Surendra M Khandhar vs Pannaben P Bhatia

BOTH these revisions arise out of a common judgment of the State Commission and as such the same were heard together. We have heard Counsel for the petitioner on admission and he has submitted before us that the Petitioner-Director cannot be made liable in his personal capacity and the Company-Respondent No. 4 has sufficient assets to satisfy the claim of the complainants. Learned Counsel stated that a reference was made under Section 15 of Sick Industrial Companies (Special Provisions) Act, 1985 and inquiry under Sections 16, 17 is pending before BIFR and proceedings in question cannot continue in view of Section 22 thereof. It is further submitted that official liquidator has been appointed. It may be pointed out at this stage that in support of this submission no material has been produced except for a letter dated 25.10.2002 which only speaks of receipt of reference under Section 15(1) of SIC (SP) Act, 1985 and that the same is registered. It may be pointed out at this stage that Sick Industrial Companies (Special Provisions) Act, 1985 has been repealed by Sick Industrial Companies (Special Provisions) Repeal Act, 2003. BIFR and Appellate Board have been abolished. It is also submitted that Respondent No. 4 was never served before the District Forum and when the petitioner who is a Director of Respondent No. 4, came to know of the order of the District Forum, he had filed appeals before the State Commission which have been dismissed on account of delay in filing the said appeals.

THE petitioner does not dispute that the complainants had deposited Rs. 2,00,222 with Respondent No. 4 in Complaint Case No. 149 of 2003 and a sum of Rs. 1,42,222 in Complaint Case No. 56 of 2005. This fact is in fact admitted by the present in the Appeal Nos. 239/07 and 240/07 filed before the State Commission

ADMITTEDLY, the matter before the District Forum had proceeded ex parte since no one appeared on behalf of the Respondent No. 4. In Complaint Case No. 149 of 2003, the District Forum ordered payment in respect of 12 deposits as also compensation and costs and granted liberty to the complainant to file fresh complaint with regard to certificates 13 to 20 once the maturity of the said certificate is completed. In Complaint Case No. 56/05, the District Forum ordered payment of deposits with compensation and costs.

THE orders of the District Forum were challenged by the present petitioner before the State Commission. In the memo of appeal filed before the State Commission it was stated that a complaint was filed against Directors of Respondent No. 4 - M/s. Suman Motors Ltd. under Maharashtra Protection and Interest of the Depositors Act, 1999 on the basis of which the present petitioner (Appellant before the State Commission) was arrested along with other Directors and the properties of the Company were seized by the investigating officer on account of which, the business of the Company stopped. It is further stated in the appeal memo that due to the said facts the Directors of the Respondent No. 4 were restrained from going out of Bombay city due to which matters relating to the present complaint filed before the Consumer Forum at Nandurbar could not be attended in proper manner. This clearly shows that the present petitioner and the other Directors were fully aware of the proceedings before the Consumer Forum, but they deliberately chose not to contest the same on the ground they were restrained from going out of Bombay city. However, the petitioner and the other Directors could certainly contest the complaints in question by appointing Advocates and power of attorney if necessary. It is also clear from what is pleaded in the appeal memo before the State Commission that the District Forum had issued bailable warrants on 28.1.2005 against the present petitioner which was sought to be executed by the police on 15.3.2007.

THE appeals were filed before the State Commission with delay of 790 days and 586 days. The petitioner did not deposit 50% of the amount of award or 25,000 rupees whichever is less in the appeals. Subsequently, an application was filed for permission to deposit the amount. Initially, the petitioner had not filed any application for condonation of delay, but subsequently applications were filed. The State Commission did not allow deposit mandatory amount after 3 years of the filing of the appeals. The applications were dismissed as also the appeals.

IN the appeal memo before the State Commission, the petitioner does not dispute that he was one of the Directors who was looking after day-to-day affairs of the Company though it is stated that there are other Directors also in the Company who are looking after day-to-day affairs of the Company. In this view of the matter, the present petitioner is liable to satisfy the award passed against the Company. Even under Section 5 of the Companies Act, the petitioner who is Director would fall within the meaning of officer who is in default. Section 5 of the Companies Act reads as under: 5. Meaning of "officer who is in default"- For the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression "officer who is in default" means all the following officers of the company, namely- (a) the managing director or managing directors; (b) the whole-time director or whole-time directors; (c) the manager; (d) the secretary; (e) any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act; (f) any person charged by the Board with the responsibility of complying with that provision: Provided that the person so charged has given his consent in this behalf to the Board: (g) where any company does not have any of the officers specified in Clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors: Provided that where the Board exercises any power under Clause (f) or Clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form.

IN view of the above position, we are not inclined to entertain these revisions which are hereby dismissed with no order as to costs.

THE petitioner had deposited the entire decretal amount with upto date interest in this Commission. Accordingly, we direct that the amount deposited in both the revisions shall be remitted to the District Forum to be paid to the complainants towards satisfaction of the award passed in Complaint Case No. 149 of 2003 and in Complaint Case No. 56 of 2003. If any balance still remains, the complainant shall be at liberty to take appropriate steps in accordance with law. Revision Petition dismissed.