Supreme Court Annual Digest 2023 - Consumer Law

A pedantic and hyper-technical approach would cause damage to the very concept of consumerism. (Para 23) 2023 LiveLaw (SC) 442

Amend Consumer Protection Rules on appointment process of commission members within 3 months : Supreme Court to Centre, States. 2023 LiveLaw (SC) 201

Builder has obligation to seek completion certificate - It is no part of the flat owner's duty to apply for a completion certificate. (Para 18, 19) 2023 LiveLaw (SC) 92

Commercial enterprises can raise consumer disputes in relation to goods or services unconnected to profit generation. 2023 LiveLaw (SC) 313

Consumer Commissions can't decide complaints involving highly disputed facts, criminal or tortious acts. 2023 LiveLaw (SC) 251

Consumer disputes are non-arbitrable disputes and a party cannot be compelled into arbitration just because they are a signatory to an arbitration agreement. 2023 LiveLaw (SC) 902

Consumer Protection (Qualification for appointment, method of recruitment, procedure of appointment, term of office, resignation and removal of President and Members of State Commission and District Commission) Rules, 2020 - Rule 3 prescribed a minimum professional experience of 20 years for consideration to appointment of members as State Consumer Commissions- Rule 4 prescribed a minimum professional experience of 20 years for consideration to appointment of members as District Consumer Commissions- Rules struck down as violative of the SC judgment in Madras Bar Association judgment which held that lawyers with 10 years of professional experience are eligible for appointment as Tribunal members -the High Court in the impugned judgment and order has rightly observed and held that Rule 3(2)(b), Rule 4(2)(c) and Rule 6(9) of the Rules, 2020 which are contrary to the decisions of this Court in the cases of State of Uttar Pradesh and Others Vs. All Uttar Pradesh Consumer Protection Bar Association; (2017) 1 SCC 444 and the Madras Bar Association Vs. Union of India and Another; (2021) 7 SCC 369 are unconstitutional and arbitrary. (Para 6.4) 2023 LiveLaw (SC) 161

Consumer Protection (Qualification for appointment, method of recruitment, procedure of appointment, term of office, resignation and removal of President and Members of State Commission and District Commission) Rules, 2020 - Rule 6(9) lacks transparency and it confers uncontrolled discretion and excessive power to the Selection Committee. Under Rule 6(9), the Selection Committee is empowered with the uncontrolled discretionary power to determine its procedure to recommend candidates to be appointed as President and Members of the State and District Commission. (Para 6.5) 2023 LiveLaw (SC) 161

Consumer Protection (Qualification for appointment, method of recruitment, procedure of appointment, term of office, resignation and removal of President and Members of State Commission and District Commission) Rules, 2020 - Till the amendments are made in order to do complete justice under A. 142 we direct that in future a person having Bachelor's degree from a recognised university and who is a person of ability, integrity standing and having special knowledge and professional experience of not less than 10 years in consumer affairs, law, public affairs, administration etc. shall be treated as qualified for appointment as President and member of State and District Commission. We also direct that for appointment the appointment shall be based on the performance in 2 papers. Qualifying marks in the papers shall be 50% and there must be a viva for 50 marks each. (Para 8.2) 2023 LiveLaw (SC) 161

Consumer Protection Act, 1986; Section 12(1)(c) – Code of Civil Procedure, 1908; Order 1 Rule 8 - The need for the application of Order I Rule 8 CPC, which speaks of a plaintiff representing the other public as a whole would be required only in a case involving a complaint under Section 12(1)(c) of the 1986 Act. In other words, it does not have any application when similarly placed complainants jointly make a complaint seeking the very same relief. In such a case, there is no question of Order I Rule 8 CPC being complied with as they do not represent the others, particularly when there is no larger public interest involved. Such complainants seek reliefs for themselves and nothing beyond. (Para 17) 2023 LiveLaw (SC) 442

Consumer Protection Act, 1986; Section 2(1)(b)(i) – Definition of 'consumer' includes 'consumers' - Joint complaint by multiple consumers need not be filed in representative capacity. Consumer Protection Act, 1986; Section 13(6) – Code of Civil Procedure, 1908; Order 1 Rule 8 - When a few consumers who have the same interest seeking the same relief file a joint complaint without any larger public interest involved, it need not be filed in a representative capacity. 2023 LiveLaw (SC) 442

Consumer Protection Act, 1986; Section 2(1)(d) - 'consumer' - 'commercial purpose' - A person buying goods either for resale or for use in large-scale profit-making activity, will not be a 'consumer' entitled to protection of the Act - If the dominant purpose of purchasing the goods or services is for a profit motive and the said fact is evident from the record, such purchaser would not fall under the ambit of 'consumer', as defined under Section 2(1)(d) of the Act. However, the Explanation clarifies that even purchases in certain situations for 'commercial purposes' would not take within its sweep the purchaser out of the definition of expression 'consumer'. In other words, if the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods would continue to be a 'consumer'. 2023 LiveLaw (SC) 754

