Tamil Nadu

StateCommission

FA/55/2018

Interacha Building Products P Ltd - Complainant(s)

Versus

Chennai Fashions India Pvt Ltd - Opp.Party(s)

R.Manohar

31 May 2022

ORDER

IN THE TAMILNADU STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI.

 

Present:   Hon’ble THIRU JUSTICE. R. SUBBIAH           :     PRESIDENT

                 THIRU R. VENKATESAPERUMAL                             :      MEMBER

 

F.A. No. 55 of 2018

(Against the order passed in C.C. No.136 of 2007 dated 20.12.2017 on the file of the D.C.D.R.F., Chennai (South).

 

Tuesday, the 31^st day of May 2022

 

1.  Interarch Building Products Pvt.Ltd.,

     A1/6, Vasant Vihar, 

     New Delhi – 110 057

     Rep. by its Managing Director

     Arvind Nanda  

 

2.  Mr. Amit Gupta

     Regional Manager (South)

     Interarch Pvt. Ltd.,

     119, A.F. Block, 6^th Street

     11^th Main Road, Anna Nagar

     Chennai – 600 040.

 

3.  Mr. Vijayan

     Officer-in-Charge

     Interarch Pvt. Ltd.,

     Interarch Ware House

     91/11.102,

     Chennai Bangalore Highways

     Irrungattukottai

     Chennai – 602 105.                                        .. Appellants/

Opposite Parties 1, 2 & 4

 

- Vs –

 

 

1.   Chennai Fashions India Pvt. Ltd.,

      Rep. by its Managing Director

      K.P. Hashim

      135, 3^rd Street

      Ganapathy Colony

      St. Thomas Mount Road

      Chennai – 600 016.                                           .. 1^st Respondent/ Complainant

 

2.    Mr. Sumeet Khanna

       Director

       Arch – Tech India Pvt. Ltd.

       Golden Gate, Flat No.3

       Ground Floor

       No.33 (Old No.11) Habibullah Road

       T. Nagar, Chennai – 600 017                            .. 2^nd Respondent/

3^rd Opposite Party

   

Counsel for Appellants/ Opposite Parties 1, 2 & 4 :  M/s. R. Manohar

Counsel for the 1^st Respondent/ Complainant        :  Absent

Counsel for the 2^nd Respondent/3^rd Opposite Party: M/s.R. Saravana Kumar

                                                                                     

                                                                  

This appeal is coming before us for final hearing on 04.04.2022 and on hearing the arguments of the counsel for the appellant and on perusing the material records, this Commission made the following :-

O R D E R

R.SUBBIAH J., PRESIDENT

1.       This appeal has been filed by the Appellants / Opposite Parties 1, 2 & 4 under Section 15 of the Consumer Protection Act, 1986 as against the order dated 20.12.2017 made in C.C. No.136 of 2007 on the file of District Consumer Disputes Redressal Forum, Chennai (South), allowing the complaint filed by the 1^st respondent herein.

 

2.  The appellants are the opposite parties 1, 2 & 4.  The 1^st respondent is the complainant.  The 2^nd respondent is the 3^rd opposite party.  For the sake of convenience, parties will be referred as per their ranking in the complaint.   

 

3.   The factual background culminating in this appeal is as follows: 

The case of the Complainant is that the complainant is a private limited company.  The business scheme of the company does not involve a very high or large scale manufacturing or commercial activity involving employment of many regular employees or multipurpose activities to make huge profits.  The complainant company may eventually get from the trading activities that will never be more than just sufficient for a normal and decent livelihood for its first directors.  In order to commence and shelter the self-employment business, the complainant explored the viability to purchase a pre-engineered building instead of constructing a building, for installation in the proposed site at Irungattukottai, Sriperumbadur, Kancheepuram MGR District, Tamilnadu, in a conventional manner involving huge expenditure.  The bilateral negotiations for purchase of a pre-engineered building and the terms of agreement between the complainant and the 1^st opposite party in the matter, culminated into a purchase order dated 02.04.2005.  As per the terms and conditions of the Purchase Order, the 1^st opposite party agreed to furnish a pre-engineered steel building and install the same in the proposed factory site for an all inclusive price of Rs.34,00,000/-.   The said price of Rs.34,00,000/- as mutually agreed and finally accepted was, for designing, engineering and preparation of erection drawings, manufacturing, supplying, transportation and erection of the pre-engineered building at the above site.  Based on the mutually agreed terms and conditions of the contract of supply, the complainant paid the sum of Rs.34,00,000/-. The opposite party also received the payment and acknowledged receipt of the above, vide their receipts dated 27.04.2005 and 22.07.2005.  In confirmation with the terms of supply, the opposite party had given the drawings of the proposed pre-engineered building to the complainant.  The complainant returned the same duly signed with his comments within the prescribed time limit and the 1^st opposite party’s authorised representative had acknowledged receipt of the same on 21.06.2005.  On receipt of the approved drawings, the 1^st opposite party was bound to schedule the delivery of goods to ensure that there was no part delivery and was bound to complete the supply of the pre-engineered building to the complainant within eight weeks from that date.  Unfortunately, contrary to the terms and conditions of the supply, after receiving the advance payment, the 1^st opposite party failed and neglected to supply the goods to the complainant without any valid reason.  The failure and deficiency of service on the part of the 1^st opposite party disabled the complainant to depute his Engineer to inspect the consignment and to issue the requisite certificate to them to produce the same before their bankers to negotiate the Letter of Credit.  The opposite party never intimated the complainant the readiness of the full consignment for delivery.  Instead they have been attempting to deviate from the mutually agreed, accepted and settled terms and conditions of the agreement as clearly detailed in the Purchase Order.  Even as on 15.10.2005, the 1^st Opposite Party did not take up production for the pre-engineered building.  On that day, the 3^rd opposite party instructed the 1^st opposite party not to take up the production and the production was to be taken up only after the complainant established the Letter of Credit.  Further, the 1^st opposite party have been imposing on the complainant unsustainable and illegal terms and various conditions outside the scheme of the agreement and even preferred to raise baseless allegations and claims against the complainant.  The complainant in good faith asked the 1^st opposite party to arrange the entire materials of the project ready, enabling him to depute his Engineer to inspect the same and to establish the Letter of Credit.  However, the 1^st opposite party deviated from the agreed terms of the contract and went ahead with further false and baseless allegations and categorically told the complainant that they would not accept the inspection clause in the Letter of Credit.  Hence, on 09.08.2006 the complainant again intimated the 1^st opposite party that his bankers would give them an assurance to open the Letter of credit, the moment they intimate his bankers their readiness to deliver the material in one consignment.  The complainant thereafter has been waiting for the confirmation of readiness to despatch the materials, to depute his engineer to inspect the materials and to issue the certificate for negotiation of the Letter of Credit, immediately on despatch of the material to his site.  Instead of intimating the readiness of supply, the 1^st opposite party preferred to indulge in irrelevant communications evidently to avoid and evade from the mutually agreed and accepted terms and conditions of the Agreement leading to the execution of the Purchase Order dated 02.04.2005.  The complainant had finally called upon the 1^st opposite party to intimate the time limit, for their readiness to deliver the PEB in one shipment at the mutually agreed price, terms and conditions detailed in the Purchase order.  However, the 1^st opposite party has neither supplied the goods as per the mutual agreement nor intimated the complainant of their readiness as to when they would be able to supply the goods.  But, the 1^st opposite party has been demanding the complainant for price increase and insisting to open a Letter of Credit in its favour without inspection of the materials to be supplied without any schedule.  Further, the 1^st opposite party has been indulging in unjust enrichment by utilising for its business purposes, the advance payment of Rs.3,40,000/- paid by the complainant.  Hence, on 03.10.2006, the complainant caused a lawyer notice to the 1^st opposite party intimating that he did not wish to have any further business dealings with them and requested to refund the advance payment of Rs.3,40,000/- with 24% interest per annum from the date of receipt of the advance by the 1^st opposite party till the date of refund.  Nevertheless, the 1^st opposite party failed and neglected to supply the material or to refund the advance payment received by them.  On the other hand, they have caused a reply notice to the complainant, containing only false allegations and untrue facts.   Hence, the present complaint has been filed by the complainant, seeking the following directions to the opposite parties :-

1. To pay the complainant an amount of Rs.3,40,000/- with 24% interest per annum from the date of receipt of the said advance amount until the date of refund of the same, and
2. To pay a sum of Rs.15,25,000/- towards damages as calculated.

 

3.   The said case was resisted by the opposite parties by filing a reply stating that the contract between the complainant and the opposite parties is for construction of a pre-engineered steel building for the export factory at Sriperumbudur.  As such, the complainant is not a consumer as per Section 2(d) of the Consumer Protection Act, 1986.  The Purchase Order dated 02.04.2005 was placed on the 1^st opposite party by the complainant for the supply of pre-engineered steel building for their second export factory unit at Sriperumbudur.  This fact shows that there has been a commercial transaction between the parties, as the complainant intended to construct a second export factory unit. This fact would clearly show that the pre-engineered steel building to be supplied by the 1^st opposite party is for commercial purpose of running a factory by the complainant and the same is not covered by the provisions of the Consumer Protection Act, 1986.  Further, the complainant was an intending purchaser of the pre-engineered steel building and the complainant himself committed breach of Agreement, thereby causing huge losses to the 1^st opposite party. Under law, since the material was not received by the complainant, the provisions of Consumer Protection Act do not apply at all.  The fact that the complainant is engaged in the business of export and an order for pre-engineered steel building was made on the 1^st opposite party for setting up of their second export factory unit, would show that the complainant is involved in huge business activity.  A private limited company carrying on its business activities, cannot be said to be doing a business in the nature of a self employment and the averments to the said facts are absolutely false.  It is true that 10% of the advance amount was paid to the 1^st opposite party.  Balance 90%  was payable by Letter of Credit, which has to be established two weeks prior to the despatch of the material, as per the terms mentioned in the purchase order dated 02.04.2005.  But, the Letter of Credit was not opened.  The pre-engineered steel building was duly built by the 1^st opposite party as per the purchase order dated 02.04.2005.  Because of the acts and omissions on the part of the complainant, the opposite party suffered huge losses and the 1^st opposite party was forced to sell the pre-fabricated building as a scrap for a total sum of Rs.9 lakhs.  As such, Rs.34 lakhs has been spent by the 1^st opposite party for the construction of the pre-engineered steel building.   But, the 1^st opposite party had received only a sum of Rs.3,34,000/- as advance and Rs.9 lakhs being the value of the building material sold as scrap and thus the opposite party has suffered a loss of Rs.21,66,000/-.  In fact, the complainant had committed breach of contract and is liable to pay a sum of Rs.21,66,000/-.  Hence, it is the submission of the appellants/ opposite parties that there is no deficiency of service on the part of the opposite parties and sought for dismissal of the complaint.

 

4.   In order to prove the case, on the side of the complainant 7 documents were filed along with proof affidavit, which were marked as Exhibits A1 to A7.  On the side of the opposite parties, 10 documents were filed and marked as Ex.B1 to Ex.B10, along with proof affidavit.

 

5.  The District Forum, after analyzing the entire evidence on records, has come to the conclusion that the opposite parties had deliberately refused to inspect the finished product of the pre-engineered steel building.  Therefore, there is deficiency of service on the part of the opposite parties.  Thus, directed the opposite parties to pay a sum of Rs.3,40,000/- with interest at the rate of       9% p.a. from the date of complaint and Rs.35,000/- towards mental agony with cost of Rs.5000/-.   Aggrieved by the same, the present appeal is filed. 

 

6.   The main submission of the counsel for the appellants/ opposite parties is that the nature of transaction that had taken place between the parties are purely a contractual obligation and further the 1^st respondent/ complainant is not a consumer as defined under Section 2(d)(i) of the Consumer Protection Act, 1986.  On merits, there was breach of contract on the part of the 1^st respondent/ complainant only and the appellants/ opposite parties had incurred a loss of Rs.21,66,000/-.  Hence, the appellants/ opposite parties were in the process of filing a civil suit for recovery against the 1^st respondent/complainant.  Therefore, the complainant has filed a false and frivolous complaint against the opposite parties.  Since the transaction in question is of a contractual obligation, the complaint is not maintainable.  He also relied upon the judgment of the Hon’ble Supreme Court reported in 1995 SCC (3) 583 in the case of Laxmi Engineering Works vs. P.S.G. Industrial Institute.  Thus, he sought for setting aside the order of the District Forum.

 

7.  Keeping in mind the submissions made by the counsel for the appellants/ opposite parties, we have carefully gone through the material available on record.    

 

8.   It is the submission of the counsel for the appellants/ opposite parties that there had been commercial transactions between the parties and the 1^st respondent/ complainant intended to construct a second export factory unit.  It clearly shows that the pre-engineered steel building to be supplied by the 1^st opposite party was for commercial purpose of running a factory by the 1^st respondent/ complaint.  But it has been stated by the complainant that the company is only a registered Small Scale Industrial Unit, incorporated with an intention to combine the savings of the individual family members into the common stock of the company and enjoy the returns for their livelihood.  Therefore, the complainant company comes under the purview of Consumer Protection Act.  But, we are not inclined to accept this submission of the complainant, since the nature and character of the business would show it is purely a commercial transaction between the parties.  Further, it is  stated by the counsel for the appellants/ opposite parties that the complainant had committed breach of contract and is liable to pay a sum of Rs.21,66,000/-;  As such, there is a solid claim by the opposite parties as against the complainant. The above details would go to show that, in this case when disputed question of facts are involved, which cannot be gone into or decided by this Commission in a summary manner, particularly when these types of complicated issues need elaborate evidence, in the form of examination / cross examination of witnesses and marking of wholesome documents.  Also, the complaint is not maintainable on the question of commercial nature of transaction, apart from the segment of merits.  Anyhow, it would be appropriate for the parties to approach the concerned civil court. 

 

9.    In the result, the Appeal is allowed by setting aside the order dated 20.12.2017 passed by the District Consumer Disputes Redressal Forum, Chennai (South) in C.C. No.136 of 2007, with the observation that, since disputed facts are involved in the matter, the same cannot be decided in a summary manner by the Consumer Forum and it is for the parties to approach the civil court concerned for proper and wholesome adjudication of the issues revolving around disputed facts.

 

 

R. VENKATESAPERUMAL                                                           R.SUBBIAH

         MEMBER                                                                          PRESIDENT

 

 

Index :  Yes/ No

AVR/SCDRC/Chennai/Orders/May/2022