Joint complaint & Class action are not the same, but both are accepted: Re-confirms SC

According to the Supreme Court’s order, the necessity of applying Order I Rule 8 of the Code of Civil Procedure, 1908 arises only in cases where a plaintiff represents the general public, specifically in complaints filed under Section 12(1)(c) of the 1986 Act. This rule does not apply when complainants in a similar position collectively file a complaint seeking identical relief. In such cases, there is no requirement to comply with Order I Rule 8 CPC since these complainants do not represent others, especially when there is no broader public interest involved. These complainants are seeking relief for themselves and nothing more.

Dr Prem Lata, Legal Head VOICE

  • Case title: Alpha G184 Owners Association V/S M/S Magnum International Trading Company Pvt. Ltd.
  • A. No.-004718 / 2022
  • Hon’ble Mr. Justice J.K. Maheshwari, Hon’ble Mr. Justice M.M. Sundresh
  • Decided 15 May 2023

Factual background

A construction company, against whom home buyers filed a consumer complaint before the National Commission due to the non-completion of a project within the promised timeframe, has once again sparked controversy. The builder argued that the current complaint is not valid for two reasons.

  • Complaint is not filed in the capacity of representation by someone under Order I Rule 8 of the Code of Civil Procedure, 1908 where public interest is involved.
  • Complaint of the association was not maintainable because the registration of the association of allottees did not conform with the Haryana Registration and Regulation of Societies Act, by-laws 2012 (HRRS Act).

The builder submitted an affidavit to the national commission, informing them that the matter mentioned in the writ petition is currently awaiting a decision from the High Court of Haryana. As a result, the national commission postponed the proceedings sine die.

Here is an appeal against the order of National commission.   

SC after going through the details observed:

“The need for the application of Order I Rule 8 of the Code of Civil Procedure, 1908 (hereinafter referred to as “CPC”), which speaks of a plaintiff representing the other public as a whole would be required only in a case involving a complaint under Section 12(1)(c) of the 1986 Act. In other words, it does not have any application when similarly placed complainants jointly make a complaint seeking the very same relief. In such a case, there is no question of Order I Rule 8 CPC being complied with as they do not represent the others, particularly when there is no larger public interest involved. Such complainants seek reliefs for themselves and nothing beyond.”

Court further held “a pedantic and hyper-technical approach would cause damage to the very concept of consumerism”.

On the second point of eligibility of association to file complaint Court noted

“That the issue of registration and byelaws of the association had no relevance in the proceedings before the Commission in light of the fact that individual affidavits were filed, the complaint would fall under Section 12(1)(a) (Manner in which complaint shall be made by a consumer) of the 1986 Act and that there was no need to go into the issue of whether the case would come under Section 12(1)(b) of the 1986 Act (Manner in which complaint shall be made by a consumer association.

“The 2019 Act facilitates the consumers to approach the forums by providing a very flexible procedure. It is meant to encourage consumerism in the country. Any technical approach in construing the provisions against the consumer would go against the very objective behind the enactment,” the Court observed.

The Apex Court directed the National Commission to expeditiously hear the matters on merits.

Earlier cases

The Class Action debate emerged during the Amrapali Sapphire Developers versus Amrapali Sapphire Flat Buyers Welfare Association case in 2019. In this case, 43 consumers collectively filed consumer complaints before the National Commission against Amrapali builders. The Flat Buyers Welfare Association had lodged the complaint in May 2016, citing a delay in the builder delivering possession of their flats. The builders contested the complaint by raising the following arguments.

  • Number of consumers cannot file cases together.
  • The pecuniary jurisdiction of Commission should be considered based on amount involved in each case separately.
  • 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. Thereafter ‘Class Action’ theory was specifically brought in Consumer Protection Act 2019.

In this connection, the judgment referred to Brigade Enterprises Ltd. v. Anil Kumar Virmani (2021)which held that consumers having similar interests can file a joint complaint and that they need not file in a representative capacity.

Reference was also made to the recent decision National Insurance Co. Ltd. v. Harsolia Motors And Ors. 2023 (SC) 313, which advocated against adopting a technical approach in interpreting Consumer Protection Act

Important Class Action Case after new act 2019: Vikrant Singh Malik & 25 Ors.Versus Supertech Limited & 2 Ors (Through its M.D.)

Following the enactment of a new act, the Supreme Court delivered a significant judgment on August 24, 2020 (SC) in a specific case, providing a comprehensive explanation of the Class Action theory. This landmark judgment is regarded as a guiding precedent for future cases involving Class Action. The case before the esteemed National Commission involved Vikrant Singh Malik & 25 Others versus Supertech Limited & 2 Others (Through its Managing Director), with the consumer case number 1290 of 2015.

The matter at hand revolved around the question of whether a complaint filed by 26 consumers who shared a common interest against the same builder in a housing matter could be accepted by the highest commission, considering that each complainant had a different status regarding their respective flats. All 26 consumers jointly submitted a complaint along with an application seeking permission to file a collective complaint. The filing of a joint complaint was based on the invocation of Section 2(1) (c) in conjunction with 2(1) (b) (IV) of the Act 86.

National Commission made two major observations:

  1. That there was variation of facts of each homebuyer about the allotment of their flat such as –
  • Apartment Distinct
  • Date of Buyer agreement different
  • Date of execution of agreement different
  • Price of flat different
  • Area of flat different
  1. Frame of complaint, nature of pleadings and relief sought is not fit to be called ‘class action’.  
  • Only seeks to highlight the grievance of 26 complaints whereas some other consumers having same grievance had settled the matter with builder.
  • Complaint does 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. Matter now comes before the Supreme Court.

Supreme Court observes-

  • A complaint filed by all the consumers with the relief for the benefit of all consumers is maintainable.
  • Regarding factually different cost, size, booking date and price variation, Supreme court refers 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 detail 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 possession, all the allotees irrespective of size shall have common grievance against the builder. Hence 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. Hence, Complainants could file a joint complaint if there is an element of sameness of the interest.

  • Complaint needs to be modified to make it Class Acton

The complaint lacks the collective representation of all the consumers involved. Furthermore, the facts indicate that some of the homebuyers have already resolved their issues with the builder and taken possession of their properties. Consequently, the complaint in its current form is not admissible and needs to be modified. Considering that the objective of the act is to protect consumer welfare, the National Commission for Dispute Resolution (NCDRC) can reconsider its decision to dismiss the complaint entirely, especially when the common interest among the complainants is clearly evident. Additionally, the issue can be examined since the advocate representing the complainants has requested permission to amend the complaint.

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

  • There should be an element of sameness of the interest and with common interest of all the consumers joining together.
  • The complaint should be represented by one leading case for protection of interest & benefit of all the consumers.
  • 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 by the Supreme Court.
  • The content of the complaint must also not be a single party centric. It should speak for all the consumers.

The Supreme Court has remanded the complaint back to the National Commission for Dispute Resolution (NCDRC) to reconsider its decision of dismissing the complaint entirely. This demonstrates that the court adopts a highly flexible approach, favouring consumers based on the specific facts and circumstances of each individual case.

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