LOURDES STY.SNEHANJALI GIRLS HOSTEL&ANR. Vs M/S H & R JHONSON(I) LTD..
Bench: T.S. THAKUR,V. GOPALA GOWDA,R. BANUMATHI
Case number: C.A. No.-007223-007223 / 2016
Diary number: 36754 / 2013
Advocates: K. V. MOHAN Vs
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NON-REPORTABLE
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7223 OF 2016
(ARISING OUT OF SLP(C) NO. 36918 OF 2013)
LOURDES SOCIETY SNEHANJALI GIRLS HOSTEL AND ANR. ……APPELLANTS
Vs.
M/S H & R JOHNSON (INDIA) LTD. & ORS. ……RESPONDENTS
J U D G M E N T
V.GOPALA GOWDA, J. Leave granted.
2. This civil appeal by special leave is directed
against the impugned judgment and order dated
23.09.2013 passed by the National Consumer Disputes
Redressal Commission, New Delhi in Revision Petition
No. 4047 of 2006 whereby it has allowed the revision
petition filed by respondent nos. 1-4 and set aside
the order dated 12.10.2006 passed by the Gujarat State
Consumer Disputes Redressal Commission, Ahemdabad in
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Appeal No. 741 of 2006.
3. The brief facts of the case in nutshell are as
under:-
The appellant no.1-Lourdes Society Snehanjali
Girls Hostel is a society registered under the
Societies Registration Act vide society registration
no.Guj/525/Surat and also a trust registered, vide its
Trust registration no. F/430/Surat. The
appellant-Society is a charitable institution running
a girls hostel at Surat for the benefit of Adiwasi
children. On 02.02.2000, the appellant-Society
purchased vitrified glazed floor tiles from respondent
no.5 (since deleted from the array of parties vide
Court’s order dated 01.04.2015) who was a local agent
of respondent no.1-Company for a sum of Rs.4,69,579/-.
The said tiles, after its fixation in the premises of
the hostel, gradually developed black and white spots.
The appellant no.1 wrote several letters to respondent
no.4 i.e., Sales Executive of respondent no.1-company,
informing about the inferior and defective quality of
the tiles. Thereafter, the respondent no.5-local agent
visited the spot but failed to solve the issue.
4. An architect J.M. Vimawala was appointed by the
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appellant-Society to assess the damage caused due to
defective tiles. The architect assessed the loss to
the tune of Rs.4,27,712.37 which included price of the
tiles, labour charges, octroi and transportation
charges. Thereafter, the appellant-Society served a
legal notice dated 12.08.2002 to the respondents
making a demand of the said amount but no response was
shown by the respondents.
5. The said inaction on the part of the respondents
made the appellant-Society to file a Consumer
Complaint No. 743 of 2002 against the respondents
before the District Consumer Disputes Redressal Forum
at Surat (for short “the District Forum”) for claim of
the said amount.
6. The District Forum appointed a Court Commissioner
to examine and find out the manufacturing defects in
the tiles as claimed by the appellant-Society. After
examination, the Court Commissioner submitted a report
dated 21.09.2004 stating therein that the tiles were
having manufacturing defect.
7. The District Forum vide its order dated 31.12.2005
held that the tiles supplied by the respondents had
manufacturing defect. The respondents committed an
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unfair trade practice by supplying such defective
tiles. By holding the respondents jointly and
severally liable, the District Forum directed the
respondents to pay to the appellants a sum of
Rs.2,00,000/- along with interest @9% p.a. from the
date of complaint i.e., 31.10.2002 till its recovery.
The respondent no.1 was directed to pay the above
amount to the appellant within a period of 30 days
from the date of order of the District Forum.
8. Being Aggrieved, the respondents filed First
Appeal No. 741 of 2006 before Gujarat State Consumer
Dispute Redressal Commission, Ahmedabad (for short
“the State Commission”) challenging the said order of
District Forum urging various grounds.
9. The State Commission dismissed the said First
Appeal of the respondents by its order dated
12.10.2006 and confirmed the order passed by the
District Forum.
10. Having become unsuccessful before the State
Commission, the respondents filed Revision Petition
No. 4047 of 2006 before the National Consumer Disputes
Redressal Commission, New Delhi (hereinafter referred
to as “the National Commission”) questioning the
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validity and correctness of the order passed by the
District Forum and the State Commission.
11. On 12.03.2012, the appellant-Society also made an
application being I.A. No.1847 of 2013 in Revision
Petition No. 4047 of 2006 to the National Commission
for invoking the powers under Sections 14(d) and
14(hb) of the Consumer Protection Act, 1986 and for
awarding sufficient amount of compensation in addition
to amount already awarded by the District Forum.
12. The National Commission vide its order dated
23.09.2013 reversed the findings of the District Forum
and the State Commission holding that the
appellant-Society has failed to establish that it is a
consumer within the meaning of Section 2(d) of the
Consumer Protection Act, 1986.
