NATIONAL
CONSUMER DISPUTES REDRESSAL COMMISSION
(From the
order dated 23.2.2001 in Appeal No.66/2000
of the State Commission Chandigarh, UT)
Lloyds Finance
Ltd.
Petitioner
Vs.
Ms. Napeena
Singh
Respondent
(From the
order dated 23.2.2001 in Appeal No.211/2000
of the State Commission Chandigarh, UT)
Lloyds Finance
Ltd.
Petitioner
Vs.
A.I. Katyal
Respondent
(From the
order dated 23.2.2001 in Appeal No.212/2000
of the State Commission Chandigarh, UT)
Lloyds Finance
Ltd.
Petitioner
Vs.
Ms. Premlata
Katyal
Respondent
(From the
order dated 23.2.2001 in Appeal No.135/2000
of the State Commission Chandigarh, UT)
Lloyds Finance
Ltd.
Petitioner
Vs.
Ms. Sangeeta
Malan
Respondent
(From the
order dated 25.5.2001 in Appeal No.1045/2000
of the State Commission Madhya Pradesh )
Lloyds Finance
Ltd.
Petitioner
Vs.
R.S. Pushp
Respondent
(From the
order dated 19.7.2001 in Appeal No.309/01
of the State Commission, Madhya Pradesh)
Lloyds Finance
Ltd.
Petitioner
Vs.
Hitendra
Tiwari
Respondent
(From the
order dated 21.6.2001 in Appeal No. 1649/00
of the State Commission, Madhya Pradesh)
Lloyds Finance
Ltd.
Petitioner
Vs.
Mrs. Simmi Mukharia
Respondent
(From the
order dated 4.3.2002 in Appeal No.43/01
of the State Commission Jharkhand)
Lloyds Finance
Ltd.
Petitioner
Vs.
Chandra
Kishore Prasad Singh
Respondent
(From the
order dated 2.5.2002 in Appeal No.409/02
of the State Commission Punjab )
Lloyds Finance
Ltd.
Petitioner
Vs.
Amarpreet Kaur
Respondent
(From the
order dated 2.5.2002 in Appeal No.406/02
of the State Commission Punjab)
Lloyds Finance
Ltd.
Petitioner
Vs.
Harpreet Singh
Respondent
(From the
order dated 4.3.2002 in Appeal No.1164/01
of the State Commission Punjab)
Lloyds Finance
Ltd.
Petitioner
Vs.
M/s. Senior
Wire Products & Anr.
Respondents
BEFORE:
HONBLE
MR. JUSTICE D.P. WADHWA,
PRESIDENT
HONBLE
MR. JUSTICE J.K. MEHRA, MEMBER
MRS.
RAJYALAKSHMI RAO, MEMBER
MR.
B.K. TAIMNI, MEMBER.
Non-Banking Financial Companies NBFC consumer has a right to file the complaint under the
Consumer Protection Act - his right is barred if he has filed a complaint
before Company Law Board under Section 45QA of the Reserve Bank of India, 1934
or had participated in the proceedings
of the Company Law Board.
O R D E R
DATED THE 30th
JANUARY, 2003.
JUSTICE D.P. WADHWA, J.(PRESIDENT)
Considering
the huge pendency of cases in Consumer
Forums against Non-Banking
Financial Companies (NBFCs) by the
depositors all over the country, it is
an unfortunate story of loot by
NBFCs and then these very NBFCs taking shelter in the safe heaven of
schemes framed by the Company Law Board in any of the regions of the country
much to the chagrin of the poor
depositors.
These revisions by the
petitioner, a Non-Banking Financial Company has the usual defence of
scheme framed by Company Law Board, Western Region when most of the depositors had no notice of hearing before the Company
Law Board. That reflects the unjustness
of the case for a depositor living in far
corner of the country and when he is
in a dark even to enforce the payment
under the scheme. For one he is a depositor who was not a
party to the proceedings before the Company Law Board and is not aware of the
order and then for breach of the scheme
he has to approach the Reserve Bank of India to take cognizance of the offense
committed by the NBFC and then the
usual endless proceedings before a Criminal Court as he has no control over the
criminal proceedings, if any, instituted
by the RBI. It was submitted
before us that the scheme framed by the petitioner covered all the
depositors and for non-compliance of the scheme about 8000 complaints were made to the RBI but not a single complaint had been filed
against the petitioner in the Criminal Court.
A question of utmost
importance has been raised in these revisions and that is the jurisdiction of
Consumer Forum vis-a-vis that of the
Company Law Board, latter exercising jurisdiction under Section 45QA of the Reserve Bank of India Act, 1934 though
constituted under Section 10E of the Companies Act, 1956.
In this batch of 11 revisions there are respondents- complainants who had made deposits with the petitioner,
a Non-Banking Finance Company (NBFC)
which deposits were not repaid to the complainants as per the terms and conditions of the
deposits. These
depositors-complainants filed
complaints before the different District Forums under the Consumer Protection
Act, 1986 (for short the Consumer Act).
