World Consumer Rights Day: Recent Important Supreme Court Judgments on Consumer Protection Law
“Customers are the most important visitor on our premises, they are not dependent on us, we are dependent on them. They are not an interruption in our work. They are the purpose of it. They are not outsiders in our business. They are part of it; we are not doing them a favour by serving them. They are doing us a favour by giving us an opportunity to do so.” – Mahatma Gandhi.
The Supreme Court of India has recently pronounced numerous judgments on Consumer Protection Law. Therefore, on the occasion of World Consumer Rights Day, it would be apposite to briefly discuss the important pronouncements.
EXPERION DEVELOPERS PVT. LTD. V. SUSHMA ASHOK SHIROOR, (CIVIL APPEAL NO. 6044 OF 2019).
The Supreme Court held that the power to direct refund of the amount and to compensate a consumer for the deficiency in not delivering the apartment as per the terms of Agreement is within the jurisdiction of the Consumer Courts. The Court held that a consumer invoking the jurisdiction of the Consumer Commission can seek such reliefs as he/she considers appropriate. A consumer can pray for refund of the money with interest and compensation. The consumer could also ask for possession of the apartment with compensation. The consumer can also make a prayer for both in the alternative. If a consumer prays for refund of the amount, without an alternative prayer, the Commission will recognize such a right and grant it, subject to the merits of the case. If a consumer seeks alternative reliefs, the Commission will consider the matter in the facts and circumstances of the case and will pass appropriate orders as justice demands. The Court observed that the Consumer Protection Act and the RERA Act neither exclude nor contradict each other and held that they are concurrent remedies operating independently and without primacy. When Statutes provisioning judicial remedies fall for construction, the choice of the interpretative outcomes should also depend on the constitutional duty to create effective judicial remedies in furtherance of access to justice. A meaningful interpretation that effectuates access to justice is a constitutional imperative and it is this duty that must inform the interpretative criterion.
SHRIKANT G. MANTRI V. PUNJAB NATIONAL BANK, (CIVIL APPEAL NO.11397 OF 2016).
The Supreme Court held that when a person avails a service for a commercial purpose, to come within the meaning of ‘consumer’ he will have to establish that the services were availed exclusively for the purposes of earning his livelihood by means of self-employment. The Court held that the relations between the appellant and the respondent in this matter is purely “business to business” relationship and as such, the transactions would clearly come within the ambit of 'commercial purpose'. The Court also held that it cannot be said that the services were availed exclusively for the purposes of earning livelihood by means of self-employment. If the interpretation as sought to be placed by the appellant is to be accepted, then the business to business disputes would also have to be construed as consumer disputes, thereby defeating the very purpose of providing speedy and simple redressal to consumer disputes. The Court observed that the legislative intent is to keep the commercial transactions out of the purview of the Consumer Protection Act and at the same time, to give benefit of the said Act to a person who enters into such commercial transactions, when he uses such goods or avails such services exclusively for the purposes of earning his livelihood by means of self-employment.
ARUN BHATIYA V. HDFC BANK & ORS., (CIVIL APPEAL NOS. 5204-5205 OF 2022).
The Supreme Court held that a person who avails of any service from a bank will fall under the purview of the definition of a ‘consumer,’ as a consequence, it would be open to such a consumer to seek recourse to the remedies provided under the Consumer Protection Act. The Court held that there was a manifest error on the part of the SCDRC in declining to entertain the consumer complaint on merits. Whether the appellant is able to establish his case is a matter which has to be decided within the parameters of law as it emerges from the provisions of the Consumer Protection Act. The essence of the complaint of the appellant was that there was a deficiency on the part of the respondent bank in proceeding to credit the proceeds of a joint FD exclusively to the account of his father. The Court held that the SCDRC ought to have determined whether the complaint related to deficiency of service and the SCDRC had no justification to relegate the appellant to pursue his claim before a civil court. The appellant did not, in the proceedings before the SCDRC, raise any claim against his father. Therefore, the SCDRC was wrong, deducing that there was dispute between the appellant and his father. It was observed that assuming that there was a dispute between the appellant and his father, that was not the subject matter of the consumer complaint. The complaint that there was a deficiency of service was against the bank. Therefore, the Court directed the NCDRC to dispose of the appeal on merits within a period of four months of the date on which a certified copy is placed on the record.
SAMRUDDHI CO-OPERATIVE HOUSING SOCIETY LTD. V. MUMBAI MAHALAXMI CONSTRUCTION PVT. LTD., (CIVIL APPEAL NO. 4000 OF 2019).
The Supreme Court held that in this case 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. 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. The Court held that 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. The Court observed that in Wing Commander Arifur Rahman Khan & Others v. DLF Southern Homes Private Limited & Others and Pioneer Urban Land Infrastructure Limited v. Govindan Raghavan, it has been held that the failure to obtain an occupancy certificate or abide by contractual obligations amounts to a deficiency in service. In Treaty Construction v. Ruby Tower Cooperative Housing Society Ltd., the Supreme Court also considered the question of awarding compensation for not obtaining the certificate. In that case, the Court declined to award damages as there was no cogent basis for holding the appellant liable for compensation, and assessing the quantum of compensation or assessing the loss to the members of the respondent society.
