2025 INSC 371
SUPREME COURT OF INDIA
(HON’BLE
SUDHANSHU DHULIA, J. AND HON’BLE AHSANUDDIN AMANULLAH, JJ.)
M/S CITICORP FINANCE
(INDIA) LIMITED
Petitioner
VERSUS
SNEHASIS NANDA
Respondent
Civil
Appeal No.14157 OF 2024-Decided on 20-03-2025
Consumer
(A)
Consumer Protection Act, 1986, Section 2(1)(d) – Consumer – Home loan agreement
– Tripartite Agreement – Adverse inference - NCDRC in the
Impugned Order has offered no reasoning on how the respondent was a ‘consumer’
under the Act - As per the complainant-respondent, there was a Tripartite
Agreement and an Indemnity Bond between the appellant, the
complainant-respondent and the borrower intervened by a Home Loan
agreement between the appellant and the borrower as also a MoU and an Agreement
for Sale between the complainant-respondent and the borrower - Though the
existence of the Tripartite Agreement was specifically denied by the appellant,
the NCDRC has drawn an adverse inference against the appellant only because a
specific affidavit was not filed before it - Such statement regarding denial of
the existence of the purported Tripartite Agreement was made in the appellant’s
reply only, in the NCDRC, which was itself supported by an affidavit and thus,
no separate/special affidavit was required in this behalf - The onus is on the
person who asserts a fact to prove it - In the present case, where the
respondent himself is a signatory to the purported Tripartite Agreement, the
presumption will be that he has retained a copy of the same - Thus,
non-production of the (complete) Tripartite Agreement, if at all there was one,
would lead to an adverse inference, and under normal circumstances as also in
the present case, against the complainant-respondent, and not against the
appellant - What the complainant produced before the NCDRC was an unsigned,
unstamped and partly blank document, which he asserts is the Tripartite
Agreement between the appellant, the borrower and him.
(Para 16)
(B) Consumer
Protection Act, 1986, Section 2(1)(d) – Consumer – Home loan agreement – Tripartite Agreement – Held that even if it is accepted
that all the afore- mentioned agreements were validly there, primarily the
Tripartite Agreement, as contended by the respondent, a conjoint reading
of all would lead to the obvious conclusion that the essential transaction of
sale was between the complainant-respondent and the borrower who was the buyer
of the flat of the complainant-respondent for an agreed consideration of
Rs.32,00,000/- - In the specific factual
setting, the respondent, having no privity of contract with the appellant,
cannot be termed a ‘consumer’ under the Act - This alone was sufficient to
dismiss the complaint.
(Para 17)
(C)
Consumer Protection Act, 1986, Section 2(1)(d) – Consumer – Home loan agreement
– Tripartite
Agreement – Whether any liability rested on the appellant to disburse the
entire amount of Rs.31,00,000/- i.e., the remaining consideration amount for
sale of the flat payable to the complainant-respondent by the borrower? -
Appellant’s liability under the Agreement for sale was restricted only to
satisfying the dues of the complainant-respondent with ICICI Bank which sum was
in fact quantified at Rs.17,87,763/-
and, in any view of the matter, could not have exceeded
Rs.23,40,000/- - Held that the NCDRC
could not have, under any circumstance, taken a view that the appellant was
liable to pay Rs.31,00,000/- both to ICICI Bank as well as to the
complainant-respondent, who was not a party to the ultimate sanction of the
loan by the Home Loan Agreement, which was between the appellant and the
borrower - Complainant- respondent cannot be said to be a ‘consumer’ under the
Act as it had no privity of contract with the appellant, due regard being
had to the totality of the factual matrix.
(Para 19 to 21)
(D)
Consumer Protection Act, 1986, Section 24A – Consumer - Limitation - The purported
Tripartite Agreement is dated 09.02.2008 - The cause of action statedly had
arisen in/by April/May, 2008 - The respondent filed a complaint under the Act
on 16.04.2018 – Held that while the NCDRC is competent to condone any period of
delay in filing a complaint beyond two years from the date when the cause of
action arises, the discretion is circumscribed by twin conditions: (i) that the
complainant satisfy the NCDRC that he had sufficient cause for not filing his
complaint within such period, and; (ii) that the NCDRC record the reasons for
condoning such delay - Neither reasons nor a formal order condoning delay is
forthcoming, either in the order-sheets or in the Impugned Order - Despite the
appellant raising the issue of limitation, the Impugned Order is silent on
the said score - On a probe into the pleadings, it transpires that the
respondent was agitating the dispute before, inter alia, the Banking Ombudsman,
Reserve Bank of India and even the High Court of Orissa by way of Writ Petition
(Civil) No.18429 of 2017 - In this backdrop, at the initial stage(s) of
hearing, the respondent ought to have satisfied/attempted to satisfy the NCDRC
on the delay, and the NCDRC ought to have passed a reasoned order condoning the
delay or refusing to condone the delay.
(Para 22)
(E)
Consumer Protection Act, 1986, Section 2(1)(c) –Consumer Complaint – Necessary
party - Home loan – Tripartite agreement - Specific
plea by the appellant, that the borrower should have been joined in the
proceedings before the NCDRC – Held that if the borrower had been arrayed as an
Opposite Party in the NCDRC, the question of whether a Tripartite Agreement was
duly executed and existed or not, could perhaps have been answered - It is too
late in the day to plug such non-joinder - In view of the borrower being the
purchaser of the flat in question and party to the MoU, the Agreement for Sale,
the Home Loan Agreement and the purported Tripartite Agreement, he was, at the
very least a proper party, but looked at from the lens where the appellant
denied the very existence of the Tripartite Agreement, the borrower being the sole
link between the respondent and the appellant, the borrower would be a
necessary party in the complaint.
