This is a primer on the Consumer Protection Act, 2019 (“CPA”).
The Consumer Protection Bill, 2018, (“CP Bill 2018”) was introduced in the Lok Sabha on 5 January, 2018 and passed on 20 December, 2018. It was then introduced in the Rajya Sabha on 7 January, 2018 but lapsed when it was dissolved ahead of the 2019 Lok Sabha elections. The bill was reintroduced in the Lok Sabha after elections as the Consumer Protection Bill, 2019 (“CP Bill 2019”) on 8 July, 2019 and passed on 30 July, 2019. The bill’s intent was “to provide for protection of the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers’ disputes and for matters connected therewith or incidental thereto”. The CP Bill 2019 was passed in the Rajya Sabha on 6 August, 2019; and it received the President’s assent on 9 August, 2019 to become the Consumer Protection Act, 2019 (“New Act”). It replaces the Consumer Protection Act, 1986 (“Old Act”).
The ninth report of the 16th Lok Sabha standing committee on food, consumer affairs and public distribution (2015-16) (“Report”) presented its views on a similar bill (the Consumer Protection Bill, 2015) intended to replace the Old Act. The Report highlighted the need for a new act which would also deploy robust measures to prevent modern forms of unfair trade and unethical business practices (including misleading advertisements and e-tailing among others) which have their foundation in the new-age consumer markets like e-commerce. These themes can be found flowing into the New Act as well, as is discussed below.
The New Act brings trade carried out through e-commerce and direct selling under its ambit. It defines e-commerce as buying or selling of goods or services including digital products over digital or electronic network. It defines electronic service provider as 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. These definitions appear to be wide enough to cover almost all aspects of trade carried out over the internet, including market places like OLX and Quickr and online auction sites such as Ebay. They also appear to include e-advertisement spaces such as those provided by Google (Google Ad-sense).
The New Act empowers the central government to make rules, take necessary measures to prevent unfair trade practices and secure the rights and interests of the consumers. In the absence of rules, it is difficult to comment on their scope. As per a statement by Mr. Ram Vilas Paswan, the cabinet minister for consumer affairs, food and public distribution, rules under the New Act will be notified by 31 December, 2019. They may cover directions to ensure compliances such as appointment of a redressal officer, universal product return/cancellation/replacement policy and minimum verification standards for listing a product or a seller among others. They may also prescribe the rights and liabilities of e-commerce companies in consumer disputes cases. The scope of these definitions may need some clarity to better understand the businesses that may get affected by them. As of now, the two definitions appear to be an all-encompassing approach from the government.
2. Product liability
The New Act prescribes stringent liability norms on traders. A product manufacturer, a product service provider and a product seller can be held liable for any harm caused by a defective product manufactured by the manufacturer, serviced by the service provider or sold by the product seller, as the case may be. The scope of their liabilities are enlisted under section 84, section 85 and section 86 of the New Act respectively.
The New Act defines harm to include (i) damage to any property; (ii) personal injury, illness or death; (iii) mental agony or emotional distress attendant to personal injury, illness or damage to property; or (iv) any other loss of consortium or service. The word attendant to appears to mean ‘arising out of’ contextually, but may need a clarification to that effect.
Defining harm and including mental agony and emotional distress within its scope may create a gray area over verification of the presence of mental agony and/or its extent. Also, it may not be easy to determine whether the mental agony or emotional distress in question is a direct, indirect or remote outcome of harm. The impact that this proximity may have over the liability of the trader in question may need further clarity.
The scope of these sections also appears to overlap with other laws. In the cloud service sector for example, will a personal data breach or denial of access to data or unauthorized modification or deletion of data invoke the cloud service provider’s liability under the New Act or under the new proposed personal data protection law or under the relevant provisions of the Information Technology Act, 2000? Similar analogies of faulty service can be drawn in the banking sector as well. Will the customer have a redressal mechanism under the New Act or under the relevant provisions of banking laws?
This clarity may come to light once the courts get an opportunity to interpret these clauses.
3. False advertisement
The New Act checks advertisements which may be detrimental to the interests or rights of a consumer. It empowers the central authority to take necessary steps to prevent certain advertisements from misleading audiences further and to bring the affected consumers to status quo. The scope of liability under this section too appears to be very wide. A concerned trader, a manufacturer, an endorser, an advertiser or a publisher can all be held liable. We may also need clarity on whether or not publicly accessible accounts involving personal experiences of common users (say on platforms like Twitter or Instagram) of a product or service will amount to endorsement.
