Consumer Protection Act 2019

Topic: -

Discussion paper based on an important legislation

(Subject- Legal Methods)

Submitted to: -

Ms. Aakanksha Kumar

Submitted by: -

Vedika Singh

1st Semester, 1st Year

2019-5LLB-113

NALSAR University of Law, Hyderabad

Table of Contents

INTRODUCTION......................................................................................................................3

SUBSTANTIVE ANALYSIS....................................................................................................4

DISCUSSION............................................................................................................................8

CONCLUSION........................................................................................................................10
INTRODUCTION

Consumer is someone who buys goods from the seller or avails himself of any services in
exchange of a considerable amount he pays, promises, or partly pays and partly promises for
his consumption or someone on his behalf. But the definition excludes those people who buy
goods to sell them again or for any other commercial purpose and avail themselves of free
services. Laxmi Engineering Works vs P.S.G. Industrial Institute 1 explains about commercial
purpose and how it is different from self-employment activities. In this way, each and every
person on this planet has to essentially consume good and services for well-being and
existence and thus needs protection from trade malpractices and unsafe, adulterated products.
This is called Consumer Protection. Certain legislative actions taken by government to
protect the consumers are- Indian Standards (Certification Marks) Act, 1952, The Prevention
of Food Adulteration Act (1954), Essential Commodities Act, 1955, and Monopolies and
Restrictive Trade Practices (MRTP) Act, 1969. But the essential and enforcing changes were
brought up by Consumer Protection Act, 19862 by establishing District, State and National
Commissions for consumers to file complaints. Now, looking at the emergence of new
technologies and modern developments like e-commerce and multi-level marketing, this
three-decades old Act has become out-dated. Thus, government has come up with a new act
called Consumer Protection Act, 20193 which received Presidential assent on 9th August,
2019 and has brought along with it some stricter rules and provisions catering to the needs of
modern consumers with establishment of Central Consumer Protection Authority (CCPA) for
its enforcement.

SUBSTANTIVE ANALYSIS

1
Laxmi Engineering Works vs P.S.G. Industrial Institute, A.I.R. 1995 S.C. 1428.
2
Consumer Protection Act, 1986, No. 68, Acts of Parliament, 1986.
3
Consumer Protection Act, 2019, No. 35, Acts of Parliament, 2019.
Expanding upon the six rights provided under Sec. 6 of Consumer Protection Act, 1986, i.e.,
right to Safety, right to Information, right to Choose, right to seek Redressal, right to be
Heard and right to Consumer Education, Consumer Protection Act, 2019 provides for-

 The definition of consumer broadened to include those who go in for “offline or

online transactions through electronic means or by tele-shopping or direct selling or
multi-level marketing.”4
 Not just the manufacturer but also the other people engaged at various stages of multi-
level marketing can be exposed to liability under CPA, 2019.
 E-commerce means “buying or selling of goods or services including digital products
over digital or electronic network.”5 Thus, central government can take measures to
curb the malpractices involved in e-commerce but whether the enforcement of CPA,
2019 can be made on liabilities arising under off-shore e-commerce transactions is not
talked about in the Act.
 Earlier, a complaint filed “if an unfair trade practice or a restrictive trade practice
was adopted by any trader or service provider.”6 Now, further expansion of ground to
file complaints established under ““unfair contract” which allows consumers to
challenge contracts which are unfair, unilateral and unreasonable.” 7 But it would be
a matter of fact to see how courts would interpret in online contracts under such a
broad subjective definition of unfair contract.
 In addition to six types of unfair trade practices8 mentioned in CPA, 1986, three
additional brought under the new act9-
1. “failure or non-issuance of a bill or a cash memo;”
2. “refusal to take back or withdraw defective goods or withdrawal
or discontinuance of deficient services or refusal to refund the
consideration amount paid within the period as stipulated in the
bill or cash memo or receipt or in the absence of such
stipulation, refusal to withdraw or refund goods or services
within thirty (30) days;” and

4
A new explanation has been added to the definition of “Consumer” in section 2(7) of CPA 2019. Section 2(d)
of CPA 1986 contained the earlier definition of “consumer”.
5
Section 2(16) of CPA 2019.
6
Section 2(c)(i) of CPA 1986.
7
Section 2(6)(i) of CPA 2019.
8
Section 2(r) of CPA 1986.
9
Section 2(47) of CPA 2019.
Here, this section pre-determines that defective goods and deficient services exist and even if
such are withdrawn or discontinued, the providers can still be held liable under “product
liability” and “deficiency of services”.

