Consumer Protection Bill, 2018 ( Highlights and Analysis)

4th January, 2019 - 11:32 am Categories: India News & Updates 0 Comments

A Critical Approach to the Proposed Consumer Protection Bill

With the growth of internet and advent of a global economy, the world has become one big marketplace and all of us are ‘consumers’ in some sense or the other. The definition of the term “consumer” has also shifted drastically and we have entered into an era of ‘fast consumership’ where each moment we need to enter into new contractual relationships with varied sellers for the provision of goods or services. This has resulted in the creation of a cluster of rights and liabilities between the consumer and the sellers and has also created the need to protect the interests of both the parties simultaneously. Where consumers enter into such relationships every second, the chances of the being duped by the sellers has grown exponentially, where the seller might out rightly deny the consumer his rights or, circumvent the provisions of law to pocket undue gains at the expense of the consumer.

To prevent this, the Indian government had enacted the Consumer Protection Act, 1986 in order to protect the rights and interests of the consumer but as time has flown by, the varieties of rights of consumers have evolved, types and modes of businesses have changed and the volume of transactions has increased manifold. In order to gauge this change, the regulations have to change too, in furtherance of which the Parliament first proposed the bill in 2015 and then amended the same on recommendations of a Parliament Standing committee and has moved the Consumer Protection Bill, 2018 which presently has been passed by the Lok Sabha and is awaiting assent of the Rajya Sabha. The provisions of the new bill have been called everything from visionary to complacent and in this article

We have tried to analyse the bill and provide our take on it.

The following are the highlights of the new consumer protection bill compared to the old one;

Central Consumer Protection Authority

i) The bill has proposed to establish a Central Consumer Protection Authority(CCPA) to specifically address issues concerning unfair trade practices including misleading advertisements by persons and facilitating the protection of Consumer rights. Following this, a complaint may be filed for issues that are violative of interests of ‘Consumers as a class’ thereby introducing the concept of ‘class action suits’, which means persons having common grievances against the same party and seeking similar reliefs against such defaulting party may do so together, thus giving consumers an edge compared to the old act.

Consumer protection Councils

The Bill has further proposed Consumer protection Councils will be setup at the district state and national level, as advisory bodies.

Dispute Redressal Commissions

ii) It has been also proposed that Consumer Dispute Redressal Commissions will be set up at the District, State and national levels for adjudicating consumer complains. Appeals from District and State Commissions will be heard at the next level and from the national Commissions by the Supreme court.

Product Liability

iii) The new bill defines ‘Product Liability’ which was absent in the previous act. By this definition, the manufacturers, sellers and service providers would now be liable for the damages caused to a consumer because of deficient products or services[1]. Such liability may arise if the product has a manufacturing defect, design defect, deviated from manufacturing specifications, not conformed to express warranties or otherwise failed to provide adequate information for the consumers’ benefits. This would result in the product or service providers to be extra cautious and employing stricter quality checks which is definitely a pro consumer approach

Misleading Advertisements

iv) The bill has further provided the definition of misleading advertisements and defined it as an advertisement which falsely describes a product or service or gives false guarantees that mislead consumers or convey representations which may constitute unfair trade practices or deliberately conceals important information. The bill has provided for penal provisions[2] including fine of upto Rs. 10 lakhs and imprisonment of upto five years which is a first as the previous act did not provide for penal consequences. This is expected to positively compel both the endorsers and advertisers to employ stricter standards while advertising and to a great extent curb the consumers from being misled to beliefs of whiter teeth in two weeks or four shades of fairness in a month.

Mediation Centres at Central and State level

v) The bill also proposes that if while adjudicating a case, a forum anticipates that a settlement may be reached between the parties by way of mediation, it may do so under the provisions of the bill, rather than adjudicating itself. For achieving this objective the Central and State governments may establish mediation centres which shall be attached to the Consumer forums[3].

vi) The Bill also defines contracts are “unfair”, if they significantly affect the right of the consumers.

vii) Finally, the Bill has proposed to expand the territorial jurisdiction of the consumer forum to include ‘place where aggrieved consumer resides or works for gain’ thereby increasing access of the consumer to the forum in case of dispute and greater efficiency in filing of complaints against the provider of products or services and has also increased the pecuniary jurisdiction of the district, state and national consumer forum in order to relieve the pendency of cases burdened on the National forum.

Conclusively, the Bill has managed to check all the right boxes and has received warm response from academics, legal fraternity and the civic society. However, there remain certain defects that escape  the sight but are equally necessary to be clarified in order to give the Bill a meaningful shape.

Issues

The first issue is that of the clash that might occur within the ‘to be established CCPA’ and the prevailing consumer forums in cases of a certain class of consumers or subject matter which may be taken up by both the bodies. There must have been a prescribed hierarchy or creation of separate class in order to avoid such conflict. Further, Section 99 of the Bill directs the CCPA to act according to the directions of the central government thereby restricting its autonomy.

Secondly, in case of product liability, it can be anticipated that there may be frivolous claims solely on the basis of discrepancy in designs, even when it results in no actual damage to the consumer or is done in order to improve functionality.

Thirdly, in case of misleading advertisements where even the endorsers may be held liable, the Bill has provided merely one straitjacketed punishment for different classes of endorsers where they may vary in terms of remunerations as well as social reach. Also creating a confusion, the Section 79 of the IT Act, 2000 defines ‘intermediary’ as any person who on behalf of another person stores or transmits that message or provides any service with respect to that message and includes the telecom service providers, internet service providers, web-hosting service providers, search engines, online-payment sites, online auction sites, online marketplaces and cyber cafes and such intermediaries are not liable for any third party information, data or communication which consequently gives e-commerce platforms a glorious defence against selling fake or sub standard products and then claiming the excuse of being ‘mere intermediaries’ and evading strict liability under the product liability clause. The new bill has been unable to address this because Section 100 of the new bill clearly states that ‘the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force’ and the IT Act, 2000 being a special act, shall continue to remain in force.

Fourthly, in case of Consumer protection Councils that are to be setup at the district state and national level which will be headed by the Ministers as advisory bodies, However it is not clear from the bill that the minister will advise to whom and in what capacity.

Fifthly, the bill has proposed to empower the Central government to appoint remove and prescribe conditions of service for members of District, State and National Consumer Disputes Redressal Commissions, however the bill has failed to specify the composition of the board and whether a judicial member will be onboard or not. Composition is left completely to the discretion Central government; there are chances of independence of the commission being jeopardized.

The Consumer Protection Bill, 2018 certainly envisions to update the consumer protection policy according to the needs of the present day consumer and the prevailing business atmosphere and it must be applauded for the futuristic approach it has taken. The changes that have been proposed will most certainly ensure a safer and fairer market for the consumers to interact with the providers, but to what extent, only time will tell. Until then certain discrepancies and confusions such as conflict of jurisdiction between parallel judicial bodies, independence of regulators, and other such issues that have been highlighted must be addressed in order to ensure a smooth sail on a seemingly long journey, the Bill has to make.

Author: Mr. Shubham Borkar, Senior Associate – Litigation and Business Development  and Asish Mishra – Intern, at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at shubham@khuranaandkhurana.com or at www.linkedin.com/in/shubhamborkar.

References:

[1] Section 2(34) of the Bill

[2] Section 89 of the Bill

[3] Section74 (1)&(2)