BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM

VAZHUTHACAUD, THIRUVANANTHAPURAM.

PRESENT

SRI. G. SIVAPRASAD : PRESIDENT

SMT. BEENAKUMARI. A : MEMBER

SMT. S.K.SREELA : MEMBER

O.P. No. 298/2003 Filed on 01.08.2003

Dated : 31.07.2010

Complainant:

M/s B'Canti Infotech (P) Ltd., P.B. No. 6107, Jawahar Nagar, Thiruvananthapuram represented by its Managing Director.

(By adv. S. Reghukumar)

Opposite parties :

1. M/s Nexus Computers (P) Ltd., 4^th Floor, Kannenkeri Estate, Marine Drive, Ernakulam-682 031 represented by its Managing Director.

    

2. M/s IBM, No. 222, T.T.K Road, Alwarpet, Chennai- 600 018.

(By adv. C. Muraudhara)

This O.P having been heard on 03.06.2010, the Forum on 31.07.2010 delivered the following :

ORDER

SMT. S.K. SREELA, MEMBER

This complaint has been filed by the Managing Director of M/s B'Canti Infotech (P) Ltd. against the opposite parties alleging as follows: The complainant purchased an IBM server X232 as per the supply order No. BCI/10/supply order/2002 dated 12.01.2002 signed and delivered by the opposite party. The opposite party accepted the supply order and the system was delivered and installed at the complainant's server co-location site at Spectrum, Cochin on 18.02.2002. The system is having comprehensive warranty for 3 years from the date of installation. The complainant has purchased the system on the assurance of the opposite party that the system is impeccable in quality and has all the qualities and features mentioned in the brochure. The said system had inherent defects and showed problems right from the inception and was not working properly. The system did not have the qualities and features as assured by the opposite party. The complainant contacted the opposite party several times in order to rectify the defects. But the opposite party failed to rectify the defects even after several attempts and the complainant was restrained from operating the system properly as a result of persisting defects. The said defects had occurred within the warranty period, which clearly shows that the system has inherent manufacturing defects. The said system was showing network card problem again on 28.01.2003 and the same was reported to the opposite party. The technical personnel diagnosed the problem as network card not working. The opposite party failed to rectify the defect the problem still persists. As per the quotation, Ethernet card is having 10/100 mbps Ethernet capabilities. But when the complainant switched the card from 10 mbps to 100 mbps, the network card gets disconnected. The performance of the system deteriorated day by day and the opposite party miserably failed to rectify the defects. The failure of the opposite party to supply a system as per the quotation itself reveals the unfair trade practice and constitute deficiency in service. The said system did not have the quality and features assured by the opposite party. Moreover the system differs from the configuration mentioned in the brochure, which was issued by the opposite party. The opposite party also failed to comply with the terms of the warranty. The obligation under the warranty was not performed by the opposite party. The opposite party miserably failed to rectify the inherent manufacturing defects, which occurred within the warranty period and thus they have committed unfair trade practice and deficiency in service. Hence this complaint.

The 1^st opposite party remains exparte. The 2^nd opposite party has filed their version contending as follows: The complainant purchased an IBM Server X232 for use in its business which amounts to use for a commercial purpose and not for earning any livelihood. Therefore, the complainant is not a consumer under Sec. 2 (1) (d) of the Consumer Protection Act, 1986. The 1^st opposite party is a reseller of the 2^nd opposite party. The sales affected by the 1^st opposite party to its customers are independent transactions and the 2^nd opposite party is not privy to the transactions between the 1^st opposite party and its customers, except to the extent of providing warranty services in accordance with the standard terms and conditions pertaining to warranty that are provided along with the said products. Therefore, it is most humbly submitted, that there are no specific obligations owed by the 2^nd opposite party to any third party customer, other than those pertaining to warranty. In the light of the above, it is most humbly submitted, that the 2^nd opposite party owes no obligations to the complainant, whatsoever, and further, there is a complete misjoinder of parties in making the 2^nd opposite party, a party to this complaint. The 2^nd opposite party denies the allegations that the said server had any inherent manufacturing defects. The 2^nd opposite party submits that the said server was as per the standard specifications set out in the documents provided along with the said server. Further, since there were no inherent defects in the said server, it is submitted that the question of having failed to rectify the same or having failed to perform its obligations under the warranty does not arise. Therefore, it is hereby denied that the 2^nd opposite party was involved in any unfair trade practices or in providing any deficiency in service. Hence prays for dismissal of the complaint.

Both parties have filed their affidavits and Exts. P1 to P6 were marked on behalf of the complainant. There is no documentary evidence produced on behalf of the opposite parties. An expert has been appointed from the Forum to inspect the system in dispute and he has filed his report which has been marked as Ext. C1.

From the contentions raised, following issues arise for consideration.

1. Whether the complainant comes under the definition of consumer as stipulated in the Consumer Protection Act?

2. Whether the system supplied to the complainant suffers from manufacturing defect?

3. Whether the complainant is entitled for the reliefs claimed for and if the above is in affirmative from whom the complainant is entitled to claim the same?

Points (i) to (iii):- The purchase of the system from the 1^st opposite party has not been disputed. The server has been installed at the complainant's server co-location site at Spectrum, Cochin which is not within the jurisdiction of this Forum. Furthermore the opposite parties are also not within the territorial jurisdiction of this Forum. But since the question of territorial jurisdiction has not been raised by the opposite parties in their written version and since the same has not been challenged at the initial stage, we are not considering the same at this later stage when the entire proceedings have been completed as the objections regarding territorial jurisdiction should be taken at the earliest opportunity or the same may deemed to have been waived.

