# [2012] 2 S.C.R. 1065

- **Citation:** [2012] 2 S.C.R. 1065
- **Court:** Supreme Court of India
- **Decided:** 2012-01-16
- **Case number:** Civil Appeal No. 7543 of 2004
- **Bench:** G.S. Singhvi, Asok Kumar Ganguly
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2012-2-s-c-r-1065-28112
- **Pages:** 62

## Headnote

Consumer Protection Act,. 1986:
A
B
ss. 12 and 2(d)(i) - Complaints fHed by farmers/growers c
of seeds before the District Forums alleging failure of the
crops/less yield on account of defective seeds supplied by the
Government Company-appellant and praying for award of
compensation - Maintainability of - Held: The Seeds Act is
a special legislation enacted for ensuring that there is no
D
compromise with the quality of seeds sold to the farmers and
others and provisions have been made for imposition of
substantive punishment on a person found guilty - However,
there is no provision for compensating the farmers etc. who
may suffer adversely due to loss of crop/less yield on account
E
of defective seeds supplied by a person authorised to sell the
seeds - Seeds Act and the Rules do not exclude farmers from
the ambit of the Consumer Act who are otherwise covered by
the wide definition of 'consumer' uls. 2(d)- Since the farmers!
growers purchased seeds by paying a price to the appellant,
they would certainly fall within the ambit of s. 2(d)(i) - They
F
cannot be denied the remedies available to other consumers
of goods and services - Thus, the District Forums have the
jurisdiction to entertain the complaints filed by the farmers -
Seeds Act, 1966.
s. 3 - Failure of crops/financial /OS$ to farmers/growers
of seeds on account of use of defective seeds sold/supplied
by appellant-Government Company - Appropriate remedy for
the aggrieved farmers/growers - Filing of complaint under the
G
1065
H
1066
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A Act or to apply for arbitration for the alleged breach of the
terms of agreement - Held: An aggrieved farmer/grower is not
remedied by prosecuting the seller/supplier of the se19ds,
since he does not get anything even if the sellerlsupplil3r is
found guilty and sentenced to imprisonment - Thus, the so8 called remedy available to an aggrieved farmer/grower to
lodge a complaint with the Seed Inspector for prosecution of
the seller/supplier of the seed cannot but be treated as illusory
and /Je cannot be denied relief under the Consumer Act on
the ground of availability of an alternative remedy - Remedy
c of arbitration is not the only remedy available to a grower,
rather, an optional remedy - He can seek reference to an
arbitrator or file a complaint under the Act - Language of s.3
makes it clear that the remedy available in the Act is in
addition to and not in derogation of the provisions of any other
0 law for the time being in force - Arbitration - Alternative
remedy.
s. 2(d)(i) -
Government company entered into an
agreement with selected farmers for growing seeds and the
company was to purchase the entire crop - Complaint by
E farmers alleging sale of defective seeds - Whether a grower
is excluded from the definition of 'consumer' - Held: Evidence
on record shows that the growers had agreed to produce
seeds on behalf of the Government company for the purpose
of earning their livelihood by using their skills and labour -- It
F cannot be said 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' - Since the farmers!
growers purchased seeds by paying a price to the appellant,
I
they would fall within the ambit of s. 2(d)(i) - Remedies
G available to other consumers of goods and services cannot
be denied.
s. 13(1)(c) - Sale of defective seeds to farmers - Award
of compensation to farmers by District Forums - Procedure
prescribed uls. 13(1)(c) - Compliance of - Held: Procedure
H adopted by the District Forum not contrary to s.13(1)(c) -
NATIONAL SEEDS CORPORATION LTD. v. M.
1067
MADHUSUDHAN REDDY
District Forums appointed agricultural experts for ascertaining
A
the status of the crops - On basis of the report of experts, the
District Forums were satisfied that the seeds were defective
and thus, did not call upon the complainants to provide
samples of the seeds for getting the same analysed/tested
in an appropriate

## Text

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[2012) 2 S.C.R. 1065
M/S. NATIONAL SEEDS CORPORATION LTD.
v ..
