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Judgment
A. P. Sahi, President Member
IA/454/2024
This application has been moved for condoning the delay in the filing of this appeal. It may be pointed out that the appeal had not been registered earlier on account of non-deposit of 50% of the decreetal amount before this Commission that was resolved by the order dated 29.12.2023. Accordingly, the deposit was satisfied and the appeal has now been registered as First Appeal No. 16 of 2024.
The delay has been explained by narrating the incorrect description of the status of the appellant and the wrong address shown in the complaint leading to non-service of notice, as well as the time taken by the appellant in seeking legal advice and then filing of the appeal in the first week of December, 2023. This has resulted in a delay which according to the appellant was 211 days but has been rightly calculated as 204 days by the registry.
Learned counsel for the appellant has also advanced submissions in support of this application contending that the merits of the appeal are apparent, in as much as, the impugned order has been passed against the appellant firstly on an ex parte basis, and secondly the liability fixed is on erroneous grounds. The complainant ceased to be a director of the company vide resignation dated 30.09.2022, whereas the complaint giving rise to this appeal was thereafter filed on 07.11.2022 and has been finally decided on 18.04.2023. The contention therefore on merits is that the complaint could not have been filed against the appellant and even otherwise the description given in the complaint of the appellant as a Chief Executive Officer is incorrect. It is submitted that the appellant was the Chief Operating Officer when the agreement was entered into, but on account of his subsequent resignation as director, he ceased to represent the company in any capacity much less a CEO or a Director and hence his impleadment by name in the complaint was erroneous. The contention therefore is that by giving a wrong description and by impleading the appellant, the complaint suffered from misjoinder of party. He therefore submits that on both these counts and keeping in view the merits of the appeal, the delay deserves to be condoned.
In the considered opinion of this Commission reference can be had to the judgment of the Apex Court in the case of “State of Uttar Pradesh and Ors. Vs. Satish Chand Shivhare and Brothers, 2022 SCC OnLine SC 2151”. The Apex Court in the said case held as under in paragraphs 21 and 22, which is gainfully extracted herein under:
“21. The questions of law purported to be raised in this Special Leave Petition are misconceived. The right of appeal is a statutory right, subject to the laws of limitation. The law of limitation is valid substantive law, which extinguishes the right to sue, and/or the right to appeal. Once an appeal is found to be barred by limitation, there can be no question of any obligation of the Court to consider the merits of the case of the Appellant.
When consideration of an appeal on merits is pitted against the rejection of a meritorious claim on the technical ground of the bar of limitation, the Courts lean towards consideration on merits by adopting a liberal approach towards ‘sufficient cause’ to condone the delay. The Court considering an application under Section 5 of the Limitation Act may also look into the prima facie merits of an appeal. However, in this case, the Petitioners failed to make out a strong prima facie case for appeal. Furthermore, a liberal approach, may adopted when some plausible cause for delay is shown. Liberal approach does not mean that an appeal should be allowed even if the cause for delay shown is glimsy. The Court should not waive limitation for all practical purposes by condoning inordinate delay caused by a tardy lackadaisical negligent manner of functioning.”
Applying the aforesaid principles it is apparent that the present appeal raises a substantial question of law regarding the incorrect joinder of the appellant as CEO and on notice having been dispatched on an incorrect address which violates the principles of natural justice. The wrong procedure and an incorrect description has led to fixing of a liability without ascertaining the correctness thereof on an ex parte basis. The appeal therefore has to be entertained on merits in the background of the facts in which the question has been raised. Consequently, the delay therefore deserves to be condoned. The application is allowed and the appeal shall be treated to have been filed within time.
Appeal
This appeal against the order of the State Consumer Disputes Redressal Commission, Telangana, dated 18.04.2023 has arisen in peculiar circumstances where the complainant on the strength of an agreement, which is stated to have been entered into in August, 2021, filed the complaint alleging that the terms of the agreement were violated and the breach was committed giving rise to a series of deficiency in service and as such the complainant was entitled to the reliefs as prayed for. The deficiency in services therefore was the foundation of the claim. While filing the complaint which seems to have been instituted on 07.11.2022, the appellant, Krishna Varun was described therein as the Chief Executive Officer of M/s. Design and Construct and was also indicated as representing the said company. It would be therefore apt to quote the said description as it stands recorded n the memo of the complaint and is also available in the impugned order as follows:
“M/s. Design and Construct,
A Unit of All about Buildings Private Limited,
Incorporated under MSMS Department,
With registration No. UDYAM-TS-02-0016632,
Having its registered Office at Flat No. 402,
Tower-B, Gopalan Lakefront Veer Sandra,
Electronic City, Phase-I, Bangalore-560100,
Represented through its CEO-Krishna Varun.”
The appellant, according to the impugned order, in spite of being served did not appear before the State Commission and was proceeded ex-parte. The impugned order nowhere records any finding on service of notice on the appellant except the fact that the opposite party remained ex-parte. There is no recital in the entire order as to how notices were served on Mr. Krishna Varun after institution of the complaint and on what address. Learned Counsel contends that the fact is that after the order was passed by the State Commission, the same was put into execution, where notices were dispatched at the address of the father of the appellant namely at Plot No. 509-I, Road No. 86, Film Nagar, Jubilee Hills, Hyderabad-500 096, Telngana. The contention is that this address is neither of the company nor of the appellant. In such circumstances the service in the execution was sought to be effected at a wrong address. It is therefore submitted that no notice was served on the appellant either in the complaint or the execution and consequently there is not only a violation of procedure but also of the fundamental principles of natural justice.
