CASE ANALYSIS OFKARNATAKA POWER TRANSMISSION CORPORATION V.ASHOK IRON WORKS PRIVATE LIMITED


CIVIL APPEAL NO. 1879 OF 2003

DATE OF JUDGEMENT: 09.02.2009



AUTHORS: Akangsha Majumdar, Presidency University

Padmalaya Kanumgo, SLS, Hyderabad

Shrey Kumar Sinha, CLC, Faculty of Law, DU


EDITOR: Dyuthi, SLS, Pune


INTRODUCTION:

The Consumer Protection Act, 1986 was enacted to establish an easy and accessible legal framework for resolution of consumer disputes. The main aim of the act is to provide speedy and efficient redressal and protect the rights and interests of the consumers. The case of Karnataka Power Transmission Corporation vs. Ashok Iron Works Pvt Ltd[1], headed by the two judge bench addressed two main issues: firstly whether a private company purchasing a service (electricity) for commercial use can be included within the ambit of the term ‘consumer’ and secondly whether a complaint regarding the delay or deficiency in services is raised before the consumer dispute redressal forums established under the act.

FACTS:

M/s Arun Iron Works Private Limited (Respondent) was a company engaged in manufacturing of iron products and applied for supply of electricity (2500KVA) from Karnataka Power Transmission Corporation (Appellants) . The respondent`s application was cleared and supply of electricity 1500 KVA was sanctioned. The dispute unfolded in the following chronological order:

  1. 01.02.1991: The Respondent submitted the required amount of Rs. 8,40,000 but the Appellants did not commence the sanctioned electricity supply.

  2. 16.04.1992: The Karnataka High Court, which was approached by the Respondent, directed the Appellants to supply the sanctioned electricity and the time for the supply was extended to 21.07.1992.

  3. The Appellants demanded an additional sum of Rs. 8,38,000 along with further Rs.1,34,000. The Respondent paid the said amount but the actual supply commenced in November, 1992.

  4. The Respondent filed a complaint under the Consumer Protection Act (CPA), 1986 claiming damages of Rs. 99,900 as losses for delay in supply of electricity in Consumer Disputes Redressal Forum. The Appellants contended that the complaint was not maintainable as the Respondent was engaged in commercial activity and electricity being goods, the sale of it for commercial purposes is outside the purview of CPA, 1986.

  5. 10.09.1993: The District Forum agreed with the Appellants and held that the complaint was not maintainable.

  6. 15.06.1995: The Respondent challenged the decision in Karnataka State Consumer Disputes Redressal Commission which set aside the decision of the District Forum and held that the respondents were covered under the definition of “consumers” under CPA, 1986.

  7. 23.11.2001: The Appellants challenged this decision in National Commission which was later dismissed.

The Appellants then approached the Supreme Court by special leave.

ISSUES:

i. Whether a private limited company is a ‘person’ within the meaning of section 2(1)(d) r/w section 2(1)(m) CPA, 1986?

ii. Whether ‘services’ u/s 2(1)(o) CPA, 1986 includes disputes related to sale and supply of electricity?

RELEVANT LAWS:

i. Section 2(1) (d) -: states the definition of ‘consumer’;

ii. Section 2(1) (m) -: defines the term ‘person’;

iii. Section 2 (1) (o) -: gives the meaning of ‘service’ as per the CPA.

ANALYSIS:

i. Private Limited Company as a ‘person’ under CPA,1986:

Following contentions were raised by the learned counsel for the Appellants:


a. The term ‘person’ as defined u/s 2(1)(m)[2] is exhaustive i.e. includes only the four categories mentioned in that provision and same is contemplated in definition of ‘consumer’ u/s 2(1)(d).[3] Therefore, a private company cannot be included within the definition.

b. The word ‘includes’ in the above provisions shall be interpreted as “means” and should not be enlarged to include companies registered under Companies Act,1956 as a ‘person’.


