National Consumer Disputes Redressal
Commission
(From the order dated 15.04.2002 in Appeal Nos. 1281, 1296-1301/98 of the
State Commission,
(A) Revision
Petition No. 1547 of 2002
M/s
Escorts Ltd. Petitioner
Vs
Shivaji
Tukaram Patil Respondent
(B) Revision
Petition No. 1588 of 2002
M/s
Escorts Ltd., Petitioner
Vs
Pandurang
Ramachandra Agale & Ors Respondents
(C) Revision
Petition No. 1699 of 2002
M/s
Escorts Ltd., Petitioner
Vs
Housabai
Narayan Ghatage Respondents
(D) Revision
Petition No. 1806 of 2002
M/s
Escorts Ltd., Petitioner
Vs
Chandrakant Baburao Jadhav
& Ors Respondents
(E) Revision
Petition No. 2358 of 2002
M/s
Escorts Ltd., Petitioner
Vs
Annasao
Tatoba & Ors Respondents
(F) Revision
Petition No. 2359 of 2002
M/s
Escorts Ltd., Petitioner
Vs
Pandurang
Namdeo Dalvi & Ors Respondents
(G) Revision
Petition No. 2360 of 2002
M/s
Escorts Ltd., Petitioner
Vs
Pandurang
Nagoji Patil Respondents
(H) Revision
Petition No. 2361 of 2002
M/s
Escorts Ltd., Petitioner
Vs
Nemanna
Balappa Vaskoti & Ors Respondents
(I) Revision
Petition No. 2362 of 2002
M/s
Escorts Ltd., Petitioner
Vs
Sou Suman Shivajirao Kadam & Ors Respondents
Before
:
Hon’ble Justice Shri K S Gupta,
Presiding Member
Hon’ble Dr P D Shenoy, Member
For
the Petitioner Shri Niraj Singh, Advocate
Ms
Monkia Malik, Advocate
For
the Respondent Shri Atul Sharma, Advocate – Resp - A to F & I
Shri S
K Sharma, Advocate - Resp - G & H
Dated
ORDER
Dr P D Shenoy, Member
The
issue in these cases is that the first respondents who were the complainants
before the District Forum had paid full amount or part amount towards
purchasing of Escorts Tractors were neither given the tractors nor their amount
was refunded.
Facts in brief :
The
complainants in all the cases are farmers and they have paid money to M/s Sai Tractors for buying tractors of various specifications
from the manufacturer i.e M/s Escorts Ltd but the
tractors were not delivered to them. The following are the details of payments made :
a. RP No.
1547/2002 - Shri Shivaji Tukaram Patil – DD of
Rs.2,35,000/- was given to Shri Sai
Tractors.
b.
RP No. 1588/
2002 - Shri Pandurang Ramchandra Agale – Issued DD
for Rs.2,90,700/- on 24.12.1996 payable to M/s Escorts
at Pune. Refund cheque
of Rs.2,96,300/- given by Shri
Sai Tractors was dishonoured.
c.
RP No. 1806/2002
- Shri Chandrakant Baburao Jadhav –Paid Rs.33,700/-
on 20.12.1996 and also gave DD for Rs.2,00,700/- on 23.12.1996 payable to
Escorts, totaling to Rs.2,33,700/-
d.
RP No. 2358/2002
- Shri Annaso Tatboa Malgave : - Draft of Rs.2,86,232/- payable to Escorts Ltd. at Pune given on 07.10.1996. On 03.10.1996 Shri Sai Tractors issued a refund
cheque to the complainant for Rs.2,95,034/-
which was dishonoured.
e.
RP No. 2360/2002
- Shri Pandurang Nagoji Patil had issued a DD for
Rs.2,22,160/- on 13.11.1995, cash of Rs.30,000/- on
03.10.1995 and cash of Rs.5000/- on 15.03.1996. The total payment made is
Rs.2,57,160/-
f.
RP No. 2362/2002
- Sou Suman Shivajirao Kadam – Made payment of
only Rs.50,000/-
on 21.10.1996.
g.
RP No. 2361/2002
– Nemanna Balappa Vaskoti & Ors – Made payment of Rs.4,11,284/-
on 04.10.1996 and Rs.30,000/-. The total payment made is Rs.4,41,284/-.
h.
RP No.2359/ 2002
– Pandurang Namdeo Dalvi & Ors – Made payment of Rs.3,14,573/-.
i.
RP No. 1699/
2002 – Hausabai Narayan Ghatage & Ors – Made payment of Rs.1,20,000/-.
The complainants approached the dealer Shri Sai Tractors several times. Some
of them had even taken up the matter with the manufacturer for delivery of
tractors or for refund but there was no positive response. Cheques
given by Shri Sai Tractors
towards repayment of money were also dishonoured by
the bank.
