Is Your Case Old? Why Continuing Cause of Action in a consumer law Saves You

Table of Contents

• 1. Bibliographic Details: Continuing Cause of Action in a consumer law
• 1.1 Case Details and Bench of the Hon’ble Supreme Court
• 2. Brief Facts: limitation period in Consumer Protection Act Context
• 2.1 The Redevelopment Agreement for Madhav Baug
• 2.2 Terms of the 2015 Indemnity-cum-Undertaking
• 3. Case Timelines: first date in a cause of action versus continuing cause of action
• 3.1 Sequence of Events leading to the 2019 Complaint
• 3.2 The Escrow Period and Final Document Release in 2018
• 4. Issues pending before the Hon’ble Supreme Court
• 5. Adjudication by the Hon’ble National Commission
• 5.1 The Decision to Dismiss based on the 2015 Cause of Action
• 6. Rationale of the Hon’ble Supreme Court
• 6.1 Establishing failure to register a flat causing a continuing cause of action
• 6.2 The Holistic View: Justice over Technicalities
• 7. Operative Portion of the Judgment
• 8. Conclusion and Final Insights
• 8.1 Key Takeaways for the Appellant
• 8.2 Key Takeaways for the Respondent
• 9. Frequently Asked Questions

1. Bibliographic Details: Continuing Cause of Action in a consumer law

We begin by providing the essential details of this significant ruling which clarifies the application of the continuing cause of action in a consumer law to protect the substantive rights of homebuyers.

1.1 Case Details and Bench of the Hon’ble Supreme Court

• Title of the Judgment: Pushpa Jagannath Shetty & Ors. Vs M/S. Sahaj Ankur Realtors & Ors.
• Name of the Judges: Hon’ble Mr. Justice Sanjay Karol and Hon’ble Mr. Justice Manmohan
• Citation Number of the Judgment: 2025 INSC 294
• Date of the Judgment: February 28, 2025

2. Brief Facts: limitation period in Consumer Protection Act Context

The Appellants were originally tenants in a building known as “Madhav Baug” located in Andheri, Mumbai . The Respondents, a partnership firm, decided to demolish the old structure and construct a new building. Consequently, a Permanent Alternate Accommodation Agreement was executed on September 20, 2013, allotting the Appellants a 700 sq. ft. flat in the new B-Wing. The agreement stipulated a construction period of 24 months plus a 6-month grace period.

However, the redevelopment faced delays. On January 10, 2015, the Respondents executed an “Indemnity-cum-Undertaking”. This document promised that if necessary approvals were not obtained within six months, the Appellants would be allotted two flats (Nos. 301 and 302) free of cost. If the Respondents failed to provide these options, the Appellants were entitled to the market value of a 1317 sq. ft. area plus 25% additional compensation . This historical context is vital to understand the first date in a cause of action versus continuing cause of action.

3. Case Timelines: first date in a cause of action versus continuing cause of action

The timeline of this case illustrates the effect of filing a consumer complaint after the 2-year limitation if negotiations are ongoing.

• September 20, 2013: Execution of the original Permanent Alternate Accommodation Agreement.
• December 2014: Possession of old flats handed over to the developer.
• January 10, 2015: Execution of the “Indemnity-cum-Undertaking”.
• December 2016: Expiry of the initial contractual 24-month period.
• January 2019: Respondents ceased paying the rent for alternative accommodation.
• December 17, 2018: Flats held in escrow were finally released to the Appellants after several meetings and letters.
• February 6, 2019: Filing of the consumer complaint before the Hon’ble National Commission.

4. Issues pending before the Hon’ble Supreme Court

The Hon’ble Supreme Court was tasked with determining whether the complaint was rightfully dismissed on technical grounds. The primary issue was:

“the question that arises for our consideration pertains to the calculation of limitation in preferring the complaint case.”

The Court had to decide if the limitation period in Consumer Protection Act should be calculated strictly from the initial breach in 2015 or if the ongoing negotiations and escrow involvement created a continuing cause of action in a consumer law .

5. Adjudication by the Hon’ble National Commission

The Hon’ble National Commission (NCDRC) dismissed the complaint by strictly applying Section 24-A of the Consumer Protection Act, 1986. It held that the cause of action arose on July 10, 2015, making the 2019 filing time-barred. The exact findings of the Hon’ble National Commission as reproduced in paragraph 5 of the Hon’ble Supreme Court’s Judgment are:

“7. We have considered the arguments of the consel for the parties and examined the record. The complainants sought to enforce “Indemnity-cum-Undertaking” dated 10.01.2015, under which, the owner undertook to allot Flat Nos.301 & 302, carpet area 650 sq.ft. and 667 sq.ft., in “B” wing, free of cost, if the owner fails o obtain necessary approval of the plan within six months from the date hereof as mutually agreed by the parties in writing. None of the parties have produced any separate writing in respect of mutually agreed date as such, six months period has to be counted from 10.01.2015. Cause of action for enforcement of “Indemnity-cum-Undertaking” arose on 10.07.2015. This complaint was filed on 19.02.2019. The complaint is time barred and no application for condonation of delay has been filed.”

6. Rationale of the Hon’ble Supreme Court

The Hon’ble Supreme Court found that the Hon’ble NCDRC’s stand “defeats the ends of justice”. The Court observed that while an initial breach occurred in 2015, the parties remained in constant communication. A critical factor was the involvement of an escrow agent, Mr. Jani, who managed the implementation of the contractual terms .

