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Consumer Protection Bill, 2018: Need for a Strong Regulatory Regime

Consumer Protection Bill, 2018: Need for a Strong Regulatory Regime
An awareness drive launched by the India Consumer Protection and Action Committee in Ahmedabad/Photo: UNI
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Above: An awareness drive launched by the India Consumer Protection and Action Committee in Ahmedabad/Photo: UNI

Before a new bill is introduced in the soon to be elected 16th Lok Sabha, the consumer disputes redressal mechanism should be overhauled to provide simple resolution without the presence of lawyers


By Pushpa Girimaji

While inaugurating a panel discussion on the Consumer Protection (CP) Bill, 2018, organised by a media group on March 1, Union Consumer Affairs Minister Ram Vilas Paswan regretted that he could not get the Bill, which was to replace the CP Act of 1986, passed by both Houses of Parliament. With the term of the present Lok Sabha coming to an end, the Bill, passed only by the Lower House, will die a natural death and has to be introduced in Parliament once again by the new government that takes oath after the parliamentary elections.

Considering that the Bill was first introduced in the Lok Sabha in 2015, the government’s failure to push it through both Houses of Parliament during its tenure is indeed disconcerting. However, given my personal involvement in the first draft of the Bill and my disappointment with the final version, I feel relieved that it lapsed and there is still an opportunity to improve on it.

But first, let me explain why the Consumer Protection Act of 1986, hailed at one time as the panacea for all consumer ills, needs to be replaced. In all fairness, I must say that the 1986 law was a milestone in the history of consumer protection in India because for the first time, it gave Indian consumers their six basic rights and created an alternative system for resolution of consumer disputes in the country. When first constituted, these tribunals opened the floodgates of consumer litigation in the country and many landmark judgments delivered by the apex consumer court and the Supreme Court further fortified the consumer rights encapsulated in the law.

But unfortunately, the concept of consumer protection envisaged in the law was erroneous. Even though it listed the rights of consumers, it failed to provide a regulator to enforce those rights and instead, entrusted the “promotion and protection” of consumer rights to toothless, advisory bodies called Consumer Protection Councils at the national, state and the district levels (many of whom are not even functioning).

Take, for example, the very first right specified in the 1986 law—the right to safe goods and services. The law did not bestow a mechanism (like the Consumer Product Safety Commission in the US or similar machinery in the European Union) to collect data on product or service related injuries and deaths, investigate them, order recall of unsafe goods and protect consumers from harm. Instead, the law provided for the enforcement of just one right—the right to redress of grievances and lawmakers hoped that the adjudicatory body, with its power to award compensation, would instill fear of the law, discipline trade and industry, and prevent practices inimical to consumer interest.

The idea was obviously flawed because an adjudicatory body cannot do the work of a regulator. And consumer courts certainly could not achieve that objective partly because of the lacunae in the law itself and partly because of the way they functioned. Even though the idea behind the creation of consumer courts was to provide simple and quick resolution of consumer disputes without lawyers, the law was drafted in such a way that it was an open invitation to lawyers. And they did come in large numbers and brought with them all the trappings of a civil court.

Soon, the increasing presence of  lawyers, repeated adjournments given at their behest, legalese bandied about in the court, complicated procedures adopted by the adjudicating members (particularly the judicial members) and their insensitivity to consumer suffering and the miserly computation of compensation all took away the promise of “inexpensive, quick and simple justice”.

Quick to take advantage of these pitfalls in the system were retailers, manufacturers and service providers, who found that by routinely appealing against the orders of the consumer courts (District Forum to State Commission to National Commission and the Supreme Court), they could prolong the adjudication process for years and effectively discourage consumers from filing complaints.

A good example of how delays defeated the very essence of the law can be found in the class action suit filed by 130 distressed farmers from Maharashtra against defective hybrid cotton seeds sold to them. They eventually won the case, but it took 14 years and during this time, 10 farmers died (RP no 524 of 1997, RP no 718 to 753 of 1999 and others).

