• Nayan Saini

Consumer Protection Act, 2019.

Updated: Jun 16

“Customers don’t expect you to be perfect but they expect you to fix things when they go wrong.”

– Donald Porter.

We humans have mastered the art of availing services that fulfill our daily needs. Our day-to-day lives revolve around consuming the goods and services around us in order to lead a comfortable and hassle-free life. As soon as we avail these amenities, we become ‘consumers’. Consumption is basically the end line of economic activities that we follow, which begins from the evaluation of the available resources and involves the further process of manufacturing the final product or service for consumption. There are defined legal provisions adopted by all welfare nations in order to codify certain rules and norms regarding consumption to protect the rights of those who are at both the ends of this consumption process, one being the consumer and another being the distributor or seller. However, it seems that the earlier approach of law encapsulated as “caveat emptor” or “let the buyer be aware” needed introspection and finally the new legal regime has recognized the same and the approach has now been converted into “let the sellers be aware”.

The maiden legislation for guaranteeing Consumer Rights in India, the Consumer Protection Act, 1986, ("Act of 1986") came into effect from 24th December 1986. The objective of the act stated that it aimed to provide for better protection of the interests of the consumers, and therefore made provisions for the establishment of specialized bodies for redressal of consumer disputes. It provided for the formation of Consumer Protection Councils, under Chapter II of the act, and Consumer Disputes Redressal Agencies, under Chapter III of the Act. Despite such formidable credentials, the act had visible loopholes and lacunae, which called for serious legislative reforms.

The Parliament, considering the shortcomings of the said Act, passed the Consumer Protection Bill, 2019 on 06.08.2019 to replace the age-old Act of 1986. The President of India also gave his assent to the Consumer Protection Act, 2019 ("Act of 2019") on 09.08.2019 and the same finally came into force on 20.07.2020, the date on which it was notified by the Central Government. The Act of 2019 aims to provide for the 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 matters connected therewith or incidental thereto.

Notably, instead of bringing another amendment in the Act of 1986, the Government enacted a new Act altogether so as to provide enhanced protection to the consumers, taking into consideration the booming e-commerce industry and the modern methods of providing goods and services such as online sales, tele-shopping, direct selling, and multi-level marketing in addition to the traditional methods.

Salient Features of Act of 2019 and its Comparative Analysis with Act of 1986 are as follows-

Wide Scope of Definition of Consumer and Complainant:

The Act of 2019 expands the scope of the definition of Consumer, as to include the consumers involved in online transactions and it now squarely covers the e-commerce businesses within its ambit.[1] Further, this Act has paid close attention to the minute details and has specified that in case a consumer is a minor, his parents or legal guardians will now be considered as a complainant in this case.[2]

Territorial jurisdiction:

The Act of 2019 now provides an added advantage to the consumers by providing for the filing of complaints where the complainant resides or personally works for gain[3], as against the Act of 1986 which only provided for filing of complaint where the opposite party resides or carry on business. This would help in removing the difficulties faced by the consumers in seeking redressal of their grievances against businesses who may not have an office or branch in their state.

Enhancement of Pecuniary Jurisdiction:

The Act of 1986 provided for a three-pronged Redressal Body, which comprised of the District Forum, State Commission and National Commission. The aforementioned sections laid down the pecuniary jurisdiction of suits that can be entertained by the respective bodies. The jurisdiction has been substantially revised by the Act of 2019-

District Level Jurisdiction- While Act of 1986 stated that District Forums cannot entertain cases wherein the value of the goods or services exceeded Rs. 20 Lakh[4], Act of 2019 states that District Commissions may entertain cases up to the amount of Rs. 1 crore[5].

State Level Jurisdiction- While Act of 1986 stated that State Commissions cannot entertain cases wherein the value of the goods or services falls between Rs. 20 lakhs to Rs. 1 Crore[6], Act of 2019 states that State Commissions may entertain cases wherein the value of the goods fall between Rs. 1 crore and Rs. 10 crores[7].

National Level Jurisdiction- While Act of 1986 stated that National Commission must entertain cases wherein the value of the goods or services exceeded Rs. 1 crore[8], Act of 2019 states that the National Commission may entertain cases with the value upwards of Rs. 10 crores.[9]

Establishment of Consumer Protection Councils and Central Consumer Protection Authority-

The Consumer Protection Act, 1986 provided for three levels of Consumer Protection Councils (CPC), which comprised of the District CPC[10], State CPC[11] , and Central CPC[12] for the purpose of rendering advice on promotion and protection of the consumers' rights under this Act at their respective levels.

