All you need to know about the Consumer Protection Act, 2019

Before going to depth into what Consumer Protection Act, 2020 is let’s deal with few basic questions which may arise for understanding this topic.
Who needs protection?

The Consumer needs protection. The Consumers are the ones who consume goods and services. He or she buys goods and/or services for consumption and not for resale or commercial purpose. The Consumer is an individual who pays some amount of money for goods or services required for consumption. Hence, consumers have an important role in the economy.

According to the Section 2(d) of Consumer Protection Act, “Consumer” means any person who,-

i) Buys any goods, for a consideration which has been paid or promised or partly paid and partly proposed, or under any system of deferred payment and includes any user of such goods other than the person who buys such code for consideration paid or promised or partly paid or partly promised or under any system set deferred payment when such e 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[1]

ii) (hires or avails of) any services 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 beneficiary of such services other than the person who (hires or avails of the service for 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[1]

Against whom and what is the protection needed?

The Consumers need protection against people who sell them the goods and/or services. Manufacturers, dealers, sellers, providers of services of various kind, traders, retailers, and so on , come under this category. Their practices of overcharging, faulty goods, misleading advertisement, ill quality, short durability, adulteration, deficiency in services, falsity in quantity, after sale services, etc. are practices against what the protection is needed.

According to the Consumer Protection Act,

“Service” means service of any description which is made available to the potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board and lodging or both, (housing construction), entertainment, amusement or the pursuing of news or other information, but does not include rendering of any service free of charge or under a contract of personal service.[1]

The definition of service in the Act can be split up into three parts the main part the inclusionary part and the exclusionary part. The main part is of an informative nature and describes service meaning any description of service rendered available to potential users The inclusionary part clearly requires the provision of facilities relating to banking funding, insurance, transport, processing, supply of electrical equipment to other energy boards or both accommodation, entertainment, entertainment or cleanliness construction or housing construction. The exclusionary aspect precludes any service being made free of charge or under a personal service contract.

What kind of relief can be provided to the Consumers in case of breach?

Repairing Refunding, Returning with interest, after sales discount, Remove the defect, Replace the goods, Return the price to the complainant, pay compensation for loss injury Discontinue the UTP/RTP, Product recall, Cease manufacture of such goods, Corrective advertisements and so on.

What are the Rights of Consumers?
  •     The right to be free from the selling of products and services that are life and property hazardous.
  •   The right to be aware of the nature, quantity, efficacy, level of purity and price of products in order to protect the customer from unfair commercial practises.
  •   The right to ensure access to a range of products at reasonable prices, wherever possible.
  •    The right to be heard and to be assured that due consideration will be given to customer preferences in suitable forums.
  •    The right to seek recourse against unfair commercial practises or unscrupulous consumer manipulation and
  •   The right to education for consumers means the right to gain the skills and ability to be an educated customer across life. Consumers’ ignorance, especially that of rural consumers, is primarily responsible for their exploitation. They should recognize their rights and have to exercise them. 

Consumer Protection Redressal Agencies
  •        Consumer disputes redressal forum- District Forum
  •        Consumer disputes redressal commission- State Commission
  •        National disputes redressal commission- National Commission

Amendments which delineated the Consumer Protection Act, 2020.

The first Consumer Protection Act was drafted in 1986 to protect the rights of the Consumers. However, the act suffered defaults and was ambiguous on the term “commercial purpose”. This paved the way for exploitation of Consumers due to broad interpretation of the term. For instance, in the landmark case of Shobag Mal Meena , the appellant was given a defective taxi under warranty under certain conditions. The taxi defaulted and the appellant registered a case under the Consumer Protection Act, 1986 where the respondent argued that the appellant doesn’t come under the definition of Consumer at the first place because the taxi was bought for commercial purpose for the motive of earning a livelihood. Hence, the court dismissed the case of Shobag Mal Meena without any relief. This created questions concerning the interpretation of the term in the minds of lawmakers who then decided to narrow it down. Therewith, came the Consumer Protection Act, 1993 which further explained the term “commercial purpose”. It added: For the purpose of sub-clause (i) “commercial purpose” does not include use by consumer of goods bought and use by him exclusively for the purpose of earning his livelihood, by means of self-employment; [1] In the case of Laxmi Engineering, the appellant was registered as a small scale industry who purchased certain machinery from the respondent which happened to be defective. The case eventually went up to the National Commission where it was upheld that consumers who buy goods exclusively for the purpose of livelihood by self-employment will come under the purview of Consumer Protection Act. However, consumers who let the goods be plied by others will fall out of the Consumer Protection Act. The explanation removes a specific reason from the application of the word ‘commercial purpose,’ which is an exception to an exception. Let us explain: a person who purchases a typewriter or a car and uses it for his personal use is definitely a customer, but it can be argued that a person who purchases a typewriter or a car for the purpose of typing other work for consideration or for plying the car as a taxi uses the typewriter/car for a commercial purpose. The explanation however clarifies that in certain situations, purchase of goods for “commercial purpose” would not yet take the purchaser out of the definition of expression “consumer”. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods is yet a consumer. In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be consumer. In other words, if the buyer of goods uses them himself, i.e., by self-employment for earning his livelihood, it would not be treated as a commercial purpose and he does not cease to be a consumer for the purpose of the Act. The explanation reduces the question, what is a ‘commercial purpose’, to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to. The several words employed in the explanation, viz., “uses them by himself”, “exclusively for the purpose of earning his livelihood” and “by means of self-employment” make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood.[2]

