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Traders use false appeals to stall consumer cases

chandigarh Updated: Feb 25, 2014 15:55 IST

When the Consumer Protection Act of 1986 came into being, trade and industry had expressed the fear that the law may encourage consumers to file false and frivolous complaints, particularly in the light of the fact that there was no court fee. So to discourage such litigation, the Consumer Protection Act prescribed in 1993, a maximum penalty of 10,000 on such consumers who may misuse the law.

But ironically, it is not the consumers, but the trade and industry, which is abusing the provisions of the law by (a) routinely dubbing consumer complaints as ‘false and frivolous’ and (b) by filing meritless appeals, thereby prolonging the process of adjudication. State-run utilities and public sector undertakings are particularly guilty of this.

Last week, the National Consumer Disputes Redressal Commission expressed its strong displeasure over both the tendencies and slapped a penalty of 5 lakh on a service provider — Delhi Development Authority — holding it guilty on both counts.

Quoting several Supreme Court judgements on the subject, the two-member bench of the Commission, comprising justices VB Gupta and Rekha Gupta, said: “… no leniency should be shown to such type of litigants, who, in order to cover up their own fault and negligence, go on filing meritless petitions in different fora” The case pertains to DDA allotting the complainant in 1997, a flat already allotted to someone else in 1995. When the Delhi State Consumer Commission directed DDA to provide a similar flat in the same or nearby locality or pay 30 lakh to the complainant, the DDA filed an appeal before the National Commission.

It’s main contention before the apex consumer court was that it was a false and frivolous complaint, liable to be dismissed with costs to the DDA. It’s second argument was that the consumer’s allotment stood automatically cancelled for non-payment of the demanded amount.

Taking strong objection to such arguments and dismissing the appeal, the apex consumer court pointed out that it was not complaint that was false and frivolous, but the defence put up by the DDA. (Delhi Development Authority Vs D.C. Sharma, RP No 895 of 2013, decided on Feb 18, 2014). One of the many reasons for the delays in the resolution of complaints before the consumer courts is the tendency among service providers and manufacturers to file meritless and vexatious appeals. Such appeals not only cause the complainants immense hardship, but also impact consumers as a class because eventually, the litigation expenses are loaded on to the cost of the goods or services.

In recent years, the apex consumer court has been imposing punitive damages on such litigations, but this is perhaps the highest penalty levied so far. Exemplary damages are usually imposed as a punishment to deter the offender from such wrongdoing in the future and the CP Act provides not only for compensation for loss or damage caused to the consumer, but also damages in deserving cases.

In R Narasimha Reddy Vs Kuchakula Surender Reddy, (FA No 502 of 2011, decided on March 5, 2012), for example, the commission had said: “Equity demands that such unscrupulous litigants whose only aim and object is to deprive the opposite party (complainants or the consumers) of the fruits of the decree must be dealt with a heavy hand.” Damages of 1 lakh were imposed on a builder in this case for vexatious appeals.

Hopefully, the apex consumer will also take a stern view of repeated adjournments sought by lawyers representing manufacturers and service providers.