UNIT IV: Consumer Protection Act, 2019

 Consumer Protection

 Need, Importance and Objectives of the Act

 Definitions

Concept and Third Party Beneficiary

If a third party gets a benefit under a contract, it does not have the right to go against the parties to the

contract beyond its entitlement to a benefit. An example of this occurs when a manufacturer sells a product

to a distributor and the distributor sells the product to a retailer.

The retailer then sells the product to a consumer. There is no privity of contract between the manufacturer

and the consumer.

The Consumer Protection Act, 1986 makes the user of the good who has not paid consideration also a consumer

which is a deviation from the general rule of privity of contract.

Consumer Protection Councils

The Act establishes consumer protection councils to protect the rights of the consumers at both the national

and state levels.

Central Consumer Protection Council: Under Section 3 of the Consumer Protection Act, 2019 the Central

Government shall establish the Central Consumer Protection Council which is known as the Central Council. It is

an advisory body and the Central Council must consist of the following members;

1. The Minister-in-charge of the Department of Consumer Affairs in the Central Government will be appointed

as the chairperson of the council, and

2. Any number of official or non-official members representing necessary interests under the Act.

The Central Council may meet as and when necessary, however, they must hold at least one meeting every year.

As per S.5 of the Consumer Protection Act 2019 the objects of the Central Council shall be to render advice on

promotion and protection of the consumers' rights under this Act.

State Consumer Protection Councils: Under S.6 every state government shall establish a State Consumer

Protection Council known as the State Council having jurisdiction over that particular state. The State Council

acts as an advisory body. The members of the State Council are:

1. The Minister-in-charge of the Consumer Affairs in the State Government will be appointed as the

chairperson of the council,

2. Any number of official or non-official members representing necessary interests under the Act, and

3. The Central Government may also appoint not less than ten members for the purposes of this Act.

The State Councils must hold at least two meetings every year.

As per S.7 of the Act the objects of every State Council shall be to render advice on promotion and protection

of consumer rights under this Act within the State.

District Consumer Protection Council: Under Section 8 of the Act, the state government shall establish a

District Consumer Protection Council for every district known as the District Council. The members of the

District Council are:

1. The collector of that district will be appointed as the Chairperson of the District Council, and

2. Any other members representing necessary interests under the Act.

Under S. 9 of the Act the objects of every District Council shall be to render advice on promotion and protection

of consumer rights under this Act within the district.

Central Consumer Protection Authority

The Central Government shall establish a Central Consumer Protection Authority which is known as the Central

Authority under Section 10 of the Consumer Protection Act, 2019, to regulate matters relating to violation of

the rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to

the interests of the public and consumers and to promote, protect and enforce the rights of consumers. The

Central Government will appoint the Chief Commissioner and the other Commissioners of the Central Authority

as required under the Act.

The Central Authority must have an ‘Investigative Wing’ under Section 15 of the Act to conduct an inquiry or

investigation. The investigative wing must comprise of the Director-General and the required number of

Additional Director-General, Director, Joint Director, Deputy Director and Assistant Director possessing the

required experience and qualifications to carry out the functions under this Act.
Functions and duties of the Central Authority: The functions and responsibilities of the Central Authority are

laid down in Section 18 of the Act which includes;

1. To protect and promote the rights of the consumers as a class and to prevent violation of consumer rights,

2. To prevent unfair trade practices,

3. To ensure no false or misleading advertisements regarding any goods or services are promoted,

4. To ensure no person takes part in false or misleading advertisements,

5. Inquire or investigate in cases of violation of consumer rights or unfair trade practices.

6. File complaints before the National, State or District Commission as the case may be,

7. To review matters relating to the factors hindering the enjoyment of consumer rights.

8. To recommend the adoption of international covenants and best international practices concerning

consumer rights

9. Promote research and awareness of consumer rights.

10. Lay down necessary guidelines to prevent unfair trade practices and protect the interests of the

consumers.

