INTERNATIONAL HOUSING DEVELOPMENT CORPORATION LTD. vs SUNITI PAL

VIDE this order, one appeal and one revision petition are being disposed of. Appeal No. 697 of 1997 has been filed by International Housing Development Corporation challenging order of District Forum, Amritsar dated 6.5.1996 giving direction to the appellant to refund a sum of Rs. 5,400/- with interest at the rate of 15% p.a. from the date of deposit till realisation alongwith cost of litigation Rs. 500/-. Since the aforesaid order was not complied with, after notice to K.K. Puri, Managing Director of International Housing Development Corporation, the District Forum on an application filed by the complainant Suniti Pal passed an order of sentencing him to undergo simple imprisonment for one month and to pay fine of Rs. 2,000/-, in default of payment of fine to undergo simple imprisonment for 15 days. Revision Petition No. 10 of 1997 has been filed by International Housing Development Corporation through K.K. Puri, the aforesaid challenging order of the District Forum dated 2.5.1997. Alongwith the revision petition, copy of the order passed by this Commission in Revision Petition No. 4 of 1997 dated 13.5.1997 was produced. Another copy of the order passed by the High Court on a Company Miscellaneous Application in Company Petition No. 15 of 1997, Smt. Meena Sarin and Others v. M/s. International Housing Development Corporation, dated 21.2.1997 has been produced which was on application filed under Section 450 of the Companies Act. An Official Liquidator has been appointed as Provisional Liquidator to manage the affairs of the Company till its formal winding up. Three questions of law that arise in these cases which are of great significance are as under : (i) Whether proceedings under the Consumer Protection Act could be continued and culminate in final order giving direction to the opposite party a Company whose winding up proceedings had commenced under the Company Application and Official Liquidator has been appointed as Provisional Liquidator? (ii) In a case where the High Court had appointed Official Liquidator as Provisional Liquidator in petition under Section 450 of the Company Application could a Director of the Company against whom order had been passed by the District Forum for payment of certain amount be sentenced under Section 27 of the Consumer Protection Act for noncompliance thereof. As after appointment of the Official Liquidator, the Directors of the Company could not make payment on behalf of the Company to its creditors. (iii) Whether the District Forum, Amritsar could entertain the complaint or the proceedings against the opposite party, a Company who was not having headquarters or branch office within the territorial jurisdiction of District Forum, Amritsar when no cause of action or part thereof had accrued there?

SUNITI Paul a resident of Amritsar claiming to be a consumer filed the complaint against the appellant-Company. The appellant-Company published a pamphlet and launched a scheme as approved by the Reserve Bank of India for raising funds. A Branch Office was opened at Amritsar. SUNITI Paul is alleged to have deposited amount in the account of the Company at Amritsar who had issued certificates for such deposits, particulars of which are given in para 4 of the complaint. The complainant as per scheme was to be given housing loan after two years which was not granted and the amount deposited was not refunded that the complaint was filed for repayment of Rs. 5,200/- with interest at the commercial rate of 24% and compensation of Rs. 5,000/- and costs. The Company contested the complaint and submitted its version. Preliminary objections were taken that the complainant was not a consumer as defined nor he had hired the services of the opposite party. It was admitted that the complainant had lent money to the company and was entitled to get the same with interest on maturity of certificates. No cause of action had accrued. There was no deficiency in rendering service. District Forum had no jurisdiction to entertain the complaint. The complaint was barred by time. The complaint was pre-matured. The complaint was not properly signed. On merits, it was stated that the opposite party was running a deposit scheme to receive the deposits in monthly instalments for different periods. On maturity, the amount was refundable with interest. For getting loan from the Company, separate applications were required to be filed before the Corporation and the loans were to be granted under the scheme. Issuing of certificate in favour of the complainant of the value of Rs. 12,000/- was admitted. Instalments of Rs. 200/- p.m. were to be made. (Letter Annexure ''C''). The complainant deposited only Rs. 5,200 / and failed to pay the balance instalments. After expiry of five years, i.e. 13.12.1994, the amount was refundable. The application for the grant of loan was not properly made supported by necessary documents. There was Branch Office of the Company at Amritsar which was subsequently closed. Some documents were produced by the parties on the basis of which final order of payment was made by the District Forum on 6.5.1996 which is challenged in appeal. On application for condoning delay in filing the appeal was filed to which reply was also submitted by the respondent. In the application for condoning delay, it was alleged that copy of the order was received through Fax (not sent by the District Forum).

On 2.7.1997, when representative of the appellant was at Amritsar to attend to another case filed by Mohinder Pal Singh, he came to know of the passing of the impugned order and also when proceedings under Section 27 of the Consumer Protection Act were initiated. Further details are not necessary to be mentioned. In the reply, it is mentioned that personally copies of the orders passed by the District Forum were handed over to Shri K.K. Puri at Amritsar on 2.7.1997. However, the orders were not complied with. The delay in filing the appeal deserves to be condoned as it is not clear if the District Forum had communicated passing of the final order to the appellant. It was otherwise brought to the notice of the representative of the appellant Corporation about passing of the order that he started process of filing the appeal or the revision. The delay in filing the appeal thus is condoned.

