GITANJALI CEMENTS PVT. LTD. vs APPLIED INDUSTRIAL PRODUCTS (P) LTD. And OTHERS

THE petitioner is a private limited company registered under the Companies Act. It had entered into a contract with the first respondent company for the supply and erection of mini cement plant for the manufacture of portland cement. THE second respondent herein is the National Council for Cement and Building Materials and the third respondent is the Karnataka State Financial Corporation with whom the complainant had entered into an arrangement for the advance of loans for financing the purchase of plant and machinery and erection and commissioning of the plant.

THE grievance put forward in the complaint-petition is that the first respondent who had agreed to supply plant and machinery and to commission the plant within nine months from the date of the agreement namely 30th May, 1986 failed to keep up the time schedule and delayed erecting the plant and machinery by about one and a half years and even after the plant was erected there were serious defects in the machinery resulting in frequent breakdowns with the result that trial production could be started only in May, 1988. According to the averments in the complaint petition even thereafter there were further breakdowns and also complete stoppage of production due to failure on the part of the first respondent to carry out repairs and replacement of defective pans. Alleging that the complainant had suffered heavy business loss on account of the delay in the commissioning of the plant and also loss of potential market and that he had unnecessarily to pay the interest on loans to the extent of Rs. 19. 6 lakhs, the complainant has sought to recover a total compensation of Rs. 239 and odd lakhs jointly and severally from Respondent Nos. 1, 2 and 3. The first respondent has raised a preliminary objection that since the contract of supply and erection of machinery and plant was specifically for the manufacture of portland cement for ''commercial'' purpose, the complainant is not a ''consumer'' and hence the petition files under the Act is totally misconceived. The claim has also been refuted in detail on the merits by the first respondent. The Second respondent has contended that there was no privity of contract at all between the complainant and the National Council of Cement and Building Materials and hence the complainant can have no means of claim against the second respondent.

Respondent No. 3 has submitted that it had only advanced some loans to the third respondent for the purpose of financing its project for establishment of the cement plant and it was not a contract of service within the meaning of the Act and the allegations in the complaint do not even disclose that there was any ''deficiency'' on the part of the third respondent in carrying out its obligation under the loan arrangement, even if, it is to be assumed for the purpose of discussion that there was any contract of ''hiring of service''.

ANOTHER objection taken by the third respondent is that the complainant has filed a Writ Petition No. 7098 of 1990 before the High Court of Karnataka seeking substantially the same reliefs against the third respondent as set out in paragraph 15 of the complaint petition and the matter is thus subjudice before the High Court. After hearing Counsel for all the parties we are unhesitatingly of the opinion that the approach made by the complainant to this commission seeking reliefs under the provisions of the Consumer Protection Act, 1986 is manifestly misconceived. On a reading of the complaint-petition as a whole, it is clearly seen that the grievance of the complainant pertains to the alleged defects in the machinery and plant supplied and erected by the first respondent and the loss allegedly caused to the complainant by reason of the existence of those defects and the consequent delay in commencement of the commercial production. The mini cement plant was clearly meant for ''commercial'' production of portland cement. The transaction between the complainant and the first respondent being one for sale and erection of machinery and plant for ''commercial'' purpose, the complainant cannot be regarded as a ''consumer'' entitled to seek relief under the Act. We are not impressed with the contention advanced by the Counsel for the complainant that since the plant and machinery became attached to the earth when it was erected, the transaction cannot be regarded as one involving sale and supply of plant and machinery. In our opinion the contract was in essence one for the sale, supply and erection of the machinery and plant. Any defect in the machinery or plant so supplied cannot lead to a consumer dispute since the purpose of the purchase of the plant and machinery was to utilise them for ''commercial'' production of portland cement.

THE complainant has not been able to show how it can be said that there was any privity of contract between itself and the second respondent-National Council for Cement and Building Materials. Hence the claim for compensation put forward against the second respondent cannot also be sustained in law. As regards the third respondent Corporation the complainant had merely borrowed amounts from it for the purpose of financing the complainant''s venture of setting up the mini cement plant. If there were any defects in the plant on machinery supplied to the complainant by the first respondent, we fail to see how the third respondent can be held responsible for the same. There is no basis for the claim for recovery of compensation put forward against the third respondent. Further, it is seen from the counter statement filed by the third respondent that in respect of the identical matter, the complainant has filed a Writ Petition before the High Court of Karnataka and the matter is subjudice before that Court. We have to decline to entertain the claim put forward by the complainant against the third respondent on this ground also. The result is that the petition fails against all the respondents on the grounds set out above and it will accordingly stand dismissed. No costs. Petition dismissed.