The Consumer Protection Act 2019 was passed by the Parliament on 6 August 2019 (2019 Act) with the objective of overhauling the earlier regime and replacing the Consumer Protection Act 1986 (1986 Act). The 2019 Act did not automatically come into force, and the Central Government was authorised to notify the 2019 Act and/or select provisions thereunder [§1(3); 2019 Act].

The Central Government has, on 15 July 20201, notified several provisions of the 2019 Act which have come into force from 20 July 2020. However, Chapter III and related provisions pertaining to the establishment and operation of the ‘Central Consumer Protection Authority' (Authority) have not yet been notified. It is worth noting that under Chapter III, the Authority would also have an investigation wing to look into complaints/information in relation to violation of consumer rights, unfair trade practices and false or misleading advertisements. The Authority is also empowered to impose penalties for such violations.

Some of the key changes and additions that have come into force, particularly relating to (i) the scope of the rights of a ‘consumer' (ii) liability of, inter alia, a manufacturer, seller, service provider and (iii) jurisdiction of the consumer fora are highlighted in this Article.

Wider ambit of consumer protection

  1. A clarification has been introduced in the definition of a ‘consumer' to include purchase of goods and hiring of services through “offline or online transactions through electronic means or by teleshopping, direct selling or multi-level marketing” [2(7)(ii)(b); 2019 Act].
  1. The definition of ‘goods' has been changed to mean “every kind of movable property” and includes ‘food' as defined by §3(1)(j) of the Food Safety and Standards Act 2016 [2(21); 2019 Act]. Previously, the definition of ‘goods' was equated to the definition in the Sale of Goods Act 1930.
  1. The definition of a ‘complaint', which can be filed before a consumer fora, now includes “an unfair contract” [2(6)(i); 2019 Act]. An expansive definition of an ‘unfair contract' has been inserted as §2(46) which seeks to curb preferential terms stemming from an unequal bargaining position. These include the imposition of a disproportionate penalty, unreasonable charge, obligation or condition to the detriment of a consumer, unilateral termination without reasonable cause and an excessive security deposit.
  1. Significantly, ‘product liability' has also been added to the definition of a ‘complaint', and a claim for product liability action would lie against a “product manufacturer, product seller, product service provider as the case may be” [2(6)(vii); 2019 Act]. §2(22) of the 2019 Act states that ‘harm' in relation to product liability would, amongst other things include damage to property (apart from the product itself), personal injury, illness or death, “mental agony or emotional distress attendant from personal injury, illness or damage to property” or any loss of consortium, services or any other loss. However, loss to the product itself, loss on account of breach of warranty conditions, “commercial or economic loss, including direct, incidental or consequential loss relating thereto” has been excluded.
  1. Any complaint in relation to ‘product liability' is to be governed by the provisions of Chapter VI [82 to §87; 2019 Act]. The Chapter deals extensively with the circumstances where a ‘product manufacturer' [§84 & §87; 2019 Act], ‘product seller' [§86 & §87; 2019 Act] and ‘product service provider' [§85; 2019 Act] would or would not be liable. It is pertinent to note that a ‘product manufacturer' would be liable in such an action “even if he proves that he was not negligent or fraudulent in making the express warranty of a product” [§84(2); 2019 Act].
  1. The meaning of ‘deficiency' by a ‘person' now includes negligence, omission or commission which causes loss or injury to the consumer and deliberate withholding of information by the ‘person' from the consumer [2(11); 2019 Act]. ‘Injury' has been defined as “any harm whatsoever illegally caused to any person, in body, mind or property” [§2(23); 2019 Act].
  1. ‘Unfair Trade Practices' has been widened to include (i) non-issuance of a bill or cash memo or a valid receipt against goods or services provided [2(47)(vii)], (ii) refusal to take back defective goods or refunding the consideration paid for deficient service within the timeframe provided for in the bill or within 30 days in the absence of such a timeframe stipulation in the bill[§2(47)(viii)], and (iii) disclosure of personal information given in confidence by the consumer [§2(47)(ix)].

Criminal Liability

As per §90 of the 2019 Act, a ‘person' who “manufactures for sale or stores or sells or distributes or imports any product containing an adulterant”, “shall” be punished with

  1. Imprisonment of up to 6 months and fine which may extend to Rs.1 Lakh if such act does not “result in any injury to the consumer”;
  1. Imprisonment of up to 1 year and fine which may extend to Rs.3 Lakhs if such act causes injury not amounting to grievous hurt to the consumer;
  1. Imprisonment of up to 7 years and fine which may extend to Rs.5 Lakhs if such act causes injury amounting to grievous hurt;
  1. Imprisonment of not less than 7 years, which may extend to imprisonment for life and fine which shall not be less than Rs.10 Lakhs if such act causes death.

For the purposes of the provision, ‘adulterant' has been defined as “any material including extraneous matter which is employed or used for making a product unsafe”.

Similar punishment would also be attracted to a person who “manufactures for sale or stores or sells or distributes or imports any spurious goods” [§91; 2019 Act], save that no punishment is prescribed for a situation where the consumer is not injured. Cancellation of license can also follow in both cases as a separate and independent punishment.

Jurisdiction of the District, State, and National Consumer Commission

The 2019 Act has revised the pecuniary jurisdiction of the District, State and National Consumer Commission. As per the revised jurisdiction, the District Commission now has the jurisdiction to entertain complaints where the “value of goods and services paid as consideration” does not exceed Rs.1 Crore. The State Commission can entertain complaints valued above Rs.1 Crore till Rs.10 Crores, and complaints valued above Rs.10 Crores will need to be filed before the National Commission.

For insurance contracts, this may mean that the premium paid by an insured will determine the forum where a consumer complaint can be filed. If so, then it is likely that complaints will mostly come to be filed before the District Commission or the State Commission, and not before the National Commission.

The District, State and National Commission have the power to refer a dispute before it, save for certain kind of complaints as may be specified, for mediation under Chapter V upon a written consent by the parties. Chapter V has been introduced in the 2019 Act for governing the process of mediation.

The Central Government has been granted the power to make rules for determining the qualifications for appointment, method of recruitment, procedure for appointment, term of office, resignation and removal of President and members of the District, State and National Commission.

Prospective or Retrospective Application

With the coming into force of the 2019 Act, the 1986 Act stands repealed [§107; 2019 Act]. It is however not absolutely clear if the 2019 Act would apply prospectively or retrospectively. A likely argument is that since the Parliament has not expressly indicated that it would operate retrospectively, the 2019 Act will have a prospective application alone. As a consequence, complaints already filed and pending in the District, State or National Commission may not be reshuffled based on the altered pecuniary jurisdiction of the consumer fora. However, the 2019 Act would certainly apply to complaints that have not yet been instituted, though the right to institute such complaints may have accrued prior to the notification of the 2019 Act. A clarification on the position may come to be issued, and that would be welcomed by many as it will avoid confusion and costs.

Concluding Remarks

The changes in the 2019 Act are a step-in-aid to empowering consumers and fastening a higher standard of care on manufacturers, sellers and service providers. Consumer driven businesses will now need to be mindful of the increased ambit of the 2019 Act as perhaps the entire gamut of consumer complaints ranging from unfair trade practises to misleading advertisements that exist today are now covered under one law.

Business can expect that the 2019 Act will lead to greater consumer awareness and also litigation against service providers and manufacturers.

Footnotes

1 Notification No. S.O. 2351(E) dated 15 July 2020 available at http://egazette.nic.in/WriteReadData/2020/220546.pdf

Originally published 03 August, 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.