11 Problems with the New Consumer Protection Act
B Vaidyanathan 17 September 2014

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])

10 years ago
Thought provoking analysis. Hope your points are considered before finalization of amendments.
Jagdish Motwani
10 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.
Replied to Jagdish Motwani comment 10 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?
10 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
10 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.
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