Arvind Rajpal Jadav vs Charudatta Vasantrao Tuljapurkar & 2 Ors

Dr. Inder Jit Singh, Presiding Member

The present Revision Petition (RP) has been filed by the Petitioner against Respondents as detailed above, under section 21(b) of Consumer Protection Act 1986, against the order dated 25.07.2012 of the State Consumer Disputes Redressal Commission, Maharashtra (hereinafter referred to as the ‘State Commission’), in First Appeal (FA) No. A/12/812 in which order dated 25.05.2012 passed by the District Consumer Disputes Redressal Forum, Solapur (hereinafter referred to as District Forum) in Consumer Complaint (CC) No. 27/2011 was challenged, inter alia praying for setting aside the order passed by the State Commission and District Forum.

While the Revision Petitioner (hereinafter also referred to as OP-2) was Appellant before the State Commission and OP-2 before the District Forum, and the Respondent-1  (hereinafter also referred to as Complainant) was Respondent No. 1 before the State Commission and Complainant before the District Forum, Respondent No.2 (hereinafter referred to as OP-3) was Respondent No. 2 before the State Commission and OP-3 before the District Forum, Respondent No. 3 (hereinafter referred to as OP-1) was Respondent No. 3 before the State Commission and OP-1 before the District Forum.

Notice was issued to the Respondents on 10.07.2013.  Parties filed Written Arguments/Synopsis on 08.12.2014 (Petitioner), 02.08.2019 (Respondent-1) and 16.08.2021 (Respondent-2) respectively.

Vide order dated 02.11.2021 the National Commission dismissed the Revision Petition for lack of prosecution.  MA was filed by the Petitioner for restoration of the Revision Petition.  MA was also dismissed vide order dated 14.12.2021.  The Applicant approached the Hon’ble Supreme Court.  Hon’ble Supreme Court in the Special Leave Petition(C) Nos. 3401-3402/2022 quashed and set aside the order passed by the National Commission in Revision Petition No. 4512/2012 with the view that if on imposition of reasonable cost upon the appellants, the revision petition is restored, it will meet the ends of justice and restored the same to the file of the National Commission on the condition that the Appellant(s) shall deposit a sum of Rs.50,000/- towards cost, to be deposited with the National Commission within a period of four weeks from the date of order. The original complainant shall be permitted to withdraw 50% of the amount (i.e. Rs.25,000/-) and balance Rs.25,000/- shall be transferred to the National Legal Services Authority, New Delhi.   Hence, again this Revision Petition.

Brief facts of the case, as emerged from the RP, Order of the State Commission, Order of the District Forum and other case records are that:

The complainant contacted to the opposite party- 2 &3 for purchase of constructed property and open space for a consideration of Rs.6,51,000/-. The complainant paid Rs.11,000/- in cash.  After receiving the said amount OP-3 (Power of Attorney holder) on behalf of OP-1 Firm and OP-2, executed an Agreement to Sell in favour of Complainant. As per agreements of Sale, the Sale Deed was to be executed within 24 months.  Since Nov./Dec. 2009 and Jan. 2010, the Complainant was requesting the OP-2 & 3 for execution of sale deed.  OP-2 told that some differences have arisen between OP-2 & 3, therefore, he expressed incompetence to execute the Sale Deed and the dispute between the OP-2 & 3 has been referred to Arbitrator (Advocate Katkar) and after its decision the sale deed will be executed.  Believing the words of OP-2 & 3, the complainant kept mum.    The complainant enquired on 25.12.2010 with the Arbitrator about the dispute between the OPs.  Thereafter, on 26.12.2010 the complainant contacted OP-2 &3, they denied to execute the sale Deed.  But OP-3 expressed legal incompetence to execute a Sale Deed.  Hence, the complainant filed complaint before the District Forum.

Vide Order dated 25.05.2012 in the CC No. 27/2011, the District Forum partly allowed the complaint and passed the following order:

"1) The application of the complainant was partly allowed.

2) The opponent No.1 to 3 should execute a Registered Sale Deed as per the terms and conditions of Agreement of Sale executed on 05/06/2008 and accept the remaining amount.

3) It was agreed in the Agreement of Sale that, required stamp, registration fee etc. will be spent by purchaser. But since 2008 to till today the stamp and registration fee have been increased in triple and the complainant will have to suffer it without any fault. Therefore, whatever expenses will be incurred for execution of Sale Deed, those will be borne equally by complainant and opponent No. 1 to 3.