Ext. P1 is the supply order wherein the IBM X Series 232 server 1 quantity amongst other items have been mentioned. As per the version of the 2^nd opposite party, this complaint is not maintainable since the complainant is not a consumer as per the Consumer Protection Act. The complainant's counsel had vehemently argued that the server has got a warranty for 3 years from the date of installation and the complainant has pleaded that the defect has occurred within the period of warranty and the counsel relied on the decision of the National Commission reported in 2004 CTJ 1086 (CP) NCDRC in Meera & Co. ltd. Vs. Chinar Syntex Ltd. wherein it has been held that even if the subject set purchased was for commercial purpose, the complainant would be maintainable as it suffered defects during its warranty period. Further the counsel for the complainant has produced the decision of the Hon'ble Kerala State Consumer Disputes Redressal Commission, wherein the Hon'ble Commission has observed in Calicut Co-operative Urban Bank Ltd. Vs. New India Assurance Company Ltd. reported in 1(2010) CPJ 180 that, “Contention, services availed for commercial purposes, hence by virtue of amendment in Consumer Protection Act, complainant not a consumer-contention rejected-Amendment came into force on 15.03.2003-Cause of action for complainant arisen before Amendment Act 62 of 2002 – said amendment only prospective in nature and not retrospective”. In the instant case, as per Ext. P1, terms and conditions 6 provides three years comprehensive warranty for parts, places, system or labour. Furthermore it has been stated that onsite warranty should be applicable for three years even if the server is relocated at other places. The server has been installed on 18.02.2002, and as per Ext. P4 it could be seen that the 'network card is not working' as on 28.01.2003 which is well within the period of warranty. Hence in the light of the above decision, we find that the complainant is a consumer as per the Consumer Protection Act.

The main aspect for consideration now is whether the server suffers from any manufacturing defect as alleged in the complaint. In order to examine the server in dispute, an expert commissioner was appointed by this Forum and his report has been marked as Ext. C1. As per Ext. C1, the commissioner has reported the following problems during inspection that the Server failed to boot due to Bootable SCSI Hard Drive failure; the malfunctioning of Integrated Network Interface Card on the Mother Board due to erratic failure, which brought the server down and malfunctioning of IBM 232 Server Integrated Network Interface Card that generated a broadcosts storm, which brought down the Internet Service Provider (ISP) (Spectrum Company) Network that forced them to remove the server from their network. The commissioner has further reported that the main Mother Board is incurably defective, Disabling erratic Integrated Network Interface Card and should have replaced with an additional PCI Network Interface Card which will keep the server running as a temporary solution, should have replaced the faulty SCSI hard drive and the defects/malfunctioning of the server has occurred within the warranty period. Finally the commissioner has concluded that the Server is having inherent manufacturing defects, which cannot be repaired or rectified by any means. Fault has occurred in important, major and integral parts and component of the server. Hence only solution is the replacement of the server in whole. The said Ext. C1 stands unshaken since no objection has been filed against the same. Moreover the expert has not been cross examined by the opposite parties. In the above circumstance, the commission report stands uncontroverted and unchallenged. Hence we find that the server supplied to the complainant suffers from manufacturing defect.

The 2^nd opposite party has contended that the transaction if any between the 1^st opposite party and the complainant is an independent transaction and if the complainant is having any grievance only the 1^st opposite party is liable. As per Ext. P1, the warranty has been provided by the 1^st opposite party. The Ext. P6 'warranty information' of IBM reads as “IBM India Limited (IBM India) will provide or at its sole discretion through its Authorized Service Providers (ASP) will arrange to provide Warranty Maintenance Services to customer in respect of products (covers IBM PC products such as Servers, Desktops, Thinkpad, Aptivas and Options) supplied by IBM India, on the following Terms and Conditions, during the Warranty Period for these products as specified by IBM India from time to time”. From the foregoing discussions, we are of the view that the opposite parties are jointly and severally liable for redressal of the complainant's grievance.

In the result, the complaint is allowed. The opposite parties jointly and severally shall replace the whole server in dispute with a new one or in the alternative shall refund the cost of the same i.e; Rs. 3,54,500/- along with a compensation of Rs. 10,000/- and a cost of Rs. 5,000/- within a period of one month from the date of receipt of the order failing which the entire amount shall carry interest @ 9% from the date of order.

A copy of this order as per the statutory requirements be forwarded to the parties free of charge and thereafter the file be consigned to the record room.

Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the Open Forum, this the 31^st day of July 2010.

S.K. SREELA : MEMBER

G. SIVAPRASAD : PRESIDENT

BEENAKUMARI. A : MEMBER

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O.P. No. 298/2003

APPENDIX

I COMPLAINANT'S WITNESS :

NIL

II COMPLAINANT'S DOCUMENTS :

P1 - Copy of supply order dated 12.01.2002

P2 - Copy of system installation report.

P3 - Copy of investment layout.

P4 - Copy of report No. 452163 dated 28.01.2003

P5 - Copy of lawyer's notice.

P6 - Copy of the warranty document.

III OPPOSITE PARTY'S WITNESS :

NIL

IV OPPOSITE PARTY'S DOCUMENTS :

NIL

V COURT EXHIBIT

C1 - Commission Report

PRESIDENT

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