State Consumer Disputes Redressal Commission
Mrs. Jayeeta Mitra vs Shribhumi Realty Pvt. Ltd. on 4 February, 2019
Cause Title/Judgement-Entry STATE CONSUMER DISPUTES REDRESSAL COMMISSION WEST BENGAL 11A, Mirza Ghalib Street, Kolkata - 700087 First Appeal No. A/668/2017 ( Date of Filing : 16 Jun 2017 ) (Arisen out of Order Dated 22/05/2017 in Case No. Complaint Case No. CC/377/2016 of District Kolkata-III(South)) 1. Mrs. Jayeeta Mitra W/o Molay Mitra, 968/2, Diamond Harbour Road, Silpara, Barisha, Pin -700 008. 2. Mr. Molay Mitra S/o Lt. Nimai Mitra, 968/2, Diamond Harbour Road, Silpara, Barisha, Pin -700 008. ...........Appellant(s) Versus 1. Shribhumi Realty Pvt. Ltd. Regd. office at 50, A.J.C. Bose Road, Thakurpukur, Kolkata - 700 063. 2. Mr. Gopal Malakar, Director, Shribhumi Realty Pvt. Ltd. 300, Parnasree Pally, Aratrika Apartment, 1st Floor, Behala - 700 060. 3. Mr. Biswabrata Maity, Director, Shribhumi Realty Pvt. Ltd. Manik Bandopadhyay Sarani, Bally, Howrah - 711 227. 4. Mr. Sagar Ganguly 53/A, Dr. N.N. Bagchi Road, Barrackpore, Nona Chandanpukur, Titagarh, Pin -700 120. 5. Mr. Samit Dutta Madhya Gobindapur Biswaspara, P.O. - Dakshin Gobindapur, Langalberiya, Sonarpur, South 24 Pgs. - 700 145. ...........Respondent(s) BEFORE: HON'BLE MR. SAMARESH PRASAD CHOWDHURY PRESIDING MEMBER HON'BLE MRS. Dipa Sen ( Maity ) MEMBER For the Appellant: Mr. Soumyajyoti Nandy, Mr. Niladri Banerjee, Advocate For the Respondent: Soumen Mondal, Pratyash Sarkar, H. Bramhachari, Ayan Pal, Advocate Dated : 04 Feb 2019 Final Order / Judgement PER: HON'BLE MR. SAMARESH PRASAD CHOWDHURY, PRESIDING MEMBER
The instant appeal Under Section 15 of the Consumer Protection Act, 1986 ( hereinafter referred to as "the Act ") is at the behest of the Complainants to impeach the Judgement/Final Order dated 22.05.2017 passed by the District Consumer Disputes Redressal Forum, Kolkata, Unit-III( for short, Ld. District Forum) in Consumer Complainant No. 377/2016. By the impugned order, the Ld. District Forum allowed the complaint ex-parte against OP Nos. 1 & 2 with cost of Rs.20,000/- and dismissed on contest against OP No. 5 and dismissed ex-parte against OP Nos.3 & 4 with a direction upon OP Nos. 1 & 2 to refund Rs.4,45,000/- to the complainant with interest @ 10% p.a. for 26 months which comes to Rs.96,408/- within one month from the date of communication of the order to OP Nos. 1 & 2 in default the amount shall carry interest @12% p.a. for the default period.
