Supreme Court overturns consumer forum order on holiday voucher scheme: Today Merchandise Pvt Ltd vs. Anil Kumar Luthra (2020)

Introduction

Date of the Judgment: 08 January 2020. Citation: (2020) INSC 1. Judges: Dr. Dhananjaya Y Chandrachud, J and Hrishikesh Roy, J. Can a consumer demand free gifts promised under a promotional scheme, even if they haven’t fulfilled the conditions to receive those gifts? The Supreme Court of India addressed this question in a recent case involving a holiday voucher scheme. The Court overturned the orders of the consumer forums, holding that free gifts are contingent on meeting specific conditions, and cannot be claimed as a matter of right. The judgment was delivered by a two-judge bench comprising of Dr. Dhananjaya Y Chandrachud, J and Hrishikesh Roy, J.

Case Background

In September 2012, Today Merchandise Pvt Ltd (the appellant) advertised a holiday voucher scheme on its website. An employee of the appellant communicated the scheme to Anil Kumar Luthra (the respondent), who then purchased three vouchers for a total of Rs 17,994. The scheme promised “free gifts” based on the number of referrals made by the purchaser. The respondent was informed of this referral scheme through an email on 18 September 2012. The gifts ranged from a UCB wrist watch for two referrals to a HCL/Dell Mini Laptop for twenty referrals.

The respondent, without making any referrals, approached the District Consumer Redressal Forum, Sikar, claiming that he was entitled to three free gifts: a laptop, a mobile phone, and a 42” LED television. The District Forum ruled in favor of the respondent, which was then upheld by the State Consumer Disputes Redressal Forum and the National Consumer Disputes Redressal Commission (NCDRC).

Timeline

Course of Proceedings

The District Consumer Redressal Forum, Sikar, allowed the respondent’s claim for free gifts. This order was confirmed by the State Consumer Disputes Redressal Forum. The National Consumer Disputes Redressal Commission (NCDRC) also upheld the order in revision. The appellant then appealed to the Supreme Court of India against the NCDRC order.

Legal Framework

The judgment primarily revolves around the interpretation of the terms and conditions of the promotional scheme offered by the appellant. The core issue was whether the respondent was entitled to the free gifts without fulfilling the condition of making referrals. There were no specific sections of any statute or rules discussed by the court.

Arguments

Appellant’s Arguments:

• The appellant argued that the offer of free gifts was conditional on the subscriber making referrals. Since the respondent did not make any referrals, he was not entitled to the gifts.
• The appellant contended that the order of the District Forum was absurd, as it would require the appellant to provide gifts worth much more than the value of the vouchers purchased by the respondent.
• The appellant also raised an objection to the jurisdiction of the District Forum.

Respondent’s Arguments:

• The respondent argued that the email dated 18 September 2012, which detailed the referral scheme, was not part of the record of the District Forum.
• The respondent claimed that an employee of the appellant had assured him that the free gifts would be provided without any conditions.
• The respondent argued that the termination of the employee’s services due to this dispute proved that such an assurance was indeed made.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue before the court was:

• Whether the respondent was entitled to the free gifts without fulfilling the condition of making referrals as per the promotional scheme.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not cite any previous cases or books in this judgment. The court relied on the terms of the agreement between the parties, specifically the promotional scheme and the email dated 18 September 2012, to reach its decision.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Promotional Scheme and email dated 18 September 2012: The Court relied on these documents to determine that the free gifts were conditional on making referrals.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the clear terms of the promotional scheme and the email communication between the parties. The Court found that the free gifts were explicitly contingent on the subscriber making referrals, a condition the respondent failed to meet. The Court emphasized that the orders of the consumer forums were manifestly absurd and contrary to the agreement between the parties.

Logical Reasoning:

The Court considered the argument that an employee had made an assurance of free gifts, but rejected it in light of the explicit terms of the scheme and the email. The Court also noted that the consumer forums had erred in confirming the order of the District Forum, which would lead to a manifestly absurd outcome.

The Supreme Court stated, “Both from the scheme as well as from the e-mail dated 18 September 2012, it is evident that a subscriber was not entitled, as a matter of right, to the “free gifts” merely on purchasing the holiday vouchers.”

The Court further added, “The free gifts were contingent upon making referrals which, admittedly, were not made by the respondent.”

The Court concluded, “The directions of the District Forum, which were affirmed by the SCDRC and NCDRC will result in a manifestly absurd outcome.”

Key Takeaways

• Promotional offers with conditions must be fulfilled to claim the benefits.
• Consumer forums should not pass orders that are manifestly absurd or contrary to the terms of an agreement.
• Consumers cannot claim benefits without fulfilling the stipulated conditions.

Directions

The Supreme Court set aside the impugned judgment and order of the NCDRC dated 28 November 2018. The complaint filed by the respondent was dismissed.

Development of Law

The ratio decidendi of this case is that free gifts offered under a promotional scheme are contingent on fulfilling the conditions specified in the scheme. This judgment clarifies that consumer forums should not grant relief that is contrary to the terms of the agreement between the parties. There is no change in the previous positions of law, but the judgment reiterates the importance of contractual terms in consumer disputes.

Conclusion

The Supreme Court’s judgment in Today Merchandise Pvt Ltd vs. Anil Kumar Luthra clarifies that consumers cannot claim free gifts under promotional schemes without fulfilling the specified conditions. The Court overturned the orders of the consumer forums, emphasizing that such orders should not be manifestly absurd or contrary to the terms of the agreement between the parties. This judgment underscores the importance of adhering to the terms and conditions of promotional offers.