Question

Create a legal issue between a business you own and a customer of your product or service. Describe the circumstances of the dispute and discuss which court will have JURISDICTION over your dispute and why. You must use legal terminology and legal reasoning for your decision.

Answer 1

Here to answer this question , I have an classic example which actully happened in back 90s in Karnataka(India).It also depicts the parties involved as well as the authorities who verdicted the case.Let's have a look at the case:

Karnataka Power Transmission Corporation (KPTC) v Ashok Iron Works Private Limited

How the factual matter of the case arose

The case dates back to the last century, when in 1991, Ashok Iron Works, a private company that manufactures iron applied for obtaining electricity from the state’s power generation company – the Karnataka Power Transmission Corporation (hereinafter KTPC) for commencing its iron production. However, despite paying charges and obtaining confirmation for the supply of 1500 KVA energy in February 1991, the actual supply did not begin until ten months later, in November 1991. This delay led to incurring of losses by the private company. This prompted a complaint to the Belgaum Consumer Dispute Forum and later Karnataka High Court, under the Consumer Protection Act 1986 for the delay in supply of electricity.

Legal Arguments by KPTC

• Commercial supply not covered under the act – The major argument relied on by the power generation company KTPC was that the complaint was not maintainable since the Consumer Protection Act 1986 excludes commercial supply of goods. The applicant company was engaged in manufacturing of iron, and hence, intended to use the electricity for commercial consumption, which is excluded under the act.
• A private company is not a consumer – The other argument by KTPC was that the complaint is not maintainable because the complainant is not a `person’ under Section 2(1)(m) of the Act, 1986. This section defines who can be included as a consumer, and because it didn’t contain “a company incorporated under Companies Act” – the applicant company is not a consumer.

Supreme Court Ruling in the case

• “Includes – is an inclusive definition” – Supreme Court relied on the ruling in Dilworth v. Commissioner of Stamps, where Lord Watson said that the word “include” is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; It may be equivalent to “mean and include”. The court also relied on other acts such as the General Clauses Act that includes a private company within the purview of the definition of a “person”. Hence, Ashok Iron Works Private Company was held to be a person.
• Supply doesn’t mean sale – The Supreme Court relied on another case – Southern Petrochemical Industries, where it was held that supply is not equivalent to a sale. Therefore, the supply of electricity by the KPTC to a consumer would be covered under Section 2(1)(o) being `service’ and if the supply of electrical energy to a consumer is not provided in time as is agreed upon, then under Section (2)(1)(g), there may be a case for deficiency in service. Thus, the clause stating “supply” of goods for commercial purpose would not apply.

Thus, the court allowed the complaint on the two grounds that the applicant – Ashok Iron Works Private Limited, can sue as a person, and that supply of electricity, if found deficient can be a fit ground for claiming compensation. The Supreme Court sent the case back to District Forum for retrial on these grounds.