Briefing Document: The Consumer Protection Act, 2019

Executive Summary

The Consumer Protection Act, 2019, represents a comprehensive overhaul

of India's consumer rights framework, replacing the three-decade-old
Consumer Protection Act, 1986. This legislative modernization was
necessitated by the drastic transformation of consumer markets,
particularly the rise of e-commerce, global supply chains, and new forms
of marketing, which exposed consumers to new vulnerabilities. The Act's
primary objective is to provide for the protection of consumer interests
through the timely and effective administration and settlement of
disputes.

Key strategic changes introduced by the 2019 Act include:

 Establishment of the Central Consumer Protection Authority

(CCPA): A new regulatory body with broad powers to protect the
rights of consumers as a class. The CCPA is empowered to conduct
investigations, order the recall of unsafe goods, and impose
significant penalties for unfair trade practices and misleading
advertisements.

 Expanded Scope for E-Commerce and Direct Selling: The Act

explicitly brings online transactions, teleshopping, direct selling, and
multi-level marketing under its purview, addressing a significant gap
in the previous legislation.

 Introduction of Product Liability: A dedicated framework holds

product manufacturers, service providers, and sellers accountable
for harm caused by defective products or deficient services, allowing
consumers to seek compensation through product liability actions.

 Revised Pecuniary Jurisdictions: The financial limits for the

consumer commissions have been significantly increased to better
align with current economic realities, streamlining the case-filing
process.

 Alternate Dispute Resolution: The Act formally incorporates

mediation as a mechanism for dispute settlement, providing a faster
and more amicable route for resolving consumer grievances.

In essence, the Consumer Protection Act, 2019, strengthens the consumer

rights regime in India by creating a more robust executive and quasi-
judicial infrastructure, expanding its scope to modern commerce, and
introducing stringent liability and penalty provisions to deter unfair and
unethical business practices.
1. Introduction and Legislative Evolution

The foundational principle of consumer protection law has evolved from

the medieval doctrine of ‘Caveat Emptor’ (let the buyer beware) to the
modern concept of ‘Consumer Sovereignty’. However, the realities of
mass production, complex supply chains, and aggressive advertising have
often diluted this sovereignty, exposing consumers to unfair practices
such as the sale of defective goods, exorbitant pricing, misrepresentation,
and negligence regarding safety standards.

The Consumer Protection Act, 1986, was a landmark piece of socio-

economic legislation in India, establishing a three-tier quasi-judicial
system of consumer courts (District, State, and National) and advisory
Consumer Protection Councils. While it served its purpose to a
considerable extent, the Act faced shortcomings, including slow case
disposal and an inability to address the challenges posed by a rapidly
modernizing marketplace.

The emergence of e-commerce, global trade, direct selling, and multi-level

marketing created new vulnerabilities for consumers. Misleading
advertisements and unfair trade practices evolved, necessitating a more
dynamic and powerful legislative framework. The Consumer Protection
Act, 2019, was enacted to address these challenges, receiving Presidential
assent on August 9, 2019. Its preamble states its purpose is "to provide
for protection of the interests of consumers and for the said purpose, to
establish authorities for timely and effective administration and
settlement of consumers’ disputes."

Supreme Court of India judgments have consistently emphasized that the

Act is a beneficial legislation deserving of liberal construction to protect
consumers from wrongs for which remedies under ordinary law have
become "illusory."

2. Main Features of the Consumer Protection Act, 2019

The 2019 Act introduces several new concepts and strengthens existing
provisions. Its main features include:

 Inclusion of E-commerce and Direct Selling: Explicitly covering

transactions made through electronic means.

 Establishment of Central Consumer Protection Authority

(CCPA): A new regulatory body to promote, protect, and enforce the
rights of consumers as a class.

 Strict Norms for Misleading Advertisement: The CCPA can

impose penalties on manufacturers and endorsers for false or
misleading advertisements.
  Strict Norms for Product Liability: Establishes clear
responsibility for manufacturers, service providers, and sellers for
harm caused by defective products.

 Revised Pecuniary Jurisdiction: Enhances the financial limits for

filing complaints at each level of the consumer commissions.

