State Consumer Disputes Redressal Commission
Jaspal Singh Bhogal vs Daljit Singh Son Of Mehar Singh on 8 April, 2013
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.
1. Revision Petition No.7 of 2011
Date of institution : 14.02.2011
Date of decision : 08.04.2013
Jaspal Singh Bhogal son of Tara Singh, r/o H.No.14, Arjan Nagar,
Near Railway Colony, Jalandhar City.
.......Petitioner
Versus
1. Daljit Singh son of Mehar Singh and Mrs. Suraksha Devi alias
Rajinder Kaur W/o Daljit Singh, R/o H.No.B-17/371, Mata Rani
Chowk, Premgarh, Hoshiarpur.
......Respondent
2. M/s J.R. Finance Limited, Regd., H.No.802, Mota Singh Nagar
Market, Near Bus Stand, Jalandhar City through its present
Managing Director.
......Proforma Respondent
2. Revision Petition No.8 of 2011
Date of institution : 14.02.2011
Date of decision : .04.2013
Jaspal Singh Bhogal son of Tara Singh, r/o H.No.14, Arjan Nagar,
Near Railway Colony, Jalandhar City.
.......Petitioner
Versus
1. Davinder Kaur w/o Late Kashmir Singh, R/o H.No.B-17/371,
Mata Rani Chowk, Premgarh, Hoshiarpur.
......Respondent
First Appeal No.7 of 2011. 2
2. M/s J.R. Finance Limited, Regd., H.No.802, Mota Singh Nagar
Market, Near Bus Stand, Jalandhar City through its present
Managing Director.
......Proforma Respondent
3. Revision Petition No.9 of 2011
Date of institution : 14.02.2011
Date of decision : .04.2013
Jaspal Singh Bhogal son of Tara Singh, r/o H.No.14, Arjan Nagar,
Near Railway Colony, Jalandhar City.
.......Petitioner
Versus
1. Jagdish Kaur w/o Late S. Jagjit Singh, R/o H.No. B-11/670,
Kamalpur, Jalandhar Road, Hoshiarpur.
......Respondent
2. M/s J.R. Finance Limited, Regd., H.No.802, Mota Singh Nagar
Market, Near Bus Stand, Jalandhar City through its present
Managing Director.
......Proforma Respondent
4. Revision Petition No.10 of 2011
Date of institution : 14.02.2011
Date of decision : .04.2013
Jaspal Singh Bhogal son of Tara Singh, r/o H.No.14, Arjan Nagar,
Near Railway Colony, Jalandhar City.
.......Petitioner
Versus
First Appeal No.7 of 2011. 3
1. Rajinder Kaur @ Suraksha Devi, W/o Daljit Singh, R/o H.No.
B-17/371, Mata Rani Chowk, Premgarh, Hoshiarpur.
......Respondent
2. M/s J.R. Finance Limited, Regd., H.No.802, Mota Singh Nagar
Market, Near Bus Stand, Jalandhar City through its present
Managing Director.
......Proforma Respondent
Revision Petitions against the orders dated
6.12.2010 of the District Consumer Disputes
Redressal Forum, Jalandhar.
Quorum:-
Hon'ble Mr. Justice Gurdev Singh, President.
Shri Baldev Singh Sekhon, Member.
Present:-
For the petitioner : Shri A.S. Gill, Advocate. For respondent No.1 : Shri Sandeep Bansal, Advocate. For respondent No.2 : Proforma Respondent. JUSTICE GURDEV SINGH, PRESIDENT :
The above noted Revision Petitions have been preferred against the orders dated 6.12.2010 and 10.2.2011 passed by District Consumer Disputes Redressal Forum, Jalandhar (in short "District Forum") in E.A. No.118 of 2010, EA No.116 of 2010, EA No.117 of 2010 and EA No.115 of 2010, respectively, vide which bailable warrants were ordered to be issued against the petitioner in the said revision petitions for the recovery of the maturity of the FDRs in respect of which orders were passed by the District Forum while allowing the complaints filed by, Daljit Singh and Suraksha Devi, respondents/complainants, Davinder Kaur, respondent/complainant, Jagdish Kaur, First Appeal No.7 of 2011. 4 respondent/complainant and Rajinder Kaur @ Suraksha Devi, respondent/complainant. All these revision petitions are being decided together by one order as similar facts and similar question of law are involved.
