NUCHEM LTD. vs SANTOSH GARG

BY this order we propose to dispose of the above mentioned 26 Appeals, filed by M/s. Nuchem Ltd. (hereinafter referred to as ''the Company''). The same are directed against a common order of the District Forum dated 9.11.1998, passed in proceedings under Section 27 of the Consumer Protection Act, 1986 (hereinafter referred as ''the Act) in Case No. 2618/98 entitled - Santosh Garg v. M/s. Nuchem Ltd. & Other cases, whereby bailable warrants of arrest have been issued against the Managing Director of the Company. The said proceedings under Section 27 of the Act came to be initiated on the basis of orders passed by the District Forum, dated 4.3.1998 and 11.6.1998 in which the complaints filed by various depositors were decided in their favour.

THE facts, giving rise to these appeals, are that the respondents had made Fixed Deposits of various amounts with the Company, to be returned to the respondents with interest at the agreed rate on maturity of the said deposits. However, the Company failed to pay back the said amounts to the depositors who filed complaints before the District Forum for the refund of principal as well as interest amount, alongwith compensation and costs. Before the District Forum, the Company took the defence that since the Company Law Board had already adjudicated upon the matter under Section 58-A of the Companies Act, 1956 and had passed orders dated 20.5.1997 laying down a schedule for the repayment of deposits and interest to the depositors, by the Company, the District Forum had no jurisdiction to take cognizance of the matter as the same was barred by the principle of res judicata. The learned District Forum, however, proceeded in the matter and passed common orders dated 4.3.1998 and 11.6.1998. Vide said orders, the District Forum directed the Company to pay to the depositors the principal amount alongwith interest as per schedule laid down by the Company Law Board order dated 20.5.1997. It was further held that in case of non-compliance of the said order, the Company would be liable to be dealt with under the provisions of Section 27 of the Act, and would also be liable to pay cost and compensation of Rs. 1,000/- for each default. Against the abovesaid order of the District Forum, the Company did not file any appeal under Section 15 of the Act. The respondents, however, filed applications under Section 27 of the Act against the Company, as the Company failed to comply with the orders of the District Forum within the prescribed period. The petitions under Section 27 of the Act were decided vide orders dated 9.11.1998, whereby bailable warrants of arrest were issued against the Managing Director of the Company. The present appeals are directed against the abovesaid order dated 9.11.1998.

We have heard the arguments advanced by Mr. V.S. Gupta, Law Officer of the Company as well as Colonel Vijay Pal, authorised representative of the respondents/depositors. We have also gone through the documents/material on record.

IN view of the contentions advanced on behalf of the parties before us the following issues arise for our consideration : (i) Whether the present appeals under Sections 15 and 17(a)(ii) are maintainable against order of the District Forum under Section 27 of the Act ? (ii) Whether, if treated as Revision Petitions, the matters in hand are maintainable under Section 17(b) of the Act ?

Issue No. I : Therefore, the question, first and foremost, before us is whether an appeal as envisaged under the Act lies against orders passed by the District Forum under Section 27 of the Act ? This very question came up for consideration before the State Commission, Haryana at Chandigarh in the case Kohinoor Carpets, Panipat & Ors. v. Rajendra Arora, reported as II (1991) CPJ 429. In that case the question whether an appeal is maintainable under Section 15 of the Act against the imposition of penalty by the District Forum under Section 27 was examined at length and the State Commission, Haryana held : "In the present interpretative exercise, the larger approach to the question seems not only to be important, but indeed crucial. It needs no great erudition to recall that the rigour and the technicalities of the earlier strict rule of grammatical construction have now been considerably mellowed down by, what is called, the schematic approach to the construction of a statute. The object and purpose of an Act is not to be lost sight of by myopically focusing oneself on a single provision thereof, as if it stood in total isolation. We are inclined to the view that the brief Section 15 is not to be construed as if in a vacuum, but only as one link in the chain of the other connected sections and in the larger mosaic of the statutory pattern of this Act. With this broader approach in mind, one has to read Sections 13, 14 and 15 of the Act together and construe them harmoniously. Section 13 somewhat exhaustively provides for the procedure on the receipt of a complaint by the District Forum. The succeeding Section 14, as its very heading shows, provides, in some detail, for the findings of the District Forum in its final order, after complying with the procedure prescribed. It is in this sequence that Section 15 immediately follows and lays down that any person aggrieved by an order made by the District Forum may prefer an appeal against it to the State Commission. The reference to the order under Section 14, though not explicit, is implicit in this provision. The intent is somewhat clear that the substantive right of appeal conferred by Section 15 is directed against the order made by the District Forum under Section 14 only.

