Revamping of Consumer Laws
Published: Nov 19, 2020
By Shweta Jain
"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. He is not an outsider in our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so." - Mahatma Gandhi
Introduction
More than three decades old Consumer Protection Act, 1986 has been replaced by a new Act called Consumer Protection Act, 2019 (CPA, 2019). The CPA, 2019 came into effect on July 24, 2020. Though no Act can be perfect and there is always a scope of improvement, still CPA, 2019, is a genuine attempt made to bring certain major changes to plug legal loopholes existing under previous Act of 1986.
Refreshing changes
Various refreshing changes have been brought by CPA, 2019. It provides for the establishment of the Central Consumer Protection Authority (CCPA) to promote and protect the rights of consumers. It provides more stringent rules for penalty and punishment for unfair trade practices and misleading advertisements. CPA, 2019 also provides for complaints to be filed in any district or state Consumer Commission closest to the consumer. Under the old Act, a consumer had to travel to the location wherefrom the service was sold to file complaint. This new Act also provides an online complaint facility.
Not only can the complaint be filed electronically, but CPA, 2019 also provides for hearing and/or examining parties through video-conferencing. This change would provide procedural ease and reduce the inconvenience to consumers.
E-commerce transactions are specifically covered under CPA, 2019. The old Act was silent about online transactions. Today, many people prefer an online mode for shopping and availment of various services. The dependence and preference of online transactions have increased many fold amidst COVID -19 pandemic. It is quite obvious that most consumer complaints in the near future will be pertaining to online sale and purchase of goods and services and CPA, 2019 will be of great help to consumers to safeguard their interest.
Revised pecuniary limits fixed in CPA, 2019 to determine Pecuniary Jurisdiction of forums are higher than the limits set by the old Act. This change would ensure that only serious and genuine complaints reach for Redressal. Number of complaints pending for disposal would also reduce and people will experience timely Redressal.
A new term "Unfair Contract" is added in CPA, 2019. This term has no mention under the old Act. The introduction of term "Unfair Contract" is very significant as the consumer is not only harassed when there is unfair trade practice or a restrictive trade practice adopted by any trader or service provider but also when the contract is unfair. This term is defined under section 2(46) of CPA, 2019. Unfair contract includes contracts between a manufacturer or trader or service provider on one hand, and a consumer on the other, having such terms which cause significant change in the rights of consumers, including the following, namely:—
(i) requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations; or
(ii) imposing any penalty on the consumer, for the breach of contract thereof, which is wholly disproportionate to the loss occurred due to such breach to the other party to the contract; or
(iii) refusing to accept early repayment of debts on payment of applicable penalty; or entitling a party to the contract to terminate such contract unilaterally, without reasonable cause; or
(iv) entitling a party to the contract to terminate such contract unilaterally, without reasonable cause; or
(v) permitting or has the effect of permitting one party to assign the contract to the detriment of the other party who is a consumer, without his consent; or
(vi) imposing on the consumer any unreasonable charge, obligation or condition which puts such consumer to disadvantage.
We have witnessed many such contracts which specify excessive security deposits or sometimes provide for unilateral termination or assignment without consent of the other party. All these types of contracts fall under category of an unfair contract. It's important to note that only the State and National Commission can hear cases relating to Unfair Contract.
If the parties under dispute are ready for settlement at any stage of legal proceedings, i.e. stage of filing complaint or at any later stage, they can go for Mediation . This Alternate Dispute Resolution mechanism was missing under the old Act. The CPA, 2019 has provision for attachment of a mediation cell to each District, State and National Commission and its regional Benches for quick resolution.
At present, situation due to COVID-19 pandemic, disputes are likely to arise over the low-grade services rendered by certain segments of the health care sector to consumers. Only time will tell how CPA, 2019 is going to help consumers of medical services as term 'health care' has been dropped from the definition of services in CPA, 2019. However, it is the opinion of legal experts that healthcare can still be included under this definition because of the inclusive nature of definition of services.
Advertisement has power to change or impact Consumer behavior, especially when the product is endorsed by celebrities. In the past, we have witnessed various consumer cases filed for misleading advertising . There are advertisements which make false claims about the quality or usage or performance of the product. The new CPA, 2019 casts a responsibility upon the person advertising a product or service (endorser) to be certain of the claims made in such advertisement. It is the duty of Endorsers to ensure that their claims are not false or misleading. In case endorser is negligent or does not comply with the norms for promoting products through advertisements, then he can be punished. Monetary penalties can be imposed. Endorsers can be directed to discontinue or modify their representations as per the new law.
The liability for product is expanded under CPA, 2019. Manufacturer, Service Provider and Product Seller all are covered and are made liable under the new Act for any kind of harm caused by their product which results in any injury or death of the consumer.
Conclusion
CPA, 2019 is a positive development in the interest of consumers and seeks to provide an effective mechanism in the administrative process and settlement of consumer disputes. Though the new Act has tried to touch various aspects which were not there in the old Act such as Mediation and E-commerce and has made various important amendments for benefit of consumers at large, only time will determine its efficacy. Since socio-economic developments keep taking place and it is never ending process, we can expect continuous amendments to CPA, 2019 so as to match those developments.
[The views expressed are strictly personal.]
