M/S LAUREATE BUILDWELL PVT. LTD. versus CHARANJEET SINGH
[2021] 6 S.C.R. 673, Supreme Court of India, 2021
Outcome: Case Partly allowed (Granted)
Segment: Facts
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M/S LAUREATE BUILDWELL PVT. LTD.
v.
CHARANJEET SINGH
(Civil Appeal No. 7042 of 2019)
JULY 22, 2021
[UDAY UMESH LALIT, HEMANT GUPTA AND
S. RAVINDRA BHAT, JJ.]
Housing – Builder flat – Rights of subsequent purchaser (re-
allottee), when builder does not honour its commitment to deliver
the flat within a stipulated time – Refund of amount deposited with
developer/ builder in respect of subject flat – Relief of interest on
refund claim made by the subsequent purchaser – Entitlement to –
Held: The nature and extent of relief, to which a subsequent
purchaser can be entitled to, would be fact dependent – However, it
cannot be said that a subsequent purchaser who steps into the shoes
of an original allottee of a housing project in which the builder has
not honoured its commitment to deliver the flat within a stipulated
time, cannot expect even reasonable time, for the performance of
the builder’s obligation – Such a conclusion would be arbitrary,
given that there may be a large number of flat buyers, waiting for
their promised flats – In such case, a purchaser who no doubt enters
the picture later surely belongs to the same class – Further, the
purchaser agrees to buy the flat with a reasonable expectation that
delivery of possession would be in accordance within the bounds
of the delayed timeline that he has knowledge of, at the time of
purchase of the flat – Therefore, in the event purchaser claims refund,
on an assessment that he too can (like the original
allottee) no longer
wait, and face intolerable burdens, the equities would have to be
moulded – It would no doubt be fair to assume that the purchaser
had knowledge of the delay – However, to attribute knowledge that
such delay would continue indefinitely, based on an a priori
assumption, would not be justified – The equities can properly be
moulded by directing refund of the principal amounts, with interest
@ 9% p.a. from the date the builder acquired knowledge of the
transfer, or acknowledged it – In the instant case, there is material
on the record suggestive of the circumstance that even as on the
date of presentation of the instant appeal, the occupancy certificate
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was not forthcoming – In these circumstances, given that the
purchaser/respondent had stepped into the shoes of the original
allottee, and intimated the appellant-builder about this fact in April
2016, the interests of justice demand that interest at least from that
date should be granted, in favour of the respondent – Consumer
Protection – Equity.
Economic Transport Organization v. Charan Spinning
Mills (P) Ltd, (2010) 4 SCC 114; Canara Bank v. United
India Insurance Co. Ltd. (2020) 3 SCC 455; State of
Karnataka v. Vishwabharathi House Building Coop.
Society (2003) 2 SCC 412: [2003] 1 SCR  397; Fair
Air Engineers (P) Ltd. v. N.K. Modi (1996) 6 SCC 385:
[1996] 4 Suppl. SCR 820; Satpal Mohindra v. Surindra
Timber Stores (1999) 5 SCC 696; and Imperia Structures
Ltd. v. Anil Patni, (2020) 10 SCC 783 – referred to.
HUDA v. Raje Ram 2008 (17) SCC 407: [2008]
16 SCR 601; Wing Commander Arifur Rahman Khan
and Anr. v. DLF Southern Homes Pvt. Ltd., 2020 SCC
Online 667 (SC) – held not good law.
Case Law Reference
[2008] 16 SCR 601
held not good law
Para12
(2010) 4 SCC 114
referred to
Para 24
(2020) 3 SCC 455
referred to
Para 25
[2003] 1 SCR 397
referred to
Para 29
[1996] 4 Suppl. SCR 820
referred to
Para 29
(1999) 5 SCC 696
referred to
Para 29
(2020) 10 SCC 783
referred to
Para 30
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7042
of 2019
From the Judgment and Order dated 29.05.2019 of the National
Consumer Disputes Redressal
Commission at New Delhi in Consumer
Complaint No.1183 of 2017.
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Jayanth Muth Raj, Sr. Adv., Rajesh  P., Prabhakar Tiwari,
Manoranjan Sharma, Advs. for the Appellant.
M. L. Lahoty, Paban K. Sharma, Anchit Sripat, Himanshu Shekhar,
Advs. for the Respondent.
The Order of the Court was passed by
S. RAVINDRA BHAT, J.
1. The appellant (hereafter called “Laureate” or “the builder”) is
aggrieved by an order of the National Consumer Dispute Redressal
Commission1 (hereafter “NCDRC”). The respondent (hereafter “the
purchaser”) had sought, through his complaint a direction against the
builder, for refund of the consideration amount of Rs.1,93,70,883/-
received by the latter, as consideration for sale of a flat along with interest
@ 24% p.a. from the date different instalments were paid, as well as
compensation and costs.
