Chapter - 21
THE CONSUMER PROTECTION ACT, 1986
The Consumer Protection Act, 1986, (hereinafter referred as the "Act") is
the most important legislation in the area of consumer protection. This is an
umbrella legislation which has widened the scope of seeking redressal of
grievances of consumers without affecting the common law remedies
available to them. In other words, the Act provides protection to consumers
in addition to and not in derogation of the provisions of any other law. 1
The Act is applicable to government as well as corporative and other sectors
and involves in the process all institutions—administrative, business, judicial
and the society at large. Though earlier, there were certain regulative
legislations dealing with various activities having a bearing on the consumer
protection, but this Act has attained prominence for being directlv and
specifically concerned with the subject.
The Act provides for the adoption of various possible measures for the
promotion and protection of the interest of consumers, mainly to desiderate
on their protection against marketing of hazardous goods, whether affecting
life or property. The most pragmatic feature of the Act is the recognition of
consumers' right to be informed about the quality, purity, standard and price
of goods and services, which is a potential device to prevent exploitation.
The Act enables taking up of measures for making available goods and
services at competitive prices and to prevent activities detrimental to such
measures. To improve the capability of consumers to get their rights better
secured, the Act contains provisions for the establishment of state and
central consumer councils for the advancement of consumer education. The
Act also provides for the establishment of separate machinery for the
settlement of consumer disputes in a speedier and effective manner. The
machinery is based on Consumer Disputes Redressal Fora (District Fora),
Consumer Disputes Redressal Commissions (State Commissions) and the
N a t i o n a l C o n s u m e r Disputes Redressal C o m m i s s i o n (National
C o m m i s s i o n ) . Their jurisdiction for the redressal of grievances of
consumers, resulting from exploitation by producers, suppliers and service
providers, has been specifically mentioned. All kinds of goods and services
are covered under the Act for remedial action unless the same have been
specifically exempted from the purview of the Act. To make available
consumer justice to the maximum number of people, the network of these
consumer fora/courts has been spread over the whole country and the cases
decided by them are being regularly reported in special as well as general law
reporters.
The Act has now been operative for nearly two decades and the
decisions given by the consumer fora relate to most of the relevant areas of
consumer interest. Though the notion of consumer sovereignty is yet to take
its practical shape, very important principles of consumer jurisprudence
have been evolved to empower consumers to stand against exploitation by
business houses and seek protection from both defective goods as well as
deficiency in service. The unfortunate part of it is that these fora are getting
formalized as ordinary courts and fall pray to the evil of delay in disposal of
cases. The popularization of the consumer movement would definitely work
as a catalyst to attain the objectives of the Act at its earliest.
2. Consumer Unity & Trust Society, State ofIndian Consumer, prologue iii (2001).
CONSUMER PROTECTION ACT, 1986 327
6. Ibid.
7. Section 5 of the Unfair Contract Terms Act, 1977 reads as follows:
5(1) In the case of goods of a type ordinarily supplied for private use or
consumption, where loss or damage-
(a) arises from the goods proving defective while in consumer use; and
(b) results from the negligence of a person concerned in the manufacture or
distribution of the goods,
liability for the loss or damage cannot be excluded or restricted by reference to any
contract term or notice contained in or operating by reference to a guarantee of the
goods.
(2) For these purposes -
(a) goods are to be regarded as "in consumer use" when a person is using
them, or has them in his possession for use, otherwise than exclusively for
the purposes of a business; and
(b) anything in writing is a guarantee if it contains or purports to contain some
promise or assurance (however worded or presented) that defects will be
made by complete or partial replacement, or by repair, monitory
compensation or otherwise.
(3) This section does not apply as between the parties to a contract under or in
pursuance of which possession or ownership of the goods passed.
CONSUMER PROTECTION ACT, 1986 331
8. (1932) AC 532.
9. Read v. /. Lyons & Co. (1947) AC 156.
10. Supra note 4 at 342.
332 A TREATISE ON CONSUMER PROTECTION LAWS
Consumer
The term "consumer" has been defined in section 2(l)(d) of the Act. It is in
two parts: (a) the first part defines the "consumer" with reference to 'goods'
and the second with reference to 'services'. According to this definition any
purchaser of goods and hirer of services for a consideration comes under
the purview of the definition of the consumer. It is not necessary that the
consideration should have already been paid for the goods or services in
q u e s t i o n . F o r qualifying as a consumer, mere promise to pay the
In M/S Jay Kay Puri Engineers & Another v. M/S Mohan Breweries &
Distilleries Ltd.,27 the National Commission, while dealing with purchase of
goods with a warranty for maintenance, has held that in respect of the
services by any manufacturer or supplier, during the warranty period, the
purchaser should be deemed to be a consumer and entitled to claim
compensation. The complainant in such a case would be a consumer with
reference to both the goods as well as the services.
Being an umbrella legislation, it is natural that under the Consumer
Protection Act, the term "consumer" should be given a wider meaning
rather than a strict interpretation. Following this trend in Parsanath S.
Dhananka v. Nizam's Institute ofMedical Sciences and Others,2* the National
Commission, while dealing with the question of compensation to be
awarded to the parents of a minor child for their acute mental agony, care
and attention of the child because of defiant medical services, held that the
parents of the child had hired the services of the hospital and were
consumers entitled to compensation for any fault on the part of the hospital.
The Supreme Court, in M/S Spring Meadows Hospital and Another v. Harjal
Ahluwalia,29 has also held that the definition of 'consumer' is wide enough
and it includes not only the person who hires services but also the
beneficiary of such services other than the persons who actually hire such
services. Therefore, if a child is admitted for his treatment in a hospital,
both the child as well as his parents should be treated as consumers.
In general, any person or agency is a consumer if he or she purchases
any goods or hires services for a consideration. Even a person who has
availed the services rendered by any agency of the armed forces is also a
consumer. In Brig. KG. Kuthiala v. Army Welfare Housing Organisation,^ the
National Commission considered the question of jurisdiction of consumer
courts with respect to entertaining a complaint against the Army Welfare
Housing Organisation for deficiency in services. The Commission held that
since the Army Welfare Housing Organisation is engaged in the systematic
activity of construction of houses / flats for the benefit of members for
consideration, a complaining member would be a consumer with respect to
any defect in services rendered by the orgnisation. In this case, the Delhi
State Commission had taken the view that it had no mandate to entertain a
complaint against the Army Welfare Housing Organisation.
Consumer Dispute
For seeking remedy from a consumer forum there should be a "consumer
dispute". According to clause (e) of section 2(1) of the Act, a "consumer
dispute" comes into existence when the person against whom a complaint
has been made denies or disputes the allegations contained in the complaint.
Thus, there can be no consumer dispute if, after complaint is made, there is
no denial by the opposite party in respect of the allegations made in the
complaint. Denial of allegation in the complaint may be express or implied
from the conduct of the opposite party. Therefore, if the opposite party
omits or fails to respond to the assertions made by a complainant within the
time stipulated in the Act, a consumer dispute can be said to have arisen.
The consumer fora may proceed to adjudicate any consumer dispute in the
manner specified in section 13 of the Act.31 The dispute between the parties
must indeed be a bona fide consumer dispute. If it is not so, the complaint
would be liable to be dismissed.32
Goods
Any dispute which can be dealt under the Act should be regarding the goods
purchased or services rendered. The Act has defined the term goods under
section 2(l)(i) to have the same meaning as it has under section 2(7) of Sale
of Goods Act, 1930. Accordingly, the "goods" means "every kind of
movable property other than actionable claims and money, and includes
stock and share, growing crops, grass and things attached to or forming part
of the land which are agreed to be severed before sale or under the contract
of sale". Though the definition treats every kind of movable property as
goods but it has excluded 'actionable claims' and 'money' from its preview.
The things specially included in "goods" are 'stock and shares', 'growing
crops', 'grass' and 'anything attached to land but agreed to be severed from
it on sale'. In view of this, things like 'good will', 'copyright', 'trade mark',
'patents','gas and electricity',33 'motor vehicles',34 'ships', 35 'lottery tickets'
etc. have been treated as goods. It is quite immaterial that they may be
governed by special Acts instead of or in addition to the Sales of Goods Act.
In any case they are covered by the definition of goods in the Consumer
Protection Act.
Money, which is a legal tender, has been excluded from the definition of
goods because the price of goods is expressed in terms of money and can
not itself be the subject of sale. Any coins or notes which have ceased to be
a legal tender may be treated as goods.36 Foreign money can also be treated
as goods if it happens to be the subject of sale. In Vikas Sales Corpn. v.
Service
The term "service" as defined in section 2(1)(o) of the Act has a very wide
connotation. It covers service of any description which may be made
available to any potential users. It includes the services, like banking,
financing, insurance, transport, processing, supply of electricity, housing
construction, boarding, lodging, entertainment, amusement and purveying of
news or other information. The definition excludes from its purview the
services rendered free of charge or under a contract of personal service.19 It
reads as follows: "service" means service of any description which is made
available to potential users and includes, but not limited to, the provision of
facilities in connection with banking, financing, insurance, transport,
processing, supply of electrical or other energy, board or lodging or both,
-housing construction, entertainment, amusement or the purveying of news
or other information, but does not include the rendering of any service free
of charge or under a contract of personal service.
The significance of this definition lies in the fact that any complaint to
initiate proceedings for redressal of grievances with respect to deficiencies in
services can be made only if such services are covered under the Act. So, it
is quite possible that on the touch-tone of section 2(l)(o), it may be found
that a particular service, though important, does not possess all the
ingredients of the definition of "service". So in any such case, even though
the service may be found deficient, a complaint would not be maintainable.
Thus, before initiating any proceedings before a consumer forum, it is
essential to ascertain at the outset whether or not the grievance of the
consumer pertains to a "service" as defined under the Act.4C
41. Ibid.
42. Ibid.
43. Supra note 1, sec. 2(l)(nnn).
44. Id., see 2 (l)(nnn)(a).
45. Id., see 2(l)(nnn)(b).
CONSUMER PROTECTION ACT, 1986 339
46. Id., sec. 2(l)(r); see for the text of the definition Appendix - XI.
47. Id., sec. 2(r)(2).
48. Id., Explanation t o sec. 2(r)(2)(a)&(b).
340 A TREATISE ON CONSUMER PROTECTION LAWS
The other unfair trade practices which have been mentioned in this
definition and are now becoming very common are:
(a) offering of gifts or prizes with the intention of actually not
providing them and covering them fully or partly by the amount
charged in the transaction; 49
(b) conduct of contests, lotteries, games of chance or skill to
promote sale, use of supply of the product or business interest;
50
established in each state by the state government, and (c) the National
Consumer Dispute Redressal Commission (NCDRC) to be established by
the central government. The Act contains detailed provisions about the
composition, jurisdiction and procedure to be followed by these fora.
District Forum
Composition
Each district forum is to consist of a president and two other members. The
president should be a person who has been or is qualified to be a district
judge. 66 Out of the other two members, one member must be a women.
Each member should be a person of not less than thirty-five years of age,
possessing a bachelor's degree from a recognized university, and be a person
of ability, integrity and standing, having adequate knowledge and experience
of at least ten years in dealing with problems relating to economics, law,
commerce, accountancy, industry, public affairs or administration. 67 As
regards disqualifications for appointment as a member of a district forum, a
person cannot be so appointed if he has been convicted and sentenced to
i m p r i s o n m e n t for an offence involving moral t u r p i t u d e , or is an
undischarged insolvent or is of unsound mind or has been removed or
dismissed from the service of the government or a body corporate owned or
controlled by the government. Any person having financial or other interest
likely to affect prejudicially his functions as a member of the district forum
can also not be appointed as a member. The state government may
prescribe any other disqualifications for such appointments.
A member of the district forum can hold office for a term of five years
or up to the age of sixty-five years, whichever is earlier. A member can be
re-appointed if he fulfils the qualifications and other conditions for
appointment. The appointments to the district forum are made by the state
government on the recommendation of a selection committee. The
President of the State Commission may be the chairman of the selection
committee and the secretaries of the law department and the depanment of
consumer affairs in the state as the members. If the president of the state
commission is, by reason of absence or otherwise, unable to act as the
chairman of the selection committee, the state government can refer the
matter to the chief justice of the concerned high court for nominating a
sitting judge of that high court to act as chairman.
O n the resignation of a member, any person having the qualifications
required for the membership of his/her category in the forum may be
appointed as a member in place of the outgoing member. 68
Jurisdiction
The pecuniary as well as territorial jurisdiction of a district forum is specified
in section 11 of the Act. As per enhancement of the pecuniary jurisdiction
of the forum by the Consumer Protection (Amendment) Act, 2002, a
complaint can be instituted in a district forum when the value of the goods
or services and the compensation is up to rupees twenty lakhs.69 Earlier this
limit of jurisdiction was rupees five lakhs.
As regards the territorial jurisdiction of the district forum, a complaint
can be filed before a district forum within whose jurisdiction the opposite
pany or each of the opposite parties, where there are more than one, at the
time of the institution of the complaint actually and voluntarily resides or
carries on business. If there are more than one opposite parties, the
complaint can be filed in a district forum on the basis of residence or place
of business of any of them, after the district forum has given permission for
that or the other opposite parties have agreed to that. 70
A complaint can also be instituted in a district forum within the local
limits of whose jurisdiction the cause of action has, wholly or in part,
arisen.71
Analysis of samples
In any case of defect in goods, if the defect cannot be determined without
proper analysis or test, a sample of the defective goods should be taken and
referred to the appropriate laboratory for that purpose. The appropriate
laboratory should give its report within forty five days or within such
extended period as may be granted by the district forum. 80 Before referring
the sample to the appropriate laboratory, the complainant may be required
to deposit to the credit of the forum the fee prescribed for the testing of the
sample. The fee deposited is to be sent to the laboratory for carrying out the
necessary analysis or test. 8 1 On the receipt of the report from the
laboratory, a copy of it should be sent by the district forum to the opposite
party alongwith its remarks. 82
In case any of the parties disputes the correctness of the findings or the
method of analysis or test adopted by the appropriate laboratory, such an
objection would have to be submitted in writing.83 Thereafter, such a party
In case the complainant or the opposite party dies during the pendency
of the proceedings, his/her legal representatives can be impleaded in his/her
place as parties. 94
To conduct the proceedings, the district forum has the same powers as
that of a civil court while trying a suit, which include:95
(a) the summoning and enforcing the attendance of any defendant
or witnesses and examining the witnesses on oath;
(b) the discovery and production of any document or other material
object as evidence;
(c) the reception of evidence on affidavits;
(d) the requisitioning of the report of the concerned analysis or test
from the appropriate laboratory or from any other relevant
source;
(e) issuing of any commission for the examination of any witness;
and
(f) any other matter which may be prescribed by the government.