13. In support of their case, the learned counsel
appearing on behalf of both the parties made the
following submissions.
Mr. Ashok Panigrahi, the learned counsel on behalf
of the appellant-Society contended that the National
Commission has erred in coming to the conclusion that
the appellant-Society is a commercial establishment
and thus, not covered by the definition of the term
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‘consumer’ under Section 2(d) of the Consumer
Protection Act, 1986. It was further submitted by him
that it is unjustified on the part of the National
Commission to hold that the Memorandum of Association
and byelaws of the appellant-society which show that
it is a charitable institution and not any commercial
establishment were not filed before the District Forum
but filed at the stage of Revision before the National
Commission. It was further submitted by the learned
counsel that the District Forum and the State
Commission have gone through the registration
certificate and Memorandum of Association of the
appellant-Society.
14. He further submitted that the National Commission
has erred in holding that the case M/s Kusumam Hotels
Pvt. Ltd. v. M/s Neycer India Ltd.1 is applicable to
the facts and circumstances of the present case.
15. It was further contended by him that both the
District Forum as well as the State Commission have
held that the appellant-Society cannot be regarded as
a commercial establishment. It is completely
unjustified on the part of the National Commission to
1 III (1993) CPJ 333 (NC)
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hold that the appellant-Society being a commercial
establishment is not a consumer within the meaning of
the term ‘consumer’ under Section 2(d) of the Consumer
Protection Act, 1986 in complete ignorance of the
Memorandum of Association and the byelaws of the
appellant-Society.
16. On the contrary, Mr. Sudhir K. Makkar, the learned
counsel on behalf of the respondents sought to justify
the impugned judgment and order of the National
Commission contending that the same is based on sound
reasoning without error and therefore, the same need
not be interfered with by this Court.
17. It is further contended by him that the District
Forum and the State Commission have erred in relying
on the report dated 21.09.2004 given by the Court
Commissioner as his qualification was not stated in
the report. The report was based on visual inspection.
Further, both the District Forum as well as the State
Commission have erred in not considering the test
certificate produced by respondent no.1 as the same
was based on modern tile testing technology in its
laboratory. In the absence of expert evidence, it was
wrong on the part of the District Forum as well as the
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State Commission to hold that tiles had manufacturing
defect.
18. After hearing the learned counsel for both the
parties we come to the following conclusion:
The National Commission has exceeded its
jurisdiction in exercising its revisional power under
Section 21(b) of the Consumer Protection Act, 1986 by
setting aside the concurrent finding of fact recorded
by the State Commission in First Appeal No. 741 of
2006 vide its judgment dated 12.10.2006 wherein the
finding of fact recorded by the District Forum was
affirmed.
19. The facts of the instant case clearly reveal that
the National Commission has erred in observing that
the appellant-Society is a commercial establishment by
completely ignoring the Memorandum of Association and
byelaws of the appellant-Society. Both the District
Forum as well as the State Commission have rightly
held that the appellant-Society is a charitable
institution and not a commercial entity. The relevant
portion of the order passed by the District Forum
reads thus:
“6. ……It is not in dispute that complainants
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are running girls hostel in the name of Complainant no.1. Commercial purpose is also explained under the provisions of the Act. So far as activities of the complainants are concerned, they are running girls hostel and receive fees from the students. The complainants are not carrying out commercial activities. Purchase of goods namely tiles are for the purpose of their hostel and it cannot be said that tiles is subject matter of their business. Whenever any person purchases goods for carrying out business for commercial or for livelihood then only question regarding purchase of goods or availing any activities from trader or professional arises. The complainants are not carrying on business of purchase from opponents. Otherwise also hostel premises can be constructed and there is no direct relation between commercial activity. Therefore, the defence of opponents that complainants are carrying on business activities and thereby complainants are not consumer is not acceptable. Hence, we hold that complainants are consumer of opponents and defence of opponents is rejected.” (emphasis supplied)
20. The National Commission has erred by applying the
decision in M/s Kusumam Hotels Pvt. Ltd. case (supra)
in holding that the appellant-Society is not a
consumer in terms of the definition under Section 2(d)
of the Consumer Protection Act, 1986 as the purchase
of tiles and laying in the same in the rooms of the
girl’s hostel run by the appellant-Society is clearly
not for any commercial purpose. The decision in M/s
Kusumam Hotels Pvt. Ltd. case (supra) has no
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application to the present fact situation for the
reason that in the said case complainant was a hotel
and the tiles purchased by the hotel were for
commercial purpose as the hotel business involves the
act of profit making, whereas in the instant case the
girl’s hostel in question is run by the
appellant-Society as one among its various charitable
activities for the benefit of adivasi students. The
appellant-Society is supporting adivasi/tribal girls
to pursue their education by providing hostel
facilities. The expenses for the food and electricity
are being paid by the inmates of the hostel. The
appellant-Society is maintaining the hostel free of
cost and no charges in the form of rent, repairs and
maintenance are collected from the inmates. Thus, the
appellant-Society cannot be considered as any
commercial establishment striving for profit.
