MEMBERS' REFERENCE SERVICE LARRDIS LOK SABHA SECRETARIAT, NEW DELHI LEGISLATIVE NOTE No. 6/LN/Ref/July/2016 For the use of Members of Parliament NOT FOR PUBLICATION 1 THE CONSUMER PROTECTION BILL, 2015 Prepared by Dr. Ranbir Kumar, Additional Director (23034740) and Smt. Vandana Chauhan, RA of Lok Sabha Secretariat under the supervision of Smt. Kalpana Sharma, Joint Secretary and Shri Sayed Kafil Ahmed, Director. The reference material is for personal use of the Members in the discharge of their Parliamentary duties, and is not for publication. This Service is not to be quoted as the source of information as it is based on the sources indicated at the end/in the text. This Service does not accept any responsibility for the accuracy or veracity of the information or views contained in the note/collection.
THE CONSUMER PROTECTION BILL 2015 INTRODUCTION Consumer markets for goods and services have undergone profound transformation since the enactment of the Consumer Protection Act in 1986. The emergence of global supply chains, rise in international trade and the rapid development of e-commerce have led to new delivery systems for goods and services and 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. Misleading advertisements, tele-marketing, multi-level marketing, direct selling and e- tailing pose new challenges to consumer protection and will require appropriate and swift executive interventions to prevent consumer detriment. There is, therefore, a need to modernise the said Act to address the myriad and constantly emerging vulnerabilities of the consumer in the market economy extant 1. CONSUMER PROTECTION BILL, 2015 INTRODUCED IN LOK SABHA The Consumer Protection Bill, 2015 was introduced on 10 August 2015 in Lok Sabha. The Bill was referred to the Parliamentary Standing Committee on Food, Consumer Affairs and Public Distribution on 25 August 2015 for examination and report. The Committee considered the Bill and presented the Ninth Report pertaining to the Consumer Protection Bill, 2015 on 26 April 2016 in Lok Sabha and laid in Rajya Sabha on same day. The Bill seeks to replace to the existing Consumer Protection Act, 1986. The said Act was amended in 1991, 1993 and 2002 to make provisions of the Act more effective. 1 The Consumer Protection Bill, 2015, p. 40
OBJECTIVES OF THE CONSUMER PROTECTION BILL, 2015 2 The objective of the 'Consumer Protection Bill, 2015' is to widen the ambit and amplify the scope of the Act to: a) Modernise the legislation on consumer protection to keep pace with the changes in markets; b) ensure fair, equitable and consistent outcomes for consumers; and c) enable swift executive intervention in the nature of class action both to prevent consumer detriment and to provide redress to consumers 2. KEY FEATURES OF THE BILL Central Consumer Protection Authority (CCPA): The Consumer Protection Bil, 2015 provides for establishment of an executive agency, the Central Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers; make interventions when necessary to prevent consumer detriment arising from unfair trade practices and to initiate class action including enforcing recall, refund and return of products. This fills an institutional void in the regulatory regime extant 3. Consumer Disputes Redressal Commission: The Bill provides for provision of establishing of Consumer Disputes Redressal Commission at the District, State and National level. Various provisions aimed at simplifying the consumer dispute adjudication process provided in the Bill are as follow: i). enhancing the pecuniary jurisdiction at the District level to Rs. 50 lakh, at State level to Rs. 10 crore and at National level the amount exceeding Rs. 10 crore or upto thrice the limit of such value respectively; ii). increasing minimum number of Members in the consumer courts to facilitate fast disposal of complaints; iii). power to review their own orders by the State and District Commission; 2 Lok Sabha, Parliamentary Standing Committee on Food, Consumer Affairs and Public Distribution, Report on Consumer Protection Bill, 2015, April 2016, pp.2-3 3 The Consumer Protection Bill, 2015, p. 40
3 iv). constitution of Circuit Bench to facilitate faster disposal of complaints; v). reforming the process for the appointment of the President and Members of the District Commission; vi). enabling provisions for consumers to file complaints electronically; and, vii). file complaints in consumer courts that have jurisdiction over the place of residence of the complainant, and deemed admissibility of complaints, if the question of admissibility is not decided within the specified period of 21 days 4. Product Liability: Provision for 'product liability' action for or on account of personal injury, death, or property damage caused by or resulting from any product has been added. The basis for product liability action and the liability of the manufacture to a claimant have been provided 5. In order to claim the manufacturer s liability, he has to prove all of the following aspects about the product: i). it contains a manufacturing defect, ii). it is defective in design, iii). it did not contain adequate instructions and warnings regarding its correct use, iv). it did not conform to an express warranty made by the manufacturer or product seller, v). the person against whom the consumer has filed a complaint is the manufacturer of the product, and vi). the dangerous aspect of the product was the cause of the harm suffered 6. Consumer Mediation Cell: The Bill introduces establishment of mediation as an Alternate Dispute Resolution Mechanism. Consumer Mediation Cell will be attached to the Redressal Commission at District, State and at National level 7. Unfair Trade Practice: Unfair trade practice means a trade practice which may include any of the following: 4 Ibid, pp. 40-41 5 Ibid, p. 40 6 Ibid, p.34 7 Ibid, p.32
