Consumer Protection Act: Supreme Court Rules on Time Limit for Filing Written Statements

The Supreme Court of India recently ruled in Diamond Exports & Anr. vs. United India Insurance Company Limited & Ors., a case concerning the time limit for filing written statements under the Consumer Protection Act, 1986. The case addressed whether consumer forums could condone delays beyond the statutory period, particularly in light of the Constitution Bench judgment in New India Assurance Company Ltd. vs. Hilli Multipurpose Cold Storage Pvt. Ltd. The Supreme Court upheld the National Consumer Disputes Redressal Commission’s (NCDRC) decision to condone a 100-day delay in filing a written statement, citing the prospective effect of the Constitution Bench ruling.

Background of the Case

The case originated from a consumer complaint filed by Diamond Exports before the NCDRC on December 3, 2018. The complaint was based on two insurance policies issued by United India Insurance Company Limited, covering damages due to fire at the complainant’s factory.

The NCDRC admitted the complaint and issued notice to the insurer, stating:

“If the Opposite Parties wish to contest the allegations in the complaint, they may file the written statements within 30 days of receipt of notice, failing which their right to file a written statement may be closed.”

The respondent-insurer received the summons on May 20, 2019 and filed its written statement on September 23, 2019, along with an application to condone a delay of 100 days. The complainant opposed this application, arguing that the written statement was filed beyond the statutory period of 30 days plus an extension of 15 days, as prescribed under Section 13(2) of the Consumer Protection Act, 1986.

The NCDRC, however, condoned the delay, subject to the insurer paying costs of Rs. 50,000. Dissatisfied with this order, Diamond Exports appealed to the Supreme Court.

Legal Issues Raised

Whether the NCDRC had the authority to condone a delay beyond the maximum statutory limit of 45 days for filing written statements.
Whether the Constitution Bench ruling in New India Assurance Company Ltd. applied retrospectively or prospectively.
Whether the insurer had sufficient cause for the delay.

Petitioner’s Arguments (Diamond Exports)

The petitioners argued that the delay beyond 45 days was not condonable as per the Constitution Bench ruling in New India Assurance Company Ltd.
They contended that the NCDRC had exceeded its jurisdiction by allowing the respondent to file its written statement beyond the statutory time limit.
The Constitution Bench had ruled that consumer forums have no power to extend the time beyond 45 days, making the delay in this case impermissible.

Respondent’s Arguments (United India Insurance Co.)

The insurer argued that the Constitution Bench ruling was delivered on March 4, 2020, while the NCDRC’s decision was issued earlier, on February 25, 2020.
The Constitution Bench had explicitly stated that its ruling would operate prospectively, meaning cases decided before March 4, 2020, would not be affected.
The insurer relied on previous Supreme Court rulings, including Reliance General Insurance Co. Ltd. vs. Mampee Timbers and Hardwares Pvt. Ltd., where consumer forums were allowed to condone delays during the pendency of the Constitution Bench reference.

Supreme Court’s Verdict

The Supreme Court, in a bench comprising Justices Dr. Dhananjaya Y Chandrachud, Surya Kant, and Vikram Nath, ruled in favor of the respondent-insurer, upholding the NCDRC’s decision to condone the delay.

The Court emphasized that the Constitution Bench ruling was prospective, stating:

“The judgment in New India Assurance Company Limited (supra) has held that the outer limit of time for filing a written statement in Section 13 of the Consumer Protection Act is binding. However, it was made clear that this ruling would operate prospectively.”

The Court distinguished this case from situations where a written statement was filed after March 4, 2020, when the Constitution Bench ruling came into force.

Key Observations by the Supreme Court

The Constitution Bench ruling in New India Assurance only applies prospectively and does not affect decisions made before March 4, 2020.
The NCDRC exercised its discretion correctly in condoning the delay since, at the time of its decision, there was no binding precedent prohibiting such condonation.
Previous rulings, including Reliance General Insurance Co. Ltd., had permitted consumer forums to accept written statements beyond 45 days under exceptional circumstances.

The Court concluded:

“In the present case, the NCDRC exercised its discretion on 25 February 2020 to condone the delay, prior to the decision of the Constitution Bench on 4 March 2020. Given the prospective application of the Constitution Bench ruling, no interference is warranted.”

Final Order

The Supreme Court dismissed the appeal and upheld the NCDRC’s decision.
The insurer was directed to pay the costs of Rs. 50,000 within two weeks.
The complainants were granted four weeks to file their replication.

Key Takeaways

Consumer Protection Act has strict time limits: Section 13 mandates that written statements must be filed within 30 days, extendable by a maximum of 15 days.
Constitution Bench ruling applies prospectively: The Supreme Court clarified that cases decided before March 4, 2020, will not be affected by the New India Assurance ruling.
Discretionary powers of consumer forums: Prior to the Constitution Bench decision, consumer forums had the discretion to condone delays in filing written statements.
Legal clarity on procedural compliance: Businesses and consumers should ensure timely filings to avoid procedural complications.

This ruling reinforces the principle that while procedural laws must be adhered to, judicial decisions affecting procedural rights should only apply prospectively to prevent unfair outcomes.

Petitioner Name: Diamond Exports & Anr..
Respondent Name: United India Insurance Company Limited & Ors..
Judgment By: Justice Dhananjaya Y Chandrachud, Justice Surya Kant, Justice Vikram Nath.
Place Of Incident: India.
Judgment Date: 13-12-2021.

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