M. MADHUSUDHAN REDDY AND ANOTHER
(Civil Appeal No. 7543 of 2004)
JANUARY 16, 2012
[G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]
Consumer Protection Act,. 1986:
A
B
ss. 12 and 2(d)(i) - Complaints fHed by farmers/growers c
of seeds before the District Forums alleging failure of the
crops/less yield on account of defective seeds supplied by the
Government Company-appellant and praying for award of
compensation - Maintainability of - Held: The Seeds Act is
a special legislation enacted for ensuring that there is no
D
compromise with the quality of seeds sold to the farmers and
others and provisions have been made for imposition of
substantive punishment on a person found guilty - However,
there is no provision for compensating the farmers etc. who
may suffer adversely due to loss of crop/less yield on account
E
of defective seeds supplied by a person authorised to sell the
seeds - Seeds Act and the Rules do not exclude farmers from
the ambit of the Consumer Act who are otherwise covered by
the wide definition of 'consumer' uls. 2(d)- Since the farmers!
growers purchased seeds by paying a price to the appellant,
they would certainly fall within the ambit of s. 2(d)(i) - They
F
cannot be denied the remedies available to other consumers
of goods and services - Thus, the District Forums have the
jurisdiction to entertain the complaints filed by the farmers -
Seeds Act, 1966.
s. 3 - Failure of crops/financial /OS$ to farmers/growers
of seeds on account of use of defective seeds sold/supplied
by appellant-Government Company - Appropriate remedy for
the aggrieved farmers/growers - Filing of complaint under the
G
1065
H
1066
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A Act or to apply for arbitration for the alleged breach of the
terms of agreement - Held: An aggrieved farmer/grower is not
remedied by prosecuting the seller/supplier of the se19ds,
since he does not get anything even if the sellerlsupplil3r is
found guilty and sentenced to imprisonment - Thus, the so8 called remedy available to an aggrieved farmer/grower to
lodge a complaint with the Seed Inspector for prosecution of
the seller/supplier of the seed cannot but be treated as illusory
and /Je cannot be denied relief under the Consumer Act on
the ground of availability of an alternative remedy - Remedy
c of arbitration is not the only remedy available to a grower,
rather, an optional remedy - He can seek reference to an
arbitrator or file a complaint under the Act - Language of s.3
makes it clear that the remedy available in the Act is in
addition to and not in derogation of the provisions of any other
0 law for the time being in force - Arbitration - Alternative
remedy.
s. 2(d)(i) -
Government company entered into an
agreement with selected farmers for growing seeds and the
company was to purchase the entire crop - Complaint by
E farmers alleging sale of defective seeds - Whether a grower
is excluded from the definition of 'consumer' - Held: Evidence
on record shows that the growers had agreed to produce
seeds on behalf of the Government company for the purpose
of earning their livelihood by using their skills and labour -- It
F cannot be said 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' - Since the farmers!
growers purchased seeds by paying a price to the appellant,
I
they would fall within the ambit of s. 2(d)(i) - Remedies
G available to other consumers of goods and services cannot
be denied.
s. 13(1)(c) - Sale of defective seeds to farmers - Award
of compensation to farmers by District Forums - Procedure
prescribed uls. 13(1)(c) - Compliance of - Held: Procedure
H adopted by the District Forum not contrary to s.13(1)(c) -
NATIONAL SEEDS CORPORATION LTD. v. M.
1067
MADHUSUDHAN REDDY
District Forums appointed agricultural experts for ascertaining
A
the status of the crops - On basis of the report of experts, the
District Forums were satisfied that the seeds were defective
and thus, did not call upon the complainants to provide
samples of the seeds for getting the same analysed/tested
in an appropriate laboratory - Further the farmers are illiterate s
and they have no idea about the Seeds Act and the Rules
framed thereunder, and the Protection of Plant Varieties and
Farmers' Rights Act, 2011 that after purchasing the seeds for
sowing, he should retain a sample - In the normal course, a
farmer would use the entire quantity of seeds purchased by c
him for the purpose of sowing - Also the Company did not
keep the samples of the varieties of seeds sold/supplied tQ
the farmers -
They neither assisted the District Forum by
providing samples of the varieties of seeds sold to the
respondents nor did they collect the samples and got them
D
tested in a designated laboratory - Seeds Act, 1966.
s. 2(d) - Definition of consumer - Scope of.
In the instant appeals, appellant-Government
Company was engaged in arranging for production of E
quality seeds of different varieties in farms of registered
growers and supply of the same to farmers. Respondents
in the various appeals were engaged in agriculture/seed
production. The respondents purchased seeds from the
appellant. It is alleged that the respondents suffered loss
due to failure of the crops/less yield because the seeds
sold/supplied by the appellants were defective. The
respondents filed separate complaints under the
Consumer Protection Act and prayed for award of
compensation. The District Consumer Disputes G
Redressal Forums allowed the complaints and awarded
compensation to the respondents. In number of these
cases, the District Forums appointed Commissioner or
referred the matter to the officers of the Agricultural
Department for their opinion about the quality of seeds
F
H
1068
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A and they submitted the report. The appellants filed
appeals and revisions and the same were dismissed by
the State Consumer Disputes Redressal Forums and the
National Consumer Disputes Redressal Forums
respectively. Therefore, the appellant filed the ins;tant
B appeals.
