Judgment-       Hon’ble- Mr.Rajendra Ku Panda  

                                                                                                                                  President

1.The genesis of the case in brief is that the complainant has filed this consumer complaint under Section 35(1)(a) of the Consumer Protection Act, 2019 alleging unfair trade practice by the Opposite Parties (herein after called as O.Ps) which the Complainant sought  redressal of his grievance before this Commission.

2.The Complainant stated that an agreement was executed between him with O.P.No-2 on 16.04.2019. The main purpose of said agreement is to supply of Milk products by the O.Ps including O.P.No-2 to the Complainant.  To execute said agreement, the complainant deposited an advance amount of Rupees One Lakh and indented the product for Rs.2 (Two) Lakhs to the  O.Ps.  In turn  the O.Ps paid remuneration to the Complainant  for storing and selling the stock to the retailers out of margins of fixed percentage.  After couple of years, the O.Ps appointed one P.Chouskey to monitor the supply of the product to the complainant but instead of expand the network of the company the said P.Chouskey  created disturbances between the complainant and present O.Ps which causes  loss to the complainant.  Subsequently, the O.Ps stopped supply of the milk products to the complainant since 01.03.2023.  Due to such non-supply of the products, the complainant has sustaining loss in collection of his livelihood which violated the duties of the O.Ps as per agreement, affects the complainant’s purpose of earning his livelihood by means of self-employment. The Complainant further alleged that the Ops are also not considering the indent orders when place by the Complainant.  By these acts of the O.Ps, the complainant sustained huge loss in his self-employment around of Rs.19,50,000/- since  then. It is also alleged that violating the terms and conditions of the agreement, the O.Ps were supplied expired and damaged milk products,  and not delivered the products in time.

                   To redress and smooth supply of the product as per agreement, the complainant issued Legal Notice on 20.03.2023 but the O.Ps replied evasively.  Being aggrieved, the complainant filed the present complaint sought compensation of Rs.19,50,000/- and supply of stock of Arun milk products without fail besides any other reliefs as deemed fit and proper.

The Complainant with his complaint filed documents including written note of argument alleging deliberate disobey of the agreed conditions regarding supply of milk products and resolve the issue of damaged products and other issues. To substantiate his case he filed the documents including D.D for security deposit of Rs.1,00,000  statement of amount transfer  in two sheets i.e for the period of 01.03.2023 to 31.03.2023 & 01.05.2024 to 31.05.2024  transfer of Rs.1,27,429.72 dtd:04.03.2023 to the Ops Company, Photographs of damaged products ,E-mail copies , CCTV Footage ,Sample order paper  and Ignorance of the Ops and the papers regarding “No Complain Issue” of the retailers in respect of the service of the Complainant towards the retailers in support of this claim. In addition, the Complainant filed affidavit as part of his evidence.

3. Notices were issued to the all the O.Ps.  Duly acknowledging the notices, the O.Ps are represented through their authorized Counsels and filed written version, arguments  and additional written arguments with citations and evidence affidavit.

4. The O.Ps submitted that the complaint is not maintainable either in law or in facts and is liable to be dismissed for the following reason:-

1. Complainant is not a consumer as defined under the Act:

1. The complainant is the distributor of the products manufactured by the O.P company.  The complainant buys the goods from the O.P company for the purpose of reselling to retailers and receives a margin of fixed percentage as a remuneration for storing and selling the stock.
2. The complainant is not a consumer as per definition of the word   consumer Under Sec.2(7) of the Consumer Protection Act, 2019 as the complainant purchased the goods from the O.P company for the purpose of resale and for commercial purpose.
3. The business between the Complainant and the Ops is a commercial business to business transaction. The Complainant is not self-employed for livelihood.
4. The Opposite Party submitted that they are employees of Hatsun Agro Products Ltd referring them as Op Company admitting the manufacture and sale of milk & milk products. It is also agreed about the collection of security deposit for the purpose of securing the Ops company’s interests towards the outstanding payable by the Complainant. Complaint in this case owes to Ops a sum of Rs.13,40,372 and the Complainant’s money will be returned after the outcome of arbitration proceeding as the Op has already initiated arbitration proceedings claim petition 2/2023.

2. Agreement:

As per agreement, the complainant shall not store/sell any brand product other than that of O.Ps Company. The Op further submits that it is the Ops conditions in the agreement between the parties that the O.Ps company is liable to terminate the agreement without giving notice, if the complainant fails to comply with the norms of the O.Ps company or sells products of other manufacturer.

3. Facts of breach:

The O.P company had been receiving multiple complaints from the retailers regarding the supply of the goods and the non-payments of delivery fee.The O.P Company had also received complaints that the products manufactured by their competitors were stored and sold by the complainant.Accordingly, the representative of the O.P Company visited the complainant’s outlet on 18.01.2023 and found a number of deviations from the SOP.In view of the deviations listed, the O.P Company sent a detailed e-mail dated 23.01.2023 to the complainant asked for explanation and possible remedial measures. When the complainant did not respond, the O.P Company again visited the shop on 25.02.2023 and found discrepancies and submitted photographs evidence storage of competitor’s products on a large scale-Documents No. B5.The O.P company was heavily disappointed with the conduct of the complainant.But the complainant did not provide any proper explanation of second e-mail dtd:25.02.2023. Accordingly, the O.P company terminated the agreement under their letter dtd:28.02.2023.With these submissions, the O.P company prayed to dismiss the complaint with cost.

4. Arbitration Clause in the Agreement between the parties:

According to Clause 21(b) of the aforesaid agreement, it was agreed between the parties that the disputes arising out of the agreement will be resolved amicably through arbitration but the Complainant has not filed any counter claim in arbitration proceeding in which he was participated.

5. Non-Joinder and Misjoinder of parties:

The complainant has arrayed only the employees of the company as parties to the complaint.There is no documentary evidence to show that any of these employees were personally involved in any of the transaction involved in the present case.

6. Frivolous and vexatious:

Regarding veracity of letters of the retailers submitted by the Complainant with his written arguments. It is further submitted that the termination of the agreement and others under the subject is not coming under consumer dispute.

7. Complicated questions of facts required trial:

The dispute is mainly about whether the complainant had committed breach of agreement and deviation of SOPs and whether termination of the Agreement by the O.P company is valid.

          On approach of the Complainant the O.P company executed an agreement dtd: 16.04.2019 with the Complainant (Distributorship Agreement) commencing from 08.05.2019 until termination by either parties. Under such Distributorship Agreement, the O.P company has entered into the lease agreement of the premises on 10.06.2022 and permits the Complainant to carry on business therein for no additional charge.  The said premises used for storing and selling the goods by the Complainant are leased out by the O.P Company.  Further, the O.P Company has invested a huge amount towards interior decoration and amenities including but not limited to furniture and cold storage facilities but for everything which are required for smooth functioning of distribution of their products.  As per agreement, the relationship between the parties strictly commercial in nature wherein the complainant receives a commission i.e. the margin obtained out of the sale of products of the O.P company.

Findings

      Heard on the point of issues raised by both the parties. Perused the complaint, written version, evidence affidavit, Written Note of Argument and documents available there under and framed following issues for determination:

Issue 1: Whether the complainant is a consumer and comes under the ambit of the Consumer Protection Act 2019?   

Issue 2: Whether a consumer and service provider relationship exists between the complainant as well as the opposite parties?

Issue 3: What is the scope of the sole arbitrator in a consumer related disputes and whether the complainant can file a consumer case when a proceeding was already initiated before the arbitrator and the scope of the Consumer Commission when an award was already passed by the sole arbitrator?      

Issue 4: Whether the Complaint is hit under Misjoinder & Non-Joinder of necessary parties?

Issue 5 : Regarding vexatious Complaint

Issue 6 : Whether the matter is involved complicated questions?   

Issue 7: Whether any deficiency of service by the opposite party to the complainant and if so, what relief they are entitled to?

Issue No-1

1. Regarding Consumer:

    The opposite parties in their written version & argument has raised preliminary objection as to locus standy of the Complainant to file the complaint on the plea that the “Complainant is not a consumer as he buys the goods from the Ops Company for the purpose of reselling to the retailers and receives a margin of fixed percentage as a remuneration for storing and selling the stock”. Therefore, the Complainant cannot be termed as consumers as the entire transaction between the Ops and the Complainant is for commercial purpose. The business between Complainant & Ops is a commercial business- to- business transaction and the complainant is not self-employed for Livelihood.

1. To answer the above query we have to discuss about definition of “Consumer” under C.P Act 2019 envisaged under Section 2 of subsection 7 (i)(ii) the explanation (a.) as well as various judgment related   Complainant doing commercial activities is considered as “consumers” if he/she fulfills the expression “Commercial Purpose” which does not include use by a person of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment.

2.  This commission is willing to share the judgement related to when the complainant who is doing the commercial activities is considered as consumers if he fulfils the exception clause as per the Consumer Protection Act 2019. The 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 intension of the legislature abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. Therefore, it is a matter of evidence. Reliance Placed K.K Bharadwaj …. Appellant – vrs – Pradeep Jain & Anr …. Respondents (FA No-1441 of 2018, decided on 01.12.2022 N.C). In which the Hon’ble National Commission’s finding is that xxxxx “Livelihood”—Simply because she had not uttered the word is ‘livelihood’, does not make the buying of the shop commercial purpose in view of the fact that she has clearly deposed on oath that shop is for self-employment purpose xxxxx In Rohit Chaudhary & Anr… Appellants – vrs – M/s Vipul Ltd—Respondent (Civil Appeal No-5858 of 2015 decided on 06.09.2023 SC…). In which the Hon’ble Apex Courts finding is that xxxxx (1.) Commercial Purpose- When there is assertion in complaint filed before Consumer Court or Commission that such goods are purchased for earning livelihood, such complaint cannot be nipped at the bud and dismissed. (2.) If commercial use is by purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods would continue to be a ‘consumer’.xxxxx  

In the case in hand the complainant uses to sit and sell the products of the O.P company outlet for which the complainant was given remuneration in accordance to the distributorship agreement.It is clearly constitute that, the complainant is not making any profit out of sale rather it speaks about that, the complainant purchased the goods from the O.P company for earning his livelihood.The law is well settled that, “purchaser of goods for commercial purpose is a consumer if he uses it himself for earning his livelihood” held by the Hon’ble Supreme Court of India in Sunil Kohli  ..Vrs.. M/S.Purearth Infrastructure Ltd… in Civil Appeal No.9004-9005/2018 decided on 01.10.2019.Hence, this Commission cannot consider the citation Srikant G Mantri…Vrs.  Punjab National Bank (SC) placed by the O.Ps .Similarly, so far as the present case is concerned having regard to the nature and character of the case and the material on record, the counter version as well as the citation including Laxmi Engg. works…vrs P.S.G Industrial Institute (1995) 3 SC 583 under Civil appeal No.4193/95 dt.4.4.1995 have no merit to the case in hand.But we consider some portion of the order in the Laxmi Engineering Case clarifies that in certain situations, purchase of goods for “Commercial Purpose” would not yet take the purchaser out of the definition of expression “Consumer”. Here in this case, the Complainant is not a partner with the Ops rather a employee under the Ops company which the Company itself stated under Para-5 Page-3 of its written arguments “the Complainant’s role is restricted only to manage storage and sale of goods supplied by the Ops Company” and also under Para-6 page-4 it has stated by the Ops that “the Complainant buys the goods from the Op Company for the purpose of reselling to retailers and receives a margin of fixed percentage as a remuneration for storing and selling the stock which also reflect in the Distributorship Agreement. Thus Annapurna BUPPIN & Others vrs Malsidddappa & another… case judgment of the Hon’ble SC which relied by the Ops not applicable to this case in hand.

2. Regarding agreement: The Ops prepared standard Form of an agreement and directed the complainant to put his signatures on the specific place in order to facilitate the Ops company and the complainant has no right to modify or amend the terms and conditions of the agreement. This unilateral and one-sided agreement dtd:16.04.2019 are ex-facie one sided, unfair and unreasonable. The incorporation of such one sided clauses in an agreement constitutes an unfair trade practice as per section- 2(47) of C.P Act,2019 since it adopts unfair methods of practices for the purpose of grab the money or to put the other side in trouble.

                 On analyzing the case record, it is apparent that, the distributorship agreement date 16.04.2019 is one sided agreement as the Hon’ble Supreme Court of India held in Pioneer Urban Land & Infrastructure Limited Vrs. Govindan Raghavan in C.A.No.12238/2018 held that, “a term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder.”  Further Hon’ble Court held that, “the incorporation of one-sided clauses in an agreement constituters the unfair trade practices within the meaning of Sec.2(r) of the Consumer Protection Act, 1986 and such clauses can’t bind a party”.

Accordingly, Issue no-1 is answered.

Issue No-2

Consumer & Service Provider Relationship

In the case in hand complainant avails service from the Ops for a consideration. The agreement also depicts definition of Sec-2 (7)(ii) of the C.P Act 2019. Sec 2(42) of C.P Act 2019 clearly defined “service” means service of any description which is made available to potential users. Now in this case can this complainant is to treat as potential users ?

The Op agreed to supply products to the complainant upon payment in advance or also on deferred payment. The complainant on receipt of products from the Op sold it to others to maintain his livelihood by means of self-employment.

In the above discussion the Commission perspective, the Complainant is a consumer and the service provided by the Ops would come under the purview of the service provider under C.P Act 2019.

Issue No- 3

Presence of an arbitration clause in the agreement does not bar the jurisdiction of the Consumer Commission. The Op Hatsun Agro Product Ltd Chennai as the claimant, filed a Claim Petition No:02/2023 before the sole Arbitrator at Chennai praying to handover the vacant possessions of the premises along with assets as mentioned in the schedule and all relevant documents in terms of the distributor agreement dtd:16.04.2019 from the present Complainant, who is the respondent claim petition in 2/2023.

In this context this Commission observes that the dispute covered under the said Claim petition is pertaining to the assets and other related documents as mentioned in the said distributor agreement. The efficiency of deficiency of services of the parties is not dealt in the said Claim petition. The Consumer Complaint No:13/2023 of DCDRC Gajapati was filed on dtd:19.04.2023 which is much prior to the institution of said Claim Petition at Chennai as per the submission of the Complainant.The question, however, is of election, or of choice, and not of which party had approached the court first.More importantly it would be the nature of the dispute, which would determine the forum for its redressal. The law gives this choice to the consumer to either avail a remedy under the Consumer Protection Act, by filingacomplaintbeforetheJudicialAuthority, orgofor arbitration. The proceedings before the Sole Arbitrator would not stop the complainant to approach the Consumer Commission even though the case was first filed for arbitration by the opposite party.

Here the opposite party has appointed a sole arbitrator and the sole arbitrator has passed an award in favour of the opposite party, but the complainant did not participate in the arbitration and wishes to file a case in the consumer commission, it's important to note the following: 1) The award of the sole arbitrator is not necessarily binding on the consumer, particularly if the consumer has chosen to pursue the matter in the consumer commission. 2) The consumer commission, being a public judicial authority, is the preferred forum for resolving consumer disputes, as it is established to protect and uphold consumer rights. The consumer commission has jurisdiction over consumer disputes, and it is equipped to handle such matters efficiently. The consumer commission can disregard the arbitral award, especially if it is against the guidelines laid down by the Supreme Court regarding consumer disputes. The consumer commission will consider the consumer's choice to have the matter resolved within the public consumer forum, as opposed to a private arbitration tribunal. Hence the order of the sole arbitrator is not binding on the complainant since the case was already filed in the consumer commission and the complainant is not interested or opting for the arbitration route.

The Hon’ble Supreme Court Of India on 10 December 2018, in the Civil Appellate Jurisdiction Review Petition (C) Nos. 2629-2630 Of 2018 In Civil Appeal Nos.23512-23513 Of 2017 M/S. Emaar Mgf Land Limited ...Appellant(S) Versus Aftab Singh ...Respondent(S) upheld the larger bench of the National Consumer Disputes Redressal Commission holding consumer disputes to be non-arbitrable and dismissed the review petition filed on the same. Also, the same legal position is upheld and valid based on the very recent judgment on 5 October 2023, related to the Hon’ble Supreme Court Of India Civil Appellate Jurisdiction Civil Appeal Nos.  6500 - 6501 Of 2023 (Arising Out Of Slp (C) Nos.4849-4850 Of 2023) Smt. M. Hemalatha Devi & Ors.    …Appellants Versus B. Udayasri   …Respondent clearly mentioned that the Consumer Disputes are not arbitrable.

The scope of a sole arbitrator in a consumer dispute in India can be limited based on the nature of the dispute and relevant legal precedents. In the case of consumer disputes, it's essential to understand that the Supreme Court of India has issued specific guidelines regarding the arbitrability of consumer disputes. The Supreme Court has recognized that consumer disputes are generally not arbitrable.

In cases where a consumer dispute arises, and there is an arbitration clause in the relevant agreement, the consumer has the choice to go to a consumer court despite the presence of the arbitration clause. The reasoning behind this is to provide consumers with a more accessible and consumer-friendly forum for dispute resolution, rather than private arbitration tribunals.

Moreover, the Op also not submitted before the Commission about the date of filing of the said Claim Petition at Chennai. The dispute covered under this CC -13/2023 of DCDRC Gajapati relates to deficiency of service caused to the Complainant by the Ops, which is exclusively dealt and triable by this Commission as the C.P Act itself a special beneficial and speedy legislation available exclusivelyto the aggrieved consumers. This commission has got ample jurisdiction to adjudicate the present Consumer disputes not withstanding anything contained in any other agreement etc. In view of the observations made by the Apex Court the arbitration clauses in an agreement cannot bar the Consumer Commission to accept the grievances of the Complainant which is held in the case of M/S. Emaar MGR Land Ltd Vrs. Aftab Singh 1 (2019) CPJ 5 (SC).

          As per ‘Doctrine of Selection’ if the civil dispute also includes the deficiency of services of the Consumers, the Complainant has the choice to go for the arbitration or to file case in the Consumer Commission. The Opposite Party has no right in imposing the Complainant to settle the dispute through arbitration process.

Issue No-4

So far as the law with regard to the mis-joinder & non-joinder of necessary parties as per Civil Procedure Code Under Order-1 Rule 9 & 10 says- no suits shall be defeated by reason of the mis-joinder or non-joinder of parties. It can proceed against the persons who are parties before the court.

          About the Non-Joinder and misjoinder of parties, the Commission observed that the Ops Company must have some employees to perform their various activities, if someone suffers any harm by the employees of the said company, it is the duty of the  injury/victim to report the matter before company- head and if not redressed he/she has to file case before appropriate Forum by making  party to the company as a whole by narrating the entire episode including the role of the  said employee and thereby causes harm but not against to one or two of its employee as they may not permanently under service with the Ops Company.

    Issue No-5

Frivolous or Vexatious Complaint: The case of State of U.P & others… vrs…. Shri Raj Veer Singh HC(Allahabad) upon which the Ops Company relied the Hon’ble Courts judgement regarding “Frivolous litigation” which is not applicable in this present case. The Commission observed if this type of Complaint, the Commission considered as Frivolous or Vexatious Complaint, then the principles of justice and fairness cannot be upheld.

     Issue No-6

Regarding complicated questions: of Facts require trial. The Ops company relied the case of Chairman & Managing Director, City Union Bank and another vrs Cholamandalam 2023 SCC on line SC 341 wherein the Hon’ble SC held that the procedure which is not feasible. In this regard this Commission observed that the case of the Complainant and Op is very simple. It is based upon an agreement, security deposit for products, supply of products, payment to the products and for all above questions the Commission has to see:

         i.) Whether non-supply of products by Ops is the deficiency in service?

        ii.) Whether Op received any payment from the Complainant?

iii.)Whether after received amount the Op not supplied the products?

iv.) If not supplied after receiving the amount, the reason behind non-supply?

v.) Whether any amount is with the Ops or with the Complainant as perallegations?

Hence if one and every disputes measures as per the case cited supra by Op, the main aim or chief motto of the Consumer Legislation will goes to peril. Further the Commission observed that, it is the Ops Company lodge the Case/Complaint in different authorities like before arbitrator, Madras High Court etc to complicate the matter without resolving the issue of non-supply of products, supply of damaged products, selling of products of other brand in place of Ops Product. Furthermore, it is the Ops company without complying the interim order Dtd:28.04.2023 of this Commission or without going to appropriate Forum as per C.P Act-2019 against the said interim order filed the case differently by disobliging the order of this Commission.

Issue No-7

      The O.P company failed to substantiate that, the complainant sold products of the competitors.  The black & white photographs of the products of other companies which are filed by the O.P company do not contain any stamp of date, location etc. and there was no filing of evidence of independent witness who counter signed the same.  The O.P company also failed to file sufficient corroborative documents regarding multiple Complaints from the retailers. The O.P company also failed to substantiate the main issue of the complaint why the company short supplies the products to the complainant whenever the complainant indents.

        Moreover upon verification it noticed that  the security deposit of Rs.1,00,000 (One Lakh) bearing D.D No-000435 dtd:17.01.2019 in favour of Hatsun Agro Product Ltd is with the Ops Company. Customer account statement in two sheets i.e for the period of 01.03.2023 to 31.03.2023 & 01.05.2024 to 31.05.2024 shows transfer of Rs.1,27,429.72 dtd:04.03.2023 to the Ops Company which proves the said amount is still lying with the Ops Company and the papers regarding ‘No Complain Issue’ of the retailers in respect of the service of the Complainant towards the retailers proves the fairness of the Complainant.    

    On foregoing discussion it is crystal clear that the O.Ps are negligent in   rendering proper service to the complainant during  these period.  Hence, in our considered view there is deficiency in service on the part of the O.Ps.

    So far as the compensation and cost of the case is concerned, we are convinced that the complainant has repeatedly requested to supply products as per agreement but the O.Ps failed to take any effective steps to sort out the problem of the complainant for which the complainant has suffered from financially, physically and mentally for which he is to be compensated.  Under the above facts and circumstances, in out considered view, it will be just and proper to award compensation in favour of the complainant.

                                                                                                 O R D E R

                   In the result, the Complainant’s case is allowed on contest against the O.Ps.  The O.Ps  are jointly and severally liable as such they are directed to refund the amount of Rs.8,87,429.72/- including security deposit of Rs.1,00,000/-,account transfer amount of Rs.1,27,429.72,expenses of Rs.30,000/- incurred on installation of 8(Eight) numbers CCTV, stock point maintenance expenses of Rs.1,00,000 and unseen expenses of Rs.30,000/-  together with Rs.4,00,000/- as compensation to the complainant within 45 days from the date of receipt of this order, failing which the award amount shall be realized @ 18% interest per annum till its actual date of realization and the complainant is at liberty to take appropriate steps under law for realization of award amount.

                   This case is disposed of accordingly.                                                                                                               

                    A copy of the order supplied to the parties at free of cost on their appearance as mandated by the Consumer Protection Act, 2019. The   parties to the case can also download same from 

          File be consigned to the record room along with a copy of this Judgment duly signed in each page.

                                                                  PRONOUNCED ON   Dtd.08.11.2024