SC Quashes Rs. 2 Cr Compensation Awarded for Deficiency in Hairstyling Services

In an order dated February 7, 2023, the Supreme Court set aside the decision of the National Consumer Disputes Redressal Commission (NCDRC) awarding Rs. 2 Crores as compensation in favour of the complainant/ respondent, Aashna Roy due to deficiency in the services provided by the saloon of Hotel ITC Maurya. Holding that the compensation awarded was unreasonable in view of the evidence provided, the court remitted the matter back to NCDRC to arrive at an amount appropriate to the evidence furnished.

In 2018, the respondent visited the saloon of Hotel ITC Maurya in New Delhi for hair styling to appear well-groomed for an interview. The hairdresser failed to cut her hair as per the directions given despite taking a tremendous amount of time for the same. To assuage her concerns, the saloon offered to provide her with a hair extension treatment free of cost to which she assented. However, the treatment which involved excessive use of ammonia and the method of its administration resulted in scalp irritation and burning.

Subsequently, the respondent complained to the Hotel authorities who took no action in this regard. Aggrieved, she approached[1] NCDRC alleging deficiency in services. A compensation of Rs. 3 Crores was sought on the basis that this incident adversely affected her modelling career and future prospects as she lost out on several assignments and also the interview that she was supposed to attend right after the hair styling session.

Upon hearing all the parties, the NCDRC awarded a compensation of Rs. 2 Crores in favour of the respondent considering the importance that hairstyles bear in the lives of women and the incident’s impact on the respondent’s modelling career. ITC Limited filed the present appeal before the Supreme Court challenging the decision of the NCDRC.

The Supreme Court held that the compensation awarded was “excessive and disproportionate” as the respondent failed to provide any material on record to show that she lost out on the assignments and the interview. Hence, the Supreme Court remitted the case back to NCDRC to arrive at an appropriate compensatory amount and issue a fresh order accordingly.

[1] The complaint was filed before the NCDRC in June 2018 under the Consumer Protection Act, 1986 since the compensation claimed was Rs. 3 Crores (i.e., within the pecuniary jurisdiction of the commission). After the Consumer Protection Act, 2019 and the Consumer Protection (Jurisdiction of the District Commission, the State Commission and the National Commission) Rules, 2021 were brought into force, the pecuniary jurisdiction of the NCDRC has been modified and currently, the commission has the pecuniary jurisdiction to hear complaints where the value of goods or services (i.e., compensation claimed is irrelevant in deciding pecuniary jurisdiction) exceeds Rs. 2 Crores (as opposed to Rs. 1 Crore under the 1986 Act and Rs.10 Crores under the 2019 Act).