Consumers play a vital role in the development of a nation. It was Mahatma Gandhi who once said, "A consumer is the most important visitor on our premises. He is not dependent on us, we are on him. He is not an interruption to our work; he is the purpose of it. We are not doing a favour to a consumer by giving him an opportunity. He is doing us a favour by giving us opportunity to serve him."
Given the scourge of widespread consumer exploitation, it is no surprise that consumer protection has gained immense importance worldwide. In the age of globalisation, consumer protection guidelines and legislation are necessary at the international and national level to ensure the safety of consumers. It was with this in mind that the United Nations General Assembly (UNGA) through a resolution adopted guidelines for consumer protection on April 9 1985.
India, which is now one of the largest markets in the world was quick to provide statutory recognition for protection of consumer rights by enacting the Consumer Protection Act in 1986.
The Consumer Protection Act, 1986 was constituted to protect the interests of the consumers and for the purpose of establishing consumer protection councils and other authorities for the settlement of consumer disputes among other things. Although, the working of the consumer dispute redressal agencies have served the purpose to a considerable extent under the said Act, an inherent need to further strengthen the redressal mechanisms under the enactment were felt by various stakeholders. Consumer markets for goods and services have undergone drastic transformation since the enactment of the Consumer Protection Act in 1986. The modern market place contains a plethora of products and services. The emergence of global supply chains, rise in international trade and the rapid development of e-commerce have led to new delivery systems for goods and services and have provided new options and opportunities for consumers. Equally, this has rendered the consumer vulnerable to new forms of unfair trade and unethical business practices. Misleading advertisements, tele-marketing, multi-level marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive interventions to prevent consumer detriment. Therefore, it was felt that there was a fundamental need to amend the Act to address the myriad and constantly emerging vulnerabilities of the consumers.
The Consumer Protection Bill, 2018, since passed by the Parliament as the Consumer Protection Act, 2019 (Act 35 of 2019) (Act of 2019), introduced in the winter session of Parliament in January, 2018 had sought to replace the almost three decade old Consumer Protection Act, 1986, which though amended on different occasions to suit the changing needs of the Indian society, was still found wanting in tackling the challenges posed by modern day economics of online trading and transactions as well as tele and digital marketing.
The authors of this article, which is being published in two parts, shall endeavour to outline some of the salient features of the Act of 2019 and how the same can be used for strengthening the protection of consumer rights in India.
PART - I
Salient features of the New Act
A bare perusal of the Act of 2019 makes the legislative intent in enacting the same abundantly clear. The Act aims at including within the statutory framework of the enactment, implicit doctrines propounded over the years by means of judicial pronouncements and active civil society deliberations. The Act of 2019 aims to further strengthen consumer interests and establish a concrete regulatory framework for timely and effective administration and settlement of consumers' disputes. The Act of 2019 has been enacted to provide a more robust grievance redressal mechanism for protecting and enforcing consumer rights. Keeping in mind the fast changing new-age economy, e-commerce platforms have now been specifically included under it.
The new Act also aims at ensuring that the rights of consumers are not subverted, in the wake of the new world of digital marketing and digital market space, especially during the current Covid-19 pandemic.. Far reaching provisions to ensure the same have been incorporated in the new Act to keep the consumer protection jurisprudence in tandem with the development of the tech enabled marked space.
Consumer and Consumer rights
The first and foremost addition to the Act of 2019 is the enlargement of the scope of the definition of 'consumer' under Section 2(7) of the Act. A new clause (b) has been inserted in the explanation for the purposes of the definition of 'consumer', whereby the expressions "buys any goods" and "hires or avails any services" includes both offline and online transactions through electronic means or by teleshopping or direct selling or multi-level marketing.
Apart from bringing within the purview of the enactment transactions effected through online platforms and teleshopping, a notable amendment to the definition is in protecting the rights of the consumers and making every stage of a multi-level marketing liable for any deficiency. The Act of 2019, therefore, extends the liability for deficiency from not only the manufacturer or the final seller but also brings within its ambit every level of marketing effected in between. The said amendment brings about corresponding provisions protecting consumers against misleading advertisements and marketing campaigns, which had in the past become the order of the day.
The Act of 2019, further, provides an all-encompassing definition of 'consumer rights' under Section 2(9) of the Act, something glaringly absent under the old Act but outlined in a catena of judicial pronouncements of the Hon'ble Supreme Court of India. The said definition includes the right to be protected against marketing of goods, products or services which are hazardous to life and property; the right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be; right to be assured access to a variety of goods, products or services at competitive prices; right to be heard and to be assured that consumers' interests will receive due consideration at appropriate fora; the right to seek redressal against unfair trade practice or restrictive trade practices or unscrupulous exploitation of consumers; and the right to consumer awareness.
The authors are of the opinion that in making explicit what was earlier implicit in the functioning of the 1986 Act, the legislature has sought to ensure that any lacunae previously present in the letter of the law is remedied.
The Act of 2019 has further envisaged a more inclusive definition of 'deficiency' by now incorporating within its purview any act of negligence or omission or commission by a person which causes loss or injury to the consumer; and deliberate withholding of relevant information by a person to the consumer.
