Constitutional laws in India

Analyzing The Consumer Protection (Amendment) Bill, 2002

Written By: Avaantika Kakkar, Vth Yr, ILS Law College, Pune
Consumer law in India
Legal Service
  • The Consumer Protection (Amendment) Bill, 2001 was introduced in the Rajya Sabha on 26th April 2001. After certain amendments the Consumer Protection (Amendment) Bill, 2002 was passed by the Rajya Sabha at its sitting held on 11th March, 2002 and was referred to the Lok Sabha. At its sitting held on 30th July 2002, the Lok Sabha passed it with certain amendments. The Bill so passed was returned to the Rajya Sabha with those amendments for its consideration of them. The Bill could not be taken up for consideration on 6th August 2002, as the House stood adjourned that day without transaction of any business. The Bill may now be moved before the Rajya Sabha only during its next session.

    The Consumer Protection (Amendment) Act will read the same as the Bill stands today unless some very ardent legislators have serious objections to its present arrangement. The Bill makes sweeping changes in the law of consumer protection in India. These amendments range between procedural and substantive law and have a bearing on the functioning and composition of the consumer courts.

    Definitions And Scope
    Definitions and phrases under the Act are expanded in their scope and their meanings have been clarified after borrowing from the many judgments of the consumer courts that interpreted their scope. The jurisdiction of the district, state and national forums is also modified and expanded.

    A glance at some of the alterations in the definitions

    Complainant will now also include the legal heir or representative of the consumer, in case of his death. This is following certain judgments of the courts and redressal agencies that have allowed legal representatives and heirs to maintain an action against the manufacturers and traders. This question ought to have been one without dispute. There are other beneficiary legislations for loss of life and limb that allow the representatives on the injured or the dead (in which case, the heirs and legal representatives are the injured) to claim compensation and like relief.

    Complaint may be filed against a trader as well as service provider for adopting deceptive practices in provision of services. A claim also lies against the trader who charges in excess of the price fixed by or under any law, displayed on the goods or package containing goods, displayed on price list exhibited by him or agreed between the parties. It appears that parties will now be able to bring claims for prices agreed to even orally. There is also nothing to exclude bargain prices (or reasonable price based on advertisements, etc)

    However, the consumer courts will not look into the actual pricing of goods and services. There are ample legislations that deal with the malady of monopolistic pricing and fair prices for essential goods and commodities, the governments have also set up commissions to monitor the pricing of goods and services.

    Consumers do not include persons who obtained goods for commercial purposes are under the Act. The earlier distinction was that this qualification did not apply to consumers of services. This will no longer be the case. Even persons who avail of services for commercial purpose will fall outside the scope of consumers under the Act.

    One is forced to wonder about the exact rationale behind this exclusion. After all, the commercial user pays for a good or service, uses it to generate goods and services for his market and is actually responsible to the consumers of his goods and services as a manufacturer or seller. And with the parallel amending of the MRTP Act, the commercial user will really have few remedies for unfair trade practices and other grievances (since the pending UTP cases will be transferred to the consumer courts). The negative exceptions should be done away with.

    The Bill maintains the exception that 'commercial purpose' will not include earning livelihood by means of self-employment. And the usual exemption to agricultural activity will continue to apply. 

    Goods that were considered hazards to health and safety when used were specified under law and some were even exempt if the legal requirements of display of warning were met with (the classic example being cigarettes). Under the Bill, these goods must not contravene any standard laid down by law and a complaint will also lie for goods if the trader would have known with due diligence that they were unsafe for the public. The scope of this amendment may be wider than one imagines, unless the former requirement is an exception to the latter. Which means that it is unclear whether the determination of the manufacturer's exercise of due diligence will arise only when there is a failure to warn. 

    The contravention of 'standards' obviously refers to existing standards for quality, quantity, packaging and content etc. Will the liability be strict in such case? There are numerous Orders and Rules relating to food, fruit and product safety and any violation may cause manufacturers to be liable. The law relating to Prevention of Food Adulteration, Weights and Measures et al are some instances of the standards manufacturers must abide with. 

