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Synopsis

The Supreme Court has on May 10, 2024 said a negative burden cannot be placed on the complainant under the Consumer Protection Act to show that the service availed was not for a commercial purpose.

A bench of Justices P S Narasimha and Aravind Kumar underscored that a plea without proof and proof without plea is no evidence in the eyes of law, as it dismissed appeals filed by Shriram Chits (India) Private Limited, formerly known as Shriram Chits (K) Pvt Ltd against the NCDRC's order upholding the orders making it liable for deficiency in service.

"Since it is always the service provider who pleads that the service was obtained for a commercial purpose, the onus of proving the same would have to be borne by it. Further, it cannot be forgotten that the Consumer Protection Act is a consumer-friendly and beneficial legislation intended to address grievances of consumers," the bench said.

Going through the definition of consumer, the bench pointed out, there can hardly be any dispute that the onus of proving the first part i.e. that the person had bought goods/availed services for a consideration, rests on the complainant himself. 

The carve out clause, in the second part, is invoked by the service providers to exclude the complainants from availing benefits under the Act. The onus of proving that the person falls within the carve out must necessarily rest on the service provider and not the complainant. This is in sync with the general principle embodied in Section 101 and 102 of the Evidence Act that ‘one who pleads must prove', the bench said.

The court also clarified that the standard of proof that has to be met in order to discharge the onus, has to be measured against a ‘preponderance of probabilities'.

"If and only if, the service provider discharges its onus of showing that the service was availed, in fact for a commercial purpose, does the onus shift back to the complainant to bring its case within the third part, i.e. the Explanation (a) to Section 2(7) – to show that the service was obtained exclusively for the purpose of earning its livelihood by means of self employment," the bench said.

Senior advocate Shailesh Madiyal, appearing for the appellant, contended that the complainant has not pleaded nor proved that the service was obtained for earning his livelihood through the means of self employment. He contended the complainant does not satisfy the definition of consumer since the service was obtained for a commercial purpose. 

The court, however, said, "The question of inquiring into the third part will only arise if the service provider succeeds in crossing the second part by discharging its onus and proving that the service obtained was for a commercial purpose. Unless the service provider discharges its onus, the onus does not shift back to the complainant to show that the service obtained was exclusively for earning its livelihood through the means of self-employment".

In the facts of this case, the bench noted the appellant has merely pleaded in its version that the service was obtained for a commercial purpose. 

"No evidence has been led to probabilise its case other than merely restating its claim on affidavit. It is now well too settled that a plea without proof and proof without plea is no evidence in the eyes of law," the bench said.

While dismissing the appeal, the court said it does not address itself to the merits of the issue since three Forums have concurred in their finding that there was proved deficiency of service.

The complaint filed before the District Consumer Forum, Bengaluru alleged illegal termination of the chit fund business in 1996 and consequent non-refund of the subscription amount, resulting in deficiency of service. 

Instead of examining whether the service availed on behalf of the complainant was for a commercial purpose, the District Forum determined whether the complainant fell within the definition of a “person” as defined in Section 2 (1)(m) of the Act. On merits, it found that there was, in fact, ‘deficiency in service’ and ordered for refund of the claimed amount with interest of 18% per annum.

The State Forum cursorily found that the District Forum was correct in concluding that there was deficiency in service, on merits. 

The NCDRC has agreed with the State Forum and District Forum on the merits of the issue and found no reason to interfere with the ‘well appraised detailed order’ of the District Forum. 

On the maintainability issue, the NCDRC appears to have mirrored the approach of the District Forum. Instead of examining whether the service obtained by the complainant was for a ‘commercial purpose’, it examined the question of whether the complainant falls within the definition of ‘person’, the bench noted.

The court, therefore, examined the issue whether the service obtained by the complainant was for a commercial purpose.

"Instead of remanding the matter back to the Consumer Forum we intend to decide the maintainability challenge here itself. The question that has eluded three judicial forums has now to be settled once and for all," the bench said, in its judgment.