National Consumer Disputes Redressal
Mrs. Adelkar Pratibha B. & Ors. vs Shivaji Estate Livestock& Farms Pvt. ... on 16 February, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 85 OF 2007 1. MRS. ADELKAR PRATIBHA B. & ORS. 17/751, Machhimar Nagar, Mahim, Mumbai - 400 016. ...........Complainant(s) Versus 1. SHIVAJI ESTATE LIVESTOCK& FARMS PVT. LTD . & ORS. . 14, Hindustan Colony, Amravati Road, Nagpur - 440 010. 2. Mr. Anil Damodar Bharatey, Managing Director, Shivaji Estate Livestock & Farms Pvt. Ltd. 14, Hindustan Colony, Amravati Road, Nagpur - 440 010. 3. Mr. Preshit Bharatey, (Director) Shivaji Estate Livestock & Farms Pvt. Ltd. Corporate Office, 2/3, Priyadarshini Shopping Complex, 62, Bhavani Shankar Road, Dadar (W) Mumbai - 400 028. 4. The Director, S.E.L.F. (Marketing) Pvt. Ltd. 3, Shivasadan, R.K. Vaidya Road,Dadar (West) Mumbai - 400 028. ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER HON'BLE MR. DR. B.C. GUPTA, MEMBER
For the Complainant : Mr. Shirish Deshpande, Advocate For the Opp.Party : Mr. Kakade Akash, Advocate
Dated : 16 Feb 2015 ORDER
JUSTICE V.K. JAIN, PRESIDING MEMBER
The opposite party Shivaji Estate Livestock & Farms Pvt. Ltd., invited the potential investors to invest in its Goat Farming and allied activities by purchasing units of several schemes floated by it. In the Brochure issued by it, the said opposite party represented to the prospective investors, inter-alia that they had arranged about 500 goats in each goat shed with 25-50 such sheds in each rearing centre; 100% of the live stocks would be insured and there would be 100% guarantee of the invested amount. It was also represented to them that the investors would have hypothetical charge on 1000 sq. ft. of land of the company and one time investment would offer consistent benefit for fifteen years, live stocks would be looked after by the experienced Vets and Professionals. The opposite party offered attractive returns on the capital invested in the units sold by it. It is alleged that the opposite party represented to the complainants that there would be minimum expected return on the investment made by them and if the targets are achieved, they would also get additional bonus. The schemes also provided for pre-mature withdrawals by giving 45 days' notice. The case of the complainants, who number as many as 373 is that in view of the attractive schemes offered by the opposite party, they invested their hard-earned savings into those schemes.
Initially, the opposite party made payment of some instalments due to the investors under the said schemes but later on they did not fulfil the terms made by them. When the investors applied for pre-mature withdrawal of the investment made by them, the opposite party failed to honour its commitment. Alleging deficiency in the services offered by the opposite party, they are before this Commission with the following prayers:
"a) To refund to the complainants their original investments along with the promised interest/returns as shown in the Ex-A;
b) To pay to the complainants compensation @ 25% of the original amounts invested, for causing considerable mental agony, hardships, and inconvenience, with further interest @ 9% p.a. thereon from the date of filing this complaint;
c) To pay to the complainants cost of Rs.500/- each for pursuing this complaint".
2. No opposite party, except opposite party No.3, filed a reply. Opposite party No. 3 is a Director of opposite party No.1. However, the name of opposite party No.2 and 3 were later deleted by this Commission, from the array of the respondents. The opposite party took a preliminary objection that in view of the provisions contained in Maharashtra Protection of Interest of Depositors in Financial Establishments Act, 1999 (hereinafter referred to as 'MPID Act') this Commission has no jurisdiction to entertain the complaint, since the aforesaid Act provides a complete machinery for recovery of the deposits made by the investors. It is also stated in the reply that a complaint was lodged against the opposite parties by one Meena Jayant Kulkarni with the C.B.C.I.D., Mumbai and an FIR was registered on the basis of the said complaint. A charge sheet was thereafter, filed against the company and nine others, under Section 420 read with Section 34 of IPC and Section 3 and 4 of MPID Act. The prosecution, pursuant to the aforesaid complaint is pending before the Designated Court. However, no averment made in the complaint has been disputed in the reply.
3. In their affidavits by way of evidence, the complainants have stated on Oath the case set out in the complaint and have also proved the documents evidencing deposit with the opposite party No.1 in the schemes floated by it. Even otherwise, neither the floating of the schemes nor the deposits claimed by the complainants have been disputed in the reply filed by the opposite party.
