NATIONAL LAW INSTITUTE UNIVERSITY

Kerwa Dam Road, Bhopal.

Teaching Assignment

Topic

Consumer Protection Bill, 2015 Proposed Amendments.

Submitted by Praneeta Vinay Gawhale.

Roll No. 2016 LL.M 40.
Enrolment No. B - 0710.

INTRODUCTION

The growing independence of the world economy and international character of many
business practices have contributed to the development of universal emphasis on consumer
rights protection and promotion.
Consumer rights are the rights given to a consumer to protect him or her from being
cheated by the manufacturer or the businessman. Consumer protection laws are designed to
ensure fair trade competition and a free flow of truthful information in the market place.
Thus, these laws are designed to prevent businesses that engage in fraud or specified unfair
trade practices from gaining an advantage over competitors; and also provide additional
protection to the consumers. So, in a way, consumer protection laws are a form of
government regulation which primarily aims to protect rights of consumer.
In India, the Consumer Protection Act, 1986, is an Act of the Parliament of India,
which was enacted in 1986 to protect the interests of the consumers. This legislation helps to
protect consumers from any kind of exploitation by availing the means for hearing and,
considering and finally settling disputes.
The Act was enacted with the aim of providing for the establishment of the
commission to prevent practices having adverse effect on fair competition, thus thereby
promote and sustain fair competition in the market; to protect the consumers interest, by
establishing consumer councils and other authorities for the settlement of consumer disputes;
and to ensure freedom of trade. So, the major focus of the Act was on the prohibition of anticompetitive agreements and of dominant position; and on the advocacy of fair competition
policy.
Thus, the Act intended to clear all hurdles in promoting competition among business
units; and to provide effective and efficient safeguards to the consumers against various types
of exploitations and unfair dealings.
However, despite all this, lately, a number of shortcomings and deficiencies in respect
of the operation of the Act have come to light. As a result of this, consumers are the ultimate
victims of the exploitative practices in different forms such as, adulteration, poor quality, high
prises, deficient services, deceptive advertisements, hazardous products, black marketing, and
so on. Thereby, the Act requires amendments in it.
Some of the important aspects due to which amendments are required in the Act asr as
follows.

NEED FOR AMENDMENT

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Endless Litigation Over the years, the time limit that has been provided in the Act,
has got tossed aside, as cases now drag on for years. Under the Act, technicalities are not to
be encouraged, and the only procedure to be followed is the principle of natural justice. But
this results in endless adjournments, which are invariably granted by the court without
specifying any reason for it. This has also resulted in the accumulation of backlogs.
Tiresome procedure Earlier, just three documents, namely, the complaint, opposite
partys reply, and rejoinder, was sufficient for the procedure, as the dispute was to be settled
according to fairness and principles of natural justice. But now, other documents such as
affidavits, legal paper, and mandatory notarised submissions are also needed, which have
complicated the procedure. Also, after the amendment made in 2003, a fee has to be paid,
instead of the litigation being free.
Need of Lawyers Where once lawyers were not required, and even barred unless the
complainant opted to employ one; today consumer courts are overrun by lawyers, who are
appointed specially by the multinational companies to protect their profit oriented interests.
Unequal Fight The present situation is that, multinational companies can afford to
employ lawyers to protect their interests as a manufacturer. But, most complainants, on the
other hand, cannot afford to employ a lawyer to fight for the loss of a few thousand rupees.
Thus, it becomes an unequal fight between a professional lawyer and a lay consumer.
Lack of availability of staff The registrar of each forum was authorised to sign as
notary for affidavits required to be submitted, at no cost to the complainant. But today, the
position is that most of the forums did not even have a registrar. Similarly, earlier,
complainants used to receive intimation through postcards about dates fixed for a hearing, but
no such intimation is now sent. Such steady degeneration of facilities and entitlements marks
the working of most of the forums in the country.
Thus, because of all these aspects, the consumer is at the ultimate end of injustice,
thus becoming the actual victim all the times.

