History and Development of Consumer Protection Laws in India

To understand the History and Development of Consumer Protection laws in India, it is essential to first understand the need for such laws. A person who buys a product or consumes a service in exchange of monetary consideration is a consumer as per the Consumer Protection Act 1986.

Introduction

Consumers often face issues if the product is of low quality, not adhering to MRP, or if there is any adulteration, etc. This is because the consumer and the company or retailer is rarely on a level playing field. This unequal power balance tends to give the seller/company undue authority to exploit the consumer.

There have been several laws enacted in India to overcome these issues. This article aims to elucidate the history of the concept of Consumer Protection Laws, by plotting the progression of the same in chronological order. Safeguarding the consumer’s rights and assuring quality service should be a priority for any company in retail as well as the Government.

History and Development of Consumer Protection Laws in India

The notion of consumer protection has been present since the very beginning of human civilization. Consumer Protection is a pursuit of socio-economic nature, by the government. Businesses need to prioritize consumer satisfaction which can be ensured only when the government steps in to provide protection to all consumers.

The government fulfils that onus through a structure of policies, regulations, and legislation. To understand the process that led to the drafting of the Consumer Protection Act 1986, one must understand that before this act came into force, there were a string of other laws created for the same objective. However, none of them successfully shielded the consumers from exploitation to the degree that was required.

In the absence of an effective consumer protection law, the onus of being careful when assessing the quality of the product was placed upon the buyer. It helped the sellers shirk their responsibility. The sellers had the leeway to get away with substandard or faulty products due to the lack of a legal framework conceptualized to protect consumers.

If a buyer found a defect in a product, he would simply avoid buying it from the same brand or shop in the future. This is due to a lack of redressal mechanisms, as well as limited access to the existing ones. It took years of activism to generate awareness regarding this issue. This culminated into the Consumer Protection Act 1986.

To understand the evolution in greater detail, the history of consumer protection can be segregated into three parts –

1. Pre – 1950
2. 1950 – 1986
3. 1986- present

1. Pre 1950

In the era preceding 1950, the matter of consumer protection was managed through the regulations enforced in the English common law. The British legal structure generated various categorizations, such as a) Tort b) Contract c) Fiduciary laws that all dealt with different aspects of Consumer Protection, without titling it explicitly. These categorizations continue to stay relevant to Indian law in present times.

Torts are civil wrongs. To establish the different kinds of torts, various tests were designed by the English Courts. Consequently, they were adopted in India. The complainant could file a suit on the grounds of misrepresentation, deceit, negligence, fraud,.etc. The compensation was either monetary in nature or a replacement of the product. In certain circumstances, the complainant could even use the ‘Master Service’ concept embedded in the vicarious liability rule to take the manufacturer accountable.

Contracts are essentially a binding agreement that had been entered into by two or more individuals. It spelt out their duties toward each other and the corresponding reliefs available to each party in case any breach occurs. The dissatisfied customer could approach trial courts for justice in case the seller had committed an unfair practice. The customer could use the Principle Agent rule to take the manufacturer to court. This would be within the vicarious liability rule.

Fiduciary obligations only emerged in limited circumstances if it could be established that there was a trust-based association between the company/shopkeeper and the customer. It had to be proved that the buyer was made to believe they could place faith in the seller, and that trust had been violated.[1]

2. 1950 – 1986

Once the Indian Constitution came into force, in 1950, the Central Government enacted multiple legislations to tackle the issue of consumer protection. The scope of these provisions were limited to the subject matter of each statute. The consumer had to establish the applicability and relevance of at least one of these statutes. If he was unable to do that, he would have to file the matter as a tort, contract or under fiduciary law.[2]

The legislation enacted in the duration of 1950-1986 for consumer protection included the following –

1. The Drugs Control Act, 1950
2. The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954
3. The Prevention of Food Adulteration Act, 1954
4. The Essential Commodities Act, 1956
5. The Trade and Merchandise Marks Act, 1958
6. The Monopolies and Restrictive Trade Practices Act, 1969
7. The Cigarettes (Regulation of Production, Distribution, and Supply) Act, 1975
8. The Prevention of Black Marketing and Maintenance of Supplies of Essential Act 1980
9. The Standards of Weights and Measures (Enforcement) Act, 1985[3]
10. The Bureau of Indian Standards Act, 1986

However, none of these Acts were fully able to overcome the malaise of unjust trade practices that exploited the consumer. Although the government had initiated various legislative policies to safeguard the interests of the consumers, they had been unable to achieve their objective.

International Influence

The Consumer Protection Act 1986 was inspired from the framework laid down by the United Nations. A National Consumer Protection Council, comprised of 28 members and multiple ministry officials, held two meetings to discuss and draft consumer protection guidelines. They organized a National Workshop in this regard, on March 11 and 12^th 1985.

