Ten Important Cases of 2023 (1)-N

2023 has been an action-packed year for various consumer related judgements. This buying guide is a compilation of top 10 significant consumer cases of 2023 that are landmark judgements. The cases relate to real estate, insurance and ecommerce to mention a few. The buying guide is divided into two part series.

Case 1

• Case Title: Goutam Roy vs Avolon Projects (NC)
• CC No 1941 of 2018
• Decided on 24^th January 2023 (NC)

Legal issue : Considerations Regarding Earnest Money Forfeiture in Real Estate (What is a reasonable amount to deduct when a home buyer cancels a booking?)

Facts:

• The builder and homebuyer entered into an agreement that includes a forfeiture clause. If the homebuyer cancels the booking, 20% of the total basic sale price will be forfeited.
• Question before the National Commission was as to how much deduction is reasonable and justifiable.

The National Commission, drawing upon various Supreme Court cases, invoked Section 74 of the Contract Act of 1872. According to this provision, in instances of contract breach, actual damages must be demonstrated to penalize the defaulting party. In cases involving the cancellation of a flat or property booking by the buyer, where the property remains solely with the builder and there is minimal loss incurred, the National Commission mandated the forfeiture of 10% of the total sale cost of the property.

Similar Cases Referred:

• Moula Bux vs Union of India 1970 SC
• Sirdar K B Ram Chandra Raj URS vs SC 2015theory of actual damage as per section 74 of contract act
• Amit Gupta & Anr. vs M/S. Vatika Limited (National Commission) Consumer Case No. 425 Of 2018

Legal issue in above case: Whether there can be any forfeiture of earnest money or any money when agreement not signed by the parties due to objectionable clauses?

“Commission directed refund of the entire amount of Rs.37, 05,892/ which the said complainant had paid to the OP, along with interest on that amount @ 9% per annum.”               

Case 2

• Case Title: National Insurance Company Ltd. vs the Chief Electoral Officer & Ors. (SC)
• Civil Appeal No.4769 of 2022
• Decided on 8^th February 2023 (Sanjay Kishan Kaul; J., Abhay S. Oka; J.)

Issue: Can we categorize a death due to heat stroke as accidental?

Facts:

On February 9, 2000, the National Insurance Company Ltd. and the Chief Electoral Officer of Bihar, Patna, entered into a Memorandum of Understanding. The purpose was to extend insurance coverage to individuals engaged in election-related duties for the Bihar Legislative Assembly Elections in the year 2000.

“The insurance is intended to provide for the payment of compensation in the event of death only resulting solely and directly from accident caused by external violent and any other visible means.”

Constable Late Deval Ravidas, serving in the Sheohar District Force, was deployed for election-related duties during the Bihar Legislative Assembly Elections in the year 2000. Unfortunately, he passed away due to a heat stroke on May 26, 2000, while performing election duty. The cause of death was not attributed to any external violent activity or accident.

Despite seeking compensation, the National Insurance Company rejected the claim. In response, the Chief Electoral Commission filed an appeal before the Supreme Court against the National Commission’s decision.

SC confirmed the order of NC

Dismissed the appeal with the following observations –

“Death due to sun stroke during election duty will not come under the scope of the clause “death only resulting solely and directly from accident caused by external violent and any other visible means. Proximate causal relationship between the accident and the body injury is a necessity”.

Reference was made to the earlier decide case of similar nature.

Alka Shukla vs LIC ((2019) 6 SCC 64

Principal laid down for interpretation of law –

A distinction between “accidental means” and “accidental result”.

(a) a fatal heart attack while dancing would be called “accidental” but would fail to attract insurance cover as not due to “accidental means.

(b) Heart attack suffered as a result of over-exertion on being chased by a ferocious dog the death might attract the insurance cover as it was caused by “accidental means”.

Case 3

• Case Title: Association of Vasanth Apartments’ Owners vs Gopinath & Ors. (SC)
• Civil Appeal No. 1890-91 of 2010 (Directed against the judgment dated 19.10.2007 of Chennai HC)
• Decided on 13^th February 2023

Issue: Building Rules

Regulation 19 of the Development Control Rules for the Chennai Metropolitan Area stipulates that builders are required to allocate open spaces within the plots they develop.

