SARVJEET KINRA vs MODERN DENIM LTD

-THESE appeals have been filed by the appellant under Section 15 of the Consumer Protection Act, 1986 (hereinafter referred to as ''1986 Act'') against the order dated 23. 10. 2006 passed by the learned District Forum, Jaipur-II, Jaipur whereby the complaint of the complainant-appellant was dismissed on the ground that the respondents have been declared as Sick Unit under BIFR as such the complaint is not maintainable.

THE factual matrix of the above appeals are identical, except for the date and the amount of the fixed deposits, and as the legal controversies are common to all the cases, we are disposing of all matters by one common order. In order to appreciate the controversies raised in these cases, we would narrate the facts of Appeal No. 2069/06 which, in our view, would cover the entire spectrum of the questions raised before us. Facts of Appeal No. 2069/06, Sarvjeet Kinra (Smt.) v. M/s. Modern Denim Ltd. The facts giving rise to this appeal for determination of the issues may be stated thus. The complainant-appellant had deposited an amount of Rs. 9,000 on 21. 11. 2006 and Rs. 10,000 on 4. 11. 1997, as Fixed Deposit in the joint names of herself and her husband, with the respondents for a period of one year and the deposit carried cumulative interest @16% p. a. The complainant-appellant alleged that instead of making payment of FDR on maturity, the respondent company formulated a scheme for repayment of FDR before the Company Law Board without informing the complaint. Thereafter, the respondents paid an amount of Rs. 3,600 on 28. 5. 1998 towards the first FDR and Rs. 2,700 on 1. 9. 1999 towards the second FDR. The complainant alleged that thereafter the respondents refused to make any payment to her on the ground that the respondents company has gone in BIFR. The complainant maintained that Section 22 (1) of BIFR does not apply to the Fixed Deposits and the respondents have committed deficiency in service by refusing to pay the maturity amount of the FDRs on wrong assumptions. The complainant, therefore, claimed the maturity amount, together with other compensation.

The respondents filed a reply submitting that the learned District Forum has no jurisdiction to hear the dispute raised by the complainant because the Company Law Board has passed an order dated 29. 12. 1997 in which the CLB has framed repayment schedule for implementation. It also stated that on a Reference to the BIFR, a case No. 325/2000 was registered and on 23. 2. 2001 the respondent was declared as Sick Unit. The complainant was informed of the position from time-to-time and as such the complainant filed by the complaint deserves to be dismissed.

AFTER hearing both the parties, the learned District Forum dismissed the complaint and held that as the respondent company has been declared as Sick Unit under the BIFR, the complaint before the learned District Forum is not maintainable under Section 22 (1) of BIFR. Aggrieved with this order, the appellant-complainant has come up before us in appeal.

WE have heard the learned Counsel of both the parties, perused the impugned order and considered the materials placed on record. The main thrust of the argument of the learned Counsel for the Appellants is that the deposit made by the complainant with the respondent company cannot and should not be treated as ''loan'' and, therefore, the claim made for return of the deposit with the company cannot be termed as a suit for recovery of money due and in these circumstances Section 22 (1) of Sick Industrial Companies (Special Provisions) Act, 1985 does not apply. On the other hand, the learned Counsel for the respondents has sought to justify the impugned order, although he offered that the respondents are prepared to make payment of the principal deposit within a period of three months to the complainant.

IN order to appreciate the contentions of the learned Counsel, it is necessary to consider the provisions of Section 22 (1) of SICA, 1985. The relevant provision of the Act read as follows: "where in respect of an industrial company, an inquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation, then no suit for the recovery of money shall lie or be proceeded with further, except with the consent of the Board"

THE question for consideration here is whether the amount deposited by the complainant with the respondent company is a deposit or loan and the proceedings for payment of that amount is a "suit for the recovery of money" attracting the provisions of Section 22 of the SICA, 1985. In the past, the various High Courts and the Hon''ble National Commission had occasion to consider the distinction between the terms ''deposit'' and ''loan'' and it would be profitable to refer to some of those cases.

