For the first time in 32 years, the Ministry of Consumer Affairs and Food Distribution introduces a bill in Lok Sabha to replace the Consumer Protection Act, 1986

The Ministry of Consumer Affairs and Food Distribution, on 20th December, 2018 has introduced the Consumer Protection Bill, 2018 as a replacement to the Consumer Protection Act, 1986 in Lok Sabha during the Winter Session.

Background:

The Consumer Protection Act, 1986 was enacted to provide for immediate settlement of consumer disputes, etc. Although, it has worked to a considerable extent under the said Act, the disposal of cases has not been fast. Consumer markets for goods and services have undergone drastic transformation since Act was introduced in 1986. The modern market place contains a plethora of products and services. The emergence of global supply chains, rise in international trade and the rapid development of e-commerce have led to new delivery systems for goods and services and have provided new options and opportunities for consumers. Equally, this has rendered the consumer vulnerable to new forms of unfair trade and unethical business practices.

Objective:

Misleading advertisements, tele-marketing, multi-level marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive interventions to prevent consumer detriment. Hence, there is a need to amend the Act to address the innumerable and constantly emerging vulnerabilities of the consumers.

Key Highlights:

  1. The Bill sets up Consumer Disputes Redressal Commissions (consumer courts) to hear complaints on matters like:
    1. defect in goods or deficiency in services;
    2. unfair or restrictive trade practices;
    3. excessive pricing;
    4. knowingly selling goods or providing services that do not meet safety norms; and product liability.

Such complaints can be filed electronically and from where the complainant resides or works.

  1. These Commissions will be set up at District, State and National level, with pecuniary jurisdiction up to Rs. 1 Crore, Rs. 1 Crore to Rs. 10 Crore, and above Rs. 10 crore, respectively. In case of unfair contracts, the State Commissions will hear complaints where the value is up to Rs. 10 crore, and National Commissions will hear complaints above that value.  These Commissions can declare unfair terms of such contracts to be null and void.
  2. Make interventions when necessary to prevent consumer detriment arising from unfair trade practices and to initiate class action including enforcing recall, refund and return of products, etc.
  3. Currently, the task of prevention of or acting against unfair trade practices is not vested in any authority. This has been provided for in a manner that the role envisaged for the Central Consumer Protection Authority (“CCPA”) complements that of the sector regulators and duplication, overlap or potential conflict is avoided.
  4. The Bill also seeks to provide for product liability action because of harm caused to consumers due to a defective product or by deficiency in services.
  5. Further, provision of “Mediation” as an Alternate Dispute Resolution Mechanism has also been provided.
  6. The Bill is aimed at simplifying the consumer dispute adjudication process of the Consumer Disputes Redressal Agencies, relating to enhancing the pecuniary jurisdiction of the Consumer Disputes Redressal Agencies; increasing minimum number of Members in the State Consumer Disputes Redressal Commissions and provisions for consumers to file complaints electronically, etc

Penalty:

  1. If a person does not comply with the orders of the District, State or National Commissions, he may face imprisonment up to 3 years, or a fine not less than Rs 25,000 extendable to Rs 1 lakh, or both.
  2. If a person does not comply with an order issued by the CCPA, he may face imprisonment of up to 6 months, or a fine of up to Rs 20 lakh, or both.
  3. For false and misleading advertisements, a penalty of up to Rs 10 lakh may be imposed on a manufacturer or an endorser. For a subsequent offence, the fine may extend to Rs 50 lakhs.  The manufacturer can also be punished with imprisonment of up to 2 years, which may extend to 5 years in case of every subsequent offence.
  4. The CCPA can also prohibit the endorser of a misleading advertisement from endorsing any product or service for a period of up to one year. For every subsequent offence, the period of prohibition may extend to 3 years.  There are certain exceptions when an endorser will not be held liable for such a penalty.
  5. The CCPA may also impose penalties for manufacturing, selling, storing, distributing or importing adulterated products. The penalties are as follows:
    1. if injury is not caused to a consumer, the penalty would be a fine of up to Rs one lakh along with imprisonment of up to six months;
    2. If injury is caused, penalty would be a fine up to Rs three lakh along with imprisonment of up to one year;
    3. If grievous hurt is caused, penalty would be a fine up to Rs 5 lakh along with imprisonment up to 7 years; and
    4. In case of death, penalty would be Rs 10 lakh or more along with a minimum imprisonment of 7 years, extendable to imprisonment for life.
  6. The CCPA may also impose penalties for manufacturing, selling, storing, distributing or importing spurious goods. The penalties are as follow:
    1. if injury is caused, penalty would be a fine up to Rs 3 lakh along with imprisonment of up to 1 year;
    2. If grievous hurt is caused, penalty would be a fine up to Rs 5 lakh along with imprisonment up to 7 years; and
    3. In case of death, penalty would be Rs 10 lakh or more along with a minimum imprisonment of 7 years, extendable to imprisonment for life.

SourceLok Sabha

Share this:

0