Citation Codes

Equivalent Citations

citation codes

Case Number

CC/307/2020

Advocates

Acts

SECTION 8 ARBITRATION ACT
CONSUMER PROTECTION ACT
Clause 84 of the Multi State Co-operative Society Act, 2002.

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Case Summary: District Consumer Disputes Redressal Commission-I, U.T. Chandigarh — CC/307/2020

Factual and Procedural Background

Complainant: Saroj Rana (wife of Jaswant Singh Rana), resident of Chandigarh. Opposite Parties: (1) Sahara Credit Co-operative Society Ltd. through its Chairman/Managing Director and (2) Sahara India Pariwar through its Branch Manager. Consumer Complaint No. CC/307/2020 was instituted on 24/08/2020 and decided on 06/01/2022 by the District Consumer Disputes Redressal Commission-I, U.T. Chandigarh (Coram: Rajan Dewan, President; Surjeet Kaur, Member).

Facts as pleaded by the complainant: on 11.08.2016 the complainant invested Rs. 12,10,000 with the opposite parties in the shape of a Fixed Deposit Receipt (FDR) maturing on 11.02.2018 with a maturity value of Rs. 14,07,230. The complainant later agreed to place the amount in a new FDR on 24.12.2018 maturing on 24.06.2020 with a maturity value stated as Rs. 18,03,813. Upon maturity, the complainant requested payment but the opposite parties delayed and ultimately refused to pay the maturity amount.

Procedural history: Opposite parties filed written reply raising preliminary objections (including lack of jurisdiction, non-maintainability on account of member–society relationship, and arbitration clause). Both parties led evidence by way of affidavits and documents. The Commission heard counsel for the parties and considered written arguments before issuing its decision.

Legal Issues Presented

Whether the consumer complaint is maintainable before the Consumer Forum despite the relationship between the complainant and the opposite parties being asserted as a member–society relationship.
Whether an arbitration clause in the governing agreement (specifically Clause 84 of the Multi State Co-operative Society Act, 2002, as invoked by the opposite parties) bars the Consumer Forum from adjudicating the dispute.
Whether the opposite parties committed deficiency in service and unfair trade practice by failing to refund the maturity amount on the FDR.
Whether the complainant is entitled to interest on the maturity amount and to compensation/costs for harassment and litigation.

Arguments of the Parties

Complainant's Arguments

The complainant invested amounts with the opposite parties under their scheme/FDR and on maturity the maturity value (stated as Rs. 18,03,813 for the later FDR) was not paid despite requests.
The non-payment by the opposite parties amounts to deficiency in service and unfair trade practice.

Opposite Parties' Arguments

The complaint is false and frivolous and there is no consumer–service provider relationship; the relationship is that of member and society, making the complaint non-maintainable before the Consumer Forum.
The Commission has no jurisdiction and the dispute should be referred to arbitration (relying on Clause 84 of the Multi State Co-operative Society Act, 2002).
The complainant had understood the terms and conditions of the scheme and, being a member, invested money for furtherance of the society's objects; the complainant cannot claim benefits beyond the scheme's terms.
They denied (initially) that the complainant approached them for refund; alternatively, they pleaded financial constraints and offered to pay by installments, which the complainant refused.
There is no deficiency in service or unfair trade practice on their part; they sought dismissal of the complaint.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Secretary, Thirumurugan Co-operative Agricultural Credit Society vs. M. Lalitha (Dead) through LRs and others, 2004 (1) CLT 456 (Hon'ble Supreme Court)	That the Consumer Protection Act is in addition to and not in derogation of other laws; Consumer Fora provide cheaper, easier, expeditious and effective redressal and the Act must be interpreted broadly to provide remedies in addition to other laws unless there is a clear bar.	The Commission relied on this decision to reject the argument that a member–society relationship precludes maintainability of a consumer complaint where the dispute concerns a deposit/return arrangement amounting to service.
Virender Jain vs. Alaknanda Co-op Group Housing Society Ltd., Civil Appeal No.64 of 2010 and connected matters (decided 13.04.2013)	Widening the scope of the Consumer Protection Act to permit disputes between members and their Society to be decided by Consumer Fora.	The Commission applied this principle to hold that the complaint is maintainable against the opposite parties and that it has jurisdiction to decide the matter.
Aftab Singh v. EMAAR MGF Land Limited & Anr., Consumer Complaint No.701 of 2015 (Larger Bench of National Commission) — order dated 13.07.2017; Civil Appeal(s) 23512-23513 of 2017 (M/s EMAAR MGF Land Ltd. & Anr. vs. Aftab Singh) dismissed by the Supreme Court (order dated 13.02.2018); Review Petition dismissed (10.12.2018)	That an arbitration clause in agreements of the kind under consideration cannot circumscribe the jurisdiction of a Consumer Forum; arbitration clause is not a bar to resolution by Consumer Fora.	The Commission relied on this line of authority to reject the opposite parties' contention that the dispute must be referred to arbitration.
Alok Shanker Pandey vs. Union of India & Ors., II (2007) CPJ 3 (SC)	Principle that interest is not a penalty but a normal accretion on capital — equity demands that a person who retains another's money should pay interest on it when returning it later.	The Commission cited this authority to justify awarding interest to the complainant on the maturity amount from the date of maturity until realization.

