A) ABSTRACT / HEADNOTE

This judgment examines whether the complainant, Mr. Snehasis Nanda, qualifies as a “consumer” under the Consumer Protection Act, 1986, and whether M/s Citicorp Finance (India) Ltd. (the appellant) owed any enforceable obligation to pay the outstanding sale consideration of Rs.31,00,000/- to the complainant arising out of the alleged Tripartite Agreement dated 09.02.2008.

The factual matrix shows a primary sale transaction between the complainant (seller) and Mr. Mubarak Vahid Patel (buyer), with the buyer procuring a home loan from the appellant. The appellant disbursed Rs.17,80,000/- to ICICI Bank to facilitate foreclosure of the complainant’s earlier housing loan and later issued a cheque for the remaining sanctioned amount which remained unencashed when the borrower closed the account.

The NCDRC had granted relief to the complainant for Rs.13,20,000/- plus interest and costs; this Court set aside that order. The Court analysed privity of contract and held that, on a conjoint reading of the MoU, Agreement for Sale, Home Loan Agreement and the alleged Tripartite instrument, the essential contractual relationship of sale was between the complainant and the borrower; the appellant’s contractual relation was only with the borrower and, at best, limited to foreclosure payment obligations quantified by the Home Loan Agreement.

The Court also observed procedural infirmities at the NCDRC notably absence of a reasoned order on limitation under Section 24-A and failure to implead the borrower, a necessary and proper party. The decision reaffirmed that a person lacking privity cannot be treated as a consumer for imposing deficiency of service under the 1986 Act and reiterated the consumer’s exclusive choice in electing forum where arbitration clauses exist.

Keywords: consumer, privity of contract, tripartite agreement, foreclosure, limitation, non-joinder, deficiency of service, arbitration, home loan agreement, NCDRC.

B) CASE DETAILS 

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arises from the sale of a flat originally encumbered by a housing loan taken by the complainant. The buyer, Mr. Mubarak V. Patel, agreed to purchase the flat for Rs.32,00,000/ and sought a home loan from Citicorp. The complainant alleged a Tripartite Agreement of 09.02.2008 whereby Citicorp agreed to disburse the sale consideration, including foreclosure payment to ICICI Bank and payment of the residual consideration to the complainant.

Citicorp executed a Home Loan Agreement with the borrower on 28.02.2008 and transferred Rs.17,80,000/ to ICICI Bank to enable foreclosure; the sanctioned loan was Rs.23,40,000/ and an unencashed cheque for Rs.5,09,311/ was issued to the borrower later. The complainant approached the NCDRC in April 2018, claiming deficiency/unfair trade practice and seeking the balance Rs.13,20,000/-. The NCDRC allowed the complaint; Citicorp challenged that order before this Court. Earlier, this Court in Civil Appeals Nos.10408–10409 of 2018 had found prima facie material and remanded for merits consideration.

On remand, NCDRC awarded relief to the complainant; the Supreme Court now re-examines both the jurisdictional and substantive aspects primarily whether the complainant is a consumer vis-à-vis Citicorp and whether Citicorp’s contractual obligation extended to payment of the entire outstanding sale consideration. The Court also inspects procedural lapses non-joinder of the borrower and absence of a reasoned order on condonation of delay under Section 24-A.

D) FACTS OF THE CASE

The complainant purchased the flat on 30.05.2006 and financed it through an ICICI housing loan of Rs.17,64,644/. In February 2008, the borrower approached the complainant to buy the flat for Rs.32,00,000/— a MoU dated 09.02.2008 and a registered Agreement for Sale dated 12.02.2008 followed. The buyer paid Rs.1,00,000/ by post-dated cheque and sought the remaining Rs.31,00,000/ through a housing loan.

The appellant and borrower executed a Home Loan Agreement on 28.02.2008 where the appellant sanctioned Rs.23,40,000/; on borrower’s request, appellant remitted Rs.17,80,000/ to ICICI Bank for foreclosure of the complainant’s loan. A balance of Rs.5,09,311/ remained which the appellant attempted to pay by cheque in 2009 but the borrower did not encash it and later closed the loan account.

