Pranav B Prem

The Delhi State Consumer Disputes Redressal Commission has held that disputes concerning Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) benefits, which arise out of an employer–employee relationship, do not constitute consumer disputes under the Consumer Protection Act. The Commission dismissed a first appeal filed by Jai Prakash Malik, observing that an employee does not fall within the definition of a “consumer” under Section 2(1)(d) of the Act.

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The appeal was decided by a Bench comprising Justice Sangita Dhingra Sehgal (President) and Bimla Kumari (Member). Upholding the order of the District Consumer Commission, the State Commission found no reason to interfere with the conclusion that consumer fora lack jurisdiction to adjudicate disputes relating to statutory employment benefits.

According to the facts recorded in the judgment, the appellant was employed with Baba Chaurangi Nath Pvt. Ltd., Delhi, and was drawing a monthly salary of ₹7,410. He alleged that despite being eligible for EPF and ESI coverage, he was deprived of the benefits under the schemes as his employer, in connivance with the authorities, failed to deposit statutory contributions on his behalf. The appellant claimed that this resulted in denial of social security benefits and amounted to deficiency in service and unfair trade practice.

Aggrieved by the alleged denial, the appellant approached the District Consumer Commission by filing a consumer complaint against the Employees’ Provident Fund Organisation and the ESI authorities. The complaint was contested, with the EPFO stating that the complainant was never covered under the EPF Scheme, 1952, and was an excluded employee under the relevant provisions. It was further contended that no case of deficiency in service or unfair trade practice was made out.

After considering the material on record, the District Commission dismissed the complaint on the ground that the dispute was essentially between an employer and an employee concerning statutory benefits. It held that such disputes do not amount to “service” within the meaning of the Consumer Protection Act and that the complainant was not a “consumer” under Section 2(1)(d). The Commission also observed that consumer fora should not venture into matters which are not consumer disputes and granted liberty to the complainant to approach the appropriate forum under law.

Challenging this order, the appellant preferred a first appeal before the State Commission. In the appeal, he reiterated his claims relating to ESI unemployment allowance, medical benefits, and monetary compensation following his termination in December 2012. However, a perusal of the grounds of appeal showed that the appellant did not specifically challenge the core finding of the District Commission regarding lack of consumer jurisdiction. Instead, he largely set out a breakup of his alleged dues and benefits.

The State Commission noted that the District Commission had dismissed the complaint on the clear finding that the appellant was an employee and not a consumer, and therefore the consumer forum was not empowered to decide disputes relating to employment and statutory benefits. It further observed that the appellant had failed to demonstrate any legal infirmity or jurisdictional error in the impugned order. As recorded in the judgment, “the contents of the entire appeal do not carve out any ground for challenging the order passed by the District Commission,” and the appellant had merely reiterated his claims without assailing the reasoning of the District Commission .

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Finding no merit in the appeal, the State Commission held that the District Commission had rightly dismissed the complaint. Accordingly, the first appeal was dismissed, and the order of the District Consumer Commission was upheld, thereby reaffirming that disputes relating to EPF and ESI benefits arising from an employer–employee relationship do not fall within the ambit of consumer jurisdiction under the Consumer Protection Act.

Cause Title: Jai Prakash Malik v. ESI & Anr.

Case No: FA-195/2022

Coram: Justice Sangita Dhingra Sehgal (President) and Bimla Kumari (Member)