Even if Section 14 is viewed with strictitude and in relative isolation, the same result would, in essence, ensue. Section 15 talks of an order made by the District Forum and not of any or every order made by it. It bears repetition that such an order has a contextual reference to the preceding Section 14 containing the findings of the District Forum on a complaint preferred before it under Section 12. To construe "an order" as "any order" in Section 15, when carried to logical lengths would lead to an obvious absurdity. If it were to be so, then every order, whether interlocutory, interim or one merely giving an adjournment made by the District Forum would come within the sweep of Section 15. This could hardly be the intent of the framers of the Constitution. It is well settled that even where two interpretations are possible, the one which leads to absurd or mischievous results, has to be necessarily avoided. Therefore, to read Section 15 as laying down that any and every order of whatever nature, passed by the District Forum would become appealable thereunder, appears to us as running patently against the basic canons of construction.

Considerable, if not conclusive support, is derived for the view we are inclined to take, by a close analysis of Sections 19 and 23 quoted above. A plain reading of Section 19, which confers similar, if not identical, right of appeal against the order of the State Commission, would show that any person aggrieved by an order made by the State Commission in exercise of its powers conferred by Sub-clause (i) of Clause (a) of Section 17 may prefer an appeal against such order to the National Commission. This in turn is confined only to the complaints preferred before the State Commission where the pecuniary value of the claim exceeds Rs. 1 lac. No other order of the State Commission, namely, within its appellate and revisional jurisdiction, is made appealable. The intent of the Parliament is, therefore, manifest from this provision that the appellate power is conferred only against the substantive orders of the State Commission made in its original jurisdiction on a complaint directly preferred before it. Since Section 19 expressly confines the appellate power against the exercise of jurisdiction by the State Commission under Section 17(a)(i) only, it necessarily follows that whenever the State Commission chooses to impose a penalty under Section 27, the said order would clearly not be appealable. The identical position then emerges in the context of Section 23, which provides for an appeal against the orders of the National Commission to the Supreme Court. This appellate power is again expressly limited to the exercise of jurisdiction conferred by Sub-clause (i) of Clause (a) of Section 21, which pertains only and exclusively to original complaints before the National Commission where the value of the goods and services and the compensation, if any, exceed Rs. 10 lakhs. No other order of the National Commission is made appealable. This being so, the identical legal position would be that whenever the National Commission also chooses to act under Section 27 and imposes a penalty thereunder, the same cannot be made the subject matter of any right of substantive appeal against it.

