Basant Kumar Rawat vs Dipak Mandal & 8 Ors

Prem Narain, Presiding Member

These revision petitions have been filed by three different petitioners who were OP nos.2, 5, and 6 respectively in the original complaint case which was filed by respondent no.1/ complainant before the District Forum being complaint case no. 424 of 2014. Complainant has alleged that he purchased debentures of Rs.100/- each on 30.01.2013 from respondent no.2 and the redemption date of the said debentures was 30.01.2014. When the complainant could not get the redemption amount, he filed a consumer complaint being CC no. 424 of 2014 before the District Consumer Disputes Redressal Forum, North 24 Parganas, Barasat (in short 'the District Forum'). The OPs did not join the proceedings and they were proceeded ex parte. The District Forum vide its order dated 02.02.2015 has allowed the complaint and observed as under:

"Hence, it is ordered that the complaint and the same be allowed on ex parte against the OPs.

OPs are directed to pay the maturity value of Rs.20,400/- to the complainant within one month from the date of this order, in default the OPs are directed to pay the maturity value of debentures together with interest @ 12% per annum for the overdue period.

OPs are also directed to pay compensation of Rs.5000/- and Rs.2000/- as litigation cost to the complainant within one month from the date of this order, failing which OPs shall have to pay a sum of Rs.50/- per day from the date of this order till its realisation, as punitive damages, which shall be deposited by the OPs in this State Consumer Welfare Fund."

The petitioners then preferred separate appeals being FA nos. A/614/2015, A/641/2015 and A/655/2015 before the State Commission. The State Commission vide its order dated 16.06.2017 dismissed all the three appeals.

Hence, the present revision petitions.

Heard the learned counsel for the petitioners and respondent no.1/ complainant in person. Learned counsel for the petitioner has stated that these petitioners were the Directors when the debentures were purchased, however, they resigned on 05.03.2013 and the same was also registered with the Registrar of Companies (ROC). Maturity date was 30.01.2014 and therefore, at the time when the cause of action arose the petitioners were not Directors of the Company which issued the debentures. Learned counsel further submitted that no notice was served upon the petitioners by the District Forum and the petitioners were proceeded ex parte and the petitioners could not get any opportunity of defence before the District Forum.

Learned counsel for the petitioners has pointed out that the concerned forum does not have the jurisdiction to entertain the present complaint in respect of redemption of debentures, as per sub section 10 of Section 70 of the Indian Companies Act 2013 which reads as under:

"Sub Section 10: Where a company fails to redeem the debentures on the date of their maturity or fails to pay interest on the debentures when it is due, the Tribunal may, on the application of any or all of the debenture holders, or debenture trustee and after hearing the parties concerned, direct, by order, the company to redeem the debentures forthwith on payment of principal and interest due thereon".

Learned counsel for the petitioners has mentioned that as per the above provision, it is only the Tribunal, i.e., National Company Law Tribunal which has the jurisdiction to pass orders in respect of redemption of debentures, hence, the orders passed by the Fora below are illegal orders which have been passed without any jurisdiction.

On the other hand, the respondent/ complainant has stated that the complainant visited the Company many times, however, no steps were taken by them for redemption of debentures purchased by the complainant. The OPs did not respond to the notice issued by the District Forum, that is why all the OPs were proceeded ex parte. When the execution was filed these three Directors preferred appeal. The State Commission has not accepted their appeals and now they have come in the revision petition before this Commission. The result is that the amount of redemption of debentures has not been received by the complainant though, it is a very meagre amount of Rs.20,400/- as ordered by the District Forum. The District Forum has also ordered 12% per annum interest on the redemption amount of debentures. However, none of the orders of the District Forum have been complied by the OPs. If the company is not coming forward to pay the redemption amount of debentures, it is only the Directors who will be held liable to pay the redemption amount of debentures. The petitioners did not file any document to prove that they were not the Directors at the time of redemption of debentures. They have also not filed any proof that the information of their resignation was submitted to ROC. The State Commission has clearly observed that the petitioners have failed to prove the same. He further stated that for a small amount, he has come four times to this Commission and earlier also spent money before the District Forum and the State Commission. The OPs are just trying to linger on the matter so that the complainant is harassed to the extent that he leaves the claim.

