About 43 cases were filed against various builders by consumers at National Commission which includes leading builders like Unitech, BPTP, Parsvnath, Jaiprakash Associates, Supertech, and TDI among others. The value of disputes was clubbed to reach the pecuniary jurisdiction.
The builders had objected to cases being contested collectively by flat buyers. It’s been observed that the term ‘Voluntary Consumer Association’ in Section 12(1) (b) of the Consumer Protection Act had not been interpreted either by National Commission or by the Supreme Court of India. Therefore, the NCDRC set up a special bench headed by Justices V.K. Jain and Dr. B.C. Gupta and Dr. S.M. Kantikar to hear this matter. This bench, dismissed the challenge by the builders on maintainability of the complaints filed by homebuyers under Section 12(1)(b) of the 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. (Para 1)
The bench has laid down the following tests to judge which VCA can file cases under Section 12(1(b) collectively for consumers:
- Registration: The VCA must be registered under the Companies Act or under any other law for the time being in force. The association of persons which is not registered as recognized consumer association will not qualify to institute a consumer complaint under Section 12(1)(b) of the Act.
- Objectives of Association: The National Commission said that if analyzed the words “Voluntary Consumer Association”, it should be formed to protect, safeguard or watch the cause of consumers as its main or one of the objectives. It also held that even a Residents Welfare Associations could also 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 developed was that so long as the association has an objective of safeguarding or redressal of consumer grievances and is registered it will be covered as 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 the consumers, a liberal and wider interpretation should be preferred over a narrow and technical interpretation to serve the intended purpose.
- Association not for financial gains: Another test is that the members must come together voluntary and not due to any pressure or influence or without being involved by financial consideration 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.
- VCA can be setup anytime: On the timing of forming of Voluntary Consumer Association, it relied upon Engineers India Ltd. Vs. Ghaziabad Development Authority & Anr. I (2000) CPJ 8 (NC) and held that whether 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 even if the association was formed after the grievance arose it would qualify as Voluntary Consumer Association. The Court said that 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 to protect and promote the common interest of the consumers. (Para 11)
- Same relief claimed against same person: It also relied upon the NCDRC judgment in Lotus Panache Welfare Associaiton Vs. M/s. Granite Gate Properties Pvt. Ltd., CC No. 120 of 2015, it was contended that a voluntary consumer organization can only seek reliefs which are general in nature and a society which has no privity of contract with them cannot 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 are of the same nature and against the same person, such an association is competent to file a complaint for and on behalf of the persons, also approach the association in this regard. The Commission said that the complaint by a recognized consumer association, such as the complainant in this case, is maintainable in respect of the reliefs sought in this complaint. The judgment of National Commission was unsuccessfully challenged before the Supreme Court vide dismissal order dated 16.10. 2015. (Para 12)
- Protecting the interest of the consumers: It also relied upon the NCDRC judgment in Amrapali Sapphire Flat Buyers Welfare Association Vs. 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 interest it would qualify as a Voluntary Consumer Association. The Supreme Court had dismissed the challenge to this judgment vide its order dated 21.02.2017. (Para 13)
- 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. Vs. 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. Mr. Bejon Kumar Mishra representing the trust, also argued before the bench but the argument in favour of trust being a Voluntary Consumer Association was rejected. (Para 16)
- Company can be individual consumer: It relied on Power Transmission Corporation vs. 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 can file a case like any other individual. (Para 6)
It was held that the Voluntary Consumer Association can file a consumer complaint on behalf of a single consumer as well as on behalf of more than one consumer, having identical grievance(s) and seeking identical relief(s) against the same service provider(s).
CONSUMER CASE NO. 560 OF 2014 WITH IA/912/2015,IA/3689/2016,IA/6376/2016,IA/8689/2014,IA/11607/2016
Judges: Hon'ble Mr. Justice V.K. Jain, Presiding Member, Hon'ble Dr. B.C. Gupta, Member Hon'ble Mr. Dr. S.M. Kantikar, Member
Decided on: 5th May, 2017