SGS INDIA LTD. versus DOLPHIN INTERNATIONAL LTD. on 6 October 2021

SGS INDIA LTD.

v.

DOLPHIN INTERNATIONAL LTD.

(Civil Appeal No. 5759 of 2009)

OCTOBER 06, 2021

[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ]

Consumer Protection Act, 1986 – Deficiency in service – Onusof proof – Complainant engaged the appellant, a testing, inspectionand certification company, for inspection of groundnut procuredby the complainant for exporting to Greece and Netherlands –Dispute with regard to shipment in Greece and Netherlands wasw.r.t the size/count of Java peanuts and content of Aflatoxin beingmore than what was specified, respectively – Commission found theappellant to be deficient in service – On appeal, held: Initial burdenof proof of deficiency in service was on the complainant – Havingfailed to prove that the result of the sample retained by the appellantat the time of consignment was materially different than what wascertified by it, the burden of proof would not shift on the appellant– Complainant has not produced best evidence in respect of the testresults of the samples sent by the appellant to the port of destination– There is no proof of negligence on the part of appellant at thetime of loading of the consignment – Thus, it cannot be heldresponsible if at the port of destination, the products specificationswere not the same as certified by it at the time of loading ofconsignment – Order passed by the Commission set aside – Complaintdismissed.

Allowing the appeal, the Court

HELD: 1.1. The onus of proof of deficiency in service is onthe complainant in the complaints under the Consumer ProtectionAct, 1986. It is the complainant who had approached theCommission, therefore, without any proof of deficiency, theopposite party cannot be held responsible for deficiency in service.The Commission has referred to the samples collected at thetime of dispatch of consignments to Netherlands but the report

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Aof such samples has not been produced by the appellant to holdthat the appellant is deficient in providing services therefore,drawn adverse inference against the appellant. The onus of proofthat there was deficiency in service is on the complainant. If thecomplainant is able to discharge its initial onus, the burden wouldthen shift to the respondent in the complaint. The rule of evidenceBbefore the civil proceedings is that the onus would lie on theperson who would fail if no evidence is led by the other side.Therefore, the initial burden of proof of deficiency in service wason the complainant, but having failed to prove that the result ofthe sample retained by the appellant at the time of consignmentCwas materially different than what was certified by the appellant,the burden of proof would not shift on the appellant. Thus, theCommission has erred in law to draw adverse inference againstthe appellant. [Paras 19, 21 and 22][704-B-C; 705-B-E]

Ravneet Singh Bagga v. KLM Royal Dutch Airlines &DAnr. (2000) 1 SCC 66 : [1999] 4 Suppl. SCR 320– relied on.

1.2 The orders on the appellant to quality check thegroundnuts do not indicate that there was any obligation on thepart of the appellant to ensure that the requirements as specifiedEat the port of loading should also be met at the port of destination.The appellant has certified the weight, packing, quality andquantity of the consignment at the port of loading. There is noallegation that there was any deficiency either in respect of weight,packing, quality or quantity against the appellant. There is evenno allegation that the directions regarding containers or packingFwere not complied with. Once there was a direction that afterfumigation the tapes should be removed, then it cannot be saidthat the appellant was duty bound to send in air-tight containers.The two things do not reconcile. The certificates issued by theappellant had a disclaimer that “no responsibility can be acceptedGfor the possible consequences of further development of Aflatoxinproducing moulds dependent upon condition of storage and/ortransportation nor for differences arising from varying methodsapplied”. Thus, the appellant cannot be held responsible for the H

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excess content of Aflatoxin for the reason that the result was avariance with the results in the certificates given by the appellant.Still further, there was no obligation upon the appellant to ensurethat the consignment would have the same product specificationat the port of destination which were at the port of loading. Thecomplainant has not produced best evidence which they wereexpected to produce in respect of the test results of the samplessent by the appellant to the port of destination. There could be adeficiency of service only if the complainant was able to provethat the certificate issued by the appellant at the time of dispatchand the samples sent to the complainant or his agents is materiallydifferent. In the absence of any such proof, the appellant cannotbe held deficient in service. Therefore, in the absence of anyproof of negligence on the part of the appellant at the time ofloading of the consignment, the appellant cannot be heldresponsible if at the port of destination, the productsspecifications were not the same as certified by the appellant atthe time of loading of consignment. In the absence of any clausein the contract to ensure that the goods consigned has to meetthe products specifications at the time of loading of consignment,the appellant cannot be held liable for change in specifications ofthe agricultural produce at the destination port after being intransit for two months on the high seas. The order of theCommission holding the appellant as deficient in service is notsustainable in the absence of any clause in the work order thatthe specifications should remain the same even at the port ofdestination. The order passed by the Commission is thus setaside and the complaint is dismissed. [Paras 23-26][705-E-H;706-A-E]

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Indigo Airlines v. Kalpana Rani Debbarma & Ors.(2020) 9 SCC 424 : [2020] 3 SCR 389 – relied on.

