Supreme Court Upholds Consumer Rights in Property Dispute: Bharati Bhattacharjee vs. Quazi Md. Maksuduzzaman (2022)

Date of the Judgment: March 23, 2022

Citation: (2022) INSC 227

Judges: Dinesh Maheshwari, J. and Aniruddha Bose, J.

Can a seller refuse to execute a sale deed after receiving a substantial amount of the sale consideration? The Supreme Court of India recently addressed this question in a case involving a property dispute, clarifying the rights of consumers and the interpretation of limitation periods under the Consumer Protection Act. This judgment emphasizes the importance of fulfilling contractual obligations and protects consumers from unfair practices by sellers. The bench comprised of Justice Dinesh Maheshwari and Justice Aniruddha Bose, with the judgment authored by Justice Dinesh Maheshwari.

Case Background

The case involves appeals against a judgment by the National Consumer Disputes Redressal Commission (NCDRC), which had ruled in favor of the complainants (respondents) who had filed cases against the appellant for not executing the sale deed despite receiving substantial payments. The complainants had agreements with the appellant for the purchase of flats but the sale deeds were not executed.

In Complaint Case No. 111 of 2013, the complainants stated that the total sale consideration was Rs. 9,00,000, and they had paid Rs. 5,79,000. In Complaint Case No. 112 of 2013, the complainants stated that the total sale consideration was Rs. 7,00,000, and they had paid Rs. 4,92,000. The appellant claimed that there were two separate agreements in each case, with a higher total sale consideration. The District Forum ruled in favor of the complainants, directing the appellant to execute the sale deed. However, the State Commission reversed this decision, agreeing with the appellant’s claim of two agreements. The National Commission then overturned the State Commission’s order, restoring the District Forum’s decision with modifications.

Timeline:

Course of Proceedings

The District Forum initially ruled in favor of the complainants, directing the appellant to execute the sale deed after receiving the remaining payment. The State Commission reversed this decision, agreeing with the appellant’s claim that there were two separate agreements for each sale. The National Commission then overturned the State Commission’s order, stating that there could not be two agreements for the same property between the same parties. The National Commission restored the District Forum’s order with a modification that the appellant was entitled to receive the remaining amount with 10% interest from the date of filing of the complaint till the date of payment. The appellant’s review applications were rejected by the National Commission.

Legal Framework

The Supreme Court considered the following legal provisions:

• Section 24A of the Consumer Protection Act, 1986: This section specifies the limitation period for filing a complaint, which is two years from the date on which the cause of action arose. The section 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 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.”

• Section 54 of the Transfer of Property Act, 1882: This section defines “sale” as a transfer of ownership in exchange for a price. The National Commission interpreted this to mean that there can only be one contract of sale for one property between the same parties.
• Section 2(e) of the Consumer Protection Act, 1986: This section defines “consumer dispute” as a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint.

  “2(e)“consumer dispute” means a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint;”

Arguments

Appellant’s Arguments:

• The complaints were barred by limitation under Section 24A of the Consumer Protection Act, 1986, as they were filed more than two years after the 90-day period for executing the sale deed as per the agreement. The appellant relied on the decision of the Supreme Court in the case of State Bank of India v. B.S. Agriculture Industries (I) : (2009) 5 SCC 121 to state that the question of limitation goes to the root of the matter and deserves consideration even if not raised before the three fora.
• The relief sought by the complainants was essentially for specific performance, and they failed to prove their readiness and willingness to perform their part of the contract, as required under Section 16 of the Specific Relief Act, 1963.
• The complainants did not call for records from their office and bank, as they had agreed to do in response to a questionnaire, and therefore, an adverse inference should have been drawn against them under Section 114 of the Evidence Act.
• The State Commission was correct in accepting the existence of two agreements in each case, and this was a bona fide defense.
• The interest should have been awarded from the date when the amount was due and not only from the date of complaint.

