Machinery bought for income growth is recognised consumer purchase

NCDRC confirms ruling directing Shivajirao More to refund ₹9.5 lakh with interest to a Maharashtra entrepreneur in grey-board unit case

Shivajirao More approached Siddhanath Sawant with a proposal that the latter should start a grey-board manufacturing unit, which the Khadi and Village Industries Commission recognised as a family activity. More also represented that he had the technical knowhow and a tieup with Mangalam Engineering Works, which had the licence to manufacture and supply the machinery and to erect and install it.

 

On September 17, 1999, Mangalam gave a quotation of ₹79.5 lakh for providing, installing, and commissioning the unit by May 1, 2000. Sawant arranged finance of ₹77 lakh from Maharashtra State Co-operative Bank, Pune branch. The parties also executed an agreement for carrying out the project.

 

After receiving an advance payment of ₹9.5 lakh, More submitted a false inspection report from a recognised electrical contractor to show that the machinery had been installed, and managed to obtain sanction from the Maharashtra State Electricity Board (MSEB) for a 15 HP (horsepower) electric connection. However, MSEB refused to give the connection after learning that the inspection report was false.

 

Sawant subsequently purchased the greyboard machinery from Shree Mahalakshmi Industries by spending an additional amount of about ₹76 lakh. He also cleared all the objections raised by MSEB and obtained an electric connection. His unit became functional, but he became burdened with heavy loans. 

Sawant approached the Maharashtra State Consumer Disputes Redressal Commission (State Commission) and filed a joint complaint against More and Mangalam for failing to execute the work and  for creating problems by submitting  false reports.

 

More contested the case, contending that he was only a technical consultant and did not have any contractual relationship with Sawant regarding the supply and installation of the machinery. He alleged that the agreement relied on by Sawant was fabricated using a blank signed paper stolen from his office. He asserted that Mangalam was a separate entity and had installed the machinery.

 

Mangalam contested the complaint, stating that it could not be held liable as More had received the money.

 

The State Commission concluded that there was no evidence to show that the agreement was fabricated. Hence, it held More liable to refund the advance of ₹9.5 lakh, along with 18 per cent interest. It also awarded ₹25,000 towards litigation costs.

 

More challenged this order in an appeal filed before the National Consumer Disputes Redressal Commission (National Commission). He argued that Sawant could not be termed a consumer as the machinery was purchased for commercial purposes. He also contended that he had been exonerated in a criminal case filed against him regarding the same project. More further alleged that he could not be held responsible for the fabricated report of the recognised electrical contractor, which Sawant himself had submitted.

 

The National Commission observed that Sawant was an educated, unemployed youth who wanted to augment his agricultural income by purchasing machinery recognised by the government as a khadi and village industry. It also noted that the machinery was not meant for large-scale commercial use. Hence, the complaint was maintainable. Regarding the criminal case, the Commission noted that it had not been dismissed on merits, but because the court considered the dispute to be of a 

civil nature.

 

On merits, the National Commission observed that More had collected all the payments, including the amount paid to Mangalam. Therefore, it held More liable to refund the amount collected by him. Accordingly, in its order of October 7, 2025, delivered by Bharatkumar Pandya for the Bench along with Justice A P Sahi, the National Commission dismissed More’s appeal and confirmed the order of the State Commission holding More liable to refund the amount to Sawant.

 

The writer is a consumer activist