Reportable  IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1493  OF 2011 [Arising out of SLP [C] No.7283/2010]

Vinod Kumar Thareja … Appellant

Vs.

M/s Alpha Construction & Ors. … Respondents

O R D E R

R. V. Raveendran J.

Leave granted.

2. The  appellant,  the  owner  of  a  plot  measuring  about  11000  sq.ft.  

situated at Bhopal, entered into a Joint Venture Agreement dated 2.7.2004  

with the first respondent for development of the said plot by construction  

and sale of nine duplex flats. Under the said agreement, the appellant was to  

provide his land to the first  respondent for construction of flats;  the first  

respondent was responsible for the construction and sale of the duplex flats;  

and out of the sale proceeds realized by sale of the flats, the appellant was

entitled to 45% and the first respondent was entitled to the balance of 55%.  

The first respondent was authorized to enter into agreements of sale with  

prospective purchasers of flats even at the stage of construction and receive  

the price either in a lump sum or in instalments. The first respondent was  

solely  responsible  for  completion  of  construction  and  the  quality  of  

construction.  According  to  the  appellant,  his  obligation  under  the  joint  

venture  agreement  was  only  to  contribute  the  land  and  in  consideration  

thereof receive 45% of sale proceeds.  

3. In pursuance of it, the appellant and first respondent entered into an  

agreement dated 18.9.2004 with respondents 2 and 3, who were interested in  

purchasing one of the nine duplex flats to be constructed in the property. The  

said agreement clearly stated that the first respondent was to construct the  

duplex  flat  and  receive  the  consideration  from  respondents  2  and  3.  In  

pursuance of it, the first respondent’s proprietor (Rajbir Singh), as Attorney  

holder of the appellant, executed a sale deed dated 14.1.2005 in favour of  

respondents 2 & 3, conveying an extent of 968 sq.ft., of land with a skeletal  

structure thereon for Rs.6 lakhs.  

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4. Respondents  2  and 3 filed  a  complaint  dated 22.6.2006 before  the  

District  Consumer  Redressal  Forum,  Bhopal  (‘District  Forum’  for  short)  

against  the  first  respondent  alleging  deficiency  in  service.  In  the  said  

complaint  they  alleged  that  they  had  paid  Rs.11,80,000/-  to  the  first  

respondent out of a total consideration of Rs.13,50,000/- for the purchase of  

a duplex flat; that on 25.6.2005, the Municipal Corporation demolished the  

structure constructed by the first respondent; and that the first respondent  

committed an unfair trade practice by not disclosing the true facts and by not  

delivering the constructed flat. The complainants also alleged that thereafter  

the  first  respondent  failed  to  construct  the  flat  and  was  guilty  of  gross  

negligence  and  deficiency  in  service.  The  complainants  consequently  

demanded from the first  respondent,  refund of the sum of Rs.11,80,000/-  

paid by them with interest of Rs.3,35,000/-, compensation of Rs.2,00,000/-  

and punitive damages of Rs.2,00,000/- in all Rs.19,15,000/-.  

5. The said petition was contested by the first respondent who was the  

sole  respondent.  The  appellant  was  not  impleaded  as  a  party  before  the  

District Forum, by the complainants. Even the first respondent did not make  

any application before the District Forum for impleading the appellant as a  

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co-respondent. Nor did he contend that the appellant should be made liable  

for payment of any amount that may be directed by the commission.  He  

merely contended that the complainants ought to have made the appellant  

also a party and in his absence the complaint was liable to be dismissed.  

6. The District Forum allowed the complaint by order dated 11.1.2007  

and directed the first respondent to refund the sum of Rs.11,80,000/- paid by  

the respondents  2 and 3 to the first  respondent,  with interest  at  18% per  

annum from the date of deposit till date of payment.

