As courts get strict on contract reading, customers must be wary

As consumers, we often have grievances against manufacturers and service providers that go unresolved due to our lack of knowledge of the procedures for seeking remedy. Consumer courts offer a simple and cost-effective avenue for addressing these issues. This World Consumer Day, let us understand a few crucial aspects consumers must consider before approaching a consumer court, and a few common mistakes they should avoid.

Are you a consumer?

The first question to ask is whether you meet the definition of a consumer. “You would be defined as a consumer only if you had bought the goods or service for personal usage. If you had bought them for commercial purposes, you are not a consumer,” says M S Kamath, Honorary Secretary, Consumer Guidance Society of India.

A consumer can challenge a deficiency but can’t challenge the validity of a scheme or rule itself. Suppose that you are a member of the Employees Provident Fund Organisation (EPFO) and you suffer because of the wrong implementation of the scheme. You can challenge that. “But as a consumer you can’t challenge the validity of the scheme itself,” says Sumit Kumar, a New Delhi-based consumer lawyer.  

Choose the right forum

The forum you file your complaint in depends on the value of the consideration involved. “If the consideration involved is below Rs 1 crore, go to the District Consumer Disputes Redressal Commission. If it is more than Rs 1 crore but less than Rs 10 crore, file your case in the State Consumer Disputes Redressal Commission. And if it is above Rs 10 crore, file it in the National Consumer Disputes Redressal Commission in New Delhi,” says Arun Saxena, president, International Consumer Rights Protection Council (ICRPC).

Many consumers spend several years after filing their case in the wrong forum, only to be told that they should go to another forum.

Time limit and court fee

A case can only be filed within two years from the date of cause of action. Saxena informs that no court fee is levied if the consideration involved is up to Rs 5 lakh.

Is the court in NCLT?

With the Insolvency and Bankruptcy Code (IBC) coming in, insolvency cases have started going into the National Company Law Tribunal (NCLT). “Suppose that you have filed a consumer case against a builder, but his case goes into moratorium. The consumer courts will not act until the moratorium is lifted,” says Kumar.

Do you have a case?

Make sure you have a case from the legal standpoint. Suppose you had bought a television set that came with a one-year warranty. It breaks down two years after purchase. You can’t react emotionally and say that such an expensive set should last for at least five-six years. “The fact that the warranty has run out puts the consumer on the backfoot in this case,” says Kamath.

Towards stricter interpretation

Earlier, consumer courts went for a lenient interpretation, but increasingly the trend is to go for a strict interpretation of the contract. In case of motor insurance, if you are involved in an accident but don’t have a valid registration certificate or permit, the courts may deny you a payout on the ground that a major clause of the contract was violated.

Agents often fill up life insurance forms and customers sign them blindly. The former often don’t disclose a pre-existing disease. Earlier, if a death occurred, consumer courts would grant at least a percentage of the sum insured as relief.

“Now the courts take the view that if you have signed a form, you have given your consent to what has been filled in it. In view of the stricter interpretation of the law, customers should read a contract carefully before signing it,” says Kumar.

Act in an informed manner

Consumer courts have their shortcomings (see box). Therefore, consumers need to be careful at the purchase stage itself. Read consumer reviews. “If consumers behave in an informed manner and avoid defective products, that will hit the revenues of companies, forcing them to remedy the problem and stop taking consumers for granted,” says Kamath.

Lacunae you should be aware of

• It can take two-three years to get a judgment in each forum
• The award can at times not be commensurate with the time and money (say, on lawyers’ fee) expended
• Class action is lacking in India (though the 2019 Consumer Protection Act or CPA did insert the words “group of consumers”)
• Alternative dispute resolution mechanisms like arbitration and mediation are not permissible under the CPA after the judgments of 2016 and 2018