Law Optional (Consumer Protection Act,2019) by Rajnish Jindal

Model Answer

Question #1. . Discuss the need and significance of Consumer Protection Act, 2019. How it will ensure justice to consumers? 10 marks (150 words)

Ans.

Key Features of the Consumer Protection Act, 2019:

• It will empower consumers and help them in protecting their rights through its various notified Rules and provisions.
• Central Consumer Protection Authority (CCPA):
  1. It is established to promote, protect, and enforce the rights of consumers.
  2. It will be empowered to conduct investigations into violations of consumer rights and institute complaints/prosecution.
  3. Order recall of unsafe goods and services
  4. Order discontinuance of unfair trade practices and misleading advertisements
  5. Impose penalties on manufacturers/endorsers/publishers of misleading advertisements
• The rules for the prevention of unfair trade practices by e-commerce platformswill also be covered under this Act. Under this act, every e-commerce entity is required to provide information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, etc. including country of origin which are necessary for enabling the consumer to make an informed decision at the pre-purchase stage on its platform.
• The e-commerce platforms have to acknowledge the receipt of any consumer complaint within forty-eight hoursand redress the complaint within one month from the date of receipt under this Act.
• Simplification of the consumer dispute adjudicationprocess in the consumer commissions:
  1. It includes the empowerment of the State and District Commissions to review their orders.
  2. Enabling a consumer to file complaints electronically and file complaints in consumer Commissions that have jurisdiction over the place of his residence.
  3. Video-conferencing for hearing and deemed admissibility of complaints if the question of admissibility is not decided within the specified period of 21 days.
• Alternate Dispute Resolution mechanism of Mediation:
  1. This will simplify the adjudication process.
  2. A complaint will be referred by a Consumer Commission for mediation, wherever scope for early settlement exists and parties agree for it.
  3. The mediation will be held in the Mediation Cells to be established under the aegis of the Consumer Commissions.
  4. There will be no appeal against settlement through mediation.
• As per the Consumer Disputes Redressal Commission Rules:
  1. There will be no fee for filing cases up to Rs. 5 lakh.
  2. There are provisions for filing complaints electronically, credit of amount due to unidentifiable consumers to the Consumer Welfare Fund (CWF).
  3. The State Commissions will furnish information to the Central Government quarterly on vacancies, disposal, the pendency of cases, and other matters.
• Product Liability: The New Act introduces the concept of product liability and brings within its scope, the product manufacturer, product service provider, and product seller, for any compensation claim.The Act provides for punishment by a competent court for the manufacture or sale of adulterant/spurious goods. The court may, in case of the first conviction, suspend any licence issued to the person for a period of up to two years, and in case of second or subsequent conviction, cancel the licence.
• The Central Consumer Protection Council Rulesare provided for constitution of the Central Consumer Protection Council. It will be an advisory body on consumer issues, headed by the Union Minister of Consumer Affairs, Food and Public Distribution with the Minister of State as Vice Chairperson and 34 other members from different fields. The Council, which has a three-year tenure, will have Minister-in-charge of consumer affairs from two States from each region- North, South, East, West, and North East Region. There is also provision for having working groups from amongst the members for specific tasks.

Conclusion: Consumer Protection Act, 1986 provided single-point access to justice, which was also time-consuming. The new act protects buyers not only from traditional sellers but also from the new e-commerce retailers/platforms. This Act will prove a significant tool in protecting consumer rights in the country only if its provisions are implemented on the ground.

Question #2. Explain the scope of rule of caveat emptor rule of caveat venditor and how it is playing a crucial role in expanding law of consumer protection? 15 marks (250 words)

Ans. The caveat emptor principle, that literally means let the buyer beware, has been followed for many years by the Courts of England. These simple words were an easy focus for judicial thought, a principle to be invoked when the going is difficult, a guide to be followed amid the baffling uncertainties of litigation. Emptor in Latin is the buyer and the verb cavere is a verb of caution: caveat emptor was the perfect principle for transactions involving not massive quantity of goods.

A lot of cases in medieval times were decided by the rules of the lexmercatoria in special courts, but for other than the basic rights such as the right of the seller to payment and the right of the buyer to the goods, private law was not very interested. As a matter of fact the criminal law and statutes that prohibited the use of false measures and the adulteration of food, beer and wine, regulated the major part of claims about the sale of goods and there were local policies regulating the trade fairs that changed from place to place.

The principle of caveat emptor was the guideline for the courts and the point was that the buyer had the chance to use his knowledge to be careful or accept the cost of his inattention. No warranties were implied to assure the quality of the goods he was going to buy and only a seller making a false statement could be sued in tort for deceit. In such a case he was not simply assuming a fact but giving a clear warranty to the buyer he could be sued even though he did not know about the falseness of his affirmation.

