STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

1.       (RBT No.1355 of 2008 in F.A. No.2755 of 2002)

M/s Cumina Diesel Sale and Service India Ltd., Flat No.307, Megh Doot Building, 94, Nehru Palace, New Delhi through Sanjay Jagtap Executive Secretarial.

……OP-1/Appellant

V e r s u s

1.                 Shorewala Roller Flour Mills Pvt. Ltd., Kaithal through its Director Arun Kumar son of Sh. Charan Dass, r/o Kaithal.

2.                 M/s Harman Diesel Services, 112-113/03, HSIDC, Industrial Estate Karnal through Mr. Raman Malhotra its Proprietor.

3.                 The Oriental Insurance Company Ltd., Pehowa Chowk, Kaithal through its Manager.

              ....Respondents

Argued by: Sh. A.P. Bhandari, Advocate for the appellant.

                   None for respondents No.1 & 2.

                   Sh. D.P. Gupta, Advocate for the respondent No.3.

2.       (RBT No.510 of 2009 in F.A. No.2254 of 2002)

The Oriental Insurance Company Ltd., through Manager, Regional Office, LIC Building, Second Floor, Jagadhri Road, Ambala Cantt.

….OP-3/Appellant

V e r s u s

1.                 Shorewala Roller Flour Mills Pvt. Ltd., Kaithal through its Director Arun Kumar son of Sh. Charan Dass, r/o Kaithal.

2.                 M/s Cumina Diesel Sale Service India Ltd., Flat No.307, Megh Doot Building, 94, Nehru Palace, New Delhi through Sanjay Jagtap Executive Secretarial.

3.                 M/s Harman Diesel Services, 112-113/03, HSIDC, Industrial Estate Karnal through Mr. Raman Malhotra its Proprietor.

              ....Respondents

Argued by: Sh. D.P. Gupta, Advocate for the appellant.

                   None for respondents No.1 & 3.

                   Sh. A.P. Bhandari, Advocate for the respondent No.2.

BEFORE:      HON’BLE MR. JUSTICE SHAM SUNDER, PRESIDENT.

                   MRS. NEENA SANDHU, MEMBER.

                   S.  JAGROOP SINGH MAHAL, MEMBER.

PER  JAGROOP  SINGH  MAHAL, MEMBER.

1.                           The aforementioned two appeals, filed under Section 15 of Consumer Protection Act, 1986 (hereinafter to be referred as the Act), have been received by transfer from the Haryana State Commission under the orders of the Hon’ble National Commission.  This order will dispose of both the appeals, first filed by the appellant/OP-1 and the second filed by the appellant/OP-3, against the order dated 19.8.2002 passed by learned District Consumer Disputes Redressal Forum, Kaithal, Haryana (hereinafter referred to as District Forum) vide which the complaint filed by the complainant (respondent No.1 herein) was allowed qua appellants/OPs 1 & 3 only and they were jointly and severally directed to pay Rs.3,08,044.08 alongwith interest @ 12% p.a. from the date of complaint till realization of amount and Rs.2,000/- as compensation for harassment and mental agony, including the costs.

2.                           Briefly stated, the complainant/respondent No.1 purchased a 200 KVA Diesel Generating set from OP-1 vide invoice  No.35 amounting to Rs.7,22,000/- The said diesel generating set was received at the premises of the complainant on 15.3.1997 and was warranted for one year. The set was insured with the OP-3 for the period 23.5.1997 to 22.5.1998 against machinery breakdown insurance for Rs.7,22,000/-. It was further submitted that the OP-2, area dealer of OP-1, entered into an agreement dated 19.3.1997 with the complainant to provide service to keep the set in proper working condition for one year from 1.4.1997 to 31.3.1998.  The said set got breakdown by burst on 4.3.1998 and was shifted to OP-2 for repairs on the directions of OP-3.  The set was repaired from OP-2 and final bills dated 28.4.1998 for Rs.4,32,464.76 and dated 28.4.1998 for Rs.38,000/- were issued to the complainant.  Out of the said bills, the complainant paid an amount of Rs.3,10,000/- only to OP-2.  The investigator Col. Chandra Prakash also submitted the investigation report dated 8.6.1998 and the estimate for repair of the set was given by OP-2.  The complainant laid its claim on the OPs, but to no avail.   Alleging the aforesaid acts of OPs as deficiency in service on their part, the complainant filed the present complaint.

