Legislation UpdatesRules & Regulations

The Department of Consumer Affairs has issued the Legal Metrology (Packaged Commodities) (Second Amendment) Rules, 2022 in order to allow the electronic products to declare certain mandatory declarations through the QR Code for a period of one year, if not declared in the package itself.

 

Key points:

The following proviso’s has been inserted in the Rule 6 of Legal Metrology (Packaged Commodities) Rules, 2011 dealing with Declarations to be made on every package:

  1. In the case of an electronic product which is manufactured or packed or imported after 15-07-2022,  the package of such product shall, for a period of one year from such date, declare the name of the manufacturer or packer or importer, as the case may be, on the package itself and such declaration shall also inform the consumers to scan the QR code for the address and other related information, in case such information is declared through the QR Code and not declared on the package itself;
  2. In the case of an electronic product which is manufactured or packed or imported after 15-07-2022, the package of such product shall, for a period of one year from such date, inform the consumers to scan the QR code for the common or generic name of the commodity and where such package contains more than one product, then for the name and number or quantity of each product, in case such information is declared through the QR Code and not declared on the package itself;
  3. In the case of an electronic product which is manufactured or packed or imported after 15-07-2022, the package of such product shall, for a period of one year from such date, inform the consumers to scan the QR code for the size and dimension of the commodity, in case such information is declared through the QR Code and not declared on the package itself;
  4. In the case of electronic product, which are manufactured or packed or imported after 15-07-2022, the package of such product shall, for a period of one year from such date, declare the telephone number and e-mail address, on the package itself and such declaration shall also inform the consumers to scan the QR code for other related information in case such information is declared through the QR Code and not declared on the package itself.
Hot Off The PressNews

   

The Central Consumer Protection Authority (CCPA) has issued an Advisory to e-commerce entities concerning the sale of Ayurvedic, Siddha and Unani drugs containing ingredients listed in Schedule E (1) of the Drugs and Cosmetics Rules, 1945. E-commerce platforms have been advised that the sale or facilitating the sale of such drugs shall be done only after a valid prescription of a registered Ayurveda, Siddha or Unani practitioner respectively is uploaded by the user on the platform. Consuming such drugs without medical supervision can lead to severe health complications.

To safeguard consumer rights while shopping online, CCPA has issued an Advisory to all marketplace e-commerce entities to ensure that details of sellers as mandated under sub-rule (5) of rule 6 of the Consumer Protection (E-commerce) Rules, 2020 including name and contact number of the grievance officer are provided in a clear and accessible manner, displayed prominently to users on the platform.

Akaant MittalExperts Corner


A. Introduction


The IB Code differentiates between financial creditors and operational creditors. Financial creditors are those having a relationship with the corporate debtor that is purely a financial contract, such as a loan or a debt security. Whereas, operational creditors are those who have due from the debtor on account of transactions made for the operational working of the debtor.[1]

 

For the purposes of the definition of the term “goods”, the Sale of Goods Act, 1930 can be referred to; whereas, the definition of the term “services” is still not concretely defined. A claim on operational debt may be on account of breach of an agreement or a decree of a court of law; still the same must relate to the supply of goods and services.

 

Now issue arises as to the status of lease dues forming an “operational debt”. The question has two aspects, namely, one whether the landlord could claim to be an operational creditor against the tenant for the rental dues outstanding; and two whether a tenant while using the tenanted premise, if suffers any damages, could claim to be an operational creditor.

 


B. Landlord claiming to be an Operational Creditor


The Bankruptcy Law Reforms Committee Report that formed the basis of the IB Code illustratively suggested that the definitions of “operational creditor” and “operational debt” include wholesale vendors of spare parts whose spark plugs are kept in inventory by the car mechanic and who gets paid only after the spark plugs are sold, thus making them operational creditors. Similarly, the lessor who rents out space to an entity is an operational creditor to whom the entity owes monthly rent on a three-year lease.[2] Operational creditors, in other words, maybe employees, rental obligations, utilities payments and trade credit.[3]

 

While the landlord certainly could claim to be an operational debtor in light of what the Bankruptcy Law Reforms Committee seems to suggest, however, in Annapurna Infrastructure (P) Ltd. v. SORIL Infra Resources Ltd.[4], such an issue was left open by the NCLAT to be decided by the NCLT. In this case, the landlord had initiated proceedings under Section 9 against the tenant on the basis of an arbitral award which awarded rent due towards the landlord on the part of the tenant. The NCLAT, however, left this contention unaddressed and remitted the matter on other grounds.

 

In Sarla Tantia v. Nadia Health Care (P) Ltd.,[5] the question before the NCLT was whether the recovery of arrears of rent can be claimed as operational debt within the meaning of Section 5(21) of the IB Code. The counsel for the corporate debtor i.e. Nadia Health Care relied on the input output test arguing that the operational debt are only those debts that have “a correlation of direct input to output produced or supplied by the corporate debtor”. However, the NCLT herein relied on the observations from the decision of the Supreme Court in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd.,[6] to conclude that the Supreme Court in the affirmative settled the issue of lease dues being an operational debt.

 

It is submitted that the same is erroneous because (i) the Supreme Court in Mobilox Innovations[7] did not discuss the issue of lease deeds in its own observations. The court had merely reproduced paragraphs from the report of the Bankruptcy Law Reforms Committee, a part of which had also touched upon rental and lease dues as a type of operational debt; and (ii) to begin with, the issue was not the subject-matter of dispute before the Supreme Court at all.

Therefore, the opinion of the NCLT in Sarla Tantia[8] may not be on strong footing.

 

Split in jurisprudence

A split in the jurisprudence before the NCLAT is found in the two rulings rendered by the NCLAT in M. Ravindranath Reddy v. G. Kishan,[9] on one side and Anup Sushil Dubey v. National Agriculture Coop. Mktg. Federation of India Ltd.[10] on the other.

 

In Ravidranath, the specific query was addressed by the NCLAT on whether a landlord by providing lease could be treated as operational creditor. The same was held by the Full Bench of NCLAT to not fall within the ambit of the definition of the term “operational debt”.[11] The NCLAT in Ravidranath[12] opined that the recommendation of the Bankruptcy Law Reforms Committee pertaining to the treatment of lessors/landlords as operational creditors, was not adopted by the legislature and only the claim in respect of goods and services were kept in the definition of operational creditor and operational debt under Sections 5(20) and 5(21) of the IB Code. Resultantly, it was concluded that the definition of an operational debt and operational creditor could not be interpreted to include rent dues as operational debt. Therefore, non-payment of rent does not amount to an operational debt.

 

There is a qualification added to the ruling in M. Ravindranath[13], when the NCLAT in Sanjeev Kumar v. Aithent Technologies (P) Ltd.[14] distinguished the former. In Sanjeev Kumar, the relationship between the creditor landlord and the debtor tenant was found to be not merely of the one to that of a landlord tenant but was held to also include certain provision of services such as electricity, diesel, sewer and water charges amongst others given to the debtor tenant. In such cases once the dues were found to be more than the pecuniary threshold, the debt was held to fall under the definition of an operational debt and an application under Section 9 of the Code was admitted.[15]

 

On the other hand in Anup Sushil Dubey[16] the NCLAT held that lease and licence agreements fall within the ambit of Section 5(21) of the IB Code. The NCLAT here noted that the appellants had leased out the premises for “commercial purpose” and the same fell within the meaning of term “service” under Section 5(21) of the IB Code. Then the NCLAT found the definition of “service” under the Consumer Protection Act, 2019 to be of relevance, which defines a service in the following manner :

(42) “service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with 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, but does not include the rendering of any service free of charge or under a contract of personal service.

 

The NCLAT similarly referred to the provisions of the Central Goods and Services Tax Act, 2017, which under the Schedule II lists down the activities that are to be treated as supply of goods or services, and in Para 2 of the Schedule stipulates as follows:

(a) any lease, tenancy, easement, licence to occupy land is a supply of services;

(b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.

 

On the basis of the above, taking into account that the premises were leased out for a commercial purpose, it was held that the dues claimed by the creditor squarely fell within the ambit of the definition of “operational debt” as defined under Section 5(21) of the Code.

 

It is essential to note that while M. Ravindranath[17] was a decision by a Full Bench of the NCLAT, the ruling in  Anup Sushil Dubey[18] was by a Division Bench. Furthermore, the NCLAT in Anup Sushil Dubey[19] while noted that the corporate debtor appellant before it, cited the ruling in M. Ravindranath[20]; the NCLAT however did not render any findings on the reference to M. Ravindranath[21].

