NCDRCs Larger bench judgment on section 12(1)(c) of consumer protection act

Larger bench of National consumer disputes redressal commission, after almost 5 months of debate, passed a judgment pertaining to interpretation of section 12(1)(c) of consumer protection act on 7th October. Lets have a look at the decision along with key factors behind it.

Background

  • The pecuniary limit of jurisdiction for NCDRC is 1 crore. So, a consumer can approach consumer court if consideration (cost+compensation) is more than 1 crore.
  • To reach the magic pecuniary limit of NCDRC, buyers would often join hand and approach NCDRC.
  • Group of buyers and associations had been approaching NCDRC with their complaints against the builder (often referred to as class action suit). In many cases, multiple groups or associations would file the case for same project leading to increased work load for NCDRC.
  • In some cases, the group of buyers constituted of buyers with a different set of complaints and interests against the builder. e.g. one buyer wanted refund while the others were looking for penalty/adjusted interest.
  • Most of the recent cases like that of Unitech, Parsvnath and Supertech had gone to Supreme court further putting the NCDRC decision under scrutiny, hence increasing the overall work load.
  • Some clarifications were also sought on what amount – agreement? or market value? amount shall constitute the claim amount.

Judgment/Decision:

The Aster Public school

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  • 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.
  • A complaint under Section 12 (1)(c) of the Consumer Protection Act is maintainable before this Commission where the aggregate of the value of the goods purchased or the services hired or availed of by all the consumers on whose behalf or for whose benefit the complaint is instituted and the total compensation, if any, claimed in respect of all such consumers exceeds Rs.1.00 crore. The value of the goods purchased or the services hired and availed of by an individual consumer or the size, or date of booking / allotment / purchase of the flat would be wholly irrelevant in such a complaint where the complaint relates to the sale / allotment of several flats / plots in the same project / building.
  • It is the value of the goods or services, as the case may be, and not the value or cost of removing the deficiency in the service which is to be considered for the purpose of determining the pecuniary jurisdiction.
  • The interest has to be taken into account for the purpose of determining the pecuniary jurisdiction of a Consumer Forum.
  • The consideration paid or agreed to be paid by the consumer at the time of purchasing the goods or hiring or availing of the services, as the case may be, is to be considered, along with the compensation, if any, claimed in the complaint, to determine the pecuniary jurisdiction of a Consumer Forum.
  • In a complaint instituted under Section 12(1)(c) of the Consumer Protection Act, the pecuniary jurisdiction is to be determined on the basis of aggregate of the value of the goods purchased or the services hired or availed by all the consumers on whose behalf or for whose benefit the complaint is instituted and the total compensation claimed in respect of such consumers.
  • A complaint under Section 12(1)(c) of the Consumer Protection Act can be instituted only by one or more consumers, as defined in Section 2(1)(d) of the Consumer Protection Act.  Therefore, a group of Cooperative societies, Firms, Association or other Society cannot file such a complaint unless such society etc. itself is a consumer as defined in the aforesaid provision.
  • More than one complaints under Section 12(1)(c) of the Consumer Protection Act are not maintainable on behalf of or for the benefit of consumers having the same interest i.e. a common grievance and seeking the same / identical against the same person. In case more than one such complaints have been instituted, it is only the complaint instituted first under Section 12(1)(c) of the Consumer Protection Act, with the requisite permission of the Consumer Forum, which can continue and the remaining complaints filed under Section 12(1) (c) of the Consumer Protection Act are liable to be dismissed with liberty to join in the complaint instituted first with the requisite permission of the Consumer Forum.
  • The individual complaints instituted before grant of the requisite permission under Section 12(1)(c) of the Consumer Protection Act can continue despite grant of the said permission but it would be open to such complainants to withdraw their individual complaints and join as parties to the complaint instituted in a representative character.
  • However, once the requisite permission under Section 12(1)(c) of the Consumer Protection Act is granted, an individual complaint, expressing the same grievance will not be maintainable and the only remedy open to a consumer having the same grievance is to join as a party to the complaint instituted in a representative character.

A crisp Interpretation

  • Definition of consumer remains unchanged. A single consumer or group of consumers who has/have not bought property for commercial purpose shall continue to be eligible.
  • For calculation of compensation amount, agreement value plus interest will have to be considered (market value wont be considered).
  • Individuals with cost of property + compensation (based on the above) more than 1 crore can approach NCDRC.
  • Group of buyers or associations can approach NCDRC provided i) they represent the entire set of consumers suffering at the hands of the builder and ii) if the claim for all in total exceeds 1 crore.
  • Group of buyers should either i) constitute all buyers that qualify as consumers for the project or ii) shall give sufficient individual/public notice to other buyers to join them prior to acceptance of the case.
  • Such a notice should disclose  (i) particulars of the project if the complaint relates to a housing project (ii) the class of persons on whose behalf or for whose benefit the complaint is filed, (iii) the common grievance sought to get redressed through the class action, (iv) the alleged deficiency in the services and (v) the reliefs claimed in the complaint.
  • If there is an already running case for the project, buyer(s) can join that case provided the grievances/interests remain the same and provided he/she or they qualify as consumer(s).

Attached is the complete judgment from the larger bench.

NCDRC Full judgment on Section 12(1)(c)

Last updated: October 12, 2016 at 19:23 pm

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