BEFORE THE TELANGANA STATE CONSUMER DISPUTES REDRESSAL COMMISSION

AT HYDERABAD.

CC 05 of 2016

Between:

1. Dr.Rajesh Kumar Vishwakarma

S/o Lt. Col.(Dr.) V.B.Vishwakarma

407, D.V.Apartments, Salarjang Colony

Mehdipatnam-Tolichowki Road

Hyderabad-500 008

2. Mrs Mohini Vishwakarma

W/o D.rRajesh Kumar Vishwakarma

407, D.V.Apartments, Salarjang Colony

Mehdipatnam-Tolichowki Road

Hyderabad-500 008

                                                          ***                         Complainants

                   A N D

1. M/s Unitech Limited

Rep. by its Chairman, Sri Ramesh Chandra

Occ: Business, Regd.Off: 6 Community Centre

Saket, New Delhi-110017

2. M/s Unitech Limited

Rep. by it’s Manager, Occ: Employee

Malik Estate, 2^nd Floor

Rd.,No.1, Banjara Hills,

Hyderaad-500 016

3. M/s Karvi Stock Broking Limited

Rep. by its CEO, Occ: Employee

Karvi Centre, 8-2-609/K, Avenue 4,

Street No.1, Banjara Hills,

Hyderabad-500 034

(Op3 Formal party)

                                                          ***                         Opposite Parties

Counsel for the complainant:                               Party in person

Counsel for the Opposite parties                          Served

QUORUM             :

 HON’BLE SRI JUSTICE B.N.RAO, PRESIDENT

&

SRI PATIL VITHAL RAO, MEMBER

MONDAY THE ELEVANTH DAY OF APRIL

TWO THOUSAND SEVENTEEN

Oral Order : (per Hon’ble Sri Justice B.N.Rao Nalla, Hon’ble President)

***

          This is a complaint filed under section 17(a)(i)  of the Consumer Protection Act, 1986 by the Complainant to direct the opposite parties 1 to 3   to refund the FDRs amount of Rs.5,00,000/-, Rs.8,00,000/- and Rs.5,00,000/- with interest @ 18% per annum together with damages of Rs.1,15,496/- and Rs.79,438/-, compensation of Rs.2,50,000/- and costs of Rs.30,000/-. 

2.                 The brief facts of the case are that the opposite parties no.1 and 2 are   engaged in the business of real estate and had been accepting deposits from the general public to invest in their business. The complainants made deposits with the opposite parties  no.1 and 2 and the details of which are as under:

3.                  The complainants submitted that after the maturity of FDR No.1250178 the complainant no.2 surrendered the FDR to pay the proceeds of the said fixed deposit amount but the opposite parties no.1 and 2  advised to renew the said FDR for which they assured to repay the deposit amount in February 2015.  Thereafter when the said FDR was also matured on 28.01.2015, the complainant no.2 sought for payment of the maturity amount from the opposite parties no.1 and 2  but they promised to refund the principal amount by August 2015.  On the contrary the complainants received a notice for the reschedulment plan submitted with Company Law Board dated 13.02.2015 in order to defer repayment and interest thereon.   The said notice receive by the complainants on 14.03.2015 and wherein it was mentioned that the depositor may send objection in the matter before the Bench, Company Law Board within 30 days from the date of notice.  AS this has created panic and compelled the complainants to surrender their other two FDRs for pre-closure at the opposite partyno.2 office requesting it to refund the principal amount but it was not accepted and was returned vide letter dated 31.03.2014 suggesting that the FDs would be repaid only on maturity and not on demand or notice.  Further,  the opposite parties no.1 and 2 declared to the Company Law Board in its application dated 13.02.2015 that they are repaying the principal sum along with agreed rate of interest regularly without delay.  But the opposite party company has neither refunded principal amount of the FDRs which matured on 28.01.2015 nor paid interest thereon for the delayed period from 29.01.2015.  The opposite party company also failed to pay interest on the FDRs no.1242969 and 1244589 of the complainants respectively.    Non-payment of the FDRs amount by the opposite parties tantamount to the deficiency in service on the part of their part.   It was further stated that the aforesaid acts of the Opposite Parties, amounted to deficiency, in rendering service, as also indulgence into unfair trade practice. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 17 of the Consumer Protection Act, 1986  was filed.

