Caterpillar India Private Limited vs Sarangdhar Keshavrao Chouksey & Anr.

The complainant purchased a machine manufactured by the petitioner company from respondent No. 2 who is an authorised dealer of the petitioner, for a consideration of Rs. 15 lacs and took delivery of the machine in October 2006. The machine carried warranty of 3000 hours or one year, whichever was earlier. The case of the complainant is that the machine developed defects from time to time and was taken to the workshop of the respondent No. 2 but the defects were not removed. Lastly the technician of respondent No. 2 visited the complainant in December 2007. He advised overhaul for the machine which the complainant refused since he wanted only the replacement of the machine. Being aggrieved on account of the alleged defects in the machine the complainant approached the concerned District Forum by way of a consumer complaint.

The complaint was resisted by the petitioner as well as by respondent No. 2 who denied any manufacturing defect in the machine. A preliminary objection was taken that the complainant was not a 'consumer' he having purchased the machine for a commercial purpose. It was also stated in the written version that the machine was handled by an unskilled person and that had resulted in the machine developing defects. Vide its order dated 12.05.2009 District Forum directed the petitioner to replace the machine with fresh warranty and directed the complainant to return the old machine to petitioner. A compensation of Rs. 1 lacs and costs quantified at Rs 2,000 was also awarded. The complaint was dismissed against the respondent No. 2 who had sold the machine.

Aggrieved from the order passed by the District Forum both the petitioner company as well as the complainant preferred separate appeals before the concerned State Commission. Vide impugned order dated 14.10.2014 the State Commission directed the replacement of the machine with a fresh warranty against return of the old engine. Rest of the order passed by the District Forum was confirmed.

As regards the preliminary objection the Ld. Counsel for respondent No. 2 has pointed out that in paragraph 8 of the complaint the complainant himself has alleged that he was paying heavy salary to the persons who were operating the machine and this by itself would show that the machine was purchased for a commercial purpose. The case of the complainant, on the other hand, is that the machine was purchased by him for the purpose of earning his livelihood he being a petty contractor. In reply to a questionnaire served upon him the complainant maintained that he was a small-time civil contractor and had employed only two persons. Thus, what stands established is that the complainant had employed two persons who were operating the machine for him and he was earning his livelihood through use of the machine.

The issue involved herein recently came up for the consideration of the Hon'ble Supreme Court in Paramount Digital Colour Lab & Ors. Vs. Agfa India Private Limited & Ors. (2018) wherein the appellants who were unemployed graduates decided to start photography business in partnership for self-employment and for their livelihood they purchased a Mini Lab machine for developing the photographs by use of Digital Technology for a consideration of Rs.62.00 lacs. Alleging defect in the said machine, they filed a consumer complaint before the State Commission. The complaint was partly allowed by the State Commission. The appeal preferred by the opposite party before this Commission having been allowed, the complainants approached the Hon'ble Supreme Court by way of an appeal by Special Leave. Dealing with the question as to whether the appellants were consumers as defined in Section 2(1)(d) of the Act, the Hon'ble Supreme Court inter-alia observed and held as under:

"11. In this case, since the appellants have purchased the machine, Section 2(1)(d) of the Act is applicable. "Consumer" as defined under Section 2(1)(d) of the Act does not include a person who obtains goods for a "commercial purpose". The Explanation supplied to Section 2(1)(d) clarifies that "commercial purpose" does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of "self-employment". If both these provisions are read together, it leads to the conclusion that if a person purchased the goods for consideration not for any commercial purpose, but exclusively for the purposes of earning his livelihood by means of "self-employment", such purchaser will come within the definition of "consumer". If a person purchases the goods for a "commercial purpose" and not for the purposes of earning his livelihood by means of "self-employment", such purchaser will not come within the definition of "consumer". It is therefore clear, that despite "commercial activity", whether a person would fall within the definition of "consumer" or not would be a question of fact in every case. Such question of fact ought to be decided in the facts and circumstances of each case:

"Self-employment" necessarily includes earning for self. Without earning generally there cannot be "self-employment". Thus, if a person buys and uses the machine exclusively for the purposes of earning his livelihood by means of "self-employment", he definitely comes within the definition of "consumer". In the matter on hand, the quality of ultimate production by the user of the machine would depend upon the skill of the person who uses the machine. In case of exigencies, if a person trains another person to operate the machine so as to produce the final product based on skill and effort in the matter of photography and development, the same cannot take such person out of the definition of "consumer".

