Wednesday, 15 October 2014

Whether compensation can be granted to consumer on mere proof of “unfair trade practice” even though there is no loss to him?

The Consumer Protection Act, 1986 - Section 2(1) (r) - “unfair trade practice” - definition of - Mere proof of “unfair trade practice” is not enough for claim or award of relief unless causing of loss is also established.

   REPORTABLE
    IN THE SUPREME COURT OF INDIA
       CIVIL APPELLATE JURISDICTION
   CIVIL APPEAL NOS. 8072-8073  OF 2009

GENERAL MOTORS (INDIA) PRIVATE LIMITED    Vs  ASHOK RAMNIK LAL TOLAT       
Dated: October 9, 2014



ADARSH KUMAR GOEL, J.




1.    These appeals have been preferred against the order
dated 16th December,  2008  of  the  National  Consumer  Disputes  Redressal
Commission (for  short  “the  National  Commission”)  in  Revision  Petition
Nos.3349 of 2006 and 2858 of 2008.
2.    The main question raised in these appeals is whether  in  the  absence
of any prayer made in  the  complaint  and  without  evidence  of  any  loss
suffered, the award of punitive damages was  permissible.   Apart  from  the
said main question, the appellant has also called  in  question  the  refund
ordered and other relief granted in favour of the respondent-complainant.
3.    In the complaint, filed before the District Forum,  Ahmedabad  (Rural)
(for short “the District Forum”), the prayer of  the  respondent-complainant
was as follows :

“The complainant, therefore, most respectfully prays :


      That this Hon’ble Forum be pleased to hold that the  opposite  parties
(joint and severally) to have practiced unfair trade practice,  towards  the
complainant and direct them (jointly and severally)  to remove unfair  trade
practice, practiced by them against the complainant;


This Hon’ble Forum be pleased to direct the opposite  parties  (jointly  and
severally) to remove the  deficiencies  in  their  services  and  negligence
towards the complainant.


      This Hon’ble Forum be pleased to direct the opposite parties  (jointly
and severally) to refund the complainant a sum  of  Rs.14,00,000/-   (Rupees
Fourteen Lakh) and Rs.1,91,295/- to  the  complainant  along  with  the  18%
interest, from the date of payment to the complainant and the Hon’ble  Forum
be pleased to direct the opposite parties to  forthwith  to  take  back  the
said vehicle from the complainant, after refunding the  complainant’s  money
with interest, as prayed;


This Hon’ble Forum be pleased to direct the opposite  parties  (jointly  and
severally)  to  pay  compensation  for  physical  and  mental  pain,  shock,
suffering, agonies, hardships, inconveniences and expenses suffered  by  the
complainant, to the tune of  Rs.50,000/-   (Rupees  Fifty  Thousand)  or  as
thought fit in the interest of justice, by this Hon’ble Forum;


      The Hon’ble Forum be pleased to direct the opposite  parties  (jointly
and serverally) to pay Rs.25,000/- to  the  complainant,  as  cost  of  this
complaint.”


4.    The case of the complainant is that he had  passion  for  driving  and
dream to visit Leh Ladakh, Jammu & Kashmir and  Nepal  by  driving  a  motor
car.    By  surfing  the  internet,  he  read  advertisement  given  by  the
appellant as follows :
“Introducing a world without borders, an SUV to end all  SUVs.   That’s  the
new Chevrolet Forester.   With the Power  of  120  horses  under  its  borne
unique All-Wheels (AWD), it literally puts the four  corners  of  the  earth
within your easy reach.  It won’t just get you there.  But  get  you  there.
But get you there in unmatched comfort and luxury by-road, off-road  or  no-
road.”