Court's Reasoning and Analysis

The Commission proceeded in a stepwise analysis:

Maintainability: The Commission rejected the opposite parties' contention that the complaint was not maintainable because the relationship was that of member and society. The reasoning was that the dispute was not purely internal governance of a co-operative society but related to a deposit under the opposite parties' scheme and refund of that deposit on maturity. The Commission treated the arrangement as rendering of a "service" under the Consumer Protection Act and therefore within the Forum's jurisdiction. It relied on the Supreme Court's Thirumurugan decision and the Virender Jain line of authority to support a broad interpretation of the Act and the availability of consumer remedies in addition to other laws.
Arbitration clause: The Commission considered the opposite parties' plea that the dispute should be referred to arbitration under Clause 84 of the Multi State Co-operative Society Act. It rejected that contention by applying the precedent in Aftab Singh v. EMAAR MGF Land Limited & Anr., and the subsequent dismissal of appeals and review petitions by the Supreme Court, holding that an arbitration clause of this kind does not oust the jurisdiction of a Consumer Forum.
Merits — establishment of deposit and non-payment: On the facts, the Commission noted the certificate/receipt (Annexure C-3) produced by the complainant showing that the complainant had last deposited Rs. 15,51,000 under the opposite parties' scheme and that the maturity amount had not been refunded. The opposite parties' pleadings were internally inconsistent: they denied that the complainant sought refund but also admitted (in other paragraphs) inability to pay due to economic constraints and that they had offered part-payment, which the complainant allegedly refused. The Commission treated these inconsistent positions as damaging to the opposite parties' defence.
Deficiency and unfair trade practice: Given the failure to pay the maturity amount and the opposite parties' continued enjoyment of the deposited funds, the Commission found there to be deficiency in service and unfair trade practice.
Interest and compensation: Citing Alok Shanker Pandey, the Commission held that the complainant was entitled to interest on the deposited amount (characterizing interest as normal accretion on capital) and also to compensation for mental agony and harassment.

Holding and Implications

Holding (core ruling):

PARTLY ALLOWED

Direct orders issued by the Commission (as recorded in the opinion):

The opposite parties are directed to refund the maturity amount of Rs. 18,03,813 to the complainant along with interest @ 9% per annum from the date of maturity i.e. 25.6.2020 till realisation.
The opposite parties are directed to pay Rs. 50,000 to the complainant as compensation for mental agony and physical harassment.
The opposite parties are directed to pay Rs. 7,000 to the complainant as costs of litigation.
The order must be complied with within thirty days from the date of receipt of its certified copy. In case of non-compliance, the opposite parties shall pay the amounts mentioned at Sr. No. (i) and (ii) with interest @ 12% per annum from the date of this order until realisation, in addition to complying with Sr. No. (iii).
Certified copies of the order are to be sent to the parties free of charge and the file is to be consigned.

Implications:

The immediate consequence is the award of repayment, interest, compensation and costs in favour of the complainant and the imposition of a higher penal rate of interest if the opposite parties fail to comply within the stipulated period. The opinion applies established Supreme Court authorities to clarify that (a) disputes arising from deposit/refund arrangements under cooperative/society schemes can fall within the Consumer Protection Act, (b) arbitration clauses of the type relied upon do not necessarily bar Consumer Fora from adjudicating such disputes, and (c) interest is payable as an accretion on capital when monies due are retained. The decision resolves the parties' dispute as between the complainant and the opposite parties but does not purport to announce a novel legal principle beyond applying extant precedents.

Decision dated: 06/01/2022 — Signed by Surjeet Kaur (Member) and Rajan Dewan (President).

