Supreme Court sets aside consumer commission order in case against Noida Jaypee Greens promoter

The Supreme Court has set aside the order of the National Consumer Disputes Redressal Commission (NCDRC) by which it had directed a complainant to file its case before appropriate authority as the amount of damages claimed was below its enhanced pecuniary jurisdiction, according to the provisions of the new Consumer Protection Act which came into force from July 20, 2020.  

In November 2011, the appellant, Neena Aneja and another, had paid an advance of Rs 3.5 lakh for a residential unit of 114.27 square metres in Krescent Homes, Jaypee Greens, Noida developed by respondent Jai Prakash Associates Ltd. The total cost was fixed at Rs 56.45 lakh and possession was to be given in a period of 42 months from the execution of the agreement of the provisional allotment letter. The appellants stated that from December 2011 till date, they have paid Rs 53.84 lakh of the total Rs 56.45 lakh. 

On June 13, 2017 and April 27, 2020, the appellant sought a refund of the consideration with interest at 18 per cent. On June 18, 2020, the appellants instituted a consumer complaint before the NCDRC for refund with interest. The complaint was dismissed by an order dated July 30, 2020 for want of pecuniary jurisdiction. In the present case, the claim of Rs 2.19 crore is below the enhanced pecuniary jurisdiction of the NCDRC. 

A single-member Bench of the NCDRC held that following the enforcement of the Act of 2019 on July 20, 2020, the limits of its pecuniary jurisdiction stands enhanced from Rs 1 crore to Rs 10 crore and the complaint instituted by the appellants is consequently not maintainable. The appellants instituted a petition seeking a review of the order. The review petition was dismissed on October 5, 2020 leading to the institution of the appeal before the Supreme Court. 

The division bench of Justice Dhananjaya Y. Chandrachud and Justice M.R. Shah said, “One can imagine the serious hardship that would be caused to the consumers if cases which have been already instituted before the NCDRC were required to be transferred to the SCDRCs as a result of the alteration of pecuniary limits by the Act of 2019. 

It noted, “A consumer who has engaged legal counsel at the headquarters of the NCDRC would have to undertake a fresh round of legal representation before the SCDRC incurring expense and engendering uncertainty in obtaining access to justice. Likewise, where complaints have been instituted before the SCDRC, a transfer of proceedings would require consumers to obtain legal representation before the District Commission if cases were to be transferred. Such a course of action would have a detrimental impact on the rights of consumers. Many consumers may not have the wherewithal or the resources to undertake a fresh burden of finding legal counsel to represent them in the new forum to which their cases would stand transferred.”

The Court further said, “It would be difficult to attribute to Parliament, whose purpose in enacting the Act of 2019 was to protect and support consumers with an intent that would lead to financial hardship, uncertainty and expense in the conduct of consumer litigation. Ironically, the objection which has been raised in the present case to the continued exercise of jurisdiction by the NCDRC in regard to the consumer complaint filed by the appellant is by the developer who is the respondent herein. It is a developer who opposed the continuation of the proceedings before the NCDRC on the ground that under the new consumer legislation the pecuniary limits of the jurisdiction exercisable by the NCDRC have been enhanced and the complaint filed by the appellant which was validly instituted under the erstwhile law should be transferred to the SCDRC. Such a course of action will result in thousands of cases being transferred across the country, from the NCDRC to the SCDRCs and from the SCDRCs to the District Commission.”

The learned Counsel appearing on behalf of the appellants had submitted before the court that Section 107(3) of the Act of 2019 gives full effect to the provisions of Section 6 of the General Clauses Act, which means that nothing in the repeal of the earlier legislation will affect pending proceedings which may continue as if the new legislation has not been enacted. He further said that as the new Act of 2019 affects substantive and vested rights so it must necessarily be prospective. And the new legislation does not contain any provision for its retrospective operation.

The Court said, “A litigant’s vested right (including the right to an appeal) prior to the amendment or repeal are undoubtedly saved, in addition to substantive rights envisaged under Section 6 of the General Clauses Act. This protection does not extend to pure matters of procedure. Repeals or amendments that effect changes in forum would ordinarily affect pending proceedings, unless a contrary intention appears from the repealing or amending statute.”

“The Act of 2019, as indicated by its long title, is enacted to provide “for protection of the interests of consumers”. The Statement of Objects and Reasons took note of the tardy disposal of cases under the erstwhile legislation. Thus, the necessity of inducing speed in disposal was to protect the rights and interests of consumers. The Act of 2019 has taken note of the evolution of consumer markets by the proliferation of products and services in light of global supply chains, ecommerce and international trade. New markets have provided a wider range of access to consumers. But at the same time, consumers are vulnerable to exploitation through unfair and unethical business practices. The Act has sought to address “the myriad and constantly emerging vulnerabilities of the consumers”. The recurring theme in the new legislation is the protection of consumers which is sought to be strengthened by procedural interventions such as strengthening   class actions and introducing mediation as an alternate forum of dispute resolution,” it said. 

The Apex Court has concluded that proceedings instituted before the commencement of the Act of 2019 on 20 July 2020 would continue before the fora corresponding to those under the Act of 1986 (the National Commission, State Commissions and District Commissions) and not be transferred in terms of the pecuniary jurisdiction set for the fora established under the Act of 2019. 

The Court said, While allowing the appeals, we issue the following directions: 

(i) The impugned judgment and order of the NCDRC dated 30 July 2020 and the review order dated 5 October 2020, directing a previously instituted consumer case under the Act of 1986 to be filed before the appropriate forum in terms of the pecuniary limits set under the Act of 2019, shall stand set aside; 

(ii) As a consequence of (i) above, the National Commission shall continue hearing the consumer case instituted by the appellants; (iii) All proceedings instituted before 20 July 2020 under the Act of 1986 shall continue to be heard by the fora corresponding to those designated under the Act of 1986 as explained above and not be transferred in terms of the new pecuniary limits established under the Act of 2019; and

(iv) The respondent shall bear the costs of the appellant quantified at Rs 2 lakh which shall be payable within four weeks.

Read the judgment here;  

Read Also: Covid-19: PIL in Delhi High Court wants Election Commission to debar campaigners who don’t wear masks