TaxTMI 
TaxTMI 
2012 (1) TMI 332
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.... Leave granted in SLP (C) Nos. 32750 of 2009 and 35350 of 2009. 2. Appellant - M/s. National Seeds Corporation Ltd. (NSCL) is a Government of India company. Its main functions are to arrange for production of quality seeds of different varieties in the farms of registered growers and supply the same to the farmers. The Respondents own lands in different districts of Andhra Pradesh and are engaged in agriculture/seed production. They filed complaints with the allegation that they had suffered loss due to failure of the crops/less yield because the seeds sold/supplied by the Appellant were defective. District Consumer Disputes Redressal Forums, Kurnool, Mehboob Nagar, Guntur, Khamman and Kakinada allowed the complaints and awarded compensation to the Respondents. The appeals and the revisions filed by the Appellant were dismissed by the Andhra Pradesh State Consumer Disputes Redressal Commission (for short, 'the State Commission') and the National Consumer Disputes Redressal Commission respectively. 3. The Appellant has questioned the orders of the National Commission, which also implies its challenge to the orders of the State Commission and the District Forums mainly ....
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....st crop with interest at the rate of 12 per cent per annum by alleging that they did not get the expected yield because the seeds sold by the Appellant were defective. 5.3 In the reply filed on behalf of the Appellant, it was pleaded that the seeds were purchased by Respondent No. 1 alone and there was no evidence of joint cultivation by the Respondents. The Appellant denied that the seeds were defective and pleaded that Respondent No. 1 did not get the expected yield because sufficient quantity of seeds had not been used for cultivation and there were no rain during the relevant period. It was also claimed that there was no complaint from any other farmer, who had purchased the same variety of seeds. 5.4 By an order dated 1.12.1999 passed in IA No. 141 of 1999, District Forum, Kurnool appointed Shri D.C. Rama Rao, retired Assistant Director of Agriculture as Commissioner and directed him to submit a report after inspecting the field of the Respondents. The Commissioner conducted the inspection and submitted report dated 1.12.1999, the relevant portions of which are extracted below: The sunflower crop is raised under rainfed conditions. The soil is black and suitable....
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....imatelogical factors. Hence the wide variation in all the aspects as explained in the earlier paras gives a scope this seed is not standard up to the mark. Particularly Hybrid seed be having with such a wide variation is not ideal. From this I estimate the yield may be around 150 to 200 kgs/Ac as against the 600 to 700 kgs/Ac expected from the variety. (Emphasis supplied) 5.5 The Appellant filed objections against the Commissioner's report and claimed that the assessment made by him was not based on any scientific method and the comparison with the adjacent field without having regard to the nature of soil, water facility etc. was unacceptable. The Appellant also contested the Commissioner's observation regarding satisfactory nature of cultivation by asserting that as per Vyavasaya Panchangam of Acharya N.G. Ranga Agriculture University, Hyderabad, 10 to 12 kgs. seeds were required for one hectare but Respondent No. 1 had used substantially less quantity of seeds for his holding of 21.10 acres. 5.6 The Respondents filed their affidavits along with copies of Invoice bill H. No. 000691 dated 11.6.1999, No. 3 Adangal, letter dated 6.11....
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....cing seeds on its behalf he will get minimum net profit of Rs. 38,000/- per acre within a span of three months. In furtherance of the terms of agreement, the Appellant supplied 5 kgs. of 'bitter gourd' foundation seeds to the Respondent by charging Rs. 1,852.50 towards cost of the seeds, inspection fee etc. The Appellant also appointed a supervisor and the Respondent sowed seeds under his supervision by spending a sum of Rs. 22,470/- towards labour charges, fertilizers and pesticides. In September, 2000, officials of the Appellant visited the field of the Respondent and Ors. who had entered into similar agreements, and rejected the seeds grown by them on the pretext that the same were not fit for certification. 6.2 On receipt of the inspection report prepared by the officials of the Appellant, the Respondent contacted the Horticulture Officer, who also inspected the field and submitted a report with the conclusion that the crop had failed because the seeds were defective. The Respondent then filed a complaint under the Consumer Act and prayed for issue of a direction to the Appellant to pay compensation of Rs. 1,38,322/- with interest at the rate of 18% per annum and com....
