Kiran Raj

A bench of the Supreme Court of India icomprising of Justice Sanjay Karol and Justice Manmohan, set aside an order of the National Consumer Disputes Redressal Commission (NCDRC), holding that the complaint filed by the appellants was within the prescribed limitation period. The Court noted that specific discussions and exchanges had taken place between the parties and the escrow agent regarding the implementation of the agreement.

The appeal arose under Section 67 of the Consumer Protection Act, 2019, challenging the judgment dated March 14, 2023, passed by the NCDRC in Consumer Case No. 238 of 2019. The dispute pertained to a redevelopment project in Andheri, Mumbai, where the appellants, former tenants of "Madhav Baug," had entered into a Permanent Alternate Accommodation Agreement dated September 20, 2013. Under this agreement, the appellants were to receive alternative accommodation in the newly constructed building. The agreement provided for the completion of construction within 24 months from the issuance of the commencement certificate, with a six-month grace period.

On January 10, 2015, the parties executed an Indemnity-cum-Undertaking, under which the appellants were to be allotted flats numbered 301 and 302 in B-Wing, should necessary approvals not be obtained within six months. The agreement specified that if neither of these options was provided, the appellants would be entitled to compensation based on the market value of 1317 sq. ft. plus 25% additional value.

The appellants vacated their old flats in December 2014, and the respondents provided financial assistance for temporary accommodation until January 2019. The judgment noted that "balance of the dislocation compensation i.e. Rs.2,50,000/-, remained pending thereafter." Correspondence took place between the parties, including a letter from the appellants to the escrow agent, Mahesh Jani, on August 13, 2018, requesting the release of property papers. In a meeting on September 26, 2018, Mr. Jani indicated that in the absence of an approved layout plan, the escrow flats could be released to the appellants on October 11, 2018. Additional delays resulted in the final release of the flats on December 17, 2018.

On February 6, 2019, the appellants filed a consumer complaint before the NCDRC seeking the registration of their title over Flats 301 and 302 and to prevent the respondents from creating third-party rights over them. Alternatively, they sought compensation of Rs. 4,59,96,225/- with interest at 12% per annum. They also sought the balance Rs. 2,50,000/- with interest and monthly rent of Rs. 51,537/- from January 2019 onward.

The NCDRC dismissed the complaint, stating that it was time-barred. It held that "the cause of action for enforcement of 'Indemnity-cum-Undertaking' arose on 10.07.2015. This complaint was filed on 19.02.2019. The complaint is time-barred, and no application for condonation of delay has been filed."

Before the Supreme Court, the appellants argued that their efforts demonstrated a continuing cause of action, as they continued their attempts to secure their title over the allotted flats through meetings, correspondence, and engagement with the escrow agent. They submitted that the release of flats from escrow in December 2018 constituted a fresh cause of action, making their complaint timely.

The Supreme Court examined the record and observed: "It is not in dispute, as is also evident from the record, that specific talks/parlays were ongoing inter se the parties and the escrow, about the implementation of the terms of the agreement." The Court referred to a communication from the escrow agent dated December 14, 2018, which stated: "Unfortunately, at the last moment you had called up in our office to cancel today’s appointment... we will fix the appointment on Monday viz., 17th December 2018, and whether you attend or not, we will hand over the escrow documents to Miss Atita Shetty without fail."

The Court noted that the complaint was not for seeking allotment of the flats but for the confirmation of title and protection against third-party interference, arising after the appellants took possession of the flats in December 2018. "The complaint case has not been filed seeking the flats in escrow for which the cause of action did arise on 10th July 2015, and hence the same limitation cannot be applied to a subsequent situation, which is that the appellants already have the flats with them. They only seek that the same be registered in their name and not alienated to any third party henceforth."

The Court observed that "limitation, while important as a feature of law, is not meant to defeat a substantive right. Efforts, in earnestness, to secure possession of the flats cannot be discounted in order to compute the applicable limitation." It stated that the NCDRC ought to have taken a holistic view of the situation and examined whether the relief sought by the appellants could be granted.

The Court noted that the appellants had continuously engaged with the respondents and the escrow agent regarding the implementation of the agreement before filing their complaint. It found that "considering the consistent efforts back and forth, inter se the parties, with regard to the implementation of the terms of the contract, there was no question of dismissal of the complaint on the issue of limitation. It was a continuing cause of action, and, only when escrow expressed helplessness that the complainant was forced to file the complaint."

Setting aside the NCDRC’s order, the Supreme Court restored the complaint and directed its expeditious disposal. "We hold that the complaint filed by the appellant is within time. The same is restored to its status and number. We direct the parties to appear before the NCDRC on 17th March 2025. We request that the matter be decided expeditiously and preferably within six months from today."

The Court held that its observations were strictly limited to the issue of limitation and did not influence the merits of the case. It stated, "Observations made herein are only for the purpose of determining the issue of limitation, and as such, save and except this limited issue, the Commission shall decide the petition on its own merit. All other contentions are left open."

Additionally, the Court noted that "The appeal is disposed of in terms as aforesaid. It is clarified that it shall be open for either party to approach this Court should the need so arise."

Case Title: Pushpa Jagannath Shetty & Ors. v. M/s. Sahaj Ankur Realtors & Ors.

Neutral Citation: 2025 INSC 294

Case Number: Civil Appeal No. 3160 of 2023

Bench: Justice Sanjay Karol, Justice Manmohan

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