May 2024

May 11,2024 The Supreme Court held that the onus to prove that the service was obtained for a commercial purpose under the Consumer Protection Act, 1986 lies with the service provider and not the consumer. The Bench reiterated that the Consumer Protection Act is a consumer-friendly and beneficial legislation intended to address the grievances of consumers which could not place a negative burden cannot be placed on the consumer to show that the service available was not for a commercial purpose. Justice Pamidighantam Sri Narasimha and Justice Aravind Kumar observed, “Structurally, there are three parts to the definition of a consumer. We can deconstruct Section 2(7)(i) as a matter of illustration. The first part sets out the jurisdictional prerequisites for a person to qualify as a consumer – there must be purchase of goods, for consideration. The second part is an ‘exclusion clause’ [‘carve out’] which has the effect of excluding the person from the definition of a consumer. The carve out applies if the person has obtained goods for the purpose of ‘resale’ or for a ‘commercial purpose’. The third part is an exception to the exclusion clause – it relates to Explanation (a) to Section 2(7) which limits the scope of ‘commercial purpose’. “Since it is always the service provider who pleads that the service was obtained for a commercial purpose, the onus of proving the same would have to be borne by it. Further, it cannot be forgotten that the Consumer Protection Act is a consumer-friendly and beneficial legislation intended to address grievances of consumer”, the court added. Sr. Advocate Shailesh Madiyal represented the appellant, while Sr. Advocate Gopal Sankaranarayanan appeared for the respondent. The Shriram Chits (India) Private Limited Chit Fund) raised a plea arguing that the complainant company was excluded from availing any remedy as it did not come under the definition of a ‘consumer’ under the Act since the service obtained by the complainant was for a commercial purpose. Source: Livelaw

May 11,2024 In a recent decision concerning insurance law, the Supreme Court observed that the issuance of a receipt of the first premium payment by the insurer would provide a presumption of the acceptance of the policy by the insurer. Reversing the findings of the National Consumer Dispute Redressal Commission (“NCDRC”), the bench comprising Justices AS Bopanna and CT Ravikumar, while interpreting the terms and conditions of the insurance contract, noted that the risk of the insured is deemed to be covered from the date of the issuance of the first premium amount receipt by the insurer. In the instance case, the respondent/Life Insurance Corporation (“LIC”) denied the claim of the appellant’s husband/insured on the ground that the policy wouldn’t be deemed to come into force from the date of the issuance of the receipt towards the payment of the first premium amount. However, the appellant contended that the policy would be deemed to be commenced from the date of the receipt of the first premium amount payment made to the LIC. The uncontroversial fact was that the first premium towards the insurance policy was accepted and a duly signed receipt was issued by the LIC on 09.07.1996. The cheque issued by the appellant against the payment of the premium amount was encashed on 12.07.1996. The appellant’s husband died on 14.07.1996 and the policy was prepared on 15.07.1996. Taking reference to the case of D. Srinivas v. SBI Life Insurance Co. Ltd. & Ors, the court framed a question as to whether issuance of receipt towards the first premium payment to the LIC would provide a presumption of the acceptance of the policy by the LIC. Rather than strictly interpreting the terms and conditions of the contract, the Supreme Court in the D. Srinivas case laid down a flexible formula for the court to see whether there was a clear indication of acceptance of the insurance. After noting that the LIC has not disputed the issuance of the First Premium Receipt carrying the assurance, the court while relying upon the dictum of D. Srinivas inclined to hold that there exists a presumption of acceptance of the policy by the LIC since the issuance of First Premium Receipt. Source: Livelaw