In the case of false affirmation of the seller there was no need of a written warranty; it was sufficient that the buyer was convinced to buy by the false statements of the seller to imply this particular warranty and, even though a contract was necessary, there was no need that the guarantee was a part of the contract. However it is very important to point out that all this concerned fraud and that was the only way for the buyer to sue the seller for breach of the contract: no implied terms arose if the seller did not make any false statement. As we have said this situation was perfect if you try to imagine the scenario of the sales in medieval times: there were small fairs and small quantities of limited types of goods to be sold. The buyer often had the knowledge to recognize defective goods and to discuss the price with the seller who, instead of offering a written warranty, could accept an eventual reduction in price.

Caveat Emptor was to be certainly disadvantageous to the buyer’s cause, because till then, the aspect of ‘reasonable’ examination was yet to come. Therefore, a scenario wherein a buyer would not have any defence against a seller who has despite being aware of a defect or something which one which cannot detect by reasonable examination which was not informed to the buyer. Another good reason, which can be thought of for the reduction of the rule of caveat emptor, is to provide adequate protection to the buyer who buys the good in good faith, which case laws put as, ‘reliance on the skill and judgment of the seller. And another reason of the complex structure of modern goods, it was only the sellers who could assure the contents and the quality of the goods. For these reasons, it became important to restrict the rule of caveat emptor by grafting a few exceptions upon its scope. There is a responsibility on the seller’s side to deliver appropriate goods and to provide appropriate information about them. Thus, it has led to the birth of ‘caveat venditor’ which means ‘let the seller beware’ in contrast to caveat emptor.

With its origin being traced within the need for disclosure of data for the aim of facilitating the rationale for purchase of the customer, gradually this rule has gained prominence and therefore the obligations of the vendor are given proper shape together with various statutes and case laws limiting the rule of precept to ‘reasonable examination’. Examples like beer contaminated with arsenic, milk-containing typhoid germs are ok to determine that courts are generous enough to exempt the customer from the duty to look at the products where the defects could not be traced in ordinary circumstances. Another important debate that arises that there are cases where, many a times seller himself does not know about the defect. Here the learned scholar on the sale of goods Benjamin has stated that the seller cannot use this justification on himself not being aware or cautious about the defects in goods.

For the reasons stated above, the rule of caveat emptor, as far as judicial precedents go, for the first time suffered a blow by the case of Priest v. Last, wherein for the first time, the reliance placed by the seller for the purposes of buying a ‘hot water bottle’ was considered for the purposes of allowing the buyer to reject the goods. This decision was the first traceable decision in common law which gave importance to the reliance placed by the buyer on the seller’s skill and judgment. This proposition of law, however, is a settled principle of law today. The Priest decision, however, was just a beginning of what could certainly be termed as the diminishing process of the rule of caveat emptor. Where in this decision, the purpose was expressly mentioned and then taken into account, the courts in subsequent cases, opined that the need/purpose of the contract would be evident from the nature of the contract or might be known to the seller from the course of negotiations between the parties. Thus express mention of the purpose behind a purchase of goods was no longer considered a requisite for proving reliance on the skill and judgment of the seller, which signified a further shift of law in favour of the buyer.

Therefore, it is important for a seller to be aware of the conditions of the goods being sole by him and making the buyer aware about the same. And instead of Caveat Emptor it is important to have Caveat Venditor.

Caveat Venditor under the Consumer Protection Act, 2019: The concept of caveat venditor is defined under Chapter VI as Product Liability under the Consumer Protection Act, 2019. It is defined as the responsibility of the product manufacturer or product seller, of any product or service, to compensate for any harm caused to a customer by a such defective product manufactured or sold or by a deficiency in service related thereto.

However, as stated in Chapter VI of the Act, there are various exceptions to the obligation. When a product was used improperly, altered, or modified, the manufacturer had provided warnings or instructions, it was sold as a component or material to be used in another product, and the necessary warnings or instructions were given, it was legally intended to be used only by or under the supervision of an expert, or the complainant was under the influence of alcohol or drugs while using the product, no liability shall be fastened on the manufacturer or seller.

The new product liability (Chapter VI) section of the Consumer Protection Act of 2019 strengthens the buyer's position in the market by allowing them to file a lawsuit against the product manufacturer if a consumer is harmed while using a defective or substandard product that they manufacture or sell. It also broadens the scope of the Consumer Courts' jurisdiction.

Section 84(1) of the Act expressly deals with the liability of the product manufacturer in a product liability action, encases of manufacturing defects, defective designs, deviations from manufacturing specifications, doesn't conform to the express warranty or fails to contain adequate instructions of correct usage to prevent any harm or any warning regarding improper or incorrect usage.

Also, Section 84(2) prevents the manufacturers to escape liability on the grounds of non-negligence or non-fraudulent in making the express warranty of a product, it makes the liability watertight and comprehensive. Similarly, Sections 85 and 86 of the Act provide for the liabilities of a service provider and product seller respectively.

This section allows the consumers to seek remedies after buying goods or rendering services that previously were ignored because a rational consumer was expected to have a good judgement. In contrast, availing goods and services and hence, the remedy provided were inadequate.