Is Education not a Service under the Consumer Protection Act?

by admin | Oct 15, 2022 | Legal

Is Education not a Service under the Consumer Protection Act?

In our country, it is a well settled law that as per Article 141 of our Constitution, the judgments made by the Supreme Court are binding on all lower courts of the country. Hence the laws laid down by the Supreme Court are binding on all High courts & on all lower courts/tribunals of the country. However, in spite of strong views taken by the apex court about judicial discipline, violation of basics by the lower courts/tribunals is yet in substantial increase. Lower courts and tribunals refuse to follow and accept the verdict of law by the larger benches giving reason of some minor differences in the facts. This amounts to disrespect to constitutional ethos and indiscipline of this kind can have grave impact on the judicial institutes- SC while adjudicating the case of Official liquidator vs Dayanand.

Dr Prem Lata, Head Legal VOICE

“Judicial Discipline is a paramount feature for a Judicial Institution’- said three judges bench of the Apex court while adjudicating the matter of Official liquidator vs Dayanand and raised its concern on several such judgments namely U.P. SEB vs Pooran Chandra Pandey and criticized this kind of disobedience and also directed that such judgments not to be treated as obiter dictum.

What is Obiter Dictum?

A judge’s expression of opinion uttered in court or in a written judgement, but not essential to the decision and therefore not legally binding as a precedent. In England an ‘obiter dictum’ has no binding effect either upon a coordinate Court or upon a subordinate Court. In our country, it is a well settled law as per Article 141 of our constitution that judgments made by the Supreme Court are binding on all lower courts of the country. Hence the laws laid down by the Supreme Court are binding on all High courts & on all lower courts/tribunals of the country. But in spite of strong view taken by the apex court about judicial discipline, violation of basics by the lower courts/tribunals is yet in substantial increase. Lower courts and tribunals refuse to follow and accept the verdict of law by the larger benches giving reason of some minor differences in the facts .This amounts to disrespect of the constitutional ethos, and indiscipline of this kind can have a grave impact on the judicial institutes. The above observation of the Supreme Court three judges bench was in this context.

Now, coming to the real question, whether Supreme Court of India has really declared anywhere that education is not service under Consumer Protection Act in the light of thunderous judgment given by National commission in Manu Solanki vs Vinayak University case which stands contrary to many judgments pronounced by the Supreme Court? Can the order passed by the National Commission be considered obiter dicta and not the precedent for lower commissions when Supreme Court judgments are contrary to the Manu Solanki judgment?

Having regard to the pendency of Civil Appeal No 3504 of 2020 (Manu Solanki and Others vs Vinayaka Mission University), the issue as to whether education is a service within the Consumer Protection Act, is pending before this Court. A bench of Justices D Y Chandrachud, Indu Malhotra and Indira Banerjee, (Manu Solanki and Others vs Vinayaka Mission University), has admitted an appeal filed by Manu Solanki and other students of a medical course against Vinayaka Mission University at Salem in Tamil Nadu, alleging deficiency in services.

Since there are divergent views of this Court bearing on the subject as to whether an educational institution or University would be subject to the provisions of the Consumer Protection Act 1986, the appeal would require admission. The Supreme Court has agreed to examine the question as to whether an educational institution or University can be sued under the consumer protection law for deficiency in services

SC asked lawyer Soumyajit, appearing on behalf of university, to file the response within six weeks to the appeal filed against a decision of the National Consumer Disputes Redressal Commission (NCDRC). Again while granting leave in a special leave petition filed by Rajendra Kumar on October 29, 2021, the Supreme Court observed that an appeal pertaining to the issue of whether education is a service within the CP Act was already pending before the court (Civil Appeal of Manu Solanki was admitted in 2020) and that this should be tagged with that. Now both the appeals are pending before the Hon’ble SC for its final verdict.

The students in the above appeal cited judgments in which it has been held that educational institutions would come within the purview of the Consumer Protection Act, 1986.
Facts leading to above appeal before the Apex court emerge from the judgment by NCDRC in above cited Manu Solanki case Hon’ble National commission which has opened a plethora of issues on Education as service. As many as 25 bunches of cases having number of petitioners and respondents have come to the National Commission from all over the country either in appeals or in Revision petitions for explanations to education as service.

In the present case in hand, namely, Consumer Case No. 261 Of 2012 Manu Solanki & 8 Ors vs Vinayaka Mission University, Tamil Nadu with 24 more cases, issue is not limited to whether education is a service or not. These cases raise a number of issues related to education.

