27 April 2021
Introduction:
Recently, in Neena Aneja & Anr. v. Jai Prakash Associates Ltd.[1], the Supreme Court of India analysed and clarified the impact of the Consumer Protection Act, 2019 (“2019 Act”), upon pending cases that were filed under the consumer fora, constituted under the Consumer Protection Act, 1986 (“1986 Act”). In this regard, the Court has inter alia discussed and analysed (i) a wide range of judicial precedents, which have interpreted the impact of a change in forum on pending proceedings; (ii) the objects, intent, legislative scheme, and procedural history behind the consumer laws in India, particularly in terms of jurisdictional provision contained in the 2019 Act; and (iii) the relevant portions of the 2019 Act in so far as they pertain to the pecuniary jurisdiction vis-a-vis the erstwhile 1986 Act.
Factual Background:
In the instant case, the underlying dispute between the parties pertained to a consumer complaint filed by the consumers (“Appellants”) for refund of consideration paid towards a residential unit in a real estate project described as KRESCENT Homes at Jaypee Greens, Noida, being developed by the developer (“Respondent”).
On November 25, 2011, the Respondent provisionally allotted a residential unit to the Appellants upon receiving an advance of Rs 3.50 lakh. The total consideration was fixed at Rs 56.45 lakh and possession was intended to be conveyed within a period of 42 months from the execution of the agreement of the provisional allotment letter. According to the Appellants, between December 2011 and the date of hearing of the appeal, an amount of Rs 53.84 lakh was paid by them. Subsequently, the Appellant sought a refund of the consideration amount, together with interest at 18 percent per annum on April 27, 2017, and June 13, 2017.
On June 18, 2020, the Appellants instituted a consumer complaint before the National Consumer Disputes Redressal Commission (“NCDRC”) for a total claim of Rs 2.19 crore. The consumer case was instituted under the provisions of the erstwhile 1986 Act. The NCDRC by its order dated July 30, 2020, dismissed the consumer case on the ground that after the enforcement of the 2019 Act, its pecuniary jurisdiction had been enhanced from Rs 1 crore to Rs 10 crore and that consequently, the Appellants’ claim was below the enhanced pecuniary jurisdiction of the NCDRC. The Appellants’ review petition was also dismissed by the NCDRC on October 5, 2020, which led to the present appeal before the Supreme Court.
The crux of the issue in the present appeals is whether a complaint, which was filed and registered under the 1986 Act, before the 2019 Act came into force, has to be entertained under the provisions of the erstwhile legislation (i.e. the 1986 Act).
In this regard, it is pertinent to note that the 2019 Act was published in the Gazette of India on August 9, 2019. By S.O. 2351(E), dated July 15, 2020, the material provisions of the 2019 Act were notified to come into force on July 20, 2020. By S.O. 2421(E), dated July 23, 2020, several other provisions were brought into force, with effect from July 24, 2020.
In order to provide further context to the ensuing discussion, the pecuniary jurisdiction of the consumer under the 1986 Act and the 2019 Act has been provided below. Under Section 11 of the 1986 Act, the jurisdiction of the District Commission to entertain original complaints was Rs 20 lakh. Under Section 17 of the 1986 Act, the State Consumer Disputes Redressal Commission (“SCDRC”) had jurisdiction to entertain complaints where the value of the goods and services or compensation of any claim exceeded Rs 20 lakh, but did not exceed Rs 1 crore. Under Section 21 of the 1986 Act, the NCDRC had jurisdiction to entertain original complaints exceeding Rs 1 crore.
The jurisdiction of the District Commission in terms of Section 34 of the 2019 Act is to entertain complaints where the value of goods and services, paid as consideration, does not exceed Rs 1 crore. Section 42 of the 2019 Act provides for the establishment of a SCDRC in each State. The pecuniary limits of the original jurisdiction of the SCDRC under Section 47(1)(a) of the 2019 Act is to entertain original complaints where the value of goods and services paid as consideration exceeds Rs 1 crore, but does not exceed Rs 10 crore. Section 53 of the 2019 Act provides for the establishment of the NCDRC. Section 58(1)(a) of the 2019 Act contains the pecuniary limits of the NCDRC jurisdiction, which in the case of original complaints is where the value of goods and services paid as consideration exceeds Rs 10 crore.
