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Judgment
Heard Mr. Rakesh Mittal, Advocate, for the complainants and Mr. Amish Tandon, Advocate, for the opposite party.
Sandeep Kumar and Anil Kumar Gupta (the complainants) have filed MA/159/2023, for clarification of the order dated 07.12.2015 passed in CC/142/2012, to the effect that they are entitled for penalty on delayed possession in the form of interest @15% per annum on their respective deposit, after 42 months or agreed period mentioned in the agreement plus 6 months grace period till the date of possession was given in terms of the judgment dated 07.12.2015.
Sandeep Kumar and Anil Kumar Gupta, Chetan Aggarwal, Nishank Gupta filed CC/142/2012, Shakuntala Devi, Suresh Chander, Deepak Balain, Mrs. Zeba Khan and Dr. Muhammad Amir Vakil filed CC/158/2014 and Daizy Rani, Romil, Nirpesh Bhardwaj, Rajesh Kumar, Sunita, Priyanka Verma, Ravi Kant Verma and Kailash Anand filed CC/336/2014, for directing the opposite party to refund the money deposited by them with interest and other consequential reliefs due to unreasonable delay in completing the project and offering possession and material alteration in layout plan.
M/s. Media Video Limited (Real Estate Division) (the opposite party) launched a group housing project in the name of “MVL Coral” at Bhiwadi, in the year 2006. The complainants, individually or jointly booked the flat in above project on different dates from the year 2006 to 2012. The opposite party allotted the flats to them and executed buyer agreements in their favour. As per payment plan, the complainants made payment but the opposite party delayed the construction and handing over possession. It was also alleged that the opposite party changed layout plan after allotments. Hence above complaints were filed.
This Commission consolidated the above complaints and decided by common judgment dated 07.12.2015, after hearing the parties. In the judgment dated 07.12.2015, this Commission found that Sandeep Kumar, Anil Kumar Gupta and Nishank Gupta had taken possession of the flats allotted to them. As such, they cannot ask for refund of money. As agreed by the opposite party, it was directed to obtain “occupation certificate” within 9 months from the date of judgment; otherwise, it would carry additional penalty of Rs.2000/- for each of the complainant, after expiry of 9 months. The opposite party was further directed to pay penalty of delayed possession in the form of interest @15% per year till the possession was given. Starting point would be 36 months or date mentioned in the agreements for the construction period plus grace period of six months i.e. after 42 months or agreed period in the agreements plus six months grace period from the receipt of first amount till the possession was given. The Opposite party was also directed to pay cost of Rs.25000/- to each of them and provide covered car parking, club membership, power back-up, park facing flat, wherever applicable and corner flat wherever applicable, as mentioned in the agreement, within the period of 9 months, as already ordered, otherwise, it would return the entire amounts paid by the complainants along with interest @15% p.a. from the date of receipt of money till realization. Other complaints were allowed with costs of Rs.25000/- payable to each of the complainants and the opposite party was directed to refund their money along with interest @15% per annum, from the date of payment till realization. Some clerical error in this order was corrected on 09.09.2016. The opposite party challenged this order in Civil Appeal Nos.9826-9828 of 2016, before Supreme Court, which was dismissed on 16.04.2018.
The complainants filed EA/132/2016 (in CC/142/2012), EA/133/2016 (in CC/158/2014) and EA/134/2016 (in CC/336/2014), for execution of the decree as passed in their favour. As agreed by the opposite party, this Commission, vide order dated 20.04.2018 directed the opposite party to pay 20% of the decretal amount to each of the complainants, which was allegedly paid on 08.05.2018.
In the meantime Company Petition No.668 of 2014, Company Petition No.734 of 2014, Company Petition No.656 of 2016, Company Petition No.657 of 2016, Company Petition No.658 of 2016, Company Petition No.779 of 2016, Company Petition No.788 of 2016 and Company Petition No.977 of 2016 were filed under Section 439 of Companies Act, 1956, before Delhi High Court, for winding up MVL Limited (the opposite party), in which, the Delhi High Court, vide order dated 05.07.2018, passed the order for winding up and appointed Official Liquidator as Provisional Liquidator.
When the execution applications were listed on 19.11.2018, 12.03.2020 and 22.09.2023, the counsel for the opposite party raised an objection that in view of the order for winding up of the opposite party, execution proceedings cannot be continued. The counsel for the decree holders submitted that the Consumer Protection Act, 1986 (for short the Act) was enacted with an object of better protection of the interest of the consumers. By virtue of Section 3, the provisions of the Act are in addition to and not in derogation of the provisions of any other law. The Act is special legislation on the subject, relating to consumer disputes. Being special and subsequent enactment, it has an overriding effect over the Companies Act, 1956. As such in spite of the winding up order, the execution proceedings are liable to be continued. He relied upon the judgment of Supreme Court in A. Navinchandra Steels Private Limited Vs. SREL Equipment Finance Limited, (2021) 4 SCC 435, in which, it has been held that a secured creditor can realize its dues against corporate debtor under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, in spite of the facts that winding up order has been passed against the corporate debtors under the provisions of Companies Act.
