Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1493 OF 2011
[Arising out of SLP [C] No.7283/2010]
Vinod Kumar Thareja ... Appellant
Vs.
M/s Alpha Construction & Ors. ... Respondents
ORDER
R. V. Raveendran J.
Leave granted.
2. The appellant, the owner of a plot measuring about 11000 sq.ft.
situated at Bhopal, entered into a Joint Venture Agreement dated 2.7.2004
with the first respondent for development of the said plot by construction
and sale of nine duplex flats. Under the said agreement, the appellant was to
provide his land to the first respondent for construction of flats; the first
respondent was responsible for the construction and sale of the duplex flats;
and out of the sale proceeds realized by sale of the flats, the appellant was
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entitled to 45% and the first respondent was entitled to the balance of 55%.
The first respondent was authorized to enter into agreements of sale with
prospective purchasers of flats even at the stage of construction and receive
the price either in a lump sum or in instalments. The first respondent was
solely responsible for completion of construction and the quality of
construction. According to the appellant, his obligation under the joint
venture agreement was only to contribute the land and in consideration
thereof receive 45% of sale proceeds.
3. In pursuance of it, the appellant and first respondent entered into an
agreement dated 18.9.2004 with respondents 2 and 3, who were interested in
purchasing one of the nine duplex flats to be constructed in the property. The
said agreement clearly stated that the first respondent was to construct the
duplex flat and receive the consideration from respondents 2 and 3. In
pursuance of it, the first respondent's proprietor (Rajbir Singh), as Attorney
holder of the appellant, executed a sale deed dated 14.1.2005 in favour of
respondents 2 & 3, conveying an extent of 968 sq.ft., of land with a skeletal
structure thereon for Rs.6 lakhs.
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4. Respondents 2 and 3 filed a complaint dated 22.6.2006 before the
District Consumer Redressal Forum, Bhopal (`District Forum' for short)
against the first respondent alleging deficiency in service. In the said
complaint they alleged that they had paid Rs.11,80,000/- to the first
respondent out of a total consideration of Rs.13,50,000/- for the purchase of
a duplex flat; that on 25.6.2005, the Municipal Corporation demolished the
structure constructed by the first respondent; and that the first respondent
committed an unfair trade practice by not disclosing the true facts and by not
delivering the constructed flat. The complainants also alleged that thereafter
the first respondent failed to construct the flat and was guilty of gross
negligence and deficiency in service. The complainants consequently
demanded from the first respondent, refund of the sum of Rs.11,80,000/-
paid by them with interest of Rs.3,35,000/-, compensation of Rs.2,00,000/-
and punitive damages of Rs.2,00,000/- in all Rs.19,15,000/-.
5. The said petition was contested by the first respondent who was the
sole respondent. The appellant was not impleaded as a party before the
District Forum, by the complainants. Even the first respondent did not make
any application before the District Forum for impleading the appellant as a
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co-respondent. Nor did he contend that the appellant should be made liable
for payment of any amount that may be directed by the commission. He
merely contended that the complainants ought to have made the appellant
also a party and in his absence the complaint was liable to be dismissed.
6. The District Forum allowed the complaint by order dated 11.1.2007
and directed the first respondent to refund the sum of Rs.11,80,000/- paid by
the respondents 2 and 3 to the first respondent, with interest at 18% per
annum from the date of deposit till date of payment.
7. Feeling aggrieved, the first respondent filed an appeal before the
Madhya Pradesh Consumer Dispute Redressal Commission (`the State
Commission' for short) challenging the order of the district forum. In the
said appeal, the first respondent made an application for impleading the
appellant herein as the third respondent. That application was allowed on
28.4.2008 and the State Commission impleaded the appellant as third
respondent in the appeal and directed the appellant to file its response to the
complaint filed by the complainants under section 12 of the Act.
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8. The appellant therefore filed a counter to the main complaint before
the State Commission pointing out that neither in the complaint by the
complainant nor in the appeal by the first respondent anything adverse has
been pleaded against them nor any claim made against him; and therefore,
the question of fastening any liability against him did not arise. The
appellant also filed objections to the appeal by contending that he was not a
necessary party to the appeal. He pointed out that the complainants had not
alleged or proved any wrong doing on his part or any deficiency in service
on his part, nor made any claim against him and therefore he could not be
impleaded as a party in the appeal.
9. The State Commission allowed the appeal of the first respondent in
part by a brief order dated 19.9.2008. It held that as the flats were
constructed by the first respondent in the land belonging to the appellant in
pursuance of a joint venture agreement between them and as the agreement
for sale in favour of respondents 2 and 3 had been executed jointly by the
appellant and first respondent and as the subsequent sale deed in favour of
respondents 2 and 3 was executed by the proprietor of first respondent as
attorney holder of the appellant, and as obtaining of building permission for
construction was the joint responsibility of the appellant and the first
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respondent, the appellant herein was also responsible to compensate the
complainants for any loss suffered by them on account of the demolition by
the Municipal Corporation. As a consequence, the State Commission, while
upholding the direction of the District Forum for refund of Rs.11,80,000/-
paid by the complainants, made the following modifications :
(a) Respondents 2 and 3 shall re-convey the property in favour of
appellant;
(b) The interest shall be reduced to 9% per annum; and
(c) The first respondent as also the appellant were liable for the amount
payable to respondents 2 and 3.
