MANOHAR INFRASTRUCTURE AND CONSTRUCTIONS PRIVATE LIMITED versus SANJEEV KUMAR SHARMA AND ORS. on 7 December 2021

1. Feeling aggrieved and dissatisfied with the impugned orderpassed by the National Consumer Disputes Redressal Commission, NewDelhi (hereinafter referred to as “National Commission”) dated27.09.2021 in I.A. No. 3621 of 2021 in First Appeal No. 330 of 2021 bywhich, the National Commission, while staying the order passed by theState Commission has directed the appellant to deposit the entire decretalamount with the State Commission, the original appellant – builder – M/s. Manohar Infrastructure and Constructions Private Limited, haspreferred the Civil Appeal No. 7098 of 2021.

2. Feeling aggrieved and dissatisfied with the impugned orderpassed by the National Commission dated 31.08.2021 passed in I.A.No. 5880 of 2021; I.A. No.5881 of 2021; I.A. No.5882 of 2021; I.A.No. 5883 of 2021 and I.A. No. 5884 of 2021 in respect of First AppealNos. 856 of 2020, 857 of 2020, 858 of 2020, 859 of 2020 and 860 of 2020by which the National Commission has dismissed the said I.A.s andrefused to modify or review or recall its earlier order dated 04.02.2021by which, while admitting the respective appeals, the National Commissiongranted stay of the orders passed by the State Commission, subject todeposit of entire decretal amount with up-to-date interest, if any, theoriginal appellant/applicant – builder – M/s. TDI Infrastructure Ltd. haspreferred the present Civil Appeal Nos. 7099 to 7104 of 2021.

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A3. At the outset, it is required to be noted that feeling aggrievedand dissatisfied with the order passed by the State Commission directingthe appellant(s) to refund the amount paid by the respective home buyerswith interest, the appellant(s) have preferred the first appeals before theNational Commission under Section 51 of the Consumer Protection Act,2019 (hereinafter referred to as the “Act, 2019”). That in the saidBappeal(s), the respective appellant(s)/applicant(s) filed the saidapplication(s) to stay the respective order(s) passed by the StateCommission.

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4. At this stage, it is required to be noted that as the said respectiveCappellant(s) have deposited 50 per cent of the decretal amount bypreferring the appeal(s), which the appellant(s) are required to depositas a pre-deposit at the time of preferring the appeal(s) as required underSection 19 of the Act, 2019. But the National Commission has stayedthe order passed by the State Commission on condition that the appellant(s)shall deposit the entire decretal amount with interest, if any, with theDState Commission. Feeling aggrieved and dissatisfied with the order(s)passed by the National Commission passed on the stay application(s)directing the appellant(s) to deposit the entire decretal amount withinterest, if any, while staying the respective order(s) passed by the StateCommission, the original appellant(s) have preferred the present appeals.

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5. Shri Sidharth Dave, learned Senior Advocate has appeared onbehalf of the appellant in Civil Appeal No. 7098 of 2021 and Ms. KanikaAgnihotri, learned Advocate has appeared on behalf of the appellant –M/s. TDI Infrastructure Ltd. in Civil Appeal Nos. 7099 to 7104 of 2021.

6. Shri Sidharth Dave, learned Senior Advocate on behalf of theFrespective appellant has vehemently submitted that the NationalCommission cannot pass an order to deposit the entire decretal amountand/or any amount higher than 50 per cent of the amount in terms of theorder of the State Commission while entertaining the appeal in view ofthe second proviso to Section 51 of the Act, 2019. It is submitted thatGaccording to the statutory intent, the requirement of deposit at best canbe 50 per cent of the decretal amount and not higher than that. Learnedcounsel appearing on behalf of the respective appellant(s) have heavilyrelied upon the number of orders passed by this Court against severalorders passed by the National Commission granting stay of the order ofthe State Commission subject to deposit of the entire decretal amountH

with the State commission and this Court has disposed of the respectivespecial leave petition(s) with the direction that the appellant(s) shall deposit50 per cent of the decretal amount in view of the second proviso toSection 51 of the Act, 2019.

6.1 It is further submitted that assuming that the NationalCommission can pass the order to deposit the entire amount and/or anyamount higher than 50 per cent of the amount while staying the orderpassed by the State Commission, in that case also such order(s) on stayapplication(s) is/are not to be passed mechanically. It is submitted thatpower to grant stay are akin to power to grant stay of the decree passedby the Civil Court under the provisions of the Civil Procedure Code,1908,namely Order XLI Rule 5.