Whether a student is a consumer for rendering services?
What is the definition of education?
What can be called an educational institute?
Do coaching centre render education?
Are skill development courses/vocational studies covered under education?
Whether post education after completion, or pre admission, institute renders services?
Are incidental activities associated with educational institutes such as swimming, sports, etc. covered under education?

The above issues had never been raised so far when services of education under consumer protection act are discussed by the apex court or apex commission.

Reviewing the Points Raised Above

Point no 1

Student is a consumer as per Supreme court three judges Bench in the case of Usmania Islamia Academy vs State of Karnataka, three judges bench comprising Justice V N Khare, Justice S N Variyavaha and Chief Justice K G Balakrishnan pronounced a detailed order on 14.8.2003, which held that education is a service by discussing every aspect covered by the educational institute in providing education to the students. Number of guidelines were issued through this three judge’s bench order and UGC was directed to frame rules on the basis of this order. UGC then circulated certain guidelines for the institutes that –

They cannot retain more than Rs 1000/- as proportionate fee in case student leaves the institute
They cannot retain the original certificates also.
They cannot demand fee for the entire course, can only ask fee for one term.

Following this order, again there was Supreme Court ruling in the year 2004 in the matter of Bhupesh Khurana vs Buddha Dental College & hospital holding college unfair for their misleading information about the college. This theory is being followed by the National Commission till date.

No case against this judgment has been passed by SC. This judgment is further followed by Bhupesh Khurana vs Buddha Dental College Hospital in the year 2009 by Supreme Court two judges bench considering the grievance of students after entire course is finished and they found institute neither recognised nor affiliated contrary to their promise and advertisement. This was a case post rendering services by the institute and this case is not reverted back by the Supreme Court in any other case. Hence on first point, established law is that student is a consumer.

Point no 2

Definition of education is of no relevance when we talk of services Service is defined under the act not only for education but for all possible services not limited to any particular discipline. Section 2 (42) of act 2019 and section 2(O) of act 1986 define as hereunder-

Section 2(1) (o) in the Consumer Protection Act, 1986

(o) “service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.

There is no word education or educational institute in this act which needs defining it for the purpose of any clarification of service.

Point No 3

What can be called an educational institute is the issue is not even remotely connected when we talk of services? It really does not matter whether service provider is educational institute, health care institute, financial services provider, housing board constructing houses or hotels boarding lodging service provider.

The case cited for defining any institute whether educational institute or not is absolutely of no relevance rendering services under Consumer Protection Act does not need it to be necessarily labelled as educational institute.

National commission referred to the following case-The Hon’ble Supreme Court in State of Punjab & Ors. Vs Senior Vocational Staff Masters Association & Ors. observed that vocational courses are those courses in which teaching is not on regular basis, though they play an important role in the grooming of students in different fields. Vocational education can also be termed as job oriented education and trains young people for various jobs and helps them acquire specialize skills.

Further reference is made to the fact that The Union Cabinet has approved a merger of the existing Regulatory Institutions in the skills space — National Council for Vocational Training (NCVT) and the National Skill Development Agency (NSDA) into the National Council for Vocational Education and Training(NCVET). The main purpose and objective of NCVET is to recognize and regulate and assess the skill related service regulators. It is clarified that even if there is any defect/deficiency/unfair trade practice in the services offered by private bodies in offering these courses and are not regulated and do not confer any degree or diploma recognized by any approved authority do fall within the ambit of definition of ‘Educational Institutions’

Further Hon’ble Seven Judge Bench of the Supreme Court in P.A. Inamdar vs State of Maharashtra, coaching centres cannot be equated to regular schools or colleges which are regulated by a Regulatory Authority and also confer a Degree/Diploma on the student who has passed in the examinations conducted as per the Rules and norms specified in the statute, hence coaching centres are promoting rote learning and not imparting actual knowledge

Let it be so if in view of the above discussion some institutes are not fit to be called educational institute under UGC guidelines or any other education ministry rules. Consumer Protection Act is only concerned that the students pay fee and avails services whether it is educational institute or not, it is service provider.

Point no 4 & 5

On these two points again, discussion is about the character of an institute and interestingly student is considered a consumer against coaching institute, so no issue on that.

Point no 6

Post education grievance has already been taken up by Supreme Court in Bhupesh Khurana vs Buddha Dental College Hospital case in the year 2009 in detail, and there is no question of any contrary view unless the Supreme Court rules out or makes contrary judgment.

