Product liability’ (Section 82-87)

 The term ‘Product liability’ has been defined as the responsibility of the product manufacturer
or the product seller to compensate for any harm that may be caused to the consumer by the
defective product or by deficiency in services relation thereto.
 A product liability claim may be brought against either or all the parties

Definition of Product Manufacturer, Product Service Provider and Product Seller

Product Manufacturer

Product Manufacturer means a person who,

i. makes any product or parts thereof

ii. assembles parts thereof made by others

iii. puts or causes to be put his own mark on any products made by any other person

iv. makes a product and sells, distributes, leases, installs, prepares, packages, labels, markets, repairs,
maintains such product or is otherwise involved in placing such product for commercial purpose

v. designs, produces, fabricates, constructs or re-manufactures any product before its sale vi. being a
product seller of a product, is also a manufacturer of such product.

Product Service Provider

Product service provider means a person who provides any service in respect of such product.

Product Seller

Product seller includes—

i. a manufacturer who is also a product seller;

ii. a service provider, but does not include –

a. a seller of immovable property, unless such person is engaged in the sale of constructed house or in
the construction of homes or flats;

b. a provider of professional services in any transaction in which, the sale or use of a product is only
incidental thereto, but furnishing of opinion, skill or services being the essence of such transaction;

c. a person who—

i. acts only in a financial capacity with respect to the sale of the product;
ii. is not a manufacturer, wholesaler, distributor, retailer, direct seller or an electronic service provider;
iii. leases a product, without having a reasonable opportunity to inspect and discover defects in the
product, under a lease arrangement in which the selection, possession, maintenance, and operation of the
product are controlled by a person other than the lessor.

What kinds of products and services are covered under the product liability regime?

 The CPA 2019 applies to goods as well as services provided in relation to the goods supplied,
unless specifically excluded by the Central Government by way of a notification.
 Human tissues, blood, blood products and organs are excluded from the definition of products.
 Services rendered free of charge or under a contract of personal service are excluded from the
service covered under the CPA 2019.
 However, if services are provided free of charge but attached to the product, it may be argued
considering that there was a charge for the product that such services should get included in the
product liability claim.

Who can initiate a product liability claim?

Any of the following persons may initiate a product liability claim before a consumer forum:

i. The consumer to whom the goods are sold;

ii. any recognized consumer association;
iii. one or more consumers, where there are numerous consumers having the same interest, with
the permission of the consumer forum deciding the case; (class action) or
iv. The Central Government, the CCPA or the State Government Suo moto.
v. Persons who have purchased a good or availed a service for commercial purposes are not
considered to be consumers under the CPA 2019, unless such persons are purchasing a good
or availing a service exclusively for the purposes of earning their livelihood through self-
employment.

What types of reliefs can be provided under Product Liability?

The consumer commissions established under the CPA 2019 are empowered to grant compensation to
the consumer in case of product liability claims for the harm caused. Additionally, the consumer
commissions are empowered to issue directions to the product manufacturer, product service provider
and product sellers under the CPA 2019, including:

a. To remove the defect in the goods or services;

b. To replace the defective goods with new goods of similar description which are free of any defect;

c. To refund the price of the goods to the consumer along with interest as may be decided;
d. To not offer hazardous goods for sale or withdraw the hazardous goods offered from sale;

e. To direct manufacturers/sellers to cease manufacture of hazardous goods and to desist from offering
services which are hazardous in nature;

f. To pay a sum determined by the consumer forum in the event the loss or injury affects a large number
of consumers who are not easily identifiable; and

g. To require one party to pay for the legal costs of the other party.

How is liability determined between the product manufacturer, service provider and product
seller?

The CPA 2019 provides for specific instances in which the product manufacturer, product seller or the
product service provider would be responsible in the event of a defect in the product or deficiency in
services relating thereto.

The Product Manufacturer would be liable in a product liability action if:

i. the product contains a manufacturing defect;

ii. the product is defective in design;

iii. there is a deviation from manufacturing specifications;

iv. the product does not conform to an express warranty regardless of whether the manufacturer was
negligent in making such express warranty; or

v. the product fails to contain adequate instructions of correct usage to prevent any harm or any warning
regarding improper or incorrect usage.

The Product Service Provider would be liable in a product liability action, if:

i. the service provided was faulty or imperfect or deficient or inadequate in quality, nature or manner of
performance which is required under any law or pursuant to any contract.

ii. there was an act of omission or commission or negligence or conscious withholding any information
which caused harm;

iii. adequate instructions or warnings to prevent harm were not issued; or

iv. the service did not conform to express warranty or the terms and conditions of the contract.

A Product Seller (who is not a product manufacturer) would be liable in a product liability action
if:
i. the seller has exercised substantial control over the designing, testing, manufacturing, packaging or
labelling of a product that caused harm;

ii. the seller has altered or modified the product and such alteration or modification was a substantial
factor in causing the harm;

iii. the seller has made an express warranty of a product independent of any express warranty made by a
manufacturer and the product failed to conform to such express warranty which caused the harm;

iv. the product has been sold by the product seller and the identity of product manufacturer of such
product is not known, or the service of notice or process or warrant cannot be effected on the product
manufacturer or the product manufacturer is not subject to the law in force in India or an order cannot be
enforced against the product manufacturer;

v. the product seller failed to exercise reasonable care in assembling, inspecting or maintaining such
product; or

vi. the product seller did not pass on the warnings or instructions of the product manufacturer regarding
the dangers involved or proper usage of the product while selling such product and such failure was the
proximate cause of the harm.

What are the typical defenses against product liability claim?

A product manufacturer/service provider/seller can take the following defences under the CPA 2019.

i. The complainant is not a ‘consumer’ under the CPA 2019 as the complainant has either obtained the
goods for resale, commercial purposes or has availed a product free of charge.

ii. Even if the product was defective, no ‘harm’7 caused to a consumer by the use of the defective
product.

iii. In case of a claim against a product seller, the product was misused, altered or modified at the time of
the harm.

iv. In case of a claim against a product manufacturer for not having provided adequate warning or
instructions, the product manufacturer shall not be liable if: ƒ

 The product was purchased by an employer for use at the workplace and the product
manufacturer had provided warnings or instructions to such employer. ƒ
 The product was sold as a component or material to be used in another product and necessary
warnings or instructions were given by the product manufacturer to the purchaser of such
component or material, but the harm was caused to the complainant by use of the end product in
which such component or material was used. ƒ
  The product was one which was legally meant to be used or dispensed only by or under the
supervision of an expert or a class of experts and the product manufacturer had employed
reasonable means to give the warnings or instructions for usage of such product to such expert
or class of experts.ƒ
 While using the product, the complainant was under the influence of alcohol or any prescription
drug which had not been prescribed by a medical practitioner.

v. The product manufacturer would not be liable for failure to instruct or warn about a danger which is
obvious or commonly known to the user or consumer of such product or which, such user or consumer,
ought to have known, taking into account the characteristics of such product.

Is mediation an option for resolving a product liability claim? Are there any consequences if the
consumer does not accept a settlement offered during mediation?

I. Yes, the CPA 2019 specifically provides for mediation as a means of dispute resolution.
II. The relevant consumer forum may refer a dispute to mediation in the event both parties are
amenable to the same.
III. In the event the dispute is not resolved by way of mediation,
 The relevant consumer forum from where the dispute was referred to mediation will
continue to hear the dispute.
 You may note, that the mediator is also required to submit a report on the mediation to
be submitted to the relevant consumer forum which may make a reference to the
settlement offer made by the opposite party.

In the event of a product liability claim, what evidence can a company produce to prove a
product’s safety and efficacy?

A product manufacturer may provide the following evidence to demonstrate the product is safe and
efficacious, as applicable:

i. Documents demonstrating that the product is as per standards prescribed by law e.g. standards
prescribed under the Medical Device Rules, 2017 in the case of medical devices;

ii. Documents demonstrating the product is in compliance with the standards prescribed under law or by
organizations such as the Bureau of Indian Standards, International Standards Organisation or the
International Electrotechnical Commission;

iii. Independent test reports demonstrating the quality of the product;

iv. Expert evidence on the cause and effect of the defect in the product or cause of the harm caused (e.g.
consumer negligence);

v. A copy of the agreement between the manufacturer and complainant capturing the terms of sale and
any warranties made in respect of the product;

vi. A copy of the manufacturing specifications to demonstrate there is no deviation between the product
sold to the complainant and the manufacturing specifications;

vii. A copy of the warranty to demonstrate the product conforms to the express warranty provided in
respect of the product; and viii. User manuals/instructions/label design to demonstrate adequate
warnings and usage instructions were provided in respect of the product.

