PRATAP RAJASTHAN SPECIAL STEELS LIMITED vs SURESH CHAND DEW AN

FEELING dissatisfied with the order dated 5.1.91 passed by the District Forum, Jodhpur in Complaint Case No. 141/90, the opposite party-appellant has filed this appeal under Sec. 15 of the Consumer Protection Act, 1986 ("the Act" herein). By the impugned order the District Forum directed the opposite party to pay a sum of Rs. 3,076.82 to the complainant. The opposite party-appellant is a duly corporated public limited company having its registered office. It carries on business of Rolling Special Steels and manufacturing steel ingots and other products. The complainant alleged that the opposite party invited the public at large to invest in its Debenture issue in order to collect funds for financing its comprehensive modernization and diversification programmes. The complainant Shri S.C. Dewan applied for allotment of the proposed Debentures and in due course became the Debenture-holder. It may be stated that the Debentures were obtained in the names of Monika Dewan, Venus Dewan, Suresh Chand Dewan and Sudarshan Dewan. The aforesaid persons are individually registered Debenture holders of the opposite party''s 15% Secured Redeemable non-convertible Debentures-II series sometime since July, 1986. Their Folio numbers and Distinct numbers are 08721 to 08724 respectively. Shri S.C. Dewan filed the complaint against the opposite party before the District Forum, Jodhpur on 15.3.1990 alleging that the respondents had invested in all a sum of Rs. 54,000/- in 540 debentures. The complaint related to non-payment of interest which fell due from 31.3.89 and 30.9.89. Despite repeated requests the interest was not paid. The complainant has stated that various letters prior to 31.3.1989 as also to the period subsequent thereto were sent which have been produced in support of the complaint. The other grievance stated in the complaint was that the complainant was put to personal financial difficulties on account of non- receipt of the interest amounts during the year 1988 as his daughter was to be married on 20.12.1988. It was prayed by the complainant that a direction may be issued for the refund of Rs. 54,000/- with due interest together with damages amounting to Rs. 15,000/- for causing mental agony and putting the complainant to humiliation and any other relief which may be considered proper may also be granted.

WITH the complaint photostat copies of the Debenture Certificate standing in the joint names of Monika Dewan and Suresh Chandra Dewan, Venus Dewan and Suresh Chandra Dewan and Sudarshan Dewan were submitted. Besides the debenture certificates, photostat copies of the letters were also submitted by the complainant. On behalf of the opposite party version of the case dated 3.5.1990 was received. Preliminary objections about the maintainability of the complaint were raised. It was stated that the financing services rendered by the Institution are covered by the Act and not the debenture holder, is service since the debentures are secured. It is stated that the position of debenture holder is that of a secured creditor and that the necessary security has been credited in favour of the Trustee to the debenture holders, viz. Punjab National Bank, M.I. Road, Jaipur which has been appointed Trustees with the consent of the Debenture holders pursuant to the terms of issue of the convertible debentures. It was stated that due to the above position the debenture holders are not included in the purview of the Consumer Protection Act, 1986 as they already enjoy the remedy against the Trustees who hold the security for the said debentures with interest thereon. It was pleaded that the District Forum, Jodhpur had no jurisdiction to entertain the complaint. Certain other objections were taken which it is not necessary to mention. On merits it was submitted that the debenture interest of the complainant was sent vide D.D. Nos. 793493,793494 and cheque No. 523823 for the periods ending 31.3.1989. 30.9.1989 and 31.3.1990 respectively with compound interest for the period of delay. It was stated that the payment of interest was delayed for some time due to financial constraints of the company due to severe power cut imposed by the State Electricity Board. Delay in payment was due to the facts beyond the control of the Company, though payment was subsequently made with compound interest for the period of delay. It was submitted that the complaint may be dismissed on merits also. Photostat copies of the letters by which the cheque for Rs. 1174.15 on debentures for the period of March 1990 was sent were filed. This included the compound interest for the delayed period. Copies of the letters enclosing the draft have also been produced with the reply.

In support of the version of the case affidavit of Shri O.P. Maheshwari, Secretary M/s. Pratap Rajasthan Special Steels Ltd. was submitted. On behalf of the complainant written arguments were submitted before the District Forum. The District Forum passed the impugned order on 5.1.1991. It ordered that the opposite party-appellant should pay Rs. 1,076.82 to the complainant within 3 months. Rs. 2,000/- were awarded as compensation for mental agony caused for borrowing loan in connection with the marriage of the daughter by the complainant. Hence this appeal.

