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Issues Involved:
1. Applicability of Section 27 of the Consumer Protection Act, 1986 to companies. 2. Application of the principle of "lifting the veil." 3. Detention of the first petitioner under Article 21 of the Constitution of India. 4. Liability of the petitioners limited to the value of shares and the impact of winding-up proceedings. 5. Alleged violation of Article 14 of the Constitution of India by Section 27. Detailed Analysis: Point 1: Applicability of Section 27 to Companies The petitioners argued that Section 27 of the Consumer Protection Act, 1986, which allows for penalties, does not apply to companies, as the term "person" in Section 2(1)(m) does not explicitly include companies. The court rejected this argument, stating that the definition of "person" in Section 2(m) is inclusive and not exhaustive. The court referred to Section 3(42) of the General Clauses Act, 1897, which defines "person" to include companies. The court concluded that the term "person" in Section 27 must include companies to fulfill the Act's objective of protecting consumer interests. Thus, Section 27 applies to companies, and Point 1 was decided against the petitioners. Point 2: Lifting the Veil The petitioners contended that the principle of "lifting the veil" applies only when a statute specifically provides for penal action against those in charge of a company. The court disagreed, citing precedents where individuals responsible for a company's actions were held liable even without explicit statutory provisions. The court emphasized that when corporate personality is used to commit fraud or improper conduct, the court can disregard the corporate entity to hold the responsible individuals accountable. The court upheld the State and National Commissions' decisions to lift the veil and hold the petitioners personally liable, thus deciding Point 2 against the petitioners. Point 3: Detention and Article 21 The petitioners argued that detaining the first petitioner for non-compliance with the decrees violated Article 21 of the Constitution, referencing the Supreme Court's decision in Jolly George Varghese v. Bank of Cochin. The court distinguished this case by noting that Section 27 of the Act creates a statutory offence for non-compliance with tribunal orders, punishable by imprisonment or fine, which is different from civil detention for debt recovery under Section 51 of the Civil Procedure Code. The court held that Section 27 is not violative of Article 21, and the punishment of simple imprisonment was upheld. Point 3 was decided against the petitioners. Point 4: Liability and Winding-Up Proceedings The petitioners claimed that their liability should be limited to the value of their shares and that recovery should occur through winding-up proceedings. The court rejected this argument, stating that the penal provisions under Section 27 are in addition to the recovery methods under Section 25. The pendency of winding-up proceedings does not preclude the Commission from imposing penalties under Section 27. The court also distinguished the case cited by the petitioners, Nova Steel v. Municipal Corporation of Delhi, as it did not deal with penal provisions like Section 27. Point 4 was decided against the petitioners. Point 5: Alleged Violation of Article 14 The petitioners argued that Section 27 is violative of Article 14 of the Constitution, which guarantees equality before the law. The court found no merit in this contention, stating that the provisions allowing for punishment for non-compliance with tribunal orders are not arbitrary and do not violate Article 14. This contention was rejected as unsubstantiated. Conclusion: For the aforementioned reasons, the Civil Writ Petition was dismissed.
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