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Satvik Varma
The 2019 Consumer Protection Act brings about fundamental changes to the existing 1986 legislation. But it also envisages a Central Consumer Protection Authority and vests too much power and control in this authority without proposing adequate administrative safeguards.
Mid-August, the Consumer Protection Act, 2019 (2019 Act) received Presidential assent and came into effect. Notably, the 2019 Act, repeals the previous consumer protection legislation which had been in effect since 1986 (1986 Act). This prior legislation had been amended from time-to-time to bring it in accordance with changes brought about by economic liberalisation, globalisation of markets and digitalisation of products and services. However, its practical implementation was far from fulfilling its desired objective of being a socio-economic legislation which sought “to provide for better protection of the interests of consumers.” While using the same phrase in its preamble, the 2019 Act, has substantially enhanced the scope of protection afforded to consumers, by bringing within its purview advertising claims, endorsements and product liability, all of which play a fundamental role in altering consumer behavior and retail trends in the 21st century.
New Additions
The definition of “consumer” under the 2019 Act includes those who make purchases online. Endorsement of goods and services, normally done by celebrities, are also covered within the ambit of the 2019 Act. In fact, an additional onus has been placed on endorsers, apart from manufacturers and service providers, to prevent false or misleading advertisements. In contrast to the 1986 Act, the definition of “goods” has been amended to include “food” as defined in the Food Safety and Standards Act, 2006. This would also bring the meteorically rising number of food delivery platforms within the fold of the 2019 Act.
Interestingly, “telecom” has been added to the definition of “services” to bring telecom service providers within the purview of the 2019 Act. But surprisingly, such inclusion has not been worded as “telecommunication service” defined under the Telecom Regulatory Authority of India Act, which would have included internet, cellular and data services.
A significant addition to the 2019 Act is the introduction of “product liability” whereby manufacturers and sellers of products or services have been made responsible to compensate for any harm caused to a consumer by defective products, manufactured or sold, or for deficiency in services. Another newly introduced concept is that of “unfair contracts” aimed to protect consumers from unilaterally skewed and unreasonable contracts which lean in favour of manufacturers or service providers.
The definition of “unfair trade practices” has been enlarged to include electronic advertising which is misleading, as well as refusing to take back or withdraw defective goods, or to withdraw or discontinue deficient services, and to refund the consideration within the period stipulated or in the absence of such stipulation, within a period of thirty days. It is now also an offence if any personal information, given in confidence and gathered in the course of a transaction, gets disclosed.
All these changes signify an attempt to create more transparency in the marketplace, through legislative protection, with a view to ensure that consumer interests are above all else.
Overview
The 2019 Act continues to have Consumer Dispute Redressal Commissions at the District, State and National levels (Consumer Commissions), however the pecuniary jurisdiction, i.e. the monetary value of complaints that can be entertained, of each of these commissions have been substantially increased to reduce the burden on the State and National Commissions by encouraging consumers to approach the District Commission for complaints valued up to Rupees 1 Crore.
Furthermore, the jurisdiction of the Consumer Commissions has also been expanded to allow complaints to be made where the complainant resides or personally works for gain, as opposed to the 1986 Act where complaints had to be instituted where the opposite party resides or conducted business, or where the cause of action arose. This will ease the burden on consumers who will now be able to institute complaints at the district level where they reside and will not be compelled to travel to other parts to pursue their complaints.
Notably, the admissibility of complaints made to Consumer Commissions are to be decided within twenty-one days. Though such provision was part of the 1986 Act as well, an addition to the 2019 Act is that if the issue of admissibility of the complaint is not decided within such time, the complaint shall be deemed to have been admitted. One can’t overstate what a remarkable addition this is, as it does away with the languishing of complaints at the pre-admission stage, as had become a current practice, especially at the National Commission. Regrettably, corresponding procedural amendments have not been introduced, which raise some doubts about the practical efficacy of the changes.
The 2019 Act introduces the power of judicial review, which would allow Consumer Commissions to review their orders, thereby reducing the burden faced on account of appeals being preferred to rectify errors apparent on the face of the record. In stark contrast to the 1986 Act, appeals from the State Commission to the National Commission may now only be made where they involve substantial questions of law. Appeals from the National Commission to the Supreme Court can only be made against complaints which originated in the National Commission. The period prescribed for preferring appeals has now also been made more
stringent, with a view to tightening the noose regarding timely filing of appeals.
Challenges for the Future
The new legislation has created a Central Consumer Protection Authority (Authority) to inter alia “regulate matters relating to 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.” To enforce this provision, the Authority is empowered to inquire and investigate, which it does through a dedicated investigative wing set-up headed by a Director-General, analogous to the Competition Commission. Additionally, the Authority can also file complaints and intervene in matters before the Consumer Commissions.
While a laudable initiative, it is unclear on how the Authority will practically function, especially since existing District Collectors have been tasked to undertake certain functions pertaining to inquiries and investigations. There is also considerable overlap between the investigative wing and the search and seizure functions of the District Collector, which are likely to lead to a potential conflict of interest.
Interestingly, the Authority is empowered to order for recall of goods, reimburse price paid for goods and services, as well as issue directions and penalize manufacturers and endorsers for misleading advertisements. Appeals against such orders can only be preferred before the National Commission. The factors on which the National Commission may hear such appeals is unclear and one only hopes it doesn’t lead to the opening of a Pandora’s Box!
At this point, one is also unclear on whether matters currently pending before the Consumer Commissions will continue or if they are likely to get transferred on account of the change in pecuniary jurisdiction. This ambiguity will further add to delays.
Conclusion
All-in-all the 2019 Act is a positive step towards reformation and development of consumer laws, in the light of dynamically changing socio-economic developments. One has seen many other similar steps having recently been taken, for example, homebuyers being considered Financial Creditors under the Bankruptcy Code and the coming into effect of RERA. But the real test for the 2019 Act is in its implementation and some leeway needs to be given for it to actualize the relief for the consumers.
Satvik Varma is a litigation counsel and corporate attorney based in New Delhi. A graduate of Harvard Law School, he’s licensed to practice both in India and New York.