A) ABSTRACT / HEADNOTE

This analysis examines the Supreme Court’s judgment in M/s Citicorp Finance (India) Ltd. v. Snehasis Nanda (Civil Appeal No.14157 of 2024), delivered on 20 March 2025, wherein the Court set aside the National Consumer Disputes Redressal Commission’s order directing refund of Rs.13,20,000/ with interest and costs. The core questions were:

(i) whether the complainant qualified as a “consumer” under Section 2(1)(d) of the Consumer Protection Act, 1986,

(ii) whether the financier (appellant) was liable to pay the outstanding sale consideration of Rs.31,00,000/ to the complainant under a purported tripartite agreement, and

(iii) whether non-joinder of the purchaser (borrower) vitiated proceedings before the NCDRC.

The Court analysed the contractual matrix memorandum of understanding, agreement for sale, home loan agreement and a partly produced tripartite document and held that the substantive sale transaction was between the complainant and the borrower; there was no privity of contract between complainant and appellant.

The judgment emphasises:

(a) the necessity of privity (contractual obligation) for invoking remedies under the 1986 Act where no service is shown;

(b) the burden of proof on the party asserting the existence of an agreement;

(c) the limited scope of financier’s liability under the home loan; and

(d) the procedural prerequisites for condoning delay under Section 24-A and for impleading necessary parties.

The Court also reiterated that arbitration clauses, if present, cannot be forced upon a consumer arbitration remains an elective forum for the consumer.

Keywords: consumer; privity of contract; tripartite agreement; foreclosure; Section 24-A; arbitration; necessary party; limitation.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arises from a residential sale where the complainant had earlier financed the flat through ICICI Bank and thereafter agreed to sell the flat to a purchaser (borrower) for Rs.32,00,000/. The purchaser sought a housing loan from the appellant (Citicorp).

The complainant produced a Memorandum of Understanding (09.02.2008), a registered Agreement for Sale (12.02.2008) and asserted a Tripartite Agreement (09.02.2008) among himself, the borrower and the appellant under which the financier would discharge the sale consideration (including foreclosure payment to ICICI and balance to the complainant).

The appellant grants a home loan of Rs.23,40,000/ and, on the borrower’s instruction, transfers Rs.17,80,000/ to ICICI to foreclose the bank’s charge; the sanctioned amount falls short of Rs.31,00,000/ which the complainant claimed was payable by the appellant under the alleged tripartite pact.

The complainant approaches the NCDRC in 2018 for refund/compensation; NCDRC rules in his favour on merits and orders refund of Rs.13,20,000/, but the Supreme Court, on second appeal, reverses. The background features both contractual substance (who owed what to whom) and procedural concerns (limitation, non-joinder, evidentiary burden regarding existence of the tripartite document).

The Court frames its review by reference to earlier interventions: its own 2019 order that restored the complaint for merits (prima facie consumer view) and decisions on arbitrability and consumer choice, notably Emaar MGF and M Hemalatha Devi, which shape the analysis of forum selection.

The judgment navigates interplay of private financing obligations and statutory consumer protection designed to benefit persons in contractual privity with service providers.

D) FACTS OF THE CASE

The complainant purchased the flat in 2006 and held outstanding housing debt with ICICI Bank (Rs.17,64,644/). In February 2008 the borrower agreed to buy the flat for Rs.32,00,000/ and the parties executed MoU (09.02.2008) and later Agreement for Sale (12.02.2008). The borrower sought a home loan from the appellant; the appellant and borrower executed a Home Loan Agreement dated 28.02.2008 for Rs.23,40,000/.

The borrower requested the appellant to pay Rs.17,80,000/ directly to ICICI to obtain foreclosure and release of title; the appellant made that payment. An amount of Rs.5,09,311/ remained due and a cheque was issued to the borrower in 2009 but not encashed; the borrower later closed the loan account.

The complainant alleges a Tripartite Agreement whereby the appellant undertook to pay the total sale consideration (or the balance), and prays for Rs.13,20,000/ (balance) plus interest and costs. The NCDRC initially dismissed the complaint at pre-admission but this Court in 2019 set aside that dismissal and remanded for merits.

