KALEESWARI INDUSTRIES vs MATHER And PLATT (INDIA) LTD.

THIS is a complaint under Section 17 read with Section 12 of the Consumer Protection Act.

THE Opposite Party is manufacturer of Back Filling Machine, Calendering Machine and Damping Machine used for production of Binding Cloth. THE Complainant placed an order with the Opposite Party for the supply of these machineries. THE Opposite Party accepted the order and guaranteed performance for a period of one year from the date of commencement of the unit. THE machineries were supplied on 31.3.199 0and erected on 12.4.1991. Some more parts were supplied on 5.8.1991. THE machinery did not function properly even from the very beginning. According to the Complainant the Unit is a composite one and even if any one of the machineries is not working to its full capacity, the production of the finished fabrics will not be possible. On 17.8.1991, the Engineer of the Opposite Party found that there were defects in the machines and required rectification. On 7.9.1991 the Opposite Party promised to take all measures for speedy rectification and asked the Complainant to bear with them. But nothing was done as promised inspite of repeated requests. THE Complainant borrowed from the Tamil Nadu Industrial Investment Corporation and as per the terms of the sale, 10% was payable to the Opposite Party only after working of the machine with full capacity for one year. THE Complainant has so far paid Rs. 18,75,621.86. THE Complainant has also purchased raw-materials for Rs. 4.00 lakhs, land and building costs of Rs. 3,40,000/-. In all, the Complainant invested Rs. 26,15,621.86. He is also paying Rs. 5,000/-per month by way of salary and Rs. 630/- as electric charges. THE Complainant is put to loss because of the failure of the Opposite Party to rectify the defects and deficiencies. Notices were issued by the Complainant. He has therefore come forward with the claim for compensation which is restricted to Rs. 9,90,000/-. The Opposite Party in its counter contented that the machineries have been purchased by the Complainant for commercial purpose and the Complainant is not a consumer. The value of the machineries is Rs. 21,28,469/- and beyond the pecuniary jurisdiction of this Commission. On merits, it is admitted that the Opposite Party offered to sell, install/erect the machineries at the Factory of the Complainant in 1987 itself. But due to the failure of the Opposite Party to make payment the delivery was delayed. The Complainant did not strictly adhere to the payment schedule. Even though the Opposite Party has furnished bank guarantee, the Complainant has not paid the lost 10% of the value. By letter dated 10.6.1991, the Complainant agreed that all the machineries are working properly except doctor blade on the Back Filling Unit. When the Complainant reported to the Opposite Party that the coating plant was not functioned properly, the Opposite Party informed the Complainant that necessary steps would be taken to set-right the plant provided the balance was paid. The Opposite Party states that it was already ready and willing to set-right the matter provided payments were made as agreed. It is the Opposite Party who had incurred loss therefore prayed for the dismissal of the Complaint.

Exhibits A1 to A38 have been marked. The Opposite Party did not file any document. Proof affidavits have been filed.

WHEN the case was taken up for hearing, the Opposite Party wanted time to inspect the machineries and to rectify the manufacturing defects. The case was therefore adjourned from 26.3.1993 to 13.4.1993. But nothing was happened. Hence the hearing of the case was taken up. The Complainant has made an endorsement in the complaint that it was restricting its claim only to the Back Filling Machine valued at Rs. 7,50,000/-. We are therefore concerned only with Back Filling Machine. The points that arise for consideration are (1) whether the complaint is maintainable? (2) whether there has been any deficiency of service on the part of the Opposite Party? and (3) to what relief the Complainant is entitled? Point No. 1. The complainant has purchased from the Opposite Party Back Filling Machine also called coating machine, calendaring machine and damping machine for the production of binding cloth. The purchase is no doubt for commercial purpose and the complainant is not therefore a consumer within the meaning of Section 2(1)(d)(i) of the Consumer Protection Act. But the complainant certainly will be a consumer under Section 2(1)(d)(ii) of the Act in respect of services rendered or to be rendered by the Opposite Party for the proper functioning of the machineries during the period of Warranty. There is no dispute that this sale carried with it a warrantee of proper working of the machineries for the period of one year from the date of the commencement of the Unit In Tuiticorin Plastics Private Limited v. Ebanesar (1993-1 CPR Page 333), this Commission has held following decisions of the State Consumer Disputes Redressal Commission of Maharashtra in Padma Amrapurkar v. Williams & Co. I (1992) CPJ 150 and Viswajothi Printers v. Mollings of India I (1992) CPJ P. 93 that a person who purchased the machineries for commercial purpose will be a consumer under Section 2(1)(d)(ii) of the Act in respect of the post-sales service performed by the manufacturer during the period of warranty. This Section came-up before the National Commission in Vishwa Jothi Printers v. Millings of India and Mollings of India v. Vishwa Jothi Printers I (1992) CPJ P. 167 (NC). It was argued before the National Commission that the services rendered by the Opposite Party during the period of warranty was without consideration and the Complainant was not therefore a consumer hiring the services of the Opposite Party. The National Commission rejected the contention and observed : "We would like to mention that the Appellant has stated that he was rendering free services of the maintenance of the machine for the period of one year under the warranty and as such in the absence of consideration, the Complainant was not a consumer and did not render any service as defined under the Consumer Protection Act. We do not accept this contention of the Appellant. The warranty was a part of the composite contract for supply of the printing machine and its maintenance for a period of one year. The consideration for service to be rendered under the warranty is obviously included in the sale price of the machine. In any case there cannot be an agreement including warranty without consideration. In other words, it is wrong to maintain that warranty obligations were being rendered gratis."

