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THE HISTORY AND DEVELOPMENT OF CONSUMER PROTECTION LAWS IN INDIA

- Monika Mehra

Besides the basic necessities of food, clothing, and shelter, we consume a variety of things in our daily lives such as cell phones, digital cameras, soaps, perfumes, cosmetics, among other things. Thus, all of us are consumers in the literal sense of the term. When we buy things from the market as a consumer, we expect value for money, i.e., quality, quantity, right price, information about the mode of use, etc. However, there may be instances where a consumer is cheated.


In such cases, most of us do not know whom to approach to seek redressal. Moreover, a majority of us also are unaware of our “rights” as a consumer and often hesitate to complain or even stand up to unfair practices. We also don't have the recourse of costly litigation to seek justice and we continue to bear such injustice.


This is where consumer forums, which can help you seek justice against unfair practices without incurring exorbitant litigation costs, come in. In the modern period, the previous traditional legal systems established by Indian kings were replaced by new modern laws. The British introduced the English Common Law in India along with other legislative measures for the public and in turn, the consumers.


Some of these legislations are:

  • The Indian Contract Act, 1872

  • The Sale of Goods Act, 1930

  • Indian Partnership Act, 1932

  • The Agricultural Produce(Grading and Marketing) Act, 1937

  • The Drugs Act, 1940 and The Drugs and Cosmetic Act 1940

These legislations proved to be immensely effective in saving the interests of the consumers during the time of the British. The rules were now uniform across the country and not arbitrary to the opinions of the various kings of the Ancient and Medieval periods. Consumer Protection is a Socio-economic activity that is to be carried out by government and business with a prime interest of consumer satisfaction. Consumer protection has been a part of the responsibilities of the rulers in India even before independence. But a formal consumer protection law, which purely focuses on consumer protection, was enacted in the year 1986. The consumer movement that flourished in the early and middle of the 20th century made the whole world focus on formulation of strong consumer Acts. United nation guidelines were the basis for formulation of consumer protection policies and measures in many developing countries including India. Consumer Protection Act 1986 (CPA 1986), which was passed in Parliament in 1986, is considered as one of the best Acts for consumer protection among its counterparts. This paper brings out the evolution of consumer protection in India, formulation of CPA 1986 and its implementation. Keywords: Consumer Protection, Consumer Protection Act 1989, UN guidelines, Consumer Movement.


Certain implications of the Indian Constitution that may apply to consumers are as follows:


Article 14 of the constitution implies equality before the law and equal protection of laws. This results in manufacturers, producers, traders, sellers and consumers having an equal position before the law. Article 39 has two clauses, (b) and (c), according to which the state is bound to direct its policy to ensure the distribution of the ownership of the material resources of the society. This distribution should be done to serve the common good. According to Article 43, the state must strive to develop an economic organization or to make legislation in order to secure a decent standard of life to all the workers.These workers are the ones who constitute the bulk of the consumers.


The Parliament passed the Consumer Protection Bill, 2019 on 06.08.2019 to replace the Consumer Protection Act, 1986. The President of India gave its assent to the Consumer Protection Act, 2019 .The 2019 Act has brought in some skyrocket changes and provides for more protection to the consumers in parimateria to the earlier 1986 Act which can be seen from the comprehensive definition provided for the term ‘Consumer’ and ‘Unfair Trade Practice’. The 2019 Act expands the scope of the definition of Consumer so as to include the consumers involved in online transactions and it now squarely covers the E-commerce businesses within its ambit. The 2019 Act has also widened the definition of Unfair Trade Practices as compared to the 1986 Act which now includes within its ambit online misleading advertisements; the practice of not issuing bill/memo for the goods and services; failing to take back defective goods or deactivate defective services and refund the amount within the stipulated time mentioned in the bill or memo or within 30 days in the absence of such stipulation; and disclosing personal information of a consumer unless such disclosure is in accordance with law.


