M/S. ELGI EQUIPMENTS LIMITED vs MALATHI & 2 ORS

The complainant, who is engaged in the business of Wheel Alignment of the vehicles, as the only source of her income, purchased a Wheel Aligner from the petitioner-M/s ELGI Equipments Ltd. on 31.05.2006 for a consideration of Rs.8,77,000/-. It is alleged that the machine was not in good working condition right from the date of erection and had to be repaired several times. It is alleged that the left side camera was not fit for wheel alignment and went out of order during the period of warranty. The complainant made a complaint in this regard to the petitioner, which asked it to contact Radial Training Centre/Opposite Party No.2. When the complainant contacted the opposite party no.2, it charged a sum of Rs.1,30,000/- from her and she was assured that the fault in the machine had been removed. It is further alleged that the right side camera of the machine developed fault on 09.09.2008 on account of defect, which had arisen during the warranty period of the machine. The machine therefore stopped functioning. When the complainant again approached the petitioner/opposite party no.1, she was asked to approach the opposite party no.2 but the defect was not removed. Being aggrieved from the defect in the product purchased by her, the complainant approached the concerned District Forum by way of a complaint seeking replacement of the machine along with compensation.

The complaint was resisted by the petitioner/opposite party no.1 inter-alia on the ground that the complainant was not a consumer as defined in the Consumer Protection Act and in any case it was only a dealer of Opposite Party No.3/ Snap on Tool''s Pvt. Ltd., who was the manufacturer of the said machine. It was however stated in the reply that they charged service charges only after the expiry of warranty period. The opposite party no.2 resisted the complaint on the ground that no charges were collected during the warranty period of one year and it was only an authorized service centre of the opposite party no.1. The opposite party No.3 resisted the complaint on the ground that there was no privity of contract between it and the complainant since the machine was sold by it to the opposite party no.1 on ''Principal to Principal'' basis and the opposite party no.1 was not its agent.

The District Forum allowed the complaint against the petitioner/opposite party no.1 but dismissed the same against the opposite parties no.2 and 3. Being aggrieved, the petitioner/opposite party no.1 approached the concerned State Commission by way of an appeal. Vide impugned order dated 10.07.2015, the State Commission disposed of the appeal with the following directions:- "14. The District Forum has come to the right conclusion that there is deficiency in service on the part of the opposite parties and has allowed the complaint passing an order directing the 1 st opposite party to replace the old Wheel Aligner to the complainant by providing a new machine of the same type or to refund the cost of machine and to pay compensation of Rs.40,000/- as compensation for mental agony and sufferings caused to her and to pay a costs of Rs.5,000/-.

We feel that awarded of Rs.40,000/- as compensation for mental agony and suffering is very much on the higher side and we are inclined to reduce the compensation of Rs.10,000/-. Otherwise there is no infirmity in the order of the District Forum and there is no merit in the appeal.

In the result, the appeal is partly allowed modifying the order of the District Forum by reducing the compensation for mental agony and sufferings to Rs.10,000/- (Rupees ten thousand only) instead of Rs.40,000/- as awarded by the District Forum and confirming the rest of the order."

Being aggrieved, the petitioner/opposite party no.1 is before this Commission by way of this revision petition.

The first question which arises for consideration in this petition is as to whether the complainant is a consumer within the meaning of Section 2 (1) (d) of the Consumer Protection Act or not. Section (2 (1) (d) of the Consumer Protection Act to the extent it is relevant provides that the term ''consumer'' does not include a person who buys any goods for resale or for any commercial purpose. The explanation attached to the aforesaid clause provides that the term ''commercial purpose'' does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment.

Referring to the above explanation, the Hon''ble Supreme Court in Laxmi Engineering Works vs. P.S.G. Industrial Institute, (1995 SCC (3) 583) held as under:- "We must, therefore, hold that (i) the explanation added by The Consumer Protection (Amendment) Act 50 of 1993 (replacing Ordinance 24 of 1993) with effect from 18.6.1993 is clarificatory in nature and applies to all pending proceedings.

(ii)Whether the purpose for which a person has bought goods is a "commercial purpose" within the meaning of the definition of expression "consumer" in Section 2(d) of the Act is always a question of fact to be decided in the facts and circumstances of each case.

(iii)A person who buys goods and use them himself, exclusively for the purpose of earning his livelihood, by means of self-employment is within the definition of the expression "consumer".

