CCPA has Jurisdiction to Initiate Proceeding Suo Moto against Enterprise

Case title: Cloudtail India Private Limited. Versus Central Consumer Protection Authority

CCPA Appeal No. 4 Of 2022 (Against the Order dated 04/11/2022 in Complaint No. J-25/72/2021 of the CCPA DELHI)

Cloudtail India Private Limited Instructed by CCPA to Retrieve 1033 Pressure Cookers, Refund Consumers within 45 Days, and Faces a Rs.100,000/- Penalty for Breaching Quality Control Order, 2020.

This marks the inaugural directive of its nature by CCPA since the implementation of the Consumer Protection Act 2019, a move that has been contested before the supreme consumer commission, challenging CCPA’s jurisdiction. Given that this is the first order from the newly established entity under the Act of 2019, its significance is noteworthy. 

Dr Prem Lata Legal Head VOICE

Issue-Mandatory BIS Mark

Bureau of Indian Standards Act, 2016, issued Notification dated 21.01.2020, making it mandatory for domestic pressure cooker to bear Standard Mark under a licence from Bureau of Indian Standards.

Facts

1. Cloudtail India Private Limited was doing e-commerce through Amazon website and listed ‘Amazon Basics Stainless Steel Outer Lid Pressure Cooker, 4 Litre’ on above website and sold 1033 pressure cookers in India after 01.02.2021. These pressure cookers were manufactured by “Zhejiang Supor Company Limited, Damaiyu Economic Investment Zone, Yuhuan, Taizhou, Zhjiang, China” and bears “European Commission Standard” mark as established in the European Union and were imported into India, prior to issue of the Order.
2. Central Consumer Protection Authority is a statutory authority constituted under Section 10 of the Consumer Protection Act, 2019 and under the power Section 18 of the Act, issued notice dated 29.11.2021 to the company to show cause as it were selling pressure cooker in violation of the Order, which was liable to be held as defective, violative of consumer right and amounts to unfair trade practice, within the meaning of the Act.
3. The Cloudtail India Private Limited submitted its reply dated 11.01.2022, stating

• That the pressure cookers in question were manufactured by “Zhejiang Supor Company Limited, Damaiyu Economic Investment Zone, Yuhuan, Taizhou, Zhjiang, China” and conforms to the “European Commission Standard” mark as established in the European Union Directives-2014/68/EU granted by TUV SUD, valid up to 13.12.2030 and holds a valid certification of conformance.
• That the product is of requisite quality, pre-shipment inspection by a nominated third-party inspection agency is carried out and product is imported after satisfaction. There was no complaint, related to safety of the pressure cooker since its introduction in the market.
• That import of this product in India was suspended prior to 01.02.2021, i.e. enforcement of the Order.
• The Order mandates domestic pressure cooker to bear BIS mark by the manufacturer and is not applicable for an importer.
• The Frequently Asked Questions, as addressed by the Bureau of Indian Standard (uploaded in February 2019 and again on 14.11.2019), explicitly state that if a product was imported to India before the last date of implementation or manufactured by domestic producers before the same date, it is permissible to sell such products.
• The pressure cooker is neither ‘defective’ within the meaning of Section 2(10) nor the appellant has committed any ‘unfair trade practice’ within the meaning of Section 2(47) of the Act. The product meets all objective criteria of Bureau of Indian Standards Act, 2016 and Consumer Protection Act, 2019 and the notice is liable to be discharged.
• That a test report dated 15.02.2022, conducted by Delhi Test House (a National Accreditation Board for Testing and Calibration Laboratory), along with a Certificate bearing the “European Commission Standard” mark in accordance with the European Union Directives 2014/68/EU, granted by TUV SUD, is available.

Action by CCPA

Authority called for reports in connection with sold cookers without BIS Mark.

• Director General Investigation, vide its report dated 04.07.2022 confirmed that product sold without mark after enforcement of the Order, manufacture, import, sell, distribution, hire, lease, store or exhibit for sale is violative of Section 17 of Bureau of Indian Standards Act, 2016.
• Department for Promotion of Industry and Internal Trade, vide its report dated. 28.09.2022 confirmed that no such exemption was issued by it, permitting sale of pressure cooker in the country, imported prior to the date of enforcement of the Order, which has no BIS mark.

