WHETHER A CONSUMER CAN FILE A WRIT PETITION BEFORE HIGH COURT CHALLENGING THE ORDER PASSED BY CONSUMER FORUM CONSTITUTED UNDER CONSUMER PROTECTION ACT, 1986?

[Mr. M. GOVINDARAJAN]

                       The Consumer Protection Act, 1986 was enacted with the objective to protect the interests of the consumer and to establish Consumer forum to redress the grievances of the consumers and to award compensation as deemed fit.  This Act is in addition to the existing laws and not in derogation of the provisions of the existing law.   Therefore it is an additional forum for getting remedy for the consumers.   But it is very useful to consumers to get the redressal at the earliest.   The Act provides for one appeal only.   There is no second appeal provided in the Act.   The following are fora constituted under the Consumer Protection Act, 1986:

• Consumer  Disputes Redressal Forum (District Forum) having original jurisdiction to entertain the complaint of the value of goods/services and compensation up to the value of Rs.20 lakhs;
• Consumer Disputes Redressal Commission (State Commission) having original jurisdiction to entertain the complaint of the value of goods/services and compensation for the value of Rs.20 lakhs to Rs. 1 crore ; Also is having appellate jurisdiction to hear the appeal against the order of the District Forum;
• National Consumer Disputes Redressal Commission (National Commission) have original jurisdiction to entertain the complaint of the value of goods/services and compensation for the value of more than Rs.1 crore; Also is having appellate jurisdiction to hear the appeal against the order of the State Commission; Also is having the Reviewing authority to hear against the first appeal decided by State Commission.
• Supreme Court – The Apex court is having appellate jurisdiction to hear the appeal against the order of National Commission and also having review power to hear against the first appeal decided by National Commission.

Thus the Consumer Protection Act gives the appellate remedy to the consumers.  In this article the issue to be discussed is whether a consumer can file a writ petition before the High Court against the order of the Consumer Forum with reference to decided case law.

                        In ‘OM Prakash Saini V. DCM Limited and others’ – (2011) 100 CLA 1 (SC) the appellant after his retirement from the service of Indian Railways invested Rs.1,90,000 in the fully secured debentures floated by the respondent company.    Just before the maturity date the respondent company informed the appellant that due to financial difficulties it would not be possible to pay the amount of maturity on the scheduled dates.   A revised scheme has been worked out for payment of the dues.  The original scheduled date is 14.08.1998.   The company proposed the following scheme:

• Interest up to the date of maturity as per terms of issue – by 31^st December 1999;
• 50% of the principal amount – By 31^st December, 1999;
• Balance principal amount + simple interest @ 14% per annum from the date of maturity – 18 months from the date of payment of 1^st installment. 

The company wanted the confirmation of the appellant for the said proposal in respect of his deposits.  Further the company indicated that the payment would be effected on first come first service basis.  Therefore the appellant did not press for payment of his dues. 

                        However the company did not pay the amount as per the revised scheme.   Therefore the appellant filed a complaint under the provisions of the Consumer Protection Act, 1986 before the State Commission,Delhiwith the prayer that respondent company may be directed to pay the amount due to him with interest and compensation of Rs.1 lakh.   (The pecuniary jurisdiction for the consumer forums as noted above is with effect from 15.03.2003)   In the reply the company pleaded that due to financial crunch it was possible to repay the amount due to the non convertible debenture holders.  In view of the serious financial crunch and cash mis-match the DCM has prepared a restructuring scheme in active consultation with financial institutions and the same has been filed in the High Court atNew Delhi.  Given the revised arrangement for real estate project, the scheme envisaged interest on the aforesaid NCDs up to 31.12.1998 on the basis of contractual interest rate till maturity i.e., 14.12.1998 and at 14% thereafter.   In terms of the scheme the payment of principal/interest would be made in 2 to 4 years.   The High Court directed to convene a meeting of the shareholders/creditors.  Thus the company took necessary effects are being made to repay the NCD holders and only for the reasons totally beyond the control of the company, the company is not able to pay the NCD holders including complainant.

                        During the pendency of the complaint, the Commission passed interim orders.   Vide order dated 29.09.2003 the Commission directed the company to ensure that at least the principal amount to the complainant who is to go bye-pass surgery be paid without prejudice to the rights and contentions of the parties.  The company relied on the scheme framed by the High Court whereby the company was required to pay at least the amount deposited with them by the subscription of the scheme for construction of flats.   The Commission considering the orders of the High Court directed the company to pay at least 50% of the deposited amount paid to the appellant on humanitarian ground to meet his medical expenses without prejudice to the rights and contentions of the parties and without the prejudice to the scheme framed by the Hon’ble High Court of Delhi. 

