18 January 2018

THE CONSUMER PROTECTION BILL 2018

The Consumer Protection Bill of 2018 (Consumer Bill) has been recently introduced in Lok Sabha. It seeks to amend the existing Consumer Protection Act of 1986 (Consumer Act). 

The rational of the Consumer Bill seems to be due to the emergence of global supply chains, rise in international trade and the rapid development of e-commerce, new delivery systems have arisen for goods and services and these 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. There is, therefore, a need to amend the Consumer Act to address the myriad and constantly emerging vulnerabilities of the consumers.

The key amendments proposed by the said Consumer Bill are as follows:

1.    Jurisdiction: The territorial jurisdictions of the dispute redressal forum will now include the place of residence or business of the complainant, in addition to that of the opposite party and the place of occurrence of the cause of action. The pecuniary jurisdiction of the District Commission and the State Commission (Forum) has also been enhanced to Rs 1 crore and Rs 10 crores respectively instead of the existing Rs 20 lacs and Rs 1 crore respectively. Further, consumers can also file their complaints before the Forum electronically. It also confers the power upon the Forums to review their orders.

2.    Mediation: If it appears to the Forum that the matter can be settled between the parties they have been given the power to refer the matter to Mediation.

3.   Central Consumer Protection Authority: It establishes a Central Consumer Protection Authority (Authority) to regulate the matters relating to violation of rights of the Consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers. It is entrusted with a power to suo-moto inquire or cause an inquiry or investigation to be made into violations of consumer rights or unfair trade practices and recall the goods that are unsafe or dangerous and reimburse the price to purchasers or discontinue any practice that is unfair. It also has the power to impose penalty on the endorsers of such harmful or unsafe products.

4.      Product Liability: The Consumer Bill provides for a provision wherein a product liability action can be brought by a complainant on the product manufacturer, product seller or the service providers for compensation in relation to any harm caused to a consumer by such defective product or service.

5.   Unfair Contracts: Contracts having terms like excessive security deposits to be given by a consumer for the performance of contractual obligations, excessive damages for a breach of the contract, refusing to accept early repayment of debt, or permitting unilateral termination of the contract or imposing on the consumer any unreasonable charge, obligation which puts the consumer to a disadvantage are regarded as unfair contracts and shall be declared as null and void by the Forum. 

6.    Penalty: The Consumer Bill states that any manufacturer or service provider, who puts up a false or misleading advertisement, will be punished with imprisonment of up to 2 years and fine of up to Rs 10 lacs. For every subsequent offence, the offender will be punished with imprisonment that may extend to 5 years and fine, which may extend to Rs 50 lacs.   

MHCO COMMENT:   

With the growth of e-commerce, there was a need to address various issues for protection of rights of the consumers. The introduction of the Consumer Bill and enhancing the jurisdiction of each of the Forums seems to be an attempt towards providing a simpler mechanism for resolution of disputes concerning misleading ads and unfair contracts which the Consumer Act failed to provide. Although the Consumer Bill makes in mandatory for the endorsers of the Product to conduct due diligence before endorsing any product, the Consumer Bill fails to provide broad parameters for the conduct of such due diligence.

 

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance.