May 2023

Recently, Thane additional district consumer disputes redressal commission held that banks can recover the dues from a credit card customer from the customer’s fixed deposit (FD) held by the bank. The district commission dismissed the plea by the card-holder after the bank contested that: The bank had reached a settlement with the card-holder to clear the dues in three instalments. Since the card-holder failed to clear the dues as per the settlement terms, the bank issued a notice to him and then exercised its right to recover the dues from his FD with the bank. Not happy with this judgement, the card-holder preferred to file an appeal before the Maharashtra state consumer disputes redressal commission. His argument was that the dues on his credit card were for the period up to 2006 and could not be recovered from his account in 2014 because the claim by the bank had been time-barred under the Limitations Act. He alleged that the bank recovered the money from his FD without his knowledge or consent. The state commission made an important observation that the card-holder had neither disputed issuance of the credit card, nor the dues against the card. The commission further held that, though the bank was barred by the Limitation Act for initiating legal remedy, it did have the right to recover the dues. So, the state commission dismissed the appeal by the card-holder and upheld the order in favour of the bank. What we gather from this news report is that the card-holder did not dispute his dues, he agreed for amicable settlement with the bank; but, since he did not follow the terms and conditions of the settlement, the bank exercised its right of set-off and the provisions of the Limitations Act, 1963 were not a hurdle in the recovery of bank dues. The Madras High Court had given almost a similar ruling on 18 June 2016. Justice M Venugopal had dismissed a writ petition filed by a retired Tamil Nadu Electricity Board employee, who sought to restrain a nationalised bank from recovering the farm loan dues from his pension amount in the savings bank account. We need to know a little more about the credit card dues and their recovery, about the right of set-off and about certain limitations under some Acts. Here, let me clarify that I am not a lawyer. I will try to explain various provisions from the view of a banker and a common man and in a broader sense. We must first understand the working of a credit card. As the term denotes, credit card facilitates the card-holder to make various payments on credit. A bill is generated at the end of the period during which such purchases are made and contains all the transaction details informing the card-holder to pay the dues by a specific date. It also explains various terms and conditions. One must understand that the card-issuing bank is settling these payments out of its own funds, which is as good as a loan given to the card–holder, and the credit card limit is nothing but a loan limit. The dues should be paid on or before the due date to avoid attracting penalty and hefty interest. If the dues are high, they can be converted into equated monthly instalments (EMI) on certain terms and conditions, if the card-holder is not in a position to pay the dues in one go. In the above-mentioned case, the bank and the card-holder even reached an amicable settlement of paying the dues in three instalments. However, since the dues were not paid as agreed upon, the bank had to initiate its right of set-off. A right of set-off is a right to set off a debt due to someone against a debt due from the same person. In other words, this is combining and netting two accounts. As an example, suppose I owe Rs10,000 to Mr A and, at the same time, Mr A owes Rs9,000 to me. Here, I can exercise the right to set off my dues to Mr A to the extent of Rs9,000 and pay him the balance of Rs1,000. Indian Contract Act, 1872, has discussed the right of set-off in detail under various Sections with examples. Sections 59, 60 and 61 deal with appropriation of payment. Section 59 deals with payments where the debtor specifies application of payment to a specific debt. Section 60 says that if the debtor has not mentioned anything specific, the creditor will apply the payment as per his discretion to any lawful debt of his choice, which has actually fallen due and whether it is or is not barred by any law of in force. As per Section 61 where neither party makes any choice for appropriation, the payments will be applied in discharge of the debts in order of time and, again, whether or not, they are barred by the law in force. For example, assume A has lent to B Rs10,000 on 1.1.2023, Rs5,000 on 17.2.2023, Rs7,000 on 15.3.2023, and so on. First payment of, say, Rs9,000 by B will go to settle the first debt of 1.1.2023. Any next payment will first be adjusted against the balance Rs1,000 of the first debt and the remaining amount will be adjusted against the second debt. If instead of Rs9,000 B pays Rs12,000, then Rs10,000 will fully go to settle debt of 1.1.2023 and balance Rs2,000 will go to adjust debt of 17.2.2023; and so on. While loans are repaid by fixed instalments, cash credits and overdrafts are running accounts. So, to avoid any complications, banks obtain ‘Letter of Continuity’ or ‘Letter of Continuing Security’ so that the earliest debts get appropriated with every subsequent deposit. Apart from the above three Sections, Section 171 of the Indian Contract Act explains general lien, inter alia, of bankers. It says that “in the absence of any contract to the contrary, they can retain as a security for a general balance of account any goods bailed

