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In the matter decided by the Hon’ble Apex Court on January 11, 2022 in Samruddhi Co-operative Housing Society Ltd. v. Mumbai Mahalaxmi Construction Pvt. Ltd.  [Civil Appeal No 4000 of 2019] it was held that members of the appellant, a Cooperative Housing Society, are within their rights as ‘consumers’ to pray for compensation on account of the failure of the respondent, to obtain the occupation certificate. According to the Court, when the respondent was responsible for transferring the title of the flats to the members of the appellant along with the occupancy certificate and he failed to do so, such failure amounted to a deficiency in service. In such circumstances, the appellant has the locus to seek compensation for consequent liability which includes payment of higher taxes and water charges etc. paid to the municipal authorities by the owners i.e members of the appellant.

The respondent, a construction company, entered into agreements with the members of the Co-operative Housing Society/ appellant to sell flats to individual purchasers i.e. the members in accordance with the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 (“MOFA”). The members got the possession of the flats in 1997. However, the respondent did not obtain the occupancy certificate from the municipal authorities which made individual flat owners ineligible for electricity and water connections. The members somehow could arrange for temporary connections but then they were required to pay property tax at a rate 25% higher than the normal rate and water charges at a rate which was 50% higher than the normal charge.

The State Commission ordered in favour of the flat owners and directed the respondent to obtain the occupancy certificate and also pay, inter alia Rs. 1,00,000/- towards reimbursement of extra charges paid. The respondent however failed to comply with the demand from the members of the petitioner. The appellant approached the National Commission seeking, apart for damages on account of mental agony and inconvenience, a recompense for the excess charges and tax paid by the members of the appellant due to the deficiency in service of the respondent.

The National Commission, however, dismissed the complaint on the ground of limitation. As per the National Commission, the cause of action to file any complaint arose when the municipal authorities ordered the members to pay higher charges on temporary individual water and electricity connections. It was further held that complaint is not in nature of a consumer dispute since appellant would not fall under the definition of ‘consumer’ under Section 2(1)(d) of the Consumer Protection Act 1986 and the respondent was not the service provider of the services for which the property tax or water charges were levied. It was municipal authorities who were the service providers.

On appeal, the Hon’ble Supreme Court held that the cause of action of the appellants was founded on continuing wrong and therefore section 22 of the Limitation Act, 1963 shall be applicable. According to section 22, a fresh period of limitation begins to run at every moment of time during which the breach continues. The Court relied upon the judgment in Balakrishna Savalram Pujari Waghmare v. Shree Dhyaneshwar Maharaj Sansthan AIR 1959 SC 798 wherein the concept of continuous cause of action has been discussed in detail. It was held by the Hon’ble Court and quoted in the judgment as follows:

“It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes acontinuing wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury. It is only in regard to acts which can be properly characterised as continuing wrongs that Section 23 can be invoked”.

The Court further borrowed the excerpts from CWT v. Suresh Seth (1981) 2 SCC 790 and M. Siddiq v. Suresh Das (2020) 1 SCC 1 which are again on the aspects of continuous cause of action.

The Court then went on to observe that the promoter of the construction company is responsible to obtain and provide the occupation certificate to the flat owners as per sections 3 and 6 of the MOFA. Promoter is further liable to make payments of outgoings such as ground rent, municipal taxes, water charges and electricity charges till the time the property is transferred to the flat-owners. The Court further reflected that the Agreement to Sell executed between the appellant and the respondent also stipulates that it is the responsibility of the respondent to obtain the occupancy certificate.

The respondent, however, repeatedly failed to fulfil its obligations, even after the directions of the State and National Commission wherein the respondent was directed to obtain the occupancy certificate. This resulted in levy of higher taxes and water charges by the municipal authority on the members of the appellant.

The Court therefore concluded by stating that “This continuous failure to obtain an occupancy certificate is a breach of the obligations imposed on the respondent under the MOFA and amounts to a continuing wrong. The appellants therefore, are entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation.” While relying on judgments passed by the Hon’ble Supreme Court in Wing Commander Arifur Rahman Khan & Others v. DLF Southern Homes Private Limited & Others (2020) 16 SCC 512 and Pioneer Urban Land Infrastructure Limited v. Govindan Raghavan (2019) 5 SCC 725, the Court also added that failure to obtain an occupancy certificate or abide by contractual obligations amounts to a deficiency in service and respondent is therefore liable in the present case.

While granting the compensation, the Court distinguished the present case from the judgment in Treaty Construction v. Ruby Tower Cooperative Housing Society Ltd. (2019) 8 SCC 157, by highlighting that in the case, the Court declined to award damages “as there was no cogent basis for holding the appellant liable for compensation, and assessing the quantum of compensation or assessing the loss to the members of the respondent society.” However, in the present case, “members of the appellant society are well within their rights as ‘consumers’ to pray for compensation as a recompense for the consequent liability (such as payment of higher taxes and water charges by the owners) arising from the lack of an occupancy certificate”. Accordingly, the Court held the complaint by the appellant to be maintainable and directed the National Commission to decide the complaint on merits of the dispute.

Recently in the matter of ECGC Limited v. Mokul Shriram EPC JV [Civil Appeal No. 1842 of 2021] (hereinafter referred to as “Appeal”) decided on February 15, 2021, the Hon’ble Apex Court clarified that onerous pre-condition of payment of 50% of the amount awarded, in the event of filing of an appeal, will not be applicable to the complaints filed prior to the commencement of the Consumer Protection Act, 2019 (hereinafter referred to as “2019 Act”).

