Rajnish Mukhra vs R. P. Rana & 12 Ors

Dinesh Singh, Member

This Revision Petition has been filed under Section 21(b) of The Consumer Protection Act, 1986, hereinafter referred to as the 'Act', challenging the Order dated 03.08.2015 passed by The State Consumer Disputes Redressal Commission, U.T. of Chandigarh, hereinafter referred to as the 'State Commission', in F. A. No. 172 of 2015 arising out of the Order dated 01.06.2015 in C.C. No. 332 of 2014 passed by The District Consumer Disputes Redressal Forum-I, U.T. of Chandigarh, hereinafter referred to as the 'District Forum'.

The 13 Complainants before the District Forum, are the 13 Respondents herein, and are hereinafter being referred to as the 'Complainants'.

The Opposite Party No. 1 before the District Forum, the Registrar, Co-operative Societies, U.T., Chandigarh, through Administrator, The Union Bank & Govt. Employees Co-op. U.S.E.T. & C. Society Ltd., has not been made a Respondent herein, and is hereinafter being referred to as the 'Registrar' / the 'Administrator' (as applicable).

The Opposite Party No. 2 before the District Forum, Mr. S. K. Brar, erstwhile President, The Union Bank & Govt. Employees Co-op. U.S.E.T. & C. Society Ltd., has not been made a Respondent herein, and is hereinafter being referred to as the 'erstwhile President'.

The Opposite Party No. 3 before the District Forum, Mr. Rajnish Mukhra, erstwhile Secretary, The Union Bank & Govt. Employees Co-op. U.S.E.T. & C. Society Ltd., is the Petitioner herein, and is hereinafter being referred to as the 'erstwhile Secretary'.

The Opposite Party No. 4 before the District Forum, Mr. Chhotee Lal, erstwhile Treasurer, The Union Bank & Govt. Employees Co-op. U.S.E.T. & C. Society Ltd., has not been made a Respondent herein, and is hereinafter being referred to as the 'erstwhile Treasurer'.

The Opposite Party No. 5 before the District Forum, The Union Bank & Govt. Employees Co-op. U.S.E.T. & C. Society Ltd. through its erstwhile office bearers, Opposite Parties No. 2 to 4 and present Administrator i.e. Opposite Party No. 1, has not been made a Respondent herein, and is hereinafter being referred to as the 'Co-op. Society'.

We heard the learned Counsel for the erstwhile Secretary, the Petitioner herein, and the learned Counsel for the Complainants, the Respondents herein.

We perused the material on record including inter alia specifically the Order dated 01.06.2015 of the District Forum and the impugned Order dated 03.08.2015 of the State Commission.

The matter, succinctly stated, is that the Complainants had deposited a total sum of Rs. 8,20,068/- in Fixed Deposits at interest of 13% per annum with the Co-op. Society through its then office-bearers, i.e. through its erstwhile President, erstwhile Secretary and erstwhile Treasurer, who were as of then managing the affairs of the Co-op. Society, which totaled Rs.9,26,676.84 on maturity. The Fixed Deposits were not duly redeemed on maturity. Due to mismanagement of the affairs of the Co-op. Society by the then office-bearers, an Administrator was appointed by the Registrar. The Complainants filed a Complaint before the District Forum seeking refund of the maturity value of the Fixed Deposits along with interest, compensation and cost of litigation.

The District Forum heard all the parties, appraised the evidence, and, vide its Order dated 01.06.2015, partly allowed the Complaint.

The Award made by the District Forum, as contained in paras 17 to 19 of its Order, is as below:

For the reasons recorded above, we find merit in the complaint and the same is partly allowed. OPs 2 to 4 are jointly and severally directed as under:-

i) To pay the maturity amount of the FDRs i.e. Rs. 9,26,676.84 to the complainants (as per details in Annexure C-36) with interest @ 9% per annum from the date of maturity till realization.

ii) To pay an amount of Rs. 2,00,000/- as compensation to the complainants, which shall be shared by them in equal shares.

iii) To pay Rs. 22,000/- as costs of litigation to the complainants, which shall be shared by them in equal shares.

This order be complied with by OPs 2 to 4 within one month from the date of receipt of its certified copy, failing which they shall make the payment of the amounts mentioned at Sr. No. (i) & (ii) above, with interest @12% per annum from the date of filing of the present complaint till realization, apart from compliance of direction at Sr. No. (iii) above.

