Key Highlights of the Consumer Protection Bill, 2019 (Passed by the Parliament)
The Parliament has passed the Consumer Protection Bill, 2019 (“Bill”) (Click here to view the Bill). This Bill will entirely replace the Consumer Protection Act, 1986. Following are the key highlights of the Bill –
i. Provisions relating to Misleading Advertisements –
a. What constitutes misleading advertisement?
The Bill has introduced a definition to the term ‘misleading advertisements’. Advertisements which (a) give a false description of a product or service; (b) give false guarantee, or are likely to mislead consumers as to quality and substance of product or service; (c) communicate an implied or express representation by the manufacturer or seller which would constitute an unfair trade practice or (d) conceal important information deliberately. Such advertisements will be considered misleading.
b. What is the punishment for making a misleading advertisement?
The authority under the Bill can impose penalty up to INR 10,00,000/- for making a misleading advertising. It is also an offence which is punishable with imprisonment for a term which may extend to five years and with fine which may extend to INR 50,00,000/-
c. Is the endorser of a misleading advertisement liable?
Endorser’s Liability Introduced – A person endorsing a misleading advertisement is liable to penalty of INR 10,00,000/-. However, such person will not be held liable if he/she has exercised due diligence to verify the content of the advertisement with respect to the product or service being endorsed.
ii. Change in limits of jurisdiction of Consumer Forums
The Bill has increased the limits of the Consumer Forums. Following is a comparison of the limits of jurisdiction of consumer forums under the Bill and the Consumer Protection Act, 1986 –
|
Forum |
The Consumer Protection Bill, 2019 |
The Consumer Protection Act, 1986 |
|
District Forum |
Claims up to INR One Crore |
Claims up to INR Twenty Lakhs |
|
State Commission |
Claims from INR One Crore to INR Ten Crores |
Claims from INR Twenty Lakhs to INR One Crore |
|
National Commission |
Claims above INR Ten Crores |
Claims above INR One Crore |
iii. Provisions dealing with Product Liability
Chapter VI of the Bill deals with product liability. Product liability is attributed to a product manufacturer or a product seller. It is the responsibility of a product manufacturer or product seller to compensate for harm caused by a defective product or a deficient service to a consumer.
a. What constitutes harm?
The Bill defines “harm” as: (a) damage to any property (other than the product); (b) personal injury, illness or death; (c) emotional distress or mental agony arising out of illness, personal injury or damage to property; (d) loss of services or other loss resulting from the instances mentioned in (a), (b) and (c). However, breach of warranty or any commercial/economic loss will not constitute harm under the Bill.
iv. Establishment of Central Consumer Protection Authority
The Central Consumer Protection Authority (“CCPA”) will be the regulatory body dealing with matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers as a class. It will also have an investigation wing for the purpose of carrying out inquiry and investigation under the Bill.
a. What will be the function of the CCPA?
The CCPA will have the following functions –
Functions relating to investigation and filing complaints –
Inquire or cause an inquiry or investigation to be made into violations of consumer rights or unfair trade practices, either suo motu or on a complaint received or on the directions from the Central Government and file complaints before the District Commission, the State Commission or the National Commission, as the case may be, under this Act;
Penal Powers –
The CCPA will have the power to penalize offenders if it is satisfied after investigation that any advertisement is false or misleading and is prejudicial to the interest of any consumer or is in contravention of consumer rights, it may, by order, issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such advertisement or to modify the same in such manner and within such time as may be specified in that order.
Quick View
The Bill has brought changes which were much needed. It will put in place a mechanism to deal with misleading advertisement, and has provisions relating to endorser’s liability. The Bill also gives power to the authority to makes rules in relation to e-commerce platforms, advertisements etc. The establishment of the CCPA will make it easier for consumers to approach the forums and it will strengthen the consumer protection regime in India. With respect to manufacturers and sellers, the Bill clearly lays down that economic/commercial loss faced by the consumer will be outside the purview of harm under the Bill, which will be seen as welcome move by the manufacturers and sellers.
