AI Structured Summary
Not yet generated for this judgment
Judgment
THE complainant, a society registered under the Societies Registration Act, 1964, is a voluntary organisation of the irrigation farmers of Arekurahatti Village, Dharwar District. Its object and purpose thereof include the protection and advancement of claims and interests of the said farmers as consumer of goods. It has 201 members. The society has been authorised by the general body to get redress of grievances of the farmers of the society.
THE first opposite party is the State of Karnataka represented by its Secretary to the Department of Agriculture while the second opposite party is the Director in the Department of Agriculture under the State of Karnataka, the third opposite party is Assistant Director of Agriculture under the second opposite party and similarly the 4th opposite party is the Assistant Director of Agriculture (Cotton). The 5th opposite party (hereinafter referred to as the Company) is registered under the Companies Act as a public limited Company with its registered office at Adalat Road, Aurangabad in Maharashtra. The said Company is engaged inter alia in the business of production/manufacture of variety of seeds and distribution of the same throughout the country, either through its branch offices or authorised agents. In Karnataka, it possesses a wide network to pursue its said business and is also a licensed dealer of cottonseeds, under the Karnataka Cotton Act of 1964. The 6th opposite party is a representative of the Company at its Branch Office in Hubli while the 7th opposite party is the Managing Director and Chairman of the Company and is incharge of the overall administration and management of the Company. The Company, being the licensed producer and distributor of cotton seeds in the State of Karnataka, offered to the farmers of Village Arekurahatti and the surrounding area as the sole producer of the new hybrid seed purported to be ''Shivnath'' cotton seed. To boost its sale falsehoods were spread orally both at Hubli and Arekurahatti by its servants and officers that the said seed, after the publication of draft Notification, has been approved by the State Government for sale by it. Simultaneously, they in their conferences with the farmers of the village both at Hubli and Arekurahatti also represented as to its quality. It was falsely claimed that ''Shivnath'' Cotton Seed has a better yield performance than that of ''DCH 32'' cotton seed, which was hitherto used by the farmers since the availability of irrigation resources in 1981. The yield was falsely represented therein as between 16 to 24 quintals per acre. It was also falsely highlighted that the staple length of the cotton fibre from ''Shivnath'' seeds would be longer than the staple from ''DCH 32'' cotton seeds. Hence, the gullible farmers solely relying upon the said false and vexatious promises made by the Company discontinued the use of ''DCH 32'' cotton seeds and, fell into he trap. Between the month of July and August, 1988 farmers, due to the said inducement, purchased the seed from the 6th opposite party, which is the branch office of the Company. Soon after the sowing, when the seeds sprouted, the farmers realised the low resistance and poor germination capacity of the cotton plants to pest. This had been caused due to the spurious quality oi ''Shivnath'' cotton seeds supplied by the Company. The symptoms were not isolated ones, but were uniform, not only in village Arekurahatti, but also in the surrounding villages, wherever ''Shivnath'' cotton seeds sold by the Company had been used. The farmers became panicky and immediately contacted the 3rd, 4th Opposite Parties and the Company, who advised them the use of pesticides to eliminate the pests. However, the advised remedy did not bear any results. The plants continued to be severely attacked by pests. Thus, some plants went totally barren and others bore very little flowers. Consequently, the farmers suffered heavy loss in the yield of cotton. Against the promise of 16 to 24 quintals of yield per acre, the farmers could not get more than 3 quintals per acre and that too of inferior quality with short staple, the price of which had been quoted at Rs. 800/- to Rs. 1,000/- per quintal in Hubli market. But for the false representations made by the Company the farmers would have continued ''DCH 32'' Cotton Seed and enjoyed the benefits of higher yield. There was no price difference between the ''Shivnath'' cotton seeds and ''DCH 32'' cotton seeds. The farmers have purchased the ''Shivnath'' cotton seeds directly from the branch office of the Company at Hubli. The list of farmers as well as area of cultivation made by them by ''Shivnath'' cotton seeds has been given in the complaint.
IT is the further case of the Complainant that the 6th opposite party, who is the Marketing Manager, became helpless to the ire of farmers. It is believed that he immediately contacted the Head Office at Aurangabad, which did not initially take cognizance of the matter. However, when the pressure from the farmers mounted and the issue assumed to blow up into a public scandal, the Company, to show concern, sent a team of experts to study the matter on spot. The inspecting team visited village Arekurahatti, wherein they met the farmers and also visited the fields of each of the farmers separately. During the said visit of the inspecting team, the farmers angrily cross-examined the members of the team, who were neither in a position to advise the farmers, nor were they authorised to suggest any immediate remedy. Thus, the Company itself, in a suspicious manner, withdrew its responsibility even to advise the farmers at this stage also. Village Arekurahatti this season had received the normal annual rainfall and water through the canal has been supplied without any interruption during the season. The village has not experienced any natural hazard or calamity. Moreover, the farmers, due to the early reports of the pests in the plants, took extra care and caution to fight the same. The farmers were compelled to seek help at the Local Self Government level. The Zilla Parishad of Dharwad, upon such request as well as due to the public pressure sent its standing committee on agriculture and animal husbandry to investigate and enquire into the facts relating to ''Shivnath'' seeds. The committee was also accompanied by Dr. S.N. Kaddappah, Senior Scientist Cotton, South Zonal Coordinator. The committee among other villages visited Arekurahatti on 21st December, 1988 and inspected the fields. It also held conferences with the farmers and examined some of them. The committee also made the comparative study of ''Shivnath'' and ''DCH 32'' crop standing in the fields of Lakkannavar and Mulgund. The committee had also examined the Zonal Manager of the Company. The committee upon deliberations concluded that, the Company has supplied spurious seeds under the brand name of ''Shivnath'' and consequently, the farmers have suffered heavy losses. The farmers who had sown cotton seeds under the brand name of ''Shivnath'' had suffered heavy losses due to its inferior and defective quality. The yield of cotton has not been more than 3 quintals per acre in any of the said lands. Even this cotton has no price in the market due to its short staple growth. The price of so produced cotton is between Rs. 800/- to Rs. 1,000/- in Hubli market as against Rs. 1400/- to Rs. 1600/- for ''DCH 32'' cotton at Hubli market.
IT is further alleged in the complaint that for the computations of damages suffered by the said farmers in 444.00 acres of lands situated in village Arekurahatti, the maximum yield of 3 quitals per acre actually produced to use of ''Shivnath'' seeds is assumed as the base point, as against the minimum yield of 16 quintals per acre promised by the Company. Thus, the shortfall in the yield per acre comes to 13 quintals on account of inferior and defective quality of seeds supplied by the Company under the brand name ''Shivnath''. Similarly, the base point for computation of price is calculated by taking into consideration the maximum price offered for ''Shivnath'' cotton seeds as against the minimum price offered for "DCH 32" cotton. The maximum price for ''Shivnath'' is Rs.1000/- and the minimum price for ''DCH 32'' is Rs.1400/- per quintal at Hubli market. Thus the price difference per quintal is Rs. 400/-. Hence for the growth of one acre of ''Shivnath'' cotton the farmer has actually suffered the minimum loss of Rs.19,400/-. Thus, the farmers have suffered a loss of Rs. 86,13,600/- (i.e. Rs. 19,400 x 444). In addition to the above damages, the opposite parties are jointly and severally liable to pay a sum of Rs. 100 lacs as exemplary damages. According to the complainant, the Company and its Board of Directors are guilty of gross negligence for making recklessly false statements without believing in truth or otherwise, as to the quality of staple and quantity of yield obtainable from Cotton Seed under the brand name ''Shivnath''. They are also guilty of gross negligence for making palpably false statements that ''Shivnath'' cotton seeds have been approved by the Government of Karnataka. They are also guilty of gross negligence for making false statements that ''Shivnath'' cotton seed is superior to ''DCH 32'' cotton seed in quality and quantity of yield, though they actually did not believe in it. The are also guilty of supplying to the farmers of Arekurahatti village of defective and inferior quality of seeds under the brand name of ''Shivnath''. The opposite parties Nos. 1 and 2 are guilty of gross negligence for deliberately neglecting to take into consideration the report submitted by University of Agricultural Sciences and thereupon banning the use of ''Shivnath'' seeds offered by the Company. The opposite parties Nos. 1 to 4 are guilty of gross negligence by tacitly allowing the Company in supplying and distributing seeds under the brand name of ''Shivnath''. They are also guilty of abatement by conspiracy with the Company in supplying inferior and defective quality of seeds under the brand name of ''Shivnath''. Thus, the complainant prayed for the award of compensatory damages of Rs. 86,13,600/- to the Complainant for the losses incurred by farmers of Arekurahatti village on account of use of ''Shivnath'' cotton seeds.
