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 The Bill was withdrawn and replaced with the Consumer Protection Bill, 2018.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.
On January 17, 2020, the Ministry of Health and Family Welfare acknowledged the emergence of a new coronavirus (COVID-19) that was spreading across China.[1] On March 11, 2020, the World Health Organisation declared the COVID-19 disease to be a global pandemic. As of April 7, 2020, there are 4,421 confirmed cases of COVID-19 in India.[2] Of these, 326 patients have been cured/discharged and 114 have died.1
As the spread increased and more information about the virus was uncovered, the central government announced several policy decisions to contain it. Further, measures were also announced to support citizens and businesses who were affected by such containment measures. In this blog post, we summarise some of the key measures taken by the central government in this regard as of April 7.
Source: Ministry of Health and Family Welfare, PRS.
Movement restrictions
21-day lockdown in the country
The Ministry of Home Affairs announced a 21-day lockdown to contain the spread of COVID-19 from March 25, 2020 to April 14, 2020.[3] During the lockdown, all establishments, other than those providing essential goods and services, and those involved in agricultural operations, have been closed. Essential goods include items such as food, medicine, and electricity. Essential services include banking services, telecommunications, and pharmaceuticals. Transportation of all goods (essential or non-essential) will remain functional. [4],[5],[6],[7],[8]
All state/UT governments have been directed to: (i) arrange for shelter and food for the needy, including migrant workers, (ii) quarantine migrant workers for at least 14 days, (iii) direct employers to pay wages during the lockdown, and (iv) ensure landlords do not demand rent from workers and students for one month.[9]
Financial aid
Pradhan Mantri Garib Kalyan Yojana to provide relief against COVID-19
On March 26, the Finance Minister announced a relief package of 1.7 lakh crore rupees under the Pradhan Mantri Garib Kalyan Yojana for the poor.[10] Key features of the package are:10,[11]
Insurance cover of Rs 50 lakh will be provided to health workers (such as doctors, nurses, paramedics and ASHA workers) who are treating patients of COVID-19.[12]
Five kilograms of wheat or rice and one kilogram of preferred pulses will be provided for free every month to poor families for the next three months.
Women account holders under the Pradhan Mantri Jan Dhan Yojana will get Rs 500 per month between April and June, and poor families will be given three free gas cylinders over the next three months.
Extension and relaxation in payment of taxes
The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 was promulgated on March 31, 2020.10 The Ordinance provides certain relaxations, such as extension of time limits and waivers of penalties, in relation to specified laws. These include the Income Tax Act, 1961 (IT Act), some Finance Acts, and the Prohibition of Benami Property Transactions Act, 1988. Key provisions under the Ordinance include:
Extension of time limits: The Ordinance extends the time limits (for the period between March 20, 2020 to June 29, 2020) for compliance of certain actions such as: (i) issuing notifications, completing proceedings, and passing orders by authorities and tribunals, (ii) filing of appeals, replies, and applications, and furnishing documents, and (iii) making any investment or payment for claiming deductions or allowances under the IT Act.
Interest and penalty: Payment of any tax, made before June 30, 2020 (or any further date specified by the government), will not be liable for prosecution or penalty. Also, the rate of interest payable for the delay in payment will not exceed 0.75% per month.
Donations to PM CARES Fund: Donations made by a person to the PM CARES Fund will be eligible for 100% tax deduction.
GST compliances: The central government may notify extension to time limits for various compliances under the Central Goods and Services Tax Act, 2017.
Measures by RBI to address the financial stress caused by COVID-19
The Reserve Bank of India (RBI) also announced several measures to address the stress in the economy caused by COVID-19.[13],[14],[15] Key measures are detailed below:
Cutting Policy Rates: The repo rate (the rate at which RBI lends money to banks) was reduced from 5.15% to 4.4%. The reverse repo rate (the rate at which RBI borrows money from banks) was reduced from 4.9% to 4.0%.
