Amendments to Consumer Protection Bill ensure consumer remains king

Consumer remains the king even after amendments in the Consumer Protection Bill diluting powers of the Central Consumer Protection Authority in view of opposition from the industry.

While powers to impose fine, direct corrective advertisement to neutralize the effect of misleading advertisement and declare as void contracts unfair to consumers stand withdrawn, the Authority, among other things, will continue to enjoy the power to suo motu launch investigation, conduct search and seizures, summon delinquent manufacturers, advertisers and service providers, order recall of goods and services found unsafe and hazardous, direct reimbursement for goods and order discontinuation of practices found unfair to consumers.


The rights of consumers would remain protected with the District Consumer Disputes Redressal Commission continuing to enjoy the power to direct corrective advertisements along with supplementary powers, like the authority to declare unfair contracts as void, conferred through the amendment.

Though the government agreed to withdraw judicial powers from the Authority on the recommendations of a Parliamentary Committee, the role of the Authority, expected to protect the rights of consumers as a whole through class action interventions, stand enlarged with the amendment providing for the additional power of compounding offences and creation of an investigating wing.

The draft prepared by the legislative department of the law ministry has further introduced provisions on e-commerce, redefined “unfair contract” to expand its ambit, provided for penal liability of manufacturer, service provider, endorser and publisher in case of false or misleading advertisement, mandated imprisonment for dealing in adulterated products, amended the definition of service to include healthcare, increased pecuniary jurisdiction of consumer fora etc.

The Bill, which was introduced in Parliament in August last year before being referred to the Parliamentary Committee, will now be presented as Consumer Protection Bill, 2016. It retains provisions for product liability and introduction of mediation in consumer disputes etc.

The amended version defines e-commerce while at the same time empowering the Central government (section 75E) to make rules for preventing unfair trade practices in online trade.

As far as power of the Authority is concerned, the new draft has inserted a provision permitting it to order discontinuation or modification of trade practice or advertisement if it finds after investigation that the practice is unfair or the advertisement misleading. Further, the power to compound is very broad and permits the Authority to compound offences even before instituting prosecution (in such case there is no scrutiny of decision by any court) and itself decide the compounding fee for dropping the case.

While draft law makes no distinction between manufacturer or service provider and celebrity in case of misleading advertisements, it has been lenient on the publisher by not providing for imprisonment as in the case of manufacturer or endorser. The punishment for publishing false or misleading advertisement is fine which may extend to ten lakh rupees.

The Ad agencies and the print and electronic news media, however, need not worry if they are vigilant. A publisher and agency can defend by proving that “he carried on the business of publishing or arranging for the publication of advertisements and that he published or arranged for the publication of such advertisement in the ordinary course of business”.

The above defence would be rejected only if the publisher should reasonably have known that the publication of such advertisement was an offence.

The draft if passed by Parliament will replace the Consumer Protection Act, 1986 which provides for a three tier structure (still there) for adjudicating consumer disputes. If a consumer is able to prove defect in good or deficiency in service availed after paying for it, he is entitled to be compensated.

The highlight of the proposed law is constitution of an executive body to protect the rights of consumers as a whole by making class action interventions against misleading advertisements and sale of defective goods and deficient services, apart from issuing safety notices and alerts to consumers. Once the new law comes into force, the liability of manufacturers and service providers will not be primarily limited to any consumer who buys goods or avails service but towards all consumers.

Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to and hit the Subscribe button.

Updated Date: Aug 30, 2016 15:49:51 IST

Also See