May 09,2024 New Delhi: The Delhi High Court has asked NBCC to refund over 76 lakh along with interest to a homebuyer after it failed to deliver possession of his flat, bought it 2012, and also awarded compensation of Rs 5 lakh for causing “extreme mental agony”. Justice Subramonium Prasad, while allowing the homebuyer’s petition against NBCC, observed that purchasing a house is one of the most significant investments an individual or a family makes in their lifetime, and it often involves years of savings, meticulous planning and emotional investment, and therefore compensating wronged homebuyers is not just a matter of rectifying past injustices but also about deterring future misconduct. The petitioner, a retired government employee, said he purchased the flat in ‘NBCC Green View Apartments’, a project launched in 2012 for Gurugram, but in spite of paying the entire sale price of over Rs 76 lakh in 2017, the unit was never handed over to him. In the order passed on May 8, the court observed that the petitioner has been deprived of his money for the last 10 years and “structurally defective houses” have been constructed, leaving him in a complete lurch, and NBCC should be “dealt with severely” for reluctance to pay interest on the amount and ensuring the petitioner’s rehabilitation. Taking judicial notice of geometric progression of price of land in the national capital region, the court said the “pittance” offered by NBCC to only return the principal amount was not an offer in the eyes of law and a rent allowance of Rs.12.50/- per sq. ft. for six months was not an adequate compensation. “This court is, therefore, inclined to allow the instant writ petition directing the respondent/NBCC to return the entire amount of money paid by the Petitioners within a period of six weeks from today along with interest @ 12% from 30.01.2021 till today. In view of the fact that the petitioner has been forced to shift accommodation and fend for himself in the last seven years and has been put to extreme mental agony, this court is inclined to direct the NBCC to pay a sum of Rs. 5 lakh to the petitioner,” the court ordered. “This is a classic case of extreme hardships suffered by a home buyer who has been made to run from pillar to post after having spent his entire life savings… Respondent has been exceedingly unfair in treating the home buyers in this manner,” the court observed. NBCC accused the petitioner of “forum shopping”, stating he has already approached the fora under the RERA Act and the Consumer Protection Act, and therefore the petition should not be entertained by the high court. The court said in the present case, the act of approaching various fora stemmed from “desperation” rather than any strategy. The behaviour, it added, arises out of a sense of frustration, helplessness and lack of legal knowledge. “In the present case, the petitioner entered into the agreement way back in the year 2012. In five years, the petitioner has pumped in over Rs 76 lakh. A ‘No Dues Certificate’ has been given to the petitioner. Structural defects have been found out in the construction after certain persons started occupying the flats. Petitioners and several other persons have been left in lurch and have been forced to knock the doors of various forums,” the court said. “Such a person faces financial crunch to ensure proper education to his children and such a situation he has no other option but to knock on the doors of various forums hoping to get relief and in such a situation the contention of the State that the person is guilty of forum shopping cannot be accepted at all,” it added. The court further said that when builders fail to deliver what was promised, they shatter the trust and financial security of homebuyers and put them in a situation where they may face immense stress, anxiety, uncertainty and ultimately be forced to navigate legal channels for seeking recourse. “The emotional toll of living in limbo, uncertain about the future of their investment and the stability of their living arrangements cannot be understated. Compensating wronged homebuyers is not just a matter of rectifying past injustices but also about deterring future misconduct,” the court observed. Source: Economic TImes

April 19,2024 The Central Consumer Protection Authority has asked the Food Safety and Standards Authority to investigate claims that baby cereal products sold by Swiss food-processing conglomerate Nestlé in India contain added sugar, PTI reported on Friday. The development comes after an investigation by the Public Eye and the International Baby Food Action Network found that Nestlé was selling products with added sugar to low-income countries. Experts maintain that sugar should not be added to foods fed to babies and young children because it is unnecessary and addictive. However, infant cereals and formulas sold in the European market, including Switzerland, Germany, France and the United Kingdom, did not have any added sugar, the investigation found. Public Eye is a Swiss non-governmental organisation campaigning for fair globalisation and the International Baby Food Action Network is a network of public interest groups working to reduce morbidity and mortality among infants and young children globally. In response to the report, Consumer Affairs Secretary and Central Consumer Protection Authority chief Nidhi Khare told PTI that she had written to the Food Safety and Standards Authority “to take cognisance of the report on Nestlé’s baby product”. The National Commission for Protection of Child Rights has also issued a notice to the Food Safety and Standards Authority about the report. According to the Public Eye and the International Baby Food Action Network report, all 15 Cerelac baby cereal products sold by Nestlé in India contain on average nearly three grams of added sugar per serving. In South Africa too, all Cerelac baby cereals contain four grams or more of added sugar per serving and in Brazil, six out of eight such products sold by Nestlé contain an average of three grams of sugar per serving, they found. On the other hand, infant cereals and formulas sold in the European market did not contain added sugar. In a statement shared with a Nestlé India spokesperson said that the company’s “products manufactured in India are in full and strict compliance with CODEX standards [a commission established by the World Heath Organization and the Food and Agriculture Organization] and local specifications [as required] pertaining to the requirements all nutrients including added sugars”. The company added: “Over the past 5 years, we have already reduced added sugars by up to 30%, depending on the variant. We regularly review our portfolio and continue to innovate and reformulate our products to further reduce the level of added sugars, without compromising on nutrition, quality, safety, and taste.” The report by the two organisations also showed that Cerelac wheat-based cereals, meant for consumption by six-month-old babies, contained over two grams of added sugar per serving in India, six grams in Brazil and over five grams in Ethiopia. The same product being sold in Germany and the United Kingdom did not contain any added sugar. Source: Scroll.in

