CONCEPT OF JURISDICTION

Knowing the Jurisdiction of courts is sine-qua-non for instituting a case or making a claim. In India, as in many other countries, Courts and Tribunals decide varied issues arising under a number of laws and involving different kinds of claims. For efficient justice delivery, therefore, Courts have been empowered with handling only specified categories of cases. This is known as a court’s jurisdiction. Jurisdiction could be on the basis of a number of parameters, for e.g. under a particular type of law like Criminal Law, Consumer laws, Electricity laws, Tax Laws, etc. It could also be on the basis of a monetary limit up to which a court could decide cases. This monetary limit of the Court is called its Pecuniary Jurisdiction.

PECUNIARY JURISDICTION OF CONSUMER COURTS UNDER THE 1986 ACT

There are special courts called Consumer Courts/Forum under the Consumer Protection Act. There are in effect 3 types of Consumers Courts, viz. The District Forum; The State Commission and the National Commission. However, all kinds of consumer cases cannot be filed or decided by all of these Consumer courts. Their jurisdiction also has monetary or pecuniary limits.

Under the Consumer Protection Act of1986, pecuniary jurisdiction of the Consumer Forum was as follows:

Section 11 (1) “Subject to the other provisions of this Act, the District Forum shall have jurisdiction to entertain complaints where the value of the goods or services and the compensation, if any, claimed does not exceed rupees twenty lakhs.”

Section 17 (1) (a) (i) “Subject to the other provisions of this Act, the State Commission shall have jurisdiction to entertain complaints where the value of the goods or services and compensation, if any, claimed exceeds rupees twenty lakhs but does not exceed rupees one crore.”

Section 21 (1) (a) (i) Subject to the other provisions of this Act, the National Commission shall have jurisdiction to entertain complaints where the value of the goods or services and compensation, if any, claimed exceeds rupees one crore.”

The pecuniary jurisdiction of the Consumer Forum under the old Act was determined with respect to “the value of the goods or services and the compensation, if any, claimed”

In Ambrish Kumar Shukla & Ors. v. Ferrous Infrastructure Pvt. Ltd. (CC/97/2016) National Consumer Dispute Redressal Commission has held that “it’s the value of the goods or services and the compensation, if any, claimed which determines the pecuniary jurisdiction of the Consumer Forum”.  In that case the complainant had claimed a refund of the amount already deposited, i.e. Rs. 76,48,940 with 18% interest as compensation, which, in total, would amount to a sum above Rs One crore. It was therefore held the NCDRC would have the pecuniary jurisdiction under Section 21(a) of the Consumer Protection Act, 1986, to entertain the case.

Thus, under the 1986 Act, the value paid for the goods or service, the compensation claimed, and the interest claimed could be taken into account for determining the pecuniary jurisdiction of a Consumer Forum. The natural corollary to this was that the Courts could allow claims only up to its pecuniary jurisdiction limit.

PECUNIARY JURISDICTION UNDER THE 2019 ACT

On the 9^th of August 2019, the Government of India passed a new law called the Consumer Protection Act, 2019, which came into force from 20^th July 2020. Wide-ranging and sweeping changes and reforms have been contemplated under the new Law. One such change is regarding the pecuniary jurisdiction of the Consumer Courts.

The 2019 Act, has laid down that the jurisdiction of the various Consumer Courts would be as follows:

Section 34 (1) “Subject to the other provisions of this Act, the District Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration does not exceed one crore rupees:”

Section 47 (1) (a) (i) Subject to the other provisions of this Act, the State Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration, exceeds rupees one crore but does not exceed rupees ten crores:”

Section 58 (1) (a) (i) Subject to the other provisions of this Act, the National Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration exceeds rupees ten crores:”

Thus, a major shift has been contemplated. While increasing the monetary limit of all the 3 categories of Consumer Courts, the new law also seems to restrict the determination of the pecuniary jurisdiction only to “the value of goods or services paid as a consideration” and exclude the amounts claimed as compensation and interest. The use of the phrase “value of goods or services paid as a consideration” would also seem to exclude any subsequent appreciation of the value of the goods or services purchased, for e.g. appreciation of the value of an apartment bought from a Real-estate Developer. It could also mean the exclusion of the insured value in an insurance contract. 