3.                           In their written reply OP-1 submitted that the Forum had no jurisdiction to try and entertain the present complaint; OP-1 has not sold the said engine; manufacturer of the engine has not been made a party and that the complaint was bad for non-joinder of necessary parties.  It has been submitted that the OP-1 was not responsible for the repairs required and carried out to the said set and further that there were maintenance lapses on the part of the complainant for which the complainant could not claim compensation from OP-1 for its own lapses regarding operations and maintenance etc.  Pleading that there was no deficiency in service or unfair trade practice on their part, OP prayed for dismissal of the complaint.

4.                           OP-2 in their written reply submitted that the complainant does not fall under the ambit of consumer; that complicated questions of law and fact were involved in the complaint for the adjudication of which, oral as well as documentary evidence was to be adduced, which was not permissible in the summary proceedings.  It has been stated that after receiving telephonic message from the complainant on 4.3.1998, the OP alongwith its Manager visited the customer’s site and made observations in its letter dated 4.3.1998 which was faxed to the then Area Service Manager of OP-1, Mr. J.R. Vohra for further guidance.  It has been admitted that they took annual service contract for the maintenance of two diesel generating sets of the complainant mills against the payment of Rs.8,000/-  for the period 1.4.1997 to 31.3.1998. It has been averred that the Area Service Manager of OP-1 directed the complainant to shift the set in question at the service center of OP-2 for proper inspection and estimate thereof.  It has been denied that there was any lapse on part of OP-2.  Pleading that there was no deficiency in service or unfair trade practice on their part, OP No. 2 prayed for dismissal of the complaint.

5.                           OP-3 the insurance company in their separate written reply submitted that there was no deficiency in service on its part and that the said set was under guarantee period of two years with OP-1.  It has been submitted that Col. Chander Parkash thoroughly investigated the matter and found that the set was under manufacturer’s warranty and the OP-3 was not liable to indemnify the loss in terms of the insurance policy.  It has been denied that the OP No. 3 was liable to pay any claim

6.                           The parties led evidence in support of their contentions. 

7.                           After hearing the learned counsel for the parties and perusing the record, the learned District Forum allowed the complaint vide impugned order dated 19.8.2002 as already mentioned in the opening para of the judgment.

8.                           The complainant has challenged the impugned order through this appeal.

9.                           We have heard the arguments of learned counsel for the parties and have perused the record.

10.                       In this judgment the respondent No.1/complainant is referred to as the complainant whereas the OPs are referred to in the same manner as mentioned in the complaint.

11.                       The contention of the ld. Counsel for OP-3/Insurance Company is that the entire proceedings before the ld. District Forum, except hearing of arguments and pronouncement of orders, appear to have been conducted only by the President and none of the Members appears to have participated.        According to him, since the proceedings have been signed only by the President, these are bad in law and the case should be remanded for fresh decision with the direction that all the proceedings should be conducted before and signed by the Members present.  In support of his contention, he referred to section 14(2) of the Consumer Protection Act, 1986 which reads as follows:

 (2) Every proceeding referred to in sub-section (1) shall be conducted by the President of the District Forum and at least one member thereof sitting together :

Provided that where a member, for any reason, is unable to conduct a proceeding till it is completed, the President and the other member shall continue the proceeding from the stage at which it was last heard by the previous member.”

                   The ld. Counsel argued that in view of this provision, all the proceedings are to be conducted and the order is to be signed by the President with at least one Member participating in the proceedings.  We do not find any merit in this contention.  When the proceedings were continuing, if there was any such alleged illegality in the procedure adopted by the ld. District Forum in continuing the proceedings by the President alone, this fact would have been challenged at the relevant time, but the OP/Insurance Co. kept silent and did not object to the same, which shows that the proceedings were being conducted by the President alongwith other Member or Members and there was no illegality in the procedure that is why the same was not opposed by the OP/Insurance Co. at the relevant time.  It may also be mentioned that no such objection was taken by the OP/appellant even in its memorandum of appeal and the present argument is an afterthought having been generated today after the lapse of 10 years.  The OP, in fact knew that the proceedings were being conducted correctly by the President and one or more Members together and there was no illegality in the same though the interim orders were being signed only by the President.  It is true that the order sheet has been signed only by the Presiding Officer, and not by the Members, but we are given to understand that since the case related to the period from 1999 to 2002, in those days, the proceedings, though were conducted by the President alongwith Members, yet the orders were signed only by the President and not by the Members.  It was only subsequently that the interim orders were ordered to be got signed from the Members also that now the interim orders bear the signatures of the Members constituting the quorum.

