Consumer Protection Act 2019 Notes for AIBE Examination

Overview: The Consumer Protection Act 2019 was enacted on 20 July 2020. It enhances consumer protections and empowers them through its updated rules and provisions. This new act is designed to be more efficient and quicker than the previous Consumer Protection Act of 1986, often leading to delays due to its single-point access to justice.

The older act established a three-tier system for resolving consumer disputes, with National, State, and District mechanisms, including the National Consumer Disputes Redressal Commission.

The Consumer Protection Act is important for law students, lawyers, and those preparing for the All India Bar Examination (AIBE) because it offers an in-depth understanding of consumer rights and the legal mechanisms available to safeguard them.

The act enhances legal awareness about fair trade practices and equips future lawyers with knowledge on addressing and resolving consumer disputes efficiently.

For AIBE aspirants, mastering the nuances of this law is essential. It forms a significant part of the exam's syllabus, emphasizing practical legal applications, consumer dispute resolution, and advocacy for client protection.

Understanding the Consumer Protection Act empowers legal professionals to represent their clients better, navigate complex legal challenges, and contribute to upholding justice in consumer-related matters.

In this blog, we will cover:

• Rights of Consumers under the Consumer Protection Act, 2019
• Important sections of the Consumer Protection Act

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Introduction:

The Consumer Protection Act of 2019 is designed to uphold consumers' rights and establish a comprehensive system for addressing grievances related to overpricing, product quality, service deficiencies, misleading advertisements, and unfair or restrictive practices by sellers or traders.

This Act replaces the Consumer Protection Act 1986 to streamline and simplify the consumer grievance redressal process.

By implementing this legislation, the government aims to empower consumers to take direct action against businesses that engage in unethical practices. Central to this effort is the creation of the Central Consumer Protection Authority (CCPA), a regulatory body responsible for enforcing consumer rights, addressing complaints, and penalizing violators, thus ensuring that consumers are adequately protected in today's dynamic marketplace.

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Rights of Consumers under the Consumer Protection Act, 2019

The Consumer Protection Act 2019 safeguards consumer rights and ensures a transparent mechanism for addressing grievances. Under this Act, consumers are entitled to the following rights:

• Right to Protection: Consumers are safeguarded against selling goods, products, or services that risk their lives and property.
• Right to Information: Consumers must be informed about the quality, quantity, purity, potency, standard, and price of goods and services to protect themselves from unfair trade practices.
• Right to Access: Consumers can choose from various goods and services at competitive prices.
• Right to Be Heard: Consumers have the right to voice their concerns and have them considered at appropriate forums.
• Right to Seek Redressal: Consumers can seek compensation for unfair trade practices, restrictive practices, or exploitation.
• Right to Consumer Education: The Act ensures that consumers know their rights and can exercise them effectively.

Restrictive Trade Practices

A restrictive trade practice is activities that manipulate prices, alter delivery conditions, or impact the market supply of goods and services to impose unjustified costs or restrictions on consumers.

Easing Consumer Access to Commissions

The Act has streamlined the process for consumers to file complaints, making it easier and more accessible:

• Filing Complaints from Residence or Workplace: Consumers can now file complaints from their place of residence or work.
• E-Filing: Complaints can be submitted electronically through the government’s online platforms.
• Videoconferencing for Hearings: Hearings can now be conducted through video conferencing, minimizing inconvenience and reducing consumer travel.

Powers of the Central Consumer Protection Authority (CCPA)

The CCPA is empowered to:

• Conduct investigations into consumer rights violations.
• File complaints and prosecutions related to consumer grievances.
• Order the recall of unsafe products and services.
• Impose penalties for unfair trade practices and misleading advertisements.

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For example, the CCPA can impose a penalty of up to ₹10 lakh and imprisonment of up to two years for false or misleading advertisements. For repeated offences, the fine can increase to ₹50 lakh, with imprisonment of up to five years.

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Consumer Disputes Redressal Commissions

The Act sets up a three-tier Consumer Disputes Redressal Commission (CDRC) at the district, state, and national levels. These commissions are responsible for resolving consumer complaints related to:

• Unfair or restrictive trade practices.
• Defective goods or services.
• Overcharging or deceptive pricing.
• Offering hazardous goods or services that may threaten life and safety.

The new system allows for mediation and e-filing; consumers can file cases at the nearest commission within their jurisdiction.

Product Liability

The Act holds manufacturers, service providers, and sellers accountable for compensating consumers who suffer harm due to defective products or poor services. Complaints can be raised for:

• Manufacturing defects.
• Design defects.
• Deviations from manufacturing specifications.
• Failing to conform to express warranties.
• Insufficient instructions for proper usage.
• Faulty or deficient services.

Mediation for Dispute Resolution

The Act promotes mediation as an alternative dispute resolution (ADR) mechanism. Mediation cells are attached to consumer commissions to facilitate settlements, and once a settlement is reached through mediation, there is no option for appeal.

Inclusion of E-Commerce

Recognizing the rise of e-commerce, the Act incorporates specific provisions to protect online consumers. The Consumer Protection (E-Commerce) Rules, 2020 ensure that e-commerce companies:

• Are registered under the Companies Act.
• Appoint a resident grievance officer.
• Clearly display the company’s legal name, address, and contact details for customer support.

The rapid growth of e-commerce, especially during the pandemic, has made these regulations crucial for ensuring fair practices and addressing the unique challenges posed by digital marketplaces.