Complaints were allowed by the District Forums and the appeals filed by the petitioner-NBFC were dismissed by the
respective State Commissions.
Now these petitions under clause (b) of Section 21 of the Consumer
Protection Act, 1986.
It is contended before
us by the petitioner that it being NBFC, functions under the guidelines of
Reserve Bank of India (RBI for short) within the purview of the Reserve Bank of India Act, 1934. Petitioner, it is stated, had received
deposits from various depositors from all over the country to the tune of over
Rs.350.00 crores. Petitioner has its registered office at Mumbai and branches at various places in the country
from where deposits were taken from the depositors. It is contended that a scheme was framed on 16.4.99 by Company Law Board ( western
branch) which was subsequently
modified on 22.12.2000. That scheme was in the interest of the depositors including the
respondents-complainants herein.
Complaints in the present case were filed in between the period from 1999 to 2001 before different Consumer
Forums. It is not contended that District Forum had no territorial
jurisdiction to take cognizance of the complaints filed before them.
Strong reliance has been placed by the petitioner on a order dated
9.11.00 rendered earlier by this
Commission in the case of M/s. Allianz Capital & Management Services Ltd. vs. N.P. Grover & Ors. [I (2000) CPJ
(NC) 617] where this Commission took the following view:
The Company Law Board is now seized of the matter in
dispute. It has been stated on behalf
of the Company that the
Petitioner-Company is adhering to the
scheme of payment framed by the Company Law Board. Since the Company Law
Board is seized of the matter, we will
not hear the case any further. The
matter is disposed of finally as above.
Any grievance about non-payment according to the schedule drawn by the
Company Law Board can be raised before the Company Law Board.
It would be seen that
the aforesaid decision does not give any particulars of the complaint filed by
depositor and other relevant information as to when Company Law Board was seized of the matter. In a very abrupt manner this Commission had
disposed of the aforesaid matter
and perhaps at that time the matter was not argued in sufficient detail and
relevant provisions of law not brought
to the notice of this Commission.
Moreover, if we do not follow
the observations as contained in the order of N.P. Grovers
case we are not reviewing order of that
case but examining these matters on the
facts of the cases before us and the
law applicable.
At this stage it will
able appropriate to refer to various provisions of law. Chapter-IIIB was introduced in the
Reserve Bank of India Act, 1934 w.e.f.
1.12.1964 and it contains provisions relating to Non-Banking Financial
Institutions. It is not disputed that petitioner is a Non-Banking Financial
Institution falling within the
Chapter-IIIB. There were further
amendments to some of the Sections
falling in this Chapter and that being insertion of Section 45QA which
we quote:
45QA. Power
of Company Law Board to offer repayment of deposit. (1) Every deposit accepted by a non-banking
financial company, unless
renewed, shall be repaid in accordance with the terms and condition of
such deposit.
(2) Where a
non-banking financial company has failed to repay and 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.
Section 45Q provides that Chapter IIIB will have overriding effect. This section is as under:
45Q. Chapter IIIB 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.
Section
58B of Chapter V of Reserve Bank of
India Act prescribes penalties. This Section in relevant part we quote:
58B. Penalties: -
(4AAA) Whoever fails to comply with any order made by the Company Law Board under sub-section (2) of Section 45QA, shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to a fine of not less than rupees fifty for every day during which such non-compliance continues.
(5) If any person other than an auditor
(a) receives any deposit in contravention of any direction given or order made under Chapter IIIB; or
(aa) fails to comply with any direction given or order made by the Bank under any of the provisions of Chapter IIIB, or
(b) issues any prospectus or advertisement otherwise than in accordance with section 45NA or any order made under section 45J, as the case may be,
he shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine which may extend,-
(i) in the case of a contravention falling under clause (a), to twice the amount of the deposit received; and
(ii) in the case of a contravention falling under clause (b) , to twice the amount of the deposit called for by the prospectus or advertisement.
However, Section 58E prescribes conditions for taking cognizance of offences. This Section we quote:
58E.
Cognizance of offences. (1)
No court shall take cognizance of any offence punishable under this Act
except upon a complaint in writing made by an officer of the Bank, generally or
specially authorized in writing in this behalf by the Bank, and no court other
than that of Metropolitan Magistrate or a Judicial Magistrate of the first
class or a court superior thereto shall try any such offence:
Provided that in respect of any
offence punishable under sub-section (5A) of section 58B, a complaint in
writing may also be made by an officer of the State Government, generally or
specially authorized in writing in this behalf by that Government.
(2) Notwithstanding anything contained in the
Code of Criminal Procedure, 1973 (2 of 1974) a Magistrate may, if he see reason
so to do, dispense with the personal attendance of the officer of the Bank filing the complaint, but the
Magistrate may in his discretion, at
any stage of the proceedings, direct the personal attendance of the
complainant.
