Supreme Court Quashes Bailable Warrants Against Director in Consumer Dispute: L&T Finance Ltd. vs. Pramod Kumar Rana (25 November 2021)

Date of the Judgment: 25 November 2021

Citation: (2021) INSC 743

Judges: M.R. Shah, J., B.V. Nagarathna, J.

Can a consumer court issue bailable warrants against a company director when the company is already represented by legal counsel? The Supreme Court of India addressed this question in a recent case involving L&T Finance Ltd. The court examined the circumstances under which a consumer court can compel the personal appearance of a company director, especially when the company is actively participating in the proceedings through its representatives. This judgment clarifies the limits of a consumer court’s power to issue bailable warrants and emphasizes the importance of ensuring fair representation for all parties involved. The judgment was delivered by a two-judge bench comprising Justices M.R. Shah and B.V. Nagarathna, with the opinion authored by Justice M.R. Shah.

Case Background

The case originated from a consumer complaint filed by Pramod Kumar Rana against M/s. Paramount Villas Pvt. Ltd. and L&T Finance Ltd. before the National Consumer Disputes Redressal Commission (National Commission). The complainant alleged that he was forced by representatives of both companies to sign blank papers and was threatened to enter into a settlement.

On August 12, 2021, the National Commission heard the matter, and the counsel for M/s. Paramount Villas Pvt. Ltd. stated that the matter had been settled. However, the complainant requested an adjournment to confirm this. On August 26, 2021, the complainant appeared in person and alleged that he was coerced into a settlement. The National Commission then directed the directors of both companies, Shri Mukesh Aggarwal of M/s. Paramount Villas Pvt. Ltd. and Shri Dinanath Mohandas Dubhashi of L&T Finance Ltd., to appear in person to clarify their positions.

On September 3, 2021, Shri Mukesh Aggarwal appeared via video conferencing, while representatives of L&T Finance Ltd. and their counsel were present. Shri Dinanath Mohandas Dubhashi did not appear, citing a pending exemption application. The National Commission then directed both directors to appear on September 16, 2021. On September 16, 2021, Shri Mukesh Aggarwal appeared, but Shri Dinanath Mohandas Dubhashi did not. The National Commission issued bailable warrants against Shri Dinanath Mohandas Dubhashi, directing his production on October 18, 2021. L&T Finance Ltd. then appealed these orders to the Supreme Court.

Timeline

Course of Proceedings

The National Commission initially directed the directors of both companies to appear in person due to allegations of coercion made by the complainant. When Shri Dinanath Mohandas Dubhashi failed to appear on two consecutive dates, despite the presence of the company’s representatives and counsel, the National Commission issued bailable warrants against him. L&T Finance Ltd. filed a review application against the order dated 26.08.2021, which was pending before the National Commission. The company then appealed to the Supreme Court against the orders dated 26.08.2021, 03.09.2021, and 16.09.2021.

Legal Framework

The judgment primarily revolves around the interpretation of the powers of the National Consumer Disputes Redressal Commission (National Commission) to ensure the presence of parties in a consumer dispute. The National Commission is a lawfully created tribunal to adjudicate upon the issues relating to consumer disputes and arrive at just conclusions. The Supreme Court emphasized the principle of free access to justice, stating that “Free access and unfettered right to approach, as permissible by law, is inbuilt in the system where rule of law prevails.” The court also noted that any attempt to impede such access or coerce anyone cannot be countenanced.

Arguments

The appellant, L&T Finance Ltd., argued that the National Commission erred in issuing bailable warrants against Shri Dinanath Mohandas Dubhashi, the director of the company, when the company was already represented by its counsel and authorized representatives. The appellant contended that the allegations of coercion were not specifically against Shri Dubhashi but against the “representatives of the opposite companies.” They also pointed out that a review application against the initial order was pending before the National Commission.

The appellant argued that the issuance of bailable warrants should be a last resort, only when parties are deliberately avoiding appearance and are not represented at all. In this case, the company was actively participating in the proceedings through its representatives and counsel, and the director of the other opposite party had appeared via video conferencing.

The respondent, the original complainant, did not appear before the Supreme Court.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the central issue addressed by the Court was:

• Whether the National Commission was justified in issuing bailable warrants against the director of the appellant company when the company was already represented by counsel and authorized representatives.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not cite any specific case laws or books in this judgment. The judgment is primarily based on the court’s interpretation of the principles of natural justice and the powers of the National Commission.

