Law

Section 26 of Consumer Protection Act, 1986 

ABSTRACT:

The Consumer Protection Act, 1986 was formulated by our legislature with a view  to create an  inexpensive procedure to file complaints and to seek redressal in an effective and efficacious manner. The court fee charged in consumer complaints under the Consumer Protection Act is nominal, and the act has a very liberal construction, as the definition of the term ‘consumer’ is very wide.

However, due to such easy accessibility and consumer friendly proceedings, the brief sojourn of this act is replete with examples of frivolous and vexatious complaints.  These complaints do not merely harass the person accused, but they also unnecessarily  waste the precious time of the forums. Thus, to prevent such complaints, Section 26 was added to the Consumer Protection Act in the year 1993.

SECTION 26 OF THE CONSUMER PROTECTION ACT: A BRIEF OVERVIEW:

According to this section:-

Section 26 Where a complaint instituted before the District Forum, the State Commission or, as the case may be, the National Commission is found to be frivolous or vexatious, it shall, for reasons to be recorded in writing dismiss the complaint and make an order that the complainant shall pay to the opposite party such cost, not exceeding ten thousand rupees, as may be specified in the order

An accusation may be frivolous or vexatious without being wholly false. A ‘vexatious’ charge may be partly true, but the object of the person making the accusation should be primarily to harass the persons accused.[1]

There have been various cases in recent times which have been dismissed by the court under Section 26. For instance, in a recent case decided by the apex National Consumer Disputes Redressal Commission on January 6, 2012[2],  one N.K. Bhatia gave two cheques to Dwarka Dheesh Investments for amounts of Rs.60,000/- and Rs.50,000/- to purchase 1,000 shares of Hotel Leela and 400 shares of NTPC respectively. Subsequently, he entered into another transaction with them and sent shares worth Rs.2,17,210/- for sale. The total proceeds of these two transactions amounting to Rs.3,27,210/- were not given to Bhatia despite his repeated demands. He filed a complaint with Delhi District Consumer Forum, which directed the company to pay the aforesaid amount to the complainant with compensation of Rs.5000. Its appeal to the State Commission was also rejected. The investment company filed a revision petition before the apex National Commission. Rejecting the same by its aforementioned judgment, the commission observed that the revision petition filed by the company was “most bogus and frivolous and has been filed just to waste the time of this commission“. The Commission directed it to deposit in addition Rs.25,000 as costs.

This judgment makes it abundantly clear that the courts have now started taking strict steps against such complainants and are dismissing such frivolous complaints without any second thoughts.

CONCEPT OF “COST”

It has been clearly specified in Section 26 that the court can issue an order, directing the Complainant to pay the Opposite Party an amount, not exceeding ten thousand rupees. However, in many cases, the court has ordered the Complainant to pay an amount exceeding ten thousand rupees. The reason behind this is to compensate for the cost incurred by the defendant. The term “cost” in its literal sense is limited to statutory allowances to reimburse for expenses incurred in instituting or defending proceedings. Costs are, therefore, meant to be given to a successful party to mitigate, to a greater or lesser extent, the necessary expenses incurred in the conduct of the litigations

When the Complainant hampers with the proceedings of the court in order to get a favorable decision, he can be subjected to pay an amount exceeding ten thousand rupees. For instance, in a case for medical negligence, prescriptions and other documents produced in the forum were torn and there were clear indications of selective tearing. Adverse inference was drawn against the Complainant because, if such documents had been produced, they would have gone against the Complainant. Non production of certain records, glaring inconsistency in between stand taken by Complainant and production of selectively torn documents, amounted to abuse of process. The complaint was rightly dismissed and a cost of Rs 25,000/- was awarded in favor of the Opposite Party[3]

TIME PERIOD FOR FILING COMPLAINT

As per Section 24A of the Consumer Protection Act,-

(1) The District Forum, the State Commission or the National Commission shall not admit a complaint unless it is filed within two years from the date on which the cause of action has arisen.