4) The opponent No.1 to 3 are directed to pay Rs. 30,000/- towards compensation, mental harassment and cost of proceedings.”

Aggrieved by the said Order dated 25.05.2012 of District Forum, Petitioner(s) appealed in State Commission and the State Commission vide order dated 25.07.2012 in FA No. A/12/812, while dismissing the Appeal with costs of  Rs.25,000/-, passed the order observing that:

“10]  Upon taking into consideration the case of the Respondent No. 1 / Complainant, order passed by the District Forum cannot be faulted with. We do not find any substance in the present appeal. However, we do not want to part with this order by simplicitor dismissing the appeal. What is important to be noted is the fact that agreement to sale was executed in favour of the Respondent No. 1 / Complainant on 5/6/2008 and  as per the said agreement, flat and property is to be given to the Respondent No.1 / Complainant. However, ever after lapse of so many years it is still not given to the Respondent No. 1 / Complainant and the Respondent No.1 / Complainant was required to file a consumer complaint after having obtained an order from the District Forum and when the partnership firm and the other partner of the partnership firm have acquiesced to the order passed by the District Forum, Appellant / Opponent No. 2 who is one of the partners of the firm  on flimsy grounds has preferred this appeal just to protract the litigation and to harass the consumer. We do not want to encourage such kind of litigations and, therefore, in order to curb such types of litigations we have to deal with iron hands and, therefore, we dismiss this appeal by imposing costs of ‘25,000/- which shall be deposited by the Appellant / Opponent No. 2 into Legal Aid Account of this Commission within a period of thirty days from today. Upon failure on the part of the Appellant / Opponent No. 2 to deposit the costs within the stipulated period, Registrar shall issue certificate under Section-25(3) of the Consumer Protection Act, 1986 to the District Collector for recovery of costs as arrears of land revenue.”

Petitioner(s) have challenged the said Order dated 25.07.2012 of the State Commission mainly on following grounds:

The State Commission ought to have allowed the appeal taking into consideration the genuine grounds put-up by the Petitioner.However, without going deep into the facts of the case, the State Commission simply dismissed the appeal which is bad in law.The original complaint is out of limitation.The question of law is not considered by the State Commission.The State Commission has wrongly held that the Petitioner was one of the partners of the Respondent No. 3 firm and he was equally an owner of the land under development, he was and is a promoter under the provisions of Maharashtra Ownership Flats Act 1963.The conclusion arrived at by the State Commission is totally wrong because when the complaint was filed the partnership firm was not in existence at all. This basic fact is overlooked by the State Commission. The State Commission wrongly came to the conclusion and held that there was no document on record to show that the Respondent No. 3 firm was dissolved. The fact of dissolution of partnership firm was evident on the fact that during the pendency of arbitration proceeding, the complaint was filed. Arbitration proceeding shows that the firm was dissolved. This important fact is not taken into consideration by the State Commission.

It is wrongly held by the State Commission that M/s Aishwarya Developers is not a legal entity under the general law, it is the individual partner who are responsible in their individual capacity. In the facts and circumstances of the case, the Respondent No. 2 had no power to execute an agreement of sale in favour of the Respondent No. 1 of his own. He had no power to execute the same on behalf of the dissolved firm. The State Commission has also wrongly held that one of the partners of the firm can enter into an agreement with third parties for and on behalf of the partnership firm and such an agreement is binding on all the partners of the firm.

The State Commission has wrongly held that the provisions of Indian Partnership Act 1932 are not applicable to any proceeding before Consumer Fora under the Consumer Protection Act. The State Commission has wrongly held that if one of the partners of the firm acquiesces to an order it is an acquiescence for and on behalf of the firm and it is binding on all the partners of the firm. It is also wrongly held that acts of one of the partners of the firm can always bind other partners of the firm. The State Commission has wrongly held that the death of one of the land owners, namely Mr. Jayant Patil will not affect the rights accrued to the Respondent No. 1/Complainant under the agreement to sell dated 05.06.2008. It is also wrongly held that the irrevocable power of attorney executed by Jayant Patil binds legal heirs of Mr. Jayant Patil after his death thereby, even death of Mr. Jayant Patil will not affect the right of a person holding such power of attorney to transfer the property. This observation is very strange and unwarranted.

