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2012 (1) TMI 332

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..... 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 .....

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..... ps/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. 3. 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 up .....

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..... vation 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 rainfed 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 natured 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 follo .....

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..... ope 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, Kurno .....

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..... nce of the terms of agreement, the Appellant supplied 5 kgs. of 'bitter gourd' foundation seeds to the Respondent by charging ₹ 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 ₹ 22,470/- towards labour charges, fertilizers and pesticides. In September, 2000, officials of the Appellant visited the field of the Respondent and Ors. 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 ₹ 1,38,322/- with interest at the rate of 18% per annum and compensation of ₹ 1,00,000/- by alleging that he had suffered loss because the foundation seeds supplied by .....

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..... C.P. Act. In those circumstances, the sample of seeds could not be sent to the appropriate Laboratory for analysis as contemplated under Section 13 of C.P. 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 (1996) 6 SCC 385, State of Karnataka v. Vishwabharathi House Building Coop. Society (2003) 2 SCC 412, CCI Chambers Housing Cooperative Society Ltd. v. Development Credit Bank Ltd. (2003) 7 SCC 233 and Indochem Electronic v. Additional Collecto .....

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..... ociate Professor and the M.R.O. deputed two executive officers to assist the Advocate Commissioner. Notice of the date of inspection was given to the Appellant but no one appeared on its behalf on the appointed day. After conducting inspection with the assistance of Shri P. Sesha Reddy and other officers, the Advocate Commissioner submitted report dated 31.1.1996, the relevant portions of which are extracted below: The field and the tomato fruits were examined by me and the Agriculture Officer and all the persons. The Petitioner was also present, who told that he purchased the tomato seeds from the opposite party/respondent as usual and transplanted the same in the month of Sep. 1995 and also manured and applied pesticides as previous. The plants were sown at a distance of 3 feets from each plant. The tomato trees were grown upto 3 to 5 feets height, but no progress in the tomato fruits. The tomato fruits are small just like small bolls. There is no saleable value in the market for the said tomato fruits. The Agrl. Associate Professor Sri P. Seshi Reddy has collected the earth in the field and also trees along with the tomato fruits for testing purpose. On enquiry the Petitioner .....

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..... ion to prove the fact. In the present case, Dr. P. Sesha Reddy had inspected only 9 fields, the details of which have been given by him in his Report and which have been referred to in the earlier paragraph. He did not inspect the fields of other Respondents. His Report is relevant insofar as the Respondents in Revision Petitions Nos. 131, 135, 136, 137, 140, 142, 143 and 150 of 2003 are concerned. Insofar as Respondents in the other 12 Revision Petitions, i.e., Revision Petition Nos. 132, 133, 134,138, 139, 141, 144, 145, 146, 147, 148 and 149 of 2003 are concerned, they have failed to produce any expert opinion to show that the seeds did not germinate in their fields because the seeds supplied were defective. Learned Counsel for the Petitioner raised another objection that under the Seeds Control Order, 1983, the Divisional Officer, Seeds alone is competent to inspect and report about the causes of failure of the crop. It was submitted that Revision Petition Nos. 131, 135, 136, 137, 140, 142, 143 and 150 of 2003 are liable to be dismissed as the defects cannot be determined without analysis or tests, which the Respondents in these Revision Petitions failed to get done. We fin .....

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..... ty of seeds and if the Respondents had any grievance about the quality of the seeds then the only remedy available to them was to either file an application under Section 10 of the Seeds Act or to approach the concerned Seed Inspectors for taking action under Section 19 read with Section 21 of that Act. They further argued that even if the complaints filed by the Respondents under the Consumer Act are held to be maintainable, the finding recorded by the District Forums that the seeds sold/supplied by the Appellant were defective is liable to be set aside because the procedure prescribed under Section 13 of the Consumer Act was not followed. Learned Counsel relied upon Section 8 of the Arbitration and Conciliation Act, 1996 and argued that in view of the arbitration clause contained in the agreements entered between the Appellant and the growers, the latter could have applied for arbitration and the Consumer Forums should have non-suited them in view of Section 8 of the Arbitration and Conciliation Act, 1996. An ancillary argument made by the Learned Counsel is that the growers of seeds cannot be treated as 'consumer' within the meaning of Section 2(d) because they had purch .....

