Unit – III

Consumer Protection Law - Definition and Need of Consumer Protection; Consumer

Rights under the Consumer Protection Act, 2019; Unfair Trade Practice, Defect in goods,
Deficiency in services; Product liability and Penal Consequences, False and Misleading
Advertisement, E- Commerce, Alternate dispute Redress mechanism; Redresses
Mechanisms under the Consumer Protection Act, 2019. Consumer Protection Act, 2019
Introduction
In today‟s world of heavy advertising and trade malpractices, consumers are pushed to a risky
situation. The slogan line of „Jago Grahak Jago‟ is applicable today. What is advertised is
not what is given, consumers are given expired products, consumers are not made aware of
the dangers that he/she can be exposed to. This affects trade and the economy as demand for
such products falls and the sale gets hampered. One consumer after using a defective product
goes on to complain to all his relatives who then try to stay away from the product and the
shop. Most of the time due to the fault of the manufacturer, the shopkeeper has a downfall.
The Consumer Protection Act, 2019 replaced the old Consumer Protection Act, 1986. The
new bill was passed by the president on Aug 06, 2019. Here we are explaining the key
features of this Consumer Protection Act, 2019.The Consumer Protection Bill, 2019 has been
passed by the Lok Sabha on Jul 30, 2019, and Rajya Sabha passed on Aug 06, 2019. This bill
was introduced in the parliament by the Minister of Consumer Affairs, Food and Public
Distribution, Mr. Ram Vilas Paswan.
Brief History of Consumer Protection Act in India
Consumer Protection has always been a matter of great concern. In ancient India, effective
measures were initiated to protect consumers from crimes in the market place. Ancient law-
givers ably described various kinds of unfair trade practices and also prescribed severe
punishments for wrongdoers. Mainly, acts of adulteration and false weights and measures
were seriously dealt with.
In the medieval period, some Muslim rulers developed well-organized market mechanisms to
monitor prices and the supply of goods to the markets. During the British period, the modern
legal system was introduced in India and many laws were enacted to protect the interests of
consumers generally.
Some of the laws which were passed during the British regime concerning consumer interests
were: the Contract Act of 1872, the Sale of Goods Act of 1930, the Penal Code of 1860, the
Drugs and Cosmetics Act of 1940, the Usurious Loans Act of 1918, and the Agriculture
Procedure (Grading and Marketing Act) of 1937. These laws provided specific legal
protection for consumers.
Today, the civil justice system is tainted with deficiencies that discourage the consumer from
seeking legal recourse. However, the Consumer Protection Act of 1986, which provided easy
access to justice, had brought a legal revolution in India as a result of its cost-effective
mechanisms and popular support. However, with the gradual advancements in technology,
the age-old 1986 Act was unable to keep up with the grievances of the modern consumer.
Thus, a need was felt to substitute the old Act which resulted in the enactment of the
Consumer Protection Act, 2019.
Meaning of Consumer Protection Act, 2019
Consumer Protection Act, 2019 is a law to protect the interests of the consumers. This act
was inevitable to resolve a large number of pending consumer complaints in consumer courts
across the country. It has ways and means to solve the consumer grievances speedily.
Aim of the Consumer Protection Act
The basic aim of the Consumer Protection Act, 2019 to save the rights of the consumers by
establishing authorities for timely and effective administration and settlement of consumers‟
disputes.
Definition of the consumer
As per the act; a person is called a consumer who avails the services and buys any good for
self-use. Worth to mention that if a person buys any good and avail any service for resale or
commercial purpose, is not considered a consumer. This definition covers all types of
transactions i.e. online and offline.
Key features of the Consumer Protection Act, 2019
1. Establishment of the Central Consumer Protection Authority (CCPA):
The act has the provision of the Establishment of the CCPA which will protect, promote and
enforce the rights of consumers. The CCPA will regulate cases related to unfair trade
practices, misleading advertisements, and violation of consumer rights.
The CCPA will have the right to impose a penalty on the violators and passing orders to
recall goods or withdraw services, discontinuation of the unfair trade practices and
reimbursement of the price paid by the consumers.
The Central Consumer Protection Authority will have an investigation wing to enquire and
investigate such violations. The CCPA will be headed by the Director-General.
2. Rights of consumers:
The act provides 6 rights to the consumers;
i. To have information about the quantity, quality, purity, potency, price, and standard
of goods or services.
ii. To be protected from hazardous goods and services.
iii. To be protected from unfair or restrictive trade practices.
iv. To have a variety of goods or services at competitive prices
18HS71 - Constitution of India and Professional Ethics
Dept. of Industrial Engineering and Management
Deficiency of Service
When a service is found deficient by a consumer, they can lodge a complaint under the
Consumer Protection Act, 2019. Thus, the prime requirement is that the matter must fall
within the “definition of service”, and it must entail a deficiency as per the requirements
provided under the Consumer Protection Act, 2019.
What is "Deficiency of Service"?
According to the definition under Section. 2(11) of Consumer Protection Act 2019 ("the
Act"), any sort of imperfection, or defect in the feature, quality, amount, worth,
authenticity, its capacity or potential, and standard which is obligatory to be maintained
and regulated as per the laws and statutes in function or any agreement/contract claimed
by the seller, with respect to the products and goods, is known as deficiency.
Willful and deliberate concealment of important information, omission or negligence of
acts by seller which may lead to injury or loss to the consumer(s), also comes under the
ambit of deficiency of service.
Any act(s), which a prudent seller is supposed to do or is supposed to omit, but
deliberately does the contrast, such actions amount to 'deficiency of service'.
Deficiency of service can be witnessed in any service sector where there is buyer-seller
relationship, such as, railways, banks, legal aid, electricity, construction, education,
transportation, aviation, hospitality, restaurants, entertainment etc. Deficiency of service can
have minor to grave consequences, ranging from inconvenience or harassment to mental or
physical injury to death, thereby leading to legal consequences.
The Consumer Protection Act (both old and new) is a legislation enacted in India with the
sole purpose of protecting and safeguarding the interests of consumers. The Consumer
Protection Act, 2019, which came into effect on July, 20 2020, not only covers within its
ambit physical platforms for buyer-seller relationship but also recognizes services provided
by E-commerce platforms.
Indian Judiciary on “Deficiency of Services” under Consumer Protection Laws
Indian Medical Association v. V.P. Shanth- In this case, the Hon'ble Supreme Court through
this case included medical profession and medical negligence, within the scope of the
Consumer Protection Act. Consequently, empowering the aggrieved (due to medical
negligence) to sue for damages for deficiency in services by a medical professional or
medical institution, in a Civil Court.
Gurshinder Singh vs. Shriram General Insurance Co. Ltd and Ors. 2020- In this case, the
Hon'ble Supreme Court while reiterating the verdict passed in the case of Om Prakash v.
