S.K. NAIK, MEMBER
Manamohan Upadhyay claiming to be an educated entrepreneur has filed this complaint. Originally, he had arrayed four opposite parties. However, at a later stage National Centre for Jute Diversification and Central Bank of India, Pirbazar, Cuttack, opposite parties no. 3 and 4 respectively, were deleted from the array of parties as no relief was claimed against them and it was not considered necessary to continue with them as proforma parties (Commission’s order dated 20th of December, 2002).
As would be evident from the nomenclature of the opposite parties no. 1 and 2, they are institutions involved in research on Jute and Allied Fibre technology under the auspices of the Indian Council of Agricultural Research. The case against them set out by the complainant is that in order to diversify his business from manufacturing of cycle parts to that of manufacturing of jute stick particle boards, he intended to set up a factory. The technology for the manufacturing of jute stick particle boards was available from the opposite parties as they had themselves developed such a technology and had offered not only the consultancy but also to prepare a project report and to transfer the said technology. He paid them a sum of Rs.1,25,000/- in this regard. Based on the project report given to him by the opposite parties, he availed financial assistance from the National Centre for Jute Diversification and the Central Bank of India. He thereafter set up the unit after investing a further sum of Rs.12,20,000/- from his own funds in the project. However, it is his contention that opposite parties had failed him on many counts, resulting in huge losses during the very first year of commercial production. The main deficiencies on their part are directed at not transferring the technology for the production of coloured particle board and recommending the purchase of a model of hydraulic press machine of a very low capacity, besides a number of other allegations, such as forcing him to procure several fixed assets which did not have any nexus with the manufacturing capacity of the unit, recommending construction of RCC roof over the office as well as factory building instead of asbestos roof etc., which have made the project completely unviable. His repeated requests regarding the difficulties faced by him did not evoke the desired response and since he suffered huge losses he has filed this complaint, seeking a compensation of Rs.69,24,000/-.
On notice being issued, the opposite parties have contested the complaint. In their joint written version/counter affidavit, opposite parties no. 1 and 2 have taken the plea that the complaint is frivolous and is based on motivated false statements and allegations. According to them, there was no deficiency whatsoever in rendering the service under the terms of the MoU entered into by them with the complainant. Since the complainant himself admits that a project report was duly prepared and given to him on the basis of which he obtained financial assistance and further that when he has already commenced commercial production, the obligation on part of the opposite parties stand duly fulfilled. They have further stated that the terms of the agreement in the MoU did not envisage or incorporate any clause with regard to the transfer of technical know-how for production of coloured particle board. According to them, apart from providing the flow chart, which gives the steps required to be followed in the process of manufacturing jute stick particle boards, they had also imparted training to the complainant as well as his workers in two difference phases. They have, therefore, stoutly denied any deficiency on their part.
In a rejoinder that has been filed by the complainant he has not only reiterated the allegations against the opposite parties but in addition has referred to the minutes of a joint meeting dated 15th of March, 2002 held under the Chairmanship of the General Manager, District Industries Centre, Cuttack, in which the complainant has raised the question of non-transfer of technical know-how for production of coloured particle board and the representative of the opposite parties had not only not stated in the meeting that there was no obligation on their part to provide such a technology but on the contrary assured that after discussing the matter with their Director, they will take every possible measure to make the unit economically viable. In view of the said commitment, the complainant has reiterated his stand that the opposite parties were obliged to provide him the technology with regard to coloured particle board.
Both the parties have filed their evidence in the form of affidavits. The complainant has filed his own affidavit while on behalf of the opposite parties, Shri A.B. Mukherjee, Officer In-charge of opposite party no.2 i.e. Regional Research Centre, Jagatpur has filed his affidavit.
