M/S. Kedia Infotech Ltd. Vs. Sanapala Venkata Ramana Murthy - Court Judgment

SooperKanoon Citationsooperkanoon.com/1107254
CourtAndhra Pradesh State Consumer Disputes Redressal Commission SCDRC Hyderabad
Decided OnAug-06-2013
Case NumberF.A.No. 520 of 2012 Against C.C.No. 157 of 2011 District Forum Srikakulam
JudgeTHE HONOURABLE MR. R. LAKSHMINARASIMHA RAO, MEMBER & THE HONOURABLE MR. S. BHUJANGA RAO, MEMBER
AppellantM/S. Kedia Infotech Ltd.
RespondentSanapala Venkata Ramana Murthy
Excerpt:
oral order: (r. lakshminarasimha rao, member) 1. the opposite party had filed appeal inter alia contending that the respondent is a franchisee of the appellant-company and they entered into agreement for business for commercial purpose and as such the respondent is not a consumer. it is contended that it was agreed by the appellant-company to pay commission to the respondent on the transactions and that jurisdiction of courts is restricted to hyderabad and the respondent has been doing various other businesses which the district forum has not considered while rendering the judgment. 2. the case of the respondent is that he deposited an amount of rs.50,000/- and entered into agreement with the appellant on 1.09.2006 and the appellant-company assured the respondent that it would send its representatives along with e-trans plus cards worth of rs.46,500/-and assured the respondent that the appellant would render marketing support to him for a period of 2 months and provide online software material , trainer reference manual, online software, franchise glow board, literature including pen logo and the respondent had taken building on rent of rs.1,200/- per month and invested a sum of rs.20,000/-on furniture and furnishings. the appellant-company failed to send its agents and provide marketing support to the respondent. the respondent demanded for refund of the deposit and got issued notice dated 19.07.2007 for which the appellant-company issued reply. 3. the appellant-company resisted the claim on the premise that the transaction between the appellant and the respondent is a business transaction and as per the terms of the agreement the compliance or non-compliance thereof has to be questioned before civil court. it is contended that the respondent is not a consumer as he has not hired service of the appellant-company and he matter involved elaborate enquiry which is beyond jurisdiction of the district forum and that the letter and notice have been brought into existence for the purpose of the case. it is contended that the respondent failed to comply with the terms of the agreement. since the agreement between them is a commercial transaction the complainants would not come under the definition of ‘consumer. 4. the respondent in proof of his case filed his affidavit evidence and got exs. a1 to a6 marked while on behalf of the appellant-company its manager filed his affidavit, and did not file any document. 5. the district forum after considering the evidence placed on record opined that collection of the amount of rs.50,000/- by the appellant on the premise that it would provide software and not providing software by the appellant company to the respondent would to amount to unfair trade practice on the part of the appellant-company. 6. the points that arise for consideration are: i) whether the respondent is a consumer, and the agreement entered into between the appellant-company and the respondent does not attract the jurisdiction of consumer forum? ii) whether the respondent is entitled for refund of amount deposited by him? iii) to what relief? 7. point no 1and2: it is beyond any dispute that the respondent entered into agreement known as franchise agreement with the appellant on 3.09.2006 to set up a centre at narsipatnam in srikakulam district . the respondent got issued notice on 14.05.2007 to the appellant stating that basing on the promise of the appellant and in pursuance of the terms of franchise agreement he got arranged for accommodation for the purpose of running the business and the appellant failed to provide the material as promised. in the notice the respondent referred to the non-co-operation of the appellant as follows: “---ever since the date of mou you failed to comply the contents of mou and nothing is provided like trainer reference manual, online software, franchisee glow board and other necessities to promote the business. my client several times approached you and requested you to provide the above said material, but you neglected by saying one or other the reasons better known to you”. 8. the appellant refused to refund the deposit of rs.50,000/- to the respondent on the premise that the respondent had committed breach of contract and as such the project could not be launched. in its reply, the appellant would state that the respondent did not come forward to receive the material supplied to him. paragraphs 3 and 4 of the reply read as under: “my client further states that your client did not evince any interest subsequent to mou and thereby committed breach of contract. my client states that due to lapse on your part the business as planned could not be launched and your client started demanding return for money though keeping lapses on his part, as my client suffered a huge loss both monetary wise as well as reputation wise. my client states that the notice under reply is one such attempt made with my client. my client states that other allegations that my client did not provided training reference manual, online software and franchise glow signboard are false and baseless. it is your client who did not come forward to take the said material since he did not made any initial arrangements for launching the business as agreed.” 