    Take the case of food packaging industries, the manufacturer will have to defend himself by proving due diligence on his behalf and establish that the hazard was not likely to have been known even after such exercise.

    The same rule will apply for services that are found hazardous to life and safety.

    The modified definition of Manufacturer seems to include any manufacturer of goods and parts; assembler of goods and parts (he need not claim end product as manufactured by himself, as previously) and the person who puts or causes to be put, his mark on any product (whether he manufactured it himself or not). So the assembler of goods is also liable as manufacturer under the Bill. Many manufacturers source their goods through assemblers and the final product bears their stamp. 

    Is the assembler a necessary party? The defect will now have to be traced to the assembler of parts or even the manufacturer of those parts where assembling was not faulty. How will the court apportion the liability between the persons involved in this chain?

    'Regulation' has been defined to mean the regulations made by the National Commission under the Act. 

    The expanded definition of 'restrictive trade practice' as not only including tie-up sales but also delay beyond period agreed to for provision of goods or services that has led to or is likely to lead to a rise in prices was included in the Ordinance of 1993 and has been given effect to under the Act.

    The definition of services has already been interpreted as wide and inclusive, the specific services mentioned in the definition were only examples and many more have since been added by the consumer courts. These judgments have had some effect and the words '…but not limited to…' have been added before including examples of services in the definition.

    Clause (oo) has been added to explain that spurious goods and services are those that are claimed to be genuine and are actually not so. This concept already existed under the definition of unfair trade practice in the principal Act this addition could suggest that action will be taken against the many sellers of fake goods and services in the market and could even target persons like spurious software providers.

    'Unfair trade practice' will now also include withholding from the participants of any scheme offering gifts, prizes or other items free of charge. This is common practice resorted to by traders and it is only the winners of some schemes that are informed of the results. The Act, as amended, will require publication of results in prominent newspapers etc.

    Value of a compliant before the District Forum or pecuniary jurisdiction did not exceed rupees five lakh and has been expanded to a sum of rupees twenty lakh obviously aimed at unburdening the State and National Commissions. Similarly, the value of complaints before the state commission will now be a range that exceeds rupees twenty lakh but not rupees one crore compared to the earlier five lakh to twenty lakh. The National Commission will hear complaints valued at rupees one crore and above.

    The place of residence or of carrying on business or where cause of action arose etc. will have a bearing on which State Commission the suit is instituted. Complaints against foreign concerns were admissible before the redressal agencies, even under the principal Act, if they had a branch office within the local jurisdiction of the agency.

    Aggrieved parties may appeal to the State Commission from the District Forum and to the National Commission from the State Commission.

    Awards And Orders
    The District Forum may, by order, allow a complaint to be proceeded with or rejected on its receipt. An opportunity of being heard must be allowed to the complainant before making an adverse order.

    An ex parte order based on complainant's evidence may be granted where defendant fails or omits to appear or represent his case. The case may be dismissed for default or decided upon merits when the complainant fails to come before the court. Many authors and journals had sought a clarification on this issue and for once, Parliament has obliged!

    The District Forum may pass interim orders during the pendency of any proceedings, if it deems fit in the interest of justice. Some authors were of the opinion that the District Forum could not pass interim orders and grant an ad-interim relief, only final relief could be granted [Suneeti Rao, 'Evolution of the Consumer Protection Law in India', Journal of the Indian School of Political Economy, p 460, Vol.7 No.3]

    A new sub-section to S 12 lays down that O XXII of the First Schedule of the Code of Civil Procedure will apply in case of death of any party to the dispute.

    Finding of District Forum: The Forum could order compensation for the opposite party's negligence. The rules of compensation were applied in assessing damages and courts are hesitant with large awards. The purpose, after all is to put complainants in the position they would have been had the loss or injury not occurred, mental agony and anxiety are taken into consideration.

    An order may also be made to cease manufacture or desist from offering harmful goods or services.

