Case 1.

Consumer Protection Act

ARVIND MILLS LTD. V. ASSOCIATED ROADWAYS .

12March, 2004
Supreme Court of India

Introduction

A complaint was filed for Consumer Protection Act, 1986, recovery of Rs 21,04,835.83p.
by the appellant against the respondent under the consumer Protection Act, 1986, before
the National Consumer Disputes Redressal Commission (for short “the National
Commission”). According to the complaint, the respondent was a common carrier and was
liable to compensate the appellant for the loss suffered because the respondent had
effected delivery of goods entrusted to it by the appellant without obtaining the original
lorry receipts from the consignee.

Issue

The National Commission followed its earlier decision in the case of Delhi Assam
Roadways Corpn. v. B.L Sharma First Appeal No. 107 of 2001, decided on 12-12-2002
and held that in the absence of a notice under Section 10 of the Carriers Act, 1865, the
complaint cannot be entertained under the Consumer Protection Act against a common
carrier. The special leave petition filed against the decision in the case of B.L Sharma was
dismissed by recording that the Court saw no reason to interfere with the reasoning of the
National Commission. The learned counsel for the appellant has contended that the order
of this Court in B.L Sharma should not be followed as it was not, in fact, a decision on an
appeal. The earlier decisions of this Court relied upon by the National Commission, all
pertained to Section 9 and not Section 10 of the Carriers Act. It is further submitted that the
National Commission had wrongly extended the principles which this Court had applied to
Section 9 of the Carriers Act to Section 10 thereof without noticing that Section 9 created
substantive rights whereas Section 10 was merely procedural. According to the appellant,
because the right available under Section 9 of the Carriers Act to a consignor was also
available under the common law, this Court had held that Section 9 of the Carriers Act
applied to the Consumer Protection Act. It is further submitted that to make a proceeding
under the Consumer Protection Act subject to the precondition of notice under Section 10
of the Carriers Act would be to place an unnecessary impediment on the rights of
consumers to have expeditious and summary disposal of their complaints which was the
object of the framing of the Consumer Protection Act. It is pointed out that Section 3 of the
Consumer Protection Act clarifies that the remedy available under the Consumer
Protection Act was an additional remedy and not in derogation of any other law.
The decision of this Court, which has been relied upon by the National Commission in B.L
Sharma and which is sought to be distinguished by the appellant, is Patel Roadways Ltd.
v. Birla Yamaha Ltd. 2000 4 SCC 91 That case is an authority for two propositions; one,
that the law relating to common carriers was crystallised under the statute; and second,
that the word “suit” in Section 9 of the Carriers Act would have to be defined to include
proceedings under the Consumer Protection Act.
Rule of law

Since the word “suit” has been used both in Section 9 and Section 10 of the Carriers Act,
there is no reason why we should not construe the said word as far as Section 10 is
concerned, in the same manner as it was done in Patel Roadways Ltd. qua Section 9. The
distinction that has been sought to be drawn between Section 9 and Section 10, namely,
that the former creates a substantive right whereas the latter only provides for procedure is
unacceptable. Section 9 deals with the rule of evidence to be followed in dealing with
cases under the Carriers Act and rules of evidence are rules of procedure. Besides, the
construction of the word “suit” in Patel Roadways Ltd. did not turn on whether Section 9
was either procedural or substantive.

Analysis

The fact that the remedies under the Consumer Protection Act are in addition to and not in
derogation of any other law does not mean that the rights under the Carriers Act can be
exercised, except in accordance with the manner provided under the Act. Sections 9 and
10 form an integral scheme by which a common carrier is fastened with liability
irrespective of proof of negligence. Merely because the procedure under the Consumer
Protection Act is summary in nature does not in any way warrant the abrogation of the
requirement to serve notice under Section 10 of the Carriers Act before fastening any
liability under that Act on the carriers.The civil appeal is, accordingly, dismissed.
Case 2. Sales of Goods Act

M/S. C.C VERMANI V. M/S. BHASIN ASSOCIATES

7 September, 1989
Supreme Court of India

Introduction

The petitioners in these writ applications, inter alia, challenged the vires of Constitution
(46th Amendment Act) as also the provisions contained in Section 25a of the Bihar
Finance Act, 1981 as amended by the Bihar Finance Amendment Act, 1984.
In these writ applications, the petitioners, inter alia, contend that as they entered into an
agreement with their respective principals for execution of the works contract prior to the
coming into force of the Bihar Finance Act, 1984, i.e prior to 1-4-1984, no sales tax is
payable in relation to the supplies made under the said contract, and in any event, they are
not liable to pay any tax whatsoever in view of Section 64A of the Sales of Goods Act.