In view of the warranty given by the Opposite Party for the proper working of the machineries for the period of one year, the Opposite Party has to render service for the proper maintenance of the machineries during the period of warranty and the purchaser is a consumer entitled to maintain this complaint for deficiency of service. (ii) It is then urged that the value of machineries is over 21,00,000/- and this Commission has no jurisdiction. In the Complaint itself the Complainant has restricted his claim to Rs. 9,90,000/- under an endorsement to the defect policy made in Complaint. This Commission has therefore pecuniary jurisdiction to entertain this complaint.

POINT No. 2 : The Opposite Party has applied one coating plant consisting of three main parts viz., (1) Back Filling Machine also called Coating Machine (2) Damping Machine, and (3) Calendaring Machine. The Complainant has confined his claim to the Back Filling Machine only as per his endorsement dated 23.4.1993. The installation of the machineries has taken place on 12.4.1991 and it is the duty of the Opposite Party to sec to the proper working of the machineries for a period of one year there from. Exhibit A-20 is the letter of the Complainant dated 10.6.1991 by which the Opposite Party was informed that all the three machines are working properly except the doctor blade called Back Filling Unit. Under Exhibit A-22 dated 17.8.1991, the Complainant has again informed the Opposite Party that the drying range which is one of the parts of the Back Filling Machine is working five metres per minute instead of 10 metres per minute. It is also pointed out that entry batching arrangement has also not been provided by the Opposite Party for the Back Filling Machine. In Exhibit A-23 reply dated 7.11.1991, the Opposite Party has assured to take all measures for the speedy rectification of the above problem. The Complainant has in its letter under Exhibit A-24 dated 17.1.1992 has pointed out that no action has been taken. Another complaint has been written to the Opposite Party under Exhibit A-25 dated 17.2.1992. Under Exhibit A-26 dated 9.3.1992, the Opposite Party has assured the Complainant of modifying the drying machine which is part of the Back Filling Machine to give final speed of 10 metres per minutes, but insisted upon clearing the balance. Again under Exhibit A-28 dated 27.4.1992, the Opposite Party has expressed his readiness to rectify the defective working of the Back Filling Machineries, provided the Complainant released payment of Rs. 1,77,847/- out of the total outstanding of Rs. 2,52,840/- leaving an amount of Rs. 75,000/-being approximate 10% value of the Back Filling Machinery. There is therefore no doubt that this Back Filling Machinery has failed to work properly from the very beginning and the Opposite Party has been assuring the complainant to rectify the deficiency but has not chosen to do anything on the ground that the Complainant did not release the balance payment. We may at this stage pointed out as per the terms imposed by the Tamil Nadu Industrial Investment Corporation, which has advanced loan for Complainant, 30% of the cost Of the machineries supplied by the Opposite Party shall be retained and 20% shall be dispersed after inspection and valuation by the panel of valuers appointed by the Tamil Nadu Industrial Investment Corporation and satisfactory performance for rated output and the balance of 10% shall be dispersed only after satisfactory PerformanCe of machinery for a period of one year. Out of the total costs of Rs. 21,28,469/- the Complainant has paid Rs. 18,75,621.86 which is more than 70% of the cost of the machineries. Out of the balance of80%, 20% shall be payable after satisfactory performance and the remaining 10% after period of one year. This Back Filling Machine has failed to work properly even from the beginning and hence it was not proper on the part of the Opposite Party in having insisted on payment of the balance before attending to the improper functioning of the Back Filling Machine. There was, therefore gross deficiency of service on the part of the Opposite Party in its failure to rectify the mal-functioning of the Back Filling Machine. As already pointed-out, the Opposite Party took time during the course of the hearing to rectify of the manufacturing defects but did nothing. We have therefore no hesitation in coming to the conclusion that the Back Filling Machine has failed to function properly from the very inception and the Opposite Party has committed deficiency of service in not attending to that immediately and insisting upon the payment and the balance. This point is found against the Opposite Party. Point No. 3 : We are convinced that the Opposite Party is not in a mood to attend to the proper working of the Back Filling Machine and there is therefore no purpose in directing it to attend to this machine. The only course available is to direct the Opposite Party to refund of the value of the Back Filling Machine and take back the machine. In Exhibit A-28 the Opposite Party has admitted the 10% value of the Back Filling Machine will be Rs. 75,000/-. It follows, that the total value of the Back Filling Machine is Rs. 7,50,000/-. The Opposite Party is to refund the amount to the Complainant and take back the Back Filling Machine. But out of the total cost of Rs. 21,28,469/-, the Complainant has paid only Rs. 18,75,621.86. There is thus a balance of Rs. 2,53,847.14. The Complainant is liable to pay this amount. After giving credit to this amount the balance payable by the Opposite Party to the Complainant comes to Rs. 4,97,152.86. In the result, we order as follows : (1) The Opposite Party shall pay to the Complainant the sum of Rs. 4,97,152.86 with interest at 12% per annum from the date of this order till payment; within one month from the date of this order and take back the Back Filling Machine. (2) The Opposite Party shall pay Rs. 2,000/- as costs to the Complainant. Complaint allowed with costs.