In the State Consumer Disputes Redressal Commission, Delhi. Decided on 30th April, 2009. Appeal no: FA-08/1043 (Arising out of Order dated 10-10-2008 passed by District Forum, Janakpuri, New Delhi, in Complaint No. 161/2007) Appellant: Sehgal school of competition Respondent: Shri Dalbir Singh Bench: Hon’ble Justice J.D Kapoor
The Consumer Protection Act: Established in 1986, it aims to provide better protection to the rights and interests of consumers. The Act empowers consumers to redress their grievances or disputes through consumer councils and various authorities for settlement of disputes. This act is regarded as ‘Magna Carta in the field of consumer protection to keep a check on unfair trade practices, defects in goods, and deficiencies in services.
This case further emphasized the Consumer Protection Act, 1986 when it comes to seeking redress by the consumer. The given case revolved around a student (respondent) who was denied a refund of his fee by his medical coaching institute (appellant). The court in its judgment has further highlighted that denying refund of fee under the guise of a condition imposed by an institution was against the principles of equity, natural justice, and fair trade.
Constitution and Statutory provisions discussed: Consumer Protection Act, 1986
The respondent had taken admission at the appellant’s institute for coaching for the medical entrance examination for a period of 2 years. The respondent had deposited the lump sum fees of Rs. 18,734 in two installments within six months. After a year, the respondent left the institute mid-way on the ground that it wasn’t up to the mark as the faculty members of the institute taught mostly engineering subjects and higher preference was given to engineering students. As the situation was not improving the respondent decided it would be futile to waste another year in such a situation and withdrew from the institute. He had asked for a refund of the balance fees which was declined. Aggrieved by this the respondent filed a complaint before the district forum for relief. The district forum directed the appellant to refund part of the fees of Rs. 18,734 without any compensation for mental agony, etc.
- Can an institution deny refund of fee to a student who has already paid the fees for a total period of the course?
- Does denying refund of fees by an institution constitute as an unfair trade practice?
The court in the given case was of the same view as that which had been upheld by the National Commission and the Supreme Court which states that ‘no institute or coaching center shall charge lump sum fees for the whole duration or should refund the fees if there is a deficiency in service in the quality of coaching etc. or for which period the student does not attend coaching as any clause saying that fees once paid shall not be refunded are unconscionable and unfair and therefore not enforceable.
The court while applying the above principle found no merit in the appeal and dismissed it. Thus, the court disposed of the appeal and stated that the payment should be made within one month.
Aggrieved by the decision of the State Commission the appellant filed a revision petition before the National Consumer Disputes Redressal Commission (NCDRC).
Revision Petition No. 813 of 2009 in Appeal No. 1043 of 08
Equivalent citations: 2009 (3) CPR 363 (NC): III (2009) CPJ 33 (NC): 2009 (3) CPC 187.
Decided on: 30th April 2009.
Bench: Hon’ble Justice B.N.P. Singh (Presiding Member).
Hon’ble Dr. P.D. Shenoy, Member.
Contentions put forth by petitioner:
- Sanjay Kumar, counsel for the petitioner contended that there wasn’t any deficiency in service as the respondent had withdrawn from the institute voluntarily.
- It was further submitted that the school had shown excellent results and hence the statement of the respondent stating that it wasn’t ‘up to the mark’ was wrong.
- It was also contended that one of the conditions imposed by the school on the students while accepting lump sum fees for 2 years is that ‘refundability/transferability of seat/fee is not possible under any circumstances.’
- Further, the petitioner relied on the case law of Homoeopathic Medical College & Hospital, Chandigarh v. Miss Gunita Virk, which held that a forum constituted under the Consumer Protection Act would have no jurisdiction to declare any rule in the prospectus of any institution as unconscionable or illegal.
The court stated that the appellant’s condition about non-refundability was biased and in favor of the petitioner and against the principle of equity and natural justice. It further stated that it was not a fair-trade practice. It stated that the case law referred by the petitioner was 13 years old and in the subsequent judgments it has been held that it is unjust to collect the fees for the total duration of the course.
The court relied on the judgment of Nipun Nagar vs. Symbiosis Institute of International Business, where it was held that the Institute was unfair and unjust in retaining the tuition fee of Rs. 1 lakh even after the student withdrew from their institute.
Thus, the court in the present case stated that the collection of total fees by the institute was an unjust and unfair trade practice and on the above grounds stated that, “Therefore, we do not see any material irregularity or jurisdictional error in the order passed by the State Commission. Accordingly, this Revision Petition is dismissed. There shall be no order as to cost.”
Thus, the petition was dismissed and the court pronounced its judgment in favor of the respondent. The additional compensation for mental agony due to approaching legal forum was not granted as the same was not mentioned in the petition. The court held that there shall be no order relating to cost and the school was required to refund the amount to the respondent.
Thus, the court through its judgment upheld that non-refundability of fees by an institution would amount to unfair trade practice and held that it would be unjust to collect lump sum fees for the total duration of the course.