Significant amendments proposed to Consumer Protection Act Online filing to be made permissible fines for non-compliance enhanced

The Government of India has recently proposed a significant number of changes to the Consumer Protection Act, 1986 (the Consumer Act) vide the Consumer Protection (Amendment) Bill 2011. The Amendment Bill, which was introduced in the Lok Sabha in December last year, is seen by many as a move in the right direction and has now been referred to a Standing Committee. 

The Government of India has recently proposed a significant number of changes to the Consumer Protection Act, 1986 (the Consumer Act) vide the Consumer Protection (Amendment) Bill 2011. The Amendment Bill, which was introduced in the Lok Sabha in December last year, is seen by many as a move in the right direction and has now been referred to a Standing Committee.

First introduced in 1986, the Consumer Act was welcomed by consumer activists in the country as it set out to consolidate and legitimise the rights of consumers against large, powerful manufacturers and industries. In fact, as noted by MJ Antony in a column written for Business Standard ,the consumer forums were formed after the sustained efforts by consumer activists led by the Common Cause Society. As per Antony, it was the PIL filed before the Supreme Court which eventually forced the government to establish consumer forums.

In his article, Antony also refers to the recent judgment of the Supreme Court in Madhusudhan's case (January 16,2012) wherein the Apex Court held that the principal objectinve of the Consumer Act is to provide for a “better protection of the interest of the consumer “ and further observed that the
“jurisdiction of the Consumer Forum should not “ ordinarily be curtailed.

The judgement in Madhusudhan Reddy, although welcome, is certainly not a new development. In a catena of judgements, the Apex Court has held that the Consumer Act is a necessary and welcome addition to Indian jurisprudence and that its provisions should be interpreted keeping in mind the basic objective of consumer protection.

However, as is so often the case with noble intentions, the Consumer Act has forced to live up to its expecations in several ways. The forums established by the Consumer Act have become clogged with pendency of cases, effective compliance is difficult to monitor and very often the compensation awarded is abysmally low. The Amendment Bill seeks to change this and addresses these issues in a variety of ways.

For instance, the Amendment Bill allows for filing of consumer complaints online, non-compliance of orders are now punishable by a fine of five hundred rupees or one-half per cent of award amount for each day of non-compliance. An award passed by the consumer forum is likened to a decree passed by a civil court of competent jurisdiction.

Other important amendments include the move to allow existing District Forums to exercise jurisdiction over districts where no such District Forum has been established; District Forums will be able to function in locations other than the district headquarters.

For faster adjudication, the Amendment Bill states that if the issue of admissibility is not decided within 28 days, then the complaint will be deemed to have been admitted. Of course, this clause is conditional on the complainant being present before the consumer forum.

Advocate Maneesha Kongovi, currently working at Aditya Sondhi's Law Chambers, says that although the Amendment Bill does contain positives, there are certain shortcomings which need to be addressed as well. “While the Bill takes a progressive step by imposing a fixed penalty of Rs. 500/- or ½ % of the value for every day of default in compliance with an Order of the Consumer Forum, by doing so it takes away the discretion of the Consumer Forum in awarding interest.”, she says.

By doing away with this discretion, the Amendment Bill prevents the forum from considering mitigating factors such as the gravity of the defect, financial status of the service provider etc. Citing the example of the Motor Vehicles Act (which provides for a schedule for calculation of damages), Kongovi says that the Amendment Bill could have followed this model and provided for a more uniform structure for computation of damages.

At the same time, this provision may prove to be unduly harsh to the service/product providers. As Kongovi elaborates, it appears that the Amendment Bill “...imposes a penalty on the manufacturer / service provider even during the period when an appeal may be preferred by the manufacturer / service provider. The manufacturer ought not to be penalized during the period when he has a statutory right of Appeal. 

The Amendment Bill also provides an expansive definition of the terms “deficiency”, “defect” and “unfair trade practice” However, as Kongovi is quick to point out, this expansive definition neccessarily means that “the Judiciary would play a crucial role.......to delineate the scope of these definitions.”

There is no doubt that the Consumer Act is a vital piece of legislation and one which can greatly encourage and protect consumer rights in the country. At the same time, it is also beyond doubt that the Consumer Act, in its present state, is suffering from ineffectiveness and non-performce. Hence, in one sense, the Amendment Bill is welcome since it acknowledges the importance of the Consumer Act and seeks to better the same. However, some of the proposed changes might require a re-think to make consumer dispute redressals truly efficient and cost-effective.