7. Feeling  aggrieved,  the  first  respondent  filed  an  appeal  before  the  

Madhya  Pradesh  Consumer  Dispute  Redressal  Commission  (‘the  State  

Commission’ for short) challenging the order of the district forum. In the  

said  appeal,  the  first  respondent  made  an  application  for  impleading  the  

appellant herein as the third respondent. That application was allowed on  

28.4.2008  and  the  State  Commission  impleaded  the  appellant  as  third  

respondent in the appeal and directed the appellant to file its response to the  

complaint filed by the complainants under section 12 of the Act.  

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8. The appellant therefore filed a counter to the main complaint before  

the  State  Commission  pointing  out  that  neither  in  the  complaint  by  the  

complainant nor in the appeal by the first respondent anything adverse has  

been pleaded against them nor any claim made against him; and therefore,  

the  question  of  fastening  any  liability  against  him  did  not  arise.  The  

appellant also filed objections to the appeal by contending that he was not a  

necessary party to the appeal. He pointed out that the complainants had not  

alleged or proved any wrong doing on his part or any deficiency in service  

on his part, nor made any claim against him and therefore he could not be  

impleaded as a party in the appeal.  

9. The State Commission allowed the appeal of the first respondent in  

part  by  a  brief  order  dated  19.9.2008.  It  held  that  as  the  flats  were  

constructed by the first respondent in the land belonging to the appellant in  

pursuance of a joint venture agreement between them and as the agreement  

for sale in favour of respondents 2 and 3 had been executed jointly by the  

appellant and first respondent and as the subsequent sale deed in favour of  

respondents 2 and 3 was executed by the proprietor of first respondent as  

attorney holder of the appellant, and as obtaining of building permission for  

construction  was  the  joint  responsibility  of  the  appellant  and  the  first  

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respondent,  the  appellant  herein  was  also  responsible  to  compensate  the  

complainants for any loss suffered by them on account of the demolition by  

the Municipal Corporation. As a consequence, the State Commission, while  

upholding the direction of the District Forum for refund of Rs.11,80,000/-  

paid by the complainants, made the following modifications :  

(a) Respondents  2  and  3  shall  re-convey  the  property  in  favour  of  appellant;  

(b) The interest shall be reduced to 9% per annum; and  

(c) The first respondent as also the appellant were liable for the  amount  payable to respondents 2 and 3.  

10. Feeling aggrieved, the appellant filed a revision before the National  

Consumer  Dispute  Redressal  Commission  (‘National  Commission’  for  

short)  which  dismissed  the  revision  by  the  impugned  order  with  the  

following observations :  

“It is not in dispute that the owner of the property as well as the builder  had  entered  into  joint  agreement  to  build  the  flats  and  though  the  responsibility of visiting the office of the corporation frequently to obtain  sanctioning  the  plan/building  licence.  Commencement  certificate  and  completion  certificate  etc.,  was  delegated  to  the  builder.  The  building  permission is obtained in the name of owner and builder.  Therefore, the  builder and owner both are jointly responsible for all  commission and  omission. Even while collecting money from the consumers/complainants,  an  agreement  was  signed  by  the  owner  also.  Further  the  Municipal  Corporation had demolished the building because of dispute in the title of  the property. Therefore, the liability of the petitioner, who claims to be the  owner of the property of which title is unclear and still had entered into an  

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agreement and sold the plot to the gullible consumers is proved and the  deficiency is writ large.”  

(Emphasis supplied)

The said order is challenged by the appellant in this appeal by special leave.  

11. On  the  contentions  urged,  the  following  question  arises  for  

consideration in this appeal : Whether a respondent against whom an order  

for payment has been made in a complaint under the Consumer Protection  

Act, 1986, can in an appeal filed by him, seek impleadment of a third party  

by contending that such third party is also liable either partly or wholly, even  

if the complainant has not sought  any relief against such third party?  

