w w w . L a w y e r S e r v i c e s . i n

East India Construction Co. & Another v/s Modern Consultancy Services & Others

    First Appeal Nos. 36 & 125 of 2004
    Decided On, 09 May 2006
    At, National Consumer Disputes Redressal Commission NCDRC
    By, MEMBER
    For the Appellants: Gurjinder Pal Singh, Sanjay Kumar Singh, Advocates. For the Respondents: Rohan Thawani, Advocate.

Judgment Text
Dr. P.D. Shenoy, Member

In this case, we are considering the appeal Nos. 36 of 2004 and 125 of 2004. These appeals were filed against the order dated 23.12.2003 in CC No. 14 of 2003 "of the State Commission, Jharkhand. Both these appeals were heard together:

The State Consumer Disputes Redressal Commission, Jharkhand heard the matter in great detail and held that admittedly the machine was purchased for Rs. 15,37,000 in the month of February 2003 and since then the machine started giving trouble and virtually remained non functional. The complainant could not use the machine which remained idle till date, even though some repairs were done on temporary basis by the service engineers. In the circumstances aforesaid, the opposite parties are directed either to remove the aforesaid defects and, if necessary, replace the defective parts by new one and make the machine completely operational without any defects whasoever. If the opposite parties fail to remove the defects within the time aforesaid, they will refund the entire amount of the machine to the tune of Rs. 15,37,000 within four weeks thereafter. Since the complainant has suffered mentally, physically and financially during the period in question, the complainant is entitled to a compensation as well as cost of litigation which are assessed at Rs. 50,000. In fine the complainant petition is partly allowed to the extent indicated above.

2. Aggrieved and dissatisfied by the order of State Commission M/s. Telco Construction Equipment Co. Ltd. (hereinafter referred to as Telco) has come up in appeal to set aside this order and to dismiss the complaint whereas the East India Construction Co. (hereinafter referred to as Construction Co.) has come up in appeal seeking enhancement of the relief granted by directing the respondent to pay Rs.65,56,000 along with 18% interest per annum till the date of realization.

Case of the complainant:

3. M/s. East India Construction Company a partnership firm engaged in the construction business is a repudiated civil construction company within the State of Jharkhand which is the complainant in this case. The complainant placed an order for the purchase of one Backoe Loader manufactured by TELCO and paid Rs. 15,37,000 in advance and order was placed with M/s. Rafiq Ahmed Modern Consultancy Service Ltd. (hereinafter referred to as Consultancy service), on behalf of Telco. Demand Drafts were issued in favour of Telco payable at Jamshedpur for Rs. 09.00 lakh and Rs. 6,37,000 respectively. The Backhoe Loader namely TATA JD 315 V was delivered at the complainant's work site on 11.2.2003, 10 days after the scheduled date of delivery. It had a warranty of one year/2000 hours from 11.2.2003. Complainant has stated that within a fortnight of the delivery it, 24.2.2003 the 'Elbow' of the machine was broken which was not replaced immediately. It was only repaired, though as per the terms and conditions of the agreement, it was to be replaced. Subsequently, the wire harness got burnt, fuel assembly unit, nut, olive, cracked which were temporarily repaired. The complainant wrote a series of letters on 26.2.2003, 8.4.2003, 21.4.2003, 14.5.2003 and, 5.6.2003 respectively regarding defects to the opposite parties. Consultancy Services - O.P. No. 1 inspected the said machine and sent Service Engineer on 11.2.2003, 13.3.2003, 24.3.2003, 22.4.2003, 30.4.2003, 5.5.2003 and 27.6.2003 but could not remove the defects as yet. Accordingly the machine was standing idle for change of parts within the warranty period. This was causing loss to the complainant. As the opposite party was behaving in a most negligent manner, it had not only caused loss to the complainant but it has suffered mental pressure and agony. According to the complainant due to the poor workmanship of manufacturer, the defects in the machine ab initio and due to extreme negligence of non-rendering of service the complainant is entitled to following compensation:


He has also claimed two lakh of rupees towards cost and other expenses.