Upholding orders passed by the fora below, the national consumer dispute redressal commission (NCDRC) asked New India Assurance Co Ltd to pay an insurance claim of Rs5 lakh to the family of the deceased holder of a debit-cum-ATM card from Axis Bank. In an order issued last week, the bench of Subhash Chandra (presiding member) says, “This Commission, in exercise of its revisional jurisdiction, is not required to re-assess and re-appreciate the evidence on record when the findings of the lower fora are concurrent on facts. It can interfere with the concurrent findings of the fora below only on the grounds that the findings are either perverse or that the fora below have acted without jurisdiction. Findings can be concluded to be perverse only when they are based on either evidence that have not been produced or based on conjecture or surmises i.e. evidence which are either not part of the record or when material evidence on record is not considered.” New India Assurance had filed a revision petition against orders passed by the district consumer disputes redressal forum at Panchkula and the Haryana state consumer disputes redressal commission. Manoj Kumar from Panchkula in Haryana had, on 7 October 2011, opened a savings bank account in Axis Bank. As per the scheme of Axis Bank, a debit-cum-ATM card was issued to Manoj Kumar. Axis Bank had a credit card package insurance policy with New India Assurance covering the risk of lost card liability and personal accident insurance, subject to eligibility criteria and exceptions of the policy. On 18 November 2011, Manoj Kumar died in a road accident. As his nominee, his father, Jagdish Chand, approached Axis Bank to pay the accident insurance claim. The Bank informed Jagdish Chand about the procedure to file a claim with the insurer. On 5 July 2012, he issued a legal notice to Axis Bank. However, New India Assurance alleged that Mr Chand and his wife, the nominees of Manoj Kumar, neither followed the procedure for the claim nor fulfilled the eligibility criteria but sent the documents to Axis Bank on 17 July 2012, which were merely forwarded to the insurer on 19 July 2012. Mr Chand and his wife made several futile efforts to have the claim released; however, Axis Bank did not honour the claim which amounted to unfair trade practice and deficiency in service and caused mental agony and harassment to them. They then filed a complaint before the district forum. Axis Bank contended that the formalities of filing all documents with the claim within 10 days of the date of death had not been done, and only documents were filed on 17 July 2012. It was stated that the insurance cover was an additional facility provided by the insurance company and there was no contract between or agreement between Mr Chand and his wife and Axis Bank, and the claim was to be settled by the insurance company. New India Assurance also denied the allegations and submitted in its written statement that Manoj Kumar had an accident insurance cover of Rs2 lakh with it. It denied that any transaction had been made with the debit card and, as the death was within 42 days of the opening of the account, he was not entitled to any personal accident insurance coverage benefit. New India Assurance also contended that though the death occurred on 18 November 2011, Mr Chand and his wife submitted the requisite papers to the insurance company after 243 days on 19 July 2012. Given the delay, New India Assurance says there was no liability on the insurer to pay the claim. The insurer also contended that the accident cover policy was applicable only if a successful payment transaction at any merchant outlet was made within 90 days before the incident, which had not been proven in the case of Manoj Kumar. In its order on 24 September 2013, the district forum allowed the complaint. It directed New India Assurance to pay the insurance amount of Rs5 lakh under the policy along with interest at 9% per annum from the due date till the actual payment. Axis Bank was directed to pay a lump sum compensation of Rs10,000 to Mr Chand and his wife for mental harassment and litigation cost. New India Assurance challenged the order before the state commission. While dismissing the appeal, the state commission pointed out that Mr Chand and his wife approached Axis Bank in December 2011 and submitted all relevant documents, such as the post-mortem report, death certificate, copy of the first information report (FIR) and other documents. They were