The legal position against it under Sections 19 and 23 being undisputedly manifest as above, the salient feature that emerges is the fact that the identical exercise of the power of imposition of penalty under Section 27 by the State Commission or the National Commission is not made appealable under the Act. Would it stand to reason to construe and hold that the same power under Section 27, when exercised by the District Forum, would become appealable under Section 15 ? In our view, it is not so. The language employed in Section 27 is again a pointer to the same effect. Thereby the failure or omission to comply with any order made by the District Forum, the State Commission or the National Commission, as the case may be, becomes subject to penalty thereunder. The three Redressal Agencies are put on an identical footing by the tenor of this provision. Therefore, it would be anomalous to hold that whilst in the case of the two Redressal Forums of the State Commission and the National Commission the exercise of the power under Section 27 is clearly non-appealable, yet, it would be so in the situation when the same is exercised by the District Forum. What next calls for pointed notice is the fact that Section 27, with its heading of ''Penalties'' appears long after Section 15 and at the fag end of the statute. It is followed only by Chapter IV, containing miscellaneous provisions under Sections 28 to 31. Contextually it deserves highlighting that the consistent scheme of the Act is that the right of appeal against the order of all the Redressal Forums constituted by the Act immediately follows the provisions pertaining to the procedure and jurisdiction thereof. This is the identical situation in the three distinct sections, namely, Sections 15, 19 and 23, which separately confer the appellate power against the substitutive orders of the District Forums, the State Commission and the National Commission respectively. Viewed in this light and in the context of the scheme of the statute, it would seem somewhat incongruous that the earlier Section 15 would envisage an appeal against the imposition of penalty by Section 27, which is considerably subsequent thereto. The scheme for enforcement of the orders of the three Redressal Agencies under the Act has then to be viewed in a larger perspective. This necessarily involves the co-relating of Sections 25 and 27 of the Act. Both these provisions are directed towards the speedy enforcement of the orders of the District Forum, the State Commission or the National Commission, as the case may be. To put it tersely both Sections 25 and 27 are in the nature of the execution proceedings of the orders made by the three Redressal Agencies. While Section 25 visualises the enforcement of such orders by a civil process, as if they were a decree or order made by the Court of law, Section 27 confers a quasi criminal sanction for their enforcement by way of punishment with imprisonment or imposition of monetary penalties. It is somewhat exiomatic that execution proceedings are not normally appealable, and it is only as a matter of rare exception that a statute may expressly provide for an appeal against the executory process. It is manifest that the Act does not in turn confer any right to appeal against the proceedings either under Section 25 or Section 27. Viewed from this angle as well, it would seem that any appellate power against the imposition of penalty under Section 27 is not to be easily countenanced by a process of strained interpretation. Before parting with this order, in all fairness, one must take notice of the contention of the learned Counsel for the appellant, which appears to us, as based more on sentiment, rather than logic. It was urged that the penalties under Section 27 envisage not only heavy monetary amounts by way of fine, but also a minimum term of imprisonment of one month and upto a period of three years. It was submitted that if such an onerous order, involving the very liberty of a citizen, was to be wholly unappealable, then in peculiar situations it might lead to a serious failure of justice, where the District Forum may go patently contrary to law. On compassionate grounds it was suggested that one appeal be provided against the order of this nature. In appraising the aforesaid contention, one has to recall the hallowed rule that the right to appeal is a pure creature of the statute. There is no inherent or natural right to a first appeal. If the Parliament in its wisdom does not provide any appeal from an order, it cannot be created on the ground that such an order is onerous in nature. The best Judge for the provision of the substantive right of appeal is the Legislature and not the Courts on any ground of compassion or sentiment. Consequently, if for the exhaustive reasons given above, it is found that the orders under Section 27 is not appealable, the same cannot be made so by interpretation on the ground of the rigour and onerousness of the penalties imposable under the said section. Apart from the above, we are inclined to view that even on larger principle de hors the specific provision, the stand taken on behalf of the appellants would be contrary to the very purpose and object of the Act, and its Rule. It is self-evident that the Act has been made to provide for the better protection of consumer, as has been spelt out in its preamble, and for the settlement of consumer disputes with particular emphasis on a summary and expeditious disposal thereof. This is evident from Sub-rule (9) of Rule 4 of the Haryana Consumer Protection Rules, which lays down that a complaint before the Redressal Agencies should be decided within 90 days, and at the highest within 150 days if the matter requires analysis or testing of goods by the laboratory. Similarly, Sub-rule (8) of Rule 8 prescribes a period of 90 days for the disposal of an appeal before the State Commission. The principle of expeditious disposal is, thus, writ large over the Act and the rules.

Now, as has been elaborated earlier, the orders under Section 27 in most of the cases would be in the nature of execution. The imposition of penalties by way of imprisonment or fine provides a quasi-criminal sanction for enforcing the substantive order of the Redressal Agencies. On the other hand, Section 25 lays down that the orders of the Redressal Agencies are executable as decrees or order of a Court by such agencies themselves or through the aid of the regular Civil Courts as well. The law delays with regard to execution of the order of the Courts have been epitomised in the hoary adage that in India the troubles of a litigant begin after he has obtained a decree in his favour. Obviously, having that in mind, the Parliament in the present Act having provided for the expeditious execution of the orders of the Redressal Agencies either under Section 25 or by way of penalty under Section 27. On a parity of reasoning if the contention of the appellants were to be accepted, the orders under Section 25 would also become equally appealable. If such orders are to become the subject matter of a first appeal, they could inevitably launch another chain of litigation merely with regard to execution of the substantive order. Once the order of the District Forum under Section 27 is made appealable to the State Commission under Section 15, then inevitably same would also come within the revisional jurisdiction of the National Commission as well. Thus, a labyrinth of litigative process would be unleashed afresh. The argument of rigour and compassion raised on behalf of the appellants is more than well met by the patent and urgent need of the expeditious disposal of disputes under the Act and ensuring the fruits of litigation to the consumer. Viewed from this angle also we are inclined to hold that a further appeal against the orders under Section 27 of the Act could neither be the intent of Legislature nor such a construction would advance the larger goal of this beneficient statute. To conclude, the answer to the question posed at the outset is rendered in the negative and it is held that no appeal under Section 15 lies against the imposition of penalty by the District Forum in exercise of its power under Section 27 above."

