Date of Disposal: 24.03.2023

BEFORE THE KARNATAKA STATE CONSUMR DISPUTES REDRESSAL COMMISSION, BENGALURU (PRINCIPAL BENCH)

DATED: 24^th Day of March 2023

PRESENT

Mr K. B. SANGANNANAVAR: JUDICIAL MEMBER

Mrs DIVYASHREE M: LADY MEMBER

APPEAL NOs. 34 to 39 of 2017, 40 to 49 of 2019,

and 694 to 702 of 2019

​

Appeal Nos.34 to 39 of 2017, 40 to 49 of 2019 and 694 to 702 of 2019 

COMMON ORDER

BY Mr. K. B. SANGANNANAVAR: PRI. DIST.  & SESSION JUDGE (R)- JUDICIAL MEMBER

1. The above appeals are filed by the Chairman, the Belgaum Postal & RMS Division Co-operative Credit Society Limited, aggrieved by the order dated 22.06.2015 in Consumer Complaint Nos.566/2015 to 588/2015, order dated 29.11.2018 passed in Consumer Complaint Nos.373/2016 to 375/2016, 407/2016, 468/2016, 469/2016, 478/2015, 524/2015, 543/2015, order dated 17.08.2017 passed in CC/19/2016 and order dated 25/.02.2019 passed in Consumer Complaint Nos.85/2017, 86/2017, 100/2017, 101/2017, 105/2017, 96/2016, 119/2016, 136/2016, 92/2017 respectively passed by District Consumer Disputes Redressal Forum, Belagavi.

2. These appeals are pending since 2016 and they are filed by the Chairman, Belgaum Postal & RMS Division Co-operative Credit Society Limited, Belagavi also during 2017 and 2019 respectively, as such as the  parties to all these appeals are almost common so far as the Ops are concerned and the issue involved being common as the relief sought   are similar, since they raised consumer complaints before the Forum below alleging deficiency rendered by the OP Society impleading the Chairman and Secretary as parties to their complaints are taken together for decision in this common appeal order.

3.  The Forum below in all the complaint cases noted in preamble directed Ops/Appellants jointly and severally to refund the maturity value of respective FDs along with future rate of interest at 08% p.a. till realization and awarded some amount of compensation to be payable within 30 days and on their failure to pay a sum of Rs.50/- per day to respective complainant from the date of disobedient till the order would be complied with.

4. (For brevity the parties to these appeals will be referred herein   as to their rank assigned to them by the Forum below and the Forum which passed the impugned orders as Forum below).  The complainants in their respective cases have stated that the OP Society had offered to pay better rate of interest as such they have invested their money with the Society in the form of FD and the OP Society having been received their money agreed to repay the said amount along with maturity value from time to time and to that affect issued certificates and as and when the maturity date comes up renewed confirming the deposits and interest. However, when they approached the Society for refund along with interest, OP Society went on postponing on postponing on one or the other pretext and their act amounts rendering deficiency in service, as such they all raised the consumer complaints. Despite issuance of the notice to the Ops, they failed to participate in the proceedings. In such circumstances, it is found from the records that the Forum below proceeded to hold  an enquiry and allowed the respective complaint cases, holding  the Chairman and Secretary jointly and severally liable to pay the FD amount along with maturity value and are liable to pay compensation and litigation cost within a particular time and in few complaints, it is found,  held not only against the Chairman, Secretary liable but also the Directors of the Society, along with the President, Chairman, Vice Chairman. Thus, one thing is cleared from the impugned orders passed by the Forum below that all the appellants and respondents/OPs liable jointly and severally to pay the FDs maturity value along with interest and compensation amount awarded as found from the respective impugned orders.  It is these orders being assailed in these appeals by the Chairman, President, Vice President, Vice Chairman and the Directors and other officer bearers of the Belagum Postal & RMS Division Co-operative Credit Society Limited, Belagavi, on the grounds that the Forum below in violation of Principles of Natural Justice without holding an enquiry, as to  who has to be sue or to be sued without going through the bye-laws of the Society committed grave error in holding the President, Chairman, Vice President, Vice Chairman as the case may be and the Directors jointly and severally liable to pay along with Secretary of the Society the alleged deposited amount.