3. “disclosure of consumer’s personal information to any other

person unless such disclosure is made in accordance with the
provisions of any law for the time being in force or in public
interest.”

Here, what if the consumer has given the consent to disclose such information? This
provision does not talk about it. And the “provisions of law” and “public interest” are too
subjective to determine whether such information can be disclosed or not.

 A claim of “product liability” 10 can be made against that manufacturer, seller or

service provider who sells defective good or avails of deficient services. “Product
liability means the responsibility of a product manufacturer or product seller, of any
product or service, related to the product to compensate for any harm caused to a
consumer by such defective product manufactured or sold or by deficiency in services
relating to the product.”11 This is a vast expansion of liabilities under this act.

Here, under provision of this new act where a product seller who is not product manufacturer
can be held liable12 if

(d) “the product has been sold by him and the identity of product manufacturer of such
product is not known, or if known, the service of notice or process or warrant cannot be
effected on him or he is not subject to the law which is in force in India or the order, if any,
passed or to be passed cannot be enforced against him;”

This point does not indicate any such liability on the product seller despite taking into
consideration that he sold such product of which the identity of product manufacturer was not
known. What if he has illegally imported it for his own benefit?

 CPA 2019 while defining “product” 13 specifically excludes “human tissues, blood,
blood products and organs”14 which very much supports the fact that trafficking of
human organs is illegal and punishable.
10
Section 2(35) of CPA 2019.
11
Section 2(34) of CPA 2019.
12
Section 86 of CPA 2019.
13
Section 2(33) of CPA 2019.
14
Supra note 13.
  Along with establishment of central authority, Central Consumer Protection Authority
(CCPA) “to promote, protect, and enforce the rights of consumers qua misleading
advertisements and unfair trade practices as a class”15 and its investigative wing16,
also empowering district collectors with the power to conduct investigations regarding
consumer grievances, there seems a direct connection between the centre and the local
level so as to ensure speedy work.
 An imposition of penalty up to INR 1 million and INR 5 million for subsequent
violations against false or misleading advertisements. Ambit of penalty also includes
endorsers i.e. bringing actors/actresses under the imposition and thus they have to do
a thorough research to exempt from the liability by establishing veracity of the claims
researched upon.
 Swifter disposal of cases possible by expanding the pecuniary jurisdictions of all the
three commissions- District Commission up to 1 crore, State Commission to hear
matters involving amount more than 1 crore but less than 10 crores and National
Commission to hear the cases involving amount of more than 10 crores.
 Removal of healthcare from the list of services i.e. Health Amendment casts doubt
upon the claim made by the government that despite this Amendment, healthcare
services will not be exempted from the purview of the CPA 2019. Because the
question then arises is that if such services are not excluded from the list of services
covered under CPA 2019 then why it was removed from the definition of the
“service”?
VP Shantha case17 held that “patients are consumers as long as they are making some
form of payment for the medical service rendered”. CPA 2019 not contradicts the
decision held but it is not clear regarding the application of this case once this Act
comes into force. “The Parliament certainly has the power to overturn a judgement
by passing a law that alters the basis of the judgment, as long as such law is applied
with prospective effect.”18 So, now the confusion arises that as CPA 2019 has been
passed, would it take the basis of the judgment in VP Shantha case away, or how the
courts would respond to the questions of whether CPA 2019 in the cases brought
before them covers the healthcare services or whether this removal of healthcare

15
Section 10 of CPA 2019.
16
Section 15 of CPA 2019.
17
Indian Medical Association v. VP Shantha & Ors. AIR 1996 SC 550.
18
The State of Karnataka and Ors. v The Karnataka Pawn Brokers Assn. and Ors., SLP(C) Nos. 8652-8656 of
2012.
 services from the definition of services by the Parliament has some bearing on such
decisions of the court.
 “Mediation cells have been attached to all the three commissions” 19 to resolve the
disputes through ADR mechanisms if there is consent to it by the side of the parties.
 CPA 2019 now allows consumers to file complaints in the district commission where
they reside or work for gain.20 In the previous Act of 1986 the complaint could be
filed from only where the manufacturer or the retailer resides but this provision in the
new Act takes into account the voice of the consumers with regard to the problems
they face while filing the complaints.
 Consumers also have the option to file complaints electronically. 21 This also works for
the benefit of the consumers as when the defaults regarding the cases of the e-
commerce arise where the headquarters of such online service providers are far from
where the consumer resides, it becomes easy for him to file the complaints via video
conferences as the physical labour gets reduced.