(j) to direct the opposite party to pay any determinate sum in case
of loss or injury suffered by a large number of consumers who
are not identifiable conveniently;97
(k) to issue corrective advertisements to neutralize the effect of any
misleading advertisement at the cost of the opposite party
responsible for issuing such misleading advertisement;
(1) to provide for adequate costs to parties.
The proceedings of the district forum should be conducted by the
president alongwith at least one member of the forum. 98 If a member is
unable to continue with the proceedings upto completion, the president and
any other member should continue the proceeding from the stage at which
the previous member discontinued.99
Appeal
Any person aggrieved by an order of the district forum can prefer an appeal
against such order before the state commission within a period of thirty days
from the date of order.100 The state commission may, however, entertain an
appeal after the given period of thirty days on the ground of sufficient cause.
According to the amendment Act of 2002 an appeal against an order of the
district forum can be entertained by the state commission only after the
appellant has deposited fifty percent of the amount payable under that order
or twenty five thousand rupees, whichever is less.101
State Commission
Composition
Above the district forum, in the hierarchy of consumer redressal agencies, is
the state commission established in each state by the state government
consisting of a president and at least two other members, one of them
should be a woman. The president of the state commission must be a
person who has been a judge of a high court. 102 The chief justice of the
concerned high court must be consulted on making such appointment. The
qualifications as well as the disqualifications for the members of a state
commission are the same as those prescribed for a member of the district
97. Id., proviso to sec. 14(l)(hb): the amount so determined should not be less than
five percent of the value of detective goods sold or defective service rendered. The
amount so obtained should be credited in favour of the persons who have suffered
the loss and be utilized in the manner prescribed under the rules.
98. Id, sec. 14(2).
99. Id., proviso to sec. 14(2)(b).
100. Id., sec. 15.
101. Id., proviso to sec. 15.
102. Id., sec. 16(1).
CONSUMER PROTECTION ACT, 1986 349
Jurisdiction
Each state commission has three types of jurisdiction: (i) original
jurisdiction, (ii) appellate jurisdiction, and (iii) revisional jurisdiction. The
original jurisdiction of the state commission refers to the power of
entertaining complaints directly. This depends upon the pecuniary and
territorial limits of each commission. As per the latest amendment of 2002,
a state commission can entertain complaints directly on matters in which the
value of goods or services and the compensation exceeds rupees twenty
lakhs but does not exceed rupees one crore. 106 As regards the territorial
jurisdiction, a complaint can be instituted in a state commission within the
limits of whose jurisdiction the opposite party or each of the opposite
parties, where there are more than one, at the time of the institution of the
complaint, actually and voluntarily resides or carries on business.107 In case
there are more than one opposite parties who, at the time of the institution
of the complaint, reside or carry on business-within the jurisdiction of
different state commissions, the complaint can be filed in any of these
commissions with the permission of that commission or after there has been
acquiescence of the other parties. 108 Complaint can also be filed in a
commission within the limits of whose jurisdiction the cause of action,
wholly or in part, has arisen.109
Ordinarily, the state commission functions in the state capital but may
also perform its functions at any other place, as the state government may
notify in consultation with the state commission. 110
Appeal against an order of the state commission may be preferred to the
National Commission within a period of thirty days from the date of the
order.111 The National Commission may, however, entertain an appeal even
after the expiry of that period on the ground of 'sufficient cause'. An appeal
may not be entertained by the National Commission unless the appellant has
deposited fifty per cent of the ordered amount or rupees thirty five
thousand, whichever is less.112
To ensure quick disposal of complaints, state commissions and the
National Commission have been required to hear the appeals expeditiously
with an endeavour to finally dispose of each appeal within a period of ninety
days from the date of its admission. Adjournment should be granted only if
there is a sufficient cause for that and the reasons thereof should be
recorded in writing. 113 Orders for payment of costs can also be made for
granting adjournments. Furthermore, it has been made mandatory for a state
commission and the National Commission that they should record in
writing the reasons for delay in disposal of an appeal beyond a period of
ninety days.114
The state commissions enjoy supervisory powers over the district
forums. On the application of the complainant or of its own motion, the
state commission may, at any stage of the proceeding, transfer any
complaint pending before a district forum to another district forum within
the state if the interest of justice so requires. 115
The state commissions may call the records of any consumer dispute
pending before or decided by any district forum within its limits of
jurisdiction if it appears to the commission that the district forum has
exercised a jurisdiction not vested in it by law or has failed to exercise
jurisdiction so vested in it. This power can also be exercised if the state
commission feels that the district forum has acted in exercise of its
jurisdiction illegally or with material irregularity.
The revisional jurisdiction may be exercised by a state commission,
either suo motu or on the application of a party. The revisionary power of
the state commission can be exercised only in matters pertaining to the
jurisdiction of a district forum. Any error in the judgment of the district
forum which does not have any relation to jurisdiction cannot be made a
ground of revision.
National Commission
Composition
The National Consumer Disputes Redressal Commission is established by
the central government. It consists of a president and four other members.
One of the members has to be a woman. The president of the National
C o m m i s s i o n can be a person who has been a judge of the Supreme
Court. 116 He is to be appointed by the central government in consultation
with the Chief Justice of India. 117 The qualifications and disqualifications
prescribed for the members are the same as those for the members of a state
commission. 118 A member of the National Commission can hold office for
a term of five years or upto the age of seventy years, whichever is earlier.119
Re-appointment, wherever possible, is allowed.120
The appointment of the members takes place on the recommendation
of a selection committee consisting of a judge of the Supreme Court
nominated by the Chief Justice of India (as Chairman of the selection
committee) and the secretaries in the department of legal affairs and the
department of consumer affairs, government of India (as members).
- The jurisdiction, powers and authority of the National Commission may
be exercised by its Benches.121 The president may constitute the Benches of
the National Commission with one or more members. 122 In case of any
difference of opinion on any issue in a dispute the decision is taken
according to the opinion of the majority. In case the members are equally
divided, they may make a reference on that to the president, who may either
hear the issue himself or refer the case for hearing by one or more of the
other members. In that case the decision would be taken according to the
opinion of the majority of the members who have heard the case, including
those who first heard it. 123
Jurisdiction
The National Commission is vested with original, appellate and revisional
jurisdictions. Under the original jurisdiction, the National Commission is
period of thirty days from the date of the order. The Supreme Court may
entertain an appeal even after the expiry of thirty days if it is satisfied that
there was a sufficient cause for not filing it within the stipulations period. 1 "
An appeal may be entertained by the Supreme Court only after the appellant
has deposited fifty percent of the ordered amount or rupees fifty thousand,
whichever is less.
Administrative Control
The National Commission enjoys the administrative control over all the
state commissions in the matter of calling for periodical returns regarding
the institution, disposal and pendency of cases. Following of uniform
p r o c e d u r e s in hearing by state commission also falls under the
administrative control of the National Commission. The National
Commission may generally keep observing the working of the state
commissions and the district forums for their proper functioning.134 In the
same way the state commissions enjoy administrative control over all district
forums within their jurisdiction.135
Compliance of Orders
The provisions regarding compliance of orders apply both to interim orders
as well as other orders. In case an interim order made under this Act is not
complied with, the relevant forum may order the attachment of the property
of the contravening person. 136 If non-compliance continue for a period
exceeding three months, the property attached may be sold by the forum
and out of the proceeds thereof damages may be awarded to the
complainant and the balance amount paid to the parties entitled thereto. 1 - 7
Whenever any amount becomes due to any person under an order made by
a forum under the Act, he can make an application to the district forum for
the issuance of a certificate in that regard to the collector of the district to
recover the same as arrears of land revenue. 138
The redressal agencies at all levels have the power to impose penalty on
any opposite party for its failure to comply with any of their orders. The
person responsible for such a failure may be punished with imprisonment
from one month to three years or with a fine of rupees two to ten thousand,
or with both. 139
For the trial of offences, these fora have the powers of a judicial
magistrate of first class and may t r y the offences under the Act
summarily.140
Appeal against any order of the district forum regarding non-
compliance may be preferred before the state commission and appeal
against the order of the state commission may be preferred before the
N a t i o n a l C o m m i s s i o n . Appeal against any order of the N a t i o n a l
Commission may be preferred to the Supreme Court. 1 4 1 The limitation
period for filing appeals is thirty days from the date of the order. 142 On
showing 'sufficient cause', the appellate forum may entertain an appeal even
after the prescribed time period. 143
A. Defects in Goods
Many cases have been decided under the Consumer Protection Act, 1986
granting relief to complainants on account of the supply of defective goods
by the suppliers/manufacturers. The judicial pronouncements cover almost
every kind of product necessary for life, like agricultural appliances, electrical
appliances, vehicles and other goods. For example, in M/s Kerala Agro
Machinery Corporation Ltd. v. Bijoy Kumar Roy',144 the Supreme Court held the
opposite party liable to compensate the complainants on account of defects
in a power tiller. This is the common trend followed by the consumer fora
regarding defective agricultural machinery. In JNPAgro Systems Pvt. Ltd. v. K
K]ose,w the district forum granted relief to the complainant who was sold
164. 1993 (2) CPR36 (AP);see also Ashok Kumar Tomar v. National Seeds Corporation Ltd,
2000 (2) CPJ 167 (Del.); Maharashtra Hybrid Seeds Co Ltd v. Annapureddy Vijender
Reddy, 2002 (3) CPJ 283 (NC); National Seeds Corporation Ltd. v. Nemmipati Nagi
Reddy, 2003(1) CPJ 241 (NC); Shyam Beej Bhandar v. Dana Singh, 2003 (1) CPJ 263
(NC).
165. 1994 (2) CPJ 652 (Mah); see also IICL Ltd v.RS Saluga, 1995 (3) CPJ 186 (MP).
166. 1992 (2) CPJ 524 (NC).
167. 1991(1) CPR 454 (Guj).
168. 1992 (1) CPR 105 (Guj).
169. 1992(1) CPR 493 (Karn).
CONSUMER PROTECTION ACT, 1986 359
Lekhak Abhyan,170 a sofa set was found defective within a short period of
five months and was taken back for the purpose of removing defects. The
Manarashtra State Commission held it as defect for the purpose of grant of
compensation. Injitendra Panchal v. Rajest Dhanjibhai Shah,171 the staple pin
machine did not work properly, the complainant was held entitled to refund
of the price with interest.
Quality of tractors and televisions has also become the subject of
claiming relief under the Consumer Protection. In Bhoop Singh v. Surendra
Agro Centre,172 a complainant had purchased a tractor and the engine of the
tractor was found defective. The district forum found that the tractor was
satisfactorily repaired and was in proper working order. It also found that
the complainant had not preserved evidence in the form of bills nor did he
produce any evidence in respect of defects. Facts also showed that he had
not chosen to avail free services which were mentioned in the maintenance
book and had used tractor in violation of warranty terms. Accordingly, the
State Commission dismissed the appeal. However, in VST Tiller Tractors Ltd
(Chairman) v. Jamuna Singh,173 the tractor was required to be frequently sent
for repairs and the complainant was deprived of use of the tractor. The
National Commission held that the opposite party should have replaced the
tractor or refunded the price rather than engaging the complainant in
continuous rounds of litigation.
In Solidaire India Ltd. v. B A Mohan Kumar,174 a complaint was filed
about defect in a television set, in respect of the failure of the picture tube.
The Kerala State Commission opined that such a defect must be ascertained
by an expert after proper test. Thus, complainant was required to either to
adduce expert evidence or request the district forum to get the television
tested by an expert. The report was to be obtained to ascertain the life span
of the picture tube and to see whether the picture tube had become
defective due to any inherent manufacturing defect. In another case,
Dynavision Ltd v. Sudhakara Kamat,175 the original picture tube was lying with
the m a n u f a c t u r e r for a long time. District forum agreed w i t h the
complainant that, by passage of time, the picture tube must have become
damaged and directed the manufacturer to fix a new picture tube in good
condition free of cost. In case the original picture tube was not available in
India, the forum directed that the manufacturer must fix in the said
television a picture tube of equal quality and standard as that of the original
picture tube. Besides defects, the Kerala State Commission took into
account also the factors of mental strain caused to the complainant and
unnecessary expenses incurred by him in the proceedings and awarded him
a compensation of Rs. 2,000. In one more case, Rose Mary Chakrapani v.
Santosh Agency,176 occurrence of defect during guarantee period was
considered as unfair trade practice and the manufacturer was asked to
replace the picture tube and repair the television set. In Uma v. Aggrellwus
and Co.,177 the television set developed black spots on its picture tube, may
be by seepage of dust and carbon. This defect was not removed by the
opposite party claiming that the phenomenon of dust is common to all
brands of television with no adverse effect on the life of the picture tube.
Rejecting this contention, the Delhi State Commission directed the opposite
party to replace the television set with a new one.
B. Defects in Services
Banking
The banking is one of the important services which has been expressly
covered under section 2(l)(o) of the Consumer Protection Act, 1986.178
The purpose of express inclusion of banking in the definition of service is
that any kind of disruption in such an important service sector can not only
create hardship for consumers but also have severe economic repercussions
on .the nation. This fact has been well recognized by court also and the
remedy has been extended to any kind of deficiency in payment of interest
on overdraft, charging of interest at leading rate, wharfage, demurrage,
defects in demand draft, wrongful crediting of an amount, delay in crediting,
improper maintenance of lockers, passing of forged cheques etc.
