MISUSE
OF pENALTY measures UNDER THE Consumer Protection Act
The Consumer Protection Act 1986
was enacted with a view to bestow the consumers with a window for the
rederessal of their grievances. The objective was achieved as well and the
consumer awareness could be reckoned now as never before. To cater to the needs
over the space of time, subsequently, the Act have undergone periodical changes
by way of successive amendments, until the Act itself was re-written with a
comprehensive change and the new Act so enacted was named as Consumer
Protection Act 2019. The existing provisions were overhauled and several additions
and modifications are made and to include all such provisions, the new Act was
necessitated. However, there is a fillip side to it as well and some time it is
noticed that punitive measures as prescribed under the Act was unleashed for
raising vendetta and still there are occasions, where the Consumer Commission
has driven itself too far. The underlying object of punitive measures are not
to inflict punishment, rather to avoid it and the same are only stipulated to
be used as a compliance seeking machinery. In practice, some time it is
different. The concern in the present write up is limited to Section 72 and Section 73 of the Consumer
Protection Act 2019 which correspond to Section 27 and 27 –A of Consumer
Protection Act 1986, as para materia the
provisions are one and same. The Section 72 and 73 of 2019 Act as it
correspond to Section 27 and 27 A of Consumer Protection Act 1986 has a trap of
criminal proceedings, in as much as under the aforesaid provisions, the
District Consumer Commission shall be construed as deemed Magistracy and the
Consumer Commissions can secure the attendance of the accused for
non-compliance of their order in case execution petition seeking punitive
measures u/s 27 of 1986 Act or Section 72 of 2019 Act as the case may be, are
applied for by the complainant. The pertinent issue, however, shall be as to
who will be the necessary party in execution petition, more particularly under
the above referred provisions and whether that should completely correspond
with the Memo of Party in complaint and orders passed in the complaint. That
part, upon notice issued as per the principles of Section 61 of Cr.P.C and
pursuant thereto, whether any different parameter are set, in the event of compliance of the order passed by the
Commission is complied with or if it is not complied with. Whether continuance
of Section 27 or Section 72 proceedings (depending on whether the action was
initiated under 1986 Act or 2019 Act) could nevertheless continue irrespective
of compliance. The thrust of the present writing shall be in a narrow compass
limited to the aspects as referred to above, since, it is noticed that some
time the District Commission opted to continue with the proceedings under the
above referred provisions, despite compliance.
To begin with, it will be worthwhile to note the features
of Section 27 and 27-A of 1986 Act and Section 72 and 73 of 2019 Act to find
out, if there are any departure in the latter Act.
|
Consumer
Protection Act 1986 |
Consumer
Protection Act 2019 |
|
Section
27 Penalties Punishment
prescribed for one month and can go for three years. Or fine not less than Rs
2000 but may extend to Rs 10,000/- or both. Notwithstanding
anything contained in Cr.P.C The District Forum , State Commission and
National Commission shall have the power of judicial magistrate of the First
Class for trial of offences under the Act and the Consumer Forum and
Commission shall be deemed to be a judicial magistrate of the First Class for
the purpose of Cr.P.C. Trial
shall be summary in nature. Section
27-A Provision
of appeal before state commission against order passed by District Forum u/s
27, both on facts and law. Similarly, order passed by State Commission shall
be appealable before National Commission and finally before Supreme Court. No
other appeal is provided, except in the manner as aforesaid. Appeal is to be
preferred within Thirty (30) days. Though, the delay beyond period of Thirty
(30) days could be condoned for “sufficient reasons” shown. |
Section
72 Penalties
for non compliance of order. This
may be noted that here, penalty prescribed is for non-compliance of order and
that is made specific. The
minimum fine is Rs 25,000/- and may be extended to Rs 1 Lakh or with both.
The provisions are otherwise similar to 1986 Act. The
deemed Judicial Magistrate or summary procedure clause are the same in both
the Act i.e 1986 Act and 2019 Act Section
73 Provision
of Appeal corresponding to section 27-A of 1986 Act and the provisions are
same as Section 27-A. . |
LAW
& PROCEDURE
Ambit
of Section 27 of Consumer Protection act 1986 and Section 72 of Consumer
Protection act 2019
The Section 27 of 1986 act corresponding to
Section 72 of the 2019 Act may need further deliberation. The Hon'ble Supreme
Court in a matter captioned as State of
Karnataka Vs. Vishwabharathi House Building Coop. Society & Ors. (2003) SCC
412 has noted:
"58. Furthermore, Section 27 of
the Act also confers an additional power upon the Forum and the Commission to
execute its order. The said provision is akin to Order 39 Rule 2-A of the Code
of Civil Procedure or the provisions of the Contempt of Courts, Act or Section
51 read with Order 21 Rule 37 of the Code of Civil Procedure. Section
25
should be read in
conjunction with Section 27. A Parliamentary statute indisputably can
create a tribunal and might say that non-compliance of its order would be
punishable by way of imprisonment or fine, which can be in addition to any
other mode of recovery.
