Introduction
Every day people engage themselves in buying and selling products or services. This activity is the fundamental quality of humans without which human existence is impossible and as far as human memory goes people have engaged in this activity. With the emergence of a capitalistic atmosphere around the world, buying and selling are now not only restricted to essential products but have turned into a whole advertisement gimmick and trend. Although, the simplest of all human activities, buying and selling is not ingenious and uncomplicated activity. Consumers have been subjected to misleading assurances, unfair trade practices, frauds, etc., since time immemorial and since the beginning of human consciousness, it has been duly realized to regulate and rectify this activity to prevent the consumers from getting duped and cheated.
The concept of consumer rights is a cardinal building block for any economy. Mahatma Gandhi has also enumerated the importance of consumers and safeguarding their rights in his quote, “Customers are the most important visitor on our premises, they are not dependent on us, we are dependent on them. They are not an interruption in our work. They are the purpose of it. They are not outsiders in our business. They are part of it; we are not doing them a favour by serving them. They are doing us a favour by giving us an opportunity to do so.” This fact has been acknowledged all across the world and was first initiated by US President JF Kennedy defined modern consumer rights in a special message to the United States Congress on protecting the consumer interest on 15th March 1962; making this day an international observance in the form of World Consumer Rights Day.
In 1985, United Nations General Assembly adopted the UN Guidelines for Consumer Protection. India has adopted pro-consumer laws being inspired by these international movements from 1986 onwards and has brought applaudable changes with time. The current statute ordained by the Parliament known as Consumer Protection Act, 2019 has incorporated laudable provisions which enhance consumer’s rights and are in consonance with international standards. The following piece enumerates the evolution of consumer laws in India and the critical analysis of the Consumer Protection Act, 2019 outlining its excellencies and challenges which are going to have an effect on the present as well as the future generations.
Consumer laws of ancient India
Buying and selling constitute the bedrock and soul of every economy and therefore, its proper regulation is indispensable for any country.
In ancient India, the ancient codes like the Vedas, Code of Chanakya, Manu Smriti, Narada Smriti, etc., encompassed provisions related to consumer protection. Measures like an audit of weights and measures every six months, an inspection of goods namely grains, medicine, perfumes, salt and sugar for any adulteration, etc. Kautilya’s Arthashastra is the comprehensive guide in dealing with consumer safety along with practical applications of its policies makes it insurmountable to any challenges. According to Kautilya, “the trade guilds were prohibited from taking recourse to black marketing and unfair trade practice.” non-conformity to laws attracted brassbound punishments like “for cheating with false cowrie-shells, dice, leather straps, ivory-cubes or by sleight of hand, [the punishment shall be] cutting-off of one hand or a fine.”
The medieval period in India was subjugated by Muslim rule. During Muslim rule, a large number of units of weights were used in India. The Holy Quran, the main text of the Muslims, also stressed the protection of consumers. The Quran has verses that indicate that the use of unjust weights and measures is unacceptable. Allaudin Khilji’s tenure witnessed stringent controls on trade. The Price Control Policy of Khilji favoured consumers’ rights and honest trade practices. Through this, the prices of the commodities were fixed, no merchant, farmer or dealer was allowed to hoard grain or to sell it at a higher rate, nobody was allowed to sell any commodity underweight as the same amount of flesh was cut off from his body, strict and immediate action was taken on the complaint of the general public and elimination of dalaal system to ensure the smooth flow of commodities in the market.
The modern period witnessed the British Rule in India and the reinvigoration and emendation of consumer laws in India. Despite the challenges of combining the British and Indian legal systems, “the fabric of modern Indian Law is unmistakably Indian in its outlook and operation” and consumer protection is not an exception to this perception. The Indian Contract Act of 1872, the Sale of Goods Act of 1930, Indian Partnership Act of 1932, the Drugs and Cosmetics Act of 1940, the Agriculture Procedure (Grading and Marketing Act) of 1937, etc., were some of the statutes passed during the British regimen in consonance with consumer protection and safety. Although these laws were aimed to regulate the quality of goods, conditions and warranties on the ground level, the state of affairs were entirely opposite. A doctrine called “Caveat Emptor” was eminently observed in the market and in courts by which the responsibility of purchasing faultless and impeccable goods and services was shifted towards the consumer and if there is any unfair trade practice or fraud committed against the consumer, there was a dearth of special and definitive laws aimed at remedying the plight of consumers.
