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Telecom Companies Getting Sued in Consumer Forums after Landmark Decisions, Must Step Up Their Game


In February last year, the Department of Telecommunications (DOT) had paved the way for telecom companies (Airtel, Vodafone etc.) to be sued in the consumer courts. But the consumer courts themselves had refused to hear cases quoting an old decision by judges Katju and Ganguly saying consumer courts have no jurisdiction, and that only a government appointed arbitrator could do so.

Now, it seems the consumer courts have relented. The Maharashtra State Commission first said okay, telcos can be sued. This was disastrous for telcos like Reliance and Vodafone and Airtel, so they appealed to the National Commission. With a lot of lawyers.

And now a ToI article says:

On November 19, 2014, Justice Malik, delivering the judgment on behalf of the bench comprising himself and Dr S M Kantikar, upheld the judgment of the Maharashtra state commission and confirmed that telecom complaints are maintainable before the consumer fora.

To give a quick background:

The History

Since 2009, telecom consumers have been unable to approach consumer forums – where small complaints of a consumer-producer nature, such as defective merchandise or overbilling, have been quickly and assertively decided. Consumer forums are courts, and exist at a district and state level all the way to the National Consumer Disputes Redressal Commission.(NCDRC)

Before 2009, if you were overbilled, you could approach the consumer forum, which would decide on the case and award compensation. Penalties given were of the order of Rs. 5,000 which, as you can imagine, are huge in relation to the average complaint, and had telcos in jitters because they just couldn’t get their systems to not harass customers.

However, in one such case, in 2001, when M. Krishnan had his BSNL telephone disconnected due to non-payment of a bill of Rs. 17,000+, the consumer forum ruled in Krishnan’s favour and told BSNL to pay Rs. 5,000 as a fine and restore the connection.

BSNL appealed in the high court, lost, appealed some more, and eventually got a Supreme Court bench to listen to the issue: does the consumer forum have jurisdiction?

The bench, consisting of Markandey Katju (the infamous outspoken one) and A.K. Ganguly (who delivered the 2G Scam judgement and was recently indicted of sexual harassment) had ruled that the consumer forum cannot rule over telco disputes. (See judgement) They quoted the 1885 Telegraph Act, Section 7B, that provided for arbitration to solve disputes.

So What Was The Problem?

There was no clarity about the arbitration process, and the government never appointed an arbitrator as mentioned in the Telegraph act. So, nowhere to go!

See a detailed reading of the situation by Akosha.

Which meant that if you were overbilled, or your phone disconnected, you just had to chin up and bear it. No consumer forum (bar a few odd ones) were taking cases relating to telecom disputes because of the SC judgement, and the NCDRC (the apex consumer disputes body) also affirmed that the judgement stood sacrosanct. (Example:Ghaziabad consumer forum refuses to take a telco-overbilling case quoting the SC judgement)

A Wake Up Call For Telcos?

Since the DOT and the Maharashtra commission judgement, people have taken telcos to consumer court. Airtel was fined Rs. 500,000 for insensitive customer service, and later, Rs. 15,000 for “giving improper Wi-Fi“. Idea was fined Rs. 71,000 for “unwanted activation of a service”.

This is great for consumers, but potentially damaging for telcos. The massive growth in the industry had fuelled shady practices like random activation of services without information, bad quality of service and so on. As consumer forums get more active and impose fines way above the kind of revenue generated from the consumers (i.e. it’s not just giving their money back, it’s punitive damages as well), telcos will have to pull their socks up and get their act together.


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