11 Problems with the New Consumer Protection Act

The government is planning sweeping changes in the Act, most of which are highly regressive


The Consumer Protection (Amendment) Act, 2014, as made available in the website of Department of Consumer Affairs, has certain serious flaws, which will neither benefit the consumer nor the hapless voluntary consumer organisations that work for consumers.


The Act has proposed certain amendments to the Consumer Protection Act that would entrust the job of grievance redressal to a new body, Consumer Protection Authority. In this authority structure, there is neither any place for consumer organisations nor for consumers and activists. There is even a proposal to exclude the value of compensation from the pecuniary jurisdiction of the Forum and Commission, which would restrict consumer litigants to the lowest forums and prevent them from approaching higher bodies. How is this in the interests of the consumers or consumer activism? Here are 11 ways in which the new Act will be regressive step.

1 A. Changing the structure of Consumer Consultations

Consumer Protection Act, 1986 envisages consultations through the Central and the State Councils consisting of different interest groups such as representatives of consumer organizations, the government –State and Centre, trade and industry, consumer fora, especially, the National Commission and others.


The proposed amendments will eliminate the Central and State Councils. This is a cynical ploy to keep out the consumer groups from the consultation process and in a way raises serious questions about their relevance and role in safeguarding the consumers. So the proposal to convert the Consumer Protection Councils as existing under section-4 to Consumer Protection Authority is ill conceived and should be dropped, to save whatever little consumer movement is prevalent at present.


1 B. Asking District Collectors / District Magistrates, to deal with the consumer issues


This proposal, on the basis of which the Central Consumer Protection Authority has been envisaged, is practically non-workable. The absurdity is all the more obvious when one considers that at the state and central levels, fully paid government officials are expected to discharge the functions of the Central Authority, while at the district level, where the problems are supposed to emanate and be addressed, an already over burdened District Collector is supposed to do it as a part of his routine.


2. Rechristening Commission as Forum and vice versa

It is being proposed to rechristen the State Commissions and the National Commission as the State Forums and the National Forum, while all the Forums (including the District Forums) should be collectively known as Commission. What an invention? There is no value addition and a source of confusion.


3. Common Forum for multiple districts


The logic is that since District Forums are not being provided with sufficient presiding officers by the state governments and since they are not able to function, resulting in delays, an amendment has been proposed for common Forums for multiple districts. Is this not a ridiculous effort to cover up an irresponsible administration? It is observed that the State Governments have been found to be lacking the interest or commitment in establishing the District Forum in each district and in manning them properly. Any concession to club the Forums of different districts as proposed will cause more hardship to the consumer litigants and will be detrimental to their wellbeing. If one has to accept this idea, then, all the Forums will not function every day and the delays will only increase.


Rather, the efficacy of these bodies to provide faster justice with least harassment should be aimed at. Instead, a provision can be introduced to make the State Government liable to compensate the victims for the delays necessitated due to non-functioning of such District Forums / State Commission.


4. Appointing President and Members of District Forums through the State Public Service Commission


This is inherently cumbersome and unworkable, especially for specialized short service requirements. Instead, a sitting or retired judge of the High Court, as nominated by the Chief Justice of the high Court would be better placed to head the Selection Committee.


5. Restrict the consumer litigants to the lowest Forums and prevent them from approaching higher bodies like the State or National Commissions


It is pertinent to note that but for the exposure to higher bodies like the National Commission, this author would have lost interest in consumer litigation long back, as the systems and procedures are far from being professional at the lower courts, where reason and logic take a back seat.


6. Value of compensation and jurisdiction of the Forum / Commission.


Which forum hears a complaint, is decided by the size of complaint. If the facility cost is less than Rs20 lakh, then the District Consumer Forum can take up the case. If the facility cost is higher than Rs20 lakh and up to Rs1 crore, then the matter is to be heard by the State Consumer Commission. If the value or size of complaint is more than Rs1 crore, then the National Consumer Forum, New Delhi can hear it out. A fee is already being collected from the complainant based on the value of the complaint.


The proposed Amendment says, “The billed value of goods or services in a complaint shall be the basis to determine the pecuniary jurisdiction of a Consumer Forum to entertain a complainant.”


Logically the compensation claimed along with the value of the goods or services needs to account for the total value of the complaint, dictating whether the complaint will fall under which one of the three tier quasi-judicial machinery. So, excluding the value of compensation claimed from the value of the litigation / pecuniary jurisdiction of the District Forum/ State Commission is irrational.


Further, how will one arrive at the billed value of goods or services in the case of public utilities like lifts / escalators / elevators, resulting in serious injury? After all, the Forum / Commission have the powers to dismiss frivolous complaints. Hence, the billed value of the goods or services alone should not be the basis to determine the pecuniary jurisdiction of the District Forums and the Commissions.


7. Allowing a complainant to file a dispute case in any Forum / Commission in whose jurisdiction he / she is residing


Though is provision could appear to be favouring the consumer, is ill-conceived, irrational and appear to be illegal as to place the seller of goods / service provider in an unreasonably disadvantageous position vis-à-vis the consumer who avails the good / service. Further, there is a distinct possibility of outstation shoppers taking the shopkeeper / service provider to ransom. This is especially true in all major cities where a good population from outside flocks for shopping. Say, for example, someone from Rourkela visits Mumbai and purchases a good. Suppose the individual is not happy with the product, for whatever reason, will it be proper to allow him to file a case in Rourkela and make the shopkeeper from Mumbai run around? Though, as an activist I would want the consumer to be protected, but not at the cost of harassing a genuine shopkeeper.


8. Mediation as a mode of minimising the consumer dispute cases and the load on the Forums.


Who stopped the government and their machinery from introducing such an official mechanism? Voluntary Consumer Organisations had done great work due to the initial boost given by the government and these served as ADR (Alternate Dispute Redressal) mechanism. In our Council itself, we had handled and settled hundreds of complaints every year, that too without any charges. Even today, I am answering queries of the consumers from across the country, on honorary basis. But putting this as part of the judicial process is likely to have adverse impact on the consumer litigant, many of whom are not aware of the law and do not know their right to refuse such mediation offers; though on paper the law may be clear about it.


Introduction of a provision to promote mediation is likely to frustrate the ends of justice and harass the consumer litigant on account of further delays and injustice. Hence, the proposed amendment as a part of the consumer justice system under the Consumer Protection Act needs to be dropped. Instead, the Consumer Affairs Department, if funds are available for the purpose, can establish these Mediation Centres, through the existing Voluntary Consumer Organisations or other means.


9. Enhance the penalty under Sec. 14(1)(hb), when the goods or services affect a large number of consumers.


This appears to be pure hype. Consumer courts as well as the Supreme Court are shying away from awarding any penalty even when tailor made cases are brought before them. (Example: Original Petition No. 224 of 2001, in the NCDRC, Consumer Protection Council, Rourkela Vs Indian Oil Corporation and Others; Civil Appeal No. 10126 of 2010, in the Supreme Court, Consumer Protection Council, Rourkela Vs Indian Oil Corporation Ltd. and Others. In these cases, as per this section, a minimum penalty of Rs3,250 crore should have been collected from M/s IOCL. But the judiciary preferred to ignore the provision of the Act.) In this country seeking money by NGOs are still considered blasphemous – a sin – height of hypocrisy.


Further, why the entire penalty should be diverted to the Consumer Welfare Fund (as per the Consumer Protection Rules)? If the government and the Department of Consumer Affairs are serious about eliminating the Unfair Trade Practices, to encourage such initiatives, a part of the penalty should be awarded to the Consumer Organisation fighting the case.


10. Delimit the number of members with judicial background, in the State Commissions.


Proposed amendment to delete the provision after 16(1)(b)(iii), which limits the members with judicial background to fifty per cent (50%), could pave the way for eliminating the non-judicial members from the State Commissions. This is against the structure of the quasi-judicial consumer courts, making these Commissions vulnerable to become an extended arm of the Civil Courts; which should be avoided. This proposed amendment, which can change the complexion of the Commissions (quasi-judicial body) is not a step in the right direction.


