2023INSC748 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1434 OF 2023

EXPERION DEVELOPERS PRIVATE LIMITED ..... APPELLANT

VERSUS

HIMANSHU DEWAN AND SONALI DEWAN

AND OTHERS .....RESPONDENTS

J U D G M E N T

SANJIV KHANNA, J.

The instant appeal filed by M/s. Experion Developers Private

Limited

1

under Section 67 of the Consumer Protection Act, 2019

2

,

is directed against the order and judgment dated 16.01.2023

passed by the National Consumer Disputes Redressal

Commission

3

, in the Consumer Case No. 34/2022, whereby the

appellant has been directed to refund to Himanshu Dewan &

Sonali Dewan & Others

4

, the amount collected towards excess

1 For short, “the appellant”.

2 For short, “the Act”.

3 For short, “National Commission”.

4 For short, “the respondents”.

Civil Appeal No. 1434 of 2023 Page 1 of 34

sale area, and to execute supplementary correction deeds within

six weeks from the date of the order.

2.The appellant in the instant case had developed and constructed

the apartments in a housing project, namely “Windchants”,

situated in Gurgaon, Haryana. The respondents are the allottees

or the subsequent purchasers/buyers of their apartments. The

contractual terms inter-se are governed by the “Apartment Buyer

Agreement”

5

.

3.Clause 8 of the agreement pertains to the “CHANGES AND

VARIATIONS IN THE SALE AREA ”. The relevant part of Clause

8.6(ii) and Clause 8.7 read: -

“8.6 While every attempt shall be made to adhere to

the Sale Area, in case any changes result in any

revision in the Sale Area, the Company shall advise

the Buyer in writing along with the commensurate

increase/decrease in Total Sale Consideration based,

however, upon the BSP as agreed herein. Subject

otherwise to the terms and conditions of this

Agreement, a maximum of 10% variation in the Sale

Area and the commensurate variation in the Total Sale

Consideration is agreed to be acceptable to the Buyer

and the Buyer undertakes to be bound by such

increase/decrease in the Sale Area and the

commensurate increase/decrease in the Total Sale

Consideration. For any increase/decrease in the Sale

Area, the payment for the same shall be required to be

adjusted at the time of Notice of Possession or

immediately in case of any transfer of the apartment

before the Notice of Possession or as otherwise

advised by the Company.

5 For short, “the agreement”.

Civil Appeal No. 1434 of 2023 Page 2 of 34

8.7 If any of the Changes leads to any change in sale

area of the apartment in excess of Ten Percent (10%)

of the Sale Area mentioned herein at any time prior to

the execution of the Conveyance Deed for the

Apartment and such variation is unacceptable to

Buyer, all attempts shall be made by the Company to

offer an alternate apartment of a sale area similar to

the Sale Area of the Apartment within a maximum of

10% variation in the Sale area within the Group

Housing Colony subject to availability. If such alternate

apartment is available, the applicable Total Sale

Consideration for such alternate apartment shall be

payable/refundable, as the case may be, for the sale

area of the alternate apartment at the BSP mentioned

herein and there shall be no claim against the

Company in respect of the Apartment nor shall

otherwise be raised by the Buyer in this regard at any

time.”

4. The expression “Sale Area” as defined in Clause 1(xlviii), reads: -

“1. (xlviii) - ‘Sale Area’ shall include the covered area,

inclusive of areas enclosed by the periphery walls,

balconies/ decks, area under the columns and wails,

half of the area of walls common with other premises,

cupboads, projections/ledges, area utilized for the

common services and facilities provided viz. areas

in/under staircases, circulation areas, walls atriums,

stilts, lift shafts and lobbies, lift machine rooms, service

shafts, passages/ corridors, refuge areas, common

washrooms/toilets, mails rooms, all electrical plumbing

and fire shafts, community facilities, common service

rooms, security rooms, sewage treatment plants,

underground and overhead water storage tanks,

DG/panel room, terrace gardens, air handling units,

pantries and any other areas which have been paid for

or are constructed by the Company for common use,

but shall exclude the areas under the following:-

a)Sites for retail shops and other

commercial areas in the Project.

b)Amenities such as schools, medical

centre/dispensary, creche, other health

centers and the like.

Civil Appeal No. 1434 of 2023 Page 3 of 34

c)Dwelling units for the economically

weaker sections as prescribed under

Applicable Laws.

d)Car Parking Spaces”

5.According to the appellant, there was an increase in the sale area,

earlier provisionally allotted to the respondents, and therefore vide

communication/letter dated 27.04.2017, the respective allottees

were informed about the increase and revision in the sale area of

their apartments. Accordingly, the differential demand letters on

account of such increase were issued by the appellant to the

allottees of the apartments, including the respondents. The

respondents/their respective previous allottees made payments

towards the differential demand without any demur or protest

between the period December 2017 to August 2018, and the

appellant executed the conveyance deeds in their favour between

the period April 2018 to September 2019.

6.Subsequently, the respondents on 25.02.2022 filed a complaint

being Consumer Case No. 34/2022 before the National

Commission seeking a refund of the amounts paid by them

towards the increased sale area alleging, inter alia, that there was

neither increase in the carpet area nor in the built-up area, and

that the demand towards increase in the sale area made by the

appellant was illegal. The respondents relied upon the decision

Civil Appeal No. 1434 of 2023 Page 4 of 34

dated 26.08.2020 rendered by the National Commission in the

case of Pawan Gupta v. Experion Developers Private Limited.

6

7.The case was resisted by the appellant by filing a reply

challenging the very maintainability of the consumer case and

contending, inter alia, that no ‘cause of action’ had arisen.