Instructions, recommendations and suggestions, rooted in these guidelines, were propagated by the spokespersons of State Government, Consumer Groups, Government officials and bureaucrats of different government agencies. Consequently, a bill was drafted at the national seminar. That bill had drawn inspiration from and made parallels to the laws of multiple common law countries. For instance, the United States of America, United Kingdom, Australia and New Zealand.

After a series of meetings, the final draft was forwarded to the Lok Sabha on 9^th December 1986 by HKL Bhagat. He was the then Minister of Parliamentary Affairs, Food and Civil Supplies. At the same time, multiple changes were introduced in the existing consumer protection legislation. This was done to empower consumers and their right to sue offenders.[4]

3. 1986 – 2019

With the objective of ensuring effective protection to the rights of the buyer, the Consumer Protection Bill 1986 was first discussed in the Lok Sabha on 5^th December 1986. Consequently, both the Houses of Parliament passed the Consumer Protection Bill, 1986. It received the assent of the President on 24^th December 1986. Thus, the Consumer Protection Act (COPRA) came into effect in 1986.

It was milestone legislation since it was the first of its kind when it came to consumer protection. Instead of the acts enacted since 1950 and before 1986 which were singular in nature in terms of the product or service they were dealing with, this act sought to bring various goods and services within its ambit.The 1986 Act was drafted as to create an additional layer of protection for consumers and not the derogation of the laws that existed prior to it.

It also created a different platform for redressal by mandating a separate series of Courts. The framework of the Consumer Courts is as follows –

In order to grant quick and effective relief to the aggrieved customer, the courts declare their verdict within three months from the date of receiving the notice sent by the opposing litigant. The statutes include both monetary compensation as well as correctional damages. Either or both can be awarded to the aggrieved customer.

The Consumer Protection Act 1986 underwent a series of amendments in 1991, 1993 and 2002. These amendments widened the scope of the authority given to consumer courts. For instance, the 2002 amendment introduced a provision that enabled the court for attaching and selling the property of an individual if they were disobeying with the court orders.[5]

4. 2019 and, thereafter

On 6^th August 2019, the Consumer Protection Bill was passed by the Parliament. The President granted his assent on 9^th August 2019. Consequently, the Consumer Protection Act of 2019 came into effect. It replaced the earlier legislation- the Consumer Protection Act, 1986.

The 2019 Act aims to manage consumer grievance in a quick and efficient manner. The intent of the legislature in creating a new act altogether, instead of simply initiating further amendments in the 1986 Act, was to grant a higher degree of security to the interests of the consumer.

In the drafting of this act, the government took into account the progress of the e-commerce industry and the new ways of selling and consuming of goods and services. For instance, online purchase and macro-level marketing are a relatively new phenomenon, witnessed only in the last couple of decades.

Introduction of Vital Phrases and Extended Meanings

I. Unfair Trade Practise

This Act introduced a more extensive understanding of the terms “Consumer’’[6] and ‘’Unfair Trade Practice’’[7]. It increases the ambit of who comes under a Consumer by including consumers who have purchased a good through a virtual portal. It now brings E-commerce under its jurisdiction[8].

The Act considers misrepresentative advertisements, not giving the consumer the bill or memo, the refusal to permit the consumer to return the faulty products in the designated timeline, and unlawfully divulging confidential data of the consumer – as Unfair Trade Practice.

II. Unfair Contract

The contracts which tend to give undue advantage to the seller or manufacturer, at the cost of the interests of the buyers are regarded as ‘Unfair Contract’[9] by this Act. For instance, contracts that demand an exorbitantly high-security deposit to be given by the consumer for ensuring the fulfilment of contractual obligations.

Another example could be a contract that permits one of the parties to unilaterally terminate the agreement without any justification. A consumer is now empowered to register his grievance against any Unfair Contract. This creates a system of checks and balances against a business that may hold a monopoly or are so high up the hierarchy, that without this provision, it would be difficult for a consumer to access justice.[10]

III. Product Liability

The 2019 Act also established the notion of Product Liability[13]. This permits a consumer to seek compensation for the damages claimed, from the product manufacturer, the product service provider and the product seller. This concept makes the manufacturer and the seller both liable for any grievance caused to the consumer.

Before this, online portals shirked responsibility by presenting themselves as simply the ‘platforms’ of the business transaction and not as an active commercial entity that benefitted from the same. Now the E-commerce websites can also be held accountable.

The 2019 Act also places a larger burden on manufacturers as opposed to product sellers. The Act states that a manufacturer may be held liable even in circumstances where they have established that they did not commit fraud or negligence while making the express warranty of a product.

