Whether District Commission Can Set Aside Ex Parte Order Passed By It Under The Consumer Protection Act, 2019?- Aneesh Johnson

Whether District Commission can set aside ex parte order passed by it under the Consumer Protection Act, 2019?

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Consumer protection legislation aims at ensuring consumer welfare, making them “benevolent social legislation”[i]. In India, the first such piece of legislation was passed in 1986 which was subsequently amended in 1991, 1993 and 2002. This was followed most recently by the Consumer Protection Act of 2019. These statutes are broadly in consonance with the international principles of consumer welfare as identified in the resolution passed by the United National General Assembly to that effect.[ii] One such principle is speedy redressal, the non-adherence of which has been held to automatically defeat the purpose of the Act itself[iii] Thus, in pursuance of the same the 2019 Act (asunder the 1986 Act as well) bestows upon the District Commission the power to pass ex parte order in case of failure of the parties to appear before it in the given time period.[iv]

While the power to pass such an order has been given explicitly to the District Commission, the power to review the same has not been conferred by any provision under the Act. This led to the following two contradicting views being put forward with respect to the power of the State and District Commissions to set aside ex parte orders passed by it:

1) Yes, as it can be reasonably assumed that an entity given the power to pass such orders is also empowered to exercise powers incidental to it. (Ancillary Powers doctrine)

2) No, as there is no explicit provision in the Act which confers such a power on the District Commission. (Strict Interpretation doctrine)

Both views enjoyed considerable support from the courts. The matter was put to rest when the apex court found substance in the second view and agreed with it. However, judgments in the recent past seem to have stirred the hornet’s nest, again.  Hence, the present article aims to highlight the same and suggest a way forward for aggrieved consumers.

Ancillary Powers doctrine

The essence of the doctrine lies in the proposition that when a body has been conferred the power to do something, then it is to be inferred that it also has the powers incidental to the exercise of such authority. Applying this to District Commission, it would mean that since it has the power to pass an ex parte order, it will also have the incidental power to review it as well. This doctrine uses the following two reasons to justify itself:

a) Powers bestowed also include incidental powers under its ambit– This was most authoritatively expressed by the Hon’ble Supreme Court in New India Assurance Co. v. R. Srinivasan[v] in Para 18 in the following words:

…every court or judicial body or authority, which has a duty to decide a lis between two parties, inherently possesses the power to dismiss a case in default… So also, it would have the inherent power and jurisdiction to restore the complaint on good cause being shown for the non- appearance of the complainant.”

An important point to note in the judgment is its reliance on the inherent power of review. This will prove to be a major setback for this point of view as the idea has been consistently opposed in a catena of judgments.  According to the court in these cases, power of review is never inherent; rather it should flow from an explicit provision or should be a result of the necessary implication of such a rule. These cases will be analysed in detail in the following section. Hence, the legal foundations of this doctrine are shaky.

Further, this reason was justified on the basis of other statutory tribunals being given incidental powers even in the absence of any explicit provision providing for the same.  In Grindlays Bank Ltd. v. Central Government Industrial Tribunal & Ors.[vi], the apex court made the following observations in Para 4:

“But it is a well-known rule of statutory construction that a Tribunal or body should be considered to be endowed with such ancillary or incidental powers as are necessary to discharge its functions effectively for the purpose of doing justice between the parties.”

The case pertained to the power of the Industrial Tribunal to set aside an ex parte order passed by it under the Industrial Disputes Act, 1947.  The Court held the Tribunal to have such powers. This was later reaffirmed in a subsequent case by the Hon’ble Supreme Court.[vii] This principle was then applied to District Commissions in E.K. Mani v. DCDRF[viii] by the Madras High Court.

Most recently, this idea found mention in B. Nagraj v. Green Earth Biotechnologies[ix] where a single judge Bench of the Madras High Court found favour with the ancillary powers doctrine and observed the following in Para 17:

When the Consumer Protection Forum has got the power to decide a complaint ex parte under Rule 8(8) and 8(9) of the Rules, it automatically implies that it has got power to set aside an ex parte order.

While the cases referred above have all been passed before the landmark case of Rajeev Hitendra (which rejected this entire doctrine) and thus stand overruled, the Madras High Court judgment failed to consider the same. Reasons for overriding the precedent too have not been adequately explained by M.V. Muralidaran J.. Hence, the judgment runs the risk of being declared per incuriam, rendering it unreliable.

b) Assumption of permissibility– This principle inverts a well-established position of law. It is widely agreed to by jurists that the Courts should not consider every procedure to be prohibited for the sole reason that it has not been expressly provided for. Hence, conversely, it stands that the Courts must assume that every procedure is permissible unless specifically barred by law.[x] 

This doctrine has been effectively overruled by the apex court. However, the Madras High Court judgment has opened up the possibility of resurrecting this debate one again.

