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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Acts
  • provisions of Section 69 of the Co-operative Societies Act, 1969 and Section 84(1) of the multi-State-co-operative Society Act, 2002
  • SECTION 2 INDUSTRIAL DISPUTES ACT 1947
  • provisions of Section 69 of the Co-operative Societies Act, 1969. 6
  • provisions of Section 69 of the Co- operative Societies Act, 1969
  • provisions of the Multi State Co-operative Society Act, 2002. 7
  • SECTION 2 A INDUSTRIAL DISPUTES ACT 1947
  • Section 2(1)(o) of the Consumer Protection Act, 1986
  • provisions of the Co-operative Societies Act, 1969
  • 14. Section 84(1) and Clause (b) of the ibid Section
  • CONSUMER PROTECTION ACT 1986
  • Multi State Co-operative Society Act, 2002,
  • 9 16. Section 69
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Acts
  • provisions of Section 69 of the Co-operative Societies Act, 1969 and Section 84(1) of the multi-State-co-operative Society Act, 2002
  • SECTION 2 INDUSTRIAL DISPUTES ACT 1947
  • provisions of Section 69 of the Co-operative Societies Act, 1969. 6
  • provisions of Section 69 of the Co- operative Societies Act, 1969
  • provisions of the Multi State Co-operative Society Act, 2002. 7
  • SECTION 2 A INDUSTRIAL DISPUTES ACT 1947
  • Section 2(1)(o) of the Consumer Protection Act, 1986
  • provisions of the Co-operative Societies Act, 1969
  • 14. Section 84(1) and Clause (b) of the ibid Section
  • CONSUMER PROTECTION ACT 1986
  • Multi State Co-operative Society Act, 2002,
  • 9 16. Section 69
See more information ...
Smart Summary

Structured Summary of the Provided Legal Opinion

Factual and Procedural Background

The complainant deposited Rs. 2,00,000 and Rs. 14,000 with the opposite parties under a fixed deposit scheme after being given assurances that the deposits would mature to Rs. 2,32,600 and Rs. 16,282 respectively, with maturity dates of 30.12.2018 and 09.03.2019. After the dates of maturity the opposite parties did not release the promised maturity amounts. The complainant filed the instant complaint seeking directions that the opposite parties pay the maturity amounts with interest (claimed at 18% p.a.), Rs. 50,000 for alleged physical harassment and mental agony, and Rs. 30,000 as litigation charges.

The opposite parties filed a joint reply raising preliminary objections of locus standi, jurisdiction and cause of action. On merits they contended that the complainant was a member of opposite party No.2 (a co-operative society) and therefore not a “consumer” under the Consumer Protection Act, 1986, and that the dispute was subject to arbitration per an arbitration clause and provisions of Section 69 of the Co-operative Societies Act, 1969 (as they relied on that provision and a precedent). The complainant filed evidence (affidavit Ex. CW‑1 and documents C‑1 & C‑2). The opposite parties filed affidavit Ex. OPW‑1 and documents OPA/1 and OPA/2. No rebuttal evidence was led by the complainant.

Legal Issues Presented

  1. Whether the complaint is maintainable before the consumer forum or whether jurisdiction is ousted by an arbitration forum/alternative remedy (as contended by the opposite parties).
  2. Whether the complainant qualifies as a "consumer" within the meaning of the Consumer Protection Act, 1986, given his status as a member of a multi‑state co‑operative society.
  3. Whether the dispute between the complainant and the multi‑state co‑operative society falls within the scope of Section 84(1) of the Multi‑State Co‑operative Societies Act, 2002 (i.e., whether it is a dispute touching the constitution, management or business of the society) so as to require reference to arbitration.
  4. Whether the refusal to pay the maturity amounts constitutes a deficiency in service and/or an unfair trade practice under the Consumer Protection Act, 1986.

Arguments of the Parties

Complainant's Arguments

  • The complainant deposited the stated sums under a fixed deposit scheme and had been assured of the maturity amounts and dates (as evidenced by certificates Annexures C‑1 & C‑2).
  • After the maturity dates he approached the opposite parties for payment, but they refused without valid reason.
  • He sought recovery of the maturity amounts with interest, and damages for harassment and litigation expenses.
  • He filed affidavit Ex. CW‑1 and produced Annexures C‑1 & C‑2 in support of his claim.

