Supreme Court Strikes Down Consumer Protection Rules on Appointment of Members: Ministry of Consumer Affairs vs. Dr. Mahindra Bhaskar Limaye (2023)

Date of the Judgment: 03 March 2023

Citation: 2023 INSC 209

Judges: M. R. Shah, J., M.M. Sundresh, J.

Can the government set its own rules for appointing members to consumer courts, or should there be a more transparent and merit-based process? The Supreme Court of India recently addressed this critical question in a case concerning the appointment of members to the State and District Consumer Commissions. The court examined whether the existing rules provided sufficient safeguards against arbitrary appointments and ensured that only competent individuals were selected to adjudicate consumer disputes. This judgment clarifies the importance of maintaining high standards in the appointment process to uphold the integrity of the consumer protection system. The bench comprised Justices M. R. Shah and M.M. Sundresh, with Justice M. R. Shah authoring the judgment.

Case Background

The Ministry of Consumer Affairs, Union of India, and the State of Maharashtra appealed against a judgment by the High Court of Judicature at Bombay, Nagpur Bench. The High Court had struck down certain rules of the Consumer Protection (Qualification for appointment, method of recruitment, procedure of appointment, term of office, resignation and removal of President and Members of State Commission and District Commission) Rules, 2020 (hereinafter referred to as the “Rules, 2020”). These rules pertained to the qualifications and appointment procedures for members of the State and District Consumer Commissions.

The High Court found that Rule 3(2)(b), Rule 4(2)(c), and Rule 6(9) of the Rules, 2020 were arbitrary, unreasonable, and violated Article 14 of the Constitution of India. These rules dealt with the eligibility criteria for members and the selection process. The High Court’s decision was based on the argument that the rules gave excessive discretionary power to the selection committee and did not ensure the appointment of competent candidates.

The original writ petitioners before the High Court argued that the selection process should include a written examination to test the candidates’ competency, especially considering the quasi-judicial nature of the positions. They also contended that the rules lacked transparency and could lead to political and executive interference.

Timeline

Course of Proceedings

The High Court of Judicature at Bombay, Nagpur Bench, heard a Public Interest Litigation (PIL) No. 11/2021 and Writ Petition No. 1096 of 2021. The petitioners challenged the constitutional validity of Rule 3(2)(b), Rule 4(2)(c), and Rule 6(9) of the Consumer Protection Rules, 2020. The High Court declared these rules unconstitutional, arbitrary, and violative of Article 14 of the Constitution of India. The High Court quashed the vacancy notice dated 2nd February, 2021, and cancelled the selection process initiated under it, directing the Union of India to frame new rules within four weeks. The Union of India and the State of Maharashtra then appealed to the Supreme Court against this decision.

Legal Framework

The case revolves around the interpretation and application of the following legal provisions:

• Consumer Protection Act, 2019: This Act repealed the Consumer Protection Act, 1986, and established a new framework for consumer protection. Sections 29 and 43, read with clauses (n) and (w) of Sub-section (2) of Section 101, empower the government to make rules for the appointment of members to the State and District Commissions.
• Rule 3(2)(b) of the Consumer Protection Rules, 2020: This rule specifies that a person is not qualified to be a member of the State Commission unless they have a bachelor’s degree and at least twenty years of special knowledge and professional experience in consumer affairs, law, public affairs, etc.
• Rule 4(2)(c) of the Consumer Protection Rules, 2020: This rule specifies that a person is not qualified to be a member of the District Commission unless they have a bachelor’s degree and at least fifteen years of special knowledge and professional experience in consumer affairs, law, public affairs, etc.
• Rule 6(9) of the Consumer Protection Rules, 2020: This rule allows the Selection Committee to determine its own procedure for making recommendations, considering suitability, past performance, integrity, and adjudicatory experience.
• Article 14 of the Constitution of India: This article guarantees equality before the law and prohibits arbitrary actions by the state.
• Article 217 of the Constitution of India: This article specifies the qualifications for appointment as a High Court Judge.
• Article 233 of the Constitution of India: This article specifies the qualifications for appointment as a District Judge.

The legal framework also includes previous judgments of the Supreme Court, particularly:

• State of Uttar Pradesh and Others Vs. All Uttar Pradesh Consumer Protection Bar Association; (2017) 1 SCC 444: This case directed the framing of model rules for the appointment of members to consumer forums.
• Madras Bar Association Vs. Union of India and Another; (2021) 7 SCC 369: This case dealt with the qualifications for appointment to tribunals and emphasized the need for competent and experienced members.