2. The relevant facts are that one Ms. Madhabi Venkatraman
(hereafter “the original allottee”) applied on 29.08.2012 for allotment of
a residential flat (No. 7013, (hereafter “the flat”) admeasuring 4545 sq.
ft., in Nectarine Tower “PARX LAUREATE” at Sector- 108,
Expressway, Noida. The flat was to be developed by the builder
(Laureate). She paid the registration amount of Rs.7,00,000/-. On
16.10.2012, an allotment letter was issued to the original allottee, for the
flat after deposit of Rs.32,33,657/- out of the total sale consideration of
Rs.2,47,29,405/-. According to the allotment letter, the possession of the
flat was to be handed over within 36 months (from the date of allotment
letter) i.e., latest by
15.10.2015. The original allottee made payment to
the tune of Rs.1,55,89,329/-, for the first seven instalments as demanded
by Laureate. On 16.02.2015, after noticing the slow pace of construction,
the original allottee decided to sell the flat. The purchaser who was in
search of a residential flat was approached by her through a broker. He
was assured that the possession of the flat would be delivered on time,
and he agreed to purchase the flat and paid an amount of Rs.1,00,000/-
as advance towards the total sale consideration of Rs.1,55,89,329/-. The
purchaser and the original allottee agreed that the balance amount of
sale consideration would be paid on or before 15.10.2015 and further
that the purchaser would pay the outstanding instalments beyond
Rs.1,55,89,329/- directly after transfer of the flat to him. Demand letters
1 In Consumer case No. 1183/2017, decided on 29-05-2019
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for two instalments (Nos. 8 & 9) were issued by Laureate and payment
to the tune of Rs.21, 68,694/- was made by the original allottee.
3. The purchaser alleged that possession was not delivered in
October, 2015 as promised (in the allotment letter). He decided to wait
for the possession and not to make any payment towards the sale;
however, the original allottee insisted upon the execution of an agreement
to sell and demanded payment of instalments, which she had made to
the builder, stating that she could not wait any further and she would
forfeit the earnest money and cancel the deal. The purchaser alleged
that he made enquiries from the officials of the builder, who assured that
the possession would be delivered by June 2016. Therefore, the purchaser,
on 17.02.2016, entered into an agreement of sale with the original allottee,
and paid an amount of Rs.1,85,00,000/-.
4. The original allottee on 02.04.2016, requested the builder to
transfer the flat in favor of the respondent. The purchaser submitted an
undertaking dated 01.04.2016 duly signed and executed by him, to the
builder, Laureate. Later, Laureate issued a letter dated 09.05.2016 to
the purchaser, confirming the payment of Rs.1,93,70,883/- towards the
purchase of the flat.  Thereafter, the purchaser visited the site to acquaint
himself with the extent of construction but he was denied entry to the
construction site by the builder’s employees citing security
reasons and
was informed that the work was in progress and possession would be
delivered shortly. The purchaser alleges that he made telephonic inquiries
from the office of the builder regarding possession, but unavailingly,
without any result. He claims to have visited the builder’s office in last
week of January, 2017 and was informed that possession of the said flat
could not be delivered till the end of year 2017.
5. After this, the purchaser sought for refund of the amount paid,
from the builder. On 08.03.2017, a legal notice was issued to the builder
asking for refund of the amount of Rs.1,93,70,883/- with interest @
24% p.a. from the various dates of deposit, was sought by the purchaser,
but in vain. He claims to have been shocked to receive the demand
letter for the 11th instalment for Rs.10,92,628/-. On refusal of the payment
of instalment, the officials of the builder threatened the purchaser of
cancellation and forfeiture of the amounts paid. It is in these
circumstances, that the appellant approached the NCDRC, for direction
to the builder to refund the entire sum of Rs.1,93,70,883/- with interest
at the rate of 24% from the respective dates when the instalments were
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paid to Laureate. In addition, Rs.5,00,000/- as compensation and Rs.
2,00,000/- as litigation expenses were sought along with other costs.