6.2 It is submitted that a speaking order is required to be passedby the National Commission, if on facts, the National Commissionproposes to pass an order to deposit the entire decretal amount and/orany amount higher than 50 per cent. It is submitted that directing theappellant(s) to deposit the entire decretal amount/entire amount wouldbe unreasonable and taking away the right of the appellant/aggrievedparty to challenge the order passed by the State Commission in an appealunder Section 51 of the Act, 2019.

6.3 It is submitted that considering second proviso to Section 51of the Act, 2019, it can be said that the legislative intent is that before theappeal of the aggrieved party is considered by the National Commissionon merits, he has to deposit 50 per cent of the decretal amount and it issufficient that 50 per cent amount of the decretal amount is depositedand not higher than that.

7. Learned counsel appearing on behalf of the original complaint(s)-respondent(s) in the appeals preferred by the TDI Infrastructure Ltd.has vehemently submitted that as such the appellant - TDI InfrastructureLtd. has not challenged the original order dated 04.02.2021 directing theappellant(s) to deposit the entire amount ordered by the State commissionas a condition for grant of stay. It is submitted that thereafter by orderdated 23.03.2021 the National Commission dismissed the respectiveappeal(s) for waiver of the condition of deposit of the entire decretalamount by earlier order dated 04.02.2021 and the same is also notchallenged. It is submitted that what is challenged is the subsequentorder dated 31.08.2021 passed in respective I.A. Nos. 5880 of 2021 to A

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A5884 of 2021 in respective First Appeal Nos. 856 of 2020 to 860 of 2020,which were filed for modification of the earlier order dated 04.02.2021.It is therefore submitted that in the absence of any challenge to theearlier main National Commission’s orders dated 04.02.2021 and23.03.2021, the present appeal(s)/special leave petition(s) challengingonly the order dated 31.08.2021 refusing to modify the earlier orderBdated 04.02.2021 is not maintainable and the same is not required to beentertained.

7.1 On merits, while opposing the present appeals, it is vehementlysubmitted that as such the order passed by the State Commission is akinto a money decree and therefore while staying the money decree theCNational Commission is absolutely justified in directing the appellant –judgment debtor to deposit the entire decretal amount while staying theorder passed by the State Commission. It is submitted that even otherwisein the present case the order passed by the State Commission is to refundthe amount to the respective home buyers, which they actually depositedDand paid to the builder. It is therefore submitted that it is their money thatthe State Commission has directed to refund. It is therefore submittedthat as such the National Commission has rightly directed to deposit theentire decretal amount.

7.2 It is further submitted by the learned counsel appearing onEbehalf of the original complainant(s) that the issue, whether the NationalCommission can pass an order to deposit the entire amount and/or anyamount higher than 50 per cent of the amount as such is no longer resintegra in view of the decision of this Court in the case of ShreenathCorporation and Ors. Vs. Consumer Education and ResearchSociety and Ors., (2014) 8 SCC 657.F

7.3 It is submitted that while considering the pari materia provisionunder the Consumer Protection Act, 1986 (hereinafter referred to as the“Act, 1986) second proviso to Section 19, it is observed and held that thepre-deposit condition has no nexus with grant of interim order of stay. Itis held that while considering the stay of the order passed by the StateGCommission, the National Commission can direct the appellant(s) todeposit the entire amount. It is submitted that deposit of 50 per cent ofthe amount awarded by the State Commission would be a pre-conditionto entertain the appeal filed by the aggrieved party-appellant and that isthe minimum mandatory requirement before the appeal and applicationHfor stay is considered on merits.

7.4 It is submitted that so far as the earlier orders passed by thisCourt directing the appellant(s) to deposit only 50 per cent of the amountis concerned, it is submitted that in none of the orders any law is laiddown by this Court. It is submitted that on the contrary, the issue involvedin the present appeal(s) is directly and squarely covered by the decisionof this Court in the case of Shreenath Corporation and Ors. (supra)by which this Hon’ble Court has considered the issue in detail on meritsand has considered the object and purpose of deposit of the amount as apre-deposit. It is submitted that in the case of Shreenath Corporationand Ors., this Court also considered the Order XLI Rule 5 and OrderXXXIX Rule 1 of the CPC alongwith the object and purpose of thedeposit of the amount as a pre-deposit before the appeal is entertainedunder Section 19 of the Act, 1986.