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Important sections of the Consumer Protection Act

1. Advertisement (Section 2(1))
An advertisement includes:

• Any audio or visual content
• Endorsements, notices, or announcements
• Delivered via light, sound, smoke, gas, print, electronic media, internet, or website
  It also covers items like labels, wrappers, invoices, and circulars.

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2. Complainant (Section 2(5))
A complainant can be:

• A consumer
• A registered consumer association
• Central or State Government
• The Central Authority
• A group of consumers with similar interests
• A legal heir or representative of a deceased consumer
• Parent or guardian of a minor consumer

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3. Complaint (Section 2(6))
A complaint refers to written allegations made by a complainant to seek relief under the Consumer Protection Act 2019. These could involve:

• Unfair or restrictive trade practices
• Defective goods or deficient services
• Overpricing of goods or services
• Sale of unsafe goods or hazardous services

4. Consumer
A consumer is any person who buys goods or avails services for personal use, excluding commercial purposes. However, if goods are used for self-employment to earn a livelihood, this is not considered a "commercial purpose."
This includes both offline and online purchases.

Points from Case Law:

1. Purchasing a Machine for Livelihood
   If someone buys a machine to operate themselves to earn a livelihood, they are considered a consumer. This status remains even if they hire one or two helpers to assist. However, if someone exclusively hires another to operate the machine, they are no longer a consumer.

2. Tractor Use
   A person who buys a tractor for personal land tilling and occasionally rents it out during idle times is still considered a consumer.

3. Insurance Policy Beneficiary
   A widow of a policyholder qualifies as a consumer because she benefits from the service.

4. Tenant and Lease Agreement
   A tenant is not considered a consumer unless the lease agreement explicitly includes separately charged services like cleaning or maintenance.

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Defect & Deficiency:

Defect (Section 2(10))
Any fault, imperfection, or shortcoming in quality, quantity, or standard of goods.

Deficiency (Section 2(11))
Refers to any inadequacy or shortcoming in the performance or quality of services, including negligence or withholding important information.

Misleading Advertisement (Section 2(28))

An advertisement is considered misleading if it:

• Falsely describes products or services
• Provides false guarantees or omits important information
• Constitutes an unfair trade practice

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Consumer Protection Councils:

1. Central Consumer Protection Council

   • Advisory body established by the Central Government.
   • Meets at least once a year.
   • Chairperson: Minister in charge of Consumer Affairs.
   • Advises on consumer rights promotion and protection.

2. State Consumer Protection Councils

   • Established by each State Government.
   • Must meet at least twice a year.
   • Chairperson: Minister in charge of Consumer Affairs.
   • Objective: To advise on consumer rights within the state.

3. District Consumer Protection Councils

   • Established by State Government for each district.
   • Chairperson: District Collector.
   • Meets at least twice a year to advise on district-level consumer rights.

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Central Consumer Protection Authority (CCPA):

Establishment (Section 10)
The Central Government establishes the CCPA to regulate violations of consumer rights, unfair trade practices, and false or misleading advertisements.

Role
The CCPA enforces consumer rights, prevents unfair trade practices, and regulates misleading advertisements. It also has the power to:

• Conduct inquiries and investigations.
• File complaints in consumer courts.
• Issue safety notices and advisory guidelines.

Product Liability:

Product Liability (Section 83)
Manufacturers or sellers are responsible for compensating consumers for any harm caused by defective products or deficient services. Action can be taken against:

• Product manufacturers (Section 84)
• Service providers (Section 85)
• Product sellers, even if they aren't the manufacturer (Section 86)

Exceptions (Section 87)
Liability does not apply if:

• The product was misused or altered.
• Adequate warnings were provided.

Consumer Mediation:

Mediation Cell (Section 74)
Mediation cells are established at District, State, and National Commissions to settle disputes amicably. These cells maintain a list of empanelled mediators and submit quarterly reports to the relevant Commission.

Empanelment of Mediators (Section 75)
Mediators are selected for a five-year term and are eligible for re-empanelment. They must disclose any conflicts of interest (Section 77) and can be replaced if found biased (Section 78).

Mediation Process (Section 79)
Mediation is conducted under the guidance of natural justice, and any settlement reached is recorded and submitted to the relevant commission.

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District Consumer Disputes Redressal Commission:

Establishment (Section 28)
State Governments set up district Commissions to resolve consumer complaints worth up to ₹1 crore.

Procedure (Section 36-39)
The Commission processes complaints, conducts hearings, and can pass orders, such as replacing defective goods or awarding compensation for losses.

Appeal (Section 41)
Aggrieved parties can appeal to the State Commission within 45 days of the District Commission’s order.

Additional Provisions:

• Appeals to Higher Courts:
  Appeals against State Commission decisions can be made to the National Commission, and National Commission decisions can be appealed to the Supreme Court.

• Enforcement of Orders (Section 71):
  Commission orders are enforceable like court decrees.

• Penalties (Section 72):
  Non-compliance with Commission orders can result in imprisonment or fines.

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Conclusion

The Consumer Protection Act of 2019 empowers consumers by establishing frameworks such as the Consumer Protection Councils, Consumer Disputes Redressal Commissions, and Mediation Cells. It also holds manufacturers and sellers accountable through product liability provisions and penalizes those producing or selling adulterated or counterfeit goods. Including e-commerce rules and enhanced consumer protection measures, the Act ensures that consumers’ rights are protected in both traditional and digital marketplaces.