CONSUMER PROTECTION ACT, 2019

The Consumer Protection Act has been enacted for the purpose of providing timely and effective administration and settlement of consumer disputes and related matters. The Government instead of bringing an amendment in the 1986 Act, enacted a new Act altogether so as to provide enhanced protection to the consumers taking into consideration the booming e-commerce industry and the modern methods of providing goods and services such as online sales, tele-shopping, direct selling and multi-level marketing in addition to the traditional methods.

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.

CONSUMER PROTECTION ACT, 2019

The Consumer Protection Act was initially enacted in 1986 and implemented from April 15, 1987. A comprehensive amendment (The Consumer Protection (Amendment) Act 2002) has been passed on Dec 17, 2002 (implemented effective from March '15, 2003, the ‘World Consumer Rights Day’).

Further, it was amended in 2019 as ‘The Consumer Protection (Amendment) Bill, 2019’. The Consumer Protection Bill, 2019 was passed by the Indian Parliament on Aug 2019. The Act of Parliament received the assent of the President on the 9th August, 2019, and is hereby published for general information. This new act replaced the old Consumer Protection Act, 1986. 

Consumer Protection Act, 2019 is a law to protect the interests of the consumers. This act was inevitable to resolve a large number of pending consumer complaints in consumer courts across the country. It has ways and means to solve the consumer grievances speedily.

AIM OF THE CONSUMER PROTECTION ACT, 2019

The basic aim of the Consumer Protection Act, 2019 to save the rights of the consumers by establishing authorities for timely and effective administration and settlement of consumers’ disputes.

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 behaviour and retail trends in the 21st century.

DEFINITION OF A CONSUMER

Consumer means any individual who-

  1. Buys any goods for a consideration which has been paid or promised or partly paid and partly promised; or
  2. Hires or avail of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment;
  3. Includes any user of such goods other than the person who buys such goods or hires of any services for consideration paid; or
  4. Promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person.

 Who is not a consumer?

  1. Person buying goods for resale;
  2. Person buying goods for any commercial purpose;
  3. Person receiving goods/services free or gifts; 
  4. Person enjoying personal service under a contract (service by employees/maid servants) etc.

Explanation: - For the purposes regarding definition of consumer;

(a) The expression "commercial purpose" does not include use by a person of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment;

(b) The expressions "buys any goods" and "hires or avails any services" includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing;

Coverage: All goods and services including banking, insurance, transport, processing, electricity, professional such as physicians etc. in private, public and cooperative sectors are covered under this Act. All banking services are covered due to their being essential services.

“CONSUMER” DEFINITION CHANGES UNDER THE NEW ACT, 2019

some major changes about the definition of “consumer” under the Consumer Protection Act, 2019 are as under;

  • 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.

RIGHTS OF CONSUMERS

The act provides following rights to the consumers;

  1. To have information about the quantity, quality, purity, potency, price, and standard of goods or services;
  2. To be protected from hazardous goods and services;
  3. To be protected from unfair or restrictive trade practices; 
  4. To have a variety of goods or services at competitive prices; 
  5. To have the right to consumer awareness.

CONSUMER PROTECTION COUNCIL

To promote and protect the right of the consumers, councils are established. Their scope is not regarding directly dealing with the consumer complaints at initial or appellate scope but to promote and protect the rights of consumer.

1.Central Consumer Protection Council: The Central Government has established a council known as the Central Consumer Protection Council, called the Central Council. The Central Council consist of the following:

a) The Minister-In-charge of the Consumer Affairs in the Central Government shall be the Chairman of the council, and

b) Such member of other official or non-official members representing such interests as may be prescribed.

 The Central Council shall meet as and when necessary but at least once in a year.

2. State Consumer Protection Council: The State Government has established a council known as the State Consumer Protection Council, called the State Council. The State Council consist of the following:

a) The Minister-In-charge of the Consumer Affairs in the State Government shall be the Chairman of the council,

b) Such member of other official or non-official members representing such interests as may be prescribed by the State Government, and

c) Such member of other official or non-official members not exceeding ten as may be nominated by Central Government.

 The State Council shall meet as and when necessary but at least twice in a year.

3. District Consumer Protection Council: The State Government has established a council known as the District Consumer Protection Council in every district, called the District Council. The District Council consist of the following:

a) The Collector of the District shall be the Chairman of the council,

b) Such member of other official or non-official members representing such interests as may be prescribed by the State Government, and

The District Council shall meet as and when necessary but at least twice in a year.

