Privity of Contract Essential for Consumer Status: The Court reiterated that for a person to qualify as a ‘consumer’ under the CPA, there must be privity of contract between the parties. In the absence of such privity, the complaint is not maintainable. (Para 16, 17)

Burden of Proof on Complainant: The burden of proving the existence of a Tripartite Agreement lies on the complainant, and non-production of a signed agreement leads to an adverse inference against the complainant. (Para 16)

Limitation Period Must Be Adhered To: The Court emphasized that complaints filed beyond the two-year limitation period under Section 24-A of the CPA must be supported by sufficient cause, and the NCDRC must record reasons for condoning the delay. (Para 21, 22)

Necessary Party Must Be Joined: The borrower, being a party to the MoU, Agreement for Sale, and Home Loan Agreement, was a necessary party to the proceedings, and his non-joinder was fatal to the complaint. (Para 23)

Arbitration Clause Not Binding on Consumer: The Court held that even if an arbitration clause exists, the consumer has the option to choose between arbitration and the consumer forum, and the choice lies exclusively with the consumer. (Para 25)

The Supreme Court held that the respondent was not a ‘consumer’ under the CPA as there was no privity of contract between the appellant and the respondent. The Court found that the existence of the Tripartite Agreement was not proven, and the respondent failed to produce a signed copy. The Court held that the appellant was not liable to pay the balance consideration of Rs. 13,20,000/- as the loan amount sanctioned was only Rs. 23,40,000/-, and the appellant had no obligation to pay the respondent directly. The Court noted that the complaint was filed beyond the limitation period, and the NCDRC failed to record reasons for condoning the delay. The Court observed that the borrower was a necessary party to the proceedings, and his non-joinder was a significant lapse. The Court set aside the NCDRC’s order and allowed the appeal, holding that the respondent was not entitled to compensation under the CPA.

Major Acts:

1. Consumer Protection Act, 1986 (CPA) – Section 2(1)(d) – Definition of ‘Consumer’ – Section 24-A – Limitation Period.

2. Indian Arbitration and Conciliation Act, 1996 – Arbitration Clause in Tripartite Agreement.

3. Indian Contract Act, 1872 – Privity of Contract.

Subjects:
Consumer Protection Act – Privity of Contract – Tripartite Agreement – Deficiency in Service – Limitation – Arbitration – Home Loan Agreement – Foreclosure – Unfair Trade Practices – Necessary Party – Proper Party.

Facts:

1. Nature of the Litigation: The appeal arose from a consumer complaint filed by the respondent, Snehasis Nanda, against Citicorp Finance (India) Limited, alleging deficiency in service and unfair trade practices for non-payment of the balance sale consideration of Rs. 13,20,000/- under a purported Tripartite Agreement dated 09.02.2008.

2. Who is Asking the Court and for What Remedy? The respondent sought compensation for the unpaid balance amount, interest, and litigation costs from the appellant, Citicorp Finance (India) Limited.

3. Reason for Filing the Case: The respondent claimed that the appellant failed to disburse the full loan amount as per the Tripartite Agreement, leading to financial loss.

4. What Has Already Been Decided Until Now? The National Consumer Disputes Redressal Commission (NCDRC) had allowed the respondent’s complaint, directing the appellant to refund Rs. 13,20,000/- with 12% interest and pay Rs. 1,00,000/- as litigation costs. The appellant challenged this order before the Supreme Court.

Issues:

1. Whether the respondent-complainant qualifies as a ‘consumer’ under Section 2(1)(d) of the Consumer Protection Act, 1986?

2. Whether the appellant was liable to pay the balance consideration of Rs. 13,20,000/- under the alleged Tripartite Agreement?

3. Whether the complaint was barred by limitation under Section 24-A of the Consumer Protection Act, 1986?

4. Whether the borrower was a necessary party to the proceedings?

5. Whether the dispute could be referred to arbitration as per the Tripartite Agreement?

Submissions/Arguments:

1. Appellant’s Submissions:
   a. The respondent was not a ‘consumer’ under the CPA as there was no privity of contract between the appellant and the respondent.
   b. The existence of the Tripartite Agreement was denied, and no signed copy was produced by the respondent.
   c. The appellant had no obligation to pay the respondent directly, as the payment to ICICI Bank was made on the borrower’s instructions.
   d. The complaint was barred by limitation, and the NCDRC failed to address this issue.
   e. The borrower was a necessary party to the proceedings, and his non-joinder was fatal to the complaint.

2. Respondent’s Submissions:
   a. The respondent was a ‘consumer’ under the CPA, and the NCDRC had rightly allowed the complaint.
   b. The Tripartite Agreement existed, and the appellant was bound to disburse the full loan amount.
   c. The appellant had engaged in unfair trade practices and deficiency in service by not paying the balance amount.