What is the limitation period for bringing such claims?

A complaint must be filed with a Consumer Dispute Redressal Commissions within two years from the
date on which the cause of action has arisen. (Section 69(1), CPA 2019)
The History of Consumer Protection

a) Consumer Protection is a concept that was first introduced by John Fitzgerald

Kennedy, the 35th President of the United States on 15th March 1962.

b) He spoke about this concept in a special speech to the Congress.

c) His speech stressed protecting the consumer’s interest. Kennedy also spoke about the
four basic rights of the consumer, namely:

 Right to Safety

 Right to be Informed

 Right to be Heard

 Right to Choose.

His discussion sparked a deliberation and subsequent legislation to protect consumers.

15th March is celebrated as World Consumer Rights Day, taking inspiration from Kennedy.

Another important name in the international sphere while discussing consumer protection is
Ralph Nader. He is the author of the book “Unsafe at Any Speed” which indicates the
faulty design of automobiles.
 The book led to a series of landmark laws that have prevented multiple motor vehicle
accidents thus curbing deaths and injuries. He revolutionized Consumer Protection in
the United States of America.

In order to understand the development of consumer protection in India, it is important to

trace the beginnings of the formation of the concept.

Ancient India
 Ancient India witnessed the supremacy of the Vedas as a religious text, coming from
God himself.
 The Code of Chanakya, Manu Smriti, Narada Smriti and so on. The ancient codes
contained provisions which sought to safeguard the interests of the consumer, with the
aim of consumer safety.
 The punishment was also granted when the consumer-related provisions were gone
against.
Most Authoritative texts in Ancient India were-

Manu Smriti

 Manu Smriti was all about the social, political and economic conditions of the society
in the ancient times.
 It stressed on ethical trade practices like adulteration, punishing those who were
unfair to the consumers.
 All goods had a market price or a sale price, as set by the king. All weights and
measures were inspected every six months, and the results of these inspections were
kept a record of.

Kautilya’s Arthashastra

 Kautilya’s Arthshastra clearly defined laws regulating weights and measures.

 A penalty was proposed traders who indulged in adulteration of goods namely grains,
medicine, perfumes, salt and sugar.
 The role of the State in regulating trade and its duty to prevent crimes against
consumers.
 Fines could be as severe as cutting off the cheater’s hand. The rights of the traders
were also well protected by the Arthashastra.

The Arthashastra was created during Chandragupta’s period. This period witnessed healthy
trade practices where traders were to possess a license to sell, which was given on
permission. The king granted a margin of profit to sellers while fixing sale prices. The State
was responsible for protecting the consumers against unfair prices and fraudulent
transactions. Such acts were punishable, including smuggling and adulteration, especially of
food. Consumers were ensured this protection by an easily accessible justice system through
different sets of courts. Providing justice was the duty of the king.
Medieval Period

 A shift in the time period of India from ancient to medieval resulted in a focus on
Islam as a religion and the laws of Islam.
 The Holy Quran, the main text of the Muslims, also stressed the protection of
consumers.
 The Quran has verses that indicate that the use of unjust weights and measures is
unacceptable.
 During the period of the Sultanate, local conditions determined the price of
commodities.

During the rule of Alauddin Khalji, the market had been controlled by various injunctions
and prescriptions. The king fixed prices of the grains. There was a strict price control
mechanism implemented in the market. Different shopping areas were established for
different goods, namely

 Grains

 Cloth, sugar, butter, oil and so on

 Horses, slaves and cattle

 Miscellaneous commodities.

Shopkeepers were also punished for under weighing their goods.

Modern Period

In the modern period, the previous traditional legal systems established by Indian kings were
replaced by new modern laws. The British introduced the English Common Law in India
along with other legislative measures for the public and in turn, the consumers.

Some of these legislations are as follows:

 The Indian Contract Act, 1872

 The Sale of Goods Act, 1930

 Indian Partnership Act, 1932

 The Agricultural Produce (Grading and Marketing) Act, 1937

 The Drugs Act, 1940

  The Drugs and Cosmetic Act 1940

These legislations proved to be immensely effective in saving the interests of the consumers
during the time of the British. The rules were now uniform across the country and not
arbitrary to the opinions of the various kings of the Ancient and Medieval periods.

Post-Independence Period

When India attained independence, it adopted the Anglo-Saxon system of administration of

justice. Hence, the previous legislation that was established by the British continued to
function in independent India.

Along with the existing legislation, the country was on its path to more laws through the
creation of the Indian Constitution and its adoption in 1950. Due to the democratic nature of
the Constitution, the prime focus of the laws was the benefit of the general public, who were
also consumers.

Certain implications of the Indian Constitution that may apply to consumers are as follows:

Article 14 of the constitution implies equality before the law and equal protection of laws.
This results in manufacturers, producers, traders, sellers and consumers having an equal
position before the law.

Article 39 has two clauses, (b) and (c), according to which the state is bound to direct its
policy to ensure the distribution of the ownership of the material resources of the society.
This distribution should be done to serve the common good.

According to Article 43, the state must strive to develop an economic organization or to make
legislation in order to secure a decent standard of life to all the workers. These workers are
the ones who constitute the bulk of the consumers.

The new legislation enacted after Independence are as follows:

 The Prevention of Food Adulteration Act, 1954
  The Essential Commodities Act, 1955

 The Monopolistic Restrictive And Unfair Trade Practises Act, 1969

 The Standard of Weights And Measures Act, 1976

 The Bureau of Indian Standards Act, 1986

 The Consumer Protection Act, 1986

 The Trade Marks Act, 1999

 The Competition Act, 2002

The Consumer Disputes Redressal agencies- the National Commission, the State
Commission, and the District Forum soon started working and has rapidly resulted in quick
action taken against those who exploit the consumers.

The efficient justice system in the sphere of consumer protection that we see today is a resulted
of all these previous developments that have taken place in the past which is worthy of
appreciation.
MEDIATION(Sec.74-81)
Provision for Alternate Dispute Resolution:

 The new Act provides for mediation as an Alternate Dispute Resolution mechanism. For
mediation, there will be a strict timeline fixed in the rules.
 As per the recently notified rules, a complaint will be referred by a Consumer Commission for
mediation, wherever scope for early settlement exists and parties agree for it. The mediation will
be held in the Mediation Cells to be established under the aegis of the Consumer Commissions.
There will be no appeal against settlement through mediation.

Consumer Mediation in the Consumer Protection Act, 2019.

Introduction
Mediation is an age old process of dispute resolution practiced since Vedic period.Mediation as an
alternative way to settle disputes is now fast catching up in the country with even some senior
members of the judiciary in the Supreme Court and the High Courts of several States expressing
their favour. Given the pendency of cases in courts of law, it is obvious that parties to a dispute
do not want justice to be delayed since it is as good as being denied. Understanding the need and
importance of ADR, several laws in India have undergone changes and have incorporated ADR
mechanisms within them. This Article aims to critically analyze Mediation in the new Consumer
Protection Act, 2019.

Alternate Dispute Resolution

Alternative dispute resolution (ADR) refers to a variety of processes that help parties resolve
disputes without a trial. Typical ADR processes include mediation, arbitration, neutral
evaluation, and collaborative law. These processes are generally confidential, less formal, and
less stressful than traditional court proceedings. The Consumer Protection Act 2019 (CPA) was
given assent by the President of India on 09th August 2019 and came in force from 20th July
2020. The new act has brought few eminent changes in the provisions. More importantly Chapter
V of the new act has brought the provisions of Mediation. Subsequent to that Consumer
Protection (Mediation) Rules 2020 came in force from 20th July 2020.

Benefits of mediation
In Mediation a neutral person called a "mediator" helps the parties try to reach a mutually
acceptable resolution of the dispute. The mediator does not decide the case, but helps the parties
communicate so they can try to settle the dispute themselves. Mediation is voluntary, party
friendly, cost effective and it aims at giving mutually satisfactory results. Mediation can prove to
be an effective tool for dispute resolution and hence sector specific mediation has been highly
recommended. Compared to the traditional court systems, mediation is quite flexible when it
comes to procedure and is more party friendly. Also, in mediation parties can directly come
together and do not require legal professionals and the end result of mediation is more agreeable
as the entire process is highly collaborative.