Reliance General Insurance and Anr. Civil Appeal No. 15611/2017 held that insurance
claims should not be declined on technical grounds, if the reason behind it is satisfactorily
explained and proved. It was further opined by the Court that if the insurance claim is
declined by the Insurer because of untimely intimation of occurrence of theft/robbery, it
would be considered as a technical ground of rejection and the same would be unjust and not
fair, if the respective claim in question has already been verified. Hence, it was held by the
Court that, mere delay in intimating the insurance company about the theft must not act as a
valid ground to decline or repudiate the insurance claim, which has already been proved to be
genuine.
Unfair Trade Practices
A trade practice is touted as unfair when in order to promote its services or sale of its goods,
supply and distribution of its products, an entity uses illicit and illegal means to mislead the
general public into opting for in-genuine and deceptive goods and services. Some examples
are: portraying the goods to be of good quality when they are actually of inferior/poor quality,
misleading public with fake components and ingredients, misrepresentation of services,
claiming used goods and products to be brand new, fake advertising, selling goods not
complying with safety and other industry standards while claiming otherwise etc.
According to the newly enacted Consumer Protection Act 2019, E-commerce Rules on unfair
trade practices have been laid down under the Consumer Protection (E-commerce) Rules,
2020.
These rules are applicable to all e-commerce portals, inventories, marketplaces and
other entities (including foreign entities, which are situated outside India but supply
goods and services to India as well) involved in providing services to customers.
Activities which take place on personal level and non- professionally, are exempted
from the applicability of these Rules.
As per the rules, E-commerce entities are mandatorily required to dispense
information such as refund policy, warranty, exchange rules, payment options,
tracking information, shipment details etc. If the goods or products sold are not up to
the mark/quality as portrayed, then sellers are liable to take them back or exchange
them accordingly.
Such platforms are mandated to answer any query or complaint filed by a consumer
within 48 hours and shall provide proper redressal to such consumer complaint within
the period of 1 months, from the date of receipt of Moreover, appointment of
grievance officer is compulsory.
Product Liability
Product liability under CPA 2019 is defined as the responsibility of either the product seller
or the product manufacturer to compensate the consumer for any harm caused because of the
defective or deficient product. A product should meet the reasonable expectations that a
consumer has regarding the quality and safety of the product.
The product should be both merchantable and marketable. Any defect in this part would
bring liability on the one who sold the product or the one who manufactured it. The consumer
cannot be expected by the seller or the manufacturer to specifically examine every aspect of
the product. It is well understood that if the price liability would fall on the consumer, the
product liability should fall on the seller or manufacturer.
CPA 2019 is the first legislation that expressly defines and contains provisions related to
product liability. It codifies the principle of product liability concerning sale or supply of
defective products or delivery of defective services to consumers against the product
manufacturer, product service provider, product sellers, exceptions to product liability action.
Nature of product liability law
Product liability claims before CPA 2019 were lodged under the Sale of Goods Act, 1930 ;
the Consumer Protection Act, 1986; and the Indian Contract Act, 1872 .The principle of
negligence and strict liability work in Torts and the principle of warranty is applied under the
law of contracts to claim damages for product liabilities. There is a statutory liability on
product manufacturers and product sellers under CPA 2019 for any defective product.
Moreover, such liability is strict in nature as it can hold them liable just based on the
defective product without the consumer having to prove actual negligence.
It derives its base from the concept of „caveat venditor‟ which means that the seller must
beware thereby making the seller liable for any harm caused by the product to the
consumer.Generally, product liability claims are brought under the legal
grounds of negligence , strict liability , or breach of warranty . Selling of the concerned
product in the market is a prerequisite condition to incur a product liability.
Privity of contract and product liability
Privity of contract means that no third party who is not a party to the contract can
sue. „Privity of contract‟ is no longer a requirement to sue for product liability– any
person whom the defendant could foresee that he would suffer from injury can sue. To
explain the nature of product liability and the concept of absence of „privity of contract‟ we
can take the case of Donoghue v. Stevenson wherein when a drink was offered to the
consumer with a decomposed snail in it that caused health injury to the consumer, the
consumer could hold the manufacturer of the product liable even though the contract existed
between the consumer and the seller.
Again, in Henningson v. Bloomfield Motors Inc. , where the Plaintiff bought a car from a
dealer and the car started to malfunction within 10 days of delivery which resulted in the
Plaintiff‟s wife suffering injuries, it was held that the Plaintiff had to get remedy because it
was a breach of the implied warranty of safety. The fact that it was the plaintiff‟s wife and
not the plaintiff who got hurt is no excuse as the product liability extended to every
foreseeable user.
Types of product liability
Here, we would deal with the various types of product liability claims that a consumer can
bring against the seller or manufacturer. They can be of 4 types:
Manufacturing defects are caused when certain products get manufactured differently or
miss any part because of defects or negligence during the manufacturing process. Here
only a few products and not all suffer from the defect.
In case of a design defect, the design of the product itself is wrong thus resulting in an
entire set of products that are incapable of performing their required functions. This is a
mistake caused not during the manufacturing stage but while creating the blueprint of the
product.
In case of marketing defects, the design and manufacture of the product are perfect but
the seller while selling the product in the market does not give proper instructions to the
consumer on how to exactly use the product that results in the damage.
When a claim is brought based on a breach of warranty, it is because the product has
failed to last and function properly for the stated warranty period.
Illustration
Let us suppose that while manufacturing a set of pencils, the lead fails to be put in one of
the pencils- in that case, the consumer can file a product liability claim based on
manufacturing defects.
Now, if a new type of car is being created to be suitable for desert sands but the tyre of
the car was designed negligently such that those tyres are sinking into sand- then a
product liability claim on design defects can be brought.
If in another instance, the seller while selling an iron did not make the consumer aware
that a particular thing if not removed could increase its temperature uncontrollably fast, it
is a marketing defect.
In another case, where a consumer buys a washing machine with an express warranty of
good functioning for 12 years but the machine malfunctions within 6 years, there would
be a product liability claim for breach of warranty.
Remedies available to consumers under the Consumer Protection Act, 2019
Remedies for product liability apply against the product manufacturer, product service
provider, and product seller. Any claim can be brought against them in case the consumer has
suffered any kind of harm or injury from using the defective product or product service.
Remedy against a product manufacturer
Section 84 under the Act states the conditions under which a consumer can claim remedy
against a product manufacturer. They are as follows:
1. There is a manufacturing defect.
2. There is a design defect.
3. There is non-confirmation to an express warranty. It does not matter if such a
warranty was made negligently or honestly.
4. There is a marketing defect, that is no warning of danger in the wrong usage was
given to the consumer in the product itself.
5. In the case where there were certain specifications to be followed while
manufacturing the product and they have not been complied with.
Unreasonably dangerous goods are defective because they are likely to jeopardize the safety
of a reasonable user. The danger may be due to defective design and non-meeting of
expectations of the user.
Remedy against a product service provider
Section 85 under the Act deals with the liabilities of a product service provider. A product
service provider is any person who gives services in respect of a product.
A product service provider would be liable to the consumer if-
1. The service that was given in respect of the product was not of sufficient and good
quality as was required by the law that was in force at that time or as per the
contract if any.
2. There was a conscious or negligent act or omission on part of the service provider
which resulted in harm to the consumer.
