SHETKARI SAHAKARI SANGH LTD. , PANSE CHEMICALS PVT. LTD vs PANSE CHEMICALS PVT. LTD. , SHETKARI SAHAKARI SANGH

-THE above two cross appeals are directed against the order of 5th October, 1991 of the State Commission of Maharashtra in Case No. 99 of 1990. THE Appellant in appeal No. 64 of 1992 Shetkari Sahakari Sangh Ltd. (Sangha for brief) is supplier of furnace oil to various industries in and around Kolhapur. It purchases furnace oil from M/s. Bharat Petroleum Corporation. Respondents No. 2 & 3 in these appeals. THE Appellant Sangha stores the furnace oil it purchases from the Bharat Petroleum in its tanks at Kolhapur and thereafter supplies to its customers through its furnace oil tankers.

THE Appellant Sangha supplied 10,000 litres of furnace oil to the Respondent. M/s. Panse Chemicals Pvt. Ltd. on 12th October, 1989 at Vetore in the District Sindhudurg at a distance of 175 Kms. According to the Respondents, the oil delivered in October, 1989 created serious problems at the sodium silicate furnace. Since nothing was found to be wrong with the inside of the furnace the Respondent closed the operations of the Unit and sent the samples of furnace oil to the Indian Chemical Laboratory, Pune for analysis on 14th February, 1990. The analysis report showed that the furnace oil contained about 54% to 64% bitumen and hence it was heavily adulterated.

The Respondent purchaser complained to the Appellant supplier about the quality of the furnace oil on 16th March, 1990. Meanwhile the Respondent purchaser had consumed 5,000 litres of the furnace oil. Respondent Bharat Petroleum claims to have supplied pure furnace oil. Hence the adulteration could have taken place subsequently.

AFTER examination of the facts and evidence the State Commission came to the finding that the Appellant herein, the Sangh, was negligent in the manner of rendering service as it did not deliver furnace oil in the same condition in which it was supplied to them by the Respondent, M/s. Bharat Petroleum Corporation. The State Commission also came to the conclusion that the respondent complainant had to close his unit due to the furnace oil being adulterated which became sick and suffered heavy loss due to the use of adulterated oil and hence the service rendered by the Appellant supplier was deficient and performed negligently. The State Commission, therefore, ordered that the Appellant supplier should reimburse to the Respondent Complainant the cost of the entire furnace oil viz. Rs. 37,000/- along with interest at the rate of 18% p.a. from 12.10,1989 onwards and take back the balance 5,000 litres of furnace oil lying unconsumed with the Respondent purchaser. In addition, the Appellant supplier was required to pay Rs. 10,000/- as compensation for the loss suffered by the Respondent purchaser. The first question to be considered is whether this is a case of sale of goods or of rendering of service. It would be evident from the facts above viz. that the appellant Sangha was the supplier of the furnace oil. Transportation through oil tanker was a part and parcel of the sale as the delivery was being effected by the Appellant supplier at the premises of the Respondent purchaser. In other words, there was no element of service in this transaction; it was a transaction of sale of goods as such.

AS it was a transaction of sale of goods and not rendering of service. It will be hit by the fact that it was a commercial transaction. In the result, the complainant will not be a consumer under the Consumer Protection Act in life light of the majority order in Synco Textiles Pvt. Ltd. v. Greaves Cotton Co. Ltd. (First Appeal No. 22 of 1989), I (1991) CPJ 499 (NC). There is no doubt that eventually the furnace oil in the custody of Respondent purchaser was found to be adulterated. The question to be considered is at what point of time or stage this adulteration could have taken place; either in the furnace oil storage tanks of the Appellant supplier or during the process of transportation by his oil tanker or after delivery of the oil to the Respondent purchaser. To determine the point of time or stage of adulteration the following facts are relevant: (i) In February, 1990 it was found that the furnace oil was adulterated with bitumen to the extent of 54% to 64%. By about this time, 5,000 litres (50% of the supply) of the furnace oil had already been consumed. Was it technically feasible to inject so highly an adulterated furnace oil in the Sodium Silicate furnace in such substantial quantity viz. 5,000 litres quantity without noticing serious problems in the working of the furnace for about four months from October, 1989 to February, 1990? Prima facie no. (ii) As observed by the State Commission on two occasions the Respondent purchaser opened the furnace presumably because his machines were not functioning properly and his production suffered. He opened the furnace to verify whether there was any defect, but found everything normal inside the furnace. Tie precise dates on which the furnace were opened are not available in the paper book. The use of adulterated furnace oil could possibly damage the furnace but not the machines as it was not used as a lubricant. At the same time, the evidence shows that the furnace was not damaged. (iii) There is a time gap of five months from the 12th October, 1989 to the 16th March, 1990, before the Respondent purchaser complained to the Appellant supplier that the furnace oil was adulterated.

THIS raises the question as to the point of time when the Respondent purchaser should have complained about the defective supplies of furnace oil.

IT was the duty of the Respondent purchaser to have checked the quality of furnace oil supplied immediately or within a reasonable time of the delivery of the oil on the 12th October, 1989. In fact it is easy and a common practice for purchasers of mineral oils to take a sample from each batch for testing purpose. From the records it is not clear whether under the contract or terms of agreement between the parties it was obligatory on the part of the Respondent purchaser to have raised objection about the quality of the supply within a specified time of delivery. But in the absence of any specific agreement between the parties, such objection has to be raised within a reasonable time. Five months time is too long a period for raising such objection in the case of furnace oil. In fact such heavy adulteration with bitumen ranging between 54% to 64%, the furnace oil ceased to be furnace oil, it became more of bitumen and this should have been capable of being detected easily and immediately after the furnace oil was used for the first time and not after having consumed 5,000 litres of the furnace oil. There is force in the contention of the Applicant Sangha in ground No. A of his grounds of Appeal No. 64. In this case it is also relevant to note that the Appellant supplier has averred that it had not received any complaint from any of their customers about the quality of the furnace oil supplied.

Again since our finding is that it is a transaction of sale of goods and not of service, there has been non-compliance with the mandatory provisions of Section 13(c) regarding testing of goods alleged to be defective before the State Commission came to its finding that the furnace oil was adulterated. There is, therefore, merit in ground B in the grounds of appeal of the Sangha No. 64 regarding test report obtained in February, 1990.

THERE is a mention in the order of the State Commission that the complainant''s unit had become sick and had suffered heavy loss. This is also stated in the Affidavit of the Driver of the furnace oil tanker in First Appeal No. 122 of 1992, I (1991) CPJ 499 (NC) who states "I further state that the complainant has closed his unit as it has fallen sick". If the unit had closed down because of the damage done to the machines by use of adulterated oil, it would be misnomer to say that it had become a sick unit. Sickness of an industrial unit is different from break-down of machinery. For the purpose of sickness, it would have been relevant to examine as to since when the unit of the Respondent purchaser started incurring heavy losses and when it became sick and for what reasons. This leads to the suspicion that the unit of the Respondent supplier had already become sick for other reasons and it has been wrongly attributed to the use of adulterated furnace oil. THERE is, therefore, merit in the ground B & H of the appeal No. 64. It will not be within the scope of this Forum to look into these matters further. It is sufficiently established that it has not been proved that the furnace oil supplied by the Appellant supplied by the Appellant supplier was adulterated before or at the time of delivery. In the result, the order of the State Commission is set aside and the Appeal No. 64 is allowed and Appeal No. 122 is dismissed. There will be no order as to costs. Appeal dismissed.