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Smart Summary

Factual and Procedural Background

The State Commission of Madhya Pradesh, Bhopal, in Original Complaint No. 2 of 1990, by its order dated 18 September 1991, declined to entertain a consumer complaint and left the complainant to seek other remedies. The State Commission had framed four points/issues and recorded findings on each. The complainant appealed against the State Commission's order refusing to adjudicate the complaint.

Legal Issues Presented

  1. Whether the State Commission could entertain the consumer complaint when a proceeding on similar allegations and identical reliefs had already been initiated before the MRTP Commission (raising the issue of parallel adjudication).
  2. Whether Premier Automobiles Ltd. (Opposite Parties Nos. 4 & 5, "PAL") could be made parties before the Consumer Forum given the asserted exclusion under the MRTP Act or on account of lack of privity.
  3. Whether the State Commission of Madhya Pradesh had jurisdiction (given that part of the cause of action allegedly arose in Raipur).
  4. Whether the allegations, which the State Commission characterized as fraud and cheating (including alleged unauthorised use of logos), were suitable for determination by a consumer forum or required elaborate evidence better suited to other fora.

Arguments of the Parties

Appellant's Arguments

  • The appellant alleged fraud and cheating in the transaction and sought reliefs under the Consumer Protection framework.
  • The appellant pointed to payments made (a demand draft of Rs. 80,000 and cash of Rs. 19,510) in connection with the purchase of a car and treated the transaction as one giving rise to consumer jurisdiction.

Respondents' Arguments

  • Opposite Parties Nos. 4 & 5 (Premier Automobiles Ltd.) contended that their sales to their agents were on a principal-to-principal basis, denying privity with the complainant and asserting they were not parties to the contract for which payment was made.
  • It was contended (and noted by the State Commission) that the payment receipt was issued by Opposite Parties Nos. 1 & 2 and did not indicate the amount was towards the price of the car, and that the demand draft was credited into PAL's account through their authorised agent (Opposite Party No. 3), rather than being received directly by PAL.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court reviewed the State Commission's four findings and the record of the appeal:

  1. On the question of parallel proceedings, the State Commission found that the complainant had initiated proceedings before the MRTP Commission on 29 March 1990 and filed the complaint before the State Commission on 15 April 1990, facts which were not disclosed in the State Commission complaint. The State Commission concluded that the subject matter in both fora was the same and declined to entertain the complaint to avoid simultaneous and parallel adjudication by two authorities.
  2. The State Commission further held that Opposite Parties Nos. 4 & 5 (PAL) were excluded from the "mischief" of the MRTP Act in the context presented and thus could not properly be arraigned before the Consumer Forum on the basis advanced.
  3. On jurisdiction, the State Commission held that part of the cause of action arose in Raipur, thereby vesting jurisdiction in the State Commission of Madhya Pradesh; that factual finding was recorded.
  4. Regarding privity, the State Commission found an absence of privity between the complainant and PAL: PAL's sales to their agents were on a principal-to-principal basis, and PAL did not admit receiving any consideration for the alleged sale to the complainant.
  5. The State Commission also characterized the case as prima facie one of fraud and cheating (including alleged unauthorised use of PAL's logos) rather than a straightforward deficiency in service or supply of defective goods. It observed that resolution of such allegations would require elaborate oral and documentary evidence.
  6. On appeal, the court noted the appellant's inability to explain the split payment (DD of Rs. 80,000 and cash Rs. 19,510) or why payments were made to Opposite Parties Nos. 1 & 2, who were not authorised dealers of PAL. The court also observed that the appellant failed to rebut PAL's contention that their relationship with their dealer (Opposite Party No. 3) was principal-to-principal and that PAL was not privy to the contract for which payment was made to Opposite Parties Nos. 1 & 2.
  7. Given these findings, the court agreed with the State Commission that the Consumer Protection Act and its machinery are not suited to be "effectively utilised for determining complicated questions of fraud and cheating" in the circumstances of this case. The court treated the prima facie characterisation of the dispute as one requiring preliminary establishment of fraud/cheating before a consumer forum could find any deficiency in service.

Holding and Implications

The appeal is rejected and the order of the State Commission is confirmed.

Consequences for the parties:

  • The State Commission's refusal to entertain the complaint is upheld.
  • The appellant was directed to pay Rs. 1,000 as costs to Opposite Parties Nos. 4 & 5 (Premier Automobiles Ltd.).

