PER S.K. NAIK, MEMBER

1.      Mr. A.K. Naikwadi, Proprietor, M/s Zoom Colour Lab - Kodak Express, Kolhapur, has filed this complaint alleging supply of defective goods and deficiency in service by the opposite parties.  In his original complaint, he had prayed for the following reliefs :-

“Rs.17,50,000/- as cost of refund of machine purchased Gretag-740 ML (Minilab);

Rs.6,25,000/-      towards simple interest calculated @ 16.5% p.a. from 01.07.2000 to 31.08.2002 & further interest till date of payment;

Rs.21,84,000/-   towards loss of profit @ Rs.3500/- per day (actually as per Kodak projections of maximum Rs.10,700/- per day profit on higher side and Rs.9000/- profit per day on lower side) & further payment on same basis till date of realization;

Rs.75,000/-         towards free photography not supplied along with purchase of Gretag Mini Lab 740+;

Rs.14,000/-         towards two Free Media Kits not supplied along with purchase of Kodak Picture Maker; and

Rs.2,00,000/-      towards mental agony and harassment.”

2.      However, when the matter was listed for hearing before this Commission on the 29^th of November, 2002, the prayer for loss of profit of Rs.21,84,000/- as also the prayers against free photography amounting to Rs.75,000/- and towards two free media kits amounting to Rs.14,000/- were not pressed.  Notice thereafter was issued to the opposite parties directing them to file their written version.  Of the four opposite parties, service of notice did not materialize with respect to Gretag Imaging Trading AG, Switzerland, opposite party no.4, and the complainant on 5^th of March, 2004 sought the deletion of the said opposite party from the array of parties.  Yet another development was that the name of the first opposite party M/s Kodak India Limited was changed to Kodak India Pvt. Ltd.  Thus, the complaint as it stands now is against Kodak India Pvt. Ltd., opposite parties no. 1 and 2, and Photoquip India Ltd., opposite party no.3 for the compensation of Rs.17,50,000/- towards cost of the machine, Rs.6,25,650/- as simple interest thereon and Rs.2,00,000/- towards mental agony and harassment.

COMPLAINANT’S VERSION :

