Delhi High Court
Case BriefsHigh Courts

Delhi High Court: Yashwant Varma, J. stayed the ruling passed in the form of guidelines by the Central Consumer Protection Authority (‘CCPA’) vide order dated 04-07-2022 holding that the issue of whether the levy of service charge would amount to a restricted and unfair trade practice under Consumer Protection Act, 2019 requires consideration in view of precedents and incidental facts of the subject matter.

CCPA passed an order dated 04-07-2022 issuing guidelines which stated that restaurants and hotels are levying service charges in the bill by default, without informing consumers that paying such charge is voluntary and optional. Further, service charges are being levied in addition to the total price of the food items mentioned on the menu and applicable taxes, often in the guise of some other fee or charge. Thus, placing an order involves consent to pay the prices of food items displayed on the menu along with applicable taxes. Charging anything other than the said amount would amount to unfair trade practice under the Act. The instant petition challenges the above ruling impugning the guidelines.

The Court noted that the issue of a levy of a service charge by the hotel industry was deprecated by the Dewan Chaman Lal Committee recommending the implementation of the continental system of service charge both with regards to its collection as well as disbursement. Later, a Wage Board was constituted by the Chief Commissioner of Delhi vide notification dated 28-10-1964 which recommended the levy of a service charge on customers’ bills varying from 5% to 10%. The collections made were then to be distributed with 10% going to a welfare fund, 15% being retained by the management towards breakages and 45% to be distributed to the workmen and employees of the establishment and the remaining 30% to be allocated to the wage bill.

In view of this, counsel for petitioner brings to notice of the Court that various settlements were entered between the workmen and individual establishments and awards were, thereby rendered by industrial adjudicators and thus, the impugned guidelines will clearly upset them.

The Court also noted that there exists a serious doubt whether the issue of pricing and the levy of a service charge would fall within the ambit of Section 2(47) of Consumer Protection Act, 2019 or not.

Reliance was placed on S S Ahuja v. Pizza Express, 1999 SCC OnLine MRTPC 2 wherein it was observed that service charges are levied for the service of food at the table in the restaurant. The choice rests with the customer either to take food in the restaurant bearing the service charges, as-is also a practice in other restaurants, or to carry away the food avoiding the aforesaid levy, there could, however, be no tie or up between the sale of food and service of it on the table as is in the present case. This goes along with it. These two cannot be separated. The practice followed by the respondent as well as the others in trade in no way harms the competitor in general or customer in particular. It has, thus, been sufficiently demonstrated that the respondent did not indulge in unfair or restrictive trade practices as alleged.”

The Court affirmed that the matter requires consideration and thus stayed the impugned guidelines dated 04-07-2022 till the next date of listing the directions subject to following conditions:

(1) The members of the petitioner Association shall ensure that the proposed levy of a service charge in addition to the price and taxes payable and the obligation of customers to pay the same is duly and prominently displayed on the menu or other places where it may deem to be expedient.

(2) The members of the petitioner Association further undertake not to levy or include service charge on any “take away” items.

The matter is next listed for 25-11-2022.

[National Restaurant Association of India v. UOI, 2022 SCC OnLine Del 2172, decided on 20-07-2022]


Advocates who appeared in this case :

Mr. Lalit Bhasin, Ms. Nina Gupta, Ms. Ananya Marwah, Ms. Ruchika Joshi and Mr. Ajay Pratap Singh, Advocates, for the Petitioner;

Mr. Sandeep Mahapatra, CGSC, Advocate, for UOI;

Mr. Varun Kumar Garg, Advocate, for R-1 & 2.


Read our previous story

CCPA issues Guidelines to prohibit automatic levy of service charge in hotels and restaurants


*Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: In an interesting case regarding insurance claim, the Division Bench comprising Hemant Gupta and V. Ramasubramanian*, JJ., reversed the NCDRC’s decision directing the insurance company to indemnify the insured of a Marine Insurance Policy on the sole ground of delay in repudiating claim.

The Court held,

“The delay in processing the claim and delay in repudiation could be one of the several factors for holding an insurer guilty of deficiency in service. But it cannot be the only factor.”

The instant appeal had been filed under Section 23 of the Consumer Protection Act, 1986 against the impugned order of the National Consumer Disputes Redressal Commission (NCDRC) directing the appellant-insurer to make payment of the sum assured under a Marine Insurance Policy.

Factual Matrix

The complainant took a policy of insurance for a sum of Rs.1,62,70,000 from the insurer, covering risks to the Mechanical Sailing Vessel MSV Sea Queen for the period 04-10-2010 to 03-10-2011.

On 30-05-2011, the subject vessel allegedly sank in the high sea between Oman and Pakistan, due to bad weather and rough tides, which damaged the lower portion of the vessel. Consequently, the complainant lodged a claim with the insurer. Since the claim was neither admitted nor repudiated, the complainant filed a consumer complaint before NCDRC.

Meanwhile, the insurer repudiated the claim by a letter dated 04-09-2013 on the ground that the subject vessel was engaged in illegal activities and was hijacked by Somali pirates and that in any case, the Meteorological reports of Oman and India showed absolutely fair-weather conditions on 29-05-2011 and 30-05-2011.

Findings of NCDRC

The NCDRC allowed the claim on the basis of the following findings:

(i) Though the incident took place on 30-05-2011, the surveyor was appointed on 03-06-2011 and a Final Survey Report was sent on 25-03-2013, the claim was repudiated by the appellant only on 04-09-2013, i.e., after more than two years, therefore, the inordinate delay violating Regulation 9 of the Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2000, constituted deficiency in service;

(ii) Though the insurer raised a dispute with regard to the place and nature of the incident, the claim of the complainant was supported by the statement of the crew members of the subject vessel which was recorded by the Superintendent of Customs and the Immigration Officer;

(iii) The Report of the Meteorological Departments relied upon by the insurer had nothing to do with the place of the accident;

(iv) The plea of the complainant that SOS/ distress calls were made from the subject vessel, was corroborated by the statement of the crew members; and

(v) It was too late for the insurer to raise a dispute with regard to the value of the subject vessel.

In view of the above findings, the NCDRC directed the insurer to pay the complainant, the sum assured of Rs.1,62,70,000 together with interest at 9% per annum.

Factual Analysis by the Court

The complainant’s version was that the subject vessel left Djibouti on 21-05-2011 on its return journey to India but on 30-05-2011, it encountered bad weather and rough tides when it was between Oman and Pakistan. The crew of the subject vessel made a distress call, which was received by the crew of another vessel-MSV Chetak.

Since the statements of the crew members of the subject vessel were also corroborated by the Captain of the rescuing vessel MSV Chetak, the NCDRC found the version of the complainant had been proved. The Court remarked,

“But what the NCDRC failed to see was that there were more questions that remained unanswered in the version of the complainant and that there were more missing links.”

Can receipt time of SOS message and the actual time of rescue be the same?

The head of the rescuing vessel revealed to have heard the SOS call at 10:00 am but according to the head of the subject vessel, they were rescued at 10:00 am. The Court opined that this crucial contradiction had been completely overlooked by the NCDRC. The Court noted that surprisingly, the inquiry by the Surveyors with Muscat Radio revealed that no SOS calls were made nor was any response from the rescuing vessel reported. Similarly, the Meteorological Departments of both countries namely Oman and India confirmed that the weather for the specific area coordinates, Latitude 23=40° N and Longitude 61 =43° E, was fair.

Hence, the Court remarked,

“It is common knowledge that the time of receipt of the SOS message by the rescuing vessel and the actual time of rescue of the crew of the sinking vessel cannot be the same. Even according to the complainant, the subject vessel MSV Sea Queen could travel only at a speed of 67 knots. Unless the rescuing vessel is in close proximity, the time of the SOS call and the time of rescue cannot be the same.”

Deviation from the set route

Admittedly, the normal practice for the Indian Dhows trading from Indian West Coast to the Arabian Gulf Ports and Yemen/Africa, in the month of May is to sail along the coast of Southern Oman and after crossing Kuria Muria Islands and Ras Madraka and set course North easterly to Gujarat. But the coordinates provided by the rescuing vessel showed that the rescuing vessel was positioned at 200 miles North. Therefore, the Court observed that the Surveyor was rightly compelled to draw the inference that subject vessel could not have been in the area where she reportedly sank.

Noting that the Directorate General (DG) of Shipping had issued a Circular dated 31-03-2010 prohibiting the operations/trading in waters South or West of the line joining Salalah and Male, the Court opined that the Circulars issued by the DG Shipping, especially with regard to the safety and security of the vessels and the crew are to be read as part and parcel of the policy conditions.

Allegation of Piracy Attack

Regarding the allegation of a piracy attack, the Court noted that there was a query on 25-10-2010 from both the coast guard and DG Shipping about a piracy attack on the subject vessel, and the same was denied by the complainant in its reply.

Again on 27-10-2010, a query was made through email about the position of the vessel on 23-10-2010, the current position of the Dhow, and the crew list. To which the complainant had replied on the same day that the vessel was near Madarka Yemen on 25-10-2010 and that the exact position on 23-10-2010 was not known.

Hence, it was clear that there was no piracy attack. However, the Court held that the exchange of emails about the suspected piracy attack demonstrated that at least the vessel was plying in the prohibited location.