No broader precedent or novel legal principle was announced beyond the court's endorsement of the State Commission's factual and procedural conclusions and its observation that consumer fora are not the appropriate mechanism for resolving complex allegations of fraud and cheating in the circumstances described.

    N. Shivaji Rao. v. Daman Motor Company & Ors

    Y. Krishan, Member:— The State Commission of Madhya Pradesh, Bhopal in Original Complaint No. 2 of 1990 vide its order dated 18th September, 1991 declined to entertain the complaint and left the complainant to seek other remedies as he might be advised. In coming to this finding the State Commission has framed issues on four points. These are briefly indicated below along with the findings of the State Commission.

    Point No 1: The State Commission found that the Complainant had moved MRTP Commission on similar allegations of unfair practices and sought identical reliefs. It found further that the complaint before the State Commission was filed on 15th April, 1990 but the proceedings before the MRTP Commission were initiated on 29th March, 1990 but these facts were suppressed in the complaint before the State Commission.

    The State Commission came to the conclusion that the subject matter of the complaint before it and before the MRTP Commission was the same and therefore the complaint was not entertainable by the State Commission as this would have involved a simultaneous and parallel adjudication on the same complaint by two different authorities.

    Secondly the State Commission held that Respondents & Opposite Parties Nos. 4 & 5-Premier Automobiles Ltd. (PAL) were excluded from the mischief of the MRTP Act and as such could not be arraigned before the Consumer Forum.

    Point No. 2: On the second point in issue the State Commission has held that the cause of action in this case partly arise in Raipur and therefore the State Commission of Madhya Pradesh had jurisdiction.

    Print No. 3: On the third point in issue the State Commission held that there was absence of privity of contract between the complainant and Opposite Parties No. 4 & 5-Premier Automobiles Ltd. It observed that the sales by the Opposite Parties No. 4 & 5-Premier Automobiles Ltd. were on principal to principal basis the PAL dealer Opposite Party No. 3 is not an agent of the PAL. In other words, Respondent Nos. 4 & 5-PAL did not admit having received any amount as consideration for the alleged sale of the car to the complainant.

    Print No. 4: On point No. 4 in issue the State Commission held that the complainant had alleged fraud and cheating and unauthorised use of PAL's Logos and Monogrammes by Opposite Party Nos. 1 & 2. This necessarily meant that the facts are complicated and determination of the facts require elaborate oral and documentary evidence regarding fraud and cheating as such.

    2. The State Commission pertinently noted that the receipt of the amount paid by the complainant was not on behalf of Opposite Party Nos. 4 & 5-PAL but it was a receipt of Opposite Party Nos. 1 & 2 and that receipt was silent that the amount paid was towards the price of the car.

    3. The complainant has come in appeal against the order of the State Commission declining to adjudicate on the complaint.

    4. At the hearing the appellant was unable to explain why he made payment partly in the form of Demand Draft for Rs. 80,000/- and partly in the form of cash of Rs. 19,510/. It remained unexplained as to why he made the payment to Opposite Perties Nos. 1 & 2 who were not the authorised dealers of Opposite Parties Nos. 4 & 5-PAL. In fact, Opposite parties Nos. 4 & 5 have been brought into the picture on the ground that the bank draft of Rs. 80,000/- is said to have been credited in the PAL's account not directly but through their authorised agent-Opposite Party No. 3 (M/s. Guru Gobind Motors. Bombay).

    5. The appellant also failed to attack the contention of Opposite Party Nos. 4 & 5 that their sales to their agents are on principal to principal basis hence they were not privy to the contract for the sale of a car for which consideration is said to have been paid to Opposite Parties Nos. 1 & 2.

    6. It is evident from above that it is not a case of supply of defective goods or of deficiency in rendering service. Prima facie it is a case of fraud and cheating as alleged by the appellant-complainant himself. Consequently, the factum of fraud and cheating would have to be established first before a consumer forum can arrive at a finding of deficiency in service. We agree with the view expressed by the State Commission that the Consumer Protection Act and the machinery thereunder cannot be effectively utilised for determining complicated questions of fraud and cheating. The appeal is rejected and the order of the State Commission is confirmed. The appellant should pay Rs. 1,000/- as costs to Opposite Parties Nos. 4 & 5.

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    N. Shivaji Rao. v. Daman Motor Company & Ors
    (Nov 2, 1992)