 


C. Tenant claiming to be an Operational Creditor


On the other hand, as regards the claim of a tenant in its tenant landlord relationship is concerned, the position seems to be settled in Jindal Steel & Power Ltd. v. DCM International Ltd.[22] wherein it was held that tenants do not come within the meaning of “operational creditor” as defined under Sections 5(20) and (21), IB Code. In this case, the tenant sought to recover the security deposit on account of the termination of the lease agreement with the landlord. The NCLAT upheld the order of the NCLT rejecting the application filed under Section 9 by the tenant holding that the tenant does not come within the meaning of the term “operational creditor”.

 

It must also be noted here that while in Sarla Tantia,[23] the NCLT had referred to the Schedule II of the CGST Act, 2017[24] which in context of land and buildings, classifies “any lease, tenancy, easement, licence to occupy land” as a supply of services. Here in Jindal Steel[25], the NCLT held that the definition of “service” in the fiscal statutes has no bearing because the purpose of fiscal statutes is to generate revenue for the Government in the form of taxes, whereas the purpose of the IB Code is to consolidate and amend the laws relating to reorganisation and insolvency resolution.

 

Similar position was maintained in  D & I Taxcon Services (P) Ltd. v. Vinod Kumar Kothari,[26] where a tenant filed a claim on account of suffering damage in the tenanted premises due to a fire incident. The NCLAT clarified that the claim of the tenant does not constitute any operational debt since by using the demised premises as a tenant, the appellant could not be said to have been providing any “services”.

 

However, sub-tenants cannot be treated as a corporate debtor even if part of the payment is made directly by such sub-tenants to the operational creditor since the same will not create any relationship of operational creditor and debtor.[27]


Conclusion


On account of the differing viewpoints expressed by the NCLT and NCLAT, the issue on whether a landlord could claim to be an operational creditor remains unresolved.

 

Since different types of creditors are granted distinct rights under the IB Code framework, it is necessary to determine to which category, a creditor belongs to. In this context, it is possible that, in the future, a leasing agreement may not fall within either of the two categories of creditors who can file for initiating a corporate insolvency resolution process (CIRP), namely, financial and operational creditors, and that they will have to make a claim as other creditors. Categorisation as such would also lead to a significant loss of rights as such creditors would have no participatory role (whatsoever) in the CoC working.

The issue is now pending before the Supreme Court in Promila Taneja.[28]

 

Given the ambiguity surrounding the problem, the Supreme Court must evaluate the larger issue of claims resulting from the use of immovable property and other associated costs, and eventually resolve the question of whether rent arrears constitute as operational debt.

 

To sum up, unless the existing gaps in the Code regarding lease transactions, their treatment as secured creditors, the right to relinquish, and other factors discussed above are addressed, the true devil will lie in the strategically drafting of lease agreements, which will essentially make or break the rights available to the lessor.


Akaant Kumar Mittal is an advocate at the Constitutional Courts, and National Company Law Tribunal, Delhi and Chandigarh. He is also a visiting faculty at the National Law University, Mumbai and the author of the commentary Insolvency and Bankruptcy Code – Law and Practice.

“The author gratefully acknowledge the research and assistance of Sh. Priyanshu Fauzdar, pursuing law at NLU, Assam in writing this article.”

[1] The Report of the Bankruptcy Law Reforms Committee, Volume 1: Rationale and Design (Nov. 2015), Ch. 5.2.1, available online at HERE .

[2] The Report of the Bankruptcy Law Reforms Committee, Volume 1: Rationale and Design, (Nov. 2015), Ch.

5.2.1.

[3] The Report of the Bankruptcy Law Reforms Committee, Volume 1: Rationale and Design, (Nov. 2015), Ch.3.2.2.

[4] 2017 SCC OnLine NCLAT 380.

[5] 2018 SCC OnLine NCLT 16726.

[6] (2018) 1 SCC 353.

[7] (2018) 1 SCC 353.

[8] 2018 SCC OnLine NCLT 16726.

[9] 2020 SCC OnLine NCLAT 84.

[10] 2020 SCC OnLine NCLAT 674.

[11] The ruling in M. Ravindranath case, 2020 SCC OnLine NCLAT 84 has been followed subsequently in Aurora Accessories (P) Ltd. v. Ace Acoustics & Audio Video Solutions (P) Ltd., 2020 SCC OnLine NCLAT 527; Promila Taneja v. Surendri Design (P) Ltd., 2020 SCC OnLine NCLAT 1105.

[12] 2020 SCC OnLine NCLAT 84.

[13] 2020 SCC OnLine NCLAT 84.

[14] 2020 SCC OnLine NCLAT 734.

[15] 2020 SCC OnLine NCLAT 734.

[16] 2020 SCC OnLine NCLAT 674.

[17] 2020 SCC OnLine NCLAT 84.

[18] 2020 SCC OnLine NCLAT 674.

[19] 2020 SCC OnLine NCLAT 674.

[20] 2020 SCC OnLine NCLAT 84.

[21] 2020 SCC OnLine NCLAT 84.

[22] Jindal Steel & Power Ltd. v. DCM International Ltd., 2017 SCC OnLine NCLAT 441 upholding the order of the NCLT in Jindal Steel and Power Ltd. v. DCM International Ltd., 2017 SCC Online NCLT 989.

[23] 2018 SCC OnLine NCLT 16726.

[24] Central Goods and Services Tax, 2017, Schedule II read with S. 2(a).

[25] 2017 SCC Online NCLT 989.

[26] 2020 SCC OnLine NCLAT 878.

[27] Rahul Gupta v. Mahesh Madhavan, 2018 SCC OnLine NCLAT 263.

[28] Promila Taneja v. Surendri Design (P) Ltd., Civil Appeal No. 4237 of 2020, order dated 28-1-2021. (SC)

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In this part, read a very pertinent decision of the Supreme Court, Amazon.com NV Investment Holdings LLC v. Future Retail Ltd.2021 SCC OnLine SC 557 wherein while holding that an award passed by Emergency Arbitrator is enforceable under the Arbitration and Conciliation Act, 1996, a Division Bench of R.F. Nariman and B.R. Gavai, JJ. has ruled in favour of Amazon in the infamous Future-Amazon dispute. It has been held that the interim award in favour of Amazon, passed by the Emergency Arbitrator appointed under the Arbitration Rules of the Singapore International Arbitration Centre is enforceable under the Indian Arbitration Act.

2022 SCC Vol. 1 Part 3

In this part read the Supreme Court decision in Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd.,(2022) 1 SCC 401, wherein the Court while the Adjudicating authority has the authority to disapprove the resolution plan approved by the Committee of Creditors (CoC), it cannot modify the same.

2022 SCC Vol. 2 Part 1

In this part read a very important matter, wherein a relative committed rape on the prosecutrix and none of the family members believed her and in fact beat her up when she narrated the incident, Supreme Court found it unfortunate that even the sister-in-law (Jethani) and mother-in-law though being women did not support the prosecutrix. [Phool Singh v. State of Madhya Pradesh, 2021 SCC OnLine SC 1153]

2022 SCC Vol. 2 Part 2


Case BriefsSupreme Court

Supreme Court: The bench of L. Nageswara Rao and BR Gavai*, JJ interpreted the true scope of a “consumer” in terms of Section 2(1)(d) of the Consumer Protection Act, 1986 and has held that the ‘business to business’ disputes cannot be construed as consumer disputes. The entire Act revolves around “business-to-consumer” disputes and not for “business-to-business” disputes.

Analysis

Section 2(1)(d) of the said Act is in two parts.

  1. Section 2(1)(d)(i) of the said Act deals with buying of goods.
  2. Section 2(1)(d)(ii) of the said Act is with respect to hiring of services.

By the 1993 Amendment Act, wherever the word “hires” was used, the same was substituted by the words “hires or avails of”.  By the said 1993 Amendment Act, insofar as Section 2(1)(d)(i) is concerned, an Explanation was provided to the effect that ‘commercial purpose’ does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood by means of self-employment. Hence, though the original Act of 1986 excluded a person from the ambit of definition of the term ‘consumer’ whenever such purchases were made for commercial purpose; by the Explanation, which is an exception to an exception, even if a person made purchases for ‘commercial purpose’, he was included in the definition of the term ‘consumer’, if such a person bought and used such goods exclusively for earning his livelihood by means of self-employment.

By the 2002 Amendment Act, the legislature has done two things.

  1. It has kept the commercial transactions, insofar as the services are concerned, beyond the ambit of the term ‘consumer’ and brought it in parity with Section 2(1)(d)(i), wherein a person, who bought such goods for resale or for any commercial purpose, was already out of the ambit of the term ‘consumer’.
  2. The legislature did was that even if a person availed of the commercial services, if the services availed by him were exclusively for the purposes of earning his livelihood by means of self-employment, he would still be a ‘consumer’ for the purposes of the said Act.

