DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION ERNAKULAM
Dated this the 23rd day of July, 2024
Filed on: 13/04/2021
PRESENT
Shri.D.B.Binu President
Shri.V.Ramachandran Member Smt.Sreevidhia.T.N Member
C.C. NO. 182/2021
COMPLAINANT
Sreejith G., Managing Partner, SG bags, shanti Complex, Thiruvallor Road, Alangad P.O., Aluva 683511
(Rep. by Adv. Asha P. Nair, Thuppath Building, Sub Jail Road, Aluva, Ernakulam)
Vs.
OPPOSITE PARTY
T. Viswanatha Sivan, Managing Director, Sivan Industrial Engineering, 69/1, Thiru Vi Ka Street, Municipal Colony, Erode 638 004, Tamil Nadu
(Rep. by Adv. Joseph George, M/s. Meenattoor & Aziz, Kaloor, Kochi 17)
FINAL ORDER
D.B. Binu, President:
1. Brief Statement of Facts of the Complaint:
The complaint was filed under Section 35 of the Consumer Protection Act, 2019. The complainant, managing partner of SG BAGS in Aluva, purchased a Tie Loop Welding machine from Sivan Industrial Engineering, Erode, Tamil Nadu on 15/09/2020 for Rs. 6,78,500, including 18% IGST. This purchase aimed to meet the increased demand for facial masks during the COVID-19 pandemic and thereby to earn his family's livelihood through manufacturing masks. Upon delivery, several essential parts of the machine, such as the auto feeder, covers, and spare parts, were missing. Despite notifying the seller, the machine was installed and operated with makeshift adjustments.
The seller acknowledged the missing parts and attributed the issue to shipping errors, promising to procure the parts from China and technical assistance from Bangalore. After two months, only the auto feeder was provided and installed. Subsequently, the machine produced defective masks, causing significant raw material wastage. The raw materials, non-woven fabric, cost Rs. 200 per kg, with additional labour and power costs. The transportation cost of the machinery was Rs. 10,000.
Repeated requests for repair or replacement via calls and emails were met with inadequate responses, citing the machine's new model and lack of technical expertise. This negligence led to a monthly loss of 1 lakh masks and substantial financial losses, preventing the complainant from fulfilling bulk orders from several hospitals and resulting in a total loss of Rs. 6 lakhs.
A legal notice demanding machine replacement was issued on 10/03/2021, but the seller failed to respond. The complainant seeks an order directing the seller to refund Rs. 6,78,500 with 18% interest from 15.09.2020, and an additional Rs. 6,00,000 as compensation for production losses, raw material wastage, and mental anguish, along with Rs. 10,000 for proceeding costs.
2. Notice:
The commission issued a notice to the Opposite Party, who subsequently filed their version.
3. Version of the Opposite Party:
The Opposite Party contends that the complaint is baseless and aimed at avoiding payments for subsequent equipment purchases. They assert their long-standing reputation for excellent sales and service in manufacturing machines. While admitting the sale and delivery of the machine, they deny any missing parts at delivery, claiming that all necessary components and support were provided, and the complainant was instructed on the machine's use.
The Opposite Party denies allegations of managing to run the machine without necessary parts and asserts that the complainant used the machine from 17/09/2020 without issues. They refute claims of apologizing for missing parts or needing time to source expertise and parts. They also deny that 70% of masks produced were defective after installing the auto feeder. Instead, they claim that their staff conducted regular maintenance visits and found no defects, and the complainant even placed a subsequent order for an additional Ultra-sonic horn, for which payment is pending.
The Opposite Party attributes damages if any to the complainant's unskilled employees and unauthorized modifications to the machine. They assert that they offered continuous service support and advised against improper handling or alterations. The Opposite Party also denies allegations of negligent service and asserts that the complainant's losses stem from unprofitable mask sales due to increased supply from other suppliers, not from their machine's defects.
They claim that the complaint is an attempt to avoid financial losses by shifting blame to the Opposite Party. They state that they provided all necessary support and that any wear and tear on the machine is normal based on usage. The Opposite Party requests the commission to dismiss the complaint with costs, asserting that they have met all obligations and the complainant's claims are unfounded.
4. Evidence
The complainant had filed a proof affidavit and six documents that were marked as Exhibits-A-1 to A-6. The report of the Expert Commissioner is marked as Exhibit C1.
- Exhibit A1: Copy of Sales Invoice dated 15.09.2020
- Exhibit A2: Copy of Advocate Notice dated 10.03.2021.
- Exhibit A3 and A3a: Copy of the purchase orders.
- Exhibit A4: Copy of the Email communications.
- Exhibit A5: Copy of the Short Visit Registration.
- Exhibit A6: Copy of Advocate Notice issued by the opposite party dated 09.04.2021.