The complaint fails against OPs 1 & 5.

The District Forum held the then office-bearers, i.e. the erstwhile President, the erstwhile Secretary and the erstwhile Treasurer, jointly and severally liable to pay the Complainants the maturity amount (Rs. 9,26,676.84) of the Fixed Deposits with interest at the rate of 9% per annum from the date of maturity till realisation along with compensation of Rs. 2,00,000/- and cost of litigation of Rs. 22,000/-.

The erstwhile Secretary filed an Appeal under Section 17(1)(a)(ii) of the Act before the State Commission, being F.A. No. 172 of 2015. Only the 13 Complainants were made Respondents. The Registrar / Administrator, the erstwhile President, the erstwhile Treasurer and the Co-op. Society were not made Respondents.

The State Commission heard the learned Counsel for the erstwhile Secretary, the Appellant therein, appraised the evidence, and, vide its Order dated 03.08.2015, dismissed the Appeal in limine.

We note the appraisal made by the State Commission in paras 13 to 16 of its impugned Order, which is as below:

After giving our thoughtful consideration, to the submissions, raised by the Counsel for the appellant, and the evidence, on record, we are of the considered opinion, that the appeal is liable to be dismissed, at the preliminary stage, for the reasons, to be recorded, hereinafter.

The core question, that falls for consideration, is, as to whether, the District Forum rightly held liable Opposite Party No.3 alongwith Opposite Parties No. 2 and 4 for payment of the maturity amount alongwith interest, compensation and litigation expenses to the complainants. The answer, to this question, is in the affirmative. As per the complainants, they had deposited with the Opposite Parties sufficient amounts in FDRs, totalling Rs. 8,20,068/- at fixed rate of interest i.e. 13% per annum and they issued Fixed Deposit Receipts (FDRs) to that effect in favour of the complainants. To prove this fact regarding deposit of the amount in the FDRs, the Counsel for the complainants produced photocopies of the same (Annexure C-1 to C-31) before the District Forum. According to the complainants, all the FDRs after expiry of their maturity time period attained their respective maturity values totalling Rs. 9,26,676.84, as per receipts issued by the Opposite Parties. The said Society was, therefore, a trustee. Even the FDRs were also renewed on different dates, in the years 2010, 2011 and 2012 and the dates of maturity of the different FDRs were also mentioned in Annexure C-36. It is pertinent to note that few of the FDRs matured on 30.01.2013 and 10.03.2013. A bare perusal of the photocopies of the FDRs (Annexure C-1 to C-31) showed that some of the receipts were signed by the President, Honorary Secretary and Treasurer and others by President, Treasurer and still others by President and Honorary Secretary. Even the appellant / Opposite Party No. 3 as well as Opposite Parties No. 2 & 4 did not deny the contents of paras No. 2 and 3 of the complaint, in their written statement. Moreover, the appellant / Opposite Party No. 3 pleaded in its written statement, before the District Forum, that he joined as Executive Member of the Society in the year 2001-02 and at this stage, the plea of the appellant that he resigned from the Society in 2010, has no value, at all because no specific date was mentioned regarding his resignation. Even the Counsel for the Opposite Parties, before the District Forum, submitted that the amounts of different FDRs were deposited by the complainants with the Union Bank & Govt. Employees Co-op. U.S.E.T & C Society Ltd., in the year 2007 to 2009. Even the appellant / Opposite Party No.3 had shifted his burden to Opposite Party No.2 i.e. Mr. S.K. Brar (erstwhile President) of the Society, alleging that the complainants neither deposited any FDRs with him (Opposite Party No. 3) nor he i.e. Opposite Party No. 3 signed the same and never renewed the same, after maturity and all the records pertaining to the accounts of Society were maintained by Opposite Party No.2. He further alleged that Opposite Party No.2 alone had misappropriated and squandered the money of the depositors. Even Mr. R.P. Rana, complainant No. 1, filed complaint against Sh. S.K. Brar, Sh. Chhote Lal and the appellant Sh. Rajnish Mukhra to SSP, Chandigarh (Exhibit R-3/1). It is admitted fact that a case under Section 420 of the IPC (Annexure R-3/2) is pending against Mr. S.K. Brar (erstwhile President), Opposite Party No.2, and, as such, the District Forum rightly held that it (District Forum) had not to record a finding that Opposite Party No. 2 cheated the complainants or not. The complainants were having faith in the President, Secretary and Treasurer of the Society, while depositing their hard earned money. But due to misdeeds and default committed by these persons i.e. President (S.K. Brar), Secretary (Rajnish Mukhra) and Head Cashier (Chhotee Lal), the Registrar vide its Order dated 16.03.2012 (Annexure C-34) dissolved the said Society and appointed Sh. Krishan Kumar, as an Administrator of The Union Bank & Govt. Employees co-op USETC Society Ltd., having custody of entire records, accounts and competent to decide liabilities of the said Society. Since the appellant i.e. Mr. Rajnish Mukhra (erstwhile Secretary) was one of the office bearers of the Society at the relevant time, so we are of the view that he was equally liable for non-refunding the amount of FDRs to the complainants. Opposite Parties No. 2 to 4 being the office bearers of The Union Bank & Govt. Employees Co-op. U.S.E.T & C Society Ltd. had been running its day to day affairs. They did not make the repayment of the maturity amount of various FDRs to the different depositors, as detailed in Annexure C-36. As such, the District Forum rightly held liable the appellant / Opposite Party No. 3 alongwith others i.e. Opposite Parties No. 2 and 4 for payment of the maturity amount alongwith interest as well as compensation and litigation expenses. So, we are of the considered view that the order of the District Forum, being legal and valid, is liable to be upheld.

