DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, PALAKKAD
DATED THIS THE 3rd DAY OF OCTOBER, 2024.
PRESENT : SRI. VINAY MENON .V,
: SMT.VIDYA A., MEMBER.
: SRI. KRISHNANKUTTY N.K, MEMBER.
DATE OF FILING:12.03.2024.
CC/88/2024
Bhuvanadas.K, - Complainant
Resident of 3/916, Narayana Nivas,
Ambikapuram, Palakkad dist,
Kerala-678 011.
(By Adv.E.Suresh Kumar)
Vs
1. Pooram Finserv Pvt. Ltd, Opposite parties
25/395/27, First Floor
Pathyapura, Round South,
Thrissur, Kerala -680 001.
2. Anilkumar Chozhiyankunnath Krishnan,
Director (DIN-02236022),
25/395/27, First Floor,
Pooram Finserv Pvt. Ltd,
Pathayapura, Round South,
Thrissur, Kerala-680 001.
3. Sunil Krishnan chozhiyankunnath,
Director (DIN-02858723),
Pooram Finserv Pvt. Ltd,
25/395/27, First Floor,
Pathayapura, Round south,
Thrissur, Kerala-680 001.
(By Adv.M/s.Sripathi and Anupama Subramanian)
ORDER
BY SMT.VIDYA A., MEMBER.
1. The complainant has deposited Rs.2 lakh with the opposite party company towards non-convertible debentures on 16.08.2018. The opposite party had issued a debenture certificate having debenture series DBN 5 SP Folio No.2337 for 200 numbers of debentures. As per the certificate, the date of redemption was on 16/08/2023. The debentures certificate is signed by one of the director of the opposite party company.
The complainant was receiving monthly interest on the said debenture @ Rs.2,125/- in the Canara Bank Account, Kalpathy Branch maintained by him. But the opposite parties failed to deposit the monthly interest of said debentures from January, 2023. The complainant had received last monthly interest on 04.01.2023 for the month December, 2022. From January, 2023 to February, 2024, ie for 14 months, the opposite parties have not paid the monthly interest to the complainant. The assurance and declaration given by the opposite parties are found to be fraud and malicious with intention to grab public money. Thus, non-payment of monthly interest is a deficiency in service on their part.
Further, they have not paid the principal amount of Rs.2 lakhs after maturity date ie 16.08.2023.
Even after several phone calls and frequent visits, the opposite party company did not pay the principal amount and pending interest to the complainant. The complainant had caused to issue a legal notice to the opposite parties demanding the amount; but the opposite parties did not settle the issue. The complainant, through his counsel had sent letters to District Collector, Thrissur, Governor, Reserve Bank of India and to the Registrar of companies with request to initiate appropriate legal proceedings against the opposite party.
The acts of the opposite parties had caused severe mental agony and financial loss to the complainant.
Hence, he approached this Commission with the following prayers.
1. To direct the opposite parties to pay the principal amount of Rs.2 lakhs along with pending interest and compensation as per the complainant’s claim statement.
2. To pay the cost and other expenses.
2. After admitting complaint, notices were issued to the opposite parties. The opposite parties filed their version beyond the statutory period and hence, it was rejected. The opposite parties also filed IA No.283/24 to hear maintainability as preliminary issue on the ground opposite parties had issued debentures and had not accepted deposits, thereby making the complainant part owner and not a consumer. It was disposed stating that this issue can be considered at the time of final hearing.
3. Complainant’s documentary evidence comprised of proof affidavit and Exts.A1 to A9 documents. The opposite parties were directed to produce the Memorandum of Association, Articles of Association and Brochures issued for collecting public money so as to ascertain the nature of deposits accepted. But the opposite parties reframed from producing their documents thereby denying the Commission a chance to understand the nature of transaction. Hence, their evidence was closed and CC is taken for orders on merit.
4. Maintainability as preliminary issue
In IA No.283/24 filed by the opposite parties challenging the maintainability of the complaint, the opposite parties stated that the documents produced by the complainant clearly shows that the relationship between the parties is on the basis of debentures issued by the opposite party company which is a pure civil dispute and does not come within the purview of the CP Act.
They further contended that the debenture holders are not consumers of the company. A debenture is one of the capital market instruments which is used to raise medium or long term funds from public.
