MANU/CF/0351/2008

Equivalent Citation: 2008(2)C .P.C .660, II(2008)C PJ240(NC )

IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI
First Appeal No. 855 of 2003 and CC No. 113 of 1999
Decided On: 21.04.2008
Appellants: Viewtech Imaging Equipment Pvt. Ltd. and Ors.
Vs.
Respondent: CMC Ltd. and Ors.
Hon'ble Judges/Coram:
R.C. Jain, J. (Presiding Member) and Anupam Dasgupta, Member
Counsels:
For Appellant/Petitioner/Plaintiff: S.S. Ray and Rakhi Ray, Advocates
For Respondents/Defendant: Shraman Sinha, Advocate
ORDER
Anupam Dasgupta, Member
1 . This is a first appeal against the Order dated 3.11.2003 of the Andhra Pradesh
State Consumer Disputes Redressal Commission, Hyderabad (the 'State Commission')
in Consumer Complaint No. 113 of 1999. By the said Order the State Commission
allowed the complaint of the CMC Ltd. (answering respondent in this appeal,
hereafter 'CMC') and directed the appellants (and respondent No. 2 herein) to pay to
CMC, (a) the sum of Rs. 3.60 lakh, by way of refund of the cost of the LCD projector
supplied by the appellants to the CMC (through respondent No. 2), along with
interest @ 24% per annum from 14.5.1999 till the date of payment; (b) hiring
charges @ Rs. 1,000 per day from 14.5.1999 till the date of payment; and (c) costs
of Rs. 10,000. The relevant facts of the case are:
(i) CMC, a Central Public Sector undertaking at the relevant time, placed a
purchase order dated 10.5.1998 for an imported (Philips) LCD projector
(model 4600 A) costing Rs. 3.6 lakh with the second (proforma) respondent
in this appeal, which was the authorised dealer of such equipment supplied
by the first appellant. The projector was delivered to CMC on 1.7.1998 and
carried an explicit written warranty of unspecified scope for 12 months from
that date (vide document marked Exhibit A-4 filed by CMC before the State
Commission, a copy of which was filed by the appellants along with its
appeal memorandum). In March 1998, CMC had purchased a projector of the
same make and model from the second respondent, which had been
delivered in early June 1998-undisputedly this first projector functioned
without any hitch.
(ii) The second projector stopped functioning in January 1999. After some
correspondence with the second respondent and the first appellant, CMC
handed over the projector (in use at the Kolkata centre of CMC) to the first
appellant at Hyderabad / Secunderabad on 11.3.1999 for repairs. As a sequel

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 to further interaction between CMC, on the one hand, and the first appellant
and second respondent, on the other, it was the second appellant which
wrote a letter dated 10th May, 1999 to CMC. This letter, written under the
signature of Shri Shashank Jain, Proprietor of the second appellant (a)
expressed regret for the delay in repairs, (ii) explained that the delay was on
account of they themselves not being satisfied with the performance of the
projector even after replacement of a PCB and hence the need to replace the
connector assembly which was being imported and expected to reach by
13.5.1999, (c) assured that the projector would be delivered "in perfect
working condition on 14.5.1999, without fail", and (d) agreed, by way of a
hand-written sentence added at the end of this letter, "to pay hiring charges
of Rs. 2,000 per day on Account".
(iii) As the repaired projector was not delivered by 19.5.1999, CMC,
Hyderabad wrote a letter of even date to the second appellant stating inter
alia that (a) the repaired projector had not been received back till that date,
(b) CMC, Kolkata had already spent a sum of Rs. 50,000 on hiring a projector
from the market, and (c) CMC, Hyderabad would send to the second
appellant a debit note for hiring charges of a projector @ Rs. 2,000 per day
from 20.5.1999 till the return of the repaired projector, as agreed to by the
second appellant in its letter dated 10.5.1999. There was no reply to this
letter.
(iv) CMC sent a legal notice dated 6.8.1999 to the first appellant and the
second respondent asking for (a) refund of the price of the projector (Rs. 3.6
lakh), (b) damages of Rs. 50,000 being the expenditure incurred by CMC,
Kolkata on hiring a projector till May 1999, and (c) further damages @ Rs.
2,000 per day (from - date unspecified) till the refund of the sum of Rs. 3.6
lakh, all within 7 days, failing which, the notice added, CMC would take
appropriate legal recourse. There was no reply to this legal notice either.
Finally, CMC filed consumer "Complaint No. 113 of 1999 on 5.10.1999 before
the State Commission, as already noted, and claimed a sum of Rs. 6.48 lakh
(being the total of Rs. 3.6 lakh towards the cost of the projector and Rs. 2.88
lakh as damages @ Rs. 2,000 per day till the date of filing the complaint).
(v) The projector was admittedly returned to the office of CMC, Hyderabad on
11.6.1999. However, there is no document on record to disprove the
allegation of CMC in its complaint that the projector was returned without
any repairs. In any case, it is not the contention of even the learned Counsel
for the appellants that the latter received CMC's formal acknowledgement by
way of acceptance of the projector as having been satisfactorily repaired and
become fully functional after these repairs.
2. We have heard the parties at some length.
(a) The main contentions of the learned Counsel for the appellants are as
under-
(i) CMC, itself a commercial organisation, used this projector for a
clearly 'commercial purpose'. Hence it was not a 'consumer' within
the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986
(hereafter, the 'Act') and its complaint to the State Commission was
not maintainable ab initio. This view was in accord with the ruling of

