JITENDRA K SHAH vs ASHOK LEYLAND LTD

-THIS appeal has been filed against the order passed by the Orissa State Consumer Disputes Redressal Commission directing the appellant/opposite party to pay back Rs. 2,03,600 with interest @ 10% and cost of Rs. 5,000 to the complainant/respondent.

FACTS in brief giving an occasion to file this revision are as under. Amarendra Raigure, the complainant/respondent paid Rs. 2,03,600 in connection with franchise business agreement for purchase of certain equipments in order to earn his livelihood. The petitioner/opposite party supplied the equipments except the important component, i. e. VSAT and Web Camera which had value of Rs. 77,500 and Rs. 3,525, respectively. It was also agreed that the petitioner would provide service to the customers through the network such as E-commerce, dissemination of information, education, etc. Instead of supplying these equipments, after several reminders, the opposite party/appellant informed the complainant/respondent vide Annexure 5 that there was no possibility of launching of VSAT network and they asked the complainant to avail the services of connectivity through other internet service provider. Thus the opposite party/petitioner failed to provide services of "e-commerce", etc. through the internet. The complainant/respondent filed complaint claiming a refund of Rs. 2,03,600 with interest @ 18% p. a. along with other reliefs.

The petitioner contested the matter, inter alia, on the plea that the complainant/respondent was not a ''consumer'' and as such, the matter could not be decided by Consumer Fora. Besides, in view of arbitration clause in the agreement, the complainant should have sought arbitration. The transaction was for commercial purpose.

THE District Forum took the view that the complainant was not a ''consumer'' and the matter would not fall within the purview of Consumer Protection Act and directed the complainant to approach the appropriate Court of law. In appeal, the State Commission took the view that the franchise agreement was neither the partnership agreement, nor it could be termed as a commercial transaction for the transaction was entered into for ones livelihood. It is apparent that it also took the view that the arbitration clause by itself would not be sufficient to refuse the relief before the Consumer Fora.

WE heard the learned Counsel for the parties and have gone through the material/documents on record. As regards the plea that the franchise agreement was a commercial transaction, one has to take into consideration certain facts. The complainant had alleged that he was an unemployed young graduate, and that he had taken loan from the bank. It had to be so held in absence of any specific denial of repeated assertion and taking of loan as such would substantiate his plea that the complainant was being unemployed entered into this agreement for earning his livelihood. The moment it is held that the petitioner entered into this franchise agreement for the purpose of earning his livelihood in transaction which related to year 2001, his claim could not be thrown away on this score that he was not a ''consumer''. As regards the transaction in question there is no dispute before us that the petitioner had agreed to supply the requisite equipment under franchise agreement franchise was supposed to provide 3 kinds of assistance and services to the complainant in running his business.

ONE is that the petitioner was a supplier of goods as would be evident from Clause 2. 3 of the agreement, which is as under: "2. 3 The franchisee shall pay to the Company an amount of Rs. 1,70,000 (Rupees one lakh seventy thousand), by Demand Draft/bankers'' Cheque payable in Mumbai for the purchase of the necessary equipment for the purposes of this Agreement (the "equipment") and towards activation fees. The list of the Equipment is set out in Annexure "c" to this Agreement. "

IT is also evident from the Franchise Agreement that basic services were to be provided to the customers as per aims and objects of the agreement, which are as under: " (a) The Company intends to establish and maintain a network of computers spread across India connected through Very Small Aperture Terminals ("vsat") or such other means of connectivity (the "network") for the purposes of providing the Services (as hereinafter defined) to the Customers. (b) The Company intends to offer all or any of the Services to Customers through Franchisees appointed for that purpose in various cities, towns and villages across India. " (c) The Company intends that the Franchisees shall offer for sale to the Customers the Services by providing access to the Network.

The third part would relate to providing the services for earning the commission.