In Consumer Unity & Trust Society, Jaipur v. Chairman and Managing Director,
Bank o/Baroda, Calcutta and Another,179 there was an illegal strike resorted to
by the employees of the bank during the pendency of conciliation
proceedings in contravention of section 22 of the Industrial Disputes Act,
1947 and the nature of the agitation and demonstration carried on by them
was such as to effectively prevent ingress from the premises of the branches
of the bank in the State of West Bengal. The complainants put forward a
claim for the loss caused to them during the strike period. The question
before the National Commission was that whether a banking company
which had been forced to suspend its business operations on account of an
illegal strike by its employees, could be held liable to pay compensation to
the account holders for the inconvenience and loss caused to them during
the period of the strike. The National Commission held that when the
down this contention, observing that the bank was deficient in its service
and upheld the decision of the district forum.
In American Express Bank Ltd., Travel Related Services v. Rajesh Gupta,186
the bank refused to give to the complainant refund for the loss of traveler's
cheques as it found serious discrepancies in his statement. It was found that
on earlier two occasions, the complainant had got refund of traveler's
cheques which were encashed. The National Commission held that as the
refused claim was rejected after holding proper inquiry and investigation, the
same did not constitute deficiency in service.
Failure on the part of a bank to commute a specified part of pension to
the credit of a customer is clearly a deficiency in service. In K.T. Shivaiah
(Dr.) v. Canara Bank,1*7 the complainant was sanctioned a monthly pension
out of which some part was commuted. The commuted part of pension was
not credited by the bank to the customer's account. It was held by the
National Commission that such conduct of the bank was deficiency in its
service.
The bank's failure to pay insurance premium on behalf of a customer in
time has been held by the National Commission a deficiency in service. In
United India Insurance Co. Ltd. v. Satrugan Sharma188, under the hypothecation
agreement, the customer had entrusted the bank with the task of making
payment of insurance premium before the expiry of the insurance cover.
The bank failed to do so and, therefore, the National Commission held that
such a failure was deficiency in service.
An issue regarding refusal of the bank to return title deeds to a
customer was considered by the National Commission in the case of Dosen
Chemicals Pvt. Ltd. v. United Bank ofIndia.1*9 In this case, after receiving the
whole amount of loan due from the complainant, the bank refused to return
the title deeds of a property which were required by him to obtain loan from
another bank to complete the complainant's building complex. The National
Commission held that there was gross deficiency in service and awarded
compensation with interest and costs.
N o bank can stop operation of an a m o u n t on the basis of the
instruction of another bank. In Dr. Purushattam Nagar v. Zonal Manager, UCO
Bank,190 the bank stayed the operation of the personal account of the
complainant as per telephone instructions from the other bank. A
complaint was filed by the complainant in the State Commission against the
bank. The State Commission partly allowed the complaint regarding
operation of the account but declined to give direction for the return of the
amount and declare the withdrawals and transfers as illegal. In appeal before
the National Commission, the Commission held that the action of the bank
amounts to deficiency in service and the complainant was entitled to full
relief.
A bank cannot stop operation of an account on its own. In Prem G's
International v. Central Bank ofIndia,191 the complainant was a private trust
and the bank account of the trust was opened in 1979 through its managing
trustee. In 1991, the operation of the said bank account was stopped by the
bank contending that the formalities were not complied with by the
complainants. The Delhi State Commission held that it was deficiency in
service on the part of the opposite party.
Not paying the full amount of the sanctioned loan or an adequate and
timely working capital is deficiency in service. In Kamal Nagpal v. State Bank
of India,192 a loan of Rs. 85,000 was sanctioned by the bank in favour of the
complainant, but only a sum of Rs. 50,000 was actually paid to him. The
balance amount was not paid. The Jammu and Kashmir State Commission
held that the bank was liable for deficiency in service. Accordingly, in Urmila
Bhargawa v. Punjab and SindBank,193 the complainant alleged deficiency in
service on the part of bank in not providing adequate and timely working
capital in accordance with settled terms. The National Commission upheld
this contention and declared that it was deficiency in service.
In State Bank ofHyderabad v. Shri Balri Lingam,X9A the appellant bank had
undertaken to provide financing facilities to the unemployed youth. When
the complainants approached the bank, it agreed to make available its
services for a consideration in the form of interest and issued a consent
letter in that regard. On the basis of the consent letter given by the bank, the
complainants purchased the land and c o m m e n c e d the necessary
constructions for their work. They also withdrew margin money sanctioned
to them by the district backward classes service cooperative society on the
basis of the consent letter and deposited that amount in the bank. Ultimately
the bank refused to render the financing facilities. O n this the National
Commission held that the complainants had acted on the promise made by
the bank which subsequently refused to perform the agreed services to the
detriment of the complainants. Thus, the services which the appellant bank
had undertaken to perform suffered from deficiency.
In the Special Officer, Yelayapalim Primary Co-operative Credit Society No. 46,
Kodavalur Mondal, Nellore District v. Koreti Chandra Reddy, &Anr.,}95 the
complainant was the member of the cooperative credit society and was
entitled to avail its services. He applied for loan, which was sanctioned in his
favour and also the amount of loan was released. As regards recovery, he
paid back the entire principal amount but did not pay the interest as the
state government had waived the interest on the loan amount. However,
when he again applied for loan, it was not granted, instead the society
demanded payment of the interest payable on the loan taken by him earlier.
The matter came for consideration before the Andhra Pradesh State
Commission which held that there was deficiency in services rendered by
the society to the complainant. He was, therefore, held entitled to proceed
against the society.
Failure to credit an amount received by a bank to customer's account
within reasonable time is deficiency in service. In Arjun Lai Aggarwal v. State
of Bank of India and Ore.,196 an amount was remitted by telegraphic transfer
for transmission to the complainants account. The amount was duly
received by the bank with firm instructions to credit it to the complainant's
account. The complainant was not paid the said amount for six months and
there was thus a delay of six months in transmitting the amount even
though the quickest method available for transferring the amount was used,
apparently for an urgent need. The State Commission held that in the
context of a telegraphic transfer remittance, a delay of six months for
reaching out the amount to its recipients is clearly a deficiency in the
banking service.
In Sovintorg (India) Pvt. Ltd. v. State Bank ofIndia,197 a cheque deposited
by the complainant was collected by the bank but was not credited to the
complainant's account for more than seven years. The bank contended that
it was to be adjusted against margin money for bank guarantee. The
National Commission observed that the delay was inordinate and the
amount was not credited even after the expiry of the bank guarantee. The
Commission held that there was a grave deficiency in service of bank which
caused serious damage to complainant's business. Accordingly, the
Commission awarded compensation for harassment and damage suffered by
the complainant in its business.
In Nagbhushana Rao (P) v. Union Bank ofIndia,m the complainant had
invested certain amount in deposit reinvestment certificate. Due to pressing
financial need, he wanted to encash the certificate before maturity.
Accordingly, he submitted the certificate for encashment several times.
However, for more than one year, the certificate could not be encashed. On
this the Andhra Pradesh State Commission observed that the bank was at
fault in not encashing the certificate for a long period and the quality, nature
and manner of performance of bank's service was hopelessly inadequate. It
was accordingly held that the bank was guilty of deficiency in banking
service.
In B.H. Canara Bank v. K.R. Hanumantha Rao,199 the complainant gave
three cheques to the bank for realising the amount and crediting in his
saving bank account but the said amount was not credited to his account
c o n t e n d i n g that the said cheques were lost. The Karnataka State
Commission held that the assertion of the bank that the said cheques were
lost itself shows that the bank was negligent in dealing with those cheques.
The bank was even unable to state the stage at which those cheques were
lost. Hence, it was not possible to know whether the amount of the said
cheques was realised by the bank or not. Therefore, the bank was held guilty
of deficiency in service, as the complainant, who had deposited the cheques
with the bank, could not be made to suffer on account of the negligence of
the employees of the bank.
Any amount should be credited by the bank to an account as instructed
by the customer. In Harisaran Abbott v. The Zonal Manager, Bank ofIndian and
Ors.,200 clear instructions were given by the complainant to the bank that
certain remittances were to be credited to the account of the complainant as
a beneficiary and not to the account of the firm of which he was a partner.
So, there were no instructions to the bank to credit the said amount to the
account of firm of which he was a partner. In spite of this the bank credited
the amount to the account of the firm. The complainant alleged that it was
deficiency in service on the part of the bank, putting him to huge financial
losses. The Maharashtra State Commission held that the bank had acted
contrary to the instructions of the consumer which had put the complainant
to loss of interest on the deposited amount for a considerable period.
Therefore, this was a case of obvious deficiency in the service directly
resulting from the negligence of the bank. Accordingly, the complainant was
held entitled to the relief he had claimed.
Negligence in comparing signature is also deficiency in service. In Abdul
Razak v. South Indian Bank201 huge sums were w i t h d r a w n from the
customer's account on the basis of forged signature. The N a t i o n a l
Commission held that the bank was liable to pay to the complainant the
fraudulently withdrawn amount with interest.
A bank's failure to prevent passing of forged cheques is deficiency in
service. In Prakash R. Shenai v. Syndicate Bank202 the complainant's five
cheques were forged and it was repeatedly pointed out by him to the
opposite party that because of the forgery committed by its employees he
has been p u t to a high financial loss. The opposite party instead of
investigating the grievances of the complainant tried to justify the passing of
cheques after due verification of the specimen signature of the complainant
from the bank's record. The complainant filed a complaint on the matter in
the M a h a r a s h t r a State C o m m i s s i o n for deficiency in service. The
Commission held that when the complainant disputed his signature on the
cheques, it was the duty of the bank to re-verify the signature and refer the
matter to the handwriting expert for his opinion, so that the truth could be
found out. O n the contrary the opposite party tried to cover the lapse
committed by their own employees who passed the forged cheques. The
attitude of the opposite party has been clearly that of non-cooperation with
the complainant as regards the finding out the truth and to understand his
complaint properly. As a result of the forgery, the complainant's amount has
been embassled which constitutes deficiency in service on the part of the
bank.
Improper maintenance of lockers is a deficiency in service. In Punjab
National Bank v. KB. Shetty20i a complaint was made by the customer about
loss of jewellery from his locker due to negligence of bank officials. The
bank took the plea that the customer had left open the locker which could
be n o t i c e d o n l y after fifty days. It was observed by the N a t i o n a l
Commission that even if the locker was left open by the customer's mistake,
it was surprising that the fact went unnoticed by the bank officials for
almost fifty days. It was held that the loss of jewellery from the locker was
due to bank's negligence.
In Mihirkumar Mukherjee v. United Bank of India (Branch Manager),204 the
National Commission took the view that any increase in the rent of the
locker does not amount to deficiency in banking service and the increase in
locker rent does not require corresponding increase in service. Since the
increase in locker rent is necessitated due to the increase in the cost of
maintenance, staff salary and other incidental expenses like rent of
accommodation, there is no deficiency in service or unfair trade practice
particularly when the increase in locker rent is not only for the complainant
but for all hirers. Since the relationship between the bank and the
complainant in respect of the agreement for locker hire is that of a licenser
and a licensee, the bank is authorised to increase the locker rent.
Issuing of unsigned demand draft by the bank has been held as a
deficiency in service. In Malati Bhat v. State Bank of India,205 an engineering
203. 1994 (2) CPR 636 (NC); also see R.G. Srivastava v. UCO Bank, 1994 (3) CPR 117
(Del).
204. 2002 (2) CPJ 38 (NC).
205. 1992 (2) CPJ 352 (NC).
368 A TREATISE ON CONSUMER PROTECTION LAWS
diploma student sent his examination fees by draft. The draft was returned
by the postal department to the complainant along with application on the
ground that the same was not signed by the bank manager. Due to bank's
negligence, the student lost six months of his student career. The district
forum held that the bank was negligent in issuing demand draft and awarded
compensation of rupees thirty thousand. O n appeal by the bank, the
Karnataka State Commission reduced the compensation to rupees twenty
thousand. Against this appeal the complainant moved the National
Commission, which set aside the State Commission's order and restored the
order of the district forum.
In N. Raveendran Nair v. Branch Manager, State Bank oflndia,20b two
officials had put that their signatures on the demand draft and the specimen
signature number of one of the officials was also inserted. The other
officials made a slip in putting his signature and the draft and for that reason
the draft was dishonoured. The complainant alleged that it was deficiency in
service. The Kerala State Commission, considering the matter, held that for
an omission committed by one of the employees of a bank, the customer
should not suffer. Since a demand draft is an instrument issued by one
branch of a bank to another branch or to the associate bank, if there has
been a lapse or an omission committed by the officials of the bank the
customer should not be put to difficulties. The dishonour of the draft made
by the opposite party was, therefore, wrongful. There is no doubt that the
service rendered by the opposite party was a defective service.
In Tarun Kumar Kanaiyalal v. Punjab National Bank, Bhuj,107 a draft
prepared by the Punjab National Bank payable by Gulf Bank in Kuwait was
dishonoured. The lapse leading to the dishonour was some matter relating
to the internal management of the issuing bank. The National Commission
allowed the complaint holding that the complainant was not concerned with
the internal management problems of the bank. Since he had deposited the
money with the bank by way of a fixed deposit through exchange, the bank
was bound to return the same on maturity or on request for premature
payment. The complainant was, therefore, held entitled to his money back
together with contractual interest.
In Bhupendra Kumar Nana Lai Rajguru v. The State Bank oflndia,20s the
draft was purchased by the complainant from State Bank of India branch at
Baroda and was payable at Calcutta. Unfortunately, when the educational
institution sent the draft for collection, it was found that the draft was on
the printed paper of the State Bank of India and was also according to the
bank duly signed by the branch manager but the signature of the teller was
not there. Therefore, the Calcutta branch of the State Bank of India
dishonoured the draft; with the result the complainant could not appear in
the examination. Consequently, one year of the complainant was spoiled and
the Gujarat State Commission held that it was a clear case of deficiency in
service and negligence.
A bank cannot retain the bank guarantee amount beyond reasonable
time. In H.C.L. Ltd. v. Bank of India,209 the respondent bank failed to make
the payment of bank guarantee amount in favour of the complainant.
Consequently, the complainant served a notice on the bank to make the
payment of the amount in terms of the guarantee. On negative response of
the bank, several reminders were given by the complainant but the amount
was not paid. Thereafter, the complainant filed the complaint in the Delhi
State Commission but during the pendency of the complaint the respondent
paid the amount. The commission observed that according to the terms of
the guarantee the amount should have been paid when the bank was called
to do so. When the complainant sent notice to the bank to make payment, it
became the duty of the bank to make the payment within a reasonable
period of time. But the payment was made by the bank after four years and
fifteen days and during this period the money was utilised by the bank. The
State Commission accordingly held the bank liable to pay interest on the
amount for the period of delay.
