State Consumer Disputes Redressal Commission
Sri Sunkesula Sambasiva Rao vs 1. M/S. Gharonda Builders And ... on 4 March, 2026
1
BEFORE THE TELANGANA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION : HYDERABAD.
EA.NO.08 OF 2021
IN
CC.NO.60 OF 2015
Between
1.Sri S.Sambasiva Rao (Died)
2. Smt. Sunkesula Ratnabala, W/o.Late Sunkesula Sambasiva Rao, Aged about 67 years, Occ: Household, Resident of Sri Sri Ratna Kamalambika Seva Ashram, Near Ramkoti Park, Shivalayam, Teku Bank Street, Agraharam, Eluru, West Godavari District, Andhra Pradesh.
3. Smt. Sunkesula Pallavi, W/o.P.Sriram, Aged about 49 years, Occ: Employee, R/o.548, Front Ridge DR, Cary, NC-27519.
Rep. by her mother and Special Power of Attorney Holder, Smt.Sunkesula Ratnabala, W/o.Late Sunkesula Sambasiva Rao, Aged about 67 years, Occ: Household, Resident of Sri Sri Ratna Kamalambika Seva Ashram, Near Ramkoti Park, Shivalayam, Teku Bank Street, Agraharam, Eluru, West Godavari District, Andhra Pradesh.
4. Mr.Sunkesula Pavan, S/o.Late S.Sambasiva Rao, Aged about 48 years, Occ: Employee, R/o.678 Clardell DR, Sun Prairie, Wl-53590.
Rep. by his mother and Special Power of Attroney Holder, Smt.Sunkesula Ratnabala, W/o.Late Sunkesula Sambasiva Rao, Aged about 67 years, Occ: Household, Resident of Sri Sri Ratna Kamalambika Seva Ashram, Near Ramkoti Park, Shivalayam, Teku Bank Street, Agraharam, Eluru, West Godavari District, Andhra Pradesh.
......Petitioners/Complainants And
1. M/s.Gharonda Builders and Developers, A Partnership Firm having its office at Premises No.4-4-932/2 & 3, Kandaswamy Lane, Sultan Bazar, Hyderabad - 500095.
Represented by its Managing Partner Sri Sunil J.Sachdev.
2. Sri Sunil J.Sachdev, S/o.Sri Jayantilal Sachdev, Aged about 62 years, Managing Partner, 2 R/o.H.No.3-6-175, Lane Opp: Old CDR Hospitals, ISH Pradhan, Hyderguda, Hyderabad - 29.
3. Sri Jayantilal Sachdev (Died)
4. Smt. Susheela Sachdev (Died)
5. Smt. Rekha Sachdev, W/o.Sri Sunil Sachdev, Aged about 60 years, Partner, R/OH.No.3-6-175, Lane Opp: Old CDR Hospitals, ISH Pradan, Hyderguda, Hyderabad - 29.
6. Smt.Sonal Thakrar, W/o.Sri Prakash Thakrar, Aged about 47 years, Partner, R/o.H.No.3-6-175, Lane Opp: Old CDR Hospitals, ISH Pradan, Hyderguda, Hyderabad - 29.
7. Smt. Roopal Sachdev (Roopal Sagi), W/o.Sri Swarjit Saagi, Aged about 38 years, Partner, R/o.H.No.3-6-175, Lane Opp: Old CDR Hospitals, ISH Pradan, Hyderguda, Hyderabad - 29.
......Respondents/Opp.Parties Counsel for the Petitioners/Complainants : M/s. D.Gopal Krishna Counsel for the Respondents/Opp.Parties: M/s.DMA Advocates-R2&5 M/s. Sharad Sanghi-R6 & R7 QUORAM:
HON'BLE SMT.JUSTICE DR.G.RADHA RANI ......PRESIDENT & HON'BLE SMT.R.S.RAJESHREE ......MEMBER (NON-JUDICIAL) WEDNESDAY THE FOURTH DAY OF MARCH TWO THOUSAND TWENTY SIX ****** Order: (Per Smt.Dr.G.Radha Rani, Hon'ble President)
1. This application is filed by the D.Hrs/Complainants under Section-72 of the Consumer Protection Act, 2019 to punish the Respondents 1,2 and 5 to 7 for non-compliance of the order dated 07.12.2020 in CC.No.60/2015.3
2. The decree holders are the Complainants in CC.No.60/2015.
3. The case of the Petitioners was that the Petitioner No.1 was the original Complainant before the State Forum and he expired on 06.03.2018. The 2nd Petitioner along with her children were brought on record as legal heirs of the deceased Complainant. The Complainants 3 & 4 executed a Special Power of Attorney in her favour on 23.11.2018. The complaint was partly allowed by the State Commission by order dated 07.12.2020 directing the Opposite Parties to refund to the Complainants an amount of Rs.55,65,250/- together with interest @ 12% p.a. from the dates of respective payments along with costs of Rs.20,000/-. The Respondents/Opposite Parties have not filed any appeal against the order of the State Commission, as such the said order became final. The Respondents had not complied with the directions of the Commission and had not refunded any amount and violated the order passed by the State Commission. They were liable to pay a sum of Rs.1,14,94,118/- as on 15.03.2021. After passing of the orders, the Petitioners issued a legal notice dated 05.02.2021 demanding payment as per the order/direction of the Commission.