Case of the opposite party-M/s. TELCO Construction Equipment Co. Ltd.:

4. The complaint is not maintainable by a partnership firm as Mr. Ashok Kumar Taneja who has filed the complaint has not filed any I documentary evidence to prove his authority to file the instant case. Secondly, the complainant has filed a crimnal case against the opposite party based on the same transaction and hence the present complaint is not maintainable under the provisions of Consumer Protection Act^ (hereinafter referred to as the Act). The Backhoe Loader along with the warranty and operation manual had been given to the complainant which contains the various instructions as regards safety, pre-start inspection, operating the engine, driving the machine, fuel and lubricants and periodic maintenance, etc., and non-use of genunine spare parts or use of hydraulic oil, grease and lubricants other than those prescribed will void its warranty! The period of warranty is of nine months from the date of the equipment leaves the company's works at Jamshedpur or for a period of six months from the date it is commissioned or for one thousand working hours whichever is earlier.

5. At the time of delivery, the Service Engineer was present who checked all the operations which were found to be satisfactory before the machine was handed over to the customer. The Project Engineer of the complainant affixed his signature confirming this. The Service Engineer Mr. M.N. Huda had welded the broken elbow and connected the machine. On customer's directions engine oil, engine oil filter, etc., were replaced and the machine was tested and was found to be in good working condition. Another service report dated 13.3.2003 indicated that Service Engineer Mr. S.K. Rana found fuel filter choked, fuel oil liners are jammed, feed pump also jammed. These were cleaned and replaced. The customer was cautioned on 21.3.2003 not to use high resistance wire in place of fuse but the customer refused to sign the report. On 5.5.2003 the Service Engineer reported that various problems occurred due to defects found in fuel which was contaminated. In another service report dated 28.6.2003 Mr. A. Chaterjee found that after 45 to 60 minutes of working the machine stopped automatically and does not start immediately but after a few minutes the machine starts. The Service Engineer opened the Fuel Injunction Pump (FIP) from the machine for recalibration as per the instructions by the senior officer. Since FIP was under warranty from Singbhoom Diesels an authorised dealer/ workshop for MICO and BOSCH products. FIP is damaged due to mishandling, etc., and it is not a manufacturing defect. It had to be repaired at a cost of Rs. 10,900.00 and it is chargeable.

6. The opposite party No. 2 also contended that the complainant in the instant case is not a consumer and as per Section 2(d) of the Consumer Protection Act, 1986 it is carrying business on a large scale and the machine/ equipment was purchased for being used for commercial purposes.

Submissions of the learned Counsel for the TELCO:

7. The learned Counsel submitted that there are two main issues to be considered by this Commission?

(a) the complainant is not a consumer at all as per Section 2(d) of the C.P. Act, 1986, as the complainant is a partnership firm engaged purely in com mercial activity,

(b) the complainant has not followed the guidelines handed over to the partnership firm along with a copy of warranty which requires the complainant to use genuine spare parts, recommended fuel and engine oils and also proper systematic maintenance.

8. The learned Counsel brought to our notice the following recommendations of the Service Engineer on 13.3.2003.

Please fill pure diesel, don't mix any lubricants with diesel and also arrange for proper elbow oil.

The Service Engineer on 21.3.2003 stated that kindly do not use high resistance wire in place of fuse it will damage wire harness. This wire harness will not be covered under warranty.

Again on 5.5.2003 the report of Service Engineer states that fuel filter brackets which was cracked presently welded. Fuel filters cleaned as well as fuel pump strainer also. Present problem machine was starting after sudden stop of engine. Engine taking 10 minutes for re starting. Fuel checked and defects found in the fuel after sudden stop caused by heating and other fuel FIP not taking fuel after sudden stop caused by heating and other fuel FIP needs repair.

9. The TELCO wrote a letter to the complainant dated 7.7.2003 for replacement of FIP as its failure was due to poor fuel quality. Further he brought to our notice the procedure for deciding warranty on failed parts/ complaints.