Liquidity management: Measures are being taken to expand liquidity in the market to ensure that financial markets and institutions can function normally. These measures include the reduction of the Cash Reserve Ratio (CRR) for all banks from 4% to 3% till March 26, 2021. CRR is the amount of liquid cash that banks have to maintain with the RBI, as a percentage of their total deposits. These steps are expected to inject total liquidity of Rs 3.74 lakh crore.
Relief to borrowers in repayment of loans: All banks and financial institutions (including NBFCs) are permitted to grant a moratorium of three months on payment of all term loan instalments (including agricultural, retail and crop loans) and interest on working capital loans (such as overdraft facilities), which are due between March 1, 2020 and May 31, 2020.
Short term credit to states
The Reserve Bank of India (RBI) has constituted an Advisory Committee to review the Ways and Means Advances (WMA) limits for states and UTs. WMA limits refer to temporary loans given by the RBI to state governments. Until the Committee submits its final recommendations, the WMA limit has been increased by 30% from the existing limit, for all states and UTs. The revised limits will be in force between April 1 and September 30, 2020.[16]
PM CARES Fund
The central government has set up a national fund to deal with emergencies like the COVID-19 pandemic. The public charitable trust known as the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) will provide relief to those affected by COVID-19. The trust is chaired by the Prime Minister and includes members such as the Defence Minister, Home Minister, and Finance Minister.[17]
Donations made by a person to the PM CARES Fund are 100% tax deductible.[18] Non-residents can also contribute to the Fund through foreign inward remittances.[19]
Health measures
COVID-19 testing
Currently, government facilities are offering free of cost diagnosis to all individuals with COVID-19 symptoms.[20] Further, the government has approved certain private laboratories to test individuals for COVID-19. The cost of screening in private labs may not exceed Rs 4,500.[21] As of April 7, there are 136 government testing centres for analysing samples of COVID-19 and 3 additional collection centres.[22] Further, there were 59 private labs offering testing in 12 states. These states are Delhi, Maharashtra, Kerala, West Bengal, Uttar Pradesh, Telangana, Tamil Nadu, Odisha, Karnataka, Haryana, Uttarakhand and Gujarat.[23]
The Ministry of Health and Family Welfare has also laid down guidelines for those who may be tested at these laboratories. These include: (i) symptomatic contacts of those who have tested positive for COVID-19, and (ii) symptomatic persons with a travel history to COVID-19 affected countries, (iii) symptomatic healthcare workers, and (iv) persons with severe respiratory diseases.21
Containment plan for large outbreaks
The Ministry of Health and Family Welfare has created a plan to contain the spread of the COVID-19 disease. Some of the measures suggested in the plan include:[24]
Geographic quarantine: This strategy requires the restriction of movement of people to and from a defined geographic area where there is a large outbreak.
Cluster Containment: This strategy will contain the disease within a defined geographic area by early detection of cases. Cluster containment will include geographic quarantine, social distancing, testing all suspected cases, and awareness amongst the public.
Restrictions on export of medicines and medical equipment
The central government placed restrictions on the export of certain medical equipment and medication so as to ensure its availability in India. For example, the export of ventilators, surgical masks, diagnostic kits, and medications such as paracetamol and hydroxychloroquine is restricted.[25],[26],[27],[28]
Travel restrictions
Domestic and international travel banned; issue of visas suspended
Civil Aviation: All passenger domestic air travel within the country is banned from March 24 till April 14, 2020.[29],[30] All international commercial passenger travel has been banned till April 14, 2020 (cargo and certain other flights are exempted).[31] All existing visas issued to nationals of any country except those issued to diplomats, officials, UN/international organisations, employment and project visas are suspended from March 13 till April 15, 2020.[32]
Railways: Indian Railways suspended all passenger trains till April 14, 2020.[33] Transportation of essential commodities will continue.[34] Railways has also made parcel vans available for quick transportation for e-commerce companies and other customers including state governments to transport certain goods. These include medical supplies, medical equipment, food, etc. in small parcel sizes.[35]
For a detailed summary of the main policy decisions taken by the central government with regard to COVID-19, please see here.
