2012 (1) TMI 332 - SC - Indian Laws

Arbitration agreement - Jurisdiction of District Forums on Quality of seeds - commercial production of the seeds - farmers/growers consumer u/s 2(d) of the Consumer Act - awarded compensation - 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 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. HELD THAT - 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. 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 covered under consumer . 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. 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 labour. 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. the procedure adopted by the District Forum was in no way contrary to Section 13 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 of the Consumer Act had not been followed. In the result the appeals are dismissed. The Appellant shall pay cost of 25, 000/- to each of the Respondents. The amount of cost shall be paid within a period of 60 days from today.

Summary

Issues Involved:
1. Jurisdiction of District Forums under the Consumer Protection Act, 1986.
2. Compliance with Section 13 of the Consumer Protection Act, 1986.
3. Definition of 'consumer' under Section 2(d) of the Consumer Protection Act, 1986.
4. Availability of arbitration as a remedy.

Detailed Analysis:

1. Jurisdiction of District Forums under the Consumer Protection Act, 1986:
The Appellant argued that the District Forums did not have jurisdiction to entertain complaints regarding the quality of seeds, as these issues are governed by the Seeds Act, 1966. However, the Supreme Court held that the Consumer Protection Act, 1986, provides an additional remedy to consumers, including farmers, and does not derogate from the provisions of any other law. The Seeds Act does not provide for compensating farmers for loss due to defective seeds, whereas the Consumer Act does. Hence, the District Forums were competent to entertain the complaints.

2. Compliance with Section 13 of the Consumer Protection Act, 1986:
The Appellant contended that the District Forums failed to follow the procedure under Section 13, which requires obtaining and testing samples of the goods. The Supreme Court found that in many cases, the entire quantity of seeds had been sown, leaving no samples for testing. The District Forums relied on reports from agricultural experts and Court Commissioners, which were deemed sufficient to establish that the seeds were defective. The Court emphasized that the procedure adopted by the District Forums was not contrary to Section 13, given the practical difficulties faced by the farmers.

3. Definition of 'consumer' under Section 2(d) of the Consumer Protection Act, 1986:
The Appellant argued that the growers of seeds were not 'consumers' as defined under Section 2(d) because they purchased seeds for commercial purposes. The Supreme Court rejected this argument, stating that the farmers purchased seeds to earn their livelihood through self-employment, which falls within the definition of 'consumer.' The Court noted that the agreements between the Appellant and the growers indicated that the seeds were supplied for cultivation under the Appellant's supervision, and the produce was to be purchased by the Appellant, not for resale by the farmers.

4. Availability of arbitration as a remedy:
The Appellant argued that the growers should have sought arbitration as per the agreements, and the District Forums should have referred the disputes to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. The Supreme Court held that arbitration is an optional remedy, and the growers could choose to file complaints under the Consumer Act instead. The Consumer Act provides an additional remedy, and the existence of an arbitration clause does not bar the jurisdiction of Consumer Forums.

Conclusion:
The Supreme Court dismissed the appeals, upholding the orders of the District Forums, State Commission, and National Commission. The Court directed the Appellant to pay costs of Rs. 25,000 to each Respondent within 60 days. The judgment emphasized the broad scope of the Consumer Protection Act, 1986, and its applicability to farmers purchasing seeds for their livelihood, while also addressing practical challenges in complying with procedural requirements under Section 13.