PROPOSED AMENDMENTS

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The new Consumer Protection Bill 2015 that has been introduced in the monsoon
session of parliament seeks to replace the old Act. Minister of Consumer Affairs, Ram Vilas
Paswan explains the rationale behind the new bill that misleading advertisements, telemarketing, multi-level marketing, direct selling and e-tailing pose new challenges to
consumer protection Hence, there was a need to modernise the act to address the situation
effectively. Thus, the primary motivation to replace the older law with a new one is to
modernise the law with respect to the development of new markets and to further widen the
ambit and a scope of the law to incorporate nuances.
Wider definition of Consumer A consumer is defined as any person who buys a
good or hires a service for a consideration, and also includes any user of such goods or
services, who uses it with the approval of such person. However, it does not include the one
who obtains the good for resale or commercial purposes.
The 2015 Bill proposes to expand the definition of consumer and states that the
expression "buys any goods" and "hires or avails any services" includes the transactions made
through any mode, inclusive of, but not limited to, offline, online through electronic means,
teleshopping or direct selling or multi-level marketing.1
E-commerce In the cases of e-commerce, numerous problems arise as the buyer and
the seller is not dealing face to face. Here, the major problem is that the buyer is not able to
inspect or sample the goods or services; and gets to see the goods only when these are
delivered. So, taking the advantage of the situation, a seller may supply inferior or defective
goods and not take back the goods and refund the price.
Thus, to remedy this, the 2015 Bill gives the right to the consumer to cancel any
contract within 30 days of the delivery of the goods or provision of service 2; and has stated
that refusal of the seller or service provider, to take back the goods or to withdraw the
services is to be treated as an unfair trade practice.
Thus, by virtue of the proposed amendment, every consumer, whether he contracts
through e-commerce or other means, has a right to terminate the contract at his will; and to do
so he merely has to communicate his intention.
Along with this, the Bill requires the electronic intermediary to furnish an address for
service of the notice on the electronic platform from where it provides services and also to
1 Explanation 2 of S.2(1)(d), of 2015 Bill.
2 Section 2(41)(H) of 2015 Bill.
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designate a grievance officer authorizing him to access and process such notice and furnish
such information, documents or records as may be required under the notice.3
Central Consumer protection Authority The Bill proposes to establish an
investigating, prosecuting, reviewing and recommending body namely, the Central Consumer
Protection Authority, to promote, protect and establish the consumer rights.4
This body is to be established by the notification of Central Government 5; to be
headed by a Commissioner6 who would be assisted by five Deputy Commissioners7; and
having head office at Delhi8.
The Bill then provides for the procedure for appointment of the Commissioner stating
that, he shall be appointed by the Central Government from amongst persons not below the
age of forty-five years, who are holding or have held a post equivalent to the post of
Secretary to the Government of India, in the Central Government, or in any State
Government or in any Central or State Public Sector Undertaking or autonomous bodies or
Universities; or persons of eminence in public or social life, who shall be persons of ability,
integrity and standing having special knowledge of and such professional experience of not
less than fifteen years in the areas related to the consumers' rights and welfare, consumers'
policy, law, economics, business, commerce or industry.9
Similarly, the Bill also provides for the procedure of appointment of the Deputy
Commissioners by stating that, they shall be appointed from amongst the persons who are not
below the age of forty years, who are holding or have held a post equivalent to the post of
Joint Secretary to the Government of India, in the Central Government or in any State
Government or in any Central or State Public Sector undertaking, autonomous bodies or
3 S.26 (2A) of the 2015 Bill.
4 S.9 of the 2015 Bill.
5 S.9(1) of the 2015 Bill.
6 S.9(1)(a) of the 2015 Bill.
7 S.9(1)(c) of the 2015 Bill.
8 S.10 of the 2015 Bill.
9 S.9(1)(b) of the 2015 Bill.
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Universities; or persons of eminence in public life with specialisation or having adequate and
expert knowledge with minimum experience of ten years in the areas of consumers rights and
welfare, consumer policy, law, medicine, food safety, health, engineering, product safety,
commerce, economics, public affairs or administration.10
The Bill then provides for the tenure of the Commissioner and the five Deputy
Commissioners to be for a period of five years or up to the age of sixty-five years, whichever
is earlier.11
The Bill provides that objects of Central Authority include12, to protect and enforce
the rights of consumers, (which includes, the right to be protected against the marketing of
goods or products and services which are unsafe or hazardous to life and property, the right to
be informed about the quality, quantity, potency, purity, standard and price of goods or
services, as the case may be); to prevent unfair trade practices; to ensure that no
advertisement is made of any goods or services which is misleading or deceiving or
contravenes the provisions of this Act and rules and regulations made under it; and to ensure
that no person engages himself in unfair trade practices or takes part in the publication of any
advertisement which is false or misleading.
Similarly, the powers and functions of the Authority includes 13, to inquire suo motu or on a
complaint or a direction from the Government into violations of consumer rights and to
launch prosecution in an appropriate forum; to pass orders, on the basis of such investigations
for recall of goods found to be unsafe or withdrawal of services found to be unsafe or
hazardous and direct, on the basis of its investigations, for discontinuation of practices found
to be unfair and prejudicial to consumer interest and order reimbursement; to intervene in any
proceeding in any allegation of violation of consumer rights before a court, with the
permission of such a court; to review safeguards for the protection of consumers and
recommend remedial measures for their effective implementation; to undertake and promote
research in the field of consumer rights; to spread and promote awareness about the rights of
consumers and consumers' literacy; to encourage of non-governmental organisations and
10 S.9(1)(b) of the 2015 Bill.
11 S.9(3) of the 2015 Bill.
12 S.11 of the 2015 Bill.
13 S.12 of the 2015 Bill.
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other institutions working in the field of consumer rights and cooperate and work with
consumer protection agencies; to issue safety notices and alert consumers against unsafe
goods or services held to be unsafe; to order withdrawal of advertisements found to be false
or misleading and direct issuance of corrective advertisements, wherever necessary; to
declare as null and void, terms of contracts found to be unfair to the consumer.
Thus, the Authority has been empowered with wide variety of powers and functions, so that it
can perform its job most effectively.
Consumer Mediation Cell The 2015 Bill explores the avenue of mediation as a
mode of consumer dispute resolution.14 This option is to be exercised on the very first day of
hearing, if it appears to the Commission that there exists possibility of settlement on terms
acceptable to both the parties.15 For this, the Bill provides for the establishment of Consumer
Mediation Cells, which will be attached to the Redressal commissions at the district, state and
national levels16. The District Consumer Mediation Cell is to be established at the state level,
by the notification of the State Government 17; while a National Consumer Mediation Cell is
to be established at the national level by the notification of the Central Government.18
Product Liability The 2015 Bill has proposed to introduce a new chapter, Chapter
VI in the Act, on Product Liability, thereby introducing the much needed concept in the
Consumer Protection Law.
Here, a liability is affixed on the manufacturer or producer and even a product seller
for any personal injury, death or property damage caused to a consumer resulting from
defects in manufacture, construction, design, formula, preparation, assembly, testing, service,
warning, instruction, marketing, packaging, or labelling of any product.19

