Salient Features of Consumer Protection Act, 2019 - As Notified

CONSUMER PROTECTION ACT, 2019

The Ministry of Consumer Affairs, Food and Public Distribution, vide notification dated 15th July 2020, has notified that certain provisions of the Consumer Protection Act, 2019 (“Act”) shall come into force on 20th July 2020. You can access the complete Act at http://egazette.nic.in/WriteReadData/2019/210422.pdf and the notification at https://consumeraffairs.nic.in/sites/default/files/Act%20into%20force.pdf.

Brief analysis of the key features are as follows:

1. Jurisdiction: The Act states the rules pertaining to constitution and functioning of the District Commission, State Commission and the National Commission (collectively referred to as “Commissions”). The Act has revised the pecuniary and territorial jurisdiction of the Commissions.

a. Pecuniary Jurisdiction: The pecuniary jurisdiction of the Commissions stand revised, and according to the revised provisions; (i) the District Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration does not exceed Rupees One Crore; (ii) the State Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration exceeds Rupees One Crore but does not exceed Rupees Ten Crore and for complaints against unfair contracts, where the value of goods or services paid as consideration does not exceed Rupees Ten Crore; (iii) the National Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration exceeds Rupees Ten Crore and for complaints against unfair contracts, where the value of goods or services paid as consideration exceeds Rupees Ten Crore.

b. Territorial Jurisdiction: The Act, in furtherance of its aim to protect the consumer, introduces convenience for the consumer as it enables the consumer to file a complaint where the consumer resides or personally works for gain. According to the Act, subject to the pecuniary limitations, the complaint can be instituted in a District Commission or State Commission, within the local limits of whose jurisdiction, (i) the opposite party or one of the parties ordinarily resides, actually or voluntarily resides, or carries on business or has a branch office or personally works for gain; or (ii) cause of action, wholly or in part, arises; or (iii) complainant resides or personally works for gain.

2. Prescribed Timelines: In an attempt to curb the issue of prolonged pendency of matters, the Act introduces timelines and mandates the Commissions to decide certain issues within the prescribed time period. The Act further prescribes time limit inter alia for deciding admissibility of a complaint, filing written statement, submission of lab report, adjudicating and deciding the complaint. For instance, the District Commission has been mandated to decide on the admissibility of a complaint within the period of 21 days from the date of filing of the complaint, failing which, the same shall be deemed to have been admitted. However, this brings about certain concerns with regard to the rights of the opposite party being affected due to deemed admission on account of delay by the District Commission and a challenge being raised at the appellate stage.

3. Pre-Deposit: The Act sets mandatory pre-deposit for entertaining appeals. For an appeal against the order passed by the District Commission or State Commission to pay an amount, the appellant shall be required to deposit 50% of such amount before the appellate commission.

4. Mediation: One of the salient features of the Act pertain to promoting mediation which may result in closure of cases at an early stage rather than at a belated stage, the frequency of which is higher in the current scenario. The Act defines mediation, mediator and provides for the formation of mediation cells attached to the respective Commissions. The Act further provides for powers to the Commissions to refer the parties for mediation. The Consumer Protection (Mediation) Rules, 2020 have also been notified and will come into effect on 20th July 2020.

5. Product Liability Action: The Act introduces the concept of product liability and various provisions have been notified relating to product liability action. The definition of complaint provides that “a claim for product liability action lies against the product manufacturer, product seller or product service provider, as the case may be.” Further, ‘product liability’ has been defined as the “responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto.” Further, the Act enables a complainant to initiate an action against a product manufacturer or a product service provider or a product seller for any harm caused to the complainant on account of a defective product. The provisions stipulate and define the liabilities of a product manufacturer, product service provider and product seller and the exceptions to their liabilities.

6. Misleading Advertisement and Endorsements: The Act defines ‘endorsement’ in relation to advertisements which includes certain acts which result in the consumer believing that such acts reflects the opinion, finding or experience of the person making such endorsement. The Act further defines ‘misleading advertisements’ in an attempt to crystallise the liability of the persons involved in indulging in activities constituting misleading customers by way of false advertisement. However, the provisions pertaining to Central Authority under the Act and provisions providing Central Authority to issue directions and penalties against false and misleading advertisements are yet to be notified.

7. Consumer Protection Council: The Act provides for the formation of a Central Council, State Councils and District Councils for rendering advice on promotion and protection of consumers’ rights under the Act. The constitution, powers and functions of the Central, State and District Councils are provided under the Act, however, certain provisions to this effect are yet to be notified.

8. E- Commerce: While the Act recognizes and extends the applicability to ‘unfair trade practices” and “e-commerce”, however, provisions in this regard are yet to be notified. Having said that, the definition of ‘consumer’ under the Act clarifies that the expressions ‘buys any goods’ and ‘hires or avails any services’ includes offline or online transactions through electronic means or by teleshopping or direct selling or multi-level marketing. Further, ‘electronic service provider’ has been defined to include “a person who provides technologies or processes to enable a product seller to engage in advertising or selling goods or services to a consumer and includes any online market place or online auction sites.”

Conclusion

While notification of several provisions is anticipated and awaited, the enforcement of the Act may assist in expediting the matters at the various District Commissions and State Commissions. The increase of the pecuniary limits may also result in dealing with the pendency and overburdened National Commission.

Kindly treat this as an information update and the same shall not constitute as an advisory by the firm.

Optimus Legal

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