State Consumer Disputes Redressal Commission
M/S Jindal Pipes vs Sanjeev Sharma on 29 November, 2011
H.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION, SHIMLA. FIRST APPEAL NO.134/2010. JUDGMENT
RESERVED ON 21.10.2011.
DATE OF DECISION: 29.11.2011.
In the matter of:
1.
M/S Jindal Pipes Ltd., Corporation Office, Plot No.30, Institutional Area, Sector No.44, Gurgaon.
2. M/S Maharashtra Seamless Ltd., Negothan, through its Chairman-cum-Managing Director, Corporate Office, Plot No.30, Institutional Area, Sector No.44, Gurgaon.
3. Shri H.K. Khanna, Director marketing, M/S Jindal Pipes Ltd., Corporate Office, Plot No.30, Institutional Area, Sector No.44, Gurgaon.
4. Shri J. Sood, General Manager (Marketing), M/s. Jindal Pipes Ltd., Corporate Office, Plot No.30, Institutional Area, Sector No.44, Gurgaon.
Appellants.
Versus Shri Sanjeev Sharma son of Shri Raghunath, partner of M/S Khaitani Construction, Anu, Hamirpur, Himachal Pradesh.
Respondent.
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Honble Mr. Chander Shekhar Sharma, Presiding Member.
Honble Mrs. Prem Chauhan, Member.
Whether approved for reporting?
For the Appellants: Mr. S.S. Mittal, Senior Advocate, with Mr. Aditya Kumar Chaudhary, Advocate.
For the Respondent: Mr. Ashik Sharma, Advocate.
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O R D E R Chander Shekhar Sharma, Presiding Member.
1. This appeal is directed against the order passed by District Forum, Hamirpur, in Consumer Complaint No.42/2008, dated 24.2.2010, whereby the complaint was allowed and opposite parties were ordered and directed jointly and severally to refund the enhanced rate amount with interest @ 9% per annum from the date of filing of the complaint till realization besides cost of the complaint which was quantified at Rs.2,000/-. Parties are hereinafter being referred to as per their status in the complaint.
2. Facts of the case within narrow compass are that the complainant, Sanjeev Sharma, partner of M/S Khaitani Construction, Anu, Hamirpur, had filed thepresent complaint under Section 12 of the Consumer Protection Act, 1986, hereinafter referred to as the Act against the opposite parties No.1 to 4 wherein it had been alleged that the complainant is working as a contractor and he used to take contracts from various Government Departments including Irrigation and Public Health Department of H.P. Government and that the opposite party No.1 introduced and disclosed that they are dealing in marketing of Jindal pipes which are manufactured by opposite party No.2 and opposite parties No. 3 & 4 are working for opposite party No.1. Further allegations in the complaint were to the effect that in the month of December, 2007, the work to lay down the pipes for water supply scheme Majhiar-Sera Pakhrol Phase-II was awarded to the complainant in December, 2007 by the State of Himachal Pradesh and consequently, when the complainant came to know that the opposite party No.1 is dealing in supply of said pipes, he contacted it on 27.12.2007 to supply certain lengths and quantity of pipes as per specification and that the opposite parties No.1 to 3 were also informed that the third party inspection was also required for the material as per norms settled with the Government and accordingly, the complainant visited the office of opposite party No.1 and the opposite party No.1 and after discussion, the opposite party No.3 agreed to supply the requisite material @ Rs.37,800/- per metric ton including excise duty and that no time limit was fixed to execute the agreement. That the order was placed, which was accepted by the opposite parties to supply the pipes of 377.76 metric ton and the complainant agreed to pay Rs.1,42,79,328/- to the opposite parties and that the opposite party No.3 negotiated the deal and the MLC (Multi City Cheque) of Rs.15,00,000/- was handed over to them.
3. It was also alleged that the complainant was not having the knowledge that the limit of issuance of cheque is only to the extent of Rs.10 lacs, so in such circumstances though there was enough amount in the account, but the payment was not made and that the cheque has never been bounced due to insufficient funds in the account and that the complainant received e-mail on 2.1.2008 from Mr.Sanjay Singh, Marketing Officer of opposite party No.1 that rolling of requisite pipes has been scheduled on 8.1.2006 and requested for payment and again same e-mail was received on7.1.2008 that all material shall be rolled in coming 2-3 days and requested to make the payment of Rs.1,51,74,613.21 and it was further stated vide e-mail dated 9.1.2008 that the entire consignment shall be ready till 14.1.2008 and requested the complainant to arrange the payment, but again on 22.1.2008 the complainant received another e-mail from Shri Sanjay Singh that the entire rolling of the pipe shall be completed within 2 or 3 days and further requested to arrange the payment.
