National Consumer Disputes Redressal
Lloyds Finance Ltd. vs Ms. Napeena Singh, A.I. Katyal, Ms. ... on 30 January, 2003
Equivalent citations: I(2006)CPJ163(NC)
ORDER
D.P. Wadhwa, J. (President)
1. Considering the huge pendency of cases in Consumer Forums against Non-Banking Financial Companies (NBFCs) by the depositors all over the country, it is an unfortunate story of loot by NBFCs and then these very NBFCs taking shelter in the safe heaven of schemes framed by the Company Law Board in any of the regions of the country much to the chagrin of the poor depositors.
2. These revisions by the petitioner, a Non-Banking Financial Company has the usual defence of scheme framed by Company Law Board, Western Region when most of the depositors had no notice of hearing before the Company Law Board. That reflects the unjustness of the case for a depositor living in far corner of the country and when he is in a dark even to enforce the payment under the scheme. For one he is a depositor who was not a party to the proceedings before the Company Law Board and is not aware of the order and then for breach of the scheme he has to approach the Reserve Bank of India to take cognizance of the offense committed by the NBFC and then the usual endless proceedings before a Criminal Court as he has no control over the criminal proceedings, if any, instituted by the RBI. It was submitted before us that the scheme framed by the petitioner covered all the depositors and for non-compliance of the scheme about 8000 complaints were made to the RBI but not a single complaint had been filed against the petitioner in the Criminal Court.
3. A question of utmost importance has been raised in these revisions and that is the jurisdiction of Consumer Forum vis-a-vis that of the Company Law Board, latter exercising jurisdiction under Section 45QA of the Reserve Bank of India Act, 1934 though constituted under Section 10E of the Companies Act, 1956.
4. In this batch of 11 revisions there are respondents- complainants who had made deposits with the petitioner, a Non-Banking Finance Company (NBFC) which deposits were not repaid to the complainants as per the terms and conditions of the deposits. These depositors-complainants filed complaints before the different District Forums under the Consumer Protection Act, 1986 (for short the Consumer Act). Complaints were allowed by the District Forums and the appeals filed by the petitioner-NBFC were dismissed by the respective State Commissions. Now these petitions under clause (b) of Section 21 of the Consumer Protection Act, 1986.
5. It is contended before us by the petitioner that it being NBFC, functions under the guidelines of Reserve Bank of India (RBI for short) within the purview of the Reserve Bank of India Act, 1934. Petitioner, it is stated, had received deposits from various depositors from all over the country to the tune of over Rs. 350.00 crores. Petitioner has its registered office at Mumbai and branches at various places in the country from where deposits were taken from the depositors. It is contended that a scheme was framed on 16.4.99 by Company Law Board ( western branch) which was subsequently modified on 22.12.2000. That scheme was in the interest of the depositors including the respondents-complainants herein. Complaints in the present case were filed in between the period from 1999 to 2001 before different Consumer Forums. It is not contended that District Forum had no territorial jurisdiction to take cognizance of the complaints filed before them. Strong reliance has been placed by the petitioner on a order dated 9.11.00 rendered earlier by this Commission in the case of M/s. Allianz Capital & Management Services Ltd. vs. N.P. Grover & Ors. [I (2000) CPJ (NC) 617] where this Commission took the following view:
"The Company Law Board is now seized of the matter in dispute. It has been stated on behalf of the Company that the Petitioner-Company is adhering to the scheme of payment framed by the Company Law Board. Since the Company Law Board is seized of the matter, we will not hear the case any further. The matter is disposed of finally as above. Any grievance about non-payment according to the schedule drawn by the Company Law Board can be raised before the Company Law Board".
6. It would be seen that the aforesaid decision does not give any particulars of the complaint filed by depositor and other relevant information as to when Company Law Board was seized of the matter. In a very abrupt manner this Commission had disposed of the aforesaid matter and perhaps at that time the matter was not argued in sufficient detail and relevant provisions of law not brought to the notice of this Commission. Moreover, if we do not follow the observations as contained in the order of N.P. Grover's case we are not reviewing order of that case but examining these matters on the facts of the cases before us and the law applicable.