    The Bill introduces punitive damages in cases where the forum deems fit. The forum will also have discretion to announce awards for injury suffered by a large number of consumers who may not be identifiable conveniently. The minimum limit on such compensation is not less than 5% of the value of such defective goods or services. This seems to make way for class action suits in India. Although a group of consumers can claim damages under the principal Act, now there will be discretion to grant awards probably for those who are not directly represented. The Bill has considered the distribution of the benefits of such an award among the victims and such amount may be credited in favour of a person 

    who may utilize it in the manner prescribed. It is not difficult to imagine a situation where manufacturers of products like alcoholic beverages are asked to pay sums towards a fund that compensates alcoholics or treats them or manages rehabilitation centers. Governments may manage the fund or NGOs or other institutional set ups so appointed. An example to derive from is the arrangement with various tobacco companies in the US. 

    The forum may also order corrective advertisements by persons who issue misleading statements and promises. There have been cases in the UK and Europe where companies have claimed that compressed sugar tablets are also useful in curing colds and the flu or where fairness creams have claimed efficiency in removal of scars et al.

    This is in addition to the usual cease and desist orders. Not only do misrepresentations stop as concerns the product, manufacturers must undergo considerable embarrassment over the adverse public opinion.

    An instance in India was the toothpaste manufacturer who made claims that the paste actually adds on calcium to the gums, this claim was grossly exaggerated and instead of the advertisement simply going off air, the effect on the public mind would have been significant had the manufacturer corrected the claim.

    New section 17A allows for transfer by the State Commission (on application by complainant or on its own motion), at any stage of the proceeding of any complaint pending before the District Forum to another District forum within the State and the National Commission under the new section 22B shall have similar powers to transfer cases from one State Commission to another and from District Forums of one state to District Forums of other states.

    S 18 of the principal Act allows that sections 12, 13 and 14 and the rules made there under will apply to the State Commission.

    And S 22 (newly substituted) makes the same provision for the National Commission. However, the National Commission will also have the power to review orders passed by it where there is an error apparent on the face of record.

    Ex parte and dismissal orders passed by it may be set aside by the National Commission on application of the opposite party or complainant as the case may be. The aggrieved party may appeal against such orders of the Forum. 

    A careful reading of S 17 allows the State Commission to entertain appeals against orders of the District Forum and the orders of the State Commission may be appealed against in the National Commission u/s 21 of the principal Act. S 17(b) confers revision jurisdiction on the State Commissions. This is not its original jurisdiction and no appeal will lie against the orders passed under its revision jurisdiction. S 19 only allows appeals to the National Commission from the exercise of its original jurisdiction of the State Commission. If the appeals are not filed within the prescribed time limit of 30 days from the date of the order, such order of the District Forum, State and National Commission becomes final. (S 23)

    There is no prescribed time limit for revision, the Calcutta High Court in Ajay Bhadra v SCRDC West Bengal (2002, citation omitted) has laid down that the time limit is 30 days since the finality of orders becomes certain when the appeal is not filed within the prescribed period and there is no question of filing for revision after such period.

    Compare this with the decision of the National Commission in 2002 CTJ 264 (CP) that revision petition must not be filed after ninety days if it must be saved from dismissal.

    The Bill inserts a second proviso to S 15. Any person who is required to pay any amount under the orders of the forum will not be allowed to go on appeal unless he deposits 50% of the said amount or Rs. 25,000, whichever is less with the District Forum. The provision is the same for an appeal from the State Commission except that the amount will be 50% of money the party appealing has been ordered to pay or Rs. 35,000, whichever is less. And at the National Commission, this amount becomes Rs. 50,000. There is no provision for second appeal if a party succeeds before the District Forum and fails before the State Commission.

    Institutional Set-Up And Composition
    The Bill requires the mandatory establishment of Central, State and District Consumer Protection Councils. The requirement was left at the discretion of the national and state governments with the use of the word 'may', which is now replaced with 'shall'.