Further, the Act also provides for the establishment of Central Consumer Protection Authorities aimed to regulate matters relating to the 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.[13]

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 the Act.[14] Further, the Central Government shall provide the Central Authority with such number of officers and other employees as it considers necessary for the efficient performance of its functions under the Act.[15]

The Central Authority shall have an Investigation Wing headed by a Director-General to conduct inquiry or investigation under this Act as may be directed by the Central Authority.[16]

A complaint relating to the violation of consumer rights or unfair trade practices or false or misleading advertisements which are prejudicial to the interests of consumers as a class may be forwarded either in writing or in electronic mode, to any one of the authorities, namely, the District Collector or the Commissioner of regional office or the Central Authority.[17]

The powers and functions of the Authority are enumerated under Section 18 of the Act of 2019. A special emphasis has been made in order to check unfair trade practices[18] and false or misleading advertisements.[19]

The authority has also been conferred wide powers to 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 on the directions from the Central Government[20] and further to file complaints before the District Commission, the State Commission or the National Commission, as the case may be, under the Act of 2019.[21] The Authority has also been conferred powers to refer the matter for investigation or to other Regulator[22] and also to issue directions and penalties against false or misleading advertisements.[23]

A provision of appeal has also been laid down whereby a person aggrieved by any order passed by the Central Authority under Sections 20 and 21 may file an appeal to the National Commission within a period of thirty days from the date of receipt of such order.[24]

Even though it is a progressive initiative, it remains ambiguous in the context that how this authority will function and certain functions relating to investigations and inquiries. There is also an evident overlap between the functions of the Director General while considering the investigative wing and search and seizure functions.

Covers E-Commerce Transactions:

The Act of 2019 has widened the definition of 'consumer'. The definition now includes any person who buys any goods, whether through offline or online transactions, electronic means, teleshopping, direct selling, or multi-level marketing.[25] The earlier Act did not specifically include e-commerce transactions, and the Act of 2019 has addressed this lacuna.

The central government along with the notification of this Act has also notified Consumer Protection (E-Commerce) Rules, 2020 (Rules, 2020) to prevent unfair trade practices in e-commerce, direct selling, and also to safeguard the interests and rights of consumers. These rules have been framed in exercise of the powers conferred by Section 101(2)(zg) of the Act.

The Rules shall apply to all goods and services bought or sold over digital or electronic network including digital products, all models of e-commerce, including marketplace and inventory models of e-commerce, all e-commerce retail, including multi-channel single brand retailers and single brand retailers in single or multiple formats and, all forms of unfair trade practices across all models of e-commerce.[26] However, these rules shall not apply to any activity of a natural person carried out in a personal capacity not being part of any professional or commercial activity undertaken on a regular or systematic basis.[27]

The new Rules shall further apply to all electronic retailers (e-tailers) registered in India or abroad but offering goods and services to Indian consumers. As per the Rules, an e-commerce entity shall be a company or a foreign company registered under the Companies Act, 1956 or 2013, or an office, branch or agency outside India owned or controlled by a person resident of India as provided in sub-clause (iii) of clause (v) of section 2 of the Foreign Exchange Management Act.[28]

Under these Rules, every e-commerce entity is required to provide information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism, payment methods, security of payment methods, charge-back options, etc.[29] including information regarding the country of origin which are necessary for enabling the consumer to make an informed decision while purchasing something on its platform.[30] It is also a mandate for e-commerce platforms to acknowledge the receipt of any consumer complaint within forty-eight hours and redress the complaint within one month from the date of receipt under this Act[31].