All the Respondents except Respondent No.7 received notices. The notice sent to Respondent No.7 was returned with an endorsement as „out of station for one month‟. Even after receipt of the notices, the Respondents have not responded or complied the orders of the Commission and intentionally disobeyed/neglected. Having no alternative, the Petitioners approached the Commission under Section-72 of the Consumer Protection Act, 2019. 4
4. A calculation memo was filed by the counsel for Petitioners along with the application showing the amount due as on 15.03.2021 was Rs.1,14,94,118/-.
5. The Execution Application was filed against seven Respondents. Respondent No.1 was a partnership firm by name M/s.Gharonda Builders & Developers, represented by its Managing Partner Sunil J.Sachdev. Respondent No.2 was the Managing Partner Sunil J.Sachdev. Respondents 3 & 4 were the parents of Respondent No.2, who were reported to be died. Respondent No.5 was the wife of Respondent No.2. Respondent No.6 was the sister of Respondent No.2 and Respondent No.7 was the daughter of Respondent No.2.
6. During the pendency of these proceedings the Respondent No.6 and 7 preferred appeals vide FA.No.800/2021 to FA.No.807/2021 before the Hon‟ble NCDRC. The appeals filed by the Respondent No.7 vide FA.No.800/2021 and FA.No.803/2021 and the appeals filed by the Respondent No.6 vide FA.No.804/2021, 805/2021, 806/2021 and 807/2021 were dismissed vide common order dated 01.07.2024. In the meanwhile, the Respondents 1, 2 and 5 also filed an application under Provincial Insolvency Act before the VI Senior Civil Judge, City Small Causes Court vide IP.No.42/2021 to declare them as indigent persons. The said matter is sub judice.
7. The Respondents/Opposite Parties are examined under Section-251 Cr.P.C. They pleaded not guilty and claimed to be tried.
5
8. During the course of enquiry, the Petitioner No.1 was examined as PW1. Ex.P1 to P5 are marked on behalf of the decree holders. Ex.P1 is the certified copy of order in CC.No.60/2015 dated 07.12.2020. Ex.P2 is the office copy of the legal notice issued to the Respondents dated 05.02.2021. Ex.P3 is the unserved postal cover addressed to the Respondent No.7. Ex.P4 is the Special Power of Attorney issued by the Petitioners 3 and 4 in favour of the Petitioner No.1 dated 23.11.2018. Ex.P5 is the certified copy of the common order in FA.Nos.803/2021 to 807/2021 by the Hon‟ble NCDRC 01.07.2024.
9. The Respondents were examined under Section 313 Cr.P.C. They denied the incriminating material available against them.
10. The Respondent No.6 and 7 are examined as RWs1 and 2. Ex.B1 to B8 are marked through the Respondent No.6. Ex.B1 is the copy of petition in IP.No.42/2021 filed before the Additional Small Causes Court, Hyderabad. Ex.B2 is the copy of the letter of retirement/resignation of Respondent No.6 dated 01.02.2018. Ex.B3 is the copy of the Deed of Retirement of Respondent No.6 dated 23.08.2018. Ex.B4 is the copy of the Deed of Partnership dated 23.08.2018. Ex.B5 is the copy of Certificate of Registrar of Firms along with Form-5. Ex.B6 is the copy of Bank Statement of ICICI Bank of Respondent No.6 for the period from 01.07.2004 to 31.12.2018. Ex.B7 is the copy of Bank Statement of SBI of Respondent No.6 for the period from 01.04.2009 to 31.03.2019. Ex.B8 is the copy of Bank Statement of HDFC Bank of Respondent No.6 for the period from 23.07.2010 to 04.10.2017. The 6 Respondent No.5 was examined as RW2. The Respondent No.7 was examined as RW3. Ex.B9 to B28 are marked through RW3.
11. Heard the learned senior counsel Sri D.Gopal Krishna and the learned counsel Sri Dinesh Kumar Gilda appearing for Damodar Mundra Associates for Respondents 1, 2 and 5 and the learned senior counsel M/s.Sharad Sanghi for Respondents 6 and 7.
12. Now the points for determination are:
(i) Whether the Petitioners established the guilt of the Respondents 1,2 and 5 to 7 for the offence under Section-
72 of Consumer Protection Act, 2019?