Parties involved in the case

In C.W.J.C No. 2655 of 1988 (R), a counter-affidavit has been filed behalf of the South
Eastern Railway Administration, wherein in paragraph 9 thereof, it has categorically been
stated that recovery had been made from the outstanding bill of the petitioner thereto only
after 1st April, 1984.

Issue

The Supreme Court of India in Builders Association of India v. Union of India [reported in
1989 BLT 151] upheld the constitutional validity of Constitution (46th Amendment) Act.
Thereafter, a Division Bench of this Court in Jamshedpur Contractors Association v. The
State of Bihar. [C.W.J.C No. 1034 of 1984 (R)] and analogous cases, disposed of on 2nd
August, 1989 and C.I.O Tyres Private Ltd., Jamshedpur v. The State of Bihar [C.W.J.C No.
2178/88 (R)] held that Clause (a) of sub-section (I) of Section 21 of Bihar Finance Act as
also Rule 13A of the Bihar Sales Tax Rules, 1983 are ultra vires.
A Division Bench of this Court in the aforementioned writ applications held that the
assessing authority would be bound to take into consideration the decision of the Supreme
Court in Builders Association Case (supra) as also a decision of the Supreme Court in N.M
Goel and Co. v. Sales Tax Officer, Rajnandgaon, [reported in (1989) 1 SCC 335 : AIR 1989
SC 285], and the aforementioned writ applications and proceed to conclude the
assessment proceeding, in accordance with law keeping in view of the ratio of the
aforementioned cases.
Rule of law

Section 64A of the Sales of Goods Act reads as follows:—

“Unless a different intention appears from the terms of the contract, in the event of any tax
of the nature described in sub-section (2) being imposed, increased, decreased or remitted
in respect of any goods after the making of any contract for the sale or purchase of such
goods without stipulation as to the payment of tax where tax was not chargeable at the
time of the making of the contract, or for the sale or purchase of such goods tax paid
where tax was chargeable at that time:—
(a) If such imposition or increase so takes effect that the tax or increased tax, as the case
may be, or any part of such tax is paid or is payable, the seller may add so much to the
contract price as will be equivalent to the amount paid or payable in respect of such tax or
increase of tax, and he shall be entitled to be paid and to sue for and recover such
addition; and
(b) If such decrease or remission so takes effect that the decreased tax only, or no tax, as
the came may be, is paid or is payable, the buyer may deduct so much from the contract
price as will be equivalent to the decrease of tax or remitted tax and he shall not be liable
to pay or be sued for, or in respect of, such deduction.”

Analysis

From a perusal of the said provision, it would thus be evident that in terms thereof a
contractor can claim reimbursement in relation to the payment of tax on goods supplied by
him to his principals in the event, there is no condition in the contract to the contrary.
It is, therefore, clear that this Court, in exercise of its writ jurisdiction cannot decide in each
case as to whether the contractor is liable to pay the tax or its principal is liable in terms of
the aforementioned provision.
The petitioners have undertaken works contract and in execution thereof had been
supplying goods to their principal and thus are liable to pay sales tax, in accordance with
the provisions of the Bihar Finance Act, 1981 as amended in the year 1984 and the rules
framed thereunder.
There cannot be any doubt that the provisions of the aforementioned Act and the rules
framed thereunder having come into force from 1-4-1984, tax would be payable in relation
to the goods supplied only if the taxable event occurred on or after the aforementioned
date irrespective of the date when the petitioners entered into contract with their principals.
It is now well that so far as liability to pay the sales tax is concerned, the same primarily is
upon the dealer.
In terms of the provisions of the Bihar Finance Act, 1981 and the rules framed thereunder,
a registered dealer is entitled to recover the tax from his buyer and in terms of Section 64A
of the Sales of Goods Act, from its principal unless there exists a contract to the contrary.
The right of such a dealer to reimburse himself, therefore, is a matter of contract. Section
64A of the Sales of Goods Act merely thus provides for an implied condition of a contract
relating to or involving supply of goods.
Such a contract/implied contract can be enforced in accordance with the provisions of the
said contract only; namely either by taking recourse to the Arbitration agreement entered
into by and between the parties thereto if there be any, or by filing a suit, in the event, the
principal refuses to fulfil his part of promise in relation thereto.
Conclusion

In view of the fact that the petitioners of these writ applications cannot invoke our writ
jurisdiction for enforcing the liabilities of their principals in terms of Section 64A of the
Sales of Goods Act, as the same involves enquiry into a disputed question of fact as also
in view of the fact that such an implied term of the contract may he enforced in another
forum, in our opinion, these writ applications are not maintainable.
These petitions are, therefore, dismissed with the observations made hereinbefore. But, in
the facts and circumstances of the case, there will be no order as to costs.