M/S. NATIONAL SEEDS CORPORATION LTD. v. M. MADHUSUDHAN REDDY AND ANOTHER

A 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 s 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 oUbe definition of 'consumer'. In the first blush, this argument appears c attractive but on a deeper examination, we do not find any merit in it. The expression "any commercial purpose" was considered in Lax mi 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: 0 "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, (1) 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; (iit) 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,

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MADHUSUDHAN REDDY [G.S. SINGHVI, J.]

on a large scale" (Concise Oxford Dictionary). The A 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)(t) of B 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)(t) by Ordinance/Amendment Act, 1993." c

33Copy pinpoint33. What needs to be emphasized is that the appellant had selected a set of farmers in the area for growing seeds on its 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 lhe 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.

34Copy pinpoint34. 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 H

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A 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, B 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 c 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 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 F Section 13(1)(c) of the Consumer Act had not been followed.

35Copy pinpoint35. 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 G system of education. They have no idea about the Seeds Act and the Rules framed thereunder and other legislations, like, 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. H Ordinarily, nobody would tell a farmer that after purchasing the

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MADHUSUDHAN REDDY [G.S. SINGHVI, J.]

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 na'ive to blame the District Forum for not having c called upon the respondents to provide the samples of seeds and send them for analysis or test in the laboratory.

36Copy pinpoint36. 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 D 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 E 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. F 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 G has not been explained. Not only this, the officers of the appellant, 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 H

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A 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.

37Copy pinpoint37. In Maharashtra Hybrid Seeds Co. Ltd. v. Alava/apati B 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 acre 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 iCourt 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: F '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 G 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 H

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MADHUSUDHAN REDDY [G.S. SINGHVI, J.]

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 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 c 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)

38Copy pinpoint38. Reference can usefully be made to the orders of the National Commission in N. S. C. Ltd. v. Guruswamy (2002) G CPJ 13, EJD. 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 H

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A 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 B 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 c 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 F 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 G 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/ H Complainant should have kept portion of seeds purchased

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MADHUSUDHAN REDDY [G.S. SINGHVI, J.]

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 Pubiic 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." F

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 G 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 H

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A that the seeds were defective."

39Copy pinpoint39. 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. 8 Alavalapati Chandra Reddy (supra) and in our view the proposition laid down in those cases represent the correct legal position.

40Copy pinpoint40. In the result, the appeals are dismissed. The appellant C 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.

N.J . Appeals dismissed.