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  • Section 107 (2) has saved “the previous operation” of any repealed enactment or “anything duly done or suffered thereunder to the extent that it is not inconsistent with the provisions of the new legislation”.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

ALSO READ

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): Prem Narain, Presiding Member, has directed the developers of “Greenopolis” to refund homebuyers their amount deposited at the interest rate of 9% p.a. and in a few complaints the bench has asked for the possession to be handed over by 30-09-2020 with the occupancy certificate and with a delayed penalty of 6% p.a. on the deposited amount.

Consumer Complaints

Allottees of the project “Greenopolis” situated in Gurgaon alleged deficiency in service on the part of Opposite parties — Three C Shelters (P) Ltd.

Original allottee booked an apartment in OP’s project for a consideration of Rs 87,16, 800/-, apartment was allotted and later the same was endorsed in favour of complainant.

OP’s failed to deliver the possession in 42 months inclusive of 6 months grace period. Till date, the complainant has paid Rs 75,96,776/- to OP’s.

Several complaints have been filed by homebuyers with regard to no delivery and possession of the apartments for which they have paid installments of a very huge amount.

Analysis and Decision

No breach of agreement by complainants | Entitled to relief under Sections 54 and 55 of the Indian Contract Act, 1872

Argument with regard to Sections 54 and 55 of the Indian Contract Act, 1872, OPs relied on the Commission’s decision in DLF Southern Town (P) Ltd. v. Dipu C. Seminal, wherein the complainant had deposited only the booking amount and no installments were paid whereas in the present complaints installment have been paid upto reasonable limit and on no progress in construction, the payment was stopped later.

Force Majeure

Defence of force majeure by OPs cannot be taken as there was no ban on construction and OPs should have put their resources and managerial skills to bring water from outside to complete the construction in time.

Joint Project

Three C Shelters (P) Ltd. pleaded for force majeure conditions for the delay and on the other hand Orris Infrastructure (P) Ltd. pleaded that Three C Shelters was responsible for delay in construction. Both of them had signed on the “Apartment buyer Agreement” and hence Commission stated that both of them were responsible for delay.

Apartment Buyer Agreement

Bench observed that the OP’s clearly have failed to complete the project and give the possession in time to the homebuyers as per the Apartment Buyer Agreement.

Hence allottees have the right to ask for a refund due to the inordinate delay which has been beyond 1 year, the possession was to be given in the year 2016.

No Forfeiture of earnest money

So far as the question of forfeiture of earnest money is concerned, it is seen that the complainants are seeking refunds as the project has been inordinately delayed. Even though the RERA, Haryana has taken a meeting to expedite the project and Three C Shelters (P) Ltd. has agreed to complete the project in phases.

Commission noted that OPs have not paid EDC and IDC to the Government and it seems that the OPs were not serious in timely completing the project. Thus, in these circumstances, there can be no question of forfeiture of earnest money.

Supreme Court in Haryana Urban Development Authority v. Diwan Singh, (2010) 14 SCC 770, observed that subsequent buyers are entitled to receive interest only after the date of endorsement in their favour.

In view of the above, Commission directed Three C Shelters to refund the amount at 9% interest per annum.

In one of the cases, Orris Infrastructure (P) Ltd. is directed to complete the construction work and handover the possession till 30-09-2020 after obtaining an occupancy certificate, and it shall pay interest of 6% p.a. on the deposited amount.

If the possession is not delivered till 30-09-2020, the complainant shall be at liberty to take a refund of the total deposited amount Rs 77,58,581/- along with interest @ 9% p.a. from the date of respective deposits till actual payment. [Sanjay Gupta v. Three C Shelter (P) Ltd., 2020 SCC OnLine NCDRC 178, decided on 20-07-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Redressal Commission (NCDRC): The Bench of R.K. Agarwal (President and V.K. Jain and M. Shreesha, Members, while taking into consideration a batch of petitions and further referring to several decisions of the Supreme Court, reached to the conclusions that,

“Coaching Classes cannot fall within the definition of ‘Education Institutions’.”

“Any defect or deficiency or unfair trade practice pertaining to a service provider like ‘Coaching Centres’ does not fall within the jurisdiction of the Consumer Fora.”

Facts in the present case are in respect to deficiency of services by an educational institution that is a Dental College for admitting students when it was neither affiliated with the university nor recognized by the Dental Council of India.

Counsel appearing for the complainants stated that the facts in Buddhist Mission Dental College and Hospital v. Bhupesh Khurana, (2009) 4 SCC 473 relate to deficiency of service on account of non-affiliation and that it does not fall within any deficiency rendered during the ‘Course of Education’ being imparted ‘Post Admission’.

OP University has indulged in deficiency of service and unfair trade practice.