advised to open a new account to transfer the balance in the account of Manoj Kumar, which was done on 20 December 2011. Axis Bank did not deny these facts. New India Assurance also did not deny providing insurance coverage of Rs5 lakh for accidental death. “Merely because some prescribed forms were not filled up, cannot be a ground to repudiate the claim, particularly when at least the initial formalities were completed by the complainants,” the state commission says in its order on 25 February 2014. New India Assurance then filed a revision petition before NCDRC. After hearing both the parties and carefully considering the material on record, Mr Chandra from NCDRC observed that New India Assurance has not denied that there was a personal accident insurance policy linked to the debit card issued by Axis Bank to the deceased son of Mr Chand and his wife. “However, it is their case that there was no privity of contract between the deceased card holder and New India Assurance. It is also argued that the claim of insurance was filed very late by the Bank and that the eligibility criteria of a valid transaction at a merchant outlet at least 90 days prior to the incident had not been met,” the bench noted. The counsel for Mr Chand and his wife submitted that the lower fora have arrived at concurrent findings which have attained finality

While allowing a home-buyer to retain money already received from a builder only because of the particular circumstances of the case, the Supreme Court reiterated that it disapproves of consumer forums awarding compound interest in these matters while exercising jurisdiction under the Consumer Protection Act. In an order last week, the bench of justice Dinesh Maheshwari and justice Sanjay Kumar says, “…even when we may not find fault with the stance of the respondent (homebuyer) in refusing to accept such an offer of a refund, particularly when she was desirous of the flats rather than money refund, the appellants (builder) cannot be saddled with any liability to pay compound interest over the amount offered by them beyond the date of their offer.” “The consumer fora have failed to consider that when the appellants had indeed offered to pay the money and sent the cheque (of Rs10.68 lakh) on 8 November 2005, it would be bringing about negative imbalance if such an effort on the part of the appellants was to be ignored altogether and compounding of interest was continued beyond 8 November 2005,” the bench says. The apex court observed that when the amount payable by the builder with reference to the principal and propositions is calculated, in its view, it does not exceed Rs2.48 crore together with accrued interest, which the home-buyer has already received. “Keeping in view the peculiar circumstances of this case, as an extraordinary measure, we propose to allow the respondent to retain the amount so received.” The case related to Anita Merchant, who in 1989 was a non-resident Indian (NRI) and booked three flats in a residential project Siddharth Shila Apartments, launched in Vaishali in Uttar Pradesh by Suneja Towers Pvt Ltd, headed by KL Suneja. She was allotted three flats, one costing Rs7.37 lakh and the other two at Rs7.35 lakh. As per the agreement, the total cost was payable by Ms Merchant in 12 instalments. However, she did not make the remaining payments after paying up to the sixth instalment. In October 2005, Ms Merchant issued a notice to Suneja Towers alleging that even after 16 years, the builder had kept the allottees waiting, despite receiving more than 60% of the total cost of the flats. She offered to pay the balance, provided that Suneja Towers clarified when the construction would be completed and she would get possession of her flats. In its response, Suneja Towers stated that it was a provisional allotment and no agreement was executed between the builder and the home-buyer, and since Ms Merchant defaulted in payment, the allotment has been cancelled. Suneja Towers offered to refund Rs10.68 lakh through cheque on 8 November 2005. Ms Merchant, however, returned the cheque and sent a rejoinder to the builder. Ms Merchant then filed a civil suit, which was dismissed for want of jurisdiction. She then filed a complaint before the district consumer forum. However, the district forum rejected her complaint, stating, “Ms Merchant tried to avail the services of Sujena Towers for commercial purpose… thus she does not fall within the category of consumer…” The home-buyer then approached the state commission. While setting aside the order passed by the district forum, the state commission held that the complaints were maintainable by law. It observed that Ms Merchant paid 60% of the total sale consideration. “However, possession of the flats booked by her was not handed over even after the expiry of the agreed period. Having opted for the construction-linked plan, the buyer was to make payment of the balance amount on delivery of possession and the allegation of her being in default was to be rejected because, on inspection of the site, construction was