deficiency in service

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Delhi State Consumer Disputes Redressal Commission (DSCDRC): Coram of Dr Justice Sangita Dhingra Sehgal (President) and Anil Srivastava (Member) decided on the question whether if a car is purchased for the personal use of a company’s Vice President, would the acquisition of such a car come under the Consumer Protection Act.

Present complaint was filed against Mercedes Benz India Private Limited and T&T Motors Limited.

As per the facts of the matter, complainant 1 had purchased a ‘Mercedes Benz C 220’ Car from OP 2 for the personal use of Complainant 2, being Vice president of the company. The said car broke down during the rainfall in Delhi and was sent to OP 3 for repair.

However, till the finding of the present complaint, the complainants received more than five estimates for repair of the said car from the opposite parties, which in total amounted to more than the value of the car.

The car was not delivered by the OPs even after the lapse of 3 months due to which the complainants raised grievances to the OPs, alleging manufacturing defect in the vehicle resulting in deficiency of service and unfair trade practice.

OPs contended that the complainants cannot be stated to be a consumer under the Consumer Protection Act 1986 as the said car was purchased by the company for its Vice president and the same amounted to commercial purpose.

Further, it was added that the vehicle was used in violation of the instructions contained in Owner’s manual and due to negligence, the car broke down.

Cause for delay in repairing was due to the late approval by the Insurance company.

Analysis, Law and Decision

Whether Complainants are consumer or not?

 Bench referred to the decision of National Consumer Disputes Redressal Commission in Crompton Greaves Limited v. Daimler Chrysler India Private Limited, 2016 SCC OnLine NCDRC 2121 wherein it was observed that, If a car or other goods are purchased or the services are hired or availed by a company for the personal use of its directors or employees, the purpose behind such acquisition is not to earn profits or to advance the business activities of the company. 

The acquisition of the goods or the hiring or availing of services, in order to bring the transaction within the purview of section 2 (1) (d) of the Consumer Protection Act, therefore, should be aimed at generating profits for the company or should otherwise be connected or interwoven with the business activities of the company. The purpose behind such acquisition should be to promote, advance or augment the business activities of the company, by the use of such goods or services.

Hence, relying on the above-settled proposition of law, Commission in the present matter held that complainants are a consumer under the Consumer Protection Act, 1986 as the said car was purchased for the personal use of the complainant 2 and the purpose behind such purchase was not to earn profits or to advance the business activities of the company.

Deficiency of Service

 OPs failed to show any documentary evidence that the car broke down due to negligence on the part of the complainants or due to the violation of instructions contained in Owner’s manual, hence Commission was in consonance with the contention of the complainants that the said car suffered from some manufacturing defects which were suppressed by the OPs.

Complainant 2 was put to great inconvenience and remained without a vehicle for 4 months.

Bench directed the OP 2 to pay Rs 2,50,000 to the complainants as compensation for inconvenience, mental agony and harassment faced by the complainants and Rs 50,000 as litigation costs. [CJ DARCL Logistics Ltd. v. Mercedes Benz India (P) Ltd., Complaint No. 584 of 2013, decided on 05-05-2021]

Advocates before the Commission:

Manu Beri, Counsel for the Complainant.

Rabiya Thakur, Counsel for OP-1.

Counsel for OP-3.

Case BriefsDistrict Court

State Consumer Dispute Redressal Commission, Odisha (SCDRC): Dr D.P. Choudhury (President) modified the compensation amount awarded to a Law Student in light of being subjected to ‘Deficiency of Service’ and ‘Unfair Trade by ‘Amazon’.

The instant appeal was filed under Section 15 of the erstwhile Consumer Protection Act, 1986.

Factual Matrix

While the appellant was in his first year of law school, the OP had floated an offer for sale of a Laptop without Laptop Bag for Rs 190 against the price of Rs 23,499.

OP had confirmed for placing of the order and two hours after receiving the confirmation, the appellant received a phone call from the OP’s Customer Care Service Department stating that the subject order stood cancelled due to the price recession issue.

Since the complainant was in need of a laptop to prepare his project, he raised an objection for such cancellation.

On not receiving any response from the OP, complainant issued a legal notice.

Deficiency in Service

Appellant had to purchase another laptop but suffered from mental agony for such cancellation, hence filed a complaint alleging the deficiency in service and unfair trade practice.

Complainant claimed compensation of Rs 50,000 and Rs. 10,000 towards litigation cost.

District Forum had allowed the complaint partly by directing the OP to pay compensation of Rs 10,000 for mental agony and to pay Rs 2,000 towards the cost of litigation.

Hence, the aforesaid impugned order was challenged by the complainant/appellant stating that the District Forum committed error in law by not deciding to direct to pay Rs 50,000 as compensation.

