(Per Shri Narendra Kawde, Hon’ble Member)
[1] All complainants are family members. Each complainant has preferred separate complaint against the same opponent for same cause of action alleging deficiency in service for supplying of defective machineries of Automatic Shuttless Rapier Looms Model K-88. Each complainant has purchased two sets of machines from the opponents, Itema (Shanghai) Textile Machinery Ltd. based at China. All these complaints were heard finally together as the facts and circumstances of each case are identical and the opponent is one and the same. In view of this, all complaints are disposed off by this common judgement.
Cases in brief:-
[2] By an agreement dated 20/07/2008 executed between each complainant and Itema (Asia) Ltd. Complainants purchased two machines each at the cost of the US$1,20,480. Manufacturer of the machinery are Itema (Shanghai) Textile Machinery Ltd. based at 98, Done Xing Road - Songiang Industrial Zone, Shanghai 201613 China. Installation of the machinery was complete in all sense by 12/02/2009. From the inception, mechanical, electronic and software problems crept in and therefore, the machinery could not work properly with its full strength as promised at 360 RPM. Repeated complaints addressed to Itema Weaving (India) Pvt.Ltd. based in Mumbai (presumed to be branch of main opponent, namely, Itema (Shanghai) Textile Machinery Ltd.) were sent to redress the problem to restore smooth working of the loom machines. With the help of engineers from Coimbatore, opponents carried out certain repairs to the machines during the period from 20/06/2009 to 22/10/2010 (between this period on several occasions). Yet the correctness of the problem to ensure full scale working at 360 RPM could not be achieved. Complainants are supplied with defective machinery by indulging into unfair trade practice as defined U/s.2(1)(r) of the Consumer Protection Act, 1986.
[3] Complainants relied on the technical report filed by Mr.Mahendra Pawar, Textile Consultant about the mal-functioning/defective functioning of the machines. Technical problems in spite of repeated repairs by the opponents was not resolved to ensure functioning of the machines to the full speed at 360 RPM and therefore complainants were put to loss, as desired optimum production could not be achieved. Request for replacement of these machines with new version R-880 was not complied with by the opponent. Complainants have stated that these machines were brought and used by each complainant exclusively for purpose of livelihood by means of self-employment. Therefore, complainants are consumers as defined U/s.2(1)(d)(ii) of the Consumer Protection Act, 1986 exclusion. For failure of the opponent to replace defective machinery with the new version R-880, these consumer complaints are filed claiming replacement of the defective machinery with the new version and direction to pay an amount of Rs.88,20,958/- to the complainants in each complaint.
[4] It was clarified by the complainant that firstly consumer complaints bearing no.37/12/, 38/12, 39/12, 40/12/ and 41/12 were filed before the Hon’ble National Commission by each complainants separately. By order dated 26/03/2012, all the complaints were disposed off with observations granting the prayer of the complainants to return these complaints to the complainants for being presented before the appropriate Consumer Fora in accordance with the Law within a period of 30 days from the date of the order. Thereupon, the complainants have filed these consumer complaints on 24/04/2012 before this State Commission i.e. within a given period of 30 days.
[5] Cause of action as presumed to have been arisen on 22/10/2010 in favour of the complainants when the opponent lastly repaired the machines and it is continuous one as the machines are defective and not functioning as per promised standard and specifications.
[6] These consumer complaints are filed praying for directions to the opponents to replace defective machineries with new version, namely, R-880, which are presently manufactured by the opponent and also claimed an amount of Rs.88,20,958/- in each complaint for compensation, installation, custom duty paid and finally for mental agony and towards costs of litigation as per the break-up in the para 6 of the complaints.
