Overview of Consumer Protection Act, 2019 | Enforced with effect from 20-7-2020/24-7-2020

Overview of Consumer Protection Act, 2019 | Enforced with effect from 20-7-2020/24-7-2020

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Created By Admin Last Updated Fri, 09-Oct-2020

I.   Introduction

Consumer Protection Act can be described as common man's Civil Court. The Act is designed to make available cheap and quick remedy to a small consumer. Under Sale of Goods Act, the principle is 'caveat emptor,' i.e., 'buyer be aware.' Buyer is supposed to take care before buying goods. He is supposed to be knowledgeable and well informed. This may be true about 100 years ago, when both buyer and seller were on equal footing. However, as organized manufacturing activity increased, sellers became bigger and better organized, while buyer continued to be unorganized and weak. Buyer could be easily misled and duped. It is now realized that a common consumer is neither knowledgeable nor well informed. He needs support and protection from unscrupulous sellers. A common consumer is not in a position to approach civil court. Quick, cheap and speedy justice to his complaints is required.

 

   II.    Background

United Nations adopted guidelines for protection of consumers on 9-4-1985. All countries were expected to take suitable legislative measures. Accordingly, 'Consumer Protection Act, 1986' was passed and made effective in 1987.

 

The objectives of the Act were discussed in V Kishan Rao v. Nikhil Super Speciality Hospital (2010) 5 SCC 513 (SC). In Laxmi Engineering Works v. P.S.G. Industrial Institute 1995 AIR SCW 2114, AIR 1995 SC 1428, it was observed that object of the Act is to protect the consumer from the exploitative and unfair practices of trade and to provide inexpensive, easily accessible and speedy remedy.

 

After gaining experience, new Consumer Protection Act, 2019 was passed (2019 Act for short). The Act has been partially made effective on 20-7-2020. The earlier Consumer Protection Act, 1986 has been repealed. There are many new innovations in the 2019 Act.

III.    Overall scheme of Consumer Protection Act, 2019

A. Three tier consumer disputes redressal mechanism – The Consumer Protection Act, 2019 envisages three tier mechanism to redress consumer disputes –

·    District Commission where value of goods or services does not exceed Rs one crore [section 34(1)]

·    State Commission where value of goods or services exceeds Rs one crore but does not exceed Rs ten crore [section 47(1)(a)]

·    National Commission where value of goods or services exceeds Rs ten crore [section 58(1)(a)(i)]

[Under the 1986 Act, the limit was Rs 20 lakhs in case of District Forum and 100 lakhs in case of State Commission]. In the Consumer Protection Act, 1986, the District Commission was known as 'consumer forums'.

 

B.  Complainant can file complaint where he is resident – Complainant can also institute the complaint within the territorial jurisdiction of the Commission where the complainant resides or personally works for gain besides what was provided earlier [Section 34(2) and 47(4)]. This will ease burden on complainant.

 

C.  Appeal against orders of Commission – The State Commission hears appeal against order of District Commission and National Commission hears appeals against original orders of State Commission. Appeal to National Commission can be filed only against original order of State Commission and not against order passed by State Commission in appeal against the order of District Commission [section 51(1)]

Appeal to Supreme Court can be filed only against original order of National Commission and not against order passed by National Commission in appeal against the order of State Commission [section 67] [Of course, jurisdiction of Supreme Court to admit Special Leave Petition remains unaffected]. Thus, in each case, only one appeal is provided.

 

D. Time limit for filing appeal before State Commission – The limitation period for filing of appeal to State Commission is increased from 30 days to 45 days. However, there is and was power to condone the delay.

 

E.  Second appeal before National Commission on substantial question of law – A second appeal to National Commission has been provided under section 51(3), if any substantial question of law is involved in the matter.

 

F.  Commission can review their orders – Power of review has been conferred to District Commission, State Commission and National Commission under sections 40, 50 and 60 of the Consumer Protection Act, 2019. This is a new provision. In my view, this may delay the matter.

 

G.  Pre-deposit while filing appeal  – A pre-deposit of 50% of amount is mandatory to file appeal. There is absolutely no provision to waive this pre-deposit of amount. This will considerably reduce frivolous appeals, though in many cases, this will cause miscarriage of justice, where high pitch unrealistic demands have been confirmed. [In the 1986 Act, limit for pre-deposit was only Rs 25,000/35,000].