- Exhibit C1: Report of the Expert Commissioner
5. Points for Analysis:
i) Whether the complaint is maintainable or not?
ii) Whether there is any deficiency in service or unfair trade practice from the side of the opposite party to the complainant?
iii) If so, whether the complainant is entitled to any relief from the side of the opposite party?
iv) Costs of the proceedings if any?
6.Argument Note by Sri. Ajay Krishnan S, Learned Counsel for the Complainant:
The complainant, managing partner of SG BAGS in Aluva, purchased a Tie Loop Welding machine from Sivan Industrial Engineering, Erode, Tamil Nadu, on 15/09/2020 for Rs 6,78,500, including 18% IGST (Exhibit A1). The machine was intended for manufacturing masks during the COVID-19 pandemic to sustain his family, funded by a loan from Service Cooperative Bank Alangad.
Upon delivery, parts such as the auto feeder, covers, and spare parts were missing. Despite notifying the opposite party, the machine was installed with makeshift adjustments, and the opposite party promised to procure the missing parts from China and technical support from Bangalore.
Two months later, the auto feeder was provided, but over 70% of the masks produced were defective, leading to significant raw material losses. Raw materials cost Rs 200 per kg, with additional labour and power costs. Transportation of the machine cost Rs 10,000. The complainant requested immediate repair or replacement through calls and emails, but the opposite party cited technical inexperience.
The complainant faced business losses due to defective machinery, failing to fulfill bulk orders for multispecialty hospitals, leading to a loss of Rs 6 lakhs. The complainant suffered severe hardships, mental agony, and monetary losses due to the opposite party's unfair trade practices, cheating, criminal breach of trust, and negligence.
Legal Notice and Response: On 10/03/2021, the complainant issued a lawyer notice demanding replacement (Exhibit A2), but the opposite party did not respond. The complainant seeks Rs 6,78,500 with 18% interest from 15.09.2020 and Rs 6 lakhs for damages and Rs 10,000 for proceeding costs.
Opposite Party's Version: The Opposite Party denies the complaint, claiming it aims to avoid payments for subsequent equipment purchases. They assert that the machine had no manufacturing defects and any issues arose from the complainant's unskilled employees and unauthorized modifications. They provided continuous support and attributed losses to market conditions, not machine defects.
Points for Consideration:
- Jurisdiction of the commission
- Entitlement to Rs 6,78,500 with 18% interest
- Entitlement to Rs 6 lakhs as compensation
- Deficiency in service and unfair trade practices
The complainant argues that the commission has jurisdiction, the opposite party is liable for the machine's cost with interest, and compensation for losses and mental agony due to defective machinery and inadequate service. The expert commission report supports the complainant's claims, and the opposite party's defences are unsubstantiated. The complainant requests the commission to grant the reliefs sought.
7. The extract from the report of the Expert Commissioner is as follows:
“b) Machine is used for attaching thread/Ear Loop/Tie loop to mask body.
c) The machine supplied by the opposite party doesn't meet the customer's demands.
d) On starting the machine mask body is inserted into the machine for welding ear loop/tie loop but in the inspected machine welding is unequal or sometimes the mask body stucks in the machine. which results in the wastage of raw materials.
e) The subject machine can only be used at low speeds but on low speeds also it can't meet the requirements.
f) As the machine is installed with all the fittings, the ultrasound unit installed makes heavy noise which will be irritating for the workmen.
g) The machine doesn't meet safety standards, and the chain systems used in the machine are openly exposed.
h) On inserting the mask body into the machine through the feeding unit it will next go into the pressing unit. Pressing/welding of the ear loop is based on frictional heat generated and it will cut on the next stage using the blade fixed at the end. In the inspected machine all the above-mentioned work is not up to requirement.”
Based on the comprehensive inspection report by Expert Commissioner Sri. Muhammed Yasir K.J, the Commission finds strong evidence supporting the complainant's allegations. The machine supplied by the opposite party is defective, failing to meet operational and safety standards. The machine's welding process is inconsistent, often causing the mask body to get stuck, leading to significant raw material wastage. Additionally, the machine can only operate at low speeds, yet still fails to meet production requirements. The excessive noise from the ultrasound unit and exposed chain systems pose serious safety hazards and create an uncomfortable working environment. These findings indicate clear negligence and deficiency in service by the opposite party, resulting in substantial financial losses, unfulfilled orders, and mental distress for the complainant. The Commission thus concludes in favor of the complainant, acknowledging the significant hardships faced due to the faulty machinery.
We have meticulously considered the detailed submissions of both parties, as well as thoroughly reviewed the entire record of evidence, including the argument note.