The complainant contends existence of a Tripartite Agreement obliging the appellant to pay the balance sale consideration; the appellant denies any such instrument executed by it and maintains contractual privity solely with the borrower. The complainant filed a consumer complaint on 16.04.2018; NCDRC initially dismissed at admission but on remand allowed the complaint and directed payment of Rs.13,20,000/- plus interest and costs.

The appellant challenges the NCDRC’s findings, asserting lack of privity, improper inference on non-production of the Tripartite Agreement, non-joinder of the borrower and absence of any reasoned condonation of delay.

E) LEGAL ISSUES RAISED

1. Whether the complainant can be considered a consumer under Section 2(1)(d) of the Consumer Protection Act, 1986 in respect of the appellant where no privity of contract exists between them?

2. Whether the appellant, having sanctioned a home loan to the borrower for Rs.23,40,000/, could be held liable to pay the entire sale consideration of Rs.31,00,000/ claimed by the complainant under the alleged Tripartite Agreement?

3. Whether the NCDRC erred in failing to record reasons while condoning the delay under Section 24-A for a complaint filed in April 2018 when the cause of action arose in 2008?

4. Whether non-joinder of the borrower rendered the NCDRC’s determination unsustainable, given the borrower’s central role in the transactions?

5. Whether an arbitration clause in the alleged Tripartite Agreement could, as a matter of law, oust the complainant’s election to seek redress before consumer fora?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsel for the appellant argued that the appellant had contractual privity only with the borrower under the Home Loan Agreement and no service or obligation was ever contracted with the complainant. The appellant denied execution of the Tripartite Agreement and submitted that the onus to prove such a document lay on the complainant who was a party thereto.

The appellant emphasized that the actual sanctioned loan (Rs.23,40,000/-) could not satisfy the claimed Rs.31,00,000/- shortfall and that at best appellant’s obligation was to discharge quantified foreclosure dues (Rs.17,87,763/- as reflected). Further, the appellant contended the borrower was a necessary party whose non-impleadment prejudiced effective adjudication and that the NCDRC failed to adjudicate the limitation objection or record reasons while condoning delay.

G) RESPONDENT’S ARGUMENTS

The respondent contended that the NCDRC’s findings of unfair trade practice and deficiency were reasoned and supported by documents; he maintained the existence of the Tripartite Agreement (09.02.2008) which authorizes appellant’s liability towards payment of sale consideration.

The respondent relied on this Court’s earlier prima facie order (06.09.2019) which remanded the matter for merits, asserting that the NCDRC properly accepted evidence and that the appellant’s denial was a tactic to avoid liability. The respondent opposed the need for joinder and defended limitation condonation by reference to parallel proceedings before banking ombudsman and writ remedy.

H) JUDGMENT

The Court undertook a two-fold analysis: jurisdictional (consumer status) and substantive (nature/extent of appellant’s liability). First, the Court clarified that the earlier order of 06.09.2019 was only prima facie and did not constitute a conclusive determination that the respondent was a consumer. On the merits, the Court held that a conjoint reading of the MoU, Agreement for Sale and Home Loan Agreement reveals that the sale transaction was essentially between complainant and borrower and that the appellant’s contractual relationship was exclusively with the borrower.

Reliance was placed on established precedent that absence of privity ordinarily precludes liability under the consumer statute (citing Indian Oil Corporation v. Consumer Protection Council, Kerala, (1994) 1 SCC 397 and Janpriya Buildestate Pvt. Ltd. v. Amit Soni, 2021 SCC OnLine SC 1269). The Court emphasized the complainant’s burden to produce the Tripartite Agreement non-production or production of an unsigned/unstamped partial document attracts adverse inference against the producer; here the complainant, being a signatory, was expected to retain the document.

Even taking the Tripartite at its highest, its terms restricted appellant’s obligation to payment of foreclosure amounts to ICICI Bank and did not envisage paying both the bank and the complainant the full Rs.31,00,000/-. The Court noted the sanctioned loan figure of Rs.23,40,000/- which in any view could not meet the full claimed consideration. Procedurally, the Court found the NCDRC silent on Section 24-A condonation requirements: the complainant’s delay (ca. 10 years) required specific satisfaction and recording of reasons which NCDRC failed to do despite the appellant raising limitation.