Strict Interpretation doctrine

According to this doctrine, the power to set aside an order passed by a Tribunal must flow from an explicit statutory source or must be a necessary implication of it. This means that a District Commission cannot set aside an ex parte order passed by it as the same has not been given under any provision of the Consumer Protection Act, 2019.

The power of review constitutes an essential element of the rule of law.[xi] Review exercised by such Tribunals is of two types- procedural and substantive.[xii]  The former seeks to correct procedural deficiencies in a judicial order. Whereas, the latter aims at rectifying the legal infirmities in a judicial order. The substantive review has to be granted explicitly to a Tribunal and cannot be held to be inherent in everybody.[xiii] Therefore, the District Commission too should be considered to be deprived of this power of review.

The Supreme Court upheld this view in Rajiv Hitendra v. Achyut K Karekar[xiv] in the following words in Para 36:

On careful analysis of the provisions of the Act, it is abundantly clear that the Tribunals are creatures of the Statute and derive their power from the express provisions of the Statute. The District Forums and the State Commissions have not been given any power to set aside ex parte orders and power of review and the powers which have not been expressly given by the Statute cannot be exercised.

With this, the Hon’ble Supreme Court laid to rest a long-drawn controversy. However, in doing so it approved of previous cases where the rule was followed. In Eureka v. Andhra Pradesh State Forum[xv] the question of applicability of the Civil Procedure Code to District Commissions was decided. The idea was to apply the CPC and clothe the Commission with the powers of a Civil Court. However, the move was struck down by the High Court as the CPC is only selectively applicable to the Commission i.e. in matters enumerated by the Central Government. Since, the Government had not bestowed inherent jurisdiction of a Civil Court on the Commission, the CPC was held to be not applicable to that extent.

In Morgan Stanley, Mutual Funds v. Kartick Das[xvi] the Court had compared setting aside of ex parte order with the power of the Commission to grant interim order/relief. Just as the Commission could not grant interim relief and was only allowed to provide final relief[xvii], it could also not review its own ex parte orders.

Therefore, a Tribunal is a statutory creature, exercising only such powers as its originator intends it to exercise.[xviii] Hence, the Commission cannot recall or review its ex-parte order or restore the case dismissed for default.[xix]

Conclusion

The aforementioned doctrines present a perplexing problem for the consumers, especially after the Madras High Court judgment. In such a case, if a complaint has resulted in an ex parte due to non-appearance of the Opposite Party, then it is advisable to appeal to the higher authority. For instance, if an ex parte order has been passed by the District Commission then one should approach the State Commission. Therefore, it not advisable to file a review before the Commission.

Endnotes

[i] C. Venkatachalam v. Ajitkumar C. Shah & Ors., 2011(9) SCC 707.

[ii]  39/248 of 9 April 1985,

[iii] Shri Raju, Prop. v. Sh. Om Prakash, 25 September 2019.

[iv] S. 38(3)(ii), Consumer Protection Act, 2019.

[v] Appeal (Civil) 11439 of 1996.

[vi] AIR 1981 SC 606.

[vii] Satnam Verma v. Union of India, AIR 1985 SC 294.

[viii] C.R.P. Nos. 2215 of 1992 and 3944 of 1993.

[ix] CRP.NO.3935 of 2008.

[x] Nursing Das v. Mongol Dubey & Ors., (1882) ILR 5 All 163 (FB)

[xi] Power of review and its ambit under the Consumer Protection Act, 1986, Madhu Sweta and Saurabh Bindal, https://www.lexology.com/library/detail.aspx?g=b0ca3cc9-4943-4b86-8f9c-cd05fdff96ec.

[xii] Grindlays Bank Ltd. v. Central Government Industrial Tribunal & Ors., AIR 1981 SC 606.

[xiii] Narshi Thakershi v. Pradyumansinghji,  AIR 1970 SC 1273.

[xiv] 2011 (3) KLT SN 133.

[xv] AIR 2005 AP 118.

[xvi] 1994 SCC (4).

[xvii] Gulzari Lal Agarwal v. Accounts Officer (1996) 10 SCC 590.

[xviii] Jyotsana Arvind Kumar v. Bombay Hospital Trust (1999) 4 SCC 325.

[xix] Chief Manager, UCO Bank v. Ram Govind Agarwal, 1996 (1) CPR 351.


Aneesh Johnson

Aneesh Johnson

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Aneesh is a skilled and adroit writer. He can impress any reader with his creative writing skills and literary texts. For any clarifications, feedback, and advice, you can reach him at [email protected]


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