3. The service provider was required to give warnings about some danger in using
the product in a wrong way which was not given which caused the injury to the
consumer.
4. There was a breach of warranty or terms of the contract of service.
Remedy against a product seller
Lastly, the consumer also has a remedy available against any liability by the product seller.
This is provided in Section 86 of the Act. The liabilities are:
1. There was an exercise of enough control by the seller in the manufacturing,
designing, testing, and labelling of the product, and this caused harm to the
consumer.
2. While selling the product, the product seller has done certain modifications to the
manufactured product and the harm caused is a direct consequence of that.
3. There was no express warranty by the product manufacturer, but the product seller
gave an express warranty which was not met.
4. A personal obligation may come on the seller if the manufacturer cannot be
recognised or made known, that is the manufacturer is undisclosed OR it is
impossible to sue the manufacturer due to some justifiable reason OR the law in
force does not apply to him. For example, if the seller is selling a product for a
foreign manufacturer, the Indian law would not apply to him. In such a case the
Indian seller would be made liable.
5. The product seller did not take proper care of the product, inspect or maintain them
or was negligent in passing certain warnings as given by the manufacturer to the
consumer and the harm resulted from it.
It must also be noted that in the above situation, the product seller and product manufacturer
are two different persons. In all of the above-given situations, the consumer can claim
compensation for the harm.
Cases of claiming remedy
Wherein a dealer of air conditioners wanted to avoid liability after selling a second-hand
defective air conditioner by stating that he was not its manufacturer, he was prevented
from doing so and made liable for the same.
A television set was bought and was serviced. Just after one week, the television stopped
functioning and throughout a period, 11 repairs had to be done. This was considered as a
deficiency of service and hence the consumer could claim compensation.
 When a pressure cooker burst while using it and the buyer‟s wife, who was an engineer,
lost her right hand, compensation of 1 lakh was awarded to the consumer.
Where for a children‟s park, certain musical fountains were asked to be installed by the
supplier and the fountains failed to work even after repairs due to inherent defective
design, the entire money was asked to be refunded.
Defences against product liability claims
It may happen that the consumer had an ill motive in bringing up the claim or simply that the
consumer was ignorant of his/her own mistake. In such cases, it would be wrong and unfair to
hold the manufacturer or the seller, or the product service provider liable and ask him to pay
compensation. Hence, whenever cases are adjudged not only is the law important but the
entire fact scenario. There are instances within the conditions given in the previous chapter
too where defence is available to the opposite party if the same can be proved. Section 87 of
the Consumer Protection Act, 2019 itself points out the cases in which the liability would be
absolved. They are the exceptions to product liability claims.
First of all, in case the consumer himself had modified the sold product at the time of
harm which caused the harm/injury then the consumer cannot bring an action against
the product seller. If the consumer gets a remedy in such a case, it would be the same as if
taking advantage of one‟s wrong.
Defences available to a product manufacturer
In case a product manufacturer has not given adequate warnings and based on that a claim is
being brought against him/her, the claim would be invalid if:
1. The employer had bought the product to be used for work and adequate warnings were
issued to the employer or the product mentioned such warnings which the employer knew
about but the employee, who brought the suit was not made aware of the same.
2. The product was a component to be used in a separate product. All warnings regarding
the component product were already given. The harm was not caused by the component
product separately but only after using it with the other product.
3. The product was to be only used under the guidance of an expert and all warnings were
given to the expert.
4. The consumer himself was not in his senses while using the product due to the intake of
some intoxicating agent or drug that was not prescribed by a medical practitioner to him.
Due to such intoxication or drug effect, harm was caused.
5. Also, if any such characteristic or danger of a product is to be known by a reasonable
consumer, the manufacturer is not compelled to give any warning of that danger. For
example, it is no fault of the manufacturer if a consumer does not know that a knife if run
on the skin can cause cuts.
If the defendant can prove any of the above, he/she would not be liable to pay compensation.
Online shopping and product liability
In modern times, most people have gone online for shopping purposes. Even the new
Consumer Protection Act, 2019 includes an online consumer. This trend has become more
prevalent during the Corona crisis. People have become lazy and want to get products and
product services sitting at home. But with the advent of online shopping consumers are
getting more defrauded. They would order some product but would get something else, or the
product would cause harm to the consumer simply because no warnings were issued when the
product was delivered or on the product body. It is true that in online shopping the liability on
the defendant increases because here the consumer had no chance of looking or examining
the product and the consumer depended upon the seller to sell a product that works properly
and that does not cause any harm to the consumer. But the problem in online shopping is that
it becomes difficult to hold the opposite party liable. In the case of online shopping, the
product deliverer is also to be considered.
Liability of a product retailer or delivery service
Sometimes the online retailers like Amazon, Flipkart, etc. take the help of the argument that
they have merely delivered the product of some seller and hence they were not liable. But in a
California Court decision, this thing was repealed and it was held that online retailers would
be liable for any third-party defects of a product that is sold on its website. (see here)
Hence, now if there is any defective product, the consumer need not find the third party but
can directly claim compensation from the product retailer.
The product manufacturer or retailer would also be liable for any kind of false
advertisement on the website- like falsely describing a product or giving false guarantees or
conveying such representations that involve unfair trade practice or deliberately concealing
important information.
There are many problems of online shopping for which there can be a liability on the
defendants. For example:
Receiving wrong products.
Damages to the product while in delivery.
Product not being delivered on time.
Where the product has been delivered by a foreign company and it is difficult to
sue for the defective product.
Sometimes there is the delivery of gray market items which are illegally sold and which
are labelled with a non-actionable warranty. Consumers can hold the seller liable for such
fraud.
Liability related to online food products
In the case of online food products, the safety measures to be taken by the seller or
manufacturer should be increased. Food traceability in the case of online food products is
important as it provides the possibility of identifying food that has a safety-related defect.
The identification of the food with the safety-related defect may also result in the supplier
being identified which is important for the food operator to know. Whenever there is a food
web-shop, the consumer must be able to know the identity and required information about the
trader, proper information about the product. If there is any defect, there would be an
obligation to pay compensation.
False and Misleading Advertisement,
The impact of advertisements on consumer rights is unquestionable, and this reality makes it
imperative that promotions be reasonable and honest. Misdirecting and bogus notices are not
just untrustworthy, but they also contort rivalry and, of course, customer decisions. False and
misdirecting ads in truth disregard a few essential privileges of purchasers – the right to data,
the right to decide, the option to be secured against dangerous products, etc. Since
advertisements are essentially intended to advance an item or assistance, one sees some
distortion in how they praise the ideals of the product or service. In any case, when it goes
past that and purposely articulates a lie or attempts to distort realities, deceiving the customer,
then at that point, it becomes questionable. For example, when a vegetable oil advertisement
gives you the feeling that you are liberated from heart issues as you are utilising that specific
oil, then, at that point, it is misrepresenting a factor when a cell phone service provider
promises STD calls for 40 paise per minute but omits to say that this rate is applicable only
when calls are made to numbers serviced by the same provider, it constitutes
misrepresentation.