On remand the NCDRC allowed the complaint and directed refund; appellant challenges before the Supreme Court pleading lack of privity, non-existence or incomplete production of tripartite agreement, limitation and non-joinder of the borrower the ostensible real party in interest.

E) LEGAL ISSUES RAISED

i. Whether the complainant qualifies as a “consumer” under Section 2(1)(d) of the Consumer Protection Act, 1986 in absence of privity of contract with the financier?
ii. Whether the appellant-financier can be held liable to pay the balance sale consideration (Rs.13,20,000/) to the complainant under the alleged tripartite agreement or otherwise?
iii. Whether the NCDRC rightly condoned delay in filing the complaint in view of Section 24-A?
iv. Whether non-joinder of the borrower (purchaser) was fatal to the NCDRC’s adjudication?
v. Whether an arbitration clause in the alleged tripartite/document ousts consumer forum jurisdiction where the complainant has chosen the consumer forum?

F) PETITIONER/ APPELLANT’S ARGUMENTS

The appellant contended that it had no privity of contract with the complainant and provided no service to him; the home-loan was a contract between appellant and borrower only. The appellant denied execution/production of any tripartite agreement and argued that burden lay on the complainant to prove such an agreement.

The appellant maintained that its payment to ICICI was made at borrower’s instruction to satisfy foreclosure and could not be converted into a direct liability to the complainant for the entire sale consideration.

Further, the appellant argued that the borrower was a necessary and proper party and non-joinder rendered the NCDRC’s order vitiated; finally, limitation under Section 24-A was raised and the NCDRC failed to record reasoning for condonation.

G) RESPONDENT’S ARGUMENTS

The respondent asserted that documentary record (MoU, Agreement for Sale and the tripartite instrument) established an obligation by the appellant to discharge sale consideration and thus he was a consumer who suffered loss when balance consideration was not paid.

He relied on the NCDRC’s findings of deficiency and unfair trade practice and urged that the trial court had adequately appreciated evidence. The respondent argued that the appellant deliberately withheld tripartite document and that this Court’s earlier prima facie view (2019) endorsed his status as consumer for merits adjudication.

H) RELATED LEGAL PROVISIONS 

i. Section 2(1)(d), Consumer Protection Act, 1986 — definition of consumer.
ii. Section 24-A, Consumer Protection Act, 1986 — limitation and condonation conditions (two-year rule and recording of reasons).
iii. Arbitration & Conciliation Act, 1996 — interplay with consumer remedies; elective nature of arbitration for consumer (as explained in M Hemalatha Devi and Emaar MGF).

I) JUDGEMENT

The Court undertook a textual and factual analysis. It first corrected the notion that the earlier 2019 order conclusively declared the respondent a consumer; the 2019 view was expressly prima facie and left the merits to NCDRC. The Supreme Court found that the NCDRC failed to articulate reasoned findings on critical precepts: the existence and production of the full tripartite agreement, the basis for treating the complainant as a consumer despite absence of contractual privity, the question of limitation under Section 24-A, and the non-joinder of the borrower.

On facts, even assuming all documents existed, the essential sale transaction and obligations were between complainant and borrower; the home-loan created rights and liabilities only between appellant and borrower and the financier’s payment to ICICI was at borrower’s request to foreclose a prior mortgage.

The partial/unsigned tripartite instrument produced by the complainant was insufficient to shift the evidentiary burden and attract adverse inference against the appellant. The Court invoked Indian Oil Corporation v. Consumer Protection Council and Janpriya Buildestate v. Amit Soni to underscore that in absence of contract/privity a person cannot be saddled with consumer-law liabilities unless the deficiency falls within residuary ambit and is proved.

The Court held that the maximum financier liability could not exceed the sanctioned loan (Rs.23,40,000/) and, in any view, only the quantified foreclosure sum (Rs.17,87,763/) was within the appellant’s obligation; ordering payment of Rs.31,00,000/ was unsustainable.

On limitation, the Court observed the cause of action arose by April/May 2008 but the complaint was filed in April 2018; NCDRC neither recorded reasons nor applied its mind to condonation under Section 24-A despite appellant’s objection a procedural lapse.

