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. 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. 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.
(3.) 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 this, flowering did 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 rainfeo 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 nature 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 3 feet height and the crop period to give flowers is over. The following are the variation, I have noticed. JUDGEMENT_330_JT1_2012Image1.jpg JUDGEMENT_330_JT1_2012Image2.jpg 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 etcetera. 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 climatological 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) 5.5. 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 of 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-a-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 2000 6.1. 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 gourd' 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 filed 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. (n) 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. On 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 be 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 CP. Act. In those circumstances, the sample of seeds could not be sent to the appropriate Laboratory for analysis as contemplated under Section 13 of CP. 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 respondent 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 [JT 1996 (8) SC 253 : 1996 (6) SCC 385], State of Karnataka v. Vishwabharathi House Building Coop. Society [JT 2003 (1) SC 344 : 2003 (2) SCC 412], CCI Chambers Housing Cooperative Society Ltd. v. Development Credit Bank Ltd. [JT 2003 (Suppl. 1) SC 113 : 2003 (7) SCC 233] and Indochem Electronic v. Additional Collector of Customs [JT 2006 (3) SC 174 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. ;