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ACIVIL APPELLATE JURISDICTION: Civil Appeal No.5759 of2009.

From the Judgment and Order dated 01.07.2009 of the NationalConsumer Disputes Redressal Commission at New Delhi in OriginalPetition No.240 of 1998.

BGopal Sankarnarayan, Sr. Adv., Simranjeet Singh, Rhea Dube,Jatin Khatri, Gautam Talukdar, Rajan Narain, Advs. for the Appellant.

Vijay Hansaria, P. I. Jose, Prashant K. Sharma, Jenis V. Francis,Advs. for the Respondents.

The Judgment of the Court was delivered by CHEMANT GUPTA, J.

1. The challenge in the present appeal is to an order passed by theNational Consumer Disputes Redressal Commission[1] on 1.7.2009allowing the complaint filed by the respondent[2] and directing the appellantto pay a sum of Rs.65,74,000/- with interest @9% p.a. from the date offiling of complaint till realization. The appellant was also directed to payDRs.25,000/- as cost to the complainant.

2. The appellant herein is a testing, inspection and certificationcompany that tests the quality and quantity of several products. Thecomplainant engaged the appellant for providing services forinspectionof groundnut procured by the complainant for the purpose of exportingEthe same to Greece and Netherlands. The appellant was responsible forcarrying out the inspection of samples and further certifyingin respectofdifferent parameters of the groundnut. There were two sets ofconsignments, one to Piraeus, Greece and another to Rotterdam,Netherlands. The specification requirement in the communication dated7.11.1997 was in respect of 122 containers of peanuts procured fromFM/s Shree Ram Industries, Rajkot. 10 containers out of 122 containerswere required to be stuffed at Kandla Port and the rest at the factory ofShree Ram Industries, Rajkot. The specifications required by thecomplainant in respect of consignment to Greece were as under:

“1)Product Specification : Moisture : Max 7.0% till 15/11/97 Max 6.5% thereafterGAflatoxin : Max 5 PPB Broken/Split : Max 1% Admixture:Max 0.25%Damage : Max 0.5% Sprouty/yellow:Nil 1 For short, the ‘Commission’

H2 For short, the ‘complainant’

[HEMANT GUPTA, J.]

2) Packing Requirement : 50 Kg new jute bag of minimum 450 gms.Gross for net Abasis.3) Marking : As per contract with supplier 4) Stuffing Instructions :

-Containers should be new, without holes and with doors which close hermatically.- To protect bags from sweating and prevent them from touching the walls of the containers, every container’s bottom, top and walls should be lined by bituminised paper (not simple craft paper) top-most layer of bags is to be covered with corrugated sheet. - Container B

- Container should be fumigated by 48 Grams/cb.m. Methyl Bromide and sealing tapes used to cover container vents so as to ensure proper fumigation.

- Sealing tapes must be removed as port prior to container being shipped.

5) SGS Certificate: SGS Certificate of quality, quantity and aflatoxin can be issued at your Kandla/Jamnagar office on receipt of copy of B/L from our C&F agent in Kandla.

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Hope you will find the above in order. Kindly carry out stringentcontinuous inspection of the cargo accordingly and do not hesitateto reject the cargo if the material/stuffing is not as per ourrequirements.”

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3. The appellant carried out the inspection and analysis of HandPicked and Selected peanuts[3 ]which were to be exported to Greece.The peanuts were of two qualities – Bold and Java and the InspectionCertificate of quantity, quality, weight and packing certificates were issuedfrom 2.12.1997 to 20.12.1997. One of the reports in respect of Bold andJava variety of peanuts is as under:

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“Representative samples were drawn from 10% of the bagsselected at random. Based on examination analysis of samples,we certify that the goods are:- 350 BAGS INDIAN GROUNDNUT KERNELS CROP 1997COUNT 45/55 JAVA VARIETY (WINTER CROP)

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3 For short,‘HPS peanuts’

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ANo responsibility can be accepted for the possible consequencesof further development of aflatoxin producing moulds dependentup on condition of storage and/or transportation nor for differencesarising from varying methods applied.”

