State Consumer Disputes Redressal Commission
Cimmco Birla Ltd. vs Anil Sethi on 22 October, 2008
IN THE STATE COMMISSION: DELHI IN THE STATE COMMISSION: DELHI (Constituted under section 9 clause (b) of the Consumer Protection Act, 1986.) Date of decision :22.10.2007 Appeal No. A-1644/03 (Arising from order dated 31.05.2003 passed by the District Forum ( New Delhi), K.G. Marg, New Delhi in Compliant case No. C-1727/02) Cimmco Birla Ltd. Birla Nagar, Gwalio (M.P.) Through Sh. J.P. Gupta, Director (Works) & President Bharatpur Works, Appellant Versus Sh. Anil Sethi R/o 21/48, Old Rajinder Nagar, New Delhi -110028 Respondents CORAM Justice J.D. Kapoor President Ms. Rumnita Mittal Member1
Whether reporters of local newspapers be allowed to see the Judgement.
2. To be referred to the Reporter or not.
Justice J.D. Kapoor (Oral)
1. Admittedly respondent deposited an amount of 2000/- with the appellant for issuing 20 debentures in the year 1991. Appellant issued 20 debentures vide folio No. CL 35961 Certificate No. 106948 and Distinctive Nos. 714751 to 714770 for Rs. 100/- @ 12.5% since 1991. The debenture was partly redeemed during October, 1998 and December 1999. However the last redemption along with interest was not paid by the appellant. Consequently he filed the instant complaint before the District Forum. Vide impugned order dated 31st May, 203, the District Forum allowed the complaint with the direction to the appellant to pay the redemption value along with agreed rate of interest from effective date to the date of redemption and interest for the delayed period @ 9% w.e.f. fixed date of redemption till realization along with cost of Rs. 1000/- . Feeling aggrieved the appellant has preferred this appeal.
2. The solitary plea taken by the appellant in its defence before the District Forum and before us is that the company is registered with the BIFR and therefore assets cannot be disposed off to make any payment and proceedings should be stayed under section 22 of Sick Industrial Companies (Special Provisions ) Act, 1985 and further that the respondent should seek permission from the company judge to initiate any proceedings against the appellant.
3. The aforesaid plea of the appellant was repelled by the District Forum by placing reliance on the decision of High Court of Karnataka in Deepak Insulated Cable Corporation Ltd. Vs. Union of India & Others (2001) Company KAR 401 that the deposit in the sick company made by the depositor is not a sum lent to the company but a sum held in trust by the company till the time of maturity. Therefore any claim made for return of a deposit with the company cannot be termed as a suit for recovery of money, attracting section 22(1) of the Sick Industrial Companies (Special Provisions ) Act, 1985.
4. The aforesaid view of Karnanatka High Court has been assailed by the appellant on the premise of the decision of the Honble Supreme Court in Gram Panchayat Vs. Shri Vallabh Glass Works , AIR 1999 SC 1017 which held as under:
Section 22(1) provides that in case the inquiry under section 16(1) is pending or any scheme referred to in Section 17 is under preparation or consideration by the Board or any appeal under section 25 is pending, then certain proceedings against the sick industrial company are to be suspended or presumed to be suspended. The nature of the proceedings which are automatically suspended are (I) winding up of the industrial company; (2) proceedings for execution, distress or the like against the properties of the sick industrial company, and (3) proceedings for the appointment of a receiver.
5. It is further contended by the appellant that ICICI Bank Ltd has been appointed as the Trustees of the Debentures issued by the appellant company and the proper course of action for the respondent was to approach the ICICI Bank Ltd in case there was any dispute regarding payment of Debentures.
6. In our view none of the above contentions hold water. The nature of proceedings which are initiated were neither proceedings for execution, distress or like against the properties of sick industrial company nor the proceedings for appointment of receiver. Even if a complaint under section 12 of the C.P. Act is deemed as suit being a generic term it is not suit for recovery of dues but suit for compensation arising from the allegation of deficiency in service or unfair trade practice. These terms have been defined independently by section 2(1)(g) and 2(1) (r) of the C.P.Act which are as under:-
Section (2)(1)(g) : deficiency means: -
any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertake to be performed by a person in pursuance of a contract or otherwise in relation to any service.
Section 2(1)(r) :
unfair trade practice means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely :
(1) the practice of making any statement, whether orally or in writing or by visible representation which,
(i) falsely represents that the goods are of a particular standard quality, quantity, grade, composition, style or model;
(ii) falsely represents that the services are of a particular standard, quality or grade;
(iii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;
(iv) represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;
(v) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;
(vi) makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;
(vii) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof :
Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;
(viii) makes to the public a representation in a form that purports to be
(i) a warranty or guarantee of a product or of any goods or services; or
(ii) a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified result, if such purported warranty or guarantee or promise is materially misleading or if there is no reasonable prospect that such warranty, guarantee or promise will be carried out;
(ix) materially misleads the public concerning the price at which a product or like products or goods or services, have been or are, ordinarily sold or provided, and, for this purpose, a representation as to price shall be deemed to refer to the price at which the product or goods or services has or have been sold by sellers or provided by suppliers generally in the relevant market unless it is clearly specified to be the price at which the product has been sold or services have been provided by the person by whom or on whose behalf the representation is made;
(x) gives false or misleading facts disparaging the goods, services or trade of another person.
