M/S Laureate Buildwell Pvt. Ltd. v. Charanjeet Singh
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 Redressa l
Commission1 (hereafter “NCDRC”). The respondent (hereafter “the
purchaser”) had sought, through his complaint a direction again st 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 balanc e amount of
sale consideration would be paid on or before 15.10.2015 and further
that the purchaser would pay the outstanding instalm ents 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 29-05-20 19
M/S LAUREATE BUILDWELL PVT. LTD. v. CHARANJEET SINGH
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 i n
October, 2015 as promised (in the allotment letter). He decided to wait
for the possession and not to make any payment towards t he sale;
however, the original allottee insisted upon the execution of an agreement
to sell and demanded payment of instalments, which she had m ade to
the builder, stating that she could not wait any further and she w ould
forfeit the earnest money and cancel the deal. The purchaser al leged
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 09.05.2 016 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 entr y to the
construction site by the builder’s employees citing security reasons and
was informed that the work was in progress and possession w ould 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 pur chaser 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
677
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 G reen
Tribunal (NGT) in OA/158/2013, and due to a notification issued by the
Ministry of Environment, Forests and Climate Change. The origi nal
allottee was aware of the orders of the NGT, and the buil der 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 Claus e 13(7) of the
agreement neither Ms. Madhabi Venkatraman, the original allottee nor
the purchaser-respondent who is endorsed by the original allott ee 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 f urnished 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 t o 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 withi n the radius of
10 kilometres. In view of clause 13(5), the builder was ent itled 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 instalm ent 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.]
floor roof slab’ of the tower had been achieved and therefore th e 11th
instalment was demanded to be paid. This showed that e ven 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/- t owards
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 Internati onal
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 seeki ng
possession. Even in the instant case, though the promised date
of delivery was way back in the year 2015, even as on dat e,
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 Man meet
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 t he
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 realisati on 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 stre ssed 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
679
that the respondent would purchase the flat and step into the shoes of
the original allottee. Learned senior counsel argued that give n these
circumstances, the respondent, as a prudent purchaser, could not have
reasonably expected the construction to be completed til l 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 allot tee – 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 complai nant
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
[S. RAVINDRA BHAT, J.]
purchaser is deemed to be aware of the nature of constructio n and the
delay which occurred till the time he or she steps into the sho es of the
allottee. The NCDRC overlooked these binding rulings and directed
payment of interest for the entire period and clearly the res pondent
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 endorseme nt with
respect to the transfer was sought. Further, it was only a fter 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 inte rim
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 n o equities in
favour of the builder; it was not open to it to claim that force majeure
conditions operated and prevented it from going ahe ad 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
681
entitled to seek delivery. There was no impediment in the pur chaser
claiming any kind of relief. Mr. Lahoty submitted that if f or 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 a llottee who
might have at an earlier point of time sought allotment but b ecause of
the delay in the construction, being unable to withsta nd economic
pressures withdrew, does not mean that the builder’s default c ould 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 instalme nts 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 ori ginal
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 under taking,
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 order s.
However, what transpired was that on 28.10.2013, the NGT imposed
M/S LAUREATE BUILDWELL PVT. LTD. v. CHARANJEET SINGH
[S. RAVINDRA BHAT, J.]
certain restrictions within 10 km radius of the Okhla Bird Sanc tuary.
The application before the NGT was disposed on 03.0 4.2014.
Consequently, there were no directions after that d ate. 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 a s 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 a nd
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 n otice, 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 cla im made by a
subsequent purchaser. The original allottee did not continu e with the
allotment; the statutory authority/developer HUDA re-allotted the plot.
The re-allottee then approached the consumer forum which dire cted
refund with interest. This court was of the opinion that when the
subsequent purchaser, i.e. the re-allottee stepped into the shoe s 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.
683
21. The relevant discussion in Raje Ram is as follows:
“14. The appellants challenged the said orders of t he 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 Develop ment
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 int erest
up to 18% per annum in similar circumstances. The National
Commission did not refer to or consider the facts o f these
cases. The said orders are challenged in these appe als by
special leave. The common issue in all these cases is whethe r
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 Dars h
Kumar [ RP No. 1197 of 1998 decided on 31-8-2001 (NC)] ,
followed in the impugned orders, did not find favour o f this
Court in HUDA v. Darsh Kumar [(2005) 9 SCC 449] . Th is
Court observed that (at SCC p. 451, para 7) where possession
is given at the old rate, the party has got the ben efit of
escalation in price of land, and therefore, there ca nnot 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 compensat ion
for harassment/mental agony.
16. The respondents in the three appeals are not the origin al
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 reall otted
to them, that there was delay (either in forming th e layout
itself or delay in delivering the allotted plot on a ccount of
encroachment, etc). In spite of it, they took reallotment. Their
cases cannot be compared to the cases of the original allottee s
who were made to wait for a decade or more for delivery and
thus put to mental agony and harassment. They were aw are
that time for performance was not stipulated as the es sence
of the contract and the original allottees had acce pted the
delay.”
M/S LAUREATE BUILDWELL PVT. LTD. v. CHARANJEET SINGH
[S. RAVINDRA BHAT, J.]