In Chandra mani Sarangi and Anr. v. Central Bank ofIndia,-10 complainants
deposited two fixed deposit amounts with the opposite party. One was for
five years and other was for ten years. The grievance of the complainant was
that inspite of maturity the amount was not paid. The opposite party stated
that the complainant was a guarantor for loans to various persons for which
he had deposited the two certificates as evidence of release. The Onssa State
Commission found that the complainant was a guarantor in two disputed
cases regarding which judgments were given by the court. The judgments
disclosed that the claims of the bank in those suits which included claims
against complainant as guarantor had been dismissed. Dates of loans in
other suits or dates of filing of any other suits were not disclosed by the
bank. The Commission, accordingly accepted the submission of the
complainant that the cases about loans given to other persons in respect of
which he was guarantor were dismissed by the court. Once the two suits had
been dismissed and no appeal was filed, the Commission held that the
deposited amounts, due to the complainant, should not remain with the
opposite party.
In Indumati Pal v. Punjab & Sind Bank,212 the complainant was the
m o t h e r of a deceased customer, w h o on the death of the customer
requested the concerned bank for disbursement of the deposits in her
favour. The bank wanted that a succession certificate should be obtained so
that the bank can consider the question of disbursement of the deposits
made by the deceased. When the complainant wanted the amount in deposit
for which she got a succession certificate, the bank did not disclose the same
to her. As a result she was deprived of getting the legitimate amount in the
custody of the bank. The Orissa State Commission directed the opposite
party to furnish the amount available with it in the account of the deceased
to the complainant within seven days from the date of receipt of the order,
by registered post at its own cost.
In Nowsheen Jahan v. Tamil Nadu Electricity Board,223 the complainant's
father had placed fixed deposit in 1975 in the joint name of himself and the
complainant for one year payable to either or survivor. In 1975, the
complainant was minor. Her father died within one year of placing the fixed
deposit. She attained majority in 1987. It was only in 1991 that the
complainant became aware of the existence of the fixed deposit while going
through some old papers. She claimed the amount of FDR with interest.
The bank agreed to pay the amount of FDR with interest only for one year,
as there was no request for renewal. The district forum and the Tamil Nadu
State Commission dismissed the complaint. O n appeal the National
Commission, held that the complainant should be paid the amount of FDR
with nine per cent per annum interest up to the time the complainant
attained majority and thereafter at five per cent interest per annum because
the bank had kept the money for all these years.
The bank was not held guilty of deficiency in service where the
complainant was himself at fault. In State Bank of India v. Mokinder Singh,224
the complainant was defaulter in respect of a huge outstanding balance of
his loan. Hence, the bank refused to issue the N O C in his favour. The
complainant filed a complaint in the district forum claiming deficiency in
service. The district forum and the State Commission allowed damages but
the National Commission set aside the order allowing damages by the
district forum and the State Commission.
From the above illustrative cases, it has become obvious that the case
law on banking services has developed to cover many issues relevant to
securing the benefit of consumers in different ways. Such an approach
would help in improving the system of banking as well as in extending more
and more protection to consumers.
Insurance
Insurance, like banking, is an important service sector specifically covered
under the definition of "service" in section 2(l)(o) of the Consumer
Protection Act. The insurance schemes have multiplied over the years to
cover various types of risks to life and property. Since 'insurance' has been
included in the definition of service, any deficiency in the services of an
insurance company would enable the aggrieved party to make complaint for
redressal of its grievances under the Act. 22 '
The protection granted under the Act is, of course, very wide and
extends to all the cases of unilateral repudiation of the insurance contract by
the insurer, delay in settlement of claims, breach of terms of the policy and
all other actions affecting the interests of the insured. The consumer fora
can adjudicate any dispute regarding such matters. Even if there is unilateral
repudiation of the insurance contract by the insurer, jurisdiction of
consumer fora to conduct adjudication of the complaint is not affected. The
rationale behind this proposition was explained by the National Commission
in LIC of India, A.P. v. Shree Bhavanam Srimvas Reddy22b that if the unilateral
repudiation of an insurance contract is held to oust the jurisdiction of the
consumer fora, such an interpretation may lead to abuse and grave public
mischief. The insurance company has to satisfy the court that the
repudiation is justified. It may be printed out that the Insurance Act also
provides for remedy of grievances arising out of repudiation but the
unilateral repudiation of an insurance contract cannot take away the
jurisdiction from the consumer fora to seek remedy for the loss suffered due
to deficiency. Further, in terms of section 3 of the Consumer Protection
Act, the provisions of the Act are in addition to and not in derogation of
any other law. In this view of the matter, a consumer forum cannot be
debarred from investigating the unilateral repudiation of the claim.
The inordinate delay in the settlement of insurance claims either due to
negligence or unexplained delay on the part of the surveyor of the insurance
company amounts to deficiency in service. This preposition was followed by
the National Commission in National Insurance Co. Ltd. v. M/s Lai Cbandjain
& Sons217 and M/S Tanawala Synthetic Textile Ltd. v. Oriental Insurance Co.
Ltd.,~s and held that a long delay of more than three years on the part of an
insurance company in deciding the claim of the insured is a deficiency in
service. Similarly, In M/S United India Insurance Co. Ltd. v. Mrs. Pooja
Gyanchandra Joshi,229 the National Commission held that the settlement of a
225 UmediLal Aggarwal v. United India Assurance Co. Ltd., 1991(1) CPR 34 (R,ij).
226 1991 (2)CPJ 189 (NC).
227 1997(1) CPR 108 (NC).
228 1996 (2) CPR 53 (NC).
229 1996 (2) CPR 149 (NC).
374 A TREATISE ON CONSUMER PROTECTION LAWS
235. Padmasri Tobacoo Co. v. New India Assurance Co. Ltd., 2002 (2) CPJ 96 (NC); New
India Assurance Co. Ltd. v. Mrs. Inderjeet Kaur, 2002 (3) CPJ 238 (NC); Motilal Meghwat
v. United India Insurance Co. Ltd., 1995 (2) CPJ 38. V.M. Parmarv. United India
Insurance Co. Ltd., 1993 (2) CPJ 813 (Guj).
236. S. Vellinayagam & Co. v. New India Assurance Co. Ltd., 1992 (1) CPR 808 (NC).
237. Bihar State Sugar Corporation Ltd. v. State Bank of India, 2003 (1) CPJ 261 (NC);
Birendra Mohan PD Sinba v. New India Insurance Co. Ltd.,(l992) 1 CPJ 225 (Bihar).
238. 1993 (2) CPJ 1030 (Bihar).
239. 1992 (1) CPR 332 (Ori).
240. 1992 (1) CPR 439 (NC).
241. S.K. Lakhotia v. National Insurance Co. Ltd., 1994 (1) CPR 43 (WB).
242. 2003 (1) CPJ 237 (NC).
376 A TREATISE ON CONSUMER PROTECTION LAWS
Transport
The term "transport", specifically included in the definition of "service" in
section 2(l)(o) of the Act, has received a fairly wide connotation by
consumer courts to include various kinds of means of transport. Since
railway administration provides transport facility to public for a charge, it is
a service rendered for "consideration" and covered by the definition of
service under the Act. Carriage of goods by railway is, therefore, service
within the meaning of the term under the Act, irrespective of the purpose,
i.e., business or personal. Likewise, transport facility provided by airlines,
state roadways and private transport companies are all covered under the
definition of service. A courier has been held to be in the same position as a
carrier, and therefore, falls within the scope of the definition under the Act.
The inclusion of transport service in the definition of 'service' under the
Act has a great socio-economic objective to achieve. The fact is that even
after compulsory motor insurance and nationalization of insurance business,
the people of the poor classes, suffering losses due to deficiency in transport
services, were getting deprived of speedy and efficient redressal of
grievances."4' After the inclusion of "transport" in the definition of service,
consumers are increasingly feeling concerned about their legal rights with
respect to transport companies and deficiency in service of these companies.
The service rendered by railways has been a subject for consideration
before consumer fora in many cases. In Ms. B. Pushpakanthi & Anr v. General
Manager-Southern Railway,244 an old couple reserved two berths for their
journey and they obtained confirmed reservation for the return journey. On
their return journey, they found that their name were missing from the
reservation chart. The old couple had to face much inconvenience in their
journey. They filed an appeal in the district forum for directing the railway
authorities to refund the fare and compensation for the hardship which they
had faced. The district forum directed refund of fare and cost apart from
Rs.10,000 as compensation. The opposite party filed an appeal in the State
Commission. The State Commission reversed the order of the district forum
243. Concord of'India Insurance Co. Ltd. v.Smt. Nirmala Devi, AIR 1979 SC 1966.
244. 2001(1) CPR 124 (NC).
CONSUMER PROTECTION ACT, 1986 377
in services on its part. The State Commission held that the complainant was
entitled to recover the loss from the opposite party. The oppose party filed
an appeal in the N a t i o n a l C o m m i s s i o n against the order of State
Commission. T h e National Commission upheld the decision the State
Commission. Regarding the contention that the complainant was not
entitled to damages as he needed the goods for a commercial purpose, the
Commission observed that a consumer who hires or avails of any service for
consideration is entitled to compensation and the question whether services
availed of were for commercial purpose or not was of no consequence.
In East India Transport Agency v. Jagdish Bbai M. Chandan,2^ the
complainant had booked a goods vehicle with the transport agency for
carrying a consignment but was informed that the consignment caught fire
and all the goods booked were destroyed. He filed a compliant in the State
Commission that there was deficiency in service and claimed compensation
for the loss suffered by him. The State Commission allowed the complaint
and directed the opposite party to pay value of goods with running interest.
Aggrieved by the order of the State Commission, the opposite party filed an
appeal in the National Commission which upheld the decision of the State
Commission observing that the appellant agency was rightly held liable for
loss.
In Kamlesh Sharma v. Rajasthan State Road Transport Corporation,249 the
complainant and her husband travelled by a delux bus of Rajasthan State
Road Transport Corporation (RSRTC). During journey, the bus was looted
and the complainant's husband was killed. It was held by the Rajasthan State
Commission that it was a part of the duty of the RSRTC to provide safe and
secure journey to its passengers. The incident of loot and killing was
accordingly regarded as a deficiency in service. The State Commission
observed that in such cases, during the night journey, night guards must be
provided, otherwise it would amount to deficiency in service.250
The transport agencies are liable for safety of passengers also. In The
Station Manager, Indian Airlines and Others v. Dr. Jiteswar Ahir,2il the
complainant along with some other medical officers boarded the aircraft. He
was told by the official of the opposite party to disembark from the aircraft
to identify the luggage. He stepped out on the stair, the ladder was suddenly
removed as a result he sustained injuries. The complainant claimed
c o m p e n s a t i o n for negligence and deficiency in service. T h e State
Commission held that there was negligence on the part of staff the opposite
party and, therefore, awarded compensation. Against the order of the State
Commission, the appeal filed by the opposite party in the National
Commission was dismissed by the Commission and upheld the findings of
the State Commission.
As regards delivery of consignments, the National Commission has
observed that the transporters are under an obligation to deliver any
consignment to the consignee only after receiving the relevant documents of
title to the goods. Accordingly, in Careway Transport of India v. Kushal Tea
Company,2^2 it has been held that there is no justification for the transporters
to hand over consignor's goods to the consignee without obtaining
documents of the title unless there are specific instructions to this effect
from the consigner.
Taking reasonable care of passengers is also obligatory for the transport
agencies. In General Manager, APSRTC v. R. Anjinerullu,1^ the complainant
was a physically handicapped person. He was traveling by Andhra Pradesh
State Road Transport Corporation (APSRTC) bus. He got down from the
bus for call of nature after informing the driver. When he returned, the bus
had left with his luggage. He filed a complaint against APSRTC claiming the
value of the luggage and compensation. The Andhra Pradesh State
Commission observed that the driver of the bus left without properly
ascertaining whether the complainant had got into the bus. The Commission
held that the driver of the bus was guilty of negligence and it was a clear
case of deficiency in service.
Regarding passenger care, in General Manager, Southern Railway, Madras v.
N. Prabahkaran,25* the National Commission has held that if the railway is
charging from the passengers first class fare and does not provide cushioned
seats as per the specifications laid down by the Railway Board, it amounts to
deficiency in service.
The above case law shows that if complaints about transport services
are frequently filed and disposed of by the redressal agencies without delay,
the travel would become safer and comfortable ensuring safety of the
luggage and the consignment also.
Electricity
Supply of electricity for domestic and industrial use is also as per express
provisions of section 2(l)(o) of the Act a "service". Being service,-" but a
252. 2002 (2) CPJ 17 (NC); A. V. Thomas & Co. Ltd. v. Meridian Apparel, 1999 (2) CPJ 1
(NC); MPRoadlmes v. MangatRam, 2001 (1) CPJ 30 (Punj).
253. 1993 (2) CPR 99 (AP).
254. 1992 (1) CPJ 323 (NC).
255. It may not, therefore, constitute goods; see Haryana State Electricity Board v. Dincsh
Kumar, 1991 (2) CPJ 88 (Har). For certain purposes, however, the electricity has
been treated as goods; see supra note 33.
380 A TREATISE ON CONSUMER PROTECTION LAWS
256. Suresh Nayak v. Chairman, Kamataka Electricity Board, 1993 (3) CPJ 1575 (Kant).
257. Sub-Divisional Officer, Haryana State Electricity Board v. Sita Ram, 1993 (2) CPR 232
(Har.). Also see Malhan Garments v. SDO, Punjab State Electricity Board, 1993 (2) CPR
288 (Punj); Amardas Thareja v. Delhi electricity Board, 1993 (1) CPJ 137 pel).
258. 2002 (1) CPJ (NC).
259. 1996 (2) CPR 30 (NC).
CONSUMER PROTECTION ACT, 1986 381
charging him for re-sale of electricity. He was made to pay a sum of Rs.
5000 at the first instance to restore him electricity. Later, the Superintendent
Engineer - Appellate Authority relieved him of the charge of resale of
electricity because all the meters belonged to the same consumer but he was
charged with some more dues about restoration and reconnection measures.