To improve the quality of consumer justice, the Union ministry of consumer affairs amended the law several times—in 1991, 1993 and 2002. Its efforts to tweak it further in 2011 failed as the Bill lapsed. But when the basic structure itself is faulty, mere scratching on the surface will not help. As part of the 2002 amendments, the lawmakers made it mandatory for consumer forums to resolve complaints within 90 days. But that came too late because by then, the consumer courts had already imbibed some of the worst features of civil litigation in the country.

About a decade after their inception, consumer courts resolved only 32 percent of the complaints within 90 days (as per data provided in the agenda note for the 19th CCPC meeting).

But a subsequent evaluation of the working of the forums done by the Indian Institute of Public Administration in 2013 showed that only 10.2 percent of the cases were resolved within three months. From the time of their inception, 48,85,877 cases have been filed before these courts and 91.03 percent of them disposed of.

In 2014, the government constituted a committee to  consider the recommendations of the Parliamentary Standing Committee submitted in 2013 on the (by then lapsed) Amendment Bill, 2011. As a member of the Committee headed by S Gurucharan, then additional secretary in the ministry of consumer affairs, I ar­gued strongly for a regulatory authority and this was readily accepted by the Chair.

Since the government decided that in addition to the regulatory body—the Central Consumer Protection Autho­rity—it would also introduce a chapter on product liability for any injury, death or destruction of property caused on account of a defective product and also provide for mediation as an alternative dispute redress mechanism (ADRM), it was decided to draft a new bill to replace the old.

The first draft underwent several changes following consultations with stakeholders before being introduced in the Lok Sabha in August 2015. The Bill was reintroduced in January 2018 after taking into consideration the recommendations of the Standing Committee on Food, Consumer Affairs and Public Distribution submitted in April 2016. The Bill was passed by the Lok Sabha on December 20, 2018.

Certainly, the Bill is more in tune with modern-day concepts of consumer protection, new market dynamics and developments in the digital age. It deals with unfair contracts and e-commerce issues; it provides for e-filing of complaints and product liability suits. It provides for mediation in addition to the earlier system of consumer justice and empowers the Central Consumer Protection Authority or the regulator to recall unsafe goods or services, order reimbursement of their price, put a stop to unfair trade practices including false and misleading advertisements, order investigations into violations of consumer rights and in general, promote, protect and enforce the rights of consumers as a class.

However, the law needs to be tweaked further so that we are not stuck with a bad law once again. For example,  instead of providing mediation cells as an alternative to consumer courts and spending taxpayers’ money on mediators, lawmakers should completely overhaul the consumer disputes redress mechanism to provide simple resolution of disputes without the presence of lawyers. One must also remember that a strong regulatory regime will considerably bring down consumer complaints.

It is also extremely important to strengthen the regulatory authority and remove a number of inconsistencies, ambiguities and weaknesses that dilute the regulatory framework in the Bill. For example, there is too much focus on misleading advertisements and too little on consumer safety. The Bill, for example, provides for a steep fine and even imprisonment of two-five years for false or misleading advertisements. For storing, selling, distributing, manufacturing or importing spurious goods or products containing adulterants, imprisonment can extend to life. However, for unsafe products and services, which lead to large-scale deaths and injuries in the country, there is no such penalty.

In fact, the 2015 Bill provided for a chief commissioner and five commissioners dealing with 1) safety of goods and services, 2) Unfair trade practices including false and misleading advertisements, 3) quality assurance and standards, 4) preventing consumer detriment and unfair contracts and 5) enforcement of consumer protection laws.

The 2018 Bill is, however, ambiguous on the number of commissioners or their area of work. Of equal concern is Section 23 which says that the government may designate any statutory authority or body to exercise the powers and perform the functions of the Central Authority.

In short, considerable changes are required in the Bill to make the law work effectively for the good of consumers. So I am now drawing up my wish list in the hope that they will be considered when the Bill is re-introduced in the new Lok Sabha.

—The writer is an author and a pioneer in consumer advocacy journalism in India

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