2. The main facts are being taken from EA No.118 of 2010. The complaint filed by, Daljit Singh and Suraksha Devi, complainants was allowed by the District Forum on 25.2.2002 and M/s J.R. Finance Limited, which was sued through Jaspal Singh petitioner as the Managing Director, OP, was directed to pay Rs.2,00,000/- along with the contractual rate of interest from the date of the receipt of that amount till the payment thereof and Rs.1,000/- as costs. The OP filed an appeal against that order, which was dismissed by the State Consumer Disputes Redressal Commission, Union Territory, Chandigarh, to whom the same was transferred, vide order dated 25.2.2008. For the execution of the order the complainant filed an application under Section 27 of the Consumer Protection Act, 1986 (in short "the Act") on the ground that the OP had wilfully and intentionally failed to comply with the same. Notice was issued to the OP but no one appeared. Thereafter bailable warrant in the sum of Rs.5,000/- with one surety of same amount was issued against the OP for the compliance of the order. In pursuance of those warrants, Jaspal Singh, petitioner appeared and filed objections contending therein that he resigned as Managing Director and ceased to be the Member of the Board of Directors of the OP on 1.6.2005 and was no First Appeal No.7 of 2011. 5 more controlling the affairs of the Company. In reply to that application, it was pleaded by the complainants that the petitioner was continuously dealing with the affairs of the Company and even before the Hon'ble Supreme Court it was he who had been representing the Company/OP as the Managing Director. After hearing learned counsel for both the sides the objections were dismissed by the District Forum vide impugned order and bailable warrants were ordered to be issued against him, vide order dated 6.12.2010. Thereafter, he filed second objection petition in his individual and personal capacity. He contended therein that he was not impleaded as a separate party in the original complaint and it was filed only against the Company through him as he was Managing Director at that time. This Company is registered under the Companies Act, 1956 and, as such, is a juristic person. It is still in operation and as per the Company law, it is liable as he has already ceased to be the Managing Director/Director thereof since 1.6.2005. A Director of the Company cannot be made liable in his personal capacity. Therefore, the application under Section 27 of the Act is not maintainable and is liable to be dismissed against him. In reply to the objection petition, the complainants denied all the contentions raised therein. After hearing learned counsel for both the sides that application was dismissed by the District Forum, vide impugned order dated 10.2.2011. On the same day, a separate order was passed by the District Forum, vide which the petitioner was directed to deposit the amount in question within a period of 7 days First Appeal No.7 of 2011. 6 and on his failure to do so, sentenced him to undergo imprisonment for a period of six months and to pay a fine of Rs.5,000/- and in default thereof to further undergo imprisonment for a period of two months.
3. We have heard learned counsel for both the sides and have carefully gone through the records of the case.
4. It was submitted by learned counsel for the petitioner that the order for the execution of which the petitioner is being proceeded under Section 27 of the Act was passed against the Company i.e. M/s J.R. Finance Ltd. and at the time the complaint was filed, he was the Managing Director thereof. He resigned, as such, with effect from 1.6.2005 and ceased to be the member of the Board of Directors of the Company. Thereafter, he could not have been made liable for the affairs of the Company and the warrants could not have been issued against him. The position would have been different, if the Company had been wound up or winding up proceedings have been going on against it. Only in that eventuality the Directors thereof could have been proceeded against for the recovery of the amount. No such recovery can be effected from the petitioner in his personal capacity. Therefore, both the impugned orders are liable to be set aside and the bailable warrants issued against the petitioner are liable to be quashed/recalled. In support of his submissions, he cited 2008 (2) RCR (Civil) 551 (Om Parkash Walecha v. State of Haryana and others).
First Appeal No.7 of 2011. 7
5. On the other hand, it was submitted by learned counsel for the complainant that resignation of the petitioner from the OP-Company is a manipulated one. The order had already been passed against the OP before that date. Even appeal was preferred against that order before that date, though same was decided on 25.2.2008. It is very much apparent from the documents on record, which includes the copy of the order dated 22.1.2010 passed by the Hon'ble Supreme Court in S.L.P. No.25394-25397 of 2008, memo of parties filed in that S.L.P. and the affidavit of the petitioner, that he filed that S.L.P. in the name of the OP/Company as the Managing Director thereof. In the affidavit, which is dated 27.9.2008, he specifically deposed that he is the Managing Director of the Company and is well conversant with the facts of the case. He verified, as true and correct, the facts stated in the S.L.P. Thus, even after 1.6.2005, he had been representing himself to be acting as the Managing Director of the OP/Company. That makes it very much clear that the giving of information to the Registrar of Companies that he has ceased to be the Member of the Board of Directors is sham one and in order to play a fraud the same was done. Otherwise, he continued to be the Managing Director and it does not lie in his mouth to allege that he is not liable for the affairs of the Company as Managing Director of the Company after 1.6.2005. Moreover, the liability had already been incurred by the OP/Company when he was the Managing Director and, as already stated above, he was holding the same position when the order was passed against him. First Appeal No.7 of 2011. 8
6. When such is the position, can it be said that he cannot be proceeded against under Section 27 of the Act for the recovery of the amounts, which the OP/Company has been directed to pay to the above said complainants?
7. Learned counsel appearing on his behalf has placed reliance on Om Parkash Walecha's case (supra). That was a case where the recovery of tax was outstanding against the Company and the question arose whether the outstanding dues of tax payable by Company can be recovered from the Director of the Company in his personal capacity? The question was answered in the negative as there was no such provision in the Central or State Sales Tax Act to that effect. It was also held therein that the recovery in terms of Section 18 of the Companies Act can be only in case of winding up or formal liquidation of the Company and in the absence thereof Section 18 is not attracted. It was in the peculiar facts of that case that the said law was laid down.
8. The present case stands at a different footing. The answer to the above posed question stands answered by the judgment of the Hon'ble National Commission reported in I (1996) CPJ 260 (NC) (RAVIKANT & ANR. VERSUS MRS. VEENA BHATNAGAR & ORS.). In that case the Managing Director and the Director of the Company were sentenced under Section 27 of the Act and it was argued on their behalf that they were not personally liable for the decretal amount and no such complaint could be filed against them under Section 27 of the Act in their personal capacity. It was also contended that the First Appeal No.7 of 2011. 9 Company was in the process of liquidation and the charge thereof had already been given to official liquidator and that no attachment or recovery can be made or enforced against the Company by virtue of provisions of Section 441, 42, 446 and 537 of the Companies Act and that those provisions were to be followed by the Redressal Forum functioning under the Act (the Consumer Protection Act, 1986). It was held by the Hon'ble National Commission as under:-
"The State Commission rightly came to the conclusion that action can be taken against the Appellants under Section 27 of the act and observed that a command to a Corporation is in fact a command to those who are officially responsible for the conduct of the affairs of the Company. If after being apprised of the order directed to the Corporation, they prevent compliance or fail to take appropriate action, within their power for the performance of duty of obeying those orders, they and the Corporate Body, are both guilty of failure in the compliance of the orders. The Corporate veil has rightly been lifted and the Managing Director and the Director who have failed to comply with the basic orders of the State Commission, besides being personally liable First Appeal No.7 of 2011. 10 under some decrees to discharge the obligations of the payment of decretal amount, have been rightly convicted and sentenced. We uphold the conclusion and the sentence awarded by the State Commission in the impugned order."
9. The position has been made crystal clear by the ratio of the above said judgment and the District Forum was very much right in proceeding against the petitioner for the recovery of the amount in dispute under Section 27 of the Act. It is also to be noted that the petitioner was sentenced to undergo imprisonment and to pay fine in the event of non-payment of the amount in dispute, vide a separate order dated 10.2.2011, which has not been challenged by him.
10. From our above discussion, we conclude that there is no merit in these revision petitions and the same are hereby dismissed and the petitioner is burdened with costs of Rs.10,000/- in each revision petition, which are to be paid by him within 30 days.
11. A copy of this order be placed in the other revision petitions.
12. The petitioner deposited a sum of Rs.50,000/- on 3.3.2011 in compliance with the order dated 16.2.2011 in Revision Petition No.7 of 2011. Similarly, the petitioner deposited a sum of Rs.30,000/- on 3.3.2011 in compliance of the order dated 16.2.2011 in Revision Petition No.8 of 2011. He also deposited Rs.50,000/- on 3.3.2011 in compliance of the order dated 16.2.2011 in Revision Petition No.9 of 2011. He also deposited Rs.10,000/- on 3.3.2011 in compliance of the First Appeal No.7 of 2011. 11 order dated 16.2.2011 in Revision Petition No.10 of 2011. The registry is directed to refund the aforesaid amounts along with interest, if any, deposited in the aforesaid revision petitions to the respective respondent/complainant by way of crossed cheques/demand drafts after the expiry of 45 days under intimation to the District Forum and the petitioner.
13. The arguments in these cases were heard on 22.3.2013 and the orders were reserved. Now, the orders be communicated to the parties.
14. The revision petitions could not be decided within the statutory period due to heavy pendency of court cases.
(JUSTICE GURDEV SINGH)
PRESIDENT
April 08 , 2013 (BALDEV SINGH SEKHON)
Bansal MEMBER