BEFORE THE CONSUMER DISPUTES REDRESSAL FORUM, ERNAKULAM.

Date of filing : 18/07/2009

Date of Order : 31/01/2012

Present :-

Shri. A. Rajesh, President.

Shri. Paul Gomez, Member.

Smt. C.K. Lekhamma, Member.

C.C. No. 376/2009

Between

And

O R D E R

A. Rajesh, President.

1. The case of the complainants is as follows :

The 1^st and 2^nd complainants are husband and wife. The 3^rd and 4^th complainants are their children. The 1^st opposite party is a financing company registered under Companies Act and the opposite parties 2 to 9 are the directors of the 1^st opposite party company. Lured by the assurances of the opposite parties, the complainants deposited the following amounts with the company:

Receipt No.	Names of the Deposit Holders	Date of Maturity	Amount Deposited	Maturity amount
178545	Dahlia James and James Sebastian	28-01-2007	Rs. 49,000/-	Rs. 88,298/-
178546	Sebin James and Dahlia James	28-01-2007	Rs. 30,000/-	Rs. 54,060/-
178547	Robin James and Dahlia James	28-01-2007	Rs. 21,000/-	Rs. 37,842/-
183349	Dahlia James and James Sebastian	23-07-2007	Rs. 90,000/-	Rs. 1,62,180/-
183350	Sebin James and James Sebastian	23-07-2007	Rs. 60,000/-	Rs.1,08,120/-
183351	Robin James and Dahlia James	23-07-2007	Rs. 50,000/-	Rs. 90,100/-

The complainants requested the opposite parties for the premature closure of the deposits. The opposite parties refused the same for their own reasons. The opposite parties failed to disburse the amount even after the maturity of the deposits in spite of the repeated requests. Thus, the complainants are before us seeking direction against the opposite parties to pay an amount of Rs. 6,91,031/- with 12.5% interest together with compensation of Rs. 2 lakhs and to pay the costs of the proceedings.

2. The version of the 1^st and 2^nd opposite parties :

The complainants are not consumers as defined in the Consumer Protection Act 1986 and the complaint is hence not maintainable. The complainants have not hired any service for consideration from the opposite parties. Owing to financial constrains, the opposite party company had filed applications before the Hon'ble High Court of Madras for the approval of a scheme of arrangement/compromise between the opposite party company and its deposit holders and bond holders as Company Application Nos. 854 and 855 of 2005 under Section 391 of the Companies Act 1956. At the meeting of the deposit holders, the following Resolution was passed by the deposit holders present in person and by proxy representing 79% of the depositors, that is more than 3/4^th majority:-

“RESOLVED that the consent of the deposit holders of the Company be and is hereby accorded to the scheme of the arrangement/compromise between integrated Finance Company Limited and its class of creditors as provided in the notice calling this meeting.

FURTHER RESOLVED that the Board of Directors of the Company be and are hereby authorised to make and/consent to the modifications, alterations or amendments in the scheme, which are desired, directed or imposed by the High Court of Judicature at Madras or any other authority.”

At the meeting of the bond holders, the following Resolution was passed by the bond holders present in person and by proxy representing 77.73% of the bond holders that is more than 3/4^th majority:-

“RESOLVED that the consent of the bond holders of the Company be and is hereby accorded to the scheme of arrangement/compromise between Integrated Finance Company Limited and its class of creditors as provided in the notice calling this meeting.

“FURTHER RESOLVED that the Board of Directors of the Company be and are hereby authorised to make and/or consent to the modifications, alterations or amendments in the scheme, which are desired, directed or imposed by the High Court of Judicature at Madras or any other Authority.”

The Madras High Court has allowed the said Company Petition and accorded sanction to the Scheme of Compromise/Arrangement by its Judgment and Order dated 19-08-2006. Though, the above judgment of the Single Bench of the Hon'ble High Court of Madras was set aside by the Division Bench in OSA 308 of 2006 and others vide Common Judgment dated 30-04-2008, the Opposite party Company filed Appeals before the Hon'ble Supreme Court of India and the same are numbered as Special Leave to Appeal (Civil) Nos. 12737-12740/2008 that has been admitted and notice has been ordered to be issued to the parties and the matter is sub judice. The complainants are accordingly bound by the resolutions passed with over 3/4^th majority at the meeting of the Bond holders held on 10-08-2005 and as such the complainants are estopped from now contending that amounts are payable by the opposite parties. In view of the proceedings before the Hon'ble Supreme Court of India, the complainants' remedies are barred as the complainants are bound by the said proceedings and the final outcome thereof. The complainants have no cause of action on account of the above. The 1^st and 2^nd opposite parties request to dismiss the complaint with costs to them.

3. The other opposite parties as well filed separate versions raising the very same contentions.

4. The 1^st complainant was examined as PW1 and Exts. A1 to A18 were marked on the side of the complainants. The witness for the opposite parties 1 to 3 and 5 to 9 was examined as DW1. Exts. B1 to B7 and B9 and B10 were marked on their side. No oral evidence was adduced by the 4^th opposite party. Ext. B8 was marked on the side of the 4^th opposite party. Heard the counsel for the parties.

5. The points that came up for consideration are :-

1. Whether the complainants are consumers within the purview of the Consumer Protection Act?

2. Whether the complaint is maintainable in this Forum?

3. Whether the complaint is barred by limitation?

4. Whether the complainants are entitled to get the amounts as claimed for?

5. Compensation and costs of the proceedings?

6. Point No. i. :- Apart from the contentions in the version of the opposite parties, nothing is on record to show that the complainants are not consumers as defined in Section 2(1)(d) of the Consumer Protection Act. Moreover, indisputably 'financing' is a service as per Section 2 (1)(o) of the Consumer Protection Act. Therefore, we are only to hold that the complainants are consumers under the provisions of the Consumer Protection Act.

