STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

1]    Healthyway Immigration Consultant Private Limited, its Registered Office at SCO No.49-51, Sector 42-C, Chandigarh, through its Director Amit Kakkar, now represented by Swati Kakkar, wife of Amit Kakkar (Director in Judicial custody).

2]    Amit Kakkar, now represented by Swati Kakkar, wife of Amit Kakkar (Director in Judicial custody), Healthyway Immigration Consultants Private Limited, its Registered Office at SCO No.49-51, Sector 42-C, Chandigarh,

……Appellants/Opposite Parties

V e r s u s

Abroad Possibilities, its office is situated at 1^st  Floor, Adjoining JTPL City, Opposite Shiwalik City, Sector 115, Mohali, Kharar-Landran Road, Pin Code 140301 through its authorized signatory Sh.Parveen Kumar.

              ....Respondent/complainant

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:    JUSTICE SHAM SUNDER (RETD.), PRESIDENT.

                   MRS. NEENA SANDHU, MEMBER.

Argued by:  Sh. Varinder Arora, Advocate for the appellants.

                   Sh. Baldev K. Behl, Advocate for the respondent.

PER  JUSTICE SHAM SUNDER (RETD.), PRESIDENT

1.             This appeal is directed against the order dated 09.03.2012, rendered by the District Consumer Disputes Redressal Forum-I, U.T., Chandigarh (hereinafter to be called as the District Forum only), vide which, it accepted the complaint, and directed the Opposite Parties(now appellants), as under:-

“As a result of the above discussion, the complaint is exparte allowed and the OPs are directed to refund the amount of Rs.1 lac deposited by the complainant along with interest @ 12% p.a. from the date of deposit, till its realization, besides Rs.5,000/- as costs of litigation, within one month from the date of receipt of certified copy of the order”.

2.             The facts, in brief, are that the complainant took the franchise, from the Opposite Parties, for self employment, to earn its livelihood. A Franchise Agreement dated 18.11.2010, was executed, between the parties. The complainant paid a sum of Rs.1 lac, as one time payment, towards Franchise fee, through cheque no.658886 dated 18.11.2010, to the Opposite Parties. According to the terms and conditions of the franchise Agreement, franchisor i.e. the Opposite Parties, were to provide the services to the franchise i.e. the complainant, such as Trade Mark, symbol or logo of the Franchisor on any stationary, letterhead, document, name plate, furniture, representation, authorizing anyone to make use of the ‘Proprietary Marks’, stationery, display material of any kind, sales literature, brochures and all other items of similar nature. It was stated that till the date of filing the complaint, the Opposite Parties, neither provided the aforesaid services, nor appointed any person to make use of the ‘Proprietary Marks’.  It was further stated that the complainant, regularly reminded the Opposite Parties, to provide the services aforesaid, and supply all the material, as per the Agreement, but all in vain. It was further stated that the aforesaid acts of the Opposite Parties, amounted to deficiency, in rendering service, as also indulgence into unfair trade practice. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), seeking refund of Rs.1 lac paid by it, to the Opposite Parties, alongwith interest, and litigation costs, was filed.

3.             The Opposite Parties were duly served, but despite service, no authorized representative appeared, on their behalf. Accordingly, they were proceeded against exparte vide order dated 01.03.2012.

4.             The complainant led evidence, in support of its case.

5.             After hearing the Counsel for the complainant, and, on going through the evidence, and record of the case, the District Forum, accepted the complaint, in the manner, referred to, in the opening para of the instant order. 

6.             Feeling aggrieved, the instant appeal, has been filed by the appellants/Opposite Parties.

7.             We have heard the Counsel for the parties, and, have gone through the evidence, and record of the case, carefully. 