5. They have submitted that the Society is engaged into credit business for the purpose of catering the needs and requirements of the employees employed in the Post and Telecommunication Department of Government of India.

6.  All the members of the Board of Directors and general body are the Government servants, working in the said department. 

7. The Society earned a very good name in the last 95 years. The Society established in 1920 and is business functions are in the same fashion showing upward growth.  There was no blemish or stigma on the image of the Society during such a long period. 

8. It is submitted that in the year April 2015, the new body of Board of Directors was constituted and nominated in April 2015 and as soon as the new Directors assumed their office, called upon the Secretary Mr.Ramesh B. Kolkar to produce the accounts and statements of income and expenditure for their verification with a view to monitor and supervise the functioning of the Society.  The Society had its office at Station Road, Belagavi, which was being exclusively managed, administered as whole and sole by the Secretary Mr.Ramesh B Kolkar and except him there was no other employee in the Society to look after the day to day business of the society.  Mr.Ramesh B. Kolkar was the custodian of all the documents and the entire administrative functions to carry out the day to day transaction in the course of business of the Society.

9. As per the Co-operative law and by-laws of the Society the Secretary being assigned with Statutory Duties of Chief Executive Officer and he has  been specified with such duties in the Co-operative Law.  The Secretary is required to discharge the duties as per by-laws to maintain all book of accounts namely Cash Book on day to day basis, FD Register, Loan Ledger Book, Cash Scroll and to prepare the Annual Income and Expenditure Statements, Balance Sheet and get audited accounts of the Society and take care of all other administrative works related to the Society under the supervision of the Board of Directors. 

10. During 2005 for two terms Mr.Ramesh B. Kolkar was appointed as Secretary and he is working since 35 years had handled the business and administration of the Society and he knew nook and corner of all the business affairs of the Society taken advantage of his position  misused  for his own monetary advantage engaging in several fraudulent transactions in connivance of  Directors, Chairman, Vice Chairman of the at the relevant time from 2007-08 and were  involved in all these fraudulent transactions  could not come to light in right time to  get it exposed.

11. The Board of Directors functioned from 2005 to 2010 for the first tenure and were continued from 2011 to 2015 and at the relevant time Mr.M.M.Patil was the Chairman, Mr.G.P.Garde and Mr.P.S.Kalpatri where Directors.  Mr.Ramesh B. Kolkar was the Secretary and CEO holding exclusive authority to carry out the business transactions.  All these 04 persons with such designation committed a criminal conspiracy to defraud the Society   accepted the investments said to have been made by all the complainants and others in their personal capacities to make the unlawful gain and to cause unlawful loss to them.  They misused their position and authority to carry out the fraudulent transactions during the period 2005 to March 2015.  They have fabricated and forged the certificates as there was no genuine transaction of crediting the amount to the accounts of the Society, accepted FD certificates   to constitute valid transactions.  The transactions are fraud and there is no question of extending any service in their capacity as the Secretary, President, vice President and Directors as the case may be at the relevant time.

12. The appellants herein these appeals were not even the Directors of the previous board between 2005 to 2015.  The Secretary Mr.Ramesh B. Kolkar assured the Board to come back in a month with all the account books and relevant register to satisfy the Board about the performance of the Society.  However, he did not respond thereafter.  The Board of Directors in 2016 Annual General Body took a decision to hold a preliminary enquiry to enquire into all the mal functioning of the previous Board of Directors and the Secretary.  The Preliminary enquiry committee on 15.04.2017 submitted a report indicating that Secretary Mr.Ramesh B. Kolkar and other 03 office bearers committed fraud as such initiated all civil and criminal actions and the disciplinary actions has been initiated against the Secretary, Mr.Ramesh B Kolkar by issuing a charge sheet dated 04.07.2017, by appointing an enquiry officer   Mr.Praveen Sambrekar, Advocate to conduct the domestic enquiry about the imputation of charge of misusing his position to issue fraudulent and false fabricated FD certificates and issue advances illegally.