Enactment of Consumer Protection Act, 1986
This was the deplorable time for consumers until the enactment of the United Nations Guidelines in 1985 which attempted to create an international framework within which national consumer protection policies and measures could be worked out. Based on the guidelines of the United Nations, a 28-member National Consumer Protection Council, consisting of various ministry representatives, conducted two meetings and decided to organize a National Workshop on Consumer Protection on March 11-12, 1985 with consumer representatives. After an abstruse and thorough discussion, a final draft was prepared and submitted to the Lok Sabha by then Minister of Parliamentary Affairs, and Food and Civil Supplies, HKL Bhagat on 9th December 1986. The parliament enacted the Consumer Protection Act 1986, which received the assent of the Indian president on 24th December 1986. The Act is meant to provide single, speedy and inexpensive redressal for consumer grievances under a three-level quasi-judicial redressal agency. According to Shri H K L Bhagat, this legislation was intended to provide a prompt and meaningful remedy for consumer grievances. He pointed out that the success of the Act depends upon its effective implementation of Central and State governments and the development of broad-based voluntary consumers. The Indian Parliament ordained the Consumer Protection Act in 1986 containing 31 sections and bestowing six consumer rights — the right to protection against hazardous goods and services, the right to be informed, the right to access to a variety of goods, the right to be heard, the right to get redressal and the right to consumer education and for its effective protection, it established Consumer Councils and a three-tier redressal mechanism at the district, state and national levels.
Landmark change brought by CPA, 1986
The enactment of CPA, 1986 was a historic development and success for consumer rights in India. The redressal mechanism propounded by this Act earned a great deal of respect and appreciation from the consumers because of its performance, functioning and providing justice to the consumer within the time frames. Due to the magnificent augmenting rate of literacy, people became more aware of their consumer rights because of which there was a booming rate of registration of cases in the consumer forums across the country. According to the National Consumer Dispute Redressal Commission records, around 90% of consumer grievance cases were resolved to instill credence and satisfaction in the legislation.
Lacunas present in CPA, 1986
The CPA, 1986 was not without lacunas and drawbacks which became putative and came into cognizance with time. Some of the grave predicaments scarred the bona fide intent behind this statute. Section 8A of CPA, 1986 enumerates the establishment of District Consumer Protection Councils at every district but during a study conducted by Dr. Suresh Patidar, Associate Professor at International Institute of Professional Studies DAVV Indore, it was discovered that in many districts these forums are working only on paper with no sign of actual safeguard of consumer rights. Besides this, in most district forums seats of members remain vacant for time immemorial creating hardship in its proper functioning. It has been frequently witnessed that members appointed to adjudicate consumer cases are underqualified resulting in great ignorance and capacity to deal with and understand consumer problems and provide appropriate remedies.
In many instances it has been found that the said redressal machinery neglects the mental trauma and torture endured by the consumers and fails in providing exemplary damages from the offending party to the consumer for the same, indicating insensitivity to mental harassment. Apart from the lacunas in the implementation of CPA, 1986; there are various shortcomings hampering the honest protection of consumer rights. The advent of online shopping in India had commenced from 1995 onwards gaining a good pace from 2005 becoming a highlight and common for people in India. According to the statistics published by Statista Research Department in 2021, the online shoppers in India were about 75 million in 2017 with an estimation to increase to 220 million in 2025. Although the figures showcase the tech proficiency of people in India and numerous excellencies of online shopping, the lack of any provision related with e- commerce in CPA, 1986 became a cause of nightmare for consumers in India.
The Act in its present form was an inefficient piece of legislation, not keeping pace with the new market dynamics, multi-layered delivery chains, and innovative and often misleading advertising and marketing machinery. Instances like getting duped by misleading advertisement on online platforms, getting the product completely different from the product advertised or not receiving any product purchased online, not getting refund or replacement, getting late delivery, etc., with a dearth of specific provisions in CPA, 1986 to remedy the harassment faced from the online shopping companies. Apart from this, the services that came within this act were for specific payment only like made for telephone, electricity, etc., but the services of doctors and hospitals including those where treatment is given free such as government hospitals did not come within the ambit of the Act.
