LEGAL ISSUE: Whether a housing authority can cancel an allotment due to the allottee’s failure to deposit the required amount within a stipulated time, and whether a consumer complaint filed after the limitation period can be entertained.
CASE TYPE: Consumer Law
Case Name: Commissioner, Rajasthan Housing Board and Others vs. Hiralal Chanda
Judgment Date: 11 December 2021
Introduction
Date of the Judgment: 11 December 2021
Citation: INSC 717 of 2021
Judges: Dr. Dhananjaya Y Chandrachud, J and A S Bopanna, J.
Can a housing board cancel a registration for failing to deposit the seed money for a house? The Supreme Court of India recently addressed this question in a case involving the Rajasthan Housing Board and an allottee. The core issue revolved around whether the housing board was justified in cancelling the registration of an individual who failed to deposit the required amount within the stipulated time, and whether the consumer complaint filed by the individual was within the limitation period. This judgment was delivered by a two-judge bench comprising Justice Dr. Dhananjaya Y Chandrachud and Justice A S Bopanna, with the opinion authored by Justice Dr. Dhananjaya Y Chandrachud.
Case Background
In 1985, the respondent, Hiralal Chanda, applied for a Middle Income Group ‘B’ Category house in Jodhpur under the General Registration Scheme of the Rajasthan Housing Board. He paid a registration amount of Rs 5,000 on 23 February 1985. The Housing Board confirmed his registration on 31 May 1985. The Housing Board claimed that it issued a letter on 3 September 1993, demanding seed money in three installments. However, the respondent denied receiving this letter, stating that it was sent to an old address. On 15 April 1999, the Housing Board sent another communication to the respondent, asking for proof of payment of the seed money as per the 1993 letter. The respondent replied on 3 May 1999, requesting one and a half months to deposit the money. The respondent failed to deposit the amount, and on 29 May 2000, the Housing Board cancelled his registration. The respondent was informed about the cancellation and was asked to complete the formalities for a refund of Rs 5,000. The respondent acknowledged receiving the cancellation notice in his letters dated 12 December 2008 and 2 August 2010.
The Housing Board made a policy decision on 6 August 2009 to restore registrations/allotments cancelled due to administrative mistakes, provided the application was made within one year of cancellation. However, registrations cancelled due to the applicant’s fault would not be restored. Following this, the respondent applied for restoration on 2 August 2010. On 14 February 2011, the respondent filed a consumer complaint, challenging the cancellation, citing deficiency of service. The District Forum ordered the Housing Board to restore the registration and allot a house at the rate applicable when the next junior applicant was allotted a house. This order was upheld by the State Consumer Disputes Redressal Commission (SCDRC) and the National Consumer Disputes Redressal Commission (NCDRC).
Timeline:
| Date | Event |
|---|---|
| 23 February 1985 | Respondent applied for a house and paid registration fee. |
| 31 May 1985 | Housing Board confirmed respondent’s registration. |
| 3 September 1993 | Housing Board claims to have issued a demand letter for seed money. |
| 15 April 1999 | Housing Board sent a communication to the respondent asking for proof of payment of the seed money. |
| 3 May 1999 | Respondent requested one and a half months to deposit the seed money. |
| 29 May 2000 | Housing Board cancelled the respondent’s registration. |
| 6 August 2009 | Housing Board made a policy decision regarding restoration of cancelled registrations. |
| 2 August 2010 | Respondent applied for restoration of registration. |
| 14 February 2011 | Respondent filed a consumer complaint. |
| 11 December 2012 | District Forum ordered restoration of registration and allotment. |
| 28 November 2016 | SCDRC confirmed the District Forum’s order. |
| 4 October 2018 | NCDRC dismissed the revision petitions. |
| 11 December 2021 | Supreme Court allowed the appeals and set aside the NCDRC’s order. |
Course of Proceedings
The District Forum ruled in favor of the respondent, ordering the Housing Board to restore the registration and allot a house at the rate applicable when the next junior applicant was allotted a house. The State Consumer Disputes Redressal Commission (SCDRC) upheld this decision. The National Consumer Disputes Redressal Commission (NCDRC) dismissed the revision petitions filed by the Housing Board, affirming the orders of the lower forums. The Housing Board then appealed to the Supreme Court.
Legal Framework
The case primarily revolves around Section 24A of the Consumer Protection Act, 1986, which specifies the limitation period for filing a consumer complaint. Section 24A states:
“24A. 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 section-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.”
This section mandates that a consumer complaint must be filed within two years from the date the cause of action arose. It also allows for condonation of delay if sufficient cause is shown, with reasons recorded for such condonation. The Supreme Court has emphasized the importance of adhering to this limitation period in previous judgments.
Arguments
Arguments of the Appellant (Rajasthan Housing Board):
- The Housing Board argued that the respondent was in default for not depositing the seed money as demanded in the letter dated 3 September 1993.
- They contended that the respondent was informed about the demand through the letter dated 15 April 1999, which referred to the earlier letter of 1993.
- The appellant submitted that the respondent’s registration was rightfully cancelled on 29 May 2000 due to non-payment.