13. The action also has been initiated against the previous office bearers like the Chairman, Working Committee Members by filing police complaint to the Camp Police Station, Belagavi against Mr.M.M.Patil, Mr.G.P.Garade, Mr.P.S.Kalpatri and Mr.Ramesh B. Kolkar.  However these 04 persons failed to submit their explanation about the transaction carried out by them to issue the FD certificates to the respective complainant.  Mr.M.M.Patil, Mr.G.P.Garade, Mr.P.S.Kalpatri have refused to attend the meeting and failed to co-operate the present Board of Directors in settling the accounts.  The appellant society has already filed 15 Criminal Complaints before the Judicial Magistrate First Class against the above 04 persons and in the alternative submitted,   if the transactions alleged to have occurred, then Mr.M.M.Patil, Mr.G.P.Garade, Mr.P.S.Kalpatri and Mr.Ramesh B, Kolkar are personally held liable  and not the present President, Chairman, Vice President, Vice Chairman or the Directors as the case may be.  The complaints are hit by mis-joinder and non-joinder of necessary parties.

14. According to the appellants namely the present body of the Society represented by the Chairman, complainants have not paid nor the Secretary credited the amount to the Society and there is no transaction between the Society and this important fact was not examined by the Forum below and the impugned orders call for interference.

15. On the contrary Learned counsel for R1 namely respective complainant submitted that the appeals are not maintainable  on the point of limitation as they are filed beyond limitation period and the grounds set out in the appeal memos to condone delay are not sufficient causes to entertain the appeals and to find support placed few reliance’s reported in 2011(14) SC 578 in the case of Anshul Aggarwal v. New Okhla Industrial Development Authority wherein held in para-05 –

“It is also apposite to observe that while deciding an application filed in such cases for condonation of delay, the Court has to keep in mind that the special period of limitation has been prescribed under the Consumer Protection Act, 1986 for filing appeals and revisions in consumer matters and the object of expeditious adjudication of the consumer disputes will get defeated if this Court was to entertain highly belated petitions filed against the orders of the Consumer Foras.” 

     In 2012 E-Juris SC (2) 173 in the case of Office of the Chief Post master General and others v. Living Media India Limited and another wherein held in para-06 –

“Since learned senior counsel for the respondents seriously objected to the conduct of the appellants in approaching the Court after enormous and inordinate delay of 427 days in filing the above appeals, we intend to find out whether there any ‘sufficient cause’ for the condonation of such a huge delay.  In view of the fact that the application for condonation delay in filing the SLPs dated 10.02.2011 does not contain acceptable and plausible reasons, we permitted the appellant Postal Department to file a better affidavit explaining the reasons for the same.” And the Hon’ble apex court held – “The Government Departments are under a special obligation to ensure that they perform the duties with diligence and commitment.  Condonation of delay is an exception and should not be used as an anticipate benefit for government departments.  The law shelters everyone under the same light and should not be swirled for the benefit of a few.  Considering the fact that there was no proper explanation offered by the Department for the delay except mentioning of various dates, according to us, the Department has miserably failed to give any acceptable and cogent reasons sufficient to condone such a huge delay.  Accordingly, the appeals are liable to be dismissed on the ground of delay.”

     In 2010 E-Juris (Trib) (11) 75 the Hon’ble Delhi State Consumer Disputes Redressal Commission in the case of HDFC Bank Limited v. Rejeev Narula held –

“the reason given for the condonation of delay cannot therefore be considered sufficient”

     In 2010 E-Juris (Trib) (5) 195 the Hon’ble Delhi State Consumer Disputes Redressal Commission in the case of BSES Yamuna Power Limited v. Lalwati held –

“The Main reason given for the delay as enumerated above, that file got misplaced in the office of the Advocate which cannot be deemed to be a sufficient reason for condonation of delay”.

