PETITIONER: INDIA OIL CORPN. Vs. RESPONDENT: CONSUMER PROTECTION COUNCIL (Mohan, J.) DATE OF JUDGMENT07/12/1993 BENCH: MOHAN, S. (J) BENCH: MOHAN, S. (J) VENKATACHALLIAH, M.N.(CJ) CITATION: 1993 SCC (1) 397 1993 SCALE (4)620 ACT: HEADNOTE: JUDGMENT:
The Judgment of the Court was delivered by
MOHAN, J.- Leave granted.
2. This appeal by special leave arises under the following
circumstances. The first respondent is a voluntary Consumer
Organisation in Kerala,
+ From the judgment and order dated March 17,1993 of the
National Consumer Disputes redressable Commission in R.P.No.
266 of 1992.
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registered under the Scientific, Literary and Charitable
Societies Registration Act. Dr P. Kamalasanan, Ram Nivas
(Gayathri), Sasthamcotta is a member and Secretary of
Respondent 1. He had taken LPG connection through M/s
Karthika Gas Agency who is the authorised distributor of the
appellant. The said Karthika Gas Agency is the second
respondent.
3. The second respondent committed several irregularities
in giving gas connection and in providing refills of LPG
cylinders to him. The Gas Agency had given more connections
than authorised by the appellant, the Indian Oil
Corporation. That amounted to deficiency in their service.
The second respondent is the authorised agent of Indian Oil
Corporation. However, the appellant-Corporation did not
take adequate care to ensure that the agency would not cheat
the consumers. Notwithstanding the fact that the appellant
was aware of the misconduct of the second respondent, it did
not take any effective steps to put a stop to the
irregularities committed by the second respondent.
4. Dr Kamalasanan, the affected consumer, took up the
matter with the appellant-Corporation. It was replied by
the Corporation on March 23, 1990 admitting the fact that
the irregularities were committed by the second respondent.
5. On January 21, 1987 Dr Kamalasanan paid an amount of Rs
2036.65 towards the charges for getting an LPG connection.
That included the price of the gas stove and the necessary
deposit towards the LPG connection. On the said date a
consumer number was also accorded for which a sum of Rs
61.65 was paid. Having regard to the irregularities
committed by the second respondent the appellant suspended
the agency. However, the agency came to be revived later
on. The second respondent gave Dr Kamalasanan a new
registration for the connection and started the regular
supply of gas cylinder. Such registration was accorded on
June 20, 1988. The registration number was 1624. Cylinder
was supplied regularly till May 1990. When the consumer
requested for regularisation of his gas connection the
appellant refused the same. According to the consumer this
would amount to a deficiency of service by the Indian Oil
Corporation, the appellant since the second respondent is
the authorised agent of the Indian Oil Corporation. On
these allegations he preferred a complaint before the
Consumer Disputes Redressal Forum, Kollam claiming
regularisation of his gas connection and a compensation of
Rs 500.
6. The District Forum accepted the case of the
complainant. The appellant-Corporation was directed to
regularise the connection given by the second respondent to
first respondent on January 21, 1987 and issue a
subscription voucher and also pay Rs 100 as cost.
7. Against the said order, an appeal was filed before the
Kerala State Consumer Dispute Redressal Commission in Appeal
No. 32 of 1991. By order dated June 10, 1992 the
appellant’s plea that there was no privity of contract
between the first respondent and the appellant as per clause
2(g) of the Consumer Protection Act, 1986 and further the
complainant was having
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unauthorised or illegal gas connection and that could not be
regularised, was not accepted. Accordingly the appeal was
dismissed.
8. The revision filed before the National Consumer
Disputes Redressal Commission, New Delhi also suffered the
same fate since by an order dated March 17, 1993 the same
was dismissed. Hence, the present appeal.
9. The contentions on behalf of the appellant are as under:
It is not open to the complainant to seek remedy under
clause 2(g) of the Consumer Protection Act, 1986 as there is
no privity of contract between the complainant and the
appellant-Corporation.
10. A person becomes an LPG customer of the Corporation
only on signing a subscription voucher. That voucher
contains the terms and conditions governing the loaning of
gas cylinders and pressure regulator. Where, therefore, the
cylinder and regulator are possessed without a subscription
voucher it would tantamount to illegal act as contemplated
in Section 3(2) of Liquefied Petroleum Gas (Regulation of
Supply and Distribution) Order, 1988. Insofar as Dr
Kamalasanan had failed to furnish a subscription voucher he
cannot raise any claim as against the appellant. In the
instant case there is no deficiency of service. On such an
enquiry it was found that M/s Karthika Gas Agency has
committed several irregularities. Alternative arrangements
came to be made through another dealer. Where the second
respondent, Karthika Gas Agency has issued several
unauthorised connections which would amount to a criminal
breach of trust, no liability can be fastened on the
appellant.
11. Clause 17 of the LPG distributorship agreement clearly
postulates the distributor to act as principal and not as an
agent. In fact, the complainant was informed under letter
dated March 23, 1990 as to the correct position. In these
circumstances, if there is no legal obligation to regularise
the connection the complaint ought to have been thrown out.
The authorities below erred in their approach.