Furthermore, the Central Authority also has the power to investigate after receiving any complaint or directions

from the Central Government or of its own motion in cases where there is an infringement of consumer rights or

unfair trade practices are carried out. And if the Central Authority is satisfied that infringement of consumer

rights or unfair trade practices has occurred then it may:

 Recall the goods or services which are hazardous and detrimental to the consumers,

 Reimburse the prices of the goods and services to the consumers, and

 Discontinue the practices that are prejudicial and harmful to the consumers.

Under Section 21 of the Act, the Central Authority is authorised to issue directions to false and misleading

advertisements which may extend to ten lakh rupees. While determining the penalty of the offence the Central

Authority must keep in mind factors such as; the population affected by the offence, frequency of the offence

and gross revenue from the sales of such product. The Central Authority can also direct search and seizure for

the purposes of this Act and in that case the provisions of the Criminal Procedure Code, 1973 will apply.

Consumer Disputes Redressal Commission

To protect consumer rights, the Act mentions the establishment of three redressal mechanisms wherein the

consumers can approach to address their grievances.

District Commission: This the lowest rank in the redressal commissions that consumers can approach. The State

Government, under section 28(1) establishes at least one district consumer dispute redressal commission in every

district of the state. If the government deems fit, it can even establish more than one district commission in a

district. Every district commission needs to have a minimum of one president and two members but can have more

members after discussing it with the Central government. If your redressal value is 1 crore or less than that,

then you can approach the district commission.

Who can file a complaint at the district commission?

The following people can file a complaint at the commission under section 35(1) of the Act:

[1] The consumer

i) To whom such goods are delivered, or sold or agreed to be sold or such service which has been provided or

has been agreed to be provided.

ii) Who alleges unfair trade practises in respect of such goods.

[2] Consumer Association: Any voluntary consumer association registered under the law. It doesn’t matter if

the consumer is part of such association or not.

[3] One or more consumers appearing on behalf of all consumers with a common interest: These consumers

would first need to get permission from the District Commission to proceed with the complaint in such a manner.

[4] The Central Government, The State Government or the Central Authority as the case might be: Under

Section 34(2), a complaint can be filed at the District Court under within whose local limits:

i) The opposite party or each of the opposition parties, in case there are more than one, normally reside, or

carry on business, or have a branch or personally work for gain.

ii) Any of the opposite parties ordinarily reside, or carry on business, or personally work for gain. Provided,

the permission of the district commission is taken.

iii) Where the cause of action wholly or partly arises.

iv) Where the complainant resides or personally works for gain.

On filing the complaint, it is necessary for the Commission to admit or reject the complaint within 21 days of

receiving the complaint. It is legally prohibited under Section 36 for the commission to reject a complaint without

first hearing the complainant. It is also necessary for every proceeding to be presided by the President and one
member at least. Where the member who has been sitting for a particular proceeding is absent, the proceeding

can be resumed with another method.

Once the complaint is admitted, the commission must:

1. Refer a copy of the complaint, within 21 days of the complaint being admitted, to the opposite party and

direct it to give its version of the story within 30 days or the extended period granted by the commission.

2. If the opposite party disputes the allegation or fails and omits to take any action regarding the complaint,

then district commission must deal with it in the following ways.

3. Must seal the allegedly defective goods, and send them to the appropriate laboratory after authenticating

it in the manner required. It must direct the laboratory to find if there is any genuine fault with the goods

and report its findings to the commission within 45 days or how much ever time granted by the commission.

4. Before the goods go to the laboratory, the complainant must be directed to deposit the sum of money

required for testing in the credit of the commission.

5. If any of the parties dispute the correctness of the finding of the laboratory, then the parties must be

directed to submit their objections in writing to the commission.

6. Give a reasonable opportunity to the opposite party or the initiating party to be heard regarding their

objections.

If the above-mentioned procedure can’t be followed due to the lack of goods to take a sample from or if the

defect alleged is in the service of the opposite party. Then the commission shall settle the dispute:

1. On the basis of evidence provided by the complainant or the opposite party if the opposite party disputes

the allegation.

2. Take an ex parte decision if the opposite party omits to do anything regarding the allegations.

3. Decide the case on its merits if the complainant fails to show up for the hearing.

If it’s inconvenient for the party to show up to the commission in person, it can submit an application for hearing

or examination of parties through video conferencing and if the district commission agrees with the reasons then

it may allow so after recording the reason.

