CP Act : Non payment of FDR on Maturity

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

1.       The Chandigarh S.B.O.P Employees Cooperative U.S.E.  Thrift

           & Credit Society Limited,  House  No.163, Gali No.6, Shanti                           Nagar, Manimajra, U.T.Chandigarh through its Secretary.

      2.        The Secretary,  The Chandigarh S.B.O.P  Employees Co-                              operative   U.S.E.  Thrift & Credit Society Limited,R/o House                           939, Sector-25, Panchkula.  

                                                                                     ----Appellants

VERSUS

Satnam  Kaur wife of Raghbir  Singh,    resident of House No.1670/1, Sector-40-B, Chandigarh.   

                                                                         ...Respondent.

Appeal U/s 27-A of Consumer Protection Act, 1986

                  CORAM: Justice Sham Sunder(Retd), President

                                  Mrs.Neena Sandhu,Member

     PRESENT:Sh.Deepak Aggarwal, Advocate,  for the  appellants.

                        Sh.Sandeep Bhardwaj, Advocate, for the respondent.

PER  JUSTICE SHAM SUNDER (Retd), PRESIDENT

            This appeal is directed against the order dated 14.11.2011, rendered  by the District Consumer Disputes Redressal Forum-I, U.T., Chandigarh (hereinafter to be called as the District Forum only),in Criminal Petition  No.72 of 2011,  vide which, it sentenced H.K.Singla, Secretary of respondent No.1(now appellant No.1) Society to undergo  imprisonment for two years, and to pay a fine of Rs.10,000/-,  and in default of payment thereof, to undergo further imprisonment for a period of six months, under Section 27 of the Consumer Protection Act,1986(hereinafter to be called as the Act only), for non-compliance with the common order dated 7.5.2009 passed  in Complaint Case No.1280 of 2008,whereby Complaint Case no.1281 titled as Satnam Kaur Vs Registrar of Societies & ors. was also disposed of on similar lines. 

2.         The facts, in brief,  are  that the complainant(now respondent )filed  Consumer Complaint No.1281 of 2008  against the Opposite Parties, stating therein, that, being allured by the assurances, given by the Opposite Parties, she agreed to invest money, in their  fixed deposit scheme. Accordingly she deposited Rs.35,000/- on 2.8.2006, vide Fixed Deposit Receipt No.7282, which was issued for a period of 12 months  and the Opposite Parties were to pay interest @ 12% p.a.. The date of maturity was 2.8.2007.  The maturity  value of the Fixed Deposit Receipt was Rs.39,200/-. After the completion of one year i.e. when the Fixed Deposit Receipt matured, the complainant approached the Opposite Parties for return of the same, but to no avail. It was stated that since the Opposite Parties failed to return the amount of the complainant with interest , which was deposited with them, they were deficient, in rendering service and indulged into unfair trade practice. When the grievance of the complainant, was not redressed, left with no other alternative, she filed a complaint  under Section 12 of the Act.

3.         The complaint was accepted by the District Forum, vide order dated 7.5.2009, in the following manner ;

“  Opposite Parties No.2 & 3 are directed to pay to the complainant, within 30 days from the date of receipt of copy of the order, a sum of Rs.39,200/-  on the agreed rate of interest of 12% per annum with effect from 2.8.2007 till the amount is actually paid to the complainant. They shall also pay Rs.5000/- as cost of litigation. ”

4.      Against the said order dated 7.5.2009 passed by the District Forum,  Opposite Party No.1(now appellant No.1)  filed appeal bearing No.446 of 2009 before this Commission, which was disposed of, vide order dated 16.10.2009, with the direction, that the entire amount, in terms of the order passed by the District Forum, shall be paid to the complainant/respondent by the appellant/Opposite Party, on or before 31.3.2010, failing which, the appellant/Opposite Party shall be liable to pay penalty of Rs.7000/-,  in that  case, besides the amount payable in terms of the order passed by the District Forum.  

