S.DURGA PRASAD RAO vs BATA SHOES STORE

SHRI S. Durga Prasad Rao, New Delhi filed a complaint under Section 36B(a) of the Monopolies and Restrictive Trade Practices Act, 1969 (for brief the Act) alleging indulgence in unfair and restrictive trade practices by Bata India Limited, respondent No. 2 and its dealer respondent No. 1. A Notice of Enquiry (NOE) was issued on 13.8.1995. The complainant also filed a Compensation Application No. 196/96. This common order is being passed in both these cases, as the cause of action in both is the same.

THE facts of the case as contained in the complaint and the compensation application can be briefly summarised as below. THE complainant/applicant purchased a pair of shoes manufactured by respondent No. 2 from respondent No. 1 for Rs. 949.50 on 28.3.1995. In purchasing the same he was led to believe in the representation of the respondents in their advertisements as well as their reputation they have built that the shoes were of a standard quality. After having owned the shoes for hardly a period of 2 weeks the complainant/applicant realised that there was a manufacturing defect in the soles of both the shoes. THE complainant/ applicant wrote a letter to respondent No. 1 on 6.5.1995 for replacement of the shoes or for refund of the money which the respondents declined. Since alongwith the complaint the complainant had to deposit the shoes he was also forced to buy another pair of cheaper shoes for his immediate requirement. In the compensation application the applicant has asked for the cost of the shoes and reimbursement of the expenses alongwith compensation for mental agony. Since despite proper service the respondent did not respond to the NOE, they were originally set ex parte. The ex parte orders were recalled nearly an year after issue of NOE. In the reply to the NOE respondent No. 2 has made the following main points : (1) The respondent manufactures the goods with utmost care and under stringent quality control and it enjoys reputation world over in respect of its products. (2) The complainant approached the respondent No. 1 after lapse of a period of 42 days after the purchase. (3) The representative of the respondent without going into the merits of the complaint offered 50% refund and thereafter as a special case sanctioned 100% refund which the complainant deliberately did not receive in order to file the complaint for his enrichment.

After the pleadings were complete, the following issues were framed : (1) Whether the respondents have indulged in or are indulging in the restrictive and unfair trade practices listed in the NOE ? (2) Whether the alleged unfair trade practices are prejudicial to public interest, to any consumer or consumers generally and whether the alleged restrictive trade practices are not prejudicial to public interest ? (3) Relief. In Compensation Application (1) Whether the respondents have indulged in or are indulging in the restrictive/unfair trade practices as indicated in the C.A. ? (2) Whether the applicant has suffered any loss or damage as a consequence of the alleged unfair /restrictive trade practices ? (3) To what amount of compensation the applicant is entitled to ?

EVIDENCE in both the complaint as well as the compensation application was led in common. On behalf of the complainant/applicant, the complainant Shri Durga Prasad Rao gave evidence and he was cross-examined by Mr. Rajesh Baweja, Advocate for the respondent. On behalf of the respondent Shri A.K. Trikha, District Manager of respondent No. 2 was produced as a witness and he was cross-examined on behalf of the complainant. I gave a hearing to Mr. Rajesh Mahana, Advocate for the complainant and Mr. D.K. Pandita, Advocate for the respondent. I have carefully gone through the records of the case and evaluated the evidences adduced.