Point no 7

Regarding observation of NC in Manu Solanki case, incidental activities are not a part of education hence the institute is not responsible. National Consumer Disputes Redressal Commission took to task educational institutions on a number of issues, one of the most notable being the award of damages to the parent of a three year old girl child who drowned in a septic tank left open on the school premises. The Commission here made it clear that safety of students was an integral part of the service provided by educational institutions (S. Somasundaram Vs Sri Chakravarty International Matriculation Academy, 2001). The same NC now gives different version.

Let all institutes be barred to earn profit by facilitating parents to get transport, sports, extra curriculum activities and stop charging fee under these heads. Parents can separately file case against swimming coach or transporter or hostel management for rendering deficient services. However, the matter is before the Supreme court now and it seems from the remarks by apex court, they may consider Universities also as service provider which as on date are not covered as per Supreme court 2009 judgment on Bihar Examination Board vs Suresh Prasad Sinha, and Maharishi Dayanand University vs Surjeet Kaur.

All eyes are on Supreme Court to set all controversies at rest on the very crucial issue of education as service under CP Act.

Jurisdiction of High court to hear appeal against National Commission Order under Article 227

by cv | Sep 17, 2022 | Legal

Jurisdiction of High court to hear appeal against National Commission Order under Article 227

The Supreme Court in its order dated 13^th May 2020 stated, “No further appeal to this Court is provided against the order passed by the National Commission in exercise of its powers conferred under Section 58(1)(a)(iii) or under Section 58(1)(a)(iv) of the 2019 Act. In that view of the matter, the remedy which may be available to the aggrieved party against the order passed by the National Commission in an appeal under Section 58(1) (a) (iii) or Section 58(1) (a) (iv) would be to approach the concerned High Court having jurisdiction under Article 227 of the Constitution of India.”

Dr Prem Lata, Legal Head VOICE

This is a well settled law that no writ petition lies against the order of the consumer commissions before the High Courts. Supreme Court in Cicily Kallarackal vs. Vehicle Factory judgment held, “to state in absolute terms that it is not appropriate for the High Courts to entertain writ petitions under Article 226 of the Constitution of India against the orders passed by the Commission, as a statutory appeal is provided and lies to this Court under the provisions of the Consumer Protection Act, 1986. Once the legislature has provided for a statutory appeal to a higher court, it cannot be proper exercise of jurisdiction to permit the parties to bypass the statutory appeal to such higher court and entertain petitions in exercise of its powers under Article 226 of the Constitution of India.”

But here is a case wherein the Supreme Court has confirmed that matter against the order of National Commission could be filed before the High Court under Article 227 of the constitution.

Facts of the Case

Faizel, a home buyer booked a flat in the project floated by the respondent /builder. Despite the payment of sale consideration, the possession of the flat was not handed over and therefore he filed a consumer complaint before the Delhi State Consumer Redressal Forum on 10.08.2013 for deficiency of service and unfair trade practice. By order dated 16.10.2020, the State Commission directed the builder to handover possession of the flat, pay compensation for the delayed period in the form of simple interest at the rate of 9% for the period from the date of possession of the flat was due to be delivered till the delivery of the possession.
Faizel filed an execution and contempt petition before the State Commission. Vide order dated 12.03.2021, the State Commission directed the decree holder /complainant to place on record the details of the bank accounts or the properties of the builder for attachment for not implementing the judgment and order dated 16.10.2020 passed by the State Commission.
Builder went in appeal before the National Commission. Vide order dated 30.03.2021, National Commission granted stay of the State Commission’s order, subject to deposit of the entire cost of the flat along with 9% interest on the amount paid till date in the Registry of the State Commission or face the execution action by the State Commission.
Feeling aggrieved and dissatisfied with the order dated 30.03.2021 passed by the National Commission, the respondent preferred writ petition before the High Court by way of writ CM (M) No. 374/2021 under Article 227 of the Constitution of India contending, inter alia, that the National Commission ought not to have directed the builder to deposit the entire cost of the apartment along with the compensation awarded by the State Commission.

This appeal before the SC is filed against the interim order passed by the High Court with a question whether High Court has the jurisdiction to entertain an appeal against the order of National Commission. We need to understand the law in this regard before understanding the stand taken by the Hon’ble Supreme Court.

As per Section 67 of the 2019 Act, the appeal remedy to the Supreme Court is available only with respect to orders passed by the NCDRC in exercise of its powers conferred by sub-clause (i) or (ii) of clause (a) of sub-section (1) of Section 58. In other words, the appeal remedy to the Supreme Court under Article 136 in SLP is only with respect to the original orders passed by the NCDRC. No appeal can be filed against the order of National Commission which are passed in appeal.