     We have gone through the above cited decisions and   on facts of the case on hand, in our view, in so far as the findings recorded by the Hon’ble Delhi State Commission, in the above cited 02 decisions, could be said recorded on facts and the facts herein these appeals arising out of the award passed by District Consumer Disputes Redressal Forum, Belagavi are entirely different considering since the facts are stated supra as to how they are different from the facts of the decisions. Further to be noted herein that in the case on hand facts are not only peculiar but the appellants at the relevant period were not personally made as the Ops to the complaint cases.  In such circumstances, in our view, it would be just and proper to hold appellants herein had sufficient cause for not preferring the appeals within time stipulated.  It is found from the enquiry files of respective complaint that OPs were recorded as absentee parties or in some case declared exparte.  At the cost of repetition to be stated herein   that the present office bearers namely the office bearers as on the date of filing appeals were not the parties in those complaint cases suffice to hold that they had sufficient cause to condone delay in not preparing appeals in time.  No doubt in all these complaint cases the Secretary of the Society is also one of the party but facts remained found from enquiry held by the Forum below that the Society had initiated criminal actions against Mr.M.M.Patil,  Mr.G.P.Garade, Mr.P.S.Kalpatri and Mr.Ramesh B Kolkar respectively.  In such circumstances, as it is found by the office bearers of the said Society from the audit report, which reveals that the FD amount of respective complainant has not been credited to the account of the Society, as such in our view the grievances of the appellant has to be examined from their interest considering the dates of FDs and the dates of maturity and indulgent of the fraudster office bearers to liable them personally and the Society. In such view and in consideration of the grounds set out in the respective complainant cases, coupled with documents placed on record by appellants herein, could be said appellants had sufficient cause for not filing appeal in time and in such conclusion contentions of the learned counsel for respective complainant/R1 that the appeals are liable to be dismissed for its belated filing is held unaccepted. 

16. The Commission has to take notice of the fact that in few complaints President, Chairman, Vice Chairman, Directors, Secretary, Ex-Secretary, Ex-Directors, Ex-Treasurers along  with their names impleaded, whereas in few complaints without mentioning the name impleaded the Chairman and the Secretary alone as parties and it is found from the enquiry that they are all placed exparte, thereby  allowed the complaints as they are holding the Chairman, The Secretary, The Vice Chairman, The Treasurer, The Directors, Ex-Chairman, Ex-Vice Chairman, Ex-Directors, Ex-Directors, Ex-Treasurer, Ex-Secretary as impleaded are liable jointly and severally to pay respective complainant the maturity value along with interest @ 08% p.a. till realization and directed to pay Rs.50/- per day for none compliance till its compliance and also allowed few complaints as they are holding the chairman and the secretary of the society liable for the awards give rise to the commission that the Forum below failed to apply its mind before holding the Ops personally liable to answer the awards. 

17. Learned counsel for appellants submit, issues involved in all these complaint cases require an elaborate evidence and the Forum below allowed all the complaints summarily on the ground that OPs were not participated in the proceedings.  Further, submits,  complicated question of fact and law involved in complaint cases require marathon trial cannot be decide in a summary way, since these appellants alleged fraudulent acts committed by the Secretary Mr.Ramesh B Kolkar, Mr.M.M.Patil, Mr.G.P.Garade and Mr.P.S.Kalpatre. It is true that they are specifically alleged against these persons and they are also the parties in some of the awards passed by the Forum below. It is also true that Mr.Ramesh B Kolkar is made one of the party as OP in most of the complaint cases and in few cases either Mr.Ramesh B. Kolkar or Mr.M.M.Patil, Mr.G.P.Garade, Mr.P.S.Kalpatre were not made parties in their personal capacity with their office of society designation to hold an enquiry as to their rendering deficiency in service in respect of the alleged FDs said to have been made by complainants with the society.  Learned counsel submits, fraudulent transaction carried out by all these persons by fabricating documents and to find support placed few reliance’s reported in II 2016 CPJ 303 NC in the case of HDFC Bank and others v. Shashikant and others wherein held –

“Proceedings before the Fora are essentially summery in nature and it does not have jurisdiction to adjudicate upon dispute factual questions.  In such cases Forum is required to examine whether in view of disputed facts it would exercise the jurisdiction”. 