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....ut any seeds from the soil and produce them before the District Forum for following the procedure contemplated under Section 13 of C.P. Act. In those circumstances, the sample of seeds could not be sent to the appropriate Laboratory for analysis as contemplated under Section 13 of C.P. Act by the District Forum. (Emphasis supplied) 6.5. The District Forum also opined that the Appellant had failed to substantiate its assertion that the Respondent had not removed off types and diseased plants despite the advice given by the Seed Officer by observing that no evidence had been produced in that regard. The District Forum finally concluded that the foundation seeds supplied to the Respondent were faulty and the Appellant was liable to compensate him. 6.6 The State Commission dismissed the appeal filed by the Appellant and confirmed the order passed by the District Forum. The National Commission considered the objections raised by the Appellant to the maintainability of the complaint, referred to the judgments of this Court in Fair Air Engineers (P) Ltd. v. N.K. Modi (1996) 6 SCC 385, State of Karnataka v. Vishwabharathi House Building Coop. Society (2003) 2 SCC 412, CCI Ch....
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....rt and an Administrative Officer of Peddagopavaram and Yerrupalem to assist him. The Principal deputed Shri P. Sesha Reddy, Associate Professor and the M.R.O. deputed two executive officers to assist the Advocate Commissioner. Notice of the date of inspection was given to the Appellant but no one appeared on its behalf on the appointed day. After conducting inspection with the assistance of Shri P. Sesha Reddy and other officers, the Advocate Commissioner submitted report dated 31.1.1996, the relevant portions of which are extracted below: The field and the tomato fruits were examined by me and the Agriculture Officer and all the persons. The Petitioner was also present, who told that he purchased the tomato seeds from the opposite party/respondent as usual and transplanted the same in the month of Sep. 1995 and also manured and applied pesticides as previous. The plants were sown at a distance of 3 feets from each plant. The tomato trees were grown upto 3 to 5 feets height, but no progress in the tomato fruits. The tomato fruits are small just like small bolls. There is no saleable value in the market for the said tomato fruits. The Agrl. Associate Professor Sri P. Seshi ....
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....ate laboratory along with a direction to make an analysis/test, whichever may be necessary. In other words, there has to be some expert opinion to prove the fact. In the present case, Dr. P. Sesha Reddy had inspected only 9 fields, the details of which have been given by him in his Report and which have been referred to in the earlier paragraph. He did not inspect the fields of other Respondents. His Report is relevant insofar as the Respondents in Revision Petitions Nos. 131, 135, 136, 137, 140, 142, 143 and 150 of 2003 are concerned. Insofar as Respondents in the other 12 Revision Petitions, i.e., Revision Petition Nos. 132, 133, 134,138, 139, 141, 144, 145, 146, 147, 148 and 149 of 2003 are concerned, they have failed to produce any expert opinion to show that the seeds did not germinate in their fields because the seeds supplied were defective. Learned Counsel for the Petitioner raised another objection that under the Seeds Control Order, 1983, the Divisional Officer, Seeds alone is competent to inspect and report about the causes of failure of the crop. It was submitted that Revision Petition Nos. 131, 135, 136, 137, 140, 142, 143 and 150 of 2003 are liable to be dism....
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....bjections to the maintainability of the complaints. Learned Counsel emphasized that the Seeds Act is a special legislation enacted for regulating the quality of seeds and if the Respondents had any grievance about the quality of the seeds then the only remedy available to them was to either file an application under Section 10 of the Seeds Act or to approach the concerned Seed Inspectors for taking action under Section 19 read with Section 21 of that Act. They further argued that even if the complaints filed by the Respondents under the Consumer Act are held to be maintainable, the finding recorded by the District Forums that the seeds sold/supplied by the Appellant were defective is liable to be set aside because the procedure prescribed under Section 13 of the Consumer Act was not followed. Learned Counsel relied upon Section 8 of the Arbitration and Conciliation Act, 1996 and argued that in view of the arbitration clause contained in the agreements entered between the Appellant and the growers, the latter could have applied for arbitration and the Consumer Forums should have non-suited them in view of Section 8 of the Arbitration and Conciliation Act, 1996. An ancillary argument....
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....ondents because they could seeks redressal of their grievance regarding the quality of seeds sold by the Appellant by lodging complaint with the concerned Seed Inspectors with a request for taking action under Section 19 read with Section 21 of the Seeds Act. 13. With a view to increase agricultural production in the country, the Central Government felt the necessity of regulating the quality of certain seeds to be sold for the purpose of agriculture including horticulture and for achieving that object, Parliament enacted the Seeds Act. The Statement of Objects and Reasons enshrined in the Bill, which led to the enactment of the Seeds Act read as under: In the interest of increased agricultural production in the country, it is considered necessary to regulate the quality of certain seeds, such as seeds of food crops, cotton seeds, etc., to be sold for purpose of agriculture (including horticulture). The method by which the Bill seeks to achieve this object are: (a) Constitution of a Central Committee consisting of representatives of the Central Government and the State Government, the National Seeds Corporation and other interests, to advise those Gove....
