M/s. National Seeds
Corporation Ltd. Vs. M. Madhusudhan Reddy and another
Civil Appeal No. 7543
of 2004
[Civil Appeal No. 622
of 2012 arising out of SLP(C) No.32750 of 2009]
[Civil Appeal No. 623
of 2012 arising out of SLP(C) No.35350 of 2009],
[Civil Appeal No. 7542
of 2004]
[Civil Appeal No. 3499
of 2009]
[Civil Appeal No. 3498
of 2009]
[Civil Appeal No. 3596
of 2009]
[Civil Appeal No.3598
of 2009]
[Civil Appeal No. 4509
of 2009]
[Civil Appeal No. 4510
of 2009]
[Civil Appeal No. 4511
of 2009]
[Civil Appeal No. 4512
of 2009]
[Civil Appeal No. 4513
of 2009]
[Civil Appeal No. 4514
of 2009]
[Civil Appeal No. 4515
of 2009]
[Civil Appeal No. 4516
of 2009]
[Civil Appeal No. 4517
of 2009]
[Civil Appeal No. 4518
of 2009]
[Civil Appeal No. 4519
of 2009]
[Civil Appeal No. 4520
of 2009]
[Civil Appeal No. 4521
of 2009]
[Civil Appeal No. 4522
of 2009]
[Civil Appeal No. 4962
of 2009]
[Civil Appeal No. 4798
of 2009]
[Civil Appeal No. 4964
of 2009]
[Civil Appeal No. 4957
of 2009]
[Civil Appeal No. 4955
of 2009]
[Civil Appeal No. 4954
of 2009]
[Civil Appeal No. 4963
of 2009]
[Civil Appeal No. 4824
of 2009]
[Civil Appeal No. 4959
of 2009]
[Civil Appeal No. 4967
of 2009]
[Civil Appeal No. 4704
of 2009]
J U D G M E N T
G. S. Singhvi, J.
1.
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 on the following grounds:
a. the District Forums
did not have the jurisdiction to entertain complaints filed by the respondents because
the issues relating to the quality of seeds are governed by the provisions contained
in the Seeds Act, 1966 (for short, `the Seeds Act') and any complaint about the
sale or supply of defective seeds can be filed only under the Seeds Act and not
under the Consumer Protection Act, 1986 (for short, `the Consumer Act').
b. the District Forums could
not have adjudicated upon the complaints filed by the respondents and awarded compensation
to them without following the procedure prescribed under Section 13(1)(c) of the
Consumer Act.
c. the growers of seeds,
who had entered into agreements with it, are not covered by the definition of `consumer'
under Section 2(d) of the Consumer Act because they had purchased the seeds for
commercial purpose.
4.
For
the sake of convenience, we may advert to the facts leading to the passing of
orders by three Consumer Forums, which have been impugned in Civil Appeal Nos. 7543
of 2004, 3499 of 2009 and 4519 of 2009. We may also mention that in their complaints
the respondents had impleaded the officers of the appellant as parties but for
the purpose of this judgment we shall only refer to them as the appellant. Civil
Appeal No.7543 of 2004
5.1 Respondents M. Madhusudan
Reddy and K. Rambhupal Reddy claim to have purchased 46 kg. of KBSH-1 Sunflower
seeds from Area Manager of the appellant at Kurnool. They undertook cultivation
by adopting the recognized modes of preparing the field and irrigation and also
used the prescribed fertilizer but there was germination only in 60% seeds and the
height of the plants was uneven.
The germination in
the remaining 40% plants was slow. Not only did this flowering not take place simultaneously.
At the request of the respondents, Area Manager of the appellant inspected
their field on 19.11.1999. He is said to have agreed that there was less
germination and the growth of the plants was uneven, but declined to give any
assurance for payment of compensation.
5.2 Dissatisfied with
the response of the Area Manager, the respondents filed a complaint under Section
12 of the Consumer Act and prayed for award of compensation of Rs.1,79,505/- towards
the cost of seeds, fertilizer and pesticides and value of the lost 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 for the Sunflower
Crop. The cultivation aspects as observed is very satisfactory. The field is clean
and free. The variety is said to be KBSJI the crop may be of 80 days above. Flowering
is seen but it is not uniform. About 55% of the plants have flowers. About 25% of
the plants have the head natured and about 10% of the plants are in the bud stage,
while rest of the plants do not have flowers and there is no possibility for these
plants to get flower, as they are only feet height and the crop period to give
flowers is over.
The following are the
variation, I have noticed. No. Observed % Height of the Flowers Stage Remarks Plants
81. 45% 6 feet Flowering and Only two to grain setting is three rows in
progress of flowers in head is setting seed. (Convex and flat heads)2. 10% 4
feet Flowering and No the seed setting possibility is started for further growth.3.
20% 6 feet Head dropping No growth since seed setting is possible is over. 4. 5%
4 feet Head dropping since seed setting is over.
5.
10%
4 to 6 feet In bud stage Growth can not be expected further.
6.
10%
3 to 4 feet No flowering Growth is seen. also is stunted. Presence of leaf heairyness
is seen in all the items except item (3) above to a certain extent i.e., 3 to 4
%. In all the cases I have noticed difference in Head shape i.e, a few or
convex a few a flat and a few are concave. In all the cases I have seen the
heads are not uniform in size. Twenty five percent of heads which are dropping because
of full maturity are bigger in size while many are of medium size. I have noticed
0.1% of flowers with multiple heads.
There are gaps which are
may be due to faulty seed or may be due to non germination of the seed. In the heads
which are flat and concave are having three rows of seed setting while in the
convex heads the filling or setting of seed is satisfactory. I have also seen two
different plots of sunflower grown adjacent to the plot in question and are exhibiting
uniformity of the plant, in height, size and opening of flower etcetra. This is
an indication of a standard seed. Similar uniformity is lacking in the plot in
question. In all the three plots, there prevailed uniform physical and
climatelogical 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) 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 6.11.1999 given to the appellant, bill dated 29.6.1999
showing the purchase of fertilizers from Chaitanya Chemicals & Fertilizers,
Kurnool and the photographs showing the unevenness in the plants. On behalf 11of
the appellant, an affidavit was filed along with copies of the documents
mentioned therein.
