General Manager M/S Dynasty Walford Ltd vs ORIENTAL INSURANCE CO LTD

FIRST Appeal 46 of 1998 has been filed by General Manager, M/s. Dynasty Walford Ltd., Guwahati (appellant before us and opposite party No. 1 before Assam State Commission, Guwahati) against the order dated 26.6.1997 of the State Commission in CP No. 7/1994 directing them to pay, (i) interest @ 18 per cent per annum on the entire amount deposited by M/s. Oriental Insurance Co. Ltd., Regional Office, Guwahati (respondent No. 1 before us and complainant before the State Commission), besides compensation of Rs. 50,000/ - and costs of Rs. 10,000/ -. Branch Manager, Walford Transport Ltd., Shillong, Branch Manager Walford Transport (El) Ltd., Dibrugarh, and Managing Director, M/s. Premier Automobiles Ltd., Bombay who are respondent Nos. 2,3 & 4 before us were respectively OP Nos. 2,3 & 4 before the State Commission.

BRIEFLY , facts of the case are as follows : Respondent -complainant Oriental Insurance Company booked five premier Padmini Cars for its sales staff with the appellant -herein and respondents 2 and 3, by depositing in advance the full price for the same i.e. Rs. 9,64,747.40 during October, 1992 and February, 1993 and as per the terms of usual practice, appellant -opposite party, (who is a dealer) was required to deliver the cars within 45 days from the date of booking. The cars were, however, neither delivered as per schedule nor even subsequently, though in response to request from the complainant, the appellant -opposite party was holding out assurances that it would confirm delivery of vehicles by November, 1993. In the meantime, in September, 1993, appellant -opposite party sent to the respondent -complainant two cheques for Rs. 1,81,831.10 and Rs. 19,376/ - which, however, bounced. Aggrieved by the failure of opposite parties to supply the cars, the Insurance Company filed a complaint before the Assam Sate Consumer Disputes Redressal Commission alleging deficiency in service and unfair trade practice on the part of the opposite parties and claiming refund of the amount deposited with interest @ 18% per annum, compensation of Rs. 5.00 lakhs for loss of insurance business and costs. During the hearing before the State Commission, one Shri R.C. Pathak appearing for opposite party 4 (respondent 4 before us) informed the Commission that the dealership of Walford Transport stood terminated with effect from 29.11.1993 and that a new Company, M/s. Dynasty Walford Transport had taken over the assets and liabilities of M/s. Walford Transport and that in pursuance of an earlier order of the State Commission, the new Company had refunded in instalments the principal amount of Rs. 9,64,746.77. The successor Company, however did not pay interest on this amount although there was specific direction of the Commission to do so. Counsel for the opposite parties raised the following two issues : (i) maintainability of the complaint i.e. whether the complainant Company is a consumer as the cars were booked for use of their officers to promote insurance business and therefore, it was for commercial purpose, and (ii) interest and compensation are not debts and hence they were not the liability of appellant -opposite party, the successor Company.

THE State Commission examined the question of maintainability of the complaint and Held the complainant Insurance Company is a consumer within the meaning of Section 2(1)(d)(i) of Consumer Protection Act. Regarding the payment of interest and compensation, the State Commission relied on the decision of the Apex Court in Mohinder Pratap Dass v. Modern Automobiles and Anr., 1995 (3) SCC 581, wherein it was Held that ''the delivery of the car within the specified period is a part of service to be performed by the respondent. There was patent deficiency in service when the respondents withheld the delivery'' and Held that interest and compensation were payable. In the result, the State Commission directed the appellant Company to pay interest @ 18% per annum on the entire amount deposited by the respondent -complainant from the dates of deposit till dates of repayment, besides compensation of Rs. 50,000/ - and costs of Rs. 10,000/ - within two months from the date of their order.

THE present appeal is filed for setting aside the aforesaid order. We have heard the Counsel on both sides and gone through the papers. It has been reiterated that the transaction was for commercial purpose, and the appellant who was the new Company was not liable to pay interest and compensation payable by its predecessor Company. It has also been contended that there was no agreement to deliver the cars within 45 day s or within any other specified dates and therefore no question of any deficiency in service or any unfair trade practice would arise. Further, it has been pleaded that if the impugned order is allowed, the appellant would have to pay interest to the tune of Rs. 5 lakhs without its fault along with compensation and costs which will certainly be a great hardship to the appellant. It may be pointed out here that the predecessor Company in their correspondence with the complainant had not raised the plea that there was no agreement to effect delivery within specified days, and hence the plea now raised by the successor Company about the absence of an agreement to supply the cars as per schedule is rejected. In the light of the aforesaid, we agree with the State Commissions conclusion that the case is one of non -delivery of cars as per schedule and the delay thereof constitutes deficiency in service, and that the complaint is therefore, maintainable under Consumer Protection Act. As for interest and compensation, the same is awarded on account of the negligence and deficiency in service on the part of the appellant - opposite party; as such the liability of refunding not only the principal amount but also paying interest on the same squarely falls on the appellant herein.

WE are however of the view that the award of interest at the rate of 18 per cent per annum is adequate by way of compensation and that compensation of Rs. 50,000/ - over and above the interest of 18 per cent per annum is not sustainable. We therefore, set aside that part of the order of the State Commission pertaining to payment of compensation of Rs. 50,000/ -. In the result, we confirm the order of the State Commission for payment of interest at 18% from the date of payment till the date of refund and costs of Rs. 10,000/ -. The appeal is partly allowed as above. No costs. Appeal partly allowed.