That the complainant replied the above e-mails and disclosed that he has already transferred Rs.60,00,000/- by RTGS on 14.1.2008 in the account as per direction of opposite parties and requested to give the delivery schedule of the consignment and that till 29th January, 2008 no communication was made to the effect that what is the delivery schedule and whether the material has been rolled and ready for dispatch, but vide e-mail received on 29th January, 2008, it was disclosed that whole of the material has been rolled and ready for dispatch and the complainant was requested to lift the entire material on or before 31.1.2008 failing which increase of Rs.2,000/- per metric ton shall be charged from the complainant and such narration of opposite parties shocked the complainant as no such fact was ever disclosed at the time of agreement and negotiations.
4. Thereafter the complainant aggrieved by the action of the opposite parties had tried to persuade the opposite parties to adhere to the deliberations of the agreement executed between the parties and he even posted e-mail to the Chairman-cum-Managing Director, but they did not agree and insisted to lift the material with enhanced amount which was Rs.2,500/- PMT above the agreed rates and that in such circumstances, the complainant was having no other option, but to pay the amount and lift the remaining material and accordingly vide e-mail dated 6.2.2008, the complainant narrated the facts and under protest and compulsion asked to give the detail of amount which was to be paid with increased rate of pipes, but it was disclosed by said Shri Sanjay that increased rate is Rs.40,300/- instead of agreed rate of Rs.37,800/- and that the inspection charges @ 1% has been charged for the first time instead of 0.35% of the cost of material excluding the CST etc., which was disclosed and settled initially at the time of execution of agreement on 27.12.2007.
5. Hence, it was alleged that there was deficiency of service and unfair trade practice on the part of the opposite parties and the averments in the complaint were to the effect that opposite parties have no right to charge any amount excess to the rate settled initially between the parties and that the total cost of material as per settled rate was Rs.1,42,79,328/- (377.75 MTN x 37800) and the CST charged @ 3% should have been Rs.4,28,380/- and inspection charges @ 0.35% should have been Rs.49,977/- and as such, the total amount payable was Rs.1,47,57,685/-, but the complainant has paid Rs.1,61,72,565/- and thus, an amount of Rs.14,14,909/- has been charged excess is Rs.12,66,106/- and consequently difference of inspection charges is Rs.1,05,537/- and CST is Rs.42,651/- and hence, the entire amount is liable to be recovered from the opposite parties with interest @ 13%.
That the opposite parties never disclosed that the material is ready for lifting, rather they kept on informing that the material shall be rolled within short time and even the final inspection has been done on 28.1.2008 and within 2 days, it was difficult to the complainant to arrange huge amount of Rs.100 lacs and to lift the material from the plant of opposite parties at Nagothane which is far away place in Maharashtra and thus, it is clear that the delivery is not delayed due to any fault of the complainant, but it was due to opposite parties, who have not rolled the material well in time and within 2 days compelled the complainant to do the act which was just impossible for him and that all the orders were given in the month of December, 2007 and rate of whole consignment were settled and no time schedule has been fixed by either of the party to lift the material. That the opposite parties kept on insisting to pay the whole of the amount in advance, though it was never agreed upon and even Rs.60,00,000/- were paid to them on 14.1.2008, but the material was not supplied and mis-appropriated the amount for 15 days for their own use and further the opposite parties did not allow to move trucks of material for 4 days and demanded Rs.10,00,000/- more to release the material of said trucks and after said payments they supplied the material of only Rs.50,00,000/- on 30.1.2008 and that the intention was not malafide, they should have sent the material of atleast of Rs.70,00,000/- on 30.1.2008 instead of Rs.50,00,000/- and the opposite parties are liable to pay interest on Rs.60,00,000/- @ 13% i.e. Rs.32,054/- to the complainant.
6. It was further pleaded that four trucks were halted by the opposite parties for four days and the complainant was forced to pay Rs.36,000/- as demurrage to the transporter and thus, the said amount is also liable to be recovered from the opposite parties and that the trucks were not allowed to move unless Rs.10,00,000/- were paid by the complainant to them, but even then the opposite parties had sent the material of only to the tune of Rs.50,00,000/- and that the complainant was mentally tortured and harassed by the opposite parties and his whole family also remained disturbed, which also effected the working and managing skill of the complainant and further that the damages are difficult to be measured and assessed, but for the purpose of this complaint, the same is calculated at Rs.30,00,000/-. In this background, present complaint under Section 12 of the Act was filed wherein direction had been sought against the opposite parties to pay jointly and severally Rs.14,14,909/- with interest @ 13% from 27.2.2008 till realization, Rs.32,054/- @ 13% since amount of Rs.60,00,000/- has been misappropriated by the opposite parties for their own use for 15 days, Rs.36,000/- being the amount paid to four trucks as demurrage with interest @ 13% from the date of payment till realization besides Rs.3,00,000/- as compensation on account of mental torture and harassment and Rs.10,000/- as cost of complaint.