(ii) To what result? 13. Point No.(i):
PW1 filed her evidence affidavit stating that she was the wife of the deceased original Complainant and the Complainants 3 and 4 were her children and they executed a Special Power of Attorney in her favour and that she was deposing on their behalf also. The said Power of Attorney was in force. During the pendency of the proceedings Respondents 3 and 4 died and since their legal heirs were already on record, the proceedings were continued against the other Respondents. After filing the E.A., the Petitioners/Complainants received notice from the Hon‟ble NCDRC about the filing of appeals by Respondents 6 and 7 in the month of October, 2023. The Petitioners/Complainants contested the matter and the NCDRC dismissed the appeals along with connected appeals vide common order dated 01.07.2024. The Respondents 7 had not complied with the directions of the Commission and had not refunded any amount and violated the orders passed by the State Commission. The Respondents/Opposite Parties were liable to pay a sum of Rs.55,65,250/- as on 28.02.2021 along with interest. The Petitioners issued a legal notice dated 05.02.2021 demanding payment, but even after receipt of notices, the Respondents not responded or complied the orders of the Commission dated 07.12.2020 and intentionally disobeyed the orders.
In her cross examination, she admitted that Respondent No.2 representing Respondent No.1 entered into agreement with her husband and the amounts were paid to him. She never met Respondents No.5 to 7 and Respondents No.5 to 7 did not come to the site at any time. She also admitted that Respondent No.1 consisted of partners who were Respondents No.2, 5, 6 and 7. She admitted that she was aware of Respondents No.1, 2 and 5 filing Insolvency Petition and that she was also participating in the I.P. proceedings by filing counter. She stated that she was not aware that Respondents No.6 and 7 retired from the Partnership Firm in the year 2018.
14. The Respondent No.6 was examined as RW1. She stated that she was the sister of Respondent No.2 and was made as a partner in the first Respondent Firm from 2001, at the request of her father and brother to join as a sleeping partner. She believed and trusted Respondent No.2, her brother who was a father figure to her. She was married in the year 1998 and was a permanent resident of Bangalore. Since the date of her marriage, she was residing along with her family initially at Gurgaon and thereafter at 8 Bangalore. She never took part in the business affairs of the Respondent No.1 which was always carried out by her brother Respondent No.2. She always used to put her signatures on blank papers to the dictation of Respondent No.2. She did not derive any benefit in cash or kind. During her tenure as alleged partner of the firm, she was never appraised of any activity of the firm. She never received any financial benefit from Respondents 1 and 2. She submitted her resignation from the partnership of firm on 01.02.2018 and executed a Deed of Retirement on 23.08.2018. She acted as a partner only on paper. She was not having knowledge of the particulars of the complaint and about the orders passed by the Commission in the C.C. as they were never brought to her notice either by Respondents 1 or 2. She had no acquaintance with the construction work, nor had any expertise in the field. She was only a housewife. The decree holder never paid any amounts under any Agreement of Sale.
In her cross examination she denied receiving any notices in CC.No.60/2015 and CC.No.65/2015 and that she engaged an advocate to represent her and filed a written version adopting the written version of Respondent No.5. She stated that she was not holding any properties in her name. She admitted that she gave Rs.18,00,000/- to Respondent No.2 by way of loan in the year 2013. She stated that she did not file Insolvency Petition along with Respondents No.1, 2 and 5.
15. The Respondent No.5, the wife of Respondent No.2 was examined as RW2. She also stated that the Petitioners exclusively dealt with Respondent No.2, who was dealing with the affairs of the 9 business and that she was a nominal one percent partner in the firm. She had not signed any documents and never took part in the conduct of the business of the firm. She was a housewife looking after the household chores and was at an advanced age of 65 years, suffering with various physical ailments like arthritis and hearing problem.
In her cross examination she denied that she was benefited from the profits of the firm and had means to comply the order of the Commission but intentionally disobeying the same.
16. The Respondent No.7, the daughter of Respondent No.2 was examined as RW3. She filed her evidence affidavit stating that she was the daughter of Respondent No.2 and that she was aged 18 years when she was made as a partner in the Respondent No.1 firm on 04.04.2001. She was a student in the year 2001. She used to sign on blank papers as per the dictation of her father. She never took part in the business affairs of the first Respondent. The firm was always represented by the second Respondent. She was married in the year 2004 and after the marriage she begot a daughter and she became busy in her family life. She had not received any amount as partner of the firm. She never drew any advantage being the partner of the firm. She maintained a Savings Bank account in ICICI Bank from the year 2004 to 2010 and thereafter in Axis Bank, Begumpet branch from the year 2010 to 2018. No other accounts were maintained by her. Her father used to credit some amount in her account and used to take back the same which were reflected in the account statement. She gave her resignation letter on 01.02.2018 and thereafter executed a Deed of Retirement on 23.08.2018. The said Deed of Retirement was 10 submitted to the Registrar of Firms. She recently obtained the Certificate from the Registrar of Firms on 27.03.2021 which did not reflect her name as partner of first Respondent Firm. She had never taken part in the business of the firm and was always a sleeping partner. She only acted on paper and had nothing to do with any of the activities of the first Respondent Firm. She was not having the knowledge of the complaint filed by the Petitioners. Even the orders passed by the Commission were never brought to her notice either by the Respondents No.1 & 2. She never flouted the orders of any court of law. She had no acquaintance with the construction work nor had any experience or expertise in the field. She was working as a school teacher. The decree holder never paid any amount under any agreement of sale to her on the ground that she was the partner in the first Respondent Firm. Till the filing of the present proceedings it was in nobody‟s knowledge that she was the partner of the firm at the said point of time.