The appellant. questioned the orders of the Natiional
Commission, the State Commission and the Dis1trict
Forums on the grounds that the District Forums did not
have the jurisdiction to entertain complaints filed by the
C respondents because the issues relating to the quality of
seeds are governed by the provisions contained in the
Seedls Act, 1966 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,
D 1986; that the District Forums could not have adjudi(fated
upon the complaint's filed by the respondents and
awarded compensation to them without following the
procedure prescribed under Section 13(1)(c) of ;the
Consumer Act; and that the growers of seeds, who had
E entered into agreements with it, are not covered by the
definition of 'consumer' under Section 2(d) of t:he
Consumer Act because they had purchased the seeds for
commercial purpose.
F
• Dismissing the appeals, the Court
HIELD: 1.1. An analysis of Sections 6, 7, 9, 10, '11,
14(1)(a) and (b), 16, 20, 21 of the Seeds Act, 1966 shows
that for achieving the object of regulating the quality of
certain seeds to be sold for the purposes of agriculture
G including horticulture, the legislature has made
provisions for specifying the minimum limits of
germination and purity of notified kind or variety of seeds
and the affixation of mark or label to indicate that su<:h
seed conforms to those limits, for restricting sale, etc., of
H any notified kind or variety of seed unless the same is
NATIONAL SEEDS CORPORATION LTD. v. M.
1069
MADHUSUDHAN REDDY
identifiable as to its kind or variety and conforms to the
A
minimum limits of germination and purity; grant of
certificate by the certific-ation agency to certain category
of person; revocation of the certificate; appointment of
Seed Analysts and Seed Inspectors with power to the
latter to take sample of any seed of any notified kind or
B
variety from any person selling such seed or a producer
of seeds and send the same for analysis by the State
Seed Laboratory or the Central Seed Laboratory. The
Seed Inspector can launch prosecution for violation of
any provision of the Seeds Act or any Rule made c
thereunder. If a person is found guilty then he can ba
punished with imprisonment upto a maximum period of
six months or he can be visited with a penalty of fine upto
Rs.1,000/- or with both. If an offence is committed by a
company, then every person who, at the time of 0
commission of offence was incharge of and was
responsible to the company of the conduct of its business
can be punished. Rule 13 of the Seeds Rules, 1968 casts
a duty on very person selling, keeping for sale, offering
to sell, bartering or otherwise supplying any seed of E
notified kind or variety to keep complete record of each
lot of seeds sold for a period of three years. He is also
required to keep sample of the seed, which can be tested
for determining the purity. [Para 16] [1104-B-G]
1.2. Though, the Seeds Act is a special legislation
F
enacted for ensuring that there is no compromise with
the quality of seeds sold to the farmers and others 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
G
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
wlio may get insufficient yield due to use of defective
seeds sold/supplied by the appellant or any other H
1070
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A 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/substandard seeds. The Seeds Act is totally silent on the
B issue of payment of compensation for the loss of crop
on account of use of defective seeds supplied bl' the
appellant and others who may obtain certificate und~r
Section 9 of the Seeds Act. A farmer who may suffer loss
of crop due to defective seeds can approach the Seed
c Inspector and make a request for prosecution o1' the
person from whom he purchased the seeds. If found
guilty, such person can be imprisoned, but this cannot
redeem the loss suffered by the farmer. [Para 17] [1104H; 1105-A-D]
D
· 1.3. India is a signatory to the resolution passed by
the General Assembly which is known as Consumer
Protection Resolution No.39/248. With a view to fulfill! the
objectives enshrined in the guidelines adopted by the
General Assembly of the United Nations and keeping in
E view the proliferation of international trade and commerce
and vast expansion of business and trade which resulted
in availability of variety of consumer goods in the market,
the Consumer Protection Bill was introduced to provide
for better protection of the interest of consumers. The
F salie11t features of the Consumer Protection Bill were to
promote and protect the rights of consumers. 'The
preamble to the Consumer Protection Act, 1986 shc>ws
that this legislation is meant to provide for better
protection of the interests of consumers and for that
G purpose to make provision for establishment of
consumer councils and other· authorities for the
settlement of consumer disputes and for matters
connected therewith. [Paras 19, 20] [1106-D-F; 1107-C:-D]
Lucknow Development Authority v. M.K. Gupta (1994) 1
H SCC 243: 1993 (3) Suppl. SCR 615; Fair Air Engineers (P)
NATIONAL SEEDS CORPORATION LTD. v. M.
