The State Consumer Disputes Redressal Commission, West Bengal dismissed an appeal challenging a district commission’s order directing builders to allocate a 300 sq ft flat to co-owners under a development agreement. Holding that the Consumer Protection Act, 1986 provides a remedy in addition to arbitration and that non-joinder of a co-owner does not defeat the complaint, the Commission affirmed the lower court’s direction for specific performance and compensation. The judgment clarifies the interplay between consumer remedies and arbitration agreements.
Background & Facts
The Dispute
The appellants, M/s. Mira Construction & Ors. (a partnership firm) and its partners, entered into a development agreement with Sri Prabir Kr. Chatterjee and his brother Subir Kumar Chatterjee, co-owners of premises No 26/1B, Sabji Bagan Lane, PS-Chetla, Kolkata-700027. Under the agreement the appellants were to obtain sanction from the Kolkata Municipal Corporation, construct the building, obtain a completion certificate and execute registered deeds of conveyance in favour of purchasers. The respondents alleged that, as per the development agreement, they were jointly entitled to a self-contained flat measuring about 300 sq ft super built up area on the first floor of the building, which the appellants failed to deliver.
Key Facts
- The development agreement was executed between the appellants and the respondent together with his brother Subir Kumar Chatterjee.
- A supplementary agreement dated 17/07/2006 was executed whereby the respondent and his brother consented to the appellants selling the flat to any intending purchaser, on condition that the consideration amount be handed over to them.
- The respondent filed a complaint before the Hon’ble District Consumer Disputes Redressal Commission, Kolkata, Unit-I in complaint case No CC/399/2012 (year 2012) alleging non-delivery of the promised flat.
- The district commission, after hearing, passed an order dated 27/10/2016 directing the appellants to provide a 300 sq ft flat on the first floor, pay compensation and litigation costs.
- Aggrieved, the appellants filed this appeal under Section 15 of the Consumer Protection Act, 1986, bearing First Appeal No. SC/19/A/655/2018.
- The appeal was filed on 13/07/2018, heard on 17/08/2026, and judgment reserved.
- During the proceedings, the respondent filed a revision petition (No 1979 of 2019) before the Hon’ble National Consumer Disputes Redressal Commission challenging an interim order dated 12/07/2019 passed by the State Commission that had condoned a delay of 594 days.
- The National Commission, by order dated 07/07/2023, set aside the order condoning delay and directed the State Commission to decide the matter afresh.
Procedural History
- 2012: Original complaint filed before District Commission (CC/399/2012).
- 27/10/2016: District Commission’s order directing delivery of 300 sq ft flat, compensation and costs.
- 13/07/2018: Appeal filed before State Commission (First Appeal No. SC/19/A/655/2018).
- 12/07/2019: State Commission’s interim order condoning delay of 594 days (challenged in revision).
- 17/08/2026: Date of hearing before State Commission.
- 07/07/2023: National Commission’s order setting aside the condonation of delay.
- 10/09/2026: Judgment of the State Commission under review.
Parties' Positions
For the Appellants: Contended that the district commission lacked jurisdiction because (i) the dispute fell within the ambit of the Arbitration and Conciliation Act, 1996 due to an arbitration clause in the development agreement; (ii) the respondent was not a consumer as the relationship was that of principal-agent; (iii) non-joinder of his brother Subir Kumar Chatterjee, a necessary party, rendered the complaint liable to dismissal; and (iv) the matter ought to be adjudicated by a civil court.
For the Respondent: No appearance or representation was made; the respondent relied on the allegations in the complaint and the documents annexed thereto.
Relief Sought
The appellants prayed that the impugned order dated 27/10/2016 be set aside on merit and that no costs be awarded.
The Legal Issue
The central question was whether the State Consumer Disputes Redressal Commission, West Bengal had jurisdiction to entertain the complaint given (a) an arbitration clause in the underlying development agreement, (b) the alleged non-joinder of a co-owner who was jointly entitled to the flat, and (c) whether the respondent qualified as a ‘consumer’ under the Consumer Protection Act, 1986.
