Jay Kay Puri Engineers vs MOHAN BREWERIES AND DISTILLERIES LTD

THIS appeal has been out of the order dated 11th December, 1992 of the State Commission, Tamil Nadu at Madras.

THE complainant who is the respondent before this commission filed a complaint under Sections 17 and 18 read with Section 13 of the Consumer Protection Act, 1986 before the State Commission/ Tamil Nadu. The complainant had established a Guest House for its Directors including the Managing Director and other Executives of the Company at C -796, New Friends Colony, New Delhi. The job of furnishing and erecting centrally air -conditioning system both the heating and cooling at the said premises was entrusted to the Appellants (opposite parties before the state commission) in response to their quotation of Rs. 9,68,000/ - for establishing the central air -conditioning with cooling and heating, auto controls of 15 T Plant with cooling tower, GI sheet, Kirloskar motors and heavy quality pipe. Detailed specifications are given in the quotation. The second opposite party undertook the work and started fixing the system and units between December, 1988 and March, 1989. It is alleged in the complaint that the opposite parties commenced from 14th April, 1989 trial runs of the cooling system of the air -conditioning plant but the system did not function. The cooling system of the air -conditioning plant when put to use did not function properly. The air -conditioning system had developed snags and did not work properly. There was leakage of water through ducting system. The service contractor of the opposite party had undertaken certain repair work but even thereafter the system did not work properly. The plant and the coiled fans fitted in the rooms were repaired. Even then the air -conditioning plant did not start functioning in a proper manner. One of the units did not function and the air conditioning units developed gas leakage and inspite of refilling of gas, the gas leakage continued to persist. The complainant had further alleged that since the opposite parties did not take any action to rectify the defects in the plant and as the complainant was unable to make use of the plant, it approached M/s. Spectral Services Consultants Pvt. Ltd. with a request to inspect the air -conditioning plant and submit a report. In the report dated 28th April, 1991 submitted by the said consultants several defects are detailed, inter alia, that one of the compressors is a rebuilt one and F.C.Vs did not appear to be of a 2.5 TR as shown in the bill of first opposite party. The complainant brought the said report to the notice of the opposite parties but they did not take any action to rectify the defects or to have the rebuilt compressor changed from M/s. Kirloskar Brothers Ltd. The complainant further alleged that due to defective fabrication and improper construction of the cooling tower installed by the opposite parties, the cooling tower with MS tank and GI Louvers was blown off on 10.7.91 due to wind. Correspondence exchanged between the parties is then referred to in the complaint. The complainant submits that the opposite parties had undertaken to put up central air -conditioning system in functional order, but they have not carried out the said work in a proper manner since they used substandard and second hand compressors and other items and failed to rectify the defects and put the air -conditioning system in a function able condition. The opposite parties have taken several preliminary objections in their replies. It is pleaded that the goods in question are an asset of the complainant working for commercial purpose and, therefore, the complainant is not a consumer within the meaning of Section 2(l)(d)(i) of the Consumer Protection Act, 1986. The opposite party resides and is carrying on business at Delhi where the job contract was entered into and executed and no cause of action arose at Madras to give territorial jurisdiction to the State Commission, Tamil Nadu at Madras to entertain the complaint. The value of the system exceeds the pecuniary jurisdiction of the State Commission. The plea of limitation and the complaint being bad for non -joinder of M/s. Kirloskar Brothers Ltd. is also taken.

ON merits it is denied that any quotation was given by the opposite party or any formal order was placed on it. It is, however, admitted that the job of erecting and installing of centrally air -conditioning system both for heating and cooling at the said premises was undertaken by the Appellants in June, 1988 and completed in December, 1988. The central air -conditioning and heating system after a trial run in October, 1988 had successfully been commissioned in December, 1988. It was only in May, 1989 that a report was received of defects which on examination was found that one compressor was burnt, due to mishandling by the complainant''s staff but as it was in warranty period, it was replaced by M/s. Kirloskar & Co. It was, therefore, only in May 1990 that a complaint about malfunctioning was received which was duly replied. The contention is that the complainant has falsely woven a story about defects in the air -conditioning system with ulterior motives.

