AJAY MURDIA vs INDCHEM ATL LTD.

INDCHEM ATL Limited (respondent hereafter) is a corporate body engaged in the business of manufacturing and marketing of electronic medical equipments like Ultrasound Diagnostic Scanners with the technical know-how from medical equipment specialists like Advanced Technology Laboratories, USA. It has a factory at Perungudi, Chennai, with service outlets in some of the major cities in India. A complaint was received from Dr. Ajay Murdia (applicant hereafter), who is running a clinic in Udaipur, Rajasthan under the name and style of Indira Infertility Clinic and Research Centre stating that on the promise of the respondent that an Ultra Sound Scanner-Ultra Mark-IV could be supplied by September, 1990, he paid an amount of Rs. 1,00,000/- to the respondent as advance on 9th May, 1990. The Scanner is used for detecting the causes of infertility. It was also assured to the applicant that he would be trained in In Vitro Fetilisation (IVF for brief) in USA, to enable him to use the Scanner ordered by him for the clinic. The respondent promised to impart training for a period of six weeks. Despite receiving an amount of Rs. 8.9 lakhs towards the full price of the equipment, there was considerable delay in supplying and installing the equipment which was actually carried out in Feb., 1991 The equipment was a defective one and the respondent failed to repair the same. Nor did the respondent arrange for the training as promised.

THIS complaint was investigated by the Director General of Investigation and Registration (DG for short) who submitted to the Commission, his Preliminary Investigation Report (PIR for short). The DG has concluded in his PIR that but for the promise of training in USA or Canada for a period of six weeks by the respondent, the applicant would not have gone for the expensive equipment in question. The applicant was, therefore, induced to purchase the equipment without training and consequently could not use the machine in a proper manner. He has added that the trade practices on the part of the respondent constitute unfair trade practices within the meaning of Section 36A(1) of the MRTP Act, 1969. A Notice of Enquiry (NOE for short) was, therefore, issued by the Commission on 22nd Jan., 1993 charging the respondent of having committed unfair trade practices attracting Section 36A of the Act. When the NOE was communicated to the respondent, it furnished a detailed reply taking certain preliminary objections and defence on merits. Its reply is summarised herein below: Preliminary objections 1. The respondent has not indulged in any unfair trade practice as alleged, as it supplied and installed the equipment in question as per the contract which was concluded on 15th Dec., 1990 and not on 9th May, 1990. The allegation of delay in supplying the equipment and of not providing training abroad cannot be construed as unfair trade practices under Section 36A of the Act. There was no misrepresentation on the part of the respondent. 2. The MRTP Act was amended on 27th September, 1991, in order to cover any unfair-method or unfair or deceptive practice within the definition of an unfair trade practice. The transaction having been completed in Feb., 1991, cannot be covered by the amended Section 36A of the Act, as the amendment cannot have retrospective operation. 3. The grievance of the applicant if at all may be related to the breach of the contract for which remedies are available in the Civil Courts.

The price of the equipment is Rs. 7.9 lakhs and not Rs. 8.9 lakhs as mentioned by the DG in his PIR or as mentioned in the Notice of Enquiry. The amount of Rs. 1,00,000/- paid by the applicant to the respondent on 9th May, 1990 as advance was adjusted in the final price. Despite earnest efforts, the respondent could not arrange for the training, due to circumstances beyond its control. Defence on merits

THE respondent is an agent of Advanced Technology Laboratories, USA for marketing certain types of ultrasound Scanners including the Scanner in question. Against the respondent''s quotation dated 8th May, 1990 the applicant placed a purchase order dated 9th May, 1990. The specifications of configuration include six types of transducers/probes, of which the applicant was required to select two. The probes constitute accessories to the equipment. The delivery was to be made within 8 to 12 weeks from the date of a clear official purchase order from the applicant. The applicant however failed to indicate the type of probes required. The applicant also requested for training. In the absence of a final purchase order, the order dated 9th May, 1990 of the applicant was not "commercially acceptable", as the choice of two probes was not indicated by him. He was, therefore, advised to amend the purchase order which he did in his letter dated 15th December, 1990. In the amended order/the applicant had expressed his willingness to undergo training within 4 to 6 weeks of the installation of the equipment. The supply of the equipment including installation was completed on 15th February, 1991 within the contract period.

