Consumer Court should not dismiss cases on mere technicalities – Supreme Court in Vibha Bakshi & Anr. versus M/s Gruhashilp Constructions & Ors.

A complaint had been filed before the NCDRC by a flat owner with respect to a residential flat. NCDRC gave an opportunity to the Complainant to file a rejoinder, with the condition that if the rejoinder is not filed, the complaint would be dismissed on the next date of hearing. The complainant failed to file the rejoinder on the next date and NCDRC dismissed the complaint, citing the conditional order passed on the last date of hearing.

On appeal, the matter reached the Supreme Court. The Supreme Court made a few relevant observations, which are:

1. That the ground for dismissal was purely technical and with utter disregard to requirements of substantive justice.

2. That the purpose of passing consumer protection law was to protect the consumers and that the manner in which the NCDRC had rejected the complaint, it showed that NCDRC had retracted from the purpose for which it was established.

3. That such dismissals by NCDRC add to the burden of litigation an defeat the purpose of ensuring justice to consumers.

4. Though the Consumer Protection Act stipulates a period for disposal of cases, complaints cannot be disposed of due to non-availability of resources and infrastructure.

5. That it is harsh to penalise a bona fide litigant for marginal
delays that may occur in the judicial process.

6. It was further observed that the consumer forum should bear the aforesaid in
mind so that the ends of justice are not defeated.

The above observations by the Supreme Court are indeed welcome at a time when it is sometimes seen that genuine cases are thrown out of courts for technicalities. Such optimistic observations by the Supreme Court keep the hopes of hapless litigants alive.

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A Discussion on ‘The Banning of Unregulated Deposit Schemes Bill, 2018’

The Banning of Unregulated Deposit Schemes Bill, 2018 was introduced in the Lok Sabha on July 18, 2018 by Mr. Shiv Pratap Shukla, the Minister of State for Finance. The status of the Bill presently is as follows:

  • It was referred to the Standing Committee on August 10, 2018 for its report.
  • The Standing Committee submitted its report on January 3, 2019.
  • On February 13, 2019, the Bill was passed by the Lok Sabha.
  • Presently, the Bill is pending for approval/ passage in Rajya Sabha.

The Bill seeks to bring about a law to provide for mechanism to ban unregulated deposit schemes and protect interests of depositors. The Statement of Objects and Reasons of the Bill states that it has become necessary to have a Central Legislation to ensure a comprehensive ban on unregulated deposit taking activity and for its effective enforcement. It states that despite the presence of Central legislations like Prize Chits and Money Circulation Schemes (Banning) Act, 1978, Chit Funds Act, 1982 and other legislations enacted by the State Governments, the said legislations have not been able to completely address the issue of unregulated deposit schemes run by unscrupulous elements.

Non-Banking Financial Companies are under the regulatory and supervisory jurisdiction of the Reserve Bank of India. Collective Investment Schemes come under the purview of the Securities and Exchange Board of India. Despite such diverse regulatory framework, schemes and arrangements leading to unauthorised collection of money and deposits fraudulently, by inducing public to invest in uncertain schemes, promising high returns or other benefits, are still operating. The regulators operate in well-defined areas within the financial sector by regulating particular kind of entities or activities. The Bill envisages to provide for a regulatory framework to make the deposit taking activity in a seamless manner.

Clause 2 (4) defines “deposit” as an amount of money received by way of an advance or loan or in any other form, with a promise to return whether after a specified period or otherwise, with or without interest. Such deposit may be returned either in cash or as a service.

Clause 2 (6) of the Bill defines “deposit taker” as individuals or group of individuals, proprietorship concern, partnership firm (whether registered or not), limited liability partnership registered under the Limited Liability Partnership Act, 2008, company, an association of persons, trust, a co-operative society or a multi-state co-operative society, or any other arrangement of whatsoever nature, receiving or soliciting deposits, but does not include banks and entities incorporated under any other law.

