Prudential Capital Markets Ltd. vs Dipankar Guha
2006 Latest Caselaw 1405 Del

JUDGMENT

Mukul Mudgal, J.

1. This writ petition challenges the order dated 10th November, 2002 passed by the Respondent No. 2, the State Consumer Dispute Redressal Commission (hereinafter referred to the 'State Commission') by which order the Respondent No. 2 registered the appeal filed by the petitioner under Section 15 of the Consumer Protection Act (hereinafter referred to as the 'Act') as a revision petition under Section 17(1)(b) of the Act and declined to grant the interim stay of the penalty proceedings under Section 27 of the Act.

2. The brief facts of the case as per the petitioner are as follows:

a) On 5th December, 2001, the Calcutta High Court passed orders for winding up the petitioner company and appointed an official liquidator. A complaint was filed by the respondent No. 1 before the respondent No. 3, the District Consumer Disputes Redressal Forum (hereinafter referred to as the District Forum) for recovery of money and damages by the respondent No. 1 The same was allowed against the petitioner by an ex-parte order of the District Forum.

b) The respondent No. 1 filed a penalty petition under Section 27 of the Act before the District Forum. Section 27 of the Act reads as follows:

27. Penalties - (1) Where a trader or a person against whom a complaint is made [or the complainant] 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 trader or person [or complainant] 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 both:

(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1947), the District Forum or the State Commission or the National Commission, as the case may be, shall have the power of a judicial Magistrate of the first class for the trial of offences under this Act, and on such conferment of powers, the District Forum or the State Commission or the National Commission, as the case may be, on whom the powers are so conferred, shall be deemed to be a Judicial Magistrate of the first class for the purpose of the Code of Criminal Procedure, 1973 (2 of 1974).

(3) All offences under this Act may be tried summarily by the District Forum or the State Commission or the National Commission, as the case may be.]

c) On 28th August, 2002 the petitioner filed a counter affidavit before the District forum contending that the proceedings under Section 27 of the Act are not maintainable in view of the Section 446 of the Companies Act. Section 446 of the Companies Act reads as follows:

Suits stayed on winding up order - (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the [Tribunal] and subject to such terms as the [Tribunal may impose.

d) On 19th September, 2002, the District forum Janakpuri held that the proceedings under Section 27 can continue.

e) In November, 2002, the petitioner filed a revision petition R.P. No. 1283/2002 against the order of the District Forum before the State Commission.

f) On 20th November, 2002 the State Commission issued notice but did not grant any stay of penal proceedings before the District Forum.

It is against this order of the State Commission dated 20th November, 2002, declining interim relief to the petitioner that the present writ petition has been filed.

3. The learned Counsel for the petitioner submitted as follows:

(a) The State Commission failed to appreciate that mere issuance of notices has no value at all and unless penal proceeding against the petitioner under Section 27 of the Act are stayed, the revision petition would itself become infructuous. Thus, the orders of the State Commission have the effect of dismissing the revision petition.

(b) The Tribunal below failed to appreciate that proceedings under Section 27 of the Act are not maintainable once the orders of winding up are passed under Section 446 of the Companies Act.

(c) The Respondent No. 2 failed to appreciate that the District Forum has no jurisdiction to entertain penalty petition under Section 27 of the Act in view of the orders of the High Court at Kolkata ordering the winding up of the petitioner company and appointing the Official Liquidator.

(d) The Tribunal below failed to appreciate that the judgment of the National Commission in Ravikant and Ors. v. Veena Bhatnagar reported in (1996) CPJ 260 (NC) the National Commission is unequivocally in favor of the petitioner. The National Commission in Ravi Kant's case (supra) has held that no proceedings against the company after the appointment of a provisional liquidator can be commenced except by the leave of the court. However, if any proceedings are pending on such date these can continue to the date when winding up orders are passed by the court. Therefore, no proceedings under Section 27 of the Act could have either commenced or continued after 5th December, 2000 when the Calcutta High Court passed orders winding up the petitioner company and appointing an official liquidator.