According to the appellant, respondent nos. 1, 2 and 5 were the

subsequent allottees, who came into picture much after the

increase in the sale area and raising of demand therefor. Even the

payments for the same were made by their concerned

predecessor allottees without any protest. In case of respondent

no. 6, the predecessor allottee was already intimated about the

increase in the sale area and had not objected to the increase.

Respondent no. 6 was, thus, well aware of the increase in the sale

area and had made payments towards the same without any

protest. Other respondents also had made payments towards the

increase in the sale area without any protest. It was further

contended that as per Section 69 of the Act, a consumer

complaint could be filed within two years from the date when the

‘cause of action’ arises. In the instant case, the ‘cause of action’

had arisen on 27.04.2017, when the demand for the increased

area was raised by the appellant. The complaint was filed before

6 2020 SCC OnLine NCDRC 788.

Civil Appeal No. 1434 of 2023 Page 5 of 34

the National Commission on 25.02.2022, that is, about five years

after the ‘cause of action’ had arisen and three years after the

lapse of limitation period. Relying upon the certificates, reports

and affidavits of the architects, it was contended that there was an

actual increase in the sale area of the apartments as mentioned

therein and therefore, the charges demanded were valid and

legal, in terms of Clause 8 of the agreement.

8.The respondents in the rejoinder had contended that due to the

Covid pandemic, the period of limitation was suspended during

the period from 15.03.2020 to 28.02.2022 by this Court in terms of

the directions issued in Suo Moto Writ Petition (Civil) No. 3 of

2020, and hence, the claim of the respondents was within the

period of limitation. In the communication/letter dated 27.04.2017,

intimating the purported increase in the sale area, the appellant

had not placed any material or evidence to justify the increase in

the area. They allege that the reports and certificates of the

architects are all post-dated records, which cannot be taken as the

basis for justifying the increase in the sale area.

9.The National Commission, as stated herein above, by the

impugned judgment has directed the appellant to refund the

amount and execute supplementary/correction deeds. The

Civil Appeal No. 1434 of 2023 Page 6 of 34

appellant being aggrieved by the same, has preferred the present

appeal.

10.Heard the learned Senior Advocates Dr. Abhishek Manu Singhvi

and Mr. Amit Sibal appearing for the appellant, and the learned

Senior Advocate Mr. Bishwajit Bhattacharyya appearing for the

respondents.

11.At the outset, we must record our disagreement with the finding

recorded by the National Commission as to the ‘continuing cause

of action’ till 26.08.2020, which is the date when the question of

the excess sale area was decided by the National Commission in

CC Nos. 285/2018 and 286/2018 titled Pawan Gupta v. Experion

Developers Private Limited. The issue of limitation has to be

decided as per the provisions in the enactment, in the instant case

Section 69

7

of the Act, which prescribes a two years limitation to

file a complaint from the date on which the ‘cause of action’ has

arisen. The ‘cause of action’ means every fact, which, if traversed,

7 69. Limitation period.—(1) The District Commission, the State Commission or the National

Commission shall not admit a complaint unless it is filed within two years from the date on which the

cause of action has arisen.

(2) Notwithstanding anything contained in sub-section (1), a complaint may be entertained after

the period specified in sub-section (1), if the complainant satisfies the District Commission, the State

Commission or the National Commission, as the case may be, that he had sufficient cause for not

filing the complaint within such period:

Provided that no such complaint shall be entertained unless the District Commission or the State

Commission or the National Commission, as the case may be, records its reasons for condoning

such delay.

Civil Appeal No. 1434 of 2023 Page 7 of 34

is necessary to prove in order to support the claimant’s right to

judgment, is not dependant on a decision in another case by an

allottee raising a similar issue.

12.As per the respondents, the ‘cause of action’ arose when the

payments towards the increase in the sale area were made, and

thereupon, the conveyance deeds were executed between April

2018 to September 2019. They also submit, on account of the

Covid pandemic, the period from 15.03.2020 to 28.02.2022 has to

be excluded in terms of the directions issued by this Court in Suo

Moto Writ Petition (Civil) No. 3 of 2020. Since the complaints were

made on 25.02.2022, and on exclusion of the period between

15.03.2020 to 28.02.2022, the complaints would be well within the

limitation of two years from the date on which the ‘cause of action’

had arisen as prescribed in Section 69 of the Act.

13.The appellant, relying upon Section 9

8

of the Limitation Act, 1963,

which provides that once limitation starts running no subsequent

disability or inability to institute a suit or make an application would

stop it, have argued that the ‘cause of action’ arose and

commenced on 27.04.2017, which is when the appellant had

8 9. Continuous running of time.—Where once time has begun to run, no subsequent disability or

inability to institute a suit or make an application stop it:

Provided that, where letters of administration to the estate of a creditor have been granted to his

debtor, the running of the period of limitation for a suit to recover the debt shall be suspended while

the administration continues.

Civil Appeal No. 1434 of 2023 Page 8 of 34

intimated the increase in the sale area and, consequently, the

enhancement of price. Accordingly, in terms of Section 69 of the

Act, which prescribes the limitation of two years from the date on

which the ‘cause of action’ has arisen, the limitation had come to

an end on 26.04.2019. Therefore, the respondents would not be

entitled to the benefit of exclusion of the period from 15.03.2020 to

28.02.2022.

