Le­gal Boost to Union­i­sa­tion of Con­sumers

Eight es­sen­tial points to know

Consumer Voice - - Contents -

Cor­re­spond­ing with the in­crease in ex­ploita­tion of flat buy­ers by sev­eral un­scrupu­lous builders, a large num­ber of buy­ers have com­menced lit­i­ga­tion against builders. Since it may be dif­fi­cult to fight a builder alone, con­sumers have taken ad­van­tage of the pro­vi­sion un­der Sec­tion 12 (1) (b) of Con­sumer Pro­tec­tion Act, 1986, which al­lows a vol­un­tary con­sumer as­so­ci­a­tion (VCA) to file a case on be­half of one or more con­sumers.

About 43 cases were filed by con­sumers at Na­tional Com­mis­sion, against var­i­ous builders in­clud­ing Unitech, BPTP, Parsv­nath, Jaiprakash As­so­ci­ates, Su­pertech and TDI. The value of the dis­putes was clubbed to reach the pe­cu­niary ju­ris­dic­tion.

The builders had ob­jected to cases be­ing con­tested col­lec­tively by flat buy­ers. Ap­par­ently, the term ‘vol­un­tary con­sumer as­so­ci­a­tion’ in Sec­tion 12 (1) (b) of Con­sumer Pro­tec­tion Act had not been in­ter­preted ei­ther by the Na­tional Com­mis­sion or by the Supreme Court of In­dia. Sub­se­quently, the Na­tional Con­sumer Dis­putes Re­dres­sal Com­mis­sion (NCDRC) set up a spe­cial bench headed by jus­tices VK Jain and Dr BC Gupta and Dr SM Kan­tikar to hear the mat­ter. This bench dis­missed the chal­lenge by the builders on main­tain­abil­ity of the complaints filed by home­buy­ers un­der Sec­tion 12 (1) (b) of Con­sumer Pro­tec­tion Act, 1986, and held that a

vol­un­tary con­sumer as­so­ci­a­tion could file a case on be­half of af­fected con­sumers. The bench heard about 35 lawyers, rep­re­sent­ing dif­fer­ent VCAs who were com­plainants in these 43 dif­fer­ent cases, along with 15 lawyers rep­re­sent­ing dif­fer­ent builders.

The bench has laid down the fol­low­ing tests to judge which VCA can file cases un­der Sec­tion 12 (1) (b) col­lec­tively for con­sumers:

1. Regis­tra­tion: The VCA must be regis­tered un­der the Com­pa­nies Act or un­der any other law for the time be­ing in force. An as­so­ci­a­tion of per­sons which is not regis­tered as a recog­nised con­sumer as­so­ci­a­tion will not qual­ify to in­sti­tute a con­sumer com­plaint un­der Sec­tion 12 (1) (b) of the Act.

2. Ob­jec­tives of as­so­ci­a­tion: To pro­tect, safe­guard or watch the cause of con­sumers should be one of the main ob­jec­tives of a vol­un­tary con­sumer as­so­ci­a­tion. In fact, even a res­i­dents’ wel­fare as­so­ci­a­tion (RWA) can file a case if its main ob­jec­tive is to pro­tect, pre­serve, ad­vance and pro­mote the cause of con­sumers in gen­eral or its mem­bers. The test is that so long as the as­so­ci­a­tion has an ob­jec­tive of safe­guard­ing or re­dres­sal of con­sumer griev­ances and is regis­tered, it will be cov­ered as a vol­un­tary con­sumer as­so­ci­a­tion un­der Sec­tion 12 (1) (b) of the Act. Also, Con­sumer Pro­tec­tion Act be­ing a wel­fare leg­is­la­tion en­acted for the ad­vance­ment of rights and in­ter­ests of con­sumers, a lib­eral and wider in­ter­pre­ta­tion should be pre­ferred over a nar­row and tech­ni­cal in­ter­pre­ta­tion to serve the in­tended pur­pose.

3. As­so­ci­a­tion not for fi­nan­cial gains: Another test is that the mem­bers must come to­gether vol­un­tar­ily and not due to any pres­sure or in­flu­ence, or with­out be­ing in­volved be­cause of fi­nan­cial con­sid­er­a­tions of earn­ing profit or re­mu­ner­a­tion us­ing such an as­so­ci­a­tion. It held that if the ob­jec­tive of the as­so­ci­a­tion is to get fi­nan­cial gain for its mem­bers it would not qual­ify as Vol­un­tary Con­sumer As­so­ci­a­tion.