6. The builder, Laureate denied the claim, stating that for the period
28.03.2013 to January 2016, (i.e. 26 months), there was complete
slowdown in the construction of the projects in all of NOIDA including
the buildings in question, due to the order passed by National Green
Tribunal (NGT) in OA/158/2013, and due to a notification issued by the
Ministry of Environment, Forests and Climate Change. The original
allottee was aware of the orders of the NGT, and the builder had sent
several reminders for payment towards the instalments and finally issued
a notice on 17.10.2014 for cancellation of the Provisional Allotment of
Flat No. 7013. It was alleged that in view of Clause 13(7) of the
agreement neither Ms. Madhabi Venkatraman, the original allottee nor
the purchaser-respondent who is endorsed by the original allottee was
entitled to any amounts for delay in construction. It was also alleged that
on 02.04.2016, the original allottee requested the builder to transfer flat
No. 7013 in favour of the purchaser. The purchaser furnished an
undertaking on 01.04.2016 duly signed before the competent authority,
which makes it clear that both the original allottee and the purchaser
were aware of the order of the NGT and the delay in construction were
beyond the control of the purchaser. Therefore, their right to claim
compensation is construed to be waived in terms of Clause 13.
7. The builder further alleged that on commencement of 18th floor
and 20th floor roof slab, the 11th and 12th instalments were demanded
from the Complainant and the same was not paid. Therefore, the builder
had a right to cancel the allotment. It is only on account of the restrictive
order dated 28.10.2013 passed by NGT on any construction within the
radius of 10 kilometres from Okhla Bird Sanctuary, that the builder could
not complete the project as the said project comes within the radius of
10 kilometres. In view of clause 13(5), the builder was entitled for
extension of time for offer of possession at such premises on account of
force majeure conditions. Therefore, it is not liable to pay any
compensation.
8. The NCDRC, after considering the depositions of the parties,
through affidavits, documentary evidence and the submissions of parties,
noticed that the demand letter for the 11th instalment was dated
24.03.2017, whereas the promised date of delivery was 15.10.2015. That
said letter stated that the construction stage ‘on commencement of 18th
M/S LAUREATE BUILDWELL PVT. LTD. v. CHARANJEET SINGH
[S. RAVINDRA BHAT, J.]
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floor roof slab’ of the tower had been achieved and therefore the 11th
instalment was demanded to be paid. This showed that even as on
24.03.2017, the construction of the said tower was incomplete. The
commission considered that Receipt No. 306 dated 01.03.2016 shows
that the original allottee had paid an amount of Rs.5,29,000/- towards
penal interest charged by the Developer at the rate of 24% per annum.
The NCDRC rejected the plea that the original allottee was a defaulter.
It thereafter allowed the complaint, reasoning as follows:
“20. We find it a fit case to place reliance on the judgement
of the Hon’ble Supreme Court in Kolkata West International
City Pvt. Ltd. Vs. Devasis Rudra, II (2019) CPJ 29 (SC),
wherein the Hon’ble Apex Court has clearly laid down that a
flat purchaser cannot be made to wait indefinitely for seeking
possession. Even in the instant case, though the promised date
of delivery was way back in the year 2015, even as on date,
the tower is far from completion.
21. The Learned Counsel for the Complainant relied on the
decision of this Commission dated 11.01.2019 in Manmeet
Singh & Anr. Vs. Unitech Hi-Tech Developers Ltd. & Ors.
(Consumer Complaint No. 1285 of 2017), wherein this
Commission has allowed refund of the principal amount with
interest @ 10% p.a.
22. For all the aforenoted reasons and the principal laid down
by the Hon’ble Supreme Court in Kolkata West International
City Pvt. Ltd.
(Supra) we are of the considered view that the
Complaint be allowed in part and we direct the Developer to
refund the amount deposited with the developer in respect of
subject flat No. 7013 with interest @ 10% p.a. from the
respective dates of deposit till the date of realisation together
with the cost of ¹ 25,000.”
Arguments of the parties
9. It is argued by Mr. Jayanth Mithras, learned senior counsel on
behalf of the builder that the relief granted by NCDRC is unwarranted.
Highlighting that the entire project had come to a standstill on account of
an interim order by the NGT, the learned senior counsel stressed that
these facts were within the knowledge of the original allottee as well as
the purchaser. When they decided to purchase it in 2015, it was decided
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that the respondent would purchase the flat and step into the shoes of
the original allottee. Learned senior counsel argued that given these
circumstances, the respondent, as a prudent purchaser, could not have
reasonably expected the construction to be completed till the interim
orders were vacated and some time was allowed for the construction to
be completed. Clearly, the purchaser was only an investor and was not
interested in residing in the flat.
10. Learned senior counsel submitted that barely a year after the
transaction of stepping into the shoes of the original allottee – which
was endorsed by the builder, the purchaser made an unreasonable demand
for the refund of the entire amount. At that point in time, the interim
order of the NGT had been vacated. Quite naturally, therefore, the
construction had started and the builder made the demand on 23.04.2017
towards subsequent instalments which were not paid. Although the
purchaser sent a legal notice prior to these demands, the fact remained
that so long as he assumed responsibility as an allottee, he could not shy
away from fulfilling the demand towards the instalments.