THE complainant has not produced any evidence regarding the representation made by the respondents. Obviously the respondent enjoys the reputation in the market in its field and the respondent has gone on record that its products are subject to stringent quality control. During cross-examination the respondent''s witness admitted that there was a guarantee of 10 weeks after purchasing the shoes. It has been established during the enquiry that the shoes purchased by the complainant/ applicant had a manufacturing defect. THE respondent''s witness specifically admitted that the crack in the sole of the shoe was due to manufacturing defect. Apart from this no evidence was led during the enquiry to further the charge that the respondent indulged in unfair trade practice falling within the definition of Section 36A(1)(i) of the Act. A single deficiency in service cannot by itself gives rise to the charge of indulgence in unfair trade practice to fall within the ambit of this clause. The question for examination in this case is whether the respondents are guilty of unfair trade practice falling within the definition of Section 36A of the Act by indulging in an unfair method as alleged by the complainant. Since shoes had a manufacturing defect, it is obvious, having regard to the nature of goods, the respondents should have either replaced the shoes or refunded the whole amount and not just offer to rectify the defect. The case of the respondent is that the respondents indeed offered 100% refund but the complainant was not willing to accept the same and filed this frivolous complaint for making unjust enrichment by taking "undue advantage". The complainant denies this and stated that the offer of 100% refund was made only after the complaint was filed with the Commission and through the reply to the NOE. The complainant in his affidavit has annexed the receipt dated 6.5.1995 given by the respondent No. 1 which indicated the delivery date as 13.5.1995. This does not indicate the intention of the respondent either to replace the shoe or to refund the amount. On the other hand the respondent in its affidavit has annexed a letter dated 23.5.1995 addressed to the complainant with a copy to its Stores Manager. In this letter there is no mention about 100% refund in the text addressed to the complainant though in the endorsement there is a direction to the Stores Manager to settle the claim 100%. However, no proof has been furnished by the respondent to show the receipt of this letter by the complainant or even for the despatch of this letter. During the cross-examination the respondent''s witness stated that he did not know whether the complainant acknowledged the offer of the respondent of 100% compensation in writing. The witness also stated that the respondent had sent its salesman to the complainant at the latter''s Residence for the settlement of the dispute but admitted that it was after filing the complaint. In the reply to the NOE, which was filed on 6.8.1996, the respondent had stated that its Manager was advised to grant 100% refund as a special case and also granted the necessary approval. In the reply to the NOE there was however no reference to any letter issued to the complainant much less a reference to the letter dated 23.5.1995 on which the respondent later relied. During the arguments, the Advocate for the complainant pointed out that while it was king argued now that the respondent was willing to offer 100% compensation due to manufacturing defect, in the reply to the NOE they had indicated that they were willing to offer 100% refund as a special case without admitting that the shoe had a manufacturing defect. It was the stand of the respondent that the shoes were returned 42 days after the purchase and after use by the complainant. 10.On the facts and circumstances of the case and the evidences led by both the parties, it has been established that the pair of shoes had a manufacturing defect and it was returned within the guarantee period of 10 weeks. It is also clear that the respondent was willing to offer 100% refund in respect of the shoes. What has not been established is that the respondent indeed offered the refund to the complainant/applicant before he filed the complaint with the Commission. The allegations of the complainant that the respondents were not willing to either replace the shoes or for 100% refund and were only willing to rectify the defects giving rise to the complaint have not thus been effectively rebutted. 11. There has been no evidence that the respondents are guilty of indulgence in unfair trade practices falling within the definition of Section 36A(1)(i) of the Act. As already pointed out a single instance of deficiency cannot give rise to the charge that unfair trade practice has been committed the terms of Section 36A(1) of the Act. In the face of a guarantee about the quality of the goods for a specific period of time if the respondent declined to replace the goods or refund then price paid it would certainly amount to an unfair trade practice. In the complaint apart from the facts of the case no other instances have been cited. The respondent has also established his intention to refund the whole amount to the complainant. The only point, which has been in dispute, is whether such an offer on the part of the respondent was because of the fact that the complainant had approached the Commission or independent of that. Since the respondent has taken the stand that where there was a manufacturing defect it was willing to refund the entire amount and in this particular case the retail outlet was not empowered to take such a decision, I am of the view that in this UTPE case it is not necessary to pass any order under Section 36D of the Act to call upon the respondent to "cease and desist". However, in the compensation application which has been filed .the interest of the applicant has been prejudicially affected by the action of the respondents as it has been established that notwithstanding the manufacturing defect in the shoes a replacement of goods or refund of the price of the goods purchased was not offered to him. In the premises, I hold that for the limited purpose of disposing of the compensation application the respondents were guilty of adopting unfair method falling within the ambit of Section 36A of the Act. The question now is whether the applicant has suffered any loss or damage and whether he is entitled for any compensation. While the applicant should who certainly be compensated for the loss of the money in purchasing the shoes with a manufacturing defect as he has been deprived of its use, considering facts and the circumstances of the case, I am of the view that the applicant cannot be considered to have suffered mental agony on account of this incident of the magnitude deserving of any compensation. However, it is a fact that he was placed in a situation to take recourse to legal proceedings in order to recover from the respondents his entitlement. In this view of the matter, I am of the opinion that applicant is entitled for the costs and the respondent should be made to contribute towards it which I assess as Rs. 2,000/-. In the premises, I direct that the respondents shall pay to the applicant in compensation application an amount of Rs. 949.50 being the price of the pair of the shoes alongwith an amount of Rs. 2,000/- as cost. C.A. disposed of.