Discrepancies on the Part of the Complainant

After analysing the facts of the case, the Court noted the following discrepancies on the part of the complainant:

(i) The complainant did not state anywhere in the complaint where exactly the mishap had happened.

(ii) The complainant relied on Column 47 of the Marine Casualty Report issued by the Indian Marine Mercantile Department, to show that the vessel sank due to bad weather. But interestingly, column 47 of the report does not contain any detail except stating broadly that there was rough weather.

(iii) Moreover, Columns 50 to 53 exposed the falsity of the statements made by the captains of both the ships to the Customs Authorities as according to Columns 50 and 51, the incident happened at 4:00 a.m. local time on 30-05-2011 but the captains of both the ships state that the incident had happened at approximately 10:00 a.m.

Conclusion

In view of the above, the Court held that the delay on the part of the Insurance Company in securing the Final Survey Report and the further delay in issuing the letter of repudiation, could not per se lead to the complaint being allowed. The Court opined,

“The Consumer Forum which has a limited jurisdiction to find out if there was any deficiency in service, could not have allowed the complaint on the basis of sketchy pleadings supported by doubtful evidence.”

Consequently, the Court concluded that the NCDRC was in error in allowing the complaint since there was no categorical evidence of any deficiency in service on the part of the insurer. Hence, the appeal was allowed and the impugned order was set aside.

[New India Assurance Co. Ltd. v. Shashikala J. Ayachi, 2022 SCC OnLine SC 874, decided on 13-07-2022]

*Judgment by: Justice V. Ramasubramanian


Advocates who appeared in this case :

Gaurav Agrawal, Advocate, for the Appellant;

Senior Advocate Siddhartha Dave, Advocate, for the Insured.


*Kamini Sharma, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

National Disputes Redressal Commission (NCDRC): The Coram of Justice R.K. Agrawal (President) and Dr S.M. Kantikar (Member), on finding that a child was found to be HIV positive after 5 years of his operation for correction of diaphragmatic hernia, held that compensation, in this case, cannot be measured in monetary terms.

Background


The appellants challenged against the impugned order passed by the State Consumer Disputes Redressal Commission whereby the appellants 2 and 3 were directed to pay a sum of Rs 10 lakh holding liable for medical negligence.

Facts of the Case


The complainant, Master Akash after the birth at the age of 3 days was operated on for the correction of diaphragmatic hernia and the same was performed by OP 3 at Kalawati Saran Children Hospital (OP 2). During the operation, the baby was given a blood transfusion twice and the blood was brought from the Blood Bank at Sucheta Kriplani Hospital (OP 4).

In the year 2003, Master Akash developed a disease of eye and after consultation, X-rays chest, blood test were conducted, but it was alleged that the treating Doctor never advised HIV testing because of fear being exposed. Again in 2005, the child suffered diffuse pain in the abdomen and was consulted in OPD and on the insistence of the well-wishers, the parents of Master Akash got HIV Testing Done.

In 2006, it was reported that the child was HIV Positive – AIDS and he was admitted for further treatment to Safdarjung Hospital. Later, he remained under observation at AIIMS and Safdarjung Hospital.

Further, it was alleged that the entire episode was a sheer deficiency and medical negligence on the part of the OPs.

On being aggrieved, the complainant filed a complaint before the State Commission seeking compensation of Rs 22 lakhs and 18% interest. The State Commission partly allowed the complaint and directed the OPs 2 and 3 to pay Rs 10 lakhs as compensation.

Further, on being aggrieved with the above, the present appeal was filed by the OPs.

Analysis, Law and Decision


The Commission observed that,

“Contaminated blood is a potential source of transmission of HIV.”

In view of the above, the possibility of contracting HIV from blood or other blood-contaminated appliances cannot be excluded in the case of Master Akash.

Coram noted that, the Opposite Parties failed to produce the blood bank register and the test reports to prove that the blood units were HIV negative. It is pertinent to note the B+ blood was issued twice.

Further, it was evident that the child Akash was detected HIV positive in the year 2006 i.e. after 5 years of blood transfusion and during the said period he frequently suffered recurrent respiratory tract infections and took treatment from various hospitals.

Coram stated that, there was a possibility of HIV infection due to other sources cannot be ruled out. Hence, it is difficult to conclusively attribute the negligence of the OPs who transfused blood to Master Akash.

“…the child contracted HIV and throughout his life he has to live with HIV and he subsequently likely to develop complications of AIDS.”

Therefore, considering the facts and the nature of disease, in the ends of justice, Commission affirmed the compensation awarded by the State Commission.

Coram added that, the allegation of the Complainant’s son of having contracted HIV from the transfusion of contaminated blood at KSCH, which was supplied by RSSB blood bank. As per Schedule F (K) to the Drugs and Cosmetic Rules, it is made to try to perform tests on blood for transmissible diseases like HIV, Hepatitis B and C, Malarial Parasites, VDRL and syphilis. Complete donor screening with a detailed questionnaire was very important.

“If the blood donors are in window period, HIV test may be negative.”

The next pivotal question is whether or not the treating doctor had taken a valid or real Consent from the Complainant before the blood transfusion.

The OPs did not place any cogent evidence in regard to the above, hence it amounts to a deficiency in service of the treating doctors.

Moving further, the Commission found that it has been 2 decades, therefore at this stage discussion on “ifs” and “buts” is certainly injustice to the HIV victim and against the object of the benevolent Consumer Protection Act.

Coram noting the fact that the complainant had claimed compensation of Rs 22 lakhs with interest @18% per annum expressed that, to award just and fair compensation, several points are to be considered like the actual expenses for the medical treatment, travel and emotional sufferings of the parents.

Adding to the above, the Commission stated that the life expectancy of Master Akash cannot be ignored and the same would depend on strict regular ART and a healthy diet.

“At present, the child is around 24 years of age. Certainly, he has already undergone untold sufferings and in future, he will still continue to suffer HIV related stigma and discrimination. The compensation cannot be measured in monetary terms.”

Hence, in Commission’s opinion, on priority, the child should be provided adequate health facilities and benefits through different welfare schemes of the Government for HIV Positive people.

In view of the above discussion, the appellant was directed to pay Rs 10 lakhs to the complainant. [Government of India v. Master Akash, FA No. 764 of 2012, decided on 25-5-2022]


Advocates before the Commission:

For the Appellants: Mr Sanjib Kumar Mohanty, Advocate

For the Respondents: Mr Deepak Dewan, Advocate and Mr Virender Kumar, AR

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): C. Viswanath, Presiding Member, held that the complainant was not investing money in the share market exclusively for earning his livelihood, hence the same was he did not fall under the definition of Consumer.

Instant revision was filed by the petitioner under Section 21(b) of the Consumer Protection Act, 1986 against the order passed by the State Consumer Disputes Redressal Commission.

The revision petition was filed with a delay of 116 days.

Factual Background

The complainant/petitioner had purchased 2000 equity shares of Aravinda Remedies and 200 equity shares of Reliance Power Ltd. by making payments of Rs 13,700 and Rs 49,400 respectively. The OP delivered 1000 shares of Aravinda remedies instead 2000 shares amounting to Rs 6,850 leaving a refundable amount of Rs 6,850.

Further, OP delivered 200 shares of Reliance amounting to Rs 47,400 leaving a refundable amount of Rs 1,960. When the complainant enquired about his Demat Account, he came to know that 200 shares of Reliance Power Ltd. were transferred to the account of Ureka Stock and Share Broking Services without intimation to the complainant.

The OP also did not make a payment of Rs 27,480 being the differential price of the share which were credited to the Demat account of the complainant.

Aggrieved by the non-refunding of the aforesaid amount by the OP, the complainant filed the consumer complaint.

Complaint was partly allowed before the District Forum and on being aggrieved with the same, the complainant approached the State Commission, wherein the matter was remanded to District Forum and the forum dismissed the complaint as barred by limitation.

Further, the State Commission also dismissed the appeal since the transactions involved were commercial in nature.

Analysis, Law and Decision

Maintainability

State Commission had dismissed the complaint with the observation that the complainant was not a “consumer” as he was dealing in the share market.

As per Section 2(1)(d) of the Consumer Protection Act, 1986, a consumer is a person who buys goods or hires or avails services for consideration. The said section, however, carves out an exception by providing that the person who purchases goods or hires/avails services for the commercial purposes shall not be included in the definition of consumer.

Though Explanation to Section 2(1)(d) provides that if such services are availed exclusively for earning livelihood, he will be considered as a “Consumer”.

State Commission relied on the Judgment of this Commission in Steel City Securities Ltd. v. G.P. Ramesh, Revision Petition No. 3060 of 2011 and dismissed the complaint with the observation that the transaction was commercial in nature and the complainant was not a “consumer”.

Supreme Court’s decision in Morgan Stanley Mutual Funds v. Kartick Das, (1994) 4 SCC 224 was also cited, and the law laid down by the Supreme Court still holds good.

“33. Certainly, clauses (iii) and (iv) of Section 2(1)(c) of the Act do not arise in this case. Therefore, what requires to be examined is, whether any unfair trade practice has been adopted. The expression ‘unfair trade practice’ as per rules shall have the same meaning as defined under Section 36-A of Monopolies and Restrictive Trade Practices Act, 1969. That again cannot apply because the company is not trading in shares. The share means a share in the capital. The object of issuing the same is for building up capital. To raise capital, means making arrangements for carrying on the trade. It is not a practice relating to the carrying of any trade. Creation of share capital without allotment of shares does not bring shares into existence. Therefore, our answer is that a prospective investor like the respondent or the association is not a consumer under the Act. Q. 2: Whether the appellant company trades in shares?”