(Para 23)
(F)
Consumer Protection Act, 1986, Section 2(1)(c) – Arbitration and Conciliation
Act, 1996 – Consumer Complaint – Arbitration – The so-called Tripartite
Agreement provides for the matter being resolved by arbitration under the
provisions of the Act,1996 – Held that even in a consumer dispute under
the Act, or for that matter, the Consumer Protection Act, 2019,
arbitration, if provided for under the relevant agreement/document, can be
opted for/resorted to, however, at the exclusive choice of the ‘consumer’
alone.
(Para
24 and 25)
JUDGMENT
Ahsanuddin Amanullah,
J. :-
The present appeal impugns the Final Judgment and Order dated 19.01.2023 [2023
SCC OnLine NCDRC 19] in Consumer Complaint No.919 of 2018 (hereinafter referred
to as the ‘Impugned Order’) passed by the learned National Consumer Disputes
Redressal Commission, New Delhi (hereinafter referred to as the ‘NCDRC’),
whereby the complaint filed by the respondent was allowed and the appellant was
directed to refund Rs.13,20,000/- (Rupees Thirteen Lakhs Twenty Thousand) with
interest @ 12% per annum and pay Rs.1,00,000/- (Rupees One Lakh)
as litigation cost.
FACTUAL
BACKGROUND:
2.
The respondent-complainant purchased Flat No.701, B-Wing, 7 th Floor, Riddhi
Siddhi Heritage, Plot Nos.56 & 57, Sector-19, Airoli, Navi Mumbai
(hereinafter referred to as the ‘flat’) on 30.05.2006. The respondent had
availed a housing loan of Rs.17,64,644/- (Rupees Seventeen Lakhs Sixty-Four
Thousand Six Hundred Forty-Four) from ICICI Bank, Malad, East Mumbai Branch. In
February 2008, one Mr. Mubarak Vahid Patel (hereinafter referred to as the
‘borrower’) approached the respondent to purchase the flat for a consideration
of Rs.32,00,000/- (Rupees Thirty-Two Lakhs). On 09.02.2008, the respondent and
the borrower entered into a Memorandum of Understanding (hereinafter referred
to as the ‘MoU’) for sale of the flat. On the same day, a Tripartite Agreement
was purportedly entered into between the respondent, borrower and the
appellant. Subsequently, the respondent and the borrower entered into an
Agreement for Sale dated 12.02.2008 for the sale of the flat for a
consideration of Rs.32,00,000/- (Rupees Thirty-Two Lakhs). Out of the total
consideration of Rs.32,00,000/- (Rupees Thirty-Two Lakhs), Rs.1,00,000/-
(Rupees One Lakh) was paid through a post-dated cheque dated 12.02.2008 and for
the remaining Rs.31,00,000/- (Rupees Thirty-One Lakhs), the borrower approached
the appellant for a housing loan.
3.
The appellant and borrower entered into a Home Loan Agreement dated 28.02.2008,
by which the appellant agreed to grant a loan of Rs.23,40,000/- (Rupees
Twenty-Three Lakhs Forty Thousand) to the borrower. As the flat was already
mortgaged with ICICI Bank, the borrower requested the appellant to disburse an
amount of Rs.17,80,000/- (Rupees Seventeen Lakhs Eighty Thousand) directly to
the respondent’s ICICI Bank account, in order to secure the release of the
flat. On 11.04.2008, the appellant granted in-principle approval for the loan.
The above payment was made by the appellant and thereafter an amount of
Rs.5,09,311/- (Rupees Five Lakhs Nine Thousand Three Hundred Eleven) remained
to be disbursed to the borrower. The appellant issued a cheque for the balance
sanctioned amount of Rs.5,09,311/- (Rupees Five Lakhs Nine Thousand Three
Hundred Eleven) in favour of the borrower in 2009. However, the borrower did
not encash this cheque and closed the loan account.
4.
On 16.04.2018, the respondent filed Consumer Complaint No.919 of 2018 before
the NCDRC, inter alia, praying for directions to the appellant to pay
compensation due to the loss caused to him for non- payment of the balance
Rs.13,20,000/- (Rupees Thirteen Lakhs Twenty Thousand) under an alleged
Tripartite Agreement dated 09.02.2008. Vide Order dated 06.09.2018 [2018 SCC
OnLine NCDRC 1416], the NCDRC, after hearing both parties, dismissed the
complaint at the pre- admission stage holding that the respondent cannot be
said to be a ‘consumer’ within the meaning of the Consumer Protection Act,
1986 (hereinafter referred to as the ‘Act’). The respondent then filed
Review Application No.326 of 2018 in Consumer Complaint No.919 of 2018, which
came to be dismissed by the NCDRC vide Order dated 20.09.2018. Thereafter, the
respondent approached this Court by filing Civil Appeals No.10408-10409 of
2018. [Snehasis Nanda v M/s Citicorp
Finance (India) Limited (Formerly Citifinancial Consumer Finance India
Limited).] By Order dated 06.09.2019, this Court allowed the said civil
appeals and set aside the Orders of the NCDRC. It restored the matter back to
the file of the NCDRC for the complaint to be decided on merits.
5.