5.7 The District Forum
rejected the appellant's objection to the Commissioner's report and held that the
complainants (the respondents herein) have succeeded in proving that the seeds
sold to them were defective resulting in loss of crop. Accordingly, the complaint
of the respondents was allowed and the appellant was directed to pay
Rs.1,00,000/- towards loss of crop and Rs.10,000/- towards the cost of fertilizer,
pesticides, labour etc. with a stipulation that if the amount is not paid
within one month, the appellant shall be liable to pay interest @ 9% per annum.
5.8 The State Commission
dismissed the appeal and held that Commissioner's report was rightly accepted by
the District Forum because the appellant had not produced any evidence to
controvert the findings contained therein that the respondent had taken proper
steps for cultivation but did not get the expected yield due to faulty seeds.
5.9 The National Commission
rejected the appellant's plea that the only remedy available to the respondents
was to file a complaint under the Seeds Act, which is a special legislation
vis-`-vis the Consumer Act, by observing that there is no provision in that Act
for compensating a farmer whose crop may be adversely affected due to use of defective
seeds sold by the appellant.
The argument that the
District Forum could not have decided the complaint without complying with the mandate
of Section 13(1)(c) of the Consumer Act was negatived by the National
Commission and it was held that the report of the Commissioner, who was an
expert in agriculture, was rightly relied upon by the District Forum for coming
to the conclusion that the crop had failed due to the use of defective
seeds.Civil Appeal No.3499 of 20006.1 Respondent P. V. Krishna Reddy is a
grower having land in Khanpur village of Manopad Mandal of Mahabubnagar
District of Andhra Pradesh.
He was one of the persons
selected by the appellant in March 2000 for growing `bitter 13gourd' seeds. The
appellant entered into an agreement with the respondent and assured him that by
producing 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 others, 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 14filed
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 compensation of Rs.1,00,000/- by alleging that he had suffered loss because
the foundation seeds supplied by the appellant were defective. 6.3 In the reply
filed on behalf of the appellant, the following objections were taken to the maintainability
of the complaint:
(i) that in view of the
arbitration clause contained in the agreement, the only remedy available to the
respondent was to apply for arbitration and the District Forum did not have the
jurisdiction to entertain the complaint.(ii) that the respondent had entered
into an agreement for commercial production of the seeds and, as such, he cannot
be treated as a `consumer' within the meaning of Section 2(d) of the Consumer
Act. 15On merits, it was pleaded that Shri M. V. Narsimha Rao, Seed Officer of
NSC Kurnool had advised the respondent and other growers to remove off-types and
diseased plants, which were liable to be rejected but the growers ignored his
advice.
It was then averred that
during their visit on 8.9.2000, Shri M. V. Narsimha Rao, Shri M. V. Sudhakar
and Area Manager, NSCL, Kurnool found 7% off-types seeds which were more than the
prescribed standards and, therefore, their crops were rejected. The report of the
Horticulture Officer was contested on the premise that the respondent did not get
the seeds tested in any government laboratory.
6.4 District Forum, Mahabubnagar
overruled the objections of the appellant by observing that the respondent had purchased
the seeds for earning livelihood by self-employment and not for any commercial purpose
and that availability of remedy by way of arbitration does not operate as a bar
to the entertaining of a complaint filed under the Consumer Act.
The District Forum also
referred to the appellant's plea that issue relating to quality of the seeds
can 16be determined only by getting the samples tested in a laboratory and rejected
the same by making the following observations: "The complainant purchased 5
kgs of bitter gourd seeds under Ex.A-1 and sowed the seeds in an extent of 3 acres
in his land. He sowed the entire seeds purchased by him. At the time of sowing,
he might not have known that he had to keep back some seeds out of the seeds purchased
by him as sample in the event of his approaching Forum if the seed crop was
ultimately rejected by NSC.
As all the seeds were
sowed, he could not have taken out any seeds from the soil and produce them before
the District Forum for following the procedure contemplated under Section 13(1)
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 17respondent 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 Chambers Housing Cooperative Society Ltd. v.
Development Credit Bank Ltd. (2003) 7 SCC 233 and Indochem Electronic v.
Additional Collector of Customs (2006) 3 SCC 721 and held that the complaint
filed by the respondent was maintainable because the jurisdiction of the consumer
forums is in addition to other remedies which may be available to him.
The National Commission
further held that the respondent is covered by the definition of `consumer'
contained in Section 2(d) of the Consumer Act because he did not purchase the seeds
for any commercial purpose. The appellant's plea that the District Forum could not
have awarded compensation to the respondents without complying with Section
13(1)(c) of the Consumer Act was negatived by the National Commission by observing
that after having used all the seeds for sowing the respondent was not in a position
to provide sample for testing and the report of the Horticulture Officer was sufficient
for proving that the foundation seeds supplied by the appellant were defective.
Civil Appeal No.4519 of 2009
7.1 The respondent is
an agricultural labourer. He used to take the lands of other farmers on lease
and cultivate the same for his livelihood. He purchased tomato seeds from the appellant
in the name of the landowners. When the respondent noticed that there was no
yield from the plants, he approached the appellant's Manager at Vijayawada and
requested him to inspect the field and assess the damages, but the latter did not
respond. He then filed a complaint for award of compensation of Rs.60,000/-
with interest at the rate 19of 12% per annum by alleging that he had suffered loss
because the seeds sold by the appellant were defective.
7.2 The appellant controverted
the claim of the respondent and pleaded that the complaint was liable to be
dismissed because the District Forum was not competent to decide the issue relating
to the quality of seeds. It was also pleaded that the crop had failed because while
sowing the seeds the respondent did not take necessary precaution.
7.3 By an order dated
27.12.1995, District Forum, Khammam appointed Shri A. Jeevan Babu, Advocate as
Commissioner to inspect the field of the respondent and estimate the loss, if any,
sustained by him. The Advocate Commissioner requested the Principal, Agriculture
College, Aswaraopet and Mandal Revenue Officer, Yerrupalem to depute an expert 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 Reddy has collected the earth in the
field and also trees along with the tomato fruits for testing purpose. On enquiry
the petitioner told regarding the mode of cultivation that he adopted in sowing
'Naru' applying manure and pesticides.
The petitioner
complainant told that he was purchasing the tomato seeds from National Seeds Corporation
Ltd., Vijayawada since more than 5 years and he sustained heavy loss this year due
to non- production of the tomato yield since he supply of with inferior quality
of tomato seeds. I conducted Panchanama at the field to that effect on
4.1.1996. 21 Number of villagers gathered and they also opined that the
petitioner complainant has sustained heavy loss this year.
He has shown empty tomato
seeds packet, which is available with him. Sri P. Sesha Reddy, Associate Professor,
Agrl. College, Aswaraopet has sent a report which is being submitted herewith.