4.                 Despite service of notice the opposite parties remained absent.  The complainant no.1 filed his evidence affidavits and got Exs.A1 to A13   marked.  The complainants filed their written arguments.  Heard the complainants party in person. 

5.                 The points for consideration are:

1. Whether the complainants are entitled to the FDR amounts despite the matter  pending before the Company Law Board?
2. If so to what relief?

6.                It is an undisputed fact that the complainants invested the amounts by way of FDRs and re-invested one of the FDR on the maturity date when the opposite parties pleaded their inability to pay the amounts due to financial constraints.   The fact remains that the complainant had made the following investments in FDRS.

7.                When the opposite parties failed to pay even the renewed maturity amount of the FDR marked as Ex.A2, the complainants were compelled to surrender two FDRs Exs.A3 and A4, for pre-closure in order to get safe refund of the principal amount but  the opposite parties vide  letter dated 31.03.2014 stated that as per the terms and conditions of the fixed deposit scheme, the fixed deposits are repayable only on maturity and not on demand or notice and therefore they expressed their inability to process the request of the complainants.      

8.                On the contrary, the opposite parties served a notice Ex.A6 in order to defer repayment and interest thereon. 

The relevant para of Ex.A6 reads as under:

Relief sought in the Application:

The Applicant Company has been making honest efforts in making payment to its fixed deposits.  However, due to adverse market conditions as stated above the Applicant Company is not in a position to make the payment to its various deposits on due dates.  The Applicant Company however, is willing to make payments to its depositors as per the rescheduled plan as may be sanctioned by Hon’ble Company Law Board.

9.                The opposite parties also submitted its proposed re-schdulement plan with Company Law Board for its approval.  It is also stated therein that if any interest person (Depositor) may send his objection in the matter to the Bench Officer, Company Law Board. 

10.              The opposite parties in application submitted before  CLB   represented that the applicant company has been making honest efforts in making payment to its fixed deposits and as such they proposed reschdedulment plan before the CLB for its approval.  But it is not known whether the CLB approved its proposal of  rescduelment plan or not and also there is no information regarding status of  application before CLB.   Hence, the complainants insist that their FDRs amount be refunded with compensation and costs.

11.              The question now whether the complainant has to approach CLB or pursue his remedy before this Commission is the point before us.

12.              In a decision in PRUDENTIAL CAPITAL MARKETS Limited, Calcutta v. State of A.P. Department of Law reported in 2000 ALT-5-468 it is held as follows:

‘There are three categories of cases.  The first category of cases are those where the depositor filed a consumer dispute case before the competent District Forum for refund of the deposit made by the depositor with the PRUDENTIAL CAPITAL MARKETS LIMITED (‘PCML’ for short) and on the District Forum allowing the application, the petitioner herein approached the State Commission which dismissed the appeal filed and whereupon the depositor approached District Forum under Section 27(1) of the Consumer Protection Act, 1986 by filing penalty petition.  The second category of cases are those where the depositor filed a penalty petition before the District Forum for implementation of the order in consumer dispute case and where the petitioner did not approach the State Commission which is the appellate forum.  The third category of cases are those where the orders of the appellate forum are challenged by the petitioner.’

13.              In the process, the question whether CLB can only entertain the complaint against PCML has arisen.  While dealing with the said question the proceedings before CLB vis-à-vis the proceedings before Consumer Forum have also arisen. 

