Retrospective effect of the Consumer Protection Act 2019

 

The Consumer Protection Act, 2019 (“New Act”) received the President’s assent on August 9, 2019 and has replaced the Consumer Protection Act, 1986 (“Old Act”). Most of the important sections have been notified[1] with effect from July 20, 2020 marking the beginning of the New Act and making it largely operative and applicable throughout India. Amongst other changes notified, the New Act enhances the pecuniary jurisdiction of the respective Consumer Fora and extends to the Consumer the option to initiate proceedings at his or her place of residence or work.[2] The Old Act has been repealed in entirety.[3]

These changes to the pecuniary and territorial jurisdiction of the respective Consumer Fora can be broadly categorized as a ‘change of forum’. Whether these changes are retrospective or not will depend a great deal on whether the changes are ‘substantive’ or ‘procedural’ in nature. A ‘change of forum’ could be substantive as well as procedural. It may well be procedural when the remedy was yet to be availed of but where the remedy had already been availed of (under an existing statutory provision), the right may be treated to have crystallized into a vested substantive right.[4]

In this backdrop, we propose to examine the effect of the ‘change of forum’ on:

• Fresh cases filed on or after July 20, 2020 i.e. the date of notification of the New Act.
• Cases filed before July 20, 2020 and pending before the respective Consumer Fora across the country.

Effect on fresh cases filed on or after July 20, 2020

Insofar as fresh cases are concerned, the change of forum is purely procedural and should accordingly be deemed retrospective.[5]

Maxwell in his Interpretation of Statutes indicated that no one has a vested right in any course of procedure. A person’s right of either prosecution or defence is conditioned by the manner prescribed for the time being by the law and if by the Act of Parliament, the mode of proceeding is altered, then no one has any other right than to proceed under the alternate mode.[6] The presumption against retrospection does not apply to legislation concerned merely with matters of procedure or of evidence; on the contrary, provisions of that nature are to be construed as retrospective unless there is a clear indication that such was not the intention of Parliament.[7]

In India, the principles relating to retrospectivity of a statute have been illustratively summarized by the Supreme Court of India as follows: [8]

“(i) A statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits.

(ii) Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal even though remedial is substantive in nature.

(iii) Every litigant has a vested right in substantive law but no such right exists in procedural law.

(iv) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished.

(v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication.”

In practice also the courts have almost always applied procedural changes, such as change in pecuniary or territorial jurisdictions, with effect from the date of notification of such changes/amendments/repeal provisions and the cases filed on or after such date have been held to be governed by the amended/new provisions. Some such instances can be found in relation to the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015[9] and the Delhi High Court (Amendment) Act, 2015[10] amongst others.

Similarly, fresh consumer cases on or after July 20, 2020 will have to be filed in accordance with the provisions of the New Act, before the respective Consumer Fora exercising jurisdiction in terms of the New Act, notwithstanding whether the cause of action for filing such cases has arisen prior to, or after, the repeal of the Old Act.

Effect on cases filed before July 20, 2020 and pending before the respective Consumer Fora across the country

We have already seen above, that where the remedy has already been availed of under an existing statutory provision, the right may be treated to have crystallized into a vested substantive right. Thus, to ascertain the impact of the New Act on this crystallized substantive right, we need to examine the ‘Repeal and Savings’ provision of the New Act.

Section 107 of the New Act is as under:

“107. Repeal and Savings

(1) The Consumer Protection Act, 1986 is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken or purported to have been done or taken under the Act hereby repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act.

(3) The mention of particular matters in sub-section (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeal.”

Likewise, Section 6 of the General Clauses Act, 1987 (“GC Act”) is as under:

“6. Effect of repeal.—Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not—

(a) revive anything not in force or existing at the time at which the repeal takes effect; or

(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid;

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.”

The opening words of Section 6 of the GC Act specify the field over which it is operative. It is operative over all the enactments under the General Clauses Act, Central Act or Regulations made after the commencement of the General Clauses Act. It also clarifies in case of repeal of any provision under the aforesaid Act or Regulation, unless a different intention appears from such repeal, it would have no affect over the matters covered in its clauses viz. (a) to (e). The central theme which spells out is that any investigation or legal proceeding pending may be continued and enforced as if the repealing Act or Regulation had not come into force. [11]

Thus, as a general rule, in view of Section 6, the repeal of a statute, which is not retrospective in operation, does not prima facie affect the pending proceedings which may be continued as if the repealed enactment were still in force. In other words, such repeal does not affect the pending cases which would continue to be concluded as if the enactment has not been repealed. When a lis commences, all rights and obligations of the parties get crystallised on that date. The mandate of Section 6 of the GC Act is simply to leave the pending proceedings unaffected which commenced under the unrepealed provisions unless contrary intention is expressed.[12]

A combined reading of sub-section (2) of section 107 of the New Act and sub-clauses (c) and (e) of section 6 of the GC Act leads to the following conclusions:

• Any “legal proceeding” in respect of any “right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed” shall not be affected by the repeal of the Old Act.
• Such “legal proceeding” shall continue “as if the repealing Act…..had not been passed”.
• Anything done or any action taken, or purported to be done or taken, under the Old Act “shall, in so far as it is not inconsistent with the provisions of this Act (New Act), be deemed to have been done or taken under the corresponding provisions of this Act (New Act).”

