India: The Consumer Protection Bill, 2018

Last Updated: 4 January 2019
Article by Yashvi Padhya

The Consumer Protection Bill, 2018 was introduced in the Lok Sabha on 5th January, 2018 and was passed in the ongoing session of the Parliament on 20th December, 2018. The Bill comes as a much needed relief to the consumers and the administration. The previous Act had not been dynamically changed since it came into force and the new bill which is to replace the 1986 act is a huge step forward.

The Bill, if passed by the Rajya Sabha, would result in a more robust structure of consumer protection in the country. The new Bill is proposed to make a great deal of changes to the existing laws as well as the judicial and administrative framework of the consumer protection mechanism. The key changes to be brought in by the Bill are iterated below.

[1] The new Bill expands the ambit of consumer protection itself by explicitly including the transactions under telecommunication, online and teleshopping transactions, housing constructions, etc for a consideration. However, it still excludes free and personal services. There was always a limitation in the implementation of the act with regard to e-commerce platforms and other related transactions, thus, this specific inclusion opens doors to redressal of a lot of consumer troubles.

[2] In addition to the pre-existing list of unfair trade practices under the act, the Bill has prescribed the addition of three more such practices: (i) failure to issue a bill or receipt; (ii) refusal to accept a good returned within 30 days; and (iii) disclosure of personal information given in confidence, unless required by law or in public interest. This change was necessary due to the fact that a lot of complaints filed with the authorities were related to these basic issues which took up a lot of time and resources of the government body. Moreover, these additions also aid in increasing the answerability of the goods and service providers when handling consumer information and data. These inclusions look towards lowering the amount of freedom given to the providers to do what they may please and completely disregard the needs of the consumers. These provisions are in true spirit of the basic principles of this consumer-centric Act.

[3] The Bill has added provisions regarding product liability whereby, the consumer may present a claim against the manufacturer, service provider, and seller. Furthermore, the compensation can be more easily obtained by proving any of the details which are presented in the bill to the consumer. The evidentiary value of the billing process has been increased by listing it as an unfair trade practice as well and also by laying emphasis on the terms and conditions listed in the bill in order for the consumer to be granted compensation.

[4] The Bill also added provisions relating to unfair contracts which were absent in the Act previously. Unfair contracts are defined as contracts that cause significant change in consumer rights and a list of six terms are given which are deemed to give rise to an unfair contract which include the following: (i) requiring excessive security deposits; (ii) imposing a disproportionate penalty for a breach in contract; (iii) refusing to accept early repayment of debts; (iv) terminating the contract without reasonable cause; (v) transferring a contract to a third party to the detriment of the consumer without his consent; or (vi) imposing unreasonable charge or obligations which put the consumer at a disadvantage.

[5] One of the major changes was brought in by establishing a Regulator under the act. The Bill establishes the Central Consumer Protection Authority (CCPA) in order to promote, protect, and enforce the rights of consumers as a class. CCPA is also given the powers to: (i) issue safety notices; (ii) pass orders to recall goods, prevent unfair practices, and reimburse purchase price paid; and (iii) impose penalties for false and misleading advertisements. The need of a regulator in the Consumer Protection framework had been long felt in order to be an omnipresent body which can single handedly regulate the affairs of consumers as a class and keep in check the goods and service providers. The Regulator would also decrease the burden on the judicial bodies under the act.

[6] The Bill also amends the pecuniary jurisdictions of the District, State and National Commissions. The District's jurisdiction has been increased to Rs. 1 crore from Rs. 20 lakhs. The State's jurisdiction has been increased from Rs. 1 crore to now Rs. 10 crore. And the National jurisdiction has been increased to include claims of over Rs. 10 crore. This amendment provides for a more free range for the three tiered structure to function as an adjudicating authority and to also have a just distribution of their respective jurisdictions in light of the rise in the pecuniary aspect of the claims.

[7] The Composition of the Commissions has also been altered. Previously, retired/current judges and two/four members were selected as the presiding authority but the Bill proposes that the Commission be headed by a President and two/four members as the case may be.

[8] Changes have also been brought regarding the process of appointment of the Members of the Commission. Previously, the members were appointed by way of a selection committee which comprised of retired judges and other members. However, now the requirement of the Selection Committee has been deleted and the appointment was to directly take place by way of a notification by the central government.

[9] Another stark change has been brought in by attachment of a Mediation Cell with each of the District, State and National Commissions, which was absent in the Act. The addition of Mediation as a form of dispute redressal would result in a lot of preservation of time and resources of the Commissions at each level and also result in faster and amiable resolution of disputes. In most Consumer Protection matters the need is only of simple communication and agreement on terms of compensation and by way of mediation the same can be achieved.

[10] The penalties under the Act for non-compliance has been increased under the Bill by increasing the fine imposed on a person. The fine has been increased to be between Rs. 25 thousand to Rs. 1 lakh whereas it was previously between Rs. 2 thousand to Rs. 10 thousand only. This increase is aimed at getting quicker action from the parties on the orders passed by the Commissions. Some parties would even risk non-compliance just because of the meager, unaffecting sum, rather than following through on the orders passed.

[11] The much needed provisions relating to e-commerce platforms have been added by the Bill of 2018 wherein it defines direct selling, e-commerce and electronic service providers. And also authorizes the central government to prescribe rules for preventing unfair trade practices in e-commerce and direct selling by their respective service providers.

Even though the Bill makes many requisite changes to the existing structure of consumer protection there are also questions being raised over several aspects of the new Bill. There are concerns over the new composition of the quasi-judicial bodies or Commissions which till now have exercised the powers which are similar to the civil courts. However, now the Bill prescribes that a president would preside over the Commission but doesn't specify the qualifications thereof, whether the President so appointed by the CG would have to have any prior judicial experience to head a quasi-judicial body or not. This according to some, results in violation of the doctrine of separation of powers as the bureaucracy would be given direct control over the judicial aspects of the framework. Furthermore, the involvement of executives in the appointment of judicial members may adversely affect the independence of judiciary in this case.

The Act also hints at imposing penalties upon any celebrities who endorse misleading products which has caused another discussion to arise regarding the extent of liability of advertisers or endorsers and celebrity rights and protection. The extent of vicarious liability in such cases is questionable.





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