The Managing Directo... v. A. Fareed Bawa And A...

1. Nadippisai Pulavar K.R Ramaswamy Sugar Mill is the revision petitioner in both the revisions. Revision petitions filed under Article 227 of the Constitution of India are against the order made in A.P Nos. 217 of 1991 and 218 of 1991, dated 18.3.1992 on the file of State Consumer Disputes Redressal Commission, Madras.

2. The case of the petitioner is briefly naratted hereunder:- The 1st respondent in both the revisions in order to raise sugarcane crop in their respective field, applied to become a shareholder of the petitioner sugar mill through the 2nd respondent herein, which is a primary agricultural co-operative bank. It is their further case that both of them were agriculturists and after becoming a member of the 2nd respondent co-operative bank requested the said bank to advance loan to become a shareholder of the petitioner sugarmill. It is further averred that as per the request made by the 1st respondent herein, in each case, the 2nd respondent has sanctioned loan and forwarded the same to the petitioner sugar mill. According to the 1st respondent, even after several months, the petitioner sugar mill has not enrolled them as member of the sugar factory, due to which according to them, they were unable to raise sugar cane crop. Hence, both of them filed a complaint before the District Consumer Forum, Tanjore in O.P No. 94 of 1991 and 95 of 1991. Before the District Forum the petitioner herein filed a detailed counter-affidavit stating that they have not received any application form accompanied by necessary amount duly signed by the parties with all particulars including the particulars of Survey numbers and extent of lands etc. In the absence of particulars and forms, it is not possible for them to enroll them as a member of the sugar mill. The Primary Agricultural Co-operative Bank has also filed separate counter-affidavit.

3. The District Forum after holding that the complainants have not furnished the necessary particulars in the approved forms for which the sugar mill cannot be blamed, has not issued any direction to the petitioner herein. However, directed the complainants to furnish the necessary particulars as mentioned in the counter-affidavit of the sugar mill within a period of one month from the date of its order.

4. Not satisfied with the order of the District Forum, the complainants filed appeals A.P Nos. 217 and 218 of 1991 before the State Consumer Disputes Redressal Commission, Madras for compensation. The petitioner herein has not filed any appeal before the State Commission. The State Commission after considering whether the complainants are entitled to any compensation and after holding that “they have not proved by acceptable evidence with regard to the loss suffered”, however, directed the petitioner herein to pay general damages of Rs. 2,000 to the complainants in both the cases as compensation. The said order of the State Commission are now being challenged in the present two revision petitions.

5. Regarding the maintainability of the revision filed in this Court, Mr. N. Jothi, learned counsel appearing for the petitioners submits that no appeal or revision is provided to National Commission against the orders of the appellate forum (State Commission) made in furtherence of an appeal against the original order from the District Forum. He points out that the appeals to the National Commission is provided only in respect of matters dealt by the State Forum in its original jurisdiction. By reading of Section 17 and 19 of the said Act, he submits that the petitioners have no other remedy except approaching this Court under Article 227 of the Constitution of India. Section 17 deals with jurisdiction of the State Commission which is extracted hereunder:

“17. Jurisdiction of the State Commission:- Subject to the other provisions of this Act, the State Commission shall have jursidiction:-

(a) to entertain-

(i) Complaints where the value of the goods or services and compensation, if any, claimed exceeds rupees five lakhs but does not exceed rupees twenty lakhs and

(ii) appeals against the orders of any District Forum within the State and

(b) to call for the records and pass appropriate orders in any consumers dispute which is pending before or has been decided by any District Forum within the State, where it appears to the State Commission that such District forum has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally or with material irregularity”

Section 19 deals with appeals to the National Commission which is extracted hereunder:

“ 19. Appeals:- Any person aggrieved by an order made by the State Commission in exercise of its power conferred by sub-clause (i) of Clause (a) of section 17 may prefer an appeal against such order to the National Commission within a period of thirty days from the date of the order in such form and manner as may be prescribed.

Provided that the National Commission may entertain an appeal after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing it within that period”.

The reading of Section 19 clearly shows that an appeal is provided to National Commission only against the order made by the State Commission in exercise of its power conferred by sub-clause (i)(a) of Section 17. Since there is no mention with regard to Section 17(a)(ii) in Section 19, no further appeal or revision lies to National Commission against the impugned orders passed by the State Commission. Hence, the submission made by Mr. N. Jothi in this regard is well-founded.

6. Coming to the merits of the case, the learned counsel for the petitioner points out that for the complaint made by the 1st respondent herein even before the District Forum, it was brought before it, that mere forwarding a necessary sum by the primary land development bank without requisite application form and particulars is not sufficient to issue a membership certificate. He relies upon the specific averment in the counter affidavit filed before the District Forum. In para 6 in both the cases, it is specifically mentioned

“The 1st respondent (petitioner herein) has received a sum of Rs. 8,200 representing towards the share of 8 persons. But no application form accompanied such amount duly signed by the parties with all particulars including the particulars of survey numbers and extent of lands in which they proposed to raise the sugarcane for the purpose of verification by the officers of the respondent”…. This respondent submits that whenever this complainant approached this respondent's office, they have properly and cautiously informed the complainant that no application for membership has so far been received and his proposal for membership or shareholder cannot be accepted in the abswnce of necessary application with particulars as demanded in the application.”