On remand, the NCDRC considered the matter and vide the Impugned Order allowed
the complaint filed by the respondent. The appellant was directed to refund
Rs.13,20,000/- (Rupees Thirteen Lakhs Twenty Thousand) with interest @ 12% per
annum from 14.04.2008 till the date of actual payment along with Rs.1,00,000/-
(Rupees One lakh) towards litigation cost. The respondent preferred Civil
Appeal No.1593 of 2023[Snehasis Nanda v
M/s Citicorp Finance (India) Ltd.] in this Court against the Impugned Order
seeking enhancement of the amount awarded, which was dismissed on 17.04.2023.
SUBMISSIONS
BY THE APPELLANT:
6.
Learned senior counsel Mr. Ritin Rai, for the appellant, submitted that the
Impugned Order suffers from several infirmities and ought to be set aside. It
was argued that the NCDRC failed to consider that the respondent is not a
‘consumer’ of the appellant within the meaning of Section 2(1)(d) of
the Act. The MoU and the Agreement for Sale were purportedly entered into
between the respondent and the borrower. The appellant is admittedly not a party
to these and has undertaken no obligations there under. Similarly, the
respondent is not a party to the Home Loan Agreement entered into between the
appellant and the borrower. It was submitted that no service was ever provided
by the appellant to the respondent and hence the respondent does not fall under
the definition of ‘consumer’ under the Act.
7.
It was argued that in such scenario, the NCDRC had concluded, without any
evidence, that the appellant and the respondent were ‘possibly’ parties to a
Tripartite Agreement under which the appellant was directly responsible for
paying the total sale consideration to the respondent. The existence of such a
‘Tripartite Agreement’ has been denied by the appellant. Pertinently, no such
‘Tripartite Agreement’ signed by the appellant was ever filed by the
respondent. The respondent, as the party averring the existence of such
agreement, bears the burden of proving the existence of the same. The
NCDRC erred by presuming the existence of a Tripartite Agreement and placing
the burden of producing the same on the appellant.
8.
It was further submitted that the appellant only had privity of contract with
the borrower. It is on the instruction of the borrower - Mr. Mubarak Vahid
Patel - that the appellant transferred an amount of Rs.17,80,000/- (Rupees
Seventeen Lakhs Eighty Thousand) to the ICICI Bank for foreclosing the loan
account of the respondent, as part of the sale consideration for the flat. This
payment does not evidence the existence of any relationship between the appellant
and the respondent, as it was made on the request of the appellant’s customer
viz. the borrower.
9.
Without prejudice to the aforesaid submissions, it was submitted that the
appellant also took an objection before the NCDRC that the borrower was a necessary
and proper party for the purpose of adjudication of the complaint. The NCDRC in
the Impugned Order failed to adjudicate upon this objection raised by the
appellant. Further, the NCDRC allowed the complaint without any reasoning on
the appellant’s objection regarding the complaint being barred by limitation.
Prayer was made to allow the appeal by the learned senior counsel.
SUBMISSIONS
BY THE RESPONDENT-IN-PERSON:
10.
Mr. Snehasis Nanda, respondent-in-person, submitted that the Impugned Order has
correctly taken note of the evidence and materials on record and allowed the
complaint, which does not require any interference by this Court. It was
submitted that the NCDRC, in a well- reasoned order, has rightly found the
appellant to be guilty of deficiency in service and engaging in unfair trade
practices, after going into the entirety of the complaint and the supporting
documents.
11.
It was submitted that the Home Loan of the borrower was approved by the
appellant based on the Tripartite Agreement dated 09.02.2008 and the registered
Agreement for Sale dated 12.02.2008, without which the appellant was not
supposed to process the home loan application on the flat, as the said flat was
mortgaged with another bank, i.e., ICICI Bank. The NCDRC has rightly upheld the
existence of the Tripartite Agreement, after finding supporting evidence in the
complaint. On the question raised by the appellant on the respondent’s status
as a ‘consumer’ under the Act, the submission is that this Court in Order dated
06.09.2019 passed in Civil Appeals No.10408-10409 of 2018 held in his favour on
this point.
12.
It was argued that the appellant has deliberately misled all fora in order to
hide the existence of the Tripartite Agreement dated 09.02.2008 and to
escape the liability to pay. Prayer was made to dismiss the appeal by the
respondent.
ANALYSIS,
REASONING & CONCLUSION:
13.
We have heard learned senior counsel for the appellant and the
respondent-in-person at length.
14.
The lis before this Court basically can be broadly classified under two
distinct heads. Firstly, as to whether the complainant would come under the
definition of ‘consumer’ in terms of the Act. Secondly, assuming the first
question is answered in the affirmative, whether any liability rested on the appellant
to disburse the entire amount of Rs.31,00,000/- (Rupees Thirty-One Lakhs) i.e.,
the remaining consideration amount for sale of the flat payable to the
complainant-respondent by the borrower. Ancillary issues arising are considered
at the appropriate place infra. At the outset, it would be useful to
reproduce Section 2(1)(d) of the Act:
‘2. Definitions.—(1)
In this Act, unless the context otherwise requires,— …
(d) “consumer” means
any person who,—
(i) buys any goods for
a consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and includes any user of such
goods other than the person who buys such goods for consideration paid or promised
or partly paid or partly promised, or under any system of deferred payment when
such use is made with the approval of such person, but does not include a
person who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails of
any services for a consideration which has been paid or promised or partly paid
and partly promised, or under any system of deferred payment and includes any
beneficiary of such services other than the person who hires or avails of the
services for consideration paid or promised, or partly paid and partly
promised, or under any system of deferred payment, when such services are
availed of with the approval of the first mentioned person but does not include
a person who avails of such services for any commercial purpose;
Explanation.—For the
purposes of this clause, “commercial purpose” does not include use by a person
of goods bought and used by him and services availed by him exclusively for the
purposes of earning his livelihood by means of self-employment;’
15.