2. Trademark Infringement – Remedy of “Passing Off” not restricted due to alternate remedy available under the Companies Act, 2013 – Delhi HC
The Delhi High Court (“Delhi HC”) in Thermax Limited v. Thermax Engineers Private Limited (Decided on July 19, 2019. Click here to view judgment.) decided on the issue concerning use of the word “THERMAX” (“word/mark”), which is also the corporate name of Thermax Limited. Permanent injunction was sought against Thermax Engineers Private Limited for using the word/mark when both the parties were conducting business of an identical nature.
The Delhi HC relied on the Supreme Court Judgment in Mahendra & Mahendra Paper Mills Ltd. v. Mahindra & Mahindra Ltd. to hold that corporate name of a company can be injuncted in a trademark infringement and passing off action remedy is available to the aggrieved person in this regard. Delhi HC also noted that the trademark of Thermax Limtied was well known and both the parties were carrying out identical business activities.
Delhi HC further drew a distinction between the remedies available under the Companies Act and the common law remedy of passing off. Delhi HC highlighted that the provisions of the Companies Act only provides for rectification of the name of a company which has been registered with undesirable name, but, it does not provide the aggrieved party a remedy to seek injunction against the use of such name. Finally, Delhi HC held that an aggrieved party will have two independent rights in case its corporate name being used by another entity carrying out identical business, one under the Companies Act and the other under the common law remedy for passing off, to obtain an injunction restraining the defendant from using a word/mark as part of its corporate name or its trade mark that is same as or similar to the aggrieved party’s trade mark and trade name.
Quick View
The Delhi HC has rightly made a thorough distinction with respect to the remedies available in cases where there is a similarity between trade names as well as trademarks of two different entities/businesses. It has highlighted how the remedies under the Companies Act and the remedy of passing off are of a different nature and provide different relief to the aggrieved persons and that the same are independent of each other. `
3. Test for establishing criminal liability in case of non-adherence to an injunction order for trademark infringement – Supreme Court
The Supreme Court in U.C. Surendranath v. Mambally’s Bakery (Decided on July 22, 2019. Click here to view judgment.) laid down the test for establishing criminal liability in case of injunction for trademark infringement.
Mambally’s Bakery had successfully obtained an interim injunction from the trial court on November 09, 2015 (“injunction order”) against U.C. Surendranath for use of the trademark “Mambally’s Bakery” (“trademark”) with respect to the sale of bakery products and running a bakery shop. The trial court had appointed an advocate Commissioner to check whether U.C. Surendranath was infringing the trademark, the advocate Commissioner carried out an inspection on U.C. Surendranath’s shop on November 07, 2015. The advocate Commissioner in its report stated that U.C. Surendranath was in the business of carrying out a bakery and tea shop business and was also selling tea cakes and other bakery products using the subject trademark. Further, the Commissioner confirmed that a big hoarding with the subject trademark was displayed in front of U.C. Surendranath’s shop.
The trial court thereafter ordered the advocate Commissioner to make a second visit to U.C. Surendranath’s shop on November 20, 2015. In the second visit the Commissioner noted that products were no longer being sold in the name of Mambally’s Bakery. However, the Commissioner also noted that the hoarding “Mambally’s Bakery” displayed in front of the shop was not removed. In this regard, U.C. Surendranath had offered his explanation stating that since the hoarding was situated at a height of 13 feet and also due to the scarcity of the labour force, he could not immediately remove the hoarding, also stating that he was 40% physically disabled and thus was incapacitated from climbing up and removing the hoarding, himself.
The trial court in its order stated that there was “wilful disobedience” on part of U.C. Surendranath and directed him to undergo imprisonment for one week. U.C. Surendranath approached the High Court against this order, his appeal was dismissed.
The Supreme Court held that allegation of wilful disobedience being in the nature of criminal liability has to be proved to the satisfaction of the court. The disobedience should not be mere “disobedience” but a “wilful disobedience”. The Supreme Court further held that the explanation provided by U.C. Surendranath was acceptable in nature, he had complied with the order of the trial court partly and was not showing disobedience wilfully, thus, the Supreme Court had set aside the order of the trial court.
Quick View
By passing this judgment, the Supreme Court has helped U.C. Surendranath to achieve the ends of justice. It has laid down a test with respect to criminal liability for not adhering to an injunction order of a court. For criminal liability to be imposed on a person it must be proved to the satisfaction of the court that there was not mere disobedience but wilful disobedience, as per the facts and circumstances of each case.