14.Having gone through the wording of the communication/letter

dated 27.04.2017, we do not find any merit in the submission of

the appellant. The communication/letter dated 27.04.2017 by the

appellant states that the construction work was in progress and

that the appellant would soon be starting the occupation certificate

process. Further, with the project reaching the handover stage, the

appellant had got clarity on the overall areas and subsequent

impact on the respective units. As per the calculation, the sale

area of the apartment had increased by the square feet as

indicated in the communication dated 27.04.2017. We do not read

the communication/letter as the starting point of the ‘cause of

action’. ‘Cause of action’ being the foundation of the claim refers

to the entire set or bundle of facts necessary and material to prove

in order to get a judgment. It refers to a definite point of time when

the requisite ingredients constituting that ‘cause of action’ are

Civil Appeal No. 1434 of 2023 Page 9 of 34

complete. The ‘cause of action’ is complete when they provide the

aggrieved party with the right to invoke jurisdiction of the

court/forum. The test is to determine when the aggrieved person

could have first maintained action for a successful result. In our

opinion, the communication/letter dated 27.04.2017 was an

assertion, albeit without any specific details or particulars. The

appellant, as per the contractual terms, is well within their right to

ask for enhanced sale consideration on increase in the sale area

as defined. The respondents have not questioned and challenged

this right of the appellant. They have challenged the computation

and calculations. The respondents have the right to ask for

calculations and details, when the appellant had stated that the

sale area had increased. On being satisfied with the calculation,

the respondents could have accepted the increase in the sale

area, if the same was in accordance with the agreement. The

‘cause of action’ arose when the appellant insisted and compelled

the respondents/allottees to make payment, but did not furnish the

details and particulars to enable the respondents/allottees to

ascertain the actual allocated sale area. One would not expect the

allottee or the consumer to challenge the demand, which is in

terms of the contract between the parties, and is therefore not

questionable. In such cases, no ‘cause of action’ arises. Further,

Civil Appeal No. 1434 of 2023 Page 10 of 34

the onus to justify and substantiate the claim and calculations of

increased sale area was, and is on the appellant. In the context of

the present case, it is an accepted position that the sale deeds

were executed with the respondents between the period from

13.04.2018 to as late as 09.01.2020. In view of the aforesaid, the

complaints filed by the respondents cannot be dismissed on the

ground of being barred by limitation under Section 69 of the Act.

We also observe that the consumer forums have the power to

condone the delay when sufficient cause is shown, even after two

years of the ‘cause of action’ having arisen. While no application

for condonation of delay was filed, the National Commission could

have always granted an opportunity to the respondents.

15.At the same time, we should notice the argument raised by the

appellant on acquiescence and estoppel, as the respondents are

seeking a refund of the amount paid without any demur or protest

about four years after the payments were made. Therefore, it is

submitted that the plea of deficiency of service is hit by the legal

bar of acceptance and ones’ previous action and conduct. It is

highlighted that the conveyance deeds were executed by the

appellant on the respondents/allottees upon making full payment,

including the payments with regard to the increased area, and

such payment, it is submitted, was voluntary and without

Civil Appeal No. 1434 of 2023 Page 11 of 34

reservation. It is also argued by the appellant that it is not even the

case of the respondents that they/original allottees had made

payments under some threat, coercion or duress. Therefore, it

does not lie in the mouth of the respondents to say, rather, they

were estopped from saying four years after the execution of the

conveyance deeds in their favour that there was no actual

increase in the sale area and the demand raised by the appellant

in that regard was not justified or was illegal.

16.Similar issues had arisen before this Court in Wing Commander

Arifur Rahman Khan and Aleya Sultana and Others v. DLF

Southern Homes Private Limited and Others

9

. This Court

accepted the argument by the consumers that execution of a deed

of conveyance by a flat buyer would not preclude a consumer

claim for compensation for delayed possession in a case where

the allottees were not given an option, but were rather told that the

possession would not be given and the conveyance deed would

not be executed without the acceptance of the offer of possession

terms. In the said case, the builder/developer had stated that it

would not handover the possession and execute the conveyance

deed without acceptance of the offer of possession terms. Any

request to take over possession and execute the documents

9 (2020) 16 SCC 512.

Civil Appeal No. 1434 of 2023 Page 12 of 34

under protest was untenable. The consumers were, in fact, asked

to file an unconditional affidavit/undertaking to that effect, as

execution of documents under protest or claim of coercion was not

to be entertained. In this background, this Court in Arifur

Rahman Khan (supra) held that the flat buyers/consumers were

essentially presented with an unfair choice of either retaining their

right to pursue their claims, in which event they would not get

possession or title in the meantime, or to forsake the claims in

order to perfect their title to the flats for which they had paid

valuable consideration. Accordingly, the question needed to be

addressed was whether a flat buyer who seeks to espouse a claim

against the developer for delayed possession can, as a

consequence of doing so, be compelled to defer the right to obtain

a conveyance to perfect their title. This Court held that it would be

manifestly unreasonable to expect that in order to pursue a claim

for compensation for delayed handing over of possession, the

purchaser must indefinitely defer obtaining a conveyance of the

premises purchased or, if they seek to obtain a deed of

conveyance to forsake the right to claim compensation. The

contrary position which the National Commission had espoused,

this Court was of the view cannot be countenanced and accepted.