Accepting the specific defence taken by the petitioner herein, the District Forum has also came to the following conclusion

In view of non furnishing the required particulars by the complainants, the sugar mill could not issue any certificate or register their sugarcane. This was also accepted by the State Commission which is extracted in para 6 of its order as follows:

“… But there is no acceptable evidence to prove the loss suffered by the complainant”

Having arrived such a specific finding, the State Commission passed the following order:-

“However, the complainant will be entitled to general damages, which we fix at Rs. 2,000”.

The reading of specific defence taken by the sugarmill in their counter-affidavit accepted and approved by the District Forum, further approval by the State Commission, I do not find any justification for the State Commission to impose a general damage of Rs. 2,000 payable by the sugarmill in favour of the complainants. Prima facie the evidence available on record clearly go to show that the direction of the State Commission for payment of Rs. 2000 towards general damages is perverse, unsustainable and contrary to the evidence on record.

7. Nodoubt Mrs. S Subbalakshmi learned counsel appearing for the 1st respondent/complainant contended that even in the absence of any evidence, the Court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequence of breach of contract. For which, she relied upon a decision of the Supreme Court reported in Maula Bux v. Union Of India† ., AIR. 1970 S.C 1955. In the said decision, the Apex Court after referring to some of the provisions of Transfer of Property Act, Sale of Goods Act as well as Section 74 of the Contract Act has held as follows-

“In every case of breach of contract the person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree, and the court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequence of the breach of contract. But the expression “whether or not actual damage or loss is proved to have been caused thereby” is intended to cover different classes of contracts which come before the courts. In case of breach of some contracts it may be impossible for the Court to assess compensation arising from breach, while in other cases compensation can be calculated in accordance with established rules. Where the Court is unable to assess the compensation the sum named by the parties if it be regarded as a genuine pre-estimate may be taken into consideration as the measure of reasonable compensation, but not if the sum named is in the nature of a penalty. Where loss in terms of money can be determined, the party claiming compensation must prove the loss suffered by him”.

For this Mr. N. Jothi has submitted that the case referred by the learned counsel for the 1st respondent arose in a breach of concluded contract. He also submitted that on the basis of the agreed contract in the light of Section 74 of the Contract Act, the Apex Court has held that the Court is competent to award reasonable compensation in case of breach even if no actual dagage is proved to have been suffered in consequence of the breach of contract. He further submits that in our case, there is no concluded contract since the complainants have not furnished the required particulars to the sugarmill. In the very same judgment, the Supreme Court itself has emphasised that “where loss in terms of money can be determined, the party claiming compensation must prove the loss suffered by him”. Here, admittedly as seen from the order of the District Forum as well as the State Commission, the complainants have miserably failed to prove the loss alleged to have been suffered. In these circumstances, the judgment referred to by the learned counsel for the 1st respondent is not helpful to their case. Then Mrs. Subbalakshmi also points out that the power of this Court under Article 227 is very limited and according to her, these cases are not fit for interference under the said Article. For which she relied on Trimbak v. Ramachandra, AIR. 1977 SC 1222, Mohd Yunus v. Mohd. Mustaquim, AIR 1984 SC 38 and V. Savarimuthu v. Special Director Of Enforcement, A.I.R 1987 Mad. 11. It is true that the apex Court in the above referred two decisions have held that

“It is also well established that it is only when an order of a Tribunal is violative of the fundamental basic principles of justice and fair play or where a patent or flagrant error in procedure or law has crept or where the order passed results in manifest injustice, that a court can justifiably intervene under Article 227 of the Constitution”.

Even on the basis of the principles enunciated i.e in the above referred cases, ott the facts narated above, this court certainly interfere and set aside the impugned order. Since the order of the State Commission imposing general damages is ex-facie illegal and if it is allowed to stand, it would amount to manifest injustice to the petitioner herein.

8. Again with regard to the power and interference under Article 227, Justice Nainar Sundaram, as he then was, has formulated five contingencies and features in the decision reported in V. Savarimuthu v. Special Director Of Enforcement, AIR 1978 Mad. 11 which is extracted hereunder:-

“The power under Article 227 is an extraordinary power, and it requires to be exercised sparingly and with extreme caution. It is a power of superintendence reserved for this Court and is subject to its discretion and it cannot be claimed as of right by any party. By now, it has been settled by pronouncements of the highest Court in the land as to when this Court could properly resort to and exercise the powers under Article 227. The well accepted contingencies and features to warrant the exercise of such powers are>

(i) lack of jurisdiction, erroneous assumption of jurisdiction or excess of jurisdiction or refusal to exercise jurisdiction;

(ii) Grave dereliction of duty or flagrant violation of law or error of law apparent on the face of the record as distinguished from a mere mistake of law or an erroneous decision of law;

(iii) violation of the principles of natural justice;

(iv) perverse finding founded on no material whatsoever; and

(v) arbitrary or capricious exercise of authority or discretion”.

On the basis of the well accepted contingencies and features referred to in the said judgment, I am of the view that the State Commission has committed flagrant violation of law as well as error of law apparent on the face of the record as distinguished from a mere mistake of law or erroneous decision of law. After having found that there is no acceptable evidence to prove the loss suffered by the complainants, the conclusion of the State Commission awarding general damages is a perverse finding founded on no material whatsoever and the State Commission has exercised arbitrary and capricious exercise of authority.

9. Looking at any angle and in view of the well established principles as mentioned above, I am unable to accept the contention of the learned counsel for the 1st respondent.

10. In the result, both the civil revision petitions are allowed and the orders of the State Consumer Disputes Redressal Commission, Madras made in A.P No. 217 of 1991 and 218 of 1991 are hereby set aside. However, there will be no order as to costs.