'Forum Shopping': Punjab & Haryana High Court Imposes Cost For Filing Writ Against Order Of State Consumer Commission Instead Of Approaching NCDRC

The Court was dealing with a writ petition moved by Managing Directors of C&C Towers Ltd., against execution proceedings instituted by the Respondents before the State Consumer Disputes Redressal Commission, under Section 27 (Penalty where a person fails to comply with any order made by the District Forum) of the Act.

The Petitioners had contended that proceedings under Section 27 were not maintainable as the National Company Law Tribunal had already passed order of moratorium under Section 14 of IBC, whereby, moratorium has been declared with regard to institution of suits or continuation of pending suits or proceedings against the corporate debtor (C&C Towers Ltd.) including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority.

Thus, the Court presided by a Single Bench of Justice Anil Kshetarpal was dealing with two questions:

1) Implication of moratorium under IBC on proceedings under Consumer Protection Act

The Court dealt with an important issue wrt implication and effect of declaration of moratorium in terms of Section 14(1) of the Insolvency and Bankruptcy Code, 2016 in respect of Section 27 of the Consumer Protection Act, 1986.

The question before the Court was whether the proceedings under Section 27 of the Consumer Protection Act, 1986 can be allowed to proceed in the wake of Section 14 of the Insolvency and Bankruptcy Code, 2016.

In the case at hand, the Petitioners had contended that in the light of the order of moratorium dated 10.10.2019, no further proceedings can be done in the aforesaid Execution Application by the State Consumer Commission.

Disagreeing with this proposition however, the Single Bench observed,

"this Court does not find that the proceedings before the State Commission are without jurisdiction. Under the 1986 Act, Section 27 of the 1986 Act, lays down the penalties including imprisonment. Hence, the proceedings before the State Commission cannot be said to be 'wholly without jurisdiction'."

The Court also referred to a decision of a three-member Bench of NCDRC, laying down that proceedings under Section 27 cannot be stayed on account of an order passed by the National Company Law Tribunal.

The NCDRC had held that moratorium under Section 14 of IBC will not result in stay of proceedings under Section 27 of the 1986 Act.

Maintainability of writ proceedings

Another question before the Court was whether it can entertain writ petitions against orders passed by the State Commission under Section 27 of the Act, particularly when a statutory remedy of appeal under Section 27-A is available before the NCDRC.

The Single Bench has made it clear that a State Commission has the power to proceed under Section 27, if the order passed in the complaint has not been complied with.

It observed,

"In view of the statutory remedy of appeal (under the Consumer Protection Act), it will not be appropriate for the High Court to entertain a writ petition."

It further held that the appropriate remedy against an order under Section 27 of the Act would be to approach the National Commission under Section 27A. It observed,

"There is no doubt that NCDRC is competent to examine and will decide holistically the plea (appeal) sought to be taken in these writ petitions."

The Bench relied upon a Coordinate Bench judgment in Pranab Ansal v. State Consumer Dispute Redressal Commission, Punjab, where it has already been held that in view of the statutory remedy of appeal, it will not be appropriate for the High Court to entertain a writ petition against orders passed by the State Commission.

It added,

"Practice of forum shopping is deprecated in the sternest words. All such practices are required to be condemned," and imposed costs.

Furthermore, it observed that merely because a three-Judge Bench of NCDRC has passed a decision (holding ­moratorium under Section 14 of IBC will not result in stay of proceedings under Section 27 of the 1986 Act) that may not be a favourable precedent for the Petitioner, would not be a ground to approach the High Court.

It observed,

"There is no doubt that NCDRC is competent to examine and will decide holistically the plea sought to be taken in these writ petitions. Merely because Three Member Bench of NCDRC has already taken a view to the contrary will not by itself be sufficient to entertain the writ petition under Article 226."

Case Title: Gurjeet Singh Johar & Anr. v. Union of India & Ors.

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