It is clear from the above, that the pending proceedings filed under the Old Act shall not abate on the passing of the New Act. The question, now, is whether such proceedings are required to be transferred to the Consumer Fora competent under the New Act?

In SEBI v. Classic Credit Ltd. [13], the Supreme Court has conclusively held and reiterated that, in a situation where the remedy had been availed of prior to the amendment (bringing about a change of forum), unless the amending provision by express words, or by necessary implication, mandates the ‘transfer’ of proceedings to the ‘forum’ introduced by the amendment, the ‘forum’ postulated by the unamended provision would continue to have the jurisdiction to adjudicate upon pending matters (matters filed before amendment).

The aforesaid observations were made while considering applicability of the amendments made to the Securities and Exchange Board of India Act, 1992 (“SEBI Act”), in 2002 and 2014, whereby the forum for the trial of offences was changed. The 2002 amendment to Section 26(2) of the SEBI Act changed the forum from Metropolitan Magistrate/Judicial Magistrate (First Class) to “no court inferior to the Court of Sessions”. The 2014 amendment omitted Section 26(2) and inserted Sections 26A to 26E with effect from 18.07.2013 whereby the offences were now to be tried by a Special Court.

After considering the express language of these amendments, the Supreme Court had concluded that the legislature had specifically intended to denude the Metropolitan Magistrate/Judicial Magistrate (First Class) of their jurisdiction to try even those offences which were committed prior to the amendment, and therefore, all case would stand jurisdictionally transferred in terms of the amendment irrespective of whether the offence was committed before or after the amendment and irrespective of the fact whether trial had or had not been initiated.[14]

The express language of the New Act does not indicate any intention to transfer the pending proceedings to the Fora competent there under. To the contrary, sub-section (2) of section 107 of the New Act saves anything done or action taken or purported to have been done or taken under the Old Act, and by a deeming fiction deems them to have been done or taken under the corresponding provisions of the New Act. We are unable to infer a mandate for transfer of existing cases in the said provisions.

Our examination of the ‘Repeal and Savings’ clauses present in other statutes also reveals that the pending cases have been transferred by courts in situations where the statutes have specifically provided for such transfers. Some illustrations can be found under the Companies Act, 2013[15], Commercial Courts Act[16] and Insolvency and Bankruptcy Code, 2016[17].

Lastly, it is important to refer to a recent decision[18] delivered by the Jammu and Kashmir High Court on the effect of a ‘change of forum’ on the proceedings initiated under the repealed provisions of the Jammu and Kashmir Consumer Protection Act, 1987 (“Local Act”) and pending before the concerned Fora after such repeal. The High Court was seized with an appeal under Section 17 of the Local Act. While the appeal was pending, the Indian Parliament passed the Jammu and Kashmir Reorganization Act, 2019 inter alia bifurcating the State into two Union Territories, repealing the Local Act in force in the State and making the Central law, viz. the Consumer Protection Act, 1986 applicable to the Union Territories. Subsequently, the Central law has also been repealed by the New Act, viz. the Consumer Protection Act, 2019.

In the above backdrop, the J&K High Court observed[19] that “an Act of the Legislature which brought about a change in the scheme of law/ forum would not affect pending actions/ proceedings, unless the intention to the contrary was clearly shown in the Act of the Legislature itself.” The High Court also considered the provisions of Section 6 of the GC Act along with the provisions of the New Act, and concluded[20] that “all the pending proceedings/ appeals arising out of the orders or awards passed by the erstwhile Jammu and Kashmir State Consumer Disputes Redressal Commission are to continue to be heard and decided by this Court as if the unamended provision/ Act is still in force.”

Conclusion

In light of the above discussion, we can safely conclude that the change of forum effected under the New Act will apply to fresh cases filed on or after July 20, 2020, i.e. the date of notification of the New Act, whereas the cases already filed and pending under the Old Act will continue unabated and unaffected, without the need for any transfer to the Fora competent under the New Act.

A concern could be raised by consumers who, under the Old Act, have filed cases in jurisdictions other than their place of residence or work, and would like to avail the benefit of the New Act which allows filing of cases at their place of residence of work. It seems the legislature has provided a remedy in the New Act, whereby the State Commission[21] may transfer cases from one District Forum to another and the National Commission[22] may transfer cases from one State Commission to another, either upon an application of the Complainant or on its own motion. Thus, this concern has been addressed in the New Act. We hope the position regarding the effects of the ‘change of forum’ under the New Act, and especially the effect on the cases already filed under the Old Act and pending before various Consumer Fora through the country, will soon be solidified through a judicial pronouncement so that valuable time and money is saved from being spent on unnecessary litigation on this account.