Arguments

Arguments by the Appellants (Union of India and State of Maharashtra):

• The Attorney General for India argued that after the Supreme Court’s initial hearing, the government considered the feasibility of conducting written examinations for appointments but found them impractical.
• It was argued that a written examination would not be suitable due to the low number of vacancies, the need for diverse expertise, and the potential to discourage experienced professionals from applying.
• The government proposed an alternative: to include a proviso under Rule 6(9) allowing the Central Government to issue instructions to guide the Selection Committee.
• The proposed instructions included a marking system where 60 marks would be for an interview and 40 marks for special achievements, such as experience, educational qualifications, and prior public service.

Arguments by the Respondents (Dr. Mahindra Bhaskar Limaye & Ors.):

• The respondents argued that the existing rules lack transparency and give excessive discretionary powers to the selection committee, violating Article 14 of the Constitution.
• They contended that the selection process should include a written examination to ensure the appointment of competent candidates, given the judicial functions of the Commissions.
• The respondents highlighted that the Consumer Protection Act, 2019, enhanced the pecuniary jurisdiction of the Commissions, making it even more crucial to have qualified members.
• They argued that the rules nullify the directions of the Supreme Court in the case of UPCPBA (supra), which had mandated the framing of model rules, including a written test.
• The respondents also pointed out that the minimum experience requirements of 20 years for State Commission members and 15 years for District Commission members were arbitrary and inconsistent with the qualifications for judges.
• They submitted that the Law Commission in its 272nd Report suggested that the members of the newly constituted tribunals should possess the qualifications akin to the judges of the High Court and District Court. The Report further recommended uniformity in the appointments.

Sub-Submissions Categorized by Main Submissions:

Innovativeness of the Argument: The respondents’ argument was innovative in highlighting the inconsistency between the experience requirements for members of the Commissions and the qualifications for judges, emphasizing the need for a merit-based selection process.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issues addressed by the court can be summarized as:

1. Whether Rule 3(2)(b) of the Consumer Protection Rules, 2020, prescribing a minimum of 20 years of experience for appointment as a member of the State Commission, is arbitrary and violative of Article 14 of the Constitution of India.
2. Whether Rule 4(2)(c) of the Consumer Protection Rules, 2020, prescribing a minimum of 15 years of experience for appointment as a member of the District Commission, is arbitrary and violative of Article 14 of the Constitution of India.
3. Whether Rule 6(9) of the Consumer Protection Rules, 2020, which allows the Selection Committee to determine its own procedure for making recommendations, is arbitrary, unreasonable, and violative of Article 14 of the Constitution of India.

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

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

How each authority was viewed by the Court?

• The Supreme Court relied on State of Uttar Pradesh and Others Vs. All Uttar Pradesh Consumer Protection Bar Association; (2017) 1 SCC 444* to emphasize the need for model rules and a transparent selection process.
• The Supreme Court relied on Madras Bar Association Vs. Union of India and Another; (2021) 7 SCC 369* to highlight the importance of competent and experienced members in tribunals and the need for 10 years of experience for advocates to be eligible for appointment as judicial members.
• The Supreme Court relied on Madras Bar Association Vs. Union of India & Anr.; (2021 SCC OnLine SC 463)* to discuss the principle of legislative override and to emphasize that a legislative act should not nullify a court’s judgment without removing the basis of the judgment.
• The Supreme Court considered the Consumer Protection Act, 2019* and Consumer Protection Act, 1986* to understand the legislative scheme and the powers of the consumer commissions.
• The Supreme Court considered Article 14 of the Constitution of India* to emphasize the need for equality before the law and the prohibition of arbitrary actions by the state.
• The Supreme Court considered Article 217 of the Constitution of India* and Article 233 of the Constitution of India* to compare the qualifications for judges with the experience requirements for members of the consumer commissions.
• The Supreme Court relied on the Law Commission in its 272nd Report* to emphasize the need for members of tribunals to possess qualifications akin to the judges of the High Court and District Court.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure a fair, transparent, and merit-based selection process for members of the State and District Consumer Commissions. The Court was concerned that the existing rules, particularly Rule 6(9), gave excessive discretionary powers to the selection committee, lacking transparency and potentially leading to the appointment of unqualified individuals. The Court also noted that the experience requirements under Rule 3(2)(b) and Rule 4(2)(c) were arbitrary and inconsistent with the qualifications for judges, violating Article 14 of the Constitution. The Court emphasized the quasi-judicial nature of the consumer commissions and the need for members to possess the requisite skills and competencies to effectively adjudicate consumer disputes.

