Present:-

          For the appellants     :         Sh. Sandeep Suri, Advocate

          For the respondent   :         Sh. Munish Goel, Advocate

JUSTICE GURDEV SINGH,  PRESIDENT :

                    This appeal has been preferred by the appellants/ opposite parties against the order dated 20.10.2010 passed by the District Consumer Disputes Redressal Forum, Fatehgarh Sahib (in short “District Forum”), vide which the complaint filed by the respondent/complainant under Section 12 of the Consumer Protection Act, 1986 (in short “Act”) was accepted and the opposite parties were directed to return the FDR of Rs.5 lakhs, along with interest at the rate of 8% p.a., after deducting the amount of interest already paid by them. They were also directed to pay Rs.10,000/-, as compensation for mental agony and harassment and Rs.5,000/-, as litigation expenses.

2.                As per the allegations made by the complainant, in his complaint, he is proprietor of Hans & Company and entered into a Credit Franchise Agreement (in short “CFA”) with the opposite parties on 29.12.2006 for earning his livelihood. After entering into that agreement he established its office at Sirhind by spending Rs.3 Lakhs.  He had been paying rent at the rate of Rs.6,000/- per month till closure of the bank. Such a huge money was invested by him on the assurance of the opposite parties that he would be doing the banking business in their name. At the time of executing CFA they obtained  FDR No.2782541, which was to mature on 14.01.2008 and was for an amount of Rs.5 lakhs; on which the interest was payable at the rate of 8% p.a., for security purposes. They terminated the CFA on their own and closed its business in the area of Fatehgarh Sahib. After the termination of that agreement they have no right to retain the FDR, which they failed to return despite repeated requests. As a result of the termination of CFA, he has suffered a loss of Rs.3 lakhs; which was the amount invested by him on the structure of the bank. On account of the deficiency in service on their part he suffered mental tension and monetary loss, as he could not enjoy his own amount of Rs.5 lakhs. For that deficiency in service he is entitled to Rs.50,000/-, as compensation and Rs.5,500/-, as litigation expenses. He prayed for the issuance of the directions accordingly to the opposite parties, in addition to the direction to return the FDR along with up to date interest.

3.                The complaint was contested by the opposite parties, who filed joint written reply before the District Forum. In the written reply they did not dispute that the CFA was entered into by them with the complaint and that the FDR was taken as a guarantee.  They denied the other allegations made in the complaint and pleaded that the complainant was required to perform the duties and obligations as mentioned in the agreement but he failed to do so. It was his duty to ensure that the loans sourced by him were not in default and in case of such default they were entitled to adjust the amounts against the security deposited by him. The complainant was appointed as Credit Franchise/Vikas Sahyogi. Out of the cases disbursed through him, 16 cases are currently live/to be paid, which are detailed in para No.2 of the preliminary objections. In view of that fact, the guarantee so obtained from the complainant is not refundable. The complainant is not a consumer within the definition of ‘Consumer’ as contained in the Act. The complaint has been filed in respect of the transactions arising out of a commercial agreement. It had only appointed the complainant as a Credit Franchise of the bank and he was only required to provide such services as were mentioned in the agreement and even the money was to be deposited with them under the terms and conditions thereof. The present dispute arises out of commercial transactions and, as such, it is outside the purview of the Act. He prayed for dismissal of the complaint with costs.

4.                Both the sides produced evidence in support of their respective averments before the District Forum, which after going through the same and hearing learned counsel on their behalf allowed the complaint, vide aforesaid order.

5.                We have heard the learned counsel for both the sides and have carefully gone through the records of the case.

6.                It has been submitted by the counsel for the appellants/opposite parties that the District Forum failed to record any concrete finding that the complainant falls under the definition of ‘Consumer’ as contained in the Act. Without recording such a finding the complaint could not have been decided on merits. According to the complainant himself the agreement in question was Credit Franchise Agreement and vide that agreement he had obtained the credit franchise of the bank. He does not become a consumer as a result of such an agreement. The franchise holder is not a consumer. In support of his submissions he placed reliance on the order of this Commission passed in F.A. No1228 of 2013 decided on 13.02.2014  [Harmanjit Singh Dhillon Vs. M/s S.K. Education Pvt. Ltd.]

7.                On the other hand, it has been submitted by the counsel for the complainant that the judgment so relied upon by the counsel for the opposite parties is distinguishable. It was not only the franchise agreement but the complainant also availed of/hired the services of the opposite parties. He clearly falls under the definition of the ‘Consumer’. The District Forum did not commit any illegality while recording the findings in his favour.  

8.                It is very much clear from the perusal of the agreement,  which was entered into between the parties and which has been proved on the record, that it was a Credit Franchise Agreement and the complainant was appointed as a Credit Franchise. In fact, he was to provide service to the customers on behalf of the opposite parties, for which he was to be paid his charges. It was held in Softspec Software Pvt. Ltd. Vs. Digital Equipment (India) Ltd. [2002(2) CPJ 5] 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.”

It was held in General Manager, Madras Telephones and Ors vs. R. Kannan [I(1994) CPJ 14.] as under:

          “A franchise holder is only a licensee of the granter 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 granter of the franchise in as much 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.  Consequent, 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-à-vis the Revision Petitioner, Telecom Department.”

9.                By following these judgments, it was held by this Commission in Harmanjit Singh Dhillon’s case(Supra) that a franchise holder is not a Consumer vis-à-vis the grantor of the franchise. In view of the law so laid down, it is to be held that the complainant does not fall within the definition of ‘Consumer’ as contained in the Act. Therefore, the complaint filed by him was not maintainable and was liable to be dismissed on that ground alone. 

10.              In the result, the appeal is allowed, the order passed by the District Forum is set aside and complaint filed by the complainant is dismissed.

11.              The sum of Rs.25,000/- deposited at the time of filing of the appeal along with interest which has accrued thereon, if any, shall be remitted by the registry to the appellants/opposite parties by way of a crossed cheque/demand draft after the expiry of 45 days of the sending of certified copy of the order to it.

12.              The appeal could not be decided within the statutory period due to heavy pendency of court cases.