The respondent contends that this Court vide Order dated 06.09.2019 passed in
Civil Appeals No.10408-10409 of 2018 has held that he is a ‘consumer’ under the
Act. We reproduce the relevant discussion from the said Order:
‘xxx At this stage, we
are considering whether prima facie there is material available on record to
support and substantiate the plea that the appellant is a consumer within the
meaning of the Act.
The documents referred
to above prima facie do show and support the case of the appellant. The matter
shall of course be gone into and if there are submission(s) to the contrary
from the other side, they will also be considered before arriving at the final
decision. However, the National Commission ought not to have disposed of the matter
at the admission stage.
We, therefore, allow
these appeals, set-aside the orders of the National Commission and restore the
matter back to the file of the National Commission, which shall be decided in
accordance with law.
We have considered the
matter only from the perspective whether prima facie it is evident that the
appellant is a consumer or not. The entire matter has to be gone into and our
prima facie view shall not debar any of the parties to submit material and
prove it to the contrary. The entirety of the matter shall be gone into by the
National Commission on merits at the appropriate stages.
xxx’
(emphasis
supplied)
16.
A bare glance at the Order dated 06.09.2019 passed in Civil Appeals
No.10408-10409 of 2018 makes it clear that this Court had nowhere conclusively
held that the respondent-complainant was a ‘consumer’ under the Act. All that
this Court did was to observe, upon perusing the documents produced before it,
that it was of the prima facie view that the appellant was a ‘consumer’; that
such view was only prima facie; that the other side could submit and show to
the contrary; that the NCDRC ought not to have disposed of the matter at the
admission stage; that the entirety of the matter be gone into, and; that the
NCDRC should decide in accordance with law. Even at that time, the respondent
had not produced a copy of the purported Tripartite Agreement before this
Court. That apart, usage of the term ‘prima facie’ and its import is obvious –
namely, that the NCDRC was left free to decide the issue, after hearing the
parties. The NCDRC in the Impugned Order has offered no reasoning on how the
respondent was a ‘consumer’ under the Act. As per the complainant-respondent,
there was a Tripartite Agreement and an Indemnity Bond between the appellant,
the complainant-respondent and the borrower intervened by a Home Loan
agreement between the appellant and the borrower as also a MoU and an Agreement
for Sale between the complainant-respondent and the borrower. Though the
existence of the Tripartite Agreement was specifically denied by the appellant,
the NCDRC has drawn an adverse inference against the appellant only because a
specific affidavit was not filed before it. Pausing here, we may note that such
statement re denial of the existence of the purported Tripartite Agreement was
made in the appellant’s reply only, in the NCDRC, which was itself supported by
an affidavit and thus, no separate/special affidavit was required in this
behalf. Moreover, and more importantly, the onus is on the person who asserts a
fact to prove it. In the present case, where the respondent himself is a
signatory to the purported Tripartite Agreement, the presumption will be that
he has retained a copy of the same. Thus, non-production of the (complete)
Tripartite Agreement, if at all there was one, would lead to an adverse
inference, and under normal circumstances as also in the present case, against
the complainant-respondent, and not against the appellant. What the complainant
produced before the NCDRC was an unsigned, unstamped and partly blank document,
which he asserts is the Tripartite Agreement between the appellant, the
borrower and him.
17.
Coming to the main merits, even if it is accepted that all the afore- mentioned
agreements were validly there, primarily the Tripartite Agreement, as
contended by the respondent, a conjoint reading of all would lead to the
obvious conclusion that the essential transaction of sale was between the
complainant-respondent and the borrower who was the buyer of the flat of the
complainant-respondent for an agreed consideration of Rs.32,00,000/- (Rupees
Thirty-Two Lakhs). In the specific factual setting, the respondent, having no
privity of contract with the appellant, cannot be termed a ‘consumer’ under the
Act. This alone was sufficient to dismiss the complaint. In Indian
Oil Corporation v Consumer Protection Council, Kerala, (1994) 1 SCC 397, it was
held that as there was no privity of contract between the concerned parties
therein, no ‘deficiency’ would arise and the action (complaint) would not be
maintainable before the concerned Consumer Forum. In Janpriya
Buildestate Pvt. Ltd. v Amit Soni, 2021 SCC OnLine SC 1269, the Court held:
‘25. We have indicated
the scheme of the Act. A claim can succeed in a case of this nature if the
consumer establishes deficiency of service. No doubt, the law giver
contemplates other elements as contemplated in the definition of the word
‘complaint’. The word ‘deficiency’ has been widely worded. Equally so, is the
word ‘service’. A statute of this nature must, indeed, if possible, be
construed in favour of the consumer. However, that is a far cry from holding
that if deficiency is not established, yet the opposite party must bear the
liability which cannot be thrust on its shoulders. We would clarify that by
making it clear that what we intend to say is that when there is no privity
between the complainant and the opposite party, the opposite party could not
become liable under the Act. In other words, if there is no law under which a
person is to provide a service and if it does not fall within the residuary
clause, namely, ‘otherwise’ as defined under the word ‘deficiency’, it is
necessary for a consumer to succeed, that there must be a contract. It is in
that context, we indicated that the existence of an obligation under a contract
is a sine qua non for a consumer to successfully prosecute a case under the
Act.’