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 the Apex Court in the case of Kalpavruksha Charitable Trust v.
Toshniwal Brothers (Bombay) Pvt. Ltd. & Anr., III (1999) CPJ 26
(SC):VIII (1999) SLT 529=(2000) 1 SCC 512.
(ii) As averred in the counter affidavit dated 29.2.2000 of Shri
Shashank Jain, Managing Director, Viewtech Imaging Equipment Pvt.
Ltd. (first appellant here), CMC took delivery of the projector only
after satisfying itself "with the working condition of the LCD
projector" and the equipment was with CMC and being used by it.
(iii) The appellants, in any case, attended to the complaint of CMC
regarding non-functioning of the projector as soon as the latter was
sent to their notice carried out the necessary repairs; disclosed
candidly the reasons for delay in repairs by their letter dated
10.5.1999; and returned the projector to CMC as soon as it was
repaired satisfactorily. Hence there was no case of 'deficiency in
service', as alleged.
(b) As against this, the learned Counsel for CMC argued:
(i) Though the second appellant had assured of a country-wide
network for servicing/repairs of the equipment - particularly, that
M/s. Vision Enterprises, Kolkata, their authorised dealer there, would
provide after sales service "whenever required" to CMC, Kolkata (by
their letter dated 22.7.1998) - CMC had to send the projector from
its Kolkata office to Secunderabad at the appellant's insistence. This
resulted in the defective projector lying unused with CMC, Kolkata till
March 1999 though it had stopped functioning in January 1999.
(ii) Despite assuring, by letter dated 10.5.1999, that the projector
would be returned "in perfect working condition on 14.5.1999
without fail", the projector was not returned till 11.6.1999 and that
too delivered at the gate of CMC's office in Hyderabad, without any
prior intimation or demonstrating to the officers concerned that the
projector was now working well, after repairs. The projector was, in
fact, not repaired at all.
(iii) Again, in spite of agreeing in writing to reimburse the cost of
hiring another projector "beyond" 14.5.1999 @ Rs. 2,000 per day,
no such payment was offered or actually made to CMC. The
appellants also did not bother to respond to CMC's legal notice of
6.8.1999.
(iv) The projector carried a written warranty of 12 months from
21.7.1998 under the purchase order dated 4.5.1998, accepted and
endorsed by the Hyderabad-based dealer of the appellants (second
respondent here). The complaint was, therefore, maintainable under
the Act in view of a catena of judgments of this Commission, viz.,
(a) M/s. Jay Kay Puri Engineers & Another v. M/s. Mohan Breweries
and Distilleries Ltd., II (1997) CPJ 26 (NC); (b) M/s. Amtrex
Ambience Ltd. v. M/s. Alpha Radios and Another, I (1996) CPJ 324
(NC):1986-96 Consumer 1999 (NS); and (c) M/s. Olympic Zippers
Pvt. Ltd. v. K.C. Cherian and Another, I (2002) CPJ 11 (NC):1986-02
Consumer 5657 (NS). In each of these decisions, it was held by this