Consumer Protection Act, 1986; Section 2(1)(d) - Taking a wide meaning of the words “for any commercial purpose”, it would mean that the goods purchased or services hired should be used in any activity directly intended to generate profit. Profit is the main aim of commercial purpose, but in a case where goods purchased or services hired is an activity, which is not directly intended to generate profit, it would not be a commercial purpose. (Para 40) 2023 LiveLaw (SC) 313

Consumer Protection Act, 1986; Section 21(a)(i) - Consumer Protection Act, 2019; Section 58(1)(a)(i) or 58(1)(a)(ii) - Appeal against order of National Commission - An aggrieved party can approach the Supreme Court under Article 136 of the Constitution for grant of special leave to appeal against an order of the National Consumer Disputes Redressal Commission (NCDRC) only if it is passed by the Commission in its original jurisdiction. No further appeal will lie against the orders passed by the NCDRC in exercise of its appellate or revisional jurisdiction. (Para 17) 2023 LiveLaw (SC) 567

Consumer Protection Act, 1986; Section 22(1) r/w. 13(4)(iv) – Insurance claim - Leakage of gas - Reports of the loss Assessor and experts – Held, NCDRC made observations in the impugned judgment as if its members were experts in the relevant field and clothed with authority to sit in appeal over the same. The leak of ammonia gas was not occasioned due to wear and tear as claimed by the insurance company but was the outcome of an accident which was not foreseen and beyond its control and not covered by any of the exceptions in the Policy so as to entitle the company to claim immunity for the ultimate purpose of repudiating the insurance claim. The NCDRC committed serious error by not giving the reports placed on record the extent of credence the same deserved. The manner in which the NCDRC dealt with such reports was not proper and legal; major part of the reports could not have been rejected and only stray observations relied upon to support the conclusions. This is one of the foremost reasons which compels to interfere with the impugned judgment and order. Repudiation of the insurance claim, on facts and in the circumstances, is held to amount to deficiency in service on its part. Therefore, see no reason to accept any of the grounds assigned by the NCDRC for rejection of the Complaint. (Para 34 – 34) 2023 LiveLaw (SC) 619

Consumer Protection Rules, 2020 - Supreme Court directs Centre and States to amend the rules in terms of the directions in Secretary, Ministry of Consumer Affairs v. Dr. Mahindra Bhaskar Limaye, 2023 LiveLaw (SC) 161 within a period of three months. 2023 LiveLaw (SC) 201

Definition of 'Consumer' includes 'Consumers'; Joint complaint by multiple consumers need not be filed in representative capacity. 2023 LiveLaw (SC) 442

Flat owners do not forfeit the right to claim amenities promised by the developer by taking possession of the apartments- Supreme Court disapproves of NCDRC order dismissing homebuyers' claim on the ground that knowingly purchased the apartments. 2023 LiveLaw (SC) 92

Flat owners don't forfeit the right to claim amenities promised by builder by taking possession of apartments. 2023 LiveLaw (SC) 92

Flat-owners' rights - If complaints were to be spurned on the specious ground that the consumers knew what they were purchasing, the object and purpose of the enactment would be defeated-in most cases, the jurisdiction of NCDRC is invoked post-purchase-Any deficiency detected post-purchase opens up an avenue for the aggrieved consumer to seek relief before the consumer for a. (Para 11) 2023 LiveLaw (SC) 92

If commercial use is by purchasers themselves for earning livelihood by self-employment, they'll be 'consumers'. 2023 LiveLaw (SC) 754

Manufacturing Defect - the Supreme Court directs Ford India Ltd. to pay Rs. 42 lakhs as compensation to a consumer who purchased a car which had manufacturing defects. 2023 LiveLaw (SC) 515

'NCDRC acted as if they were experts': Supreme Court sets aside order upholding insurance claim repudiation. 2023 LiveLaw (SC) 619

Party has right to address final arguments before NCDRC despite not filing written version. 2023 LiveLaw (SC) 763

Party has the right to address final arguments before NCDRC despite not filing a written version. 2023 LiveLaw (SC) 763

Railways not liable for theft of passenger's belongings - the theft of personal belongings of a Passenger is not “deficiency of service” by Railways. If the passenger is not able to protect his own belongings, the Railways cannot be held responsible. The Supreme court set aside orders passed by Consumer forum whereby Railways was directed to reimburse the stolen amount of cash to the Passenger. 2023 LiveLaw (SC) 487

Rs. 2 Crore compensation for bad haircut excessive: Supreme Court asks NCDRC to decide model's claim afresh. 2023 LiveLaw (SC) 87

Supreme Court Paves way for lawyers with 10 yrs experience to be considered for consumer commission appointments; upholds striking down of centre's rules. 2023 LiveLaw (SC) 161