(emphasis
supplied)
18.
Ultimately, the loan which was sanctioned by the appellant to the borrower was
only for a sum of Rs.23,40,000/- (Rupees Twenty-Three Lakhs Forty Thousand).
Thus, here also we find that the Impugned Order of the NCDRC holding that the
appellant was bound to pay the entire amount of Rs.31,00,000/- (Rupees
Thirty-One Lakhs) and directing it to pay the balance consideration of
Rs.13,20,000/- (Rupees Thirteen Lakhs Twenty Thousand), appears to be wholly
without basis. In Tata Motors Limited v Antonio Paulo Vaz, (2021) 18
SCC 545, the Court stated:
‘28. The record
establishes the absolute dearth of pleadings by the complainant with regard to
the appellant's role, or special knowledge about the two disputed issues i.e.
that the dealer had represented that the car was new, and in fact sold an old,
used one, or that the undercarriage appeared to be worn out. This, in the
opinion of this Court, was fatal to the complaint. No doubt, the absence of the
dealer or any explanation on its part, resulted in a finding of deficiency on
its part, because the car was in its possession, was a 2009 model and sold in
2011. The findings against the dealer were, in that sense, justified on
demurrer. However, the findings against the appellant, the manufacturer, which
had not sold the car to Vaz, and was not shown to have made the representations
in question, were not justified. The failure of the complainant to plead or
prove the manufacturer's liability could not have been improved upon, through
inferential findings, as it were, which the District, State and National
Commission rendered. The circumstance that a certain kind of argument was
put forward or a defence taken by a party in a given case (like the
appellant, in the case) cannot result in the inference that it was involved or
culpable, in some manner. Special knowledge of the allegations made by the
dealer, and involvement, in an overt or tacit manner, by the appellant, had to
be proved to lay the charge of deficiency of service at its door. In these
circumstances, having regard to the nature of the dealer's relationship with
the appellant, the latter's omissions and acts could not have resulted in the
appellant's liability.’
(emphasis
supplied)
19.
Further, the purported Tripartite Agreement, relied upon by the
complainant-respondent himself, states that the appellant would only pay the
foreclosure amount, out of the total loan amount sanctioned to the borrower, to
ICICI Bank for or on behalf of the borrower towards foreclosure of respondent’s
loan facility with it. No further liability to pay any amount directly to the
complainant-respondent was even envisaged in the Tripartite Agreement. Thus,
arguendo the Agreement for Sale did mention that the loan amount of
Rs.17,80,000/- (Rupees Seventeen Lakhs Eighty Thousand) would be paid to ICICI
Bank towards foreclosure of the respondent’s loan account and the remaining
would be paid to the complainant-respondent by the appellant, it cannot be lost
sight of that such stipulation was only mentioned in the Agreement for Sale,
which is only between the complainant-respondent and the borrower. This is
clear even from that fact that ultimately the amount which was sanctioned by
the appellant to the borrower was only Rs.23,40,000/- (Rupees Twenty-Three
Lakhs Forty Thousand) and not Rs.31,00,000/- (Rupees Thirty-One Lakhs).
20.
In the aforesaid background, we find that the appellant, assuming any liability
in this regard existed at all, taking the respondent’s case at the highest,
could not have been saddled with having to pay more than what was envisaged
under the Home Loan Agreement between the borrower and the appellant. In any
event, the appellant’s liability under the Agreement for sale was restricted
only to satisfying the dues of the complainant-respondent with ICICI Bank which
sum was in fact quantified at Rs.17,87,763/- (Rupees Seventeen Lakhs Eighty
Seven Thousand Seven Hundred Sixty-Three) and, in any view of the matter, could
not have exceeded Rs.23,40,000/- (Rupees Twenty-Three Lakhs Forty Thousand).
Thus, the NCDRC could not have, under any circumstance, taken a view that the
appellant was liable to pay Rs.31,00,000/- (Rupees Thirty-One Lakhs) both to
ICICI Bank as well as to the complainant-respondent, who was not a party to the
ultimate sanction of the loan by the Home Loan Agreement, which was between the
appellant and the borrower. Hence, even the second question is answered in the
negative.
21.
As has been discussed above, it is clear that the complainant- respondent
cannot be said to be a ‘consumer’ under the Act as it had no privity of
contract with the appellant, due regard being had to the totality of the
factual matrix. The purported Tripartite Agreement is dated 09.02.2008. The
cause of action statedly had arisen in/by April/May, 2008. The respondent filed
a complaint under the Act on 16.04.2018. The Act provides as under:
‘24-A. Limitation
period.—(1) The District Forum, the State Commission or the National Commission
shall not admit a complaint unless it is filed within two years from the date
on which the cause of action has arisen. (2) Notwithstanding anything contained
in sub-section (1), a complaint may be entertained after the period specified
in sub-section (1), if the complainant satisfies the District Forum, the State
Commission or the National Commission, as the case may be, that he had sufficient
cause for not filing the complaint within such period:
Provided that no such
complaint shall be entertained unless the National Commission, the State
Commission or the District Forum, as the case may be, records its reasons for
condoning such delay.’
(emphasis
supplied)
22.