Submissions of the Parties:
The Appellant inter alia contended that (i) Section 107(3) of the 2019 Act gives full effect to the provisions of Section 6 of the General Clauses Act (“GCA”), which meant that nothing in the repeal of the earlier legislation would affect pending proceedings, which may continue as if the new legislation had not been enacted; (ii) the “relevant date” is the date of the institution of the complaint and not the date when the matter is heard or decided; (iii) the 2019 Act affects the substantive rights of appeal to the NCDRC by making a deposit of 50% of the decretal amount mandatory; (iv) in the absence of an express provision, the 2019 Act must operate prospectively; (v) in the absence of a provision for transfer of pending cases, complaints which were instituted prior to the enforcement of 2019 Act should not be disturbed; and finally (vi) the 2019 Act came into force on July 20, 2020, while the complaint in the present case was instituted before the NCDRC on June 18, 2020.
The Respondent inter alia contended that (i) the basic principle of law is that when a statute is repealed, everything stands obliterated; (ii) a change in forum under the law is treated as a matter of procedure and not of substance; (iii) the 2019 Act is not a legislation enhancing the limits of the pecuniary jurisdiction by an amendment to the 1986 Act, however, it is a law which repeals the earlier legislation and creates a new hierarchy of courts and it must, consequentially, be treated as retroactive; (iv) the limits of pecuniary jurisdiction, which have been defined under the 2019 Act, will apply to all pending actions and a transfer of existing cases would be required in those cases where the jurisdiction to entertain the complaint lies within the pecuniary limits of the newly established forum.
Findings and Analysis of the Court:
Position of Law on the Change of Forum
In order to ascertain the position of law on the change of forum, the Court analysed a wide range of precedents[2] on the impact of change of forum on pending proceedings and retrospectivity. In this regard, the Court observed that the change in forum would lie in the realm of the procedure. Accordingly, in compliance with the tenets of statutory interpretation applicable to procedural law, the Court held that amendments on matters of procedure are retrospective, unless a contrary intention emerges from the statute. The Court further held that a litigant’s vested right (including the right to an appeal), prior to the amendment or repeal are undoubtedly saved, in addition to substantive rights envisaged under Section 6 of the GCA. The Court held that this protection did not extend to pure matters of procedure and that repeals or amendments that effect changes in forum would ordinarily affect pending proceedings, unless a contrary intention appears from the repealing or amending statute. The Court then proceeded to analyse the impact of the 2019 Act on pending cases that were filed before the fora constituted under the 1986 Act.
Legislative intendment underlying Section 107 of The 2019 Act
The Court analysed Section 107[3] of 2019 Act and iterated that Section 107(1) repealed the 1986 Act. The Court noted that Section 107 (2) saved “the previous operation” of any repealed enactment or “anything duly done or suffered thereunder to the extent that it is not inconsistent with the provisions of the new legislation”. It observed that Section 107(3) indicated that the mention of matters in sub-Section (2) would not prejudice or affect the general application of Section 6 of the GCA.
The Court noted that Section 6 of GCA provided governing principles regarding the impact of repeal of a central statute or regulation and the same were to apply, unless a different intention appears. The Court clarified that Clause (c) of Section 6 inter alia stipulated that a repeal would not affect “any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed”. The Court explained that the right to pursue a validly instituted consumer complaint under the 1986 Act was a right, which has accrued under the law, which was repealed. In this regard, it observed that Clause (c) of Section 6 had the effect of preserving the right which has accrued. Clause (e) ensured that a legal proceeding that has been initiated to protect or enforce “such right” would not be affected and that it can be continued as if the repealing legislation has not been enacted. The Court stated that the expression such a right in clause (e) evidently meant the right, which has been adverted to in clause (c). The Court highlighted the consequence of clause (c) and clause (e) mainly that the right that has accrued on the date of the institution of the consumer complaint under the 1986 Act (the repealing law) is preserved and the enforcement of the right through the instrument of a legal proceeding or remedy would not be affected by the repeal.
Having stated the above position, the Court iterated that the same needed to be harmonised with the principle that the right to a forum was not an accrued right. The Court noted that while Section 6(e) of GCA protected the pending legal proceedings for the enforcement of an accrued right from the effect of a repeal, the same did not mean that the legal proceedings at a particular forum were saved from the effects of the repeal. The Court iterated that the question whether the pending legal proceedings were required to be transferred to the newly created forum by virtue of the repeal would persist. In this regard, the Court (on the basis of the precedents) held that the forum was a matter pertaining to procedural law and therefore the litigant has to pursue the legal proceedings at the forum created by the repealing act, unless a contrary intention appeared. Against this backdrop, the Court stated that what was relevant to ascertain is whether a contrary intent to the general rule of retrospectivity has been expressed under the 2019 Act to continue the proceedings at the older forum.