7. This complaint was contested and resisted by the opposite parties who have raised preliminary objections to the effect that the complaint is bad for mis-joinder of parties and no cause of action had arisen against the opposite party No.1 and present complaint is not maintainable and complainant is not a consumer and he does not fall within the ambit of definition of a consumer as provided under Section 2 (1)(d) of the Act, as the complainant has undertaken huge construction work which is a commercial enterprise and the pipes were purchased by the complainant-Company for the commercial purpose and the complainant has not made any averment in the complaint to show that he is a consumer of the opposite parties and it was further pleaded that there was no deficiency of service on the part of the opposite parties and the contract between the parties has come to an end as the complainant-Company has made the entire payments as demanded by opposite party No.2 against the goods supplied; that the opposite party No.2 revised the price of the remaining unlifted stocks of about 260 MTs with effect from 1.2.2008 and still the complainant lifted the said stocks at the revised rates without any objection as the prices on unlifted stocks were revised having regard to the understanding between the parties and thus, the complainant cannot be permitted to raise any issue at this belated stage and that the action of the complainant to file the present complaint is clearly an afterthought and that the complainant placed orders for supply of certain lengths and quantity of pipes as per specification and that in the trade of opposite party No.2, the specifications ordered by contracting party are different from each other and any fresh order requires fresh production; that the rolling of the pipes as per desired specification takes some time, which was clearly explained to the complainant, who was asked to keep himself equipped with all arrangements including payments, so that he is able to lift the stocks by 31st January, 2008 and the opposite parties informed the complainant vide mail dated 29.1.2008 that the stocks be surveyed and the same be lifted by 31.1.2008 and thus, the complainant made payment as was due that too without raising any protest or reserving his right to claim refund at a later stage.
8. Other averments in the reply were to the effect that the rate as mentioned was as per the prevailing market rate and it was orally made clear to the complainant that the rates would be revised depending upon the price of raw material in the market and that having regard to the market conditions, the opposite party No.2 decided to revise the rates with effect from 1.2.2008 and said revision was for all the contracting parties of opposite party no.2 at that point of time. That no time was mentioned/fixed for execution of the contract, but the intention of the opposite party No.2 was clear that the same was to be executed at the earliest and that the opposite party No.2 was to perform its part at the earliest and the complainants Company had to reciprocate in the same manner and that it was in the interest of the complainant to make arrangements for lifting the entire stocks by 31.1.2008. That the complainant was duly informed on 22.1.2008 that the entire rolling of pipes would be complete within 2-3 days and was again asked to arrange the payments.
That the allegation of factum of revision of rates was never disclosed, is false and an afterthought and is only a product of the figment of imagination of the complainant and that the complainant was asked to pay the rates in accordance with the agreement between the parties and the conduct of the complainant in lifting the entire stocks and making payment of the entire amount without any protest or objection demonstrates this fact. That merely by mentioning a price on the paper does not mean that the opposite party No.2 had No.2 had no right to revise the price as per the prevailing market rate. Making any protest before opposite party No.2 by the complainant and misappropriate of money by the replying opposite parties have been denied and rest o the allegations have also been denied. Hence, prayer had been made for dismissal of the complaint since it is wholly misconceived and does not have any merit and is a clear abuse of process of law.
9. Rejoinder to the complaint was also filed wherein the stand taken in the complaint was reiterated.
10. Brief resume of evidence led by the parties in nutshell is that the complainant in support of his case has filed affidavit of Shri Sanjeev Sharma, partner of M/S Khaitani Construction and had placed reliance upon a number of documents, Annexures C.1 to C.11 and opposite parties in support of their case have placed reliance upon Annexures R.1 to R.3. The documents filed by the complainant as well as by the opposite parties in evidence have been discussed in detail in para-8 of the order by the Forum below.
