Full Judgment Text
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PETITIONER:
LATA CONSTRUCTION & ORS.
Vs.
RESPONDENT:
DR. RAMESHCHANDRA RAMNIKLAL SHAH AND ANR.
DATE OF JUDGMENT: 12/08/1999
BENCH:
S.Saghir Ahmad , R.P.Sethi
JUDGMENT:
S. SAGHIR AHMAD, J.
This appeal is directed against the judgment and order
dated 22nd November, 1995 passed by the National Consumer
Disputes Redressal Commission, New Delhi (for short, ’the
National Commission’).
The respondents had approached the Commission with the
complaint that the appellants who were developers and had
promised, under a written agreement dated 27.1.1987, to
provide a flat to them, had failed to do so and, therefore,
they were guilty of "deficiency in service." It was
indicated in the complaint that the respondents who were, at
that time, in Libya and wanted to settle in India, had
entered into an agreement dated 27.1.1987 with M/s. Lata
Construction, the appellant No.1, which stipulated that the
appellants would develop, construct and hand over possession
of flat No. AG-2 on the ground floor with an area of 670
sq. ft. situated in a building named "Madhusudan", on Plot
No. 138, T.P.S. 11 and C.T.S. No.1166 and 1166(1) in Vile
Parle, Bombay 400057. It was indicated that the appellants
had earlier entered into a development agreement on
9.12.1985 with the owners in respect of the said property to
develop, construct and to sell flats in the proposed
building which was to be constructed on ownership basis. On
27th of January, 1987, the respondents had paid a sum of
Rs.3,38,000/- to the appellants in cash but without any
receipt and a sum of Rs.32,000/- by cheque against receipt.
The respondents also paid to the appellants on various
dates, as and when demanded by them, a further sum of Rs.
2,00,000/- against receipt. In June, 1988 when the
respondents returned from Libya, they requested the
appellants to deliver, on payment of balance amount of sale
consideration, possession of the flat to them as the
construction of the building was complete but the appellants
refused to accept the payment and deliver possession on the
plea that the building was still under construction
particularly as the electricity, plumbing, tiling and
fencing work was in progress. The appellants, however,
assured the respondents that as and when the building would
be completed in all respects, they would accept the balance
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amount of sale consideration and deliver possession to them.
In April, 1990, when the respondents again came back from
Libya on a short visit to India and visited the building,
they found that the flat was locked and outside the main
door of the flat, a name plate of "Indira Joshi" had been
put up. The respondents returned from Libya in January,
1991 and when they demanded the possession of the flat, the
appellants expressed their inability to give possession of
the flat to the respondents in compliance of the agreeement
dated 27.1.1987. The appellants, however, entered into a
fresh agreement with the respondents on 23.2.1991 agreeing
to pay to the respondents a sum of Rs. 9,51,000/- in lieu
of the flat in three instalments on or before 30.5.1991 as
under:-
1. Rs. 3,00,000/- - on or before 20.3.1991 2. Rs.
3,00,000/- - on or before 20.4.1991 3. Rs. 3,51,000/- - on
or before 30.5.1991
The respondents had entered into a fresh agreement
with the appellants without prejudice to their rights under
the earlier agreement dated 27.1.1987. Since the appellants
did not honour the commitments under both the agreements,
the respondents approached the National Commission which,
decreed the claim of the respondents for a sum of
Rs.9,51,000/- together with interest at the rate of 18% per
annum with effect from 23.2.1991 till the date of payment.
Another sum of Rs. 1,00,000/- was allowed as compensation
for pain and suffering undergone by the respondents. The
Commission also allowed a sum of Rs. 10,000/- to the
respondents as costs of the proceedings.
Learned counsel appearing on behalf of the appellants
has contended that the claim instituted by the respondents
before the Commission was beyond time inasmuch as it was
filed beyond the period of two years prescribed under
Section 24-A of the Consumer Protection Act, 1986 (for
short, ’the Act’). It is contended that since the
respondents had entered into a fresh agreement with the
appellants under which the entire amount of Rs. 9,51,000/-
had to be paid on or before 30th of May, 1991, the
respondents, if the amount was not paid, could have
instituted the claim petition before the Commission within
the period of limitation starting from 31.5.1991, and since
the claim was filed in July, 1993, it was clearly beyond
time. This plea has been negatived by the Commission on the
ground that since the right under the agreement of 1987 had
not been given up by the respondents, there was a continuing
cause of action running against the appellants and the claim
was, therefore, not beyond time.