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....cy to any person selling, keeping for sale, offering to sell, bartering or otherwise supplying any seed of any notified kind or variety. Sections 9 and 9 contain the procedure for grant of certificate. Section 10 provides for revocation of the certificate granted under Section 9. Any person aggrieved by an order made under Sections 9 or 10 can file an appeal under Section 11. Under Section 12, the State Government is empowered to issue notification for appointment of Seed Analysts and define the area of their jurisdiction. Similar provision is contained in Section 13 for appointment of Seed Inspectors. The powers of the Seed Inspector are enumerated in Section 14. Section 15 contains the procedure which is required to be followed by the Seed Inspector for taking samples. In terms of Section 15, the sample taken by the Seed Inspector is required to be sent to the Seed Analyst for the purpose of analysis. Section 16 lays down the procedure for submission of the report by the State Seed Laboratory and Central Seed Laboratory. Section 19 specifies the acts which can be punished with an imprisonment upto six months or with fine of Rs. 1,000/- or with both. Section 21 deals with offences....
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....nd purity specified for that seed under Clause (a) of Section 6. 10. Revocation of certificate - If the certification agency is satisfied, either on a reference made to it in this behalf or otherwise, that: (a) the certificate granted by it under Section 9 has been obtained by misrepresentation as to an essential fact; or (b)the holder of the certificate has, without reasonable cause, failed to comply with the conditions subject to which the certificate has been granted or has contravened any of the provisions of this Act or the rules made there under, then, without prejudice to any other penalty to which the holder of the certificate may be liable under this Act, the certification agency may, after giving the holder of the certificate an opportunity of showing cause, revoke the certificate. 11. Appeal - (1) Any person aggrieved by a decision of a certification agency under Section 9 or Section 10, may, within thirty days from the date on which the decision is communicated to him and on payment of such fees as may be prescribed, prefer an appeal to such authority as may be specified by the State Government in this behalf: Provid....
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....ry under Sub-section (2) is produced in any proceedings under Section 19, it shall not be necessary in such proceeding to produce any sample or part thereof taken for analysis. 19. Penalty. - If any person: (a) contravenes any provision of this Act or any rule made thereunder; or (b) prevents a Seed Inspector from taking sample under this Act; or (c) prevents a Seed Inspector from exercising any other power conferred on him by or under this Act, he shall, on conviction, be punishable- (i) for the first offence with fine which may extend to five hundred rupees, and (ii) in the event of such person having been previously convicted of an offence under this section, with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both. 20. Forfeiture of property - When any person has been convicted under this Act for the contravention of any of the provisions of this Act or the rules made thereunder, the seed in respect of which the contravention has been committed may be forfeited to the Government. 21. Offences by companies. - (1) Where an offence under th....
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.... except that any seed sample may be discarded one year after the entire lot represented by such sample has been disposed of. The sample of seed kept as part of the complete record shall be as large as the size notified in the Official Gazette. This sample, if required to be tested, shall be tested only for determining the purity. 23. Duties of a Seed Inspector. - In addition to the duties specified by the Act the Seed Inspector shall.: (a) inspect as frequently as may be required by certification agency all places used for growing, storage or sale of any seed of any notified kind or variety; (b) satisfy himself that the conditions of the certificates are being observed; (c) procedure and send for analysis, if necessary, samples of any seeds, which he has reason to suspect are being produced stocked or sold or exhibited for sale in contravention of the provisions of the Act or these rules; (d) investigate any complaint, which may be made to him in writing in respect of any contravention of the provisions of the Act or these rules; (g) institute prosecutions in respect of breaches of the Act and these rules; and 23-A. Act....
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....then every person who, at the time of commission of offence was incharge of and was responsible to the company of the conduct of its business can be punished. Rule 13 of the Rules casts a duty on very person selling, keeping for sale, offering to sell, bartering or otherwise supplying any seed of notified kind or variety to keep complete record of each lot of seeds sold for a period of three years. He is also required to keep sample of the seed, which can be tested for determining the purity. 17. Though, the Seeds Act is a special legislation enacted for ensuring that there is no compromise with the quality of seeds sold to the farmers and Ors. and provisions have been made for imposition of substantive punishment on a person found guilty of violating the provisions relating the quality of the seeds, the legislature has not put in place any adjudicatory mechanism for compensating the farmers/growers of seeds and other similarly situated persons who may suffer loss of crop or who may get insufficient yield due to use of defective seeds sold/supplied by the Appellant or any other authorised person. No one can dispute that the agriculturists and horticulturists are the largest cons....