Clause 2 (17) defines “Unregulated Deposit Scheme” as a scheme or an arrangement under which deposits are accepted or solicited by any deposit taker by way of business and which is not a Regulated Deposit Scheme.

Clause 3 of the Bill lays down that Unregulated Deposit Scheme is banned.

Clause 7 provides for Authorities under the law. It states that the appropriate Government shall by notification appoint one or more officers, not below the rank of Secretary to that Government, as the Competent Authority. Such other officers may be appointed by the State Government as it thinks fit, to assist the aforesaid Competent Authority, by a notification.

Where the aforesaid Competent Authority or officers appointed to assist him have a reason to believe that any deposit taker is soliciting deposits which are banned, the said illegal deposits may be provisionally attached. The Competent Authority and the officers appointed to assist him would have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908.

After the aforesaid provisional attachment, the Competent Authority will approach the Designated Court to (i) make the provisional attachment absolute, and (b) ask for permission to sell the assets. The Competent Authority will have to approach the Court within 30 days (extendabe to 60 days).

Under Clause 8, one or more “Designated Courts” will be constituted in specified areas. These Courts will be headed by a judge not below the rank of a district and sessions judge.

The Designated Courts will have the power to make the provisional attachment absolute, vary or cancel the provisional attachment, finalise the list of depositors and their respective dues and direct the Competent Authority to sell the property and equitably distribute the money realised among the depositors. The Court will seek to complete to process within 180 days of being approached by the Competent Authority. The Bill however, states that unless otherwise provided by the SARFAESI Act, 2002 ad the Insolvency and Bankruptcy Code, 2016, amounts due to depositors will be paid in priority over all other debts payable by the deposit taker.

Further, police officers receiving information about the offences committed under the Bill will report to the Competent Authority. Police Officers, not below the rank of an officer-in-charge of a police station may enter, search and seize any property believed to be connected with and offence under the Bill, with or without warrant.

Chapter IV of the Bill which includes Clauses 9 to 11 provides for the Central Government to designate and authority to create an online central database for information on deposit takers. All deposit takers will be required to inform the database authority about their business. The Competent Authority will be required to share all information on unregulated deposits with the authority.

Chapter VI which deals with Offences and Penalties defines three types of offences and penalties related to them. The offences as per the Bill are (a) running unregulated deposit schemes (b) fraudulently defaulting on regulated deposit schemes, and (c) wrongfully inducing depositors to invest in unregulated deposit schemes by willingly falsifying facts.

Accepting unregulated deposits will be punishable with imprisonment between 2 and 7 years, along with a fine ranging from rupees 3 to 10 lakhs. Defaulting in repayment of unregulated deposits will be punishable with imprisonment between 3 to 10 years and a fine ranging from rupees 5 lakhs to twice the amount collected from depositors. Repeat offenders will be punishable with imprisonment between 5 to 10 years, along with a fine ranging from rupees 10 lakhs to 5 crores.

CRITICISM OF THE BILL:

Under the Bill, the definition of ‘unregulated deposits’ is too wide and leaves a lot of room for interpretation. This will lead to subjective and conflicting decisions by the Authorities while adjudicating offences related to such offences. ‘Unregulated deposits’ ought to be defined more comprehensively.

Moreover, in the the informal banking sector there are various financial arrangements, involving advances to start-ups and small entrepreneurs, that may fall under the definition of unregulated deposits by default. Such ambiguities need to be cleared to prevent undue harassment and misuse of these financing entities.

The Bill also states that unless otherwise provided by the SARFAESI Act, 2002 and the Insolvency and Bankruptcy Code, 2016, amounts due to depositors will be paid in priority over all other debts payable by the deposit taker. Repaying depositors’ money is the most critical part of process of restitution of depositors. Therefore, exceptions under the SARFAESI Act and IBC ought to be removed from the Bill and a time-frame ought to be specified for repayment of depositors’ dues.

