NCDRC Should Pass Speaking Order If Conditional Stay Of State Commission's Order Is Granted Subject To Deposit Of Entire Or More Than 50% Of Amount Involved- SC

A two-judge Bench of Justice MR Shah and Justice BV Nagarathna has held that National Commission can pass an order to deposit the entire amount and/or any amount higher than 50 per cent of the amount while staying the order passed by the State commission.

Further, in support of this finding, the Court elucidated that National Commission has to pass a speaking order giving reasons why in the facts of the particular case the conditional stay of the order passed by the State Commission is to be passed subject to deposit of the entire amount and/or any amount higher than 50 per cent of the amount awarded by the State Commission.

The Supreme Court was hearing a batch of appeals filed against an order passed by the National Consumer Disputes Redressal Commission. NCDRC had, while staying the order passed by the State Commission, directed the Appellant to deposit the entire decretal amount with the State Commission. The State Commission had passed the order directing the Appellant to refund the amount paid by the respective home buyers with interest.

The bench heard the petition which was against the order of the National Commission of depositing the entire decretal amount with the State Commission as the Appellants had already deposited 50 per cent of the decretal amount as a pre-deposit at the time of preferring the appeals as required under Section 19 of the Consumer Protection Act, 2019.

The issue which was dealt with by the Court was -

Whether in an appeal under Section 51 of the Consumer Protection Act, 2019 and while considering the stay application to stay the order passed by the State Commission, the National Commission can pass an order to deposit the entire amount and/or any amount higher than 50 percent of the amount in terms of the order of the State Commission while entertaining the appeal under Section 51 of the Act, 2019?

The Supreme Court observed that "Rules for entertainment of an appeal on deposit of 50 per cent of the amount ordered by the State Commission, which is a statutory pre-deposit and the grant of interim order on the stay application subject to deposit of further amount are distinct and different."

The Court additionally held, "The order on the stay application is not to be passed mechanically. It must reflect an application of mind by the National Commission why the order passed by the State Commission is to be stayed on condition of deposit of the entire amount and/or any amount higher than 50 per cent of the amount awarded by the State Commission. However, at the same time, there is no discretion at all to stay the order passed by the State Commission subject to deposit of any amount less than 50 per cent of the amount which is required to be deposited as a pre-deposit before the appeal is entertained as per second proviso to Section 51 of the Act, 2019."

Thus, the Court concluded the following:

"(i) Pre-deposit of 50 per cent of amount as ordered by the State Commission under second proviso to Section 51 of the Consumer Protection Act, 2019 is mandatory for entertainment of an appeal by the National Commission;

(ii) The object of the said pre-deposit condition is to avoid frivolous appeals;

(iii) The said pre-deposit condition has no nexus with the grant of stay by the National Commission;

(iv) While considering the stay application in staying the order passed by the State Commission, the National Commission can grant a conditional stay directing the appellant(s) to deposit the entire amount and/or any amount higher than 50 per cent of the amount in terms of the order of the State Commission;

(v) However, at the same time, the National Commission has to assign some cogent reasons and/or pass a speaking order when the conditional stay of the order passed by the State Commission is passed subject to deposit of the entire amount and/or any amount higher than 50 per cent of the amount either as an ex parte order or after hearing both sides and considering the facts and circumstances of the case."

Accordingly, the Court held that the impugned order passed by NCDRC on the stay application directing the Appellant t(s) to deposit the entire decretal amount while staying the respective order(s) passed by the State Commission was passed mechanically and without assigning any reason(s) and/or no speaking order was passed. 

Thus, the Court remanded the matters back to National Commission to decide the application afresh and pass an appropriate order with a direction that the Respondents would not take any coercive action against the Appellant(s).

In the light of these observations, the Court partly allowed the appeal.

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