    The objects of the Central Council are enumerated in Sec 6 of the principal Act and the same will apply for the state and district levels. There is also provision for nomination of up to 10 members by the central government in the state councils.
    The Bill makes detailed provisions for membership and procedures.

    Changes have been made in the composition of the District Forum u/s 10, the State Commissions and National Commission u/s 16 and 20, respectively. Disqualifications are mentioned in detail and are actually the usual impediments to public office in India. Provisions for reappointment are now included subject to the conditions of age etc. New provisions have been inserted for substitution of Chairman of Selection Committee by a sitting judge of the High Court when the President of the District Forum is absent or unable to so act; in such a circumstance with the State Commission, the Chief Justice of the High Court shall appoint a sitting Judge as substitute; similar provisions are made for the National Commission. 

    In case the office of the President of the District Forum, State Commission, or National Commission is for some reason vacant, the senior most member of the District Forum, State and National Commission shall perform his functions. The proviso clarifies that where a retired judge of the High Court is the member of the National Commission, such member or where there is more than one such member, the senior most among them shall preside in the absence of the President. 

    The Bill has allowed the State and Central governments option to notify Circuit Benches for the functioning of the State and National commissions from time to time. This could mean temporary establishment in areas beyond the state and national capitals.

    S 12 deals with the manner in which a complaint shall be made

    Provisions regarding complaints by consumers and registered consumer associations remain. New provisions refer to
    a. fees (as prescribed) to accompany complaints 
    b. District Forum to allow complaint to proceed or be rejected (only after complainant is allowed opportunity of being heard)
    c. of admissibility to be decided within 21 days of receipt of complaint.

    No complaint will be transferred to any other court, tribunal, any authority set up by or under any law for the time being in force. We have to keep in mind that u/s 3 of the principal Act, the Consumer Protection Act is in addition to and not in derogation of any law for the time being in force. So it is possible that this new provision does not affect consumer disputes where the parties choose to arbitrate. Besides, the arbitrator is not an authority set up 'by or under any law'; he is appointed by the consent of both parties and derives authority from contact rather than enacted statute. 

    The marginal heading of S 13 that read 'procedure on receipt of complaint' will now read 'procedure on admission of complaint' as 'receipt' is dealt with u/s 12.

    Provisions To Expedite Proceedings

    The admissibility of the complaint must be decided within twenty-one days of its receipt.

    The opposite party must be referred copy of complaint within twenty-one days from date of admission. His version of the story is expected within thirty days with extension of not more than fifteen days. 

    Complaints are to be heard as expeditiously as possible and the court must attempt to decide the case within three months from date of receipt of notice by the opposite party as long as the complaint does not require testing and analysis. We know already, that the laboratory must report its findings to the court within forty-five days of the reference or in such extended time as the court grants it. The court will endeavour to decide a complaint requiring analysis and testing within five months.

    The Bill seeks to curtail the grant of adjournment. The Forum is required to consider whether sufficient cause is shown and record a reasoned order (in writing). The Forum will make orders as to costs occasioned by such grant in accordance with the regulations made under the new Act.

    Proviso to S 14(2) will be substituted. Where the member, for any reason, was unable to conduct proceedings till completion, the President and other member
    were required to inquire de novo. This was cause for substantial delay and will no longer be the case. The new member will pick up the strings from the stage of the last hearing.

    Appeals filed before the State or National Commission shall also be heard as expeditiously as possible and endeavor shall be made to dispose of it within ninety days of its admission.

    S 25 of the Act lays down that an order passed by the District Forum, State or National Commission will have the same effect as a decree or order made by a court in a suit pending before it. In fact, the District Forum, State or National Commissions may send the order to the appropriate court for enforcement when unable to do so themselves.

    S 27 allows for a minimum imprisonment of one month or a minimum fine of Rs. 1000 which may extend to 3 years and Rs. 10,000, respectively, or both in case any party omits or fails to comply with an order passed by the District Forum, State or National Commission. The consumer courts have been allowed discretion to award less than the minimum penalties so prescribed in the proviso to the section.

