CENTRAL CONSUMER PROTECTION AUTHORITY

[Mr. M. GOVINDARAJAN]

Introduction

The Consumer Protection Act, 1986 was enacted to provide for better protection of the interests of the consumers and for the purpose of making provision for establishment of consumer protection councils and other authorities for settlement of consumer disputes etc.,  The Central Government noticed several shortcomings in the administration of the various provisions of the said Act. The emergence of global supply chain, rise in international trade and the rapid development of e-commerce have led to new delivery systems for goods and services and have provided new options and opportunities for consumers.  This has rendered the consumer vulnerable to new forms of unfair trade and unethical business practices. Misleading advertisements, tele-marketing, multi level marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive interventions to prevent consumer detriment.

Central Consumer Protection Authority

The Central Government introduced the Consumer Protection Bill, 2018 in the Lok Sabha with the proposal to repeal the existing Consumer Protection Act, 1986.  The new Bill provides for the establishment of an executive agency as the Central Consumer Protection Authority (‘Authority’ for short) to-

• promote, protect and enforce the rights of the consumers;
• make interventions when necessary to prevent consumer detriment arising from unfair trade practices. And
• to initiate class action including recall, refund and return of products etc.,

Establishment of Authority

The Central Government shall, by notification, establish with effect from such date as it may specify in that notification, a Central Consumer Protection Authority to be known as the Central Authority to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote and enforce the rights of consumers as a class.

Members of Authority

The Authority shall consist of a Chief Commissioner and such number of other Commissioners as may be prescribed to be appointed by the Central Government.

Location of Authority

The headquarters of the Authority shall be at such place in the National Capital Region of Delhi. It shall have regional and other offices in any other place in India as the Central Government may decide.

Qualification of members

The Central Government may, by notification, make rules to provide for the qualifications for appointment, method of recruitment, procedure for appointment, term of office, salaries and allowances, resignation, removal and other terms and conditions of the service of the members of the Authority.

Powers and functions of the Authority

The Authority shall regulate the procedure for transaction of its business and allocation of its business amongst the Chief Commissioner and Commissioners as may be specified by regulations.  The Chief Commissioner shall have the powers of general superintendence, direction and control in respect of administrative matters of the Authority.

The Authority shall-

• protect, promote and enforce the rights of consumers as a class and prevent violation of consumers rights;
• prevent unfair trade practices and ensure that no person engages himself in unfair trade practices;
• ensure that no false or misleading advertisement is made of any goods or services which contravenes the provisions of this Act or the rules or regulations made there under;
• ensure that no person takes part in the publication of any advertisement which is false or misleading.

For the above purposes, the Authority may-

• inquire or cause an inquiry or investigation to be made into violations of consumer rights or unfair trade practices, either suo motu or on a complaint received or on the directions from the Central Government;
• file complaints before the District Commissioner, the State Commission or the National Commission;
• intervene in any proceedings before the District Commissioner or State Commission or National Commission, in respect of any allegation of violation of consumer rights or unfair trade practices;
• review the matters relating to, and the factors inhibiting enjoyment of consumer rights, including safeguards provided for the protection of consumers under any other law for the time being in force and recommend appropriate remedial measures for their effective implementation;
• recommend adoption of international covenants and best international practices on consumer rights to ensure effective enforcement of consumer rights;
• undertake and promote research in the field of consumer rights;
• spread and promote awareness on consumer rights;
• encourage non Governmental organizations and other institutions working in the field of consumer rights to co-operate and work consumer protection agencies;
• mandate the use of unique and universal goods identifiers in such goods, as may be necessary, to prevent under unfair trade practices and to protect consumers’ interest;
• issue safety notices to alert consumers against dangerous or hazardous or unsafe goods or services;
• advise the Ministries and Departments of the Central and State Governments on consumer welfare measures;
• issue necessary guidelines to prevent unfair trade practices and protect consumers’ interest.

Investigation wing

The Authority shall have an investigation wing headed by a Director General for the purpose of conducting inquiry or investigation. The Central Government may appoint a Director General or such number of Additional Director-General, Director, Joint Director, Deputy Director and Assistant Director from amongst persons who have experience in investigation and possess such qualifications. 

The inquiries or the investigations made by the Director General shall be submitted to the Authority in such form, in such manner and within such time as may be specified by the regulations.

District Collector

The District Collector may, on a complaint or on a reference made to him by the Authority or the Commissioner of a regional office, inquire into or investigate complaints regarding violation of rights of consumers as a class, on matters relating to violations of consumer rights, unfair trade practices and false or misleading advertisements, within his jurisdiction and submit his report to the Central Authority or to the Commissioner of a regional office, as the case may be.

