Introduction
The Consumer Protection Act, 2019 (‘CPA’) introduced a significant development in the realm of consumer rights with the establishment of the Central Consumer Protection Authority (‘CCPA’) under Section 10 of the CPA. This executive agency serves as a crucial addition to the existing three-tier Consumer Disputes Redressal Commissions (‘CDRC’) and the three-tier Consumer Protection Councils. However, the CCPA distinguishes itself by being a multifaceted authority, wielding a broad spectrum of powers that span across regulation, advice, investigation, adjudication, and imposition of penalties in certain cases.
Notably, the CCPA is not confined to a singular role—it functions as an executive agency with overarching responsibilities that extend beyond traditional regulatory or quasi-judicial functions. It was created with the clear mandate of promoting, protecting, and enforcing the rights of consumers as a class, effectively making it a guardian of consumer welfare on a national scale.
This article explores the powers, jurisdiction, procedural framework, evolving enforcement trends, and the key challenges businesses face in navigating the CCPA's legal landscape.
Role and Authority of the CCPA
The CCPA is vested with the authority to address and regulate issues pertaining to violations of consumer rights, unfair trade practices and false or misleading advertisements that is detrimental to the public and consumer interests.
Empowered with extensive authority, the CCPA has the following key powers:
* Initiate suo motu action, respond to complaints received, or act on directives from the Central Government[1];
* Refer a complaint to the Director General (‘DG’) of the Investigation Wing to probe issues related to consumer rights violations, unfair trade practices, and misleading advertisements[2];
* File complaints before the District, State and National CDRCs and intervene in any proceedings concerning allegations of consumer rights violations or unfair trade practices[3];
* Refer the matter to any concerned Regulatory Authority for further investigation[4];
* Issue orders for the recall of goods and services, mandate reimbursement of the price to consumers for the recalled goods and services, and discontinue practices which are detrimental to the consumers[5]; and
* Issue directions and impose penalties against false or misleading advertisements[6].
Procedural Framework
The procedural framework for addressing a matter by CCPA is outlined below:
1. Preliminary inquiry to establish the existence of a prime facie case
* The Secretary of the CCPA, upon receiving information, a complaint, or a directive from the Central Government, shall present it to the CCPA for assessment of a prima facie[7]
* If deemed necessary, the CCPA shall conduct a preliminary inquiry and request information or invite individuals for the inquiry as needed, to assess if a prima facie case exists.[8]
* No formal rules of procedure apply to the preliminary inquiry.[9]
* The CCPA shall record its opinion on the existence of a prima facie case within fifteen days (a non-mandatory timeline).[10]
2. Refer for investigation post establishing prima facie case
* If the CCPA determines a prima facie case exists, the Secretary will direct the CCPA's order to the DG or relevant Regulatory Authority within seven days of investigation.[11]
* In the event no prima facie case is established, the Secretary shall send a copy of the CCPA’s closure order to the Central Government or the complainant/ informant.[12]
3. Investigation by the DG[13]
* Report Submission: The DG must submit the investigation report to the Secretary within the specified timeframe (typically within thirty days), detailing the findings on each allegation along with all collected evidence, documents, statements, and analysis. The DG also has the power to search and seize.
* Further Investigation: If the CCPA deems further investigation necessary, it may direct the DG to conduct additional inquiries and submit a supplementary report within a specified timeframe, not exceeding forty-five days.
4. CCPA Actions Based on Investigation Report. The CCPA shall, if the investigation report evidences:
* Violation of Consumer Rights/Unfair Trade Practices- pass an order to recall goods and services, mandate reimbursement to consumers for the recalled goods and services and discontinue any detrimental practices. [14]
* False and misleading advertisements that are prejudicial to the interest of any consumer or is in contravention of consumer rights- pass an order against the concerned trader or manufacturer or endorser or advertiser or publisher to discontinue or modify the advertisement; prohibit the endorser from endorsing any product/service for up to one year (up to three years for repeated offences); and impose a penalty on the wrong-doer of up to ten lakh rupees (up to fifty lakh rupees for repeated offences).[15]
5. Appeal
* The aggrieved person can appeal against the CCPA’s order with the National CDRC.[16]
CCPA Order Trends: A closer look
Through class actions, the CCPA has emerged as a powerful force in holding businesses accountable for misleading advertisements, unfair trade practices, and violations of consumer rights on a collective scale. Its proactive approach has focused heavily on curbing misleading advertisements and ensuring product compliance, particularly in sectors like health, food, cosmetics and education, where false claims are rampant. The CCPA has also sharpened its scrutiny of e-commerce platforms. This trend underscores the growing need for businesses to maintain accurate records/documentation of resolution of consumer complaints and grievances and records evidencing regulatory compliance at every stage of the supply chain.
