Category Archives: Consumer

The Apex Court in the matter of Vodafone Idea Cellular Ltd v. Ajay Kumar Agarwal [Civil Appeal No 923 of 2017] decided on 16 February, 2022 held that telecom services provided by a private company comes within the definition of services and section 7B of the Indian Telegraph Act which provides for a statutory arbitration does not oust the jurisdiction of the Consumer For a under Consumer Protection Act, 1986.

The complaint was filed by the Respondent against the Appellant seeking inter alia compensation in tune of Rs. 22,000/- on account of excessive billing between 8 November 2013 and 7 December 2013. The Appellant filed an application challenging the maintainability of the complaint on the ground that according to General Manager, Telecom v. M Krishnan and Another (2009) 8 SCC 481, it is not a service provider. The District Forum preliminarily observed that private telecom service provider is not a ‘telegraph authority’ for the purposes of Section 7B of the Indian Telegraphic Act, 1885 and asked the Appellant to file its written statement.

The order of the District Forum was challenged by the Appellant. The State Commission held that the issue of jurisdiction could be raised as a preliminary issue. The State Commission further relied upon the judgment in Bharthi Hexacom Ltd. v. Komal Prakash [Misc Application No. 204/2014 in Revision Petition Application No. 12] wherein it was held that “for a dispute under Sect. 7(B) between Private Service Provider and Consumer the authority cannot take decision because, for Private Service provider any arrangement is not made in the above act … hence, the Learned Consumer Forum has the jurisdiction to hear, decide and dispose of the dispute between the Private service Provider and consumer”.

The National Commission affirmed the decision of State Commission.

On appeal, the Hon’ble Supreme Court framed the following issue for determination – whether the existence of a remedy under Section 7B of the Act of 1885 ousts the jurisdiction of the consumer forum under the Consumer Protection Act 1986?

The Court started with analysis of the jurisdiction of District Forum provided under Section 11 and definitions of ‘service’ provided under section 2(o) and ‘deficiency’  provided under section 2(g) of the Consumer Protection Act, 1986. The Court observed that the language employed under the provision shows that definition of ‘service’  is very wide particularly by use of expressions – “service of any description which is made available to potential users”, “means and includes”, “but not limited to”. The expression ‘service’ is wide enough to mean service of any description.

Section 7B of the Telegraph Act provides for arbitration. Accordingly, “any dispute concerning any telegraph line, appliance or apparatus arises between the telegraph authority and the person for whose benefit the line, appliance or apparatus is, or has been, provided, the dispute shall be determined by arbitration and shall, for the purposes of such determination, be referred to an arbitrator appointed by the Central Government”. The Appellant while relying on section 7B argued that Appellant being a telecom service provider, the subscriber/Respondent has the remedy to invoke arbitration as per section 7B of the Telegraph Act.

With regards to the overriding effect of Telegraph Act, the Court observed that both are special enactments. While the Telegraph Act is for regulating telegraphs, Consumer Act, 1986 is a later enactment and is intended to protect the interest and welfare of consumers. It was emphasised by the Court that Consumer Protection Act, 1986 being a later enactment, an ouster of jurisdiction cannot be lightly assumed unless express words are used or such a consequence follows by necessary implication. Addressing the contention of the Appellant that telecom services were incorporated only in the new legislation i.e. Consumer Protection Act, 2019, the Court held that “specification of services in Section 2(s) of the earlier Act of 1986 was illustrative” and therefore the argument was declined.

With regard to provision of arbitration under Section 7D of the Telegraph Act, the Court observed that the remedy of arbitration is statutory in nature but this does not retrain the applicability of law laid down by the Apex Court in Emaar MGF Land Ltd. v. Aftab Singh (2019) 12 SCC 751. The Hon’ble Supreme Court had held that an arbitration agreement shall not oust the jurisdiction of consumer fora. The Court added that section 3 of the Consumer Protection Act, 1986 which provides that “the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force” further strengthens the argument. The Court had held that Consumer Protection Act, 1986 provides for a special remedy to a consumer which is in addition to the remedies that can be availed of by them. Remedies include arbitration and also special statutes [Imperia Structures Ltd. v Anil Patni (2020) 10 SCC 783]. A person/party has in such circumstances. In IREO Grace Realtech (P) Ltd. v. Abhishek Khanna [2021 SCC OnLine SC 277] it was observed that if a person has at its disposal two remedies, he “can make the choice to elect either of the remedies as long as the ambit and scope of the two remedies is not essentially different.” This emerges from the doctrine of election. In the case of IREO Grace Realtech (P) Ltd. the consumer/complainant, who was an allottee, also had the choice of proceeding under RERA.

