Legal File: How courts make laws

The Consumer Protection Act has evolved over the last decade and the judiciary can be credited with keeping consumer protection upto date with the changing times.

The Supreme Court and National Commission's decisions in banking, insurance, education and civic services-related cases are now as good as law and have gone a long way in guiding the consumer protection initiative

The distinct roles of the Indian judiciary and the legislature are well-defined. While the governments (or legislature) formulate laws, the judiciary has the job of interpreting them if any disputes arise. The Indian judiciary, sometimes on its own initiative, has changed the conditions of living for Indian citizens. Whether its environmental issues, human rights or consumer concerns like unsolicited phone calls, judicial decisions have had significant impact on how things are run in India.

While giving interpretation to the acts, laws and rules, courts do give due attention to the intention and purpose of the law that pertains to the case in question. In a number of judgements, the Supreme Court has underlined this observation while interpreting the law. A case in point being the National Insurance Company Ltd versus Laxmi Narayan Dhat case, where the Supreme Court (2007 [CP] page 445) made it clear that the interpretation of the law should be made keeping in view the purpose of the Act. ‘A statute being an edict of the legislature, in construing it, it is necessary to seek the intention of its maker', said the Supreme Court.

There are situations where the law is silent and facts of the case demand that the meaning of particular clauses be elaborated upon. In such situations, the courts take many factors into account like the circumstances of the case and purpose of the law. This accompanied with the fundamental principal of natural justice is the basis of the interpretation. Such interpretations, when made by the judiciary, become a precedent for future cases of similar nature and if one can put it that way, they become law.

The Consumer Protection Act: One of its kind

While looking at the Consumer Protection Act, we can see that many landmark orders have been made by consumer fora and state commissions during the last decade, specially after the 2002 amendment when the Act got more teeth to deal with consumer matters.

In fact consumer courts enjoy ample power to interpret the law. Section 14 of the Consumer Protection Act also allows the courts to give relief to consumers by way of compensation depending upon the circumstances. The consumer courts can also order rectification of defective goods, improving of deficient services and even direct to stop any unfair trade practices. The insurance companies for example had been rejecting consumer claims on the plea of pre-existing disease in most mediclaim cases. With mediclaim cases piling up in consumer courts, the courts noted that the hidden terms and conditions were not disclosed to the insured at the time of filling of the proposal forms as these details were sent to the insurer only after the policy had been taken. Therefore insurance companies cannot summarily reject claims on the basis of the ‘pre-existing disease' clause. With consumer courts taking a note of this, insurance companies have since amended their application forms which now include terms and conditions with the proposal form itself. And now unless it is proved that claimant was aware of the particular disease and had taken medicine or consultation for that particular disease, the claim cannot be rejected

In the case of Asha Rani Goyal versus Life Insurance Corporation in the year 2000, three criteria were set up for coming to the conclusion that the claimant had pre-existing disease:

•  The insured should have been aware of the particular disease and should have concealed the fact

•  The fact so concealed should be of such great importance that it could affect the insurance company's decision to not issue the policy at all.

Setting basic facilities right

Civic problems are another area where consumers have been forced to approach the judiciary to get conditions improved. The civic bodies of Delhi—Municipal Corporation of Delhi (MCD) and New Delhi Municipal Corporation (NDMC) were pulled up when the State Commission held them responsible for poor maintenance of sewers, roads, parks and other utility services provided by statutory bodies. They defended themselves by saying that their work does not come under the purview of the Consumer Protection Act. The consumer courts explained that the civic bodies were free to adopt any strategy in the planning phase but once they had decided to render certain services, and then if they did not live up to their word, they would indeed be deficient in administrative implementation of the government plans. Now, efforts are afoot to bring civic services under the Consumer Protection Act net.

Education services and consumer rights

Education institutions too have been hauled up for setting unreasonable rules for admission of children in schools and also for demanding donations or charging for even issuing something as basic as a school leaving certificate. It was a consumer state commission's orders against educational institutions which compelled the Ministry of Human Resources Development to issue notifications for setting reasonable norms for the welfare of the common public in the interest of students (Bal Bharti Public School v Shiv Shankar Gupta [2007])

Banking services made consumer-friendly

Consumer commissions as well as the Supreme Court have not favoured banks when it comes to banks alleging that credit card holders have defaulted in payments. The interest rates charged to Indian credit card holders are some of the highest in the world and the courts have taken note of this. Forcible repossession of vehicles by banks and financial companies was another practice which consumer courts objected to. The apex court took a very serious note of such practices and directed banks to resort only to legal recourse through civil recovery suits if they wished to take back the vehicles for which loans had been given to consumers.

The consumer courts explained that the civic bodies were free to adopt any strategy in the planning phase but once they had decided to render certain services, and then if they did not live up to their word, they would indeed be deficient in administrative implementation of the government plans. Now, efforts are afoot to bring civic services under the Consumer Protection Act net.

Dr Premlata

The author is member, consumer court, Delhi

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