UPSC MAINS 2019: The Consumer Protection Bill, 2018

The Consumer Protection Bill 2018

 

Topic: The Consumer Protection Bill, 2018

 

Topic in Syllabus: GS Paper 3: Indian Economy

The Consumer Protection Bill 2018

Context:

A bill for strengthening the rights of consumers and providing a mechanism for redressal of their complaints regarding defects in goods and deficiency in services was passed by the Lok Sabha.

 

More about on news:

  • The Consumer Protection Bill 2018, which will replace the Consumer Protection Act, 1986, will now go to the Rajya Sabha for passage
  • The legislation had not been amended since last three decades and needed changes for strengthening the rights of the consumers.
  • The bill, among other things, proposes setting up of the Consumer Disputes Redressal Commission and forums at the District, State and National levels for adjudicating consumer complaints.
  • It will have the power to set up a Central Consumer Protection Authority to promote, protect and enforce consumer rights as a class.

 

Who is a consumer?

Section 2(d) of the CPA defines “consumer” as a person who:

Buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for a consideration paid or 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, but does not include a person who obtains such goods for resale or for any commercial purpose;

Hires or avails of any services for consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for a consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose. It may, however, be noted that “commercial purpose” does not include use by a person of goods bought and services exclusively for the purposes of earning his livelihood by means of self-employment.”

 

Consumer Rights in India:

  • The definition of Consumer right is ‘the right to have information about the quality, potency, quantity, purity, price and standard of goods or services’, as it may be the case, but the consumer is to be protected against any unfair practices of trade.
  • It is very essential for the consumers to know these rights.
  • However there are strong and clear laws in India to defend consumer rights, the actual plight of consumers of India can be declared as completely dismal.
  • Out of the various laws that have been enforced to protect the consumer rights in India, the most important is the Consumer Protection Act, 1986.
  • According to this law, everybody, including individuals, a firm, a Hindu undivided family and a company, have the right to exercise their consumer rights for the purchase of goods and services made by them.
  • It is significant that, as consumer, one knows the basic rights as well as about the courts and procedures that follow with the infringement of one’s rights.
  • The Consumer Protection Act, 1986 and several other laws like the Weights, Standards & Measures Act can be formulated to make sure that there is fair competition in the market and free flow of correct information from goods and services providers to the ones who consume them.
  • In fact, the degree of consumer protection in any country is regarded as the right indicator of the progress of the country.There is high level of sophistication gained by the goods and services providers in their marketing and selling practices and different types of promotional tasks viz. advertising resulted in an increasing requirement for more consumer awareness and protection.
  • The government of India has realized the condition of Indian consumers therefore the Ministry of Consumer Affairs, Food and Public Distribution has incorporated the Department of Consumer Affairs as the nodal organization to protect the consumer rights, redress the consumer grievances and promote the standards governing goods and services provided in India.

 

In general, the consumer rights in India are listed below:

  • The right to be protected from all kind of hazardous goods and services
  • The right to be fully informed about the performance and quality of all goods and services
  • The right to free choice of goods and services
  • The right to be heard in all decision-making processes related to consumer interests
  • The right to seek redressal, whenever consumer rights have been infringed
  • The right to complete consumer education

 

If there is infringement of rights of consumer then a complaint can be made under the following circumstances and reported to the close by designated consumer court:

  • The goods or services purchased by a person or agreed to be purchased by a person has one or more defects or deficiencies in any respect
  • A trader or a service provider resort to unfair or restrictive practices of trade
  • A trader or a service provider if charges a price more than the price displayed on the goods or the price that was agreed upon between the parties or the price that was stipulated under any law that exist

 

CONSUMER PROTECTION ACT, 1986

  • One of the most important milestones in the area of consumer protection/consumer movement in the country has been the enactment of the Consumer Protection Act, 1986.
  • It was a progressive and comprehensive pieces of legislation of its time, covering all goods and services.
  • The Act ensures the rights of consumer for safety, information, choice, representation, and redressal and consumer education, and provides for a simple, speedy and inexpensive redressal to the consumers’ in the nature of a specific nature and also awards compensation, wherever appropriate, to the consumer.
  • An exclusive three tier redressal machinery as an alternative to the civil court and other legal remedies available in the country has been established under the Act, wherein an aggrieved consumer can seek redressal against any defect in the goods purchased or deficiencies in services availed, including restrictive/unfair trade practices adopted by such manufacturer and trader of goods/service provider.
  • In the past thirty years more than 4.3 million consumer cases were adjudicated and decided by the consumer fora.