 Broadened Definition of "Unfair Trade Practice": The scope is

expanded to include practices like non-issuance of bills and refusal
to take back defective goods.

 Concept of "Unfair Contract": Allows consumers to challenge

contracts that are unilateral, manifestly arbitrary, or cause a
significant change in their rights.

 Alternate Dispute Resolution: Provides for settlement of disputes

through mediation.

3. Core Definitions and Concepts

The Act defines numerous key terms that form the basis of its application.

3.1. Definition of "Consumer"

A "consumer" [Section 2(7)] is defined as any person who:

1. Buys goods for a consideration (paid, promised, partly

paid/promised, or deferred payment). This includes any user of such
goods, provided the use is with the approval of the buyer.

2. Hires or avails of any service for a consideration. This includes

any beneficiary of such services, provided the services are availed
with the approval of the person who hired them.

Exclusions: A person is not a consumer if they:

 Obtain goods or services free of charge.

 Obtain goods for resale or for any commercial purpose.

 Avail services for any commercial purpose.

 Avail services under a contract of service (i.e., an employer-

employee relationship).

3.2. "Commercial Purpose" Explained

The Act clarifies that "commercial purpose" does not include the use of
goods bought and used by a person exclusively for earning their livelihood
by means of self-employment. The Supreme Court in Laxmi Engineering
Works v. P.S.G. Industrial Institute held that this is a question of fact. For
instance:
  A person who buys a machine to operate it themselves (even with
the help of one or two assistants) for their livelihood is a consumer.

 If a person buys a machine and engages another person exclusively

to operate it, this is considered a commercial purpose, and the
buyer is not a consumer.

 A tractor purchased primarily to till the owner's land and let out on
hire during idle time is not considered a commercial use (Bhupendra
Jang Bahadur Guna vs. Regional Manager and Others).

3.3. Key Transactional and Practice-Related Definitions

Definitio
Term n Key Details
[Section]

Any audio or visual publicity, representation, or

Advertiseme
2(1) endorsement made via light, sound, print,
nt
electronic media, internet, etc.

An advertisement that falsely describes a

Misleading
product/service, gives a false guarantee,
Advertiseme 2(28)
constitutes an unfair trade practice, or
nt
deliberately conceals important information.

A trade practice that adopts any unfair or

deceptive method to promote sales. This
includes false representations about quality,
misleading price information, offering prizes with
Unfair Trade
2(47) no intention of providing them, hoarding goods
Practice
to raise prices, and manufacturing spurious
goods. It now also includes refusing to take back
defective goods or refund the consideration
within 30 days.

A practice that manipulates price or conditions of

Restrictive delivery to impose unjustified costs or
Trade 2(41) restrictions on consumers (e.g., tying
Practice arrangements where buying one good requires
buying another).

Unfair 2(46) A contract with terms that cause a significant

Contract change in a consumer's rights, such as requiring
excessive security deposits, imposing
disproportionate penalties for breach, allowing
 unilateral termination without reasonable cause,
or imposing unreasonable conditions.

Buying or selling of goods or services, including

E-Commerce 2(16) digital products, over a digital or electronic
network.

Marketing, distribution, and sale of goods or

Direct
2(13) services through a network of sellers, other than
Selling
from a permanent retail location.

Any fault, imperfection, or shortcoming in the

Defect 2(10)
quality, quantity, purity, or standard of goods.

Any fault, imperfection, shortcoming, or

inadequacy in the quality, nature, or manner of
Deficiency 2(11) performance of a service. This includes acts of
negligence causing loss or injury and the
deliberate withholding of relevant information.

3.4. Consumer Rights

The Act explicitly defines "consumer rights" under Section 2(9) to include:

 Right to be protected against hazardous goods and services.

 Right to be informed about quality, quantity, purity, standard, and

price.

 Right to access a variety of goods and services at competitive

prices.

 Right to be heard and have consumer interests receive due

consideration.

 Right to seek redressal against unfair or restrictive trade practices.

 Right to consumer awareness.

