Class action claims are a unique and vital part of the civil dispute resolution ecosystem. A class action proceeding is initiated when a group of litigants bring a suit or other proceedings before a court/tribunal/forums on behalf of a larger group of persons.1
Class action cases contemplate commonality of facts and reliefs sought in the proceedings where all the members of the class have a common grievance and some of the persons in the said group initiate proceedings before courts in their representative capacity for other members of the class. Class action proceedings provide the courts/forums with an opportunity to adjudicate claims of similarly placed persons; a class action proceeding is advantageous as prevents initiation and adjudication of multiple proceedings in courts but also allows the adjudicating court to asses and award claims for all members of the class which in turn aids in reducing litigation, avoiding multiplicity and expediting the whole process.
While the Code of Civil Procedure, 1908 contemplates class proceedings under Order I Rule 8, CPC, the provision is infrequently invoked. Another recent enactment i.e. Companies Act, 2013 introduced Section 245 which provided the right to initiate class action proceedings before the National Company Law Tribunal to shareholders and depositors against the Company, its directors, auditors(auditing firms) and experts, advisors, consultants and other persons.
It would not be out of place to mention that class action proceedings can also be maintained in the form of Public Interest Litigation/social action litigation under Articles 32 and 226 for enforcement of fundamental rights enshrined in the Constitution of India before the Supreme Court and High Courts in India, it would be however important to highlight a crucial distinction between a PIL and ordinary class action proceeding i.e. lack of locus standi in PILs. In a PIL the Petitioner is not an aggrieved party and does not form part of the class it represents; however in a class action proceedings, the parties are required to possess necessary locus to maintain proceedings arising out of the same cause of action.
The remedy to initiate class action cases was also incorporated in the Consumer Protection Act, 1986 through the Consumer Protection (Amendment) Act, 1993 which inserted specific provisions for initiating proceedings before the consumer forums by expanding the definition of 'complainant'23 under the 1986 act and inserted Section 2(1)(b)(iv) which stated "one or more consumers, where there are numerous consumers having the same interest;"
The amendment also provided for adoption of the provisions of Order I Rule 8 of the Code of Civil Procedure, 1908 in proceedings under the Consumer Protection Act, 1986 through introduction of Section 13(6)4 5to the act thereby mandating the procedure provided in the Civil Procedure Code to be followed in cases of class action consumer claims.
With the introduction of the provisions for initiating class action proceedings, the law in respect of the practice and procedure in cases of class complaints also developed and evolved with time.
What is also important to highlight here is that that class complaints have primarily been initiated in the Real Estate6 sector (specially relating to residential real estate disputes), which invariably brought the litigation before the National Consumer Dispute Redressal Commission7 as the pecuniary limit of the National Commission was for reliefs valued at more than Rs. 1 Crore( Rupees Ten Million)8.
Therefore the National Commission and the Supreme Court of India9 had the occasion to examine, adjudicate and frame the law relating to class action complaints under the Consumer Protection Act, 1986.
One of the leading cases relating to interpretation of the law with respect of class action proceedings under Section 13 was adjudicated in Ambrish Kumar Shukla & Ors. V. Ferrous Infrastructure Pvt. Ltd10 11. The full bench of the National Consumer Disputes Resolution Commission examined the scope, import and limitations of the Consumer Protection Act, 1986 in relation to class action complaints. The issues relating to class action complaints were referred to the larger bench in this matter and the Commission held that:
Issue No. (i)
As held by the Hon'ble Supreme Court in Tamil Nadu Housing Board (supra), the interest of the persons on whose behalf the claim is brought must be common or they must have a common grievance which they seek to get addressed. The defect or deficiency in the goods purchased, or the services hired or availed of by them should be the same for all the consumers on whose behalf or for whose benefit the complaint is filed.Therefore, the oneness of the interest is akin to a common grievance against the same person. If, for instance, a number of flats or plots in a project are sold by a builder / developer to a number of persons, he fails to deliver possession of the said flats/plots within the time frame promised by him, and a complaint is filed by one or more such persons, either seeking delivery of possession of flats / plots purchased by them and other purchasers in the said project, or refund of the money paid by them and the other purchasers to the developer / builder is sought, the grievance of such persons being common i.e. the failure of the builder / developer to deliver timely possession of the flats/plots sold to them, they would have same interest in the subject matter of the complaint and sufficient community of interest to justify the adoption of the procedure prescribed in Order 1 Rule 8 of the Code of Civil Procedure, provided that the complaint is filed on behalf of or for the benefit of all the persons having a common grievance against the same developer / builder, and identical relief is sought for all such consumers.
