Supreme Court Allows Class Action in Consumer Case: Anjum Hussain vs. Intellicity Business Park (2019)

Date of the Judgment: 10 May 2019

Citation: 2019 INSC 450

Judges: Arun Mishra, J., Uday Umesh Lalit, J.

Can a group of homebuyers file a joint complaint against a builder, even if some bought properties for investment and others for self-employment? The Supreme Court of India addressed this question in a recent case, clarifying the scope of class action suits under the Consumer Protection Act, 1986. This judgment allows multiple consumers with similar grievances to jointly seek justice against a service provider, even if their individual reasons for availing the service differ. The bench comprised of Justices Arun Mishra and Uday Umesh Lalit, with the judgment authored by Justice Uday Umesh Lalit.

Case Background

The case involves 44 appellants who had booked commercial units (office spaces) in a project called “Intellicity” developed by the respondent, Intellicity Business Park Pvt. Ltd. The appellants had entered into Builder-Buyer Agreements with the respondent in 2013, where the respondent promised to deliver possession of the units within four years. However, the project was delayed, and the appellants did not receive possession of their units. The project was still at the excavation stage, leading the appellants to seek a refund of their payments along with interest and compensation.

Timeline:

Course of Proceedings

The appellants filed a case before the National Consumer Disputes Redressal Commission (NCDRC) seeking a refund of their payments, along with interest and compensation, due to the respondent’s failure to deliver possession of the units within the agreed timeframe. They also filed an application under Section 12(1)(c) of the Consumer Protection Act, 1986, seeking to pursue the case as a class action on behalf of all buyers in the project. The NCDRC dismissed the case, stating that the appellants had not demonstrated that all the buyers had booked their units for the purpose of self-employment, which is a requirement to be considered a “consumer” under the Act. The NCDRC observed that the dismissal would not prevent the appellants from seeking other remedies. This dismissal was challenged in the Supreme Court.

Legal Framework

The Supreme Court considered the following provisions of the Consumer Protection Act, 1986:

• Section 2(1)(b) defines “complainant” to include a consumer, a voluntary consumer association, the Central or State Government, or one or more consumers with the same interest.
• Section 2(1)(d) defines “consumer” as a person who buys goods or hires services for consideration, but excludes those who do so for commercial purposes. However, the explanation to this section clarifies that “commercial purpose” does not include goods or services used exclusively for earning a livelihood through self-employment. The court quoted the section as:
  
  “Explanation : For the purposes of this clause “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood, and services availed by him by means of self-employment;”
• Section 12(1)(c) allows one or more consumers to file a complaint on behalf of all consumers with the same interest, with the permission of the District Forum.
• Section 13(6) states that when a complaint is filed by one or more consumers on behalf of numerous consumers with the same interest, the provisions of Rule 8 of Order I of the Code of Civil Procedure, 1908, apply.

Arguments

Appellants’ Arguments:

• The appellants argued that they had a common grievance against the respondent for not delivering possession of the units within the agreed timeframe.
• They contended that the NCDRC erred in requiring proof that all the buyers had purchased the units solely for self-employment, as the law only requires a common interest or grievance.
• They relied on the decision in Chairman, Tamil Nadu Housing Board, Madras vs. T. N. Ganapathy, which held that those represented in a suit under Order I Rule 8 of the Civil Procedure Code need not have the same cause of action, only a common interest or grievance.

Respondent’s Arguments:

• The respondent argued that since the complaint was on behalf of all the allottees, it should be shown that all the allottees had booked the shops/commercial units solely for the purpose of earning their livelihood by way of self-employment.
• The respondent contended that the purpose for which the allottees booked the shops/commercial units can only be in the knowledge of the concerned allottees.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the National Commission was correct in holding that a class action under Section 12(1)(c) of the Consumer Protection Act, 1986 was not maintainable in the absence of an averment that all the allottees of the shops/commercial units had booked the same solely for the purpose of earning their livelihood by way of self-employment.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following authorities:

• Chairman, Tamil Nadu Housing Board, Madras vs. T. N. Ganapathy [1990] 1 SCC 608 (Supreme Court of India): This case clarified that persons represented in a suit under Order I Rule 8 of the Civil Procedure Code need not have the same cause of action, but must have a common interest or grievance. The court emphasized that the purpose of this provision is to avoid multiplicity of litigation.
• Ambrish Kumar Shukla and Ors. vs. Ferrous Infrastructure Pvt. Ltd. (Consumer Case No.97 of 2016, decided on 07.10.2016) (National Consumer Disputes Redressal Commission): The NCDRC, relying on the T.N. Housing Board case, held that consumers with a common grievance against the same service provider could file a class action, even if they sought different reliefs.

Judgment

How each authority was viewed by the Court?

