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SC reverses National Commission order

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The Supreme Court recently reversed a judgment of the National Commission and reprimanded it for exceeding its jurisdiction in a case that came up on appeal from the State Commission.

The top court held that the National Commission had wrongly interfered with the concurrent finding of fact by the District Forum and the State Commission. It reversed the order against an NGO based in Gujarat in Lourdes Society Snehanjali Girls Hostel vs H and R Johnson (India) Ltd.

The Lourdes Society is an NGO helping adivasi students. It runs a girls’ hostel for adivasi students where they are only charged for food and electricity while staying there for completing their studies. The Society had bought vitrified glazed tiles from H&R Johnson for the hostel flooring. However, these tiles were found to be defective.

The Society contacted the tile company but received no response initially. After several letters, a local agent on behalf of the company inspected the tiles and found them defective, but the company took no action. Thereafter, the Society got an architect to examine the tiles who concluded that there had been a loss to the Society to the tune of Rs 4,27,712.37.

The National Commission erroneously ruled that the Lourdes Society was a commercial entity, and therefore, not a consumer under Section 2(d) of the Consumer Act.

Receiving no response from the company, the Society approached the District Forum. The District Forum gave a ruling in favor of the Society. The findings of the District Forum were upheld by the State Commission when the company appealed against the District Forum’s order.

However, the National Commission erroneously ruled that the Lourdes Society was a commercial entity, and therefore, not a consumer under Section 2(d) of the Consumer Act.

The Supreme Court pointed out that there had been no errors in the findings of the State Commission and District Forum and that the Society was a non-profit charitable organization.

As there had been no illegality or irregularity committed, the Supreme Court held that the National Commission could not have reopened the question of the applicability of Section 2(d) to the Society.

 Section 21(b) mandates that the National Commission can call for the records and pass appropriate orders “where it appears to the National Commission that the State Commission has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity”. Since this was not the case and there had been no illegality or irregularity committed, the Supreme Court held that the National Commission could not have reopened the question of the applicability of Section 2(d) to the Society.

The Forum had found that the Society was a non-profit organization and therefore a “consumer” as per the requirements of Section 2(d). The litigation needlessly went on for 14 years. Therefore, the Supreme Court not only restored the order of the District Forum but also imposed costs of Rs 50,000 to be paid to the Lourdes Society.

—By India Legal Bureau

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