JUSTICE V.K.JAIN, PRESIDING MEMBER (ORAL)

          Vide its order dated 23.04.2018, passed in three separate Consumer Complaints, the State Commission directed refund of the amount which the complainants had paid to the appellant against allotment of residential flats to them, alongwith interest @ 12% per annum, compensation quantified at Rs.1,00,000/- for mental agony and harassment and litigation expenses.   The order passed by the State Commission was to be complied by the appellant within one month from the date of receipt of the certified copy of the order. 

2.      The certified copy of the order, as per the endorsement of the State Commission, was dispatched on 06.09.2018.  The submission of the learned counsel for the appellant is that the said certified copy was received by the appellant sometime in November 2018, though the submission of the learned counsel for the complainants is that the said certified copy would have been received within a few days from the date on which it was dispatched.  The appellant did not comply with the order of the State Commission even within one month of receiving the certified copy.  Three separate appeals were instituted by the appellant before this Commission against the order which the State Commission had 23.04.2018.  The said appeals, according to the learned counsel for the appellant, were instituted some time in December 2018 but since some defects were found by the Registry in the said appeals, they came to be listed before the Bench on 31.05.2019 when this Commission stayed the above referred order dated 23.04.2018 subject to the appellant depositing the amount payable in terms of the order of the State Commission with this Commission.  The appeals came to be finally disposed of by this Commission on 26.11.2019 and the submission of the learned counsel for the appellant is that the copy of the order of this Commission was received by them on 11.01.2020, but even the order passed by this Commission is yet to be complied.

3.      In the meanwhile, a petition u/s 7 of the IBC was admitted against the appellant company and a moratorium in terms of Section 14 of the Code was declared against it on 24.01.2019.  The said moratorium came to be lifted on 24.03.2019. 

4.      Since the order passed by the State Commission had not been complied, the said Commission, vide impugned order dated 11.03.2019, convicted the appellant company u/s 27 of the Consumer Protection Act and sentenced it to pay a fine of Rs.10,000/- in each case.  Being aggrieved from the above referred order of the State Commission, the appellant is before this Commission by way of these three separate appeals.

5.      The submission of the learned counsel for the appellant is that a moratorium against the appellant company having been declared on 24.01.2019, the order of conviction passed on 11.03.2019, during the subsistence of the said moratorium, was illegal.  He also submits that even the execution proceedings could not have continued after 24.01.2019 when the moratorium was declared. 

6.      Section 27 of the Consumer Protection Act, to the extent it is relevant, provides that where a person against whom a complaint is made, fails or omits to comply with any order made by the District Forum, the State Commission or the National Commission, as the case may be, such person shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to three years, or with fine which shall not be less than two thousand rupees but which may extend to ten thousand rupees, or with both.

7.      It is not in dispute that the order passed by the State Commission in the Consumer Complaints on 23.04.2018, was not complied by the appellant company within one month of receiving its certified copy.  Though an appeal had been preferred by the appellant company against the orders passed by the State Commission on 23.04.2018, in the absence of exact date of receipt of certified copy of the order dated 23.04.2018 by the appellant company and the exact date of institution of the appeals before this Commission against the order dated 23.04.2018, it cannot be known whether the said appeal had been preferred within one month of receiving the certified copy of the order of the State Commission dated 23.04.2018 or not.  However, the fact remains that the said order was not complied within 30 days of receiving its certified copy despite there being no stay against execution of the said order.  In my opinion, the appellant company was under a legal obligation to comply with the order passed by the State Commission on 23.04.2018 after one month of receiving its certified copy, there being no stay against the said order either by this Commission or by any other Court/Forum.  The appellant company having failed to comply with the said order dated 23.04.2018, within one month of receiving its certified copy, the offence punishable u/s 27 of the Consumer Protection Act stood committed by it.  A reference in this regard can be made to the decision rendered by a Three-Members Bench of this Commission on 08.01.2019 in EA/80/2016 Rajnish Kumar Rohtagi & Anr. Vs. M/s. Unitech Ltd. & Anr. & connected matters whereby the larger Bench interalia held as under:

(1)     A company, or a partnership firm, which fails or omits to comply with any order made by a District Forum, State Commission or National Commission, as the case may be, will be liable to the penalty prescribed in Section 27 of the Consumer Protection Act.

(2)     The date on which the order is passed by the District Forum, State Commission or the National Commission, as the case may be shall be deemed to be the date on which the offence under Section 27 of the C.P. Act is committed.  The said offence will be deemed to continue till the order passed by the District Forum, the State Commission or the National Commission is complied in all respects.

8.      The question as to whether the proceedings u/s 27 of the Consumer Protection Act can be initiated against a company in respect of whom a moratorium in respect of Section 14 of the IBC has been declared or not, came up for consideration of a Three-Members Bench of this Commission in E.A. No. 25 of 2018 Lotus Panache Welfare Association Vs. M/s Granite Gate Properties Pvt. Ltd. & Ors. decided on 06.09.2019 and the following view was taken:

(i)     The proceedings under Section 27 of the Consumer Protection Act can be instituted and continued against a corporate debtor, which has failed or omitted to comply with an order passed by a Consumer Forum and in respect of whom a moratorium under Section 14 of the Insolvency and Bankruptcy Code is declared by the Adjudicating Authority;

(ii)    The proceedings under Section 27 of the Consumer Protection Act can be instituted and continued against the persons incharge of and responsible to the corporate debtor for the conduct of its business as well as against a person referred in Para (13) hereinabove, even after a moratorium under Section 14 of the Insolvency and Bankruptcy Code is declared by the Adjudicating Authority against the corporate debtor.

9.      In a recent decision in Crl. OP(MD) No.34996 of 2019, Mr. Ajay Kumar Bishnoi Vs. M/s Tap Engineering, a petition u/s 482 of the Code of Criminal Procedure was filed seeking quashing of the proceedings initiated against the petitioner u/s 138 of the Negotiable Instruments Act on the ground that a moratorium in terms of IBC had been declared against the concerned company namely Tecpro Systems Limited.  Relying upon the decision in Indorama Synthetics (I) Ltd. Nagpur Vs. State of Maharashtra and others reported in 2016 (4) Mh. L.J. 249 and upon the order dated 02.04.2019 in Crl OP No.8869 of 2018 (M/S. Nag Leathers Pvt. Ltd. Vs. J.L. Sobhana), the Hon’ble High Court interalia held as under:

16.     Now, the question is whether by operation of the provisions of Insolvency and Bankruptcy Code, 2016, the criminal prosecution initiated under Section 138 r/w.141 of the Negotiable Instruments Act, 1881 r/w. 200 of Cr.Pc, can be terminated.  The categorical answer is “No”.  In JIK Industries Limited vs. Amarlal V.Jumani (2012) 3 SCC 255, the Hon'ble Supreme Court held that  sanction of a scheme under Section 391 of the Companies Act, 1956 will not lead to any automatic compounding of offence under Section 138 of the Act without the consent of the complainant. Neither Section 14 nor Section 31 of the Code can produce such a result. The binding effect contemplated by Section 31 of the Code is in respect of the assets and management of the corporate debtor.   No clause in the Corporate Insolvency Resolution Plan even if accepted by the adjudicating authority/appellate Tribunal can take away the power and jurisdiction of the criminal court to conduct and dispose of the proceedings before it in CRL OP(MD). Nos.34996  of 2019 and etc., batch accordance with the provisions of the Code of Criminal Procedure.   

17.     It is true that by virtue of Section 238 of the Insolvency and Bankruptcy Code, 2016. the provisions of the Code 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. But, no provision of the Insolvency and Bankruptcy Code bars the continuation of the criminal prosecution initiated against the corporate debtor or its directors and officials.         

10.    It would thus be seen that declaration of the moratorium in terms of Section 14 of the IBC did not come in the way of the State Commission continuing with the proceedings which the complainant had instituted against the appellant company u/s 27 of the Consumer Protection Act on account of the appellant company having failed to comply with the order of the said Commission dated 23.04.2018.

11.    The learned counsel for the appellant relies upon an order dated 01.11.2019 passed by a single Hon’ble Member of this Commission in AE/27/2019, Emaar MGF Land Ltd. Vs. Dalwinder Singh Atwal, whereby it was held that the State Commission could not have proceeded against the appellant company, during the subsistence of the moratorium declared u/s 14 of the IBC.  The said decision being contrary to the above referred decisions rendered by the larger Benches of this Commission and Madras High Court, is per incuriam, does not constitute a binding precedent and therefore, cannot be followed.

12.    The learned counsel for the appellant submits that in view of Section 238 of the IBC, the provisions of the Code have an overriding effect upon the provisions of the Consumer Protection Act.  The said submission, in my opinion, has no bearing on the issue involved in these appeals, the matter being fully covered by the above referred decisions rendered by the larger Benches of this Commission. 

13.    The learned counsel for the appellant submits that though the appellant had expressed willingness to deposit the entire amount before the State Commission subject to decision of the appeal pending before the National Commission, no order by the State Commission was passed on the aforesaid offer though it was recorded in the order of the State Commission dated 11.01.2019.  The said submission, in my opinion, has absolutely no bearing on this case, the issue involved herein being as to whether the conviction of the appellant company was justified or not.

14.    For the reasons stated hereinabove, I find no merit in the appeals which are accordingly dismissed with no order as to costs.