A question of compensation

According to the Consumer Protection Act, 1986, consumer complaints will be entertained by consumer fora to initiate action against erring companies / service providers and award compensation to consumers. Compensation is an integral part of consumer justice, and it is unfortunate that many a time, the computation of damages by consumer fora is extremely conservative to be fair and too less to be productive.

In fact, in 1993, in Lucknow Development Authority vs. M.K. Gupta, the Supreme Court accentuated on the need for consumer fora to award compensation proportionate to the injustice suffered by consumers. It observed that the word “compensation” was of very wide connotation, and in legal sense, “compensation” may constitute actual loss or expected loss and may extend to physical, mental or even emotional suffering, insult or injury or loss. The Apex Court emphasised that when the forum / commission was vested with the jurisdiction to award value for goods or services and compensation, it has to be construed widely, enabling it to determine compensation for any loss or damage suffered by a consumer. Any other construction would defeat the very purpose of the Consumer Protection Act. The forum / commission, mentioned in the Act, is, therefore entitled to award not only value of the goods or services, but also compensate consumers for injustice suffered by them, it said.

In Chandrakant Mahadev Kadam vs. the Maharashtra State Electricity Board (MSEB), a review petition was filed before the National Commission. Electricity supply to Kadam’s house was disconnected by MSEB without any reason, and he had to go without power for 65 days. Kadam approached the District Consumer Disputes Redressal Forum and was awarded Rs. 5,000. Later, the MSEB officials accepted their mistake and agreed that due to negligence, a wrong bill was issued to Kadam. Though the State Consumer Disputes Redressal Commission took serious view of the fault committed by MSEB, it found the compensation awarded by the District Forum to be reasonable. Hence, the review petition before the National Commission. The Commission observed that there was gross deficiency in service and it was regrettable that the negligent staff was not accountable for the harassment of a consumer. It further said that “unfortunately, we do not put ourselves in the position of a consumer to see how he suffered. In our view, there is a clear case of miscarriage of justice and awarding Rs. 5,000 as compensation is adding insult to injury”. The compensation amount was enhanced, and MSEB was asked to pay an additional Rs. 5,000 towards cost of filing the review petition.

It is important that the quantum of compensation awarded is decided on a case-to-case basis and in line with the claims made. Otherwise, the very reason for the existence of these consumer fora will be defeated.

(The writer works with CAG, which offers free advice on consumer complaints to its members. For membership details / queries contact 2491 4358 / 2446 0387 or

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Printable version | Jan 14, 2022 10:42:42 AM |

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