Order by CCPA

• By virtue of its order dated 04.11.2022, the Central Consumer Protection Authority determined that following the implementation of the Order on 01.02.2021, all domestically sold pressure cookers in India must adhere to IS 2347:2017. Non-compliance will be subject to scrutiny.
• The pressure cookers which do not conform to IS 2347 :2017 are liable to be held as defective within the meaning of Section 2(10) of the Act and violative of the consumer’s right as defined under Section 2(9) of the Act.
• Admittedly, the appellant had sold 1033 pressure cookers after 01.02.2021, which did not conform IS 2347 :2017. The Cloudtail India Private Limited is directed to recall 1033 pressure cookers, sold by the company in the country, refunding its price to the consumers within 45 days and a penalty of Rs.100000/- has been imposed upon it for selling the pressure cooker, in violation of Quality Control Order, 2020. Hence the present appeal has been filed before Apex Commission (NC) for adjudication.

Stand of appellant company before NC

The company restated its position in the appeal, as mentioned earlier. Nevertheless, the appellant company also included the assertion that the Central Consumer Protection Authority’s finding labelling the pressure cooker as ‘defective’ due to the absence of the ISI mark is legally questionable. Furthermore, it argued that any violation of the Domestic Pressure Cooker (Quality Control) Order, 2020 should fall under the purview of the Bureau of Indian Standards Act, 2016, rather than the Consumer Protection Act, 2019.

Analysis by National Commission

‘Consumer Rights’ as defined under Section 2 (9) includes

• The right to be protected against the marketing of goods, products or services which are hazardous to life and property.
• The right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be, so as to protect the consumer against unfair trade practices.
• The right to be assured, wherever possible, access to a variety of goods, products or services at competitive prices.
• The right to be heard and to be assured that consumer’s interests will receive due consideration at appropriate fora.
• The right to seek redressal against unfair trade practice or restrictive trade practices or unscrupulous exploitation of consumers; and
• The right to consumer awareness.

‘Defect’ as defined under Section 2(10) of the Act is quoted below:

“defect” means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force or under any contract, express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods or product and the expression “defective” shall be construed accordingly.”

Observations by the National Commission

Section 16 of the Bureau of Indian Standards Act, 2016 mandates the compulsory use of the standard mark. With the enforcement of the Quality Control Order, 2020, the use of the standard mark has become obligatory. Despite a product bearing the European Commission Standard Marks or satisfying the norms of the Bureau of Indian Standard in subsequent test reports, consumer rights must also be considered. Consumers have the right to purchase products with the BIS mark only after 01.02.2021. If the BIS mark is not affixed or certified, and the product is sold, it amounts to a violation of consumer rights, especially considering the mandatory requirement of the standard mark after the implementation of the Domestic Pressure Cooker (Quality Control) Order, 2020.

Supreme Court Verdict  

Various earlier judgments on the issue:

• Sumat Prasad Jain vs Sheojanam Prasad (Dead) & Ors (1973) 1 SCC 56
• Delhi High Court in Bottled Water Processor Association vs Union of Inida, 2010
• SCC Online Delhi 2038 and Andhra Pradesh High Court in Sri Seetharamanjaneya Swamyvari Seva Sangam vs Superintending Engineer, APSPDCL, 2015 SCC Online Hyd. 335

Above judgments highlighted the significance of BIS standards and held that people at large will be put to risk and public interest would be jeopardised if the safety standards are not complied with.

CCPA holds power under Section 18 of the Consumer Protection Act, 2019 and authority can exercise its power suo moto and to protect the consumers’ interest it can pass any suitable order. It cannot be said that it was without jurisdiction.

There is no evidence of procedural irregularities in the issuance of the order by CCPA. Subsequent to the commencement of the proceedings, a report dated 04.07.2022 has been acquired from the Director General (Investigation). The appellant has been granted a comprehensive opportunity for a hearing, including notice and access to the report.

CCPA’s order stands confirmed.