22. In Arifur Rahman Khan, the court observed as follows:
“43. Similarly, the three appellants who have transferred thei r
title, right and interest in the apartments would not be entit led
to the benefit of the present order since they have sold their
interest in the apartments to third parties. The wr itten
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 liabilit ies 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, pa ra
16)
“16. The respondents in the three appeals are not t he
original allottees. They are re-allottees to whom reallotment
was made by the appellant in the years 1994, 1997 an d
1996 respectively. They were aware, when the plots we re
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, the y 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 a nd
harassment. They were aware that time for performan ce
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 inter est
in the apartments had continued to agitate on the i ssue 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 fr om
this order. The subsequent transferees in spite of being aware
of the delay in delivery of possession the flats, had purc hased
the interest in the apartments from the original buyers. Further,
it cannot be said that the subsequent transferees suffered an y
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.”
685
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. Th e question
then is whether a subsequent purchaser is not entitled to similar treatment
as the original allottee, and can be denied relief which oth erwise 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 w ell 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 num ber 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 agreemen t.
This would mean that in most cases, allottees start repaying the bank or
financial institutions with instalments (mostly equ ated 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 beco me
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 c ourts
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) Ltd 4, the question was
whether an insurer, who honours its contract, and pays the insured the
4 (2010) 4 SCC 114
M/S LAUREATE BUILDWELL PVT. LTD. v. CHARANJEET SINGH
[S. RAVINDRA BHAT, J.]
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, th e insurer
can obtain a special power of attorney from the assured and
then to sue the wrongdoer in the name of the assured as hi s
attorney.
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37. Whether the document executed by the assured in favour
of the insurer is a subrogation simpliciter, or a subrogati on-
cum-assignment is relevant only in a dispute betwee n the
assured and the insurer. It may not be relevant for deciding
the maintainability of a complaint under the Act. I f 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 ins urer is
explained as being a subrogee. Whether the amount claime d
is the total loss or only the amount for which the claim was
settled would make no difference for the maintainab ility of
the complaint, so long as the consumer is the compl ainant
(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 consume r)
is not the complainant, and the insurer alone files the
complaint in its own name, the complaint will not b e
maintainable, as the insurer is not a “consumer”, nor a person
who answers the definition of “complainant” under t he Act.
The fact that it seeks to recover from the wrongdoer (serv ice
provider) only the amount paid to the assured and n ot any
amount in excess of what was paid to the assured will a lso
not make any difference, if the assured-consignor is n ot the
complainant or co-complainant. The complaint will n ot be
maintainable unless the requirements of the Act are fulf illed.
The remedy under the Act being summary in nature, once the
687
consumer is the complainant or is a co-complainant, i t will
not be necessary for the Consumer Forum to probe the exact
nature of relationship between the consumer (assure d) and
the insurer, in a complaint against the service provi der.
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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-att orney,
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 th e
Consumer Forum to consider the nature of relationsh ip
between the assured and the insurer or the nature an d true
purport of the document produced as a letter of subrogatio n.
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 sub ject 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 ar e 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 definiti on 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 go ods
other than the person who buys such goods as long a s the
use is made with the approval of such person. Therefore, the
definition of consumer even in the first part not only inclu des
the person who has purchased but includes any user o f the
goods so long as such user is made with the approval of t he
5 (2020) 3 SCC 455
M/S LAUREATE BUILDWELL PVT. LTD. v. CHARANJEET SINGH
[S. RAVINDRA BHAT, J.]
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 t his
part of the section, consumer includes not only the person
who has hired or availed of the services but also i ncludes
any beneficiary of such services. Therefore, an insured coul d
be a person who hires or avails of the services of the Ins urance
Company but there could be many other persons who coul d
be the beneficiaries of the services. It is not necess ary that
those beneficiaries should be parties to the contra ct 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 wid e
and it includes beneficiaries who can take benefit of the i nsurance
availed by the insured. As far as the present case is concerned,
under the tripartite agreement entered between the B ank, the cold
store and the farmers, the stock of the farmers was hypotheca ted as
security with the Bank and the Bank had insisted that the said st ock
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 fur ther
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 c onsumer
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 consumer s’
interests will receive due consideration at appropriate for ums;
689
(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. Gupta 6 this
Court held:
“The importance of the Act lies in promoting welfare of the
society by enabling the consumer to participate dir ectly in
the market economy. It attempts to remove the helplessne ss of
a consumer which he faces against powerful business ,
described as, ‘a network of rackets’ or a society i n which,
‘producers have secured power’ to ‘rob the rest’ and the m ight
of public bodies which are degenerating into storehous es of
inaction where papers do not move from one desk to another
as a matter of duty and responsibility but for extr aneous
consideration leaving the common man helpless, bewild ered
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 purchase r
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 f act that other
forums/courts would also have jurisdiction to adjudica te 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
M/S LAUREATE BUILDWELL PVT. LTD. v. CHARANJEET SINGH
[S. RAVINDRA BHAT, J.]
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 Re al Estate
Regulatory Authority Act, 2019.
31. In view of these considerations, this court is of the o pinion
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 – e ven 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 belong s 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 purchase r claims
refund, on an assessment that he too can (like the original a llottee) 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 pro perly 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 presentat ion of the
9 Imperia Structures Ltd. v. Anil Patni, (2020) 10 SCC 783
691
present appeal, the occupancy certificate was not forthcoming. In these
circumstances, given that the purchaser/respondent had ste pped 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.]