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 Commission essentially to the effect that, (a) even if an
equipment/machine is (purchased and) used by a buyer for a
commercial purpose, the buyer would be treated as a 'consumer'
under Section 2(1)(d)(ii) if the equipment/machine carried a
warranty (for repairs/replace-ment and/or after sales service) and a
defect in the said equipment/machine, noticed during the period of
warranty, was not set right by the seller/supplier to the satisfaction
of the buyer; in other words, in such cases, the seller / supplier
could be liable, based on the facts and circumstances of each such
case, to be held guilty of deficiency in service under the Act and
dealt with accordingly.
Findings:
3 . The first point which, therefore, needs to be answered is whether CMC can be
treated as a 'consumer' under the Act, given the fact that the projector in question
bought by CMC was actually used for a 'commercial purpose, viz., as a visual aid for
training courses for which CMC charged fees.
(i) It needs to be first noted in this context that the Act was amended with
effect from 18.6.1993 to exclude from the purview of "commercial purpose"
(vide Sub-clause (i) of Clause (d) of Sub-section (1) of Section 2 of the Act
defining a "consumer" in the context of "goods") goods purchased by a buyer
if such goods were "bought and used by him ...... exclusively for the
purposes of earning his livelihood by means of self-employment". This was
by way of an Explanation inserted below Sub-clause (i) of the Clause (d),
which defined a "consumer" only of goods. Thus, Sub-clause (ii) of Clause
(d) which defined a "consumer" (availor) of a "service" and did not ab initio
include any exclusion for use of such service for a "commercial purpose",
remained unaltered; the only restrictions/exclusions in the case of "service"
were those provided originally in the definition of "service" in Clause (o) of
Section 2(1) of the Act, viz., "...... (the rendering of) any service free of
charge or under a contract of personal service".
(ii) It is against this background that for nearly ten years thereafter (i.e., till
the wide-ranging amendments effective from 15.3.2003), this Commission
(and the Consumer Fora below) continued to deal with complaints alleging
"deficiency in service" from persons/entities who/which availed of services
even for commercial purposes. In the context of goods bought and used for
commercial purposes, the above mentioned view was extended to cover
cases where the goods carried a warranty, treating such a warranty as a paid
"service" and the seller of such goods (or its agent) as the service provider.
(iii) The Act was again comprehensively amended in 2002 and the
amendments were made effective from 15.3.2003. of interest in this case is
the amendment which made the Explanation below Sub-clause (i) of Clause
(d) of Section 2(1) of the Act thereafter applicable to both the Sub-clauses
(i) and (ii), i.e., to both goods and services. As a result, all buyers/availors
of goods/services were excluded from the definition of "consumer" if the
goods/services were used for any commercial purpose, except those who
bought/availed of goods/services and used them exclusively for the purposes
of earning livelihood through self-employment.

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(iv) It is also noteworthy that the Act did not (and does not still) define
either "livelihood" or "self-employment".
(v) Section 24 of the Act clearly provides that the orders of, inter alia, the
National Commission attain finality, if no appeal is preferred against such
orders. Neither party has shown or contended that any of the three
judgments/orders of this Commission in the cases mentioned in paragraph
3(b)(iv) supra has been challenged before the Apex Court and the Apex Court
has ruled contrary to the ratio of these judgments / orders of this
Commission. Thus, the view held by this Commission (viz., that in case of
defects in goods carrying a warranty not being satisfactorily rectified by the
seller during the period of warranty, the buyer would continue to be treated
as a consumer in respect of the service assured by way of the warranty in
spite of the use of such goods for commercial purpose and the said buyer
would be entitled to relief for deficiency in service as found to be admissible
under the Act by the competent Consumer Forum) would have to be treated
as final, at least till the amendment to Clause (d) brought about by the
Amending Act (No. 62 of 2002) became effective, i.e., from 15.3.2003. This
appeal is squarely covered by the ratio of the judgments of this Commission
in the cases mentioned above as well as the period over which the Act
permitted holding the said view.
(vi) We also respectfully note that the ratio of the judgment of the Apex
Court in the case of Kalpavruksha Charitable Trust v. Toshniwal Brothers
(Bombay) Pvt. Ltd. (supra) would not come in the way of what we have
observed in paragraph 5 above. First, in the said case, referring to the
Court's decision in the case of Laxmi Engineering Works v. P.S.G. Industrial
Institute, II (1995) CPJ 1 (SC)=(1995) 3 SCC 583, the Apex Court affirms,
inter alia, the test, "Whether the purpose for which a person has bought
goods is a 'commercial purpose', within the meaning of the definition of the
expression 'consumer' in Section 2(1)(d) of the Act is always a question of
fact to be decided in the facts and circumstances of each case". Secondly,
this judgment of the Apex Court does not relate to cases of purchase (and
use for 'commercial purpose') of goods covered explicitly by a warranty, as is
the situation here. Thirdly, this judgment also does not deal with the view
held by this Commission in any of the three cases, cited supra. Lastly, none
of the amendments concerned to the Act have, in our view, retrospective
effect. Otherwise the scores of judgments and orders passed by this
Commission and the Consumer Fora below over nearly a ten-year period
would be upturned and that could not have been the intention of the
Parliament. However, we do feel that the full range of issues flowing from the
successive amendments to the Act in relation to the import of the phrase
'commercial purpose' and the word/expression 'consumer' in that context,
within the ambit of the Act, would have to be considered and answered
comprehensively by perhaps a full/sufficiently Larger Bench of the National
Commission, at an appropriate time. At the same time, in our opinion this
case is not the one which offers that opportunity.
(vii) In conclusion and limiting ourselves to the appeal on hand, we answer
in the affirmative the question posed at the beginning of this discussion, i.e.,
in this case, CMC is a 'consumer' within the definition of that term under
Sub-clause (ii) of Clause (d) of Section 2(1) of the Act, as it stood during the
period 18.6.1993 and 14.3.2003.

