Telegraph Traffic Employees vs B F Basthwala

BOTH these appeals are being decided together inasmuch as they arise out of same order rendered by the Andhra Pradesh State Consumer Disputes Redressal Commission, Hyderabad in CC No. 57 of 2008. By the impugned order, the joint complaint filed by the 5 complainants was allowed. The original complainant Nos. 1, 2, 4 and 5 are represented by authorized representative, namely, Ms. Yasmin Behmanshah. The original complainant No. 3 appeared in person at the initial stage. By the impugned order, the complaint was partly allowed. The State Commission directed the original O.P. No. 1-The Telegraph Traffic Employees Co-op. Credit Society Ltd. to pay Rs. 22,86,000. The State Commission, however, directed that interest and compensation would be payable to the complainants as per the orders passed by the High Court of Andhra Pradesh.

FEEING aggrieved, OP. No. 1 - The Telegraph Traffic Employees Co-op. Credit Society Ltd. has preferred F.A. No. 211 of 2010 whereas the original complainants have preferred F.A. No. 241 of 2010.

BY consent of learned Counsel for the parties, both the appeals were taken up for expeditious hearing. For the dispute relating to amounts deposited by the complainants is pending since long and the deposits (FDS) made by them is not in dispute before the State Commission.

THE complainants are inter-related According to them, they had deposited various amounts with the O.P. No. 1. The O.P. No. 1 is a Cooperative Credit Society. The O.P. No. 1 had agreed to pay interest @ 13% p.a. on the fixed deposits and subsequently, had raised the interest payable @ 14% p.a. on some of the fixed deposits. The complainants came out with a case that they had deposited amount of Rs. 22,86,000 between 21.4.1997 till 18.1.2008. The deposits were made out of pensionary benefits and personal earnings with hope that interest amount will be paid as per the promise made by the O.P. No. 1. The investments were made since long and were being revived from time-to-time. The details of FDs made with the O.P. No. 1 were stated in the complaint in a tabular form. They came to know that management of the O.P. No. 1 committed financial irregularities, misappropriation and bunglings of funds of the O P No. 1 - Credit Society and, hence, the O.P. No. 1 was under financial crises. Hence, the complaint was filed before the State Commission for recovery of the principal amount of Rs. 22,86,000 along with interest amount at the rate of 14% p.a. to the tune of Rs. 3,89,778 as well as compensation of Rs. 2,00,000. The compensation of Rs. 2,00,000 was sought on account of harassment and mental agony whereas the interest amount was sought in keeping with the terms of agreement of the FDs. We are not much concerned with the original opposite party Nos. 2 and 3 who are the Hyderabad District Co-op. Central Bank Ltd. and Union Bank of India because the main complaint was not against them. Both of them were proceeded ex parte during the proceedings before the State Commission and no claim was made against them.

THE O.P. No. 1 submitted that the funds were misappropriated by members of the earlier Managing Committee and therefore, O.P. No. 1 cannot be made liable to pay such amounts. It was contended that the complaint could not have been entertained by the State Commission According to the O.P. No. 1, the dispute is under the Andhra Pradesh Co-operative Societies Act and the Consumer Commission had no jurisdiction to entertain the complaint. It was averred that the Managing Committee Members and non-Members had collected deposits by alluring the depositors to pay higher rate of interest and thereafter had committed mis-appropriation of the said amounts. The O.P. No. 1 further pointed out that a criminal case was filed vide Crime No. 226 of 2008 against the Members of Managing Committee. The O.P. No. 1 pointed out further that by order dated 29.9.2008 enquiry under Section 51 of the Andhra Pradesh Cooperative Societies Act. 1964 was ordered by the Government. The Managing Committee was superseded. It is further stated that at present affairs of the O.P. No. 1 are under control of the Liquidator. It is further contended that there was no deficiency in the service because Members of the Managing Committee of the O.P. No. 1 had committed misappropriation of the funds and therefore, the claims could not be settled.

THE complainants placed on record the bunch of 19 FDRs valued Rs. 22,86,000. The complainants also placed on record various other documents including communication made to the District Cooperative Registrar It appears that a writ petition was filed by Members of the O.P. No. 1 in the High Court of Andhra Pradesh vide W.P. No. 12928/09. Some of the non-Members also had filed W.P. No. 28935 of 2009 seeking liquidation proceedings against O.P. No. 1. Some of the retired Members of the O.P. No.1 had filed W.P. No. 15333/09.