11. Limit the number of appeals to National Commission


In yet another interesting effort to save the National Commission from adjudicating unwanted appeals, there is a proposal to restrict the consumer litigant from not appealing more than once. Such restrictions can materially affect consumer justice and is ill-conceived. Further, when the orders of the State Commission can be appealed against, even as per the present amendments, how a distinction can be made between a case arising from the District Forum and those arising under the original jurisdiction of the State Commission itself, when both are decided by the same bench? The proposed amendment is irrational and without any logic.


Having discussed the shortcomings, it will not be appropriate to leave out some of the positive changes that are being contemplated. These include:


  • • Amendments to prevent members of political parties from being appointed as Members

  •    of the quasi-judicial machinery;


  • • Standardization and enhancement of remuneration of the presiding members of the

  •    District Forums, State Commissions and the National Commission;


  • • Amendment to Sec. 13(2)(c), requiring the Forum to decide the case on merits based on 

  •    available records, instead of dismissing it when the consumer fails to appear before it;


  • • Quantification of punitive damages, under Sec. 14(1)(d);


  • • Providing for a sitting judge of the High Court to head the Selection Committee in place

  •    of the President of the State Commission, to appoint the Members of the State 

  •    Commission; and


  • • Introduction of restrictions on the appearance of advocates.


Consumer Protection Act, as already existing, is one of the progressive pieces of legislations to have been enacted for the better protection of the consumers.


Unfortunately, the spirit of the Act has been missing in its implementation. The present government and the department will do well to bridge this gap, even if it is unable to bring in further amendments to the CP Act. It is imperative that it desists from tinkering with the Act, to reshape it beyond recognition. Why the government shies away from serious consultation with the stakeholders, especially the consumer groups who have the hands-on experience and know where the shoe actually pinches?


When the government is in dearth of resources, installing of a Consumer Protection Authority which is appearing to be an excuse to employ ex-bureaucrats and others, with the expenditure coming from the consolidated fund of India will only be a drain on the Tax Payers money without any tangible results coming around. Further, such bureaucrats as proposed will be provided with an opportunity to go on foreign trips to participate in international conferences, in the garb of cooperating and working with consumer protection agencies in foreign countries. This aspect has been specifically stated in the amendment proposal itself. But till date have the authorities that be, ever thought on these lines and sponsored any of the consumer activists to international conferences so that these sinful souls might have got a glimpse of what is happening around the world. Rather, in the garb of minimising the expenses, even the Central Consumer Protection Council has been pruned from about 150 members to 35 members, thereby reducing the CCPC to a farce.


(B Vaidyanathan is the Chief Mentor of Consumer Protection Council, Rourkela and can be reached at [email protected])




3 years ago

Thought provoking analysis. Hope your points are considered before finalization of amendments.

Jagdish Motwani

3 years ago

Premature to conclude that whatever is proposed will be passed. I understand that highest number of consumer complaints are against Govt. owned PSUs' & first thing should be to set up some ADRF for complaint against such PSU's like Insurers, Banks, etc.



In Reply to Jagdish Motwani 3 years ago

Setting up of ADRs and giving them some legal sanction is the need of the hour. If such bodies will function effectively, they will unquestionably reduce the load on the consumer courts and benefit the consumers. Unfortunately, the government does not seem to be keen to do this. As pointed out in the above article, the direction of the amendments proposed is not in that direction. Many voluntary consumer organisations like ours have been doing this ADR without even charging a fee and that too without any legal support. Suppose, assume, that tomorrow the government gives such efforts of VCOs a prime space in the Act and if the compensation/penalty is decided based on such interventions, then it will be more relevant to consumer dispute redressal system. Further, why the government cannot compensate the VCOs for handling complaints on their own? Instead of giving the primary role to ADRs, what the amendment attempts is to make the affected consumer, who must have exhausted all means before approaching the District Forum, to go to the Mediation Centre and waste his time, as proposed by the Forum. Does it not amount to reinventing the wheel?