Explanation.For the purposes of clause (1), a statement that is
(a) expressed on an article offered or displayed for sale, or on its wrapper or container; or
(b) expressed on anything attached to, inserted in, or accompanying, an article offered or displayed for sale, or on anything on which the article is mounted for display or sale; or
(c) contained in or on anything that is sold, sent, delivered, transmitted or in any other manner whatsoever made available to a member of the public, shall be deemed to be a statement made to the public by, and only by, the person who had caused the statement to be so expressed, made or contained;
(2) permits the publication of any advertisement whether in any newspaper or otherwise, for the sale or supply at a bargain price, of goods or services that are not intended to be offered for sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature of the advertisement.
Explanation.For the purposes of clause (2), bargaining price means
(a) a price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise, or
(b) a price that a person who reads, hears or sees the advertisement, would reasonably understand to be a bargain price having regard to the prices at which the product advertised or like products are ordinarily sold;
(3) permits
(a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole;
(b) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest;
(4) permits the sale or supply of goods intended to be used, or are of a kind likely to be used, by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by competent authority relating to performance, composition, contents, design, constructions, finishing or packaging as are necessary to prevent or reduce the risk of injury to the person using the goods;
(5) permits the hoarding or destruction of goods, or refuses to sell the goods or to make them available for sale or to provide any service, if such hoarding or destruction or refusal raises or tends to raise or is intended to raise, the cost of those or other similar goods or services.] (2) Any reference in this Act to any other Act or provision thereof which is not in force in any area to which this Act applies shall be construed to have a reference to the corresponding Act or provision thereof in force in such area.
7. Further more section 3 of the C.P. Act prescribes additional remedy which is not in derogation of the provisions of any other law for the time being in force meaning thereby that any proceedings before Company Court under Companies Act are no bar to initiate action under the provisions of the C.P. Act. Since Section 3 provides an additional and independent remedy to the consumers to seek compensation for the deficiency of service or for unfair trade practice for mental agony, harassment etc, neither the provisions of the Companies Act are applicable nor provision of section 22(1) of the Sick Industrial Companies (Special Provisions ) Act. 1985 are applicable.
8. In this regard, following decision of Supreme Court are noteworthy and are as under:
III. SCOPE OF SECTION 3 OF ACT 1986
(i) Secretary, Thirumurugan Coo-operative Agricultural Credit Society Vs. M. Lalitha (Dead) through LRS and Ors. Civil Appeal No. 92 of 1998 decded on 11-12-2003.
Reported in S.C. & N.C. Consumer cases (1996-2005).
10. In Section 3 of the Act in clear and unambiguous terms it is stated that the provisions of 1986 Act shall be in addition to an not in derogation of the provisions of any other law for the time being in force.
From the statement of objects and reasons and the scheme of 1986 Act, it is apparent that the main objective of the Act is to provide better protection of the interest of the consumer and for that purpose to provide better redressal, mechanism through which cheaper, easier, expeditious and effective redressal is made available to consumers. To serve purpose of the Act, various quasi judicial forums are set up at the district, State and National level with wide range of powers vested in them. These quasi judicial forums, observing the principle of a specific nature and to award, whenever appropriate compensation to the consumers and to impose penalties for non-compliance of their orders.
(ii) Fair Air Engineers Pvt. Ltd. and Anr.
Vs. N.K. Modi, 1996 (6) SCC 385.
It would, therefore be clear that the legislature intended to provide a remedy in addition to the consequent arbitration which could be enforced under the Arbitration Act or the civil action in a suit under the provisions of the Code of Civil Procedure.
In view of the object of the Act and by operation of section 3 thereof, we are of the considered view that it would be appropriate that these forums created under the Act are at liberty to proceed with the matter in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that the Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the forums on their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate forum for adjudication of the disputes would be otherwise those given in the Act.
(iii) Smt. Kalawati and others Vs. M/s United Vaish Co-operative Thrift and Credit Society Ltd. R.P. No. 823 to 826 of 2001, SC & NC Consumer Law Cases (1886-2005) 275, wherein the National Commission observed that
4. Section 3 is worded in widest terms and leaves no one in doubt that the provisions of CPA shall be in addition and not in derogation of any other law for the time being in force. Thus even if any other Act provides for any remedy to litigant for redressal by that remedy a litigant can go to Dist. Forum if he is a consumer under CPA. That remedy exists in any other law which creates the right is no bar to District Forum assuming jurisdiction.