But what can be the way to justice if Supreme Court cannot be contacted under this situation? Should it be considered the end with no further remedy?

This is a case before the Hon’ble Supreme court in the matter of Ibrat Faizan versus Omaxe Buildhome Private Limited wherein the question before it was to decide as to whether, against the order passed by the National Commission in an appeal under Section 58 (1) (a) (iii) of the 2019 Act, a writ petition before the concerned High Court under Article 227 of the Constitution of India would be maintainable?

SC held in its order dated 21 March 2022, “No further appeal to this Court is provided against the order passed by the National Commission in exercise of its powers conferred under Section 58(1)(a)(iii) or under Section 58(1)(a)(iv) of the 2019 Act. In that view of the matter, the remedy which may be available to the aggrieved party against the order passed by the National Commission in an appeal under Section 58(1)(a)(iii) or Section 58(1)(a) (iv) would be to approach the concerned High Court having jurisdiction under Article 227 of the Constitution of India.”

In this case, the Court has explained the difference between a writ filed under Art 226 and under Art 227 through various earlier decided cases and confirmed that in present situation writ is not admitted under Art 226. It is Art 227 under which consumer against the order of a tribunal can go to High Court when no other remedy is available to the consumer.

Article 226 and Article 227: The Difference between the Two

The case of Meshram and Ors. vs. Smt. Radhikabai and Anr, laid down the scope, power and differences between Article 226 and Article 227.

“The first and foremost difference between the two articles is that proceedings under Article 226 are in exercise of the original jurisdiction of the High Court while proceedings under Article 227 of the Constitution are not original but only supervisory. The power of superintendence has been extended by this Article to tribunals as well.”

It further stated, “The power under Article 227 is intended to be used sparingly and only in appropriate cases for the purpose of keeping the subordinate courts and tribunals within the bounds of their authority. Power under Article 227 shall be exercised only in cases occasioning grave injustice or failure of justice.”

The Hon’ble Court in case of Surya Devi rai vs. Ram Chander Rai, further observed that there is lack of knowledge of the distinction between the understanding of Article 226 and 227 and hence it is a common custom with the lawyers labelling their petitions as one common under Articles 226 and 227 of the Constitution, though such practice has been deprecated in some judicial pronouncements.

After reeling on the catena of decisions of the apex court, the Hon’ble Supreme Court in Surya Devi Rai vs. Ram Chander Rai laid down the following differences:

The writ of certiorari is an exercise of its original jurisdiction (Article 226) by the High Court. Exercise of supervisory jurisdiction (Article 227) is not an original jurisdiction and in this regard, it is akin to appellate revisional or corrective jurisdiction.
The jurisdiction under Article 226 of the Constitution is capable of being exercised on a prayer made by or on behalf of the party aggrieved but the power conferred under Article 227 viz the supervisory jurisdiction is capable of being exercised suo moto as well.
In a writ of certiorari, the record of the proceedings having been certified and sent up by the inferior court or tribunal to the High Court, the High Court if inclined to exercise its jurisdiction, may simply annul or quash the proceedings and then do no more (Art 226).
In exercise of supervisory jurisdiction (Art 227), the High Court may not only quash or set aside the impugned proceedings, judgment or order but it may also make such directions as the facts and circumstances of the case may warrant, may be by way of guiding the inferior court or tribunal as to the manner in which it would now proceed further or afresh as commended to or guided by the High Court.
In appropriate cases the High Court, while exercising supervisory jurisdiction, may substitute the impugned decision with a decision of its own, as the inferior court or tribunal should have made.
The court concluded that under Article 226 of the Constitution, writ is issued for correcting gross errors of jurisdiction. Supervisory jurisdiction under Article 227 of the Constitution is exercised for keeping the subordinate courts within the bounds of their jurisdiction

Law established in this case:

National commission is a tribunal, hence Article 227 applies and High court has the jurisdiction in supervisory capacity.
No appeal on appeal case, only once appeal is permitted hence SC cannot be contacted under Special Leave Petition (SLP) for appeal over appellant order.