Therefore, while the NCDRC is competent to condone any period of delay in
filing a complaint beyond two years from the date when the cause of action
arises, the discretion is circumscribed by twin conditions:
(i) that the
complainant satisfy the NCDRC that he had sufficient cause for not filing his
complaint within such period, and;
(ii) that the NCDRC
record the reasons for condoning such delay. We have perused the ordersheets of
the NCDRC pertaining to the complaint at hand. Neither reasons nor a formal
order condoning delay is forthcoming, either in the ordersheets or in the
Impugned Order. Despite the appellant raising the issue of limitation, the
Impugned Order is silent on the said score. On a probe into the pleadings, it
transpires that the respondent was agitating the dispute before, inter alia,
the Banking Ombudsman, Reserve Bank of India and even the High Court of Orissa
by way of Writ Petition (Civil) No.18429 of 2017. In this backdrop, at the
initial stage(s) of hearing, the respondent ought to have satisfied/attempted
to satisfy the NCDRC on the delay, and the NCDRC ought to have passed a
reasoned order condoning the delay or refusing to condone the delay. Be that as
it may.
23.
Another specific plea by the appellant, that the borrower should have been
joined in the proceedings before the NCDRC has also gone unanswered. If the
borrower had been arrayed as an Opposite Party in the NCDRC, the question of
whether a Tripartite Agreement was duly executed and existed or not, could
perhaps have been answered. It is too late in the day to plug such non-joinder.
In view of the borrower being the purchaser of the flat in question and party
to the MoU, the Agreement for Sale, the Home Loan Agreement and the purported
Tripartite Agreement, he was, at the very least a proper party, but looked at
from the lens where the appellant denied the very existence of the Tripartite
Agreement, the borrower being the sole link between the respondent and the
appellant, the borrower would be a necessary party in the complaint. We need
only refer to the dicta in Udit Narain Singh Malpaharia v Additional
Member Board of Revenue, Bihar, 1963 Supp (1) SCR 676, where the Court
explained:
‘7. To answer the
question raised it would be convenient at the outset to ascertain who are
necessary or proper parties in a proceeding. The law on the subject is well
settled: it is enough if we state the principle. A necessary party is one
without whom no order can be made effectively; a proper party is one in whose
absence an effective order can be made but whose presence is necessary for a
complete and final decision on the question involved in the proceeding.
8. The next question
is, what is the nature of a writ of certiorari. What relief can a petitioner in
such a writ obtain from the Court. Certiorari. lies to remove for the purpose
of quashing the proceedings of inferior courts of record or other persons or
bodies exercising judicial or quasi-judicial functions. It is not necessary for
the purpose of this appeal to notice the distinction between a writ of
certiorari and a writ in the nature of certiorari: in either case the High Court
directs an inferior tribunal or authority to transmit to itself the record of
proceedings pending therein for scrutiny and, if necessary, for quashing the
same. It is well settled law that a certiorari lies only in respect of a
judicial or quasi-judicial act as distinguished from administrative act. The
following classic test laid down by Lord Justice Atkin, as he then
was, in King v. Electricity Commissioners [(1924) 1 KB 171] and followed by
this Court in more than one decision clearly brings out the meaning of the
concept of judicial act:
“Wherever anybody of
persons having legal authority to determine questions affecting the rights of
subjects, and having the duty to act judicially, act in excess of their legal
authority they are subject to the controlling jurisdiction of the King's Bench
Division exercised in these writs.”
Lord Justice Slesser in King v. London County
Council [(1931) 2 KB 215, 243] dissected the concept of judicial act laid down
by Atkin, L.J., into the following heads in his judgment: “Wherever any body of
persons (1) having legal authority (2) to determine questions affecting rights
of subjects and (3) having the duty to act judicially (4) act in excess of
their legal authority — a writ of certiorari may issue”. It will be seen
from the ingredients of judicial act that there must be a duty to act
judicially. A tribunal, therefore, exercising a judicial or quasi-judicial act
cannot decide against the rights of a party without giving him a hearing or an
opportunity to represent his case in the manner known to law. If the provisions
of a particular statute or rules made there under do not provide for it,
principles of natural justice demand it. Any such order made without hearing
the affected parties would be void. As a writ of certiorari will be granted to
remove the record of proceedings of an inferior tribunal or authority
exercising judicial or quasi-judicial acts, ex hypothhesi it follows that the
High Court in exercising its jurisdiction shall also act judicially in
disposing of the proceedings before it. It is implicit in such a proceeding
that a tribunal or authority which is directed to transmit the records must be
a party in the writ proceedings, for, without giving notice to it, the record
of proceedings cannot be brought to the High Court. It is said that in an
appeal against the decree of a subordinate court, the court that passed the
decree need not be made a party and on the same parity of reasoning it is
contended that a tribunal need not also be made a party in a writ proceeding.
But there is an essential distinction between an appeal against a decree of a
subordinate court and a writ of certiorari to quash the order of a tribunal or
authority: in the former, the proceedings are regulated by the Code of
Civil Procedure and the court making the order is directly subordinate to
the appellate court and ordinarily acts within its bounds, though sometimes
wrongly or even illegally, but in the case of the latter, a writ of certiorari
is issued to quash the order of a tribunal which is ordinarily outside the
appellate or revisional jurisdiction of the court and the order is set aside on
the ground that the tribunal or authority acted without or in excess of
jurisdiction. If such a tribunal or authority is not made party to the writ, it
can easily ignore the order of the High Court quashing its order, for, not
being a party, it will not be liable to contempt. In these circumstances
whoever else is a necessary party or not the authority or tribunal is certainly
a necessary party to such a proceeding. In this case, the Board of Revenue and
the Commissioner of Excise were rightly made parties in the writ petition.