IV. JURISDICTION OF CONSUMER ORUM/COMMISSIONS
(i) Lucknow Development authority Vs. M.K. Gupta, 1994 (1) SCC 243- On the question of jurisdiction it is stated that the forums under the Act have jurisdiction to entertain a complaint despite the fact that other forums/courts would also have jurisdiction to adjudicate upon the list.
Remedies that are available to the aggrieved party under the 1986 Act are wider. For instance in addition to granting a specific relief the forums under the 1986 Act have jurisdiction to award compensation for the mental agony, suffering etc. which possibly could not be given under the Act in relation to any other dispute under any other law.
(ii) Spring Meadows Hospital and another Vs. Harjot Ahluwalia through K.S. Ahluwalia and another, 1998 (4) SCC 39 On the question of jurisdiction it is stated that the forums under the Act have jurisdiction to entertain a complaint despite the fact that other forums/courts would also have jurisdiction to adjudicate upon it. It is also noticed that the Act provides for a further safeguard to the effect that in the event a complaint involves complicated issues requiring recording or evidence of experts, the complainant would be at liberty to approach the civil court for appropriate relief.
9. Moreover, the District Forum have powers to order the opposite party to do many things as referred under section .. of the C.P., Act. The compensation in the context of the provision of the C.P. Act is not confined to the actual loss or any amount consumer is entitled to receive from the service provider but also entitles the consumer for compensation on account of mental agony, harassment and the physical discomfort or injustice done to a consumer.
10. The word compensation in the context of C.P. Act has been given wide connotation by the Supreme Court in Ghaziabad Development Authority Vs. Balbir Singh (2004) 4 SCC 65 in reference to provision of the C.P. Act. 1986.
The word compensation is of a very wide connotation. It may constitute actual loss or expected loss and may extend to compensation for physical, mental or even emotional suffering, insult or injury or loss. The provisions of the Consumer Protection Act enable a consumer to claim and empower the Commission to redress any injustice done. The Commission or the Forum is entitled to award not only value of goods or services but also to compensate a consumer for injustice suffered by him. The Commission/ Forum must determine that such sufferance is due to malafide or capricious or oppressive act. It can then determine amount for which the authority is liable to compensate the consumer for his sufferance due to misfeasance in public office by the officers. Such compensation is for vindicating the strength of law.
11. Thus in our view the combined effect of the provisions of Section 3 of the C.P. Act and section 22(1) of SICA and of Company Law leave no manner of doubt that wherever any company is found guilty for deficiency in service or guilty of unfair trade practice or even restrictive trade practice, it is bound to compensate consumer in terms of actual losses, injury suffered by him or for several other harassments suffered by him due to conduct of the company.
12. It is settled law that parties are governed by the contract, in this case there was no contract between the parties while issuing the debentures that in case company goes into liquidation or becomes sick the consumer shall not be entitled to any amount except through proceedings under Company Act or receiver or official liquidaotor. The remedy under Sick Company Act is an independent remedy available to a Company and not to the consumer and moreover the persons who were issued debentures at the agreed rate of interest are entitled to get an amount in terms of contract between the parties. Where the company becomes defunct or sick, it is not attributable to consumer, as they have no role to play in it. It is the consumer who suffers at the hands of such a company who became defunct and sick due to mismanagement of its affairs or any other reasons and the conduct of affairs of the company qua the consumer has to be decided and adjudicated on the anvil of definition of deficiency in service provided by the Consumer Protection Act.
13. For offence under the C.P. Act, not only company but all the Directors are jointly and severally liable for the loss and injury suffered by the consumer at their hands, may be for any reason, say for mismanagement or bad management of the company or malafide and oppressive or repressive conduct.
14. There is no other statute governing the affairs of the consumers except the C.P. Act which was enacted by the Parliament and defines the offence of deficiency in service, unfair trade practice or restrictive trade practices, as well as manufacture and sale of defective goods . The definitions of these offences provided by the C.P. Act are unique in themselves and in our view C.P.Act is best piece of legislation ever enacted by the Parliament for better protection of interest of Consumers in such an effective manner. Furthermore it is in consonance with the resolution No. 143 passed by the United Nations General Assembly in April, 1985 which called upon the developing countries to bring out a law to protect the poor consumers from the exploitation by the service providers or manufactures of goods and those indulging in unfair trade practice at a large scale.
15. Foregoing reasons pursuade us to dismiss the appeal being devoid of merit.
16. F.D.R./ Bank Guarantee, if any, furnished by the appellant be returned forthwith after completion of due formalities.
17. A copy of this order as per statutory requirements, be forwarded to the parties free of charge and also to the concerned District Forum and thereafter the file be consigned to the record room.
18. Copy be sent to Presidents of all the District Forums.
Announced on the 22nd October, 2007.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member rk