THE State Commission on the pleadings of the parties formulated several points for consideration. It came to the conclusion that the Guest House is not used for commercial purpose and the air -conditioning system supplied and installed therein is not for commercial purpose and holding that the complainant is a consumer within the meaning of Section 2(1)(d)(i)of the Act. It is also Held that even where goods are supplied for commercial purpose, if there is a warranty for its maintenance, the purchaser becomes a consumer in respect of the services rendered or to be rendered by the manufacturer or supplier during the period of warranty and thus the complainant is also consumer within the meaning of Section 2(1)(d)(ii) of the Act. On the question of the pecuniary jurisdiction the State Commission came to the conclusion that the value of the relief claimed does not exceed Rs. 10. lakhs and the complaint is, therefore, entertainable by the State Commission under Section 17(a)(i) of the Act. On the question of territorial jurisdiction the State Commission came to the conclusion that the contract for installation of the air -conditioning system has been entered into at Madras and, therefore, the State Commission, Tamil Nadu at Madras has jurisdiction to entertain the complaint. The plea of limitation was rejected by the State Commission after finding that the plant carried a warranty of good services for the period of one year, even assuming that the installation was completed in December, 1988 as the complaint has been filed within a period of three years from the date of the expiry of the period of warranty i.e. December, 1989. On merits the finding of the State Commission is that the system has failed to function properly and there has been a total failure resulting in sheer waste of money, time and energy, on account of the supply of defective materials and machineries and deficiency of service in the proper functioning of the system. In the result the State Commission directed the opposite parties to rectify the defects and deficiencies in the centrally air -conditioning and cooling system, if necessary by replacing the unit with the new good one with similar description free from defects and make the system properly operational to the complete satisfaction of the complainant or in the alternative to pay to the complainant Rs. 5.00 lakhs (the amount partly paid by the complainant by cheque dated 15.2.90) with interest thereon at 24% from 15.2.90 till repayment and take back the units. The opposite party was also directed to pay Rs. 3000 / - towards costs. The oral arguments in the case were heard on 15.12.94. The parties were granted liberty to file written submissions in supplementation of oral arguments advanced by them. Written submissions have been filed by the parties within the time allowed. We have gone through the records once again as well as the written submissions filed by the parties.

MR . V.S. Joneja, the learned Counsel for the Appellant has assailed the findings of the State Commission, Tamil Nadu at Madras only on two aspects. The submission on the question whether the complainant is a consumer or not is that the complainant is admittedly a Public Limited Company engaged in the business of manufacturing and trading and works for gain. The goods were purchased for commercial purposes, urges the Counsel, a & it is an asset of the Company for advancing its commercial activity. In our view, the State Commission rightly came to the conclusion that the Guest House is intended only for the residence of the Directors including the Managing Director and other Executives of the Company during their visits to Delhi. The installation of the air -conditioning system is only to provide comfort in the residence used by the officers of the Company on their visits to Delhi, may be in connection with their official and business activity. The Guest House is not used for any commercial purpose but only for the residence of the officers of the Company. The supply and installation of the air -conditioning system in the Guest House is not for the purpose of commercial activities of the complainant of the Brewery and Distillery at Madras, or the Glass Division at Pondicherry or Sugar Industry in Orissa or manufacture of Beer and I.M.F.L. at Ghaziabad. The air -conditioning system in the Guest House has no close or direct nexus with the commercial activity carried on by the Company. Apart from it the State Commission correctly stated the settled legal position that even where the goods were purchased for commercial purpose, if there is a warranty, as in this case, for its maintenance, the purchaser becomes a consumer 1 in respect of the services rendered or to be rendered by the manufacturer or supplier during the warranty period. We uphold that the complainant is a consumer within the meaning of Section 2(1)(d)(i) of the Act as well as Section 2(1)(d)(ii) of the Act.