(2) Notwithstanding anything contained in sub-section (1), a complaint may be entertained after the period specified in sub-section (1), if the complainant satisfies the District Forum, the State Commission or the National Commission, as the case may be, that he had sufficient cause for not filing the complaint within such period:

Provided that no such complaint shall be entertained unless the National Commission, the State Commission or the District Forum, as the case may be, records its reasons for condoning such delay.

Thus, if a complaint is filed after 2 years from the date at which the cause of action arises, the court can dismiss the complaint under Section 24. This principle has been applied in a large array of cases. For instance, when a complaint was filed by three brothers against a builder 4 years after the cause of action arose, the complaint was dismissed by the Maharashtra Commission.

NECESSITY FOR REASONS

It has been clearly mentioned in the Act that the Court has to record the reasons in writing while terming any complaint as frivolous or vexatious. When the Complaint is dismissed with cost without assigning any reason, it would not be considered proper, and imposition of costs will also not be justified.[4]

Also, it was explicitly stated by the apex court that “Reasons are the links between the materials on which certain conclusions are based and the actual conclusions”[5]

RECENT DEVELOPMENT

As the number of frivolous complaints being filed in the court have increased tremendously, the courts have started taking stringent steps with respect to certain sectors. An example of a recent development is a judgement of the apex court given by a bench comprising of Justice Markandey Katju and RM Lodha delivered on February 17, 2009 which held that police cannot arrest doctors in cases of medical negligence without prima facie evidence. The bench said that frivolous complaints against doctors have increased by leaps and bounds, thus it is necessary to have certain safety measures. The bench also restrained consumer forums from issuing notices against doctors in cases of medical negligence, without seeking any expert opinion.  This is an important decision of the court, as the number of frivolous cases against doctors are on the rise, and it is important to protect the doctors who have actually not been negligent in performing their duties.

DISCLOSING INFORMATION TO THE FORUM

In many instances, in spite of being provided with the necessary services, complainants file a case in the consumer forums, complainants conceal important information from the courts in order to have a strong case. For instance, in a recent decision by the Bangalore Consumer Forum, a passenger was directed to pay Kingfisher Airlines an amount of Rs 6,000/- for filing a frivolous complaint against them. The Complainant informed the court that his flight was cancelled due to technical failure at the last moment and he suffered monetary loss as well as mental agony due to this. However, he did not inform the court that kingfisher airlines had informed him about the cancellation of flight well in advance, and his money was also refunded. The court observed that the complainant had filed the case in order to harass the opponent and to waste the time of the court.

Thus, it is important that the complainant reveals all the important information while presenting his case in the court.  Otherwise, the court may order compensation to the Opposite Party due to the negligence of the complainant.

CONCLUSION

The foregoing facts make it clear that a large number of frivolous cases are filed regularly by consumers.

 It is pertinent to note that the number of cases pending in the consumer courts is extremely high, and if vexatious complaints are lodged in the courts now and again, it will lead to undue wastage of time and can  also result in harassment and defamation of prominent manufacturers and service providers.

Also, in certain situations, consumers file complaints in consumer forums merely because the court fee is low. However, these complaints do not fall under its purview and should be discouraged.[6]

There have been talks off late to increase the amount of compensation from Rs 10,000/- to Rs 1,00,000/-. This would be a welcome step as it would go a long way in discouraging consumers from filing vexatious frivolous complaints. Now, as never before, there is a dire need to strengthen existing mechanisms and to develop new mechanisms to deal effectively with such complaints.

A lot of steps have been taken in pursuance of this goal, but a lot still remains to be done.

By: Rahul Bajaj

[1] Balkaji v Mukand Singh, AIR 1920 Nag 108.

[2] Dwarka Dheesh Investments v NK Bhatia and Anr 2012 CPR 305.

[3] Sallemuddin v Dr Sunil Malhotra, III(2006) CPJ 396 : 296 (3) CLT 450 (NC).

[4] Pankaj Gupta v Chandigarh Housing Board, 2004 (1) CPR 12 ( U.T Chandigarh).

[5] Gurdial Singh Fijji v State of Punjab (1979) 2 SCC 368 (377) :AIR 1979 SC1622.

[6] Orissa vegetable oil complex limited v State of Orissa 1994 (1) CPR 32.

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