M/S. Sunny Construction Company Through Its Partners and Another Vs. Parasmal V. JaIn and Another - Court Judgment

Dhanraj Khamatkar, J. Presiding Member:

[1] This appeal takes an exception to an order dated 21/12/2010 passed by the Central Mumbai District Consumer Disputes Redressal Forum (hereinafter referred to as ‘the District Forum for the sake of brevity) in Consumer Complaint No.76 of 20007, Mr. Parasmal V. Jain and Another Vs. M/s. Sunny Construction Company. Facts leading to this appeal can be summarized as under:-

[2] Respondents/original Complainants, namely – Mr. Parasmal V. Jain and Smt. Rasila Parasmal Jain (hereinafter referred to as ‘the Complainants for the sake of brevity) had filed consumer complaint before the State Commission. It was filed seeking possession of flat booked by the Complainants in the year 1992 for an consideration of Rs.7,42,600/-. As per the prayers of the Complainants were less than the pecuniary jurisdiction of this Commission, the complaint was returned to the Complainants for presenting it before an appropriate District Forum. Accordingly, the Complainants filed a consumer complaint before the District Forum 13/4/2007. Sum and substance of the complaint was that the Complainants had booked a flat bearing No.701, admeasuring 632 sq. ft. in area situated on the seventh floor of the building to be constructed by the Appellant/original Opponent, namely – M/s. Sunny Construction Company (hereinafter referred to as ‘the Builder for the sake of brevity). The Complainants paid a sum of Rs.10,000/- which was accepted by the Builder on 10/2/1992. Price of the flat was of Rs.7,42,600/- and the balance consideration amount was to be paid in eight installments in the manner provided in articles of agreement dated 10/2/1992. Possession of the flat was to be handed over on 30/5/1995. It is contended by the Complainants that they made a payment of Rs.5,40,000/- as per the demands made by the Builder. After 26/6/2003, there was no demand from the Builder for the balance consideration amount of Rs.1,92,600/-. Complainants approached the Builder for registering the agreement dated 10/2/1992. However, there was no response and, therefore, the Complainant approached the Sub-Registrar for a declaration dated 26/10/2004 to confirm the agreement dated 10/2/1992 and to get the same registered under the ‘Abhay Yojana-2004. The Complainants issued a notice through an advocate to the Builder on 4/1/2007 for delivering the possession. The Builder vide its letter dated 20/1/2007 though agreed the agreement for sale of the flat, claimed that said agreement was treated as cancelled. Again the Complainants issued a notice through an advocate on 30/1/2007. However, the Builder has not produced the documentary evidence to show that they have refunded the consideration and terminated the agreement. The Builder by a letter dated 12/2/2007 communicated to the Complainants that they are liable to pay an amount of Rs.10,00,000/- as consideration instead of a sum of Rs.7,42,600/-. The Complainants approached the Builder on several occasions and called upon the Builder to deliver the possession of the flat. However, the Builder has not handed over the possession of the flat to the Complainant. Hence, the Complainants filed a consumer complaint seeking following relief:-

“(a) The opposite parties be ordered to deliver the possession of flat bearing No.701 on the 7^th floor of ‘B wing, Prathamesh Co-op Hsg. Soc. Ltd., C. S. No.16, M. M. G. S. Road, Naigaon, Dadar, Mumbai – 400014. as per articles of agreement dated 10^th February, 1992 and/or in the alternative, the opposite parties be directed to pay the sum equal to the value of the flat as on the date of passing of order by this Honble Forum.

(b) The opposite parties be directed to pay to the complainants a sum of Rs.19,50,000/- (Rupees Nineteen Lacs fifty thousand only) (though the said compensation claimed cannot be compensated in terms of money for the damages, harassment and mental agony caused to the complainants hereinabove.

(c) Pending hearing and final disposal of the above complaint, the opposite parties be restrained by an order and injunction of this Honble Court, restraining the opposite parties their agents, representative, employees, or any other person acting on their behalf from disposing dealing with and/or creating and third party interest, right and title in the suit premises.

(d) Cost of the complaint be granted

(e) Such further and other reliefs as the nature and circumstances of the case may require.