5.    Relying upon the same, he visited the agents of the appellant and  was
given a book titled “for a special journey called life”.    He  was  assured
that the vehicle offered for sale will realise his  dream.     The  brochure
also assured that “the vehicle in question is an SUV to end all SUVs.    And
 …………… it will put the four corners of the earth within your each and  ………..
it won’t just get you their every time.   But get you’re there in  unmatched
comfort, by  road,  off-road  or  no  road”.    He  was  also  shown  visual
presentation of  the  vehicle  and  was  also  given  a  copy  of  the  VCD.
Accordingly, he purchased the vehicle on 1st May, 2004 for Rs.14  Lakhs  and
got accessories worth Rs.1,91,295/- fitted and also got the vehicle  insured
and registered.
6.    Thereafter he realised that the vehicle was not fit for “off-road,  no
road and dirt road” driving as represented and  had  defects.   Accordingly,
he approached the appellant and its dealers  who  referred  to  the  owner’s
manual at pages 8-6 column 1 & 3 printed by the Company to the effect :
“off-road driving …………   But please keep in mind that  AWD  Chevrolet  is  a
passenger car and is neither a conventional  off-road  vehicle  nor  an  all
terrain vehicle ……..   If the driving through water such  as  when  crossing
shallow streams, first check the depth of the water  and  the  water  stream
bed for firmness and ensure that the bed of stream is flat  …………  the  water
should be shallow enough that it does not reach under carriage.”

      Thus he found that the owner’s manual was contrary  to  the  assurance
in the brochure, internet and the book titled “for a special journey  called
life”.  He also realised that the vehicle was not SUV but a  mere  passenger
car, not fit for “off-road, no road and dirt road” driving.   He  could  not
realise his dream to drive it to Leh Ladakh,  Jammu  &  Kashmir  and  Nepal.
The action of the appellant was thus, “unfair trade  practice”.   He  sought
permission to remove “unfair trade practice”  and  deficiencies  in  service
and also to refund a sum of  Rs.14  Lakhs  the  price  of  the  vehicle  and
Rs.1,91,295/- the price of accessories with 18% interest from  the  date  of
purchase till the date of payment and also to pay compensation for  physical
and mental pain shock,  suffering,  agonies,  hardships,  inconvenience  and
expenses suffered by the complainant, to  the  tune  of  Rs.50,000/-  or  as
thought fit in the interest of justice and the costs.    The District  Forum
directed  refund  of  Rs.14  Lakhs  plus  Rs.1,91,295/-   towards  cost   of
accessories  with interest @ 9% per annum from the date of complaint to  the
date  of  payment  subject  to  the  return  of  the  vehicle,  apart   from
compensation of Rs.5,000/- for mental agony  and   Rs.2,000/-  as  costs  of
litigation.
7.    The said order of the District Forum was challenged by  the  appellant
before the Consumer Disputes Redressal Commission, Gujarat State,  Ahmedabad
(for short “the State Commission”).  The  State  Commission  held  that  the
vehicle had no mechanical or  manufacturing  defect  but  the  advertisement
that car was SUV  amounted to “unfair trade  practice”.     Accordingly,  in
substitution of the order of the District Forum, the  complainant  was  held
entitled  to  Rs.50,000/-   as  compensation   which   included   costs   of
litigation.  But at the same time,  the  complainant  was  required  to  pay
Rs.5,000/- towards costs for undeserving claim.  The appellant was  directed
not  to  describe  the  vehicle  in  question  as  SUV  in   any   form   of
advertisement, website, literature etc.  and to make the correction that  it
is a passenger car as mentioned in the manual.
8.    Accordingly,  the  appellant  complied  with  the  said  direction  by
issuing a disclaimer.
9.    The respondent preferred a revision petition against the Order of  the
State Commission while the appellant filed a cross revision petition.
10.   The National Commission held that the appellant could not  be  allowed
to contest the finding of committing “unfair trade practice” in view of  its
conduct in voluntarily complying with the order of the State Commission  and
filing cross revision without any justification  and  belatedly.   Referring
to the material on record, particularly, the undisputed correspondence,  the
said  finding  was  also  affirmed  on  merits.   After  referring  to   the
definition of  “unfair  trade  practice”  under  Section  2(1)  (r)  of  the
Consumer Protection Act, 1986  (for short “the Act”),  it was concluded :
“Keeping in view the above definition  of  unfair  trade  practice  and  the
material obtaining on record more particularly the representations made  and
held out by the respondent in their brochures relating  to  the  vehicle  in
question, the owner’s manual as  also  the  clarification  rendered  by  the
manufacturer of the vehicle, there can be hardly any doubt  that  the  motor
vehicle Chevrolet  forester  AWD  model  was  not  a  vehicle  of  the  said
description in as much  as  it  was  not  a  SUV  vehicle.   Therefore,  the
petitioner must have been misled on that score to believe that  the  vehicle
offered for sale was a SUV.   This act of the respondent would clearly  fall
within the mischief of unfair trade practice as envisaged  in  section  2(r)
(supra).   We therefore, affirm the findings  of  the  State  Commission  in
this behalf.”