THAT takes us to the challenge of the learned Counsel to the findings of the State Commission that the goods supplied by the Appellants are defective, second hand machinery and there has been gross deficiency in rendering after -sales service. The affidavit of Mr. M. Nandagopal, Managing Director of the complainant Company was filed. He stated: "I state that the unit was put to operation from 14th April, 1989 on a trial -run basis and that this system did not function properly. Despite of the repair work undertaken by the service contractor of the opposite party, M/s. Jaffray Associates, the system was not put to proper workable condition. There was also leakage of water through the ducting system due to improper work. I state that since the opposite party did not take action to rectify the defects in a proper manner, we approached M/s. Spectral Service Consultants Private Ltd., for necessary inspection of the air -conditioning plant. M/s. Spectral Service Consultants Pvt. Ltd. inspected the plant and submitted their report dated 28.4.1990 and the same is marked as Ex. A2. I state that as per the report of the said Consultants, one of the compressors is re -built and the F.C.U.s do not appear to be of 2. 5TR as shown in the bill of the first opposite party apart from the other defects". The report of M/s. Spectral Service Consultants Pvt. Ltd. referred to in the affidavit has also been filed on the record. The counter -affidavit filed by Mr. Jay Kay Puri, partner of M/s. J.K. Puri Engineers does not specifically deal with the defects pointed out by M/s. Spectral Service Consultants Pvt. Ltd. The affidavit merely asserts that the system was being operated by unskilled staff of the complainant with the result that the one compressor got burnt but since it was under warranty with them, the system was put in order with strict instructions that only a technically competent person should be allowed to operate the system. It is thus clearly established from the affidavit of Mr. M. Nandagopal that air -conditioning system was commissioned for cooling on a trial run on 14.4.1989 and from then the system failed to function. M/s. Spectral Service Consultants Pvt. Ltd. in its report dated 28.4.1990 have pointed out the defects and deficiency in the system. It is an independent consultant entity and their evidence in the shape of the report can be relied upon. In its report the problems experienced/observations are recorded in these words: "The equipment was installed in the end of 1988 and was not commissioned on cooling. During 1989 the equipment has not worked. One of the compressors has burnt out twice. There is constant leakage of refrigerant from both the water chilling machines. Even today compressor of unit 1 is burnt out and there is no refrigerant in unit No. 2. M.S. Tank of the cooling tower is very badly rusted and corroded. The system is not properly designed and installed. It is very difficult to ensure at this stage that the equipment installed is properly matching because no documents are available at site. In one of the Contractor''s bills it is mentioned that water chilling machines are of 5 TR each and the FCUs are 2.5 TR each. The FCUs do not appear to be of 2.5 TR capacity. There is no stand by equipment installed."

RECOMMENDATIONS were also made that it shall not be economical to get the system set right since as per specified rectification replacements are necessary before the system is decommissioned. It is also opined that even after these there is no assurance that the system shall function smoothly since non -standard components have been used. The complainant in its I letter dated 23rd May, 1990 after reproducing the expert''s opinion called upon the Appellant to give its comments in the matter. The reminder was issued on 10th July, 1990 followed by another notice dated 5th August, 1991. It is only then somewhere in the end of August, 1991 that reply was given by the Appellant. No specific comment was given to the point raised in the letter dated 23rd April, 1990 pointing out the deficiency based on the report of M/s. Spectral Services Consultants Pvt. Ltd. From this material on record the inference is irresistible that the goods i.e. air -conditioning equipment and machinery supplied were defective and there has been gross deficiency in service.

WE , therefore, uphold the decision of the State Commission and dismiss the appeal with posts which we assess at Rs. 3,000/ -. Appeal dismissed.