advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Thursday, August 4, 2016

manufacturing defect.= Defective Tiles were affixed on the Walls of building - liable to compensate = The appellant-Society is a charitable institution running a girls hostel at Surat for the benefit of Adiwasi children. On 02.02.2000, the appellant-Society purchased vitrified glazed floor tiles from respondent no.5 (since deleted from the array of parties vide Court’s order dated 01.04.2015) who was a local agent of respondent no.1-Company for a sum of Rs.4,69,579/-. The said tiles, after its fixation in the premises of the hostel, gradually developed black and white spots. The appellant no.1 wrote several letters to respondent no.4 i.e., Sales Executive of respondent no.1-company, informing about the inferior and defective quality of the tiles. Thereafter, the respondent no.5-local agent visited the spot but failed to solve the issue. An architect J.M. Vimawala was appointed by the appellant-Society to assess the damage caused due to defective tiles. The architect assessed the loss to the tune of Rs.4,27,712.37 which included price of the tiles, labour charges, octroi and transportation charges. = the appellant-Society is not a commercial establishment rather a registered society helping the adivasi students in their education by providing hostel facilities. The charges, if any, for accommodation in the hostel are for maintaining the hostel and not for making profit. Thus, the appellant-Society is consumer within the meaning of the term ‘consumer’ under Section 2(d) of the Consumer Protection Act, 1986.= The National Commission has reversed the order passed by the State Commission by wrongly applying the decision of M/s Kusumam Hotels Pvt. Ltd. case (supra) to the set of facts in the present case. Therefore, the concurrent finding of fact recorded by the District and the State Commission has been erroneously interfered with by the National Commission by passing the impugned order, which is liable to be set aside. For the reasons stated supra this appeal is allowed, the impugned order of the National Commission is hereby set aside and we restore the order of the District Forum which is affirmed by the State Commission. The matter has been under litigation for the last fourteen years, we direct the respondents to pay or deposit the amount so awarded by the District Forum along with interest @9% p.a. within six weeks from the date of receipt of the copy of this judgment. The costs of Rs.50,000/- of these proceedings are also awarded in favour of the appellant-Society.

NON-REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                        CIVIL APPEAL NO. 7223 OF 2016
                  (ARISING OUT OF SLP(C) NO. 36918 OF 2013)


  LOURDES SOCIETY SNEHANJALI GIRLS
  HOSTEL AND ANR.                         ……APPELLANTS

                                     Vs.

M/S H & R JOHNSON (INDIA) LTD. & ORS.  ……RESPONDENTS



                               J U D G M E N T


V.GOPALA GOWDA, J.