Facts:

• Members of the Association of Vasanta Apartment own specific units within a complex comprising 12 blocks. According to Rule 19 of the Development Control Rules, a portion of the land was designated as Open Space Reservation (OSR) area. However, even after 12 years, this OSR area has not been transformed into a park. Interestingly, the Vasanta Apartments are separated from this OSR area by a compound wall, and the area is currently being utilized as an kaccha road. The claim put forth by Vasanta Apartments asserts that this land is integral to their layout.
• Considering the presence of a kaccha road that has been actively used by a significant number of the public, the High Court concluded that altering the existing situation on the ground would result in substantial injustice. Consequently, the court issued a directive for the land to be exclusively utilized for the designated purpose of Open Space Reservation (OSR).

Supreme Court upheld rule

• A regulation requiring builders to allocate open spaces in the plots they develop, specifically mandating a reservation of 10% open space area, was deemed not to infringe upon Article 14 and 300A of the Constitution. The court held that such a mandate does not constitute compulsory acquisition.
• Areas covered by the Open Space Regulations cannot be diverted for any other purpose. The respondents (local authorities) are duty-bound to ensure that the area set apart as OSR is stringently utilised only for the purpose in the rule/regulation.
• We direct that no area meant for OSR shall be utilised as dumping yards or any other purpose other than as OSR.

 Case 4

• Case Title: Naresh Garg and Sons vs CHD Developers Ltd. (NC)
• CC No. 1753 of 2018,
• Decided on 23^rd March 2023

Issue: Can the builder benefit from their own wrongdoing, particularly in cases of delayed possession?

Facts:

The flat in question was initially assigned to Sh. Sarvesh Kumar. Mr. Naresh Garg subsequently applied to CHD Developers, the Opposite Party, for the re-allotment of a unit near the Golf Course Avenue in Gurgaon. The re-allotment was approved, and all requisite formalities were completed, including the payment of charges. However, despite the agreement stipulating that possession of the unit should be handed over by the Opposite Party within 42 months, they failed to meet this timeframe.

Arguments extended by Opposite Party:

• That the delay was caused due to a notification by the National Green Tribunal, Delhi resulting into stopping all construction activities by OP for a few months.
• That the complainant does not fall under the definition of ‘consumer’ as Section 2(1)(d)(i) of the Consumer Protection Act of 1986 for the reason the property was purchased for investment and re-sale and falls under Commercial purpose
• That the Complainant’s claim is inflated to bring the complaint within the pecuniary jurisdiction of NCDRC.

 National Commission Held

In addressing the aforementioned case, the National Commission dismissed the Developers’ argument claiming that the delay was a result of guidelines issued by the National Green Tribunal to halt construction. The bench commented that the Opposite Party cannot capitalize on their failure to adhere to the rules of the green tribunal and then use it as a justification for construction delays; this cannot be deemed as force majeure.

 SC Judgment

• There was no blanket order of the NGT to stop construction activities. The direction to stop construction activities was only where the construction was being carried out in violation of the MOEF Guidelines 2010.

“Builders are to bear for the consequences for the delays caused due to their own mismanagements and if any order by any courts are passed subsequently, that cannot be treated as force majeure conditions.”

• The contention of the Opposite Party that Mr. Naresh is not a consumer was rejected as no evidence was produced to corroborate the same.

 Case 5

• Case Title – Kamukayi & Ors. vs Union of India and Ors. (SC)
• Civil Appeal No. 3799 OF 2023 (arising out of SLP (C) NO. 17062/2022)
• Decided on 16^th May 2023

Issue: Does the lack of a ticket lead to the rejection of a bona fide passenger’s claim under the Railways Act, 1989, when defining an ‘untoward incident’?

Facts:

• In Civil Miscellaneous Appeal No. 2442/2019, the Madras High Court held that the appellant had not succeeded in proving that the deceased was a bona fide passenger. Additionally, the appellant failed to establish the occurrence of any ‘untoward incident’ or that the death of the deceased resulted from such an incident.
• The Railway Claims Tribunal, Chennai Bench, rejected the claim petition filed for compensation related to the death of Muchamy, also known as Muthusamy.

Appeals Before Supreme Court

Legal position

• Under Section 123(c), Clause (2) of the relevant legal provision, an “untoward incident” includes the accidental falling of any passenger from a train that is designed to carry passengers.
• According to Section 124A, the Railway Administration is obligated to provide compensation in the event of an untoward incident during the operation of the railway. Whether or not there is any wrongful act, neglect, or default on the part of the Railway Administration, a passenger who has suffered injury or death during such an incident is entitled to receive compensation. The Railway is required to pay compensation as specified for the particular untoward incident.
• By the explanation of the said section clarifying about ‘passenger’, it would include a person who has purchased a valid ticket for travelling by a train carrying passengers on any date or a valid platform ticket and becomes a victim of an untoward incident.