The commission must deal with the case as expeditiously as possible and endeavour must be done to dispose of

the case within three months if no analysis or testing is required and five months if analysis and testing are

required.
 The District commission has the same power as the district court under this act: If a party is aggrieved by

the order of the district commission then they may prefer an appeal to the State Commission within 45 days of

receiving such order. Even though the State Commission may entertain the plea after 45 days if sufficient reason

is given by the party.

The State Commission shall not hear the appeal of the party if the party has to pay a certain amount ordered to

be paid by the District Commission. Minimum 50% of the amount must be paid before the State Commission will

hear the appeal.

State Commission: The State government establishes a State commission, under section 42(1) of the Act, in the

state through the notification and can even establish regional branches if it seems fit. Each State Commission

shall consist of one President and no less than four members and a maximum of as many members as is

required. According to section 47, the State Commission has the jurisdiction to entertain:

i. complaints where the value of the goods or services paid as consideration, exceeds rupees one crore but

does not exceed rupees ten crores: Provided that where the Central Government deems it necessary so to

do, it may prescribe such other value, as it deems fit;

ii. complaints against unfair contracts, where the value of goods or services paid as consideration does not

exceed ten crore rupees;

iii. appeals against the orders of any District Commission within the State;

Apart from that, it also has the jurisdiction to call for the records and pass appropriate orders in any consumer

dispute which is pending before or has been decided by any District Commission within the State, where it appears

to the State Commission that such District Commission has exercised a jurisdiction not vested in it by law, or

has failed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally or with material

irregularity.

A bench of the State Commission must consist of a President and one member or more if the president deems it

fit.

The State Commission also has the power to shift proceedings from one district commission to another under

section 48. The State Commission can do that on its own cognizance or through an application filed by the parties.

But it must be to serve the purpose of justice.

State Commission disposes of the case in the exact same method as the District Commission and also holds the

power to review its own cases.

If aggrieved by the decision, the aggrieved party may prefer an appeal to the National Commission within 30 days

of receiving the order from the State commission. If sufficient reason is shown, then the national commission

can also entertain the plea after the thirty days.

The national commission shall not listen to an appeal if the person who has to pay a particular amount from the

order of the state commission, has not paid at least 50% of the amount ordered to be paid.

The appeal must be dealt with expeditiously and endeavours must be made to dispose of the appeal within 90

days from its date of admission.

National Commission: Under Section 53(1), the Central Government establishes a National commission through

notification. The main National Commission operates on the national capital region but the Central government

can establish regional branches through notification. The National Commission must have one president and at

least 4 members with the maximum being whatever is prescribed by the national government.

The National Commission has jurisdiction, under section 58 of the Act:

(a) to entertain:

(i) complaints where the value of the goods or services paid as consideration exceeds rupees ten crores:

Provided that where the Central Government deems it necessary so to do, it may prescribe such

other value, as it deems fit;

(ii) complaints against unfair contracts, where the value of goods or services paid as consideration

exceeds ten crore rupees;

(iii) appeals against the orders of any State Commission;

(iv) appeals against the orders of the Central Authority; and

(b) to call for the records and pass appropriate orders in any consumer dispute which is pending before or has

been decided by any State Commission where it appears to the National Commission that such State Commission

has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted

in the exercise of its jurisdiction illegally or with material irregularity.

A bench in the National Commission must at least consist of the President and one member but there can be more

members if the President deems it fit.

The National Commission disposes of a case in the same manner as the district commission and also reserves the

right to review its cases suo moto or based on an application filed by one of the parties.

Section 65(1) also states: All notices, required by this Act to be served, shall be served by delivering or

transmitting a copy thereof by registered post acknowledgment due addressed to opposite party against whom

complaint is made or to the complainant by speed post or by such courier service, approved by the District

Commission, the State Commission or the National Commission, as the case may be, or by any other mode of

transmission of documents including electronic means:

If the postal delivery guy acknowledges that the post was refused by the party, then the commission must

acknowledge the party as duly served under 65(2).

