CONSUMER PROTECTION BILL

IN NEWS

The Lok Sabha  passed the Consumer Protection Bill 2018, which seeks to wholly replace the Consumer Protection Act 1986.

The Bill seeks to establish a national level regulator -Central Consumer Protection Authority- to deal with consumer complaints on a proactive measure. The present law does not have a regulator. Also, the Bill contains key provisions dealing with celebrity endorsements etc. The Bill also addresses new age developments like e-commerce, direct selling, tele-marketing etc.

HIGHLIGHTS OF THE BILL

  1. The Bill replaces the Consumer Protection Act, 1986.  The Bill enforces consumer rights, and provides a mechanism for redressal of complaints regarding defect in goods and deficiency in services.
  2. Consumer Disputes Redressal Commissions will be set up at the District, State and National levels for adjudicating consumer complaints.  Appeals from the District and State Commissions will be heard at the next level and from the National Commission by the Supreme Court.
  3. The Bill sets up a Central Consumer Protection Authority to promote, protect and enforce consumer rights as a class.  It can issue safety notices for goods and services, order refunds, recall goods and rule against misleading advertisements.
  4. If a consumer suffers an injury from a defect in a good or a deficiency in service, he may file a claim of product liability against the manufacturer, the seller, or the service provider.
  5. The Bill defines contracts as ‘unfair’ if they significantly affect the rights of consumers.  It also defines unfair and restrictive trade practices.
  6. The Bill establishes Consumer Protection Councils at the district, state and national levels to render advise on consumer protection

ANALYSIS OF THE BILL

The 2018 Bill is a marked improvement over the 2015 Bill and addresses several issues in the 2015 Bill. However, two major issues with regard to the Consumer Disputes Redressal Commissions remain the same.

  1. The Bill sets up the Consumer Disputes Redressal Commissions as quasi-judicial bodies to adjudicate disputes.  The Bill empowers the central government to appoint members to these Commissions.  The Bill does not specify that the Commissions will comprise a judicial member.  If the Commissions were to have members only from the executive, the principal of separation of powers may be violated.
  2. The Bill empowers the central government to appoint, remove and prescribe conditions of service for members of the District, State and National Consumer Disputes Redressal Commissions.  The Bill leaves the composition of the Commissions to the central government.  This could affect the independence of these quasi-judicial bodies.
  3. Consumer Protection Councils will be set up at the district, state, and national level, as advisory bodies.  The State and National Councils are headed by Ministers in-charge of Consumer Affairs.  The Bill does not specify whom the Councils will advise.  If the Councils advise the government, it is unclear in what capacity such advice will be given.
  4. The Bill permits the central government to notify the method of appointment of members of the Commissions.  It does not require that the selection involve members from the higher judiciary.  It may be argued that allowing the executive to determine the appointment of the members of Commissions could affect the independent functioning of the Commissions. 
  5. The Bill specifies that the Commissions will be headed by a ‘President’ and will comprise other members.  However, the Bill does not specify that the President or members should have minimum judicial qualifications. 

WAY FORWARD

Inclusion of the right to terminate a contract on the grounds of quality of goods or services received under consumer rights is necessary so as to bring in more responsibility to the manufacturers .In order to facilitate early disposal of cases, involvement of advocates in complaints involving compensation value of up to Rs 20 lakh should be prohibited as their involvement had attributed to inordinate delay in disposal of cases .As per the recommendation of the Standing Committee a provision may be inserted that the proposed Bill will apply to any matter covered under a special law, unless the special law excludes the application of the proposed Bill. Also it recommended Advertising Standards Council of India (ASCI) should be given legal backing. If incorporated this would have effect that the misleading advertiser is compelled to issue a corrective advertisement.

However the new law will revolutionise consumer rights in India by investing consumers and agencies with a lot more power than they currently have .

 

EXTRA INFO

Provision

1986 Act

2018 Bill

Ambit of law
  • All goods and services for consideration.
     
  • Free and personal services are excluded.
  • All goods and services, including telecom and housing construction, and all modes of transactions (online, teleshopping, etc.) for consideration.
     
  • Free and personal services are excluded.

Unfair trade practices*
  • Includes six types of such practices, like false representation, misleading advertisements.
  • Adds three types of practices to the list, namely: (i) failure to issue a bill or receipt; (ii) refusal to accept a good returned within 30 days; and (iii) disclosure of personal information given in confidence, unless required by law or in public interest.
     
  • Contests/ lotteries may be notified as not falling under the ambit of unfair trade practices.

Product liability
  • No provision.
  • Claim for product liability can be made against manufacturer, service provider, and seller.
     
  • Compensation can be obtained by proving one of the several specified conditions in the Bill.

Unfair contracts
  • No provision.
  • Defined as contracts that cause significant change in consumer rights.
     
  • Lists six contract terms which may be held as unfair.

Central Protection
Councils (CPCs)
  • CPCs promote and protect the rights of consumers.
     
  • CPCs established at the district, state, and national level.
  • Makes CPCs advisory bodies for promotion and protection of consumer rights.
     
  • Establishes CPCs at the district, state and national level.

Regulator
  • No provision.
  • Establishes the Central Consumer Protection Authority (CCPA) to promote, protect, and enforce the rights of consumers as a class.
     
  • CCPA may: (i) issue safety notices; (ii) pass orders to recall goods, prevent unfair practices, and reimburse purchase price paid; and (iii) impose penalties for false and misleading advertisements.

Pecuniary jurisdiction
of Commissions
  • District:  Up to Rs 20 lakh.
     
  • State:  Between Rs 20 lakh and up to Rs one crore.
     
  • National:  Above Rs one crore.
  • District:  Up to Rs one crore.
     
  • State:  Between Rs one crore and up to Rs 10 crore.
     
  • National:  Above Rs 10 crore.

Composition of
Commissions
  • District:  Headed by current or former District Judge and two members.
     
  • State:  Headed by a current or former High Court Judge and at least two members.
     
  • National:  Headed by a current or former Supreme Court Judge and at least four members.
  • District:  Headed by a President and at least two members.
     
  • State:  Headed by a President and at least four members.
     
  • National:  Headed by a President and at least four members.

Appointment
  • Selection Committee (comprising a judicial member and other officials) will recommend members on the Commissions.
  • No provision for Selection Committee.  Central government will appoint through notification.

Alternate dispute
redressal mechanism
  • No provision.
  • Mediation cells will be attached to the District, State, and National Commissions.

Penalties
  • If a person does not comply with orders of the Commissions, he may face imprisonment between one month and three years or fine between Rs 2,000 to Rs 10,000, or both.
  • If a person does not comply with orders of the Commissions, he may face imprisonment up to three years, or a fine not less than Rs 25,000 extendable to Rs one lakh, or both.

E-commerce
  • No provision.
  • Defines direct selling, e-commerce and electronic service provider.
     
  • The central government may prescribe rules for preventing unfair trade practices in e-commerce and direct selling.