Contentions

OPs Counsel placed reliance on Supreme Court’s decision in P.T. Koshy v. Ellen Charitable Trust, 2012 (3) CPC 615 (SC), and stated that students are not ‘Consumers’ and ‘Education’ is not a commodity and the Educational Institutions are not rendering ‘Service’.

Counsel appearing for the Complainant’s while referred to P. Sreenivasulu v. P.J. Alexander, wherein it was held that Educational Institutions would come within the purview of the Consumer Protection Act, 1986 and that Education is a ‘service’.

Analysis and Decision

Commission addressed the ratio laid down by the Supreme Court in a catena of Judgments with respect to ‘Education’ and ‘Educational Services’ vis-a-vis Consumer Protection Act, 1986.

Bihar School Examination Board v. Suresh Prasad Sinha, (2009) 8 SCC 483,

“…Any dispute relating to fault in holding of examination and non-declaration of result by an examinee does not fall within the purview of the Consumer Protection Act, 1986.”

Maharshi Dayanand University v. Surjeet Kaur, (2010) 11 SCC 159,

“…Supreme Court in the above-stated case examined in detail the jurisdiction of the Consumer Fora to entertain a Complaint with respect to deficiency of service by Educational Institutions.”

While noting the contention that Supreme Court clearly culls down the principles and has emphatically laid down that student is not a consumer and educational institutions are not providing any ‘Service’, Supreme Court’s decision in P.T. Koshy v. Ellen Charitable Trust, 2012 (3) CPC 615 (SC) was referred to wherein it was held that,

“…Educational Institutions are not providing any kind of service, therefore, in matter of admission, fees, etc., there cannot be a kind of service, therefore, in matter of admission, fee, etc., there cannot be a question of deficiency of service. Such matters cannot be entertained by the Consumer Forum under the Consumer Protection Act, 1986.”

Counsel for the Complainants contended that the ratio of the order has to be interpreted in the sense that it was applicable only to cases which involve ‘Core Education’ services and not all activities which relate to Educational Institutions and that both  Bihar School Examination Board v. Suresh Prasad Sinha, (2009) 8 SCC 483 and Maharshi Dayanand University v. Surjeet Kaur (2010) 11 SCC 159, refer to conference of a degree and conduction of an examination, which do not sum up the entire gamut of “Education”.

Unni Krishnan, J.P. v. State of A.P., (1993) 1 SCC 645,

“…Education has never been a commerce in this country and that establishing an Educational Institution can neither be a trade or business nor can it be a profession within the meaning of Article 19 (1)(g), it was held that “Education” in its truest aspect is more a mean and a vocation rather than a profession or trade or business.”

Commission relying on the in Amar Singh Yadav v. Shanta Devi, AIR 1987 Patna 191, wherein it was held that,

“…while deciding the Law of Precedence has observed that when there is a direct conflict between two decisions of the Supreme Court of co-equal Bench, the subordinate Court must follow the judgments which states the law more elaborately and accurately and that the question whether the decision is earlier or later is not material. In the instant case in Maharishi Dayanand University Case (Supra) the Hon’ble Supreme Court had discussed the law elaborately.”

Thus, the Commission stated that ratio laid down in the last judgment that is Amar Singh Yadav v. Shanta Devi, AIR 1987 Patna 191 has to be followed. It is significant to note here that the ratio in Maharshi Dayanand University v. Surjeet Kaur (2010) 11 SCC 159, P.T. Koshy v. Ellen Charitable Trust, 2012 (3) CPC 615 (SC), Prof. K. K. Ramachandran (Supra) and Anupama College of Engineering (Supra) does not address to the aspect of what comprises ‘Core Education’ and whether all activities related to Education/ Educational institutions would be excluded from the purview of the Act.

In view of the above discussion, consumer complaints were dismissed. [Manu Solanki v. Vinayak Mission University, 2020 SCC OnLine NCDRC 7, decided on 20-01-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Dispute Redressal Commission:  The Commission held that if a complaint is filed beyond a period of two years from when the cause of action has happened the same will not be entertained, unless there are sufficient reasons for condoning the delay in filing the appeal.

The Consumer Forum through a Division Bench, comprising of, B.C. Gupta, Presiding Member and S.M. Kantikar, Member dismissed an appeal filed by M/S. Kiran Gems Pvt. Ltd. The brief facts, being that the appellant company had purchased an insurance policy from the respondent, to cover all the damages that may arise in the normal course of business ,but upon the actual event of an abnormal activity, the Insurance Company did not entertain the full claim of the appellant and the same being under dispute between the two parties, in the present case. The appellant also contested that the Insurance company owed a total sum of Rs 35,15,014 to them, and further argued that the dismissal of their previous complaint regarding the same matter (Miscellaneous Application, MA/90/2011) is not valid.