Supreme Court terms Rs 2 crores compensation awarded by the NCDRC for a bad hair-cut suffered by a model at a 5-star hotel saloon as excessive and disproportionate-quantification of compensation has to be based upon material evidence and not on the mere asking. (Para 13, 15) 2023 LiveLaw (SC) 87

Supreme Court upholds the Bombay High Court judgment which struck down provisions of the Consumer Protection Rules which excluded persons with 10 years professional experience from appointment to State Consumer Commissions and District Consumer Forums - for appointment of President and Members of the State Commission and District Commission, the appointment shall be made on the basis of performance in written test consisting of two papers. 2023 LiveLaw (SC) 161

Supreme Court's comments on flat-owners' plight - Now-a-days, flat owners seldom purchase flats with liquid cash. Flats are purchased on the basis of finances being advanced by banks and other financial institutions. Once a flat is booked and the prospective flat owner enters into an agreement for loan, instalments fall due to be paid to clear the debt irrespective of whether the flat is ready for being delivered possession. The usual delays that are associated with construction activities result in undue anxiety, stress, and harassment for which many a prospective flat owner, it is common knowledge, even without the project/flat being wholly complete is left with no other option but to take possession. 2023 LiveLaw (SC) 92

Tests to determine if goods or services were purchased or availed for commercial purposes - Two fold tests- (i) whether the goods are purchased for resale or for commercial purpose; or (ii) whether the services are availed for any commercial purpose - If the goods are purchased for resale or for commercial purpose, then such consumer would be excluded from the coverage of the Act, 1986. For example, if a manufacturer who is producing product A, for such production he may be required to purchase articles which may be raw material, then purchase of such articles would be for commercial purpose. As against this, if the same manufacturer purchases a refrigerator, television or air-conditioner for his use at his residence or even for his office has no direct or indirect nexus to generate profits, cannot be held to be for commercial purpose and for afore-stated reason he is qualified to approach the Consumer Forum under the Act, 1986 - Similarly, a hospital which hires services of a medical practitioner, it would be a commercial purpose, but if a person avails such services for his ailment, it would be held to be a noncommercial purpose. (Para 39) 2023 LiveLaw (SC) 313

The 2019 Act facilitates the consumers to approach the forums by providing a very flexible procedure. It is meant to encourage consumerism in the country. Any technical approach in construing the provisions against the consumer would go against the very objective behind the enactment. (Para 15) 2023 LiveLaw (SC) 442

The Act, 1986 is a social benefit-oriented legislation and, therefore, the Court has to adopt a constructive liberal approach while construing the provisions of the Act - The provisions of the Act, 1986 thus have to be construed in favour of the consumer to achieve the purpose of enactment as it is a social benefit-oriented legislation. (Para 21, 24) 2023 LiveLaw (SC) 313

The Consumer Protection Act' is definitely a piece of welfare legislation with the primary purpose of protecting the interest of a consumer. Consumer disputes are assigned by the legislature to public fora, as a measure of public policy. Therefore, by necessary implication such disputes will fall in the category of non­arbitrable disputes, and these disputes should be kept away from a private fora such as 'arbitration', unless both the parties willingly opt for arbitration over the remedy before public fora. 2023 LiveLaw (SC) 902

The proceedings before the Commission being summary in nature, the complaints involving highly disputed questions of facts or the cases involving tortious acts or criminality like fraud or cheating, could not be decided by the Forum/Commission under the said Act. The “deficiency in service”, as well settled, has to be distinguished from the criminal acts or tortious acts. There could not be any presumption with regard to the wilful fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance in service, as contemplated in Section 2(1)(g) of the Act. The burden of proving the deficiency in service would always be upon the person alleging it. (Para 12) 2023 LiveLaw (SC) 251

The Supreme Court has upheld the order of the National Consumer Disputes Redressal Commission (NCDRC) where the Commission had held that no case of deficiency of service was made out against drug-manufacturer, Glaxo Smithkline Pharmaceuticals Ltd, in relation to administration of vaccine Engerix-B. The complainant had failed to prove the allegations with the minimal required evidence even on a preponderance of probability. Non-mentioning of 'myositis' as an adverse reaction in the literature accompanying the injection or on the 'vial', did not amount to 'deficiency of service' on part of the pharmaceutical company, more particularly when the adverse reaction was to the minimal level, i.e., 0.02 in one million. 2023 LiveLaw (SC) 764

There is no such exclusion from the definition of the term “consumer” either to a commercial enterprise or to a person who is covered under the expression “person” defined in Section 2(1)(m) of the Act, 1986 merely because it is a commercial enterprise. (Para 36) 2023 LiveLaw (SC) 313

Whether a commercial enterprise can be held to be a "consumer" in relation to dispute relating to insurance policy availed by it - Held yes in the facts of the case - hiring of insurance policy is clearly an act for indemnifying a risk of loss/damages and there is no element of profit generation - clarifies that it is not a general rule and depends on the facts of the case. (Para 44 to 47) 2023 LiveLaw (SC) 313