Varalakshmi Starch Industries (P) Ltd vs Man Rollo Generations India (P) Ltd

THE key controversy pivots around the question is whether the complainant is a consumer? The facts to understand the problem are these. The complainant Varalakshmi Starch Industries (P) Ltd. is a company registered under the Companies Act 1956 and transacts the following business: (i) To manufacture, produce, refine, buy, sell, export, import or otherwise deal in all types of Tapioca and Maize starch, sago, glucose, dextrine, glues, dextrose and all kinds of Tapioca and Maize products. (ii) To manufacture, produce, refine, buy, sell, export, import or otherwise deal in all types of products manufactured out of tapioca and Maize. (iii) To carry on business of generating, selling, transmitting, distributing, supplying either directly or through others, electrical energy by using coal, lignite, wind energy, solar energy, tidal energy, wave energy, hydro energy and other methods for captive use or otherwise.

ON 19.08.2009, the purchase agreement was entered into between the complainant and Man Rollo Generations India (P) Ltd, Opposite Party No. 1 for fixing price and excise duty, mode of payment with payment schedule and delivery schedule for engineering, supply, Erection, commissioning, test run, trial run, performance Test and maintenance of the biogas fuel based densets. There was mutual agreed agreement in the said set. Opposite Party No. 1 vide its letter dated 23.11.2009 informed the complainant that it proposes to execute the order and fulfill their obligations under the aforesaid agreement through their holding company i.e. M/s. Power Engineering (India) Pvt. Ltd., Opposite Party No. 2 as it was internally decided by both the companies Opposite Party No. 1 and Opposite Party No/2.to merge. Opposite Party No. 1 also informed the complainant in the said letter that as the process of merger would envisage compliances and court procedures which would take some time, they felt it proper and correct in the mutual interest of complainant and Opposite Party No. 1 to assign the above contract in favour of Opposite Party No. 2 by entering into suitable Tripartite Agreement between Opposite Party No. 1, Opposite Party No. 2 and the complainant which would ensure transfer of the obligations and rights mutatis mutandis under the original agreement to Opposite Party No. 2 without compromising the interest of the complainant in the contract. Accordingly a Tripartite agreement was executed on 17.01.2010 whereby the Opposite Party No. 2 accepted the assignment of the contract to transferring all the terms, conditions, commitments and responsibilities etc. mutatis mutandis alongwith the advance received by Opposite Party No. 1 of the contract to them as if Opposite Party No. 2 has been the original party to the contract in place of Opposite Party No. 1. The complainant agreed to enter into the Tripartite agreement only upon incorporating the original condition in the said Tripartite agreement. On 27.01.2010, opposite party no. 2 vide its letter dated 27.01.2010 asked the complainant for opening of two L.C.s in their favour for Rs. 2,77,20,000/- totally as per the payment terms in the agreement for the first batch of four gensets. Opposite party no. 2 also promised that upon establishment of L.C.s, they shall affect the shipment of four number of biogas fuel gensets with all auxiliaries in single consignment as per the agreement terms. Accordingly, the complainants opened an irrevocable LC for an amount of Rs. 2,49,48,000/- with State Bank of India, Siruthozil Branch, Salem on 30.01.2010 and another irrevocable LC for a sum of Rs. 27,72,000/- towards successful commissioning of all four Gensets on 30.01.2010.

THE complainant issued cheque for Rs. 31,72,000/- towards excise duty payable by the complainant in respect of four Gensets. On 21.03.2011, Opposite party no. 2 ought to have delivered the complete consignment containing four Gensets along with all accessories. On scrutiny, it was found that some of the vital mechanical, electrical, electronic components and the related software were not delivered by opposite party no. 2. The Biogas blowers supplied were of different, unsafe, substandard and very cheap brand. Opposite party no. 2 raised invoices with false description of goods and value to match the LC value. The complainant immediately protested vide its letter dated 22.03.2010. On 27.03.2010, the .Opposite Party No. 2 admitted about the short supply and assured that the same could be supplied before 25.04.2010. The complainant visited opposite party no. 2 at Goa but the matter could not be dispatched. Opposite party no. 2 vide its letter dated 08.09.2011 also proposed to the complainant that they will ensure that all the short supplied materials required to be delivered alongwith their personnel would be complied with within 7 days, subject to a rider that the complainant should withdraw the complaint/FIR filed by him.

