Holding

Liability under Section 14(1)(d) of the Consumer Protection Act, 1986 arises only when the opposite party is negligent and the loss flows from that negligence; the bank was not negligent, so no compensation is payable.

Summary

The Consumer Unity and Trust Society filed a complaint against Bank of Baroda alleging loss of banking services due to an illegal 54‑day strike by the bank’s employees. The society claimed compensation for interest on overdrafts, wharfage, demurrage and other consequential losses. The National Consumer Disputes Redressal Commission dismissed the complaint as not maintainable, and the matter was appealed before the Supreme Court. The Court examined whether the bank, as a service provider under Section 2(g) of the Consumer Protection Act, 1986, could be held liable for damages under Section 14(1)(d) when the loss arose from the employees’ strike. It held that liability under Section 14(1)(d) requires negligence on the part of the opposite party and a causal link between that negligence and the loss. Since the bank was not negligent – the service disruption was caused by the employees’ illegal strike – no compensation could be awarded. Consequently, the appeal was dismissed.

Issues considered

Whether a banking company, as a service provider under the Consumer Protection Act, 1986, is liable to compensate customers for loss of service caused by an illegal strike of its employees
Whether Section 14(1)(d) of the Act applies when the loss does not arise from the bank’s negligence

Legislation cited

Consumer Protection Act, 1986s. 14(1)(d), s. 2(l)(g)

Subjects

consumer protectionservice deficiencynegligencebank strikedamagesSection 14(1)(d)illegal strikeliability

Judgment

CONSUMER UNITY AND TRUST S_OCIETY, JAIPUR A
v.
~ 'THE CHAIRMAN AND MANAGING DIRECTOR,
BANK OF BARODA, CALCUTTA AND ANR.

JANUARY 31, 1995
B
[KULDIP SINGH, R.M. SAHA! AND S. MOHAN, JJ.)

Consumer Protection Act, 1986-Section 2(l)(g), 14(1)(d)-iJank-
·-+ ing-Illegal strike by employee~Loss of service-Claim of damage~Whether
banking company is liable to compensate its customer~Held, No. c
The respondent bank was prevented from rendering any skeleton
service to its customers due its employees resorting to illegal strike against
the enforcement of scheme of transfer by the bank. Since the customers of
the bank were deprived of the services due to strike for 54 days, payment
of interest at lending rate, wharfage, demurrage etc. were claimed by its D
. customers. The claim was dismissed by the National Consumer Commis·
sion as not maintainable. Hence this appeal.

The question raised for determination was whether a banking com·
pany which renders service within the meaning of clause (g) of section 2 E
of the Consumer Protection Act, 1986, is liable to compensate its cus-
tomers for loss of service due to illegal strike by its employees.

Dismissing the appeal, this Court

•
+ HELD : The provisions of Section 14(1) (d) of the Consumer Protec- F
tion Act are attracted if the person from whom damages are claimed is
found to have acted negligently and such negligence must have resulted in
some loss to the person claiming damages. In other words, loss or injury, if
any, must flow from negligence. Mere loss or injury without negligence is
not contemplated by this Section. The bank had not been found to be
negligtmt·in discharge of its duties.'Therefore, even if any loss or damage
G
-~
was caused to any depositor but it was not caused due to negligence of bank
then no claim of damages under the Act was maintainable. (710-H, 711-A]

t CIVIL APPEALLATE JURISDICTION: Civil Appeal No. _7166 of
1993. H
707
708 SUPREME COURT REPORTS [1995] 1 S.C.R.

A f'.rom the Judgment and Order dated 18.5.89 of the Nation~! ~on-
sumer Disputes Redressal Commission, New Delhi in O.P. No. 2 of 1988.
""' ..
L.K. Pandey, Naresh Sahai Mathur and Raghupathy V.N. for the
Appellant.
•
B Lalit Bhasin, Ms. Nina Gupta, for Vineet Kumar Adv. for the
Respondent No. 1.

Haris~ N. Salve, J. Savla, for Vineet Kumar for the Respondent No.2.

The Judgment of the Court was delivered by
c
R.M. SAHAI, J. The short question that arises for consideration in
this appeal directed against judgment of National Consumer ·Disputes
Redressal Commission, New Delhi, is whether a banking company which
renders service within meaning of clause (g) of Section 2 of the Consumer
D Protection Act, 1986 (referred in brief as 'the Act') is liable to compensate
its customers for loss of service due. to illegal strike by its employees.

Reasons for the strike due to enforcement of scheme of transfer by
the Bank and its being illegal due to employees resorting to it during
pendency of conciliation proceedings before the Commission· have not
E been assailed in this appeal. Even the finding that the. bank was prevented
from rendering any skeleton service to its customers due to unruly be-
haviour · of the employees who not only created barricades by forming
human wall before the bank but even mutilated and defaced the signature
on cheques issued by the bank to cater to urgent demands of its customers
F by colluding with employees. of Resetve Bank of India is well founded and
unassailable. But what was argued was. that since the custpmers of the bank •
were deprived of the· services due to strike for 54 days, the bank was liable
to pay such amounts as, .