In Ramesh G. Kohali
vs Shivanand Shanbag, NATIONAL CONSUMER DISPUTES REDRESSAL
COMMISSION NEW DELHI IN APPEAL EXECUTION
NO. 105 OF 2019 decided on 9 January,
2020 has held that:
“29.As noted earlier, Section 27 of
the CP Act was amended with effect from 15.3.2003. While deleting the
proviso which permitted imposition of a less than the minimum term of
imprisonment and less than the minimum amount of fine, the legislature also added
sub-section(2), thereby conferring the powers of Judicial Magistrate of the
First Class upon the District Forum, the State Commission or the National
Commission, as the case may be, for trial of the offences under the CP Act and
also provided that the District Forum, State Commission or the National
Commission shall be deemed to be a Judicial Magistrate of the First Class for
the purpose of Code of Criminal Procedure. Sub-Section (3) was also added
to provide that the offences under the CP Act may be tried summarily.
Considering the aforesaid amendment, and bound by the decision of the Hon'ble
Supreme Court in Kamlesh Aggarwal (supra), taking therein the view that the
District Forum was required to follow the procedure prescribed in Section 262
read with Chapter XX and Section 251 of the Code of Criminal Procedure, we have
no hesitation in holding that after amendment with effect from 15.3.2003, the
proceedings initiated under Section 27 of the CP Act are regulated by the
procedure prescribed in the above-referred provisions of the Cr.PC.
Though, in Kamlesh Aggarwal (supra), the Hon'ble Supreme Court exercised its
plenary powers under Article 142 of the Constitution, what needs to be noted is
that the said power was exercised because the District Forum had not followed
the procedure prescribed in Section 262 read with Chapter XX and Section 251 of
the Cr. P.C”.
The Delhi High Court has held in Ravi Kant vs National Consumer Disputes Commission 66 (1997) DLT 13 has held:
21. In fact, Section 27 of
the Act has created a statutory offence the non-compliance of on order of a
duty constituted Tribunal under the Consumer Protection Act 1986 -
and has made the said non - compliance an offence punishable with simple
imprisonment or fine. A statute can create a Tribunal and might say that non -
compliance with the orders of the Tribunal is an offence and is punishable by
the way of imprisonment or fine (as in Section 27) and this penal provision can
be in addition to any other mode of recovery (as in Section 25). Section
25 permits recovery as a civil court and may also permit arrest
under Section 51 and Order 25 Rule 37 as a mode of recovery. But
under Section 25 no statutory offence is created; while under Section
27 a separate offence is created if Section 25 order is not
implemented. We are, therefore unable to hold that Section 27 is either
bad or that the order of punishment of simple imprisonment passed against the
petitioner is violative of Article 21 . Point
3 is held against the petitioners.
Thus, it may appear that without recourse to
section 25 corresponding to Section 71 of 2019 Act, invocation of Section 27 or
section 72 as the case may be, is contrary to the spirit of the Consumer
Protection act 1986 or Consumer Protection act 2019.
Execution
in individual name whether permitted?
This brings us to another leg of the discussion
i.e relating to summoning the Managing Director or CEO of a company or
corporation in Execution petition and seeking their personal presence
(1) Hon'ble Supreme Court in case H.K. Singla v. Avtar Singh Saini & Ors.
I (2019) CPJ 3 (SC) held in Para-9 (relevant portion) as under:
"9. In this appeal, it is to be noticed
that there is no order passed against the appellant herein by the District
Forum in its individual capacity. The appellant was shown as Secretary of the
Society during the relevant period. For the default committed by the Society
and in absence of any personal liability imposed on the appellant, the
appellant is to be imprisoned under Section 27 of the Act is doubtful. In view
of the pendency of the appeal filed before the State Commission, we do not wish
to record any definite finding on the same. Prima facie, we are of the view
that for the default committed by the society, no order for imprisonment can be
ordered against the appellant herein..............."
(2)
III (2012)
CPJ 164-Abhay Kumar Singh & Ors Vs Tushar Dhananjay Mandlekar ( Maharashtra
State Commission)
The Maharashtra State Commission has held as
under:
“4. In fact, Abhay Kumar Singh was not a party to
the said proceeding. In respect of corporate bodies or co-operative societies whenever
complainant is filed u/s 27 of Consumer Protection Act 1986 the opponents are
required to follow the procedure as laid down under section 305 of Cr.P.C and the
same view was taken by State Commission in case of Revision Petition No.