4. Consumer Protection Bodies

4.1. Consumer Protection Councils

The Act provides for a three-tier advisory structure to promote and protect
consumer rights:

 Central Consumer Protection Council: Established by the

Central Government and chaired by the Minister-in-charge of
Consumer Affairs. It meets at least once a year.
  State Consumer Protection Councils: Established by State
Governments and chaired by the state Minister-in-charge of
Consumer Affairs. They must meet at least twice a year.

 District Consumer Protection Councils: Established by State

Governments in every district, chaired by the District Collector. They
must meet at least twice a year.

4.2. Central Consumer Protection Authority (CCPA)

The CCPA, established under Section 10, is the Act's new regulatory
authority.

 Mandate: To regulate matters related to violation of consumer

rights, unfair trade practices, and false or misleading
advertisements. It is empowered to promote, protect, and enforce
the rights of consumers as a class.

 Composition: Consists of a Chief Commissioner and other

Commissioners appointed by the Central Government.

 Investigation Wing: Headed by a Director General, this wing

conducts inquiries and investigations as directed by the CCPA. The
District Collector also has the power to investigate complaints within
their jurisdiction.

 Key Powers [Section 18, 20, 21]:

o Inquire or investigate violations of consumer rights, either suo

motu, on complaint, or on direction from the Central
Government.

o File complaints before the Consumer Commissions.

o Order the recall of goods or withdrawal of services that are

dangerous or unsafe and order reimbursement to purchasers.

o Issue directions to discontinue unfair trade practices.

o Issue directions to discontinue or modify a false or misleading

advertisement.

o Impose a penalty of up to ₹10 lakh on a manufacturer or

endorser for a false advertisement, and up to ₹50 lakh for a
subsequent contravention.

o Prohibit an endorser of a misleading advertisement from

making any endorsement for up to one year (up to three years
for subsequent contraventions).
  Appeal: An order passed by the CCPA under Sections 20 and 21 can
be appealed to the National Commission within 30 days.

5. Consumer Disputes Redressal Commissions

The Act maintains the three-tier quasi-judicial machinery for adjudicating

consumer disputes.

5.1. Pecuniary Jurisdiction

The financial limits for filing complaints have been revised as follows:

Pecuniary Jurisdiction (Value of goods/services paid as

Commission
consideration)

District
Does not exceed ₹1 crore
Commission

State
Exceeds ₹1 crore but does not exceed ₹10 crore
Commission

National
Exceeds ₹10 crore
Commission

5.2. District Consumer Disputes Redressal Commission

 Establishment: Established by the State Government in each

district.

 Territorial Jurisdiction [Section 34]: A complaint can be filed

where:

o The opposite party resides, works for gain, or has a branch

office.

o The cause of action (wholly or in part) arises.

o The complainant resides or personally works for gain.

(This is a significant pro-consumer change).

 Procedure [Section 38]:

1. On admission, a copy of the complaint is sent to the opposite

party, who must reply within 30 days (extendable by 15 days).

2. If the complaint involves goods needing testing, a sample is

sent to an appropriate laboratory.

3. Disputes are heard based on affidavit and documentary

evidence.
 4. An endeavour must be made to decide the complaint within
three months (or five months if testing is required).

 Findings [Section 39]: If a complaint is proven, the Commission

can order the opposite party to: remove defects, replace goods,
return the price paid, pay compensation for loss/injury (including
punitive damages), discontinue unfair/restrictive trade practices,
withdraw hazardous goods, or issue corrective advertisements.

 Appeal [Section 41]: An appeal against a District Commission's

order lies with the State Commission and must be filed within 45
days. The appellant must deposit 50% of the awarded amount
before the appeal is entertained.

5.3. State Consumer Disputes Redressal Commission

 Establishment: Established by the State Government in each

state.

 Jurisdiction [Section 47]:

o Pecuniary: Complaints where consideration is between ₹1

crore and ₹10 crore.

o Unfair Contracts: Complaints against unfair contracts where

consideration does not exceed ₹10 crore.

o Appellate: Hears appeals against orders of District

Commissions within the state.

o Revisional: Can call for records from any District Commission

to examine the legality or propriety of an order.