"(a) Interest on Over drafts accounts to be reimbursed at lending
G rate during the period the account was not operative.

(b) Re-imbursement of interest at the lending rate less actual rate
of interest creditable to the saving deposit account holders. ;

(c) Interest at the l~nding rate on the negotiable instruments held
H in suspense during this pe~iod to be reimbursed to the cus-
CONSUMER UNITY AND TRUST SOCY. v. BANK OF BARODA [R.M. SAHAI, J.] 709

tome rs. A
( d) Re-imbursement of interest at which the customers may have
borrowed money from elsewhere to meet with their exigencies
for the period during which they could not lay hands on their
own money lying stuck in or due to the Bank.
B
(e) Reimbursement of wharfage, demurrage and such other costs
on consignments, documents of which were lying in the Bank
or could not be delivered to the Bank during this period and
the related period before and after this strike.

(t) Such consequential damages and losses incurred by the cus- C
tomers resultant of the strike, including compensation for
mental and physical anguish and agony caused due to non-
availability of the money or against a limit/loan or over-draft
facility with th~_Bank.

(g) Such other losses and claims, which may arise out of the
D
J_ actual claims to be lodged by the customers and/or assessed
for the strike period after making "thorough assessment
through an independent agency".

To determine merits of this submission, it is necessary to advert to certain E
provisions of the Act. A consumer or any registered voluntary consumer
association, like the appellant, is entitled to file a complaint, as provided
in sub-clause (iii) of Clause (c) of sub-section (1) of the Act for deficiency
in service. 'Service' has been defined in clause (o) of Section 2 of the Act

.. and reads as under :

""service" means service of any description which is made available
F

to potential users and includes the provision of facilities in con-
nection with banking, financing, insurance, transport, processing,
supply of electrical or other energy, board or loading or both
housing construction entertainment, amusement or the purveying G
- of news or other information, but does not include the rendering
of any service free of charge or under a contract of personal
service".

The expression, 'any description' widens the ambit of the Section and
extends it to any service. Therefore, payment of interest on overdrafts, H
710 I SUPREME COURT REPORTS (1995) 1 S.C.R.

A interest at lending rate, wharfage, demurrage etc. claimed by the appellant
may be covered in the expression 'service'. But 'deficiency' in service has
been defined in clause (g) of Section 2 of the Act as under : __...,..

""deficiency" means any fault, imperfection, shortcoming or inade-
quacy in the quality, nature and manner of performance which is
B required to be maintain·ed.by or under any law for the time being
in force or has been undertaken to be performed by a person in
pursuance of a contract or otherwise in relation to any service".

Even though the depositors were deprived of the service of the bank but
C · the deficiency did not arise due to one of the reasons mentioned in clause
(g). The shortcoining in the service by bank did not arise due to failure on
the part of bank in performing its duty or discharging its obligations as
required by law: Since the depositors were prevented . to avail of the
services of the bank not because of any deficiency on the part of the bank
but due to strike resorted to by the employees who almost physically
D prevented the bank from functioning, the failure of the bank to render
service could not 'be held to give rise to claim for recovery of any amount
under the Act. Further, the power and jurisdiction 'of the Commission is
to award compensation under Section 14(1)(d) of the Act as it has been
made applicable to the Commission by sub.--rule (b) of Rule 19 of the Rules
E framed under the Act. Clause (d) of sub-section (1) of Section 14 is
extracted below :

"to pay such amount as may be awarded by it as compensation to
the consumer for any loss or injury suffered by the consumer due
to the negligence of the opposite party".
F
Each of these expressions used in the sub-section are of wide connotation ...
and are fully comprehended both in common and legal sense. Negligence
is absence of reasonable or prudent care which a reasonable person is
expected to observe in a given set of circumstances. But the negligence for
which a consumer can claim to be compensated under this sub-section
G must cause some loss or injury to him. Loss' is a generic term. It signifies
some detriment .or deprivation or damage. Injury too means any damages
or-wrong. It means, 'invasion of any legally protected interest of another'.
Thus the provisions of Section 14(1)(d) are attracted if the person from
whom damages are claimed is found to have acted negligently and such
H negligence must result in some loss to the person claiming dam~. In
CONSUMER UNITY AND TRUST SOCY. v. BANK OF BARODA [RM. SAHAI, J.) 711

other worfts, l~ss or injury, if any, must flow from negligence. Mere loss or A
injury without negligence is not contemplated by this Section. The bank has
... not been found to be negligent in discharge of its duties. Therefore, even
if any loss or damage was caused to any depositor but it was not caused
dtte to negligence of bank then no claim of damages under the Act was
maintainable.
B
For these reasons, the appeal fails and is dismissed. But there shall
be no order as to costs.

A.G. Appeals dismissed.

l

.. +