State Consumer Disputes Redressal Commission
1. Sri D. Srinivas vs 1. M/S. Gharonda Builders And ... on 4 March, 2026
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BEFORE THE TELANGANA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION : HYDERABAD.
EA.NO.20 OF 2021
IN
CC.NO.50 OF 2015
Between
1.Sri D.Srinivas, S/o.Sri D.K.Raju, Aged 45 years, Occ: service
2. Smt.D.Lakshmi, W/o.Sri D.K.Raju, Aged 69 years, Occ: Housewife.
Both are R/o.2-2-647/273-D, Flat No.103, Tirumala Padmavathi Apartments, CE Colony, Bagh Amberpet, Hyderabad - 500013.
......D.Hrs/Petitioners And
1. M/s.Gharonda Builders & Developers, Regd. Office: 4-4-932/1 to 3, Kandaswamy Lane, Opp:Hanuman Vyayamashala, Sultan Bazar, Hyderabad - 500095.
Rep. by its Managing Partner Sri Sunil J.Sachdev.
2. Sri Sunil J.Sachdev, S/o.Sri Jayantilal L.Sachdev, Aged about 56 years, Occ: Business, Managing Partner of M/s.Gharonda Builders & Developers, # 4-4-932/1 to 3, Kandaswamy Lane, Opp:Hanuman Vyayamashala, Sultan Bazar, Hyderabad - 95.
Presently R/o.H.No.3-6-175, "Ish Pradhan", Hyderguda, Hyderabad - 500048.
3. Swarjit Saagi, Son in law of Sri Sunil J.Sachdev, M/s.Gharonda Builders & Developers, #4-4-932/1 to 3, Kandaswamy Lane, Opp:Hanuman Vyayamashala, Sultan Bazar, Hyderabad - 95.
Presently R/o.H.No.6-3-1219/15, Flat No.201, Dairyas Zion Villa, Umanagar, Begumpet, Hyderabad - 500016.
Mobile No.8008804287.
4. Kashyap Dhruv, Son in law of Sri Sunil J.Sachdev, M/s.Gharonda Builders & Developers, # 4-4-932/1 to 3, Kandaswamy Lane, Opp:Hanuman Vyayamashala, Sultan Bazar, Hyderabad - 95.
Presently R/o.Sri Harikrupa, 26th Serpentine Road, Kumara Park West, Vasanthnagar, Bengaluru - 560020. 2
5. Smt.Roopal Saagi, W/o.Swarjit Saagi, D/o.Sri Sunil J.Sachdev, M/s.Gharonda Builders & Developers, #4-4-932/1 to 3, Kandaswamy Lane, Opp:Hanuman Vyayamashala, Sultan Bazar, Hyderabad - 95.
Presently R/o.H.No.6-3-1219/15, Flat No.201, Dairyas Zion Villa, Umanagar, Begumpet, Hyderabad - 500016.
Mobile No.09849453928.
6. Smt.Meenal Dhruv, W/o.Kashyap Dhruv, D/o.Sri Sunil J.Sachdev, M/s.Gharonda Builders & Developers, #4-4-932/1 to 3, Kandaswamy Lane, Opp:Hanuman Vyayamashala, Sultan Bazar, Hyderabad - 95.
Presently R/o.Sri Harikrupa, 26th Serpentine Road, Kumara Park West, Vasanthnagar, Bengaluru - 560020.
......J.Drs/Respondents Counsel for the DHRs/Petitioners : M/s. D.V. Padmaja Counsel for the JDRs/Respondents: M/s.DMA Advocates-R1 & R2 M/s. Sharad Sanghi-R5 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/Petitioners under Section-72 of the Consumer Protection Act, 2019 to punish the Respondents as contemplated under the provisions of the Act by issuing non-bailable warrant for non-compliance of the orders passed in CC.No.50/2015 dated 27.01.2021.
2. The decree holders are the Complainants in CC.No.50/2015.3
3. The decree holder No.1 filed an affidavit in support of the petition stating that the decree holder No.2 was his mother and he was filing the affidavit on her behalf also. The State Commission passed an order in CC.No.50/2015 on 27.01.2021 allowing the complaint in part directing the Opposite Parties to refund Rs.17,73,785/- to the Complainant together with interest thereon @ 12% p.a. from the dates of respective payments till realization along with costs of Rs.20,000/-, granting time of two months for compliance. Inspite of passage of two months, the Respondents had not complied with the said order and had not paid any amount till date. Though the Respondents have sufficient means to pay the same, they were evading to pay the same. Hence, liable to be arrested for non-payment of the decretal amount deliberately.
4. The decree holders filed a calculation memo showing the amount due and payable by the Respondents till the date of filing of E.A. as Rs.40,61,300/-. The Execution Application was filed against six Respondents. Respondent No.1 was a firm by name M/s.Gharonda Builders & Developers represented by its Managing Partner Sri Sunil J.Sachdev. Respondent No.2 was the Managing Partner Sunil J.Sachdev. Respondent No.3 & 4 were his sons-in-
law. Respondent No.5 & 6 were the daughters of Respondent No.2. Respondent No.2 to 6 made their appearance. During the pendency of these proceedings they preferred appeals vide FA.No.800/2021 to 807/2021 before the Hon'ble National Commission. The appeals filed by Respondent No.5 vide FA.No.800/2021, FA.No.803/2021 to FA.No.807/2021 were dismissed vide common order dated 01.07.2024, while the appeals 4 filed by the Respondent No.3, 4 & 6 vide FA.No.801/2021 and FA.No.802/2021 were allowed setting aside the order and decree of the State Commission modifying to the extent leaving the decree against the firm and its partners intact.
5. In the meanwhile, the Respondents No.1 and 2 also filed an application under Provincial Insolvency Act before the VI Senior Civil Judge, City Small Causes Court, vide Insolvency Petition No.42/2021 to declare them as indigent persons. The said matter is sub-judice.
6. The Respondents/Opposite Parties are examined under Section-251 Cr.P.C. They pleaded not guilty and claimed to be tried.
7. The Petitioner No.1/D.Hr No.1 was examined as PW1. Ex. P1 to P7 are marked on behalf of the decree holders. Respondents No.2 & 5 are examined under Section-313 Cr.P.C. They denied the incriminating material available against them. The Respondent No.5 was examined as RW1. Ex.B1 to B22 are marked on behalf of Respondent No.5.
8. Heard the learned senior counsel Sri J.Prabhakar representing M/s.D.V.Padmaja for the Petitioners/Decree Holders and the learned senior counsel Sri Dinesh Kumar Gilda appearing for Damodar Mundra Associates for Respondent Nos.1 & 2 and the learned senior counsel M/s.Sharad Sanghi for Respondent No.5. All the learned counsel filed citations relied by them. 5
9. Now the points for determination are:
(i) Whether the Petitioners established the guilt of the Respondents No.1, 2 & 5 for the offence under Section-72 of Consumer Protection Act, 2019?
(ii) Whether the Respondents No.2 & 5 are liable for punishment being the partners of Respondent No.1 Firm?
(iii) To what result? 10. Point No.(i) and (ii):
a) PW1 in his evidence stated about the order passed by this Commission in CC.No.50/2015 and that all the Respondents were jointly and severally liable to refund the amount of Rs.17,73,785/-
with interest @ 12% p.a. along with costs of Rs.20,000/- which came to Rs.40,61,300/- by the date of filing the E.A. and to that effect he filed the calculation memo. He further stated that the E.A. was filed for the arrest of the J.Drs for non-payment of the decretal amount. The Respondents/J.Drs did not pay any amount during the pendency of CC.No.50/2015 or subsequent to filing the case, as such prayed to issue arrest warrant against the JDRs. He also further stated that in view of allowing FA.No.801/2021 and FA.No.802/2021 by the Hon'ble NCDRC on 15.07.2024 he was not pressing the E.A. as against Respondents No.3, 4 & 6.
b) In his cross examination, he admitted that the order was pronounced in CC.No.50/2015 on 27.01.2021 during the Covid period but denied that the Execution Application was filed prematurely. He admitted that he did not file any document to show that Respondent No.2 has means to pay the amount to 6 satisfy the decree but denied that Respondent No.2 became bankrupt.
c) In the cross examination by the counsel for Respondent No.5, he stated that Respondent No.5 was made as a party in the capacity of a partner. He stated that he was not aware of the percentage of share of Respondent No.5 in the firm or that she was retired as a partner on 01.02.2018. He admitted that he paid all the amounts to Respondent No.1 and denied that Respondent No.5 was no way concerned with the construction of the building in question.
11. A Sale Deed executed by Respondent No.5 along with her mother in favour of a third party on 27.09.2018 with regard to sale of plot No.201 in Zion Villa Apartments situated at Uma Nagar, Begumpet, Hyderabad for a sale consideration of Rs.36,88,000/- was marked as Ex.P5 by the Petitioners/D.Hrs.
12. PW1 was cross examined with regard to the document and he stated that, to his knowledge Respondent No.5 was residing in the said property but admitted that he did not enquire with the vendee of Ex.P5 regarding the said transaction and in what capacity Respondent No.5 was residing therein. He denied that Respondent No.5 was residing as tenant in the said property sold under Ex.P5.
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13. Ex.P7 is the certified copy of Form-A issued by the Registrar of Firms, Hyderabad District showing the names of the partners in Respondent No.1 firm.
14. a) The Respondent No.5 was examined as RW1. She stated 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 resignation letter on 01.02.2018 and thereafter executed a Deed of Retirement on 23.08.2018. The said Deed of Retirement was 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 8 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 has 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.
b) It was suggested to her in cross examination that in collusion with the other partners she created the Deed of Retirement but there was no such retirement on that date, which she denied. She admitted that no paper publication was carried out at the time of her retirement.
15. As per the contention of the learned counsel for the Petitioners/decree holders, the Agreement of Sale was entered in the year 2005, the Respondent No.5 was also a partner when the transaction took place. All the partners of the firm were jointly and severally liable. The execution court cannot go beyond the decree and cannot decide the liability of the partners whether they were actively involved in the business or not. No amount was paid by the Respondents after passing of the decree. Respondent No.2 was in jail since 18.03.2025 and was already suffering imprisonment in several other matters which were decided against him and relied upon the following judgments:
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Judgment of the High Court of A.P. in Cr.R.C.No.759 of 2010 dated 28.06.2010 in Venkataraya Enterprises, rep. by its Proprietor, R.P.Road, Tanuku, West Godavari Vs. District Consumer Disputes Redressal Forum, West Godavari at Eluru and others Judgment of the Hon'ble Apex Court in Syndicate Bank Vs. R.S.R. Engineering Works and others, (2003) 6 SCC 265 Judgment of the Hon'ble Apex Court in Lekh Raj (Dead) Through Legal Representatives and others Vs. Ranjit Singh and others, (2018) 12 SCC 750 Judgment of the Hon'ble Apex Court in Brakewel Automotive Components (India) Private Limited Vs. P.R.Selvam Alagappan, (2017) 5 SCC 371.
The learned counsel for the Petitioners further relied upon the judgments of the Hon'ble Apex Court in:
P.Dinakaran Vs. Janak Raj Chopra and others, (2004) 13 SCC 647 State of Karnataka Vs. Parmjit Singh and others, (2006) 4 SCC 49 Judgment of the Hon'ble NCDRC in Sudeshchandra Vs. Madat Ali Noor Mohammed Gilani and Another, 2025 SCC Online NCDRC 457.
16. The counsel for Respondents No.1 & 2 on the other hand contended that the Respondent No.2 had no mensrea to cheat any of the purchasers. He completed more than 59 projects in the city and constructed more than 1000 plots and was a reputed firm in 10 the business of construction. But due to dispute in two projects from the owners and subsequently at the instance of one of the owners, have to suffer huge loss. Due to income tax raids on the premises of the firm and residence, he was put in a grave fix resulting in financial loss and closure of the business. The amounts collected towards purchase of flat was never intended to usurp. He always had an intention to provide flats and refund the money, but since the entire business was closed and he did not have any funds to repay the amount, under the constrained circumstances moved the court by way of filing Insolvency Petitions. The court need to look into the state of affairs of the business and the state where the Respondent No.1 firm and its partners stand at. Respondent No.1 and its partners were left with no means of income and lost all their valuables including movables and immovables. The Respondent No.2 surrendered before the court for non-payment and was undergoing imprisonment in pursuance of the sentences passed in various complaints for non- compliance of the orders since 18.03.2025. He was already in jail and undergoing sentence of imprisonment in eight matters which were already decided. He was sentenced to four months imprisonment in two matters and three months imprisonment in six matters. All the sentences were directed to run consecutively. As the Insolvency Petition filed by the Respondents was pending, the execution proceedings could not continue, as no property was available. Since there was no mensrea, penal provisions could not be imposed on the Respondents for non-payment and non- compliance of the orders passed by the court and prayed to take a sympathetic view against the firm and its partners. 11
17. The learned counsel for the Respondent No.5 on the other hand contended that the Petitioners exclusively dealt with the Respondent No.1 Firm represented by its Managing Partner. Respondent No.5 held only 10% share as per the Partnership Deed. From the date of inception of the firm, she was never involved in any kind of business or day to day affairs of the firm. She neither signed any documents or any papers pertaining to the transaction. She filed her bank accounts to show that she was not a beneficiary. The contents of the complaint would not disclose any specific role played by the Respondent No.5 except stating that she was also a partner along with the Respondent No.2. Such averments would not show that she was equally liable along with Respondent No.2. She had already submitted her resignation and the firm was also re-constituted. Ex.B2 was the letter showing her resignation and Ex.B4 was the re-constituted Partnership Deed. Ex.B6 would disclose that the firm was continuing with only two partners, Respondent No.2 and his wife. The other partners were not vicariously liable for the acts and deeds of the Respondent No.2. The Partnership Deed came to an end by 01.02.2018. She was not a partner by the date of passing of the order. The order was passed exparte and relied upon the judgments of the High Court of Maharashtra, Nagpur Bench in SREI Equipments Finance Limited Vs. Rajesh Bajirao Khandelwal and others, judgment of the Hon'ble Apex Court in K.Sitaram Vs. CFL Capital Financial Service Limited, (2017) 5 SCC 725, judgement of the Hon'ble Apex Court in State of Karnataka Vs. Pratapchand and others, AIR 1981 SC 872 and in Niaz Mohammed and others Vs. State of Haryana and others, 12 MANU/SC/0063/1995 and in Beeram Guru Prasad Vs. M/s.Margadarsi Chit Fund Pvt.Ltd., & others, (2019) 6 ALT 9.
18. 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 Respondent No.5 is one of the partners of the firm. It was admitted that Respondent No.2 is actively involved in the day to day business of the firm and Respondent No.5 is a sleeping partner. It was the contention of the learned counsel for the Respondent No.5 that Respondent No.5 was not actively involved in the business of the firm, it was Respondent No.2 alone who managed the business affairs, the Respondent No.5 also submitted her resignation prior to passing of the judgment, as such she was 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 13 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."
19. 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 offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence"
and 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."
20. 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 14 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."
21. But this is not a criminal case and the principles rendered in the above cases are not applicable to the factual situation of this case. Under Section-25 of Indian Partnership Act, 1932, every partner is jointly and severally liable for all the acts of the firm done while he/she is a partner. The liability arises if they were partners at the time of transaction. As admittedly, the Respondent No.5 is also a partner of the firm when the agreement of sale was executed and the cause of action arose during her partnership, her subsequent resignation does not absolve her from liability towards third parties.
22. Section-32 of the Indian Partnership Act, 1932 provides that:
"Retirement of a partner - (1) A partner may retire -
(a) With the consent of all the other partners,
(b) In accordance with an express agreement by the partners, or
(c) Where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire. (2) A retiring partner may be discharged from any liability to any third party for acts of the firm done before his retirement by an agreement made by him with such third party and the partners of the reconstituted firm, and such agreement may be implied by a course of dealing between such third party and the reconstituted firm after he had knowledge of the retirement.
(3) Notwithstanding the retirement of a partner from a firm, he and the partners continue to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the retirement, until public notice is given of the retirement:15
Provided that a retired partner is not liable to any third party who deals with the firm without knowing that he was a partner.
(4) Notices under sub-section(3) may be given by the retired partner or by any partner of the reconstituted firm."
23. The Hon'ble Apex Court in Syndicate Bank Vs. R.S.R. Engineering Works and others held that:
"Under sub-section (2) of Section 32, the liability of the retiring partner as against third party would be discharged only if there is an agreement made by the retiring partner, with the third party, and the partners of the reconstituted firm. Of course, an agreement could be implied by the course of dealing between such third party and the reconstituted firm, after retirement of a partner. In the instant case, there was no agreement between the appellant Bank and Respondents 2 and 3 as regards their liability in respect of the dissolved firm. There is also no evidence to show that there was an implied contract between the appellant and Respondent 4 who allegedly agreed to discharge the liabilities of Respondents 2 and 3. It is also pertinent to note that there was no public notice under sub- section (3) of Section-32 of the Indian Partnership Act by Respondents 2 and 3. Even if there was a public notice, it may not alter the position as the alleged liabilities of Respondents 2 and 3 were incurred by them prior to the so-called dissolution of the firm."
24. Thus as per Section-32 sub-clause (3) of the Indian Partnership Act a retiring partner continues to be liable to third parties for the acts of the firm done before retirement. As such even if she was a sleeping partner or not actively participating, the same was irrelevant as against third parties. Her resignation only protects her from future liabilities but does not wipe out past liabilities.
25. 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. 16 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."
26. Thus all the partners of the firm are vicariously liable for the acts of the firm and we do not find any merit in the contention of the learned counsel for Respondent No.5 on this aspect.
27. 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."
28. 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 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 17 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."
29. Though a petition was filed under the Provincial Insolvency Act by the Respondents 1 and 2, penal prosecution for non- compliance will still continue. Protection is not automatic unless adjudicated by the Insolvency Court about Respondents being insolvent. 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 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."18
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."
30. 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 in 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 19 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, 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.
31. 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.
32. The document marked as Ex.P5 would also disclose that during the pendency of this Consumer Complaint, the wife and daughter of the Respondent No.2 (i.e., Respondent No.5) had executed the Sale Deed in favour of a third party on 27.09.2018 with respect to the house where they were residing. It shows their deliberate conduct to evade the payment and to defeat the consumers' rights. The very fact of the transfer proves their conscious dealing with the property despite the risk of litigation 20 which establishes awareness and deliberate conduct. As the transfer of the property was made when the complaint was pending, the only reasonable inference that can be drawn is with regard to their intention to defeat execution of the anticipated decree. Such conduct shows active evasion. As transfer of the property proves that the Respondents owned valuable assets and had financial capacity and consciously disposed off the property rendering the recovery difficult, it satisfied the test of wilful default.
33. The filing of Insolvency Petition strengthens the inference of evasion. The filing of the insolvency proceedings after the transfer of the property shows a calculated attempt to defeat the creditors. As the very object of the consumer legislation would be defeated if the Respondents were permitted to dispose off assets during litigation by frustrating the decree and plead inability after diverting property, such conduct squarely amounts to wilful disobedience. The chain of events of lodging of the complaints, not contesting the matters before the District Commission, transferring the property before passing the decree without complying the same and filing Insolvency Petitions would demonstrate knowledge, conscious avoidance and intent to defeat decree. As such the Respondents could not seek protection under Article-21. The fraudulent transfers, abusing the judicial process proves the existence of assets and financial capacity and demonstrates deliberate attempt to defeat execution satisfying the requirement of wilful disobedience under Section-72 of the Consumer Protection Act. As such detention in such circumstance is a legitimate coercive mechanism necessary to uphold the authority of the 21 Commission. As such we consider that the guilt of the Respondents is established under Section-72 of Consumer Protection Act, 2019 beyond reasonable doubt and they are liable to be punished under the said provision.
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.
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Dt: 04.03.2026
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34. Point No.(iii):
Respondent No.2 is produced from jail. He is informed about finding him guilty under Section-72 of the Consumer Protection Act and questioned on the quantum of sentence. The Respondent No.5 appeared on virtual and she is also informed about finding her guilty for the offence under Section-72 of Consumer Protection Act and heard on the quantum of sentence. Both the Respondents reported to take a lenient view on them. Respondent No.2 stated that he is a senior citizen and that he was already in prison for the past one year suffering sentences imposed in other cases and prayed to take a lenient view. The Respondent No.5 stated that she is a school teacher, having a daughter of marriageable age and that if she was imprisoned, her career will be ruined and her family life also would be affected and prayed to take a lenient view.
35. Considering the facts and circumstances of the case, we deem it fit to convict the Respondents No.2 and 5 under Section- 255(2) Cr.P.C. for the offence under Section-72 of Consumer 22 Protection Act, 2019 and to sentence them to undergo simple imprisonment for a period of six months each. The remand period of Respondents if any, shall be given set off. 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 Respondents are informed about their right to prefer an appeal against the order of this Commission to the Hon'ble NCDRC.
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APPENDIX OF EVIDENCE
Witnesses examined
For the D.Hrs/Petitioners :
Evidence affidavit of D. Srinivas as PW1, Petitioner No.1. For the J.Drs/Respondents:
Evidence affidavit of Smt.Roopal Sagi, Respondent No.5.
Exhibits marked on behalf of the D.Hrs/Petitioners:
Ex.P1: is the copy of CC.No.50/2015 dated 27.01.2021. Ex.P2: is the copy of CC.No.56/2015 dated 27.01.2021. Ex.P3: is the copy of common order in FA.No.800/2021, FA.No.803/2021 to 807/2021 dated 01.07.2024. Ex.P4: is the copy of common order in FA.No.801/2021 and FA.No.802/2021 dated 15.07.2024.
Ex.P5: is the original Sale Deed dated 27.09.2018. Ex.P6: is the original Sale Deed dated 03.06.2004. Ex.P7: is the certified copy of Form-A issued by the Registrar of Firms, Hyderabad District showing the names of the partners in Respondent No.1 firm.
Exhibits marked on behalf of the J.Dr/Respondent No.5:
Ex.B1: is the copy of IP.No.42/2021 filed before the Additional Small Caused Court, Hyderabad.
Ex.B2: is the copy of Service Certificate of Respondent No.7. Ex.B3: is the copy of letter issued to Respondent No.5 dated 26.05.2014.
Ex.B4: is the Copy of pay slip of M/s.Accenture of Respondent No.5 dated January, 2014.
23Ex.B5: is the Copy of letter from M/s.ADP Pvt.Ltd., in favour of Respondent No.5 dated 11.12.2015.
Ex.B6: is the Copy of letter from M/s.ADP Pvt.Ltd., in favour of Respondent No.5 dated 11.12.2015.
Ex.B7: is the copy of payslip of Respondent No.5 dated January, 2014.
Ex.B8: is the copy of letter of retirement/resignation of Respondent No.5 dated 01.02.2018.
Ex.B9: is the copy of the Deed of Retirement of Respondent No.5 dated 23.08.2018.
Ex.B10: is the Copy of Deed of Partnership dated 23.08.2018. Ex.B11: is the Copy of Certificate issued by Registrar of Firms along with Form-V dated 27.03.2021.
Ex.B12: is the copy of Bank Statement of Axis Bank of Respondent No.5 dated 01.01.2010 to 31.12.2010.
Ex.B13: is the copy of Bank Statement of Axis Bank of Respondent No.5 dated 01.01.2011 to 31.12.2011.
Ex.B14: is the copy of Bank Statement of Axis Bank of Respondent No.5 dated 01.01.2012 to 31.12.2012.
Ex.B15: is the copy of Bank Statement of Axis Bank of Respondent No.5 dated 01.01.2013 to 31.12.2013.
Ex.B16: is the copy of Bank Statement of Axis Bank of Respondent No.5 dated 01.01.2014 to 31.12.2014.
Ex.B17: is the copy of Bank Statement of Axis Bank of Respondent No.5 dated 01.01.2015 to 31.12.2015.
Ex.B18: is the copy of Bank Statement of Axis Bank of Respondent No.5 dated 01.01.2016 to 31.12.2016.
Ex.B19: is the copy of Bank Statement of Axis Bank of Respondent No.5 dated 01.01.2017 to 31.12.2017.
Ex.B20: is the copy of Bank Statement of Axis Bank of Respondent No.5 dated 01.01.2018 to 31.12.2018.
Ex.B21: is the copy of Bank Statement of ICICI Bank of Respondent No.5 dated 01.04.2005 to 31.03.2010. Ex.B22: is the copy of letter dated 04.08.2025 issued by the District Registrar, Hyderabad addressed to Respondent No.5 along with Form V. Sd/- Sd/-
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