State Consumer Disputes Redressal Commission
All Goa Manipal Finance Group vs Manipal Sowbhagya Nidhi Limited, on 21 August, 2012
BEFORE THE GOA STATE CONSUMER DISPUTES REDRESSAL COMMISSION PANAJI GOA EA No.8/2004 with MA 3/08 in CC. No.11/2003 and EA No.9/2004 with MA 4/08 in CC. No.10/2003 All Goa Manipal Finance Group of Companies Creditors Association, having their office at 13/B, Garden Centre, Opp. Police Station, Mapusa, Bardez-Goa. Decree Holders/complainants V/s. Manipal Sowbhagya Nidhi Limited, having its registered Office at Manipal House, Manipal 576 119, Karnataka. ... Judgment Debtor/O.P. D.Hs represented by Dr. Malkarnekar . J.D. Company/Managing Director represented by Adv. Shri. S. Samant. Coram: Shri Justice N.A. Britto, President. Smt. Vidhya R. Gurav, Member. Dated: 21/08/2012. ORDER
[Per Shri Justice N.A. Britto, President] This common order shall mainly deal with the claim of some of the D.Hs for compound interest till the date of actual payment, as well as the prayer of the J.D. Company made vide application dated 31/05/12 for recall of the recovery certificate dated 7/4/2009 issued to the District Recovery Officer.
2. Some facts are required to be stated to dispose off the said two claims. One, of some of the DHs and the other of J.D. Company.
3. Execution application No. 8/04 arises from CC. No. 11/03 and EA No. 9/04 arises from CC. No. 10/03.
4. CC. No. 11/03 was filed for the benefit for about 253 creditors of the J.D Company, all named therein. CC. No. 10/03 was filed for the benefit of about 63 creditors, also named therein.
Names of some of the creditors were repeated but yet, all these years, no efforts were made by either of the parties to delete the names which were repeated. The certificates/receipts on which the money was due, were also mentioned in the complaints against the names of each of the creditors. We have not included their names in the cause title with a view to save time and space; we have also not included the names of the Branch Offices of the J.D Company.
5. The CC. Nos. 11/03 and 10/03 came to be disposed off by orders of this Commission dated 28/07/04. The said orders/decrees, if we may call them, attained finality when the Honble National Commission dismissed the appeals filed therefrom on or about 9/5/06 and the Honble Supreme Court refused to entertain special leave petitions, filed therefrom on or about 18/01/08.
6. By order/decree dated 28/07/04 in CC. No. 11/03, the O.P./J.D. Company was directed to pay to the complainants the principal amount of SowbhagyaLaxmi Cash Certificates, fixed deposit receipts and Sr. Citizens special deposit scheme amounting to Rs. 87,33,000/- alongwith interest at the rate specified in the terms and conditions, within 30 days and were also directed to pay to the complainant Association a sum of Rs. 10,000/- as costs.
7. In CC. No. 10/03 this Commission by order dated 28/07/04 directed the O.P./J.D. Company to pay to the complainants the principal amount of SowbhagyaLaxmi Cash Certificate, fixed deposit receipts amounting to Rs. 20,30,800/- alongwith interest with the rate specified in the terms and conditions, within 30 days. The O.P/J.D was also directed to pay to the complainant-Association a sum of Rs. 10,000/- as cost.
8. The Honble National Commission by order dated 9/5/06 dismissed the appeals, being FA Nos. 310 & 311 of 2004, as having no merit with the further direction to the O.P./J.D to pay Rs. 1000/- as costs to each one of the depositors who are members of the Association.
9. Thereafter the present execution applications were filed, but by then it was noticed that the J.D Company had settled many of the creditors who were parties to the complaints. This fact is recorded in orders dated 20/03/09. Then applications were filed showing the dues payable by the J.D. Company. By applications dated 26/05/08, the D.Hs in Ex.A No. 9/04 claimed a sum of Rs. 4,52,713/- inclusive of interest as on 31/05/08 and in Ex.A No. 8/04 claimed an amount of Rs. 39,83,008/-. That the said sums were inclusive of compound interest was not mentioned either in the applications or the statements accompanying them. Then by applications dated 9/12/08 the D.H. claimed an amount of Rs. 5,85,063/- in Ex.A No. 9/04 and Rs. 50,37,255/- in Ex.A No. 8/04 as on 30/11/08.