He opined that the seed `Pusa Early Dwarf' supplied by, NSC, Vijayawada to the farmers
of Yerrupalem and Pedergopalem villages may not be true type and crop failure to
yield true type may be due to defective seed. I returned back to Khammam on 4-1-1996
at 9-30 p.m. by passengers train." (emphasis supplied)
7.4 The District Forum
considered the material produced before it including the Commissioner's report,
allowed the complaint of the respondent and directed the appellant to pay him
Rs.36,200/-. The State Commission and the National Commission approved the
conclusion recorded by the District Forum that the respondent had suffered loss
because the seeds sold by the appellant were defective. The National Commission
dealt with the appellant's plea that the District Forum had not complied with
Section 13(1)(c) and that there was violation of the Andhra Pradesh Seeds (Control)
Order, 1983 and held:
22"It is well settled
by now that under Section 13 of the Consumer Protection Act, 1986 (hereinafter
referred to as `the Act' for short), the burden to prove the deficiency, if any,
on the part of the respondent, is on the complainant. Section 13(1)(c) provides
that where a complainant alleges a defect in the goods which cannot be determined
without proper analysis or test of the goods, the District Forum shall obtain a
sample of the goods from the complainant, seal it and authenticate it in the
manner prescribed and refer the sample so sealed to the appropriate 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 dismissed as the defects cannot be determined without analysis or tests, which
the respondents in these Revision Petitions failed to get 23 done. We find no
substance in this submission.
The Seeds Control Order,
1983 issued under G.O.M.s No. 97 F&A FP(2) dated 11.02.1985 does not debar any
other agency from conducting an enquiry into the causes of failure of crop
other than the officers mentioned therein. In the present case, it is at the instance
of the District Forum that a Report was got from a Local Commissioner through Dr.
P. Sesha Reddy, the expert who inspected the fields of 8 respondents and not
others.
The petitioners had
not sent their representatives to the fields of the complainant/respondents in spite
of their making representations to that effect. Petitioner failed to take any step
on the representations/complaints received from the respondents. The Report submitted
by the Expert can certainly be taken into consideration even if there was no analysis
of the seeds from a laboratory.
Non-examination of the
seeds from the laboratory is not fatal to the case of the complainants whose
fields were inspected by Dr. P. Sesha Reddy regarding which he gave an opinion
as an expert. Nothing stopped the petitioner from sending the sample seeds for analysis
to a laboratory. There is no explanation as to why it could not send the seeds
for analysis." (emphasis supplied)
8. Factual matrix of
other cases is substantially similar except that some of the respondents had purchased
Castor seeds while others had purchased Chilli seeds. In a number of cases, the
District Forums appointed Commissioner or 24 referred the matter to the officers
of the Agriculture Department for their opinion about the quality of seeds and ordered
payment of compensation by relying upon their reports.
9. We may also mention
that in none of these cases, the appellant had offered to produce samples of the
variety of the seeds sold/supplied to the respondents and made a prayer before
the District Forum that the same may be got tested/analysed in an appropriate
laboratory.10.Learned counsel for the appellant argued that the impugned orders
are liable to be set aside because the District Forums did not have the jurisdiction
to entertain the complaints filed by the respondents and the State and National
Commissions committed grave error by brushing aside the appellant's objections 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(1)(c) 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 made by the learned counsel is that the growers
of seeds cannot be treated as `consumer' within the meaning of Section 2(d)
because they had purchased seeds for commercial purpose.
11.Learned counsel for
the respondents supported the impugned orders and argued that the District Forums
did not commit any illegality by entertaining the complaints filed under the Consumer
Act because the Seeds Act and the Rules framed thereunder do not contain any provision
for compensating a farmer whose crop is lost or who does not get the expected
yield if the seeds sold/supplied by the appellant are defective.
Learned counsel
submitted that the remedy available under the Consumer Act is in addition to other
remedies available to a consumer and the complaints filed by the respondents under
that Act cannot be held as barred merely because they could also approach the Seed
Inspector for taking action under Section 19 read with Section 21 of the Seeds Act.
Learned counsel further argued that the growers of seeds are covered by the definition
of consumer because they had agreed to undertake cultivation of seeds on behalf
of the appellant for earning livelihood.
On the issue of non compliance
of Section 13(1)(c) of the Consumer Act, learned counsel submitted that the
District Forums had rightly relied upon 27 the reports of the Court
Commissioners and other evidence for recording findings that the seeds sold/supplied
by the appellant were defective. Learned counsel emphasized that the respondents
had used the entire quantity of seeds purchased by them for sowing and they had
not retained samples by anticipating loss of crop or less yield.
Learned counsel
pointed out that the Commissioners had inspected the fields of the respondents and
recorded categorical findings that the farmers had suffered losses because the seeds
supplied by the appellant were defective and the District Forums did not commit
any illegality by relying upon their reports. Learned counsel also submitted that
the appellant could have produced samples of the seeds sold/supplied to the respondents
and get them tested to prove that the same were not defective, but no such step
was taken by it.
12.We shall first
consider the question whether the Seeds Act is a special legislation vis-`-vis the
Consumer Act and the District Forums could not have entertained and decided 28 the
complaints filed by the respondents 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 Governments on all matters arising out of the proposed Legislation;
b.
fixing
minimum standards of germination, purity and other quality factors;
c.
testing
seeds for quality factors at the seed testing laboratories to be established by
the Central Government and the State Governments;
d.
creating
seed inspection and certification service in each State and grant of licences
and certificates to dealers in seeds;
e.
compulsory
labelling of seed containers to indicate the quality of seeds offered for sale,
and
f.
restricting
the export, import and inter-State movement of non-descript seeds."
14. Section 2 of the Seeds
Act contains definitions of various terms including "Central Seed Laboratory",
"Certification Agency", "Committee", "Seed", "Seed
Analyst", "Seed Inspector" and "State Seed Laboratory".
Section 3 casts a duty on the Central Government to constitute a Committee called
the Central Seed Committee to advise it and the State Governments on matters
arising out of the administration of the Act and to carry out other functions
assigned to it by or under the Act.
Section 4(1) empowers
the Central Government to establish a Central Seed Laboratory or declare any
seed laboratory as the Central Seed Laboratory to carry out the functions entrusted
to such laboratory by or under the Act. Section 4 (2) contains similar
provisions for establishment of State Seed Laboratories by the State
Government.
