B.K.SETHI, MANAGING DIRECTOR INDU VIDEO FILMS (P) LTD. vs DELHI FINANCIAL CORPORATION

SHRI B.K. Sethi, Managing Director, Indu Video Films (P) Ltd., has filed this complaint under the Consumer Protection Act, 1986. Opp. Parties No. 1, 2, 3, 5 and 6 respectively are Chairman, Managing Director, Deputy General Manager, Legal Officer and Manager (Disbursement) of the Delhi Financial Corporation (for short Corporation) while Opp. Party No. 4 Shri S.S. Sodhi is Ex-General Manager of the said Corporation. Various reliefs have been claimed in this complaint. At pages 16 & 17 of the Complaint, the Complainant has claimed the following reliefs: "Release of the balance sanctioned amount i.e. Rs. 11,00,000/- lacs within 30 days from the application to complete the Unit. No interest payable by the unit w.e.f. 87 till equipment is complete in all respects. Interest for 87 to 89 payable by PNB as they never released the amount to the Unit for the purchase of equipment in March, 88. Payment of damages/loss incurred by the unit to be paid forthwith. Individual cases to be initiated against the employees whose action has killed the Unit. After the unit is complete in all respects, the Unit will clear off the liability within a period of 2 years. In the prayer clause the relief claimed is: "a decree of Rs. 1,22,94,000/- (rupees one crore twenty-two lacs and ninety-four lacs only) be passed in favour of the complainant and against the respondents along with directions to release the balance of the equipments sanctioned in the sanction letter and also cancel the interest on the amounts released so far and adjust the loan amount due from the complainant from the above amount and pay the balance amount of Rs. 1 crore and ninety-four thousands only (Rs. 1,00,94,000/-). Pendente lite and future interest of 18% per annum on the above amount be granted to the complainant against the respondents.

ACCORDING to the allegations in the complaint the Unit of the Complainant is a Small Scale Unit registered with Directorate of Industries as well as with the Ministry of Information and Broadcasting who have given equipment under concessional scheme of the Ministry of Finance to establish a production centre for generation of video software by the Unit. IDBI under their special scheme also offered the facility of refinance to the Corporation. NFDC has also given clearance to the Unit for the export of programmes. The Corporation sanctioned a loan of Rs. 33,20,000/- towards the purchase of 39 items vide their sanction letter dated 5/13th March, 1987. However, the Corporation released funds amounting to Rs. 22,16,000/-, only for 18 items out of the list. Funds for all items were never released and thus the Unit never started production till today. Out of the released amount of Rs. 12,61,400/- was paid to the Punjab National Bank vide cheque dated 26th August, 1987 for crediting in the ''Special Account with the Punjab National Bank to be utilised as and when delivery of the equipments required to start the productions from M/s. Gujarat Communications and Electronics Ltd., Baroda were ready. However, without disclosing the grounds, on 7th December, 1987 i.e. just after three months of the inauguration of the Unit, the Corporation sealed the Unit under Section 29 of the Delhi State Financial Corporation Act, (for short the Act) resulting in: (a) cancellation of working capital by the Punjab National Bank, (b) cancellation of job work in hand, (c) Non-release of funds by the Punjab National Bank lying in the ''Special Account, for the purchase of equipment from Gujarat Communications and Electronics Limited, (d) Piling of overheads like rent of the unit" salaries and other operation cost. (e) loss of reputation, (f) cancellation of various orders of production of films processed by the various Ministries if the Government. (g) orders of award of tenders won by the Company from Ministry of Agriculture were not released to the Company as the unit of the Company had been sealed.

The Corporation got defective insurance policy intentionally and the Unit was not got covered under theft/burglary and this caused a loss of Rs. 2.30 lakhs to the Unit as some of the articles lying in the premise of the Unit were stolen. The Corporation again sealed the Unit on 4th May, 1990 on the ground of non-payment of two installments whereas the equipment by which the Unit was to become operational was never realized by the Corporation in spite of assurances. First Dr. G.C. Sood a retired Dy. Directors of Industries was appointed consultant and Rs. 2,500/- was paid to him monthly by the Complainant. However, his efforts to bring back the Unit on the rails were never accepted by the Corporation. Dr. Sood''s actions were strong and he used to stress that equipment asked for was the life line of the Unit and unless and until equipment was complete, no generation was possible. The Corporation removed Dr. Sood and one Shri T.R. Mannan, a person from the postal Department, was brought as consultant who had no knowledge of any industry.

