BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I,

CHITTOOR

Present:- Sri. V. Parthasaradhi Rao, B.A., L.L.B., President

Kum.S.R.Sumathi, B.A., B.L., Female Member

Sri.K.Subramanyam Reddy, B.A., B.L., Male Member

Monday, the (16th) Sixteenth day of March, Two thousand and Nine

C.C. No. 121 /2008


Between


M.Chandra Sekhar, aged about 29 years,
S/o M.Muthyalu, Hindu, residing at D.No.1/79,
Main Road, Cinema Hall Complex, Kalakada,
Chittoor District.
… Complainant.


And

1.RADIANT INFOSYSTEM (P) LTD.,
Hyderabad, Rep. by its Director
C.Narayanacharyulu, 2227/1, Divi No.52A,
9th Main B.S.K. II Stage,
Bangalore – 560 070.

2.The Senior Manager, Franchise Opertions,
RADIANT INFOSYSTEM (P) LTD.,
S.V.S.Classic Residence, III Floor,
Room No.301, Near V.I.P. Show Room,
Ameerpet, Hyderabad.

3.The Co-ordinator, Radiant Infosystem (P) Ltd.,
Opposite I.T.C., Rajeev Gandhi Road,
D.No.3-82, Opp. Geetha Mandhir,
Greamspet, Chittoor.

… Opposite Parties.

This complaint coming on before us for final hearing on 04.03.2009 and upon perusing the complaint, written versions, affidavits, material documents and on hearing Sri K.Upendraiah counsel for the complainant, and Sri K.Sathyamoorthy counsel for the opposite parties 1 to 3 and having stood over till this day for consideration, the Forum made the following:-

ORDER

DELIVERED BY Kum.S.R.Sumathi, B.A., B.L., Female Member

ON BEHALF OF THE BENCH

This complaint is filed by the complainant U/S 12 of C.P.Act to direct the opposite parties to refund the deposit amount of Rs.1,25,000/- with interest at 24% P.A., for compensation towards loss sustained by him and cost of the complaint.

The brief facts of the complaint are that the complainant is an educated unemployee. The opposite parties 1 and 2 were made publicity on behalf of Radiant Infosystem (P) Ltd., calling upon the intending persons may apply to Rajiv Internet Centre at various places, including the limits of the complainant’s centre under self employment scheme. This is a project initiated by Govt. of Andhra Pradesh and awarded to BEL – Radiant – Comsortium. The Radiant has incorporated a new company called Radgove Solutions Private Limited, at Hyderabad to implement Rajiv Project. The complainant approached the opposite parties to start Franchise to operate Rajiv Internet Centre at Kalakada, Chittoor Dist. under self employment scheme for his livelihood. The opposite parties have furnished Project Information document to the complainant for the proposed services item No. 1 to 64. Further the opposite parties have directed the complainant to deposit a sum of Rs.1,25,000/- with the opposite parties to provide proposed services 1 to 64 to operate Rajiv Internet Centre at Kalakada. Accordingly the complainant has deposited a sum of Rs.1,25,000/- by way of D.Ds. and the 2nd opposite party issued receipt No.3785 and receipt No.3791.

As per the terms of opposite parties the complainant for establishment of Rajiv Internet Centre at Kalakada arranged a building on monthly rent of Rs.2,000/- by paying advance amount of Rs.20,000/- and spent Rs.78,000/- towards furniture and Rs.10,000/- for Internal decorations of the building. The opposite parties have inspected the building and arrangements made by the complainant and have satisfied on 19.08.2006. The opposite parties have allotted the Rajiv Internet Centre in favour of the complainant at Kalakada to run services 1 to 64. The opposite parties have also provided one UPS, one Computer, One Scanner, One Web Camera and one Printer to Operate the RAJIV INTERNET CENTER AT Kalakada. After that the complainant has obtained a telephone connection along with Internet connection and also engaged one Computer operator on monthly salary of Rs.2,000/- to run the Rajiv Internet Centre. But the opposite parties have provided only single service i.e., collection of the electricity bills from the electricity consumers and for the remaining 63 services the opposite parties have promised in a month or two months from November 2006 onwards. In spite of several requests so far the opposite parties have not provided the said proposed services to the complainant’s centre. The complainant issued legal notice to the opposite parties. The opposite parties received the same and issued reply with false allegations.

The income from the Internet centre per month approximately is Rs.2,000/-. The opposite parties assured the gross income per month is about Rs.20,000/-. The net loss to the complainant per month is about Rs.9,110/- till today. The complainant has spent Rs.31,850/- towards telephone bills including Internet charges and the electricity consumption charges. The opposite parties are also liable to pay the loss of damages and future earnings to the complainant at Rs.1,50,000/- with interest at 24% p.a.