In her cross examination she admitted preferring appeals before the NCDRC and that they were dismissed. She stated that she never received any amounts from the purchasers and the funds were collected by Respondent No.1 firm and denied that the funds received from the purchasers were misutilized. She also denied that she had sufficient means to comply the orders of the Commission but intentionally disobeying the same.
17. The learned counsel for the Petitioners/D.Hrs contended that the Respondents No.2 to 7 were partners of the firm and they were jointly and severally liable. The execution court could not go beyond the decree and cannot decide the liability of the partners. No amount was paid by the Respondents after passing of the 11 decree and relied upon the judgments of the Hon‟ble Apex Court in Syndicate Bank Vs. R.S.R. Engineering Works and others.
18. The learned counsel for the Respondents 1, 2 and 5 on the other hand contented that the Respondent No.2 had no mensrea to cheat any of the purchasers. Respondents 1 and 2 completed more than 59 projects in the city and constructed more than 1000 flats and was a reputed firm in the business of construction. Due to disputes in two projects from owner and subsequently due to Income Tax raids on the Respondent No.1 and its partners, they were left with no other alternative other than to file an application under the Provincial Insolvency Act and filed IP.No.42/2021 to declare them as indigent persons. The said matter was sub judice and was coming up for trial. Since the Respondent No.1 and its partners were left with no means of income, the Respondent No.2 surrendered before the court for non-payment and was undergoing imprisonment in pursuance to the sentences passed in various complaints for non-compliance of the orders since 18.03.2025. The non-payment of the amounts towards purchase of flat was never intended to usurp. The court need to look into the state of affairs of the business. It was decided by the Hon‟ble Apex Court in various cases that when a person approached the court to declare him as indigent, the court would have to abstain from imposing penal punishment and prayed to relieve the Respondent No.1 and its partners from imposition of any penal action of imprisonment for non-compliance of the orders.
He further contended that the Respondent No.5 belonged to an orthodox/traditional Gujarati family and since the date of 12 marriage she remained as a housewife in the family looking after the household chores, she was not a qualifying lady and never involved in any business affairs, she was at an advanced age of 65 years and suffering with various physical ailments. She was a nominal 1% partner in the Respondent No.1 firm and could not be held liable for any kind of penal punishment or liability. The imposition of criminal liability would be against the principles of natural justice and would be harsh upon her and relied upon the judgments of the Hon‟ble Apex Court in K.Sitaram Vs. CFL Capital Financial Service Limited, (2017) 5 SCC 725, State of Karnataka Vs. Pratapchand and others, AIR 1981 SC 872 and in Niaz Mohammed and others Vs. State of Haryana and others, MANU/SC/0063/1995 and of the judgment of the High Court of Maharashtra Nagpur Bench in SREI Equipment Finance Limited Vs. Rajesh Bajirao Khandewar & others and of the High Court of A.P. in Berram Guru Prasad Vs. Margadarsi Chit Fund Pvt. Ltd., and others, MANU/AP/0149/2019.
