In a significant verdict delineating the contours of consumer law, the Supreme Court of India has ruled that a person who has no contractual relationship with a service provider cannot invoke the Consumer Protection Act, even if indirectly affected. The bench comprising Justice Ahsanuddin Amanullah and Justice Sudhanshu Dhulia delivered the judgment in M/s Citicorp Finance (India) Limited vs. Snehasis Nanda, Civil Appeal No. 14157 of 2024, setting aside a ruling of the National Consumer Disputes Redressal Commission (NCDRC).
The Supreme Court held that the respondent, Mr. Snehasis Nanda, failed to prove any privity of contract or the existence of a Tripartite Agreement with Citicorp Finance (India) Ltd., and therefore could not be classified as a ‘consumer’ under Section 2(1)(d) of the Consumer Protection Act, 1986.
Background of the Case
The dispute arose from a 2008 property transaction where Nanda sold a flat in Navi Mumbai to one Mr. Mubarak Vahid Patel for ₹32 lakh. Of this, Patel was to obtain ₹23.4 lakh through a home loan from Citicorp Finance. According to Nanda, a Tripartite Agreement between himself, the borrower (Patel), and Citicorp made Citicorp liable to pay ₹31 lakh, of which only ₹17.8 lakh was paid directly to ICICI Bank (to foreclose Nanda’s existing home loan). The remaining ₹13.2 lakh was never received.
Nanda approached the NCDRC in 2018 after a decade of pursuing various forums including the Banking Ombudsman and the High Court of Orissa. Initially, the NCDRC dismissed the complaint at the admission stage, stating Nanda was not a ‘consumer’. But the Supreme Court in 2019 restored the matter, directing the NCDRC to hear it on merits.
In 2023, the NCDRC ruled in Nanda’s favour, directing Citicorp to pay ₹13.2 lakh with 12% interest and ₹1 lakh litigation costs. Citicorp appealed this order in the Supreme Court.
Key Legal Issues
Who is a “Consumer”?
The main issue was whether Nanda could be considered a consumer of Citicorp, despite not being party to the Home Loan Agreement.
Existence of a Tripartite Agreement:
Nanda claimed a Tripartite Agreement obligated Citicorp to disburse the full sale consideration. Citicorp denied this.
Limitation:
The consumer complaint was filed in 2018, ten years after the alleged cause of action. The question was whether this delay could be condoned.
Necessary and Proper Party:
Citicorp argued that Patel, the borrower and actual party to the loan, was not made part of the consumer complaint, violating principles of fair adjudication.
Supreme Court’s Observations and Ruling
Justice Amanullah, writing for the bench, categorically held that the consumer fora “cannot presume contractual obligations” where none exist. The Court stressed that no signed copy of any Tripartite Agreement had been produced by Nanda, and he failed to discharge the burden of proof.
“The onus is on the person who asserts a fact to prove it… non-production of the Tripartite Agreement would lead to an adverse inference — not against the appellant, but against the complainant-respondent,” the Court noted.
Further, the Court emphasized that a consumer must establish ‘deficiency in service’, which requires an existing contractual obligation.
“When there is no privity between the complainant and the opposite party, the opposite party could not become liable under the Act,” the Court said, citing its own judgment in Janpriya Buildestate Pvt. Ltd. v. Amit Soni (2021).
On limitation, the Court flagged that the NCDRC had failed to pass any order condoning the ten-year delay, despite being required to do so under Section 24-A of the Act.
“Neither reasons nor a formal order condoning delay is forthcoming… Despite the appellant raising the issue of limitation, the Impugned Order is silent on the said score,” the bench observed.
On the non-joinder of the borrower, the Court held that Patel was not just a proper party, but a necessary party, since the transaction’s liability could not be determined without his role being adjudicated.
Finally, the Court underscored that even if an arbitration clause existed in the alleged agreement, only a ‘consumer’ could opt out of arbitration under consumer law — which Nanda was not.
Decision
The Supreme Court allowed the appeal, setting aside the NCDRC’s order. No costs were imposed, and the Court clarified that the decision would not bar any legal action between the borrower and Nanda in other competent forums — though without relaxing any applicable limitation period.
“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.”