7.5 Making above submissions, it is prayed to dismiss the presentappeals.

8. We have heard learned counsel for the respective parties atlength.

9. The short question which is posed for consideration of thisCourt is:

“Whether in an appeal under Section 51 of the ConsumerProtection Act, 2019 and while considering the stay application to staythe order passed by the State Commission, the National Commissioncan pass an order to deposit the entire amount and/or any amount higherthan 50 per cent of the amount in terms of the order of the StateCommission while entertaining the appeal under Section 51 of the Act,2019?”

10. While considering the aforesaid issue/question, Section 51 ofthe Consumer Protection Act, 2019 is required to be referred to, whichreads as under:- “51. Appeal to National Commission.—(1) Any personaggrieved by an order made by the State Commission in exerciseof its powers conferred by sub-clause (i) or (ii) of clause (a) ofsub-section (1) of Section 47 may prefer an appeal against suchorder to the National Commission within a period of thirty daysfrom the date of the order in such form and manner as may beprescribed:

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SUPREME COURT REPORTS

AProvided that the National Commission shall not entertainthe appeal after the expiry of the said period of thirty days unlessit is satisfied that there was sufficient cause for not filing it withinthat period:

Provided further that no appeal by a person, who is requiredBto pay any amount in terms of an order of the State Commission,shall be entertained by the National Commission unless theappellant has deposited fifty per cent of that amount in the manneras may be prescribed.

(2) Save as otherwise expressly provided under this Act or byCany other law for the time being in force, an appeal shall lie to theNational Commission from any order passed in appeal by anyState Commission, if the National Commission is satisfied that thecase involves a substantial question of law.

(3) In an appeal involving a question of law, the memorandum ofDappeal shall precisely state the substantial question of law involvedin the appeal.

(4) Where the National Commission is satisfied that a substantialquestion of law is involved in any case, it shall formulate thatquestion and hear the appeal on that question:E

Provided that nothing in this sub-section shall be deemed totake away or abridge the power of the National Commission tohear, for reasons to be recorded in writing, the appeal on anyother substantial question of law, if it is satisfied that the caseFinvolves such question of law.

(5) An appeal may lie to the National Commission under this sectionfrom an order passed ex parte by the State Commission.”

11. On a fair reading of Section 51 of the Act, 2019, moreparticularly, second proviso to Section 51, it appears that the appellant(s)Gin an appeal against the order passed by the State Commission mayprefer an appeal, however, before the appeal is entertained by theNational Commission, the appellant(s) has to deposit 50 per cent of theamount. So, it is the pre-condition to deposit 50 per cent of the amountas ordered by the State Commission before his appeal is entertained byHthe National Commission. Therefore, it is a condition precedent to deposit 50% of the amount before his appeal is entertained by the NationalCommission. However, that does not take away the jurisdiction of theNational Commission to order to deposit the entire amount and or anyamount higher than 50 per cent of the amount while considering the stayapplication to stay the order passed by the State Commission. Rules forentertainment of an appeal on deposit of 50 per cent of the amountordered by the State Commission, which is a statutory pre-deposit andthe grant of interim order on the stay application subject to deposit offurther amount are distinct and different. Pre-deposit condition as persecond proviso to Section 51 has no nexus with the grant of interimorder of stay by the National Commission subject to deposit of the amountawarded by the State Commission.

12. An identical question came to be considered by this Court inthe case of Shreenath Corporation and Ors. (supra). In the aforesaidcase, this Court was considering the pari materia provision under theAct, 1986 and second proviso to Section 19, which provided pre-depositof amount specified therein, i.e., 50 per cent of the amount awarded bythe State Commission or Rs.35,000/- whichever is less. In the aforesaidcase, this Court had occasion to consider the object and purpose of pre-deposit condition while entertaining the appeal under Section 19 by theNational Commission, against the order passed by the State Commission.In paragraphs 8 to 10, it is observed and held as under:- “8. This Court in State of Haryana v. Maruti Udyog Ltd. [(2000)7 SCC 348], while dealing with the case of waiver of “pre-deposit”in an appeal under first proviso to Section 39(5) of the HaryanaGeneral Sales Tax Act held: (SCC p. 353, para 7)

