Defective Merits-Based References May Permit an NCDRC Referee Member to Decide the Appeal

Introduction

This decision concerns the powers of a third member of the National Consumer Disputes Redressal Commission (“NCDRC”) when the two members who initially heard an appeal deliver conflicting opinions. The appellants were the original consumer complainants. The State Consumer Disputes Redressal Commission, Uttar Pradesh (“SCDRC”) had awarded them compensation of ₹95 lakh with interest at 15%.

In appeal, the two-member NCDRC Bench differed: the presiding member dismissed the complaint, while the companion member substantially maintained the award after reducing the compensation and interest. A third member was therefore called upon under Section 58(3) of the Consumer Protection Act, 2019 (“CP Act”). He agreed with the companion member and proceeded to dispose of the appeal in accordance with the resulting majority.

The Allahabad High Court, exercising jurisdiction under Article 227 of the Constitution, held that the third member could only answer the referred questions and return the matter to the original Bench. The Supreme Court was required to decide whether the third member’s direct disposal of the appeal constituted a jurisdictional error warranting supervisory interference.

Rule Laid Down

Ordinarily, a referee member must answer only the points of difference and return the matter to the referring Bench. However, where the referring Bench fails to identify the actual points of difference and instead frames questions that necessarily require examination of the entire merits and evidence, the referee member’s disposal of the appeal on the resulting majority opinion does not automatically constitute an illegality warranting interference under Article 227.

The ruling creates a narrow, fact-sensitive exception. It does not confer a general appellate power upon every third member dealing with a reference under Section 58(3).

Summary of the Judgment

• Section 58(3) ordinarily requires the members who differ to state the precise points of disagreement.
• The third member should normally give an opinion on those points, after which the matter is decided according to the majority view.
• In this case, the referring Bench did not properly identify the points of difference. It framed five questions going to the root of the complaint and requiring consideration of the evidence and rival contentions.
• The third member consequently had to examine the entire record and agreed with the companion member.
• His decision of the appeal reflected the “common sense approach” recognised in State of Punjab v. Salil Sabhlok.
• Although the adopted procedure was not the normal one, it was not such an illegality as to justify interference under Article 227.
• The Supreme Court set aside the High Court’s order and remanded the Article 227 application for a fresh decision on its merits.
• The Court did not affirm the merits of the NCDRC’s findings or finally determine the compensation dispute. All factual and legal issues were left open.

Analysis

1. Statutory framework under Section 58(3)

Section 58(3) of the CP Act provides that where members of an NCDRC Bench differ, the points of disagreement must be stated and referred to the President or another member. Those points are then decided according to the majority opinion of all members who heard the matter, including the original members.

On a literal reading, therefore, the third member’s role is to give an opinion on the referred points rather than independently dispose of the appeal. The Supreme Court expressly accepted that the third member’s action might, at first sight, appear to exceed this statutory role.

2. The defective nature of the reference

The decisive feature was the manner in which the original NCDRC Bench framed the reference. Instead of stating its precise points of disagreement, it formulated five broad questions concerning proof of the medical centre’s involvement, admission and treatment of the patient, missing medical records, additional oral explanations, and reliance upon untested affidavits.

These were not isolated legal questions. They required a comprehensive evaluation of the pleadings, evidence and competing versions. The Supreme Court therefore regarded the objection to the third member’s final disposal as substantially technical in the particular circumstances.

3. Formation of a majority

The third member agreed with the companion member. Their opinions were thus ad idem—of the same mind—and constituted the statutory majority. The third member’s operative directions reflected that majority conclusion rather than a wholly independent adjudication disconnected from the original opinions.

4. Article 227 and procedural error

Article 227 gives High Courts supervisory jurisdiction over subordinate courts and tribunals. It is intended to correct serious jurisdictional or procedural failures, not every technical irregularity.

The Supreme Court held that, given the malformed reference and the merits-based questions posed, the procedure adopted by the third member was not so illegal as to justify setting aside his opinion solely under Article 227. The High Court should instead examine the substantive challenges to the NCDRC’s findings.

5. Distinction from civil and criminal procedural references

The Court observed that the Code of Civil Procedure, 1908 does not contain a provision equivalent to Section 392 of the Code of Criminal Procedure, 1973 or Section 433 of the Bharatiya Nagarik Suraksha Sanhita, 2023. References in civil matters are consequently guided by precedent, while consumer proceedings are specifically governed by Section 58(3) of the CP Act.

