Kodak India Pvt. Ltd. vs Digital Signage Systems P. Ltd.

TWO revision petitions (R.P. No.967/07 & R.P.No.3578/07) have been filed by M/s Kodak India Ltd. and M/s Ample Technologies Pvt. Ltd.(hereinafter referred to as the Petitioner No.1 and 2), respectively being aggrieved by the order of the State Consumer Disputes Redressal Commission, Karnataka in Appeal No.1722/06 and 1733/2006 in favour of M/s Digital Signage Systems Pvt. Ltd. (hereinafter referred to as the Respondent).

SINCE the parties, facts and points of law involved are common in both cases, we propose to dispose of these revision petitions through a single order by taking into consideration the facts of Revision Petition No.967 of 2007. The cause of complaint according to the Respondent is that in order to carry on his business of printing work of advertising materials, Digital Graphics Signages, Lamination, Hoardings, scanning and displays, he had formed a firm with the help of some unemployed youth and for this purpose he had approached M/s Encad Inc. (Petitioner No.1) for purchase of one ENCAD NOVAJET printer manufactured by M/s Encad Inc. He was assured that the printer booked was of a high quality and defects, if any, would be promptly attended to during the warranty period. Accordingly a purchase order was placed on 02.11.2000 and a total amount of Rs.7,50,000/- was paid by cheque. Respondent had taken a loan for Rs.15,86,000/- from the Central Bank of India by mortgaging the printing and the supporting machineries. The printer was installed on 08.03.2001 by Petitioner No.1s Distributor i.e. M/s Digital Electronics Ltd. but unfortunately on 09.03.2001 itself a number of problems cropped up in the printer which were brought to the notice of both the manufacturer and the distributor. It was attended to on their behalf on two occasions by their representatives Mr.Chandrasekhar and Mr.Madhusudan who informed after due examination that the printer had major problems. This was also confirmed from call sheets issued by these representatives. However, nothing positive was done to set right the defective printer because of which the Respondent suffered heavy losses. On 12.12.2002, Respondent was informed through a communication from Petitioner that the manufacturer company (i.e. ENCAD Inc.) of the printer had been acquired by M/s Kodak Ltd. (Petitioner in R.P.No.967/07) and a new Distributor {M/s Ample Technologies (P) Ltd Petitioner in R.P. No.3578/07} had been appointed to look into any defects. However, despite complaints to the new Distributor, the defects persisted and therefore, Respondent issued a legal notice to the Petitioners to pay compensation of Rs.15,00,000/- along with 18% interest and cost of litigation. Since there was no response to this notice, Respondent filed a complaint before the District Forum which was inter alia rejected on the grounds that the Respondent was not a consumer as defined under Section 2 of the Consumer Protection Act, 1986. Aggrieved by this, Respondent filed an appeal before the State Commission which after hearing the parties was of the view that there were some technical defects in the complaint since Respondent had not impleaded the proper parties. The State Commission, therefore, disposed of the appeal with the observation that the Respondent was at liberty to file a fresh complaint before the District Forum by impleading the necessary parties. Respondent thereafter filed a complaint before the District Forum in which he again impleaded M/s Kodak India Ltd. along with M/s Ample Technologies as opposite parties No.1 & 2.

Petitioners have denied the complaints made by the Respondents on the grounds that they are neither manufacturers nor the distributors of the printer that was purchased by Respondent because at the time of purchase of the printer M/s ENCAD Inc. was not acquired by the Petitioner. At that time they were a separate entity and their dealer and distributor were M/s Digital Electronics Ltd. and not the present dealer/distributor appointed after acquisition of ENCAD Inc. by Petitioner No.1. It was also submitted that the Respondent is not a consumer since he was running a commercial establishment.

THE District Forum after hearing both parties and considering the evidence on record accepted the complaint. THE relevant observations made by the District Forum are reproduced: No doubt, the 1st Opposite Party took up a defence that M/s ENCAD Inc. ought to have been a party to this proceeding since they are the Manufacturer of the goods in question. However, the evidence on record has made it clear that M/s ENCAD Inc. has been take over by M/s Eastman Kodak Company and it has become a Kodak Company. THE 1st Opposite Party as revealed in the evidence is one of their Offices in India. This has not been questioned by the 1st Opposite Party. When that is the position, it cannot lie in the mouth of the 1st Opposite Party to contend that they had nothing to do with M/s ENCAD Inc. the Manufacturer of the goods in question. Accordingly, we are of the considered opinion that there is no substance in the above contention of the 1st Opposite Party regarding the impleadment of M/s ENCAD Inc. as a party to this proceeding. Further, as already stated, M/s Digital Electronics Ltd. is no more a Distributor of that Manufacturer and the present Distributor is the 2nd Opposite Party herein as revealed in the evidence. At the cost of repetition, we have to state that Annexure-A10 referred to above makes it clear about the rights and obligations of the Opposite Parties touching the customers who transacted with the previous Distributor namely M/s Digital Electronics Ltd., regarding the goods namely the Printers. ....As far as the defects in the goods are concerned, the Opposite Parties have not made any attempt to remove the same so far and on the other hand, they rest contended without discharging their obligation, on technical grounds. This approach of the Opposite Parties is not unjust, but also iniquitous. In view of the above facts, the District Forum directed the Petitioners to remove the defects in the said printer if necessary by replacing the affected parts, free of cost. If however, for any reason the goods cannot be repaired the opposite parties were directed to replace the printer with a brand new one which would be free from any defect without asking from the Respondent anything by way of consideration. The Petitioner was also directed to pay the Respondent a sum of Rs.10,000/- on account of loss and sufferance because of their deficiency in service and a sum of Rs.5,000/- towards cost of litigation. Aggrieved by this order, Petitioners filed an appeal before the State Commission which dismissed the appeal. The relevant part of the order of the State Commission is reproduced: As stated earlier, it is not in dispute that the Printer sold to the Complainant was manufactured by M/s Encad In. Op-1 in its Appeal Memo at paragraph 9 has specifically stated as follows: The Appellant submits that ENCAD Inc. is a USA based company and M/s Digital Electronics Ltd. and M/s Ample Technologies are the dealers/distributors of ENCAD Inc. It is pertinent to mention that ENCAD Inc. is a limited company which was acquired by Eastman Kodak Company, USA, in April, 2002 which is a multinational, owning and controlling a number of companies all over the world including the Appellant. From this averment it is seek that M/s Encad Inc. is the owner of M/s Kodak India Private Ltd. When such being the case, necessarily M/s Kodak India Pvt. Ltd. has to be treated as the manufacturer of the Printer said to have been manufactured by M/s Encad Inc. Consequently OP-1 being the owner of M/s Encad Inc. is liable to make good the Deficiency in Service, in the event if there is any defect in the Printer manufactured by M/s Encad Inc.