Section 6 empowers
the Central Government to issue a notification, after consulting the Committee
constituted under Section 3 and specify the minimum limit of germination and purity
with respect to any seed of any notified kind or variety and the mark or label to
indicate that such seed conforms to the minimum limit of germination and purity.
Section 7 regulates the sale of seeds of notified kinds or varieties. Under Section
8, the State Government can establish a certification agency for the State to carry
out the functions entrusted to such agency by or under the Act.
This power can also be
exercised by the Central Government in consultation with the State Government. Sections
8-A to 8-E provide for establishment of the Central Seed Certification Board and
31appointment of other Committees by the Board. Section 9(1) provides for grant
of certificate by certification agency to any person selling, keeping for sale,
offering to sell, bartering or otherwise supplying any seed of any notified
kind or variety. Sections 9(2) and 9(3) 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(1) contains the procedure
which is required to be followed by the Seed Inspector for taking samples. In
terms of Section 15(2)(b), 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 32Laboratory. 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 by the companies.
Sections 6, 7, 9, 10,
11, 14(1)(a) and (b), 16, 19, 20 and 21 of the Seeds Act, which have bearing on
the decision of the first question raised by the appellant are reproduced below
- "6. Power to specify minimum limits of germination and purity, etc. - The
Central Government may, after consulting with the Committee and by notification
in the Official Gazette, specify - (a) the minimum limits of germination and purity
with respect to any seed of any notified kind or variety; (b) the mark or label
to indicate that such seed conforms to the minimum limits of germination and purity
specified under Cl.(a) and the particulars which such mark or label may
contain.
7. Regulation or sale
of seeds of notified kinds or varieties - No person shall, himself or by any
other person on his behalf, carry on the business of selling, keeping for sale,
offering to sell, bartering or otherwise supplying any seed of any notified kind
or variety, unless –
(a) such seed is
identifiable as to its kind or variety; 33(b) such seed conforms to the minimum
limits of germination and purity specified Cl.(a) of Section 6;(c) the container
of such seed bears in the prescribed manner the mark or label containing the
correct particulars thereof specified under Cl.(b) of Section 6; and(d) he complies
with such other requirements as may be prescribed.9. Grant of certificate by certification
agency –
(1) Any person selling,
keeping for sale, offering to sell, bartering or otherwise supplying any seed of
any notified kind or variety may, if he desires to have such seed certified by
the certification agency, apply to the certification agency for the grant of a
certificate for the purpose.
(2) Every application
under sub-section (1) shall be made in such form, shall contain such particulars
and shall be accompanied by such fees as may be prescribed.
(3) On receipt of any
such application for the grant of a certificate, the certification agency may, after
such enquiry as it thinks fit and after satisfying itself that the seed to
which the application relates conforms to the prescribed standards grant a
certificate in such form and on such conditions as may be prescribed. Provided that
such standards shall not be lower than the minimum limits of germination and
purity specified for that seed under Cl. (a) of Sec.6.
10. Revocation of
certificate - If the certification agency is satisfied, either on a reference
made to it in this behalf or otherwise, that- 34(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 thereunder, 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: Provided that
the appellate authority may entertain an appeal after the expiry of the said
period of thirty days if it is satisfied that the appellant was prevented by sufficient
cause from filing the appeal in time.
(2) On receipt of an appeal
under sub-section (1), the appellate authority shall, after giving the appellant
an opportunity of being heard, dispose of the appeal as expeditiously as
possible.(3) Every order of the appellate authority under this section shall be
final. 3514. Powers of Seed Inspector. - (1) The Seed Inspector may-(a) take
samples of any seed of any notified kind or variety from-
(i) any person
selling such seed; or (ii) any person who is in the course of conveying,
delivering or preparing to deliver such seed to a purchaser or a consignee; or (iii)
a purchaser or a consignee after delivery of such seed to him; (b) send such
sample for analysis to the Seed Analyst for the area within which such sample
has been taken16. Report of Seed Analyst. –
(1) The Seed Analyst
shall, as soon as may be after the receipt of the sample under sub-Section (2)
of Section 15, analyse the sample at the State Seed Laboratory and deliver, in
such form as may be prescribed, one copy of the report of the result of the analysis
to the Seed Inspector and another copy thereof to the person from whom the
sample has been taken.
(2) After the
institution of a prosecution under this Act, the accused vendor or the
complainant may, on payment of the prescribed fee, make an application to the Court
for sending any of the samples mentioned in clause (a) or clause (c) of
sub-Section (2) of Section 15 to the Central Seed Laboratory for its report and
on receipt of the application, the Court shall first ascertain that the mark and
the seal or fastening as provided in clause (b) of sub-Section (1) of Section 15
are intact and may then despatch the sample under its own seal to the 36Central
Seed Laboratory which shall thereupon send its report to the Court in the prescribed
form within one month from the date of receipt of the sample, specifying the
result of the analysis.
(3) The report sent by
the Central Seed Laboratory under sub-Section (2) shall supersede the report
given by the Seed Analyst under sub-Section (1).
(4) Where the report sent
by the Central Seed Laboratory 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 37 which the contravention has been committed may be forfeited to the
Government.
21. Offences by
companies. - (1) Where an offence under this Act has been committed by a company,
every person who at the time the offence was committed was in charge of, and
was responsible to the company for the conduct of the business of the company,
as well as the company, shall be deemed to be guilty of the offence and shall be
liable to be proceeded against and punished accordingly: Provided that nothing contained
in this sub- section shall render any such person liable to any punishment under
this Act if he proves that the offence was committed without his knowledge and that
he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything
contained in sub- section (1), where an offence under this Act has been
committed by a company and it is proved that the offence has been committed
with the consent or connivance of, or is attributable to any neglect on the part
of, any director, manager, secretary or other officer of the company, such director,
manager, secretary or other officer shall also be deemed to be guilty of that offence
and shall be liable to be proceeded against and punished accordingly. Explanation.
- For the purpose of this section,-(a) "company" means any body
corporate and includes a firm or other association of individuals; and (b)
"director", in relation to a firm, means a partner in the firm."
15.In exercise of the
power vested in it under Section 25 of the Seeds Act, the Central Government
framed the Seeds Rules, 1968 (for short, `the Rules'). Rules 13, 23(a) to (d),
(g) and 23-A of the Rules, which are also relevant for deciding the first
question are reproduced below: "13. Requirements to be complied with by a person
carrying on the business referred to in Section 7 –
(a) No person shall
sell, keep for sale, variety, after the date recorded on the container, mark or
label as the date upto which the seed may be expected to retain the germination
not less than that prescribed under Cl.(a) of Section 6 of the Act. (2) No person
shall alter, obliterate or deface any mark or label attached to the container
of any seed.