Thus, in our considered opinion, each case ought to be judged based on the peculiar facts and circumstance of that case. Whether the assistance of someone is required to handle the machine, is a question of fact and necessity? Ultimately, if it is purely for a "commercial purpose" and not for "self-employment", the complainant may not get the benefit of the Explanation to Section 2(1)(d) of the Act. The buyers of the goods or commodities for "self-consumption" in economic activities in which they are engaged would be "consumers" as defined in the Act. Furthermore, there is nothing on record to show that the appellants wanted to use the machine in question for purposes other than "self-employment".

Therefore, the point to be considered is whether the appellants have purchased the machine in question for "commercial purpose" or exclusively for the purposes of earning their livelihood by means of "self-employment". There cannot be any dispute that the initial burden is on the appellants to prove that they fall within the definition of "consumer". It is pertinent to mention that respondent No. 4, who is a contesting party, did not choose to file a counter affidavit before the State Commission. In other words, he did not deny any of the claims made by the appellants. None of the parties have led their evidence. Based on the material on record before the State Commission, it proceeded to decide on merits. As the litigation is being fought since 2006 in different Forums, we do not wish to remand the matter, particularly, when there is sufficient material available on record for arriving at the conclusion.

The word "purchaser" means and includes members of his family also. The machine in question was purchased by two partners; both were unemployed graduates. They started a firm namely M/s. Paramount Digital Color Lab at Varanasi, U.P. afresh. The appellants have specified that they are unemployed graduates; they planned to start a business of photography for self-employment and for their livelihood, for which they contacted respondent Nos. 2 & 4, which means that they had not planned to start their business of photography till they planned to purchase the machine in question. Having felt the need of the machine in question, they contacted respondent No. 1 and enquired about the salient features and performance of the "Agfa Minilab D-Lab.1 Allrounder" machine. Being impressed by the advice and suggestion made by respondent Nos. 2 & 4, appellants borrowed a loan from the Union Bank of India on 12.7.2004 and placed an order for the purchase of the said machine and paid by draft an amount of Rs. 62,00,000/- towards the cost of the machine along with freight and collateral charges. It is the case of the appellants that they purchased the machine with the fond hope and belief that it would give good results and that they would earn a handsome amount by which their basic needs of livelihood would be fulfilled and that the family of the appellants will survive smoothly. They might have started the business with the help of one operator and helper. Of course, in Paragraph 14 of the complaint, the appellants have used the words "Operators and Helpers". This portion of the complaint has been highlighted by the National Commission to conclude that the appellants were using the machine with the help of third parties for commercial purposes inasmuch as they themselves were not using the machine personally. Such averment by the appellants in the complaint appears to be an exaggerated version with a view to get more compensation. One such stray sentence will not tilt the balance against the appellants. The material needs to be seen in its entirety and not in isolation. Since there is nothing on record to show that they wanted the machine to be installed for a commercial purpose and not exclusively for the purposes of earning their livelihood by means of self-employment, the National Commission was not justified in concluding that the appellants have utilised the services of an operator or a helper to run a commercial venture. One machine does not need many operators or helpers to complete the work entrusted. Since the appellants were two partners, they must have been doing the work on their own, of course, may be with the aid of a helper or an operator. The machine would not have been used in a large-scale profit-making activity but, on the contrary, the appellants purchased the machine for their own utility, personal handling and for their small venture which they had embarked upon to make a livelihood. The same is distinct from large-scale manufacturing or processing activity carried on for huge profits. There is no close nexus between the transaction of purchase of the machine and the alleged large-scale activity carried on for earning profit. Since the appellants had got no employment and they were unemployed graduates, that too without finances, it is but natural for them to raise a loan to start the business of photography on a small scale for earning their livelihood.""

Hon'ble Supreme Court in Madan Kumar Singh (Dead) v. District Magistrate, Sultanpur & Ors., (2009) 9 SCC 79 inter alia held as under:-

"25. Apart from the above, it may also be seen that the purchase of the truck by the appellant would also be covered under explanation to Section 2(1)(d) of the Act. The appellant had mentioned categorically that he had bought the said truck to be used exclusively by him for the purpose of earning his livelihood, by means of self-employment. Even if he was to employ a driver for running the truck aforesaid, it would not have changed the matter in any case, as even then appellant would have continued to earn his livelihood from it and of course, by means of self-employment. Furthermore, there is nothing on record to show that he wanted to use the truck for any commercial purpose."

