M.R. Saifi & 2 Ors vs Amit Pandey

Subhash Chandra, Presiding Member

This appeal under section 19 of the Consumer Protection Act, 1986 (in short, ‘the Act’) challenges the order dated 04.01.2017 passed by the Uttar Pradesh State Consumer Disputes Redressal Commission, Lucknow (in short, ‘the State Commission’) in CC no. 9 of 2013, partly allowing the complaint and directing the opposite party/ appellant to pay Rs.13,88,000/- with simple interest @ 9% per annum from the date of filing of the complaint till the date of payment along with Rs.1.00 lakh towards financial loss and Rs.5.00 lakh towards litigation expenses within two months of the date of the order, failing which the entire amount would be payable with interest @ 12% per annum.

The appellant is before this Commission praying to set aside the impugned order, to dismiss the complaint and to pass such other order(s) as deemed fit and proper in the facts and circumstances of the case.

The delay of 26 days in filing of this appeal has been prayed to be condoned vide IA no. 3284 of 2017 on the ground that it took the appellant some time to locate a suitable counsel in Delhi for filing the appeal since they are based at Lucknow. For the reason mentioned in the IA and in the interest of justice, the delay of 26 day is condoned.

We have heard the learned counsel for the parties and perused the records carefully.

In brief the relevant facts are that the respondent entered into an arrangement with the appellant to buy machinery to set up a unit for making welding rods on the assurance that appellant would ensure the sale of the product manufactured. The respondent who was an unemployed youth agreed to take the machinery from the appellant against payment in 12 installments of Rs.45,000/-. The appellant undertook to install the machine worth Rs.15 lakh and the balance amount be paid through Bank finance. The respondent paid a sum of Rs.5,40,000/- in 12 installments of Rs.45,000/- between 09.10.2009 and 22.12.2010. The process for obtaining a Bank loan was initiated based upon a quotation from the appellant. The appellant persuaded the respondent to install a chemical and physical laboratory and wire drawing machine on the possibility of obtaining export orders for the same. A Bank loan was sanctioned for Rs.14,08,000/-. By 02.06.2011, despite the appellant havingpaid Rs.19,48,800/- (including disbursal by the Bank), no machine was supplied. Machine worth Rs.15 lakh was supplied to the respondent in installments by the appellant on 05.11.2011 and despite payment of the balance amount Rs.9,39,200/- on 14.11.201, the machinery supplied was worth Rs.15 lakh against payment of Rs.28,88,000/-. The respondent issued a legal notice and thereafter approached the State Commission in complaint no. 9 of 2013 which came to be decided on contest by way of the impugned order.

The appellant has challenged this order on the grounds that the State Commission failed to appreciate that the complaint was beyond its scope since the terms and conditions of the quotation could not be considered by it. It has also challenged it on the grounds that as per the terms and conditions of the quotation, the machinery was to be supplied only on payment of the full amount and there was no delay in the supply of the machine since payment had not been made in full. The impugned order has also been challenged on the grounds that the State Commission ignored the fact that the respondent after the initial payment of Rs.5.40 lakh did not make any further payment for almost two years till 2011 till the loan was sanctioned by the Bank. It was also argued that the State Commission failed to appreciate that the remaining machines were still lying with the appellant and that the respondent, instead of accepting the delivery, had chosen to seek refund of his money by approaching the Consumer forum. It was also argued that the State Commission failed to appreciate that because of the respondent not accepting the delivery of the machine, the appellant had suffered financial loss and therefore the impugned order was liable to be set aside.

During the course of arguments, the appellant contended that the respondent was not a ‘consumer’ under the Act since the machine had been purchased for a commercial purpose. Reliance was placed on (i) Laxmi Engineering Works vs PSG Industrial Institute ( 1995) 3 SCC 583); (ii) Synco Textiles (P) Ltd., vs Greaves Cotton and Co. Ltd., (1991) 1 CPJ 499; and (iii) M/s Pioneer Automotive Equipments Pvt. Ltd., vs Regional Manager, SBBJ and Ors. (CC no.1818 of 2017)

Per contra, the respondent argued that the machine in question had been ordered by him purely in order to earn his livelihood and it had been agreed between the parties that the respondent would make payments only in 12 installments of Rs.45,000/- each with the balance amount being provided through financing through a bank loan. The arrangement was that the appellant would undertake marketing and sale of welding rods and scope of the arrangement had been extended further on the assurance of export orders for wires for which physical and chemical laboratory and wire, drawing machine was sold by the appellant to the respondent. It was argued that the appellant was a ‘consumer’ under section 2 (1) ( d) of the Act, since the entire arrangement was intended to earn his livelihood and that the argument of maintainability of the complaint on the ground that the respondent was not a consumer had not been raised before the State Commission. It was contended that the despite the full amount of Rs.28,88,000/- having been paid to the appellant, it failed to deliver the machine which was a deficiency in service and the appellant was therefore liable under the Act. The order of the State Commission was contended to be in order and it was prayed that the same be upheld.

