SUPREME COURT HOLDS THAT NATIONAL COMMISSION CAN DIRECT AN APPELLANT TO DEPOSIT THE ENTIRE DECRETAL AMOUNT PROVIDED THERE IS A SPEAKING ORDER

In a recent case of TDI Infrastructure Ltd. vs Jyoti Bhardwaj and other similar matters, involving an #Infrastructure Company called TDI Infrastructure Limited (TDI), several #HomeBuyers sued TDI under the #ConsumerProtection Act 2019 for failure of the Builder to give them completed flats. They therefore demanded #refund of their #deposits with interest. The matters came up before the State Commission, which, after hearing the Parties, passed an Order 27-09-2021 directing TDI to refund the amounts paid by the Home Buyers with interest up to date on the deposit that the Home Buyers had made with TDI.

The Builder, TDI approached the National Commission in a First Appeal against the Order of the State Commission under Section 51 of the Consumer Protection Act 2019 (Act of 2019). At the time of preferring the Appeal, TDI made a deposit of 50% of the Decretal Amount, as a pre-deposit for filing the Appeal. That in the Appeal, TDI had asked for stay of the Order passed by the State Commission. The National Commission while hearing the admission of the Appeal and Application for Stay of the State Commission’s Order, directed that the Appeal would be admitted upon deposit of the entire Decretal Amount, with up to date interest, that was to be paid to the Home Buyers.

TDI went in Appeal to the Supreme Court challenging the Order of the National Commission that directed it to deposit the full Decretal Amount. Counsel for TDI submitted that the National Commission could not have directed deposit of the entire Decretal Amount in view of the Proviso of Section 51 of the Act of 2019, which according to the statutory intent, was only deposit of 50% of the Decretal Amount. He placed reliance on several Supreme Court cases, where the Court had disagreed with deposit of the full amount. He contended that the powers of the National Commission to grant stay are similar to the powers of a Civil Court that can stay a decree under the provisions of the Code of Civil Procedure 1908 (CPC). He further argued that if the National Commission has directed TDI to deposit the entire Decretal Amount, the same should be supported by a reasoned order, which in the present case was missing. He sought reliance on Section 51 of the Act of 2019 arguing that deposit cannot be more than 50% of the Decretal Amount.

Counsel for the Home Buyers challenged the Appeal on the ground that the Appeal in question was not against the Order of Deposit of entire Decretal Amount dated 04-02-2021 but a subsequent Order dated 31-08-2021, which was a refusal Order to modify the main Order of Deposit of the full Decretal Amount. The Home Buyers’ Counsel argued that the deposit consisted of refund of the amount paid by the Home Buyers to the Builder and as such the National Commission was right in directing deposit of full amount.

The Home Buyers’ Counsel placed reliance on an earlier decision of the Supreme Court, Shreenath Corporation and Ors. Vs. Consumer Education and Research Society and Ors., (2014) 8 SCC 657. It was also argued that there is no nexus between the pre-deposit condition and grant of interim order of stay of the original Order passed by the State Commission.

The Apex Court, after hearing both Parties, framed the short question, which was whether in an appeal under Section 51 of the Act of 2019 and while considering the stay application to stay the order passed by the State Commission, the National Commission can pass an order to deposit the entire amount and/or any amount higher than 50% of the amount in terms of the order of the State Commission while entertaining the appeal under Section 51 of the Act, 2019?

The Supreme Court while dealing with the issue, passed a Judgment dated 07-12-2021 and concluded as follows:

1) It appears that the Appellant(s) in an appeal against the Order passed by the State Commission may prefer an appeal, however, before the Appeal is entertained by the National Commission, the Appellant(s) have to deposit 50% of the amount. So, it is the pre-condition to deposit 50 per cent of the amount as ordered by the State Commission before this Appeal is entertained by the National Commission.

2) However, that does not take away the jurisdiction of the National Commission to order deposit of entire amount and/or any amount higher than 50% of the amount while considering the stay application to stay the Order passed by the State Commission.

3) 50% of the amount ordered by the State Commission is a statutory pre-deposit and the grant of interim stay subject to deposit of further amounts, are different and distinct.

4) If the National Commission, after hearing the appeal, has the discretion to stay the awarded amount.

5) Entertainment of an appeal and stay of proceeding are two different stages. One (pre-deposit) has no nexus with merit of the appeal and the other (grant of stay) depends on prima facie case, balance of convenience and irreparable loss of party seeking such stay.

The Apex Court while agreeing with Shreenath Corporation (supra) held that the National Commission can order deposit of the entire Decretal Amount. However, the said order cannot be passed mechanically. The Supreme Court further held that Order XLI Rule 5 CPC also directs that there shall not be an unconditional stay of a money decree. Hence, in case a decree is stayed, the Court must give a conditional order citing cogent reasons.

In view of the above, the Apex Court directed that the matter be remanded back to the National Commission and the National Commission may rehear the matter and pass a speaking order and give a conditional stay for deposit of the entire amount or any amount higher than 50%. The National Commission was directed to decide the matter afresh and pass an appropriate order giving cogent reasons within 8 weeks of the passing of the Supreme Court Order.

Sushila Ram Varma

Chief Consultant and Editor

The Indian Lawyer