 

H.  Administrative control of State Commission over District Commission and National Commission over State Commission – Provision have been made for administrative control of State Commission over District Commission and National Commission over State Commission [section 70]

 

I.   Enforcement of orders of Commission – Section 71 of Consumer Protection Act confers power of execution of order of Commission as provided under Order XXI of first Schedule of The Code of Civil Procedure, 1908.

 

J.   Mediation - The State Government shall establish a consumer mediation cell to be attached to each of the District Commissions and the State Commissions of that State – Section 72(1) of Consumer Protection Act, 2019. If both parties agree, the District/State Commission shall refer the matter to mediation. This is similar to lok-adalat and may expedite procedure of settlement of dispute. If mediation fails, matter will go back to District/State Commission [This is a new provision in 2019 Act].

 

K.  Provisions relating to unfair contract, restrictive and unfair trade practices Provisions relating to unfair contract, restrictive and unfair trade practices have been made in the 2019 Act. Provisions relating to unfair contract [section 2(46)] are new provisions. Section 49(2) and 59(2) of the 2019 act gives power to the State Commission and National Commission respectively to declare any terms of contract, which is unfair to any consumer, to be null and void. Provisions relating to restrictive trade practice [section 2(42) and unfair trade practices [section 2(47) were in the 1986 Act also.

 

L.  Measures to prevent unfair trade practices in e-commerce, direct selling, etc. – For the purposes of preventing unfair trade practices in e-commerce, direct selling and also to protect the interest and rights of consumers, the Central Government may take such measures in the manner as may be prescribed – Section 94 of Consumer Protection Act, 2019 [This section not notified and not made effective]

 

M. Central Consumer Protection Authority [Central Authority] – Sections 10 to 27 of Consumer Protection Act, 2019 deal with provisions relating to Central Consumer Protection Authority [Central Authority], to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers as a class.

The Central Authority shall consist of a Chief Commissioner and other members. These provisions are not so far notified and not made effective. Wide powers have been conferred on Central Authority.

[This is new provision under the 2019 Act, not made effective till 20-7-2020]

 

N.  Investigation Wing of Central Authority headed by Director General – The Central Authority shall have an Investigation Wing headed by a Director General for the purpose of conducting inquiry or investigation under the Consumer Protection Act as may be directed by the Central Authority [Section 15(1) of Consumer Protection Act, 2019]. Director General has powers of search and seizure under section 22.

[This is new provision under the 2019 Act, not made effective till 20-7-2020]

 

O.  Powers of District Collector – Powers have been vested on District Collector to investigate and report matters relating to violation of consumer rights [section 16]. He has powers of search and seizure under section 22 [This is new provision under the 2019 Act, not made effective till 20-7-2020].

 

P.   Powers to Director General of Search and seizure  – Wide powers have been conferred on Director General of search and seizure [section 22].

 

Q.  Offences and Penalties  – Provision of fine and imprisonment has been made for first time in Consumer Protection Act [sections 88 to 93].

Penalty for non-compliance of direction of Central Authority – section 88 [Not notified as provisions relating to Central Authority not notified till 20-7-2020].

·    Punishment for false or misleading advertisement – section 89 [This section is draconian and luckily not made effective till 20-7-2020].

·    Punishment for manufacturing for sale or storing, selling or distributing or importing products containing adulterant – section 90.

·    Punishment for manufacturing for sale or for storing or selling or distributing or importing spurious goods – section 91.

 

R.  Product Liability – The 2019 Act provides for claim for compensation under a product liability action by a complainant for any harm caused by a defective product manufactured by a product manufacturer or serviced by a product service provider or sold by a product seller – Section 82 of Consumer Protection Act, 2019. This is a new provision in the 2019 Act.

 

S.   Central Consumer Protection Council - The Central Government shall, by notification, establish the Central Consumer Protection Council to be known as the Central Council – Section 3(1) of Consumer Protection Act, 2019.

The Central Council shall be an advisory council and consist of the following members, namely - (a)the Minister-in-charge of the Department of Consumer Affairs in the Central Government, who shall be the Chairperson; and (b)such number of other official or non-official members representing such interests as may be prescribed – Section 3(2) of Consumer Protection Act, 2019.