Central Government Reprimanded By SC Over Its Lackadaisical Approach Towards Comsumer Protection Act, 2019

KEY TAKEAWAYS

• The Consumer Protection Act, 2019 was enacted to repeal the Consumer Protection Act, 1986 on grounds of the latter not fulfilling the requirements of modern times.
• The 2019 Act contained some notable changes related to definition of goods, consumer etc. and also some new concepts like mediation, product liability etc.
• Another significant change was the expansion in the pecuniary jurisdiction of the consumer forums, done with an aim to facilitate timely and local remedy to the consumers and to reduce the burden of the National Forum.
• This change was not met with adequate and timely increase in the number of members of the forums to deal with the matters.
• The Supreme Court took note of the situation and came down heavily upon the Central and State Governments, calling out their perfunctory view of the situation and recalcitrance in their approach towards the consumer rights mechanism.
• The governments were ordered to complete the appointments within 8 weeks. The Central Government was also ordered to furnish a Legislative Impact Study regarding the Act within 4 weeks of the date of the order.

INTRODUCTION

The Supreme Court, on 11th August, 2021, while hearing a suo motu petition on the inadequate appointments in the National and State Consumer Forums, came down heavily upon the Central and various State Governments while calling out their ignorance towards the filling of vacancies in the National and State Consumer Forums and passed orders to complete the appointment process within a period of 8 weeks. The Court also rebuked the Government over the lack of inputs it had regarding the deficiencies in the old Act and the problems faced by the consumers and the impact that the framing of the new Act would actually have on them.

AN OVERVIEW OF CONSUMER PROTECTION ACT, 2019

The Consumer Protection Act, 2019 was enforced in the year 2019, after receiving the presidential assent in the month of August, 2019. This Act repealed the pre-existing Consumer Protection Act which was enacted in the year 1986. The 1986 Act was not in sync with the demands of the modern consumer, and the modern trends of the market, particularly the trend of high usage of e-commerce websites, generally known as online shopping and online food delivery services. The old Act did not have any provisions in this regard, thereby leaving the customers vulnerable and exposed in the event of any harm suffered by them due to defective products, food items, or services delivered online. Further, the old Act was also not in sync with the rise in per capita income and standard of living of the people, considering that with more spending capacity, the monetary disputes also arose proportionately, and the authorities established under the Act were not wholly equipped to deal with the cases of such magnitude, with the maximum weight falling upon the National Forum.

To deal with such discrepancies, a wholly new and innovated Act was passed in the year 2019, which addressed various issues not dealt with by the 1986 Act. This Act brought some revolutionary changes in the consumer law regime, particularly widening the ambit of consumer rights to include protection against any fraud or defective goods or services, and also expanding the pecuniary jurisdiction of the Consumer Forums in tandem with the current needs of the people.

Some notable changes brought about in the Act were:

1. Inclusion of e-commerce mechanism in the Act: The definition of consumer under Section 2(7) in the 2019 Act now includes a customer who purchases some goods or services using the online medium. Now, if any consumer suffers due to a defective product received online, he/she can enforce their rights and seek remedy in the appropriate forum.

Further, the definition of goods under Section 2(21) now includes food as defined under the Food Safety and Standards Act. As a result of this, any food item purchased through the online food delivery services are also included within the ambit of the Act, and any harm suffered due to a faulty delivery or bad quality food can now be remedied.

2. Provision for endorsements and false advertising: The new Act contains provisions related to endorsement of products done by any person like a celebrity under Section 2(28), and also contains provisions related to punishments in case of false advertisements or intentionally hiding material information under Section 89 of the Act. It was generally observed that if a popular celebrity with huge following endorsed a brand, the public swayed towards the product, and suffers harm, if the product turned out to be defective. To prevent this, the liability is placed on the manufacturer and the traders (including online retailers) to ensure the quality of the good, and also upon the celebrity endorsing the brand to ensure that the product is of good quality and that no material information is withheld from the public.

3. Expansion in pecuniary jurisdiction: The new Act has significantly expanded the pecuniary jurisdiction of the Consumer Forums, meaning that under the current Act, the limits of monetary value of the disputes and the remedy sought has been increased. This has been done keeping in view the rise in the value of the disputes in the recent times owing to various changes in the socio-economic nature of the society.

In case of District Forums, the earlier limit of Rs. 20 lakhs has been raised to Rs. 1 crore; in case of State fForum, the minimum and maximum limits of Rs. 20 lakh and Rs. 1 crore respectively has been increased to Rs. 1 crore and Rs. 10 crores respectively under Section 47(1)(a)(i); in case of National Forum, the earlier limit of Rs. 1 crore has been increased to Rs. 10 crores under Section 58(1)(a)(i).

4. Establishment of Central Consumer Protection Authority: Under Section 10 of the Act, a new regulatory authority has been set up, for the purpose of looking into matters related to violation of the rights of the customers, including unscrupulous trade practices and false advertisements which can induce the customers to purchase products not suitable for them, to the extent of being harmful and dangerous.