8.             The Counsel for the appellants, submitted that since, according to its own admission, the complainant was appointed as a Franchise by the Opposite Parties, which were the Franchisors, and a Franchise Agreement dated 18.11.2010, was executed, between the parties, it (complainant) did not fall within the definition of a consumer, nor the Opposite Parties fell within the definition of service providers. He further submitted that, in case, there was a breach of the terms and conditions of the Agreement, the complainant could resort to any other legal remedy, which was available to it, but the Consumer Complaint, did not lie, as it was not a Consumer Dispute. He further submitted that it was the duty of the District Forum,  to determine, as to whether, the complainant fell within the definition of a Consumer, and, whether the complaint involved any Consumer Dispute, but, it failed to take into consideration, this aspect of the matter, as a result whereof, it fell into a grave error, in accepting the complaint. He also placed reliance on Softspec Software Pvt. Ltd. Vs. Digital Equipment (India) Ltd. & Ors. II (2002) CPJ 5 (NC), a case decided by a four Member Bench of the National Consumer Disputes Redressal Commission, New Delhi, General Manager, Madras Telephones & Ors. Vs. R. Kannan, I (1994) CPJ 14 (NC),  Prof. P. Narayanankutty Vs. Uptron India Ltd. & Ors., I (1996) CPJ 240 (NC), Mysore Sales International Ltd. Vs. M.N. Misra, II (1996) CPJ 64 (NC), C. Ravi Kiran Vs. M/s S. Kumars Online Ltd. & Anr, Revision Petition No.309 of 2009, decided on 19.02.2009, by the National Consumer Disputes Redressal Commission, New Delhi and C. Ravi Kiran Vs. M/s S. Kumars Online Ltd. & Anr, Petition(s) for Special Leave to Appeal (Civil) No(s) 32821/2009, decided on 19.11.2010, by the Hon`ble Supreme Court of India, in support of his contention, that the complainant did not fall within the definition of a Consumer, and, as such, the question of deficiency, in rendering service, on the part of the appellants/Opposite Parties, did not at all arise.

9.             On the other hand, the Counsel for the respondent/complainant, submitted that the complainant, fell within the definition of a Consumer, and the Opposite Parties, fell within the definition of Service Providers. He further submitted that, no doubt, the complainant was a Franchise, and the Opposite Parties were Franchisors, and Franchise Agreement dated 18.11.2010, was executed between the parties. He further submitted that the Opposite Parties, i.e. the Franchisors, from time to time, were to offer the Franchise approved local marketing plans, and materials, without limitation, templates for advertising that were to cover pre-opening and post-opening advertising. He further submitted that, thus, the Opposite Parties were the Service Providers. He further submitted that the condition in the Franchisee Agreement, that the amount paid by the complainant, as a Franchise fee, shall be non-refundable, if the agreement was terminated, was unfair. He further submitted that the District Forum was right, in accepting the complaint.

10.           The only question, that arises, for consideration, in this appeal, is, as to whether, the respondent/complainant fell within the definition of a Consumer, or not. Admittedly, the complainant was appointed as a Franchise, by the Opposite Parties. A Franchisee Agreement dated 18.11.2010, Annexure-I, was executed between the parties. Clause 13(2) of the franchisee agreement reads as under:-

“13(2).The Franchisee shall not use any of the Franchisor`s trade names, trademarks, symbols, logos or the words or any other name owned or used by the Franchisor in the stationery, letterhead, name board or otherwise, except to the extent and in the form and manner approved by the Franchisor in writing. The Franchisee shall use only such stationery, letterheads, name boards and other items as have been supplied by the Franchisor or expressly approved for use by the Franchisor or expressly approved for use by the Franchisor in writing. The Franchisee shall enjoy only limited and non-assignable right to use the Franchisor`s trademarks, names, symbols or logo when permission to use is granted by the Franchisor during the term of this Agreement. Specifically, the use of any name, logo, trademark or symbol other than the Franchisor is expressly forbidden except to the extent and in a manner specifically approved in writing”.

