Limitation Period Cannot Be Extended Based On Discussions Or Exchange Of Letters: NCDRC

Brief Facts of the Case

The complainant, an educational institution, signed a contract with Jain Construction Company to build a school. The complainant paid ₹10 lakhs in advance, but the construction company allegedly did not perform the agreed-upon work. As a result, the complainant claimed they suffered a loss of ₹28 lakhs in school fees due to the delay in starting classes. Additionally, the construction work was reported to be of inferior quality despite the company charging higher-than-market rates, which the complainant argued was a serious deficiency in service. The complainant approached the State Commission of Rajasthan and sought compensation of ₹28 lakhs for the lost school fees, ₹48,02,723 for the substandard construction and repairs, and ₹10 lakhs for the overall deficiency in service. The State Commission dismissed the complaint, following which the complainant appealed to the National Commission.

Contentions of the Construction Company

The construction company contested the complaint by arguing that the educational institution, operating commercially, failed to make timely payments as required by the contract. As a result, the construction company filed a suit for recovery of ₹22,50,560 against the institution in the Court of Additional District & Sessions Judge, Ajmer. The construction company claimed that the institution filed the complaint before the State Commission to avoid paying the outstanding amount related to a bill sent to it. They also asserted that they completed the work per the contract and handed over the building. Additionally, the construction company argued that the complaint was not filed within the two-year limitation period, making it time-barred and not maintainable, given the commercial and civil nature of the dispute. They, therefore, requested that the complaint be dismissed.

Observations by the National Commission

The National Commission observed that the main issues were whether the complainant qualified as a “consumer” under Section 2(1)(d) of the Consumer Protection Act, 1986 and whether the complaint was filed within the prescribed limitation period. Citing the case of Laxmi Engineering Works Vs P.S.G. Industrial Institute (1995) 3 SCC 583, the Commission observed that despite running a school, the complainant availed of construction services, which does not automatically qualify as a commercial purpose. Regarding the limitation period, the Commission determined that the construction would be completed by the agreed date, and the building was handed over shortly thereafter. The complainant argued that the limitation period should start later when discussions about the construction took place. However, the Commission rejected this argument, citing Shakti Bhog Food Industries Limited vs. Central Bank of India & Anr. (2020) 17 SCC 260, which emphasizes that the limitation period cannot be extended based on discussions or exchange of letters. The Commission also referenced State Bank of India vs B S Agriculture Industries (I) (2009) 5 SCC 121, stating that the law of limitation must be applied rigorously and that the consumer forum has a duty to ensure that complaints are filed within the prescribed period. The complainant failed to provide sufficient reasons for the delay in filing the complaint, which was considered a routine and casual approach rather than a legitimate cause. Further, in R. B. Ramlingam vs R. B. Bhavaneshwari, I (2009) CLT 188 (SC), it was held that a party who is not diligent is not entitled to the condonation of delay. The burden was on the complainant to prove sufficient cause for the delay, as explained in Basawaraj & Anr. Vs. The Spl. Land Acquisition Officer, 2013 AIR SCW 6510, and Anshul Aggarwal Vs. New Okhla Industrial Development Authority (2011) 14 SCC 578. Since the complainant approached the Commission four years late, claiming a continuing cause of action, the Commission dismissed the appeal as barred by limitation and upheld the State Commission's order.

Case Title: Central Academy Educational Society Ajmer Vs. M/S. Jain Construction Company

Case Number: F.A. No. 1177/2014

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