The present article deals with the concept of Deficiency in Service under the gamut of Consumer Protection Laws in India along with a case study dealing with deficiency aspects in banking services. Before explaining the concept of deficiency in service it is essential to understand what is meant by service.

Service means service of any description which is made available to potential users and include, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, the supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal services.

The expression contract of personal service is not defined under the Act. In common parlance, it means - a contract to render service in a private capacity to an individual. For example, where a servant enters into an agreement with a master for employment, or where a landlord agrees to supply water to his tenant, these are the contracts of personal service. The idea is that under a personal service relationship, a person can discontinue the service at any time according to his will and he need not approach Consumer Forum to complain about deficiency in service.

There is a difference between contract of personal service and contract for personal service.

In the case of contract of personal service, the service seeker can order or require what is to be done and how it should be done. Like a master can tell his servant to bring goods from a particular place. But in a contract for personal service, the service seeker can tell only what is to be done. How the work will be done is at the wish of the performer. Like when a person gives a suit to the tailor for stitching, he does not tell him which method he should use to stitch it.


It does not make a difference whether the service provider is a Government body or a Private body. Thus even if a statutory corporation provides a deficient service, it can be made liable under the Act.

The definition provides a list of eleven sectors to which service may pertain in order to come under the purview of the Act. The list of these sectors is not an exhaustive one.

Service may be of any description and pertain to any sector if it satisfies the following criteria:

1. service is made available to the potential users, i.e., service not only to the actual users but also to those who are capable of using it.
2. it should not be free of charge, e.g., the medical service rendered free of charge in Government hospital is not a service under the Act;
3. it should not be under a contract of personal service.

Deficiency means any fault, imperfection shortcoming or inadequacy in the quality, nature, and manner of performance which is required to be maintained by or under any law for time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service. The deficiency must be in relation to service - The words ‘....in relation to any service' in the definition signifies that the deficiency is always in terms of service. Thus if the grievance pertains to a matter which does not fall in the definition of service, the concept of deficiency would not apply.

In the normal course, if the service is found deficient as per the above criteria, it is held deficient and the compensation is awarded. However, there may be abnormal circumstances beyond the control of the person performing service. If such circumstances prevent a person from rendering service of the desired quality, nature and manner, such person should not be penalized for the same.

For instance: A agreed to supply water to B for irrigation of crops. He failed to do so because of a power breakdown due to the burning of a transformer. As a result crop damaged. B sued A for providing deficient service. The National Commission held that it was duty of A to get the transformer repaired immediately. Since he was negligent in doing so, he is liable for the deficiency in service - Orissa Lift Irrigation Corpn. Ltd. v. Birakishore Raut [1991] 2 CPJ 213 (NC).

The distinction between a deficiency in service and negligence is brought out in the case of Ravneet Singh Bagga vs. KLM Royal Dutch Airlines - 2000 (1) SCC 66. The deficiency in service cannot be alleged without attributing fault, imperfection, shortcoming or inadequacy in the quality, nature, and manner of performance which is required to be performed by a person in pursuance of a contract or otherwise in relation to any service.

The burden of proving the deficiency in service is upon the person who alleges it. The complainant has, on facts, been found to have not established any willful fault, imperfection, shortcoming or inadequacy in the service of the respondent.

The deficiency in service has to be distinguished from the tortuous acts of the respondent. In the absence of deficiency in service the aggrieved person may have a remedy under the common law to file a suit for damages but cannot insist for grant of relief under the Act for the alleged acts of commission and omission attributable to the respondent which otherwise do not amount to deficiency in service. If on facts it is found that the person or authority rendering service had taken all precautions and considered all relevant facts and circumstances in the course of the transaction and that their action or the final decision was in good faith, it cannot be said that there had been any deficiency in service.

If the action of the respondent is found to be in good faith, there is no deficiency of service entitling the aggrieved person to claim relief under the Act. The rendering of deficient service has to be considered and decided in each case according to the facts of that case for which no hard and fast rule can be laid down. Inefficiency, lack of due care, absence of bonafide, rashness, haste or omission and the like may be the factors to ascertain the deficiency in rendering the service.