11.           The perusal of the afore-extracted clause, clearly goes to show that the Franchise was only to use such stationery, letterheads, name boards and other items, as were to be supplied by the Franchisor, or expressly approved for use by the Franchisor, in writing. The Franchisor did not supply the goods, to the Franchise, for consideration. It was only a Franchise Agreement which was executed between the parties. The definitions of Consumer and Service as contained in Clauses (d) and (o) of Sub-section (1) of Section 2 of the Consumer Protection Act read as under:-

 “(d) `Consumer’ means any person who—

     (i)  buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

     (ii)  [hires or avails of] any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who [hires or avails of] the services for consideration paid or promised, or partly paid any partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person.

[Explanation—For the purposes of Sub-clause (i) ‘commercial purpose’ does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment;]

(o) ‘service’ means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, (housing construction] entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.”

12.              Deficiency  is also defined in Clause (g) and it means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service. The terms and conditions of the Franchise Agreement do not, in any way, go to establish that the Franchisor provided its services for consideration, to the Franchise (complainant). So, there was no relationship of a Consumer and Service Providers between the parties. The Opposite Parties could only be said to be grantors, and the Complainant could be said to be a grantee. In Softspec Software Pvt. Ltd.`s case (supra), relating to the Franchise Agreement, it was held as under:-

“As to what is the relationship between grantor of franchise and the franchisee holder certainly depends on the terms of the agreement between the parties. Ordinarily a grantor of franchise allows the franchisee holder to use the name of the grantor and to sell the product of the grantor strictly in accordance with the agreement while the grantor keeps a watch over the activities of the franchisee to see that there was no breach of the agreement and the franchisee does not act in a manner which brings the name of the grantor in disrepute. In such circumstances a grantor of franchisee does not provide services to its customers”.

In General Manager, Madras Telephones  & Ors. case (supra), the National Consumer Disputes Redressal Commission, New Delhi, held that a franchise holder is only a licencee of the grantor of the franchise, and while examining the relationship between the operator of STD/PCO and the Telecom Department, observed as under:-

“A franchise holder is only a licensee of the grantor of the franchise for operating in this case the STD/PCO and collecting the call charges on behalf of the franchiser. It is the franchise holder who is rendering service to the grantor of the franchise inasmuch as he runs and maintains STD/PCO relieving the Telecom Department of the responsibility for providing and maintaining Public Call Offices. The franchise holder performs two functions; (a) establishes and runs a Public Call Office; and (b) collects the call charges on behalf of the department. For rendering these services the franchiser, the franchise holder, gets a commission. The mere fact that the franchise holder has been described as the hirer of the PCO does not make him a person who renders service to the revision petitioner, Telecom Department. Consequently, the fact that he has been described as hirer in the agreement would not mean that he is rendering a service to the Telecom Department for consideration. A franchise holder renders service to those who use the Public Call Office which is performed by the Telecom Department directly wherever there is no franchiser to manage a Public Call Office. Consequently it is erroneous to hold in this case that the franchise holder who is maintaining and running a STD/PCO Office, is a consumer vis-a-vis the Revision Petitioner, Telecom Department.”

In Prof. P. Narayanankutty v. Uptron India Ltd. & Ors., I (1996) CPJ 340 (NC), the National Consumer Disputes Redressal Commission, New Delhi, again examined the question of the right of Franchise holder and held as under:-

“We have gone through the records of the case and heard the parties. We are of opinion that in the present case the complainant cannot be said to be a consumer qua the opposite parties under the agreement dated 29th March, 1990 for running a Franchise Centre in Calicut. The opposite parties were only supposed to provide technical know-how and other materials to the franchisee as per the terms of the said agreement on payment.

A franchise holder cannot be held to have hired the services of the principal. In the case of Telephone Public Call Offices, this Commission has repeatedly held that a franchisee of the Telephone Department cannot be said to be hirer of services of the Department. Reference can also be made to The General Manager, Madras Telephones & Ors. v. R. Kannan, 1994 CPJ 14 (NC). The same principal applies to the present case.”

