SCHOOL OF LAW

2023-2024

SUBJECT: BANKING LAW

NAME OF THE TOPIC: CONSUMER PROTECTION
ACT 2019

SUBMITTED TO:
Dr. APOORVA SINGH KATIYAR
ASSISTANT PROFESSOR
MODY UNIVERSITY
SUBMITTED BY:
DIVYA RAO
B.COM.LLB 5th year
190297
Table of Contents
What are consumer rights under the Consumer Protection Act, 2019....................................................6
What are unfair trade practices under the Consumer Protection Act, of 2019........................................7
Changes incorporated in Consumer Protection Act, 2019......................................................................7
Essential provisions of the Consumer Protection Act, 2019..................................................................8
Consumer Protection Council............................................................................................................8
Central Consumer Protection Council...........................................................................................8
State Consumer Protection Councils..............................................................................................9
District Consumer Protection Council...........................................................................................9
Central Consumer Protection Authority............................................................................................9
Functions and duties of the Central Authority.............................................................................10
Consumer Disputes Redressal Commission.....................................................................................11
Mediation........................................................................................................................................11
Product liability...............................................................................................................................12
Liability of product manufacturer................................................................................................12
Liability of product service provider...........................................................................................12
Liability of product seller............................................................................................................12
Exceptions to product liability.....................................................................................................13
Offenses and penalties under the Consumer Protection Act, 2019.......................................................13
How do consumers benefit from the Consumer Protection Act, 2019.................................................14
Landmark case laws............................................................................................................................15
Horlicks Ltd. v. Zydus Wellness Products Ltd. (2020)....................................................................15
Veena Khanna v. Ansal Properties & Industries Ltd, NCDRC (2007)............................................15
Sapient Corporation Employees v. Hdfc Bank Ltd. & Ors. (2012)..................................................16
Conclusion...........................................................................................................................................16
Standard Chartered Bank Ltd. Vs. Dr. B.N.
Raman
The respondent in the present case was a non-resident Indian who had placed a
deposit of US$5000 vide FCNR (Foreign Currency Non-Resident) account with
the appellant Bank. Upon maturity of the deposit, the respondent requested the
appellant bank to reinvest the entire amount for another period of 3 years. Upon
non-receipt of any information regarding the status of the deposit, the
respondent filed a complaint with the RBI and then to the State Consumer
Disputes Redressal Commission under the Consumer Protection Act, 1986. The
State Commission ruled in favor of the respondent. The decree of the State
Commission was affirmed by the National Consumer Disputes Redressal
Commission. Aggrieved by the said order, the appellant filed the present appeal.