This Court thus rejected the argument that on the execution of the

Civil Appeal No. 1434 of 2023 Page 13 of 34

conveyance deed, the transaction ceases to be a transaction in

the nature of “supply of services” covered under the Consumer

Protection Act, 1986 and becomes a mere sale of immovable

property and, therefore, it is not amenable to the jurisdiction of the

consumer fora. At the same time, this Court had refused to

interfere and grant relief in cases of purchasers who had entered

into specific settlement deeds with the developers observing that it

would only be appropriate and proper if the parties were held

down by the terms of the bargain. The contention that the

settlement deeds were executed under coercion or under undue

influence was also not accepted since no specific material had

been produced on record to demonstrate the same. This Court

also held that subsequent purchasers cannot benefit from the

order of this Court therein. However, this view in re. the

subsequent purchasers stands overruled by a bench of three

judges’ in Laureate Buildwell Private Limited v. Charanjeet

Singh

10

. In Laureate Buildwell Private Limited (supra) the larger

bench over-ruled the ratio laid down in Arifur Rahman Khan

(supra) to the extent that a subsequent purchaser would not be

entitled to the benefit of the order passed in case of the original

allottee. On the other hand, it has been held that the nature and

extent of relief, to which the subsequent purchaser can be entitled,

10 2021 SCC OnLine SC 479.

Civil Appeal No. 1434 of 2023 Page 14 of 34

is fact and situation dependent. It cannot be argued that a

subsequent purchaser, who steps into the shoes of the original

allottee of a housing project in which the builder has not honoured

its commitment to deliver the flat within the stipulated time, should

not expect even reasonable time for the performance of builder’s

obligation. Such an argument, if accepted, would lead to a

situation where a large number, possibly thousands of flat buyers,

waiting for their promised flats or residences would be left without

any relief. Such a conclusion would be arbitrary. In these cases, it

would be fair to assume that the subsequent purchaser had

knowledge of the delay, but such knowledge cannot be extended

to accept the submission that such delay shall continue indefinitely

based upon an a priori assumption. The equities have to be

properly moulded.

17.As these aspects and questions are essentially factual, albeit have

not been ascertained and addressed in the present case, we

would pass an order of remand to the National Commission to

examine the issue in light of the dictum laid down by this Court.

Upon the facts being first ascertained, the legal principles have to

be applied.

Civil Appeal No. 1434 of 2023 Page 15 of 34

18.There is yet another and a stronger reason why we are inclined to

pass an order of remand. For this purpose and for the sake of

convenience, we would reproduce the observations by the

National Commission in Pawan Gupta (supra) on the merits for

rejecting the claim made by the builder/developer (the appellant)

for the increase of the sale area. These are as under:

“The complaints have been filed mainly for two

reasons. The first is that the opposite party has

demanded extra money for excess area and second is

the delay in handing over the possession. In respect of

excess area, the complainant has made a point that

without any basis the opposite party sent the demand

for excess area and the certificate of the architect was

sent to the complainant, which is of a later date. The

justification given by the opposite party that on the

basis of the internal report of the architect the demand

was made for excess area is not acceptable because

no such report or any other document has been filed by

the opposite party to prove the excess area. Once the

original plan is approved by the competent authority,

the areas of residential unit as well as of the common

spaces and common buildings are specified and super

area cannot change until there is change in either the

area of the flat or in the area of any of the common

buildings or the total area of the project (plot area) is

changed. The real test for excess area would be that

the opposite party should provide a comparison of the

areas of the original approved common spaces and the

flats with finally approved common spaces/buildings

and the flats. This has not been done. In fact, this is a

common practice adopted by majority of

builders/developers which is basically an unfair trade

practice. This has become a means to extract extra

money from the allottees at the time when allottee

cannot leave the project as his substantial amount is

locked in the project and he is about to take

possession. There is no prevailing system when the

competent authority which approves the plan issues

some kind of certificate in respect of the extra super

Civil Appeal No. 1434 of 2023 Page 16 of 34

area at the final stage. There is no harm in

communicating and charging for the extra area at the

final stage but for the sake of transparency the

opposite party must share the actual reason for

increase in the super area based on the comparison of

the originally approved buildings and finally approved

buildings. Basically the idea is that the allottee must

know the change in the finally approved lay-out and

areas of common spaces and the originally approved

lay-out and areas. In my view, until this is done, the

opposite party is not entitled to payment of any excess

area. Though the Real Estate Regulation Act (RERA)

2016 has made it compulsory for the

builders/developers to indicate the carpet area of the

flat, however the problem of super area is not yet fully

solved and further reforms are required.”

19.The appellant had challenged the said decision of the National

Commission by filing the appeals being Civil Appeal Nos. 3703-

3704 of 2020 before this Court. However, they were dismissed

vide the order dated 12.01.2021. The order reads as under:

“1. We are not inclined to interfere with the order of the

National Consumer Disputes Redressal Commission

dated 26 August 2020 in Consumer Complaint Nos.

285 and 286 of 2018.

2. The appeals are accordingly dismissed.

3. Pending application, if any, stands disposed of.”

20.The review petitions, being R.P. (C) Nos. 1357-1358 of 2021, in

the said civil appeals filed by the appellant, were also dismissed

by this Court on 11.01.2022 by passing the following order:

“1. Application for oral hearing is dismissed.

Civil Appeal No. 1434 of 2023 Page 17 of 34

2. We have carefully gone through the review petitions

and the connected papers. We find no merit in the

review petitions and the same are accordingly

dismissed.

3. Pending applications, if any, stand disposed of.”

21.The order dated 12.01.2021 of this Court dismissing the civil

appeals and the order dated 11.01.2022 dismissing the

subsequent review petitions filed in the case of Pawan Gupta

(supra) are non-reasoned orders that do not state what has

weighed with the court while dismissing the appeals and the

review petitions. However, the result is that the order passed by

the National Commission in the case of Pawan Gupta (supra) has

attained finality and binds the parties to the decision.

