Supreme Court Annual Digest 2025: Consumer Law

Consumer Disputes Redressal Forums - The Supreme Court allowed an appeal by the Life Insurance Corporation (LIC) against an order of the NCDRC which had upheld the decisions of the State and District Consumer Forums directing LIC to compensate the respondent-claimants under the “Jeevan Arogya” hospital cash benefit policy. The deceased insured, a chronic alcoholic, had suppressed this fact in the proposal form, answering “No” to questions regarding alcohol consumption. Following his hospitalization and death due to complications linked to chronic liver disease and cardiac arrest, LIC repudiated the claim under Clause 7(xi) of the policy, which excludes coverage for conditions arising from alcohol misuse. Held, the lower forums erred in interpreting the policy terms and the exclusion clause, as the deceased's chronic alcoholism was a material fact directly related to his hospitalization and death. Overruling the NCDRC's reliance on Sulbha Prakash Motegaoneker v. LIC, the Court clarified that suppression of a pre-existing condition justifies repudiation if it is linked to the cause of death. The appeal was allowed, the NCDRC order was set aside, and the repudiation upheld. However, considering the respondents' hardships and payments already made (approximately ₹3,00,000), the Court directed that no recovery of these amounts be sought, though no further payments were to be made. (Para 16 – 21) Life Insurance Corporation v. Sunita, 2025 LiveLaw (SC) 346 Consumer Forum - Qualification for appointment - A bunch of appeals and review petitions arose from Bombay High Court orders invalidating aspects of the Consumer Protection (Qualification for appointment, method of recruitment, procedure of appointment, term of office, resignation and removal of the President and members of the State Commission and District Commission) Rules, 2020 (“2020 Rules”), concerning appointments to consumer fora under the Consumer Protection Act, 1986 and the Consumer Protection Act, 2019, particularly in Maharashtra. In Impugned Order I, the Bombay High Court struck down Rule 6(1) of the 2020 Rules for executive dominance in the selection process (violating judicial independence per Rojer Mathew v. South Indian Bank Limited, (2020) 6 SCC 1, Madras Bar Association v. Union of India, (2021) 7 SCC 369 (“MBA – III”), and Madras Bar Association v. Union of India, (2022) 12 SCC 455 (“MBA – IV”)) and partially invalidated Rule 10(2) on tenure extensions; absent clear reappointment rules, it applied Rule 8(18) of the Consumer Protection (Appointment, Salary, Allowances, and Conditions of Service of President and Members of State Commission and District Forum) Rules, 2019, temporarily. Impugned Order II clarified that directions in Secretary, Ministry of Consumer Affairs v. Dr. Mahindra Bhaskar Limaye, [2023 SCC OnLine SC 231] (“Limaye – I”) on written examinations apply only to non-judicial members of State Commissions and District Commission members. Impugned Order III (Telangana High Court) set aside District Commission appointments predating Limaye – I. The Supreme Court examined consumerism's constitutional foundations under Articles 38, 39, and 47, its evolution, and the adequacy of tenure-based grievance redressal mechanisms. Issues: (i) Feasibility of a permanent adjudicatory forum (e.g., Consumer Tribunal or Consumer Court) for consumer disputes, replacing or supplementing tenure-based appointments with permanent judicial/non-judicial members, staff, and Presiding Officers (potentially headed by sitting judges), alongside enhanced strength and infrastructure; (ii) Notification of revised recruitment rules ensuring judicial independence (majority judicial selection committees), efficiency (five-year tenures per precedents), and differentiated processes (no examinations for judicial posts; mandatory for non-judicial); (iii) Validity of 2020 Rules' provisions on selection committees, examinations, and reappointments; (iv) Scope of Limaye – I directions; (v) Status of existing/pending appointments, terminations, and recruitments amid transitions. Held: Upholding consumerism as a constitutionally embedded right integral to participatory democracy, economic activity, and environmental justice, the Court held that impermanent, tenure-based offices undermine security of tenure, motivation, judicial quality, efficiency, and consumer trust—necessitating a shift to permanency for qualitative, timely decisions. Exercising Article 142 powers, it advocated revamping consumer fora toward permanency at district, state, and national levels, aligning with precedents on judicial independence (Rojer Mathew, MBA – III, “MBA – IV”). Struck down unsustainable aspects of 2020 Rules; clarified Limaye – I requires no written examinations/viva voce for Presidents/Judicial Members of State Commissions or District Commission Presidents, but mandates them (in consultation with State...

Supreme Court Annual Digest 2025: Consumer Law

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