GURMEL SINGH V. BRANCH MANAGER, NATIONAL INSURANCE CO. LTD., (CIVIL APPEAL NO. 4071 OF 2022).
The Supreme Court held that in the present case, the insurance company has become too technical while settling the claim and has acted arbitrarily. The appellant was asked to furnish the documents which were beyond the control of the appellant to procure and furnish. The Court held that once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical and ought not to have refused to settle the claim on nonsubmission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control. The Court also held that in many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. While settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control.
VODAFONE IDEA CELLULAR LTD. V. AJAY KUMAR AGARWAL, (CIVIL APPEAL NO. 923 OF 2017).
The Supreme Court held that the existence of an arbitral remedy will not oust the jurisdiction of the consumer forum. The Court held that it would be open to a consumer to opt for the remedy of arbitration, but there is no compulsion in law to do so and it would be open to a consumer to seek recourse to the remedies which are provided under the Consumer Protection Act. The Court also held that the insertion of the expression ‘telecom services’ in the definition which is contained in Section 2(42) of the Consumer Protection Act, 2019 cannot be construed to mean that telecom services were excluded from the jurisdiction of the consumer forum under the Consumer Protection Act, 1986. On the contrary, the definition of the expression ‘service’ in Section 2(o) of the Consumer Protection Act, 1986 was wide enough to comprehend services of every description including telecom services.
HYUNDAI MOTOR INDIA LIMITED V. SHAILENDRA BHATNAGAR, (CIVIL APPEAL NO. 3001 OF 2022).
The Supreme Court held that the failure to provide an airbag system which would meet the safety standards as perceived by a car buyer of reasonable prudence should be subject to punitive damages which can have deterrent effect and in computing such punitive damages, the capacity of the manufacturing enterprise should also be a factor. The Court observed that a consumer is not meant to be an expert in physics calculating the impact of a collision on the theories based on velocity and force. The Court held that if the reliefs granted in a consumer complaint fits any of the statutory provision contained in sub clause (1) of Section 14 of the Consumer Protection Act, it would be well within the power and jurisdiction of the Forum to pass directions irrespective of the fact as to whether specifically certain reliefs have been claimed or not, provided that facts make out foundations for granting such reliefs. In any event, it is within the jurisdiction of the forum to mould the reliefs claimed to do effective justice.
RAJIV SHUKLA V. GOLD RUSH SALES AND SERVICES LTD. & ANR. (CIVIL APPEAL NO. 5928 OF 2022).
The Supreme Court held that, to not deliver the new car despite the full sale consideration paid and/or to deliver the defective car can be said to be unfair trade practice. The Court held that non-delivery of a new car can be said to be an unfair trade practice and even it can be said to be dishonesty on the part of the dealer and against the morality and ethics. Once the new car was booked and the full sale consideration was paid, a duty was cast upon the dealer to deliver a new car which is not defective, therefore, the District Forum as well as the State Commission were justified in directing the dealer to give delivery of a new car.
JSK INDUSTRIES PVT. LTD. V. ORIENTAL INSURANCE COMPANY LIMITED, (CIVIL APPEAL NO. 7630 OF 2022).
The Supreme Court held that, in a claim made by the insured before a consumer commission, an insurance company cannot take a defense which did not form the basis of repudiation of the claim. The Supreme Court relied on the decision in Saurashtra Chemicals Ltd. v. National Insurance Co. Ltd. and observed that in Saurashtra it was a claim relating to standard fire and special perils policy. Repudiation was solely on the ground that a spontaneous combustion did not result into fire and loss had not been caused by the fire as stipulated by policy conditions. The insured had approached the National Commission. One of the defenses taken by the insurance company in the Commission was that the intimation of claim was with delay for over a month. This delay, according to the insurance company vitiated one condition of the general conditions of the policy, as applicable in that case. The insurance company was successful before the National Commission. The insured preferred an appeal which was heard and decided by a Coordinate Bench. Before the Bench, the main point on which the case turned was that the insurance company was taking a defense which did not form the basis of repudiation of the claim. It is in that context the Supreme Court held this was impermissible. The Court, therefore, in the present case, set aside the decisions of the National Commission as also of that of the State Commission and remanded the matter to the State Commission for taking a decision afresh on the claim of the appellants on the grounds which formed the basis of repudiation.
SUNIL KUMAR MAITY V. STATE BANK OF INDIA AND ANR., (CIVIL APPEAL 432 OF 2022).
The Supreme Court held that the revisional jurisdiction of the National Commission under Section 21(b) of the Consumer Protection Act is extremely limited and 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. The Court also held that the requirement of leading detailed evidence could not be a ground to shut the doors of any forum created under the Act like the Consumer Protection Act. The anvil on which entertainability of a complaint by a forum under the Act is to be determined, is whether the questions, though complicated they may be, are capable of being determined by summary enquiry. The Court observed that though a party can produce additional evidence at the appellate stage, the same has to be within the four corners of law. The party has to establish that notwithstanding the exercise of due diligence, such evidence was not within its knowledge or could not even after due diligence, be produced by it at the time when the decree appealed against was passed.
(Muneeb Rashid Malik is an Advocate and can be reached at [email protected] He tweets @muneebmalikrash).