(3) Every person
selling, keeping for sale, offering to sell, bartering or otherwise supplying any
seed of notified kind or variety under Section 7, shall keep over a period of three
years a complete record of each lot of seed 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 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. 3923. 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. Action
to be taken by the Seed Inspector if a complaint is lodged with him. –
(1) If farmer has
lodged a complaint in writing that the failure of the crop is due to the
defective quality of seeds of any notified kind or variety supplied to him, the
Seed Inspector shall take in his possession the marks or labels, the seed containers
and a sample of unused seeds to the extent possible from the complaintant for establishing
the source of supply of seeds and shall investigate the causes of the failure
of his crop by sending samples of the lot to the Seed Analyst for detailed
analysis at the State Seed Testing Laboratory. He shall thereupon submit the
report of his findings as soon as possible to the competent authority.
(2) In case, the Seed
Inspector comes to the conclusion that the failure of the crop is due to the quality
of seeds supplied to the farmer being less than the minimum standards notified by
the Central Government, he shall launch proceedings against the supplier for contravention
of the provisions of the Act or these Rules."
16. An analysis of
the above reproduced provisions shows that for achieving the object of regulating
the quality of certain seeds to be sold for the purposes of agriculture including
horticulture, the legislature has made provisions for specifying the minimum
limits of germination and purity of notified kind or variety of seeds and the
affixation of mark or label to indicate that such seed conforms to those
limits, for restricting sale, etc., of any notified kind or variety of seed
unless the same is identifiable as to its kind or variety and conforms to the minimum
limits of germination and purity; grant of certificate by the certification agency
to certain category of person; revocation of the certificate; appointment of Seed
Analysts and Seed Inspectors with power to the latter to take sample of any
seed of any notified kind or variety from any person selling such seed or a producer
of seeds and send the same for analysis by the State Seed Laboratory or the
Central Seed Laboratory.
The Seed Inspector can
launch prosecution for violation of any provision of the Seeds Act or any Rule
made thereunder. If a person is found guilty then he can be punished with imprisonment
upto a maximum period of six months or he can be visited with a penalty of fine
upto Rs.1,000/- or with both.
If an offence is
committed by a company, 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 42seeds sold to the farmers and others 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 consumers of seeds. They
suffer loss of crop due to various reasons, one of which is the use of defective/sub-standard
seeds. The Seeds Act is totally silent on the issue of payment of compensation
for the loss of crop on account of use of defective seeds supplied by the appellant
and others who may obtain certificate under Section 9 of the Seeds Act.
A farmer who may suffer
loss of crop due to defective seeds can approach the Seed Inspector and make a request
for prosecution of the person from whom he purchased the seeds. If found guilty,
such person can be 43 imprisoned, but this cannot redeem the loss suffered by
the farmer.
18.At this stage, we may
notice the background in which the Consumer Act was enacted and its salient features.
The General Assembly of the United Nations after extensive discussion and negotiations
among Governments and taking into account the interest and needs of consumers
in all countries, particularly those in developing countries, adopted the draft
guidelines submitted by the Secretary General to the Economic and Social Council
(UNESCO) in 1983. The objectives of these guidelines are:
a.
To
assist countries in achieving or maintaining adequate protection for their population
as consumers.
b.
To
facilitate production and distribution patterns responsive to the needs and
desires of consumers.
c.
To
encourage high levels of ethical conduct for those engaged in the production and
distribution of goods and services to consumers.
d.
To
assist countries in curbing abusive business practices by all enterprises at the
44 national and international levels which adversely affect consumers.
e.
To
facilitate the development of independent consumer groups.
f.
To
further international cooperation in the field of consumer protection.
g.
To
encourage the development of market conditions which provide consumers with greater
choice at lower prices.
19.India is a
signatory to the resolution passed by the General Assembly which is known as Consumer
Protection Resolution No.39/248. With a view to fulfill the objectives enshrined
in the guidelines adopted by the General Assembly of the United Nations and keeping
in view the proliferation of international trade and commerce and vast expansion
of business and trade which resulted in availability of variety of consumer
goods in the market, 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 therewith. Section 2 of the Consumer
Act contains definitions of various terms. Clauses (d) and (f) thereof read as
under: "2. (d) `consumer' means any person who,-
(i) buys any goods for
a consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and includes any user of such
goods other than the person who buys such goods for consideration paid or promised
or partly paid or partly promised, or under any system of deferred payment when
such use is made with the approval of such person, but does not include a person
who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails
of any services for a consideration which has been paid or promised or partly
paid and partly promised, or under any system of deferred payment and includes any
beneficiary of such services other than the person who hires or avails of the services
for consideration paid or promised, or partly paid and partly promised, or under
any system of deferred payment, when such services are availed of with the approval
of the first-mentioned person but does not include a person who avails of such
services for any commercial purpose;
Explanation.--For the
purposes of sub-clause (i), `commercial purpose' does not include use by a
consumer of goods bought and used by him exclusively for the purpose of earning
his livelihood, by means of self-employment; (The explanation was substituted w.e.f.
15.3.2003 by Consumer Protection (Amendment) Act 62, 2003)(f) `defect' means any
fault, imperfection or shortcoming in the quality, quantity, potency, purity or
standard which is required to be maintained by or under any law for the time being
in force or under any contract, express or implied, or as is 47 claimed by the
trader in any manner whatsoever in relation to any goods."