Elaborating further on the above referred explanation, the Hon''ble Supreme Court in M/s. Cheema Engineering Services vs. Rajan Singh, (1997 (1) SCC 131) held as under:-

"In other words, the Explanation excludes from the ambit of commercial purpose in sub-clause (i) if section 2(1)(d) , any goods purchased by a consumer and used by him exclusively for the purpose of earning his livelihood by means of self-employment. Such purchase of goods is not a commercial purpose. The question, therefore, is : whether the respondent has been using the aforesaid machine for self-employment? The word ''self-employment'' is not defined. Therefore, it is a matter of evidence. Unless there is evidence and on consideration thereof it is included that the machine was used only for self-employment to earn his livelihood without a sense of commercial purpose by employing o regular basis the employee or workmen for trade in the manufacture and sale of bricks, it would be for self- employment. Manufacture and sale of bricks in a commercial way may also be to earn livelihood, but "merely earning livelihood in commercial business", does not mean that it is not for commercial purpose. Self-employment connotes altogether a different concept, namely, he alone uses the machinery purchased for the purpose of manufacture by employing himself in working out or producing the goods for earning his livelihood. ''He'' includes the members of his family. Whether the respondent is using the machine exclusively by himself and the members of his family for preparation, manufacture and sale of bricks or whether he employed any workmen and if so, how many, are matters of evidence. The burden is on the respondent to prove them."

In Madan Kumar Singh Vs. District Magistrate, Sultanpur [(2009) 9 Supreme Court Cases 79] , it was found that the complainant had engaged a driver for running the truck purchased by him. The issue before the Hon''ble Supreme Court was whether he fell in the category of a consumer despite the fact that he himself was not driving the truck. Holding the appellant to be a consumer, the Hon''ble Supreme Court inter alia held as under:-

"Apart from the above, it may also be seen that the purchase of the truck by the appellant would also be covered under explanation to Section 2(1)(d) of the Act. The appellant had mentioned categorically that he had bought the said truck to be used exclusively by him for the purpose of earning his livelihood, by means of self- employment. Even if he was to employ a driver for running the truck aforesaid, it would not have changed the matter in any case, as even then appellant would have continued to earn his livelihood from it and of course, by means of self- employment. Furthermore, there is nothing on record to show that he wanted to use the truck for any commercial purpose." In National Seeds Corpn. Ltd. vs. P V Krishna Reddy, R.P. No.1029 of 2004 decided on 18.11.2008, this Commission inter-alia observed as under:-

The explanation reduces the question, what is a "commercial purpose", to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to. The several words employed in the explanation, viz., "uses them by himself", "exclusively for the purpose of earning his livelihood" and "by means of self-employment" make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. A few more illustrations would serve to emphasise what we say. A person who purchases an auto-rickshaw to ply it himself on hire for earning his livelihood would be a consumer. Similarly, a purchaser of a truck who purchases it for plying it as a public carrier by himself would be a consumer. A person who purchases a lathe machine or other machine to operate it himself for earning his livelihood would be a consumer. (In the above illustrations, if such buyer takes the assistance of one or two persons to assist/help him in operating the vehicle or machinery, he does not cease to be a consumer). As against this a person who purchases an auto-rickshaw, a car or a lathe machine or other machine to be plied or operated exclusively by another person would not be a consumer. This is the necessary limitation flowing from the expressions "used by him", and "by means of self-employment" in the explanation. The ambiguity in the meaning of the words "for the purpose of earning his livelihood" is explained and clarified by the other two sets of words."

The onus was upon the opposite parties including the petitioner before this Commission to prove that the complainant had not purchased the Wheel Aligner for the purpose of her livelihood or that neither she nor any member of her family was working on the aforesaid machine. No evidence was however led by them to prove either that the complainant was engaged in some other business profession or vocation at the time the wheel aligner was purchased by her or to prove that only the workers were working on the machine, and neither the complainant nor any member of her family was not involved in working on the aforesaid machine. Therefore, I see no reason to reject the plea taken by the complainant that she having purchased the wheel aligner as a source of livelihood for herself and her family, she was the consumer within the meaning of Section 2 (1) (d) of the Consumer Protection Act.