19. The learned counsel for the Respondents 6 and 7 contended that the Respondents 6 and 7 retired from the partnership firm in the year 2018. The contents of the complaint would not disclose any specific role played by the said Respondents except stating that they were also partners along with Respondent No.2. Such averments would not show that they were equally liable along with Respondent No.2. Respondents 6 and 7 were not vicariously liable for the acts and deeds of Respondent No.2 as the Partnership Deed came to an end by 01.02.2018 and contended that in a similar case in EA.No.196 of 2017, Respondents 5, 6 and 7 were discharged from liability. The scope of the enquiry under Section- 13 27 shall be limited to whether the non-compliance of the directions of the Commission require to imprison the said Respondents and relied upon the judgment of the High Court of A.P. in Writ Petition No.4585/2025 dated 09.07.2025 in Shaik Allah Baksh Vs. The State of Andhra Pradesh. He further contended that the specialized work can only be carried out by Opposite Party No.2 and Respondents 6 and 7 were not responsible and relied upon the judgments of the Hon‟ble Apex Court in Vinayak Purushottam Dube Vs. Jayashri Padamkar Bhat, (2024) 9 SCC 398 and in Giridharilal Gupta Vs. B.H.Mehta, 1971 (3) SCC 189. He further relied upon the judgments of the Hon‟ble Apex Court in K.Sitaram Vs. CFL Capital Financial Service Limited, (2017) 5 SCC 725, State of Karnataka Vs. Pratapchand and others, AIR 1981 SC 872, State of Karnataka Vs. Pratapchand and others, AIR 1981 SC 872, Madhavi Uppalapati & others Vs. Sojid Corporation, 2021 (2) ALD Criminal 1036 and Susela Padmavathy Amma Vs. Bharti Airtel Limited, 2024 (2) ALD Criminal 232 SC with regard to vicarious liability under criminal law and also relied upon the judgments of the Hon‟ble Apex Court in AIR 2003 4172, 2022 9 SCC 186 and 2022 9 SCC 286.
20. As seen from the record, Respondent No.1 is a firm represented by its Managing Partner and Respondent No.2 is the Managing Partner of the firm and Respondents No.5, 6 and 7 are sleeping partners. It was the contention of the learned counsel for the Respondents 5, 6 and 7 that they were not actively involved in the business of the firm and it was Respondent No.2 who alone managed the business affairs. The Respondent No.5 was only a 1% partner and the Respondents 6 and 7 submitted their resignations 14 prior to passing of the judgment, as such they were not vicariously liable and relied upon the judgment of the Hon‟ble Apex Court in State of Karnataka Vs. Pratapchand and others wherein it was held that:
(5) "........It is seen that the partner of a firm is also liable to be convicted for an offence committed by the firm if he was in charge of, and was responsible to, the firm for the conduct of the business of the firm or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any neglect on the part of the partner concerned. In the present case the second respondent was sought to be made liable on the ground that he alongwith the first respondent was in charge of the conduct of the business of the firm. Section 23-C of the Foreign Exchange Regulation Act 1947 which was identically the same as section 34 of the Drugs and Cosmetics Act came up for interpretation in G. L. Gupta v. D. N. Mehta it was observed as follows:
"What then does the expression "a person in charge and responsible for the conduct of the affairs of a company mean"? It will be noticed that the word 'company' includes a firm or other association and the same test must apply to a director in-charge and a partner of a firm incharge of a business. It seems to us that in the context a person 'in charge' must mean that the person should be in overall control of the day to day business of the company or firm. This inference follows from the wording of S. 23C(2). It mentions director, who may be a party to the policy being followed by a company and yet not be in charge of the business of the company. Further it mentions manager, who usually is in charge of the business but not in over-all-charge. Similarly the other officers may be in charge of only some part of business."
The evidence in the present case shows that it was respondent No. 1 and not respondent No. 2 who was in overall control of the day to day business of the firm. The second respondent is not liable to be convicted merely because he had the right to participate in the business of the firm under the terms of the Partnership Deed."
21. But in our opinion, the above judgment is not applicable, as the facts of the said case were distinct from the facts of this case. It was a case under Drugs and Cosmetics Act and there was a specific provision under Section-34 of the Drugs and Cosmetics Act wherein under the proviso to Section-34(1) it was provided that, "nothing contained in this sub-section shall render any such person liable to any punishment provided under the Act if he proves that the 15 offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence." Considering the said provision it was held in the criminal appeal that it was Respondent No.1 and not Respondent No.2 who was in overall control of the day to day business of the firm responsible for the conduct of the business and as such the second Respondent was not liable to be convicted."
22. The learned counsel for the Respondents No.1, 2 and 5 relied upon the judgment of the Hon‟ble Apex Court in K.Sitaram and another Vs. CFL Capital Financial Service Limited and another in Criminal Appeal No.2285 of 2011, wherein it was held that:
(28) "With regard to the contention of the learned Senior Counsel for the appellants herein that there can be no vicarious liability attributed to the Director, Deputy Director of a Company unless the statute specifically creates so, no doubt, a corporate entity is an artificial person which acts through its officer, directors, managing directors, chairman etc. If such a company commits an offence involving mensrea, it would normally be the intent and action of that individual who would act on behalf of the company that too when the criminal act is that of conspiracy. Thus, an individual who has perpetrated the commission of an offence on behalf of the company can be made an accused, along with company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which an individual can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically invoking such a provision."
23. However, we consider that the said principles were stated by the Hon‟ble Apex Court in criminal cases which were not strictly applicable to the factual situation in this case which arises out of civil liability.