CENTRAL CONSUMER PROTECTION AUTHORITY (CCPA)

One of the most significant additions to the 2019 Act is the proposal to establish Central Consumer Protection Authority (CCPA) with the following features;

  • The Central Authority shall consist of a Chief Commissioner and such number of other Commissioners as may be prescribed, to be appointed by the Central Government to exercise the powers and discharge the functions under this Act.
  • The Central Authority shall have an Investigation Wing headed by a Director General for the purpose of conducting inquiry or investigation under this Act as may be directed by the Central Authority.
  • The CCPA has to regulate, protect and enforce the interest of the consumers and matters related to unfair trade practices.
  • The CCPA has been provided with vast powers to inquire, investigate and take action against violations of the 2019 Act. 
  • Another significant power the CCPA has been showered with, is the power to take action and impose penalty against misleading and false advertisement as well as against any endorser of such advertisement, which means the CCPA can now initiate action against the celebrities who have endorsed such misleading and false advertisement provided such celebrities failed to carry out any due diligence before participating in such advertisements. 
  • The CCPA may impose a penalty of up to Rs.10 Lakhs for first violation and up to Rs.50 Lakhs on every subsequent violation on a manufacturer or an endorser, for a false or misleading advertisement. 
  • In addition to this, such manufacturer or endorser may be sentenced to imprisonment for upto two years. 

PROHIBITION & PENALTY FOR A MISLEADING ADVERTISEMENT

The Central Consumer Protection Authority (CCPA) will have the power to impose fines on the endorser or manufacturer up to 2-year imprisonment for misleading or false advertisement (Like Laxmi Dhan Warsha Yantra).

Worth to mention that repeated offense, may attract a fine of Rs 50 lakh and imprisonment of up to 5 years.

CONSUMER DISPUTES REDRESSAL COMMISSION

The act has the provision of the establishment of the Consumer Disputes Redressal Commissions (CDRCs) at the national, state and district levels. The CDRCs will entertain complaints related to;

  1. Overcharging or deceptive charging,
  2. Unfair or restrictive trade practices,
  3. Sale of hazardous goods and services which may be hazardous to life, 
  4. Sale of defective goods or services.

JURISDICTION UNDER THE CONSUMER PROTECTION ACT, 2019

The act has defined the criteria of Consumer Disputes Redressal Commission (CDRCs). As far as the Consumer Redressal Commissions are concerned, certain key changes have been brought by the 2019 Act such as:-

  1. Territorial Jurisdiction – The 2019 Act now provides an added advantage to the consumers by providing for filing of complaints where the complainant resides or personally works for gain as against the 1986 Act which only provides for filing of complaint where the opposite party resides or carry on business. This would help in removing the difficulties faced by the consumers in seeking redressal of their grievances against businesses who may not have an office or branch in their state.
  2. Pecuniary Jurisdiction – The 2019 Act also changed the pecuniary jurisdiction for the District, State and National Commissions, respectively. The pecuniary limit for the District Commission has been increased to up to Rs.1 Crore from up to Rs.20 Lakhs; for State Commission it has been increased to up to Rs.10 Crores from up to Rs.1 Crore; and for National Commission the pecuniary jurisdiction has been increased to over and above Rs.10 Crores as against Rs.1 Crore in the 1986 Act. In addition to this, the 2019 Act has also changed the manner for determining the pecuniary jurisdiction for filing the Complaint. Now the pecuniary jurisdiction will be determined on the basis of the value of goods or services paid as consideration as against the 1986 Act wherein, the pecuniary jurisdiction was determined as per the value of goods and services as well as compensation claimed. This would help in doing away the practice of inflating the compensation claimed so as to bring the complaint within the jurisdiction of State or National Commission.
  3. Alternate Dispute Resolution – Another provision introduced by the 2019 Act to ensure speedy resolution of disputes is to provide for referring the disputes to mediation. As per the 2019 Act, the Consumer Commission shall refer the matter to mediation on written consent of both the parties. For this purpose, the 2019 Act also provides for establishment of a consumer mediation cell by the respective State Governments in each District Commission and State Commission as well as at the National Commission by the Central Government.
  4. E-Complaints - The 2019 Act also provides for filing of Complaints before the District Commissions electronically in accordance with the rules which are yet to be prescribed by the Government.

WHO CAN FILE A COMPLAINT?

A consumer (individually or jointly) himself or through any voluntary consumer Organisation, Central or State Governments can file a complaint. Limitation period is 2 years from the date of cause of action i.e. purchase of goods/hiring of services.

