Courts to adopt constructive, liberal approach while construing provisions of Consumer Protection Act: SC

NEW DELHI, Apr 13: The Supreme Court said on Thursday the Consumer Protection Act, 1986 is a “social benefit-oriented” legislation and courts have to adopt a constructive, liberal approach while construing the provisions of this law.

The apex court said the law meets long-felt necessity of protecting the common man from such wrong for which the remedy under ordinary law for various reasons has become “illusory” and the importance of the Act lies in promoting welfare of the society by enabling the consumer to participate directly in the market economy.

A bench of Justices Ajay Rastogi and C T Ravikumar made these observations while delivering its judgement on a batch of  appeals filed by an insurance firm against the December 2004 verdict of the National Consumer Disputes Redressal Commission (NCDRC) which had held that a person who takes insurance policy to cover the envisaged risk does not take the policy for the commercial purpose.

Elaborating on the facts of the case, the top court noted a vehicle dealer and a firm had taken fire insurance policy from an insurance company, and on February 28, 2002, damage was caused to the goods of both due to fire during the Godhra riots in Gujarat.

“The 1986 Act is a social benefit­-oriented legislation and, therefore, the court has to adopt a constructive liberal approach while construing the provisions of the Act,” the bench said, adding it was enacted to protect the interest of consumers.

It said use of the word “protection” furnishes the key to the minds of the makers of the Act and various definitions and provisions which elaborately attempt to achieve this objective have to be construed in this light without departing from the settled law that a preamble cannot control otherwise the plain meaning of a provision.

“In fact, the law meets long felt necessity of protecting the common man from such wrong for which the remedy under ordinary law for various reasons has become illusory,” it said.

“Various legislations and regulations permitting the State to intervene and protect interests of the consumers have become a haven for unscrupulous ones as the enforcement machinery either does not move or it moves ineffectively and inefficiently for reasons which are not necessary to be stated,” the bench observed.

It said provisions of the Act have to be construed in favour of the consumer to achieve the purpose of its enactment and the primary duty of the court or commission while construing the provisions of such an Act is to adopt a constructive approach, subject to that it should not do violence to the language of the provisions and is not contrary to attempted objective of the enactment.

While dealing with the issue raised before it, the bench noted a provision of the Act defines “person” and includes a firm, whether registered or not, apart from other categories without any distinction, big or small.

The bench, which referred to several previous judgements of the apex court, noted, “Thus, what is culled out is that there is no such exclusion from the definition of the term ‘consumer’ either to a commercial enterprise or to a person who is covered under the expression ‘person’ defined in section 2(1)(m) of the Act, 1986 merely because it is a commercial enterprise.”

It said to the contrary, a firm, whether registered or not, is a person who can always invoke the jurisdiction of the Act, provided it falls within the scope and ambit of the expression ‘consumer’ as defined under section 2(1)(d) of the legislation.

The top court observed that in the present case, what needs to be determined is whether the insurance service has a close and direct nexus with the profit generating activity and whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary.

“The fact that the insured is a commercial enterprise is unrelated to the determination of whether the insurance policy shall be counted as a commercial purpose within the purview of section 2(1)(d) of the Act,” the bench said.

It noted that each case has to be examined on its own facts and circumstances and what is to be examined is whether any activity or transaction is for commercial purpose to generate profits and there cannot be a straight-­jacket formula which can be adopted.

Referring to the case, the bench said, “…We are of the view that the complaint filed by the respondent insured herein has no close or direct nexus with the profit generating activity and the claim of insurance is to indemnify the loss which the respondent insured had suffered and the commission has rightly held that the respondent is a ‘consumer’ under section 2(1) (d) of the Act, 1986.”

While dismissing the appeals, the bench said the Gujarat State Consumer Disputes Redressal Commission may adjudicate the complaint of the respondents on their own merit in accordance with law, and since it is an old matter, it be decided expeditiously with a year. (PTI)