Theme: Consumer Protection

Mediation as a mode of Consumer Dispute Settlement

Mediation(( Section 2(25), Consumer Protection Act, 2019)) is an out-of-court settlement where the parties can decide the manner of the proceedings. It helps the speedy settlement of disputes.

The Consumer Protection Act, 2019 has introduced the provision where the relevant Commission can refer a consumer dispute for mediation, when there is a scope of settlement between the parties(( Section 37(1), Consumer Protection Act, 2019)). However, parties to the mediation are given a time frame of 5 days to accept or reject the process of mediation, as consent is vital for it(( Section 37(2), Consumer Protection Act, 2019)). Once a dispute is referred to mediation, the fee paid to the Commission for dispute redressal is refunded to the parties(( Rule 5, Consumer Protection (Mediation) Rules, 2020)).

Process of Mediation

The mediation proceeding may be conducted in the following way:

Step-1: It would be held at a ‘Consumer Mediation Cell’ which would have a panel of mediators to settle disputes. This cell maintains a list of cases and records(( Regulation 11(7), Consumer Protection (Mediation) Regulations, 2020)) of the proceedings(( Section 74, Consumer Protection Act, 2019)).

Step-2: Every mediator is expected to act fairly and judiciously while deciding the matter(( Section 77, Consumer Protection Act, 2019)). A fee is also paid to the mediator before the proceedings begin(( Rule 8(6), Consumer Protection (Mediation) Rules, 2020)).

Step-3: Mediation would be conducted in the presence of both parties(( Regulation 11(1), Consumer Protection (Mediation) Regulations, 2020)) and will remain confidential(( Regulation 12, Consumer Protection (Mediation) Regulations, 2020)).

Step-4: The parties must provide all the relevant information and documents to the mediator(( Regulation 11(6), Consumer Protection (Mediation) Regulations, 2020)).

Step-5: If the parties come to an agreement after the mediation proceedings within 3 months(( Regulation 11(2), Consumer Protection (Mediation) Regulations, 2020)), a ‘settlement report’ would be forwarded to the Commission along with the signatures of the parties(( Sections 80 (1) and 80 (2), Consumer Protection Act, 2019)).

Step-6: The concerned Commission is required to pass an order within the 7 days of receiving the ‘settlement report’ of the parties(( Section 81(1), Consumer Protection Act, 2019)).

Step-7: In case no agreement has been reached through mediation, the same is communicated to the Commission through a report of proceedings. The Commission would then hear the issues of the concerned consumer dispute and decide the matter(( Sections 80(3) and 81(3), Consumer Protection Act, 2019)).

Step-8: A dispute cannot be taken to other proceedings, like arbitration or court litigation, once it has undergone the mediation procedure(( Rule 6, Consumer Protection (Mediation) Rules, 2020)).

Complaints which cannot be settled by mediation

However, the following matters cannot be referred to mediation(( Rule 4, Consumer Protection (Mediation) Rules, 2020))

  • Serious medical negligence or one that results in death.
  • Fraud, forgery, coercion.
  • Applications for compounding of offences(( Section 96, Consumer Protection Act, 2019)) by either of the parties.  This means that proceedings about these offences can be settled between the parties upon the payment of fine unless the commission of such offence has recurred in a span of 3 years(( Sections 88 and 89, Consumer Protection Act, 2019.)).
  • Criminal offences and public interest issues. These include issues concerning the public who are not parties to the case. For example, violation of privacy in terms of electronic bank transactions on e-commerce platforms.

 

Maximum Customer Liability and Bank Policy

The maximum a customer of a Basic Savings Bank Deposit Account can be liable for is Rs 5,000.

All other Savings Bank Accounts, Pre-paid Payment Instruments and Gift Cards, Current/ Cash Credit/ Overdraft Accounts of Micro, Small and Medium Enterprises, Current Accounts/ Cash Credit/ Overdraft Accounts of Individuals with annual average balance (during 365 days preceding the incidence of fraud)/ limit up to Rs.25 lakh. Credit cards with limit up to Rs.5 lakh, the maximum they are liable for is Rs. 10,000

For all other Current/ Cash Credit/ Overdraft Accounts and credit cards with limit above Rs.5 lakh, they can be liable up to Rs 25,000.

If the delay is for more than seven working days, the customer liability will be determined as per the Bank’s Board Policy:

  • Banks should provide the details of their policy in regard to customers’ liability formulated at the time of opening the accounts.
  • Banks should also display their approved policy in public domain for wider circulation.
  • The existing customers must also be individually informed about the bank’s policy.