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Saroj Rana v. Sahara credit Co-operative Society Ltd

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION-I,

U.T. CHANDIGARH

Consumer Complaint No.	:	CC/307/2020
Date of Institution	:	24/08/2020
Date of Decision	:	06/01/2022

Saroj Rana w/o Sh. Jaswant Singh Rana r/o House No.2350, Sector 40-C, Chandigarh. … Complainant

V E R S U S

1. Sahara Credit Co-operative Society Ltd., Sahara India Bhawan-1, Kapoorthala Complex, Aliganj, Lucknow, Uttar Pardesh 226024 through its Chairman/Managing Director.

2. Sahara India Pariwar, Sector Office, SCF 40/41, Phase-5, Mohali, through its Branch Manager.

… Opposite Parties CORAM : SHRI RAJAN DEWAN PRESIDENT

MRS. SURJEET KAUR MEMBER

ARGUED BY ^:Sh. Arif Qureshi, Counsel for Complainant : Sh. Ammish Goel, Counsel for OPs -1-

Per Rajan Dewan, President

1. Briefly stated allegations are, on 11.8.2016, complainant invested 12,10,000/- with the OPs in the shape of FDR which was to mature on 11.2.2018 and the maturity value was 14,07,230/-. On being convinced by the OPs, the complainant agreed to put the amount in new FDR on 24.12.2018 which was to mature on 24.6.2020 having maturity value of 18,03,813/-. Upon maturity, when the complainant requested the OPs to pay the amount, they dilly dallied the matter and ultimately refused to do so. Alleging that the aforesaid acts amount to deficiency in service and unfair trade practice on the part of OPs, complainant has filed the instant complaint.

1. OPs contested the consumer complaint, filed their written reply and, inter alia, raised the preliminary objections that the complaint is false and frivolous; there is no relationship of consumer and service provider inter se the complainant and the OPs and that this Commission has no jurisdiction to entertain the complaint and the same is liable to be referred to the arbitrator. It has further been pleaded that the relationship between the complainant and the OPs is of Member and Society and therefore, for any dispute between the society and Member, consumer complaint is not maintainable. It has been pleaded that the complainant before opting the scheme had duly understood its terms and conditions and being a member of the Society, invested money for furtherance of the objects of the society. It has further been pleaded that the complainant cannot get benefit beyond the terms and conditions of the scheme. Pleading that there is no deficiency in service or unfair trade practice on their part, OPs prayed for dismissal of the consumer complaint.

2. Parties led evidence by way of affidavits and documents.

3. We have heard the learned counsel for the parties and gone through the record, including written arguments.

4. The first plea of the OPs is that the instant consumer complaint is not maintainable under provisions of the Consumer Protection Act as relationship between the complainant and OPs is of member and the Society. However, we do not find any weight in this submission as it is not a pure dispute between members of the cooperative Society regarding its governance. In fact, it is a dispute with regard to deposit of amount under the scheme of the OPs for a particular period and refund of the same after maturity alongwith benefits. As such, the same certainly amounts to rendering of 'service' as defined under the Act. There is element of 'deficiency in service' as well as 'unfair trade practice' due to non-performance of the contract, whereby service of the OPs has been hired by the complainant by depositing the above said amount with them. Besides this, it is well settled law that remedy before the Consumer Forum is in addition to and not in derogation to the provisions of any other law for the time being in force. Here we are strengthened by the judgment of the Hon'ble Supreme Court of India in " Secretary, Thirumurugan Co-operative Agricultural Credit Society Versus M. Lalitha (Dead) through LRs and others", 2004(1) CLT 456 in which it was held as under:-

"11. From the statement of objects and reasons and the scheme of 1986 Act, it is apparent that the main objective of the Act is to provide for better protection of the interest of the consumer and for that purpose to provide for better redressal, mechanism through which cheaper, easier, expeditious and effective redressal is -2-

made available to consumers. To serve the purpose of the Act, various quasi judicial forums are set up at the district, State and National level with wide range of powers vested in them. These quasi judicial forums, observing the principles of natural justice, are empowered to give relief of a specific nature and to award, wherever 'appropriate, compensation to the consumers and to impose penalities for non-compliance of their orders.

12. As per Section 3 of the Act, as already stated above, the provisions of the Act shall be in addition to and not in derogation to any other provisions of any other law for the time being in force. Having due regard to the scheme of the Act and purpose sought to be achieved to protect the interest of the consumers, better the provisions are to be interpreted broadly, positively and purposefully in the context of the present case to give meaning to additional/extended jurisdiction, particularly when Section 3 seeks to provide remedy under the Act in addition to other remedies provided under other Acts unless there is clear bar."