The accordingly concluded by stating that in the present matter “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 Act of 1986, now replaced by the Act of 2019.”

The Court once again clarified that the insertion of the expression ‘telecom services’ in the definition which is contained in Section 2(42) of the Act of 2019 cannot be construed to mean that telecom services were excluded from the jurisdiction of the consumer forum under the Act of 1986. The definition of the expression ‘service’ in Section 2(o) of the Act of 1986 was wide enough to embrace services of every description including telecom services.

In the matter decided by the Hon’ble Apex Court on January 11, 2022 in Samruddhi Co-operative Housing Society Ltd. v. Mumbai Mahalaxmi Construction Pvt. Ltd.  [Civil Appeal No 4000 of 2019] it was held that members of the appellant, a Cooperative Housing Society, are within their rights as ‘consumers’ to pray for compensation on account of the failure of the respondent, to obtain the occupation certificate. According to the Court, when the respondent was responsible for transferring the title of the flats to the members of the appellant along with the occupancy certificate and he failed to do so, such failure amounted to a deficiency in service. In such circumstances, the appellant has the locus to seek compensation for consequent liability which includes payment of higher taxes and water charges etc. paid to the municipal authorities by the owners i.e members of the appellant.

The respondent, a construction company, entered into agreements with the members of the Co-operative Housing Society/ appellant to sell flats to individual purchasers i.e. the members in accordance with the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 (“MOFA”). The members got the possession of the flats in 1997. However, the respondent did not obtain the occupancy certificate from the municipal authorities which made individual flat owners ineligible for electricity and water connections. The members somehow could arrange for temporary connections but then they were required to pay property tax at a rate 25% higher than the normal rate and water charges at a rate which was 50% higher than the normal charge.

The State Commission ordered in favour of the flat owners and directed the respondent to obtain the occupancy certificate and also pay, inter alia Rs. 1,00,000/- towards reimbursement of extra charges paid. The respondent however failed to comply with the demand from the members of the petitioner. The appellant approached the National Commission seeking, apart for damages on account of mental agony and inconvenience, a recompense for the excess charges and tax paid by the members of the appellant due to the deficiency in service of the respondent.

The National Commission, however, dismissed the complaint on the ground of limitation. As per the National Commission, the cause of action to file any complaint arose when the municipal authorities ordered the members to pay higher charges on temporary individual water and electricity connections. It was further held that complaint is not in nature of a consumer dispute since appellant would not fall under the definition of ‘consumer’ under Section 2(1)(d) of the Consumer Protection Act 1986 and the respondent was not the service provider of the services for which the property tax or water charges were levied. It was municipal authorities who were the service providers.

On appeal, the Hon’ble Supreme Court held that the cause of action of the appellants was founded on continuing wrong and therefore section 22 of the Limitation Act, 1963 shall be applicable. According to section 22, a fresh period of limitation begins to run at every moment of time during which the breach continues. The Court relied upon the judgment in Balakrishna Savalram Pujari Waghmare v. Shree Dhyaneshwar Maharaj Sansthan AIR 1959 SC 798 wherein the concept of continuous cause of action has been discussed in detail. It was held by the Hon’ble Court and quoted in the judgment as follows:

“It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes acontinuing wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury. It is only in regard to acts which can be properly characterised as continuing wrongs that Section 23 can be invoked”.

The Court further borrowed the excerpts from CWT v. Suresh Seth (1981) 2 SCC 790 and M. Siddiq v. Suresh Das (2020) 1 SCC 1 which are again on the aspects of continuous cause of action.

The Court then went on to observe that the promoter of the construction company is responsible to obtain and provide the occupation certificate to the flat owners as per sections 3 and 6 of the MOFA. Promoter is further liable to make payments of outgoings such as ground rent, municipal taxes, water charges and electricity charges till the time the property is transferred to the flat-owners. The Court further reflected that the Agreement to Sell executed between the appellant and the respondent also stipulates that it is the responsibility of the respondent to obtain the occupancy certificate.

The respondent, however, repeatedly failed to fulfil its obligations, even after the directions of the State and National Commission wherein the respondent was directed to obtain the occupancy certificate. This resulted in levy of higher taxes and water charges by the municipal authority on the members of the appellant.

