Ressweld Engineers vs JAYARAM REDDY

M /s Pressweld Engineers, OP -1 before the State Commission, have filed this appeal against the order of Karnataka State Consumer Disputes Redressal Commission in CC No. 34/1999. The State Commission has allowed the complaint of Shri S. Jayaram Reddy, Proprietor Ramesh Engineering Works, holding the present Appellant/OP -1 and M/s. Equip Sales/OP -2, jointly and severely, liable to refund Rs.19,75,000/ - to the Complainant with interest at 12% from the date of delivery of the machine in dispute in November, 1997 and thereafter to take back the machine. It is however reported by the Registry that no appeal has been filed on behalf of OP -2. Therefore, the impugned order, in so far as it applies to OP -2, has acquired finality.

THE appeal has been filed with delay of 33 days which, considering the explanation given by the appellant, is condoned. In the course of the proceedings before this Commission on 16.11.2010 the present appeal was dismissed for non -prosecution but was subsequently restored on 26.4.2013. Mr. P.V. Ramesh Kumar, Advocate for the Appellant/OP -1 and S. Nagraj Reddy for Respondent No.1/Complainant have been heard. The record of proceedings before the State Commission, as submitted before us, has also been perused carefully.

A significant ground raised in the Memorandum of Appeal is that on 8.4.2005 the State Commission had dismissed the complaint for non prosecution. By a subsequent order the complaint was restored, even without notice to the OPs. Perusal of the record of proceedings before the State Commission shows that the dismissal for non prosecution took place on 8.4.2005, in the presence of the counsel for OP -1. The matter next came up on 28.7.2005 and 5.12.2005. The marginal note made in the proceedings of 5.12.2005 also shows that in the meanwhile the complaint had been restored. On 5.12.2005 the matter was adjourned to 9.12.2005. The impugned order was dictated and pronounced on 9.12.2005. From this it is clear that the State Commission had first dismissed the complaint, then restored it and thereafter passed the impugned order. In the process, it had reviewed its own decision. The question whether State Commissions have power to review their own orders arose directly for decision before Hon''ble Supreme Court of India in Rajeev Hitendra Pathak and Ors. Vs. Achyut Kashinath Karekar and Anr., 2011 4 CPJ 35 . It was held that: - "36. On careful analysis of the provisions of the Act, it is abundantly clear that the Tribunals are creatures of the Statute and derive their power from the express provisions of the Statute. The District Forums and the State Commissions have not been given any power to set aside ex parte orders and power of review and the powers which have not been expressly given by the Statute cannot be exercised.

The Legislature chose to give the National Commission power to review its ex parte orders. Before amendment, against dismissal of any case by the Commission, the consumer had to rush to this Court. The amendment in Section 22 and introduction of Section 22 -A were done for the convenience of the consumers. We have carefully ascertained the legislative intention and interpreted the law accordingly."

THEREFORE , in the light of the settled position of law, the impugned order, passed by the State Commission in substantive modification of its own order, will not be sustainable. However, we feel that remand of the matter for fresh consideration by the State Commission will lead to further delay in the matter. In our view, it will be more appropriate and expedient for us to decide the matter on merits. Therefore, we proceed to decide the appeal on merits.

THE consumer dispute arose from purchase of a 250 Tonne Hydraulic Press Brake Machine with its accessories. Proforma invoice for this purchase was issued by OP -2/M/s. Equip Sales. Consideration of Rs.24.49 lakhs was allegedly released in favour of OP -2 through a pay order of 10.4.1997 from the Punjab National bank, Chikpet Branch, Bangalore. The machinery was received from OP -1, though not without delay of three months.

AS per the Complaint Petition, it was found to have major defects, which the OPs were asked to either rectify or to replace the machine itself by new one. Allegedly, the matter was in correspondence with the two OPs for several months, but without any substantive results. In December, 1998 their Mechanic did visit the site, but allegedly did not succeed in repairing the machine. Simultaneously, the complaint also refers to correspondence between the two OPs in which Rs.2.17 lakhs was claimed by OP -1 as balance of price from OP -2. The resultant situation for the Complainant is summed up in para 16 of the Complaint Petition, which reads: - "The complainant humbly submits that right from the day of supply of 250 Hydraulic Press Brake Machine by investing huge amount by borrowing and availing from Punjab National Bank, the complainant could not utilize the machine supplied by the opponent No.1 and here by incurred huge and heavy loss. Further the complainant has moral duty and obligation on his part in answering and also in settling the so raised loan from the Punjab National Bank. Further because of the negligent and irresponsible attitude of the opponent No.1 the complainant could not commission the machine so supplied by the opponent No.1 and as a reason of which the interest on the loan amount, raised is accumulating for no fault of the complainant."

ORDER for the machine in question was placed through OP -2. But, no reply to the complaint was filed on its behalf, before the State Commission. In its written statement the manufacturer/OP -1 has completely denied the averments in the complaint with counter allegation that the complaint itself had been filed to avoid payment of balance amount due from it to OP -1. Simultaneously, it was also contended that the price for the machine was received by OP -2 and not OP -1. Therefore, OP -1 was neither responsible to replace the machine nor to refund the price paid for it. If at all, it was the responsibility of OP -2. OP -1 also alleged that the complainant and OP -2 had, with common intention and in conspiracy with each other, induced OP -1 to part with valuable machinery. We find that this claim runs counter to the position emerging from letters written by OP -1 to the respondent/complainant. Thus, its letter of 16.1.1998 says "Regarding point No.1 of your above letter, we would like to inform you that nowhere we have mentioned in our letter No.1101 dtd. 20.11.97 that we have supplied the above machine as per the order received from M/s. Equip Sales. However, now we are stating herewith that the above Machine was manufactured and supplied in line with the Order received from M/s. Equip Sales and satisfactory trial was taken by you and Equip Sales in Mumbai to your entire satisfaction. Further, your allegation, that we have refused to supply the machine according to your requirement, is totally baseless, since we have manufactured and supplied the said machine as per the Technical and Commercial discussion you had with the undersigned in Mumbai and the order received from M/s. Equip Sales."