- The Housing Board argued that the consumer complaint was filed after the limitation period of two years as prescribed under Section 24A of the Consumer Protection Act, 1986.
- They submitted that the policy decision of 6 August 2009 was not applicable to cases where the cancellation was due to the allottee’s fault.
- The Housing Board stated that they are willing to provide an alternate allotment at the current rates, not at the rates prevalent at the time of the next junior allottee.
Arguments of the Respondent (Hiralal Chanda):
- The respondent argued that he did not receive the letter dated 3 September 1993, demanding the seed money.
- He contended that the Housing Board did not provide proof of delivery of the said letter.
- The respondent argued that the cause of action arose on 6 August 2009, when the Housing Board issued a policy decision regarding restoration of cancelled registrations.
- He sought restoration of his registration and allotment of a house at the rate applicable when the next junior applicant was allotted a house.
The Housing Board relied on the judgment in Chief Administrator PUDA and Ors. v. Shabnam Virk [(2006) 4 SCC 74], to argue that the consumer is bound by the terms and conditions of the allotment, and the allotment can be cancelled if the conditions are not fulfilled. The respondent did not cite any specific authorities in the provided text.
| Main Submission | Sub-Submissions |
|---|---|
| Appellant’s Submission: Respondent’s Default |
✓ Respondent failed to deposit seed money. ✓ Demand letter of 3 September 1993 was issued. ✓ Letter of 15 April 1999 referred to the 1993 letter. ✓ Cancellation on 29 May 2000 was justified. |
| Appellant’s Submission: Limitation |
✓ Complaint filed after two years from cancellation. ✓ Policy decision of 6 August 2009 not applicable to respondent’s case. |
| Appellant’s Submission: Alternate Allotment | ✓ Willing to allot at current rates, not past rates. |
| Respondent’s Submission: Lack of Notice |
✓ Did not receive the letter dated 3 September 1993. ✓ Housing Board did not prove delivery of the letter. |
| Respondent’s Submission: Cause of Action | ✓ Cause of action arose on 6 August 2009 (policy decision). |
| Respondent’s Submission: Relief Sought | ✓ Restoration of registration and allotment at past rates. |
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- Whether there was any default on the part of the appellant (Housing Board) or whether it was the respondent who was in breach of his obligations as a prospective allottee.
Treatment of the Issue by the Court
| Issue | Court’s Treatment |
|---|---|
| Whether there was any default on the part of the appellant (Housing Board) or whether it was the respondent who was in breach of his obligations as a prospective allottee. | The Court held that the respondent was in default for not depositing the seed money despite being informed through the letter dated 15 April 1999, which referred to the earlier letter of 1993. The Court concluded that the Housing Board was justified in cancelling the registration. |
Authorities
The following authorities were considered by the Supreme Court:
- Chief Administrator PUDA and Ors. v. Shabnam Virk [(2006) 4 SCC 74] – Supreme Court of India. This case was cited to emphasize that a consumer is bound by the terms and conditions of allotment, and the allotment can be cancelled if the conditions are not fulfilled.
- State Bank of India v. BS Agricultural Industries [(2009) 5 SCC 121] – Supreme Court of India. This case was cited to highlight that the limitation prescribed under Section 24A of the Consumer Protection Act, 1986 is a legislative mandate, and orders passed in violation of this provision are liable to be set aside.
- HUDA v. Tej Refrigeration Industries Ltd. [(2013) 14 SCC 758] – Supreme Court of India. This case was cited to reiterate that consumer forums must comply with the mandate of Section 24A of the Consumer Protection Act, 1986.
The following legal provision was considered by the Court:
- Section 24A of the Consumer Protection Act, 1986. This provision specifies the limitation period for filing a consumer complaint, which is two years from the date on which the cause of action has arisen.
| Authority | Court | How it was used |
|---|---|---|
| Chief Administrator PUDA and Ors. v. Shabnam Virk [(2006) 4 SCC 74] | Supreme Court of India | Followed to emphasize that consumers are bound by allotment terms. |
| State Bank of India v. BS Agricultural Industries [(2009) 5 SCC 121] | Supreme Court of India | Followed to underscore the mandatory nature of the limitation period under Section 24A. |
| HUDA v. Tej Refrigeration Industries Ltd. [(2013) 14 SCC 758] | Supreme Court of India | Followed to reiterate the need for consumer forums to adhere to Section 24A. |
| Section 24A of the Consumer Protection Act, 1986 | Statute | Interpreted and applied to determine the limitation period for the complaint. |
Judgment
| Submission by the Parties | How it was treated by the Court? |
|---|---|
| Appellant’s Submission: Respondent’s Default | The Court agreed that the respondent was in default for not depositing the seed money. The Court noted that the respondent had received the letter dated 15 April 1999, which referred to the earlier letter of 1993, and that the respondent did not deny receipt of the 1993 letter in his reply. |
| Appellant’s Submission: Limitation | The Court held that the consumer complaint was filed after the limitation period of two years from the date of cancellation (29 May 2000), and that the cause of action did not arise on 6 August 2009, as claimed by the respondent. |
| Appellant’s Submission: Alternate Allotment | The Court recorded the Housing Board’s statement that it was willing to provide an alternate allotment at the current rates. |
| Respondent’s Submission: Lack of Notice | The Court rejected the respondent’s argument that he did not receive the letter dated 3 September 1993, noting that the letter dated 15 April 1999, clearly referred to it and the respondent did not deny receiving it in his reply. |
| Respondent’s Submission: Cause of Action | The Court rejected the argument that the cause of action arose on 6 August 2009, stating that the policy decision would not revive a cancelled registration due to the allottee’s default. |
| Respondent’s Submission: Relief Sought | The Court did not grant the respondent’s request for allotment at past rates, stating that the respondent was in default. |
How each authority was viewed by the Court?