Hence, the complainant was not a consumer and the state commission had passed a well-reasoned order. [Baidyanath Mondal v. Kanahaya Lal Rathi, 2022 SCC OnLine NCDRC 62, decided on 29-4-2022]


Advocates before the Commission:

For the Petitioner: Mr Sahej Uban, Advocate with Petitioner in Person

For the Respondent: Mr Kanhaiya Lal Rathi (Respondent No.3 in person and

AR for Respondents Nos. 1 & 2)

Bombay High Court
Case BriefsHigh Courts

Bombay High Court: Stating that, the Courts cannot examine the constitutional validity if a situation created by impugned legislation is irremediable, the Division Bench of V.M. Deshpande and Amit B. Borkar, JJ., addressed a matter wherein the constitutional validity of Section 29A of the Consumer Protection Act, 1986 has been challenged.

Factual Matrix


District Consumer Forum had passed an order signed by only two Members without the President being party to it.

As per the said order, the petitioner-developers were directed to execute the Sale Deed and deliver possession of the said plot.

Petitioners, instead of availing the statutory remedy under the provisions of the said Act, filed the present petition under Articles 226 and 227 of the Constitution of India challenging the validity of the judgment mainly on the ground that the exercise of powers by the District Consumer Forum without the President being its party is illegal.

Section 29A of the Act, which permits the District Forum to pass judgment without the President, violates Article 14 of the Constitution of India.

Analysis, Law and Decision


High Court stated that the Supreme Court had repeatedly stated that Constitutional Courts can strike down legislative enactments only on two grounds:

i) The legislator is not competent to make the law;

ii) that such statute or provision takes away or breaches any of the fundamental rights enumerated in Part-III of the Constitution of India.

Well Settled Law

Any enactment cannot be struck down on the ground that Court thinks it is unjustified. The Court cannot pass any judgment on the wisdom of the Parliament and Legislators consisting of representatives of the people, who are supposed to know and be aware of the needs of the people.

“…presumption of constitutionality is always in favour of Legislation only if the contrary is shown. The burden of establishing unconstitutionality is always on a person who challenges its vagaries.” 

Bench opined that the language of Section 29A of the Act is intended to provide for a situation where a President of State Commission or District Forum is non-functional, either having not been appointed in time or is on leave due to reasons beyond his control.

The scheme of appointment and adjudication of consumer disputes is laid down under the Act to make the District Forum or State Commission continuously functional, allowing the Members in the absence of the President to function in a situation beyond the control of the Members of the Forum.

High Court expressed that, the mere absence of the President for reasons beyond control alone is not sufficient for striking down Section 29A of the Act as unconstitutional, particularly when such provision has been made to ender the District Forum of State Commission functional in the absence of the President.

Therefore, it was held that there was no merit in the challenge to the constitutional validity of Section 29A of the Consumer Protection Act, 1986. [Aparna Abhitabh Chatterjee v. Union of India, 2022 SCC OnLine Bom 760, decided on 24-3-2022]


Advocates before the Court:

Shri S. V. Bhutada, Advocate for petitioners.

Shri Nandesh Deshpande, ASGI for respondent no. 1.

Shri M. K. Pathan, APP for respondent no. 2/State.

Shri H. R. Gadhia, Advocate for respondent no. 4.

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): The Coram of Dinesh Singh (Presiding Member) and Justice Karuna Nand Bajpayee (Member) expressed that in the ‘service’ of ‘housing construction’, if, in a particular case, “compensation” is computed “by way of interest” on the deposited amount it shall not be differently treated than the other cases in which the term “interest” may not at all be used in computing the compensation.

Background

This Commission had by an earlier order directed that OP shall refund the entire principal amount of Rs 2,74,79, 831,48 to the complainant alongwith compensation in form of simple interest at the rate of 11% and OP shall also pay a sum of Rs 25,000 as the cost of litigation.

Both sides admitted that the entire amount paid by the decree holder to the judgment debtors has been refunded along with the cost of litigation.

Issue for Consideration

Whether or not compensation which was computed by way of interest on the deposited amount, attracts TDS?

Analysis, Law and Decision

Coram stated that the only issue was in respect of deduction of tax at source on the “compensation” awarded, which in the present case was computed “in the form of simple interest” on the deposited amount.

Certainly, tax is not deducted at source if the compensation is awarded in the form of a lumpsum amount, or when the formula or yardstick, if and as any adopted for the purposes of computation, does not involve or refer to the term “interest”. It will therefore be erroneous to deduct tax at source just because in a particular case the formula or yardstick adopted for computation alludes to the term “interest”.

Commission clarified that it is neither adding to nor subtracting from the Income Tax Act. If a person is responsible to pay income tax on any revenue or capital receipt under the aid Act, he will be so liable.

Adding to the above, Coram stated that compensation awarded under the Consumer Protection Act is for the loss or injury suffered and is universally applicable to both goods and services inclusive of the service relating to housing construction.

The context and meaning of the term “interest” if used in the mode of calculation or a formula or yardstick adopted for computing compensation under section 2(1)(d) of the Consumer Protection Act is identifiably different from the context and meaning as used in Section 194A of the Income Tax Act.

Hence, there was no justification for deducting tax at source in the instant case.

Concluding the matter, the Commission observed that the tax deducted at source on compensation appeared to be a mistake with no malafide and even though the tax ought not to have been deducted it is also seen that the same has not been retained by the judgment debtors and deposited in the account of the decree-holder in the Income Tax Department.

In view of the above discussion, the matter was closed. [Rita Bakshi v. M3M India Ltd., 2022 SCC OnLine NCDRC 40, decided on 2-3-2022]


Advocates before the Commission:

For the Appellant: Mr. Deepak Narayana, Advocate

For the Respondent: Mr. A. K. Takkar, Advocate with Ms. Syashee Pesswani, Advocate

Kerala High Court
Case BriefsHigh Courts

Kerala High Court: N. Nagaresh, J., decided whether medical service would fall within the ambit of Section 2(42) of the Consumer Protection Act, 2019 unless of course the service is free of charge or is under a contract of personal service.

Background

Doctors practising Modern Medicine in Kannur filed the present petition seeking to quash the orders of District and State Consumer Disputes Redressal Commissions, as sans jurisdiction and hence illegal.

They sought to declare that the Consumer Fora under the Consumer Protection Act, 2019 does not have jurisdiction to take cognizance of complaints in respect of medical negligence and deficiency in medical service as a medical profession and practice and practice does not come within the purview of term ‘service’ defined under Section 2(42) of the Consumer Protection Act, 2019.

Contention

Senior Counsel assisted by the counsel for the petitioners argued that the medical service/practice is not included in the illustrations in the inclusive definition of the term ‘service’ under Section 2(42) of the Consumer Protection Act, 2019 and hence the intention of the Parliament is clear that the Parliament did not want to include medical services/profession within the purview of the term ‘service’. The learned Senior Counsel pointed out that the Draft Bill of the new Consumer Protection Act, 2019 had included health sector among the illustrations of facilities that are treated as ‘service’ in Section 2(42) of the new Act. However, the health sector was removed from among the illustrations under Section 2(42). The obvious reason is that the lawmakers intended to exclude medical service/profession from the purview of the new Act.

Analysis

High Court noted the argument of the petitioners that a complaint in respect of medical negligence or deficiency in medical service was not maintainable before the District or State Consumer Disputes Redressal Commission for the reason that Section 2(42) of the Consumer Protection Act, 2019 does not take within its ambit the medical profession/medical services.

Supreme Court’s decision in Indian Medical Association v. V.P. Shantha, (1995) 6 SCC 651, considered the question whether medical negligence/deficiency in the medical services would fall within the ambit of ‘service’ and it was held that the services rendered to a patient by a medical practitioner by way of consultation, diagnosis and treatment, both medical and surgical would fall within the ambit of ‘service’ as defined under Section 2(1)(o) of the Act, 1986.

The Act, 1986 was substituted by the Consumer Protection Act, 2019, wherein the term ‘service’ is defined under Section 2(42).

Further, it was added that both Sections 2(42) of the Act, 2019 and Section 2(1)(o) of the Act, 1986 more or less have the same meaning and implications. The only difference is that Section 2)42) of the Act, 2019 is more descriptive and takes specifically in the banking, financing, insurance, transport, processing supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information.

High Court opined that Section 2(42) of the Act would show that the Parliament intended to specifically underline that, certain services like Banking, Financing, Insurance, transport, etc., which are in the nature of public utility services, would come within the purview of services.

The said definition is inclusive and not exhaustive. Therefore, all services which are made available to potential users would fall under Section 2(42), except those services rendered free of charge or under a contract of personal service. The words “but not limited to” appearing in Section 2(42) clarifies the intention of the Parliament.

Hence,

Medical services therefore would indeed fall within the ambit of Section 2(42), unless of course the service is free of charge or is under a contract of personal service.

Bench added that, the District Commission considered the issue of maintainability of the complaint and noted that there was no difference to the meaning of ‘service’ in the old Act and the new Act. Therefore, District Commission rejected the objections as to the maintainability of the complaint.

