INDIAN OIL CORPORATIONversusCONSUMER PROTECTION COUNCIL, KERALA AND ANR.

A                  INDIAN OIL CORPORATION
                              v.
        CONSUMER PROTECTION COUNCIL, KERALA AND ANR.

                               DECEMBER 7, 1993

B             [M.N. VENAT.ACHALIAH, CJ. AND S. MOHAN, J.)

           Consumer Protection Act, 1986-Section 2(1) (g)-Deficiency of ser-
     vice-Unauthorised gas connection-Cylinder and regulator possessed without
     a subscription voucher-Illegal act-No privity of contract between Oil Cor-
C    poration and such a consumer-Refusal of regularisation of gas connec-
     tion-ffhether deficiency in service-Held, No.

            Liquified Petroleum Gas (Regulation of Supply & Distribution) Order,
     1988-Section 3(2}-Gas Cylinder and regulator possessed without a sub-
     scription voucher-Illegal act-Unauthorised gas connection.
D
            Complainant had taken L.P.G. connection through an authorised
     Agent of Indian Oil Corporation. Cylinder was regularly supplied. When
     the complainant requested for regularisation of his gas connection the Oil
     Corporation refused the same. He filed a complaint before the Consumer
     Redressal Forum claiming regularisation of his gas connection and com-
E    pensation. According to the complainant, the refusal amounted to a
     deficiency of service by the Indian Oil Corporation.

            The District Forum allowed the complaint and directed the Corpora-
     tion to regularise the connection and issue a subscription voucher. Appeal
     filed against the order was dismissed. Appellant's plea that there was no
F    privily of contract between the Indian Oil Corporation and the complainant
     and further the compainant was having unauthorised or illegal gas connec-
     tion and that could not be regularised, was not accepted. Revision filed
     before the National Consumer Dispute Redressal Commission was also
     dismisse.d. This appeal had been filed against the order of the National
G    Commission.

            The appellant urged that it was not open to the complainant to seek
     remedy u/s 2(g) of the Consumer Protection Act as there was no privity of
     contract between the complainant and the appellant corporation, and that
     since the complainant had failed to furnish a subscription voucher he could
·H   not raise any claim as against the appellant.
                                          884
                    I.O.C. v. CON. COUNCIL [MOHAN, J.)                   885

      In opposition, respondents contended .that the subscription voucher A
was not the sole evidence to establish the existence of an authorised con-
nection; and that possession of LPG gas Cylinder, pressure regulator and
regular supply and refill of cylinders would constitute enough evidence to
establish consumership.

        Allowing the appeal, this Court                                         B
       HELD : Production of the subscription voucher is essential to estab-
lish legal connection to bind the appellant Corporation. Therefore, on the
strength the obtaining possession by means of an unauthorised connection
it is not open to foist a contract on the Corporation. In so far there is no
privily of contract between the appellant and the consumer, no 'deficiency'     C
as defined u/s 2(g) of the Consumer Protection Act arises. Therefore, the
action itself is not maintainable before the Consumer Forum.
                                                           (889-A, C, 890-G]
        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7330 of
1993.                                                                           D
                                                                                -.~

     From the Jlidgment and Order dated 17.3.93 of the National Con-
sumer Disputes Redressal Commission in R.P. '.No. 266 of 1992.

        Ms. Asha Jain Madan for the Appellant.
                                                                                E
        K.R. Nambiar for th~ Respondents.

        The Judgment of the Court was delivered by

        MOHAN, J. Leave granted.

        This appeal by special leave arise under the following circumstances:   F

      The first respondent is a voluntary Consumer Organisation in Kerala,
registered under the Scientific, Literary and Charitable Societies Re:stra-
tion Act. Dr. P. Kamalasanan, Ram Nivas (Gayatri), Sesthamcotta is a
member and Secretary of the 1st respondent, he had taken L.P.G. Connec- G
tion through M/s. Karthika Gas Agency who is the authorised distributor
of the appellant. The said Karthika Gas Agency is the 2nd respondent.

     The 2nd respondent committed several irregularities in giving gas
connection and in providing refills of L.P.G. cylinders to him. The Gas
Agency had given more connections than authorised by the appellant, the         H
    886                   SUPREME COURT REPORTS [1993] SUPP. 3 S.C.R.

