Central govt has notified the Consumer Protection Act 2019 (Act) and they came into effect on 20.07.2020 and 24.07.2020 thereby repealing the Consumer Protection Act, 1986 in this post an attempt has been made to summarise the Act on the following areas for the purposes of easy understanding.
- Objects and salient features of Act;
- Consumer Protection Council;
- Central Consumer Protection Authority (CCPA)
- Consumer Disputes Redressal Commission
- Mediation
- Product liability
- Offences and Penalties
- Major Comparisons between CP Act, 1986 and CP Act, 2019
- Consumer Protection (E-Commerce) Rules, 2020
- Objects and salient features of the Act
- Protection of the interests of the consumers
- Establishment of executive agencies to promote, protect and enforce consumer rights (Eg: CCPA)
- Product liability action due to defective product
- Mediation as an alternate dispute resolution mechanism
- Online filling of complaints and adjudication through video conferencing
- Penalties and imprisonment for non-compliance with Commission’s orders.
- Sections 3 to 9 deals with Consumer Protection Council:-
- Establishment of three-tier Central, State and District council with the aim to “render advice on promotion and protection of the consumer rights under this Act”
- Sections 10 to 27 (Chapter III) relating to formation of Central Consumer Protection Authority (CCPA) which will have the following powers:
- CCPA to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements.
- Investigation wing headed by Director General to conduct inquiry or investigation as may be directed by Central consumer protection authority
- District collector’s power to inquire or investigate regarding violation of consumer rights, unfair trade practices.
- Power to CCPA to recall goods, reimbursement of prices and discontinuation of practices which are unfair.
- Power to issue directions and penalties against false and misleading advertisements. Endorser or manufacturer can be penalised upto 10 lakhs
- Power of search and seizure of goods.
- Appeal from order passed by CCPA shall lie before National Commission within a period of 30 days from the date of receipt of such order.
- In this regard Central govt has notified Central Consumer Protection Authority (Allocation and Transaction of Business) Regulations, 2020
- Sections 28 to 73 (Chapter IV) relating to establishment of the following Consumer Disputes Redressal Commission: –
District Commission
- Shall consist of president and two other members
- Pecuniary Jurisdiction: Value of goods or services does not exceed 1 crore
- Powers of District Commission:
- During pendency of proceeding may pass interim order
- Will have powers of civil court under CPC
- To award compensation for any loss or injury, grant punitive damages, cease manufacture of hazardous goods,
- Review any order passed if there is an error apparent on the face of the record
- Appeal from District Commission lies before State Commission. Appeal to be filed within 45 days.
- Appeal will be entertained only on deposit of 50% of the amount awarded in District Commission.
State Commission
- Shall consist of president and four other members
- Pecuniary Jurisdiction: Value of goods or services exceeds 1 crore but does not exceed 10 crores
- Powers of State Commission:
- Pass appropriate orders in any consumer dispute which is pending before it or has come on appeal from District Commission.
- Power to declare any terms of contract which is unfair to any consumer to be null and void
- Appeal from State Commission lies before National Commission. Appeal to be filed within 30 days from the date of the order.
National Commission
- Shall consist of president and four other members
- Pecuniary Jurisdiction: Value of goods or services exceeds 10 crores
- Powers of State Commission:
- Pass appropriate orders in any consumer dispute which is pending before it or has come on appeal from State Commission
- Power to declare any terms of contract which is unfair to any consumer to be null and void
- Set aside ex-parte orders
Appeal from the order of the National Commission shall lie before Supreme Court within a period of 30 days from the date of order.
- Limitation Period to file Consumer Complaint before all the above-mentioned Commission’s shall be 2 years from the date of which the cause of action arise.
- Penalty for non-compliance of the order of Commission:
Non-compliance with any order by the District, State and National Commission shall be punishable within imprisonment for a term which shall not be less than one month but may extend to three years or with fine which shall not be less than 25,000 rupees which may extend to upto 1 lakh or with both
- The Commission’s shall have the power of Judicial magistrate first class for trial of non-compliance of the orders
- Mediation (Chapter V) from Sections 74 to 81
- Establishment of consumer mediation cell to be attached with the respective commissions
- Settlement can happen through mediation the terms to agreed in writing and the same shall be submitted before the concerned Commission.
- Barring appeal from an order passed under Section 80 on the basis of settlement reached between the parties.
- Product liability (Chapter VI) from Sections 82 to 87
- Product means any article or goods possessing intrinsic value and in produced for introduction to trade or commerce
- Product liability responsibility of a product manufacturer to compensate for any harm caused to the consumer by such defective product.
- Product liability action can be brought against a product manufacturer for any harm caused to the consumer on account of defective product.
- Product Manufacturer shall be liable for:
- Manufacturing defect;
- Defective in design;
- Deviation from manufacturing specifications;
- Product does not confirm to express warranty
- Fails to contain any adequate usage to prevent any harm or any warning
- Offences and Penalties: (Chapter VII) only Sections 88 to 93
- Punishment for manufacturing for sale adulterant – whoever manufactures for sale or sells or distributes any adulterant shall be punished with imprisonment which may extend to a term which may extend to 6 months or with fine upto 1 lakh
- If the manufactured adulterant causes death of the consumer he can be punished with imprisonment for a term which shall not be less than 7 years and which may extend upto imprisonment for life and with fine which shall not be less than 7 lakh rupees.
- Whoever manufactures for sale or sells or distributes any spurious goods shall be punished with imprisonment for a term which may extend to one year and with fine upto 3 lakh rupees.