Judgment

The Supreme Court allowed the appeals filed by L&T Finance Ltd. The court quashed and set aside the orders dated 26.08.2021, 03.09.2021, and 16.09.2021, which directed Shri Dinanath Mohandas Dubhashi to personally appear and issued bailable warrants against him.

The court held that the issuance of bailable warrants was not warranted at this stage, given that the company was represented by its counsel and authorized representatives. The court emphasized that bailable warrants should be a last resort when parties are deliberately avoiding appearance or are not represented at all. The court also noted that the allegations of coercion were not specifically against Shri Dubhashi and that a review application was pending.

The Supreme Court clarified that the National Commission is free to pass further orders after giving both parties an opportunity to present their case on the allegations of coercion. The court also stated that the appellant could be represented by its authorized representatives and counsel at this stage. However, the National Commission could require the presence of Shri Dinanath Mohandas Dubhashi in the future if needed.

The court also directed the National Commission to hear and decide the pending review application without being influenced by any of the observations made in the present order. The court clarified that it had not expressed any opinion in favor of either party on the allegations made by the complainant.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Representation: The fact that L&T Finance Ltd. was already represented by its counsel and authorized representatives weighed heavily in the court’s decision. The Court emphasized that the company was actively participating in the proceedings, and therefore, the personal appearance of the director was not immediately necessary.

• Last Resort: The Court reiterated that bailable warrants should be a measure of last resort, to be used only when parties are deliberately avoiding appearance and are not represented at all. In this case, the Court found that the company was not avoiding appearance.

• Nature of Allegations: The allegations of coercion were not specifically against the director, Shri Dinanath Mohandas Dubhashi, but rather against the “representatives of the opposite companies.” This distinction played a crucial role in the Court’s decision to quash the bailable warrants.

• Pending Review Application: The fact that a review application against the initial order was pending before the National Commission was also a factor. The Court directed the National Commission to consider the review application without being influenced by the present judgment.

• Free Access to Justice: The Court reiterated the importance of free access to justice and that any attempt to impede or obstruct the course of justice cannot be countenanced. However, the Court also recognized that the allegations against the company were yet to be proven.

Key Takeaways

• Bailable Warrants as Last Resort: Consumer courts should use bailable warrants as a last resort, only when parties are deliberately avoiding appearance and are not represented at all.

• Representation Matters: If a company is represented by counsel and authorized representatives, the personal appearance of its directors may not be necessary unless there is a specific need.

• Specificity of Allegations: When allegations are made, it is important to specify who is being accused. The court will consider if the allegations are specifically against a director or against the company’s representatives in general.

• Review Applications: Pending review applications should be considered before taking coercive measures like issuing bailable warrants.

• Free Access to Justice: While free access to justice is paramount, it should be balanced with the rights of the parties to be represented and not be subjected to coercive measures unnecessarily.

Directions

The Supreme Court directed the National Commission to:

• Consider the pending review application without being influenced by the observations made in this judgment.

• Allow L&T Finance Ltd. to be represented by its authorized representatives and counsel at this stage.

• Pass further orders on the allegations of coercion after giving both parties an opportunity to present their case.

• Require the presence of Shri Dinanath Mohandas Dubhashi in the future if needed.

Development of Law

The ratio decidendi of this case is that bailable warrants against a director of a company should be issued only as a last resort when the company is not represented and is deliberately avoiding appearance. This judgment clarifies the circumstances under which a consumer court can compel the personal appearance of a company director, especially when the company is actively participating in the proceedings through its representatives. There is no change in the previous position of law, but this judgment provides a practical application of the principles of natural justice in the context of consumer dispute resolution.

Conclusion

The Supreme Court’s decision in L&T Finance Ltd. vs. Pramod Kumar Rana clarifies the limits of a consumer court’s power to issue bailable warrants against company directors. The court emphasized that bailable warrants should be used as a last resort and only when parties are deliberately avoiding appearance and are not represented. This judgment ensures that companies are not subjected to unnecessary coercive measures when they are actively participating in the proceedings through their representatives. The court’s decision balances the need for free access to justice with the rights of the parties to be represented and not be subjected to coercive measures unnecessarily.