A debenture is essentially a debt instrument that acknowledges a loan to the company and is executed under the common seal of the company. Hence, debenture holders are debtors of the company and the relationship between them can only be that of civil nature.
A debenture is an instrument of debt executed by the company acknowledging its receipt to repay the same at a specified rate and also carrying an interest. It is in sum and substance, a certificate of loan or a bond evidencing the fact that the company is liable to pay a specified amount, with interest and although the money raised by the debentures becomes a part of the company’s capital structure, yet it does not become share capital.
In this case, the debentures issued to the complainant are non-convertible and the opposite party had issued certificate showing a particular date as the date of redemption. Since the opposite party had promised to pay a monthly interest and refund of the principal amount, it has more of a character of deposit. Further, the opposite parties did not produce the MOA, AOA and Brochures before the Commission. Hence, We cannot identify the nature of the deposit, albeit termed as debenture. In the absence of any evidence, We consider the transaction as coming within the purview of CP Act. Hence, the complainant is a consumer and the complaint is maintainable before the Commission.
5. In the absence of version of the opposite parties, the complainant has only to prove a prima facie case against the opposite parties. Inorder to prove his case, the complainant produced 9 documents which were marked as Exts.A1 to A9. Ext.A2 is the debenture certificate issued by the opposite party to the complainant. In this, the number of debentures is shown as 200, maturity value as Rs.2 lakhs, rate of interest is 12.75%, monthly interest payment Rs.2,215 and date of redemption is 16.08.2023. Exts.A2 and A3 are the copies of the pages of the pass book of the complainant for the accounts maintained in the Canara Bank.
Ext.A4 is the Legal Notice issued to the opposite parties. Ext.A5 is the letter addressed to the District Collector, Ext.A6 letter to the Governor, Reserve Bank of India, Exts.A7 is the Registrar of companies. Ext.A8 is the statement of claim against the opposite parties.
6. Eventhough the opposite parties are entitled to challenge the evidence, even in the absence of written version, they failed to exercise this right.
As per the evidence adduced, it is clear that the complainant is entitled to get the refund of the principal amount and interest from 01.01.2023 to 29.02.2024 amounting to 29, 750. The act of the opposite parties in the non-payment of the amount on the date of redemption and failure to pay the interest amounts to deficiency in service on their part. The acts of the opposite party had caused mental agony and financial loss to the complainant and they are bound to compensate the complainant for that.
In the result, the complaint is allowed.
1. We direct the opposite parties jointly and severally to pay Rs.2 lakhs.
2. To pay the interest @ 2,225/- per month pending from 01.01.2023 till realisation.
3. To pay Rs.10,000/- for their deficiency in service, Rs.5,000/- as compensation for mental agony and Rs.5,000/- as cost of the litigation.
The above amounts are to be paid within 45 days of receipt of this order, failing which the opposite parties are liable to give Rs.500/-as solatium per month or part thereof, from the date of the order, till the date of payment.
Pronounced in open court on this the 3rd day of October, 2024.
Sd/-
VINAY MENON .V, PRESIDENT
Sd/-
VIDYA A., MEMBER.
APPENDIX
Documents marked from the side of the complainant:
Ext.A1: Copy of Bank pass book with relevant transaction statement page of deponent banker.
Ext.A2: Copy of said non-convertible debenture certificate dated 16.08.2018 issued by the opposite parties.
Ext.A3: Copy of the Canara Bank Statement of deponent for the period from 04.08.2018 to 31.08.2023.
Ext.A4: Copy of the legal notice 18.02.2024.
Ext.A5: Copy of the legal notice 21.02.2024.
Ext.A6: Copy of the legal notice 21.02.2024.
Ext.A7: Copy of the legal notice 21.02.2024.
Ext.A8: Copy of statement of claim.
Ext.A9: Copy of the daily proceedings.
Document marked from the side of Opposite party:Nil
Document marked from the side of Court: Nil
Witness examined on the side of the complainant: Nil
Witness examined on the side of the opposite party: Nil
Court witness: Nil
Cost : 5,000/-.
NB: Parties are directed to take back all extra set of documents submitted in the proceedings in accordance with Regulation 20(5)of the Consumer Protection (Consumer Commission Procedure) Regulations, 2020 failing which they will be weeded out.
