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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.