Category: Consumer Law and Cases

No matter how attractive or appealing something may look on paper, it is of no use whatsoever if it does not achieve its objective, and worse when it actually harms the very cause it is supposed to espouse. This is the case with the Consumer Protection Act 2019 which comes into effect from today, repealing the earlier enactment of 1986.

Let us look at the existing scenario. The District Consumer Forum which till now had a pecuniary limit of Rs 20 lakhs, are mostly located in premises which are too small, especially in urban areas where the filing of cases is more and there is a scarcity of adequate space. Consequently, files are spilling over even in corridors, and there is hardly any place for movement. The Forum is manned by just one or maximum two clerks, who find it difficult to cope with the existing work load of accepting complaints, scrutinising them, preparing and despatching notices, accepting of deposits and investing the money during the pendency of appeals, issuing certified copies of orders, etc.

Similarly, there is also a dearth of stenographers, and there is just one stenographer who has to sit on the dais during court hours to take dictation of daily proceedings of each case (known as the case roznama), and thereafter take dictation of judgments from the Presiding Officer as well as two members, Imagine the plight when there is just one steno between three persons. Consequently, judgments are invariably delayed, sometime by two to six months. Besides, when the steno proceeds on leave due to an illness or for some family occasion, the work of the forum comes to a grinding halt.

Read the full article at https://www.mxmindia.com/2020/07/why-the-new-consumer-protection-act-is-a-death-knell-of-consumer-rights/

The main features of The Consumer Protection Act, 2019 are as follows:-

1. District forum is renamed as District Commission

2. The Opposite Party needs to deposit 50% of the amount ordered by District Commission before filing appeal before State Commission, earlier the ceiling was of maximum of Rs. 25,000/-, which has been removed.

3. The limitation period for filing of appeal to State Commission is increased from 30 days to 45 days, while retaining power to condone the delay.

4. State Commission shall have a minimum of 1 President and 4 Members

5. The original pecuniary jurisdiction of District Commission shall be uptil Rs. 1 Crore, State Commission from 1 Cr – 10 Cr. And NCDRC to be more than Rs. 10 crore

6. Now complainant can also institute the complaint within the territorial jurisdiction of the Commission where the complainant resides or personally works for gain besides what was provided earlier

7. Section 49(2) and 59(2) of the new act gives power to the State Commission and NCDRC respectively to declare any terms of contract, which is unfair to any consumer, to be null and void.

8. A second appeal to NCDRC has been provided U/s 51(3) if there is a substantial question of law involved in the matter

9. Power of revision can still be exercised by NCDRC U/s 58(1)(b) and by State commission under 47(1)(b) of the Act.

10. Power of review has been conferred to District Commission, State Commission and NCDRC U/s 40, 50 and 60 of the Act respectively

11. NCDRC can hear appeals against the order of Central Authority by virtue of Section 58 of the Act

12. Period of limitation in filing of complaint remains 2 years with a provision for condonation of delay power U/s 69 of the Act

13. Section 70 provides for administrative control of State Commission over District Commission and that of NCDRC over State Commission. It inter alia provides for investigation into any allegations against the President and members of a State Commission / District Commission and submitting inquiry report to the State Government concerned along with copy endorsed to the Central Government for necessary action

14. Section 71 confers power of execution as provided Under Order XXI, The Code of Civil Procedure, 1908 with such limitation as provided in the section

15. Mediation is given statutory status by way of introduction of Section 74 in the new Act

16. A product liability action may be brought by a complainant against a product manufacturer or a product service provider or a product seller, as the case may be, for any harm caused to him on account of a defective product.

17. Chapter III of the Act provides for creation of Central Authority to regulate 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

18. The Central Authority shall have an Investigation Wing headed by a Director General for the purpose of conducting inquiry or investigation under this Act as may be directed by the Central Authority

19. The Act of 2019 has come into effect w.e.f. 9.8.19 and old Act of 1986 stands repealed, subject to section 1(3) of the New Act.

20. Rules regarding appointment, conditions of service etc. of the Members are to be notified soon.

*The list is not exhaustive and the above is just a bird’s eye view only of the new Act. For more / exact details kindly refer to the notification dated 9.8.19 notifying the Act.

Consumer Protection Act, 2019 notification

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COMMERCIAL CONTRACTS AND CHALLENGES ARISING FROM THE COVID 19 PANDEMIC

On 07th May 2020 at 6.30 pm – By ADVOCATE MR. ZERICK DASTUR

Click Here to join https://zoom.us/j/8487251418
In association with Consumer Resources & ON-LYNE

The unprecedented situation in view of the pandemic and the consequent lockdown imposed by the Government of India has impacted the performance of many commercial contracts and posed a number of questions on the rights and obligations of the parties to a contract. The webinar will address the following topics :

1. Force Majeure and Frustration of Contract – Recognizing your contractual rights, Risk Assessment and Risk Management.

2. “Once bitten twice shy” – The approach to adopt while entering into future contracts.

3. Analyzing the present legal scenario, the views adopted by Indian Courts and the recent measures undertaken by the Government across various sectors.

4. Position on employee payments during lockdown.

5. Q&A

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IMPACT OF THE COVID-19 PANDEMIC ON COMMERCIAL AGREEMENTS AND LATEST GOVERNMENT NOTIFICATIONS RELATING THERETO

As you are all aware, the world has been gripped by the outbreak of the COVID-19 epidemic which has been declared by the World Health Organization as a global pandemic. This has drastically affected the performance of many commercial contracts and resulted in many infrastructure projects coming to a sudden halt. In the present economic scenario, the concepts of force majeure and frustration of contract have gained significant importance.