11. We have heard learned Counsel for the parties and have gone through the record of the case minutely.
12. Mr. S.S. Mittal, Senior Advocate in the present case has laid main emphasis on the point that the complainant in the present case being a contractor who had taken contracts from various departments including Irrigation & Public Health Department of Himachal Pradesh Government and who was awarded work for laying down the pipes for water supply Scheme Majhiar-Sera Pakhrol Phase-II, had placed order in bulk for supply of pipes of certain length and quantity as per specification given in Annexure C.1 for supply of pipes of 377.76 MT and complainant agreed to pay Rs.1,42,79,328/- to the appellants and Multi-City cheque of Rs.15,00,000/- was handed over to them and this cheque was dishonoured due to insufficiency of funds in the account and the pipes purchased from the appellants were to be used for the commercial purpose. As such, the complainant does not fall within the ambit of definition of a consumer as per Section 2(1) (d) of the Act since it is a commercial transaction and the pipes have been purchased for earning profit. His other arguments were to the effect that there was no deficiency of service on the part of the opposite parties in any manner and through various e-mails and Annexure C.7 it was made clear to the complainant by the opposite parties that the entire contract amount is to be paid by 31.1.2008, failing which, he will be liable to pay the enhanced charges and there is no deficiency of service on the part of the opposite parties and the order of the Forum below is not legally sustainable. He has also placed reliance upon the judgments of the Honble Supreme Court given in the case of Laxmi Engineering Works Versus P.S.G. Industrial Institute, (1995) 3 SCC 583, Rajeev Metal Works Versus Mineral & Metal Trading Corpn. of India Ltd., (1996) 9 SCC 422, Cheema Engineering Services Versus Rajan Singh, (1997) 1 SCC 131 and Birla Technologies Ltd. Versus Neutral Glass & Allied Industries, (2011) 1 SCC 526. In all these judgments, the Honble Supreme Court had concluded that the goods purchased for commercial purpose will not fall within the ambit of definition of a consumer under Section 2 (1)(d) of the Act as per explanation appended to Section 2(1)(d) which only excludes the purchase made by the purchaser for the purpose of earning of his livelihood by means of self employment. Appellants have also filed written submissions in the present case which are placed on record and the same are on the similar lines as per arguments addressed by the learned Senior Counsel, Mr. S.S. Mittal.
13. Mr. Ashik Sharma, learned Counsel for the respondent had supported the order of the Forum below and he has drawn our attention to the definition of deficiency given in clause 2(1)(g) and definition of a person given in Section 2 (1) (m) of the Act. His main emphasis was on the definition of deficiency given in clause 2(1) (g) of the Act, wherein as per definition thereof, deficiency means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service and he laid emphasis on the point that the definition of person includes a firm, whether registered or not, and as per him, the complainant and his wife are partners of M/S Khaitani Construction and there was deficiency of service on the part of the opposite parties since the contract was not performed by the opposite parties in pursuance of the contract entered into between the parties. He also argued that the complainant does fall within the definition of a consumer and order of the Forum below is based on sound reasoning and is legally sustainable.
14. After hearing learned Counsel for the parties and going through the record of the case, we are of the considered view that the order of the Forum below is not legally sustainable and it deserves to be set aside. Reason being that in the present case specific objection relating to the fact that the complainant does not fall within the definition of a consumer under the Act as pipes were purchased by the complainant-Company for the commercial purpose but it appears that the Forum below had not at all given any finding on this aspect of the case and had wrongly held the opposite parties liable jointly and severally for refunding the enhanced rate amount with interest @ 9% per annum from the date of filing of the complaint and awarding of cost of Rs.2,000/-. Since from the averments made in the complaint this fact is very clear that the complainant is a contractor who had undertaken contract from the Government Department including Irrigation & Public Health Department and was awarded work to lay down the pipes for water supply Scheme, Majhiar-Sera Pakhrol Phase-II by the State Government in December, 2007 and had placed orders for supply of pipes in large quantity of certain lengths as per specification given in Annexure C.1 and the opposite party No.3 agreed to supply the requisite material @ 37,800/- per MT inclusive of excise duty and the complainant had agreed to pay Rs.1,42,79,338/- to the opposite parties and the bulk order was placed with the opposite parties for the purchase of pipes with which the opposite parties were dealing and as such the order in bulk for supply of pipes which were to be used for the work awarded to him by the Government is clearly for the commercial purpose since the complainant-firm is doing business of contracts for the purpose of making profit. As such, the complainant clearly does not fall within the ambit of definition of a consumer under the Act. The definition of consumer is given in Section 2 (1)(d) of the Act, relevant portion thereof is quoted below for ready reference:-
2. Definitions.----(1) In this Act, unless the context otherwise requires,----
Xxx xxx xxx xxx
(d) consumer means any person who,
(i) Buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) Hires or avails of any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment 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 and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose;
Xxx xxx xxx xxx Explanation,- For the purposes of this clause, commercial purpose does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment.