    There is controversy over the validity of S 27. The Karnataka High Court [Paramjit Singh v Union of India, 1999 CTJ 570] struck down the proviso of the section as violating Articles 20 and 21 of the Constitution of India. The Delhi and Kerala High Courts upheld the validity of s 27. The arguments against its validity were inter alia that there is no provision for summons, no right of being heard for reasons as to why compliance was omitted; there is no provision for appeal from this order; it is an offence created under the Act and leads to the deprivation of liberty etc. Writs based on similar grounds are reported pending in various High Courts. The Supreme Court has had no opportunity to opine on the matter, as yet.

    The Bill amends both S 25 and S 27. S 25 is to be substituted with a new section that declares an order for attachment may be made against the property of a person failing to abide by interim orders passed by the District Forum, State or National Commission. The attachment shall not continue beyond three months, and if non-compliance persists, the property may be sold to award damages to the complainant and the balance may be paid to the party entitled.

    Where an amount is due to a person under an order passed by the District Forum, State or National Commission, such person may make an application for issue of a certificate of the said amount to the Collector (or other person) of the district who shall proceed to recover the amount as arrears of land revenue.

    The proviso to S 27 is omitted. The District Forum, State or National Commission shall be deemed to be and have the powers conferred on the Judicial Magistrate First Class under the Code of Criminal Procedure, 1973 and will so function in spite of anything contained therein. The Bill further provides that all offences may be tried summarily by the District Forum, State or National Commission. Thus, allowing for and making provision for any objections that may have been raised against the validity of this very potent threatening provision on which the efficacy of the Act depends.

    S 18 A of the Act that dealt with vacancy of office of the President is omitted.
    New S 28 A lays down provisions for serving of notices, etc. S 30 now allows the Central Government to make rules for the efficient enforcement of the Act. All rules so made will be laid before both Houses of Parliament and must be made within two years of coming into force of the Act. Parliament seems to have tired itself with this enactment leaving it now to the Executive to apply its mind. The National Commission will also make regulations, subject to the approval of the Central Government. All rules and regulations made under the Act are subject to scrutiny by both Houses of Parliament. 

    The Amendment proposed prior to this final Bill had restricted the jurisdiction of Consumer Courts to plaints for which no other law provides remedy. This had meant mayhem for a lot of consumers who were becoming used to filing complaints against the state electricity boards, telephone services and even private companies for matters related to shares and dividends etc. S 3 of the principal Act says that the provisions of the Act are in addition to and not in derogation of any law for the time being in force. The proposed s 3 was to read: The provisions of this Act shall apply to all claims except claims in respect of which corresponding remedies of judicial nature are available under any special law for the time being in force.

    Besides, the Amending Bill also proposed a restriction on engagement of lawyers at the option of complainant. The opposite party would have been unable to engage a lawyer unless the complainant engaged one or had no objection to the opposite party engaging legal practitioners. 

    These amendments raised many concerns and were finally done away with. Perhaps for the better as consumers would have had to return to the mercy of departmental procedure and enquiry under various laws. 

    Also, with the inclusions of concepts like punitive damages and procedural provisions for grant of ex parte and dismissal orders and time limitations, one fails to imagine the consumer unaided by legal expertise. Would the Forums and Commissions have undertaken to inform them of the manner in which they were to present a strong case, the arguments against technicality and time frames within which procedure was to be complied with?
    As is usually the case with any new enactment in India, one applauds the efforts of the minds that enacted this legislation; it is an effort towards efficiency and does away with many lacunae in the law. It also leaves ample scope for the courts to interpret and add meaning. What worries us is the enforcement. Will the judges be eager to give reasoned orders for adjournments or will they, in the spirit of the Act, refuse to be lenient? How far will consumers claim their rights and be informed of them? Will the voluntary organizations jump into the fray and become more proactive than before? Much depends on the individual and collective agencies of society.

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