Understanding Mediation under CPA 2019

According to new CPA, a Consumer Mediation Cell shall be attached with all the Dispute
Resolution Forums at District, State and National level. The Act further states that, if upon the
admission of complaint the Forum feels that if the Complaint is fit for mediation, then it can
direct the parties to undertake Mediation [Sec.1 (37)] and the parties have to send their written
consent to undergo mediation within 5 days. Upon the receiving consent, the Forum shall send
the Complaint to Mediation Cell within 5 days.
As per the Consumer Protection (Mediation) Regulations 2020, the entire Mediation process
shall stand terminated on expiry of three months from the date of first appearance before the
mediator unless the time for completion of mediation is extended by the Consumer Commission,
in which case it shall stand terminated on expiry of such extended time. The Agreement reached
between parties is then sent to the Commission in a sealed cover. If no agreement is reached the
reasons stating so must be accordingly sent to the Commission.

ANALYSIS
Last Resort
A consumer knocks the doors of court after he has already exhausted other alternate remedies.
For instance, a complainant of defective products or one availing insurance services first
approaches that product provider, service provider or Complaint cell of that provider and tries to
settle the issue and if that fails a complaint is filed with Consumer Forums. However, with the
introduction of Mediation Process an additional step is introduced which can prove to be time
consuming. Further, if there has been no agreement between parties within 3 months the
consumer would have no option but continue with the regular proceedings. This would further
add to the pendency of proceedings.

Lack of bargaining power

According to Blacks – Law – Dictionary, MEDIATION is the act of a third person who
interferes between two contending parties with a view to reconcile them or persuade them to
adjust or settle their dispute. Mediation can often be synonymous to compromise where the
parties mutually come to an agreement. However, mediation can often be problematic where one
party (usually the consumer) has less bargaining power, for instance in a typical case of delayed
possession a flat buyer might have to settle for much less than what the court grants. Also, the
main objective of Consumer Protection Act is restoration and enforcement of “Consumer Rights”
and providing a protection to consumers, the consumer forums act as a sense of security to the
consumers. Also, the Consumer Protection act allows the person to appear in person and the
same applies for mediation, and an individual Consumer would often not have such bargaining
power. In such cases, whether Mediation would be a successful tool in restoring the consumer
rights is a question to be pondered upon!

Suggestive Nature
In Mediation the decision of a mediator is only “suggestive” in nature, the mediator can only
recommend the compensation, this can be highly problematic. Typically, four situations arise
when a complaint goes for mediation viz.
1. Settlement – Approved by Commission.

2. Settlement – Partly approved and partly disapproved

3. Settlement – Completely Disapproved by Commission

4. No Settlement in Mediation

Here, the situations b), c), d) can be troublesome, since the very nature of the settlement between
parties and observations of Mediator are merely suggestive, how far shall that settlement be
binding upon parties, wherein there is minimal or no violation of consumer rights is to be taken
into account by the Commission. In case on non settlement, part settlement or disapproved
settlement, the complaint is transferred back to the commission and the regular proceedings, this
would entirely defeat the very purpose of speedy disposal.

Deterrence
The main purpose of the Consumer Protection Act is to protect the interest of Consumers. The
Consumer Commissions act as deter to prevent the abuse of consumers from unfair practices and
further ensures in restoring the consumer rights. These Commissions are capable of giving strict
orders in case of violation of consumer rights and restoring their faith. Since, mediation aims at
mutual settlement, it doesn’t act as a deter, unlike the courts, this could hamper the consumers in
cases of gross violation of consumer rights, wherein the other party may just get away by paying
off settlement amount.
Judicial Infrastructure
Lack of judicial infrastructure is one of the major reasons for pendency of cases. As per a recent
report, currently, Karnataka has the third highest number of pending consumer cases in the State
Commissions after Uttar Pradesh (25,500) and Maharashtra (18,408). The new act talks about
establishing Mediation Cells, however the act is silent as to cases with how much pecuniary limit
can be sent for mediation. With the pecuniary jurisdiction of District and State Forums increased,
these forums are bound to be overburdened with complaints, similarly with lack of infrastructure
the mediation cells are also bound to be overburdened. This would defeat the very purpose of
speedy disposal of complaints.
Party Autonomy
According to Consumer Protection Act, “At the first hearing of the complaint after its admission,
or at any later stage, if it appears to the District Commission that there exists elements of a
settlement which may be acceptable to the parties, except in such cases as may be prescribed, it
may direct the parties to give in writing, within five days, consent to have their dispute settled by
mediation in accordance with the provisions of Chapter V.” The entire essence of mediation lies
in its voluntary nature. However, in situations where in one party agrees to go for mediation with
court direction and if other party is reluctant in going further might still have to go further, this
might severely affect the party autonomy as the consumer would often have to compromise on
his right of choice

SUGGESTION

Pre Litigation Mediation

The most essential element of Mediation is that it is voluntary and mutual in nature.
One of the efficient ways in resolving Consumer Complaint is analyzing the subject matter of
complaint. If the dispute can be mediated, attempts should be made at a pre litigation stage by
bringing the parties together. Such a process would be less time consuming and more satisfactory
compared to post litigation mediation, wherein the parties would have to wait for their case to
come on board, and get the complain transferred to Mediation Cell. Establishing mediation cells
that can be directly approached can be a much more effective tool for dispute resolution. The
Online Consumer Mediation Centre, established at the National Law School of India University,
Bengaluru under the aegis of Ministry of Consumer Affairs, Government of India aims to
provide for a state-of-theart infrastructure for resolving consumer disputes both through physical
as well as online mediation through its platform.

Online Dispute Resolution (ODR)

In this age of technological advancement, ODR has become a new normal. ODR platforms can
be an effective tool for fast and easy dispute settlement. The new Act includes E- Commerce
within its ambit, ODR mechanisms can prove to be effective tool for resolving issues arising out
of E-Commerce services. ODR can be used to settle disputes involving small claims.

CONCLUSION
At the face of it consumer mediation might seem to be great addition to the Act and could prove
to effective in resolving matters like delayed possession to multiple home buyers, negligence etc.
However, Mediation could be an add on step to the already existing Redressal system which
could be time consuming as Consumer Disputes Redressal Forums are already established for
speedy disposal. Also the act does not set a cap on what type of cases could be referred for
mediation this could lead to back logging of cases referred for mediation. However, consumer
mediation could be effective as mediation is an informal mechanism and would not require legal
experts, setting up of Mediation Centers especially online mediation centers which can be
directly approached without filing of complaint in the Redressal forums could be more effective.
The success of Consumer Mediation in India will purely depend upon the effectiveness of the
Mediation Cells and how efficiently they would dispose of the complaints in a speedy manner.
 India: The Consumer Protection (E-Commerce) Rules, 2020

The Consumer Protection Act, 2019 (“Act”) received the assent of the President of India and
was published in the official gazette on August 9, 2019. The Act came into force on July 20,
2020. It supersedes the three-decade old Consumer Protection Act, 1986. In furtherance to the
provisions of the Act1, the Ministry of Consumer Affairs, Food and Public Distribution, on July
23, 2020, notified the Consumer Protection (E-Commerce) Rules, 2020 (“Rules”) to prevent
unfair trade practices in e-commerce and facilitate consumer welfare.

The below paragraphs set out an analysis of the Rules summarizing its applicability as well as
certain duties and liabilities prescribed in the Rules.

Applicability of the Rules

Rules set out that they apply to: (a) all goods and services available over the digital or electronic
network including digital products; (b) all models of e-commerce entity 2 such as marketplace e-
commerce entity3 and inventory e-commerce entity4; (c) all e-commerce retail like multi-channel
single brand retailers and single brand retailers in single or multiple formats; and (d) all forms of
unfair trade practices across all models of e-commerce. The Rules do not apply to any activity of
a natural person carried out in a personal capacity not being part of any ‘professional or
commercial activity' undertaken on a regular or systematic basis. Further, the Rules have been
expressly made applicable to an e-commerce entity which is not established in India but
systematically offers goods and services to consumers in India. This aspect, however, leaves
room for interpretation as to what would mean by ‘systematically'. For example, a foreign
website selling goods with an option to ship its product around the world, including in India, but
does not specifically or categorically offer the product to consumers in India, would such website
also need to comply with the provisions of the Rules.