The more serious contention which has been raised by the learned counsel for the appellant is with regard to the description of the appellant in the array of parties indicating as if the appellant was the CEO, an officer responsible for all the actions on behalf of the company. He submits that this is totally incorrect, in as much as, the appellant was a Director of the company with 8% of the shares but he was described as the Chief Operating Officer, when the agreement was entered into. Consequently he was never the Chief Executive Officer and such a description in the complaint was erroneous.
He then submits that the fact is that the appellant had resigned from the company on 30.09.2022. The contention is that had the appellant been duly put to notice, all these facts could have been brought to the notice of the State Commission and even otherwise the complainant could have taken proper steps for correcting the array of parties. It is therefore urged that the impugned order has proceeded on a completely wrong premise and has therefore resulted in miscarriage of justice. The contention therefore is that the complaint could not have proceeded on merits nor any liability could have been fixed on the appellant.
Opposing the said appeal learned counsel for the caveator/ respondent submits that the land belonged to the complainant and it is for development and construction of a building thereon was the subject matter of agreement between the parties for which negotiations were made and therefore the appellant, who was admittedly the 8% holder of the assets of the company is liable, and therefore there is no error committed in describing him as a representative of the company in the array of parties.
He further submits that even assuming that the delay has been explained, it is evident that the appellant during the proceedings was served on the correct address, as it was the address of his father and no such immunity can be claimed by the appellant for the purpose of service of notice. He therefore submits that the appellant was well aware of the proceedings and it is also strange as to how he could know about the execution proceedings which were only when non-bailable warrants were issued. Learned counsel for the opposite party therefore submits that in fact the appellant had the knowledge of the proceedings and did not voluntarily choose to appear therein. Apart from this the liability cannot be shifted by the appellant on the grounds that have been taken in the appeal, hence the impugned order does not require any interference.
Learned counsel however submits that in the eventuality of this Commission coming to a conclusion otherwise, the matter may be disposed of finally at this stage itself, as the pendency of this appeal would be detrimental to the cause of the complainant.
Having heard learned counsel for the parties, on facts it is evident that Mr. Krishna Varun according to the agreement was described as the Chief Operating Officer and not the Chief Executive Officer of the company. A copy of the agreement has been filed, a perusal thereof leaves no room for doubt that the description of Mr. Krishna Varun in the complaint has been incorrectly made by describing him as the CEO. There is no finding recorded, even if the complaint was proceeded exparte, that the Chief Operating Officer was liable to be sued on behalf of the Company. The second aspect of the matter is that once it is stated on record that Mr. Krishna Varun had resigned on 30.09.2022, but was delisted on 16.12.2022, this fact was completely omitted and not taken notice by the State Commission while proceeding to fix any liability on Mr. Krishna Varun. Without examining the said issue, which presumably was on account of the appellant not having put in appearance, the State Commission committed an error in proceeding to fix the liability.
Further, it is evident that even if it is correct that the company was liable then it ought to have been described correctly and notices ought to have been dispatched to the director of the company or any such authorised representative of the company, who according to the constitution of the company was responsible for carrying out all affairs on the part of the company. This however, is open to the complainant to plead and proceed accordingly but for the moment, the given description on record, the impugned order has proceeded without examining the facts and issuing proper notice and therefore cannot be sustained.
Learned counsel for the appellant has relied on the three Member Bench decision of this Commission in “Rajnish Kumar Rohatgi & Anr. Vs. M/s. Unitech Limited & Anr., EA/80/2016 in CC/14/2015”, decided on 08.01.2019 to urge that the said principle as culled out with regard to the proceedings under Sections 25 and 27 of the Consumer Protection Act, 1986, would apply in as much as, in order to fix liability and for compliance, it is imperative on the part of the State Commission to first ascertain as to whether the person arrayed as party could be made responsible for any of the proceedings and also for fixing any liability in respect of the reliefs claimed for at the time of the institution of the complaint. He therefore submits that a director cannot be proceeded against personally for which he relies on the judgment of the Apex Court in the case of “Deposit Insurance & Credit Guarantee Corporation Vs. Rajendra Madhukar Deval & Ors. Dated 16.08.2013”, arising out of a revision petition that was decided by this Commission.
Having considered the aforesaid submissions, suffice it to state at this stage that such issues arising out of arraying of a proper and necessary party and then the complaint being competent accordingly has to be considered at the outset by the Commission before proceeding to either allow or dismiss a complaint. But the fact remains that it can be done only if the proper and necessary parties are represented.
In the background above and in view of what has been stated above learned counsel for the respondent has agreed for the final disposal of the appeal, the same is therefore allowed and the order dated 18.04.2023 is set aside. The matter is remitted back to the State Commission for decision afresh in accordance with law, preferably within a period of six months from the date of presentation of the certified copy of this order.
It is further provided that the amount which was remitted to this Commission under the orders dated 29.12.2023, shall be remitted back to the State Commission and shall be kept in deposit till the final disposal of the complaint.