Judicial Review of the Consumer Commissions

Held. The Act was valid. It was enacted to provide a cheap, speedy and efficacious remedy; the remedy it gives is in addition to and not in derogation of other remedies; the procedure is summary but not unfair, since complicated questions may be left to a civil court; and a statute is not to be struck down as ultra vires or unworkable merely because its procedure differs from that of the ordinary courts.

Why it matters here. It is the answer to any question asking whether the Commissions may decide disputes at all.

Can a consumer be kept out? Two lines of cases

An arbitration clause does not oust the Commission.

Facts. Emaar MGF Land Ltd v. Aftab Singh, (2019) 12 SCC 751, decided on 10 December 2018. Flat buyers complained of delay, and the builder applied to refer the disputes to arbitration under the arbitration clauses in the buyers' agreements.

Held. A complaint before a consumer forum is not liable to be referred to arbitration merely because the agreement contains an arbitration clause. The consumer remedy is an additional special remedy created by statute for a class of persons, and the arbitration remedy is barred by implication for such disputes. Where a person entitled to that special remedy does not opt for it and is party to an arbitration agreement, there is no bar to arbitration.

Nor does a special statute for the sector.

Facts. Imperia Structures Ltd v. Anil Patni, (2020) 10 SCC 783, decided on 2 November 2020. Allottees complained of delay after the Real Estate (Regulation and Development) Act 2016 came into force, and the builder argued that section 79 of that Act barred the consumer fora.

Held. Section 79 does not in any way bar a Commission or Forum under the consumer law from entertaining a complaint. The proviso to section 71(1) of the Real Estate Act entitles a complainant who had begun proceedings under the consumer law to withdraw them with permission and apply to the adjudicating officer; it gives an option and does not compel withdrawal, and that Act creates no mechanism for transferring pending consumer proceedings.

And an unfair clause in the contract does not bind the consumer.

Facts. Ireo Grace Realtech Pvt. Ltd v. Abhishek Khanna, (2021) 3 SCC 241, decided on 11 January 2021. Apartment buyers complained of long delay; the developer relied on the terms of the buyer's agreement, which gave it wide rights of extension and termination while confining the buyer to a small compensation.

Held. The terms were wholly one-sided and unfair; incorporating such clauses is an unfair trade practice; and the developer cannot compel the buyers to be bound by them. The Court noted that the Act of 2019 expressly recognises the power to declare unfair contractual terms null and void, and that this is a statutory recognition of a power implicit under the Act of 1986. The buyers who did not wish to wait were entitled to refund with interest.

And the section that ties them together. Section 100 of the Act of 2019 provides that its provisions are in addition to and not in derogation of any other law for the time being in force, and Neena Aneja v. Jai Prakash Associates Ltd, decided on 16 March 2021, shows the same approach to the transition from the old Act: proceedings begun under the Act of 1986 continue where they were filed.

A worked example

A builder loses before the State Commission in appeal and wants to challenge the order.

An appeal under section 51? No: that lies only against the State Commission's original orders.

Revision to the National Commission under section 58(1)(b)? Yes, if the State Commission exercised a jurisdiction not vested in it, failed to exercise one, or acted illegally or with material irregularity.

A writ petition under article 226 or 227? Available, but a High Court will ask why the statutory route was not used.

An arbitration clause in the buyer's agreement? No answer at all, on Emaar MGF Land Ltd v. Aftab Singh.

The Real Estate Act? No bar either, on Imperia Structures Ltd v. Anil Patni.

The one-sided clauses in the agreement? Not binding, on Ireo Grace Realtech Pvt. Ltd v. Abhishek Khanna.

What it does NOT mean

A writ petition is not an appeal. It corrects jurisdictional error and gross illegality, not every mistake.

A statutory appeal does not oust article 226. It makes the court reluctant, not powerless.

Arbitration is not always excluded. A consumer who chooses not to use the special remedy may be referred to arbitration.

