Unfair Contracts and Unfair Trade Practices defined under CPA 2019

The Consumer Protection Act (CPA) of 2019 defines unfair contracts as agreements between a consumer and a manufacturer, trader, or service provider that significantly alter the consumer’s rights.

“Unfair Contract”[19] means a contract between the manufacturer/trader/service provider and the consumer and shall be deemed to be unfair if it adversely affects the rights of the consumer and includes, (i) demand huge payments to fulfill the contractual obligations; (ii) imposing a penalty on the consumer for breach of contract when the consumer has already suffered a greater loss due to the breach; (iii) refusing pre-closure of debts with applicable payment; (iv) unilateral termination of contracts without proper reasons; (v) permitting one party to assign the contract to the detriment of the consumer, without his consent; (vi) imposing inequitable conditions that affect consumers.

The 2019 Act has also defined ‘unfair contracts'[7], which means a contract between a manufacturer, trader, or service provider on one hand, and a consumer on the other, having such terms that cause significant changes in the rights of such consumer; including;

a) requiring excess security deposits from consumers;

b) imposing a disproportionate penalty upon the consumer for breach of contract;

c) refusing to accept early repayment of debt;

d) entitling unilateral termination;

e) permitting the assignment of contract to the detriment of the customer without his/ her consent;

f) imposing on the consumer any unreasonable charge, obligation, or condition, which puts such consumer at a disadvantage. Both the State Commission [8] and the National Commission [9] have the power to declare such contracts null and void.

UNFAIR TRADE PRACTICE

The Consumer Protection Act of 2019 defines unfair trade practices as any of the following:

• Manufacturing or offering defective or spurious goods for sale
• Providing defective services
• Not issuing bills or cash memos for goods or services
• Refusing to take back or withdraw defective goods or services
• Not refunding the cost of goods or services
• Disclosing personal information to others without following the law
• failure or non-issuance of a bill or a cash memo;
• refusal to take back or withdraw defective goods, or withdrawal or discontinuance of deficient services or refusal to refund the consideration amount paid within the period as stipulated in the bill or cash memo or receipt or in the absence of such stipulation, refusal to withdraw or refund goods or services within thirty (30) days;
• disclosure of consumer’s personal information to any other person unless such disclosure is made by the provisions of any law for the time being in force or the public interest.

All complaints against Unfair Contracts, where the value of the goods and services paid as consideration does not exceed Rupees Ten Crores, will have to be filed before the State Consumer Dispute Redressal Commission [20]. Complaints concerning such contracts where the consideration exceeds Rupees Ten Crores will have to be filed before the National Consumer Dispute Redressal Commission [21].

The purpose of the Consumer Protection Act is to ensure that consumers can make informed decisions about the goods and services they buy. Unfair trade practices are also known as “deceptive trade practices” or “unfair business practices”.

E-Complaints: The New Act also contains enabling provisions for consumers to file complaints electronically and for hearing and/or examining parties through video-conferencing[37]. This should reduce inconvenience for the consumers, especially the ones who are physically challenged due to ill-health or old age.

Alternate Dispute Resolution [38]: Another provision introduced by the New Act to ensure speedy resolution of disputes is to provide for referring the disputes to mediation. As per the New Act, the Consumer Redressal Forum shall refer the matter to mediation on written consent of both parties. For this purpose, the New Act also provides for the establishment of a consumer mediation cell by the respective State Governments in each District Commission and State Commission as well as at the National Commission by the Central Government.

Penalty for non-compliance of orders:

Under CPA 2019, failure to comply with orders passed by the District Commission, the State Commissions, or the National Commission attracted a punishment of imprisonment for a term not less than one month, but which could extend to three years, or with a fine, which was not less than two thousand rupees and could extend up to ten thousand rupees, or with both as in the CPA 2006. Though the New Act retains the same term of imprisonment for non-compliance, the fine has been increased to twenty-five thousand rupees, which may extend to one lakh rupees, or both [39].

Power of Review [40]: Unlike the 1986 Act, where the aggrieved parties did not have any recourse other than filling an appeal to the State or the National Commission to set right the errors made by the District Forum or the State Commission respectively, under the New Act the District, State, and National Commissions have been vested with the power to review its own orders where an application is filed for within 30 days of passing such an order.

Appeal against the order of the District Commission [41]:

If a party is aggrieved by the order of the district commission then they may prefer an appeal to the State Commission within 45 days of receiving such order. The State Commission may entertain the plea after 45 days if sufficient reason is given by the party. However, a minimum of 50% of the amount must be paid before the State Commission will hear the appeal.

Appeal against the order of the State Commission [42]: If aggrieved by the decision, the aggrieved party may prefer an appeal to the National Commission within 30 days of receiving the order from the State Commission. If sufficient reason is shown then the National Commission can also entertain the plea after the thirty days. However, a minimum of 50% of the amount must be paid before the National Commission will hear the appeal.

Appeal against the order of the National Commission [43]: If aggrieved by the decision then an appeal does lie to the Supreme Court if made within thirty days of receiving the order. If sufficient reason is shown then the Supreme Court can also entertain the plea after the thirty days. However, a minimum of 50% of the amount must be paid before the Supreme Court will hear the appeal.

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