The Rules provide for the duties of the seller and various e-commerce entities. Every marketplace e-commerce entity shall inter alia display details of the sellers offering goods and services, including the name of their business, whether registered or not, their geographic address, customer care number, any rating or other aggregated feedback about such seller, and any other information necessary for enabling consumers to make informed decisions at the pre-purchase stage.[32]

Further, in wake of the fake review of products at e-commerce entities, it has been provided that no seller shall falsely represent itself as a consumer and post reviews about goods or services or misrepresent the quality or the features of any goods or services.[33]

It has also been provided that sellers on marketplace shall not refuse to take back goods, or withdraw or discontinue services purchased or agreed to be purchased, or refuse to refund consideration, if such goods or services are defective, deficient or spurious, or if the goods or services are not of the characteristics or features as advertised or as agreed to, or if such goods or services are delivered late from the stated delivery schedule.[34]

Unfair trade practices & Unfair Contracts:

The Act of 2019 introduces a wide definition of Unfair Contracts[35] and Unfair Trade Practices[36], which also includes sharing of personal information given by the consumer in confidence unless such disclosure is made in accordance with the provisions of any other law.

This Act has also introduced the concept of Unfair contracts, which includes those contracts having terms which, favor the manufacturers or service providers and are against the interest of the consumers such as contracts requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations; impose any penalty on the consumer for a breach of the contract, which is wholly disproportionate to the loss occurred due to such breach to the other party to the contract; refuse to accept early repayment of debts on payment of applicable penalty; entitle a party to the contract to terminate such contract unilaterally, without reasonable cause; permit 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; and impose on the consumer any unreasonable charge, obligation or condition which puts such a consumer to any disadvantage.[37]

This concept would help to keep an eye on businesses, including banks and e-commerce sites that tend to take undue advantage of their dominance and mandatorily require the helpless consumers to sign such unfair contracts and accept their standard terms before selling them goods or providing services.

Simplified Dispute Resolution Process:

The Act of 2019, provides for simplifying the consumer dispute adjudication process in the consumer commissions, which include, inter alia, empowerment of the District and State Commissions to review their own orders[38], enabling a consumer to file complaints electronically (e-complaints)[39], videoconferencing for hearing[40] and deemed admissibility of complaints if the question of admissibility is not decided within the specified period of 21 days.[41]

Mediation:

The Consumer Protection Act of 1986 had no provision regarding any mediation proceedings for the purposes of reconciliation or settlement, which is always a possibility in such types of cases. However. an Alternate Dispute Resolution mechanism of Mediation has been provided in the Act of 2019 under Chapter V, which will simplify the adjudication process for an aggrieved consumer. A Consumer Commission will refer a complaint for mediation, wherever scope for early settlement exists and parties agree for it. Such mediations will be held in the Mediation Cells to be established under the supervision of the Consumer Commissions[42].

The Consumer Mediation Cell (CMC) shall be attached to each district, state and national level[43], which is itself a tedious and lengthy task owing to the funding that courts get, and the lack of infrastructural facilities especially at the district level.

However, even this concept has certain lacuna as the decision taken via these mediation cells will be final and there will be no appeal against settlement through mediation.

Product Liability & Penal Consequences:

The Act of 1986 had no provision regarding product liability. However, the Act of 2019, under Chapter VI lays down the various provisions relating to product liability and brings within its scope, the product manufacturer, product service provider and product seller, for any claim for compensation. The term ‘product liability’ means 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[44] and further, it defines the concept of ‘product liability action‘ as a complaint file 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.[45]

Further Section 84(1) lays down the liability of the Product Manufacturer in cases of manufacturing defects, defects in design, etc. and Section 86 lays down the liability of Product Sellers, subject to certain conditions laid down under the section.

This new concept shall prevent product manufacturers from selling defective products or service providers from providing faulty services, since, they will now be completely responsible for the same if the consumer receives a defective product or a faulty service. What makes this concept even more effective is that the manufacturers or service providers cannot escape liability even if they prove that they were not acting negligently or fraudulently. Now any consumer can file a complaint for product liability in case he receives any defective goods or any faulty services.

Food Safety and Standards Act, 2006:

The Act of 2019 includes the definition of “food” as defined under the Food and Standards Act, 2006.[46] This has replaced the definition of “goods” under the Act of 1986. This would help in bringing the number of food delivery platforms to come under the ambit of consumer protection.

Therefore, it can be concluded that the Consumer Protection Act, 2019, is one of the vital steps taken by the Central Government for enhancing consumer rights and speedy delivery of justice. The Consumer Protection Act, 2019 as compared to the Act of 1986, has shown great improvement in keeping up with the fast-paced life of consumers and has also kept in mind the technological advancements. The Act of 2019 has evaluated all the loopholes which the manufacturers, traders and service providers used in the 1986 Act.