The false misrepresentation can be classified into two broad categories:
The first category involves advertisements that hawk health cures and medications of
questionable adequacy and health gadgets of obscure qualities and aid-related false
claims, especially those focusing on children, old age, and those with certain medical
conditions, for example, diabetes.
In the second category, other kinds of false and misleading advertisements, fraudulent and
deceptive advertisements are involved (non-health, vitamins related), violating the
consumers‟ right to information and choice and thereby causing the consumer monetary
loss and even intellectual agony.
False and misleading advertisements now have a broader basis: in the past, they were only
seen in print media, appeared together with other mainstream media (such as brochures and
fees), and are now seen on TV, affecting more people, even illiterates.
Indian laws and regulations on misleading advertisements
The Consumer Protection Act, 2019
The Consumer Protection Act of 2019 came into effect in 2020. In a video conference, Sri
Ram Vilas Paswan, who was the former head of the Ministry of Consumer Affairs, Food
and Public Distribution, briefly introduced the 2019 Consumer Protection Act to the
media. He had stated that this new legislation will empower consumers and pass various
rules and regulations to help them protect their rights through multiple provisions, such as
consumer protection advice, consumer dispute resolution committees, mediation, product
liability, and penalties for product manufacturing or sales. It promotes, protects and
enforces consumer rights.
The legislation provides for establishing the Central Consumer Protection Authority
(CCPA) to prevent unfair business practices in e-commerce. CCPA will have the power
to investigate consumer abuse, initiate complaints/harassment, order the recall of unsafe
products and services, prohibit unfair business practices and misleading advertising, and
sanction advertisers/sponsors/publishers. The rules to prevent unfair business practices on
e-commerce platforms will also be bound by the law.
As per the legislation, all e-commerce companies must provide information about returns,
refunds, exchanges, warranties and guarantees, shipping and delivery, payment methods,
exclusion mechanisms, payment method security, payment refund options, etc., including
the country of origin, which is necessary for consumers to make informed buying
decisions on these platforms.
It is also stated that e-commerce platforms must confirm the receipt of any consumer
complaints within 48 hours and resolve them within one month from the date of receipt of
the complaint under the law. Shri Ram Vilas Paswan had further stated in the video
conference that the new law introduces the concept of product liability and enables
product manufacturers, product service providers, and product sellers to make any claims
for damages.
The legislation also optimises the process of resolving consumer disputes at the
Consumer Council, including (but not limited to) authorising state and regional
committees to review their orders and enabling consumers to file complaints
electronically and lodge a complaint with a qualified consumer council at the location
complaint. If the acceptance issue is not resolved within the specified 21 days, a
complaint can be filed in Consumer Commissions that have jurisdiction over the
residence, videoconferencing for hearing and deemed admissibility of complaints.
The new law also provides a mechanism for resolving disputes through mediation and
simplifies the arbitration procedure. If any reservations are approved in advance and both
parties agree to it, the Consumer Council will file a complaint concerning mediation. The
mediation panel is established under the auspices of the Consumer Protection
Commission, so there will be no appeals for mediation in the court. According to
the Consumer Protection (General) Rules, 2020, there can be no fee for cases up to Rs. 5
lakh. There are provisions for filing proceedings electronically, credit of amount because
of the unidentifiable consumer to Consumer Welfare Fund (CWF).
The State Commissions will supply data to the Central Government on a quarterly
foundation basis on vacancies, disposal, the pendency of instances, and different matters.
During the earlier Consumer Protection Act, 1986, a single factor to get the right of entry
to justice was given, which is likewise time-consuming. The new Act has been delivered
after many amendments to offer safety to consumers from corrupt shopkeepers and also
from new e-trade retailers/platforms. The Act will show an important tool in protecting
the rights of consumers in the country.
The Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of
Trade and Commerce, Production, Supply, and Distribution) Act, 2003 (CTP Act)
The CTP Act prohibits the direct or oblique advertisement of cigarettes or other tobacco
merchandise in all styles of audio, visual, and print media (Section 5 of the CTP Act) and
presents that any individual in contravention of such prohibition might be at risk of being
punished with imprisonment of two years or fine of INR. 1,000 (Rupees One Thousand
Only) or both, which can be prolonged to a period of five (five) years or INR. 5,000 (Rupees
Five Thousand Only) or both (Section 22 of the CTP Act). The CTP Act additionally permits
authorized organizations, the power of search, seizure, forfeiture, and confiscation in
admiration of any commercial of cigarettes or other tobacco merchandise (Sections
12, 13, 14, and 23 of the CTP Act).
The Cable Television Networks (Regulations) Act, 1995 (CTN Act)
The CTN Act prohibits anyone from rebroadcasting programs (including
advertisements under Section 2(g) of the CTN Act) through cable television unless
the guidelines provide for the same.
As per Rule 7 of the Cable Television Networks (Amendment) Rules, 2006, a
body of rules framed under the CTN Act, cable service providers must ensure that
no such advertisement is aired that is offensive to the viewers‟ decency, morality,
and religious susceptibilities.Other laws related to advertising in India
Some Indian laws that apply to advertising include the following:
Doordarshan/All India Radio (AIR) Advertisement Code
Drugs and Cosmetics Act, 1940, Drugs (Control) Act, 1950
Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954
Prenatal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994
Pharmacy Act, 1948
Prize Competitions Act, 1955
Emblems and Names (Prevention of Improper Use) Act, 1950
Indecent Representation of Women (Prohibition) Act, 1986
Code of Ethics for Advertising in India (ASCI Code), issued by the Advertising
Standards Council of India (ASCI)
It is pertinent to note that the above-mentioned laws are fully exhaustive and there are various
other local, state, and central laws governing advertising.
E COMMERCE
The Consumer Protection Act has bolstered the regulatory approach towards consumer
protectionism and reinforced the legal framework for a timely and effective administration
and settlement of consumer disputes at a time when rapid developments in the modern age
retail trade and technology have led to a marketplace which is accessible by a click of a
button and is no longer shackled by the rigours of distance, location, space constraints,
opening hours, stock limitations or logistical challenges.
We have in an earlier article discussed the key implications of the Consumer Protection Act
on the ecommerce sector, and in this follow up piece, we assess and discuss the various
obligations and rights stemming from the Ecommerce Rules from the perspective of each of
the following key stakeholders in the e-commerce sector – ecommerce entities (marketplace
and inventory models), sellers and the consumers.
Applicability
The term “ecommerce entity” has been very broadly defined under the E-Commerce Rules to
mean/include “any person, who owns, operates or manages digital or electronic facility or
platform for electronic commerce, but does not include a seller offering his goods or services
for sale on a marketplace e-commerce entity” and the E-Commerce Rules apply to:
all goods and services bought or sold over digital or electronic network including
digital products;
all models of e-commerce, including marketplace and inventory models of e-
commerce;
all e-commerce retail, including multi-channel single-brand retailers and single-brand
retailers in single or multiple formats; and/or
all forms of unfair trade practices across all models of e-commerce.