The Appellants herein being Complainants lodged the consumer complaint U/s. 12 of the Act before the Ld. District Forum claiming themselves to be consumer with prayer for certain reliefs against the Opposite Parties on account of deficiency in services on the part of them in a dispute of housing construction. The complainants have stated that in order to purchase of a flat under the MIG category in Mouza- Sankhripota, P.S.- Mahestala, District - South 24 Parganas which is being developed by Shribhumi Realty Pvt. Ltd. (OP No .1), they paid a sum of Rs. 1,25,000/- by cash on 10.09.2012, Rs. 50,000/- through cheque on 06.12.2013 and Rs.2,70,000/- through another cheque on 22.05.2014 aggregating Rs.4,45,000/- in favour of OP No.1Company. In the year 2014, an Indenture for Sale was executed between the OP No.1 and the complainants, wherein a flat measuring about 829 sq. ft. super built up area being Flat No.7B on the 2nd floor in Block No.2 (MIG) was agreed to sell by OP No.1 Company in favour of complainants. As per terms of the agreement, OP No.1 Company was under obligation to complete the construction within May, 2016 but even after expiry of 26 months no progress in the construction has been made. The complainants through their Advocate made a representation on 15.06.2016 requesting the OPs to refund the booking amount along with an interest @ 10% to complainants and despite receipt of the same the OPs neglected to return the booking amount to the complainants till date. Hence, the appellant approached the Ld. District Forum with prayer for several reliefs, viz - (a) an order directing the OPs to refund Rs. 4,45,000/- towards the booking amount alongwith an interest @10% p.a. for 26 months; (b) compensation of Rs.1,00,000/- for harassment and mental agony ; (c) litigation cost of Rs.20,000/- etc. Despite receipt of notice, excepting Respondent No.5/OP No.5, none appears to contest before the Ld. District Forum. Therefore, the complaint was heard and decided against Respondent Nos. 1 to 4/OP Nos.1 to 4 ex-parte.
The Respondent No.5 being OP No.5 by filing a written version has stated that due to personal reasons and inconvenience, he was not working in the OP No.1 Company from March,2014 and thereafter, resigned on 23.06.2014 from the said Company and since then he has no knowledge about the functioning of the Company or about its Directors. Accordingly, he has made a prayer for dismissal of the complaint against him.
On evaluation of materials on record including the pleadings and the evidence led by the parties, the Ld. District Forum by the impugned judgement/final order dated 22.05.2017 allowed the complaint with certain directions as recorded above. Being aggrieved and dissatisfied with the order of dismissal against OP Nos. 3 to 5, the complainants have come up in this Commission with the present appeal.
Undisputedly, the Respondent No.1 Company "Shribhumi Realty Pvt. Ltd." has made wide publication for their upcoming project 'Shribhumi' at Mouza - Sankhripota, P. S. - Mahestala, District - South 24 -Parganas. In order to purchase a flat under the MIG category in the said complex, the appellant paid a sum of Rs. 1,25,000/- by cash on 10.09.2012, Rs. 50,000/- through cheque on 06.12.2013 and Rs.2,70,000/- through cheque on 22.05.2014 aggregating Rs.4,45,000/- in favour of Respondent No.1/OP No.1Company.
Evidently, as per the terms of the agreement, the respondent no.1 company was under obligation to complete the construction of the subject flat within May, 2016. However, even after expiry of 26 months, not even a single pillar has yet been constructed. Finding no other alternative, the appellants through their Advocate made a prayer for refund on 15.06.2016 but it yielded no response, which prompted the appellant to lodge the complaint before the Ld. District Forum.
The evidence on record goes to show that the Respondent No.1 Company has accepted the amount from the appellants without obtaining the required sanctioned plan from the competent authority. A developer/builder has no authority to collect any amount from an intending buyer without obtaining sanctioned plan or lay out plan etc. from the competent authority and collection of money from a buyer before obtaining sanctioned building plan amounts not only deficiency in services on the part of developer/builder but also amounts to an unfair trade practice under the definition of Section 2(1)(r) of the Act.
The written version filed by Respondent No.5/OP No.5 does not indicate any scope of progress in the matter of construction. The respondent Nos.2 & 3 took the plea that owing to an order of injunction passed by the Ld. 7th Civil Judge (Senior Division) at Alipore being T. S. No. 153 of 2015 they could not proceed with the construction work. However, the impugned order speaks that they have failed to show any copy of order showing that an order of injunction has been passed by any competent Civil Court restraining the respondents/OPs to raise construction in the project.