If it can be adjused/repaired at site, then at first, it should be taken on hand, in such cases, warranty/ replacement is not permitted.

10. The learned Counsel for TELCO quoted clauses of the warranty which are as under:

This warranty shall not apply if the excavator /crane wheeled equipment or any parts thereof shall have been replaced or altered otherwise than in accordance with the standard repair procedure in any way so as in the company's judgment which shall be final and binding to Affect its reliability nor shall it apply if in the company opinion which shall be final and binding the excavator/ crane wheeled equipment has been subjected to accident misuse, negligence, improper or inadequate maintenance and/or servicing including use of other than genuine replacement parts or operation beyond its certified capacity.

The warranty does not cover natural wear and tear or any damages caused by the natural elements or negligent or improper operation, storage or transport during the period of warranty.

11. He further submitted that though the State Commission has quoted his documents relating to service report it has not stressed upon the defects pointed out and advice given by the service engineer. On the other hand it has unnecessarily quoted the letters addressed by the complainant TELCO in extent so. As per the order of the National Commission dated 21.4.2004 the TELCO repaired the vehicle and they filed an affidavit stating that the machine has been repaired but the complainant has refused to acknowledge the same.

Submissions of the learned Counsel for the East India Construction Co.:

12. Learned Counsel for the respondent -East India Construction Co., was the complainant before the State Commission. He contended that the elbow is the main/important part of the Backhoe Loader and it was broken. Despite the advice given by the Service Engineer to replace the same, it was only welded as per the service report dated 25.2.2003. He specifically quoted the following extracts from the order of the State Commission:

"The service report of opposite party No. 1 dated 25.2.2003 is on record which goes to show that the elbow was broken in two pieces and other parts bearing No. 3766 P 052 of elbow are required to be replaced immediately. The same service reports show that engine oil filter as well as engine oil was replaced.?

13. He also quoted the extracts of the letter addressed by East India Construction Co. addressed to TELCO :

Your aforesaid machine supplied belatedly as on 18.2.2003 started giving trouble within 7 days from 24.2.2003, observed severe manufacturing defect on 24.2.2003 and was under breakdown till your Service Engineer Mr. M.N. Huda to site on 26.2.2003 and did some patch work, befooling the customer and not replacing the exact parts of engine even after observing several defects which resulted irreparable losses to us.

14. He further contended that:

(i) One of the vital parts was broken due to manufacturing defect which resulted total non-funtioning of the machine. The grievance of the complainant further stood corroborated from the various service reports submitted by the engineer from time-to-time. The engineers of the opposite party have however temporarily made the machine functional but, thereafter, there were frequent breakdowns of the machine.

(ii) In such circumstances non-redressal of the grievance of the complainant, is an apparent deficiency in service on the part of the opposite party. The machine supplied being defective one, the deficiency in service on the part of the opposite party is clearly visible.

(iii) In such a short time, such major break-down have been occurred because of manufacturing defects which required replacement as has been rightly suggested by the Service Engineer.


1.5. The State Commission has gone into the preliminary objections regarding maintainability of the complaint and have answered all these points convincingly. Before this Commission, the learned Counsel for the appellant - TELCO based his argument on two main points, (a) the complainant is not a consumer under the Act as it is a commercial transaction, and (b) secondly the defects occurred in the equipment due to the mishandling of the equipment and also due to non-use of proper fuel and lubricants.

