Important Judgments on Consumer Protection Law in India


March 26, 2018

SC: Insurance Company cannot Reject Claims on Technical Grounds

Case name: Om Prakash v. Reliance General Insurance (2017)

In the case, the Appellant insured his truck with the Respondent. The Appellant’s vehicle was stolen and consequently, an FIR was also lodged. The theft of the vehicle had taken place on 23.03.2010, the FIR was lodged on 24.03.2010 and the claim petition with the Respondent company was filed on 31.03.2010. On lodging the insurance claim, the Investigator appointed by the Respondent confirmed the factum of theft and consequently, the Corporate Claims Manager approved an amount of Rs.7,85,000/- for the said claim of the appellant.

Thereafter, the Appellant made several requests to the respondent, seeking speedy processing and disposal of his insurance claim. However, on non-payment the Appellant served a legal notice to the Respondent but the Respondent repudiated the Appellant’s insurance claim citing breach of condition of terms of Insurance by the Appellant. The impugned term being- i.e. immediate information to the Insurer about the loss/theft of the vehicle.

Aggrieved by the aforesaid, the Appellant filed complaint before the, District Consumer Disputes Redressal Forum (‘District Forum’), seeking a direction to the respondent-company for payment of claim amount with an interest @ 18% per annum, along with compensation of Rs.1,00,000/-. However, the District Forum dismissed the complaint of the appellant. The Appellant met with a similar fate in State Commission as well as National Commission, wherein his appeals were dismissed.

In the instant case, the Appellant approached the Supreme Court against National Commission’s order and challenged the legality and correctness of the said order.

Bench’s Verdict

The Supreme Court allowed the Appellant’s appeal and made the following observations:

  • That truck-driver, had filed an affidavit before the District Forum stating that the owner of the truck had reached the place of occurrence of theft and on lodging complaint the Police had asked him and the Appellant to stay with them in order to help them for tracing out the truck. Thus, the Appellant was busy with the Rajasthan Police in searching the vehicle and returned to his village on 30.03.2010.
  • The Court in the aforesaid context noted that it is common knowledge that a person who lost his vehicle may not straightaway go to the Insurance Company to claim compensation. At first, he will make efforts to trace the vehicle. It is true that the owner has to intimate the insurer immediately after the theft of the vehicle. However, thiscondition should not bar settlement of genuine claims particularly when the delay in intimation or submission of documents is due to unavoidable circumstances.
  • The Court also observed that an Insurance company shall reject claim on valid grounds. Rejection of the claims on purely technical grounds in a mechanical manner will result in loss of confidence of policy-holders in the insurance industry. If the reason for delay in making a claim is satisfactorily explained, such a claim cannot be rejected on the ground of delay. It is also necessary to state here that it would not be fair and reasonable to reject genuine claims which had already been verified and found to be correct by the Investigator.
  • The Court also noted that the Consumer Protection Act, 1986 is a beneficial legislation that deserves liberal construction. This laudable object should not be forgotten while considering the claims made under the Act.

In view of the aforesaid, the Supreme Court held that the National Commission was not justified in rejecting the claim of the appellant without considering the explanation for the delay. The Court also held that the claimant was entitled for a sum of Rs.50,000/- towards compensation.

The Court directed the Respondent company to pay a sum of Rs. 8,35,000/- to the Appellant along with interest @ 8% per annum from the date of filing of the the claim petition till the date of payment.

The Apex Court in the case has made a very essential observation that the Consumer Protection Act, 1986 is a beneficial legislation, hence the same shall be interpreted liberally and in the interest of public at large.

Read the case here.

Also read Rejection of Insurance Claims – reasons and remedies

Here it would be relevant to mention that rejection of claims by Insurance companies merely on technical grounds has time and again been condemned by the Judiciary and Insurance Regulator, Insurance Regulatory and Development Authority (IRDA) which had issued a Circular in 2011 and emphasized that insurance claims in which intimation or submission of documents has been delayed due to unavoidable circumstances shall not be rejected.

SC: Insurance Company Liable to Pay Claim of Hijacked Vehicle

Manjeet Singh v. National Insurance Company Ltd. & Anr.

In this recent case, decided by Two-Judge Bench of the Supreme Court, the Court has further expanded the scope and ambit of protecting consumers under Insurance claims by holding that an insurance company cannot reject motor vehicle claim on the ground that giving lift to passengers which was later stole by them did not tantamount to fundamental breach of terms of policy.