3.      Complainant, A.K. Naikwadi, who was already in the business of developing of photography film rolls and photography printing, was offered/lured by the representatives of Kodak India Pvt. Ltd., opposite parties no. 1 and 2, to open a Kodak Express Lab Outlet at Kolhapur and persuaded him to buy a brand new Gretag Master Lab Machine 740 ML + for Rs.17,50,000/- from them.  By assuring him that this would be the second such Kodak Express Lab in the city of Kolhapur, the first being M/s Subhash Photographics since 1990 and further that they will be protected against any competition by giving an undertaking that no new Kodak Express Outlet would be opened in the city for the next three years and further assuring regular supply of spare parts and prompt and timely after-sale service, repair and maintenance etc. and further explaining that the said Gretag Master Lab Machine 740 ML+ did not require highly skilled operator and had a printing capacity of 500 prints per hour of 4"x6” photographs and above all convincing him that the lab would yield Rs.9000/- profit per day, and a host of other benefits.  The complainant was made to believe that it was an opportunity/good chance for him to improve his earnings and, therefore, he agreed to their suggestion to set up such a lab with the new machine even though it entailed hiring of a new premises.  On 2^nd of May, 2000, the complainant received a quotation for the supply of Gretag Master Lab Machine along with a list of standard accessories for a price of Rs.17,50,000/-.  A brochure provided to the complainant made various tall claims including about the capacity of the machine that it was capable of giving 500 prints of 4”x6” in an hour.  Convinced that the new machine with the promised capacity will indeed enhance his level of earning manifold, the complainant placed an order with the opposite parties, first by paying a sum of Rs.1,00,000/- as advance and subsequently the balance amount of Rs.16,50,000/- on 27^th of June, 2000.  On receipt of the full payment, the machinery which was directly delivered in packed condition at the complainant’s premises could be installed by the engineer sent for the purpose by the opposite parties on 31^st of August, 2000 only partly as he found it difficult to commission the machine fully.  Another engineer Mr. Bhupen Mestri deputed for the purpose, however, managed to commission it with great difficulty on or about 6^th of September, 2000. No follow up visit was made by any other engineer/technician/expert even though promised at the time of the commissioning that such a visit would be made on the 30^th of September, 2000.  The complainant alleges that soon after it’s commissioning, he discovered that the machine could not produce the promised number of prints and further that the speed was not constant and consistent.  As against the assured 500 prints per hour, it was capable of producing only 170 to 180 prints per hour.  Additionally, there was humming sound in the machine and frequent blub burning problem.  He has contended that because of the under-rated capacity and the defects in the machine, it not only consumed more power but took more time for developing, processing and printing of the film rolls frustrating his ambition of better earning from the lab.  The matter was brought to the notice of the opposite parties, who rather than rectifying any defect tried to persuade the complainant to buy one more brand new mini lab model 2600E manufactured by Noritsu Koki Co. Ltd., Japan marketed by them at a cost of Rs.12,50,000/- and also develop and print about 100 photo film rolls every day.  Apprehending that the complainant was being taken for a ride and also because of his inability to invest further, the complainant did not agree to the proposition.  Problem of the complainant was further compounded when the opposite parties went back from their assurance not to open similar lab in Kolhapur city without his written consent at least for a period of three years and introduced 6 Kodak Express Colour Labs during the period, besides introducing 23 Kodak Photo Shops in the city resulting in fierce competition.  The complainant also alleges that the opposite party Kodak India Pvt. Ltd. indulged in unfair trade practice, inasmuch as they started selling second hand reconditioned single size photographic mini lab called Micro Machines costing Rs.4,00,000/- to Rs.4,75,000/-.  Buyer of these machines were also given the same name as Kodak Express Lab Outlet which was in direct conflict and violation with the representation made to him.  It has further been alleged that despite repeated complaints, including those in writing about the problems being faced, the opposite party finally responded by deputing a representative of opposite party no.3, Photoquip India Ltd., just two days before the expiry of the warranty/guarantee period of the machine, who in his report though stated that the machine was working in good condition the complainant had clearly remarked that the low speed of the machine has not been rectified and the bulb burning problem continued.  The only defect rectified by the engineer was with regard to the humming sound which was duly acknowledged by the said engineer.  Thus, the complainant tried his best to bring it to the notice of the opposite parties that he was furnished wrong, false, misleading, improper and incomplete information and representations with regard to the machine and its capacity resulting in huge financial loss but failed to get any relief from the opposite parties.  He issued a lawyer’s notice elaborating in detail the defects in the machine and gross deficiency in post commission service but no reply thereto was received even though vide their letter dated 27.12.2001 and 28.01.2002 it was stated that the matter was under consideration of opposite party no. 3 to resolve the matter, which never came about nor was any reply furnished.  Under these circumstances and finding no other way to get his grievance redressed, the complainant was constrained to approach this Commission by filing this consumer complaint.

OPPOSITE PARTIES’ VERSION :  

4.      On service of the notice, the opposite parties have contested the complaint and have filed their written versions denying the allegations in the complaint.  They have refuted that there was any defect in Gretag Master Lab Machine 740+ supplied to the complainant nor has there been any deficiency in rendering necessary service after the said machine was installed.  Opposite parties no. 1 and 2 in their written version have raised a preliminary objection that the complainant purchased the machine for commercial purpose and would, therefore, not fall within the definition of ‘consumer’ as envisaged under the Consumer Protection Act, 1986.  It has been contended that the complainant wanted to maintain his monopoly in Kolhapur and is scared of competition in his business.  His failure to compete with other Kodak Express Labs in the city is the reason behind the complaint to find fault with the machine for malafide reasons.  It has been denied that any assurance was ever given to the complainant that no Kodak Express Lab Outlet would be opened in the city of Kolhapur for the next 3 years.  Allegation of earlier promise to M/s Subhash Photographics in 1990 not to open any new lab during the next year has been denied and it has been stated that it was a mere coincidence that no such lab was opened until the year 2000.  It has been contended that opening of Kodak Express Lab Outlet as well as number thereof depended upon the business opportunity available at a particular place and the opposite parties never given any undertaking much less seeking any written consent of the complainant to open any new outlet.  With regard to the purchase of Gretag machine, it has been stated that of the many models available it was the choice of the complainant to go for the Gretag Master Lab Machine 740+ dependent on his budget and expected workload and after considering all the pros and cons thereof.  The complainant after carefully going through the literature pertaining to the said machine giving complete details of its capacity and standard system of operation and, therefore, he cannot later on blame that there was any misrepresentation by them.  They have further denied that they exerted any pressure on the complainant to set up the lab at Rajarampuri or to carry out interior decoration as alleged.  According to them, it was the complainant who himself selected the location to have brisk business.  It has also been denied that the machine could not produce the promised print as per the specification.  In so far as post commission complaints were concerned, they were readily attended to and rectified.  According to them, these visits revealed that the complainant was facing competition from other Kodak Express Lab Outlets and was in the habit of making the complaints in order to shift the blame onto the opposite parties by finding fault with the machine, which did not exist.  The opposite parties have denied all the allegations in their written version and have contended that the complaint is totally ripe and is misconceived and have prayed for its dismissal.