     In 2006 (7) SCC 655 in the case of Oriental Insurance Company Limited v. Munimahesh Patil wherein held –

“In summery proceedings question of forging documents cannot be decided”.

     In III 2013 CPJ 624 (NC) in the case of Jaspreet Singh v. ICIC Home Finance Company Limited and others wherein held –

“Complicated questions of facts and law involved in the compliant which requires elaborate evidence cannot be decide in a summery way by Consumer Forum........ fraudulent act committed by respondent if any cannot be dealt by the Consumer Forum.”

18. We have gone through the ratios laid down by the Hon’ble NCDRC and the Hon’ble Apex Court of India but here in the case on hand, facts remained that the Consumer Complaints raised by respective complainant are only in respect of return of maturity value, since they were deposited their hard earned money to earn interest for their livelihood with the Society and the have shown that the society issued FD certificates in their favour. It is not that they are issued in their personal capacity but as officer bearers as the Secretary of the Belgaum Postal & RMS Division Credit Co-operative Society, Belagavi. It is therefore, the complainants herein are nothing to do with their dispute inter-se either with previous body or present body or future body as the case may be, since, matter alleged by these complainant has to be examined under consumer laws and the procedure to be followed is summery in nature, though rightly examined by the Forum below but failed to apply its mind in right perception as stated supra.  As already stated above the Forum below has taken casually for simple reason as the Ops have failed to participate in the proceedings. Had  Ops have participated and raised their objections, brought to the notice of the Forum below that Mr.Ramesh B Kolkar, the Secretary of the Society along with ex-office bearers Mr.M.M.Patil, Mr.G.P.Garade and Mr.P.S.Kalpatre for their wrongful gain fraudulently transacted with these complainants matter would have been different and the Forum below could have passed orders in their names or otherwise. If the persons at the relevant time could have acted in due diligence, participated in the proceedings matter would have been different as such in our view their wilful non-participation in the complaint cases proceedings, either they are the Society cannot escape from their liability to answer the FDs. If   according to Society certain office bearers including Mr.Ramesh B Kolkar for fraudulent transactions with these complainants have fraudulently transacted with these complainants for their wrongful gain could have initiated police complaints against them.  As already stated above their inter-se dispute is nothing to do with complaints raised by these complainants, yet in our view there is no uniformity in passing of the order passed by Forum below since in few complaints as already stated the Chairman and Secretary of the Society were liable to answer the award, whereas in few complaints  in their personal names or  either with their designation as Chairman, Ex-Chairman, Vice Chairman, Ex-Vice Chairman, Treasurers, Ex-Treasurers, Secretary, Ex-Secretary, Directors, Ex-Directors as the case may be creating confusion as to how they are to be execute to realise the award amount, which in our view call for an interference of this Commission and to find support it would be appropriate to refer herein  the decision of the Hon’ble NCDRC in the case of Amarjith Singh v. Gagandeep Singh wherein held –

On the question “Whether the Ex-Secretary or the Ex-President or other office bearers of any Co-operative Society fall within the category of the service providers?” 

It was held in para-19 –

In view of the discussion above, we answer the reference as follows:

1. Ordinarily Ex-Secretary or the Ex-President or other office bearers of any Co-operative Credit Society shall not fall within the category of service providers in respect of any dealing of the depositors with such society.
2. However, if it is established that the Ex-Secretary or the Ex-President or office bearers of any Co-operative Credit Society has indulged in misfeasance/fraudulent activity with view to defraud depositors under the cloak of the Co-operative Society, such person shall fall within the category of service providers and shall be liable to compensate the consumers for deficiency in service.