In their version before the District Forum Shri Sai Tractors admitted
acceptance of the money but they contended that what ever money was taken for
booking was sent to M/s Escorts Ltd., from time to time, hence they were not
responsible for the non-delivery of the tractors. M/s Escorts Ltd., in their
version have produced the Dealer’s Sale Agreement signed by the Escorts Ltd.,
and Shri Sai Tractors which
gives them principal to principal status and that M/s Shri
Sai Tractors is not their agent but an approved
dealer, he was buying the tractors from them and selling the same to the
buyers, accordingly they were not liable.
After hearing
the parties in great detail and analyzing the agreement the District Forum held
the opponents M/s Escorts Ltd., and Shri Sanjay Balasaher Patil, Proprietor of Sai Tractors jointly and severely liable to compensate each
complainant and they were directed to refund the amount paid by the
complainants/ farmers with 20% interest from the date of payment till the date
of refund alongwith compensation of Rs.5000/- and
cost Rs.5000/- in each case.
Aggrieved by the order of the District Forum M/s
Escorts Ltd., and M/s Shri Sai
Tractors have filed a batch of appeals which were heard together and were
dismissed by the State Commission with costs of Rs.1500/- in each case to be
paid to each one of the complainants. Dissatisfied with the order of the State
Commission M/s Escorts Ltd., has filed a batch of revision petitions before us.
The lower fora have held that both the manufacturer
and the dealer are jointly and severally liable to refund the money with
interest to the complainant as the tractors were not supplied to these poor
farmers, some of them have taken loans to finance these tractors and their
properties were attached.
It
is not disputed that in three cases i.e. (i) RP No.
1588 of 2002, (ii) RP No. 1806 of 2002 and (iii) RP No. 2358 of 2002 the Demand
Drafts were directly issued in favour of M/s Escorts
Ltd., and the Revision Petitioner cannot escape from the liability of paying
back these amounts to the concerned complainants alongwith
interest as ordered by the lower fora.
Then
the dispute boils down to the issue pertaining to six other farmers wherein the
dealer has accepted the money in his own name. M/s Shri
Sai Tractors has not disputed that they had collected
the money on behalf of M/s Escorts and sent the same to M/s Escorts Ltd and
that they were having a running account with M/s Escorts Ltd., is also not in
dispute. Whether M/s Shri Sai
Tractors is an agent of M/s Escorts Ltd., is to be decided by us.
Clause
4 of the Dealer Sale Agreement is quoted below :
Agreement to purchase and sell. The company agrees to sell and the dealer agrees to
purchase Company Products from the Company upon the terms and conditions
hereinafter specifically set forth. The company products constituting this
franchise agreement will consist of products itemized on the attached annexure
under item ‘B’.
By
reading the above clause one feels that M/s Escorts Ltd.,
sells the tractors to the dealer and the dealer buys the same for resale.
Clause 19 (a) is quoted below :
This agreement does not in any way create the
relationship of principal and agent between the company and the dealer and
under no circumstances shall the dealer be considered the agent of the company.
The dealer shall not act or attempt to act, or represent himself directly or by
implication, as an agent of the company or in any manner assume or create, or
attempt to assume or create, any obligation on behalf of or in the name of the
company. All dealings between the company and the dealer shall be as principal
to principal.
Similarly reading the above clause this gives us a
feeling that all the dealings between the company and the dealer are as principal
to principal. But this misconception vanishes into thin air when we go into
other clauses of the agreement, viz Clause 3, Clause
10 (b) (c) (d) (e) (l) (f) and (h) (i) and Sections
190, 211, 212, 213 and 226 of the Indian Contract Act which leads us to the
irresistible conclusion that clause 19 (a) is only facade and that M/s Escorts
Ltd., was the principal and Shri Sai
Tractors was the agent of the company.
Ld
Counsel for the respondents Shri Atul
Sharma submitted that the respondents who are the farmers were lured by the big
advertisement issued by the Escorts Tractor Company wherein the authorized
dealers name, address were given in small letters.
They were all impressed by the reputation of the Escorts tractor and that its
capacity to help farming operations.
Though
in one of the clauses it is mentioned that dealership agreement is between
principal to principal, it is very clear from the perusal of the various
clauses of the agreement that the dealer
was the authorized distributor and he acted as an agent of M/s Escorts Tractors.
He quoted several clauses of the Dealer Sales Agreement :
Clause 3 – “Appointment.
The company hereby appoints the Dealer as a Non-exclusive authorized dealer in
Company Products in and for the Area defined on the attached Annexure item ‘A’
(hereinafter called ‘Dealer’s Area’) and the dealer hereby accepts such
appointment and agrees to fulfil the responsibilities
of such a dealer as herein provided in the Dealer’s Area.”