 

SECTORAL LAWS PROTECTING CONSUMERS IN INDIA

Besides the Consumer Protection Act 1986, various laws and Regulations in India protect the interests of consumers, some of which are:

  • The Bureau of Indian Standard Act 2016: The Bureau of Indian Standards (BIS) Act 2016 establishes BIS as the National Standards Body of India. Besides containing provisions for establishing voluntary standards, the Act also contains provisions to bring under compulsory certification regime any article, process or service which it considers necessary from point of view of health, safety, environment, prevention of deceptive practices, security etc
  • The Legal Metrology Act 2009: The Act has come into force on 01.04.2011 and has repealed the Standards of Weights & Measures Act, 1976 & Standards of Weights & Measures (Enforcement) Act, 1985. The Government ensures through the Act that all weight and measure used for trade or commerce or for protection of human health and safety are accurate and reliable so that users are guaranteed for correct Weighment and Measurement.
  • The Essential Commodities Act 1955 : The Act empowers the Government to regulate prices, production, supply, distribution etc. of essential commodities for maintaining or increasing their supplies and for securing their equitable distribution and availability at fair prices. Most of the powers under the Act have been delegated by the Central Government to the State Governments with the direction that they shall exercise these powers.
  • The Food Safety and Standards Act, 2006: The Act envisages regulation of manufacture, storage, distribution, sale and import of food to ensure availability of safe and wholesome food for human consumption and for consumers connected therewith. The Food Safety and Standards Authority of India (FSSAI) has been established under this Act for laying down scientific standards for articles of foods and to regulate their manufacture, storage, distribution, sale and import to ensure availability of safe and wholesome food for human consumption.
  • The Contract Act 1872: The Act binds people on their promises made in a contract. The Act also provides remedies available to parties in case of breach of contract.
  • The Sale of Goods Act 1930: The act provides safeguard and relief to customers in case goods are not complying with the expressed conditions and warranty.
  • The Competition Act, 2002: The Act governs Indian competition law. It replaced the Monopolies and Restrictive Trade Practices Act, 1969. Under this legislation, the Competition Commission of India was established to prevent the activities that have an adverse effect on competition in India.
  • The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954. The Act controls advertising of drugs in India. It prohibits advertisements of drugs and remedies that claim to have magical properties, and makes doing so a cognizable offence. The act defines “magic remedy” as any talisman, mantra, amulet or any other object, which is claimed to have miraculous powers to cure, diagnose, prevent or mitigate a disease in humans or animal.
  • The Drugs and Cosmetics Act, 1940: The Act regulates the import, manufacture and distribution of drugs in India. The primary objective of the act is to ensure that the drugs and cosmetics sold in India are safe, effective and conform to state quality standards. The Drugs and Cosmetics Rules, 1945 framed under the Act contain provisions for classification of drugs under given schedules and there are guidelines for the storage, sale, display and prescription of each schedule.

 

RECENT INITIATIVES IN UPGRADING LEGISLATIONS:

A comprehensive up gradation of the existing Consumer Protection Act, 1986, by way of introduction of a new Bill is currently under consideration of the Parliament, aimed at making the consumer law more effective, functional and purposeful. Salient features of the Bill include:

  • Establishment of the central consumer protection authority (CCPA) to promote, protect and enforce the rights of consumers, to investigate and intervene when necessary to prevent consumer detriment arising from unfair trade practices, and to and take action against misleading advertisements.
  • Provisions for “product liability” action for or on account of harm caused by or resulting from any product by way fixing laibility the liability of a manufacturer
  • Provision for “mediation” as an alternate dispute resolution (ADR) mechanism which aims at giving legislative basis to resolution of consumer disputes through mediation, thus making the process less cumbersome, simple and quicker. This will be done under the aegis of the consumer fora.
  • Several provisions aimed at simplifying the consumer dispute adjudication process in the consumer fora are envisaged. These include, among others, enhancing the pecuniary jurisdiction of the consumer disputes redressal agencies, increasing minimum number of members in the consumer fora to facilitate quick disposal of complaints, power to review their own orders by the state and district commission, constitution of ‘circuit bench’ to facilitate quicker disposal of complaints, reforming the process for the appointment of the president and members of the district fora, enabling provisions for consumers to file complaints electronically and file complaints in consumer fora that have jurisdiction over the place of residence of the complainant, and deemed admissibility of complaints if the question of admissibility is not decided within the specified period of 21 days.

 

The Consumer Protection Bill, 2018:

  • 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.
  • 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.
  • 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.
  • 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.
  • The Bill defines contracts as ‘unfair’ if they significantly affect the rights of consumers. It also defines unfair and restrictive trade practices.
  • The Bill establishes Consumer Protection Councils at the district, state and national levels to render advice on consumer protection.

 

Key Features of the bill:

 

Consumer Complaints:

  • The Bill sets up Consumer Disputes Redressal Commissions (consumer courts) to hear complaints on matters like:
  • defect in goods or deficiency in services;
  • unfair or restrictive trade practices;
  • excessive pricing;
  • knowingly selling goods or providing services that do not meet safety norms; and
  • Product liability. Such complaints can be filed electronically and from where the complainant resides or works.
  • These Commissions will be set up at District, State and National level, with pecuniary jurisdiction up to Rs one crore, Rs one crore to Rs 10 crore, and above Rs 10 crore, respectively. In case of unfair contracts, the State Commissions will hear complaints where the value is up to Rs 10 crore, and National Commissions will hear complaints above that value. These Commissions can declare unfair terms of such contracts to be null and void.
  • Appeals from the District Commissions will be heard by the State Commission, and from the State Commission by the National Commission. Appeals from the National Commission will be heard by the Supreme Court.
  • The Commissions will attempt to dispose a complaint within three months, if the complaint does not require analysis or testing of commodities. If analysis and testing is required, the complaint will be disposed within a period of five months.
  • The District Commissions will consist of a President and at least two members. The State and National Commissions will consist of a President and at least four members. The qualifications, tenure, and method of appointment and removal of the President and members of these Commissions will be prescribed by central government through notification.
  • The Bill also provides for mediation cells attached to the District, State and National Commissions. The Commissions may refer a matter for mediation if the parties consent to settle their dispute in this manner.