Because of these hardships the complainant approached the Haryana State
Commission. The State Commission ordered payment of Rs. 40,000 as on
account of loss and Rs. 5,000 as compensation in favour of the complainant.
The Board filed an appeal in the National Commission which dismissed the
appeal and confirmed the order of the State Commission.
Another case regarding wrongful disconnection of electricity is Haryana
State Electricity Board v. TanujRashi Paultry Farm,2b0 which was about a non
resident Indian entrepreneur. In this case, the meter of the electric
connection of the complainant was burnt but not replaced, because he did
not meet the illegal demands of the concerned staff of the Board. Looking
to the absurdity of the demand, the Haryana State Commission held that
there was deficiency in service and allowed a relief for harassment and other
business loss to the complainant. The National Commission upheld the
order of the State Commission and further directed to pay costs to the
complainant.
Delay in providing the sanctioned additional load also amounts to
defining in service. In Executive Engineer, O&M, Tamil Nadu v. Electricity
Board and Others, V.K.R. Mani,2^1 the complainant was running an industry
for which he needed additional electric supply. He applied for the additional
load and remitted the earnest money. After verifying all the relevant facts,
the Board passed an order sanctioning the supply of additional load for the
complainants industrial unit. The complainant subsequently paid for
estimated cost of the work also. Then, with dishonest intentions, the Board
wrongly disconnected the additional load and asked the complainant to
deposit an amount to restore the connection. The complainant paid the
amount under protest but the Board failed to restore the connection. The
complainant claimed that because of violations committed by the Board he
suffered huge financial losses. The Tamil Nadu State Commission, while
considering the matter, found that there was a delay of nearly 20 months for
giving connection after sanctioning of the additional load and this exhibited
gross deficiency of service and negligence on the part of the opposite party
and granted compensation in favour of the complaint. In an appeal filed by
the Board, the National Commission upheld the decision of the State
Commission and observed that the unexplained delay in providing additional
load, which had already been sanctioned, was a deficiency in service.
Commission. The Commission allowed the complaint and held that the
claim was barred by limitation of 3 years. The Supreme Court rejected the
contention of limitation period and held that the Board had exercised the
power of disconnecting supply when the consumer had neglected to pay the
bill for additional sum. The Board had a right to do so without recourse to
the right to file a suit to recover the due sum. The court further observed
that the right to file a suit is a matter of option. The mere fact that there was
a right given to the Board to file a suit and with respect to which limitation
has been prescribed, could not take away the right of the Board to
discontinue supply of electricity on default in paying charges. The Supreme
Court clarified that there could be deficiency in service if there had been
negligence or collusion by the subordinate staff in not properly recording
the meter reading or allowing pilferage to consumers which would be
deficiency in service under the Consumer Protection Act.
Failure to replace the burnt out meter of a poultry farm,265 disruption
of electricity supply to an orange-garden due to theft of wire, 266 refusal of a
new connection to a factory unless the outstanding arrears of the existing
connection were cleared,267 and an effort to recover arrears for a period of
eight year from a factory due to slow running of the meter, without recourse
to the prescribed procedure have all been declared as matters of deficiency
in service. 268
Causing loss due to sparking from electric wires is a deficiency in
service. In Assistant Executive Engineer Sub-Division No. 11, Karnataka State
Electricity Board v. Sri Neelkanta Gouida Siddanagouda Patil,2^ the complainant
claimed damages for loss of sugarcane crops, coconut trees and chikku trees
which had got burnt due to sparking from the electric wires passing over the
field of the complainant. The sparking wires were providing electricity to the
pump set of the complainant for irrigation purposes. The district forum on
the basis of the material on record allowed the complaint holding that there
was deficiency in service on the part of the Electricity Board and awarded a
compensation of Rs. 1,50,000 in favour of the complainant. Feeling
aggrieved by the order of the district forum, the Board as well as the
complainant filed appeals before the Karnataka State Commission, which
upheld the order of the district forum. However, again aggrieved by the
order of the State Commission, the Board filed a revision petition before the
National Commission, which also got dismissed. Thus, failure of the Board
to connect wires in proper position, which caused damage to the crops of
265. H.S.E.B. v. Tanuj Rashi Poultry Farm, 1996 (2) CPJ 15 (NC).
266. Mahadeo B. Gulhane v. M.S.E.B., 1995 (3) CPJ 1991 (Mah).
267. Rasi Engg. Works v. Commissioner, Coimbatore Corpn., 1995 (3) CPJ 15 (NC).
268. RasiEngg. Works v. Commissioner, Coimbatore Corpn.,1995 (3) CPJ 15 (NC).
269. 2002 (2) CPR 61 (NC).
384 A TREATISE ON CONSUMER PROTECTION LAWS
the complainant, who was also consumer of electricity, was, therefore, held
as a deficiency in service on the part of the Board.
The opinion that if there is a failure on the part of an Electricity Board
in maintaining the lines in a proper condition that amounts to deficiency in
service has been followed in Karnataka Electricity Board now known as
Karnataka Power Transmission Corporation Ltd. & Anr. v. Smt. Sharavva &
Ors.,270 also. In this case a livewire had snapped from the electric pole
supplying electricity to the pump set irrigating the fields of the victim
resulting into his death. The family, complaining deficiency in service in not
supplying electricity properly and safely and causing death of their bread
earner, filed a complaint for damages. The district forum found that the
power line which fed the pumpset of the deceased was loose and hung very
low and it was precariously connected to the poles on either side. The power
line was broken at various places and mended shoddily. The district forum
awarded compensation in favour of the complainants with interest from the
date of the complaint. The Electricity Board went in appeal before the
Karnataka State Commission which examined the matter in depth and
dismissed the appeal. Aggrieved by the order of the State Commission also
the Board approached the National Commission. The National Commission
confirming the decisions of the fora below held that the failure on the part
of the board in maintaining electricity line in a proper condition and
snapping up of the livewire from pole, which was supplying electricity to
pump set of the deceased who died on account of electrocution, amounts to
deficiency in service and entitles the legal heirs of the deceased to claim
compensation. The revision petition was accordingly dismissed by the
National Commission.
In Neelkamal Industries v. M.P. Electricity Board,271 the petitioner had a
small-scale industry and the premises of the industry were visited by the
officers of the board who found that the meter was faulty and that one
phase was not giving reading on the meter. Thereafter, bills were sent to the
petitioner for payment. Feeling aggrieved by this, the petitioner filed a
complaint. The complaint was dismissed by the district forum with costs
and so was the appeal before the M.P. State Commission. Before the
National Commission, the petitioner raised a plea that if the meter is found
faulty, the respondent could not issue a supplementary bill without referring
the matter to the electrical inspector which had been admittedly not done in
the present case. Accordingly, the revision petition was accepted and the
orders of the district forum as well as State Commission were set-aside. It
was thus established that the supplementary bill could be issued only after
obtaining report from the Electrical Inspector. It was further held that if the
a m o u n t of the bill had already been recovered, credit should be given to the
respondent for the a m o u n t and that should be adjusted in the future bills.
A n u m b e r of other cases have been decided by the fora about deficiency
in supply of electricity services and some standards have been laid d o w n in
this regard. Accordingly, a person w h o has applied for a connection and has
fulfilled the formalities, including deposit of the required amount of fee can
c o m p l a i n about the delay in giving him the connection. 2 7 - But w h e r e the
applicant has deposited only the earnest m o n e y with an application without
fulfilling other formalities, he would be only an intending consumer and not
a consumer.-71
After t a k i n g a cumulative view of the decisions, it can be found that
raising arbitrary demands for exorbitant amounts by billing and enforcing
t h e m t h r o u g h t h r e a t of d i s c o n n e c t i o n has been held t o be deficiency in
service. Sending of bills w i t h o u t taking meter readings and not considering
the genuine grievances of the consumers have been held t o be a deficiency
and c o m p e n s a t i o n has been a w a r d e d in such cases for m e n t a l agony. 2 7 4
T h e r e is also deficiency in service if the s u p p l y is disconnected for non
p a y m e n t and the m a t t e r is not referred to arbitration in spite of repeated
r e q u e s t s . 2 7 3 T h e non-service of bills at the a p p o i n t e d time as per billing
cycle and harassing the consumer with heavy arrears bills, charging late fee
wrongfully and n o t m a i n t a i n i n g correct meters a m o u n t to deficiency in
service entitling the c o n s u m e r t o claim redress. 2 7 6 Denial of t w o separate
c o n n e c t i o n s in t h e same p r e m i s e s and c l u b b i n g t h e load for r a i s i n g a
d e m a n d o n the ground that t w o connections could not be given in the same
premises is also deficiency in service. 2 7 7
Raising of bills o n average c o n s u m p t i o n is also questionable. So, if the
m e t e r has n e i t h e r s t o p p e d r e c o r d i n g the c o n s u m p t i o n n o r has b u r n t or
c e a s e d t o f u n c t i o n , t h e bill c a n n o t be raised o n t h e basis of a v e r a g e
c o n s u m p t i o n for succeeding m o n t h s . 2 7 8 In Haryana S.E.B. v. Jawabar Lai
Singla,-7^ additional bill was sent on the basis of average consumption after
t w o years of sending the original bill on the basis of suspicion expressed in
272. Consumer Protection Council TamilNadu v. T.N.E. B., 1992 (2) CPJ 761 (TN); and
Shamsher Singh Khan v. Rajasthan S.E.B., 1993 (2) CPR 6 (Raj).
273. Additional Chief Engineer v. Ramlingan, 1993(2) CPJ 225 (NC).
274. CM. Manjrekar v. Dv. Eng. Maharashtra Electricity Board, 1991 (1) CPR 452 (Mah);
and West Bengal S.E.B. v. TPS Factory, 1993 (3) CPR 448 (WB).
275. M.S. Salvasckaran (Smt.)v. Executive Engineer Orissa S.E.B., 1991(2) CPR 197, 198
(On).
276. Y.N. Gupta v. Desu, 1993 (1) CRJ 27,28 (NC); Punjab SEB v. Satish Kumar, 1999 (2)
CPJ 359.
277. Hnd.
278. M.P. Pandya v. State ofRajasthan, 1997 (3) CPR 363 (Raj); and D.K. Industries v. Sub-
dmswnal Officer, 1998(3) CPR 135 (Chd).
279. 1993 (1) CPJ 335 (Bar).
386 A TREATISE ON CONSUMER PROTECTION LAWS
arr audit report because the low consumption recorded in the original bill
suggested some tampering with the meter or the supply by the consumers. It
was held to be deficiency in service.
Disconnecting the supply of a consumer on account of arrears due from
another consumer, even if related to the former, is deficiency in service.- 80
So, disconnecting the supply of a consumer on account of unpaid arrears of
his m o t h e r or any other relation amounts to deficiency in service and
v i o l a t i o n of l a w . 2 8 1 Regarding n e w occupants of a p r e m i s e s , if the
conditions of supply provide that an intending consumer can be asked to
pay up the arrears of electricity c o n s u m p t i o n charges of the o u t g o i n g
occupant of a premises, it can be used by the Electricity Board as a pre-
condition for reconnection or grant of a new connection. 2 8 2
If the electricity is disconnected even after payment of the dues in
arrears, there is deficiency in service. 283 Similarly, delay in reconnecting the
s u p p l y , even after p a y m e n t of arrears and r e c o n n e c t i o n charges, is a
deficiency in service. 284 If disconnection is effected prior to the last date of
payment, there is deficiency in service. 285 Unreasonable delay in changing
the name of the consumer in records, inspite of repeated requests and
completion of formalities, is deficiency in service. 286
T h e r e is thus a catena of judicial p r o n o u n c e m e n t s w h i c h can be
f o l l o w e d to the best advantage of the consumers of electricity and for
making the electricity supply system better.
Prior to the 1993 amendment, the Supreme Court had held in the case
oi Lucknow Development Authority v. M.K. Gupta,2SS that the housing activity is
a service and was covered by the main part of the definition. In that
decision, the Supreme Court had observed that the entire purpose of
widening the definition was to include in it not only day to day buying and
selling activities but even such other activities which were not commercial in
nature, as long as they give some benefit to consumers. Therefore, the
activity of the development of land and allotment of flats/plots falls within
the definition of "service" in section 2(l)(o). 289 But, accordingly to the
Gujarat State Commission, the allotment of a shop does not amount to
hiring of service within the meaning of section 2(l)(o). 290
It is now well settled that the housing development schemes announced
by any development authority are "service" and, therefore, the consumer
fora have jurisdiction to adjudicate in the matters connected therewith. In
Jatinderdev Singh Musafir v. Ludhiana Improvement Trust,291 the complainant's
father was allotted by the opposite party a plot at the reserved price payable
in installments. After the death of the father the plot was transferred in the
name of the complainant. After the entire consideration was deposited in
installments, the complainant requested for the possession of the allotted
plot for which consideration had been paid. The opposite party stated that
it was not possible for them to deliver the possession of the allotted plot for
which consideration had been paid. It allotted to the complainant another
plot of 500 sq. yards and called upon him to deposit additional amount,
which he deposited. The complainant claimed that he was entitled to
another plot of 500 sq. yard as he had deposited amount for 1000 sq. yards.
The district forum, while considering the complaint held that the opposite
party had resorted to clear unfair trade practice and also committed
deficiency in service. O n appeal by the opposite party, the Punjab State
Commission held that the complainant waived his right, if any, qua
allotment of 1000 sq. yards of plot by accepting the alternative plot of 500
sq. yards on higher price and that it is not within the jurisdiction of the fora
to go into the pricing pattern of the plot. The case came up for hearing
before the National Commission. The National Commission allowed the
revision petition and set aside the order of the State Commission restoring
the order of the district forum.
Delay in delivering the possession of a flat/house amounts to deficiency
in service. In V.L. Bhanukumar v. Dega Sundara Rama Reddy & Others,297 a
deposited till the date of realization. The National Commission taking a view
of the whole scenario held that the failure on the part of the builder to
construct and deliver possession of flats in terms of agreement was a
deficiency in service. It directed the~opposite p a r t y to pay to the
complainants the amount deposited by them within three months with 18
per cent interest and also allowed compensation for mental agony and
suffering.
