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1994 DIGILAW 835 (DEL)

BY FORD LEASING LIMITED v. UNION OF INDIA

1994-12-13

ARUN B.SAHARYA, M.S.A.SIDDIQUI

body1994
Mr. Arun B. Saharya, J. ( 1 ) BY this petition under Article 226 of the Constitutionof India the petitioner-company is challenging the impugned order dated 20/24. 5. 1994 (Annexure-D) made by the State Commission (Consumer Disputesredressal Commission) Delhi dismissing the petitioner s application filed in theproceedings initiated against the petitioner/company under Section 27 of theconsumer Protection Act, 1986 (hereinafter REFERRED TO to as "the Act)". ( 2 ). It is also prayed that the complaint of respondent No. 3 made against thepetitioner/company as well as the warrants issued by the State Commission forthe arrest of the Chairman of the petitioner company by the impugned order bequashed. ( 3 ). Further, it is prayed that a declaration be issued that Section 27of the Actis ultra virse and, that in the alternative the proceedings under Section 27 of the Actare governed by the procedure prescribed in the Code of Criminal Procedure byvirtue of the provision made in Section 4 of Sub-section 2 of the said Code. ( 4 ). The Writ Petition is opposed on behalf of respondent No. 3 on all counts, inaddition to the plea that the petitioner has got an alternative remedy by way of anappeal or revision against the impugned order of the State Commission undersection 19 read with Section 21 of the Act. ( 5 ). The facts and circumstances in which the impugned order has been made, may be briefly stated: ( 6 ). On a petition made by respondent No. 3 the State Commission passedagainst the petitioner company a payment order dated 15/04/1993 directingthe company to pay to respondent No. 3 an amount of Rs. 93,681. 00 with intereston an amount of Rs. 83,681. 00. The company preferred TO an appeal against the saidpayment order to the National Commission. Together with the appeal the companyalso prayed forstay,of operation of the impugned order of the Commission. Thenational Commission granted stay sought by the company subject to thecondition that the company, desposited before the State Commission a sum of Rs. 75,000. 00 within one month to be paid to respondent No. 3 herein without insisting upon any surety and in default of compliance of this condition, it wasclarified that the stay, order shall stand automatically cancelled. This order waspassed by the National Commission on 16/09/1993. 75,000. 00 within one month to be paid to respondent No. 3 herein without insisting upon any surety and in default of compliance of this condition, it wasclarified that the stay, order shall stand automatically cancelled. This order waspassed by the National Commission on 16/09/1993. The appealpreferred TO by the company against the payment order dated 15/04/1993passed by the State Commission is still pending before the Nationalcommission. In the meanwhile, on 15/07/1993 respondent No. 3 filed anapplication for action against the company undersection 27of the Act. On l9. 8. 93the State Commission ordered notice to be issued to Sh. B. K. Sahni, Chairman ofthe company for 16/09/1993. That day one Mr. D. L. Sehgal appearedon behalf of the company and stated before the State Commission that thenational Commission had stayed the operation of the payment order on certainconditions. He requested for time to file the order of the National Commission andto comply with that order. Accordingly the case was adjourned to 18/07/1993. That day an Advocate appeared for the company, and made a statement thatmr. B. K. Sahni, Managing Director of the company, had gone to Bombay. Butbeing specifically asked by the Commission the learned Counsel stated that he was not in a position to produce Mr. Sahni before the Commission on the nextdate of hearing. Consequently the State Commission issued bailable warrantsagainst Mr. Sahni returnable on 11. 11. 1993. A report was received that Mr. Sahnihad not been served as he was away to Bombay. Fresh bailable warrants were issued, for 7/01/1994 but report regarding service was not received backand bailable warrants were again issued for 24/02/1994 and then for 1 1/03/1994. Sh. D. L. Sehgal, Assistant Vice-President of the company enteredappearance and filed the application for cancellation of the bailable warrantsissued for appearance of the Chairman/managing Director of. the company. This is the application which was dismissed by the impugned order. ( 7 ). Before the State Commission two propositions were urged by the company. Firstly, that no notice could be issued under the Act to the Chairman /director or anyof the officer of the company in proceedings against the company under Section 27of the Act and that proceedings under Section 27 of the Act could be undertakenonly in accordance with the provisions made in the Code of Criminal Procedure for the trial of a warrant case. The State Commission after hearing Counsel for theparties dismissed both the pleas of the company by a detailed speaking order whichis the subject matter of challenge in this petition. With regard to liability of thechairman/managing Director or any other person responsible for the conduct ofthe business of the company, the State Commission has recorded a finding thatpersons who are officially responsible for the conduct of the affairs of the companyare liable to be punished for disobeying the orders of Competent Courts directedagainst thecompany inasmuch as command to the company Or a corporation is infact a command to those who are officially responsible for conduct of its affairs. Ifthey, after being appraised of the order directed to the corporation, prevent complained or fail to take appropriate action, within their power, for theperformance of the duty of obeying those orders, they and the corporate bodyare both guilty of disobedience and may be punished for contempt. Reliance forthis purpose has been placed on the decision of the Supreme Court in Aligarhmunicipal Board and Ors. v. Ekka Tanga Mazdoor Union and Others reported in air 1970 SC 1767 . Accordingly, the State Commission has held that action canbe taken against the Managing Director or the Chairman or any other officer ofthe company under Section 27 of the Act. ( 8 ). With regard to the second proposition about the procedure to be followedin a case undersection 27 of the Act, the Commission has held that in the absenceof any specific provision made in the Act itself the Commission has to devise aprocedure of its own which of course should be in conformity with the principlesof natural justice. ( 9 ). On a combined reading of the provisions made in Section 19 and Section21, it appears to us that the impugned order of the State Commission is subject