Defence :-
[7] Opponents have appeared by filing written version contesting the claim of the complainants in each case. Main contentions as per the written version available on record are that the complainants are not consumers under the provisions of the Consumer Protection Act, 1986 as there is no deficiency in service on the part of the opponent. Complaints suffer with infirmity of non-joinder of necessary parties and mis-joinder of the parties as the complainants have not impleaded executants of the agreement to sale of the machines, namely, M/s.Itema (Asia) Ltd., who are based at Hongkong nor the manufacture of the machinery, namely, M/s.Itema (Shanghai) Textile Machinery Ltd. as necessary parties required for proper adjudication of the claim of the complainants. Complaints further suffered from want of territorial jurisdiction as defined under the provision of the Consumer Protection Act, 1986 as the manufacturer, M/s.Itema (Shanghai) Textile Machinery Ltd. are based in China and the opponent-M/s.Itema Weaving (I) Pvt.Ltd., whose office is located in Mumbai is not Branch Office of the manufacture, at all (Emphasis Supplied). Agreement for sale of the machines has been signed between the complainants and M/s.Itema (Asia) Ltd., whose office is located at Hongkong. Said agreement has provided arbitration and arbitrator is to be appointed in accordance with National and International Arbitration Rules of the National and International Chamber of Bergamo, Italy. Governing law for the contract is in accordance with the law in England and the place of the arbitration as notified is Hongkong at Hongkong International Arbitration Centre. There is no privity of contract with the opponent located in Mumbai, namely, M/s.Itema Weaving (I) Pvt.Ltd., as the agreement to sale of the machines has been executed by M/s.Itema (Asia) Ltd. M/s.Itema Weaving (I) Pvt. Ltd. located in Mumbai is neither a branch of the manufacture nor supplier of the machines. Under the Contract of Agency Agreement, M/s.Itema Weaving (I) Pvt. Ltd. is an agent of M/s.Promotech SPA, M/s.Itema (Switzerland), M/s.Itema Weaving (China) Ltd. Thus, by the provisions of agency agreement, M/s.Itema Weaving (I) Pvt. Ltd. are the technician to perform and discharge start-up related work to install the machineries and the said conditions have been stipulated in the agreement to sale dated 20/07/2008. Under the provisions of Articles incorporated in the agency agreement, they are agent and their status, duties and liabilities have been spelt out more particularly, under the Article 3 of the said agreement. As agent, they are prohibited to conclude transactions on behalf of the principal or otherwise represent the principal except with explicit or prior approval of the principal. There is no explicit prior approval to enter into transaction in the name of the principal and any violation/breach cast responsibilities directly and entirely on the agent. In the complainants’ case, M/s.Itema Weaving (I) Pvt. Ltd. is mere agent to perform technical duties in relation with installation and repairs of the machines thereafter.
[8] Opponent further contended that the complaints are barred by limitation as the same is filed after a period of 3 years from the date of cause of action of agreement/contract as the machines were commissioned on 12/02/2009 to the running conditions. Complainants have purchased the machineries after having studied the specifications thereof and with full knowledge.
[9] It was noticed by the opponent that the complainants got some parts replaced locally without the knowledge of this opponent which seriously affected the performance of the machine though technical training was imparted to the complainants. It was noticed by Deputy Engineer of this opponent concerned on visit that the complainants failed to carry out instructions given by the opponent for setting up the machines and it was found that poor quality of yarn was used. Repeated visits on receiving complaints to carry out certain repairs during warranty period and even replacement of certain parts (free of charge), the complainants were not satisfied and they went on dispatching complaints after complaints. Before expiry of the warranty period, the complainants sent e-mail to the manufacturer at Shanghai for extension of the warranty period upto 12/02/2010. As the complainants were fully aware that M/s.Itema Weaving (I) Pvt. Ltd. did not supply the machines nor they were running branch office of the manufactures. Opponent disputed the certificate dated 23/01/2012 of the technical expert, Mr.Mahendra Pawar about the non-functioning of the machines. Therefore, the opponent has prayed to dismiss the complaints with costs.
[10] We have heard learned counsel Mr.Jagtap for the complainants and learned counsel Mr.Piyush Shah for the opponent. With the help of both the counsels, we have perused voluminous record of each complaint.