A   Indian Oil Corporation. That amounted to deficiency in their service. The
    2nd respondent is the authorised Agent of Indian Oil Corporation. How-
    ever, the appellant-Corporation did not take adequate care to ensure that
    the Agency would not cheat the consumers .. Notwithstanding tht.: fact that
    the appellant was aware of the misconduct of the 2nd respondent, it did
    not take. effective steps to put a stop to the irregularities committed by the
B   2nd respondent.

          Dr. Kamalasanan, the affected consumer, took up the matter with
    the appellant-Corporation. It was replied by the Corporation on 23rd of
    March, 1990 admitting the fact that the irregularities were committed by
C   the 2nd respondent.

           On 21st January, 1987 Dr. Kamalasanan paid an amount of Rs. 2,
    036.65 towards the charges for getting an L.P.G. connection. That included
    the price of the gas stove and the necessary deposit towards the L.P.G.
    connection. On the said date a consumer number was also accorded for
D which a sum of Rs. 61.65 was paid. Having regard to the irregularities
    committed by the 2nd respondent the appellant suspended the agency.
    However, the agency came to be revived later on. The 2nd respondent the
    appellant suspended the agency. However, the agency came to be revived
    later on. The 2nd respondent gave Dr. Kamalasanan a new registration for
    the connection and started the regular supply of gas cylinder. Such registra-
E tion was accorded on 20th June, 1988. The registration number was 1624.
  . Cylinder was supplied regularly till May 1990. When the consumer re-
    quested for regularisation of bis 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 2nd respon-
   dent is the authorised Agent of the Indian Oil Corporation. On these
F allegations he preferred a complaint before the Consumer Disputes
    Redressal Forum, Kollam claiming regularisation of his gas connection and
    a compensation of Rs. 500.

          The District Forum accepted the case of the complainant. The
G appellant-Corporation was directed to regularise the connection given by
    the 2nd respondent to 1st respondent on 21.01.87 and issue a subscription
    voucher and also pay Rs. 100 as cost.

        Against the said order, an appeal was filed before the Kerala State
  Consumer Dispute Redressal Commission in Appeal No. 32 of 1991. _By
H order dated 10th June, 1992 the appellant's plea that there was no privity
                    1.0.C. v. CON. COUNCIL [MOHAN,J.]                     887

  cf contract between the 1st respondent and the appellant as per clause 2(g)    A
  of the Consumer Protection Act, 1986 and further the complainant was
  having unauthorised or illegal gas connection and that could not be
  regularised, was not accepted. Accordingly the appeal was dismissed ...

       The revision filed before the National Consumer Disputes Redressal
  Commission, New Delhi also suffered the same fate since by an order dated      B
  17th March, 1993 the same was dismi.;sed. Hence, the present appeal.

        The contentions on behalf of the appellant are BS 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 privily of contract . C
  between the complainant and the appellant,Corporation. ·

         A person becomes an L.P.G. customer of the Corporation only on
  signing a subscription voucher. That voucher contains fhe. terms and con-
  ditions gove;IDng the loaning of gas cylinders and ~e regulator.
  Where, therefore, the cylinder and regulator ¥e poSsessed .,...'lhout a        D
  subscription voucher it would tantamount to illegal act~ cort2rnplated in
  Section 3(2) of Liquofied Petroleum Gas (Regulation of Supply and Dis-
  tribution) Order, 1988. In so far as Dr. Kamalasanan had filled to furnish
  a subscription voucher he cannot raise any claim as against the appellant.
  In the instance case there is no deficiency of service. On such 31). enquiry   E
  it was found that M/s. Karthika Gas Agency has committed several ir-
  regularities. Alternative arrangements came to be made through another
  dealer where the 2nd 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.

        Clause 17 of the L.P.G. distributorship a!7eement clearly postulates
                                                                                 F
  the distn"butor to "act as principal and not as an agent. In fact, the com-
  plainant was informed under letter dated 23rd of March, 1990- as to the
  corfect position. In these circumst~ceS, 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.                              G
         In opposition to this, the learned counsel for the respondent would
. contend that the subscription voucher is not the sole"evidence to establish
 "!he existence of an·authorised connection. Possession of L.P.G. Cylinder,
  pressure regulator and regular supply and refill of cylinders would con-
  stitute enough evidence to establish consumership since no other person        H
    888                   SUPREME COURT REPORTS (1993] SUPP. 3 S.C.R.

