In a significant ruling reinforcing legislative intent behind consumer dispute resolution, the Supreme Court on Tuesday upheld the constitutional validity of the Consumer Protection Act, 2019 provisions that determine pecuniary jurisdiction of consumer commissions based on the actual consideration paid, rather than the compensation amount claimed.
A Bench of Justices PS Narasimha and Manoj Misra affirmed Sections 34, 47, and 58 of the Act, holding that jurisdiction under the District, State, and National Consumer Disputes Redressal Commissions must be determined by the value of goods or services paid for—marking a departure from the 1986 Act where compensation claimed dictated jurisdiction.
“The classification of claims based on the value of consideration paid has a direct nexus with the objective of establishing a tiered adjudicatory structure,” the Court observed, rejecting the argument that the framework violates Article 14 of the Constitution.
The judgment came in response to a writ petition under Article 32 and a civil appeal arising from NCDRC decisions. Petitioners, including a woman whose husband died in a car fire after purchasing a Ford Endeavour worth ₹31.19 lakh, had claimed high-value compensation that, under the repealed 1986 Act, would have allowed them to approach the NCDRC directly. They contended that the 2019 Act unfairly restricted jurisdiction by tying it to consideration paid, not the damages sought.
However, the Court ruled that such a basis for jurisdiction is neither arbitrary nor discriminatory, noting that consideration is central to contract law. “In non-gratuitous agreements, consideration serves as a valid foundation for categorizing disputes by value,” it said.
The ruling also clarified that the legislative change was designed to prevent forum shopping and relieve the National Commission of excessive case load caused by inflated claims.
Reassuring consumers, the Bench noted that no restriction had been placed on the quantum of compensation they could seek—only on which forum would hear the complaint. “There is no loss of judicial remedy due to this framework,” the Court stated.
Concerns raised regarding large insurance claims—where premiums typically fall below jurisdictional thresholds—were acknowledged, but the Court held that such issues relate to policy design, not constitutional validity. It directed the Central Consumer Protection Council and Central Consumer Protection Authority to audit and review the Act’s implementation and advise the government on potential revisions.
“It is part of the rule of law that statutes must be reviewed to ensure they work as intended,” the Court emphasized.
Senior Advocate Abhimanyu Bhandari led the petitioners’ side, supported by a team of advocates. The Union of India was represented by Additional Solicitor General Vikramjit Banerjee and team.