5.      Opposite Party No.3, Photoquip India Ltd., the manufacturer of the machine in their written version, in addition to the objection that the complainant is not a ‘consumer’ as the machinery had been purchased for commercial purpose, has raised another objection with regard to the maintainability of the complaint on the ground of pecuniary jurisdiction.  It has been contended that after the complainant has deleted/dropped the claims of Rs.21,84,000/-, Rs.75000/- and Rs.14,000/-, only three items are left out.  Out of these three items, an amount of Rs.6,25,650/- has been claimed as interest.  According to opposite party no.3, interest cannot be included in the compensation amount as it depends on the discretion of the Commission and cannot be taken as sacrosanct.  Therefore, after deducting the amount of interest, the total of remaining two items work out at Rs.19,50,000/- (which is less than the minimum requirement of Rs.20,00,000/- to invoke the jurisdiction of this Commission).  Additionally, it has also been contended that the complaint is bad for non-joinder/mis-joinder of necessary parties, inasmuch as the Insurance Company has not been impleaded as an opposite party and further that there was no privity of contract between the complainant and opposite party no.3.  Dismissal of the complaint has been prayed on these scores.  On merits has been averred that there was no manufacturing defect in the machine as claimed by the complainant.  On the contrary, the employees of the complainant were not fully trained nor were they using proper raw material to get the optimum results.  Adopting and reiterating the stand of opposite parties no. 1 and 2 on the allegations, opposite party no.3 has also prayed for the dismissal of the complaint.

6.      In the rejoinder to the written versions filed by the opposite parties, the complainant has outright rejected the explanations offered as not based on their own catalogue/brochure and the documents and inspection report of their engineers and has reiterated the averments and allegations made in the complaint.  In support of their respective stand, the complainant has filed his own affidavit while on behalf of opposite parties no. 1 and 2 Prakash Rosario and Anil Sachdeva have filed their affidavits and on behalf of opposite party no.3 Dhaval J. Soni has filed his affidavit.  The parties have also relied upon the documents and correspondence exchanged between them in support of their respective claims.  Written synopsis of arguments have also been filed on behalf of the complainant and opposite parties no. 1 and 2.

7.      We have perused the records carefully and heard the learned counsel for the parties and have also considered their written submissions. 

8.      The case set up by the complainant primarily revolves around the following aspects :

(i)           Whether the Gretag machine which was sold by opposite parties to the complainant had a rated capacity of 500 photo prints of 4” x 6” size per hour?

(ii)          Whether the opposite parties no. 1 and 2 had lured the complainant by giving an assurance that they would not permit the setting up of any other similar photo lab in the city of Kolhapur for the next three years so as to prevent any competition so that the complainant is in a position to make full use of the machine and receive at least 40% return on his investment?

(iii)        Whether there has been any deficiency, firstly in the installation of the machine and subsequently with regard to the post commission inspection/service?

(iv)        Whether the opposite parties have restricted/stopped supply of raw materials on which they had complete monopoly which prevented the complainant from operating the machine and, thus, resulting in huge financial losses.