Opposite Parties' Arguments

  • Raised preliminary objections of locus standi, jurisdiction and cause of action.
  • Contended that the complainant is not a "consumer" because he voluntarily became a member of opposite party No.2 (a co‑operative society registered under the Multi‑State Co‑operative Societies Act, 2002) and opened an account/scheme with full knowledge of its terms and conditions.
  • Asserted that the complaint is not maintainable before this Forum because an arbitration clause/Section 69 of the Co‑operative Societies Act, 1969 requires such disputes to be resolved by arbitration (they relied on a precedent to support this position).
  • Denied any malafide intention in refusing payment and claimed inability to repay due to an excessive demand made by the complainant.
  • Produced affidavit Ex. OPW‑1 and documentary material Annexures OPA/1 and OPA/2 (including the membership/account form) to support their stance.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Mrs. Anjana Abraham Chembethil v. The Managing Director, The Koothattukulam Farmers Service Co‑operative Bank Ltd., NCDRC (referred to as "Anjana's case") Authority for the proposition that disputes between a member and a cooperative (in that case a co‑operative bank) fall to be determined by arbitration under Section 69 of the Co‑operative Societies Act, 1969. The court distinguished that precedent: it observed that Anjana's case concerned a society/bank registered under the 1969 Act and involved an actual banking business and a general body resolution changing rates of interest. By contrast, the instant opposite party No.2 is registered under the Multi‑State Co‑operative Societies Act, 2002, and the facts (and statutory regime) differ; therefore the precedent was not applied to oust jurisdiction here.

Court's Reasoning and Analysis

The court proceeded by comparing the statutory scheme under the Co‑operative Societies Act, 1969 (Section 69) with the Multi‑State Co‑operative Societies Act, 2002 (Section 84(1)). It observed that:

  1. The basic facts were undisputed: the complainant deposited the sums and the certificates (Annexures C‑1 & C‑2) showed the maturity dates and promised maturity amounts. The opposite parties did not deny the undertaking to pay on maturity.
  2. The opposite parties relied on an arbitration requirement (and the Anjana precedent) to contend the consumer forum lacked jurisdiction. The court noted, however, that Section 84(1) of the Multi‑State Co‑operative Societies Act, 2002 applies to disputes "touching the constitution, management or business" of a multi‑state co‑operative society and expressly excludes certain categories (disciplinary action against paid employees and industrial disputes). Thus Section 84 is not identical to Section 69 of the 1969 Act; it is narrower in scope because it requires the dispute to relate to constitution, management or business before arbitration is mandatory.
  3. The court identified the pivotal factual/legal question: whether the present dispute "touches the business" of opposite party No.2. If it does, Section 84(1) would mandate arbitration and oust the consumer forum's jurisdiction; if it does not, the consumer forum retains jurisdiction.
  4. The court found the opposite parties did not discharge their evidentiary burden to show that the society's main activity was commercial/business in nature. They failed to place their bye‑laws on record (which would have shown aims/objects and shed light on whether the society was constituted to run a business). The court treated the absence of bye‑laws as permitting an adverse inference against the opposite parties.
  5. The membership/account form (Annexure OPA‑1) filed by the opposite parties revealed only that a minimum amount of Rs.5,000 was required for membership and that members could receive loyalty bonus points and the society undertook to pay back deposits after 18 months with interest. The form did not demonstrate that the society was engaged in commercial banking or similar business in the legal sense.
  6. The court contrasted the present facts with those in Anjana's case: in that case the opposite party was a co‑operative bank engaged in banking business and there had been a resolution altering rates of interest; those circumstances were materially different from the facts here.
  7. Given (i) the absence of proof that the dispute relates to constitution, management or business of the society, (ii) the undisputed undertaking to pay the maturity amounts, and (iii) the complainant's claim being limited to the maturity amounts and interest (he did not demand amounts beyond the maturity value or assert forfeiture of interest in case of delay), the court concluded that the opposite parties had provided a "service" under Section 2(1)(o) of the Consumer Protection Act, 1986.
  8. The court therefore held that the opposite parties' refusal to pay the maturity amounts upon expiry of the stipulated period amounted to both a deficiency in service and an unfair trade practice under the Consumer Protection Act, 1986.

Holding and Implications

Holding: The court concluded that the opposite parties had provided a service to the complainant within the meaning of Section 2(1)(o) of the Consumer Protection Act, 1986, and that their refusal to pay the maturity amounts after the stipulated period constituted a deficiency in service as well as an unfair trade practice.

Implications:

  • Direct effect on the parties: The court's finding means the complaint is maintainable before the consumer forum (i.e., the consumer forum is not ousted of jurisdiction on the basis urged by the opposite parties under the arbitration provisions relied upon), and the complainant's allegations fall within the statutory protections against deficiency in service and unfair trade practices.
  • Evidence burden and procedure: The court relied on the absence of bye‑laws and on the documentary record to draw an adverse inference against the opposite parties' contention that the dispute concerned the "business" of the society; thus, evidence of the society's aims/objects (bye‑laws) would have been determinative on the jurisdictional point.
  • Broader precedent: The opinion distinguished the Anjana precedent on its facts and statutory context (1969 Act vs. 2002 Act). The opinion does not state that it has established a novel binding precedent beyond applying statutory interpretation to the facts of this case.
Show full summary ...
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    Kushal Kumar v. Sahara India

    Facts giving rise to the institution of the instant complaint in brief are that on account of the allurement made by the opposite parties, the complainant deposited `2.00 lacs and `14000/- with them in their fixed deposit scheme. He had been given the assurance by the opposite parties that he would receive `2,32,600/- and `16,282/- on the date of its maturity i.e. 30.12.2018 and 09.3.2019, respectively.

