Facts of the case
SGS India Ltd. v. Dolphin International Ltd. (Supreme Court) is a case on appeal. This case is filed in the Civil Appellate Jurisdiction – Civil Appeal no. 5759 of 2009. Here, the appellant, SGS India Pvt Ltd, challenged an order that the National Consumer Redressal Commission had passed. The order in question was passed on January 1, 2009. This order allowed and acknowledged the complaints that the respondent, Dolphin International Pvt Ltd, had brought up in the previous case. The order directed the appellant to pay a sum of Twenty-five thousand rupees as the cost to the respondent. The order further directed the appellant to pay a sum of Sixty-five lakh seventy-four thousand rupees with an interest of 9 percent per annum.
SGS India Pvt Ltd. is a company that provides services like inspection – to ensure the goods meet the standards benchmark, testing – any health or other safety hazards, certification – standards that meet the national and/or global level, verification – working through the entire supply chain. Dolphin International Pvt Ltd, the respondent, had purchased ground nuts with the intention of exporting those ground nuts to Greece and the Netherlands. The respondent entered into business with the appellant for the services of inspection and certification. Dolphin International Pvt Ltd had already divided the consignments of groundnuts into two sets – one consignment was meant for Piraeus which is a city in Greece, while the other consignment was meant for Rotterdam which is a major economic center in the Netherlands. All the necessary details were communicated by the respondent on November 7, 1997. According to the said communication, the specifications made were for the Hundred and twenty-two containers of groundnut, which the respondent had purchased from M/s Shree Ram Industries in Rajkot. A part of these containers, ten containers out of the Hundred and twenty-two containers, were to be stuffed at the Kandla Port. The specifications for containers that were to be shipped to Greece are given in paragraph 2 of the judgment.
The SGS India Pvt Ltd inspected the Hand-Picked and Selected Peanuts (HPS) from the containers meant for Greece and analyzed that there were two qualities of groundnuts in the container- Bold and Java. All the certificates needed – certificates for quantity, quality, weight, and packaging – were issued between December 2, 1997, to December 20, 1997. The consignments reached Piraeus, Greece on February 7, 1988, by the merchant vehicle named “Shun Chen – 12”. Immediately, on February 7, 1988, the respondent communicated with the appellant about twenty fully loaded containers that were under dispute. The respondent wanted to send these containers to another unit of the appellant company – named SGS, Greece. SGS India Pvt Ltd replied to this on February 9, 1998, assuring that the inspection would be done by their Greece counterpart.
The product specifications with respect to the consignments for Rotterdam, the Netherlands are specified in Paragraph 6 of the judgment. Certification for this particular consignment with regards to its quantity, quality, weight, and packaging was issued on December 23, 1997. The merchant vehicle carrying this consignment was “Orient Patriot”. The consignments which reached Rotterdam, Netherlands were subjected to inspection at Dr. Verwey’s Lab. According to the lab’s report, on February 3, 1998, the ground nuts showed higher levels of Aflatoxin. This increase was also seen in its other variants such as B1, B2, G1, and G2. The SGS India Pvt Ltd, through its Netherlands counterpart – SGS, Netherlands, ran an inspection again. This inspection also confirmed that Aflatoxin levels were high.
The order passed by The National Consumer Redressal Commission is not sustainable as it failed to understand the law and facts.
Arguments of the parties
Arguments for the appellant
The appellant, SGS India Pvt Ltd, was represented by learned senior counsel Mr Gopal Sankarnarayanan.
He argued that the SGS India Pvt Ltd is understandably only responsible for the certification of quality, quantity, weight and packaging at the time of shipment. This means that the appellant has no assurance or no responsibility towards this shipment after it leaves the borders of India. It is very clear from this that the appellant does not have any obligation towards the respondent, in the sense that it is not responsible for ensuring the consignment would have the same specifications at the port of the destination as it did in India.
He further argued that no specific instruction was given by the respondent with regards to securing the containers for the process of fumigation. This means that air could have entered containers which was the reason for the different results obtained at the port of destination.
It was brought to the notice of the Honourable Court that the disclaimers in the certificate specifically included the non-responsibility of the appellant in case Aflatoxin-producing molds were to develop in the containers as a result of its storage conditions and/or transportation. This disclaimer is enough proof that the appellant has no responsibility or liability when the consignment leaves the Indian Ports and reaches its ports of destination.