11. Learned senior counsel argued that the purchaser could not
claim the equities in the same manner that an original allottee could. In
the present case, the original allottee had not paid the instalments in time
and was constrained to pay penal interest – a fact noted by the NCDRC.
In these circumstances, there were no equities
compelling the NCDRC
to grant any relief over and above a refund of compensation much less
interest @ 10% from the period the deposits were made by the original
allottee.
12. Learned senior counsel submits that since the complainant
was not the original allottee but a subsequent purchaser, he could not
claim any interest. He relied upon two rulings of this Court in HUDA v.
Raje Ram2 and the recent judgment of this Court in Wing Commander
Arifur Rahman Khan and Anr. v. DLF Southern Homes Pvt. Ltd.3. It
is submitted that in both these cases, this Court had categorically ruled
that when the allottee in a housing project transfers his or her rights in
favour of another, such a third party cannot claim equities to the same
extent as the original allottee, especially as regards a claim for interest.
It was submitted by the learned senior counsel that there is a sound
public policy rationale in support of such a rule which is that a subsequent
2 2008 (17) SCC 407
3 2020 SCC Online 667 (SC)
M/S LAUREATE BUILDWELL PVT. LTD. v. CHARANJEET SINGH
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purchaser is deemed to be aware of the nature of construction and the
delay which occurred till the time he or she steps into the shoes of the
allottee. The NCDRC overlooked these binding rulings and directed
payment of interest for the entire period and clearly the respondent
purchaser was not entitled to any interest at all.
13. Mr. M.L. Lahoty, learned counsel for the respondent urged
this Court not to interfere with the findings and directions of the NCDRC.
He highlighted that even if they were notified about the transfer by the
original allottee in respect of the respondent, the builder had made demands
towards penal interest, for various periods. A total amount of ¹  5.9 lakhs
was in fact paid during the period 01.03.2016 to 18.04.2016. The builder
was made aware of the agreement to sell when its endorsement with
respect to the transfer was sought. Further, it was only after receiving
the amounts towards the so-called penal interest that the endorsement
letter was ultimately issued on 09.05.2016 by the builder. This clearly
confirmed Rs.1,93,70,883/- was paid towards the flat. This endorsement
letter also confirmed that the respondent purchaser would be entitled to
the delivery of the flat.
14. It is submitted that the purchaser had entered into an
understanding and paid the amounts towards the previous instalments as
well as settled the later penal interest component to the original allottee
and also paid penal
interest upto October 2016. In these circumstances,
it was not unreasonable for him to expect that project would be complete
and the flat would be handed over at least in the first part of 2017.
However, upon visiting the site and noticing that there was practically no
progress, the respondent/purchaser was constrained to move the NCDRC
for the relief of direction of refunding the entire amount.
15. Mr. Lahoty pointed to the findings and observations of the
NCDRC which had noticed the facts that although the NGT’s interim
order had subsisted for a while, and the builder had taken shelter under
it to say that construction could not take place, the record indicated that
the builder had sought for instalments from the original allottee, including
demanding penal interest. Given these facts, there were no equities in
favour of the builder; it was not open to it to claim that force majeure
conditions operated and prevented it from going ahead with the
construction.
16. It was submitted that upon the endorsement by the builder of
all the transactions, and its acknowledgment, the purchaser had become
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entitled to seek delivery. There was no impediment in the purchaser
claiming any kind of relief. Mr. Lahoty submitted that if for instance,
there were to be any defect or deficiency in service, the purchaser could
not be discriminated against and an application or a plaint in that regard
cannot be dismissed as not maintainable. Likewise, the mere fact that a
subsequent purchaser steps into the shoes of an original allottee who
might have at an earlier point of time sought allotment but because of
the delay in the construction, being unable to withstand economic
pressures withdrew, does not mean that the builder’s default could be
glossed over. Learned counsel urged that there is no rule or principle to
support the judgment in Raje Ram (supra) or Wing Commander Arifur
Rahman Khan and Anr. (supra) to say that subsequent purchasers
should never be given the relief of interest on refunds. It was submitted
that the refusal of the Court to grant relief have to be seen in the light of
the peculiar circumstances of those cases.