Consumer Protection Act, 2020

The changes brought in 1993 Amendment to replace the Consumer Protection Act of 1986:

The 1993 amendment was further renewed in 2019. The new Act suggested that the Central Consumer Protection Authority (CCPA) be formed to promote, protect and enforce consumer rights. With stringent laws, including prison time for unfair trade practices such as adulteration and misleading advertising by businesses, it aims to be more holistic. The CCPA is also determined to pursue class action, including the implementation of product recall, restitution and return. Instead of going to the place where the service was sold, customers can now file complaints with any district or state Consumer Commission nearest to them. If customers have not sustained injuries, the culpable corporation can be penalized with up to 6 months of incarceration or fined as high as Rs. 1 lakh. The fines can go up to Rs. 5 lakh or up to seven years in prison in case a consumer is hurt. If the unfair trade practice leads to the death of a customer, the business person responsible will have to pay a minimum of Rs. 5 lakh and a jail sentence of at least seven years, which can be extended to life imprisonment, depending on the seriousness of the complaint. This new act came into force in India on 20thJuly, 2020. Laws for the selling of items by e-commerce are now prescribed. The new legislation also allows for the e-filing of complaints affecting customers. Via video conferencing, a customer may conduct her own case. It is optional to hire a lawyer. The new legislation established a principle of product liability, enabling aggrieved customers to seek monetary compensation as a remedy because of the negligence of the producer or service provider. In order to minimize costs and increase the chances of redress or settlement, a group of aggrieved customers will join hands and file a class action suit. It is possible to punish manufacturers of counterfeit goods with imprisonment. Misleading ads can be punished with incarceration. Celebrities endorsing a product may not be prosecuted, but if the advertising is misleading, they may be barred from endorsing it. E-commerce is now strictly regulated, and it is now required that e-commerce companies will reveal all relevant product information, including country of origin, and respond to customer concerns with specified timelines. The new legislation encourages the settlement of consumer disputes by mediation, i.e., with the aid of a neutral intermediary outside the consumer court, thereby saving the disputing parties time and money that would otherwise have been expended in a structured process on dispute resolution. Consumers are now entitled to many protected rights, including the right to protection, facts, option, recourse, and the right to be heard, to be educated as a customer, and to a negotiated settlement. The Act has further reinforced the position of a consumer in the society.

Benefits of Consumer Protection Act

An analysis of the provisions of the act shows that, although invested with some of the powers of a civil count, the quasi-judicial bodies/authorities/agencies established by the Act, known as District Forums, State Commissions and the National Commission are not courts. They are quasi-judicial tribunals brought into existence to provide customers with cheap and timely remedies. It is equally clear that the forums/commissions were not meant to supplant the current judicial structure but to supplement it. The goal was to provide an alternative platform to provide a cheap and fast solution to conflicts between customers and suppliers of products and services. The platform thus created is uninhibited by a court\’s demand for court fees or formal procedures. Any client is free to go and file a complaint. The case does not actually need to be brought by the plaintiff himself, and any recognized consumer group can help his cause. Where a large number of customers have a common complaint, on behalf of all of them, one or more may file a complaint. It is also possible for the central government and state governments to intervene on their behalf. The aim was to help consumers achieve fairness and equal treatment for the purchase and use of products and services in a market dominated by large trading and manufacturing bodies. The entire Act, indeed, revolves around the customer and is intended to safeguard his interest. This Act allows for business-to-consumer conflicts and not for business-business conflicts. In our view, this scheme of the act is applicable to the terms that fall for consideration in this appeal and helps to understand them.

BASIS ACT OF 1986 ACT OF 2019
State commissions composition 2 Members and president 4 Members and president
Appeal timeline Previously, there was a 30-day timeframe for challenging a District Forum order (Section 15) 50 percent or 25,000, whichever is smaller, must be deposited first. It\’s now been 45 days (Section 41) Now, 50% of the award total is paid out.
Settlement through mediation No provision existed in this act Sec 80 can be applied and courts may refer the case to be settled by mediation
Financial jurisdiction District forum (up to 20 lacs) State commission (20 lacs – 1 crore) National commission ( 1 crore and above) District forum (upto 1 crore) State commission ( 1 crore – 10 crore) National commission (10 crore and above)
Purchase price criteria MRP was formerly used as a criterion for determining pecuniary jurisdiction. the discounted price and the final selling price is now a criterion.
Jurisdiction over the territory Where the seller\’s office exists. Where the plaintiff lives or works.
Unfair condition No provision existed in this act. Sections 49(2) and 59(2) of the new act offer the State Commission and the NCDRC the authority to consider any contract provisions that are unfair and unreasonable to consumers null and void.
Online purchase No protection is given to such customers. The customer who buys products or services online is directly included.
False or misleading advertisements Manufacturers and service. providers were solely responsible for this. If the endorser proceeds to advertise false information about the goods after receiving a notice from the consumer, the commission could levy a fine of fifty lakhs under section 21(2) of the 2019 Act.

  • WESTERN INDIA STATE MOTORS v. SOBHAG MAL MEENA & OTHERS
  • Laxmi Engineering Works v. P.S.G. Industrial Institute

References

[1] The Consumer Protection Act, 2020(bare act)

[2] http://indiakanoon.org

[3] https://www.lexology.com

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Disclaimer

The views and opinions expressed in this article are those of the author and do not reflect the views and opinions of Legally Flawless or its members.

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