9. in terms of the franchise agreement, the appellant agreed to prove free of cost the soft copy of online software material . trainer reference manual, online software, franchise glow board. further the appellant agreed to furnish the material mentioned in clause 9 of the franchise agreement to the respondent. clause 9 reads as follows: whereas it has been accepted by the second party that it shall furnish to the first party a complete and accurate up-to-date stock check with the actual figures of the turnover of the operation in its territory, within thirty (30) days prior to the expiry of the duration if this agreement or within 14 days from the date of receipt of notice of termination, as the case may be, besides this, within 30 days the second party shall settle the dues payable to the first party and stop the usage of any material or literature including the logo of the first party forthwith. it should also return all the material and other publicity literature to the first party forthwith and sign a notification of cessation of the use of the business plan as required by the first party. it is also restricted from engaging directly or indirectly in any capacity in any business in competition with the first party including soliciting the customers of the first party within a period of two months from the cessation of this agreement. 10. as seen from the reply of the appellant to the notice of the respondent and the statement of the respondent, it would be clear that the appellant had not provided the material and did not send its marketing executives to establish the franchise establishment. even as seen from the reply of the appellant, the project could not be launched. the respondent sought for refund of the deposit he made in terms of the franchise agreement. 11. the learned counsel for the appellant has contended that the respondent is not a consumer and as such the complaint is not maintainable before the consumer forum. he has contended that the transaction between the parties is a commercial transaction and as such the respondent cannot invoke jurisdiction of consumer forum. he has relied upon the decision of the honble national commission in “mahanagar telephone nigak ltd vs girvar lal” iv (2010)cpj 394(nc) wherein it was held that the complainant who took franchise from the opposite party to run pco is not a consumer as the complainant did run pco for commercial purpose and the complainant is the franchisee of the opposite party and the complainant having collected commission on amount collected and payble to the opposite party is not consumer. 12. the decision is not applicable to the facts of the case as it is related to collection of the amount from customers and payable to the opposite party. this commission applying the latest decision of the natianal commission allowed the appeal in fa 1637 of 2008 between “yadagir shanganti vs radiant infosystems pvt. ltd. decided on 29.09.2011, it held that: we may mention herein that in a batch of complaints filed by various complainants against the very same respondent (r1) in c.c. 28/2008 and batch amounts were directed to be returned. on an appeal this commission confirmed the order, against which was a revision was preferred. the national commission confirmed the same in r.p. no. 2809/2010 by order dt. 25.10.2010. “it is not disputed before us that the petitioner had failed to provide the promised service to the respondent. the fora below have rightly come to the conclusion that the petitioner has failed to provide the services promised by it, as it had not taken clearance from the various departments while collecting the sum of rs. 2 lakhs from each of the respondents. we do not find any infirmity in the order passed by the fora below. revision petitions are dismissed. counsel for the petitioner states that the petitioner had supplied certain goods to the respondents. if that be so, the respondents are directed to return the goods/equipment received by them, on receipt of the awarded amount.” 13.  it is evident from the record that the service provider could not keep up the promise of facilitating the business and means from the perspective of the respondent. the appellant failed to provide the services promised 14. in “ kumari vs smt.rama devi kumarvs.m.bharat kumar and ors” in rpno. 35 of 2007 decided on 11.01.2011 the national commission held that franchise holder is consumer and he can maintain complaint before the consumer forum. it was held: regarding the merits of the case as observed by the state commission, the district forum had conducted a detailed inquiry based on the evidence produced before it and had come to a finding of fact that there was a deficiency of service on the part of the petitioner and allowed the complaint. we see no reason to interfere with these findings of fact. the order of the district forum and the state commission is upheld. the revision petition is dismissed accordingly. the petitioner is directed to pay to the respondent rs.2,13,150/- with interest @ 12% per annum from 04.12.2003 till the date of payment and compensation of rs.20,000/- and cost of rs.1,000/- within 30 days from the date of receipt of this order. 15. the aforementioned decision being later in point of time, the decision relied upon by the learned counsel for the appellant is not applicable to the facts of the case. the respondent is consumer and the complaint as such is maintainable as also there is no justification on the part of the appellant in retaining the deposit with it. however, keeping in view of the lapse on the part of the respondent contributing to the circumstances whereby the business could not be launched, this commission is of the view that the relief for refund deposit with interest from the date of filing the complaint is just and reasonable. all other reliefs granted by the district forum are liable to be set aside. 16. in the result ,the appeal is allowed modifying the order of the district forum. the appellant/opposite party is directed to refund the amount of rs.50,000/-with interest @ 9% p.a. from the date of filing of complaint till payment. there shall be no separate order as to costs.
Judgment:

Oral Order: (R. Lakshminarasimha Rao, Member)

1. The opposite party had filed appeal inter alia contending that the respondent is a franchisee of the appellant-company and they entered into agreement for business for commercial purpose and as such the respondent is not a consumer. It is contended that it was agreed by the appellant-company to pay commission to the respondent on the transactions and that jurisdiction of courts is restricted to Hyderabad and the respondent has been doing various other businesses which the District Forum has not considered while rendering the Judgment.

