[Section 51 CPA] Supreme Court says pre-deposit of 50% of amount as ordered by the State Commission is mandatory for entertainment of an appeal by NCDRC

The Supreme Court on Tuesday held that pre-deposit of 50 per cent of amount as ordered by the State Commission under second proviso to Section 51 of the Consumer Protection Act, 2019 is mandatory for entertainment of an appeal by the National Commission.

It further held that the object of the said pre-deposit condition is to avoid frivolous appeals and the said pre-deposit condition has no nexus with the grant of stay by the National Commission.

A bench of Justices MR Shah and BV Nagarathna has also said that while considering the stay application in staying the order passed by the State Commission, the NCDRC can grant a conditional stay directing the appellant(s) to deposit the entire amount and/or any amount higher than 50 per cent of the amount in terms of the order of the State Commission.

"...however, at the same time, the National Commission has to assign some cogent reasons and/or pass a speaking order when the conditional stay of the order passed by the State Commission is passed subject to deposit of the entire amount and/or any amount higher than 50 per cent of the amount either as an ex parte order or after hearing both sides and considering the facts and circumstances of the case", added the Court.

Last month, the Supreme Court while hearing a special leave to appeal was faced with a question of law i.e.,  whether the National Commission can pass an order to deposit the entire amount and/or any amount higher than the 50% of the amount in terms of the order of the State Commission while, entertaining the appeal in view of Section 51 of the Consumer Protection Act, 2019?

Section 51 of the Consumer Protection Act, 2019 provides that no appeal by a person, who is required to pay any amount in terms of order of the State Commission shall be entertained by the National Commission unless the appellant has deposited 50% of that amount in the manner as may be prescribed.

A group of builders aggrieved by the direction of the NCDRC to deposit the entire decretal amount determined by the SCDRC for conditional stay had approached the top court.

It was contended that the builders had deposited 50 per cent of the decretal amount which they were required to deposit as a pre-deposit at the time of preferring the appeal(s) as required under Section 19 of the Act, 2019.

The Court noted that the condition under Section 51 does not take away the jurisdiction of the National Commission to order to deposit the entire amount and or any amount higher than 50 per cent of the amount while considering the stay application to stay the order passed by the State Commission.

"Rules for entertainment of an appeal on deposit of 50 per cent of the amount ordered by the State Commission, which is a statutory pre-deposit and 11 the grant of interim order on the stay application subject to deposit of further amount are distinct and different. Pre-deposit condition as per second proviso to Section 51 has no nexus with the grant of interim order of stay by the National Commission subject to deposit of the amount awarded by the State Commission.", it added.

Reliance was further placed on Order XLI Rule 5 of CPC wherein the general rule states is that normally there shall not be any unconditional stay of a money decree, however, at the same time, the Appellate Court may pass an appropriate conditional order while staying the impugned decree depending upon the facts of the case and by giving cogent reasons.

In the instant case the bench noted that the impugned order(s) passed by the National Commission, had been passed mechanically and without assigning any reason(s) and/or no speaking order was passed.

With this in mind, the court ordered thus, while allowing the appeals partly,

"Therefore, the matters are remanded to the National Commission to decide the said application(s) afresh and pass an appropriate order on the said application(s) in light of the observations made hereinabove. Till then, the respondent(s) herein shall not take any coercive steps against the appellant(s) herein."

Cause Title: Manohar Infrastructure Constructions Pvt Ltd vs Sanjeev Kumar Sharma & Ors.