“7. … There cannot be any dispute that right of appeal isthe creature of the statute and has to be exercised withinthe limits and according to the procedure provided by law.It is filed for invoking the powers of a superior court toredress the error of the court below, if any. No right ofappeal can be conferred except by express words. An appeal,for its maintainability, must have a clear authority of law.Sub-section (5) of Section 39 of the Act vests a discretionin the appellate authority to entertain the appeal if it is filedwithin sixty days and the amount of tax assessed along withpenalty and interest, if any, recoverable from the persons AB

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has been paid. The aforesaid restriction is subject to theproviso conferring discretion upon the appellate authorityto dispense with the deposit of the amount only on proof ofthe fact that the appellant was unable to pay the amount.Before deciding the appeal, the appellate authority affordsan opportunity to the party concerned to either pay theamount or make out a case for the stay in terms of provisoto sub-section (5) of Section 39 of the Act. Once theconditions specified under sub-section (5) of Section 39 arecomplied with, the appeal is born for being disposed of onmerits after hearing both the sides.”

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9. The second proviso to Section 19 of the Act mandates pre-deposit for consideration of an appeal before the NationalCommission. It requires 50% of the amount in terms of an orderof the State Commission or Rs 35,000, whichever is less forentertainment of an appeal by the National Commission. Unlessthe appellant has deposited the pre-deposit amount, the appealcannot be entertained by the National Commission. A pre-depositcondition to deposit 50% of the amount in terms of the order ofthe State Commission or Rs 35,000 being condition precedent forentertaining appeal, it has no nexus with the order of stay, as suchan order may or may not be passed by the National Commission.The condition of pre-deposit is there to avoid frivolous appeals.

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10. It is not the case of any of the appellants that the ConsumerForum, including the State and National Commissions, has nopower to pass interim order of stay. If the National Commissionafter hearing the appeal of the parties in its discretion wants toFstay the amount awarded, it is open to the National Commissionto pass an appropriate interim order including conditional order ofstay. Entertainment of an appeal and stay of proceeding pursuantto order impugned in the appeal stand on different footings, at twodifferent stages. One (pre-deposit) has no nexus with merit of theGappeal and the other (grant of stay) depends on prima facie case,balance of convenience and irreparable loss of party seeking suchstay.”

13. We are in complete agreement with the view taken by thisCourt in the case of Shreenath Corporation and Ors. (supra).HTherefore, it is held that National Commission can pass an order to

deposit the entire amount and/or any amount higher than 50 per cent ofthe amount in terms of the order of the State Commission while stayingthe order passed by the State commission.

However, at the same time, while considering the stay applicationagainst the order passed by the State Commission and while passing theorder to deposit the entire amount and/or any amount higher than 50 percent of the amount, the National Commission has to assign some reasonsand pass a speaking order why the conditional stay is being granted oncondition of deposit of the entire amount and/or any amount higher than50 per cent of the amount. Such an order on the stay application is not tobe passed mechanically. Even in the case of Shreenath Corporationand Ors. (supra), it is observed that if the National Commission afterhearing the appeal of the parties in its discretion wants to stay theamount awarded by the State Commission, it is open to the NationalCommission to pass an appropriate interim order including a conditionalorder of stay. The order passed by the State Commission directing theappellant to refund the amount and/or pay any amount higher than 50per cent can be said to be akin to a money decree. Even as per OrderXLI Rule 5, the general rule is that normally there shall not be anyunconditional stay of a money decree, however, at the same time, theAppellate Court may pass an appropriate conditional order while stayingthe impugned decree depending upon the facts of the case and by givingcogent reasons. Therefore, while considering the stay applicationrequesting to stay the order passed by the State Commission and asobserved and held hereinabove, the National Commission can pass anorder to deposit the entire amount and/or any amount higher than 50 percent of the amount while staying the order passed by the Statecommission, however, the National Commission has to pass a speakingorder giving some reasons why in the facts of the particular case theconditional stay of the order passed by the State Commission is to bepassed subject to deposit of the entire amount and/or any amount higherthan 50 per cent of the amount awarded by the State Commission andthat too after giving an opportunity to the appellant as well as to therespondent. The order on the stay application is not to be passedmechanically. It must reflect an application of mind by the NationalCommission why the order passed by the State Commission is to bestayed on condition of deposit of the entire amount and/or any amounthigher than 50 per cent of the amount awarded by the State Commission.However, at the same time, there is no discretion at all to stay the order A

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Apassed by the State Commission subject to deposit of any amount lessthan 50 per cent of the amount which is required to be deposited as apre-deposit before the appeal is entertained as per second proviso toSection 51 of the Act, 2019.