tostatutory appeal to the National Commission under the Act. If it be contendedthat the impugned order is wrong, appeal would certainly lie to the Nationalcommission under Section 19 read with Section 21 (a) (ii ). In the alternative, if itbe contended, for whatever reasons, that the State Commission has acted beyondits jurisdiction, the order would be subject to correction in proceedings which arein the nature of revision envisaged under Section 21 (b) of the Act. ( 10 ). In the alternative, if itbe contended, for whatever reasons, that the State Commission has acted beyondits jurisdiction, the order would be subject to correction in proceedings which arein the nature of revision envisaged under Section 21 (b) of the Act. ( 10 ). In any event, we find no error of jurisdiction or error apparent on theface of the impugned order made by the State Commission in the present case. ( 11 ). Section 27 of the Act provides that where a trader or a person againstwhom a complaint is made, fails or omits to comply with any order made by thedistrict Forum, the State Commission or the National Commission, as the case maybe,such trader or person shall be punishable with imprisonment under the Act. Bymaking this provision, the legislature has empowered each of the specified Forato punish a person who fails or omits to comply with any order made by it underthe Act. The power has been conferred upon each of the nominated quasi-judicialauthorities for effectively enforcing compliance of its own orders. The exerciseof such a power cannot be subjected to investigation inquiry and trial nor can acase of this kind be dealt with according to the provisions made for this purposein respect of offences under the Code of Criminal Procedure. In the very nature ofa case envisaged under Section 27 of the Act, the provision made in Sub-section2 of Section 4 of the Code of Criminal Procedure cannot be invoked. Thecommission has rightly held that in the exercise of its power under Section 27 ofthe Act it has to devise a procedure of its own. The proceedings under Section27 of the Act are of a summary nature. It is open to the Fora created under the Actto adopt any procedure to deal with the case of this nature provided the procedureis fail and just. ( 12 ). Learned Counsel for respondent No. 3 has invited our attention to thestatement of Objects and Reasons for enactment of the provisions made in the Act. Clause 4 of the Statement of Objects and Reasons states that the Act intends toprovide speedy and simple redressal to consumer disputes, a quasi-judicialmachinery is sought to be set up at the District, State and Central levels. Thesequasi-judicial bodies, "will observe the principles of natural justice". ( 13 ). Clause 4 of the Statement of Objects and Reasons states that the Act intends toprovide speedy and simple redressal to consumer disputes, a quasi-judicialmachinery is sought to be set up at the District, State and Central levels. Thesequasi-judicial bodies, "will observe the principles of natural justice". ( 13 ). So far as the question of personal liability of the Chairman/managingdirector is concerned, we find that the conclusions arrived at by the Statecommission in the impugned order are perfectly reasonable. A person inchargeof and responsible for the conduct of business of the company is liable to punishment for disobedience of the orders made by the concerned authorities. ( 14 ). Section 27of the Act was challenged on the plea that it is unconstitutional in another case of Ravi Kant v. National Consumer Redressal Consumer Disputesredressal Commission and Others, in CWP 3858/94. The challenge was rejectedby another Division Bench of this Court by an order dated 26th September, 1994where the Bench observed that they did not find any merit in the said submission. We are also of the same view and our view is based upon the reasons that we havealready set out hereinabove with regard to the nature of the provisions and theprocedure that has to be adopted in proceedings under Section 27 of the Act. ( 15 ). In the present case, we find no equity either in favour of the petitioner. On the contrary, it appears that the petitioner is resorting to dialatory tactics tothwart and abuse the process of law. As noticed earlier, the Chairman/managingdirector of the company chose not to appear before the State Commission inspiteof his having knowledge of the proceedings under Section 27 of the Act. Thecompany secured on 16th September, 1993 an order from the Nationalcommission for conditional stay of the operation of the payment order of the Statecommission. . That order envisaged payment by the company of a sum of Rs. 75,000. 00 within one month. This condition was not complied with. Yet,on the basisof the said conditional stay order the company tried to delay progress of theproceedings under Section 27of the Act. The company did not stop it that. On 14thoctober, 1993, the company filed a Writ Petition being CW 4845/93 in this Court forquashing the payment order dated 15th April, 1993 passed by the State Commissionas well as conditional order of stay dated 16th September, 1993 passed by thenational Commission. The company did not stop it that. On 14thoctober, 1993, the company filed a Writ Petition being CW 4845/93 in this Court forquashing the payment order dated 15th April, 1993 passed by the State Commissionas well as conditional order of stay dated 16th September, 1993 passed by thenational Commission. In that petition, the company also sought a declarationthat Section 2 (d) and 2 (j) and Section 14 (b) of the Act are ultra vires Articles14,19 (1) (g) and 31 of the Constitution of India. Here, we may recall that Mr. D. L. Sehgal Assistant Vice-President of the petitioner company had already appearedbefore the State Commission and was fully aware of the proceedings under Section27 of the Act even on 16th September, 1993. Yet, in CWP 4845/93 the petitionerschose not to challenge the vires of Section 27 of the Act. That writ petition was dismissed by a speaking order dated 15th October, 1993 passed by a Division Benchcomprising Hon ble Mr. Justice D. P. Wadhwa and Hon ble Mr. Justice Vijanderjain. Rather than paying up the amount as directed by the State Commission andeven by the National Commission, the petitioner has chosn to indulge an unnecessary litigation, apparently, with a view to harass respondent No. 3 and toavoid liability to make the payment. We are unable to appreciate such conduct ofthe petitioner. In these circumstances, we are of the opinion that the petitionerought to pay costs of the present proceedings to respondent No. 3. ( 16 ). For the aforesaid reasons, the Writ Petition is dismissed with costs. The fee of Counsel for respondent No. 3 is assessed at Rs. 10,000. 00.