Do not expect outsized compensation TINESH BHASIN

Consumer courts award smaller amounts for mental agony and legal fees

The National Consumer Disputes Redressal Commission (NCDRC) recently asked Axis Bank to pay ~5 million to its customer Rajesh Gupta. The money was awarded because the bank failed to return certain documents that Gupta had submitted when taking a loan.

In another recent case, the apex consumer forum asked the Indian postal service to pay ~2.48 million to two brothers — Jambu Kumar Jain and Chhagan Lal Jain. The department had to pay the money towards the maturity value of the small-savings scheme certificates bought for them by their late father, but were lost.

The figures may look generous if you don’t delve into the details of these cases. The bank was asked to pay ~5 million to Gupta because he was unable to sell his house in the absence of documents such as the builder-buyer agreement, full and final payment receipt, and the original allotment letter. The money was given for the loss of value of the property. In the case of the Jain brothers, the court asked India Post to pay the amount based on the maturity value of the investment made by their father.

When you hear of big awards consumers receive on approaching consumer forums, the compensation element is small. The bigger part of the award is either the loss the consumer has suffered or the money that the consumer was liable to receive from the other party. “The consumer forums are usually conservative about the amount that needs to be awarded,” says M S Kamath, general secretary, Consumer Guidance Society of

India.

When an individual approaches a consumer forum, there are four different compensations he can seek. The primary compensation is for the actual loss incurred or the money the other party owes the complainant. If the case has dragged on for years, the individual can ask for the interest on the amount in dispute. Then, there’s an award for mental agony and, finally, an amount is paid towards legal expenses incurred. “Individuals should realise that approaching consumer forums is not akin to suing another party as it happens in the US, where millions are awarded for suffering and agony,” says Abhilash Panickar, a Mumbai-based lawyer.

Consumer court lawyers say

that compensation varies from one judge or president to another. But in most cases, it is nominal. Jehangir Gai, a consumer activist and lawyer, explains: “For mental agony, typically, a person gets anything from ~1,000 to ~50,000. Compensation for legal fees is also a few thousands, irrespective of the amount spent. The interest rate is typically between 6 per cent and 18 per cent.” There have been Supreme Court judgments on the adequate compensation of mental agony or how the interest rate should be decided. But it remains difficult to quantify these subjective aspects. In the case of the interest rate, the apex court has said it should be 2-3 per cent above the bank fixed deposit rate.

When it comes to compensation for the loss incurred, the consumer has to produce relevant documents to convince the judge. If an individual suffers, say, a job loss due to the negligence of a company, he will need to produce his sources of income that are affected due to the job loss for the specific period. In case a faulty pressure cooker damages a consumer’s kitchen, he will either need to produce the bills for the money he had spent on the kitchen or redo the kitchen to the original state and produce bills of the expenses incurred. “For any loss incurred, the consumer will need to produce sufficient documents to show his loss that can convince the judge,” says Gai.