Fact:Law Ratio

Logical Reasoning:

The Court considered alternative interpretations but rejected them, finding the existing rules insufficient to ensure a merit-based selection process. The Court’s final decision was aimed at upholding the integrity of the consumer protection system and ensuring that only competent individuals are appointed to adjudicate consumer disputes.

The majority opinion was delivered by Justice M. R. Shah, with Justice M.M. Sundresh concurring. There were no dissenting opinions.

The Court’s reasoning included:

• The need for a transparent and objective selection process.
• The importance of ensuring that members of the consumer commissions possess the necessary skills and competencies.
• The need to avoid political and bureaucratic interference in the appointment process.
• The need to ensure that the rules are consistent with the Constitution and previous judgments of the Supreme Court.

The court quoted from the judgment:

• “The transparency and selection criteria are absent under Rule 6(9).”
• “The standards expected from the members of the tribunal should be as nearly as possible as applicable to the appointment of judges exercising such powers.”
• “The Consumer Protection Act, 1986 has been repealed and the Consumer Protection Act, 2019 has come into force w.e.f. 24.07.2020 with a sole intention to provide adequate safeguards to the consumers and the pecuniary jurisdiction of the District Fora and State Commissions are enhanced substantially.”

Key Takeaways

• The Supreme Court struck down Rule 3(2)(b), Rule 4(2)(c), and Rule 6(9) of the Consumer Protection Rules, 2020, as unconstitutional.
• The Court emphasized the need for a transparent and merit-based selection process for members of the State and District Consumer Commissions.
• The Court directed that appointments should be based on a written test consisting of two papers and a viva voce.
• The Court reduced the minimum experience requirement for members to 10 years.
• The judgment ensures that the selection process is fair, objective, and free from arbitrary or political interference.
• The judgment upholds the principle of judicial independence and the rule of law in the appointment of members to consumer commissions.

Directions

The Supreme Court issued the following directions:

• The Central Government and the concerned State Governments must amend the Rules, 2020, particularly Rule 6(9), to ensure that the Selection Committee follows a procedure for appointment as per Model Rules, 2017.
• The appointment of President and Members of the State and District Commissions should be based on the performance in a written test consisting of two papers of 100 marks each and 50 marks for viva voce.
• The Central Government and the concerned State Governments must amend the Rules, 2020, to provide 10 years’ experience to become eligible for appointment of President and Member of the State Commission as well as the District Commission, instead of 20 years and 15 years respectively.
• Until suitable amendments are made, a person with a bachelor’s degree and 10 years of experience in relevant fields is qualified for appointment as President and Members of the State Commission and District Commissions.
• The written test shall consist of two papers:
  • Paper-I: General Knowledge, current affairs, knowledge of the Constitution of India, and consumer-related laws.
  • Paper-II: Essay on trade, commerce, consumer issues, or public affairs, and a case study of a consumer case.
• The qualifying marks in each paper shall be 50 percent, and there shall be a viva voce of 50 marks.

Development of Law

The ratio decidendi of this case is that the rules governing the appointment of members to the State and District Consumer Commissions must be transparent, objective, and merit-based. The Supreme Court has clarified that the selection process must include a written examination to ensure the appointment of competent individuals. The judgment has changed the previous position of law by striking down the rules that gave excessive discretionary powers to the selection committee and prescribed arbitrary experience requirements. This case reaffirms the principle of judicial independence and the rule of law in the appointment of members to consumer commissions.

Conclusion

The Supreme Court’s judgment in Ministry of Consumer Affairs vs. Dr. Mahindra Bhaskar Limaye & Ors. is a significant step towards ensuring a fair and transparent appointment process for members of the State and District Consumer Commissions. By striking down the arbitrary rules and directing the inclusion of a written examination, the Court has upheld the principles of meritocracy, judicial independence, and the rule of law. This decision will have far-reaching implications for the consumer protection system in India, ensuring that only competent and qualified individuals are appointed to adjudicate consumer disputes.