Force Majeure clauses and their application

1. Force Majeure clauses are provisions inserted by parties in contracts which exempt a performing party from its obligations upon the happening of certain events provided for in the clause itself. The occurrence of a force majeure event protects a party from liability for its failure to perform a contractual obligation.  These events are usually events over which a party has no control or events which could not have been reasonably foreseen by the parties at the time of entering into the contract.  Force majeure events are generally in the nature of acts of god i.e. natural calamities or man-made events i.e. wars, strikes, lock outs, change in government policy, political events etc. Whether or not a particular event can be classified as a force majeure event will depend on the terms of the force majeure clause and its interpretation.

2)    A force majeure clause is generally invoked by notifying the other party as soon as the concerned event has taken place or as soon as the performance of the obligations under the contract become impossible.  The party claiming force majeure is usually under a duty to show that it has taken all reasonable endeavours to avoid or mitigate the event and its effects. This would also largely depend on the contract between the parties and the interpretation thereof.

Consequences of invocation of Force Majeure

3)    Once a contracting party invokes the force majeure clause, the obligations of the parties under the contract will generally stand suspended entirely or partly till the event continues and a party cannot be held liable for the non-performance of its part of the contract during such period. As a result of such suspension, the timelines under the contract or the term of the contract may stand extended as required or as agreed between the parties. Many force majeure clauses also provide for termination of the contract if the force majeure event does not conclude within a period of time mentioned in the contract. Further consequences of the invocation of a force majeure clause will be subject to the contract between the parties.

Steps taken by the Government and various authorities

1. The Ministry of Finance, Government of India has issued an Office Memorandum on February 19, 2020, in relation to the Government’s ‘Manual for Procurement of Goods, 2017’, which serves as a guideline for procurement by the Government. The Office Memorandum effectively states that the Covid-19 outbreak should be considered as a natural calamity and may be invoked as a force majeure.

1. Similarly, Ministry of Shipping by its memorandum dated March 24, 2020, addressed to all major ports in India has ordered, that the COVID-19 pandemic may be considered as a valid ground for invoking force majeure clause on port activities and operations.  Pursuant to this, various major ports have further issued notifications in relation to the port operations.

1. The Hon’ble Supreme Court by its order dated March 23, 2020 in exercise of its powers under Article 142 of the Constitution of India has directed all Courts, Tribunals and Authorities that the period of limitation prescribed under the various laws shall stand extended from March 15, 2020 till further orders. The order was passed taking cognizance of the peculiar situation arising out of the challenge faced by the country on account of COVID-19.

1. SEBI also vide it’s circular dated March 19, 2020 extended the timelines for certain filings as required under the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (‘LODR’) to listed entities. Further, by the said circular SEBI has exempted the Board of Directors and Audit Committee of the listed entities from observing the maximum stipulated time gap of 120 days under the LODR, between two meetings for the meetings held or proposed to be held between the period December 01, 2019 and June 30, 2020.

Frustration under Section 56 of the Indian Contract Act, 1956 (Contract Act)

8)    The concept for force majeure is not defined in any statute under the Indian Law. Force Majeure is a contractual remedy and can be invoked if a contract provides for the same. The Contract Act recognises the doctrine of frustration of contract under Section 56 which may also be relevant in the present context. Even in cases where a contract does not contain a force majeure clause, the performing party can claim for a discharge from performance of its obligations under the doctrine of frustration of contract under the section 56 if subsequent events make the contract impossible or impracticable to perform. Section 56 provides that an agreement to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.

9)    It is a settled position of law that in order to claim termination of a contract on the grounds of frustration, the party seeking reliefs must show that the events or circumstances due to which the contract has become impossible, must be so fundamental as to be regarded by law as striking at the root of the contract. The following well settled principles need to be borne in mind while claiming relief of frustration under Section 56 of the Contract Act:

(a)  The party claiming frustration must show that concerned event or change of circumstance totally upsets the very foundation upon which the parties rested their bargain such that the promisor finds it impossible to do the act which he promised to do.

(b)  The term “impossible” used in Section 56 of the Contract Act has not been used in the sense of physical or literal impossibility but also includes situations where it becomes impracticable to perform the contract.

(c)   Once it is proved that there is frustration, a dissolution of a contract occurs and both parties are discharged from their future obligations under the contract.

(d)  If the intervening change or circumstance was contemplated by the parties at the time of entering into the contract, then the contract would stand despite the occurrence of such circumstance and no relief of frustration will apply.

10) In view of the prevailing situation, it is important for companies to carry out a detailed review of its contracts and analyse the rights and obligations of the parties, performance of which is likely to be affected.  The review must specifically include (but not limited to) analysis of the clauses on termination, force majeure, compensation, governing law and dispute resolution. A detailed review of its operations and the likely effects and risks attached to suspension of its operations must be undertaken.

We trust that the above analysis is helpful for you to assess the legal impact of the current scenario on your business and operations and accordingly, enable you to take appropriate commercial decisions. If you require any further clarifications, please feel free to contact us. We will update you in case of any further decisions, measures, notifications by the Government and other authorities in this regard.

Zerick Dastur, Advocates and Solicitors

____________________________

 Advocate

Zerick Dastur, Advocates & Solicitors

15, Manek Mahal 5^th Floor,

Veer Nariman Road, Churchgate, Mumbai 400 020

M: +91 98207 92004 |  E: zerick@zdlegal.com