1071
MADHUSUDHAN REDDY
Ltd. v. N.K. Modi (1996) 6 sec 385: 1996 (4) Suppl. SCR
A
820; State of Karnataka v. Vishwabharathi House Building
Coop. Society (2003) 2 SCC 412: 2003 (1) SCR 397; Skypay
Couriers Limited v. Tata Chemicals Limited (2000) 5 SCC
294: 2000 (1) Suppl. SCR 324; Vishwabharthy CCF
s·ecretary, Thirumurugan Cooperative Agricultural Credit
B
Society v. M. Lalitha (2004) 1 SCC 305: 2003 (6 ) Suppl.
SCR 659; H.N. Shankara Shastry v. Assistant Director of
Agriculture, Karnataka (2004) 6 SCC 230: 2004 (2) Suppl.
SCR 406; Trans Mediterranean Airways v. Universal Exports
and Anr. (2011) 10 SCC 316 - referred to.
c
1.4. In the context of farmers/growers and other
consumer of seeds, the Seeds Act is a special legislation
insofar as the provisions contained therein ensure that
those engaged in agriculture and horticulture get quality
seeds and any person who violates the provisions of the
D
Act and/or the Rules is brought before the law and
punished. However, there is no provision in that Act and
the Rules framed thereunder for compensating the
farmers etc. who may suffer adversely due to loss of
crop or deficient yield on account of defective seeds
E
supplied by a person authorised to sell the seeds. That
apart, there is nothing in the Seeds Act and the Rules
which may give an indication that the provisions of the
Consumer Act are not available to the farmers who are
otherwise covered by the wide definition of 'consumer'
F
under Section 2(d) of the Consumer Act. 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 and there is no reason why the
G
provisions of the Consumer Act should be so interpreted.
[Para 23) (1111-H; 1112-A-D]
1.5. The definition of 'consumer' contained in Section
2(d) of the Consumer Act is very wide. Sub-clause (i) of H
1072
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A the definition takes within its fold any person who ll>uys
any goods for a consideration paid or promised or partly
paicl and partly promised, or under any system of defE!rred
payment. It also includes any person who uses the gc>ods
though he may not be buyer thereof provided that =;uch
. B use is with the approval of the buyer. The last part of the
definition contained in Section 2(d)(i) excludes a person
who obtains the goods for resale or for any comme·rcial
purpose. By virtue of the explanation which was added
w.e.f. 18.6.1993 by the Consumer Protection (Amendment)
C Act 50 of 1993, it was clarified that the expression
'commercial purpose' used in sub-clause (i) does; not
include use by a consumer of goods bought and used
by him for the purpose of earning his livelihood by means
of self-employment. Since the farmers/growers
0 purchased seeds by paying a price to the appellant, they
would certainly fall within the ambit of Section. 2(d)(i) of
. the Consumer Act and there is no reason to deny tthem
the remedies which are available to other consumers of
goods and services. [Paras 25 and 26] [1113-D-F; 1i114E F]
,Kishore Lal v. Chairman, Employees' State Insurance
Corporation (2007) 4 SCC 579: 2007 (6) SCR 139; Spring
Meadows Hospital v, Harjo/ Ahluwalia (1998) 4 SCC 39; State·
of Karnataka v. Vishwabharathi House Building Coop.
F Society (2003) 2 SCC 412: 2003 (1) SCR 397; Secrntary,
Thirumurugan Cooperative Agricultural Credit Society v. M.
Lalitha (2004) 1 sec 305: 2003 (6 ) Suppl. SCR 659;
Lucknow Development Authority v. M.K. Gupta (1994) 1 SCC
243: 1993 (3) Suppl. SCR 615 - referred to.
G
2.1. As regrds the issue whether the growers of
seeds were not entitled to file complaint under the
Consumer Act and the only remtfdy available to them for
the alleged breach of the terms of agreement was to apply
for arbitration, the grievance of a farmer/grower who has
H suffered financially due to loss or failure of crop on
NATIONAL SEEDS CORPORATION LTD. v. M.
1073
MADHUSUDHAN REDDY
account of use of defective seeds sold/supplied by the
A
appellant or by an authorised person is not remedied by
prosecuting the seller/supplier of the seeds. Even if such
person is found guilty and sentenced to imprisonment,
the aggrieved farmer/grower does not get anything.
Therefore, the so-called remedy available to an aggrieved
B
farmer/grower to lodge a complaint with the concerned
Seed Inspector for prosecution of the seller/supplier of
the seed cannot but be treated as illusory and he cannot
be denied relief under the Consumer Act on the ground
of availability of an alternative remedy. [Para 27 and 28] c
[1114-G-H; 1115-C-E]
2.2. The remedy of arbitration is not the only remedy
available to a grower. Rather, it is an optional remedy. He
can either seek reference to an arbitrator or file a
complaint under the Consumer Act. If the grower opts for D
the remedy of arbitration, then it may be possible to say
that he cannot, subsequently, file complaint under the
Consumer Act. However, if he chooses to file a complaint
in the first instance before the competent Consumer
Forum, then he cannot be denied relief by invoking
E
Section 8 of the Arbitration and Conciliation Act, 1996 Act.