The product sellers are afforded a degree of leeway that is not available for the manufacturers. The Act grants specific exemptions from liability to the product sellers. For instance, the product seller is not accountable in the case of the product having been misused or altered.

Steps taken towards enhancing Transparency

I. Central Consumer Protection Authority (CCPA)

The Central Consumer Protection Authority (CCPA)[11] is a body created to govern, secure and enforce the rights of the consumer. The CCPA looks after matters of unfair trade practices. It has been given authority to inquire and initiate action against those who disobey the 2019 Act. It is also empowered with investigative powers.

They may enforce a sanction against misleading advertisements, including against those who endorse those advertisements[12]. This essentially means that even a celebrity who is simply hired to act in a commercial may be held liable. This has placed the onus of due diligence on those actors before they propagate any misrepresentative advertisement.

The CCPA can enforce a fine of Rs. 10 lakh upon the first transgression, and up to Rs. 50 lakh on every transgression that follows. Punishment may also include imprisonment up to two years. The CCPA also has the ability to initiate a class-action suit or give instructions to cancel services and give a refund to consumers.

II. Consumer Redressal Forums: Major Amendments

Consumer Protection Act 2019 instituted some fundamental changes in the Consumer Redressal Forums –

(i) Territorial Jurisdiction

This Act grants consumers more access to justice. Earlier, consumers endured hardships if the business did not have an office in their state because jurisdiction was restricted to the area where the seller lived or conducted business. Unlike the 1986 Act, this act permits consumers to file a complaint based on where they live or work.[14]

(ii) Pecuniary Jurisdiction

The 2019 Act brought changes in this aspect for the District, State and National Commissions. Earlier the limit for District Commission was Rs. 20 Lakhs[15] but now it is Rs. 1 Crore[16]. The limit for State Commission used to be Rs. 1 Crore but is now extended till Rs. 10 Crore. Likewise, the limit for the National Commission has increased above and beyond Rs. 10 Crore[17]. As the 1986 Act, the limit for National Commission was restricted to Rs. 1 Crore.[18]

(iii) Online registration of complaints

The 2019 Act permits consumers to file a complaint before the District Forum through electronic means. This makes the process easier and less time-consuming.[19]

(iv) Alternate Dispute Resolution

The 2019 Act has certain provisions that help refer a consumer dispute to mediation in order to reach a settlement in a more time-effective manner.

The Consumer Forum will have to refer the case for mediation if both parties have given their written consent. For the same objective, the 2019 Act emphasizes the need to institute a consumer mediation cell in every District and State Commission. This is the responsibility of the State Governments. Likewise, it demands a mediation cell in the National Commission, by the Union Government.[20]

Conclusion

It can be concluded that the Consumer Protection Act 2019 provides a greater degree of security to the rights and interests of the consumer than the 1986 Act. It significantly helps overcome the imbalanced power structure between the consumer and seller. However, for the 2019 Act to be truly effective in ensuring the protection of consumers, the implementation of the legislation is the fundamental determining factor. That is yet to be seen, given how recent the 2019 Act is.

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[1]Prasad, A. R, “Historical Evolution of Consumer Protection and Law in India”, Journal of Texas
Consumer Law, 11(3), pp 132-136, 2008

[2]Mekala R (PDF) A Study on Evolution of Consumer Protection Act in India – CPA 1986. Available Here: [accessed Jun 16 2020]

[3]Sekhar S, ‘The History Of Consumer Protection – Law Times Journal’ (Law Times Journal, 2018) Available Here accessed 16 June 2020

[4]Mekala R, Supra, Note 2

[5]Ibid

[6] Section 2(7) of The Consumer Protection Act 2019

[7] Section 2(47) of The Consumer Protection Act 2019

[8] Section 2(16) of The Consumer Protection Act 2019

[9]Section 47(1)(a)(ii) and section 58(1)(a)(ii) respectively of The Consumer Protection Act 2019

[10]Kanth G, ‘The Consumer Protection Act, 2019: An Overview – Consumer Protection – India’ (Mondaq.com, Available Here) accessed 15 June 2020

[11]Section 10(1) of The Consumer Protection Act 2019

[12] Section 21 of The Consumer Protection Act 2019

[13]Section 84, 85 and 86 of The Consumer Protection Act 2019

[14]Kanth G, Supra, Note 7

[15]Section 11(1) of The Consumer Protection Act 1986

[16]Section 34(1) of The Consumer Protection Act 2019

[17]Section 47(1)(a)(i) of The Consumer Protection Act 2019

[18]Section 17(1)(a)(i) of The Consumer Protection Act 1986

[19]Section 1(17) of The Consumer Protection Act 2019

[20]Section 74(1) and section 74(2) respectively of The Consumer Protection Act 2019

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