4. The merchant vehicle “Shun Cheng-12” reached Piraeus,BGreece on 7.2.1998. The complainant thus sent a communication on7.2.1998 to the appellant in respect of 20 full container loads. It wasstated that peanut count size in 11 full container load was disputed andfurther asked to send all the sealed samples to SGS, Greece which wasanother unit of the Appellant. It was communicated as under:

C“This buyer is now disputing the peanut count size in 11 FCLs andis demanding the following: (a) a discount of US$ 30 = PMT onthese 11 FCLs (b) Our bearing detention/demurrage charges forthese 11 FCLs till settlement of this matter (c) Our bearing costof SGS inspection for these 11 FCLs at discharge port.”

D5. The appellant thereafter responded to such communication on9.2.1998 stating that the sealed samples for shipment retained by theappellant were couriered to the counterpart of the appellant in Greece.The samples were tested by the counterpart of the appellant. The resultof type Bold of kernels per ounce was 52-54 whereas for Java type, thecount was 57-61. The dispute with regard to shipment in Greece is onlyEin respect of the size/count ofJava peanuts as against the limit of 45/55.

6. In respect of shipment to Rotterdam, Netherlands, the productspecifications as per the communication dated 7.11.1997were as under:

“All cargo is originating from Shree Ram Industries, Rajkot andFwill be factory stuffed. Contracted specs. are as under:

Goods will undergo for final inspection by Dr. A. Verwey lab. atdischarge port as per code of practice for peanuts of ProductBoard for Fruit of Vegetables, The Hague, “January, 1996” (CopyHgiven by the undersigned to Mr. Prafful).”

7. The Inspection Certificate dated 23.12.1997 of quantity, quality,weight and packing for the consignment to Netherlands is reproducedas under:“INDIAN GROUNDNUT KERNELS CROP 1997 COUNT50/60 JAVA VARIETY (WINTER CROP)

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Goods are free from Mould and infestation Crop 97

No responsibility can be accepted for the possible consequencesof further development of Aflatoxin producing moulds dependentupon condition of storage and/or transportation nor for differencesarising from varying methods applied.”

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8. Similar inspection certificate was given in respect of othercontainers for shipment by merchant vehicle “Orient Patriot”.

9. Dr. Verwey’s Lab at Rotterdam, Netherlands conducted aninspection of the consignmentand in its report dated 3.2.1998 reflected ahigher level of Aflatoxin, including its variants B1, B2, G1 and G2. Thetest carried by SGS, Netherlands also confirmed high Aflatoxin level.

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10. In this background, the argument of Mr. GopalSankaranarayanan, learned senior counsel for the appellant was thatthere was no responsibility or assurance of the appellant beyond theborders of India and that they were to only satisfy the quantity, quality,weight and packaging of the consignment at the time of shipment. Theappellant was only incharge of supervising the weighing and packingand to certify the quality and quantity of peanuts. It had no control orresponsibility of the subject shipment once the shipment left the Indianport. There was thus no corresponding obligation on the appellant toensure that the packed consignment would have the same specificationsat the port of destination as well. It was also pointed out that there wereinstructions that the appellant had to seal the containers for fumigationbut after fumigation, tapes were to be removed. Therefore, the air couldenter the container which may result in deviation in the reports at the F

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Aport of destination. Each of the certificates furnished by the appellantalso had a disclaimer that no responsibility can be accepted for the possibleconsequences of further development of Aflatoxin producing mouldsdepending upon the condition of storage and/or transportation nor forthe differences arising from varying methods applied. Therefore, in viewof such disclaimer being part of the certificates furnished by the appellantBat the time of shipment, the responsibility of the appellant in respect ofthe consignment does not extend till the port of destination.

11. It was contended that there is not any whisper that the methodof testing, packing, weighment was not as per the specifications providedby the appellant. Therefore, the agricultural produce transported via shipChas to face vagaries of nature starting from the tropical weather of Indiaover the high sea, which could have altered the level of Aflatoxin andthe size of peanuts.