4. VCA can be set up any­time: On the tim­ing of form­ing of a vol­un­tary con­sumer as­so­ci­a­tion, the bench re­lied upon En­gi­neers In­dia Ltd ver­sus Ghazi­abad De­vel­op­ment Author­ity & Anr I (2000) CPJ 8 (NC) and came to this rul­ing: whether

As­so­ci­a­tion mem­bers must come to­gether vol­un­tar­ily and not due to any pres­sure or in­flu­ence, and not be­cause of fi­nan­cial con­sid­er­a­tions of earn­ing profit or re­mu­ner­a­tion us­ing such an as­so­ci­a­tion.

the as­so­ci­a­tion was formed be­fore or af­ter the cause of ac­tion arose is not ma­te­rial. It fol­lowed the de­ci­sion of a five-mem­ber bench in this case and held that even if the as­so­ci­a­tion was formed af­ter the griev­ance arose, it would qual­ify as a vol­un­tary con­sumer as­so­ci­a­tion. The as­so­ci­a­tion will be cov­ered un­der the def­i­ni­tion of Sec­tion 2 (b) (ii) of the Act even if it is formed af­ter tak­ing pos­ses­sion of the flats, in or­der to pro­tect and pro­mote the com­mon in­ter­ests of con­sumers.

5. Same re­lief claimed against same per­son: The bench re­lied upon the NCDRC judge­ment in Lo­tus Panache Wel­fare As­so­ci­a­tion ver­sus M/s Granite Gate Prop­er­ties Pvt. Ltd, CC No. 120 of 2015. It was con­tended that a vol­un­tary con­sumer or­gan­i­sa­tion could only seek re­liefs that were gen­eral in na­ture, and that a so­ci­ety that had no priv­ity of con­tract with them could not claim re­liefs such as de­liv­ery of pos­ses­sion of the apart­ment and pay­ment of com­pen­sa­tion to the in­di­vid­ual al­lot­tees. The Na­tional Com­mis­sion held that that if the re­liefs claimed were of the same na­ture and against the same per­son, such an as­so­ci­a­tion was com­pe­tent to file a com­plaint for and on be­half of the per­sons. The Com­mis­sion said that the com­plaint by a recog­nised con­sumer as­so­ci­a­tion, such as the com­plainant in this case, was main­tain­able in re­spect of the re­liefs sought in this com­plaint. This judge­ment of Na­tional Com­mis­sion was un­suc­cess­fully chal­lenged be­fore the Supreme Court, vide dis­missal or­der dated 16.10. 2015.

6. Pro­tect­ing the in­ter­ests of con­sumers: The bench fur­ther re­lied upon the NCDRC judeg­ment in Am­ra­pali Sap­phire Flat Buy­ers Wel­fare As­so­ci­a­tion ver­sus Am­ra­pali Sap­phire De­vel­op­ers Pvt. Ltd & Anr, CC No. 816 of 2016, where it was held that if the ob­jec­tive of the as­so­ci­a­tion in­cluded ad­vo­cat­ing the cause of its mem­bers to pro­tect their in­ter­ests, it would qual­ify as a vol­un­tary con­sumer as­so­ci­a­tion. The Supreme Court had dis­missed the chal­lenge to this judge­ment vide its or­der dated 21.02.2017.

7. Trust is not VCA: Another de­ci­sion given was that a char­i­ta­ble trust would not qual­ify as a VCA un­der Sec­tion 12 (1) (b) of the Act. The bench cited Prat­i­bha Pratisthan & Ors ver­sus Man­ager, Ca­nara Bank & Ors, dated 07.03.2017, hold­ing that a trust could not be a com­plainant un­der Sec­tions 2 (b), 2 (c), 2 (d) and 2 (m) of the Act. Two of the 43 cases be­fore this bench were filed by a trust, Con­sumer On­line Foun­da­tion, against Su­pertech. Be­jon Ku­mar Mishra, rep­re­sent­ing the trust, ar­gued be­fore the bench but the ar­gu­ment in favour of a trust be­ing a vol­un­tary con­sumer as­so­ci­a­tion was re­jected. 8. Com­pany can be in­di­vid­ual con­sumer: The bench re­lied on Power Trans­mis­sion Cor­po­ra­tion ver­sus Ashok Iron Works Pvt. Ltd (2009) 3 SCC 240 where it was held that a com­pany could be a con­sumer u/s 2 (1) (a) and could file a case like any other in­di­vid­ual.

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