The Apex Court dealing with the first contention observed that, the remedies accessible provisions of the CPA, 1986 are in addition to provisions of other laws in force and not in their derogation. ‘Person’ as defined in the General Clauses Act, 1897 includes any incorporated or unincorporated company or association or body of individuals.[4] Therefore, definition of ‘person’ under CPA is not restricted. Sect. 2(1)(m)[5] while defining ‘person’ cannot be restricted and confined to four categories enumerated but should be interpreted as “including them”. The provision is thus inclusive not exclusive.


The Court regarding second contention observed that, the interpretation of a word or expression must depend on the text and the context. Legislature often shows its intention to give enlarged and extensive meaning to any expression by using the word ‘includes’. However, the context may suggest that ‘includes’ should be read as “means”. Sufficient guidance may be provided for the interpretation of term ‘includes’ in any enactment by its setting, context and objectives.


The Court held that Legislature never intended to exclude a juristic person like a company while defining ‘person’ u/s 2(1)(m) as the four categories mention are mere indicative. The intention was to include both body incorporate and body unincorporate. Thus, a private company was held to a person within the meaning of sect. 2(1)(d) r/w sect. 2(1)(m) of CPA,1986.

ii. Sale and Supply of Electricity under ‘Services’ in CPA, 1986:

The major argument put forth by the company KPTC (Karnataka Power Transmission Corporation), was that the complaint was not maintainable as the Consumer Protection Act 1986 excludes commercial supply of goods. They argued that the company Ashok Iron Works Pvt. Ltd. manufactured and supplied iron, and hence, intended to use the electricity for commercial consumption, which is excluded under the act.


The Court, for this issue, took the case of Southern Petrochemical Industries Co. Ltd.[6]as a precedent, in which the Court had held that 'supply' of electricity did not mean 'sale’ as in under section 2(d)(1). Therefore, supply of electricity by the KPTC would fall under 'service' according to section 2(1)(o). And any case of deficiency in service would fall under section 2(1)(g). And, the clause stating 'Supply of goods' for commercial purposes would not apply.


Thus, the court stated that, if found any deficiency in the supply of electricity, compensation can be claimed. In other words, the dispute related to the sale and supply of electricity does not fall under the ambit of ‘service’ as in under section 2(1)(o) of the Act.

CONCLUSION:

The Hon’ble Supreme Court decided in the favour of Ashok Iron Works Limited and held that the company falls within the ambit of the word ‘person’ and the supply of electricity is to be considered as a service. The Court also observed that if the electricity supply is not made in time, it would be concluded as a deficiency in service. The judges while giving the judgement in the given case interpreted certain words such as ‘consumer’ and defect in ‘service’. It was held in the judgement that company is to be considered as a consumer within the meaning of the definition given in Section 2(1) (d) (i) of the Consumer Protection Act, 1986, even though the electricity was purchased from the KTPC for commercial purpose and not for personal consumption. The definition of consumer included only to ‘person’ while the definition of person stated in section 2(1) (m) of the Act includes the following[7]:

i. “A firm whether registered or not;

ii. A Hindu undivided family;

iii. A co-operative society;

iv. Every other association of persons whether registered under the Societies Registrations Act, 1860 or not;”


Moreover, section 3(42) of the General Clauses Act, 1897 defines a person as “Person shall include any company or association or body of individuals whether incorporated or not.” The purpose of the term ‘include’ used in the interpretation clauses is to give an extensive view or broaden the scope of the words or terms mentioned in the statutes and therefore, the company is considered to be included in the word ‘consumer’. In addition to this, it was also observed by the Hon’ble Supreme Court that the supply of electricity can be considered as a service as per section 2(1) (o) of the Consumer Protection Act, 1986 and if the same is not provided within the prescribed time period, that will amount to deficiency in service. Also, the complaint filed by Ashok Iron Limited before the NCDRF was held to be valid by the court.

[1] (2009) 3 SCC 240. [2]Consumer Protection Act, 1986 [3] Ibid [4] Sect. 3(42), General Clauses Act, 1897 [5]Supra Footnote 2. [6]Southern Petrochemical Industries Co. Ltd. Electricity Inspector and ETIO and Others [(2007) 5 SCC 447] [7] Section 2 (1) (m), Consumer Protection Act, 1986.

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