Consumer Protection Authorities

Given below are the details and functions of all the consumer protection authorities:

Central Consumer Protection Authority(( Chapter III, Consumer Protection Act, 2019))

The Central Consumer Protection Authority (CCPA) aims to promote, protect and enforce the rights of consumers collectively. The CCPA is empowered to:

  • Conduct investigations into violation of consumer rights and start prosecutions on complaints received.
  • Order recall of unsafe goods and services
  • Order discontinuation of unfair trade practices and misleading advertisements
  • Impose penalties on manufacturers, endorsers and publishers of misleading advertisements(( Central Consumer Protection Authority established to promote, protect and enforce the rights of consumers, PIB, accessed at https://pib.gov.in/PressReleasePage.aspx?PRID=1642422.)).

It is headquartered in New Delhi(( Notification by Ministry of Consumer Affairs, Food and Public Distribution dated 23 July, 2020, accessed at https://consumeraffairs.nic.in/sites/default/files/Estt%20of%20CCPA.pdf, but there is also scope to set up regional centers throughout the nation((Section 10(3), Consumer Protection Act, 2019.)). The CCPA can begin to inquire into the mentioned issues either when they receive complaints, or on their own.

Consumer Protection Councils(( Chapter II, Consumer Protection Act, 2019.))

The Central Consumer Protection Council has advisory functions, giving suggestions about the promotion and protection of consumer rights. Similarly, state-level units called State Consumer Protection Councils and District Consumer Protection Councils are also formed which perform similar advisory functions. Some of the other bodies that also perform similar roles (such as spreading awareness) include, Consumer Education and Research Centre (Gujarat) , Bureau of Indian Standards, Federation of Consumer Organization in Tamil Nadu, Mumbai Grahak Panchayat, etc.

 

What is product liability?

Product liability refers to the responsibility of the product manufacturer or seller to compensate for the harm caused to the customer due to a defect in the product or deficiency in service(( Section 2(34), Consumer Protection Act, 2019.)). The harm caused can include issues such as personal injury, mental distress, death, damage to property, breach of contract, etc(( Section 2(22), Consumer Protection Act, 2019.)). For example, if an online food product causes health issues or is highly adulterated, a consumer can file a complaint to bring about a product liability action against the seller(( Section 83, Consumer Protection Act, 2019)). A complaint can be filed against the product manufacturer, the seller and the service provider in such cases.

Instances of product liability (( Section 84, Consumer Protection Act, 2019.))

  • When the product has a manufacturing defect or is not good enough
  • Where the manufacturing of the product did not conform with manufacturing specifications
  • Modification or alteration in the product that has caused the harm(( Section 86(b), Consumer Protection Act, 2019.))
  • The product has a design, testing or packaging defect
  • Inadequate instructions or warnings as to the usage of the product bought1
  • Product that does not conform with the express warranty or guarantees mentioned

 

  1. Section 86(e), Consumer Protection Act, 2019. [↩]

What are services?

Service means any activity made available to people, and it can include facilities related to banking, financing, insurance, transport, processing, provision of electrical or other energy, telecom, boarding or lodging, housing construction, entertainment, amusement or the relay of news or other information(( Section 2(42), Consumer Protection Act, 2019.)).

‘Services’ include any activities carried out by one person for another, in return for some payment or other benefits such as gift vouchers, as part of an offer, etc. For instance, activities like haircuts, medical check-ups, packing-and-moving services, flour mills, massages, watch-repairs, etc. for payment would be considered as services. Broadly, it can be said that services include:

  • Business services: Business services are services that support the daily functioning and activity of any business, such as technological setup, website hosting, call centers, banking, transport service, telecom etc.
  • Personal services: Personal services are usually more individualistic in nature, such as catering, hotel accommodation, medicine, painting, sculpting etc.
  • Social services: Social services are usually funded by the Government, and include services such as housing, medical care to the underprivileged, primary education etc.

Services that are free of charge

Further, services that are free of charge(( Section 2(42), Consumer Protection Act, 2019.)),  are usually not covered under consumer protection laws(( Joint Labour Commissioner and Registering Officer and Another v. Kesar Lal, AIR 2020 SC 2596.)). In other words, unpaid services which are provided informally, rather than with an expectation of a fee, are not covered under consumer protection law. For example, if someone goes to a doctor for a medical check-up, but being an acquaintance, the doctor does not charge any fee, the patient cannot later sue the doctor for any deficiency of service, as it had been provided free of charge. However, a traveller buying a ticket for a train is a consumer, and can sue the railways for any deficiency of service including bad food service, bad hygiene standards etc((Commentary on Consumer Protection Act, National Consumer Disputes Redressal Commission, accessed at, http://ncdrc.nic.in/bare_acts/1_1_2.html.