not found as per schedule.” The state commission found the case of Ms Merchant akin to that of Dr Manjeet Kaur Monga and when the units in question had already been sold, found it just and proper to direct the present appellants to refund the deposited amount together with compound interest at 14%pa (per annum) from the date of deposit. Suneja Towers challenged the decision before the national consumer disputes redressal commission (NCDRC). However, the appeal was dismissed. It says, “…in this case, the state commission had duly followed the dictum of the Supreme Court in Dr Monga’s case, and therefore, it cannot be said that the findings of the state commission are perverse or without jurisdiction. We found no illegality or infirmity in the impugned order. The present revision petitions have no merit, and the same are dismissed.” Suneja Towers then filed an appeal before the apex court. After hearing both sides, the bench observed that in her original complaint, Ms Merchant did not make any prayer for an award of compound interest; instead, her prayer had essentially been for directions to the appellants to deliver the flats and to award damages. She sought a simple interest at 18%pa. Citing the case of Dr Monga, the home-buyer for the first time claimed compound interest only before the state commission. The SC observed that the state commission did not elaborate much on the principles governing its powers and those governing awarding compound interest and rather considered the decision in Dr Monga’s case to be decisive of the matter. The apex court delved upon several judgements related to builders or developers and home-buyers and found, in most cases, the compensation for delayed delivery of possession and even in the cases where the builder was not delivering possession or not being taken by the purchaser for a valid reason, the award of compensation was restricted to the refund with a simple interest in the range of 6%pa to 9%pa. The bench stated that while awarding compensation and/or punitive damages, the concerned (consumer) forum can take all the relevant factors into account and award such amount as deemed fit and necessary but “ordinarily, in the matters of money refund, awarding of compound interest as a measure of punitive damages is not envisaged.” “A shortcut of awarding compound interest

The Intelligence Fusion & Strategic Operations (IFSO) unit of Delhi Police has arrested five cyber criminals for cheating 22 Max Insurance policy holders to the tune of Rs 2.38 crore, an official said. The official said that the gang, including two ex-employees of Max Insurance company, was allegedly involved in fraudulent withdrawal of unclaimed money of Max Life Insurance policy holders through bank accounts opened using forged documents. The accused have been identified as Prem Parkash (37), Chandan Jain (41), Sujeet Kumar Mishra (41), Rohit Kumar Aggarwal (28), and Vikas (30). Aggarwal, a former senior executive at Max Life Insurance Co., used his access to policyholders’ data to identify those with unclaimed surrendered and maturity amounts. He then shared these details with Mishra, another employee at the company, who passed them on to Jain. Jain, in turn, passed the information to Prakash, who opened bank accounts in the names of these policyholders. Meanwhile, Max Life Insurance said in a statement: “At Max Life Insurance, we believe in conducting business with the highest standards of ethics and integrity. We have zero tolerance for any unethical and fraudulent practices that compromise our customers’ interest and put Max Life’s reputation at risk. During our internal enquiry, we discovered that the implicated individuals had indulged in unethical practices. “We had taken strict action against employee involved and terminated their employment with immediate effect. The FIR was registered on complaint by Max Life only. We are extending the necessary support to aid ongoing investigations to ensure justice is met. We remain resolute in delivering the best services with necessary fraud control measures that our customers expect from us.” According to the police, the matter came to light after a case was registered under the relevant sections of the Indian Penal Code at the Special Cell police station on the complaint of Max Life Insurance, wherein it was alleged that a sum of Rs 51 lakh related to surrendered/maturity amount of two Max policyholders – Ashutosh Joshi and Abdul Hye Choudhary – had been fraudulently received by unknown persons whose requests for refund were processed through their ex-employees. It was later discovered by the company that Choudhary had expired on March 13, 2018 and no such request was made on his behalf. “During inquiry, further documents and information shared by the company were examined and it was revealed that around Rs 2.38 crore pertaining to 37 policies of 22 Max Life Insurance policyholders got refunded fraudulently,” said Deputy Commissioner of Police (IFSO), Prashant P. Gautam. The police then collected relevant account-related documents from the