The respondent employee filed a complaint before the District Consumer Disputes Redressal Commission Malappuram seeking arrears of gratuity payable under the Payment of Gratuity Act. The Commission allowed the complaint and directed the petitioner society to pay the balance gratuity amount of Rs 2 20 217 along with compensation and costs. The petitioner society challenged this order before the Kerala High Court.
Legal Issue Examined by the Court
The core question before the High Court was whether a retired employee claiming statutory gratuity could maintain a consumer complaint by asserting that he had availed the employer's services and therefore qualified as a consumer under Section 2 7 of the Consumer Protection Act 2019. The Court examined the definitions of consumer and service under Sections 2 7 and 2 42 of the Act.
Court’s Reasoning on Consumer Status
The Court observed that consumer status arises only where a person hires or avails services for consideration. In an employer employee relationship the service is rendered by the employee to the employer in return for salary and allowances. Consequently the employer cannot be characterised as a service provider and the employee cannot be regarded as a person who availed services from the employer. The Court quoted its own observation that in a case of employer employee the service is being rendered by the employee to the employer in return of a specified remuneration in the form of salary and other allowances and not vice versa.
Application of Precedent
The Court relied on the Supreme Court decision in Jagmittar Sain Bhagat and Others v Director Health Services Haryana and Others 2013 10 SCC 136 where a government employee s claim to be a consumer under the Consumer Protection Act 1986 was rejected. The Court noted that the essential criteria for availing services remain unchanged in the 2019 Act and therefore the earlier reasoning applies. The Court also referred to Ministry of Water Resources v Shreepat Rao Kamde 2023 13 SCC 819 which reaffirmed the same position.
Distinction from Earlier Decisions Treating Employees as Consumers
The Court distinguished decisions such as Chairman cum Managing Director ONGC Ltd v Consumer Education Research Society AIR 2020 SC 87 and Kerala State Co operative Employees Pension Board v CDR Forum 2004 1 KLT 111 where employees were treated as consumers because they had contributed to retirement benefit schemes and received fund management services in return. Those cases involved a service provider consumer relationship independent of the contract of employment. The Court held that gratuity is a statutory entitlement under the Payment of Gratuity Act requiring no employee contribution and does not involve any service rendered by the employer to the employee for consideration. Hence the precedents concerning contributory pension schemes were inapplicable.
Reference to Consumer Law Principles
Citing Indian Medical Association v V P Shantha and Ors 1995 6 SCC 651 and ICICI Bank Ltd v Diagember Vaman Gurjar and Another Revision Petition No 28 of 2020 the Court observed that consumer law governs relationships arising from contracts for service whereas employment relationships are contracts of service. The Court concluded that the employee s claim could not be sustained under the Consumer Protection Act 2019.
Operative Outcome
The High Court set aside the order of the District Consumer Disputes Redressal Commission Malappuram and quashed the direction to pay the balance gratuity compensation and costs. The petition seeking to quash the Commission s order was allowed.