    2. The grievance of the complainant is that when after the expiry of the date of maturity, he approached the opposite party for the release of the aforementioned maturity amount, they did not release the payment without any valid reason.

    3. So under these circumstances, he approached this Forum by way of instant complaint and thereby sought a direction against the opposite parties, directing them jointly and severally to make payment of the maturity amount of `2,32,600/-, and `16,282/- alongwith interest @ 18% per annum, and `50,000/- for subjecting him to physical harassment and mental agony, and `30,000/- as litigation charges.

    4. In response to the notices issued, opposite parties filed joint reply and therein they raised preliminary objections of locus standi, jurisdiction and cause of action.

    5. On merits, they questioned the status of the complainant as a consumer as envisaged by the Consumer Protection Act, 1986 by taking the plea that opposite party No.2 is a co-operative society registered under the Multi State Co-operative Society Act, 2002, and that the complainant himself had approached the opposite party No.1 and having fully understood the terms and conditions of the scheme of opposite party No.2, had become its member, and opened account under Sahara A Select Scheme for certain period and that as such he could not be held to be their consumer. However, they had not denied that after the expiry of the stipulated period, the account of the complainant had matured but expressed their inability to repay the amount of the complainant due to excessive demand made by the complainant. They had denied that on account of any malafide intention, they had declined to make the payment to the complainant. By making reference to the arbitration clause of the policy of opposite party No.1, which prohibited any member from seeking the redressal of his/her grievance by any other mode than by way of arbitration proceedings, they had taken the plea that the complaint filed by the complainant before this forum was not maintainable, and had thus made a prayer for dismissal of the same with costs.

    6. The complainant had not opted to file any rejoinder.

    7. However, to lend corroboration to his case, he had tendered in evidence his affidavit Ex. CW-1 and documents Annexures C-1 & C-2.

    8. To controvert the case of the complainant and to lend corroboration to their case, opposite parties had filed affidavit Ex. OPW-

    1 of Sh. Ranvir Singh, branch manager of opposite party No.1, and tendered documents Annexures OPA/1 and OPA/2.

    9. No evidence in rebuttal had been led on behalf of the complainant.

    10. We have heard learned counsels for parties at length and have thoroughly gone through the entire record available on the file.

    11. If the nature of the stand taken by the parties in their respective pleadings raised and subsequent evidence produced are taken into consideration, then same go to show that opposite parties had not disputed that the complainant had deposited `2,00 lacs and `14000/- with them, and that as per the copies of certificates Annexures C-1 & C-2, the amount so deposited was to mature on 30.12.2018 and 09.3.2019, respectively, and that on the maturity thereof, they had undertaken to pay `2,32,600/- and `16,282/- to the complainant. However, the opposite parties had questioned the maintainability of the complaint and the jurisdiction of this Forum to hear and decide the instant complaint under the provisions of the Consumer Protection Act, 1986. In this behalf, they have taken the plea that since the complainant was member of opposite party No.2 and that since the complainant had raised excessive demand upon the maturity amount, so the dispute in question could be resolved only by way of arbitration as per provisions of Section 69 of the Co-operative Societies Act, 1969. In this behalf, they had also re-produced the provisions of Section 69 of the ibid Act.

    12. It is correct that the aforementioned section of the ibid Act inter alia provides that in case any dispute arises between a member(s) and the society, then it has to be referred to the Arbitration Court or the Registrar and that no other authority shall have the jurisdiction to entertain any suit or other proceedings in respect of such dispute. In this behalf, they had also tried to seek support to their aforementioned contention by relying upon judgment titled as Mrs. Anjana Abraham Chembethil versus The Manager Director, The Koothattukulam Farmers Service Co-operative Bank Ltd., NCDRC 759{(2013) 4CPJ} 333(NC). But while raising the aforementioned contention, the opposite parties appeared to have become oblivious of the fact that opposite party No.2 had admittedly been registered not under the provisions of the Co-operative Societies Act, 1969 but under the provisions of the Multi State Co-operative Society Act, 2002.

    13. So in view of the above, it has to be seen as to whether there is any provision in the ibid Act of 2002 which ousts the jurisdiction of this Forum to hear and decide the present complaint. In this behalf, regard has to be had to Chapter IX of the ibid Act. Infact, Section 84 contained therein is relevant from the point of view of the aforementioned proposition.