Precedents Cited

Kesho Nath Khurana vs Union of India and Others

A Single Judge had referred a particular question of law to a Division Bench, but the Division Bench decided the entire second appeal. The Supreme Court held that the Division Bench should have answered the referred question and returned the appeal to the Single Judge.

This precedent supported the High Court’s order in the present case and established the normal rule limiting a referee Bench to the reference. The Supreme Court did not reject that rule; it distinguished its application because the present reference itself failed to identify precise points and instead required a complete merits review.

Commissioner of Income Tax, Delhi & Bansi Dhar and Sons

This case arose from a reference under the Income Tax Act, 1961 and concerned whether interim stay could be granted during reference proceedings. The question was answered in the negative. The Supreme Court noted that its issue was materially different, limiting its relevance to the present controversy.

Shriram Industrial Enterprises Limited v. The Union of India and Others

The High Court relied upon this Full Bench decision in support of the proposition that a Bench receiving a reference should remain within its terms. The Supreme Court recorded that reliance but did not separately analyse or apply the case, resolving the matter principally through Section 58(3) and later Supreme Court authority.

State of Punjab v. Salil Sabhlok

This was the principal authority supporting a contextual approach. It affirmed that a larger or referee Bench should ordinarily answer only the questions referred. At the same time, it recognised that subsidiary questions which “logically and unavoidably” arise may be answered by adopting a common-sense approach.

The Court used this qualification to uphold the third member’s procedure. Since the questions framed were inseparable from the merits, a full examination of the dispute was practically unavoidable.

Kerala State Science & Technology Museum v. Rambal Co.

This authority reiterates that a larger Bench cannot adjudicate an issue that was not referred to it. It reinforced the general rule of confinement to the terms of reference.

T.A. Hameed v. M. Viswanathan

The Full Bench was required to answer the referred question and remit the proceeding to the Division Bench for adjudication on the merits. It illustrates the ordinary two-stage procedure of answering the reference and then returning the main case.

Saquib Abdul Hameed Nachan v. State of Maharashtra

This decision states that, normally, after the larger Bench answers a reference, the referring court decides the merits using those answers. The word “normally” also leaves room for exceptional statutory or factual settings.

Complex Concepts Simplified

Referring Bench

The original Bench whose members disagreed and sent their disputed points to another member.

Referee or third member

The member asked to give an opinion so that a majority view can be formed.

Ad idem

A Latin expression meaning “of the same mind” or in agreement.

Article 227 jurisdiction

The High Court’s supervisory power to correct serious jurisdictional or procedural errors by subordinate courts and tribunals.

Remand

Sending a matter back to the lower court or tribunal for a fresh decision.

Summary proceeding

A comparatively streamlined proceeding intended to resolve disputes without all the formalities of an ordinary civil trial.

Impact of the Judgment

• Consumer commissions: Benches must carefully state the exact points on which they disagree. Broad, merits-based questions may create procedural complications.
• Third-member references: A third member should ordinarily confine the opinion to the referred points, but may adopt a practical approach where those points unavoidably encompass the entire merits.
• Article 227 proceedings: A technical departure from the prescribed reference procedure will not necessarily justify supervisory interference unless it causes a substantial jurisdictional failure.
• Limited precedent: The ruling is not authority for routine disposal of appeals by referee members. Its application depends upon a defective reference, merits-wide questions and an identifiable majority opinion.
• Merits remain reviewable: Parties may still challenge the factual findings, evidentiary conclusions and substantive relief before the High Court.

Important Qualification

The judgment contains differing references to the rate of interest: its factual narration mentions 12%, while the quoted third-member order refers to 10% on the compensation and 12% for payment beyond the prescribed period. The Supreme Court did not resolve this issue because it remanded the proceeding and left all merits-based questions open.

Conclusion

The Supreme Court preserved the settled rule that a referee member should normally answer only the points referred and return the matter to the original Bench. It nevertheless recognised a narrow exception where the reference is itself defective and its questions cannot be answered without deciding the merits.

The decision prioritises practical justice over rigid procedural form while cautioning adjudicatory bodies to formulate references precisely. The High Court must now determine the Article 227 application on its substantive merits, and the NCDRC is not to proceed further until that determination.