The appellant contended that the respondent had deposited the said amount in
the FCNR account with the bank but had prematurely withdrawn the deposit
and therefore the deposit could not be reinvested. The appellant bank placed
reliance on the sale/purchase register. The appellant also denied that the deposit
receipt was kept in Safe Custody and submitted that the demand for recovery of
money was barred by limitation. The appellant also submitted that the
respondent was not a consumer as defined under Section 2(1)(d) of the said
1986 Act. The appellant also contended that under RBI rules, the bank was not
bound to retain records after eight years and that the burden was on the
respondent to prove the alleged facts regarding reinvestment. The respondent
placing reliance on his passport contended that he did not withdraw the deposit
prematurely as he was not in India at that time. He further alleged that a copy of
the original FCNR was put in the safe deposit vault and relied upon the deposit
receipt memo retained by the bank. The Supreme Court held that the claim of
the respondent for money decree with interest at the rate of 18% p.a. till
realization was on the higher side and inflation. The economic situation of the
country has to be kept in mind while passing a money decree by agencies under
the Consumer Protection Act, 1986 as well as the question of the appropriate
rate of exchange and rate of interest that the appellant was required to pay
should also be looked into, which was not done in this case. Therefore, the
appeal was partly allowed, and the matter was remitted to the State Commission
to pass a decree in favor of the respondent
This civil appeal, by grant of special leave, is filed by Standard Chartered Bank
Ltd. against an order dated 14.7.2004 passed by the National Consumer
Disputes Redressal Commission (for short ’National Commission’)
dismissing the bank’s appeal and confirming the decree passed by the State
Consumer Disputes Redressal Commission, New Delhi (for short ’State
Commission’) under Consumer Protection Act, 1986 (for short ’the Act’).
Respondent herein was a non-resident Indian employed as a professor of
Medical Physiology at the University of Libya from 1975 to 1980. Thereafter,
he stayed in Libya till 1992. On 17.8.79 when the respondent was in Libya he
had placed with the bank US$5000 in FCNR (Foreign Currency Non-
Resident) Account for 63 months at 9% p.a. vide LF No.MR-24, DR
No.316/79/39. The deposit was made by the draft drawn on New York Bank.
The deposit was to mature on 17.11.84. The appellant confirmed the deposit.
The deposit receipt is annexed to the paper book. In 1984, the Reserve Bank
of India (RBI) allowed the banks to keep FCNR for six years. Interest on such
deposits was increased from 9% to 13% p.a. According to the respondent, in
June 1984, intimation was given to the appellant to reinvest the entire amount
in the FCNR account on maturity for a further period of six years at 13% p.a.
In 1986, the respondent visited India. He attended the branch office of the
bank. The respondent claims that he was assured by the bank that everything
was in order and that US$ 7939.56 was lying in the FCNR account which
amount stood reinvested at 13% p.a. for six years maturing on 17.11.90.
Respondent alleged that in September 1990 he had requested the bank to
reinvest the entire amount in his FCNR account for a further period of three
years. This was to be done on the maturity of his deposit on 17.11.90. In
January 1992, as stated above, the respondent returned to India. He enquired
about the status of his deposits. He did not get the response. He made a
complaint in writing on 5.1.92 and on 14.1.92. On 7.9.92, he received a letter
from the bank
2 .stating that no outstanding amount was there in his name in the FCNR
account. By letter dated 15.10.92, the appellant stated that from their records
it is seen that the said deposit was prematurely withdrawn on 22.11.79.
Thereafter, correspondence ensued. Respondent herein denied the fact of
premature withdrawal of the deposit. He complained to RBI. On 19.4.93 the
bank stated that the deposit was encashed prematurely not on 22.11.79 but on
23.11.79. A copy of the sale/purchase register was also enclosed by the bank
to show that the deposits stood withdrawn on 23.11.79. Ultimately, on
28.9.94 the respondent herein preferred a complaint under section 2(1)(g)
and section 2(1)(o) of the Act before the State Commission.
In the said complaint respondent alleged that he could not have
withdrawn the amount on 23.11.79 as he was not in India. He relied upon his
passport to show that he was not in India. He further alleged that a copy of
the original FCNR was put in the safe deposit vault. In this connection, he
relied upon the said receipt which states that the deposit receipt memo is
retained by the bank in Safe Custody. Respondent stated, on the basis of the
above facts, that the amount has been withdrawn by somebody in connivance
with the bank’s officers. In the circumstances, respondent herein claimed
that he was entitled to the decree in following terms :

"S.No. Year Interest Total amount payable on maturity

1. From 17.8.79 to @ 9% to be US $7939.56 16.11.1984 (63 added

half yearly months) on $ 5000

2. From 17.11.84 @ 13% to be added US $ 16904/093 to 16.11.1990

half yearly on (6 years) $ 7939.56

3.

A total of Rs.7,12,337.99 at present date is due from the opposite party till
17.11.93. Thereafter, interest @ 18% per annum on the aforesaid amount
which comes to approx. Rs.1,28,220.83 (Rupees one lakh twenty eight
thousand two hundred twenty and paise eighty-three only)."
 By written statement, the appellant conceded that the respondent had
deposited on 17.8.79 a sum of US$ 5000 in FCNR account for 63 months
maturing on 17.11.84 at 9% p.a. However, the appellant contended that prior
to the date of maturity the deposit was prematurely withdrawn on 23.11.79.
In this connection, reliance was placed on sale/purchase register. Therefore,
according to the bank, there was no question of reinvesting of the aforestated
amount from time to time, as alleged by the respondent. The appellant also
denied that the deposit receipt was kept in Safe Custody. In this connection,
the appellant submitted that an inquiry into premature withdrawal and the
demand for recovery of money after 12 years was beyond time. The bank,
however, agreed that in 1984 RBI allowed it to keep FCNR for six years at the
3

http://JUDIS.NIC.IN SUPREME COURT O

What are consumer rights under Consumer

Protection Act, 2019
There exist six rights of a consumer under the Consumer Protection Act,
2019. The rights of the consumers are mentioned under Section 2(9) of the
Act, which are as follows:

1. The right of a consumer to be protected from the marketing of

goods and services that are hazardous and detrimental to life and
property.
 2. The right of a consumer to be protected against unfair trade
practices by being aware of the quality, quantity, potency, purity,
standard and price of goods, products or services.
3. The right of a consumer to have access to a variety of goods,
services and products at competitive prices.
4. The right to seek redressal at respective forums against unfair and
restrictive trade practices.
5. The right to receive adequate compensation or consideration from
respective consumer forums in case they have been wronged by the
seller.
6. The right to receive consumer education.

What are unfair trade practices under

Consumer Protection Act, 2019
Section 2(47) of the Consumer Protection Act, 2019 defines the term ‘unfair
trade practices’ which include:

1. Manufacturing spurious goods or providing defective services.

2. Not issuing cash memos or bills for the goods purchased or services
rendered.
3. Refusing to take back or withdraw the goods or services and not
refunding the consideration taken for the purchase of the goods or
services.
4. Disclosing the personal information of the consumer.

Changes incorporated in Consumer Protection

Act, 2019
The changes that were incorporated with the enactment of the Consumer
Protection Act, 2019 are:

1. The District Commissions will have the jurisdiction to entertain

complaints where the value of the goods, services or products paid
as consideration to the seller does not exceed 50 lakh rupees.
2. State Commissions will have the jurisdiction to entertain complaints
where the value of the goods, services or products paid as
consideration to the seller exceeds 50 lakh rupees but does not
exceed two crore rupees.
 3. The National Commission will have the jurisdiction to entertain
complaints where the value of the goods, services or products paid
as consideration to the seller exceeds two crore rupees.
4. The Act further states that every complaint concerning consumer
dispute shall be disposed of as expeditiously as possible. A
complaint filed under this Act shall be decided within the period of
three months from the date of receipt of notice by the opposite
party in the cases the complaint does not require analysis or testing
of the goods and services and within a period of 5 months, if it
requires analysis or testing of the goods and services.
5. The Consumer Protection Act, 2019 also facilitates the consumers to
file complaints online. In this regard, the Central Government has
set up the E-Daakhil Portal, which provides a convenient, speedy
and inexpensive facility to the consumers all over India so that they
are able to approach the relevant consumer forums in case of any
dispute arises.
6. The Act lays down the scope for e-commerce and direct selling.
7. The Consumer Protection Act, 2019 lays down provisions for
mediation and alternative dispute resolution so that the parties can
dispose of the case conveniently without going through the trouble
of litigation.
8. The Consumer Protection Act, 2019 contains provisions for product
liability, and unfair contracts and it also includes three new unfair
trade practices. In contrast, the old Act just stated six types of
unfair trade practices.
9. The Act of 2019 acts as the advisory body for the promotion and
protection of consumer rights.
10. Under the Consumer Protection Act, 2019 there is no scope for
selection committees, the Act authorizes the Central Government to
appoint the members.
Therefore, with the changes in the digital era, the Indian Parliament enacted
and brought the Consumer Protection Act, 2019 in force to include the
provisions for e-commerce as digitalization has facilitated convenient
payment mechanisms, a variety of choices, improved services, etc.

Essential provisions of the Consumer

Protection Act, 2019
The essential provisions of the Consumer Protection Act, 2019 are:

Consumer Protection Councils

The Act establishes consumer protection councils to protect the rights of
consumers at both the national and state levels.

Central Consumer Protection Council

Under Chapter 2 Section 3 of the Consumer Protection Act, 2019 the Central
Government shall establish the Central Consumer Protection Council which is
known as the Central Council. It is an advisory body and the Central Council
must consist of the following members;

1. The Minister-in-charge of the Department of Consumer Affairs in the

Central Government will be appointed as the chairperson of the
council, and
2. Any number of official or non-official members representing
necessary interests under the Act.
The Central Council may meet as and when necessary, however, they must
hold at least one meeting every year. The purpose of the Central Council is
to protect and promote the interests of the consumers under the Act.