9. The next question
is whether the parties whose rights are directly affected are the necessary
parties to a writ petition to quash the order of a tribunal. As we have seen, a
tribunal or authority performs a judicial or quasi- judicial act after hearing
parties. Its order affects the right or rights of one or the other of the
parties before it. In a writ of certiorari the defeated party seeks for the
quashing of the order issued by the tribunal in favour of the successful party.
How can the High Court vacate the said order without the successful party being
before it. Without the presence of the successful party the High Court cannot
issue a substantial order affecting his right. Any or that may be issued behind
the back of such a party can be ignored by the said party, with the result that
the tribunal's order would be quashed but the right vested in that party by the
wrong order of the tribunal would continue to be effective. Such a party,
therefore, is a necessary party and a petition filed for the issue of a writ of
certiorari without making him a party or without impleading him subsequently,
if allowed by the court, would certainly be incompetent. A party whose
interests are directly affected is, therefore, a necessary party.
10. In addition, there
may be parties who may be described as proper parties, that is parties whose
presence is not necessary for making an effective order, but whose persence may
facilitate the settling of all the questions that may be involved in the controversy.
The question of making such a person as a party to a writ proceeding depends
upon the judicial discretion of the High Court in the circumstances of each
case. Either one of the parties to the proceeding may apply for the impleading
of such a parry or such a party may suo motu approach the court for being
impleaded therein.
11. The long
established English practice, which the High Courts in our country have adopted
all along, accepts the said distinction between the necessary and the proper
party in a writ of certiorari. The English practice is recorded in Halsbury's
Laws of England, Vol. 11, 3rd Edn. (Lord Simonds') thus in para 136:
“The notice of motion
or summons must be served on all persons directly affected, and where it
relates to any proceedings in or before a court, and the object is either to
compel the court or an officer thereof to do any act in relation to the
proceedings or to quash them or any order made therein, the notice of
motion or summons must be served on the clerk or registrar of the court, the
other parties to the proceedings, and (where any objection to the conduct of
the judge is to be made) on the judge…”.
In para 140 it is
stated:
“On the hearing of the
summons or motion for an order of mandamus prohibition or certiorari, counsel
in support begins and has a right of reply. Any person who desires to be heard
in opposition, and appears to the court or Judge to be a proper person to be
heard, is to be heard notwithstanding that he has not been served with the
notice or summons, and will be liable to costs in the discretion of the court
or Judge if the order should be made …”. So too, the Rules made by the Patna
High Court require that a, party against whom relief is sought should be named
in the petition. The relevant Rules read thus:
Rule 3. Application
under Article 226 of the Constitution shall be registered as
Miscellaneous Judicial Cases or Criminal Miscellaneous Cases, as the case may
be.
Rule 4. Every
application shall, soon after it is registered, be posted for orders before a
Division Bench as to issue of notice to the respondents. The Court may either
direct notice to issue and pass such interim order as it may deem necessary or
reject the application.
Rule 5. The notice of
the application shall be served on all persons directly affected and on such
other persons as the Court may direct.
Both the English rules
and the rules framed by the Patna High Court lay down that persons who are
directly affected or against whom relief is sought should be named in the
petition, that is all necessary parties should be impleaded in the petition and
notice served on them. In “The Law of Extra-ordinary Legal Remedies” by Ferris,
the procedure in the matter of impleading parties is clearly described at p.
201 thus:
“Those parties whose
action is to be reviewed and who are interested therein and affected thereby,
and in whose possession the record of such action remains, are not only proper,
but necessary parties. It is to such parties that notice to show cause against
the issuance of the writ must be given, and they are the only parties who
may make return, or who may demur. The omission to make parties those officers
whose proceedings it is sought to direct and control, goes to the very right of
the relief sought. But in order that the court may do ample and complete
justice, and render a judgment which will be binding on all persons concerned,
all persons who are parties to the record, or who are interested in maintaining
the regularity of the proceedings of which a review is sought, should be made
parties respondent.”
xxx’
(emphasis
supplied)
24.
Further, the so-called Tripartite Agreement provides for the matter being
resolved by arbitration under the provisions of the (Indian) Arbitration
and Conciliation Act, 1996. In this context, we notice the judgment
in M Hemalatha Devi v B Udayasri, (2024) 4 SCC 255, authored by one of us
(Sudhanshu Dhulia, J.), where this Court held, inter alia:
‘17. The exclusion of
a dispute from arbitration may be express or implied, depending again upon the
nature of the dispute, and a party to a dispute cannot be compelled to resort
to arbitration merely for the reason that it has been provided in the contract,
to which it is a signatory. The arbitrability of a dispute has to be examined when
one of the parties seeks redressal under a welfare legislation, in spite of
being a signatory to an arbitration agreement. “The Consumer Protection Act” is
definitely a piece of welfare legislation with the primary purpose of
protecting the interest of a consumer. Consumer disputes are assigned by the
legislature to public fora, as a measure of public policy. Therefore, by
necessary implication such disputes will fall in the category of non-arbitrable
disputes, and these disputes should be kept away from a private fora such as
“arbitration”, unless both the parties willingly opt for arbitration over the
remedy before public fora.
xxx
22. The question,
however, is of election, or of choice, and not of which party had approached
the court first.