Duties of E-commerce Entities

Rules provide for certain conditions which the e-commerce entities are required to comply with
which are set out below.

Corporate Entity: Rule 4(1) of the Rules sets out that an e-commerce entity shall be a corporate
entity under the Companies Act 2013 (whether an Indian company or foreign company) or an
office, branch or agency outside India owned or controlled by a person resident in India as
provided in the Foreign Exchange Management Act, 1999. It is noteworthy that this provision is
extremely restrictive and does not take into account any other form of a legal entity in India. It
severely impacts enterprises operating as sole proprietorship, partnership or any other form of a
recognised body corporate as they could potentially be restricted from operating an e-commerce
platform for their goods and services. Given the current market situation, various micro
businesses are coming online and not taking the route of a seller under a market place e-
commerce entity. Such micro businesses are generally not set up in the form of a company and it
would be relevant to determine whether such a micro business can fall within the ambit of an ‘e-
commerce entity' or if they would have to rely on a marketplace e-commerce entity as a seller.
Further, the Rules lack clarity with respect to applicability to B2B business, social media
websites, digital products, digital services and agency model of e-commerce where the e-
commerce entity merely acts as a facilitator between the buyer and the seller of goods or
services. While the Rules are applicable to digital products, what constitutes ‘digital product' is
uncertain.

Nodal Officer: The Rules require an e-commerce entity to appoint a nodal person of contact or
an alternate senior designated functionary who is resident in India, to ensure compliance with the
provisions of the Act or the Rules. The Rules do not, however, set out any qualifications of such
nodal officer.

Disclosure of Information: An e-commerce entity is required to provide the following

information on its platform5: (i) its legal name; (ii) principal address of its headquarters and all
branches; (iii) name and details of its website; (iv) contact details of customer care as well as of
grievance officer; and (v) details of the importer or seller of imported goods and services. This
ensures that the customer has full disclosure of the e-commerce entity thereby reducing cases of
fraud.
Grievance Redressal: An e-commerce entity required to establish a grievance redressal
mechanism and appoint a grievance officer for consumer grievance redressal. While this is a
welcome move to protect the consumer's interest, it may be a challenge for small/ micro
businesses operating as e-commerce entities as it can increase the overall cost to set up such a
mechanism.

Unfair Trade Practice: An e-commerce entity is prohibited from adopting any unfair trade
practice whether in the course of business on its platform or otherwise. Further, an e-commerce
entity is also prohibited from manipulating the price of the goods or services offered on its
platform in such a manner as to gain unreasonable profit by imposing on consumers any
unjustified price having regard to the prevailing market conditions. However, it remains unclear
as to what constitutes price manipulation. For instance, food and taxi aggregators justify any
increase or decrease in the price depending on the market demand, and the question arises is that
could such an increase imply price manipulation in terms of the Rules.

Cancellation Charges and Consent of Consumers: An e-commerce entity is prohibited from

imposing cancellation charges on consumers after confirming the purchase unless such charges
are also borne by the e-commerce entities upon unilateral cancellations. Again, while such a
move is quite welcome it may not be entirely feasible across the broad spectrum. For instance,
such a stipulation can adversely affect the e-commerce entities offering perishable goods on their
platform or services, for which costs have already been incurred. Further, at the very least the
Rules should have clarified or provided an exception for cancellation charges on consumers who
cancel the order once it has been shipped by the ecommerce entity for certain cases.
Additionally, the Rules also bar an ecommerce entity from automatically recording consent of a
consumer for purchase including in the form of pre-ticked checkboxes.

Duties and Liabilities of Marketplace E-commerce Entities

In addition to the duties relating to e-commerce entities, the Rules provide the marketplace e-
commerce entities to ensure that sellers on their platform undertake that the description
pertaining to the goods or services on their platform is accurate and corresponds directly with the
general features of such goods or services. Every marketplace e-commerce entity is required to
disclose and display information about the sellers offering goods and services on its platform
including information relating to return, refund, exchange, warranty and guarantee, delivery and
shipment, modes of payment, and grievance redressal mechanism, for enabling the consumers to
make informed decisions. Further, marketplace e-commerce entities are also required to
display, inter alia, terms and conditions generally governing its relationship with sellers on its
platform. Importantly, the Rules require a market place e-commerce entity to include in its terms
and conditions governing its relationship with the sellers a description of any differentiated
treatment which it gives or might give between goods and services or sellers of the same
category.

Duties of Sellers on Marketplace E-Commerce Entities

The Rules prohibit the sellers from adopting any unfair trade practice, representing themselves as
consumers to post product reviews and misrepresenting the quality or features of any goods or
services offered by them. Further, the sellers offering goods or services through a marketplace e-
commerce entity cannot refuse to take back goods or discontinue the services purchased or
agreed to be purchased, if such goods or services were defective or delivered late. The Rules also
impose obligations on the sellers to appoint a grievance officer for consumer grievance redressal,
to ensure that the advertisements for the goods and services are accurate and to disclose
information to the e-commerce entity including price of the goods and services, expiry dates of
the goods, country of origin of the goods and services, details of goods and services, exchange,
returns and refunds, shipping details, guarantees of authenticity or genuineness of imported
goods, and other guarantees or warranties under applicable law. However, the obligation on the
sellers to provide country of origin of the goods might be tricky in case of assembled goods and
agency model of e-commerce.

Duties of Inventory E-Commerce Entities

The duties and obligations of the inventory e-commerce entities are similar to those applicable to
the sellers on marketplace e-commerce entities such as information disclosure obligations except
country of origin of the goods and services. The inventory e-commerce entities are required to
deliver their goods on time and to have to guarantee the authenticity of the goods, except if the
late delivery was due to a force majeure event. The Rules further set out that the inventory
ecommerce entity which vouches for authenticity or guarantees such authenticity in relation to
the goods / services provided by it, are required to bear the appropriate liability in any action
related to the authenticity of such good/service. It may be noted that in instances where the e-
commerce entity is offering second hand products, it would be difficult to guarantee the
genuineness and authenticity of the product.

Conclusion

It can be said that Rules aim to bring transparency and accountability in provision of information
and disclosure by e-commerce platforms to consumers. Rules also seek to put a check and
provide for disclosure on the practice of preferential treatment being accorded to some sellers
reducing possibility of unfair trade practices by large sellers. With increase in ecommerce
activity especially in present times, the Rules are a step to address consumer grievances and
prescribe certain best practices for benefit of consumers.

However, there are many grey areas as well as discussed above. With several obligations to
comply with, it might have an adverse impact on small businesses operating as an e-commerce
entity. Given that non-compliance of the Rules would have penal provisions as set out in the Act,
it could be an excessive deterrent for small business. Further, these Rules neither deal with
consumer data protection nor storage of confidential information especially for ecommerce
entities operating as payment aggregators. Aspects relating to enforceability of the provisions of
the Rules to the foreign business also remain to be clarified given that handling a dispute
involving a foreign entity may have territorial and jurisdictional constraints. A pre-defined
procedure for resolving these types of disputes may be required. It remains to be seen if the
government comes out with any clarification and allow for a bit more balance between consumer
protection and commercial interests.

CENTRAL CONSUMER PROTECTION AUTHORITY(Sec.10-27)

