Contributory Deficiency, NCDRC Reduces Compensation

Brief Facts:

The North Eastern Region Institute of Science and Technology (“NERIST”) entered into a contract with M/S Intec Infonet Pvt. Ltd. (“Intec”) for the installation and commission of electrical equipment and expanded fibre optical lines for their institute. The project was to be completed initially by 21.05.2007, however, the deadline was extended to 21.07.2008. Disputes arose between the parties regarding the completion of the project, supply delays, and unpaid bills. NERIST issued a legal notice and subsequently filed a complaint before the State Consumer Disputes Redressal Commission, Andhra Pradesh (“State Commission”) alleging deficiencies in the services provided by Intec.

The State Commission allowed the complaint and ordered Intec to pay Rs. 10,22,500/- to NERIST. It also imposed an injunction to prevent Intec from receiving the remaining billed amount for the project. Aggrieved by the order, Intec filed an appeal to the National Consumer Disputes Redressal Commission (“NCDRC”).

Intec contended that the complaint should be dismissed on the grounds of limitation, as the complaint was filed more than two years after the alleged cause of action. It argued that the State Commission erroneously concluded that there were deficiencies in its services. It also disputed the additional expenditure of ₹16,21,722 mentioned in the complaint, arguing that it was related to expenditures incurred long after the project was completed and not covered under warranty.

NERIST argued that the cause of action was continuing, as the alleged defaults and deficiencies remained unresolved, leading to the complaint filed in 2010. It further contended that the delay and deficiencies in the project were Intec’s fault, resulting in additional expenses to make the system operational. NERIST emphasized that the completion of their R&D centre was not achieved due to Intec’s negligence, and this amounted to unfair trade practices.

Observations by the National Commission:

The NCDRC observed that the entire delay could not be attributed to Intec as NERIST’s site and room were not available beyond the period of the contract. Further, the NCDRC observed that the State Commission erred in calculating the delay (141 days) in the project. It considered the initial deadline without considering the extension of 2 months. Thus, technically, the delay was of 81 days. Regarding the contention on the departure of the engineer with the essential password, the NCDRC observed that the said engineer was the employee of NERIST itself. Moreover, neither the 3rd component of the development project was installed, nor any payment was made to Intec for the same. Thus, the contention that NERIST had to incur an additional expenditure of Rs. 16,21,722/- due to the deficiency of Intec’s service was rejected.

NCDRC acknowledged that there was a deficiency on Intec’s part up to a small extent. However, it deemed the magnitude of around Rs. 16 lakhs as an additional expenditure to be unfair. Thus, the compensation amount was recalculated under the agreement between the parties, totalling to Rs. 2,02,500/- along with a compensation of Rs. 20,000/- for Intec’s failure to install the 3rd component. For the departure of the engineer with the password, a penalty of Rs. 2,00,000/- was imposed on Intec as the subsequent engagement of NERIST with the engineer was said to not absolve Intec’s responsibility. The injunction imposed on Intec to receive the left-over billed amount was removed. Intec was also ordered to pay Rs. 20,000/- to NERIST for litigation costs. Conclusively, the appeal was allowed and the impugned order of the State Commission was modified.

Case Title: M/S. Intec Infonet Pvt. Ltd. vs North Eastern Region Institute of Science and Technology (NERIST)

Case No.: FA/546/2013

Advocate for the Complainant/Respondent (NERIST): Mr Dhananjay Bhaskar Ray

Advocate for the Opposite Party/Appellant (Intec): Mr Ashish Verma and Mr Kartikay Bhargava

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