BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION: AT HYDERABAD.
F.A.No. 1152 OF 2008 AGAINST C.C.NO.178 OF 2008 DISTRICT CONSUMER FORUM-II HYDERABAD
Between
SIFY Limited
2nd Floor, Tidel Park No.4
Canal Bank Road, Taramani
Chennai-600 113, India
SIFY Limited
126, 1-7-289/A, 3rd Floor, Jaya Mansion
Behind IOC Building, S.D.Road,
Secunderabad
Appellant/opposite party
A N D
I NET
Dr.No.709, Sai Ram Complex,
Above Andhra Bank, Dilsukhnagar
Hyderabad-060, rep. by its Proprietor
Mr.K.Veera Reddy S/o Siva Rami Reddy
Respondent/complainant
Counsel for the Appellants Sri V.Padmanabhan
Counsel for the Respondents Sri B.A.Prakash Reddy
QUORUM: SRI SYED ABDULLAH, HON’BLE MEMBER
&
SRI R.LAKSHMINARSIMHA RAO, HON’BLE MEMBER
THURSDAY THE SEVENTEENTH DAY OF JUNE
TWO THOUSAND TEN
Oral Order ( As per R.Lakshminarsimha Rao, Member)
***
The opposite parties no.1 and 2 in C.C.No.78 of 2008 on the file of District Forum-II, Hyderabad are the appellants herein.
The complainant filed the complaint contending that the opposite parties promised to allot franchise in favour of the complainant for providing the following services:
(1) Sify iWay
1. High Speed Internet
2. Mobile Recharge (any service provider across India)
3. Internet Telephone (crystal clear calls)
4. Pay utilitiy bills (Telephone, Electricity etc.)
(2) Sify Travel
1. Train Tickets
2. Air Tickets
3. Hotel Bookings
(3) Sify Education
1. Online Tuition (Maths – NCERT, Sify Mathguru
Science (Std. 1-10) Sify Class Teacher
The complainant issued a post dated cheque towards the cost of the franchise fees of Rs.71,180/-. Subsequently, the opposite parties collected an amount of Rs.60,000/- from the complainant. Franchise agreement was executed on 7.11.2007. The opposite parties had provided browsing only from 16.11.2007. As the other facilities were not provided the complainant requested for providing the same. In this regard the complainant had sent email on 13.2.2008 and 14.2.2008 that it had sustained loss of Rs.50,000/- from November 2007 to February 2008 and requested the opposite parties to refund the amount. The opposite party no.1 sent email dated 14.2.2008 that the cheque issued by the complainant was bounced.
There is no forfeiture clause in the agreement in case the opposite parties committed default. The opposite parties committed deficient service by not providing the facilities to the complainant till 31.12.2007. In view of the urgency of the matter the complainant has filed the complaint without issuing notice to the opposite parties. The complainant would have benefited at the rate of Rs.10,000/- per month from the month of November 2007 had the opposite parties provided the service as promised. The complainant invested an amount of Rs.3 lakh for allotment of franchise of the opposite parties by way of purchasing computers, peripherals, cabins, chairs etc.
The opposite parties remained exparte.
The proprietor of the complainant firm K.Veera Reddy has filed his affidavit and documents Exs.A1 to 5.
The District Forum has allowed the complaint holding that the opposite parties failed to provide internet facilities as agreed by them in favour of the complainant.
Feeling aggrieved by the impugned orders, the opposite parties preferred the appeal contending that the complainant is not a consumer within the meaning of Sec.2(1)(d)(i) of C.P. Act and as per the clause 7 of the Franchise Agreement dated 7 .11.2007 the jurisdiction over any matter covered by the agreement was restricted to the courts at Chennai. The complainant has used the facilities provided by the opposite parties for commercial purpose. The complainant had terminated the service by violating the agreement without issuing statutory notice as contemplated under clause 6 of the franchise agreement.
The points for consideration are:
1) Whether the complainant is a consumer as defined under Section 2(1)(d)(i) of C.P.Act?
2) Whether the courts and tribunals in the State of Andhra Pradesh have the jurisdiction to adjudicate the matter?
3) To what relief?
POINT NO.1 The learned counsel for the opposite parties has submitted that the complainant is not consumer since the internet services provided by the opposite parties to the complainants were used for commercial purpose. The franchise agreement entered into between the parties provides authorization in favour of the complainant to use the facilities provided by the opposite parties in connection with railway ticket booking, cancellation and enquiry services to the customers and for being appointed as the franchisee the complainant has to pay one time fees and security deposit. The fees of Rs.10,000/- is refundable. The opposite parties would pay commission to the complainant out of the revenue collected by the complainant from the customers. Clause “K” of the franchise agreement which deals with the payment of commission to the complainant reads as follows:
“ Sify shall invoice the franchisee for its revenue share against the collections made by franchise from the customers”.
The complainant being the franchisee of the opposite parties would provide services to its customers which were obtained by it from the opposite parties. The revenue collected by providing services as contemplated under the franchise agreement to the customers by the complainant was to be shared between the complainant and the opposite parties and the share of the complainant is termed as ‘commission’. Sec.2(1)(d)(i) of the C.P. Act defines a person as consumer only if he utilizes the services provided by the service provider exclusively for his own necessity and in case he utilizes the service for any commercial purpose it is governed by the commercial purpose concept which in turn is subject to the utilization by the person for eking out his livelihood as self employment.
The complainant is a firm and there is no mention of any utilization of service for self employment purpose in the complaint. The complainant had utilized the service rendered by the opposite parties and sold it to the customers There was an agreement for sharing of the profits out of revenue collected by the complainant and as such the relationship between the complainant and the opposite parties cannot be termed as the consumer qua the service provider.
Wikipedia describes Franchising as the practice of using another firm's successful business model. The word 'franchise' is of Anglo-French derivation - from franc- meaning free, and is used both as a noun and as a transitive verb. Each party to a franchise agreement has to protect several interests and perform several obligations. Usually the franchise agreement is in favour of the franchiser and tends to be unilateral in favour of the franchiser. The franchisee has to be careful while entering into the Franchise agreement as the agreement is a contract between the franchiser and the franchisee governed by the Contract Act and Specific Relief Act which provides for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract.
The matter in relation to the franchiser and its franchisee is not a consumer dispute in order to be raised before the consumer forum. Hence, we are of the opinion that the complainant is not a consumer entitled to invoke the jurisdiction of the consumer forum. The point is answered against the complainant.
POINTS NO.2 & 3 In view of the finding that the complainant is not a consumer and cannot invoke the provisions of the C.P.Act, we do not feel it necessary to take this point for discussion. However, the complainant is at liberty to approach the proper forum and in such case he would be entitled to the benefit of the Section 14 of the Limitation Act.
In the result the appeal is allowed by setting aside the order dated 30.6.2008 passed by the District Forum. Consequently the complaint is dismissed with the observation that the complainant can seek redressal of his grievance in proper forum. No costs.
Sd/-
MEMBER
Sd/-
MEMBER
Dated 17.06.2010
KMK*