 

Other Bodies established under the Bill

  • Central Consumer Protection Authority: The Bill sets up the Central Consumer Protection Authority (CCPA) to promote, protect, and enforce the rights of consumers as a class. It will be headed by a Chief Commissioner and comprise other Commissioners.  It will have an investigation arm headed by a Director General.  It may:
  • issue safety notices
  • pass orders to recall goods, prevent unfair and restrictive trade practices;
  • reimburse purchase price paid
  • Impose penalties for false and misleading advertisements. It may also file complaints before the Consumer Disputes Redressal Commissions.
  • Consumer Protection Councils: The Bill sets up Consumer Protection Councils (CPCs) at the district, state, and national levels as advisory bodies. The Councils will advise on promotion and protection of consumer rights.  Under the Bill, the Central and State Council will be headed by the Minister-in-charge of Consumer Affairs at the central and state level, respectively.  The District Council will be headed by the District Collector.

 

Product Liability

  • The Bill allows a person to make a claim of product liability against a manufacturer, seller, or service provider for any defect in a product or deficiency in a service. A claim for compensation may be made for any harm caused, including:
  • property damage;
  • personal injury, illness, or death
  • Mental agony or emotional harm accompanying these conditions.

 

Unfair contracts

  • A contract is said to be unfair if it causes significant change in the rights of the consumer, which include the following:
  • requiring excessive security deposits;
  • imposing a disproportionate penalty for a breach in contract;
  • refusing to accept early repayment of debts;
  • terminating the contract without reasonable cause;
  • transferring a contract to a third party to the detriment of the consumer without his consent; or
  • Imposing unreasonable charge or obligations which put the consumer at a disadvantage.
  • The State and National Commissions may determine if the terms of a contract are unfair and declare such terms to be null and void.

 

Unfair and restrictive trade practices

  • An unfair trade practice includes:
  • making a false statement regarding the quality or standard of a good or service;
  • selling of goods not complying with standards;
  • manufacture of spurious goods; (iv) non-issuance of a receipt for a good or service sold;
  • refusing to withdraw or refund goods or services within 30 days; or
  • Disclosing personal information provided by a consumer to any other person.
  • A restrictive trade practice is one that imposes unjustified costs or restrictions on consumers, including: (i) delays in supply that lead to increase in price; and (ii) requiring purchase of certain goods or services as a condition for procuring any other goods or services.
  • The CCPA may take steps to prevent and discontinue unfair and restrictive trade practices. The District, State or National Commissions may order the discontinuation of unfair and restrictive trade practices.

 

Penalties

  • If a person does not comply with the orders of the District, State or National 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.
  • If a person does not comply with an order issued by the CCPA, he may face imprisonment of up to six months, or a fine of up to Rs 20 lakh, or both.
  • For false and misleading advertisements, a penalty of up to Rs 10 lakh may be imposed on a manufacturer or an endorser. For a subsequent offence, the fine may extend to Rs 50 lakh. The manufacturer can also be punished with imprisonment of up to two years, which may extend to five years in case of every subsequent offence.
  • The CCPA can also prohibit the endorser of a misleading advertisement from endorsing any particular product or service for a period of up to one year. For every subsequent offence, the period of prohibition may extend to three years. There are certain exceptions when an endorser will not be held liable for such a penalty.
  • The CCPA may also impose penalties for manufacturing, selling, storing, distributing or importing adulterated products. The penalties are as follows: (i) if injury is not caused to a consumer, the penalty would be a fine of up to Rs one lakh along with imprisonment of up to six months; (ii) if injury is caused, penalty would be a fine up to Rs three lakh along with imprisonment of up to one year; (iii) if grievous hurt is caused, penalty would be a fine up to Rs five lakh along with imprisonment up to seven years; and (iv) in case of death, penalty would be Rs ten lakh or more along with a minimum imprisonment of seven years, extendable to imprisonment for life.
  • The CCPA may also impose penalties for manufacturing, selling, storing, distributing or importing spurious goods. The penalties are as follow: (i) if injury is caused, penalty would be a fine up to Rs three lakh along with imprisonment of up to one year; (ii) if grievous hurt is caused, penalty would be a fine up to Rs five lakh along with imprisonment up to seven years; and (iii) in case of death, penalty would be Rs ten lakh or more along with a minimum imprisonment of seven years, extendable to imprisonment for life.

 

Key Issues and Analysis:

  • 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.
  • 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.
  • 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.

 

Sample Question:

Critically examine the recent passed consumer protection bill 2018, and discuss how this bill will strengthening the rights of consumers and providing a mechanism for redressal of their complaints regarding defects in goods and deficiency in services.