REGARDING training, the respondent had taken steps to arrange for the same even before the supply of the equipment. What was offered to the applicant was training on IVT (Intra Vaginal Transducer) Procedure which also includes IVF techniques. The applicant had misunderstood this to mean that the respondent would give "plain IVF training." In view of certain medico legal problems against hospitals and doctors in USA, as the applicant did not have a licence to undergo training in USA, the respondent had to make alternative arrangements, which he did in Canada scheduling the training in October, 1991. This was communicated to the applicant who declined to undergo the training arranged in Canada. The respondent in its letter dated 5th December, 1992 expressed its willness to fix up the training and to bear the cost of the training, to the extent of Rs. 1,00,000/- as against Rs. 50,000/- agreed to earlier. The training cost being only I/6th of the total cost of the equipment, the applicant cannot say that he would not have gone for the equipment but for the promise of the training. In that event, he should have accepted the training scheduled in Canada.

THE applicant has been using the equipment for quite some time. THE respondent''s Service Engineer has observed black spots on the image due to the pulse processor being defective. This is not a major defect so as to make the allegation that the equipment has broken down. THE applicant has spent an amount of Rs. 5,000/- towards some repairs at the "fag end of the warranty period." After the pleadings were completed, the following issues were framed on 24th August, 1993: 1. Whether the respondent has indulged / is indulging in unfair trade practices as broadly mentioned in the NOE? 2. If issue No. 1 is decided in the affirmative, whether the said practices are prejudicial to public interest, interest of the consumers or consumers generally? 3. Relief 4. THE applicant filed a compensation application under Section 12B of the Act. He has alleged that the respondent has indulged in the aforesaid unfair trade practices, like delay in supply of the equipment, refusal to repair the equipment and failure to impart training on IVF. He has sought compensation by way of refund of the advance amount of Rs.l,00,000/-with interest from 9th May, 1990, refund of Rs. 6,98,250/ - with interest from 5th Feb., 1991 (the actual amount paid besides the advance amount is Rs. 6,98,250/- and not Rs. 6.9 lakhs). He has also claimed compensation towards the differential in price of a new machine, sonographic charges, savings that would have accrued, had the equipment functioned properly and also compensation towards mental tension and other expenses including costs.

THE reply of the respondent to the compensation application practically traverses its reply to the main complaint application except that it has questioned the compensation claims advanced by the applicant. THE following issues were framed in the compensation application on 16th March, 1994: 1. Whether the respondents are or have been indulging in restrictive/unfair trade practices, as claimed in the compensation application ? 2. If the answer to the foregoing issue is in the affirmative whether the restrictive/unfair trade practices are prejudicial to public interest or the interest of the consumer or the consumers generally? 3. Whether the applicant has suffered any loss as a result of the unfair/ restrictive trade practices ? 4. To what relief, if any, is applicant entitled ? Dr. Ajay Murdia, the applicant filed his affidavit in evidence alongwith the documents in support. He was cross-examined by Ms. Pushpa Rajan, Advocate for the respondent. THE respondent filed the affidavit of Mr. J.S. Sundararajan, its General Manager (Marketing). He was cross- examined by Mr. O.P. Dua, Advocate for the applicant. 5. We gave a hearing to Mr. R. Tikku, Advocate for the DG, Mr. O.P. Dua, Advocate for the applicant and Mr. K.B.S. Rajan, Advocate for the respondent. 6. Before we deal with the controversy in question, we would like to deal with the preliminary objections taken by the respondent in its reply in the main enquiry as well as in the compensation application. 7. One of the main objections taken is that Section 36A of the Act having been amended with effect from 27th September, 1991 the amended section cannot be made to operate retrospectively for a cause of action anterior to the said date namely 27th September, 1991. It is true that when Section 36A of the MRTP Act was amended on 27th September, 1991, it included in the definition of an unfair trade practice, the adoption of any unfair method or unfair or deceptive practice. Prior to the amendment, an unfair trade practice was defined to include inter alia the practice of making false representations etc. After the amendment, while the section retains false representations in its definition of unfair trade practice, it has been enlarged to include in its definition any trade practice which "adopts any unfair method or unfair or deceptive practice". Even now, after the amendment the inclusive definition renders false representations to continue to fall within it namely unfair trade practices. Ergo, the amendment has not done anything to impair the said inclusive definition but has merely enlarged its scope and sweep. 8. If we look at the allegations in the NOE as well as in the PIR, it is obvious that the entire case is built around the alleged false representations on the part of the respondent and failure to honour its assurances. THE alleged false representation, failure to honour its assurances and deficiency in service on the part of the respondent will all fall under Sections 36A(1)(i), (ii), (iv), (vi), (vii) and (viii) of the Act. In this view of the matter, therefore, the retrospectivity of the amendment has no relevance at all. 9. Be that as it may, the case of the DC as well as the case of the applicant are supported by certain correspondence between the applicant and the respondent of dates 28th September, 1991, 25th October, 1991, 5th December, 1991, 20th December, 1991, 30th Dec., 1991 and 3rd February, 1992 all of which are admitted by the respondent (docket entry dated 10th May, 1994 refers). Thus, the cause of action continued beyond 27th September, 1991 after the amendment to Section 36A of the Act. Very tellingly, the letter of the respondent dated 28th September, 1991 addressed by the respondent to the applicant is regarding the training organised in Canada for the latter. This letter is after the amendment came into force. THE respondent itself has made much of this letter stating that it had organised training for the applicant in support of its own bona fides ! 10. THE preliminary objection, therefore, has no force. THE other preliminary objections are in the nature of certain averments on the part of the respondent as to how no unfair trade practice has been indulged in by it. THEse will be discussed while deciding the first issue in the main enquiry as well as in the compensation application.

