talks about instances when a product seller shall be guilty.  Stringency of the act can be judged by the fact that mere exercise of due diligence or establishment of the fact that the person complained against, was not being negligent is not enough. The benefit of doubt is given to the consumer and not to the seller.

Unfair Contract and unfair trade practices

Defined under section 2(46) of the 2019 Act[21] the act of buying and selling a product or a service binds the parties involved, into a contract. However, the Consumer Protection Act until now, did not have any statutory provisions relating to it. In the meantime, there has not been a deficiency in disputes relating to unfair terms of contracts in the courts. Therefore, the reliance had only been on previous judicial pronouncements, which of course can never equal to having a provision in the statue in place and also is highly unpredictable to reply on since decisions and judgements can be overruled from time to time. Another example of the intent of the legislative to do away with any lacunae that might arise in absence of a law.

Adding to the unfair trade practices listed in the 1986 Act, the 2019 Act adds three more practices namely- I) failure to issue a receipt; II) non-compliance with goods returned within 30 days and III) revelation of confidential information given by the consumer unless bound by a law or in public interest under section 2 (47) explanation[22]. Thus broadening the seller’s accountability to the consumers.

Advertisements and endorsements

Fiercely competitive market space has led to the growth of product quality and helped in setting high standards of what’s expected by the consumer from a product or a service. Creative, attractive and informative advertisements are an important way to attract consumers. Brands and corporates have thus huge budgetary allocations for creating the perfect advertisements for their products or services. This cut-throat competition in advertisements, often lead to exaggerated, misleading and false representations of the products to the potential consumers, who invest their money buying these products in hopes of false expectations, created by such misleading advertising. There is now a definition added to the new consumer protection act of ‘misleading advertisements’ under section 2(28) of the 2019 Act[23]. Penalties are imposed on manufacturers, service providers and even endorsers.   This means that now, action can also be taken against celebrities by the CCPA who endorse products through false advertisements if they did not take part in exercising their part of due diligence before endorsing any such product. Under section 21[24] the act lays down the types of penalties that will be imposed in cases of false and misleading advertisements, their endorsers and any other party related to the publication of such advertisements. Monetary penalty may range from 10-50 lakhs, as determined by the Central Authority after the consideration of several factors. This is a welcome decisions from the government as celebrities endorsing anything has a huge impact on its sales due to them being public personalities, they have the responsibility to enquire about the legitimacy of the things that they are endorsing to the public at large, which is a huge risk in itself. As already highlighted several times above, accountability to the consumers in the new act is made the priority. According to section 89 of the Act[25], manufacturers and service providers whoever is a part of spreading misleading advertisements, harmful to the interests of the consumers will be penalised with imprisonment for up to two years or a fine up to Rs. 10 lakhs and for subsequent offences, the imprisonment terms increases and so does the fine amount to be paid. Due to the absence of a provision of penalty for misleading advertisements in the 1986 Act, the Supreme Court in the 2009 case of Buddhist Mission Dental College & Hospital v. Bhupesh Khurana & Ors[26] held that apart from there being a deficiency in service provided to the students who took admission after being misrepresented about the college’s affiliation, they were completely mislead by the false advertisement of the college which led to harm to careers of many students. A similar decision was upheld in another case of Bhanwar Kanwar v. R.K. Gupta & Anr.[27]

Easing consumer complaint mechanism

A consumer can now, file a complaint from the place where he/she resides instead of the place of the business of the product or service that the complaint is against, thus easing the process and increasing accessibility to justice. This is an option that was earlier not available to the consumers under the 1986 Act. This change has been enshrined in Chapter IV of the 2019 Act. Additionally an e-complaint can also be filed and no fee is to be levied on filing of a complaint if the said complaint is under Rs.5 lakhs. A consumer can decide to whether to engage a lawyer or handle the case by themselves. An option of video-conferencing has also been added, which is specially appreciated in a world where going outside as less as possible has become the norm.

Conclusion

The key highlight of the act, has been the need to protect the consumers from these new emerging markets and their risks. Many have, criticized the act on this point, stating that in the post-pandemic world where the sellers and manufacturers are already down in the dumps about their business, specially the way the pandemic has affected small businesses in particular. Many have been forced to shut down permanently. Stricter consumer protection provisions government has just reinforced rules that would further bring down the morale of the sellers and is not helping them in any manner. However, like anything, different opinions would always prevail. Just as sellers and service providers would want more governmental support for their own good, the consumers and the common people in general would want protection from the rapidly transforming market that many haven’t had the chance to understand properly yet.

[1] Consumer Protection Act 2019, ss 2(7) explanation (b)

[2] Consumer Protection Act 2019, ss 2(16)

[3] Consumer Protection Act 2019, ss 2(9)

[4] Food Safety and Standards Act 2019, ss2(7)(ii)(b)

[5] Consumer Protection Act 2019, ss 2(11)

[6] Consumer Protection Act 2019, s 10

[7] Consumer Protection Act 2019, s 18

[8] Consumer Protection Act 2019, ss 15(1)

[9] Consumer Protection Act 2019, ss 18(2)(a)

[10] Consumer Protection Act 2019, s 20

[11] Consumer Protection Act 2019, s 88

[12] Consumer Protection Act 2019, s 34

[13] Consumer Protection Act 2019, ss 47(1)

[14] Consumer Protection Act 2019, ss 58(1)

[15] Consumer Protection Act 2019, ss 2(11)

[16] Consumer Protection Act 2019, s 74

[17] Consumer Protection Act 2019, ss 2(34)

[18] Consumer Protection Act 2019, s 84

[19] Consumer Protection Act 2019, s 85

[20] Consumer Protection Act 2019, s 86

[21] Consumer Protection Act 2019, ss 2(46)

[22] Consumer Protection Act 2019, ss 2(47)

[23] Consumer Protection Act 2019, ss 2(28)

[24] Consumer Protection Act 2019, s 21

[25] Consumer Protection Act 2019, s 89

[26] (2009) 4 SCC 473

[27] (2013) 4 SCC 252

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