14 S.27 of the 2015 Bill.

15 S.27(1) of the 2015 Bill.
16 S.56 of the 2015 Bill.
17 S.56(2) of the 2015 Bill.
18 S.56(3) of the 2015 Bill.
19 S.72 of the 2015 Bill.
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Further, the Bill provides for the kind of evidences that the claimant can be shown to
make the manufacturer liable, and it includes, the proof that the product contains a
manufacturing defect or there is a deviation from manufacturing specifications; the product is
defective in design; the product failed to contain adequate instructions of correct use to avoid
danger or warnings of the improper/incorrect use; the product did not conform to an express
warranty with respect to the product made by the manufacturer or product seller; the
defendant was the manufacturer of the actual product that was the cause of harm for which
the claimant seeks to recover compensatory damages; and the dangerous aspect of the
product was the proximate cause of the harm suffered by the claimant.20
The Bill also provides for the situations where the manufacturer would not be held
liable, which includes, the manufacturer has provided warnings or instructions; the product
was sold as a component or material to be incorporated into another product, and the
manufacturer provided warnings or instructions to the next manufacturer; the product was
one that is legally be used only under the supervision of a class of experts and the
manufacturer has given warnings or instructions to the effect; the claimant was under the
influence of intoxicating alcohol or any non-over the counter drug.21
Higher Pecuniary Jurisdiction of District Forum The 2015 Bill has proposed to enhanced
the pecuniary jurisdiction of the District, State as well as National Commission. The
jurisdiction of the District Commission is proposed to enhance to rupees Fifty Lacs or up to
thrice the limit of such value as may be prescribed22.
Increased Penalties As per the 2015 Bill, any person who fails to comply with an order of
either of the Commissions would be liable for imprisonment from one month to three years,
or with a fine from 10,000 rupees to 50,000 rupees. In the Bill, the penalty for filing a
frivolous complaint has also been proposed to be enhanced from Rs. 10,000/- to Rs. 50,000/to minimize baseless and false complaints.23
Unfair Contract Terms The Bill provides for cancelation of unfair terms and
conditions in a contract to protect the exploitation of the consumers by traders or service
20 S.73 of the 2015 Bill.
21 S.74 of the 2015 Bill.
22 S.23 of the 2015 Bill.
23 S.54 of the 2015 Bill.
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providers. It recognises that there is no place for unfair contract terms in consumer
contracts. This necessarily means that a contract is binding but not the unfair terms in it. If,
however, the cancellation of such unfair terms goes to the root of the contract, the contract
would be held void.24
Pre-Pay the Decree Amount In the 2015 Bill, one of the interesting new additions
in order to minimize frivolous litigation is the requirement to deposit fifty per cent of the total
amount that the defendant has been asked to pay in terms of the appealable order in case he
intends to prefer an appeal to an appellate Commission.25
Enforceability of the Order Unlike the Consumer Protection Act, the Bill makes
any and every order passed by the District Commission, State Commission and National
Commission enforceable as if it were a decree passed by a court in a suit pending before it.26
Power of Review The District Commission and the State Commission are given
power to review their own orders in case there is an error apparent on the face of it.27

