Karnataka High Court
Piramal Capital And Housing Finance ... vs Mr.V.R.Raghunathan on 22 July, 2022
Author: P.S.Dinesh Kumar
Bench: P.S.Dinesh Kumar
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22nd DAY OF JULY, 2022
PRESENT
THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
WRIT PETITION No.19748 OF 2021 (GM-CON)
C/W
WRIT PETITION No.19724 OF 2021 (GM-CON)
IN W.P. NO. 19748/2021
BETWEEN
PIRAMAL CAPITAL & HOUSING FINANCE LIMITED
THROUGH IT ITS AUTHORIZED SIGNATORY
MR.AIYANNA NK
WARDEN HOUSE 2ND FLOOR
SIR PM ROAD, FORT MUMBAI
MAHARASHTRA-400001
ALSO AT:
PIRAMAL CAPITAL & HOUSING FINANCE LIMITED,
ZONAL OFFICE NO.13, OLD NO.5,
1ST MAIN ROAD,
NEAR KODAVA SAMAJA,
VASANTH NAGAR, BANGALORE-560052.
...PETITIONER
(BY SRI UDAYA HOLLA, SENIOR ADVOCATE FOR
SRI MOHAMMAD SHAMEER, ADVOCATE)
AND
1 . MR.V.R.RAGUNATHAN
S/O LATE V.S.RAMABHARDRAN
AGED ABOUT 68 YEARS,
2 . MRS.R.SUNDARAVALLI
2
AGED ABOUT 61 YEARS,
W/O V.R.RAGHUNATHAN,
3 . MR.R.ARAVIND
S/O V.R.RAGHUNATHAN
AGED ABOUT 34 YEARS,
ALL THE RESPONDENTSS ARE
R/AT NO.515, 15TH MAIN,
15TH CROSS, VIJAYANAGAR,
3RD STAGE, B BLOCK
MYSURU-570030.
...RESPONDENTS
(BY SRI RUDRAPPA P, ADVOCATE FOR R1 TO R3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING
AND SETTING ASIDE THE ORDER DATED 03.03.2021 PASSED
BY THE LD.STATE COMMISSION IN THE MATTER
V.R.RAGHUNATHAN AND ORS. V. THE BRANCH MANAGER,
DEWAN HOUSING FINANCE CORPORATION LTD, CONSUMER
COMPLAINT NO.554 OF 2019 WHICH IS ANNEXED HEREWITH
AS ANNEXURE-A AND ETC.
IN W.P. NO.19724/2021
BETWEEN
PIRAMAL CAPITAL & HOUSING FINANCE LIMITED
THROUGH ITS AUTHORIZED SIGNATORY
MR.AIYANNA NK
WARDEN HOUSE 2ND FLOOR
SIR PM ROAD, FORT MUMBAI
MAHARASHTRA-400001
AND
PIRAMAL CAPITAL & HOUSING FINANCE LIMITED
ZONAL OFFICE NO.13,
OLD NO.5, 1ST MAIN ROAD,
NEAR KODAVA SAMAJA,
VASANTH NAGAR, BANGALORE-560052.
...PETITIONER
(BY SRI UDAYA HOLLA, SENIOR ADVOCATE FOR
SRI MOHAMMAD SHAMEER, ADVOCATE)
3
AND
1 . MR.V.R.RAGHUNATHAN
S/O LATE V.S.RAMABHARDRAN
AGED ABOUT 68 YEARS,
2 . MR.R.SUNDARAVALLI
AGED ABOUT 61 YEARS,
W/O V.R.RAGHUNATHAN,
3 . MR.R.ARAVIND
S/O V.R.RAGHUNATHAN
AGED ABOUT 34 YEARS,
ALL RESPONDENTSS ARE RESIDING
R/AT NO.515, 15TH MAIN,
15TH CROSS, VIJAYANAGAR,
3RD STAGE, B BLOCK
MYSURU-570030.
