1. Shri Arvind Sharma, s/o Shri Srikishan Sharma, r/o Bungalow No.L-189, Railway Colony, Abu Road, Sirohi District, Rajasthan, filed an application for institution of enquiry under Section 36-B(d) of the Monopolies and Restrictive Trade Practices Act, 1969 (the MRTP Act for brief), against M/s. Rajasthan Financial Corporation, Jaipur, Rajasthan (RFC for short) and M/s. Angira Heavy Engineering Industries, Abu Road, Sirohi District, Rajasthan, for the unfair trade practices indulged in by them. It has been stated that the informant/complainant set up an industrial unit in the small scale sector for manufacturing/processing of granite tiles. He obtained a loan of Rs. 5.60 lakhs in October, 1989 from RFC for financing the same. With the said loan the informant/complainant also purchased two machines from the respondent.
The informant/complainant having defaulted in the payment of loan, RFC initiated recovery proceedings against him under Section 29 of the State Financial Corporations Act which inter alia empowers the RFC to attach the property of the defaulting unit.
2. The transaction between the informant/ complainant and the RFC is a separate matter which as such has nothing to do with the present enquiry in which allegations of unfair trade practices have been made against the other respondent, namely, M/s. Angira Heavy Engineering Industries. Further, since there was no specific charge made out nor any relief sought against the RFC, it was deleted from the array of the respondents during the course of the proceedings. Finally, the Notice of Enquiry (NOE) was issued to M/s. Angira Heavy Engineering Industries, under Sections 36-A, 36-B(d) and Section 36-D Of the MRTP Act.
3. It has been alleged that Shri Arvind Sharma, the informant/complainant, purchased two cutting machines from the respondent, M/s. Angira Heavy Engineering Industries at a cost of Rs. 1.45 lakhs. It is stated that the first machine supplied by the respondent had inherent manufacturing defects and that its cooling system did not function properly right from the beginning. It is further stated that the frequent occurrences of malfunctioning were brought to the notice of the respondent from time to time, during the warranty period of the machine. But the same were never rectified to the satisfaction of the informant/complainant. As a result, the machines failed to produce goods as per warranted capacity. It is also alleged that due to malfunctioning of the cooling system of the machine, fire broke out in the premises of the informant/complainant on 5.6.1991. The incident was duly reported to the police. The respondent, however, did not replace, maintain or repair the cutting machines. In view of this, it has been alleged that the tradf practice of supplying the cutting machine with inherent manufacturing defects in the cool system and subsequently, the act of failing to replace, maintain or repair the same, amounts to unfair trade practice within the meaning of Section 36-A of the MRTP Act.
4. The respondent filed a reply to the NOE in which, it has been clarified that the respondent had supplied two cutting machines to the informant/complainant at a total cost of Rs. 1.38 lakhs and not Rs. 1.45 lakhs as stated in the NOE. The first machine, supplied at a cost of Rs. 63,000/-, was without a motor. The cost of the second machine purchased by the informant/complainant only after satisfying himself about the performance of the first machine, was Rs. 75,000/-. In its reply, the respondent has forcefully denied the contention of the informant/complainant that there was a warranty period for the machines so supplied. On the other hand, it has been clarified that the risk and responsibility of the owners (respondent) ceases after the goods leave their godowns, as is evident from para 3 of the relevant bill which is reproduced below : 5. Similarly, it has been stated that there was no service contract between the informant/ complainant and the respondent, under which the respondent could be held responsible for repair and maintenance of the machines. The respondent has also refuted the charge that the machines supplied to the informant/ complainant had inherent manufacturing defects. It is stated that the fire that broke out on 5.6.1991 was due to inefficient management in the premises of the informant/complainant and not due to malfunctioning of the cooling system because the machine supplied had no built-in cooling system. The respondent has finally denied the allegation of unfair trade practice and has stated that there was no failure on the part of the respondent in meeting its obligations under the arrangement between the informant/complainant and the respondent.
(1) Whether the respondent has indulged in or indulging in unfair trade practices listed in the NOE (2) Whether the alleged unfair trade practices are prejudicial to the public interest or to the interest of the informant and the interest of the consumers generally 7. DG having been assigned the responsibility of prosecuting the case, an affidavit of evidence was filed by the DG. The witness produced for cross-examination was none other than the informant/complainant himself. The witness was party cross-examined on 8.10.1998. Thereafter he failed to turn up for further cross-examination despite bailable warrants issued. Finally, DC dropped the witness and closed his evidence. The respondent also filed the affidavit of evidence along with supporting documents. The respondent's witness, Shri Mohan Lal Sharma, was cross-examined on 16.1.2000. Arguments were finally heard on 9.4.2002.
8. Learned Counsel for the DG, Mr. S.P. Pahwa, reiterated the allegations made in the NOE and emphasized that the first machine supplied by the respondent had inherent manufacturing defects and that its cooling system did not function properly right from the beginning.
He further contended that the respondent failed to rectify the defects to the satisfaction of the informant/complainant, during the warranty period.
9. Learned Counsel for the respondent, Mr. J.K. Nayyar, clarified that the respondent had supplied two cutting machines to the informant/complainant and that the second machine was supplied only after the informant/ complainant felt satisfied with the performance of the first machine. He forcefully argued that there was neither any warranty period nor any service contract for the said machines and as such the repair and maintenance of the machines was none of its responsibility. Still, the defects and difficulties relating to these machines, were attended to as and when they were brought to the notice of the respondent. He argued that DG has failed to produce any evidence to show that there was any failure on the part of the respondent which could amount to unfair trade practice within the meaning of Section 36-A of the MRTP Act. Similarly, DG has also failed to prove that there was a warranty period of one year for the machines in question. As regards the performance of the machine, learned Counsel invited our attention to the communication dated 21.11.1990 in which, the informant/complainant himself has certified that the machine was working satisfactorily even after a period of seven months from the date of its purchase.
10. We have carefully considered the submissions made by the learned Counsel for the parties and have also gone through the facts on record.
DG has not been able to substantiate that the respondent made any misleading representation regarding the machines in question. In fact, there was no performance guarantee or warranty given by the respondent.
On the contrary, Note 3 of the bill dated 31.7.1990 clearly says that "Our risk & responsibility cease when the goods leave our godown".
Similarly, there is no proof of any service contract between the parties under which the respondent could possibly be faulted for its failures. The allegation that the machines had inherent defects also remains unsubstantiated. On the contrary, the communication dated 21.11.1990 received from the informant/complainant himself, which speaks of the satisfactory performance of the machines.
11. For the fire that took place on 5,6.1991, the informant/complainant has put the entire blame on the cooling system of the machines. But there is nothing on record to show that the .machines supplied by the respondent had any built-in cooling system. In the relevant bills also there is no mention of the same. In view of this, allegation that the fire broke out due to inherent defects in the cooling systems of the machines is totally baseless. It is important to note that .although there was no warranty or service contract for the impugned machines, the respondent attended to the complaints as and when they were brought to its notice. Even after the fire incident, the machines are stated to have been repaired by the respondent. The fact that the informant/complainant did not come forward to complete his deposition further reveals the falsity of the allegations made by the informant/ complainant.
12. In the light of the facts discussed above, it is established beyond doubt that the respondent did not make any misleading representation about the performance of the impugned machines, nor was there any failure on its part in fulfilling its obligations. In this view, of the matter, no case of unfair trade practice is made out against the respondent to attract the provisions of Sections 36-A, 36-B(d) and Section 36-D of the MRTF Act. The complaint petition is accordingly dismissed and the NOE is discharged with no order as to costs.