THE next contention of OP-1 is that there is no privity of contract between the Complainant and OP-1. No doubt, the Complainant has got the Printer from the Distributor. But there is a duty case upon the manufacturer to see that goods manufactured by it must be in good condition when they are sold to consumers. In the event it there is any defect in the goods, it is the duty of the manufacturer to rectify the same. In the instant case, since OP-1 admits that M/s Encad Inc. owning and controlling OP-1, necessarily OP-1 should rectify the defect, if any, in the Printer sold to the Complainant. THErefore, in our view, there is no substance in any one of the contentious raised by OP-1 in this Appeal. Hence the present revision petition. Counsel for both parties made oral submissions before us. Learned counsel for Petitioner No.1 again highlighted the fact that the complaint of the Respondent is not maintainable because at the time when the printer was purchased by the Respondent in 2000, ENCAD Inc. the manufacturer, was not acquired by the present Petitioner Company i.e. Eastman Kodak Ltd. This acquisition took place only in 2002 and, therefore, Petitioner cannot be held liable for manufacturing defects in the printer which was purchased prior to acquisition of ENCAD Inc. by the Petitioner Company. It was further pointed out that the concerned parties were not impleaded by the Respondent even though he was given a second opportunity to do so by the State Commission. Therefore, the complaint if at all maintainable should have been filed against ENCAD Inc. and not the Petitioner. Even otherwise, Respondent was running a commercial establishment and, therefore, he is not a consumer under the provisions of Consumer Protection Act, 1986. Learned fora below erred in not appreciating these facts and gave a decision in favour of Respondent. The revision petition should, therefore, be allowed. Learned counsel for Respondent, on the other hand, stated that as rightly observed by the State Commission, Petitioner cannot absolve itself from the manufacturing defects for which ENCAD Inc. was responsible since they are now a single entity. He brought to our attention a letter written by ENCAD Inc. on 12.12.2002 wherein it informed its customers that ENCAD Inc. is now a wholly owned subsidiary of the Eastman Kodak Company (i.e. Petitioner No.1) created through the acquisition of ENCAD Inc. and that ENCAD Inc. stands committed to support ENCAD products previously sold to customers and will continue to cover all printer with valid warranty through its new Distributor i.e. Ample Technologies Pvt. Ltd. (Petitioner No.2). Learned counsel for Respondent also stated that the printer was used for self-employment and the small firm was being run by him with the help of some unemployed educated youth and this in no way would constitute it to be a commercial establishment. Therefore, his complaint was maintainable under the Consumer Protection Act, 1986.

WE have heard the learned counsel for both parties and have carefully gone through the evidence on record.

IT is not in dispute that the Respondent had booked the printer from M/s ENCAD Inc. in 2000. IT is also a fact which has again not been disputed that ENCAD Inc. was taken over by Kodak Ltd. in the year 2002 i.e. almost two years after the printer was purchased. Under these circumstances it cannot be justifiably contended that Petitioner No.1 is responsible for products which were manufactured by another company and which at that time was a separate legal entity since it had not been taken over by Petitioner No.1. Further, the letter dated 12.12.2002 written by ENCAD Inc. brought to our notice by Respondent in support of his case that even after its acquisition in 2002, ENCAD Inc. had agreed to support its earlier products including maintenance of printers with valid warranty, does not help the Respondent since this communication was not sent by the Petitioner Company i.e. Kodak. Further, the letter only states that ENCAD Inc. is now appointing a new Distributor who would attend to complaints if any during the valid warranty period of goods manufactured by ENCAD Inc. prior to its acquisition. IT does not state that the Distributor would be liable for any deficiencies prior to the period of appointment as Distributor. Respondent was given an opportunity to implead ENCAD Inc. as a party before the District Forum, which it failed to do as well as the earlier dealer M/s Digital Technologies Ltd. IT is clear from the facts narrated above that the present Petitioner did not manufacture the defective printer and at the time of purchase of the printer there was no privity of contract between Petitioner and Respondent. Unfortunately, the fora below failed to appreciate this important fact and erroneously concluded in holding Petitioner guilty of deficiency in service. On the same analogy, the present dealer who was appointed in 2002 can also not be held accountable for any complaints/deficiencies prior to its appointment as Dealer/Distributor in 2002. In view of the above facts, we set aside the order of the State Commission. The revision petitions are accepted with no order as to costs.