 SC Held

• Nevertheless, the mere absence of a ticket with the injured or deceased individual does not automatically negate the claim that they were a bona fide passenger. The initial burden of proof lies with the claimant, which can be fulfilled by submitting an affidavit outlining the pertinent facts. Subsequently, the burden shifts to the Railways, and the matter can be adjudicated based on the presented facts or the surrounding circumstances.
• Whenever any untoward incident happens occurs in the course of working of the railway, the Railway Administration is liable to compensate the passenger irrespective of whether there has been any wrongful act, neglect or default on the part of railway administration.

 Referred Cases:

• Madhya Pradesh High Court in Raj Kumari vs Union of India
• Delhi High Court in Gurcharan Singh vs Union of India
• Andhra Pradesh High Court in Jetty Naga Lakshmi Parvathi vs Union of India
• Supreme Court in Kamrunnissa vs Union of India

Case 6

• Case Title: K C Ninan vs Kerala State Electricity Board & Ors. (SC)
• Civil Appeal No 2109-2110 of 2004 with many others
• Decided on 19^th May 2023

Issue:

• Whether the arrears of unpaid electricity dues outstanding from the erstwhile owner can be claimed from the subsequent owner.
• The implication of the expression “as is where is” basis while getting transfer of any property.

Facts:

• The supply of electricity was discontinued due to the failure of the previous owners to pay the dues for consumption of electricity on the premises.
• The previous owners underwent liquidation, leading to the auction sale of the premises typically on an “as is where is” basis. Subsequently, the new owners, who acquired the properties through auction, sought new electricity connections for the premises where electricity had previously been disconnected due to non-payment of dues.

Observations by Court

1. A statute mandating the new property owner to settle the previous owner’s electricity debts before accessing electricity services will possess a statutory nature. Therefore, the retrieval of electricity arrears from a new owner aligns reasonably with the objectives outlined in the 2003 Act.
2. The phrase “as is where is” signifies that every prospective bidder is alerted to the fact that the seller disclaims any responsibility concerning the property being auctioned, including any aspect thereof.

SC Held –

In the exercise of the jurisdiction under Article 142 of the Constitution, the Electric Utilities have been directed in the facts of cases before us to waive the outstanding interest accrued on the principal dues from the date of application for supply of electricity by the auction purchasers. (SC gave relief to the consumer under special circumstances of the case)

Case 7

• Case Title: Pushpa Verma & 2 Ors. vs Bhardwaj Nursing and Maternity Home Private Limited & 9 Ors. (NC) (Escorts at Mumbai & Medanta at Gurugram)
• Consumer Case No. 257 Of 2015
• Decided on 12^th June 2023

About Justice J S Verma

Justice J.S. Verma retired from the post of Chief Justice of India on 18.01.1998. Thereafter, he worked as Chairman, National Human Rights Commission, and India during 1999 to 2003.

Issue: Did the doctors display any negligence in the treatment of Justice J.S. Verma?

Facts

• Justice J.S. Verma underwent coronary angiogram in 1993 and was diagnosed with asymptomatic coronary artery disease (CAD). He was treated at Fortis Escorts Hospital Mumbai, Bhardwaj Nursing & Maternity, Fortis Escorts Hospital Mumbai, and Medanta Hospital Gurugram where he expired on 22.04.2013.
• Family of J S Verma filed a negligence case before NC.

NC Held

• The physicians were duly qualified, and no negligence was evident at any point. The prescribed medication, as mentioned, was administered following consultation with expert doctors at UK DUBIGATRON.
• Some facts were concealed by the family but there was no negligence on the part of doctors in giving proper treatment.

Material taken into consideration

• Relevant literature & medical reports
• Opinion of Delhi Medical Council & UK based doctors

Case Referred (Supreme Court Judgments)

• Achyut Haribhai Khodva vs State of Maharashtra (Theory: Five methods, one chosen, no negligence)

 Case 8

• Case Title: Om Prakash Ahuja versus Reliance General Insurance Co. Ltd. etc. (SC)
• Civil Appeal Nos. 2769-2770 Of 2023
• Decided on 4^th July 2023

Issues:

• Is the concealment of a fact considered a material issue when a claim is filed for a treatment unrelated to the concealed ailment?
• Is the denial of renewal justified when the insurance company acknowledges that the concealment of a disease was deemed non-material and unrelated to the ailment leading to death?

