TaxTMI 
TaxTMI 
2000 (8) TMI 979
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....ries 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 the PCML and on the District Forum allowing the application, the petitioner herein approached the State Commission which dismissed the appeal filed and whereupon depositor approached District Forum under section 27(1) of the Consumer Protection Act, 1986 ('the Consumer Act') 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. As the petitioner is the same and the questions of law that arise for consideration are same, it is convenient to dispose of all the writ petitions by a common order. For the sake of convenience, the pleadings in Writ Petition No. 7920 of 1999 may be noticed. 3. The petitioner is Non-Banking Finance Company (NBFC) under the cont....
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....rs filed complaints before Consumer Forums, Criminal Courts under section 138 of the Negotiable Instruments Act, 1889, as well as other Courts of law. Though there are clear provisions in the RBI Act, the District Forums and State Commissions have been entertaining and adjudicating the complaints. As section 3 of the Consumer Act is not in derogation of the existing law and as section 45Q of the RBI Act contains non obstante clause, it would not be open to the parties to resort to the additional remedy before the Forums. Right to recover the deposits can only be enforced in accordance with section 45QA in Chapter IIIB of the RBI Act and the additional remedy under the Consumer Act will not be available to the depositors. Therefore, it is alleged that the action of the District Forum in entertaining C.D. No. 800 of 1998 filed by the third respondent (depositor) suffers from inherent lack of jurisdiction and hence should be prevented from entertaining any complaint/petition for implementation of the order in C.D. No. 800 of 1998. 5. The third respondent/depositor filed a counter-affidavit through her grand-father. Indeed, he is representing five depositors who filed C.D. No. 800 of ....
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..... On 22-4-1999 the State Commission dismissed F.A. No. 41 of 1999. When the case was posted to 22-4-1999 by the State Commission, the petitioner approached this Court on 19-4-1999 and obtained ex parte order of stay of implementation of the order in C.D. No. 800 of 1998. It is also contended that the provisions of Chapter IIIB of the RBI Act or the Companies Act do not take away the jurisdiction of the District Forum and the State Commission. The RBI did not furnish any material before the CLB before passing any order. As per the provisions of Regulation 21 of the CLB Regulations, 1991, the CLB is required to issue notices to the depositors and all others connected with the matter. The depositors filed a complaint in July 1999 before the RBI, which ordered PCML to stop collection of deposits and, therefore, the CLB ought to have called for necessary information from the RBI in respect of the deposits. The CLB without proper verification and without issuing notice to the depositors calling for objections from them, passed orders on the applications made by negligible number of less than 200 depositors. The CLB unilaterally ordered a scheme of repayment. Though the PCML was directed....
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....ompared to the remedy under the Consumer Act, especially in view of the legal position that the CLB established under section 10E of the Companies Act has got sufficient and substantial powers to order penalty and also order imprisonment to the Directors of the defaulting company. At the instance of various depositors, the CLB, Eastern Region Bench, entertained the matter and passed a detailed order granting time to PCML to pay/refund the deposits over a period of about four years in instalments. When once the CLB passed an order covering all the depositors of PCML, Consumer Forum/State Commission cannot take cognizance of the consumer cases. The Forums constituted under the Consumer Act, therefore, suffer from inherent and apparent lack of jurisdiction and accordingly they should be prohibited by a writ from proceeding further with the original proceedings, appellate proceedings or execution proceedings. 9. On behalf of the depositors (respondents in the writ petitions) G. Krishnan, G. Ramgopal and Ashok Anand Kumar made leading submissions. The learned counsel firstly submit that the petitioner/PCML approached this Court by suppressing the facts and that they have effective alte....
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....he deposit; and (iii)What is the effect of the order dated 27-5-1998 passed by the CLB Eastern Region Bench in File No. CLB/ERB/CAL/15 (PCML) of 1997-98, on the proceedings before the District Forum/State Commission or in the proceedings under section 27 of the Consumer Act. "Writ of Prohibition may be defined as extraordinary judicial writ, issuing out of a court of superior jurisdiction and directed to an inferior court, for the purpose of preventing the inferior tribunal from usurping a jurisdiction with which it is not legally vested. The object of writ is to restrain subordinate judicial tribunals of every kind from exceeding their jurisdiction ." - Janes L. High A Treatise on Extraordinary Legal Remedies: 3rd edn. 1896; pp. 705-706. It does not lie for grievances which may be redressed, in the ordinary course of judicial proceedings, by appeal. It is not a writ of right, granted ex debito justitiae but rather one of sound judicial discretion, to be granted or withheld according to the circumstances of each particular case. This writ has to be used with great caution and forbearance for furtherance of justice and to secure order and regularity in judicial proceedings, when n....
