The Supreme Court has agreed to examine the question of whether an educational institution or university in India can be sued under the Consumer Protection Law for deficiency in services, saying there have been “divergent views” of the top court on the issue.
Do universities fall under Consumer Law?
The appeal arises from a judgment of the National Consumer Disputes Redressal Commission (NCDRC) delivered on 20 January 2020, which threw out the complaints of nine medical students and held, in terms that cover every kind of institution imparting education, that such institutions are outside the Consumer Protection Act, 1986. By admitting the appeal, the Supreme Court has taken up for itself the question of whether universities fall under Consumer Law, which the commission had answered in the negative.
A bench of Justices D Y Chandrachud, Indu Malhotra and Indira Banerjee has agreed to hear an appeal filed by Manu Solanki and other students from a medical course against Vinayaka Mission University at Salem in Tamil Nadu, alleging deficiency in services.
“Since there are divergent views of this Court bearing on the subject as to whether an educational institution or University would be subject to the provisions of the Consumer Protection Act 1986, the appeal would require admission. Admit,” the top court said in its order of October 15.
The bench asked lawyer Soumyajit, who appeared on behalf of caveator university, to file the response within six weeks to the appeal filed against a decision of the National Consumer Disputes Redressal Commission (NCDRC).
The university has previously relied upon apex court judgments in the Maharshi Dayanand University and in the PT Koshy cases to say that these verdicts have held that education is not a commodity and educational institutions are not providing any kind of service.
Hence, concerning the matter of admission and fees, there cannot be a kind of service and therefore, there cannot be a question of deficiency of service to be adjudicated upon in consumer forum or commissions. The students, however, cited other judgments in which it has been held that educational institutions would come within the purview of the Consumer Protection Act, 1986.
Two lines of Supreme Court authority
The “divergent views” the bench referred to are set out at length in the NCDRC’s judgment in the Solanki case. On one side sit Maharshi Dayanand University v Surjeet Kaur (2010), in which the Supreme Court held that “education is not a commodity” and that a student “is neither a consumer nor is the appellant rendering any service”, and P.T. Koshy v Ellen Charitable Trust (2012), where the court said that “educational institutions are not providing any kind of service”. In Anupama College of Engineering v Gulshan Kumar (2017), the court followed that view and set aside commission orders in favour of a student who had withdrawn within a week of admission and sought a refund of fees.
On the other side sit Buddhist Mission Dental College v Bhupesh Khurana (2009), in which the court upheld a finding of deficiency in service and a refund order against a college that was neither affiliated nor recognised to impart education, and P. Sreenivasulu v P.J. Alexander (2015), which held that “an educational institution would come within the purview of the Consumer Protection Act, 1986”.
The commission noted that the Sreenivasulu bench appears not to have been shown the Maharshi Dayanand and P.T. Koshy decisions, and that the Anupama bench was not shown Sreenivasulu. Faced with benches of equal strength pulling in different directions, it chose the authority that, in its words, “states the law more elaborately and accurately”, and followed the most recent decision, Anupama.
Solanki and eight other students pursuing a medical course from the university seek compensation worth ₹1.4 crores each, alleging deficiency in service and on account of “loss of social standing, academic years, career opportunities, mental and physical agony”. They alleged that the university induced them to take admission in their course on a false assurance that it had all the requisite approvals from the authorities.
The students were admitted in the offshore programme in 2005-2006, which consisted of a two-year study programme in Thailand and a tenure of two-and-a-half years of study in the university in India, the plea said. The students were assured that they would be getting their MBBS final degree conferred by the university and recognized by the Indian Government and the Medical Council of India.
However, after two years of study in Thailand, the students were informed that they should continue their course at Thailand and would be conferred a Foreign Medical Degree and should subsequently appear for a screening test in India, as alleged by the plea. The students said that they suffered a loss of career opportunities as the National Board of Examination said that their qualification was “not a primary medical qualification since the Degree is not recognized by the Medical Council of India or the Council of Thailand”.
The NCDRC, in its judgement of January 20, had said,
“We are of the considered opinion that the institutions rendering education including vocational courses and activities undertaken during the process of pre-admission as well as post-admission and also imparting excursion tours, picnics, extra co-curricular activities, swimming, sport, etc. except Coaching Institutions, will, therefore, not be covered under the provisions of the Consumer Protection Act, 1986.”
What the NCDRC decided in January 2020
The judgment under appeal was delivered by a three-member bench of the commission: its then president, Justice R.K. Agrawal, with members Justice V.K. Jain and M. Shreesha. It dismissed Consumer Complaints 261 and 267 of 2012 as not maintainable. In those complaints, each student had sought Rs 1,44,13,573 for loss of social standing, academic years and career opportunities, and for mental and physical agony, and the complaints described an offshore programme “comprising of two year study in Thailand and two and half years study” at the university in India.
The commission made one exception to its ruling. “Coaching Centres cannot be equated to regular schools or colleges,” it said, holding that coaching classes do not fall within the meaning of education and that coaching centres are not educational institutions, so complaints of defects or unfair trade practices against them remain within the reach of the consumer forums. Whether universities fall under Consumer Law was answered, at the commission, with a clear no.
The students thus filed an appeal in the apex court to seek a solution to their grievances.
A new consumer law in the background
The appeal is being argued under the 1986 Act, but the statute changed while the case was travelling. The Consumer Protection Act, 2019 came into force on 20 July 2020, the consumer affairs ministry announced. It set up a Central Consumer Protection Authority “to promote, protect and enforce the rights of consumers”, lets consumers file complaints in the commission with jurisdiction over the place where they live, provides for hearings by videoconference, and treats a complaint as admitted if the question of admissibility is not decided within 21 days.
The new law also allows commissions to refer complaints to mediation where there is scope for early settlement, with no appeal against a settlement reached that way, introduces product liability claims, and charges no fee for cases worth up to Rs 5 lakh, according to the ministry. The Solanki complaints were filed in 2012 and the question the bench has admitted is framed in terms of the 1986 Act. When the Supreme Court rules on whether universities fall under Consumer Law, the answer will settle which of the two lines of its own authority binds the consumer commissions. As of the order of 15 October, the university’s response was due within six weeks.
