Was there really a need to repeal the Consumers Protection Act, 1986? The answer is YES! After undergoing three amendments in the year 1991, 1993 and 2002 the Act was still found to be needing empowering and modern provisions to deal with a new and modern market, newer dynamics and newer challenges and to accost the challenges posed by online transactions, tele and multi-level marketing and digital marketing in addition to the conventional methods. It was the aim of the legislators to provide enhanced protection to the consumers in consideration with the flourishing E-commerce industry. Consumers Protection Act, 1986 was seemingly becoming more vulnerable and incoherent in protecting the rights of the consumers against the evils of e-commerce and other conventional modalities, and as is with the nature of the vulture to forage when their prey is most vulnerable, the consumers were being preyed on effectively.

Along with the inclusion of ‘E-commerce’ under the ambit of Consumer Protection Act, 2019 there have been several other key inclusions in pari materia to the 1986 Act, meant to strengthen the rights of the consumers by establishing authorities, imposing strict liabilities and penalties on product manufacturers, electronic service providers, misleading advertisers, unfair trade practice and by providing additional settlement of consumer disputes through mediation.

Demystifying Product liability & E-commerce:

The foregoing Consumer Protection Act, 1986 did not have a specific ‘Product Liability’ theory in India and due to the absence of a statutory law, the courts were often guided by the principles of justice, equity, good consience and provisions of English Law. The english judgement Donoghue v. Stevenson[1]has widely been used in India.The judgement lays down the position where one owes a duty of care to another and upon the breach of such duty of care there is negligence irrespective of whether there was a contractual relationship in existence between the parties.

Product Liability means the responsibility of a product manufacturer or product seller, of any product or service, related to the product to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating to the product.[2]The Consumer Protection Act, 2019 even delineates product manufacturer[3], product seller[4] and product service provider[5] to provide clarity so as to ensure that the right person can be held liable for an action under chapter VI of the Act.

According to Section 84 (2) of the new legislation a product manufacturer shall be liable in product liability action even if he proves that he was not negligent or fraudulent in making the express warranty of product. As per section 85, service provider shall be held liable for services which are faulty or imperfect or deficient or inadequate in quality, nature or manner or performance which is supposed to be provided to the consumer as per laws time being in force. A seller liability in an action for product liability has been established under section 86 which states that if the seller has exercised substantial control over designing, testing, manufacturing, packaging, labelling, altering or modifying the product which has caused harm then the seller shall be held liable. Moreover, in cases where the seller has expressed independent warranty apart from manufacturer warranty, in cases where the manufacturer is not traceable for completion of service of notice or warrant,or in cases where the seller has failed to take due measures for assembling, inspecting or maintaining the product or giving necessary instruction with respect to dangers/warning/caution for product usage the seller shall be held liable.

Keeping in view the economic changes, technological advancements taking place every now & then, e-commerce has been included in the Consumer Protection Act, 2019, where the ambit of‘consumer’ has also been broadened by introducing additional grounds for filing a complaint & imposition of higher penalty for misleading information/advertisements, which in turn strengthens the consumers interest by way of protection and timely effective redressal mechanism. The legislation has kept a wide angle by giving due importance to issues such as disclosure of personal information of the consumer given to the seller under due confidence.

In today’s era e-commerce transactions have changed the entire system of physical transactions, the inclusion of e-commerce in the new legislation was the need of the hour, therefore, section 2(16) defines e-commerce as buying or selling of goods or services including digital products over digital or electronic network.

Until the enactment of the new legislation there were numerous lacunas due to which it was difficult to establish the accountability of e-commerce platforms as well as providing effective redressal to the grievances of the consumers, but the new legislation empowers the Central Government under section 94 to take such measures as may be prescribed in order to prevent unfair trade practices in e-commerce and direct selling in order to prevent and strengthen the interests of the consumers.

Coincidently, a grey area has been left which still needs due consideration of the legislature which is ‘off-shore e-commerce’. The off-shore e-commerce is the aspect which finds no place in the new legislation for obvious reasons, the implementation and regulation of operations of e-commerce in off-shore jurisdictions would be a cumbersome task to deal with. Considering the growth rate of e-commerce and its expansion every day, it would be sine qua non to introduce provisions which protect the interest of the consumer in regard to off-shore e-commerce transactions.

Conclusion:

The inclusion of ‘Product Liability’ and ‘E-commerce’ in the Consumer Protection Act, 2019 has left no manufacturer, seller, service provider and advertiser immune from the application of the Act, although both product liability and e-commerce were not alien to the foregoing 1986 Act but were clearly missing the dynamics that were imperative to ensure the protection of the interests of the consumers. The Act, has been enacted at a time where brick & mortar stores have been limited to their mere physical presence alone while e-commerce platforms enjoy the greater chunk of the market.

 It would be fair to say that for a long time e-commerce platforms have been working  with impunity as they could shift the blame of a faulty product or its service on the sellers and sharing no part of the culpability. However, under the new Act, they share the same accountability as the sellers. Incidentally, there are various third party sellers on e-commerce platforms such as Amazon, Flipkart etc for whom there was no ‘express liability’ but now under the new legislation, apart from the third party seller the individual e-commerce platform will also be held liable for the deficiencies of third party seller and due to this stringent provision there will be strict compliance to the mandates of the Act. This provision is of utmost importance as earlier the e-commerce platforms did not undertake responsibility for the products sold by third party sellers and due to this, often products displayed did not correspond with the actual product received by the consumers.

Given the circumstances and the ever changing dynamics the Consumers Protection Act, 2019 is a robust and comprehensive enactment and at par with the international standards of consumer laws.

References:

[1][1932] UKHL 100

[2]2(34) Consumer Protection Act, 2019

[3]2(36) Consumer Protection Act, 2019

[4]2(37) Consumer Protection Act, 2019

[5]2(38) Consumer Protection Act, 2019

Authored by;

1. Rudrank Shivam Singh, Advocate, Patna High Court.

2. Aman Pathak.

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