BEFORE the State Commission the correspondence between the complainant and the OPs was produced. It shows that the supplied machinery had serious working limitation/problem which the technician sent by OP -1 had not been able to rectify. Even after replacement of several parts, the machine could not reach its designed capacity of 250 tonne pressure. It could reach only 120 tonnes and no more. The job output of the machine also remained uneven due to poor quality and alignment of dyes and spindles. Pleadings and evidence of the Appellant/OP -1 before the State Commission do not point to any specific evidence to the contrary. Even averments in the Memorandum of Appeal have failed to travel beyond bland and general denial of specific defects and inadequacies listed by the complainant. Similarly, there is no mention of evidence led before the State Commission to show how the defects were effectually rectified.

ON the contrary, the main defence of OP -1, before the State Commission as well as in this appeal, has been that there was no privity of contract between the complainant and OP -1. At the same time, it is argued that part of the sale consideration was not received. There is no denial that the machine was supplied by the appellant/OP -1 directly to the complainant. There is no denial that a representative of the appellant/OP -1 had been deputed to attend to the defects in the machine. In fact, in the pleadings before the State Commission, appellant/OP -1 admits to have had direct interactions with the complainant in April 1997. It also admits pre -despatch trials of the machinery to the alleged satisfaction of the complainant, in September 1997 and supply of the machine in November 1997. Later, in 1999 OP -1 even issued a legal notice to the complainant for non payment of balance price of Rs 2.17 lakh. It is thus a case where consideration was received and machine was supplied by the appellant/OP -1. We therefore, have no hesitation in rejecting the contention of the appellant that the complainant/respondent -1 was not its ''Consumer''.

LEARNED counsel for the appellant also argued that proceedings of 5.12.2005 and 9.12.2005 before the State Commission do not show that any opportunity/hearing was given to it. A perusal of the record of proceedings shows that OP -1 was given three opportunities before it filed its written response to the complaint, on 12. 1. 2000. Affidavit evidence of the complainant was filed on 27.12.2001. OP -1 filed its affidavit of evidence on 30.5.2002, after three more opportunities. On 28.3.2003 the counsel for the present appellant sought time to argue the case. It was fixed for 28.7.2003. After six adjournments also, arguments for the complainant only had been concluded but appellant/OP -1 failed to do so. This clearly would show that more than sufficient opportunity had been afforded by the State Commission before the matters was decided. Therefore, this contention is contrary to the record and must be rejected.

NEITHER the Memorandum of Appeal nor the arguments of learned counsel to the appellant/OP -1 have pointed to any piece of evidence led before the State Commission which could show that the defects had been removed and the machine had been made fully functional. Thus, it is a clear case of ''deficiency of service'' within the meaning of Section 2(1) (g) of the Consumer Protection Act, 1986.

FINALLY , it is argued that the transaction of purchase being ''Commercial'' in nature, the Complainant is not a ''Consumer'' under the Consumer Protection Act, 1986. Learned counsel for the respondent/Complainant placed reliance on the decision of this Commission in East India Construction Co. and Anr. Vs. Modern Consultancy Services and Ors., 2006 2 CPJ 289 wherein it was held that: - "16. The first issue has been answered by this Commission in a catena of judgments wherein it has held that even though the machine/equipment is used for commercial/industrial purposes if any manufacturing defect occurs during the warranty period then the issue is covered under the Act and for that purpose purchaser of the equipment is entitled to file a complaint under the Act. This point has been elaborated in the following judgments some of which are quoted below: In Meera and Co. Ltd. V. Chinar Synten Ltd., 2004 2 CPJ 24 , this Commission has held that even if the generating set purchased by the complainant for a commercial purpose, it suffered the alleged defects during its warranty period of one year and, therefore, the complainant as well within its right to move the Consumer Forums under the Act, it being a consumer of the opposite party''s service. This Commission also mentioned that if any authority is needed on that settled position in law, reference may be made to the decision in Amtrex Ambience Ltd. V. Ms. Alpha Radios and Anr., 1996 1 CPJ 324 "

We respectfully reiterate the view taken by this Commission above and hold that the Complainant is competent to invoke jurisdiction under the provisions of the Consumer Protection Act, 1986.

IN view of the details examined above, the impugned order is set aside on the ground that the State Commission did not have power to review its order of 8.4.2005. At the same time, considering the pleadings, evidence and arguments advanced by the two sides, as detailed above, the Complaint is allowed. OPs 1 and 2 are held jointly and severally liable to refund the price of the Hydraulic Press Brake Machine to the complainant/respondent -1 with 9% interest from the date of delivery of the machine i.e. 10.11.1997. In the Complaint before the State Commission Rs.19.75 lakhs was claimed. However, we limit the amount to the value of Rs.17.68 lakhs, as per the proforma invoice of 27.1.1997. The same shall be paid within three months from the date of this order failing which, interest will be payable at 11% for the period beyond three months. Thereafter, the machine shall be returned by respondent/complainant to appellant/OP -1, if not already returned.