Complainant Having No Privity Of Contract With Opposite Party, Cannot Be Termed A ‘Consumer’ Under Consumer Protection Act: Supreme Court
The Supreme Court set aside the Order of the NCDRC whereby the Appellant was directed to refund litigation cost to the Complainant.
Justice Sudhanshu Dhulia, Justice Ahsanuddin Amanullah, Supreme Court
The Supreme Court has clarified that a complainant not having a privity of contract with the opposite party cannot be termed as a ‘consumer’ under the Consumer Protection Act.
The Court set aside the Order of the National Consumer Disputes Redressal Commission (NCDRC) whereby M/S Citicorp Finance (India) Limited (Appellant) was directed to refund litigation cost to the Respondent. The Appellant challenged this Order, arguing that there was no privity of contract between the parties.
A Bench of Justice Sudhanshu Dhulia and Justice Ahsanuddin Amanuallah stated, “In the aforesaid background, 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.”
AOR Chanchal Kumar Ganguli represented the Appellant, while the Respondent appeared in-person.
Brief Facts
The Respondent had purchased a flat after availing a housing loan from ICICI Bank. then the Respondent entered into a Memorandum of Understanding (MoU) with a third-party borrower for the sale of the flat. A purported Tripartite Agreement was also executed between the Respondent, the borrower, and the Appellant, which sanctioned a housing loan to the borrower.
The dispute arose when the Respondent claimed that the Appellant had failed to disburse part of the loan arrangement. The Respondent filed Consumer Complaint before the NCDRC, seeking a refund and compensation. The NCDRC initially dismissed the complaint on the ground that the Respondent was not a ‘consumer’ but later, on remand, directed the Appellant to refund litigation costs.
Court’s Reasoning
The Supreme Court noted that even though the existence of the Tripartite Agreement was specifically denied by the Appellant, the NCDRC drew an adverse inference against it only because a specific affidavit was not filed before it.
“Pausing here, we may note that such statement re denial of the existence of the purported Tripartite Agreement was made in the appellant’s reply only, in the NCDRC, which was itself supported by an affidavit and thus, no separate/special affidavit was required in this behalf. Moreover, and more importantly, the onus is on the person who asserts a fact to prove it,” the Bench explained.
“Thus, 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. What the complainant produced before the NCDRC was an unsigned, unstamped and partly blank document, which he asserts is the Tripartite Agreement between the appellant, the borrower and him,” the Court remarked.
The Court referred to its decision in Janpriya Buildestate Pvt. Ltd. v. Amit Soni (2021) wherein it was clarified that “by making it clear that what we intend to say is that when there is no privity between the complainant and the opposite party, the opposite party could not become liable under the Act. In other words, if there is no law under which a person is to provide a service and if it does not fall within the residuary clause, namely, ‘otherwise’ as defined under the word ‘deficiency’, it is necessary for a consumer to succeed, that there must be a contract. It is in that context, we indicated that the existence of an obligation under a contract is a sine qua non for a consumer to successfully prosecute a case under the Act.”
The Bench held, “In the specific factual setting, the respondent, having no privity of contract with the appellant, cannot be termed a ‘consumer’ under the Act. This alone was sufficient to dismiss the complaint.”
Consequently, the Court held, “Thus, the NCDRC could not have, under any circumstance, taken a view that the appellant was liable to pay Rs.31,00,000/- (Rupees Thirty-One Lakhs) both to ICICI Bank as well as to the complainant-respondent, who was not a party to the ultimate sanction of the loan by the Home Loan Agreement, which was between the appellant and the borrower.”
Accordingly, the Supreme Court allowed the Appeal.
Cause Title: M/S Citicorp Finance (India) Limited v. Snehasis Nanda (Neutral Citation: 2025 INSC 371)