Arguments of the Learned Counsel Mr.Jagtap for the complainants :-
[11] Mr.Jagtap, learned counsel for the complainants tried to establish the privity of contract between the parties on the basis of documents relied on by both the parties, namely, agreement to sale of the machines which was executed between the complainants (individual) on 20/07/2008 with the supplier, M/s.Itema (Asia) Ltd., though the manufacturer of the machines or M/s.Itema (Shanghai) Textile Machinery Ltd. based in China. Learned counsel further argued that M/s.Itema Weaving (I) Pvt. Ltd. are the agent of the manufacturer and they are running branch office at Mumbai which is within the jurisdiction of this State Commission as entire start-up work after sale as per the terms of sale incorporated in the agreement had been assigned to M/s.Itema Weaving (I) Pvt. Ltd. who have discharged this function by installing the machine and also attending the repair works on complaints of the complainants periodically. Repeated reference to M/s.Itema Weaving (I) Pvt. Ltd. in the sale agreement as presumed by the learned counsel does not absolve them from the discharge of their duties as agent of the manufacturer. Complainants are consumers as defined u/s.2(1)(d)(ii) of the Consumer Protection Act, 1986 exclusion, since all the complainants are running the business to earn their livelihood. All the machineries though were made functional by M/s.Itema Weaving (I) Pvt. Ltd. on 12/02/2009, immediately mal-functioning of machineries occurred and first such complaint was sent by e-mail dated 17/06/2009 and repeatedly till 23/05/2010. Admittedly, between 26/06/2009 and 22/06/2010, more than dozen times, engineer of M/s.Itema Weaving (I) Pvt. Ltd. repaired the machines but the problem of mal-functioning remain unresolved. Therefore, request for replacement with new version of machine R-880 manufactured by the opponent did not materialize, even though sale agreement provides for arbitration for any dispute between the parties when Sec.3 of the Consumer Protection Act, 1986 is additional remedy being invoked by the complainants.
[12] Since according to the learned counsel, the opponents have supplied defective machinery which could not run with the standard specifications warranted by the opponent with repeated problem of mal-functioning, complainants were put to heavy loss on account of lack of desired output. Repeated repairs and even replacement of certain parts by the opponent, M/s.Itema Weaving (I) Pvt. Ltd. bears testimony that the supply of machinery, per se, was defective which amount to unfair trade practice and deficiency in service as defined U/s.2(1)(o) and (r) of the Consumer Protection Act, 1986. Learned counsel relied on technical expert report submitted by Mr.Mahendra Pawar and Government Polytechnic, Solapur. Both the expert reports demonstrate technical flaws which are of serious nature.
[13] Learned counsel further submitted that the complaints are well within limitation as the last repair to the machineries was carried out by the opponent on 27/10/2010 which is supported by the last job card available on record. Firstly, consumer complaints were filed before the Hon’ble National Commission on 10/02/2012. Because of pecuniary jurisdiction, these complaints were disposed off by the Hon’ble National Commission by granting prayer to file the same before appropriate Consumer Fora in accordance with law within a period of 30 days from the date of order dated 26/03/2012 of the Hon’nble National Commission. Thereupon, immediately i.e. within a period of 30 days, present consumer complaints have been filed before this State Commission on 24/04/2012. Therefore, the provisions of Sec.24A of the Consumer Protection Act, 1986 as argued by the opponent will not be applicable.
[14] Quantum of loss worked out in each consumer complaint is supported by report of two chartered accountants. These chartered accountants have estimated profit during the specified period and thereafter actual production has been estimated which according to this report fall much short of expected production by each machine. Huge loss of production has been quantified to Rs.3,28,86,132/- in each case. Entire report of both the Chartered Accountants is also on record.
[15] About the objections of the opponent for not impleding proper parties in consumer complaints, it was submitted by the learned counsel that since M/s.Itema Weaving (I) Pvt. Ltd. are branch office of the manufacture of the machines, it was not felt necessary to implead the manufacturer in Shanghai or the suppliers/executants of sale agreement in Hongkong as necessary party to the complaints.
[16] Finally, the learned counsel relied upon the decision of the Hon’ble Apex Court in the matter - Vodafone International Holdings BV vs. Union of India and another - (2012) 6 Supreme Court Cases 613 and in the matter of - Cheema Engneering Services vs. Rajan Singh - (1997) 1 Supreme Courts Cases 131, to strengthen his arguments.
Arguments of learned counsel Mr.Piyush Shah for the opponent:
[17] Learned counsel Mr.Piyush Shah clarified that he has been pleading the case on behalf of M/s.Itema Weaving (I) Pvt. Ltd., who are allegedly made opponent on behalf of the manufacture of the machineries under misconceived notion of they being Agent of manufacturer.
