The Supreme Court has raised important concerns over the manner in which the pecuniary jurisdiction of consumer commissions is determined under the Consumer Protection Act, 2019. A bench comprising Justice KV Viswanathan and Justice Arun Palli flagged several situations in which determining jurisdiction solely on the basis of the consideration actually paid by a consumer could produce anomalies and potentially create difficulties for consumers seeking legal remedies. The Court clarified that it was not questioning Parliament’s authority to prescribe the basis for determining pecuniary jurisdiction. Instead, it wanted the Union Government to explain how the existing statutory framework would operate in practical situations where the consideration paid does not accurately reflect the nature or value of the consumer dispute. The Court has given the Centre six weeks to file a detailed response, and the matter has been listed for October 8, 2026.
The proceedings arose in the case of M/s Avon Elastomers (India) v. M/s Bajaj Allianz General Insurance Co. Ltd. & Ors., which essentially involved a consumer dispute relating to an insurance contract. During the hearing, however, the Supreme Court expanded the discussion beyond the immediate dispute and examined the larger question of how pecuniary jurisdiction under the Consumer Protection Act, 2019 operates. The Court was particularly concerned with the statutory departure from the position under the earlier Consumer Protection Act, 1986. Under the 1986 legislation, the jurisdiction of consumer fora was determined by taking into account the aggregate value of the goods or services involved and the compensation claimed. The 2019 Act changed this approach by making the value of the consideration paid for the goods or services the primary basis for determining pecuniary jurisdiction.
Senior Advocate Gagan Gupta, appearing for the insured petitioner, highlighted several practical problems that may arise from this change. His submissions focused on situations where the amount paid by the consumer may not correspond to the actual dispute or the relief being sought. According to the concerns placed before the Court, a strict consideration-based formula could potentially result in consumers with substantially similar grievances being required to approach different consumer commissions depending merely on the amount they happened to pay. This could create an artificial distinction between disputes and could also make access to the appropriate consumer forum more complicated.
One of the examples placed before the Court concerned fixed deposit accounts with banks. A person maintaining a fixed deposit may unquestionably be receiving banking services and may therefore fall within the statutory framework applicable to consumers. However, there may not necessarily be a separate consideration paid specifically for opening or maintaining the fixed deposit account in the manner contemplated by the pecuniary jurisdiction provision. If a dispute subsequently arises concerning the loss of deposited money, non-payment of interest or another deficiency in service, the question arises as to what amount should be treated as the “consideration paid” for determining the appropriate consumer forum. The example demonstrates the difficulty of applying a rigid consideration-based formula to financial services where the dispute may concern an amount substantially greater than any identifiable service charge.
The Court also heard concerns regarding medical services provided on a subsidised basis. In the healthcare sector, some patients may pay for services while others may receive similar treatment either at a substantially subsidised rate or without payment. Both categories could nevertheless fall within the statutory concept of a consumer in appropriate circumstances. If pecuniary jurisdiction is determined exclusively by the amount actually paid, two individuals receiving substantially similar medical services could potentially be required to approach different consumer fora merely because one paid a particular amount and the other paid little or nothing. This raises questions about whether the consideration paid is always an appropriate indicator of the economic value of the dispute or the appropriate forum for adjudication.
Another illustration concerned disputes relating to fixtures and fittings in a house or flat. Suppose the consumer's grievance relates only to a particular defective fixture or fitting. If the consumer paid a composite amount for the entire property and there is no separate breakup of the consideration attributable to the disputed component, determining jurisdiction could become difficult. A strict interpretation may require the value of the entire property to be considered even though the actual dispute concerns only a small portion of it. This could potentially place a relatively minor consumer grievance before a higher consumer commission simply because the disputed component formed part of a much larger transaction.
The bench was also presented with an example involving the purchase of a high-value automobile. If a consumer purchases a car worth ₹2.5 crore but the complaint concerns only a defective windshield, determining jurisdiction on the basis of the entire consideration paid could require the consumer to approach the National Consumer Disputes Redressal Commission, even though the actual grievance concerns a comparatively limited defect. In contrast, if another consumer has paid an advance of ₹40 lakh for the same ₹2.5 crore vehicle and the dispute concerns delayed delivery, the consideration actually paid may result in the matter being placed before the District Commission. Thus, two disputes relating to the same vehicle could potentially fall within different jurisdictions depending upon the amount paid at the relevant stage of the transaction.
