Overcoming The Pecuniary Conundrum In Consumer Cases

Shivkrit Rai & Kashish Bajaj
15 Sep 2020 7:30 AM GMT
Overcoming The Pecuniary Conundrum In Consumer Cases
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The new Consumer Protection Act, 2019 came into effect on July 20, 2020, thereby replacing the Consumer Protection Act, 1986. While the new Act has brought in a catena of changes which will empower the consumers, it has also brought in some structural changes with respect to the power vested with the Consumer Disputes Redressal Commissions. One of the most prominent changes which has been brought by the new Act is the change in the pecuniary jurisdiction of the Consumer Commissions at all three levels of the hierarchy, i.e. at the District level, State level and the National level.

As per the 2019 Act, the pecuniary jurisdiction of the District Commissions is till Rs. 1 crore which is an increase from the previous Rs. 20 lakhs. The State Commissions have a jurisdiction to entertain cases between 1 crore to 10 crores, which has been changed from the previous bracket of Rs. 20 lakh to Rs. 1 crore. The National Commission will now take matters which are upwards of Rs. 10 crores. The National Commission's pecuniary jurisdiction as per the old act was to entertain cases which exceeded Rs. 1 crore. (See sections 34, 47 and 58)

Change in Pecuniary Jurisdiction


District Commission

State Commission

National Commission

Consumer Protection Act, 1986 Act(As amended in 2002)

Upto Rs. 20 Lakhs

Between Rs. 20 lakhs and Rs. 1 crore

Above Rs. 1 crores

Consumer Protection Act, 2019

Upto Rs. 1 crore

Between Rs. 1 crore and Rs. 10 crores

Above Rs.10 crores

Quite interestingly, the criteria for determining pecuniary jurisdiction has also changed. When the 1986 Act was in force, the National Commission in its landmark judgment of Ambrish Kumar Shukla v. Ferrous Infrastructure had laid down the criteria for determining pecuniary jurisdiction for all the Commissions. However, the decision of the National Commission had created more ambiguity as it gave the complainants the power to escape the hierarchy and approach the National Commissions directly. The new Act will cure these lacunas, as the wordings of the section dealing with pecuniary jurisdiction has changed significantly.


Before 2016, there had been a constant confusion in various Consumer Commissions on how to determine the pecuniary jurisdiction of an original consumer complaint. The Act provided, that the pecuniary jurisdiction is to be determined on the basis of value of goods or services and compensation, if any, claimed. (See sections 11, 17 & 21 of Consumer Protection Act, 1986)

The sections had created ambiguity and raised two main questions for determining pecuniary jurisdiction. First, where there is a defect in the goods or services in question, will the value of total goods or services determine the pecuniary jurisdiction or is it merely the cost of curing the defect which should be taken into account. Second, should the compensation which has been prayed for by the complainant in the consumer complaint be taken into account while considering the aspect of pecuniary jurisdiction.

The judgment of the three-judge bench in Ambrish Kumar Shukla case before the National Commission had attempted to clarify the ambiguity over pecuniary jurisdiction. The bench held that in cases where there is a defect in the goods or services in question, the pecuniary jurisdiction will be determined on the basis of the aggregate value of goods or services involved. For this, the bench clarified their stance by way of an illustration. The bench explained that if a person had bought an apartment for Rs. 1 crore, and the defect which was sought to be cured was for Rs. 5 lakhs only, then the value of the goods i.e. apartment will be taken into account which is 1 crore, instead of the Rs. 5 lakhs which is the cost of curing the defect.

With respect to the compensation aspect, it was held that the interest sought by the complainant in the consumer complaint is treated in the form of compensation and therefore the interest amount should be taken into account while determining pecuniary jurisdiction.

The above two basis laid down for determining pecuniary jurisdiction in the Ambrish Kumar Judgment seems to be bad in law for various reasons. For starters, in cases of defect, the criteria may compel the complainants to go to a higher forum. This will result in the complainant missing out a stage of appeal. Moreover, Section 14 of the Consumer Protection Act, 1986 provides for the nature of relief which the Commission can pass. In subsection (e) of Section 14 of the 1986 Act, the Commission was categorically empowered to remove the defects in goods or services in question. Therefore, determining the pecuniary jurisdiction in cases of defect by computing the aggregate value of the goods or services in questions seems to be unnecessary and arbitrary. The computation should be only on the basis of the value of the goods or services which are in defect and not the aggregate value of the goods purchased. A similar view has been taken by the Hon'ble Calcutta High Court in the case of Woods Birch Hazel Residents Association v/s The Managing Director, Bengal United Credit, Belani Housing Company Limited.