19. Thus from the above discussions it is made clear that in respect of the reliefs sought by the respective complainant for return of their FDs along with maturity value is concerned, complaints raised by complainants before the Forum below are perfectly maintainable but facts remained   the Forum below had no opportunity to examine whether the Ex-Secretary or the Ex-President or office bearers of the Society have indulged in misfeasance/fraudulent activity with view to defraud depositors under the cloak of the Co-operative Credit Society, such person shall fall within the category of service providers and shall be liable to compensate the consumers for deficiency in service.  It is therefore, in our view, it would be just and proper to remand back all these cases to the Forum below to examine whether the Ex-Secretary or the Ex-President or office bearers of the Society either as Treasurer or Directors as the case may at the relevant time had indulged in any misfeasance/fraudulent activity with view to defraud complainants under the cloak of the Co-operative Credit Society, since the Hon’ble NCDRC held - “Ordinarily Ex-Secretary or the Ex-President or other office bearers of any Co-operative Credit Society shall not fall within the category of service providers in respect of any dealing of the depositors with the society.”  It is true that the Secretary ordinarily is the person to sue or to be sued but herein all these complaints as already stated above in few of them the President/Chairman and the Secretary with their office designation made party, in few with their personal names with their office and in few with their personal name with their ex-office as such they are to be  examined by the Forum below considering the facts  stated above, since appellants are directly alleged  against Mr.Ramesh B. Kolkar, Mr.M.M.Patil, Mr.G.P.Garade and Mr.P.S.Kolkar were indulged in fraudulent activity, either in issuing  FD receipts not credited the amount to the society account   to gain wrongfully acted detrimental to the interest of the Society. No doubt at the very outset it is stated that the Society is in existence for the past  95 years, thereby established its  own reputation  in and around Belagavi and by now the society has to be said in century old.  Learned counsel for the appellants also submitted legal steps taken by the newly nominated Board of Directors constituted in April 2015.  In our view, whether such body nominated in April 2015 is still in existence or not, facts remained that the Belgaum Postal & RMS Division Co-operative Credit Society Limited, Belagavi is shown to be in existence had good reputation and the present office bearers whether or not are still continued or not or new body comes over in their place is immaterial since shown society still exist is bound to settle the disputes of the poor depositors in accordance with law.

20. In view of the above such discussions and in such conclusion Commission proceed to allow Appeal Nos.34 to 39 of 2017, 40 to 49 of 2019 and 694 to 702 of 2019 respectively.  Consequently set aside the impugned order passed by District Consumer Disputes Redressal Forum, Belagavi passed in Consumer Complaint Nos.566/2015 to 588/2015 dated 22.06.2015, in Consumer Complaint Nos.373/2016 to 375/2016, 407/2016, 468/2016, 469/2016, 478/2015, 524/2015, 543/2015 dated 29.11.2018, CC/19/2016 dated 17.08.2017 and Consumer Complaint Nos.85/2017, 695/2019 to 702/2019 dated 25.02.2019 respectively and remitted  back to the Forum below with a direction to re-admit all these complaint cases and issue notice to all the parties to examine whether Ex-President or other office bearers, Secretary, Ex-Secretary, Treasurer or Ex-Treasurer, Directors or Ex-Directors were indulged in misfeasance/fraudulent activity with view to defraud these complainants under the Cloak of the Belgaum Postal & RMS Division Co-operative Credit Society Limited, Belagavi and to decide who are all liable to repay the maturity value of the FDs deposited by the respective complainants. 

21. The Commission below is directed to allow parties to the complaint cases to place additional evidence if any on record and decide the complaint cases as early as possible keeping in mind the object of the Consumer Laws, date of receipt of the complaint cases and the date of deposits.

22.  All contentions are kept open.  The appellants herein are directed to pay cost of Rs.10,000/- each to each of the complainant before the Commission below. The Amount in deposit in all these appeals is directed to be transferred to Commission below for needful and the Commission below is directed to exercise its wisdom to act on this amount and return the remaining amount to the appellants/Ops with proper identification by their Advocate. It is hereby clarified that the  cost is awarded considering the fact that Society is in existence  since 100 years was placed exparte because of indifferent attitude of its office bearers at the relevant time of FD deposits, on the date of complaint and during the course of enquiry as the case may be.

23. Directed to keep the original order in Appeal Nos.34/2017 and copies thereof in other connected matter to complete the record.

24. Send a copy of this Order to the District Commission and parties to the appeals immediately to proceed with the matters as early as possible.

Lady Member                                Judicial Member  

*GGH*  `