The examples highlighted before the Court demonstrate the central difficulty in the present statutory framework. The amount paid by a consumer does not always correspond with the monetary value of the grievance, the compensation sought, the value of the property or service involved, or the seriousness of the alleged deficiency. A consumer may have paid a small amount but may be seeking recovery of a much larger sum because of the consequences of the alleged deficiency. Conversely, a consumer may have paid a very large consideration but may have a dispute involving only a minor component or defect. The Court's concern is therefore whether the consideration-based approach provides a workable and consistent mechanism for assigning cases to different consumer fora.
The Supreme Court also considered an important issue concerning who can institute consumer proceedings. Advocate Jagdish Chandra Solanki pointed out that complaints under the Consumer Protection Act are not necessarily filed only by individuals who have personally paid consideration for goods or services. Consumer associations can initiate proceedings, and complaints can also be instituted by the Central Government, State Governments and the Central Consumer Protection Authority in circumstances permitted by law. In such cases, there may not be any straightforward “consideration paid” by the complainant himself. The Court observed that this aspect also requires examination while determining how the pecuniary jurisdiction provisions are intended to operate.
During the hearing, Additional Solicitor General Vikramjit Banerjee, appearing for the Union Government, referred to the Supreme Court's earlier decision in Rutu Mihir Panchal & Ors. v. Union of India & Ors., reported as 2025 LiveLaw (SC) 503. The Union relied upon that judgment to submit that the constitutional validity of the provisions concerning pecuniary jurisdiction under the 2019 Act had already been upheld. This was an important point because the present proceedings could otherwise be understood as a direct challenge to the legislative scheme itself.
The Supreme Court, however, clarified that it was not disputing the legislature's power to prescribe the basis for pecuniary jurisdiction. The bench specifically distinguished between the constitutional authority of Parliament to create a jurisdictional framework and the practical question of how that framework functions in difficult factual situations. The Court stated that it was “anxious to know how the pecuniary jurisdiction will operate” in light of the anomalies brought to its attention. Therefore, the Court's intervention at this stage is aimed at understanding the operation and consequences of the existing provisions rather than questioning the basic legislative competence behind them.
Another significant issue raised by the Supreme Court concerns the reduction of the pecuniary jurisdiction of the National Consumer Disputes Redressal Commission. The Court sought an explanation from the Union Government regarding the reduction of the National Commission's jurisdiction from ₹10 crore under the Consumer Protection Act, 2019, to ₹2 crore through a notification dated December 30, 2021. The Court's decision to seek an explanation indicates that it wants the Government to place the rationale and legal basis for this change on record. This issue could have considerable implications for the distribution of consumer cases among District, State and National consumer commissions.
The reduction in the National Commission's pecuniary threshold is particularly relevant because jurisdiction determines the forum before which a consumer must initiate proceedings. A lower threshold at the National Commission level means that more cases may fall within its jurisdiction, while cases below the prescribed threshold would generally be handled by lower consumer fora. Consequently, any change in the threshold can affect the workload of different commissions and determine the level at which consumers first litigate their disputes. The Court's request for an explanation suggests that the practical consequences of this change are now being examined alongside the broader issue of consideration-based jurisdiction.
The Supreme Court's intervention could therefore have significance for consumer litigation across several sectors, including banking, insurance, automobiles, real estate, healthcare and other services. If the Court ultimately finds that the existing interpretation creates substantial inconsistencies, it may provide guidance on how consumer commissions should apply the consideration-based jurisdictional rule. Alternatively, the Union Government could consider legislative or regulatory clarification if the existing language proves inadequate to address the situations identified by the Court.
At this stage, however, the Supreme Court has not altered the existing pecuniary jurisdiction framework. The Court has only sought a detailed response from the Union Government and has given it six weeks to address the anomalies identified during the hearing. The Government's affidavit will therefore be important in explaining how the statutory provision is intended to operate in cases involving composite transactions, subsidised services, financial products, partial payments and complaints filed by entities that have not themselves paid consideration. The Court will consider the matter further after receiving the Government's response.
The proceedings ultimately highlight a broader issue in consumer law: whether the amount paid by a consumer should always determine the appropriate forum when that amount may have little connection with the actual grievance. The Consumer Protection Act, 2019 sought to simplify the basis for determining pecuniary jurisdiction by moving away from the earlier formula involving the value of goods or services and compensation claimed. However, the examples presented before the Supreme Court demonstrate that a simpler formula may itself create new complications. The Court's present intervention seeks to ensure that the jurisdictional mechanism remains workable, predictable and capable of dealing with the diverse nature of modern consumer disputes. The matter will next be considered on October 8, 2026, when the Supreme Court is expected to examine the Union Government's response to the concerns raised by the bench.
0 Comments
Thank you for your response. It will help us to improve in the future.