The legislative intent to include all forms of e-commerce/retail models/entities – B2C, B2B
and B2B2C, whether incorporated in or outside India (but offering goods and services to
consumers in India), within the grip of the E-commerce Rules is abundantly clear.
Therefore, all types of e-commerce entities whether operating on the inventory model or the
marketplace model including e-commerce platforms that are engaged in providing services or
renting/leasing goods will fall within the meaning of “e-commerce entity” as defined under
the E-Commerce Rules and consequently will be subject to the legal regime prescribed under
the Consumer Protection Act and the E-Commerce Rules.
The Key Obligations Applying To Ecommerce Entities And Sellers
Ecommerce Entities
The E-Commerce Rules prescribe an elaborate framework for ecommerce entities to oversee
and prevent any unfair trade practices or misleading advertisements on part of the sellers on
their platform and obligate them to ensure that they do not engage in any price manipulation
and have in place adequate internal mechanism for the redressal of complaints by consumers.
Further, the Consumer Protection Act and the E-Commerce Rules also stipulate that an e-
commerce entity shall not directly or indirectly influence the sale price of goods or services
and shall maintain a level playing field for all sellers without any discrimination.
Pertinently, prior to the notification of the Consumer Protection Act and the E-Commerce
Rules, these obligations to restrain from influencing the sale price of goods or services and to
maintain a level playing field for all sellers without any discrimination were applicable only
in respect of e-commerce entities that had received foreign investment.
With these restrictions being introduced under the Consumer Protection Act and the E-
Commerce Rules as well, the Government has now created a uniform governing code for all
e-commerce entities in India (with or without foreign investment) and resolved the
abovementioned disparity.
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However, there are still some gaps between the requirements under the Foreign Exchange
Management (Non–Debt Instrument) Rules 2019 (NDI Rules) that apply only in respect of e-
commerce entities with foreign investment and the Consumer Protection Act/E-Commerce
Rules.
Interestingly, ecommerce entities are now required to obtain an express consent from its
consumers for the purchase of any good or service offered on its platform and this consent
can no longer be recorded automatically, not even in the form of pre-ticked checkboxes.
However, the exact tenor of this requirement is unclear – what actions of the consumers
would constitute „explicit‟ and „affirmative‟ consents have been not been elucidated in the E-
Commerce Rules. Would a consent which is accorded through a click wrap agreement be
sufficient to ensure compliance under the E-Commerce? Would this consent be required only
at the time of the registration by a consumer with an online e-commerce platform or would a
consent be required every time a consumer undertakes a purchase transaction?
A consumer typically accepts the terms and conditions of the marketplace (which are often
structured as a click wrap agreement) only once at the time of making an account with such
marketplace (and not at the time of every purchase) and these terms and conditions continue
to apply every time the consumer makes a purchase on the marketplace.
In our view, this requirement appears to be more relevant in cases/in respect of marketplaces
which allow the consumers to shop and check out from the website as a „guest’ without any
registration. In such cases, the exercise of such option by a consumer (by means of clicking at
the payment button at the time of checkout) automatically makes a consumer agree to the
terms and conditions of such purchase, without actually giving an opportunity to the
consumer to read and accept such terms and conditions.
Given this new legal requirement to procure an express consent of a consumer for the
purchase of any good or service, in our view, all e-commerce entities that allow a consumer
to checkout as a „guest‟ would now need to ensure that before a consumer checks out with the
purchase, the consumer is presented with the terms and conditions of such purchase and is
offered with an opportunity to read and provide his/her express consent for such purchase.
Price Manipulation
Price of the goods or services offered cannot be manipulated by the e-commerce entities to
gain unreasonable profits. The underlying intent behind this obligation is to ensure that a
level playing field is maintained for all sellers and no unfair method or deceptive practices
are adopted by an e-commerce entity (such as deep discounts, freebies, cash back offers
and/or EMI options) to influence transactional decisions of the consumers which favour a
particular seller.
In the past, there have been instances where certain e-commerce entities have witnessed
alleged claims of price manipulation involving deep discounts being offered on certain
products that were originally listed at prices which were more than the MRP of such
products. In fact, the National Consumer Disputes Redressal Commission and the District
Consumer Disputes Redressal Commission have in the past also held that listing goods at a
price higher than the MRP is an offence under the Consumer Protection Act.
The restriction on price manipulation and the allied requirements to ensure a level playing
field for all sellers was first introduced by the Government under the FDI policy in respect of
only those e-commerce entities which had foreign investments. With the inclusion of these
restrictions under the E-commerce Rules, all e-commerce entities in the country (with or
without foreign investment) would now need to ensure that all sellers compete without any
favouritism or bias in a transparent manner.
Consumer Discrimination And Disclosure Of Preferential Treatment To Sellers
Ecommerce entities have to now ensure that there is no discrimination between the
consumers of „same class‟ or make any classification amongst the consumers, which (directly
or indirectly) affects the rights of the consumers.
Separately, now it is also mandatory for e-commerce entities to disclose the terms and
conditions governing their relationship with sellers on their platforms including a description
of any differential treatment that a marketplace is providing to any particular seller(s) or in
respect of any goods or services in the „same category‟.
This requirement is clearly an extension of the aforementioned overarching restrictions,
namely, the restriction on influencing the sale price of the products or services that are listed
on the marketplace (whether directly or indirectly) and the obligation to maintain a level
playing field for all sellers in a ‘same category’.
Pertinently, there is no clarity, test or yardstick under the E-commerce Rules on what
constitutes a „same class‟ of consumers or „same category‟ of sellers or how should an e-
commerce entity segregate its consumers/sellers into different classes.
Therefore, the discretion in respect of classifying consumers into different classes or sellers
into different categories seems to be with the e-commerce entities and (in practice) may be
driven by parameters such as volume of sales/purchase, period of association and type of
products/services), subject to the rider that same treatment has to be ensured to all consumers
or sellers (as the case may be) forming part of „a particular class‟.
Cancellation Charges
No cancellation charges can be levied on a consumer, even where a consumer wants to cancel
a confirmed order, unless similar charges are also borne by the e-commerce entity if it
unilaterally cancels an order placed by a consumer for any reason whatsoever.
Timely Refunds
All refund requests are required to be completed within a „reasonable period of time‟. Every
e-commerce entity has a different policy in relation to refunds and there have been instances
where consumers have had to wait for a considerable amount of time to receive the refund
payments. Instead of prescribing an outer time limit for processing refund payments, the E-
commerce Rules have provided flexibility to within the overall contour of a reasonability test.
Again, what would constitute a „reasonable period of time‟ would not only differ from one e-
commerce entity to another, it would also differ from a consumer to consumer and be driven
by factors such as what was the mode of payment, the processing bank and the time period
underlying the returns.
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Grievance Redressal Officer
It is now mandatory for e-commerce entities to appoint a grievance redressal officer for
consumer grievance redressal and the details of such grievance officer, such as name, contact
details and the designation are required to be displayed on the online platforms. Also, such
officer will need to acknowledge the consumer complaint within 48 hours of receipt of the
complaint and redress the complaint within one month from the date of receipt of the
complaint.