”

[3] Opponent/Builder contested the complaint by filing a written version inter-alia contending that the complaint filed is frivolous and it is filed with an ulterior motive and the complaint involves complicated questions of law and fact and requires an elaborate evidence and hence be tried by the Civil Court and the complaint is time-barred as cause of action arose on 31/5/1995 when the Builder failed to hand-over the possession of the flat to the Complainants. Alleged agreement of sale subsequently came to be cancelled. Builder had refunded the substantial amount paid by the Complainants. Hence, there is not ‘brevity of contract between the parties which would bind the Builder to hand-over the possession. Clause (08) of the alleged agreement makes it crystal clear that if the possession of the flat is not handed over within the stipulated period then, the Builder shall be liable to refund to the flat-purchasers the amount already received by the Builder in respect of the flat together with simple interest thereon @ 9% p.a. as from the date when the Builder received the sum till the amount and interest thereon is paid. The Complainants failed and neglected to pay the balance consideration amount of Rs.1,92,600/- as stipulated in the agreement inspite of time demand. After registration of the agreement in the year 2004, as alleged, it is not known nor there is any cogent evidence as to why the Complainants waited for another three years to demand the possession. Said agreement was treated as cancelled long back before its alleged registration. The Builder by its reply dated 20/1/2007 rightly informed to the Complainants that the agreement was treated as cancelled. The Complainants were asked to take back the amount of consideration paid. The Builder, therefore, prayed that the complaint may pleased be dismissed with costs.

[4] On 20/6/2008 the Complainants moved an application before the District Forum seeking permission to amend the complaint as filed. Said application was accompanied with a copy of ready-reckoner and the property rates prevalent in the various localities of MumbaiCity alongwith an affidavit of evidence after the amendment of the original complaint.

[5]  In the application for amendment of the complaint, there are following prayers:-

“The prayer clause (a) of the complaint be amended and substituted with the following clauses:-

aa) The opposite parties be ordered to deliver the possession of flat bearing No.701 on the 7^th floor of ‘B wing, Prathamesh Co-op. Hsg. Soc. Ltd., C. S. No.16, M. M. G. S. Road, Naigaon, Dadar, Mumbai – 400014 as per articles of agreement dated 10^th February, 1992 more specifically described in the schedule annexed to the articles of agreement dated 10^th February, 1992

ab) Or in the alternative, a flat having an equal area admeasuring 632 sq. ft. (approx.) built up area equivalent to 58.73 sq. mtrs. (approx.), in the same locality, be ordered to be given to the complainants.

ac) Or in the alternative, the valuation of the premises as on today which is about Rs.45,00,000/- (calculated on the basis of ready reckoner/government gazette) may be ordered to be paid by the opposite parties to the complainants.”

[6] Opponent/Builder filed written statement opposing the amended complaint. It is supported by an affidavit in evidence sworn by Mr. Rajesh P. Mayekar on behalf of the Builder.

[7] The Complainants filed their affidavit-in-rejoinder.

[8] The District Forum after going through the complaint, written version filed by the Builder, amendment application filed by the Complainant and evidence on affidavits filed by both the parties, partly allowed the consumer complaint and directed the Opponent/Builder to pay the Complainants an amount equivalent to prevalent market rate for a flat admeasuring 632 sq. ft. in the same vicinity and simultaneously the Complainants were directed to pay to the Builder the balance consideration amount of Rs.1,62,600/-. Said order was directed to be complied with within a period of two months and failing which the amounts were to carry interest @ 6% p.a. Alternatively, it was directed that the Complainants were at a liberty to accept another flat having same area in the same vicinity from the Builder in lieu of flat in dispute. Opponent/Builder was further directed to refund to the Complainants the charges to stamp-duty and registration of the agreement. Opponent/Builder was also directed to pay to the Complainants an amount of Rs.5,000/- by way of compensation towards mental agony besides costs of Rs.5,000/-. Being aggrieved by the said order, the Builder preferred this appeal.

[9]  We heard Adv. Asim S. Vidyarthi on behalf of the Appellant/Builder and Adv. P. R. Moses on behalf of the Respondents/Complainants. We have also perused the record.

[10] We have carefully scrutinized the impugned order. The District Forum instead of passing a speaking order has disposed of the complaint by passing a non-speaking order. Reading of the impugned order of the District Forum leaves us with the impression that according to the District Forum, there is no requirement of recording of the reasons while endorsing the finding as the cases under the Consumer Protection Act, 1986 are required to be decided in a summary manner. It does not appear to us that the impugned order had been passed after due consideration of the facts and evidence on record. In fact, nowhere in the impugned order, has the District Forum noted or considered any of the contentions raised by the parties or the evidence put on record. This approach is neither justified nor acceptable. The order passed by the District Forum amounts to impertinence as it violates the judicial discipline. Order passed without recording reasons is liable to set aside. Honble Supreme Court in the case of A.K. Kraipak and Ors. Vs. Union of India and Ors, (1969) 2 SCC 262, more than 40 years back held that even in administrative matters which involve civil consequences, it was necessary to record reasons in support of the decision taken. The relevant observation made in A.K. Kraipaks case is reproduced hereunder:

“17. This takes us to the question whether the principles of natural justice apply to administrative proceedings similar to that with which we are concerned in these cases. According to the learned Attorney General those principles have no bearing in determining the validity of the impugned selections. In support of his contention he read to us several decisions. It is not necessary to examine those decisions as there is a great deal of fresh thinking on the subject. The horizon of natural justice is constantly expanding. The question how far the principles of natural justice govern administrative enquiries came up for consideration before the Queens Bench Division in In re : H.K. (An Infant) (1967) 2 Q.B.617 Therein the validity of the action taken by an Immigration Officer came up for consideration. In the course of his Judgment Lord Parker, C.J. observed thus:

“But at the same time, I myself think that even if an immigration officer is not in a judicial or quasi-judicial capacity, he must at any rate give the immigrant an opportunity of satisfying him of the matters in the sub-section, and for that purpose let the immigrant know what his immediate-impression is so that the immigrant can disabuse him. That is not, as I see it, a question of acting or being required to act judicially, but of being required to act fairly. Good administration and an honest or bona fide decision must, as it seems to me, require not merely impartiality, nor merely bringing ones mind to bear on the problem, but acting fairly; and to the limited extent that the circumstances of any particular case allow, and within the legislative framework under which the administrator is working, only to that limited extent do the so-called rules of natural justice apply, which in a case such as this is merely a duty to act fairly. I appreciate that in saying that it may be said that one is going further than is permitted on the decided case because heretofore at any rate the decisions of the courts do seem to have drawn a strict line in these matters according to whether there is or is not a duty act judicially or quasi-judicially.”

In the same case Blain, J. observed, thus:

“I would only say that an immigration officer having assumed the jurisdiction granted by those provisions is in a position where it is his duty to exercise that assumed jurisdiction whether it be administrative , executive or quasi-judicial , fairly, by which I mean applying his mind dispassionately to a fair analysis of the particular problem and the information available to him in analyzing it. If in any hypothetical case, and in any real case, this Court was satisfied that an immigration officer was not so doing, then in my view mandamus would lie.”

18. In State of Orissa V. Dr. (Miss) Binapani Dei and Ors. MANU/SC/0332/1967: (1967) IILLJ 266SC. Shah, J. speaking for the Court, dealing with an enquiry made as regards the correct age of a government servant, observed thus:

We think that such an enquiry and decision were contrary to the basic concept of justice and cannot have any value. It is true that the order is administrative in character, but even an administrative order which involves civil consequences as already stated, must be made consistently with the rules of natural justice after informing the first respondent of the case of the State………”

[11] There is a plethora of case law on the subject. We may refer to the decision of the Constitution Bench in S.N. Mukherjee Vs. Union of India, (1990) 4 SCC 594, wherein the Supreme Court held as under:

“35. The decisions of this Court referred to above indicate that with regard to the requirement to record reasons the approach of this Court is more in line with that of the American courts. An important consideration which has weighed with the court for holding that an administrative authority exercising quasi-judicial functions must record the reasons for its decision, is that such a decision is subject to the appellant jurisdiction of this Court under Article 136 of the Constitution as well as the supervisory jurisdiction of the High Courts under Article 227 of the Constitution and that the reasons, if recorded, would enable this Court or the High Courts to effectively exercise the appellate or supervisory power. But this is not the sole consideration. The other considerations which have also weighed with the Court in taking this view are that the requirement of recording reasons would (i) guarantee consideration by the authority; (ii) introduce clarity in the decisions; and (iii) minimize chances of arbitrariness in decision-making. In this regard a distinction has been drawn between ordinary courts of law and tribunals and authorities exercising judicial functions on the ground that a Judge is trained to look at things objectively uninfluenced by considerations of policy or expediency whereas an executive officer generally looks at things from the standpoint of policy and expediency.”

36. “Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this Court in holding that an administrative authority must record reasons for its decision, are of no less significance. These considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decision-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge.”

[12] In Director, Horticulture Punjab and Ors. Vs. Jagjivan Parshad (2008) 5 SCC 539, the Honble Supreme Court went to the extent of saying that reasons introduce clarity to the order and failure to give reasons amounts to denial of justice. Reasons substitute subjectivity by objectivity. The failure to record reasons makes it impossible for the higher Courts to perform their appellate functions or exercise the power of judicial review in adjudging the validity of decisions. Right to reason is an indispensable part of sound judicial system. Relevant observations of the Supreme Court in para 5 to 8 are reproduced below.

“5. Reasons introduce clarity in an order. On plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of challenge. The absence of reasons has rendered the High Courts judgment not sustainable.”

6. We find that the writ petition involved disputed issues regarding eligibility. The manner in which the High Court has disposed of the writ petition shows that the basic requirement of indicating reasons was not kept in view and is a classic case of non-application of mind. This Court in several cases has indicated the necessity for recording reasons.

7. Even in respect of administrative orders Lord Denning, M.R. in Breen V. Amalgamated Engg. Union (1971) 1 All ER 1148 observed: (All ER p.1154h) “The giving of reasons is one of the fundamentals of good administration.” In Alexander Machinery (Dudley) Ltd. v. Crabtree 1974 1 CR 120 it was observed:

Failure to give reasons amounts to denial of justice. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at.