The Hon’ble Supreme Court highlighted the escrow communication from December 14, 2018, as mentioned in paragraph 7 of the Judgment:

“1. Further to the meeting held in our office on 12/10/2018, it appears that Miss. Atita Shetty and her family are not satisfied with the non-performance of the promises made by you, that you will tender an approved plan of proposed flat to be given to her and her family which you have failed and neglected to do as per her letter dated 16/11/2018, and accordingly has asked us to handover the escrow documents to her. 2. It was decided and agreed to handover the escrow documents to Miss Atita Shetty on 7th December, 2018 and the same was postponed to 14th December 2018. 3. Unfortunately, at the last moment you had called up in our office to cancel today’s appointment, we have fixed it on Monday viz., 17th December 2018. We will fix the appointment on Monday viz., 17th December 2018 and whether you attend or not, nor we will postpone any further date and on 17th December 018 we will hand over the escrow documents to Miss Atita Shetty without fall, which kindly take note.”

The Hon’ble Supreme Court concluded that this was a continuing cause of action in a consumer law, stating:

“In our view, the stand of the NCDRC defeats the ends of justice. The initial cause of action indeed arose in July 2015 after the six-month period expired, however, the Court cannot be amiss to the fact that the parties had been pursuing the matter with the respondent by way of letters, meetings, and even with the escrow agent…”

The Court further noted that the failure to register a flat causing a continuing cause of action meant that the limitation for seeking registration and protection against third-party rights is distinct from the initial demand for the flat itself .

7. Operative Portion of the Judgment

The Hon’ble Supreme Court, after considering the holistic situation, passed the following orders to restore the complaint:

“Finding the view taken by it to be ex-facie erroneous, we quash and set aside the impugned order with particulars mentioned in paragraph 1 of this order.”

“We hold that the complaint filed by the appellant is within time. The same is restored to its status and number.”

The parties are directed to appear before the Hon’ble NCDRC on March 17, 2025.

The Hon’ble NCDRC is requested to decide the matter on its own merits, preferably within six months .

8. Conclusion and Final Insights

This Judgment reinforces that the limitation period in Consumer Protection Act should not be used as a tool to stifle substantive rights when parties are actively seeking to implement their contracts . For the Appellants, this is a victory ensuring that the effect of filing a consumer complaint after the 2-year limitation if negotiations are ongoing is recognized as a valid continuation of their legal rights. For Respondents, it serves as a reminder that technical delays cannot bypass contractual obligations when a continuing cause of action in a consumer law is established through their own conduct.

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9. Frequently Asked Questions

1. What does the term continuing cause of action in a consumer law mean in property disputes?
It refers to a situation where the legal injury or breach of contract is ongoing rather than a one-time event . In this case, because the parties were still actively working with an escrow agent to implement the contract, the Hon’ble Supreme Court held the cause of action was continuing rather than ending at the first breach.

2. How does the limitation period in Consumer Protection Act affect redevelopment cases?
Under Section 24-A of the Consumer Protection Act, 1986, a complaint must generally be filed within two years from the date the cause of action arises. However, if the conduct of the parties shows ongoing efforts to fulfill the contract, this period may not strictly bar the case as it becomes a continuing cause of action in a consumer law.

3. What is the effect of filing a consumer complaint after the 2-year limitation if negotiations are ongoing?
The Hon’ble Supreme Court ruled that when negotiations, meetings, and letters are consistently exchanged, the complaint should not be dismissed on a technicality. Such active engagement ensures that the right to seek justice is preserved even if the initial breach happened years earlier .

4. Can the failure to register a flat causing a continuing cause of action help my case?
Yes, seeking the security of title and registration for a flat already in your possession is considered a distinct and subsequent situation . The Hon’ble Supreme Court clarified that the limitation for such a relief does not necessarily expire just because the initial date of flat delivery passed.

5. What is the difference between the first date in a cause of action versus continuing cause of action?
The first date is the initial point of breach (e.g., July 2015 when approvals were not obtained). A continuing cause of action recognizes the entire timeline of interactions, including meetings and escrow releases. The Hon’ble Supreme Court noted that courts must look at the situation holistically rather than just the first date of default.

6. Why did the Hon’ble NCDRC originally dismiss the complaint in the Madhav Baug case?
The Hon’ble NCDRC took a narrow view, counting the six-month period from the 2015 “Indemnity-cum-Undertaking” and concluding the cause of action arose on July 10, 2015 . Because the case was filed in 2019, they deemed it time-barred under Section 24-A of the Consumer Protection Act, 1986.

7. How did the involvement of an escrow agent impact the limitation period?
The presence of an escrow agent showed that the implementation of the contractual terms was still being pursued . The Hon’ble Supreme Court found that the cause of action remained active until the escrow agent finally released the documents in December 2018.

8. What happens if a developer stops paying rent for alternative accommodation during a delay?
In this Judgment, the developer continued paying rent until January 2019 but left a balance of dislocation compensation pending. This ongoing financial relationship was part of the evidence that the contract was still being actively managed .

9. Can I seek registration of my flat even if the developer has defaulted on earlier timelines?
Yes, the Hon’ble Supreme Court held that if a buyer is already in possession, they can still file a complaint to ensure the property is registered in their name and not alienated to third parties . This right is substantive and should not be defeated by technical limitation features.

10. What specific timeline did the Hon’ble Supreme Court set for the restored case?
The Court directed the parties to appear before the Hon’ble NCDRC on March 17, 2025. It also requested that the matter be decided on its merits expeditiously, preferably within six months from the date of the Judgment.