 Appeal [Section 51]: An appeal against the State Commission's

original order lies with the National Commission within 30 days. An
appeal from an order passed in appeal by the State Commission lies
only if the case involves a "substantial question of law." The
appellant must deposit 50% of the awarded amount.

5.4. National Consumer Disputes Redressal Commission

 Establishment: Established by the Central Government.

 Jurisdiction [Section 58]:

o Pecuniary: Complaints where consideration exceeds ₹10

crore.

o Unfair Contracts: Complaints against unfair contracts where

consideration exceeds ₹10 crore.
 o Appellate: Hears appeals against orders of any State
Commission and the Central Consumer Protection Authority
(CCPA).

o Revisional: Can call for records from any State Commission

to examine the legality or propriety of an order.

 Appeal [Section 67]: An appeal against an order of the National

Commission lies with the Supreme Court within 30 days. The
appellant must deposit 50% of the awarded amount.

6. Mediation Framework

Chapter V of the Act introduces a formal mechanism for alternate dispute

resolution.

 Establishment of Mediation Cells [Section 74]: State and

Central Governments are empowered to establish Consumer
Mediation Cells attached to the District, State, and National
Commissions.

 Referral to Mediation [Section 37]: At the first hearing, if the

Commission sees a possibility of settlement, it can refer the parties
to mediation, provided they give written consent within five days.

 Settlement [Section 80]: If mediation is successful, the terms of

the agreement are written down and signed by the parties. The
mediator prepares a settlement report and submits it to the
Commission.

 Order [Section 81]: The Commission will pass an order recording

the settlement within seven days of receiving the report. No appeal
lies against an order passed pursuant to a settlement by mediation.

7. Product Liability

Chapter VI introduces a comprehensive product liability framework. A

product liability action [Section 83] can be brought by a complainant for
any harm caused by a defective product.

 Liability of Product Manufacturer [Section 84]: A manufacturer

is liable if the product has a manufacturing defect, is defective in
design, deviates from manufacturing specifications, does not
conform to an express warranty, or fails to contain adequate
instructions for correct usage.

 Liability of Product Service Provider [Section 85]: A service

provider is liable if the service was faulty or deficient, there was an
 act of omission or negligence, adequate instructions were not
provided, or the service did not conform to an express warranty.

 Liability of Product Seller [Section 86]: A seller (who is not a

manufacturer) is liable if they exercised substantial control over the
product's design/manufacturing, altered or modified the product,
made an independent express warranty that was breached, or if the
manufacturer cannot be identified or served legal notice.

 Exceptions [Section 87]: A product liability action cannot be

brought if the product was misused, altered, or modified by the
consumer at the time of harm. A manufacturer is not liable for
failing to warn about dangers that are obvious or commonly known.

8. Offences and Penalties

The Act specifies penalties for non-compliance and criminal offenses.

 Non-compliance with CCPA Directions [Section 88]: Failure to

comply with a CCPA direction (e.g., to recall goods) is punishable
with imprisonment up to six months or a fine up to ₹20 lakh, or
both.

 False or Misleading Advertisement [Section 89]: A

manufacturer or service provider causing a false or misleading
advertisement prejudicial to consumer interests can be punished
with imprisonment up to two years and a fine up to ₹10 lakh. For a
subsequent offense, this can extend to five years' imprisonment and
a fine of up to ₹50 lakh.

 Manufacturing/Selling Products with Adulterants [Section

90]: This is a graded offense.

o No injury: Imprisonment up to 6 months and a fine up to ₹1

lakh.

o Causing non-grievous hurt: Imprisonment up to 1 year and a

fine up to ₹3 lakh.

o Causing grievous hurt: Imprisonment up to 7 years and a fine

up to ₹5 lakh.

o Causing death: Imprisonment from 7 years to life, and a fine of

not less than ₹10 lakh.

 Manufacturing/Selling Spurious Goods [Section 91]: Similar

graded penalties apply, ranging from imprisonment of up to 1 year
for non-grievous hurt to a minimum of 7 years to life for causing
death.