PROCEDURE FOR FILE A COMPLAINT

A simple written complaint in duplicate with full name and address of opposite party narrating facts of the complaint along with copies of the supporting documents and details of relief sought. No Court Fee is charged. Engaging of Lawyer is not necessary. Consumer or anyone can represent his case.

Consumer can fill his complain in the following consumer Commission

1.District Commission: A Consumer Disputes Redressal Commission to be known as the “District Commission” established by the State Government in each district of the State by notification. Each State Commission shall consist of a President and not less than two members. The District Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration does not exceed Rs. 1 Crore.

The Central Government may make rules to provide for the qualifications, method of recruitment, procedure for appointment, make rules to provide for salaries and allowances term of office, resignation and removal of the President and members of the District Commission.

2. State Commission: Each State Commission shall consist of a President and not less than four or not more than such number of members as may be prescribed in consultation with the Central Government. complaints where the value of the goods or services paid as consideration, exceeds rupees one crore, but does not exceed rupees ten crore:

The Central Government may make rules to provide for the qualification for appointment, method of recruitment, procedure of appointment, term of office, resignation and removal of the President and members of the State Commission.

The State Government may make rules to provide for salaries and allowances and other terms and conditions of service of the President and members of the State Commission.

3. National Commission: The National Commission shall consist of a President and not less than four or not more than such number of members as may be prescribed in consultation with the Central Government. complaints where the value of the goods or services paid as consideration, exceeds rupees one crore, but does not exceed rupees ten crore:

The Central Government may, by notification, make rules to provide for qualifications, appointment, term of office, salaries and allowances, resignation, removal and other terms and conditions of service of the President and members of the National Commission.

The President and members of the National Commission shall hold office not exceeding five years from the date on which he enters upon his office and up to age of seventy years in the case of the President and sixty-seven years in the case of any other member. 

Commission Claim Amount Office Structure
District Commission Up to Rs. 1 Crore Headed by President & 2 other members.
State Commission More than Rs. 1 Crore up to Rs. 10 Crore Headed by President & 4 other members.
National Commission Above Rs. 10 Crore Headed by President & 4 other members. Maximum age 70 years for President and 67 years for any other member.
 

ESTABLISHMENT OF CONSUMER MEDIATION CELL

Another provision introduced by the 2019 Act to ensure speedy resolution of disputes is to provide for referring the disputes to mediation. As per the 2019 Act, the Consumer Commission shall refer the matter to mediation on written consent of both the parties.

The State Government shall establish, by notification, a consumer mediation cell to be attached to each of the District Commissions and the State Commissions of that State.  The Central Government shall establish, by notification, a consumer mediation cell to be attached to the National Commission and each of the regional Benches. Every consumer mediation cell shall maintain:

(a) a list of empanelled mediators;

(b) a list of cases handled by the cell;

(c) record of proceeding; and

(d) any other information as may be specified by regulations.

Pursuant to mediation, if an agreement is reached between the parties with respect to all of the issues involved in the consumer dispute or with respect to only some of the issues, the mediator shall prepare a settlement report of the settlement and forward the signed agreement along with such report to the concerned Commission. The District Commission or the State Commission or the National Commission, as the case may be, shall, within seven days of the receipt of the settlement report, pass suitable order recording such settlement of consumer dispute and dispose of the matter accordingly.

RELIEF BY DISTRICT COMMISSION 

If, after the proceeding conducted the District Commission is satisfied about the complaint, it shall issue an order to the opposite party directing him:

  • To remove the defect pointed out from the goods;
  • To removal of deficiencies in services;
  • To replacement by new goods free from defects;
  • To refund of price/ charges etc.;
  • To pay such amount as may be awarded as compensation to the consumer for any loss or injury suffered by the consumer, due to the negligence of the opposite party.

OFFENCES AND PENALTIES

Some significant changes about the various types of penalties and punishments for different offences under the Consumer Protection Act, 2019 are as under;