5.      The Opposite Parties (now appellants) did not comply with the orders dated 7.5.2009 and 16.10.2009, referred to above.  Thus, a  Criminal Complaint/Execution Application  under Section 27 of the Act, was filed, by the complainant, to punish them, for not complying with the aforesaid orders.

6.         A Show Cause Notice was issued to the Respondents/Opposite Parties, by the District Forum. Mr.H.K.Singla, Secretary of the Society appeared and stated that he had no means to make  payment in his personal capacity and, the moment, the money was received from the Society, the payment would be made, as there was award by the Arbitrator in favour of the respondents.  He further stated that he had no objection, if he was sent to civil prison for non-compliance of the order dated 7.5.2009.

7.      From the statement, made by Mr.H.K.Singla, Secretary of the Society, the District Forum came to the conclusion, that the respondents/Opposite Parties were not ready to comply with the order, referred to above.

8.       Accordingly Criminal Petition/Execution Application was accepted and Mr.H.K.Singla, Secretary of the Society, was sentenced  to undergo imprisonment, as stated in the opening para of the instant order.

 9.        Feeling aggrieved, the instant appeal was filed by the appellants under Section 27A of the Act.

10.       We have heard the Counsel for the Parties, and have gone through the record of the case, carefully.

11.       The Counsel for the appellants, submitted that, Mr.H.K.Singla, Secretary, could not be held personally liable, and, as such, the District Forum erred in law, in awarding him sentence under Section 27 of the Act, referred to above.  The submission of the Counsel for the appellants, in this regard, does not appear to be correct.  It is evident, from the record of the case, that Consumer Complaint No.1281 of 2008  was filed by Smt.Satnam Kaur, respondent/complainant against the Registrar of the Societies, the Chandigarh SBOP Employees Coop. USE Thrift & Credit Society Ltd. and the President/Secretary of the said Society. It means that Mr.H.K.Singla, who was the Secretary of the Society, at the relevant time, was impleaded as a party to the Consumer Complaint, by the complainant. The District Forum allowed the Consumer Complaint against the Chandigarh SBOP Employees Coop. USE Thrift & Credit Society Ltd., as also against the President/Secretary of the said Society, who were Opposite Parties No.2 & 3 therein.  Both the aforesaid Opposite Parties No.2 & 3 were directed to pay to the complainant, within thirty days, from the date of receipt of a certified copy of the order, a sum of Rs.39,200/-, at the agreed rate of interest of 12% p.a. with effect from 2.8.2007 till the amount was actually paid to him(complainant) alongwith costs of litigation to the tune of Rs.5000/-. As stated above, feeling aggrieved, against the order of the District Forum, in the Consumer Complaint, First Appeal No.446 of 2009 was filed by the Chandigarh  SBOP Employees Coop. USE Thrift & Credit Society Ltd. (now appellant No.1). The same was disposed of, in the manner, referred to above. Since the Consumer Complaint was accepted and the order therein, as stated above, was passed against the Society, as also against the President and the Secretary of the same, it could not be said that Mr.H.K.Singla, who was the Secretary of the Society, at the relevant time, was not personally liable to comply with the order passed in the Consumer Complaint. The submission of the Counsel for the appellants, in this regard, being devoid of merit, must fail, and the same stands rejected. 

12.       Even if, the  Secretary had not been impleaded, as a party, in the Consumer Complaint, in person, the proceedings under Section 27 of the Act could be initiated against him, for non-compliance of the order.  All the provisions of Code of Civil Procedure are not applicable to the proceedings before the Consumer Fora, except those, specifically  mentioned under Section 13(4) of the Act. The Society was not to act itself. The Society was to act through its office bearers i.e. the President and the Secretary etc.  In Ashish Ramesh Chandra Birla & Ors.Vs Murlidhar Rajdhar Patil & Ors.I(2009)CPJ200(NC), a Consumer Complaint was filed against Siddhi Vyankatesh Urban Co-operative Credit Society Ltd. Jalgaon, that some amount was invested with it, in a Scheme launched by it, but it failed to pay the same, on maturity.  The complaint was, ultimately, accepted by the District Forum.  Aggrieved against the order of the District Forum, First Appeal was preferred, before the State Consumer Disputes Redressal Commission, which was dismissed. Dissatisfied with the orders of the District Forum and the State Commission, Revision Petition was filed, before the National Consumer Disputes Redressal Commission, taking up an objection, that the Directors of the Society were not personally responsible, for any default of repayment of the maturity amount, by the Society. Ultimately, the National Consumer Disputes Redressal Commission held that the Directors of the Society were jointly and severally liable to pay the amount of maturity and were rightly held to be deficient, in rendering service, by the Foras below. In Sanjay K.Malviya Vs Sidhharth Enterprises & Anr. I(2008)CPJ 74(NC), it was held that the provisions under Section 27 could be applied to the Directors of the Companies, notwithstanding the absence of specific provision, for action against those incharge of the  affairs of the Company.  It was further held that impleadment of the Directors of the Company, as parties, in addition to the  Company, in the Consumer Complaint was not necessary.  It was further held that the orders passed by the Foras below against the Company were binding on the Directors of the Company. In the instant case, the position is certainly better than the one,  prevailing in the aforesaid cases. In the instant case, as stated above, the President and the Secretary, were also impleaded as  parties to the Consumer Complaint. The Secretary of the Society Mr.H.K.Singla (now appellant No.2) was also impleaded as respondent No.2 in Criminal Petition/Execution Application No.72 of 2011. Under these circumstances, the submission of the Counsel for the appellants, being without merit, must fail, and the same stands rejected.

 13.        The Counsel for the appellants, however, placed reliance on S.K.Alag Vs State of Uttar Pradesh and Others (2008) 5 Supreme Court Cases 662, Maksud Saiyed Vs State of Gujarat and others (2008) 5 Supreme Court Cases 668, Madhumilan Syntex Ltd. and others Vs Union of India and another (2008) 1 Supreme Court Cases(Cri)143, S.M.S. Pharmaceuticals Ltd. Vs Neeta Bhalla and another 2005  Supreme Court Cases (Cri)1975, Standard Chartered Bank and others Vs Directorate of Enforcement and others(2005) 4 Supreme Court Cases 530, Monaben Ketanbhai Shah and another Vs State of Gujarat and others 2004 Supreme Court Cases (Cri) 1857, to contend that it was the Society, with which the amount was deposited, by the complainant/respondent, which was liable to repay the maturity value of the Fixed Deposit Receipt alongwith the agreed rate of interest, and the Secretary could not be held vicariously  liable.  In S.K.Alag’s case(supra), which related to the offence under Section 406 of  the Indian Penal Code, it was held that vicarious liability could not be fastened on the Managing Director of the Company for the alleged offence committed by it(Company). In Maksud Saiyed’s case (supra), it was held that no vicarious liability could be fastened upon the Director of the Company  when the accused was the Company under the provisions of Indian Penal Code.  In Madhumilan Syntex Ltd.’s case (supra), it was held that where an assessee Company failed to pay into the account of Central Government, the amount of tax, deducted at source, the Company or its Directors, held, not immune from prosecution.  In S.M.S. Pharmaceuticals Ltd.’s case (supra), which related to the interpretation of Sections 138 and 139 of the Negotiable Instruments Act,1881 (amended upto date), it was held that essential averments were required to be made, in the complaint, that particular Directors were responsible to the Company for the conduct of its day to day business. In Standard Chartered Bank and others’ case(supra), which related to the interpretation of  the provisions of  the Foreign Exchange Regulation Act,1973, it was held that, if an offence is committed  by a Company attracting mandatory punishment of imprisonment and fine, though the Company cannot be sentenced to imprisonment, it could nevertheless be prosecuted and the Court could impose punishment of fine instead. In Monaben Ketanbhai Shah and another’s case (supra),  which related to the interpretation of Sections 138 and 141 of the  Negotiable Instruments Act,1881, it was held that the primary responsibility of the complainant is to make necessary averments, in the complaint, and establish the fact that when the offence was committed the accused were in charge of and responsible to  the firm, for the conduct of its business.

14.       There is, no dispute, about the principle of law, laid down, in the aforesaid cases, relied upon the Counsel for the appellants. However, the facts of the instant case, are completely distinguishable, from the facts of the aforesaid cases.  None of the cases, relied upon by the Counsel for the appellants, related to the interpretation of the provisions of Section 27 of the Act. Those cases related to the vicarious liability of the Directors of the Company under the Indian Penal Code, under the Foreign Exchange Regulation Act,1973,  under the Income Tax Act, or under the Negotiable Instruments Act,1881.  In the instant case, the principle of law, laid down in Ashish Ramesh Chandra Birla & Ors   and Sanjay K.Malviya ‘s cases(supra) relating to the interpretation of the provisions of Section 27 of the Act, shall be applicable.  No help, therefore, can be drawn by the Counsel for the appellants, from the principle of law, laid down, in the cases, relied upon by him, and cited in the foregoing paragraph. The submission of the Counsel for the appellants, therefore, being devoid of merit, must fail, and the same stands rejected.

15.       It was next submitted by the Counsel for the appellants that Mr.H.K.Singla, Secretary of the Society, as per bye-laws, was not charged with the duty of receiving the amount of Fixed Deposit Receipts, from the depositors/members of the Society. He further submitted that, if any amount was deposited, that was deposited with the Society, and not with the Secretary, and, as such, he could not be made liable to comply with   the Order passed in the Consumer Complaint, and, thus, he could not be sentenced to undergo imprisonment under Section 27 of the Act. It may be stated here, that the District Forum, as per  the order, passed by it, in the Consumer Complaint held the Society, as also the President/Secretary of the same jointly and severally liable to pay the amount.  That order was challenged in First Appeal No.476 of  2009, which was disposed of vide order dated 16.10.2009, referred to above. The order passed in  the Consumer Complaint, which was affirmed by this Commission, has attained  finality. This Commission, therefore, cannot go beyond the order passed by the District Forum in the Consumer Complaint and affirmed by this Commission.  Such an argument, on the part of the Counsel for the appellants, being completely devoid of merit, must fail, and the same is rejected.

16.       It was next submitted by the Counsel for the appellants, that when show cause notice was issued to Mr.H.K.Singla, Secretary of the Society, he put in appearance, and made a statement, referred to above. He further submitted that no further opportunity was afforded to him, to comply with the order. He further submitted that, at the time of making statement before the District Forum, in Criminal Petition, Mr.H.K.Singla was in distress.  He further submitted that even his complete statement was not recorded.  This submission of the Counsel for the appellants, does not appear to be correct. When show cause notice was issued to H.K.Singla, he put in appearance. Complete details were mentioned,  in the show cause notice.  It was for Mr. H.K.Singla to file objections, to the show cause notice or to seek a date for filing reply to the same.  He did not do so.  On the other hand, he voluntarily made a statement on 14.11.2011, before the District Forum, wherein he stated that  he was unable to comply with the order.  There is nothing, on record, that he was in distress.  The statement made by H.K.Singla is complete in all respects. Since Mr. H.K.Singla showed his inability to comply with the order, no option was left with the District Forum than  to pass  an appropriate order under Section 27 of the Act, in Criminal Petition No.72 of 2011.  Under these circumstances, the submission of the Counsel for the appellants, being devoid of merit, must fail, and the same stands rejected.

 17.         No other point, was urged, by the  Counsel for the parties.

18.              In view of the above discussion, it is held that the order passed by the District Forum, being based, on the correct appreciation of facts and circumstances of the case, as also the  record, does not suffer from any illegality or perversity, warranting the interference of this Commission. The same is liable to be upheld.

19.           For the reasons recorded above, the appeal, being devoid of merit, must fail, and the same is dismissed,  with no order as to costs. The order of the District Forum is upheld.

20.       Certified Copies of this order be sent to the parties, free of charge. 21.       The file be consigned to Record Room.

Announced

December 19, 2012                                     Sd/-

                                                            [JUSTICE SHAM SUNDER(Retd)]

                                                                       PRESIDENT

                                         (NEENA SANDHU]  MEMBER