Posted on: October 2, 2020 Posted by: Shreyansh Anand Comments: 0
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Introduction

Humans have mastered the art of taking advantage of services that meet their daily needs. Our everyday revolves around the exploitation of the goods and services that surround us with the aim of leading a comfortable and uncomplicated life. When we make use of these amenities, we become “consumers.” The term effectively means that we consume the assets around us. We seem to be at peace with a fact and for the most part we do not regret to describe our society as a consumer society, even if we sometimes question that many cherished things, especially human beings and human relationships, are treated as one form of consumer good; even if we are increasingly aware of the danger that the added effect, of our consumption practices enjoyed peacefully, can have on the environment and the working conditions of people living on the other side of the world. Consumption is the process by which goods and services are used in proper accordance by the people.

Who is a consumer?

According to Sec. 2 (d) of the Act, “consumer” has been defined as any person who:

  • purchases any good for a consideration that has been paid or promised or paid in part and in part promised, or under any deferred payment system, and includes any user of such goods other than the person who purchases said goods in exchange for a consideration paid or promised or partially paid or partially promised, or under any deferred payment system when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
  • contracts or makes use of any service for a consideration that has been paid or promised or partially paid and partially promised, or under any deferred payment system, and includes any beneficiary of such services other than the person who contracts or makes use of the services for your consideration paid or promised, or paid in part and promised in part, or under any deferred payment system, when such services are taken advantage of with the approval of the first person mentioned.

History of Consumer Protection

The concept of protection of consumer rights is not new; rather it is a practice that has been present in society and in several countries in one form or another, historically. The Old Testament mentions a form of consumer protection, as does the Code of Hammurabi, but only from a commercial perspective. An early form of consumer defence movement was born in the United States, where the foundations for the birth and development of monopoly and oligopolistic capitalism had begun. The first consumer organizations were born in Denmark in 1947 and Great Britain in 1955, where the Government created the Consumer Council to allow consumers to express themselves on issues reserved for producers and traders. But the real regulatory innovation came with the Single European Act; modified the Treaty of Rome solidifying the role of the Economic and Social Committee, which was given powers to safeguard consumers. Over the years, some major changes were made to the aforementioned legislation that paved the way for a broader consumer policy. But despite these additions, it still lacked a solid foundation for real consumer protection.

Development of Consumer Protection in India

Before Independence

With the advent of British rule, different English legislations emerged in India that aimed to protect the interests of the general public. These laws did not speak exclusively of consumers per se, but in the application they indirectly covered their interests. Despite these enactments, common law principles continued to govern the judgments of the Privy Council. In other words, it can be said that the principles of common law overshadowed the laws, which were introduced in India by the British Empire. Interestingly, although these laws were present in society, there was no notable improvement in the economic and social position of indigenous people as consumers, as they continued to suffer due to unfair commercial practices by foreigners and various bad practices present in the market.

The Penal Code of India, promulgated in 1860, contains the provisions dealing with the “crime related to weights and measures” in Chapter XIII. Sec. 272 and 273 prescribe penalties for the crime of adulteration of food or drink. The Medicines and Cosmetics Act of 1940 played a crucial role in regulating the import, manufacture, distribution and sale of adulterated or deceptive medicines and cosmetics.

The Indian Contract Act promulgated in 1872 governs the contractual aspects of transactions entered into by two parties. The essence of this legislation lies in the phrase “meeting of minds”. Lawmakers realized that the “meeting of minds” is one of those phenomena, which may not be found in all settings. When an individual buys certain merchandise from a dealer or seller, the entire gamut of the transaction that takes place between them rests on the agreed terms. The principles of the contract govern the determination of the rights and obligations of both parties to a transaction.

Making a proposal from one person to another creates the contractual relationship between two people. Any agreement when concluded by mutual consent of both parties takes the form of a contract. In other words, for an agreement to qualify as a contract, both parties must agree to “the same” and “in the same way.”

