The Punjab and Haryana High Court has clarified that in consumer protection execution proceedings, attaching an entire housing project and all bank accounts constitutes a disproportionate remedy unless strictly necessary. The judgment establishes a critical principle of proportionality in enforcement, ensuring that remedies do not collapse legitimate business operations affecting thousands of homebuyers.
Background & Facts
The Dispute
The petitioner, Sushma Buildtech Limited, entered into an agreement dated 07.03.2015 with respondent No. 2, a complainant, for the allotment of an apartment in a residential project. The complainant later filed a complaint under Section 35 of the Consumer Protection Act, 2019, alleging deficiency in service and delay in possession. A batch of similar complaints was consolidated before the State Consumer Disputes Redressal Commission, Chandigarh.
Key Facts
- The agreement was executed on 07.03.2015 for the sale of an apartment.
- The State Commission passed an order dated 18.10.2024 directing the petitioner to refund the entire amount paid by complainants, along with interest and compensation.
- The petitioner did not comply with the order within the stipulated time.
- The complainant filed an execution application seeking enforcement of the 18.10.2024 order.
- The State Commission issued a notice for hearing on 01.10.2025, but the notice was returned with the report ‘office shifted and left’.
- Despite this, the State Commission proceeded ex parte without issuing a fresh notice or attempting alternative service.
- On 28.10.2025, the State Commission ordered attachment of the petitioner’s entire housing project.
- On 04.02.2026, the State Commission further ordered attachment of all bank accounts of the petitioner.
- The petitioner’s project houses approximately 4,000 families.
- The petitioner had made no attempt to evade service or defy the Commission’s orders.
Procedural History
- 07.03.2015: Agreement executed between petitioner and complainant.
- 18.10.2024: State Commission ordered refund of entire amount with interest and compensation.
- 26.08.2025: State Commission issued notice for execution hearing on 01.10.2025.
- 01.10.2025: Notice returned undelivered with report ‘office shifted and left’.
- 28.10.2025: State Commission passed order attaching entire housing project ex parte.
- 04.02.2026: State Commission passed order attaching all bank accounts of the petitioner.
- 20.03.2026: Writ petitions filed before the Punjab and Haryana High Court under Articles 226 and 227.
Relief Sought
The petitioner sought quashing of the orders dated 28.10.2025 and 04.02.2026, release of the attached project and bank accounts, and direction to the State Commission to adopt a proportionate method of enforcement.
The Legal Issue
The central question was whether the State Consumer Commission could lawfully attach an entire housing project and all bank accounts of a developer in execution of a consumer order, without considering the proportionality of the remedy, the number of affected homebuyers, or the possibility of alternative enforcement mechanisms.
Arguments Presented
For the Petitioner
Learned Senior Counsel argued that the attachment of the entire project and bank accounts was manifestly disproportionate and would cause irreparable harm to approximately 4,000 homebuyers who had invested their life savings. The petitioner demonstrated its bona fides by offering to pay 50% of the principal amount in two installments within four months. It was submitted that the State Commission failed to follow due process by proceeding ex parte after a notice was returned undelivered, violating the principles of natural justice. Reliance was placed on State of Haryana v. Bhagwan Das to argue that execution must be proportionate and not punitive.
For the Respondent
Counsel for respondent No. 2 did not contest the petitioner’s offer of payment but maintained that the attachment was lawful under Section 35 of the Consumer Protection Act, 2019, which empowers the Commission to enforce orders by attachment of property. He submitted that the petitioner had deliberately avoided service and that the Commission was justified in proceeding ex parte.
The Court's Analysis
The Court observed that while the State Commission has broad powers under Section 35 of the Consumer Protection Act, 2019, those powers are not unfettered. The principle of proportionality is inherent in the exercise of any coercive power, especially when it affects the livelihoods of thousands of innocent third parties.
"The attachment of an entire housing project, which houses over four thousand families, and freezing all bank accounts, effectively paralyzing the petitioner’s ability to generate revenue, cannot be justified merely on the ground that the petitioner failed to comply with the order."
The Court emphasized that the return of the notice with the report ‘office shifted and left’ did not absolve the Commission of its duty to ensure proper service. Alternative modes of service, including publication, email, or registered post to the registered office, were available and should have been exhausted.
The Court further noted that the petitioner had not demonstrated any mala fide intent or attempt to evade liability. Instead, it had proactively offered a structured payment plan. The Commission’s actions, therefore, amounted to a gross overreach that violated the doctrine of proportionality recognized in K.S. Puttaswamy v. Union of India and applied in consumer law by M/s. DLF Limited v. Smt. Sunita Devi.
The Court held that the remedy of attachment must be tailored to the quantum of liability and must not destroy the very enterprise meant to discharge the obligation.
The Verdict
The petitions were allowed. The Court directed the petitioner to pay 25% of the principal amount within two months and a further 25% (making 50% in total) within four months. The attached housing project and all bank accounts were immediately released. The petitioner was permitted to operate its business and deal with the project. If the petitioner fails to comply with the payment schedule, proceedings for contempt under Article 215 of the Constitution and the Contempt of Courts Act, 1971, shall be initiated against its directors. The remaining amount beyond 50% of the principal shall be adjudicated before the State Commission on 06.05.2026.
What This Means For Similar Cases
Proportionality Is Mandatory in Consumer Execution
- Practitioners must now argue that attachment orders must be calibrated to the quantum of debt, not used as punitive tools.
- Courts and commissions must consider the impact on third-party homebuyers before ordering blanket attachment of projects.
- A developer’s offer of partial payment in good faith must be treated as a mitigating factor, not ignored.
Due Process in Service Cannot Be Circumvented
- Return of notice as ‘undelivered’ does not justify ex parte proceedings.
- Commissions must attempt alternative service methods before proceeding ex parte.
- Failure to do so renders the order voidable for violation of natural justice.
Bank Accounts Cannot Be Frozen Entirely in Civil Enforcement
- Freezing all bank accounts of a corporate entity in consumer cases is prima facie disproportionate.
- Courts should permit operation of accounts for essential expenses, payroll, and project continuity.
- Partial restraint or escrow mechanisms are preferable to total freeze.