The Commissions are not outside the Constitution. They are tribunals subject to articles 226, 227 and 136.

Quick revision

1. Inside the Act: appeal under sections 41, 51, 24 and 67; revision under sections 47(1)(b) and 58(1)(b); review under sections 40, 50 and 60; administrative control under section 70.
2. Outside: article 227 superintendence, article 226 writ jurisdiction, article 136 special leave.
3. State of Karnataka v. Vishwabharathi House Building Co-operative Society, (2003) 2 SCC 412: the Act is valid; the remedy is additional; the summary procedure is not unfair.
4. Emaar MGF Land Ltd v. Aftab Singh, (2019) 12 SCC 751: an arbitration clause does not send a consumer complaint to arbitration.
5. Imperia Structures Ltd v. Anil Patni, (2020) 10 SCC 783: section 79 of the Real Estate Act does not bar the consumer fora.
6. Ireo Grace Realtech Pvt. Ltd v. Abhishek Khanna, (2021) 3 SCC 241: one-sided clauses are an unfair trade practice and do not bind the buyer.
7. Section 100: the Act is in addition to and not in derogation of any other law.

Test yourself

1. How are the orders of the Consumer Commissions controlled? Within the Act, by appeal, revision, review and administrative control: an appeal from the District Commission to the State Commission under section 41, from the State Commission's original orders to the National Commission under section 51, from the Central Authority to the National Commission under section 24, and from the National Commission's original orders to the Supreme Court under section 67; a revisional power in sections 47(1)(b) and 58(1)(b) where the lower Commission has exercised a jurisdiction not vested in it, failed to exercise one so vested, or acted illegally or with material irregularity; a power of review for an error apparent on the face of the record under sections 40, 50 and 60; and administrative control by the National Commission and the State Commissions under section 70. Outside the Act, a Commission is a tribunal subject to the superintendence of the High Court under article 227 and to its writ jurisdiction under article 226, and to special leave under article 136, though a court is slow to entertain a petition where the Act provides an appeal.

2. Can a consumer be compelled to go to arbitration, or to another statutory authority? No, on the authority of two decisions. In Emaar MGF Land Ltd v. Aftab Singh, (2019) 12 SCC 751, the Supreme Court held that a complaint before a consumer forum is not liable to be referred to arbitration merely because the agreement contains an arbitration clause, since the consumer remedy is an additional special remedy created by statute for a class of persons and the arbitration remedy is barred by implication for such disputes; it added that a person who does not opt for the special remedy may still be sent to arbitration. In Imperia Structures Ltd v. Anil Patni, (2020) 10 SCC 783, the Court held that section 79 of the Real Estate (Regulation and Development) Act 2016 does not bar a consumer forum, that the proviso to section 71(1) of that Act gives an allottee an option to withdraw and go to the adjudicating officer rather than an obligation, and that the Act creates no mechanism for transferring pending consumer proceedings. Section 100 of the Consumer Protection Act 2019 supplies the principle: the Act is in addition to and not in derogation of any other law.

3. Is the consumer forum's summary procedure constitutionally valid? Yes. In State of Karnataka v. Vishwabharathi House Building Co-operative Society, (2003) 2 SCC 412, the constitutional validity of the Act of 1986 was challenged on the grounds that its fora exercised judicial power without judicial members of adequate standing, that their summary procedure denied a fair hearing and that they encroached on the jurisdiction of the civil courts. The Supreme Court upheld the Act, holding that it was enacted to give a cheap, speedy and efficacious remedy, that the remedy is in addition to and not in derogation of other remedies, that the summary procedure is not unfair because complicated questions may be left to a civil court, and that a statute is not to be struck down as ultra vires or unworkable merely because its procedure differs from that of the ordinary courts. The same approach explains V. Kishan Rao v. Nikhil Super Speciality Hospital, (2010) 5 SCC 513, which holds that simple cases may be decided on the Act's own procedure while complicated ones may go to the civil court.