9.      Before we proceed to discuss and decide on these aspects, it would be appropriate to consider the preliminary objections that have been raised by the opposite parties.  It has been contended that the complainant does not fall within the definition of a ‘consumer’ as defined under Section 2(1)(d) of the Consumer Protection Act, 1986 as the machine in question was purchased by the complainant for commercial purpose.  In this regard, it may be stated that the complainant has specifically made an averment that he purchased the machine by raising a bank loan for earning his livelihood for daily basic needs of bread and butter and family maintenance through self-employment assisted by his brother.  To belie this contention of the complainant, the opposite parties in the additional evidence adduced by them have contended that the complainant to run the photo lab had employed an assistant by the name of Udai Mansingh Powar, who in his affidavit has stated that apart from him there were two other persons working at this lab.  While the same additional evidence has not been countered in specific terms by the complainant, the said Udai Mansingh Powar has neither given the names of the other two persons who were engaged by the complainant in the running of the lab nor has any affidavit been filed on behalf of the other persons.  A perusal of the premises from the photograph filed in the additional evidence, it appears that only the machine has been installed in a cubicle with hardly any space for more than a person to man the machine and the counter.  The Supreme Court of India in the case Madan Kumar Singh V. District Magistrate, Sultanpur And Others [(2009) 9 SCC 79] while considering whether the appointment of a driver to ply a truck would take the owner of the truck out of the definition of ‘consumer’, it has been clearly held that “Appellant purchasing a truck to earn his livelihood by means of self-employment, held, notwithstanding appointment of a driver to ply the said truck, appellant would still be a consumer”.  Drawing support from this ruling by the Hon’ble Apex Court, it may be stated that it would be too much to think that an individual running a photo lab shop will be expected to continuously man the shop without any break.  Engagement of an assistant/helper to man the counter/shop, therefore, would not be justified to say that the owner was running the shop for commercial purposes as his primary objective is to earn his livelihood by processing the film rolls of the customers.     

10.    Insofar as the objection of opposite party no.3 that the complaint does not fall within the pecuniary jurisdiction of this Commission is concerned, we have noted the same only to be rejected as even after the deletion of claims of Rs.21,84,000/-, Rs.75000/- and Rs.14,000/-, as per the opposite parties own admission the remaining claim is pegged at Rs.19,50,000/-.  The pecuniary jurisdiction of this Commission at the time of filing the complaint being above Rs.20,00,000/- and the complainant in any case being entitled to interest and some damages for mental agony and harassment, the value would definitely exceed Rs.20,00,000/-.  It may be mentioned here that in order to entertain a complaint, the value of the goods or services and compensation, if any, claimed by the complainant has to be taken into account as per Section 21(a)(i) of the Consumer Protection Act, 1986.  This objection, therefore, has no legs to stand and is accordingly rejected.

11.    Insofar as the other preliminary objections that the dispute being complicated one should be referred to a civil court and that the complaint be dismissed for non-joinder/mis-joinder of parties are concerned, we reject the same as the dispute involves the adjudication of a simple matter which we are fully competent to deal with.  In this regard, reference may be made to the judgment of the Hon’ble Supreme Court in the case of J.J. Merchant (Dr.) V. Shrinath Chaturvedi [(2002) 6 SCC 635], in which it has been held that the procedure under the Consumer Protection Act, 1986 is adequate vis-vis civil suit, the head of the National Commission being a retired Judge of the Supreme Court is competent to decide complicated issues of law or facts.  The Hon’ble Apex Court has also held that it would not be proper to relegate a remedy to the civil court after inordinate delay.  In the present case, the complaint was filed 10 years ago and there being no complicated question of law or fact, we reject the contention of the learned counsel for the opposite parties that the matter be relegated to the civil court for adjudication.

12.    Coming to the merits of the case, it may be stated that the adjudication of the complainant is within a very narrow compass.  The complainant’s main grievance is that opposite parties no. 1 and 2 in their endeavor to promote the sales of their machine painted a rosy picture with regard to the capacity of Gretag Machine assuring him that it was capable of producing 500 prints of 4” x 6” size within one hour and that they will be able to make a profit of Rs.9000/- per day, meaning thereby that the opposite parties promised to provide photographic paper and chemicals at discounted rate in an uninterrupted manner in addition to prompt service for maintenance.  This was the main reason why the complainant opted for the purchase of the said machine at a huge cost of Rs.17,50,000/- by obtaining a loan from the bank.  The other allegation is that the opposite parties had undertaken not to franchise or set up any other photo lab in the city of Kolhapur for a period of three years from the date of its commissioning so as to protect the complainant from undue competition.  The third objection is that the opposite parties had failed to service/attend to the complaints after the machine was supplied.