The CCPA’s jurisdiction extends beyond traditional consumer protection, addressing issues governed by other statutes such as the Bureau of Indian Standards Act, 2016 (‘BIS’), and the Food Safety and Standards Act, 2006. This cross-jurisdictional approach, as reflected in its orders, aligns with Section 100 of the CPA, which ensures that the provisions of the CPA complement—not override—other existing laws. Thus, the CCPA’s powers are not only broad but also designed to work in tandem with other regulatory frameworks, allowing proceedings to be initiated under other applicable laws.
Regulatory pitfalls for businesses
One of the primary challenges businesses encounter with the CCPA’s enforcement approach is the absence of clear provisions specifying the types of documents and records that the CCPA can require to establish a prima facie case. Additionally, there are no formal procedural rules governing how such a case should be established, nor is there clarity on the scope of documents that the CCPA’s investigative arm, led by the DG, can demand during proceedings. This lack of clarity, combined with the absence of defined limitations on the look back period, i.e., on how far back these documents can be sought, creates significant uncertainty for businesses. Moreover, while the CPA regulations mandate a thirty-day timeline for investigations by the DG[17]—extendable with sufficient justification— the practical timeline for investigations remains unclear, often ranging from two months to over ten months, depending on the case’s complexity. This extended and unpredictable timeline leaves businesses in a state of uncertainty regarding both the duration and scope of the inquiry. To make matters more challenging, there is no fixed timeline for the overall proceedings, further exacerbating the uncertainty faced by businesses.
Another key challenge for businesses under the CPA is the broad definition of ‘unfair trade practices’. Both the CDRCs and the CCPA interpret this definition expansively. This wide scope, while protecting consumer rights, often leaves companies unsure of where to draw the line on compliant conduct. While the legislation requires the CCPA to ascertain and establish a practice for ruling against any matter involving any ‘unfair trade practice’, often one-off cases of rejection of consumer refunds or rejection of product return requests, even when on genuine grounds, are looked at by the CCPA as an unfair trade practice. Additionally, documents and records of past years, without any specific timeline, is often sought from companies by the CCPA in its investigations. This leaves a wide room for legal uncertainty for businesses which have B2C dealings as their mainstay business and goes against the very objective of the Government of improving India’s performance in ease of doing business.
Judicial scrutiny of CCPA’s jurisdiction and powers
The CCPA has recently faced legal challenges, particularly concerning its ability to impose penalties for unfair trade practices. For instance, it levied penalties on e-commerce platforms for their role in the sale of non-BIS compliant products, which it classified as an unfair trade practice. E-commerce platforms challenged before the Delhi High Court (‘DHC’) whether the CCPA has the jurisdiction to penalize such practices, given its penalty imposing powers are explicitly tied to misleading advertisements under the CPA.[18] The DHC has sought clarity from the Union Government on the CCPA’s intended jurisdiction, powers, and role in the broader consumer protection framework. Specifically, the DHC has asked the Union Government to clarify whether the CCPA is envisioned as a parallel forum to existing CDRCs.
Additionally, a tour and travel company has challenged the CCPA’s authority to order refunds in consumer disputes before the DHC[19], and the DHC, has similarly requested the Union Government to take a definitive stand on whether the CCPA was intended to function as a standalone adjudicatory forum for disputes related to goods and services or if such disputes should instead fall under the purview of the traditional CDRCs with territorial or pecuniary jurisdiction.