The primary object behind permitting a class action such as a complaint under Section 12(1)(c) of the Consumer Protection Act being to facilitate the decision of a consumer dispute in which a large number of consumers are interested, without recourse to each of them filing an individual complaint, it is necessary that such a complaint is filed on behalf of or for the benefit of all the persons having such a community of interest. A complaint on behalf of only some of them therefore will not be maintainable. If for instance, 100 flat buyers / plot buyers in a project have a common grievance against the Builder / Developer and a complaint under Section 12(1)(c) of the Consumer Protection Act is filed on behalf of or for the benefit of say 10 of them, the primary purpose behind permitting a class action will not be achieved, since the remaining 90 aggrieved persons will be compelled either to file individual complaints or to file complaints on behalf of or for the benefit of the different group of purchasers in the same project. This, in our view, could not have been the Legislative intent. The term 'persons so interested' and 'persons having the same interest' used in Section 12(1)(c) mean, the persons having a common grievance against the same service provider. The use of the words "all consumers so interested' and "on behalf of or for the benefit of all consumers so interested", in Section 12(1)(c) leaves no doubt that such a complaint must necessarily be filed on behalf of or for the benefit of all the persons having a common grievance, seeking a common relief and consequently having a community of interest against the same service provider.
Sub rule (2) of Rule 8 of Order I of the Code of Civil Procedure mandates the Court to give notice of the institution of the suit /complaint to all the persons "so interested", meaning thereby to the persons having the same interest, i.e. a common grievance, on whose behalf or for whose benefit the complaint is instituted. Notice can be either by way of personal service or where personal service is not reasonably practicable, by way of a public advertisement. The aforesaid provision clearly envisages institution of a suit / complaint on behalf or for the benefit of not only those who approach the Court/Forum but also on behalf of or for the benefit of the persons other than the plaintiffs / complainants, but having the same grievance. Had the Legislative intent been to permit such a complaint only on behalf of the persons deciding to approach the Court/ Forum, there could be no occasion for requiring the service of notice in the aforesaid manner, since there can be no question of serving any notice on those who are already before the Court/Forum.
Sub Rule (5) of Rule 8 of Order I enables the Court to substitute the name of any person having same interest in the suit as plaintiff where it finds that the person suing the suit is not proceeding with due diligence in the suit. The aforesaid power given to the Court also indicates that a suit in terms of order 1 Rule 8 of the Code of Civil Procedure commonly termed as a class suit is intended on behalf or for the benefit of all the persons having a common grievance against the same party and seeking the same relief not on behalf of or for the benefit of only some of them.
12.Issue No. (ii) and (iii)
Section 21 of the Consumer Protection Act, to the extent it is relevant provides that this Commission shall have jurisdiction to entertain complaints where the value of the goods or services and compensation, if any, claimed exceeds Rs.1.00 crore. Therefore, what has to be seen, for the purpose of determining the pecuniary jurisdiction, is the value of the goods or services and the amount of the compensation claimed in the complaint. If the aggregate of (i) the value of the goods or services and (ii) the compensation claimed in the complaint exceeds Rs.1.00 crore, this Commission would have pecuniary jurisdiction to entertain the complaint. Similarly, if the aggregate of the value of (i) the goods or services and (ii) compensation, if any, claimed in the complaint exceeds Rs.20.00 lacs but does not exceed Rs.1.00 Crore, the State Commission would have the pecuniary jurisdiction to entertain the complaint. Since a complaint under Section 12(1)(c) of the Consumer Protection Act can be filed only where there are numerous consumers having the same interest and it has to be filed on behalf of or for the benefit of all the consumers so interested i.e. all of the numerous consumers having the same interest, it is the aggregate of the value of the goods purchased or services hired or availed of, by all those numerous consumers and the total compensation, if any, claimed for all those numerous consumers, which would determine the pecuniary jurisdiction of this Commission. If the aggregate of the value of the goods purchased or the services hired or availed of by all the consumers having the same interest and the total compensation, if any, claimed for all of them comes to more than Rs.1.00 crore, the pecuniary jurisdiction would rest with this Commission alone. The value of the goods purchased or the services hired or availed of and the quantum of compensation, if any, claimed in respect of the one individual consumer therefore, would be absolutely irrelevant for the purpose of determining the pecuniary jurisdiction in such a complaint. In fact, this issue is no more res Integra in view of the decision of a Four-Members Bench of this Commission in Public Health Engineering Department Vs. Upbhokta Sanrakshan Samiti I (1992) CPJ 182 (NC).In the above referred case, a complaint was preferred, seeking to recover compensation for alleged negligence on the part of the petitioner which had resulted in a large number of persons getting infected by Jaundice. The names of 46 such persons were mentioned in the complaint but it was alleged that there were thousands of other sufferers who were similarly placed and that complaint was filed on behalf of all of them. The complainant had sought compensation of Rs.20,000/- for every student victim, Rs.10,000/- for every general victim and Rs.1,00,000/- for the legal representatives of those who had died due to Jaundice. The District Forum held that it had no pecuniary jurisdiction to adjudicate upon the complaint. The State Commission took the view that the District Forum has to go by the value as specified for each consumer. Rejecting the view taken by the State Commission, this Commission inter-alia held as under:
"5. In our opinion this proposition is clearly wrong since under the terms of Section 11 of the Act the pecuniary jurisdiction of the District Forum would depend upon the quantum of compensation claimed in the petition. The view expressed by the State Commission is not based on a correct understanding or interpretation of Section 11. On the plain words used in Section 11 of the Act, the aggregate quantum of compensation claimed in the petition will determine the question of jurisdiction and when the complaint is filed in a representative capacity on behalf of several persons, as in the present case, the total amount of compensation claimed by the representative body on behalf of all the persons whom it represents will govern the valuation of the complaint petition for purposes of jurisdiction".
6. The quantum of compensation claimed in the petition being far in excess of Rs.1.00 lac the District Forum was perfectly right in holding that it had no jurisdiction to adjudicate upon the complaint. The reversal of the said order by the State Commission was contrary to law".
Therefore, irrespective of the value of the goods purchased or the service hired and availed of by an individual purchaser / allottee and the compensation claimed in respect of an individual purchaser / allottee, this Commission would have the pecuniary jurisdiction to entertain the complaint if the aggregate of the value of the goods purchased or the services hired or availed of by the numerous consumers on whose behalf or for whose benefit the complaint is filed and the total compensation claimed for all of them exceeds Rs.1.00 crore.
Issue No. (iv)
13. As noted earlier, what is required for the applicability of Section 12(1)(c) of the Consumer Protection Act read with Order I Rule 8 of the Code of Civil Procedure is the sameness of the interest i.e. a common grievance of numerous persons which is sought to get redressed through a representative action. Therefore, so long as the grievance of the consumers is common and identical relief is claimed for all of them, the cost, size, area of the flat / plot and the date of booking / allotment / purchase, would be wholly immaterial. For instance, if a builder / developer has sold 100 flats in a project out of which 25 are three-bed room flats, 25 are two-bed room flats and 50 are one-bed room flats and he has failed to deliver timely possession of those flats, all the allottees irrespective of size of their respective flats / plots, the date of their respective purchase and the cost agreed to be paid by them have a common grievance i.e. the failure of the builder/ developer to deliver possession of the flat / plot sold to them and a complaint filed for the benefit of or on behalf of all such consumers and claiming same relief for all of them, would be maintainable under Section 12(1)(c) of the Consumer Protection Act. The relief claimed will be the same / identical if for instance, in a case of failure of the builder to deliver timely possession, refund, or possession or in the alternative refund with or without compensation is claimed for all of them. Different reliefs for one or more of the consumers on whose behalf or for whose benefit the complaint is filed cannot be claimed in such a complaint.
(emphasis supplied)
The Supreme Court of India thereafter also had the occasion to examine the correctness and applicability of Ambrish Kumar Shukla(supra) in context of the class action/class complaint proceedings while considering the case of Anjum Hussain and Ors. Vs. Intellicity Business Park Pvt. Ltd. and Ors.12. In Anjum Hussain (supra) the NCDRC had dismissed a class complaint on the ground that although the allottees had common grievance of delay on construction of a commercial project, however it was not shown as to how many of the allottees had booked the shops/commercial units solely for the purpose of earning their livelihood by way of self-employment.
The NCDRC thus effectively negatived the option of class action/class complaint purely on the ground that some of the allottees may not be covered by the ambit of Consumer Protection Act, 198613 and would not be entitled to reliefs as claimed in the class complaint. This distinction between allottees of commercial offices in the case was erroneous in as much as mere allotment to "non-consumer" would not defeat or extinguish the right of "consumers" under the act to initiate class action complaints against the builder.
The Supreme Court quoting with approval the law laid down by the full bench of the NCDRC in Ambrish Kumar Shukla(supra) held that the essential test for the consumer forum while entertaining a class complaint is to consider the test of oneness of the interest is akin to a common grievance against the same person; once the test is satisfied in a class complaint, the matter ought to be adjudicated on merits and proceeded to revive the class complaint and remanded for adjudication on merits.
The Supreme Court as recently in February, 202014 had the occasion to examine the locus of an association to file a class action/class complaint. The question before the court was whether an association which was formed by virtue of any law or rule wherein the membership was mandatory and not voluntary could maintain a class complaint.
The court after examining the definition of complainant/consumer under the Consumer Protection Act, 1986 and also the scope of provisions relating to representative complaints concluded and held that since the definition of 'complainant' is restrictive and not exhaustive or inclusive, hence associations which are not 'voluntary' in nature cannot maintain a complaint under the Consumer Protection Act, 1986.
It would however be proper to clarify that Sobha Hibiscus Condominium(supra) does not take away the right of an involuntary association or any association which is formed by mandate of any law or rule or regulation from otherwise maintaining a consumer complaint as a definition of person, consumer and complainant expressly includes 'every other association of persons'15.
Lastly, for the sake of completeness, it would be important to highlight that the Consumer Protection Act, 1986 stood repealed and replaced with the Consumer Protection Act, 201916 which has retained the provisions for initiating class action complaints under the 2019 law.
Footnotes
1 https://www.investopedia.com/terms/c/classaction.asp
2 Section 2(1)(b) of the Consumer protection act, 1986:
3 https://www.indiacode.nic.in/handle/123456789/1868?sam_handle=123456789/1362
4 Section 13(6) Where the complainant is a consumer referred to in sub-clause (iv) of clause (b) of sub-section (1) of section 2, the provisions of rule 8 of Order I of the First Schedule to the Code of Civil Procedure, 1908 shall apply subject to the modification that every reference therein to a suit or decree shall be construed as a reference to a complaint or the order of the District Forum thereon.
5 https://www.indiacode.nic.in/handle/123456789/1868?sam_handle=123456789/1362
6 https://curarelegal.com/real-estate/
8 Section 21 of the Consumer Protection Act, 1986: https://www.indiacode.nic.in/handle/123456789/1868?sam_handle=123456789/1362
11 2016 SCC OnLine NCDRC 1117
12 MANU/SC/0750/2019: (2019) 6 SCC 519
13 Section 2(1)(d) of the Consumer Protection Act, 1986 defines consumer and excludes purchasers of goods and receipt of services for "commercial purpose" the explanation of the sub clause excludes goods purchased or services availed for earning livelihood for purposes of self-employment.
14 Sobha Hibiscus Condominium vs. Managing Director, Sobha Developers Ltd. and Ors. (14.02.2020 - SC) : MANU/SC/0178/2020
15 Section 2(1)(m) of the Consumer Protection Act, 1986
16 Notified in official gazette of the Government of India w.e.f 09-08-2019, the law has not come in force yet as no commencement date has been notified.
17 Section 38, 49 and 59 of The Consumer Protection Act, 2019 referring to procedure before the District Consumer Forum, State Commission and National Commission respectively.
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