12. In the absence of any requirement that the consignment shouldhave the same level of Aflatoxin or the size of the peanut at the destinationDport, the appellant cannot be made liable for any variation in the contentof Aflatoxin or sizes of peanuts.

13. It was further contended that the samples retained by theappellant were couriered on the same day i.e., 9.2.1998, when the samplewas tested at the destination but the report of the couriered sample hasEnot been shared by the complainant, nor the appellant was privy to thereport of Dr. Verwey’s Lab in respect of consignment to Netherlands.

14. It was also argued that the size of groundnut is subject to amarginal difference after 2½ months of transportation between Indianand Greece port. Such variation could be as a result of natural causesFsuch as weather, moisture, humidity, temperature and even storagecondition, being an agricultural commodity. It was argued that theCommission has not given any finding in respect of any deficiency ofservice in respect of the inspection carried out by the appellant in theterritory of India.G15. On the other hand, the argument of Mr. Vijay Hansaria, learned G15. On the other hand, the argument of Mr. Vijay Hansaria, learnedsenior counsel for the complainantwas that it had got orders for exportof 20 full container loads of HPS peanuts from Athens, Greece and 28full container loads from Rotterdam, Netherlands. As per the terms andconditions of the inspection, Aflatoxin could be maximum 4 ParticlesPer Billion (PPB) in respect of consignment meant for Netherlands.H

The stuffing instructions were that the containers should be new, withoutholes and with doors which closed hermetically. It was pointed out thathermetic means to exclude external air, airtight as per the dictionarymeaning. The appellant was thus liable to ensure not only the quality butalso the stuffing and packaging of the containers and it was evenauthorized to reject the cargo if the material and/or stuffing were not asper requirement. The cargo was to be tested by High Performance LiquidChromatography (HPLC) method for which higher charges wereclaimedby the appellant. It was pointed out that Aflatoxin content for theconsignment to Rotterdam, Netherlands in respect of B1, B2, G1 andG2 was required to be maximum of 4 PPB. The certificate given by theappellant was to the effect that Aflatoxin content was less than 4 PPBbut on arrival at the port of destination, the Aflatoxin B1, B2, G1, G2 wasfound to be beyond 4 microgram/Kg i.e. PPB. Mr. Hansaria referred tothe communication dated 17.2.1998 on behalf of Dr. Verwey’s Lab thaton arrival of cargo, no water damage to the contents of the containernorany visible mould growth was reported. Any mould growth on groundnutkernel will not take place unless the water activity of groundnut is 0.68which is equal to the moisture content of 7%. When Aflatoxin producingmoulds are present in groundnuts, they will not metabolize Aflatoxinsunless the water content of the nuts is above 10%. Dr. Verwey’s Labwas an independent expert nominated by the buyer. The appellant wasinformed that the goods would undergo final inspection at the dischargeport by the said Lab.

16. In respect of the cargo to Greece, the size of peanuts Javatype were found to be 57 to 61 counts per ounce, which was higher thanwhat was certified by the appellant to be 45 to 55 counts per ounce. Itwas alleged that the appellant had deliberately withheld the report of itscounterpart in Greece with regard to samples sent by it on 9.2.1998. Itwas even contended that the appellant did not send its sealed sample atthe port of loading to its counterpart in Netherlands though the samewas requested on 12.2.1998 and 19.2.1998. Since report has not beenproduced by the appellant, adverse inference should be drawn againstthe appellant.

17. The Commission found that the appellant has not led anyevidence in respect of the contention that quantity of Aflatoxin in peanutsis affected by various extraneous factors i.e., weather, moisture, humidity,temperature and storage conditions. On the basis of the said fact, theCommission returned a finding that the appellant was grossly negligent A

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Aand deficient in service as the count of Java type peanuts and content ofAflatoxin was more than what was specified.

18. We have heard learned counsel for the parties and find thatthe order of the Commission is not sustainable and it proceeds on thewrong understandingof law and facts.B

19. The onus of proof of deficiency in service is on the complainantin the complaints under the Consumer Protection Act, 1986. It is thecomplainant who had approached the Commission, therefore, withoutany proof of deficiency, the opposite party cannot be held responsiblefor deficiency in service. In a judgment of this Court reported as RavneetCSingh Baggav. KLM Royal Dutch Airlines &Anr.[4], this court heldthat the burden of proving the deficiency in service is upon the personwho alleges it.