The new exhaustive definition of 'deficiency' has truly revitalised the aged old latin term of caveat venditor which means let the seller beware, and envisages that the person selling goods is accountable for providing information about the goods to the seller. It is a counter to caveat emptor and forces the seller to take responsibility for the product and discourages sellers from selling products of unreasonable quality.
As a corollary to the aforesaid, the Act of 2019, further outlines a new genre of deficiency in the form of misleading and unscrupulous advertisements. Definitions and a means of seeking legal redressal, which were previously absent in the 1986 Act have now been prominently included in the new Act to ensure the due redressal of the grievances of consumers in the wake of such misleading advertisements. The Act of 2019 provides an exhaustive and inclusive definition of 'advertisements' under Section 2(1), and states that an 'advertisement' means 'any audio or visual publicity, representation, endorsement or pronouncement made by means of light, sound, smoke, gas, print, electronic media, internet or website, and includes any notice, circular, label, wrapper, invoice or other such documents".
The Act further under Section 2(28) defines a 'misleading advertisement' in relation to any product or service, means an advertisement which falsely describes such product or service; or gives false guarantees to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, will constitute an unfair trade practice; or deliberately conceals important information.
The enactment also envisages a substantive punishment under Section 89 of the Act whereby any manufacturer or service provider who causes a false or misleading advertisement to be made which is prejudicial to the interest of consumers shall be punished with imprisonment for a term which may extend to two years, and with fine which may extend to ten lakh rupees; and for subsequent offence, be punished with imprisonment for a term which may extend to five years and with a fine which may extend to rupees fifty lakhs.
It is pertinent to bear in mind that the Hon'ble Supreme Court of India, in the absence of such provisions in the 1986 Act, had by means of judicial pronouncements, particularly in the landmark cases of Buddhist Mission Dental College & Hospital v. Bhupesh Khurana & Ors, (2009) 4 SCC 473 outlined that any misrepresentation on behalf of an institute which tantamounts to unfair trade practice, clearly falls within the purview of deficiency as defined in the Consumer Protection Act. In that case, the respondents were admitted to the BDS course for receiving education for consideration by the Appellant College which was neither affiliated nor recognised for imparting education. The Hon'ble Supreme Court, therefore, held that the Learned National Consumer Disputes Redressal Commission rightly held that there was deficiency in service on the part of the institute and the respondent claimants are entitled to claim the relief as prayed for in the plaint. The appeal filed by the appellant being devoid of any merit was dismissed.
It was further held that appellant institute by giving a totally misleading and false advertisement clearly misled the respondents that the institute is affiliated by Magadh University and recognised by the Dental Council of India. It was observed that the respondents have lost their two valuable academic years which would have tremendous impact on their future career and that the appellant institute has played with the career of the students and virtually ruined their career and the respondents have lost two valuable academic years. Similar observations was also passed in the case of Bhanwar Kanwar v. R.K. Gupta & Anr., (2013) 4 SCC 252.
The Act of 2019 has therefore taken the jurisprudence further and in addition to any payment of compensation for any such deficiency, a more stringent enforcement mechanism which includes penal punishments has also been envisaged under the Act.
Another far reaching and substantive change envisaged in the Act of 2019 is the provision for making celebrities liable for misleading advertisements. The same stems from the addition of the new definition of 'endorsement' under Section 2(18) of the Act and from a holistic reading of the newly incorporated definition of 'advertisements' under Section 2(1) of the Act. The said issue has been subject of innumerable deliberations in the past. As far back as in 2016, the Central Consumer Protection Council (CCPC), headed by the Union Consumer Affairs Minister had opined that celebrities should be held responsible for misleading advertisements of brands endorsed by them. The Council had also proposed that there should be adequate guidelines for brand ambassadors and that though celebrities might not be experts at judging the quality of a product, they should at least apply some common judgement before endorsing a product. The Central government had also constituted a Parliamentary standing committee under J C Divakar Reddy, Member of Parliament, which was tasked with exhaustively analysing various aspects related to misleading advertisements. The Parliamentary Committee had recommended a jail term of up to five years, along with a hefty penalty, on celebrities who are found endorsing misleading advertisements. The panel also proposed a fine of up to Rs 10 lakh or an imprisonment of up to 2 years, or both, for first-time offenders. The repeat offenders were to be treated more stringently, with a fine of up to Rs 50 lakh, or imprisonment of up to five years, or both.
The said changes under the Act of 2019 might spell a difficult time ahead for celebrities, who have so far escaped any liability for misleading advertisements. The Act of 2019 recognises that celebrities have moral and ethical responsibility of the products they endorse. However, up till now their responsibility was only moral. The Act of 2019 is all set to change that.
In Part - II of the Article, the authors will discuss the new substantive provisions mads in the Act of 2019 in relation to Unfair Contracts, Product liability action, the establishment of the Central Consumer Protection Authority (CCPA), the statutory recognition afforded to Mediation as a mode of dispute resolution and whether the Act of 2019 can, in law, be afforded retrospective operation?
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.