Post-Independence

After independence, India has been more aware of the fact that consumer interest is a priority in a democracy. No democracy can resist if its consumers are dissatisfied or if they feel that the usefulness of the goods and services they are obtaining is not worth considering, or if they suffer damage due to prevailing bad practices in society.

In 1954, the Food Adulteration Prevention Act was enacted with the aim of curbing the evils of adulteration of various harmful and toxic elements in basic products. Although the Indian Penal Code has already classified the act of “Adulteration of drugs”[1], “Sale of adulterated drugs”[2] and “Sale of drugs as a different medicine or prescription”[3] as crimes and punishable, for them, the Food Adulteration Prevention Act helped to further strengthen the restrictions. The following legislations have been enacted and are currently applied governing consumer laws in India:

  • The Drug (Control) Act, 1950;
  • The Food Adulteration Prevention Act, 1954.
  • Essential Commodities Act of 1955.
  • The Monopolies and Restrictive Business Practices Act of 1969.
  • The India Bureau Standards Act, 1986.
  • The Consumer Protection Act of 1986.

Consumer Rights

  1. Right to security

It means the right to be protected against the commercialization of goods and services that are dangerous to life and property.The acquired goods and services available must not only satisfy your immediate needs, but also satisfy long-term interests.

  1. Right to be informed

It means the right to be informed about the quality, quantity, potency, purity, standard and price of the goods to protect the consumer against unfair commercial practices.The consumer must insist on obtaining all the information about the product or service before making a choice or a decision.

  1. Right to choose

It means the right to have insured, whenever possible, access to a variety of goods and services at competitive prices.In the case of monopolies, it means the right to be assured of satisfactory quality and service at a fair price.

  1. Right to be heard

It means that the interests of the consumer will receive due consideration in the appropriate forums. It also includes the right to be represented in various forums created to consider consumer welfare.Consumers should form non-commercial, non-political consumer organizations that can be represented on various committees formed by the Government and other bodies on consumer matters.

  1. Right to request redress

It means the right to seek redress against unfair business practices or unscrupulous exploitation of consumers. It also includes the right to a fair resolution of genuine consumer complaints.Consumers should make complaints for their genuine complaints. Many times your complaint may have little value, but its impact on society as a whole can be very great. They can also enlist the help of consumer organizations to seek redress for their complaints.

  1. Right to consumer education

It means the right to acquire the knowledge and skills to be an informed consumer throughout life, being the ignorance of consumers, particularly rural consumers, the main responsible for their exploitation.They must know their rights and exercise them. Only then can real consumer protection be achieved successfully.

Where should Consumer go to get Justice

Consumers have the right to seek redress against unfair business practices and exploitation in consumer courts. If damage occurs to a consumer, the consumer is entitled to compensation according to the degree of damage. The consumer movement in India has led to the formation of various organizations known locally as a consumer forum or consumer protection council, which guide consumers on how to present cases in consumer court.

Under the Act a three-tier system is established at the district, state and national levels for the redress of consumer disputes. Various claims are filed by these courts as follows:

  • District level: up to Rs 20 Lakhs.
  • State level: between Rs 20 Lakhs and Rs 1 Crore.
  • National level: above Rs 1 Crore

If a case is dismissed in district court, the consumer can appeal to the state and then to the national level court.

CPA loopholes, 1986

The very purpose of the law introduced in 1986 was to protect the interests of consumers. It was a transition from the principles of caveat emptor to caveat venditor. It was not punitive or preventive in nature, but simply compensatory. The purpose of the law was to offer an easy, fast and inexpensive repair to consumers. But a change or change in the consumer’s mindset, the development of technology and the delay by the Consumer Courts have obstructed the desired effect or the purpose that is sought to achieve with said act. This required the need for the government to enforce laws that could effectively control consumer fraud and provide the necessary amendments to the various provisions of the Act to inaugurate a more successful robust mechanism that could administer justice to consumers and assess their rights.

