The Consumer Protection Bill, 2018 was introduced in Lok Sabha in January 2018. The Bill replaces the Consumer Protection Act, 1986. Previously in 2015, a Bill had been introduced to replace the 1986 Act. The 2015 Bill acknowledged that the rapid change in consumer markets, introduction of practices such as misleading advertisements, and new modes of transactions (online, teleshopping, etc.) had necessitated the need for a new law. The Bill was subsequently referred to a Standing Committee, which recommended several changes to it. The Bill was withdrawn and replaced with the Consumer Protection Bill, 2018. The Bill is listed for passage in the ongoing Monsoon Session. In this post, we analyse the Bill in its current form.
How is the 2018 Bill different from the 1986 Act?
The Bill adds various provisions for consumer protection that were absent in the 1986 Act. Key among them are the provisions on product liability and unfair contracts. Under product liability, when a consumer suffers an injury, property damage or death due to a defect in a product or service, he can file a claim for compensation under product liability. The Bill outlines cases in which the product manufacturer, service provider and seller will be held guilty under product liability. Under the proposed law, to claim product liability, an aggrieved consumer has to prove any one of the conditions mentioned in the Bill with regard to a manufacturer, service provider and seller, as the case may be.
An unfair contract has been defined as a contract between a consumer and manufacturer/ service provider if it causes significant change in consumer rights. Unfair contracts cover six terms, such as payment of excessive security deposits in an arrangement, disproportionate penalty for a breach, and unilateral termination without cause. The consumer courts being set up under the Bill will determine contract terms to be unfair and declare them null and void.
What are the different bodies being set up under the Bill?
The Bill sets up Consumer Protection Councils as advisory bodies, who will advise on protection and promotion of consumer rights. However, it does not make it clear who these Councils will render advise to. Under the 1986 Act, the Consumer Protection Councils have the responsibility to protect and promote consumer rights.
To promote, protect, and enforce consumer rights, the Bill is setting up a regulatory body, known as the Central Consumer Protection Authority. This Authority can also pass orders to prevent unfair and restrictive trade practices, such as selling goods not complying with standards, and impose penalties for false and misleading advertisements.
The Bill also sets up the Consumer Disputes Redressal Commissions (known as consumer courts) at the district, state and national levels. These Commissions will adjudicate a broad range of complaints, including complaints on defective goods and deficient services of varying values. These Commissions are also present under the 1986 Act. However, their pecuniary jurisdiction (amount up to which they can hear complaints) has been revised under the Bill. The Bill also adds a provision for alternate dispute redressal mechanism. As part of this, mediation cells will be attached with the Consumer Disputes Redressal Commissions.
What are the penal provisions under the Bill?
The Bill increases penalties for different offences specified in it. It also adds penalties for offences such as issuing misleading advertisements, and manufacturing and selling adulterated or spurious goods. For example, in case of false and misleading advertisements, the Central Consumer Protection Authority can impose a penalty of up to Rs 10 lakh on a manufacturer or an endorser. For a subsequent offence, the fine may extend to Rs 50 lakh. The manufacturer can also be punished with imprisonment of up to two years, which may extend to five years for every subsequent offence. The Authority can also prohibit the endorser of a misleading advertisement from endorsing any particular product or service for a period of up to one year. For every subsequent offence, the period of prohibition may extend to three years. There are certain exceptions when an endorser will not be held liable for such a penalty.
Are there any issues to think about in the Bill?
The 2018 Bill is a marked improvement over the 2015 Bill and addresses several issues in the 2015 Bill. However, two major issues with regard to the Consumer Disputes Redressal Commissions remain. We discuss them below.
First issue is with regard to the composition of these Commissions. The Bill specifies that the Commissions will be headed by a ‘President’ and will comprise other members. However, the Bill delegates the power of deciding the qualifications of the President and members to the central government. It also does not specify that the President or members should have minimum judicial qualifications. This is in contrast with the existing Consumer Protection Act, 1986, which states that the Commissions at various levels will be headed by a person qualified to be a judge. The 1986 Act also specifies the minimum qualification of members.
Under the current Bill, if the Commissions were to have only non-judicial members, it may violate the principle of separation of powers between the executive and the judiciary. Since these Commissions are adjudicating bodies and will look at consumer dispute cases, it is unclear how a Commission that may comprise only non-judicial members will undertake this function.
Second issue is with regard to the method of appointment of members of the Commissions. The Bill permits the central government to notify the method of appointment of members of the Commissions. It does not require that the selection involve members from the higher judiciary. It may be argued that allowing the executive to determine the appointment of the members of Commissions could affect the independent functioning of the Commissions. This provision is also at variance with the 1986 Act. Under the Act, appointment of members to these Commissions is done through a selection committee. These section committees comprise a judicial member.