14. Now in so far as the various orders passed by this CourtBrelied upon by the learned counsel for the respective appellant(s) bywhich, the special leave petition(s) have been disposed of directing theappellant(s) to deposit only 50 per cent of the amount as ordered by theState Commission are concerned, at the outset, it is noted that in none ofthe cases any law has been laid down by this Court. It appears thatwhile issuing a notice(s), the appellant(s) was/were directed to depositC50 per cent of the amount as ordered by the State Commission andthereafter without discussing any law and/or considering anything onmerits and the scheme of the Act, 2019, more particularly, Section 51 ofthe Act, 2019, the special leave petition(s) has/have been disposed of.On the contrary, there is a direct binding decision of this Court in theDcase of Shreenath Corporation and Ors. (supra) laying down thelaw after discussing the scheme, object and purpose of pre-deposit andthe power of the National Commission to grant conditional stay of depositof the entire amount and/or any amount higher than 50 per cent of theamount.

E15. The sum and substance of the above discussion and ourconclusions would be that:-

(i) pre-deposit of 50 per cent of amount as ordered by theState Commission under second proviso to Section 51 ofthe Consumer Protection Act, 2019 is mandatory forFentertainment of an appeal by the National Commission;

(ii) the object of the said pre-deposit condition is to avoidfrivolous appeals;

(iii) the said pre-deposit condition has no nexus with the grantof stay by the National Commission; G

(iv) while considering the stay application in staying the orderpassed by the State Commission, the National Commissioncan grant a conditional stay directing the appellant(s) todeposit the entire amount and/or any amount higher than50 per cent of the amount in terms of the order of the StateHCommission;

(v) however, at the same time, the National Commission has toassign some cogent reasons and/or pass a speaking orderwhen the conditional stay of the order passed by the StateCommission is passed subject to deposit of the entire amountand/or any amount higher than 50 per cent of the amounteither as an ex parte order or after hearing both sides andconsidering the facts and circumstances of the case.

(vi) Thus, the National Commission can grant a conditional stayof the order passed by the State Commission on deposit ofthe entire amount and/or any amount higher than 50 percent of the amount as ordered by the State Commission inthe aforesaid manner.

16. Considering the impugned order(s) passed by the NationalCommission, it appears that the said order(s) on the I.A.(s)/stayapplication(s) directing the appellant(s) to deposit the entire decretalamount while staying the respective order(s) passed by the StateCommission have been passed mechanically and without assigning anyreason(s) and/or no speaking order is passed. Therefore, the mattersare remanded to the National Commission to decide the said application(s)afresh and pass an appropriate order on the said application(s) in light ofthe observations made hereinabove. Till then, the respondent(s) hereinshall not take any coercive steps against the appellant(s) herein.

17. In view of the above discussion and for the reasons statedabove, all the appeals succeed in part. The respective I.A.(s) in respectiveappeal(s) are ordered to be restored to the file of the National Commissionand the National Commission to pass fresh orders on the respectiveI.A.(s)/stay application(s) and pass speaking order/reasoned orderconsidering the observations made hereinabove. It will be open for theoriginal complainant(s) to submit that as it is a money decree and theorder passed by the State Commission is to refund the amount depositedby them as a home buyer, therefore, the appellant(s) be directed todeposit the entire amount and/or any amount higher than 50 per cent ofthe amount and the same may be considered by the National Commissionafter giving opportunity to the appellant(s). At the same time, it will alsobe open for the appellant(s) to pray for an unconditional stay withoutdeposit of the entire amount and/or any amount higher than 50 per centof the amount. The said contentions may be considered by the NationalCommission while exercising the discretion and considering the respective A

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Astay application(s). The aforesaid exercise has to be completed within aperiod of eight weeks from today. Either of the parties to place a copy ofthe present judgment and order before the National Commission forthwith.

All these appeals are partly allowed to the aforesaid extent onlywith the law laid down on the powers of the National Commission toBgrant conditional stay of the order passed by the State Commission oncondition of deposit of the entire amount and/or any amount higher than50 per cent of the amount as observed hereinabove.

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Divya Pandey

Appeals partly allowed.

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