MANAGER, M/S. UNITED ENTERPRISES vs B. VENKATESWARA RAG

THIS is an appeal preferred by the opposite party in C.C. No. 312 of 1994 questioning the order of the Visakhapatnam District Forum dated 6.2.1997 allowing the said case and directing him to dis- continue "Own Your Bajaj Chetak (Mutual Donation System) Scheme" started by it and also not to repeat such unfair trade practices and to pay Rs. 5,000/- as costs to the complainant.

THE complainant is the respondent before us. According to him he paid a sum of Rs. 5,850/- under the scheme in question started by the appellant and the appellant issued booklet Bearing D No. 2218 in quadruplicate (marked as Ex. A1) asking him to get payment from four persons of Rs. 5,850/- each. THE respondent further stated in his complaint as follows: "When the complainant approached his friends and relatives for sale of the tickets they informed the complainant that there was a publication against the opposite party on 15.7.1993 that they were not genuine and were arrested by the police as such no one would buy the tickets. THE complainant was also informed by the friends that similar schemes floated by certain persons have cheated the public of their money".

Thereafter he requested the appellant to refund the amount paid by him. But the appellant postponed the matter on one pretext or the other. The respondent further stated in his complaint as follows: "The scheme floated by the opposite party under mutual donation system is an unfair trade practice inducing the public as if a person can get a scooter for just Rs. 1,170/-. But actually the sum is collected from the person to whom the tickets are sold by the members of the scheme. If any person could not sell the ticket to four persons as stipulated he would not get either the scooter or the amount paid by him. The mode of loss sustained by the public can be easily seen by going through whole transaction of the opposite party. The public at large are deceived by the opposite party by such fanciful system".

In his complaint the respondent sought refund of the sum of Rs. 5,850/- paid by him together with interest @ 24% per annum from the date of the complainant, i.e. 27.4.1994, and payment of Rs. 2,500/- towards compensation and Rs. 750/- towards costs, and also a direction to the appellant to desist from operating the scheme.

THE appellant admitted that M/s. United Enterprises floated the scheme in question "to help the people who cannot afford to purchase scooter". THE operation of the scheme is explained in the affidavit dated 17.4.1995 of the Manager of the M/s. United Enterprises as follows: "I submit that one who joined newly in the scheme, must voluntarily donate Rs. l,170/- to his friend who has already joined in the scheme and gets admission in it. Subsequently if he donates Rs. 4,680/- to the same friend, as a part amount for the purpose to purchase his friend''s Bajaj Chetak Scooter he will be given four coupons. If the person, so joined, gives his four coupons to four friends/relatives, he will be donated Rs. 1,170/- from each of them, they will get admission into the scheme. Thus he will get donation of Rs. 4,680/- from his four friends. Later, in the four friends, donate Rs. 4,680/- each to him, he will get Rs. 18,720/-, but the Company will charge Rs. 650/- only for office maintenance from that amount. THE total amount Rs. 18,070/- will be given to the successful person to purchase a new Bajaj Chetak Scooter. I submit that the main principal of the scheme is to donate and be donated among friends mutually and it is meant only for helping friends among themselves and all this procedure is an open fact to one all".

But the rub is in the condition that if the person who gets four coupons fails to see that all the four coupons are taken by some friend or relative of his ''donating'' Rs. 1,170/- for admission into the scheme and then further donating Rs. 4,680/-, he would lose the amount already ''donated'' by him. In the present case one G. Venugopal Rao received four coupons from the appellant. He gave one of the coupons to the respondent and received Rs. 1,170/- and made him enroll into the scheme. He also got Rs. 4,680/- as ''donation'' from the appellant by way of demand draft to M/s. United Enterprises. After the respondent was made a member of the scheme, he was given four coupons in turn. According to the respondent he could not dispose of the four coupons because of the bad publicity received by the appellant. Under those circumstances he requested the appellant to refund Rs. 5,850/- paid by him.

THE case of the appellant is that it was made clear in the scheme itself that the donor would not get back the donation amount of Rs. 1,170/- + 4,680/- paid by him and that the respondent knew about this when he gave the ''donation'' to Sri G. Venugopal Rao. THE appellant relies on the documents marked by the respondent himself as Exs. A-l to A-3. Ex. A-3 is coupon bearing No. D 1817, received from G. Venugopal Rao. Inter alia, it is stated therein as follows: "Kindly hand over the donation amount to my friend/relative (donee) and send me a Mutual Donation System''s Book, as I am having 4 persons of my friends/relatives (others) who are interested to give me a donation to purchase a Bajaj Chetak. I clearly know that. I will get the vehicle only after all the 4 persons of my friends/ relatives gives me the donation by D.D. to purchase vehicle. I clearly know that the donation amount Rs. 1,170 / - + 4,680 / paid by me is not refundable and there will be no claim from my side to the Company. As I am voluntarily giving the donation through Bajaj Chetak Mutual Donation System".