(e) The Tribunal below failed to appreciate that under Section 27 of the Act a person/trader can be penalized only for willful default in complying with the orders of the District Forum. Once the High Court of Calcutta ordered the winding up, the petitioner company is no longer in control of its affairs, monies or assets. It cannot disburse any amount and it is for the official liquidator to determine the amounts payable to the creditors/investors and take the necessary action and hence it will not be possible for the company to comply with the orders for payment of the money.

(f) The State Commission has committed an error in re-registering the appeal filed under Section 15 of the Act as a revision petition under Section 17(1)(b) of the Act, which impedes the right of the petitioner to file a revision petition before the National Consumer Dispute Redressal Commission (hereinafter referred to as the National Commission) under Section 21(b) of the Act. Section 15, Section 17(1)(b) and Section 21(b) of the Act read as follows:

15. Appeal - Any person aggrieved by an order made by the District Fourm may prefer an appeal against such order to the State Commission within a period of thirty days from the date of the order, in such form and manner as may be prescribed.

Provided that the State Commission may entertain an appeal after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not finding it within that period.

[Provided further that no appeal by a person, who is required to pay any amount in terms of an order of the District Forum, shall be entertained by the State Commission unless the appellant has deposited in the prescribed manner fifty per cent of that amount or twenty-five thousand rupees, whichever is less.]

17. Jurisdiction of the State Commission (1) Subject to the other provisions of this Act, the State Commission shall have jurisdiction--

(a) ...

(b) to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any District Forum within the State, where it appears to be State Commission that such District Forum has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally or with material irregularity.

21. Jurisdiction of the National Commission.- Subject to the other provisions of this Act, the National Commission shall have jurisdiction--

(a) ...

(b) to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any State Commission where it appears to be National Commission that such State Commission has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity.

(g) No appeal or petition is maintainable under the Act against the orders passed by the State Commission under Section 17(1)(b) of the Act to the National Commission.

(h) The Act as it stood when the impugned order was passed on 10th November, 2002 did not specifically provide for an appeal against the order passed under Section 27 of the Act. Therefore, the only available remedy to the petitioner against the order passed under Section 27 of the Act, would have been an appeal under Section 15 of the Act. As the respondent has erroneously re-registered the appeal filed by the petitioner under Section 15 as a petition under Section 17(1)(b) of the Act, the petitioner does not have any remedy by approaching the National Commission.

4. The learned Counsel for the respondent submitted as follows:

(a) The present writ petition has no merit in the light of the decision of this Court in "Lunar Diamonds v. Consumer Dispute Redressal Forum-III, Janak Puri, New Delhi and Ors. WP (C) 4383/1999 and CM 8432/99 dated 8th February 2000. In this case, this Court followed the position of law laid down by the Hon'ble Supreme Court in Laxmi Engineering Works v. P.S.G. Industrial Institute held that any question which is decided by the authority under the Consumer Protection Act cannot be agitated in a civil court.

(b) The present writ petition has become infructuous in light of the order dated 13th January 2003 of the Calcutta High Court after the winding up order dated 5th December, 2001 ordering the Company to make payment as per the earlier order passed by the Company Law Board, Eastern region Bench, Kolkata on proper submission of claim for deposit made with the Company. This fact has been concealed by the petitioner from this Court.

(c) Proceedings under Section 27 of the Act are criminal in nature therefore cannot be stayed under Section 27 of the Consumer Protection Act.

(d) This Delhi High Court in the case of Ravikant Sharma v. National Consumer Commission reported in AIR 1997 Del 182, has held that penal provisions under Section 27 of the Act are in addition and therefore, pendency of winding up proceedings will not come in the way of the commission passing orders under Section 27 of the Act. The relevant para reads as follows:

Point:4: The contention is that liability of the company or of the petitioners is to be restricted to the value of the shares held by them or has to be dealt with only during the winding up proceedings of the two companies is again untenable. It may be that the proceeding for recovery under Section 25 of the Act may, on the facts, require the taking into account of the pendency of the winding up proceedings but the penal provisions under Section 27 of the Act are in addition to the mode of recovery contemplated by Section 25 and, therefore, the pendency of winding up proceedings will not come in the way of the Commission passing orders under Section 27 of the Act.

