Interest and pecuniary jurisdiction of Consumer Court

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The first step towards filing of any Consumer Complaint is deciding the jurisdiction of the Forum or Commission where it could be filed. More often than not almost every Consumer Complaint filed before the Forum or the Commission carries the prayer for grant of payment of interest. The question that was posed before the NCDRC was whether the prayer for interest accumulates to total amount claimed by the Complainant against the opposite party and thereby affect the pecuniary jurisdiction as to where the Complaint is required to be filed.

The law on this point was already very clear, the Hon’ble Supreme Court in the case of Shahbad Cooperative Sugar Mills Ltd. VsNational Insurance CoLtd. & Ors held that the interest component cannot be added while deciding pecuniary jurisdiction of the Court. The Apex Court held “Bare reading of the prayer made would show that the interest claimed by appellant pertains to the period up to the date of filing complaint, pendente lite and future. Rate and the period for which interest has to be allowed, is within the discretion of State Commission and the stage for exercise of such a discretion would be the time when the complaint is finally disposed off. Thus, the State Commission had acted erroneously in adding to the amount of Rs. 18,33,000/- the interest at the rate of 18% per annum thereon till date of filing of complaint for the purpose of determination of pecuniary jurisdiction before reaching the said stage. Order under appeal, therefore, deserves to be set aside.’

However, the said proposition changes, when the interest is claimed as compensation by the Complainaint. The National Commission in the case of Thangvel Palnivel & Anr. v. M/s. DLF Southern Homes Pvt. Ltd. distinguishing the judgment of Shahbad Co-operative Sugar Mills Ltd. v. National Insurance Co. Ltd. wherein the Complainant had prayed for refund of specific sum of money being the interest claimed for refund of money against the Opposite party, the Commission citing previous decision held that “The following view taken in Satish Kumar Pandey (supra) is relevant in this regard:  ‘The learned counsel for the opposite party has referred to the decision of the Hon’ble Supreme Court in LIC & Anr. Vs. Smt. S. Sindhu (2006) (V) 258 where the Hon’ble Court inter alia observed that the courts and tribunals cannot re-write contracts contrary to the terms of the contract to the defaulting parties. In the above referred case, the policy was treated as a paid up policy on account of default in payment of premium. As per the terms of the policy, the premium paid in such a policy was to be refunded without interest. The Consumer Fora, despite the above referred policy condition, directed payment of interest on the amount of the premium at the rate of 12% per annum. In the said case case no deficiency on the part of the LIC in the services rendered to the insured was found. On the other hand in the cases before us there has been gross deficiency on the part of the opposite party in rendering services to the complainants who have paid about 95% of the cost of the flat and waited for a number of years in the hope of getting roof over their head. Nowhere has the Hon’ble Supreme Court held that even in such a case of gross deficiency in rendering services to the complainant compensation in the form of interest cannot be awarded against the service provider. The learned counsel for the opposite party has also referred to the decision of this Commission in Shahbad Cooperative Sugar Mills Vs. National Insurance Co. Ltd., II(2003) CPJ 81 (NC) where it was held that the interest cannot be added to the principal for the purpose of determining the pecuniary jurisdiction. In the judgment relied upon by the learned counsel interest was not claimed as compensation on account of deficiency in rendering services to the complainant. The aforesaid judgment, therefore, would not apply to the cases before us’.

The view taken in Satish Kumar Pandey (supra) reiterated by this Commission in Swarn Talwar (supra) and the decision of this Commission, as noted earlier, was upheld by the Hon’ble Supreme Court.

Therefore, I have no hesitation in reiterating that the compensation which the builder has to pay to the buyers in such cases cannot be restricted to the compensation stipulated in the wholly one side Buyers Agreement and has to be based upon the loss suffered by the consumer on account of deficiency in the services rendered to him.”

Thus, this decision clarifies as to whether the interest would be required to be considered while ascertaining pecuniary jurisdiction would depend on the facts of the case and wherein the interest is claimed as compensation on account of unfair trade practice and is the direct consequence of the same thereof, the same would be required to be considered towards pecuniary jurisdiction and vice-versa.

Full Judgment -> Thangavel Palnivel & Anr. v. M/s. DLF Southern Homes Pvt. Ltd.

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