Modern Threads (India) Ltd. vs LT.COL.B.K.SHARMA

SINCE the above mentioned appeals, filed by the appellant named above, under Section 15 of the Consumer Protection Act, 1986 (hereinafter to be referred to as ''the Act'') have common facts and also raise common questions for consideration, the same, with the consent of the learned Counsel for the appellant and the respondents/authorised representatives of the respondents/learned Counsel for the respondents, have been heard together and are being disposed of finally by this common order.

THE facts, relevant for the disposal of the above mentioned appeals, briefly stated, are that the appellant is a Company duly incorporated and registered under the Companies Act, 1956, having its Registered Office at A-4, Vijaypath, Tilak Nagar, Jaipur, and a Branch Office at 709-Ansal Bhawan, 16-Kasturba Gandhi Marg, New Delhi. In all the above mentioned appeals, the respondents had made deposited with the appellant. THE deposits, so made by the respondents, with the appellant were to carry interest at the agreed rate and after the date of maturity, the same were payable by the appellant to the respondents together with interest. In some of the cases, the appellant had even issued post-dated cheques in advance towards the repayment but the same on presentation were not honoured. Since the appellant failed to pay the amount of deposits together with agreed rate of interest to the respondents, the respondents filed separate complaints against the appellant before the District Forum, under Section 12 of the Act with the prayer that the appellant be directed to refund the amount of deposits together with interest, compensation and costs. The claim of the respondents, before the District Forum, was contested by the appellant, who filed written reply/written version. In the reply/written version, filed on behalf of the appellant, while admitting the deposits made by the respondents, it was stated that the District Forum had no jurisdiction to entertain the complaints and the Company Law Board vide order dated 29.12.1997, had already approved a scheme for repayment to the creditors including the respondents. It was stated in the reply/written statement that there was no cause of action for the respondents for filing the complaints. It was prayed that the complaints filed by the respondents be dismissed with costs.

The learned District Forum, vide orders, being impugned in the present proceedings, has rejected the pleas/contentions raised by the appellant, allowed the complaints and has directed the appellant to refund to the respondents the amounts in question alongwith interest and costs.

FEELING aggrieved, the appellant has preferred the above mentioned appeals under Section 15 of the Act. Notice of the appeals, preferred by the appellant, was given to the respondents, who in some of the matters have entered appearance either through their duly authorised Advocates or through their duly authorised representatives or in person. We have heard the learned Counsel for the appellant, the learned Counsel for the respondents, the authorised representatives of the respondents and also the respondents, who had appeared in person, in the above mentioned appeals and have also carefully gone through the documents/material placed on record by the parties. In the light of the challenges laid and contentions advanced at the Bar, we formulate the following questions, which arise for our decision in the present appeals : 1. Whether the respondents, in the present appeals, are ''consumers'' within the meaning of Section 2(1)(d) of the Act ? 2. Whether, in the given facts, the appellant was providing any ''service'' within the meaning of Section 2(1)(o) of the Act ? 3. Whether in view of order dated 29.12.1997, passed by the Company Law Board, Northern Region Bench, New Delhi, in the matter of Modern Threads (India) Ltd., the respondents/complainants could have approached a FORA constituted under the Act ? 4. Whether the District Forum had no territorial jurisdiction to entertain the complaints filed by the respondents? 5. Whether, in the given facts, it can be stated that there was ''deficiency in service'' on the part of the appellant within the meaning of Section 2(1)(g) of the Act ? Question Nos. 1 and 2

SINCE both the above questions are inter-connected, therefore, we would be dealing with the same together. The term ''Consumer'' has been defined in Section 2(1)(d) of the Act and, therefore, it would be appropriate for us to refer to that definition of the word ''Consumer'' at this stage, which reads as under : "''Consumer'' means any person who- (i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made within the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or (ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who (hires or avails of) the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person; Explanation-For the purpose of Sub-clause (i) "commercial purpose" does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood by means of self-employment."