Case Study:
Analysis of deficiency in service in case of Banks UCO Bank v/s Asit Sen Gupta;

Issue Involved - Right to sell or dispose of hypothecated goods:

Mr. Asit Sen Gupta (Complainant) entered into a three-year export contract with M/s. MIG Enterprises, Dubai, for which he received three export orders. The dispute under this case is concerned with respect to the consignment for which the export order was received on 22.2.2003 for US $ 8840.

Further, the complainant had obtained a policy cover from Export Credit Guarantee Corporation Ltd. (appellant in F.A. No. 198/1997) and had also obtained export package credit of from the UCO Bank (appellant in FA No. 191/1997).

The case of the complainant before the State Commission was that having obtained the orders from importer in Dubai for tea bags, he sought policy cover from E.C.G.C. on 'payment' 'terms' - DA 180 days open delivery. This was required as per the requirement of the importer, whose letter of credit had come to end in Jan. 1993; as per the importer, he was to make the payment on the goods being sold by the importer. Hence, in  these circumstances, what was required was from E.C.G.C. was policy based on payment terms on open delivery basis.

Whereas the E.C.G.C. initially issued a policy covering the risk on 'DA within 180 days from the day of Shipment which was not as per the application made by the complainant. When this was brought to the notice of the E.C.G.C, they amended the Policy but sent it to the old address of the complainant whereas he had already communicated to E.C.G.C. his new address, with a clear advice that henceforth correspondence be made with him at the new address.

Since this revised policy was never received, he could not export the consignment which was ready for dispatch. This was a clear case of deficiency on the part of the E.C.G.C. resulting in total loss of the export order and the goods in question, resulting in loss to him.

As far as UCO bank is concerned, it is stated that they took no pains to rectify the error committed by the E.C.G.C. and also did not help the complainant in disposing of the tea bags which were lying with the manufacturer Balmer Lawrie and Company, resulting in total loss to him. UCO Bank did not help them in retrieving the situation nor did they help the requisite assistance firstly by rectifying/obtaining afresh the revised policy from the E.C.G.C. and secondly not helping them in disposing of tea bags, when the export order could not materialize on account of deficiency on the part of E.C.G.C.

The State Commission after hearing the parties and perusal of material on record, directed the E.C.G.C. to pay an amount of Rs. 10,00,000 as compensation to the complainant and also directed UCO Bank to pay Rs. 3,00,000 c as compensation to the complainant and with a further direction not to charge any interest on this amount. Both the appellants were also directed a cost of Rs. 5,000 each to the complainant.

The matter was raised before NCDR Forum and decision was as follows:

1. No deficiency can be fastened on the E.C.G.C. appellant in FA No. 198/97.
    
2. No deficiency in service can be fastened on the part of the Bank, vis-a-vis, acts of omission and commission on the part of the E.C.G.C. As per material on record, the 'Export Packing Credit Facilities' and Foreign Bill Discounting Facility was entered into between the Bank and the complainant; it was a bilateral agreement which is on record. It does not envisage any third party interest as far as bank is concerned. Hence, UCO Bank cannot be held responsible for any act of omission and commission on the part of the E.C.G.C.
   
   
3. Hypothecation agreement envisages that the hypothecated goods and all sales, realization and insurance proceeds thereof shall be held as the bank's exclusive property especially appropriated to this security and the borrowers will not create any encumbrance thereof and the borrowers shall not part with the hypothecated goods save by way of sale in the ordinary course of the Borrower's business and as hereinafter provided nor shall any sale be made after prohibition in writing from the Bank against selling.
   
   That the Borrowers shall with previous consent of the Bank be at liberty from time to time to sell or dispose of in any manner the hypothecated goods. Such previous consent sought by the complainant, was not responded to, by bank. Consequently, the complainant could not dispose of the goods, resulting in loss. Order of the State Commission was upheld with respect to First Appeal No. 191/1997 filed by UCO Bank, wherein it was directed to compensate complainant in terms of the order passed.