Monthly Archives: November 2014

INDIAN CONSUMER PROTECTION LAW GETTING AMENDED

The Ministry of Consumer Affairs proposed to amend Consumer Protection Act 1986 and provided in its website the amendment proposals for all stakeholders to comment.  Here is a small note regarding proposed amendments.

  • Introduction of mediation as another way of resolving consumer disputes.  Hence, a new definition of mediation is proposed.  A new chapter 4 is introduced to the enactment establishing a consumer mediation cell which in detail provides the qualification for a mediator, the office of mediator, and its setup and procedure of mediation, the time frame for mediation which is 30 days, etc, and it also narrates process of mediation, how settlement to be arrived, recorded, etc.
  •  The amendment also proposes to create a new executive machinery for investigation and enquiry of Unfair Trade Practices and other complaints relating to the consumer.  Thus, it proposes to create Central Consumer Protection Authority and a new Consumer Protection Commission will be formed.  The amendment proposes additional five deputy commissioners under the commission.  The place and working hours of this authority will be like a central government office and the authority shall be located in Delhi and the additional responsibility of the Central Consumer Protection Authority is provide inexpensive and speedy redressal of grievance and complaints.  This authority can enquire suo moto or upon a complaint or from a direction from a government, parliament, and judiciary any violation of consumer rights enumerated in Consumer Protection Act.  This authority can intervene in judicial proceeding with consent of the court in all allegations of violation of consumer rights.  The Authority can conduct search and seizure of documents, records and articles and other forms of evidence, summon delinquent manufacturers, record oral evidence, make orders on the basis of such investigation to withdraw services and issue safety notices and alerting consumer against unsafe goods, direct discontinuation of practices which are found to be unfair and prejudicial to consumer interest, order withdrawal of advertisements found to be false, declare any unfair consumer contract as null and void, accept undertaking from bodies who breached law that they will desist from continuing such practices, file class action suit at National Consumer Forum on behalf of consumers, draw up code of conduct for fair business practices, impose administrative penalty on those found violating provisions of this law, etc.
  • The definition of the word “Defect” and “Deficiency” contained in section (1)(f) is proposed to be expanded by replacing the word “means” with “include.”  Consciously withholding relevant information to consumer is included within the definition of “Deficiency.”
  • The definition of Unfair Trade Practice is proposed to be expanded by including non-issuance of a cash memo or a bill as an Unfair Trade Practice.  Another proposal was to add the right of the consumer to reject and return the good or refuse to avail services.  A refusal to refund the consideration within 30 days is considered an Unfair Trade Practice.  The concept of Unfair Contracts is proposed and it states that a contract that requires manifestly excessive security deposit to be given by a party to the contract for the performance of contractual obligations, imposing any penalty on a party to the contract disproportionate to the loss occurred to the breach of the other party, refusal to accept early repayment of debt, a right of a party to terminate unilaterally without any cause are considered Unfair Contracts.
  • This Amendment proposes an exclusive bench in National Consumer Authority to hear class action suits.  Consumer protection Authority will have regional offices headed by a deputy commissioner.  The powers of the central consumer commission will be handled at district level by District collector or magistrate who can suo moto or otherwise investigate matters relating to consumer rights violation.  The orders made by the district collector or district magistrate is appealable before the Deputy Commissioner of Consumer Protection Authority and order of Deputy Commissioner shall be appealed to the Central authority.
  • The new amendment proposes that consumer complaint can be filed in the form of an e-mail to either District Collector or Deputy Commissioner and all complaints shall be acknowledged within a week and complaint shall be disposed within one month.
  • Any noncompliance of order of Central Authority will be reported to District Law enforcement authority who will take immediate action and report compliances. The National Consumer Commission and State Consumer Commission will be renamed as National Forum and State forum.  The salaries, perks, and other benefits of judges of consumer forum are amended.
  • Section 13 is proposed to be amended whereby in all claims below 5 lakhs both the parties to the dispute are not allowed to engage advocates.   No advocates can appear before state forum for any parties unless the billed value of the goods or services claimed in a complaint is 50 lakhs or above. In a national forum, no advocate shall appear if the claim is below 1cr and 50 lakhs.
  • The consumer forum after admission of the complaint shall refer the matter for resolution by mediation.
  • The consumer forum is given the power to award punitive damages which shall not be less than 10 times the value of the goods or service or 25% of the profit from the total sale of the said goods whichever is higher.
  • After the proposed amendment to challenge an award of a district forum, the appellant has to mandatorily deposit 50% of the award.    The amendment suggests that there won’t be second appeal.  That means that an order of district forum can be appealed before state forum and no further appeal shall be before national forum.
  • The enforcement of order of the consumer form if not complied with, the person shall be required to pay not less than Rs. 500  per day or 1.5% of the value awarded whichever is higher for each day of delay for such noncompliance of order.  The consumer forum is given the power to attach the property of the person and if the default in compliance of an order continues for more than 3 months, the attached property shall be sold.  The amendment further proposes directing the district collector to recover the money  from defaulter as arrears in land revenue.

This proposed amendments would bring substantial changes in the enforcement of consumer rights. However, some of the provisions like preventing lawyers from appearing in a Judicial process, based on pecuniary limits of the case is unfair and unconstitutional.  I could also notice many drafting errors and inconsistencies. The Ministry has requested all stakeholders to issue comments.  All right conscious citizens may  carefully read the proposed amendments and make meaningful suggestion and participate in this legislative exercise.