By the logic used in the Ambrish Kumar Judgment, if a consumer had purchased a vehicle in 2010 for Rs. 25 lakhs, and the vehicle had a defect in its entertainment system which is for Rs. 1 lakh, the consumer/complainant will have to approach the State Commission instead of the District Commission to get the necessary relief. This is because, the pecuniary jurisdiction is determined based on the aggregate value of goods and services involved and not the value of defective goods. This may defeat the purpose of the Consumer Protection Act as it will create more problems for the consumers with respect to physical accessibility to Commissions especially in bigger states where the State Commissions are located far of from the Consumers and District Commissions may be preferable.

The criteria of including compensation in determining pecuniary jurisdiction is also flawed. In practice, various Commissions take compensation prayed in consumer complaints at its face value while admitting cases. The resultant effect is, that complainants misuse this wide discretion and manufacture pecuniary jurisdiction. The lacuna lies in failing to determine an upper limit of the compensation amount. Consumer complaints often have prayers requesting the commission to grant upto 18% interest on principal amount from the date of deposit till realization of final amount. The reality is that Consumer Commission often award interest in the form of compensation based on market interest rate and not the high interest rates which have been claimed in the Consumer Complaints.

The pecuniary jurisdiction can easily be manufactured by the Complainant by praying for an astronomical interest rate. For e.g., if the goods or services in question have a value of Rs. 12 lakhs, the pecuniary jurisdiction should lie with the district commissions. However, the Complainant by adding an interest of 24% per annum along with compensation of Rs. 5 lakhs for mental harassment can shift the jurisdiction to State Commission. Recently, the National Commission had identified this lacuna and had stated in its order that interest cannot be claimed at fictitious and impractical rates such as 24%. However, no criteria has been laid down for determining an upper limit of the interest rate.


The bench in Ambrish Kumar Shukla case should have taken assistance from Code of Civil Procedure,1908 to determine pecuniary jurisdiction. The value of a Civil suit for purposes of determining pecuniary jurisdiction is calculated in accordance with the provisions of the Suits Valuation Act which further refers to the Court Fees Act. As per Section 8 of the Suits Valuation Act, the value of the suit is determined as per the court-fees. Section 7 of the Court Fees Act states that in suits for money (including suits for damages or compensation, or arrears of maintenance, of annuities, or of other sums payable periodically) the court fees is determined according to the amount claimed, henceforth, the suit is determined as per the amount claimed and nothing else.

Here, pre-litigation interest is calculated in cases only where there is an agreement, express or implied between the parties. In the presence of an agreement which mentions interest amount, the interest amount is also accounted in the process of suit valuation.

Apart from that, the criteria for determining interest rate over and above the amount claimed has been mentioned in Section 34 of the CPC, which states that the interest is at the sole discretion of the court adjudicating the suit and that too from the date of the institution of the suit. There is a rider to the power of granting interest in Section 34. The interest can be granted at the rate not exceeding six percent per annum. However, if the subject matter is of commercial nature, then the interest can exceed the 6% p.a. but cannot exceed the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions. The National Commission in Ambrish Kumar Shukla should have used the criteria laid down in Section 34 to account interest amount.


When the Consumer Protection Act, 2019 was promulgated it changed the pecuniary jurisdiction of all the Consumer Commissions in the hierarchy (District, State and National). More importantly, it changed the criteria for determining the pecuniary jurisdiction which was previously laid down in the Consumer Protection Act, 1986 and subsequently clarified in the landmark judgment of Ambrish Kumar Shukla v. Ferrous Infrastructure.

As per the new Act, the pecuniary jurisdiction would be based on the "consideration paid" and not the aggregate value of goods and services in question. Moreover, the compensation prayed for in the consumer complaint will not be included in determining the pecuniary jurisdiction of the Consumer Commission. In fact, this new position has been reiterated in orders passed by the National Consumer Commission and the Delhi State Consumer Commission. The resultant effect of the new legislation is that it cures the fault lines created by the Ambrish Kumar judgment which gave the complainants an opportunity to manufacture jurisdiction.


While the position related to pecuniary jurisdiction has been clarified in the new Act, there are some practical ramifications which the litigants will face in the years to come. For starters, the change in the criteria of determining pecuniary jurisdiction has diluted the role of the National Commission and the State Commissions to that of an Appellate authority.

For example, in the insurance sector, consideration paid is in the form of "insurance premium", which only in a handful of cases would cross more than Rs. 1 crore. Therefore, these cases would often fall outside the ambit of original jurisdiction of the State Commission and the National Commission and would lie only with the District Commissions. Similarly, cases related to medical negligence, where mostly consideration paid is under Rs. 1 crore will fall within the jurisdiction of the overburdened District Commissions.

At the same time, no steps seem to have been taken to empower the District Consumer Commissions to deal with the large influx of cases that will be coming towards it. The new Act also states that an endeavor should be made to dispose of cases within three months from the date of receipt of notice by opposite party. Therefore, there is an active need for the State Governments to empower these District Commissions by providing the requisite infrastructure and manpower to efficiently and effectively deal with these cases and to fulfill their mandate.

(Authors are Delhi based lawyers and were previously Law Researchers in the Delhi High Court. Opinions are personal.) 

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