If aggrieved by the decision then an appeal does lie to the Supreme Court if made within thirty days of receiving

the order.

Administrative control: Section 70 of the act states that the national commission shall lay down regulations for

the State Commission after consultation with the Central government, for the better protection of the

consumers and for that purpose must also have administrative control over all state commissions in the following

matters:

a) monitoring performance of the State Commissions in terms of their disposal by calling for periodical returns

regarding the institution, disposal and pendency of cases;

b) investigating into any allegations against the President and members of a State Commission and submitting

inquiry report to the State Government concerned along with copy endorsed to the Central Government for

necessary action;

c) issuance of instructions regarding the adoption of uniform procedure in the hearing of matters, prior service

of copies of documents produced by one party to the opposite parties, furnishing of the English translation of

judgments written in any language, speedy grant of copies of documents;

d) Overseeing the functioning of the State Commission or the District Commission either by way of inspection or

by any other means, as the National Commission may like to order from time to time, to ensure that the objects
and purposes of the Act are best served and the standards set by the National Commission are implemented

without interfering with their quasi-judicial freedom.

There shall be a monitoring cell instituted by the president of the national commission and the State Commission

shall also have the same administrative control over the district commission.

Section 71 of the Act also states that every decision of the commission must be enforced in the same way as a

decree made by the court under Order XXI of the first schedule of the Civil procedure code.

Section 72 lays down the punishment on the disobedience of commission orders: Whoever fails to comply with

any order made by the District Commission or the State Commission or the National Commission, as the case may

be, shall be punishable with imprisonment for a term which shall not be less than one month, but which may extend

to three years, or with fine, which shall not be less than twenty-five thousand rupees, but which may extend to

one lakh rupees, or with both.

The section further grants the commissions the same power as a judicial magistrate first class under the Code

of Criminal Procedure.

Mediation

Section 74 of the Consumer Protection Act, 2019 states that a Consumer Mediation Cell shall be established by

the Central Government at the national level and every state government shall establish Consumer Mediation Cell

exercising within the jurisdiction of that state. The mediator nominated to carry out the mediation shall conduct

it within such time and in such manner as may be specified by regulations.

Section 75 of the Act talks about the empanelment of the mediators. It states the qualifications, terms and

conditions of service, the procedure for appointing, and the fee payable to the empanelled mediators.

It is the duty of the mediator to disclose certain facts such as; any personal, financial or professional in the

result of the consumer dispute, the circumstances giving rise to their independence or impartiality and any other

necessary information for the protection of consumer rights.

Product Liability

Under Section 83 of the Act, a product liability action may be brought by a complainant against a product

manufacturer, product service provider or product seller.

Liability of product manufacturer: A product manufacturer will be held liable in a product liability action under

the following circumstances:

o The product contains manufacturing defects.

o The product is defective.

o There is a deviation from manufacturing specifications.

o The product does not conform to the express warranty.

o The product fails to contain adequate information for proper usage.

Liability of product service provider: A product service provider will be held liable in a product liability action

under the following circumstances:

o The service provider will be responsible when the service provided by them is faulty or imperfect.

o There was an act of negligence on their part.

o The service provider failed to issue adequate instructions and warnings for the services.

o The service provider failed to conform to the express warranty or terms and conditions of the contract.

Liability of product seller: A product seller will be held liable in a product liability action under the following

circumstances:

o They altered or modified the product which resulted in being detrimental to the consumer.

o They failed to exercise reasonable care in assembling, inspecting or maintaining such product

o They exercised substantial control over the product which resulted in causing harm to the consumer.

Exceptions to product liability: There are certain exceptions to product liability action mentioned in Section

87 of the Act, such as;

 The product was altered, modified or misused by the consumer,

 A consumer cannot bring product liability action when the manufacturer has given adequate warnings and

instructions for the use of the product,

 The manufacturer would not be liable in case of a product liability action for not warning about any danger

that is commonly known to the general public.