Analysis, Decision and Law

Bench observed that “When there is an advertisement made for offer placed by the OP and made the offer as per the material available on record and complainant placed the order and same got confirmed, the agreement is complete.”

Another aspect to be noted was that, when the OP had allowed Rockery Marketing at his platform as per written version, the responsibility of the OP could not be lost sight of.

Since there was a breach of contract by OP, OP is held to be liable to pay the damages.

Commission agreed with District Forum’s observation that OP not only negligent in providing service but was also involved in unfair trade practice.

Taking all the factors discussed above for consideration, Bench concluded that compensation awarded should be of Rs 30,000 for unfair trade practice and punitive damages of Rs 10,000. Further, with regard to the cost of litigation Rs 5000 needs to be awarded.

On failing to make the above payments to the complainant within 30 days, the said amounts will carry interest at the rate of 12% per annum.

In view of the above, the appeal was disposed of. [Supriyo Ranjan Mahapatra v. Amazon Development Centre India (P) Ltd., First Appeal No. 492 of 2018, decided on 11-01-2021]

Read More:

District Consumer Forum directs ‘Amazon’ to pay compensation for “deficiency in services”

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National Consumer Disputes Redressal Commission (NCDRC): A Division bench of Justice R.K. Agrawal (President) and S.M. Kanitkar (Member) directed the developer to refund the principal amount along with compensation in the form of 9% p.a. interest and 25,000 as litigation costs in view of a 4-year delay in giving the possession of the apartment.

Consumer complaint was filed against Pioneer Urban Land and Infrastructure Limited.

Complainants booked an apartment in the Pioneer Group Housing Project called “Araya” for an amount of Rs 30,00,000. Pursuant to the execution of apartment buyer’s agreement, a unit was allotted to the complainants.

Complainants submitted that on visiting the site regularly they were surprised to see no progress in the construction of the project. Entire site seemed to be an abandoned piece of land with semi constructed structure. 

Failed to deliver the possession of Apartment

Till 16.12.2015 complainants had paid a sum of 3,22,18,954 out of the total consideration of 3,45,22,779 i.e. almost 95% of the total Consideration towards the cost of the apartment.

However, the Developer failed to deliver the possession of the Unit, complete in all respect, even after expiry of a long period of approx. five years despite repeated requests and remedies over letters, email, phone calls and personal visits.

Hence, in view of the above, complainants alleged deficiency in service on the developer’s part.

Complainants by the present petition sought more than contractual benefits from the developer.

Natural causes

Developer contended that the delay in completing the project was due to reasons beyond their control. Further, for refund and compensation, the Complainants have to adhere to the provisions made in Clause 11.5 of the Agreement.

Clause 11.5 of the Apartment-Buyer’s Agreement

Bench observed that, with regard to Clause 11.5 of the Agreement upon which the reliance has been placed by the Developer for refund and compensation payable to the Complainants, this Commission in Consumer Complaint No. 2000 of 2016 – Geeta Bansal v. Ireo Grace Realtech (P) Ltd.  – decided on 24-09-2018,  held that such a Clause is wholly one sided and unfair and, therefore, the Complainants would not be bound by the same. If the Developer is unable to justify the delay, this Commission would be competent to direct refund of the amount paid by them to the Developer along with appropriate compensation.

However, Pioneer had approached Supreme Court against the decision taken by Commission in the above Order, but Supreme Court affirmed the finding returned by this Commission and dismissed the Civil Appeals.

Hence, in the present matter, commission referring to the Supreme Court’s decision, allowed the complainant and directed the OP-Developer to refund the principal amount with compensation in form of simple interest @9% p.a. with costs of Rs 25,000 to be pid to the complainants.

Interest was awarded in light of the current market situation and three months times has been granted to the developer to refund the same. [Smita Uban v. Pioneer Urban Land & Infrastructure Ltd., Consumer Case No. 1430 of 2017, decided on 23-07-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Prem Narain, Presiding Member, has directed the developers of “Greenopolis” to refund homebuyers their amount deposited at the interest rate of 9% p.a. and in a few complaints the bench has asked for the possession to be handed over by 30-09-2020 with the occupancy certificate and with a delayed penalty of 6% p.a. on the deposited amount.

Consumer Complaints

Allottees of the project “Greenopolis” situated in Gurgaon alleged deficiency in service on the part of Opposite parties — Three C Shelters (P) Ltd.

Original allottee booked an apartment in OP’s project for a consideration of Rs 87,16, 800/-, apartment was allotted and later the same was endorsed in favour of complainant.

OP’s failed to deliver the possession in 42 months inclusive of 6 months grace period. Till date, the complainant has paid Rs 75,96,776/- to OP’s.

Several complaints have been filed by homebuyers with regard to no delivery and possession of the apartments for which they have paid installments of a very huge amount.