12.                       Otherwise also, sub Section (2), referred to above, refers to the proceedings after the proceedings mentioned in Section 13 are over.  It may be mentioned that Section 12 relates to the admission of the complaint and Section 13 to the summoning of the OPs, filing of the written reply, collection of evidence and allied matters.  Section 14(2) refers to the proceedings in connection with the passing of the final orders by the District Forum.  Since Section 14(1) refers to the proceedings after the collection of evidence is complete and relates only to the passing of the final order, we cannot say by implication of sub section (2) that the proceedings under Section 13 should also have been conducted by the President with at least one Member sitting.  Had this been the intention of the Parliament, then there was no necessity of referring to sub section (1) of Section 14 in sub section (2) thereof.  The provision then could be that “every proceeding by the District Forum shall be conducted by the President of the District Forum and at least one Member thereof sitting together”, but it is not so here because the quorum of two is required only after the evidence had been collected and the case becomes ripe for hearing arguments.  Viewed from this angle also, even if the proceedings had been conducted by the President alone, the same cannot be said to be contrary to law, especially when the order dated 12.8.2002 is signed by both the Members and the President to the following  effect :-

“Arguments heard. Written arguments also submitted on behalf of the respondents.  To come up on 19.8.2002 for order.”

      Sd/-                                Sd/-                                 Sd/-

(Member)                      (Member)                      (President)

Needless to mention that the impugned order is signed by all the 3 members of the District Forum and the zimine order dated 19.8.2002 also records about it.  The procedure adopted by the ld. District Forum, therefore, cannot be said to be contrary to law and the case need not be remanded for fresh decision.

A similar question arose before the Delhi State Commission in case Vijay Kumar Beri Vs. BSES Rajdhani power Ltd.-IV (2010) CPLJ 310 wherein a similar view was taken by that Commission.

13.                       The ld. Counsel for the OP/Insurance Co. then argued that the Diesel generating set was under warranty and there was a manufacturing defect in the same and, therefore, the OP-1 alone was liable to compensate the complainant for the loss suffered by it.  In support of his contention, he referred to Annexure R-7, which is copy of report given by Col. Chandra Prakash, surveyor to this effect.  The ld. Counsel argued that if the engine was under warranty, the entire loss has to be compensated by OPs 1 & 2 and not by the Insurance Co./OP-3 as the same is exempted under special exclusions No.3 of insurance policy (Annexure R-5). We do not find any merit in this contention. The ld. Counsel for the OP/appellant could not prove any warranty with respect to the engine in question. No doubt the complainant has mentioned about it in para No.3 of the complaint but OP-1 has not admitted it.  It was alleged by OP-1 that it is not the manufacturer of the engine.  As regards manufacturing defect again there is no evidence to prove the same.  Rather there is report (Annexure C-9) of Shashank Gadgil to the effect that the failure cannot be attributed to manufacturing defect, but it was due to maintenance lapses.  In the absence of a manufacturing defect and secondly in the absence of warranty being proved on record, the damages cannot be awarded against the OP-1.

14.                       The ld. Counsel for the OP/Insurance Co. has also referred to para 6 of the complaint vide which the complainant mentioned that he had entered into an agreement with respondent No.2 to provide service to the complainant to keep the said diesel generating set in proper working condition for one year from 1.4.1997 to 31.3.1998.  The ld. Counsel then referred to exclusion clause 3 of the insurance policy (Annexure R-5), which reads as follows :-

“SPECIAL EXCLUSIONS :

The company shall not be liable for :

1.                 XXX    XXX                      

2.                 XXX    XXX            

3.       Loss or damage for which the manufacturer or supplier or repairer of the property is responsible either by law or under contract.”