OPPOSITE Parties Nos. 1 to 4 have filed a joint counter. According to them the complaint was not maintainable against them under the Act since they have neither sold or delivered any goods or rendered any services to the complainant as to invite the provisions of the Consumer Protection Act, 1986. Whatever advice was given or services rendered by them to the complainant was without consideration. The draft notifications was issued by the State Government to call for objections and suggestions only from concerned personnel who were likely to be affected. It was not an approval of State Government for selling ''Shivnath'' seeds as contended by the Company. The notification never authorised any license holder to sell Shivnath seed which has not even completed the due procedure for the final notification. The complainant never enquired about the said varieties referred in the Notification with any of the officers of the Department before they had purchased and took up sowing. If the complainant has been misled by the Company to believe that ''Shivnath'' is superior, the Department could not be held responsible for the damages so caused to the complainant. The allegation that officers had replied stating that the State Government had no objection to use and grow Shivnath seeds was false and denied. The opposite parties Nos. 1 to 4 were not aware of the fact that the Company had induced the farmers to purchase and sow the Shivnath seeds. The farmers have purchased and sown Shivnath seeds and suffered loss at their own risk. It came to the light only on 28th November, 1988. Soon after the complaints were received, the godown of the said Company at Hubli was searched through Local Magistrate''s order and objectionable records were seized and it was found that the Company had conducted sales of unnotified varieties secretly without the knowledge of the Department of Agriculture. Criminal cases were booked and the unauthorised seeds packets were confiscated. According to opposite parties Nos. 1 to 4 they are not guilty of any negligence.
OPPOSITE parties Nos. 5 to 7 also filed a joint counter. The competency of the society who filed the complaint was challenged and it was alleged that it is not a consumer nor does it represent any consumer and on the other hand it is an organisation of busy bodies and middle-some interlopers. On merits it was pleaded that the allegation that the Company and its officers advertised and canvassed for the sale of Shivnath cotton seed in Arekurahatti village and other areas is not correct. It is also false to say that the Company or its officials held conferences and made representations to the effect that Shivnath cotton seed would fetch 16 to 24 quintals of yield per acre etc. No propaganda as alleged in the complaint was ever made by the Company or any of its officials. Nobody was induced to buy any particular seed by the Company. The allegation that the farmers being gullible fell prey to the alleged false and fictitious promises made by the Company are all false. No farmers either individually or collectively met the Company or its officials. It was false that the farmers purchased the seeds from the 6th opposite party. The Company never sells the seeds directly either at its office or through its officers, but all the marketing is done only through its Distributors. The farmers of Arekurahatti village have not purchased any Shivnath cotton seed from the Company. It is not known to the Company that from where the said farmers purchased their cotton seeds or which brand they have purchased. If some dealer has sold them some spurious seeds, the Company is not responsible for it. Shivnath cotton seed is a hybrid which has been tested by series of Government, Semi-Government agencies and innumerable certificates and results have come out in support of Shivnath Hybrid Cotton Seed. It has universally proved that Shivnath is one of the best Cotton Hybrid available in the country today and it has improved considerably upon the performance of ''DCH 32''. Therefore, the statement made on the contra in the complaint regarding quality of Shivnath cotton seed is false. Pest attack is a common phenomena and if it happens to the farmers of Arekurahatti there is nothing surprising or strange about it. The Company had a Distributor at Bagalkot by name Shri B.V. Patil. Shri B.V. Patil''s brother is also a Dealer having his shop in Hubli. The said B.V. Patil, the Distributor for Bagalkot are indulging in selling spurious cotton and other seeds under the trade name of Nath seeds. He was resorting to this practice because of the immense popularity of Nath seeds and when this came to the notice of the Company, it immediately filed a private complaint in June, 1988 in the Court of Judicial Magistrate at Bagalkot and got an order for attachment of the spurious stock. The Distributorship of this party was immediately terminated by the Company and a public notice to that effect and about to the sale of spurious seeds was issued in the larger interest of farmers. The said B.V. Patil has his office at Bagalkot. Some of the stock was also attached by the Police. But it appears that the said B.V. Patil transferred some of his spurious stocks to his brother''s shop at Hubli. The said B.V. Patil was arrested by the Police in that regard. He felt deeply offended and he and his brother V.V. Patil in Hubli had started a campaign against the Company and its products. The two persons being locally powerful persons and connected with the M.L. As., and high officers went on spreading rumours against the Company. The distribution arrangements of the area from where the problem has come is covered by a very close relative of B.V. Patil. Taking advantage of this situation they themselves supplied spurious seeds in this area with the sole object and view of destroying the business of the Company and in order to take revenge against it they went