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Judgment
This appeal has been filed by the appellant M/s. Bharath Earth Movers Ltd. (BEML) against the order dated 31.07.2015 of the State Consumer Disputes Redressal Commission, Kerala, ( in short 'the State Commission') passed in CC No.36 of 2011.
The brief facts of the case are that the complainant/respondent No.1 is the proprietor of Surya Associates. It carries infrastructure work for many companies in India. For official work, complainant needed two numbers of BE-200 and one number of BE-200 excavators to carry out work at Chennai port and Goa Shipyard respectively. So he contacted opposite party No.3/respondent No.2, who was dealer for opposite parties/appellant. Opposite parties were manufacturers of excavators. It was informed to the complainant that the excavators and all its part had a guarantee of 1 year. One excavator was delivered to the Chennai Port on 7.5.2009 by the opposite party. An amount of Rs.20,00,000/- was paid to the opposite party No.3/respondent No.2. On 28.5.2009, the so called excavator had a problem. It was rectified by the opposite party. On 26.6.2009, it was recorded in the service report by the opposite party, that due to poor performance of the engine the machine was taken back. All the opposite parties admitted the defect in the excavator but no action was taken by any one of them to rectify the grievance of the complainant. Aggrieved the complainant filed a consumer complaint CC No.36 of 2011 in the Kerala State Consumer Disputes Redressal Commission, Thiruvananthpuram. It was alleged that the act of opposite parties amounted to deficiency in service and unfair trade practices. On the other hand, opposite parties No.1 & 2/ appellant pleaded that the excavator worked only for 156 hours and in that short span, one cannot come to the conclusion that it is a defective one. Opposite party No.3/respondent pleaded that it took the money from the complainant and forwarded it to the other parties. He was not liable as he was only dealer.
The State Commission vide its order dated 31.07.2015 passed the following:-
"In the result, the complaint is partly allowed and direct the opposite parties jointly and severally to pay as follows:
(1) To refund the sum of Rs.20 Lakhs paid by the complainant with interest @9% per annum with effect from the date of complaint till realization;
(2) To pay Rs.2,00,000/- as compensation;
(3) To pay Rs.25,000/- as cost of the proceedings;
The order is to comply within 2 months on receipt of the copy of the order, failing which the opposite parties are jointly and severally liable to pay the said amount with interest @12% from the date of this order till realization."
Hence the present appeal.
Heard the learned counsel for the parties and perused the record. The learned counsel for the appellant stated that the State Commission did not have the territorial jurisdiction to decide the present complaint. Moreover, the complainant is not a consumer as the complainant purchased the machine for commercial purpose. The complainant initially wanted to purchase three machines however, he paid the advance for only one machine and the same was supplied. As the machine was ordered for the contract work at Chennai port, this clearly means that he intended to purchase these machines only for the commercial purpose and for earning profits. To support this contention the learned counsel referred to the judgment of the Supreme Court in Lakshmi Engineering Works vs. P.S. G. Industrial Institute(1995) 3 SCC 583 In further support of his arguments learned counsel referred to the following judgments:-
"(1) Sushila Automobiles Pvt. Ltd. Dr. Birendra Narain Prasad & Ors., RP 1652 of 2006, decided 07.5.2010 (NC)
(2) Birla Technologies Ltd. Vs. Neutral Glass and Allied Industries Ltd. ,2011(1) ALLMR (SC) 919"
It was further argued by the learned counsel for the appellant that the learned State Commission further erred by observing that the BE 200 excavator was suffering from inherent manufacturing defects whereas the damage to BE 200 excavator was due to its abuse and the defects were duly rectified whenever required.
Learned counsel for the appellant stated that the State Commission failed to take expert opinion with respect to the alleged inherent defect and had decided the complaint merely on surmises and suppositions.
Learned counsel for the appellant further argued that the appellant had only received Rs.7.25 lakhs against the total cost of the equipment i.e. 40.00 lakhs and the complaint filed is only to avoid the payment of balance amount.
On the other hand, the learned counsel for the respondent complainant stated that the machine started giving trouble from the first day of use and the Mechanic was to be called. Though the machine was repaired, but it developed defects after little use. All the opposite parties admitted the manufacturing defect in the machine, however, none of them took any action to rectify the same. After inspection of the machine the machine was taken back by the opposite parties as acknowledged in their report dated 26.06.2009. Thus, manufacturing defect has been admitted by the opposite parties and therefore, the complainant cannot be compelled to purchase this machine. State Commission has rightly ordered the refund of the amount deposited of Rs.20,00,000/- to the complainant.
