Consumer commission can impose conditional stay

MUMBAI: The Consumer Protection Act requires a party challenging an order in appeal to deposit the prescribed amount at the time of lodging the appeal. Can the appellate authority direct the appellant to deposit further money to grant conditional stay? This question has recently been decided by the Supreme Court in its July 7 judgment delivered by Justice Sudhansu Jyoti Mukhopadhaya and Justice V Gopala Gowda in the case of Shreenath Corporation & Others v/s CERS & Others.
Case study: Shreenath Corporation had constructed a building and had handed over possession of the flats in 1992. Within nine years of purchase, a portion of the building collapsed in January 2001 due to poor quality of construction. Several flat purchasers were killed while other sustained injuries. With the help of Consumer Education and Research Society (CERS), a complaint was filed against the builder, seeking compensation. The commission upheld the complaint and directed the firm to pay compensation ranging from Rs 1.5 lakh to Rs 18.6 lakh, along with 9% interest.
The builder appealed to the national commission. The Consumer Protection Act (CPA) requires a party challenging the order to deposit a certain amount of money when the appeal is lodged. In case of appeals to the national commission, this amount is 50% of the amount awarded or Rs 35,000, whichever is lower. Accordingly, the builder deposited Rs 35,000 per appeal.
The builder also applied for an interim stay on the enforcement of the state commission’s order during the pendency of the appeal. The national commission granted conditional stay subject to the builder depositing 50% of the principal amount (excluding the interest component), within three months. The amount so deposited was to be invested in a fixed deposit with a nationalized bank.
The builder challenged this interim order before the Supreme Court. The builder argued that since Rs 35,000 had already been deposited at the time of filing the appeal in accordance with the provisions of the CPA, the national commission had no authority to give a direction to deposit any further amount.
The Supreme Court observed that the deposit of Rs 35,000 is a “pre-deposit”, payable as a condition precedent to filing the appeal. The objective of this pre-deposit is to avoid frivolous appeals. At the time of hearing the appeal, the commission would have the power to pass suitable interim orders. The commission could exercise its discretion while passing such interim orders to either grant a total stay, or a conditional stay, or refusal to grant stay.
The Supreme Court also observed that the amount payable as a pre-deposit and that which is payable under interim order occur at two different stages of the proceedings. The pre-deposit is payable at the time of filing the appeal and has no link with the merits of the dispute. In contrast, the direction to make a further deposit is passed during the hearing of the application for interim stay, and is determined on a consideration of the merits of the appeal, the balance of convenience, and whether irreparable loss would be caused to a party seeking a stay.
The Supreme Court accordingly concluded that the interim order passed by the national commission was well within its jurisdiction, and dismissed the builder’s appeal.
Conclusion: It is the discretion of the appellate authority whether or not to grant stay or to impose conditional stay. If stay is not granted, the order has to be complied with regardless of pendency of the appeal.
(The author is a consumer activist and has won the Govt. of India's National Youth Award for Consumer Protection. His email is jehangir.gai.articles@hotmail.com)