Key features of Consumer Protection Act 2019

  1. Establishment of the Central Consumer Protection Authority (CCPA)

The law has the provision of the establishment of the CCPA that will protect, promote and enforce the rights of consumers. The CCPA will regulate cases related to unfair business practices, misleading advertisements, and violation of consumer rights. The CCPA will have an investigation wing, headed by a Director General, which will be able to conduct inquiries or investigations into violations of consumer law.

The CCPA has been vested with broad powers to take suo-moto actions, recall products, order a refund of the price of goods / services, cancel licenses and file class action lawsuits, if a consumer complaint affects more than one individual.

  1. Penalties for misleading ads

The bill contains provisions regarding misleading advertisements that are defined according to Clause 2 (28) of the Act. The New Act sets the liability of sponsors, considering that there have been numerous cases in the recent past where Consumers have been victims of unfair business practices under the influence of celebrities who act as brand ambassadors. In such cases, it is important that the endorser take responsibility and exercise due diligence to verify the veracity of the claims made in the advertisement to refute the liability claims.

The CCPA can impose a fine of up to INR 1,000,000 on a manufacturer or sponsor for a false or misleading advertisement and imprisonment of up to 2 years for the same. Under section 21 (2) of the 2019 Act, the commission could even impose a fine of Rs.50 lakhs on the endorser who continues to advertise false information about the products even after receiving a consumer-issued notice. The CCPA may also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to 1 year. For each subsequent violation, the ban period can be extended to 3 years.

  1. Unfair business practices

The Law introduces a specific broad definition of Unfair Business Practices, which also includes the exchange of personal information provided by the consumer in a confidential manner, unless such disclosure is made in accordance with the provisions of any other law. Misleading advertisements also fall under the scope of “unfair business practices” in the new law.

  1. Product liability

Product liability is an important aspect introduced in this bill that would benefit consumers. Under the provisions of this bill, a manufacturer or a service provider shall compensate the consumer in the event of any loss or injury due to a manufacturing defect in the product or poor service.

This is distinguished from the existing provision in which only the cost of the product was offset by the manufacturer or service provider and not the cost of loss or injury as in the current proposal.The product liability claim may be brought by a claimant against a product manufacturer, a product service provider, and a product vendor who exercises substantial control over the design, testing, or modification of the product.However, it will not include any damage caused by breach of the warranty conditions or any commercial or economic loss. The seller of the product will also not be responsible when the product has been misused, altered or modified.

  1. Covering e-commerce transactions

With the expansion of technologies and lifestyle, buying and selling of things on online platforms (such as Amazon, Flipkart, ebay) has increased. The new law successfully throws a blanket of protection over online transactions. The definition of consumer now includes within its scope any person who purchases goods, whether through online or offline transactions, electronic means, teleshopping, direct selling or multi-level marketing.

  1. Enabling Electronic Complaints / Hearings Through Video Conferencing

Unlike the previous Law, the new Law allows consumers to file electronic complaints from their homes. Electronic complaint filing and hearing via video conferencing has unravelled and resolved many of the complexities consumers face during filing procedures, going to court and participating in time-consuming documents. In addition, unlike the filing of claims by the consumer in the jurisdiction where the seller is located, the new Act allows consumers to file claims from anywhere or from where the consumer resides.

  1. Provision for mediation

If consumers wish to resolve the dispute out of court, there is also a provision for Mediation. The dispute can be referred to mediation as an alternative dispute redress mechanism. There is also a provision for the creation of a consumer mediation cell. This provision would ease the existing burden of millions of court cases and allow for faster resolution of the cases in question.

  1. Revised pecuniary jurisdiction

The new law has improved the pecuniary jurisdiction of consumer courts on several levels. The District Commission will now deal with cases where the value of paid goods and services is up to Rs 1 million, the State Commission with cases up to Rs 10 million and the National Commission with cases exceeding the value of 10 million rupees.


[1]Sec. 273, The Indian Penal Code, 1860

[2]Sec. 274, The Indian Penal Code, 1860

[3]Sec. 275, The Indian Penal Code, 1860

Shreyansh Anand
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2nd year BALLB Student at Amity Law School, Noida

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