7. At this stage it will able appropriate to refer to various provisions of law. Chapter-IIIB was introduced in the Reserve Bank of India Act, 1934 w.e.f. 1.12.1964 and it contains provisions relating to Non-Banking Financial Institutions. It is not disputed that petitioner is a Non-Banking Financial Institution falling within the Chapter-IIIB. There were further amendments to some of the Sections falling in this Chapter and that being insertion of Section 45QA which we quote:
"45QA. Power of Company Law Board to offer repayment of deposit. - (1) Every deposit accepted by a non-banking financial company, unless renewed, shall be repaid in accordance with the terms and condition of such deposit.
(2) Where a non-banking financial company has failed to repay and deposit or part thereof in accordance with the terms and conditions of such deposit, the Company Law Board constituted under Section 10E of the Companies Act, 1956, (1 of 1956) may, if it is satisfied, either on its own motion or on an application of the depositor, that it is necessary so to do to safeguard the interests of the company, the depositors or in the public interest, direct, by order, the non-banking financial company to make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the order:
Provided that the Company Law Board may, before making any order under this sub-section, give a reasonable opportunity of being heard to the non-banking financial company and the other persons interested in the matter.
Section 45Q provides that Chapter IIIB will have overriding effect. This section is as under:
45Q. Chapter IIIB to override other laws.- The provisions of this Chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
8. Section 58B of Chapter V of Reserve Bank of India Act prescribes penalties. This Section in relevant part we quote:
"58B. Penalties: -
(4AAA) Whoever fails to comply with any order made by the Company Law Board under sub-section (2) of Section 45QA, shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to a fine of not less than rupees fifty for every day during which such non-compliance continues.
(5) If any person other than an auditor - (a) receives any deposit in contravention of any direction given or order made under Chapter IIIB; or (aa) fails to comply with any direction given or order made by the Bank under any of the provisions of Chapter IIIB, or (b) issues any prospectus or advertisement otherwise than in accordance with section 45NA or any order made under section 45J, as the case may be, he shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine which may extend,- (i) in the case of a contravention falling under clause (a), to twice the amount of the deposit received; and (ii) in the case of a contravention falling under clause (b) , to twice the amount of the deposit called for by the prospectus or advertisement".
9. However, Section 58E prescribes conditions for taking cognizance of offences. This Section we quote:
"58E. Cognizance of offences. - (1) No court shall take cognizance of any offence punishable under this Act except upon a complaint in writing made by an officer of the Bank, generally or specially authorized in writing in this behalf by the Bank, and no court other than that of Metropolitan Magistrate or a Judicial Magistrate of the first class or a court superior thereto shall try any such offence:
Provided that in respect of any offence punishable under sub-section (5A) of section 58B, a complaint in writing may also be made by an officer of the State Government, generally or specially authorized in writing in this behalf by that Government.
(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) a Magistrate may, if he see reason so to do, dispense with the personal attendance of the officer of the Bank filing the complaint, but the Magistrate may in his discretion, at any stage of the proceedings, direct the personal attendance of the complainant.
10. Section 58F is for application of fine imposed by the Court and this Section we reproduce:
"58F. Application of fine.- A Court imposing any fine under this Act may direct that the whole or any part thereof shall be applied in, or towards payment of, the costs of the proceedings".
11. RBI has also power to impose fine under certain conditions if there is contravention of Section 58B but we are not concerned with that in the present proceedings.
12. Section 45QA of RBI Act refers to the Company Law Board constituted under Section 10E of the Companies Act, 1986. It is not necessary for us to go into the constitution of Company Law Board as provided in Section 10E of the Companies Act except to note that Section 10F of the Companies Act also provides for appeals against the orders of the Company Law Board. Nothing has been said on the applicability of Section 10F. It is perhaps on account of the fact that orders passed by Company Law Board with reference to provisions of Companies Act are only appealable under Section 10F. In any case since nothing was argued on this aspect, we leave the matter at that. Coming back to the provisions as contained in Chapter IIIB of the RBI Act an argument was raised that provisions of Section 45QA override that of the Consumer Act. That argument is only stated to be rejected. Consumer Act only provides additional remedy. Andhra Pradesh High Court in the case of Prudential Capital Markets Ltd. vs. State of Andhra Pradesh & Ors. -I (2001) CPJ 230 has held that remedy under Section 45QA of the RBI Act is in addition to that available under the Consumer Act. Depositor may approach either the Consumer Forum or the Company Law Board and there is no exclusion of jurisdiction of the Consumer Forum from entertaining a dispute at the instance of a depositor. It is a profound judgment of the High Court written by Hon'ble Mr. Justice V.V.S. Rao. The Hon'ble Judge has examined various aspects of the matter in detail to come to the following conclusion amongst other:
" (iv) The provisions of Sections 45-Q, 45-QA of the R.B.I. Act and Section 58-A(9) of the Companies Act, do not either expressly or impliedly bar the jurisdiction of the Forums constituted under the Consumer Protection Act, from entertaining a consumer dispute case at the instance of the depositor claiming repayment of the deposit from a non-banking finance company. In view of Section 3 of the Consumer Protection Act, remedy under the said Act is an additional remedy and the same cannot be taken away either by the R.B.I. Act or by the Companies Act.