Thus, a person who availed of services for commercial purpose exclusively for the purposes of earning his livelihood by means of self-employment was kept out of the term ‘commercial purpose’ and brought into the ambit of ‘consumer’, by bringing him on par with similarly circumstanced person, who bought and used goods exclusively for the purposes of earning his livelihood by means of self-employment.

“If a person buys goods for commercial purpose or avails services for commercial purpose, though ordinarily, he would have been out of the ambit of the term ‘consumer’, by virtue of Explanation, which is now common to both Sections 2(1)(d)(i) and 2(1)(d)(ii), he would still come within the ambit of the term ‘consumer’, if purchase of such goods or availing of such services was exclusively for the   purposes of earning his livelihood by means of self-employment.”

The upshot of the above-mentioned discussion led to the conclusion that when a person avails a service for a commercial purpose, to come within the meaning of ‘consumer’ as defined in the said Act, he will have to establish that the services were availed exclusively for the purposes of earning his livelihood by means of self-employment. There cannot be any straitjacket formula and such a question will have to be decided in the facts of each case, depending upon the evidence placed on record.

Ruling

The Court was deciding the case where NCDRC has come to a finding that the appellant had opened an account with the respondent-Bank, took overdraft facility to expand his business profits, and subsequently from time to time the overdraft facility was enhanced so as to further expand his business and increase his profits.

The Court affirmed the said ruling and observed that the relations between the appellant and the respondent is purely “business to business” relationship. As such, transactions would clearly come within the ambit of ‘commercial purpose’. It cannot be said that the services were availed “exclusively for the purposes of earning his livelihood” “by means of self-employment”.

[Shrikant G. Mantri v. Punjab National Bank, 2022 SCC OnLine SC 218, decided on 22.02.2022]


*Judgment by: Justice BR Gavai


Counsels

For appellant: Senior Advocate Shyam Divan

For respondent: Senior Advocate Dushyant Dave

Case BriefsHigh Courts

High Court of Bombay at Goa: Stating that the State Administration comprises several IAS Officers, the least expected out of them is to find the solution to problems, so that State Consumer Disputes Redressal Commission functions effectively, The Division Bench of M.S. Sonak and R.N. Laddha, JJ., directed the State of Goa to ensure that the post of President and 3 other members of the Commission which are vacant be filled expeditiously.

The instant petition highlighted an extremely unfortunate situation in which the very functioning of a State Consumer Disputes Redressal Commission has been brought to a virtual standstill on account of inordinate delay in filling up the post of the President and three of its four members.

It has been stated the Commission has been running with one member for the past 15 months.

The affidavit filed by Sudhir Kerkar, Director & Ex-officio Joint Secretary (Department of Civil Supplies & Consumer Affairs), Government of Goa portrays only difficulties and no serious efforts to resolve the same.

Consumer Protection Act clearly requires the State Government to constitute such a Commission and to create circumstances conducive to its effective functioning. This statutory duty cannot be shirked by putting forth several difficulties, most of which are quite routine and easily surmountable, High Court expressed. 

High Court directed the State of Goa to ensure that the post of President and the post of three members, which are lying vacant at the Commission are filled in accord with law as expeditiously as possible and, in any case.

Bench stated that,

“…this time we expect the Chief Secretary of the State of Goa to personally look into this matter and ensure that not only the mandate of the statute but also this writ of mandamus, which we are issuing, is complied with within three months from today”

The matter has been posted for 1-3-2022, by which date the first compliance report will have to be filed. [Dr D.J. De Souza v. State of Goa, 2022 SCC OnLine Bom 190, decided on 28-1-2022]


Advocates before the Court:

Petitioner in person.

Mr. Deep Shirodkar, Additional Government Advocate for Respondent Nos. 1 and 2.

Case BriefsSupreme Court

Supreme Court: The bench of Dr. DY Chandrachud* and AS Bopanna, JJ has held that failure on the part of the builder to provide occupancy certificate is a continuing breach under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 and amounts to a continuing wrong.

Factual Background

The appellant is a co-operative housing society. The respondent constructed Wings ‘A’ and ‘B’ and entered into agreements to sell flats with individual purchasers in accordance with the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 (MOFA). The members of the appellant booked the flats in 1993 and were granted possession in 1997. According to the appellant, the respondent failed to take steps to obtain the occupation certificate from the municipal authorities.

There was an obligation on the respondent to provide the occupancy certificate and pay for the relevant charges till the certificate has been provided, however, the respondent time and again failed to provide the occupancy certificate to the appellant society. For this reason, a complaint was instituted in 1998 by the appellant against the respondent. The NCDRC on 20 August 2014 directed the respondent to obtain the certificate within a period of four months. Further, the NCDRC also imposed a penalty for any the delay in obtaining the occupancy certificate beyond these 4 months. Since 2014 till date, the respondent failed to provide the occupancy certificate.

In the absence of the occupation certificate, individual flat owners were not eligible for electricity and water connections. Due to the efforts of the appellant, temporary water and electricity connections were granted by the authorities. However, the members of the appellant had to pay property tax at a rate 25% higher than the normal rate and water charges at a rate which was 50% higher than the normal charge.

Analysis

Obligations of Promoter under MOFA

Section 3 of the MOFA imposes certain general obligations on a promoter. These obligations inter alia include making disclosures on the nature of title to the land, encumbrances on the land, fixtures, fittings and amenities to be provided, and to not grant possession of a flat until a completion certificate is given by the local authority. The responsibility to obtain the occupancy certificate from the local authority has also been imposed under the agreement to sell between the members of the appellant and the respondent on the latter.

Sections 3 and 6 of the MOFA indicate that the promoter has an obligation to provide the occupancy certificate to the flat owners. Apart from this, the promoter must make payments of outgoings such as ground rent, municipal taxes, water charges and electricity charges till the time the property is transferred to the flat-owners. Where the promoter fails to pay such charges, the promoter is liable even after the transfer of property.

Limitation

In the instant case, the appellant submitted that since the cause of action is founded on a continuing wrong, the complaint is within limitation.

Section 24A of the Consumer Protection Act 1986 provides for the period of limitation period for lodging a complaint. A complaint to a consumer forum has to be filed within two years of the date on which the cause of action has arisen.

Section 22 of the Limitation Act 1963 provides for the computation of limitation in the case of a continuing breach of contract or tort. It provides that in case of a continuing breach of contract, a fresh period of limitation begins to run at every moment of time during which the breach continues

A continuing wrong occurs when a party continuously breaches an obligation imposed by law or agreement. The continuous failure to obtain an occupancy certificate is a breach of the obligations imposed on the respondent under the MOFA and amounts to a continuing wrong.

The appellants, therefore, were entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation.

“Rejecting the complaint as being barred by limitation, when the demand for higher taxes is made repeatedly due to the lack of an occupancy certificate, is a narrow view which is not consonance with the welfare objective of the Consumer Protection Act 1986.”

Consumer

Section 2(1)(d) of the Consumer Protection Act defines a ‘consumer’ as a person that avails of any service for a consideration. A ‘deficiency’ is defined under Section 2(1)(g) as the shortcoming or inadequacy in the quality of service that is required to be maintained by law.

In the present case, the NCDRC had held that the appellant is not a ‘consumer’ under the provisions of the Consumer Protection Act as they have claimed the recovery of higher charges paid to the municipal authorities from the respondent. Extending this further, the NCDRC observed that the respondent is not the service provider for water or electricity and thus, the complaint is not maintainable.

The respondent was responsible for transferring the title to the flats to the society along with the occupancy certificate. The failure of the respondent to obtain the occupation certificate is a deficiency in service for which the respondent is liable. Thus, the members of the appellant society are well within their rights as ‘consumers’ to pray for compensation as a recompense for the consequent liability (such as payment of higher taxes and water charges by the owners) arising from the lack of an occupancy certificate.

[Samruddhi Co-operative Housing Society Ltd v. Mumbai Mahalaxmi Construction Pvt. Ltd, 2022 SCC OnLine SC 35, decided on 11.01.2022]


*Judgment by: Justice Dr. DY Chandrachud

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Ram Surat Maurya (Presiding Member) addressed a matter wherein the date of issue of the Risk Confirmation Letter was in a serious dispute leading to Insurance Broker’s fraudulent act.

The complainant had a factory, and the OP was engaged in the business of providing insurance services. Further, the complainant obtained standard Fire and Special Peril Policy from the OP, for a period of 10-2-2005 to 9-2-2006 for its buildings, furniture, fixtures, fittings and electrical installation, Plant and Machinery, machinery parts, Dies & moulds and stock for a sum of Rs 23 crores. The said policy was renewed.