IMPACT ON CONSUMERS
The most important impact that the 2015 Bill will have, will be in the area of e-commerce.
The use of internet for purchasing products, the online mode of payment, and such other
digital activities raise a number of issues with regard to consumer protection. So it is often
contended that consumers face a variety of threats when shopping online, because of various
unethical aspects of e-commerce, such as misleading advertisements to consumers, online
multi-level marketing, direct selling practices and so on. The new bill proposes to cover all
such shortcomings by acknowledging the new consumer trends emerging through the ecommerce platform.

24 S.2(42) of the 2015 Bill.

25 Proviso to S.29 of the 2015 Bill.
26 S.52 of the 2015 Bill.
27 S.28(2B) of the 2015 Bill.
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Then, by giving wide variety of powers to the consumer protection authority, specially
their power to look into the matter suo moto, it will have a deterrent effect on the
manufacturers as well as on the service providers. This will result in the better protection of
the rights of the consumers.
Also, the provision in the Bill which authorises the consumers to cancel the contract,
if the product is defective, gives a wider authoritative position to the consumers over the
manufacturers or the service providers. Similarly, the non-applicability of unfair contract
terms also protects the consumers from the unjust liability under the contract.
Further, by increasing the amount of penalty that can be imposed in case of frivolous
complaints, the instances of such complaints would decrease and can be kept check on.
Furthermore, by institution the provision of mediation as one of the mode of dispute
settlement, it would reduce the expenses of the consumers in this process; and also reduce the
time frame that is required in such process.

CRITIQUE
Despite all these amendments, the Consumer Protection Bill, 2015 is facing criticism
on many aspects.
Firstly, the proposal for creating an authority has created an institutional rivalry. The
NCDRC, the apex consumer forum, has objected that the government is creating a parallel
jurisdiction by creating another body with similar judicial powers. These equivalent powers
which are granted to the proposed authority will overlap with that of the judiciary, which is
not only undesirable but may also lead to greater complexities. This is likely to make process
of consumer grievance redressal more complex and burdensome.
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Secondly, the draft bill also provides for mediation as a mechanism to resolve the
disputes. Introduction of such a provision is likely to frustrate the ends of the justice on
account of further delaying the process of settlement. Also, provisions pertaining to
appointment of mediators could act as a breeding ground for corruption leaving the weaker
party helpless.
Thirdly, the bill recognisees that the authority has an adjudicatory function and it
should follow natural justice in making decisions. However, the details of the process are left
for the rule-making powers of the central government. Here, the authority will be dealing
with a number of varied cases, whereby the adjudication process will invariably get
challenged before the courts on numerous grounds. Thus, it would be best if the procedure to
be followed by the Authority for adjudication is specified in the Act itself.
Fourthly, the Bill could have proposed for the enactment of a separate Act to regulate
e-commerce transactions. Since, e-commerce transactions differ in various aspects from an
ordinary contract, therefore there is need for separate law in order to effectively deal with the
issues of e-commerce. Similarly, looking at the sheer volume of advertisements, a specialised
body is needed for addressing the concerns of unfair trade practices. Thus, it would have been
better if the Consumer Protection Authority would have emerged as a specialised body on the
issue of unfair trade practices only.
Fifthly, the Bill states that the electronic intermediaries must furnish their detail
information on their websites; however, the Bill does not prescribe any process to ensure its
compliance and neither contains any kind of detriment, in case such directions have not been
met with.
Thus, though the Bill brings about many positive changes, it still needs to be revised.

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