This Slide will help you understand case of Lata Construction v Dr. Rameshchandra Ramniklal Shah, (2000) 1 SCC 586. where you can get clear understanding about NOVATION clause under Indian Contract Act, 1872, Section 62.

2. RESEARCH OBJECTIVE:
• To get known with facts and understand the judgment and reasoning of this case
• To study the concept of Novation or alteration
• To discuss the contractual relationship and define the term "deficiency in service"
with regard to construction industry.
• To briefly understand the essentialities to prejudice the previous contract.

3. FACTS OF THE CASE

4. DR.
RAMESHCHANDRA
RAMNIKLAL SHAH

5. Dr. Rameshchandra Shah entered into an agreement dated 27.1.1987 with M/s.
Lata Construction, the appellant No.1, which stipulated that the appellants would
develop, construct and hand over possession of flat.

6. I T W A S P R O M I S E D TO D E V E L O P, C O N S T R U C T A N D H A N D O V E R
P O S S E S S I O N O F F L AT N O. A G - 2 O N T H E G R O U N D F L O O R W I T H A N A R E A
O F 6 7 0 S Q. F T. S I T U AT E D I N A B U I L D I N G N A M E D " M A D H U S U D A N " , O N P L O T
N O. 1 3 8 , T. P. S . 1 1 A N D C . T. S . N O. 1 1 6 6 A N D 1 1 6 6 ( 1 ) I N V I L E PA R L E , B O M B AY
4 0 0 0 5 7 .
MADHUSUDAN

7. P A Y M E N T S D O N E :
1 . O N 2 7 T H O F J A N U A R Y , 1 9 8 7 , T H E
R E S P O N D E N T S H A D P A I D A S U M O F
R S . 3 , 3 8 , 0 0 0 / - T O T H E A P P E L L A N T S
I N C A S H B U T W I T H O U T A N Y R E C E I P T
2 . A S U M O F R S . 3 2 , 0 0 0 / - B Y
C H E Q U E A G A I N S T R E C E I P T . T H E
R E S P O N D E N T S A L S O P A I D T O T H E
A P P E L L A N T S O N V A R I O U S D A T E S , A S
A N D W H E N
D E M A N D E D B Y T H E M , A F U R T H E R
S U M O F R S . 2 , 0 0 , 0 0 0 / - A G A I N S T
R E C E I P T .

8. 1 . I N J U N E 1 9 8 8 ,
R E S P O N D E N T C A M E T O
I N D I A F R O M L I B YA T O
A S K F O R P O S S E S S I O N O F
F L AT A N D PAY R E S T O F
T H E PAY M E N T
2 . B U T T H E A P P E L L A N T,
E V E N W H E N P O S S E S S I O N
WA S R E A D Y O F F L AT,
T H E Y D E N I E D T O
R E C E I V E T H E PAY M E N T
A N D P L E D T O G I V E
P O S S E S S I O N O F F L AT
W H E N F L AT ’ S O V E R A L L
C O N S T R U C T I O N W I L L B E
R E A D Y.

9. .
T H E R E S P O N D E N T S C A M E B A C K T O I N D I A I N A P R I L , 1 9 9 0
A N D T H E Y S AW “ I N D I R A J O S H I ” N A M E P L AT E H A S B E E N
P U T U P O V E R F L AT.
AT J A N U A R Y 1 9 9 1 , W H E N R E S P O N D E N T S A S K E D F O R
P O S S E S S I O N , T H E A P P E L L A N T S E X P R E S S E D T H E I R
I N A B I L I T Y
INDIRA JOSHI

10. T H E Y T H A N , E N T E R E D I N T O A
F R E S H A G R E E M E N T W I T H T H E
R E S P O N D E N T S O N 2 3 . 2 . 1 9 9 1
A G R E E I N G T O PAY T O T H E
R E S P O N D E N T S A S U M O F R S .
9 , 5 1 , 0 0 0 / - I N L I E U O F T H E
F L AT I N T H R E E I N S TA L M E N T S
O N O R B E F O R E 3 0 . 5 . 1 9 9 1 , I N
S U C H WAY:
1 . 3 L A C O N O R B E F O R E 2 0
M A R C H 1 9 9 1
2 . O T H E R 3 L A C – 2 0 A P R I L 1 9 9 1
3 . R E S T 3 , 5 1 , 0 0 - 3 0 M AY 1 9 9 1