16. The first issue has been answered by this Commission in a catena of judgments wherein it has held that even though the machine /equipment is used for commercial/ industrial purposes if any manufacturing defect occurs during the warranty period then the issue is covered under the Act and for that purpose purchaser of the equipment is entitled to file a complaint under the Act. This point has been elaborated in the following judgments some of which are quoted below :

In Meera & Co. Ltd. v. Chinar Synten Ltd., II (2004) CPJ 24 (NC)=2004 CTJ 1086 (CP) (NJCDRC), this Commission has held that even if the generating set purchased by the complainant for a commercial purpose, it suffered the alleged defects during its warranty period of one year and, therefore, the complainant as well within its right to move the Consumer Forums under the Act, it being a consumer of the opposite party's service. This Commission also mentioned that if any authority is needed on that settled position in law, reference may be made to the decision in Amtrex Ambience Ltd. v. Ms. Alpha Radios and Ant., I (1996) CPJ 324 (NC)=1996 CTJ 906 (CP).

17. In Amtrex Ambience Ltd.'s case this Commission has held that where the allegation of the complainant was that there was malfunctioning of the machinery/equipment during the period of warranty when the manufacturer had undertaken to keep the machinery in good working condition, even if sold for commercial purpose, the purchaser will certainly be a consumer under Section 2(l)(d)(ii) in respect of service rendered or to be rendered by the seller for the proper functioning of the machinery/equipment, system during the period of warranty.

18. Similar was the finding of the National Commission in O.P. /290/1997 - Jindal Drilling & bid. Ltd. v. Indocom Engineers Pvt. Ltd. & Anr.

19. Hence, it is very clear that M/s. East India Construction Co. is a consumer and is entitled for protection under the Act.

20. The next issue to be considered whether the equipment supplied by TELCO suffered from manufacturing defects. In this case it is profitable to refer to the frequent complaints made by the buyer of the equipment who has stated that the most important part of the machine Backhoe Loader namely the 'Elbow' was broken and instead of replacing the same it was welded. The service report dated 13.3.2003 indicates that there was several problems and efforts were made to rectify the same. The service report dated 21.3.2003 indicates that wire harness was damaged. The subsequent report dated 5.5.2003 also indicates several defects which have been analysed in great detail by the State Commission. It is true that the Service engineer advised use of particular type of fuel. It is nowhere proved that good quality fuel, engine oil were not used. The purchaser of the equipment is a contractor of repute. A business man would like to use pure quality fuel for such a costly equipment. Repeated correspondence with the East India Construction Co. addressed by TELCO from 8.5.2003 onwards to 5.6.2003, etc. speaks the volume about the defects in the equipment and continuous breakdown of the machinery despite repairs made time-to-time by the Service Engineer.

21. Hence, it is clear that manufacturing defects were noticed during the warranty which could not be rectified properly resulting in deficiency of service.

22. Now the issue is relating to the relief to be granted. This Commission in one of its interim orders had directed the TELCO to repair the machine and file an affidavit. They

Please Login To View The Full Judgment!
have filed the affidavit stating that they have repaired the machine. However, it is clear from the records that the Construction Company was not satisfied with the repair and they did not agree to sign the same. The learned Counsel for the Construction Company asserted that the machine was idle and they were not satisfied with the repairs undertaken and hence their representatives were not agreeable to sign the inspection report. A perusal of the service report indicated that the service engineer went for inspection on 18.7.2004 at the site and found that the machine was working satisfactorily. The complainant had by the time lost faith in the repair work undertaken and they had expressed that every time it was repaired it gave only temporary relief and not a permanent cure. 23. Accordingly, we do not find any inconsistency in the conclusions of the State Commission holding that the opposite parties were deficient in service. However, we would feel that there is defect in the relief granted by the State Commission. The State Commission had ordered the refund of the entire cost of the machine of Rs. 15,37,000 without directing the complainant to return the equipment to the manufacturer/dealer. This order requires modification, as the complainant cannot have the cake and eat it to. Hence the order of the State Commission is modified to direct that the complainant shall return the equipment to the dealer. 24. The complainant has also filed an appeal seeking enhancement of compensation to his original claim of Rs. 64,56,000, but we find that he has not filed any affidavit with detailed calculations and justification fur such a huge claim towards damages/ compensation towards non-utility of machine, per hour loss, etc. Hence, it is not possible to grant this prayer. Accordingly, the appeal filed by the complainant is dismissed. 25. No order as cost.