• Chairman, Tamil Nadu Housing Board, Madras vs. T. N. Ganapathy [1990] 1 SCC 608: The Supreme Court followed this case, reiterating that the persons represented in a suit under Order I, Rule 8 of the Civil Procedure Code need not have the same cause of action. The court stated that the common interest or common grievance is sufficient.

The Supreme Court allowed the appeal, set aside the order of the National Commission, and restored the case to the file of the National Commission for further proceedings. The Court held that a common grievance was sufficient for a class action under Section 12(1)(c) of the Consumer Protection Act, 1986. The Court emphasized that the NCDRC had incorrectly interpreted the law and had lost sight of the principles laid down in previous decisions.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that the Consumer Protection Act, 1986, aims to protect the interests of consumers and avoid multiplicity of litigation. The Court emphasized that a common grievance among consumers is sufficient to maintain a class action, and it is not necessary for all consumers to have the same individual purpose for availing the service. The Court also considered the previous rulings in Chairman, Tamil Nadu Housing Board, Madras vs. T. N. Ganapathy and Ambrish Kumar Shukla and Ors. vs. Ferrous Infrastructure Pvt. Ltd., which clarified that a common interest or grievance is sufficient for a class action. The court found that the NCDRC had erred in requiring proof that all buyers had purchased the units for self-employment, thereby misinterpreting the law.

Logical Reasoning

Key Takeaways

• A group of consumers with a common grievance can file a class action under the Consumer Protection Act, 1986, even if they do not have the same individual purpose for availing the service.
• The focus should be on the common grievance or interest of the consumers, rather than their individual purposes.
• This judgment reinforces the principle that the Consumer Protection Act, 1986, aims to protect the interests of consumers and avoid multiplicity of litigation.
• The National Consumer Disputes Redressal Commission (NCDRC) must not insist on proof that all consumers have the same purpose for availing the service when considering a class action.

Directions

The Supreme Court directed that Case No. 2241 of 2018 be restored to the file of the National Commission and proceeded with in accordance with the law.

Development of Law

The ratio decidendi of this case is that a class action under Section 12(1)(c) of the Consumer Protection Act, 1986, is maintainable if the consumers have a common grievance, even if they do not have the same individual purpose for availing the service. This judgment reinforces the principle that the focus should be on the common grievance or interest of the consumers, rather than their individual purposes. This clarifies the scope of class actions under the Consumer Protection Act and ensures that consumers with similar grievances can jointly seek justice without the need to prove that all consumers have the same purpose for availing the service.

Conclusion

In conclusion, the Supreme Court’s judgment in Anjum Hussain & Ors. vs. Intellicity Business Park Pvt. Ltd. & Ors. clarifies that a class action can be maintained under the Consumer Protection Act, 1986, as long as there is a common grievance among the consumers, regardless of their individual purposes for availing the service. This ruling is a significant step towards ensuring that consumers with similar grievances can jointly seek justice and avoid the burden of individual litigation. The Court’s emphasis on the common grievance and its interpretation of the relevant legal provisions will serve as a guiding principle for future consumer cases.

Category

Parent Category: Consumer Protection Act, 1986

Child Categories:

• Section 2(1)(b), Consumer Protection Act, 1986
• Section 2(1)(d), Consumer Protection Act, 1986
• Section 12(1)(c), Consumer Protection Act, 1986
• Section 13(6), Consumer Protection Act, 1986
• Class Action Suits
• Consumer Rights
• Real Estate Disputes
• Deficiency in Service

FAQ

Q: What is a class action suit?
A: A class action suit is a legal action where a group of people with similar grievances come together to sue a common defendant. This is done to avoid multiple individual lawsuits and make the legal process more efficient.

Q: What did the Supreme Court decide in this case?
A: The Supreme Court decided that a group of consumers can file a class action suit even if they don’t all have the same reason for buying a product or service. It is enough that they have a common problem or grievance.

Q: What does ‘common grievance’ mean in this context?
A: A ‘common grievance’ means that the group of consumers has faced a similar issue or problem with a service provider. For example, in this case, all the consumers had not received possession of their property within the agreed timeframe.

Q: Can I join a class action suit if I bought a property for investment and others bought for self-employment?
A: Yes, according to this judgment, you can join a class action suit if you have a common grievance, like a delay in possession, even if your purpose for purchasing the property was different from others in the group.

Q: What should I do if I have a common grievance with other consumers?
A: If you have a common grievance with other consumers against a service provider, you can consider filing a class action suit. Consult a lawyer to understand the process and whether your case qualifies.

Q: What is the significance of this judgment?
A: This judgment clarifies that consumers with similar problems can jointly seek justice, even if their individual reasons for using the service are different. This makes it easier for consumers to fight against unfair practices and avoid the burden of individual lawsuits.