11. > A S A P P E L L A N T D I D
N O T A C T A C C O R D I N G
T O P R O M I S E ,
R E S P O N D E N T W E N T T O
N C R D C . W H E R E T H E
J U D G M E N T D E C R E E D
F O R A S U M O F
R S . 9 , 5 1 , 0 0 0 / - T O G E T H E R
W I T H I N T E R E S T AT T H E
R AT E O F 1 8 % P E R
A N N U M .
> A N O T H E R S U M O F R S .
1 , 0 0 , 0 0 0 / - WA S A L L O W E D
A S C O M P E N S AT I O N
> A L S O A L L O W E D A S U M
O F R S . 1 0 , 0 0 0 / - T O T H E
R E S P O N D E N T S A S C O S T S
O F T H E P R O C E E D I N G S
National Consumer
Dispute Redressal
Commission

12. ISSUES:
1 . I s R e s p o n d e n t E n t i t l e F o r S u c h
C o m p e n s a t i o n A c q u i r e d B y T h e C o m m i s s i o n ?
2 . D o R e s p o n d e n t H o l d R i g h t s A n d C a u s e O f
A c t i o n A g a i n s t T h e P r e v i o u s C o n t r a c t D a t e d
2 7 . 1 . 1 9 8 7 ?
3 . D o T h e E s s e n t i a l i t i e s O f N o v a t i o n ( S e c t i o n
6 2 O f T h e I n d i a n C o n t r a c t A c t ) We r e F u l f i l l e d To
A l t e r T h e P r e v i o u s C o n t r a c t I n t o N e w ?

13. ARGUMENT RAISED BY
APPELL ANT
 T h e C l a i m I n s t i t u t e d B y T h e R e s p o n d e n t s
B e f o r e T h e C o m m i s s i o n W a s B e y o n d T i m e
I n a s m u c h A s I t W a s F i l e d B e y o n d T h e
P e r i o d O f Tw o Ye a r s P r e s c r i b e d U n d e r
S e c t i o n 2 4 - A O f T h e C o n s u m e r
P r o t e c t i o n A c t , 1 9 8 6 .
 T h e C l a i m P e t i t i o n B e f o r e T h e
C o m m i s s i o n W i t h i n T h e P e r i o d O f
L i m i t a t i o n S t a r t i n g F r o m 3 1 . 5 . 1 9 9 1 , A n d
S i n c e T h e C l a i m W a s F i l e d I n J u l y, 1 9 9 3 ,
I t W a s C l e a r l y B e y o n d T i m e . T h i s P l e a
H a s B e e n N e g a t i v e d B y T h e C o m m i s s i o n
O n T h e G r o u n d

14. ARGUMENT RAISED BY
RESPONDENT

15. RELIANCE ON DECIDED CASE:
in Lucknow Development Authority V. M.K. Gupta
1994 1 SCC 243, where in a sense the supreme court
in this judgement has upheld the rule of law. By
holding that the Commission was the court within its
rights to damages for harassment and this has
empowered the ordinary citizen. This judgement
should act as a deterrent for public authorities to not
take the public for granted.

16. 1. Question of law was arise in this case, that amendment of the Consumer Protection
Act, in 1993, the definition 'service' also included facilities available to a consumer in
connection with banking, insurance etc. All such activities are discharged by the
statutory authorities as the court as private bodies. And “Housing Construction” were
not there in clause before 1993. But Supreme Court said, agreeing that the
amendment did not have retrospective effect ruled that 'housing construction' was
added as a matter of abundant caution as housing as a service was already there in the
Act prior to the amendment.
2. ‘Deficiency in service' which is defined in section 2(g) of the Consumer Protection
Act 1986, where "deficiency" connotes any imperfection, deformity, shortcoming or
inadequacy in the quality, nature and method of execution which is should have been
maintained by or then again under any law for the time being in power or has been
endeavored to be performed by an individual
3.The Commission under Section 24 A of The Consumer Protection Act 1986,
Limitation period. - (l) The District Forum, 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 (l), if the complainant satisfies the District Forum, the State
Commission or the National Commission, as the case ma