Mr. Niladri Banerjee, Ld. Advocate for the Appellant has placed reliance to paragraph - 27 of a decision of Hon'ble Supreme Court reported in 1995 SCC (1) 478 ( New Horizons Ltd. -vs. - Union of India ) and submitted that in passing the impugned order the Ld. District Forum totally ignored the dictum of the Hon'ble Supreme Court. The extract of paragraph - 27 are reproduces below -
"27. The conclusion would not be different even if the matter is approached purely from legal stand point. It cannot be disputed that, in law, a company is a legal entity distinct from its members. It was sole laid down by the House of Lords in 1897 in the leading case of Salomon -vs. - Salomon & Company. Even since this decision has been followed by the Courts in England as well as in this country. But there has been in roads in the doctrine of corporate personality propounded in the said decision by its statutory provisions as well as by judicial pronouncements. By the process, commonly described as "lifting the veil ", the law either goes behind the corporate personality to the individual members or ignores the separate personality of each company in favour of the economic entity constituted by a group of associate companies. This Court is adopted when it is found that the principle of corporate personality is two fragrantly opposed to justice, convenience or the interest of the Revenue. (see : Gower's Principles of Modem Company Law, 4th Edn, P112) This concept, which is described as " piercing the veil " in the United States, has been thus put by Sanborn, J in U.S. -vs. - Milwaukee Refrigerator Transit Co. " When the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud or defend crime, the law will regard the Corporation as an association of persons".
The Ld. Advocate for the Appellant has also referred paragraph - 23 of a decision of Hon'ble Apex Court reported in AIR 2016 SCC 510 ( State of Rajasthan & Ors. -vs. - Gotan Lime Stone Khanji Udyog Pvt. Ltd. & Anr. ) which is reproduces below -
"23. The principle of lifting the corporate veil as an exception to the distinct corporate personality of a company or its members is well recognised not only to unravel tax evasion but also where protection of public interest is of paramount importance and the corporate unity is an attempt of legal obligations and lifting of veil is necessary to prevent a revise to avoid welfare legislation. It is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since that must necessarily depend on the relevant statutory or other provisions , the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be affected etc".
The Ld. Advocate for the Appellants has also referred us another decision of Maharshatra State Consumer Commission dated 16.02.2009 in FA/1293/2008 ( Kiron Baliram Saradoe -vs. - Tapi Parashar Urban Cooperative Credit Society Ltd. & Anr. ) where it has been held that the prayer for exoneration from the liability on account of resignation cannot be accepted once complainant/depositor proves that the person who has made a prayer to exonerate him was in the post when deposit was made in the Society, he owes the liability to repay the amount along with other Directors though he has resigned from the post.
Mr. Ayan Pal, Ld. Advocate for the Respondent No.4 has submitted that in Paragraph-3 of petition of complaint, the complainants/appellants have specifically stated that OP Nos. 2 & 3/Respondent Nos. 2 & 3 are present Directors of respondent no.1 Company and the respondent nos. 4 & 5 are the erstwhile Directors of the said company but when the appellants/complainants have not stated anything in the petition of complaint, the complaint has rightly been dismissed against his client in view of the decision of the Hon'ble National Commission reported in 2017 (3) CPR 707 [M/s. Narne Estates Pvt. Ltd. & Anr. - Vs. - Dr. E. Surender Rao & Anr.] wherein it has been held that in absence of specific plea, oral submission made by the Ld. Advocate cannot be entertained.
Mr. Pratyush Sarkar, Ld. Advocate for Respondent No.5 has drawn our attention to the relevant provision relating to resignation of Director of a Company, particularly Section 168 (2) of the Company Act. The provisions of Section 168(2) of the said Act is set forth below -
"(2) The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the Director in the notice, whichever is later ;
Provided that the director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure".