THE Corporation never took any action against the Punjab National Bank in spite of IDBI''s letter for initiating action against the Bank which did not release funds lying in trust in the ''Special Account''. The funds were released only after a period of 14 months.

AFTER the Unit was handed over back to the Complainant by the Corporation on 10th July, 1990, a commitment was made by the Complainant to pay Rs. 50,000/- monthly w.e.f. November, 1990. The said commitment was kept up till March, 1991 and thereafter the problem of DESU (Delhi Electric Supply Undertaking) was so grim that the Unit had virtually no power for more than 22 days in a month. Section 29 of the Act was again sought to be enforced against the Unit in September, 1991. However, the Chairman of the Corporation asked the Unit to pay Rs.2.00 lakhs before March, 1992 which was paid. An amount of Rs. 50,000/- was to be paid on 31st March, 1992 which could not be paid as the payment from the Ministry was not released to the Unit. The payment was released on 28th April, 1992 and the same was paid to the Corporation on 30th April, 1992. However, the Corporation took possession of the Unit on 2nd May, 1992 under Section 29 of the act in spite of the fact that the Complainant had delivered a letter of request on 1st May, 1992 after the receipt of notice under Section 29 of the Act but no action was taken on that letter. Repeated requests were made for the release of funds for the generating of video software but to no avail. A similar request was made to the Small Scale Industry Corporation but they also did not accept the same as the main finance facility was given by the DFC.

IT was further alleged by the Complainant that on account of sealing of the Unit on 7th December, 1987 by the Corporation, the Punjab National Bank cancelled the working capital loan and also did not release funds out of ''Special Account'' for the purchase of essential equipments. The possession of the Unit was delivered back l½ months thereafter but in spite of it the Punjab National Bank did not permit operation of the various accounts. The Corporation also did not release the second charge and pari passu charge in favour of the Indian Overseas Bank which had taken over the accounts of the Punjab National Bank. Indian Overseas Bank had sanctioned working capital vide their letter dated 11th August, 1988 and requested the Corporation for giving second charge and pari passu charge in their favour which the Corporation had given in favour of Punjab National Bank earlier. The same was given on 8th March, 1989 and thus the working capital was released by the Indian Overseas Bank only on 13th May, 1989.

THE Complainant procured tender for 1988-89 for production of video film from Ministry of Agriculture for producing of as many as 60 documentaries on behalf of the Agriculture Ministry. However, the Unit could not do so as equipment was not complete. Hiring of equipments from outside was not possible as the working capital had been withdrawn by the Punjab National Bank and the creation of charges in favour of the Indian Overseas Bank took 8 or 9 months so the year went by. The Complainant could produce only two films of Rs. 1,45,000/- only. Thus causing a direct loss of Rs. 35,00,000/- which could have easily liquidated the entire liability of the Corporation. The Unit had entered into contract with M/s. CIET (NCERT) for production of films but it was not able to execute any film as the equipment was not made available and the job was cancelled. Tills caused a loss of Rs. 5.00 lakhs. A contract was entered into with M/s. Diamond Comics (P) Ltd. for producing video films on children but it also could not last long as the equipment was not complete. This also caused a loss of Rs. 30.00 lakhs. Another contract with M/s. Prime Time Communications (P) Ltd. was made for advertisements in the programmes of the Complainant''s Unit but this also could not be fulfilled for non-availability of entire equipment and the quality of production was not acceptable to the client. This further resulted in a loss of about Rs. 10.00 lakhs. Hiring of equipment was not done as the equipment was not complete. Otherwise it could have generated Rs. 2,45,44,000/- and keeping in view that 100 per cent turnover was not possible, the Complainant could at least make 50 per cent turnover and thus could have generated Rs. 1,22,94,000/- and this amount can be taken as loss having been caused to him. For release of funds for the balance 21 items various meetings were held with the Chairmancum-Managing Director and General Manager Sh. S.S. Sodhi, with the Consultants Dr. G.C. Sood and Shri T.R. Mannan and many letters of requests were written. In addition to these letters and meetings, the issue of release of funds was taken in every Board meeting after the appointment of the nominee Director of the Corporation Shri S.P. Madan, Deputy General Manager (Technical) Mr. Lekh Chand and Mr. Goyal were also asked to submit reports but in spite of their recommendations balance equipments were not released. The report of the said persons are with the Corporation and which may be ordered to be produced. The entire project has collapsed owing to the non-procurement of the balance equipment. No Sanction of the Unit is complete to generate cash to pay the installment. The Complainant has cited ten witnesses including himself in support of his case.