24. Under Section-25 of Indian Partnership Act, every partner is jointly and severally liable for all the acts of the firm done while 16 he/she is a partner. The liability arises if they were partners at the time of transaction. The cause of action arose during their partnership. The Hon‟ble NCDRC in Sudeshchandra Vs. Madat Ali Noor Mohammed Gilani and another, while considering the issue of liability of Directors of the Company for proceeding under Section-27 of Consumer Protection Act, 1986 (corresponding to Section-72 of Consumer Protection Act, 2019) while referring the larger bench judgment of the Commission in Rajnish Kumar Rohatgi Vs. Unitech Limited in EA.80/2016 in CC.14/2015 decided on 08.01.2019 held that:
"(1) A company, or a partnership firm, which fails or omits to comply with any order made by a District Forum, State Commission or National Commission, as the case may be, will be liable to the penalty prescribed in Section-27 of the Consumer Protection Act."
(8) "The vicarious criminal liability of a Director in a company shall apply to a partner in a firm where the offence under Section-27 of the C.P.Act is committed by a partnership firm." Thus all the partners of the firm are vicariously liable for the acts of the firm.
25. Section-72 (1) of Consumer Protection Act, 2019 provides penalty for non-compliance of the orders of the Consumer Fora. It reads as:
Section-72: Penalty for non-compliance of order:
"72. (1) Whoever fails to comply with any order made by the District Commission or the State Commission or the National Commission, as the case may be, shall be punishable with imprisonment for a term which shall not be less than one month, but which may extend to three years, or with fine, which shall not be less than twenty-five thousand rupees, but which may extend to one lakh rupees, or with both."
Arrest under Section-72 is penal in nature and requires wilful non-compliance. The Petitioners also must prove deliberate disobedience on the part of the Respondents. Arrest and detention are coercive modes of execution and can be used only when there 17 was means to pay and there was deliberate refusal. The learned counsel for the Respondents 1, 2 & 5 further relied upon the judgment of the Hon‟ble Apex Court in Niaz Mohammad and Ors Vs. State of Haryana and Ors, (MANU/SC/0063/1995), wherein it was held that, "contempt jurisdiction is distinct from execution proceedings and that mere non-compliance does not automatically amount to contempt. It must be established beyond reasonable doubt that the disobedience was deliberate and intentional. Financial constraints and compelling circumstances rendering compliance difficult are relevant considerations while determining wilfulness."
26. Though a petition was filed under the Provincial Insolvency Act by the Respondents 1,2 and 5, penal prosecution for non- compliance will still continue. Protection is not automatic unless adjudicated by the Insolvency Court about Respondents being insolvent.
27. As imprisonment under Section-72 can be ordered only upon proof of wilful and deliberate non-compliance, the Petitioners must show that the Respondents had means to comply the order but were deliberately refusing to comply. The High Court of A.P. in Berram Guru Prasad Vs. Margadarsi Chit Fund Pvt.Ltd., and Ors, while referring to the case of Hon‟ble Apex Court in Jolly George Varghese Vs. Bank of Cochin held that: "the J.Drs cannot be subjected to arrest and cannot be imprisoned when he is an insolvent and has no means to pay the decree debt and when it cannot be said that he is wilfully and deliberately evading payment 18 of the decree debt though capable of paying the same" and observed that:
"(13) .....In that view of the matter, even though his insolvency petition is not maintainable insofar as the present D.Hr Chit Fund Company is concerned, yet as his earlier income is immaterial and as his present financial position and inability to satisfy the debt indicate that he is in penury and that there is no malafide refusal and/or wilful failure to pay the decree debt inspite of having means to discharge the decree debt, it is not lawful and fair to order his arrest."
28. The Hon‟ble Apex Court in Jolly George Varghese Vs. Bank of Cochin, (1918) 2 SCC 360 held that:
"a person cannot be detained in civil prison merely for his inability to pay. There must be proof of means to pay and deliberate refusal. Detention without establishing wilful failure violates Article-
21. Poverty or financial inability is a valid defense against arrest. As such arrest is impermissible unless the Petitioners were able to prove the existence of sufficient means and intentional refusal to comply. The pendency of the insolvency proceedings demonstrates financial incapacity and bonafide inability rather than defiance. Arrest cannot be used as a substitute for recovery when insolvency is pleaded."
