Karnataka High Court

Piramal Capital And Housing ... vs Mr.V.R.Raghunathan on 22 July, 2022

Bench: P.S.Dinesh Kumar, C.M. Poonacha

  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 22nd DAY OF JULY, 2022

                         PRESENT

      THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR

                          AND

       THE HON'BLE MR. JUSTICE C.M. POONACHA

      WRIT PETITION No.19748 OF 2021 (GM-CON)
                        C/W
      WRIT PETITION No.19724 OF 2021 (GM-CON)

IN W.P. NO. 19748/2021

BETWEEN

PIRAMAL CAPITAL & HOUSING FINANCE LIMITED
THROUGH IT ITS AUTHORIZED SIGNATORY
MR.AIYANNA NK
WARDEN HOUSE 2ND FLOOR
SIR PM ROAD, FORT MUMBAI
MAHARASHTRA-400001

ALSO AT:
PIRAMAL CAPITAL & HOUSING FINANCE LIMITED,
ZONAL OFFICE NO.13, OLD NO.5,
1ST MAIN ROAD,
NEAR KODAVA SAMAJA,
VASANTH NAGAR, BANGALORE-560052.
                                             ...PETITIONER
(BY SRI UDAYA HOLLA, SENIOR ADVOCATE FOR
    SRI MOHAMMAD SHAMEER, ADVOCATE)

AND

1 . MR.V.R.RAGUNATHAN
    S/O LATE V.S.RAMABHARDRAN
    AGED ABOUT 68 YEARS,

2 . MRS.R.SUNDARAVALLI
                            2




   AGED ABOUT 61 YEARS,
   W/O V.R.RAGHUNATHAN,

3 . MR.R.ARAVIND
    S/O V.R.RAGHUNATHAN
    AGED ABOUT 34 YEARS,

   ALL THE RESPONDENTSS ARE
   R/AT NO.515, 15TH MAIN,
   15TH CROSS, VIJAYANAGAR,
   3RD STAGE, B BLOCK
   MYSURU-570030.
                                         ...RESPONDENTS
(BY SRI RUDRAPPA P, ADVOCATE FOR R1 TO R3)

      THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING
AND SETTING ASIDE THE ORDER DATED 03.03.2021 PASSED
BY   THE    LD.STATE   COMMISSION    IN   THE   MATTER
V.R.RAGHUNATHAN AND ORS. V. THE BRANCH MANAGER,
DEWAN HOUSING FINANCE CORPORATION LTD, CONSUMER
COMPLAINT NO.554 OF 2019 WHICH IS ANNEXED HEREWITH
AS ANNEXURE-A AND ETC.

IN W.P. NO.19724/2021

BETWEEN

PIRAMAL CAPITAL & HOUSING FINANCE LIMITED
THROUGH ITS AUTHORIZED SIGNATORY
MR.AIYANNA NK
WARDEN HOUSE 2ND FLOOR
SIR PM ROAD, FORT MUMBAI
MAHARASHTRA-400001

AND
PIRAMAL CAPITAL & HOUSING FINANCE LIMITED
ZONAL OFFICE NO.13,
OLD NO.5, 1ST MAIN ROAD,
NEAR KODAVA SAMAJA,
VASANTH NAGAR, BANGALORE-560052.
                                         ...PETITIONER
(BY SRI UDAYA HOLLA, SENIOR ADVOCATE FOR
    SRI MOHAMMAD SHAMEER, ADVOCATE)
                                3




AND

1 . MR.V.R.RAGHUNATHAN
    S/O LATE V.S.RAMABHARDRAN
    AGED ABOUT 68 YEARS,

2 . MR.R.SUNDARAVALLI
    AGED ABOUT 61 YEARS,
    W/O V.R.RAGHUNATHAN,

3 . MR.R.ARAVIND
    S/O V.R.RAGHUNATHAN
    AGED ABOUT 34 YEARS,

      ALL RESPONDENTSS ARE RESIDING
      R/AT NO.515, 15TH MAIN,
      15TH CROSS, VIJAYANAGAR,
      3RD STAGE, B BLOCK
      MYSURU-570030.
                                       ...RESPONDENTS
(BY SRI RUDRAPPA P, ADVOCATE FOR R1 TO R3)

        THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF THE CONSTITUTION OF INDIA PRAYING TO SETTING
ASIDE    THE   ORDER   DATED   03.03.2021   PASSED    BY   THE
LD.STATE COMMISSION IN THE MATTER V.R.RAGHUNATHAN
AND ORS. V. THE BRANCH MANAGER, DEWAN HOUSING
FINANCE CORPORATION LTD, CONSUMER COMPLAINT NO.553
OF 2019 WHICH IS ANNEXED HEREWITH AS ANNEXURE-A AND
ETC.