The applications were filed for appropriate orders. This Commission by orders dated 20/03/09 directed the DRO (District Recovery Officer) Panaji to attach four properties more particularly described in para 6 of order dated 20/03/09 to recover an amount of Rs. 5,85,063/- in EA No. 9/04 and Rs. 50,37,255/- in EA No. 8/04. The applications are silent on compound interest though the statements show that it was calculated on compounding basis.
10. Thereafter, applications came to be filed on behalf of the D.Hs under section 27 of the C.P. Act, 1986 and objections to the same were disposed off by the order of this Commission dated 21/02/12. This Order has been upheld by the National Commission. In disposing off the said objections taken on behalf of the J.D Company and/or its Directors, this Commission had directed that the J.D. Company should atleast make part payment to all the named creditors in the complaints as per offer made on behalf of the J.D. Company on 20/12/11 i.e pay 100% of the amount invested with 10% simple interest, which order, according to Shri. S. Samant, the Lr. Advocate on behalf of the J.D. Company, has been complied with and not only that Shri. S. Samant has also made a statement that all the creditors of the J.D. Company have been paid the amount due to them on the certificates held by them with compound interest till the date of the decree and simple interest at the rate of 9% till the date of payment, though the said D.Hs were not entitled for the same in terms of the orders/decrees passed by this Commission, as confirmed by the National Commission. Shri. S. Samant submits that the said payment has been made by the J.D. Company out of their moral responsibility, though the DHs were not entitled to the same in terms of sub-section (2) of Section 34, CPC, 1908. Shri. S. Samant, Lr. Advocate has also submitted that the J.D. Company has also paid the creditors the amount due on the debentures, the claim regarding which was not entertained by this Commission in orders/decrees dated 28/07/04. Shri. S. Samant has further submitted that the J.D. Company has now paid to the named creditors an amount which is more than shown on the recovery certificates issued by this Commission consequent to orders dated 20/03/09 and therefore Lr. Advocate submits that the recovery certificates need to be recalled unexecuted. Shri. S. Samant has also submitted that the cost of Rs. 10,000/- ordered to be paid by this Commission would be paid in the name of the Creditors Association and as far as the costs are concerned, ordered to be paid by the National Commission, Lr. Advocate submits, the same need not be paid because the J.D. Company has paid 9% interest from the date of the decree untill payment for which the D.Hs were otherwise not entitled to and therefore the cost of Rs. 1000/- to each of the creditors can be adjusted against the sum so paid. Shri. S. Samant has also submitted that both the properties which have been attached and which have been referred to in clause (ii) and (iii) of para 6 of this Commissions order dated 20/03/09 belong to the J.D. Company (and not to Manipal Finance Corporation) though the office of the latter Company is functioning from on the 1st floor of the property more particularly described under (iii) of para 6 of Order dated 20/03/09.
11. The facts stated by Shri. S. Samant have not been controverted either on behalf of the D.H Association or some of the D.Hs who were present at the time of hearing.
These facts would show that both the properties which have been attached for the recovery of the dues as per the recovery certificates, belong to the J.D. Company and this position is otherwise reflected in the order of the Honble High Court dated 01/02/11 in Writ Petition No. 194/2010 filed by the J.D. Company. Likewise, what is not contested is also that besides the D.Hs who have be settled, the other D.Hs in this execution applications have been paid compound interest till the date of decree and simple interest at the rate of 9% till the date of payment. According to Shri. S. Samant, the Lr. Advocate, the D.Hs were not even entitled to compound interest as the decree is silent on the same and further interest is deemed to have been refused and in this regard Shri. Samant has placed reliance on Section 34 (2) of CPC, 1908 and some decisions.
12. This Commission in its order dated 21/02/12 had, inter alia, observed that the Companies had settled many of the Creditors on whose behalf the complaints and execution applications were filed and their names were required to be deleted.