The 3rd opposite party is the Coordinator for the opposite parties 1 and 2 having its office at Chittoor.

The complainant submits that there is deficiency in service on the part of opposite parties in providing the remaining agreed 63 services as per the project information document to the Village Internet Centre at Kalakada. Therefore the complaint is filed against the opposite parties to refund the deposit amount of Rs.1,25,000/- with interest at 24% p.a. and to pay Rs.1,08,000/- (amounts spent for decoration, furniture cost and shop advance amount) with interest at 24% p.a. and to pay the Operator salary of Rs.2,000/- per month from November 2006 to December 2007 and to pay Rs.1,50,000/- with interest at 24% p.a. towards loss of damages and earnings and to pay Rs.31,850/- towards electricity consumption charges and telephone bills and to pay cost of the complaint and the complaint may be allowed.

The opposite parties filed written version on 30.01.2009. The opposite parties denied of the material allegations stated in the complaint and stated that the complainant had approached the opposite party No.1 and submitted an application seeking Franchise to operate Internet centre at Kalakada, Chittoor. The complainant was permitted to operate the Internet centre. An agreement dated 31.08.2006 was entered between opposite party No.1 and the complainant, specifying the terms and conditions. The complainant after having understood terms and conditions and the nature and scope of the business of the Internet Centre paid a sum of Rs.1,25,000/- as advance which is non-refundable. In fact, the said payment was received towards the expenses incurred by opposite party No.1 to provide necessary I.T. infrastructure such as creating portals, date centre, applications, etc. through which Complainant herein could provide various services to his customers, opposite party No.1 has built the said infrastructure by investing a sum of about 10 crores, as stated supra. In addition to that opposite party No.1 supplied one U.P.S., one Computer, one Scanner, one Web Camera and one Printer to start the Internet Centre to the complainant.

Project Information Document issued by opposite party No.1, it was projected that one of the objectives of the Project was to provide over 64 services identified by Government of Andhra Pradesh such as Electricity, Telephone bill and Tax Payments, etc. However, it was made clear to the complainant that whatever services approved by the Government of Andhra Pradesh shall be provided to him, and there is no agreement to provide any specific number of services.

As per Clause 10.5 of the Consortium Agreement, it is the responsibility of BEL to ensure compliance of the contract by the Government of Andhra Pradesh and the other departments. BEL failed to impress the Govt. of A.P. of its roles and responsibilities towards Rajiv Project. Therefore both BEL and Govt. of A.P. are equally responsible for failure of the Rajiv Project and for denial of Govt. services to the citizens including the complainant but not opposite parties. The Govt. of India through the Department of Information Technology came up with a flagship programme to set up 1,00,000 ICT and broad band enabled kiosks known as Common Service Centers (CSC) to provide government and private services and it would function in the same line as the one made in Rajiv Project. The Govt. of A.P. insisted that BEL and opposite party No.1 should voluntarily exit from Rajiv Project to enable the Government to wind up the Rajiv Project and subsume the existing infrastructure into CSC Scheme. Inspite of objections made by opposite party No.1 in meeting held on May, 2007 the Bell without even informing the opposite party No.1 agreed to give up the Rajiv Project in preference to the CSC Project and the Rajiv Project was given up and as such the opposite party No.1 could not run the Rajiv Project. It was specifically made clear to the complainant that at the time of granting license that whatever the services provided by the Govt. of A.P. shall be provided to the complainant and there was no agreement to provide any specific number of services. As per clause 12 of the agreement the opposite party is not liable to the complainant for any loss caused to him due to failure of opposite party to observe terms and conditions of the agreement which are beyond reasonable control. The project was closed by the Government of Andhra Pradesh in preference to the CSC Project launched by the Central Government. Therefore the opposite party No.1 could not run the project.

Though the project was closed Complainant herein continued to run Internet Centre with the opportunity provided by opposite party No.1 and opposite party No.1 paid him commission on the income derived from the services the complainant rendered to citizens. Subsequently the complainant closed the internet center. Thereafter the complaint has approached the opposite party No.1 and informed that he is closing internet center. The opposite party permitted the complainant to retain 1 UPC, one Computer, one Scanner, one Web Camera and one Printer supplied by opposite party No.1 to the complainant, towards full and final settlement of the claim.

The cheques issued by the complainant towards working capital i.e. for providing service were bounced in spite of that the opposite parties provided services to the complainant. There was no deficiency of services rendered by opposite parties. Therefore the complaint is liable to be dismissed with exemplary costs.

