Why Delhi HC’s service charge order is a class action milestone for India

A relative newcomer in the Indian judicial system, class action got its biggest shot in the arm yet this March when the Delhi high court upheld the Central Consumer Protection Authority’s (CCPA) guidelines barring hotels and restaurants from charging patrons a service tax.Formed during the pandemic after the Consumer Protection Act, 2019, came into force, the CCPA has made important interventions through class action, like refunds for fliers when planes were grounded during Covid. Class action itself became available as a legal recourse to enforce consumer rights after the Act laid down provisions for it, giving consumers protection and an avenue for redress when companies engage in unfair trade practices.The Act provided for the CCPA to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements, which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of “consumers as a class�?The CCPA became functional in difficult circumstances after the first wave of the pandemic because the consumer affairs department, which is its parent, didn’t wait for a full office with staff and manpower. It went ahead with whatever resources it had at that point. The move paid off when the CCPA made major interventions through class action such as directing companies to withdraw misleading advertisements claiming to neutralise the novel coronavirus and ordering refunds for cancelled air travel.“Since the idea of establishing CCPA was to take cognisance and act immediately when one saw a pattern of infringement of consumer rights, we went ahead with it rather than wait for posts to be created and an office to be set up,�?former consumer affairs secretary Leena Nandan told TOI.To begin with, an additional secretary in the ministry was designated chief commissioner and a joint secretary commissioner. Bureau of Indian Standards (BIS) and National Test House (NTH) were tasked with technical investigation. medium nocaptionhttp://youtu.be/QFIf67XJ2K4?si=CgGgCp_CwSk1sVvKClass action and outcomesSo far, the CCPA has passed nearly 150 orders. Among these are key class action suits. During the lockdown, it took cognisance of complaints lodged with the National Consumer Helpline (NCH) about large-scale pending refunds by people who had booked plane tickets in advance but could not fly because of the lockdown. Airlines and ticketing firms had not cleared refunds despite a Supreme Court order of April 20, 2020. After a series of hearings and warnings, all the refunds were issued.Another such intervention was when it took suo motu cognisance of misleading guarantees by coaching centres, particularly for civil services, and imposed nearly �?0 lakh in penalties over two years on two dozen institutes. It clubbed complaints lodged with the NCH about enrolment fees they charged by making such claims and initiated a suit that eventually got coaching institutes to collectively refund �?.6 crore.This is also how it acted against aggregator Swiggy after the NCH received 10,590 complaints of deficiency of services and delivery of defective or wrong products. It directed Swiggy to change its consumer grievances redress mechanism and ensure quicker resolution of complaints. It took cognisance as well of 7,938 consumer complaints against Zomato, with directions to the aggregator to submit their resolution status. The directives were passed in October 2024.Also following similar CCPA intervention in December 2024, with more than 10,000 pending complaints for service deficiency, delivery delays and a slow repair process against Ola Electric, the company addressed 99% of the complaints. Among other important orders were the recall of non-ISI pressure cookers sold on e-commerce platforms and refund of payments to consumers and a �?0 lakh fine plus a directive to withdraw all misleading ads to Naaptol in 2022. medium nocaptionhttp://youtu.be/Wp1Osb9R6pk?si=CPv5CC-bNIySpf4uWhere to complain?Consumer affairs secretary and CCPA chief commissioner Nidhi Khare told TOI that similar complaints lodged with the NCH is one of the criteria that triggers class action. “Sometimes, even a few complaints or sale of an item that poses a threat to consumer safety can become the basis for class action,�?she said.“While consumers can send their complaints to CCPA, we encourage people to lodge complaints with NCH. This helps us identify a pattern and initiate action to bring relief to a large section of consumers. The focus of CCPA and NCH is to strengthen grievance resolution at the pre-litigation stage without any financial burden on the consumer,�?she added.The CCPA can also be an avenue for the executive to step in, as proceedings on car seat belt alarm stoppers showed. The road transport ministry had approached the CCPA to stop their sales by e-commerce companies, arguing their manufacture and sale was illegal under the Motor Vehicles Act. Amazon, Flipkart, Meesho, Snapdeal and Shopclues have since collectively delisted 13,118 stoppers.Consumer rights get teethThis suo motu approach has led to a marked difference in the assertion of consumer rights from the earlier regime of the consumer affairs department issuing advisories. Companies could overlook those and the only practical option would be to go to the consumer forum.Rohit Singh, a member of the National Consumer Disputes Redressal Commission and former consumer affairs secretary, said, “The establishment of CCPA marked a transformative moment in the evolution of consumer rights in India. For the first time, a dedicated statutory body has been empowered to take suo motu action against unfair trade practices, misleading advertisements, and rights violations. This has shifted the paradigm from reactive grievance redress to proactive market oversight.”Ashim Sanyal, COO of Consumer Voice, added, “It’s clear now that if CCPA functioning is streamlined as an independent body with its own setup, it gives the regulatory framework the teeth it needs to stop business malpractices.�?medium120094681Birth of class actionThe old law, Consumer Protection Act, 1983, focused on individual consumer rights and lacked mechanisms to effectively address unfair trade practices and enforce product liability through class action. It provided for consumer forums at the district, state and national levels, offering consumers an avenue to seek compensation for grievances related to goods and services. But it didn’t spell out mechanisms for regulatory interventions on behalf of the consumer.Officials who dealt with the preparation of the new consumer protection law recalled that with the dissolution of the Monopolies and Restrictive Trade Practices Commission (MRTPC) and the emergence of the Competition Commission of India (CCI), unfair trade practices no longer fell under direct regulatory scrutiny. While the CCI concentrated on promoting fair competition, consumer issues such as misleading advertisements and deceptive pricing remained unaddressed. Without class action and product liability enforcement, it was difficult for consumers to seek justice against powerful corporations.Learning from the USG Gurucharan, former additional secretary in the consumer affairs department, said the regulatory gap led to the legislation of the Consumer Protection Act, 2019. Sources said the idea of the CCPA as a body that could initiate class action came from a conference where experts from the US shared the impact of the class action there and how companies comply with orders.The US enacted Class Action Fairness Act in 2005, which lets one or more plaintiffs file or prosecute a suit on behalf of a larger group in federal courts. Class action results in orders or settlements that treat all class members as one, even those who are not part of the suit. Types of class actions include securities litigation, school funding and consumer product liability cases. Successful class action cases often result in hefty pre-trial settlements.For filing a class-action suit in the US, a lawyer looks at a case to determine the strength of the case and then files a complaint. A judge certifies class action based on the information provided.