The outcome of cases which are similarly placed in terms of facts and circumstances are poised to determine the future contours of the CCPA’s powers, jurisdiction, and its relationship with other consumer protection bodies. The outcomes of these proceedings could have far-reaching implications for how the CCPA exercises its functions, including its authority to impose penalties and make binding orders in consumer disputes.
CCPA’s Court-like powers
It may be argued that the CCPA has the ‘trappings of the court’ as it performs functions resembling those of a court, such as issuing notices, passing orders, and levying penalties. The Hon'ble Supreme Court has consistently ruled[20] that a tribunal or body with the ‘trappings of the court’ should include members who possess legal qualifications, such as individuals who have held judicial office or have substantial experience in the practice of law and are qualified to be appointed as a Judge of the High Court or a District Judge. Additionally, bodies with the ‘trappings of the court’ are required to act objectively and ‘exercise their discretion in a judicial manner, without caprice, and according to the general principles of law and rules of natural justice.’[21] The judgments of the DHC will probably determine whether or not, the CCPA passes this test.
Conclusion
The CCPA marks a transformative shift in consumer protection, but its broad powers have raised critical questions about its jurisdiction and authority. While its influence grows, the lack of clear procedural guidelines and the ongoing legal challenges to its scope create significant uncertainty for businesses. The CCPA’s expansive reach—spanning multiple statutes and its proactive enforcement—requires businesses to stay updated and informed. As judicial proceedings over its role and powers unfold, the future of the CCPA will depend on how courts define its limits and interactions with CDRCs. To navigate this evolving landscape, businesses must prioritize compliance and anticipate potential shifts in regulatory practices, ensuring they are prepared for both current and future challenges.
[The first author is a Partner, while other two are Associates in Corporate and M&A practice at Lakshmikumaran & Sridharan Attorneys, New Delhi]
[1] Section 18(2)(a), CPA.
[2] Section 19(1), CPA.
[3] Section 18(2)(b), CPA,
[4] Section 19(2), CPA.
[5] Section 20, CPA.
[6] Section 21, CPA.
[7] Regulation 3(1), Central Consumer Protection Authority (Submission of Inquiry or Investigation by the Investigation Wing) Regulations, 2021.
[8] Regulation 4(1) and Regulation 4(2), Central Consumer Protection Authority (Submission of Inquiry or Investigation by the Investigation Wing) Regulations, 2021.
[9] Regulation 4(3), Central Consumer Protection Authority (Submission of Inquiry or Investigation by the Investigation Wing) Regulations, 2021.
[10] Regulation 3(2), Central Consumer Protection Authority (Submission of Inquiry or Investigation by the Investigation Wing) Regulations, 2021.
[11] Regulation 5(1), Central Consumer Protection Authority (Submission of Inquiry or Investigation by the Investigation Wing) Regulations, 2021.
[12] Regulation 6, Central Consumer Protection Authority (Submission of Inquiry or Investigation by the Investigation Wing) Regulations, 2021.
[13] Regulation 7, Central Consumer Protection Authority (Submission of Inquiry or Investigation by the Investigation Wing) Regulations, 2021.
[14] Section 20, CPA.
[15] Section 21, CPA.
[16] Section 24, CPA.
[17] Regulation 7, Central Consumer Protection Authority (Submission of Inquiry or Investigation by the Investigation Wing) Regulations, 2021.
[18] Central Consumer Protection Authority V. Clues Network Private Limited and Ors., CONT.CAS(C) 810/2024 & CM APPL. 29473/2024.
[19] Kesari Tours Private Limited V. The Central Consumer Protection Authority and Ors., W.P.(C) 14572/2021 & CM APPLs. 45910/2021,56266/2023.
[20] State of Gujarat and others V. Utility Users Welfare Association and others (2018) 6 SCC 21; Tamil Nadu Generation and Distribution Corporation V. PPN Power Generating Co. (P) Ltd. (2014) 11 SCC 53.
[21] Central Organisation for Railway Electrification V. ECI SPIC MCML (JV) A Joint Venture Company, 2024 SCC OnLine SC 3219; Grindlays Bank Ltd. V. Central Govt. Industrial Tribunal, 1980 Supp SCC 420.