        THESE PETITIONS HAVING BEEN HEARD AND RESERVED
FOR     JUDGMENT    ON   13.07.2022,    COMING       ON    FOR
PRONOUNCEMENT OF ORDER, THIS DAY, POONACHA, J., MADE
THE FOLLOWING:
                                    4




                                 ORDER

Writ Petition Nos. 19724 and 19748/2021 are filed

challenging the orders dated 03.03.2021 passed in

Consumer Complaint No. 553 and 554/2019, respectively

by the Karnataka State Consumer Dispute Redressal

Commission, Bengaluru (hereinafter referred to as 'State

Commission').

2. The complainants in both the complaints are

the same and the case put forth in both the Complaints are

similar. Hence, both the Writ Petitions are disposed of by

this common order.

3. It is the case of the complainants -

Respondents in W.P.No.19724/2021 that they had placed

deposits with Dewan Housing and Finance Corporation

Limited (herein after referred to as 'DHFL'), the details of

which are as follows:

Sl. FD receipt details Amount Maturity No. date

dated 20.06.2016 in the 8.90% p.a., and name of Respondent INR 4,67,967

2 FD receipt NO.3450 INR 10,00,000 01.11.2019 dated 01.07.2016 in the @ 9.15% p.a., and name of Respondent INR 13,47,768

dated 05.07.2016 in the 8.90% p.a., and name of Respondent INR 4,67,967

4. It is the case of the complainants -

Respondents in W.P.No.19748/2021 that they had placed

deposits with DHFL. The details of which are as follows:



Sl.   FD receipt details            Amount          Maturity
No.                                                 date


      dated 15.10.2016 in the       @ 8.90%
      name of Respondent

2     FD receipt NO.806989          INR 8,00,000 @ 08.02.2028
      dated 06.02.2018 in the       8.90%
      name of Respondent


      dated 23.11.2016 in the       8.90%
      name of Respondent






       5.      The    Respondents         filed    Complaints     under

Section 17 of the Consumer Protection Act, 1986 (for short

'the Act') before the State Commission inter alia with a

prayer to direct DHFL to pay the proceeds of the Fixed

Deposit receipts with applicable interest on premature

closure.

6. Owing to governance concerns and failure to

pay its obligations, the Reserve Bank of India (for short

'RBI') superseded the Board of Directors of DHFL and

appointed an Administrator in exercise of its power under

Section 45 IE 5(a) of the RBI Act. Thereafter, on

29.11.2019, RBI filed an Application under Sections 227

and 239(2) (zk) of The Insolvency and Bankruptcy Code,

2016 ( for short 'the IBC') r/w Rules before the National

Company Law Tribunal (for short 'the NCLT') and initiated

Insolvency proceedings against DHFL. On the same day

i.e. on 29.11.2019, RBI vide a press release declared that

it had filed the application for commencement of

insolvency proceedings against DHFL and interim

moratorium had commenced from the said date in terms of

the Insolvency and Bankruptcy (Insolvency and

Liquidation Proceedings of Financial Service Providers and

Application to Adjudicating Authority) Rules, 2019 (for

short 'FSP Rules'). On 03.12.2019, the NCLT admitted the

application filed by the RBI against DHFL and ordered that

'moratorium' w.e.f. 29.11.2019 is in accordance with the

IBC.

7. Public depositors were included as a class of

creditors in accordance with Section 21(6A)(b) of the

IBC. The Committee of Creditors (hereinafter referred to

as 'COC') of DHFL was duly constituted on 24.12.2019 and

its first meeting was held on 31.12.2019. The depositors

were represented by their authorised representative. On

22.12.2020, Piramal Capital and Housing Finance Limited

(hereinafter referred as to as 'Piramal') submitted a

Resolution Plan which was approved by the COC on

15.01.2021. The manner of distribution of proceeds was

also approved by a majority of the COC. The claim of the

depositors including the Respondents was considered and

formed part of Resolution Plan and distribution

mechanism. The RBI communicated its 'No Objection' to

the Resolution Plan on 16.02.2021 as per Rule 5 of the FSP

Rules. The Administrator filed Interlocutory Application

No.449/2021 in Company Petition (IB) No.4258/2019

under Section 31 of the IBC Code for approval of the

Resolution Plan submitted by the Piramal. The NCLT vide

order dated 07.06.2021, after hearing the objections of all

the parties including the deposit holders, approved the

same. In view of the said order dated 07.06.2021, as per

Section 31 of the IBC code, the same is binding on all the

stakeholder of the DHFL including the Respondents.

8. The order of the NCLT was challenged by the

association of deposit holders before the National Company

of Appellate Tribunal (NCLAT) and vide order dated

12.07.2021, the NCLAT upheld the order of the NCLT. The

implementation of the Resolution Plan as approved by the

NCLT was carried out, whereby, Piramal merged into DHFL

w.e.f., 30.09.2021. Consequently, there is a change in

management of DHFL by way of appointment of additional

Directors and a new Board has superseded the

Administrator.