Moreover, the plain language of Section 3 of the
Consumer Act makes it clear that the remedy available in
that Act is in addition to and not i,n derogation of the
provisions of any other law for the time being in force.
F
[Para 29] [1115-F-H; 1116-A]
.
Fair Air Engineers (P) Ltd. v. N.K. Modi (1996) 6 SCC
385: 1996 (4) Suppl. SCR 820; Skypay Couriers Limited v.
Tata Chemicals Limited (2000) 5 SCC 294: 2000 (1) Suppl.
G
SCR 324; Trans Mediterranean Airways v. Universal Exports
and Anr. (2011) 10 sec 316 - referred to.
3.1. As regards the issue whether a grower is
excluded from the definition of 'consumer' because the
seeds produced by him are required to be supplied to the
H
107 4
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A appellant, the submission that foundation seeds were
supplied to the growers for commercial purpose and as
such their cases would fall in the exclusion part of' the
definition of 'consumer', cannot be accepted. The
appellant had selected a set of farmers in the area1 for
B growing seeds on its behalf. After e.ntering into
agreements with the selected farmers, the appellant
supplied foundation seeds to them for a price, with an
assurance that within few months they will be abl1e to
earn profit. The seeds sown under the superyision of the
c expert deputed by the appellant. The entire crop was to
be purchased by the appellant. The agreements entEtred
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
0 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 perison
other than the appellant. Therefore, it is not possiblE! to
E 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 ma1tter of fact, the evidence brought on record shows
that the growers had agreed to produce seeds on behalf
of the appellant for the purpose of earning their livelihc>od
F by using their skills and labour. [Paras 32 and 33) [1118A-B; 1119-C-G]
G
Laxmi Engineering Works v. P. S. G. Industrial Institute
(1995) 3 SCC 583: 1995 (3) SCR 174 - referred to.
3,2. A reading of the plain language of Section 13
(1 )(c) shows that the District Forum can call upon the
complainant to provide a sample of goods if it is satisfiied
that the defect in the goods cannot be determined withc>ut
H proper analysis or test. After the sample is obtained, t.he
NATIONAL SEEDS CORPORATION LTD. v. M.
1075
MADHUSUDHAN REDDY
same is required to be sent to an appropriate laboratory
A
for analysis or test for the purpose of finding out whether
the goods 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
8
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 C
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 0
the complainants were not called upon to provide
samples of the seeds for getting the same analysed/
tested in an appropriate laboratory. The procedure
adopted by the District Forum was in no way contrary to
Section 13(1)(c) of the Consumer Act and the appellant ·
cannot seek annulment of well-reasoned orders passed
E
by three Consumer Forums on the specious ground that
the procedure prescribed under Section 13(1)(c) of the
Consumer Act. had not been followed. [Para 34] [1119-H;
1120-A-F]
F
3.3. Majority of the farmers in the country remain
illiterate throughout their life because they do not have
access to the system of education. They have no idea
about the Seeds Act and the Rules framed thereunder
and other legislations, like, Protection of Plant Varieties
G
and Farmers' Rights Act, 2011. They mainly rely on the
information supplied by the Agricultural Department and
Government agencies, like the appellant. Ordinarily,
nobody would tell a farmer that after purchasing the
seeds for sowing, he should retain a sample thereof so
H
1076
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A that in the event of loss of crop or less yield on account
of defect in the seeds, he may claim compensation 1from
the seller/supplier. In the normal course, a farmer would
use the entire quantity of seeds purchased by him for the
purpose of sowing and by the time he discovers that the
8 crop has failed because the seeds purchased by him
were defective nothing remains with him which could be
tested in a laboratory. In some of the cases, the
respondents had categorically stated that they had s1own
the e'ntire quantity of seeds purchased from the appellant.