Recently, the National Consumer Dispute Redressal Commission in the matter M/s Pyaridevi Chabiraj Steels Pvt. Ltd. v. National Insurance Company Ltd. (CC/833/2020) has clarified the legal position holding that, “for determining the pecuniary jurisdiction of the District Commission, State Commission or National Commission the value of the goods or services paid as consideration alone has to be taken and not the value of the goods or services purchased/ taken.”

In this case, the Complainant had initially taken a standard Fire and Special Perils Policy for a sum of Rs.28,00,20,000/- by paying a premium of Rs.3,20,525/-. The Complainant thereafter took an additional coverage of Rs.13,00,00,000- by paying a premium of Rs.1,23,037/-. The complainant suffered a loss and lodged a claim with the Insurance Company, which was repudiated. The Complainant, therefore, filed a complaint with the National Commission on the basis of the claim amount. The National Commission framed a preliminary issue as to how the Consumer Complaint is maintainable before the National Commission as the value of the premium paid for taking the Insurance Policies was only Rs.4,43,562/-, which was less than the pecuniary limit of Rs.10,00,00,000/-set under the new Act. The National Commission went on to dismiss the complaint holding that the National Commission has no jurisdiction to entertain the present Consumer Complaint. This judgment, therefore, makes it clear that irrespective of the claim amount, the pecuniary jurisdiction of courts under the Consumer Protection Act, 2019 would be solely on the basis of the consideration paid for the goods or services.

This position of law however raises a crucial question regarding the power of the Courts to award the claim amount. In the example of the case cited above, the case would be filed before the District Forum as the total value of the premium paid was Rs. 4.43 Lakhs. The loss of the Complainant however was more than Rs.10 Crore and thus his claim is more than Rs.10 Crores. Under the old Act, the District Forum would have had the power to grant compensation only up to its Pecuniary limit, which would be much below the claim amount. To address this anomaly, recourse to Section 39(1) (d), needs to be had. Section 39 reads as follows:

Section 39. (1) Where the District Commission is satisfied that the goods complained against suffering from any of the defects specified in the complaint or that any of the allegations contained in the complaint about the services or any unfair trade practices, or claims for compensation under product liability are proved, it shall issue an order to the opposite party directing him to do one or more of the following, namely:—

(a) to remove the defect pointed out by the appropriate laboratory from the goods in question;

(b) to replace the goods with new goods of similar description which shall be free from any defect;

(c) to return to the complainant the price, or, as the case may be, the charges paid by the complainant along with such interest on such price or charges as may be decided;

(d) to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party:

Provided that the District Commission shall have the power to grant punitive damages in such circumstances as it deems fit;

In fact, even the National Commission has relied upon Section 39 (1) (d) in its judgment in the case referred to above, to hold that that the District Commission has to power to order the opposite party to pay any amount as compensation for any loss or injury suffered by the consumer due to the negligence of the opposite party.

The New Consumer Protection Act has been enacted with the purpose of keeping the law relevant to the evolving concepts of the goods and services and also to ensure effective and timely settlement of consumer disputes. The new provisions relating to the jurisdiction of Consumer Courts will go a long way in achieving that purpose, because District Forums, which are easily accessible to all consumers, will now have jurisdiction in dealing and settling an enormously larger number of disputes than before. However, the Union Government as also the State Governments will have to ensure that the District Forums and State Commissions have the wherewithal, sufficient infrastructure, and overall ‘bandwidth to handle the increased number of cases.

Author –

Shiv Gupta

Partner, Veritas Legis