“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work – he is the purpose of it. We are not doing him a favor by serving him. He is doing us a favor by giving us the opportunity to serve him.” – Mahatma Gandhi.
The customer is truly a king, but sometimes a king can be deceived or cheated. We do not live in a monarchy where the “king” would deliver justice, so we have a redressal system established for the same. The name is “Consumer Protection Act”.
A consumer or a customer has been treated as an important entity in our history, India has been an integral trade economy since the times of the original silk route. As we progressed, different kingdoms and dynasties arose but justice was delivered in such cases. Soon, we had a formal code of conduct in the form of the rules and laws made by the Britishers for our country such as “The Indian Contract Act,1872”. After independence, there were rules but not a proper redressal forum for a consumer. Consumer protection has been a significant part of the legal rules and regulations across the world and there are dedicated international bodies established for the interests of a consumer such as:
- International Consumer Protection and Enforcement Network.
- European Union Consumer Protection Cooperation Network.
- ASEAN Coordinating Committee on Consumer Protection.
- International Financial Consumer Protection Organization.
These were a few worldwide acknowledged names in consumer protection. These are well-established forums and there was a need to constitute the same for our country. A significant change occurred in 1986 with the introduction of the Consumer Protection Act,1986 which was a big boost in the quest for justice for a normal consumer. As the popular opinion goes, this act was truly the “Magna Carta” on the grounds of consumer rights and protection.
I shall dwell upon the virtues of the 1986 Act in short below:
It proposed setting up a three-tier redressal system. The tiers are – District, State, and then National. The upper limits are, Rs.20 Lakh/Rs.1 Crore/Rs.1 Crore and above respectively. This applied to all types of products and services. The body can impose a fine of up to 10,000 Rupees and a maximum of 3 years of prison.
This shall be the summary of the earlier act, this act was a great move towards securing consumer justice but lacking in several aspects such as:
- No Separate regulator.
- No provisions for e-commerce
- No Mediation cells
- No provisions for product liability i.e the consumer needed to approach the civil court in case of harm caused by a product/service.
- Legal hassles such as: The complaint could be filed only in the court where the defendant’s office is located,
Such shortcomings were visible starkly in recent years, as no data is needed to show that there has been a tremendous rise in e-commerce shopping hence, the need for redressal in this aspect. The other aspect is, the increasing consumer awareness has burdened the courts hence mediation cells are necessary and the legal complications need to be reduced. Here came the Consumer Protection Act,2019 which was introduced in the Lok Sabha on the 8th of July, 2019 to replace the archaic Consumer Protection Act,1986. The new act aims to increase the ambit of the courts, provide swift and less time-consuming justice.
A Look into the Procedure
Firstly, dwelling upon the various new features of the law, and then we shall proceed to the intricacies of the same.
The following content also contains the procedure established under the Consumer Protection Act for the disposal of complaints.
Central Consumer Protection Authority
Establishment of a “Central Consumer Protection Authority” which shall be the foremost body in the interest of consumers and would have various powers such as Taking action on Misleading advertisements and conducting investigations in cases regarding consumer rights violations and undertake strict action in such cases. The CCPA would be having an “investigation wing” headed by a DG (Director General) who shall conduct inquiries into violations.
Consumer Disputes Redressal Commission
Consumer Disputes Redressal Commissions (CDRCs) will be set up in a three-tier system just like the 1986 act. It would be under Chapter IV of the act. The levels are – district, state, and national. A consumer can file a complaint with the commissions on the grounds of :
(i) unfair or restrictive trade practices;
(ii) defective/bad goods or services;
(iv) the offering of goods or services for sale which may be hazardous to life and safety.
Complaints against an “unfair contract” can be filed with only the State and National. Appeal against the District CDRC Judgement would be heard in the State CDRC. Appeal against the State CDRC Judgement would be heard in the National CDRC. The final respite for an appellant shall be the Supreme Court of India.
The process regarding sale of harmful(adulterated) goods
Suspension of license for two years and for repeated offenses a lifetime suspension of license.
Alternate Dispute Resolution is a rapidly-growing field in India and to use the same can be a benefit to reduce the burden on the courts. If there is a settlement in part, the court shall continue the hearings and in the case of unsuccessful mediation, it should work to dispose of the matter in seven working days.
The process would be:
- Reference for ADR would be made by a consumer commissioner where there seems to be the scope and the parties agree to the same.
- The mediation would be held in Mediation cells which shall be established under Consumer Commission.