Also, the compulsory civil services, such as sanitation, water supply, etc. provided by the State or local authorities do not come under the ambit of this Act. Further, the consumer Protection Act, 1986, does not give any definition of safety requirements and permitted hazard levels. Under the Act, a consumer can seek redressal only if he has endured a loss as a result of the unfair trade practice or deficiency in service or the unfair trade practices resorted to by a trader. There are no provisions that empower the Consumer Redressal Forums to take up cases suo-moto and to publish the names of manufacturers, traders, and dealers whose products or services are found to be hazardous to public safety. The Act constrains a consumer to file a complaint with Consumer Fora if an alternative remedy is provided under some other law. There is no liability on the chief executive, manager, or director where it is evident that an offence has been committed by an organization. The Act completely neglects the right of consumers to a healthy environment. It acknowledges only six rights of the consumers as are recognized by the international organization of consumer rights.
Formation of Consumer Protection Act, 2019
These shortcomings of CPA, 1986 necessitated a reformation of this Act and inclusion of the vital elements in accordance with the digital age and new developments and ameliorating the various provisions of the legislation to realize pro- consumer intent. The Government instead of bringing an amendment in the 1986 Act, enacted a new Act altogether so as to provide enhanced protection to the consumers taking into consideration the booming e-commerce industry and the modern methods of providing goods and services such as online sales, teleshopping, direct selling and multi-level marketing in addition to the traditional methods. Some of the watershed provisions included in this statute are:
1) E-commerce:
The widening of the definition of ‘consumer’ under Section 2(7) to include offline, as well as online purchases via teleshopping or direct sales or multi-level marketing, is commendable. The e-commerce market has been a double-edged sword for the consumers, on one hand, it has revamped the day-to-day activities of consumers through its swift, easy and attractive platforms, on the other hand, it has also exposed the customers to unfair trade practices at the hands of retailers. The provisions under this statute are pretty exhaustive, comprehensive and pellucid by which the traders or service providers will not able to escape behind the virtual platform from their liability because of any loophole and will have to own up their responsibility to provide impeccable product or service to customers. For the successful implementation of this new approach, the Consumer Protection (E-commerce) Rules, 2020 (‘the Rules’), came into force in 2020, providing for finer nuances on the subject and saddle duties and liabilities on various players in the e-commerce market. E-commerce and emerging markets are at the heart of the new law and this is also demonstrated from the fact that the Rules clearly define the relevant players of the e-commerce space, such as e-commerce entity, inventory e-commerce entity, marketplace e-commerce entity, and seller.
2) E- filing of complaints:
There are various empowering arrangements for purchasers to document grumblings electronically and for tuning in to and additionally analyzing parties through video-conferencing. That is the motivation behind giving cycle straight forwardness and bother free and badgering for the purchasers (stipulation to Section 35(1)). By introducing the online form of complaint, the government has taken a greater step towards resolving/addressing consumers’ grievances in a speedy manner. The online procedure can be considered as one of the friendly and fruitful procedures, especially during the time of the pandemic.
3) Mediation:
The new act introduced Mediation as a means to resolve consumer disputes. In this, the disputes are resolved with the help of an impartial person called the mediator who assists the parties in negotiating the differences without actually participating in the proceedings. Mediation is a cost-effective and simpler technique for dispute resolution. Mediation cells will be attached to the District, State, and National Commissions, in case there is a possibility of settlement at the stage of admission of a complaint or at any later stage, if acceptable to both parties.
4) Product Liability:
Another important incorporation is ‘product liability according to which a product manufacturer, service provider or a seller is obligated to compensate the customer for the damage or accident incurred by a damaged item or a defective service. Besides this, since the product seller has now been 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. Therefore, the ground was commonly taken by E-commerce websites that they merely act as ‘platforms’ or ‘aggregators’ will now not be tenable before the court anymore and therefore, there are increased liability risks of manufacturers in comparison with product service providers and product sellers, considering that under the 2019 Act, manufacturers will be liable in product liability action even where they successfully prove that they were not negligent or fraudulent in making the express warranty of a product.