“6. The deficiency in service cannot be alleged without attributingfault, imperfection, shortcoming or inadequacy in the quality, natureDand manner of performance which is required to be performed bya person in pursuance of a contract or otherwise in relation to anyservice. The burden of proving the deficiency in service is uponthe person who alleges it. The complainant has, on facts, beenfound to have not established any wilful fault, imperfection,shortcoming or inadequacy in the service of the respondent.E………….”

20. This Court in a Judgment reported as Indigo Airlines v.Kalpana Rani Debbarma & Ors.[5], held the the initial onus tosubstantiate the factum of deficiency in service committed by the oppositeparty was primarily on the complaint. This Court held as under:-F

“28. In our opinion, the approach of the Consumer Fora is incomplete disregard of the principles of pleadings and burden ofproof. First, the material facts constituting deficiency in serviceare blissfully absent in the complaint as filed. Second, the initialonus to substantiate the factum of deficiency in service committedGby the ground staff of the Airlines at the airport after issuingboarding passes was primarily on the respondents. That has notbeen discharged by them. The Consumer Fora, however, went onto unjustly shift the onus on the appellants because of their failure 4 (2000) 1 SCC 66H5 (2020) 9 SCC 424

to produce any evidence. In law, the burden of proof would shifton the appellants only after the respondents/complainants haddischarged their initial burden in establishing the factum ofdeficiency in service.”

21. The Commission has referred to the samples collected at thetime of dispatch of consignments to Netherlands but the report of suchsamples has not been produced by the appellant to hold that the appellantis deficient in providing services therefore, drawn adverse inferenceagainst the appellant.

22. The onus of proof that there was deficiency in service is onthe complainant. If the complainant is able to discharge its initial onus,the burden would then shift to the respondent in the complaint. The ruleof evidence before the civil proceedings is that the onus would lie on theperson who would fail if no evidence is led by the other side. Therefore,the initial burden of proof of deficiency in service was on the complainant,but having failed to prove that the result of the sample retained by theappellant at the time of consignment was materially different than whatwas certified by the appellant, the burden of proof would not shift on theappellant. Thus, the Commission has erred in law to draw adverseinference against the appellant.

23. The orders on the appellant to quality check the groundnutsdo not indicatethat there was any obligation on the part of the appellantto ensure that the requirements as specified at the port of loading shouldalso be met at the port of destination. The appellant has certified theweight, packing, quality and quantity of the consignment at the port ofloading. There is no allegation that there was any deficiency either inrespect of weight, packing, quality orquantity against the appellant. Thereis even no allegation that the directions regarding containers or packingwere not complied with. Once there was a direction that after fumigationthe tapes should be removed, then it cannot be said that the appellantwas duty bound to send in air-tight containers.The two things do notreconcile. The certificates issued by the appellant had a disclaimer that“no responsibility can be accepted for the possible consequencesof further development of Aflatoxin producing moulds dependentupon condition of storage and/or transportation nor for differencesarising from varying methods applied”. Thus, the appellant cannot beheld responsible for the excess content of Aflatoxin for the reason thatthe result was a variance with the results in the certificates given by the A

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Aappellant. Still further, there was no obligation upon the appellant to ensurethat the consignment would have the same product specification at theport of destination which were at the port of loading.

24. The complainant has not produced best evidence which theywere expected to produce in respect of the test results of the samplesBsent by the appellant to the port of destination. There could be a deficiencyof service only if the complainant was able to prove that the certificateissued by the appellant at the time of dispatch and the samples sent tothe complainant or his agents is materially different. In the absence ofany such proof, the appellant cannot be held deficient in service.

C25. Therefore, in the absence of any proof of negligence on thepart of the appellant at the time of loading of the consignment, the appellantcannot be held responsible if at the port of destination, the productsspecifications were not the same as certified by the appellant at the timeof loading of consignment. In the absence of any clause in the contractto ensure that the goods consigned has to meet the products specificationsDat the time of loading of consignment, the appellant cannot be held liablefor change in specifications of the agricultural produce at the destinationport after being in transit for two months on the high seas.

26. In view thereof, we find that the order of the Commissionholding the appellant as deficient in service is not sustainable in theEabsence of any clause in the work order that the specifications shouldremain the same even at the port of destination. Consequently, the presentappeal is allowed. The order passed by the Commission is thus set asideand the complaint is dismissed.

FDivya Pandey

Appeal allowed.

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