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..... spectors with a request for taking action under Section 19 read with Section 21 of the Seeds Act. 13. With a view to increase agricultural production in the country, the Central Government felt the necessity of regulating the quality of certain seeds to be sold for the purpose of agriculture including horticulture and for achieving that object, Parliament enacted the Seeds Act. The Statement of Objects and Reasons enshrined in the Bill, which led to the enactment of the Seeds Act read as under: In the interest of increased agricultural production in the country, it is considered necessary to regulate the quality of certain seeds, such as seeds of food crops, cotton seeds, etc., to be sold for purpose of agriculture (including horticulture). The method by which the Bill seeks to achieve this object are: (a) Constitution of a Central Committee consisting of representatives of the Central Government and the State Government, the National Seeds Corporation and other interests, to advise those Governments on all matters arising out of the proposed Legislation; (b) fixing minimum standards of germination, purity and other quality factors; (c) testing seeds for quality f .....

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..... 10 provides for revocation of the certificate granted under Section 9. Any person aggrieved by an order made under Sections 9 or 10 can file an appeal under Section 11. Under Section 12, the State Government is empowered to issue notification for appointment of Seed Analysts and define the area of their jurisdiction. Similar provision is contained in Section 13 for appointment of Seed Inspectors. The powers of the Seed Inspector are enumerated in Section 14. Section 15 contains the procedure which is required to be followed by the Seed Inspector for taking samples. In terms of Section 15, the sample taken by the Seed Inspector is required to be sent to the Seed Analyst for the purpose of analysis. Section 16 lays down the procedure for submission of the report by the State Seed Laboratory and Central Seed Laboratory. Section 19 specifies the acts which can be punished with an imprisonment upto six months or with fine of ₹ 1,000/- or with both. Section 21 deals with offences by the companies. Sections 6, 7, 9, 10, 11, 14 and (b), 16, 19, 20 and 21 of the Seeds Act, which have bearing on the decision of the first question raised by the Appellant are reproduced below: 6. Powe .....

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..... ation as to an essential fact; or (b)the holder of the certificate has, without reasonable cause, failed to comply with the conditions subject to which the certificate has been granted or has contravened any of the provisions of this Act or the rules made there under, then, without prejudice to any other penalty to which the holder of the certificate may be liable under this Act, the certification agency may, after giving the holder of the certificate an opportunity of showing cause, revoke the certificate. 11. Appeal - (1) Any person aggrieved by a decision of a certification agency under Section 9 or Section 10, may, within thirty days from the date on which the decision is communicated to him and on payment of such fees as may be prescribed, prefer an appeal to such authority as may be specified by the State Government in this behalf: Provided that the appellate authority may entertain an appeal after the expiry of the said period of thirty days if it is satisfied that the Appellant was prevented by sufficient cause from filing the appeal in time. (2) On receipt of an appeal under Sub-section (1), the appellate authority shall, after giving the Appellant an opport .....

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..... cising any other power conferred on him by or under this Act, he shall, on conviction, be punishable- (i) for the first offence with fine which may extend to five hundred rupees, and (ii) in the event of such person having been previously convicted of an offence under this section, with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both. 20. Forfeiture of property - When any person has been convicted under this Act for the contravention of any of the provisions of this Act or the rules made thereunder, the seed in respect of which the contravention has been committed may be forfeited to the Government. 21. Offences by companies. - (1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this Sub-section shall render any such person liable to any punishment under .....