The next question which arises for my consideration is as to whether there was any defect in the machine purchased by the complainant and if so whether she is entitled to reimbursement of the said machine along with compensation quantified at Rs.10,000/- and the cost of litigation quantified at Rs.5,000/-. Both the District Forum as well as the State Commission having returned a finding of fact that the machine supplied by the petitioner to the complainant was a defective machine. This Commission will not be justified in interfering with the aforesaid concurrent finding of fact unless there is shown to be perverse in nature. The petitioner has failed to establish that the finding returned by the fora below in this case was perverse in the sense that no reasonable person acting on the material available with the fora below could have returned the finding which the said fora returned in this case.

A perusal of the service report dated 15.06.2006 would show that the machine was installed on 15.06.2006 by a representative of the petitioner company. The District Forum on perusal of the customer service call report dated 28.06.2006 found that there was some complaints with respect to the machine within a few days from the date on which erected. On perusal of the customer call report dated 16.11.2006 (Ex.A8), the District Forum found that there were defects in the machine on 14.11.2006. The defects were also noticed from the service call reports dated 04.01.2007 (Ex.A10), 06.01.2007 (Ex.A11), 24.01.2007 (Ex.A12), 19.02.2007 (Ex.A13) and 05.07.2006 (Ex.A14), 28.04.2008 (Ex.A15). (Ex.A17) filed before the District Forum was a copy of the proforma invoice for Rs.1,30,000/- which was charged from the complainant, vide receipts (Ex.A18 and Ex.A19). Ex.A20 filed before the District Forum is the copy of the equipment service report dated 16.10.2008 whereas Ex.A22 is copy of the receipt of Rs.1,00,000/- given by the OP No.2 on 15.10.2008. Considering the above referred documentary evidence, which was accepted not only by the District Forum but also by the State Commission, there is no justification for interfering with the aforesaid finding of facts in exercise of revisional jurisdiction of this Commission. I therefore have no hesitation in holding that the machine supplied to the complainant was defective right from the time it was erected and therefore the said machine is required to be replaced by a new machine.

The next question which arises for consideration is who is liable to replace the machine and pay the compensation and cost of litigation to the complainant? The learned counsel for the petitioner contended that since the machine was manufactured by the respondent no.3 and not by the petitioner company, it is respondent no.3 which is liable to replace the machine and pay the compensation as well as cost of litigation. The learned counsel for the respondent no.3, on the other hand, contended that since the machine from them was purchased by the petitioner company on ''Principal to Principal'' basis, it is the petitioner company alone which is liable to replace the machine and pay the compensation and cost of litigation to the complainant.

In Vijay Traders vs. Bajaj Auto Ltd., (1995) 6 SCC 566, the Hon''ble Supreme Court, on perusal of the correspondence between the parties, rejected the contention that the petitioner was an agent of the defendant company. It was noticed that the plaintiffs were buying the product from the defendants for resale and the terms of the contract between the parties did not indicate the relationship of agent between them in this regard. It was held that even an agent become a purchaser when he makes payment to the principal on his own responsibility. In Maruti Udyog Ltd. vs. Nagender Prasad Sinha & Anr., R.P. No.674 of 2004, decided on 04.05.2009, this Commission relying upon the decision of the Hon''ble Supreme Court in Indian Oil Corporation vs. Consumer Protection Council, Kerala and Anr., {II (1994) CPJ 21 (SC)} held that in view of Clause 17 of the Dealership Agreement between the parties the relationship between them is on "Principal to Principal" basis and not that of "Principal to Agent". It was further held that since there was no privity of contract between the purchaser of the vehicle and the manufacturer Maruti Udyog Ltd., the complaint before the Consumer Forum was not maintainable against it.

In the present case, the petitioner company itself has alleged in para 24 of the revision petition that respondent no.3 is the manufacturer of the Wheel Alignment Machine from which the said machine was purchased by the petitioner before selling the same to respondent no.1. It thus appears that the petitioner company had been purchasing such machine from the respondent no.3 by making a payment to it and then selling the said machine to its customer. The relationship between the petitioner and the respondent no.3 therefore was on ''Principal to Principal'' basis and the petitioner cannot be said to be an agent of respondent no.3. Since there is no privity of contract between the complainant and the respondent no.3 and there is no relationship of agent and principal between the petitioner and the respondent no.3, the complainant is not entitled to the replacement of the machine or to recover any amount from the respondent no.3.

For the reasons stated herein above, I find no merit in the revision petition and the same is accordingly dismissed, with no order as to costs.