The term ''Service'' has been defined in Section 2(1)(o) of the Act which runs as under : "Service" means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both [housing construction] entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service." On a bare perusal of the above provisions of the Act, it is apparent that definition of the word ''Consumer'' as defined in Clause (d) of Sub-section (1) of Section 2 and that of the word ''Service'' as defined in Clause (o) of Sub-section (1) of Section 2 of the Act, is of a wide sweep. The above provisions of the Act as contained in Sections 2(1)(d) and (o) came up for consideration before the Hon''ble Supreme Court in case Lucknow Development Authority v. Shri M.K. Gupta, III (1993) CPJ 7 (SC)=1986-95 CONSUMER 278 (SC)= (1994) 1 SCC 243, and Their Lordships of the Supreme Court in the abovesaid case have held : "To begin with the Preamble of the Act which can afford useful assistance to ascertain the legislative intention, it was enacted, to provide for the protection of the interest of consumers. Use of the word ''protection'' furnishes key to the minds of makers of the Act. Various definitions and provisions which elaborately attempt to achieve this objective have to be construed in this light without departing from the settled view that a preamble cannot control otherwise plain meaning of a provision. In fact, the law meets long felt necessity of protecting the common man from such wrongs for which the remedy under ordinary law for various reasons has become illusory... The word ''consumer'' is a comprehensive expression. It extends from a person who buys any commodity to consume either as eatable or otherwise from a shop, business house, corporation, store, fair price shop to use of private or public services. In Oxford Dictionary a consumer is defined as ''a purchaser of goods or services''. In Black''s Law Dictionary it is explained to mean, ''one who consumes. Individuals who purchase, use, maintain and dispose of products and services. A member of that broad class of people who are affected by pricing policies, financing practices, quality of goods and services, credit reporting, debt collection, and other trade practices for which State and Federal Consumer Protection Laws are enacted. xxx xxx Xxx xxx xxxx xxx xxx Xxx xxx xxxx xxx xxx xxx xxx xxxx The legislature has taken precaution not only to define ''complaint'', ''complainant'', ''consumer'', but even to mention in detail what would amount to unfair trade practices by giving an elaborate definition in Clause (r) and even to define ''defect'' and ''deficiency'' by Clauses (f) and (g) for which a consumer can approach the Commission. The Act thus aims to protect the economic interest of a consumer as understood in commercial sense as a purchaser of goods and in the larger sense of user of services."

(Emphasis supplied)

ALMOST a similar question, as to whether a depositor who has made deposits with the Company or a firm in response to an offer from the firm, inviting deposits from general public, on promise of attractive rates of interests, is a ''Consumer'' or not and whether a Company or a firm inviting deposits on promise of attractive rates of interests and prompt repayment of principal and interest on the expiry of the stipulated period with full security for investment, is providing ''Service'' for consideration, within the meaning of the Act, came up for consideration before the National Commission in case Neela Vasant Raje v. Amogh Industries & Anr., III (1993) CPJ 261 (NC)=1986-95 CONSUMER 446 (NS), and the National Commission in the abovesaid case has made the following observations which are of utmost significance in the present context : "In interpreting a social welfare legislation one should not make a narrow approach but should be guided by the principles of benevolent interpretation which will help to promote and achieve the object and purpose of the Act namely, to protect the interests of consumers and suppress the evil sought to be remedied by the statute namely the unscrupulous exploitation of consumers. The main part of the definition of the expression ''service'' is couched in the widest possible language and it expressly covers ''service of any description'' other than any service rendered ''free of charge'' or ''under a contract of personal service''. The mere fact that a particular form of arrangement for provision of a facility does not fall within any of the specified categories enumerated in the inclusive part of the definition is absolutely of no consequence as long as the arrangement entered into between the parties is one of rendering ''service'' as that expression is generally understood in common parlance. We are quite clear in our minds that when a Company or a firm invites deposits on promise of attractive rates of interest and prompt repayment of principal and interest on the expiry of the stipulated period with full security for the investment in the shape of the assets of the Company or firm, it is in essence of an offer by the Company of providing to persons interested a safe avenue for investment of their funds with an assurance of prompt repayment and full security of investment. The consideration for the arrangement consists of the fact that the Company or firm is enabled to use the funds deposited with it for the purposes of its business. Such a transaction in our opinion is clearly one of providing service for ''consideration'' and the depositor is clearly a ''consumer'' under the Act. In construing the scope of a Social Welfare Enactment we have to take note of the current state of our society and the ground realities of life confronting the common people. To be offered a safe avenue for investing one''s funds with assurance of reasonable return in the shape of interest and sound security for repayment is certainly to be regarded as a ''service'' under the contemporary conditions prevailing in our society. It is a well known fact which we cannot lose sight of that it is common practice with many hundreds of thousands of middle class families and retired pensioners to invest their funds in such schemes of deposits launched by companies and firms and it would not be right to take a hypertechnical view regarding such an arrangement and deny relief under the Act to these depositors in the event of the Company or firm failing to discharge their obligations in the matter of repayment of the principal and interest on the basis of the arrangement of service entered into between the parties."

(Emphasis supplied)

THE above mentioned decisions of the Apex Court and that of the Apex Commission clinch the matter finally and placing reliance on the abovesaid decisions of the Hon''ble Supreme Court and that of the National Commission, we hold that the respondents, in the above noted appeals, are decidedly ''Consumers'' within the meaning of Section 2(1)(d) of the Act and the appellant in the given facts was providing ''Service'' within the meaning of Section 2(1)(o) of the Act. Question No. 3 During the course of arguments, the learned Counsel for the appellant, stated that in view of order dated 29.12.1997, passed by the Company Law Board, Northern Region Bench, New Delhi, in the matter of the appellant Company, the complaints filed by the respondents before the District Forum, constituted under the Act, were not maintainable and should have been dismissed by the District Forum on the above ground alone. This very question came up for consideration before the West Bengal Consumer Disputes Redressal Commission, Calcutta, in case Gyan Singh & Ors. v. Carry on Savings and Investments Company Ltd. & Ors., III (1994) CPJ 9, and the West Bengal State Commission, in the abovesaid case of Gyan Singh & Ors. has held : "With regard to the contention of the opposite parties that the matter should be adjudicated in the Company Law Board instead of filing this complaint before this Commission and it is not maintainable before the Consumer Disputes Redressal Forum, we do not agree with such views of the opposite parties because we are of the opinion that this Commission can entertain such complaint received from the complainants/petitioners and there is no bar to entertain such complaint by us in view of provisions of Section 3 of the Consumer Protection Act by way of additional remedy claimed by the complainants/petitioners if such actions are not in derogation of the provisions of any other law for the time being in force."