Central Consumer Protection Authority: Establishment, Powers and Functions

About the CCPA-

 It was established to promote, protect and enforce the rights of consumers.
 It was constituted under section 10 of the Consumer Protection Act, 2019 that replaced Consumer Protection Act, 1986.
 The new act has been incorporated with additional consumer concerns like treating misleading advertisements and providing wrong
information regarding quality or quantity of goods or provision of services as an offence.
 It deals with matters affecting rights of consumers by individuals or entities following improper trade practices or by display of inappropriate or
wrong advertisements affecting public interest.
 It helps to promote consumer trust by enforcing the rights of consumers through effective guidelines.
Composition-
It consists of the following members appointed by the Central Government.
 Chief Commissioner.
 Two Commissioners.
 One commissioner each will represent goods and services.
Powers of CCPA-
 If the commission finds violations of rights of consumers or in notice of trade practices which is unfair it can inquire or cause an inquiry, either
on receipt of complaint or suo moto or as directed by Central Government.
 If the commission finds after preliminary inquiry of an existence of a prima facie case of consumer rights violation or it is in notice of any
unfair trade practice or any wrong or inaccurate advertisement which is prejudicial to public interest or to the interests of the consumers,it can
order an investigation by the District Collector or by Director General.
 If the commission finds prima facie evidence of a person involved in violation of consumer rights or following any unfair trade practice or
making any false or inaccurate advertisement as described above.
 It can call upon the person involved and can direct him to produce any document or record in his possession relating to it.
 In addition, the District Collector or Director General under the Code of Criminal Procedure,1973 has powers of search and seizure , and
authority to ask for submission of any record or document.
 The commission can direct recalling of any dangerous, hazardous or unsafe goods or withdrawal of similar services and order refunding of
the proceeds collected towards sale of goods or offering of services so recalled or order stoppage of any unfair practices after giving the person
directed to do so, an opportunity of being heard.
 The commission can involve in and engage in services relating to consumer advocacy by offering services of registering complaints before
the National Commission, the State Commission,or the District Commission, formed as per the Act, involving in the proceedings before them,
suggesting remedial actions, involving itself in related research, creating awareness and guiding consumers on safety precautions.
 The commission can direct to a trader or manufacturer or endorser or advertiser or publisher after investigation to discontinue
advertisements which are wrong or misleading or prejudicial to consumers, and in such case impose penalties upto Rs 10 lakhs payable in cash.
 The commission can also prevent the endorser of advertisement which is wrong or misleading from making the same in relation to any
product or service for a time period ranging upto one year, and three years in case of subsequent contravention.

Consumer Disputes Redressal Commission:

  The Act has the provision of the establishment of Consumer Disputes Redressal Commissions
(CDRCs) at the national, state and district levels to entertain consumer complaints.
 As per the notified rules, the State Commissions will furnish information to the Central
Government on a quarterly basis on vacancies, disposal, the pendency of cases and other matters.
 The CDRCs will entertain complaints related to:

 Overcharging or deceptive charging

 Unfair or restrictive trade practices
 Sale of hazardous goods and services which may be hazardous to life.
 Sale of defective goods or services
As per the Consumer Disputes Redressal Commission Rules, there will be no fee for filing cases
up to Rs. 5 lakhs.

Section 9 of the Act provides for ‘establishment of consumer dispute redressal agencies’ which
include:

 A District forum established by the State Government in each district of the State by its
notification.
 A State Commission established by the State Government in each state by its notification
and
 A National Commission established by Central Government by notification

District Forum
Each District Forum shall consist of a person who is or has been qualified as a District judge, as the
President. There must be two other persons who are not less than thirty-five years of age and also
possesses a degree from a recognized university. The persons must have adequate knowledge in the
field of economics, commerce, industry, public affairs, and administration. The district forum must
have the jurisdiction to entertain such complaints where the value of goods or services and the
compensation, does not exceed Rs. twenty lakhs. The need for district forums for consumer redressal
is that majority of the people who face any consumer rights violation are unable to file a complaint in
a state or national forum because such f has to look at matters concerning various other district
forums which result in a large number of pending cases. District forums are also enabled with a faster
way of dispensing consumer redressal as the amount of claim is pretty less than that of State/National
redressal forums which enables normal people to seek a solution for their problems.
State Commission
Each State Commission shall consist of a person who is or has been a judge of High Court as its
president. The Commission also consists of not less than two members, who are above thirty-five
years of age and also possesses a degree from a recognized university. The persons must have
adequate knowledge in the field of economics, commerce, industry, public affairs, and
administration. The Act also states that not less than fifty percent of the members shall be from
amongst the persons having a judicial background. The State Commission has a jurisdiction to
entertain cases where the value of goods or services or the compensation claimed, if any, exceeds the
number of Rs. twenty lakhs but does not exceed Rs. one crore. It also entertains appeals against any
District Forum within the state and also looks after any pending disputes or cases decided by any of
the district forums in which the forums have exercised a jurisdiction not vested in them by the law, or
has been exercised illegally or with any material irregularity.

National Commission
The National Commission shall consist of a person, who is or has been a judge of the Supreme Court,
to be appointed by the Central Government, shall be the President, provided that no appointment
shall be made except after the consultation with the Chief Justice of India. The commission shall
consist of not less than four members of its executive committee who shall not be less than thirty-five
years of age and must be graduates from a recognized university. They must also be specialized in
the areas of commerce, economics, and administration. The jurisdiction of the commission shall
extend to any case where the compensation amount might exceed Rs. one crore and the
Commission shall also entertain appeals against State Commissions. The Commission also has
the power to check any pending disputes or cases decided by any of the State Commissions where the
State Commission has exercised a jurisdiction not vested in it by law or it has been exercised illegally
or with any material irregularity.

Power of redressal forums

There are various powers for all of the redressal forums with regards to its jurisdiction. Some of them
include:

1. Examining, enforcing as well as summoning the witness on oath;

2. Discovering and producing any material evidence;
3. Receiving evidence on affidavit;
4. Requesting for report or test analysis from the concerned authorities and laboratories;
5. Issuing commission for examining the witness;
6. Enforcing any other powers prescribed by the Central or State Government.
Limitation period
The District, State or National Forum for consumer grievance redressal will not entertain a case
which is filed two years after the occurrence of the case unless the party/parties can condone
themselves regarding the reasons behind the delay of filing within the specified period. Such a
provision was formulated to increase the accuracy of the function of such forums and also for
delivering fast redressal solutions to the parties.
 Role of Regulatory Authorities
The sensitive nature of the medical procedures and the devastating consequences which can follow from
medical negligence make it important that consumer grievances with the medical sector are addressed:
(ICMR Guidelines 2000, MCI 1956)

1. Lack of consent of the patient in the medical procedure due to misleading claims or lack of
communication.

2. Extremely high costs of healthcare due to defensive medicine being practiced255, less coverage by
health insurance and high cost of drugs.

3. Lack of medical equipment and trained medical personnel in hospitals

Yashumati Devi v. Christian Medical College, Vellore (Medical Negligence)

Facts: The Appellant’s husband, a 58-year-old man, had a history of pain in his left arm and in 2009, he
visited the hospital’s outpatient department complaining of pain in his left arm on exertion. On diagnosis,
it was revealed that he had a coronary artery disease (CAD). The patient was administered doses of
Herapin without any monitoring protocol. Even when the patient complained of bleeding and
disorientation, the authorities ignored the requests of the patient. The patent later suffered a stroke and
there was immediate need of a CT scan. The hospital denied CT scan for over three hours citing unpaid
dues despite the fact that Rs. 1.5 lakh were already deposited.

Issue: Whether this was a case of medical negligence and was the wife of the patient entitled to
compensation?

Decision: The NCDRC granted a compensation of Rs. 25 lakhs to the Appellant stating that a hospital has
every right to insist on payment but it also has the prime duty to take care of a patient facing a health
emergency. The Court noted that there was an urgent need for the patient’s brain CT scan but it was
delayed for more than three hours as the hospital waited for a fresh receipt of Rs. 1850/- towards charges
for the procedure. Thus, a deficiency/negligence was clearly established.
Insurance is necessary for consumers as it provides them with protection from any unexpected financial
loss as it provides them with the means to recover from such a loss. As a result, consumer grievances
must be addressed:

Following the recommendations of the Malhotra Committee Report in 1999, the Insurance Regulatory
and Development Authority of India was established by the Insurance and Regulatory Authority of India
Act, 1999

1. False/misleading information about the insurance plan and the policy.

2. Unfair terms of insurance.

3. Rejection of genuine claims without reason.

4. Delay in grant of compensation upon acceptance of claim.

5. Non-payment of entire amount of claim.

6. Charging of extra premium.

7. Wrongful cancellation of policy.

Life Insurance Corporation of India v. Kulwant Kumari, (Insurance)

Facts: Kailash Chander got himself insured with the Life Insurance Corporation; the policy lapsed but
was later revived. He died three years after the original date of the policy, but the claim was rejected on
the ground that he was suffering from diabetes two years prior to the revival of the policy.

Decision: The National Commission held that the burden of proving concealment was on the insurance
company and this had to be done within 2 years as per the terms of Section 45 of the Insurance Act. It
also rejected the contention of the Life Insurance Corporation that the two years were to be counted from
the date of revival of the policy

Accordingly, the common grievances of consumers with respect to the real estate sector can be divided
into two parts – problems faced before construction and problems faced after construction:
1. False/misleading information being given by the real estate agent.

