Consumer Appeal Can't Be Dismissed Without Considering Extension Plea For Pre-Deposit When Substantial Amount Already Paid: MP High Court

The Madhya Pradesh High Court has set aside orders dismissing an appeal filed by an insurance company before the State Consumer Disputes Redressal Commission (SCDRC), holding that its application seeking extension of time to furnish the pre-deposit receipt ought to have been placed before the State Commission for consideration.

A Division Bench of Justice Subodh Abhyankar and Justice Alok Awasthi observed that the insurance company was deprived of its right to be heard on the extension application after the Registrar dismissed the appeal without placing the application before the SCDRC.

“the application for extension of time was also filed by the petitioner on 24.01.2024, which ought to have been put up for hearing before the SCDRC by its Registrar.”

The Court was hearing a petition filed by Bajaj Life Insurance Limited challenging the order passed by the National Consumer Disputes Redressal Commission (NCDRC), which had affirmed the dismissal of the company's appeal by the Registrar of the State Commission.

The dispute arose from a consumer complaint alleging deficiency in service by the insurance company following the death of the complainant's husband. By an order dated October 6, 2022, the District Consumer Forum directed the insurance company to pay the entire home loan amount, along with requisite interest, to Aavasa Finance Ltd. It also directed the company to pay ₹50,000 as compensation for mental trauma and ₹10,000 towards expenses and loss suffered by the complainant.

The insurance company challenged the order before the State Commission. At the time, it had not furnished the 50% pre-deposit required under Section 41 of the Consumer Protection Act.

On January 10, 2024, the State Commission granted the company two weeks to remove the default, directing that the appeal would stand dismissed if the default was not cured within that period. However, on January 24, 2024, the company filed an application seeking extension of time to furnish the pre-deposit receipt. The Registrar nevertheless dismissed the appeal on January 30, 2024, observing that the receipt had not been furnished within the stipulated period.

The company subsequently approached the NCDRC. Before the High Court, it submitted that the amount had eventually been deposited before the District Consumer Forum on March 1, 2024. It also submitted that the extension application had explained that a draft prepared for the pre-deposit and sent to the local advocate had been lost in transit, necessitating preparation of a fresh draft.

The complainant opposed the petition, contending that the company had challenged the Registrar's order dated January 30, 2024 instead of the original order of the State Commission dated January 10, 2024. It was also argued that the company had claimed before the NCDRC that the entire amount had been deposited, whereas ₹18,00,742 had been deposited and there was an alleged shortfall of ₹1.5 lakh.

The High Court however noted that the application seeking extension of time was reflected in the Registrar's order but had not been placed before the State Commission for consideration. It held that had the application been placed before the SCDRC, an appropriate order could have been passed on it, but the company was deprived of an opportunity to be heard.

Referring to Section 41 of the Consumer Protection Act, the Bench noted that while an appeal involving payment of an amount cannot be entertained by the State Commission unless 50% of that amount is deposited, the provision did not mandate that the 50% deposit had to be made at the time of filing the appeal. The Court therefore held that the application seeking extension of time could have been considered.

The Court also noted that the insurance company had deposited a substantial amount. The NCDRC had recorded that, according to the company, the total amount was ₹16 lakh, while ₹18,00,742 had actually been deposited, though the complainant disputed the calculation and claimed a shortfall of ₹1.5 lakh. The High Court observed that the amount deposited was substantially more than 50% of the decretal amount.

It further found that the NCDRC had failed to address the grounds raised by the insurance company in its appeal. It observed that the matter was procedural and should not have been prolonged, particularly when more than 50% of the decretal amount had already been deposited.

On the objection that the insurance company had challenged the Registrar's order rather than the original order of January 10, 2024, the Bench held that this was not an incurable mistake. The company could have been granted some time to challenge the appropriate order instead of having its petition dismissed on that ground.

The High Court accordingly set aside the NCDRC's order as well as the consequential orders passed by the State Commission and its Registrar, and remanded the matter to the State Commission to decide the appeal afresh on merits after giving both parties an opportunity of hearing.

The Court directed the State Commission to decide the appeal as expeditiously as possible, preferably within two months.