Analysis and Conclusions:
17. The allotment letter dated 16.10.2012 assured the original
allottee that the possession of the flat would be handed over within 36
months i.e. on or before 15.10.2015.  The original allotee made payment
to the tune of Rs.1,55,89,329/-, towards the first seven instalments as
and when demanded.  Apparently, the allottee due to her own compulsions
could not continue to wait indefinitely for delivery of the flat,
having
regard to the slow pace of construction. She therefore felt compelled to
sell the flat.  It was then that the purchaser stepped in, and an agreement
to sell was executed between the parties on 17.02.2016.  The original
allottee thereafter approached the builder, informing it that the purchaser
had stepped into her shoes and would continue with the obligations, and
was therefore entitled to possession.  Significantly, the builder endorsed
and even required the purchaser to execute the letter of undertaking,
which he did.  With this development, the builder acknowledged that the
rights and entitlements of the original allottee relation to the flat were
assumed by the purchaser, and signified its obligations, correspondingly
to the purchaser, as the consumer.
18. In the meanwhile, there was a slowdown in construction,
apparently, on account of orders made by NGT. The builder alleged that
the slowdown in construction was due to the NGT’s interim orders.
However, what transpired was that on 28.10.2013, the NGT imposed
M/S LAUREATE BUILDWELL PVT. LTD. v. CHARANJEET SINGH
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certain restrictions within 10 km radius of the Okhla Bird Sanctuary.
The application before the NGT was disposed on 03.04.2014.
Consequently, there were no directions after that date. A review
application was filed before the NGT which remained pending for some
time; however, even at that stage there were no interim orders requiring
stoppage of construction.  On 19.08.2015 the Ministry of Environment
and Forests issued a notification.  The appellant is unclear as to the
effect of this notification; apparently, it did not impede construction; the
notification was challenged.  It is only on 05.07.2016, on account of an
application preferred by an occupant of an adjoining area that the NGT
directed the builder not to carry on with the construction. This, the builder
informs in its appeal, was finally disposed of in January 2016.
19. The facts set out in the preceding paragraph demonstrate that
on the one hand the builder/appellant is not categorical with respect to
the existence of interim orders enjoining it not to construct further. Rather,
it appears that there was no construction of the project for about six
months.  However, despite this position, it continued to demand and
received instalments.  The purchaser entered the scene in 2016, waited
for some time and demanded refund of the entire amount with interest
from the dates that deposits were made.  After receiving notice, the
builder demanded further
instalments.  It was in this background that the
purchaser approached the NCDRC successfully with the claim for refund.
The claim for interest was allowed to the extent of 10% on the entire
amounts deposited from the respective dates of deposits.
20. The principal argument of the builder is the rights of a purchaser
are not the same as an original allottee.  The builder appellant cites Raje
Ram and Arifur Rahman Khan (supra).In the first decision Raje Ram,
this Court declined to grant interest on a refund claim made by a
subsequent purchaser.  The original allottee did not continue with the
allotment; the statutory authority/developer HUDA re-allotted the plot.
The re-allottee then approached the consumer forum which directed
refund with interest.  This court was of the opinion that when the
subsequent purchaser, i.e. the re-allottee stepped into the shoes of the
original allottee, he was aware of the delay in handing over the possession
which had occurred and therefore could no longer claim the time of the
delay.  In Arifur Rahman Khan (supra) several allottees approached
the Court.  This Court did not grant relief to the subsequent purchasers
who stepped into the shoes of the original allottees, citing Raje Ram.
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21. The relevant discussion in Raje Ram is as follows:
“14. The appellants challenged the said orders of the State
Commission contending that no interest was payable. The
National Consumer Disputes Redressal Commission by its non-
speaking orders dated 27-8-2002, 30-9-2002 and 27-8-2002,
disposed of the said revisions filed by the Development
Authority, in terms of its earlier decision in HUDA v. Darsh
Kumar [ RP No. 1197 of 1998 decided on 31-8-2001 (NC)]
by merely observing that it had upheld the award of interest
up to 18% per annum in similar circumstances. The National
Commission did not refer to or consider the facts of these
cases. The said orders are challenged in these appeals by
special leave. The common issue in all these cases is whether
interest could have been awarded against the appellant, and
if so whether the rate of interest is excessive.
15. The decision of the National Commission in Darsh
Kumar [ RP No. 1197 of 1998 decided on 31-8-2001 (NC)] ,
followed in the impugned orders, did not find favour of this
Court in HUDA v. Darsh Kumar [(2005) 9 SCC 449] . This
Court observed that (at SCC p. 451, para 7) where possession
is given at the old rate, the party has got the benefit of
escalation in price of land, and therefore, there cannot and
should not be award of interest on the amounts paid by the
allottee on the ground of delay in allotment. On the special
facts of that case, this Court however awarded compensation
for harassment/mental
agony.
16. The respondents in the three appeals are not the original
allottees. They are re-allottees to whom reallotment was made
by the appellant in the years 1994, 1997 and 1996
respectively. They were aware, when the plots were reallotted
to them, that there was delay (either in forming the layout
itself or delay in delivering the allotted plot on account of
encroachment, etc). In spite of it, they took reallotment. Their
cases cannot be compared to the cases of the original allottees
who were made to wait for a decade or more for delivery and
thus put to mental agony and harassment. They were aware
that time for performance was not stipulated as the essence
of the contract and the original allottees had accepted the
delay.”