21. Section 3 declares
that the provisions the Consumer Act shall be in addition to and not in derogation
of the provisions of any other law for the time being in force. Section 9 provides
for establishment of the Consumer Forums at the District, State and National
level. Section 11 relates to jurisdiction of the District Forum. Section 12 prescribed
the manner in which the complaint can be filed before the District Forum and
the procedure required to be followed for entertaining 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 48 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 proper
analysis or test of the goods, the District Forum shall obtain a sample of the goods
from the complainant, seal it and authenticate it in the manner prescribed and refer
the sample so sealed to the appropriate laboratory along with a direction that such
laboratory make an analysis or test, whichever may be necessary, with a view to
finding out whether such goods suffer from any defect alleged in the complaint or
from any other defect and to report its findings thereon to the District Forum within
a period of forty-five days of the receipt of the reference or within such extended
period as may be granted by the District Forum;
d.
before
any sample of the goods is referred to any appropriate laboratory under clause (c),
the District Forum may require the complainant to deposit to the credit of the Forum
such fees as may be specified, for payment to the appropriate laboratory for carrying
out the necessary analysis or test in relation to the goods in question;
e.
the
District Forum shall remit the amount deposited to its credit under clause (d) to
the 49 appropriate laboratory to enable it to carry out the analysis or test
mentioned in clause (c) and on receipt of the report from the appropriate laboratory,
the District Forum shall forward a copy of the report along with such remarks
as the District Forum may feel appropriate to the opposite party;
f.
if
any of the parties disputes the correctness of the findings of the appropriate laboratory,
or disputes the correctness of the methods of analysis or test adopted by the appropriate
laboratory, the District Forum shall require the opposite party or the
complainant to submit in writing his objections in regard to the report made by
the appropriate laboratory;
g.
the
District Forum shall thereafter give a reasonable opportunity to the complainant
as well as the opposite party of being heard as to the correctness or otherwise
of the report made by the appropriate laboratory and also as to the objection made
in relation thereto under clause (f) and issue an appropriate order under section
14."
22. The scope and reach
of the Consumer Act has been considered in large number of judgments - Lucknow Development
Authority v. M.K. Gupta (1994) 1 SCC 243, Fair Air Engineers (P) Ltd. v. N. K. Modi
(supra), Skypay Couriers Limited v. Tata Chemicals Limited (2000) 5 SCC 294,
State of Karnataka v. Vishwabharathi House Building Cooperative Society (supra),
CCI Chambers Cooperative 50Housing 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 another (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 settlement of consumer disputes and matters
connected therewith. In Section 3 of 51 the Act in clear and unambiguous terms it
is stated that the provisions of the 1986 Act shall be in addition to and not in
derogation of the provisions of any other law for the time being in force.
From the Statement of
Objects and Reasons and the scheme of the 1986 Act, it is apparent that the
main objective of the Act is to provide for better protection of the interest of
the consumer and for that purpose to provide for better redressal, mechanism through
which cheaper, easier, expeditious and effective redressal is made available to
consumers.
To serve the purpose of
the Act, various quasi- judicial forums are set up at the district, State and national
level with wide range of powers vested in them. These quasi-judicial forums, observing
the principles of natural justice, are empowered to give relief of a specific nature
and to award, wherever appropriate, compensation to the consumers and to impose
penalties for non-compliance with their orders."
23.It can thus be said
that in the context of farmers/growers and other consumer of seeds, the Seeds Act
is a special legislation insofar as the provisions contained therein ensure that
those engaged in agriculture and horticulture get quality seeds and any person who
violates the provisions of the Act and/or the Rules is brought before the law and
punished.
However, there is no provision
in that 52 Act and the Rules framed thereunder for compensating the farmers
etc. who may suffer adversely due to loss of crop or deficient yield on account
of defective seeds supplied by a person authorised to sell the seeds.
That apart, there is nothing
in the Seeds Act and the Rules which may give an indication that the provisions
of the Consumer Act are not available to the farmers who are otherwise covered by
the wide definition of `consumer' under Section 2(d) of the Consumer Act.
As a matter of fact,
any attempt to exclude the farmers from the ambit of the Consumer Act by implication
will make that Act vulnerable to an attack of unconstitutionality on the ground
of discrimination and there is no reason why the provisions of the Consumer Act
should be so interpreted.
24. In Kishore Lal v.
Chairman, Employees' State Insurance Corporation (2007) 4 SCC 579, this Court
was called upon to consider the question whether a person (appellant) who got
his wife treated in ESI dispensary could file a complaint under the Consumer Act
for award of compensation by 53alleging 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(d) 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 that if two different fora have jurisdiction to entertain
the dispute in regard to the same subject, the jurisdiction of the Consumer
Forum would not be barred and the 54 power of the Consumer Forum to adjudicate upon
the dispute could not be negated."
25.The definition of
`consumer' contained in Section 2(d) of the Consumer Act is very wide. Sub-clause
(i) of the definition takes within its fold any person who buys any goods for a
consideration paid or promised or partly paid and partly promised, or under any
system of deferred payment.
It also includes any
person who uses the goods though he may not be buyer thereof provided that such
use is with the approval of the buyer. The last part of the definition contained
in Section 2(d)(i) excludes a person who obtains the goods for resale or for any
commercial purpose.
By virtue of the explanation
which was added w.e.f. 18.6.1993 by the Consumer Protection (Amendment) Act 50 of
1993, it was clarified that the expression `commercial purpose' used in sub-clause
(i) does not include use by a consumer of goods bought and used by him for the purpose
of earning his livelihood by means of self-employment. The definition of `consumer'
was interpreted in Lucknow Development Authority v. M.K. Gupta (supra).
The Court referred to
the 55dictionary meanings of the word `consumer', definition contained in
Section 2(d) and proceeded to observe: "It is in two parts. The first deals
with goods and the other with services. Both parts first declare the meaning of
goods and services by use of wide expressions. Their ambit is further enlarged by
use of inclusive clause. For instance, it is not only purchaser of goods or hirer
of services but even those who use the goods or who are beneficiaries of
services with approval of the person who purchased the goods or who hired
services are included in it.
The legislature has taken
precaution not only to define `complaint', `complainant', `consumer' but even to
mention in detail what would amount to unfair trade practice by giving an elaborate
definition in clause (r) and even to define `defect' and `deficiency' by clauses
(f) and (g) for which a consumer can approach the Commission.
The Act thus aims to
protect the economic interest of a consumer as understood in commercial sense as
a purchaser of goods and in the larger 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 Arbitration and Conciliation Act the dispute arising
out of the arbitration clause had to be referred to an appropriate arbitrator and
the District Consumer Forums were not entitled to entertain their complaint.
This contention represents
an extension of the main objection of the appellant that the only remedy available
to the farmers and growers who claim to have suffered loss on account of use of
defective seeds 57 sold/supplied by the appellant was to file complaints with the
concerned Seed Inspectors for taking action under Sections 19 and/or 21 of the
Seeds Act.
28.The consideration
of this issue needs to be prefaced with an observation that the grievance of a
farmer/grower who has suffered financially due to loss or failure of crop on
account of use of defective seeds sold/supplied by the appellant or by an
authorised person is not remedied by prosecuting the seller/supplier of the seeds.
