Lost in translation


As with most things in India, the intention behind policies is good, the implementation often lets the citizens down. So it is with the Consumer Protection Act, where certain inherent ambiguities have made the Act cumbersome and inefficient. Jehangir B. Gai comments.

Even 30 years after its enactment, there are various ambiguities and lacunae in the Consumer Protection Act (CPA). The lack of clarity results in conflicting judgements, due to subjective interpretation by the adjudicating member.

Commercial purpose
The CPA excludes disputes related to “commercial purpose” from the purview of the consumer fora, without defining this term. Is there a difference between commercial purpose and commercial activity, would it relate only to issues of profitmaking? How is the term to be interpreted?

In the case Harsolia Motors v/s National Insurance and other connected cases decided on 3rd December, 2004, [(2005) CPJ 27 (NC)], the National Commission had to consider whether business houses could file claims against insurers under the CPA. The insurance companies had contented that such disputes would not be maintainable in view of commercial services having been excluded from the purview of the CPA.

The National Commission observed that an insurance policy is not used to carry on any trade or commercial activity. It is taken for reimbursement or for indemnifying a loss which may be suffered due to various perils. The objective is to protect the interest of the insured and not for making any profit or trading or carrying on commercial purpose. Thus, the Commission distinguished between commercial activity and commercial purpose. Disputes regarding commercial activities where there was no trading or profit generation were considered to be maintainable under the CPA. Hence it was held that complaints about insurance services could be filed by business houses.

In another case, Interfreight Services Private Ltd. v/s Usha International & Anr. decided on 12th January, 1994, [I (1995) CPJ 128 (NC)], the dispute was in respect of a defective fan installed in the office. Even though the fan was not being used for any trading or commercial activity, the National Commission held that the intention of the Parliament in excluding goods for commercial purposes was to impose a restriction that the special remedy under the CPA could be invoked only by ordinary consumers purchasing goods for their private and personal use, and not by business organisations. Accordingly, it held that the purchase of fans was for commercial purpose, and the complaint was not maintainable.

In yet another case, Controls & Switchgear Co. Ltd. v/s Daimler Chrysler India Pvt. Ltd. & Anr, decided on Sep.17, 2007, [IV (2007) CPJ 1 (NC)], the dispute was regarding two defective cars purchased by a public limited company for its directors. The maintainability of the complaint was challenged on the ground that the cars were purchased by a corporate entity using the company’s financial resources, and also claiming depreciation on the vehicles. Yet, the National Commission rejected these arguments, observing that the cars were neither let out on hire nor used for other commercial purpose, but are being used by the directors. The Commission concluded that the cars were not being used for any activity directly connected with earning profit, so it would not amount to a commercial purpose merely because the vehicles were purchased by a company. The Commission held that the complaint was maintainable. The lack of clarity as to how “commercial purpose” should be interpreted has resulted in chaos and inconsistent judgements, with adjudicating officer interpreting this term as he pleases.

Joint complaint v/s representative complaint
When some of the similarly situated aggrieved consumers come together and collectively file a complaint, would it be considered a joint complaint or a representative complaint?

In the case of a joint complaint, the relief or directions which are sought would be applicable only to those who have collectively filed the complaint. Since all these persons are parties to the dispute, no permission is required for the filing of a joint complaint.

In contrast, when one or more consumers file a representative complaint, the relief or directions sought are on behalf of all affected consumers, and will be binding even on those who are not parties to the dispute. The general rule is that a court would grant relief only to those persons who are parties before it, which means that rights of an individual cannot be decided unless he is a party to the proceedings. The exception to this rule is in the case of representative complaints, where one or more of the aggrieved persons file a case for the benefit of all similarly placed persons who cannot be identified, which would avoid multiplicity of litigation (i.e., different individuals or groups filing separate complaints for the same reliefs). As this is a deviation from the general rule, a representative or class action case can be filed only if the court grants permission. Even then, since the judgment would affect unnamed and unidentifiable consumers, a public notice in a newspaper would be required to let other consumers know about the legal proceedings.

While concluding, the Commission observed that the Act does not put any restriction on the number of consumers who can collectively file a joint complaint. Merely because several persons have come together to jointly redress the grievances does not change the nature of the complaint. The test to determine whether it is a joint complaint or a representative complaint would be the basis of whether the reliefs sought are confined to the persons who have filed the complaint, or are sought even on behalf of those who are not parties to the dispute.

Even though the law was well settled, and that too by a four member Bench, the National Commission has recently held that joint complaints are not permissible, and that each consumer must individually file a complaint. If one or more than one consumers come together and file a complaint, it is to be automatically treated as a representative complaint. (Ambrish Kumar Shukla & 21 Ors v/s Ferrous Infrastructure Pvt. Ltd.). This judgment is not only contrary to the earlier larger bench judgement, but also puts the consumers to hardship because of the costly procedure of inserting a public notice for the benefit of others who have done nothing to fight for their rights.

Pecuniary jurisdiction
The Act stipulates the pecuniary jurisdiction of the District Forum, State Commission and National Commission on the basis of the value of the goods or services and the compensation, if any, claimed. A consumer is considered a master of the complaint, and he can forego a part of his claim or limit it. Hence, it was the quantum of claim which would determine the pecuniary jurisdiction.

Giving a go by to the well settled law, the National Commission has now made justice more difficult for the consumer. In the case of Ambrish Kumar Shukla v& 21 Ors v/s Ferrous Infrastructure Pvt. Ltd., the National Commission has held that pecuniary jurisdiction would not be governed merely upon cost of removing the defects in the goods purchased or deficiencies in the services. Even when the claim is limited to the cost of removal of defects or deficiencies, the value of the goods or services must be added to the claim amount. By way of illustration, the Commission explained that a person who buys a machine for `1 crore, and lodges a claim of `10 lakhs for removing the defects in the machine, the pecuniary jurisdiction would be determined by adding the cost of the machine to the repair cost. Similarly, if a flat costing over `1 crore is sold, and there are certain defects in the flat which would have to be repaired at a cost of `5 lakhs, the claim amount would be deemed the aggregate of these amounts.

This interpretation has made life miserable for the consumer. A person who could hitherto file a claim for repairs before the District Forum will now be compelled to approach the State or National Commission. This will not benefit as his actual claim amount will be only for the repair costs, but his expense will increase manifold when he has to approach a higher forum. This will act as a deterrent to consumers seeking justice. It even affects the existing cases, which are now getting rejected by the lower courts for lack of pecuniary jurisdiction.

The Consumer Protection Act is meant to empower the consumer. But the recent decision regarding the pecuniary jurisdiction is contrary to established precedents and the avowed objective of the Act. Besides this, when there is lack of clarity, decisions vary from bench to bench, and from time to time, resulting in chaos and unpredictability. Hence it is necessary to interpret the law in a rational manner that helps to strengthen the consumer to fight against injustice, rather than thwart it. The legislature must also define the ambiguous terms so that there is uniformity in interpretation. Till then, consumer empowerment remains a distant dream.


Jehangir B. Gai

Jehangir B. Gai is a senior consumer activist. He has received the Govt. of India’s National Youth Award for Consumer Protection. He spreads consumer awareness through his regular columns in Times of India, Business Standard and Mumbai Samachar. He also gives talks to schools, colleges, clubs and associations.