2. Inordinate and unjustified delay in construction

3. Delay in allotment and transferring the title of property to the consumer.

4. Charging of additional money due to unfair clauses in the contractual agreement,

5. Delay in payment of compensation if a grievance is recognized by the service provider.

6. Selling of common spaces without permission of the residents.

7. Lack of maintenance of facilities and amenities.

In 2016, the Real Estate (Regulation and Development) Act was passed which provided for the
establishment of a Real Estate Regulatory Authority by the state governments in their respective states.
The purpose of these authorities is to protect the interests of consumers in the real estate sector

Sanjay Gupta v. Three C Shelters (Real Estate)

Facts: The original allottee had booked an apartment in OP’s project for a certain consideration. An
agreement was executed between the parties. However, the Opposite Party failed to deliver the possession
in 42 months inclusive of 6 months grace period. The case of the OP was that the buyers had stopped
paying instalments after a certain period and consequently as per Section 55 of the Indian Contract Act,
1872 and thus, they are not entitled to any relief.

Issue: Whether there was inordinate delay and would the buyers be entitled to compensation?

Decision: The Court held that the OPs clearly had time to deliver possession of properties to the
respective Complainants in time as per the allotment letter and the agreement. Thus, the allottees should
have the right to ask for refund if the possession is inordinately delayed and especially beyond a year. The
court observed that the instalments had been payed up to reasonable time and the payment only stopped
later when there was no progress in construction. Thus, there cannot be said to be in any breach. A delay
of 42 months is a long period and would be considered as inordinate delay and thus the Commission
directed the companies to refund approx. 12 crores to the buyers.

Given this importance to education, the consumer grievances must be looked at:

1. Delay in providing study material which is of high quality.

2. Lack of qualified faculty or study material.

3. Lack of providing certificates, report cards etc.

4. Problems in admission process.

5. Problems in conducting exams.

6. non-adherence to curriculum or UGC guidelines

 The Ministry of Human Resource Development is responsible for development of human

resource in India through education. It functions through two departments – the Department of
School Education & Literacy and the Department of Higher Education.
 The University Grants Commission was established by the University Grants Commission Act,
1956 for development and maintenance of educational standards in India.
 There are numerous statutory bodies for certain professional disciplines – the Medical Council of
India, the All-India Council of Technical Education, Indian Council for Agricultural Research
etc.
 The National Assessment and Accreditation Council was established following the
recommendations of the National Education Policy, 1986 and the Programme of Action, 1992
which asked for setting up of an autonomous institution for accreditation of higher education
institutions.95

Rithvik K.R. v. Union of India (Education Sector)

Facts: In the present case, four students applied for admission in KIMS against management quota for I
year MBBS course for the academic year 2014-2015 along with fees and donations amounting to
approximately eighty lakhs. The father of one of the students was also made to sign an undertaking that
he understands that the admission given to his son was only provisional and subject to approval by
RGUHS/MCI and in excess of the stipulated management seats. In case of non-approval, the management
and the college will not be responsible. Later, three of the students were discharged from the college on
the ground that their admission to the course was in excess of the admission capacity fixed for the college.
The college discharged them only after the expiry of the last date of taking admission in colleges for that
academic year.
Issue: Whether there was a deficiency in service by the college authorities in admission process?
Decision: The Court found the conduct of the college of taking such an undertaking from the parents of
the student along with huge amounts of donation disturbing and ordered the MCI and Central
Government to take serious note of the matter and take measures to ensure transparency in the admission
process even against management quota, especially by making it more technology based. The High Court
also found the college’s act of not discharging the students with illegal admission and not refunding the
amount received from them well before the last date for admission in colleges for that academic year as
grossly irresponsible and as it resulted in them losing one academic year and unnecessary litigation
causing unimaginable mental agony to them the High Court ordered the college to pay Rs. 1 crore each to
all the three students as compensation along with refund of the amount paid by them to the college for the
admission.

The National Electricity Policy, 2005 and The National Electricity Plan, 2018 lay out the common
grievances of consumers with regards to the electricity sector which have been listed out in a report:
1. Delay in sanctioning of a new connection.
2. Problems in supply of electricity.
3. Erratic voltage fluctuations.
4. Delay in repairs and restoration of power supply.
5. Delay in reconnection following disconnection.
6. Delay in shifting of connection lines.
7. Problems in the electricity meter.
The Electricity Act, 2003 provided for the establishment of the Central Electric Authority and the
Central Electric Regulatory Commission for the regulation and management of electricity services.

Tukaram v. The Executive Engineer, Maharashtra State Electricity Distribution Company Limited
and Ors (Electricity Board)
Facts: Appellant applied for electricity connection on his land to Respondent and deposited charges. The
Respondent raised a bill for consumption charges. The Appellant claimed that no electricity connection
had been installed. Appellant filed a consumer complaint before the Consumer Forum. The District
Forum allowed the complaint and grated compensation. In appeal, the State Commission reversed the
order of the District Forum. When the Appellant carried the matter to the National Commission, the
revision was initially dismissed. However, the Appellant filed a review petition. The Review Petition was
allowed and compensation was awarded to the Appellant. Appellant preferred a present appeal for
enhancement of compensation.
Issue: Whether Appellant entitled for enhancement of compensation?
Decision: Supreme Court while allowing the appeal held that the grant of compensation by the National
Commission would not be adequate to meet the requirement of just and fair compensation to a consumer
who had suffered as a consequence of the default of the Respondent and enhance the compensation to an
amount of Rs. 5,00,000/- which shall be paid over within a period of four weeks from today. In default,
the compensation shall carry interest at the rate of 9 per cent per annum. Observing that the Appellant had
suffered hardship and inconvenience as a result of an unexplained delay of one decade on the part of the
Respondent (s) in granting an electricity connection.

Accordingly, the relevant provisions which deal with unfair trade practices are:
1. Sec. 2(1)(r) of the Consumer Protection Act, 1986 defines unfair trade practice to be “a trade practice
which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any
service, adopts any unfair method or unfair or deceptive practice”.391
2. Sec. 3(1) of the Competition Act, 2002 prohibits anti-competitive agreements as “No enterprise or
association of enterprises or person or association of persons shall enter into any agreement in respect of
production, supply, distribution, storage, acquisition or control of goods or provision of services, which
causes or is likely to cause an appreciable adverse effect on competition within India”.
3. Sec. 4 of the Competition Act, 2002 prohibits abuse of dominant position and defines dominant
position as “a position of strength, enjoyed by an enterprise, in the relevant market, in India, which
enables it to—
(i) operate independently of competitive forces prevailing in the relevant market; or
(ii) affect its competitors or consumers or the relevant market in its favor”

Dinesh Parshad Raturi v. Bata India Limited (Unfair Trade Practice)

Facts: The Raturi had bought a pair of shoes from a Bata store in Sector 22 D on February 5. He added
that the actual price of a pair of shoes that he purchased was Rs. 399/-, but he paid Rs. 402/-. When he
saw the bill, he found that he was charged Rs. 3 for the paper bag. Cashier at the Bata store handed over
the pair of shoes and put in a paper bag bearing the advertisement name of the shop ‘BATA’. However,
Raturi had no intention to purchase the carry bag. Raturi stated that it was the duty of the store to provide
the carry bag, but he was forced to pay price for the paper bag, which was being used as advertisement by
Bata. He added that “Bata Surprisingly Stylish”, “Barcelona Milan Singapore New Delhi Rome” was
printed on the paper bag. Raturi alleged that at the cost of the consumer, he was being used as the
advertisement agent of the Bata India Limited. However, Bata India in reply just submitted that for the
purpose of environmental safety, the Complainant was given carry bag at the cost of Rs. 3/-.
Issue: Whether charging for paper carry bags is an unfair trade practice?
Decision: The forum held that “there is unfair trade practice on the part of Bata India in compelling the
Complainant to purchase the carry bag worth Rs. 3/- and if Bata India is an environmental activist, it
should have given the same to the Complainant free of cost” and “it was for gain of the company” By
employing unfair trade practice, opposite party [Bata] is minting lot of money from all customer and
further consumer forum directed Bata India to provide free carry bags to all its customers forthwith who
purchase articles from its shop and also directed Bata India to refund Rs. 3/- wrongly charged for the
paper carry bag from Chandigarh resident Dinesh Parshad Raturi, pay him Rs. 3,000/- as compensation
and Rs. 1,000/- as litigation expenses. It also directed Bata India to deposit Rs. 5,000/- in the “Consumer
Legal Aid Account”.
In 2017, TRAI released a report on recommendations for addressing consumer grievances in the telecom
sector. The most common grievances are as follows:
1. Billing related problems – inaccurate billing, change in tariff plain without consent, delay in tariff
packs, billing despite discontinuation of services etc.
2. Mobile Number Portability – rejection of porting, delay in porting, non-generation of UPC
3. Fault Repairs – delay in repairs
4. Connection/Disconnection of Services – delay in subscriber verification, refusal of request for
disconnection etc.
5. VAS (Value Added Services) – activation of VAS without consent
6. Broadband Speed – lack of broadband speed

The Telecom Regulatory Authority of India Act, 1997 provided for the establishment of the Telecom
Regulatory Authority of India (TRAI for the purpose of regulating the telecom sector of India)381 and an
amendment passed in 2000 provided for the establishment of the Telecom Disputes Settlement and
Appellate Tribunal (TDSAT) for resolving disputes between consumers and service providers relating to
the telecom sector.
Consumer Protection Act, 2019

The new Consumer Protection Act was passed by Parliament in 2019. It came into force in July 2020 and
replaced the Consumer Protection Act, 1986.