On behalf of the appellant it was argued, relying on the judgment of the Hon’ble Supreme Court in the case of K Lubna and Others vs Beevi and Others (2020) 2 SCC 524 and National Textile Corporation Limited vs Naresh Kumar Badrikumar Jagad and Others, Civil Appeal no.7448 of 2011, (2011) 12 SCC 695 and Tata Mills (A unit of the National Textile Corporation Limited) vs TATA Housing Development Company Limited, Civil Appeals No. 7449 and 7450 of 2011 that a question of law could be permitted to be raised at any stage of the proceedings and therefore, the argument that the respondent was not a consumer could be raised by it even in appeal.

Addressing the preliminary issue of maintainability of the complaint with regard to the respondent being a ‘consumer’ under the Act, it is evident that the Hon’ble Supreme Court has held in Laxmi Engineering Works (supra) that the onus of proving that service or product had been obtained for commercial purpose lay on the party making such allegations, which in this case is the appellant. The appellant has not provided any evidence to prove that the respondent was engaged in commercial activity or that it had ordered the machine from the respondent with a view to undertake a large scale commercial activities. On the other hand, the respondent has clearly argued that the purpose of the contract was that the appellant would supply the machinery to set up a small unit for his own livelihood on the assurance that the product would be marketed and sold by the appellant. The same has not been denied by the appellant. Even the subsequent sale of physical and chemical laboratory and wire drawing machine is quite evidently on the suggestion of the appellant on the assurance that there may be a possibility of export orders in case of installation such a machine. The contention of the appellant that the respondent was engaged in commercial activity is not supported by any evidence on record and is contrary to the facts of the case. The contention of the appellant in this regard, therefore, cannot be accepted.

The State Commission’s order has clearly held that it was undisputed that the respondent/ complainant had contacted the opposite party/ appellant for setting up of a welding rod industry for which he had paid Rs.5,40,000/- and that the bank had paid Rs.9.00 lakh through demand draft nos.112218 and Rs.5,08,800/- through demand draft no. 112219 by courier on 03.06.201. This fact has not been refuted by the appellant. It has also been accepted by the appellant that the only machine worth Rs.15 lakh had been supplied as against an order of Rs.28,88,000/-. The State Commission’s conclusion that machinery worth Rs.13,88,000/- related to the physical and chemical laboratory and wire drawing machine since, as per the letter dated 19.08.2010 of the appellant, the breakup of these machines was Rs.7,50,000/- and Rs.6,38,000/- respectively. The State Commission has also concluded that the appellant’s argument that while these machines were ready for delivery, it was the respondent who did not come forward to accept them, lacked force since the obligation was on the appellant to supply the same. The State Commission has therefore, concluded that:

“……………..If there was any amount of the opposite parties that was due towards the complainant the same could have been asked from the complainant but no such evidence has been filed on behalf of the opposite parties which proves that any amount was due towards the complainant after payment of Rs.28,88,000/- for which a demand was raised by them. In such circumstances, there seems to be no proper justification for not supplying chemical and physical lab machines and wire drawing machine by the opposite parties. Hence, the opposite parties, by not supplying machines for Rs.15,00,000/- on time and by not supplying machines of chemical and physical lab and wire drawing machine, have committed deficiency in service. Accordingly, the above issue is disposed of.”

The order of the State Commission has held that the appellant was liable for deficieny in service in not supplying the machine worth Rs.15 lakh on time and not supplying the machines for chemical and physical laboratory and wire drawing machine inspite of receiving the payments.

It is evident from the foregoing that the appellant has failed to substantiate its preliminary objections that the respondent was not a ‘consumer’ under the Act, since it had failed to establish that the purchase of the machine was for commercial purpose. It has also failed to disprove the contention of the respondent that the machine had been ordered for the purpose of earning his livelihood by the respondent. The delay in supplying the machinery has not been contested by the appellant. Even with regard to the machinery worth Rs.13,88,000/- consisting of chemical and physical laboratory machine and wire drawing machine, it is admitted that the machine could not be delivered since the respondent did not come forward. There is nothing on record to prove that the appellant conveyed to the respondent to take the delivery after having received the money through the Bank. The findings of the State Commission that the appellant had been deficient in service can therefore, not be found fault with.

In view of the foregoing discussion, we do not see any reason to interfere with the order of the State Commission which is a well-reasoned order. Accordingly, we do not see any merit in the appeal. The appeal is therefore, dismissed as without merits. The order of the State Commission is affirmed with the following directions:

The amount of Rs.13,88,000/- shall be refunded to the respondent by the appellants with 9% per annum interest from the date of receipt by the appellants within eight weeks failing which 12% per annum till realization;

Appellants shall pay the respondent, litigation cost of Rs.25,000/-;

The order of the State Commission directing to pay Rs.1,00,000/- towards compensations is set aside, since multiple compensation for a singular default are not justified as held by the Hon’ble Supreme Court in DLF Home Panchkula Pvt., Ltd., Vs D S Dhanda and Ors., Civil Appeal no. 4910–4941 of 2019, decided on 10.05.2019.

Pending IAs, if any, stand disposed of by this order.