1. Further, the Hon'ble Supreme Court of India in Virender Jain Vs. Alaknanda Co op Group Housing Society Ltd ., Civil Appeal No.64 of 2010 and connected matters, decided on 13.04.2013 had also widened the scope of CPA by holding that disputes between members and their Society can be decided by the Consumer Fora. The principle of law laid down in the aforesaid judgments is squarely applicable to the facts of the case in hand. Hence, it is held that the instant consumer complaint is maintainable against the OPs and this Commission has got jurisdiction to entertain and decide the same under the provisions of the Consumer Protection Act.

2. The next plea taken by the OPs is that the dispute between the parties is liable to be referred to arbitration, as per Clause 84 of the Multi State Co-operative Society Act, 2002. In this respect, it needs to be mentioned that the Larger Bench of the Hon'ble National Commission, vide order dated 13.07.2017, passed in Consumer Complaint No.701 of 2015 titled as Aftab Singh v. EMAAR MGF Land Limited & Anr ., held that an Arbitration Clause in the afore-stated kind of Agreements between the Complainants and the Builder cannot circumscribe jurisdiction of a Consumer Fora, notwithstanding the amendments made to Section 8 of the Arbitration Act, 1996. The Civil Appeal No.(s) 23512-23513 of 2017 (M/s EMAAR MGF Land Limited & Anr. Vs. Aftab Singh) filed against the said order of the Hon'ble National Commission has also been dismissed by the Hon'ble Apex Court vide

order dated 13.02.2018. Even Review Petition (C) Nos.2629-2630 of 2018 filed against

above said order was also dismissed by the Hon'ble Supreme Court vide judgment dated

10.12.2018. Consequently, it is held that existence of Arbitration Clause in the agreement is

not a bar to resolve the present dispute by this Commission. Thus, this objection of the

opposite parties is also rejected.

3. From the perusal of certificate/receipt (Annexure C-3) produced on record by the

complainant, it is established that lastly the complainant had deposited the amount of 15,51,000/- under the scheme of the OPs. Admittedly, the maturity amount thereof has not been refunded to the complainant by the OPs.

4. In this regard, the plea of the OPs is that the complainant never approached them for refund. However, we are of the opinion that the OPs are blowing hot and cold in the same breath. On one hand, they have vehemently denied that the complainant ever approached them for refund while on the other, in para 6 (on merits) and para 5 (additional plea) of their -3-

reply, OPs state that due to economic crisis and financial constraint they were rendered unable to make payment of contribution amount and its benefit at one go and complainant was asked to receive payment in part/installment, but, she refused the same. Thus, failure of OPs to pay the maturity amount to the complainant clearly proves deficiency in service as well as indulgence into unfair trade practice on their part.

5. Before parting it would not be out of place to mention here that admittedly the maturity amount has remained deposited with the OPs and till date they are enjoying benefits of the same to the detriment of the complainant. Therefore, the complainant is certainly entitled to further interest on the deposited amount, as held by Hon'ble Supreme Court in Alok Shanker Pandey Vs. Union of India & Ors., II (2007) CPJ 3 (SC) and the relevant portion thereof is reproduced as under :-

"9. It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence equity demands that A should not only pay back the principal amount but also the interest thereon to B." 1. In view of the above discussion, the consumer complaint deserves to succeed and the same is accordingly partly allowed. OPs are directed as under :-

i. to refund the maturity amount i.e. 18,03,813/- to the complainant alongwith interest

@9% per annum from the date of maturity i.e. 25.6.2020 till realisation.

ii. to pay 50,000/- to the complainant as compensation on account of mental agony and physical harassment.

iii. to pay 7,000/- to the complainant as costs of litigation.

2. This order be complied with by the OPs within thirty days 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 this order, till realization, apart from compliance of direction at Sr.No.(iii) above.

3. Certified copies of this order be sent to the parties free of charge. The file be consigned.

Sd/-

06/01/2022

[Surjeet Kaur]

[Rajan Dewan]

Member

President -4-

Saroj Rana v. Sahara credit Co-operative Society Ltd

Case Summary: District Consumer Disputes Redressal Commission-I, U.T. Chandigarh — CC/307/2020

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Complainant's Arguments

Opposite Parties' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Saroj Rana v. Sahara credit Co-operative Society Ltd

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