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.... prohibition together - H.W.R. Wade and C.F. Forsyth : 'Administrative Law' : 7th edn. 1994; p. 625. In R. v. North ex parte Oakey, [1927] 1 KB 491 Lord Justice Atkin observed as under : "I can see no difference in principle between certiorari and prohibition, except that the latter may be invoked at an earlier stage. If the proceedings establish that the body complained of is exceeding its jurisdiction by entertaining matters which would result in its final decision being subject to being brought up and quashed on certiorari, I think that prohibition will lie to restrain it from so exceeding its jurisdiction." Clive Lewis refers to R's case (supra), Estate & Trust Agencies Ltd. v. Singapore Improvement Trust [1937] AC 898 and R. v. Horseferry Road Justice, ex parte, Independent Broadcasting Authority [1987] QB 54 and comments as under : "Prohibition may also be used to prevent the implementation of a decision which is unlawful. Thus, the Courts have prohibited a statutory corporation from implementing an invalid decision to demolish a house and the execution of a court order imposing a fine, which was vitiated by a breach of natural justice. Certiorari to quash (or now, a decla....
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.... law is cited in a notice or order if the power to proceed is actually there under another provision." (p. 2137) 14. In U.P. Sales Tax Service Association's case (supra ), the Supreme Court indicated situations and circumstances under which a writ of prohibition can be issued. It is useful to extract the relevant portion from paragraph 23, which reads as under : "...The High Court has power to issue a writ of prohibition to prevent a court or Tribunal from proceeding further when the inferior court or Tribunal (a) proceeds to act without or in excess of jurisdiction, (b) proceeds to act in violation of the rules of natural justice, (c) proceeds to act under law which is itself ultra vires or unconstitutional, or (d) proceeds to act in contravention of the fundamental rights...." (p. 719) 15. In view of the various precedents and the comments of textbook writers, it may be taken as well-settled that a writ of certiorari and a writ of prohibition have many characteristics in common. A writ of prohibition is issued at the earliest stage to prevent a lower Court/Tribunal from usurping the jurisdiction, which does not vest in it and where the lower Court/Tribunal inherently and appar....
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....n v. Administrator Municipal Committee AIR 1963 SC 1547, Firm of Illuri Subbayya Chetty & Sons v. State of Andhra Pradesh AIR 1964 SC 322 and Dhulabhai v. State of Madhya Pradesh AIR 1969 SC 78.). 19. In Firm Seth Radha Kishan's case (supra), the Supreme Court considered the question whether availability of the remedy under the Punjab Municipal Act by way of appeal against orders passed by the Municipal authority excludes the jurisdiction of the civil court to adjudicate a claim for refund of octroi improperly collected by the Municipality. His Lordship Koka Subba Rao (as His Lordship then was) speaking for a Division Bench of the Supreme Court laid down the law as under : ". . . A statute, therefore, expressly or by necessary implication, can bar the jurisdiction of Civil Courts in respect of a particular matter. The mere conferment of special jurisdiction on a tribunal in respect of the said matter does not in itself exclude the jurisdiction of Civil Courts. The statute may specifically provide for ousting the jurisdiction of Civil Courts; even if there was no such specific exclusion, if it creates a liability not existing before and gives a special and particular remedy for th....
