Vesting Jurisdiction In Consumer Courts Based On Value Of Goods & Services Not Illegal: Supreme Court Upholds Constitutionality Of CP Act Provisions
The Supreme Court observed that the value of consideration is and can be a valid basis for classifying claims for determining pecuniary jurisdiction.
Justice P.S. Narasimha, Justice Manoj Misra, Supreme Court
The Supreme Court has upheld the Constitutionality of the provisions of the Consumer Protection Act, 2019 (CP Act) prescribing pecuniary jurisdictions of the District, State and National Commissions on the basis of value of goods and services paid as consideration, instead of compensation claimed.
The Court was dealing with a Writ Petition filed under Article 32 of the Constitution along with a Civil Appeal, challenging the Order of the National Consumer Disputes Redressal Commission (NCDRC).
The two-Judge Bench comprising Justice P.S. Narasimha and Justice Manoj Misra held, “… vesting jurisdiction in the district, state or national commission on the basis of value of goods or services paid as ‘consideration’, is neither illegal nor discriminatory. For this very reason, the submission made by Mr. Shreeyash Lalit that the width of the expression ‘consumer’ under Section 2(7) of the Act is arbitrarily restricted by Sections 34, 47 and 58 pales into insignificance. The myriad ways in which a consideration could be inferred would not derogate from the essentiality of consideration in every transaction leading to formation of a contract.”
The Bench observed that the value of consideration is and can be a valid basis for classifying claims for determining pecuniary jurisdiction and it therefore rejected the submission that Sections 34, 47, and 58 of the CP Act are discriminatory and violative of Article 14 of the Constitution.
Senior Advocate Abhimanyu Bhandari and Advocate Shreeyash Lalit appeared on behalf of the Petitioners while ASG Vikramjeet Banerjee and Advocate Nachiketa Joshi appeared on behalf of the Respondents.
Facts of the Case
As per the Writ Petition, the Petitioner’s husband had purchased a sedan- Ford Endeavour Titanium car from S.P. Vehicles Pvt. Ltd., authorised dealer of Ford India for an amount of Rs. 31.19 Lakhs. Tragically, the vehicle caught fire in 2018 while being driven leading to death of her husband. Though criminal proceedings were initiated, the proceedings before the Court were concerned with the statutory proceedings initiated under the CP Act, 2019 by way of Consumer Complaint before the District Consumer Commission, Vadodara for compensation of Rs. 51.49 crores with interest thereon. Pending disposal of the Consumer Complaint, the Appellant approached the Apex Court by way of the Writ Petition, alleging that she was compelled to approach the District Commission because of the statutory regime under the CP Act, 2019 whereas under the repealed Consumer Protection Act, 1986, she could have directly approached the National Commission based on compensation claimed.
As per the Civil Appeal, the Appellant’s husband, a District Governor of the Lions Club of Jhansi, passed away due to COVID-19 in 2020. When her claim on the basis of insurance policy offered by Lions International Club, up to two million dollars as compensation to families of deceased members was denied, she approached the National Commission seeking Rs. 14.94 crores. However, the National Commission rejected her Petition on the ground that the consideration for the insurance policy does not exceed Rs.10 crores.
Reasoning
The Supreme Court after hearing the arguments from both sides, noted, “Classification based on value of goods or services on the basis of the amount paid as consideration is valid. “Consideration” is an integral part of forming any contract. It is also an integral part of the definition of a ‘consumer’.”
The Court said that such classification of claims has a direct nexus to the object sought to be achieved and it is thus not a suspect classification. It added that the value of consideration paid for good or service purchased is closer and more easily relatable to compensation than the self-assessed claim for damages of a consumer.
“It is clear that the determination of jurisdiction of the district, state or national commissions on the basis of value of consideration paid for purchase of goods and services has rational nexus to the object of provisioning hierarchy of judicial remedies”, it further enunciated.
The Court held that there is no unrestricted claim for compensation and that it is subject to the determination of the Court and also held that the classification of claims based on value of goods and services paid as consideration has a direct nexus to the object of creating a hierarchical structure of judicial remedies through Tribunals.
“A peculiar feature of how our legislative system works is that an overwhelming majority of legislations are introduced and carried through by the Government, with very few private member bills being introduced and debated. In such circumstances, the judicial role does encompass, in this Court’s understanding, the power, nay the duty to direct the executive branch to review the working of statutes and audit the statutory impact. It is not possible to exhaustively enlist the circumstances and standards that will trigger such a judicial direction”, it also remarked.
The Court was of the view that shifting the focus of judicial review to functional capability of the bodies is not to be understood as an argument for alternative remedy, much less as a suggestion for judicial restraint and this shift is in recognition of an important feature of judicial review, which performs the vital role of institutionalizing authorities and bodies impressed with statutory duties, ensuring they function effectively and efficiently.
“The power of judicial review in matters concerning implementation of policy objectives should transcend the standard power of judicial review to issue writs to perform statutory duty and proceed to examine whether the duty bearers, the authorities and bodies are constituted properly and also whether they are functioning effectively and efficiently. By ensuring institutional integrity, we achieve our institutional objectives”, it emphasised.
The Court elucidated that an effective and efficient performance of the institutions can reduce unnecessary litigation.
Conclusion
Furthermore, the Court held that the Council and Authority being statutory authorities having clear purpose and objects and vested with powers and functions must act effectively and in complete coordination to achieve the preambular object of the statute to protect the interest of consumers.
“As they are impressed with statutory duty, their functioning will be subject to judicial review. Vibrant functioning of the Council and the Authority will subserve the purpose and object of the Parliament enacting the 2019 legislation”, it added.
The Court, therefore, dismissed the Constitutional challenge to Sections 34, 47, and 58 of the CP Act and declared that the said provisions are Constitutional and are neither violative of Article 14 nor manifestly arbitrary.
“Central Consumer Protection Council and the Central Consumer Protection Authority shall in exercise of their statutory duties under sections 3, 5, 10, 18 to 22 take such measures as may be necessary for survey, review and advise the government about such measures as may be necessary for effective and efficient redressal and working of the statute”, it also directed.
Accordingly, the Apex Court disposed of the Petition and Appeal.
Cause Title- Rutu Mihir Panchal & Ors. v. Union of India & Ors. (Neutral Citation: 2025 INSC 593)
Appearance:
Petitioners: Senior Advocate Abhimanyu Bhandari, AORs Haresh Raichura, Manisha Ambwani, Advocates Shreeyash Lalit, Saroj Raichura, Kalp Raichura, Rajat Vats, Somesh Tiwari, Utsav Saxena, Shubhankar Singh, and Aashna Mehra.
Respondents: ASG Vikramjit Banerjee, AORs Shreekant Neelappa Terdal, Amrish Kumar, Viresh B. Saharya, Advocates Nachiketa Joshi, Anmol Chandan, Priyanka Das, T.S. Sabarish, and A. Deb Kuamar.