5) Curtailment of Misleading Advertisement:
With the enactment of the new Act, not only the manufacturers or sellers, but the celebrity endorsers are also going to be liable for any false and misleading advertisement and may be subjected to a penalty of Rs. 10 lakhs and imprisonment to 2 years. For every subsequent offense, this penalty may go up to Rs. 50 lakhs with imprisonment to 5 years. The endorsers may also be banned from making any endorsements for up to 1 year. Through this, the endorsers will not be able to escape from any liability for advertising any product or service which may be faulty or harmful, making them prudent and careful in accepting offers from brands.
6) Additions in Unfair Trade Practice:
The 2019 Act added three types of practices under the ambit of Unfair Trade Practice i.e., failure to issue a bill or receipt, refusal to accept a product returned within 30 days and disclosure of personal information given in confidence without any valid reason.
7) Unfair Contracts:
With the new act, six types of unfair contracts have been included. The introduction of ‘unfair contracts’ which refer to those contracts which are favourable to the manufacturers or service providers at the expense of the weal of the consumers, for instance, contracts requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations; imposing any penalty on the consumer for a breach of the contract, which is wholly disproportionate to the loss occurred due to such breach to the other party to the contract; etc., the inclusion of ‘unfair contracts’ under the new statute would deter the businesses including banks and e-commerce sites from taking undue advantage of the vulnerability of consumers by coercing them to abide by such unfair contracts.
8) Central Consumer Protection Authority:
The CCPA is included in the new act under Section 10 with an aim to keep a check on unfair trade practices, and false and misleading advertisements that are deleterious for the weal of consumers. The CCPA has been accredited with colossal powers to inquire, investigate and take action against violations of the 2019 Act. It is empowered to charge any manufacturer or endorser with a penalty up to Rs. 50 lakhs and imprisonment up to 5 years in case of false and misleading advertisement. The CCPA can also initiate suo-moto proceedings against violators; pass directions to recall products or discontinue services and provide refunds to consumers; and file class-action suits on behalf of multiple consumers which makes it an operative device to inhibit mass transgression of consumer interest.
9) Enhancement of Pecuniary Jurisdiction:
With the new act, pecuniary jurisdiction of all the three redressal commissions have been widened accordingly i.e., District Commission (increased to Rs. 1 crore), State Commission (between Rs. 1 crore to Rs. 10 crore) and National Commission (exceeds Rs. 10 crore). Increasing the ambit of pecuniary jurisdiction will further assist the consumers to file those matters which were previously not admissible. Through this change, the determination of the pecuniary jurisdiction will be done on the basis of “value of goods or services paid as a consideration” and not on “value of goods or services and the compensation, if any, claimed” under the 1986 Act. This change has been possibly incorporated to rid the practice of exaggerating compensation, usually by claiming non-pecuniary elements such as mental harassment, agony etc., just to bring the case within the purview of State or National Commissions.
10) Territorial Jurisdiction:
The new act provides for filing of complaints at the place where the Complainant resides or personally works for gain. This would help in removing the difficulties faced by the consumers in seeking redressal of their grievances against businesses who may not have an office or branch in their state as well as making the liability of the businesses harsher.
Challenges ahead of Consumer Protection Act, 2019
The execution of CPA, 2019 is going to be a breakthrough in the true realization of consumer welfare in India by strengthening the doctrine of ‘Caveat Venditor’ and making the businesses responsible for providing defect less and efficient products and services. The CPA, 2019 was enacted on 9th August 2019 but it came into force on 20th July 2020; almost a year after its enactment. This showcases the dominance of the companies over the government which tried its best to procrastinate the enforcement of the statute. This could explain the delay in formulating the bill in consonance with the digital age and new developments. The lamentable thing is that the consumer affairs departments are still tied up with the food and public distribution department, which factor does not permit the authorities to have a determined focus to safeguard various rights of consumers. India lacks a dedicated consumer affairs ministry to be industrious safeguarding the rights of consumers. Other challenges faced by the new law are:
1. The incorporation of the Central Consumer Protection Authority (CCPA) is an applaudable move to rectify the dearth of provisions related to taking suo- moto cognizance of practices against consumer welfare under the 1986 Act. Except that there is ambiguity regarding the operation of investigations and inquiries conducted by it. Also, considering the investigation wing and the search and seizure functions, there is an overlap with the position of the Director-General. Also, there is skepticism regarding its pecuniary jurisdiction that whether the current cases would be ordered to be moved or not. The scope and jurisdiction of CCPA may result in normalizing prejudice against producers along with minimal remedy available to them for all the product recalls which may have a devastating effect on the financial position and reputation of such companies.