THE above view has been further endorsed and relied upon by the Rajasthan State Commission, Jaipur, in the case entitled M/s. Aggarwal Sales Corporation v. Jagdish Prasad Vyas, reported as I (1993) CPJ 538. THE above two decisions having dealt with the issue in hand, in exhaustive detail, we have no hesitation in holding that the present appeals are not maintainable against impugned order passed by the learned District Forum under Section 27 of the Act. Issue No. II : If we proceed to treat the matters in hand as petitions under Section 17(b) of the Act, instead of appeals the next question for our consideration would be about the maintainability of the same as petitions under Section 17(b) of the Act. Thus, it is pertinent to point out at the very outset, that the ambit and scope of petitions under Section 17(b) of the Act is very limited. The State Commission can interfere with or set aside an order of a District Forum only in the following eventualities : (a) that the District Forum has exercised jurisdiction not vested in it by law; (b) that the District Forum has failed to exercise jurisdiction vested in it; (c) that the District Forum has acted in exercise of its jurisdiction illegally or with material irregularity. The provisions of Section 17(b) of the Act and Section 115 of the Code of Civil Procedure, 1968 (hereinafter referred to as ''the CPC'') are almost identical except for the proviso to Section 115, C.P.C. The scope and extent of the latter provision came up for consideration before the Hon''ble Supreme Court in case entitled Shri M.L. Sethi v. R.P. Kapur, AIR 1972 SC 2379 : "The provisions of Section 115 of the Code have been examined by judicial decisions on several occasions. While exercising its jurisdiction under Section 115, it is not competent to the High Court to correct errors of fact however gross they may be, or even errors of law, unless the said errors have relation to the jurisdiction of the Court to try the dispute itself. As Clauses (a), (b) and (c) of Section 115 indicate, it is only in cases where the subordinate Court has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity that the revisional jurisdiction of the High Court can be properly invoked. It is conceivable that points of law may arise in proceedings instituted before subordinate Courts which are related to questions of jurisdiction. It is well settled that a plea of limitation or a plea of res judicata is a plea of law which concerns the jurisdiction of the Court which tries the proceedings. A finding on these pleas in favour of the party raising them would oust the jurisdiction of the Court and so an erroneous decision on these pleas can be said to be concerned with questions of jurisdiction which fall within the purview of Section 115 of the Code. But an erroneous decision on a question of law reached by the subordinate Court which has no relation to questions of jurisdictions of that Court, cannot be corrected by the High Court under Section 115."

IN view of the above observations let us examine the pleas of the Company, only relating to the question of jurisdiction of the District Forum which has passed the impugned order. The Company, in the present case, has challenged the order of the District Forum dated 9.11.1998 on two grounds i.e. (i) that the order dated 9.11.1998 is in execution of substantive orders dated 4.3.1998 and 11.6.1998 which were passed by the District Forum without jurisdiction, as the Company Law Board had already adjudicated upon and passed order dated 20.5.1997 on the subject under Section 58-A of the Companies Act, 1956, (ii) that the order dated 9.11.1998 directed issuance of bailable warrants of arrest against the Managing Director of the Company, whereas in contradiction of its own order, the District Forum issued warrants against the Joint Managing Director of the Company and as such acted illegally and with material irregularity.

AS regards the first plea that the orders dated 4.3.1998 and 11.6.1998 were passed by the District Forum, without jurisdiction, the same is not tenable, as it is not the case of the Company that the depositors are not consumers, or that the complaints filed by them are not ''Consumer Disputes'', under the Act. In any case the said issue has already been laid to rest by the Hon''ble National Commission in the case of Neela Vasant Raje v. Amogh Industries Ltd., reported as III (1993) CPJ 261 (NC)=1993 (3) CPR 343, that the complaints of the depositors against a Company which has defaulted in the payment of the principal or interest amount, are ''Consumer Disputes'' within the meaning of the Act and that the agencies under the Act have the jurisdiction to entertain and adjudicate upon the same. The Company''s plea that since the Company Law Board had already passed oder dated 20.5.1997, the District Forum had no jurisdiction to adjudicate upon the controversy and that the same is barred by the principle of res judicata, is also not maintainable. In this regard we are inclined to agree with the view taken by the learned District Forum that merely because the matter has been deliberated upon by the Company Law Board, the FORA under the Act are not barred from adjudicating upon the same. The West Bengal Consumer Disputes Redressal Commission, Calcutta has taken a similar view in case entitled Gyan Singh & Ors. v. Carry on Savings and Investment Company Ltd. & Ors., III (1994) CPJ 9, and the State Commission, U.T., Chandigarh in the case of Ms. Simran Macker v. M/s. D.C.M. Financial Services & Ors., I (1999) CPJ 654. This Commission in Case No. C.A. 528/97 entitled -Thapar Agro Mills Ltd. v. Geetanjali Vasuja, Appeal No. - 1091/99 entitled-M/s. World Link Finance Ltd. v. Shri M.R. Dixit, as well as in Appeal No. A-916/98, M/s. D.C.M. Financial Services Ltd. v. Shri Bal Kishan Gupta have consistently held the same view.

