State Consumer Disputes Redressal Commission
Sri Chaitanya Educational Trust vs E-Shield (India) Pvt. Ltd., on 23 January, 2013
BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD F.A.No.636 OF 2012 AGAINST C.C.NO.602 OF 2010 DISTRICT FORUM-I HYDERABAD Between: Sri Chaitanya Educational Trust Plot No.304, Kasetti Heights Madhapur, Hyderabad Appellant/opposite party A N D E-Shield (India) Pvt. Ltd., Flat No.2 LIC Colony, Busareddyguda West Marredpally, Secunderabad Rep. by its Manager Respondent/opposite party Counsel for the Appellant M/s T.Rajendra Prasad Counsel for the Respondent Notice held sufficient QUORUM: SRI R.LAKSHMINARASIMHA RAO, HONBLE MEMBER
AND SRI THOTA ASHOK KUMAR, HONBLE MEMBER WEDNESDAY THE TWENTY THIRD DAY OF JANUARY TWO THOUSAND THIRTEEN Oral Order (As per Sri R.Lakshminarasimha Rao, Honble Member) ***
1. The unsuccessful complainant is the appellant. The appellant institute purchased 33 Biometric Readers @ `33,750/-
which included !2% VAT on 4.07.2009 and the respondent company installed 30 colleges of the appellant institute in various districts in the State. The appellant institute has claimed for return of `9,21,375/- with interest thereon and a sum of Rs.5 lakh towards compensation on the premise that the respondent company failed to install software in the devices and collected extra amount of `14,500/-
on each device against the prevailing price of `15,500/- and excess VAT of 12.5% against the actual VAT of 4% . It is stated that the respondent had played unfair trade practice on the appellant institute and rendered deficient service by not installing software in the devices supplied by them.
2. The respondent company resisted the claim on the premise that the appellant institute negotiated with it for several times and after satisfying itself with the price and quality of the devices, it had placed purchase order on 4.06.2009 for purchase of 30 Bio metric Readers of Model 6161 T and the respondent supplied and installed the Biometric System along with software at various branches of the appellant institute and there has been no complaint from any of the branches of the appellant institute in regard to service rendered by the respondent. It is stated that the respondent had not collected any extra amount either on the price of the device or VAT and the appellant institute in order to avoid payment of balance sale consideration of `91,125/- issued notice on 16.12.2009 and the respondent had addressed reply.
3. The of the appellant institute filed his affidavit and the documents,ExA1 to A12. On behalf of the respondent-company .
4. The District Forum dismissed the complaint on the ground that the appellant institute after verifying the prices of the devices placed order and purchased them as also got them installed at its branches and it having used the Biometric Readers for few months cannot question the price of the device or the VAT charged on them.
5. Aggrieved by the order of the District Forum, the complainant has filed appeal contending that collection of excess amount came to the notice of the appellant institute subsequently and that the respondent had not installed the software as also that collection of excess amount and making of false promise and misleading representation would amount to unfair trade practice and deficiency in service on the part of the respondent company.
6. The point for consideration is whether the respondent played unfair trade practice on the appellant?
7. The appellant has submitted that the respondent company has collected excess price of Biometric readers and excess amount towards Vat as also it failed to install software in the systems. The appellant addressed letter to the respondent on 16.12.2009 demanding for return of the amount received by the respondent company and to take back the devices. The respondent company has issued reply on 31.12.2009. The contents of the letter and reply would unravel most of the matter relevant to come to the conclusion as to whether the respondent has played unfair trade practice on the appellant in the matter of sale of Biometric Readers to the appellant.
8. The letter dated 16.12.2009 and reply dated 31.12.2009 of the respondent to the letter read as under:
Letter dated 16.12.2009:
Systems were installed in the month of July & August,2 009. Even though you have promised to installed the said units in the month of June itself. The warranty period is one year, we have paid entire amount on supplying the said systems.
