NCDRC Can Direct Deposit Of Entire Or More Than 50% Of Amount Determined By SCDRC For Stay : Supreme Court

In a significant judgment on the Consumer Protection Act 2019, the Supreme Court on Tuesday held that the National Consumer Disputes Redressal Commission(NCDRC) can direct the deposit of the entire amount or more than 50% of the amount determined by the State Consumer Disputes Redressal Commission for conditional stay.

The Court added that however to pass such an order, the NCDRC has to pass a speaking order assigning cogent reasons.

The Court also held that the condition of pre-deposit for entertaining appeal under Section 51 of the Consumer Protection Act 2019 was mandatory.

A bench comprising Justices MR Shah and BV Nagarathna laid down this dictum in a case involving the interpretation of Section 51 of the Consumer Protection Act 2019, which prescribes pre-deposit for filing appeal before the NCDRC.

Section 51 of the Consumer Protection Act, 2019 provides that no appeal by a person, who is required to pay any amount in terms of order of the State Commission shall be entertained by the National Commission unless the appellant has deposited 50% of that amount in the manner as may be prescribed.

The question before the Court was whether the same can be said to be the minimum amount to be deposited or whether the NCDRC was precluded from directing the deposit of amount higher than 50% of the amount determined by the SCDRC.

The question framed by the Court was:  "whether the National Commission can pass an order to deposit the entire amount and/or any amount higher than the 50% of the amount in terms of the order of the State Commission while, entertaining the appeal in view of Section 51 of the Consumer Protection Act, 2019".

The bench has answered the issue in the following terms :

(I) pre-deposit of 50 per cent of amount as ordered by the State Commission under second proviso to Section 51 of the Consumer Protection Act, 2019 is mandatory for entertainment of an appeal by the National Commission;

(ii) the object of the said pre-deposit condition is to avoid frivolous appeals;

(iii) the said pre-deposit condition has no nexus with the grant of stay by the National Commission;

(iv) while considering the stay application in staying the order passed by the State Commission, the National Commission can grant a conditional stay directing the appellant(s) to deposit the entire amount and/or any amount higher than 50 per cent of the amount in terms of the order of the State Commission;

(v) however, at the same time, the National Commission has to assign some cogent reasons and/or pass a speaking order when the conditional stay of the order passed by the State Commission is passed subject to deposit of the entire amount and/or any amount higher than 50 per cent of the amount either as an ex parte order or after hearing both sides and considering the facts and circumstances of the case.

(vi) Thus, the National Commission can grant a conditional stay of the order passed by the State Commission on deposit of the entire amount and/or any amount higher than 50 per cent of the amount as ordered by the State Commission in the aforesaid manner.

Background

The appeals before the Supreme Court were filed by a group of builders aggrieved by the direction of the NCDRC to deposit the entire decretal amount determined by the SCDRC for conditional stay.

Senior Advocate Siddharth Dave, appearing for the appellants, essentially argued that Section 51 imposed a statutory limit that the pre-deposit amount cannot be higher than 50% of the decretal amount.

The Supreme Court held that Section 51 does not take away the power of NCDRC to direct the deposit of the entire amount.

"...it is a condition precedent to deposit  50% of the amount before his appeal is entertained by the National Commission. However, that does not take away the jurisdiction of the National Commission to order to deposit the entire amount and or any amount higher than 50 per cent of the amount while considering the stay application to stay the order passed by the State Commission", the judgment authored by Justice MR Shah noted.

"Pre-deposit condition as per second proviso to Section 51 has no nexus with the grant of interim order of stay by the National Commission subject to deposit of the amount awarded by the State Commission", the judgment added.

The Court also noted that the precedent Shreenath Corporation and Ors. Vs. Consumer Education and Research Society and Ors., (2014) 8 SCC 657, in the context of Section 19 of the Consumer Protection Act 1986, had held that it is open to the NCDRC to impose any condition for stay of the impugned order.

Since Section 19 of the 1986 Act is pari materia with Section 51 of the 2019 Act, the Court said that it was in agreement with the view expressed in Shreenath.

"We are in complete agreement with the view taken by this Court in the case of Shreenath Corporation and Ors. (supra). Therefore, it is held that National Commission can pass an order to deposit the entire amount and/or any amount higher than 50 per cent of the amount in terms of the order of the State Commission while staying the order passed by the State commission", the Court stated in the judgment.

Accordingly, the appeals against the NCDRC orders were dismissed.

Case Title : Manohar Infrastructure and Constructions Private Ltd versus Sanjeev Kumar Sharma and others

Citation : LL 2021 SC 714

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