13.    On the question whether the opposite parties at any stage advocated that the Gretag machine was capable of producing 500 prints of 4” x 6” size photographs per hour, we find that the same is clearly borne out from the brochures supplied by both the Kodak India Pvt. Ltd., opposite parties no. 1 and 2, and the Photoquip India Ltd., the dealer/opposite party no.3, that the capacity of the printer for 4”x6” size photos is 500 prints per hour.  The same has also been stated by K.M. Kapadi & Co., engaged by the complainant as an expert to assess the capacity of the said machine, who in their report at page 307 of the paper-book have stated that while both Kodak India Pvt. Ltd. and Photoquip India Ltd. in their pamphlets claimed that the machine was capable of giving 500 prints per hour, on their examination it was found that the machine could produce only 173 prints of 4”x6” size in an hour.  In similar vein is the report of Mr. M.V. Gundale, Industrial Electronics Engineer of Divya Sales, Kolhapur, who after examining the machine in his report has stated that maximum printing speed of the machine was only 172 photo prints of 4”x6” size per hour.  The opposite parties questioned the reliability of these reports on the ground that these were procured by the complainant without seeking any order from this Commission and that the investigations were done by them without the presence/participation of the opposite parties.  We do not find substance in this objection since the reports have been submitted by qualified and experienced persons who have only referred to the claim/data given in the brochure supplied by the opposite parties.  Above all, we also find that the complainant referring to the catalogue/booklet at page 305 of the paper-book has mathematically derived from the processing time/processing speed indicated therein that the machine was capable of developing only 250 prints per hour.  It may be stated here that earlier this Commission vide its order dated 30.11.2005 had directed the engineer of the opposite parties to visit the machine and report its status, which, however, was of not much use as the engineer complained that the complainant did not permit him to undertake proper inspection.  Subsequently, the Registrar of the Kolhapur District Forum was directed by this Commission to visit the site in the presence of both the parties and submit his report.  The Registrar visited the premises of the complainant on the 5^th of January, 2006 in the presence of the engineer of the opposite parties and the complainant and in para-3 of his report (page 372 of the paper-book) has stated as under :-

“However, the representatives and Engineer of Deptt. Kodak Company did not show the following aspects of the machine

a)   Actual working performance of the machine

b)   Machine output at rated capacity

c)   Desired quality of the prints

d)   They did not start the machine at all but have done visual observations only.”

14.    From a cumulative appreciation of the evidence as discussed above, we are left with no manner of doubt that even though the opposite parties had promised that the machine supplied was capable of giving 500 prints per hour, in actual practice it was capable of producing only 173 to 250 prints per hour at the most.

15.    We also find from the brochure supplied by the opposite parties that the proposition to buy the said machine would give a minimum return of around 40%.  The brochure at page 22 of the paper-book states as under :-

“Our Kodak Express store owners attest that the Kodak Express Program is a very profitable proposition.  It is an investment that offers around 40% returns in an industry with a huge long terms growth potential.  To join our nationwide chain we expect you to have at least 300 sq. ft. prime retail space, investment in the range of 16-25 lakhs.”  

16.    We have, therefore, no doubt that the opposite parties have made tall claims with regard to the capacity of their machine and have also lured the complainant to buy such a machine and set up a lab at a space suitable to them while retaining the monopoly of supply of raw materials.  It has further been alleged by the complainant that on being pointed out that the said machine was not capable of developing 500 prints per hour, they attempted to advise him to purchase another machine again with the promise that it will enhance his capacity.

17.    Insofar as the allegation that the opposite parties failed to provide prompt and adequate post-installation service in regard to maintenance, it has not been denied by the opposite parties that the first engineer Maulesh Dholakia, who was deputed to install the Gretag machine on 31.08.2000, was not equipped to the task and gave up, as a result of which another engineer Bhupen Mestri was deputed to complete the installation, which was finally accomplished on 06.09.2000 after two months of the arrival of the Gretag machine which was delivered to the complainant on 05.07.2000 at his premises.  Thereafter, there has been a series of correspondence addressed by the complainant to the opposite parties, which have met with hardly any response.  When finally a legal notice was slapped on them, the opposite parties no. 1 and 2 first replied vide their letter dated 27.12.2001 as under :-

“The undersigned is taking instructions from the concerned people to your notice in detail.  In the meanwhile, nothing is contained in your aforesaid notice is deemed to have been accepted by us.  We would reply to you within 30 days from the date of receipt hereof.”