SC affirms complaint should not be returned for misjoinder of parties

by cv | Aug 20, 2022 | Legal

SC affirms complaint should not be returned for misjoinder of parties

The Supreme Court while setting aside the order of National Commission in the matter of Brahmaputra Biochem Private Limited Versus New India Assurance Company & Anr said, “If the National Consumer Disputes Redressal Commission (NCDRC) is of the opinion that the Surveyor was an unnecessary party or the pleadings are contradictory, it should have struck down the said party. The striking of surveyor from the array of parties would not make the complaint disjoined, as it was duty of the NCDRC to strike of an unnecessary party.”

Dr Prem Lata, Legal Head VOICE

Facts leading to appeal before the SC were that an order was passed by the National Consumer Disputes Redressal Commission on 27.09.2021 by which complaint was returned unadjudicated for the reason as said that surveyor was an unnecessary party in Insurance claim matter. Liberty was given to the claimant/appellant to file fresh complaint within 30 days. While granting liberty, it was directed to make the insurance company alone the sole opposite party for seeking redressal.

Observation by the NCDRC

The NCDRC returned the complaint with the Observations

“We agree that a complaint ought not to be defeated by reason of misjoinder of parties alone. In the present case however we find that the contents and articulation of the complaint is such that the insurance co. and its surveyor & loss assessor have been inextricably conjoined together. The material distinction that the complainant co. is a ‘consumer’ of the insurance co. alone, and not of its surveyor & loss assessor also, has been completely lost. The difference between the performance of service by the insurance co. and the role and responsibility of its surveyor & loss assessor has not been maintained. In the wake of such confounding overlappings, a mechanical deletion of the opposite party no. 2 surveyor & loss assessor from the array of the parties would make the complaint disjointed and askew, as may occasion to cause embarrassment to its adjudication on merit.”

From the above observation, it appears that the National Commission finds that complainant is not a consumer against surveyor & loss assessor because it is not complainant taking services from surveyor. He is an agent and service provider to the Insurance Company.

Findings of SC

SC bench comprising Justice Hemant Gupta and Justice V Ramasubramanian observed that the approach of NC is erroneous and said that if there was misjoinder of parties, the unnecessary parties should be deleted, instead of returning the complaint. The complaint cannot be returned unadjudicated with liberty to file fresh complaint as the issue of limitation will also arise. Once the period of limitation has expired, the appellant/complainant cannot file the second complaint.

Further, the surveyor was not impleaded to claim compensation but as a proper party in view of the allegations levelled against it. Surveyor was in fact the necessary party for the reasons that facts about claim were known to him only as assessor. As part of principles of natural justice, if there are allegations against the surveyor and the loss assessor, an opportunity should have been given to such person to rebut the allegations. It was also revealed by the advocate of complainant that the notices were issued to the surveyor on the last known address but the notice could not be served as the firm had shifted its office.

It is open to the appellant to serve the surveyor by substituted service in a newspaper and thereafter, the NCDRC could proceed and decide the matter on merits Consequently, SC set aside the order passed by the NCDRC dated 27.09.2021 and remit the matter for fresh decision in accordance with law.

Law laid down in earlier decided case on similar issue

A case of non-joinder of party decided by SC on the same lines in year 2004 also wherein SC did not agree with National Commission for dismissing the complaint for not making a doctor a party in medical negligence case against a hospital.

The legal question in that case was as to whether non-impleading the treating doctor as party could result in dismissal of the original petition for non-joinder of necessary party. Supreme Court in the above matter held that “An error of non-joinder of necessary to the party cannot result in dismissal of the original petition for non-joinder of party. The National Commission shall, in the disposal of any complaints or any proceedings before it, have the power of a civil court and can direct the parties to disclose the name and other particulars of treating doctor if not known to the complainant. So far as the law with regard to the non-joinder of necessary party under Code of Civil Procedure, Order 1 Rule 9 and Order 1 Rule 10 of the CPC no suit shall fail because of mis-joinder or non-joinder of parties. Even if after the direction given by the Commission the concerned doctor and the nursing staff who were looking after the deceased have not been impleaded as opposite parties, it cannot result in dismissal of the original petition as a whole.”

Law laid down in the above case was

An error of non-joinder of necessary to the party cannot result in dismissal of the original petition for non-joinder of party.
The National Commission shall, in the disposal of any complaints or any proceedings before it, have the power of a civil court and can direct the parties to disclose the name and other particulars of treating doctor if not known to the complainant.
So far as the law with regard to the non-joinder of necessary party under Code of Civil Procedure, Order 1 Rule 9 and Order 1 Rule 10 of the CPC is concerned, no suit shall fail because of mis-joinder or non-joinder of parties. Even if the concerned doctor and the nursing staff who were looking after the deceased have not been impleaded as opposite parties, it cannot result in dismissal of the original petition as a whole.
Since the burden is on the hospital to prove not guilty, they can discharge the same by producing the treating doctor of the patient in defence to substantiate their allegation that there was no negligence.
If the hospital fails to discharge their duties through their doctors being employed on job basis or employed on contract basis, it is the hospital which has to justify and by not impleading a particular doctor will not absolve the hospital of their responsibilities.

