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Judgment
WITH a view to bring speedy development of Konkan region, Government of Maharashtra decided to finance the project of cashew processing units having a project cost of up to Rs. 5,00,00,000 and cashew processing and manufacturing of cashew liquor units having a project cost of Rs. 10,00,00,000. The State Government also decided to sanction share capital in the ratio of 1:9 in respect of the aforesaid units. The complainant No. 2, which is a society, planned to manufacture cashew units and cashew liquor from cashew apples and, therefore, approached the Government of Maharashtra for assistance under the said scheme. The cost of the project was estimated at Rs. 10,00,00,000 and was sought to be funded by way of loan from opposite party -NCDC to the extent of Rs. 6,00,00,000, share capital from the State Government to the extent of Rs. 3,60,00,000 and the contribution of the society to the extent of Rs. 40,00,000. Vide letter dated 30.7.2004 the State Government recommended the proposal of the society to NCDC for financial assistance. A number of documents were annexed to the said communication sent to NCDC. Vide letter dated 8.9.2004, NCDC requested the Government of Maharashtra that the beneficiary society may be advised to submit the information mentioned in its letter, duly certified by the Competent said letter that the State Government had already recommended two other proposals for financial assistance of Rs. 6,00,00,000 each. Noticing that all the three units were from Sindhudurg District, the said Government was requested to take a consolidated view in respect of the availability of the raw material, marketing of the product and the desirability of setting up three liquor manufacturing units in the same District. This was followed by letters dated 17.2.2005 and 22.3.2005. Vide letter dated 21.4.2005, NCDC requested the Government to furnish the following information: "(a) Whether the proposal has concurrence of Finance Department of Government of Maharashtra.
(b) Present status of the ''special package for development of cashew based industry in Konkan region'' regarding contribution of societies to the tune of 4% for "cashew processing instead of 9% as in case of agro processing."
The aforesaid communication was followed by a reminder dated 3.8.2005.
VIDE letter dated 23.2.2006 the Government of Maharashtra informed NCDC as under: "To make speedy development of Konkan region Government has taken special cabinet decision to finance the Cashew Processing Cooperative Industries on dated 15th October, 2003. Government has also taken a decision to sanction share capital at the ratio of 1:9 for cashew units. And for recommendation of this proposal concurrence has given by Finance Department."
Vide letter dated 1.6.2006 addressed to Government of Maharashtra, NCDC informed the State Government as under in respect of the four projects which the State Government had forwarded to it for financial assistance: "2. It may be observed that all these. societies will operate in the Konkan region. Thus, there will be huge production of fenny (about 1.2 crores bottles by the above units). It is felt that fenny does not have a large consumer base in Maharashtra to sustain such a large volume of. production. NCDC is not convinced, prima facie, of the need to create such a large processing capacity in one region. It is, therefore, requested that comments/views of the Govt. of Maharashtra may be offered on the following issues:
• Demand of fenny vis -vis total production from existing units and proposed units. Authenticated statistical information may please be made available.
• Technology to be adopted by the proposed units for manufacturing fenny vis -vis its cost effectiveness. Whether the proposed technology has been adopted elsewhere successfully.
• Expertise required for manufacturing fenny and marketing the same. Whether such expertise is available to the above societies.
• Performance of existing fenny manufacturing unit(s) in Konkan Region by way of capacity utilization, profit and loss position, etc.
• Policy of the State Government regarding issuance of licence for manufacturing of fenny. Whether long term licences are being issued for manufacturing fenny."
THE queries raised by NCDC were sought to be addressed by Deputy Registrar of Cooperative Societies, Sindhudurg by way of a letter dated 2.8.2006 sent to the Under Secretary, Cooperation, Marketing and Textile Department, Government of Maharashtra. vide communication dated 13.11.2006 sent to NCDC, the view of the Government of Maharashtra on the issues raised by NCDC were conveyed and it was requested to consider the proposal favourably and communicate its sanction as early as possible. Vide letter dated 10.7.2007, NCDC sought further information/clarification from the State Government.
SINCE financial assistance from NCDC was not forthcoming the complainants approached this Commission by way of a complaint dated 20.4.2008 seeking the following reliefs: "(a) to pay compensation and relief of Rs. 10,00,33,264 with interest thereon @ 20% per annum, on monthly rest, from the date of complaint till actual payment made to the complainant;
(b) to enforce directing to opposite party to remove the defects and deficiency in service in question and perform duties by release of sanctioned financial assistance as per cabinet decision GR dated 4th November, 2003 subsequent letter dated 30th July, 2004 of Rs. 9,60,00,000 to complainant;
(c) to call for record and proceedings of the Cabinet meeting dated 17th May, 2000 of OP -GOM."