The State Commission has wrongly held that non- registration of agreement to sale would not affect the rights of the Respondent No. 1/complainant to avail the service from the opponents. The State Commission has wrongly held that the Petitioner has preferred the revision petition on the flimsy grounds just to protract the litigation and harass the consumer.

The State Commission has not considered the fact that in the present case there are various complicated questions of law and facts which are required to be decided by leading cogent evidence that can be done before the competent Civil Court and not before the forums under the Consumer Protection Act. The original complainant should have been directed to file a suit for specific performance of contract under the provisions of the Specific Relief Act.

Heard counsel for the Petitioner.  Contentions/pleas of the Petitioner, on various issues raised in the RP, Written Arguments of Petitioner and Respondent No.1 (sent through post and received in Commission on 02.08.2019) and Oral Arguments advanced by the Counsel for the Petitioner during the hearing, are summed up below.

9.1 It is contended that both the Fora have given the concurrent findings and it is to be seen whether any question of law is violated by Courts below.  The first important question of law which is to be looked into and decided is that whether the Respondent-2 had any locus-standi to execute an agreement of sale in favour of Respondent-1, as a promoter, under the provisions of Maharashtra Ownership of Flats Act 1963 (MOFA).  It is contended that Respondent No.2 does not fall under the definition of Promotor as envisaged in Maharashtra Ownership of Flats Act 1963.   In this case, the Respondent -2 is neither the owner of the land nor he is a lessee.  He has executed an agreement of sale in favour of the Respondent No.1 without making the applicant as a confirming party to the agreement of sale.  Hence, the agreement of sale itself is against the MOFA.  The agreement of sale between the Respondent-1 and 2 is not at all binding on the petitioner.  Once it is not binding legally, the Respondent-1 is not the consumer of the applicant.  Hence, the applicant is not bound to execute a sale deed in favour of Respondent -1.  It is further contended that as per the provisions of the Contract Act also, there is no agreement between the Petitioner and Respondent-1, specific performance cannot be enforced.   The State Commission arrived at the conclusion that Petitioner is the partner of the firm and equally an owner of the land under development and therefore he was and is a promotor under the provisions of MOFA.  Developer Firm namely M/s Aishwarya Developers is also a promotor alongwith its partners and the deceased land owner namely –Mr. Jayant Patil is also a promotor of the said scheme.  This conclusion of the State Commission is against the Act.  If the development agreement, Power of Attorney and the terms of partnership are binding on all the parties to this agreement, the Resondent-2 is not authorized to sell or enter into an agreement of sale either in respect of open plot or half constructed raw house.  Section 4 of the MOFA stipulates that the promotor of the scheme has to execute an agreement of sale in a prescribed form and the agreement of sale is required to be registered compulsorily.  It is a mandatory provision.  In spite of this, the Respondent-2 has entered into an illegal agreement with Respondent No.1 and the agreement of sale is not the registered one.  The State Commission has asserted that if one of the partners of the firm acquiesce to an order it is an acquiescence for and on behalf of the firm and it is binding on all the partners of the firm and acts of one of the partners for a firm can always bind other partners for a firm and create obligation against them.  This general principle of law is not applicable in the present facts and circumstances of the case.  It is further contended that the development agreement and Power of Attorney were executed in favour of the Respondent No. 2 in the month of December 2001.  The partnership firm was created between the petitioner and the Respondent No.2 on 18.12.2001.  After this, one of the owners of the land Sh. Jayant Patil expired on 12.08.2003.  It is a settled law that in case powers given to the Power of Attorney are not executed during the lift time of the executant, the same cannot be executed after the death of the executant.  Power of Attorney was executed in the year 2001 without fulfilling the provisions of the MOFA.  The death of one of the executants of Power of Attorney affects the rights of the holder of Power of Attorney.  The relationship as principal and agent ends soon after the death of the executant of Power of Attorney.  The Respondent-2 has not fulfilled any of the requirements of Section 209 of the Contract Act and also violated Section 215 and 216 of the said Act. The State Commission has mis-interpreted Section 4A of the MOFA, 1963 and came to a wrong conclusion that non-registration of agreement to sale cannot affect the right of the parties to avail the services as claimed under the agreement to sale.

