“Class Action” theory under new Consumer Protection Act 2019 (An additional option to file consumer complaint )

Simple meaning is -An action which is preferred by a class Specifically under Consumer Protection Act ,it shall be an action by class of people for defective goods, deficiency in services and for unfair trade practices.

Then what is consumer complaints filed by number of complainants together before the consumer commission .Is it different from class action as inserted in new consumer protection act 2019

This debate started with Amrapali Sapphire Developers v/s Amrapali Sapphire Flat Buyers Welfare Association amrapali builders case in 2019 when 43 consumers filed consumer complaints together before the National Commission Flat Buyers Welfare Association, filed the complaint against the builder in May 2016, for delay in handing over possession of their flats.and it was contested by Builders raising following points 

1. Number of consumer cannot file cases together
2. The pecuniary jurisdiction of Commission  should be considered on the basis of amount involved in each case separately
3. RWA cannot be a complainant on behalf of residents

 The Supreme Court (SC) announced on that flat owners can now join hands and directly approach the National Consumer Disputes Redressal Commission (NCDRC) against real estate developers for delay in handing over possession of their flats,

Highlights: 

1. Flat buyers can come together to file complain against developers with NCDRC

2. The 43 buyers had complained against Amrapali Sapphire Developers to the Supreme Court for delay in handing over possession of their flats 

3. As per the Consumer Protection Act, a plea can be filed in NCDRC directly only if the cost involved is more than Rs 1 crore 

This order was in 2019 when new ct had not come into force

Realtors body CREDAI expressed concern that the Supreme Court judgement that flat buyers can jointly approach the apex consumer commission NCDRC will open the floodgates of legal cases against builders but this order was final

Thereafter ‘Class Action’ theory was developed was in Consumer Protection Act 2019 by defining complainant as  shown below –

Section 2 (5) “complainant” means—(7 type of persons )

(i) a consumer; or

(ii) any voluntary consumer association registered under any law for the

time being in force; or

(iii) the Central Government or any State Government; or

(iv) the Central Authority; or

(v) one or more consumers, where there are numerous consumers having

the same interest;

(Explaination -when these come on behalf of more than one consumer for the same cause,against the same person or authority or unit or establishment  ,for the similar relief  )

(vi) in case of death of a consumer, his legal heir or legal representative;

(vii) in case of a consumer being a minor, his parent or legal guardian;

For the purpose of –

·   For defective goods, deficiency in services and for unfair trade practices .

·   Any act against the rights of consumers

Consumers are not having dual Rights –

·        Right before Consumer Courts

·        Rights Before Central Consumer Protection Authority

After enactment of new act Supreme court Decided on 24 august 2020(SC) in one case explained the theory of Class Action in detail which is considered landmark judgment to be followed in matter related to  Class Action cases

A case before the Hon’ble National Commission was  in the matter of  Vikrant Singh Malik & 25 Ors.Versus Supertech Limited & 2 Ors(Through its M.D.) Consumer Case No. 1290 of 2015

The issue involved was as to whether the complaint by  26 consumers with the same interest against the same builder in the matter of housing could be admitted before the apex commission when status of flat  of each complainant was different. All the 26 consumers filed a joint  complaint along with an application for permission to file joint complaint. Section 2(1)(c) read with  2(1) (b) (iv) of the Act 86 invoked for filing joint complaint. And prayed for certain directions to the builder

National Commission made two major observations

1. That there was variation of facts of each homebuyer about the allotment of their flat such as –
2. Apartment Distinct
3. Date of Buyer agreement different
4. Date of execution of agreement different
5. Price of flat Different
6. Area of flat different

• Frame of complaint,nature of pleadings and relief sought is
• Only seeks to high light  the grievance of 26   complaints  whereas some other consumers having same grievance  had settled the matter with builder
• Complaint does not not possess the character of representative for all having the common interest which is the essential  element of section 2(i)(c) and then could refer to  section 13(6

     NCDRC dismissed the complaint in entirety giving liberty to the complainants to file individual complaints before the appropriate forum because of the fact that cost ,size area and date of booking /purchase /allotment of each consumer were different.

Matter now comes before the Supreme Court

Supreme court observes

·         Regarding factually different cost,size ,booking date and price variation ,Supreme court referes to full bench order in the matter of Ambrish Kumar Shukla v/s Ferrous Infrastructure Pvt. Ltd (2017)NC wherein the issue was explained in details by giving example-

If a developer has sold 100 flats in a project out of which 25 are three bedroom flats ,25 are two bedroom flats and 50 are one bedroom flats and failed to deliver timely possesstion,all the allotees irrespective of size shall have common grievance against the builder .A complaint filed by all the consumers with the relief for the benefit of all consumers is maintainable under section 2(1)(c) of the act

·         There is an element of sameness of the interest and with common interest ,complainants could file a joint complaint.

·         Character of reprentative of all the consumers is missing in the complaint .Facts also revealed that some of the homebuyers had settled their grievance with builder and taken the possession ,hence  complaint in the present form was not maintainable 

·         Since the object and purpose of the act  is welfare of the consumers NCDRC can reconsider the decision  to dismiss complaint in entirety when element of sameness of interest of complainants is very much apparent on face of it . This issue can  also be considered in the light of the fact advocate appearing on behalf of complainants had sought liberty to file application to amend the complaint

 Hence law laid down by Supreme Court for “Class Action” character as a consumer Complaint thus stands as hereunder-

1. There should be  an element of sameness of the interest and with common interest of all the consumers joining together.
2. The complaint should be represented by one leading case for protection of interest& benefit of all the consumers.
3. Factually different cost,size ,booking date and price variation will not affect the character of “class action” against the same party with the same objective held Supreme Court.

• The content of the complaint must also not be a single party centric it should speak for all the consumers.

Supreme court sends back the complaint  to NCDRC  for re-considering to dismiss in entirety .

This means Supreme court wishes the NCDRC to allow amendment in complaint  by giving it representative character for all the aggrieved  homebuyers for the same reason  . NCDRC can also decide on the issue if some out of 26 complainants have settled the matter with builder.

It be noted that number of complainant who wish to file individual complaint together as bunch of cases can always do so but shall not be considered class action case