Consumer Protection Act • Official Statutory Text & Practice Guide
(1) Where the Central Authority is satisfied after investigation that any advertisement is false or misleading and is prejudicial to the interest of any consumer or is in contravention of consumer rights, it may, by order, issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such advertisement or to modify the same in such manner and within such time as may be specified in that order.
(2) Notwithstanding the order passed under sub-section (1), if the Central Authority is of the opinion that it is necessary to impose a penalty in respect of such false or misleading advertisement, by a manufacturer or an endorser, it may, by order, impose on manufacturer or endorser a penalty which may extend to ten lakh rupees:
(3) Notwithstanding any order under sub-sections (1) and (2), where the Central Authority deems it necessary, it may, by order, prohibit the endorser of a false or misleading advertisement from making endorsement of any product or service for a period which may extend to one year:
(4) Where the Central Authority is satisfied after investigation that any person is found to publish, or is a party to the publication of, a misleading advertisement, it may impose on such person a penalty which may extend to ten lakh rupees.
(5) No endorser shall be liable to a penalty under sub-sections (2) and (3) if he has exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by him.
(6) No person shall be liable to such penalty if he proves that he had published or arranged for the publication of such advertisement in the ordinary course of his business:
(7) While determining the penalty under this section, regard shall be had to the following, namely:-
(a) the population and the area impacted or affected by such offence;
(b) the frequency and duration of such offence;
(c) the vulnerability of the class of persons likely to be adversely affected by such offence; and
(d) the gross revenue from the sales effected by virtue of such offence.
(8) The Central Authority shall give the person an opportunity of being heard before an order under this section is passed.
Legal Commentary & Landmark Judgments: Section 21
Section 21 vests the Central Consumer Protection Authority with far-reaching enforcement and punitive powers against traders, manufacturers, advertisers, publishers, and celebrity endorsers who disseminate false or misleading advertisements. It establishes a multi-tiered regulatory regime capable of directing modification/withdrawal, imposing heavy financial penalties up to Rs. 50 Lakhs, and disqualifying celebrity endorsers, while embedding precise statutory safe harbours based on due diligence and ordinary course of business.
For celebrity endorsers and brand ambassadors, defense under Section 21 hinges entirely on documenting due diligence under Section 21(5). Retain a formal verification dossier: accredited third-party laboratory test certificates, regulatory approvals (e.g., FSSAI/AYUSH licenses), and written representations from the manufacturer. For manufacturers challenging the quantum of penalty, plead that the CCPA failed to properly apply the four mitigating criteria in Section 21(7), especially where the reach of the campaign was limited or no actual consumer injury occurred.