WE have heard the counsel for the complainant. He submitted that since there is deficiency in service, therefore, the Consumer Protection Act is applicable. He also argued that if this project is permitted it would benefit the county a lot. However, he failed to establish that petitioner is a consumer as per explanation appended to Section 2 (d) of the Consumer Protection Act. In Bihar School Examination Board v. Suresh Prasad Sinha, IV (2009) CPJ 34 (SC)=VII (2009) SLT 109=AIR 2010 SC 93, it was held that according to the definition of ''consumer '' in Section 2(d) of the Act, a person who hires or avails of any services for a consideration, is a consumer. The following category of service-availors will not be consumers: (i) persons who avail any service for any commercial purpose; (ii) persons who avail any free service; (iii) persons who avail any service under any contract of service. A consumer is entitled to file a complaint under the Act if there is any deficiency in service provided or rendered by the service-provider.

IN other case, the Apex Court in Birla Technologies Ltd. v. Neutral Glass and Allied Industries Ltd., I (2011) CPJ 1 (SC)=IX (2010) SLT 396=(2011) 1 SCC 525 wherein it was alleged that deficiency in service to seven modules had developed. State Commission had dismissed complaint. National Commission held that respondent was entitled to maintain complaint with respect to deficiency in service during one year warranty period. Held that software in question amounted to sale of goods by appellant to respondent for commercial purpose. Complaint was not maintainable in toto as respondent was excluded for being considered as a consumer.

IN Sanjay D. Ghodawat v. R.R.B. Energy Ltd., IV (2010) CPJ 178 (NC), it was held that Windmill Turbine Generators were purchased for commercial purpose and deficiency of service during warranty period did not bring complainant within the ambit of consumer. Complaint was not maintainable. Relief could be claimed by proceedings before appropriate Forum. It was further held in Laxmi Engineering Works v. PSG Industrial Institute, II (1995) CPJ 1 (SC)=(1995) 3 SCC 583, by the Hon ''ble Apex Court as under: "The National Commission appears to have been taking a consistent view that where a person purchases goods "with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit ", he will not be a ''consumer '', within the meaning of Section 2 (d) (i) of the Act. Broadly affirming the said view and more particularly, with a view to obviate any confusion - the expression "large scale " is not a very precise expression - Parliament stepped in and added the explanation to Section 2(d)(1) by Ordinance/ Amendment Act, 1993. The explanation excludes certain purposes from the purview of the expression "commercial purpose " - a case of exception to an exception. Let us elaborate : a person who buys a typewriter or a car and uses them for his personal use is certainly a ''consumer '' but a person who buys a typewriter or a car for typing others '' work, for consideration or for plying the car as a ''taxi '', can be said to be using the typewriter/car for a commercial purpose. The explanation however clarifies that in certain situations, purchase of goods for "commercial purpose " would not yet take the purchaser out of the definition of expression of expression ''consumer1. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of ''self-employment '', such purchaser of goods is yet a ''consumer ''. In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other words, if the buyer of goods uses them himself, i.e. by self-employment, for earning his livelihood, it would not be treated as a "commercial purpose " and he does not cease to be a consumer for the purposes of the Act. 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 ".

THERE is no averment in the instant complaint that the four Gensets were being purchased for self employment or for earning his/their livelihood. The skimble scamble explanation given by the counsel for the complainant is of no help to him. The complaint is dismissed at admission stage. However, nothing will preclude the complainant to seek remedy from an appropriate Forum or Civil Court. Complaint dismissed.