In considering the expression of intent in the repealing enactment in the present case, the Court clarified that it was apparent that there is no express language indicating that all pending cases would stand transferred to the fora created by the 2019 Act by applying its newly prescribed pecuniary limits. In deducing whether there is a contrary intent, the Court stated that the legislative scheme and procedural history may provide a relevant insight into the intention of the legislature. It further stated that 2019 Act, as indicated by its long title, was enacted to provide “for protection of the interests of consumers”. Thus, the necessity of inducing speed in disposal was to protect the rights and interests of consumers. The Court iterated that the 2019 Act had taken note of the evolution of consumer markets by the proliferation of products and services, in light of global supply chains, e-commerce and international trade as new markets had provided a wider range of access to consumers. However, the Court also found that at the same time, the consumers were vulnerable to exploitation through unfair and unethical business practices. Pertinently, the Court clarified that the 2019 Act had sought to address “the myriad and constantly emerging vulnerabilities of the consumers”. The Court highlighted that the recurring theme in the new legislation was the protection of consumers, which was sought to be strengthened by procedural interventions such as strengthening class actions and introducing mediation as an alternate forum of dispute resolution.
In view of the above, the Court stated that something specific in terms of statutory language (either express words or words indicative of a necessary intendment) would have been required for mandating the transfer of pending cases. The Court highlighted the disadvantages and the serious hardship that would be caused to the consumers, if cases which have been already instituted before the NCDRC were required to be transferred to the SCDRC as a result of the alteration of pecuniary limits by the 2019 Act. In particular, the Court stated that a consumer who had engaged a legal counsel at the headquarters of the NCDRC would have to undertake a fresh round of legal representation before the SCDRC, incurring expense and engendering uncertainty in obtaining access to justice. Likewise, where complaints have been instituted before the SCDRC, a transfer of proceedings would require consumers to obtain legal representation before the District Commission if cases were to be transferred. Such a course of action would have a detrimental impact on the rights of consumers. Many consumers might not have the wherewithal or the resources to undertake a fresh burden of finding legal counsel to represent them in the new forum to which their cases would stand transferred.
Further, from an analysis of the data drawn from the annual reports of the Union Ministry of Consumer Affairs, indicating pendency of consumer cases before the NCDRC, SCDRC and the District Commission from financial year 2015-2016 to financial year 2019-2020, the Court concluded that as on October 31, 2019, around 21,216 cases were pending before the NCDRC and 1,25,156 cases were pending before the SCDRC. The Court noted that most of the cases would have to be transferred if the view which the Respondent propounded in the present case was upheld (i.e. of transferring the cases). The Court noted that the same would seriously dislocate the interests of consumers in a manner which would defeat the object of the legislation, which was to protect and promote their welfare. In this regard, the Court observed that clear words indicative of either an express intent or an intent by necessary implication would be necessary to achieve this result. Conclusively, the Court noted that CPA 2019 contains no such indication. The Court held that the legislature could be attributed to be remiss in not explicitly providing for transfer of pending cases according to the new pecuniary limits set up for the fora established by the 2019 Act, were that to be its intention. In fact, the omission, when contextualised against the statutory scheme, portended a contrary intention to protect pending proceedings through Section 107(2) of the 2019 Act. In this regard, the Court also referred to an earlier decision of the NSDRC in South Paints and Chemicals Pvt. Ltd. v. New India Assurance Co. Ltd.[4] wherein the NCDRC had construed the amendment to the pecuniary jurisdiction of the consumer fora under the 1986 Act by way of the amending Act 62 of 2002 as prospective in nature. Further, it was also observed that the transitional provisions contained in Sections 31, 45 and 56 expressly indicated that the adjudicatory personnel who were functioning as Members of the District Commission, SCDRC and NCDRC under the erstwhile 1986 Act would continue to hold office under the 2019 Act. The Court stated that such provisions are necessary because persons appointed to the consumer fora under 1986 Act would have otherwise demitted office on the repeal of the legislation.