It is argued that since the complainant had a contract with OP-2 for the maintenance of the generating set, the insurance company would not be liable to pay any compensation.  We do not find any merit in this argument.

15.                        In order to examine whether the contract falls under the special exclusions, we may refer to the service contract (Annexure C-4) entered into between the complainant and OP-2. The relevant portion of the contract reads as follows :-

“TYPE OF SERVICE

You are free to select any of the following system to avail the number of calls.

A.               HDS service engineer will attend to the engine between every 225-275 hours to carry out ‘B’ check. Customer should inform us in writing as soon as the engine has clocked 225 hours, to enable HDS to attend the engine in due time.

B.                 HDS service engineer will attend to the engine whenever you call for our service, irrespective of the hours clocked.

If you wish to have discussion with us, kindly call us.

SCOPE :      HDS service engineer will attend to the engine problem and will also inform you about its general condition.  He will also recommend what maintenance/running repairs spares you should stock.  Customer to maintain a log book. Changing of piston – Rings, cylinder liner etc. i.e. Ring job and overhauling of the engine is not covered under this contract.

                   Diesel, oil etc. required shall be extra to your account.

                   Labour charges for repairing accessories like PT pumps, injectors, cylinder head etc. will be payable extra, as per prevailing rates.

PAYMENT    HDS will raise a bill for Rs._________ for this contract.  Customer shall pay the contract amount in advance before commencement of the contract.

GENERAL    Though every efforts will be made to render prompt service to your engine, however, HDS is not liable to pay any compensation of whatsoever nature for loss of any kind to the customer on account of breakdown of the engine.”

This document shows that the service engineer would attend to the engine when it had run 225-275 hours in order to carry out the ‘B’ check. There is no dispute about it that OP-2 had been carrying out the said checkings and there was no deficiency in service on their part nor has any been alleged or proved.  In case of mishap, OP-2 was not liable to pay any compensation of whatever nature for loss of any kind to the customer on account of breakdown of the engine.  The service agreement between the complainant and OP-2, therefore, leaves no doubt to conclude that OP-2 was not responsible for the loss or damage, either by law or under the contract (Annexure C-4).  If that is the case, then special exclusion No.3 would not apply to the contract of insurance and the Insurance Co./OP-3 is not exempted or protected from paying for the loss suffered by the complainant. The mere fact that a person or firm has been engaged by the complainant for upkeep of the generating set does not entitle the OP/Insurance Co. to evade its liability after getting the premium from the complainant for providing insurance cover to the generating set. 

16.                       We are, therefore, of the opinion that since there was no manufacturing defect nor any warranty proved on file, OP-1 is not liable to pay any compensation to the complainant. Neither OP-2 is liable to compensate the complainant for the loss suffered by him nor OP-3/Insurance Co. is exempted under the special exclusion No.3 of the insurance policy (Annexure R-5).  As per agreement (Annexure C-4) referred to above, OP-2 also is not liable to pay any compensation to the complainant.  It is true that the generating set was being serviced and was repaired by OP-2 but for that it has charged Rs.3,10,000/- from the complainant and rightly so because it was only to check the engine and not to pay for the spare parts or for the damage, if any suffered by the engine. The entire responsibility to pay the loss is, therefore that of the Insurance Co. It has evaded its responsibility and was, therefore, deficient in rendering proper service. 

                   The appeal filed by M/s Cumina Diesel Sale and Service India Ltd./OP-1 is accordingly accepted and the impugned order is set aside qua them.

17.                       The appeal filed by the Oriental Insurance Co. Ltd./OP-3 is, therefore, dismissed with litigation costs of Rs.10,000/-. The impugned order is modified to the extent that the Insurance Co./OP-3 shall pay the entire amount of Rs.3,08,044/- alongwith interest @ 12% per annum from the date of filing of the complaint till realization of the amount, alongwith Rs.2,000/- as compensation for harassment and mental agony including costs as awarded by the ld. District Forum.

                   Copies of this order be sent to the parties free of charge.

Pronounced.

18^th April, 2011.

Sd/-

[JUSTICE SHAM SUNDER]

PRESIDENT

Sd/-

[NEENA SANDHU]

MEMBER

Sd/-

[JAGROOP SINGH MAHAL]

MEMBER

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