Statement of Objects and Reasons:

The Consumer Protection Act.1986 (68 of 1986) was enacted to provide for better protection of the
interests of consumers and for the purpose of making provision for establishment of consumer protection
councils and other authorities for the settlement of consumer disputes, etc.

Although, the working of the consumer dispute redressal agencies has served the purpose to a
considerable extent under the said Act, the disposal of cases has not been fast due to various constraints,
Several shortcomings have been noticed while administering the various provisions of the said Act.

Consumer markets for goods and services have undergone drastic transformation since the enactment of
the Consumer Protection Act in 1986, The modern market place contains a plethora of products and
services. The emergence of global supply chains, 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. Equally, this has rendered the consumer vulnerable to new forms of unfair
trade and unethical business practices. Misleading advertisements, tele-marketing, multilevel marketing,
direct-selling-and e-commerce pose new challenges to consumer protection and will require appropriate
and swift executive interventions to prevent consumer detriment. Therefore, it has become inevitable to
amend the Act to address the myriad and constantly emerging vulnerabilities of the consumers. In view of
this, it is proposed to repeal and reenact the Act.

Accordingly, a Bill, namely, the Consumer Protection Bill, 2018, was introduced in Lok Sabha on the 5th
January, 2018 and was passed by that House on the 20th December, 2018. While the Bill was pending
consideration in Rajya Sabha, the Sixteenth Lok Sabha was dissolved and the Bill got lapsed: Hence, the
present Bill, namely, the Consumer Protection Bill, 2019.

The proposed Bill provides for the establishment of an executive agency to be known as the Central
Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers; make
interventions when necessary to prevent consumer detriment arising from unfair trade practices and to
initiate class action including enforcing recall, refund and return of products, etc. This fills an institutional
void in the regulatory regime extant. Currently, the task of prevention of or acting against unfair trade
practices is not vested in any authority. This has been provided for in a manner that the role envisaged for
the CCPA complements that of the sector regulators and duplication, overlap or potential conflict is
avoided.

The Bill also envisages provisions for product liability action on account of harm caused to consumers
due to a defective product or by deficiency in services. Further, provision of “Mediation” as an Alternate
Dispute Resolution Mechanism has also been provided.

The Bill provides for several provisions aimed at simplifying the consumer dispute ajudication process of
the Consumer Disputes Redressal Agencies, inter alia, relating to enhancing the pecuniary jurisdiction of
the Consumer Disputes Redressal Agencies; increasing minimum number of Members in the State
Consumer Disputes Redressal Commissions and provisions for consumers to file complaints
electronically, etc.

Need for the new act:

-The Digital Age has ushered in a new era of commerce and digital branding, as well as a new set of
customer expectations. Digitisation has provided easy access, a large variety of choices, convenient
payment mechanisms, improved services and shopping as per convenience. However, there are also
associated challenges related to consumer protection.

-To help address the new set of challenges faced by consumers in the digital age, the Indian Parliament
passed the landmark Consumer Protection Bill, 2019 which aims to provide timely and effective
administration and settlement of consumer disputes.

-The basic aim of the Consumer Protection Act, 2019 is to save the rights of the consumers by
establishing authorities for timely and effective administration and settlement of consumers’ disputes.

Significance of the Act:

Empowering consumers:

 The new Act will empower consumers and help them in protecting their rights through its various
rules and provisions. The new Act will help in safeguarding consumer interests and rights.

 Consumer-driven businesses such as retail, e-commerce would need to have robust

policies dealing with consumer redressal in place.
  The new Act will also push the consumer-driven businesses to take extra precautions
against unfair trade practices and unethical business practices.
Inclusion of the e-commerce sector:

 The earlier Act did not specifically include e-commerce transactions, and this lacuna has been
addressed by the new Act.

 E-commerce has been witnessing tremendous growth in recent times. The Indian e-
commerce market is expected to grow to US$ 200 billion by 2026.
The Act also enables regulations to be notified on e-commerce and direct selling with a focus on
the protection of interest of consumers. This would involve rules for the prevention of unfair
trade practices by e-commerce platforms.
 As per the notified rules, every e-commerce entity is required to provide information
relating to return, refund, exchange, warranty and guarantee, delivery and shipment,
modes of payment, grievance redressal mechanism, payment methods, the security of
payment methods, charge-back options, etc. including country of origin which are
necessary for enabling the consumer to make an informed decision at the pre-purchase
stage on its platform.
 The e-commerce platforms will have to acknowledge the receipt of any consumer
complaint within forty-eight hours and redress the complaint within one month from the
date of receipt under this Act. This will bring e-commerce companies under the ambit of
a structured consumer redressal mechanism.
 E-commerce entities that do not comply will face penal action.
Time-bound redressal:

 A large number of pending consumer complaints in consumer courts have been common across
the country. The new Act by simplifying the resolution process can help solve the consumer
grievances speedily.
 A main feature of the Act is that under this, the cases are decided in a limited time period.
Responsible endorsement:

 The new Act fixes liability on endorsers considering that there have been numerous instances in
the recent past where consumers have fallen prey to unfair trade practices under the influence of
celebrities acting as brand ambassadors.
  This will make all stakeholders – brands, agencies, celebrities, influencers and e-commerce
players – a lot more responsible. The new Act would force the endorser to take the onus and
exercise due diligence to verify the veracity of the claims made in the advertisement to refute
liability claims.
Upholding consumer interests:

 For the first time, there will be an exclusive law dealing with Product Liability.
 Product liability provision will deter manufacturers and service providers from delivering
defective products or deficient services.
 The new legislation empowers the National Consumers Dispute Redressal Committee as well as
the State Commission to declare null and void any terms of a contract while purchasing a product.
This will go a long way in protecting consumers, who are often subject to contract conditions that
favour a seller or manufacturer.
Alternate dispute redressal mechanism:

 The provision of Mediation will make the process of dispute adjudication simpler and quicker.
 This will provide a better mechanism to dispose of consumer complaints in a speedy manner and
will help in the disposal of a large number of pending cases in consumer courts across the nation.
Simplified process for grievance redressal:

 The new Act would ease the overall process of consumer grievance redressal and dispute
resolution process. This will help reduce inconvenience and harassment for the consumers.

PRELIMINARY (Sec.1-2)

Sec.2 Definitions

Sec2(7) Consumer,2(9) Consumer Rights, Deficiency 2(11),2(42) Service

Sec2(7) New definition of consumer:

The new Act has widened the definition of ‘consumer’.As per the Act, a person is called a
consumer who avails the services and buys any good for self-use. Worth to mention that if a
person buys any good or avails any service for resale or commercial purposes, he/she is not
considered a consumer. This definition covers all types of transactions i.e. offline and online
through teleshopping, direct selling or multi-level marketing.

