The Supreme Court has held that a third or referee member of the national consumer disputes redressal commission (NCDRC) does not commit an illegality warranting interference under Article 227 of the Constitution merely because the member, while answering questions referred to him, proceeds to decide the appeal on merits instead of returning the reference to the original bench.
In an order, a bench of justice Dipankar Datta and justice Sheel Nagu said that although the normal course under Section 58(3) of the Consumer Protection Act, 2019 is for the referee member to answer the specific points of difference and return the matter to the referring bench, an exceptional situation may justify a ‘common sense approach’.
The ruling came in an appeal challenging an Allahabad High Court judgement which had quashed an order of NCDRC third member and directed the matter to be heard afresh by another referee member.
The apex court set aside the High Court’s order and remanded the Article 227 proceedings to the High Court for fresh consideration on their merits.
NCDRC Members Differed over ₹95 Lakh Compensation
The dispute arose from a consumer complaint filed before the Uttar Pradesh state consumer disputes redressal commission in 2006. The case concerned allegations of medical negligence and deficiency in service.
The state commission allowed the complaint on 4 December 2012 and awarded the complainants compensation of ₹95 lakh with interest at 15%pa (per annum).
The first respondent subsequently challenged the order before NCDRC. A two-member bench heard the appeal but delivered differing opinions on 19 March 2021.
The presiding member allowed the appeal and dismissed the complaint, while the companion member modified the state commission’s order by reducing the compensation to ₹93 lakh and interest to 12%.
As the members were divided, the matter was referred to a third member under Section 58(3) of the Consumer Protection Act, 2019.
Third Member Answered 5 Questions and Decided Appeal
Instead of merely stating the points on which the original bench differed, the referring bench formulated five questions for consideration by the third member.
The questions concerned matters including the evidence linking the doctor to the medical centre, proof relating to the patient’s admission and operation, the use of oral affidavits, withholding of medical records and reliance on uncontroverted affidavits in summary proceedings.
The Supreme Court noted that these questions required consideration of the facts and evidence underlying the complaint.
On 9 January 2024, the third member disagreed with the presiding member and agreed with the companion member. After answering the five questions, the third member proceeded to dispose the appeal itself.
The order modified the compensation structure, reduced the interest, awarded litigation costs and issued directions concerning the disbursement of the amount.
The first respondent challenged the order before the Allahabad High Court under Article 227 of the Constitution.
Allahabad HC Held Third Member Exceeded Jurisdiction
The single judge of the Allahabad High Court, in an order dated 11 December 2024, held that the third member had exceeded his jurisdiction by deciding the appeal rather than confining himself to the questions referred.
The High Court directed that the matter be heard afresh by a third member, who was to answer the questions referred and return the matter to the original division bench of NCDRC for a final decision.
The appellants then approached the Supreme Court.
The central question before the apex court was whether the third member had acted illegally by deciding the appeal after answering the questions referred to him.
SC: Referee Normally Has To Return Questions with Answers
The Supreme Court reiterated that, ordinarily, a referee bench is required to answer the questions referred and return them to the bench that made the reference.
This enables the original bench to decide the issues before it while taking into account the answers given by the referee member.
However, the apex court said the present case had a significant distinguishing feature.
Under Section 58(3) of the Consumer Protection Act, the members of the original bench are required to state the point or points on which they differ before making a reference.
In the present case, however, the referring bench had not clearly identified the specific points of difference. Instead, it had framed five questions that went to the root of the complaint and required examination of the evidence and rival contentions.
"The referring order did not delineate the point(s) of difference; instead, it formulated questions which went to the root of the complaint and are inseparable from the evidence on record," the Supreme Court observed.
‘Common Sense Approach’ Justified in Exceptional Cases
The bench relied on the Supreme Court’s earlier decision in State of Punjab vs Salil Sabhlok, which recognised that a referee bench may, in exceptional circumstances, adopt a common sense approach to answer subsidiary questions that logically and unavoidably arise.
Applying that principle, the Supreme Court said the third member necessarily had to examine the entire material and rival submissions because of the manner in which the reference had been framed.
"The third member, necessarily, had to survey the entire gamut of material and the rival contentions raised before the referring Bench," the Court said.
It added that the third member’s approach ‘does reflect a common sense approach’ of the kind recognised in Salil Sabhlok case.
The Court, therefore, declined to disapprove the approach at this stage of the proceedings.
‘No Such Illegality’ to Warrant Article 227 Interference
The Supreme Court ultimately held that the third member’s decision to dispose of the appeal, rather than merely returning the reference with answers, did not constitute an illegality serious enough to warrant the High Court’s interference under Article 227.
"On facts and in the circumstances, we hold that by not returning the reference with the answers to the question referred and, instead, by deciding the appeal itself, the third member did not commit such an illegality that the situation warranted an interference in exercise of jurisdiction under Article 227 of the Constitution," the Bench held.
The Court, however, did not itself decide the underlying merits of the consumer dispute.
It noted that the Allahabad High Court had interfered with the NCDRC order only on a procedural issue and had not considered the correctness of the third member's answers.
The Supreme Court, therefore, considered it appropriate to remand the Article 227 application to the High Court for fresh consideration on its own merits.
Merits of Dispute Remain Open
The apex court made it clear that its ruling did not amount to an endorsement of the third member's substantive findings.
It directed that all issues of fact and law remain open for consideration by the appropriate roster bench of the Allahabad High Court.
The parties, including the first respondent and the appellants, will, therefore, be entitled to raise their respective contentions before the High Court.
The Supreme Court also directed that the matter be considered expeditiously in view of the time that has elapsed.