                        The State Commission finally allowed the complaint and directed the company to pay the maturity amount to the appellant as per the terms of the contract along with interest at the agreed rate up to the maturity date and 12% after the maturity date and also awarded Rs.10,000 as cost of litigation.   The Company challenged the order of the State Commission by filing an appeal before the National Commission.

                        The company filed a petition under Article 227 of the Constitution of India, which was allowed by the Single Judge vide his order dated 11.07.2007 on the premise that in the face of the scheme sanctioned by the Company Court under the Companies Act, 1956 the State Commission did not have jurisdiction to entertain the complaint.   The appellant, who could not appear before the High Court on the date of hearing i.e., 11.07.2007 filed an application for recall of the aforementioned order, but the same was dismissed by him without going into the issue whether the cause shown by the appellant for his non appearance was sufficient.  Therefore the appellant filed this appeal before the Supreme Court.

                        The Company produced fax copy of the letter dated 10.04.2008 allegedly written by the appellant to the Advocate the company admitting that he has received the full amount.   But it was vehemently denied by the appellant.   The following arguments were put forth:

• The High Court committed a jurisdictional error by entertaining the petition filed by respondent company under article 227 of the Constitution ignoring that the company had already availed the statutory remedy of appeal;
• There was no extraordinary reason which could justify entertaining of a petition by the High Court under Article 227 of the Constitution by making a departure from the settled law that it will not entertain a petition under Article 226 or 227 of the Constitution if an effective alternative remedy is available to the aggrieved person;
• The High Court committed a serious error by declining to entertain the application filed by the appellant for recall or order.

The company submitted the following:

• Even though the company had availed the statutory remedy of appeal the High Court did not commit any error by entertaining the petition filed under Article 227 of the Constitution  because the Company had assured on 21.03.2007 before the High Court that the appeal pending before the National Commission would be withdrawn and, as a matter of fact, this was done on 25.07.2007;
• The High Court did not commit any error by setting aside the order of the State Commission because it was contrary to the scheme sanctioned by the Company Judge under Sec. 391 read with Sections 392 and 394 of the Companies Act.

The Supreme Court held that the Consumer Protection Act, 1986 was enacted to provide for better protection of the interests of the consumers by making provisions for establishment of consumer councils and other authorities for settlement of consumer disputes and adjudication thereof.   The Act is a complete code unto itself.   It provides for establishment of consumer councils and adjudicatory forums at the District, State and National levels.   Any person aggrieved by an order passed by the District Forum can file appeal before the State Commission.  If he is not satisfied with the order of the State Commission, a further remedy is available by way of revision before the National Commission.   If the complaint is decided by the State Commission, the aggrieved person can file an appeal before the National Commission.   Elaborate procedure has been laid down for filing of the complaints and disposal thereof.   Since the Act is a special statutory enacted by the Parliament for better protection of the interest of consumers and a wholesome mechanism has been put in place for adjudication of consumer disputes, the remedy of appeal available to a person aggrieved by an order of the State Commission cannot but be treated as an effective alternative remedy.

                        The Supreme Court further observed that the Company had availed the alternative remedy available to it under Sec. 21 by filing an appeal against the order of the State Commission.  During the pendency of the appeal, the company chose to challenge the order of the State Commission by filing a petition under Article 227 of the Constitution, which was entertained by the High Court on the basis of the assurance given by the Company that the appeal filed before the National Commission would be withdrawn. 

                        In the view of the Supreme Court, during the pendency of the appeal filed by the Company the High Court was not at all justified in entertaining the petition filed under Article 227 of the Constitution merely because he thought that the State Commission did not have the jurisdiction to entertain the complaint in view of the scheme sanctioned by the Company Judge under Sec. 391 read with Sections 392 and 394 of the Companies Act.

                        The Supreme Court further held that the dismissal of the application filed by the appellant for recall of the order is clearly vitiated by a patent error of law.  In the petition filed by him, the appellant had averred that he could not file reply because of heart ailment and on the date of hearing he could not reach the High Court because of failure of the public bus transport system.   The company did not controvert these averments.   Notwithstanding this, the High Court dismissed the application without even examining sufficiency of the cause shown by the appellant for his non appearance of the date of hearing.

                        The Supreme Court allowed the appeal and set aside the impugned order of the High Court and remitted to the High Court for fresh adjudication.