Even the State Commission held that since no conscious change in the definition of “service” was made in the new Act, the petitioner’s contention that Health Sector had been deliberately excluded by the Parliament while enacting the new law, could not be accepted.

High Court dismissed the petition in view of the above. [Dr Vijil v. Ambujakshi T.P., 2022 SCC OnLine Ker 863, decided on 10-2-2022]


Advocates before the Court:

For the Petitioners:

By Advocates:

GOPAKUMARAN NAIR (SR.)

SOORAJ T.ELENJICKAL

RENOY VINCENT

ARUN ROY

HELEN P.A.

SHAHIR SHOWKATH ALI

For the Respondents:

By Advocates:

SRI.MANU S, ASGI

SRI.V.GIREESH KUMAR, CGC

Case BriefsTribunals/Commissions/Regulatory Bodies

District Consumer Disputes Redressal Commission, Kolkata Unit-II(Central): While holding against the service charge, charged by a restaurant, Coram of Swapan Kumar Mahanty (President) and Ashoke Kumar Ganguly (Member) directed for return of the amount charged as “service charge” along with compensation.

What led to the filing of the present complaint?

The complainant and his friends went OP-1/Restaurant and found that the restaurant food was of poor quality and the behaviour of the boys was outlandish.

OP-1 issued a bill amounting to Rs 3,563 including 10% service charges though the complainant insisted on not including 10% service charge over the invoiced amount, since service charge is not mandatory, and it is upto the consumer either to pay or refute the same.

To avoid embarrassment, the complainant was compelled to pay the said amount.

In consequence to the above said, complainant, vide a legal notice requested the OP-1 to tender their apology in the appropriate form and further asked to pay compensation to the tune of Rs 25,000 within 15 days.

Since the notice remained unattended, the complainant filed the present complaint.

Analysis and Discussion

Consumer Forum found the conduct of OP-1 as illegal, malafide and contrary to the principles of law as stipulated under the Consumer Protection Act and the OP-1 deliberately failed to ameliorate the grievance of the complainant.

Coram held that OP-1 had committed unfair trade practice towards the complainant.

The OPs must have been aware of the guidelines of Fair Trade Practice related to changing of service charge from the consumers by hotels/restaurant issued by Department of Consumer Affairs, Government of India, inter alia, stipulating that service charge on hotel and restaurant bill is “totally voluntarily” and not mandatory.

Forum’s Directions

  • OP-1 to refund Rs 308 as service charge over the invoiced amount of Rs 3,085.
  • OP-1 to pay compensation of Rs 10,000 for mental agony and harassment to the complainant.
  • Lastly, OP-1 was directed to pay a sum of Rs 3,000 as litigation cost.

In view of the above, the complaint was disposed off. [Arkadeep Sarkar v. Yauatcha, Kolkata; Complaint Case No. CC/391/2019, decided on 7-1-2022]


Advocates before the Forum:

For the Complainant: Sunil Kumar Gupta, Advocate for Complainant 1


Also Read:

Fair Trade Practices | Service charge despite GST

Case BriefsSupreme Court

Supreme Court: In a case where the NCDRC had condoned a delay for a period beyond the prescribed statutory outer limit just before the decision of the Constitution Bench on 4 March 2020 wherein it was held 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 3-judge bench of Dr. DY Chandrachud*, Surya Kant and Vikram Nath, JJ has held that the Constitution Bench judgment would not affect applications that were pending or decided before 4 March 2020.

The Court made clear that such applications for condonation would be entitled to the benefit of the position in Reliance General Insurance Co. Ltd. v.  Mampee Timbers & Hardwares Pvt. Ltd.,  (2021) 3 SCC 673, which directed consumer fora to render a decision on merits.

Factual Background

While entertaining a Consumer Complaint, the NCDRC has condoned the delay of 100 days in filing a written statement. The order of the NCDRC was a few days before the judgment of a Constitution Bench dated 4 March 2020, in New India Assurance company Limited v. Hilli Multipurpose Cold Storage Private Limited, (2020) 5 SCC 757 which held that the limitation period under Section 13(2)3 of the Consumer Protection Act 1986 could not be extended beyond the statutorily prescribed period of forty-five days.

The appellants filed a consumer complaint before the NCDRC on 3 December 2018 based on two insurance policies on the ground of an alleged fire that took place at the factory of the appellant. The respondent received the summons on 20 May 2019 together with the order of the NCDRC and a complete set of papers consisting of the consumer complaint and documents. The respondent filed its written statement on 23 September 2019 together with IA No 15390 of 2019 for condonation of a delay of 100 days. The NCDRC, by its order dated 25 February 2020, condoned the delay subject to the respondent paying costs of Rs 50,000.

What led to the confusion?

A series of judgments, before and after the Constitution Bench verdict, gave contradictory views with respect to discretion of NCDRC to condone the delay beyond 45 days. Here’s how the various Supreme Court verdicts created uncertainty:

Reference to the Constitution Bench

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.

During the pendency of the matter before the Constitution Bench

Bhasin Infotech and Infrastructure Private Limited v. Grand Venezia Buyers Association, (2018) 17 SCC 255

Parties were permitted to file written statements beyond the prescribed limitation period, subject to payment of appropriate costs.

Reliance General Insurance Co. Ltd. v.  Mampee Timbers & Hardwares Pvt. Ltd.,  (2021) 3 SCC 673

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.

Constitution Bench Verdict

New India Assurance company Limited v. Hilli Multipurpose Cold Storage Private Limited, (2020) 5 SCC 757 [Constitution Bench]

The Constitution Bench reiterated the view taken in the case of J.J.Merchant and held 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.

“28. It is true that “justice hurried is justice buried”. But in the same breath it is also said that “justice delayed is justice denied”. The legislature has chosen the latter, and for a good reason. It goes with the objective sought to be achieved by the Consumer Protection Act, which is to provide speedy justice to the consumer. It is not that sufficient time to file a response to the complaint has been denied to the opposite party. It is just that discretion of extension of time beyond 15 days (after the 30 days’ period) has been curtailed and consequences for the same have been provided under Section 13(2)(b)(ii) of the Consumer Protection Act. It may be that in some cases the opposite party could face hardship because of such provision, yet for achieving the object of the Act, which is speedy and simple redressal of consumer disputes, hardship which may be caused to a party has to be ignored.”

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

Matter decided right after the Constitution Bench verdict

Daddy’s Builders Private Limited v. Manisha Bhargava, (2021) 3 SCC 669

The decision was rendered on 11 February 2021 after the judgment of the Constitution Bench in New India Assurance Company Limited (supra). That was a case where the NCDRC in a judgment dated 4 September 2020, had confirmed the order of the Karnataka State Consumer Disputes Redressal Commission dated 26 September 2018 rejecting an application seeking condonation of delay in filing the written statement. Ultimately it was left to the concerned fora to accept written statements beyond the stipulated period of 45 days in an appropriate case. [Read more]

Conclusion

Having regard to the prospective effect of the judgment of the Constitution Bench in New India Assurance Company Limited and the orders in Reliance General Insurance Company Limited and Bhasin Infotech, which had recognized an element of discretion pending the reference, the Court held that no case for interference is made in the order of the NCDRC allowing the application for condonation of delay on merits.

[Diamond Exports v. United India Insurance Company Limited, 2021 SCC OnLine SC 1241, decided on 14.12.2021]


Counsel

For appellant: Advocate Salil Paul


*Judgment by: Justice Dr. DY Chandrachud

Case BriefsDistrict CourtTribunals/Commissions/Regulatory Bodies

Consumer Disputes Redressal Commission Gujarat State, Ahmedabad: Justice V.P. Patel, President and U.P. Jani, Member, addressed an appeal which was raised in light of a complaint raised due to excess of electricity duty being charged.

Appellants filed the instant appeal under Section 15 of the Consumer Protection Act, 1986 on being dissatisfied with the decision of the District Commission.

 Factual Matrix

Complainant obtained electric connection for their industrial undertaking and consumed exclusively low-tension energy from the opponent company. Energy bills were raised by the opponent corporation and said bills included charges of electricity duty liable under the Bombay Electricity Duty Act, 1958 (Electricity Act). Complainant realized in the year 2012 that the opponents have been collecting electricity duty at a higher rate than the prescribed rates under the Electricity Act.

Opponent charged the electricity duty at the rate of 60%, 30%, 15%, 50% or 25% without any basis. Further, it was stated that the charges of electricity duty were collected by the opponent illegally and unconstitutional in service. It was stated that the opponents could charge the electricity duty as per rules, but they have charged at a higher rate than prescribed in the rules.

Vide letter on 19-12-2012, opponent replied that the electricity duty was required to be collected at the rate of 10% as per the rules and they have started to issue bill with electricity duty at the rate of 10%. Therefore, the complainant had filed a consumer complaint about the difference in amount.

Limitation Period 

Limitation prescribed under the local or special act will be applicable and no general provision of limitation Act will be applied for counting prescribed period.

As per Rule 12(1) of the Electricity Rules, the period of limitation prescribed is 1 year to file an application for refund. Electricity Rules were amended with effect from 31-07-2014.

Coram noted that the documents produced by the complainant addressed to the Collector of Electricity Duty can be said to be applicants for a refund of an amount of excess electricity duty under Rule 12 of the Electricity Rules.