In the present Appeal, the Appellant had assailed order passed by the National Consumer Dispute Redressal Commission directing the Appellant to pay a sum of Rs. 265.01 Crores along with interest @ 10% p.a. to the Complainant. The complaint was filed under Section 21(a)(i) of the Consumer Protection Act, 1986 (hereinafter referred to as “1986 Act”) on account of non-payment for invoices issued by the Complainant for the work done under the contract. The said complaint was allowed on 27.1.2021.

The issue arose out of an application filed by the Appellant before the Hon’ble Court in the said Appeal wherein the Appellant prayed to entertain the appeal as per the provisions of the 1986 Act. Therefore, the question before the Hon’ble Apex Court was whether the appeal would be governed under the 2019 Act or under the 1986 Act.

As per Section 67 of the 2019 Act, an appellant is required to deposit fifty per cent of the amount directed to be paid as a pre-requisite of filing the appeal. Under proviso to Section 23 of the 1986 Act, on the other hand, an appellant was required to pay fifty per cent of the amount or fifty thousand rupees, whichever is less.  It was contended on behalf of the Appellant in the application that the condition of deposit of 50% of the amount under the 2019 Act is more onerous than what was provided under the 1986 Act wherein an upper limit of Rs. 50,000/- was provided. The Appellant further relied upon Section 107 of the 2019 Act and Section 6 of the General Clauses Act, 1897. It was argued that unless a different intention appears, the repeal shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed as per Clause (c) of Section 6 of the General Clauses Act, 1987. It was further contended that as per Clause (e) of section 6 of the General Clauses Act, 1987, the repeal shall not affect any  legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment which may be imposed as if the repealing Act or the Regulation has not been passed. It was submitted that as per the relevant provisions, the right to file an appeal under the 1986 Act has accrued in favour of the Appellant in terms of Clause (c) of Section 6 of the General Clauses Act at the time of filing of complaint.

In this regard it was hence pertinent to be examined by the Court what is the nature of right to appeal and when does it vest in the parties.

The Hon’ble Apex Court analysed the judgments cited by the Appellant. In Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh & Ors [AIR 1953 SC 221] a similar question w.r.t. the Central Provinces and Berar Sales Tax Act, 1947 was involved. The amendment made the pre-requisite for filing the appeal more onerous. In the said case it was held as quoted in the judgment also –

“The above decisions quite firmly establish and our decisions in Janardan Reddy v. State [(1950) SCR 941] and in Ganpat Rai v. Agarwal Chamber of Commerce Ltd. [(1952) SCJ 564] uphold the principle that a right of appeal is not merely a matter of procedure. It is a matter of substantive right. This right of appeal from the decision of an inferior tribunal to a superior tribunal becomes vested in a party when proceedings are first initiated in, and before a decision is given by, the inferior court. In the language of Jenkins, C.J. in Nana bin Aba v. Shaik bin Andu to disturb an existing right of appeal is not a mere alteration in procedure. Such a vested right cannot be taken away except by express enactment or necessary intendment. An intention to interfere with or to impair or imperil such a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication.”

It was further explained that “the pre-existing right of appeal is not destroyed by the amendment if the amendment is not made retrospective by express words or necessary intendment. The fact that the pre-existing right of appeal continues to exist must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. As the old law continues to exist for the purpose of supporting the preexisting right of appeal that old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provision preventing the exercise of that right.”

The judgment was later approved by the Constitutional Bench in Garikapati Veeraya v. N. Subbiah Choudhry & Ors AIR 1957 SC 540. Applying the same principles in State of Bombay v. M/s. Supreme General Films Exchange Ltd. & Anr AIR 1960 SC 980, it was held that the court fees applicable on the Memorandum of Appeal was one that was applicable prior to the amendment of the Court Fees Act, 1870 and not as per the amendment in the Act. It was held, “It is thus clear that in a long line of decisions approved by this Court and at least in one given by this Court, it has been held that an impairment of the right of appeal by putting a new restriction thereon or imposing a more onerous condition is not a matter of procedure only; it impairs or imperils a substantive right and an enactment which does so is not retrospective unless it says so expressly or by necessary intendment.”

Similarly in K. Raveendranathan Nair & Anr. v. Commissioner of Income Tax & Ors (2017) 9 SCC 355 it was held that the relevant date for paying the court fee would be when the proceedings were initiated in the lowest court and not when the appeal was preferred.  Similarly, judgments in Ramesh Singh & Anr. v. Cinta Devi & Ors (1996) 3 SCC 142 and M/s Gurcharan Singh Baldev Singh v. Yashwant Singh & Ors. (1992) 1 SCC 428 with respect to the right of appeal as provided under the Motor Vehicles Act, 1939 which was repealed by Motor Vehicles Act, 1988, were also relied upon. The counsel for the Respondent, on the other hand, averred that the amendment is procedural in nature and thus always retrospective. The procedure includes the manner and form of filing of appeal, pre-deposit and limitation. [Thirumalai Chemicals Limited v. Union of India & Ors. 1 (2011) 6 SCC 739]. The Court, however, after considering the cases cited by the Respondent, held that the judgments were not applicable to the issues involved in the application. The Court, therefore concluded that onerous condition of payment of 50% of the amount awarded will not be applicable to the complaints filed prior to the commencement of the 2019 Act.