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.... facts and circumstances of this case. This requires examination in brief the scheme of the Consumer Act and the purport of the relevant provisions of the Companies Act and the RBI Act. 23. The framework for the Consumer Act was provided by a Resolution, dated 9-4-1985 of the General Assembly of the United Nations Organisation. This is known as Consumer Protection Resolution No. 39/248. Being a signatory to the said Resolution, India enacted the Consumer Act to provide inter alia for better protection of the interest of the consumers and for establishment of Forums for easy, uncumbersome and expeditious settlement of consumer disputes. As observed by the Supreme Court in Lucknow Development Authority v. M.K. Gupta AIR 1994 SC 787, the 'consumer law meets long felt necessity for protecting the common man from the wrong perpetuated by suppliers of goods and services'. The observations of the Supreme Court are apt : ". . . In fact the law meets long felt necessity of protecting the common man from such wrongs for which the remedy under ordinary law for various reasons has become illusory. Various legislations and regulations permitting the State to intervene and protect interest of ....
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....rts and some of the provisions of the Code of Civil Procedure, 1908 are also made applicable to the proceedings before the Forums. Every proceeding before the Forum shall be deemed to be judicial proceeding within the meaning of sections 193 and 228 of Indian Penal Code, 1860. Apart from this, the act in section 27 lays down the procedure for taking penal action against a person, who fails or omits to comply with the order of the District Forum or State Commission or National Commission as the case may be. Non-compliance or non-implementation of the order of the Forums entails in imprisonment for a minimum term of one month which may extend to three years and imposing of fine of Rs. 2,000 to Rs. 10,000. 26. The analysis of the provisions of the Consumer Act leaves no doubt that it is a special enactment aimed at protecting the consumers brought on to Statute book as per the UN Resolution and it is a comprehensive code in itself. The enactment is intended to provide for Forums at the primary level, appellate level and apex level so as to settle the consumer disputes and give redressal to consumers. The remedies provided are not in derogation of the provisions of common law remedies....
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....expertise in the fields to which the goods or services are related. It will be for the parties to place necessary material and the knowledge and experience which members will have in the fields would enable them to arrive at findings on the basis of the material. It was further laid down as under : "In complaints involving complicated issues requiring recording of evidence of experts, the complainant can be asked to approach the Civil Court for appropriate relief. Section 3 of the Consumer Act which prescribes that the provisions of the Consumer Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force preserved the right of the consumer to approach the Civil Court for necessary relief." [Emphasis supplied] The above enunciation of the Supreme Court clinchingly show that the remedy of approaching the CLB constituted under section 10E of the Companies Act under the provisions of section 45QA(2) of the RBI Act is in addition to the remedy available under the Consumer Act. A depositor or depositors may approach either the Consumer Forum or the CLB under section 45QA(2) read with sub-section (9) of section 58A of the Companies Ac....
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....ed, 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 10E 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." 29. The learned counsel for the PCML also invited the attention of the Court to sections 58B and 58E of the RBI Act. These are penal provisions which say that a company which fails to comply with an order made by the CLB under sub-section (2) of sectio....
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....iament enacted section 45Q giving overriding effect to the provisions of sections 45H to 45Q. 33. Chapter-IIIB of the RBI Act was again amended by the RBI (Amendment) Act, 1997 (Act 23 of 1997) with effect from 9-1-1997. This Act inserted sections 45-IA, 45-IB, 45-IC, 45-JA, 45-MA, 45-MB, 45-MC, 45-NA, 45-NB, 45-QA and 45-QB. The statement of objects and reasons appended relevant Bill relating to Act 23 of 1997 shows that earlier the only recourse available to depositor was to approach Court of law for redressal of grievances and now powers have been vested with the CLB also for directing the defaulting NBFCs to make repayment of deposits/interests with a view to protect the interest of the depositors. The purpose of the amendment, therefore, is to protect the depositors and not to exclude the jurisdiction of civil court for refund of deposit. By the time section 45Q was enacted by Act 55 of 1963, the Consumer Act was not in existence. The Consumer Act was enacted in 1986 and by that time section 45Q was in existence though section 45QA was not in existence. It is presumed that the Parliament is aware of all the existing laws before enacting any provision. Therefore, it is correct....
