RAJAN V. KAMAT & ORS. vs PEDRO A. ALMEIDA & ANR.

The case of the complainants in Revision Petition No.1549 of 2010 is that on 10-06-1993 the opposite parties, namely Pedro A. Almeida & Bhujaballi A.A., convened a meeting at Natraj Theatre inviting the complainants and several other persons for the purpose of launching a project namely Nilgiri Plantation Project III. The meeting was addressed by opposite party No.1 as the Chief Promoter of the project. This is also the case of the complainants that in the aforesaid meeting the opposite parties distributed pamphlets inviting them to invest a minimum sum of Rs.12,000/- per person in the aforesaid project and promised that the investment made by them would yield five times more return after a time period of seven years. Under the scheme a sum of Rs.6,000/- was to be invested on enrollment, followed by another investment of Rs.6,000/- at Stage II. Believing the representation made to them by the opposite parties, the complainants invested their hard earned money with them, for the aforesaid project. According to the complainants the opposite parties had also represented to them that their investment was fully secured by the rights acquired by them in the land situated in Zambotti/Gunji in District Belgaum of Karnataka. They were told that the return would be paid to them out of the produce from the said immovable property.

The grievance of the complainants is that on completion of the stipulated period of seven years some time in 1999, the opposite parties did not pay the promised return to them, despite repeated requests made to them. The complainants, therefore, approached the concerned District Forum seeking payment of a sum of Rs.54,000/- each to all of them along with interest at the rate of 18% per annum from the date of maturity till the date of payment.

The complaint was resisted by the opposite parties taking a preliminary objection that the complainants were not consumers within the meaning of Consumer Protection Act. On merits, it was alleged that the complainant No.1, Rajan V. Kamat and complainant No.5, Umesh Shamba Palyekar alone were managing the entire project and the opposite parties along with others were entitled to receive the share amount from the investments, they being land members. Thus, according to them the project was promoted by complainants Nos.1 & 5 and not by them.

Another complaint being Complaint No.115 of 2003 which is the subject matter of Revision Petition No.1550 of 2010 was filed by as many as 20 persons against the same opposite parties i.e. Pedro A. Almeida & Bhujaballi A.A who claimed that in a meeting convened on 15-12-1991 the aforesaid opposite parties had launched the project Nilgiri Plantation II and opposite party No.1 had claimed to be the Chief Promoter of the said project in the aforesaid meeting. The said complainants claimed to have invested Rs.10,000/- each in the aforesaid scheme, on the basis of the representation made by the opposite parties. They also did not receive the promised return on expiry of seven years from the date of the deposit made by them. Being aggrieved they also approached the District Forum seeking payment of a sum of Rs.64,620/- to each of them along with interest at the rate of 18% per annum.

The second complaint was also resisted by the opposite parties on the same ground on which the first complaint which is subject matter of Revision Petition No.1549 of 2010 was contested. It was alleged in the reply that the opposite parties were only members of the scheme floated by the complainants Nos.1, 2 and 14 in the said complaint namely Deepak U. Palyekar, Arjun R. Kharutkar and Rajan Kamat.

The District Forum allowed the complaints and directed the opposite parties to refund the sum of Rs.64,620/54,000 to each of the complainants along with interest at the rate of 12% per annum from the date of maturity till the date of final payment.

Being aggrieved from the order passed by the District Forum the opposite parties approached the concerned State Commission by way of two separate appeals being Appeal No.27 of 2009 and Appeal No.34 of 2009. Vide impugned order dated 19-03-2010 the State Commission allowed the appeals, set aside the orders passed by the District Forum and dismissed both the complaints. Being aggrieved the complainants are before us by way of these two separate revision petitions.

The first question which comes up for our consideration in these cases is as to whether the complainants are consumers within the meaning of Section 2(1)(d) of the Consumer Protection Act. It was contended by the learned counsel for the respondent that the investment by the complainants having been made to earn income, the transaction was for a commercial purpose. The expression ''commercial purpose'' has not been defined in the Act and, therefore, as held herein below by the Hon''ble Supreme Court in Laxmi Engineering Works Vs. P.S.G. Industrial Institute (1995) 3 SCC 583 , we have to go by the dictionary meanings, "In the absence of a definition, we have to go by its ordinary meaning ''Commercial'' denotes "pertaining to commerce" (Chamber''s Twentieth Century Dictionary); it means "connected with, or engaged in commerce; mercantile, having profit as the main aim" (Collins English Dictionary) whereas the word ''commerce'' means "financial transactions especially buying and selling of merchandise on a large scale" (Concise Oxford Dictionary)".