Earlier, ever e-commerce entity had its own policy as regards the response time for consumer
complaints. However, this would provide for a minimum standard to be followed. Given the
population and number of consumers, such officer is going to have a herculean task in
acknowledging the complaints in the given time frame, and even if the former is complied
with, redressal of complaints in one month would certainly be a challenging task.
Nodal Person Of Contact
Apart from a grievance redressal officer, an e-commerce entity is now required to also
appoint a nodal person of contact or an alternate senior designated functionary (who is
resident in India) to ensure compliance with the provisions of Consumer Protection Act and
the E-Commerce Rules. Several e-commerce entities have already set up in-house legal and
compliance departments whose role is to ensure that there are no slippages in compliance
under the applicable legislations.
Nevertheless, with the requirement to identify and designate a senior official for overseeing
and ensuring compliance under the consumer protection law, issues regarding the personal
liability of such designated officials and protection from monetary exposures/risk of litigation
will now assume more importance whilst such employees are negotiating their employment
contract/engagement with the e-commerce marketplaces.
Complaint Token
It is compulsory for the e-commerce entities to allocate and provide a ticket number for each
consumer complaint for tracking the status of his/her complaint. This practice was already
prevalent as a good practice by several e-commerce entities, but now has been made
mandatory for all e-commerce entities.
Sellers
A number of obligations have also been cast on a seller who lists its goods or services on an
e-commerce platform. An overview of these obligations is as follows:
Written Contract
The E-commerce Rules prescribe that it is now mandatory for a seller to enter into a written
contract with an e-commerce entity in order to undertake any sale of goods and services on
the platform of such e-commerce entity. As a matter of practice, e-commerce entities used to
enter into a standard contract with a seller (before onboarding such seller on its platform) and
such a contract was usually in a form of a click wrap agreement which set out the terms and
conditions governing the sale of goods and services by such seller on the e-commerce entity‟s
marketplace.
Now, with the introduction of the E-commerce Rules and the obligation to ensure a written
contract between the seller and the e-commerce entity, both the parties are bound to relook at
the terms of these standard onboarding contracts to ensure a strict contractual allocation of
risks and responsibilities and a proper limitation of liability regime. Given the obligation to
disclose the details of any preferential treatment to a seller, it would be interesting to see how
deviations from the standard terms of the onboarding contract would play out from a
disclosure perspective.
False Or Misleading Advertisements
Each seller needs to ensure that (a) it does not impersonate itself as a consumer and post
reviews about the goods or services sold by it or misrepresent the quality or any features of
any goods or services; (b) it would not refuse to take back the goods or refuse to refund the
sale consideration, where the goods or services in question are defective, deficient or spurious
or if they do not conform to the advertised features or the promised delivery schedule; (c) it
would not advertise the goods or services offered in such a manner that are inconsistent with
the actual characteristics of such goods or services; and (d) the images/description used in
advertisements of goods or services offered, are consistent with the actual characteristics of
such goods or services.
While these measures would certainly act as a deterrent for the sellers, from an
implementation perspective, since the onus is also on the ecommerce platforms to ensure
compliance under the E-commerce Rules, it will certainly become a challenging and costly
task for the marketplaces, which in turn would result in an increased reliance on contractual
indemnity arrangements by the marketplaces.
Grievance Redressal Officer
The obligation of appointing a grievance redressal officer has also been extended to the
sellers. We are seeing that e-commerce entities are already taking adequate representations
from the sellers (at the time of onboarding) ensuing compliance with the obligations under
the E-commerce Rules.
Disclosure
In order to weed out unscrupulous sellers, the E-commerce Rules have made it mandatory for
the sellers to disclose certain prescribed information to the marketplace which information is
required to be displayed on the marketplace platform.
This information includes the legal name and address of the seller, contact details, customer
care number, applicable GSTIN, PAN, MRP breakup, postage and handling charges,
conveyance charges, applicable taxes, country of origin and expiry date of the goods, terms
of exchange, returns and refunds, cost of return shipping and any relevant guarantees or
warranties applicable on the goods or services.
Consumer Complaint Redressal Mechanism
In case of any deficiency in services, the consumer can approach Consumer Courts
constituted under the Act. After the commencement of new Consumer Protection Act, 2019,
consumer complaints can now be registered electronically. The whole adjudicating procedure
has been simplified by not just permitting electronic filing but, empowering and authorizing
District and State Consumer Forums to address to review applications and also advise
mediation (whenever feasible).
Consumer Courts is a 3-tier system of courts (National level, State level and District level)
where aggrieved consumers can approach as per the valuation of matter in concern, for
redressal and adjudication of disputes. Once the issues of the matter in dispute are
recognized, the further step is to understand the pecuniary limit/jurisdiction of the case.
Pecuniary Jurisdiction in Consumer Cases
Forum Value of Claim
District Consumer Disputes Redressal
Forum[9]:
Rs. 1 Crore or less
State Consumer Disputes Redressal
Commission[10]
Between Rs. 1 Crore to Rs. 10 Crore.
National Consumer Disputes Redressal
Commission[11]
More than Rs. 10 Crore
1. Grievance Redressal Mechanism of Service provider- One of the first step that an
aggrieved Consumer shall consider is to approach the Grievance redressal mechanism or
authority of the service provider. For instance, most of the Insurance companies and
organizations have their Internal grievance redressal mechanism and an aggrieved
consumer can approach this mechanism or authority with his complaints before initiating
any legal action against the service provider.
2. Sending of Legal Notice: Prior to availing of statutory remedies and approaching
the Consumer Forum, it is advisable that the aggrieved consumer exhausts any
alternative legal remedies available to him/her. One of the actions that can be taken by
Consumer before approaching the Consumer Court is to send legal notice to the service
provider detailing the particulars of compliant, relief sought for, time period to comply
with the conditions and cautioning the service provider of legal recourse in the event of
non-compliance of terms and conditions of the notice.
3. File Consumer complaint before appropriate Forum- If the service provider fails to
comply with the terms and conditions mentioned in the legal notice or disagrees to
compensate for the loss caused, the complainant has the right to file a legal complaint in
the Consumer forum. It is pertinent to state that, sending of legal notice is not mandatory
and therefore, a complainant has the right to directly approach respective consumer forum
for filing of complaint.
Particulars of Compliant- The complaint must contain all the necessary details of the
complainant and service provider such as: name and address, relevant facts of the matter,
remedy sought, affidavit (signed and verified), all other relevant documents (bill details,
mode of payment, guarantee cards etc).
Limitation period to file Consumer Complaint- As per Section 35 of the Act, a consumer
complaint must be filed to respective District Forum within a span of two years from the date
on which the cause of action or deficiency in service or defect in goods arises. Nevertheless,
the law permits the Consumer or aggrieved to file a complaint even after the statutory period
of two years if the District Forum is satisfied that the complainant has genuine and valid
reasons for not filing the complaint within the specified time period.
Admissibility of Complaint by forum- Section 36 of the Act prescribes that, after the filing of
consumer complaint, District Forum shall revert on admissibility of the complaint within the
span of 21 days from the date of filing. Failing which shall be deemed to be admitted and
approved.