...RESPONDENTS
(BY SRI RUDRAPPA P, ADVOCATE FOR R1 TO R3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF THE CONSTITUTION OF INDIA PRAYING TO SETTING
ASIDE THE ORDER DATED 03.03.2021 PASSED BY THE
LD.STATE COMMISSION IN THE MATTER V.R.RAGHUNATHAN
AND ORS. V. THE BRANCH MANAGER, DEWAN HOUSING
FINANCE CORPORATION LTD, CONSUMER COMPLAINT NO.553
OF 2019 WHICH IS ANNEXED HEREWITH AS ANNEXURE-A AND
ETC.
THESE PETITIONS HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT ON 13.07.2022, COMING ON FOR
PRONOUNCEMENT OF ORDER, THIS DAY, POONACHA, J., MADE
THE FOLLOWING:
4
ORDER
Writ Petition Nos. 19724 and 19748/2021 are filed challenging the orders dated 03.03.2021 passed in Consumer Complaint No. 553 and 554/2019, respectively by the Karnataka State Consumer Dispute Redressal Commission, Bengaluru (hereinafter referred to as 'State Commission').
2. The complainants in both the complaints are the same and the case put forth in both the Complaints are similar. Hence, both the Writ Petitions are disposed of by this common order.
3. It is the case of the complainants -
Respondents in W.P.No.19724/2021 that they had placed deposits with Dewan Housing and Finance Corporation Limited (herein after referred to as 'DHFL'), the details of which are as follows:
5
Sl. FD receipt details Amount Maturity No. date 1 FD receipt No.3436 INR 3,50,000 @ 20.10.2019 dated 20.06.2016 in the 8.90% p.a., and name of Respondent INR 4,67,967 Nos.1 and 3 2 FD receipt NO.3450 INR 10,00,000 01.11.2019 dated 01.07.2016 in the @ 9.15% p.a., and name of Respondent INR 13,47,768 Nos.1 and 2 3 FD receipt No.3451 INR 3,50,000 @ 25.11.2019 dated 05.07.2016 in the 8.90% p.a., and name of Respondent INR 4,67,967 Nos.1 and 3
4. It is the case of the complainants -
Respondents in W.P.No.19748/2021 that they had placed deposits with DHFL. The details of which are as follows:
Sl. FD receipt details Amount Maturity No. date 1 FD receipt No.3509 INR 10,00,000 15.10.2026 dated 15.10.2016 in the @ 8.90% name of Respondent Nos.1 and 2 2 FD receipt NO.806989 INR 8,00,000 @ 08.02.2028 dated 06.02.2018 in the 8.90% name of Respondent Nos.1 and 3 3 FD receipt No.3540 INR 5,00,000 @ 23.11.2026 dated 23.11.2016 in the 8.90% name of Respondent Nos.1 and 3 6
5. The Respondents filed Complaints under Section 17 of the Consumer Protection Act, 1986 (for short 'the Act') before the State Commission inter alia with a prayer to direct DHFL to pay the proceeds of the Fixed Deposit receipts with applicable interest on premature closure.
6. Owing to governance concerns and failure to pay its obligations, the Reserve Bank of India (for short 'RBI') superseded the Board of Directors of DHFL and appointed an Administrator in exercise of its power under Section 45 IE 5(a) of the RBI Act. Thereafter, on 29.11.2019, RBI filed an Application under Sections 227 and 239(2) (zk) of The Insolvency and Bankruptcy Code, 2016 ( for short 'the IBC') r/w Rules before the National Company Law Tribunal (for short 'the NCLT') and initiated Insolvency proceedings against DHFL. On the same day i.e. on 29.11.2019, RBI vide a press release declared that it had filed the application for commencement of insolvency proceedings against DHFL and interim moratorium had commenced from the said date in terms of the Insolvency and Bankruptcy (Insolvency and 7 Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (for short 'FSP Rules'). On 03.12.2019, the NCLT admitted the application filed by the RBI against DHFL and ordered that 'moratorium' w.e.f. 29.11.2019 is in accordance with the IBC.
