Retailers, manufacturers and service providers who file frivolous appeals before consumer courts will now have to pay a steep price for “abusing the process of law”. In an order, indicative of the apex consumer court’s resolve to discourage such litigation, a builder has been slapped with a penalty (punitive damages) of Rs 1 lakh.
In at least three recent cases, the National Consumer Disputes Redressal Commission had expressed its displeasure over baseless appeals filed by service providers and imposed punitive damages to the tune of Rs 25,000. Now, by quadrupling this quantum of damages, the court has sent out a clear signal that it has further toughened its stand on those who misuse the appeal provision to unnecessarily prolong the process of adjudication, harass the consumer and also waste the time of the courts. (R. Narasimha Reddy vs Kuchakula Surender Reddy, F.A. No. 502 of 2011, decided on March 5, 2012)
It all began with a complaint filed by 74-year-old Kuchakula Surendar Reddy, a resident of Hyderabad in 2009, against a construction company (Shikhara Constructions) and its two partners — Vishnu Vardhan Reddy and R.Narasimha Reddy — for failing to hand over his flat, for which he had already paid Rs 23 lakh in 2007. The Andhra Pradesh State Commission, in its order delivered in September 2010, directed the partners to complete the construction, execute the sale deed, hand over the flat to the complainant and also pay compensation as per the agreement signed by the parties. It also directed the consumer to pay the balance amount of Rs 13,25,000 to the builder, which he did.
However, instead of complying with the order, one of the partners, Narasimha Reddy, who had failed to appear before the consumer court despite notice, filed a total of six appeals against this order. So the national commission was forced to take a stern view of all such frivolous appeals, which it said, should be put down with a heavy hand. It directed the builder to pay Rs 75,000 as punitive damages to the complainant and Rs 25,000 to the “Legal Aid Cell” of the commission.
Punitive damages are usually awarded in addition to actual damages (awarded for loss suffered by the complainant) and are meant as a punishment to deter the wrongdoer (and others too) from such behaviour in the future. So the steep punitive damages in this case (hopefully it will get steeper in cases such as these) should force trade and industry to think twice before filing appeals without merit.