National Consumer Disputes Redressal
Sanjay K. Malviya vs Siddharth Enterprises And Anr. on 19 November, 2007
Equivalent citations: I(2008)CPJ74(NC)
ORDER
K.S. Gupta, J. (Presiding Member)
1. Challenge in this appeal is to the orders dated 4.8.1998 and 30.8.2007 of State Commission, Delhi. Along with Memo of Appeal, the appellant has filed application seeking condonation of delay in filing appeal against the order dated 4.8.1998 in terms whereof M/s. Transbridge Shipping Pvt. Ltd., OP No. 1. who was ex parte, was directed to pay a total amount of Rs. 4,28,500 to respondent No. 1 complainant. In execution proceedings by the said order dated 30.8.2007, the appellant has been ordered to make payment of the balance awarded amount of Rs. 2,14,000. Two Demand Drafts of Rs. 1,00,000 each and cash amount of Rs. 14,000 have been given on behalf of PreetiU. Rumade and Ulhas D. Rumade, Directors of OP No. 1, Company to respondent No. 1.
2. Submission advanced by Mr. Hiren Dasan for the appellant is that the appellant was not a party in the complaint wherein the order dated 4 8.1998 was made. Appellant was the Executive Director of OP No. 1-Co. sometime upto 1997. Appellant, thus, not being a party in complaint or Director of OP No. 1 on the date the award was made cannot be made to pay any amount to respondent No. 1. Further submission advanced is that by the order dated 30.8.2007, the State Commission without any basis has fixed the liability for payment of amount of Rs. 2,14,000 by the appellant. It is pointed out that the State Commission, Delhi did not have even the territorial jurisdiction to decide the complaint as the appellant for last so many years has been staying in Mumbai.
3. Copy of the order dated 4.8.1998 is at pages 1 to 5 while that of dated 30.8.2007 is at page No. 6. Former order would show that OP No. 1 had failed to appear in the complaint in spite of service of notice. Appellant as Director of OP No. 1 was not impleaded as a party in the complaint. At this juncture, decision in Ravi Kant and Anr. v. National Consumer Disputes Redressal Commission and Ors. I (1997) CPJ 271 (DB), which has bearing in this appeal need be referred to. In this case, the petitioner No. 1 and his wife-petitioner No. 2, Directors had sought issuance of a writ of certiorari quashing the orders of National Commission dated 8.12.1995 and order of the State Commission, Delhi dated 15.10.1993 in four Complaint Case Nos. C-242, C-243, C-255 of 1992 and C-82 of l993. By the order dated 15.10.1993 passed under Section 27 of the Consumer Protection Act, 1986 (for short the Act), the State Commission had imposed a sentence of one year simple imprisonment on petitioner No. 1 and directed him to pay fine of Rs. 5,000 in each of the four cases. Petitioner No. 2 was directed to pay fine of Rs. 10,000 in Case No. 243 of 1992. This order was confirmed by the National Commission on 8.12.1995. As may be seen from para No. 9 of the decision, the following issues arose for consideration before the High Court:
(1) Section 27 of the Act permitting penalties to be imposed by the Commission does not apply to a 'Company' in view of the definition of 'person' in Section 2(1)(m) and also because Section 27 refers to a 'person' and not to a Company and this is in contrast to Section 25 which refers to a Company.
(2) The principle of 'lifting the veil' applies only if the concerned statute creates a Penaliability against a Company and permits action against those who are in charge of the affairs or in control of the actions of the Company.
(3) As the case of the petitioner is that they have no money to pay the decrees passed by the Commission, the detention of the 1st petitioner in jail is violative of Article 21 of Constitution of India and in view of Jolly George Varghese v. Bank of Cochin .
(4) The liability of the petitioners is only upto the value of shares held by them. Any recovery of monies against the Company could be only through the winding up proceedings which are pending in respect of the two companies.
4. After elaborate discussion, it was, inter alia, held that the penal provision in Section 27 of the Act can be applied to the Directors of the Companies, notwithstanding the absence of a specific provision for action against those in-charge of or in control of the affairs of the Company. Obviously, this ratio will equally apply as regards applicability of the provision in Section 25 of the Act. Complaint pertained to the transactions of the year 1996 with OP No. 1 Company. In view of above decision, it was not necessary of the appellant being also impleaded as party being Director in addition to OP No. 1 - Company to fasten liability arising out of the award passed against the Company. Since the appellant does not dispute that he was the Executive Director of respondent No. 1-Company in the year 1996, the order dated 4.8.1998 is binding on him. It was open to respondent No. 1 to have recovered the amount as awarded by the order dated 4.8.1998 from all or any of the Directors of O.P. No. 1-Company as also the Company. Issue of territorial jurisdiction is a mixed question of law and fact and was not before the State Commission. Assuming that there is sufficient cause to condone the delay in question, none of the two orders under challenge suffer from any legal infirmity calling for interference under Section 21(a)(ii) of the Act.
Accordingly, the appeal is dismissed.