Lift firm asked to compensate hospital

Shree Ram Hospital and Research Centre

in

Udaipur

had availed of a loan from Rajasthan Financial Corporation for the construction of a hospital. In August 1991, an order was placed with Omega Elevators for supplying and installation of a hospital lift at a cost of Rs.1.65 lakh.


As per the payment terms, 10% would be payable as advance while placing the order, 70% on supply of material and the balance 20% after installation.

The hospital issued a demand draft for Rs 16,500 towards 10% advance. Its receipt was acknowledged by Omega Elevators. The elevator manufacturer asked the hospital to obtain a letter from the financer to confirm that payment was be made. Despite furnishing this, the lift was not supplied. The hospital then lodged a complaint before the district forum. Omega contested the case, contending that there was no binding contract for installaling the lift.

The forum ordered Omega to refund the advance of Rs 16,500, along with 18% interest. Additionally, a

compensation

of Rs 70,000 and the litigation cost of Rs 1,000 was also awarded. Omega appealed to the Rajasthan state commission, which reduced the interest rate to 9% while upholding the rest of the order.

Omega finally approached the National Commission. It argued that there was no binding contract as the hospital had failed to make payment of the next instalment. The hospital countered that this would be due after the material was delivered at the site. The National Commission noted that the terms agreed upon stated that the payment would be made upon delivery of the material at the site. So, it concluded that the refusal to deliver the lift materials and demand payment prior to despatch was not permissible under the sale terms. It held this to be a deficiency in service.

By its order of March 25, 2019, delivered by M Shreesha for the bench headed by Justice R K Agrawal, the National Commission dismissed Omega’s revision and imposed further cost of Rs 25,000 payable to the hospital.