THE controversy revolves around essentially allegations relating to delay in the supply and installation of the equipment, failure to repair the equipment and failure to honour its promise of imparting training to the applicant in USA on the part of the respondent. We will discuss and deal with the three limbs in the same order. First limb- delay in the supply and installation of the equipment. The original order of the applicant dated 9th May, 1990 (document No. 12 of the DG''s notice admitted by the respondent) clearly indicates that the applicant had placed a purchase order for an Ultrasound Scanner-Ultra Mark-IV. Nowhere in the said letter has the applicant indicated his choice of the two probes. It was only through his letter dated 15th December, 1990 that he has specified the probes wherein he has confirmed the configuration (dockment 13 of the DG''s notice admitted by the respondent). Shri Sunderarajan, General Manager (Marketing) of the respondent in his affidavit has stated that "the confirmation of the configuration of probes is a sine qua non for execution of the order and the respondent Company had in fact on the basis of the confirmation of probes by the petitioner on 15.12.1990 installed the equipment well within the time agreed under the contract". There was no cross examination of this statement of the witness by the DC or the applicant. Nor do we have the applicant rebutting the said statement in his pleadings or his own affidavit. We are, therefore, unable to hold the respondent guilty of delay in supplying and installing the equipment in question. Interestingly, the witness of the respondent has given a statement in his affidavit about the stock position in May, 1990, which shows that it had the equipment ready to be supplied but which it did not do, for the reason that there was no confirmation of probes by the applicant. In as much as the order was executed within the contract period, the respondent is not guilty of delay in supplying and installing the equipment. Second limb -failure to repair the equipment

The applicant in para 10 of his affidavit has stated : "In May, 1991 after working for nearly two and half months the machine went out of order and IVT was not working". It would appear that an Engineer of the respondent inspected the equipment and took away the defective IVT for repairs. The Engineer of the respondent on 30th September, 1991 after about four and half months checked the equipment and tried to rectify the defects. He observed black spots on the screen and informed the applicant that he suspected that the pulse processor was defective. When the applicant lost hope with the conduct of the respondent, he got the machine repaired locally. The applicant in his affidavit stated that the equipment was in operational and that he has hired a portable ultrasound machine and has been running his clinic.

THERE is no refutation of this statement on oath of the applicant by the respondent in its affidavit of evidence. All that its General Manager (Marketing) has stated is that the respondent after getting special permission from its Principal in USA, got the machine repaired locally. But what passes our comprehension is as to why even after the so called repairs, the machine is still in operational. The various letters written by the applicant about the equipment not working are ample testimony in support of the charge. For instance, the applicant''s letter dated 14th May, 1991, asking the respondent''s Engineer to check the IVT" as it is not working", his letter dated 22nd August, 1991 stating that the "machine is lying inoperational since last 3 months", the respondent''s letter dated 27th August, 1991, stating that "the Intravaginal transducer which is defective is with us", the service report dated 30th September, 1991 to the effect that "the main system is not working properly" and that a fault is suspected in the pulse processor and the letter dated 25th Oct., 1991, from the applicant addressed to the respondent lamenting that his career had been spoiled and that he had suffered severe financial loss are all eloquent evidence that the equipment had been defective and that The respondent had not been able to make The equipment perform satisfactorily. In as much as The applicant himself has stated in his affidavit that The equipment is in operational shows that The representations of The respondent relating to The quality and standard of The equipment relating to its after sales service and relating to The honouring of its warranty have been proved to be false attracting Sections 36A(1) (i), (ii), (iv), (vi), (vii) and (viii) of The Act. The second limb stands proved. Third limb - failure to honour promise of imparting training in U.S.A.