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...., the Consumer Protection Bill was introduced to provide for better protection of the interest of consumers. The salient features of the Consumer Protection Bill were to promote and protect the rights of consumers such as: (a) the right to be protected against marketing of goods which are hazardous to life and property; (b) the right to be informed about the quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices; (c) the right to be assured, wherever possible, access to an authority of goods at competitive prices. (d) the right to be heard and to be assured that consumers interests will receive due consideration at appropriate forums; (e) the right to seek Redressal against unfair trade practices or unscrupulous exploitation of consumers, and (f) right to consumer education. 20. The preamble to the Act shows that this legislation is meant to provide for better protection of the interests of consumers and for that purpose to make provision for establishment of consumer councils and other authorities for the settlement of consumer disputes and for matters connected....
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.... the same. Once the complaint is admitted, the procedure prescribed under Section 13 is required to be followed by the District Forum. Sub-section (1) of Section 13, which lays down the procedure to be followed after admission of the complaint reads as under: 13. Procedure on admission of complaint. - (1) The District Forum shall, on admission of a complaint, if it relates to any goods,: (a) refer a copy of the admitted complaint, within twenty-one days from the date of its admission to the opposite party mentioned in the complaint directing him to give his version of the case within a period of thirty days or such extended period not exceeding fifteen days as may be granted by the District Forum; (b) where the opposite party on receipt of a complaint referred to him under Clause (a) denies or disputes the allegations contained in the complaint, or omits or fails to take any action to represent his case within the time given by the District Forum, the District Forum shall proceed to settle the consumer dispute in the manner specified in Clauses (c) to (g); (c) where the complaint alleges a defect in the goods which cannot be determined without pr....
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....Karnataka v. Vishwabharathi House Building Cooperative Society (supra), CCI Chambers Cooperative Housing Society Limited v. Development Credit Bank Limited (supra), Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha (2004) 1 SCC 305, H.N. Shankara Shastry v. Assistant Director of Agriculture, Karnataka (2004) 6 SCC 230 and Trans Mediterranean Airways v. Universal Exports and Anr. (2011) 10 SCC 316. However, we do not consider it necessary to discuss all the judgments and it will be sufficient to notice some passages from the judgment in Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha (supra). In that case, the 2-Judge Bench noticed the background, the objects and reasons, and the purpose for which the Consumer Act was enacted, referred to the judgments in Lucknow Development Authority v. M.K. Gupta (supra), Fair Air Engineers Private Limited v. N.K. Modi (supra) and proceeded to observe as under: The preamble of the Act declares that it is an Act to provide for better protection of the interest of consumers and for that purpose to make provision for the establishment of Consumer Councils and other authorities for the....
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.... (appellant) who got his wife treated in ESI dispensary could file a complaint under the Consumer Act for award of compensation by alleging negligence on the part of the doctors in the dispensary. The District Forum, the State Commission and the National Commission declined relief to the Appellant on the ground that the medical services provided in ESI dispensary were gratituous. This Court referred to Sections 74 and 75 of the Employees State Insurance Act, 1948, the definition of the 'consumer' contained in Section 2 of the Consumer Act, referred to the judgments in Spring Meadows Hospital v. Harjol Ahluwalia (1998) 4 SCC 39, State of Karnataka v. Vishwabharathi House Building Cooperative Society (supra), Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha (supra) and observed: The trend of the decisions of this Court is that the jurisdiction of the Consumer Forum should not and would not be curtailed unless there is an express provision prohibiting the Consumer Forum to take up the matter which falls within the jurisdiction of civil court or any other forum as established under some enactment. The Court had gone to the extent of saying ....
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....arger sense of user of services. The common characteristics of goods and services are that they are supplied at a price to cover the costs and generate profit or income for the seller of goods or provider of services. But the defect in one and deficiency in other may have to be removed and compensated differently. The former is, normally, capable of being replaced and repaired whereas the other may be required to be compensated by award of the just equivalent of the value or damages for loss. (Emphasis supplied) 26. Since the farmers/growers purchased seeds by paying a price to the Appellant, they would certainly fall within the ambit of Section 2(d)(i) of the Consumer Act and there is no reason to deny them the remedies which are available to other consumers of goods and services. 27. The next question which needs consideration is whether the growers of seeds were not entitled to file complaint under the Consumer Act and the only remedy available to them for the alleged breach of the terms of agreement was to apply for arbitration. According to the Learned Counsel for the Appellant, if the growers had applied for arbitration then in terms of Section 8 of the Arbitra....