Analysis and Decision

No breach of agreement by complainants | Entitled to relief under Sections 54 and 55 of the Indian Contract Act, 1872

Argument with regard to Sections 54 and 55 of the Indian Contract Act, 1872, OPs relied on the Commission’s decision in DLF Southern Town (P) Ltd. v. Dipu C. Seminal, wherein the complainant had deposited only the booking amount and no installments were paid whereas in the present complaints installment have been paid upto reasonable limit and on no progress in construction, the payment was stopped later.

Force Majeure

Defence of force majeure by OPs cannot be taken as there was no ban on construction and OPs should have put their resources and managerial skills to bring water from outside to complete the construction in time.

Joint Project

Three C Shelters (P) Ltd. pleaded for force majeure conditions for the delay and on the other hand Orris Infrastructure (P) Ltd. pleaded that Three C Shelters was responsible for delay in construction. Both of them had signed on the “Apartment buyer Agreement” and hence Commission stated that both of them were responsible for delay.

Apartment Buyer Agreement

Bench observed that the OP’s clearly have failed to complete the project and give the possession in time to the homebuyers as per the Apartment Buyer Agreement.

Hence allottees have the right to ask for a refund due to the inordinate delay which has been beyond 1 year, the possession was to be given in the year 2016.

No Forfeiture of earnest money

So far as the question of forfeiture of earnest money is concerned, it is seen that the complainants are seeking refunds as the project has been inordinately delayed. Even though the RERA, Haryana has taken a meeting to expedite the project and Three C Shelters (P) Ltd. has agreed to complete the project in phases.

Commission noted that OPs have not paid EDC and IDC to the Government and it seems that the OPs were not serious in timely completing the project. Thus, in these circumstances, there can be no question of forfeiture of earnest money.

Supreme Court in Haryana Urban Development Authority v. Diwan Singh, (2010) 14 SCC 770, observed that subsequent buyers are entitled to receive interest only after the date of endorsement in their favour.

In view of the above, Commission directed Three C Shelters to refund the amount at 9% interest per annum.

In one of the cases, Orris Infrastructure (P) Ltd. is directed to complete the construction work and handover the possession till 30-09-2020 after obtaining an occupancy certificate, and it shall pay interest of 6% p.a. on the deposited amount.

If the possession is not delivered till 30-09-2020, the complainant shall be at liberty to take a refund of the total deposited amount Rs 77,58,581/- along with interest @ 9% p.a. from the date of respective deposits till actual payment. [Sanjay Gupta v. Three C Shelter (P) Ltd., 2020 SCC OnLine NCDRC 178, decided on 20-07-2020]

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National Consumer Disputes Redressal Commission (NCDRC): A Division Bench of Dr S.M. Kantikar (Presiding Member) and Dinesh Singh (Member) while addressing the present first appeal held that,

“Releasing a dead body by a hospital to an unrelated third person unquestionably constitutes ‘deficiency in service’ within the meaning of Section 2(1)(g) & (o) of Consumer Protection Act, 1986.”

The present first appeal was filed challenging the compensation amount granted by Kerala State Commission for alleged negligence and deficiency in service from Ernakulam Medical Centre (OP-1) that issued wrong dead body of a patient to some other claimant.

Facts pertinent to the case are that, deceased’s body was kept in the mortuary of the hospital, when deceased’s grandson along with his father came for the release of the same, it came as a surprise that the dead body was not of the deceased. Further, it came to light that, V.K. Ramesh (Pubic Relations Officer) of OP-1 had already released the body to immediate relatives of Lt. Col. A.P. Kanthi who had died a day after the deceased and the body released was cremated with religious rites. Relatives of Lt. Col. A.P. Kanthi admitted their mistake and sought apology and thereafter handed over the ashes of the deceased.

It was alleged that that such callous attitude of OPs in wrongly releasing the dead body of the father of the complainants deprived their right to decent cremation of deceased. Aggrieved with the stated a complaint was filed before Kerala State Commission.

OPs contended that it was neither unfair trade practice nor negligence nor deficiency of service on their part. Complaint cannot be maintainable as the claim raised by complainants was beyond the scope of Consumer Protection Act, 1986.

Further, the State Commission partly allowed the complaint by awarding Rs 25 lakhs as compensation. Aggrieved with the same, OPs filed the first appeal.

Commission in the above view held that, it was negligence and failure of duty of care by the PRO who without proper identification wrongly released the dead body of the deceased. 

Commission also observed that,

“complaint is totally misconceived as 2 of the 4 children of the deceased person have attempted to make a fortune out of the mistake committed by a stranger who bonafidely claimed the body of their deceased father. The State Commission ought to have appreciated that it is trite law that awarding of compensation should be on the basis of cogent grounds.”