State Consumer Protection Councils

Every state government shall establish a State Consumer Protection Council
known as the State Council having jurisdiction over that particular state. The
State Council acts as an advisory body. The members of the State Council
are:

1. The Minister-in-charge of the Consumer Affairs in the State

Government will be appointed as the chairperson of the council,
2. Any number of official or non-official members representing
necessary interests under the Act, and
3. The Central Government may also appoint not less than ten
members for this Act.
The State Councils must hold at least two meetings every year.

District Consumer Protection Council

Under Section 8 of the Act, the state government shall establish a District
Consumer Protection Council for every district known as the District Council.
The members of the District Council are:

1. The collector of that district will be appointed as the Chairperson of

the District Council, and
2. Any other members representing necessary interests under the Act.
Central Consumer Protection Authority
The Central Government shall establish a Central Consumer Protection
Authority which is known as the Central Authority under Section 10 of the
Consumer Protection Act, 2019, to regulate matters relating to violation of
the rights of consumers, unfair trade practices, and false or misleading
advertisements which are prejudicial to the interests of the public and
consumers and to promote, protect and enforce the rights of consumers. The
Central Government will appoint the Chief Commissioner and the other
Commissioners of the Central Authority as required under the Act.

The Central Authority must have an ‘Investigative Wing’ under Section 15 of

the Act to conduct an inquiry or investigation. The investigative wing must
comprise of the Director-General and the required number of Additional
Director-General, Director, Joint Director, Deputy Director, and Assistant
Director possessing the required experience and qualifications to carry out
the functions under this Act.

Functions and duties of the Central Authority

The functions and responsibilities of the Central Authority are laid down
in Section 18 of the Act which includes;

1. To protect and promote the rights of the consumers as a class and

to prevent violation of consumer rights,
2. To prevent unfair trade practices,
3. To ensure no false or misleading advertisements regarding any
goods or services are promoted,
4. To ensure no person takes part in false or misleading
advertisements,
5. Inquire or investigate in cases of violation of consumer rights or
unfair trade practices.
6. File complaints before the National, State, or District Commission as
the case may be,
7. To review matters relating to the factors hindering the enjoyment of
consumer rights.
8. To recommend the adoption of international covenants and best
international practices concerning consumer rights
9. Promote research and awareness of consumer rights.
10. Lay down necessary guidelines to prevent unfair trade practices
and protect the interests of the consumers.
Furthermore, the Central Authority also has the power to investigate after
receiving any complaint or directions from the Central Government or of its
motion in cases where there is an infringement of consumer rights or unfair
trade practices are carried out. And if the Central Authority is satisfied that
infringement of consumer rights or unfair trade practices has occurred then it
may:

 Recall the goods or services which are hazardous and detrimental to

the consumers,
 Reimburse the prices of the goods and services to the consumers,
and
 Discontinue the practices that are prejudicial and harmful to the
consumers.
Under Section 21 of the Act, the Central Authority is authorized to issue
directions to false and misleading advertisements which may extend to ten
lakh rupees. While determining the penalty of the offense the Central
Authority must keep in mind factors such as; the population affected by the
offense, frequency of the offense, and gross revenue from the sales of such
product. The Central Authority can also direct search and seizure for this Act
and in that case, the provisions of the Criminal Procedure Code, 1973 will
apply.

Consumer Disputes Redressal Commission

The state government shall establish a District Consumer Disputes Redressal
Commission, known as the District Commission in each district of the state
under the Consumer Protection Act, 2019. The District Commission shall
comprise a President and not less than two members as prescribed by the
Central Government.

Section 34 of the Act authorizes the District Commission to entertain

complaints where the value of the goods or services paid as consideration
does not exceed one crore rupees. The complaint relating to goods and
services can be filed to the District Commission by the consumer, recognized
consumer association, Central Government, Central Authority, State
Government, etc.

Section 36 states that all the proceedings before the District Commission
shall be conducted by the President and at least one member of the
commission.