7. Public depositors were included as a class of creditors in accordance with Section 21(6A)(b) of the IBC. The Committee of Creditors (hereinafter referred to as 'COC') of DHFL was duly constituted on 24.12.2019 and its first meeting was held on 31.12.2019. The depositors were represented by their authorised representative. On 22.12.2020, Piramal Capital and Housing Finance Limited (hereinafter referred as to as 'Piramal') submitted a Resolution Plan which was approved by the COC on 15.01.2021. The manner of distribution of proceeds was also approved by a majority of the COC. The claim of the depositors including the Respondents was considered and formed part of Resolution Plan and distribution mechanism. The RBI communicated its 'No Objection' to the Resolution Plan on 16.02.2021 as per Rule 5 of the FSP 8 Rules. The Administrator filed Interlocutory Application No.449/2021 in Company Petition (IB) No.4258/2019 under Section 31 of the IBC Code for approval of the Resolution Plan submitted by the Piramal. The NCLT vide order dated 07.06.2021, after hearing the objections of all the parties including the deposit holders, approved the same. In view of the said order dated 07.06.2021, as per Section 31 of the IBC code, the same is binding on all the stakeholder of the DHFL including the Respondents.
8. The order of the NCLT was challenged by the association of deposit holders before the National Company of Appellate Tribunal (NCLAT) and vide order dated 12.07.2021, the NCLAT upheld the order of the NCLT. The implementation of the Resolution Plan as approved by the NCLT was carried out, whereby, Piramal merged into DHFL w.e.f., 30.09.2021. Consequently, there is a change in management of DHFL by way of appointment of additional Directors and a new Board has superseded the Administrator.
9. The Respondents filed Consumer Complaints before the State Commission on 21.11.2019. They filed 9 their claims on 12.12.2019 before the Administrator to release all the amounts under the Fixed Deposit receipts. Vide order dated 03.03.2021, the State Commission ordered the Petitioners to do the needful pursuant to the request of the Respondents to pay the amounts under the FDs upon pre-mature closure after completion of the moratorium period. The Respondents vide letter dated 12.04.2021 addressed to the Administrator, sought implementation of the order dated 03.03.2021 passed by the State Commission. It is the case of the Petitioners that at the time of voting by the COC on the Resolution Plan on 15.01.2021 and obtaining of RBI's 'No Objection Certificate' on 16.02.2021, the claim of the Respondents formed part of the entire pool of claims submitted to the Administrator.
10. In accordance with the plan approval order passed by the NCLT, the DHFL requested the Respondents to confirm their bank details, in order to enable them to process the final pay out as per the Resolution Plan. In response to DHFL's request, the Respondents addressed letters dated 29.09.2021 to DHFL reiterating that they had 10 requested that their claims be withdrawn vide letters dated 12.04.2021. As on date, it is the case of the Petitioners that the Respondents have received their payments in accordance with the approved Resolution Plan. It is their further case that in the proceedings before the State Commission, they had entered appearance and brought it to the notice of the Commission regarding the pendency of Insolvency Proceedings and the 'moratorium' under Section 14 of the IBC as also the Resolution Plan. Despite the same, the order dated 03.03.2021 has been passed by the State Commission which is impugned in the present Writ Petitions.
11. The Respondents have entered appearance and filed their statement of objections. They justify the order passed by the State Commission inasmuch as the State Commission has ordered that the payments as per the Fixed Deposit receipts have been directed to be paid by the Petitioner only after the order of moratorium. In W.P.No.19748/2021 the Respondents submitted that as against the claim of Rs.23,00,000/- on 29.09.2021, they have received a sum of Rs.8,68,568/- leaving a balance of 11 Rs.14,31,432/- plus interest and in W.P.No.19724/2021, as against the claim of Rs.22,83,709/-, a sum of Rs.2,11,105/- was received leaving a balance of Rs.20,72,597/- plus interest. The Respondents seek for payment of the amount as contemplated in the Fixed Deposit receipts as ordered by the State Commission.