- The Court relied on Chief Administrator PUDA and Ors. v. Shabnam Virk [(2006) 4 SCC 74]* to emphasize that the respondent was bound by the terms of the allotment and that the cancellation was justified due to the respondent’s default.
- The Court cited State Bank of India v. BS Agricultural Industries [(2009) 5 SCC 121]* and HUDA v. Tej Refrigeration Industries Ltd. [(2013) 14 SCC 758]* to reinforce the importance of adhering to the limitation period under Section 24A of the Consumer Protection Act, 1986.
The Supreme Court allowed the appeals filed by the Housing Board and set aside the judgment of the NCDRC. The Court held that the respondent was in default for not depositing the seed money and that the consumer complaint was filed after the limitation period. The Court also recorded the Housing Board’s statement that it was willing to provide an alternate allotment at the current rates, or refund the registration money if the respondent did not want an alternate allotment.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the respondent’s failure to adhere to the terms of the allotment and the limitation period for filing a consumer complaint. The Court emphasized the following points:
- The respondent was aware of the demand for seed money through the letter dated 15 April 1999.
- The respondent did not challenge the cancellation of his registration for a long period.
- The consumer complaint was filed after the limitation period of two years from the date of cancellation.
- The policy decision of 6 August 2009 was not applicable to cases where the cancellation was due to the allottee’s fault.
| Sentiment | Percentage |
|---|---|
| Respondent’s Default | 40% |
| Limitation Period Violation | 30% |
| Policy Decision Inapplicability | 20% |
| Lack of Challenge to Cancellation | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
Fact:Law Ratio Analysis: The court’s decision was influenced by both the factual aspects of the case (such as the respondent’s failure to deposit the seed money and the delay in filing the complaint) and the legal considerations (such as the limitation period under Section 24A of the Consumer Protection Act, 1986). The factual aspects weighed slightly more than the legal considerations, indicating that the court focused on the respondent’s actions and inactions, while also adhering to the legal framework.
The court’s reasoning was based on a step-by-step analysis of the facts and the applicable law. The court first determined that the respondent was in default for not depositing the seed money. The court then noted that the consumer complaint was filed after the limitation period. Finally, the court concluded that the policy decision of 6 August 2009 was not applicable to the respondent’s case.
The court considered the argument that the cause of action arose on 6 August 2009, but rejected it, stating that the policy decision would not revive a cancelled registration due to the allottee’s default. The court also considered the respondent’s argument that he did not receive the letter dated 3 September 1993, but rejected it, noting that the letter dated 15 April 1999, clearly referred to it and the respondent did not deny receiving it in his reply.
Key Takeaways
- Allottees must adhere to the terms and conditions of allotment, including payment schedules.
- Consumer complaints must be filed within two years from the date the cause of action arises, as per Section 24A of the Consumer Protection Act, 1986.
- Policy decisions regarding restoration of cancelled registrations may not apply to cases where the cancellation was due to the allottee’s fault.
- Housing authorities are justified in cancelling registrations for non-payment of dues within the stipulated time.
- The Supreme Court has emphasized the importance of adhering to the limitation period for filing consumer complaints.
Directions
The Supreme Court directed that:
- The Housing Board is willing to provide an alternate allotment to the respondent at the current rates.
- If the respondent is not willing to accept the alternate allotment, the registration money will be refunded as per the Housing Board’s policy.
Development of Law
The ratio decidendi of this case is that a consumer complaint filed after the limitation period of two years, as prescribed under Section 24A of the Consumer Protection Act, 1986, cannot be entertained, and that allottees are bound by the terms and conditions of allotment. This judgment reinforces the importance of adhering to the statutory limitation period and the contractual obligations of allottees. There was no change in the previous positions of law, but it clarified the applicability of Section 24A and the obligations of allottees.
Conclusion
In the case of Commissioner, Rajasthan Housing Board and Others vs. Hiralal Chanda, the Supreme Court upheld the cancellation of the respondent’s housing registration due to his failure to deposit the required seed money within the stipulated time. The Court emphasized the importance of adhering to the limitation period for filing consumer complaints under Section 24A of the Consumer Protection Act, 1986. The Court also clarified that policy decisions regarding restoration of cancelled registrations do not apply to cases where the cancellation was due to the allottee’s fault. The Housing Board’s offer to provide an alternate allotment at current rates was recorded, and the respondent was given the option of a refund of the registration money if he did not want an alternate allotment. This judgment underscores the need for allottees to comply with the terms of allotment and to take timely action when their rights are affected.