22.Learned counsel for the parties have made elaborate submissions

on the issue of whether the orders passed by this Court in the

case of Pawan Gupta (supra) by applying the doctrine of merger,

principle of res judicata and in view of the rule of precedential

value, would foreclose the submissions raised by the appellant in

the present case. Learned Senior Advocate, Mr. Bhattacharyya,

appearing on behalf of the respondents, has submitted that the

findings recorded in the judgment by the National Commission in

Pawan Gupta’s (supra), which is a case related to the same

housing project, has merged with the order passed by this Court in

Civil Appeal No. 1434 of 2023 Page 18 of 34

the appeals preferred by the appellant and it will be binding on the

appellant on subsequent cases, including the cases filed by the

respondents.

23.On the other hand, it is submitted by learned Senior Advocates,

Dr. Abhishek Manu Singhvi and Mr. Amit Sibal, that the complaint

preferred by Pawan Gupta was in his individual capacity and not

in a representative capacity. Pawan Gupta had made specific

prayer for handing over possession of his unit, for awarding

interest on the amount paid by him for the delay that occurred in

handing over possession and also for a refund of the amount

charged by the appellant towards service tax, car parking and

increase in the common area. Hence, upon the dismissal of the

statutory appeals filed by the appellant in case of Pawan Gupta

(supra), the judgment of the National Commission would merge

into the order of this Court through a non-speaking order. The

result would be that the litigation inter se the parties in case of

Pawan Gupta (supra) had attained finality in the said case.

Nonetheless, it could not be construed by any stretch of

imagination that the National Commission was barred from

examining or deciding the issues involved in the instant case as

the appellant had placed on record details and evidence in the

form of the architect’s certificate dated 23.09.2020 and a report of

Civil Appeal No. 1434 of 2023 Page 19 of 34

the same date with calculations to show and justify the increase in

the sale area. The architect’s certificate and the report dated

23.09.2020 were not placed before the National Commission in

the case of Pawan Gupta (supra). No doubt, the same were filed

before this Court as additional documents, but the appeal itself

was dismissed in limine without taking the additional documents

on record, and that too by a non-reasoned order. In the present

case, the architect’s certificate and the report dated 23.09.2020

were placed before the National Commission, but they were not

examined and considered in the reasons set out by the National

Commission. Decision in Pawan Gupta (supra) was simply

applied.

24.Specifically on the question of additional documents, it is

submitted by Learned Senior Advocate, Mr. Bhattacharyya,

appearing on behalf of the respondents, that once an application

for additional documents was filed in this Court, the doctrine of

merger would apply and, therefore, the present appeal merits

dismissal on this short ground.

25.This Court has examined doctrine of merger in several decisions,

but we would, for the purpose of this case, refer to only two

decisions in Kunhayammed and Others v. State of Kerala and

Civil Appeal No. 1434 of 2023 Page 20 of 34

Another

11

and Khoday Distilleries Limited and Others v. Sri

Mahadeshwara Sahakara Sakkare Karkhane Limited .

12

, which

approves of the ratio in Kunhayammed (supra).

26.Kunhayammed (supra) refers to several other decisions of this

Court and has crystallised the legal position as under:

“44. To sum up, our conclusions are:

(i) Where an appeal or revision is provided against an

order passed by a court, tribunal or any other authority

before superior forum and such superior forum

modifies, reverses or affirms the decision put in issue

before it, the decision by the subordinate forum merges

in the decision by the superior forum and it is the latter

which subsists, remains operative and is capable of

enforcement in the eye of law.

(ii) The jurisdiction conferred by Article 136 of the

Constitution is divisible into two stages. The first stage

is upto the disposal of prayer for special leave to file an

appeal. The second stage commences if and when the

leave to appeal is granted and the special leave

petition is converted into an appeal.

(iii) The doctrine of merger is not a doctrine of universal

or unlimited application. It will depend on the nature of

jurisdiction exercised by the superior forum and the

content or subject-matter of challenge laid or capable

of being laid shall be determinative of the applicability

of merger. The superior jurisdiction should be capable

of reversing, modifying or affirming the order put in

issue before it. Under Article 136 of the Constitution the

Supreme Court may reverse, modify or affirm the

judgment-decree or order appealed against while

exercising its appellate jurisdiction and not while

exercising the discretionary jurisdiction disposing of

petition for special leave to appeal. The doctrine of

merger can therefore be applied to the former and not

to the latter.

(iv) An order refusing special leave to appeal may be a

non-speaking order or a speaking one. In either case it

does not attract the doctrine of merger. An order

11 (2000) 6 SCC 359.

12 (2019) 4 SCC 376.

Civil Appeal No. 1434 of 2023 Page 21 of 34

refusing special leave to appeal does not stand

substituted in place of the order under challenge. All

that it means is that the Court was not inclined to

exercise its discretion so as to allow the appeal being

filed.

(v) If the order refusing leave to appeal is a speaking

order, i.e., gives reasons for refusing the grant of leave,

then the order has two implications. Firstly, the

statement of law contained in the order is a declaration

of law by the Supreme Court within the meaning of

Article 141 of the Constitution. Secondly, other than the

declaration of law, whatever is stated in the order are

the findings recorded by the Supreme Court which

would bind the parties thereto and also the court,

tribunal or authority in any proceedings subsequent

thereto by way of judicial discipline, the Supreme Court

being the Apex Court of the country. But, this does not

amount to saying that the order of the court, tribunal or

authority below has stood merged in the order of the

Supreme Court rejecting the special leave petition or

that the order of the Supreme Court is the only order

binding as res judicata in subsequent proceedings

between the parties.