Hence, from a bare perusal of definition of consumer as given under Section 2(1)(d) of the Act which is to be read with the Explanation given thereunder, the complainant does not fall within the definition of consumer as pipes were purchased for commercial purpose to earn profit in the business of contract by the complainant. Moreover in the complaint, there is not even a whisper to the effect that the goods bought by the complainant are to be exclusively used for the purpose of earning livelihood by means of self employment in any para of the complaint.
15. The Honble Supreme Court in the case of Laxmi Engineering Works Versus P.S.G. Industrial Institute, (1995) 3 SCC 583, in para-11 had elaborately dealt with the definition of a consumer as given in the Act of 1986 and also with the expression commercial purpose as provided in Explanation thereunder, wherein the Honble Supreme Court had observed that the expression commercial purpose is not defined in theAct. The ordinary meaning of commercial is pertaining to commerce; it means conncted with, or engaged in commerce; mercantile; having profit as themain aim whereas the word commerce means financial transactions especially buying and selling of merchandise, on a large scale. The National Commission appears to have been taking a consistent view that where a person purchases goods with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profot he will not be a consumer within the meaning of Section 2(d)(i) of the Act. Broadly affirming the said view and more particularly with a view toobviate any confusion the expression large scale is not very precise expression Parliament stepped in and added the explanation to Section 2(d)(i) by Ordinance/Amendment Act, 1993 which excludes certain purposes from the purview of the expression commercial purpose a case of exception to an exception.
16. In the recent judgment of the Honble Supreme Court given in the case of Birla Technologies Limited Versus Neutral Glass and Allied Industries Limited, (2011) 1 Supreme Court Cases 525, the Honble Supreme Court had also dealt with the definition of a consumer and commercial purpose elaborately in para-12 of the judgment, wherein it was observed by the Honble Court as under:-
12. It seems that the whole error has crept in because of the wrong factual observation that the complaint was filed on 1.8.2000. In that view, it has to be held that the complaint itself was not maintainable, firstly, on the count that under Section 2(1)(d)(i), the goods have been purchased for commercial purposes and on the second count that the services were hired or availed of for commercial purposes. The matter does not come even under the Explanation which was introduced on the same day i.e. on 15.3.2003 by way of the amendment by the same Amendment Act, as it is nobodys case that the goods bought and used by the respondent herein and the services availed by the respondent were exclusively for the purpose of earning the respondents livelihood by means of self-employment. In that view, it will have to be held that the complaint itself was not maintainable in toto.
Hence, in view of the fact that the pipes were purchased by the complainant from the opposite parties which were to be used by him in the contract awarded to him by the Irrigation & Public Health Depart of the H.P. Government by laying down these pipes for water supply scheme, Majhiar-Sera Pakhrol Phase-II, awarded to him in his contract business as they were purchased by the complainant with a purpose of profit making and which purpose was apparently commercial in nature, as such the complainant does not fall within the ambit of definition of a consumer under Section 2(1)(d) of the Act and even he had not made any averment in the complaint to the effect that the goods bought by him were exclusively being used for the purpose of earning livelihood by him by means of self employment and the Forum below had committed a grave illegality in allowing the present complaint since the Forum below has no jurisdiction to try the present complaint as the complainant does not fall within the definition of consumer under Section 2(1)(d) of the Act and even without giving any finding upon the specific objection taken by the opposite parties in their reply to the effect that the complainant does not fall within the definition of a consumer as the transaction is commercial in nature, the order of the Forum below is perverse and not legally sustainable and as such there is no force in the arguments of the learned Counsel for the respondent.
Since we have concluded that the complainant does not fall within the definition of a consumer under the Act, as such we are not dealing with other points raised in appeal.
17. No other point was urged.
In view of the aforesaid discussion and facts and circumstances of the case and the legal position explained in the judgments of the Honble Supreme Court Laxmi Engineering Works Versus P.S.G. Industrial Institute, and Birla Technologies Ltd. Versus Neutral Glass & Allied Industries, (supra), order passed by the District Forum, Hamirpur, in Consumer Complaint No.42/2008, dated 24.2.2010 is set aside and consequently the present appeal is accepted and complaint stands dismissed being not maintainable. No order as to costs. However, it is ordered the complainant shall be at liberty to avail the remedy available to him before the appropriate forum or Court of law and he shall be entitled to avail the benefit of Section 14 of the Limitation Act since he has bonafide prosecuted the proceedings under the Consumer Protection Act, 1986, both before the District Forum as well as before the State Commission.
All interim orders passed in this appeal from time to time shall stand vacated forthwith.
Copy of this order be sent to the parties free of cost as per rules.
Shimla, Announced on November 29,2011.
( Chander Shekhar Sharma ) Presiding Member ( Prem Chauhan) Member