Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Coram of Justice R.K. Agrawal (President) and Dr S.M. Kantikar (Member)reiterated that the presence of an arbitration clause in the agreement does not bar the jurisdiction of consumer fora.

Grievance of the Buyer

Complainants alleged that the Project in which they had booked their flat has not been completed till date even after about 8 years from the date of the booking. OP developer indulged in unfair trade practices by utilizing the money collected from the complainants, for its personal gains on benefits and further diverted the funds collected from the complainants to its other projects.

Complainants noting that the project has not even reached the 50% completion stage, clearly showed that the OP had no intention of developing/completing the project.

It was also alleged that even after 8 years, the construction of the project is not even close to completion, there are no laying of roads, utility supplies, access/service roads, facilities, clubs, no sign of rail over bridge etc. It was further alleged that the unexpected, unreasonable and inordinate delay in developing and constructing the project, and facilities and also the delay in handing over possession of the flat, clearly amounts to deficiency in services.

Builder’s Contention

OP contended that the present Complaint is not maintainable in light of Clause 33 of the Agreement executed between the Parties, according to which, all or any disputes arising out of or touching upon or in relation to the terms of the Agreement including its interpretation and validity and the respective rights and obligations of the parties have to be settled amicably by mutual discussion failing which the disputes have to be settled through arbitration. The Opposite Party has further submitted that Complainant 1 has no privity of contract with the Opposite Party and no relief can be granted to the said Buyer’s Association.

Analysis, Law and Decision

Coram while analysing the matter and noting the contention with respect to the arbitration clause relied on the Supreme Court decision of Emaar MGF Land Ltd. v. Aftab Singh – I, (2015) CPJ 5 (SC), in which it was laid down that an Arbitration clause on the agreement does not bar the jurisdiction of the Consumer Fora to entertain the complaint.

Hence, the objection raised by the Counsel for the OP that the clause of the Arbitration bars this commission from entertaining the complaint was unsustainable.

Counsel’s contention for the Developer that the Complainants are not ‘Consumers’ and that the subject Flats were booked for investment purpose was completely unsustainable in the light of the judgement of this Commission in Kavita Ahuja v. Shipra Estates I (2016) CPJ 31, in which the principle laid down is that the onus of establishing that the Complainants were dealing in real estate i.e. in the purchase and sale of plots/ flats in his normal course of business to earn profits, shifts to the OP Developer, which in the instant case the Opposite Party Developer had failed to discharge.

Further, as per Clause 4.5 of the Agreement of the Flat Buyer Agreement, in case of failure to deliver possession, the OP developer was liable to refund the amounts paid by the allottees with simple interest 10% pa for the period such amounts were laying with the Developer/SPV and to pay not other compensation whatsoever, whereas, in terms of Clause 1.19 in case of late payment, the Complainant/Buyer is liable to pay interest @18% p.a.

The above-stated terms depicted that they were wholly one-sided and unfair, therefore the complainant cannot be made bound to the terms of the agreement.

Elaborating further, Commission stated that it was not in dispute that the Complainants were allotted the Flats in the year 2009 and till date the construction of the flat has not been completed.

Coram opined that buyer cannot be made to wait indefinitely for the delivery of possession and the act of OP with regard to relying on Farmers’ agitation while retaining the amounts deposited by the complainants was not only an act of deficiency of service but also amounted to Unfair Trade Practice.

Direction

Complainants are entitled to refund of the principal amount with reasonable interest of @9% p.a. from the date of the respective date of deposit till the date of actual refund. [Ansal API Megapolis Buyer’s Assn. v. Ansal Hi-Tech Townships Ltd., Consumer Case No. 1467 of 2015, decided on 8-11-2021]


Advocates before the Commission:

For the Complainants: Mr Saurabh Jain, Advocate

For the Opposite Party: Mr Rakesh Kumar, Advocate Mr Rupesh Kumar Sinha, Advocate

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): C. Viswanath (Presiding Member) while addressing the complaint reiterated the settled position of law, expressed that,

Section 58 of the Act provides that the National Commission shall have jurisdiction to entertain the Complaint where value of the goods or services paid as consideration exceeds rupees ten crores.

Complainant submitted that he was given a cash credit limit of Rs 25 lakhs by the State Bank of India.

It was submitted that OP/SBI had committed deficiency of service as an interest of Rs 18,66,719 had been demanded from the complainant against the outstanding loan of Rs 23 lakhs.

