M/S. National Seeds Corpn. Ltd. vs M.Madhusudhan Reddy & Anr. on 16 January, 2012 Supreme court

Grounds for challenging the order of National commission,Statae commission and District Forum

AND

Supreme court’s Observations

Order 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:

1.      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').

            “ 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.”

 

Supreme court held on the point :

 

 Supreme court while dealing with  both the above objections referred to number of judgements by the apex court including Fair Air Engineers Pvt. Ltd. And Anr. v. N.K. Modi reported in (1996) 6 SCC 385, State of Karnataka v. Vishwabharthi House Building Coop. Society and Others reported in (2003) 2 SCC 412, CCI Chambers Coop. Hsg. Society Ltd. v. Development Credit Bank Ltd. reported in (2003) 7 SCC 233 and Indochem Electronic and Another v. Additional Collector of Customs, A.P. reported in (2006) 3 SCC 721. It has been observed by the Supreme Court in all these cases that the Courts have to consider that the Consumer Protection Act, 1986 confers additional jurisdiction upon Consumer Forums and not their exclusion.

            Further,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.

Further, the salient features of the Consumer Protection Bill were to promote and protect the rights of consumers

 (b) the right to be informed about the quality, quantity, potency, purity, standard and price of goods t(a) the right to be protected against marketing of goods which are hazardous to life and property; 

o 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.

            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

 

2.      Another issue raised in this case was about the arbitration clause in the agreement and it was contested by the defending party that matter can be heard by the arbitrator only :

“ in view of the arbitration clause contained in the agreements under Section 8 of the Arbitration and Conciliation Act, 1996 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”

Supreme court held on the point :

           

Supreme court rejected the argument extended by the respondant and relied upon the views expressed by the apex court in its earlier orders in the matter of Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha (Dead) Through Lrs. And Others reported in  (2004) 1 SCC 305,wherein it was held that the existence of Arbitration Clause in agreement is no bar to the entertainment of the complaint by the Consumer Forum, which is an additional remedy under the Consumer Protection Act, 1986. The remedy provided under the Consumer Protection Act, 1986 is in addition to the provisions of any other law unless there is a clear bar,

3.      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.

Supreme court held on the point :

           While checking with the facts of the case ,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.Hence it is observed by the court that farmer is not expected to keep some samples  with the presumption that they may need the same for legal battle .The necessary things to be considered are the inspection carried out by the inspectors about the quality of soil and method adopted by the farmer while sowing the seeds which were found satisfactory.

4.      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.

Supreme court held on the point :

Respondants have raised the question of commercial purpose of the farmers stating that crops were meant for re-sale.The actual facts found are that the appellant had selected a set of farmers in the area for growing seeds on their behalf. 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 .Hence on this very point also ,court rejected the argument of respondants .

                                         

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