C Therefore, it is na"ive to blame the District Forum for not
having called upon the respondents to provide the
samples of seeds and send them for analysis or tes;t in
the laboratory. (Para 35] (1120-F-H; 1121-A-C]
3.4. There was abject failure on the appellant's part
D to assist the District Forum by providing samples of the.
varieties of seeds sold to the respondents. Rule 1:3(3)
casts a duty on every person selling, keeping for sale,
offering to sell, bartering or otherwise supplying any sieed
of notified kind or variety to keep over a period of three
E years a complete record of each lot of seeds sold except
that any seed sample may be discarded one year after the
entire lot represented by such sample has been disposed
of. The sample of seed kept as part of the complete
record has got to be of similar size_ and if required to be
F tested, the same shall be tested for determining :the
purity. The appellant is a large supplier of seeds to the
farmers/growers and growers. Therefore, it was expected
to keep the samples of the varieties of seeds sold/
supplied to the respondents. Such samples could have
G been easily made available to the District Forums for
being sent to an appropriate laboratory for the purpose
of an;:1lysis or test. Why the appellant did not adopt that
course has not been explained. Not only this, the offic1~rs
of the appellant, who inspected the fields of the
respondents could have collected the samples and got
H
NATIONAL SEEDS CORPORATION L TO. v. M.
1077
MADHUSUOHAN REDDY
them tested in a designated laboratory for ascertaining
A
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. [Para 36] [1121-D-H; 1122B
A]
Maharashtra Hybrid Seeds Co. Ltd. v. Alavalapati
Chandra Reddy (1998) 6 SCC 738 - relied on.
N.S.C. Ltd. v. Guruswamy (2002) CPJ 13; E./.D. Parry c
{I) Ltd. v. Gourishankar (2006) CPJ 178; India Seed House
v. Ramjifal Sharma (2008) 3 CPJ 96 - approved.
CCI Chambers Housing Cooperative Society Ltd. v.
Development Credit Bank Ltd. (2003) 7 SCC 233: 2003 (3)
Suppl. SCR 139; lndochem Electronic v. Additional Collector D
of Customs (2006) 3 SCC 721: 2006 (2) SCR 584 - referred.
Case Law Reference:
1996 (4) Suppl. SCR 820 Referred to.
Para 6.6,
22, 28
E
2003 (1) SCR 397
Referred to.
Para 6.6,
22, 24
2003 (3) Suppl. SCR 139 Referred to.
Para 6.6
2006 (2 ) SCR 584
Referred to.
Para 6.6
1993 (3) Suppl. SCR 615 Referred to.
Para 22
2000 (1) Suppl. SCR 324 Referred to.
Para 22, 30
F
2003 (6 ) Suppl. SCR 659 Referred to.
Para 22, 24
G
2004 (2) Suppl. SCR 406 Referred to.
Para 22
(2011) 10 SCC 316
Referred to.
Para 22, 31
2007 (6) SCR 139
Referred to.
Para 24
H
1078
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A
(1998) 4 sec 39
Referred to.
Para 24
1995 (3) SCR 174
Referred to.
Para 32
(1998) 6 sec 738 ·
Relied on.
Para 391
B
(2002) CPJ 13
Approved.
Para 39
(2006) CPJ 178
Approved.
Para 39
(2008) 3 CPJ 96
Approved.
Para 39
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
C 7543 of 2004.
D
From the Judgment & Order dated 24.03.2003 of National
Consumer Disputes Redressal Commission in Revision
Petition No. 508 of 2003.
·
WITH
C.A. Nos. 622, 623 of 2012, C.A. Nos. 3498, 3499 of 2009,
C.A. Nos. 3596, 3598, 4509, 4510, 4511, 4512, 4513, 45'14,
4515,4516,4517,4518,4519,4520,4521,4522,4704,47B8,
E 4824, 4954, 4955, 4957, 4959, 4962, 4963, 4964, 4967 of
2009 & C.A. No. 7542 of 2004.
Pallav Shishodia, Sudhir Kulshreshtha, M.Y. Deshmukh,
Sachin Katariya, Rameshwar Prasad Goyal, M.J. Paul, Manoj
F Swarup, Devesh Kumar Tripathi, Ashok Anand, Kamal Mohan
Gupta, Nitin S. Tambwekar, B.S. Sai, K. Rajeev for the
Appellant.
R. Venkataramani, G.N. Reddy, Aljo K. Joseph, Ravi
Shankar, Gouri Karuna Das, Anu Gupta, Shanti Kumar Jaisani,
G Bhakti Pasrija, Sanjeev Kumar Sharma (for Rani Jethmalani),
E.R. Surnathy, Shobha, Sunil Kumar Verma, Ranjith K.C., Abhijit
Sengupta, K. Rajeev, Rohit Kumar Singh, Venkateswara Rao
Anumolu for the Respondents.
H
The' Judgment of the Court was delivered by
NATIONAL SEEDS CORPORATION LTD. v. M.
1079
MADHUSUDHAN REDDY
G. S. SINGHVI, J. 1. Leave granted in SLP (C) Nos.32750
A
·of 2009 and 35350 of 2009.