THE Delhi Financial Corporation contested the complaint. It averred that the complaint is not maintainable in view of the decision of this Commission in M/s. Special Machines, Karnal . The Complainant has not come before the Commission with clean hands. He has already filed a suit being Suit No. 1824 of 1992 titled M/s. Indu Video (P) Ltd. v. Delhi Financial Corporation in the High Court of Delhi wherein he had set out similar facts and raised similar disputes and an interim injunction was prayed for in the said suit which was not granted. The Complainant in his suit has not claimed damages against the Corporation and in fact has not prayed for any specific relief. Hence the Complainant would be deemed to have given up all his relief and consequently the present petition would be hit by the provision of res judicata. The petition itself is bad for misjoinder of parties as the officers or ex-officers of the Corporation are not liable to be impleaded as parties. Their impleadment is an abuse of the process of law. No relief can be granted against the officers as they have been discharging their duties and there is not even a mention in the complaint that these officers have acted beyond their jurisdiction or in a malafide manner.

ON merit it was averred that the Complainant was sanctioned a loan of Rs. 33.20 lakhs for which a mortgage deed was executed by the borrower in favour of the Corporation. Initially the loan of Rs. 22.80 lakhs was disbursed on 22nd July, 1987 for purchase of machinery. The Complainant was to return the loan in 16 installments commencing from 1st August, 1987. Interest of 17.5% per annum with 4% rebate in case of prompt payment and 1.5% additional interest was payable in the event of default. The complainant committed default right from the beginning. A show cause notice was issued in December, 1988 itself. After the receipt of the said notice no dispute was raised by the borrower; on the contrary he prayed that the installment payable fur August and November 1988, February and May 198C) may be deferred. He undertook to remit the a mount of Rs. 50,000/- per month vide his letter dated 10th July, 1990. The payment of Rs. 50,000/- per month was to start from November, 1990. Default was again committed and again the borrower agreed to undertake to remit the sum of Rs. 75,000/- per month from December, 1989 but again defaulted. In view of the persistent default and since despite efforts of the Corporation to facilitate payment of loan as per the request of borrower, the borrower failed to assure repayment of the amount in any manner, the Corporation was compelled to issue a notice under Section 29 of the Delhi Financial Corporation Act, It was issued on 6th April, 1990 and the possession of the Unit was taken over on 4th May, 1990. A third party approached the Court and obtained ex-pane order dated 23rd April, 1990 in Company Petition No. 36 of 1989 and subsequently the Unit was ordered to be wound up and official liquidator was directed to take the possession of the assets. Subsequently these proceedings were stayed a ad the Company was permitted to clear the dues of the third party. On the repeated request of the Company and its undertaking to the Corporation, the Corporation agreed to handover the possession of the Unit to the borrower on 11th of July, 1990. The borrower again defaulted and did not make the payment as per its commitments. The Corporation gave a number of opportunities to the borrower to repay the amount in accordance with the terms and conditions of the Agreement and letter dated 10th July, 1990. All efforts of the Corporation failed. From the various letters it will appeal that the borrower has all along been admiring his liability and it never raised any dispute and had been asking the Corporation to give accommodation which was given by the Corporation from time to time. However, the borrower failed to repay the amount in spite of repeated requests and promises. Being left with no other alternative the Corporation was compelled to issue a fresh notice under Section 29 of the Act on 25th September, 1991 which again was kept in abeyance on the assurance and promise of the borrower which, however, were not kept up and a '' final notice under Section 29 of the Act was issued on 26th February, 1992 and the possession of the Unit was taken on 2nd May, 1992. Till date the borrower has failed to clear the dues and even to make substantial payments towards the amount due to the Corporation. The outstanding amounts from the borrower as on 1st November, 1991 was Rs, 40,93,711.46 and on 1st May, 1992 the total amount due was Rs. 42,34,626.32. The respondent has submitted that the Complainant should not be permitted to take advantage of his own wrongs and defaults. The Corporation denied the fact that the Joan was sanctioned against the purchase of 39 items. The loan is said to have been granted to the Complainant company to start the business and for establishment of Unit. The Corporation received complaints from the various creditors of the Complainant-Company .and after inquiring the genuineness of the Complaints, the Corporation decided that the Complainant Company had not acquired competence for their credibility and they had got dispute with various trade creditors, (In this regard the minutes of the meeting dated 6th January, 1988 have been Annexed as Annexure-VI.)