What was the prayer made by the complainant?

  1. Pass an award directing the Opposite Party to pay a sum of Rs 19,85,27,562 to the Complainant towards compensation and damages for negligence, deficiency in service and unfair trade practices;
  2. Pass an award directing the Opposite Party to pay a sum of Rs 5,00,000 to the Complainant for pain and mental agony;
  3. Pass an award directing the Opposite Party to pay a sum of Rs 4,00,00,000 to the Complainant for loss of closing of the industry of the complainant;
  4. Pass an award directing the opposite party to pay a sum of Rs 4,00,00,000 to the Complainant for the loss of reputation;
  5. And directing the Opposite Party to pay the cost of entire proceedings; rectification and
  6. Pass such further or other orders as this National Commission may deem fit and proper in the circumstances of the case and thus render justice.

Decision

Bench remarked that Consumer Protection Act, 2019 provides for a hierarchy of the Consumer Fora to deal with consumer complaints, depending upon the pecuniary value of the complaint.

In the instant case, the complainant had demanded disproportionate compensation to inflate the value of the complaint and reach the pecuniary jurisdiction of this Commission which is nothing but an abuse of the process of law.

Hence, the complaint was dismissed in view of the above discussion, since it did not fall within the pecuniary jurisdiction of the National Commission.[M.V. Madhu Sudhana v. SBI, 2020 SCC OnLine NCDRC 845, decided on 06-04-2021]

Case BriefsSupreme Court

Supreme Court: The bench of Dr. DY Chandrachud* and MR Shah. JJ has held that the proceedings instituted before the commencement of the Consumer Protection Act 2019 on 20 July 2020 would continue before the fora corresponding to those under the Consumer Protection Act 1986 (the National Commission, State Commissions and District Commissions) and not be transferred in terms of the pecuniary jurisdiction set for the fora established under the Act of 2019.

Background

The material provisions of the Consumer Protection Act 2019 came into force on 20 July 2020. The appellants instituted a consumer case against real estate developers before the National Consumer Disputes Redressal Commission on 18 June 2020 under the Consumer Protection Act 1986 . The NCDRC by its order dated 30 July 2020 dismissed the consumer case on the ground that after the enforcement of the Act of 2019, its pecuniary jurisdiction has been enhanced from rupees one crore to rupees ten crores. The appellants’ review petition was also dismissed by the NCDRC on 5 October 2020. In the present case, the claim of Rs. 2.19 crores is below the enhanced pecuniary jurisdiction of the NCDRC.

This gave rise to the issue as to whether a complaint which was filed and registered under the Act of 1986, before the new Act of 2019 came into force, has to be entertained under the provisions of the erstwhile legislation. In anticipation of the enforcement of the Act of 2019, an administrative notice was issued by the NCDRC on 17 July 2020 to allow the functioning of its registry for fresh filings on 18 July 2020, since the new law was to come into force on 20 July 2020.

Analysis

Impact of a change in forum on pending proceedings and retrospectivity

After considering a number of precedents that have interpreted the impact of a change in forum on pending proceedings and retrospectivity, the following position of law emerged:

“a change in forum lies in the realm of procedure. Accordingly, in compliance with the tenets of statutory interpretation applicable to procedural law, amendments on matters of procedure are retrospective, unless a contrary intention emerges from the statute.”

Section 107 of the Act of 2019

  • Section 107(1) of the Act of 2019 repeals the Act of 1986.
  • Section 107 (2) has saved “the previous operation” of any repealed enactment or “anything duly done or suffered thereunder to the extent that it is not inconsistent with the provisions of the new legislation”.
  • Section 107(3) indicates that the mention of particular matters in sub-Section (2) will not prejudice or affect the general application of Section 6 of the General Clauses Act.

Section 6 of the General Clauses Act

Section 6 of the General Clauses Act provides governing principles with regard to the impact of the repeal of a central statute or regulation. These governing principles are to apply, “unless a different intention appears”. Clause (c) of Section 6 inter alia stipulates that a repeal would not affect “any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed”. The right to pursue a validly instituted consumer complaint under the Act of 1986 is a right which has accrued under the law which was repealed.

Clause (c) of Section 6 has the effect of preserving the right which has accrued. Clause (e) ensures that a legal proceeding which has been initiated to protect or enforce “such right” will not be affected and that it can be continued as if the repealing legislation has not been enacted. The expression “such a right” in clause (e) evidently means the right which has been adverted to in clause (c).