2. Appellant - Mis. National Seeds Corporation Ltd.
(NSCL) is a Government of India company. Its main functions
are to arrange for production of quality seeds of different
8
varieties in the farms of registered growers and supply the
same to the farmers. The respondents own lands in different
districts of Andhra Pradesh and are engaged in agriculture/
seed production. They filed complaints with the allegation that
they had suffered loss due to failure of the crops/less yield
C
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
D
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
E
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
F
any complaint about the sale or supply of defective
seeds can be filed only under the Seeds Act and
G
not under the Consumer Protection Act, 1986 (for
short, 'the Consumer Act').
(b)
the District Forums could not have adjudicated
upon the complaints filed by the respondents and
H
A
B
1080
SUPREME COURT REPORTS
[2012] 2 S.C.R.
awarded compensation to them without following
the procedure prescribed under Section 13(1 )(c) of
the Consumer Act.
(c)
the growers of seeds, who had entered into
agreements with it, are not covered by the definition
of 'consumer' under Section 2{d) of the Consumer
Act because they had purchased the seeds for
commercial purpose.
4. For the sake of convenience, we may advert to the facts
C leading to the passing of orders by three Consumer Forums,
wh!ch have been impugned in Civil Appeal Nos. 7543 of 2004,
3499 of 2009 and 4519 of 2009. We may also mention that in
their complaints the respondents had impleaded the officers of
the appellant as parties but for the purpose of this judgment we
D shall only refer to them as the appellant.
Civil Appeal No.7543 of 2004
5.1 Respondents M. Madhusudan Reddy and K.
Rambhupal Reddy claim to have purchased 46 kg. of KBSH-1
E Sunflower seeds from Area Manager of the appellant at
Kurnool. They undertook cultivation by adopting the recognized
modes of preparing the field and irrigation and also USE!d the
· prescribed fertilizer but there was germination only in 60%
seeds and the height of the plants was uneven. The gennination
F in the remaining 40% plants was slow. Not only this, flowering
did not take place simultaneously. At the request cif the
respondents, Area Manager of the appellant inspected their
field on 19.11.1999. He is said to have agreed that them was
less germinatien and the growth of the plants was uneven, but
G declined to give any assurance for payment of compensation.
5.2 Dissatisfied with the response of the Area Manager,
the respondents filed a' complaint under Section 12 c>f the
Consumer Act and prayed for award of compensation of
H Rs.1, 79,505/- towards the cost of seeds, fertilizer and
NATIONAL SEEDS CORPORATION LTD. v. M.
1081
MADHUSUDHAN REDDY [G.S. SINGHVI, J.]
pesticides and value of the lost crop with interest at the rate of A
12 per cent per annum by alleging that they did not get the
expected yield because the seeds sold by the appellant were
defective.
5.3 In the reply filed on behalf of the appellant, it was
8
pleaded that the seeds were purchased by respondent no. 1
alone and there was no evidence of joint cultivation by the
respondents. The appellant denied that the seeds were
defective and pleaded that respondent No. 1 did not get the
expected yield because sufficient quantity of seeds had not
C
been used for cultivation 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 D
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
E
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%
F
of the plants are in the bud stage, while rest of the plants
do not have flowers and there is no possibility for these
G
plants to get flower, as they are only 3 feet height and the
crop period to give flowers is over.
The following are the variation, I have noticed.
H
1082
SUPREME COURT REPORTS
[2012) 2 S.C.R
A
No. Observed %
Height of
Flowers
Remarks
the Plants
Stage
1.
. 45%
6 feet
Flowering and
Only two to
grain setting is
three rows
in progress
of flowers
B
in head is
setting seed.
(Conveand
flat heads)
2.
10%
4 feet
Flowering and
No
c
the seed setting
possibility
is started
for further
growth.
3.
20%
6 feet
Head dropping
No growth
since seed
is possible
D
setting is over.
4.
5%
4 feet
Head dropping
-dosince seed
setting is over.
E
5.
10%
4 to 6 feet
In bud stage
Growth can
not be
expected
further.
6.
10%
3 to 4 feet
No flowering
Growth
is seen.
also is
F
stunted.
Presence of leaf heairyness is seen in all the items
except item (3) above to a certain extent i.e., 3 to 4 %.
In all the cases I have noticed difference in Head
G
shape i. e, a few or convex a few a flat and a few an:~
concave.
In all the cases I have seen the heads are not unifom1
in size. Twenty five percent of heads which are dropping
because of full maturity are bigger in size while many are
H
of medium size.
NATIONAL SEEDS CORPORATION LTD. v. M.
1083
MADHUSUDHAN REDDY [G.S. SINGHVI, J.]
I have noticed 0.1 % of flowers with multiple heads.
A
There are gaps which are may be due to faulty seed
or may be due to non germination of the seed.