As mentioned previously, the Commissions are intended to be quasi-judicial bodies, while the government is part of the executive. There may be instances where the government is a party to a dispute relating to deficiency in service provided by a government enterprise, for e.g., the Railways. In such a case, there would be a conflict of interest as the government would be a party to the dispute before the Commissions and will also have the power to appoint members to the Commission.
In an Indian express editorial, Mandira Kala discusses the Bills, addressing corruption and good governance, pending in Parliament. She discusses what their fate may be given that the Monsoon session is widely being viewed as a make or break session for the government to get its legislative agenda through Parliament. The monsoon session of Parliament started on a stormy note last week. Question hour was disrupted on most days and only one government bill was passed. There are 11 days left in the session and more than 40 bills pending for parliamentary approval. With the 15th Lok Sabha drawing to an end, this session is being viewed as a "make or break" session for the government to get its legislative agenda through Parliament. Since 2010, there has been much debate in Parliament on corruption and an important part of the government's legislative agenda was the introduction of nine bills in the Lok Sabha to address corruption and improve governance through effective delivery of public services. Three of these bills have been passed by the Lok Sabha and are currently pending before the Rajya Sabha. These include legislation to address corruption in public office, enforce standards and accountability in the judiciary, and protect whistleblowers. The government has proposed amendments to each of these bills that the Rajya Sabha will have to consider and pass. If the Rajya Sabha passes these bills with amendments, they will be sent back to the Lok Sabha for approval. It is difficult to assess in what timeframe these bills will become law, given that both Houses need to agree on the amendments. The Lokpal and Lokayuktas Bill creates a process for receiving and investigating corruption complaints against public officials, including the Prime Minister, Ministers and Members of Parliament, and prosecuting these in a timebound manner. The government amendments include allowing states the flexibility to determine their respective Lokayuktas and giving the Lokpal power of superintendence over the CBI, if the case has been referred by him. A mechanism to protect whistleblowers and create a process for receiving and investigating complaints of corruption or wilful misuse of discretion against a public servant are proposed under the Whistleblowers' Protection Bill, 2010. The amendments proposed by the government prohibit whistleblowing if the disclosure of information affects the sovereignty of the country and its strategic, scientific and economic interest. The Judicial Standards and Accountability Bill requires judges to declare their assets, lays down judicial standards and establishes processes for the removal of judges of the Supreme Court and high courts. The bill is not listed in the government's legislative agenda for the monsoon session and media reports suggest that the government intends to make amendments to it. In the arena of strengthening governance and effective delivery of public services, there are three bills currently pending in Parliament. The Citizens' Charter Bill confers the right to timebound delivery of goods and services on every citizen and creates a mechanism for redressing complaints on such matters. The Electronic Delivery of Services Bill mandates that Central and state governments shall deliver public services electronically no later than eight years from the enactment of the law. The parliamentary standing committee had highlighted that the Citizens' Charter Bill and Electronic Delivery of Services Bill have an inherent overlap, which the government would have to resolve. While the former is listed for passing in this session, the government plans to withdraw the latter and replace it with a new bill. This new bill is not part of the list that is up for consideration and passing this session. To create a reliable method of identifying individuals to facilitate their access to benefits and services the National Identification Authority of India Bill was introduced in Parliament to provide unique identification numbers ("aadhaar") to residents of India. This bill has not been listed for parliamentary approval during this session. Two other pending bills do not find place in the government's legislative agenda for the session either. These include legislation that curbs the holding and transfer of benami property and regulates the procurement process in government departments to ensure transparency, accountability and probity. The Prevention of Bribery of Foreign Public Officials Bill, which imposes penalties on Indian companies and individuals who bribe officials of a foreign government or international agency, is listed for passing this session. Each of these nine bills were introduced in the Lok Sabha. If they are not passed by both Houses before the 15th Lok Sabha is dissolved in 2014, no matter where they are in the legislative process, the bills will lapse. This implies that the entire legislative process will have to start all over again, if and when there is political will to legislate on these issues in the 16th Lok Sabha. The challenges in getting legislation passed by Parliament are many, given that its overall productive time, especially time spent on legislation, is decreasing. Typically, Parliament spends about 25 per cent of its time debating legislation, but in the past few years this average has declined to 15 per cent. While the time lost by the House due to frequent adjournments is difficult to make up, parliamentarians will have to cautious about passing bills without the rigours of parliamentary debate. It is uncertain what the trajectory of the anti-corruption legislation in Parliament will be — enacted as law or resigned to a pool of lapsed legislation.