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22. In Arifur Rahman Khan, the court observed as follows:
“43. Similarly, the three appellants who have transferred their
title, right and interest in the apartments would not be entitled
to the benefit of the present order since they have sold their
interest in the apartments to third parties. The written
submissions which have been filed before this Court indicate
that “the two buyers stepped into the shoes of the first buyers”
as a result of the assignment of rights and liabilities by the
first buyer in favour of the second buyer. In HUDA v. Raje
Ram [HUDA v. Raje Ram, (2008) 17 SCC 407 : (2009) 5 SCC
(Civ) 889] , this Court while holding that a claim of
compensation for delayed possession by subsequent
transferees is unsustainable, observed that: (SCC p. 410, para
16)
“16. The respondents in the three appeals are not the
original allottees. They are re-allottees to whom reallotment
was made by the appellant in the years 1994, 1997 and
1996 respectively. They were aware, when the plots were
reallotted to them, that there was delay (either in forming
the layout itself or delay in delivering the allotted plot on
account of encroachment, etc.). In spite of it, they took
reallotment. Their cases cannot be compared to the cases
of the original allottees who were made to wait for a decade
or more for delivery and thus put to mental agony and
harassment. They were aware that time for performance
was not stipulated as the
essence of the contract and the
original allottees had accepted the delay.”
Even if the three appellants who had transferred their interest
in the apartments had continued to agitate on the issue of
delay of possession, we are not inclined to accept the
submission that the subsequent transferees can step into the
shoes of the original buyer for the purpose of benefiting from
this order. The subsequent transferees in spite of being aware
of the delay in delivery of possession the flats, had purchased
the interest in the apartments from the original buyers. Further,
it cannot be said that the subsequent transferees suffered any
agony and harassment comparable to that of the first buyers,
as a result of the delay in the delivery of possession in order
to be entitled to compensation.”
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23. The builder does not deny that upon issuance of the
endorsement letter, the purchaser not only stepped into the shoes of the
original allottee but also became entitled to receive possession of the
flat.  There is no denial that the purchaser fulfils the description of the
complainant/ consumer and is entitled to move any forum under the
Consumer Protection Act for any deficiency in service.  The question
then is whether a subsequent purchaser is not entitled to similar treatment
as the original allottee, and can be denied relief which otherwise the
original allottee would have been entitled to, had she or he continued
with the arrangement.  An individual such as the original allottee, enters
into an agreement to purchase the flat in an on-going project where
delivery is promised.  The terms of the agreement as well as the
assurance by the builder are that the flat would be made available within
a time-frame.  It is commonplace that in a large number of such
transactions, allottees are not able to finance the flat but seek advances
and funds from banks or financial institutions, to which they mortgage
the property. The mortgage pay-outs start initially after an agreed period,
commencing in a span of about 15 to 24 months after the agreement.
This would mean that in most cases, allottees start repaying the bank or
financial institutions with instalments (mostly equated monthly
instalments) towards the principal and the interest spread over a period
of
time, even before the flats are ready.  If these facts are taken into
consideration, prolongation of the project would involve serious economic
repercussions upon such original allottees who are on the one hand
compelled to pay instalments and, in addition, quite often -if she or he is
in want of a house -also pay monthly rents.  Such burdens become
almost intolerable.  It is at this point that an indefinite wait is impossible
and allottees prefer to find purchasers who might step into their shoes.
That such purchasers take over the obligations of the original allottee –
either to pay the balance instalments or to wait for sometime, would not
per se exclude them from the description of a consumer.  All that then
happens is that the consumer forum or commission – or even courts
have to examine the relative equities having regard to the time frame in
each case.
24. In a larger five judge bench ruling in Economic Transport
Organization v. Charan Spinning Mills (P) Ltd4, the question was
whether an insurer, who honours its contract, and pays the insured the
4 (2010) 4 SCC 114
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agreed money, in the event of an insurable incident such as an accident,
can maintain a consumer complaint against the carrier, who is responsible
for the accident. This court held that such complaints are not barred:
“29. In all three types of subrogation, the insurer can sue the
wrongdoer in the name of the assured. This means that the
insurer requests the assured to file the suit/complaint and has
the option of joining as co-plaintiff. Alternatively, the insurer
can obtain a special power of attorney from the assured and
then to sue the wrongdoer in the name of the assured as his
attorney.