Respondents’ Arguments:

• The cause of action arose when the appellant failed to execute the sale deed despite a notice on 09.11.2012, and therefore, the complaints were within the limitation period.
• There was no basis for the claim that there were two agreements in each case.
• The complainants had not withheld any evidence, and there was no reason to draw any adverse inference.
• The National Commission’s order was correct and should be upheld.

Issues Framed by the Supreme Court

The Supreme Court did not frame specific issues but addressed the following points:

1. Whether the complaints were barred by limitation under Section 24A of the Consumer Protection Act, 1986.
2. Whether the complainants had failed to prove their readiness and willingness to perform their part of the contract.
3. Whether an adverse inference should have been drawn against the complainants for not calling for records.
4. Whether the State Commission was correct in accepting the existence of two agreements in each case.
5. Whether the interest should have been awarded from the date when the amount was due and not only from the date of complaint.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• The Supreme Court referred to the case of State Bank of India v. B.S. Agriculture Industries (I) : (2009) 5 SCC 121*, but distinguished it on facts, holding that the complaints were not barred by limitation in this case.
• The Supreme Court referred to the case of V.N. Shrikhande v. Anita Sena Fernandes:(2011) 1 SCC 53* to interpret the term ’cause of action’ in the context of the Consumer Protection Act, 1986.
• The Court interpreted Section 24A of the Consumer Protection Act, 1986* to mean that the limitation period starts from when the cause of action arises.
• The Court interpreted Section 54 of the Transfer of Property Act, 1882* to mean that there can only be one contract of sale for one property between the same parties.
• The Court interpreted Section 2(e) of the Consumer Protection Act, 1986* to define the term “consumer dispute”.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the following factors:

• The appellant’s failure to produce the second agreement in Complaint Case No. 111 of 2013.
• The fact that the two agreements in Complaint Case No. 112 of 2013 were of the same date and appeared to be a copy of each other.
• The fact that the complainants had paid a substantial part of the sale consideration and there was nothing substantial left for them to perform.
• The fact that the appellant had failed to execute the sale deed despite receiving notice from the complainants.

The Court emphasized the importance of fulfilling contractual obligations and protecting consumer rights. The Court’s reasoning was based on the factual aspects of the case, such as the absence of a second agreement and the substantial payments made by the complainants, as well as the legal aspects, such as the interpretation of the Consumer Protection Act and the Transfer of Property Act.

Logical Reasoning

Key Takeaways

• A seller cannot refuse to execute a sale deed after receiving a substantial part of the sale consideration.
• The limitation period for filing a consumer complaint starts from the date when the cause of action arises, which, in this case, was when the seller failed to execute the sale deed after receiving notice.
• There can be only one contract of sale for one property between the same parties.
• Consumers are not required to prove their readiness and willingness when they have already paid a substantial part of the sale consideration.
• Consumer courts will not draw adverse inferences against complainants who have not withheld any material evidence.

Directions

The Supreme Court dismissed the appeals and imposed costs of Rs. 50,000 on the appellant in each case. The Court directed the appellant to execute the Deed of Conveyance in favor of the respondents.

Development of Law

The ratio decidendi of this case is that a consumer complaint for non-execution of a sale deed is not barred by limitation if it is filed within two years from the date when the seller fails to execute the sale deed after receiving notice. This judgment also clarifies that there can be only one contract of sale for one property between the same parties. This ruling reinforces the protection of consumer rights in property transactions and provides clarity on the interpretation of the Consumer Protection Act, 1986.

Conclusion

The Supreme Court’s decision in Bharati Bhattacharjee vs. Quazi Md. Maksuduzzaman & Ors. reaffirms the importance of fulfilling contractual obligations in property transactions and protects the rights of consumers. The Court dismissed the appellant’s claims of limitation and the existence of multiple agreements, upholding the National Commission’s order to execute the sale deed. This judgment serves as a reminder that sellers cannot avoid their responsibilities after receiving a substantial part of the sale consideration and that consumer courts will protect the rights of consumers in such disputes.