12. In opposition to this, the learned counsel for the
respondent would contend that the subscription voucher is
not the sole evidence to establish the existence of an
authorised connection. Possession of LPG gas cylinder,
pressure regulator and regular supply and refill of
cylinders would constitute enough evidence to establish
consumer-ship since no other person can possess these items
as they are monopoly items available with LPG producing
companies only.
13. The letter dated December 8, 1989 establishes the fact
that the appellant was aware of the unauthorised acts of
dealer from 1989 onwards. Where for the unauthorised act of
second respondent his agency came to be terminated, there
was no justification whatever to revive the same. Besides,
how the appellant allowed the second respondent to give
continuous supply of gas cylinder is not explained.
Therefore, the presumption is that the appellant had
ratified the unauthorised acts of the respondent.
14. In order to decide this question it is necessary for us
to look at clause 1 (a) of Ex. R-2. That is the memorandum
of agreement between Indian Oil
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Corporation and M/s Karthika Gas Agency. That establishes
the relationship between Indian Oil Corporation, the
appellant and Karthika Gas Agency as distributor of the
Corporation, on principal to principal basis. (emphasis
supplied) Clause 17 of the agreement is as under:
“In all contracts or engagements entered into
by the Distributor with the customers for sale
of LPG and/or the sale and/or installation
and/or repairs of appliances and/or
connections thereof with LPG cylinders (filled
or empty) and/or refills and/or pressure
regulators and/or attached equipment the
Distributor shall act and shall always be
deemed to have acted as a principal and not as
an agent or on account of the Corporation, and
the Corporation shall not in any way be liable
in any manner in respect of such contracts
and/or engagements and/or in respect of any
act or omission on the part of the
Distributor, his servants, agents and workmen
in regard to such installation, sale,
distribution, connections, repairs or
otherwise. The Distributor shall be bound to
inform the customers in writing of this
provision, through correspondence or at the
time of enrollment, of the customer.”
15. Thus, it is clear that the relationship is one of
principal to principal basis. The reliance by the
authorities below that the circumstances, documents and
conduct of parties proved the relationship as of principal
and agent is difficult to understand. This is a case in
which the second respondent Karthika Gas Agency has given an
unauthorised connection. If it was a legal connection
nothing would have been easier than to produce tile
subscription voucher. Such a voucher as rightly pointed out
by the learned counsel for the appellant, is important and
will bind the appellant-Corporation. The authorities below
have not given due importance to the subscriptionvoucher.
Section 3(2) of the LPG Control Order reads as under:
“No person shall possess or use liquefied petroleum gas
filled in cylinder or in bulk form unless he has received
supply thereof from a distributor or from an Oil Company.”
16. The possession of an LPG gas cylinder by Dr Kamalasanan
in this case has not been proved to be authorised.
Therefore, on the strength of obtaining possession by means
of an unauthorised connection it is not open to the first
respondent to foist a contract on the Corporation.
17. The letter dated March 23, 1990 to Dr Kamalasanan is as
under:
"Indian Oil Corporation Limited LPG : 104 23-03-1990 Dr P. Kamalasanan
Consumer Protection Council of Kerala
TC 5/96, Perurkada,
Trivandrum 695 005.
Dear Sir,
Sub: LPG distribution at Karunagapally.
401
We make reference to your letter dated January
8, 1990 on the subject. On enquiry it is
understood that M/s Karthika Gas Agencies,
Karunagapally, has released a number of
cylinders and regulators unauthorisedly to
various persons in Karunagapally. It is also
understood that for such releases a receipt in
the name of the Karthika Gas Enterprises has
been issued and not in the name of Karthika
Gas Agencies, who are our authorised
distributors. This appears to be a clear
unauthorised action entailing criminal breach
of trust. However, insofar as we are not
provided with a valid document such as receipt
of subscription voucher issued by M/s Karthika
Gas Agencies who are our authorised
distributors we may not be in a position to
take any action in regularising the
connection.
In regard to the supply of refills we are
taking up the matter suitably with our
Manager, Trivandrum to further streamline the
existing, arrangement of supplies ex Haripad.
Thanking you,
Yours faithfully,
for INDIAN OIL CORPN. LTD.,
sd/-
Area Manager”
18. This puts the position beyond doubt. It should have
made the consumer aware of his legal rights. Further, in
this case for the unauthorised acts of second respondent,
its distributorship came to be cancelled. The fact that it
was revived is of no consequence if due regard is to be had
to clause 17 of the agreement which has been extracted
above. Section 2(g) of the Consumer Protection Act states
as follows:
“(g) ‘deficiency’ means any fault,
imperfection, shortcoming or inadequacy in the
quality, nature and manner of performance
which is required to be maintained by or under
any law for the time being in force or has
been undertaken to be performed by a person in
pursuance of a contract or otherwise in
relation to any service;”
19. Insofar as there is no privity of contract between the
appellant and the consumer no ‘deficiency’ as defined under
Section 2(g) (quoted above) arises. Therefore, the action
itself is not maintainable before the Consumer Forum. For
all these reasons, we set aside the judgments of the
authorities below. Civil Appeal will stand allowed.
However, in the circumstances of the case there shall be no
order as to costs.
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