14.              In the instant case since opposite parties have clutched the jurisdiction of CLB, the question is whether the provisions of CLB oust the jurisdiction of Consumer Forum.  The said question has been discussed in the above decision as follows:

‘The next aspect of the matter is whether the provisions of the Companies Act and the RBI Act impliedly ousts the jurisdiction of the Consumer Forums when the CLB is seized of the matter or passed an order at the instance of some of the depositors of NBFC.  Hence, sub-sees. (4-D) and (5) of Section 10-E and Section 58-A(9) of the Companies Act and Sections 45-Q and 45-QA of the RBI Act require to be examined, which are as under:“10-E-(4-D) :  Every Bench shall be deemed to be a Civil Court for the purposes of Section 195 and (Chapter XXVI of the Code of Civil Procedure,1973) and every proceeding before the Bench shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code and for the purpose of Section 196 of that code.(5)  Without prejudice to the provisions of sub-sections (4-C) and (4-D), the Company Law Board shall in the exercise of its powers and the discharge of its functions under this Act, or any other law be guided by the principles of natural justice and shall act in its discretion. “58-A(9): Where a company has failed to repay any deposit or part thereof in accordance with the terms and conditions of such deposit, the Company Law Board may, if it is satisfied, either on its own motion or on the application of the depositor, that it is necessary so to do to safeguard the interests of the company, the depositors or in the public interest, direct, by order, the company to make repayment of such deposit or part the order:  Provided that the Company Law Board may, before making any order under this sub-section, give a reasonable opportunity of being heard to the company and the other persons interested in the matter.  “Sections 45-Q and 45-QA of the RBI Act are as under: “45-Q:  Chapter III-B to override other Laws:  The provisions of this Chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.  45-QA.  Power of Company Law Board to order repayment of deposit:  (1) Every deposit accepted by a non-banking financial company, unless renewed, shall be repaid in accordance with the terms and conditions of such deposit.  (2)  Where a non-banking financial company has failed to repay any deposit or part thereof in accordance with the terms and conditions of such deposit, the Company Law Board constituted under Section 10-E of the Companies Act, 1956 (1 of 1956) may, if it is satisfied, either on its own motion or on an application of the depositor, that it is necessary so to do to safeguard the interests of the company, the depositors or in the public interest, direct, by order, the non-banking financial company to  make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the order:  Provided that the Company Law Board may, before making any order under this sub-section, give a reasonable opportunity of being heard to the non-banking financial company and the other persons interested in the matter.”

15.              The provisions of Reserve Bank of India Act, vis-à-vis., the CLB also came to discussion.  The very same logic could as well be applied to the case on hand.  In view of the fact that their Lordships in Para 51 of the above decision opined as follows:

The CLB is constituted by the Central Government and the said Board shall exercise and discourage powers and functions as may be conferred on it by or under the companies Act or any other law and shall also exercise and discharge such other powers and functions of the Central Government under the Companies Act or other law as may be conferred on it by the Central Government. Notwithstanding subsection (1A) of Section 10-E of the Companies Act, the Civil Courts exercised jurisdiction under sec.9 of the Code of the Civil Procedure, till sub-section (9) of Section 58-A was inserted by the Companies (Amendment ) Act, 1977 with effect from 24-12-1977 conferring powers on the CLB to entertain an application of the depositor for repayment of money. After 1977, till the enactment of Consumer Act in 1986, both the Civil Courts as well as the CLB entertained applications from the depositors for refund of deposits. After the Consumer Act, the Forums established under it started granting redressal to the depositors having regard to the broad definition ‘service’ adumbrated in Sec.2(1) (O) of the Consumer Protection Act. Ultimately, to provide an additional speedy remedy, the Parliament enacted RBI ( Amendment) Act, 1997 inserting Sec.45-QA giving power to CLB constituted under Sec.10-E of the Companies Act which ‘may, either on its own motion or on application of the depositors’ order NBFCs to make repayment of such deposits. This background should be kept in mind while examining the order of the CLB, Eastern Region Bench, Calcutta, dated 27-5-1998.