Leave granted.
This civil  appeal  by  special  leave  is  directed  against  the  impugned
judgment  and  order  dated  23.09.2013  passed  by  the  National  Consumer
Disputes Redressal Commission, New Delhi in Revision Petition  No.  4047  of
2006 whereby it has allowed the revision petition filed by  respondent  nos.
1-4 and set aside the order dated 12.10.2006 passed  by  the  Gujarat  State
Consumer Disputes Redressal Commission,  Ahemdabad  in  Appeal  No.  741  of
2006.
The brief facts of the case in nutshell are as under:-
The appellant no.1-Lourdes Society Snehanjali  Girls  Hostel  is  a  society
registered under the Societies Registration Act  vide  society  registration
no.Guj/525/Surat and also a trust registered, vide  its  Trust  registration
no. F/430/Surat. The appellant-Society is a charitable  institution  running
a girls hostel at Surat for the benefit of Adiwasi children. On  02.02.2000,
the  appellant-Society  purchased  vitrified   glazed   floor   tiles   from
respondent no.5 (since deleted from the array of parties vide Court’s  order
dated 01.04.2015) who was a local agent of  respondent  no.1-Company  for  a
sum of Rs.4,69,579/-. The said tiles, after its fixation in the premises  of
the hostel, gradually developed black and white spots.  The  appellant  no.1
wrote  several  letters  to  respondent  no.4  i.e.,  Sales   Executive   of
respondent no.1-company, informing about the inferior and defective  quality
of the tiles. Thereafter, the respondent no.5-local agent visited  the  spot
but failed to solve the issue.
An architect J.M. Vimawala was appointed by the appellant-Society to  assess
the damage caused due to defective tiles. The architect  assessed  the  loss
to the tune of Rs.4,27,712.37 which included  price  of  the  tiles,  labour
charges, octroi  and  transportation  charges.  Thereafter,  the  appellant-
Society served a legal notice dated 12.08.2002 to the respondents  making  a
demand of the said amount but no response was shown by the respondents.
The said inaction on the part of the respondents made the  appellant-Society
to file a Consumer Complaint No. 743 of 2002 against the respondents  before
the District Consumer Disputes Redressal Forum  at  Surat  (for  short  “the
District Forum”) for claim of the said amount.
The District Forum appointed a Court Commissioner to examine  and  find  out
the manufacturing defects in the tiles as claimed by the  appellant-Society.
After  examination,  the  Court  Commissioner  submitted  a   report   dated
21.09.2004 stating therein that the tiles were having manufacturing defect.
The District Forum vide its order  dated  31.12.2005  held  that  the  tiles
supplied by  the  respondents  had  manufacturing  defect.  The  respondents
committed an unfair trade practice by supplying  such  defective  tiles.  By
holding the respondents jointly and severally  liable,  the  District  Forum
directed the respondents to pay to the appellants  a  sum  of  Rs.2,00,000/-
along with interest @9% p.a. from the date  of  complaint  i.e.,  31.10.2002
till its recovery. The respondent no.1 was directed to pay the above  amount
to the appellant within a period of 30 days from the date of  order  of  the
District Forum.
Being Aggrieved, the respondents filed First Appeal No. 741 of  2006  before
Gujarat State Consumer Dispute Redressal Commission,  Ahmedabad  (for  short
“the State Commission”) challenging the said order of District Forum  urging
various grounds.
The State Commission dismissed the said First Appeal of the  respondents  by
its order dated 12.10.2006 and confirmed the order passed  by  the  District
Forum.
Having become unsuccessful before  the  State  Commission,  the  respondents
filed Revision Petition No.  4047  of  2006  before  the  National  Consumer
Disputes Redressal Commission, New Delhi (hereinafter referred  to  as  “the
National Commission”) questioning the validity and correctness of the  order
passed by the District Forum and the State Commission.
On 12.03.2012, the appellant-Society also made  an  application  being  I.A.
No.1847 of 2013 in Revision Petition  No.  4047  of  2006  to  the  National
Commission for invoking the powers under Sections 14(d) and  14(hb)  of  the
Consumer  Protection  Act,  1986  and  for  awarding  sufficient  amount  of
compensation in addition to amount already awarded by the District Forum.
The National  Commission  vide  its  order  dated  23.09.2013  reversed  the
findings of the District Forum and the State  Commission  holding  that  the
appellant-Society has failed to establish that it is a consumer  within  the
meaning of Section 2(d) of the Consumer Protection Act, 1986.
In support of their case, the learned counsel appearing on  behalf  of  both
the parties made the following submissions.
Mr. Ashok Panigrahi, the learned counsel on behalf of the  appellant-Society
contended  that  the  National  Commission  has  erred  in  coming  to   the
conclusion that the appellant-Society  is  a  commercial  establishment  and
thus, not covered by the definition of the  term  ‘consumer’  under  Section
2(d) of the Consumer Protection Act, 1986. It was further submitted  by  him
that it is unjustified on the part of the National Commission to  hold  that
the Memorandum of Association and byelaws  of  the  appellant-society  which
show  that  it  is  a  charitable  institution  and   not   any   commercial
establishment were not filed before the District  Forum  but  filed  at  the
stage of Revision before the National Commission. It was  further  submitted
by the learned counsel that the District  Forum  and  the  State  Commission
have  gone  through  the  registration   certificate   and   Memorandum   of
Association of the appellant-Society.
He further submitted that the National Commission has erred in holding  that
the case M/s Kusumam Hotels  Pvt.  Ltd.  v.  M/s  Neycer  India  Ltd.[1]  is
applicable to the facts and circumstances of the present case.
It was further contended by him that both the District Forum as well as  the
State Commission have held that the appellant-Society cannot be regarded  as
a commercial establishment. It is completely unjustified on the part of  the
National Commission to hold that the appellant-Society  being  a  commercial
establishment is not a consumer within the meaning of  the  term  ‘consumer’
under Section  2(d)  of  the  Consumer  Protection  Act,  1986  in  complete
ignorance of the Memorandum of Association and the byelaws of the appellant-
Society.
On the contrary, Mr. Sudhir K. Makkar, the learned counsel on behalf of  the
respondents sought to  justify  the  impugned  judgment  and  order  of  the
National Commission contending that the same is  based  on  sound  reasoning
without error and therefore, the same need not be interfered  with  by  this
Court.
It is further contended by  him  that  the  District  Forum  and  the  State
Commission have erred in relying on the report  dated  21.09.2004  given  by
the Court Commissioner as his qualification was not stated  in  the  report.
The report was based on visual inspection. Further, both the District  Forum
as well as the State Commission have  erred  in  not  considering  the  test
certificate produced by respondent no.1 as the  same  was  based  on  modern
tile testing  technology  in  its  laboratory.  In  the  absence  of  expert
evidence, it was wrong on the part of the District  Forum  as  well  as  the
State Commission to hold that tiles had manufacturing defect.
After hearing the learned counsel for  both  the  parties  we  come  to  the
following conclusion:
The National Commission has exceeded  its  jurisdiction  in  exercising  its
revisional power under Section 21(b) of the Consumer  Protection  Act,  1986
by setting aside the concurrent  finding  of  fact  recorded  by  the  State
Commission in  First  Appeal  No.  741  of  2006  vide  its  judgment  dated
12.10.2006 wherein the finding of fact recorded by the  District  Forum  was
affirmed.
The facts of the instant case clearly reveal that  the  National  Commission
has  erred  in  observing  that  the  appellant-Society  is   a   commercial
establishment by completely  ignoring  the  Memorandum  of  Association  and
byelaws of the appellant-Society. Both the District Forum  as  well  as  the
State  Commission  have  rightly  held  that  the  appellant-Society  is   a
charitable institution and not a commercial entity. The relevant portion  of
the order passed by the District Forum reads thus:
“6. ……It is not in dispute that complainants are  running  girls  hostel  in
the name of Complainant no.1. Commercial purpose  is  also  explained  under
the provisions of the Act. So far as  activities  of  the  complainants  are
concerned,  they  are  running  girls  hostel  and  receive  fees  from  the
students. The complainants  are  not  carrying  out  commercial  activities.
Purchase of goods namely tiles are for the purpose of their  hostel  and  it
cannot be said that tiles is subject matter of their business. Whenever  any
person purchases goods for carrying  out  business  for  commercial  or  for
livelihood then only question regarding purchase of goods  or  availing  any
activities from trader or professional  arises.  The  complainants  are  not
carrying on business of  purchase  from  opponents.  Otherwise  also  hostel
premises can  be  constructed  and  there  is  no  direct  relation  between
commercial activity. Therefore, the defence of opponents  that  complainants
are carrying  on  business  activities  and  thereby  complainants  are  not
consumer is not acceptable. Hence, we hold that  complainants  are  consumer
of opponents and defence of opponents is rejected.”
                         (emphasis supplied)

