Supreme Court upholds NCDRC third member deciding consumer appeal on faulty reference

A Bench of Justices Dipankar Datta and Sheel Nagu set aside an Allahabad High Court order and remanded the Article 227 plea, holding the third member did not exceed jurisdiction.

The Supreme Court has set aside a Single Judge order of the Allahabad High Court that had quashed a National Consumer Disputes Redressal Commission decision on the ground that its third member overstepped his mandate. In a judgment delivered on 24 August 2026, a Bench of Justices Dipankar Datta and Sheel Nagu held that where the referring Bench of the NCDRC never stated the points on which its two members differed, and instead framed five questions going to the root of the complaint, the third member could decide the appeal itself while answering those questions. The Court described the objection to the scope of the reference as “technical” and remanded the matter to the High Court to decide the Article 227 application afresh on its merits, having found no illegality warranting interference under Article 227.

How the dispute reached the Court

The complainants, appellants before the Supreme Court, had lodged Complaint No. 13 of 2006 before the State Consumer Disputes Redressal Commission, Uttar Pradesh. On 4 December 2012 the SCDRC allowed the complaint and awarded Rs.95 lakh compensation with 15% interest.

The first respondent carried First Appeal No. 156 of 2013 to the NCDRC. The two members hearing it differed. The presiding member allowed the appeal and dismissed the complaint by order dated 19 March 2021. The companion member, by an order of the same date, instead reduced the compensation and interest to Rs.93 lakh and 12%.

A reference followed under Section 58(3) of the Consumer Protection Act, 2019. The third member gave his opinion on 9 January 2024, disagreeing with the presiding member and agreeing with the companion member. He did not stop at answering the reference. He proceeded to dispose of the appeals, reducing total compensation from Rs.95 lakh to Rs.93 lakh, apportioning specific shares among the complainants, and directing payment within three months.

What the High Court held

Aggrieved, the first respondent moved the Allahabad High Court under Article 227. The Single Judge, by order dated 11 December 2024, held that the third member had acted in excess of the powers conferred on a referring member. The order was quashed, with a direction that the third member answer only the questions referred and send the matter back to the Division Bench of the National Commission.

The Single Judge relied on Kesho Nath Khurana v. Union of India, Commissioner of Income Tax, Delhi v. Bansi Dhar and Sons, and a Full Bench decision of the High Court in Shriram Industrial Enterprises Limited v. Union of India.

The reference procedure and its limits

The Supreme Court framed the short question as whether the third member was justified in deciding the appeal itself while concurring with the companion member, or should have returned the case with his answers to the referring Bench.

The Court traced the settled position through Kesho Nath Khurana, where a Division Bench was held to have erred by deciding a second appeal on merits instead of returning the reference to the Single Judge. It also drew on State of Punjab v. Salil Sabhlok, quoting the concurring opinion of Justice Madan B. Lokur, which surveyed the line of authority that a larger Bench should decide only the questions referred to it.

From Salil Sabhlok the Court noted the qualification that where a subsidiary question “logically and unavoidably arises”, the larger Bench may answer it on a common sense approach. The normal course, the Court restated, is for the referee Bench to return the questions with answers to the Bench that made the reference.

The Court observed that the CPC contains no provision akin to Section 392 of the Code of Criminal Procedure, 1973 or Section 433 of the Bharatiya Nagarik Suraksha Sanhita, 2023, so CPC references are governed by precedent. For consumer disputes, Section 58(3) of the CP Act supplies the framework, mandating that where members differ they shall state the points of difference for reference.

Why the reference here was different

On a plain reading of Section 58(3), the Court accepted that the third member would prima facie appear to have exceeded jurisdiction by deciding the appeal. But it found one significant feature. The members of the referring Bench did not state the points on which they differed. Instead, five questions were formulated for the third member, and these required a consideration of the facts alleged and rebutted on merits.

The Court held the objection to the scope of reference was technical. The referring order did not delineate the points of difference; it framed questions that went to the root of the complaint and were inseparable from the evidence. The third member had to survey the entire material and the rival contentions, and his opinion and the companion member's opinion were ad idem. Viewed this way, his approach reflected the common sense course acknowledged in Salil Sabhlok as available in exceptional cases.

The Court concluded that by deciding the appeal rather than returning the reference, the third member did not commit an illegality warranting interference under Article 227. Although the Single Judge's approach found support in Kesho Nath Khurana, the Court declined to uphold the conclusions in paragraph 21 of the impugned order, given Section 58(3) and the faltering reference.

Order

The Court recorded that the Single Judge had not taken exception to the third member's answers on merits, only to the procedure adopted. It held it imperative for the High Court to decide the Article 227 application on its own merits.

The impugned order was set aside and the appeal allowed by remanding the Article 227 application to the High Court for fresh decision in accordance with law, with all issues of fact and law left open before the roster Bench. The Court directed early disposal and recorded that the NCDRC would not proceed further till the High Court gives its final decision.