I have carefully considered the arguments advanced by the learned counsel for the parties and have examined the material on record. It is an admitted fact that the machine developed some problem in the initial days of its working which was rectified by the mechanics of the opposite parties. Later on the machine was taken back for repairing the defects. The State Commission has observed the following:-
"8. The complaint arose due to the defect found in the excavator. After the delivery of the excavator on 7/5/2009 with a delay of more than one month there occurred defects on 28/5/2009 which was rectified. Subsequently on 16/6/2009 defects like fan belt broken, overhead problem, oil leakage from servicing motor assembly noticed and replaced new 0. Ring from customer Stock. It is specifically mentioned in the report that oil leakage from Rock Breaker spool dummy valve and requires replacement. Again on 26/6/2009 it is reported (Exbt 8) that control valve assembly, fan, belt, modified water pump were replaced under warranty. The failure details given on 17/06/2009 was the Boom and Arm Spool were frequently strucking and even after replacement the defect persisted. Due to the poor performance of engine the customer is unwilling to take back the machine and the machine is lying with the opposite parties."
These conditions clearly show that the machine was not operating properly and there were defects in the machine as observed by the State Commission. In this situation, I do not see any force in the argument of the learned counsel for the appellant that there was no expert report to prove the manufacturing defect when so many defects developed frequently and the opposite party accepted repairing those defects. No expert opinion is required to prove the obvious.
It is seen that the complainant has purchased only one machine and therefore, it cannot be said that he had a fleet of machines being used by him to generate profits. So far as the judgment of the Supreme Court in Birla Technologies Ltd. vs. Neutral Glass and Allied Industries Ltd.(supra) is concerned, it is seen that the judgment of the Hon'ble Supreme Court relates to provision of services and the present case related to provision of goods as the computer software was ordered by the complainant in Birla Technologies Ltd. vs. Neutral Glass and Allied Industries Ltd.(supra) whereas excavator has been ordered by the complainant in the present case. Thus, the principle laid down in the Birla Technologies Ltd. vs. Neutral Glass and Allied Industries Ltd.(supra) may not be applicable in the present case. Moreover, Hon'ble Supreme Court in Paramount Digital Color Lab & Ors. etc., Vs. Afga India Pvt. Ltd. & Ors. etc. III (2018) CPJ 12 (SC) has held the following:-
"13. 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."
In the present case, the complainant has not shown any other reason for purchase of the excavator except that he would be utilising the same for his own use. Thus, relying upon the judgment of the Hon'ble Supreme Court in Paramount Digital Color Lab & Ors. etc., Vs. Afga India Pvt. Ltd. & Ors. etc. (supra) it can be safely concluded that the complainant purchased the excavator for earning his livelihood through self-employment.
So far as the question of territorial jurisdiction of the State Commission is concerned, it is seen that the dealer is located at Ernakulam. Thus, a part of the cause of action arose at Ernakulam for purchase of the machine, therefore, the State Commission of Kerala had the jurisdiction to proceed with the case. Hence, I do not find any merit in the assertion of the learned counsel for the appellant that the State Commission did not have the territorial jurisdiction to decide the present case. Apart from the above technical issues, the fact of the matter is that the excavator suffered from different defects from the initial period of purchase and the same was left at the premises of the opposite parties for removing the defects. If a person is paying full cost of a machine and is purchasing a new machine, why the purchaser should settle for defective machine even if the same is rendered workable after repairs. Thus, even if all the defects could be removed by repairs and the defects may not be called the manufacturing defects, the purchaser may not be said to be unreasonable and unjustified if he demands the refund of the amount paid and particularly when the full amount has not been paid.
The State Commission has mentioned that the complainant has used this machine for 153 hours. Clearly, the complainant is liable to pay the rent of the machine for 153 hours, if he does not want to continue with the purchase of the machine and wants refund. It seems that the complainant had invited rates of rent for the machine for his work. One such quotation from K.Balasubramanian [Bala] dated 28.06.2009 is available wherein the rent has been proposed to be Rs.2,75,000/- for 200 hours. This gives an idea of the prevailing rent for the machine. Thus, complainant is liable to pay Rs.1,68,300/- for 153 hours.
The State Commission has also awarded a compensation of Rs.2,00,000/-. As the State Commission has already awarded interest at a higher rate i.e. 9% p.a., there is no justification for granting the separate compensation.
Based on the above discussion, the first appeal No.8 of 2016 is partly allowed and the order of the State Commission is modified to the extent that the appellant shall be liable to pay Rs.18,31,700/- (rupees eighteen lakhs thirty one thousand seven hundred only) and not Rs.20,00,000/- as ordered by the State Commission. The order in respect of the award of compensation of Rs.2,00,000/- to the complainant is set aside. Order relating to payment of Rs.25,000/- is maintained. The appellant/opposite party is directed to comply with the order of the State Commission as modified by this order within a period of 45 days from the date of receipt /service of this order.