Keeping in view the facts and circumstances of the case, we are of the considered view that the District Forum was right, in partly allowing the complaint, as stated above. Hence, the order passed by the District Forum, being based on correct appreciation of evidence and law, on the point, does not suffer from any illegality or perversity, warranting the interference of this Commission.

For the reasons recorded above, the appeal, filed by the appellant / Opposite Party No. 3, being devoid of merit, must fail, and the same is dismissed, at the preliminary stage, with no order as to costs. The order of the District Forum is upheld.

(emphasis supplied)

We find the impugned Order of the State Commission to be well-appraised and well-reasoned.

The State Commission has concurred with the findings of the District Forum.

In his memo of petition, the erstwhile Secretary, the Petitioner herein, has raised questions principally in relation to appreciation of the evidence by the two Fora below, as to which of the one or the other (s) are liable. The facts of [a] sums being received in Fixed Deposits, [b] mismanagement of the affairs of the Co-op. Society, necessitating the appointment of an Administrator by the Registrar and [c] the Fixed Deposits not being duly redeemed on maturity, have not been questioned.

Within the ambit and scope of section 21(b), we, however, find no crucial error in appreciating the evidence by the two Fora below, as may cause to require de novo re-appreciation of the evidence in revision.

We may also note that, on the one hand, the erstwhile Secretary has attempted to shift the liability on the erstwhile President alone, while, on the other hand, he neither made the erstwhile President (who was Opposite Party No. 2 before the District Forum) a Respondent in the Appeal before the State Commission and nor has he made him a Respondent in the Revision Petition before this Commission.

The State Commission has inter alia observed that:

"A bare perusal of the photocopies of the FDRs (Annexure C-1 to C-31) showed that some of the receipts were signed by the President, Honorary Secretary and Treasurer and others by President, Treasurer and still others by President and Honorary Secretary. Even the appellant / Opposite Party No. 3 as well as Opposite Parties No. 2 & 4 did not deny the contents of paras No. 2 and 3 of the complaint, in their written statement." and

"Since the appellant i.e. Mr. Rajnish Mukhra (erstwhile Secretary) was one of the office bearers of the Society at the relevant time, so we are of the view that he was equally liable for non-refunding the amount of FDRs to the complainants. Opposite Parties No. 2 to 4 being the office bearers of The Union Bank & Govt. Employees Co-op. U.S.E.T & C Society Ltd. had been running its day to day affairs. They did not make the repayment of the maturity amount of various FDRs to the different depositors,".

Accordingly, when the erstwhile Secretary was a signatory to the receipts of the Fixed Deposits along with the erstwhile President and the erstwhile Treasurer (in various permutations and combinations), and when the erstwhile Secretary was an office-bearer at the relevant time, his attempt to shift the liability on the erstwhile President alone, falls.