9. The Respondents filed Consumer Complaints

before the State Commission on 21.11.2019. They filed

their claims on 12.12.2019 before the Administrator to

release all the amounts under the Fixed Deposit receipts.

Vide order dated 03.03.2021, the State Commission

ordered the Petitioners to do the needful pursuant to the

request of the Respondents to pay the amounts under the

FDs upon pre-mature closure after completion of the

moratorium period. The Respondents vide letter dated

12.04.2021 addressed to the Administrator, sought

implementation of the order dated 03.03.2021 passed by

the State Commission. It is the case of the Petitioners that

at the time of voting by the COC on the Resolution Plan on

15.01.2021 and obtaining of RBI's 'No Objection

Certificate' on 16.02.2021, the claim of the Respondents

formed part of the entire pool of claims submitted to the

Administrator.

10. In accordance with the plan approval order

passed by the NCLT, the DHFL requested the Respondents

to confirm their bank details, in order to enable them to

process the final pay out as per the Resolution Plan. In

response to DHFL's request, the Respondents addressed

letters dated 29.09.2021 to DHFL reiterating that they had

requested that their claims be withdrawn vide letters dated

12.04.2021. As on date, it is the case of the Petitioners

that the Respondents have received their payments in

accordance with the approved Resolution Plan. It is their

further case that in the proceedings before the State

Commission, they had entered appearance and brought it

to the notice of the Commission regarding the pendency of

Insolvency Proceedings and the 'moratorium' under

Section 14 of the IBC as also the Resolution Plan. Despite

the same, the order dated 03.03.2021 has been passed by

the State Commission which is impugned in the present

Writ Petitions.

11. The Respondents have entered appearance

and filed their statement of objections. They justify the

order passed by the State Commission inasmuch as the

State Commission has ordered that the payments as per

the Fixed Deposit receipts have been directed to be paid

by the Petitioner only after the order of moratorium. In

W.P.No.19748/2021 the Respondents submitted that as

against the claim of Rs.23,00,000/- on 29.09.2021, they

have received a sum of Rs.8,68,568/- leaving a balance of

Rs.14,31,432/- plus interest and in W.P.No.19724/2021,

as against the claim of Rs.22,83,709/-, a sum of

Rs.2,11,105/- was received leaving a balance of

Rs.20,72,597/- plus interest. The Respondents seek for

payment of the amount as contemplated in the Fixed

Deposit receipts as ordered by the State Commission.

12. Sri Udaya Holla, learned Senior counsel for the

Petitioner, inter alia, contended that:

(a) The order passed by the State Commission is

one without jurisdiction and Writ Petitions before this Court

are maintainable despite existence of an alternative

remedy under the Consumer Protection Act;

(b) It is impermissible for the Respondents to stand

outside the Resolution Plan and seek for payment of

amounts in variance with the same;

with the Administrator as per the Fixed Deposit receipts is

incorporated in the Resolution Plan and the same have

been approved by the NCLT and NCLAT. The said

Resolution Plan is statutorily binding on all the

stakeholders of the erstwhile DHFL;

(d) It is impermissible for the Petitioners to make

payments in variance to the Resolution Plan as the same

will open flood gate of claims from the other deposit

holders who are 70,000 in number of the erstwhile DHFL;

13. Learned Senior Counsel relied on the following

judgments:

i) Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited 1;

ii) Committee of Creditors of Essar Steel India Ltd.v. Satish Kumar Gupta & Ors.,2;

iii) Alchemist Asset Reconstruction Co.

Ltd., v. Hotel Gaudavan (P) Ltd.,3

14. Putting forth the said contentions, and relying

on the aforementioned Judgments, the Petitioner seeks for

allowing of the Writ Petitions.

2021 SCC OnLine SC 313

(2020) 8 SCC 531

(2018) 16 SCC 94

15. Per contra, learned counsel for the

Respondents contended that:

(a) the Writ Petitions filed by the Petitioner are not

liable to be entertained in view of the existence of an

alternative and efficacious remedy as contemplated under

the Consumer Protection Act;

(b) Petitioner having participated in the proceedings

before the State Commission and considering the

contentions put forth by it, the said Commission has

directed the Petitioner to pay the amount due and payable

under Fixed Deposit after completion of the moratorium

period which order is just and proper and not liable to be

interfered with;

16. Learned counsel for the Respondents relied on

the judgment in the case of Cicily Kallarackal v. Vehicle

Factory 4.

17. The learned counsel for the Respondents seek

for dismissal of the Writ Petitions having regard to the

contentions put forth.

SLP (C) No.24228-24229/2012 (CC Nos.12891-1292/2012), DD 06.08.2012

18. The question that arise for consideration is

'Whether the order dated 03.03.2021 passed by the State

Commission is liable to be interfered with?'

