In a significant ruling that clarifies the functioning of consumer dispute redressal forums across India, the Supreme Court has upheld the constitutional validity of the Consumer Protection Act, 2019 provisions that determine the pecuniary jurisdiction of Consumer Commissions. The Court ruled that jurisdiction must be decided based on the actual amount paid for goods or services, not on the compensation claimed by a consumer.
The judgment was delivered in the case of Rutu Mihir Panchal & Ors. v. Union of India & Ors., where the Court dismissed writ petitions challenging the legality of Sections 34, 47, and 58 of the Consumer Protection Act, 2019. These provisions govern the jurisdiction of District, State, and National Consumer Disputes Redressal Commissions respectively.
Supreme Court Ruling: What Was Challenged?
Under the old Consumer Protection Act, 1986, pecuniary jurisdiction of consumer forums was determined based on the amount of compensation claimed by the complainant. This allowed consumers to inflate their claims to approach higher forums like the National Consumer Disputes Redressal Commission (NCDRC), often bypassing District or State Commissions.
However, the Consumer Protection Act, 2019 made a fundamental change: jurisdiction is now based on the consideration paid—that is, the actual value of goods or services purchased—not the compensation claimed.
Petitioners argued that this change was arbitrary and violated Article 14 of the Constitution, as it discriminated between consumers who may suffer similar losses but paid different amounts for their goods or services. They also contended that this shift limited access to the NCDRC and could adversely affect high-value insurance claims where the premium paid is usually low.
The Court’s Observations: Legislative Intent and Constitutional Validity
The Bench comprising Justices PS Narasimha and Manoj Misra rejected the petitioners’ arguments and upheld the validity of Sections 34, 47, and 58.
The Court made several critical observations:
- Consideration as a Valid Classification: The Court held that classifying claims based on the amount paid for goods or services is a valid and rational classification with a direct nexus to the objective of creating a three-tiered redressal system.
- No Violation of Article 14: The judges stated that determining jurisdiction based on consideration paid is neither arbitrary nor discriminatory. Since consumer transactions are contractual in nature and not gratuitous, consideration is integral and can be used to define jurisdiction.
- Forum Shopping Prevented: The Court emphasized that the earlier practice of inflating claims to select a preferred forum was problematic. The new provisions ensure that consumers file complaints at the appropriate level, reducing the burden on higher commissions like the NCDRC.
- Access to Justice Not Denied: Importantly, the Court clarified that consumers are still free to claim any amount of compensation. The limitation is only on the forum they can approach, not the relief they can seek.
Case Backgrounds Highlight the Issue
In one of the cases, the petitioner’s husband had purchased a Ford Endeavour worth ₹31.19 lakh. After the vehicle caught fire and led to his tragic death, the widow filed a consumer complaint claiming ₹51.49 crore in compensation. Under the 1986 Act, she could have approached the NCDRC directly. However, under the 2019 Act, the case fell within the District Commission’s jurisdiction based on the amount paid for the car.
In another connected appeal, the petitioner’s husband died due to COVID-19, and a claim of ₹14.94 crore was made under a life insurance policy. Because the policy premium paid was below ₹10 crore, the NCDRC declined jurisdiction.
These examples were cited by petitioners to argue that the new system was unfair and limited access to justice. However, the Court firmly rejected this view, stating that jurisdiction is not a matter of consumer privilege but a legal structure aimed at streamlining dispute resolution.
Policy Evaluation vs. Constitutional Challenge
The Supreme Court drew a clear line between judicial review and policy evaluation. It held that complaints about practical difficulties—such as low insurance premiums preventing access to higher forums—fall under the domain of legislative or executive review, not constitutional scrutiny.
In a forward-looking move, the Court directed the Central Consumer Protection Council and the Central Consumer Protection Authority (CCPA) to conduct surveys and performance audits to assess whether the statute is working effectively. This ensures ongoing evaluation and scope for reform if needed.
Rule of Law and Statutory Review
The Court emphasized that periodic review and implementation analysis of legislation is a fundamental component of the Rule of Law. If a statute is not delivering on its objectives, it is the duty of the executive to examine the causes and suggest necessary amendments.
The judgment thus balanced judicial restraint with constructive suggestions for administrative oversight, reaffirming the need for a responsive and efficient consumer redressal framework.
Legal Precedents Cited
The Court referred to the decision in Nandita Bose v. Ratanlal Nahata, reiterating that courts and tribunals retain the power to examine and reassess overvalued claims filed with the intention of forum shopping. This curbs the misuse of jurisdiction and ensures integrity in the litigation process.
Representation in Court
The petitioners were represented by Senior Advocate Abhimanyu Bhandari and a legal team comprising Haresh Raichura, Shreeyash Lalit, Saroj Raichura, and others. The Union of India was represented by Additional Solicitor General Vikramjit Banerjee along with a team of advocates including Nachiketa Joshi and Anmol Chandan.
Conclusion
The Supreme Court’s judgment in Rutu Mihir Panchal & Ors. v. Union of India & Ors. is a landmark verdict that strengthens the integrity of India’s consumer protection mechanism. By upholding the provisions that base pecuniary jurisdiction on the value of goods or services paid, the Court has ensured a more balanced, efficient, and fair adjudication process.
While consumers still have the freedom to claim significant compensation, this judgment restricts the tendency to manipulate forum choice, thereby reducing case overload and ensuring smoother justice delivery. The proactive involvement of the Central Consumer Protection Authority and the Consumer Protection Council in monitoring the Act’s implementation further reflects a healthy model of law-making, enforcement, and judicial oversight.
This verdict is a reminder that access to justice must be structured, not exploited—and that statutory evolution should align with the principles of reasonability, equality, and administrative efficiency.