Till today you have not installed software systems event though we informed you several times about the said defects and deficiency of service. Our staff of branches in which you have installed the units in the entire state have approached several times and brought to your notice about the deficiency of service and requested you to install the system. Till today you have not taken any action on enquire to our surprise it came to our notice that you have collected an excess amount of RS.14,500/- for each unit. For the same branded unit the market price is Rs.15,500/- . We came to know about same an inviting quotation from some other form. As per regulations the VAT is 4% whereas you have collected 12.625% by way of VAT. By collecting aforesaid excess amount you played fraud. It is not proper. We are ready to return the entire units and systems supplied by you and we are requesting you to refund the entire amount collected from us within two weeks from the date of the receipt of this letter by taking back the entire units.
Reply dated 31.12.2009 Price of the product will vary from company to company. Same produce is available from Rs.12,000/- to Rs.58,000/- in the market.
These products dont have any MRP.
So depending of the company, rates will be vary, we supply to our dealers for Rs.12,000/- only with basic software, exclusive of installation testing, commissioning and service support.
The rates also vary for local and non-local supply and support. Here in your case we have quoted on the bases of supply, support and warranty for local and non local areas. The price what we gave you is including product, doorstep service, installation, commissioning, software and warranty for various locations. The points mentioned in your letter might be raised at the time of issuing the purchase order only, this is not the correct state to discuss.
9. A perusal of the letter and the reply would show that the appellant institute demanded for return of the amount paid by it for purchase of the Biometric readers and requested the respondent to take back the devices and the respondent through its reply has clarified that product varies from company to company and there has been no MRP fixed on the device and as regards VAT the respondent raised objection that the appellant institute has not objected at the initial stage of the project.
10. It is not denied that the respondent company has raised various quotations for supply and installation of centralized biometric attendance system for various branches of the appellant institute and there were negotiations held on several occasions which resulted in the respondent raising quotation on 01.06.2009 for supply and installation of centralized biometric attendance system in the branches of the appellant institute at different places in Andhra Pradesh. It is not disputed that the respondent quoted the price of each device at `33,750/- including VAT and service tax. The respondent has contended that it had quoted the rate after taking into consideration of expenses such as travelling charges, boarding and lodging expenses for its engineers who had to visit branches of the appellant institute situate at various places in the state and stay there for a period of 3 days as also the installation charges, testing and commissioning of the equipment charges had been considered at the time of fixing the price of the devices.
11. The appellant institute has suppressed the fact of demonstration of the device and software by the respondent company for two months before the appellant institute has placed the order and after satisfying itself with the function of the equipment and its price the appellant institute placed the purchase order . It is not denied that the respondent at the request of the appellant institute, effected modification with SCL by incurring expenditure of `50,000/- and as required by the appellant institute, the respondent company has provided licensed Time Watch software worth `25,000/-free of cost .
12. The plea of the respondent company that it had installed the Biometric Reader along with software at various branches of the appellant institute has acceptable force as seen from the unrebutted statement of the respondent company that the unit heads of the appellant institute had issued certificates denoting the proper functioning of the system and the email sent by Tanuku branch of the appellant institute expressing their satisfaction as to the functioning of the system. Thus, the statement of the appellant institute that software was not installed is incorrect and devoid of bonafides.
13. Unfair trade practice is defined and included in its ambit all that mentioned in Section 2(1)(r) of the Consumer protection Act which reads as follows:
(r) "unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely;
(1) the practice of making any statement, whether orally or in writing or by visible representation which,
(i) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;
(ii) falsely represents that the services are of a particular standard, quality or grade;
(iii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;
(iv) represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;
(v) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;
(vi) makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;
(vii) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof;
Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;
(viii)makes to the public a representation in a form that purports to be
(i) a warranty or guarantee of a product or of any goods or services; or
(ii) a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified result, if such purported warranty or guarantee or promise is materially misleading or if there is no reasonable prospect that such warranty, guarantee or promise will be carried out;
(ix) materially misleads the public concerning the price at which a product or like products or goods or services, have been or are, ordinarily sold or provided, and, for this purpose, a representation as to price shall be deemed to refer to the price at which the product or goods or services has or have been sold by sellers or provided by suppliers generally in the relevant market unless it is clearly specified to be the price at which the product has been sold or services have been provided by the person by whom or on whose behalf the representation is made;
(x) gives false or misleading facts disparaging the goods, services or trade of another person.