1. Mediation- According to Section 37 of the Act, if the respective Forum considers
mediation as a viable option for settlement, it may, with the consent of parties, advise
them to opt for mediation. In that case, contesting parties are required to provide written
consent within five days from such proposal, to the Forum. If mediation fails, case shall
fall back to the Forum. It is pertinent to mention that, according to Section 81(1), no
appeal can be filed and entertained by respective forum against the order passed by
Mediation.
2. Review application- If the complainant is not satisfied with the verdict passed by District
consumer forum, then he/she can file a review application in the same forum within 30
days from the date of pronouncement of order. In case the complainant is not satisfied by
the order on review application, the aggrieved can appeal to the next higher judicial
authority i.e., State Commission within 45 days from the date of passage of order.
3. Filing appeal with National Commission- Similarly, if the complainant is not satisfied
with the order passed by State Commission, aggrieved can file review application in the
same forum within a period of 30 days from the date of passage of order.[14] Otherwise,
if aggrieved by the order passed by State Forum, he can has the right to appeal to National
Forum within 30 days from the date of order given by previous forum.
Central Consumer Protection Authorities
One of the major drawbacks of the previous Act was that there were no protection authorities
in order to keep check, regulate and address the grievances of the consumers in an effective
and speedy manner. Chapter III of the 2019 Act provides with the Central Consumer
Protection Authority (CCPA) which has been added in order to regulate matters relating to
violation of rights of consumers, unfair trade practices and false or misleading advertisements
which are prejudicial to the interests of public and consumers and to promote, protect and
enforce the rights of consumers as a class. Central Authority shall consist of a Chief
Commissioner and such number of other Commissioners as may be prescribed, to be
appointed by the Central Government to exercise the powers and discharge the functions
under this Act. It will consist of an investigation wing headed by a Director-General for the
purpose of conducting inquiry or investigation under this Act as may be directed by the
Central Authority.
An appeal to an order passed by the CCPA on this issue can be filed before the National
Commission within a period of 30 days from the date of the receipt of such order.
How to make a complaint?
Section 17 states that a complaint relating to violation of consumer rights or unfair trade
practices or false or misleading advertisements which are prejudicial to the interests of
consumers as a class, may be forwarded either in writing or in electronic mode, to any one
of the authorities, namely, the District Collector or the Commissioner of Regional
Office or the Central Authority.
The Central Authority under Section 21 has been provided with the powers to issue
directions and penalties against false or misleading advertisements.
Consumer Dispute Redressal Commission (CDRC)
Chapter IV of the Act deals with the Establishment, Qualifications, Jurisdiction, Manner of
Complaint, Proceedings etc. regarding the Consumer Disputes Redressal Commission. CDRC
is empowered to resolve complaints with respect to unfair and restrictive trade practices,
defective goods and services, overcharging and goods which are a hazard to life and safety. It
has to be set up at three levels, i.e. the District, State and National levels (commissions). In
comparison to the old Act, the jurisdictions of the commissions have been enhanced.
District Consumer Disputes Redressal Commission (previously known as the District
Forum):
District Commission shall consist of a President and not less than two and not more than such
number of members as may be prescribed, in consultation with the Central Government. The
District Commission now has the jurisdiction to entertain complaints where the value of the
goods and services paid as consideration does not exceed one crore rupees. Section
34(2)(d) categorically states that the complaint can now also be instituted in a District
Commission within the local limits of whose jurisdiction the complainant resides or
personally works for gain, apart from filing in the jurisdiction where the other side actually or
voluntarily resides, or carries a business, or has a branch office or personally works for gain.
State Consumer Disputes Redressal Commission (previously known as the State
Commission):
The State Commission shall have jurisdiction to entertain the complaints where the
consideration exceeds one crore rupees but does not exceed ten crore rupees.
National Consumer Disputes Redressal Commission (previously known as the National
Commission):
The National Commission shall have the jurisdiction to entertain complaints where the
consideration paid exceeds ten crore rupees.
The jurisdiction in which the complaint is to be filed is now on the basis of the value of the
goods and services paid, which was not the case in the 1986 Act where it was on the value of
the goods and services and the compensation, if any, claimed. A great emphasis has been
placed on mediation which will be dealt with further.
Mediation
The Act has introduced a new chapter (Chapter V) on mediation as an alternate dispute
resolution mechanism in order to resolve the consumer dispute in a much faster way without
having to approach the Commissions. Thus, in the events where the mediation is successful in
whole, the terms of such agreement shall be reduced into writing accordingly. Where the
dispute is settled only in part, the Commission shall record the statement of the issues which
have been settled, and shall continue to hear the remaining issues involved in the dispute. In
case of unsuccessful mediation the respective Commission shall within seven days of the
receipt of the settlement report, pass a suitable order and dispose of the matter accordingly.
Offences and Penalties
Section 21(2) and Section 89 of the 2019 Act provides the Central Authority with the power
to impose a penalty in respect of any false or misleading advertisement, by a manufacturer
or an endorser, it may, by order, impose on manufacturer or endorser a penalty which may
extend to ten lakh rupees. Apart from this, a separate chapter (Chapter VII) for offences and
penalties has been introduced where detailed penalties and punishments have been mentioned
in relation to non-compliance, or manufacturing for sale or storing, selling or distributing or
importing products that are adulterated or spurious.
Related Rules and Regulations
The Consumer Protection (E-Commerce) Rules, 2020 which are mandatory and are not
advisories, lay down all the important information relating to the e-commerce entities
keeping in mind both the consumer and the product/service provider. Key highlights are:
E-commerce entities according to Rule 5 are required to provide
information to consumers, relating to return, refund, exchange, warranty and
guarantee, delivery and shipment, modes of payment, grievance redressal
mechanism, payment methods, security of payment methods, charge-back
options and country of origin.
These platforms will have to acknowledge the receipt of any consumer
complaint within 48 hoursand redress the complaint within one month from
the date of receipt. They will also have to appoint a grievance officer for
consumer grievance redressal.
Sellers cannot refuse to take back goods or withdraw services or refuse
refunds,if such goods or services are defective, deficient, delivered late, or if
they do not meet the description on the platform.
The rules also prohibit the e-commerce companies from manipulating the
priceof the goods or services to gain unreasonable profit through unjustified
prices.
As per the Consumer Protection (Consumer Disputes Redressal Commissions) Rules,
2020 which came into force on 20th July 2020, the amount of fee payable for filing the
complaint in the District Commission up to Rs 5 lakhs has been made Nil according to
Rule 7.
The credit of the amount due to unidentifiable consumers will go to the Consumer
Welfare Fund(CWF).
State Commissions will furnish information to the Central Government on a quarterly
basis on vacancies, disposal, the pendency of cases and other matters.
Apart from these general rules, there are Central Consumer Protection Council
Rules, provided for the constitution of the Central Consumer Protection
Council(CCPC).
 It will be an advisory body on consumer issues, headed by the Union Minister of
Consumer Affairs, Food and Public Distribution with the Minister of State as Vice
Chairperson and 34 other members from different fields.