TAKING up the third point as mentioned above first, at the time the complainant deposited amount at Amritsar, the appellants had their office there which was subsequently closed. At the time of filing of the complaint, the opposite party was not having any branch office at Amritsar. Since part of cause of action accrued at Amritsar where the amount was deposited, the District Forum, Amritsar had the jurisdiction to entertain the complaint, in view of Section 11(c) of the Act. It is so held. The two other questions formulated above can be decided together which would finally dispose of the appeal as well as the revision petition. The remedy under the Consumer Protection Act is in addition to the remedy available in the ordinary Civil Courts. In that sense Consumer Protection Act is a general law. The Company Act is a special law relating to the matters of the Company and after winding up proceedings are commenced, effective order of winding up or any order in that process is passed/ it will have its effect on the civil suits or legal proceedings pending in different Courts against such a Company. Section 446 of the Companies Act reads as under : "446(1) When a winding up order has been made or the Official Liquidator has been appointed a Provisional Liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the Company, except by leave of the Court and subject to such terms as the Court may impose. (2) The Court which is winding up the Company shall notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of- (a) any suit or proceeding by or against the Company; (b) any claim made by or against the Company (including claims by or against any of its branches in India); (c) any application made under Section 391 by or in respect of the Company; (d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the Company; whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the Company, or before or after the commencement of the Companies (Amendment) Act, 1960. (3) Any suitor proceeding by or against the Company which is pending in any Court other than that in which the winding up of the Company is proceeding may, notwithstanding contained in any other law for the time being in force, be transferred to and disposed of by that Court. (4) Nothing in Sub-section (1) or Sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court".

SECTION 443 of the Companies Act authorises the Company Court to make any interim order that it thinks fit on hearing winding up petition. Such an order appointing Official Liquidator as Provisional Liquidator in the matter of winding up of the appellant Company was passed on 9.5.1997 in the Company Petition No. 15 of 1997. Since the impugned order was passed by the District Forum, Amritsar on 6.5.1996, the same can not be held to have been passed illegally by the District Forum on the ground of the matter having been taken up in the Company Petition No. 15 of 1997 instituted later. The Delhi High Court had the occasion to consider the matter where only petition under the Company Act had been filed before the High Court and no order of winding up had been passed. It was held that FORA under the Consumer Protection Act could deal with the matter and pass appropriate orders Ravi Kant and Another v. National Consumer Disputes Redressal Commission & Ors., I (1997) CPJ 271 (DB).Thus in the present case, validity of the order passed by the District Forum cannot be questioned on the ground that subsequently the High Court had passed interim order appointing Official Liquidator in the process of winding up proceedings. As to what would be the effect of an order passed by the High Court in a Company Petition on the proceeding initiated under Sections 15 and 7 of the Consumer Protection Act remains to be considered. 9 As already observed above, remedy under the Consumer Protection Act is in addition to the remedy under the Civil law. In this context, reference be made to the decision of the Supreme Court, AIR 1985 (SC) 194, Sanam Verma v. Union of India. In this case the Apex Court had held that the FORA established under the Act has the trappings of a Civil Court and is a judicial authority. These observations are made after making reference to different provisions of the Consumer Protection Act. Under what conditions the jurisdiction of the FORA would be ousted was under consideration of this Commission in Sampuran Singh Deol v. The Manager, Doraha Primary Cooperative Agricultural Development Ltd. & Ors., II (1997) CPJ 481. The question for consideration therein was as to whether the provisions of the Cooperative Societies Act put special provisions barring jurisdiction of other Courts in respect of matters dealt therein was considered. Judgment of the Supreme Court and other decisions referred to were Dalip Singh and Ors. v. Prabandhak Sahakari Bhumi Vikas Bank Maryadit Jhabua and Another, 1996 (1) CON.LT 191 and The Chairman, Thiruvalluvar Transport Corporation v. The Consumer Protection Council, I (1995) CPJ 3 (SC). It was held that the FORA established under the Consumer Protection Act could not entertain the complaint where the dispute under the Cooperative Societies Act could be adjudicated under such provisions. Applying the ratio of the decisions aforesaid and taking into consideration the provisions of Section 446 of the Companies Act, ho manner of doubt is left in coming to the conclusion that the matters covered under the provisions of the Companies Act are to be dealt with under such provisions particularly after order of winding up or appointment of Official Liquidator in the process of winding up of a Company has been passed. No suit or other proceedings can be instituted relating to affairs of such a Company and if instituted or pending, they are to be transferred to the High Court (Company Judge). An appeal is continuation of the original cause. The present appeal challenging order of the District Forum passed on merits cannot be finally adjudicated in view of the bar provided under Section 446 of the Companies Act as on the material produced already referred to above. Company Judge has appointed Official Liquidator to take over the Company in the process of winding up. Appeal is, therefore, ordered to be transferred to the High Court for disposal according to law by the Company Judge. 10. Revision Petition No. 10 of 1997 has been filed challenging order of the District Forum sentencing K.K. Puri to imprisonment and fine under Section 27 of the Consumer Protection Act. Such proceedings are not required to be transferred to the High Court in view of Section 446 of the Companies Act for the simple reason that such proceedings are not suit or other legal proceedings. Section 27 of the Act is a penal provision providing penalty of sentence and fine and are thus in the nature of criminal proceedings. The bar of Section 446 of the Act is not attracted to the criminal proceedings. 11. The question for consideration is as to whether K.K. Puri could be sentenced under Section 27 of the Act after an order of appointment of Official Liquidator has been made by the Company Judge (High Court). After such an order had been made, none of the Directors of the Company could deal with the finances of the Company even if orders or decrees have been passed against the Company. There was thus a legal justification for K.K. Puri not to honour the order of the District Forum as he was unable to do so. It was not a case of deliberate disobedience of the order of the District Forum that any order of sentence or fine could be passed. This revision petition for the reasons stated above is allowed and order of the District Forum passed under Section 27 of the Consumer Protection Act sentencing and fining K.K. Puri is set aside. Revision allowed.