In February 2008, the complainant invited offers from Insurances brokers for renewal of the above-said policy. It was stated that the Western Regional Office of the OP accepted the proposal form and issued risk confirmation for fire and allied perils insurance policy and Satyan Insurance Broker sent a Risk Confirmation letter to the complainant on 18-2-2008.

On 17-2-2008, a major fire occurred at the factory premises of the complainant causing extensive loss to the buildings, plant & machineries, furniture and stock etc. The complainant informed the insurer about the said incident and the insured appointed a surveyor and loss adjuster, and further the surveyor declined to proceed in the absence of the insurance policy.

The complainant received a letter (bearing the date 18-02-2008) on 28-02-2008 from the Insurer, stating therein that the consideration received for covering the risk was less than the offer given by them. Hence, they were not in a position to cover the risk as requested.

The Insurer, vide dated 13-03-2008, denied issuance of Risk Confirmation on 14-02-2008.

The complainant then gave a legal notice, to the Insurer for either making payment of Rs 2.70 crores within seven days or to refer the dispute to an Arbitrator. The Insurer, vide reply declined to refer the dispute to an Arbitrator or to pay.

Further, the complainant filed an arbitration application in the Bombay High Court which was ultimately rejected on the ground that in the absence of an arbitration agreement between the parties, the application was not maintainable. Then the present complaint was filed.

What is the serious dispute about?

The dispute between the parties was with regard to the date of issue of Risk Confirmation letter and the letter of the Insurer, declining to issue policy on the ground that the premium was deficient.

Analysis and Discussion

The Commission stated that two circumstances clearly proved the fraudulent act of Satyan Insurance Broker, firstly cheque of Rs 6,825 was bearing a date of 13-02-2008. The complainant issued his cheque of Rs 23,891 on 13-02-2008. Had Satyan Insurance Broker informed the complainant that an insurance premium of Rs 30,176 was payable then the complainant instead of issuing a cheque of Rs 23,891 would have issued the cheque of the full amount. Secondly, it was not a normal conduct that any insurance agent would give a premium of a client from his account.

Section 19 of Contract Act, 1872, provides that when the consent of an agreement is caused by coercion, fraud, or misrepresentation, the agreement is voidable at the option of the party whose consent is so caused.

In Supreme Court’s decision of Reliance Life Insurance Company v. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175 and New India Assurance Company Ltd. v. Satpal Singh Muchal, (2009) 12 SCC 673, it was held that a contract insurance is a contract of uberrima fide and non-disclosure of material fact, vitiates the insurance policy.

Therefore, no illegality in not issuing the insurance policy by the Insurer as the Risk Confirmation letter was obtained on concealment of material facts relating to the fire incident.

Coram concluded by stating that,

“If Risk Confirmation letter had been issued on 14.02.2008, the complainant would not have committed two days delay in informing the Insurer in respect of fire incident. Appointment of the surveyor on 20.02.2008 was an innocent mistake, the complainant cannot get any benefit of it.”

In view of the above, no merit was found in the complaint and it was dismissed. [Tainwala Personal Care Products (P) Ltd. v. Royal Sundaram Alliance Insurance Co. Ltd., 2022 SCC OnLine NCDRC 11, decided on 25-1-2022]


Advocates before the Commission:

For the Complainant: Ms. Fareshte Sethna, Mr. Munindra Dvivedi, Ms. Divya Bhalla, Ms. Aathira Pilllai, Advocates

For the OP: Mr. S.M. Tripathi, Advocate and Ms. Deepa Chacko, Advocate

Case BriefsSupreme Court

Supreme Court: In an interesting case where one SBI account holder was left with a balance of Rs. 59/- only in his account due to the existence of another bank account with strikingly similar name in the same branch, the bench of Sanjiv Khanna and Bela M. Trivedi*, JJ has set aside the “highly erroneous” impugned order passed by the National Consumer Disputes Redressal Commission solely relying upon the suo-moto report called for from SBI during the pendency of the revision application.

Factual Background

Sunil Kr. Maity had a saving account number 01190010167 with SBI since January, 2000. On 24.02.2010, the said account number was changed to number 10140478732. On 15.09.2012, the appellant went to deposit a sum of Rs. 500/- in the said account, when a staff of respondent-bank informed him that the account number had again been changed and wrote account number being 32432609504 on his passbook. The said amount was deposited in the said account number. Thereafter, on 16.01.2013, appellant deposited a cheque being no. 670013 for Rs. 3,00,000/- drawn on SBI of the said Branch.

When the appellant went to update his passbook on 11.12.2013, he noticed that his passbook showed the balance of Rs. 59/- only, though he had not made any transaction between 16.01.2013 to 11.12.2013. On the enquiry having been made, the respondent-bank informed the appellant that there was another customer by the name Sunil Maity whose account number was 32432609504 and the said account number was wrongly given to the appellant whose name was Sunil Kr Maity on 15.09.2012. The said Sunil Maity on 25.01.2013 and 28.01.2013 had withdrawn the sum of Rs. 1,00,000/- and Rs. 2,00,000/- respectively from the said account number.

When the matter reached the National Commission, it not only sought for a report from SBI at the revisional stage but set aside the findings and conclusion recorded by the District and State Forum, simply based on this report. The report indicated that the bank had every reason to believe that wrong account number was intentionally inserted by the appellant himself for reasons best known to the appellant or on account of negligence by the appellant by not keeping the passbook in his safe and proper custody.

Analysis

Explaining the scope of the revisional jurisdiction of the NCDRC under Section 21(b) of the said Act, the Court held that the same is extremely limited. It should be exercised only in case as contemplated within the parameters specified in the said provision, namely when it appears to the National Commission that the State Commission had exercised a jurisdiction not vested in it by law, or had failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdiction illegally or with material irregularity.

In the instant case, the Court noticed that the NCDRC itself had exceeded its revisional jurisdiction by calling for the report from the bank and solely relying upon such report, had come to the conclusion that the two fora below had erred in not undertaking the requisite in-depth appraisal of the case that was required.

The Supreme Court was at a loss to understand as to how the NCDRC could have sought for a report at the revisional stage, that too from an officer of the party which already had an opportunity to submit all the documents necessary for the purpose of defending itself before the Consumer Forum, and as to how such a report in the form of an additional evidence produced at the revisional stage could be relied upon, in respect of which the two fora below had no opportunity to deal with.

Contrary to the NCDRC’s opinion, the Court observed that both the State Commission as well as the Consumer Forum had elaborately appreciated the documents on record and passed the reasoned orders.

On the reliability of the report submitted by the Bank, the Court said that the report that tries to absolve the respondent-bank of its liability is based on surmises and conjectures as it abstrusely and without evidence holds that the bank has every reason to believe that wrong account number was intentionally inserted by the appellant himself for reasons best known to the appellant or on account of negligence by the appellant by not keeping the passbook in his safe and proper custody.

“The suppositions are contradictory as well as incredulous and fanciful. The appellant did not know the second respondent and would not have known his account number unless given to him by a bank officer. There was no way that the appellant would have known that the second respondent, namely Sunil Maity had an account in the same branch. No sane person would deposit cash or cheque meant to be deposited in his account in an account number belonging to another person with similar name.”

On the other hand, the bank should have been extra cautious given the fact that accounts of the appellant, Sunil Kumar Maity, and the second respondent, Sunil Maity, were with the same bank branch. The Court found it rather surprising that the NCDRC set aside the findings and conclusion recorded by the District and State Forum, by simply relying on this report.

The Court hence, restored the State Commission’s order wherein it was held that,

“Given that it is virtually impossible for one to know the account number of another person, and more so, as passbook is stated to be updated by Group ‘D’ staff of the bank, it would be myopic not to believe that the goof up created at the end of the Appellant itself. Besides this, since the Appellant made a great blunder while crediting the amount of the cheque to the account of Respondent No. 2, we feel, the Appellant must own up due responsibility in this regard.”

[Sunil Kumar Maity v. State Bank of India, 2022 SCC OnLine SC 77, decided on 21.01.2022]


*Judgment by: Justice Bela M. Trivedi

Legal RoundUpSupreme Court Roundups

Year 2021! The year that started with the hope of the COVID-19 Pandemic nearing an end with countries starting vaccination, ended up becoming deadlier than the year gone by. A year of losses for many, 2021 was also the year when the Supreme Court judges lost one of their own. Justice MM Shantanagoudar, a sitting judge of the Supreme Court, breathed his last on April 24, 2021.

Read: The Judicial Legacy of Justice MM Shantanagoudar

As the Nation was crippled with hardship and adversity, the Supreme Court refused to bog down and went on to deliver 865 judgments, which is a lot more than the number of judgments delivered in the 2020.

