India: Challenges and Opportunities in Consumer Matters for In-house Counsels

April 12, 2018
Consumer Matters for In-house Counsels

The role of an in-house Counsel, is rapidly evolving to keep pace with the changing needs of the businesses that they support. In modern times, the scope of work of an in-house Legal Counsels/Legal Manager has shifted from a general advisor and managing compliance obligations to a much wider scope. They now have to handle all kinds of matters that affects the business of their Company. Handling bulk consumer litigation all over the country is one aspect of their work. A few challenges faced by the in-house Counsels in India, along with a few possible solutions are:

  • It is a common practice that in case of a grievance, consumers generally file complaint against the then dealer/distributors of the Company and do not implead the Company as a Respondent or mention the address of the dealer/distributors instead of the Company address, which often results in a lack of communication of any fresh matters. Due to this, the court notices are not served upon the Company, which may lead to passing of an ex-parte order, which only comes into their knowledge upon receiving the copy of the judgement or notice in the execution proceedings.
  • Sometimes, the consumers while hunting for huge discounts on the internet, ends up purchasing fake/counterfeit products from unauthorized e-commerce websites, and when they face any post sale warranty issue in the product or with its authenticity, they file a consumer complaint against the manufacturer Company seeking refund and compensation and not against the unauthorized sellers.
  • The limitation period for filing an appeal from the date of order of the District Forum is 30 days as provided under the Consumer Protection Act, 1956 (hereinafter referred as to “Act”). However, the Act is silent about the limitation period for filing an Execution Application. Therefore, such period is governed by Regulation 14 (1) (iv) of the Consumer Protection Regulations, 2005, which says the limitation for filing any application is of 30 days from the date of the cause of action or the date of knowledge. Since the limitation period for both filing an appeal and execution is the same i.e., 30 days, it becomes cumbersome and a strenuous task for the in-house Counsel to take legal opinion of the Counsel and necessary sanctions from management for filing Appeal in the State Commission. Therefore, many a times even before the appeal is filed, the Company receives a notice in the execution proceedings or bailable warrant from Forums, hence, results in harassment of the Senior officers of the Company and multiple litigation between the same parties.
  • Under Section 13 of the Consumer Protection Act, in case the complaint relates to manufacturing defect in a product, which cannot be determined without proper analysis of the product or test of goods, the Consumer Forum has to obtain a sample of the same, seal it and send it to an appropriate laboratory for proper analysis. However, such provision is hardly followed by any Forum, which results in passing of orders, which are often based on mere allegations and assumptions. As a corollary, it causes adverse impact on the interests of the Company. In fact, the Forum declares in its order that the product inspection report of the Technician/Engineer filed by the Company technicians is biased.
  • As per Consumer Protection Act, 1986, if the party against whom the order has been passed, does not comply with the order of the Forum, then the Forum may pass an order of imprisonment of not less than one month not exceeding three years, or fine of upto Rs. 10,000. Therefore, while exercising such powers, sometimes the Forums, while admitting the execution applications, directly issues bailable warrants against the directors of the Company, which causes extreme harassment to the in-house Counsel as well as the management.
  • The information available on the government portal is either incomplete or incorrect. Usually the order sheets are not even uploaded. Therefore, it becomes a task for the in-house Counsels to track the next dates, obtain orders or to do a general search to check if any case is pending against the Company, in which the Company has not even received summons from the Forum.

The solutions in hindsight to the abovementioned problems faced by the in-house Counsels is that the stakeholders may make recommendations to the Government for issuance of guidelines for the following:

  • Mandatory guidelines may be issued to provide registered office address of the Company in the complaint, as per the records of MCA along with its official email address. The Forums should serve the summons/notice of the complaint upon the Company by post as well as by email.
  • The free copy of the judgement should also be sent by the Forum to the Respondent Company by email as soon as the order is passed for their information/necessary compliance etc.
  • If the consumer admits purchasing a fake/counterfeit product from an unauthorized source, then the complaint should not be admitted as there is an element of fraud and the cause of action and remedy is beyond the scope of the Act.
  • The Act should contain a similar provision as contained in the CPC, where no execution can be filed unless the statutory period of filing appeal expires.
  • In consumer complaints, where there is a challenge to technical observations of a Company official, the Supreme Court and National Commission has laid down in a catena of cases that the onus of proof should be put on the complainant for rebutting the expert opinion. The onus of proof on Complainant in such cases and the appointment of Technical Expert for his opinion should be made compulsory and also definite criteria/ prerequisite/ qualifications should be in place for appointment of Technical expert under Section 13(1)(c) of Consumer Protection Act.
  • If the Company has remained ex-parte in the complaint and the time for filing appeal is not expired, then while admitting execution applications, the Forums must issue a notice to the Company before passing any harsh orders for issuance of bailable warrants against the directors of the Company. If there is scope for amicable settlement of dispute between the parties, then ADR must be adopted.
  • The website may have an option to conduct a free text search, so that it becomes easier for the in-house Counsels to conduct a periodic search of cases filed against the Company.

Last but not the least, the most primary challenge faced by an in-house Counsel in a Company is to keep a track of the number of consumer cases at different Forum levels, managing hearing dates and deadlines, hunting for local lawyers in multiple jurisdictions, settling their fees, getting the documents translated from the vernacular languages, vetting the drafts prepared by these local lawyers, etc.

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