We have considered the arguments of the counsel for the parties and examined the record. So far as judgment in A. Navinchandra Steels Private Limited Vs. SREI Equipment Finance Limited, (2021) 4 SCC 435, is concerned, in this case Bombay High Court, vide order dated 05.10.2016 passed in Company Petition No.1066 of 2015, directed for winding up of SREL Equipment Finance Limited and Official Liquidator has taken possession of its assets on 17.04.2018. Thereafter, SREL Equipment Finance Limited filed a petition under Section 7 of Insolvency and Bankruptcy Code, 2016, before National Company Law Tribunal, which was admitted on 06.11.2019. This order was challenged before National Company Law Appellate Tribunal, which vide order dated 07.02.2020, held that as the proceeding of winding up is pending as such a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 was not maintainable. This order has been upheld by Supreme Court. In this judgment the winding up proceeding under Companies Act has been given precedence over Insolvency and Bankruptcy Code, 2016.
There is no provision under the Act, which gives overriding effect to the Act over other enactments. Section 3 of the Act, provides that the Act shall be in addition and not in derogation of any other law for the time being enforce. Blacks Law Dictionary defines the word “derogation” as the partial repeal or abrogation of a law by a later enactment that limits its scope or impairs its utility and force. Supreme Court in P.C. Joshi Vs. State of U.P., A.I.R. 1961 SC 387, held that “derogation” means taking away, lessening or impairing the authority, position or dignity.
The provisions in the Act can be invoked in addition to any other enactment but not in derogation of other enactment. If the arguments of the counsel for the decree holder is accepted that the Act, being special enactment, be given precedence over the provisions of the Companies Act then it would become derogatory to Section 446 of the Companies Act, 1956 or Section 279 the Companies Act, 2013.
Section 446 of the Companies Act, 1956 is quoted below:-
(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced. or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may impose.
(2) The Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being, in force, have jurisdiction to entertain, or dispose of-
(a) any suit or proceeding by or against the company;
(b) any claim made by or against the company (including claims by or against any of its branches in India);
(c) any application made under section 391 by or in respect of the company;
(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company;
whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960 .] (65 of 1960.)]
(3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that Court.
(4) 1 Nothing in sub- section (1) or sub- section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.]
The provisions of Section 446 (2) of the Companies Act, 1956, came up for consideration before constitution Bench of Supreme Court in S.V. Kandeakar Vs. V.M. Deshpande, (1972) 1 SCC 438, in which, taking note of Law Commission Report, Supreme Court found that the object of sub-section-2 of Section 446 is to empower the company court as in exercise of insolvency jurisdiction to decide all claims made by or against the company to assure pro-rata distribution of the assets of the company. In this case, Supreme Court held that the authorities under Income Tax Act, 1961 can assess the tax liability against the company under liquidation but such assessed tax would be corporate debt and for its realization they have to go for company judge. Similar view has been taken by Supreme Court in Banshidhar Shankarklal vs. Mohd. Ibrahaim (1970) 3 SCC 900 in which Section 171 of Indian Companies Act, 1913 has been considered and it was held that it was intended to ensure that the assets of a company ordered to be wound up by the Court shall be administered for the benefit of the creditors and that some creditors only shall not obtain an advantage over others by instituting or prosecuting proceedings against the company. The section is intended to maintain control of the Court which has made an order for winding up on proceedings which may be pending against the company or may be initiated after the order of winding up, and the Court may remain seized of all those matters so that its affairs are administered equitably and in an orderly fashion. In Harihar Nath & Ors. State Bank of India (2006) 4 SCC 457 the Supreme Court held as follows: -
“It is now well settled that if any winding up order is passed, during the pendency of a suit against the company, and if the suit is continued without obtaining leave, in spite of that bar contained in section 446(1), the decree passed is only voidable at the instance of the liquidator, and not void ab initio. Even if the suit is proceeded with, without obtaining leave of the Company Court, either not being aware of the order of winding up or ignoring the provisions of section 446(1), the resultant decree will not be void, but only be voidable at the instance and option of the official liquidator of the company.”
Similar view has been taken by various High Courts i.e. Kerala High Court in Sudarshan Chits (India) Ltd. Vs. The Official Liquidator & Ors. (1992) 1 CLJ 34 (Ker); Kolkata High Court in Narendra Mohan Lakhotia vs. Pinaki Bhusan Sinha & Anr. (2002) SCC OnLine Cal 487; Andhra Pradesh High Court in Official Liquidator vs. Gaurav Sharmaman & Ors. (2010) SCC OnLine AP 1057 and Delhi High Court in K. Radha Krishnan vs. Karnataka Consumer’s Forum & Ors. (2011 (3) CPC 248.
In the present case, the decree has been passed by this Commission and its executions are pending. In view of the judgment of Supreme Court as well as various High Courts, the execution proceeding can be continued by either taking permission from Company Judge or the decree can itself be executed by the Company Judge in the winding up petition of the company.
ORDER
In view of aforesaid discussions, the execution applications are disposed off giving liberty to the decree holders to set up their claim before the Company Judge of Delhi High Court in Petition No.668 of 2014, Company Petition No.734 of 2014, Company Petition No.656 of 2016, Company Petition No.657 of 2016, Company Petition No.658 of 2016, Company Petition No.779 of 2016, Company Petition No.788 of 2016 and Company Petition No.977 of 2016.
List MA/159/2023 before the regular Bench.