Case Note & Summary
The present appeal arises from a consumer complaint filed by the respondent (original complainant) against the appellant bank before the National Consumer Disputes Redressal Commission (NCDRC). The respondent had sold his flat to a borrower in 2008 for Rs.32,00,000. The borrower obtained a housing loan of Rs.23,40,000 from the appellant bank. As part of the loan disbursement, the appellant bank, on the borrower's instruction, paid Rs.17,80,000 directly to the respondent's earlier lender (ICICI Bank) to clear the existing mortgage. The balance loan amount of Rs.5,09,311 was issued by cheque to the borrower but was not encashed, and the borrower closed the loan account. The respondent alleged that under a purported Tripartite Agreement dated 09.02.2008, the appellant bank was liable to pay the entire balance sale consideration of Rs.13,20,000 to him. The NCDRC initially dismissed the complaint on the ground that the respondent was not a 'consumer', but the Supreme Court in earlier proceedings set aside that order and remanded the matter for decision on merits. On remand, the NCDRC allowed the complaint, directing the appellant bank to refund Rs.13,20,000 with interest and costs. The appellant bank appealed to the Supreme Court. The Supreme Court framed two main issues: (i) whether the respondent is a 'consumer' under the Consumer Protection Act, 1986; and (ii) whether the appellant bank is liable to pay the balance consideration. The Court held that the respondent did not hire or avail any service from the appellant bank; the bank's services were rendered to the borrower, not to the respondent. The respondent was merely a beneficiary of the payment made to ICICI Bank, which was done on the borrower's instruction. There was no privity of contract between the respondent and the appellant bank. The Court further held that the respondent failed to prove the existence of the alleged Tripartite Agreement, and the NCDRC erred in presuming its existence and shifting the burden of proof to the appellant. Additionally, the complaint was barred by limitation as it was filed in 2018 for events that occurred in 2008-2009. The Supreme Court allowed the appeal, set aside the NCDRC's order, and dismissed the consumer complaint.
Headnote
A) Consumer Law - Definition of Consumer - Section 2(1)(d) Consumer Protection Act, 1986 - Privity of Contract - The respondent sold his flat to a borrower who took a loan from the appellant bank. The respondent had no contractual relationship with the appellant bank. The bank disbursed loan amounts to the borrower and, on the borrower's instruction, paid part of the loan to the respondent's earlier lender. Held that the respondent did not hire or avail any service from the appellant bank and thus is not a 'consumer' under the Act. (Paras 14-17) B) Consumer Law - Deficiency in Service - Tripartite Agreement - Burden of Proof - The respondent alleged a Tripartite Agreement obligating the appellant bank to pay the entire sale consideration. The appellant denied its existence. The respondent failed to produce the alleged agreement. Held that the burden to prove the existence of the Tripartite Agreement lay on the respondent, and the NCDRC erred in presuming its existence and shifting the burden to the appellant. (Paras 18-20) C) Consumer Law - Limitation - Barred by Limitation - The complaint was filed in 2018 for an alleged cause of action arising in 2008-2009. The NCDRC failed to adjudicate the appellant's objection regarding limitation. Held that the complaint is barred by limitation under the Consumer Protection Act, 1986. (Paras 21-22)
Issue of Consideration
Whether the respondent-complainant is a 'consumer' under Section 2(1)(d) of the Consumer Protection Act, 1986 in respect of the appellant bank, and whether the appellant bank is liable to pay the balance sale consideration to the respondent.
Final Decision
Appeal allowed. Impugned order of NCDRC set aside. Consumer complaint dismissed.
Law Points
- Consumer
- Privity of Contract
- Deficiency in Service
- Tripartite Agreement
- Burden of Proof