[18] Mr.Shah empathetically relied on the contentions raised in the written version. According to the learned counsel, there is no tangible document to establish privity of contract with the complainant. Agreement to sale is relied upon by the complainants. However, it no where shows M/s.Itema Weaving (I) Pvt. Ltd. as agent of the manufacturer or even for that matter of supplier (executants of the agreement). M/s.Itema Weaving (I) Pvt. Ltd. are merely technicians for undertaking start-up technical work of installation of the machines. It is clearly stipulated in the agreement to sale that manufacturer of the machine are M/s.Itema (Shanghai) Textile Machinery, based in China. Cost of machinery has been paid by the complainant and received by M/s.Itema (Asia) Ltd., based at Hongkong who have executed sale agreement. The learned counsel brought to our notice payment details made through Bank of India, Main Branch, Kolhapur available in the complaint compilation. Name of Benificiary clearly indicating in the Issue of Documentary Credit is M/s.Itema (Asia) Ltd., Room 808, Tower 1, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Hongkong and this document was sent by Bank of India, Kolhapur to “Banka Intesa Sanpaolo S.P.A. Hongkong”. Admittedly, M/s.Itema (Asia) Ltd. has executed the sale agreement with the complainants for machines on 20/07/2008. In none of the documents available on the record as pleaded by the learned counsel, M/s.Itema Weaving (I) Pvt. Ltd. shown as branch office of the manufacturer or of the supplier of the machines. Consumer Complaints are based not for defective services rendered by this opponent, but pertain to the manufacturing defects. Complainants have not come out with justification as to why they have failed to implead manufacturers and the suppliers of the machines as necessary party and made opponent as unnecessary party. It was well open for the complainants before filing the consumer complaints to implead manufacturers and the suppliers (executants of the agreement) as necessary party for proper adjudication of the case.
[19] Further it is submitted that except for rendering technical services on behalf of the supplier, M/s.Itema (Asia) Ltd., this opponent did not derive any authority to conclude any transaction whatsoever on behalf of said supplier. As per the terms and conditions of the agency agreement executed on 16/07/2010 between the parties, even this opponent has been working as agent since 2008 for the same M/s.Itema (Asia) Ltd. to render technical services since 2008 under the terms and conditions of the contract entered into between the parties.
[20] Learned counsel brought to our notice the e-mail dated 11/02/2010 addressed by the complainants to the representative of the manufacturer based in Shanghai thereby requesting to extend the warranty period of the machines as the complainants were fully aware that the manufacturer of the machines, M/s.Itema (Shanghai) Textile Machinery Ltd. were having their base in China. This e-mail satisfies to establish that this opponent has no privity of contract whatsoever either as an agent or the branch in Mumbai of the manufacturer or the supplier as erroneously presumed to be by the complainants.
[21] It was further submitted that it is the opponent who brought on record documents of contracts entered into between the complainants with the supplier, namely, M/s.Itema (Asia) Ltd. and the terms and conditions of sale.
[22] Role of this opponent is strictly confined to the terms and conditions of agency agreement executed between the parties to attend to the technical work in their capacity as technicians as provided in Article 3 of the agreement which defines the status and duties of the agent. No where this opponent has been authorized or empowered to conclude transaction on behalf of the principal as there is no explicit prior approval of the principal to discharge such provisions. Mere repetition of name of this opponent in contractual documents that has been entered by the complainants with M/s.Itema (Asia) Ltd. does not, per se, cast any duty as agent of the manufacturer or for that matter, the supplier, M/s.Items (Asia) Ltd. Terms and conditions of the sale stipulated in the sale agreement clearly indicate that this opponent is the technician for undertaking the start-up work of the machinery. Moreover, the agency agreement executed among other three with M/s.Itema (Asia) Ltd. prohibits this opponent to receive any payment for the product sold. Unless there is prior approval of the principal in writing, this opponent in his capacity as technician agent is not authorized to make contracts, to make offers, accept orders on behalf of the principal or in any way to bind the principal. These terms of appointment as agent are effective from January, 2008 onwards. Only change in the latter agreement is about nomenclature of the first mentioned party in the agency agreement from M/s.Promatech SPA to ITEMA SPA.
[23] By no stretch of imagination, this opponent has any privity with the complainants except to render technical services under the terms and conditions of the agency agreement executed among the opponent and 1) Promatech SPA, 2) Itema (Switzerland) Ltd., 3) Itema Weaving Machinery (Chaina) Co.Ltd. and 4) Itema (Asia) Ltd. One of the last mentioned party is M/s.Itema (Asia) Ltd. who have actually accepted the order for supply of machinery, executed sale agreement with certain sale conditions and who finally received the payment through international bank transfer. Whether this opponent fell short of taking up replacement of machineries or not is a question not to be agitated by the complainants in their complaints.
