NCDRC Affirms Finding Of Deficiency In Machinery Supply Case; Lowers Interest From 18% To 12%
Pranav B Prem
The National Consumer Disputes Redressal Commission (NCDRC) has upheld the findings of the Maharashtra State Consumer Disputes Redressal Commission in a machinery supply dispute, affirming the seller’s liability for deficiency in service but reducing the interest rate awarded to the complainant from 18% to 12% per annum. A Bench comprising Justice A.P. Sahi (President) and Mr. Bharatkumar Pandya (Member) passed the order while hearing an appeal filed by Shivajirao More (Appellant/OP-1) against the State Commission’s decision directing refund of ₹9,50,000 for failure to supply and install machinery as agreed.
Background
The complainant, Siddhanath Sawant (Respondent No. 1), approached Shivajirao More (OP-1) for the purchase and installation of machinery used in the manufacture of grey boards. The appellant represented that he was in a business arrangement with M/s Mangalam Engineering Works (OP-2), the alleged manufacturer of such machinery. Relying on these representations, the complainant entered into an agreement dated 10 March 2000, under which the appellant acknowledged receipt of ₹9,50,000 and undertook to supply, install, and commission the unit by 1 May 2000. Despite full payment, the appellant failed to deliver or install the machinery within the stipulated period.
Aggrieved, the complainant filed Consumer Complaint No. 47/2003 before the Maharashtra State Commission, alleging deficiency in service. After evaluating the evidence, the State Commission found the appellant liable and directed refund of ₹9,50,000 with 18% annual interest from 1 May 2000 until realisation. The appellant challenged this order before the National Commission, claiming that the complainant was not a “consumer” under the Consumer Protection Act, 1986, and that there was no privity of contract between them.
Appellant’s Contentions
The appellant contended that there was no direct contractual relationship with the complainant, as the demand drafts were issued in favour of M/s Mangalam Engineering Works (OP-2). He argued that any payments received were later transferred to that firm. It was further submitted that the machinery had already been supplied and installed at the complainant’s premises in October 1999, and the unit was functional as evidenced by an electricity connection granted by the MSEB in June 2000. The appellant alleged that the agreement dated 10 March 2000 was fabricated on a blank signed paper. He also argued that the complainant was not a ‘consumer’ since the machinery was purchased for commercial manufacturing, not for self-employment or livelihood purposes.
Respondent’s Submissions
The complainant denied the appellant’s claims and maintained that the entire consideration was paid to OP-1, as recorded in the written agreement of 10 March 2000. The respondent asserted that the document itself proved the non-delivery of machinery, since it expressly required supply and installation by 1 May 2000. He argued that the transaction was undertaken for earning livelihood through self-employment, and therefore fell within the scope of “consumer” under Section 2(1)(d) of the Consumer Protection Act.
Findings of the Commission
The NCDRC rejected the appellant’s contention regarding lack of privity and held that a clear contractual relationship existed between the complainant and the appellant. Upon reviewing payment records and submissions from M/s Mangalam Engineering Works, the Commission noted that payments made to the manufacturer were subsequently transferred to the appellant, establishing that he had received the full amount of ₹9,50,000. The Bench observed: “The direct payments, including the demand draft of ₹1.4 lakh and cash of ₹1.1 lakh, were admittedly received by the appellant. The balance amount was also passed on to him by OP-2, confirming receipt of the entire consideration.”
On the question of the complainant’s status, the Commission held that the machinery was purchased for livelihood purposes and not for large-scale commercial use. Hence, the complainant was rightly treated as a consumer under the Act. The NCDRC further found that the appellant had failed to prove that the machinery was ever supplied or installed, noting the absence of credible evidence or invoices. The Commission remarked: “The appellant has not produced any positive evidence to show that the machinery was supplied or installed within the stipulated time. The agreement dated 10.03.2000 and the complainant’s payment records establish deficiency in service on part of OP-1.”
Reduction of Interest
While affirming the State Commission’s conclusion on liability, the NCDRC considered the 18% annual interest awarded by the State Commission to be excessive and disproportionate. The Bench noted that the complainant’s loan exposure was limited to ₹7 lakh, and a reduced rate would balance equity. Accordingly, it modified the order to provide interest at 12% per annum from 1 May 2000 until realisation. The operative part of the order reads: “Subject to modification in the rate of interest, the appeal stands dismissed. The appellant shall refund ₹9,50,000 to the complainant with interest at 12% per annum from 01.05.2000 till realisation.”
The NCDRC upheld the State Commission’s order finding deficiency in service on the part of the appellant for failure to supply the machinery despite receiving full payment. The Commission, however, reduced the rate of interest from 18% to 12% per annum, balancing the equities between the parties. The appeal was accordingly dismissed with modification in interest and no separate order as to costs.
Appearance
For the Appellant: Mr. Mahaling Malikarjun Pandarge, Advocate
For the Respondents: Mr. Anand Patwardhan, Advocate for R-1 R-2 Deleted Vide Order Dated 11.02.15
Cause Title: Shivajirao More vs Siddhanath Sawant
Case No: First Appeal No. 75/2013
Coram: Justice A.P. Sahi (President), Mr. Bharatkumar Pandya (Member)