Clause 10 (b) “Standard Provisions - The dealer
agrees, not without the consent in writing of the company, to engage in or
promote the sale of any products manufactured or marketed by any other person,
firm or company which are identical to or in any manner either directly or
indirectly, compete with the company products.”
Clause 10 (c ) – “The dealer shall render prompt,
workmanlike, courteous and willing service on all Company Products in the
Dealer’s Area, including all services specified by the Company in warranty and
policy instructions issued from time to time by the company.”
Clause 10 (d) (ii) – “Tools, special service tools,
machinery and equipment therein of such variety, quality and efficiency, as
will meet standards for premises and equipment established by the Company from
time to time and will enable the Dealer to fulfil his
sales and service responsibilities under the agreement. The dealer shall remain
open for business during normal business hours according to general practice in
the Dealer’s Area. Once the Dealer’s premises have been approved by the
Company, the Dealer shall not enlarge, reduce or move from them, nor shall the
Dealer or any person named in paragraph 7 establish any new or additional
premises for the sale or service of Company Products, without the prior written
consent of the company.”
Clause 10 (e) (i) – “The
dealer may, and at the request of the Company, shall at appropriate locations
within the dealer’s area, appoint sub-dealer or establish depots or branches
for the sale and service of the Company’s Products provided that each
appointment or establishment is first approved by the Company in writing which
approval shall not be unreasonably withheld.”
Clause 10 (l) “The dealer shall furnish each month
to the company, on the dates and forms specified by the company, orders for
company products for such succeeding months as the company shall designate, and
estimates of requirements for such subsequent months as the company may
request.”
The Ld Counsel for the respondents quoted extensively
from the Indian Contract Act, 1872 which deals with agents and sub-agents
He
quoted section 190 relating to sub-agents :
“When agent cannot delegate – An agent cannot
lawfully employ another to perform acts which he has expressly or impliedly
undertaken to perform personally unless by the ordinary custom of trade a
sub-agent may, or, from the nature of the agency, a sub-agent must, be
employed.”
So in this case, the company has directed the
sub-agent be appointed which means authorized dealer becomes an agent. Further
he relied upon section 211- Agent’s duty to principal :
“Agent’s duty in conducting principal’s business – An
agent is bound to conduct the business of his principal according to the
directions given by the principal, or in the absence of any such directions
according to the custom which prevails in doing business of the same kind at
the place where the agent conducts such business. When the agent acts
otherwise, if any loss be sustained, he must make it good to his principal, and
if any profit accrues, he must account for it.”
Section – 212 – “Skill and diligence required from
agent – An agent is bound to conduct the business of the agency with as much
skill as is generally possessed by persons engaged in similar business unless
the principal has notice of this want of skill. The agent is always bound to
act with reasonable diligence, and to use such skill as he possesses; and to
make compensation to his principal in respect of the direct consequences of his
own neglect, want of skill, or misconduct, but not in respect of loss or damage
which are indirectly or remotely caused by such neglect, want of skill, or
misconduct.”
Section – 213 – “Agent’s accounts – An agent is bound
to render proper accounts to his principal on demand.”
Section – 226 – “Enforcement and consequences of
agent’s contracts – Contracts entered into through an agent, and obligations
arising from acts done by an agent, may be enforced in the same manner, and
will have the same legal consequences as if the contracts had been entered into
the acts done by the principal in person.”
Accordingly
he argued that the above clauses of the agreement and the sections of the Contract Act quoted by
him clearly indicates that OP No. 2 Shri Sai Tractors was the agent of Escorts Company Ltd., and the
relationship was not between principal to principal.
Our
attention was invited to following clauses of standard provisions of dealers sale agreement by Ld Counsel for the respondents Shri S K Sharma:
Clause 10 (h) – “The dealer shall employ and train a
sufficient number of competent personnel of good character, including without
limitation, department managers, salesmen and mechanics to fulfil
all of the dealer’s responsibilities under this agreement; and shall cause
representatives employees of the dealer to attend such schools for dealership
personnel as the company may conduct from time to time. All persons named in
paragraph 7 should normally reside in the dealer’s area.”
Clause 10 (i) – “The dealer
shall install and use for all dealership operations and accounting system in
accordance with standard procedures for dealer accounting established by the
company from time to time.
He also invited our attention to Clause 10 (f) (i) “the dealer shall
deposit with the company in cash a sum of money as detailed in the attached
annexure item ‘D’ as Fixed Advance against orders. The dealer,
thereupon shall be entitled to interest as mentioned on the attached annexure,
item “D” for the period of validity of this agreement and shall immediately
comply for the due fulfillment of this agreement.”