“The plain consequence of clause (c) and clause (e), when read together is twofold: first, the right which has accrued on the date of the institution of the consumer complaint under the Act of 1986 (the repealing law) is preserved; and second, the enforcement of the right through the instrument of a legal proceeding or remedy will not be affected by the repeal.”

However, considering that right to a forum is not an accrued right, the question whether the pending legal proceedings are required to be transferred to the newly created forum by virtue of the repeal would still persist.

While Section 6(e) of the General Clauses Act protects the pending legal proceedings for the enforcement of an accrued right from the effect of a repeal, this does not mean that the legal proceedings at a particular forum are saved from the effects from the repeal.

Object of the Act of 2019

There is no express language indicating that all pending cases would stand transferred to the fora created by the Act of 2019 by applying its newly prescribed pecuniary limits.

The Act of 2019 is enacted to provide “for protection of the interests of consumers” and has taken note of the evolution of consumer markets by the proliferation of products and services in light of global supply chains, ecommerce and international trade.

“New markets have provided a wider range of access to consumers. But at the same time, consumers are vulnerable to exploitation through unfair and unethical business practices. The Act has sought to address “the myriad and constantly emerging vulnerabilities of the consumers. The recurring theme in the new legislation is the protection of consumers which is sought to be strengthened by procedural interventions such as strengthening class actions and introducing mediation as an alternate forum of dispute resolution.”

In this backdrop, something specific in terms of statutory language – either express words or words indicative of a necessary intendment would have been required for mandating the transfer of pending cases.

“One can imagine the serious hardship that would be caused to the consumers, if cases which have been already instituted before the NCDRC were required to be transferred to the SCDRCs as a result of the alteration of pecuniary limits by the Act of 2019. A consumer who has engaged legal counsel at the headquarters of the NCDRC would have to undertake a fresh round of legal representation before the SCDRC incurring expense and engendering uncertainty in obtaining access to justice. Likewise, where complaints have been instituted before the SCDRC, a transfer of proceedings would require consumers to obtain legal representation before the District Commission if cases were to be transferred. Such a course of action would have a detrimental impact on the rights of consumers. Many consumers may not have the wherewithal or the resources to undertake a fresh burden of finding legal counsel to represent them in the new forum to which their cases would stand transferred.”

Hence, it would be difficult to attribute to Parliament, whose purpose in enacting the Act of 2019 was to protect and support consumers with an intent that would lead to financial hardship, uncertainty and expense in the conduct of consumer litigation.

Data on pendency of cases

Data drawn from annual reports of the Union Ministry of Consumer Affairs indicates pendency from financial year 2015-16 to financial year 2019-20 indicates that as on 31 October 2019, 21,216 cases were pending before the NCDRC and 1,25,156 cases were pending before the SCDRC. Many of these cases would have to be transferred if the view which the developer propounds is upheld.

“This will seriously dislocate the interests of consumers in a manner which defeats the object of the legislation, which is to protect and promote their welfare. Clear words indicative of either an express intent or an intent by necessary implication would be necessary to achieve this result. The Act of 2019 contains no such indication.”

Hence, the legislature cannot be attributed to be remiss in not explicitly providing for transfer of pending cases according to the new pecuniary limits set up for the fora established by the new law, were that to be its intention.

Conclusion

All proceedings instituted before 20 July 2020 under the Act of 1986 shall continue to be heard by the fora corresponding to those designated under the Act of 1986 and not be transferred in terms of the new pecuniary limits established under the Act of 2019.

[Neena Aneja v. Jai Prakash Associates Ltd., 2021 SCC OnLine SC 225, decided on 16.03.2021]


*Judgment by: Justice Dr. DY Chandrachud

Know Thy Judge| Justice Dr. DY Chandrachud

Appearances before the Court by:

For appellants: Advocate P Vinay Kumar

For respondent: Senior Advocate Krishnan Venugopal

Case BriefsSupreme Court

Supreme Court: The bench of Dr. DY Chandrachud and MR Shah, JJ has held that consumer fora has no jurisdiction and/or power to accept the written statement beyond the period of 45 days.

The Court was hearing the case where the National Consumer Disputes Redressal Commission had confirmed the order passed by the Karnataka State Consumer Disputes Redressal Commission rejecting the application seeking condonation of delay in filing the written statement to the consumer complaint. The written version/written statement was filed beyond the prescribed period of limitation provided under the Consumer Protection Act, 1986, i.e., beyond the period of 45 days.