banks which revealed that several accounts were opened in Equitas Small Finance Bank, Kotak Mahindra Bank, Bandhan Bank, Yes Bank, IDBI Bank and Jana Small Finance Bank in the names of policyholders. “Many of these accounts were opened digitally using the e-Aadhaar authentication process. It was also found that most of the money received in these accounts was transferred to accounts in the name of Rinku Sales, whose proprietor was Prem Prakash, having the address of Kabir Nagar, Rana Pratap Bagh, Delhi,” said the DCP. However, the said address was not traceable. “Prem Prakash was nabbed from near Burari and on the basis of his interrogation, five more persons were also arrested subsequently,” Gautam said. The officer said that Prakash lured his known persons and others, mostly poor people residing in jhuggis near Rana Pratap Bagh, and took them to the Aadhaar Centre to get their names/addresses changed to the names and addresses of the policyholders. “Vikas, who worked at the Aadhaar Centre, got these changes updated without collecting any relevant documents against Rs 1,000-1,500 per case. Many of these accounts were opened digitally using the e-Aadhaar authentication process,” the officer said. Aggarwal used to fill up the NEFT mandate forms using the signature of the policy holders and sent them along with scanned copies of cheque/passbooks through his official email ID to the data entry team of the company to initiate the refund process. “The refund amount was received in the bank accounts opened in the names of policyholders from where most of it was transferred to the bank accounts of Rinku Sales. From the account of Rinku Sales, the amount was withdrawn in cash and shared by the accused persons,” the officer said. The police have also recovered 39 mobile phones, 55 PAN cards, 33 Aadhaar cards, 32 voter ID cards, 46 debit cards, 73 cheque books/passbooks, six point of sale machines, and 10 rubber stamps. Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

Expressing concern over increasing unclaimed deposits with banks, companies, mutual funds and insurers, finance minister (FM) Nirmala Sitharaman advised sector regulators to conduct a special drive to settle unclaimed deposits and claims. The value of unclaimed deposits in India is estimated to be over Rs90,000 crore, out of which the total unclaimed deposits transferred to the Reserve Bank of India (RBI) by public sector banks (PSBs) was Rs35,012 crore as of February 2023. As reported by Moneylife, the total amount of unclaimed deposits was over Rs82,000 crore as of July 2021. Speaking at the 27th meeting of the financial stability and development council (FSDC), Ms Sitharaman says, “Regulators should conduct a special drive to facilitate the settlement of unclaimed deposits and claims in the financial sector across all segments, such as banking deposits, shares and dividends, mutual funds, and insurance.”  Unclaimed funds of the public get transferred to government-owned funds like RBI’s Depositor’s Education and Awareness Fund (DEAF), Investor’s Education and Protection Fund (IEPF) and Senior Citizen’s Welfare Fund (SCWF) on the grounds that the legal heirs or nominees did not claim them. A July 2021 report from Economic Times (ET) has estimated total unclaimed deposits at over Rs82,000 crore. It includes Rs26,497 crore in the provident fund (PF) accounts, Rs18,381 crore in inactive or dormant bank accounts, excluding Rs4,820 crore in matured fixed deposits (FDs), Rs17,880 crore in mutual funds, Rs15,167 crore in life insurance policies, and Rs4,100 crore in dividends. As per these figures, as of July 2021, total unclaimed deposits were over Rs82,000 crore. Considering a bank interest rate of 6%, these funds would have increased to around Rs92,000 crore in two years. Moneylife has repeatedly written about the difficulty in having bank accounts unfrozen and made operative again. The constant accretion to DEAF, despite stringent KYC requirements, is testimony to the callousness of a system that makes it difficult for funds to be transferred to rightful claimants. In the case of death, each bank makes up its own rules to transfer funds (‘Zindagi ke baad bhi’: COVID and the Worries about Transmission and Succession); some even arm-twist heirs to park it in fixed deposits with the same banks. Apart from the red-tape involved in obtaining succession certificates, some banks, in addition to succession certificates, demand two sureties from unrelated persons—which is a completely unreasonable demand. The Insurance Regulatory and Development Authority of India (IRDAI) mandates that all insurers transfer all policyholders’ money lying unclaimed for over 10 years to SCWF of the government set up in 2015. Unclaimed deposits under small savings, public provident fund (PPF), employee provident fund (EPF), all post-office savings accounts, senior citizens’ savings scheme accounts, Indira Vikas Patra and Kisan Vikas Patras are also transferred to the SCWF. Sucheta Dalal, managing editor of Moneylife and founder-trustee of Moneylife Foundation, had