In Mysore Sales International Ltd.s case (supra), the National Consumer Disputes Redressal Commission, New Delhi, examined the consequences of failure to appoint the complainant as selling agent and held as under:-

“There is no hiring of service of the petitioners herein by the complainant for consideration. Failure to appoint the complainant as a selling agent is a breach of contract for which remedy lies in Civil Court and not before the Consumer Forum. Even if it was a transaction, as the case of the petitioner herein, of the sale of oil, it will be hit by the fact that it was a commercial contract and case relating to non-supply of the oil. The complainant will not be consumer being purchase of goods in which no defect is alleged.”

In M/s  S. Kumars Online Ltd. & Anr. Vs. C. Ravi Kumar, First Appeal No. 1743 of 2005, decided on 12.09.2008, by the A.P. State Consumer Disputes Redressal Commission, Hyderabad, the Franchise filed a Consumer Complaint. Ultimately, the A.P. State Consumer Disputes Redressal Commission, Hyderabad, held that the Franchise did not fall within the definition of a Consumer. The order of the District Forum, accepting the complaint, was set aside, and the appeal was allowed. Feeling aggrieved, Revision Petition No.309 of 2009 titled as C.Ravi Kiran, Petitioner Vs. M/s S. Kumars Online Ltd., & Anr., Respondents (supra), was filed before the National Consumer Disputes Redressal Commission, New Delhi. The National Consumer Disputes Redressal Commission, New Delhi, vide its order dated 19.02.2009, while dismissing the Revision Petition, held as under:-

“We agree with the view taken by the State Commission that the petitioner was not a consumer in the given facts and circumstances of the case. Petitioner had applied for franchise and it has repeatedly been held by this Commission that a person, who is a franchise-holder, is not a consumer. Dismissed”.

13.           Still feeling dissatisfied, Petition(s) for Special Leave to Appeal (Civil) No(s) 32821/2009, titled as C. Ravi Kiran Vs. M/s S. Kumars Online Ltd. & Anr, (supra), was filed, before the Hon`ble Supreme Court of India, which was also dismissed by it on 19.11.2010.

14.           The principle of law, laid down, in the aforesaid cases, is fully applicable to the instant case. It is, therefore, held that the complainant,  did not fall within the definition of a Consumer, and, as such, the complaint did not involve any Consumer Dispute. The District Forum was, thus, wrong, in holding that the complainant was a Consumer. The Consumer Complaint was, thus, not maintainable. The District Forum, thus, gravely erred in accepting the complaint.

15.           The Counsel for the respondent/complainant,  however, submitted that the condition, contained in the agreement, that the franchise fee paid by the complainant, shall be non-refundable, being unreasonable, amounted to unfair trade practice. The parties signed the agreement, with eyes wide open. Since, it has been held that the complainant did not fall within the definition of a Consumer, whether such condition was unfair or otherwise, is not required to be decided, by this Commission. If the Franchise Agreement was terminated, by the Franchisor illegally or before the expiry of the period mentioned therein, then the complainant, may have any other legal remedy, to which it can resort to. In this view of the matter, the submission of the Counsel for the respondent, being without merit, must fail, and the same stands rejected.

16.           No other point, was urged, by the Counsel for the parties.

17.           In view of the above discussion, it is held that the District Forum, did not appreciate the evidence, and law, on the point, in its proper perspective, as a result whereof, it fell into a grave error, in holding the complainant, as a Consumer, maintainability of the Consumer Complaint and accepting the same.

18.           The order passed by the District Forum, being not based on the correct appreciation of evidence, and law, on the point, suffers from illegality and perversity, warranting the interference of this Commission.

19.           For the reasons recorded above, the appeal is accepted, with no order as to costs. The order of the District Forum is set aside.

20.           The respondent/complainant shall, however, be at liberty to resort to any other legal remedy, which may be available to it.

21.    Certified copies of this order, be sent to the parties, free of charge.

22.    The file be consigned to Record Room, after completion

Pronounced.

August 14, 2012

Sd/-

[JUSTICE SHAM SUNDER(RETD.)]

PRESIDENT

Sd/-

[NEENA SANDHU]

MEMBER

Rg