8. “Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the “inscrutable face of the sphinx”, it can, by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking-out. The “inscrutable face of the sphinx” is ordinarily incongruous with a judicial or quasi-judicial performance (See: Chairman and Managing Director, United Commercial Bank v. P.C. Kakkar, MANU/SC/0110/2003:2003IILLJ181SC.”

[13] The Honble Supreme Court in Ramphal Vs. The State of Haryana and Ors., (2009) 3 SCC 258 went a step further and held that, “reason is heartbeat of every conclusion. Without the same, it becomes lifeless”.

[14] Supreme Court in “M/s Kranti Associates Pvt. Ltd. and Anr. Vs. Masood Ahmed Khan and Others, (2010) 9 SCC 496” held that the judicial and quasi-judicial courts/authorities are required to pass speaking orders. In the said case, National Commission had dismissed the revision petition vide its order dated 31.08.2007 by passing following order:-

“Heard.

In view of the concurrent finding of the State Commission, we do not find any force in this revision petition.

The Revision Petition is dismissed. “

[15] Supreme Court after considering the entire case law came to the conclusion that it is mandatory for the courts and quasi-judicial authorities to record reasons in support of conclusion arrived at. Supreme Court set aside the order passed by this Commission and remitted the case back to this Commission for deciding the matter by passing a reasoned order in the light of the observations made. Supreme Court summarized as under:

“51. Summarizing the above discussion, this Court holds:

a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially.

b. A quasi-judicial authority must record reasons in support of its conclusions.

c. Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.

d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power.

e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations.

f. Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.

g. Reasons facilitate the process of judicial review by superior Courts.

h. The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice.

i. Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants faith in the justice delivery system.

j. Insistence on reason is a requirement for both judicial accountability and transparency.

k. If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.

l. Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or Rs.rubber-stamp reasons is not to be equated with a valid decision making process.

m.  It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny.(See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-737).

n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, “adequate and intelligent reasons must be given for judicial decisions”.

o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of “Due Process”.”

[16] For all these reasons impugned order passed by the District Forum cannot be supported in law and needs to be quashed and set aside.

[17] There is one more aspect. As observed earlier, the Complainants moved an application before the District Forum on 20/6/2008 seeking permission to amend the complaint as filed. It appears that the Builder contested the amendment application. Thereafter, an order was passed allowing the amendment application. It is the contention of the Appellant/Builder that the order allowing amendment of the complaint was inherently without jurisdiction and bad in law. However, here it is pertinent to note that such order was not challenged by the Builder by preferring a revision before this Commission. Hence, that order achieved finality under Section-24 of the Consumer Protection Act, 1986. On perusal of the impugned order, it does appear to us that said order has been passed after taking into consideration the amended prayers of the Complainants in the complaint. Actually, if the amended prayers of the Complainants are taken into consideration it is evident that those are beyond the pecuniary jurisdiction of the District Forum. Thus, the order passed and relief granted by the District Forum exceeds it pecuniary jurisdiction. It settled position of law through various precedents of the superior authorities that order passed without jurisdiction is a nullity in the eyes of law. Thus, for this reason also, impugned order cannot be supported with. If at all the District Forum had allowed the amendment as proposed by the Complainants then, it was obligatory on the part of the District Forum to return the complaint to the Complainants for presenting it before a competent authority having pecuniary jurisdiction. However, it was not so done. Therefore, impugned order cannot be supported in law. However, in the interest of justice we would like to give one more opportunity to the parties. Upon setting aside the impugned order, we would like to direct the District Forum to decide the amendment application dated 20/6/2008 filed by the Complainants afresh upon giving opportunity to both the parties to lead evidence in support of their contentions and upon hearing the parties. We hold accordingly and pass the following order:-

ORDER

1. Appeal is allowed.

2. Impugned order dated 21^st December, 2010 passed by the District Consumer Disputes Redressal Forum, Central Mumbai is hereby quashed and set aside.

3. Consumer complaint is remitted back to the District Forum to decide it afresh in accordance with law. The District Forum shall proceed with the complaint by first deciding the amendment application dated 20^th June, 2008 moved by the Respondents/Complainants by giving sufficient opportunity to both the parties to lead their respective additional evidence, if any and then, upon hearing the parties shall decide the said application.

4. We direct the District Forum to pass speaking orders as per law laid down by the Supreme Court and the directions issued by us. We hope that in future we shall not get any non-speaking order from the District Forum and the District Forum shall pass the orders keeping in mind the directions issued by this Commission and the law laid down by the Honble Supreme Court.

5. The parties, through their counsel or in person, are directed to appear before the District Forum on 01^st August, 2013.

6. In peculiar circumstances, the parties to bear their own costs.