Mediation
Chapter 5 Section 74 of the Consumer Protection Act, 2019 states that a
Consumer Mediation Cell shall be established by the Central Government at
the national level and every state government shall establish a Consumer
Mediation Cell exercising within the jurisdiction of that state. The mediator
nominated to carry out the mediation shall conduct it within such time and in
such manner as may be specified by regulations.

Section 75 of the Act talks about the empanelment of the mediators. It

states the qualifications, terms, and conditions of service, the procedure for
appointing, and the fee payable to the impanelled mediators.

The mediator must disclose certain facts such as; any personal, financial, or
professional result of the consumer dispute, the circumstances giving rise to
their independence or impartiality, and any other necessary information for
the protection of consumer rights.

Product liability
Under Section 83 of the Act, a product liability action may be brought by a
complainant against a product manufacturer, product service provider, or
product seller.

Liability of product manufacturer

A product manufacturer will be held liable in a product liability action under
the following circumstances:

 The product contains manufacturing defects.

 The product is defective.
 There is a deviation from manufacturing specifications.
 The product does not conform to the express warranty.
 The product fails to contain adequate information for proper usage.

Liability of product service provider

A product service provider will be held liable in a product liability action
under the following circumstances:

 The service provider will be responsible when the service provided

by them is faulty or imperfect.
 There was an act of negligence on their part.
  The service provider failed to issue adequate instructions and
warnings for the services.
 The service provider failed to conform to the express warranty or
terms and conditions of the contract.

Liability of product seller

A product seller will be held liable in a product liability action under the
following circumstances:

 They altered or modified the product which resulted in being

detrimental to the consumer.
 They failed to exercise reasonable care in assembling, inspecting, or
maintaining such product
 They exercised substantial control over the product which resulted
in causing harm to the consumer.

Exceptions to product liability

There are certain exceptions to product liability action mentioned in Section
87 of the Act, such as;

 The product was altered, modified, or misused by the consumer,

 A consumer cannot bring product liability action when the
manufacturer has given adequate warnings and instructions for the
use of the product,
 The manufacturer would not be liable in case of a product liability
action for not warning about any danger that is commonly known to
the general public.

Offenses and penalties under the Consumer

Protection Act, 2019
The offenses and penalties listed under this Act are mentioned as follows.

1. Punishment for false and misleading

advertisements: Under Section 89 of the Act any manufacturer or
service provider who promotes false or misleading advertisements
will be punished with imprisonment for a term that may extend to
two years and with a fine that may extend to ten lakh rupees.
2. Punishment for manufacturing, selling, and distributing
products containing adulterants: Under Section 90 of the
 Consumer Protection Act, 2019 any person who sells, manufactures,
or distributes products containing adulterants shall be penalized in
case of the following circumstances;

 If the adulterated product does not cause any injury to the

consumer then the term for imprisonment will extend to a period of
six months and a fine which may extend to one lakh rupees,
 If the product containing adulterant causes injury not amounting to
grievous hurt then the term for imprisonment will extend to a period
of one year and a fine which may extend to three lakh rupees,
 If the product containing adulterant causes injury amounting to
grievous hurt then the term for imprisonment will extend to a period
of seven years and a fine which may extend to five lakh rupees,
 If the product results in causing death to the consumer then the
term for imprisonment will be for seven years which may extend to
life imprisonment and a fine not less than ten lakh rupees.

3. Punishment for manufacturing, selling, and distributing

spurious products: Section 91 states that any person who sells,
manufactures, or distributes spurious products shall be punished for
such acts.

How do consumers benefit from Consumer

Protection Act, 2019
The Consumer Protection Act, of 2019 is a significant piece of legislation as it
is beneficial for the consumers. The Act widens the scope of protection
regarding the rights and interests of consumers.

1. Unfair contracts: The Act introduced an ‘unfair contract’

under Section 2(46) of the Act, which includes contracts requiring
excessive security deposits to be given by the consumer for the
performance of contractual obligations. However, the inclusion of
unfair contracts in the Act would enable the consumer to file
complaints in such cases and would also keep the fraudulent
businesses in check.
2. Territorial jurisdiction: The Act enables the consumers to file
complaints where the complainant resides or personally works for
gain thus it would benefit the consumers in seeking redressal for
their grievances when their rights have been violated.
3. False and misleading advertisements: The Act defines the term
‘false and misleading advertisements’ and also lays down strict
penalties for such acts or omissions.
 4. Product liability: The term ‘product liability’ has been defined by
this Act, which states that it is the duty of the product
manufacturer, service provider, or seller to compensate for any
harm caused to a consumer by such defective product manufactured
or service provided to the consumer.
5. Mediation and alternative dispute resolution: The Act enables
the consumer to opt for mediation and alternative dispute resolution
mechanisms for speedy and effective settlement of consumer
disputes.
6. E-filing of complaints: The Act also facilitates e-filing of the
complaints and seeking video conference hearings by the
Commission. Thus, providing convenient means for the consumers
to voice their grievances.

