JAIPUR METALS AND ELECTRICALS LTD vs LAXMI INDUSTRIES

1.THE complainant has lodged a complaint against the opposite party for the losses arising from its failure to erect and commission the cold rolling mill which it had supplied in accordance with purchase agreement between the parties. THE purchase order was placed by the complainant on the opposite party on 17th March, 1988 and the supply was to be completed by November, 19. As per the terms of contract, the complainant purchaser was to pay a sum of Rs. 40.63 lakhs (Rs. 36.63 lakhs for the mill, and Rs. 4 lakhs for systems engineering, designing, erection and commissioning of the mill). THE complainant has paid Rs. 34 lakhs for the machines supplied and has claimed a sum of Rs. 2,31.98,839/ - from the opposite party on account of its failure to erect and commission the mill and the consequential losses incurred by the complainant. (Para 13 of the complaint refers).

THE opposite party in its counter affidavit has taken the preliminary objection regarding the maintainability of the complaint that the complainant is not a consumer as defined in the Consumer Protection Act and that the mill machinery was purchased for a commercial purpose and therefore this transaction is not covered by the provisions of the Consumer Protection Act The opposite party has further submitted that the complaint is regarding breach of contract of sale and supply of goods and not deficiency in service and as such remedy for the grievance, if any, of the complainant lies a civil Court and not before the National Consumer Disputes Commission. Before going into the complaint, the counter affidavit and the rejoinder thereto, it is necessary to decide the preliminary objection whether the case falls purely in the realm of breach of contract or as there is also any deficiency in service as defined in the Consumer Protection Act

FROM the perusal of paragraph 13 of the complaint, it is evident that the amount claimed from the opposite party is on account of the payment made for the machines and also for the losses incurred by the complainant for failure of the opposite party to render the service of erection and commissioning the mill and. giving the performance test.

FROM the description of the different components of the losses alleged to have been caused of the complainant, it is evident that the complaint pertains to shortcomings or deficiencies on the part of the opposite party, that is, the supplier, in executing the contract. Section 2(1)(g) of the Consumer Protection Act defines deficiency as under : - "deficiency" means any fault, imperfection, shortcoming of inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service".

IT would be evident from this definition that deficiency must pertain to the ''performance'' in terms of quality, nature and manner, to be maintained or has been undertaken to be performed in pursuance of a contract. Such a'' performance can arise only after the equipment has been erected and commissioned. Where the equipment has not been erected and commissioned, the question of performance does not arise. Failure to erect and commission the equipment would be purely a breach of contract of sale and supply of goods and will not be in the nature of deficiency in service.

DURING the hearing the counsel for the complainant maintained that there were separate and distinct contracts for supply of equipment, and for erection and commissioning and that there has been deficiency in service in regard to the second component of the contract viz. erection and commissioning. He emphasized that the price for supply of the mill viz. Rs. 36.63 lakhs was indicated separately from the amount payable for systems engineering, designing, erection and commissioning etc. viz. Rs. 4 lakhs. However a perusal of the purchase order of 28th January, 1988 indicates that the ''scope of supply'' would include supply of mill and systems engineering design, supervision of erection and commissioning of the plant. The total cost was indicated to be about Rs. 44 lakhs for works and the split up of the price between the mill and for services like systems engineering, designing and erection and commissioning does not mean that there was a separate ''service'' contract We are therefore satisfied mat the alleged failure of the opposite party to erect and commission the equipment cannot be deemed to be deficiency in service under the Consumer Protection Act. On this preliminary ground the complaint is not maintainable and is dismissed without any order as to costs. Complaint dismissed.