on telling the villagers and other people that those were Shivnath seeds and that Company had cheated the people. The villagers fell into the trap and believed that the Company had supplied inferior quality of seeds. Other allegations of the complainant were also denied. In the light of discussions at the bar, vide order dated January 19, 1990, this Commission considered it necessary to have the evidence gathered through the instrumentality of a Commission. For executing the Commission the work was entrusted to a two-member Committee, one of the members of the committee was Dr. R. Dwarakanath, former Vice-Chancellor of Bangalore Agricultural University and the other one was retired District Judge of the Karnataka Higher Judicial Service. The committee was desired to find out: (1) whether during the agricultural season 1988-89 any of the farmers in the village had used hybrid Shivnath cotton seeds for cultivating cotton on their lands; (2) if Shivnath seeds were used, whether they were of inferior quality or whether the seeds used were spurious; (3) from what source the seeds were purchased by the farmers; (4) whether M/s. Nath Seeds was distributing seeds from their Branch Office at Hubli during the year concerned; (5) what extent of land, if any, in the said village was actually cultivated with Shivnath seeds during the particular year; (6) whether the planting of seeds was done late in the agricultural season and, if so, to what extent, if any, was the crop affected by such late planting; (7) whether there was any loss to the farmers on account of the cotton crop yield being poor in quantity and/or quality and the reason for such poor yield and quality of crop; (8) the names and addresses of farmers who suffered loss, if any, on account of poor yield or inferior quality of crop raised by using Shivnath seeds; and (9) the extent of loss, if any, suffered by each of them. 10. The Commission was also requested to report specifically on the question whether the Shivnath cotton seeds which were supplied to the farmers during that year, assuming that such supply was made, was defective in quality and if so, in what respect. 11. The Commission has since sent its report. After discussion of the evidence, the Commissioners have answered the above points as under:
"(1) Yes. (2) Yes. Used and were of inferior and spurious quality. (3) The farmers went in groups to the shop of R-5 at Hubli and purchased Shivnath seeds at the rate of Rs. 210/- per packet. (4) Certainly yes. (5) 213 acres and 4-1/2 guntas. (6) No. (7) Yes. (8) The names and addresses are given by separate list of which is attached herewith. (9) With regard to the question whether the Shivnath Cotton Seeds which were supplied to the farmers were defective in quality and if so in what respect, the Commission has the following to state: The farmers growing Shivnath Cotton Seec supplied by Nath Seeds Ltd., as Shivnath Seeds, in Arekurahatti have suffered a two-way loss, namely loss in yield and loss in income due to inferior cotton quality. From the evidence brought before the Commission it is clear that Nath Seeds Ltd., has been conducting an aggressive salesmanship regarding Shivnath Seeds in the area. It is also clear from the evidence that this variety had not been certified, had not been endorsed as hybrid seeds, and had not been subjected to multi-location trials in Karnataka. However, Nath Seeds Ltd., on the other hand, has claimed all these attributes to Shivnath Seeds, they were selling, which were contrary to the facts, as seen from the letter addressed by the representative of Nath Seeds Ltd., to the Director of Agriculture Exhibit C.E.44 (copy enclosed). It is concluded, therefore, on the basis of not only the experience of Arekurahatti farmers but also on the findings of the investigation of the Agricultural Sub-Committee of the Zila Parishad as well as on the findings of the experts of the university and / the Department of Agriculture that the seeds sold by Nath Seeds Ltd., Hubli as Shivnath Cotton Seeds to the farmers of Arekurahatti were in fact spurious. As such, the performance of this cotton variety in Arekurahatti was poor both in yield and in cotton quality. The farmers, as a result, have incurred loss from growing Shivnath Cotton both in terms of yields per acre, as well as market price for this cotton."
THE Company has filed objections to the report of the Commissioners. The main objection is that proper opportunity of hearing was not given to them. We have considered the report of the Commissioners carefully and have come to the opinion that Opposite Parties Nos. 5 to 7 are themselves to blame for not availing the various opportunities given by the Commissioners for recording the evidence. We reject the objections filed by the Company.
WE have gone through the report of the Commissioners and find that they have considered all the relevant evidences. Their findings are not vitiated in any manner. Therefore, we uphold the report of the Commissioners. The Commissioners have prepared a statement showing the estimated loss incurred by the farmers of Arekurahatti village due to Shiv Nath cotton seeds grown during 1988-89. That statement is at pages 40 to 46 of the report of the Commissioners. Names and addresses of farmers who incurred loss on account of sowing of Shiv Nath Cotton Seeds supplied by M/s. Nath Seeds Ltd. i.e. the Company has also been prepared by the Company and it is at pages 47 to 49.
WE order that both the lists shall form the part of this order. The various farmers mentioned in the list are awarded amounts as estimated by the Commissioners in the list which is at pages 40 and 46 of the report. These amounts will be payable by the Opposite Parties Nos. 5 to 7 jointly and severally within two months of the receipt of this order. The Complainant is also allowed Rs. 5,000/- as costs of the present proceedings from the said Opposite Parties.