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..... ation agency all places used for growing, storage or sale of any seed of any notified kind or variety; (b) satisfy himself that the conditions of the certificates are being observed; (c) procedure and send for analysis, if necessary, samples of any seeds, which he has reason to suspect are being produced stocked or sold or exhibited for sale in contravention of the provisions of the Act or these rules; (d) investigate any complaint, which may be made to him in writing in respect of any contravention of the provisions of the Act or these rules; (g) institute prosecutions in respect of breaches of the Act and these rules; and 23-A. Action to be taken by the Seed Inspector if a complaint is lodged with him. - (1) If farmer has lodged a complaint in writing that the failure of the crop is due to the defective quality of seeds of any notified kind or variety supplied to him, the Seed Inspector shall take in his possession the marks or labels, the seed containers and a sample of unused seeds to the extent possible from the complainant for establishing the source of supply of seeds and shall investigate the causes of the failure of his crop by sending samples of the lot to .....

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..... ation enacted for ensuring that there is no compromise with the quality of seeds sold to the farmers and Ors. and provisions have been made for imposition of substantive punishment on a person found guilty of violating the provisions relating the quality of the seeds, the legislature has not put in place any adjudicatory mechanism for compensating the farmers/growers of seeds and other similarly situated persons who may suffer loss of crop or who may get insufficient yield due to use of defective seeds sold/supplied by the Appellant or any other authorised person. No one can dispute that the agriculturists and horticulturists are the largest consumers of seeds. They suffer loss of crop due to various reasons, one of which is the use of defective/sub- standard seeds. The Seeds Act is totally silent on the issue of payment of compensation for the loss of crop on account of use of defective seeds supplied by the Appellant and Ors. who may obtain certificate under Section 9 of the Seeds Act. A farmer who may suffer loss of crop due to defective seeds can approach the Seed Inspector and make a request for prosecution of the person from whom he purchased the seeds. If found guilty, such .....

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..... ces. (d) the right to be heard and to be assured that consumers interests will receive due consideration at appropriate forums; (e) the right to seek Redressal against unfair trade practices or unscrupulous exploitation of consumers, and (f) right to consumer education. 20. The preamble to the Act shows that this legislation is meant to provide for better protection of the interests of consumers and for that purpose to make provision for establishment of consumer councils and other authorities for the settlement of consumer disputes and for matters connected therewith. Section 2 of the Consumer Act contains definitions of various terms. Clauses (d) and (f) thereof read as under: 2. (d) 'consumer' means any person who,: (i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods f .....

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..... ding fifteen days as may be granted by the District Forum; (b) where the opposite party on receipt of a complaint referred to him under Clause (a) denies or disputes the allegations contained in the complaint, or omits or fails to take any action to represent his case within the time given by the District Forum, the District Forum shall proceed to settle the consumer dispute in the manner specified in Clauses (c) to (g); (c) where the complaint alleges a defect in the goods which cannot be determined without proper analysis or test of the goods, the District Forum shall obtain a sample of the goods from the complainant, seal it and authenticate it in the manner prescribed and refer the sample so sealed to the appropriate laboratory along with a direction that such laboratory make an analysis or test, whichever may be necessary, with a view to finding out whether such goods suffer from any defect alleged in the complaint or from any other defect and to report its findings thereon to the District Forum within a period of forty-five days of the receipt of the reference or within such extended period as may be granted by the District Forum; (d) before any sample of the goods i .....

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..... ackground, the objects and reasons, and the purpose for which the Consumer Act was enacted, referred to the judgments in Lucknow Development Authority v. M.K. Gupta (supra), Fair Air Engineers Private Limited v. N.K. Modi (supra) and proceeded to observe as under: The preamble of the Act declares that it is an Act to provide for better protection of the interest of consumers and for that purpose to make provision for the establishment of Consumer Councils and other authorities for the settlement of consumer disputes and matters connected therewith. In Section 3 of the Act in clear and unambiguous terms it is stated that the provisions of the 1986 Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force. From the Statement of Objects and Reasons and the scheme of the 1986 Act, it is apparent that the main objective of the Act is to provide for better protection of the interest of the consumer and for that purpose to provide for better redressal, mechanism through which cheaper, easier, expeditious and effective redressal is made available to consumers. To serve the purpose of the Act, various quasi- judicial forums are se .....