[24] Finally, the learned counsel relied upon the decision by the Hon’ble Apex Court, Civil Appeal No.6656/08 decided on 14/11/2008 in the matter – Premnath Motors vs. Anurag Mittal, wherein it was held that the agent is not liable for acts of disclosed principal subject to the contract to the contrary as provided U/s.230 of the Indian Contract Act, 1872. Learned counsel further argued that the complaints in their original format cannot be adjudicated more particularly, for non-joinder and mis-joinder of the parties since the complainants have not approached this State Commission with clean hands. Therefore, consumer complaints deserve to be dismissed by imposing exemplary costs for consuming precious time of the State Commission being frivolous and vexatious u/s.26 of the Consumer Protection Act, 1986.
CONCLUSION:-
[25] Perused the voluminous record, documents relied upon by the parties with the assistance of learned counsels and elaborate arguments advanced by the counsels of the parties.
[26] Admittedly, manufacturer of the machineries-M/s.Itema (Shenghai) Textile Machinery Ltd., which are based in China. Agreement to sale has been executed by M/s.Itema (Asia) Ltd. who on receipt of order and the payment, supplied the machineries ordered by the complainants. Opponent, M/s.Itema Weaving (I) Pvt. Ltd. are technicians for discharging the start-up work of the machines. This Itema Weaving (I) Pvt. Ltd. has been appointed as agent under the agency agreement to discharge technical functions after sales of the machineries. Further, it is clearly mentioned in the start-up conditions of the agreement to sale that M/s.Itema Weaving (I) Pvt.Ltd. as technicians make themselves available at the site of the buyer for undertaking the start-up work. On perusal of the various job cards available in the complaint compilation, M/s.Itema Weaving (I) Pvt.Ltd. discharged their functions of installation of the machines and attending the technical complaints received thereafter. Even, it is admitted by the complainants that certain parts were replaced as goodwill gesture in addition to more than dozen services rendered to redress the technical fault. We do not find any documents to demonstrate that this opponent is party to the contract vis-à-vis the complainants except to render technical services in their capacity as technicians to the complainants under the stipulation of conditions appended to the sale agreement of machines. Even by virtue of agency agreement executed between the parties on 16/07/2010, no where authorizes this opponent to execute, transact any contract to receive any payment on behalf of the principals. Therefore, the argument of the complainant that this opponent, M/s.Itema Weaving (I) Pvt. Ltd. has privity of contract is totally unfounded and therefore, we do not agree with the arguments made on behalf of the complainants.
[27] Opponent’s objection to entertain these consumer complaints on the ground that complainants are not consumers is not acceptable to us in view of the statements made by the complainants in the complaints about earning their livelihood by means of self-employment by running business of these loom machines. Since such a statement made on oath supported by affidavit cannot be disbelieved. Moreover, opponent failed to lead documentary evidence to the contrary. Therefore, the complainants are covered under the provisions of Sec.2(1)(d)(ii) of the Consumer Protection Act, 1986.
[28] Last technical service rendered to the complainants is dated 27/10/2010, which is supported by the documentary evidence, namely, job card and e-mail in the record of the complaint compilations. It is consistent contention of the complainants that the machineries have not been functional and repeatedly were required repairs/replacement of certain parts. First consumer complaints submitted before the Hon’ble National Commission was on 10/02/2012 and the present complaints in obeyance of the prayer granted by the Hon’ble National Commission filed within the stipulated period of 30 days from the date of order i.e. 26/03/2012 passed by the Hon’ble National Commission. Viewed from any angle, cause of action in favour of the complainants arose on 27/10/2010 and the complaints were filed well within two years before the Hon’ble National Commission and even before this State Commission well within the period of two years from date of accrual of the cause of action. Therefore, the arguments of the opponents that application of the provisions u/s.24-A of the Consumer Protection Act, 1986 are not sustainable.
