Matters Involving Fraud, Forgery And Cheating In Transactions Should Be Handled By Civil Courts: NCDRC

The National Consumer Disputes Redressal Commission, presided by AVM J. Rajendra, held that Matters involving fraud, forgery, and cheating in financial transactions are challenging to resolve through the summary proceedings of the Consumer Protection Act and are more suitable for adjudication in a civil court.

Brief Facts of the Case

The complainant and her husband were approached by a local diesel supplier after their potato harvest and persuaded to store their potatoes at a newly established cold storage. The diesel supplier introduced her to the owners of the cold storage, who promised safe storage at competitive prices. A total of 3389 bags of potatoes were taken to the cold storage, with partial receipts initially provided and incorrect details on some later receipts. The complainant became suspicious when the cold storage records showed unauthorized withdrawals of Rs. 3,59,775, which she never received. When she tried to retrieve her potatoes, only two bags were returned, with the cold storage claiming they were withdrawn by someone else. Potatoes worth over Rs. 9,00,000 were kept at the cold storage. Further investigation revealed that the diesel supplier and his wife forged the complainant's signature to encash cheques. Despite police complaints, no action was taken, leading her to file a consumer complaint before the District Forum, which allowed the complaint and directed the storage facility to return 3389 bags ofpotatoes deposited by the complainant in the cold storage or pay Rs. 748969 along with Rs.50000 towards mental harassment and cost oflitigation. Being aggrieved, the cold storage company filed an appeal before the State Commission of Uttar Pradesh which allowed the appeal. Consequently, the complainant filed a revision petition before the National Commission.

Contentions of the Opposite Party

The cold storage facility argued that the complaint was barred under Section 24 of the Uttar Pradesh Regulation of Cold Storage Act, 1976, stating that the District Horticulture Officer has the authority to adjudicate such matters. It relied on judgments from the Allahabad High Court and the Supreme Court, claiming that the special law overrides the Consumer Protection Act, thus the Commission lacks jurisdiction. The facility also argued that the complainant was not a consumer and that the complaint was filed in the wrong jurisdiction. It claimed that the diesel supplier, acting as the complainant's agent, brought the potato bags and took money under various names. The facility stated that Rs. 5,90,227 was due against the complainant and alleged that the false complaint was made to evade this liability. It further argued that the bank had certified the cheque payments were made to the complainant.

Observations by the National Commission

The National Commission observed that the main issues to be determined were whether the complainant qualifies as a consumer under the Consumer Protection Act, whether the application of the UP Regulation of Cold Storage Act, 1976 bars the jurisdiction of the Consumer Protection Act, and whether the dispute is triable under consumer law. It was contended by the diesel supplier and the cold storage facility that the case was not maintainable under consumer law due to the UP Cold Storage Act. However, the Commission noted that Section 3 of the Consumer Protection Act provides that its provisions are in addition to and not in derogation of any other law. Therefore, the case was maintainable under the Consumer Protection Act. The Supreme Court's ruling in Trans Mediterranean Airways vs. Universal Exports & Anr was cited to reinforce this point, stating that the Act offers an additional remedy for addressing deficiencies in service, without overriding other legal remedies. The Commission also addressed whether the complainant, a farmer, was a consumer. The cold storage facility argued that storing potatoes constituted a “commercial purpose,” excluding the complainant from being a consumer under the Act. However, the Supreme Court's decision in National Seeds Corporation Limited vs. M. Madhusudhan Reddy & Anr clarified that activities aimed at personal sustenance and livelihood do not count as commercial activities, and the storage of potatoes for livelihood falls within the scope of consumer protection. Regarding the main dispute, the Commission acknowledged the allegation that Rs. 3,59,775 had been fraudulently withdrawn by the wife of the diesel supplier. The State Commission noted that adjudicating matters involving fraud, forgery, and cheating in financial transactions is difficult under the summary proceedings of the Consumer Protection Act and would be better handled by a civil court. Thus, the State Commission deducted Rs. 5,90,227 (the disputed amount and cold storage rent) from the value of the potatoes and ordered the payment of the remaining Rs. 1,58,742 to the complainant. The complainant was directed to recover the disputed amount through civil proceedings. The Commission found no reason to interfere with the State Commission's order and dismissed the revision petition.

Case Title: Neelam Vs. M/S. Dynamic Cold Storage Pvt. Ltd. & Anr.

Case Number: R.P. No. 1959/2019

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