4. The salient features of the scheme floated by the opposite party; as contained in the Brochure issued by the said opposite party were as under:
"A golden opportunity to multiply your investment in proportion with the fast multiplying small ruminant, Ideal plantation of Silvi Pasture, Agro-forestry, Legume, Pastures, Thorny bushes etc. Arrangement of approx.. 500 goats in each goat-shed, 25 to 50 Goat sheds in each rearing centre. Opening 25 rearing centres in Maharashtra & M.P. in coming five years. About 40% savings in the recommended project costs by Govt. training programme on practical Goat Management approved by Maharashtra State Govt. Publication of Books on Scientific and Economic Goat farming by the end of this year. Providing project to interested persons on turn-key arrangements. Creating employment potentials for about 3000 persons within the next five years. Projected investment of Rs.250 crores in the next five years. 100% insurance of livestock, 100% guarantee of invested amount. Hypothetical charge of investor on 1000 sq. ft. land of the company. One time ivestment that offers consistent benefits for 15 years. Livestock looked after by experienced Vets and Professionals. Breeding of goats by Artificial Insemination, Frozen Semen Technology and Embryo Transfer Technology".
5. The details of some of the schemes floated by the opposite party, as stated in the Brochure issued by the company read as under:
"A. Self Unit Scheme Jayashree Scheme (D)- This scheme is based on yearly returns till 15 years on the minimum investment of Rs.3,000. Members will get minimum returns starting with Rs.500/- in the first year which will gradually increase every year as shown in the chart.
Rajashree Scheme (E) - A very popular scheme, this will give benefit after every 4 years on a minimum investment of Rs.3000/-. Members will get returns every four years starting with Rs.3000/- in the 4th year, 4500/- in the 8th year, Rs.8000/- in the 12th year and Rs.12,500/- in the 15th year. Hence, the total earning in 15 years amount to Rs.28,000/-.
Vanashree Scheme (F) - This is a long term investment scheme which give returns at a time after 15 years. The return is based on the principal amount which increases every year till the end of 15th year. Members get a sum of Rs.74,343/- after 15 years as shown in the chart on a minimum investment of Rs.3000/- as principal amount.
B. Mild Unit Scheme In this scheme, members get an option to choose the no. of unit set and the term according to their convenience. Special feature of this scheme is that, members get rebate on larger amount which increases with an increase in the invested amount. Also, if the member opts for a longer term, the returns increase along with. In a way, long and short term investment options and opportunity for investing larger amount is made possible for the members under this scheme.
C. Ajadhan Unit Scheme Under this scheme, members will get returns twice in a year on a minimum investment of Rs.15,000/- and its multiples as shown in the chart.
All the above mentioned schemes are meant only for the members of 'SELF' and returns received under these schemes are the minimum expected returns. The Board of Directors have decided that if they achieve the target of their minimum expected returns, then the investing members may get an additional bonus along with their expected returns. All the members will receive cheques one month before the due date at the addresses registered with the office".
6. It would thus be seen that besides promising a minimum return which was to increase with the passage of time, the opposite party also represented to the potential investors that 100% of the livestock would be got insured. The opposite party gave 100% guarantee of the invested amount. The unrebutted case of the complainant is neither 100% of the livestock was got insured by the opposite party nor has the opposite party paid even the original amount invested by them.
7. As per Section 2(1)(d) of the Consumer Protection Act, 1986, 'consumer' means any person, who either buys goods or hires or avails services for a consideration, but does not include a person, who avails of such services for any commercial purpose. The term 'service' has been defined in Section 2(a0 of the Act to mean service of any description which is made available to potential users. The above referred definition of 'service' given is an inclusive and not exhaustive definition, meaning thereby that there can be services other than those specifically mentioned in the aforesaid Clause, which if made available to the potential users would be covered in the said definition. The complainants hired or availed the services of the opposite party for investing their savings in the schemes floated by the opposite party, and deposited money with it for investing on their behalf in Goat Farming and allied activities. Therefore, it can hardly be disputed that the complainants are consumers of the opposite party within the meaning of Section 2(1)(d) of the C.P. Act.
8. Section 3 and 4 of the MPID Act read as under:
"3. Fraudulent default by Financial Establishment - Any Financial Establishment, which fraudulently defaults any repayment of deposit on maturity along with any benefit in the form of interest, bonus, profit or in any other form as promised or fraudulently fails to render service as assured against the deposit, every person including the promoter partner, director, manager or any other person or an employee responsible for the management of or conducting of the business or affairs of such Financial Establishment shall, on conviction, be punished with imprisonment for a term which may extend to six years and with fine which may extend to one lac of rupees and such Financial Establishment also shall be liable for a fine which may extend to one lac of rupees.
Explanation: For the purpose of this Section, a Financial Establishment, which commits default in repayment of such deposit with such benefits in the form of interest, bonus, profit or in any other form as promised or fails to render any specified service promised against such deposit, or fails to render any specific service agreed against the deposit with an intention of causing wrongful gain to one person or wrongful loss to another person or commits such default due to its inability arising out of impracticable or commercially not viable promises made while accepting such deposit or arising out of deployment of money or assets acquired out of the deposits in such a manner as it involves inherent risk in recovering the same when needed shall, be deemed to have committed a default or failed to render the specific service, fraudulently".
