Unfortunately, getting an order from the forum is only part of the travails that the consumer has to suffer in his fight for justice
Consumer courts have been liberal in passing orders in favour of consumers. Unfortunately, getting an order from the forum is only part of the travails that the consumer has to suffer in his fight for justice. Many persons against whom orders are passed, still manage to stymie the complainant through devious methods to avoid paying compensation.
One of the commonest ploys is for the respondent to declare his company sick, financially bankrupt or on the verge of failure. The other is to close a company and say that as directors of a limited company, they have limited liability and cannot be held personally responsible. Or, the ploy is to say that the director was never a party to the original plaint (if the company fails) and is immune from making the payment to the creditor.
All these practices will come to a close after the recent judgment by the National Consumer Dispute Redressal Commission in Sanjay K Malviya vs. Siddharth Enterprises and another. Malviya was a partner in Transbridge Shipping Pvt. Ltd., against whom an order was passed by the state commission, Delhi to pay Rs4,28,000 to Siddharth Enterprises. When the company stated its inability to pay the sum, the heat turned on to Malviya, as executive director of the company, to pay the consumer.
Malviya filed an appeal in the national commission that he was not a party to the case in the lower court. However, he admitted that he was executive director of the company at the relevant time. Relying on Sec. 27 of the Consumer Protection Act, 1986, and a Delhi High Court order, the national commission said in case a company could not pay the creditor, under consumer law, the court could ask the directors to pay the sum due.
The commission held that as executive director, he should have been aware of the case and the fact that he was not party did not make him immune from liability, as the consumer had the option of recovering the money either directly from the company or the directors who were in charge of it at the relevant time.
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