  • Penalty for fails to comply with any order: Whoever fails to comply with any order made by the District Commission or the State Commission or the National Commission, as the case may be, shall be punishable with imprisonment for a term which shall not be less than one month, but which may extend to three years, or with fine, which shall not be less than twenty-five thousand rupees, but which may extend to one lakh rupees, or with both.
  •  Penalty for noncompliance of direction of Central Authority: Whoever, fails to comply with any direction of the Central Authority shall be punished with imprisonment for a term which may extend to six months or with fine which may extend to twenty lakh rupees, or with both.
  •  Punishment for false or misleading advertisement: 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 every subsequent offence, be punished with imprisonment for a term which may extend to five years and with fine which may extend to fifty lakh rupees. 
  • Punishment for manufacturing for sale or storing, selling or distributing or importing products containing adulterant or importing spurious goods: Whoever, by himself or by any other person on his behalf, manufactures for sale or stores or sells or distributes or imports any product containing an adulterant shall be punished, if such act:
  1. does not result in any injury to the consumer, with imprisonment for a term which may extend to six months and with fine which may extend to one lakh rupees;
  2. causing injury not amounting to grievous hurt to the consumer, with imprisonment for a term which may extend to one year and with fine which may extend to three lakh rupees; 
  3. causing injury resulting in grievous hurt to the consumer, with imprisonment for a term which may extend to seven years and with fine which may extend to five lakh rupees and non-bailable; and 
  4. results in the death of a consumer, with imprisonment for a term which shall not be less than seven years, but which may extend to imprisonment for life and with fine which shall not be less than ten lakh rupees and non-bailable.

The punishment in case of first conviction, suspend any licence issued to the person for a period up to two years, and in case of second or subsequent conviction, cancel the licence.

SUMMARY OF OFFENCE AND PUNISHMENT

Particulars Offence Type Punishment Amount Imprisonment Period
Order made by the District / State / National Commission Found guilty Min. Rs. 25000/- Max. Rs. 1 Lakh Min. 1 month Max. 3 years
Direction of Central Authority Fails to comply with any direction Max. Rs. 20 Lakh Max. 6 months
False or misleading advertisement First time offence Max. Rs. 10 Lakh Max. 2 years
Every subsequent offence Max. Rs. 50 Lakh Max. 5 years
Manufacturing for sale or storing, selling or distributing or importing products containing adulterant or importing spurious goods. (1st conviction, suspend licence for a period up to two years, and in case of second or subsequent conviction, cancel the licence) Does not result in any injury Max. Rs. 1 Lakh Max. 6 months
Causing injury not amounting to grievous hurt Max. Rs. 3 Lakh Max. 1 years
Causing injury resulting in grievous hurt Max. Rs. 5 Lakh Max. 7 years non-bailable
Results in the death of a consumer Min. Rs. 10 Lakh Min. 7 years Max. Whole life non-bailable
 

APPEAL AGAINST ORDER PASSED BY COMMISSION

A person aggrieved by any order passed by the Central Authority may file an appeal to the National Commission within a period of thirty days from the date of receipt of such order.

Any person aggrieved by an order made by the District Commission may appeal against the order to the State Commission within 45 days from the date of order. Appeal to State Commission against the award of District Commission will be accepted after Deposit amount is 50% of that amount in the manner as may be prescribed.

Any person aggrieved by an order made by the State Commission may appeal against the order to the National Commission within 30 days from the date of order. Appeal to National Commission against the award of State Commission will be accepted after Deposit amount is 50% of that amount.

Any person aggrieved by an order made by the National Commission may appeal against the order to the Supreme Court within 30 days from the date of order. Appeal to Supreme Court against the award of National Commission will be accepted after Deposit amount is 50% of that amount.

An appeal filed before the State Commission or the National Commission, as the case may be, shall be heard as expeditiously as possible and every endeavour shall be made to dispose of the appeal within a period of ninety days from the date of its admission.

TIME LIMITS FOR DISPOSAL OF COMPLAINT

Endeavour is made to decide the complaint within the following time frame: -

  1. Admissibility of the complaint from date of receipt of the complaint: within 21 days;
  2. Decision on complaint (Without analysis or testing of commodities): 3 months;
  3. With analysis or testing of commodities: 5 months.
ACTION TAKEN ON COMPLAINT TIME LIMIT
Admission of complaint from the date of receipt of the complaint.  21 days
Disposal without analysis or testing of commodities.  3 months
Disposal analysis or testing of commodities.  5 months
Appeal against the order made by the District Commission to the State Commission.  45 days
Appeal against the order made by the State Commission to the National Commission.  30 days
Appeal against the order made by the National Commission to the Supreme Court.  30 days
Appeal against the order made by the Central Authority to the National Commission.  30 days
Decision should be taken on Appeals for admission or rejection.  90 days
 

Conclusively, the Consumer Protection Act, 2019 when compared with the 1986 Act shows that it provides for greater protection of consumer interests taking into consideration the current age of digitization. The 2019 Act also deals with the technological advancements in the industry, provides for easier filing of complaints and also imposes strict liability on businesses including, which, prima-facie, appears to be much more consumer-friendly than the 1986 endorsers for violating the interest of the consumers. However, the test of time will prove the fate of the 2019 Act as and when it is notified by the Central Government Act and also includes the current industry trends of e-commerce.