2. The case of the respondent is that he deposited an amount of Rs.50,000/- and entered into agreement with the appellant on 1.09.2006 and the appellant-company assured the respondent that it would send its representatives along with e-trans plus cards worth of Rs.46,500/-and assured the respondent that the appellant would render marketing support to him for a period of 2 months and provide online software material , trainer reference manual, online software, franchise glow board, literature including pen logo and the respondent had taken building on rent of Rs.1,200/- per month and invested a sum of Rs.20,000/-on furniture and furnishings. The appellant-company failed to send its agents and provide marketing support to the respondent. The respondent demanded for refund of the deposit and got issued notice dated 19.07.2007 for which the appellant-company issued reply.

3. The appellant-company resisted the claim on the premise that the transaction between the appellant and the respondent is a business transaction and as per the terms of the Agreement the compliance or non-compliance thereof has to be questioned before Civil Court. It is contended that the respondent is not a consumer as he has not hired service of the appellant-company and he matter involved elaborate enquiry which is beyond jurisdiction of the District Forum and that the letter and notice have been brought into existence for the purpose of the case. It is contended that the respondent failed to comply with the terms of the Agreement. Since the agreement between them is a commercial transaction the complainants would not come under the definition of ‘Consumer.

4. The respondent in proof of his case filed his affidavit evidence and got Exs. A1 to A6 marked while on behalf of the appellant-company its Manager filed his affidavit, and did not file any document.

5. The District Forum after considering the evidence placed on record opined that collection of the amount of Rs.50,000/- by the appellant on the premise that it would provide software and not providing software by the appellant company to the respondent would to amount to unfair trade practice on the part of the appellant-company.

6. The points that arise for consideration are:

i) Whether the respondent is a consumer, and the agreement entered into between the appellant-company and the respondent does not attract the Jurisdiction of Consumer Forum?

ii) Whether the respondent is entitled for refund of amount deposited by him?

iii) To what relief?

7. POINT NO 1and2:

It is beyond any dispute that the respondent entered into agreement known as franchise agreement with the appellant on 3.09.2006 to set up a centre at Narsipatnam in Srikakulam district . The respondent got issued notice on 14.05.2007 to the appellant stating that basing on the promise of the appellant and in pursuance of the terms of franchise Agreement he got arranged for accommodation for the purpose of running the business and the appellant failed to provide the material as promised. In the notice the respondent referred to the non-co-operation of the appellant as follows:

“---ever since the date of MOU you failed to comply the contents of MOU and nothing is provided like trainer reference manual, online software, franchisee glow board and other necessities to promote the business. My client several times approached you and requested you to provide the above said material, but you neglected by saying one or other the reasons better known to you”.

8. The appellant refused to refund the deposit of Rs.50,000/- to the respondent on the premise that the respondent had committed breach of contract and as such the project could not be launched. In its reply, the appellant would state that the respondent did not come forward to receive the material supplied to him. Paragraphs 3 and 4 of the reply read as under:

“My client further states that your client did not evince any interest subsequent to MOU and thereby committed breach of contract. My client states that due to lapse on your part the business as planned could not be launched and your client started demanding return for money though keeping lapses on his part, as my client suffered a huge loss both monetary wise as well as reputation wise.

My client states that the notice under reply is one such attempt made with my client. My client states that other allegations that my client did not provided training reference manual, online software and franchise glow signboard are false and baseless. It is your client who did not come forward to take the said material since he did not made any initial arrangements for launching the business as agreed.”

