1. Consumer Laws — Overview

This is the overview of Law of Torts, Unit V — Consumer Laws. The unit moves from the common-law background of negligence to the Consumer Protection Act, 2019, and then through its rights, authorities, remedies and penalties. This post is the map. Each stage has its own Note, and the order below is the order in which they are best read.

The Problem This Topic Solves

A buyer is usually weaker than the seller. The seller knows the product and the buyer does not. A claim in ordinary tort or contract law is slow and expensive, and for a small purchase it is not worth the trouble. Consumer law exists to close this gap, first by giving the buyer rights and then by giving the buyer a fast, cheap forum.

The Consumer Protection Act, 2019 repealed and replaced the 1986 Act and came into force on 20 July 2020. It covers rights, a regulator, product liability, Commissions, mediation and penalties. Students find the unit long because the topics are spread across many Notes. This overview shows how the pieces fit, so that every Note can be placed in the larger picture.

The Group at a Glance

The table below lists each Note in the order of the syllabus and says what it covers.

Background: Common Law and the Consumer Movement

Before any consumer statute, the tort of negligence was the consumer's only real remedy. Donoghue v. Stevenson established that a manufacturer owes a duty of care to the ultimate consumer independently of any contract, which removed privity as a bar. Cassidy v. Ministry of Health extended the reasoning to hospitals, which are directly liable for the negligence of their organised medical staff. The Act was needed because ordinary civil litigation was too slow and costly to enforce these rights, not because the common law gave none.

Consumerism is the organised movement asserting that consumers, as a class, are entitled to basic protection against unfair, deceptive or unsafe business practices. It moved the law from caveat emptor, "let the buyer beware", towards caveat venditor, "let the seller beware". Sustained pressure from consumer groups led to the Consumer Protection Act, 1986 and then the 2019 Act. Full study: Common Law and the Consumer and Consumerism.

The 2019 Act and Its Key Definitions

The 2019 Act replaced the 1986 Act to deal with e-commerce, endorsements and delay. Its biggest structural change is the Central Consumer Protection Authority. Other changes are product liability as a separate chapter, a statutory mediation mechanism, higher penalties, and Commission jurisdiction based only on the consideration paid. Full study: Salient Features of the Consumer Protection Act, 2019.

A "consumer" under Section 2(7) is a person who buys goods or hires or avails a service for consideration, including online and multi-level-marketing transactions. A person who buys goods for a commercial purpose is excluded, but goods bought and used exclusively to earn a livelihood by self-employment do not fall within that exclusion. The Act recognises six rights: safety, information, choice, to be heard, redressal and consumer education. Full study: Consumer and Their Rights.

A "defect" under Section 2(10) concerns goods: a fault or shortcoming against a legal standard, a contract or the trader's own claim. A "deficiency" under Section 2(11) concerns services and expressly includes negligence and deliberate withholding of relevant information. Indian Medical Association v. V.P. Shantha held that medical services, other than those rendered entirely free, are "services". An "unfair trade practice" under Section 2(47) is a deceptive method of selling. A "restrictive trade practice" under Section 2(41) manipulates price, delivery or supply, and a tie-in arrangement is the classic example. Full study: Defects in Goods and Deficiency in Service and Restrictive and Unfair Trade Practices.

Authorities: Councils and the CCPA

The Consumer Protection Councils are advisory bodies at the Central, State and District levels. The Central Council is chaired by the Union Minister in charge of Consumer Affairs, the State Council by the State Minister, and the District Council by the Collector. They give advice on policy, standards and awareness. They cannot award compensation or pass any order binding a trader. The Central Council meets at least once a year and the State Council at least twice. Full study: Consumer Protection Councils.

The Central Consumer Protection Authority is established under Section 10. It protects consumers as a class and can act suo motu, on a complaint or on a direction of the Central Government. Its Investigation Wing is headed by a Director-General. It can order recall of dangerous goods, withdrawal of unsafe services, discontinuation of unfair practices and reimbursement of purchasers. It can penalise manufacturers, endorsers and publishers of misleading advertisements, and can bar an endorser for a period. Full study: Establishment, Powers and Functions of the CCPA.

