January 11, 2018
SC: For Entitlement to Compensation it is Essential to Prove Loss or Damage
Case name: Chief Administrator, H.U.D.A. & Anr. v. Shakuntla Devi(Supreme Court)
In the case, the Respondent alleged that inspite of paying the full price of the plot/allotment as per the terms and conditions of the allotment letter, she was not given the possession of the plot by the Appellant.
In the case, the State Commission held that the Respondent had established deficiency of service by the Appellants as there was delay in handing over physical possession of the plot and was entitled to compensation. In appeal, the National Commission upheld the State Commission’s order.
The Supreme Court in the case made some essential observation which are also rudimentary for awarding compensation and quantum of compensation in consumer protection cases concerning real estate matters.
- That the sine qua non for entitlement of compensation is proof of loss or injury suffered by the consumer due to the negligence of the opposite party. Once the said conditions are satisfied, the Consumer Forum would have to decide the quantum of compensation to which the consumer is entitled.
- That there cannot be any dispute that the computation of compensation has to be fair, reasonable and commensurate to the loss or injury. There is a duty cast on the Consumer Forum to take into account all relevant factors for arriving at the compensation to be paid.
- The Supreme Court also made reference to the case of Charan Singh v. Healing Touch Hospital and Others, wherein the Apex Court held that calculation of damages depends on the facts and circumstances of each case. No hard and fast rule can be laid down for universal application.
- That while awarding compensation, a Consumer Forum has to take into account all relevant factors and assess compensation on the basis of accepted legal principles, on moderation. It is for the Consumer Forum to grant compensation to the extent it finds it reasonable, fair and proper in the facts and circumstances of a given case according to the established judicial standards where the claimant is able to establish his charge.
- That compensation cannot be uniform and can best be illustrated by considering cases where possession is being directed to be delivered and cases where only monies are directed to be returned. In cases where possession is being directed to be delivered the compensation for harassment will necessarily have to be less because in a way that party is being compensated by increase in the value of the property he is getting.
- That in cases where the Consumer Forum has directed delivery of possession, the party has to a certain extent already got a benefit. The cost of the land/flat would have gone up in the meantime. Of course, even in cases, where delivery of possession has been directed there could be compensation for harassment/ loss. But such compensation has to be worked out after looking into the facts of each case and after determining the amount of harassment/loss that has been caused to the consumer.
Read the case here.
SC: Insurance Company cannot Reject Claims on Technical Grounds
Case name: Om Prakash v. Reliance General Insurance (Supreme Court)
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.
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.
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.
Read the case here.
National Commission on Class Action Suit under the Consumer Protection Act
Case Name: Ambrish Kumar Shukla & 21 ors. v. Ferrous Infrastructure Pvt. Ltd. (National Consumer Dispute Redressal Commission)
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 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.
- 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 Act are 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 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.
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
- (v) the reliefs claimed in the complaint.
Read the case 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. (Supreme Court)
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-vis the 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 consumer in 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.
Trust cannot Lodge a Complaint under the Consumer Protection Act
Case name: Pratibha Pratisthan & Ors. v. Manager, Canara Bank & Ors. (Supreme Court)
In this case, the issue taken up by the Court was whether a complaint can be filed by a Trust under the provisions of the Consumer Protection Act.
The Supreme Court while arriving at its conclusion made reference to definition of complaint and complainant and consumer under the Consumer Protection Act and held that it is quite clear from the definition of a complainant that it does not include a Trust.
- That a reading of the definition of the words ‘complaint’, ‘complainant’ and ‘consumer’ makes it clear that a Trust cannot invoke the provisions of the Act in respect of any allegation on the basis of which a complaint could be made. To put this beyond any doubt, the word ‘person’ has also been defined in the Act and Section 2(m) thereof defines a person as follows :- (m) “person” includes, − (i) a firm whether registered or not; (ii) a Hindu undivided family; (iii) a co-operative society; (iv) every other association of persons whether registered under the Societies Registration Act, 1860.
- That on a plain and simple reading of all the above provisions of the Act it is clear that a Trust is not a person and therefore not a consumer. Consequently, it cannot be a complainant and cannot file a consumer dispute under the provisions of the Act.
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.
SC asks Centre to Frame Rules and Regulations for Effective Implementation of Consumer Protection Act
Case name: State Of U.P. Through Principal Secretary & Ors v. All U.P. Consumer Protection Bar Association(Supreme Court)
In the case, the Supreme Court vide its order in January, 2016 had constituted Committee for examining the aspect of paucity of infrastructure in Consumer Forum and accordingly, the Committee was requested to forward its deliberations to the State Governments.
Later the Supreme Court had issued direction to the Union Government to frame model rules for adoption by the State Governments. The Supreme Court in its latest order has now directed the Union Government to file a a comprehensive status report indicating compliance with the directions issued by the Court on affidavit within a period of six weeks.
Read the case here.
 (2017) 2 SCC 301
 An essential condition
 (2000) 7 SCC 668
 Ghaziabad Development Authority v. Balbir Singh, (2004) 4 SCC 65
 Civil Appeal No. 2740 of 2007