Class Action Proceedings- Challenges In Consumer Fora

The relevant portions of the said provision are reproduced as under:

35. (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—

(a)…..;

(b)…..

(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; or (d) ……

59. (1) The provisions relating to complaints under sections 35, 36, 37, 38 and 39 shall, with such modifications as may be considered necessary, be applicable to the disposal of complaints by the National Commission.

The Order dated 07.10.2016 in Consumer Case No. 97 of 2016 titled Ambrish Kumar Shukla & 21 Ors. Versus Ferrous Infrastructure (P) Ltd. reported as (2017) 1 CPJ 1(NC) rendered by a Full Bench of NCDRC (which has attained finality) answered the reference in this regard inter-alia as under:

A complaint under Section 12 (1)(c) of the Consumer Protection Act can be filed only on behalf of or for the benefit of all the consumers, having a common interest or a common grievance and seeking the same / identical relief against the same person. Such a complaint however, shall not be deemed to have been filed on behalf of or for the benefit of the consumers who have already filed individual complaints before the requisite permission in terms of Section 12(1)(c) of the Consumer Protection Act is accorded.

Advantage Of Class Action

The biggest advantage of filing a class action complaint is, that a group of consumers can join together and file a consumer complaint straightaway before the competent consumer for a, thereby obviating the expenditure of time and money before the competent consumer Fora, such as the NCDRC or State Commission or the District Commission, as per the applicable pecuniary jurisdiction. In the case of a class action complaint directly before the NCDRC, the case individually filed by a Consumer before the lower For a and then being eventually carried up in appeal to the NCDRC, by the Consumer or the Builder gets obviated. The representative capacity of the proceedings lifts the status of the Consumers as a litigating party both in the eyes of the Builder/Developer and the competent consumer Fora.

Problems As A Ground Reality

The Hon'ble Supreme Court in Civil Appeal No. 12238 of 2018 titled Pioneer Urban Land and Infrastructure Ltd. vs Govindan Raghavan reported as 2019 (5) SCC 725 has inter-alia held that the Builder cannot seek to bind the consumer with one-sided and unfair contractual terms, nor can the consumer be compelled to take possession of the Flat after the grace period under the Agreement expired. Further, in Civil Appeal No. 5785 of 2019 titled Ireo Grace Real Tech (P) Ltd. vs Abhishek Khanna reported as (2021) 3 SCC 241 the Hon'ble Supreme court has even gone to the extent of awarding refund to those consumers in whose cases, the Occupation certificate was not available. This being a progressive approach in the sphere of consumer law, the Consumer Fora ought not to adopt such procedures which cause delays. In a class action, certain difficulties are faced which are as under:

1. After the case is fixed for final disposal, various impleadment applications are filed. The Builder/Developer is directed to file replies to those applications. Consequently, the date for final hearing gets adjourned leading to enormous delays. Such impleadments are allowed by the NCDRC, as the legal and vested rights to litigate by consumers cannot be taken away.
2. Another reason for delay is the procedure of admission/denial of documents. Builders/Developers seek numerous adjournments in this regard at the cost of the consumers' interests.
3. The requirement to file Amended Memo of Parties, consequential to impleadment or deletion of parties also delays the final hearing of the case. Certain Benches of the Consumer Commissions insist on the filing of the Amended Memo of Parties on the date of final hearing due to which the case gets adjourned.
4. The requirement to get a public notice published in a newspaper regarding institution of the class action complaint becomes very expensive for the Consumers, which is seen as a big bone of contention between various consumers who form a group. People who have subsequently been impleaded, do not share the costs of the newspaper publication, which the first group of consumers have borne, while they take the benefit of the class action.The Consumer Fora are required to comply with the mandate of Section 38(11) of the Consumer Protection Act 2019 [Section 13 (6) of the repealed Act of 1986].This requirement of publication in a newspaper has been upheld by the Hon'ble Supreme Court in Civil Appeal No. 5802 of 2018 titled Rameshwar Prashad Srivastava &Ors. Vs. Dwarkadhis Projects Pvt. Ltd. &Ors. reported as (2019) 2 SCC 417. The Hon'ble Supreme Court despite recording the submission regarding the prohibitive costs, had no option but to follow the express mandate of the statute.