filed a public interest litigation (PIL) in the Supreme Court on making public on a centralised platform details of unclaimed money of investors and depositors taken by various regulators and which remains inaccessible to rightful legal heirs. In response to the petition, the RBI submitted that, during FY21-22, the depositors’ DEAF refunded Rs505.51 crore of 187,975 claimants. According to RBI, settling disputed claims by banks may involve adjudication of facts and appreciation of evidence which are normally subject matters of the court and could lead to avoidable litigation involving the banks, which is not in the interest of the banks and their depositors. Last month, RBI governor Shaktikanta Das announced the development of a common web portal to search for unclaimed deposits. At present, the depositors or beneficiaries of unclaimed bank deposits of 10 years or more have to go through the websites of multiple banks to locate such deposits, Mr Das said. “Now, in order to improve and widen the access of depositors and beneficiaries to information on such unclaimed deposits, it has been decided to develop a web portal to enable search across multiple banks for possible unclaimed deposits. This will help depositors and beneficiaries in getting back unclaimed deposits,” he added. (Read: RBI To Develop a Centralised Portal To Search Unclaimed Deposits) IEPF, which holds monies from the unclaimed dividend account that remains unpaid or unclaimed for seven years, offers a search facility on its website, operated under the ministry of corporate affairs (MCA-21). Further, IEPF has relaxed certain requirements, including advanced receipt, succession certificate or probate of a will (relaxed for a claim of Rs5 lakh for physical and demat shares). It also allowed self-attestation by the claimant instead of notarised documents while relaxing the requirement of affidavits and surety. As of 31 January 2023, IEPF processed 74,396 claims and transferred dividends worth Rs35.18 crore to claimants. It also transferred 2.29mn (million) shares to the claimants. Last month, terming the issue of unclaimed deposits as ‘very large’, the apex court allowed senior counsel Prashant Bhushan to file a combined rejoinder in the PIL. During the hearing, Justice PS Narasimha mentioned that “This issue is very large. It is being considered in detail.” The PIL urges developing a centralised online database under the control of RBI that will provide information about the deceased account holder, including such details as the name, address and last date of transaction by the deceased account holder. Further, it should be mandatory for banks to inform RBI about the inoperative or dormant bank accounts, and this exercise should be repeated after an interval of nine to 12 months. Source: Timesofindia.com

Meta-owned WhatsApp on Thursday said it has taken stern action on the growing menace of International scam calls in India, after the government took cognisance of the issue and announced to send a notice to the platform over the issue. The platform, which has over 500 million users in the country, said it has ramped up its artificial intelligence (AI) and machine learning (ML) systems to bring down such incidents significantly. “Our new enforcement will reduce the current calling rate by at least 50 per cent and we expect to be able to control the current incidence effectively. We will continue to work relentlessly towards ensuring a safe experience for our users,” a company spokesperson said in a statement. Earlier in the day, Minister of State for Electronics and IT, Rajeev Chandrasekhar, said that the IT Ministry will send a notice to WhatsApp on the issue of spam calls from unknown international numbers, stressing that social media platforms are responsible for ensuring the safety and trust of users. These spam calls with international numbers, mostly from African and Southeast Asian countries, along with fake messages from unknown users, flooded WhatsApp users in India. The spam calls showed country codes of Indonesia, Vietnam, Malaysia, and Ethiopia, among others. Most of these calls started with +251 (Ethiopia), +62 (Indonesia), +254 (Kenya), +84 (Vietnam) and other countries. WhatsApp said that international scam calls are a new way that bad actors have recently adopted. By giving a missed call, they lead curious users to call or message back only to get scammed. “We continue to provide several safety tools within WhatsApp like Block and Report, consistently build user safety education and awareness, as well as, proactively weed out bad-actors from our platform. However, bad actors find different ways to scam users,” the company spokesperson noted. Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

