In a significant ruling by the Supreme Court of India, a landmark decision was made regarding class action lawsuits in consumer protection cases. The judgment provides clarity on the application of Order 1 Rule 8 of the Code of Civil Procedure in addressing common grievances against service providers. This ruling will have far-reaching implications for consumer rights and legal proceedings in similar cases.
Facts
- Appellant no.1 booked an office space of 440 sq.ft in a project by the respondent.
- Similar agreements were entered into by appellant nos. 2 to 44 with the respondent for various units in the same project.
- Appellants sought refund of amounts paid due to non-delivery of possession within four years.
- Builder-Buyer Agreement was executed on 02.12.2013 with a commitment of possession within four years.
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Arguments
- Maintainability of the suit in a representative capacity under Order I, Rule 8 of the Code of Civil Procedure is contested.
- The contention is that since the injury complained of relates to a demand of money by separate demands against each of the allottees, giving rise to different causes of action, Rule 1 is not applicable.
- It is unclear whether each allottee in Ashok Nagar was served with an additional demand before the suit was filed.
- The concern is that those who were served may be interested only in defeating the demand individually referable to them and not concerned with others.
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Analysis
- The National Commission noted that all the appellants had a common grievance regarding the non-delivery of the units booked from the respondent, indicating deficient service.
- The appellants failed to demonstrate how many of the allottees had booked the commercial units for the sole purpose of earning their livelihood through self-employment.
- The case of Chairman, Tamil Nadu Housing Board, Madras vs T. N. Ganapathy was referred to, emphasizing that for application of Order 1 Rule 8 of the Civil Procedure Code, it is essential for the concerned individuals to have a common interest or grievance, without requiring the same cause of action.
- The court stressed the importance of the sameness of interest among the complainants in such cases.
- The term ‘persons so interested’ and ‘persons having the same interest’ in Section 12(1)(c) refer to individuals with a common grievance against the same service provider.
- The complaint encompassed all allottees of Ashok Nagar seeking refunds, interest, and compensation.
- For a class action lawsuit, it must be shown that all allottees booked units for self-employment purposes.
- Without evidence that all allottees share the same interest, a class action suit cannot proceed.
- The purpose of the Consumer Protection Act’s class action provision is to group individuals with a common grievance.
- Individual allottees do not need the exact same cause of action to be represented in a lawsuit under Order I Rule 8.
- The Full Bench of the National Commission equated oneness of interest to a common grievance against the same entity.
- Allottees who received additional demands can still maintain a legal action collectively without filing separate suits.
- Order I Rule 8 aims to prevent multiple litigations in the public interest.
- The provision in Order 1 Rule 8 of the Code of Civil Procedure allows for a class action complaint in consumer cases where multiple consumers have a common grievance against the same service provider.
- The primary purpose of such a class action complaint is to address consumer disputes involving a large number of consumers without each having to file individual complaints.
- The recent clarification by the Explanation in the Code of Civil Procedure (Amendment) Act, 1976, states that it is not necessary for the persons suing or defending to have the same cause of action as the persons they represent in a class action complaint.
- A class action complaint must be filed on behalf of or for the benefit of all persons who have a common grievance and a community of interest against the same service provider.
- Filing a complaint on behalf of only some of the aggrieved persons will not achieve the primary purpose of a class action complaint, as it may lead the remaining aggrieved persons to file individual complaints.
- The legislative intent behind allowing class action complaints in consumer cases is to reduce the number of consumer complaints and provide a cost-effective solution for both consumers and service providers.
- The interest of the persons represented in a class action complaint must be common, with a shared grievance seeking resolution.
- A Full Bench decision of the Madras High Court highlighted the necessity of a common interest and community of interest among the represented persons in a class action complaint.
- The objective of the provision in Order 1 Rule 8 is to facilitate the resolution of issues involving a large number of interested persons without resorting to the usual legal procedures.
- The decision of the National Commission emphasized the application of Order 1 Rule 8 of the CPC to consumer complaints to avoid multiple litigations and address the common interests of numerous consumers.
- The National Commission in this case deviated from the established principles in previous decisions.
- The approach taken by the National Commission was deemed completely erroneous.
- The National Commission overlooked the clear principles highlighted in the relevant decisions.
- The National Commission’s handling of the instant case was heavily criticized for its departure from established precedents.
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Decision
- No costs are awarded in this case.
- The appeal is allowed and Case No. 2241 of 2018 is reinstated with the National Commission.
- The application under Section 12(v)(o) of the Act made by the appellants is considered maintainable.
- The order being appealed is set aside.
Case Title: ANJUM HUSSAIN Vs. INTELLICITY BUSINESS PARK PVT LTD
Case Number: C.A. No.-001676 / 2019