Legal Position Under The Current Consumer Protection Act, And The Rules And Regulations Framed Thereunder.

1. The Consumer Protection Act is not a complete code. The Rules and Regulations framed under the Consumer Protection Act do not provide for procedural aspects such as impleadments or deletions being allowed in the advanced stages of hearing of the case. Consumer Fora have therefore devised their own procedure. There is no procedure in the Consumer Protection Act, Rules or Regulations regarding impleadment or deletion of parties, akin to Order I, Rule 10 CPC.
2. Regulation No. 26(1) of the Consumer Protection (Consumer Commission Procedure) Regulations 2020 is reproduced as under:

" In all proceedings before the Consumer Commission, endeavour shall be made by their parties and their Counsel to avoid the use of provisions of Code of Civil Procedure, 1908": Provided that the provisions of the Code of Civil Procedure, 1908 may be applied which have been referred to in the Act or in the rules made thereunder". (akin to Regulation 26(1) of the Consumer Protection Regulations 2005).

Only very limited powers of CPC have been vested in the Consumer Fora under Section 38(9) of the Consumer Protection Act 2019 (Section 13(4) of the repealed Consumer Protection Act, 1986).

Section 38 (9) provides for "Procedure on admission of Complaint" and is reproduced as under:

(9) For the purposes of this section, the District Commission shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit in respect of the following matters, namely:—

(a) the summoning and enforcing the attendance of any defendant or witness and examining the witness on oath;

(b) requiring the discovery and production of any document or other material object as evidence;

(c) receiving of evidence on affidavits;

(d) the requisitioning of the report of the concerned analysis or test from the appropriate laboratory or from any other relevant source;

(e) issuing of commissions for the examination of any witness, or document; and

(f) any other matter which may be prescribed by the Central Government.

Barring the above, no other procedural aspect regarding the conduct of proceedings has been provided either in the Consumer Protection Act, or the Rules and Regulations framed thereunder, be it under the 1986 Act or the 2019 Act.

Section 103 of the Consumer Protection Act, 2019 gives power to the National Commission to make Regulations and the relevant portions of the said provision are reproduced as under:

103. (1) The National Commission may, with the previous approval of the Central Government, by notification, make regulations not inconsistent with this Act to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may make provisions for—

(a) –(h) ….

(i) such other matter for which provision is to be, or may be, made by regulation.

Regulation 24 of the Consumer Protection (Consumer Commission Procedure) Regulations 2020 is reproduced as under

24. Practice Directions.- The National Commission shall be entitled to issue practice directions from time to time as may be necessary for the proper conduct of the cases before Consumer Commission including prescribing forms for complaints, notices, returns, certificate to be issued to the collector and the like.

Suggestions/ Remedial Measures

While the Hon'ble Supreme Court has rendered landmark judgements in the field of consumer law, the above mentioned procedures adopted by NCDRC and other consumer Fora result in excessive delay. It is trite to say that justice delayed is justice denied. Consumer proceedings being summary in nature, the procedures devised/adopted by the Consumer Fora as aforesaid, especially in the absence of Rules and Regulations in this regard, ought to be more consumer friendly and not technical or pedantic.

The Judgement in a class action would be applicable to all persons interested in the Project, irrespective of the fact whether they have joined the class action or not. In other words, they can claim benefit of the judgement so rendered. The impleadment or deletion of parties, the requirement to file Amended Memo of Parties, the exercise to carry out admission/denial of documents etc. which delay the final hearing as aforesaid are avoidable.

1. The requirement to take out newspaper advertisement be done away with. In this regard, Section 38(11) of the Consumer Protection Act 2019 be amended by the Parliament, inserting a proviso which will expressly not include newspaper advertisement as being a form of "public advertisement" or "notice" for the institution of the complaint to all persons/consumers interested in the Complaint/ Project of the Opposite Party-Builder, as provided in Order I, Rule 8(2) of CPC, and as made applicable to consumer class actions also.