Ld. Advocate for the Respondent No.5 has referred me a decision of Delhi High Court dealing with the liability of the director of a company for the dishonoured of the cheques of the company. Referring to the said decision being RFA 14-2010 and CM No. 498 210 (Mukesh Hans & Anr. -vs. .- Smt. Uma Bhasin & Ors.) the Ld. Advocate for respondent no.5 has submitted that the company is distinct from its shareholders and its directors. Neither the shareholders nor the director can treat the company's assets as their own. Directors of a company are liable for misappropriation of company's funds and other misfeasance, but not for an ordinary contractual liability of the company. The liability of the members or the shareholders or the directors is limited to the capital invested by them. The Ld. Advocate for respondent no.5 has also referred a decision of Hon'ble Supreme Court being Appeal (Crl ) 664 2002 (SMS Pharmaceuticals -vs. - Neeta Bhalla & Anr.) wherein in paragraph - 6B it has been held that merely being a director of a company is not sufficient to make the person liable Under Section 141 of the N. I. Act . A director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The Ld. Advocate for the respondent no.5 has further referred a decision of Hon'ble National Commission reported in 2017 (3) CPR 707 (M/s. Narne Estates Pvt. Ltd. & Anr. - vs.- Dr. E. Surender Rao & Anr.) which has already been cited by the Ld. Advocate for respondent no.4 where it has been held that in absence of any plea, oral submission made by Counsel cannot be entertained.
The plain reading of the provisions of Section 168(2) of the Company Act make its manifestly clear that a director of a company shall be liable for the Act done by him during his tenure as a Director of the Company and shall be liable even after his resignation for the offences which occurred during his tenure and the resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later. The decision passed by Maharashtra State Commission in the case of Kiran Baliram Sarode (supra ) also speaks that the director will be liable if the deposit is made by complainant/depositor during the tenure of the director and not the deposit after the resignation of the concerned director. The decisions referred by the Ld. Advocate for the appellant in the case of New Horizons Ltd. (supra) and the decision in the case of State of Rajasthan & Ors. (supra) indicate that the doctrine of lifting of corporate veil depend primarily on the realities of the situation and the aim of the legislation to all the parties and it depend primarily on the realities of the situation. In other words, there is no straight-jacket formula and the lifting the veil is permissible depending upon the facts and the circumstances of the case. The decision in the case of SMS Pharmaceuticals Ltd. (supra) or the decision in the case of Mukhesh Hans & Anr. (supra) are also consistent with the above view.
The materials on record indicate that the indenture of Sale was executed between the appellants and the respondent no.1 Company in the year 2014. The said agreement for Sale does not speak the month or date when the execution of Agreement had taken place. However, it is quite clear that respondent no.2/OP No.2 put his signature on behalf of respondent no.1 company in the said Agreement for Sale. The evidence on record also goes to show that respondent no.5 was inducted as a Director of respondent No.1 Company on 11.11.2011 and he tendered resignation on 23.06.2014 which was accepted by respondent no.1 Company. The respondent no.4 was inducted as a director in January, 2014 and he resigned from the directorship of respondent no.1 Company on 02.03.2015. It clearly indicates that at the time of indenture of Sale, respondent no.4 was an active director of respondent no.1 Company. Since the indenture for Sale does not show any specific date as to the execution of the agreement and more particularly when respondent no.5 has resigned from respondent no.1 Company on 23.06.2014, certainly, the Ld. District Forum was quite justified in dismissing the complaint against respondent no.5/OP No.5. On the other hand, throughout the year 2014, respondent no.4/OP No.4 was a director of respondent no.1 Company and, therefore, respondent no.4 cannot absolve his responsibility regarding the alleged deficiencies made by the respondent no.1 Company towards the appellants.
In view of the above, the impugned judgement/final order is modified to the extent that the complaint is allowed against respondent nos. 1 to 4/Opposite Party Nos. 1 to 4 and dismissed against respondent no.5/Opposite Party No.5. The respondent nos. 1 to 4/Opposite Party Nos.1 to 4 are jointly and severally directed to refund Rs. 4,45,000/- to the complainants/appellants and also to pay compensation in the form of interest @ 10% p.a. from the date of each payments till its realisation. The appellants are also entitled to litigation cost imposed by the Ld. District Forum amounting to Rs.20,000/-. The above amount must be paid within 60 days from date in default the appellants/complainants may put the order in execution before the Ld. District Forum.
With the above observations and directions, the appeal stands disposed of.
The Registrar of the Commission is directed to send a copy of the order to the Ld. District Consumer Disputes Forum, Kolkata, Unit- III for information.
[HON'BLE MR. SAMARESH PRASAD CHOWDHURY] PRESIDING MEMBER [HON'BLE MRS. Dipa Sen ( Maity )] MEMBER