(v) The order of the Company Law Board, Eastern Region Bench, Calcutta dated 27.5.1998 cannot be construed as either taking away the right of the depositors in these cases to approach the Consumer Forum or nullifying the orders passed by the District Forum/State Commission.
13. It is not necessary for us to examine which is the most effective remedy as far as depositor is concerned. It is for him to decide. It may, however, be noticed that if an order of the Company Law Board is not complied a complaint will have to be made only by RBI under Section 58E of the RBI Act. Company Law Board does not seem to have any powers of its own to enforce its order.
14. The question now which arises is : whether Company Law Board was authorized to frame scheme and if such scheme is permissible under Section 45QA and binding on the complainants as the scheme is now the main plank of defense of the petitioner- an NBFC.
15. Section 45QA when analyzed would mean under sub section (1) every deposit accepted by a non-banking financial company, unless renewed, shall be repaid in accordance with the terms and condition of such deposit. This is the mandate of the law. Under sub section (2) when NBFC has failed to repay a deposit or part thereof in accordance with the terms and conditions of such deposit Company Law Board is to be moved by an application filed by the depositor or Company Law Board can itself of its own motion take action. However, Company Law Board has to be satisfied that an order is necessary to safeguard the interest of the Company, the depositors or in the public interest. Thereafter NBFC has to make payment of such deposit or part thereof forthwith or within such time or subject to such condition as may be specified in the order. It is not that NBFC has to approach the Company Law Board. Sub-section (2) does not talk of any scheme which would apply to all the depositors. Before making any order regarding repayment of the deposit made by the depositor Company Law Board has to give reasonable opportunity of being heard to the NBFC and to other persons interested in the matter. It would be thus seen that Company Law Board may pass an order suo moto and even without any application having been filed by the depositor. Section 45QA does not empower the Company Law Board to pass an order effecting all the depositors without granting them opportunity of hearing as that is the requirement of law and Company Law Board has to grant reasonable opportunity of being heard not only to NBFC but also to 'other persons interested in the matter' which would mean all other depositors who had not made any application to the Company Law Board.
16. It is the case of the complainants before us that they did not apply to the Company Law Board under Section 45QA. They were not served with any notice of any proceedings before the Company Law Board and they were not aware of any notice being published in any newspaper to which they subscribe to or is otherwise in circulation in the locality in which they reside. They say it is perversity of justice that Company Law Board situated in Mumbai could be approached by small depositors in the far flung corner of the country. The whole scheme as framed is floated and tilted in favour of NBFC. That is, however, not for us to consider. What the requirement of law is that a depositor may either approach the Company Law Board under Section 45QA or file a complaint under the Consumer Protection Act before the appropriate forum. A depositor cannot certainly choose both the remedies simultaneously and once he files an application under Section 45QA of the RBI Act before the Company Law Board, he cannot file a complaint in a Consumer Forum under the Consumer Protection Act.
17. The order of this Commission in M/s. Allianz Capital & Management Services Ltd. vs. N.P. Grover & Ors. has to be read in this context and is with reference to the facts of that case and cannot said to have application in other cases.
18. It is thus clear that if the complainant has not filed any application before the Company Law Board under Section 45 QA of the RBI Act or has not received any notice from the Company Law Board in the proceedings initiated by any other depositor or has not participated in the proceedings before Company Law Board, he will be entitled to file a complaint before the Consumer Forum under the Consumer Act.
19. We would, therefore, do not find that the revision petitions filed by the Llyods Ltd. are fit cases for us to exercise our jurisdiction under clause (b) of Section 21 of the Consumer Protection Act. These petitions are dismissed with costs of Rs. 5000/- to each of the respondents-complainants.