In Abdul Hamid Sahib v. Rahmat Bi, AIR 1965 Mad. 427, Their Lordships of Madras High Court held that the terms ''deposit'' and ''loan'' are not mutually exclusive. A loan is repayable the minute it is incurred. But this is not so with a deposit and unlike a loan there is no immediate obligation to repay in the case of a deposit

SIMILARLY, in Seethamma v. Kamala, 1980 KLT 755 (DB), the Hon''ble Kerala High Court also held that unlike the case of loan, a deposit is made for the benefit of the person who hands over the money and the principal the debtor should seek the creditor has no application. In Deepak Insulated Cable Corporation Ltd. v. Union of India and Ors. , (2001) Co. KAR 401, the Hon''ble Karnataka High Court had also held that a deposit made in the sick company is not a sum lent to the company but a sum held in trust by the company till the time of the maturity.

IN Kamla Dhalyla and Anr. v. A. V. Hegde and Ors. , II (2005) CPJ 170, it was held by the Hon''ble National Commission that the deposit in sick industries made by depositor is not a sum lent to the company but is a sum deposited with the company to be held in trust by the company till the time of maturity and, therefore, any claim made for return of a deposit made with the company cannot be termed as a suit for recovery of money due and, therefore, provisions of Section 22 of SICA is not available to the sick company against a depositor. Again, in Sneha Dyechem Ltd. v. Jyoti Rathore, II (2006) CPJ 195 (NC), it was held by the Hon''ble National Commission that Section 22 of the BIFR Act does not place bar on hearing of a complaint filed under the provisions of the Consumer Protection Act, 1986. Again in Mahesh Chandra Sharma v. Modern Threads (India) Ltd. , IV (2007) CPJ 353 (NC), RP 2355/06 dated 10. 10. 2007, the respondents did not pay interest on deposit on the ground of pendency of proceedings before BIFR. In that case, it was held by the Hon''ble National Commission that a deposit by the depositors is not a sum lent to the company but is a sum deposited with the company to be held in trust by the company till the time of maturity. It is not a loan in the strict sense of the term and any claim made for return of the deposit with the company cannot be termed as a suit for recovery of money due attracting Section 22 (1) of Sick Industrial Companies (Special Provisions) Act, 1985. In the circumstances, the Hon''ble National Commission held that a complaint is maintainable before the Consumer Forum.

THE Respondents had filed a review Misc. Application No. 733/07 against the above order in which the Hon''ble National Commission passed the following order on 7. 12. 2007: "heard the learned Counsel Mr. Shakdhar. We make it clear that the order dated 10. 10. 2007 qua the Petitioner shall not be treated as precedent and would have no impact on the scheme which may be framed by the BIFR. Miscellaneous application stands disposed of accordingly. "

IN Mahesh Chandra Sharma v. Modern Syntex (India) Ltd. , IV (2006) CPJ 179 (NC), RP 1637/06 dated 26. 9. 2006, the Hon''ble National Commission elucidated the position and held that the distribution of the proceeds of the sale of the assets of a company being wound up could only be under the supervision of the Company Court. The legal position that emerges out of the above decided cases is that there is no bar imposed by SICA on hearing of a complaint filed under the provisions of the Consumer Protection Act, 1986, but the Scheme as framed by the BIFR would be given effect to and the complainant would be entitled to payment of interest in accordance with the Scheme of Repayment only.

