Jehangir B Gai: Officebearers liable for frauds

The president of the society transferred money to his personal account and ran away from the country

Nectar Cooperative House Building Society in Mohali, Punjab, had been formed to construct flats for its members. While collecting the money, the society informed its members that land had been purchased and construction would begin soon .
 
One of the members, Balkar Singh, had paid the membership fee of Rs 10,500 and an additional Rs 6 lakh for a flat (Rs 1 lakh was paid in cash without a receipt). However, the bhoomi pujan ceremony did not take place in December 2006, as promised. This situation continued for long.
 
When the society could not even produce any permission for construction, members sought refunds. Seven members, including Balkar Singh, filed separate consumer complaints before the District Forum.
 
The society questioned the maintainability of a consumer complaint about a dispute within its members, arguing only cooperative courts have the jurisdiction. It stated
 
269 members had applied for flats but land could not be purchased, as 212 members defaulted. The society sought dismissal of the complaint against officebearers because it had gone into liquidation and the society was currently under control of the liquidator.
 
The forum observed that as there was no proof of the cash payment of Rs 1 lakh, the members weren’t entitled to get refunds. However, it ordered the liquidator to refund Balkar Singh
 
Rs 5.10 lakh, along with nine% interest from the date of payment and Rs 5,000 as litigation costs. If the liquidator failed to pay within three months, the three office bearers would have to pay the amount. The three office bearers appealed to the Punjab State Commission. The commission modified the order and held that all the four officebearers, including the society’s president, would be jointly and held liable for compliance of the order.
 
The dispute reached the National Commission, where it was revealed that Sudeep Singh Sabharwal, president of the society, was a developer with company under the name of J S Dwellers & Infrastructure and had already fled to the US.
 
The other officebearers claimed when they attempted to ascertain the records of society, they found Sabharwal, who was the cashier as well, had siphoned off Rs 1.5 crore from the society’s account to his company’s account. The other office bearers had lodged a first-information report with the police. They claimed that since they had discovered the fraud and reported it, they were helping the members and shouldn’t be held liable in their individual capacities.
 
The National Commission observed since the officebearers had played an active role in collection of money from the members and in issuing share certificates, they could not escape their liabilities. The commission relied on its own earlier judgements in pronouncing its verdict.
 
Dealing with the other technical contention that the complaint was time-barred, the Commission said since the flat was not given nor the money refunded, the interpretation was wrong. Also, it said that a case could be filed even with consumer court, as the Consumer Protection Act provides an additional remedy.
 
Accordingly, by its order of December, 23, 2016, the National Commission upheld the orders passed in favour of the members and held the society’s officebearers personally liable for defrauding the members.

The author is a consumer activist