For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.
[1] Novel coronavirus outbreak in China, Ministry of Health and Family Welfare, January 17, 2020, https://www.mohfw.gov.in/pdf/TraveladvisorytotravelersvisitingChina17012020.pdf.
[2] Ministry of Health and Family Welfare website, last accessed on March 31, 2020, https://www.mohfw.gov.in/index.html.
[3] Order No. 1-29/2020-PP, National Disaster Management Authority, March 24, 2020, https://mha.gov.in/sites/default/files/ndma%20order%20copy.pdf.
[4] Order No. 40-3/2020-DM-I(A), Ministry of Home Affairs, March 24, 2020, https://mha.gov.in/sites/default/files/MHAorder%20copy.pdf.
[5] “Guidelines on measures to be taken by Ministries/Department of Government of India, State/Union Territory Governments and State/Union Territory Authorities for containment of COVID-19 Epidemic in the Country”, Ministry of Home Affairs, March 24, 2020, https://mha.gov.in/sites/default/files/Guidelines.pdf.
[6] Second Addendum to Order No. 40-3/2020-DM-I(A), Ministry of Home Affairs, March 24, 2020, https://mha.gov.in/sites/default/files/PR_SecondAddendum_27032020.pdf.
[7] “Consolidated Guidelines on the measures to be taken by Ministries/Departments of Government of India, State/Union Territory Governments and State/Union Territory Authorities for containment of COVID-10 Epidemic in the Country, as notified by the Ministry of Home Affairs on 24.03.2020 and further modified on 25.03.2020 and 27.03.2020”, Ministry of Home Affairs, https://mha.gov.in/sites/default/files/PR_ConsolidatedGuidelinesofMHA_28032020.pdf.
[8] D.O. No. 40-3/2020-DM-I(A), Ministry of Home Affairs, March 29, 2020, http://164.100.117.97/WriteReadData/userfiles/3rd%20Addendum%20to%20Lockdown%20Guidelines%20on%20exempted%20Goods%20and%20Services.pdf.
[9] Order No. 40-3/2020-DM-I(A), Ministry of Home Affairs, March 29, 2020, https://mha.gov.in/sites/default/files/MHA%20Order%20restricting%20movement%20of%20migrants%20and%20strict%20enforement%20of%20lockdown%20measures%20-%2029.03.2020.pdf.
[10] “Finance Minister announces Rs 1.70 Lakh Crore relief package under Pradhan Mantri Garib Kalyan Yojana for the poor to help them fight the battle against Corona Virus”, Press Information Bureau, Ministry of Finance, March 26, 2020.
[11] “Monetary and Fiscal policy response by Government of Indian and Regulators”, Department of Economic Affairs, Ministry of Finance, March 27, 2020, https://dea.gov.in/sites/default/files/India%20economic%20policy%20response%20on%20%20COVID%2019%20Fiscal%20and%20Monetary%20as%20on%2027032020.pdf.
[12] “Pradhan Mantri Garib Kalyan Package: Insurance Scheme for Health Workers Fighting COVID-19”, Press Information Bureau, Ministry of Health and Family Welfare, March 29, 2020.
[13] Seventh Bi-Monthly Policy Statement 2019-20”, Press Release, Reserve Bank of India, March 27, 2020, https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR2129F5E23A447E0F4A00955429716C53F5A2.PDF.
[14] “Statement on Developmental and Regulatory Practices”, Reserve Bank of India, Press Releases, March 27, 2020, https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=49582.
[15] “COVID-19 – Regulatory Package”, Notifications, Reserve Bank of India, March 27, 2020, https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11835.
[16] RBI announces further measures for dealing with the COVID-19 pandemic, Reserve Bank of India, April 1, 2020, https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR2167BA409AC37FA8460497BA0C9B283E5DD9.PDF.
[17] Appeal to generously donate to ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)’, Press Information Bureau, Prime Minister’s Office, March 28, 2020, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1608851.
