NCDRC Upholds State Commission's Order In Machinery Supply Dispute; Reduces Interest To 12%
The NCDRC Bench comprising Justice A.P. Sahi (President) and Mr. Bharatkumar Pandya (Member), while dealing with an appeal concerning failure to honour the supply of machinery, held that Shivajirao More (OP-1/appellant) was liable for deficiency in service for failing to supply and install the machinery as agreed. The Commission upheld the State Commission's findings and directed a refund...
The NCDRC Bench comprising Justice A.P. Sahi (President) and Mr. Bharatkumar Pandya (Member), while dealing with an appeal concerning failure to honour the supply of machinery, held that Shivajirao More (OP-1/appellant) was liable for deficiency in service for failing to supply and install the machinery as agreed. The Commission upheld the State Commission's findings and directed a refund of ₹9,50,000 with 12% interest per annum from the date of promise.
Background
The respondent No. 1 (complainant) approached Mr. Shivajirao More (appellant / OP No. 1) for the purchase and installation of machinery required for manufacturing grey boards. The appellant represented that M/s Mangalam Engg. Works (respondent No. 2 / OP No. 2) was engaged in manufacturing such machinery and that he had a business arrangement with O.P No.2 .
Relying on these assurances, the complainant agreed to purchase the machinery and entered into an agreement dated 10.03.2000, whereby the appellant acknowledged receipt of ₹9,50,000 and undertook to supply, install, and commission the unit by 01.05.2000. However, despite receiving the full amount, the appellant failed to supply or install the machinery within the stipulated time.
Aggrieved, the complainant filed a complaint before the Maharashtra State Consumer Disputes Redressal Commission against both opposite parties, alleging failure to deliver the machinery and deficiency in service. The State Commission, after examining the evidence, held the appellant (OP No. 1) liable for deficiency in service and directed him to refund ₹9,50,000 with interest at 18% per annum from 01.05.2000 till realization. Challenging this order, the appellant filed the present appeal before the National Consumer Disputes Redressal Commission (NCDRC)
Arguments of the parties
The appellant (Shivajirao More) contended that there was no privity of contract between him and the complainant. It was argued that the demand drafts issued by the complainant were drawn in the name of M/s Mangalam Engineering Works (OP No. 2) and that any payments received were subsequently transferred to that firm. The appellant further argued that the complainant was not a 'consumer' within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986, since the machinery was purchased for commercial manufacturing purposes and not for self-employment or livelihood.
He also claimed that the machinery had already been supplied and installed at the complainant's premises in October 1999, relying on inspection reports and electricity connection documents issued by the Maharashtra State Electricity Board (MSEB) in June 2000 to substantiate that the unit was operational. The appellant further alleged that the agreement dated 10.03.2000 was fabricated using a blank signed paper and denied any liability to refund the amount.
The respondent (complainant), on the other hand, asserted that the entire consideration of ₹9,50,000 was duly paid to the appellant and that the written agreement dated 10.03.2000, executed by the appellant himself, reconfirmed receipt of the full amount and clearly established his responsibility to supply and commission the unit by 01.05.2000. The respondent further argued that this agreement itself proved that the machinery had not been supplied or installed as of that date, since the appellant acknowledged his obligation to complete the work within the agreed timeline. Hence, the respondent maintained that there was a clear deficiency in service on the part of the appellant.
Findings of The Commission
The Commission observed that the complainant had purchased the machinery to earn his livelihood by way of self-employment and that there was no evidence to show that it was intended for any large-scale commercial enterprise.
The Commission further observed that there existed privity of contract between the appellant and the complainant. Upon reviewing the evidence, it observed that the direct payments, including a demand draft of ₹1.4 lakh and cash of ₹1.1 lakh, were admittedly received by the appellant. Referring to the submissions of M/s Mangalam Engineering Works, the Commission noted that all payments received by that firm were handed over to the appellant, thereby establishing that the entire consideration of ₹9,50,000 had been duly received by him.
On the issue of deficiency in service, the Commission observed that the appellant had failed to fulfil his contractual obligations under the agreement dated 10.03.2000. The complainant had proved the payment of consideration, and the validity of the agreement was duly established. The Commission observed that the appellant did not produce any positive evidence to show that the machinery had been supplied or installed within the stipulated deadline.
Accordingly, the NCDRC concluded that there was deficiency in service on the part of the appellant. However, it found the interest rate of 18% per annum awarded by the State Commission to be excessive and disproportionate, considering that the complainant's loan was limited to ₹7 lakh. Therefore, the Commission reduced the rate of interest to 12% per annum from 01.05.2000 until realization.
Subject to this modification, the NCDRC upheld the order of the State Commission directing the appellant to refund the amount of ₹9,50,000 to the complainant.
Case Title : Shivajirao More vs Siddhanath Sawant FIRST APPEAL NO. 75/2013