4. Bodies established under the New Act
4.1 Consumer protection councils: The New Act empowers the respective governments to establish a Central Consumer Protection Council (“Central Council”), a State Consumer Protection Council (“State Council”) and a District Consumer Protection Council (“District Council”). The objective of these councils shall be to render advice on promotion and protection of the consumers’ rights at their respective levels.
4.2 Consumer protection authority: The New Act empowers the central government to establish a Central Consumer Protection Authority (“CCPA”). The CCPA will regulate matters related to violation of rights of the consumers, unfair trade practices and false advertisements and to protect, promote and enforce the rights of consumers of a class.
4.3 Consumer disputes redressal commissions: The New Act empowers the respective governments to establish a National Consumer Disputes Redressal Commission (“NCDRC”), a State Consumer Disputes Redressal Commission (“SCDRC”), and a District Consumer Disputes Redressal Commission (“DCDRC”). The role of these commissions established under the New Act is respectively comparable to the role of the commissions established under the Old Act. They have jurisdiction to entertain consumer complaints in relation to any goods or services. The New Act also provides jurisdiction to the SCDRCs and the NCDRC to hear complaints against unfair contracts.
4.4 Mediation cells: The New Act empowers the respective governments to establish mediation cells to be attached to the DCDRCs, the SCDRCs and the NCDRC. The DCDRCs are empowered to refer certain matters present before them to the respective mediation cells. The SCDRCs and NCDRC do not appear to be empowered to do so. The reason for this is unclear, but the language of section 79 of the New Act suggests that this may be an oversight.
5. Other changes
5.1 Unfair contract: Consumers can file complaints against manufacturers, service providers or traders for an unfair contract under the new act. A contract may amount to an unfair contract (at the determination of the respective commission) if it involves any of the following: i) demand for excessive security deposits; ii) imposition of penalty for breach which is disproportionate to the loss occurred; iii) refusal to accept early repayment of debt; iv) provision to terminate the contract unilaterally without reasonable cause; v) provision to assign the contract to a third party to the detriment of the consumer without his consent; and vi) imposition of unreasonable charges, obligations or conditions which are disadvantageous to the consumer.
5.2 Pecuniary jurisdiction: The New Act revises the pecuniary jurisdiction of all levels of redressal forums. The DCDRCs have a jurisdiction over matters involving goods or service of value up to INR 1 crore as against INR 20 lakh. The SCDRCs have a jurisdiction over matters involving goods or service of value up to INR 10 crores as against INR 1 crore. The NCDRC has jurisdiction over matters involving goods or service of value above INR 10 crores as against INR 1 crore.
This post is authored by Rishwin Chandra Jethi, Associate with inputs from Tuhina Joshi, Associate and Nehaa Chaudhari, Public Policy Lead at Ikigai Law.
 Act no. 35 of 2019
 See section 107 of the New Act
 See section B under chapter I of the Report.
 See section 2(16) of the New Act
 See section 2(17) of the New Act
 See section 94 read together with section 101(2)(zg) of the New Act
 See section 82 read together with section 83 of the New Act.
 See section 2(22) of the New Act
 See section 21 of the New Act
 See section 3(1) of the New Act
 See section 6(1) of the New Act
 See section 8(1) of the New Act
 See section 5, section 7 and section 9 respectively of the New Act
 See section 10(1) of the New Act
 See section 10(1) of the New Act
 See section 53(1) of the New Act
 See section 42(1) of the New Act
 See section 28(1) of the New Act
 See section 58(1), 47(1) and 34(1) respectively of the New Act
 See section 47(1)(a)(ii) and section 58(1)(a)(ii) respectively of the New Act
 See section 74(1) and section 74(2) respectively of the New Act
 See section 37(2) of the New Act
 See section 48 read together with section 58 of the New Act
 See section 2(46) of the New Act
 See section 34(1) of the New Act
 See section 11(1) of the Old Act
 See section 47(1)(a)(i) of the New Act
 See section 17(1)(a)(i) of the Old Act
 See section 58(1)(a)(i) of the New Act
 See section 21(a)(i) of the Old Act