Concurring with State Commission’s view, bench stated that the point made by the complainants stands proved, i.e. release of the dead body of the complainants’ father to some other person, and thereby depriving the complainants of the last rites and cremation and final journey of the deceased, is decidedly deficiency in service within the meaning of Section 2(1)(g) & (o) of the Act 1986.

Thus, the compensation of Rs 5 lakh to the complainants would be just and equitable, and would meet the ends of justice. [Ernakulam Medical Centre v. Dr P.R. Jayasree, First Appeal No. 273 of 2017, decided on 12-03-2020]

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National Consumer Disputes Redressal Commission (NCDRC): While directing Indian Overseas Bank to pay Rs 50,000 to a person for delay in processing cheque, NCDRC upheld the order of District Forum asking the bank to pay the money to the man while holding deficiency in service on part of the bank. Said order of District Forum was also affirmed by New Delhi State Consumer Disputes Redressal Commission in an appeal filed by the Bank.

Earlier, there was delay by the Bank in crediting of a cheque amount of Rs 24,652.82 into the account of the complainant, who filed complaint in the matter before the District Forum. Before the District Forum, the Bank had contended that the complainant had failed to mention the account number and the account holder’s name on the pay-in-slip, at the time of deposit of the cheque and the particulars were filled up later. District Forum directed the Bank to pay to the complainant a sum of Rs 50,000/- as damages, which was inclusive of the litigation expenses. The order of District Forum was affirmed by the State Commission.

After perusal of material on record, NCDRC observed that as the Bank has not specifically challenged the findings of fact recorded by District Forum and the State Commission that the petitioner had failed to substantiate its stand that the delay in credit of the said amount was because of the reason that the complainant had failed to mention the account number and the account holder’s name on the pay-in-slip, at the time of deposit of the cheque, as being perverse, there is no jurisdictional error in the order, warranting interference in revisional jurisdiction. While affirming the orders of District Forum and New Delhi State Consumer Disputes Redressal Commission, NCDRC dismissed the revision petition filed by the Indian Overseas Bank. [Indian Overseas Bank v. R.K Sharma, 2017 SCC OnLine NCDRC 2, decided on January 2, 2017]

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National Consumer Disputes Redressal Commission (NCDRC): “Since prayer of interest under the scheme to institutions was prohibited, failure to pay interest to the Complainant in that case could not be construed as a case of deficiency in service in terms of Section 2(1)(g) of the Consumer Protection Act,” observed NCDRC and allowed an appeal filed by the Superintendent Of Post Offices, Kolhapur, Maharashtra challenging an order of Maharashtra State Consumer Commission vide which the Department of Posts was directed to refund Rs 60.71 lakh, along with Rs 25,000 as costs to Ichalkaranji Municipal Council in Kolhapur district for alleged deficiency in services.

Earlier, Ichalkaranji Municipal Council (IMC), deposited the amount accumulated in Staff Salary Reserve Fund with Head Post Office at Ichalkarnaji, District Kolhapur, under its Time Deposit Scheme for a period of five years, commencing 13.08.2002.  The interest payable was @ 8.5%/7.5% p.a. According to IMC, at the time of accepting the deposits, it was never informed that such accounts could not be opened by the Council. On the amounts deposited, IMC received interim interest, however, Post Master, Head Post Office, Ichalkarnaji, later informed IMC that in light of the Audit objection, the Time Deposits made in an official capacity in contravention of the Rules, were required to be closed immediately without payment of interest and by recovering the interest already paid. The postmaster’s letter to IMC followed an amendment to the Post Office Savings Account Rules of 1981 that came into effect on July 27, 2005. Prior to the amendment, the Department of Posts, New Delhi, had issued a general statutory rule on March 8, 1995, barring opening of time deposit accounts by institutions. Consequently, the Post Office refunded the amount deposited in the Time Deposits after deducting the interest paid thereon. While alleging the said action to be illegal and arbitrary, IMC filed complaint before the State Commission. The State Commission partly allowed the complaint on the ground that there was deficiency in service on the part of authorities of Postal Department as they made IMC to believe that the Scheme was to continue, without bringing to its notice the change of the Rules from 1995 itself.

The National Commission perused the material on record and heard both the parties at length. While relying on the judgment of Supreme Court in Arulmighu Dhandayudhapaniswamy Thirukoil v. Department of Posts, (2011) 13 SCC 220, NCDRC noted, “In view of the statutory prohibition, the complainant (IMC) was not entitled to any interest and, therefore, there was no deficiency in service on the part of the appellant (senior superintendent of post offices, Kolhapur) in deducting the amount of interest, periodically paid to the complainant on the time deposits in questions.” [Superintendent of Post Offices v. Ichalkaranji Municipal Council, 2016 SCC OnLine NCDRC 1466, decided on November 3, 2016]