Summary
A writ petition under Article 32 and a civil appeal challenged Sections 34(1), 47(1)(a)(i) and 58(1)(a)(i) of the Consumer Protection Act, 2019, which fix the pecuniary jurisdiction of the district, state and national commissions by the value of goods or services paid as consideration rather than by the compensation claimed. The Court upheld the provisions: Parliament may prescribe pecuniary limits of jurisdiction, consideration is an intelligible basis of classification because it is integral to contract formation and to the definition of 'consumer', and the classification has a rational nexus with creating a hierarchy of remedies and curbing inflated claims. Concerns about the working of the scheme were matters for performance audit, and the Central Consumer Protection Council and Central Consumer Protection Authority were directed to review and advise on the statute's working.
Issues
- Whether Parliament has the legislative competence to prescribe the pecuniary jurisdiction of consumer commissions by reference to the value of consideration paid.
- Whether Sections 34, 47 and 58 of the Consumer Protection Act, 2019 are discriminatory and violative of Article 14 or manifestly arbitrary for basing pecuniary jurisdiction on consideration paid instead of compensation claimed.
- Whether the shift to consideration-based jurisdiction results in a loss of judicial remedy for consumers.
- Whether the alleged lopsided operation of the scheme (for example in insurance claims) is a ground of invalidity or a matter for performance audit of the statute, and what role the Central Consumer Protection Council and Central Consumer Protection Authority have in that review.
Provisions considered
- Sections 34(1), 47(1)(a)(i) and 58(1)(a)(i), Consumer Protection Act, 2019These sections vest jurisdiction in the district commission where the value of goods or services paid as consideration does not exceed one crore rupees, in the state commission where it exceeds one crore but not ten crore, and in the national commission where it exceeds ten crore, replacing the 1986 Act's test of value plus compensation claimed. The Court held the classification valid under Article 14 and not manifestly arbitrary, and declared the provisions constitutional. (¶¶ 4, 4.1, 10, 10.2, 10.5, 11, 11.1, 13)
- Section 2(7) (definition of 'consumer'), Consumer Protection Act, 2019A consumer is one who buys goods or hires services for a consideration, whether paid or promised, in whole or part or by deferred payment; consideration is thus essential to being a consumer, and the submission that the width of 'consumer' is arbitrarily restricted by the jurisdictional provisions was rejected. (¶¶ 6.1, 10.4, 10.5)
- Section 2(a), (b), (d), (e) and (h), Indian Contract Act, 1872Tracing the definitions of proposal, promise, consideration, agreement and contract, the Court held that consideration is the essential core without which there is no agreement and hence no contract; value of consideration is therefore a valid basis for classifying claims for pecuniary jurisdiction. (¶¶ 10.2, 10.3, 10.5)
- Article 14, Constitution of IndiaApplying the twin test from Anwar Ali Sarkar (intelligible differentia and rational relation to the object), classification by value of consideration was held to be intelligible and to have a direct nexus with the object of provisioning a hierarchy of judicial remedies and relieving the national commission of a disproportionate caseload. (¶¶ 10, 10.1, 10.5, 11, 13)
- Article 246 read with Entry 95 of List I and Entries 11-A and 46 of List III, Constitution of IndiaParliament's competence to enact the 2019 Act and to prescribe the jurisdiction and powers of courts and tribunals includes the power to prescribe pecuniary limits of jurisdiction, as recognised in State of Bombay v. Narottamdas Jethabhai and illustrated by monetary thresholds in other central statutes. (¶¶ 9, 9.1, 9.2)
- Sections 3, 5, 10 and 18 to 22, Consumer Protection Act, 2019The Central Consumer Protection Council (Sections 3 and 5, an advisory body) and the Central Consumer Protection Authority (Section 10, with powers and functions under Sections 18 to 22) are statutory duty bearers for the consumer protection regime; they must function effectively and in coordination, their functioning is subject to judicial review, and they were directed to survey, review and advise the government on measures for effective working of the statute. (¶¶ 12.6, 12.7, 12.8, 12.9, 12.10, 12.11, 12.14, 12.17, 13)
Held
- Parliament's legislative competence to prescribe the jurisdiction and powers of courts and tribunals, coupled with the power to constitute and organise them, includes the power to prescribe pecuniary limits of jurisdiction; it may prescribe different monetary values as the basis for exercising jurisdiction, as it has done in several other statutes. (¶¶ 9, 9.1, 9.2)
- Classification of claims by the value of goods or services paid as consideration is founded on an intelligible differentia. Consideration is the essential core of a contract and is integral to the statutory definition of a consumer; the many ways in which consideration may be inferred do not detract from its essentiality in every non-gratuitous transaction. Sections 34, 47 and 58 are therefore neither illegal nor discriminatory. (¶¶ 10.2, 10.3, 10.4, 10.5)
- The classification has a direct nexus with the object of creating a hierarchical structure of judicial remedies: the value of consideration is closer and more easily relatable to compensation than a consumer's self-assessed claim for damages, and the change was intended to relieve the national commission of a disproportionate burden and to oust individual whims in valuing claims. (¶ 11)
- There is no loss of judicial remedy. The compensation a consumer may claim remains unrestricted and access to the state and national commissions is not taken away; a consumer has no right to raise an unlimited claim and thereby choose a forum, and a court or tribunal can always reassess a grossly over- or under-valued claim (Nandita Bose v. Ratanlal Nahta). (¶ 11.1)
- The contention that consideration-based jurisdiction makes the scheme lopsided, for instance by relegating nearly all insurance claims to district commissions, raises no illegality or lack of competence; its soundness depends on the working of the statute and on data, and is a matter for performance audit. The executive has a constitutional duty to monitor and assess the working of statutes as part of the rule of law, and courts may direct such audits on cogent material though they cannot compel legislative reform. (¶¶ 12.1, 12.2, 12.3, 12.4, 12.5)
- The Central Consumer Protection Council and the Central Consumer Protection Authority are statutory bodies with clear objects and powers; they must act effectively and in complete coordination to achieve the Act's preambular object, and their functioning is subject to judicial review. In reviewing statutes establishing such bodies, constitutional courts should first ensure that the bodies are properly constituted and functioning effectively and efficiently. (¶¶ 12.14, 12.15, 12.16, 12.17)
Result
Writ Petition and Civil Appeal disposed of: the constitutional challenge to Sections 34, 47 and 58 of the Consumer Protection Act, 2019 dismissed and the provisions declared constitutional, neither violative of Article 14 nor manifestly arbitrary; the Central Consumer Protection Council and Central Consumer Protection Authority directed, under Sections 3, 5, 10 and 18 to 22, to take measures for survey and review and to advise the government on measures necessary for effective and efficient redressal and working of the statute; pending applications disposed of.