Accepting the evidence submitted by a complainant to substantiate her compensation claim, the national consumer disputes redressal commission (NCDRC) decided to keep its Rs2 crore compensation intact. NCDRC was hearing afresh the case remitted by the Supreme Court. While upholding a deficiency in service as hair was important in a woman’s life, the Supreme Court in February this year remanded the case to NCDRC to compute the damages afresh. NCDRC, in this case, has awarded Rs2 crore as damages to the complainant. In the February order, a bench of justice Aniruddha Bose and justice Vikram Nath had said, “…we are left with no option but to set aside the order of NCDRC awarding Rs2 crore as compensation for loss of income, mental breakdown and trauma and pain and suffering. We remit the matter to the NCDRC to give an opportunity to the respondent to lead evidence with respect to her claim of Rs3 crore.” “In the absence of any material with regard to her existing job, the emoluments received by her, any past, present or future assignments in modelling which the respondent was likely to get or even the interview letter for which the respondent alleges she had gone to the saloon to make herself presentable, it would be difficult to quantify or assess the compensation under these heads. What could be quantified was compensation under the head of pain, suffering and trauma. However, an amount of Rs2 crore would be extremely excessive and disproportionate. This Court, therefore, is of the view that the NCDRC fell in error by awarding compensation to the tune of Rs2 crore without there being any material to substantiate and support the same or which could have helped the NCDRC to quantify the compensation,” it says. Aashna Roy had filed the complaint with NCDRC alleging wrong hair treatment on two occasions at the saloon of Hotel ITC Maurya in New Delhi. After not receiving a proper response from the manager and senior executives of ITC Maurya, she approached NCDRC, alleging deficiency in service, seeking a written apology from the management as also compensation of Rs3 crore for harassment, humiliation, mental trauma, loss of career, loss of income and loss of future prospects. Hearing the matter afresh as per direction from the apex court, NCDRC noted that Ms Roy had submitted various emails offering a higher post and job to her, certificates and letters certifying that she was modelling for various hair care products during the period from 2015 to 2018. “Having gone through the evidence led by Ms Roy in support of her claim, there cannot be any doubt that she was doing modelling for the hair-care products and as such to maintain the hairstyle and taking care of her hair was crucial for her high profile and bright career of modelling,” the bench of justice RK Agrawal (president) and Dr SM Kantikar (member) of NCDRC noted. In its order last week, the Commission says, “….we are of the view that Ms Roy has sufficiently substantiated her claim for compensation by leading the cogent evidence. However, having carefully considered all the submissions of Ms Roy and evidence led by her, in our view, no case has been made out by her for enhancement of the claim. Taking into consideration the various materials/documents filed by Ms Roy, we are of the considered opinion that the interest of justice will be met if she is awarded Rs2 crore as compensation. We accordingly award Rs2 crore as compensation. However, since a long time has passed from the date of passing of our earlier order dated 21 September 2021, in our view, Ms Roy is entitled to compensation by way of interest.” NCDRC asked Hotel ITC Maurya to pay, within six weeks, Rs2 crore to Ms Roy along with interest at 9%pa (per annum) from the date of filing of the complaint, i.e. ,19 July 2018 until payment.  During the previous hearing, NCDRC recorded a finding that the length of Ms Roy’s hair had been shortened contrary to her instructions. It also recorded a finding that because of faulty hair styling, the looks of Ms Roy may have changed. NCDRC also recorded a finding that there was negligence on the part of the saloon in providing the hair treatment to the respondent and also damage caused in the scalp. NCDRC after that proceeded to deal with the quantification of the compensation. NCDRC further recorded that Ms Roy was a model for hair products and because of her long hair she had been a model for VLCC and Pantene. “On account of the deficiency in service and the damage caused to her hair styling, she lost her expected assignments and suffered a huge loss which completely changed her lifestyle and shattered her dream to be a top model,” NCDRC observed. While awarding a compensation of Rs2 crore, NCDRC noted that “Ms Roy underwent severe mental breakdown and trauma due to the negligence in the services provided to her and as a result of which she also lost her job. She also suffered burning sensation and irritation in her scalp.” Hotel ITC Maurya challenged the NCDRC decision before the apex court. The SC noted, “The NCDRC, based upon the evidence led which included the affidavits, photographs, CCTV footage, WhatsApp chats and other material on record, came to the conclusion that there was a deficiency in service. We are not inclined to interfere with the said finding regarding deficiency in service as the same is based upon an appreciation of evidence and thus would be a pure question of fact.”  However, the apex court says it did not find any reference or discussion on any material evidence to quantify the compensation of Rs2 crore. The bench repeatedly asked Ms Roy to share evidence or records to show her expected loss. However, she could not provide any evidence. The bench of justice Bose and justice Nath offered Ms Roy to engage a counsel, which she denied. She was also offered free legal

