The new Consumer Protection Act, 2019 widens the reach, scope of protection and empowerment of consumers and its provisions thus aid home buyers. There are close to ten provisions in the new Act which may be of interest to home buyers.

At the outset, I begin by making an observation that the new Consumer Protection Act, 2019 aims to protect the consumers hitherto rendered vulnerable by the rapidly changing methods of transactions brought about by the introduction and increased use of digital technology. The new Consumer Protection Act, 2019 was enacted on August 9, 2019; however, it has been notified with effect from July 20, 2020.

In this article, I shall be focusing only on those ten provisions in the new Consumer Protection Act, 2019, that may be of particular interest and weigh in favour of home buyers as follows:

Unfair contract

The new Consumer Protection Act, 2019 has introduced the concept of 'unfair contract' by way of definition in Section 2 (46) which includes those contracts, which favour the manufacturers or service providers and are against the interest of consumers such as contracts requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations, imposing any penalty on the consumer for a breach of the contract, which is wholly disproportionate to the loss occurred due to such breach to the other party to the contract, refusing to accept early repayment of debts on payment of applicable penalty, entitlement of a party to the contract to terminate such contract unilaterally, without reasonable cause, permitting or has the effect of permitting one party to assign the contract to the detriment of the other party who is a consumer, without his consent; and imposing on the consumer any unreasonable charge, obligation or condition which puts such a consumer to any disadvantage.

Unfair consumer contracts such as there have now been covered under this Act, and a complaint in this regard can now be filed by a consumer. This would help to keep a check on many businesses, including real estate developers who many times mandatorily require helpless consumers to sign such unfair contracts and accept their standard terms before providing services.

Product liability

Another significant introduction in the 2019 Act is the concept of 'Product Liability' which covers within its ambit the product manufacturer, product service provider and product seller, for any claim for compensation. The term 'product liability' has been defined by this Act as the duty of a product seller or product manufacturer, of any service or product, related to the product to compensate for any harm caused to a consumer by such defective product manufactured or sold or by a deficiency in services relating to the product. However, certain exceptions have been provided under the new Act from liability claims, such as, that the product seller will not be liable where the product has been misused, altered, or modified.

Territorial jurisdiction

The new Consumer Protection Act now provides an added advantage to consumers by providing for the filing of complaints where the complainant resides or personally works for gain as against the earlier Act which only provided for filing of complaint where the opposite party resided or carried on business. The amended provision would help in removing difficulties faced by consumers in seeking redressal of their grievances against businesses who may not have an office or branch in their geographical location.

Pecuniary jurisdiction

The new Act also provides for a change in the pecuniary jurisdiction for the District, State and National Commissions, respectively. The pecuniary limit for the District Consumer Disputes Redressal Commission has been increased to up to Rs 1 Crore, whereas in the earlier Act, it was up to Rs 20 Lakh; for State Consumer Disputes Redressal Commission it has been increased to up to Rs 10 Crores from up to Rs 1 Crore earlier; and for the National Consumer Disputes Redressal Commission, the pecuniary jurisdiction has been increased to over and above Rs 10 Crores as against Rs 1 Crore in the previous Act.

In addition, the 2019 Act has changed the manner for determining the pecuniary jurisdiction for filing the complaint. Now the pecuniary jurisdiction will be determined based on the value of goods or services paid as consideration as against the earlier Act wherein, the pecuniary jurisdiction was determined based on the value of goods and services as well as compensation claimed. This would greatly help in doing away with the practice of inflating the compensation claimed so as to bring the complaint within the jurisdiction of State or National Commission by the complaining consumers.

False and misleading advertisements

The Act has defined the term 'misleading advertisement' concerning any product or service as, 'an advertisement which falsely describes the product or service which gives a false guarantee and is likely to mislead the consumer as to the substance, nature, quality or quantity of such product or service and conveys an express or implied representation which, if made by the seller or manufacturer or service provider, would comprise an unfair trade practice and would also consist of information which is concealed deliberately". Strict penalties for false and misleading advertisements have been provided in the new Act.

Mediation/settlement is now a possibility

The new Act goes on to introduce a chapter on mediation as an alternate dispute resolution mechanism, in order to resolve a consumer dispute faster without having to approach the Commissions with the option of resolving the dispute either in whole or in parts.

Thus, in the event that the mediation is successful, the terms of such agreement shall be reduced into writing accordingly and put up before the Commission adjudicating upon the controversy and where the consumer dispute is settled only in part, the Commission, shall record the settlement of the issues which have been settled, and shall continue to hear the remaining issues involved. In the event the mediation is not successful, the Commission shall within seven days of the receipt of the report, pass a suitable order and shall proceed to dispose of the matter accordingly.

Central Consumer Protection Authority (CCPA)

The new Act introduces the establishment of a Central Consumer Protection Authority (CCPA) by the Central Government. The CCPA will be a regulatory authority and shall be empowered to impose penalties, recall goods, cause the withdrawal of services, provide refunds and investigate matters. It shall also be responsible for protecting the rights of consumers as a class and shall further ensure that no person engages in unfair trade practices and that no misleading advertisements are made. The Act also provides for establishing an investigation wing which shall be headed by the Director-General who shall be appointed by the Central Government for conducting investigations as per the order of the CCPA.

E-filing of complaints and hearing through video conference

This is a unique provision introduced in the new Act as it facilitates e-filing and provides that the consumer can also seek video conference hearing of the case by the Commission, which is a futuristic approach to adjudication of matters definitely aimed at helping consumers.

Decision only on merits

The new Act has done away with the discretionary power of the Commission to dismiss the case in default and mandates that the complaint shall be decided on merits only if the complainant fails to appear on the date of hearing.

Second appeal and review

Lastly, something extremely crucial in the process of dispensation of justice to a consumer, some part of which was missing in the Consumer Protection Act of 1986.

The new Act confers the power of a second appeal upon the National Consumer Disputes Redressal Commission which has been provided under Section 51 (3), subject of course to the determination of a substantial question of law involved in the matter. And, while retaining the power of revision to be exercised by the National Commission, the Act seeks to introduce the power of revision in the State Commission. The power of review has been conferred upon the District Commission, State Commission as well as the National Commission under Sections 40, 50 and 60 of the Act, respectively.

Conclusion

While providing for provisions to deal with class actions, product liability, misleading advertisements and for that matter, even liability for celebrity endorsements, meant to address new-age developments like e-commerce, direct selling and telemarketing, the new Consumer Protection Act of 2019 when compared with the hitherto prevailing 1986 Act is a path-breaking attempt aimed at protecting consumer interests taking into consideration the fact that the digitisation is now the norm. The Act also mandates the imposition of strict liability for violating the interests of consumers with the option of a dispute resolution process, which may enable fast-track resolution of grievances.