Landmark case laws

Horlicks Ltd. v. Zydus Wellness Products Ltd. (2020)

In this case, both parties are manufacturers of nutritional drinks, however,
Zydus advertised a television commercial trivializing the products of Horlicks
Ltd. The commercial was telecasted in various languages including English,
Tamil, and Bengali. Therefore, the Delhi High Court relied on various
judgments on misleading advertisements, disparagement, and laws
governing the publication of advertisements on television and held that the
advertisement is disparaging as it does not provide any concrete proof
regarding the quality of the product. Further, electronic media leaves an
impression on the minds of the viewers thus, these types of advertisements
would not only be detrimental to the consumers but also to the complainant
and would suffer irreparable damage.

A famous judgment relied on by the Delhi High Court while deciding this case
is Pepsi Co. Inc. v. Hindustan Coca-Cola Ltd., 2003 where the Delhi High
Court held that certain important factors are to be kept in mind in case of
disparagement which are; the manner of the commercial, intent of the
commercial and storyline of the commercial.

Veena Khanna v. Ansal Properties & Industries Ltd,

NCDRC (2007)
In this case, the complainant offered to purchase a flat from the respondent
which the respondent agreed to deliver on 1.6.1999 through a letter.
However, the flat was not constructed within the specified date and hence it
was not delivered. For such deficiency in services, the complainant
demanded a refund of the deposited amount with interest at the rate of 18%
pa which was refused by the opposite party.

The National Commission observed that due to delays in construction and

delivery of possession, it is quite difficult for a consumer to purchase a flat at
market price. The National Commission stated that the State Commission
must direct the builders to deliver the possession of the flat as soon as it is
completed and the complainant should be awarded suitable compensation for
the delay in construction. The complainant just claimed the refund amount
before the State Commission, but the case was pending before the
commission for five years, and during that time there was a tremendous rise
in the market prices of the immovable property. The National Commission
further stated that it was the duty of the State Commission to direct the
respondents to deliver the possession of the flat or any other flat of
equivalent size to the complainant with appropriate compensation, due to the
delay in delivering the possession within the specified time. Or, adequate
compensation ought to have been provided to the complainant so that they
could purchase a new flat of the same size at the prevailing market rate in
that same locality.

Sapient Corporation Employees v. Hdfc Bank Ltd. &

Ors. (2012)
In this case, a consumer complaint was filed by Sapient Corporation
Employees Provident Fund Trust against HDFC Bank Ltd. The complainant
claimed that OP-Bank had committed a deficiency of services by debiting the
account of the Complainant. The court in this case held that there was no
deficiency of service on the part of OP-bank and the arguments contented by
the complainant are baseless. A behavior that conforms to the direction of
regulatory authority cannot be said to be negligence or service deficiency.

Conclusion
The Consumer Protection Act, 2019 is a modified piece of legislation that
offers consumers a great variety of benefits and rights to protect them from
unfair trade practices, false or misleading advertisements, etc. The Act
enables consumers to seek alternative dispute resolution mechanisms and
mediation so that the parties can opt for speedy and effective settlement of
consumer disputes. The scope of e-filing of complaints and e-consumers in
the Act portrays forward-thinking in part of the legislature. Furthermore, the
Act also introduced new terms such as product liability, unfair contracts, etc.
thereby widening the scope of protection of consumer rights and enabling the
consumers to file complaints when their rights have been violated under the
Act.
Thus, the inclusion of the provisions in this fills up the lacunae in the
Consumer Protection Act, of 1986. The enactment of the Act was paramount
and it changed the ambit of protecting the rights of consumers in the
country.