12. Sri Udaya Holla, learned Senior counsel for the Petitioner, inter alia, contended that:
(a) The order passed by the State Commission is one without jurisdiction and Writ Petitions before this Court are maintainable despite existence of an alternative remedy under the Consumer Protection Act;
(b) It is impermissible for the Respondents to stand outside the Resolution Plan and seek for payment of amounts in variance with the same;
(c) The claims which were made by the Respondents with the Administrator as per the Fixed Deposit receipts is incorporated in the Resolution Plan and the same have been approved by the NCLT and NCLAT. The said 12 Resolution Plan is statutorily binding on all the stakeholders of the erstwhile DHFL;
(d) It is impermissible for the Petitioners to make payments in variance to the Resolution Plan as the same will open flood gate of claims from the other deposit holders who are 70,000 in number of the erstwhile DHFL;
13. Learned Senior Counsel relied on the following judgments:
i) Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited 1;
ii) Committee of Creditors of Essar Steel India Ltd.v. Satish Kumar Gupta & Ors.,2;
iii) Alchemist Asset Reconstruction Co.
Ltd., v. Hotel Gaudavan (P) Ltd.,3
14. Putting forth the said contentions, and relying on the aforementioned Judgments, the Petitioner seeks for allowing of the Writ Petitions.
1 2021 SCC OnLine SC 313 2 (2020) 8 SCC 531 3 (2018) 16 SCC 94 13
15. Per contra, learned counsel for the Respondents contended that:
(a) the Writ Petitions filed by the Petitioner are not liable to be entertained in view of the existence of an alternative and efficacious remedy as contemplated under the Consumer Protection Act;
(b) Petitioner having participated in the proceedings before the State Commission and considering the contentions put forth by it, the said Commission has directed the Petitioner to pay the amount due and payable under Fixed Deposit after completion of the moratorium period which order is just and proper and not liable to be interfered with;
16. Learned counsel for the Respondents relied on the judgment in the case of Cicily Kallarackal v. Vehicle Factory 4.
17. The learned counsel for the Respondents seek for dismissal of the Writ Petitions having regard to the contentions put forth.
4 SLP (C) No.24228-24229/2012 (CC Nos.12891-1292/2012), DD 06.08.2012 14
18. The question that arise for consideration is 'Whether the order dated 03.03.2021 passed by the State Commission is liable to be interfered with?'
19. It is clear from the aforementioned that the essential facts being not in dispute, inasmuch as, DHFL who has received deposits from members of the Public and have issued Fixed Deposit Receipts. At the instance of the RBI, proceedings were initiated under the RBI Act and the IBC as noticed above, resulting in a Resolution Plan which was approved by the COC and upheld by the NCLT and NCLAT, vide orders dated 07.06.2021 and 12.07.2021.
20. In the case of Ghanashyam Mishra, the Hon'ble Supreme Court has held as follows:
"95(i) That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan."15
21. In the case of Committee of Creditors of Essar Steel India Ltd, the Hon'ble Supreme Court has held as follows:
" 105. Section 31(1) of the Code makes it clear that once a resolution plan is approved by the Committee of Creditors it shall be binding on all stakeholders, including guarantors. ..........
106. ....
107. ...... A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. ......
22. In view of the above, it is impermissible in law for the Respondents to claim the amounts due under the Fixed Deposits by being outside the Resolution Plan and claim amounts contrary to the said Plan.
23. Regarding maintainability of the Writ Petitions, the Hon'ble Supreme Court in the case of Whirlpool 16 Corporation v. Registrar of Trade Marks, Mumbai and others 5, has held that:
"20. ........... law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation".