The year also witnessed the appointment of 9 judges, including 3 women judges and if all goes well, Justice BV Nagarathna, might take oath as the first woman Chief Justice of India in 2027!  Read more…

5 judges, including the former CJI Justice SA Bobde, retired. Justice NV Ramana took oath as the 48th Chief Justice of India. Read more…

Also read:

·        Chief Justice SA Bobde retires: A look at his legacy and justice in the time of COVID-19

·        A Winner All Along – Justice Indu Malhotra

·        Messiah of the sufferers: Bidding adieu to Justice Ashok Bhushan

·        A Multifaceted Expert — Justice Rohinton Fali Nariman

·        A Champion who applied technology to optimize human potential and capabilities – Justice Navin Sinha

Let’s go through the most important of the 865 judgments delivered by the Supreme Court in the year 2021. 

CONSTITUTION BENCH VERDICTS

Only 3 Constitution Bench judgments were delivered in the year 2021. Read all about them here.


THE MOST TALKED ABOUT CASES

Central Vista Project

The year began with the Supreme Court giving a go-ahead to the Central Vista Project in a 2:1 verdict. While the majority found itself compelled to wonder if it can dictate the government to desist from spending money on one project and instead use it for something else, Justice Khanna, in his dissenting opinion, observed that citizens have the right to know and participate in deliberation and decision making. [Rajiv Suri v. Delhi Development Authority,  2021 SCC OnLine SC 7]

Read: Supreme Court gives a go-ahead to Central Vista Project in a 2:1 verdict

Also read: Justice Khanna dissents in 2:1 verdict clearing the Central Vista Project

Farm Bill and Farmer Protest

While the repeal of the Farm laws came at the fag end of the year, the Supreme Court stayed the implementation of these Laws right in the beginning of the year after noticing that despite the peaceful protest, a few deaths had already taken place as Senior Citizens, youth and children were exposing themselves to not just the cold weather but also to COVID-19. [Rakesh Vaishanv v. Union of India,  (2021) 1 SCC 590]

Read: Supreme Court stays implementation of Farm Laws

Also read: Farmer Protests| Shashi Tharoor and 6 journalists not to be arrested for now over tweets on protester’s death during Republic Day Tractor Rally

Here’s a list of some more unmissable high-profile cases:


THE WAY FORWARD

The structures of our society have been created by males and for males. As a result, certain structures that may seem to be the “norm” and may appear to be harmless, are a reflection of the insidious patriarchal system.

Nitisha v. Union of India

2021 SCC OnLine SC 261

In 2021, the Supreme Court showed the way forward by giving many progressive orders/judgments. One of the top stories from the year 2021 was where the Court said that the administrative requirement imposed by the Indian Army authorities while considering the case of the Women Short Service Commissions Officers (WSSCO) for the grant of Permanent Commission (PC), of benchmarking these officers with the officers lowest in merit in the corresponding male batch was arbitrary and irrational.

In another important ruling, before taking the oath as the Chief Justice of India, Justice NV Ramana noticed that the conception that housemakers do not “work” or that they do not add economic value to the household is a problematic idea that has persisted for many years and must be overcome. He added that the issue of fixing notional income for a homemaker, therefore, served extremely important functions.

Here is the list of all the judgments that take us as a nation a step forward:


SEDITION AND FREE SPEECH

By way of a series of judgments and orders on free speech, the Supreme made clear that, a citizen has a right to criticize or comment upon the measures undertaken by the Government and its functionaries.

In a big move, the Supreme Court also agreed to decide the constitutionality of Section 124A IPC after it was submitted before the Court that the decision of the Court in Kedar Nath Singh v. State of Bihar, 1962 Supp. (2) SCR 769 required reconsideration. [Kishorechandra Wangkhemcha v. Union of India, (2021) 6 SCC 177]

Read everything here:


IBC – THE IMPERFECT LAW?

While stating that “there is nothing like a perfect law and as with all human institutions, there are bound to be imperfections”, the Supreme Court, in a 465-pages long judgment, upheld the validity of several provisions of the Insolvency and Bankruptcy Code (Amendment) Act, 2020, albeit with directions given in exercise of powers under Article 142 of the Constitution of India. [Manish Kumar v. Union of India,  (2021) 5 SCC 1]

Read: IBC (Amendment) Act, 2020 upheld, albeit with directions

This judgment was followed by a series of judgments and orders on IBC. Check out the list below to read more:


RIGHTS OF PERSONS WITH DISABILITIES

“In their blooming and blossoming, we all bloom and blossom.”

Vikash Kumar v. Union Public Service Commission,

(2021) 5 SCC 370

This year witnessed many Supreme Court Judgments and orders on the Rights of Persons with Disabilities.

Check out this list to know more:


DEMOCRACY AND TRANSPERANCY

No-one is above law; this was the Supreme Court message as it stressed on importance of transparency by Political Parties and Government Institutions.

Read here:


THE CONSTITUTIONAL RIGHT TO PROPERTY

In a case where State took possession of surplus land in absence of surplus land, this Supreme Court’s verdict served as a reminder that right to property is still a constitutional right under Article 300A of the Constitution of India though not a fundamental right. The deprivation of the right can only be in accordance with the procedure established by law. [Bajranga v. State of Madhya Pradesh,  2021 SCC OnLine SC 27]

Read: Right to property is still a constitutional right under Article 300A of the Constitution


WHEN A CONSTITUTIONAL AMENDMENT WAS STRUCK DOWN

In a rare move, the Supreme Court held that the Constitution (97th Amendment) Act, 2011 which inter alia inserted Part IX-B was ultra vires the Constitution insofar it is concerned with the subject of Cooperative Societies for want of the requisite ratification under Article 368(2) proviso. [Union of India v. Rajendra N. Shah2021 SCC OnLine SC 474]

Read: Part IX-B of Constitution relating to cooperative societies unconstitutional for want of ratification by half of the States; Provisions relating to multi-State cooperative societies severable and valid: SC


THE “EVEN MORE DESERVING PARTIES”

Section 89 of CPC and Section 69-A of Tamil Nadu Court Fees and Suit Valuation Act, 1955 contemplate the refund of court fees in all methods of out-of-court dispute settlement between parties that the Court subsequently finds to have been legally arrived at and not just to those cases where the Court itself refers the parties to any of the alternative dispute settlement mechanisms listed in Section 89 of the CPC.

The Court observed that the parties agreeing to out-of-court settlement are “even more deserving”. [High Court of Madras v. MC Subramaniam(2021) 3 SCC 560]

Read: Parties agreeing to out-of-court settlement without judicial intervention under Section 89 CPC can’t be denied benefit of refund of court fees


BANKS AND BANKING

While the Constitution bench looked down upon the “mechanical” conversion of complaints under Section 138 NI Act from summary to summons trial and directed that the magistrates “must” record reasons, many other important decisions were given in 2021.

Read here: 


CONSUMER PROTECTION

The Supreme Court took cognizance of Government’s lackadaisical attitude towards consumer empowerment and observed that the ground reality is quite different as there is little endeavour to translate this Legislative intent into an administrative infrastructure with requisite facilities, members and staff to facilitate the decision on the consumer complaint.

Here are the important rulings on Consumer Protection that you cannot miss:


FROM “DEATH” TO “LIFE”

In 3 cases, the Supreme Court commuted the death sentences of the convicts to Life Imprisonment and in one case, 3 death row convicts were acquitted of all charges.

Read here:


MOTOR ACCIDENTS CLAIMS

Read how a one-stop online platform for all parties involved and Motor Vehicle Appellant Tribunals will help in achieving a hassle free disposal of Motor Vehicle Accident claims:


ARBITRATION

No year goes by without the Supreme Court delivering some important ruling on Arbitration and the year 2021 was no different.

Read the updates here:


A GUIDE FOR THE BENCH!

“The Magistrates are the first lines of defence for both the integrity of the criminal justice system, and the harassed and distraught litigant.”

Krishna Lal Chawla v. State of U.P.,

2021 SCC OnLine SC 191

In 2021, the Court also delivered a number of judgments on the issues of pendency of cases, judicial vacancies and overall standard to be followed by the members of bench while dealing with case.

Read all about these judgments here:


COVID-19

As the second wave of COVID-19 brought the nation to its knees, the Supreme Court did everything in it’s power to ensure that the loss is minimized.

Read all the important judgments here:

Case BriefsSupreme Court

Supreme Court: In a case where it was alleged that more than one consumer cannot institute a complaint unless they come within the definition of the word “complainant” of Section 2(5) of the Consumer Protection Act, 2019 and also satisfy the requirements of Section 38(11) read with Order I Rule 8 CPC, the bench of Hemant Gupta and V. Ramasubramanian*, JJ has held that it is wrong to contend that wherever there are more consumers than one, they must only take recourse to Order I Rule 8 CPC, even if the complaint is not on behalf of or for the benefit of, all the consumers interested in the matter.