In the heads which are flat and concave are having
three rows of seed setting while in the convex heads the
B
filling or setting of seed is satisfactory.
I have also seen two different plots of sunflower
grown adjacent to the plot in question and are exhibiting
uniformity of the plant, in height, size and opening of flower c
etcetra. This is an indication of a standard seed.
Similar uniformity is lacking in the plot in question.
In all the three plots, there prevailed uniform physical and
climatelogical factors.
Hence the wide variation in all the aspects as
explained in the earlier paras gives a scope this seed is
not standard up to the mark.
D
Particularly Hybrid seed be having with such a wide
E
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
F
by him was not based on any scientific method and the
G
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
H
1084
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A 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,
8 letter dated 6.11.1999 given to the appellant, bill dated
29.6.1999 showing the purchase of fertilizers from Chaitanya
Chemicals & Fertilizers, Kurnool and the photographs showing
the unevenness in the plants. On behalf of the appellant, an
affidavit was filed along with copies of the documents
mentioned therein.
c
5.7 The District Forum rejected the appellant's objection
to the Commissioner's report and held that the complainants
(the respondents herein) have succeeded in proving that the
seeds sold to them were defective resulting in loss of crop.
D Accordingly, the complaint of the respondents was allowed and
the appellant was directed to pay Rs.1, 00, 0001- towards loss
of crop and Rs.10,000/- towards the cost of fertilizer, pesticides,.
labour etc. with a stipulation that if the amount is not paid within
one month, the appellant shall be liable to pay interest @ 9%
E per annum.
5.8 The State Commission dismissed the appeal and held
that Commissioner's report was rightly accepted by the District
Forum because the appellant had not produced any evidence
to controvert the findings contained therein that the respondent
F had taken proper steps for cultivation but did not get the
expected yield due to faulty seeds.
, · 5.9 The National Commission rejected the appellant's plea
that the only remedy available to the respondents was to file a
G complaint under the Seeds Act, which is a special legislation
vis-a-vis the Consumer Act, by observing that there is no
provision in that Act for compensating a farmer whose crop may
be adversely affected due to use of defective seeds sold by
the appellant. The argument that the District Forum could not
H have decided the complaint without complying with the mandate
NATIONAL SEEDS CO~PORATION LTD. v. M.
1085
MADHUSUDHAN REDDY [G.S. SINGHVI, J.]
of Section 13(1)(c) of the Consumer Act was negatived by the
A
National Commission and it was held that the report of the
Commissioner, who was an expert in agriculture, was rightly
relied upon by the District Forum for coming to the conclusion
that the crop had failed due to the use of defective seeds.
Civil Appeal No.3499 of 2000
6.1 Respondent P. V. Krishna Reddy is a grower having
land in Khanpur village of Manopad Mandal of Mahabubnagar
District of Andhra Pradesh. He was one of the persons selected
B
by the appellant in March 2000 for growing 'bitter gourd' seeds.
C
The appellant entered into an agreement with the respondent
and assured him that by producing seeds on its behalf he will
get minimum net profit of Rs.38,000/- per acre within a span
of three months. In furtherance of the terms of agreement, the
appellant supplied 5 kgs. of 'bitter gourd' foundation seeds to
D
the respondent by charging Rs.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 Rs.22,470/- towards labour
charges, fertilizers and pesticides. In September, 2000, officials
E
of the appellant visited the field of the respondent and others,
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
F
the seeds were defective. The respondent then filed a complaint
under the Consumer Act and prayed for issue of a direction to
G
the appellant to pay compensation of Rs.1,38,322/- with interest
at the rate of 18% per annum and compensation of
· Rs.1,00,000/- by alleging that he had suffered loss because the
foundation seeds supplied by the appellant were defective.
H
1086
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A
6.3 In the reply filed on behalf of the appellant, the following
objEictions were taken to the maintainability of the complaint:
(i) that in view of the arbitration clause contained in the
agreement, the only remedy available to the respondent was
8 to apply for arbitration and the District Forum did not have the
jurisdiction to entertain the complaint
(ii) that the respondent had entered into an agreement for
commercial production of the seeds and, as such, he cannot
be treated as a 'consumer' within the meaning of Section 2(d)
C of the Consumer Act.
On merits, it was pleaded that Shri M. V. Narsimha Rao,
Seed Officer of NSC Kurnool had advised the respondent and
other growers to remove off-types and diseased plants, which
D were liable to be rejected but the growers ignored his advice.
It was then averred that during their visit on 8.9.2000, Shri M.
V. Narsimha Rae-, Shri M. V. Sudhakar and Area Manager,
NSCL, Kurnool found 7% off-types seeds which were more than
the prescribed standards and, therefore, their crops were
E rejected.