Further, the authorised representative of the Company has neither shown any provision of law, nor cited any decision of the Apex Court or that of the Apex Commission or any State Commission whereby it has been held that the jurisdiction of FORA under the Act is barred, once the matter is seized of or decided by the Company Law Board. Even the Companies Act is silent on the issue. Had the intention of the Legislature been to debar any other Court/FORA from taking cognizance of matters relating to the repayment of its debts by the Company to its creditors, a statutory bar as created by Section 446 of the Companies Act, 1956, would have been provided for. In the absence of any such provision in the Companies Act, it cannot be held that proceedings under another statute by a different FORA would be without jurisdiction.

THE Act, is a special statute and a piece of social welfare legislation framed to protect the rights of a consumer. A special statute has to be given precedence over the general law. THErefore, the learned District Forum was right in holding that Section 3 of the Act provides an additional remedy under the Act, which is in addition to and not in derogation of any other law in force. It is significant to note that during the course of arguments before us, all the respondents present as well as the authorised representative of the respondent Col. Vijay Pal categorically stated that none of the respondents were party to the proceedings before the CLB and that the order of the Company Law Board dated 20.5.1997 was, therefore, not binding on them. In the above circumstance, the plea of res judicata raised by the Company is also not available to it. Further, it was vehemently argued by the authorised representative of the respondents that the Company had not even bothered to file an appeal against the orders of the District Forum dated 4.3.1998 and 11.6.1998, whereby the cases were decided in favour of the respondents/depositors, and the same have now become final in view of the provisions of Section 24 of the Act. The said contention of the respondents is not without substance. It is well settled principle of law that the Court executing a decree cannot go behind the orders/decree unless it is a nullity. The Company, in the present cases has not been able to establish that the substantive orders passed by the District Forum dated 4.3.1998 and 11.6.1998 were a nullity or without jurisdiction and, therefore, the impugned order under Section 27 of the Act, in execution of the above mentioned orders, is absolutely legal and valid.

COMING to the second objection of the Company, that the learned District Forum acted illegally and with material irregularity in passing order dated 9.11.1998 (the impugned order) as, in contradiction of the said order, bailable warrants were issued not against the Managing Director of the Company but against the Jt. Managing Director. The question as to what constitutes acting illegally or with material irregularity by a Court came up for consideration in the case of Keshardeo Chamria v. Radha Kissen Chamria & Ors., AIR 1953 SC 23, wherein it was held : "Reference may also be made to the observations of Bose, J. in his order of reference in Narayan Sonaji v. Sheshrao Vithoba, AIR 1948 Nag. 258, wherein it was said that the words ''illegally'' and ''material irregularity'', do not cover either errors of fact or law. They do not refer to the decision arrived at but to the manner in which it is reached. The errors contemplated relate to material defects of procedure and not to errors of either law or fact after the formalities which the law prescribes have been complied with." (Emphasis supplied) In the matters, in hand, in fact, no procedural errors or material defects in conducting the proceedings by the District Forum have been alleged. Merely because warrants of arrest have been issued in the name of the Jt. Managing Director instead of the Managing Director would not vitiate the impugned order. In any case, it is a mere technicality and in proceedings under the Act, we are more concerned with substantial justice and equity than with technical tortures. The idea is to bring to book the person/persons concerned who had defrauded the poor depositors of their life time savings and are disobeying the orders of the Fora with impunity. Thus, it cannot be said that the District Forum acted without jurisdiction or illegality and with material irregularity at any stage of the present cases. Therefore, in view of the aforesaid discussion we uphold the impugned order of the District Forum dated 9.11.1998 as the present matters do not stand to judicial scrutiny either as appeals or petitions under Section 17(b) of the Act. The same are, therefore, dismissed with cost of Rs. 1,000/- in each case. The above matters are disposed of accordingly. Appeals dismissed with costs.