Offences and Penalties

1. Punishment for false and misleading advertisements: Under Section 89 of the Act any manufacturer or

service provider who promotes false or misleading advertisements will be punished with imprisonment for

a term that may extend to two years and with fine that may extend to ten lakh rupees.

2. Punishment for manufacturing, selling, distributing products containing adulterants: Under Section

90 of the Consumer Protection Act, 2019 any person who sells, manufactures, distributes products

containing adulterants shall be penalised in case of the following circumstances;

 If the adulterated product does not cause any injury to the consumer then the term for imprisonment

will extend to a period of six months and fine which may extend to one lakh rupees,

 If the product containing adulterant causes injury not amounting to grievous hurt then the term for

imprisonment will extend to a period of one year and fine which may extend to three lakh rupees,

 If the product containing adulterant causes injury amounting to grievous hurt then the term for

imprisonment will extend to a period of seven years and fine which may extend to five lakh rupees,

 If the product results in causing death to the consumer, then the term for imprisonment will be for

a period of seven years which may extend to life imprisonment and fine not less than ten lakh rupees.

The court may, in case of first conviction, suspend any licence issued to the person referred to in that sub-

section, under any law for the time being in force, for a period up to two years, and in case of second or

subsequent conviction, cancel the licence.

3. Punishment for manufacturing, selling, and distributing spurious products: Section 91:

(1) Whoever, by himself or by any other person on his behalf, manufactures for sale or stores or sells or

distributes or imports any spurious goods shall be punished, if such act:

(a) causing injury not amounting to grievous hurt to the consumer, with imprisonment for a term which may

extend to one year and with fine which may extend to three lakh rupees;

(b) causing injury resulting in grievous hurt to the consumer, with imprisonment for a term which may

extend to seven years and with fine which may extend to five lakh rupees;

(c) results in the death of a consumer, with imprisonment for a term which shall not be less than seven

years, but may extend to imprisonment for life and with fine which shall not be less than ten lakh rupees.

The court may, in case of first conviction, suspend any licence issued to the person referred to in that sub-

section, under any law for the time being in force, for a period up to two years, and in case of second or subsequent

conviction, cancel the licence.

 Consumer Protection Act 1986 v. Consumer Protection Act 2019

The amendment of 2019 to the Consumer Protection Act came after thirty-three years of the act being passed.

Technology has progressed a lot in these years and while the older act tried to keep updated with small

amendments here and there. The repeal of the older act and the establishment of the 2019 act was much needed.

First and foremost, while there have been judicial pronouncements bringing the purchases made through online

methods under the ambit of consumers. The 2019 Act explicitly includes the consumer who purchases goods or

services online. Apart from the inclusion of online purchases the Act has also made endorsers answerable

regarding false or misleading advertisements.

In the 1986 act, the onus of that was only on the manufacturers and the service providers. Under section 21(2)

of the 2019 Act, the commission could even levy a fine of fifty lakhs of the endorser continues to advertise false

information about the products even after getting a notice issued by the consumer. Misleading advertisements

are also under the ambit of ‘Unfair Trade Practices’ in the new act.

The Act also proposes provision for product liability wherein the manufacturer not only has to compensate for

the defective goods but also has to compensate for any loss or injury inflicted on the complainant due to the

defect.

The redressal agencies have also gone through changes under the new Act. While the 1986 act did stipulate for

the commissions to either accept or reject a complaint within 21 days of receiving it, the 2019 act has gone a

step further and stated that if no action has been taken within 21 days then the complaint is to be assumed to

be admitted. The pecuniary jurisdiction of the district commission has also been raised to ease the burden of

the state and national commissions. You can apply to the district commission now if the value of your case is within

1 crore. You don’t even need to file the complaint at the residence of the opposite party. It can be filed where

you reside or where the cause of action arose as well. The commissions also have the power to review their cases

now and can also refer cases to mediation with the consent of both the parties.

The act also proposes for the establishment of an independent regulator: Central Consumer Protection Authority

(CCPA). While this authority won’t be listening to consumer grievances or settling disputes, it will be taking

administrative steps such as imposing liabilities to address any unfair trade practises etc. It’s essentially another

body to ensure a stronger presence of consumer rights in the country.