Complaints to Authorities

A complaint relating to violation of consumer rights or unfair trade practices or false or misleading advertisements that are prejudicial to the interests of consumers as a class, may be forwarded either in writing or in electronic mode, to any of the authorities, namely, the District Collector or the Commissioner of regional office or the Authority.

Authority to refer for investigation

The Authority may, after receiving any information or complaint or directions from the Central Government or of its own motion, conduct or cause to be conducted a preliminary inquiry as to whether there exists a prima facie case of violation of consumer rights or any unfair trade practice or any false or misleading advertisement, by any person, which is prejudicial to the public interest or to the interests of consumers. If it is satisfied that there exists a prima facie case, it shall cause investigation to be made by the Director General or by the District Collector. 

After the preliminary inquiry, the Authority is of the opinion that the matter is to be dealt with by a Regulator established under any other law for the time being in force, it may refer such matters to the concerned regulation along with its report.  For this purpose, the Authority may call upon a person to produce any document or record in his possession.

Recalling of goods

If the Authority is satisfied on the basis of investigation that there is sufficient evidence to show violation consumer rights etc., by a person it may pass such order as may be necessary including-

• recalling of goods or withdrawal of services which are dangerous, hazardous or unsafe;
• reimbursement of the prices of goods or services so recalled to purchasers of such goods or services; and
• disconnection of practices which are unfair and prejudicial to consumers’ interest.

The Authority shall give the person an opportunity of being heard before passing such order.

Directions

If the Authority is satisfied after investigation that any advertisement is false or misleading and is prejudicial to the interest of any consumer or is in contravention of consumer rights, it may, by order, issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher to discontinue such advertisement or to modify the same in such manner and within such time as may be specified in that order.

Prohibition

If the Authority deems it necessary, it may, by order, prohibit such endorser of a false or misleading advertisement from making endorsement of any product or service for a period which may extend to one year.  For every subsequent contravention, the Authority may prohibit such endorser from making in respect of any product or service for a period which may extend to three years.

Penalty

If the Authority is of the opinion that it is necessary to impose a penalty in respect of such false or misleading advertisement, by a manufacturer or endorser, it may, by order, impose on manufacturer or endorser a penalty which may extend to ₹ 10 lakhs.

If any person is found to publish or is a party to the publication of a misleading advertisement, the Authority may impose on such person a penalty which may extend to ₹ 10 lakhs.

No endorser shall be liable to penalty if he has exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by him. 

    Likewise no person shall be liable to penalty if he proves that he had published or arranged for the publication of such advertisement in the ordinary course of his business. No such defence shall be available to such person if he had previous knowledge of the order passed by the Authority for withdrawal or modification of such advertisement.

While determining the penalty under this section, regard shall be had to the following-

• the population and the area impacted or affected by such offence;
• the frequency and duration of such offence;
• the vulnerability of the class of persons likely to be adversely affected by such offence; and
• the gross revenue from the sales effected by virtue of such offence.

The Authority shall give the person an opportunity of being heard before an order is passed. 

Appeal

A person aggrieved by any order passed by the Authority may file an appeal to the National Commission within a period of 30 days from the date of receipt of the order.

Offences and penalties

Whoever fails to comply with any direction of the Authority shall be punished with imprisonment for a term which may extend to six months or with fine which may extend to ₹ 25 lakhs or with both.

Any manufacturer or service provider who caused a false or misleading advertisement to be made which is prejudicial to the interest of consumers shall be punished with imprisonment for a term which may extend to two years and with fine which may extend to ₹ 10 lakhs and for every subsequent offence, be punished with imprisonment for a term which may extend to five years and with fine which may extend to ₹ 50 lakhs.

Compounding of offence

The Authority or any officer as may be specially authorized by him in this behalf may compound offences as stated above, on payment of such amount as may be prescribed.  No compounding of such offence shall be made without the leave of the Court before which a complaint has been filed.  Such sum shall not, in any case, exceed the maximum amount of fine, which may be imposed under this Act for the offence so compounded.

Where an offence has been compounded no proceeding or further proceeding shall be taken against the offender in respect of the offence so compounded.

Power to make regulations

The Authority may, with the previous approval of the Central Government, by notification, make regulations not inconsistent with this Act, for the purpose of giving effect to the provisions of this Act.  Such regulations may provide for all or any of the following matters-

• the procedure for engaging experts and professionals and the number of such experts and professionals;
• the procedure for transaction of business and the allocation of business of the Chief Commissioner and Commissioner;
• the form, manner and time which, inquiries or investigation made by the Director General shall be submitted to the Central Authority;
• such other matter for which provision is to be, or may be made by regulation.