24. In the case of Harbanslal Sahnia and another v. Indian Oil Corporation Ltd., and others 6, the Hon'ble Supreme Court has held that:
"7. ............... In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] .) ............
25. It is unfortunate that thousands of persons have deposited their savings in DHFL and today they are driven to litigate at various fora even for refund of monies 5 (1998) 8 SCC 1 6 (2003) 2 SCC 107 17 deposited by them. However, it is to be noted that, envisaging such a situation, the IBC has been enacted and a process has been contemplated by a Statute whereunder, every attempt is made to ensure claims of creditors are expeditiously dealt with in an organized manner in accordance with law. It is under such a process that the COC have reviewed the Resolution Plan offered by various entities proposing to take over DHFL, all aspects of the said Plan have been gone into by the authorities as contemplated under the Statute resulting in the Resolution Plan as approved by the Committee of Creditors also being upheld by the NCLT and NCLAT. In the process of finalizing the Resolution Plan, all the stakeholders including the representatives of the deposit holders have also participated in the same. It is relevant to note that not only have individual Fixed Deposit holders deposited their monies with DHFL, but also Employees of the UP State Power Sector Employees Trust Board, Employees of Provident Fund Trust, Army Group Insurance Fund, etc., which have also been dealt with under the Resolution Plan. 18
26. Hence, in the proceedings before the State Commission, the Petitioner was required to specifically plead and put forth the necessary facts/details as to the amounts payable to the Petitioner in terms of the Resolution Plan, which the Petitioner has failed to do. Merely remitting ad hoc amounts to the Respondents without intimating them the basis of the remittances made, does not absolve the liability of the Petitioner making payments to the Respondents, even if it is to be in terms of the Resolution Plan.
27. It is noticed that in W.P.No.19748/2021 the Respondents, as against the claim of Rs.23,00,000/- have received a sum of Rs.8,68,568/- leaving a balance of Rs.14,31,432/- and in W.P.No.19724/2021, as against the claim of Rs.22,83,709/-, a sum of Rs.2,11,105/- was received leaving a balance of Rs.20,72,597/-. The amounts repaid by the Petitioners to the Respondents in the writ petitions ex-facie appear to be dis-proportionate. The Petitioner was required to place on record before the State Commission itself the entitlement of the Petitioner in both the Writ Petitions as to the amount due and payable to 19 them under the Resolution Plan by furnishing the relevant details/particulars and the making payments of the said sums to the Petitioner, if any in terms of the Resolution Plan.
28. In the case of Alchemist Asset Reconstruction Co. Ltd (supra), the Hon'ble Supreme Court has held that:
"4. The mandate of the new Insolvency Code is that the moment an insolvency petition is admitted, the moratorium that comes into effect under Section 14(1)(a) expressly interdicts institution or continuation of pending suits or proceedings against corporate debtors."
29. In the case of Cicily Kallarackal(supra), the Hon'ble Supreme Court has taken exception with the High Court in entertaining the Writ Petitions under Article 226 of the Constitution of India despite there being a statutory appeal under the Consumer Protection Act.
30. In view of the aforementioned, it cannot be said that the Orders dated 03.03.2021 passed by the State Commission are without jurisdiction, inasmuch as the complaints were filed prior to the moratorium coming into 20 force and vide orders dated 03.03.2021, the State Commission has directed the Petitioner to pay the amounts after the moratorium period. In fact, even before this Court the necessary details as noticed above have also not been placed. In fact, it is due to the lacuna on the part of the Petitioner in placing the necessary details/particulars regarding disbursement that the Respondents were entitled to under the Resolution Plan, which resulted in passing of the impugned orders.
31. In view of the aforementioned, we do not find that this is a fit case to exercise the extraordinary discretionary jurisdiction under Article 226 of the Constitution of India. The Writ Petitions fail and are accordingly, rejected.
SD/-
JUDGE SD/-
JUDGE BS/nd