Summary
The Supreme Court set aside an NCDRC order directing a housing finance company to pay a flat seller Rs.13,20,000 as the unpaid balance of sale consideration, holding that the seller had no privity of contract with the financier, whose loan was to the buyer, and so was not a 'consumer' under the Consumer Protection Act, 1986; the burden of proving the alleged tripartite agreement lay on the complainant; the financier's liability could in no case exceed the loan it sanctioned; the complaint was filed about ten years after the cause of action without any order condoning delay; and the buyer was a necessary party who had not been joined.
Issues
- Whether the complainant-seller was a 'consumer' of the appellant-financier within Section 2(1)(d) of the Consumer Protection Act, 1986, in the absence of privity of contract.
- Whether this Court's earlier order dated 06.09.2019 remanding the complaint had conclusively held the complainant to be a consumer.
- On whom lay the burden of proving the alleged tripartite agreement, and whether the NCDRC could draw an adverse inference against the financier for not filing a separate affidavit denying it.
- Whether any liability rested on the financier to pay the seller the entire balance consideration of Rs.31,00,000 when the loan sanctioned to the buyer was only Rs.23,40,000.
- Whether the complaint, filed about ten years after the cause of action, could be entertained under Section 24A without a reasoned order condoning delay.
- Whether the borrower-buyer was a necessary party to the complaint.
- The effect of an arbitration clause in the purported tripartite agreement on a consumer complaint.
Provisions considered
- Section 2(1)(d), Consumer Protection Act, 1986On a conjoint reading of the MoU, the agreement for sale, the home loan agreement and even the purported tripartite agreement, the essential sale transaction was between the seller and the buyer; the seller, having no privity of contract with the financier, could not be a 'consumer', which alone sufficed to dismiss the complaint (Indian Oil Corporation v. Consumer Protection Council; Janpriya Buildestate v. Amit Soni). (¶¶ 14, 16, 17, 21)
- Section 24A, Consumer Protection Act, 1986A complaint must be filed within two years of the cause of action; the NCDRC may condone delay only if the complainant satisfies it that there was sufficient cause and it records its reasons. Neither a formal order nor reasons condoning delay appeared in the ordersheets or the impugned order, although the objection had been raised. (¶¶ 21, 22)
- Arbitration clause in a contract vis-a-vis the consumer remedy, Arbitration and Conciliation Act, 1996Following Emaar MGF Land v. Aftab Singh and M. Hemalatha Devi v. B. Udayasri, arbitration provided for in an agreement may be resorted to in a consumer dispute under the 1986 or 2019 Act only at the exclusive choice of the consumer; the point needed no further examination because the complainant was not a consumer and the tripartite agreement's existence was doubtful. (¶¶ 24, 25)
Held
- The order of 06.09.2019 only recorded a prima facie view, on the documents then produced, that the complainant appeared to be a consumer, expressly left the other side free to show the contrary and remanded the matter for decision on merits; it was not a conclusive finding, and the NCDRC's order offered no reasoning of its own on the point. (¶¶ 15, 16)
- The onus is on the party asserting a fact to prove it. A denial of the tripartite agreement in a reply that was itself supported by affidavit needed no separate affidavit; since the complainant was himself a signatory and would be presumed to have kept a copy, non-production of the complete agreement warranted an adverse inference against the complainant, not against the financier. What was produced was an unsigned, unstamped and partly blank document. (¶ 16)
- Even taking all the agreements as valid, the sale was between the seller and the buyer; with no privity of contract with the financier, the seller was not a 'consumer' under the 1986 Act, and where there is no privity no 'deficiency' can arise and the complaint is not maintainable. (¶¶ 17, 21)
- The loan sanctioned to the buyer was Rs.23,40,000, and the tripartite agreement relied on by the seller itself contemplated only payment of the foreclosure amount to ICICI Bank on the buyer's behalf; a stipulation in the agreement for sale, to which the financier was not a party, that the financier would pay the remainder to the seller could not bind it. Taking the seller's case at its highest, the financier's liability was confined to the ICICI dues (Rs.17,87,763) and could never exceed the sanctioned loan, so the direction to pay Rs.13,20,000 as the balance of Rs.31,00,000 was wholly without basis (Tata Motors v. Antonio Paulo Vaz). (¶¶ 18, 19, 20)
- The complainant, who had meanwhile been agitating the dispute before the Banking Ombudsman, the Reserve Bank of India and the Orissa High Court, ought to have satisfied the NCDRC on the delay at the initial stage, and the NCDRC ought to have passed a reasoned order condoning or refusing to condone it; the impugned order was silent despite the limitation objection. (¶¶ 21, 22)
- The buyer, being party to the MoU, the agreement for sale, the home loan agreement and the purported tripartite agreement, and the sole link between the seller and the financier which denied the agreement's existence, was at the least a proper party and in truth a necessary party within Udit Narain Singh Malpaharia; the non-joinder was too late to cure. (¶ 23)
Result
Appeal allowed; impugned NCDRC order dated 19.01.2023 set aside; parties to bear their own costs; the judgment not to affect any proceedings between the borrower and the respondent nor extend any period of limitation; the respondent's application to appear in person formally allowed and no orders needed on the other I.A.s.