UDAIPUR CEMENT WORKS vs PUNJAB WATER SUPPLY AND SEWAGE BOARD

M /s. Udaipur Cement Works is the appellant and the Punjab Water Supply and Sewage Board is the respondent before us in this appeal arising from the order of the State Commission, U.T., Chandigarh, in Complaint Case No. 170 of 1991. The brief facts of the case are that the respondent had obtained a levy permit for procuring cement for the purpose of construction work on behalf of the Municipal Committees of Punjab for the welfare of citizens in the Punjab State. The cement was to be supplied by the appellant, M/s. Udaipur Cement Works, on the basis of this levy order issued by the Government of India within a period of four months from the date of. issue of the order. The respondent remitted a sum of Rs. 23,62,900/- on 1.10.1987 for this purpose hoping that the cement would be available to them before 7.3.1988, the valid date of the permit. However, the cement could not be supplied in time by the appellant. Later, they supplied the cement in November, 1990, but not on controlled price; it was supplied at the prevailing price in the market at that time. It may be noted that the market price is always substantially higher than the controlled price of the cement which is supplied on the basis of the permit issued by the Government of India from the quota of levy imposed on the cement manufacturers. The State Commission, after considering the points raised by the appellant before them came to the conclusion that there was a clear deficiency of service inasmuch as there was a delay of 2 years 3 months and 9 days in the supply of the required cement on the basis of the permit and also that for this very period the appellant, M/s. Udaipur Cement Works kept an amount of Rs. 23,62,900 / - with them. This amount was deposited by the respondent right in the beginning when they obtained levy cement permit from the Government of India. The State Commission, therefore, awarded simple interest at the rate of 12% on the amount of Rs, 23,62,900/- for the period of delay i.e. 2 years, 3 months and 9 days to be paid within three months,

IN the appeal against this order of the State Commission, U.T., Chandigarh, this Commission took a view vide its order dated 27th September, 1994 in First Appeal No. 563/1992 that there was no deficiency in service and, therefore, set aside the order of the State Commission. The National Commission in their order observed: "In our opinion the Counsel appearing for the appellant is well founded in his submission that there was no arrangement of hiring of service at all between the parties in this case since the transaction is one of sale and purchase simpliciter namely the sale and purchase of a specified quantity of cement which was to be supplied by the appellant herein to the respondent. In these circumstances no question of deficiency in service can arise so as to entitle the complainant to invoke the jurisdiction of the Consumer Forum when there was no case at all of any defect in the goods supplied. Unfortunately, this important aspect of the case was lost sight of by the State Commission and it proceeded to grant relief to the complainant on the ground that delay in the supply of cement constituted deficiency in service. We hold that the said order of the State Commission is clearly illegal and without jurisdiction and is hereby set aside. The complainant will be at liberty to pursue whatever other remedies are open to him in law. In case the appellant has made any payment to the complainant pursuant to the impugned order of the State Commission the said amount shall be refused to the appellant by the complainant within six weeks from today."

M/s. Punjab Water Supply and Sewage Board, went in appeal to the Supreme Court against this order of the National Commission. The Supreme Court in their order dated 13.11.1995 observed as follows: "We do not appreciate the blanket observation of the National Commission to the effect that where the transaction is one of sale and purchase simpliciter "no question of deficiency in service can arise so as to entitle the complainant to invoke the jurisdiction of the Consumer Forum when there was no case at all of any defect in the goods supplied. The impugned order of the National Commission is rather mechanical. Learned Counsel for the parties have invited our attention to Section 2(c), (d), (f), (g), (o) and various other provisions of the Consumer Protection Act, 1986 (the Act). The National Commission, in our view, should have appreciated the pleadings of the parties in the light of various provisions of the Act. We allow the appeal, set aside the impugned order of the National Commission and remand the case to the National Commission to hear the appeal against the order of the Commission afresh after affording opportunity to the parties. It will be open to the parties to raise relevant questions of la w and fact before the National Commission. No costs."

THE points which have been urged by the appellant before us now are that there was an arbitration clause in the conformation letter sent by them and, therefore, the respondent should have taken recourse to arbitration rather than filing a complaint in a Consumer Disputes Redressal Forum. We are of the view that mere existence of an arbitration clause should not come in the way of an aggrieved party from seeking legitimate relief under the Consumer Protection Act, which is a special piece of legislation to protect the interests of the consumers notwithstanding the other laws in force. We find that the State Commission was in the right in rejecting this contention and we uphold their view in this regard.

THE other points raised by the appellant relate to power cut imposed on their factory, protracted period of correspondence between the parties as regards destination and quantity of cement to be despatched etc. These points have been adequately dealt with in the order of the State Commission dated September 2,1992 and we do not feel any necessity of dealing with them afresh at this stage. The reason for doing so is that in the year 1996 vide its order dated 21.8.1996 this Commission in a similar case of non-supply of cement in time on the basis of a permit issued by the Government of India in the First Appeal No. 571 of 1993 in the case of The Principal, St. Roberts High School, Hazaribagh v. M/s. Sone Valley Portland Cement Co. Ltd. and Ors. clearly held: % "After perusing the circumstances of this case we are of the view that it was not merely a transaction of sale and purchase between the appellant and the respondent but it also involved the compliance of a direction issued by the Government for the supply of levy cement under the Cement Control Order at controlled price and that too, for public purpose, namely, construction of a building of a high school. Therefore, it would be appropriate that all the facts and circumstances of this case are given due consideration to arrive at a decision."

While holding that the supply of levy cement on the basis of the permit is not merely a breach of contract of sale and purchase simpliciter, but constitutes deficiency in service which the cement manufacturer is obliged to render under the cement control order, this Commission in its order of 21.8.1996 also noted the observation of the Supreme Court in the present case as well as the decisions given by the National Commission in Bricks Manufacturers Association & Ors. v. Coal India Ltd. & Ors., I (1993) CPJ 99 (NC) and M/s. Maruti Udyog Ltd. v. Bhuvana Vishwanathan & Ors., II (1993) CPJ 172 NC. After a careful consideration of the facts of this case we are of the view that the permit issued by the Government of India is in the nature of a direction to the cement manufacturers to supply cement at controlled price. Such permits are issued after a due scrutiny of the applications made in this regard and are normally issued for priority sectors and public purposes. Complying with this direction to supply cement at controlled price, which is substantially lower than the market price, is in the nature of a service, and, therefore, non-compliance thereof constitutes deficiency. In the present case, the facts are not in dispute. There was a direction for supply of cement from the levy quota, the necessary amount for the supply of the required cement was deposited with the appellants by the respondents, cement was not supplied in time on one pretext or the other, later the cement was supplied at the market price and not on controlled price after a lapse of 2 years, 10 months and 9 days and for this very period the amount of Rs. 23,62,900/- remained with the appellant. The State Commission after going into all these facts allowed the appellant a period of 7 months which, according to them, was consumed in correspondence and on account of lower production arising from power cut imposed on their factory. After deducting this period of 7 months, the period of delay, and retention of the amount deposited by the appellant came to 2 years, 3 months and 9 days. For this period the State Commission awarded a simple interest at the rate of 12% p.a. to the respondent. We are of the view that the order of the State Commission is fair and just and therefore see no reason to alter it. The appeal by M/s. Udaipur Cement Works is accordingly dismissed with no order as to costs.