11.   After recording the above finding the  National  Commission  proceeded
to consider the relief to be given.   It was held that the State  Commission
was not justified in reversing the direction of the District Forum once  the
commission of “unfair trade practice” was established, even as  per  finding
of the State Commission.   Accordingly,  the  National  Commission  restored
the relief given by the District Forum with slight modification  as  follows
:
“Once it is found that respondent has  indulged  in  unfair  trade  practice
which had misled the petitioner to purchase the vehicle in question, in  our
view, the most appropriate relief to the petitioner would  be  to  reinstate
the petitioner to his original position before the purchase of  the  vehicle
viz., refund of the price of the vehicle along  with  some  compensation  in
that behalf.   Keeping in view that the vehicle was used by  the  petitioner
for a period of about one year and it has run approximately 14,000  kms,  we
consider  it  appropriate  that  the  respondent  should  refund  a  sum  of
Rs.12,50,000 (Rupees twelve lacs fifty  thousand  only)  to  the  petitioner
subject  to  the  condition  that  the  vehicle  in  question,  without  the
accessories, which the petitioner got fixed at a cost of  Rs.1,91,295/-,  is
returned to the respondent.”

12.   The above was not the end of the journey, though the above relief  met
the claim of the complainant in his  complaint.    The  National  Commission
proceeded to consider the  issue  of  punitive  damages  for  “unfair  trade
practice” in selling the said vehicles to about 260 consumers.  It was  held
that though the consumers had not approached the National Commission  and  a
period of four years had passed, the appellant should pay  punitive  damages
of Rs.25 lakhs and out of the said amount,  a sum of Rs.5 Lakhs be  paid  to
the complainant while the rest be deposited in the “Consumer  Welfare  Fund”
of the Central Government to be utilized for the benefit and  protection  of
the interests of the consumers generally.  Final operative order  passed  by
the National Commission is as follows :
“The respondents are hereby directed to pay a sum of Rs.12,50,000/-  (Rupees
Twelve Lacs Fifty Thousand only) to the  petitioner  towards  price  of  the
vehicle subject to the petitioner returning the vehicle in question  without
accessories to the respondents.  The respondents are hereby called  upon  to
deposit a sum of Rs.25 lacs (Rupess Twenty Five Lacs)  as  punitive  damages
with this Commission.  Out of the said deposited amount, a sum of Rs.5  lacs
(rupees five lacs) shall be paid to the petitioner-complainant and  rest  of
the amount shall be credited to the “Consumer Welfare Fund” of  the  Central
Government to be utilized for the benefit and protection  of  the  interests
of the consumers generally.  We also award  a  sum  of  Rs.50,000/-  (rupees
fifty thousand) in favour of the complainant to meet his cost of  litigation
before the three consumer fora.   The  liability  to  pay  and  deposit  the
amounts shall be joint and several on the respondents.  We grant  six  weeks
to the respondents to comply with the directions given herein above. ”

13.   We have heard learned counsel for the  appellant  and  the  respondent
No.1-complainant in-person and perused the record.
14.   The concurrent finding recorded by  the  District  Forum,   the  State
Commission and the National Commission to  the  effect  that  “unfair  trade
practice” was  committed  by  the  appellant  which  is  based  on  adequate
material on record, does not call for any interference  by  this  Court  and
the same is affirmed .
15.   What survives for consideration is the submission  of  learned  senior
counsel for the appellant, that there  was  no  claim  before  the  National
Commission for the punitive damages nor the appellant had an opportunity  to
meet such claim and that part of the order needs to be set aside.
16.   We find merit in this submission.  Vide interim order  of  this  Court
dated 17th  July,  2009,  the  operation  of  the  impugned  order  awarding
punitive damages was stayed.  Learned counsel for  the  appellant  undertook
to deposit the  amount  awarded  in  favour  of  the  respondent-complainant
towards his claim.  The said order  was  allowed  to  continue,  vide  order
dated 20.11.2009, with the following modifications :

“(i)  Respondent No.1 shall return the vehicle to  the  appellant  within  a
period of four weeks from today.  The latter  shall  arrange  for  accepting
delivery of the vehicle at Ahmedabad.