The Court also criticized non-joinder of the borrower, who was a necessary party given his central role and his presence on the MoU, Agreement for Sale and Home Loan Agreement. On arbitration, the Court reiterated settled principle that a consumer may elect consumer fora over arbitration and that arbitration clauses do not curtail such election; arbitration, if present, is for the consumer’s option alone (drawing on M Hemalatha Devi v. B Udayasri and Emaar MGF Land Ltd. v. Aftab Singh).

Concluding that the NCDRC’s award had no tenable basis, the Court set aside the impugned order and allowed the appeal with parties bearing their own costs, while expressly not prejudicing any remedy inter se borrower and respondent.

a. RATIO DECIDENDI

The decisive principles are:

(i) privity of contract is essential for maintaining a complaint under the 1986 Act unless some distinct statutory duty or residuary deficiency can be established; (

ii) the burden of proof rests on the party alleging existence of a contract/document and failure to produce a complete executed Tripartite Agreement militates against that party;

(iii) an award under consumer law requires proper procedural compliance on condoning delay under Section 24-A, with recorded reasons; and

(iv) a consumer has the exclusive choice to pursue consumer fora notwithstanding an arbitration clause.

Applying these principles to the facts, the Court concluded the complainant was not a consumer vis-à-vis the appellant and that the appellant’s contractual liability could not extend beyond what the Home Loan Agreement contemplated.

b. OBITER DICTA

The Court observed obiter that in consumer disputes arbitration remains an available option but the statutory remedial architecture is protective and elective in favour of consumers; further, adverse inferences for non-production of documents ordinarily run against the party asserting their existence, especially when that party is a signatory.

c. GUIDELINES

1. Consumer fora must record reasons when condoning delay under Section 24-A and should ensure parties are satisfied on sufficiency of cause.

2. Complainants alleging multi-party instruments must produce complete executed documents; absence justifies adverse inference.

3. NCDRC and similar fora should scrutinize necessary/proper parties and direct impleadment to avoid later fatal non-joinder.

4. Where arbitration clauses exist, courts must respect consumer’s election while balancing arbitrability principles and public policy.

I) CONCLUSION & COMMENTS

The Supreme Court’s decision underscores a strict but balanced application of consumer law: it preserves the protective intent of consumer fora while insisting on foundational contractual principles such as privity and proof. Practically, the judgment cautions litigants against relying on fragmented or unsigned instruments and reiterates the necessity to implead all parties who are central to the factual matrix.

For consumer forums, the judgment serves as a procedural reminder to record cogent reasons when exercising discretion on limitation and to guard against rewarding litigants who delay prosecution without adequate explanation. The ruling preserves the complainant’s remedies against the borrower but removes the basis for holding the financier jointly liable beyond documented contractual undertakings.

The treatment of arbitration reconfirms the consumer’s choice to seek public remedies, a point of practical significance in real estate-linked finance disputes.

J) REFERENCES

a. Important Cases Referred

1. Indian Oil Corporation v. Consumer Protection Council, Kerala, [1993] Supp. 3 SCR 884 : (1994) 1 SCC 397.

2. Janpriya Buildestate Pvt. Ltd. v. Amit Soni, 2021 SCC OnLine SC 1269.

3. Tata Motors Limited v. Antonio Paulo Vaz, [2021] 1 SCR 625 : (2021) 18 SCC 545.

4. Udit Narain Singh Malpaharia v. Additional Member Board of Revenue, Bihar, [1963] Supp. 1 SCR 676.

5. M Hemalatha Devi v. B Udayasri, [2023] 13 SCR 258 : (2024) 4 SCC 255.

6. Emaar MGF Land Ltd. v. Aftab Singh, [2018] 14 SCR 791 : (2019) 12 SCC 751.

7. Snehasis Nanda v. M/s Citicorp Finance (India) Limited (Formerly Citifinancial Consumer Finance India Limited), Civil Appeals Nos.10408–10409 of 2018 (order dated 06.09.2019).

b. Important Statutes Referred

1. Consumer Protection Act, 1986 (specifically Section 2(1)(d) and Section 24-A).

2. Consumer Protection Act, 2019.

3. Arbitration and Conciliation Act, 1996.