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From central watchdog to out-of-court settlements, Consumer Protection Bill 2018 makes big strides in consumer rights

The Lok Sabha recently passed the Consumer Protection Bill 2018 to provide greater protection to citizens against consumer harm. The Consumer Protection Act (COPRA) is the present consumer protection legislation in India which was enacted in 1986. While the Parliament made certain amendments to COPRA in 1991, 1993 and 2002, the 2018 Bill seeks to replace COPRA altogether. Given that the past decade has seen a dramatic change in the consumption of goods and services in India (especially due to e-commerce), it is worth exploring whether the Bill adequately protects consumers against various kinds of harm.

Substantive provisions of Consumer Protection Bill 2018

A salient feature of the 2018 Bill is the establishment of a Central Consumer Protection Authority (Central Authority) to oversee violation of consumer rights, unfair trade practices and false or misleading advertisements prejudicial to the public and consumer interests, and to “promote, protect and enforce the rights of consumers”.

The Central Authority is a central regulating authority akin to the Securities and Exchange Board of India (SEBI) which protects the interests of investors and promotes the development of the securities market in India and the Competition Commission of India (CCI) which is endowed with the task of preventing activities which have an appreciable adverse impact on competition in markets.

 From central watchdog to out-of-court settlements, Consumer Protection Bill 2018 makes big strides in consumer rights

Representational image. AFP

The Central Authority also comprises an investigation wing to which will investigate practices which harm consumers. On the basis of the investigation carried out, the regulator can inter alia direct the recall of goods or withdrawal of services which are dangerous, hazardous or unsafe, and issue directions and impose penalties related to advertisements which are false/misleading and prejudicial to the consumer interest.

Under Section 21(3) of the 2018 Bill, the Central Authority can also prohibit the endorser of a false or misleading advertisement from endorsing the impugned product or service for a period of 1 year (or up to 3 years where the endorser contravenes the earlier prohibition order). In 2016, actor Pierce Brosnan, known for playing the character James Bond, kicked up a controversy in India when he endorsed pan masala, a chewing mixture which is said to increase the risk of oral cancers. Pan masala advertising is banned by the Indian government due to health concerns; under the 2018 Bill, any celebrity who endorses such products can be prohibited by the Central Authority from endorsing the product.

The other functions of the Central Authority are to promote awareness of consumer rights and to advise the Central and state governments on consumer welfare measures. The Central Authority also has the power to intervene in any proceedings before the consumer disputes redressal agencies under the 2018 Bill.

Under COPRA, the Central Government had established Central Consumer Protection Council (Central Council) and state consumer protection councils (state councils) to promote and protect the rights of consumers such as the right to be protected against marketing of hazardous goods and services and the right to consumer education. However, as COPRA separately provides for consumer disputes redressal agencies which are forums for consumers to file their disputes, the role of the Central Council and the state councils beyond consumer education was not clear.

The 2018 Bill explicitly establishes the Central Council and the state councils as advisory councils; the Bill also envisages the setting up of district consumer protection councils (district councils) at the district level.

A novel provision in the 2018 Bill is the chapter on product liability (Chapter VI). While consumers could file complaints against defective products under COPRA, product liability was not expressly provided for. In the 2018 Bill, a product manufacturer is absolutely liable in a product liability action; the absolute liability standard adopted under the 2018 Bill is also stricter than a ‘strict liability rule’ as stated in COPRA.

Under Section 90 of the 2018 Bill, a manufacturer/seller/distributor/importer of adulterated goods can be punished with fine or imprisonment. However, adulteration is not an offence under COPRA.

Procedural provisions in the 2018 Bill

The 2018 Bill in its Preamble recognises the need for “timely and effective” administration and settlement of consumer disputes and contains a number of provisions geared towards this objective.

The 2018 Bill, like COPRA, provides for consumer disputes redressal commissions. The 2018 Bill retains the nomenclature of the consumer disputes redressal commissions as provided under COPRA, however, the pecuniary jurisdiction of redressal commissions has been raised at the district, state and national level. A unique feature of the 2018 Bill is Section 37 which permits the redressal commissions to refer parties to a consumer dispute to mediation to resolve disputes. Chapter V of the 2018 Bill provides for consumer mediation cells attached to the Redressal Commissions; this is a positive feature of the 2018 Bill as mediation can result in expeditious settlement of disputes without the need for litigation. The European Union has issued Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2003 on alternative dispute resolution for consumer disputes which recognises alternative dispute resolution (including mediation) for consumer disputes.

Is the 2018 Bill a mere paper tiger?

The 2018 Bill is revolutionary in the aspect that it establishes a watchdog to bust unfair trade practices and oversee violation of consumers' rights. The 2018 Bill bolsters enforcement of consumer protection law through the Central Authority, making it a significant improvement to the current regime dealing with consumer protection in India. A question which arises is whether the regulator with search and seizure powers can, in fact, be used to harass traders and businesses in the garb of investigating unfair trade practices. This concern, however, is alleviated by the inclusion of Section 93 which punishes the Director General (in charge of an investigation under the Central Authority) and any other officer who exercises search and seizure powers in case of vexatious search with imprisonment and/or fine.

While the 2018 Bill covers “online transactions through electronic means or by teleshopping”, regrettably e-commerce itself is given short shrift under the 2018 Bill. For instance, Section 94 empowers the Central Government to take measures to prevent ‘unfair trade practices in e-commerce’ without illustrating what amounts to ‘unfair trade practices in e-commerce’. Further, it is not clear whether there will be a separate e-commerce regulator as hinted at by the government in its e-commerce policy.

Other improvements in the 2018 Bill over the existing consumer protection legislation include Section 35 which allows consumers to file complaints electronically before the district commissions. Further, under Section 2 (47) (ix) of the Bill, it is an unfair trade practice to disclose the personal information of the consumer (which the consumer gave in confidence). This provision can help prevent the personal data of consumers to be leaked to a third party. Overall, the revised consumer protection law drafted by the legislature is comprehensive and if implemented well, can help the government crackdown on unscrupulous trade practices to better protect consumers.

The author holds a Master of Law degree from the University of Cambridge and is currently a researcher at National Law University, Delhi

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Updated Date: Jan 14, 2019 16:55:40 IST

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