Another argument raised was that there was no point in time where the methods used by the appellant were questioned. The appellant had followed the instructions given by the respondent. This means that the goods – ground nuts in this case – had faced other natural variants which caused the aflatoxin levels to go up. There was no requirement as to maintaining the level of aflatoxin till the ground nuts reached their port of destination. So, holding the appellant liable cannot be justified.
It was further brought to the notice of the Honourable Court that the tests which were done at the destination ports, in Greece as well as in the Netherlands, were not shown to the appellant.
Finally, it was contended that the size or count of the ground nuts is definitely subject to change because of the two and half month gap between the sample test and the time it reached its respective port of destination.
While concluding the argument, the learned senior counsel for the appellant pointed out that the National Consumer Redressal Commission did not find any insufficiency in the service of inspection done by SGS India Pvt Ltd.
Arguments for the respondent
The respondent, The Dolphin International Pvt Ltd, was represented by learned senior counsel Mr Vijay Hansaria.
Mr Vijay Hansaria argued that the respondent had received orders to export twenty of the full containers of the Hand-Picked and Selected Peanuts from Athens, Greece, and twenty-eight of the full containers of the Hand-Picked and Selected Peanuts from Rotterdam, the Netherlands. The instructions given with regards to packaging and stuffing had clearly mentioned the use of air-tight containers during packaging. This means that the appellant shall be held liable for the packaging of containers. Further, the respondent had already authorized the appellant to reject any cargo if the packaging and stuffing does not meet the pre-determined standards. The appellant had also claimed higher charges for testing the cargo according to these standards. The cargos were subjected to the High Performance Liquid Chromatography (HPLC) method for inspection. The SGS India Pvt Ltd was already made aware of the fact that the consignments would be subjected to inspections once it reaches their ports of destination. And when the tests were done on the consignments which reached the Netherlands, it was found that aflatoxin, B1, B2, G1, and G2 were way above the limit of 4 Particles Per Billion. This level is way more than what the appellant had mentioned in its certificate. Similarly, in Greece, according to the appellant the count of Java variety of groundnuts was to be forty five to fifty five per ounce. This was also found to be different when the tests were done at the port of destination. It was found to be fifty seven to sixty one per ounce, which is higher than the original statement.
The National Consumer Redressal Commission had found that SGS India Pvt Ltd was actually neglecting and providing insufficient services since the aflatoxin levels and the count or size of groundnuts were more than specified. They came to this conclusion because SGS India Pvt Ltd could not produce any evidence with respect to the contention that the ground nuts were affected by external factors which were out of its control.
The honorable judge of the Supreme court, Hemant Gupta, delivered the judgment after hearing these arguments as follows.
It was held by the Supreme Court that when a matter of insufficiency or deficiency in service provided is brought about under The Consumer Protection Act of 1986, the burden of proof to prove such insufficiency lies on the complainant.
In this case, insufficiency in service on the part of the appellant needs to be proved by the respondent. Until and unless the insufficiency is not proved, the appellant cannot be held liable for the damages faced because of the ‘insufficiency’.
A similar judgment was given in Ravneet Singh Bagga v. KLM Royal Dutch Airlines and another [(2000) 1 SCC 66]. In this case, S Saghir Ahmad (J) and R P Sethi (J) held that one cannot allege deficiency in service without a resulting fault, or any shortcoming or inadequacy that may happen, which the alleged party should otherwise have taken care of in the first place. The alleging party has the burden to prove that the alleged party had done his work negligently and not up to the expected standards and requirements.
In another case, The Branch Manager, Indigo Airlines, Kolkata and Another v. Kalpana Rani Debbarma and Others [ (2020) 9 SCC 424] Honourable Justice A M Khanwilkar held that the initial onus or burden to justify, verify and authenticate the fact that there is a deficiency of service committed by a party is on the opposite party – the party who filed the lawsuit.
In this case, the bench of justices Hemant Gupta and V Ramasubramanian held that the order passed by the National Consumer Redressal Commission, which alleges that the appellant provided inefficiently and deficit services, cannot be sustained. This is because there was no specified instruction that the specifications of consignments should remain the same even at the destination port. The Court thus allowed this appeal and dismissed the original complaint and the order by the National Consumer Redressal Commission.