On non-joinder, the borrower was the pivotal party being party to MoU, sale deed, loan agreement and the alleged tripartite document; failure to implead him deprived the forum of effective adjudication on core facts. Finally, the Court addressed arbitration: noting precedents (including M Hemalatha Devi and Emaar MGF), it reiterated that arbitration remains a consumer’s elective forum; since appellant was not a consumer, that branch of analysis need not be pursued.

a. RATIO DECIDENDI

The dispositive ratio is threefold:

(1) privity of contract is a sine qua non for establishing that a person is a consumer under the 1986 Act in the absence of proved service or residuary deficiency; hence the complainant, not being in contractual relationship with the appellant, could not be treated as consumer;

(2) burden of proof rests on the party asserting the existence and terms of a tripartite agreement production of a partly blank/unsigned instrument was insufficient; adverse inference normally runs against the party who asserts existence and retains the document;

(3) procedural compliance is mandatory: condonation under Section 24-A requires the commission to record reasons and a necessary party (the borrower) must be impleaded where his presence is requisite to make an effective order. These principles together defeat the NCDRC’s award.

b. OBITER DICTA 

The Court expanded on policy dimensions: consumer fora are public remedies and arbitration, even if contractually envisaged, cannot be forced on the consumer arbitration is elective for the consumer alone. The judgment clarifies that where a consumer opts for statutory redress, private arbitration cannot oust that choice.

The Court also observed that in finance transactions the financier’s obligations cannot be enlarged beyond the home-loan contract and attendant documents; equitable inferences cannot substitute for contractual liability. The Court’s comments on documentary production and adverse inference reinforce evidentiary discipline in consumer litigation.

c. GUIDELINES

1. A complainant asserting a tripartite or collateral agreement must produce the complete executed instrument; absence permits an adverse inference against the party who asserts and retains the document.

2. Consumer fora must record reasoned orders when condoning delay under Section 24-A — mere silence on limitation is untenable where objection is raised.

3. Parties whose presence is necessary to render an effective decree (here the borrower) must be impleaded; NCDRC /Commissions should scrutinise impleadment at admission/early stage.

4. The existence of an arbitration clause in a financing/sale document does not preclude consumer forum jurisdiction where the consumer elects statutory remedy; thus tribunals should ascertain whether the claimant has chosen the consumer forum.

5. Tribunal findings should distinguish between payments made by a financier on borrower’s instruction (to satisfy foreclosure) and admissions of primary liability to seller; sanctions cannot be imposed beyond the financier’s contracted sanction.

J) CONCLUSION & COMMENTS

The Supreme Court correctly re-examined both fact and law and set aside the NCDRC order for want of privity, inadequate proof of the tripartite instrument, failure to record reasons for condonation under Section 24-A, and non-joinder of the purchaser who was the focal party. The judgment underscores strict evidentiary expectations in consumer litigation and protects financiers from imputed obligations not evidenced by contract.

Practitioners should note the dual thrust: substantive protection for consumers where contractual or residuary deficiency is proved, and procedural safeguards for respondents (proof, joinder, reasoned orders) to prevent unsupported expansion of liability.

The decision reiterates that consumer fora must act within procedural strictures while being mindful of the statute’s protective object; simultaneously, claimants must produce complete documentary proof when asserting third-party guarantees or tripartite obligations.

K) REFERENCES

a. Important Cases Referred

1. M/s Citicorp Finance (India) Ltd. v. Snehasis Nanda, Civil Appeal No.14157 of 2024, Supreme Court of India (20 Mar. 2025).

2. Indian Oil Corporation v. Consumer Protection Council, Kerala, (1994) 1 S.C.C. 397.

3. Janpriya Buildestate Pvt. Ltd. v. Amit Soni, (2021) SCC OnLine SC 1269.

4. Tata Motors Ltd. v. Antonio Paulo Vaz, (2021) 18 S.C.C. 545.

5. Udit Narain Singh Malpaharia v. Additional Member Board of Revenue, Bihar, 1963 Supp (1) S.C.R. 676.

6. M. Hemalatha Devi v. B. Udayasri, (2024) 4 S.C.C. 255.

7. Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 S.C.C. 751.

b. Important Statutes Referred

1. Consumer Protection Act, 1986, §§ 2(1)(d), 24-A.

2. Arbitration & Conciliation Act, 1996.