These
clauses indicate that Shri Sai
Tractors was the agent and he has got no freedom in appointing personnel of his
own choice and he has to train sufficient number of them. Further the dealer shall follow the
accounting system as dictated by principal from time to time.
In
view of the above analysis the following citations quoted by the learned
Counsel for the revision petitioner do not offer any assistance to support his
case for the following reasons :
(i) In (1996) 4 CTJ 199 (CP) (NCDRC) – Hero Honda
Motors Ltd., vs K B Murleedharan
and Anr an extract of which is given below :
“According to the agreement arrived at between the
manufacturer and the dealer, copy of which has been filed on record, it is
clear that the transactions between the manufacturer and the dealer were as principal
to principal. Thus the dealer did not accept the amount from the customers as
agent of the manufacturer. He used to accept the amount on his own behalf and
then used to place the order with the manufacturer for the supply of the motor
cycle against payment. In the present case it is not case that the amount
deposited by the complainant with the dealer had been passed on by the latter
to the manufacturer. As noticed above, the dealer was not acting as agent
of the manufacturer.”
(ii) In (1995) 6 Supreme Court Cases 566 – Vijay
Traders vs Bajaj Auto Ltd.,
it is stated that :
“It is clear from the evidence that the contract
provided that the distributor will pay the price of the vehicles ordered and
delivery was to be given to the plaintiffs on payment of the price. The
defendant- company took no risk with regard to the damage caused to the
vehicles during transit and the same had to be suffered by the plaintiff’s
firm. Thus the contract between the plaintiffs and the defendants would be
one of purchase and sale and not of any agency. In these facts and
circumstances the view taken by the two courts below cannot be said to be
erroneous so as to call for any interference.”
(iii) In
(1997) 6 Supreme Court Cases 31 - Philips India Ltd., vs Collector of Central Excise, Pune
it is stated that :
“In
It is not in dispute that the agreement between the
appellant and their dealers is genuine agreement entered into at an arm’s
length, that they are as between principal and principal and that the payments
contemplated therein are made.”
(iv) In Moped
India Ltd., vs The Assistant Collector of Central
Excise Nellore and Others it is held as under :
“We shall presently analyze the terms of the
agreement between the appellants and the dealers but one thing is clear from
the terms of the agreement that the appellants sold the moped to the dealers on
principal to principal basis and if that be so, it is not possible to say
that the appellants had any interest in the business of the dealers.”
(v) In RP Nos.
1916, 1917 and 1970 of 2000 the National Commission held that
:
“A dealer cannot necessarily be an agent. If we refer
to Law Lexicon ‘Dealer’ is seller of specified articles. For example in the
present case Sundaram Motors is a dealer in cars. As
to what are its terms with the manufacturer – Pal Peugeot Ltd., for being its
dealer of Peugeot -309 cars we have to see the terms and conditions on which
the customer has booked the car. We cannot go beyond that and assume something
which is not there. In the present case Sundaram
Motors could well be classified as purchasers for resale. It is nobody’s case
that Sundaram Motors is the agent of Pal Peugeot Ltd.
Chitty on Contracts (page 31-002, 27th Edition) says “….but the
doctrines of agency are not always so well worked out beyond the main affairs
of their operation and the context in which the reasoning is used and the
extent of its use may, therefore, require careful consideration in each case.”
.
In this connection, it is worthwhile to look into the
relevant portion of the order of the District Forum which reads as follows :
“The term ‘agent’ is defined in Section 182 of Indian
Contract Act “is a person employed to do any act for another or to represent
another in dealings with third person. He was accepting orders on behalf of
Escorts Ltd., and sending the money so collected to the Escorts Ltd., providing
after sale services on behalf of Escorts Ltd.,” Hence, clearly the acts of Shri Sai Tractors were of the
nature of an agent.”
This
has been affirmed by the State Commission in the following words.
“Plain reading would show that there is an
agreement between the manufacturer and the dealer, whereby manufacturers have
engaged their Dealer to effect sales of their products namely tractors.”
It
is, therefore, amply proved that the dealer was a lawfully appointed dealer and
an agent of the manufacturer.
Accordingly we do not
see any merit in the revision petition except that the rate of interest awarded
by the District Forum, confirmed by the State Commission @ 20% p.a. is clearly
on a
higher side.
Therefore, we reduce the same to 12% p.a. The petitioner shall also pay Rs.5000/- as
cost to each one of the respondents/farmers.
Accordingly, the revision petition is disposed of as per the aforesaid
terms.
……………………J
[ K
Presiding Member
……………………
[ P D Shenoy ]
Member
rsk