BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION

AT HYDERABAD

CC 

Between:

1) 

S/o. Rajendra Kumar

Plot No. 14/1F, BHEL Enclave

Akbar Road, Secunderabad-9

2) 

W/o. Ravikanth Veda

Plot No. 14/1F, BHEL Enclave

Akbar Road, Secunderabad-9                                                                                       

1. M/s. Maytas Properties

(Formerly known as Hill County Pvt. Ltd)

Rep. by its M. Theja Pratap Raju

O/o. Customer Support Department

Hill County, Bachupally

Miyapur, Hyderabad- 500 072.

2) 

S/o. Hari Prasad Raju

O/o. Customer Support Department

Hill County, Bachupally

Miyapur, Hyderabad- 500 072. 

3) Arun Kumar Saha

S/o. Brindavan Chandra Saha

(Additional Director/Promoter)

Maytas Properties Ltd.

R/o. 601-602, Green AcresPali Hill, Bhandra (W)

Mumbai-400 050

4) Vimal Kishore Kaushik

S/o. Sadanand Shastry

(Additional Director/Promoter)

Maytas Properties Ltd.

R/o. S-27/1-D, DLF Qutub Enclave

Gurgaon-122 002

Haryana State.

5) Ramesh Chandra Bawa

S/o. Saradanda(Additional Director/Promoter)

Maytas Properties Ltd.

R/o. W-78, Greater Khailash

Part-I, New Delhi-110 048.

6) Ramachandra Karunakaran

S/o. Kalapara Vedasseri Karunakaran

(Additional Director/Promoter)

Maytas Properties Ltd.

R/o. 3^rd

E-23, Gajdhar Scheme

S.D.Road, Santha Crutz

Mumbai-400 054

7) 

Axis Bank Ltd.

P. M. Modi Complex

2^nd

M. G. Road, Karbala Compound

Secunderabad.

Counsel for the Complainants :                 Counsel for the Opposite Parties

CC 

Between:

Smt. Kalidindi Jhansi Lakshmi

W/o. K. K. Raju

R/o. Flat No. 301,

My Home Gardenia Apartments

Ameerpet, Hyderabad-16.                                                                                    

1. M/s. Maytas Properties Ltd,

(Formerly known as Hill County Pvt. Ltd)

Rep. by its Managing Director

6-3-1186/5/A, 3^rdAmoga Plaza, Begumpet, Hyderabad

2. 

Himayathnagar, Hyderabad

Rep. by its Manager. 

Counsel for the Complainant :         

Counsel for the Opposite Parties

CC 

Between:

Neravati Raja Sekhar

S/o. Chandra Mohan Neravati

Rep. by GPA Chandra Mohan Neravati

Flat No. 405, Plot No. 26/28 & 30

Padmarekha Apartments

Rajeevnagar, Hyderabad-18. 

         1. M/s. Maytas Properties Ltd,

(Formerly known as Hill County Pvt. Ltd)

Rep. by its Managing Director

6-3-1186/5/A, 3^rdAmoga Plaza, Begumpet, Hyderabad

2) 

Rep. by its Branch Manager

3^rd

Saeed Plaza, Lakdikapul,

Beside Central Court Hotel

Hyderabad.

Counsel for the Complainant :         

Counsel for the Opposite Parties

Associates (Bank)

CORAM:

&

WEDNESDAY, THE EIGTH DAY OF 

ORAL ORDER: (Per Smt. M. Shreesha, Member)

***

1)               Since the facts     

2)                                               

3)           

4)               

5)                    

6)                      

7)           

Op1 further submits that the complainant issued         

8)       

9)             and Op7 (bank)    charged on the loan amount and therefore there is no deficiency of service or unfair trade practise     

10)     

11)              

i.    Whether there is deficiency of service 

ii.   Whether the bank was justified in releasing the entire amount, contrary to the terms of agreement and whether there is deficiency of service 

 12)                                  Ex. A5 is the legal notice got issued by the complainant to Op7 stating that       

13)                          

14)             

15)             

16)             

17)             

The CLB order dt. 13-1-2011 reads as follows:

(i)                  I permit the induction of IL & FS group (consisting of Infrastructure Leasing & Financial Services Limited (IL&FS). IL&FS Financial Services Limited (IFIN) and IL&FS Engineering & Construction Company Limited (IECL) as the new promoter of MPL and permit reconstitution of the Board of MPL as provided hereunder.