Arguments Presented
For the Appellant
Reliance was placed on the principle that a consumer forum cannot oust the jurisdiction of an arbitral tribunal where a valid arbitration agreement exists, citing M/S Emaar MGF Land Ltd v. Aftab Singh, (2019) 12 SCC 751, and the proposition that the Consumer Protection Act, 1986 does not confer an automatic right to stay proceedings under Section 34 of the Arbitration and Conciliation Act, 1996. It was further argued that the respondent, by not impleading his brother, violated the rule against non-joinder of necessary parties, and that the relationship between the parties was that of principal-agent, thus excluding the respondent from the definition of ‘consumer’ under Section 2(d) of the Act.
For the Respondent
No arguments were advanced on record as the respondent did not appear or file a written statement; the respondent’s case rested solely on the allegations in the complaint and the annexures.
The Court's Analysis
The Commission first examined the scope of the Consumer Protection Act, 1986. It observed that the Act is a beneficent statute intended to provide a speedy and inexpensive remedy to consumers, and that its provisions are to be construed widely to give effect to its object. Drawing on Skypak Couriers Ltd v. Tata Chemicals, (2000) 5 SCC 294, the Commission held that the remedy under the Act is in addition to, and not in derogation of, any other law for the time being in force, including arbitration agreements. Consequently, the existence of an arbitration clause does not bar the entertainment of a complaint by a consumer forum.
On the issue of non-joinder, the Commission noted that the Consumer Protection Act, 1986 follows a summary procedure and is not to be shackled by the technicalities of the Civil Procedure Code. The general rule that no suit shall be defeated by reason of non-joinder of parties applies, and the court may proceed with the parties actually before it. Since the objection of non-joinder was not raised before the district forum, it was deemed waived. Furthermore, the respondent and his brother were jointly entitled to the flat, and the district commission had already recognised this entitlement in its order.
Regarding the respondent’s status as a consumer, the Commission found that the respondent, being a co-owner who entered into a development agreement for the purpose of obtaining a flat, falls within the ambit of a ‘consumer’ as defined under Section 2(d) of the Act, since the agreement relates to a service (construction and transfer of immovable property) and the respondent alleges a defect in that service (non-delivery of the flat).
Having considered the merits, the Commission found no substance in the appellants’ contentions. The district commission’s appreciation of the facts - that the respondent could take possession of the flat at any moment and there was no laches on the part of the opposite parties - was deemed correct. The appeal was therefore dismissed on merit.
The Verdict
The appeal bearing No. SC/19/A/655/2018 is dismissed on merit without any order as to costs. The order passed by the Hon’ble District Consumer Disputes Redressal Commission, Kolkata, Unit-I in CC/399/2012 dated 27/10/2016 is affirmed, directing the appellants to provide a 300 sq ft super built up area flat on the first floor of the building, pay compensation and litigation costs as determined by the district commission.
What This Means For Similar Cases
Jurisdiction of Consumer Forums Not Ousted by Arbitration Clauses
- The Consumer Protection Act, 1986 provides a remedy supplementary to arbitration; forums may proceed despite an arbitration agreement.
- Practitioners should not assume that an arbitration clause automatically ousts consumer forum jurisdiction.
Non-Joinder of Co-Owners Does Not Defeat a Complaint
- Where a complaint is filed by one co-owner alleging denial of entitlement, the omission to implead other co-owners is not fatal if the objection was not raised at the earliest opportunity.
- The forum may proceed with the parties actually before it and grant relief based on the proven entitlement.
Consumer Status in Development Agreements
- A co-owner who seeks possession of a flat promised under a development agreement qualifies as a ‘consumer’ under Section 2(d) of the Act.
- Allegations of non-delivery of the promised unit constitute a defect in service, sustaining a complaint under the Act.
Practical Takeaways
- File complaints promptly; delay in raising objections such as non-joinder may result in waiver.
- Keep copies of all agreements, including supplementary ones, to demonstrate the parties’ intentions and any conditions attached.
- When defending, challenge the consumer status and the existence of a valid arbitration clause early, preferably at the forum level.