The complaint has been resisted by NCDC. Referring to the exchange of communications with the Government of Maharashtra it is stated in the written statement that the reply sent by the State Government was incomplete to the queries raised by NCDC and the project was rejected by it after considering the excise laws, fenny being country liquor in Maharashtra could not be moved outside the said State, no statistical data had been provided in respect of the demand and consumption of fenny during at least last five years and also feeling that providing such a large production capacity would be unsustainable rendering the project technically infeasible and economically unviable. In its written statement NCDC has listed out several factors which prevailed upon it to reject the proposal of all the five cooperative societies including the complainant before this Commission. It is further stated in the reply that the decision to reject the proposal was conveyed. to Government of Maharashtra vide letters dated 10.3.2008 and 4.12.2007.
IT is also submitted in the written statement filed by NCDC that the said Corporation provides funds to the State Government which in turn is supposed to release the fund to the cooperatives and it has no direct contact with the cooperative. According to NCDC neither the complainant is its consumer nor is it a service provider to the cooperative. It is also pointed out in the written statement that no processing fee was charged by NCDC for processing the proposals recommended by the State Government, It is further submitted that mere recommendation by the State Government does not bind the Corporation to accept the proposal and finance the project. NCDC has to independently decide, considering the finance and technological viability of the project whether to finance it or not.
THE first question which comes up for our consideration in this case is as to whether the complainants can be said to be consumer of the opposite party NCDC or not. Section 2(1)(d) of the Consumer Protection Act, to the extent it is relevant provides that the consumer means any person who hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised or partly paid partly promised but does not include a person who avails of such services for any commercial purpose. It is not in dispute that the complainant neither paid nor promised any consideration to NCDC. Admittedly, even the Government of Maharashtra did not either pay or promise any consideration to the said Corporation. In fact, the complainants were not even interacting directly with NCDC. Therefore, it cannot be said that they had hired or availed the services of NCDC for a consideration paid or promised either by them or by the State Government. In fact, the complainants cannot be said to be consumer of NCDC. The complaint, therefore, is liable to be rejected on this ground alone. Moreover, financing of a project for manufacturing of fenny, which is a liquor would clearly be a commercial purpose. Therefore, even if it is presumed, despite our finding to the contrary, that the complainants had hired or availed the services of NCDC for a consideration, they would still not be consumers since the services in such a case would be said to have been availed for a commercial purpose. The explanation below Section 2(1)(d) which excludes, from the commercial purpose a person availing services exclusively for the purpose of earning his livelihood by means of self -employment, would not apply in the case of the complainants. Therefore, we have no hesitation in holding that the complainants are not consumers of NCDC within the meaning of Section 2(1)(d) of the Consumer Protection Act 1986.
EVEN on merits, there was no obligation on NCDC to grant financial, assistance merely on the basis of the recommendation made by the State Government. NCDC provides loan from its own sources and not out of the funds made available to it by the Government. The corporation, therefore, is very much entitled to evaluate a project recommended to it for the purpose of financial assistance and then determine whether the project sent to it by the Government justifies such financial assistance or not. If NCDC Is made to finance a project only on account of recommendation made by the State Government that may result in an unviable project getting financed from the public funds and the cooperative taking finance from NCDC through the State Government may not be in a position to service the loan taken by it, thereby causing financial loss either to NCDC or to the State Government. In fact an unviable project may also result in the capital contributed by the members of the co -operative getting wiped out.
A perusal of the written statement would show that the following factors led to the proposal of the complainants being rejected by NCDC: "That these cooperatives being new thus have no expertise for fenny production.
State Government view on cost competitiveness of cashew fenny also do not support establishment of such units since the cost of production of fenny will be higher than the molasses based liquor. Thus, its demand will be impaired and constantly marketing of fenny may pose a serious threat and thus economically the project is unviable as there will be negative growth and the project will prematurely collapse before its inception.
On account of higher cost and other factors on demand and limited market and inclination of consumers in the State, no private company has ventured to produce fenny. Even the leading companies who have tried blending fenny with other popular liquors for selling as blended IMFG have been a failure."
The aforesaid factors, in our opinion, cannot be said to be irrelevant or arbitrary. Therefore, assuming for the sake of arguments, that the complainants are consumers of NCDC, the decision taken by it in rejecting the proposal of the complainants does not constitute deficiency in the services referred by it. For the reasons stated hereinabove, we find no merit in the complaint and the same is hereby dismissed.