Judicial Analysis Court Copy Headnote Facts Arguments Court observation

TAMIL NADU STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, MADRAS
Hon’ble Thiru Justice S.A. Kader, President;
Dr. Tmt. Ramani Mathuranayagam, Member
LILLY CHAOYIN—Complainant
versus
CHAIRMAN & MANAGING DIRECTOR,
TAMIL NADU INDUSTRIAL INVESTMENT
CORPORATION LTD. & ANR.—Opp. Parties
O.P. No. 9 of 1994—Decided on 8.9.1994

Advocates:
Counsel for the Parties :
For the Complainant :Tr. S.R. Sundararajan, Advocate.
For the Opp. Parties:Tr. M. Nazir Ahmed, Advocate.

A complaint under the Consumer Protection Act is not maintainable when the matter is already sub-judice before the ordinary Civil Court, to avoid conflicting decisions and multiplicity of proceedings. Deliberate suppression of the pendency of a related suit amounts to not coming to the Consumer Forum with clean hands and further justifies the dismissal of the complaint.

Headnote:
CONSUMER PROTECTION ACT - SECTION 17, 12 - LOAN SANCTION - COLLATERAL SECURITY - FORECLOSURE NOTICE - PENDENCY OF SUIT - MAINTAINABILITY OF COMPLAINT - CONSUMER FORUM'S JURISDICTION - SUIT FILED IN CIVIL COURT - CONCURRENT ADJUDICATION - AVOIDANCE OF CONFLICTING DECISIONS - MULTIPLICITY OF PROCEEDINGS - CLEAN HANDS DOCTRINE - DISMISSAL OF COMPLAINT.
Fact of the Case:

Complainant, an experienced food processing technologist, applied for a loan from the opposite party, Tamilnadu Industrial Investment Corporation (TIIC), to purchase machinery and construct a building. The loan was sanctioned, and a portion of the amount was disbursed. However, the complainant failed to provide collateral security as required by the TIIC and purchased only a few items of machinery, which were not properly protected. The TIIC issued a foreclosure notice demanding payment of the loan amount and threatening to take possession of the machinery. The complainant filed a suit in the City Civil Court seeking an injunction to restrain the TIIC from taking possession of the unit and subsequently filed a complaint before the Consumer Forum alleging deficiency in service.
Finding of the Court:

The Consumer Forum held that the complaint was not maintainable since the matter was already sub-judice before the City Civil Court. It observed that concurrent adjudication of the same issue by the Consumer Forum would lead to conflicting decisions and multiplicity of proceedings. The Forum also noted that the complainant had deliberately suppressed the pendency of the suit in the City Civil Court in her complaint before the Consumer Forum, which amounted to not coming to the Forum with clean hands.
Issues: 1. Whether the complaint is maintainable in view of the pendency of a suit on the same issue in the City Civil Court? 2. Whether the Consumer Forum can conduct a concurrent adjudication when a matter is sub-judice before the ordinary Civil Court? 3. Whether the complainant's failure to disclose the pendency of the suit in the City Civil Court amounts to not coming to the Forum with clean hands?
Ratio Decidendi: 1. The Consumer Forum held that the complaint was not maintainable due to the pendency of the suit in the City Civil Court. It relied on the principle that where a matter is sub-judice before the ordinary Civil Court, a concurrent adjudication of the same issue by the Consumer Forum should be avoided to prevent conflicting decisions and multiplicity of proceedings. 2. The Forum observed that the objection to the maintainability of the complaint was not based on lack of jurisdiction but on considerations of propriety and prudence. 3. The Forum also held that the complainant's deliberate suppression of the pendency of the suit in the City Civil Court amounted to not coming to the Forum with clean hands, which further justified the dismissal of the complaint.
Final Decision: The Consumer Forum dismissed the complaint as not maintainable, without prejudice to the complainant's right to agitate her claim in the suit filed before the City Civil Court.

ORDER

Mr. Justice S.A. Kader, President—This is a complaint under Section 17 read with Section 12 of the Consumer Protection Act.

2. The complainant claims vast experience in Food Processing Technology. She started in a rented premises as early as in 1987 manufacturing Appalam/Papad and other products. She approached the first opposite parry Tamilnadu Industrial Investment Corporation for financial assistance. She submitted her loan application in 1991 and remitted the investigation fee of Rs. 1485/- on 14.6.91. A Screening Committee of the opposite party considered the matter and sanctioned a term loan of Rs. 7,20,000/- n 19.8.91. As per clause 28 of the above order 50% of the amount will be released at the time of delivery of the machineries and the balance after valuation. The complainant represented that for designing and manufacturing the machineries advance has to be paid and requested the opposite party to pay at least 75% of the value as cash advance. The complainant paid a sum of Rs. 38,000/- for her share of the land and a cheque was issued to her on 21.2.92 for Rs. 1,41,850/- instead of Rs. 2,90,700/- The Branch Manager Mr. Venkataraman told the complainant to proceed with the work and get what can be fabricated or purchased and submit invoice. Accordingly the complainant placed orders and received 4 items of machineries. On 23.3.92 for a sum of Rs. 154,800/-. But subsequently mere was change in the staff and the new Manager ordered a second inspection on 10.6.92. The opposite parry wrote a letter to Anna University, Madras for valuation of the machinery. The valuation report was submitted on 2.7:92 but the opposite party did not released the funds; instead it claimed collateral security from the complainant There was no such stipulation for furnishing collateral security in the first sanction order dated 19.8.91. It was also falsely alleged, that the dryer was kept in the portico of the building and exposed to sun or rain. The opposite party instead of considering complainant’s letter on merits have unilaterally cancelled the contract for no fault of the complainant by letter dated 20.10.92. The complainant has therefore come forward with this claim for compensation in the sum of Rs. 15,25,004/-.

3. The opposite parties resisted the claim. It is contended that the complainant is not a consumer and the complainant is not maintainable. It is pointed out that the complainant originally applied for a term loan of Rs. 9,90,000/- for a soft loan of Rs. 90,000/- on 14.6.91 for the purchase and erection of machinery and construction of building on the land at Ninnakkarai village. The complainant subsequently dropped the proposal of purchase of Land and construction of building and opted for leasehold premises at No. 7A, Mahalakshmi St., Srinivasapuram Guduvancherry. The project was revised and she applied for a term loan of Rs. 7,80,000/- and soft loan of Rs. 75,000/- for purchase of machinery. A term loan of Rs. 7,20,000/- and soft loan of Rs. 1,44,000/- on 14.8.91 was sanctioned. The money will be released at 50% at the time of delivery and 50% after valuation at site. The complainant accepted the terms and conditions. The period of lease of the building was for 8 years and the opposite party insisted on production of the registered Lease Deed. The complainant wanted to purchase the land measuring 11,000 sq.ft. in S.No. 34/lA- Ninnakkarai Village, Chenglepat District. The complainant offered collateral security of the land to be purchased by her but she failed to give the security even after purchase of the land. It was found that only few items have been purchased and the complainant did not give protection to the hypothecated machinery. The opposite party sent a letter dated 16.6.92 calling upon the complainant to shift the machinery inside the lease-hold premises. The complainant requested by her letter dated 22.10.91 to grant time till June 1992 to offer the property as collateral security. She failed to deposit the ori

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Judicial Analysis