(vi) Once leave to appeal has been granted and

appellate jurisdiction of Supreme Court has been

invoked the order passed in appeal would attract the

doctrine of merger; the order may be of reversal,

modification or merely affirmation.

(vii) On an appeal having been preferred or a petition

seeking leave to appeal having been converted into an

appeal before the Supreme Court the jurisdiction of

High Court to entertain a review petition is lost

thereafter as provided by sub-rule (1) of Rule 1 of

Order 47 CPC.”

27.The aforesaid decision no doubt draws the distinction between a

simple non-speaking order passed by this Court rejecting the

special leave to appeal filed under Article 136 of the Constitution

of India, in which case the doctrine of merger has no application,

and cases where this Court exercises its appellate power in terms

Civil Appeal No. 1434 of 2023 Page 22 of 34

of the statute or the Constitution. In the former set of cases, the

grant of special leave to appeal is discretionary. The effect of a

non-speaking order of dismissal of the special leave petition

without anything more indicating the grounds or reasons for

dismissal by a necessary implication cannot be taken as

acceptance of the reasons or the ratio of the judgment under

challenge. It is not correct to assume that the Court has implicitly

decided all the questions. There could be multiple reasons why in

a particular case a special leave to appeal can be refused. It

would be incorrect to attempt to embark on such reasons when

they have not been so stated. Such reasons can be varied and

different, and may not completely and directly relate to the merits

of the case as to be construed as an imprimatur of this Court on

the correctness of the decision appealed against. A case may not

raise a question of general principle but turn on its own facts.

Facts of the particular case may not be suitable as a foundation

for determining some question of a general principle. Due to

heavy backlog of work, this Court has to restrict the intake of fresh

cases. Thus, there can be a variety of reasons why the court

dismisses a special leave petition, and that too by a non-speaking

order.

Civil Appeal No. 1434 of 2023 Page 23 of 34

28.Approving this aforesaid ratio, in Khoday Distilleries Ltd. (supra)

it is observed:

“20. The Court thereafter analysed number of cases

where orders of different nature were passed and dealt

with these judgments by classifying them in the

following categories:

(i) Dismissal at the stage of special leave petition —

without reasons — no res judicata, no merger.

(ii) Dismissal of the special leave petition by speaking

or reasoned order — no merger, but rule of discipline

and Article 141 attracted.

(iii) Leave granted — dismissal without reasons —

merger results.”

29.On the question whether there was any conflict in the legal ratios

in Kunhayammed (supra) and earlier judgment of this Court in

Abbai Maligai Partnership Firm and Another v. K.

Santhakumaran and Others

13

, the three judges’ Bench in

Khoday Distilleries Ltd. (supra) has held:

“24. Having noted the aforesaid two judgments and

particularly the fact that the earlier judgment in Abbai

Maligai Partnership Firm is duly taken cognizance of

and explained in the latter judgment, we are of the view

that there is no conflict insofar as ratio of the two cases

is concerned. Moreover, Abbai Maligai Partnership

Firm was decided on its peculiar facts, with no

discussion on any principle of law,

whereas Kunhayammed is an elaborate discourse

based on well-accepted propositions of law which are

applicable for such an issue. We are, therefore, of the

view that detailed judgment in Kunhayammed lays

down the correct law and there is no need to refer the

cases to larger Bench, as was contended by the

counsel for the appellant.

13 (1998) 7 SCC 386.

Civil Appeal No. 1434 of 2023 Page 24 of 34

25. While taking this view, we may also point out that

even in K. Rajamouli this Court took note of both these

judgments and explained the principle of res judicata in

the following manner: (SCC p. 41, para 4)

“4. Following the decision in Kunhayammed we

are of the view that the dismissal of the special

leave petition against the main judgment of the

High Court would not constitute res judicata

when a special leave petition is filed against the

order passed in the review petition provided the

review petition was filed prior to filing of special

leave petition against the main judgment of the

High Court. The position would be different

where after dismissal of the special leave

petition against the main judgment a party files

a review petition after a long delay on the

ground that the party was prosecuting remedy

by way of special leave petition. In such a

situation the filing of review would be an abuse

of the process of the law. We are in agreement

with the view taken in Abbai Maligai

Partnership Firm that if the High Court allows

the review petition filed after the special leave

petition was dismissed after condoning the

delay, it would be treated as an affront to the

order of the Supreme Court. But this is not the

case here. In the present case, the review

petition was filed well within time and since the

review petition was not being decided by the

High Court, the appellant filed the special leave

petition against the main judgment of the High

Court. We, therefore, overrule the preliminary

objection of the counsel for the respondent and

hold that this appeal arising out of the special

leave petition is maintainable.””

30.Reiterating the conclusions in Kunhayammed (supra), Khoday

Distilleries Ltd. (supra), states:

“26. From a cumulative reading of the various

judgments, we sum up the legal position as under:

Civil Appeal No. 1434 of 2023 Page 25 of 34

26.1. The conclusions rendered by the three-Judge

Bench of this Court in Kunhayammed and summed up

in para 44 are affirmed and reiterated.

26.2. We reiterate the conclusions relevant for these

cases as under : (Kunhayammed case, SCC p. 384)

“(iv) An order refusing special leave to appeal may be a

non-speaking order or a speaking one. In either case it

does not attract the doctrine of merger. An order

refusing special leave to appeal does not stand

substituted in place of the order under challenge. All

that it means is that the Court was not inclined to

exercise its discretion so as to allow the appeal being

filed.

