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M/S Janpriya Buildestate Pvt. Ltd. v. Amit Soni & Ors.

Civil Appeal · 2021 INSC 831Decided 7 Dec 2021
Civil Appeal No. 1065 of 2021
Justice K.M. Joseph · Justice P.S. Narasimha

Background

The appellant was a landowner who had entered into a collaboration agreement with a developer for a group housing project, and was also named as a "confirming party" in a tripartite agreement between the landowner, developer and home buyers. When the project was delayed, home buyers filed a consumer complaint before the National Consumer Disputes Redressal Commission (NCDRC), which held both the developer and the landowner jointly and severally liable to refund the buyers' money with interest. The landowner appealed, arguing it had no direct obligation to the buyers under the agreements and should not have been held liable.

Decision Breakdown

The Supreme Court held that the NCDRC had not properly examined the actual contractual obligations undertaken by the landowner versus the developer, and had wrongly concluded that merely being a "confirming party" to the tripartite agreement, by itself, made the landowner liable for the developer's failure to deliver the flats. The Court noted that liability under the Consumer Protection Act requires a genuine contractual or statutory obligation and "deficiency of service," which had not been properly established against the landowner on the record as it stood. However, since the buyers separately argued (without having pleaded it before the NCDRC) that the developer and landowner were effectively a single entity, the Court set aside the NCDRC's order and remanded the matter, giving the buyers liberty to amend their pleadings and the landowner liberty to raise all its defences afresh.

Lesson Learnt

A party to a multi-party property transaction (such as a landowner who is only a "confirming party" in a builder-buyer agreement) is not automatically liable to flat purchasers under consumer law unless a specific contractual obligation or deficiency of service on its part is actually pleaded and proved, being named in the paperwork is not, by itself, enough.

Official source (sci.gov.in)View Judgment (PDF)

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