16.              Their lordships also held at P-57 as follows:

‘Sub-section (5) of Sec.10-E of the Companies Act lays down that the CLB shall in the exercise of its powers and the discharge of its functions under the Companies Act or any other law be guided by the principles of natural justice.  The proviso to sub-section (9) of Sec.58A categorically lays down that CLB may, before making any order under sub-sec. (9), give a reasonable opportunity of being heard to the Company and the other persons interested in the matter.  Likewise, the proviso to sub-section (2) of Sec.45-QA mandates that CLB may, before making any order under sub-section (2), give an opportunity of being heard to NBFC and the other persons interested in the matter., Elaborate reasoning is not required to infer that “the other persons interested in the matter’ appearing in the proviso to subsection (9) of Sec.58-A of the Companies Act and the proviso to sub-section (2) of Sec.45-QA of the RBI Act also include the depositors and other creditors of NBFC.  It also does not require any authority to say that any provision which adumbrates the principles of natural justice should be interpreted as a mandatory provision.  Though the two provisions use the word ‘may’, the same should be interpreted as mandatory.  Obligation is on the part of the CLB to order notices to all the depositors in a matter like this.  How a notice is sent or information is communicated about the cases filed before the CLB under Sec.45-QA (2) of the RBI Act or Sec.58-A (9) of the Companies Act is altogether different matter’.

17.              Coming to the present case, opposite parties did not make any attempt to place the case of the complainants before CLB.  There is no proof that notice was issued to the complainant while passing the order.    Therefore,  the complainants are justified in contending that the order if any passed by CLB is a nullity and has no binding on him or proceedings before this Commission.

18.              Their Lordships in the above case pointed out at P-59   as follows:

‘Further, as per the legal position, the proceedings before appropriate Bench of CLB should be initiated by the aggrieved party at the place of company’s registered office.  This is cumbersome procedure.  Therefore, all the depositors cannot be expected to appear before the CLB, Calcutta, especially when there is no notice validly served on all the depositors.  The judgments of the Supreme Court referred to above support the view that when the ordinary remedy provided under the alternative law is cumbersome, the consumer cannot be deprived of the remedy before the Consumer Forums.

 In para 60, their Lordships asserted as follows:

‘The summary of the findings under point No.1 for consideration may now be given. (i) A writ of prohibition cannot be granted unless want of jurisdiction is apparent and if want of jurisdiction is not apparent, the applicant must wait until the decision making body passes orders and seek a writ of certiorari. (ii) A writ of prohibition ordinarily cannot be granted to stop execution or implementation of the decision; (iii) The grant of writ of prohibition is also governed by other principles which ordinarily govern the grant of extraordinary writs like delay and laches, availability of alternative remedy etc. (iv) The provisions of Sec.45-Q, 45-QA of the RBI Act and Sec.58-A(9) of the Companies Act, do not either expressly or impliedly bar the jurisdiction of the forums constituted under the Consumer Protection Act, from entertaining a consumer dispute case at the instance of the depositor claiming repayment of the deposit from a non-banking finance company.  In view of Sec.3 of the Consumer Protection Act, remedy under the said Act is an additional remedy and the same cannot be taken away either by the RBI Act or by the Companies Act. (v)  The order of the Company Law Board, Eastern Region Bench, Calcutta dated 27-5-1998 cannot be construed as either taking away the right of the depositors in these cases to approach the consumer forum or nullifying the orders passed by the District Forum/State Commission’.

19.              In the light of the above said decision, we are of the opinion that this Commission has jurisdiction.  The orders,  if any,  passed by CLB have nothing to do with the case on hand.  The CLB was not appraised about the cases that were filed before this Commission.  In view of the above decision, we are of the opinion that the orders of CLB would in no way prevent or prohibit this Commission from passing appropriate orders as the case may be.

20.              It is a matter of common knowledge and common practice that large number of middle class people and retired pensioners invest their funds in various schemes of deposits to have their livelihood. We find that utilization of the funds of the complainants by the opposite parties  were the consideration for availing of the services of the Company by the complainant and, therefore, we find absolutely no hesitation in holding that complainant is a Consumer within the ambit and scope of Sec. 2(1)(d) of the Act, being a hirer of services of the company for consideration.

21.              Law is settled on the point that the depositor is a Consumer as utilization of funds of the depositor is consideration for availing of services of the Company. In view of the fact that the complainant is a Consumer within the meaning of Sec. 2(1)(d) of the Consumer Protection Act,1986, being depositor and as she did not move any application before the Company Law Board and did not participate in the proceedings before the Company Law Board and the fact that there is no provision in the Companies Act, 1956 or under Sec. 45QA(2) of the RBI Act, 1934 creating bar on  jurisdiction of any Court, tribunal, authority, we are of the view that it is discretion of the complainant to invoke jurisdiction of Company Law Board, Civil Court or Consumer Fora as provisions contained in Sec. 3 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.

 22.              We, therefore, hold that this Commission   has jurisdiction to entertain the complaint in cases where complainants have not approached the Company Law Board for appropriate relief. Since this forum has the jurisdiction as held above, this Commission is not bound by the directions,  if any,  contained in the order of the Company Law Board.

23.              The opposite parties have attempted to evade their liability to pay the amount covered under the deposit receipts. An offer to pay the deposit amount with attractive rate of interest and failure to pay the same by the opposite parties   to the complainants constitutes deficiency in service and unfair trade practice. Hence, the opposite parties are liable to pay the amount on maturity.

24.              As the Company Law Board (CLB)  has   not finalized the scheme for re-payment of the deposited  amounts,  opposite parties are required to pay interest at the contracted rate till the date of maturity in all cases and future interest would be paid from the immediately next date from the date of maturity till the date of payment at the contracted rate of interest.     It is the contention of complainants that they are not parties to the proceedings before the CLB and the CLB has not issued any notices to the complainants.  In these circumstances, in our view, the payment of interest at contracted rate  as per the scheme framed would be just and proper. 

                In the result the complaint is allowed directing the opposite parties no.1 and 2  to pay  Rs.5,00,000/-, Rs.8,00,000/- and Rs.5,00,000/-   with interest    @ 11.50%, 12.50% and 12.50% p.a. respectively  on the said amounts from the date of deposits till the date of realization together with compensation of Rs.25,000/- and costs of Rs.5,000/-.  Time for compliance four weeks. 

PRESIDENT                                       MEMBER

Dated : 11.04.2017

APPENDIX OF EVIDENCE

 WITNESSES EXAMINED

NIL

EXHIBITS MARKED

For Complainants :

Ex.A1          Email   dt.27.03.2015

Ex.A2          Copy of FDR dated 19.03.2014

Ex.A3          Original FDR dated 26.10.2013

Ex.A4          Original FDR dated 12.11.2013

Ex.A5           Email to the opposite parties dated 18.02.2015

Ex.A6          Application u/s 74(2) of the Companies Act dated 13.02.2015

Ex.A7          Letter dated 16.03.2015 addressed to the Office in charge Unitech
                   Ltd., Gurgaon, Haryana by the complainants

Ex.A8          Article with regard to Acceptance of Deposits by Companies

Ex.A9          Letter dated 16.03.2015 addressed to the Office in charge Unitech
                   Ltd., Gurgaon, Haryana by the complainants

Ex.A10        Copy of FDR dated 26.10.2013

Ex.A11        Copy of FDR dated 12.11.2013

Ex.A12        Letter dated 31.03.2014 addressed by the OP to the complainant
                   no.1

Ex.A13        Fixed Deposit Schemes

For the opposite parties

NIL

PRESIDENT                                       MEMBER

Dated : 11.04.2017