3 years ago

The Comments are very valid. Late Padmabhushan H.D.Shourie had filed a PIL on non establishment of District Forums in several districts as a result of which almost all districts in the country had a Forum. To say now that District Forums will be combined is for lack of functioning of the Forum is contrary to the direction of the Supreme Court. The Consumer Protection Authority to be created is nothing but a redundant fifth Wheel!Formalising ADR's under the Act will make several other projects sanctioned by the Consumer Affairs Ministry, whichare doing fairly well such as CORE,National Consumer Helpline,VOICE etc. redundant!Consumer Organizationsin the country should get together and raise their vaoice in protest.
S. Krishnan, Consumer Online Foundation and Consumer Connexxion

Rtn. Dr Sunil Prakash

3 years ago

Every one has diverse views. this is one of it. We need to give some time to experiment. Congress has experimented for so many years, let BJP also experiment for few years.

their policies does not seems to be too coherent, still we must give them some free hand.

UP sugar mills still undecided over cane price formula

It may be a good idea for the Indian government to intervene and work out a uniform proposal for cane price in UP, similar to the linkage formula already in operation in Maharashtra and Karnataka


The new sugar cane crushing season is scheduled to start in about two weeks' time. Most cane farmers would start bringing in the freshly cut canes for crushing in the mills in October onwards, though, in most producing areas, such as Uttar Pradesh, Maharashtra and Karnataka, farmers have long overdue arrears to collect from the mill owners.


India produces about 24.3 million tonnes of sugar, 50% of which comes from UP and the balance between Maharashtra and Karnataka. Of these, both Maharashtra and Karnataka have already enacted laws to adopt the revenue sharing model whereby a linkage formula will determine the price of cane at 70% of the revenue realised from sugar as primary product or at 75% for sugar alone, giving 5% weightage to by-products. This system is prevalent and practised without any difficulty in most countries in the world.


In Uttar Pradesh, however, the State Advised Price for sugar cane is unrealistic, as the cane yields have gone down and sugar recoveries have also remained flat or low in many areas of the state. Millers have not paid the farmers for the cane and the arrears have been piling up leading to untold suffering of the farmer, who is forced to obtain loans from moneylenders at exorbitant rates, to carry on his day to day expenses.


In order to overcome various difficulties faced by the sugar industry in general, and UP in particular, the Union Government made several moves to improve the situation. As demanded by the industry, the first step was to increase the import duty of sugar to 25%. The second was to increase the export subsidy from Rs3,300 to Rs3,371 per tonne. The third was to give soft loans to the extent of Rs6,600 crore and finally recommended the increase in ethanol blending to 10% from 5% which was applicable earlier.


UP had cane arrears of Rs14,095 crore when the new government took over. This has now been brought down to Rs7,760 crore and arrears to cane farmers is still not settled completely.


It has been reported in the press that Union Food Minister, Ram Vilas Paswan has asked the UP government to take serious action against defaulters who have not yet settled the farmers’ dues. He appears to have assured them that should the millers approach for additional soft loans, this could also be considered favourably, if there was an assurance that the funds would be used to directly settle the long overdue payments of the cane growers.


In the meantime, in the absence of a national cane policy, private millers (in UP) have decided not to start crushing cane from October. More importantly, they have declined even to attend the UP Sugarcane department meeting, called for "cane reservations".


A few weeks ago, it may be recalled, that 66 of the 95 private sugar mills had given suspension notice to the UP Government that they cannot start their crushing operations for 2014-15, starting in October. These 66 mills account for 66% sugar production in UP and supply 3/4th of the ethanol and co-generated power. If this is not settled immediately, the farmers will struggle to find any buyers for their canes that would line up in front of mills with nobody to receive them.