A consumer court is established with the objective that such courts work as agencies to deal with any matter regarding a consumer’s dispute, conflicts, and grievances. A consumer can claim compensation before the consumer courts when the consumer faces any harassment, mental torture, or financial losses that they may suffer because of a defective good sold or any kind of deficiency or insufficiency in the service provided.
In the present case, we see the scenario where one party, Dolphin International Pvt Ltd, is asking for compensation before the National Consumer Redressal Commission for the deficiency of service provided on part of the other party, SGS India Pvt Ltd. This case of appeal was dismissed because the complainant, Dolphin International Pvt Ltd, could not prove the deficiency of service provided by the appellant, SGS India Pvt Ltd while demanding compensation for the same.
In this case, we saw that the burden of proof plays a crucial role in determining the outcome as it changed the whole judgment that was passed by the National Consumer Redressal Commission. As the complainant/respondent could not prove the deficiency in service provided by the appellant, they lost the suit as the Supreme Court dismissed the complaint brought about by them.
In The Branch Manager, Indigo Airlines, Kolkata and Another v. Kalpana Rani Debbarma and Others [(2020) 9 SCC 424], it can be clearly seen that it is a basic legal necessity to institute and establish as to which party is responsible for proving or defeating the claims raised, and to produce sufficient evidence for the same. Most of the time the burden of proof lies on the party who brings up the claim – complainant or plaintiff etc. The complainant or plaintiff would have to produce evidence supporting their claim in the form of documents, witness testimonies, etc.
But, during the trial, the judge has the discretion to assign the burden of proof on different parties each time as he finds necessary. Then, it is up to the judge to decide whether the party was able to satisfy the burden of proof. The whole judgment will more or less depend on this scale of satisfaction – being able to prove the disputed matter beyond a reasonable doubt will ensure that the case is in favor or against the party. Though, in some matters, the burden of proving the facts can be subject to a more lenient standard. It differs on a case-to-case basis.
In SGS India Ltd. v. Dolphin International Ltd., it is a civil lawsuit, the burden of proof is on the person filing the suit- the complainant or plaintiff. It is upon the complainant party to prove the allegations that they claim to be true. This includes the aspect that they should prove that the defending or responding party had done some act or omission which caused damage to them.
This is different in cases of criminal lawsuits. In a criminal case, the burden of proof mostly lies on the prosecution. The defendant is to be treated as an innocent person until the prosecution is able to prove otherwise, that is, when the prosecution is able to establish the guilt of the defendant. This principle of a person being innocent until proven guilty is subjected to certain exceptions. Such as, in case the defendant seeks to prove his innocence by making claims of self-defense or insanity, then the burden to prove such claim lies on the defendant. Unlike in a civil lawsuit, in a criminal case, the burden of proof should be proved beyond all reasonable doubt.
In the present case, Dolphin International Pvt Ltd was expected to prove that SGS India Pvt Ltd had committed a breach of the duty which it was obliged to perform. Only then can they prove any kind of deficiency of service on part of SGS India Pvt Ltd. It is imperative to prove that they acted (or omitted to act) in a certain way which any other party would not (or would) have done under similar circumstances. Dolphin International Pvt Ltd could not prove that the instructions with regards to the packaging of the ground nuts in a certain way meant that SGS India Pvt Ltd would have to take the responsibility for any damages sustained beyond the boundaries of India.
It is clear that the party that makes the claims and allegations is imposed with the duty to prove the veracity of the claims and allegations brought up by them. The law does not usually burden the defending party to carry this burden. However, this is subject to certain exceptions. Consumer protection, like the civil laws of the land, applies the principle that the burden of proof is on Dolphin International Pvt Ltd (complainant) to prove deficiency of service provided by SGS India Pvt Ltd. As it was held in various Supreme Court Cases, the burden to prove the initial fact, deficiency of service, lies on the person who brings about the allegation (The Branch Manager, Indigo Airlines, Kolkata and Another v. Kalpana Rani Debbarma and Others [(2020) 9 SCC 424]). This can be further understood by the fact that one cannot bring up an allegation until there has been some kind of insufficiency or shortcoming by the other party in the first place (Ravneet Singh Bagga v. KLM Royal Dutch Airlines and another [(2000) 1 SCC 66]). Hence, in the case of SGS India Ltd. v. Dolphin International Ltd., the Supreme Court allowed the appeal by SGS India Pvt Ltd and dismissed the complaint originally brought about by Dolphin International Pvt Ltd as the latter was not able to prove the allegations raised by it.