WHEN the loan was in the process of release some irregularities regarding the power of attorney submitted by the Complainant Company came to the knowledge of the Corporation and accordingly a committee comprising the D.G.M., Managing Director, Manager Accounts and R& C and Manager (Appl.)of the Corporation was constituted to inquire into the issue about the execution of the power of attorney by Shri Mohan Lal Chopra uncle of Shri P.K. Sethi, Complainant on the basis of which the collateral security was mortgaged to the Corporation. According to the report of the said committee the power of attorney submitted by Shri Mohan Lai Chopra was false and fake. On the basis of said report the Corporation initiated action against the Complainant Company under Section 29 of the Act. Subsequently the premises were locked and the possession of the assets was taken over by the Corporation. Thereafter, a genuine collateral security was executed and registered mortgage was created in favour of the Corporation. The possession of the Unit was restored to the Complainant Company. (These facts relate to the sealing of the Complainant''s Unit on 7th December, 1987).

IT was further averred that due to the controversy started by the Complainant Company and upon finding, the irregularities, the Corporation first appointed Shri S.P. Madan, Bank Manager (Development) as nominee Director of the Complainant Company and Dr, G.C. Sood as consultant. During the intervening period various complaints were received from some of the creditors of the Complainant Company about business transactions. There was a main complaint of over invoicing of the air-conditioning equipment for which the Corporation had given a disbursement of Joan amount. The above said persons appointed by the Corporation had examined the complaints. There was no occasion to take action against the Punjab National Bank. On the contrary the Complainant Company committed various defaults of the agreement entered into between the parties and also committed various irregularities. No crisis or problem was created by DESU. The Corporation also denied the fact that the loss as alleged by the Complainant was suffered by him due to the non-release of loan and alleged illegal enforcement of Section 29 of the Act. The Complainant''s Unit has been killed by its own Directors and officials by committing various deeds and acts. The Corporation is a Public Financial institution and the funds involved are public money and the Complainant cannot be allowed to misuse/misutilise the public money for personal gains and benefits. The Corporation denied the other allegations of the Complainant.

THE Complainant filed a rejoinder to the counter of the Corporation and pleaded that the case relates to deficiency of service on the part of the Corporation and, therefore, the complaint is maintainable under the Consumer Protection Act. In the suit filed in the Delhi High Court a reference has been made in the plaint that for damages a separate case was being filed. The Officers and ex-officers of the Corporation are liable for their action and deeds as they have acted on the wrong orders given by their officers, General Managers and are liable in their personal capacity. These officers have acted beyond their jurisdiction with mala fide intentions. That in the mortgage deed the first installment was to become due only on 1st August, 1988 and before that the entire fund of Rs. 33,20,000/- should have been released for the purchase of the essential items. The Corporation joined hands with the business competitors of the Complainant and made them to develop misleading facts and concocted stories against the Complainant. The details with regard to the false power of attorney are wrong. The same was a creation of the Corporation and since they had initiated an action on some doubt developed, notice could have been given. In order to save its own face in this regard, the Corporation got other mortgage deed registered once again on the property after the equitable mortgage. It was prayed in the replication that the reports submitted by Dr. G.C. Sood and Mr. T.R. Mannan be got produced from the Corporation to make the matter clear.

THE parties were heard and we have gone through the record carefully and written arguments submitted by the parties have also been perused. We may, however, mention here that in the written sub-miss ions the Complainant has also made reference to facts averred by him in his separate complaint filed against Punjab National Bank. We are not taking note of those facts. After careful consideration we are of the opinion that in the circumstances of the present case and in the interest of justice the complainant should be directed to take recourse to the remedy by way of a civil suit in the competent Court of law.

AS noticed earlier the complaint has been filed against the officers and one ex-officer of the Corporation. The present working officers can be taken as representing the Corporation, however, no such explanation can be given about the ex-officer namely Shri S.S. Sodhi. The contention of the Complainant in his replication is that officials and ex-officials acted with mala fide intention while obeying the orders of their seniors. Under the Consumer Protection Act a complaint can be filed if there is deficiency in the rendering of service. Service was to be rendered by the Corporation. However, no complaint can be filed against its officers, particularly ex-officer, on the ground that they acted with mala fide intentions. For claiming compensation on this ground the Complainant will have to go to Civil Court.

