Sanchayita Lahkar

A Division Bench of the Supreme Court comprising Justice Sudhanshu Dhulia and Justice Ahsanuddin Amanullah allowed a civil appeal filed by M/s Citicorp Finance (India) Limited, setting aside an order by the National Consumer Disputes Redressal Commission (NCDRC). The NCDRC had earlier directed the financial institution to refund Rs.13,20,000/- along with interest at 12% per annum and Rs.1,00,000/- in litigation costs to Snehasis Nanda, the respondent in the appeal.

In the appeal before the Supreme Court, the core issue was whether the respondent qualified as a 'consumer' under Section 2(1)(d) of the Consumer Protection Act, 1986, and whether any liability existed for the appellant to disburse Rs.13,20,000/- directly to the respondent as per an alleged Tripartite Agreement. The Supreme Court determined that the respondent could not be considered a consumer due to lack of contractual privity with the appellant. It concluded that the respondent failed to establish the existence of the Tripartite Agreement, which was essential to his claims.

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The respondent initially purchased a flat at Riddhi Siddhi Heritage, Navi Mumbai, in May 2006, financed by ICICI Bank with a housing loan of Rs.17,64,644/-. In February 2008, Mubarak Vahid Patel (the borrower) proposed to purchase the flat from the respondent for Rs.32,00,000/-. A Memorandum of Understanding (MoU) and an Agreement for Sale were executed between the respondent and the borrower on 09.02.2008 and 12.02.2008, respectively. The borrower approached Citicorp Finance (India) Limited for a home loan, resulting in a Home Loan Agreement dated 28.02.2008 for Rs.23,40,000/-. On the borrower's request, the financial institution directly paid Rs.17,80,000/- to ICICI Bank to release the respondent’s mortgage on the flat.

The respondent filed a complaint before the NCDRC in April 2018, alleging deficiency of service by Citicorp for failing to disburse an additional Rs.13,20,000/- as balance consideration as per a purported Tripartite Agreement dated 09.02.2008. Initially, the NCDRC dismissed the complaint, concluding the respondent was not a consumer. After an appeal, the Supreme Court remanded the matter back to the NCDRC for reconsideration on merits.

Upon remand, the NCDRC allowed the complaint, directing Citicorp to refund Rs.13,20,000/- plus interest and litigation costs. Citicorp appealed this decision before the Supreme Court, arguing that the respondent did not qualify as a consumer, having no direct contractual relationship or service arrangement with the financial institution. Additionally, it contended the purported Tripartite Agreement was never proven.

Representing Citicorp, Senior Counsel Mr. Ritin Rai submitted before the Supreme Court that the respondent is not a ‘consumer’ of the appellant within the meaning of Section 2(1)(d) of the Act. He noted that the MoU and the Agreement for Sale were purportedly entered into between the respondent and the borrower and the appellant is admittedly not a party to these and has undertaken no obligations thereunder. Rai stated that no service was ever provided by the appellant to the respondent.

The Supreme Court observed that the respondent produced only an unsigned, unstamped and partly blank document, which he asserts is the Tripartite Agreement. The court further stated, non-production of the (complete) Tripartite Agreement, if at all there was one, would lead to an adverse inference, and under normal circumstances as also in the present case, against the complainant-respondent, and not against the appellant.

The Supreme Court further noted, even if it is accepted that all the afore-mentioned agreements were validly there, primarily the Tripartite Agreement, a conjoint reading of all would lead to the obvious conclusion that the essential transaction of sale was between the complainant-respondent and the borrower who was the buyer of the flat. The judgment pointed out that the respondent, having no privity of contract with the appellant, cannot be termed a ‘consumer’ under the Act.

On the issue of liability for the disputed sum, the Supreme Court stated explicitly that the loan which was sanctioned by the appellant to the borrower was only for a sum of Rs.23,40,000/- and observed that the appellant was bound to pay the entire amount of Rs.31,00,000/- and directing it to pay the balance consideration of Rs.13,20,000/-, appears to be wholly without basis. The judgment additionally noted that the purported Tripartite Agreement, relied upon by the complainant-respondent himself, states that the appellant would only pay the foreclosure amount, out of the total loan amount sanctioned to the borrower, to ICICI Bank for or on behalf of the borrower towards foreclosure of respondent’s loan facility. No further liability to pay any amount directly to the complainant-respondent was even envisaged in the Tripartite Agreement.

Addressing procedural points, the Supreme Court mentioned that despite the appellant raising the issue of limitation, the Impugned Order is silent on the said score, and further remarked, neither reasons nor a formal order condoning delay is forthcoming, either in the ordersheets or in the Impugned Order.

Regarding the absence of the borrower in the proceedings before the NCDRC, the Supreme Court stated, another specific plea by the appellant, that the borrower should have been joined in the proceedings before the NCDRC has also gone unanswered, further stating that if the borrower had been arrayed as an Opposite Party in the NCDRC, the question of whether a Tripartite Agreement was duly executed and existed or not, could perhaps have been answered.

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Ultimately, the Supreme Court concluded by stating, we find that the appellant, assuming any liability in this regard existed at all, taking the respondent’s case at the highest, could not have been saddled with having to pay more than what was envisaged under the Home Loan Agreement between the borrower and the appellant.

The appeal was accordingly allowed by the Supreme Court. The order of the NCDRC was set aside, and parties were directed to bear their own costs. The judgment specified clearly, this Judgment shall not impact proceedings, if any, inter-se borrower and respondent.

Advocates Representing the Parties

Advocate for Appellant: Mr. Ritin Rai, Senior Counsel

 Respondent-in-Person

Case Title: M/s Citicorp Finance (India) Limited v. Snehasis Nanda
Neutral Citation: 2025 INSC 371
Case Number: Civil Appeal No. 14157 of 2024
Bench: Justice Sudhanshu Dhulia, Justice Ahsanuddin Amanullah

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