• PAGE ONE
• INDEX
• HOME

SC ruling on Consumer Disputes Redressal Commissions

R. N. Sahai

IN the absence of any provision in the Consumer Protection Act, 1986 (`the Act') itself, authorising the Commission to refer a pending proceeding before it on receipt of a complaint from a consumer, for being settled through a consensual adjudication, th e conclusion is irresistible that the Commission's under the Consumer Protection Act do not have the jurisdiction to refer the dispute for a consensual adjudication and then make the said decision of the so called consensual arbitrator, an order of the C ommission itself.

Even if there exists an arbitration clause in an agreement, and a complaint is made by the consumer in relation to certain deficiency of service then the existence of an arbitration clause will not be a bar to the entertainment of the complaint by the Re dressal Agency, constituted under the Act, since the remedy provided under the Act is in addition to the provisions of any other law for the time being in force.

That was the point decided by the Supreme Court in Skypak Couriers Ltd. vs. Tata Chemicals Ltd. (Civil Appeal No. 2500 of 1994 decided on May 12, 2000). It was judgment by a three-Judge Bench comprising Mr. Justice G.B. Pattanaik, Mr. Justice Doraiswamy Raju and Mr. Justice S.N. Variava.

Tracing the object and purpose of the Act, the judges observed that with industrial revolution and development in the international trade & commerce, there has been a substantial increase of business and trade, which resulted in a variety of consumer goo ds appearing in the market to cater to the needs of the consumers.

The modern method or advertisement in media, influence the mind of the consumers and notwithstanding the manufacturing defect or imperfection in the quality, a consumer is tempted to purchase the goods. There has been possibility of deficiency in the ser vices rendered. For the welfare of consumers and to protect them from the exploitation, Parliament enacted the Consumer Protection Act, and the Act itself makes provision for the establishment of commissions for settlement of the consumer disputes and ma tters connected therewith.

They further pointed out that the commissions, under the Act, are quasi judicial bodies and they are supposed to provide speedy and simple redressal to consumer disputes, and for that purpose, they have been empowered to give relief of a specified nature and in an appropriate way, to award compensation.

They added that Section 22 of the Act provides that the Commission shall have the powers of a court. These powers would include the power to call for documents and take evidence either by itself or on commission.

Next, the judge remarked that for the purpose of this order they will presume, without laying down any law in this behalf, that the Commission may even refer disputes to Arbitration/Conciliation. However, such reference to arbitration could only be under the provisions of the Arbitration Act, 1940, or the Arbitration and Conciliation Act, 1996. There is no provision in law, and they consider it an unhealthy practice for courts/commission/tribunal to abdicate their duties and functions and to delegate ad judication of disputes before them to third parties.

The adjudication can only be by the concerned court/commission/tribunal. For an effective adjudication the commission /court must address itself to the evidence, documents, respective case of the parties, including submission on their behalf and then giv e a finding on that basis. The judges also observed that the counsel has sought to support the practice of consensual adjudication by relying upon certain English authorities wherein it is held that parties could agree to abide by the decision/adjudicati on of a third person, and that the opinion of the third person would then be final and binding on the parties. The judges agreed that there can be no disputes with such a proposition.

However, if a party does not abide by the decision then the only remedy would be to file a suit to enforce the agreement of the parties and the decision. There is no provision in law nor could any authority be shown that adjudication of matters before a court/commission/tribunal can be entrusted to a third party/individual and the decision of the third person then made a decree or order of the court/commission/tribunal.

The judges then stated that an award made by an arbitrator can be and is made a decree of court, but that is under the provisions of the Arbitration Act and not dehors the Act. Here it is seen that the Commission is referring matters to third persons for consensual adjudication dehors the Arbitration Act.

It is then making those awards the rule of the court by passing orders based on the award. The Commission is not applying its own mind or adjudication on the disputes. It is merely putting its impremanitive on decisions given by third parties. By doing t his it is abdicating its own functions and duties. Such a procedure is unwarranted and unjustified. It cannot be allowed to continue. Accordingly, the Commission is directed to forthwith discontinue with such a practice.

Finally, to deal with the bunch of present cased, the Judges explained that they have proceeded on the basis that all parties had consented to their matters being referred to third persons. Awards have been passed.

In their view, it would be inequitable to now set at naught all the awards, and relegate the parties back to the original proceedings. In their view, the reference being by consent, must be treated as awards of Arbitrators. In such a situation, it will b e open for parties to challenge the awards on such grounds as are available under the Arbitration Act, 1940 and or the Arbitration and Conciliation Act, 1996.

(By arrangement with the Corporate Law Adviser, New Delhi.)