Litigation against Company
Who Can imitate Litigation Against a Company?
Consumer in general parlance means "one who consumes". A consumer who buys goods or avails of services of a company, may sue a company for any defects/ deficiency.
A. A consumer may file a complaint before MRTPC, for any "Unfair Trade Practices", adopted by the company (sec. 36 A of MRTP Act)
The "Unfair Trade Practices" adopted by the company may relate to :
- Making false representation of quality of goods or services
- Giving a false guarantee or services.
- Falsely representing a govt. the price
- Gives a false advertisement
(Sec. 10) a consumer may also file a complaint before MRTPC, for any "Restrictive Trade Practice", adopted by company
The Restrictive Trade Practice, means a trade practice adopted by company in such a manner which:
- Affects the competition,
- Obstructs the free flow of capital, and
- Imposes unjustified cost on the consumer. Sec. [2(0)]
The MRTPC, on receipt of complaints from consumer in record to unfair / Restrictive Trade Practice, may pass such order, as it thinks fit.
(B) A consumer may also approach the consumer forum, for any defects/ deficiency in goods brought or services availed from a company. However, under the consumer forum, he has to be a consumer, i.e. he should have bought the goods or hired services for his own personal use, and not for any commercial purpose.
Example of "Defects in goods" may be :
- New Television set brought not working properly,
- New Car brought, not running smoothly
Examples of "Services availed" may relate to :
- Delay in allotment of flat,
- Negligence in conducting operation
Consumer forum is divided into three parts, according to jurisdiction.
- Complaint, where value does not exceed Rs. 5 lakhs - District comm.
- Complaint, where value does not exceed Rs. 20 lakhs , and above Rs. 5 lakhs . - State Commission.
- Complaint over and above Rs.20 lakhs - National Commission.
Advantages of consumer forum", is No Govt. fees, quick disposal and no need for lawyer.
2.People Associated With Company:
People, who transact business with the company, can also file a case against the company. Such people may be Sellers, Agents, Distributors, Money Lender etc.
- Many a times, company is not able to, or is unwilling to pay, to the :
- Seller from whom it brought goods on credit,
- Money lender from whom it borrowed certain sum of money,
- Agent or Distributors, their due commission.
- These people can also file a criminal case, if they feel they have been cheated by the company, or the company has committed some sort of fraud on them.
- These people whose claims are due, may also file a wining up petition before High Court. However it is essential, that they should be named or termed as creditors, in the books of account of company.
- Intent of Agents, Distributors, and even competitions has been also taken care of by MRTP act, 1969
These people can file a complaint or make a reference to Director General for any restrictive trade practice by the company.
Restrictive Trade Practice amount to :
- Restricting the dealer to deal only with company
- Restricting the agent to buy only specific product
- Placing a limit of minimum order to be secured by dealer
- Forcing the dealer / Agent to sell the product only at a fixed price etc.
- Where a reference is made to Director General, it may investigate into the affairs of company, and if thinks so, file a complaint before MRTPC.
3.Share holders/ Members
- Shareholders are integral part of the company. They have a right to participate in the General Meeting of the company, and in the general affairs of business.
- Shareholders can initiate a complaint before Company Law Board (C.L.B) for any of the following :
- Default in calling General Meeting of company
- Default in paying dividend, which has been declared.
- Default in transfer of shares
- Default in further allotment of shares.
- Any sort of oppression or Mismanagement committed upon minority
- Any other act in contravention of companies Act.
- Members can themselves wind up the company by passing a special resolution. Such an order of winding up shall be made by High Court.
- Members can also file a criminal complaints , before a criminal court, alleging misappropriation of money, any forgery committed, any fraudulent act.
In all the above noted points/modes, the central / state government may suo moto initiate complaint, against the company before various tribunals/ courts.
For example the Government may, make a reference to ;
- Board for Industrial & Financial Reconstruction, for declaring the company to be " sick company".
- Director General, under the MRTP Act, for any alleged unfair / Restrictive / Monopolistic Trade Practice.
- Consumer forum, for any complaint regarding defects in goods or deficiency in services.
- For winding up, in case of complaint received from minority members with respect to mismanagement, or oppression.