Consumer Protection Bill 2019 soon to be enacted; includes Product Liability, unfair trade practices, misleading advertisements under its purview

Consumer Protection Bill 2019 soon to be enacted; includes Product Liability, unfair trade practices, misleading advertisements under its purview

August 7, 2019 Industries, post_cats, states 0

The Ministry of Consumer Affairs, Food and Public Distribution has passed the Consumer Protection Bill, 2019 (“Bill of 2019”) on 30th July 2019.

Background:

The Consumer Protection Bill, 2018 (“Bill of 2018”) was introduced in Lok Sabha on the 5th January 2018 and was passed on the 20th December 2018. The Bill lapsed while it was pending consideration in Rajya Sabha. Hence, the Bill of 2019 was reintroduced in Lok Sabha on 8th July 2019. The emergence of global supply chain rises 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.

Key Highlights:

A. Central Consumer Protection Authority

The Bill proposes to establish the Central Consumer Protection Authority (CCPA) 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, protect and enforce the rights of consumers as a class.

B. Product Liability of a product manufacturer or product seller

A consumer will be able to file a claim for product liability where the action would lie against the product manufacturer, product seller or product service provider. In order to implement the claim compliant, the term product liability has been defined as the responsibility of a product manufacturer or product seller of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services. However, certain exemptions have been provided to product seller and manufacturers, which are detailed below:

  1. A product manufacturer will 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;
  2. A product liability action cannot be brought against the product seller if, at the time of harm, the product was misused, altered, or modified.
  3. In any product liability action which is based on the failure to provide adequate warnings or instructions, the product manufacturer will not be liable if –
  • the product was purchased by an employer for use at the workplace and the product manufacturer had provided warnings or instructions to such employer;
  • 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;
  • 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; or
  • the complainant, while using such product, was under the influence of alcohol or any prescription drug which had not been prescribed by a medical practitioner.

C. Unfair Contract, Unfair Trade Practises and Misleading Advertisements:

  1. The Authority has been empowered to determine any terms of contract to be null and void which is unfair to any consumer. The term ‘Unfair contract’ means a contract between a manufacturer or trader or service provider on one hand, and a consumer on the other, having such terms which is causing significant change in the rights of a consumer.
  2. The Bill also covers “unfair trade practice” which includes adoption of any unfair method or unfair or deceptive practice for the purpose of promoting the sale, use or supply of any goods or for the provision of any service. In case CCPA is satisfied on the basis of investigation that there is sufficient evidence to show violation of consumer rights or unfair trade practice by a person, it may pass such order for recalling of goods or withdrawal of services which are dangerous, hazardous or unsafe and reimbursement of the prices of goods or services so recalled to purchasers of such goods or services.
  3. The Bill includes misleading advertisements also under its purview. Any manufacturer or service provider who causes a false or misleading advertisement to be made which is prejudicial to the interest of consumers will be punished with imprisonment extending up to 2 years and with fine extending up to ten lakh rupees. In case of a subsequent offence, a punishment with imprisonment extending up to 5 years and with fine which may extend to fifty lakh rupees. The Bill covers the following activities as misleading advertisements:

(i)            false description of product or service;

(ii)           providing false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or

(iii)          conveying of an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or

(iv)          deliberate concealing of important information

  1. Penalties:
Maximum Penalty Imprisonment Fine
Manufacturing for sale or storing, selling or distributing or importing products containing adulterant 7 years Rs. 7 Lakhs
Manufacturing for sale or for storing or selling or distributing or importing spurious goods For Life Rs. 10 Lakhs
Non-compliance of direction of Central Authority: 6 months

 

Rs. 20 Lakhs

 

SourceLok Sabha

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