Supreme Court settles jurisdiction of Consumer Forums in Telecom Disputes: Vodafone Idea Cellular Ltd. vs. Ajay Kumar Agarwal (2022) INSC 123 (16 February 2022)

Date of the Judgment: 16 February 2022
Citation: (2022) INSC 123
Judges: Dr Dhananjaya Y Chandrachud, J, Surya Kant, J, Vikram Nath, J
Can a consumer forum hear a complaint against a telecom company, or is arbitration the only option? The Supreme Court of India recently addressed this important question, clarifying the rights of consumers in disputes with telecom service providers. This judgment confirms that consumers can approach consumer forums for grievances, even when there’s an arbitration clause. The judgment was authored by Justice Dr. Dhananjaya Y Chandrachud, with Justices Surya Kant and Vikram Nath concurring.

Case Background

The case began when Ajay Kumar Agarwal, the respondent, filed a complaint against Vodafone Idea Cellular Ltd., the appellant, with the District Consumer Disputes Redressal Forum, Ahmedabad on 25 May 2014. Mr. Agarwal had a post-paid mobile connection with a monthly basic rent of Rs 249. He used an ‘auto pay’ system through his credit card. He alleged that for the billing period between 8 November 2013 and 7 December 2013, he was billed Rs 24,609.51, which he claimed was an overcharge. His credit limit was Rs 2,300 until 8 November 2013, which was then increased to Rs 2,800. Mr. Agarwal stated that the service provider did not inform him when his bill reached 80% of his credit limit, which he claimed was a standard practice. After contacting the appellant’s representatives, he registered a complaint on 22 December 2013. He then filed a consumer complaint seeking compensation of Rs 22,000, along with interest and other reliefs.

Timeline:

Course of Proceedings

The District Forum initially dismissed the appellant’s objection to the maintainability of the complaint, stating that the appellant was not a ‘telegraph authority’ under Section 7B of the Indian Telegraph Act 1885. The District Forum directed the appellant to submit a written statement on all issues, including jurisdiction. The State Consumer Disputes Redressal Commission (SCDRC), Gujarat, however, held that the issue of jurisdiction could be raised as a preliminary issue. The SCDRC relied on a Department of Telecommunication letter stating that the judgment in General Manager, Telecom v. M Krishnan and Another [(2009) 8 SCC 481] on Section 7B of the Indian Telegraph Act 1885 would not apply to private service providers. The SCDRC held that the Consumer Forum had jurisdiction to hear disputes between private service providers and consumers. The National Consumer Disputes Redressal Commission (NCDRC) upheld the SCDRC’s decision.

Legal Framework

The Supreme Court examined the relevant provisions of the Consumer Protection Act 1986 and the Indian Telegraph Act 1885.

• Section 11 of the Consumer Protection Act 1986: This section specifies the jurisdiction of the District Forum, allowing it to entertain complaints where the value of goods or services and compensation claimed does not exceed a certain amount.
  
  “11. Jurisdiction of the District Forum .—(1) Subject to the other provisions of this Act, the District Forum shall have jurisdiction to entertain complaints where the value of the goods or services and the compensation, if any, claimed does not exceed rupees twenty lakhs.”
• Section 2(o) of the Consumer Protection Act 1986: This section defines “service” broadly to include services of any description, including facilities related to banking, finance, insurance, transport, and more. It excludes services rendered free of charge or under a contract of personal service.
  
  “2 (o) “service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.”
• Section 2(g) of the Consumer Protection Act 1986: This section defines “deficiency” as any fault, imperfection, or inadequacy in the quality, nature, and manner of performance required by law or contract.
  
  “2(g) “deficiency” means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.”
• Section 4 of the Indian Telegraph Act 1885: This section vests the Central Government with the exclusive privilege of establishing, maintaining, and working telegraphs. It allows the government to grant licenses to others to do the same.
• Section 7B of the Indian Telegraph Act 1885: This section provides for the arbitration of disputes between the telegraph authority and the person for whose benefit the telegraph line, appliance, or apparatus is provided.
  
  “7B. Arbitration of disputes. —(1) Except as otherwise expressly provided in this Act, if any dispute concerning any telegraph line, appliance or apparatus arises between the telegraph authority and the person for whose benefit the line, appliance or apparatus is, or has been, provided, the dispute shall be determined by arbitration and shall, for the purposes of such determination, be referred to an arbitrator appointed by the Central Government either specially for the determination of that dispute or generally for the determination of disputes under this section. (2) The award of the arbitrator appointed under sub- section (1) shall be conclusive between the parties to the dispute and shall not be questioned in any court.”
• Section 3(6) of the Indian Telegraph Act 1885: This section defines “telegraph authority.”
  
  “telegraph authority” means the Director General of 1 [Posts and Telegraphs], and includes any officer empowered by him to perform all or any of the functions of the telegraph authority under this Act”
• Section 2(42) of the Consumer Protection Act 2019: This section defines “service” and specifically includes telecom services.
  
  “service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service”

Arguments

The appellant, Vodafone Idea Cellular Ltd., argued that Section 7B of the Indian Telegraph Act 1885 provides a statutory remedy of arbitration, which should exclude the jurisdiction of consumer forums. They contended that the definition of ‘telegraph authority’ in Section 3(6) of the Indian Telegraph Act 1885 and ‘telecom officer’ in Section 3(2) of the Indian Telegraph Act 1885 supports their argument that disputes should be resolved through arbitration.