May 06,2024 In a recent ruling, the Supreme Court has held the District Cooperative Bank in Varanasi accountable for service lapses, affirming its vicarious liability for the actions of its employees . The apex court directed the bank to compensate a man with Rs 25,000 nearly three decades after he was wrongly denied access to his fixed deposit. A bench comprising Justices P S Narasimha and Aravind Kumar upheld the decision of the district consumer forum from 1997, which had initially granted compensation to the aggrieved individual. The National Consumer Disputes Redressal Commission’s (NCDRC) contrary ruling was overturned by the apex court. The case revolves around the non-release of fixed deposit receipts totaling Rs 1,60,000 by the District Cooperative Bank in Varanasi. The petitioner alleged that the bank had unlawfully prevented him from withdrawing his funds. The district consumer forum, upon review, ordered the bank to refund the amount along with 15% interest, and an additional Rs 25,000 in damages. The Supreme Court, in its judgment, emphasized, “It is seen from the record that the district forum was satisfied that the appellant had, in fact, handed over Rs 1,60,000 to the bank’s officials. This is evidenced from the bank’s ledger.” The court noted the establishment of an inquiry committee that recommended criminal proceedings against certain officials, which the bank had duly pursued. Additionally, it acknowledged the periodic renewal of fixed deposit receipts, thereby affirming the bank’s vicarious liability for its employees’ actions. Source: Economic TImes

May 09,2024 The Consumer Disputes Redressal Commission in Chandigarh has fined the homestay marketplace Airbnb and one of its hosts ₹10,000 after a six-month-old child was accidentally injured while the property was being cleaned. The Commission President Pawanjit Singh and members Surjeet Kaur and Suresh Kumar Sardana noted an email exchange between the complainants and Airbnb, where Airbnb and the caretaker admitted to the incident and apologised. The emails from the accused clearly admit the incident on March 6, 2022, when the complainant’s six-month-old daughter, wrapped in a blanket, fell while the room was being cleaned by the caretaker, and the accused also apologised, the May 2 order stated. The commission directed both Airbnb and the property caretaker to pay ₹5,000 to the complainant as compensation, along with an additional ₹5,000 for litigation costs. The development comes after the bench heard a complaint from the child’s mother. Source: CNBCTV

May 09,2024 Difficulty in collating information cannot be the grounds for denying details sought under the Right to Information Act, the Delhi High Court has observed. In a judgment on May 2, Justice Subramonium Prasad said that a public authority cannot justify denying any information to an applicant under the Act by claiming that the details were not available in a single place and that would take time to collate it. “Efforts have to be made by the department to collate the information and then give it to the respondent,” the court held. Prasad observed that the objective of the Right to Information Act was to ensure transparency in the functioning of government departments and that this mandate cannot be obstructed by state governments. The judgment came on a petition filed by the Delhi government against an order of the Central Information Commission. The commission had asked the state government to provide information under the Act to applicant Prabhjot Singh Dhillon regarding actions taken by the education department against government teachers for conducting private tuitions. The Delhi government told the High Court that it could not provide such information for unaided schools as it they did not fall within its jurisdiction, reported Bar and Bench. It also said that private unaided schools do not fall under the purview of the Right to Information Act. The state said that the vigilance arm of the Department of Education had not issued any directions to maintain data on cases of misconduct by government teachers. The High Court rejected the state’s petition. Prasad remarked that information regarding actions taken against teachers of aided schools would be available with the department, though not in one place, and could be provided to Dhillon. “[The Delhi School Education Rules, 1973] stipulates that if a School intends to take a major penalty against a teacher then the approval of the Director of Education is necessary and without such an approval any action of major penalty cannot be imposed on the teacher,” the court held. “Therefore, information related to teachers of private unaided schools can be collated from the records of major punishment imposed by such schools.” Source: Scroll.in