A can possess these items as they are monopoly items available with L.P.G.
    producing companies only.

          The letter dated 08.12.89 establishes the fact that the appellant was
    aware of the unauthorised acts of dealer from 1989 onwards where for the
    unauthorised act of 2nd respondent his agency came to be terminated.
B   There was no justification whatever to revive the same. Besides, how the
    appellant allowed the 2nd 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.

           In order to decide this question it is necessary for us to look at clause
C   l(a) of Exb. R-2. That is the memorandum of agreement between Indian
    Oil Corporation and M/s. Karthika Gas Agency. That established the
    relationship between Indian Oil Corporation, the appellant and Karthika
    Gas Agency as Distributor of the Corporation, on principal to principal
    basis.
D                                                             (Emphasis supplie~

             Cla1ise 17 of the agreement is as under ;

             "In all contracts or engagements entered into by the Distributor
             with the customers for sale of L.P.G. and/or the sale and/or
E
             installation and/or repairs of appliances and/or connections there-
             of with L.P.G. 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 principle
             and not as an agent or on account of the Corporation, and the
F            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, connec-
             tions, repairs or otherwise. The Distributor shall be bound to
             inform the customers in writing of this provision, through cor-
G
             respondence or at the time of enrolment of the customer."

           Thus, it is clear that the relationship is one of principal to principal
    basis. The reliance by the authorities below that the circumstances, docu-
    ments and conduct Of parties proved the Telationship as of principal and
H   agent_ is'difficult to understand. This is a case in which the 2nd respondent
                    1.0.C. v. CON. COUNCIL (MOHAN, J.]                   889

Karthika Gas Agency has given an unauthorised connection. If it was a A
legal connection nothing would have been easier than to produce the
subscription voucher. Such a voucher as rightly pointed out by the learned
counsel for the appellant, is important and will bind the appellant-Corpora-
tion. The authorities below have not given due importance to the subscrip-
tion voucher. Section 3(2) of the L.P.G. Control Order reads as under :
                                                                                B
        "No person shall possess or use liquefied petroleum gas filled in
        cylinder or in bulk form unless he has received supply thereof from
        distributor or from an Oil company."

      The possession of an L.P.g. gas cylinder by Dr. Kamalasanan in this
case has not been proved to be authorised. Therefore, on the strenght of        C
obtaining possession by means of an unauthorised connection it is not open
to the 1st respondent to foist contract on the Corporation.

     The letter dated 23rd of March, 1990 to Dr. Kamalasanan is as
under:
                                                                                D
                                  "Indian Oil Corporation Limited
                                  LPG: 104
                                  23.03.90

        Dr. P. Kamalasanan                                                      E
        Consumer Protection Council of Kerala,
        TC. 5/96, Perurkada,
        Trivendrum 695 005.

        Dear Sir,
                                                                                F
        Sub : LPG distribution at Karunagapally.

        We make reference to your letter dated 08.01.90 on the subject.
        On enquiry it is understood Karunagapally, has released a number
        of cylinders and regulators unauthorisedly to various person in
        Karunagapally. It is also understood that for such releases a receipt   G
        in the name of the Kmthika 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 entail-
        ing criminal breach of trust. However, in so far as we are not
        provided with a valid document such as receipt of subscription H
    .890                  SUPREME COURT REPORTS [1993] SUPP. 3 S.C.R.

A             voucher issued by a M/s. Karthika Gas Agencies who are our
              authorised distributors we may not be in a position to make 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
B             existing agreement of supplies ex Haripad.
                                                                                     i-
              Thanking you,

                                                     Your faithfully,
                                             For INDIAN OIL CORPN. LTD.,
c
                                                              Sd/-

                                                         Area Manager"

            This ·puts the position beyond doubt. It should have made the con-
D sumer aware of his legal rights. Further, in this case ·for the unauthorised
     acts of 2nd respondent, its distributorship came to be cancelled. This 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 :                            ·
E
              "(g) "deficiency" means any fault, imperfection shortcommg 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 has been undertaken to be performed by a
              person in pursuance of the contract or otherwise in relation to any
F             service;"

           In so far there is no privity of contract between the appellant and the
     consumer no "deficiency" as defined under Sec. 2 (g) (quoted above) arises.
     Therefore, the action itself is not maintainable before the Consumer
G    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.

     A.G.                                                        Appeal allowed.