IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

 CIVIL APPEAL NOS.4902-04   OF 2010

(Arising out of SLP(C) Nos. 26730-26732 of 2008)

Om Prakash Saini …..Appellant

Versus

DCM Ltd. and others ….Respondents

J U D G M E N T

G.S. Singhvi,  J.

1. Leave granted.

2. In these appeals,  prayer has been made for setting aside order dated  

22.8.2008 passed by the learned Single Judge of Delhi High Court in R.A.  

Nos. 329 of 2007, 401 of 2007 and CM No. 11710 of 2008 in CM (M) No.  

398 of 2007.

3. After retirement from the service of Indian Railways,  the appellant  

invested Rs.1,90,000 in the Fully Secured Debentures floated by respondent  

No.1.  The debentures were due for payment on 14th August, 1998, but just  

before that date, respondent No.1 vide its letter dated 16.7.1998 informed the  

appellant  and  other  similarly  situated  persons  that  due  to  financial  

difficulties  it  will  not  be  possible  to  pay the  amount  of  maturity  on the  

scheduled dates and a revised scheme has been worked out for payment of  

the dues.  The relevant portions of that letter are extracted below:

“The company had in the month of February, 1997 allotted 17  months  and  25  days  –  19.5%  Secured  Redeemable  Non- Convertible  Private  Placed  Debentures  of  Rs.1,000/-  each  (Debentures) of the Series `A’.  These Debentures were issued  under Regular and cumulative Schemes.  These Debentures are  due  for  payment  on  14th August,  1998.   However,  due  to  reasons as explained in the next few paragraphs, the payment  terms need to be revised.

It is proposed that the payment as per the revised schemes of re- payment shall be made on receipt of your confirmation.  In case  of  Debentures  issued  under  the  Cumulative  Scheme  such  payment shall comprise of the interest at the coupon rate.  In  case  of  debentures  issued  under  the  Regular  Scheme  the  payment  shall  comprise  of  the  interest  for  the  period  commencing from 21.02.1998 to 14.08.1998.

The re-payment plan is as under:-

1 Interest  upto  the  date  of  maturity  as  per  terms  of  issue:

By 31.12.1999

2 50% of principal amount: By 31.12.1999

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3 Balance  principal  amount  plus  Simple  interest  @  14% p.a. from the date of  maturity

18 months  from  the  date  of  payment  of  1st  instalment

4. The above payment will be effected on first come  first served basis

4. The assurance contained in the aforementioned letter was reiterated  

vide  communications  dated  26.2.1999  and  17.6.1999  sent  by  respondent  

No.1.  This appears to be the reason why the appellant did not press for  

payment of his dues.  However, as respondent No.1 did not pay the amount  

as  per  the  revised  scheme,  the  appellant  filed  a  complaint  under  the  

Consumer Protection Act, 1986 (for short, `the 1986 Act’) before the State  

Consumer  Disputes  Redressal  Commission,  Delhi  (for  short,  `the  State  

Commission’) with the prayer that respondent No.1 may be directed to pay  

the amount due to him with interest and compensation of Rs.1 lakh.   

5. In the reply filed on behalf of respondent No.1, it was pleaded that  

due to financial crunch, it was not possible to repay the amount due to the  

NCD holders.  This is evinced from paragraph 3 of the reply which reads  

thus:

“3. In  view of  the  serious  financial  crunch  and  cash  mis- match,  DCM  has  prepared  a  restructuring  scheme  in  active  consultation with financial institutions and the same has been  

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filed in Hon’ble High Court at New Delhi.  Given the revised  arrangement  for  real  estate  project,  the  scheme  envisaged  interest on the aforesaid NCDs upto 31.12.1998 on the basis of  contractual interest rate till maturity i.e. 14.08.98 and at 14%  thereafter till 31.12.1998.  In terms of the scheme, the payment  of principal/interest would be made in 2-4 years.  The Hon’ble  Delhi  High Court  vide order dated 14.2.2000 was pleased to  convene  a  meeting  of  the  shareholders/creditors  on  17/18.05.2000.  The notice on the scheme would be issued by  Hon’ble Delhi High Court to all the NCD holders in due course.

From the aforesaid the Hon’ble Consumer Forum would  appreciate  that  necessary  efforts  are  being  made  by  the  respondent company to repay to the NCD holders and only for  the  reasons  totally  beyond  the  control  of  the  company,  the  respondent company is at present not able to repay to the NCD  holders including complainant.”

6. During the pendency of the complaint, the State Commission passed  

three interim orders dated 29.9.2003, 15.7.2004 and 7.7.2005 for payment of  

at least 50% of the amount due to the appellant.  These orders read as under:

“29.09.2003

Present: Complainant  in  person  along  with  counsel  Mr.  Arya Girdhari.

