REV.FR.FERDINAND KAYAVIL vs MAHAVIR GUPTA

THE complainant is running Ozanam Eye Centre, Benziger Hospital at Quilon. According to the complainant this is being run by a registered charitable mission hospital administered by the Bishop of Quilon. It is engaged in providing treatment for eye patients for which purpose free eye camps are Regularly conducted and poor patients are given medical and surgical care totally free. This institution is recognised by the Government of India from which it received a grant of Rs. 2 lakhs for purchasing new equipment so as to improve the medical services.

THE complainant purchased an Argon Laser unit (Photocoagulator) with accessories for a total CIF value of US$ 30,000 from M/s. Universal Medical Products, USA with one year''s warranty. The purchase was negotiated in December, 1989 through M/s. Apu Impex, of which the Opposite Party is the M.D. Bombay and was installed in June, 1990, after providing the facilities required for the installation of the Argon Laser unit. The installation was also done by the service engineer of the opposite party M/s. Apu Impex Bombay. The laser unit, however, first stopped functioning on 19th April, 1991. The service engineer of the opposite party stated that Argon Laser unit had stopped working due to a short circuit which was rectified. Again it did not function in June, 1991 and this was found to be due to some fault in the transistors and indicators. The Argon Laser unit did not function satisfactorily and in July, 1991 the opposite party requested the supplier of the equipment viz. HGM Inc., USA for a new power supply under the warranty but this did not materialise. In the result, the laser unit remained in disuse. According to the complainant the prolonged disuse of the unit would have meant deterioration of the laser tube which is the heart of the unit. According to the complainant, it was not sufficient to otherwise repair the unit without replacing the tube "because the laser tube having deteriorated, the longevity of the laser unit will become severly reduced". So the complainant asked for the replacement of the Laser tube along with the other parts to make the unit functioning. As the opposite party did not do so, it asked for a sum of Rs. 16.61 lakhs from the opposite party including refund of the cost of the unit, interest, loss of clientele, goodwill and reputation and costs for prosecuting the complaint. The opposite party M/s. Apu Impex have stated that the Argon Laser unit functioned smoothly from the time of installation to 12th January 1991 when a fault was rectified. In April 1991 it suffered short circuit which was also rectified. It was replaced in January 1992 the power supply equipment to start the laser and that thereafter the laser unit was functioning satisfactorily. The opposite party M/s. Apu Impex maintained that they had rendered necessary service for repairing the equipment whenever necessary and that it was not functioning due to improper handling and bad maintenance and that such an electronic equipment required regular servicing and that there was also no problem with the laser tube as such.

DURING the course of hearing, a question arose whether the Eye Centre was being run as a commercial concern and if so whether the purchase of the Argon Laser unit was for a commercial purpose. The complainant was called upon to produce the audited balance sheets and the profit and loss accounts of the hospital for a period of three consecutive years. Originally he submitted on 18th February, 1993 the Income and Expenditure Account and the Balance Sheets for the period from 1-1-1989 to 31-3-1990, 1990-91 and 1991-92 with a certificate from the Chartered Accountant that it had been "Verified and found correct." He had also submitted a certificate from the Chartered Accountant that the centre was exempted under Section 10 (22A) of the Income Tax Act and hence they were not assessed to tax under Section 10 (22 A)"the income of a hospital for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or rehabilitation existing solely. for philanthropic purposes need not be included in the computation of taxable income. However, from the copy of the assessment order for 1986-87 of the Assistant Commissioner of Income Tax, it is seen that the Complainant assessee had returned his "Net taxable income as per the return filed by the assessee" as "Nil".

THE opposite party M/s. Apu Impex pointed out that the Balance Sheets and Income and Expenditure Statements of the Centre submitted had not been duly audited and they were merely copies of the ledger of the complainant. The balance sheets were not signed by the auditor as well as by the concerned parties nor there were any reports of the auditor on the financial statements. Further that the balance sheets for the year ending 31st March, 1990 showed a profit of Rs. 4.80 lakhs; for the year ending 31st March, 1991 the profit was of Rs. 80,000 and for the year ending31st March, 1991 the pro fit was of Rs.2.30 lakhs. It also contested the contention of the complainant that the Eye Centre was registered as charitable trust or institute and averred that the claim of the complainant that that centre was carrying on charitable activities was totally false and misleading. Certain additional documents were filed by the complainant on 23rd of February, 1993. They were Income and Expenditure Accounts and Balance Sheets of the Eye Centre for the years ending 31-3-1990, 1990-91, and 1991-1992. The Chartered Accountant has recorded on these statement of accounts "Audited, verified and found correct".

THESE are not statement of accounts which are deemed to have been audited as required under the law. The auditor has to furnish a certificate that the books of accounts have been maintained properly and that they give a fair and true view of the financial affairs of the institution.

A perusal of the statement of accounts indicates that this eye centre has a substantial income from various services; to list: income from various services was as under as per the Income and Expenditure Account for the period ending 31st March, 1992: By medicines, injection and Dressing: : Rs. 3.09 lakhs, By Rent: Rs. 1.49 lakhs, By Treatment charges : Rs. 1.22 lakhs, By Consultation fees : Rs. 1.48 lakhs, By Dispensary collection : Rs. 1.31 lakhs, By Refraction collection : Rs. 1.34 lakhs, By Anaesthesia collection : Rs. 2.34 lakhs, By Operation fee : Rs. 12.23 lakhs, By Contact Lens : Rs. 7,15 lakhs. Profit (excess of Income over Expenditure) = Rs. 2.37 lakhs. It is evident from the statement of accounts that the eye centre is a profit generating centre and running on commercial basis. The fact that free treatment is also being provided to some persons (in 1991-92, the value of the free treatment provided was quantified at Rs. 3.36 lakhs) does not alter the fact that the eye centre is a medical service activity being conducted on a commercial basis. As such the equipments, the Argon Laser unit, was acquired for a commercial purpose and hence a complaint in regard to such purchase cannot be maintained before the Consumer Forum constituted under the Consumer Protection Act, 1986. The complaint, therefore, is dismissed as being not maintainable. This is without prejudice to the right of the complainant to seek redress of his grievances in a Civil Court if he is so advised.