Relevant Provisions

Section 2(5) of the Consumer Protection Act, 2019 reads as under:

“(5) “complainant” means—

(i) a consumer; or

(ii) any voluntary consumer association registered under any law for the time being in force; or

(iii) the Central Government or any State Government; or

(iv) the Central Authority; or

(v) one or more consumers, where there are numerous consumers having the same interest; or

(vi) in case of death of a consumer, his legal heir or legal representative; or

(vii) in case of a consumer being a minor, his parent or legal guardian;

35. Manner in  which  complaint  shall  be  made.­

(1) A complaint, in relation to any goods sold or delivered or agreed to be sold or delivered or any service provided or agreed to be provided, may be filed with a District Commission by—

(c)  one or more consumers, where there are numerous consumers having the same interest, with the permission of the District Commission, on behalf of, or for the benefit of, all consumers so interested.

38. Procedure on admission of complaint.

(11)  Where the complainant is a consumer referred to in sub-clause (v) of clause (5) of section 2, the provisions of Order I Rule 8 of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908) shall apply subject to the modification that every reference therein to a suit or decree shall be construed as a reference to a complaint or the order of the District Commission thereon.

Analysis

The Court agreed to the fact that the definition of the word “complainant” is little misleading. It, however, explained,

“There may be cases where only “a few consumers” and not “numerous consumers” have the same interest. There is nothing in the Act to prohibit these few consumers from joining together and filing a joint complaint.”

It is true that Section 2(5)(i) uses the expression “a consumer”. If the vowel “a” and the word “consumer” appearing in Section 2(5)(i) are to be understood to exclude more than one person, it will result in a disastrous consequence while reading Section 2(5)(vi). Section 2(5)(vi) states that in the case of death of a consumer, “his legal heir or legal representative” will be a complainant. Unless the words “legal heir” and “legal representative” are understood to mean ‘legal heirs’ and ‘legal representatives’, a meaningful reading of the provision may not be there.

The Court also took note of Section 13(2) of the General Clauses Act, 1897, which provides that words in the singular shall include the plural and vice versa in all Central Acts and Regulations, unless there is anything repugnant in the subject or context. Hence, it said that,

“We cannot read anything repugnant in the subject or context of Section 2(5) or 35(1)(c) or 38(11) of the Consumer Protection Act, 2019 to hold that the word in the singular, namely, “consumer” will not include the plural.”

Further, a joint complaint stands in contrast to a complaint filed in a representative capacity. For attracting the provisions of Section 35(1)(c), the complaint filed by one or more consumers should be on behalf of or for the benefit of numerous consumers having same interest. It does not mean that where there are only very few consumers having the same interest, they cannot even join together and file a single complaint but should take recourse only to independent and separate complaints.

Explaining by way of an example, the Court said,

“… a case where a residential apartment is purchased by the husband and wife jointly or by a parent and child jointly. If they have a grievance against the builder, both of them are entitled to file a complaint jointly. Such a complaint will not fall under Section 35(1)(c) but fall under Section 35(1)(a). Persons filing such a complaint cannot be excluded from Section 2(5)(i) on the ground that it is not by a single consumer. It cannot also be treated as one by persons falling under Section 2(5)(v) attracting the application of Order I Rule 8 CPC read with Section 38(11).”

Therefore, the proper way of interpreting Section 35(1) read with section 2(5), would be to say that a complaint may be filed by:

  1. a single consumer;
  2. a recognised consumer Association;
  3. one or more consumers jointly, seeking the redressal of their own grievances without representing other consumers who may or may not have the same interest;
  4. one or more consumers on behalf of or for the benefit of numerous consumers; and
  5. the Central Government, Central Authority or State Authority.

Further, it must be remembered that the provisions of the Consumer Protection Act are in addition to and not in derogation of the provisions of any other law for the time being in force, by virtue of Section 100. Even Section 38 which prescribes the procedure to be followed by the Commission for enquiring into the complaint, does not expressly exclude the application of the provisions of CPC. Though Sub-sections (9), (11) and (12) of Section 38 make specific reference only to a few provisions of the Code of Civil Procedure, the principle behind Order I Rule 1 enabling more than one person to join in a suit as plaintiff is not expressly excluded.

[Brigade Enterprises Ltd. v. Anil Kumar Virmani, 2021 SCC OnLine SC 1283, decided on 17.12.2021]


Counsels

For appellant: Senior Advocate Jayant Bhushan,

For Respondent: Senior Advocate Ajit Kumar Sinha

For intervenors: Advocate Omanakuttan K. K.


*Judgment by: Justice V. Ramasubramanian

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 BriefsSupreme Court

Supreme Court: Explaining the scope of Section 51 of the Consumer Protection Act, 2019, the bench of MR Shah* and BV Nagarathna, JJ has held that National Commission can pass an order to deposit the entire amount and/or any amount higher than 50 per cent of the amount in terms of the order of the State Commission while staying the order passed by the State commission.

However, at the same time, while considering the stay application against the order passed by the State Commission and while passing the order to deposit the entire amount and/or any amount higher than 50 per cent of the amount, the National Commission has to assign some reasons and pass a speaking order why the conditional stay is being granted on condition of deposit of the entire amount and/or any amount higher than 50 per cent of the amount. Such an order on the stay application is not to be passed mechanically.

Issue

Whether in an appeal under Section 51 of the Consumer Protection Act, 2019 and while considering the stay application to stay the order passed by the State Commission, the National Commission can pass an order to deposit the entire amount and/or any amount higher than 50 per cent of the amount in terms of the order of the State Commission?

Analysis

Section 51 of the Consumer Protection Act, 2019 – Explained

As per Section 51 of the Act, 2019, more particularly, second proviso to Section 51, the appellant(s) in an appeal against the order passed by the State Commission may prefer an appeal, however, before the appeal is entertained by the National Commission, the appellant(s) has to deposit 50 per cent of the amount.

It is the pre-condition to deposit 50 per cent of the amount as ordered by the State Commission before his appeal is entertained by the National Commission. However, that does not take away the jurisdiction of the National Commission to order to deposit the entire amount and or any amount higher than 50 per cent of the amount while considering the stay application to stay the order passed by the State Commission.

“Rules for entertainment of an appeal on deposit of 50 per cent of the amount ordered by the State Commission, which is a statutory pre-deposit and the grant of interim order on the stay application subject to deposit of further amount are distinct and different. Pre-deposit condition as per second proviso to Section 51 has no nexus with the grant of interim order of stay by the National Commission subject to deposit of the amount awarded by the State Commission.”

Speaking order

In Shreenath Corporation v Consumer Education and Research Society, (2014) 8 SCC 657, the Court considered the Order XLI Rule 5 and Order XXXIX Rule 1 of the CPC alongwith the object and purpose of the deposit of the amount as a pre-deposit before the appeal is entertained under Section 19 of the Act, 1986 and held that,

“The order passed by the State Commission directing the appellant to refund the amount and/or pay any amount higher than 50 per cent can be said to be akin to a money decree. Even as per Order XLI Rule 5, the general rule is that normally there shall not be any unconditional stay of a money decree, however, at the same time, the Appellate Court may pass an appropriate conditional order while staying the impugned decree depending upon the facts of the case and by giving cogent reasons.”

Hence, if the National Commission after hearing the appeal of the parties in its discretion wants to stay the amount awarded by the State Commission, it is open to the National Commission to pass an appropriate interim order including a conditional order of stay.

However, the National Commission has to pass a speaking order giving some reasons why in the facts of the particular case the conditional stay of the order passed by the State Commission is to be passed subject to deposit of the entire amount and/or any amount higher than 50 per cent of the amount awarded by the State Commission and that too after giving an opportunity to the appellant as well as to the respondent.

“The order on the stay application is not to be passed mechanically. It must reflect an application of mind by the National Commission why the order passed by the State Commission is to be stayed on condition of deposit of the entire amount and/or any amount higher than 50 per cent of the amount awarded by the State Commission.”

However, at the same time, there is no discretion at all to stay the order passed by the State Commission subject to deposit of any amount less than 50 per cent of the amount which is required to be deposited as a pre-deposit before the appeal is entertained as per second proviso to Section 51 of the Act, 2019.

Conclusion

  • Pre-deposit of 50 per cent of amount as ordered by the State Commission under second proviso to Section 51 of the Consumer Protection Act, 2019 is mandatory for entertainment of an appeal by the National Commission;
  • the object of the said pre-deposit condition is to avoid frivolous appeals;
  • the said pre-deposit condition has no nexus with the grant of stay by the National Commission;
  • while considering the stay application in staying the order passed by the State Commission, the National Commission can grant a conditional stay directing the appellant(s) to deposit the entire amount and/or any amount higher than 50 per cent of the amount in terms of the order of the State Commission;
  • however, at the same time, the National Commission has to assign some cogent reasons and/or pass a speaking order when the conditional stay of the order passed by the State Commission is passed subject to deposit of the entire amount and/or any amount higher than 50 per cent of the amount either as an ex parte order or after hearing both sides and considering the facts and circumstances of the case.
  • Thus, the National Commission can grant a conditional stay of the order passed by the State Commission on deposit of the entire amount and/or any amount higher than 50 per cent of the amount as ordered by the State Commission.