Read more here.

SC: Arbitration Clause Does not Bar Filing of Complaint with Consumer Forum

In this recent case M/S Emaar MGF Land Limited & Anr. v. Aftab Singh(2018), the Two-Judge Bench of the Supreme Court agreed with NCDRC’s holding in July 2017 whereby, the National Commission ruled that an Arbitration Clause in Buyer’s Agreement cannot circumscribe the jurisdiction of a Consumer Fora, notwithstanding the amendments made to Section 8 of the Arbitration Act.

NCDRC had made the following conclusions in the case:

  • the disputes which are to be adjudicated and governed by statutory enactments, established for specific public purpose to sub-serve a particular public policy are not arbitrable;
  • there are vast domains of the legal universe that are non-arbitrable and kept at a distance from private dispute resolution;
  • the subject amendment was meant for a completely different purpose, leaving status quo anteunaltered and subsequently reaffirmed and restated by the Hon’ble Supreme Court;
  • Section 2(3) of the Arbitration Act recognizes schemes under other legislations that make disputes non-arbitrable
  • In light of the overall architecture of the Consumer Act and Court-evolved jurisprudence, amended sub-section (1) of Section 8 cannot be construed as a mandate to the Consumer Forums, constituted under the Act, to refer the parties to Arbitration in terms of the Arbitration Agreement.

In view of the aforesaid findings and observations, the NCDRC held that an Arbitration Clause in the afore-stated kind of Agreements between the Complainants and the Builder cannot circumscribe the jurisdiction of a Consumer Fora, notwithstanding the amendments made to Section 8 of the Arbitration Act.

Read more here.

SC: Limitation Provision in Consumer Protection Act cannot be strictly construed to disadvantage of Consumer

Case name: National Insurance Company Ltd. v. Hindustan Safety Glass Works Ltd. & Anr.

In the case, the Insurance Company refused to compensate the Respondent on account of damage caused due to heavy rain during the mentioned period. The Insurance Company admittedly denied relief to the Insured on account of one of the conditions in the Policy which stated that National Insurance would not be liable for any loss or damage 12 months after the event that caused the loss or damage to the insured unless the claim is the subject matter of a pending action or arbitration.

The Supreme Court with reference to the case made the following observations:

  • That when a claim is made by the insured that itself is actionable. There is no question of requiring the insured to approach a court of law for adjudication of the claim. This would lead to encouraging avoidable litigation which certainly cannot be the intention of the insurance policies and is in any case not in public interest.
  • That in the case the event that caused the loss or damage to the insured occurred on 6th August, 1992 when due to heavy incessant rain in Calcutta, the raw materials, stocks and goods, furniture etc. of the insured were damaged. On the very next day, the insured lodged a claim with National Insurance. That the surveyor appointed by the Insurance Company took about one year to submit its report. Thus, the National Insurance itself took more time in surveying or causing a survey of the loss or damage suffered by the insured. Surely, this entire delay is attributable to National Insurance and cannot prejudice the claim of the insured more particularly when the insured had lodged a claim well within time.
  • That in a dispute concerning a consumer, it is necessary for the Courts to take a pragmatic view of the rights of the consumer principally since it is the consumer who is placed at a disadvantage vis-à-visthe supplier of services or goods. It is to overcome this disadvantage that a beneficent legislation in the form of the Consumer Protection Act was enacted by Parliament.
  • That the provision of limitation in the Act cannot be strictly construed to disadvantage a consumerin a case where a supplier of goods or services itself is instrumental in causing a delay in the settlement of the consumer’s claim.

Read the case here.

National Commission says “No Cure/No Success is not Medical Negligence”

Case name: Dr. M. Kochar vs Ispita Seal (National Commission)

In this case, decided by the National Commission, the Commission was confronted with the issue of deficiency in services in IVF procedure performed by the Doctor. The Commission while delivering its judgement made reference to medical literature relating to IVF procedure to arrive at the conclusion that No cure/ no success in IVF is not a negligence.