9. In terms of the Franchise Agreement, the appellant agreed to prove free of cost the soft copy of online software material . trainer Reference Manual, Online Software, Franchise glow board. Further the appellant agreed to furnish the material mentioned in Clause 9 of the Franchise Agreement to the respondent. Clause 9 reads as follows:

WHEREAS it has been accepted by the Second Party that it shall furnish to the FIRST PARTY a complete and accurate up-to-date Stock Check with the actual figures of the turnover of the operation in its territory, within thirty (30) days prior to the expiry of the duration if this agreement or within 14 days from the date of receipt of notice of termination, as the case may be, besides this, within 30 days the Second Party shall settle the dues payable to the first party and stop the usage of any material or literature including the Logo of the First Party forthwith. It should also return all the material and other Publicity Literature to the First Party forthwith and sign a notification of cessation of the use of the Business Plan as required by the First Party. It is also restricted from engaging directly or indirectly in any capacity in any business in competition with the First Party including soliciting the customers of the first party within a period of two months from the cessation of this Agreement.

10. As seen from the reply of the appellant to the notice of the respondent and the statement of the respondent, it would be clear that the appellant had not provided the material and did not send its marketing executives to establish the franchise establishment. Even as seen from the reply of the appellant, the project could not be launched. The respondent sought for refund of the deposit he made in terms of the Franchise Agreement.

11. The learned counsel for the appellant has contended that the respondent is not a consumer and as such the complaint is not maintainable before the Consumer Forum. He has contended that the transaction between the parties is a commercial transaction and as such the respondent cannot invoke jurisdiction of Consumer Forum. He has relied upon the decision of the Honble National Commission in “Mahanagar Telephone Nigak Ltd vs Girvar Lal” IV (2010)CPJ 394(NC) wherein it was held that the complainant who took franchise from the opposite party to run PCO is not a consumer as the complainant did run PCO for commercial purpose and the complainant is the franchisee of the opposite party and the complainant having collected commission on amount collected and payble to the opposite party is not consumer.

12. The decision is not applicable to the facts of the case as it is related to collection of the amount from customers and payable to the opposite party. This Commission applying the latest decision of the Natianal Commission allowed the appeal in FA 1637 of 2008 between “Yadagir Shanganti vs Radiant Infosystems Pvt. Ltd. Decided on 29.09.2011, it held that:

We may mention herein that in a batch of complaints filed by various complainants against the very same respondent (R1) in C.C. 28/2008 and batch amounts were directed to be returned. On an appeal this Commission confirmed the order, against which was a revision was preferred. The National Commission confirmed the same in R.P. No. 2809/2010 by order dt. 25.10.2010.

“It is not disputed before us that the petitioner had failed to provide the promised service to the respondent. The fora below have rightly come to the conclusion that the petitioner has failed to provide the services promised by it, as it had not taken clearance from the various departments while collecting the sum of Rs. 2 lakhs from each of the respondents. We do not find any infirmity in the order passed by the fora below. Revision petitions are dismissed. Counsel for the petitioner states that the petitioner had supplied certain goods to the respondents. If that be so, the respondents are directed to return the goods/equipment received by them, on receipt of the awarded amount.”

13.  It is evident from the record that the service provider could not keep up the promise of facilitating the business and means from the perspective of the respondent. The appellant failed to provide the services promised

14. In “ Kumari vs Smt.Rama Devi Kumarvs.M.Bharat Kumar and Ors” in RPNo. 35 of 2007 decided on 11.01.2011 the National Commission held that franchise holder is consumer and he can maintain complaint before the Consumer Forum. It was held:

Regarding the merits of the case as observed by the State Commission, the District Forum had conducted a detailed inquiry based on the evidence produced before it and had come to a finding of fact that there was a deficiency of service on the part of the Petitioner and allowed the complaint.

We see no reason to interfere with these findings of fact. The order of the District Forum and the State Commission is upheld. The Revision Petition is dismissed accordingly. The Petitioner is directed to pay to the Respondent Rs.2,13,150/- with interest @ 12% per annum from 04.12.2003 till the date of payment and compensation of Rs.20,000/- and cost of Rs.1,000/- within 30 days from the date of receipt of this order.

15. The aforementioned decision being later in point of time, the decision relied upon by the learned counsel for the appellant is not applicable to the facts of the case. The respondent is consumer and the complaint as such is maintainable as also there is no justification on the part of the appellant in retaining the deposit with it. However, keeping in view of the lapse on the part of the respondent contributing to the circumstances whereby the business could not be launched, this Commission is of the view that the relief for refund deposit with interest from the date of filing the complaint is just and reasonable. All other reliefs granted by the District Forum are liable to be set aside.

16. In the result ,the appeal is allowed modifying the order of the District Forum. The appellant/opposite party is directed to refund the amount of Rs.50,000/-with interest @ 9% p.a. from the date of filing of complaint till payment. There shall be no separate order as to costs.