The Court therefore concluded by stating that “This continuous failure to obtain an occupancy certificate is a breach of the obligations imposed on the respondent under the MOFA and amounts to a continuing wrong. The appellants therefore, are entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation.” While relying on judgments passed by the Hon’ble Supreme Court in Wing Commander Arifur Rahman Khan & Others v. DLF Southern Homes Private Limited & Others (2020) 16 SCC 512 and Pioneer Urban Land Infrastructure Limited v. Govindan Raghavan (2019) 5 SCC 725, the Court also added that failure to obtain an occupancy certificate or abide by contractual obligations amounts to a deficiency in service and respondent is therefore liable in the present case.

While granting the compensation, the Court distinguished the present case from the judgment in Treaty Construction v. Ruby Tower Cooperative Housing Society Ltd. (2019) 8 SCC 157, by highlighting that in the 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.” However, in the present case, “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”. Accordingly, the Court held the complaint by the appellant to be maintainable and directed the National Commission to decide the complaint on merits of the dispute.

Recently in the matter of ECGC Limited v. Mokul Shriram EPC JV [Civil Appeal No. 1842 of 2021] (hereinafter referred to as “Appeal”) decided on February 15, 2021, the Hon’ble Apex Court clarified that onerous pre-condition of payment of 50% of the amount awarded, in the event of filing of an appeal, will not be applicable to the complaints filed prior to the commencement of the Consumer Protection Act, 2019 (hereinafter referred to as “2019 Act”).

In the present Appeal, the Appellant had assailed order passed by the National Consumer Dispute Redressal Commission directing the Appellant to pay a sum of Rs. 265.01 Crores along with interest @ 10% p.a. to the Complainant. The complaint was filed under Section 21(a)(i) of the Consumer Protection Act, 1986 (hereinafter referred to as “1986 Act”) on account of non-payment for invoices issued by the Complainant for the work done under the contract. The said complaint was allowed on 27.1.2021.

The issue arose out of an application filed by the Appellant before the Hon’ble Court in the said Appeal wherein the Appellant prayed to entertain the appeal as per the provisions of the 1986 Act. Therefore, the question before the Hon’ble Apex Court was whether the appeal would be governed under the 2019 Act or under the 1986 Act.

As per Section 67 of the 2019 Act, an appellant is required to deposit fifty per cent of the amount directed to be paid as a pre-requisite of filing the appeal. Under proviso to Section 23 of the 1986 Act, on the other hand, an appellant was required to pay fifty per cent of the amount or fifty thousand rupees, whichever is less.  It was contended on behalf of the Appellant in the application that the condition of deposit of 50% of the amount under the 2019 Act is more onerous than what was provided under the 1986 Act wherein an upper limit of Rs. 50,000/- was provided. The Appellant further relied upon Section 107 of the 2019 Act and Section 6 of the General Clauses Act, 1897. It was argued that unless a different intention appears, the repeal shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed as per Clause (c) of Section 6 of the General Clauses Act, 1987. It was further contended that as per Clause (e) of section 6 of the General Clauses Act, 1987, the repeal shall not affect any  legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment which may be imposed as if the repealing Act or the Regulation has not been passed. It was submitted that as per the relevant provisions, the right to file an appeal under the 1986 Act has accrued in favour of the Appellant in terms of Clause (c) of Section 6 of the General Clauses Act at the time of filing of complaint.

In this regard it was hence pertinent to be examined by the Court what is the nature of right to appeal and when does it vest in the parties.

The Hon’ble Apex Court analysed the judgments cited by the Appellant. In Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh & Ors [AIR 1953 SC 221] a similar question w.r.t. the Central Provinces and Berar Sales Tax Act, 1947 was involved. The amendment made the pre-requisite for filing the appeal more onerous. In the said case it was held as quoted in the judgment also –

“The above decisions quite firmly establish and our decisions in Janardan Reddy v. State [(1950) SCR 941] and in Ganpat Rai v. Agarwal Chamber of Commerce Ltd. [(1952) SCJ 564] uphold the principle that a right of appeal is not merely a matter of procedure. It is a matter of substantive right. This right of appeal from the decision of an inferior tribunal to a superior tribunal becomes vested in a party when proceedings are first initiated in, and before a decision is given by, the inferior court. In the language of Jenkins, C.J. in Nana bin Aba v. Shaik bin Andu to disturb an existing right of appeal is not a mere alteration in procedure. Such a vested right cannot be taken away except by express enactment or necessary intendment. An intention to interfere with or to impair or imperil such a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication.”