Explanation. - For the purposes of clause (1), a statement that is
(a) expressed on an article offered or displayed for sale, or on its wrapper or container; or
(b) expressed on anything attached to, inserted in, or accompanying, an article offered or displayed for sale, or on anything on which the article is mounted for display or sale; or
(c) contained in or on anything that is sold, sent, delivered, transmitted or in any other manner whatsoever made available to a member of the public, shall be deemed to be a statement made to the public by, and only by, the person who had caused the statement to be so expressed, made or contained;
(2)permits the publication of any advertisement whether in any newspaper or otherwise, for the sale or supply at a bargain price, of goods or services that are not intended to be offered for sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature of the advertisement.
Explanation .For the purpose of clause (2), "bargaining price" means
(a) a price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise, or
(b) a price that a person who reads, hears or sees the advertisement, would reasonably understand to be a bargain price having regard to the prices at which the product advertised or like products are ordinarily sold;
(3) permits
(a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole;
(b) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest;
(3A) withholding from the participants of any scheme offering gifts, prizes or other items free of charge, on its closure the information about final results of the scheme.
Explanation.
For the purposes of this sub-clause, the participants of a scheme shall be deemed to have been informed of the final results of the scheme where such results are within a reasonable time, published, prominently in the same newspapers in which the scheme was originally advertised;
(4) permits the sale or supply of goods intended to be used, or are of a kind likely to be used, by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by competent authority relating to performance, composition, contents, design, constructions, finishing or packaging as are necessary to prevent or reduce the risk of injury to the person using the goods;
(5) permits the hoarding or destruction of goods, or refuses to sell the goods or to make them available for sale or to provide any service, if such hoarding or destruction or refusal raises or tends to raise or is intended to raise, the cost of those or other similar goods or services.
(6) manufacture of spurious goods or offering such goods for sale or adopts deceptive practices in the provision of services.
(2) Any reference in this Act to any other Act or provision thereof which is not in force in any area to which this Act applies shall be construed to have a reference to the corresponding Act or provision thereof in force in such area.
14. It is contended that the respondent had informed the appellant the rate of the Biometric Reader and the rate of VAT and service tax charged thereon. The plea of the appellant that it came to know about the charging of excess rate of the device and VAT few months subsequent to purchase of the Biometric Reader holds no water in the light of its prolonged discussion with the respondent prior to purchase of the equipment as also on calculations making payment of half of the agreed amount. The respondent in paragraphs 12 and 13 of the written version would contend that:
It is pertinent to mention here that the opposite party has collected the VAT of 12.5% and the same was paid to the commercial Tax authority. The opposite party has not played any fraud on the complainant by collecting excess rate on the device and excess VAT. The copy of the VAT returns are filed before the Honble Court as document no.51 evidencing that the opposite party has paid 12.5% VAT to the Government and their no fraud on the part of the opposite party. It is also pertinent to mention that there was no service calls from any of the branches of the complainant. The opposite party is always ready to serve its customers if they face any problem in operating the deice. Except mere allegations, the complainant has not filed nay document to show that the opposite party is evading to provide services inspite of their request.
It is denied that the opposite party is bound to pay 4% VAT and collecting 12.5% VAT is illegal and unethical tantamount to found and liable for prosecuted by competent authorities. The opposite party has clearly stated that as per norms, they generally collect 12.5% VAT and pay the same to the authorities and the same was intimated to the complainant through the quotation. The complainant has not raised any issue about the VAT at the time of negotiations and now he is estopped from doing so
15. The appellant has suppressed fact of demonstration of the function of the system for a period of two months prior to placing the order, its holding negotiations with the respondent with regard to the price of the devices, the respondent installing the software at various branches of the appellant institute and its knowledge of details of the charges etc.
16. We do not find any merit in the appeal The appellant has approached the District Forum with unclean hands and it cannot be heard to attribute deficiency in service and unfair trade practice to the respondent company.
17. In the result, the appeal is dismissed confirming the order of the District Forum. The parties shall bear their own costs.
MEMBER MEMBER Dt.23.01.2013 KMK*