WE have heard learned Counsel for the parties. We have perused the relevant material on record. It is not necessary to reiterate that deposits were made by the complainants from time-to-time. It appears further that the complainants are old aged persons and the complainant No. 3 requires finance to undergo a major surgery for removal of brain tumour. Learned Counsel for the O.P. No. 1 submitted that as per bye-laws of the O.P. No. 1, the deposits could not have been accepted only by the Secretary or the staff member. He submits, therefore, that the FD receipts could not be relied upon by the State Commission. We reject such contention of the learned Counsel for two reasons. First, such a technical plea was not raised before the State Commission, nor there was any dispute regarding acceptance of the amounts deposited by the complainants Secondly, it was never the case of the O.P. No. 1 that the concerned authorized official or Member of the Managing Committee had not accepted the FDs of the amounts stated in the fixed deposit receipts. It was nobody''s case that all the 19 FDs filed by the complainants were fabricated or hallow. What appears from the record is that the complainants used to deposit the amounts from time-to-time even before the year 1997-1998 and after the maturity period, the deposits were renewed under the receipts issued by the Authorized Secretary or the staff Member of the O.P. No. 1. Indeed, the O.P. No. 1 resisted the complaint only on the ground that there was not a consumer dispute as such, but it was a dispute which could be tried only by the Co-operative Court.

THE contention of the O.P. No 1 that jurisdiction of the State Commission could not be availed by the complainants is incorrect, improper and is not acceptable In Secretary, Thirumurgan Co-op. Agril. Credit Society v. M. Lalitha, I (2004) CPJ 1 (SC)=I (2004) SLT 200=I (2004) CLT 20 (SC)=2003 STPL (CL) 612 (SC), a Division Bench of the high Court held that remedy under Consumer Protection Act, 1986 is in addition to and not in derogation of other remedies available. The legal position is further explicit in view of Registrar of Co-operative Societies v. Tamil Nadu Consumer Protection Council, Trichy, II (2007) CPJ 175 (NC)=2007 NCDRC 047. This Commission in R.P. No. 1421 of 2003, held that that the Registrar of the Cooperative Societies and the Special Officer cannot be held personally liable for non-refund of the deposits. The consistent view taken by various Courts and this Commission is that the jurisdiction of the Consumer Commission is not ousted by under provisions of the State Co-op. Societies Act. Obviously there is no merit in the objection raised by the O.P. No. 1 regarding jurisdictional issue. We cannot overlook the fact that a Co-operative Society falls within the expression of word ''person'' as used under the Consumer Protection Act and the remedy under the Consumer protection Act is available under Section 3 because such remedy is not in derogation to the provisions of the Andhra Pradesh Co-op. Society Act, 1964. Needless to say, there is no substance in the appeal preferred by the O.P. No. 1 (F.A. No. 211 of 2010). The said appeal deserves to be dismissed.

NOW coming to the question of liability of the O.P. No. 1 to pay the interest amount and/or compensation amount, it may be stated that the State Commission did not reject the prayer of the complainants for payment of the interest and compensation. What the State Commission observed, in this context, is that the payment of interest and compensation would be subject to the orders of the Hon''ble High Court. The liability to pay other amount, whatsoever, may be determined by the State Commission could be always subject to final order of the Andhra Pradesh High Court. Still, however, the State Commission should not have abdicated its legal responsibility to crystallize the liability for payment of such amount of interest. It appears that the deposits were accepted with a promise to pay interest @ 14% p.a. The normal rate of interest payable by the bank could be around 9 to 12% p.a. The depositors were allured by the OP No. 1 on the promise to pay more interest. There are various proceedings going on between the Members, non-Members and the Members of the Managing Committee, etc. We are informed by the learned Counsel for the parties that certain properties of the Members of the then Managing Committee have been attached under provisions of the Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 We are further informed that the Special Court is seized of the matter in respect of amounts to be paid to the depositors. We record such a statement of the Counsel for the parties.

AS stated before, the complainants are entitled to recover the principal amount of Rs. 22,86,000 as well as agreed rate of interest @ 14% which comes to Rs. 3,98,778. The complainants are entitled, therefore, to recover Rs. 26,84,778 along with an amount of Rs 1,00,000 being compensation on account of harassment, mental agony and trouble suffered by them They are also entitled to recover amount of Rs. 50,000 being the litigation expenses. Thus, they are entitled to recover an amount of Rs 27,84,778 + Rs. 50,000=Rs. 28,34,778.

FOR the reasons discussed herein above, we are inclined to dismiss the F.A. No. 211/2010 and to partly allow the F.A. No. 241 of 2010. Hence, the F.A. No 211 of 2010 is dismissed. F.A. No. 241 of 2010 is partly allowed. The O.P. No. 1 shall pay an amount of Rs. 28,34,778 to the complainants i.e. the appellants in F.A. No. 241 of 2010 which is inclusive of the cost of litigation of these appeals as well as the litigation before the State Commission. It is, however, made clear that the complainants are at liberty to move the Special Court for the purpose of such recovery of the amount or may seek the recovery from the liquidator as per the due procedure for disbursement under the relevant law. The complainants are entitled to recover such amount due from the O.P. No. 1 accordingly but cannot proceed against the then Members of the Managing Committee or Directors under Section 25 or 27 of the Consumer Protection Act, 1986 for the purpose of execution. The appeals are accordingly disposed of. Appeal No. 241/2010 partly allowed. Appeal No. 211/2010 dismissed.