    14. Section 84(1) and Clause (b) of the ibid Section is re-produced verbatim herein under:- (1) Notwithstanding anything contained in any other law for the time being in force, if any dispute other than a dispute regarding disciplinary action taken by a multi-State Co-operative Society against its paid employee, or an industrial dispute as defined by Clause (k) of Section 2 of the Industrial Disputes Act 1947(14 of 1947) touching the constitution, management or business of a multi-State-Co-operative Society arises:- (a) xxxx xxxx xxxx xxxx (b) between a member, past members and persons claiming through a member, past member or deceased member and the multi-State-co-operative Society, its board or any officer, agent or employee of the multi- State-co-operative Society or liquidator, past or present, (c) xxxx xxxx xxxx xxxx (d) xxxx xxxx xxxx xxxx such dispute shall be referred to arbitration

    15. If the provisions of Section 69 of the Co-operative Societies Act, 1969 and Section 84(1) of the multi-State-co-operative Society Act, 2002 are taken into consideration, then same go to show that there is a marked difference between the provisions of the aforementioned sections.

    16. Section 69 supra provides that if any dispute arises between a member(s) and the society, same has to be determined only by way of arbitration. However, Section 84 supra qualifies the nature of the dispute. It provides that this section shall not only be in applicable to disciplinary action by a multi-State co-operative society against its paid employees or to any industrial dispute as defined in Clause (k) of Section 2 of the Industrial Disputes Act, 1947, but shall also not apply to any dispute which does not relate to its constitution, management or business.

    17. Admittedly, the dispute in question is neither a dispute pertaining to disciplinary action or an industrial dispute nor does it relate to the constitution or management of the society.

    18. Now the question arises as to whether the dispute in question could be held to be a dispute touching the business of the opposite parties? In case it is found to be a dispute touching the business of the opposite parties, then it could be held that this Forum does not have jurisdiction to hear and decide the instant complaint.

    19. To prove this aspect of the case, the opposite parties could have easily produced their bye laws to show as to what were the aims and objects of the society. In other words, whether opposite party No.2 had been constituted with the object to run some business. Admittedly, business includes any commercial activity. But opposite parties had not produced the necessary record with respect to the bye laws of opposite party No.2 nor had they assigned any reason for non-production thereof. Under the given circumstances, the aforementioned document was the best document which could have thrown light on the nature of the business carried on by opposite party No.2. So in the absence of any specific reason assigned in this behalf, an adverse inference could be raised against the opposite parties.

    20. Further, opposite parties had placed on record document Annexure OPA-1. This document infact is a form whereby a person could become a member of the opposite parties by opening an account with them. Condition No.1 mentioned under title terms and conditions of this document provides that minimum amount to become a member of the scheme was `5,000/-. But the aforementioned form also does not go to show that the main activity of opposite party No.2 was commercial in nature. Rather, it goes to show that the minimum amount required to get membership of the society, and of its scheme was `5,000/-. However, it had provided additional benefit to the members to get loyalty bonus points on purchase of products from Q- shop. Besides above, opposite party No.2 had undertaken to pay back the necessary amount after 18 months alongwith interest mentioned in Annexures C-1 & C-2. Thus it goes to show that opposite party No.2 had provided an incentive to its members to get their amount back alongwith interest.

    21. There is another aspect of the case. Opposite parties had not disputed that they had undertaken to pay back the maturity amount after the expiry of stipulated period. By way of present complaint, the complainant is also simply demanding his maturity amount and further interest thereon after the expiry of the maturity. He had not taken the plea that he was entitled to receive more amount than the maturity amount or that under the terms and conditions of the scheme, he was not entitled to receive the necessary interest in case the payment is not made after the expiry of the stipulated period.

    22. The facts of Anjanas case cited supra were quite different from the present one. In that case, the provisions of Section 69 of the Co- operative Societies Act, 1969 were under consideration. Moreover, in that case, the general body of the opposite party bank had reduced the rate of interest and on the basis of the aforementioned resolution, the opposite party had calculated the maturity amount as per the reduced rate of interest. But in this case, opposite parties had not taken the plea that after depositing of the aforementioned amount, the society had decided otherwise.

    23. Further, the opposite party in Anjanaa case supra was a co- operative bank. In other words, the opposite party therein was doing banking business. But in this case, as already observed above, in the absence of necessary record, it cannot be inferred that the society had been incorporated with the sole aim and object to run business as is understood in legal parlance.

    24. Admittedly, under the given circumstances, it could be held that opposite parties had provided service as defined by Section 2(1)(o) of the Consumer Protection Act, 1986 to the complainant for consideration and that the conduct on the part of the opposite parties in refusing to pay the maturity amount after the expiry of stipulated period, not only amounts to deficiency in service but also indulgence into unfair trade practice.

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    Comments

    Kushal Kumar v. Sahara India
    (Mar 9, 2020)