12. Respondents 2 and 3 filed the complaint against the first respondent as  

they had made the payments to the first respondent and first respondent had  

agreed  to  construct  and  deliver  them  the  duplex  flat  and  that  the  flat  

constructed  by  the  first  respondent  was  demolished  by  the  municipal  

authorities. The complainants had no grievance against the appellant nor did  

they seek any relief against the appellant. The first respondent herein who  

was the sole respondent before the District Forum did not seek impleadment  

of the appellant as a respondent in the complaint before the District Forum.  

The District Forum allowed the complaint and held that the first respondent,  

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as the service provider, was guilty of deficiency of service and directed the  

first respondent to pay to the complainants, a sum of Rs.11,80,000/- with  

interest. That order was not challenged by the complainants (respondents 2  

and 3). The only question that can, therefore, be considered in an appeal by  

the  first  respondent  was  whether  it  was  liable  to  pay  any  amount  to  

respondents 2 and 3 and, if so the extent thereof.

13. The scheme of the Act does not permit a service provider, who has  

been made liable to refund the amount paid towards price under the order of  

the District Forum, to file an appeal and pass on a part of the liability to  

some third party, on the ground that the contract between them enabled him  

to do so. In an appeal by a respondent in a complaint, aggrieved by the order  

made in favour of the complainant, the only issue is whether the liability of  

the respondent should be upheld, modified or rejected. The question whether  

anyone  else  should  be  made  liable  along  with  the  respondent  in  the  

complaint, does not arise. The appeal by a respondent in a complaint has to  

be dismissed, if the respondent is liable for the claim. If he has been wrongly  

made liable, the appeal will be allowed. The issue in the appeal and the relief  

that can be granted in the appeal can be only qua the complainant and not  

qua some third party. If a service provider who has been made liable to a  

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complainant wants contribution from anyone else, on the ground that such  

third party had also contributed to the deficiency in service,  it  is  for the  

service  provider  to  take  independent  action  against  such  third  party,  in  

respect of the liability. As the complainants neither impleaded nor sought  

any  relief  against  the  appellant,  neither  the  State  Commission  nor  the  

National Commission could make the appellant liable along with the first  

respondent.  

14. The first respondent contended that when the appellant was impleaded  

as  the  third  respondent  in  its  appeal,  the  appellant  did  not  protest,  nor  

challenged the order of the State Commission impleading him as a party, but  

filed objections to the complaint before the State Commission on merits and  

participated in the appeal proceedings and therefore he was estopped from  

challenging his impleadment.  Being impleaded as a party in an appeal  is  

different from being made liable by an order in the appeal. A person may not  

have any grievance if he is merely impleaded as a party, but may have a  

grievance in regard to the impleading, if such impleading led to making him  

liable for any payment. When a non-party is impleaded as a respondent in an  

appeal,  he  can  either  challenge  the  impleadment  itself  or  challenge  his  

impleadment,  while challenging the final decision in the appeal.  The fact  

that  the impleaded non-party filed objections  to the complaint  during the  

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pendency of the appeal, on the specific direction of the State Commission,  

will not deny his right to challenge the impleadment.

15. This  appeal  is,  therefore,  allowed  and  the  order  of  the  National  

Commission  affirming  the  order  of  the  State  Commission  making  the  

appellant liable jointly with first respondent is set aside. It is, however, made  

clear that :

(i) if  the first respondent has any claim or cause of action against  the  

appellant,  it  is  at  liberty  to  seek  redressal  of  its  grievances  against  the  

appellant;  

(ii) the  order  of  the  State  Commission  affirmed  by  the  National  

Commission to the extent it reduces the interest from 18% to 9% per annum  

and requiring the respondents 2 and 3 herein to re-convey the flat to their  

vendor under the sale deed dated 14.1.2005 is not disturbed; and  

(iii) respondents  2  and  3  may  draw any  amount  deposited  by  the  first  

respondent towards the amount due under the order of the District Forum as  

modified by the State Commission.   

……………………….J. (R.V. Raveendran)

New Delhi; ……………………….J. February 08, 2011. (A.K. Patnaik)

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