Product Liability

Chapter VI, Sections 82 to 87, makes manufacturers, service providers and sellers liable for harm caused by a defective product or a deficient service. A manufacturer is liable under Section 84 on any one of five grounds: a manufacturing defect, a design defect, deviation from specifications, non-conformity with an express warranty, or failure to give adequate instructions or warnings. Section 85 covers service providers, Section 86 sellers and Section 87 the exceptions, such as misuse, alteration and obvious danger. "Harm" includes property damage other than to the product itself, personal injury, illness, death and mental agony, and excludes commercial or economic loss. Full study: Product Liability under the Consumer Protection Act, 2019.

Remedies: Commissions and Mediation

The Act sets up District, State and National Commissions. Jurisdiction depends on the consideration paid: the District Commission up to ₹50 lakh, the State Commission above ₹50 lakh up to ₹2 crore, and the National Commission above ₹2 crore. A complaint can be filed where the complainant resides or personally works for gain, and it can be filed electronically under Section 35. Section 69 sets a two-year limitation period, extendable for sufficient cause, and a continuing cause of action gives a fresh period for as long as the wrong continues. Appeals go from the District to the State to the National Commission and then to the Supreme Court. Full study: Three-Tier Redressal Mechanism, E-Filing, and Continuous Cause of Action.

Chapter V, Sections 74 to 81, adds a statutory mediation mechanism. Mediation cells are attached to the Commissions. Mediators are empanelled and nominated for each dispute, they must disclose conflicts of interest, and mediation needs the consent of both parties. Once a settlement is reached, the Commission must pass an order recording it within seven days of receiving the settlement report. Full study: Mediation Under the Consumer Protection Act, 2019.

Penalties: Civil and Criminal Liability

Civil liability is compensatory: removal of the defect, refund, compensation and discontinuation of the practice. Criminal liability is punitive. Both can arise from the same facts and are not alternatives. Section 89 punishes a manufacturer or service provider who causes a false or misleading advertisement prejudicial to consumers with imprisonment up to two years and a fine up to ₹10 lakh for a first offence, and imprisonment up to five years and a fine up to ₹50 lakh for a later offence. Liability can extend to endorsers and publishers. Full study: Civil and Criminal Liability and Penalties for Misleading Advertisements.

How to Tell Them Apart

The unit has three bodies with different jobs that students often mix up. Councils advise on policy. The CCPA regulates and protects consumers as a class. The Commissions decide individual complaints and award compensation. The table below compares them.

A Practical Example

A consumer buys a pressure cooker through an online marketplace after a celebrity endorses it, claiming a safety feature that the product does not have. The cooker explodes and burns her hand. She can file a complaint before the District Commission, from where she lives, electronically, claiming compensation under the product-liability provisions for the design defect and for mental agony. She does not need to prove negligence by the maker.

The CCPA can act separately. It can investigate the advertisement, order its discontinuation, order a recall and reimbursement, and penalise the manufacturer and the endorser. The manufacturer can also be prosecuted under Section 89. If the parties agree on the refund amount, the Commission can refer the dispute to mediation and must record the settlement within seven days of the settlement report.

Quick Revision Points

• Unit V order: common law, consumerism, the 2019 Act, consumer and rights, defect and deficiency, unfair and restrictive trade practices, Councils, CCPA, product liability, Commissions, mediation, penalties.
• Six rights: safety, information, choice, to be heard, redressal, consumer education.
• Section 2(7) consumer; Section 2(10) defect; Section 2(11) deficiency; Section 2(47) unfair trade practice; Section 2(41) restrictive trade practice.
• Councils advise; CCPA (Section 10) regulates; Commissions decide complaints.
• Product liability: Sections 82 to 87; manufacturer under Section 84, service provider under Section 85, seller under Section 86.
• Commissions: ₹50 lakh, ₹2 crore; Section 35 e-filing; Section 69 two-year limitation.
• Mediation: Sections 74 to 81, order within seven days. Section 89: two years and ₹10 lakh; five years and ₹50 lakh.