Supreme Court upholds validity of Consumer Protection Act, 2019 provisions on pecuniary jurisdiction

The Supreme Court on Tuesday upheld the Constitutional validity of key provisions of the Consumer Protection Act, 2019 which prescribe the pecuniary jurisdiction of District, State and National Consumer forums [Rutu Mihir Panchal & Ors. vs. Union of India & Ors.]..A Bench of Justices PS Narasimha and Manoj Misra upheld Sections 34, 47 and 58 as per which the jurisdiction of the Consumer Commissions is to be determined based on the actual amount paid for the product or service and not on the basis of the compensation claimed by the affected party.“The classification of claims based on the value of goods and services paid as consideration has a direct nexus to the object of creating a hierarchical structure of judicial remedies through tribunals,” the Court said.Hence, it dismissed the petitions which had challenged provisions laying down the pecuniary jurisdiction of the District, State and National Consumer Commissions..The Court was dealing with a writ petition filed under Article 32 of the Constitution, and a civil appeal arising out of an order of the National Consumer Disputes Redressal Commission (NCDRC). In the writ petition, the petitioner challenged the change introduced under the 2019 Act, as per which the pecuniary jurisdiction is determined based on the value of consideration paid and not on the compensation sought as was the position under the repealed Consumer Protection Act, 1986..According to the petitioner, her husband had purchased a Ford Endeavour Titanium car for ₹31.19 lakh, which tragically caught fire and led to his death. A consumer complaint claiming ₹51.49 crore in compensation was filed before the District Commission at Vadodara. The petitioner argued that had the 1986 Act still applied, she could have directly approached the NCDRC, given the amount claimed as compensation.In the connected civil appeal, another petitioner whose husband died due to COVID-19 approached the NCDRC seeking ₹14.94 crore in compensation under an insurance policy. However, her claim was rejected since the consideration for the policy did not exceed ₹10 crore.The petitioners argued that the change in determining jurisdiction created an anomaly, discriminating between consumers who might have identical compensation claims but had paid different considerations for their goods or services. They contended that the new system was arbitrary and violated Article 14 of the Constitution..Rejecting the argument, the Supreme Court held that the classification based on the value of consideration was neither discriminatory nor arbitrary.“Vesting jurisdiction in the district, state or national commission on the basis of value of goods or services paid as consideration is neither illegal nor discriminatory... “Consideration” is an integral part of forming any contract. As we are not dealing with gratuitous agreements, value of consideration can be a valid basis for classifying claims for determining pecuniary jurisdiction,” the Court observed..It further reasoned that the legislative shift was intended to address the disproportionate burden of cases on the NCDRC and prevent inflated compensation claims that often ousted the jurisdiction of District and State Commissions.“There is also a misconception that there is some kind of a loss of judicial remedy. No such event has occurred because of Sections 34, 47 and 58 of the 2019 Act. The relief or compensation that a consumer could claim remains unrestricted and at the same time, access to the state or national commission is not taken away. It is well settled that there is no right or a privilege of a consumer to raise an unlimited claim of compensation and thereby chose a forum of his choice for instituting a complaint,” the Court said..The Court reiterated that while consumers are free to claim any amount of compensation, they cannot overvalue their claims to select a preferred forum. The Court placed reliance on the decision in Nandita Bose v. Ratanlal Nahata to hold that courts and tribunals retain jurisdiction to reassess overvalued claims to prevent abuse of process..The judgment also addressed concerns that the new system would restrict large-value insurance claims to District Commissions, since insurance premiums rarely exceed ₹1 crore. The Court noted that this was a matter of statutory working and policy evaluation rather than constitutional flaw.To address such concerns, the Court directed the Central Consumer Protection Council and the Central Consumer Protection Authority—both established under the 2019 Act, to carry out surveys, performance audits, and advise the government about any necessary changes to ensure effective and efficient working of the statute..Further, it said that the duty of the executive to review and audit the performance of statutes is a part of rule of law. “Reviewing and assessing the implementation of a statute is an integral part of Rule of Law. The purpose of such review is to ensure that a law is working out in practice as it was intended. If not, to understand the reason and address it quickly.”.In conclusion, the Court dismissed both the petitions and upheld the validity of Sections 34, 47 and 58 of the Consumer Protection Act, 2019..The petitioners were represented by Senior Advocate Abhimanyu Bhandari along with advocates Haresh Raichura, Shreeyash Lalit, Saroj Raichura, Kalp Raichura, Rajat Vats, Somesh Tiwari, Utsav Saxena, Shubhankar Singh, Aashna Mehra and Manisha Ambwani. The respondents were represented by Additional Solicitor General Vikramjit Banerjee along with advocates Nachiketa Joshi, Anmol Chandan, Priyanka Das, TS Sabarish, A Deb Kuamar, Shreekant Neelappa Terdal, Amrish Kumar and Viresh B Saharya. .[Read Judgment]