In our considered opinion, this conclusion is also in conformity with the objects of the SICA, 1985 and the Consumer Protection Act, 1986. Speaking about SICA, Their Lordships of the Supreme Court have observed in Rishabh Agro Industries Ltd. v. PNB Capital Services Ltd. , IV (2000) SLT 717= (2000) 5 SCC 515: "the object of the Act is to afford maximum protection of employment, optimize the use of financial resources, salvaging the assets of production, realizing the amount due to the banks and to replace the existing time-consuming and inadequate machinery by efficient machinery for expeditious determination by a body of experts to safeguard the economy of the country and protect viably sick units. "

AGAIN, speaking about the Consumer Protection Act, 1986, Their Lordships of the Supreme Court have held in M/s. India Photographic Co. Ltd. v. HD Shourie, II (1999) CPJ 36 (SC)=vii (1999) SLT 86, that in interpreting the provisions of Consumer Protection Act, "rational approach and not a technical approach is the mandate of law. " It is pertinent to reiterate that under Section 3 of the Consumer Protection Act, 1986, the provisions of the Consumer Protection Act, 1986 are in addition to and not in derogation of the provisions of any other law for the time being in force. As such, the provisions of this Act give the consumer an additional remedy besides those that may be available under other existing laws. In this view of the matter also, the complaint of the complainant was maintainable in the learned District Forum. The learned District Forum has failed to appreciate the above legal position and as such the impugned order cannot be legally justified and deserves to be quashed and set aside. On Point of Compensation:

IN the present case, the complainant-appellant had requested for payment of the principal amount of fixed deposit together with the interest at contracted rate. Payment of Principal Amount of Deposit: Insofar as payment of the principal fixed deposit is concerned, as stated above, the respondent is willing to pay back the amount of fixed deposit within a period of three months from the date of this judgment. In view of the consent given by the learned Counsel for the respondents, it is considered appropriate that a period of three months from the date of this judgment be given to the respondents to make payment of the principal amount to the appellant-complainant. This would give succour to the complainant and would reduce the controversy between the parties. Therefore, the respondents shall now pay the principal amount on fixed deposit within a period of three months from the date of this judgment, after adjusting the amount already paid by it to the complainant in the past. Payment of Interest on Principal Amount:

AS far as interest on the principal amount is concerned, in the present case, there is evidence on record that, under its order dated 29th December, 1997, the Company Law Board had finally approved a Scheme for Repayment of Fixed Deposits, which was revised by it on 11th August, 1999 in which, inter alia, it was ordered that the interest on deposits will be paid on maturity at the contracted rate up to the date of original maturity and thereafter the same will be paid @14% (simple interest) along with the last instalment of principal amount. This scheme would come into force w. e. f. 1st April, 1999. In the circumstances, the payment of interest @ 14% p. a. as per the CLB would be just and proper.

IN view of the above, in our considered opinion, the appeal deserves to be allowed. Appeal No. 2065/06, Sarvjeet Kinra (Smt.) v. M/s Modern Thread (India) Ltd. , Appeal No. 2066/06, Priti Kinra (Ms.) v. M/s. Modern Terry-Towels Ltd. , Appeal No. 2067/06, Sarvjeet Kinra (Smt.) v. M/s. Modern Denim Ltd. , Appeal No. 2068/06, Ramesh Sen Kinra v. M/s. Modern Denim Ltd. In these appeals also, the questions of facts and law are indentical with those of Appeal No. 2069/06, Sarvjeet Kinra (Smt.) v. M/s. Modern Denim Ltd. and, therefore, these appeals are also to be decided and allowed in terms of decision in that Appeal.

Accordingly, all the above five appeals are allowed, the impugned orders are set aside and quashed, and the complaints of the complainants are allowed in the following manner: 1. The Respondents shall make payment of balance of principal amount of fixed deposits to the complainants within a period of three months from the date of this judgment. 2. The Respondents shall make payment of interest on deposits at the contracted rate up to the date of original maturity, and thereafter the same will be paid @ 14% simple interest along with the principal amount, after adjusting the payment, if any, made by them to the complainants in the past. 3. The Respondents shall also pay an amount of Rs. 2,000 as litigation expenses to each of the complainant-appellants.

Appeals allowed.