9.2 On the other hand Respondent No.1 contended in his written arguments that the State Commission and District Forum have rightly held that Respondent No.1 is consumer of Petitioner and Respondent-2 & 3 and rightly directed them to execute the sale deed in favour of Respondent No.1.  The State Commission has rightly held that Petitioner was one of the partners and hence he was promoter as per the provisions of MOFA on the date of execution of Agreement for Sale dated 05.06.2008 and hence Petitioner was found to execute the sale deed in favour of Respondent No.1 as agreed on 05.06.2008.  It is also contended that Respondent No. 2 was empowered to execute the Agreement for Sale in favour of Respondent No.1 by Petitioner by executing irrevocable power of attorney dated 19.12.2001 in his favour and the irrevocable power of attorney was in force at the time of execution of Agreement for sale dated 05.06.2008.  The contention of the petitioner that Partnership firm was not in existence at the time of filing of the complaint by the petitioner before State Commission, is completely meaningless one. Because the firm was in existence at the time of execution of Agreement for Sale and it is immaterial that whether the firm was in existence at the time of filing of complaint & hence as per Sec.25 of the Indian Partnership Act, 1932, Petitioner is responsible to execute the sale deed in favour of Respondent No. 1. The State Commission has rightly held that, Section 69 of the Indian Partnership Act, 1932 is not applicable. The State Commission has rightly held that, the death of one of the land owners Mr. Jayanat Patil will not affect the rights accrued to Respondent No.1 because Mr.Jayant Patil has executed the power of attorney in favour of firm for consideration and as per Section 202 of Indian Contract Act, 1882 as the interest of the firm was created in said property, it will not get terminated on the death of Mr.Jayant Patil and hence it is binding on the heirs of Mr.Jayant Patil. The State Commission has also rightly held that, non-registration of Agreement to Sale would not affect the rights of Rrespondent No.1, because as per proviso to Sec.49 of the Registration Act, 1908 the non- registered document also may be received in evidence for collateral proposes.

We have carefully gone through the orders of the State Commission, District Forum, other relevant records and rival contentions of the parties. In this case, there are concurrent findings of both the fora below against the Petitioner herein. Relevant paras of State Commission’s order are reproduced below:-

“7. ….that firm has been dissolved. However, that does not affect the obligations of the promoters under the Maharashtra Ownership Flats Act, 1963. Opponent No.l, M/s.Aishwarya Developers is a partnership firm and a partnership firm is not a legal entity in a general law. It is a group of persons coming together for the purpose of carrying on business in the name and style of partnership firm, in the present case, namely - M/s.Aishwarya Developers. Thus, when-ever M/s. Aishwarya Developers is impleaded as a party, all the partners are represented. Not only that since M/s. Aishwarya Developers is not a legal entity under the general law, it is the individual partner who are responsible in their individual capacity and that is settled position of law under the Indian Partnership Act, 1932 and, therefore, even though the partnership firm is dissolved, the assets of the partnership firm are taken by the partners to the proportion of their share and, therefore, their individual liability and obligation qua the Respondent No.1/Complainant do not cease to exists. It is also well settled principle under the Indian Partnership Act, 1932 that one of the partners of the firm can enter into an agreement with third parties for and on behalf of the partnership firm and such an agreement is binding on all the partners of the firm. On 5/6/2008, Mr. Avinash Shriram Bachuvar has executed an agreement for sale for an on behalf of the firm, M/s. Aishwarya Developers with the Respondent No.1/Complainant and, therefore, said document is binding on all the partners of the firm. It is very interesting to note that under the Consumer Protection Act, 1986 a 'person' has been defined under Section-2(1)(m) and a 'firm' whether registered or not is treated as a 'person' for the purpose of a consumer litigation and thus, registration of a partnership firm is not mandatory under the Consumer Protection Act, 1986. However, registration of a partnership firm is mandatory under the Indian Partnership Act, 1932 and if a partnership firm is not registered, Section-69 of the Indian Partnership Act, 1932 prohibits institution, of a suit. However, a consumer complaint is not a suit and, therefore, those provisions embodied under Section-69 of the Indian Partnership Act, 1932 are not applicable to a proceeding before Consumer Fora under the Consumer Protection Act, 1986. On the contrary, in view of specific definition of 'person' under Section-2(1)(m) of the Consumer Protection Act, 1986 even an unregistered firm is covered under the definition of the term - 'person' and such an unregistered firm can be sued before Consumer Fora and the legislature has rightly taken into consideration this aspect. Ultimately viewed from any angle agreement for sale dated 5/6/2008 executed by Mr. Avinash Shriram Bachuvar for an on behalf of the firm, M/s. Aishwarya Developers is binding even as against the present Appellant, Mr. Arvind Rajpal Jadhav. Moreover, said agreement is binding on the Appellant since the partnership firm, M/s.Aishwarya Developers and its other partner, Mr. Avinash Shriram Bachuvar have acquiesced to the order passed by the District Forum, as observed earlier and it is well settled principle of law that if one of the partners of the firm acquiesce to an order it is an acquiescence for and on behalf of the firm and it is binding on all the partners of the firm. Acts of one of the partners of the firm can always bind other partners for a firm and create obligation against them and, therefore, an individual appeal filed by the Appellant is not sustainable in law.