The complainant filed his affidavit and the same is marked as Pw.1 and filed Exs. A1 to A . The opposite parties filed 13 documents which were marked as Ex.B1 to B13.

Both parties have filed the written arguments and this Forum heard the counsel of both the parties basing on the pleadings and material available on the record. The points that arise for consideration are

1)Whether the complainant is not a Consumer ?
2)Whether the complainant is entitled for refund of the deposit of Rs. 1,25,000/- with interest at 24% p.a. ?
3)Whether the complainant is entitled to the expenditure of Rs.1,08,000/- (amounts spent for decoration, furniture cost and shop advance amount) and Rs.31,850/- towards electricity consumption charges and telephone bills and salary of Computer Operator at Rs.2,000/- per month from November 2006 to December 2007 ?

4)Whether the complainant is entitled Rs.1,50,000/- towards damages and loss of earnings ?

5)Whether the opposite parties committed deficiency in service ?

6)To what result ?


Point 1 :-

The counsel for opposite party argued that the complainant is not a consumer within the meaning of Sec. 2 (1) (d) of C.P.Act. The complainant is only a Franchisee does not fall under the purview of Consumer and the complaint is liable to be dismissed.

In this regard the Hon’ble National Commission in a decision reported in II, 2008 C.P.J. held as follows :-
The complainant purchased goods and paid Rs.2,03,600/- for purchase of equipment under Franchise Agreement. The opposite parties supplied incomplete – defective system VSAT and Web Camera not provided - the contention of opposite party was that the complainant not consumer. The Honourable National Commission held that the contention not acceptable. Complainant entered into Franchise Agreement for earning livelihood, is consumer. Further the National Commission made observation as follows:-







The plea that the fanchise agreement was a commercial transaction, one has to take into consideration certain facts. The complainant had alleged that he was an unemployed young graduate, and that he had taken loan from the bank. It had to be so held in absence of any specific denial of repeated assertion and taking of loan as such would substantiate his plea that the complainant was being unemployed entered into this agreement for earning his livelihood. The moment it is held that the petitioner entered into this franchise agreement for the purpose of earning his livelihood in transaction which related to year 2001, his claim could not be thrown away on this score that he was not a ‘consumer’.








Further the complainant stated in his complaint that the complainant is an educated unemployee and he approached the opposite parties to operate Rajiv Internet Center at Kalakada, Chittoor District under self employment scheme for his livelihood. The pamphlet issued by 1st opposite parties also clearly shows Rajiv Internet (e-seva) Centers. “A Rewarding Self Employment Opportunity”.


Sec.2 (1) (d) explanation says
For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment;




In view of the aforesaid decision and explanation considering the facts of the case. The complainant is a consumer and the complaint is within the purview of C.P.Act.

Points 2 to 5 :-
The undisputed facts are that the complainant under Ex.A1 paid a sum of Rs.1,25,000/- towards deposit to the opposite parties to run Rajiv Internet Center at Kalakada. The opposite parties have allotted the Rajiv Internet Center in favour of the complainant and the opposite parties provided equipments i.e. one U.P.S., one Computer, one Scanner, one Web Camera and one Printer to operate the Rajiv Internet Center. The opposite parties have provided only single service i.e. Collection of Electricity Bills and the other 63 services not provided.

The counsel for the complainant argued that the complainant paid Rs.1,25,000/- to the opposite parties to provide 1 to 64 services as mentioned in the Project Information Document to the complainant. But the opposite parties have provided only single service i.e. collection of the electricity bills from the electricity consumers. The opposite parties have not provided the remaining 63 services. In spite of issuance of legal notice the opposite parties have not provided the 63 services. Therefore the complainant sustained loss financially and also loss future earnings. Therefore there is deficiency in the service on the part of opposite parties.

The counsel for the opposite parties argued that the complainant paid - Rs.1,25,000/- as advance is not refundable and the said payment was received to provide necessary IT Infrastructure through which complainant herein could provide various services to his customers. In addition to that the opposite parties supplied equipment i.e. U.P.S., Computer, Scanner, Web Camera and Printer to start Internet Center. Though Project Information Document projected 1-64 services it was made clear to the complainant that what ever services provided by the Govt. of A.P. shall be provided to him and there is no agreement to provide any specific number of services and no time limit. The Govt. of A.P. insisted the opposite parties to exist from Rajiv Project voluntarily to enable the Government to wind up the Rajiv Project. The project was closed by the Govt. of A.P. in preference to the CSC project launched by Central Government. Therefore there is no deficiency in the service on the part of opposite parties.

Both parties in support of the contentions filed their Affidavits and the complainant filed Ex.A1 to Ex.A14 and the opposite parties filed Ex.B1 to B13.