Moreover, the Bill does not provide for a Central Regulatory Authority. State Governments are the designated authorities for implementing the provisions of the Bill. The Bill provides for an authority at the central level which will create, maintain and operate an online database on deposit-takers operating in India. State Level Coordination Committees under RBI, with representation from agencies such as SEBI and state police departments, presently function as ad-hoc coordinating mechanisms to look into deposit taking businesses. The present system could be institutionalised under the Central Authority. The mandate of the authority should be extended to also include regulation and monitoring of the implementation of the provisions of the Bill.

Under the Bill, all offences except fraudulent default in regulated deposit schemes and failure to notify the central authority, maintaining the database of deposit takers, of a deposit taking business are cognizible and non-bailable. It would be more effective if all offences in the Bill be made cognizible and non-bailable.

The Bill provides for the appointment of one or more government officers, not below the rank of Secretary to the state or central government, as the Competent Authority. If the Authority believes that any offence involves more than one state or union territory, or a significant amount of money, then they must refer the matter to the Central Bureau of Investigation (CBI) for investigation. However, such matters may involve offences under various economic laws. Further, the CBI already has huge workload. It is recommended that other investigating agencies such as the Serious Fraud Investigation Office also be involved depending on the subject matter. The central government also should take suo motu cognizance of any offence which involves more than one state and refer it to the appropriate investigation authority.

A public website be developed: (i) for people to check whether an entity soliciting deposits is registered with a regulator, and (ii) to file and track complaints against unregulated deposit takers.

In a nutshell, it is the following that the Bill seeks to provide for, as has been stated in its Statement of Objects and Reasons –

  • to make a provision for banning of unregulated deposit schemes;
  • to impose an obligation on the deposit taker, pursuant to a regulated deposit scheme, not to commit any fraudulent default in the repayment or return of the deposit;
  • to provide for deterrent punishment for promoting or operating an unregulated deposit taking scheme;
  • to provide for punishment for fraudulent default in repayment to depositors;
  • designation of a Competent Authority by the State Government to ensure repayment of deposits in the event of default by a deposit taking establishment;
  • to constitute the Designated Courts for such area or areas or such case or cases as per the provisions of the proposed Bill;
  • to empower the Central Government to designate an authority which shall create, maintain and operate an online data base for information on deposit takers operating in India; and
  • to confer powers and functions upon the Competent Authority including the power to attach assets of a defaulting establishment.

The present Bill if passed by the Upper House shall go a long way in empowering the depositors, who sometimes unfortunately have to lose their hard-earned life’s savings to unscrupulous deposit-takers, who entice them with unrealistic schemes and false promises. However, like other laws which have been passed keeping the interest of depositors in view, the real challenge would be the implementation of the law, once passed.

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Supreme Court rightly dismisses two court masters for tampering with orders directing personal appearance of Anil Ambani

This has always been the concern of some of my clients in high stake litigations – after the judge dictates an order, what if the court master or the steno does not take the order correctly.

As per media reports, the Supreme Court has rightly dismissed two court masters because the order dictated was different from the one published.

Offices like court masters of the Supreme Court or any other Courts’ judges carry tremendous responsibility. When justice is not seen to be done, the sword of justice ought to strike – which in the present case was done.

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Dharna and vested interests

Is this a start to a disturbing trend of misusing “dharna politics” to suit vested interests? Things that otherwise ought to be solved through across the table talks between senior and responsible government officials and representatives are being dealt with out on the streets. Does this look good?

https://timesofindia.indiatimes.com/city/puducherry/puducherry-cm-v-narayanasamy-does-a-didi-sits-on-dharna/articleshow/67985620.cms?utm_campaign=andapp&utm_medium=referral&utm_source=native_share_tray

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DTC App – A welcome move for commoners

A robust public transport is the backbone of any developed economy. This move by the DTC is a welcome move and will strengthen the crippling public transport system in Delhi. Hope that some measures are taken to cope with the rough driving by the DTC bus drivers.