19. It is clear from the aforementioned that the

essential facts being not in dispute, inasmuch as, DHFL

who has received deposits from members of the Public and

have issued Fixed Deposit Receipts. At the instance of the

RBI, proceedings were initiated under the RBI Act and the

IBC as noticed above, resulting in a Resolution Plan which

was approved by the COC and upheld by the NCLT and

NCLAT, vide orders dated 07.06.2021 and 12.07.2021.

20. In the case of Ghanashyam Mishra, the

Hon'ble Supreme Court has held as follows:

"95(i) That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan."

21. In the case of Committee of Creditors of

Essar Steel India Ltd, the Hon'ble Supreme Court has

held as follows:

" 105. Section 31(1) of the Code makes it clear that once a resolution plan is approved by the Committee of Creditors it shall be binding on all stakeholders, including guarantors. ..........

106. ....

107. ...... A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. ......

22. In view of the above, it is impermissible in law

for the Respondents to claim the amounts due under the

Fixed Deposits by being outside the Resolution Plan and

claim amounts contrary to the said Plan.

23. Regarding maintainability of the Writ Petitions,

the Hon'ble Supreme Court in the case of Whirlpool

Corporation v. Registrar of Trade Marks, Mumbai and

others 5, has held that:

"20. ........... law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation".

24. In the case of Harbanslal Sahnia and

another v. Indian Oil Corporation Ltd., and others 6,

the Hon'ble Supreme Court has held that:

"7. ............... In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] .) ............

25. It is unfortunate that thousands of persons

have deposited their savings in DHFL and today they are

driven to litigate at various fora even for refund of monies

(1998) 8 SCC 1

(2003) 2 SCC 107

deposited by them. However, it is to be noted that,

envisaging such a situation, the IBC has been enacted and

a process has been contemplated by a Statute

whereunder, every attempt is made to ensure claims of

creditors are expeditiously dealt with in an organized

manner in accordance with law. It is under such a process

that the COC have reviewed the Resolution Plan offered by

various entities proposing to take over DHFL, all aspects of

the said Plan have been gone into by the authorities as

contemplated under the Statute resulting in the Resolution

Plan as approved by the Committee of Creditors also being

upheld by the NCLT and NCLAT. In the process of

finalizing the Resolution Plan, all the stakeholders including

the representatives of the deposit holders have also

participated in the same. It is relevant to note that not

only have individual Fixed Deposit holders deposited their

monies with DHFL, but also Employees of the UP State

Power Sector Employees Trust Board, Employees of

Provident Fund Trust, Army Group Insurance Fund, etc.,

which have also been dealt with under the Resolution Plan.

26. Hence, in the proceedings before the State

Commission, the Petitioner was required to specifically

plead and put forth the necessary facts/details as to the

amounts payable to the Petitioner in terms of the

Resolution Plan, which the Petitioner has failed to do.

Merely remitting ad hoc amounts to the Respondents

without intimating them the basis of the remittances

made, does not absolve the liability of the Petitioner

making payments to the Respondents, even if it is to be in

terms of the Resolution Plan.

27. It is noticed that in W.P.No.19748/2021 the

Respondents, as against the claim of Rs.23,00,000/- have

received a sum of Rs.8,68,568/- leaving a balance of

Rs.14,31,432/- and in W.P.No.19724/2021, as against the

claim of Rs.22,83,709/-, a sum of Rs.2,11,105/- was

received leaving a balance of Rs.20,72,597/-. The amounts

repaid by the Petitioners to the Respondents in the writ

petitions ex-facie appear to be dis-proportionate. The

Petitioner was required to place on record before the State

Commission itself the entitlement of the Petitioner in both

the Writ Petitions as to the amount due and payable to

them under the Resolution Plan by furnishing the relevant

details/particulars and the making payments of the said

sums to the Petitioner, if any in terms of the Resolution

Plan.

28. In the case of Alchemist Asset

Reconstruction Co. Ltd (supra), the Hon'ble Supreme

Court has held that:

"4. The mandate of the new Insolvency Code is that the moment an insolvency petition is admitted, the moratorium that comes into effect under Section 14(1)(a) expressly interdicts institution or continuation of pending suits or proceedings against corporate debtors."

29. In the case of Cicily Kallarackal(supra), the

Hon'ble Supreme Court has taken exception with the High

Court in entertaining the Writ Petitions under Article 226 of

the Constitution of India despite there being a statutory

appeal under the Consumer Protection Act.

30. In view of the aforementioned, it cannot be

said that the Orders dated 03.03.2021 passed by the State

Commission are without jurisdiction, inasmuch as the

complaints were filed prior to the moratorium coming into

force and vide orders dated 03.03.2021, the State

Commission has directed the Petitioner to pay the amounts

after the moratorium period. In fact, even before this