DISCUSSION

Lok Sabha took the discussion on the Consumer Protection Bill. 2019 on 30 July, 2019 when
Union Minister Ramvilas Paswan moved the bill for passage, Jalna MP Raoshaeb Danve also
talked about the bill amid the sloganeering against Mr. Paswan by the opposition party who
were protesting against Unnao rape accident survivor. This shows the priority of the

19
Section 74 of CPA 2019.
20
Section 34(2)(d) of CPA 2019.
21
Section 35(1) of CPA 2019.
opposition and their engagement in the discussion of the bill. Although when Mr. Danve said
loud out that this Act provides for establishment of CCPA to redress the grievances of the
consumers and protect their rights effectively, the opposition denied the support for this bill
by virtue of counter argument that “through establishing CCPA they were centralising the
authority and diluting the powers vested with the state governments.”22

Rajya Sabha approved the Bill by voice vote. Though the amendments proposed by the
members of TMC and CPI regarding sending the bill to a select committee of Rajya Sabha
for further scrutiny were rejected by the Upper House. Thus, showing the upper hand of the
ruling party. A point raised by one of the members of SP regarding celebrity endorsements
was answered wittingly. That earlier the Standing Committee had proposed for the jail term
for such endorsers but later an assessment was conducted where no provisions regarding
serious punishments for celebrities were found world-wide. Also, such celebrities should only
stick to what they had been asked to do by the manufacturer in the written form or else could
be held responsible for misleading advertisements, though a quick remark was added by the
Union Minister that there are other celebrities who are endorsing social messages like
Swachchta Campaign. TMC member also talked about how the executive powers were totally
held in the hands of the centre while the state remained with the financial burden of setting up
and maintaining State and District Commissions and also the appointments of officials under
such Commissions also rested in the hands of the Central Government only. Also, “Paswan
called the bill a “non-controversial” one and that except five, all the recommendations of the
Standing Committee were taken into consideration” 23 but one TRS member said that
government did not take into account the eleven recommendations of Parliamentary Standing
Committee and he also challenged the complicated language used in the drafting of the bill.

22
International (2019). Consumer Protection Bill, 2019: Lok Sabha takes up discussion. [online] India Today.
Available at: https://www.indiatoday.in/india/story/consumer-protection-bill-2019-lok-sabha-takes-up-
discussion-1575181-2019-07-30 [Accessed 23 Sep. 2019].
23
@businessline. (2019). Rajya Sabha passes Consumer Protection Bill. [online] Available at:
https://www.thehindubusinessline.com/news/national/rajya-sabha-passes-consumer-protection-
bill/article28837345.ece [Accessed 23 Sep. 2019].
CONCLUSION
Consumer Protection Act 201924 has brought forth various provisions like setting up of
CCPA, bringing in new section of product liability, expanding the pecuniary jurisdictions of
the Commissions, mediation procedures, filing of cases electronically, etc to cater the needs
of modern consumers indulged in e-commerce transactions, tele-marketing and multi-level
marketing. This Act is laudable in its efforts to move away from the days of caveat emptor
but towards caveat venditor. But some grey areas are always left in such acts when the
central government holds upper hand on the provisions under these acts. Like, clashes
between CCPA and many local regulators involved in some specific sectors, indirect
appointment of non-judicial members to the redressal bodies by being non-inclusive of
judicial qualifications as provided in earlier Act of 1986, hearing of cases of government
entities by the government nominees only could give rise to conflict of interests and many
more.

Thus, one could only expect of effective enforcement of an easily accessed, simply processed
and timely-bound resolution.

24
Supra note 3.