Hence, we find that the Supreme court in both the situations whether in case of non-joinder or misjoinder holds that Commissions must adjudicate the matter on merits and has freedom of choice to add or delete the unessential party from the array of parties but cannot refuse justice to parties.

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No more service charge by default, Govt issues notification

by admin | Jul 10, 2022 | Legal

No more service charge by default, Govt issues notification

The Notification by the Ministry of Consumer affairs issued on 04.07.2022 in the form of Guidelines are meant to stop levy of service charge by the Hotels and restaurants in the bill while customer avails service by visiting at their premises.

The question arises here as to whether guidelines in this form are really of any help to consumers and serve any purpose? We need to go back to the similar Guidelines issued in the year 2017 also on 21st April when CCPA was not formed and guidelines were issued by Ministry under the signature of Dy Secretary to the Government of India. This time CCPA under its power under section 18(2) of the Consumer Protection Act 2019 has done the same act with the similar guidelines.

In the earlier Guidelines of 21.04.2017 observations by Ministry was as hereunder-

Whereas it has come to the notice of this department that some hotels and restaurants are charging tips/gratuities from the customers without their express consent in the name of service charges
Whereas it has come to the notice of this department that some customers have been paying tips to waiters in addition to service charges under the mistaken impression that service charge is a part of taxes
Whereas it has come to the notice of this department that in some cases hotels/restaurants are restraining customers from entering the premises if they are not in prior agreement to pay mandatory service charge

Guidelines to prevent unfair trade practices and protection of Consumer Interest with regard to levy of service charge in hotels and restaurants

Guidelines on fair trade practices related to charging of service charge from consumers by hotels/restaurants

Due to above observations Ministry had issues following guidelines –

In view of the above ,the bill presented to the customer may clearly display that service charge is voluntary and the service charge column of the Bill may be left blank for the customer to be fill up before making payment
A customer is entitled to exercise his/her rights as a customer to be heard and redress under provisions of the Act in case of unfair/restrictive trade practices and can approach Consumer Dispute Redressal Commission/Forum of appropriate jurisdiction

The above Guidelines were found absurd by many consumer luminaries and were criticised for the reason service charges were made optional /voluntary. It is not clear from the language whether it is voluntary to put in bill or voluntary to pay by the customer .But Hotels / restaurants are guided to keep column blank meaning thereby column can be very much there

New Guidelines dated 4.07.2022

Now coming to the new guidelines the same observations are made that Hotels /Restaurants are levying service charge in the bill by default without informing consumers that paying such charge is voluntary and optional.

Further Ministry again talks of Tips system like earlier guidelines and assumes that service charge is levied in substitute to Tip to waiter for good services

Further Ministry holds that service charges shall not be collected by adding it along with the goods bill while levying GST on the total bill

Further emphasis given that aforesaid guidelines shall be in addition to and not in derogation of the guidelines dated 21.04.2017

The bottom line of the present Guidelines are-

Levy of service charge is optional
Earlier guidelines dated 21.04.2017 are very much valid, customer must be informed that they may or may not pay service charges.
It is also said that consumer can go for redressal of grievance to the redressal agencies

Legal repercussion of the above can never be any redressal from the court of law if at all consumer prefers so. First, it is guideline with less legal force and above that option to levy or pay service charge is not clear whether this option is to the htel /restaurant or to the customer . Most of the consumers do not know they have option to refuse and if some refuse, they can be obliged by not taking such charge and matter ends

It’s just no relief .One fails to understand why any option again when GST system is now prevailing as one time tax for everything.

Further any legal manual should be very specific, clear in terms of implementation and should not be narrative which could lead to more than one meanings. In both the above guidelines there is unnecessary presumption of tip by way of service charge when issue is limited –levy of Service charge . It is also mentioned in both the guidelines that some hotels restricted the entry if customer is unwilling to pay service charge which sounds untrue. How can an hotelier know that this particular person entering will not pay service charge at the end when bill is given? Such narrations cannot be the part of manual like document.