While arriving at its decision, the National Commission made the following observations:

  • That IVF is a complex series of procedures used to treat fertility and assist with the conception of a child and it involves several technical steps. The hospital or any treating doctor will not give assurances or guarantees of the treatment. According to medical literature the chances of having a healthy baby using IVF depend on many factors, such as patient’s age and the cause of infertility. In addition, IVF can be time-consuming, expensive and invasive.
  • That medical literature clearly states that presence of vaginal infection does not alter pregnancy rate.
  • That a woman’s age is the most important factor that influences the success rate of IVF procedures. The IVF success rate is highest for women between 24 and 34 as this is the period when they are at their peak fertility levels.
  • With reference to the case, the Commission held that treating doctor adopted the standard method of IVF. The patient was properly investigated and given proper medicines for retrieval of eggs prior to IVF. In any given cycle, the chance of IVF success varies, depending on age and personal health circumstances. The Commission opined that there was no deficiency or lapses in the duty of care on the part of the treating Doctor or OP in the case.
  • That “No cure/ no success is not a negligence”, thus fastening the liability upon the treating doctor is unjustified. The National Commission also set aside the State Commission’s order and stated that the OP could not be held liable without any cogent evidence or medical ground.

Read the case here.

Also read Important Judgments on Medical Negligence in India

Also read What Is Medical Negligence?  When and How to File a Case pertaining to Medical Negligence?

Remedy under Consumer Protection Act is an additional remedy

The Chhattisgarh High Court in a case in 2016 opined that remedy available to the Consumer under Consumer Protection Act  is an additional remedy and other statutory remedy available to the Consumer under other statutory law would not bar the Consumer to avail remedy under the CPA.

A similar observation was also made by the Supreme Court in the case of Virendar Jain v. Alaknanda Cooperative Group Housing Society Limited and Others[1]., wherein the Apex Court categorically stated that remedy available under the CP Act, 1986 is in addition to the remedies available under the other statute and the availability of alternative remedies is not a bar to the entertaining of a complaint filed under Consumer Protection Act .

The case can be accessed here.

Class Action Suit under the Consumer Protection Act, 1986

Case name: Ambrish Kumar Shukla & 21ors. v. Ferrous Infrastructure Pvt. Ltd. (2016)

In the case, the National Commission while taking up the issue whether a complaint under Section 12(1)(c) of the Consumer Protection Act filed on behalf of or for the benefit of only some of the numerous consumers having a common interest or a common grievance is maintainable or it must necessarily be filed on behalf of or for the benefit of all the consumers having a common interest or a common grievance against same person?

While deciding the issue the National Commission elucidated on the object of “class action suit” as under:

  • That a suit in terms of order 1 Rule 8 of the Code of Civil Procedure commonly termed as a class suit is intended on behalf or for the benefit of all the persons having a common grievance against the same party and seeking the same relief not on behalf of or for the benefit of only some of them.
  • 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.
  • That more than one complaints under Section 12(1)(c) of the Consumer Protection Actare 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.
  • That 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 Actare liable to be dismissed with liberty to join in the complaint instituted first with the requisite permission of the Consumer Forum.
  • That individual complaints instituted before grant of the requisite permission under Section 12(1)(c) of the Consumer Protection Actcan 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.

Directions to exercise due care and caution while considering such a complaint to grant the requisite permission, only where the complaint fulfils all the requisite conditions in terms of Section 12(1)(c) of the Consumer Protection Act read with Order I Rule 8 of the Code of Civil Procedure .

The Bench should either give individual notices or an adequate public notice of the institution of the complaint to all the persons on whose behalf or for whose benefit the complaint is instituted. Such a notice should disclose inter­alia

  • the subject matter of the complaint including the particulars of the project if the complaint relates to a housing project / scheme,
  • the class of persons on whose behalf or for whose benefit the complaint is filed
  • the common grievance sought to get redressed through the class action,
  • the alleged deficiency in the services and
  • the reliefs claimed in the complaint.

Read the case here.

SC on Maintainability of Second Complaint under Consumer Protection Act, 1986

Case name: Indian Machinery Company v. M/s Ansal Housing & Construction Ltd.

The seminal issue that arose in the case was that whether a second complaint to the District Forum under the Consumer Protection Act  is maintainable when the first complaint was dismissed for default or non-prosecution. In the case, the National Commission took the view that the second complaint would not be maintainable.