[Manohar Infrastructure and Constructions Pvt. Ltd. v. Sanjeev Kumar Sharma, 2021 SCC OnLine SC 1182, decided on 07.12.2021]


Counsels

For appellants: Senior Advocate Sidharth Dave and Advocate Kanika Agnihotri


*Judgment by: Justice MR Shah

Know Thy Judge | Justice M. R. Shah

Case BriefsSupreme Court

Supreme Court: The Division Bench comprising of Hemant Gupta* and V. Ramasubramanian, JJ., set aside NCDRC’s order granting 14 lakhs compensation to the claimants in negligence claim against doctors. The Bench stated,

“The doctors are expected to take reasonable care but none of the professionals can assure that the patient would overcome the surgical procedures.”

In the instant case, the National Consumer Disputes Redressal Commission (NCDRC) had directed the appellants i.e., Bombay Hospital & Medical Research Centre and Dr. C. Anand Somaya to pay a sum of Rs. 14,18,491/- along with interest at 9% p.a. to the claimants. The claimants, namely legal heirs of the deceased – patient Dinesh Jaiswal had alleged medical negligence and deficiency of service on the part of the Hospital and the Doctor in treating the patient.

Factual Analysis

Noticeably, the allegation against the hospital was of failure of the Doctor to take the follow-up action after surgery, a delayed decision to amputate the leg subsequent to re-exploration, and the alleged undue foreign visit of the Doctor.

Admittedly, the patient was in critical condition when the Doctor was consulted and surgery was thereafter performed within two days. Rejecting the claim of negligence, the Bench opined that non-working of the DSA machine and consequent delay in performing the test could not be said to be negligence on the part of the Doctor or the Hospital. The Bench remarked,

“DSA machine is a large, expensive and complicated machine which unfortunately developed certain technical problem at the time when patient had to be tested. Any machine can become non-functional because of innumerable factors beyond the human control as the machines involve various mechanical, electrical and electronic components.”

Since the DSA test of the patient was conducted in the Hospital prior to surgery was a proof that DSA machine was not dysfunctional for a long time. Moreover, the alternative process to determine the blood flow was carried out by angiography and the decision for re-exploration was taken. On the issue of non availability of operation theatres, the Bench held,

“No fault can be attached to the Hospital if the operation theatres were occupied when the patient was taken for surgery. Operation theatres cannot be presumed to be available at all times.”

Therefore, the Bench opined that non-availability of an emergency operation theatre during the period when surgeries were being performed on other patients was not a valid ground to hold the Hospital negligent in any manner. In respect of the allegation that doctors failed to amputate legs on time, the Bench observed that efforts were being made to save the limbs as amputation was considered as the last resort. The amputation was done as per the advice of Dr. Pachore, who was the expert in that subject. Similarly, with regard to the contention of the Doctor being on a foreign visit, the Bench held that mere fact that the Doctor had gone abroad could not lead to an inference of medical negligence as the patient was admitted in a hospital having specialists in multi-faculties.

Findings of the Court

Noticeably, it was not the case of the complainant that Doctor was not possessed of requisite skill in carrying out the operation. Also, there was no proof of negligence in performing the surgery or in the process of re-exploration. Therefore, the Bench expressed,

“In spite of the treatment, if the patient had not survived, the doctors cannot be blamed as even the doctors with the best of their abilities cannot prevent the inevitable.”

Opining that there is a tendency to blame the doctor when a patient dies or suffers some mishap, the Bench stated that the doctors are expected to take reasonable care but none of the professionals can assure that the patient would overcome the surgical procedures.

“It is too much to expect from a doctor to remain on the bed side of the patient throughout his stay in the hospital which was being expected by the complainant here. A doctor is expected to provide reasonable care which is not proved to be lacking in any manner in the present case.”

Decision

Spotting both legal and factual errors in the findings recorded by NCDRC, the Bench opined that the order holding the Hospital and the Doctor guilty of medical negligence were not sustainable in law. Consequently, the appeals were allowed. The order of the NCDRC was set aside and the complaint was dismissed.

However, the Bench directed that the sum of Rs. 5 lakhs disbursed to the complainant by virtue of interim order passed by the Court should be treated as ex gratia payment to the complainant and not to be recovered by either the Hospital or the Doctor.

[Bombay Hospital & Medical Research Centre v. Asha Jaiswal, 2021 SCC OnLine SC 1149, decided on 30-11-2021]


Kamini Sharma, Editorial Assistant has put this report together


*Judgment by: Justice Hemant Gupta

Case BriefsTribunals/Commissions/Regulatory Bodies

Delhi State Consumer Disputes Redressal Commission (DSCDRC): On finding deficiency in providing services, Coram of Dr Justice Sangita Dhingra Sehgal (President) and Anil Srivastava (Member), held that the builder gave false assurances to the complainant with regard to handing over the buyer for delivery of possession.

The instant complaint was filed under Section 17 of the Consumer Protection Act alleging deficiency of service and unfair trade practices.

In the year 2010, Mr M.K. Arora booked a unit in the project of OP. The Builder Buyer agreement was executed between the parties after the expiry of 4 years from the date of the first payment made to the OP.

As per the said agreement, the OP was supposed to hand over the possession of the said office space from the date of signing of the above-stated agreement, however, till date the possession has not been handed over by the OP. Along with this, OP unilaterally changed the size of the said unit which escalated the cost of the unit.

Allottee kept paying the OP as and when demanded by it. Later the allottee sent a legal notice to the OP asking for refund.

Analysis, Law and Decision

Deficiency of Service

Whether OP is actually deficient in providing its services to the complainant or not?

As per clause 3(a) of the Builder Buyer Agreement, OP was bound to handover the possession of the said office space within 3 years from the date of signing of the said agreement.

OP executed the said builder buyer agreement after a period of 4 years from the date of the first payment received from the allottee.

It has been well settled that the complainant cannot be expected to wait for an indefinite time period to get the benefits of the hard-earned money that they have spent in order to purchase the property in question. [Ref: Fortune Infrastructure v. Trevor D’ Lima, (2018) 5 SCC 442]

In view of the above, it was held that OP was deficient in providing its services to the complainant as the OP had given false assurance to the complainant with respect to the time for delivery of possession of the said office space and kept the hard-earned money of the complainant for about 11 years.

The commission directed OP to refund the amount paid by the complainants. [Promila Arora v. Landmark Apartments (P) Ltd., Complaint Case No. 152 of 2018, decided on 29-11-2021]


Advocates before the Commission:

Complainants: Mr Sumit K Batra, Advocate

Opposite Party: Nida Doon & Simranjeet Singh, Advocate

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

National Consumer Disputes Redressal Commission (NCDRC):  Expressing its opinion of ‘Condonation of Delay’, Coram of C. Viswanath (Presiding Member) and Justice Ram Surat Ram Maurya (Member) dismissed the present appeal calling it an abuse of process of law.

Instant appeal was filed against the decision of the State Consumer Disputes Redressal Commission. Further, along with the appeal, an application for condonation of delay of 13 years was also filed by the appellant.

Section 14 of the Limitation Act 

“14 Exclusion of time of proceeding bona fide in court without jurisdiction. —

(1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

(2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

(3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature. Explanation.— For the purposes of this section,—

(a) in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted; 

(b) a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding; 

(c) misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction.”

 It was noted that the Opening sentence of Section 14 of the Limitation Act says “exclusion of time of proceeding bona fide in court without jurisdiction.”

In the present matter, Opposite Party (OP) tried to take undue benefit of Section 14 of the Act and not act bonafidely. Appellant had malafide intention to evade implementation of the order passed by the State Commission.

Further, Supreme Court has held that a party who has not acted diligently or remains inactive is not entitled to condonation of delay

Elaborating further on condonation of delay, Court observed that Condonation of delay is not a matter of right and the applicant has to set out the case showing sufficient reasons which prevented them to come to the Court/Commission within the stipulated period of limitation.