8. Analysis and Legal Reasoning:
The issues mentioned above are considered together and are answered as follows:
i) Maintainability of the Complaint:
In the present case, as per Section 2(7) of the Consumer Protection Act, 2019, a consumer is a person who buys any goods or hires or avails of any services for a consideration that has been paid or promised or partly paid and partly promised, or under any system of deferred payment. A copy of the sales invoice dated 15.09.2020 (Exhibit A1), produced by the complainant, shows that the machine was purchased from the opposite party for a consideration. This qualifies the complainant as a consumer under the Act, and therefore, the complaint is maintainable.
ii) Deficiency in Service and Unfair Trade Practice:
The opposite party’s failure to provide essential parts of the machine and the subsequent defective operation constitutes a clear deficiency in service. Despite being aware of the issues, the opposite party failed to rectify the problems in a timely manner. The complainant faced significant losses due to the defective machine, including wastage of raw materials and inability to fulfill bulk orders.
Lucknow Development Authority vs M.K. Gupta (1994) - The Supreme Court held that any defect or deficiency in service provided by any person falls within the scope of the Consumer Protection Act. The case established that services should meet the standards promised at the time of purchase, and failure to do so constitutes a deficiency in service.
iii) Entitlement to Relief:
Given the evidence of persistent defects and the opposite parties' failure to rectify them, the complainant is entitled to relief. The complainant has sought a refund of the purchase price with interest and compensation for the hardships endured.
iv) Costs of the Proceedings:
Considering the circumstances and the evidence presented, the commission finds it appropriate to award the complainant the costs of the proceedings.
Liability of the Opposite Party:
The Expert Commissioner’s report (Exhibit C1) provides strong evidence that the machine supplied by the opposite party was defective and failed to meet operational and safety standards. The welding process was inconsistent, leading to significant raw material wastage, and the machine posed serious safety hazards. These findings indicate clear negligence and deficiency in service by the opposite party.
The shift from the traditional concept of "buyer beware" to "seller beware" under the 2019 Act signifies a major transformation in consumer rights. The Act promotes transparency in transactions and holds sellers and endorsers accountable for their products, moving away from the contract law principle of "Let the Buyer Beware" (caveat emptor) towards "Let the Seller Beware" (caveat venditor), indicating a progressive step in consumer protection.
Under Section 84 of the Consumer Protection Act, 2019, a "product manufacturer" faces liability in several scenarios related to their products.
In this era of fierce economic competition, the livelihood of the complainant and his family was significantly affected due to the negligence of the opposite party. The complainant’s genuine efforts to adapt to the increased demand for masks during the COVID-19 pandemic were thwarted by the faulty machine supplied by the opposite party. The financial strain and mental agony endured by the complainant and his family underscore the human element at the core of this case. Beyond the financial losses, the emotional distress caused by the opposite party’s actions must be acknowledged and rectified.
The Commission satisfied that the complaint is maintainable as per Consumer Protection Act, 2019 and also determine that issue numbers (II) to (IV) are also in the complainant favour due to the significant service deficiency and the unfair trade practices on the part of the opposite party. Consequently, the complainant has endured considerable inconvenience, mental distress, hardships, and financial losses as a result of the negligence of the opposite party.
In view of the above facts and circumstances of the case, we are of the opinion that the opposite party are liable to compensate the complainant.
Hence, the prayer is partly allowed as follows:
- The opposite party shall refund ₹6,78,500/- (Rupees Six Lakh Seventy-Eight Thousand Five Hundred Only) to the complainant.
- The opposite party shall pay ₹6,00,000 (Rupees Six Lakh Only) as compensation for production losses, raw material wastage, and mental anguish. This amount is awarded for the deficiency in service and unfair trade practices, as well as for the mental agony and physical hardships endured by the complainant.
- The opposite party shall also pay the complainant ₹10,000 (Rupees Ten Thousand Only) towards the cost of the proceedings.
The opposite party is liable for the fulfilment of the above orders, which must be executed within 45 days from the date of receiving this order. Failure to comply with the payment orders under points I and II will result in interest at the rate of 9% per annum from the date of filing the complaint (13.04.2021) until the date of full payment realization.
The opposite party shall have the liberty to take back the machinery in question from the complainant within 30 days of complying the above direction.
Pronounced in the open Commission on this the 23rd th day of July, 2024
Sd/-
D.B.Binu, President Sd/-
V. Ramachandran, Member
Sd/-
Sreevidhia.T.N, Member
Forwarded/By Order
Assistant Registrar
Appendix
Complainant’s Evidence
- Exhibit A1: Copy of Sales Invoice dated 15.09.2020
- Exhibit A2: Copy of Advocate Notice dated 10.03.2021.
- Exhibit A3 and A3a: Copy of the purchase orders.
- Exhibit A4: Copy of the Email communications.
- Exhibit A5: Copy of the Short Visit Registration.
- Exhibit A6: Copy of Advocate Notice issued by the opposite party dated 09.04.2021.
- Exhibit C1: Report of the Expert Commissioner
Opposite party’s Exhibits
Nil
Depositions
Exbt. C1: Commission Report
Despatch date:
By hand: By post
kp/
CC No. 182/2021
Order Date: 23/07/2024