10. Feeling aggrieved, the appellant filed a revision before the National
Consumer Dispute Redressal Commission (`National Commission' for
short) which dismissed the revision by the impugned order with the
following observations :
"It is not in dispute that the owner of the property as well as the builder
had entered into joint agreement to build the flats and though the
responsibility of visiting the office of the corporation frequently to obtain
sanctioning the plan/building licence. Commencement certificate and
completion certificate etc., was delegated to the builder. The building
permission is obtained in the name of owner and builder. Therefore, the
builder and owner both are jointly responsible for all commission and
omission. Even while collecting money from the consumers/complainants,
an agreement was signed by the owner also. Further the Municipal
Corporation had demolished the building because of dispute in the title of
the property. Therefore, the liability of the petitioner, who claims to be the
owner of the property of which title is unclear and still had entered into an
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agreement and sold the plot to the gullible consumers is proved and the
deficiency is writ large."
(Emphasis supplied)
The said order is challenged by the appellant in this appeal by special leave.
11. On the contentions urged, the following question arises for
consideration in this appeal : Whether a respondent against whom an order
for payment has been made in a complaint under the Consumer Protection
Act, 1986, can in an appeal filed by him, seek impleadment of a third party
by contending that such third party is also liable either partly or wholly, even
if the complainant has not sought any relief against such third party?
12. Respondents 2 and 3 filed the complaint against the first respondent as
they had made the payments to the first respondent and first respondent had
agreed to construct and deliver them the duplex flat and that the flat
constructed by the first respondent was demolished by the municipal
authorities. The complainants had no grievance against the appellant nor did
they seek any relief against the appellant. The first respondent herein who
was the sole respondent before the District Forum did not seek impleadment
of the appellant as a respondent in the complaint before the District Forum.
The District Forum allowed the complaint and held that the first respondent,
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as the service provider, was guilty of deficiency of service and directed the
first respondent to pay to the complainants, a sum of Rs.11,80,000/- with
interest. That order was not challenged by the complainants (respondents 2
and 3). The only question that can, therefore, be considered in an appeal by
the first respondent was whether it was liable to pay any amount to
respondents 2 and 3 and, if so the extent thereof.
13. The scheme of the Act does not permit a service provider, who has
been made liable to refund the amount paid towards price under the order of
the District Forum, to file an appeal and pass on a part of the liability to
some third party, on the ground that the contract between them enabled him
to do so. In an appeal by a respondent in a complaint, aggrieved by the order
made in favour of the complainant, the only issue is whether the liability of
the respondent should be upheld, modified or rejected. The question whether
anyone else should be made liable along with the respondent in the
complaint, does not arise. The appeal by a respondent in a complaint has to
be dismissed, if the respondent is liable for the claim. If he has been wrongly
made liable, the appeal will be allowed. The issue in the appeal and the relief
that can be granted in the appeal can be only qua the complainant and not
qua some third party. If a service provider who has been made liable to a
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complainant wants contribution from anyone else, on the ground that such
third party had also contributed to the deficiency in service, it is for the
service provider to take independent action against such third party, in
respect of the liability. As the complainants neither impleaded nor sought
any relief against the appellant, neither the State Commission nor the
National Commission could make the appellant liable along with the first
respondent.
14. The first respondent contended that when the appellant was impleaded
as the third respondent in its appeal, the appellant did not protest, nor
challenged the order of the State Commission impleading him as a party, but
filed objections to the complaint before the State Commission on merits and
participated in the appeal proceedings and therefore he was estopped from
challenging his impleadment. Being impleaded as a party in an appeal is
different from being made liable by an order in the appeal. A person may not
have any grievance if he is merely impleaded as a party, but may have a
grievance in regard to the impleading, if such impleading led to making him
liable for any payment. When a non-party is impleaded as a respondent in an
appeal, he can either challenge the impleadment itself or challenge his
impleadment, while challenging the final decision in the appeal. The fact
that the impleaded non-party filed objections to the complaint during the
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pendency of the appeal, on the specific direction of the State Commission,
will not deny his right to challenge the impleadment.
15. This appeal is, therefore, allowed and the order of the National
Commission affirming the order of the State Commission making the
appellant liable jointly with first respondent is set aside. It is, however, made
clear that :
(i) if the first respondent has any claim or cause of action against the
appellant, it is at liberty to seek redressal of its grievances against the
appellant;
(ii) the order of the State Commission affirmed by the National
Commission to the extent it reduces the interest from 18% to 9% per annum
and requiring the respondents 2 and 3 herein to re-convey the flat to their
vendor under the sale deed dated 14.1.2005 is not disturbed; and
(iii) respondents 2 and 3 may draw any amount deposited by the first
respondent towards the amount due under the order of the District Forum as
modified by the State Commission.
............................J.
(R.V. Raveendran)
New Delhi; ............................J.
February 08, 2011. (A.K. Patnaik)