Even if such person is found guilty and sentenced to imprisonment, the aggrieved
farmer/grower does not get anything.
Therefore, the so- called
remedy available to an aggrieved farmer/grower to lodge a complaint with the concerned
Seed Inspector for prosecution of the seller/supplier of the seed cannot but be
treated as illusory and he cannot be denied relief under the Consumer Act on
the ground of availability of an alternative remedy.
29.The remedy of
arbitration is not the only remedy available to a grower. Rather, it is an optional
remedy. He can either 58seek reference to an arbitrator or file a complaint
under the Consumer Act. If the grower opts for the remedy of arbitration, then it
may be possible to say that he cannot, subsequently, file complaint under the Consumer
Act. However, if he chooses to file a complaint in the first instance before the
competent Consumer Forum, then he cannot be denied relief by invoking Section 8
of the Arbitration and Conciliation Act, 1996 Act.
Moreover, the plain language
of Section 3 of the Consumer Act makes it clear that the remedy available in
that Act is in addition to and not in derogation of the provisions of any other
law for the time being in force. In Fair Air Engineers (P) Ltd. v. N.K. Modi (supra),
the 2-Judge Bench interpreted that section and held as under: "the provisions
of the Act are to be construed widely to give effect to the object and purpose of
the Act. It is seen that Section 3 envisages that the provisions 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, 59the 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. Thereby,
as seen, Section 34 of the Act does not confer an automatic right nor create an
automatic embargo on the exercise of the power by the judicial authority under
the Act.
It is a matter of
discretion. Considered from this perspective, we hold that though the District
Forum, State Commission and National Commission are judicial authorities, for
the purpose of Section 34 of the Arbitration Act, in view of the object of the Act
and by operation of Section 3 thereof, we are of the considered view that it
would be appropriate that these forums created under the Act are at liberty to
proceed with the matters in accordance with the provisions of the Act rather
than relegating the parties to an arbitration proceedings pursuant to a
contract entered into between the parties.
The reason is that the
Act intends to relieve 60 the consumers of the cumbersome arbitration proceedings
or civil action unless the forums on their own and on the peculiar facts and circumstances
of a particular case, come to the conclusion that the appropriate forum for adjudication
of the disputes would be otherwise those given in the Act." (emphasis
supplied)
30.In Skypay Couriers
Limited v. Tata Chemicals Limited (supra) this Court observed: "Even if
there exists an arbitration clause in an agreement and a complaint is made by the
consumer, in relation to a certain deficiency of service, then the existence of
an arbitration clause will not be a bar to the entertainment of the complaint by
the Redressal Agency, constituted under the Consumer Protection Act, since the remedy
provided under the Act is in addition to the provisions of any other law for
the time being in force."
31. In Trans Mediterranean
Airways v. Universal Exports (supra) it was observed: "In our view, the
protection provided under the CP Act to consumers is in addition to the remedies
available under any other statute. It does not extinguish the remedies under another
statute but provides an additional or alternative remedy."
32.The aforementioned
judgments present a clear answer to the appellant's challenge to the impugned orders
on the ground that the growers had not availed the remedy of arbitration. An
ancillary point which may not detain us for long but needs consideration is whether
a grower is excluded from the definition of `consumer' because the seeds produced
by him are required 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, 62 (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 commercial
purpose.
The expression
`resale' is clear enough. Controversy has, however, arisen with respect to meaning
of the expression "commercial purpose". It is also not defined in the
Act. In the absence of a definition, we have to go by its ordinary meaning. `Commercial'
denotes "pertaining to commerce" (Chamber's Twentieth Century Dictionary);
it means "connected with, or engaged in commerce; mercantile; having profit
as the main aim" (Collins English Dictionary) whereas the word `commerce'
means "financial transactions especially buying and selling of
merchandise, on a large scale" (Concise Oxford Dictionary).
The National Commission
appears to have been taking a consistent view that where a person purchases goods
"with a view to using such goods for carrying on any activity on a large scale
for the purpose of earning profit" he will not be a `consumer' within the meaning
of Section 2(d)(i) of the Act. Broadly affirming the said view and more
particularly with a view to obviate any confusion -- the expression "large
scale" is not a very precise expression -- Parliament stepped in and added
the explanation to Section 2(d)(i) by Ordinance/Amendment Act, 1993."
33. What needs to be emphasized
is that the appellant had selected a set of farmers in the area for growing
seeds on its 63behalf. After entering into agreements with the selected
farmers, the appellant supplied foundation seeds to them for a price, with an
assurance that within few months they will be able to earn profit. The seeds sown
under the supervision of the expert deputed by the appellant. The entire crop was
to be purchased by the appellant.
The agreements entered
into between the appellant and the growers clearly postulated supply of the foundation
seeds by the appellant with an assurance that the crop will be purchased by it.
It is neither the pleaded case of the appellant nor any evidence was produced
before any of the Consumer Forums that the growers had the freedom to sell the seeds
in the open market or to any person other than the appellant.
Therefore, it is not
possible to take the view that the growers had purchased the seeds for resale
or for any commercial purpose and they are excluded from the definition of the term
`consumer'. As a matter of fact, the evidence brought on record shows 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 64 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(1)(c). 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 65 true status of the crops.
The reports of the agricultural experts produced before the District Forum unmistakably
revealed that the crops had failed because of defective seeds/foundation seeds.
After examining the reports
the District Forums felt satisfied that the seeds were defective and this is
the reason why the complainants were not called upon to provide samples of the seeds
for getting the same analysed/tested in an appropriate laboratory. In our view,
the procedure adopted by the District Forum was in no way contrary to Section 13(1)(c)
of the Consumer Act and the appellant cannot seek annulment of well-reasoned orders
passed by three Consumer Forums on the specious ground that the procedure
prescribed under Section 13(1)(c) of the Consumer Act had not been followed.
35.The issue deserves
to be considered from another angle. Majority of the farmers in the country remain
illiterate throughout their life because they do not have access to the system
of education. They have no idea about the Seeds Act and the Rules framed thereunder
and other legislations, 66like, Protection of Plant Varieties and Farmers' Rights
Act, 2011. They mainly rely on the information supplied by the Agricultural
Department and Government agencies, like the appellant.
Ordinarily, nobody
would tell a farmer that after purchasing the seeds for sowing, he should
retain a sample thereof so that in the event of loss of crop or less yield on
account of defect in the seeds, he may claim compensation from the seller/supplier.