17. NOVATION
S e c t i o n 6 2 O f I n d i a n C o n t r a c t A c t , 1 8 7 2 :
I f T h e P a r t i e s To A C o n t r a c t A g r e e To S u b s t i t u t e
A N e w C o n t r a c t F o r I t , O r To R e s c i n d O r A l t e r
I t , T h e O r i g i n a l C o n t r a c t N e e d N o t B e
P e r f o r m e d .
I l l u s t r a t i o n s : ( A ) A O w e s M o n e y To B U n d e r a
C o n t r a c t . I t I s A g r e e d B e t w e e n A , B A n d C , T h a t
B S h a l l T h e n c e f o r t h A c c e p t C A s H i s D e b t o r,
I n s t e a d O f A . T h e O l d D e b t O f A To B I s A t A n
E n d , A n d A N e w D e b t F r o m C To B H a s B e e n
C o n t r a c t e d .
( B ) A O w e s B 1 0 , 0 0 0 R u p e e s . A E n t e r s I n t o A n
A g r e e m e n t W i t h B , A n d G i v e s B a M o r t g a g e O f
H i s ( A ' s ) E s t a t e F o r 5 , 0 0 0 R u p e e s I n P l a c e O f
T h e D e b t O f 1 0 , 0 0 0 R u p e e s . T h i s I s A N e w
C o n t r a c t A n d E x t i n g u i s h e s T h e O l d .

18. 1 . S I N C E T H E P R I V I L E G E U N D E R T H E A R R A N G E M E N T O F 1 9 8 7 H A D N O T B E E N G I V E N U P B Y
T H E R E S P O N D E N T S , T H E R E W A S A C O N T I N U I N G C A U S E F O R A C T I O N R U N N I N G A G A I N S T
T H E A P P E L L A N T S A N D T H E C L A I M W A S , A C C O R D I N G LY, N O T P A S T T I M E .
2 . T H E F L A T N O T H A V I N G B E E N P R O V I D E D T O T H E M U N D E R T H E P R E V I O U S A G R E E M E N T,
T H E Y C O U L D J U S T M O V E T O W A R D T H E C I V I L C O U R T F O R R E C O V E R Y O F T H A T S U M Y E T
C O U L D N ' T L A W F U L LY I N S T I T U T E T H E C L A I M P E T I T I O N B E F O R E T H E C O M M I S S I O N F O R
C O M P E N S A T I O N O N T H E G R O U N D O F " D E F I C I E N C Y I N S E R V I C E . "
3 . T H E J U D G M E N T P A S S E D B Y T H E C O M M I S S I O N , T H E E N T I R E T O T A L D U E F R O M T H E
A P P E L L A N T S H A S E F F E C T I V E LY B E E N P A I D T O T H E R E S P O N D E N T S I N C L U D I N G I N T E R E S T
A T T H E S P E E D O F 1 8 % P E R A N N U M O N T H E P R I N C I P A L P R O P O R T I O N O F R S . 9 , 5 1 , 0 0 0 / - .
T H A T B E I N G T H U S LY, W E A R E N O T S E T U P T O E N T E R T A I N T H E R E Q U E S T O F T H E
A P P E L L A N T S T H A T T H E A F F I R M A T I O N P A S S E D B Y T H E C O M M I S S I O N I N S E E O F R S . 1
L A K H A S C O M P E N S A T I O N D U E T O T H E P A I N A N D S U F F E R I N G G O N E T H R O U G H B Y T H E
R E S P O N D E N T S
4 . 8 . T H E C O U R T F I N D S N O M E R I T I N T H E A P P E A L A N D T H E S A M E I S A C C O R D I N G LY
D I S M I S S E D W I T H N O O R D E R A S T O C O S T S

19. CONCLUSION
A S C O N T E M P L AT E D B Y S E C T I O N 6 2 , I S T H AT T H E R E S H O U L D B E
C O M P L E T E S U B S T I T U T I O N O F A N E W C O N T R A C T I N P L A C E O F T H E
O L D . I T I S I N T H AT S I T U AT I O N T H AT T H E O R I G I N A L C O N T R A C T N E E D
N O T B E P E R F O R M E D . S U B S T I T U T I O N O F A N E W C O N T R A C T I N P L A C E
O F T H E O L D C O N T R A C T W H I C H W O U L D H A V E T H E E F F E C T O F
R E S C I N D I N G O R C O M P L E T E LY A LT E R I N G T H E T E R M S O F T H E
O R I G I N A L C O N T R A C T, H A S T O B E B Y A G R E E M E N T B E T W E E N T H E
P A R T I E S . A S U B S T I T U T E D C O N T R A C T S H O U L D R E S C I N D O R A LT E R O R
E X T I N G U I S H T H E P R E V I O U S C O N T R A C T. B U T I F T H E T E R M S O F T H E
T W O C O N T R A C T S A R E I N C O N S I S T E N T A N D T H E Y C A N N O T S TA N D
T O G E T H E R , T H E S U B S E Q U E N T C O N T R A C T C A N N O T B E S A I D T O B E I N
S U B S T I T U T I O N O F T H E E A R L I E R C O N T R A C T.
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