SC: ‘Consumer courts can’t decide cases involving tortious acts’

Supreme Court has said that consumer courts cannot decide complaints involving highly disputed questions of facts

New Delhi: The Supreme Court has said that consumer courts cannot decide complaints involving highly disputed questions of facts or the cases involving tortious acts or criminality like fraud or cheating.

A bench comprising justices Ajay Rastogi and Bela M. Trivedi said: “The proceedings before the commission being summary in nature, the complaints involving highly disputed questions of facts or the cases involving tortious acts or criminality like fraud or cheating, could not be decided by the forum/commission under the said Act.”

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The bench further added, “the deficiency in service, as well settled, has to be distinguished from the criminal acts or tortious acts. There could not be any presumption with regard to the wilful fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance in service, as contemplated in Section 2(1)(g) of the Act”.

The bench added that the burden of proving the deficiency in service would always be upon the person alleging it.

A complainant had alleged that the City Union Bank had transferred Rs 8 lakh of demand drafts to an incorrect account . The complainant filed a complaint in the State Consumer Disputes Redressal Commission (SCDRC) in 1999.

The state commission found the bank and its official guilty of deficient service and ordered the bank to pay Rs 8 lakh along with compensation of Rs 1 lakh towards mental agony, loss and hardship to the complainant.

The chairman and managing director, City Union Bank and others moved the National Consumer Disputes Redressal Commission (NCDRC) against the state commission order, but its appeal was dismissed in February 2007. An appeal was filed by them in 2009 before the apex court challenging the NCDRC order.

The counsel, representing the chairman and managing director, City Union Bank and others, submitted that state commission and the national commission had committed an error in not appreciating the fact that in absence of any fault, imperfection, shortcoming or inadequacy in the performance, which was required to be maintained by the appellants’ bank, it could not be presumed that there was deficiency in service as defined under Section 2(1)(g) of the Consumer Protection Act, 1986.

The counsel further argued that if any fraud was committed, such disputes would not fall within the jurisdiction of the state commission or the national commission to decide.

The counsel for complainant submitted that when the two forums have consistently held the appellants liable for the deficiency in service, the apex court should not interfere with the same.

He further submitted that the bank would be vicariously liable for the acts of its employees and there was a clear deficiency in service on the part of the bank.

The bench said: “So far as the facts of the present case are concerned, even if the allegations made in the complaint are taken on their face value, then also it clearly emerges that there was no wilful fault, imperfection, shortcoming or inadequacy in the discharge of the duty on the part of the employees of the appellants’ bank, which could be termed as deficiency in service under Section 2(1)(g) of the said Act.”

The bench noted that some disputes were going on amongst the directors of the company and one of the directors, if allegedly had committed fraud or cheating, the employees of the bank could not be held liable, if they had acted bona fide and followed the due procedure.

The bench said: “In the instant case, respondent-complainant having miserably failed to discharge his burden to prove that there was a deficiency in service on the part of the employees of the appellants-bank within the meaning of Section 2(1)(g) of the Act, his complaint deserved to be dismissed, and is accordingly dismissed. The orders passed by the State Commission and the National Commission are therefore quashed and set aside. The appeal stands allowed accordingly.”