Supreme Court in the matter of Ram Lal v. Rewa Coalfields Ltd., AIR 1962 Supreme Court 361 has held as under:

“It is, however, necessary to emphasize that even after sufficient cause has been shown a party is not entitled to the condonation of delay in question as a matter of right. The proof of a sufficient cause is a condition precedent for the exercise of the discretionary jurisdiction vested in the Court by Section 5. If sufficient cause is not proved nothing further has to be done; the application for condoning delay has to be dismissed on that ground alone. If sufficient cause is shown then the Court has to enquire whether in its discretion it should condone the delay. This aspect of the matter naturally introduces the consideration of all relevant facts and it is at this stage that diligence of the party or its bona fides may fall for consideration; but the scope of the enquiry while exercising the discretionary power after sufficient cause is shown would naturally be limited only to such facts as the Court may regard as relevant.” 

Burden of showing delay is on whom?

Coram stated that the burden is on the applicant to show that there was sufficient cause for the delay.

In the Supreme Court decision of Anshul Aggarwal v. NOIDA, (2011) 14 SCC 578, Supreme Court warned the Commissions to keep in mind while dealing with such applications the special nature of the Consumer Protection Act.

In a recent judgment the Supreme Court observed that condonation of delay would depend on the background of each and every case, and routine explanation would not be enough.

Hence, in the present matter, appellant’s submission that he got the knowledge of the impugned order on 31-01-2017 was nothing but an attempt to mislead the Court.

Therefore, the present first appeal was just an abuse of process of law. [Suranjan Biswas v. Ashoke Kumar Nath, FA No. 1005 of 2019, decided on 15-11-2021]


Advocates before the Commission:

For the Appellant: Ramdulal Manna, Advocate

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

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

Grievance of the Buyer

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

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

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

Builder’s Contention

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

Analysis, Law and Decision

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

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

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

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

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

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

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

Direction

Complainants are entitled to refund of the principal amount with a reasonable interest of @9% p.a. from the date of the respective date of deposit till the date of actual refund. [Ansal API Megapolis Buyer’s Assn. v. Ansal Hi-Tech Townships Ltd., 2021 SCC OnLine NCDRC 330, decided on 8-11-2021]


Advocates before the Commission:

For the Complainants: Mr Saurabh Jain, Advocate

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

Case BriefsHigh Courts

Bombay High Court: Holding that mere repeal of the Consumer Protection Act, 1986 by the 2019 Act, without anything more, would not result in the exclusion of ‘health care’ services rendered by doctors to patients from the definition of service, the Division Bench of Dipankar Datta CJ and G.S. Kulkarni, J., expressed that present matter is,

“…a thoroughly misconceived Public Interest Litigation and we have no doubt that it deserves outright dismissal.”

In the instant matter, the Trust sought declaration from this Court that services performed by healthcare service providers are not included within the purview of the Consumer Protection Act, 2019 as well as for mandamus directing all consumer fora within the territorial jurisdiction of this Court not to accept complaints filed under 2019 Act against healthcare service providers.

Further, the petitioning Trust submitted that the 2019 Act having been brought into force upon the repeal of the Consumer Protection Act, 1986, registration of complaints, which were filed against doctors, by the consumer fora in the State of Maharashtra was illegal and shall be declared as such.

Analysis, Law and Decision

In High Court’s opinion, there was no material difference between the definition of service in Section 2(1)(o) of the 1986 Act and in Section 2(42) of the 2019 Act, except for inclusion of ‘telecom’ in Section 2(42) of the 2019 Act, the terms of the definition were identical.

Another significant point noted by the Bench was that Section 2(1)(o) of the 1986 Act did not include services rendered by doctors within the term “service”, but such definition was considered by the Supreme Court in its decision in Indian Medical Association v. V. P. Shantha, (1995) 6 SCC 651.

In view of the above, High Court upheld the decision of NCDRC.

Definition of “service” in both the enactments (repealed and new) are more or less similar and what has been said of “service” as defined in section 2(1)(o) of the 1986 Act would apply ex proprio vigore to the definition of the terms “service” in Section 2(42) of the 2019 Act.

 Hence, services rendered by doctors in lieu of fees/charges therefor were not beyond the purview of the 2019 Act.

In view of the above petition was dismissed petitioning Trust was directed to pay Rs 50,000. [Medicos Legal Action Group v. Union of India, 2021 SCC OnLine Bom 3696, decided on 25-10-2021]


Advocates before the Court:

Mr. Ashish S. Chavan a/w Mr. Adithya Iye a/w Mr. Kunal Shinde for petitioner.

Mr. Anil C. Singh, Addl. Solicitor General a/w Mr. Aditya Thakkar a/w Mr. D. P. Singh for respondent-UOI

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

National Consumer Disputes Redressal Commission (NCDRC): Expressing that the builder cannot take shelter of “Force Majeure” while delay in handing over possession Coram of C. Viswanath (Presiding Member) and Ram Surat Ram Maurya (Member) directed for a refund of buyers’ amount along with interest.

Facts in a Nutshell

Complainants had booked a unit in OP’s project and paid a booking amount as well. Later they were allotted a unit vide an allotment letter.

Subsequently, an Apartment Buyer’s Agreement was executed, wherein possession of the unit was promised within 39 months from the date of excavation, excluding an additional grace period of 6 months to complete the project.

Grievance

The grievance of the Complainants was that the OP, despite receiving more than 90% of the total consideration, failed to hand over possession of the Unit, within the promised time period and even possession in the near future seemed unlikely.

Contentions of the OP

OP while contending that the possession could not be delivered in time because some of the customers did not make timely payments also added that there was a shortage of labour due to construction of Commonwealth Games Village, shortage of water, dispute with construction agencies, delays in obtaining licenses, approvals, etc. Further, it was added that as per the Agreement, in case of delay caused due to “Force Majeure” events, the OP would be entitled to an extension of time, without incurring any liability.

Though, the Opposite Party failed to prove that there was an unforeseen and unexpected event that prevented the completion of the Project within the stipulated time period.

Analysis, Law and Decision

Commission expressed that the OP cannot take shelter of the “Force Majeure” Clause and the reasons cited by the OP for the delay of the project, appeared to be delaying tactics veiled as “Force Majeure” conditions and seemed to be an attempt to wriggle out of its contractual obligations.

It was noted that even after receiving the substantial amount OP failed to fulfil its contractual obligation of delivering possession of the Unit to the complainant within the time stipulated.

Conclusion

A person cannot be made to wait indefinitely for the possession of the flats allotted to him/her. The Complainants are, therefore, entitled to seek the refund of the amount paid along with compensation. [Manoj Kawatra v. Pioneer Urban Land & Infrastructure, 2021 SCC OnLine NCDRC 325, decided on 1-11-2021]


Advocates before the Commission:

For the Complainant: Aditya Parolia, Advocate

For the OP: T.V.S. Raghavendra Sreyas, Advocate

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

National Consumer Disputes Redressal Commission (NCDRC):   Coram of Justice Deepa Sharma (Presiding Member) and Subhash Chandra (Member)directed a full refund of the principal amount along with interest, due to failure of delivering timely possession of an apartment purchased by the complainant.

Facts in a nutshell

Complainant had booked an apartment and made an initial payment of Rs 15,00,000 and an allotment letter was issued. Builder -Buyer agreement was also executed, and the complainant had paid a total sum of Rs 2,23,91,480 on several dates.

It was submitted the due date of delivery of possession was 42 months with a grace period of six months from the date of approval of the building plan. The delivery of the subject flat was not made within the stipulated period.

In view of the above grievance, complainant filed a complaint and prayed that OP be directed to hand over the subject property along with delayed compensation containing all the facilities promised otherwise a direction for a full refund should be ordered along with an interest of 18%.

Analysis, Law and Decision

Coram expressed that a person who buys a good ceases to be a consumer, if that person indulges itself in commercial activities qua the goods and in case of purchase of residential houses, it can be said that buyer is indulging into the activity of buying/selling the properties and purchased it for that purpose.

Settled Position of Law

Burden is upon the OP to prove that the complainant is indulging in commercial activities of sale and purchase of the flats and that he had booked the subject flat with the intention to sell it to earn profit as part of his commercial activities.

Since the OP failed to prove the above in the present matter, Commission held that the complainant was a consumer within the meaning of Section 2(1)(d) of the Act.

OP shall refund the entire principal amount of Rs 2,23,91,480/- to the complainant alongwith compensation in the form of simple interest at the rate of 10.25 % per annum, which is stated to be the interest rate under RERA, in Haryana, in respect of the cases where refund is made to the flat buyer on account of delay on the part of the developer in offering possession of the house, from the date of each payment till the date of refund.

OP shall also pay a sum of Rs 25,000 as cost of litigation to the complainant. [Aloke Anand v. IREO Pvt. Ltd., Consumer Case No. 1277 of 2017, decided on 1-11-2021]


Advocates before the Court:

For the Complainant: Nithin Chandran, Advocate

For the OP: Abhimanyu Bhandari, Advocate