21. Further, the National Commission while passing the
impugned order has ignored certain facts which throws
light on callous attitude on the part of the
respondents viz., when the defect in the tiles were
brought to the notice of the respondents by sending
various letters, there was no action on their part.
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Later a local agent on behalf of the respondent
no.1-Company visited the premises of the girl’s hostel
and verified that the said tiles were defective and
damaged. However, no proper attention was paid by the
respondents towards the issue. Further, to assess the
damage caused to the appellant-Society by the use of
the said defective tiles, a registered architect and
interior designer, J.M. Vimawala was hired by the
appellant-Society, who in his report declared the
tiles to be defective and assessed the damage to the
appellant-Society to the tune of Rs.4,27,712.37.
Thereafter, the appellant-Society made a demand of the
said amount as damages from the respondents vide legal
notice dated 12.08.2002. But the respondents did not
pay any heed to the said notice as well. Because of
such irresponsible and indifferent attitude on the
part of the respondents, the appellant-Society was
compelled to file Consumer Complaint No. 743 of 2002
before the District Forum.
22. The District Forum, after appreciating the
pleadings and evidence on record has rightly awarded
Rs. 2 lakhs as damages to the appellant-Society
towards defective tiles supplied by the respondents
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along with compensation towards mental harassment and
cost of present proceedings with interest @9% p.a.
from the date of complaint till its recovery. In
concurring with the findings of the District Forum,
the State Commission, after proper re-appreciation of
the facts and evidence on record has rightly exercised
its jurisdiction by dismissing the appeal of the
respondents. The National Commission should not have
interfered with the concurrent findings of fact
recorded in the judgment impugned before it
particularly having regard to the nature of the
jurisdiction conferred upon it by Section 21 of the
Consumer Protection Act, 1986. Section 21 of the
aforesaid Act reads thus:
“21. Jurisdiction of the National Commission.— Subject to the other provisions of this Act, the National Commission shall have jurisdiction— (a) to entertain—
(i) complaints where the value of the goods or services and compensation, if any, claimed exceeds rupees one crore; and (ii) appeals against the orders of any State Commission; and
(b) to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any State Commission where it appears to the National Commission that such State Commission has exercised a jurisdiction not vested in it by law, or has failed to exercise a
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jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity.”
23. The National Commission has to exercise the
jurisdiction vested in it only if the State Commission
or the District Forum has either failed to exercise
their jurisdiction or exercised when the same was not
vested in them or exceeded their jurisdiction by
acting illegally or with material irregularity. In the
instant case, the National Commission has certainly
exceeded its jurisdiction by setting aside the
concurrent finding of fact recorded in the order
passed by the State Commission which is based upon
valid and cogent reasons. The National Commission has
reversed the order passed by the State Commission by
wrongly applying the decision of M/s Kusumam Hotels
Pvt. Ltd. case (supra) to the set of facts in the
present case. In the said case, the complainant was a
hotel, it was considered to be a commercial entity and
therefore, it was kept out of the purview of the
definition of ‘consumer’ under Section 2(d) of the
Consumer Protection Act, 1986. However, the National
Commission has failed to appreciate the fact that in
the present case, the appellant-Society is not a
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commercial establishment rather a registered society
helping the adivasi students in their education by
providing hostel facilities. The charges, if any, for
accommodation in the hostel are for maintaining the
hostel and not for making profit. Thus, the
appellant-Society is consumer within the meaning of
the term ‘consumer’ under Section 2(d) of the Consumer
Protection Act, 1986. The National Commission has
erroneously accepted the contention urged on behalf of
the respondents in the revisional proceedings that
supply of tiles to the appellant-Society by respondent
no. 1 through its local agent is for commercial
purpose. The said finding is based on the decision in
M/s Kusumam Hotels Pvt. Ltd. case (supra), which case
absolutely has no application to the fact situation.
24. Therefore, the concurrent finding of fact recorded
by the District and the State Commission has been
erroneously interfered with by the National Commission
by passing the impugned order, which is liable to be
set aside. For the aforesaid reasons, the appeal of
the appellant-Society must succeed.
25. For the reasons stated supra this appeal is
allowed, the impugned order of the National Commission
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is hereby set aside and we restore the order of the
District Forum which is affirmed by the State
Commission. The matter has been under litigation for
the last fourteen years, we direct the respondents to
pay or deposit the amount so awarded by the District
Forum along with interest @9% p.a. within six weeks
from the date of receipt of the copy of this judgment.
The costs of Rs.50,000/- of these proceedings are also
awarded in favour of the appellant-Society.
……………………………………………………………CJI [T.S. THAKUR]
………………………………………………………………J. [V. GOPALA GOWDA]
………………………………………………………………J.
[R. BANUMATHI]
New Delhi, 2nd August, 2016