(ii)  After return of the vehicle to the appellant,  respondent  No.1  shall
be  entitled  to  withdraw  the  amount  of  Rs.12,50,000/-  together   with
litigation cost deposited by the appellant  before  the  District  Forum  in
terms of  order  of  this  Court  dated  17th  July,  2009  subject  to  his
furnishing security to the satisfaction of the District Forum.


(iii) It will be open to the appellant to sell  the  vehicle  and  keep  the
sale proceeds in a  separate  interest  bearing  account.   Respondent  No.1
shall cooperate with the appellant by signing the  documents  necessary  for
selling the vehicle.”


17.   We proceed to deal with the issue of correctness of  finding  recorded
by National Commission for awarding punitive damages.  Before doing  so,  we
may notice that  the  respondent-complainant  appearing  in-person,  in  his
written submissions has raised various  questions,  including  the  question
that the appellant should be asked  to  account  for  the  proceeds  of  the
vehicles sold by it.  Admittedly, the vehicle in question has  been  ordered
to be handed back to the appellant against which respondent-complainant  has
no claim.  Thus, the plea raised is without any  merit.    The  other  issue
raised for further punitive damages of Rs.100 crores and  also  damages  for
dragging him in this Court, merits no consideration being beyond  the  claim
of the complainant in the complaint filed by him.    Moreover,  no  litigant
can be punished by way of  punitive  damages  for  merely  approaching  this
Court, unless its case is found to be frivolous.
18.   The Act is a piece of social legislation to provide  a  forum  to  the
consumers who are taken for a ride by suppliers of goods and services.   The
redress is provided to a consumer against any deficiency in service as  well
as against any loss or injury arising out of “unfair trade  practice”.    By
later amendment,  scope  of  a  complaint  can  cover  not  only  individual
consumer  but  also  consumers  who  are  not   identifiable   conveniently.
However, the complainant has to make an averment and make a claim.   Section
12 of the Act permits not only a complaint by a consumer to whom  goods  are
sold or delivered but also any recognised consumer  association  or  one  or
more consumers on behalf of and for the benefit of all consumers but  still,
a case has to be made out and the affected party heard on  such  issue.   We
are conscious that having regard  to  the  laudable  object  of  the  social
legislation to protect the interest  of  consumers,  liberal  and  purposive
interpretation has to be placed on the scheme  of  the  Act  avoiding  hyper
technical approach.  At the same time,   fair  procedure  is  hall  mark  of
every legal proceeding and an affected  party  is  entitled  to  be  put  to
notice of the claim with such affected party has to meet.
19.   We may at this stage refer to the scheme of the  Act  with  regard  to
claim against “unfair trade practice”.   The background  and  scope  of  the
provision was dealt with in  Ludhiana  Improvement  Trust  v.  Shakti  Coop.
House Building Society Ltd.[1] as follows :

“18. Prior to the substitution of clause (r) in sub-section (1)  of  Section
2 of he Act with retrospective effect from 18-6-1993, there was no  separate
definition of the term “unfair trade practice” and the said term  was  given
the same meaning as in Section 36-A of the Monopolies and Restrictive  Trade
Practices Act, 1969 (for short “the MRTP  Act”).  But  now  after  the  said
amendment, the definition of the term  has  been  specifically  provided  in
Section  2(1)(r),  although  the  definition  is  practically   a   verbatim
reproduction of the definition in Section 36-A of the MRTP Act.


19. The basic ingredients of “unfair trade practice” are:


(i)   it must be a trade practice;


(ii)  the trade practice must be employed for the    purpose of    promoting
the sale, use or supply of any goods or for the provision  of  any  service;
and


(iii)       the trade  practice  adopts  any  unfair  method  or  unfair  or
deceptive practice including any of the practices enumerated in clauses  (1)
to (6) of Section 2(1)(r) of the Act.