The National Commission has erred by applying the decision  in  M/s  Kusumam
Hotels Pvt. Ltd. case (supra) in holding that the appellant-Society  is  not
a consumer in terms of the definition under Section  2(d)  of  the  Consumer
Protection Act, 1986 as the purchase of tiles and laying in the same in  the
rooms of the girl’s hostel run by the appellant-Society is clearly  not  for
any commercial purpose. The decision in M/s Kusumam Hotels  Pvt.  Ltd.  case
(supra) has no application to the present  fact  situation  for  the  reason
that in the said case complainant was a hotel and  the  tiles  purchased  by
the hotel were for commercial purpose as the  hotel  business  involves  the
act of profit making, whereas in the  instant  case  the  girl’s  hostel  in
question  is  run  by  the  appellant-Society  as  one  among  its   various
charitable activities for the benefit of adivasi  students.  The  appellant-
Society is supporting adivasi/tribal girls  to  pursue  their  education  by
providing hostel facilities. The expenses for the food and  electricity  are
being  paid  by  the  inmates  of  the  hostel.  The  appellant-Society   is
maintaining the hostel free of cost and no charges  in  the  form  of  rent,
repairs and maintenance are collected from the inmates. Thus, the appellant-
Society cannot be considered as any commercial  establishment  striving  for
profit.
Further, the National  Commission  while  passing  the  impugned  order  has
ignored certain facts which throws light on callous attitude on the part  of
the respondents viz., when the defect in  the  tiles  were  brought  to  the
notice of the respondents by sending various letters, there  was  no  action
on their part. Later a local agent on behalf of the respondent  no.1-Company
visited the premises of the girl’s hostel and verified that the  said  tiles
were defective and damaged. However, no proper attention  was  paid  by  the
respondents towards the issue. Further, to assess the damage caused  to  the
appellant-Society by the use of  the  said  defective  tiles,  a  registered
architect and interior designer, J.M. Vimawala was hired by  the  appellant-
Society, who in his report declared the tiles to be defective  and  assessed
the  damage  to  the  appellant-Society  to  the  tune  of   Rs.4,27,712.37.
Thereafter, the appellant-Society made  a  demand  of  the  said  amount  as
damages from the respondents vide legal notice  dated  12.08.2002.  But  the
respondents did not pay any heed to the said  notice  as  well.  Because  of
such irresponsible and indifferent attitude on the part of the  respondents,
the appellant-Society was compelled to file Consumer Complaint  No.  743  of
2002 before the District Forum.
The District Forum, after appreciating the pleadings and evidence on  record
has rightly awarded Rs. 2 lakhs as damages to the appellant-Society  towards
defective tiles supplied by the respondents along with compensation  towards
mental harassment and cost of present proceedings  with  interest  @9%  p.a.
from the date of  complaint  till  its  recovery.  In  concurring  with  the
findings of the District Forum,  the  State  Commission,  after  proper  re-
appreciation of the facts and evidence on record has rightly  exercised  its
jurisdiction by dismissing the  appeal  of  the  respondents.  The  National
Commission should not have interfered with the concurrent findings  of  fact
recorded in the judgment impugned before it particularly  having  regard  to
the nature of the jurisdiction conferred  upon  it  by  Section  21  of  the
Consumer Protection Act, 1986. Section 21 of the aforesaid Act reads thus:
“21.  Jurisdiction  of  the  National  Commission.—Subject  to   the   other
provisions of this Act, the National Commission shall have jurisdiction—
(a) to entertain—
(i) complaints where the value of the goods or  services  and  compensation,
if any, claimed exceeds rupees one crore; and
(ii) appeals against the orders of any State Commission; and
(b) to call for the records and pass  appropriate  orders  in  any  consumer
dispute which is pending before or has been decided by any State  Commission
where it appears to the National Commission that such State  Commission  has
exercised a jurisdiction not vested in it by law, or has failed to  exercise
a jurisdiction so vested, or has acted in the exercise of  its  jurisdiction
illegally or with material irregularity.”