Section 38(11) of the Consumer Protection Act, 2019 [Section 13 (6) of the repealed Act of 1986] is reproduced as under:

(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 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.

Order I, Rule 8, CPC 1908, in so far as necessary, is reproduced as under:

8. One person may sue or defend on behalf of all in same interest.—

(1) Where there are numerous persons having the same interest in one suit, (a) one or more of such persons may, with the permission of the Court, sue or be sued, or may defend such suit, on behalf of, or for the benefit of, all persons so interested; (b) the Court may direct that one or more of such persons may sue or be sued, or may defend such suit, on behalf of, or for the benefit of, all persons so interested.

(2) The Court shall, in every case where a permission or direction is given under sub-rule (1), at the plaintiff's expense, give notice of the institution of the suit to all persons so interested, either by personal service, or, where, by reason of the number of persons or any other cause, such service is not reasonably practicable, by public advertisement, as the Court in each case may direct.

It can be seen that the requirement in Order I, Rule 8(2) is only public advertisement. Nowhere is it stipulated that the mode has to be essentially by way of newspapers. In the age of technological advancements, the interpretation and practice, both have to be purposive. The alternative could be that the NCDRC or other Fora as the case be, put up a formal Notice on their websites, giving the list of cases filed against various Builders by various groups of consumers as a class action. This will be Notice enough to the public at large and will completely obviate the prohibitive costs of newspaper publication, and will be consumer friendly. The objective of the Act will be subserved.

2. It is seen that the bulk of the class actions have been/are being filed before the NCDRC. The Consumer Protection Act, and the Rules/Regulations are silent about impleadments. There is no provision akin to Order I, Rule 10 CPC. In fact CPC per-se is not applicable. The right to get impleaded in a class action complaint flows from Order I, Rule 8(3) [as made applicable by Section 38(11) of the Consumer Protection Act, 2019] which is reproduced as under:

8. One person may sue or defend on behalf of all in same interest.—

(3) Any person on whose behalf, or for whose benefit, a suit is instituted, or defended, under sub-rule (1), may apply to the Court to be made a party to such suit.

With regard to the problems faced due to fresh impleadments time and again, the NCDRC may either make suitable Regulations deriving its power from Section 103 of the Act or issue Practice Directions under Regulation 24 of the Regulations as aforesaid. One way to achieve speedy remedy would be for the NCDRC to frame clear Practice Directions, which will stipulate clearly that no fresh impleadments be allowed after the case by the original group of consumers/complainants is filed and especially after the Builder/Developer files its Reply. These could be done, since the Practice Directions are to be framed under Special Law, namely, the Consumer Protection Act, and not the general law. Since cause of action is continuous in the case of delayed possession or not handing over of possession, such impleadments could take the form of fresh subsequent cases filed and would not be hit by the bar of Limitation. Such subsequent cases would be covered by the previous judgement rendered in the class action filed by the first group of consumers.

3. The Consumer Protection Act, and the Rules/Regulations are silent about filing of any Amended Memo of Parties. The need to file Amended Memo of Parties, ostensibly seems to have been borrowed by Consumer Fora from the procedures of civil courts. If Suggestion No. 2 is implemented, there would not be any need or occasion to file Amended Memo of Parties. Alternatively, even assuming impleadments or deletions of parties are allowed, it should not be done so, after the case is fixed for final disposal. The filing of amended memo of parties be directed to be filed on the date the case is reserved for Judgement within a period of one week. The case of a deletion (even after the case is fixed for final disposal) will be of no consequence, since the party withdrawing its case will not be filing any execution against the Builder. It will be anyway open for the Builder in its Objection (to the Execution Petition) to point out that a particular consumer has either settled the case with the Builder or opted out of the Project by transferring his Flat to some other person, and thus stands deleted. Suitable Practice Directions can be framed by the NCDRC in this regard.
4. The whole procedure be stream-lined so that all the Fora apply procedural rules and aspects uniformly.

Unless these remedial measures are addressed, class actions are bound to be delayed causing enormous prejudice to the consumers.

The author is an Advocate regularly practising before the NCDRC and other Fora. Views are personal.