The respondent, Ajay Kumar Agarwal, argued that the Consumer Protection Act 1986 is a special law intended to protect consumers, and its provisions are in addition to, not in derogation of, other laws. He contended that the definition of ‘service’ under the Consumer Protection Act is broad enough to include telecom services, and therefore, consumer forums have jurisdiction.

Issues Framed by the Supreme Court

The main issue before the Supreme Court was:

1. Whether the existence of a remedy under Section 7B of the Indian Telegraph Act 1885 ousts the jurisdiction of the consumer forum under the Consumer Protection Act 1986.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court held that the consumer forum has the jurisdiction to entertain complaints against telecom service providers, despite the availability of arbitration under Section 7B of the Indian Telegraph Act 1885.

The Court specifically overruled the decision in General Manager, Telecom v. M Krishnan and Another [(2009) 8 SCC 481], which had held that the remedy under the Consumer Protection Act is barred by the special remedy under Section 7B of the Indian Telegraph Act 1885. The Court clarified that the 1986 Act is a special law for consumer protection, and its remedies are additional to those in other statutes.

The Court emphasized that the Consumer Protection Act 1986 is a special law enacted to protect the interests of consumers. The definition of “service” under Section 2(o) of the Consumer Protection Act 1986 is broad enough to include telecom services. The Court also noted that Section 3 of the Consumer Protection Act 1986 states that its provisions are in addition to, and not in derogation of, any other law.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to protect consumer interests and ensure that consumers have access to effective redressal mechanisms. The Court emphasized that the Consumer Protection Act 1986 is a special law designed to provide additional remedies to consumers, and this intent should not be undermined by other statutes. The Court also highlighted the broad definition of “service” under the Act, which includes telecom services, and the principle that later laws can override earlier ones if they are inconsistent. The court also emphasized the importance of the doctrine of election, allowing consumers to choose the most appropriate remedy.

Logical Reasoning

The Court reasoned that the definition of ‘service’ under Section 2(o) of the Consumer Protection Act 1986 is broad enough to include telecom services. The Court also stated that Section 3 of the Consumer Protection Act 1986 makes it clear that the remedies under the Act are in addition to any other law. Therefore, the existence of an arbitration clause under Section 7B of the Indian Telegraph Act 1885 does not bar the jurisdiction of the consumer forum. The Court also applied the principle that a later law, even if general, can override an earlier special law if there is an inconsistency.

The Court considered the argument that the specific inclusion of telecom services in the Consumer Protection Act 2019 implies that they were not covered under the 1986 Act. However, the Court rejected this argument, stating that the definition of “service” in the 1986 Act was illustrative and broad enough to include telecom services.

The Court stated, “The definition employs the ‘means and includes formula’. The means part of the definition incorporates service of “ any” description. The inclusive part incorporates services by way of illustration… The inclusive part is prefaced by the clarification that the services which are specified are not exhaustive. This is apparent from the expression “but not limited to”. “

The Court also observed, “The only distinction in the present case is that where Section 7B of the Act of 1885 applies, a statutory remedy of arbitration is provided. The fact that the remedy of an arbitration under the Act 1885 is of a statutory nature, would not oust the jurisdiction of the consumer forum.”

The Court further stated, “In any event, the decision in M Krishnan (supra) also fails to note that the Act of 1986 is a special law providing protection to consumers. Crucially, M Krishnan (supra) fails to notice that Section 3 of the Act of 1986 clearly provides that the remedies available under the Act are in addition to the remedies available in other statutes and the availability of additional remedies would not bar a consumer from filing a complaint under the Act of 1986.”

Key Takeaways

• Consumers can approach consumer forums for grievances against telecom service providers, even if there is an arbitration clause.
• The Consumer Protection Act 1986 provides additional remedies for consumers, and these remedies are not barred by other laws.
• The Supreme Court overruled its previous decision in General Manager, Telecom v. M Krishnan and Another [(2009) 8 SCC 481], clarifying the jurisdiction of consumer forums in telecom disputes.
• Telecom service providers cannot insist on arbitration as the sole remedy for consumer disputes.

Directions

The Supreme Court dismissed the appeal and upheld the judgment of the NCDRC. The Court also directed that the consumer complaints be restored to the respective forums for adjudication.

Development of Law

The ratio decidendi of this case is that the remedies available under the Consumer Protection Act 1986 are in addition to, and not in derogation of, the remedies available under other laws, including the Indian Telegraph Act 1885. This judgment overrules the previous position of law established in General Manager, Telecom v. M Krishnan and Another [(2009) 8 SCC 481], which had held that the special remedy under Section 7B of the Indian Telegraph Act 1885 barred the jurisdiction of the consumer forum. This decision reaffirms the importance of consumer protection and provides clarity on the jurisdiction of consumer forums in telecom disputes.

Conclusion

The Supreme Court’s judgment in Vodafone Idea Cellular Ltd. vs. Ajay Kumar Agarwal clarifies that consumer forums have jurisdiction to hear complaints against telecom service providers, even when there is an arbitration clause. This decision reinforces the consumer-centric approach of the Consumer Protection Act and ensures that consumers have access to multiple avenues for redressal. The overruling of the earlier judgment in General Manager, Telecom v. M Krishnan and Another [(2009) 8 SCC 481] provides much-needed clarity and strengthens consumer rights in the telecom sector.