The argument that a criminal case under Section 420 (Cheating and dishonestly inducing delivery of property) of the I.P.C. is pending against Mr. S. K. Brar, erstwhile President, alone, and, as such, the erstwhile Secretary, the Petitioner herein, requires to be absolved of his liability, is totally ill-conceived and misplaced in the present facts.

The factum that a criminal case is pending against one particular person does not preclude a complainant's right to agitate 'deficiency in service' or 'unfair trade practice' under the Act against the concerned persons (in addition to the one particular person against whom a criminal case is pending).

The two, a criminal case in respect of an offence, and filing a Complaint in respect of 'deficiency in service' or 'unfair trade practice', are in different domains, the one in the criminal domain, the other in the civil domain, and, as such, the two can proceed independently and concurrently.

A pending criminal case in no manner affects a complainant's right to agitate apropos a civil wrong.

The case, as appraised by the two Fora below, is simple, and unsavoury. The Complainants had made Fixed Deposits with the Co-op. Society through its then office-bearers i.e. the erstwhile President, the erstwhile Secretary and the erstwhile Treasurer. The Fixed Deposits were made in the period when the then office-bearers were managing the affairs of the Co-op. Society. The mismanagement, including financial malfeasance, took place when the then office-bearers were managing the affairs of the Co-op. Society. The payments of the maturity amounts of the Fixed Deposits were not made at the due time. They were thus held jointly and severally liable to refund the maturity amounts with interest, compensation and cost of litigation.

It is significant and material that due to mismanagement of the affairs of the Co-op. Society by its then office-bearers, an Administrator was (/had to be) appointed by the Registrar.

The factum that the Registrar subsequently appointed an Administrator, does not absolve the then office-bearers, who were as of then, at the relevant time, managing the affairs of the Co-op. Society, of their liability, it does not absolve the erstwhile President, the erstwhile Secretary and the erstwhile Treasurer of their (joint and several) liability accruing by their mismanagement, including financial malfeasance.

An argument that an Administrator has subsequently been appointed in accordance with the provisions of the relevant statute (The Punjab Co-operative Societies Act, 1961) and as such the erstwhile office-bearers are no longer liable, is totally ill-conceived and misplaced in the facts of the present case. The Fixed Deposits were made when the erstwhile office-bearers were managing the affairs of the Co-op. Society. The erstwhile office-bearers indulged in mismanagement, including financial malfeasance, due to which intervention of the Registrar by way of appointing an Administrator was necessitated. The factum of appointment of an Administrator can in no way extinguish the liability for mismanagement including financial malfeasance undertaken by the then office-bearers at the relevant time, the liability sustains.

The statute, in enabling the appointment of an administrator to manage the affairs of a co-operative society for reason of mismanagement by its office-bearers, does not intend to provide immunity to the erstwhile office-bearers for their acts of omission or commission for which they may be guilty or liable for a criminal offence or a civil wrong. Arguing the converse would tantamount to condoning anarchical unlawful acts, which cannot be the aim and object of the (/any) statute.

We thus find no jurisdictional error, or a legal principle ignored, or miscarriage of justice, in the matter before us, as may require interference in exercise of our revisional jurisdiction under Section 21(b).

We find the Award made by the District Forum, quoted in para 6 above, and as upheld by the State Commission, to be just and equitable.

The Revision Petition, being totally ill-conceived and bereft of merit, is dismissed. The Order dated 03.08.2015 of the State Commission is confirmed.

Vide this Commission's Order dated 28.03.2016, the erstwhile Secretary, the Petitioner herein, was directed to deposit 50% of the awarded amount with the District Forum as condition attached to the grant of stay on the operation of the impugned Order. The amount so deposited, along with interest if any accrued thereon, shall be utilized by the District Forum towards satisfaction of the Award made vide its Order dated 01.06.2015.

It goes without saying that in the contingency of failure or omission to comply with the Award made vide its Order dated 01.06.2015, in its entirety, the District Forum shall undertake execution against the erstwhile President, the erstwhile Secretary and the erstwhile Treasurer, in respect of their joint and several liability, both for 'Enforcement' under Section 25(3) and for 'Penalties' under Section 27 of the Act, as per the law.