More importantly it
would be the nature of the dispute, which would determine the forum for its
redressal. The law gives this choice to the consumer to either avail a remedy
under the Consumer Protection Act, by filing a complaint before the
judicial authority, or go for arbitration. This option is not available to the
builder, as they are not “consumers”, under the 2019 Act. It is the respondent
here Smt B. Udayasri who has to make a “choice” between submitting before the
private fora i.e. the Arbitration Tribunal or to make a complaint before the
Consumer Forum, which is a public fora. She has chosen to go to the latter. Her
reply before the Telangana High Court on the Section 11 application
of the builder is not her submission to the arbitration process. In her reply,
she informs the High Court of the complaint made by her as a consumer before
the District Consumer Forum, which is a “judicial authority” and
hence Section 8 of the Arbitration Act, 1996 would come into play and
not an application under Section 11 of the Arbitration Act, 1996.
xxx
35. It was held that
the 1986 Act was enacted to provide better protection of the interest of
consumers and for providing a redressal mechanism, which is cheaper, easier,
expeditious and effective. For this purpose, various quasi-judicial forums were
set up at district, State and national level with a wider range of powers
vested in these Judicial Authorities. These Judicial Authorities were vested
with the powers to give relief of a specific nature and to award compensation
to the consumer wherever it was felt necessary to impose penalty for non-
compliance of their orders, and the judicial authorities were vested with such
powers. Now compare this with the power of the arbitrator. An arbitrator does
not have the power to impose a penalty. This is also one of the essential
differences between the two forums. It was finally held that the provisions
given under the 1986 Act were in addition to, and not in derogation to, any
other provisions or any other law for the time being in force. xxx
38. This Court in a
series of decisions, while considering both the provisions in the Consumer
Protection Act, 1986 and the Arbitration Act, 1996, has held that
the Consumer Protection Act being a special and beneficial legislation,
the remedies provided therein are special remedies and a consumer cannot be
deprived of them should he choose to avail such a remedy, in spite of an
arbitration agreement between the parties. It is a remedy provided to the
consumer where the consumer finds a defect in either goods or services provided
to him and therefore seeks a redressal of his grievances before the consumer
forum provided to him by the legislature.
xxx
47. This Court
ultimately held that the main purpose of bringing an amendment inter alia in Sections
8 and 11 of the Arbitration Act, 1996 was to minimise the scope
of judicial authority, which was to refuse reference to arbitration only on the
ground when it prima facie finds that there was no valid arbitration agreement.
The legislative intent for the amendment was confined to limiting judicial
intervention, and once the Court finds that there is a valid arbitration
agreement, it has no option but to refer the matter for arbitration. But this
would not mean that where the matter itself is non-arbitrable, or is covered by
a special legislation such as the Consumer Protection Act, it still has to
be referred for arbitration. In para 59 of Emaar-3 [Emaar MGF Land
Ltd. v Aftab Singh, (2019) 12 SCC 751: (2018) 5 SCC (Civ) 652], it was stated
as under: (SCC pp. 781-82)
“59. The amendment
in Section 8 cannot be given such expansive meaning and intent so as
to inundate entire regime of special legislations where such disputes were held
to be not arbitrable.
Something which
legislation never intended cannot be accepted as side wind to override the
settled law. The submission of the petitioner that after the amendment the law
as laid down by this Court in National Seeds Corpn. [National
Seeds Corpn. Ltd. v M. Madhusudhan Reddy, (2012) 2 SCC 506: (2012) 1 SCC (Civ)
908] is no more a good law cannot be accepted. The words ‘notwithstanding any
judgment, decree or order of the Supreme Court or any court’ were meant only to
those precedents where it was laid down that the judicial authority while
making reference under Section 8 shall be entitled to look into
various facets of the arbitration agreement, subject-matter of
the arbitration whether the claim is alive or dead, whether the
arbitration agreement is null and void.
The words added
in Section 8 cannot be meant for any other meaning.” Emaar-3
[Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751: (2018) 5 SCC (Civ) 652]
though ends with a caveat, where it leaves the option with the party who may
have an option to choose between a public or private forum, may consciously
choose to go for private fora. This is what it says: (SCC p. 783, para 63) “63.
We may, however, hasten to add that in the event a person entitled to seek an
additional special remedy provided under the statutes does not opt for the
additional/special remedy and he is a party to an arbitration agreement, there
is no inhibition in disputes being proceeded in arbitration. It is only the
case where specific/special remedies are provided for and which are opted by an
aggrieved person that judicial authority can refuse to relegate the parties to
the arbitration.”’
(emphasis
supplied)
25.
As vivid from Emaar MGF Land Ltd. v Aftab Singh, (2019) 12 SCC 751
and M Hemalatha Devi (supra), even in a consumer dispute under the Act, or
for that matter, the Consumer Protection Act, 2019, arbitration, if
provided for under the relevant agreement/document, can be opted for/resorted
to, however, at the exclusive choice of the ‘consumer’ alone. As the appellant
is not a ‘consumer’ in terms of the Act and the existence of the Tripartite
Agreement is doubtful, we need not dwell further hereon.
26.
On an overall circumspection of the facts and circumstances of the case coupled
with a survey of the precedents, we find that the Impugned Order cannot be
sustained. Accordingly, in view of the discussions in the preceding paragraphs,
the Impugned Order is set aside.
27.
The appeal is allowed. Parties to bear their own costs.
28.
However, this Judgment shall not impact proceedings, if any, inter-se borrower
and respondent. This shall not ipso facto relax/extend any period of limitation
for resort to lawful remedies, as may be applicable.
29.
In view of the appeal being allowed, no order is required to be passed in I.A.
No.117048/2023 and I.A. No.188226/2023.
30.
I.A. No.166893/2023 is the respondent’s application seeking permission to
appear and argue in person; as we have already heard him, hence this
application is formally allowed.
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