(v) If the order refusing leave to appeal is a speaking

order i.e. gives reasons for refusing the grant of leave,

then the order has two implications. Firstly, the

statement of law contained in the order is a declaration

of law by the Supreme Court within the meaning of

Article 141 of the Constitution. Secondly, other than the

declaration of law, whatever is stated in the order are

the findings recorded by the Supreme Court which

would bind the parties thereto and also the court,

tribunal or authority in any proceedings subsequent

thereto by way of judicial discipline, the Supreme Court

being the Apex Court of the country. But, this does not

amount to saying that the order of the court, tribunal or

authority below has stood merged in the order of the

Supreme Court rejecting the special leave petition or

that the order of the Supreme Court is the only order

binding as res judicata in subsequent proceedings

between the parties.

(vi) Once leave to appeal has been granted and

appellate jurisdiction of the Supreme Court has been

invoked the order passed in appeal would attract the

doctrine of merger; the order may be of reversal,

modification or merely affirmation.

(vii) On an appeal having been preferred or a petition

seeking leave to appeal having been converted into an

appeal before the Supreme Court the jurisdiction of the

High Court to entertain a review petition is lost

thereafter as provided by sub-rule (1) of Order 47 Rule

1 CPC.”

26.3. Once we hold that the law laid down

in Kunhayammed is to be followed, it will not make any

difference whether the review petition was filed before

the filing of special leave petition or was filed after the

Civil Appeal No. 1434 of 2023 Page 26 of 34

dismissal of special leave petition. Such a situation is

covered in para 37 of Kunhayammed case.”

31.No doubt, in Pawan Gupta’s case (supra), this Court had not

exercised the power or jurisdiction conferred by Article 136 of the

Constitution of India, but had exercised its appellate power, which

would, in terms of the ratio in Kunhayammed (supra), becomes

the final order which is executable. Thus, the dismissal of the

appeal by this Court in the case of Pawan Gupta (supra), had put

a finality and an end to the litigation in the said case. To this

extent, therefore, the application of the general principle of res

judicata would bar the party from raising the plea once again. The

order passed by this Court, on the application of the principle of

judicial discipline, bars and prevents any tribunal or parties from

canvassing or taking a view which would have the effect of re-

examination of the issues and points determined in the case of

Pawan Gupta (supra) inter-se the parties to the decision.

However, dismissal of the appeal would not operate as res

judicata in the case of the respondents against the appellant as

they were not parties to the said case, and the proceedings

initiated by Pawan Gupta were fact specific and not in a

representative capacity.

Civil Appeal No. 1434 of 2023 Page 27 of 34

32.The dismissal of the appeal in the case of Pawan Gupta (supra)

without any reasons being recorded would not attract Article 141

of the Constitution of India as no law was declared by the

Supreme Court, which will have a binding effect on all courts and

tribunals in India. There is a clear distinction between the binding

law of precedents in terms of Article 141 of the Constitution of

India and the doctrine of merger and res judicata. To merge, as

held in Kunhayammed (supra), and Khoday Distilleries Ltd.

(supra) means to sink or disappear in something else, to become

absorbed or extinguished. The logic behind the doctrine of merger

is that there cannot be more than one decree or operative orders

governing the same subject matter at a given point of time. When

a decree or order passed by an inferior court, tribunal or authority

is subjected to a remedy available under law before a superior

forum, then the decree or order under challenge continues to be

effective and binding; nevertheless, its finality is put in jeopardy.

Once the superior court disposes the dispute before it in any

manner, either by affirming the decree or order, by setting aside or

modifying the same, it is the decree of the superior court, tribunal

or authority, which is the final binding and operative decree. The

decree and order of the inferior court, tribunal or authority gets

merged into the order passed by the superior forum. However, as

Civil Appeal No. 1434 of 2023 Page 28 of 34

has been clarified in both decisions, this doctrine is not of

universal or unlimited application. The nature of jurisdiction

exercised by the superior court and the content or subject matter

of challenge laid or could have been laid will have to be kept in

view.

33.What is important is the distinction drawn by this Court between

the law of precedents and res judicata. In State of Rajasthan v.

Nemi Chand Mahela and Others

14

, it is held:

“11. The learned counsel for the petitioners had drawn

our attention to para 22 of the decision in Manmohan

Sharma case , (2014) 5 SCC 782 which refers to the

case of one Danveer Singh whose writ petition had

been allowed and the order had attained finality as it

was not challenged before the Division Bench or before

the Supreme Court. Termination of services in the case

of Danveer Singh, it was accordingly held, was not

justified and in accordance with law. The reasoning

given in paras 22 and 23 in Manmohan Sharma

case relating to the case of Danveer Singh would

reflect the difference between the doctrine of res

judicata and law of precedent. Res judicata operates in

personam i.e. the matter in issue between the same

parties in the former litigation, while law of precedent

operates in rem i.e. the law once settled is binding on

all under the jurisdiction of the High Court and the

Supreme Court. Res judicata binds the parties to the

proceedings for the reason that there should be an end

to the litigation and therefore, subsequent proceeding

inter se parties to the litigation is barred. Therefore, law

of res judicata concerns the same matter, while law of

precedent concerns application of law in a similar

issue. In res judicata, the correctness of the decision is

normally immaterial and it does not matter whether the

previous decision was right or wrong, unless the

erroneous determination relates to the jurisdictional

matter of that body.”

14 (2019) 14 SCC 179.

Civil Appeal No. 1434 of 2023 Page 29 of 34

This ratio was followed and approved by a three judges’

Bench in Malook Singh and Others v. State of Punjab and

Others

15

.