In M/S Sousa & Sons Realty Constructions and Developers & Another v.
Sandur Udyog Pvt. Ltd.,297 the opposite party entered into an agreement with
the complainant to place them in possession of flats for a consideration. It
was agreed that if the opposite party failed to give possession within the
agreed period, a sum of Rs. 500 would be paid to the complainant as
damages per day. O n the breach of the terms by the opposite party, the
complainant sent a legal notice to it claiming possession of the flat and
damages. When there was no compliance, a complaint was filed in the Goa
State Commission. The State Commission allowed the complaint and
directed the opposite party to pay to the complainant interest at the rate of
18 per cent per annum on the total contribution, compensation and cost of
the complaint. In an appeal before the National Commission, it held that the
delay in handing over of the possession of the flats by three and a half years
amounted to deficiency in service.
In Smt. Pushpa Pathania v. The Rajasthan Housing Board,™ the
complainant applied for a house to the opposite party which was allotted to
her and she took its possession. Before taking the possession she told the
officers of the opposite party that the house was incomplete and it was not
fit for living. She was falsely assured that the remaining work of the house
would be completed within a month or two. The district forum held that as
there were defects in the house the opposite p a r t y should get the
shortcoming and defects in the house removed within three months or in
default to pay Rs. 40,000/- to the complainant who would herself remove
the defects. The opposite party filed on appeal in the Rajasthan State
Commission which accepted the appeal and dismissed the complaint. In a
revision petition before the National Commission, the Commission held
that even if a consumer has taken the possession of an allotted house,
giving a declaration that the house was complete in all respects, the
complainant cannot be stopped from raising disputes about defects which
could not be visible immediately.
In M/S Sambhavana Builders (P) Ltd. & Others v. Mrs. Sudha Pillai,299 the
opposite party formulated a scheme for construction of certain flats and
informed the complainants that they had undisputed title and possession
over the land and had all the clearance required under the law for
commencing construction of flats. The complainant was also enrolled as a
member on payment of money and she applied for a three bed-room flat in
a proposed building. After sometime the opposite party informed its
members that they were awaiting a letter for the conversion of the land
from the authorities. Thereupon, the complainant asked for the refund of
money paid by her with interest, but only the money deposited was returned
to her, withholding the interest due on that. The district forum directed the
opposite party to pay her interest on the money she had deposited by way of
damages. But the opposite party filed appeal before the Delhi State
Commission which expressed the view that the district forum was right in
granting interest and compensation to the complainant. Then the opposite
party filed a revision petition before the National Commission, but the
National Commission also dismissed his petition and held that the collection
of huge amount of money by the builder from various persons on the basis
of mis-representation was an unfair trade practice and deficiency in service.
All these decisions lay down a clear rule declaring any kind of failure in
delivering possession of a house to a complainant as deficiency in service,
t h u s , m a k i n g him entitled to recovery of the deposited money and
compensation and interest thereon.
To strengthen the position of consumers, the consumer fora have in
certain cases exercised their powers not only to award compensation but
also direct the opposite party to allot the house/flat to a complainant. This
was held by the National Commission in Harbans Singh v. Rajasthan Housing
Board.300 In this case, the complainant got himself registered with the
housing board for allotment of a house. He deposited the seed money and
installments within the stipulated time but he was neither given the
allotment letter nor possession of the house. The complainant alleged that
there was deficiency in service and filed a complaint in the district forum.
The forum held the board guilty of deficiency in service and directed it to
deliver the possession of the house for the complainant. The board filed an
appeal before the State Commission. The order of district forum was
modified by the State Commission observing that the forum could award
only compensation and could not direct the allotment of a house. Aggrieved
by the order of the State Commission, the complainant came in appeal to
the National Commission, which directed the board to allot the house to the
complainant on the price already deposited by him.
In Capt. C.P. Gupta v. Joint Secretary, Department ofLocal Government,301 the
complainant was allotted a plot on the basis of payment of instalments.
After paying the final installment he requested for the registration of the
plot in his name. He was told that the same plot had been allotted to some
one else. Thereafter, another plot was allotted to him but he was directed to
pay difference in price alongwith interest as penalty for not depositing the
enhanced amount in time. The amount was deposited by the complainant
under protest. Even then the plot was not registered in his name. The State
Commission found gross deficiency on the part of the opposite party and
directed them to pay to the complainant the originally deposited amount
plus the amount deposited later with interest. The complainant, besides
getting this relief, insisted on the allotment of the original plot which had
been allotted to someone else. The National Commission, however, directed
transfer of another specified plot in his name and refund of extra amount
charged from the complainant. N o interest was made payable on that
account, observing that the new plot and the refund of the extra money
would be enough to compensate the harassment and hardship caused to the
complainant.
In Smt. Govindra Khurana & Another v. M/S Satya Sai Apartments (P) Ltd.
& Another?®2 the complainant booked one basement-cum-ground floor flat.
Later, it was agreed that in lieu of that the complainant would purchase
from the opposite party the flat on the second floor. A draft agreement in
this respect was finalized and the complainant made payments to the
opposite party by account payee cheques for about five months. After that
he found that the pace of construction slowed down and later there was
total stoppage of the work. Due to this delay the next instalment was not
paid by him. The complainant made repeated requests to the opposite party
for signing a fair deal agreement but no response was received from them.
The opposite party, therefore, showed no commitment and responsibility to
construct the flat and handover its possession to the complainant.
Consequently the complainant brought the matter before the National
Commission. The National Commission held that the builders had
commited deficiency in service in not completing construction of the flats.
They were accordingly directed to deliver the possession of the flat to the
complainant within a month for the date of the order.
In M.K. Gupta v. Lucknow Development Authority?®7' there was delay in
handing over possession of house due to internal managerial problems of
the opposite party, the complainant was held by the National Commission
entitled to immediate possession and c o m p e n s a t i o n on account of
harassment, mental agony and torture suffered by him due to failure of the
opposite party in handing over possession even after full payment.
Non-delivery of flats due to the intervention of a civil court cannot
defend the builder from liability. In M/s Ketan Consultants Pvt. Ltd. v. Sanjay
302. 1996 (2) CPR 143 (NC).
303. 1992 (1) CPJ 66 (NC).
CONSUMER PROTECTION ACT, 1986 393
P. Bansal,i04 the opposite party agreed to build the flat and also to deliver
the possession within 18 months. They could not deliver possession within
the stipulated time due to stay granted by the civil court. Proper course for
them was to return the money to the complainants. Having failed to do so,
Commission directed refund of the deposit to the complaints with interest.
The National Commission held that the complainant was also entitled to
compensation for harassment.
If a development authority fails to deliver possession of a flat due to
mistake of its officials, the buyer of the flat is not liable to pay enhanced
price of the other flat allotted to him to amend such a mistake. This was
held by the Delhi State Commission in Amur Singh v. Delhi Development
Authority. On the other hand, the buyer was held entitled to compensation
for delay in delivery by way of interest of 15 per cent per annum on the
amount deposited by him for original flat until the alternative flat was
allotted.305 However, in Amrit Lai Chum v. Shimla Development Authority,306
the State Commission held that the enhancement in the price cannot be
challenged if it was given in the brochure containing the particulars of the
construction and sufficient indication was given about the possible
e n h a n c e m e n t . In L.D.A. v. B.S. Sethi, 307 the cost mentioned in the
brochure was enhanced after eight years which was found even higher than
the cost d e t e r m i n a t i o n at the time of enhancement. The N a t i o n a l
Commission considered such escalation as an arbitrary exercise of power by
the development authority. It directed refund of the excess over the price
mentioned in the brochure to the complainant with interest. In M.D. Hegde
(Dr.) v. Karnataka Housing Board,m the cost of the flat was escalated after 14
years of the execution of the sale deed. The National Commission directed
the opposite party to execute the sale deed without further demand. In V.K.
Kathuria v. DDA,i09 the price of the flats was increased regarding which a
circular had been issued. The complainant was allotted a flat prior to the
date of the circular. The National Commission held that the circular was not
to have retrospective effect and accordingly directed refund of the excess
price with interest.
In Ludhiana Improvement Trust v. Kulwant Kaur (Smt.),310 the complainant
was entitled to a plot of land measuring 500 square yards. Many others who
had deposited the earnest money at that time were allotted the flats. The
claim of the complainant was ignored. It was held by the N a t i o n a l
Commission that the complainant cannot be directed to pay the higher price
under the new rules because the allotment of the complainant was made
under old rules.
Providing amenities in new localities is now becoming an important
activity for builders and it is essential that the housing boards should
provide all the amenities which have been promised to the consumers. If a
housing board does not provide amenities, like schools, roads, 311 or other
such amenities mentioned in brochures, such as health club, swimming pool,
playground, jogging trail, mini golf club, it would be guilty of deficiency.312
Same is the case with delivery of possession of flats in a dilapidated
condition without basic amenities, like sewerage, water supply and
electricity.313
In Dorothy Pearson, Hotel Aldea Abelo (Mrs.) v. Virebur Frederick Souza
Title?1* the complainant had paid money to the opposite party to get
electricity and water connection and for the furnishing of the flat. O n its
failure to do so, the opposite party was directed by the Commission to give
to the complainant the occupancy certificate within seven days to enable
him to take these connections immediately and further directed the opposite
party to furnish the flat to the extent of the amount paid by the complainant
in that regard.
Additional amount cannot be demanded for water connection if the
agreement provides for such amenities in the flat. The N a t i o n a l
Commission, finding such terms in the agreement, in Alliance Builders Pvt.
Ltd. v. B. Ananda Ranga Rao,ns directed the builder to complete the whole
work that was left incomplete and the builder was also held liable for
compensation and interest, for not being p r o m p t . In Vice-Chairman
Hyderabad Development Authority v. Keerthi Varson,316 the possession of the
house was given to the complainant but the electricity supply was not
provided for more than two years. The State Commission held that it
amounts to deficiency in services.
311. The Chandersekharpur Housing Board Colony v. State of Orissa, 1992 (1) CPR 58 (Ori);
see also Sneh Chadda (Smt.)v. Delhi Development Authority, 1991 (1) CPR 532 (NC).
312. ChandereshKumarv. Skipper India Ltd., 1992 (1) CPJ 349 (Del); see also UP Avas
Evam VikasParishadv. Garima Shukla, 1991 (1) CPJ 1 (NC); Avkash Enterprises v.
Consumer Protection Council, 2003 (1) CPJ 211 (NC); Amritsar Improvement Trust v.
Sanjay Kumar, 2002 (1) CPJ 107 (NC).
313. Delhi Development Authority v. ShantiDevi, 2000 (3) CPR 152 pel).
314. 2002 (3) CPJ 257.
315. 2002 (3) CPJ 345 (NC).
316. 1996 (2) CPJ 190 (AP).
CONSUMER PROTECTION ACT, 1986 395
Medicine
The Consumer Protection Act, 1986 has made speedier remedy available in
cases of medical negligence. This represents a radical change on the remedy
which was available under the law of torts. Since the law of tons dealt with
civil wrongs, it was difficult for patients and their relatives to get speedy
redressal in cases of medical negligence. Cases have been decided on the
subject ranging from lack of sufficient qualification to lack of care on the
part of doctors. Any doctor working without having sufficient quaUfication
to treat a patient amounts to negligence in service. This was emphasized by
the Supreme C o u r t in Poonam Verma v. Ashwin Patel?n in which a
homeopath doctor, without ascertaining the blood sugar, administered
intravenous glucose to a patient suffering from blood sugar because of
which his condition deteriorated and ultimately died. The doctor was not
possessing the required qualification in allopathic medicine. The doctor was,
therefore, held to be negligent in his service and a compensation of Rs. 3
lakhs was awarded in favour of the complainant with costs worth Rs. 30,000.
In Sr. Louis (Dr.) v. Cannolil Pathumma?19 the doctor was not a specialist
in gynaecology but "M.D. (Gyn.)" was mentioned on the broad with the
object of creating an impression that the doctor possessed a post-graduate
degree in gynaecology. The doctor admitted a patient in the hospital for
delivery who developed some complications at the time of delivery, which
eventually led to the death of the child and the patient. The National
Commission allowed a complaint for medical negligence holding that the
service rendered by the hospital was deficient.
An important case on exploitation of the general public by medical
practitioners in Nadiya v. Fathima Hospital?2® In this case, the complainant
aged 15 years, a student of Class VIII having a height of 135 cms., tempted
by an advertisement claiming increase in a person's height, got admitted to
the hospital for surgery for increasing her height. She was assured an
increase of 10 cms. in her height within six months by surgery, for a charge
of Rs. 32,000. The surgery was conducted and ring fixators were fixed on
317. 1996 (1) CPJ278 (NC); See also Kanbiayalal Mathur v. Rajastban Housing Board, 1991
(1) CPR 188 (NC).
318. 1996 (2) CPJ 1(SC).
319. 1993 (1) CPJ 30 (NC); also see A Naram Rao v. G Ramaknshnan Reddy (Dr.), 1993
(l)CPJHO(NC).
320. 2002 (1) CPJ 190.
396 A TREATISE ON CONSUMER PROTECTION LAWS
her legs, which had to be adjusted every six hours. The girl was discharged
from the hospital with instruction to get the X-ray done every 15 days. But
on her discharge from the hospital, to her utter dismay, she found her left
leg short by 1 1 / 2 inches, and, therefore, she could not walk. H e r pain
increased and a number of meetings were held with the doctor. The ring
fixators were also removed and the plaster was applied. Operation and skin
grafting was conducted on her left foot but still that stood shorter and she
was bed-ridden. The Commission after considering the complaint held that
the hospital and the doctor were negligent and deficient in their service and
directed them to pay Rs. 5 lakhs with costs amounting to Rs. 2,000 to the
complainant and also directed the concerned insurance company to
indemnify the opposite party to the extent of amount covered by the policy.
Similarly, in Dr. A. Saibaba Goud. v. Mrs. L. Thomasi21, the complainant
got her right eye operated and, after the operation, she complained of pain
in the eye. The complainant contended that the doctor did not pay heed to
the problem and discharged her 'forcibly', prescribing some pain killers. This
aggravated the problem leading to the loss of vision in the right eye. She
filed a complaint at the district forum claiming compensation of Rs. 1 lakh
for the loss of sight and rupees twenty five thousand as compensation for
the mental agony. However, the doctor refuted the allegation. The district
forum held that it was deficiency in service and directed the doctor to pay
rupees fifty thousand towards compensation for the loss of vision and
mental agony suffered by the complainant. Doctor filed an appeal before the
State commission, claiming his innocence. The State commission dismissed
the appeal with costs Rs. 2000 and upheld the order of the district forum.