4 (i) making a false statement regarding the quality or standard of a good or service, (ii) selling of goods not complying with standards, (iii) manufacture of spurious goods, (iv) not issuing a receipt for a good or service sold, (v) refusal to withdraw or refund goods or services within 30 days, (vi) disclosing personal information provided by a consumer to any other person, etc 8. Unfair Contract: A contract is said to be unfair if it contains any one of the following six terms: (i) payment of excessive security deposits, (ii) payment of a disproportionate penalty for a breach in contract, (iii) refusal to accept early repayment of debts, (iv) right to terminate the contract without reasonable cause, (v) transfer of a contract to a third party to the detriment of the other party, without that party s consent, or (vi) imposing of any unreasonable charge or obligations which put the consumer at a disadvantage 9. Penalties: Any person who fails to comply with an order of either of the Commission would be liable to imprisonment from one month to three years or with a fine from Rs. 10,000 to Rs. 50,000 or both 10. 8 Ibid, p.7,9 9 Ibid, p.9 10 Ibid, p.36
5 Inclusion of Online Products : Transaction made through any mode, inclusive of but not limited to, offline, online through electronic mean, teleshopping or direct selling or multi level marketing are being covered under the provisions of the Bill 11. IMPORTANT RECOMMENDATIONS OF THE PARLIAMENTARY STANDING COMMITTEE Some of the important recommendation given by the Parliament Standing Committee on Food, Consumer Affairs and Public Distribution given in its Ninth Report are: Central Consumer Protection Authority: The Bill establishes the Central Consumer Protection Authority (CCPA) to inquire and investigate into consumer complaints, issue directions and impose penalties. The Bill also establishes consumer dispute redressal commissions to adjudicate consumer disputes. The Committee stated that this function of the CCPA overlaps with the functions of the commissions. It recommended that the CCPA should not be vested with any judicial powers 12. Product Liability: The Bill specifies six conditions regarding a defective product which are to be proven by a consumer in order to claim product liability. The Committee observed that this puts an undue burden on the consumer, since he will not be able to claim liability if any one of the conditions are not met. It recommended that the provision be redrafted such that the consumer has to prove any one of the conditions instead of all six of them. Similar provisions with regard to services provided may also included under the Bill 13. 11 Ibid, p.3 12 Op.cit., Standing Committee Report on Consumer Protection Bill 2015, April 2016, p. 32 13 Ibid, p. 46
6 Unfair Contracts: The Committee recommended that the Bill should lay down principles which would determine whether contract term is unfair. This would allow terms of contracts other than the specified six to be classified as unfair 14. Consumer Rights: The Committee recommended that the Bill should expand the rights of consumers to include the right to terminate a contract based on the ground of quality of goods and services 15. Pecuniary Jurisdiction of District Commissions:. Under the Bill, consumer disputes regarding good or services with a value of up to Rs 50 lakh will go to the district commission, and those with a value of up to Rs 10 crore will go to state commissions. The Committee recommended that the jurisdiction of district commissions may be raised to Rs 1 crore. Appearance of Advocates in complaints involving compensation of upto Rs. 20 lakh may be prohibited 16. Misleading Advertisement: The Committee recommended that strict penalties to deal with misleading advertisements should be included in the Bill. It suggested a fine of Rs 10 lakh or an imprisonment of two years or both, to deter such advertisements. It also suggested that these penalties be applicable to the persons who endorse the products in the advertisements 17. Adulteration of Products: The Committee recommended that well-equipped laboratories should be established in the country to deal with the issue of adulteration of products such as food, drugs, fertilizers, seeds, etc. It also recommended a penalty 14 Ibid, pp. 26-27 15 Ibid, p. 35 16 Ibid, p. 38 17 Ibid, p. 17
7 of a fine of Rs 10 lakh, imprisonment of 2 years, and a suspension of license for two years, for the adulteration of these products 18. Appeal againts Order of District Commission: The Committee feels that period of 30 days to appeal against the order of the District Commission to the State Commission is apparently too short and should be enhanced to 45 days 19. The Consumer Protection Bill, 2015 is likely to be taken for consideration during the Monsoon Session of the Parliament which will commence from 18 July 2016. REFERENCES: 1. The Consumer Protection Bill, 2015 2. Lok Sabha, Standing Committee on Food, Consumer Affairs and Public Distribution, Ninth Report on Consumer Protection Bill, 2015, April 2016 18 Ibid, p. 23 19 Ibid, p. 41