Further in both the guidelines one thing is commonly said that there is no restriction on cost of food items, hence service charge not desired but at the end it is said optional /voluntary.

Here it is very relevant to quote the views of SC from its judgments in the matter of the Federation of Hotels and Restaurants Association of India & Ors Versus Union of India & Ors. Again in the year 2009 in the matter of Delhi Gymkhana Club Ltd V Union of India elaborating the scheme and law in detail. The question raised in the year 2007 in the case of Federation Of Hotels & Restaurants Association Of India & Ors V/S Union Of India was as to whether it is permissible for the hotel to charge their customers any price above the maximum retail price mentioned on the mineral water bottle .The court held in clear terms that charging price for mineral water in excess of the MRP printed on the packaging ,in the provision of service to the customers does not violate any of the provisions of the standards of weights and measurement act as it does not constitutes a sale or transfer of the commodity to them Billing by hotelier/restaurant for service and goods is one and indivisible. It is further elaborated that a customer when enters a hotel or restaurant ,it is not simply to make a purchase of these commodities .His direct purpose of going therein is more than this-it is to enjoy its ambience ,hence held NO for courts to interdict the sale of bottled mineral water.

The most important part of the above judgments is that Billing by hotelier/restaurant for service and goods is one and indivisible. Henec there is no question of optional service charge ,this is the law explained by Supreme court as back as in 2009

Hence Guidelines are absurd, not specific and difficult to implement

By Dr Prem Lata

Ex –Member, Consumer Commission

How the courts make law

by admin | Jul 10, 2022 | Legal

How the courts make law

(1)

It is well settled law that –

“Requirement of leading detailed evidence could not be a ground to shut the doors of any forum created under the Act like the Consumer Protection Act.”

CCI Chambers Coop. Hsg. Society Ltd. vs. Development Credit Bank Ltd.

(2003) 7 SCC 233

(2)

“We find that the approach of the NCDRC is erroneous as If the NCDRC is of the opinion that the Surveyor was an unnecessary party or the pleadings are contradictory, it should have struck down the said party. The striking of surveyor from the array of parties would not make the complaint disjoined, as it was duty of the NCDRC to strike of an unnecessary party.”

Said Supreme Court

“As a part of principles of natural justice, if there are allegations against the Surveyor and the loss assessor, an opportunity should have been given to such person to rebut the allegations.”

Bharmaputra Biochem Private Limited Versus New India Assurance Company & Anr SC

Civil Appeal No. 6943 Of 2021

February 21, 2022

Telecom Disputes back to Consumer Commissions: SC

by cv | May 14, 2022 | Legal

Telecom Disputes back to Consumer Commissions: SC

This judgment is not the result of incorporating the word telecom in the Consumer Protection Act 2019. It is in fact a revisit by the apex court three judges bench on the merit of the case as it stands under the earlier Consumer Protection Act 1986. The apex court reversed the order, finding it erroneous in view of the applicability of the then prevailing law.

Dr Prem Lata, Legal Head VOICE

It was a historic day when the Hon’ble Apex Court after long thirteen years declared on 16th Feb 2022 in Civil Appeal No 923, Vodafone Idea Cellular Ltd. Versus Ajay Kumar Agarwal that Consumer Protection Act is a specific and not a general act. The bench comprising Justices DY Chandrachud, Surya Kant and Vikram Nath further observed that the existence of an arbitral clause under the Indian Telegraph Act, 1885, will not oust the jurisdiction of the consumer forum. The above order was in appeal arising out of judgment dated 26 May 2016 of the National Consumer Disputes Redressal Commission.

Facts of the Case

A dispute between a consumer and Vodafone Idea Cellular Ltd started on 25 May 2014, at Ahmedabad District consumer forum with allegation of deficiency in services. The telecom company raised an objection to the maintainability of the complaint by placing reliance on a Supreme Court judgment in General Manager, Telecom v. M Krishnan and Another. This objection was dismissed at District Forum, State Commission and also National Commission, holding that a private service provider is not a ‘telegraph authority’ for the purposes of Section 7B of the Indian Telegraph Act 1885. The matter came to Supreme Court referring to Section 7B, of the act which provides disputes concerning a telegraph line, appliance or apparatus, between the telegraph authority and the person, for whose benefit the line has to be determined by arbitration.

Background of the Dispute

In 1992, a case came before the National Commission for adjudication to decide on the issue as to whether existence of a remedy by way of arbitration in the Indian Telegraph Act preclude an aggrieved consumer to seek remedy under the Consumer Protection Act. While deciding this matter between the Telecom Dist. Manager, Patna and Bihar State Warehousing Corporation, the national commission held that consumer can seek remedy under the Consumer Protection Act.