[18] The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, Gazette of India, Ministry of Law and Justice, March 31, 2020, http://www.egazette.nic.in/WriteReadData/2020/218979.pdf.
[19] Rupee Drawing Arrangement – Remittance to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM-CARES) Fund, Reserve Bank of India, April 3, 2020, https://rbidocs.rbi.org.in/rdocs/Notification/PDFs/NOT2087A69F5158C174585A46C69B78BD96DBD.PDF.
[20] Strategy for COVID-19 testing in India, India Council for Medical Research, Ministry of Health and Family Welfare, March 17, 2020, https://www.mohfw.gov.in/pdf/LabTestingAdvisory.pdf.
[21] Guidelines for COVID-19 testing in private laboratories in India, Ministry of Health and Family Welfare, March 21, 2002 https://www.mohfw.gov.in/pdf/NotificationofICMguidelinesforCOVID19testinginprivatelaboratoriesiIndia.pdf.
[22] Government Approved Laboratories by ICMR, Ministry of Health and Family Welfare, April 7, 2020. https://icmr.nic.in/sites/default/files/upload_documents/Govt_Labs_functional_for_COVID19_testing_05042020.pdf.
[23] Private Approved Laboratories by ICMR, Ministry of Health and Family Welfare, April 7, 2020. https://icmr.nic.in/sites/default/files/upload_documents/Private_Labs_06042020.pdf.
[24] Containment Plan for Large Outbreaks, Ministry of Health and Family Welfare, April 4, 2020, https://www.mohfw.gov.in/pdf/3ContainmentPlanforLargeOutbreaksofCOVID19Final.pdf.
[25] S.O. 1171(E), Amendment in Export Policy of Masks, Ventilators and textile raw material for masks and coveralls, Ministry of Commerce and Industry, March 19, 2020, http://egazette.nic.in/WriteReadData/2020/218857.pdf.
[26] S.O. 955(E), Amendment in Export Policy of APIs and formulations made from these APIs, Ministry of Commerce and Industry, March 3, 2020, http://egazette.nic.in/WriteReadData/2020/216551.pdf.
[27] Notification no. 01/2015-2020, Amendment in Export Policy of Hydroxychloroquine, Ministry of Commerce and Industry, April 4, 2020, https://prsindia.org/files/covid19/notifications/1492.IND_Export_Restriction_Hydroxychloroquine_Apr_4.pdf.
[28] Notification no. 59/2015-2020, Amendment in Export Policy of Diagnostic Kits, April 4, 2020, https://prsindia.org/files/covid19/notifications/1491.IND_Export_Restriction_Diagnostic_Kits_Apr_4.pdf.
[29] AV. 11011/1/2020-US(AG) Office-MOCA, Ministry of Civil Aviation, March 23, 2020, https://www.civilaviation.gov.in/sites/default/files/Revised-%20COVID-19%20-%20Order%20under%20Section%208B.pdf.
[30] No.4/1/2020-IR, Director General of Civil Aviation, March 27, 2020, https://dgca.gov.in/digigov-portal/Upload?flag=iframeAttachView&attachId=130618666.
[31] No.4/1/2020-IR, Director General of Civil Aviation, March 26, 2020, https://dgca.gov.in/digigov-portal/Upload?flag=iframeAttachView&attachId=130618625.
[32] No.4/1/2020-IR, Director General of Civil Aviation, January 30 to March 17, 2020, https://dgca.gov.in/digigov-portal/Upload?flag=iframeAttachView&attachId=130617742.
[33] “Ministry of Railways extends Cancellation of Passenger Train Services till 2400 hrs of 14th April, 2020”, Press Information Bureau, Ministry of Railways, March 25, 2020.
[34] “Transportation of essential commodities to various parts of the country by Indian Railways continues at full speed”, Press Information Bureau, Ministry of Railways, March 30, 2020.
[35] “Indian Railways to run Special Parcel Trains for carriage of essential items in small parcel sizes during the complete lockdown in fight against COVID-19”, Press Information Bureau, Ministry of Railways, March 29, 2020.