(Underlined by us)

A similar view has been taken by the Consumer Disputes Redressl Commission, U.T. Chandigarh, in case Ms. Simran Macker v. M/s. DCM Financial Services Ltd. & Ors., I (1999) CPJ 654. This Commission, in Case No. CA-528/97, entitled Thapar Agro Mills Ltd. v. Geetanjali Vasuja, has also taken the same view.

IN view of the position explained above, we are of the view that even after passing of order dated 29.12.1997 by the Company Law Board, the jurisdiction of FORA constituted under the Act is not ousted and a ''consumer'' aggrieved can still approach FORA constituted under the Act for redressal of his grievances. Question No. 4. The learned Counsel for the appellant, during the course of arguments, stated that the District Forum had no territorial jurisdiction to entertain the complaints in question. In our opinion, in the given facts, the above contention advanced by the learned Counsel for the appellant is also devoid of substance because as already stated the appellant Company though having its Registered Office at Jaipur, is also having a Branch Office at 709-Ansal Bhawan, 16 Kasturba Gandhi Marg, New Delhi. Moreover, the deposits in question from the respondents were accepted by the appellant at Delhi through its authorised agents and, thus, a part of the cause of action had arisen within the territorial jurisdiction of a Consumer FORA established under the Act and functioning in the Union Territory of Delhi. Question No. 5

DURING the course of arguments, it was stated by the learned Counsel for the appellant that the District Forum failed to appreciate that there was no ''deficiency in service'' on the part of the appellant within the meaning of the Act. Insofar as the above aspect is concerned, it is not in dispute that in response to an invitation, the respondents had made deposits with the appellant. It is also not disputed that the deposits so made by the respondents with the appellants were to carry interest at the agreed rate and after the date of maturity the same were payable by the appellant to the respondents together with interest. It is also not in dispute that the appellant due to financial crunch has failed to discharge the abovesaid obligation. The National Commission in Neela Vasant Raje''s case (supra) has held- "The default on the part of the Company or a firm to carry out its obligations to repay the principal and/or interest constitutes, in our opinion, ''deficiency in service'' so as to warrant the filing of a complaint before a Consumer Forum seeking relief under the Act."

(Emphasis supplied) In a subsequent decision, in case K. Kasi Annapurna & Ors. v. Smt. Vemuri Bharathi & Ors., I (1996) CPJ 43 (NC), it has been held by the National Commission- "It is well settled that the failure to refund the amounts deposits with any financial institution on maturity will amount to deficiency in service."

(Emphasis supplied) The above decisions of the Apex Commission clinch the matter finally and placing reliance on the abovesaid decisions of the Apex Commission, we have least hesitation in holding that in the given facts, there was ''deficiency in service'' on the part of the appellant. The learned Counsel for the appellant, during the course of arguments, has placed reliance on a number of decisions of the Hon''ble Supreme Court, National Commission and State Commissions in cases Sri Ram Dass Motor Transport Ltd. & Ors. v. Tadi Adhinarayana Reddy & Ors., (1997) 5 SCC 446; Chairman, Thiruvalluvar Transport Corporation v. Consumer Protection Council, I (1995) CPJ 3 (SC)=(1995) 2 SCC 479; State of U.P. v. Nawab Hussain, (1977) 2 SCC 806; M/s. E.I.D. Parry (India) Ltd. v. Baby Benjamin Thushara, I (1992) CPJ 279 (NC); Aggarwal Dyeing Industries v. Rajasthan Financial Corporation & Ors., II (1991) CPJ 341; Ravindra Kumar Dass v. Managing Director, II (1991) CPJ 344; Ruby Food Products v. Branch Manager, Tamil Nadu Small Industries Development Corporation, I (1992) CPR 91; and Dalip Singh & Ors. v. Prabhandhak & Anr., I (1996) CPJ 141. We have carefully gone through the above decisions of the Hon''ble Supreme Court, National Commission and various State Commissions, relied upon by the learned Counsel for the appellant. There can be no two opinions insofar as the proposition of law laid down therein is concerned, but the same in the facts and circumstances of the present appeals, in no way, help the cause of the appellant insofar as the present appeals are concerned.

IN view of the above discussion, in our opinion, the above mentioned appeals, filed by the appellant are liable to be dismissed. Accordingly, the same are dismissed. IN the facts and circumstances of the case, the appellant is also burdened with costs and it is directed that the appellant shall pay a sum of Rs. 500/- in each case to the respondents by way of litigation expenses. The appeals, mentioned above, stand disposed of in above terms. Appeals dismissed.