We have gone through the material on record. Ex.B14 is the agreement dated 31.08.2006 between the Complainant and 1st opposite party. The agreement clearly shows that on the basis of Project Information Document parties are invited to obtain for operating KIOSK and the complainant was granted license to run KIOSK. Under Ex.A3, the Project Information Document which contains 1-64 various kinds of services and gross income per month is shown as Rs.20,120/-. It is an admitted fact that only one single service provided by opposite parties to the complainant and the other 63 services were not provided. When the agreement is on the basis of General Information Document i.e. Ex.A3, the argument of the learned counsel for opposite party that there is no agreement to provide any specific number of services is not acceptable. Further the learned counsel for opposite party submitted that in the year 2007, the Bharat Electronics Limited (BEL) in a meeting held by Govt. of A.P., without informing to opposite party No.1 agreed to give up the Rajiv Project in preference to the Common Service Centre (CSC) Project launched by Central Govt. ignoring the objections of 1st opposite party and the Govt. also send notice under Ex.A8 to the opposite parties stating that the opposite parties should voluntarily exit from Rajiv Project to enable the Govt. to wind up the Rajiv Project. In support of their contention opposite parties filed Ex.B6 to B13.

The agreement Ex.B14 was entered on 31.08.2006. Rajiv Project was closed on 17.05.2007. But till the issuance of legal notice Ex.A6 by the complainant to the opposite parties on 04.02.2008 the opposite parties have not intimated the said fact to the complainant. If there was intimation the complainant might have closed the center much earlier.

Further the learned counsel for opposite party argued that the fee of Rs.1,25,000/- is non refundable fee. As per clause 12 of the agreement, the opposite party is not liable to the complainant for any loss sustained by him due to failure of opposite party providing all the 64 Services which are beyond its control. It is true, in the agreement Ex.B14 it is stated that the deposit amount of Rs.1,25,000/- is non-refundable. But in the said agreement Ex.B14 in Clause 5.3 it is stated as follows :-

“LICENSOR has the exclusive right to cancel this Agreement and refund the License fee in the event the Kiosk does not become operational for whatever reasons.”

The main contention of the opposite parties is that the Govt. of A.P. and BEL closed the Rajiv Project in preference to the CSC program sponsored by Central Govt. and Govt. requested the 1st opposite party to exit from Rajiv Project. Therefore he could not run the Rajiv Project. When the Rajiv Project was closed in preference to the CSC program as per clause 5.3 of the agreement as stated above the opposite party No.1 ought to have terminate the agreement and refunded the fee to the complaint. Failure to do so amounts deficiency in service on the part of opposite parties.

The next point for consideration is whether the complainant is entitled to the refund of Rs.1,25,000/- and to compensation. The counsel for opposite party submitted, the opposite party permitted the complainant to retain the equipment supplied by opposite parties i.e. 1 U.P.S., 1 Computer, 1 Scanner, 1 Web Camera, 1 Printer towards full and final settlement of the claim. As per clause 1.1 of the agreement Ex.B14 owner ship of the Kiosk equipment allotted to the Center Vest with the 1st opposite party. The agreement has not been terminated. The tenure of agreement is 5 years and it is in force. At any time there is possibility of taking back the equipment from the complainant by the 1st opposite party. As the Rajiv Project was closed and the 1st opposite party is unable to perform the agreement and the providing of services 1 to 64 as per Project Information Document is beyond his control due to subsequent event of closer of Rajiv Project and as the fee of Rs.1,25,000/- was paid for providing services. The complainant is entitled to claim refund of the same with interest.

The counsel for complainant contends that the complainant to run Rajiv Internet Center, he incurred an expenditure of Rs.1,08,000/- (building advance, cost of furniture, decoration) besides rent of Rs.2,000/- per month to the building, Salary of Rs.2,000/- per month to the Computer operator and Rs.31,850/- towards telephone bills, Internet charges and Electricity consumption charges. In proof of the same complainant filed Ex.A4, A5, A8 to A11. The complainant might have invested some considerable amount and spent considerable time of many months in the business and might have suffered loss. Considering these aspects this Forum is granting Rs.10,000/- as compensation towards loss of income, mental agony and deficiency in service.
Points 2 to 4 are answered in favour of the complainant.

Point 5 :-
In the result the complaint is allowed in part directing the opposite parties to pay a sum of Rs.1,25,000/- with interest at 9% p.a. from 31.08.2006 till the date of realization and to pay Rs.10,000/- towards compensation and Rs.1,500/- towards cost of the complaint within 6 weeks. Failure of payment of compensation within 6 weeks, the amount will carry interest at 9% p.a. from the date of order.