In the normal course, a farmer would use the entire quantity of seeds purchased
by him for the purpose of sowing and by the time he discovers that the crop has
failed because the seeds purchased by him were defective nothing remains with
him which could be tested in a laboratory.
In some of the cases,
the respondents had categorically stated that they had sown the entire quantity
of seeds purchased from the appellant. Therefore, it is naove to blame the District
Forum for not having called upon the respondents to provide the samples of
seeds and send them for analysis or test in the laboratory.
36.It may also be mentioned
that there was abject failure on the appellant's part to assist the District Forum
by providing samples of the varieties of seeds sold to the respondents. Rule 13(3)
casts a duty on every person selling, keeping for sale, offering to sell, 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, 68 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 to the plea of the respondents that the seeds sold/supplied by the
appellant were defective.
37.In Maharashtra Hybrid
Seeds Co. Ltd. v. Alavalapati Chandra Reddy (1998) 6 SCC 738, this Court did
not decide the issue relating to the alleged non-compliance of Section 13(1)(c)
of the Consumer Act, but approved the reasoning of the State Commission which
found fault with the appellant for not taking steps to get the seeds tested in
an appropriate laboratory. In that case, the respondent had complained that the
sunflower seeds purchased by him did not germinate because the same were defective.
The complaint was contested by the appellant on several grounds.
The District Forum
allowed the complaint and declared that the respondent was entitled to
compensation @ Rs.2,000/- per 69acre in addition to the cost of the seeds. The State
Commission rejected the objection of the appellant that the District Forum had not
collected the sample of the seeds and sent them for analysis or test for determining
the quality. The National Commission summarily dismissed the revision filed by the
appellant. In paragraph 4 of the judgment, this Court extracted the finding
recorded by the State Commission for upholding the order of the District Forum and
declined to interfere with the award of compensation to the respondent.
The relevant portions
of paragraph 4 are reproduced below: "Thus, it is clear that it is on the
permit granted by the Agricultural Officer that the complainants purchased
seeds from the opposite parties and that the same Agricultural Officer visited the
land and found that there was no germination. In view of the letter written by the
Agricultural Officer to the opposite parties to which they sent no reply, it is
clear that the same seeds that were purchased from the opposite parties were sown
and they did not germinate.
In view of the aforesaid
letter of the Agricultural Officer, the District Forum felt that the seeds need
not be sent for analysis. Moreover, if the opposite parties have disputed that the
seeds were not defective they would have applied to the District Forum to send the
samples of seeds from the said batch for analysis by appropriate laboratory. But
the opposite parties have not chosen to file any 70 application for sending the
seeds to any laboratory.
Since it is probable that
the complainants have sown all the seeds purchased by them, they 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 these cases the National Commission
considered the issue relating to non-compliance of Section 13(1)(c) in the
context of the complaints made by the farmers that their crops had failed due to
supply of defective seeds and held that the District Forum and State Commission
did not commit any error by entertaining the complaint of the farmers and
awarding compensation to them. In the first case, the National Commission noted
that the entire quantity of seeds had been sown by the farmer and observed:
"There is no doubt
in our mind that where complainant alleges a defect in goods which cannot be
determined without proper analysis or test of the goods, then, the sample need
to be taken and sent to a laboratory for analysis or test. But, the ground reality
in the instant case is that reposing faith in the seller, in this case the leading
Public Sector Company dealing in seed production and sale, the petitioner sowed
whole of the seed purchased by him.
Where was the
question of any sample seed to be sent to any laboratory in the case? Whatever
the Respondent/Complainant had, was sown. One could have appreciated the bonafides
better, if sample from the crop was taken during the visit of Assistant Seed
Officer of Petitioner - N.S.C. and sent for analysis. Their failure is
unexceptionable. In our view, it is the Petitioner Company which failed to comply
with the provisions of Section 13 (c) of the Act.
By the time, complainant
could be filed even this opportunity had passed. If the Petitioner Company was little
more sensitive or alert to the complaint of the Respondent/Complainant, this situation
might not have arisen. Petitioner has to pay for his insensitivity. The Respondent/Complainant
led evidence of State's agricultural authorities in support who made their statements
after seeing the crop in the field.
The onus passes on to
the Petitioner to prove that the crop which grew in the field of the
complainant was of 'Arkajyothi' of which the seed was sold and not of 'Sugar Baby',
as alleged. He cannot take shelter under Section 13 (c) of the CP Act. Learned Counsel's
plea that Respondent/Complainant should have kept portion of seeds purchased by
him to be used for sampling purposes, is not only unsustainable in law but to say
the least, is very unbecoming of a leading Public Sector Seed Company to expect
this arrangement.
"In the second
case, the National Commission took cognizance of the objection raised by the appellant
that the procedure prescribed under Section 13(1)(c) of the Consumer Act had
not been followed and observed:
"Testimony of the
complainant would show that whatever seed was purchased from respondent No. 2
was sown by him in the land. Thus, there was no occasion for complainant to
have sent the sample of seed for testing to the laboratory. It is in the deposition
of Jagadish Gauda that after testing the seed the petitioner company packed and
sent it to the market.
However, the testing report
of the disputed seed has not been filed. Since petitioner company is engaged in
business of sunflower seed on large scale, it must be having the seed of the
lot which was sold to complainant. In order to prove that the seed sold to complainant
was not sub- standard/defective, the petitioner company could have sent the sample
for testing to the laboratory which it failed to do.
Thus, no adverse
inference can be drawn against complainant on ground of his having not sent the
sample of seed for testing to a laboratory."In the third case, the
National Commission held: "Holding in favour of the complainant, the
National Commission stated that, "it is not expected from every buyer of
the seeds to set apart some quantity of seeds for testing on the presumption that
seeds would be defective and he would be called upon to prove the same through laboratory
testing. On the other hand a senior officer of the Government had visited the field
and inspected the crop and given report under his hand and seal, clearly certifying
that the seeds were defective."
39. The reasons
assigned by the National Commission in the aforementioned three cases are
similar to the reasons assigned by the State Commission which were approved by this
Court in Maharashtra Hybrid Seeds Company Ltd. v. Alavalapati Chandra Reddy (supra)
and in our view the proposition laid down in those cases represent the correct
legal position.
40. In the result, the
appeals are dismissed. The appellant shall pay cost of Rs.25,000/- to each of
the respondents. The amount of cost shall be paid within a period of 60 days
from today.
........................................J.
[G.S. Singhvi]
........................................J.
[Asok Kumar Ganguly]
New
Delhi,
January
16, 2012.
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