(ii)                 The IL &FS group shall invest Rs.20 lakhs in equity share

capital of the MPL whereupon its shareholding in MPL would

become 80%.

(iii)               The IL &FS group on induction as the strategic investor

shall take-over the management control of the MPL and

reconstitute the Board of Directors of MPL as under:

a)   There shall be 4 nominees of the IL &FS group as directors on the Board of MPL including the Chairman.

b)   The existing Directors of MPL, i.e., Mr.Rama Raju, Mr.D.Gopla Krishnam Raju and Mr.D.Venkata Satya Subba Raju shall resign as Directors of MPL immediately on induction of IL&FS group as the strategic investor in MPL.

c)   Mr. Ved Jain , the nominee Director, appointed by the Union of India, Pursuant to the directions contained in the order dt. 5.4.2009 shall continue as Director in MPL for a further period of 3 years.

(iv).   

(v)

shall arrange the required finances to complete the 

The order required the above said group to complete the project within 18 months. Pursuant to it, the developer has been taken over by new inductives. It is not known as to the steps that are initiated in compliance of the orders.

18)             

The supreme Court in, held that Section 402 of the Companies Act, 1956 is without prejudice to the generality of the powers of the Company Law Board under Section 397 & 398 and may provide for directions to achieve the objects for which the above sections are enacted. These statutory powers have been vested to administer justice and equity, giving broad discretion applying general standard of fairness to meet the ends of justice.

           , the Supreme Court held that the powers under Section 402 are residuary in nature and in addition to the powers available to the Company Law Board under Sections 397(2) and Section 398(2) which permit the Company Law Board to make such order as it thinks fit with a view to bringing to an end the matters complained under 397(1) and 398(1).

           the Supreme Court held that the jurisdiction of the Company Law Board having been couched in wide terms and as diverse reliefs can be granted by it to keep the company functioning, is it not desirable to pass an order which for all intent and purport would be beneficial to the company itself and the majority of the members? A court of law can hardly satisfy all the litigants before it. This however, by itself would not mean that the Company Law Board would refuse to exercise its jurisdiction, although the statute confers such a power on it.

           it was held that Clause (g) of Section 402 has illustrated these extraordinary powers in which the Company Law Board may provide for any other matter, which in the opinion of the Company Law Board is just and equitable.

           ,it was held that instead of destroying the corporate existence of a company, the Company Law Board has been enabled to continue its corporate existence by passing such orders as it thinks fit in order to achieve the objective of removing the oppression to any member or members of a company or to prevent the company’s affairs from being conducted in a manner prejudicial to public interest.

The decisions did not lay down any proposition that the proceedings before the consumer fora have to be shelved or the complainants have to approach the CLB only.

19)             

‘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 thePRUDENTIAL 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.’

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.

20)             

‘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.”

21)             

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.

Their lordships also held at para-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’.

22)             

Their Lordships in the above case at Pare-59 pointed out 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.

At 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’.

23)             

“It is the case of the complainants before us that they did not apply to the Company Law Board under Section 45QA. They were not served with any notice of any proceedings before the Company Law Board and they were not aware of any notice being published in any newspaper to which they subscribe to or is otherwise in circulation in the locality in which they reside. They say it is perversity of justice that Company Law Board situated in Mumbai could be approached by small depositors in the far flung corner of the country. The whole scheme as framed is floated and tilted in favour of NBFC. That is, however, not for us to consider. What the requirement of law is that a depositor may either approach the Company Law Board under Section 45QA or file a complaint under the Consumer Protection Act before the appropriate forum. A depositor cannot certainly choose both the remedies simultaneously and once he files an application under Section 45QA of the RBI Act before the Company Law Board, he cannot file a complaint in a Consumer Forum under the Consumer Protection Act.”