The Commission held that the appeal was filed beyond the mentioned time period of 2 years and because of this delay the appellant cannot be heard. The Bench also referred to the judgment of Anshul Aggarwal v. New Okhla Industrial Development Authority, (2011) 14 SCC 578 in which the Hon’ble Apex Court held that:

“It is also apposite to observe that while deciding an application filed in such cases for condonation of delay, the Court has to keep in mind that the special period of limitation has been prescribed under the Consumer Protection Act, 1986 for filing appeals and revisions in consumer matters and the object of expeditious adjudication of the consumer disputes will get defeated if this Court was to entertain highly belated petitions filed against the orders of the Consumer Foras.”

The Bench ordered the dismissal of the appeal because there was a delay of 2178 days in filing the complaint and no remarkable justification was given by the appellant while explaining this delay.  [M/s Kiran Gems Pvt. Ltd. v. Oriental Insurance Co. Ltd., Appeal Number 1718 of 2016, decided on 12-12-2017]

Case BriefsSupreme Court

Supreme Court: After a 3-member committee headed by former Supreme Court judge, Justice Arijit Pasayat, filed it’s report on the facilitating infrastructural improvements in National/State Consumer Fora, the 3-judge bench of Dipak Misra, CJ and AM Khanwilkar and Dr. DY Chandrachud, JJ asked the Central Government to file a comprehensive status report indicating compliance with the directions issued by the Court on 21 November 2016 within six weeks. The committee had submitted the report on March 4, 2017.

On 21.11.2016, the Court had issued the following directions:

  • The Union Government shall for the purpose of ensuring uniformity in the exercise of the rule making power under Section 10(3) and Section 16(2) of the Consumer Protection Act, 1986 frame model rules for adoption by the state governments. The model rules shall be framed within four months and shall be submitted to this Court for its approval;
  • The Union Government shall also frame within four months model rules prescribing objective norms for implementing the provisions 24 of Section 10(1)(b), Section 16(1)(b) and Section 20(1)(b) in regard to the appointment of members respectively of the District fora, State Commissions and National Commission;
  • The Union Government shall while framing the model rules have due regard to the formulation of objective norms for the assessment of the ability, knowledge and experience required to be possessed by the members of the respective fora in the domain areas referred to in the statutory provisions mentioned above. The model rules shall provide for the payment of salary, allowances and for the conditions of service of the members of the consumer for a commensurate with the nature of adjudicatory duties and the need to attract suitable talent to the adjudicating bodies. These rules shall be finalized upon due consultation with the President of the National Consumer Disputes Redressal Commission, within the period stipulated above;
  • Upon the approval of the model rules by this Court, the state governments shall proceed to adopt the model rules by framing appropriate rules in the exercise of the rule making powers under Section 30 of the Consumer Protection Act, 1986;
  • The National Consumer Disputes Redressal Commission is requested to formulate regulations under Section 30A with the previous approval of the Central Government within a period of three months from today in order to effectuate the power of administrative control vested in the National Commission over the State Commissions under Section 24(B)(1)(iii) and in respect of the administrative control of the State Commissions over the District fora in terms of Section 24(B)(2) as explained in this Judgment to effectively implement the objects and purposes of the Consumer Protection Act, 1986.

Requesting Additional Solicitor General Maninder Singh to assist the Court in the matter, the Court fixed 30.01.2018 as the next date of hearing. [State of Uttar Pradesh v. All U.P. Consumer Protection Bar Association, 2017 SCC OnLine SC 1488, order dated 15.12.2017]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission: The grievance of the petitioner in a recent case before the Commission was that appellants/complainants had entered into agreements with the respondents for purchase of residential flats, which the respondents were to construct and despite paying the substantial amount to the respondents, the construction of the flats had not been completed. The State Commission dismissed the complaints and ruled in favor of respondents against which the appellants approached the National Commission.

To decide on the issue, the Commission examined and explained the relevance of Section 3 of the Consumer Protection Act which provides that the provisions of the Act shall be in addition and not in derogation of the provisions of any other law for the time being in force. Therefore, the remedy under the Act is an additional remedy available to the consumer. The Commission presided by V.K. Jain, J. observed that in the instant case, respondents had entered into agreements with the complainants/appellants, agreeing to construct flats for them and give possession of the said flats and therefore they have a relationship of consumer and service provider and this relationship would not come to an end with just one party canceling the agreement.

The Commission further said that if there is deficiency on the part of the respondents in rendering services to consumers and the same is proved, the complainants/appellants would be entitled to appropriate relief in terms of the provisions of the Consumer Protection Act. In this case, remedy was initiated before the civil court by respondents and not the complainants and therefore, the jurisdiction of civil court is not at all ousted.  [Yashwant Rama Jadhav v. Shaukat Hussain Shaikh, First Appeal No. 1229 of 2017, decided on 18.11.2017]