With the promulgation of Act of 2019, the government aims to tighten control over potential defaulters, by expanding the scope of the act to include e-commerce platforms. The new Act talks about on many aspects such as Mediation and E-commerce, about which the world was unaware in 1986. So, it was important to revamp the old act when digitalization has changed the way a consumer conducts online transactions and mode of shopping has shifted from offline to online. Certainly, the Act of 2019 is a positive step towards reformation, development and enhancing consumer rights. Socio-economic developments and changes are taking place every year and this Act has abided by ever changing times especially in timid times of COVID pandemic where almost every individual has shifted towards buying online even for groceries. However, the real implementation of the Act of 2019 will be seen in the coming times by analyzing how much relief it offers to the consumers.



(This Article is co-authored by Mr. Devesh Saxena, Advocate, Ms. Nayan Saini, Ms. Tamanna Gupta and Ms. Deveshree Gupte.)

[1] Consumer Protection Act, 2019, explanation (b) to Section 2(7)(ii). [2] Consumer Protection Act, 2019, Section 2(5)(vii). [3] Consumer Protection Act, 2019, Section 34(2)(d) & 47(4)(d). [4] Consumer Protection Act, 1986, Section 11. [5] Consumer Protection Act, 2019, Section 34(1). [6] Consumer Protection Act, 1986, Section 17. [7] Consumer Protection Act, 2019, Section 47(1). [8] Consumer Protection Act, 1986, Section 21. [9] Consumer Protection Act, 2019, Section 58(1). [10] Consumer Protection Act, 2019, Section 8. [11] Consumer Protection Act, 2019, Section 6. [12] Consumer Protection Act, 2019, Section 4. [13] Consumer Protection Act, 2019, Section 10(1). [14] Consumer Protection Act, 2019, Section 10(2). [15] Consumer Protection Act, 2019, Section 13(1). [16] Consumer Protection Act, 2019, Section 15(1). [17] Consumer Protection Act, 2019, Section 17. [18] Consumer Protection Act, 2019, Section 18(1)(b). [19] Consumer Protection Act, 2019, Section 18(1)(c) and (d). [20] Consumer Protection Act, 2019, Section 18(2)(a). [21] Consumer Protection Act, 2019, Section 18(2)(b). [22] Consumer Protection Act, 2019, Section 19. [23] Consumer Protection Act, 2019, Section 21. [24] Consumer Protection Act, 2019, Section 24. [25] Supra at 1. [26] Consumer Protection (E-Commerce) Rules, 2020, Rule 2(1). [27] Consumer Protection (E-Commerce) Rules, 2020, Proviso to Rule 2(1). [28] Consumer Protection (E-Commerce) Rules, 2020, Rule 4(1). [29] Consumer Protection (E-Commerce) Rules, 2020, Rule 5(3)(c). [30] Consumer Protection (E-Commerce) Rules, 2020, Rule 4(6). [31] Consumer Protection (E-Commerce) Rules, 2020, Rule 4(5). [32] Consumer Protection (E-Commerce) Rules, 2020, Rule 5(3)(a). [33] Consumer Protection (E-Commerce) Rules, 2020, Rule 6(2). [34] Consumer Protection (E-Commerce) Rules, 2020, Rule 6(3). [35] Consumer Protection Act, 2019, Section 2(46). [36] Consumer Protection Act, 2019, Section 2(47). [37] Supra at 35. [38] Consumer Protection Act, 2019, Section 40 & 50 respectively. [39] Consumer Protection Act, 2019, Proviso to Section 35(1). [40] Consumer Protection Act, 2019, Proviso to Section 38(6). [41] Consumer Protection Act, 2019, Section 36(3). [42] Consumer Protection Act, 2019, Section 74(1). [43] Consumer Protection Act, 2019, Section 79(1). [44] Consumer Protection Act, 2019, Section 2(34). [45] Consumer Protection Act, 2019, Section 2(35). [46] Consumer Protection Act, Section 2(21). #consumerlaws #consumerprotection #cpa20 #ecommerce #ecommercebusiness #productliability #lawyers #lawstudents #complaint #consumerforum #buyer #seller #newlaws #lawfirm #lawfirmupdates

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