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Numbers and Democracy

Population in a democratic setup can prove to be both a boon and a bane. If the people are educated and intelligent, it’s a boon and if they are fools, guided by parochial interests of caste, religion, etc. they shall sooner or later prove to be a bane.

The other day I heard a leader from a state that he would support a certain party in the state if it supported their interests and their demand for reservation. “Reservation” as per the founding fathers of the Constitution was a short term measure intended to work for the uplifting the people who were ignored in the past. It wasn’t introduced to stay. Sadly, the political class has abused reservation as an election tool. It’s shocking that there are instances where there are 100% reservations. This is not only harmful, since it impedes the growth of the economy, but also a fraud played upon the people who are supposed to benefit from reservation.

The collective will and intelligence of the world’s largest democracy needs to be such that no one, not even the political class, can abuse them to suit their vested interests. Only then we can think of moving forward together and reaching greater heights. Otherwise, despite great potential and vibrant energy, which otherwise could propel us to pinnacle of economic growth, we shall remain in the same place due to different people and groups pulling each other in different directions.

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A 10 Year Old Pregnant Rape Victim and the Supreme Court

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The Medical Termination of Pregnancy Act, 1971, an Act which sought to regulate the termination of pregnancy is once again in the dock, in light of the recent order of the Supreme Court of India, wherein the Supreme Court refused to allow a 10 year old rape survivor to legally terminate/ abort her pregnancy.

The reason for refusing the prayer for abortion was that Continue reading

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We, the Orphan Children of India

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I hope this never happens to anyone but imagine, you just leave your house for some work or to meet someone, hoping that you will be back home in a little while. While you are leisurely on your way, thinking about the grand plans that you have in your life, you suddenly freeze and feel volts of electricity pass through your body and lose consciousness. When you wake up Continue reading

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Abortion and Supreme Court’s Plenary Powers

The recent decision of the Supreme Court wherein it refused to allow a woman to abort her foetus which was 23 weeks old seems to have gone wrong. The mother of the foetus wanted the child to be aborted because the child was suffering from Down’s Syndrome, which is a disability and severely impairs proper intellectual and mental growth of the child.

The Supreme Court came to the decision indicating that its hands were tied and that there was no physical risk to the mother in continuation of the pregnancy. It is respectfully submitted that the Supreme Court seems to have missed the point. The point was not safety of the mother. The woman had moved the Apex Court so that a life which was yet to take birth did not face any difficulty after it was born. The Supreme Court is armed with plenary powers to do complete justice in a matter. Yes, it is true that the Supreme Court cannot digress from the legal substratum of a statute or a policy, but to take a stand that it was bound by letter of the law, does not appear to be a good enough reason. Even uncodified law, law of equity, etc are considered law and the Supreme Court does exercise such power. The present matter required the Supreme Court to view from that perspective.

Rendering justice is a divine function and Courts have to function within the confines of law. Yet all laws cannot contemplate all situations. There are some situations in which Courts need to travel and see beyond the law. And yes, this power cannot be exercised by lower Courts. Hence the Supreme Court decided matters after taking a holistic view of the matter. It is presumed that the Supreme Court has such maturity and legal acumen to render justice in such situations. Hence it is armed with such powers.

Coming back to the case at hand – a child is most loved and cared for by his or her mother. The mother knows what is best for a child. When a mother wants a foetus to be aborted because it has Down’s Syndrome, the Supreme Court ought not have restricted itself to a pedantic and parochial view of the law. It does not mean that a child with Down’s Syndrome is any lesser. A child with Down’s Syndrome has equal right to live and enjoy life as a child without it. But the mother may have her reasons for not being able to accept the fact. She may be faced with horrors of her child being teased as a child or that his/ her growth may be restricted. There may be so many other reasons. Moreover, when the mother is doubtful about the well-being of the child, the Courts ought to respect that.