Setting aside an order passed by the state commission, the national consumer disputes redressal commission (NCDRC) clarified that assessment of the academic and overall performance, including ‘conduct and character’ of a student, in an educational institution made by the faculty as part of its working in the ordinary course is beyond the scope of the provisions of the Consumer Protection Act. In an order, the bench of Dinesh Singh (presiding member) and justice Karuna Nand Bajpayee (member) says, “…we do not at all agree with the state commission’s observation in its order that ‘the opposite party has not only caused deficiency of service but also followed unfair trade practice against the complainant’. The evaluation or assessment of a student’s performance by the faculty of an academic institution imparting a degree in medicine can by no stretch of imagination have similitude with a trader or service provider selling goods or providing services. ‘Deficiency in service’ or ‘unfair trade practice’ by a trader or service provider in respect of ‘goods’ or ‘services’ as are within the purview of the consumer protection act are not at all relevant or related or applicable to the evaluation or assessment of a student’s academic and overall performance including ‘conduct and character’.” Kanyakumari-based Shreem Mookambika Institute of Medical Sciences (SMIMS) had filed the appeal before NCDRC challenging an order passed by the Kerala state consumer disputes redressal commission. Tripur-based V Balasundar Raj was pursuing his bachelor of medicine, and bachelor of surgery (MBBS) degree from SMIMS. After completing the curriculum, he was undertaking his compulsory rotating resident internship (CRRI). He wanted his resident internship transferred to Christian Medical College (CMC) at Vellore from SMIMS. However, SMIMS refused the transfer because the rules did not allow it. Mr Balasundar approached the Kerala High Court (HC) which decided in his favour. In compliance with the HC’s 31 January 2013 order, the Institute issued a no-objection certificate (NOC) on 6 March 2013 and a transfer certificate (TC) on 4 February 2013 to enable Mr Balasundar to transfer his internship to CMC Vellore. The transfer of internship took place. In the TC, SMIMS evaluated his ‘conduct and character’ as ‘not satisfactory’. Mr Balasundar challenged this evaluation before the Kerala state commission. In an order on 14 August 2019, the state commission directed SMIMS to issue another TC to Mr Balasundar, stating that his ‘conduct and character’ is ‘satisfactory’ and to pay him a compensation of Rs20 lakh along with Rs10,000 as litigation expenses within one month. SMIMS then approached NCDRC. Senior counsel RP Bhat, representing the Institute, submitted that the conduct and character of the student were assessed as not satisfactory as it was the fair opinion of the faculty. He also contended that the assessment of the academic and overall performance, including the ‘conduct and character’ of a student by a medical institution imparting a degree in medicine, is beyond the scope of a consumer protection forum. Even otherwise, institutions rendering education—except coaching institutions—are not covered under the provisions of the Consumer Protection Act, Mr Bhat submitted. Advocate Ritesh Khare, representing Mr Balasundar, contended that the complainant’s ‘conduct and character’ was assessed as ‘not satisfactory’ only because he had approached the HC and obtained an order in his favour. Senior counsel Bhat, in his rebuttal, submitted that there is no evidence at all to show that the Institute was biased just because Mr Balasundar had approached the HC. “Seeking legal remedy was his lawful right, and there can hardly be any reason for bias or any reason to take umbrage on that count. The state commission appears to have passed its order on surmises and conjunctures without a shred of evidence having a basis, in fact, to show that the institute was biased. The ‘not satisfactory’ assessment was the fair, unbiased opinion of the institute’s faculty taken in the normal course of its working,” he stated. After hearing both sides, NCDRC bench says it finds merit in the submission of Mr Bhat that there is no evidence to support the allegation of bias on the part of the Institute in assessing Mr Balasundar’s ‘conduct and character’ as ‘not satisfactory’. Allowing the appeal and setting aside the order passed by the state commission, NCDRC directed the registry to immediately send to all parties and upload a copy of the order on its website. (First Appeal No1900 of 2019  Date: 25 April 2023) Source:moneylife.in