It was further explained that “the pre-existing right of appeal is not destroyed by the amendment if the amendment is not made retrospective by express words or necessary intendment. The fact that the pre-existing right of appeal continues to exist must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. As the old law continues to exist for the purpose of supporting the preexisting right of appeal that old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provision preventing the exercise of that right.”

The judgment was later approved by the Constitutional Bench in Garikapati Veeraya v. N. Subbiah Choudhry & Ors AIR 1957 SC 540. Applying the same principles in State of Bombay v. M/s. Supreme General Films Exchange Ltd. & Anr AIR 1960 SC 980, it was held that the court fees applicable on the Memorandum of Appeal was one that was applicable prior to the amendment of the Court Fees Act, 1870 and not as per the amendment in the Act. It was held, “It is thus clear that in a long line of decisions approved by this Court and at least in one given by this Court, it has been held that an impairment of the right of appeal by putting a new restriction thereon or imposing a more onerous condition is not a matter of procedure only; it impairs or imperils a substantive right and an enactment which does so is not retrospective unless it says so expressly or by necessary intendment.”

Similarly in K. Raveendranathan Nair & Anr. v. Commissioner of Income Tax & Ors (2017) 9 SCC 355 it was held that the relevant date for paying the court fee would be when the proceedings were initiated in the lowest court and not when the appeal was preferred.  Similarly, judgments in Ramesh Singh & Anr. v. Cinta Devi & Ors (1996) 3 SCC 142 and M/s Gurcharan Singh Baldev Singh v. Yashwant Singh & Ors. (1992) 1 SCC 428 with respect to the right of appeal as provided under the Motor Vehicles Act, 1939 which was repealed by Motor Vehicles Act, 1988, were also relied upon. The counsel for the Respondent, on the other hand, averred that the amendment is procedural in nature and thus always retrospective. The procedure includes the manner and form of filing of appeal, pre-deposit and limitation. [Thirumalai Chemicals Limited v. Union of India & Ors. 1 (2011) 6 SCC 739]. The Court, however, after considering the cases cited by the Respondent, held that the judgments were not applicable to the issues involved in the application. The Court, therefore concluded that onerous condition of payment of 50% of the amount awarded will not be applicable to the complaints filed prior to the commencement of the 2019 Act.

In a Public Interest Litigation No. 58 of 2021 [Medicos Legal Action Group v. Union of India], a Trust approached the High Court of Judicature at Bombay, to declare that services performed by healthcare service providers (“HSPs”) are not included within the purview of the Consumer Protection Act, 2019 (“2019 Act”) and to direct all consumer fora within the territorial jurisdiction of this Court not to accept complaints filed under the 2019 Act against HSPs. The Trust heavily relied on the parliamentary debates and statement of Minister for Consumer Affairs, Food and Public Distribution on the Consumer Protection Bill, 2018 that ‘healthcare’ had been deliberately kept out of the 2019 Act. Therefore, according to the Trust, since the 2019 Act having been brought into force upon repeal of the Consumer Protection Act, 1986 (“1986 Act”), registration of complaints, which are filed against doctors by the consumer fora in the State of Maharashtra are illegal.

The Court compared the definition of ‘service’ as given in Section 2(1)(o) of the 1986 Act and section 2(42) of the 2019 Act and observed that there is no material difference between the two and the only term added subsequently under 2019 Act is ‘telecom’.

The Court went on to observe that even in the 1986 legislation, the definition of ‘service’ did not include the services rendered by the doctors. However, the Hon’ble Supreme Court has held that the Consumer Act is applicable in case of services by a medical practitioner. The Court heavily relied on the landmark case of Indian Medical Association Vs. V. P. Shantha & Ors ((1995) 6 SCC 651) as a binding precedent where it was held that “Service rendered to a patient by a medical practitioner (except where the doctor renders service free of charge to every patient or under a contract of personal service), by way of consultation, diagnosis and treatment, both medicinal and surgical, would fall within the ambit of ‘service’ as defined in Section 2(1)(o) of the Act.”

In the matter of Indian Medical Association, the Supreme Court hadclarified that there is a difference between ‘contract of personal service’ and ‘contract for personal services’. According to the Court, “[I]n the absence of a relationship of master and servant between the patient and medical practitioner, the service rendered by a medical practitioner to the patient cannot be regarded as service rendered under a ‘contract of personal service’. Such service is service rendered under a `contract for personal services’ and is not covered by exclusionary clause of the definition of ‘service’ contained in Section 2(1)(o) of the Act.”. To further bring clarity, it was held that the expression ‘contract of personal service’ in case of a medical practitioner will apply in case of employment of a medical officer for the purpose of rendering medical service to the employer. In such arrangement, “the service rendered by a medical officer to his employer under the contract of employment would be outside the purview of ‘service’ as defined in Section 2(1)(o) of the Act”.

The Court in Indian Medical Association also discussed various scenarios where the medical services may be given free of cost. Broadly, services` rendered – (i) free of charge by a medical practitioner attached to a hospital/Nursing home or a medical officer employed in a hospital/Nursing home where such services are rendered free of charge to everybody and (ii) at a Government hospital/health centre/dispensary or non-Government hospital/Nursing home, where no charge whatsoever is taken from any person availing the services, would not be “service” as defined in Section 2(1)(o) of the Act. This position shall remain as it is even if a token registration fee has been charged from the patients.

The Court further listed the scenarios where a medical service will fall within the purview of the expression ‘service’ under the 1986 Act. As a general rule, service rendered by hospitals/nursing homes where charges are required to be paid by the persons availing such services, will constitute a ‘service’ under the Act. However, the following services shall additionally fall within the definition – they are – (i) Service rendered at a Government and non-Government hospital/health centres/nursing homes where charges are required to be paid by persons who are in a position to pay and persons who cannot afford to pay are rendered service free of charge;  (ii) when services are availed by a person who is covered by an insurance policy for medical care where under the charges for consultation, diagnosis and medical treatment are borne by the insurance company; and (iii) when the employer bears the expenses of medical treatment of an employee and his family members dependent on him.

While addressing the precise premise taken by the Trust, the Court referred to State of Travancore-Cochin vs. Bombay Co. Ltd. AIR 1952 SC 366  where in Justice Patanjali Shastri had made an acute observation regarding the relevance of speeches in course of debate in a Parliament. It was observed that opinion in such speeches at best can be indicative of the subjective opinion of the speaker. The Court also referred to other cases decided by the Hon’ble Supreme Court where in it was held that ‘speeches made on the floor of the Parliament are not admissible as extrinsic aids to the interpretation of statutory provisions’ because a statute is the expression of the collective intention of the Legislature as a whole and any statement made by an individual, albeit a Minister, of the intention and object of the Act, cannot be used to cut down the generality of the words used in the statute. On this basis, the Court found that the submissions made by the Trust as least relevant.

The Court also considered the submission made in the PIL that ‘health care’ was initially included in the definition of the term “service” in the Bill but the same was deleted after extensive debates. The Court in this regard opined that the parliamentarians might have thought of not including `health care’ as the same has already been understood and interpreted by the Supreme Court in Indian Medical Association and such express inclusion would have amounted to a ‘mere surplusage’. The Court further observed that “If at all the Parliament while repealing and replacing the 1986 Act with the 2019 Act had intended to give a meaning to the term “service” different from the one given by the Supreme Court, such intention ought to have been reflected in clear words by a specific exclusion of ‘health care’ from the purview of the 2019 Act.”

With this background and reasoning, the Court dismissed the PIL as being ‘thoroughly misconceived’ and imposed a cost of Rs.50,000/- to be paid to the Maharashtra State Legal Services Authority.

In a recent matter decided by the Supreme Court [Nandlal Lohariya v. Jagdish Chand Purohit and others (Special Leave Petition(C) Diary No. 24842 of 2021), the petitioner filed a complaint against three advocates who appeared on behalf of the petitioner in three complaints against BSNL. The Petitioner alleged deficiency in service on their part in contesting his cases against BSNL before the District Forum.

The District Forum dismissed the complaint filed by the petitioner and the State Commission and the National Commission confirmed the decision of the District Forum where it was held that there was no negligence on the part of the advocates at all and that there was no deficiency in service.

The Court found that there was no substance in the present special leave petitions and upheld the decision of the National Commission. The Court observed that “In each and every case where a litigant has lost on merits and there is no negligence on the part of the advocate/s, it cannot be said that there was any deficiency in service by the advocate/s”. The Court further stated that if the submission advanced on behalf of the petitioner is accepted, in that case, in each and every case where a litigant has lost on merits and his case is dismissed, he will approach the consumer fora and pray for compensation alleging deficiency in service. The Court clarified that it cannot be said to be deficiency in service on the part of the advocate when the party has lost the case after the advocate argued the matter on merits. Further, one party is bound to lose in a litigation and it is not permissible that the party who loses in the litigation may then approach the consumer fora for compensation alleging deficiency in service.

On the grounds stated above the Special Leave Petition was dismissed.