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Synopsis

The Supreme Court has said limitation, while important as a feature of law, is not meant to defeat a substantive right, as it allowed a plea against the National Consumer Disputes Redressal Commission’s order dismissing the matter on the ground of limitation.

"The NCDRC ought to have taken a holistic view of the situation and then proceeded to examine whether the relief as claimed may be granted in favour of the appellants", a bench of Justices Sanjay Karol and Manmohan said.

The court noted that Section 24-A of the Consumer Protection Act prescribes the limitation period to be two years. The proviso thereto also provides for the possibility of the commission condoning delays beyond this point, but when doing so, it is to record its reasons, it said.

Acting on an appeal filed by Pushpa Jagannath Shetty and others against M/s Sahaj Ankur Realtors and others, the bench said, "In our view, the stand of the NCDRC defeats the ends of justice."

In the case, the bench noted, the initial cause of action indeed arose in July 2015 after the six-month period expired. However, the court cannot be amiss to the fact that the parties had been pursuing the matter with the respondent through letters, meetings, and even with the escrow agent, who, in turn, engaged in his own back and forth with the owner before finally releasing the flats in escrow in favour of the appellants, court said.

It noted that the efforts, in earnestness, to secure possession of the flats could not be discounted in order to compute the applicable limitation.

The respondents here were a partnership firm that owned the building named "Madhav Baug" in the village of Andheri, Mumbai. The complainants were tenants in two flats on the ground floor in Building-A. The former decided to demolish the building and construct a new one and, in furtherance thereof, executed a Permanent Alternate Accommodation Agreement on September 20, 2013, allotting Flat No. 801, with a carpet area of 700 sq ft, on the 8th floor of the B-Wing of the new building.

The agreement provided 24 months from the date of the issue of the commencement certificate, along with a grace period of six months, to complete such construction. The proposed redevelopment, however, could not be completed within the stipulated time. As such, on January 10, 2015, the respondents executed an “Indemnity-cum-Undertaking” to allot two flats, numbered 301 and 302, having carpet areas of 650 sq ft and 667 sq ft in B-Wing, free of cost, if necessary approvals could not be obtained within six months.

This agreement further provided that if the respondents failed to give either of the two options to the appellants, they would be entitled to compensation for 1,317 sq ft of carpet area at market value plus 25% additional value thereon.

Vacant possession of the old flats was handed over in December 2014, and necessary monetary consideration for alternative accommodation stood transferred to the appellants within time. The contractual period of 24 months expired in December 2016.

The respondents continued payment of rent for the alternate accommodation of the appellants at the applicable rates till January 2019. The balance of the dislocation compensation, i.e., Rs 2,50,000, remained pending thereafter. Several letters were exchanged, and meetings were held between the parties.

The appellants wrote a letter on August 13, 2018, to Mahesh Jani, the solicitor and escrow agent, asking him to hand over the papers of the flats in escrow to them. In a meeting held on September 26, 2018, the respondents were informed by Jani that if the approved layout plan was not produced, the flats put in escrow could be released to the appellants on October 11, 2018.

Further time was sought on two occasions, but the flats in escrow were finally released to the appellants on December 17, 2018.

The instant complaint was filed on February 6, 2019, seeking a direction to the opposite party to pay Rs 4,59,96,225 as market value and 25% compensation for the flats, along with further interest thereon at the rate of 12% per annum till payment or realisation from the date of filing of the complaint.

Before the apex court, the question that arose for consideration pertained to the calculation of limitation in preferring the complaint case.

The impugned order noted that six months were required to be counted from the date of the Indemnity-cum-Undertaking, i.e., January 10, 2015.

The flats in escrow were to be given requisite permissions, which could not be obtained within a period of six months; hence, the cause of action arose on July 10, 2015. The complaint case was filed on February 19, 2019, and, as such, was barred by limitation.

The application before the commission was filed on February 6, 2019; hence, the matter would be governed by the Consumer Protection Act, 1986, the bench said.

"The parties have agreed to keep the papers in escrow with a third party. In our view, this was done.for the purpose of property implementation of the terms of the agreement. It is not in dispute, as is also evident from the record, that specific talks/parlays were ongoing inter se the parties and the escrow, about the implementation of the terms of the agreement," the bench noted.

The court further found that only in the absence of any response did the appellants set up their claims in terms of the complaint preferred before the NCDRC on February 6, 2019.

Even before the said forum, the instant respondents committed default in filing their response and, as is evident from the order of July 1, 2019, were subjected to payment of costs quantified at Rs 25,000. The focus of the respondents herein was to get the complaint dismissed on merits, the bench said.

"It appears that the NCDRC has dismissed it on the grounds of limitation. In our considered view, considering the consistent efforts back and forth, inter se the parties, with regard to the implementation of the terms of the contract, there was no question of dismissal of the complaint on the issue of limitation. It was a continuing cause of action, and, only when escrow expressed helplessness that the complainant was forced to file the complaint," the bench said.

The court said limitation, while important as a feature of law, is not meant to defeat a substantive right. "Efforts, in earnestness, to secure possession of the flats cannot be discounted in order to compute the applicable limitation. As such, we hold the NCDRC to have committed an error on the face of the record," the bench said.

The court quashed and set aside the impugned order by holding that the complaint filed by the appellant was within time and finding the view taken by the NCDRC to be ex facie erroneous.

The bench restored the complaint and directed the parties to appear before the NCDRC on March 17, 2025. The court asked that the matter be decided expeditiously and preferably within six months.

Case Title: Pushpa Jagannath Shetty & Ors. Versus M/s. Sahaj Ankur Realtors & Ors.