Consumer Protection Act, 1986 – ss.12(1), 13(6), 2(1)(d) – “consumer” – Reserve Bank of India Act, 1934 – Respondent nos. 1 and 2-Trusts claiming themselves to be a voluntary consumer association fighting for consumer rights, if had the locus to approach the National Commission – The original complaint, if met the threshold of ss.12(1) and 13: Held: No – The original Complaint before the Commission which was filed in a representative capacity, by the Trust, representing all consumers purportedly aggrieved owing to the exorbitant rates of interest charged by the banks, was filed without complying with the mandate of Or. I, r.8, CPC prescribed u/s.13(6) – No order was passed by the National Commission permitting the Respondent nos.1 and 2 to represent the interest or act on behalf of any consumer – Complainants filed the application u/s.13(6) seeking permission to act “on behalf of consumers” only at the stage of conclusion of arguments, and judgment being reserved – Since, the requirement of Or. I r.8, prescribed in s.13(6) is to be read into s.12(1), the requirement of obtaining prior permission from the Commission, for any consumer to act in a representative capacity, cannot be dispensed with – Further, a trust is not a “person” as defined u/s.2(1)(m) of the 1986 Act and therefore not a consumer and thus, cannot file a consumer dispute under the 1986 Act – Also, the consumer complaint did not disclose any deficiency in service or violation and was in fact a public interest litigation in guise of a purported consumer dispute – Respondents approached the National Commission at the behest of the Respondent no.3, a credit card holder with Citibank, purportedly claiming an amount of Rs. 90,000/- against excess interest charged by the bank, which is barred by the pecuniary jurisdiction of the Commission – Furthermore, the administrative policy decisions of banks do not constitute provisions/facilities of banking, which may come under the umbrella of ‘service’, defined u/s.2(1)(o) of the 1986 Act – A policy decision pertaining to the rate of interest, and trade practices carried out by the banks across the country is a regulatory function within the specific statutory domain of the RBI and cannot come under the purview of judicial scrutiny by the National Commission – National Commission erred in holding that any complaint under the 1986 Act to curb unfair trade practice(s) adopted by the banks is maintainable – National Commission had no jurisdiction to entertain a complaint having vague, ambiguous allegations and no cause of action – Order of the National Commission set aside. [Paras 42-47, 57]
Reserve Bank of India Act, 1934 – Banking Regulation Act, 1949 – s.21A – Whether the NCDRC has the jurisdiction to interfere with banking operations which is the exclusive statutory domain of the RBI – Whether the NCDRC had the jurisdiction to fix a maximum ceiling rate of interest to be charged by banks from their credit card holders for their failure to make full payment on the due date, at the behest of the RBI and unilaterally direct banks/non-banking financial institutions to charge rates of interest not beyond the 30% p.a., in absence of an instruction/directive of the RBI: Held: RBI is the prime banking institution of the country and a statutory authority entrusted with the supervisory role over banking and conferred with the authority of issuing binding directions having statutory force – NCDRC assumed jurisdiction and expertise over the RBI observing that a ceiling on the rates of interest is the purported solution to the alleged exploitation of credit card holders – It made observations contrary to the legislative intent of s.21A of the 1949 Act that provides for a statutory bar on any court/tribunal to re-open transactions, that the rate of interest charged by the banking company in respect of such transaction is excessive – The decision of the National Commission unilaterally holding that any interest above 30% p.a. is usurious is contrary to the legislative intent of s.21A and is an encroachment upon the domain of the RBI – The challenge by the complainants that the guidelines issued by the RBI are arbitrary and not in public interest is without any basis – RBI is the prime regulator and the decision-making authority for the economic/financial decisions of the Indian economy, any endeavor by the National Commission or any other Court/Tribunal to decide at the behest of the RBI cannot be termed to be just, fair and equitable – An endeavour to cap the rate of interest charged by banks and dictating the need for a Benchmark Prime Lending Rate, drawing parallels with other economies across the world, whilst failing to trust the prudence of the RBI which is entrusted with the fundamental responsibility of regulation of the monetary system and banking business is unwarranted – A direction cannot be issued to the RBI, to enact a particular legislation. [Paras 48, 50, 51, 56, 58-60] Consumer Protection Act, 1986 – s.2(1)(m) – “person” – Trust, if a “person” and whether can file a consumer dispute under the 1986 Act:
Held: A trust, whether registered under the Indian Trust Act or the State Trust Registration Act is not a “person” as defined u/s.2(1)
(m) of the 1986 Act – The issue whether a Trust would come within the purview of consumer has been referred to a larger bench in Administrator Smt. Tata Bai Desai Charitable Opthalmic Trust Hospital, Jodhpur case, however, the ratio in Pratibha Pratisthan case holding that a trust is not a person and therefore not a consumer and consequently cannot invoke provisions or file a consumer dispute under the provisions of this Act, is the position of law in force – Indian Trust Act, 1882 – State Trust Registration Act. [Para 44]
Reserve Bank of India Act, 1934 – Notifications, circulars, direction/guideline issued by RBI – Nature:
Held: Any direction or guideline issued by a statutory authority is an extension of the statute itself – Rules made under a statute must be treated, for all purposes of construction or obligations, exactly as if they were in that Act – The notifications, circulars and directions of the RBI are nothing but the legislative expression of the ‘statement of object & reasons’ encapsulated in the preamble of the 1934 Act – Hence, the statutory presumption that the legislature while formulating laws has inserted every part thereunder for a purpose and that legislative intention, which should be given effect to, would be applicable to the present guidelines as well – National Commission had no jurisdiction to assume the jurisdiction of the RBI, or act/decide or regulate on its behest, any monetary decision or policy. [Paras 56, 57]
Contract – Terms of the contract, if can be re-written – Whether the Impugned Judgment of the National Commission interferes with the contract executed between the parties: Held: Yes – The credit card holders in the present case were well-informed and educated and agreed to be bound by the express stipulation by the terms issued by the respective banks – The banks in the most important terms and conditions provided all necessary information with regard to fees, and charges applicable to credit cards, credit and cash withdrawal limits – Once the terms of the credit card operations were known to the complainants and disclosed by the banking institutions before the issuance of the credit cards, the National Commission could not have scrutinized the terms or conditions, including the rate of interest – National Commission had no jurisdiction to re-write the said terms of the contract entered between the banks and the credit cardholders, which the parties mutually agreed to be bound by. [Paras 63, 65] Economic legislation/notification – Validity – To be tested on the touchstone of reasonableness:
Held: In deciding the validity of any economic legislation or notification having a public objective sought to be attained, it is imperative to test it on the touchstone of reasonableness – In the absence of any patent arbitrariness, the directions cannot be condemned as being violative of Part III of the Constitution of India – In the present case, it is not the case of the Complainants that the directions or decisions taken by the statutory authority entrusted to manage the economy, do not pass the test of Wednesbury principle of reasonableness, or are not free from arbitrariness nor affected by bias or actuated by mala fide. [Para 61] Unfair trade practice – What is not – Whether charging rate of interests by banks in the manner as advised by RBI vide its master circulars & notifications being independent of a standard ceiling rate prescribed by the RBI, constitute an unfair trade practice:
Held: No – Any trade practice adopted for promoting the sale, use, or supply of any goods, or for the provision of any service, by adopting any unfair method or unfair or deceptive practice, has to be treated as ‘unfair trade practice’ – Thus, whether an act can be condemned as an unfair trade practice, or not, the key is to examine the ‘modus operandi’ i.e. whether there is any false statement/misrepresentation or deception – In the present case, the pre-conditions of ‘deceptive practice’ and unfair method’ are manifestly absent – The Banks in no manner made any misrepresentation to deceive the credit card holders – RBI held that none of the bank acted contrary to the policy directives issued by the RBI – Even otherwise, there is no averment to establish how the charging of rates of interest upon the default by credit card holders, without a standardized rate, is usurious and constitutes an unfair trade practice – Mere inflation in the rates of interest cannot be construed as a practice, intended to cause loss or injury. [Paras 68, 69]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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