There is no dispute about the fact that a sum of Rs. 2,03,600 were charged. It is also evident that a sum of Rs. 1,70,000 was paid for purchase of equipment. As per Clause 2. 3 of the agreement, Annexure ''c'', VSAT - Dish, Cable and Transmit/receive Box with USB Port and Web Camera with built in microphone, cable and related software were to be provided by the appellant. It is an undisputed fact that VSAT and Web Camera had not been provided. Charging money and not providing all the parts of system would indicate supplying incomplete/defective system. There is no dispute about the fact that the petitioner failed to take any action to supply these goods instead they had broken promise by giving up the idea of supply of VSAT.

THIS is not a case similar to the case of The General Manager, Madras Telephones and Others v. R. Kannan, I (1994) CPJ 14 (NC ). In that case, the PCO was installed by the person himself and not by the MTNL. In this case, the price has been paid for supplying VSAT and Web Camera. Therefore, this case is distinguishable from the case of The General Manager, Madras Telephones and Others v. R. Kannan (supra ). The case of Softspec Software Pvt. Ltd. v. Digital Equipment (India) Ltd. and Others, II (2002) CPJ 5 (NC)=2002 (1) CPR 114 (NC), was decided on its own fact. In that case, Digital USA gave notice to the complainant of termination of the Logo Agreement. Digital India (not Digital USA) assured that they would continue to provide existing levels of support and issue existing certificate but without Digital Logo. There was no allegation of taking the price and failure to supply any equipment as is in the present case. Besides, the complainant was not an individual and a company could not be said to be earning "his livelihood".

IN para 13 of the orders in Softspec Software Pvt. Ltd. (supra), this Commission also observed : "as to what is the relationship between the grantor of franchise and the franchise holder certainly depends on the terms of the agreement between the parties". In that case the question of supply of equipment did not arise. One could not be oblivious to the fact that the complainant was a software engineer and paid the aforesaid amount to earn his livelihood through a business. Therefore, all the observations relating to franchisees agreement made by this Commission in Softpec Software Pvt. Ltd. (supra) related the fact in that matter. As such, observations in Softpec Software Pvt. Ltd. (supra) would not apply to facts and in context of this case, as has been sought to be applied by the State Commission. Learned Counsel also relied upon the judgment in the case of Mysore Sales International Ltd. v. M. N. Misra, II (1996) CPJ 64 (NC ). In that case a sum of Rs. 11. 00 lakh were deposited as security by the complainant for appointing him as a selling agent of the oil manufactured by the petitioners therein. It was held that to appoint as a selling agent was a breach of contract for which remedy would lie in Civil Court and not before the Consumer Fora. In that case also, no price was paid for supply of any system. Learned Counsel submitted that there would be inconsistency in the present matter if the entire amount was ordered to be paid. If incomplete or defective system was supplied in addition to the services which were to be rendered in the Franchisees Agreement, none of the aforesaid judgments would be of any help. The facts of the cases referred to hereinabove are certainly not similar and, therefore, in the present case this Commission in not taking any inconsistent view. If a person enters into a contractual agreement for supply of certain goods for the purpose of rendering service as a Franchisee to others after receiving services from the petitioner for providing the services to the customers and the term ''customer'' as per 1. 8 of the Agreement mean "any person who avails the service (s) offered by the Company through the Network", the agreement to enforce the supplying complete system - meaningful in the context could be enforced by an individual even in relation to commercial transaction entered into to earn his livelihood.

AS regards deficiency, there could not be deficiency in supplying incomplete goods. One would just like the observations of Supreme Court in the case of Punjab Water Supply and Sewage Board v. Udaipur Cement Works and Another, I (1996) CPJ 7 (SC ). In that case the complainant placed an order for the supply of cement and paid a sum of Rs. 23,62,900. The cement was to be supplied by 7. 3. 1988. There was delay and delivery was made at a higher rate. The State Commission allowed the complaint. This Commission reversed the order. The Supreme Court set aside the order of this Commission and remanded the matter to hear afresh. In para 4, specific reference was made to Sections 2 (c), (d), (f), (g), (o ). But, in the present matter, it should suffice to refer and reproduce clause (f), which reads as under: "2 (f) Defect means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force or [under any contract, express or implied, or]as is claimed by the trader in any manner whatsoever in relation to any goods. "

IT is evident that imperfection or shortcoming in the quality, quantity or potency here required to be maintained not in contract could be defect in service and would lead deficiency in terms of Clause (g) of Section 2, Consumer Protection Act. If the petitioner had charged the money for the purpose of supplying certain articles and they were not supplied with, the petitioner cannot claim that it was money, the amount could not be treated as article and the petitioner should be bound to pay the price charged for such incomplete system.