In Dr. K.Mahabola Bhat & Anr v. K.Krishna and others322, wife of the
complainant consulted the opposite party for termination of pregnancy. She
was admitted in their nursing home and was operated upon when she lost
her life during the operation. On this a complaint was filed before the State
C o m m i s s i o n for compensation and the C o m m i s s i o n awarded a
compensation of Rs. 2,01,000 to the petitioner. Against the order of the
State Commission, the opposite party filed an appeal in the National
Commission. Considering the facts, the National Commission also held the
opposite party guilty of deficiency in service and upheld the decision of the
State Commission.
In Indian Medical Association v. V.P. Santha32i, the husband of the
complainant died in a private hospital. She filed a complaint before the State
Commission alleging negligence on the part of the hospital leading to the
death of her husband and claiming a compensation for the loss suffered by
her. The hospital raised objection that the woman was not a 'consumer'
under the Act as her husband only had availed of the medical services of the
hospital and the service provided by the medical professionals and health
care organizations was not a commercial service and was exempted under
the last category specified in the definition of service, namely, "service
provided under the personal contact of service". The State Commission
rejected the contention of the opposite party, ruling that the complainant
being a legal heir to the deceased husband was a consumer and fully entitled
to claim any compensation for the death of her husband. The Commission
ruled that the medical service is not exempted under the category of "service
provided under personal contract of service" and the negligence on the part
of the hospital amounted to deficiency in medical service. The Commission
awarded a compensation of Rs. 3.59 lakhs to the widow of the deceased.
In appeal against the State C o m m i s s i o n ' s order, the N a t i o n a l
Commission also rejected the contention of the opposite party that the
medical service was a personal service exempted under the Act. In this
judgment the National Commission upheld the right of the consumer to
seek redressal before the consumer courts for any negligence or deficiency
in the service rendered by the medical professionals or hospitals for a fee.
The Commission also recognized locus standi to the nearest relation of the
patient to seek compensation in the event of his death.
The order of the National Commission was challenged by the opposite
party before the Supreme Court. 324 The court, in its historical judgment,
held that the medical practitioners are not immune from the claim for
damages on the ground of negligence even if they are governed by the
Indian Medical Council Act, 1956. The fact that the medical practitioners
are governed by the Indian Medical Council Act, 1956 and are subject to the
disciplinary control of the Medical Council can be no solace to a person who
has suffered due to negligence and that does not affect the right of any such
sufferer to seek redress under the Consumer Protection Act. The Supreme
Court laid down the following basic propositions in this case:
1. Service rendered to a patient by a medical practitioner (except
where the doctor renders service free of charge to every patient
or under a contract of personal service), by way of consultation,
diagnosis and treatment, both medicinal and surgical, would fall
within the ambit of 'service' as defined in Section 2(l)(o) of the
Act.
2. The fact that medical practitioners belong to the medical
profession and are subject to the disciplinary control of the
Medical Council of India a n d / o r State Medical Councils
constituted under the provisions of the Indian Medical Council
324. See Indian Medical Association v. V.P. Santha, 1995 (6) SCC 651.
398 A TREATISE ON CONSUMER PROTECTION LAWS
Telephone
Telephone service is one of the important segment of public service in
which complaints are fluently received. Most of the complaints deal with
excess billing and disconnection without notice. 3 2 9 For example, in
Department of Telecommunications v. Smt. Radha Tewari,330 the complainant filed
a complaint before the district forum against the excessive billing by the
t e l e p h o n e d e p a r t m e n t . She claimed that her telephone had been
disconnected and not reconnected for two years, resulting in physical,
mental and financial loss to her. The opposite party contended that the
phone was disconnected for non-payment of dues. The district forum held
it to be a case of deficiency in the service and allowed a compensation of Rs.
3,000 for the loss suffered and Rs.1,000 as cost of proceedings. Aggrieved
with the order, the telecommunication department preferred an appeal
before the State Commission contending that the complainant had already
been provided rebate on the bills in question. Moreover, they alleged that
the complainant had the STD facility with dynamic lock facility and since
the rebate had already been provided during the pendency of the complaint,
the appeal had become infructous. The Commission observed that the facts
that the bills were later on reduced and rebate was granted t o the
complainant during the pendency of the case showed clearly that there was
deficiency in service. Since, the opposite party had failed to explain how the
bill amount was exaggerated, the Commission affirmed the order of the
district forum admitting the claim of the complainant for deficiency in
service.
The position of a consumer who has not received the bill but his
telephone has been disconnected has been explained by the National
Commission in Anuvibhagiya Adhikari, Telephones & Anr. v. Firm Vilayat
Hussain.331 In this case, the complainant's telephone had been disconnected
for non payment of a bill. The complainant alleged that he did not receive
the bill, and, therefore, obtained a duplicate bill and deposited the bill
amount. But reconnection of the telephone was not ordered before the
realization of reconnection charges, which were ultimately deposited by the
complainant and the telephone was restored. Considering the matter, the
district forum held that since the bill was not received by the complainant,
disconnection for the non-payment of the bill was a deficiency in service. It
ordered return of the amount of reconnection charges to the complainant
alongwith compensation and cost of the proceedings. The State
Commission upheld the order of the district forum. The matter came in
appeal before the National Commission. The question before the National
Commission was whether telecom department should sent the bill or if bill
is not received is it also the duty of the subscriber to collect the bill. The
National Commission held that the complainant after disconnection kept
waiting for a long period of one year and after obtaining the duplicate bill
deposited the amount of the bill and reconnection charges. The conduct of
the complainant reveals that he was not vigilant for which no blame can be
t h r o w n on the telephone department for award of c o m p e n s a t i o n .
Therefore, while maintaining the order of the district forum of return for
the amount of reconnection charges and cost, the order for payment of
compensation was set aside.
Not attending the telephone of a complainant after it has become non
functional is a deficiency in service. In MTNL v. Mohd. Sbakir,ii2 the
telephone of the complainant was non-functional for fifteen months despite
numerous complaints made to the opposite party. Besides this, he continued
to pay* the raised bills every two months. The district forum held the
opposite party guilty of deficiency in service and directed it to pay a sum of
Rs. 25,000 to the complainant as compensation, in addition to the litigation
costs of Rs. 500. Feeling aggrieved with the order, the opposite party filed
the emoluments of the officials who were found to have been responsible
for this mischief.
The above stated norms developed by the consumer fora for a better
working of the telephone system are appreciable but their impact on the
functioning of the telephone service has not been so far as expected.
Initiative on the part of consumers to proceed against the service providers
can improve the situation.
Education
After the passage of the Consumer Protection Act, 1986, a number of
complaints came before the consumer fora against lapses of educational
institutions in various aspects of their services. There have been complaints,
inter alia, regarding wrong allotment of roll numbers, delay in declaration of
results, admission in excess of the allotted quota. Since educational
institutions are becoming commercialized, there are also complaints coming
up regarding mis-representation about their affiliation to various universities
and professional institutions when in fact, there is no such affiliation.
The National Commission considered the matter of admissions
exceeding the approved quota in Sonal Matapurkar v. S. Niglingappa
Instituted In this case, admissions were made by the dental institute over
and above the sanctioned seats as a result of which the students were not
allowed to appear in the examination by the university. Since the students
had paid huge donations and had also made investment of time and energy,
the National Commission held that there was deficiency in service and the
complainants were entitled to refund of the donation and compensation
with interest and cost of the proceedings.
In Akhil Bhartiya Grahak Panchayat v. Secretary Sbarda Bhawan Education
Society,-J6 the complainants before the State Commission were the students
of D. Pharmacy course run by the opposite party. They were admitted to the
college in July 1987 and passed the final examination in 1989. But the
students could obtain registration, after qualifying in the D. Pharmacy
course, only in 1991. They had to suffer for two years without being able to
do pharmacy work due to the fact that the college had admitted students in
excess of the authorized number of admissions. The students claimed that
there was deficiency in the service on the part of the management of the
college. They claimed compensation of Rs. 2 lakhs for each for the loss
sustained by them due to delay in getting registration as pharmacists
including mental torture, humiliation and traveling expenses. The State
C o m m i s s i o n dismissed the complaint but on appeal the N a t i o n a l
335. 1997(2) CPJ 5 (NC); also see D.A. V. Institute ofPhysiotherapy v. Miss Navleen Kaur,
1998(1) CPC 254 (Punjab).
336. 1994 (2) CPR 283 (NC).
CONSUMER PROTECTION ACT, 1986 405
Commission held that there was unfair trade practice as well as deficiency in
service on the pan of the college authorities. The Commission set aside the
order of the State Commission and allowed the appeal.
In Abel Pacheco Gracias v. Principal Bharti Vidyapith College of Engineering^7
the Maharashtra State Commission has explained that a student is essentially
a consumer of services of an educational institution. Therefore, a college
cannot appropriate the fees when there is no service. If the college insists on
collecting fees payed by a student, without imparting education, it would
amount to deficiency in service.
Considering the question, whether delay in declaration of results of an
examination is deficiency in service, in Biren Kumar Jagdev v. Controller of
Examination, Utkal University,3ii the Orissa State Commission has held that
delay in the publication of results of an examination falls within the ambit of
the matters relevant for determining deficiency in service. In Secretary, Board
of School Education Haryana, Bhiwani v. Mukesh Chand ofPalwal,339 the
respondents result was declared after a period of one year and eight months
of the scheduled time. The Haryana State Commission held that there was
erratic functioning on the part of the opposite party and it had a callous
attitude towards its students, which is deficiency in service on its part.
Failure to inform candidates about the dates of viva voice examination is
deficiency in service. In Rajinder Singh Saluja v. Datapro Information
Technology,™ the complainant had joined the institution of the opposite
party as a student for the training of advanced diploma in computer
software system analysis and design. The complainant alleged that the date
of viva voice was not communicated to him and due to that lapse he lost a
valuable year of his career and suffered financial losses also. T h e
Maharashtra State Commission held that there was negligence on the part of
the opposite party, therefore, the complainant deserved compensation.
Delay in issuing certificates is also deficiency in service. In V. Murugesan
v. Registrar, University of Madras?*1 the complainant applied for a degree
certificate, but it was issued to him only after a decade. The Tamil Nadu
State Commission held that there was deficiency in service on the part of
the university observing that since the university was lethargic and
indifferent in issuing the certificates, the complainant should be awarded Rs.
10,000 as compensation.
337. 1992 (1) CPJ 105 (Mali); also see AkhilBhartiya Grahak Panchayat Pune v. Principal,
JNF's AGPMMedical College, 1994 (1) CPJ 370 (Mat).
338. 1992 (2) CPJ 307 (Ori).
339. 1994 (1) CPR 269 (Har).
340. 1992(3) CPJ 170 (Mali).
341. 1993 (1) CPR 190 (TN).
406 A TREATISE ON CONSUMER PROTECTION LAWS
complaint before the district forum. After analyzing the evidence the district
forum held that the institute was not recognized by All India Council of
Technical Education and that without such recognition the appellant
institute was not entitled to make admission to the course. The forum thus
held this amounting to 'deficiency in service' and the complainant was
awarded an amount of Rs. 25000 by way of damages for the loss suffered
and cost of the proceedings. O n appeal the Himanchal Pradesh State
Commission held that the institute was guilty of deficiency in service but in
the complaint there was no specific allegation that the complainant suffered
a loss because of such deficiency. The appeal was partly accepted and the
order of the district forum awarding compensation was set aside. The
decision of the State Commission is clearly not in tone with the consumer
jurisprudence.
Preponement of examination does also amount to deficiency in service.
In Manas Kumar Panda v. Vice Chancellor, Berhampur University?^ the
petitioner had filled up his examination form with the required fee. The
examination was scheduled to be held on April 15,1992, but it was changed
to April, 14,1992 for which the examinee could not sit in the examination.
The Orissa State Commission held that the action taken was arbitrary and
there was deficiency in service. The examination could have been postponed
to any other day and that would not have created inconvenience to any
student.
The position with respect to refund of fees on discontinuation of a
student has been explained by the National Commission in R.C. Dixit v.
Principal, St. Paul's school.*46 In this case, the complainant's daughter was
admitted in school on payment of various fees and the security deposit.
Since there was n o p r o p e r arrangement in the school for teaching
economics, the complainant withdrew his daughter and put her in another
s c h o o l . T h e c o m p l a i n a n t sought full refund of fees on which the
Commission took the view that since the withdrawal from the school was
voluntary, admission fees and monthly tuition fees were not refundable.
However, the examination fees and security deposit were fully refundable.
The annual maintenance, sports and library fees were held refundable after
proportionate deduction.
In S. Venkatapathy v. The Principal, Adhiyaman College ofEngineering^1 the
college selected the complainants for admission to the degree course and
received a fee of Rs. 7,000 from each of them at the time of their admission.
Subsequently, the complainants were admitted to various colleges in the city
and they applied to the college in which they had been admitted first for
Postal service
Postal services, a traditionally well established mode of communication in
India, are availed by public on payment of specific charges. Accordingly, any
deficiency in postal service can be covered under the Consumer Protection
Act. Matters of deficiency in service regarding various aspects of postal
service are genuinely coming before consumer fora for consideration and
redressal of grievances. Some of the cases explaining the nature of
deficiency in service and approach of the redressal agencies are given here to
make the position clear. Misappropriation of money and mis-delivery of mail
are the most c o m m o n lapses on the part of the postal service. So
misappropriation of demand drafts by the postman is one of the matters
making the postal service guilty of deficiency in service. In Union of India v.
D. Venkaiah,348 a demand draft had been sent through a registered letter
which was stolen by the postman and the amount was misappropriated after
opening account in the name of the addressee. The Andhra Pradesh State
Commission held the postal department guilty of deficiency in service and
both the postman and the bank were held liable to pay the amount of the
draft to the complainant.
