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Power of Consumer Commission to Issue Arrest Warrant

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 09-Oct-2024

Source: Delhi High Court 

Why in News? 

Recently, the Delhi High Court in the matter of Rakesh Khanna v. Naveen Kumar Aggarwal & Ors has held that the Consumer Commission has the power to issue arrest warrant against the director of the company to hold the company accountable for its non-compliance. 

What was the Background of Rakesh Khanna v. Naveen Kumar Aggarwal & Ors Case? 

  • In this matter, Respondent no.1 filed a complaint under Section 17 of the Consumer Protection Act, 1986 (CP), alleging deficiency of services and unfair trade practices by VXL Realtors Pvt. Ltd (Respondent No.4). 
  • Delhi State Consumer Disputes Redressal Commission (SDCRC) passed a judgement granting relief to the complainant and ordered Respondent No.4 to refund the entire amount to the complainant along with other reliefs. 
  • In furtherance to it Respondent No. 1 filed an execution application where a warrant of arrest was issued against the directors (petitioner) of Respondent No.4. 
  • The petitioner applied for recall of the order and challenged the order before National Consumer Disputes Redressal Commission (NCDRC). 
  • The NCDRC also filed an order against the petitioner and issued a warrant of arrest. 
  • Aggrieved by the decision of the NCDRC the petitioner filed the present appeal before the Delhi High Court by contenting that: 
    • He was not the director of Respondent No.4 at the time of the alleged act. 
    • He was not managing the business of the company at the time the alleged act was committed and to support the same medical reports were presented by him. 
    • The process of passing execution order under CP Act was incorrect. 

What were the Court’s Observations? 

  • The Delhi High Court observed that: 
    • Section 72 of CP Act empowers the consumer commission to issue an arrest warrant for non-compliance of its order. 
    • The purpose of issuing an arrest warrant by the SDRCX and NCDRC was not to seek the personal liability of the director but to seek accountability for the alleged act. 
    • The director cannot take the plea that he was not active when the alleged act occurred. The order was not about his personal liability but about holding the Respondent No. 4 accountable. 
  • The court also stated that the power of enforcement and issuing warrant of arrest derives from Section 71 and Section 72 of CP Act respectively. 
  • The power of issuing a warrant under CP Act derives from Section 71 of the Act to Section 72 of the Act. 
  • The Delhi Hogh Court therefore dismissed the plea of the petitioner and confirmed the order of NCDRC. 

What is the Process of Enforcement of Order by Consumer Dispute Redressal Commission:  

  • Section 71 - Enforcement of Orders  
    • Orders of the District Commission, State Commission, or National Commission shall be enforced in the same manner as a court decree, using the provisions of Order XXI of the Code of Civil Procedure.  
  • Section 72 - Penalty for Non-Compliance of Orders  
    • Failure to comply with an order of the District Commission, State Commission, or National Commission is punishable with:   
    • Imprisonment of 1 month to 3 years, and/or  
    • Fine of ₹25,000 to ₹1 lakh.  
    • The respective Commission shall have the powers of a Judicial Magistrate of the First Class for trial of such offences.  
    • The offences shall be tried summarily by the respective Commission. 

What is Deficiency of Service?  

    • The concept of "deficiency of services" encompasses any failure, lack, or shortfall in the expected standard of services provided to consumers.  
    • It covers instances where the service rendered falls short of the legal requirements, contractual obligations, or reasonable expectations of the consumer.  
    • Deficiency can arise due to negligence, intentional acts, or omissions by the service provider, leading to consumer dissatisfaction, inconvenience, or harm.  
    • Section 2(11) of CPA defines "deficiency" as any fault, imperfection, shortcoming, or inadequacy in the quality, nature, and manner of performance required to be maintained under any law or undertaken to be performed by a person under a contract or otherwise in relation to any service. It includes:  
      • Any act of negligence or omission or commission by the service provider, which causes loss or injury to the consumer.  
      • Deliberate withholding of relevant information by the service provider from the consumer. 

Landmark Judgement 

  • Rajnish Kumar Rohatgi & Anr. Vs. M/s Unitech Limited & Anr (2016): 
    • In this case it was held that the persons who were in charge and responsible to the company for conduct of its business on and after the date the order came to be passed by the Consumer Forum, till the said order is complied, shall be liable to be punished under the CP Act. 
  • Ravi Kant v. National Consumer Disputes Redressal Commission (2024): 
    • In this case it was held that if a company fails or neglects to comply with an order passed by a Consumer Forum, liability extends not only to the company itself, but also to those individuals who are responsible for its operations and fail to take necessary steps to ensure compliance.