Section 58F is for
application of fine imposed by the Court
and this Section we reproduce:
58F. Application of fine.- A Court imposing any fine under this
Act may
direct that the whole or any part thereof shall be applied in, or towards payment of, the costs of the
proceedings.
RBI has also power to
impose fine under certain
conditions if there is contravention of
Section 58B but we are not concerned
with that in the present proceedings.
Section
45QA of RBI Act refers to the Company
Law Board constituted under Section 10E
of the Companies Act, 1986. It is not necessary for us to go into
the constitution of Company Law Board as provided in Section 10E of the Companies Act except
to note that Section 10F of the
Companies Act also provides for appeals
against the orders of the Company Law Board.
Nothing has been said on the applicability of Section 10F. It is perhaps on account of the fact that orders passed by Company Law
Board with reference to provisions of
Companies Act are only appealable under Section 10F. In any case since nothing was argued on this aspect, we leave
the matter at that. Coming back to the
provisions as contained in Chapter IIIB of the RBI Act an argument was raised
that provisions of Section 45QA override that of the Consumer Act. That argument is only stated to be
rejected. Consumer Act only provides additional remedy. Andhra Pradesh High Court in the case of Prudential Capital Markets Ltd. vs. State of
Andhra Pradesh & Ors. I (2001) CPJ 230 has held that remedy under Section 45QA of the RBI Act is
in addition to that available under the
Consumer Act. Depositor may approach
either the Consumer Forum or the
Company Law Board and there is no
exclusion of jurisdiction of the Consumer Forum from entertaining a dispute
at the instance of a depositor.
It is a profound judgment of the High Court written by Honble Mr.
Justice V.V.S. Rao. The Honble Judge
has examined various aspects of the matter in detail to come to the following conclusion amongst other:
(iv) The
provisions of Sections 45-Q, 45-QA of
the R.B.I. Act and Section 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 Section 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 R.B.I. 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.
It is not necessary for
us to examine which is the most
effective remedy as far as depositor is
concerned. It is for him to decide. It may, however, be noticed that if an order
of the Company Law Board is not complied
a complaint will have to be made
only by RBI under Section 58E of the RBI Act.
Company Law Board does not seem to have any powers of its own to enforce
its order.
The
question now which arises is : whether Company Law Board was authorized to
frame scheme and if such scheme is permissible under Section 45QA and binding on the complainants as the scheme is now the main plank of defense of the petitioner- an NBFC.
Section 45QA when
analyzed would mean under sub section (1) every
deposit accepted by a non-banking financial company, unless renewed, shall be repaid in accordance with
the terms and condition of such deposit.
This is the mandate of the law.
Under sub section (2) when
NBFC has failed to repay a deposit or
part thereof in accordance with the terms and conditions of such deposit
Company Law Board is to be moved by an
application filed by the depositor or
Company Law Board can itself of its own
motion take action. However, Company
Law Board has to be satisfied that an
order is necessary to safeguard the interest of the Company, the depositors or in the public interest. Thereafter NBFC has to make payment of such deposit or part
thereof forthwith or within such time
or subject to such condition
as may be specified in the order.
It is not that NBFC has to
approach the Company Law Board.
Sub-section (2) does not talk of any scheme which would apply to all the
depositors. Before making any order
regarding repayment of the deposit made
by the depositor Company Law Board has to
give reasonable opportunity of being heard to the NBFC and to other persons
interested in the matter. It would be
thus seen that Company Law Board may pass
an order suo moto and even
without any application having been
filed by the depositor. Section 45QA does not empower the
Company Law Board to pass an order effecting all the depositors without granting them opportunity of hearing as that is the requirement of law and Company Law Board has to
grant reasonable opportunity of being
heard not only to NBFC but also to
other persons interested in the matter which would mean all other depositors
who had not made any application to the Company Law Board.
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.
The order of this
Commission in M/s. Allianz Capital & Management Services Ltd. vs. N.P. Grover & Ors. has to be read in this context and is with reference to the facts of that case
and cannot said to have application in other cases.
It is thus clear that if
the complainant has not filed any
application before the Company Law Board under Section 45 QA of the RBI Act or
has not received any notice from the Company Law Board in the proceedings
initiated by any other depositor or has
not participated in the proceedings before Company Law Board, he will be entitled
to file a complaint before the Consumer Forum under the Consumer Act.
We would,
therefore, do not find that the revision petitions filed by the
Llyods Ltd. are fit cases for us to
exercise our jurisdiction under clause (b) of
Section 21 of the Consumer Protection
Act. These petitions are
dismissed with costs of Rs.5000/- to each of the respondents-complainants.
J
(D.P.
WADHWA)
PRESIDENT
J
(J.K.
MEHRA )
MEMBER
(RAJYALAKSHMI
RAO )
(B.K.
TAIMNI)