THE respondent''s letter dated 26th December, 1989 assures training to be arranged within one month''s notice and provided as soon as the applicant placed his order with an advance. Its letter dated 2nd May, 1990 says : "We will provide training for IVF application at USA for a period of two weeks" (emphasis added). THEre is an important letter of the applicant dated 9th May, 1990, which says : "THE above amount includes the IVF training at USA with training charges, journey charges, boarding and lodging charges for training period to be borne by you". (emphasis added). Alongwith this letter the applicant paid an advance of Rs. 1,00,000/-. THE respondent acknowledged receipt of the same with the endorsement "accepting to all the conditions in the order dated 9.5.1990 received alongwith the draft". (Ex. A /12 admitted by the respondent). Thus, the acknowledgement receipt accepts all the conditions in the applicant''s letter dated 9th May, 1990. This implies that the respondent, at its cost, will provide IVF training in USA. Subsequently, the applicant reminded the respondent on 15th December, 1990 to fix up the training programme. A further reminder was sent on 14th May, 1991 for arranging the training. On this aspect, the applicant has lamented on22nd August, 1991 that training has not been arranged for more than 15 months since the original order was placed. At this point of time the respondent informed the applicant on 22nd August, 1991 that the training arrangement had been made but it was stated that the arrangement was for IVT training. Training in Canada was organised from 28th October, 1991 to 1st November, 1991 at the Grace Hospital in Canada. This training was for IVT. This immediately evoked a protest from the applicant who in his letter dated 25th October, 1991 stated that the training has to be on IVF and not IVT and that the travelling charges and other charges would have to be in terms of I heir original agreement. This had the right effect on the respondent who informed the applicant on 5th December, 1991 that he would be given training on IVF and that its expenses would be limited to Rs. 1,00,000/-. But this was not accepted by the applicant.

FROM the series of letters and correspondence, referred to above, it is clear that the applicant had sought only IVF training and that the respondent had also categorically assured training in IVF at USA for a period of two weeks (respondent''s letter dated 2nd May, 1990 refers). The weak defence put forth by the respondent that if one were trained in IVT, he can undertake IVF application, is no explanation whatsoever as the assurance was for IVF training. It is well within the right of the applicant to insist on IVF training and not accept IVT training. The late offer on 5th December, 1991 by the respondent that it would provide IVF training came to the applicant after the equipment itself had become in operational. Obviously as the applicant''s Advocate Mr. O.P. Dua and the DG''s Advocate Mr. R. Tikku, pointed out, there was no appoint in taking training to operate a machine which had become in operational. The third limb is also proved.

IN sum, the charges relating to failure to repair the equipment and provide service resulting in deficiency in service and failure to honour its promise of imparting training in USA to the applicant are proved against the respondent. The first issue in the main enquiry is answered in the affirmative against the respondent. The respondent has indulged in unfair trade practices under Section 36A(1)(i), (ii), (iv), (vi), (vii) and (viii) of the Act. The second issue is also answered in the affirmative as the aforesaid unfair trade practices have been prejudicial to the interest of the applicant. This has come out well established not only through the correspondence and letters admitted by the respondent but also in the equipment in question not being operational for the use of applicant. In this view of the matter, the respondent is directed to cease indulging in the aforesaid unfair trade practices and desist from indulging in them in future. The respondent shall file an affidavit in compliance within four weeks of the date of this order.

In so far as compensation is concerned, the evidence in the main enquiry is practically the same as the evidence in the compensation application. The first issue in the compensation application is answered in the affirmative against the respondent to the effect that the respondent has indulged in unfair trade practices alleged against it. The second issue is also answered in the affirmative that the said unfair trade practices are prejudicial to the interest of the applicant. Like-wise the third issue is also answered in the affirmative that the applicant has suffered loss and damage as a consequence of the aforesaid unfair trade practices.

THE in operational equipment shall be returned by the applicant to the respondent. THE respondent shall return the advance amount of Rs. 1,00,000/- alongwith interest @ 18% per annum from 9th May, 1990 upto the date of payment. Likewise the respondent shall return the amount of Rs. 6,98,250/- alongwith interest @ 18% per annum with effect from 5th February, 1991 upto the date of payment. THE amount of Rs. 5,500/- expended by the applicant towards repairs of the equipment shall also be refunded by the respondent (bill No. 2975 dated 14.1.1992 for Rs. 5,500/- raised by Pyrotech Engineering Services, Udaipur). The amounts claimed towards sonographic charges and notional savings that might have accrued to the applicant had the machine worked properly, are not allowed as we are allowing interest @ 18% on the amounts paid by the applicant to the respondent. However, we allow compensation towards mental agony suffered by the applicant, which we assess at Rs. 50,000/-. We also allow costs of Rs. 5,000/-.

THE respondent shall pay the aforesaid amounts to the applicant within four weeks from the date of this order. On receipt of the same, the applicant shall simultaneously return the equipment to the respondent. THE respondent shall file an affidavit in compliance within the same time framed of four weeks. Application disposed of. ______________