…..Mr. Jayant Patil, during his lifetime, executed an irrevocable power of-attorney in favour of Mr. Avinash Shriram Bachuvar. Such an irrevocable power-of-attorney also binds legal heirs of Mr. Jayant Patil after his death and thereby even death of Mr. Jayant Patil will not affect the right of a person holding such power-of-attorney to transfer the property.

…Section-16 of the Maharashtra Ownership Flats Act, 1963 makes it clear that provisions of the Maharashtra Ownership Flats Act, 1963 are in addition to Transfer of Property Act, 1882. 'Sale' is defined under Section-54 of the Transfer of Property Act, 1882 and agreement to sale is provided under Section-54 of the said Act. It is well settled principle as per Transfer of Property Act, 1882 that agreement to sale does not, of itself, create any interest in or charge on such property but it creates a right to get another conveyance from the person and, therefore, agreement to sale is not required to be registered compulsorily under the Registration Act and, therefore, non-registration of the agreement to sale dated 5/6/2008 cannot affect the rights of the parties to avail the services as claimed under the agreement to sale. Apart from that Section-4A of the Maharashtra Ownership Flats Act, 1963 deals with effect of non-registration of agreement required to be registered under Section-4 of the said Act and that also protects the rights of the parties to avail the services. However, only effect of non-registration of an agreement is that such an unregistered document cannot be used for the purpose for which it is executed but it can be used for collateral purpose and here in the present case collateral purpose is to avail services as per the agreement and, therefore, viewed from any angle non-registration of agreement to sale dated 5/6/2008 will not affect the rights of the Respondent No.1/Complainant to avail the services from the Opponents.”

The dissolution of a partnership firm does not absolve its partners from obligations under the Maharashtra Ownership Flats Act, 1963. Partnership firms, while not considered distinct legal entities under general law, consist of individuals collectively engaging in business activities. Even post-dissolution, partners remain liable for obligations incurred during the firm's existence, as prescribed by Section 45 of the Indian Partnership Act, 1932. Agreements made by one partner on behalf of the firm are binding on all partners, as per the provisions of the Indian Partnership Act, 1932. The Consumer Protection Act, 1986, defines 'person' to encompass firms, regardless of registration status, enabling legal recourse against unregistered partnership firms. An agreement executed by one partner on behalf of the firm carries legal validity for all partners with their consent. If one partner accepts an order, it is binding on all partners, and individual appeals may not be tenable if they contradict collective decisions made by the partnership.

By virtue of this irrevocable power of attorney, Mr. Avinash Shriram Bachuvar retains the authority to execute property transfers on behalf of Mr. Jayant Patil, with such authorization persisting notwithstanding Mr. Patil's demise. Hence, the legal heirs of Mr. Patil are prohibited from disputing the validity of transactions conducted by Mr. Bachuvar under the purview of the power of attorney.

Both the State Commission and District Forum have given well-reasoned orders, duly and appropriately addressing the issues raised by Petitioner. We are in agreement with the findings of State Commission and District Forum. As was held by the Hon’ble Supreme Court in Rubi Chandra Dutta Vs. United India Insurance Co. Ltd. [(2011) 11 SCC 269], the scope in a Revision Petition is limited. Such powers can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order. In Sunil Kumar Maity Vs. State Bank of India & Ors. [AIR (2022) SC 577] held that “the revisional jurisdiction of the National Commission under Section 21(b) of the said Act is extremely limited. It should be exercised only in case as contemplated within the parameters specified in the said provision, namely when it appears to the National Commission that the State Commission had exercised a jurisdiction not vested in it by law, or had failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdiction illegally or with material irregularity." We find no illegality or material irregularity or jurisdictional error in the order of the State Commission, hence the same is upheld. Accordingly, the RP is dismissed.

The pending IAs in the case, if any, also stand disposed off.