18.    This was followed by another communication dated 28.01.2002 to the following effect :-

“Photoquip India Ltd. have been in touch with your clients with a view to resolve this issue.  We understand that this process will take some time and therefore we request you not to take any action as advised earlier.  We will reply to your notice in detail after Photoquip (opposite party no.3) confirms to us that there is no satisfactory resolution of the matter.” 

19.    However, despite their commitment to file a detailed reply, neither opposite parties no. 1 and 2 nor opposite party no.3 ever filed a reply to the legal notice.  Obviously, they had no solid defence to the allegations of the complainant. 

20.    In their written versions while denying that there was any misrepresentation with regard to the capacity of the machine to develop 500 prints per hour, it has been stated that the capacity of the machine is dependent on a number of factors “such as population of negatives, operatives efficiency, print processing speed, work floor and more importantly, the way the machine is used by the staff”.  It has further been stated that the overall capacity of the machine depends on a number of variables and the complainant has wrongly assumed that 500 prints will be produced with different rolls and negatives.  We are not at all convinced with this line of argument as the machine was simply not capable of developing more than 250-300 prints of the 4”x6” size per hour, as already discussed.  Even now it is not the case of the opposite parties that the machine is capable of producing 500 prints for the simple reason that had that been so, their engineer Bhupen Mestri who installed the machine on 06.09.2000 would have demonstrated to the complainant that the machine was capable of turning out 500 prints.  Subsequently too when Maulesh Dholakia (another engineer of the opposite parties who was deputed first to install the Gretag machine at the complainant’s premises) visited the premises of the complainant on 22.11.2000 the only explanation offered was that the slow speed of the machine will increase with the passage of time.  Deficiency in service is further established from the fact that the opposite parties did not provide any warranty/guarantee document, which is unbelievable for the simple reason that such a costly and sophisticated machine would be supplied by the manufacturer without any promise of warranty/guarantee.  Their deficiency can be further gauzed from the fact that on the repeated requests of the complainant, one Yogesh Choudhary, an engineer of opposite party no.3 Photoquip India Ltd., visited the complainant’s premises only two days prior to the expiry of the warranty. He promised free maintenance visits which were not carried out.  Interestingly, we also find from the document on record at page 262 of the paper-book that these very opposite parties appears to have settled a dispute with one Sanjay Tukaram Talvanekar outside the consumer fora by offering a compensation of Rs.10,00,000/-.  All this is indicative of the fact that the opposite parties were indeed alluring the gullible consumers in the hope of providing phenomenal returns on their investments and have been putting them in great difficulty/financial burden.

21.    Thus, viewed from any angle, we are of the considered view that the opposite parties have supplied defective equipment and committed deficiency in service and are liable to compensate the complainant.

22.    Coming to the quantum of compensation, we find that the complainant has paid a sum of Rs.17,50,000/- towards the cost of the machine and has hardly run it for a period of 10 to 12 months.  He had to borrow money from the bank for the purpose and also invested in the shaping up of the photo lab as per the requirements of the opposite parties.  While considering this aspect, we also take into account the conduct of the complainant, inasmuch as he appears to have intimidated the engineers of the opposite parties in properly inspecting the machine under the orders of this Commission and further that he had not maintained the machine even if it was giving less productivity.  We are not able to understand the reason behind keeping the asset in such a shabby condition as is apparent from the report of the Registrar of the Kolhapur District Forum.  However, from the background of the dispute between the parties it appears that the complainant faced difficulties with regard to the procurement of raw materials such as chemicals and photographic paper, which could be procured from and supplied only by the opposite parties and, therefore, he may not have been in a position to run the machine.  We, therefore, consider it appropriate to direct the opposite parties to refund the cost of the machine i.e. Rs.17,50,000/- jointly and severally along with a nominal interest of 6% per annum from the date of the complaint till its payment.  The opposite parties are directed to pay the awarded amount within a period of six weeks.  On the payment being made, they would be entitled to receive the salvage/machine from the complainant and the complainant would create no hindrance in handing over the salvage/machine to the opposite parties.  

24.    The complaint, accordingly, is allowed in the above terms, leaving the parties to bear their respective costs.