It will have a three-year tenure and will have Minister-in-charge of consumer
affairs from two States from each region: North, South, East, West, and North-
East Region.
The Delhi High Court while examining the concept of advertisement decided the case of,
Horlicks Ltd. v. Zydus Wellness Products Ltd., 2020 SCC OnLine Del 873
The High Court passed an interim order restraining Zydus from telecasting its advertisement
comparing Complan to Horlicks on the grounds that the same was misleading and
disparaging. The Court relied on various judgments on misleading advertisements,
disparagement and law governing publication of advertisements on television. Major
decisions were:
Dabur (India) Ltd. v. Colortek (Meghalaya) (P) Ltd., 2010 SCC OnLine Del 391
The Delhi High Court culled out the principles governing disparagement in the
advertisements and held:
On the basis of the law laid down by the Supreme Court, the guiding principles for us should
be the following:
i. An advertisement is commercial speech and is protected by Article 19(1)(a) of the
Constitution.
ii. An advertisement must not be false, misleading, unfair or deceptive.
iii. Of course, there would be some grey areas but these need not necessarily be taken as
serious representations of fact but only as glorifying one‟s product.
To this extent, in our opinion, the protection of Article 19(1)(a) of the Constitution is
available. However, if an advertisement extends beyond the grey areas and becomes a false,
misleading, unfair or deceptive advertisement, it would certainly not have the benefit of any
protection.
Pepsi Co. Inc. v. Hindustan Coca Cola Ltd., 2003 SCC OnLine Del 802
In Pepsi Co. it was held that certain factors had to be kept in mind while deciding the
question of disparagement. Those factors were:
i. Intent of the commercial,
ii. Manner of the commercial, and
iii. Story line of the commercial and the message sought to be conveyed.
These factors were amplified or restated in the following terms:
1) The intent of the advertisement – this can be understood from its story line and the
message sought to be conveyed.
2) The overall effect of the advertisement – does it promote the advertiser‟s product or does
it disparage or denigrate a rival product?
In this context it must be kept in mind that while promoting its product, the advertiser
may, while comparing it with a rival or a competing product, make an unfavorable
comparison but that might not necessarily affect the story line and message of the
advertised product or have that as its overall effect.
3) The manner of advertising – is the comparison by and large truthful or does it falsely
denigrate or disparage a rival product? While truthful disparagement is permissible,
untruthful disparagement is not permissible.”
Advertisement to Misleading Advertisement | Horlicks Ltd. v. Zydus Wellness Products
In Connaught Plaza Restaurants Ltd. Kapil Mitra, 2020 SCC OnLine NCDRC 192
The complainant/respondent had participated in Mc Donald‟s widely published scheme „Mc
Donald‟s Mein Khao Har Bar Prize Le Jao‟ by placing two separate orders worth Rs 81. It
was alleged by the complainant that Connaught Plaza Restaurants Ltd. (CPRL) a franchisee
running Mc Donald restaurants has indulged in unfair trade practices by not giving the
assured prizes as per the scheme, rather put the participants under the obligation to make a
further purchase of a minimum Rs 20 in order to avail free French Fries. Also, the
complainant had to send two SMS giving the coupon numbers, for which Rs 3 per SMS were
charged. Moreover, the details of the entire scheme with its terms and conditions and the
result of the winners were also concealed from the participating customers. Therefore, the
complainant filed a consumer complaint before the District Forum praying to declare the
scheme as unfair trade practice and that Connaught Plaza Restaurants Ltd. be directed to
disclose the entire scheme and winners of the prizes. The District Forum allowed the
complaint and awarded compensation and costs to the complainant of Rs. 10,000 and
Rs.2,000.
Aggrieved, CPRL filed an appeal before the State Commission, but the State Commission
modified the order of the District Forum by enhancing the compensation and awarding
punitive damages to the tune of Rs. 2,00,000 and Rs. 10,00,000.
18HS71 - Constitution of India and Professional Ethics
Dept. of Industrial Engineering and Management
CPRL then appealed before the NCDRC. The NCDRC held that no proof had been filed by
the complainant that CPRL had collected the SMS charges or that it had an agreement with
the Telecom Company/Service provider on sharing of SMS charges. Thus, the order of the
State Commission could not be sustained on those grounds. On the other hand, it held that it
is also true that the scheme was an unfair trade practice followed by Connaught Plaza
Restaurants Ltd. This fact having been established by the concurrent findings given by the
District and the State Commission. The complainant and other similar customers who may
not have come forward to file a complaint need to be granted relief. Partly allowing the
appeal, the NCDRC reduced the amount of compensation to Rs. 30,000 and costs to Rs.
70,000 respectively.
The National Consumer Disputes Redressal Commission (NCDRC) in the recent case
of, Ernakulam Medical Centre P.R. Jayasree, 2020 SCC Online NCDRC 490
observed that,
“Releasing a dead body by a hospital to an unrelated third person unquestionably constitutes
„deficiency in service‟ within the meaning of Section 2(1)(g) and (o) of Consumer Protection
Act, 1986.”
NCDRC | Releasing a dead body by a hospital to an unrelated third person
unquestionably constitutes „deficiency in service‟ within the meaning of S. 2(1) (g) & (o)
of Consumer Protection Act, 1986
Recently, the Supreme Court in a judgment laid emphasis on the role of NCDRC
in Union of India N.K. Srivastava, 2020 SCC OnLine SC 636, wherein the Court had
dismissed an appeal which had aroused from an order of the National Consumer Disputes
Redressal Commission. The complaint alleged medical negligence against Sarvodaya
Hospital and Safdarjung Hospital. The NCDRC allowed the revision of Sarvodaya
Hospital. While exonerating it of the finding of medical negligence, it held Safdarjung
Hospital liable to pay the compensation of Rs 2 lakhs imposed by the State Consumer
Disputes Redressal Commission.
The District Forum had dismissed the consumer complaint stating that there was no
deficiency on the part of Sarvodaya Hospital in referring the complainant to a specialized
facility. An appeal was filed before the State Consumer Disputes Redressal Commission by
the original complainant. The SCDRC, by its judgment concluded that Sarvodaya Hospital
was guilty of medical negligence and directed it to pay a sum of Rs 2 lakhs as compensation
and costs quantified at Rs 20,000. However, the complaint was held not to be maintainable
against Safdarjung Hospital. A revision was filed against the judgment of the SCDRC by
Sarvodaya Hospital before the NCDRC which allowed the revision and came to the
conclusion that Sarvodaya Hospital was not guilty of medical negligence, however, the
NCDRC elaborated on the question as to whether Safdarjung Hospital had been correctly
exonerated. The NCDRC held that though the complainant had not filed a revision against the
order of the SCDRC specifically holding that Safdarjung Hospital was not amenable to the
jurisdiction of the consumer fora, he was not precluded from challenging a finding which was
adverse to him in the revision petition. On these facts, the NCDRC sustained the finding of
medical negligence against Safdarjung Hospital and directed it to pay compensation
quantified at Rs 2 lakhs.