- An important point is, there would be no appeal against such mediations.
Simplification of the Process
With the inclusion of electronic complaints, one can file them from the comfort of their home. Also, as discussed earlier, the complainant can file the complaint in his/her own jurisdiction instead of the defendant’s jurisdiction. Hearings in the form of video-conferencing if needed. Automatic (Deemed) admissibility of complaints in the case of the lapse of the “21-day” period of admissibility. There would be no form of fees for complaints which are up to Rs.5 lakhs. There would be communication quarterly between the state and central commissioners regarding the number of cases disposed of, pendency, etc. There would also be an establishment of a “Central Consumer Protection Council” based on Central Consumer Protection Council Rules & It shall act as an advisory body regarding issues pertaining to consumers.
Central Consumer Protection Council (CCPC) would be constituted in the following manner
- Head – Union Minister of Consumer Affairs, Food and Public distribution.
- Vice Chairperson – State Minister
- Along with 34 other members from various fields.
- It shall have a three-year tenure along with two ministers of consumer affairs from each region namely North East, South, West, North, East.
Under the new act, the definition of advertisement [Section 2(1)] is defined widely to include new radical forms of advertisements such as the internet, website, etc. A section for a minor consumer has been added under Section 2(5)(vii) of the act in which the parent/legal guardian of the minor can seek relief. The definition of the consumer has been widened broadly thus, a synopsis includes any consumer who “buys any goods or hires any services” including both offline and online modes. Defined under section 2(7). Perhaps, the biggest change shall be section 2(9) which is about “consumer rights”.
Section 2(9) includes the following Rights
- Right to protection
- Right to Information
- Right to be assured
- Right to be heard
- Right to seek redressal
- Right to consumer awareness.
The new internet/electronic aspect has been included via the “e-commerce” Section 2(16) and “electronic service provider” Section 2(17). This has helped to include the sections which were not included in the earlier act due to the nature of the archaic law. A new section, as discussed earlier, talks about “Product Liability” under section 2 sub-clause 34. Earlier in the case of product liability, one had to approach civil courts but now consumers can approach consumer courts.
Another legislation that can be clubbed with this act shall be “The consumer protection(e-commerce) Rules,2020”. The rules are mandatory to follow and not advisory in nature. The legislation lays down everything important relating to e-commerce.
Important aspects of E-Commerce Rules 2020
- The E-commerce companies shall follow the Rule 5 and provide information to consumers relating to every aspect of a product like return/exchange/refund/delivery/guarantee and warranty/grievance redressal/country of origin etc.
- The entity shall acknowledge the consumer complaints within a timeframe of 48 hours and provide a redressal to the complaint within one month of the acknowledgment. There also needs to be an appointment of a Grievance officer for looking after the same.
- The e-commerce entity cannot refuse to accept returned goods or deny refunds or cancel services in the case of a deficiency or defect in the services of goods. The consumer can approach the consumer courts in such cases wherein there is a denial of the same.
- The e-commerce entities are also forbidden from manipulating prices of goods and services to gain unscrupulous profit.
Issues & Loopholes in the E-Commerce Rule 2020
- The intentions of the act seem noble and for bringing a change but some of the provisions are not-business friendly. Applying identical rules for large and small businesses is not a friendly approach. A small business may not be able to comply with the provisions for setting up a grievance redressal system hence failing to comply.
- No clear cut definition regarding price manipulation in the E-commerce rules.
- The rules also prohibit any sort of cancellation fees on orders, this won’t harm the big entities but it can badly affect small businesses who have a wafer thin profit margin and adding on to the shipping costs it shall become very difficult to sustain business in such conditions.
There needs to be a change in the “one rule fits all” notion and there should be some practical provisions to safeguard the sellers too from fraudulent cases and appeals.
The act can act as a tremendous change from what one could witness in the 1986 act, there are a lot of significant changes which have been described above. 1986 was at its best during the period of license raj and when there was no advent of e-commerce but changing times demanded a much-required change and the new move is welcome. The new law seems to have tackled inflation (increase in the upper limits), the issue of consumer awareness (electronic complaints), and the establishment of a regulator. The new law is well defined and provides well-defined rights to the consumer and truly empowers them. Alas, the thing boils down to the one final point which every statue in India has come to, it is Implementation. The application of the law and redressal in the quickest and swift manner with proper justice delivery shall truly empower the consumer. It was noted in the 1986 act that there were some loopholes and improper application hence leaving the consumer in a lurch but all we can hope is that this new enactment shall perform its task.