2. Another big challenge concerns the issue of liability of legal professionals for negligence and deficiency of services that fell within the scope of the Consumer Protection Act, 2019 given its wider definition of ‘Services’. The consumer law affairs ministry has clarified that the services of legal professionals will remain outside the purview of CPA, 2019. Thus, consumers will remain unprotected with respect to the services of legal practitioners. Although there are various other statutes like Legal Practitioners (Fees) Act, 1926; Advocates Act, 1961; and Draft Legal Practitioners (Regulations and Maintenance of Standards in Professions, Protecting the Interest of Clients and Promoting the Rule of Law) Act, 2010, etc., have initially propounded incriminating the legal practitioners for faulty services but all efforts went in vain and in reality there are still doubts that whether a client of a law firm or lawyer is a consumer or not.
3. India has successfully created an environment where the rights of individuals are recognized not only by the polity but by its citizens too. Through various legislations and judicial decisions, these rights have been further strengthened and refined. But with this augmenting attention towards the sacrosanct rights has resulted in complete neglect of the importance of duties. As Justice N. Kirubakaran said, “When you talk about rights, you should also speak about duties. While rights are being celebrated, duties are forgotten”. Similarly, Vice President of India and Chairman of Rajya Sabha, Shri M. Venkaiah Naidu has stressed that the Fundamental Rights of citizens are critically dependent on the discharge of Fundamental Duties since both the rights and duties flow from each other. Hence, along with the duty of sellers or manufacturers or producers to provide impeccable service or product, it is the duty of the consumer also to ensure the protection of their own interest and develop conscious consumerism. Regrettably, there are no provisions which are in consonance with this perspective which encourage consumer responsibility.
4. The formation of deliberated and thorough legislation is not impossible but its focused and honest implementation poses a huge challenge. The present set-up (infrastructure and staff) at both district and state consumer fora is wretchedly insufficient to manage the cases even as per the present limits. Adding cases to this due to increased limits (after the new CPA) without increasing the capacity of present fora or creation of more fora is going to make the situation chaotic.
5. The consumer courts in the 2019 Act ask the submission of complaints by complainants in legal formats and legal language which coerces the consumers to purchase the services of lawyers who charge the magnanimous amounts of fees which discourages the consumers to file complaints in consumer forums.
6. Eminent lawyer and consumer activist Mr Jahangir Gai has termed the new consumer law to be deleterious for consumers as the District Councils are overburdened with huge claims up to Rs. 1 crore. This broad pecuniary jurisdiction will consequently hamper justice to consumers with small claims as the complaints with huge claims will gain precedence and as a result, there will be enormous delays in securing justice. Thus, to enforce the law honestly, there is an acute necessity of setting up more redressal forums in each district so that a single consumer forum does not get overburdened with cases resulting in delayed justice to consumers. In addition to this, there is a dearth of competent persons in these forums to adjudicate the complaints, sufficient space and accommodation and enough staff and manpower to manage the mounting complaints.
Conclusion
The digital age has aided in increasing consumerism and shopaholic tendencies turning it into a golden age for all kinds of businesses. In search of convenience, happiness and satisfaction people flock to these companies but there are looming possibilities of receiving harassment instead of contentment. Every economy depends upon consumers; thus, it is rational and prudent to satisfy the consumers and not subject them to any unfair trade practice. As Micheal Le Boeuf has quoted, “A satisfied customer is the best strategy of all”, hence an unhappy customer is a curse on a business and ultimately on the economy.
References
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This article has been written by Jagrati Gupta, 2nd Year Law student of Faculty of Law, Banaras Hindu University.
