Central Authority under Consumer Protection Act

Introduction


The Consumer Protection Act, 2019 has expanded consumer rights in areas such as e-commerce portals, online sales, direct selling, and multi-level marketing. Additionally, newly developed concepts such as ‘product liability’ and ‘unfair contracts’ have been established to reinforce and safeguard consumers’ interests.

Section 10(1) of Chapter III of the Act establishes a ‘Central Consumer Protection Authority’ or “Central Authority” to regulate matters relating to consumer rights violations, unfair trade practises, and false or misleading advertisements that are detrimental to the public and consumers’ interests, as well as to promote and enforce consumer rights collectively. Section 10(2) specifies that the Central Authority shall be composed of a Chief Commissioner and such additional Commissioners as the Central Government may designate.

Powers of the Central Authority

The Central Authority is empowered by the Act to exercise broad and broad-ranging regulatory, investigative, and adjudicatory duties. Among these are the abilities to:

(i) conduct or cause to be conducted an investigation into alleged violations of consumer rights or unfair commercial practises, either on its own initiative or in response to a complaint or on the instruction of the Central Government [Section 18(2)].

(ii) direct the Director General or the District Collector to conduct an investigation if it is satisfied, following a preliminary inquiry, that a prima facie case of violation of consumer rights, unfair trade practise, or false or misleading advertisement prejudicial to the public interest or the interests of consumers exists [Section 19(1)].

(iii) summon a person who has been determined prima facie to be engaged in a breach of consumer rights, an unfair commercial practise, or a false or misleading advertisement, as specified above, and also to require him to provide any document or record in his possession. Additionally, the Director General or District Collector would have search and seizure authority pursuant to the Code of Criminal Procedure, 1973, as well as the authority to order the production of any document or record [Section 22].

(iv) recall harmful, hazardous, or unsafe products or services, or direct repayment of the prices of such goods or services, or cessation of unfair practises after allowing the target person an opportunity to be heard [Section 20].

(v) engage in and promote consumer advocacy, including by filing complaints with the District Commission, State Commission, or National Commission established under the Act, intervening in any proceedings before these fora, recommending corrective measures, conducting research, spreading awareness, and issuing consumer safety alerts [Section 18].

(vi) instruct a merchant, manufacturer, endorser, advertiser, or publisher, following an inquiry, to stop deceptive or misleading ads that are detrimental to consumers, and to impose monetary penalties of up to Rupees ten lakhs [Section 21].

(vii) prohibit the endorser of a false or misleading advertising from endorsing any product or service for a period of up to one year, or up to three years in the case of a repeat violation [Section 21(3)].

Criticism

In Brahm Dutt vs. Union of India (1), the Supreme Court observed that if an expert body is to be established under the Competition Act, 2002, it may be appropriate to establish two distinct bodies, one with advisory and regulatory expertise and the other with adjudicatory expertise. However, the Court deferred to the legislature’s wisdom in that matter. Although the Competition Act was changed later, the Supreme Court’s recommendation to form two distinct organisations was ignored.

Although the Central Authority is endowed with adjudicatory powers (including the authority to direct search and seizure, issue cease and desist orders, and even restrain person endorsements), the Act makes no provision for the Central Authority’s members  to be drawn from areas of legal expertise and competent to discharge judicial functions. Rather than that, Section 13(2) provides that the Central Authority may engage experts and professionals with special knowledge and experience. This might be interpreted to indicate that engaging someone with a legal background, certification, or expertise is purely optional.

Several discernible threads emerge from the Supreme Court’s recent pronouncements on appointments to tribunals and bodies with “judicial trappings” and exercising judicial power, including the following:

i. What matters in the case of a tribunal or body is whether it performs judicial tasks with all the “trappings of a court” and also exercises judicial authority, at least in relation to some aspect of its operation.

ii. once the tribunal or body acquires the “trappings of the court” and performs judicial activities, albeit restricted ones in the context of its overall operation, the presence of a judicial member becomes required to fulfil such judicial functions that may have far-reaching consequences.

iii. A clause providing for the appointment of a person from the field of law as a member of such tribunal or body does not mean any person of law, but rather a person who is or has held judicial office or a person who possesses professional qualifications and substantial experience in the practise of law and who possesses the requisite experience to have been appointed as a High Court or District Judge.

iv. Each bench of the tribunal or body exercising adjudicatory responsibilities should include at least one judge.

v. the argument that the participation of a judge in the appeal Tribunal or forum (the National Commission, as defined in the Act) would negate the requirement for a man of law to serve on the initial commission/body created is invalid.

Conclusion

While exercising its executive authority to carry out the provisions of the Consumer Protection Act 2019, the Central Government would be well to bear in mind the aforementioned judicial principles. Otherwise, the legitimacy of these provisions and the rules implementing them may come under court scrutiny, stalling or delaying the Act’s implementation.

References

  1. (2005) 2 SCC 431
  2. https://consumeraffairs.nic.in/acts-and-rules/consumer-protection
  3. https://pib.gov.in/PressReleasePage.aspx?PRID=1642422
  4. https://www.indiacode.nic.in/show-data?actid=AC_CEN_21_44_00007_201935_1596441164903&sectionId=50035&sectionno=10&orderno=10#:~:text=(1)%20The%20Central%20Government%20shall,practices%20and%20false%20or%20misleading

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