National Consumer Disputes Redressal
H.C.L. Ltd. vs Krishna Nanu Naik & Sons And Anr. on 7 December, 1992
JUDGMENT A.S. Vijayakar, J.
(1) This is an appeal against the order of the Goa State Commission, Panaji in Complaint No. 12/91.
(2) The complaint was for recovery of compensation on account of supply of defective goods. The facts of the case as derived from the State Commission's order are that:- "THEComplainant (respondent herein) alleged that they were supplied a computer system in the year 1985 by the Opposite Party (appellant herein) model WORKHORSE-11. The Complainant also had hired the services of 0.P. under maintenance a contract for a period of five years for the maintenance of aforesaid computer system. The complainant had no grievances at all either about the functioning of WORKHORSE-II computer system or for its maintenance. Thereafter, complainant's business increased considerably. In the year 1988, the O.P. volunteered to supply another computer system of model OASYS-1 in place of WORKHORSE-11 taking into consideration the expansion of business. The O.P. on 22.9.1988 gave the quotation with special trade-in offer considering the requirement of the complainant. The complainant placed the order dated 16.2.1989 with the respondent for the model OASYS-I with a five years warranty and service contract. Both the parties entered into two contracts. (1) for the supply of OASYS-I model and (2) for annual maintenance of the computer system. The settled terms were that the Opposite Party shall take back WORKHORSE-II model to be replced by OASYS-1 model for which the complainant was to pay to Opposite Party Rs.2,59,347.62 including installation and successful commissioning. In ad- 448 dition to this, the balance amount as regards the maintenance charges for WORKHORSE-11 model lying with the Opposite Party, the complainant was to pay Rs. 99,590.00 for Five years annual maintenance charges. The OASYS-1 model was supplied to the complainant in the month of March, 1989. The aforesaid facts are not in dispute. A consumer dispute arose in this case when the Opposite Party could not successfully commission the OASYS-I model computer. The complainant alleged that despite several attempts of mechanics and experts of the Opposite Party, the OASYS-I computer could not be successfully commissioned till the date of Sling this complaint. The complainant, therefore, claimed compensation for Rs.7,45,991.65 alleging negligence of the part of Opposite Party in supplying the defective computer. While opposing the complainant's claim, the Opposite Party raised many technical objections and submitted that the complainant had malafide intention to file the complaint with the sole aim to prove that OASYS-I computer could not work under Hicix and that he had various both Dos and Hicix software on Floppy and cartridge tapes which could be copied on the OASYS-I system whenever he wished. Several technical aspects were mentioned in the lengthy written version of the Opposite Party."
(3) Though the appellant had put forward the argument that the computer system had been purchased by the respondent for a commercial purpose, the State Commission had not considered it to be so, stating that it was for a personal or office use. On its second point of consideration whether the goods supplied were defective, it was found in the affirmative.
(4) On the third point of consideration the State Commission found that though the claim was for Rs.74,591.65 taking into view that the old WORKHORSE-II system was still in use and that respondent had paid only Rs.2,59,347.62 plus Rs.99,590.00 for service contract, it was only fair that the appellants refund those amounts and pay 18% interest from 28.3.1989 till realisation within 30 days from the date of the receipt of the order and take back the new OASYS-I computer system from the respondent's premises at the appellant's costs.
(5) Aggrieved by this order, the appellants have come in appeal at the National Commission. A plea is raised by the appellants that the State Commission had rejected various points raised in the written statements filed by the appellant concerning the software used etc., on vague findings and passed them off as technical objections, without in any way discussing the same.
(6) The appellants also maintain that the purchase of the computer system was for a 'commercial purpose' and the State Commission should have directed the respondent company to produce their Balance Sheets, which would have enabled to verify whether the cost of the computer forms part of the assets of the complainant company, i.e. the cost of maintenance, operation and depreciation of the computer system were charged in the Profit & Loss Account of the respondent company and the expenses on account of depreciation, and maintenance, form part of the overhead costs of the product manufactured and sold by the respondent. Also the analogy applied by the State Commission is thoroughly miscon- ceived as articles like fans, furniture etc. cannot be equated with the computer as they provide comfort and are for, personal use, whereas the computer is an integral part of the business. The respondents had availed tax depreciation with regard to the machine in the year 1989, under Section 32 of the Income Tax Act. An assessee can avail this depreciation only if the purchase of machinery is for business or for his profession. This clearly indicates that the machine was purchased by the purchaser for commercial purpose.
(7) It was also averred that the respondents according to their own averments were forced to employ eight employees when the computer system failed to work properly on account of which they sufered establishment cost of Rs.91,500.00 and further Rs.l,14,500.00 as salary paid to four employees. The amounts spent on establishment cost as aforesaid would again form part of the overhead costs and would be shown in the Profit & Loss Account of the firm.
(8) Further since the machine OASYS-1 could not be commisioned, there was no question of providing maintenance service.
(9) We are satisfied that the purchase of the computer system was for a commercial purpose, as is clearly seen from the facts that it has close nexus with the commercial activity of the respondent company and also that the respondent company is a large commercial organisation. We have held in our judgment in Synco Textiles Pvt. Ltd. Vs. Greaves Cotton & Co. Ltd. (First Appeal No.22 of 1989) that these two points would decide the question of commercial purpose.
(10) Thus the appeal is allowed and the order of the State Commission, Goa, giving relief and compensation is set aside. There will be no order as to costs.