A perusal of the agreement dated 23rd of February,
1991 would show that it was specifically stipulated therein
that the rights under the agreement dated 27th of January,
1987 would remain uneffected. It was for this reason that
in the claim petition filed before the Commission, it was
clearly mentioned that their rights under the agreement
dated 27th of January, 1987 as also those under the
agreement dated 23rd of February, 1991 may be enforced. It
was also specifically mentioned in the second agreement that
the first agreement of 1987 would be treated as terminated
only on full payment of the stipulated amount of
Rs.9,51,000/- to the respondents. Since the rights under
the agreement of 1987 had not been given up and the
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appellants were constantly under an obligation to provide a
flat to the respondents and deliver possession thereof to
them, the Commission rightly treated "cause of action" to be
a "continuing cause of action" and came to the right
conclusion that the claim was not beyond time.
Moreover, under the terms of the agreement dated 23rd
of February, 1991, it was stipulated that if the entire
amount of Rs.9,51,000/- was not paid by 30th May, 1991, the
whole of the amount would become payable at once and it
would be open to the respondents to claim payment of full
amount together with interest after giving seven days’
notice to the appellants. It was further stipulated that in
case of default, the amount already paid by the appellants
shall stand forfeited. Since the whole of the amount had
not been paid to the respondents who could recover the whole
of the amount together with interest from the appellant on
giving seven days’ notice, the rights under the old
agreement did not come to an end and they could legally
claim specific performance of that agreement for a flat
being provided to them. Their claim was, therefore, not
barred by time.
It was next contended that the agreement dated
27.1.1987 having been substituted by a fresh agreement dated
23.2.1991, under which the respondents themselves had agreed
to receive Rs.9,51,000/- as compensation for the flat not
having been provided to them under the earlier agreement,
they could only approach the civil court for recovery of
that amount but could not legally institute the claim
petition before the Commission for compensation on the
ground of "deficiency in service."
This plea has been rejected by the National Commission
by placing reliance upon the decision of this Court in
Lucknow Development Authority v. M.M. Gupta (1994) 1 SCC
243.
We have already held above that the rights under the
earlier agreement of 1987 were kept alive even after the
second agreement. The rights under the first agreement had
not been given up and there was no substitution of the
earlier agreement in its entirety by the new agreement.
We may, at this stage, refer to the provisions of
Section 62 of the Indian Contract Act which provides as
under :
"If the parties to a contract agree to substitute a
new contract for it, or to rescind or alter it, the original
contract need not be performed." This provision contains the
principle of "Novation" of contract.
One of the essential requirements of ‘Novation’; as
contemplated by Section 62, is that there should be complete
substitution of a new contract in place of the old. It is
in that situation that the original contract need not be
performed. Substitution of a new contract in place of the
old contract which would have the effect of rescinding or
completely altering the terms of the original contract, has
to be by agreement between the parties. A substituted
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contract should rescind or alter or extinguish the previous
contract. But if the terms of the two contracts are
inconsistent and they cannot stand together, the subsequent
contract cannot be said to be in substitution of the earlier
contract.
In the instant case, the rights under the original
contract were not given up as it was specifically provided
in the subsequent contract that the rights under the old
contract shall stand extinguished only on payment of the
entire amount of Rs.9,51,000/-. Since the amount was not
paid by the appellants as stipulated by the subsequent
contract, the rights under the original contract were still
available to the respondents and he could legally claim
enforcement of those rights. Obviously, under the original
contract, the appellants were under an obligation to provide
a flat to the respondents. This right would come to an end
only when the appellants had, in pursuance of the subsequent
contract, paid the entire amount of Rs.9,51,000/- to the
respondents. Since they had not done so, the respondents
could legally invoke the provisions of the earlier contract
and claim before the Commission that there was "deficiency
in service" on the part of the appellants.
We may also point out that the appellants had filed
only a written statement before the Commission but had not
produced any evidence in support of their pleas. Even an
affidavit in support of what they had stated in the written
statement was not filed before the Commission. Their case,
thus was not supported by any evidence and the Commission,
in the facts and circumstances of the case, was justified in
decreeing the claim of the respondents.
Learned counsel for the parties have stated before us
that in terms of the judgment passed by the Commission, the
entire amount due from the appellants has already been paid
to the respondents including interest at the rate of 18 per
cent per annum on the principal amount of Rs.9,51,000/-.
That being so, we are not prepared to entertain the plea of
the appellants that the decree passed by the Commission in
respect of Rs.1 lakh as compensation on account of the pain
and suffering undergone by the respondents may be reversed.
We find no merit in the appeal and the same is
accordingly dismissed with no order as to costs.