In the present case there is nothing on record to show that the complainant is engaged in a large scale business. The evidence available on record shows that he employed only two persons. He claims to be a patty civil contractor. In my opinion, considering the scale of his business, it cannot be said that the machine was purchased by him for a commercial purpose. It seems to have been purchased by him for the purpose of earning his livelihood though instead of himself operating the machine the operators employed by him may be operating the said machine or may be the complainant himself as well as the operator were operating the machine as and when so required. Therefore, I find no merit in the preliminary objection.

Coming to the merits of the case, the State Commission extracted the following from the order of the District Forum while confirming the finding of the defect in the engine of the machine:-

"By analyzing the documents (Documents No. 363) it has come to the Notice of the forum that Complainant purchased a said Caterpillar machine manufactured by OP 1 on 9/10/2006 for the consideration of Rs. 15 lakhs and paid tax of Rs.2,44,800 on the said machine. Complainant has reported about the defects in the said machine, from time to time. It is evident from the Service report at Document No. 8 dated 8/1/2007 that Complaint was made as the machine was becoming over heated. According to the service report, the radiator had choked because of which the radiator was serviced and new coolant was filled. Thereafter according to service report dated 18/5/2007, again a complaint was made of over heating. According to the service engineer report the water temperature was above limits. Reportedly due to defect in thermostat element it was removed and bypassed. According to service report of 1/6/2007 complaint made was that of overheating and oil leakage. According to service report the elbow was tightened and radiator was cleaned up. Thermostat was bypassed again. After checking ail the basics since the defect remained the Complainants were intimated that fuel injectors, temperature censors and temperature gauge were required to be checked. As per the Service report dated 16/7/2007 there was a complaint about failure of rubber pop pin. According to the report the tube assembly was changed and it was reported and remarked as blowboy CSO. According to the report on 15/10/2007 complaint was-made that engine was not taking the required load. Reportedly the out filter was in damaged condition and air filter was wrongly fitted which was rectified. The Complainant was advised to change the inner filter and air intake hosepipe pipe. According to the service report of 17/12/2007, there was over consumption of oil and diesel, and the Complainant complained that engine was not taking load and CR bearing warn was out. There are increase in bud gap between piston rings. (Documents 371 to 376). As per the service report dated 14/1/2008, the Complainant refused to give the said machines for repair and asked for total replacement of the machine to the Opposite parties."

I have perused the job cards available on record. The job card available on page 10 of the paper book dated 06.01.2007 refers to the work which the respondent No. 2 had carried out when the technician visited the place of the complainant. It would thus be seen that the problem of overheating of the engine persisted even at that time and the Mechanic had simply removed the thermostat and bypassed the same. He noted that even after checking of the basic things the problem was still there and there was a need to check the injector and some other parts mentioned therein.

A perusal of the job card dated 12.07.2007 available on page 11 of volume 2 of the paper book would show that when the mechanic visited the place of the complainant he complained of high consumption having blowboy, oil consumption and engine not taking load. The job card further shows that the mechanic had dismantled the engine. After dismantling the engine he found that CR bearing had worn out and the piston was also in a bed shape. He recommended overhaul of the engine. This report leaves no reasonable doubt that at least the engine of the machine had manufacturing defects on account of which it was overheating and the defect was so serious that even the CR bearing had worn out and piston rings required overhauling. A perusal of the job card available on page 13 of the paper book dated 08.09.2007 would show that the problem of overheating persisted even at that time. The radiator was found in a choked condition and was dismantled by the mechanic who found machine was working satisfactorily. The job card dated 14.01.2008 on page 14 of volume 2 would show that there was a problem of blowboy and the the Mechanic referred to the earlier service report in this regard. It also shows that the mechanic had visited the site for engine overhauling which the complainant had refused despite having collected the parts from Nagpur store.

Considering the above referred report of the Mechanic I find no justification to interfere with the findings of fact recorded by the fora below in exercise of the revisional jurisdiction of this Commission. This is more so when the State Commission has already substituted the order passed by the District Forum for the replacement of the machine, and has directed replacement only of the engine. The sum awarded by the District Forum and maintained by the State Commission also cannot be said to be unreasonable and excessive in the facts and circumstances of the case. Revision petition be devoid of any merit is dismissed.