4. Attachment of properties on default of return of deposits - (1) Notwithstanding anything contained in any other law for the time being in force, -
(i) Where upon complaints received from the depositors or otherwise, the Government is satisfied that any Financial Establishment has failed -
(a) to return the deposit after maturity or on demand by the depositor ; or (b) to pay interest or other assured benefit; or (c) to provide the service promised against such deposit; or (ii) where the Government has reason to believe that any Financial Establishment is acting in a calculated manner detrimental to the interest of the depositors with an intention to defraud them; and if the Government is satisfied that such Financial Establishment is not likely to return the deposits or make payment of interest or other benefits assured or to provide the services against which the deposit is received, the Government may, in order to protect the interest of the depositors of such Financial Establishment, after recording reasons in writing, issue an order by publishing it in the Official Gazette, attaching the money or the property believed to have been acquired by such Financial Establishment either in its own name or in the name of any other person from out of the deposits, collected by the Financial Establishment, or if it transpires that such money or other property is not available for attachment or not sufficient for repayment of the deposits, such other property of the said Financial Establishment or the promoter, director, partner or manager or member of the said Financial Establishment as the Government may think fit. (2) On the publication of the order under sub-section (1), all the properties and assets of the Financial Establishment and the persons mentioned therein shall forthwith vest in the Competent Authority appointed by the Government, pending further order form the Designated Court". 9. Section 6 (2) of the aforesaid Act reads as under: "(2) No court including the court constituted under the Presidency Towns Insolvency Act, 1909, and the Provincial Insolvency Act, 1920, other than the designated court, shall have jurisdiction in respect of any matter to which the provisions of this Act apply".
10. Considering the definition of 'deposit' given in Section 2(c) and definition of 'Financial Establishment' given in Section 2(d) of MPID Act, coupled with Sections 3 and 4 thereof it can hardly be disputed that the deficiencies attributed to the opposite party constitutes fraudulent default by a Financial Establishment within the meaning of the aforesaid Act and therefore, if the allegations made in the complaint are proved during trial, the opposite party is liable to be convicted and punished by the designated court in terms of the provisions of the aforesaid Act. The question which comes up for our consideration is as to whether the jurisdiction of this Commission is barred under sub-section (2) of Section 6 of the aforesaid Act.
11. It was contended by the learned counsel for the complainants that since the consumer forum is not a court, the provisions of Section 6(2) of the MPID Act are not applicable to such forum. It is also submitted that the remedy provided before a consumer forum is a civil remedy in a case where the fraudulent default, as defined in MPID Act, also constitutes deficiency in the services rendered by a service provider, whereas MPID Act provides for criminal prosecution and punishment of the persons indulging in such fraudulent defaults. It is also pointed out on behalf of the complainants that the designated court constituted under the provisions of MPID Act, has no power to grant compensation which a consumer forum can grant in a case of deficiency in the services rendered to a consumer.
12. In Laxmi Engineering Works Vs. P.S.G. Industrial Institute (1995) 3 SCC 583, the Hon'ble Supreme Court inter-alia observed as under:
"that quasi-judicial bodies/authorities/agencies created by the Act are not courts though are vested with some of the powers of a civil court. It was further observed that they are quasi-judicial tribunals brought into existence to render inexpensive and speedy remedies to consumers which were supposed to supplant and not supplement the existing judicial system, the idea being to provide additional forum providing inexpensive and speed resolution of disputes arising between consumers and suppliers of goods and services".
In State of Karnataka Vs. Vishwabharathi House Building Cooperative Society & Ors. (2003) 2 SCC 412, it was held by the Hon'ble Supreme Court that the provisions of the Consumer Protection Act should be interpreted as broadly as possible. Referring to its earlier decision in Fair Air Engineering Pvt. Ltd. Vs. N. K. Modi, 1996 (6) SCC 385 it was observed that the consumer forum has jurisdiction to entertain a complaint despite the fact that the other forums/courts would also have jurisdiction to adjudicate upon the lis.
In Secretary, Thirumurugan Cooperative Agricultural Credit Society Vs. M. Lalitha (Dead) Through LRs & Ors. (2004) 1 SCC 305, it was held that Section 10 of the Tamil Nadu Cooperative Societies Act does not oust the jurisdiction of the consumer forum to adjudicate upon the dispute between the members and cooperative societies.