Section 3 of Consumer Proetction Act cannot be said to be inconsistent with Rule 12 of the Electricity Duty Rules.

Since the Collector of Electricity Duty did not act in conformity with fundamental principles of judicial procedure, District Consumer Commission had jurisdiction to deal with the matter.

Commission observed that:

It is true that where the statute gives finality to the order of the Collector of Electricity Duty jurisdiction of Courts is excluded. However, Collector of Electricity Duty had not been complied with the fundamental principle of judicial procedure and acted in conformity of Electricity Duty Act.

In view of the above observation, Consumer Court has jurisdiction in this case.

Collector of electricity duty has not considered the period of 1 year under Section 12(2) of the rules and has not passed an order of refund of electricity duty, this amount to deficiency in service as well as unfair practice.

Hence, in the present matter, it was held that the complainant can get refund of the amount of Electricity Duty charge not prescribed under the Electricity Act and Rules.

As per the documentary evidence and arguments of the parties, Commission concluded that the complainant was not entitled to get any amount of electricity duty for last one year. Therefore, the appeal was allowed.

On verifying the amount deposited by appellant the same shall be refunded with interest. [Gujarat Urja Vikas Nigam Ltd. v. Cham Trawi Nets Organisation, Appeal No. 913 of 2014, decided on 24-05-2021]


Additional Read:

Section 2(1)(o) of Consumer Protection Act, 1986: Supply of electricity is included in the definition of service. [for the definition of “service” in CPA, 2019, see S. 2(42)]

Section 2(1)(c) of Consumer Protection Act, 1986: ‘Complainant’ means any allegation in writing made by the complainant that trader or service provider, as the case made, has charged for the goods or for the service mentioned in the complaint a price in excess of the price, fixed by or under any law in time being force.[for the definition of “complainant” in CPA, 2019, see S. 2(6)]

Case BriefsTribunals/Commissions/Regulatory Bodies

Delhi State Consumer Disputes Redressal Commission (DSCDRC): Coram of Dr Justice Sangita Dhingra Sehgal (President) and Anil Srivastava (Member) decided on the question whether if a car is purchased for the personal use of a company’s Vice President, would the acquisition of such a car come under the Consumer Protection Act.

Present complaint was filed against Mercedes Benz India Private Limited and T&T Motors Limited.

As per the facts of the matter, complainant 1 had purchased a ‘Mercedes Benz C 220’ Car from OP 2 for the personal use of Complainant 2, being Vice president of the company. The said car broke down during the rainfall in Delhi and was sent to OP 3 for repair.

However, till the finding of the present complaint, the complainants received more than five estimates for repair of the said car from the opposite parties, which in total amounted to more than the value of the car.

The car was not delivered by the OPs even after the lapse of 3 months due to which the complainants raised grievances to the OPs, alleging manufacturing defect in the vehicle resulting in deficiency of service and unfair trade practice.

OPs contended that the complainants cannot be stated to be a consumer under the Consumer Protection Act 1986 as the said car was purchased by the company for its Vice president and the same amounted to commercial purpose.

Further, it was added that the vehicle was used in violation of the instructions contained in Owner’s manual and due to negligence, the car broke down.

Cause for delay in repairing was due to the late approval by the Insurance company.

Analysis, Law and Decision

Whether Complainants are consumer or not?

 Bench referred to the decision of National Consumer Disputes Redressal Commission in Crompton Greaves Limited v. Daimler Chrysler India Private Limited, 2016 SCC OnLine NCDRC 2121 wherein it was observed that, If a car or other goods are purchased or the services are hired or availed by a company for the personal use of its directors or employees, the purpose behind such acquisition is not to earn profits or to advance the business activities of the company. 

The acquisition of the goods or the hiring or availing of services, in order to bring the transaction within the purview of section 2 (1) (d) of the Consumer Protection Act, therefore, should be aimed at generating profits for the company or should otherwise be connected or interwoven with the business activities of the company. The purpose behind such acquisition should be to promote, advance or augment the business activities of the company, by the use of such goods or services.

Hence, relying on the above-settled proposition of law, Commission in the present matter held that complainants are a consumer under the Consumer Protection Act, 1986 as the said car was purchased for the personal use of the complainant 2 and the purpose behind such purchase was not to earn profits or to advance the business activities of the company.

Deficiency of Service

 OPs failed to show any documentary evidence that the car broke down due to negligence on the part of the complainants or due to the violation of instructions contained in Owner’s manual, hence Commission was in consonance with the contention of the complainants that the said car suffered from some manufacturing defects which were suppressed by the OPs.

Complainant 2 was put to great inconvenience and remained without a vehicle for 4 months.

Bench directed the OP 2 to pay Rs 2,50,000 to the complainants as compensation for inconvenience, mental agony and harassment faced by the complainants and Rs 50,000 as litigation costs. [CJ DARCL Logistics Ltd. v. Mercedes Benz India (P) Ltd., Complaint No. 584 of 2013, decided on 05-05-2021]


Advocates before the Commission:

Manu Beri, Counsel for the Complainant.

Rabiya Thakur, Counsel for OP-1.

Counsel for OP-3.

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Dinesh Singh, Presiding Member, held that,

“…selling a second-hand car, in place of a new car, after accepting the full consideration price for a new car, inter alia constitutes ‘unfair trade practice’ under Section 2(1)(r) of the Consumer Protection Act.”

Revision Petition was instituted under Section 21(b) of the Consumer Protection Act, 1986 impugning the State Commission’s Order.

Short point in the present case was the delivery of a second-hand car, instead of a new car, by the OPs to the Complainant, after obtaining the full consideration price of a new car.

State Commission determined that the District Forum was correct in concluding that a second-hand car was delivered to the complainant instead of a new one. Further, it was also determined that the compensation awarded by the District Forum was just and equitable.

State Commission’s Order: 

“OPs/respondents refuted the allegations leveled by the complainant in the complaint and averred that at the time of Chhattisgarh Rajyotsav Fair, the vehicle was booked by Hardeep Singh Hora, on payment of Rs.10,000/-. But, later on, no amount was paid by that person and the vehicle was never delivered to Hardeep Singh Hora and so it remained a branch new vehicle and it was sold to the complainant. As such it was not an old or secondhand vehicle and so no amount was payable to the complainant as compensation.” 

Bench noted from the examination made by two fora below, after obtaining the total consideration price of new car, a second-hand car, instead of a new car, was delivered by the OPs to the Complainant.

Commission remarked that the present case revolved around unfair trade practice and stated that:

Factum of selling a second-hand car, in place of a new car, after accepting the full consideration price for a new car, inter alia constitutes ‘unfair trade practice’ (“- – unfair method or unfair or deceptive practice – -”) within the meaning of Section 2(1)(r) of the Act 1986.

Hence, the district forum’s order which was upheld by the State Commission was sustained. [Shashank Shah v. Gurjeet Singh Maan, 2021 SCC OnLine NCDRC 171, decided on 01-04-2021]


Advocates before the Commission:

For the petitioner: Mr Manish Kumar, Advocate with Mr Piyush Kaushik, Advocate

For the Respondent: Mr Kaushik Mishra, Advocate

National Consumer Disputes Redressal Commission
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 BriefsHigh Courts

Delhi High Court: Prathiba M. Singh, J., directed that the National Consumer Disputes Redressal Commission to pronounce judgment in a case pending for 15 years, within two weeks of the date it is listed.

In the present matter, petitioners concern was the non-pronouncement of orders/judgment by the National Consumer Dispute Redressal Commission (NCDRC).

Petitioner had filed a complaint before the NCDRC alleging negligence by the doctors and hospital – Kanpur Medical Centre Private Ltd., due to which severe burns were caused to her as a newly born infant. Complaint was filed before the NCDRC I April, 2006 and the said complaint has been pending for more than 15 years.

Petitioners Counsel, Raghavendra M. Bajaj, submitted that repeated enquiries were made with NCDRC, but to no avail. Further, an application was moved by the petitioner by seeking re-hearing and pronouncement of judgment, despite which, matter was not listed before any Bench.

Adding to the above, Counsel submitted that he has received intimation that the application is now listed on 23-02-2021.

Supreme Court in the decisions of Anil Rai v. State of Bihar, (2001) 7 SCC 318 and Balaji Baliram Mupade v. State of Maharashtra, 2020 SCC OnLine SC 893 emphasised the importance of timely pronouncement of judgments and orders once submissions are heard.

Recently, in Supreme Court decision of JVNL v. CCM HIM JV [Civil Appeal No. 494 of 2021, decided on 12-02-2021] has reiterated its pronouncement in Anil Rai v. State of Bihar, (2001) 7 SCC 318 while clarifying that the same would not apply to High Courts.

Bench stated that the above pronouncements would apply to Subordinate Courts and tribunals equally.

 The Supreme Court decision in Sudipta Chakrobarty v. Ranaghat S.D. Hospital, 2021 SCC OnLine SC 107, dealt with cases where the NCDRC pronounced operative portions of orders with reasons to follow.

The entire purpose of the Consumer Protection Act, 1986, is supposed to provide speedy justice to complainants, which stands completely defeated in a case of the present nature where the matter has taken more than 15 years to be adjudicated and the same has not reached a conclusion yet.