As per the Consumer Protection Act, 1986, the written version/written statement is required to be filed within 30 days and the same can be extended by a further period of 15 days.

As per the decision of the Constitution Bench in New India Assurance company Limited v. Hilli Multipurpose Cold Storage Private Limited, (2020) 5 SCC 757,

“the District Forum has no power to extend the time to file the response to the complaint beyond the period of 15 days in addition to 30 days as is envisaged under Section 13 of the Act.”

It was, however, submitted by the petitioner that as observed in paragraph 63, the said judgment shall be applicable prospectively only. Therefore, the aforesaid decision shall not be applicable retrospectively to the complaints filed before the said decision.

Refusing the accept the contention, the Court said that as per the decision in J.J. Merchant v. Shrinath Chaturvedi, (2002) 6 SCC 635, which was a three Judge Bench decision, consumer fora has no power to extend the time for filing a reply/written statement beyond the period prescribed under the Act. However, thereafter, despite the above three Judge Bench decision, a contrary view was taken by a two Judge Bench and therefore the matter was referred to the five Judge Bench and the Constitution Bench has reiterated the view taken in the case of J.J.Merchant and has again reiterated that the consumer fora has no power and/or jurisdiction to accept the written statement beyond the statutory period prescribed under the Act, i.e., 45 days in all.

The petitioner had then relied on Reliance General Insurance Co. Ltd. v.  Mampee Timbers & Hardwares Pvt. Ltd., 2017 SCC OnLine SC 2027, wherein it was directed that the consumer fora may accept the written statement beyond the stipulated time of 45 days in an appropriate case, on suitable terms, including the payment of costs and to proceed with the matter, keeping in view the fact that the judgment of this Court in the case of New India Assurance Company Limited v. Hilli Multipurpose Cold Storage Private Limited, (2015) 16 SCC 20 has been referred to a larger Bench.

The Court rejected this contention too on the ground that the Court had, in Reliance General Insurance Co. Ltd, specifically mentioned that

“it will be open to the concerned fora to accept the written statement filed beyond the stipulated period of 45 days in an appropriate case, on suitable terms, including the payment of costs and to proceed with the matter.”

Therefore, ultimately, it was left to the concerned fora to accept the written statement beyond the stipulated period of 45 days in an appropriate case.

In the present case, despite sufficient time granted the written statement was not filed within the prescribed period of limitation. Therefore, the Court observed that the National Commission had considered the aspect of condonation of delay on merits also.

[Daddy’s Builders Pvt. Ltd. v. Manisha Bhargava, 2021 SCC OnLine SC 82, decided on 11.02.2021]


*Judgment by: Justice MR Shah

Petitioner’s Counsel: Advocate Ashish Choudhary

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District Forum can’t extend limitation period of 45 days for filing response under Section 13 of Consumer Protection Act

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): A Division Bench of S.M. Kantikar and Dinesh Singh, Members, allowed an appeal filed against the order of Delhi State Consumer Disputes Redressal Commission whereby the appellant’s petition was dismissed at the stage of maintainability itself.

The appellant had filed a complaint against the respondents for medical negligence. One of the respondents had prescribed a medicine for appellant’s husband; however, the pharmacist (OP-2) gave the wrong medicine. The appellant’s husband died because of taking the wrong medicine.

The main issue that arose before the Commission was whether the present dispute amounts to a consumer dispute and hence whether it can be adjudicated upon under the provisions of Consumer Protection Act, 1986.

The Commission observed that the State Commission had cited the case of Bright Transport Co. Ltd. v. Sangli Sehkari Bank Ltd., II (2012) CPJ 151 (NC) wherein it was held that complaints which are based on allegations of fraud, forgery, etc. and trial of which would require voluminous evidence and consideration are not to be entertained by the consumer fora. However, in the instant case the appellant had neither alleged fraud nor did she allege forgery on the part of respondents.

The Commission held that it was a case of medical negligence and deficiency in services and it does not require recording of voluminous evidence and consideration, as may make the adjudication of this case unfeasible or prescribed in consumer fora. The allegations of medical negligence and deficiency of services is a complaint within the meaning of Section 2(1)(c) of the 1986 Act and would convert into a “consumer dispute” within the meaning of Section 2(1)(e) if the opposite parties dispute or deny the allegations contained in the complaint. [Vimla v. Ashwani Gupta, First Appeal No. 1062 of 2018, order dated 05-08-2018]