 

What are Public Utility Services?

Public utility services are facilities provided by the Government, which are essential to a citizen’s needs. For instance, these services include, the supply of water to homes, supply of electricity, the postal system, the banking system, railways, etc. The consumer protection law enables consumers to file complaints about these public utility services.

Examples of public utility services

Some examples of public utility services include(( Section 22A(b), Legal Services Authorities Act, 1987.)):

  • Transport service for carrying passengers or goods by air, road or water
  • Postal services
  • Telephone services
  • Power facilities
  • Lighting facilities
  • Water facilities
  • Insurance service

The law recognizes public utility services as “establishments” under the law. This means that the local branch offices of a public utility service which are establishments, can be held liable in the same way as its main central authority. For example, if one has a complaint against the local water department, one can file a complaint against the local/district department itself, and not against the Central Water Commission. Other than the mainstream consumer protection laws in India, Permanent Lok Adalats can also be approached to request for good standards of public utility services at a district level(( Section 22B, Legal Services Authorities Act, 1987.)).

Complaint Mechanisms

Obstructing or not providing a public utility service

If someone is obstructing, stopping or not providing you with a public utility service, you can file a complaint with the National Government Services Portal. The Portal, though not exclusively dedicated to consumer services, has a wide range of public services against which consumers can file grievances. Issues such as commodity rates (prices of gold, silver etc.), monitoring ration cards, etc. can easily be done by visiting the National Government Services Portal.  Among other things, the portal provides a user with information on the consumer complaint forum, state- wise break up on details of the Public Distribution System etc. Even complaints about the Bureau of Indian Standards can be filed here. This means that consumers can file a complaint about the quality of a BIS-certified product, Hallmarked products, misleading advertisements about the BIS standard, etc.(( Consumer Protection, Bureau of Indian Standards, accessed at https://bis.gov.in/other/consumer_affairs.htm#:~:text=%2D%20Through%20Online%20Complaint%20Registration%20on,Head%20(Consumer%20Affairs%20Department).))

Postal, telecom and banking services

The Department of Administrative Reforms and Public Grievances’ (CPGRAMS) portal is very useful to file complaints about  postal services, telecommunication, banking services, insurance services, school and education, road transport, natural gas, etc.

  • The postal department deals with issues such as delay, non-delivery, pensions, insurance (postal service), corruption charges, e-commerce related problems, AADHAR related issues, etc.
  • The telecom department deals with issues related to mobile, broadband, landline, pension, employee, malpractices and corruption. Complaints about telecom facilities can be filed at the telecom grievance portal.
  • The banking and insurance division deals with issues related to bank lockers, deficiency in customer service, education and housing loans, NBFCs, Pradhan Mantri schemes, fraud, mobile banking, misappropriation, harassment, loan settlement, etc. Complaints about banking facilities can be filed at the RBI complaints portal. Complaints can also be filed to the Banking Ombudsmen, who are senior officials appointed by the RBI to redress customer complaints against deficiency in certain banking services.

Water, sanitation and electricity

Some states such as Karnataka, Tamil Nadu and Andhra Pradesh have implemented electricity call services for making complaints about electricity service. For complaints related to water services, customers can lodge  grievances  at the  Ministry of Drinking Water and Sanitation grievance portal.

The issues listed above are only indications of the kinds of complaints that can be made, and it is not an exhaustive list.

What are Goods?

Goods include anything other than money, that is manufactured or produced for consumption by people(( Section 2(7), Sale of Goods Act, 1930)). As per the consumer protection law, goods refer to all movable property, including food.(( Section 2(21), Consumer Protection Act, 2019.)) Based on how a good is used, there are two types of goods:

  • Capital goods: Capital goods are used to produce other goods and services. For example, heavy machinery in a factory.
  • Consumer goods: Consumer goods are meant for direct consumption. In other words, consumer goods are not used for creating new goods.

Consumer protection laws apply to consumer goods and not capital goods(( Section 2(7)(i), Consumer Protection Act, 2019; Section 2(d)(i), Consumer Protection Act, 1986.)). An airplane may be a capital good when used by an airline company to provide the service of transportation, and it could be a consumer good when flown for personal pleasure. The Government controls the production and sale of capital goods in the public’s interest, for which it may even regulate or prohibit production of goods as needed. For example, petroleum production, sale and pricing(( Essential Commodities Act, 1955; Prevention of Black marketing And Maintenance of Supplies of Essential Commodities Act, 1980)).