The Court also made certain observations regarding the expression “entertain” used in the context of the jurisdiction of the District Commission, SCDRC and NCDRC under the 2019 Act. It observed that in defining the jurisdiction of the District Commission, SCDRC and NCDRC in Section 34, Section 47 and Section 58, respectively, the 2019 Act entrusts the jurisdiction to “entertain” complaints. In this regard, the Court noted that the expression “entertain” had been earlier considered by a two-judge bench of the Court in Hindustan Commercial Bank Ltd. v. Punnu Sahu (dead) through Legal Representatives[5] to mean to adjudicate upon or proceed to consider on merits. It observed that Sections 34, 47 and 58 of the 2019 Act similarly indicate that the respective consumer fora could entertain complaints within the pecuniary limits of their jurisdiction. The Court held that these provisions would undoubtedly apply to complaints, which were instituted after the 2019 Act came into force. However, the mere use of the word “entertain” in defining jurisdiction is not sufficient to counteract the overwhelming legislative intention to ensure consumer welfare and deliberately not provide for a provision for transfer of pending proceedings in the 2019 Act.
In light of the above, the Court held that proceedings instituted before the commencement of the 2019 Act (i.e. before 20th July 2020) would continue before the fora, corresponding to those under the 1986 Act (i.e. the National Commission, State Commissions and District Commissions), and will not be transferred in terms of the new pecuniary jurisdiction set for the fora established under 2019 Act. Accordingly, while allowing the appeals, the Court set aside the Impugned Judgment and the Review Order and directed the National Commission to continue hearing the consumer case filed by the Appellants.
Conclusion:
Upholding the recurring theme of the 2019 Act, being ‘for protection of the interests of consumers’ and harmonising the varied interests of the multiple stakeholders, the Supreme Court has adopted a well-reasoned stance in the aforesaid judgment. The Court has assiduously sought to preserve and protect the interests of the consumers, especially those who may not have the wherewithal or the resources to undertake a fresh burden of filing proceedings before a new forum to which their cases would stand transferred, as per the pecuniary jurisdiction provisions contained in the 2019 Act. The Court’s approach of adopting an objective, statistical, historical, and legislative analysis while arriving at its conclusion is worth appreciating.
For further information, please contact:
Aditya Mehta, Partner, Cyril Amarchand Mangaldas
aditya.mehta@cyrilshroff.com
[1] Judgment dated 15th March 2021 passed in Civil Appeal Nos. 3766-3767 of 2020
[2] Venugopala Reddiar v. Krishnaswami Reddiar, alias Raja Chidambara Reddiar [AIR 1943 FC 24]; Kiran Singh v. Chaman Paswan [AIR 1954 SC 340]; Garikapati Veeraya v. N Subbiah Choudhry [1957 SCR 488]; Mohd. Idris v. Sat Narain [AIR 1966 SC 1499]; New India Assurance Company Limited v. Smt. Shanti Mishra [(1975) 2 SCC 840 ]; Maria Cristina De Souza v. Amria Zurana Pereira Pinto [(179) 1 SCC 92]; Hitendra Vishnu Thakur v. State of Maharashtra [(1994) 4 SCC 602 ]; Sudhir G Angur v. M Sanjeev[(2006) 1 SCC 141]; Shiv Bhagwan Moti Ram Saraoji v. Onkarmal Ishar Dass [AIR 1952 Bom 365]; Ramesh Kumar Soni v. State of Maharashtra [(2013) 14 SCC 696 ]; Commissioner of Income Tax, Orissa v. Dhadi Sahu [1994 Suppl. (1) SCC 257]; Ambalal Sarabhai Enterprises Ltd. v. Amrit Lal & Co. [(2001) 8 SCC 397 ]; Himachal Pradesh State Electricity Regulatory Commission v Himachal Pradesh State Electricity Board [(2014) 5 SCC 219 ]; Videocon International Limited v. Securities and Exchange Board of India [(2015) 4 SCC 33]; Securities and Exchange of Board of India v. Classic Credit Limited [(2018) 13 SCC 1]
[3] Section 107 contains the repeal and savings provision, which is in the following terms:
“107. Repeal and savings-
(1) The Consumer Protection Act, 1986 is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken or purported to have been done or taken under the Act hereby repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act.
(3) The mention of particular matters in sub-section (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeal.”
[4] Consumer Case No. 286 of 2000 (NCDRC)
[5] (1971) 3 SCC 124