Therefore, any trade practice which is adopted for the purpose of  promoting
the sale, use or supply of any goods or for the provision  of  any  service,
by adopting any unfair method or unfair or  deceptive  practice  has  to  be
treated as “unfair trade practice” for which an action under the  provisions
of the Act would lie, provided, the complainant is able  to  establish  that
he is a consumer within the meaning of Section 2(1)(d) of the Act.”


In Colgate Palmolive (India) Ltd. v. MRTP  Commission[2]   this  Court  laid
down five ingredients which have to be established before a  trade  practice
can  be  said  to  be  an  “unfair  trade  practice”.  The  Court  laid  the
ingredients in the following manner:

“16.  A bare perusal of the aforementioned provision would clearly  indicate
that the following five ingredients are necessary to  constitute  an  unfair
trade practice:


1.    There must be a trade practice [within the meaning of Section 2(u)  of
the Monopolies and Restrictive Trade Practices Act].


2.    The trade practice must be employed for the purpose of  promoting  the
sale, use or supply of any goods or the provision of any services.


3.    The trade practice should fall within the ambit of one or more of  the
categories enumerated in clauses (1) to (5) of Section 36-A.


4.    The trade practice should cause loss or injury  to  the  consumers  of
goods or services.


5.     The  trade  practice  under  clause  (1)  should  involve  making   a
‘statement’ whether orally or in writing or by visible representation.”

      Again in  Godfrey  Phillips  India  Ltd.  v.  Ajay  Kumar[3],  it  was
observed :
“18. So far as Direction (iii) is concerned, it is to be  noted  that  there
was no prayer for  any  compensation.  There  was  no  allegation  that  the
complainant had suffered any loss.  Compensation  can  be  granted  only  in
terms of Section 14(1)(d) of the  Act.  Clause  (d)  contemplates  award  of
compensation to the  consumer  for  any  loss  or  injury  suffered  due  to
negligence of  the  opposite  party.  In  the  present  case  there  was  no
allegation or material placed on record to show negligence.”

      Thus, mere proof of “unfair trade practice”  is not enough  for  claim
or award of relief unless causing of loss is also established which  in  the
present case has not been established.
20.   We have already set out the relief sought in the  complaint.   Neither
there is any averment in the  complaint  about  the  suffering  of  punitive
damages by the other consumers nor the appellant was  aware  that  any  such
claim is to be met by it.  Normally, punitive damages are awarded against  a
conscious wrong doing unrelated to the actual loss suffered.  Such  a  claim
has to be specially pleaded.   The  respondent  complainant   was  satisfied
with the order of  the  District  Forum  and  did  not  approach  the  State
Commission.  He only approached the  National  Commission  after  the  State
Commission set  aside  the  relief  granted  by  the  District  Forum.   The
National  Commission  in  exercise  of  revisional  jurisdiction  was   only
concerned about the correctness or otherwise  of  the  order  of  the  State
Commission setting aside the relief given by the District Forum and to  pass
such order as the State Commission ought  to  have  passed.    However,  the
National Commission has gone much beyond its jurisdiction  in  awarding  the
relief which was neither sought  in  the  complaint  nor  before  the  State
Commission.  We are thus, of the view that to this extent the order  of  the
National Commission cannot be sustained.  We make it clear that we have  not
gone into the merits of the direction but the  aspect  that  in  absence  of
such a claim being before the National Commission and the  appellant  having
no notice of such a claim, the said order is contrary to principles of  fair
procedure and natural justice.   We also make it clear that this order  will
not stand in the way of any  aggrieved  party  raising  a  claim  before  an
appropriate forum in accordance with law.
21.   Accordingly we allow these appeals and set  aside  the  order  of  the
National Commission to the extent of award of punitive damages.


                                                          ……..…………………………….J.
                                                         [ V. GOPALA GOWDA ]

                                                         .….………………………………..J.
NEW DELHI                             [ ADARSH KUMAR GOEL ]
October 9, 2014


-----------------------
[1]     (2009) 12 SCC 369
[2]     (2003)  1 SCC 129
[3]     (2008)  4 SCC 504

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