The National Commission has to exercise the jurisdiction vested in  it  only
if the State Commission or the District Forum has either failed to  exercise
their jurisdiction or exercised when the same was  not  vested  in  them  or
exceeded  their  jurisdiction  by  acting   illegally   or   with   material
irregularity. In the instant case, the  National  Commission  has  certainly
exceeded its jurisdiction by setting aside the concurrent  finding  of  fact
recorded in the order passed by the State Commission  which  is  based  upon
valid and cogent reasons. The National Commission  has  reversed  the  order
passed by the State Commission by  wrongly  applying  the  decision  of  M/s
Kusumam Hotels Pvt. Ltd. case (supra) to the set of  facts  in  the  present
case. In the said case, the complainant was a hotel, it  was  considered  to
be a commercial entity and therefore, it was kept out of the purview of  the
definition of ‘consumer’ under Section 2(d) of the Consumer Protection  Act,
1986. However, the National Commission has failed  to  appreciate  the  fact
that in  the  present  case,  the  appellant-Society  is  not  a  commercial
establishment rather a registered society helping the  adivasi  students  in
their education by providing hostel facilities. The  charges,  if  any,  for
accommodation in the hostel are for  maintaining  the  hostel  and  not  for
making profit. Thus, the appellant-Society is consumer  within  the  meaning
of the term ‘consumer’ under Section 2(d) of the  Consumer  Protection  Act,
1986. The National Commission has erroneously accepted the contention  urged
on behalf of the respondents in the revisional proceedings  that  supply  of
tiles to the appellant-Society by respondent no. 1 through its  local  agent
is for commercial purpose. The said finding is based on the decision in  M/s
Kusumam Hotels  Pvt.  Ltd.  case  (supra),  which  case  absolutely  has  no
application to the fact situation.
Therefore, the concurrent finding of fact recorded by the District  and  the
State Commission has  been  erroneously  interfered  with  by  the  National
Commission by passing the impugned order, which is liable to be  set  aside.
For  the  aforesaid  reasons,  the  appeal  of  the  appellant-Society  must
succeed.
For the reasons stated supra this appeal is allowed, the impugned  order  of
the National Commission is hereby set aside and we restore the order of  the
District Forum which is affirmed by the State  Commission.  The  matter  has
been  under  litigation  for  the  last  fourteen  years,  we   direct   the
respondents to pay or deposit the amount so awarded by  the  District  Forum
along with interest @9% p.a. within six weeks from the date  of  receipt  of
the copy of this judgment. The costs of  Rs.50,000/-  of  these  proceedings
are also awarded in favour of the appellant-Society.


……………………………………………………………CJI
[T.S. THAKUR]


………………………………………………………………J.
[V. GOPALA GOWDA]


                                     ………………………………………………………………J.
[R. BANUMATHI]


New Delhi,
2nd August, 2016
-----------------------
[1]     III (1993) CPJ 333 (NC)

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.