Going by the Dictionary meaning of the expression ''Commerce'' as far as hiring or availing services are concerned, a person can be said to have hired or availed services only if they are connected or related to the business or commerce in which he is engaged. In other words, the services in order to exclude the hirer from the ambit of Section 2(1)(d) of the Act should be availed for the purpose of promoting, advancing or augmenting an activity, the primary aim of which is to earn profit with use of the said services. It would ordinarily include activities such as manufacturing, trading or rendering services. A person having surplus funds available with him would not like to keep such funds idle and would seek to invest them in such a manner that he gets maximum returns on his investment. He may invest such funds in Bank Deposits, Shares, Mutual Funds and Bonds or Debentures, etc.. Likewise, he may also invest his surplus funds/savings in a scheme which promises a decent return on the investment made by him, but that would mean that such an investor/depositor was engaged in a commerce or business while making such an investment. Earning returns by way of investments made in such a scheme in our opinion would be altogether different from generating profits by way of a trading or manufacturing activity and, therefore, we cannot accept the contention that the complainants had engaged the services of the opposite parties for a commercial purpose. Consequently, we find no merit in the preliminary objection taken by the opposite party.

The next question which arises for our consideration in this case is as to whether the complainants had hired or availed the services of the opposite parties by making investment on the basis of the representations made by them or it was the other way round as is claimed by the opposite parties.

A perusal of the circular dated 18-10-1992 relating to launching of Scheme III of Nilgiri Plantation Project would show that in the said circular the opposite party No.1, Pedro A. Almeida claimed to be the Chief Promoter of the aforesaid project. The aforesaid circular to the extent it is relevant reads as under: "Shri P.A. Almeida was seized of an idea of agricultural farming on a large scale which he thought was possible by collective effort. The idea of the project was hatched in his mind, and as the Chief Promoter of the Project, he set out to put into practice. The project report which meant a projected scheme was placed before the interested enthusiasts in September 1990. The response was favourable and at the first meeting a group of forty members contributed their subscriptions to set the project into motion. The purchase of land was the first item before the Committee headed by Shri P.A. Almeida, and others. The land was acquired and the development was begun. The project went into plantation in June 1990 and the first scheme was today on its rolls 49 members - 80,000 sq.m. of land - 60,000 Nilgiri plants - 83 mango plants - 25 Chickoo plants - 1000 teakwood stems - 500 silverwood plants - 500 cyprus plants.

The entire work of purchase of plants, development of land procurement or plant and plantations was the team work of Shri P.A. Almeida & A.A. Bhujballi - Presidents and Vice Presidents of Committee."

"The projected statement of expenses and sources of funds is given below for the benefit of the interested.

PROJECTED EXPENSES Rs. Rs.

Cost of land Rs.3,00,000.00

Cleaning & Development of land Rs.25,000.00

Preparation of pits, fertilizers, reopening of pits and plainting of saplings Rs.75,000.00