Sec.2(9) "consumer rights" includes, —

(i) the right to be protected against the marketing of goods, products or services which
are hazardous to life and property;
(ii) the right to be informed about the quality, quantity, potency, purity, standard and
price of goods, products or services, as the case may be, so as to protect the consumer
against unfair trade practices;
(iii) the right to be assured, wherever possible, access to a variety of goods, products or
services at competitive prices;
(iv) the right to be heard and to be assured that consumer's interests will receive due
consideration at appropriate fora;
(v) the right to seek redressal against unfair trade practice or restrictive trade practices or
unscrupulous exploitation of consumers; and
(vi) the right to consumer awareness;

Sec.2 (11) "deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality,
nature and manner of performance which is required to be maintained by or under any law for
the time being in force or has been undertaken to be performed by a person in pursuance of a
contract or otherwise in relation to any service and includes— (i) any act of negligence or
omission or commission by such person which causes loss or injury to the consumer; and (ii)
deliberate withholding of relevant information by such person to the consumer;

Sec.2(42) "service" means service of any description which is made available to potential users
and includes, but not limited to, the provision of facilities in connection with banking, financing,
insurance, transport, processing, supply of electrical or other energy, telecom, boarding or
lodging or both, housing construction, entertainment, amusement or the purveying of news or

other information, but does not include the rendering of any service free of charge or under a
contract of personal service;
 Quality Assurance
What are Standards?

Standards are authoritative statements of the criteria necessary to ensure that the material, product or
procedure is fit for its intended purpose. Product standards generally prescribe optimum levels of
quality, safety and performance as well as sampling and methods of practical evaluation.

The standards ensure:

• Protection of safety and health

• Fitness for purpose (performance)

• Environmental protection

• Ease of use

• Quality and reliability

• Compatibility between products (interoperability)

• Transparency of product information and labelling

• Protection from false or misleading claims

• Fair competition, hence choice among goods and services and competitive pricing

• Systems of redress, such as complaints handling and processing of claims

• Consistency in the delivery of services

• Suitability of products for vulnerable populations (such as children, persons with disabilities, and the
elderly)
ISI mark

Mark is a standardization mark issued by the Bureau of Indian Standards (BIS) to certify that the
products conform to the minimum quality standards. The Product Certification Scheme of BIS aims at
providing

 Third Party Guarantee of quality,

 safety and

 reliability of products to the customer.

Consumer products under Compulsory Certification are infant foods, food colors, cement, GLS lamps,
electric iron, electric immersion water heater, some steel tubes, packaged bottle water etc.

Hallmark

Hallmarking is the accurate determination and official recording of the proportionate content of
precious metal in precious metal articles. Hallmarks are thus official marks used in many countries as a
guarantee of purity or fineness of precious metal articles.

• In India, at present two precious metals namely gold and silver have been brought under the purview
of Hallmarking.

• The principal objective of Hallmarking Scheme is to protect consumers against victimization due to
irregular gold or silver quality, and to develop India as a leading gold market center in the World and to
develop export competitiveness.

Features of Hallmarking: -

• Hallmarking of Gold Jewellery is a purity certification scheme of BIS launched in the year 2000.

• Hallmarked jewellery goes through stringent norms of manufacture and quality control.

• Hallmarked jewellery is assayed and marked by BIS recognized Assaying and Hallmarking Centers.

 Look for Jewellery showroom selling hallmarked jewellery.

  BIS mark on the jewellery along with purity mark. Buy Hallmarked jewellery only. It assures
fineness mark.
 Ask for Cash receipt which helps BIS to resolve complaints (if any).
 Caution Do not get impressed by testing of jewellery by Karat meter or other similar instruments
(it checks only surface)
 Hallmark indicates that the jewellery article has been independently tested and assures that it
conforms to the marked

AGMARK

What is AGMARK?

AGMARK is a certification mark on agricultural products in India, assuring that they conform to a set of
standards approved by the Directorate of Marketing and Inspection, an agency of the Government of
India. The AGMARK is legally enforced in India by the Agricultural Produce (Grading and Marking) Act,
1937. The present AGMARK standards cover quality guidelines for 205 different commodities spanning a
variety of Pulses, Cereals, Essential Oils, Vegetable Oils, Fruits and Vegetables, and semi-processed
products.

What are Vegetarian and Non-vegetarian Marks?

Packaged food products sold in India are required to be labeled with a mandatory mark in order to be
distinguished between vegetarian and non-vegetarian.

 The red circle indicates that the food item contains non-vegetarian ingredients
 green circle indicates vegetarian ingredients.
 This helps the consumer to identify the food of their choice. The Government of India has made
it mandatory for all packages of processed food items to bear the vegetarian or non-vegetarian
mark.

Declaration by way of red dot /brown dot marking on the package for non-vegetarian/ eggetarian
contents and green dot for vegetarian content in soaps, shampoos, tooth pastes and other cosmetics
and toiletries has been made mandatory through the Legal Metrology (Packaged Commodities)
(Amendment) Rules, 2014.
BIS

Bureau of Indian Standards (BIS) is the National Standard Body of India. BIS is responsible for
the harmonious development of the activities of standardization, marking and quality
certification of goods and for matters connected therewith or incidental thereto.

STATUTORY FRAMEWORK
The Bureau of Indian Standards Act, 2016, has been implemented since 12 October 2017. The
highlights of the new BIS Act are:

 Positions BIS as the National Standards Body.

 Allows multiple conformity assessment schemes in line with global practices.
 Enables the Government to authorize any agency apart from BIS to certify and enforce
conformity to a standard.
 Enables the Government to include products under mandatory certification on grounds of
health, safety, environment, national security and prevention of deceptive practices.
 Enables the Government to bring Hallmarking of precious metal articles under mandatory
certification.
 Provides consumer protection measures like recall of non-conforming standard marked
products, compensation to the consumer and more stringent penal provisions.

OBJECTIVES OF BIS

 Harmonious development of the activities of standardization, marking and quality

certification of goods
 To provide thrust to standardization and quality control for growth and development of
industry on one hand and to meet the needs of consumers on the other.
ORGANIZATIONAL NET WORK
BIS has its Headquarters at New Delhi. It has 5 Regional Offices (ROs) located at Kolkata
(Eastern), Chennai (Southern), Mumbai (Western), Chandigarh (Northern) and Delhi (Central).

ACTIVITIES
The activities of BIS can be broadly grouped under the following heads:
1. Standards formulation

2. International activities

3. Product Certification

4. Hallmarking

5. Laboratory services

6. Training services - National Institute of Training for Standardization

7. Consumer Affairs and Publicity

STANDARDS FORMULATION
BIS formulates Indian Standards in line with the national priorities for various sectors that have
been grouped under 14 Departments like Chemicals, Food and Agriculture, Civil, Electro-
technical, Electronics & Information Technology, Mechanical Engineering, Management &
Systems, Metallurgical Engineering, Petroleum Coal & Related Products, Medical Equipment
and Hospital Planning, Textile, Transport Engineering, Production & General Engineering and
Water Resources. Corresponding to these Departments fourteen Division Councils exist. Each
Division Council has a number of Sectional committees working under it. The standards cover
important segments of economy and help the industry in upgrading the quality of their goods and
services.

INTERNATIONAL ACTIVITIES
International Organization for Standardization (ISO)- ISO is an independent, non-
governmental membership organization and the world’s largest developer of voluntary
International Standards. BIS is a founder member of ISO and is actively involved in
development of International Standards by acting as Participating (P) member or Observer (O)
member on various Technical Committees, Sub-Committees, Working Groups, etc.

International Electro-technical Commission (IEC)- IEC was founded in 1906 and is the
world’s leading organization for the preparation and publication of International Standards for all
electrical, electronic and related technologies. India is represented in IEC through BIS.

PRODUCT CERTIFICATION
BIS operates a Product Certification scheme for ensuring compliance to Indian Standards.
Presence of BIS standard mark (popularly known as ISI mark) on a product indicates conformity
to the relevant Indian Standard. Before granting licence to any manufacturer, BIS ascertains the
availability of required infrastructure and capability of the manufacturer to produce and test the
product conforming to the relevant Indian Standard on a continuous basis.

Foreign Manufactures Certification Scheme (FMCS)

BIS has been operating a separate scheme for foreign manufacturers in order to certify goods
manufactured outside India. Under this scheme, foreign manufacturers can seek certification
from BIS for marking their product(s) with BIS Standard Mark after ensuring conformity of the
products to relevant Indian Standard(s).

Registration Scheme for Self-Declaration of conformity

Registration Scheme operated by BIS is a simplified process of conformity assessment. In this
this scheme a manufacturer himself makes a declaration that his product conforms to the Indian
Standard.

Ministry of Electronics and Information Technology (MeitY) has notified "Electronics and
Information Technology Goods (Requirements for Compulsory Registration) Order, 2012" on 3
Oct 2012 mandating Compulsory Registration from BIS for Electronics and Information
Technology (IT) products. BIS had also notified a separate ‘Standard Mark’ for the Registration
Scheme.