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Section 12 Consumer Protection Act – Legal Boost to Unionisation of Consumers

Corresponding with the increase in exploitation of flat buyers by several unscrupulous builders, a large number of buyers have commenced litigation against builders. Since it may be difficult to fight a builder alone, consumers have taken advantage of the provision under Section 12 (1) (b) of Consumer Protection Act, 1986, which allows a Voluntary Consumer Association (VCA) to file a case on behalf of one or more consumers.

About 43 cases were filed by consumers at   National Commission, against various builders  including Unitech, BPTP, Parsvnath, Jaiprakash Associates,    Supertech and TDI. The value of the disputes was clubbed to reach the pecuniary jurisdiction. The   builders   had objected   to cases being contested collectively by flat buyers.  Apparently, the term 'voluntary consumer association' in Section 12

(1)  (b) of  Consumer Protection  Act had not been interpreted  either by the National Commission  or by the Supreme Court of India. Subsequently,  the National Consumer Disputes Redressal Commission (NCDRC) set up a special bench headed by justices VK Jain and Dr BC Gupta and Dr SM Kantikar to hear the matter. This bench dismissed the challenge by the builders on maintainability of the complaints filed  by homebuyers under Section 12 (1) (b) of Consumer Protection Act, 1986, and held that a voluntary consumer association could file a case on behalf of affected consumers. The bench heard about 35  lawyers,  representing  different VCAs  who were complainants in these 43 different cases, along with 15 lawyers representing different builders.

The  bench  has laid  down the following  tests to judge which VCA can file cases under Section 12 (1) (b) collectively for consumers:

  1.  Registration:  The  VCA must  be registered under  the Companies  Act or under any  other law safeguarding  or redressal of  consumer grievances and is registered, it will be covered as a voluntary consumer  association under Section 12 (1) (b) of the Act. Also,  Consumer  Protection  Act being a welfare  legislation enacted for  the advancement of rights and interests of consumers, a liberal and wider interpretation  should be preferred over a narrow and technical interpretation to serve the intended purpose.
  1. Association not for financial gains: Another for  the time  being in force.  An association  of persons which  is test  is that  the members  must come together voluntarily not   registered   as a recognised consumer   association will not qualify   to institute a consumer complaint  under Section 12 (1) (b) of the Act.
  1.  Objectives  of association: To   protect,   safeguard or   watch the cause of consumers should be one  of the main objectives of a Association members must come together voluntarily and not due to any pressure or influence, and not because of financial considerations of earning profit or remuneration using such an association and   not due   to any pressure or  influence, or without being involved   because of financial considerations of  earning profit or remuneration using such  an association. It held that if the objective of the association is to get financial gain for its members it would not qualify as Voluntary voluntary   consumer association.  In  fact,  even a  residents'  welfare Consumer Association.
  1. VCA can be set up anytime: association (RWA) can file a case if its main objective is to protect, preserve, advance and promote the cause of consumers in general or its members. The  test is that  so long as the  association has an  objective of

On  the timing  of forming of  a voluntary consumer association,  the bench relied upon Engineers  India Ltd versus Ghaziabad Development Authority & Anr I (2000) CPJ 8 (NC) and came to this ruling: whether the association was formed before or after the cause of action arose is not material. It followed the decision of a five-member bench in this case and held that even if the association was formed after the grievance arose, it would qualify as a voluntary consumer association. The association will be covered under the definition of Section 2 (b) (ii) of the Act even if it is formed after taking possession of the flats, in order to protect and promote the common interests of consumers.

  1. Same relief claimed against same person: The bench relied upon the NCDRC judgement in Lotus Panache  Welfare Association  versus Mis Granite Gate  Properties Pvt. Ltd, CC No.  120 of 2015. It was contended that a voluntary consumer organisation could only seek reliefs that were general in nature, and that a society that had no privity of contract with them could not claim reliefs such as delivery of possession of the apartment and payment of compensation to the individual allottees. The  National  Commission  held that that if the reliefs claimed were of the same nature and  against the same person, such an association was competent to file a complaint for and on behalf of the persons. The Commission said that the complaint by  a recognised consumer association, such as the complainant in this case, was maintainable in respect of the reliefs sought in this complaint. This judgement of National Commission was unsuccessfully challenged before the Supreme Court, vide dismissal order dated 16.10. 2015.
  1.  Protecting  the interests  of consumers: The bench further relied upon the NCDRC judegment in Amrapali Sapphire Flat Buyers Welfare Association versus  Amrapali Sapphire Developers Pvt. Ltd & Anr, CC No.  816 of 2016, where it was held that if the objective of the association included advocating the cause of its members to protect their interests, it would qualify as a voluntary consumer association. The Supreme  Court had dismissed the challenge to this judgement vide its order dated 21.02.2017.
  2. Trust is not VCA: Another decision given was that  a charitable trust would not qualify  as a VCA under Section 12 (1) (b) of the Act. The bench cited Pratibha Pratisthan & Ors versus Manager, Canara Bank  & Ors, dated 07.03.2017, holding that a trust could not be a complainant under Sections 2 (b), 2 (c), 2 (d) and 2 (m) of the Act. Two of the 43 cases before  this bench were filed by a trust, Consumer Online Foundation, against Supertech. Bejon Kumar Mishra, representing the trust, argued before the bench but the argument in favour of a trust being a voluntary consumer association was rejected.
  3.  Company  can be individual  consumer: The bench  relied on Power  Transmission  Corporation versus  Ashok Iron Works Pvt.  Ltd (2009) 3 SCC 240  where  it was  held that  a company could  be a consumer u/s 2 (1) (a) and could file a case like any other individual.

 

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1 Comment

  1. neeraj saini
    May 1, 2018
    Reply

    whether RWA can file consumer complaint in consumer forum, regarding purchased some goods from other firm. but now he is not maintaining the said goods.

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