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....visions of the Act are in addition to and are not in derogation of any other law in force. It is true, as rightly contended by Shri Suri, that the words 'in derogation of the provisions of any other law for the time being in force' would be given proper meaning and effect and if the complaint is not stayed and the parties are not relegated to the arbitration, the Act purports to operate in derogation of the provisions of the Arbitration Act. Prima facie, the contention appears to be plausible but on construction and conspectus of the provisions of the Act we think that the contention is not well founded. Parliament is aware of the provisions of the Arbitration Act and the Contract Act, 1872 and the consequential remedy available under Section 9 of the Code of Civil Procedure, i.e., to avail of right of civil action in a competent court of civil jurisdiction. Nonetheless, the Act provides the additional remedy. It would, therefore, be clear that the legislature intended to provide a remedy in addition to the consentient arbitration which could be enforced under the Arbitration Act or the civil action in a suit under the provisions of the Code of Civil Procedure. The....
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....quired to be supplied to the Appellant. The argument of the Learned Counsel for the Appellant is that the foundation seeds were supplied to the growers for commercial purpose and as such their cases would fall in the exclusion part of the definition of 'consumer'. In the first blush, this argument appears attractive but on a deeper examination, we do not find any merit in it. The expression 'any commercial purpose' was considered in Laxmi Engineering Works v. P.S.G. Industrial Institute (1995) 3 SCC 583. The two-Judge Bench referred to the amended definition of 'consumer' contained in Section 2(d) and observed: Now coming back to the definition of the expression 'consumer' in Section 2(d), a consumer means insofar as is relevant for the purpose of this appeal, (i) a person who buys any goods for consideration; it is immaterial whether the consideration is paid or promised, or partly paid and partly promised, or whether the payment of consideration is deferred; (ii) a person who uses such goods with the approval of the person who buys such goods for consideration; (iii) but does not include a person who buys such goods for resale or for any c....
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.... that the growers had agreed to produce seeds on behalf of the Appellant for the purpose of earning their livelihood by using their skills and labour. 34. We shall now deal with the question whether the District Forum committed a jurisdictional error by awarding compensation to the Respondents without complying with the procedure prescribed under Section 13. A reading of the plain language of that section shows that the District Forum can call upon the complainant to provide a sample of goods if it is satisfied that the defect in the goods cannot be determined without proper analysis or test. After the sample is obtained, the same is required to be sent to an appropriate laboratory for analysis or test for the purpose of finding out whether the goods suffer from any defect as alleged in the complaint or from any other defect. In some of these cases, the District Forums had appointed agricultural experts as Court Commissioners and directed them to inspect the fields of the Respondents and submit report about the status of the crops. In one or two cases the Court appointed Advocate Commissioner with liberty to him to avail the services of agricultural experts for ascertaining the ....
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...., bartering or otherwise supplying any seed of notified kind or variety to keep over a period of three years a complete record of each lot of seeds sold except that any seed sample may be discarded one year after the entire lot represented by such sample has been disposed of. The sample of seed kept as part of the complete record has got to be of similar size and if required to be tested, the same shall be tested for determining the purity. The Appellant is a large supplier of seeds to the farmers/growers and growers. Therefore, it was expected to keep the samples of the varieties of seeds sold/supplied to the Respondents. Such samples could have been easily made available to the District Forums for being sent to an appropriate laboratory for the purpose of analysis or test. Why the Appellant did not adopt that course has not been explained. Not only this, the officers of the Appellant, who inspected the fields of the Respondents could have collected the samples and got them tested in a designated laboratory for ascertaining the purity of the seeds and/or the extent of germination, etc. Why this was not done has also not been explained by the Appellant. These omissions lend support....
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....were not in a position to send seeds for analysis. In these circumstances, the order of the District Forum is not vitiated by the circumstance that it has not on its own accord sent the seeds for analysis by an appropriate laboratory. * * * It is clear from the letter of the Agricultural Officer that the opposite parties in spite of their promise, never visited the fields of the complainants. The opposite parties did not adduce any material to show that the complainants did not manure properly or that there is some defect in the field. In the absence of such evidence and in view of the conduct of the opposite parties not visiting the fields and having regard to the allegation in the complaint that there were rains in the month of September 1991 and the complainants sowed the seeds, it cannot be said that there is any defect either in the manure or in the preparation of the soil for sowing sunflower seeds. (Emphasis supplied) 38. Reference can usefully be made to the orders of the National Commission in N.S.C. Ltd. v. Guruswamy (2002) CPJ 13, E.I.D. Parry (I) Ltd. v. Gourishankar (2006) CPJ 178 and India Seed House v. Ramjilal Sharma (2008) 3 CPJ 96. In....