29. The above judgments would disclose that imprisonment under Section-72 can be ordered only upon proof of wilful and deliberate non-compliance and arrest is not a mechanical consequence of non-payment. The Petitioners must prove that the Respondents had means to comply and that they deliberately refused to comply. Although the Respondents 5, 6 and 7 were partners at the time of the execution of the Agreement of Sale, they were not Managing Partners and had not participated in the day to day affairs of the firm and had no control over the finances. The business affairs were exclusively conducted by the Respondent No.2, the Managing Partner of the Firm. Under the Indian Partnership Act, 1932, though liability is joint and several, but criminal/penal consequences cannot be imposed without proof of 19 personal involvement or wilful default. Vicarious civil liability does not automatically translate into penal detention. The factual situation also need to be taken into consideration before imposing penal detention. The Respondent No.5 was a old aged woman of 65 years of age reported to be suffering with various physical ailments. The Respondents 6 and 7 had submitted their resignations prior to passing of the order in the C.C. Though the resignation does not extinguish past civil liability, it demonstrates absence of control over firm assets and inability to ensure compliance with the Commission‟s order. The Petitioners also failed to prove their present capacity to satisfy the decree. Detention for failure to comply with an order over which they had no operational control would be unjust. Arrest cannot be used as a mode of recovery, when inability and not refusal is established.
30. Section-72 requires intentional non-compliance. The Petitioners must prove that the Respondents possess sufficient means and that they were deliberately withholding payment. In the absence of such evidence, arrest would violate settled execution principles analogous to Order 21 CPC governing detention in execution. Execution must first be levied against the firm assets and assets of Managing Partner responsible for the conduct of business. Arrest is to be resorted as a last measure and can be invoked only when other modes of execution fail. Personal liberty of these women Respondents who were not in control of operations could not be curtailed as a first resort. Article 21 of the Constitution protects personal liberty. Imprisonment for debt without proof of wilful refusal and means would amount to unjust 20 deprivation of liberty. As such, we consider it fit to dismiss the prayer for arrest and detention of the Respondents 5 to 7.
31. However, the Respondent No.2 was the Managing Partner of the firm, in-charge of the day to day affairs of the firm responsible for financial management and execution of the Agreement of Sale. Though every partner is jointly and severally liable for the acts of the firm, a Managing Partner stands on a strong footing being the controlling authority of the firm. Thus his liability was not merely technical, but direct and operational. Filing insolvency proceedings does not automatically create a moratorium or grant immunity from penal consequences. As Insolvency Petition is only pending and the same was not admitted adjudicating the Respondents as insolvent, there was no statutory protection available to them. The judgment of the High Court of Maharashtra in SREI Equipments Finance Limited Vs. Rajesh Bajirao Khandewar & Ors., is not applicable to the facts of this case as in that case, the National Company Law Tribunal, Kolkata Bench admitted the insolvency resolution process and imposed moratorium under Section-14 of the Insolvency and Bankruptcy Code and sanctioned the resolution plan of the Petitioner Company. In the present case there was no adjudication by the court adjudging the Respondents 1and 2 as insolvents. Even under Section-14 of Insolvency & Bankruptcy Code, 2016, it only bars recovery proceedings but does not automatically stay criminal/penal proceedings. Thus penal consequences under Section-72 of the Consumer Protection Act continue to operate. As the material on record would disclose that the Respondent No.2 while acting as the Managing Partner, 21 collected the sale consideration from the Petitioners and utilized the funds in the course of his business and failed to refund or comply with the order, his wilful default is evident. Filing Insolvency Petition indicates his attempt to defeat execution and not his genuine inability.
32. Consumer Protection Act is a beneficial statute. The Act is intended to provide speedy and effective remedy to consumers. If Managing Partners are permitted to retain consumer‟s money and were permitted to disobey the orders and file Insolvency Petitions to delay compliance, the very purpose of the Act would be defeated. No bonafide efforts was made by Respondent No.2 even to partially comply the order. No stay order from Insolvency Court has been produced.
33. As such we consider that the Petitioners established the guilt of Respondents 1 and 2 (for the offence under Section-72 of Consumer Protection Act, 2019) but failed to prove the guilt of Respondents 5, 6 and 7.
Dictated to the Stenographer, transcribed and typed by her, corrected by me and pronounced by us in the open Court on this the 4th day of March, 2026.
Sd/- Sd/-
PRESIDENT MEMBER-NJ
Dt: 04.03.2026
UC*
34. Point No.(ii):
Respondent No.2 is produced from jail. He is informed about finding him guilty under Section-72 of Consumer Protection Act, 2019 and questioned on the quantum of sentence. Respondent 22 No.5 appeared on virtual. The Respondent No.2 stated that he is an old aged person undergoing sentence in other matters for the past one year, filed insolvency application and requested to show mercy upon him.
35. However, considering that the Petitioners also had not received any amount till date though they had paid lakhs of rupees to the Respondent No.1 represented by Respondent No.2 believing him under the Agreement of Sale, we consider it fit to convict him under Section-255 (2) Cr.P.C. for the offence under Section-72 of Consumer Protection Act, 2019 and sentence him to undergo simple imprisonment for a period of four months. The remand period of Respondent No.2 undergone by him if any, shall be given set off under Section-428 Cr.P.C. The sentence imposed under this matter against the Respondent No.2 shall run consecutively with the other sentences imposed against him in other cases. The Respondent No.2 is informed about his right to prefer an appeal against the order of this Commission to the Hon‟ble NCDRC. Respondents 5, 6 and 7 are acquitted under Section-255 (1) Cr.P.C.