Following directions have been issued to NCDRC:

  1. Whenever judgments are reserved, they ought to be pronounced in accordance with the timelines prescribed in Anil Rai v. State of Bihar, (2001) 7 SCC 318
  2. If orders are not pronounced within six months of being reserved and an application is filed by either party, the same ought to be listed before the President, NCDRC by the Registry of the NCDRC within two days, without fail. The NCDRC may issue a practice direction to this effect so that the same is complied with by the Staff of the Registry;

Hence, Court directed NCDRC to pronounce the judgment within two weeks of the date it has been listed. [Sandhya Srivastava v. Dr Neelam Mishra, 2021 SCC OnLine Del 892, decided on 18-02-2021]


Advocates who appeared for the matter:

For the Petitioner: Raghavendra M. Bajaj, Garima Bajaj, Agnish Aditya & Nikhil Bamal, Advocates

For the Respondents: Ajay Saroya, Advocate for R-3.

Case BriefsDistrict Court

State Consumer Dispute Redressal Commission, Odisha (SCDRC): Dr D.P. Choudhury (President) modified the compensation amount awarded to a Law Student in light of being subjected to ‘Deficiency of Service’ and ‘Unfair Trade by ‘Amazon’.

The instant appeal was filed under Section 15 of the erstwhile Consumer Protection Act, 1986.

Factual Matrix

While the appellant was in his first year of law school, the OP had floated an offer for sale of a Laptop without Laptop Bag for Rs 190 against the price of Rs 23,499.

OP had confirmed for placing of the order and two hours after receiving the confirmation, the appellant received a phone call from the OP’s Customer Care Service Department stating that the subject order stood cancelled due to the price recession issue.

Since the complainant was in need of a laptop to prepare his project, he raised an objection for such cancellation.

On not receiving any response from the OP, complainant issued a legal notice.

Deficiency in Service

Appellant had to purchase another laptop but suffered from mental agony for such cancellation, hence filed a complaint alleging the deficiency in service and unfair trade practice.

Complainant claimed compensation of Rs 50,000 and Rs. 10,000 towards litigation cost.

District Forum had allowed the complaint partly by directing the OP to pay compensation of Rs 10,000 for mental agony and to pay Rs 2,000 towards the cost of litigation.

Hence, the aforesaid impugned order was challenged by the complainant/appellant stating that the District Forum committed error in law by not deciding to direct to pay Rs 50,000 as compensation.

Analysis, Decision and Law

Bench observed that “When there is an advertisement made for offer placed by the OP and made the offer as per the material available on record and complainant placed the order and same got confirmed, the agreement is complete.”

Another aspect to be noted was that, when the OP had allowed Rockery Marketing at his platform as per written version, the responsibility of the OP could not be lost sight of.

Since there was a breach of contract by OP, OP is held to be liable to pay the damages.

Commission agreed with District Forum’s observation that OP not only negligent in providing service but was also involved in unfair trade practice.

Taking all the factors discussed above for consideration, Bench concluded that compensation awarded should be of Rs 30,000 for unfair trade practice and punitive damages of Rs 10,000. Further, with regard to the cost of litigation Rs 5000 needs to be awarded.

On failing to make the above payments to the complainant within 30 days, the said amounts will carry interest at the rate of 12% per annum.

In view of the above, the appeal was disposed of. [Supriyo Ranjan Mahapatra v. Amazon Development Centre India (P) Ltd., First Appeal No. 492 of 2018, decided on 11-01-2021]


Read More:

District Consumer Forum directs ‘Amazon’ to pay compensation for “deficiency in services”

Legislation UpdatesNotifications

National Consumer Disputes Redressal Commission

Central Government establishes a National Consumer Disputes Redressal Commission to be known as the National Commission.

The President and every other member of the National Commission appointed immediately before the commencement of the Consumer Protection Act, 2019 shall continue to hold office as the President and Member of the National Commission as provided in Section 56 of the said Act.

NOTIFICATION


Ministry of Consumer Affairs, Food and Public Distribution

[Notification dt. 11-01-2020]

Law made Easy

[Disclaimer: This note is for general information only. It is NOT to be substituted for legal advice or taken as legal advice. The publishers of the blog shall not be liable for any act or omission based on this note]

The interest of the consumer has to be kept in the forefront and the prime consideration that an essential commodity ought to be made available to the common man at a fair price must rank in priority over every other consideration.”

Y.V. Chandrachud, J. in Prag Ice & Oil Mills v. Union of India, (1978) 3 SCC 459

 Introduction

“An Act to provide for protection of the interests of consumers and for the said purpose, to establish authorities for timely and effective administration and settlement of consumers’ disputes and for matters connected therewith or incidental thereto”

The long title of the new Consumer Protection Act, 2019 (“2019 Act”) in the least number of words explains the whole and sole purpose of the Act. While the Consumer Protection Act, 1986 had nearly the same long title, but being around three decades old, did not inculcate the needful things that would have solved the problems of the modern and technology-dependent consumers, which is why a need was felt to replace the whole Act with a new one and bring a fundamental change.

The Parliament passed the Consumer Protection Bill, 2019 on 06-08-2019 to replace the Consumer Protection Act, 1986. The President of India gave its accent to the 2019 Act on 09-08-2019 and the same came into force on 20-07-2020. The 2019 Act has been enacted for the purpose of providing timely and effective administration and settlement of consumer disputes and related matters.

Related Read:

Substantial portion of Consumer Protection Act, 2019 along with related Rules to come into force on 20th July, 2020

Consumer Protection Act, 2019 comes into force from today

Brief History of Consumer Protection Act in India

Consumer Protection has always been a matter of great concern. In ancient India, effective measures were initiated to protect consumers from crimes in the market place. Ancient law-givers ably described various kinds of unfair trade practices and also prescribed severe punishments for wrongdoers. Mainly, acts of adulteration and false weights and measures were seriously dealt with.

In the medieval period, some Muslim rulers developed well-organized market mechanisms to monitor prices and the supply of goods to the markets. During the British period, the modern legal system was introduced in India and many laws were enacted to protect the interests of consumers generally.

Some of the laws which were passed during the British regime concerning consumer interests were: the Contract Act of 1872, the Sale of Goods Act of 1930, the Penal Code of 1860, the Drugs and Cosmetics Act of 1940, the Usurious Loans Act of 1918, and the Agriculture Procedure (Grading and Marketing Act) of 1937. These laws provided specific legal protection for consumers.

Today, the civil justice system is tainted with deficiencies that discourage the consumer from seeking legal recourse. However, the Consumer Protection Act of 1986, which provided easy access to justice, had brought a legal revolution in India as a result of its cost-effective mechanisms and popular support. However, with the gradual advancements in technology, the age-old 1986 Act was unable to keep up with the grievances of the modern consumer. Thus, a need was felt to substitute the old Act which resulted in the enactment of the Consumer Protection Act, 2019.

Key features of the Consumer Protection Act, 2019

  • The new Act which was drafted keeping in mind the needs of the modern consumers incorporates new terminologies which had no place in the old Act. Under Section 2(1)advertisement” is defined as any audio or visual publicity, representation, endorsement or pronouncement made by means of light, sound, smoke, gas, print, electronic media, internet or website and includes any notice, circular, label, wrapper, invoice or such other documents; which means that now a consumer who is aggrieved due to some kind of misleading advertisement can approach the authorities concerned seeking relief.
  • A provision for a minor being a consumer has been introduced under Section 2(5)(vii) of the Act where the parent or legal guardian can approach the authorities through the minor seeking relief.
  • A new clause of “product liability action[Section 2(35)] has been added with definition of “complaint” under Section 2(6)(vii) which lies against the product manufacturer [Section 2(36)], product seller [Section 2(37)] or product service provider [Section 2(38)] as the case may be.
  • Under the new Act, “consumer” is defined under Section 2(7) as a person who “buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose” or “hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such service other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person, but does not include a person who avails of such service for any commercial purpose.”

Thus, a consumer will now mean any person who “buys any goods” and “hires any services” which shall include both online and offline transactions through electronic means, teleshopping, direct selling or multi-level marketing.

  • The most important feature of the new Act definitely being the rights of the consumer under Section 2(9), which 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.
  • Section 2(10) and 2(11) of the Act talk about “defect” and “deficiency” “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; whereas “deficiency” means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service and includes—(i) any act of negligence or omission or commission by such person which causes loss or injury to the consumer; and

(ii) deliberate withholding of relevant information by such person to the consumer.

  • The new additions include “e-commerce” Section 2(16), “electronic service provider” Section 2(17) along with the prescribed liabilities in relation to internet frauds. This has broadened the scope of the Act and it looks after the better protection of the rights of e-consumers and also enables them to proceed against e-commerce websites in the event of any infringement or violation.
  • Thereafter, a series of new terminologies have been added to Section 2 of the Act, for example a brand new concept of “product liability” has been included in the new Act which has been defined under Section 2(34) of the Consumer Protection Act, 2019 as “the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto;” and in lieu of which the concepts of “product liability action”, “product manufacturer” etc. have also been included in the Act.

Central Consumer Protection Authorities

One of the major drawbacks of the previous Act was that there were no protection authorities in order to keep check, regulate and address the grievances of the consumers in an effective and speedy manner. Chapter III of the 2019 Act provides with the Central Consumer Protection Authority (CCPA) which has been added in order to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers as a class. Central Authority shall consist of a Chief Commissioner and such number of other Commissioners as may be prescribed, to be appointed by the Central Government to exercise the powers and discharge the functions under this Act. It will consist of an investigation wing headed by a Director-General for the purpose of conducting inquiry or investigation under this Act as may be directed by the Central Authority.

An appeal to an order passed by the CCPA on this issue can be filed before the National Commission within a period of 30 days from the date of the receipt of such order.

How to make a complaint?

Section 17 states that a complaint relating to violation of consumer rights or unfair trade practices or false or misleading advertisements which are prejudicial to the interests of consumers as a class, may be forwarded either in writing or in electronic mode, to any one of the authorities, namely, the District Collector or the Commissioner of Regional Office or the Central Authority.

The Central Authority under Section 21 has been provided with the powers to issue directions and penalties against false or misleading advertisements.

Consumer Dispute Redressal Commission (CDRC)

Chapter IV of the Act deals with the Establishment, Qualifications, Jurisdiction, Manner of Complaint, Proceedings etc. regarding the Consumer Disputes Redressal Commission. CDRC is empowered to resolve complaints with respect to unfair and restrictive trade practices, defective goods and services, overcharging and goods which are a hazard to life and safety. It has to be set up at three levels, i.e. the District, State and National levels (commissions). In comparison to the old Act, the jurisdictions of the commissions have been enhanced.

      District Consumer Disputes Redressal Commission (previously known as the District Forum):

District Commission shall consist of a President and not less than two and not more than such number of members as may be prescribed, in consultation with the Central Government. The District Commission now has the jurisdiction to entertain complaints where the value of the goods and services paid as consideration does not exceed one crore rupees. Section 34(2)(d) categorically states that the complaint can now also be instituted in a District Commission within the local limits of whose jurisdiction the complainant resides or personally works for gain, apart from filing in the jurisdiction where the other side actually or voluntarily resides, or carries a business, or has a branch office or personally works for gain.

      State Consumer Disputes Redressal Commission (previously known as the State Commission):

The State Commission shall have jurisdiction to entertain the complaints where the consideration exceeds one crore rupees but does not exceed ten crore rupees.

      National Consumer Disputes Redressal Commission (previously known as the National Commission):

The National Commission shall have the jurisdiction to entertain complaints where the consideration paid exceeds ten crore rupees.

The jurisdiction in which the complaint is to be filed is now on the basis of the value of the goods and services paid, which was not the case in the 1986 Act where it was on the value of the goods and services and the compensation, if any, claimed. A great emphasis has been placed on mediation which will be dealt with further.

Mediation

The Act has introduced a new chapter (Chapter V) on mediation as an alternate dispute resolution mechanism in order to resolve the consumer dispute in a much faster way without having to approach the Commissions. Thus, in the events where the mediation is successful in whole, the terms of such agreement shall be reduced into writing accordingly. Where the dispute is settled only in part, the Commission shall record the statement of the issues which have been settled, and shall continue to hear the remaining issues involved in the dispute. In case of unsuccessful mediation the respective Commission shall within seven days of the receipt of the settlement report, pass a suitable order and dispose of the matter accordingly.

Offences and Penalties

Section 21(2) and Section 89 of the 2019 Act provides the Central Authority with the power to impose a penalty in respect of any 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. Apart from this, a separate chapter (Chapter VII) for offences and penalties has been introduced where detailed penalties and punishments have been mentioned in relation to non-compliance, or manufacturing for sale or storing, selling or distributing or importing products that are adulterated or spurious.

Related Rules and Regulations

  • The Consumer Protection (E-Commerce) Rules, 2020 which are mandatory and are not advisories, lay down all the important information relating to the e-commerce entities keeping in mind both the consumer and the product/service provider. Key highlights are:
    • E-commerce entities according to Rule 5 are required to provide information to consumers, relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism, payment methods, security of payment methods, charge-back options and country of origin.
    • These platforms will have to acknowledge the receipt of any consumer complaint within 48 hoursand redress the complaint within one month from the date of receipt. They will also have to appoint a grievance officer for consumer grievance redressal.
    • Sellers cannot refuse to take back goods or withdraw services or refuse refunds,if such goods or services are defective, deficient, delivered late, or if they do not meet the description on the platform.
    • The rules also prohibit the e-commerce companies from manipulating the priceof the goods or services to gain unreasonable profit through unjustified prices.
  • As per the Consumer Protection (Consumer Disputes Redressal Commissions) Rules, 2020 which came into force on 20th July 2020, the amount of fee payable for filing the complaint in the District Commission up to Rs 5 lakhs has been made Nil according to Rule 7.
  • The credit of the amount due to unidentifiable consumers will go to the Consumer Welfare Fund(CWF).
  • State Commissions will furnish information to the Central Government on a quarterly basis on vacancies, disposal, the pendency of cases and other matters.
  • Apart from these general rules, there are Central Consumer Protection Council Rules, provided for the constitution of the Central Consumer Protection Council(CCPC).
    • It will be an advisory body on consumer issues, headed by the Union Minister of Consumer Affairs, Food and Public Distribution with the Minister of State as Vice Chairperson and 34 other members from different fields.
    • It will have a three-year tenure and will have Minister-in-charge of consumer affairs from two States from each region: North, South, East, West, and North-East Region.

Conclusion

The 2019 Act is a much required change in favor of the consumers considering the current age of digitization. It empowers them with clearly defined rights and dispute resolution process which will enable them to get their grievance addressed with a fast track mechanism.

In order to have a better understanding of the concepts have a glance over some of the landmark judgments given by our Courts according to the Consumer Protection Act, 1986 which is now repealed but the guidelines laid down in those cases helped in framing the new Consumer Protection Act, 2019.

  • The Delhi High Court while examining the concept of advertisement decided the case of,

 Horlicks Ltd. v. Zydus Wellness Products Ltd., 2020 SCC OnLine Del 873

The High Court passed an interim order restraining Zydus from telecasting its advertisement comparing Complan to Horlicks on the grounds that the same was misleading and disparaging. The Court relied on various judgments on misleading advertisements, disparagement and law governing publication of advertisements on television. Major decisions were:

Dabur (India) Ltd. v.  Colortek (Meghalaya) (P) Ltd., 2010 SCC OnLine Del 391

The Delhi High Court culled out the principles governing disparagement in the advertisements and held:

On the basis of the law laid down by the Supreme Court, the guiding principles for us should be the following:

(i) An advertisement is commercial speech and is protected by Article 19(1)(a) of the Constitution.

(ii) An advertisement must not be false, misleading, unfair or deceptive.

(iii) Of course, there would be some grey areas but these need not necessarily be taken as serious representations of fact but only as glorifying one’s product.

To this extent, in our opinion, the protection of Article 19(1)(a) of the Constitution is available. However, if an advertisement extends beyond the grey areas and becomes a false, misleading, unfair or deceptive advertisement, it would certainly not have the benefit of any protection.

 Pepsi Co. Inc. v. Hindustan Coca Cola Ltd., 2003 SCC OnLine Del 802

In Pepsi Co. it was held that certain factors had to be kept in mind while deciding the question of disparagement. Those factors were:

(i) Intent of the commercial,

(ii) Manner of the commercial, and

(iii) Story line of the commercial and the message sought to be conveyed.

These factors were amplified or restated in the following terms:

“(1) The intent of the advertisement – this can be understood from its story line and the message sought to be conveyed.

(2) The overall effect of the advertisement – does it promote the advertiser’s product or does it disparage or denigrate a rival product?

In this context it must be kept in mind that while promoting its product, the advertiser may, while comparing it with a rival or a competing product, make an unfavorable comparison but that might not necessarily affect the story line and message of the advertised product or have that as its overall effect.

(3) The manner of advertising – is the comparison by and large truthful or does it falsely denigrate or disparage a rival product? While truthful disparagement is permissible, untruthful disparagement is not permissible.”

Related Read:

Advertisement to Misleading Advertisement | Horlicks Ltd. v. Zydus Wellness Products

The complainant/respondent had participated in Mc Donald’s widely published scheme ‘Mc Donald’s Mein Khao Har Bar Prize Le Jao’ by placing two separate orders worth Rs 81. It was alleged by the complainant that Connaught Plaza Restaurants Ltd. (CPRL) a franchisee running Mc Donald restaurants has indulged in unfair trade practices by not giving the assured prizes as per the scheme, rather put the participants under the obligation to make a further purchase of a minimum Rs 20 in order to avail free French Fries. Also, the complainant had to send two SMS giving the coupon numbers, for which Rs 3 per SMS were charged. Moreover, the details of the entire scheme with its terms and conditions and the result of the winners were also concealed from the participating customers. Therefore, the complainant filed a consumer complaint before the District Forum praying to declare the scheme as unfair trade practice and that Connaught Plaza Restaurants Ltd. be directed to disclose the entire scheme and winners of the prizes. The District Forum allowed the complaint and awarded compensation and costs to the complainant of Rs. 10,000 and Rs.2,000.

Aggrieved, CPRL filed an appeal before the State Commission, but the State Commission modified the order of the District Forum by enhancing the compensation and awarding punitive damages to the tune of  Rs. 2,00,000 and Rs. 10,00,000.