Contending that the transfer of technology for the production of coloured particle boards was inherent to achieve the objective of running the unit with profit, learned counsel for the complainant submits that even though the same is not specifically mentioned as a term/condition of the MoU, the flow chart annexed by the opposite parties themselves to their written version clearly states that there is a dye unit. From this unit, the dyed JSP (Jute Stick Particle) are fed to the blender/mixer. Since the opposite parties have failed to provide the technology for this purpose, they are now trying to cover up their deficiency in the technical/specific grounds that the same was not a part of the agreement entered into between the parties in the MoU. Referring to the proceedings of the joint meeting held under the Chairmanship of the General Manager, District Industrial Centre (DIC), Cuttack on 15th of March, 2002, she has tried to fortify her argument that the representatives of the opposite parties had raised no objection in this regard, which amounted to their admission to provide/transfer such a technology.
Learned counsel has further refuted the claim of the opposite parties that they had imparted training to the complainant and his men at the factory site. In fact, she terms it as a total falsity and only admits to Mr. R.N. Das and Mr. P.K. Talukdar, representatives of the opposite parties, visiting the factory site from 14th to 17th of February, 2001 and attempting to run the unit on a trial basis but totally failed.
In the other limb of her arguments, the learned counsel in the passing has referred to the complainant having procured the machinery as per the suggestion of the opposite parties, to only discover to her dismay later that the machinery was having lower production capacity. She has also referred to the failure on part of the opposite parties to undertake a trial run at site. The effect of all this, the learned counsel contends, has been that the unit has run in huge losses, ultimately resulting in its closure and the complainant has been made to suffer huge losses purely on account of the deficiency in service by the opposite parties.
Learned counsel for the opposite parties has reiterated the stand taken by them in their written version. He contends that there was no clause in the agreement with regard to transfer of technology for production of coloured particle board. Insofar as manufacturing of jute stick particle board is concerned, there is no deficiency on their part since the complainant himself admits that he had already commenced commercial production. The allegation of non-transfer of technical know-how for production of coloured particle board, he submits is an afterthought to cover up the declining profit due to lack of proper labour management and inadequate inventory control. It was also aimed at making out a case to avoid payment of his loan to financial institutions.
We have heard the learned counsel for the parties and have perused the records of the case carefully. The twin ground on which the allegations are contended to be established relate to non-transfer of technology for manufacturing of the coloured particle board and recommendation for the purchase of inappropriate model of hydraulic press machine as also unwarranted construction of factory building entailing heavy cost.
On the point of whether the opposite parties were duty bound under the terms of the MoU/agreement to transfer technology with regard to coloured particle board, it would be relevant to refer to MoU in this regard, which reads as under :-
'As the proposed Jute-Stick Particle Board is intend to be established and operated on the basis of the technology developed exclusively by NIRJAFT, the PARTY has approached NIRJAFT to :-
a)Provide technical know-how about establishing the particle board manufacturing unit involving transfer of technological know-how and expertise,
b) Prepare a complete project report with adequate details for submission to the lending/borrowing institutions and/or other Government Authorities.
In response to a written request received from the PARTY, NIRJAFT has agreed to take up the assignment as indicated above.
The terms of reference for the assignment of consultancy to be undertaken by NIRJAFT are broadly as hereunder :-
1) Preparation of detailed project report for submission to Bank/Financial Institutions etc. which would, inter alia, include:-
a)Examination of Locational advantages of the proposed/selected site and available infrastructural facilities therein.
b)Details of Plan and machineries and other equipments, Estimated output, Requirement of Raw Materials, Man-Power and other related particulars.
c)Technical details of the products and the processes with necessary flow-charts where required, financial statements showing production and profitability, projected for 7 (seven) to 10 (Ten) years as required.
d)NIRJAFT will assist the PARTY in procuring the required plant and machinery by carrying out detailed appraisal of quotations and recommend placement of orders. In case of difficulty experienced by the PARTY, NIRJAFT will assist in locating manufacturers of related machineries etc. of the required specification. NIRJAFT will carry out, if required, inspection of machineries, at the manufacturer’s works before despatch.