Facts:

The complainant raised concerns about Reliance General Insurance Ltd. not reimbursing the expenses incurred for his wife’s ovarian cancer treatment. The Consumer Commission ruled in favour of the complainant, and the State Commission in Haryana upheld the District Commission’s order, dismissing the appeal made by the Insurance Company.

National Commission

In Revision Petition No. 1417/2014, the National Commission upheld the State Commission’s directions regarding reimbursing the expenses for the treatment of the complainant’s deceased wife. However, the directive for the renewal of the health insurance policy was overturned.

 Supreme Court:

• Insurance cannot take other plea once admitted no concealment of facts.
• Once there is a valid insurance policy in favour of a person, the claim for reimbursement of the expenses incurred must be paid.
• If the insurance company has acknowledged that the concealment of a disease during the policy purchase was not material, particularly as it was unrelated to the ailment leading to death, it is not permissible for the company to subsequently deny additional claims or refuse to renew the insurance policy on the same basis.

Case 9

• Case title: Cloudtail India Private Limited. vs Central Consumer Protection Authority
• CCPA Appeal No. 4 of 2022 (Against the Order dated 04/11/2022 in Complaint No. J-25/72/2021 of the CCPA DELHI)

This marks the inaugural order of its kind by the CCPA (Central Consumer Protection Authority) following the enforcement of the Consumer Protection Act of 2019. The order has been contested before the apex consumer commission, challenging the jurisdiction of the CCPA. Given that the CCPA is a newly established entity under the Act of 2019, this order carries substantial significance.

Issue -Mandatory BIS Mark

Bureau of Indian Standards Act, 2016, issued notification dated 21.01.2020, making it mandatory for domestic pressure cooker to bear Standard Mark under a licence from Bureau of Indian Standards.

Facts

• Cloudtail India Private Limited was doing e-commerce through Amazon website and listed ‘Amazon Basics Stainless Steel Outer Lid Pressure Cooker, 4 Litre’ on above website and sold 1033 pressure cookers in India after 01.02.2021. These pressure cookers were manufactured by “Zhejiang Supor Company Limited, Damaiyu Economic Investment Zone, Yuhuan, Taizhou, and Zhjiang, China” and bears “European Commission Standard” mark as established in the European Union and were imported into India, prior to issue of the Order.
• Central Consumer Protection Authority under the power Section 18 of the Act, issued notice dated 29.11.2021 to the company to show cause as it were selling pressure cooker in violation of the Order, which was liable to be held as defective, violative of consumer right and amounts to unfair trade practice, within the meaning of the Act.
• Not satisfied with the reply, CCPA directed Cloudtail India Private Limited to recall 1033 pressure cookers, sold by the company in the country, refunding its price to the consumers, within 45 days and imposed a penalty of Rs.100000/-, for selling the pressure cooker, in violation of Quality Control Order, 2020.
• The National Commission dismissed the appeal submitted by Cloudtail India, thereby affirming the order by the CCPA that indicated a violation of BIS Rules.

Case 10

• Case Title: M/S. Rajasthan Art Emporium versus Kuwait Airways & Anr (NC)
• Civil Appeal No. 9194 of 2012&Civil Appeal No. 9106 Of 2012
• Decided on 9^th November 2023, New Delhi (NC)

Issue: Theory of Vicarious Liability of Principal for the act of agent

In the usual course, individuals are not typically held accountable for the actions of others. However, the theory of Vicarious Liability allows for the imposition of liability on an individual for the actions of someone else, based on their relationship with the wrongdoer. An example of this is the case where Kuwait Airways was found responsible for a delay in the delivery of goods. The airline, acting through its agent, had promised that the goods would be delivered within a week but, in reality, they were delivered after one and a half months.

Facts

• The fax message sent by agent through whom the consignment was booked to be shipped by the Airways goes to show that the goods shall be delivered at Chicago Memphis on 29.07.1996, 31.07.1996 and 31.07.1996.
• The airline never asserted that the agent was not authorized or lacked the authority to provide the delivery schedule for the consignment. Consequently, the airline is vicariously liable for the actions of its agent.

Law

Liability of the Principal for the act of his Agent: When a principal authorizes his agent to perform any act, he becomes liable for the act of such agent, provided the agent has conducted it in the course of performance of duties.