Source: Supreme Court  

Why in News? 

Recently, the bench of Justices PS Narasimha and Manoj Misra held that vesting pecuniary jurisdiction in consumer commissions based on the value of consideration paid for goods or services is constitutionally valid, non-arbitrary, and does not violate Article 14. 

• The Supreme Court held this in the matter of Rutu Mihir Panchal and others v. Union of India and others.(2025). 

What was the Background of Rutu Mihir Panchal and others v. Union of India and others. (2025) Case? 

• The petitioners in this case challenged the constitutionality of Sections 34(1), 47(1)(a)(i), and 58(1)(a)(i) of the Consumer Protection Act, 2019, which determine the pecuniary jurisdiction of consumer forums based on the value of goods or services paid as consideration rather than compensation claimed. 
• Under the repealed Consumer Protection Act, 1986, the pecuniary jurisdiction was determined based on the value of goods or services and compensation claimed, whereas the 2019 Act shifted this basis to the value of consideration paid. 
• The writ petition involved a case where the petitioner's husband died when his Ford Endeavour car caught fire due to an alleged manufacturing defect, and the petitioner sought compensation of Rs. 51.49 crores. 
• Due to the new provisions under the 2019 Act, the petitioner was required to approach the District Commission as the value of the car (Rs. 31.19 lakhs) was less than Rs. 1 crore, whereas under the 1986 Act, she could have directly approached the National Commission based on the compensation claimed. 
• The civil appeal involved a similar issue where the appellant's claim for Rs. 14.94 crore in insurance compensation was rejected by the National Commission on the ground that the consideration for the insurance policy did not exceed Rs. 10 crores. 
• The petitioners contended that the new criteria created an anomalous situation where consumers claiming identical compensation but having paid different considerations are treated differently, thereby violating Article 14 of the Constitution. 
• The petitioners argued that the new provisions were discriminatory, arbitrary, and not rationally connected to the purpose of providing a hierarchical judicial system for consumer protection, constituting an offence against constitutional principles.

What were the Court’s Observations?

• The Supreme Court held that Parliament has legislative competence to prescribe jurisdiction and powers of courts and tribunals, including pecuniary limits of jurisdiction, under Entry 95 of List I read with Entries 11-A and 46 of List III of the Constitution. 
• The Court observed that classification of claims based on the value of consideration paid for goods or services is neither illegal nor discriminatory, as consideration is an integral part of forming any contract and is essential to the definition of a "consumer" under Section 2(7) of the 2019 Act. 
• The Court determined that this classification has a rational nexus to the object of creating a hierarchical structure of judicial remedies, as the value of consideration is more easily relatable to compensation than a self-assessed claim for damages. 
• The Court noted that there is no unrestricted right to raise unlimited claims of compensation to choose a forum, and courts always have jurisdiction to assess or reassess overvalued claims. 
• While upholding the constitutional validity of the provisions, the Court directed the Central Consumer Protection Council and the Central Consumer Protection Authority to exercise their statutory duties to survey, review, and advise the government on measures necessary for effective functioning of the statute. 
• The Court emphasized that these statutory bodies must work effectively and efficiently to protect consumers against unfair practices and prevent any offence against consumer rights, with their functioning being subject to judicial review. 

What is Pecuniary Jurisdiction? 

• Pecuniary jurisdiction refers to the authority of a court to hear and determine cases based on the monetary value or amount involved in the dispute, establishing limits on which courts can entertain suits of particular monetary values. 
• Under Section 15 of the Civil Procedure Code, 1908, every suit must be instituted in the court of the lowest grade competent to try it, meaning a case must be filed in the lowest court having jurisdiction over that monetary value. 
• The plaintiff's valuation in the plaint determines which court has pecuniary jurisdiction, though courts can examine whether a suit has been deliberately undervalued or overvalued to choose a particular forum. 
• The pecuniary jurisdiction system creates a hierarchical structure where courts of higher grades are not overburdened with suits that could be handled by lower courts, affording convenience to parties and witnesses while ensuring efficient administration of justice. 

What are the Legal Provisions of the Consumer Protection Act, 2019? 

• Section 34(1) of the Consumer Protection Act, 2019 prescribes that the District Commission shall have jurisdiction to entertain complaints where the value of goods or services paid as consideration does not exceed one crore rupees. 
• Section 47(1)(a)(i) of the 2019 Act establishes that the State Commission shall have jurisdiction to entertain complaints where the value of goods or services paid as consideration exceeds one crore rupees but does not exceed ten crore rupees. 
• Section 58(1)(a)(i) of the 2019 Act confers jurisdiction on the National Commission to entertain complaints where the value of goods or services paid as consideration exceeds ten crore rupees. 
• Under the repealed Consumer Protection Act, 1986, Section 11(1) granted jurisdiction to the District Forum for complaints where the value of goods or services and compensation claimed did not exceed twenty lakhs rupees. 
• Section 17(a)(i) of the 1986 Act provided the State Commission with jurisdiction for complaints where the value of goods or services and compensation claimed exceeded twenty lakhs rupees but did not exceed one crore rupees. 
• Section 21(a)(i) of the 1986 Act granted the National Commission jurisdiction for complaints where the value of goods or services and compensation claimed exceeded one crore rupees. 
• Section 2(7) of the 2019 Act defines a "consumer" as any person who buys goods or hires or avails any service for a consideration which is fully paid or promised, partly paid or promised, under a system of deferred payment, and includes a user of such goods or services. 
• Sections 3 and 10 of the 2019 Act establish the Central Consumer Protection Council and the Central Consumer Protection Authority respectively, with statutory duties to protect consumer interests and ensure effective functioning of the consumer protection regime.