e)Detailed Engineering Drawing of Building, Plant layout, Electrical installation which would be provided by the PARTY would be subjected to examination and amendment if necessary by NIRJAFT.
f)NIRJAFT will advise and guide in the erection and commission and trial production and would assist the PARTY by suggesting ways of removing any teething-trouble that may arise upto the date of commencement of commercial production.
g)Testing and evaluation of product quality will be carried out by NIRJAFT during trial-run.
h)NIRJAFT will assist in introducing a system of statistical quality control as well as a management information system.
i)NIRJAFT will examine all aspects of the requirement of environmental protection and pollution control, if required.
j)NIRJAFT will impart necessary training to the operators as well as maintenance personnel employed by the PARTY.'
As is evident, the agreement was entered into between the parties for the setting up of a jute stick particle board unit and the transfer of technological know-how and expertise thereof. There is no reference to either the setting up of a manufacturing unit for the production of coloured particle board or transfer of any such technology. The complainant admits that he has not only set up the particle board manufacturing unit as per the project report prepared and given to him by the opposite parties but has also undertaken commercial production thereof for a considerable period of time. Had his agreement/consultancy been for the production of coloured particle board, he ought to have raised the issue at the time the project report was discussed and handed over to him. If there was any misunderstanding the least the complainant could have done was to have raised the issue at the time of commissioning of the plant. In his written submissions, the complainant has referred to a viability report purportedly addressed by the opposite parties to one Mr. P. Chakrabarty, Director, ES, NCJD dated 14th of October, 1997 claiming that a new addition was made in the project proposal by introducing coloured particle board. It has been stated therein that the said letter has been annexed as annexure-20. However, the said annexure has not been filed on record nor has the counsel been able to produce the same. This objection, therefore, does not stand substantiated.
The contention of the complainant that opposite parties had neither imparted any training nor undertaken any trial-run cannot be accepted as the opposite parties being research and training institute, in the normal circumstances would be expected to be more keen to make sure that the technology developed by them is made popular. They don’t have any commercial motive. The allegation, therefore, appears to be only an afterthought.
On the allegation of the opposite parties having recommended the purchase of a hydraulic press machine of lower capacity and construction of the factory premises with heavy construction structure, such as RCC against asbestos roof, again has to be rejected for the simple reason that the terms of the agreement/MoU did not envisage that a ‘turn key project’ was entrusted to the opposite parties. Their role was limited to the transfer of their technology with regard to the manufacturing of the jute stick particle board. With regard to the construction of the factory premises and purchase of plants and machinery, they had a limited advisory role and if the complainant wanted to use construction material of his own choice, they could not have forced him to go in for RCC construction etc. In fact, we find from the evidence that it was the complainant, who, for his selfish reasons to construct a residence within the factory premises, violating the projected drawings, perhaps to cater to the additional accommodation within the scope of the cost of the project for obtaining loans etc. from financial institutions,
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departed from the approved plan. The complainant in the written arguments has extensively referred to the minutes of the meeting under the chairmanship of the General Manager, DIC, Cuttack. However, we find that the purpose of the meeting was the revival of unit, which had already gone sick and in that context the minutes referred to the submissions of the complainant with regard to the non-transfer of technology for the production of coloured particle board amongst other factors. No doubt, the meeting was attended by the representatives of the opposite parties but that by itself would not constitute deficiency specially when the MoU/agreement and the subsequent correspondence by the complainant do not refer to any such technology transfer of coloured particle board. A reference has also been made with regard to the opposite parties not claiming the balance amount of Rs.25,000/- from the complainant but that cannot constitute a ground for the complainant to say that the opposite parties refrained from doing so because they had not transferred the technology for the manufacturing of coloured particle board. The opposite parties, as already observed, are research, development and training institute funded by the Government and if they have not recovered the full consultancy amount from a project proponent, it would not be fair to hold the omission against them. In the totality of facts and circumstances of the case and preponderance of the evidence, we are of the view that the complaint does not stand substantiated and is, accordingly, dismissed with no order as to cost.