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4. Given the facts and circumstances of the case, as discussed above (as well as by
the State Commission in the impugned order), the finding of the State Commission
that in this case the appellants are guilty of gross deficiency in service during the
period of warranty for the projector in question is fully justified. We would like to
add that in this appeal, the appellants have tried, unsuccessfully, to cloud the issue
of liability between the first appellant and the second by resorting to a make-believe
distinction between the "public limited company" named "Viewtech Imaging
Equipment Pvt. Ltd." and the "partnership firm" named "Viewtech Imaging Systems".
Suffice it to note that each record of some significance produced before the State
Commission and relied upon in the case is signed by one and the same person,
namely, Shri Shashank Jain, either as Managing Director or whatever else. The office
addresses of the "two entities" (??) are also the same. Moreover, there is not an iota
of evidence on record to show that the projector in question was actually repaired
during the period 11th March - 11th June, 1999. The promise of returning the
projector to CMC "in perfect working condition by 14.5.1999 without fail" was thus
clearly not met. Nor was there any reply to either the letter dated 19.5.1999 or the
legal notice dated 6.8.1999 sent by CMC. It is also noteworthy that by its own
admission (letter of July 1998 (date unclear) signed by Shri Shashank Jain for
Viewtech Imaging Systems - vide Exhibit A-7 filed before the State Commission) the
second appellant represented to CMC that the model 4600A of this LCD projector had
been 'discontinued internationally' by Philips and replaced by model 4700 and the
Philips India were engaged in a clearance sale. The possibility of some ab initio
irreparable manufacturing defect remaining in the second LCD projector (of the
discontinued model 4600 A) supplied to CMC cannot thus be at all ruled out.
5. However, the State Commission's order is not what can be upheld in its entirety. It
has granted to CMC reliefs which were not quite prayed for in the complaint. With its
complaint dated 5.10.1999, CMC did not produce even a scrap of evidence to show
that it had actually hired another similar projector from the market spent a sum of Rs.
50,000 as of 19.5.1999 on such hire and also sent a detailed and vouched debit note
to any of the appellants (or respondent No. 2 here) for hire charges after 19.5.1999,
as it stated in its letter of that date. In its complaint, however, it claimed damages of
Rs. 2.88 lakh and "further damages @ Rs. 2,000 per day from the date of filing the
complaint till realisation thereof", in addition to the cost of the projector, i.e., Rs. 3.6
lakh. The State Commission proceeded to award interest @ 24 per cent per annum on
the cost of the projector from 14.5.1999 till its realisation and also "hiring charges"
@ Rs. 1,000 per day from 14.5.1999 till payment and costs of Rs. 10,000. As noted,
there is no evidence on record regarding CMC actually paying any hiring charges. Nor
is the grant of interest at a rate as high as 24 per cent per annum on the full cost of
the projector for the period mentioned in the impugned order justified by any stretch
of imagination. The State Commission also held the two appellants as well as the
dealer (respondent No. 2 here) jointly and severally liable for the payments ordered
by it. This too is not tenable, in respect of the dealer.
6 . We, therefore, partly modify the impugned order of the State Commission and
direct the two appellants here to jointly pay to CMC the full cost of the projector, i.e.,
Rs. 3.6 lakh along with interest @ 9 (nine) per cent per annum on Rs. 3.6 lakh from
April 1999 (i.e., beginning of the month following the month of handing over the
projector to the appellants) till payment. This will compensate CMC adequately. The
appellants, in turn, would be entitled to withdraw the sum of Rs. 2 lakh, deposited
with the State Commission in accordance with our order dated 14.12.2004, along
with interest, if any, accrued on the said deposit. The parties shall bear their own
costs throughout the proceedings - here and before the State Commission. There

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shall be no liability on the second respondent. This appeal is disposed of accordingly.
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