The 2019 Act has introduced the concept of ‘Unfair contract’ which includes those contracts, which favor the manufacturers or service providers and are against the interest of the consumers such as contracts requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations, refusing to accept early repayment of debts on payment of applicable penalty. Such unfair consumer contracts are now covered under the 2019 Act and a complaint in this regard can now be filed by a consumer. This would help to keep a check on businesses including banks and e-commerce sites that take advantage of their dominance in the market and mandatorily require the helpless consumers to sign such unfair contracts and accept their standard terms before selling them goods or providing services. One of the most significant additions to the 2019 Act is the proposal to establish Central Consumer Protection Authority, so as to regulate, protect and enforce the interest of the consumers and matters related to unfair trade practices. The CCPA has been provided with vast powers to inquire, investigate and take action against violations of the 2019 Act. It has the power to take action and impose penalty against misleading and false advertisement as well as against any endorser of such advertisement. It may impose a penalty of up to Rs.10 Lakhs for first violation and up to Rs.50 Lakhs on every subsequent violation on a manufacturer or an endorser, for a false or misleading advertisement. In addition to this, such manufacturer or endorser may be sentenced to imprisonment for upto two years. The CCPA has also been granted the authority to initiate suo-moto proceedings against violators; pass directions to recall products or discontinue services and provide refund to consumers; and file class action suits on behalf of multiple consumers which makes it an effective tool to curb mass violation of consumer interest.


The concept of Product Liability has also been introduced which covers within its ambit the product manufacturer, product service provider and product seller, for any claim for compensation. It is the responsibility of a product manufacturer or product seller, of any product or service, related to the product to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating to the product.


As far as the Consumer Redressal Forums are concerned, certain key changes have been brought by the 2019 Act such as:-


i. Territorial Jurisdiction – The 2019 Act now provides an added advantage to the consumers by providing for filing of complaints where the complainant resides or personally works for gain as against the 1986 Act which only provides for filing of complaint where the opposite party resides or carries on business. 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.


ii. Pecuniary Jurisdiction – The 2019 Act also changed the pecuniary jurisdiction for the District,State and National Commissions, respectively. The pecuniary limit for the District Commission has been increased to up to Rs.1 Crore from up to Rs.20 Lakhs; for State Commission it has been increased to up to Rs.10 Crores from up to Rs.1 Crore; and for National Commission the pecuniary jurisdiction has been increased to over and above Rs.10 Crores as against Rs.1 Crore in the 1986 Act. In addition to this, the 2019 Act has also changed the manner for determining the pecuniary jurisdiction for filing the Complaint. Now the pecuniary jurisdiction will be determined on the basis of the value of goods or services paid as consideration as against the 1986 Act wherein, the pecuniary jurisdiction was determined as per the value of goods and services as well as compensation claimed. This would help in doing away the practice of inflating the compensation claimed so as to bring the complaint within the jurisdiction of State or National Commission.


iii. Alternate Dispute Resolution – Another provision introduced by the 2019 Act to ensure speedy resolution of disputes is to provide for referring the disputes to mediation. As per the 2019 Act, the Consumer Forum shall refer the matter to mediation on written consent of both the parties. For this purpose, the 2019 Act also provides for establishment of a consumer mediation cell by the respective State Governments in each District Commission and State Commission as well as at the National Commission by the Central Government.


iv. E-Complaints - The 2019 Act also provides for filing of Complaints before the District Forums electronically in accordance with the rules which are yet to be prescribed by the Government.


Conclusively, the Consumer Protection Act, 2019 when compared with the 1986 Act shows that it provides for greater protection of consumer interests taking into consideration the current age of digitization. The 2019 Act also deals with the technological advancements in the industry, provides for easier filing of complaints and also imposes strict liability on businesses including endorsers for violating the interest of the consumers. However, the test of time will prove the fate of the 2019 Act as and when it is notified by the Central Government, which, prima-facie, appears to be much more consumer-friendly than the 1986 Act and also includes the current industry trends of e-commerce.


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