Delay in the delivery of a money order can also make the postal service
chargeable for deficiency. In Surinder Singh v. Post Master General,2*9 there
was delay in delivery of telegraphic money order and the delay was caused
by the negligence of the employees of the post office. The opposite party
claimed immunity from liability but the Goa State Commission rejected their
claim and held them liable for deficiency.
Mis-delivery of a money order also testamounts to deficiency in service.
In Sub-post Master, Rewari v. Vinod Kumar Saxena,ii0 a money order sent by
the complainant was misdelivered and to escape liability the concerned sub-
post master contended that under section 48 of the Indian Post Office Act,
1898 exemption was granted from suit or legal proceeding in respect of
wrong payment of money order due to incorrect or incomplete information
given by the sender regarding name and address of the payee. It was also
contended that the said exemption also covered delay in payment of money
order caused by accidental neglect, omission or mistake of any officer of the
post office or for any cause other than fraud or willful neglect or default of
such officer. The matter was considered by the Haryana State Commission,
which turned down this plea observing that the object of the said exemption
was to protect the staff of post office against inadvertent bonafide mistake in
discharging duties and that the said exemption does not give blanket
i m m u n i t y to the officers of postal department who may have acted
negligently.
Similarly, if a registered letter is wrongly delivered, that would amount
to deficiency in service. In Sr. Suptd. of Post Office v. Mrs. Pushpavati v.
Kanekar,i51 another important case decided by the Goa State Commission, a
registered letter was delivered by the postman to the grand daughter-in-law
of the addressee. The complaint was filed in the State Commission alleging
deficiency in service as the service letter was n o t received by the
complainant. The Commission held that the delivery of the registered letter
to person other than the addressee amounts to deficiency in service.
The Tamil Nadu State Commission has extended the remedy under the
Act to cases of tampering a parcel also. In M/s K.K.E. Amalgamations v. The
Post Master General,3*2 the complainant deposited a parcel with the opposite
party for transportation and delivery. The parcel, which was insured,
contained a silk saree. The parcel was tampered with and the addressee
refused to accept it. The Commission held that there was deficiency in
service on the part of the opposite party and the complainant was entitled to
costs of the goods and compensation.
The delivery of an envelop back to the sender after proper posting has
been held in the case of Koku Rajendraprasad v. Union ofIndia,?*3 as deficiency
in service. In this case, the complainant posted a envelop with complete
addresses of the addressee and the sender. The envelop was properly
stamped and the words "application for admission to M.A./M.Sc./MCA"
were printed in bold letters. In spite of that the envelope was misdelivered
back to the sender. The Andhra Pradesh State Commission held that it was
a clear case of gross negligence, callous indifference and sheer dereliction of
358. 1993 (1) CPR 278 (Mah); See also Shivani Shekhar Parlekar v. Bharat Petroleum
Corporation Ltd., 1995 (2) CPJ 412 (Mah.); and Sharda Ben v. Gujarat Gas Supplier.
1992 (1) CPJ 225 (NC).
359. 1993(1) CPJ 218 (NC).
360. 1992 (1) CPJ 62 (NC); see also M/s Kartik Agencies v. K. Raj Kumari, 1993 (3) CPJ
278 (NC).
361. 2002 (1) CPJ 270 (NC).
412 A TREATISE ON CONSUMER PROTECTION LAWS
limits. The complainant proved that his area was within municipal limits. It
was held by the National Commission that there was gross deficiency in the
service and the complainant was entitled to damages and cost for the non-
supply of LPG connection.
With respect to LPG, the consumer fora have settled some more norms.
According to these, if the gas cylinder were supplied with much delay and
that too not at the residence of the complainant, it would amount to
deficiency in service.362 Releasing of a LPG connection to a wrong person
out of turn is also deficiency in service. This has been held in Monilisa Gas
Service v. Rajesb Kumar Puran Chand Shah,%3 where the complainant was an
applicant for LPG connection and he was not provided the gas connection
on his turn as the same had been delivered to a wrong person. Denial of the
connection was held as deficiency in service.
In the area of LPG gas supplies the norms of safety need to be enforced
very strictly as have been done in the above mentioned uses.
Air Travels
Complaints are coming before the consumer fora regarding grievances of air
travelers because of various kinds of deficiencies in service of the Airlines.
In Indian Airlines v. S.N. Sinha,ib4 a complaint was filed by a traveller for
compensation on the ground that a sharp metallic wire came in the mouth
of the complainant alongwith rice and curry served as a part of the dinner by
the Airlines. When the matter came before the National Commission, it
observed that the provision of food is one of the amenities provided to the
passengers in return for payment of the fare for the journey and it forms an
essential part of the services rendered by the Airlines for consideration. Any
defect in the food supplied must, therefore, be regarded as a deficiency in
service rendered by the Airlines. The complainant was, thus, held entitled to
compensation for the inconvenience and mental shock caused to him on the
metallic wire pressing against his gum while consuming the rice and curry.
Mistake of the agent of any Airlines is relevant for determining
deficiency in service. In K. Santbilajan (Dr.) v. Malaysia Airlines?*" an
approved travel agent sold a ticket to the complainant and due to his
mistake, the ticket number was not confirmed. This made the complainant
to overstay at Singapore. The Tamil Nadu State Commission observed that
the complainant must have been put to mental pain and agony at the time of
his departure and subsequently during stay at Singapore. It awarded Rs.
25,000 as compensation apart from cost of the new ticket bought by the
362. National Forum for Consumer Education v. Patel Gas Agency. 1994 (2) CP] 161 (Mah).
363. 1994 (l)CPJ 478 (Guj).
364. 1992(1)CPJ62(NC).
365. 1994 (l)CPR 274 (TN).
CONSUMER PROTECTION ACT, 1986 413
air ticket of the complainant was confirmed but the flight was not provided
because of which he took an alternative flight. The Chandigarh State
Commission awarded him refund of the fare alongwith compensation.
In Mohinder Singh -Sethi v. Indian Airlines,m the complainant was issued a
confirmed ticket on the day when there was no scheduled flight. He filed a
complaint for deficiency in service in the district forum. The district forum
dismissed the complaint. On appeal the State Commission, Chandigarh
observed that this was deficiency in service because of issuance of a ticket
on a day when it was known that no flight was operating on that day. The
Commission, therefore, set aside the order of the district forum and the
opposite party was held liable to pay compensation to the complainant.
In Dr. Mrs. Lalitha Kumar v. British Airways,387 an agent soled the air
tickets of the opposite party on its behalf to the complainant on the
payment of additional charges for confirmation. The ticket were shown with
'OK' status instead of a "wait listed" or "chance ticket" status. It was held
by the National Commission that the negligence or deficiency of service was
in wrongly selling an "OK" ticket to the complainant instead of a "wait
listed" ticket. Since the capacity of the passengers in every flight is limited
and when tickets are issued to prospective passengers, the availability of
seats is verified. In case of non-availability of seats only a "wait listed" ticket
is issued and the passenger has to take his chance if and when there is any
cancellation or confirmation. There is, therefore, no question of payment of
additional charge of confirmation. Such a thing does not arise at all.
In Air India v. Yohgendra Hira Lai Parekh383 the complainant purchased
air ticket for both ways from an agent. On the ticket no return date was
mentioned and no seat was, therefore, provided. The National Commission
held that the Airlines is not responsible for the mistake of its agent.
In the Commercial Manager, Indian Airlines, Calcutta, v. S.N. Mukherjee?M
the respondent purchased two full tickets and a half ticket to travel by air
from Bombay to Calcutta. He lost the tickets but before that he had
preserved their xerox copies and informed the Airlines besides making a
G.D. Entry at the police station about the loss. Even then the Airlines
authorities paid no attention to his request for allowing him to travel by the
scheduled flight and insisted him to. purchase three fresh tickets for traveling
by the same plane. The W,est Bengal State-Commission rejected the
contention of the Airlines and held that the complainant suffered pecuniary
loss as well as harassment because of illegal insistence on the part of the
appellant in making the respondent pay air fares twice for a single flight.
Such illegal realization of the double fare by the Airlines for a singly journey
amounts not only to a serious deficiency in its service but also to a highly
unfair trade practice.
Delay in delivery of baggage by airlines can also be treated as deficiency
in service. In Manickam (Mrs.) @ Sivabagiam (Mrs.) v. Air Lanka Ltd./83 the
complainant had handed over her baggage to the Airline at Colombo to be
carried to Madras. However, the same was delivered after five days because
before loading the baggage at Colombo, the tag fastened to the baggage had
come off leading to the problem of identification. The Tamil Nadu State
Commission held that not properly fastening the baggage tag, which caused
delay, amounted to deficiency in service.
Miscellaneous
Various other cases, covering diverse consumer interests, have been decided
by the consumer fora and need to be highlighted to activate the consumers
for seeking relief on the basis of the principles laid down in these cases. In
a case regarding swimming pool management, Prakash H Sadekar v.
Dombivali Gymkhana,^ the complainant's 13 year old daughter was admitted
for learning swimming on the payment of coaching charges. She drowed in
the 7 feet deep swimming pool of the opposite party and no help came forth
for fifteen-twenty minutes after the incident. The complainant filed a
complaint in the Madras State Commission for compensation. The
Commission observed that it was a mandatory duty of the swimming pool
authorities to have adequately trained guards to meet any disaster. The
Commission found that the coach available at the time of the incident was
grossly negligent and the water of the pool was also found not clean but
t u r b i d . O n these facts the opposite party was held liable to pay
compensation of Rs. 1 lakh for loss of life and Rs. 30,000 for mental shock.
The National Commission has extended the jurisdiction of consumer
courts to municipalities with respect to the activity of supply of water also.
In Asst. Engineer, Department ofPHED v. Banwan Lai,™7 houses of the
complainants were located at the far end of the colony, where due to lack of
necessary pressure, water could not reach in reasonable quality. For this
deficiency in municipal service, compensation of Rs.lOOC was awarded by
the National Commission to each complainant with costs.
Mistake on the part of forest authorities regarding maintenance of
elephants properly to prevent damage to people is deficiency in service. In
Mayi Gowda v. State of Karnataka,388 during the elephant ride for which
charges were paid, the forest guard failed to prevent miscreants from
pricking the elephant due to which the elephant became panicky. As the
cradle was loosely tied, it tilted and the complainant who was seized by the
elephant lost both the eyes due to injuries. This showed negligence of the
forest department in not taking precautionary measures. The complainant
was, therefore, held entitled to compensation for permanent disability.
Cases regarding pension and provident fund have also been brought
under the purview of the Consumer Protection Act. In Regional Provident
Fund Commissioner v. Rahuma Beevi (Smt.),389 the National Commission has
held that the non-payment of pension to a person entitled to it is deficiency
in service. On default the opposite party is liable to pay pensionary benefits
with arrears. In Assistant Provident Fund Commissioner, Thiruvanathapuram v. Alt
Akbar^90 the pension was refused to the complainant on the ground of
dispute about his date of birth. The National Commission accepted the
certificate issued by the registrar of births and deaths as the proof of the
birth and held the opposite party liable to sanction the pension with interest
on arrears.
Similarly, non-payment of GPF deposits is also deficiency in service. In
M.K, Sangal v. The Accountant General391 the complainant was a regular sub
scriber to the GPF. After his retirement the opposite party did not pay him
the deposits although a number of reminders were sent from time to time.
Therefore, the complainant approached the Delhi State Commission with a
prayer that the respondents be directed to issue the authorization slip
regarding his GPF account payable at Delhi alongwith compensation on
account of harassment and mental agony caused to him. The State
Commission held that the non-payment of provident fund amount is
deficiency in service and directed issuance of the authorization slip in
favour of the claimant in respect of the entire amount of GPF to his credit
alongwith interest. Compensation for mental agony was granted by the
Commission and directed the opposite party to pay to the complainant Rs.
10000 as damages.
Loss caused due to improper maintenance of cold storage is also
covered by the provision regarding deficiency in service. In a case of its own
kind, Dharrna Pal & Others v. Chawla Cold Storage of fugadhari,^- the
complainant hired the service of a cold storage for storing potato seeds. He
deposited the bags containing seeds in the cold storage after proper receipt
and paid the rental charges. However, when the complainant brought out
the bags of seeds from the cold storage, he found that the same had already
germinated and were wholly unfit for sowing in the fields. A complaint was
filed in the Haryana State Commission for granting relief which held that the
complainant had admittedly hired the services of the cold storage for
consideration and there was a glaring deficiency in rendering the services as
well as negligence.
Same is the case with deficiency in maintenance of cinema halls. In Mrs.
Sharda Sharma v. Fida Films and Hotel Co. Pvt. Ltd.,393 the complainant
accompanied by her two children and a friend were watching the cinema
show in the theater owned by the opposite party. While they were watching
the cinema, the ceiling fan in the theater fell off and struck the complainant
on her head causing injuries. The complainant alleged that the service
rendered by the opposite party was deficient as a result of which she had
suffered the injuries and loss. Therefore, the complainant claimed Rs.2 lakh
as compensation. The Maharashtra State Commission held that the
management was responsible for not maintaining the electric fans in safe
and proper working order and for this negligence, they were responsible.
The above study of the case law reveals that mostly the complaints have
been decided in favour of the complainants and denial of the relief has taken
place very rarely. This is also obvious that the relief has been denied only in
those cases in which either the grievance was not established or the
complainant was found himself at fault. Generally the grant of the has been
in the form of compensation, removal of defects in goods or replacement of
goods and refund of the amount involved in a transaction with interest on
the ground of non-performance by the opposite party.
Filing of appeals under the Act has been very frequent. The district fora
have generally allowed the complaints and in most of the cases the State
Commissions and the National Commission have upheld the decisions of
the district fora. Surprisingly, in many cases, where the State Commissions
had altered the findings and decisions of the district fora, the National
Commission has restored those decisions. This shows that the district fora
are well connected with the consumer cause.
Time taken for disposal of cases has been usually much more than 90
days, which is the statutory period fixed by the Act. The reason for this is
larger number of complaints coming before the for a, limited time of
hearings, legal technicalities involved in the matters, engagement of
advocates and long time taken to make available the evidence. To provide
speedy consumer justice is, therefore, a goal yet to be achieved.
The measures to attain the objective of speedier remedy to consumers
should include the joint involvement of the voluntary organizations,