Yet again, on another occasion in the case of District Manager, Telephones, Patna V Dr Tarun Barthvar, the question before the commission was as to whether the consumer forum had the jurisdiction to decide a dispute involving meter reading or excess billing which are covered under section 7B of the Indian Telegraph Act 1885. The commission gave a positive response to it. Further, in a case of Mahanagar Telephone Nigam Ltd V Ghevar Chand Seasmal Sonigara, 1992, the question was more specific as to whether it was not mandatory for the complainant to invoke the arbitration clause under the Telegraph Act. The National Commission held that it was not.

A similar issue was raised in case of Union of India V Dr B S Sidhu 1992, in a case of Govt of India, Secretary, department of Telecom V Satya Narayan Lal, and also in case of Union of India through Rajkot Telephone V Dhanji Bai, National Commission. In all the above cases, it was held that consumer court has the jurisdiction to deal all such cases inspite of arbitration clause in the telegraph act. In yet another case of Divisional Engg. Telecom Moradabad V Virender Kumar, the National Commission confirmed the jurisdiction of consumer forum.

Supreme Court also held in a number of cases while deciding the various issues under Consumer Protection Act, that since the inception of the act that section three of the consumer protection act gives additional remedy to the consumer apart from the other provisions available to him. Till the latest judgement pronounced by the Honorable Supreme Court on 1.9.2009, the Consumer forum had been dealing with all telecom matters filed by consumers.

The Supreme Court, in civil appeal no 7687 of 2004 in the case of GM Telecom V M Krishanan, barred the jurisdiction of consumer forum and held that such disputes will be decided by arbitrator under section 7B of the Indian Telegraph Act. The arbitrator shall be appointed by the Central Govt either specifically for determination of referred dispute or generally for the determination of disputes under this section. The apex court has further remarked that it is a well settled law that overrides the general law. In that context, a two judge bench of this Court said, “In our opinion when there is a special remedy provided in Section 7B of the Telegraph Act regarding disputes in respect of telephone bills, then the remedy under the Consumer Protection Act is by implication barred”.

After this judgment, questions arose as to whether this bar applied to private players also. These private companies came into the field of telecommunication through the notification allotting license to these companies. Ministry of Communication, Department of telecommunications, licensing group, and basic service cell issued notification on 24^th may 1999. Through this notification, exercising the provisions of sec 19B of part 111 of the Indian telegraph act 1885, the Central Govt conferred the power upon the duly authorized licensee /private basic telephone services operators to provide services to any persons, public corporations, and autonomous bodies, State Govt or Central Govt. It is said at clause 1(b) that these licensee(s) are to always comply with the provisions of the act or any other law for the time being in force meaning thereby that these private licensee are to adhere with section 7B of the Indian Telegraph Act. The question was would the central govt. make arrangement of arbitrators for all private players also when consumers are left with no remedy but the arbitration provision which is final for them. Not only that, it is quite possible that no arbitrator was appointed on the request of aggrieved consumers. Even the provisions under the Arbitration and Conciliation Act 1996 for appointment of arbitrator through civil court is a full fledge case in itself, not easily reachable to consumers.

Subsequently, a letter from the Department of Telecommunication dated 24 January 2014 was issued and stated that the judgment in M Krishnan on Section 7B of the Act of 1885 would not be applicable to a private service provider since it is not a ‘Telegraph Authority”.

Further, with the SC remark that special act prevails over general law, huge number of cases related to banks, railways, societies and other specific acts started pouring into consumer forums which issues were already settled by Supreme Court through various orders that consumer protection act is an additional remedy to consumers under section 3 of act 1986.

Ministry of Consumer Affairs then issued notification and circulated among all Consumer forums and commissions to accept telecom cases for adjudicating but consumer courts could not accept cases because article 141 bound them to follow apex court precedence .Due to this reason, parliament had to incorporate telecom word in Consumer Protection Act 2019.

Supreme Court finally held on 16 Feb 2022 in Civil Appeal No 923 of 2017, Vodafone Idea Cellular Ltd. Versus Ajay Kumar Agarwal that

Consumer Protection Act is a specific law.
Services of telecom nature are services under consumer protection act as an additional remedy to the consumers, not limited to specific words in the act.
Arbitration clause does not bar consumers to file their telecom cases before consumer commissions.

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