As regards the plea that in view of the arbitration clause, the matter should have been referred to the arbitration in view of the fact Franchisee Agreement provided for arbitration, there could not be any dispute about the fact that Clause 19 provided for settlement through arbitration. However, it may be mentioned that the Supreme Court in Skypak Couriers, Ltd. Etc. , Etc. v. Tata Chemicals, Ltd. Etc. , Etc. , II (2000) CPJ 6 (SC)=iv (2000) SLT 494=85 (2000) DLT 634 (SC)=2001 CPR 1 (SC), made notable observations in paras 2 and 5 as under: "1. . . . . . . . . . . . . . . . . . . . 2. . . . . . . . . In the absence of any provision in the Act itself, authorising the Commission to refer a pending proceeding before it, on receipt of a complaint from a consumer, for being settled through a consensual adjudication, the conclusion is irresistible that the Commissions under the Consumer Protection Act do not have the jurisdiction to refer the dispute for a consensual adjudication and then make the said decision of the so-called consensual Arbitrator, an order of the Commission itself. Even if there exists an arbitration clause in an agreement and a complaint is made by the consumer, in relation to certain deficiency of service, then the existence of an arbitration clause will not be a bar to the entertainment of the complaint by the Redressal Agency, constituted under the Consumer Protection Act, since the remedy provided under the Act is in addition to the provisions of any other law for the time being in force. . . . . . . . . . . . . . . . . . . . . . 5. Section 22 of the Consumer Protection Act provides that the Commission shall have the powers of a Court. These powers would include the power to call for documents and take evidence either by itself or on Commission. However, the final adjudication has to be by the Commission. For purposes of this order we will presume, without laying down any law in this behalf, that the Commission may even refer disputes to Arbitration/consultation may even refer disputes to Arbitration/conciliation. However, such reference to Arbitration could only be under the provisions of the Arbitration Act, 1940 or the Arbitration and Conciliation Act, 1996. There is no provision in law and we consider it an unhealthy practice for Courts/commission/tribunal to abdicate their duties and functions and to delegate adjudication of disputes before them to third parties. The adjudication can only be by the concerned Court/commission/tribunal. For an effective adjudication the Commission/court must address itself to the evidence, documents, respective case of the parties, including submission on their behalf and then give a finding on that basis. . . . . . . . "

BESIDES, in this regard one has to consider that in the light of the provision of Section 3 of the Consumer Protection Act, it is an additional mode to grant speedy relief. Section 3 reads as under: "3. Act not in derogation of any other law - The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force".

It may be mentioned that arbitration could not be said to be a bar to entertain the complaint by the Consumer Fora constituted under the Act.

AS regards the relief in view of the above, we find it difficult to accept the plea of the petitioner that the petitioner is not liable to pay, for the petitioner failed to supply the equipment valued at Rs. 1,40,000 which included the cost of VSAT and Web Camera, which had not been supplied. Without supplying VSAT, the entire system has been rendered virtually useless for earning ones livelihood. Supposing for the sake of argument Registration Fee of Rs. 10,000 is ignored, if the system could not be activated without VSAT and the Web Camera, the complainant would be entitled to Rs. 1,40,000, cost of the equipment as well as activation fee in view of the supply of incomplete system and therefore defective goods supplied by the petitioner and the complainant-respondent was entitled to recover at least Rs. 1,70,000 for the value of goods for supply of defective/incomplete goods. Seeing in the light of the afore-mentioned facts and circumstances and the fact that the State Commission has directed refund of Rs. 2,03,600 with interest only @ 10% p. a. (despite the fact that the complainant had taken loan from the bank), considering the loss, torture and agony suffered by the complainant, we feel that we should not disturb the quantum of compensation awarded by he State Commission. For the aforesaid reasons, we do not find any force in this revision petitioner. It is dismissed accordingly. Revision Petition dismissed.