This was signed by the respondent. Ex. A-2 is the pamphlet given by M/s. United Enterprises for promoting "Own Your Bajaj Chetak Mutual Donation System" describing it as a unique opportunity. It proceeds as follows: "United Enterprises brings to you a golden opportunity to Own a Bajaj Chetak Scooter for an unbelievable cost of Rs. 1,170/-. But it is true. No further instalments or payments are required. Just you have to collect donations from your friends/relatives. Pay Rs. 1,170/- ...... and Rs. 4,680/-.... as donation to your friend/relative under Mutual Donation System and get a Booklet. Collect Rs. 1,170/-... from 4 persons of your friends/relatives as donation wherein you will get back the donation amount paid by you to your friends / relatives. THEn take Rs. 4.680/-..... from each person those who wants to give you a donation to purchase Bajaj Chetak. When all the 4 persons of your relatives/friends give your donation (4,680 X 4 -18,720), you will get your Bajaj Chetak at your nearest Bajaj dealer under Mutual Donation System. Liasoning Charges will be deducted at the time of taking delivery of vehicle".

(Emphasis supplied) The District Forum found that the said scheme constituted an ''unfair trade practice'' as defined under Sections 2(1)(r)(3)(a) of the Consumer Protection Act, 1986 (''the Act'' for short). After referring to the contents of the said provision, the District Forum held as follows: "In the present case the activities that were being carried out by the opposite party (appellant herein) under the scheme in essence involve sale of scooters. The opposite party was, with regard to each member or donee, receiving a total amount of Rs. 22,500/- and it was paying a lesser amount for obtaining a scooter to another member. It cannot be said that the opposite party was extending a gratuitous service with any laudable object. The scheme as conceived and put into practice was undoubtedly intended to enrich its coffers taking advantage of the gullibility of people. The deceitful intentions to deceive and instead can be gauged from the very first sentence in the Pamphlet referred to above (also reproduced in the donation coupon booklet) that a person joining the scheme would be able to own a Bajaj Chetak Scooter for unbelievable cost of Rs. 1,170/- and that no further instalments were required and what the subscribers were required to do was only to collect donations. Donations are always made for a good cause and a person who makes a donation ordinarily does not expect any thing in return. But in the instant case tine donations which are to be collected are only meant to enable the donee to get a scooter at a very small fraction of its price and the donor makes the donation again with the object of getting a scooter virtually for nothing. Donations, it is stated were to be collected from friends and relatives. The amounts collected as donations are after all to be sent to the opposite party and not to be detained by the donees. We have no hesitation in holding that the case in hand is similar to the situation provided in Sections 2(r)(3)(a) and (b) of the Consumer Protection Act and therefore comes within the scope of unfair trade practices as envisaged in the Act. An impression was definitely sought to be created by the opposite party that a scooter was being given almost free of charge though in fact it was not so as the opposite party was getting much more than the price of the scooter. The use of expression that donations from relatives and friends was only intended as a cover up and camouflage and also give some respect and credibility to the scheme and perhaps further to escape legal scrutiny. If a person like the complainant is unable to sell the donation coupons, the money he has put in would be lost to him but the opposite party gains by the transaction whether it be by way of collection of service/establishment/ maintenance charges or otherwise. The opposite party had under the scheme offered its services to enable people to obtain scooters. The provisions of the Consumer Protection Act are therefore squarely attracted".

We fully agree with the reasoning of the District Forum. The scheme set up by the appellant is clearly a case of deception. Undoubtedly the consumer was not getting a scooter for only Rs. 1,170/-. Instead of paying himself, he would have to entice his friends/ relatives to pay for him as donations a sum of Rs. 23,400/- (Rs. 5,850 x 4) towards entire cost of the scooter and more, and also the so called service charges of the appellant of Rs. 650/- as admitted by the Manager of M/s. United Enterprises in his affidavit dated 17.4.1995. If the complainant failed to get the contributions from his friends/relatives, he would lose the sum of Rs. 5,850/- paid by him initially forgetting the Mutual Donation System Book. Thus all consumers who fail to get contributions will be losing the sums contributed by them apart from not getting the scooter. If a person wanting to purchase a scooter has friends or relatives ready to donate or contribute to him towards the cost of scooter, there really is no need for any proffered services of the appellant no charges need be paid to some one like the appellant. The so called scheme as "Unique Opportunity" is only a subterfuge to entice people to initially pay a sum of Rs. 5,850/- on pain of losing the said sum if similar contributions are not received from friends/relatives who also must desire to obtain scooters similarly and unwittingly have to take a similar risk of losing the initial ''donation''. The period of getting the so-called ''donation'' is restricted to six months. There is no provision in the scheme for refunding the amount if contributions are not obtained from friends/relatives. This makes it an unfair trade practice and bad. In the result, we up-hold the findings and the order of the District Forum. We direct the appellant and M/s. United Enterprises to desist from running/continuing "Own Your Bajaj Chetak Mutual Donation System" Scheme. The order of the District Forum was not stayed pending the present appeal. Needless to say continuation of the said scheme would entail penal action under Section 27 of the Act. The appeal is accordingly dismissed with costs of Rs. 500/- payable to the respondent/ complainant. Appeal dismissed with costs.