CPRL then appealed before the NCDRC. The NCDRC held that no proof had been filed by the complainant that CPRL had collected the SMS charges or that it had an agreement with the Telecom Company/Service provider on sharing of SMS charges. Thus, the order of the State Commission could not be sustained on those grounds. On the other hand, it held that it is also true that the scheme was an unfair trade practice followed by Connaught Plaza Restaurants Ltd. This fact having been established by the concurrent findings given by the District and the State Commission. The complainant and other similar customers who may not have come forward to file a complaint need to be granted relief. Partly allowing the appeal, the NCDRC reduced the amount of compensation to Rs. 30,000 and costs to Rs. 70,000 respectively.

  • The National Consumer Disputes Redressal Commission (NCDRC) in the recent case of, Ernakulam Medical Centre P.R. Jayasree, 2020 SCC Online NCDRC 490 observed that,

“Releasing a dead body by a hospital to an unrelated third person unquestionably constitutes ‘deficiency in service’ within the meaning of Section 2(1)(g) and (o) of Consumer Protection Act, 1986.”

Related Read:

NCDRC | Releasing a dead body by a hospital to an unrelated third person unquestionably constitutes ‘deficiency in service’ within the meaning of S. 2(1) (g) & (o) of Consumer Protection Act, 1986

  • Recently, the Supreme Court in a judgment laid emphasis on the role of NCDRC in Union of India N.K. Srivastava, 2020 SCC OnLine SC 636, wherein the Court had dismissed an appeal which had aroused from an order of the National Consumer Disputes Redressal Commission. The complaint alleged medical negligence against Sarvodaya Hospital and Safdarjung Hospital. The NCDRC allowed the revision of Sarvodaya Hospital. While exonerating it of the finding of medical negligence, it held Safdarjung Hospital liable to pay the compensation of Rs 2 lakhs imposed by the State Consumer Disputes Redressal Commission.

The District Forum had dismissed the consumer complaint stating that there was no deficiency on the part of Sarvodaya Hospital in referring the complainant to a specialized facility. An appeal was filed before the State Consumer Disputes Redressal Commission by the original complainant. The SCDRC, by its judgment concluded that Sarvodaya Hospital was guilty of medical negligence and directed it to pay a sum of Rs 2 lakhs as compensation and costs quantified at Rs 20,000. However, the complaint was held not to be maintainable against Safdarjung Hospital. A revision was filed against the judgment of the SCDRC by Sarvodaya Hospital before the NCDRC which allowed the revision and came to the conclusion that Sarvodaya Hospital was not guilty of medical negligence, however, the NCDRC elaborated on the question as to whether Safdarjung Hospital had been correctly exonerated. The NCDRC held that though the complainant had not filed a revision against the order of the SCDRC specifically holding that Safdarjung Hospital was not amenable to the jurisdiction of the consumer fora, he was not precluded from challenging a finding which was adverse to him in the revision petition. On these facts, the NCDRC sustained the finding of medical negligence against Safdarjung Hospital and directed it to pay compensation quantified at Rs 2 lakhs.


† Editorial Assistant (Legal)

Hot Off The PressNews

It has been reported to the Department that most of the honey brands sold in the market are adulterated with sugar syrup.

This is a serious matter as it will compromise our health in the troubled times of COVID 19 and add to the risk of Covid-19. The Department has asked the Central Consumer Protection Authority(CCPA) to look into the matter. The CCPA, in accordance with Section 19(2) of the Consumer Protection Act 2019, after preliminary examination, has referred the matter to the FSSAI, the food regulator, to take appropriate action in the matter and has offered to extend cooperation in the investigation of the matter for taking class action as envisaged in Section 10 of the Act.

The Department takes the consumer issues seriously.

Recently, taking note of an incident where a 40-year – an old man set himself on fire in a Rohini mall and got burn injuries after mobile phone service centre allegedly refused to replace a phone he had bought for his niece, a 12th class school student for her online classes, the Department took up the matter with the mobile phone company concerned. The mobile company has informed that they have decided to compensate the consumer with Rs. 1,00,000/- and a new Mobile handset.

Use of proper accurate and standards weights and measures are very important for effective functioning of any economy, as it plays an indispensable role in consumer protection as protection from malpractices of underweights or under-measure is an important function of the Government. The Legal Metrology (Packaged Commodities) Rules, 2011 are framed to regulate the pre-packaged commodities. Under these rules, the pre-packaged commodities have to comply with certain mandatory information on e-commerce platform by the seller in the interest of consumers. It was observed that some e-commerce entities are violating the mandatory requirement of declaration of information of the product on e-commerce platforms. Therefore, notices have been issued to various e-commerce entities for non-compliance.

The Department of Consumer Affairs in the Ministry of Consumer Affairs, Food & Public Distribution, Government of India, is the nodal department for consumer protection and it has been taking several measures for the protection of the interests and rights of the consumers. The Consumer Protection Act, 2019 has come into force from 20th July 2020, which provides for three-tier quasi-judicial machinery to provide simple and speedy redressal to consumer disputes. A Central Consumer Protection Authority (CCPA) has been established to regulate matters relating to violation of rights of consumers, unfair trade practice and false or misleading advertisements which are prejudicial to the interests of public and to promote, protect and enforce the rights of a consumer as a class.


Ministry of Consumer Affairs, Food & Public Distribution

[Press Release dt. 10-12-2020]

[Source: PIB]

Case BriefsSupreme Court

Supreme Court: The bench of UU Lalit and Vineet Saran, JJ has held that the Real Estate (Regulation and Development) Act, 2016 (RERA Act) does not bar the initiation of proceedings by allottees against the builders under the Consumer Protection Act, 1986.

“It is true that some special authorities are created under the RERA Act for the regulation and promotion of the real estate sector and the issues concerning a registered project are specifically entrusted to functionaries under the RERA Act. But for the present purposes, we must go by the purport of Section 18 of the RERA Act. Since it gives a right “without prejudice to any other remedy available’, in effect, such other remedy is acknowledged and saved subject always to the applicability of Section 79.”


Background of the Case


The said decision of the Court came in the matter relating of delay in handing over the possession of flats to buyers by the developer. The apartments were booked by the Complainants in 2011-2012 and the Builder Buyer Agreements were entered into in November, 2013. As promised, the construction should have been completed in 42 months. The period had expired well before the Project was registered under the provisions of the RERA Act. Even after four years there were no signs of the Project getting completed and hence, a complaint was filed by the Buyers.


RERA Act vis-à-vis CP Act: Statutory Analysis


The Court discussed the following provisions for the purpose of deciding the case at hand:

  • Section 79 of the RERA Act bars jurisdiction of a Civil Court to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered under the RERA Act to determine.
  • Section 88 specifies that the provisions of the RERA Act would be in addition to and not in derogation of the provisions of any other law.
  • Section 89 provides that the provisions of the RERA Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force.

The Court noticed that an allottee placed in circumstances similar to that of the Complainants, could have initiated following proceedings before the RERA Act came into force.

A) If he satisfied the requirements of being a “consumer” under the CP Act, he could have initiated proceedings under the CP Act in addition to normal civil remedies.

B) However, if he did not fulfil the requirements of being a “consumer”, he could initiate and avail only normal civil remedies.

C) If the agreement with the developer or the builder provided for arbitration:-

i) in cases covered under Clause ‘B’ hereinabove, he could initiate or could be called upon to invoke the remedies in arbitration.

ii) in cases covered under Clause ‘A’ hereinabove, in accordance with law laid down in Emaar MGF Ltd v. Aftab Singh, (2019) 12 SCC 751, he could still choose to proceed under the CP Act.

The Court noticed that on plain reading of Section 79 of the RERA Act, an allottee described in category (B) stated hereinabove, would stand barred from invoking the jurisdiction of a Civil Court.

“The absence of bar under Section 79 to the initiation of proceedings before a fora which cannot be called a Civil Court and express saving under Section 88 of the RERA Act, make the position quite clear.”

To answer the question whether the Commission or Forum under the CP Act is a civil court or not, the Court referred to the decision in Malay Kumar Ganguli v. Dr. Sukumar Mukherjee, (2009) 9 SCC 221 , where it was held,

“The proceedings before the National Commission are although judicial proceedings, but at the same time it is not a civil court within the meaning of the provisions of the Code of Civil Procedure. It may have all the trappings of the civil court but yet it cannot be called a civil court.”

Hence, Section 79 of the RERA Act does not in any way bar the Commission or Forum under the provisions of the CP Act to entertain any complaint.

The Court further discussed the proviso to Section 71(1) of the RERA Act which entitles a complainant who had initiated proceedings under the CP Act before the RERA Act came into force, to withdraw the proceedings under the CP Act with the permission of the Forum or Commission and file an appropriate application before the adjudicating officer under the RERA Act. It noticed,

“The proviso thus gives a right or an option to the concerned complainant but does not statutorily force him to withdraw such complaint nor do the provisions of the RERA Act create any mechanism for transfer of such pending proceedings to authorities under the RERA Act. As against that the mandate in Section 12(4) of the CP Act to the contrary is quite significant.”

It was held that insofar as cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation. Further, Section 18 itself specifies that the remedy under said Section is “without prejudice to any other remedy available”.

“Thus, the parliamentary intent is clear that a choice or discretion is given to the allottee whether he wishes to initiate appropriate proceedings under the CP Act or file an application under the RERA Act.”

[Imperia Structures v. Anil Patni,  2020 SCC OnLine SC 894, decided on 02.11.2020]