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..... y (supra), Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha (supra) and observed: The trend of the decisions of this Court is that the jurisdiction of the Consumer Forum should not and would not be curtailed unless there is an express provision prohibiting the Consumer Forum to take up the matter which falls within the jurisdiction of civil court or any other forum as established under some enactment. The Court had gone to the extent of saying that if two different fora have jurisdiction to entertain the dispute in regard to the same subject, the jurisdiction of the Consumer Forum would not be barred and the power of the Consumer Forum to adjudicate upon the dispute could not be negated. 25. The definition of 'consumer' contained in Section 2 of the Consumer Act is very wide. Sub-clause (i) of the definition takes within its fold any person who buys any goods for a consideration paid or promised or partly paid and partly promised, or under any system of deferred payment. It also includes any person who uses the goods though he may not be buyer thereof provided that such use is with the approval of the buyer. The last part of the definition .....

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..... the remedies which are available to other consumers of goods and services. 27. The next question which needs consideration is whether the growers of seeds were not entitled to file complaint under the Consumer Act and the only remedy available to them for the alleged breach of the terms of agreement was to apply for arbitration. According to the Learned Counsel for the Appellant, if the growers had applied for arbitration then in terms of Section 8 of the Arbitration and Conciliation Act the dispute arising out of the arbitration clause had to be referred to an appropriate arbitrator and the District Consumer Forums were not entitled to entertain their complaint. This contention represents an extension of the main objection of the Appellant that the only remedy available to the farmers and growers who claim to have suffered loss on account of use of defective seeds sold/supplied by the Appellant was to file complaints with the concerned Seed Inspectors for taking action under Sections 19 and/or 21 of the Seeds Act. 28. The consideration of this issue needs to be prefaced with an observation that the grievance of a farmer/grower who has suffered financially due to loss or fail .....

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..... y available under Section 9 of the Code of Civil Procedure, i.e., to avail of right of civil action in a competent court of civil jurisdiction. Nonetheless, the Act provides the additional remedy. It would, therefore, be clear that the legislature intended to provide a remedy in addition to the consentient arbitration which could be enforced under the Arbitration Act or the civil action in a suit under the provisions of the Code of Civil Procedure. Thereby, as seen, Section 34 of the Act does not confer an automatic right nor create an automatic embargo on the exercise of the power by the judicial authority under the Act. It is a matter of discretion. Considered from this perspective, we hold that though the District Forum, State Commission and National Commission are judicial authorities, for the purpose of Section 34 of the Arbitration Act, in view of the object of the Act and by operation of Section 3 thereof, we are of the considered view that it would be appropriate that these forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a co .....

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..... ar as is relevant for the purpose of this appeal, (i) 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; (iii) 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, on a large scale' (Concise Oxford Dictionary). The National Commission appears to have been taking a consistent view that whe .....

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..... s 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 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 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 bee .....

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..... nalysis or test. Why the Appellant did not adopt that course 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 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. 37. In Maharashtra Hybrid Seeds Company Ltd. v. Alavalapati Chandra Reddy (1998) 6 SCC 738, this Court did not decide the issue relating to the alleged non-compliance of Section 13 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 @ .....

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..... 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) 38. Reference can usefully be made to the orders of the National Commission in N.S.C. Ltd. v. Guruswamy (2002) CPJ 13, E.I.D. 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 in the context of the complaints made by the farmers that their crops had failed 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 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 analysis or test. But, the ground reality in the instant case is that re .....

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..... eed 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. 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 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 that the seeds were defective. 39. 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. Alavalapati Chandra Reddy (supra) and in our view the proposition laid down in those cases represent the correct legal position. .....

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