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37. Whether the document executed by the assured in favour
of the insurer is a subrogation simpliciter, or a subrogation-
cum-assignment is relevant only in a dispute between the
assured and the insurer. It may not be relevant for deciding
the maintainability of a complaint under the Act. If the
complaint is filed by the assured (who is the consumer), or by
the assured represented by the insurer as its attorney holder,
or by the assured and the insurer jointly as complainants, the
complaint will be maintainable, if the presence of insurer is
explained as being a subrogee. Whether the amount claimed
is the total loss or only the amount for which the claim was
settled would make no difference for the maintainability of
the complaint, so long as the consumer is the complainant
(either personally or
represented by its attorney-holder) or is
a co-complainant along with his subrogee.
38. On the other hand, if the assured (who is the consumer)
is not the complainant, and the insurer alone files the
complaint in its own name, the complaint will not be
maintainable, as the insurer is not a “consumer”, nor a person
who answers the definition of “complainant” under the Act.
The fact that it seeks to recover from the wrongdoer (service
provider) only the amount paid to the assured and not any
amount in excess of what was paid to the assured will also
not make any difference, if the assured-consignor is not the
complainant or co-complainant. The complaint will not be
maintainable unless the requirements of the Act are fulfilled.
The remedy under the Act being summary in nature, once the
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consumer is the complainant or is a co-complainant, it will
not be necessary for the Consumer Forum to probe the exact
nature of relationship between the consumer (assured) and
the insurer, in a complaint against the service provider.
******************
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40. If in a summary proceedings by a consumer against a
service provider, the insurer is added as a co-complainant or
if the insurer represents the consumer as a power-of-attorney,
there is no need to examine the nature of rights inter se between
the consumer and his insurer. When the complaint is by the
consignor-consumer, with or without the insurer as a co-
complainant, the service provider cannot require the
Consumer Forum to consider the nature of relationship
between the assured and the insurer or the nature and true
purport of the document produced as a letter of subrogation.
A wrongdoer cannot side-track the issue before the Consumer
Forum. Once the “consumer”, that is the assured, is the
complainant, the complaint will be maintainable subject to
fulfilment of the requirements of the Act.”
25. In another decision, Canara Bank v. United India Insurance
Co. Ltd.5 the issue which this court had to consider was whether the
insurer could repudiate liability in respect of a fire which destroyed farm
produce kept in a cold storage, when the farmers had no privity with the
insurer, but with the cold storage, and who availed credit on the security
of the crop. The court held as follows:
“28.
Taking the issue of privity of contract, we are of the
considered view that as far as the Act is concerned, it is not
necessary that there should be privity of contract between
the Insurance Company and the claimants. The definition of
“consumer” under Section 2(d) quoted hereinabove is in two
parts. Sub-clause (i) of Section 2(1)(d) deals with a person
who buys any goods and includes any user of such goods
other than the person who buys such goods as long as the
use is made with the approval of such person. Therefore, the
definition of consumer even in the first part not only includes
the person who has purchased but includes any user of the
goods so long as such user is made with the approval of the
5 (2020) 3 SCC 455
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person who has purchased the goods. As far as the definition
of “consumer” in relation to hiring or availing of services is
concerned, the definition, in our view, is much wider. In this
part of the section, consumer includes not only the person
who has hired or availed of the services but also includes
any beneficiary of such services. Therefore, an insured could
be a person who hires or avails of the services of the Insurance
Company but there could be many other persons who could
be the beneficiaries of the services. It is not necessary that
those beneficiaries should be parties to the contract of
insurance. They are the consumers not because they are
parties to the contract of insurance but because they are the
beneficiaries of the policy taken out by the insured.
29. The definition of “consumer” under the Act is very wide
and it includes beneficiaries who can take benefit of the insurance
availed by the insured. As far as the present case is concerned,
under the tripartite agreement entered between the Bank, the cold
store and the farmers, the stock of the farmers was hypothecated as
security with the Bank and the Bank had insisted that the said stock
should be insured with a view to safeguard its interest..”
26. If one also considers the broad objective of the Consumer
Protection Act, which is to provide for better protection of the interests
of consumers and for that purpose, provide for the establishment of
Consumer Councils and other authorities for the settlement of consumer
disputes and for matters connected therewith, as evident from the
Statement of Objects and Reasons of the Act. The Statement further
seeks inter alia to promote and protect the rights of consumers such
as—
“(a) The right to be protected against marketing of goods
which are hazardous to life and property;
(b) the right to be informed about the quality, quantity, potency,
purity, standard and price of goods to protect the consumer
against unfair trade practices;
(c) the right to be assured, wherever possible, access to variety
of goods at competitive prices;
(d) the right to be heard and to be assured that consumers’
interests will receive due consideration at appropriate forums;
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(e) the right to seek redressal against unfair trade practice
or unscrupulous exploitation of consumers; and
(f) right to consumer education.”