ANOTHER fact to note is that the pleadings of the parties which have been reproduced in detail above contain many disputed and complicated facts requiring recording of lot of evidence and going through numerous documents. The Complainant has filed numerous documents which are at pages 21 to 192 of the paper book. The Corporation has also filed documents which are at pages 217 to 279. The Complainant has also relied upon certain reports sent to the Corporation by Dr. G.C. Sood and Shri T.R. Mannan and which are said to be in the possession of the Corporation. It is further to be noted that the main contention of the Complainant throughout is that the Corporation did not release the remaining sanctioned loan for purchase of 21 items and, therefore, the Unit could not become fully functional. However, in a letter dated 20th July, 1988 (which is at page 215) the Complainant''s Unit had written to the Corporation as follows:" "Delhi Financial Corporation has very kindly sanctioned our Company a term loan of Rs. 33,20,000/- out of which only a sum of Rs. 22,88,000/- has so far been released, leaving a balance of Rs. 10,32,000/-yet to be released. 2. On account of change in the circumstances the entire sanctioned but unreleased amount may not be required for implementing the project as originally envisaged. Therefore it is suggested that some of the sanctioned amount may kindly be re-allocated and released to the Company for carrying out a publicity campaign to refurbish the image of the company and procure more fund generating business". By this letter only Rs. 2,90,000/- were asked for publicity campaign. This letter requires explanation as it is in conflict with some of the letters written by the Complainant to the Corporation subsequently. Evidence has to be taken of many witnesses to determine controversial facts. Thus a scrutiny of lot of evidence and documents has to be undertaken in this complaint. For this purpose the proper forum as noticed above is a Civil Court. Here we may reproduce with advantage the observation of this Commission made in case M/s. Special Machines Ltd., Karnal v. Punjab National Bank & Ors., 1991 1 CPJ 78 "We have already referred to the statement made by Counsel appearing on behalf of the complainant that he is prepared to undertake not to press for any detailed examination of witnesses on his side but cannot ignore the nature of the pleas raised by the Bank in its defence and the submission made on its behalf by the learned Attorney that elaborate oral as well as documentary evidence will have to be adduced. We find that having regard to the complicated nature of the pleadings filed in the case and the issues of fact arising therefrom, the submission made by the respondent Bank that the questions arising for consideration in the case cannot be satisfactorily adjudicated upon without elaborate oral and documentary evidence being adduced and scrutinised is well founded. The contentions advanced by the plaintiff that there has been manipulation of accounts, failure to give credits, over charging of interest at various stages and incorrect maintenance of accounts etc. would necessitate a detailed scrutiny of the books of accounts maintained by the Hindustan Commercial Bank Limited and its successor-in-interest (Respondent Nos. 2 and 3) in relation to the different heads of transactions (accounts) that the complainant had with the said Bank over a period of more than 12 years (1975-76 to 1987-88). Such elaborate scrutiny and settlement of accounts can be satisfactorily undertaken and performed only in a regular civil suit and not in proceedings before this Commission under the Act which are more or less summary in nature.

The procedure for disposal of complaints under the Act has been laid down in Section 13 of the Act, the provisions of which are made applicable to proceedings before the National Commission by Rule 14(2) of the .. Sub-sections (2) and (3) of Section 13 of the Act show beyond doubt that the statute does not contemplate the determination of complicated issues of fact involving taking of elaborate oral evidence and adducing of voluminous documentary evidence and a detailed scrutiny and assessment of such evidence. It is no doubt true that the Forums constituted under the Act are vested with the power to examine witnesses on oath and to order discovery and production of documents. But such power is to be exercised in cases where the issues involved are simple such as the defective quality of any goods purchased or any shortcoming or inadequacy in the quality, nature and manner of performance of a service which the respondent has contracted to perform for consideration. Even in such cases, if it appears to the concerned Forum under the Act that the issues raised cannot be determined without taking elaborate oral and documentary evidence it is open to it to decline to exercise jurisdiction and refer the party to his ordinary remedy by way of suit." For the foregoing reasons we decline to exercise jurisdiction in this complaint case and refer the Complainant to his ordinary remedy by way of institution of a civil suit in a competent Court having jurisdiction. We make no order as to costs.