5. In so far as the merits of the dispute are concerned, this Court is fully bound by the judgment of a Division Bench of this Court in Ravi Kant's case (supra). The Division Bench of this Court in para 22 of the said judgment clearly held that the penal provision under Section 27 of the Act are in addition to the mode of recovery contemplated by Section 25 and, therefore, the pendency of winding up proceedings will not come in the way of the Commission passing orders under Section 27 of the Act. Thus this plea of the learned Counsel for the petitioner that a winding up order bars proceedings under Section 27 of the Act has no substance.

6. The learned Counsel for the petitioner has relied upon the judgment of the National Commission in the case of Ravikant and Anr. v. Veena Bhatnagar reported in (1996) CPJ 260 (NC) to submit that the no proceedings against the company under Section 27 of the Act after the appointment of the Provisional Liquidator except by the leave of the Court. The relevant portion of the judgment reads as follows:

Admittedly no winding up order has been passed of the two companies. The State Commission considered the provisions of 446 of the Companies and held in our view rightly that from the reading of Sub-section (1) of Section 446 of the Companies Act it is evident that no proceedings against a Company after the appointment of a Provisional Liquidator can be commenced except by the leave of the Court. However, if any proceedings are pending on such date these can continue till the date when winding up order are passed by the Court. The proceedings before the State Commission thus could continue inspite of the fact that a Provisional Liquidator has been appointed by the High Court for I. G. F. Leasing (P) Ltd. as the cases were pending on the date of the appointment of the Provisional Liquidator.

However, this judgment was challenged in this Court wherein it was held by this Court that the pendency of winding up proceedings will not come in the way of the Commission passing orders under Section 27 of the Act. Thus, the petitioner cannot rely upon the judgment of the National Commission to contend that the proceedings under Section 27 of the Act cannot commence in view of the bar of the Section 446 of the Companies Act.

7. However, we are required to deal with the additional point raised by the learned Counsel for the petitioner about the State Commission suo motu treating the appeal preferred by the petitioner as a revision petition under Section 17(1)(b) of the Act. The main thrust of Mr. Rao, learned Counsel for the petitioner is that by treating the petitioner's appeal as a revision petition, the State Commission had denuded it of a right of appeal to the National Commission under Section 21(b) of the Act. The State Commission has wrongly registered the appeal stating that it should be treated as revision petition. The State Commission gave no reasons why the office had wrongly registered the appeal preferred by the petitioner as an appeal and what compelled the State Commission to treat it as a revision petition. There is a substance in the plea of the petitioner that the appeal preferred by it ought not to have been suo motu converted by the State Commission into a revision petition thus depriving the petitioner of the right to challenge the order of the State Commission in revision before the National Commission. A persual of Section 17(1)(b) shows that no revision lies from an order passed in revision petition under Section 17(1)(b). Consequently, the petitioner is right in contending that the order of the State Commission treating its appeal as revision thereby depriving it of the right of revision to the National Commission was not justified particularly when the State Commission has not given any reason whatsoever for treating the petitioner's appeal as a revision. We are, therefore, of the view that the State Commission was absolutely unjustified in treating the appeal preferred by the petitioner as a revision petition particularly when no reason whatsoever have been given by the State Commission in treating the appeal filed by the petitioner as a revision petition. Therefore, we are of the view that the impugned order on the aspect of treating the appeal preferred by the petitioner as the revision petition cannot be sustained.

8. Normally this would have necessitated the remand of the matter to the State Commission. However, we have considered the matter on merits and found that in view of the judgment of the Division Bench of this Court in Ravikant's case (supra), there is no merit in the plea of the petitioner that after the winding up order, proceedings under Section 27 of the Act would not lie. We are therefore of the view that no useful purpose will be served by remanding the matter in view of the concluded position of law. We also record our appreciation of the work put in by the amices Curiae, Shri Maulick Nanavati.

9. Accordingly, the writ petition is dismissed but with the above clarification in respect of powers of the State Commission under Section 15 and 17(1)(b) of the Act.