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....eld as under : ". . . The provisions of the Act thus have to be construed in favour of the consumer to achieve the purpose of enactment as it is a social benefit oriented legislation. The primary duty of the Court while construing the provisions of such an Act is to adopt a constructive approach subject to that it should not do violence to the language of the provisions and is not contrary to attempted objective of the enactment." (p. 791) 35. In Fair Air Engineers (P.) Ltd. v. N.K. Modi [1996] 6 SCC 385, the question arose whether a party is disabled to approach the State Commission having regard to an arbitration clause in the agreement creating jural relationship between him and another person and whether the Forum under the Consumer Act is required to stay pending before it under section 34 of the Arbitration Act, 1940. While holding that the proceedings before the Forums are 'legal and judicial proceedings', the Supreme Court nevertheless held that in view of the provisions of section 3 of the Consumer Act the parties do not get an automatic right to have the proceedings stayed and that it is for the Forum to stay the proceedings under section 34 of the Arbitration Act, if i....
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....ng violence to the language of section 3 of the Consumer Act. Accordingly on this point it is to be held that the provisions of the Companies Act or the RBI Act referred to hereinabove do not either specifically or impliedly exclude the jurisdiction of the District Forum and/or State Commission. 38. Now, I may take up the question of effect or order dated 27-5-1998 passed by the CLB on the proceedings before the District Forum/State Commission or on the proceedings under section 27 of the Consumer Act. 39. The CLB is constituted by the Central Government and the said Board shall exercise and discharge 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 sub-section (1A) of section 10E of the Companies Act, the civil courts exercised jurisdiction under section 9 of the Code of Civil Procedure, till sub-section (9) of section 58A was inserted by the Companies (Amendment) Act, 1977 with effect from 24-12-1977 conferring powers on the CLB to ent....
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.... a general letter to all the deposit-holders in October, 1997 informing them about the financial status of the company. After hearing the company, the CLB directed them to submit a scheme for repayment of deposits. Accordingly, the Company submitted two schemes. After receiving the scheme what happened before the CLB may be noticed by extracting from the order of the CLB. "This Bench has been receiving applications in thousands in respect of PCML. As this Bench cannot afford to accommodate thousands of applicant depositors to hear their distress as regards non-payment of deposits, notices have been issued to 175 depositors covering all categories of deposits to attend the hearing on three consecutive dates i.e., 12th, 13th and 14th May, 1998 and react to the Schemes presented by the company. Notice of hearing was also issued to the General Manager, RBI, Deptt. of Supervision (Financial Companies), Calcutta. But no representative from RBI was present at the hearing on those days. 49 depositors have attended the hearing on those days when Shri Vinod Baid, Managing Director, and other senior executives of PCML were also present." All the 49 depositors who were present on the day of ....
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....l rule of natural justice. 44. Sub-section (5) of section 10E 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 section 58A categorically lays down that CLB may, before making any order under sub-section (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 section 45QA 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 sub-section (9) of section 58A of the Companies Act and t he proviso to sub-section (2) of section 45QA 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....
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....rdinary remedy provided under the alternative law is cumbersome, the consumer cannot be deprived of the remedy before the Consumer Forums. 47. The summary of the findings under point No. 1 for consideration may now be given : (i)Thus writ of prohibition cannot be granted unless want of jurisdiction is apparent ad if want of jurisdiction is not apparent, the applicant must wait unit 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 or 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 sections 45Q, 45QA of the RBI Act and section 58A(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 section 3 of the Consumer Protection Act, remedy under the said A....
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....asons also, the petitioner is not entitled for any relief in these writ petitions as the petitioner is guilty of suppressio veri, suggestio falsi. On point No. 2, I hold accordingly. In Re Point No. 3 : 49. It is well settled that a petition under article 226 of the Constitution cannot be rejected on a mere ground that an inappropriate writ is sought. It is always within the plenary power of the High Court to mould the relief having regard to the facts presented before it. As held by me, after the Tribunal/Forum exercises its power and renders a decision, the appropriate relief to be sought is a writ of certiorari. The question, therefore, is whether any order can be passed in favour of the petitioners. The learned counsel for the petitioners places reliance on the judgment of a Division Bench of this Court in M. Varalakshmi v. A.P. State Consumer Disputes Redressal Commission [1997] (2) ALT 95 (DB), and submits that in appropriate cases this Court can quash a decision resulting in improper exercise of jurisdiction. The Division Bench of this Court in Varalakshmi's case (supra) laid down as under : "While there cannot be any dispute about the existence of the supervisory jurisdi....