Sd/- Sd/-
PRESIDENT MEMBER-NJ
Dt: 04.03.2026
UC*
APPENDIX OF EVIDENCE
Witnesses examined
For the D.Hr/Petitioner :
Evidence affidavit of Petitioner No.1-Smt.Sunkesula Ratnabala as PW1.
For the J.Drs/Respondents:
Evidence affidavit of Smt.Sonal Thakrar, Respondent No.6 and Smt.Roopal Sachdev, Respondent No.7 as RWs1 and 2.23
Exhibits marked on behalf of the D.Hr/Petitioner:
Ex.P1: is the certified copy of order in CC.60/2015 dated 07.12.2020.
Ex.P2: is the office copy of the legal notice issued to the Respondents dated 05.02.2021.
Ex.P3: is the unserved postal cover addressed to Respondent No.7. Ex.P4: is the copy of Special Power of Attorney issued by the Petitioners 3 and 4 in favour of the Petitioner No.1, dated 23.11.2018.
Ex.P5: is the certified copy of the common order in FA.Nos.803 to 807/2021 by the Hon‟ble NCDRC in 01.07.2024. Exhibits marked on behalf of the J.Dr/Respondent No.6:
Ex.B1: is the copy of IP.No.42/2021 before the Additional Small Causes Court, Hyderabad dated Ex.B2: is the copy of letter of retirement/resignation of Respondent No.6 dated 01.02.2018.
Ex.B3: is the copy of the Deed of Retirement of Respondent No.6 dated 23.08.2018.
Ex.B4: is the copy of the Deed of Partnership dated 23.08.2018. Ex.B5: is the Copy of Certificate of Registrar of Firms along with Form-V. Ex.B6: is the copy of Bank Statement of ICICI Bank of Respondent No.6 for the period from 01.07.2004 to 31.12.2018. Ex.B7: is the copy of Bank Statement of SBI of Respondent No.6 for the period from 01.04.2009 to 31.03.2019. Ex.B8: is the copy of Bank Statement of HDFC Bank of Respondent No.6 for the period from 23.07.2010 to 04.10.2017.
Exhibits marked on behalf of the J.Dr/Respondent No.7:
Ex.B9: is the Copy of Service Certificate of Respondent No.7. Ex.B10:is the Copy of letter issued to Respondent No.7 dated 26.05.2014.
Ex.B11:is the Copy of Pay Slip of M/s.Accenture of Respondent No.7 for Jan,2014.
Ex.B12: is the copy of letter from M/s.ADP Pvt.Ltd., in favour of Respondent No.7 dated 11.12.2015.
Ex.B13: is the copy of letter from M/s.ADP Pvt.Ltd., in favour of Respondent No.7 dated 11.12.2015.
Ex.B14: is the copy of payslip of Respondent No.7 for January,2014.
Ex.B15: is the copy of retirement/resignation of Respondent No.7 dated 01.02.2018.
Ex.B16: is the copy of Deed of Retirement of Respondent No.7 dated 23.08.2018.
Ex.B17: is the copy of Deed of Partnership dated 23.08.2018. Ex.B18: is the copy of certificate issued by Registrar of Firms along with Form-V dated 27.03.2021.
Ex.B19: is the copy of Bank Statement of Axis Bank of Respondent No.7 from 01.01.2010 to 31.12.2010.
Ex.B20: is the copy of Bank Statement of Axis Bank of Respondent No.7 from 01.01.2011 to 31.12.2011.
24Ex.B21: is the copy of Bank Statement of Axis Bank of Respondent No.7 from 01.01.2012 to 31.12.2012.
Ex.B22: is the copy of Bank Statement of Axis Bank of Respondent No.7 from 01.01.2013 to 31.12.2013.
Ex.B23: is the copy of Bank Statement of Axis Bank of Respondent No.7 from 01.01.2014 to 31.12.2014.
Ex.B24: is the copy of Bank Statement of Axis Bank of Respondent No.7 from 01.01.2015 to 31.12.2015.
Ex.B25: is the copy of Bank Statement of Axis Bank of Respondent No.7 from 01.01.2016 to 31.12.2016.
Ex.B26: is the copy of Bank Statement of Axis Bank of Respondent No.7 from 01.01.2017 to 31.12.2017.
Ex.B27: is the copy of Bank Statement of Axis Bank of Respondent No.7 from 01.01.2018 to 31.12.2018.
Ex.B28: is the copy of Bank Statement of ICICI Bank of Respondent No.7 from 01.04.2005 to 31.03.2010.
Sd/- Sd/-
PRESIDENT MEMBER-NJ
Dt: 04.03.2026
UC*