A sum of Rs. 3,077/- has already been paid to the complainant vide order dated 30.5.1991 passed in the appeal. Both the parties submitted written arguments in the appeal. We have considered the written arguments submitted by them. The complaint is with respect to the deficiency in service by the opposite party-appellant in regard to the non-payment of interest within the prescribed time on 15% secured redeemable non- convertible debentures-II series each of Rs. 100/- which was offered to the public in July 1986. The grievance made by the complainant on his behalf and on behalf of his family members is that interest falling due on 31.3.1989 and 30.9.1989 was not paid in time. Besides it has been alleged that the complainant has received the amount. But in the year 1988 when his daughter was going to marry he was put to lot of personal financial difficulties. There is no doubt that the debentures are included in the goods as defined in S. 2(1 )(i) of the Act. But the grievance of the complaint is that by not paying the interest in time the service rendered by the opposite party suffered from deficiency. "Consumer" has been defined in S. 2(1)(d) as follows : - "Consumer" ;- "(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 with 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, 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 the services for consideration paid or promised, orpartly 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."

The contention raised on behalf of the complainant-respondent is that the payment of interest of the debentures is a "Service" under the Act. The opposite party-appellant has obtained finances from various debentures holders for use and consumption for running its business. The company has borrowed money from the complainant and his family members. If the interest is not paid by the company which has borrowed the money or the payment of interest is not made in time, it does not fall within the definition of ''"service". Relevant part of the debenture certificate of the opposite party is as follows : - "DEBENTURE CERTIFICATE- Issue of a series of 1,70,595 15% Secured Redeemable __ Non-Convertible (II series) Debentures of Rs. 100/- each of an aggregate face value of Rs. 1,70,59,500/- bearing interest at the rate of 15 per cent per annum (subject to deduction of income- tax at the rate prescribed under the Income tax Act, 1961 or any statutory modification or re-enactment thereof for the time being in force) payable half-yearly on 31st March and 30th September and on the date of redemption of the Debenture all ranking pari passu inter se and numbered 1 to 1,70,595 (both inclusive) made under the authority of Clause 17 of the Memorandum of Association and Article 55 of Articles of Association of the Company and the resolution passed by the company of the Annual General Meeting held on 2nd January, 1986 under the provisions of Section 293(1)(a) of the Companies Act, 1956 in terms of and subject to the Memorandum and Articles of Association of the company, prospectus dated 31st March, 1986 issued by the Company, Articles or Agreement dated 13.7.1988 made between the Company of the one part and Punjab National Bank, as Debenture Trustees, of the other part, and Declaration of Trust by the Debenture Trustees on 3rd November, 1988. This is to certify that the person(s) named in the Certificate is/are the Registered Holder(s) of the within mentioned Debentures of Rs, 100/- each bearing Distinctive Numbers herein specified in Partap Rajasthan Special Steels Ltd. 15% Secured Redeemable Non-Convertible (II series) Debentures each of Rs. 100/- amount paid up per Debenture Rs. 100/-"

They are 15% secured redeemable non-convertible (II series) debentures each of Rs. 100/-. Amount paid up per debenture is Rs. 100/-.There is distinctive no. and interest scheme is mentioned non-cumulative. There is no dispute that debentures are goods. According to the complainant timely payment of the interest by the opposite party-appellant is a service and non-payment of interest on the debentures within the stipulated time is clearly a deficiency in service and as the opposite party-appellant has delayed the payment of interest more than 11/2 years, there was deficiency in service and so the District Forum was right in awarding the sum which it did. The relationship between the complainant and the family members with that of opposite party was that the complainant advanced finances to the opposite party-appellant in lieu of the debentures. It was in the nature of a loan for which interest was to be paid in time by the opposite party-appellant. In these circumstances, it cannot be said that the complainant and his family members are the "consumers" who have hired the services of the opposite party and if that is so questions of deficiency and payment of compensation do not arise. From the perusal of para 5 of the memo of appeal it is clear that the opposite party has paid the interest on debentures for the period ending 31.3.1989 and 30.9.1989 under cover of letter No. PS/OPM/S-7/2331 dated 6.4.1990 for the period ending March 1990 under cover of letter No. PS/ OPM/S-7/2330 dated 6.4.1990 and the cheque included the compound interest for the delayed period.

AS the complainant is not a consumer within the meaning of Sec. 2(1)(d) of the Act, no relief should be granted to the complainant. The District Forum was not right in allowing the complaint and directing the opposite party to pay the amount of interest Rs. 1,076.82 and Rs. 2,000/- as compensation total Rs. 3,076/-. The amount of interest including the compound interest for the delayed period has been paid. AS such interest could not be awarded. The complainant and his family members are not entitled to any compensation for they are not "consumers" as defined in Sec. 2(1)(d) of the Act. The order passed by the District Forum, Jodhpur on 5.1.91 in Complaint Case No. 141/90 cannot be sustained. It is, therefore, set aside. The complainant shall refund the amount of Rs. 3,077/- which was paid to him on 30.5.91 together with interest (a) 12% from 30.5.1991 until the date of payment. The result is that the appeal is allowed and the order dated 5.1.1991 passed by the District Forum, Jodhpur in Complaint Case No. 141/90 is set aside. The appeal is allowed as indicated above. Parties shall bear their own costs. Appeal allowed.