DECODING NCDRC ORDER ON CLASS ACTION BY HOME BUYERS

There has been enormous heat everywhere on legality of class action in consumer complaints especially when the matter pertains to home buyers as lakhs of such people feel cheated with delayed possession and several illegal demands by builders compelling the government to promulgate RERA, which may reduce such errant behavior in future. But, for undergoing projects before introduction of RERA home buyers have to rely on various remedies including consumer complaints, criminal complaints, company winding up petitions, writ petitions, petition in CCI, etc.

Among all the remedies consumer complaint is most popular remedy and complainants have natural urge to file complaint in uppermost forum by any possible means. Hence, forming an association to file consumer complaint has become a natural practice and later question on legality of class action in consumer complaints arose.

Larger bench of NCDRC comprising of Mr. Justice D. K. Jain, Mr. Justice V. K Jain and Mr. B. C. Gupta pronounced order in CC/97/2016 yesterday dated 07/10/2016 to keep rest speculation on above besides some other question of law relating to consumer cases.

CLASS ACTION IN CONSUMER COMPLAINT
Class action in consumer complaints can be initiated by group of buyers even without having registered association for benefit of all buyers (and not only few ones) under section 12(1)(c) read with order I rule 8 of the Code of Civil Procedure subject to following conditions:
  • There are numerous consumers/ buyers
  • All intended complainants/ buyers have same and identical interest & grievance with claim of common relief
  • Permission to file consumer complaint in representative capacity from appropriate court is accorded
  • Notice in terms of sub-rule (2) of rule 8 of order I whether individual or public is given to all persons for benefit of whom the complaint is instituted 

JURISDICTION ON THE BASIS OF SALE CONSIDERATION AND NOT MARKET VALUE
As per Consumer Protection Act, what has to be seen, for the purpose of determining the pecuniary jurisdiction of different forum, is the value of the goods or services along with the amount of the compensation claimed in the complaint. There had been different opinions including that held by NCDRC in Santosh Johari Vs. Unitech Limited, which concluded that for purpose of relief under Consumer Protection Act, the current market value of the good/ services would be the pecuniary value of the service. But this position is now set aside.

Sale consideration agreed to be paid by the consumer added by amount of compensation as claimed in the complaint should be taken as the value of the goods or services for computation of pecuniary jurisdiction in consumer cases.

COST OF REMOVING DEFICIENCY HAS NO BEARING ON PECUNIARY JURISDICTION
The Consumer Protection Act does not envisage determination of the pecuniary jurisdiction based upon the cost of removing the deficiencies in the goods purchased or the services to be rendered to the consumer. Therefore, the cost of removing the defects or deficiencies in the goods or the services would have no bearing on the determination of the pecuniary jurisdiction. it’s the value of the goods or services and the compensation, if any, claimed that determines the pecuniary jurisdiction of the Consumer Forum.

MORE THAN ONE COMPLAINT NOT MAINTAIABLE
Under section 12(1)(c) of Consumer Protection Act, more than one complaint is not maintainable on behalf of or for benefit of consumers having identical grievance seeking identical relief against same person.

ORDER IN CLASS ACTION NOT APPLICABLE FOR INDIVIDUAL COMPLAINANT IN PENDING LEGAL ACTION
Consumers who are already before appropriate consumer forum will not be considered as complainant/ beneficiary of class action and individual complaints instituted by them will continue at relevant forum without any difficulty. However, if such complainants wish to withdraw their complaint and join as parties to the complaint instituted in a representative character, they may do so in their own wish.

NO INDIVIDUAL COMPLAINT ON SAME GRIVANCE AS THAT OF CLASS ACTION
Once permission under Section 12(1)(c) of the Consumer Protection Act for representative complaint in class action is granted by appropriate forum, no individual complaint, seeking identical relief will be maintainable and the only remedy available to intended complainant having the same grievance is to join as a party to the complaint instituted in class action.

NO COMPLAINT BY COOPERTAIVE SOCIETY, ASSOCIATION OR FIRM
A person, whether natural or artificial, who does not qualify to be consumer under section 2(1)(d) of the Consumer Protection Act cannot be complainant in representative complaint in class action under section 12(1)(c) of said act. Hence, any cooperative society, association or firm cannot file such complaint until they themselves are consumer, i.e. who buys goods or avails service for consideration in their own capacity.

However, a recognized consumer association may file complaint under section 12(1)(b) of the Consumer Protection Act irrespective of the fact that such association is consumer or otherwise and consumer is member of such association.

POSSIBILITY OF INVESTORS GETTING RELIEF
The scope of the Consumer Protection Act is normally limited to consumers only and not to investors. But, there is nothing in order under discussion to ensure removal of investors from being getting relief. Hence there is every possibility that even investors would be benefited in representative complaint in class action.


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