As per the same order, the J.D Company filed statements showing the names of the creditors who have been settled and the names to whom payments have been made after 31/03/12. We asked Dr. Malkarnekar, who appears on behalf of the D.Hs, whether the statement filed by the J.D. Company showing the names of the creditors as settled, reflects the correct position or not and to that Dr. Malkarnekar stated that he was unable to make any statement. None of the said creditors who have been shown as settled, have also come before us, disputing the said claim of the J.D. Company. In the circumstances, we have no other option but to order the deletion of their names from the cause title of the execution applications i.e of those who have been settled. The numbers against their name shall be shown encircled in red.
MAs Nos. 32, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61 of 2012 in Ex Appl. No. 8/04 These applications are filed by individual creditors at Sr. Nos. 40, 205, 206, 207, 69, 70, 91, 203, 107, 104, 42, 43, 44, 185, 76, 77, 155, 156, 239, 240, 241, 55, 56 and 131 claiming compound interest.
13. Section 34 of CPC, 1908 reads as follows:
34.
Interest Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree in addition to any interest adjudged on such principal sum for any period prior to the situation of the suit, with further interest at such rate not exceeding 6%, per annum as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the court think fit:
Provided that Explanation 1 Explanation 2 (2) where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest and separate suit therefore shall not lie.
13.1 Section 31 of the Arbitration and Conciliation Act, 1996 deals with Form and contents of arbitral award, and, sub Section 7, clause (a) of that Section provides that unless otherwise agreed by the parties, where and in so far as an arbitral award for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.
14. Shri. D.V. Borkar, nominee of D.H No. 55 for self and on behalf of the D.H No. 56 in MA N. 60/12 in EA No. 8/04 would submit that the D.Hs are entitled to compound interest, firstly because the certificate itself provided for such payment and secondly because the Commission accepted by Order dated 20/03/09, the calculations made based on compound interest and submitted by the D.Hs, by the D.Hs applications dated 5/12/08. He submits that in the said order, it was observed that the D.H had submitted detailed calculations vide application dated 5/12/08 showing the amount due to the creditors as on 30/11/08 is Rs. 50,37,255/-. It is his further submission that payment of compound interest was accepted by this Commission and this order dated 20/03/09 was not challenged by the J.D. Company in any Court of law and therefore has attained finality.
15. On the other hand, it is submitted by Shri. S. Samant that the orders/decrees of this Commission dated 28/07/04 only directed payment of Rs. 87,33,000/- and Rs. 20,30,800/- alongwith interest at the specified rate. Shri. Samant submits that the D.Hs were not entitled to any compounded rate of interest and yet the J.D. Company have paid to the D.Hs compounded rate of interest till the date of decree. Lr. Advocate further submits that the orders/decrees dated 28/07/04 are absolutely silent as regards payment of interest from the date of the decree and therefore in terms of sub Section (2) of Section 34 CPC the D.Hs are deemed to have been refused any interest from the date of the decree and yet the J.D. Company have paid to the D.Hs simple interest at the rate of 9% from the date of the decree untill payment which they were not entitled to in terms of sub section (2) of Section 34, CPC. Shri. Samant further submits that no sanctity could be attached to the calculations submitted by the D.Hs before passing orders dated 20/03/09 since it was not ever held by this Commission that the amount submitted by the D.Hs was the amount due to be paid by the J.D. Company to the D.Hs. Shri. Samant has also submitted that in the absence of any provision as regards grant of interest in CP Act 1986, the provisions of Section 34 CPC, 1908 are required to be followed.
16. In State Bank of India Vs. Shri. Umanath Ganpat Nadkarni & Ors., 1999(4) ALL MR 195, the High Court of Bombay held as follows:
14. Section 34 apparently deals with the liability to pay interest in money suits during the pendency of the suit as well as after the disposal of the suit till the payment of the entire amount. It does not relate to the interest prior to the filing of the suit as it is a matter of substantive law and it is outside the scope of the said Section. In other words Section 34 empowers the Court to award interest pending the suit and after the disposal of the suit. This is also clear from sub-section (2) of the said Section wherein it is provided that when a decree is silent about the payment of interest from the date of decree, it shall be deemed that the Court has refused to grant such interest and the decree-holder would not be entitled to file any separate suit in respect of such claim. As regards the interest during the pendency of the suit, the Section itself provides that the Court may order interest at such rate as the Court deems reasonable.
Therefore, the rate of payment of interest has been made a matter of discretion of course to be exercised judiciously by the Court.
15. It is thus clear that the grant of interest under Section 34 is a matter of discretion and is to be exercised based on the facts and circumstances of each case.
The trial Court in the case in hand has awarded interest at the rate of 6% per annum from the date of the filing of the suit till the date of payment of the entire amount. The materials on record do not disclose any justification for grant of any interest at the rate beyond 6% awarded by the trial Court. In order to enable the trial Court to grant the interest beyond the rate of 6% it was necessary for the appellant to place on record the materials justifying the same.
The appellant, therefore, is not entitled for contractual rate of interest from the date of filing of the suit till the date of payment of the entire amount.
16.1 In Shaikh Imam Mohamad Khaja vs. State of Maharashtra & anr, 2000(4) ALL MR 496, the Bombay High Court, with reference to Section 28 of the Land Acquisition Act, 1984, has observed that neither the provisions of the Land Acquisition Act, nor the Award passed by the Civil Judge, provide for compound interest.
If compound interest is payable then, there must be specific directions to that effect; otherwise, the interest is always simple interest. That means the interest on the principal amount and not on the principal amount plus amount of interest accrued on the principal amount. The Award passed by the learned Civil Judge does not indicate as to whether interest should be compound or simple interest; and, in such circumstances, the interest has to be calculated as simple interest under S. 28.
16.2 In State of Haryana vs. M/s. S.L. Arora & Company, 2010 ALL SCR 639, the Apex Court with reference to Section 31(7) of the Arbitration and Conciliation Act, 1996, inter alia, held that:
16.
Some Arbitral Tribunals have misconstrued clause (b) of section 31(7) of the Act and assumed that the said provision requires the rate of post-award interest in all arbitral awards should be 18% per annum, and that they do not have any discretion in regard to post-award interest. Some have misconstrued it further to infer the rate of interest mentioned therein is an indication that invariably the rate of interest in arbitrations, either pre-award or post-award should be 18% per annum. Both these assumptions are baseless and erroneous. If that was the legislative intention, there would have been no need for vesting discretion in Arbitral Tribunals, in the matter of interest, under section 31(7)(a). The principles relating to award of interest, in general, are not different for courts and arbitral tribunals, except to the extent indicated in section 31(7) of the Act and CPC. A comparatively high rate of post-award interest is provided in section 31(7)(b) of the Act, not because 18% is the normal rate of interest to be awarded in arbitrations, but purely as a deterrent to award-debtors from avoiding payment or using delaying tactics. In fact a provision similar to section 31(7)(b) of the Act, if provided in section 34 of Code of Civil Procedure, will considerably reduce the travails of plaintiffs in executing their decrees in civil cases.
17. We have to go by Section 34 CPC as a whole because it is a general provision of law based upon justice, equity and good conscience, as observed by the Apex Court in Sovintorg (India) Ltd. v/s. State Bank of India (AIR 1999 SC 2963). The Apex Court has observed:
We, however, find that the general provision of the Section 34 being based upon justice, equity and good conscious (sic. conscience) would authorize the Redressal Forums and Commissions to also grant interest appropriately under the circumstance of each case. Interest may also be awarded in lieu of compensation or damages in appropriate cases. The interest can also be awarded on equitable grounds as was held by this Court in Satinder Singh and Ors. Vs. Amrao Singh & Ors. (1961 (3) SCR 676) .
17.1. Moreover, Section 34 CPC is more a substantive provision of law rather than procedural. We say so on the basis of the authority of Mirza Ali Akbar Kashani vs. UAR, (AIR 1966 SC 230) wherein the Constitution Bench of the Apex Court has held that Section 86(1) CPC in substance was not merely procedural. Now, that the proceedings under the C.P. Act have been held to be suits (see Patel Roadways AIR 2000 SC
461) Section 34 CPC is required to be followed lock, stock and barrel in proceedings under the C.P. Act. The effect of Section 34 (2) CPC is, in plain words, that interest not given from the date of the decree is deemed to have been refused.
17.2. Admittedly, the orders/decrees of this Commission dated 28/07/04 did not award to the D.Hs any compound interest nor award any interest at all from the date of the order/decree till payment and yet the D.Hs have been paid compound interest by the J.D. Company up to the date of the order/decree and 9% simple interest from the date of the decree untill payment, payments which the D.Hs were not otherwise entitled to in terms of law as well as order/decrees dated 28/07/04 of this Commission. That the executing Court cannot go behind or beyond the decree is a well settled proposition of law so as to require any authority to support it and if any authority is required at all to support such a proposition, we may refer to Hiralal Patni v/s. Sri Kali Nath, AIR 1962 SC 199. We may also refer to the decision of Yodao vs. Anukavi Constructions Pvt. Ltd. (2012 (1) CPR 230) wherein it has been held that the executing Court cannot go beyond and behind basic order which is put to execution. An executing Court must take the decree according to its tenor and cannot entertain any objection that the decree was incorrect in law or on facts.
Untill it is set aside by an appropriate proceeding in appeal or revision, a decree even if it be erroneous is still binding between the parties. An executing Court can go behind the decree if it is only a nullity or without inherent jurisdiction. Not otherwise.
17.3. We have seen on one of the certificates an endorsement which says that interest will be paid quarterly. That does not mean that the interest would have been paid with quarterly rests or compounded.
Some of the certificates do show what was the maturity value which was payable but it is nobodys case that this maturity value payable was calculated by compounding interest either on monthly, quarterly or six monthly basis. No D.H. has come with such a case. The D.Hs did give calculations/statements by calculating interest either monthly or quarterly. However, it is significant to note that neither in the applications dated 26/5/08 nor in applications dated 5/12/08 there is a mention that what is claimed is calculated on compound basis. Likewise, there is no whisper in the said order dated 23/02/09 that the DHs were entitled to interest compounded quarterly. In the absence of any statement in the applications that interest was calculated on compounding basis and in the absence of any finding to that effect by the Commission in order dated 20/3/09, it cannot be said that the claim of some of the creditors was accepted by the Commission for payment of interest on compounding basis. We may refer to Abdulla vs. Smt. Shyana Devi (AIR 2007 NOC Allah 2106) wherein it has been held that an executing Court has no jurisdiction to direct payment of interest when decree is silent about it. If the Commission had not granted interest on compounding basis in the final order/decree such interest could not be granted by the Commission at the time of execution. Moreover, we must keep in mind that we are executing the final order/decree dated 28/07/04 and not order dated 20/03/09, which are otherwise without jurisdiction as held in Abdulla (supra). Even for a moment their argument is accepted, then the DHs would not be entitled to compound interest beyond 30/11/08 but we hasten to add that the Commission in the final orders/decrees had not awarded any compound interest to the D.Hs and as such this Commission as an executing Court could not have granted to the D.Hs compound interest. An executing Court is required to execute the decree as it is and not to add to or subtract anything from it. In our view, the D.Hs therefore are not entitled to any balance amount calculated on compound interest either quarterly, or six monthly, till the date of payment, as claimed by them. This they are not entitled to by virtue of sub-section (2) of Section 34, CPC. Any interest not granted, is deemed to have been refused to them. Yet the D,Hs have been paid compound interest till the date of decree and simple interest at the rate of 9% from the date of the decree untill payment. The D.Hs, in case they were aggrieved by orders/decrees of this Commission, ought to have filed an appeal therefrom. What is sauce for the goose has to be sauce for the gander. The D.Hs now cannot contend that the argument of the J.D Company on that score looks absurd. It is not. It is in accordance with law. What follows from the above is that the D.Hs are not entitled to compound interest as claimed by them. The D.Hs have been paid, as stated on behalf of the J.D Company, compound interest till the date of the decree and thereafter simple interest at the rate of 9%, untill payment, which they were otherwise not entitled to, in terms of final orders/decrees dated 28/07/04 r/w 34(2) CPC.
In other words the D.Hs have received dues more than they were entitled to. Therefore, the MA Nos. 32/12 to 61/12 shall stand dismissed.
18. If that be the position, nothing would remain to be paid to the D.Hs by the J.D. Company and as such the J.D Company is bound to succeed in their application dated 31/05/12 for recall of the recovery certificate unexecuted, issued to the DRO in terms of the order of the Commission dated 20/03/09.
19. As far as payment of Rs. 10,000/- is concerned, ordered to be paid by this Commission, Shri. Samant has stated that the said payment would be made to the D.H. Association. If quarterly interest has been paid upto the date of decree, and so also simple interest, thereafter, till the date of payment, the J.D. Company has done the same out of their own volition as a matter of their moral obligation.
Payment of Rs. 1000/- is a requirement of the order of the National Commission. The J.D Company did not deem it necessary that the said sum of Rs. 1000/- should be adjusted at the time of making the payment to the creditors of simple interest at the rate of 9% from the dated of the decree untill payment.
We, therefore, are of the view that the D.Hs, who have not been settled, or accepted the offer made by the J.D. Company would be entitled to the payment of Rs. 1000/- as ordered to be paid by the National Commission.
20. Nevertheless, we find that in EA No. 8/04 creditors at sr. nos. 26, 48, 49, 84, 85, 86, 87, 88 and 121 have not been paid at all. Creditor at Sr. No. 26 is stated to have expired. The contention of the J.D. Company appears to be that no Execution Application was filed on their behalf and this contention is apparently raised because their names were not included in the calculations submitted by the D.Hs prior to passing the orders dated 20/03/09. In our view the applications for execution were filed in the very names shown in the cause title of the complaints and only because the representatives of the D.Hs Association for some reason did not show the amount due to them, in our view they should not made to suffer. We have already held that the complaints were filed on behalf of the Creditors Association and they were filed for the benefit of the creditors named therein. The decree was passed for the benefit for all the creditors named in the Complaints. Just because the amount due to them was not shown in the calculations submitted by the D.Hs Association, they cannot be made to suffer. They are also required to be paid on the same terms, as the other D.Hs who have been paid, with quarterly interest till the date of decree and simple interest thereafter till the date the payment is made.
21. Before concluding, we would like to observe that the CP Act, 1986 is one of the benevolent pieces of legislation which was intended to protect a large body of consumers from exploitation by providing for an alternate system of consumer justice which was expected to be summary, speedy and inexpensive. Orders to be passed by the Fora under C.P. Act are not expected to be against reason and against law though they are expected to be short and precise but as precise as practicable. The consumer courts, if we may use that expression, were created to supplement and not to supplant the jurisdiction of the Civil Courts. In the case of Vishwa Bharati House Building Co-operative Society (2003 (2) ALL MR 1091) the Apex Court stated that it is one of the postulates of such a body (Fora under the Act) that it should arrive at a decision based on reason. Orders are always expected to be in accordance with reason and experience. Ours is a country governed by rule of law. The words of Thomas Fuller Be you ever so high, the law is above you have now become our judicial dictum and that is what the Apex Court tried to convey in Marine Contract Service South Pvt. Ltd., (AIR 1999 SC 80) when it is stated that the Contract Act applied to all including the litigants under the Consumer Protection Act, 1986.
22. The J.D Company shall also pay a sum of Rs. 10,000/- by way of costs of these execution applications to the DH Association. On payments being made, as indicated herein above, or an assurance being given that the payments would be made by a particular date, the recovery certificates issued pursuant to orders dated 20/03/09 to the District Recovery Officer, Collectorate, North-Goa shall be recalled unexecuted and the proceedings of the above mentioned execution applications shall stand closed.
[Smt. Vidhya R. Gurav ] [Justice Shri. N. A. Britto] Member President