I have carefully considered the arguments advanced by both the sides and have examined the record. First of all, it is seen that the District Forum has allowed the redemption value of debentures to be paid by the OPs. The redemption value of debentures is Rs.20,400/- and nine OPs have been ordered to pay this amount. Clearly, the Company, i.e., OP no.1/ respondent no. 2 is responsible to honour the debentures and pay the redemption value, however, if the Company has not paid, the Directors will be responsible to pay the same. In fact, the State Commission has observed in their order dated 16.06.2017 as under:

"In any case, while supporting documents likes Memorandum of Association/ Articles of Association/ Prospectus/ Appointment letter could have thrown some light about appellant's exact role in the respondent no.2 Company, not a single piece of document is furnished from his side to show that he had no involvement in the matter of issuance of debentures to respondent no.1 and / or that in terms of the Memorandum/ Article of Association of the Respondent no.2 Company, he did not have any personal liability.

In such circumstances, I am constrained to hold that the appellant has miserably failed to prove the bona fide of his case and as such, he cannot be absolved of the decretal liability as prayed for. The appeal, accordingly fails.".

The facts have already been examined by two fora below and both the fora below have given concurrent findings, so far as these three petitioners are concerned. The scope under the revision petition is limited and only jurisdictional aspects are to be seen. The Hon'ble Supreme Court in 'Rubi (Chandra) Dutta vs United India Insurance Co. Ltd., - (2011) 11 SCC 269 has held as under:

"23. Also, it is to be noted that the revisional powers of the National Commission are derived from Section 21 (b) of the Act, under which the said power can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order, and only then, may the same be set aside. In our considered opinion there was no jurisdictional error or miscarriage of justice, which could have warranted the National Commission to have taken a different view than what was taken by the two Forums. The decision of the National Commission rests not on the basis of some legal principle that was ignored by the Courts below, but on a different (and in our opinion, an erroneous) interpretation of the same set of facts. This is not the manner in which revisional powers should be invoked. In this view of the matter, we are of the considered opinion that the jurisdiction conferred on the National Commission under Section 21 (b) of the Act has been transgressed. It was not a case where such a view could have been taken by setting aside the concurrent findings of two fora."

It was ordered by this Commission vide order dated 31.10.2017 that the petitioners will deposit Rs.8,000/- for getting the stay. No proof of deposit has been filed with this Commission as reported by the Registry. Learned counsel for the petitioners has stated that Rs.8000/- was deposited by the petitioners with the District Forum. Apart from that, the State Commission has observed that the Directors are liable for execution of the decree. However, the execution was filed by the complainant which has been stayed till the decision of the present revision petition. In the present case, as the Company has failed to pay the redemption amount of the debentures to the complainant even after passing of the order by the District Forum, it seems that in the present case, money will have to be ultimately recovered from the Directors. From this consideration, and as the amount is very meagre, in my view, the liability of these petitioners should end, if they pay their shares in the order passed by the District Forum.

Thus, even if interest is added to the amount ordered by the District Forum, the liability of each of the petitioners will not be more than Rs.3500/-. As the amount is very small and the fora below have already given concurrent findings, this Commission would not like to go into the details on any legal questions raised by the petitioners which will be kept open to be decided in a case where substantial amount is involved.

Based on the above discussion, the revision petitions are partly allowed and the liability of each of the three petitioners will not be more than Rs.3500/- including interest as ordered by the District Forum. Consequently, the revision petitioners are directed to pay Rs.3500/- each to the complainant. As mentioned by the learned counsel for the petitioners that the petitioners have deposited Rs.8,000/- in each of the revision petitions before the District Forum, hence, the District Forum is directed to release the amount of Rs.3500/- out of the deposited amount of Rs.8000/- in each case to the respondent/ complainant, once the complainant files an application for release of this amount before the District Forum. The remaining amount with accrued interest will be refunded to the petitioners separately in each case after due verification of the deposit made by the petitioners. Once the amount is received by the complainant, the liability of these petitioners shall extinguish.