It is not the case of the developer that complainants have invoked the jurisdiction of CLB,

24)             

It is not known whether the said order has been complied viz., raising of Rs. 150 crores etc. 

25)             

26)    

27)                     

28)             

29)             

30)                

This kind of equitable action to recover back money which ought not in justice to be kept….. lies only for money which

(emphasis supplied)

Section 72 of the Indian Contract Act runs as follows :

A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it. There must be some undue pecuniary inequality existing in the one party relative to the other which the law recognizes as requiring compensation upon equitable principles.

31)             

32)              

33)             

34)             

2)      

However, the bank, with reference to need or progress of construction, which decision shall be final and binding on the borrower/developer. 

(a) Borrowers has paid his/her own contribution in full to the developer (the cost of the dwelling unit less the loan) and

3)               

(5)              

7(a)    

7 (b)             

9)       the 

35)             

36)             

37)             

38)             

39)             

40)             

41)             

42)             

43)             

Refusal on the part of the respondent bank to pay interest on the ground that opening of such account and crediting of the interest is not in accordance with the guidelines of RBI is not tenable as the respondent is solely responsible for suppressing the fact while entering into the contract.

44)             

developer as well as the bank. Necessarily the complainants have to be compensated. Since terms of the agreement enable the bank to collect from the developer it can as well recover the same. The bank by violating its own rules cannot take advantage and recover the same from the complainants. This suppression of rules at the time when so called authorization taken from the complainants amounts to unfair trade practise. This cannot be allowed to happen.

45)

46)

CC 64 of 2012

         Further Ops 1 to 6 are directed to refund the amount disbursed by the bank (Op7)

On compliance of aforementioned directions the complainant shall re-convey the same to the developer

          Further Op No. 1 is

CC 79 

In the result the complaint is allowed in part Further Op No.

1)PRESIDING MEMBER 

2) ________________________________

MEMBER 

APPENDIX OF EVIDENCE

COMPLAINANTS

CC 64 OF 2012

DOCUMENTS MARKED FOR COMPLAINANTS:

Ex. A1 

Ex. A2 

Ex. A3 

Ex. A4 

Ex. A5

Ex. A6 

Ex. A7

Ex. A8  

Ex. A9 

DOCUMENTS MARKED FOR OPPOSITE PARTIES :

Ex. B1 

Ex. B2 

Ex. B3 Ex. B4 Ex   

Ex. B15  

Ex. B16  

Ex

Ex

Ex. B19  

Ex. B20  

Ex. B21

CC

DOCUMENTS MARKED FOR COMPLAINANTS:

Ex.A.1  Ex.A.2  

Ex.A.3  

Ex,.A.4 

Ex.A.5  

Ex.A.6  

Ex.A.7  

Ex.A.8  

Ex.A.9  ndEx.A.10

Ex.A.11

Ex.A.12st

Ex.A.13st

Ex.A.14st

Ex.A.15

ExA.16 stExA.17 

DOCUMENTS MARKED FOR OPPOSITE PARTIES :

Ex.B.1.

ExB.2    

Ex.B.3   

Ex.B.4   

Ex.B.5   

Ex.B.6   

Ex.B.7   

Ex.B.8   

Ex.B.9   

Ex.B10  

Ex.B.11

Ex.B.12

Ex.B.13

Ex.B.14

CC 79 OF 2010

DOCUMENTS MARKED FOR COMPLAINANTS:

Ex.A.1  

Ex.A.2  

Ex.A.3  

Ex,.A.4 

Ex.A.5  

DOCUMENTS MARKED FOR OPPOSITE PARTIES :

Ex.B.1.

ExB.2    

Ex.B.3   

Ex.B.4   

Ex.B.5   

Ex.B.6   

Ex.B.7   

Ex.B.8   

Ex.B.9.

Ex.B.10

Ex.B11  

Ex.B.12

Ex.B.13

Ex.B.14

Ex.B.15

Ex.A.16

Ex.B.17

Ex.B.18

Ex.B.19

Ex.B.20

1)PRESIDING MEMBER 

2) ________________________________

MEMBER                            

*pnr

UP LOAD – O.K.