Shri S.C. Verma, an employee of the OP in person. C-255/99

It is stated by the complainant that he has to undergo bypass  surgery  on  priority  basis  which  cannot  be  postponed  and  therefore, he requests on the ground of compassion that at least  the  principal  amount  be  paid  to  him on  priority.   Shri  S.C.  Verma who is appearing on behalf of the OP, is directed to seek  instructions on the above point to ensure that  in view of the  

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above fact, at least the principal amount, without prejudice to  rights and conditions of the parties, is paid to the complainant.

A copy of this order be given dasti to the representative  of the O.P. to enable him to have suitable instructions on the  above point.

Re-list on 1.10.2003. Sd/-

(Justice Lokeshwar Prasad) President

Sd/- (Mahesh Chandra)

Member 15.07.2004

Present: Complainant present in person. Mr. Rahul Srinivastava, Counsel for the OP.

C-255/99

Vide  order/proceedings  dated  29.9.2003,  the  OP  was  directed  to  ensure  that  at  least  the  principal  amount  to  the  complainant who has to go bye pass surgery be paid without  prejudice  to  the  rights  and  contentions  of  the  parties.   The  learned counsel for the OP has relied upon the scheme framed  by the  Hon’ble  High Court  of  Delhi  by  way  of  order  dated  29.10.2003 whereby the OP was required to pay at  least  the  amount deposited with them by the subscription of the scheme  for construction of flats.  Since the complainant has to undergo  bye  pass  surgery.   It  is  directed  that  at  least  50%  of  the  deposited amount be paid to the complainant on humanitarian  ground to meet his medical expenses without the prejudice to  the  rights  and  contentions  of  the  parties  and  without  the  prejudice to the scheme framed by the Hon’ble High Court of  Delhi in the aforesaid order.  

Re-list on 26.10.2004. Sd/-

(Justice J.D. Kapoor) President

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Sd/- (Rumnita Mittal)

Member

07.07.2005

Present: Complainant in person. Mr. Saurabh Sodhi, Counsel for the OP.

C-255/99

Complainant has been paid 50% of the deposited amount.  He is an old man waiting for his by-pass surgery and could not  get it done for want of funds.  Counsel for the OP is directed to  seek instructions from the OP to pay the deposited amount to  the  complainant  on  humanitarian  ground  and  the  remaining  dispute can be decided at the time of final hearing.  

Re-list on 05.08.2005. Sd/-

(Mahesh Chandra) Presiding Member

Sd/- (Rumnita Mittal)

Member”

7. The State Commission finally allowed the complaint and directed the  

respondent to pay the maturity amount to the appellant as per the terms of  

contract along with interest at the agreed rate up to the maturity date and  

12%  after  the  maturity  date.   The  State  Commission  also  awarded  

Rs.10,000/- as cost of litigation.

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8. Respondent No.1 challenged the order of the State Commission by  

filing an appeal under Section 21 of the 1986 Act but withdrew the same on  

25.4.2007.   Thereafter,  it  filed  a  petition  under  Article  227  of  the  

Constitution of India, which was allowed by the learned Single Judge vide  

his  order dated 11.7.2007 on the premise that in the face of the scheme  

sanctioned  by  the  Company  Judge  under  the  Companies  Act,  the  State  

Commission did not have the jurisdiction to entertain the complaint.   

9. The appellant,  who could not appear before the High Court on the  

date  of  hearing  i.e.,  11.7.2007,  filed  an  application  for  recall  of  the  

aforementioned order,  but  the  same was dismissed  by the  learned Single  

Judge without going into the issue whether the cause shown by the appellant  

for his non-appearance was sufficient.

10. We have heard learned counsel for the parties and perused the record.  

At the outset, we deem it proper to mention that during the course of hearing  

of these appeals, learned counsel for respondent No.1 produced fax copy of  

letter  dated 10.4.2008 allegedly written  by the  appellant  to  Shri  Kirat  S.  

Nagra,  Advocate for respondent  No.1 admitting that  he has received full  

amount,  but  learned  counsel  appearing  for  the  appellant  emphatically  

asserted that the amount due to his client has not been paid.

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11. Ms. Prasanthi Prasad, learned counsel for the appellant argued that the  

High Court committed a jurisdictional error by entertaining the petition filed  

by  respondent  No.1  under  Article  227  of  the  Constitution  ignoring  that  

respondent  No.1  had  already  availed  the  statutory  remedy  of  appeal.  

Learned counsel submitted that there was no extra-ordinary reason which  

could justify entertaining of a petition by the High Court under Article 227  

of the Constitution by making a departure  from the settled law that it will  

not entertain a petition under Article 226 or 227 of the Constitution if an  

effective  alternative  remedy  is  available  to  the  aggrieved  person.   Ms.  

