National Consumer Disputes Redressal Commission Clarifies Distinction Between Consumer and Criminal Proceedings

June 19, 2024

The National Consumer Disputes Redressal Commission, under the leadership of Dr. Inder Jit Singh, has made a significant clarification regarding compensation awarded by consumer commissions. Dr. Singh emphasized that the compensation granted in consumer cases should not be equated with a criminal sentence or punishment. This distinction is crucial because consumer complaints, typically involving service deficiencies or unfair trade practices, operate under different legal standards compared to criminal courts. Unlike criminal proceedings, which require proof beyond a reasonable doubt for culpable offenses, consumer disputes are adjudicated based on the balance of probabilities. This clarification underscores the unique nature of consumer grievances and aims to ensure a fair and equitable resolution process for both consumers and businesses.

BRIEF FACTS

The complainant’s case involves a complex series of events concerning the booking of a flat with Kalindi Enterprises, a builder constructing flats in ‘Vrindavan Avenue’ at Shanti Park, Thane. Despite paying an initial advance and subsequent installments totaling Rs. 5,56,990 between August 1994 and September 1996, the complainant did not receive possession of the booked flat as promised by the builder. After several years of waiting, the complainant canceled the agreement in March 2003 due to the builder’s failure to fulfill their obligations.

In an attempt to resolve the matter, a compromise was reached, with the builder agreeing to pay Rs. 8,11,000 to the complainant and issuing five cheques as part of the settlement. While the first two cheques, amounting to Rs. 3,50,000, were initially unpaid but later settled along with an additional Rs. 75,000, the remaining three cheques totaling Rs. 4,61,000 were dishonored, leaving the outstanding amount unpaid.

Moreover, the complainant discovered that the flat initially booked had been sold to third parties by the builder, indicating a clear case of deficiency in service and unfair trade practice. This revelation led to the filing of a criminal complaint under Section 138 of the Negotiable Instruments Act due to the dishonor of the cheques issued by the builder.

Notably, the builder was found guilty of the offense under the Negotiable Instruments Act and has been convicted, receiving both a prison sentence and a fine. This case highlights the importance of consumer protection laws in addressing grievances against builders and emphasizes the consequences of unfair trade practices and non-compliance with legal obligations.

Following the initial complaint, the aggrieved complainant sought recourse through the District Forum, where the complaint was allowed in their favor. Dissatisfied with this decision, the builder escalated the matter to the State Commission, hoping for a different outcome. However, the State Commission dismissed the complaint, prompting the builder to pursue further legal avenues. Subsequently, the builder filed a Revision Petition with the National Commission, seeking a review of the decision made by the lower forums. This escalation reflects the builder’s persistent efforts to challenge the rulings and underscores the complexity of the legal process involved in resolving consumer disputes.

CONTENTION OF THE OPPOSITE PARTY

The builder’s argument centered around the notion of double jeopardy, citing that since the trial court had already imposed a fine and provided compensation to the complainant, awarding additional compensation by the consumer commission would be unjustified. They contended that this would essentially penalize them twice for the same offense. Hence, the builder asserted that the Consumer Commission’s decision to award further compensation was legally flawed and should be overturned. This argument raises questions about the principles of fairness and legal interpretation, as well as the potential overlap or conflict between civil and criminal proceedings in cases involving consumer grievances.

OBSERVATION BY THE COMMISSION

he Commission made a significant observation regarding the relationship between the Consumer Protection Act 2019 and other existing laws. Referring to Section 100 of the Act (which is equivalent to Section 3 of the 1986 Act), it clarified that the remedies provided by the Consumer Protection Act are supplementary to, rather than contradictory with, any other laws in force. This crucial point highlights that the compensation awarded by the consumer commission does not equate to a criminal sentence or punishment.

The distinction between civil and criminal proceedings is crucial here. Criminal courts operate under the legal principle of proof beyond a reasonable doubt for culpable offenses, a standard not applicable to consumer complaints involving service deficiencies or unfair trade practices. The proceedings under the Consumer Protection Act function independently from criminal proceedings, with both jurisdictions coexisting simultaneously. Therefore, the concept of double jeopardy, which prohibits being punished twice for the same offense, does not apply in this context. This clarification underscores the unique nature of consumer disputes and reaffirms the authority of consumer commissions to adjudicate such matters without infringing upon the domain of criminal law.

Furthermore, the State Commission highlighted that the petitioner had sold the subject flat to a third party before canceling the agreement, which was considered an unfair trade practice. After a thorough examination of all evidence, the State Commission affirmed the District Commission’s findings, stating that the builder engaged in unfair trade practices by issuing dishonored cheques.

The commission reiterated that when operating in a revisional capacity, it must adhere strictly to the statutory confines of the law and refrain from interfering with lower court findings unless there is evidence of jurisdictional errors or material irregularities. In this instance, no such errors were detected, and the State Commission’s decision was deemed sufficiently reasonable.

Consequently, the commission disposed of the revision petition and upheld the State Commission’s order, thereby bringing closure to the legal proceedings in this matter.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

Deem Conveyance, Family Matters, and Property Disputes.

Human and Civil Rights Campaigner

President Citizens Justice Forum https://citizensjusticeforum.in