- Major Comparisons between CP Act, 1986 and CP Act, 2019
| Area | Consumer Protection Act 1986 | Consumer Protection Act 2019 |
| Nomenclature | District / State/ National Forum | District / State / National Commission |
| Regulator | No Separate Regulator | Central Consumer Protection Authority under Chapter III. |
| Product Liability | No provision. Consumer could approach a civil court but not | Sections 82 to 87 (Both Inclusive) Consumer can seek compensation for harm caused by a product or service. |
| Limitation period for filing compliant | 2 Years | 2 years with a provision for condonation of delay power U/s 69 of the Act. |
| Filing Jurisdiction | Complaint could be filed where the Seller’s (Defendant) office is located. | Complaint can be filed where Complainant resides or work. |
| Pecuniary Jurisdiction | District: Upto Rs. 20 Lakhs State: Rs.20 Lakhs to Rs.1 Cr.National: Above Rs. 1 Cr. | District: Upto Rs. 1 Cr. State: Rs. 1 Cr. To Rs. 10 Cr.National: Above Rs. 10 Cr. |
| Mediation | No such Legal Provision | Court can refer settlement through mediation. New Chapter of V is added |
| Penalties | No such provision | Section 90 Punishment for manufacturing products containing adulterant Section 91 Punishment for manufacturing for sale or for storing or selling or distributing or importing spurious goods. |
Consumer Protection (E-Commerce) Rules, 2020 (E-Commerce Rules)
E-Commerce Rules protects the consumers from unfair trade practices and other practices of e-commerce platforms
- As per rules 4 (4) of the E-Commerce Rules mandates that every e-commerce entity must establish an adequate grievance redressal mechanism and grievance officer
- Complaints must be acknowledged with 48 hours and ticket number should be generated and address the complaint within 1 month from the date of receipt of complaint
- E-commerce entity shall mention the name and details of any importer from whom it has purchased such goods or services
- E-commerce entity shall not impose cancellation charges on consumers cancelling after confirming purchase unless similar charges are also borne by the e- commerce entity
- Every E-commerce entity shall effect all payments towards accepted refund requests of the consumers as prescribed by RBI or as per applicable law;
- No E-commerce entity shall:
- manipulate the price of the goods or services offered on its platform in such a manner as to gain unreasonable profit by imposing on consumers any unjustified price having regard to the prevailing market conditions;
- discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights.
- Liabilities of marketplace e-commerce entities:
- Every marketplace e-commerce entity (entity which provides IT platform to facilitate transactions between buyers and sellers) shall require sellers through an undertaking to ensure that descriptions, images, and other content pertaining to goods or services on their platform is accurate.
- E-commerce entity shall provide details about the sellers offering goods and services, including the name of their business, whether registered or not, their geographic address and other details.
- Every marketplace e-commerce entity shall take reasonable efforts to maintain a record of relevant information allowing for the identification of all sellers who have repeatedly offered goods or services that have previously been removed or access to which has previously been disabled under relevant laws.
- Duties of sellers on marketplace:
- No seller offering goods or services through a marketplace e-commerce entity shall adopt any unfair trade practice
- No such 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.
- No seller offering goods or services through a marketplace e-commerce entity shall refuse to take back goods purchased or refuse to refund consideration, if paid, if such goods are defective, deficient or spurious, or if the goods or services are not of the characteristics or features as advertised.
- Any seller offering goods or services through a marketplace e-commerce entity shall have a prior written contract with the respective e-commerce entity in order to undertake to sale or offer
- Inventory e-commerce entity:
It shall mean an e-commerce entity which owns the inventory of goods or services and sells such goods or services directly to the consumers and shall include single brand retailers and multi-channel single brand retailers.
Every inventory e-commerce entity shall provide the following information in a clear and accessible manner, displayed prominently to its users:
- accurate information related to return, refund, exchange, warranty and guarantee, delivery and shipment, cost of return shipping, mode of payments, grievance redressal mechanism.
- all mandatory notices and information required by applicable laws.
- information on available payment methods, the security of those payment methods, the procedure to cancel regular payments under those methods, any fees or charges payable by users, charge back options, if any, and the contact information of the relevant payment service provider.
- all contractual information required to be disclosed by law.
- total price in single figure of any good or service along with the breakup price for the good or service, showing all the compulsory and voluntary charges, such as delivery charges, postage and handling charges, conveyance charges and the applicable tax; and
- a ticket number for each complaint lodged, through which the consumer can track the status of their complaint.
- No inventory e-commerce entity shall falsely represent itself as a consumer and post reviews about goods and services or misrepresent the quality or the features of any goods or services.
- Every inventory e-commerce entity shall ensure that the advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of such goods or services.
- No inventory e-commerce entity shall refuse to take back goods, or withdraw or discontinue services purchased or agreed to be purchased, or refuse to refund consideration, if paid, if such goods or services are defective, deficient spurious.
- Any inventory e-commerce entity which explicitly or implicitly vouches for the authenticity of the goods or services sold by it, or guarantees that such goods or services are authentic, shall bear appropriate liability in any action related to the authenticity of such good or service.
- Contravention of E-Commerce Rules:
- The provisions of the Consumer Protection Act, 2019 shall apply for any violation of the provisions of the E-Commerce Rules.
Conclusion:
The Act is a much needed piece of legislation to protect the interests of consumers and especially in the e-commerce regime where most of the deficiency of service arise and gets unredressed. In a nutshell by notifying this Act, the major implications would be:-
- Consumers may get enhanced compensation towards deficiency of service or sale of defective goods.
- Commission has abundant to power to declare a provision or the agreement itself as unfair contract.
- Parties can effectively use mediation to settle consumer disputes at initial stage itself rather than adjudicating before Commission.
- Setting up of grievance redressal mechanism and grievance officer for products sold through e-commerce and digital platforms should adhere to the obligations under E-commerce Rules.
- Advertisements of published on digital platforms shall adhere to the Act and Rules.