Consumer Courts and the Power to Set Aside Ex Parte Orders

In a recent notable judgment, the Supreme Court of India considered the question of power of Consumer Courts in India to set aside their own ex parte orders. Here, we take a closer look at the judgment and the law laid down by the Court in the case of “Rajeev Hitendra Pathak & Others Vs. Achyut Kashinath Karekar & Another – (2011) 9 SCC 541

A. Question before the Court

In the above case, the main question that came up for consideration before the Court was:

  • Whether the District Consumer Forums, and the State Commissions, have the power to set aside their own ex-parte orders? Do they have the power to recall or review their own orders?

B. Conflicting Decisions –Background of the Case

In Jyotsana Arvindkumar Shah Vs. Bombay Hospital Trust [(1999) 4 SCC 325] the Supreme Court had held that the State Commission did not have the power to review or recall its ex parte order. The Court observed that there is no provision in the Act enabling the State Commission to set aside an ex parte order.

Subsequently, in New India Assurance Co. Ltd. Vs R. Srinivasan [(2000) 3 SCC 242], the Supreme Court took a contrary view and held that the State Commission could review or recall its ex parte order. The Court observed that there was an inherent power and jurisdiction to restore the complaint on good cause being shown for non-appearance of the complainant.

However, in the latter case i.e., the New India Assurance case, reference was not made to the earlier decision in Jyotsana’s case.

Subsequently, the Act was amended by the Consumer Protection (Amendment) Act, 2002, provisions of which included substitution of Section 22 of the Act, and insertion of a new Section 22-A to the Act. After the amendment, Section 22 (2) and Section 22-A of the Act read as below:

Section 22. Power of and Procedure applicable to the National Commission:

(1) —–

(2) Without prejudice to the provisions contained in sub-section (1), the National Commission shall have the power to review any order made by it, when there is an error apparent on the face of the record.”

Section 22-A. Power to set aside ex parte orders :

Where an order is passed by the National Commission ex parte against the opposite party or a complainant, as the case may be, the aggrieved party may apply to the Commission to set aside the said order in the interest of justice.

When the matter came up for hearing in Rajeev Hitendra Pathak’s case, in view of the divergence of views expressed by coordinate Benches, the matter was referred to a larger Bench to consider the question whether the State Commission has the power to recall an ex parte order.

C. Arguments

Few key arguments submitted in support of the contention that the State Commission did not have the power to recall an ex parte order, were as follows:

  1. Consumer Tribunals are creatures of the statute and derive their powers only from the express provisions of the statute. Since no power of review and recall was conferred on the District Forums and the State Commissions, they can exercise no such power.
  2. Section 22 (2) was introduced in 2002 to give the National Commission the power to review its own order, and this power could not have been used by the Commission before the amendment.
  3. This power under Section 22 (2) has been given only to the National Commission and not extended to the District Forums or the State Commissions.
  4. Only a few provisions of the CPC have been made applicable to the proceedings before the District Forums and the State Commissions. The limited applicability of the provisions of the CPC to the Tribunals under the Act is under Section 13(4) of the Act, and there is no power of review or recall under the said provision.
  5. In New India Assurance case, the Court did not notice the earlier decision in Jyotsana’s case.

In support of the contention that the State Commission has the power to recall an ex parte order, it was submitted, among other arguments, that the decision in Jyotsana’s case is manifestly per incuriam. It does not refer to the doctrine of implied powers and was not aware of its applicability. The latter decision in the New India Assurance case is expressly mindful of the doctrine.

D. Decision

After considering all the material, the Court held that:

  1. Tribunals are creatures of the statute and derive their power from the express provisions of the statute.
  2. The District Forums and the State Commissions have not been given any power to set aside ex parte orders.
  3. The power of review and the powers which have not been expressly given by the statute cannot be exercised.
  4. The legislature chose to give the National Commission power to review its ex parte orders.
  5. Decision in Jyotsana’s case laid down the correct law. The view taken in New India Assurance case is untenable and cannot be sustained.