7. Point No. ii. :- At the outset, the opposite parties raised the question of maintainability of the complaint by filing I.A. No. 568/2009. The order in the I.A. was kept in abeyance vide order dated 09-07-2010. Admittedly, the maturity of the deposit of the complainants was on 28-01-2007 and 23-07-2007. Ext. A15 letter issued by the 1^st opposite party dated 12-02-2009 goes to show the reason for the delay in disbursing the maturity amount. Ext. A 15 letter reads as follows :

“We wish to inform you that the Division Bench of the Hon 'ble High Court, Madras on 30-04-2008 has allowed the appeals filed by RBI and others setting aside the order of the Single Bench of the Hon'ble High Court, Madras sanctioning the scheme of arrangement/Compromise Petition No. 160/2005 filed by the company under section 391 of the Companies Act 1956.

However, the company has filed a Special Leave Petition in the Supreme Court, New Delhi on 09-05-2008 against the order of the Division bench of the Madras High Court. The Supreme Court had issued notice on the admission of the appeal vide order dated 16-05-2008.

As the matter is pending before the Supreme Court, we are sorry we are not in a position to take any further action in this matter. Kindly advise your client accordingly.”

The counsel for the opposite parties 1 to 3 and 5 to 9 relied on the decision rendered by the Hon'ble Kerala State Consumer Disputes Redressal Commission in First Appeal No. 590/2006 decided on 28-07-2011 in M/s. Integrated Finance Company Ltd. and Others Vs. Moly Chacko and Others. However, the Hon'ble National Consumer Disputes Redressal Commission in Manohar Lal Bhandari and Another Vs. Sun Earth Ceramics Ltd. (2009 CTJ 68), held in Para 4 as follows :-

“Submission advanced by Shri Vinod Kumar, Amicus Curiae, is that the pendency of respondent Company's reference under the Act of 1985 would not operate as bar to the maintainability and disposal of the complaint by the Consumer Fora and the orders under challenge are, therefore, legally erroneous. Reliance has been placed on the decision in Sneha Dyechem Ltd. V. Jyoti Rathore, II (2006) CPJ 195 (NC). This decision was rendered with reference to Section 22 of the Act. Act of 1985 does not provide for any permission to continue with a pending complaint filed under the Consumer Protection Act, 1986 nor does it place any restriction on the consumer fora to deal with a complaint pending proceedings under the said Act.”

Since in no circumstances can a customer be endangered of his right unless otherwise proved. So, the contention of the opposite parties that the complaint is not maintainable in this Forum is unsustainable squarely.

8. Point No. iii. :- The question of limitation raised by the opposite parties as well is unsustainable especially so, because even according to the opposite parties at their instance an SLP is pending before the Hon'ble Supreme Court to approve the scheme of arrangement/compromise between the opposite parties and its deposit holders and bond holders.

9. Point No. iv. :- The opposite parties have not disputed the liability of deposit of the amounts made by the complainants with the 1^st opposite party. The contention raised by the opposite parties 2 to 9 is that the directors of the company are not liable to pay the debt of the company. The counsel for the opposite parties 2 to 9 relied on the following decisions rendered by the Hon'ble Supreme Court :-

1. HARSHENDRA KUMAR.D. Vs. REBATILATA KOLEY AND OTHERS (2011) 3 Supreme Court Cases 351.

2. STATE OF HARYANA Vs. BRIJ LAL MITTAL AND OTHERS. (1998) 5 Supreme Court Cases 343.

3. NATIONAL SMALL INDUSTRIES CORORATION LIMITED Vs. HARMEET SINGH PAINTAL AND ANOTHER (2010) 3 Supreme Court Cases 330.

10. The learned counsel for the 4^th opposite party contended that the 4^th opposite party was relieved from the capacity of the director with effect from 10-11-2003 which is evident from Ext. A8 form No. 212. The learned counsel appearing for the complainant relied on the decision rendered by the Hon'ble Apex Court in Delhi Development Authority Vs. Skipper Construction Company (P) Ltd. and Another (1996) 4 SCC 622. We are not appreciate the contentions raised by the opposite parties, since the Hon'ble Supreme Court in Delhi Development Authority case (Supra), held that the directors of a company are also liable for the acts of the company. The decisions cited by the opposite parties differ in our opinion since it does not conform with the decision cited by the counsel for the complainant. In the above circumstances, we are only to hold that the opposite parties are jointly and severally liable to refund the deposited amounts together with interest at the rate of 12% p.a. till realisation.

11. Point No. v. :- Since the primary grievance of the complainants having been met squarely, the order for compensation and costs are not called for.

12. Accordingly, we partly allow the complaint and direct that the opposite parties shall jointly and severally refund the maturity amount as per Exts. A1 to A6 to the respective complainants with interest at the rate of 12% p.a. from the date of maturity till payment.

The order shall be complied with, within a period of one month from the date of receipt of a copy of this order.

Pronounced in open Forum on this the 31^st day of January 2012.

Forwarded/By Order, Sd/- A. Rajesh, President.

Sd/- Paul Gomez, Member.

Sd/- C.K. Lekhamma, Member.

Senior Superintendent.

A P P E N D I X

Complainant's Exhibits :-

Opposite party's Exhibits :-

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