5. Mediation: Sections 74-81 of the 2019 Act also contains the provisions related to mediation which shall be optional for the parties. These provisions have been inserted to facilitate speedy resolutions of the disputes and prevent litigation of such disputes to the maximum possible level. Under the new Act, it has been envisaged that a Consumer Mediation Cell (CMC) would be established along with each forum at District, State and National level which would ensure that the parties coming to it do not have to pursue litigation on the forum.

6. Product liability: Chapter VI of the 2019 Act deals with the provision related to the liability in case of a damage arising from a defective product. It lays down that, in case a consumer suffers any physical, mental, psychological damage due to the use of the product, the product manufacturer, product service provider and the product seller shall be held liable. However, the primary liability shall lie on the manufacturer of the product to ensure that the good is safe for consumption.

Apart from these, there were numerous other changes that were brought about in the 2019 Act to expand and consolidate the protection mechanism of the consumer rights mechanism.

THE “SUPREME” REBUKE

On 11.08.21, while hearing a suo motu writ petition [Civil No. 2/2021] on the issue of unfilled vacancies in the consumer forums and lack of proper infrastructure, a bench of the Supreme Court, comprising of Justice Sanjay Kishan Kaul and Justice Hrishikesh Roy severely criticized the lethargy in the actions of the governments towards filling the vacancies and completing the appointment procedure for various posts across the district and state forums. The Court ordered the Central and State Governments to complete the entire procedure of appointment within a period of 8 weeks. The bench took note of the lack of adequate infrastructure with regard to consumer forums and said that while the jurisdiction of the forums has been increased, there has not been a corresponding increase in the appointment of members in the consumer forums to deal with the problems. As a result, even the consumer courts are reeling under pendency of cases thereby defeating the purpose for which they were created.

Further, the Court also took up the issue of the absence of a Legislative Impact Study with reference to the 2019 Act. A Legislative Impact Study can be considered as a survey which is done to analyze the socio-economic-legal impact that a planned legislation may have on the people, the society and the legal system and to analyze that whether the proposed legislation shall be able to meet the demands of the people and serve the intended purpose that it seeks to achieve. The Court asked the Additional Solicitor General (ASG) Mr. Aman Lekhi, who was pleading on behalf of the Government, about the study, to which he replied that all the changes that were introduced in the new Act were done on the basis of the recommendations of the Standing Committee set up for particular purpose. Apart from that, letters were sent to various State Governments seeking their replies on the pecuniary jurisdiction of the consumer forums. The Bench, particularly Justice Kaul was furious at this reply and stated that “it means that no study was done”. The Court highlighted the importance of the impact study in the context of the development of the new law and stated that it was essential to study the impact that a law would have on the litigation procedure. The Court stated that the new Act raised the scope of litigation by enhancing the jurisdiction, and that such increase warranted an adequate and corresponding increase in the number of members of the forums which would hear the matter.

The ASG further submitted that there was an established mechanism wherein a draft of any proposed legislation or policy would be placed in the public domain to seek suggestions of the stakeholders on the issue. The Court did not consider it to be an adequate measure and ordered the Central Government to submit a Legislative Impact Study within 4 weeks of the date of the order.

Apart from that, the Court also took a serious note of various State Governments which did not notify the rules related to the Act framed by the Court and ordered them to notify the rules within a period of 2 weeks from the date of the order. Apart from that, the State Governments were also ordered to set up the selection committees that would work towards filling the vacant positions in the consumer forums, within a period of 4 weeks from the date of the order.

AN ANALYSIS OF THE ORDER

By issuing this order, the Supreme Court has shaken the Central Government from its deep slumber and made it aware of the realities of the mechanism of consumer rights. The gross negligence and indifference of the governments towards this structure led to its decay and eventually become an institution in shackles. Further, the issue of not doing the Legislative Impact Study was also a serious issue. But at the same time, the order seems to put a question mark on the legislative abilities of the Government, in the sense that if an impact assessment for the Act was not done, the provisions of the Act automatically become questionable. The Court completely disregarded the recommendations of the Standing Committee, suggestions of the stakeholders and the inputs given by various State Governments on the application of the Act. The Court should also have taken note of the fact that the process of drafting of the Act started way back in 2010, and that in such a long time, various suggestions would have been sought and analysis of impacts must have been undertaken. The fixation of the Court on the impact study was just another example of just blindly following the established process of completing the documentation while ignoring the practical conditions associated with a particular issue.

CONCLUSION

In conclusion, it can be said that the Consumer Protection Act, 2019 was a monumental step towards securing the rights of the consumers by enlarging the ambit of the Act to include various online shopping activities and even online food delivery systems, wherein the consumer spends the most nowadays and is actually prone to fraudulent activities. The absence of an impact assessment report should not serve as a ground to negate the efforts of the policymakers and all those who were involved in the framing of the Act. But nonetheless, it was the right step of the Court to reprimand the Governments and opening their eyes towards the appalling conditions of the consumer rights mechanism. It was essential because if the vacancies are not filled in time, the consumer forums would also become overburdened with the litigation under the Act and it shall not take long wherein their condition would be akin to that of the other courts of our country.