60/2010 captioned as M/s Kesari Tours
Private Ltd Vs Mr Harish Chandra Babulal Daspute decided on 6.5.2001.The
application u/s 27 should have been filed only as against the SBI Card and
Payment Services Pvt Ltd and two others as were shown parties in the complaint
and the said private ltd company would have followed section 305 of Cr.P.C and
nominated its representative to represent in said proceedings. Therefore it is
not necessary in each and every case that Chief Executive Officer of the said company
or corporate body shall appear before consumer for a. It is further to be noted
that in respect of corporate body, under
these circumstances the punishment of imprisonment cannot be imposed as against
the representative nominated under Section 305, Cr.P.C. Only punishment of penalty
can be imposed and that too not against the person, who represented the said
body, but it will be said punishment against a corporate body and forum has
overlooked this provision and committed an error in directing Abhay Kumar Singh
to remain present before District Consumer Disputes Redressal Forum.”
(3). The
State Commission, Chandigarh, in a matter captioned as Shri Paramjit Singh vs The Whemley'S Cooperative House in Execution Application No.397 of 2018 and
upon subsequent to enactment of Consumer Protection Act 2019 on 18 December, 2020 in an application u/s 72 of
2019 Act bearing Misc.
Applications No.2016 & 2022 of 2020 has held on similar line.
Effect
of Compliance of order in complaint and continuance of Section 27 or Section 72
proceedings?
The National Commission in a matter reported
as III (2015) CPJ 125 (NC) captioned as Syed Nizam Ali Vs Anita Pradeep & Anr has
held as under:
10. The learned counsel for the petitioner states
that in compliance of the interim order passed by this Commission, they have
already deposited a sum of Rs 5 Lakhs with District Forum on 09.09.2014. The
interest therefore will be payable only till 09.09.2014. The balance amount if
any payable in terms of the order shall be in terms of this order shall be
calculated and deposited before the district forum within four weeks from
today. The District Forum shall verify the deposit dated 09.09.2014. Thereafter
the District Forum shall pay the amount deposited earlier and the additional
amount if any to be deposited by the complainant in terms of this order and
terminate the proceedings initiated under section 27 of the Consumer Protection
Act…”
ANALYSIS
What is borne out from the aforesaid judgment is
that provisions of Section 27 of 1986 Act corresponding to Section 72 of
Consumer Protection Act 2019 are meant for securing compliance of the order
passed in a complaint. The Execution Petition under Section 25 of 1986 Act corresponding
to Section 71 of 2019 Act are contemplated in the event of non compliance of
order and only thereafter, Section 27 (1986 Act) or Section 72 (2019 Act) as
the case may be, could be invoked. As may be evident from the above judgment
that upon compliance of the order, underlying object of the Consumer Protection
Act 1986 or 2019 Act is to terminate the proceedings rather than act as a
criminal courts and continue with the proceedings and continue with trial. The
object of the Consumer Protection Act is not that and upon compliance of the order
as per complaint the penalty proceedings are required to be terminated. The Consumer
Forum is bestowed with power of Magistrate and are treated as deemed Magistrate
only with a view to secure that object and the provision is not meant for
inflicting tyranny on the opposite parties. The Consumer Forums or Commission
therefore shall not be akin to the court of Magistrate in wholesome manner.
Besides that, the Managing Director or CEO of the
company in a routine manner are not required to be summoned and the trap of
section 305 of Cr.P.C is required to be invoked, when corporation or registered
society is an accused. Section 305 (1) of Cr.P.C clearly stipulates that corporation
shall means an incorporated company or other body corporate and include a
society registered under the Societies Registration Act, 1860. Further Section
305(2) contemplates appointing representative for the purpose of inquiry or
trial and as per section 305 (5) Cr.P.C such appointment in writing by Managing
Director is a sufficient compliance and such representative could be examined.
REMARK
The aforesaid discussion leads to an inescapable
conclusion that the compliance of the order passed by the Consumer Commission
is the object of the Consumer Protection Act 1986 or Consumer Protection act 2019.
No doubt, the Consumer Commission is clothed with power of Magistrate and are
construed as deemed Magistrate but, the same is only with a limited purpose to
secure compliance of order in a penalty proceedings and not to involve or
indulge in seeking personal presence of Managing Director or CEO of a company
or corporation and that too after compliance of the order. Moreover, it is also
noticed that in a routine manner, several Consumer Commissions remains
oblivious to section 305 Cr.P.C which clearly stipulates that a corporation or
a company could be represented by a representative appointed by managing
Director or CEO. The bottom line is after compliance of the order in a
complaint which may be subject matter of penalty proceedings, the continuance
of proceedings u/s 27 (1986 Act) or under Section (2019 Act) are not
warranted and the proceedings are required to be terminated.
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Anil K Khaware
Founder & Senior Associate
Societylawandjustice.com
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