It does not mean that every abortion case ought to be allowed. But the present matter deserved a better treatment. Moreover, the Courts have allowed abortion beyond 20  weeks (provided in Medical Termination of Pregnancy Act) in the past. So to hold that the Supreme Court’s hands are tied in such matters which require deeper contemplation and consideration, is a little uninspiring.

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Let my country awake!


A society’s robustness and its value system is tested when the most vulnerable in the society is free and can stand up fearlessly against what’s wrong, without any worry of being treated in an unjust manner. It was rather shocking to see that a girl and her father were asked to leave a restaurant, when the girl raised objection at being  harassed, stalked and shamelessly stared at by a drunk man, who was continuously leering at her and other women present at the restaurant.

The video just displayed the sheer apathy, insensitivity and heartlessness of our contemporary society. Instead of asking the rogue, the drunkard, who was staring and harassing the women present at the restaurant, the people present at the restaurant, including the customers, police and the restaurant owner himself, shooed the girl and her father out of the restaurant, on the pretext that how could they ask the person who was drinking to leave!!  Shocking! As such, the victims, who ought to have been protected and supported by the people and authorities present there, were thrown out of the restaurant and the rogue continued sitting there sipping his drink. What country have we turned into or rather are? And then we complain of being talibanised from time to time. It our apathy to such shameless acts that fans the audacity of perpetrators of such heinous and atrocious acts. So in a way, we the society are also responsible for not raising our voices against such acts and it makes me lower my head in shame.

We call ourselves a civilised society.. Well, there a big looming question mark now. A civilised society does not corner someone who is in vulnerable position; it backs someone based on right and wrong, principles of propriety and deals with the situation in a dignified decorum.

The video simply reflects how easily some hooligan can get away with whatever he does, and that too in a public place! Here, the poor girl is seen trying everything possible to stand up and maintain her dignity, which by itself is no mean task. The girl’s father is seen losing his cool, like any father would, because his daughter was a victim of indecency in the open in a public place. The hotel staff, surprisingly is seen applying force on the father and someone, drunk of course, is seen coming forward and trying to assault the girl and the girl’s father. All this while the person who was harassing the girl and other women in the restaurant is coolly sipping his drink and threatening the girl and her father! Yet the people there are seen carrying on as if nothing happened. There was someone who even said “so what” when the girl tried to explain the reason for being upset.

Dear people, the father and the daughter didn’t go to the restaurant expecting such a thing to happen. But it happened. You will also never expect such a thing to ever happen to you, but it may happen. Pause and give it a thought..  and in such a scenario, you would want someone to stand by you and support you, because standing up for what’s right is so difficult and courageous now a days. As Naloplean Bornaparte had remarked, “The world suffers a lot. Not because of the violence of bad people, but because of the silence of good people.”

Our country and society will only be as good as “We the People” make it. Many laws, rules and regulations have been framed and even more, like candle march, demonstrations, etc. has gone into symbolism of empowering women; but in this case, the society clearly failed the girl and her father.

I salute the girl who stood up for herself and for the the dignity of other women present there. I hope strong action will be taken against the hotel authorities, the person who was abusing and harassing the girl and her father and the one who tried to assault the girl and the father. As for the customers, a reflection and representation of our the society – scared, timid and spineless, who were present in whose sight everything happened and who sheepishly let it happen, I hope they will at least come up and stand firmly with the girl and her family, in anyway possible, so that it sends out a message that anyone who stands up for what’s right, is not alone, so that for once the society is a catalyst for change towards something good and not passive to its constituent member. Only then will we have a place safe for everyone, only then can we claim to be civilised.

I would like to end with a few lines of Kabiguru Rabindranath Thakur, which echo and resound with a deafening silence of disappointment due to unfulfilled aspirations of our forefathers for a free India:

Where the mind is without fear and the head is held high,

Into the heaven of freedom my father,

Let my country awake!

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