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Consumer redressal: Courts can award punitive damages

This week I would like to focus on two provisions in the Consumer Protection Act that consumers can make good use of.

delhi Updated: Dec 19, 2010 01:46 IST

This week I would like to focus on two provisions in the Consumer Protection Act that consumers can make good use of. While one pertains to class action complaints, the other is related to the power vested in the consumer courts to award punitive damages.

‘Class action’ basically means a collective claim. To put it differently, it refers to a large group of consumers with a similar complaint coming together to file one common petition. The biggest advantage here is that they do not have to fight complaints individually and as a group, they have a better bargaining power.

Similarly, unlike compensatory damages that are meant to compensate the consumer for the loss suffered, punitive or exemplary damages, based on the philosophy of corrective justice, is aimed at deterring the wrong doer from indulging in practices that are unlawful, unfair or against the interests of consumers.


Dr Arvind Aggarwal: Around three years ago, my son-in-law booked an apartment at a housing project in Kundli, Sonepat. The cost of the apartment was around R33 lakh. He paid R8 lakh by cheques and R25 lakh through a bank loan.

Three years on, the construction has not even begun. Whenever I ask them, they say that they do not have the money and what they collected was diverted and invested in purchase of land for other projects. Whenever we pressurise them, they show us the agreement, where in the fine print they have written that possession will be delivered within 36 months ‘after starting the construction’ and they are not even willing to tell us when will they begin construction.

Every time I visit their office, I find hundreds of people fighting with them to get their money back. Yesterday, I received an email from a person in Hissar who says that he and his friend are facing a similar situation and asked if we could all get together to fight this big developer, who has cheated all of us. How do we proceed in the matter?

Answer: There is great strength in unity. Just form an association of all those who have paid the builder towards purchase of an apartment and start talking to the builder as a cohesive group. You will find a sudden change in his behaviour.

As a group, you can file a class action complaint directly before the highest consumer court in the country, the National Consumer Disputes Redressal Commission. Only complaints where the claim amount exceeds R1 crore can be filed before the National Commission, and in a class action suit, the total claim amount of all the claimants will be calculated. Here, you can not only ask for refund of money with interest (including the interest charged by the bank on the loan), but also compensation for the opportunities lost and the harassment and mental agony suffered. This is also a fit case for awarding stiff punitive damages.

If you go to the website of the ministry of consumer affairs (www.fcamin.nic.in) and click on the icon, ‘department of consumer affairs’, you will see on the left side, a list of links. The eighth link says, ‘Consumer Fora’. From there you can access the model ‘Form for Complaint’ that will help you draft the complaint. All you have to do is to write the facts.

I would also suggest that you buy a copy of the Consumer Protection Act or download it from the website of the National Consumer Disputes Redressal Commission (www.consumercom.nic.in) and read it. It will be useful.