Total: Rs.4,00,000.00

B Forward Rs.4,00,000.00

Cost of plants including transportation Rs.30,000.00

Cleaning of grass Rs.5,000.00

Fertilizers for the first four years Rs.60,000.00

Refilling of earth-4 years Rs.50,000.00

Fertilizers for the first time Rs.20,000.00

Wages of supervisors & Watchmen 7 years Rs.75,000.00

10 Travelling, site visits, lodging, boarding Rs.1,00,000.00

11 Brokerage & Agency Commission Rs.50,000.00

12 Recurring expenditure Rs.35,000.00

Expenditure at the time of cutting Rs.5,000.00

14 Office maintenance for 7 years Rs.10,000.00

15 Advertisement & Publicity Rs.10,000.00

Rs.10,00,000.0

Source of funds

Subscription from 50 members @ Rs.12,000.00 Rs.6,00,000.00

Maintenance contribution Rs.1,000.00 from

each member for 6 years Rs.50,000 X 6 Rs.3,00,000.00

Interest on capital Rs.15,000.00

Loan and advances from Banks Rs.85,000.00

Rs.10,00,000

RETURN ON INVESTMENT

Projected sale proceeds after seven years Rs.60,00,000.00

from fully grown plants

Less: Wastage 10% Rs.6,00,000.00

Rs.54,00,000

Less: Expenditure 10,00,000.00

Sales tax 4% 2,40,000.00

Reserve Fund 4% 2,40,000.00

Promoter''s Commission 2,40,000.00

Expenses for 2 nd yield 5,70,000.00

Rs.22,19,000.00

Profit available for appropriation

Rs.31,81,000.00

Less: Welfare funds

Rs.1,81,000.00

Net Profit available for members

Rs.30,00,000.00

Subsequent yields II after 6 years income 10% above gross Expenses 10% do

III after 6 years income 10% above gross of IInd yield Expenses do do If yield after 6 years. Income 10% above gross of III yield Expenses 10% do

P.A. Almeida Chief Promoter"

(emphasis supplied)

In view of the aforesaid circular it would be difficult to deny that the opposite parties namely Pedro A. Almeida & Bhujaballi A.A. were main promoters of the project being President and Vice President respectively of the committee. None of the complainants find named in the aforesaid circular.

Vide letter dated 15-05-1995 opposite party No.1 describing himself as Chairman convened a General Body Meeting of the investors. The Balance Sheet and Receipt & Payments Accounts for the period ending 31-03-1995 was signed by both the opposite parties as President and Vice President respectively of Nilgiri Plantation Project. Letters of allotment issued to complainants were signed by both the opposite parties, besides another person namely Kustas Jevaron Dalmet. The receipts for the amounts paid by the complainants were also signed by opposite party No.1 as the President of Nilgiri Plantation Project. Several other notices of the General Body Meeting came to be issued by the opposite parties. The maintenance contribution from the investors was also demanded by opposite party No.1 by way of letter dated 20-06-1996.

A perusal of the projected statement of account presented in the meeting held at Nataraj Theatre on 15-12-1991 also shows that opposite party No.1 was the promoter of the scheme whereby a return of Rs.32,31,000/- was projected on the investment of Rs.8,84,400/- after seven years. The report presented in respect of Project I, which is available on page 97 of the papers book of Revision Petition No.1550 of 2010 to the extent it is relevant reads as under: " INTRODUCTION : Shri Pedro A. Almeida, the then promoter and now President of the Project had in his brain a project which could benefit and give a long-term yield and side by side also partake in the Government to develop the forests and greenery. The thoughts in his mind were put in writing on the paper in the form of a projected statement of accounts, with the assistance of Shri A.A. Bhujballi, Vice-President and Shri Naguesh Naik, Secretary. The report so prepared projected a sizeable magnitude. SITE PROCUREMENT: As the response from the members was an encouraging one, Shri Peter A. Almeida and Shri A.A. Bhujballi, with renewed vigour set to finalise the selection of plots to be purchased. They selected a site with an area of 80,000 sq.m. and a group of 7 members visited the site on. The site was purchased and 50% of the total cost has been paid remaining a balance 50% to be paid by 1993." (emphasis supplied) The aforesaid statement in the report referred above is yet another proof of the opposite parties being promoters and brain behind the scheme in which investments were made by the complainants. There is no evidence of any of the complainants being the promoter of the scheme/project.

For the reasons stated hereinabove, we have no hesitation in holding that it were the opposite parties alone who had promoted the aforesaid project and lured the complainants into making investments therein, by promising very high returns on the investments made by them. Admittedly, the opposite parties did not make payment to the complainants in terms of the promise made by them, thereby committing deficiency in the services rendered by them to the complainants. The opposite parties, therefore, are liable to duly compensate the complainants by returning the principal amount invested by them along with reasonable interest on that amount. The view taken by the State Commission, in our opinion is perverse since no reasonable person acting on the basis of the material available on record could have taken such a view. The order passed by the State Commission, therefore, is liable to be set aside.

For the reasons stated hereinabove, the impugned order passed by the State Commission is set aside and the opposite parties are directed to refund the principal amount invested by the complainants along with simple interest on that amount at the rate of 10% per annum with effect from the date of deposit till the date of payment. If the payment in terms of this order is not made within eight weeks from today it shall carry interest at the rate of 12% per annum. The revision petitions stand disposed of.