Supreme Court clarifies consumer status in ONGC employee retirement scheme: ONGC Ltd. vs. Consumer Education Research Society (2019)

Introduction

Date of the Judgment: 09 December 2019

Citation: (2019) INSC 1023

Judges: S. Abdul Nazeer, J. and Deepak Gupta, J.

Can employees, who contribute to a post-retirement benefits scheme managed by a trust, be considered consumers of their employer? This was the core question before the Supreme Court of India. The Court examined whether a consumer-service provider relationship existed between the Oil and Natural Gas Corporation (ONGC) and its employees under the Self Contributory, Post Retirement and Death in Service Benefits Scheme, 1991. The Supreme Court bench comprising Justices S. Abdul Nazeer and Deepak Gupta delivered the judgment, with Justice Deepak Gupta authoring the opinion.

Case Background

The case originated from claims made by several employees of the Oil and Natural Gas Commission (ONGC). These employees were members of the Self Contributory, Post Retirement and Death in Service Benefits Scheme, 1991. This scheme was introduced by ONGC with the approval of the Government of India. Under the scheme, employees made regular contributions from their salaries, while ONGC made a token contribution of ₹100 per annum. The employees alleged that delays in processing their claims by the Life Insurance Corporation (LIC) resulted in financial losses. They approached consumer forums seeking redressal, arguing that ONGC was liable for the losses.

Timeline

Arguments

The appellants, ONGC, argued that the employees could not be considered consumers under the Consumer Protection Act, 1986, because:

• The definition of ‘consumer’ in Section 2(d) of the Consumer Protection Act, 1986 requires a payment of consideration for availing services.
• The definition of ‘service’ in Section 2(o) of the Consumer Protection Act, 1986 excludes services rendered free of charge or under a contract of personal service.

ONGC contended that the scheme was a self-contributory one, with a minimal contribution from the employer (₹100 per annum), and managed by a trust, not ONGC itself. They relied on the judgment in Jagmittar Sain Bhagat & Ors. vs. Director, Health Services, Haryana & Ors. [2013(10) SCC 136] to support their argument that the relationship did not fall under the purview of the Consumer Protection Act, 1986.

The respondents, the employees, argued that they were indeed consumers of ONGC. They relied on the judgments in Regional Provident Fund Commissioner v. Shiv Kumar Joshi [2000(1) SCC 98] and Regional Provident Fund Commissioner v. Bhavani [(2008) 7 SCC 111] to argue that the employer was providing a service and they were consumers of that service.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

1. Whether a relationship of consumer and service provider exists between the private respondents (claimants) and the appellants (ONGC).

Treatment of the Issue by the Court

Authorities

The Court considered the following authorities:

Judgment

The Court held that the service, if any, was being rendered by the Trust and not by ONGC. Therefore, there was no relationship of consumer and service provider between the claimants and ONGC.

The Court considered the following authorities:

• Jagmittar Sain Bhagat & Ors. vs. Director, Health Services, Haryana & Ors. [2013(10) SCC 136]* The court relied on this case to support the view that the relationship did not fall under the purview of the Consumer Protection Act, 1986.
• Regional Provident Fund Commissioner v. Shiv Kumar Joshi [2000(1) SCC 98]* The court distinguished this case, stating that the facts were different and not applicable to the present case.
• Regional Provident Fund Commissioner v. Bhavani [(2008) 7 SCC 111]* The court distinguished this case, stating that the facts were different and not applicable to the present case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the post-retirement scheme was managed by a separate trust and not directly by ONGC. The Court emphasized that the employees’ contributions were made to the trust, and the trust was responsible for managing the funds and providing the benefits. This separation between ONGC and the trust was a key factor in the Court’s conclusion that there was no consumer-service provider relationship between ONGC and its employees under the scheme.

The Court observed,

“Therefore, we have no hesitation in coming to the conclusion that there is no relationship of consumer and service provider between the claimants and the ONGC.”

The Court also noted,

“The most important aspect is that the Scheme is managed and run by a Trust and not by the ONGC.”

The Court further stated,

“Therefore, without going into the question as to whether any amount is being paid by the employees for contribution to the services rendered by the Trust, it is apparent that the service, if any, is being rendered by the Trust and not by the ONGC.”

Key Takeaways

• Employees contributing to a post-retirement scheme managed by a separate trust are generally not considered consumers of their employer under the Consumer Protection Act, 1986.
• The management of the scheme by a separate trust is a crucial factor in determining the absence of a consumer-service provider relationship between the employer and employee.
• Employers may not be held liable for deficiencies in service under such schemes if the scheme is managed by a separate trust.

Directions

The Supreme Court directed ONGC to pay the amounts payable (other than the costs) under the impugned orders to the claimants within 8 weeks.

Specific Amendments Analysis

There is no specific amendment discussed in the judgment.

Development of Law

The ratio decidendi of this case is that a consumer-service provider relationship does not exist between an employer and its employees under a post-retirement benefits scheme when the scheme is managed by a separate trust, and the employer’s contribution is minimal. This judgment clarifies the scope of the Consumer Protection Act, 1986, in the context of employer-employee relationships and post-retirement benefit schemes.

Conclusion

The Supreme Court partly allowed the appeals, setting aside the orders of the National Consumer Disputes Redressal Commission and the State Consumer Disputes Redressal Commission. The Court held that there was no consumer-service provider relationship between ONGC and its employees under the Self Contributory, Post Retirement and Death in Service Benefits Scheme, 1991, as the scheme was managed by a separate trust. However, ONGC was directed to pay the amounts payable (other than the costs) under the impugned orders to the claimants.