[29] As rightly pleaded by the learned counsel for the opponent, these consumer complaints pertain to deficiency in service for supply of defective machineries by the manufacturers/suppliers. There are no allegations of rendering deficient technical service by the opponent. Therefore, no deficiency in service as alleged can be attributed to this opponent in their capacity as an agent to attend technical works. Complainants have failed to explain as to why the manufacturers and the suppliers of the machinery have not been impleded as necessary parties. There is no satisfactory explanation whatsoever. The role of M/s.Itema Weaving (I) Pvt.Ltd. is clearly limited to render technical services only and on perusal of the record, admittedly right from 26/06/2009 to 22/10/2010, this technical agent have rendered in all 16 services as narrated in para 4 of the complaint by the complainants. Therefore, no fault can be attributed to the opponent, M/s.Itema Weaving (I) Pvt.Ltd. as technicians and certainly not for replacement of machineries as it was beyond their scope of work.
[30] Entire thrust of the complainants is for replacement of the machineries with new version, namely, R-880 which are presently manufactured by the manufacturers. During the course of arguments, it was brought to our notice that the prayer clause in the complaints are for replacement of the machineries, value of the machinery is US$1,20,480 for two machines (looms) and also prayer for compensation of Rs.88,20,958/- Value of the machines and compensation sought for exceeds Rs.1 crore. Learned counsel for the complainants submitted that complainants would like to scale down the prayer clause by adding prayer (b) clause as alternate clause. Permission was granted during the course of arguments. Accordingly, he undertook to file pursis to that effect. However, before the close of date, the complainant failed to file such pursis on record. Only on the next date i.e. 14/08/2014, the learned counsel Mrs.Archana Pise filed the pursis to that effect which was taken on record which limits the claim of the complainants for replacement of the machinery or alternatively payment of compensation of Rs.88,20,958/-.
[31] Having considered these cases in entirety and the aforesaid observations, complainants have miserably failed to explain as to why manufacturer and supplier, who executed the sale agreement have not been impleaded as necessary parties for proper adjudication of the cases. No further convincing explanation is available on record for impleading M/s.Itema Weaving (I) Pvt. Ltd. as allegedly branch head of the manufacturer as opponent, even though the complainants were fully aware about the legal status of M/s.Itema Weaving (I) Pvt. Ltd. since they represent only as a technician in their capacity as an agent. Complainants also failed to establish deficiency in service against rendering technical services against this opponent as it was will within knowledge that M/s.Itema Weaving (I) Pvt.Ltd. was not vested with such powers to replace the alleged defective machineries. Complainants further failed to demonstrate flow of power/authority of opponent-M/s.Itema Weaving (I) Pvt. Ltd. by adducing documentary evidence. It remains unexplained even to make manufacturer-M/s.Itema (Shenghai) Textile Machinery Ltd. and M/s.Itema Weaving (I) Pvt. Ltd., as opponents Nos.1&2 as independent parties. Complainants relied on the authority of the Hon’ble Apex Court in the matter of Vodafone International Holdings BV V/s. Union of India & Anr., (2012) 6 SCC-613 to strengthen their claims. On carefully going through the judgement, ratio cannot be made applicable as the facts and circumstances of the case are not identical with the case on hand. There is no justification as to how and on what basis the Chartered Accountants have quantified the loss on the basis of expected production as they are not expert in the field. No doubt, the complainants might have been facing operational difficulties of the machines as they have tried to make out the case right from the initial stage of the filing the complaints. There is no denial of the fact that this opponent-M/s.Itema Weaving (I) Pvt. Ltd. rendered technical services to install the machines and attend technical defects as and when required. Misreading of contracts as against this opponent, the complainants have proceeded to prosecute these complaints against this opponent. Proper remedy as it was within their knowledge was to take these issues either with the manufacturer directly or the supplier who have executed the sale agreement and received considerations. Complainants have failed to do so. It remains unexplained even to make manufacturer-M/s.Itema (Shenghai) Textile Machinery Ltd. and M/s.Itema Weaving (I) Pvt. Ltd., as opponents Nos.1&2 as independent parties. The complaints are devoid of merit and liable for dismissal as complainants have failed to establish privity of contract. We hold accordingly and pass the following order :-
ORDER
- Consumer Complaints bearing no.CC/12/106 to CC/12/110 stand dismissed.
- No order as to costs.
- Certified copies be furnished to the parties.
Pronounced on
27th August, 2014.
