Costly Claims

Compensation in consumer cases must be based on actual loss or injury

Does the Consumer Protection Act (CPA) allow for hefty claims? That is a question which has come up more than once before the consumer courts. Recently, the question came up before the Supreme Court of India.

Section 14(1)(d) of the CPA lays down that compensation will be awarded only if the negligence of the opposite party is established. Secondly, the compensation has to be linked to the loss or injury suffered by the consumer. The section, thus, rules out gigantic sums that are sometimes claimed by consumers.

As early as 1991, the National Commission observed in Jai Dev Prasad Singh Vs Auto Tractors Ltd., that the loss involved must be quantified carefully. That case arose because a defective tractor was sold to the complainant. The National Commission observed: