National Consumer Disputes Redressal
Mr. Tonse N.M. Pai (Sri Tonse Narayana M. ... vs All Goa Manipal Finance Group on 1 May, 2012
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO.145 OF 2012 Alongwith (I.A. NO.1 & 2 of 2012) (Against the order dated 21.2.2012 in Complaint Case No.3/08,4/08,3/11 & 4/11 of the State Commission, Goa) Mr. Tonse N.M. Pai (Sri Tonse Narayana M. Pai) Director of M/s. Manipal Sowbhagya Nidhi Ltd. Having its registered office at Manipal House, Manipal-576 104 Karnataka .Appellant Vs. All Goa Manipal Finance Group of Companies Creditors Association having Its office at 13/B Garden Centre Opposite Police Stat ion Mapusa Bardez, Goa .Respondent FIRST APPEAL NO.146 OF 2012 Alongwith (I.A. NO.1 & 2 of 2012) (Against the order dated 21.2.2012 in Complaint Case No.3/08,4/08,3/11 & 4/11 of the State Commission, Goa) Mr. Tonse N.M. Pai (Sri Tonse Narayana M. Pai) Director of M/s. Manipal Sowbhagya Nidhi Ltd. Having its registered office at Manipal House, Manipal-576 104 Karnataka .Appellant Vs. All Goa Manipal Finance Group of Companies Creditors Association having Its office at 13/B Garden Centre Opposite Police Stat ion Mapusa Bardez, Goa .Respondent FIRST APPEAL NO.147 OF 2012 Alongwith (I.A. NO.1 & 2 of 2012) (Against the order dated 21.2.2012 in Complaint Case No.3/08,4/08,3/11 & 4/11 of the State Commission, Goa) Mr. Tonse N.M. Pai (Sri Tonse Narayana M. Pai) Director of M/s. Manipal Sowbhagya Nidhi Ltd. Having its registered office at Manipal House, Manipal-576 104 Karnataka .Appellant Vs. All Goa Manipal Finance Group of Companies Creditors Association having Its office at 13/B Garden Centre Opposite Police Stat ion Mapusa Bardez, Goa .Respondent FIRST APPEAL NO.148 OF 2012 Alongwith (I.A. NO.1 & 2 of 2012) (Against the order dated 21.2.2012 in Complaint Case No.3/08,4/08,3/11 & 4/11 of the State Commission, Goa) Mr. Tonse N.M. Pai (Sri Tonse Narayana M. Pai) Director of M/s. Manipal Sowbhagya Nidhi Ltd. Having its registered office at Manipal House, Manipal-576 104 Karnataka .Appellant Vs. All Goa Manipal Finance Group of Companies Creditors Association having Its office at 13/B Garden Centre Opposite Police Stat ion Mapusa Bardez, Goa .Respondent BEFORE: HONBLE MR. JUSTICE V.B. GUPTA, PRESIDING MEMBER HONBLE MR. VINAY KUMAR MEMBER For the Appellant: Mr. Gaurav Bahl, Advocate Pronounced on: 1st May, 2012 ORDER
PER MR.
JUSTICE V..B. GUPTA, PRESIDING MEMBER Goa State Consumer Disputes Redressal Commission, Panaji- Goa (for short as State Commission) vide impugned order, dated 21.2.2012, disposed of Miscellaneous Applications No.3 and 4 of 2008 in CC No.9 &10 of 2003 and Miscellaneous Applications no.3 and 4 of 2011 in CC No.9 & 10 of 2011.
2. Since issues are similar in these appeals and parties are also common, accordingly, we propose to pass a common order.
3. Factual matrix of these cases are that most of the complainants are senior citizens, retired and sick persons who are entirely dependent on the interest accrued on deposits made by them with opposite parties (in the State Commission ). Complainants case is that through various press statements and public gimmicks OPs introduced deposit schemes and invited applications from public. In response thereto, complainants deposited their hard-earned money in different schemes, i.e. Shreyus, which are in the nature of promissory notes; fixed deposits; debenture certificates and application form for redeemable Subordinated debt, contain various terms and conditions. One such condition stipulated therein is that in case of any deficiency in service the depositor can approach the forums set up under the Consumer Protection Act, 1986 (for short as Act) for relief. Thereafter, OPs closed down their business in Goa without any reasonable cause and refused to refund the deposits to the depositors. Complainants came to know through reliable sources that company has disposed of their office premises and other immovable properties in Goa. Complainants issued a letter to the OPs on 28th November, 2002, inter-alia calling upon them to return their deposits without further delay which did not elicit any response. Hence, they filed complaints before the State Commission, praying for refund of the deposits made with OPs with interest and costs.
4. OPs contested the case before the State Commission contending that the complainants were not consumers under the Act. It was further pleaded that Registered Office of OPs was at Manipal, hence, State Commission at Goa, had no territorial jurisdiction. Further, it was stated that subject matter of the complaint was similar to the Company Petition which was pending before the Karnataka High Court.
5. State Commission after hearing the parties and going through the records held, that different groups of consumers have preferred separate complaints whose value is within the pecuniary jurisdiction of that Commission. In so far as territorial jurisdiction is concerned, the deposits were made through various branches of the OPs company, , situated at Goa. Hence, Goa State Commission had pecuniary and territorial jurisdiction.
6. State Commission, vide order dated 28.7.2004 held that complainants are entitled for refund of the fixed deposits/ cash certificates alongwith interest at the rate specified in the terms and conditions of such deposits and directed the opposite party Company to pay jointly and severally the deposited sums alongwith interest at the rate specified in the terms and conditions, within 30 days of the date of the order alongwith costs of Rs.10,000/-.
7. Aggrieved by order dated 28.7.2004 passed by the State Commission, complainants filed First Appeals before this Commission. This Commission, vide order dated 15.4.2008, allowed the appeals and passed the following directions;
Accordingly, these appeals are allowed. The order passed by the State Commission is modified to the extent that the Manipal Finance Corporation Ltd. is directed to repay the maturity value of Shreyus Certificate to the appellants with 9% interest from the date of maturity till the date of payment. Similarly, they are also directed to repay the maturity value of debentures with 9% interest from the date of maturity till the date of payment. The respondents shall also pay Rs.2,000/- (Rupees two thousand only) as costs to each one of the 269 appellants.
8. Order dated 15.4.2008 of this Commission, was challenged by OPs by way of Special Leave to Appeal before Honble Supreme Court, which dismissed the Special Leave to appeal, vide its order dated 10.11.2008 and it reads as under:-
Heard learned counsel for the parties.
We do not find any ground to interfere with the impugned order.
The special leave petition is, accordingly, dismissed.
9. Thereafter, complainants filed an application under Sections 25 of the Act, dated 24.12.2008, for execution of the orders passed by the State Commission as well as by this Commission, for issuance of certificate for decretal amount to the Collector as arrears of land revenue. Accordingly, recovery certificate was issued.
10. Subsequently, complainants filed application under Section 27 of the Act dated 28.6.2011, praying that as per Section 27 of the Act, Managing Director and other Directors of Manipal Finance Corporation Ltd. (OPs, may be arrested and brought before State Commission for further action.
11. Thereafter, complainants filed another application under Section 27 of the Act, dated 8.8.2011, praying that Managing Director/Directors of OPs company may be arrested and brought before the State Commission for further action.
12. Appellant in response to show cause notice dated 24.8.2011, issued under Section 27 of the Act, filed his objections.
13. State Commission, vide impugned order, disposed of applications dated 8.5.2008 and 8.8.2011, filed on behalf of the complainants under Section 27 of the Act and dismissed the objections raised by the appellant.
14. Aggrieved by the impugned order, appellant has filed the present appeals.
15. It is contended by learned counsel for the appellant that no offence has been committed by the appellant as there was no allegation against him, either in the complaint filed before the District Forum, nor he was given any direction by the State Commission in its final order dated 28.7.2004. Moreover, appellant, is not arraigned as a party even in the execution petition under Section 25 of the Act and no vicarious liability can be fasten upon the appellant, who is the Managing Director of the company, in proceeding under Section 27 of the Act.
16. In its impugned order, State Commission observed;
22. A company acts through its board of directors at the meetings. It is managed through its managing director. It is through him/them that the objections are being taken for the sale of the properties though nothing prevented him/them from not objecting to the sale of the properties and putting forward their claims of preferential payment of other group companies. Can a managing director, use the mask of the company and file objections before D.R.O. and ultimately delay the recovery of the dues of creditors, and here before the Commission contend that it is the Company who is liable to be penalizied and not he? The answer has got to be negative at least in a jurisdiction meant to protect the interest of consumers. Section 27 provides for a penalty to be imposed with a view to ensure compliance of the orders as an additional mode of execution in addition to the mode provided under Section 25(3). A Managing Director is certainly in-charge of and responsible to the affairs of the Company and as such can be penalized under Section 27 of the Act. A Managing Director cannot be allowed through the company, not to comply with the order and then in proceedings u/s 27 to contend that only the Company is liable to be penalized. A contrary view can only defeat the provision u/s 27 (1) of the Act which is enacted for greater protection of the interests of the consumers by way of additional remedy.
23. This view of ours finds support in Byford Leading Ltd. V/s. Union of India (57) (1995) DLT 623 which again has been followed in Ravikant and another v/s. National Consumer Disputes Redressal Commission and others (1997 (2) CPR 65). In Byford Leasing Limited (supra) a Divisional Bench of Delhi High court held that under Section 27, the Chairman and Managing Director of the Company can be proceeded against, he being in-charge of the Management and control of the affairs of the Company. This view was again endorsed in Ravikant and Another (supra) by another Division Bench. The same view was then followed by the New Delhi State Commission in Motilal Jain and others (1998 (1) CPR 605) observing that any steps which would ensure compliance of the order would therefore be according to the spirit of the provision and relying on Byford Leasing Ltd., it was further observed that a person in-charge of and responsible for the conduct of the business of the Company was liable to punishment for disobedience of the order made by Fora under the C.P. Act. Again, we may refer to Door Sanchar Mandilaya Abhiyanta (1996 (3) CPR 415), wherein the Uttar Pradesh State Commission held that the notice under section 27 can be addressed to a person by designation and that would be sufficient compliance for proceeding under section 27 of the C.P. Act, 1986.
24. In Ravikant and another (supra) the Division Bench of the Delhi High Court referred to the unamended Contempt of the Courts Act, 1962 and the decision of the Apex Court in Aligarh Municipality (AIR 1970 SC 1767) and held that a penal provision in Section 27 of the C.P. Act which is applicable to a company must be treated as applicable to those who are officially responsible for the conduct of its affairs. That was a case of two petitioners who were the Directors of each of the Companies and it was held that the penal provision of Section 27 can be applied to the Directors of Companies, notwithstanding the absence of the specific provision for action against those in charge of or in control of the affairs of the Company. This conclusion was also reached by invoking the principle of lifting of corporate veil.
Observations to this effect can be found in para 15 of the Lr. Judgement.
25. Show cause notices were issued in consonance with the old procedure prior to 15//3/2003 by the then members of this Commission and not with a view of trying them u/s 27(1) under the new procedure prescribed u/s 260 Cr.P.C. Applications filed cannot be treated as complaints filed under Cr.P.C. nor show cause notices can be taken to be process issued against them, as contended on their behalf. There is no need to follow such procedure and those who do not comply with the orders can be directly tried for the contravention of Section 27(1) of the C.P. Act.
26. None of the Directors to whom the Show Cause notices were issued have told us that it somebody else who in-charge of or in control of affairs of the Companies. On the contrary we have the 28th annual report. We therefore prima facie have no other option but to proceed against Shri. Tonse N.M. Pai as Managing Director for not complying with our orders till date under Section 27(1) of the C.P. Act. He would be entitled to his defence at the trial. The Managing Director could have complied with our orders by selling the four properties which were to be attached or by not objecting to the attachment of two of the properties or at least by making part payment of the dues of the creditors. The offers made on 20/12/2011 show that they are in financial position to comply with the orders, at least by making part payment. They have not complied with an no explanation, much less a satisfactory explanation, is forthcoming. The default can be treated as willful and deliberate. The observations of Maharashtra State Commission in Nirmala S. Jaipuria (2004 CTJ 1092) are clearly in applicable to the facts of this case.
17. State Commission in its impugned order further held;
31. As already noted, the orders passed by this Commission has attained finality and have remained without being complied for too long and although recovery certificates were issued way back on 5/6/09 the payment is not forthcoming. We have also noted that some of the Creditors have been settled and their cases are required to be closed. On 20/12/11 on behalf of the Companies an offer was made to the D.Hs that they were prepared to pay 100% of the amount invested with 10% and 6% simple interest from the date of investment until payment. 10% interest in case of Creditors of M/s. Sowbhagya Nidhi Limited and 6% in case of M/s. Manipal Finance Corporation Ltd. It appears that those in charge of the Creditors Association declined the offer, but there are others, as can be seen from applications filed subsequently, that they are willing to accept the amount on the said terms. There could be many who are unaware of what transpired before this Commission on 20/12/11 and would be willing to accept payment on the said terms. Nothing prevented the Companies or for that matter the Managing Director or the other Directors of the said Companies to have made part payment of the amount due to the Creditors as requisite finances to make the payment are available with them, besides other charges.
32. For the aforesaid reasons, we proceed to dismiss the objections raised to the applications and proceed to try Shri Tonse N.M. Pai, Managing Director under Section 27(1) of the C.P. Act. He should remain present before this Commission for explaining the substance of accusation on the next date. For failure to attend, his presence will be secured by issuing NBW.
However, before we start the trial we would like to give the companies yet another opportunity to comply with the orders i.e. by making part payment at least to all named Creditors in the complaints as per offer made on 20.12.2011. Payment to be made by cross cheques sent by registered post at the given addresses. We further direct the said Managing Director to file an Affidavit alongtwith a statement showing the payment made and the balance that would be payable as per orders, at specified rates, as on 31.3.2012.
Compliance report to be filed on 1.4.2012. On failure to comply with this order, the Managing Director to remain present to be tried on 10.4.2012 at 10.30 a.m. Cases of Creditors who are settled are not to be reopened. Further proceedings adjourned to 3rd and 10th April, 2012.
18. Admittedly, appellant is the Managing Director of the OPs. Moreover, appellant himself admits in the grounds of appeal filed before this Commission that during the pendency of recovery proceedings, OPs have paid sum of Rs.64,56,100/- and Rs.79,10,864/-. If OPs are not liable to pay the awarded amount, then we fail to understand as to what was the occasion for OPs to pay the same.
19. It is well settled that any Corporation/Company only Act through those person who are in charge and responsible of running the affairs of the Corporation. Here, in the present case, appellant is admittedly the Managing Director and OPs companies are acting through him. Appellant being in-charge and responsible for running the affairs of the OPs companies cannot escape his liability. Hence, we do not find any illegality or infirmity in the findings given by the State Commission that the present appellant is fully responsible and is liable to pay the awarded amount as ordered by the State Commission.
20. In Ravinder Kaur Vs. Ashok Kumar, AIR 2004 SC 904, Apex Court observed ;
Courts of law should be careful enough to see through such diabolical plans of the judgment debtor to deny the decree holders the fruits of the decree obtained by them.
These type of errors on the part of the judicial forum only encourage frivolous and cantankerous litigations causing laws delay and bringing bad name to the judicial system.
21. It is well settled that no leniency should be shown to such type of litigants who in order to cover up their own fault and negligence, goes on filing meritless petitions in different foras. Equity demands that such unscrupulous litigants whose only aim and object is to deprive the opposite party of the fruits of the decree must be dealt with heavy hands.
22. Now question arises for consideration is as to what should be the quantum of costs which should be imposed upon the appellant for dragging the respondents upto this fora when appellant had no case at all. It is not that every order passed by the judicial fora is to be challenged by the litigants even if the same are based on sound reasonings.
23. Apex Court in Ramrameshwari Devi and Ors. Vs. Nirmala Devi and Ors., Civil Appeal Nos.4912-4913 of 2011 decided on July 4, 2011 has observed ;
45. We are clearly of the view that unless we ensure that wrongdoers are denied profit or undue benefit from the frivolous litigation, it would be difficult to control frivolous and uncalled for litigations.
In order to curb uncalled for and frivolous litigation, the Courts have to ensure that there is no incentive or motive for uncalled for litigation. It is a matter of common experience that courts otherwise scarce and valuable time is consumed or more appropriately wasted in a large number of uncalled for cases.
46. Usually the court should be cautious and extremely careful while granting ex-parte ad interim injunctions. The better course for the court is to give a short notice and in some cases even dasti notice, hear both the parties and then pass suitable biparte orders. Experience reveals that ex-parte interim injunction orders in some cases can create havoc and getting them vacated or modified in our existing judicial system is a nightmare. Therefore, as a rule, the court should grant interim injunction or stay order only after hearing the defendants or the respondents and in case the court has to grant ex-parte injunction in exceptional cases then while granting injunction it must record in the order that if the suit is eventually dismissed, the plaintiff or the petitioner will have to pay full restitution, actual or realistic costs and mesne profits.
47. If an ex-parte injunction order is granted, then in that case an endeavour should be made to dispose of the application for injunction as expeditiously as may be possible, preferably as soon as the defendant appears in the court.
48. It is also a matter of common experience that once an ad interim injunction is granted, the plaintiff or the petitioner would make all efforts to ensure that injunction continues indefinitely. The other appropriate order can be to limit the life of the ex-parte injunction or stay order for a week or so because in such cases the usual tendency of unnecessarily prolonging the matters by the plaintiffs or the petitioners after obtaining ex-parte injunction orders or stay orders may not find encouragement. We have to dispel the common impression that a party by obtaining an injunction based on even false averments and forged documents will tire out the true owner and ultimately the true owner will have to give up to the wrongdoer his legitimate profit. It is also a matter of common experience that to achieve clandestine objects, false pleas are often taken and forged documents are filed indiscriminately in our courts because they have heardly any apprehension of being prosecuted for perjury by the courts or even pay heavy costs. In Swaran Singh Vs. State of Punjab (2000) 5 SCC 668 this court was constrained to observe that perjury has become a way of life in our courts.
49. It is a typical example how a litigation proceeds and continues and in the end there is a profit for the wrongdoers.
50. Learned Amicus articulated common mans general impression about litigation in following words :
Make any false averment, conceal any fact, raise any plea, produce any false document, deny any genuine document, it will successfully stall the litigation, and in any case, delay the matter endlessly. The other party will be coerced into a settlement which will be profitable for me and the probability of the court ordering prosecution for perjury is less than that of meeting with an accident while crossing the road.
24. In our opinion, present appeals are nothing but gross abuse of process of law and these appeals are totally frivolous and without any legal basis and same are required to be dismissed with punitive costs of Rs.25,000/-
in each of the appeal.
25. Accordingly, we dismiss the present appeals with punitive costs of Rs.25,000/- in each case.
26. Total costs of Rs.1,00,000/- (Rupees one lakh only) in all these four appeals, be deposited by appellant by way of demand draft in the name of Consumer Legal Aid Account of this Commission, within two months from today.
27. In case, appellant fails to deposit the aforesaid costs within the prescribed period, then it shall also be liable to pay interest @ 9% p.a., till realization.
28. Pending applications, if any, also stand disposed off.
29. List for compliance on 6.7.2012.
...J (V.B. GUPTA) PRESIDING MEMBER ...
(VINAY KUMAR) MEMBER Sg.