Jurisdiction of National Consumer Forum

Introduction

An individual who buys products or services for private use is a consumer. Consumers do not include anybody who receives products or services for free, makes purchases for business purposes, or who receives service as an employer under a service contract. With the advancement of technological platforms and the proliferation of supply sources, customers are more reliant on e-commerce and digitalization. The ever-increasing demands and alternatives have created opportunities for fraud, unfair commercial practises, and service shortcoming. Thus, in order to protect consumers from such activities, the government enacted specific laws. Among these, the “Consumer Protection Act, 1986” is critical for protecting the interests of innocent customers. This Act did not cover transactions involving e-commerce, but as these platforms grew in popularity, a new Act, the consumer protection Act of 2019, was drafted and entered into force on 20th July, 2020.

Section 10 of the new Act empowers the Central Government to establish the Central Consumer Protection Authority (CCPA), which will safeguard consumers against fraud, unfair commercial practises, deceptive advertising, and violations of their consumer rights. The CCPA may take notice of a consumer complaint on its own initiative, i.e. suo moto, or in response to a directive from the federal government or upon receipt of a consumer complaint.

The new Act guarantees that consumers’ voices are heard and that their grievances are resolved appropriately through suitable channels. A customer may register a complaint either directly or through a legal counsel.

This method of establishing pecuniary jurisdiction was detailed in Ambrish Kumar Shukla v. Ferrous Infrastructure Pvt. Ltd(1). It is important to emphasise, however, that there is no information available to assist consumers in making reasonable claims for compensation. Naturally, this resulted in a scenario in which customers frequently sought exorbitant sums of compensation despite the fact that the real consideration was very little, and as a result, the District and State Commissions lost authority.

The 2019 Act seeks to address this problem by increasing not just the monetary threshold for determining jurisdiction under each fora, but also by altering the criterion used to determine monetary jurisdiction under the 2019 Act. In this regard, the 2019 Act enlarged the District Commissions’ pecuniary jurisdiction to INR 1 crore, the State Commissions’ jurisdiction to INR 1 crore to INR 10 crores, and the National Commission’s jurisdiction to any claims exceeding INR 10 crores. Significantly, the 2019 Act changed the definition of ‘the value of the goods or services plus any compensation sought’ to ‘the value of the goods or services paid as consideration’. As a result, the primary criterion for establishing pecuniary jurisdiction is the price paid by a customer for an item or service that is indicative of its worth.

What is the purpose of Consumer Courts?

Though consumers are the primary drivers of commerce and trade, c Consumer fraud is not new. Other statutes and acts safeguard the rights of innocent customers, including the Indian Contract Act, the Sales of Goods Act, and the Civil Procedure Code. However, its implementation is insufficient, which discourages customers from reporting complaints. The Consumer Protection Act of 1986 was a magnificent achievement by the government in this regard. The Act was enacted to safeguard consumers’ rights and interests. The Act establishes statutory organisations known as Consumer Courts to hear cases brought by consumers. This is a critical step under the Act, since it will help consumers seeking proper remedy save money, time, and effort. Consumer courts are established at three levels to do this, namely district, state, and national.

The law establishes Councils to educate and raise consumer awareness about dishonest dealers or vendors.

A complaint may be made under the act in the following instances: unfair trade practises, restricted trade practises, and unfair contract, the trader charging a higher price, the trader selling items that are harmful to life or property that do not adhere to the requirements, and so on.

Jurisdiction

To adjust to the changing environment, the consumer protection act of 2019 superseded the 1986 act. The new Act encompasses electronic commerce transactions. Additionally, the legislation amended the definition of the complainant to include the complainant’s parent or legal guardian if the complainant is a juvenile.

The 2019 Act also contains several important revisions to the Consumer Redressal Forums. These are as follows:

1. Territorial Jurisdiction – The Consumer Protection Act, 2019 now allows consumers to register complaints at a location where all or one of the opposing parties resides or conducts business, or at the location of the cause of action or where the complainant resides or works for gain, in contrast to the 1986 Act (which required the complainant to file a complaint at the respondent’s place of residence or business only), thereby broadening the scope of the Act. The ultimate goal is to eliminate the challenges and obstacles that customers confront when seeking redress against firms.

Complaints are filed with relevant forums based on their monetary jurisdictional limits.

1. Pecuniary Jurisdiction — The Consumer Protection Act, 2019, which took effect on July 20, 2020, significantly amended the consumer courts’ pecuniary jurisdiction. According to Section 34 of the 2019 Act, “…the District Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration does not exceed one crore rupees…” Similarly, Sections 47 and 58 of the 2019 Act specify that 

(1) State Commissions shall have jurisdiction over disputes valued at more than INR 1 crore but less than INR 10 crores; and 

(2) the NCDRC shall have jurisdiction over disputes valued at more than INR 10 crores. However, the 2019 Act takes effect prospectively, which means that matters already underway in consumer courts will not be moved to the redesigned venue.

Upon examination of these clauses, it is clear that they say unequivocally that only the amount paid by consumers as consideration shall be considered. This principle was ratified by the NCDRC in the case of M/s Pyaridevi Chabiraj Steels Pvt. Ltd. v. National Insurance Company Ltd. & Ors.(2) in which the NCDRC held that under the provisions establishing the District Commission’s, State Commission’s, or NCDRC’s pecuniary jurisdiction, the value of the goods or services paid as consideration alone must be taken into account, not the value of the goods or services purchased/taken.

1. Dispute Resolution Through Alternative Dispute Resolution – Alternative dispute resolution in the form of mediation is another critical redress option added by the 2019 Act. This expedites and reduces the cost of resolving conflicts. According to the 2019 Act, a complaint may be submitted to mediation upon its admission, during the initial hearing, or at any time before the disagreement is settled. The forum shall send the dispute to mediation upon receipt of both parties’ written permission within five days.

To this end, the new legislation provides for the formation of consumer mediation cells by the respective State Governments in each district and state, as well as at the central government’s national commission, which will be affiliated with the forums.

It is founded on natural justice ideas.

1. E-Complaints– Additionally, the 2019 Act allows for electronic filing of Complaints with District Forums. The Government has not yet established the regulations governing this. This was done to address issues arising as a result of the growth in digitization.

References

  1. CONSUMER CASE NO. 1498 OF 2015
  2. Consumer Case No. 833 of 2020 
  3. (After including the amendments made vide the Consumer Protection (Amendment) Act, 2002 [62 of 2002] which was passed by Rajya (ncdrc.nic.in)
  4. The Consumer Protection Bill, 2019 (prsindia.org)
  5. https://pib.gov.in/PressReleasePage.aspx?PRID=1642422

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