On the other hand in S.P. Goel Vs. Collector of Stamps, Delhi, 1996 (1) SCC 573, the Hon'ble Supreme Court held that a person presenting a document for registration and paying the requisite stamp duty as well as registration fee was not a consumer within the meaning of Section 2(1)(d) of the Act. In taking this view, the Hon'ble Court referring the provisions of the Registration Act and the Stamp Act, inter-alia observed as under:
"The Registration Act, as also the Stamp Act, are meant primarily to augment the State revenue by prescribing the stamp duty on various categories of instruments or documents and the procedure for collection of stamp duty through distress or other means including criminal prosecution as non-payment of stamp duty has been constituted as an offence. Payment of registration fee or registration charges including charges for issuing certified copies of the registered documents or fee for the inspection of various registers or documents kept in the Registrar's or Sub-Registrar's office etc. constitute another component of State revenue.
In this situation, therefore, the person who presents a document for registration and pays the stamp duty on it or the registration fee, does not become a consumer nor do the officers appointed to implement the provisions of the two Acts render any service within the meaning of Consumer Protection Act. They only perform their statutory duties (some of which, as earlier indicated, are judicial or, at least, quasi-judicial in nature) to raise and collect the State revenue which is a part of the sovereign power of the State."
In Trans Mditerranean Airways Vs. Universal Exports & Anr., 2011 (10) SCC 316, the Apex Court with respect to interpretation of the word 'court' used in Rule 29 of the Second Schedule of the Carriage by Air Act held as under:
"The use of the word "court" in Rule 29 of the Second Schedule of the CA Act has been borrowed from the Warsaw Convention. We are of the view that the word "court" has not been used in the strict sense in the Convention as has come to be in our procedural law. The word "court" has been employed to mean a body that adjudicates a dispute arising under the provisions of the CP Act. The CP Act gives the District Forums, State Forums and National Commission the power to decide disputes of consumers. The jurisdiction, the power and procedure of these forums are all clearly enumerated by the CP Act. Though, these forums decide matters after following a summary procedure, their main function is still to decide disputes, which is the main function and purpose of a court. We are of the view that for the purpose of the CA Act and the Warsaw convention, the consumer forums can fall within the meaning of expression "court".
In General Manager, Telecom Vs. M. Krishnan & Anr., 2009 (8) SCC 481, the complainant was aggrieved from disconnection of his telephone on account of non-payment of a bill and had approached the consumer forum seeking direction for its reconnection, besides compensation. It was held by the Hon'ble Supreme Court that when there is a special remedy provided in Section 7B of the Telegraph Act regarding disputes in respect of telephone bills, then the remedy under the Consumer Protection Act is by implication barred.
13. It would be seen from a perusal of the provisions contained in MPID Act that the designated court has no power to grant compensation to a person who is a victim of the fraudulent default on the part of a Financial Establishment. Therefore, it would be difficult to say that the said MPID Act provides an adequate redressal of the grievances of a person who suffers on account of the fraudulent default on the part of the Financial Establishment, where such defaults also constitutes deficiency in the services rendered by a service provider to its consumer. We are also in agreement with the learned counsel for the complainant that the remedy before a consumer forum is primarily a civil remedy; whereas the prosecution before and conviction by a designated court constituted under MPID Act is a criminal remedy available to the victim of a fraudulent default on the part of a Financial Establishment.
Section 3 of the Consumer Protection Act provides that the provisions of the said Act shall be in addition to and not in derogation of the provision of any other law for the time being in force. The MPID Act came to be enacted much later than enactment of the Consumer Protection Act. Despite that the Legislation in its wisdom used only the expression "Court" and not the expression "Court or any other forum" in sub-Section (2) of Section 6 of the said Act. In these circumstances, it would be difficult to say that the legislative intent behind the enactment of sub-section (2) of Section 6 was also to exclude the jurisdiction of the consumer forum in a case where fraudulent default on the part of the Financial Establishment also constitutes deficiency in the service rendered to a consumer. Therefore, in our view, for the purpose of the sub-section (2) of Section 6 of the MPID Act, consumer forum cannot be said to be a "Court".
14. As noted earlier, in the reply filed by opposite party No.3, the said opposite party has not disputed the case of the complainants on merit, the only plea taken by him being that the jurisdiction of the consumer forum is barred under sub-section (2) of Section 6 of MPID Act. Even otherwise, the complainants have duly proved their case, by filing their respective affidavits which have gone wholly unrebutted and uncontested.
15. For the reasons stated hereinabove, we hold that the opposite party Shivaji Estate Livestock & Farms Pvt. Ltd., has been deficient in rendering services to the complainants. We consequently direct the said opposite party to refund the investment made by the complainants in the schemes floated by it and as detailed in Exhibit-A annexed to the complaint, along with interest on the said amount @ 9% per annum from the date of filing of the complaint till the date of payment. We also direct the said opposite party to pay 10% of the amount invested by the complainants as compensation and Rs.1,000/- each as the cost of litigation to each of the complainants. No relief against the other opposite party is made out. The complaint stands disposed of.
......................J V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER