Diamond Exports & Anr. v. United India Insurance Co. Ltd. & Ors.
Background
Diamond Exports filed an insurance claim before the National Consumer Disputes Redressal Commission (NCDRC) over a factory fire. The insurance company filed its written statement 100 days late, and in February 2020 the NCDRC condoned this delay. Shortly afterwards, a Constitution Bench of the Supreme Court ruled (in the Hilli case) that consumer fora cannot condone delays beyond 45 days under the Consumer Protection Act. Diamond Exports argued that this ruling meant the NCDRC's earlier condonation of a 100-day delay was invalid.
Decision Breakdown
The Supreme Court held that the Constitution Bench's ruling in Hilli was expressly made to apply only prospectively (from the date of that judgment, 4 March 2020), and the NCDRC's condonation order here was passed before that date, based on the more flexible practice that previously prevailed. Surveying several conflicting precedents on how "prospective effect" should be applied, the Court adopted a clear rule: applications for condonation of delay decided, or pending, before 4 March 2020 retain the benefit of the earlier, more lenient approach. On that basis, the NCDRC's decision to condone the delay was upheld and the appeal was disposed of, with directions on payment of costs and time to file a reply.
Lesson Learnt
When a court changes a long-standing legal rule but says the change applies only "prospectively," people and businesses whose disputes were already decided, or were already pending, under the old, more lenient rule generally continue to get the benefit of that older rule.