According to ISMA - Indian Sugar Mills Association - raw sugar exports for the current season ending September is expected to reach 2.45 million tonnes, slightly higher than last season by 348,000 tonnes. However, due to increase in sugar production in Brazil, Indian exporters will face serious challenge to export at the current international price level of $320. For example, the ex-factory price in Maharashtra hovers around Rs28,000 per tonne, while it is Rs29,500 to Rs30,500 in UP. The export subsidy of Rs3,371 is valid for August and September shipments only and new rate for October/ November has not yet been announced. In any case, if export should continue, it cannot be viable at the current subsidy rate of Rs3,371 and industry is already demanding a revision to Rs6,000.


Iran, Sudan and Somalia were top importers of Indian sugar and it remains to be seen if serious competition from Brazil and others do not come in our way of exports.


Karnataka contributes about 18% of Indian sugar production and has an active Sugar Control Board. The sugar industry in this state too, has similar problems of delays in settling arrears to farmers, which is said to be Rs2,300 crore. According to K Shantakumar, Convenor of Sugar Cane Growers Association, they have made a petition to the government as to why they cannot directly settle the farmers' dues and later on recover from the millers? If this situation continues, they have told the government that the farmers would decide to take a crop holiday and go in for some cash crops! Meantime, farmers are awaiting the cane price announcement from the Sugar Control Board for the 2014-15 season.


For the sugar industry to survive, particularly in UP, it is imperative that urgent steps are taken by the State Government to sort out the arrears issue urgently, and also devise means to ensure that in the new crushing season, farmers do not have to run from pillar to post to collect their dues. Also, it may be a good idea for the Union Government to intervene and work out a uniform proposal for cane price in the manner of the linkage formula that is already successfully in operation in many countries, including in our own states of Maharashtra and Karnataka.


Any delays will cause serious harm to the industry.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


MLF seminar on Safe & Smart Financial Planning for HUL’s Working Women
Salary does not make you rich, but avoiding losses and sensible investing can 
Moneylife Foundation conducted a seminar for women employed with Hindustan Unilever Limited, at their headquarters in Mumbai. Sucheta Dalal and Debashis Basu, both founder-trustees of Moneylife Foundation, took the audience through the various aspects of their current and future financial planning and how to deal with the challenges that it may throw up.
In the first part of the session, Ms Dalal began by saying, “Women outlive their partners by about five to seven years, on an average, and these are usually the years when you live off your savings.” She laid out the basic mantras to securing a working woman’s future: minimising losses, right insurance, taking financial prophylactics such as Wills and nomination, avoiding emotional, credit and investment traps and, finally, keeping finances simple. Citing the large losses people seem to suffer in various wrong investments, she said, “The recouping of losses never includes the opportunity cost of the money lost, and there is no recompense for the troubles.”
Ms Dalal explained how to identify secure financial products. She then discussed the intricacies and importance of having a clear Will and women’s rights under the law. She narrated some real-life examples where women had been cheated of their rightful inheritance because of unclear planning. Finally, she spoke of the role of credit in today’s life, and how this is central to how finances are planned. “This is especially true for salaried professionals,” she said.
In the second part of the session, Mr Basu unveiled the simple path to creation of wealth and future prosperity for salaried professionals, through investing smartly. “Salary does not make you rich, so what does?” he asked. He discussed how most salaried women’s (in fact, even men’s) path to creating wealth is undermined by poor saving and investment habits. 
Mr Basu enumerated the products that most effectively help achieve our simple goals: buying an apartment, marriage, education, etc. The biggest question on everyone’s minds when they speak of various investments, or investing in general, is: “How much returns will I get?” Mr Basu detailed the kind of returns that investors should realistically expect from various asset classes like equity, gold, FDs, real estate, etc.
He also emphasised the corrosive effects of inflation on wealth. The one way to counter this is to compound your wealth through products that beat inflation, namely, good-quality stocks and mutual fund schemes. These can accelerate growth in the future, if handled systematically. He disputed the many myths about investing in gold and real estate which deliver far lower returns than good-quality stocks. “Less is more, even in investing,” he explained. “A simple financial life, with just a few products, will help your secure a great financial future,” he said.


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