Prasanthi Prasad further argued that the learned Single Judge committed a  

serious error by declining to entertain the application filed by the appellant  

for recall of order dated 11.7.2007.  Shri C.S. Vaidyanathan, learned senior  

counsel appearing for respondent No.1 argued that even though respondent  

No.1 had availed the statutory remedy of appeal, the learned Single Judge  

did not commit any error by entertaining the petition filed under Article 227  

of the Constitution because counsel appearing on behalf of respondent No.1  

had assured the High Court on 21.3.2007 that the appeal pending before the  

National Consumer Disputes Redressal Commission will be withdrawn and,  

as a matter of fact, this was done on 25.4.2007.  Learned senior counsel then  

argued that the learned Single Judge did not commit any error by setting  

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aside  the  order  of  the  State  Commission  because  it  was  contrary  to  the  

scheme sanctioned by the learned Company Judge under Section 391 read  

with Sections 392 and 394 of the Companies Act, 1956.

12. We have considered the respective submissions. The 1986 Act was  

enacted  to  provide  for  better  protection  of  the  interests  of  consumers  by  

making  provisions  for  establishment  of  consumer  councils  and  other  

authorities  for  settlement  of  consumer  disputes  and  adjudication  thereof.  

The 1986 Act is a complete Code unto itself.  It defines the various terms  

like  `consumer’,  `consumer  dispute’,  `defect’,  `deficiency’,  `goods’,  

`manufacturer’, `restrictive trade practice’, `service’, `unfair trade practice’.  

It provides for establishment of consumer councils and adjudicatory forums  

at the District, State and National levels.  Any person aggrieved by an order  

passed  by  the  District  Forum  can  file  an  appeal  before  the  State  

Commission.   If he is not satisfied with the order of the State Commission,  

a  further  remedy  is  available  by  way  of  revision  before  the  National  

Commission.   If  the  complaint  is  decided  by the  State  Commission,  the  

aggrieved  person  can  file  an  appeal  before  the  National  Commission.  

Elaborate  procedure has been laid down for  filing of  the complaints  and  

disposal  thereof.   Since the 1986 Act  is  a  special  statute  enacted by the  

Parliament  for  better  protection  of  the  interest  of  consumers  and  a  

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wholesome mechanism has been put in place for adjudication of consumer  

disputes, the remedy of appeal available to a person aggrieved by an order of  

the  State  Commission  cannot  but  be  treated  as  an  effective  alternative  

remedy.   

13. Admittedly,  respondent  No.1  had  availed  the  alternative  remedy  

available to it under Section 21 by filing an appeal against the order of the  

State  Commission.   During the pendency of the appeal,  respondent  No.1  

chose to challenge the order of the State Commission by filing a petition  

under Article 227 of the Constitution, which was entertained by the learned  

Single Judge on the basis of the assurance given by the learned counsel that  

the appeal filed before the National Commission will be withdrawn.  The  

order passed by the learned Single Judge on 21.3.2007 or the one by which  

the  petition  filed  by  respondent  No.1  was  finally  disposed  of  does  not  

contain any indication as to why the learned Single Judge thought it proper  

to make a departure from the rule that the High Court will not entertain a  

petition  under  Article  226  or  227  of  the  Constitution  if  an  effective  

alternative remedy is available to the aggrieved person.  In our view, during  

the pendency of the appeal filed by respondent No.1 under Section 21 of the  

1986 Act, the learned Single Judge was not at all justified in entertaining the  

petition  filed  under  Article  227  of  the  Constitution  merely  because  he  

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thought that the State Commission did not have the jurisdiction to entertain  

the  complaint  in  view of  the  scheme sanctioned  by  the  Company  Judge  

under Section 391 read with Sections 392 an 394 of the Companies Act.

14. The dismissal  of the application filed by the appellant for recall  of  

order dated 11.7.2007 is clearly vitiated by a patent error of law.  In the  

petition filed by him, the appellant had averred that he could not file reply  

because of heart ailment and on the date of hearing he could not reach the  

High  Court  because  of  failure  of  the  public  bus  transport  system.  

Respondent No.1 did not controvert these averments.  Notwithstanding this,  

the learned Single Judge dismissed the application without even examining  

sufficiency of the cause shown by the appellant for his non-appearance on  

the date of hearing.     

15. In the result, the appeals are allowed.  The impugned order is set aside  

and the matter is remitted to the High Court for fresh adjudication of CM  

(M) No. 398 of 2007.  While deciding the matter, the High Court is expected  

to take note of the fact  that  respondent No.1 had an effective alternative  

remedy against the order passed by the State Commission and, as a matter of  

fact, it had availed the remedy of appeal.  If the High Court comes to the  

conclusion  that  respondent  No.1  should  be  relegated  to  the  remedy  of  

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appeal, then it may pass appropriate order to facilitate recall of order dated  

25.4.2007 passed by the National Commission so that respondent No.1 may  

be able to pursue the remedy of appeal.

………………….…….…J. [G.S. Singhvi]

……………….…………J. [Asok Kumar Ganguly]

New Delhi, July 6, 2010.

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