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TMI Blog2016 (12) TMI 1896X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or other office bearers of any Cooperative Credit Society fall within the category of the service providers?" 2. Above noted revision petitions have arisen from almost identical consumer complaints filed by various depositors who had deposited certain amounts in fixed term deposits with opposite party Sarb Bank Employees Cooperative U.S.E.T. & Credit Society Limited with minor variations. The basic allegations in the respective complaints are almost similar. Allegations of the complainants in their respective complaints are that petitioner / opposite party no.1 Amarjit Singh, the then President of the above noted Cooperative Society approached the respective complainants and represented to them that if they deposit any amount with the cooperative society, they would receive interest @ 15-16% p.a. on their respective fixed deposits. Allegedly, the petitioner / opposite party Amarjit Singh convinced the complainants that the opposite party / cooperative society has been floated by the employees of State Bank of India and there was no risk involved. Being lured by the attractive offer, the complainants deposited specific amounts in fixed deposit with the opposite party / cooperat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of two member bench in RP No. 1579 & 1580 of 2011 filed by Ex Secretary Anil Pahwa gives an impression that bench was of the view that if the office bearer of a cooperative society is involved in unethical practice, in such a situation, the office bearer would be liable for deficiency in service. 7. Learned Shri Vipin Gogia, Advocate for the petitioner in the respective revision petitions has contended that former President or former Secretary of the cooperative society or the office bearers have an entity distinct from the cooperative society. They have no privity of contract with the complainant. Therefore, they cannot be held responsible for any deficiency in service on the part of the cooperative society. In support of his contention, learned counsel for the petitioner has referred to section 30 of Punjab Cooperative Societies Act, 1961. 8. Learned counsel for the respondents complainants on the contrary has submitted that President, Secretary or the Office Bearer of a cooperative society were running the affairs of the cooperative society. Therefore, they are directly responsible for deficiency in service. It is further contended that the petitioner who was the Presiden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for consideration which has been paid, promised or partly paid and partly promised or under any deferred system of payment subject to the exception that a person hiring any service for commercial purpose shall not be a consumer for the purpose of the Act. 11. Complaint has been defined under section 2(1)(c) of Act as under: (i) an unfair trade practice or a restrictive trade practice has been adopted by any trader or service provider; (ii) the goods bought by him or agreed to be bought by him; suffer from one or more defects; (iii) the services hired or availed of or agreed to be hired or availed of by him suffer from deficiency in any respect; (iv) a trader or service provider, as the case may be, has charged for the goods or for the service mentioned in the complaint a price in excess of the price - (a) fixed by or under any law for the time being in force (b) displayed on the goods or any package containing such goods ; (c) displayed on the price list exhibited by him by or under any law for the time being in force; agreed between the parties; (v) goods which will be hazardous to life and safety when used or being offered for sale to the public,-- (A) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act, particularly Section 36 has observed thus: "As stated above, in view of the provisions of Section 36 of the Maharashtra Co-operative Societies Act, the society can be proceeded against and can be sued or the society may defend any action in Civil Court or forum. However, so far as members of the managing committee are concerned, they stand on totally different footing and they cannot be held responsible to contribute to the damages or make payment in respect of dues recoverable from the society unless the methodology prescribed under the Act for holding them responsible for making such payment is adopted. In my view, the Consumer Protection Act, 1986, does not prescribe modalities for holding inquiry against the Directors in respect of acts or omissions committed by them. Unless the members of the managing committee are held responsible for any act detrimental to the interest of the society or any inaction on their part, which caused wrongful loss to the society, they cannot be held responsible to contribute the loss or in respect of liability, which is required to be borne by the society. The forum created under the Consumer Protection Act, 1986 does not provide for an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided by that Act". Since then, however, the Courts have come to recognize several exceptions to the said rule. While it is not necessary to refer to all of them, the one relevant to us is "when the corporate personality is being blatantly used as a cloak for fraud or improper conduct". [Gower: Modern Company Law - 4th Edn. (1979) at P.137]. Pennington [Company Law - 5th Edn. 1985 at P.53] also states that "where the protection of public interests is of paramount importance or where the company has been formed to evade obligations imposed by the law", the court will disregard the corporate veil. A Professor of Law, S.Ottolenghi in his article "From Peeping Behind the Corporate Veil, to Ignoring it Completely" says "the concept of 'piercing the veil' in the United States is much more developed than in the UK. The motto, which was laid down by Sanborn, J. and cited since then as the law, is that 'when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons. The same can be seen in various European jurisdictions". [(1990) 53 Modern Law Review 338]. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rading with enemy is sought to be defeated, the veil of corporation is lifted by judicial decisions and the shareholders are held to be 'persons who actually work for the corporation ." In DHN Food Distributors Ltd. & Ors. v. London Borough of Tower Hamlets [ 1976 (3) All.E.R. 462 ], the Court of Appeal dealt with a group of companies. Lord Denning quoted with approval the statement in Gower's Company Law that "there is evidence of a general tendency to ignore the separate legal entities of various companies within a group, and to look instead at the economic entity of the whole group". The learned Master of Rolls observed that "this group is virtually the same as a partnership in which all the three companies are partners". He called it a case of "three-in-one" - and, alternatively, as "one-in-three". The concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people. Where, therefore, the corporate character is employed for the purpose of committing illegality or for defrauding others, the court would ignore the corporate character and will look at the reality behind the corporate veil so as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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