Read Time: 15 minutes

Synopsis

The Supreme Court has said when there is no privity of contract between the parties concerned, no ‘deficiency’ would arise and the filing of a complaint would not be maintainable before the Consumer Forum.

A bench of Justices Sudhanshu Dhulia and Ahsanuddin Amanullah also referred to Section 24A of the Consumer Protection Act, to point out that the National Consumer Disputes Redressal Commission is competent to condone any period of delay in filing a complaint beyond two years from the date when the cause of action arises.

However, 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, the court said.

Citing Emaar MGF Land Ltd Vs Aftab Singh, (2019) and M Hemalatha Devi Vs B Udayasri, (2024), the bench also said, 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.   

The court allowed an appeal filed by M/s Citicorp Finance (India) Ltd against the NCDRC order of January 19, 2023.

The NCDRC allowed the complaint filed by the respondent, Snehasis Nanda, and directed the appellant to refund Rs 13,20,000 with interest at the rate of 12% per annum, along with Rs 1,00,000 as litigation cost.

In the case, the appellant denied the existence of a tripartite agreement, which formed the basis of the consumer complaint with regard to purchase of a flat at Navi Mumbai in 2006. 

The court noted that such statement with regard to 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," the bench said. 

In the present case, where the respondent himself was 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, the bench said. 

The court pointed out that what the complainant produced before the NCDRC was an unsigned, unstamped and partly blank document, which he asserted was the tripartite agreement between the appellant, the borrower and him.

The court further noted the essential transaction of sale was between the complainant-respondent and the borrower, Mubarak Vahid Patel, 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," the bench said. 

Ultimately, the loan which was sanctioned by the appellant to the borrower was only for a sum of Rs 23,40,000. Thus, here also, the court found that the impugned order of the NCDRC holding that the appellant was bound to pay the entire amount of Rs 31,00,000 and directing it to pay the balance consideration of Rs 13,20,000 appears to be wholly without basis, the bench said.

"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," the bench said. 

In any event, the court said, the appellant’s liability under the Agreement for sale was restricted only to satisfy 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. 

"Thus, 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," the court said.        

The court, therefore, held that it was clear that the complainant respondent could not 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 bench further pointed out the purported tripartite agreement was dated February 09, 2008. The cause of action statedly had arisen in/by April/May, 2008. The respondent filed a complaint under the Act on April 16, 2018.  

"We have perused the order sheets of the NCDRC pertaining to the complaint at hand. 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," the bench said.

On a probe into the pleadings, the court noted, it transpired 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. 

In this backdrop, at the initial stage of hearing, the respondent ought to have satisfied or 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, the court said.

The bench also noted 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 had 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, the bench said.  

Further, the court pointed out that the so-called tripartite agreement provided for the matter being resolved by arbitration under the provisions of the (Indian) Arbitration and Conciliation Act, 1996.  

"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," the bench said. 

The court thus declared the impugned order could not be sustained and was therefore set aside.

The court also clarified that the present judgment should not impact proceedings, if any, inter-se borrower and respondent. This should not ipso facto relax/extend any period of limitation for resort to lawful remedies, as may be applicable, court ordered.

Case Title: M/s Citicorp Finance (India) Limited Vs Snehasis Nand