27. In Lucknow Development Authority v. M.K. Gupta6  this
Court held:
“The importance of the Act lies in promoting welfare of the
society by enabling the consumer to participate directly in
the market economy. It attempts to remove the helplessness of
a consumer which he faces against powerful business,
described as, ‘a network of rackets’ or a society in which,
‘producers have secured power’ to ‘rob the rest’ and the might
of public bodies which are degenerating into storehouses of
inaction where papers do not move from one desk to another
as a matter of duty and responsibility but for extraneous
consideration leaving the common man helpless, bewildered
and shocked.”
28. It was further held that
“The Act thus aims to protect the economic interest of a
consumer as understood in commercial sense as a purchaser
of goods and in the larger sense of user of services. … It is a
milestone in history of socio-economic legislation and is
directed towards achieving public benefit.”
29. This court has further observed in State of Karnataka v.
Vishwabharathi House Building Coop. Society,7 that (the) “provisions
of the said Act are required to be interpreted as broadly as possible.
It has jurisdiction to entertain a complaint despite the fact that other
forums/courts would also have jurisdiction to adjudicate upon the
lis”8
30.
It is therefore evident that the Consumer Protection Act, 1986
was conceived as a legislation to address complaints of consumers (an
expression defined and interpreted widely) and provide a forum for their
quick redressal, and, furthermore, wherever third parties have claimed
relief, technicalities have been brushed aside consistently, by this court.
6 (1994) 1 SCC 243
7 (2003) 2 SCC 412
8 This court also relied on Fair Air Engineers (P) Ltd. v. N.K. Modi [(1996) 6 SCC 385]
and Satpal Mohindra v. Surindra Timber Stores [(1999) 5 SCC 696
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Thus, even after an original consumer is indemnified for a fire accident,
the insurer can maintain a complaint against the carrier/service provider,
and claim damages (of course along with the insured party). Likewise,
absence of privity of contract is not a bar for maintaining a complaint
against a service provider, by a third party who suffers an incident, which
is otherwise covered by an agreement. This court has also ruled, recently9
that proceedings initiated by complainants and resultant actions including
of the NCDRC are fully saved by provisions of the Real Estate
Regulatory Authority Act, 2019.
31. In view of these considerations, this court is of the opinion
that the per se bar to the relief of interest on refund, enunciated by the
decision in Raje Ram (supra) which was applied in Wg. Commander
Arifur Rehman (supra) cannot be considered good law. The nature
and extent of relief, to which a subsequent purchaser can be entitled to,
would be fact dependent. However, it cannot be said that a subsequent
purchaser who steps into the shoes of an original allottee of a housing
project in which the builder has not honoured its commitment to deliver
the flat within a stipulated time, cannot expect any – even reasonable
time, for the performance of the builder’s obligation. Such a conclusion
would be arbitrary, given that there may be a large number- possibly
thousands of flat buyers, waiting for their promised flats
or residences;
they surely would be entitled to all reliefs under the Act. In such case, a
purchaser who no doubt enters the picture later surely belongs to the
same class. Further, the purchaser agrees to buy the flat with a reasonable
expectation that delivery of possession would be in accordance within
the bounds of the delayed timeline that he has knowledge of, at the time
of purchase of the flat. Therefore, in the event the purchaser claims
refund, on an assessment that he too can (like the original allottee) no
longer wait, and face intolerable burdens, the equities would have to be
moulded. It would no doubt be fair to assume that the purchaser had
knowledge of the delay. However, to attribute knowledge that such delay
would continue indefinitely, based on an a priori assumption, would not
be justified. The equities, in the opinion of this court, can properly be
moulded by directing refund of the principal amounts, with interest @
9% per annum from the date the builder acquired knowledge of the
transfer, or acknowledged it.
32. In the present case, there is material on the record suggestive
of the circumstance that even as on the date of presentation of the
9 Imperia Structures Ltd. v. Anil Patni, (2020) 10 SCC 783
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present appeal, the occupancy certificate was not forthcoming. In these
circumstances, given that the purchaser/respondent had stepped into
the shoes of the original allottee, and intimated Laureate about this fact
in April 2016, the interests of justice demand that interest at least from
that date should be granted, in favour of the respondent. The directions
of the NCDRC are accordingly modified in the above terms.
33. The impugned order of the NCDRC is modified in the above
terms; the appeal is partly allowed. There shall be no order on costs.
Devika Gujral
Appeal partly allowed.
M/S LAUREATE BUILDWELL PVT. LTD. v. CHARANJEET SINGH
[S. RAVINDRA BHAT, J.]