Delhi High Court upholds power of consumer commissions to issue arrest warrants

The Delhi High Court recently upheld the power of consumer commissions to issue arrest warrants under the Consumer Protection Act.  [Rakesh Khanna vs. Naveen Kumar Aggarwal & Ors].

Justice Sanjeev Narula noted that under Consumer Protection Act, commissions are empowered with judicial authority akin to that of a judicial magistrate of the first class for executing their directions.

"Hence, the issuance of arrest warrants against the directors of the Judgment Debtor Company for compelling compliance, is well within the ambit of the statutory framework of the CP Act," the order dated September 25 stated.

The Court was hearing a petition by the Director of a company challenging a National Consumer Disputes Redressal Commission (NCDRC) order that upheld arrest warrants issued against him by the Delhi State Commission.

The respondent, Naveen Kumar Aggarwal, had filed a complaint before the State Commission against Rakesh Khanna, the director of a company named VXL Realtors Pvt. Ltd, for alleged deficiency of services and unfair trade practices. 

The Commission had passed an order in Aggarwal’s favour. During the execution proceedings of this order, it had issued arrest warrant against Rakesh Khanna.

Against this order, Khanna moved the State Commission for recalling its order and then the NCDRC which upheld the arrest warrants.

The petitioner argued he was not the director of the company when the cause of action arose and therefore, could not be held liable. He pointed out that a warrant was issued against him after his resignation as the Director, demonstrating a disregard of the changed circumstances.

Additionally, he argued that the warrants were issued against him arbitrarily and without following due process of law under Order XII Rule 41(3) CPC.

The Court rejected Khanna’s contention that he was not the director of the company when the cause of action arose, holding that the liability for not complying with SCDRC’s order falls on all company officials who were responsible for ensuring compliance. 

“Petitioner’s role as a director, places upon him an obligation to ensure that the Company complies with the order of the SCDRC, failing which he becomes liable under the provisions of the CP Act,” the Court observed. 

Therefore, while holding the director of the company Rakesh Khanna responsible for non-compliance of the State Commission's order, the Court upheld the arrest warrants issued against him.

It held that the State Commission was vested with both the jurisdiction and authority to enforce its orders, which includes the power to issue arrest warrants.

“The CP Act is explicit on this point: those in charge of a company at the time of non-compliance are accountable. By holding a directorial position during this period, the Petitioner is naturally included in this responsibility. Additionally, the Petitioner’s reliance on procedural aspects of CPC is equally misplaced. The CP Act grants the SCDRC the power to act with the authority of a Judicial Magistrate for trial of offences under Section 72(1) of the Act, which includes the power to issue warrants of arrest. The arrest warrants, therefore, are issued under the CP Act’s specific provisions, and not the CPC. In this context, the issuance of these warrants is both appropriate and within the Commission’s jurisdiction,” the order stated.

The Section 72 of the Consumer Protection Act, 2019 confers powers of a Judicial Magistrate first class for trial of offences on NCDRC, SCDRC and DCDRC for ensuring compliance of its orders.

Advocates Saurav Kumar, Rajesh Kumar and JS Matta appeared for Rakesh Khanna

[Read judgment]