However, in appeal, the Supreme Court set aside the National Commission’s order. The Court while arriving at its decision made reference to the case of New India Assurance Co. Ltd. Vs. R. Srinivasan[2], wherein it was opined that the rule of prohibition contained in Order 9 Rule 9(1) CPC cannot be extended to the proceedings before the District Forum or the State Commission. The fact that the case was not decided on merits and was dismissed in default of non-appearance of the complainant cannot be overlooked and, therefore, it would be permissible to file a second complaint explaining why the earlier complaint could not be pursued and was dismissed in default.

In view of the aforesaid, the Supreme Court considering the facts and circumstances of the case held that the second complaint filed by the appellant was maintainable on the facts of this case.

The entire case can be accessed here.

SC: Opposite Party can be granted a Further Period of 15 days and not beyond that to File Reply

Case name: New India Assurance Co. Ltd. v. Hilli Multipurpose Cold Storage Pvt. Ltd.

In this case, the issue that came up before the Court pertained to the period within which the opposite party has to give his version to the District Forum in pursuance of a complaint, which is admitted under Section 12 of the Consumer Protection Act . According, to the statutory provision the opposite party is given 30 days’ time for giving his version and the said period for filing or giving the version can be extended by the District Forum, but the extension should not exceed 15 days. Thus, an upper cap of 45 days has been imposed by the Act for filing version of the opposite party.

In the case of Dr. J.J. Merchant & Ors. v. Shrinath Chaturvedi[3], the Supreme Court had held from the impugned provision under Consumer Protection Act  it is apparent that on receipt of the complaint, the opposite party is required to be given notice directing him to give his version of the case within a period of 30 days or such extended period not exceeding 15 days as may be granted by the District Forum or the Commission. For having speedy trail, this legislative mandate of not giving more than 45 days in submitting the written statement or the version of the case is required to be adhered to. If this is not adhered to, the legislative mandate of disposing of the cases within three or five months would be defeated.

The conflict in the case arose by the judgement of the Supreme Court in the case of Kailash v. Nankhu & Ors.[4]. The Respondent in the case while relying on the said case contended that the said provision with regard to extension of time beyond a particular limit is directory in nature and that would not mean that extension of time cannot exceed 15 days. Hence, it is directory in nature and not mandatory.

In the New India Assuarnace case, the Supreme Court eventually settled the issue by holding that the District Forum can grant a further period of 15 days to the opposite party for filing his version or reply and not beyond that.

The entire case can be accessed here.

RTI Applicant can Approach Consumer Forum if Denied Information

In the year 2013, the Ernakulam Consumer Disputes Redressal Forum passed a noteworthy order by holding that if an RTI applicant is denied information then the same would be a deficiency in service and the applicant will be entitled to compensation under the Consumer Protection Act, 1986.

In this case, the applicant sought information of the names of the councilors who failed to convene ward sabhas once in 3 months. The concerned PIO failed to give the requisite information to the applicant and subsequently the applicant approached Consumer Forum citing that denying his RTI application without any reasonable cause was deficiency in service on part of the Corporation. The Consumer Forum while holding that the case of complainant was within the purview of Section 2(i) (o) of the Consumer Protection Act, directed the concerned PIO to pay Complainant Rs. 5000/- as compensation.

Colleges and Universities covered under Consumer Protection Law

While expanding the scope of Consumer Law, National Commission opened new doors in “Bhupesh Khurana and others Vishwa Budha Parishad and others” that imparting education falls within the ambit of service as defined under CPA. It was held in the case that fees are paid for services to be rendered by way of imparting education by educational institutions.

The key observation made by the National Commission in the case was that imparting of education by an educational institution for consideration falls within the ambit of ‘service’ as defined in the Consumer Protection Act. Fees are paid for services to be rendered by way of imparting education by the educational institutions. If there is no rendering of service, question of payment of fee would not arise. The Complainants had hired the services of the Respondent for consideration so they are consumers as defined in the Consumer Protection Act.

The Complainants in the case were admitted in the B.D.S. course for imparting education for consideration for which the college of the respondent was not affiliated and recognised for imparting education The National Commission held that this case clearly fell within the purview of deficiency as defined in the Consumer Protection Act.

Read more here.

The entire case can be accessed here.

Also read 7 Landmark Judgments on Consumer Protection in 2017


[1] (2013)9 SCC 383

[2] [(2000) 3 SCC 242]

[3] [(2002) 6 SCC 635]

[4] (2005) 4 SCC 480