The Consumer Protection Act, 1986

Consumer Protection Act
THE CONSUMER PROTECTION ACT, 1986

INTRODUCTION

The industrial revolution and the development in the international trade and commerce has led
to the vast expansion of business and trade, as a result of which a variety of consumer goods
have appeared in the market to cater to the needs of the consumers and a host of services have
been made available to the consumers like insurance, transport, electricity, housing,
entertainment, finance and banking. A well organised sector of manufacturers and traders with
better knowledge of markets has come into existence, thereby affecting the relationship
between the traders and the consumers making the principle of consumer sovereignty almost
inapplicable. The advertisements of goods and services in television, newspapers and
magazines influence the demand for the same by the consumers though there may be
manufacturing defects or imperfections or short comings in the quality, quantity and the purity
of the goods or there may be deficiency in the services rendered. In addition, the production of
the same item by many firms has led the consumers, who have little time to make a selection,
to think before they can purchase the best. For the welfare of the public, the glut of adulterated
and sub-standard articles in the market have to be checked. In spite of various provisions
providing protection to the consumer and providing for stringent action against adulterated
and sub-standard articles in the different enactments like Code of Civil Procedure, 1908, the
Indian Contract Act, 1872, the Sale of Goods Act, 1930, the Indian Penal Code, 1860, the
Standards of Weights and Measures Act, 1976 and the Motor Vehicles Act, 1988, very little
could be achieved in the field of Consumer Protection. Though the Monopolies and Restrictive
Trade Practices Act, 1969 arid the Prevention of Food Adulteration Act, 1954 have provided
relief to the consumers yet it became necessary to protect the consumers from the exploitation
and to save them from adulterated and sub-standard goods and services and to safe guard the
interests of the consumers. In order to provide for better protection of the interests of the
consumer the Consumer Protection Bill, 1986 was introduced in the Lok Sabha on
5th December, 1986.

STATEMENT OF OBJECTS AND REASONS
The Consumer Protection Bill, 1986 seeks to provide for better protection of the interests of
consumers and for the purpose, to make provision for the establishment of Consumer councils
and other authorities for the settlement of consumer disputes and for matter connected
therewith.
2. It seeks, inter alia, to promote and protect the rights of consumers such as-

(a) The right to be protected against marketing of goods which are hazardous to life and
property;
(b) The right to be informed about the quality, quantity, potency, purity, standard and price
of goods to protect the consumer against unfair trade practices;
(c) The right to be assured, wherever possible, access to an authority of goods at
competitive prices;
(d) The right to be heard and to be assured that consumers interests will receive due
consideration at appropriate forums;
(e) The right to seek redressal against unfair trade practices or unscrupulous exploitation of
consumers; and
(f) right to consumer education.

3. These objects are sought to be promoted and protected by the Consumer Protection Council
to be established at the Central and State level.
4. To provide speedy and simple redressal to consumer disputes, quasi-judicial machinery is
sought to be setup at the district, State and Central levels. These quasi-judicial bodies will
observe the principles of natural justice and have been empowered to give relief of a specific
nature and to award, wherever appropriate, compensation to consumers. Penalties for
noncompliance of the orders given by the quasi-judicial bodies have also been provided.
5. The Bill seeks to achieve the above objects.
Consumer Protection Act 2019

Consumers can cheer as the Consumer Protection Act, 2019 has recently replaced the three
decade old Consumer Protection Act, 1986.
The new Act proposes a slew of measures and tightens the existing rules to further safeguard
consumer rights. Introduction of a central regulator, strict penalties for misleading
advertisements and guidelines for e-commerce and electronic service providers are some of the
key highlights.
Consumer courts
Consumer redressal commissions, aka consumer courts, are present at the district, state and
national levels to address consumer complaints. The Act has increased the pecuniary
jurisdiction, which means ability of courts to take up cases depending on the value of the case,
of the consumer courts. “Since access to district courts is better compared to state and national
commissions, the increase in limit to Rs 1 crore of district courts will be a convenience. point,”
says M.R. Madhavan, Co-Founder and President, PRS Legislative Research.
Another crucial change says that now the money spent on buying the product till that time will
determine the value of the case as opposed to the previous parameter of total value of the
purchased goods/service. “Say something is bought on discount, it’s only fair that the amount
the consumer has paid is the determiner in place of the MRP,” says Madhavan.
In another move, the Act allows consumers to file their complaint with the court from
anywhere. This comes as a big relief as earlier they were required to file complaint in the area
where the seller or service provider was located. This is a fitting move considering the rise in e-
commerce purchases, where the seller could be located anywhere. In addition, the Act also
enables the consumer to seek a hearing through video conferencing, saving him both money
and time.
What has changed in the new Act?
The Digital Age has ushered in a new era of commerce and digital branding, as well as a new
set of customer expectations. Digitization has provided easy access, a large variety of choice,
convenient payment mechanisms, improved services and shopping as per convenience.
However, along the growth path it also brought in challenges related to consumer protection.
Keeping this in mind and to address the new set of challenges faced by consumers in the digital
age, the Indian Parliament, on 6 August 2019, passed the landmark Consumer Protection Bill,
2019 which aims to provide the timely and effective administration and settlement of consumer
disputes. The Consumer Protection Act, 2019 (New Act) received the assent of the President of
India and was published in the official gazette on 9 August 2019. The New Act will come into
force on such date as the Central Government may so notify. The New Act seeks to replace the
more than 3 (three) decades old Consumer Protection Act, 1986 (Act).
Key Highlights of the New Act:

- Covers E-Commerce Transactions: The New Act has widened the definition of 'consumer'.
The definition now includes any person who buys any goods, whether through offline or online
transactions, electronic means, teleshopping, direct selling or multi-level marketing. The earlier
Act did not specifically include e-commerce transactions, and this lacuna has been addressed
by the New Act.
- Enhancement of Pecuniary Jurisdiction: Revised pecuniary limits have been fixed under
the New Act. Accordingly, the district forum can now entertain consumer complaints where the
value of goods or services paid does not exceed INR 10,000,000 (Indian Rupees Ten Million).
The State Commission can entertain disputes where such value exceeds INR 10,000,000
(Indian Rupees Ten Million) but does not exceed INR 100,000,000 (Indian Rupees One
Hundred Million), and the National Commission can exercise jurisdiction where such value
exceeds INR 100,000,000 (INR One Hundred Million).
- E-Filing of Complaints: The New Act provides flexibility to the consumer to file complaints
with the jurisdictional consumer forum located at the place of residence or work of the
consumer. This is unlike the current practice of filing it at the place of purchase or where the
seller has its registered office address. The New Act also contains enabling provisions for
consumers to file complaints electronically and for hearing and/or examining parties through
video-conferencing. This is aimed to provide procedural ease and reduce inconvenience and
harassment for the consumers.
- Establishment of Central Consumer Protection Authority: The New Act proposes the
establishment of a regulatory authority known as the Central Consumer Protection Authority
(CCPA), with wide powers of enforcement. The CCPA will have an investigation wing, headed
by a Director-General, which may conduct inquiry or investigation into consumer law violations.
- The CCPA has been granted wide powers to take suo-moto actions, recall products, order
reimbursement of the price of goods/services, cancel licenses and file class action suits, if a
consumer complaint affects more than 1 (one) individual.
- Product Liability & Penal Consequences: The New Act has introduced the concept of
product liability and brings within its scope, the product manufacturer, product service provider
and product seller, for any claim for compensation. The term 'product seller' is defined to include
a person who is involved in placing the product for a commercial purpose and as such would
include e-commerce platforms as well. The defense that e-commerce platforms merely act as
'platforms' or 'aggregators' will not be accepted. There are increased liability risks for
manufacturers as compared to product service providers and product sellers, considering that
under the New Act, manufacturers will be liable in product liability action even where he proves
that he was not negligent or fraudulent in making the express warranty of a product. Certain
exceptions have been provided under the New Act from liability claims, such as, that the product
seller will not be liable where the product has been misused, altered or modified.
- Unfair Trade Practices: The New Act introduces a specific broad definition of Unfair Trade
Practices, which also includes sharing of personal information given by the consumer in
confidence, unless such disclosure is made in accordance with the provisions of any other law.
- Penalties for Misleading Advertisement: The CCPA may impose a penalty of up to INR

1,000,000 (Indian Rupees One Million) on a manufacturer or an endorser, for a false or
misleading advertisement. The CCPA may also sentence them to imprisonment for up to 2 (two)
years for the same. In case of a subsequent offence, the fine may extend to INR 5,000,000
(Indian Rupees Five Million) and imprisonment of up to 5 (five) years. The CCPA can also
prohibit the endorser of a misleading advertisement from endorsing that particular product or
service for a period of up to 1 (one) year. For every subsequent offence, the period of
prohibition may extend to 3 (three) years.
- The New Act fixes liability on endorsers considering that there have been numerous instances
in the recent past where consumers have fallen prey to unfair trade practices under the
influence of celebrities acting as brand ambassadors. In such cases, it becomes important for
the endorser to take the onus and exercise due diligence to verify the veracity of the claims
made in the advertisement to refute liability claims.
- Provision for Alternate Dispute Resolution: The New Act provides for mediation as an
Alternate Dispute Resolution mechanism, making the process of dispute adjudication simpler
and quicker. This will help with the speedier resolution of disputes and reduce pressure on
consumer courts, who already have numerous cases pending before them.
With the New Act all set to become the law, gone are the days, where the 'consumer was asked
to beware'. A consumer is now the one who assumes to be treated like a King. Hence, it is
important for consumer driven businesses (such as, retail, e-commerce) to be mindful of the
changes in the legal landscape and have robust policies dealing with consumer redressal in
place. Consumer driven businesses must also strive to take extra precautions against unfair
trade practices and unethical business practices.

The Consumer Protection Act, 1986

Uploaded by

Copyright:

Available Formats

The Consumer Protection Act, 1986

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Consumer Protection Act, 1986

Uploaded by

Copyright:

Available Formats

Consumer Protection Act

THE CONSUMER PROTECTION ACT, 1986

Consumer Protection Act 2019

What has changed in the new Act?

Key Highlights of the New Act:

- Penalties for Misleading Advertisement: The CCPA may impose a penalty of up to INR

You might also like