Birbal’s Update
January 2019
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Key Updates

Recent Judgements

Complaints filed under the Consumer Protection Act can also be proceeded with despite there being any arbitration agreement between the parties

The Hon’ble Supreme Court of India in M/s. Emaar MGF Land Ltd. Vs. Aftab Singh. Review Petition (C) Nos. 2629-2630 of 2018 in Civil Appeal Nos. 23512-23513 of 2017, with reference to the Arbitration and Conciliation Act, 1986 and Consumer Protection Act, 1986 held that the proceedings of Consumer Protection Act, 1986 are special proceedings which are required to be continued despite an arbitration agreement. The Supreme Court further noted that there are large number of other fields where an arbitration agreement can neither stop or stultify the appropriate proceedings.

The Hon’ble Court specifically observed that in the event a person entitled to seek an additional special remedy provided under the statutes does not opt for the additional/special remedy and he is a party to an arbitration agreement, there is no inhibition in disputes being proceeded in arbitration. It is only the case where specific/special remedies are provided for and which are opted by an aggrieved person that judicial authority can refuse to relegate the parties to the arbitration.


The Hon’ble Supreme Court of India in ‘CCI Projects (P) Ltd. v. Vrajendra Jogjivandas Thakkar’, Civil Appeal Nos. 6784-6785 of 2018 (‘CCI Projects Case’), while adjudicating the maintainability of the complaints held that subsequent transferees of a flat can file a consumer complaint if the transfer has been effected within the family of the original allottee, where the members have been residing together.

The apex court distinguished this situation from the position laid down in the case of Haryana Urban Development Authority v. Raje Ram, Civil Appeal No. 2381 of 2003 (‘HUDA Case’), where the apex court held that subsequent transferees, who were aware of the delay and accepted the situation as is, were not entitled to file a consumer complaint. The Court in CCI Projects case observed that the subsequent transferees in the HUDA case were total strangers and were aware of the delay in the delivery of allotted plots. Since, in the present case the, the transfers were effected within the family members who were residing together, they were entitled to file a consumer complaint.

The court made specific observation in this regard and categorically held that the HUDA case cannot be stretched to say that a consumer complaint filed by any subsequent transferee is not maintainable under law.

Policy Updates

Remolding the Consumer Protection Act, Lok Sabha Passes the Consumer Protection Bill 2018.

Since the inception of the Consumer Protection Act in the year 1986 with the view of protecting the rights of consumer and safeguarding the consumer from exploitation that a business may practice to make profits. The Act has since become stagnant. It had not been amended since last three decades and needed changes for strengthening the rights of the consumers, said Consumer Affairs Minister Ram Vilas Paswan replying to a brief debate on the bill.

The Lok Sabha passed the Consumer Protection Bill on 20th December, 2018 remolding the entire Act and providing for establishment of an executive agency called Central Consumer Protection Authority (CCPA) to promote, protect, and enforce the rights of consumers as a class headed by a Chief Commissioner and comprise other Commissioners. The said bill also confers the authority with the power to issue notices, pass orders to recall goods, prevent and impose penalties for false and misleading advertisements unfair and restrictive trade practices it may also file complaints before the Consumer Disputes Redressal Commissions. It also establishes Consumer Protection Council an advisory body at the district, state and national levels to be headed by District Collector and Minister-in charge respectively. In order to ease the process for consumers the bill aims to establish consumer mediation cells so that the consumer disputes are heard by a single entity and not at separate and the matters are resolved quickly.

Escalating the liabilities of manufacturers, the bill aims to pave way for class action suits wherein the liability of manufacturers or service providers will not be limited to just one group of customers moreover wrapping around all those customers who have been affected by a particular product of the company. Furthermore, all the parties involved i.e, manufacturer, seller and producer shall be held accountable for any physical damage caused to the consumer.

The Bill shoots up the liabilities of e-commerce firms by requiring them to now share more information with the users and covering such industry under the ambit of service providers thus increasing liability in case of an error.

Under the Bill, endorsement of false advertisement can now lead celebrities and renowned individuals into trouble. However, the manufacturers and producers shall be liable for imprisonment up to 2 years and a fine of Rs. 10 lakh, whereas, the celebrities shall only be liable to fine and not for imprisonment.

A solution to resolve the issue of fake complaints has been resolved by imposing a bill of Rs. 10,000 to Rs. 50,000 on filling of any fake complaint with the authority.

The Bill further defines the ambit of misleading advertisements by recognizing unfair trade practices, false information regarding the quality or quantity of a good or service as offences. Subject to Non-compliance with the orders of the commission, it shall subject a person to imprisonment of up to 3 years, or a fine not less than Rs 25,000/- extendable to Rs. 1 lakh, or both.

New FDI Norms: Guidelines or Restriction on online retail?

The Ministry of Commerce and Industry recently brought in Guidelines for Foreign Direct Investments in E-Commerce Sector which shall have far reaching effects in not just the Indian Market but also the world Economy. The Circular has permitted 100 % FDI in e- Commerce via the automatic route Pursuant to such exposure, a restriction has been placed on the inventory based model of E-Commerce. Subject to the provisions of FDI Policy, e-commerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce. If more than 25 % of purchases of a vendor are from its group companies then such an inventory will be deemed to be controlled by e-commerce marketplace. The government does not plan to ease out the rules allowing FDI in Business to consumer (B2C) e-commerce players holding the inventory of various goods, even if such products are locally-made. E-commerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. The recent Notification released by the Department of Industrial Policy and Promotion clears the air by specifying that the present policy does not impose any restriction on the nature of products which can be sold on the marketplace. Further, a concluding point was laid down stating that the said norms are applicable only to entities which operate a marketplace for e-commerce.

Other digital platforms such as computers, television channels and internet application such as web pages, extranets, mobiles, etc. are to be included in the Digital & electronic network. Notification restricts the entities having equity participation in the e-commerce market place. Its group companies will not be permitted to sell its products on the platform run by such entity. No e-commerce marketplace entity shall be allowed to mandate any seller to sell any product exclusively on its platform only.

Provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances have been deemed to be unfair and discriminatory Therefore, A fair and non-discriminatory process has been mandated under the notification by Ministry of Commerce and Industry stating that E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Also cash back provided by group companies of marketplace entity to buyers shall be sheltered under the fair and non-discriminatory policy. Payments for sale by the e-commerce entity should be in conformity with the guidelines of the Reserve Bank of India.

Notification proceeds to provide for the requirements such as the name, address and other contact details of the seller to be made available for sale electronically on website. Additionally the accurate delivery & satisfaction of customers shall be the responsibility of the seller. The warranty/ guarantee of goods and services sold shall also fall under such responsibility. Support services such as warehousing, logistics, order fulfillment, call centre, payment collection and other services may be provided by e-commerce marketplace.

Above decision will take effect from the first day of February, 2019 requiring the e-commerce market place entity to furnish a certificate along with a report of statutory auditor to Reserve Bank of India, confirming compliance of above guidelines, by 30th of September of every year for the preceding financial year.

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