34.In Makhija Construction & Engg. (P) Ltd. v. Indore

Development Authority and Others

16

, after referring to several

earlier decisions, this Court has observed that a precedent

operates to bind in similar situations in a distinct case, whereas

res judicata operates to bind parties to proceedings for no other

reason, but that there should be end to litigation. Principle of res

judicata should apply where the lis was inter-parties and has

attained finality on the issues involved. The principle of res

judicata will have no application in cases where the judgment or

order has been passed by the Court having no jurisdiction thereof

or involving a pure question of law.

17

Law of binding precedents, in

terms of Article 141 of the Constitution of India, has a larger

connotation as it settles the principles of law which emanates from

the judgment, which are then treated as binding precedents.

35.In the context of factual background of the present case, and on

examining the judgment in the case of Pawan Gupta (supra)

15 (2021) SCC OnLine SC 876.

16 (2005) 6 SCC 304.

17 See Fida Hussain and Others v. Moradabad Development Authority and Another, (2011) 12 SCC

615.

Civil Appeal No. 1434 of 2023 Page 30 of 34

passed by the National Commission, we are clearly of the view

that the order passed by this Court dismissing the appeal in the

case of Pawan Gupta (supra) would operate as res judicata in the

said case but does not lay down a binding precedent which would

be applicable to other cases. As it transpires from the judgment in

the case of Pawan Gupta (supra), the National Commission itself

had specifically observed inter alia that “there was no harm in

communicating and charging for the extra area at the final stage,

but for the sake of transparency opposite party must share the

actual reason for the increase in the super area based on

comparison of the originally approved buildings and finally

approved buildings. Basically, the idea is that the allottee must

know the change in the finally approved layout and areas of

common spaces and the originally approved layout and areas”. It

is true that there was no material on record placed by the

appellant in the said case of Pawan Gupta (supra) showing the

actual increase in the sale area. Nonetheless, the appellant in the

instant case, along with its detailed reply, had produced the

documents, i.e. the certificate dated 23.09.2020 given by the

Architects D-idea, the Report dated 23.09.2020 given by Knight

Frank (India) Private Limited, the affidavit dated 31.08.2021 by Mr.

Muninder Pal Singh, and the affidavit dated 26.04.2022 by Mr.

Civil Appeal No. 1434 of 2023 Page 31 of 34

Anurag Mahajan, to show that there was an actual increase in the

sale area, justifying its demand for the extra payment. The

respondents, in rejoinder, had neither placed any material to

contradict the said Architect’s certificates and reports nor had they

disputed the contents thereof. The only contention raised by them

was that the said documents were produced as an afterthought

and, therefore, could not be taken into consideration. At this

juncture, it is also pertinent to note that clause 8.6 of the

agreement, provided for an increase/decrease in the sale area as

defined and also the corresponding sale price increase of upto

10%. The appellant, by producing the said documents, had sought

to justify that the variance, i.e. increase in the built up area of the

project, which was less than 5% and such variance was within the

permissible limits.

36.Thus, we are clearly of the view that the order of this Court

dismissing the appeal in the case of Pawan Gupta (supra) cannot

be read as a precedent and applied to the cases in hand. In fact,

precedents cannot decide questions of fact. The decision in the

case of Pawan Gupta (supra) was based on evidence adduced

by the appellant/builder/developer, which in the said case was not

found to be sufficient and cogent to justify and substantiate the

demand raised in view of the increased sale area. No doubt, the

Civil Appeal No. 1434 of 2023 Page 32 of 34

architect’s certificate and report dated 23.09.2020 was filed before

this Court as additional documents, but a non-reasoned order

passed by this Court dismissing the case cannot be read as

accepting and considering the additional evidence, or as rejecting

justification and reasons given therein for claiming

additional/increased sale area. Any additional evidence sought to

be produced at the appellate stage can only be introduced when

an appropriate application under Rule 27 to Order XLI of the Code

of Civil Procedure,1908 is moved and an order is passed taking

them on record. Therefore, the order passed by this Court

dismissing the appeal in the case of Pawan Gupta (supra) is

confined to the facts of the said case, including the evidence led

by the parties before the National Commission. The National

Commission was therefore required to consider and examine the

contentions of the appellant and not overrule the same on the

grounds of the principle of res judicata and on the rule of binding

precedent, which do not apply. An order of remand on the

question of merits as to the stipulation and increase in the sale

area is therefore required.

37.However, we wish to clarify that the observations made in this

order, insofar as limitation is concerned, would be binding and has

attained finality. Observations made in this order on the question

Civil Appeal No. 1434 of 2023 Page 33 of 34

of acquiescence/estoppel and merits/justification of the increase in

the sale area would be aspects which would have to be

considered by the National Commission afresh in terms of the

observations contained in the present judgment. We have not

specifically commented on whether or not, in the facts of the

present case, principles of acquiescence/estoppel will apply or

whether or not the appellant has been able to justify and

substantiate the claim for the increase in the sale area. These

aspects would be examined by the National Commission by

ascertaining the facts and on merits.

38.Accordingly, for the reasons stated above, the impugned order

and judgment passed by the National Commission is set aside

and the appeal is disposed of with a direction of remand in terms

of the observations and directions given herein. There would be

no order as to costs.

......................................J.

(SANJIV KHANNA)

......................................J.

(BELA M. TRIVEDI)

......................................J.

(UJJAL BHUYAN)

NEW DELHI;

AUGUST 18, 2023.

Civil Appeal No. 1434 of 2023 Page 34 of 34