Customer Drags Innoson Motors Before FCCPC Over Alleged Breach Of Vehicle-Supply Contract

A Nigerian company, Petronella (Nig) Limited has filed a complaint against Innoson Vehicle Manufacturing (IVM) Limited, before Federal Competition and Consumer Protection Commission, (FCCPC) over alleged breach of contract to supply vehicles worth N430million.

Just as the management of Innoson Vehicles Manufacturing has admitted the transaction, insisted that refund will take place after Petronella had returned rejected vehicles.

In the complaint letter before the FCCPC, and made available to journalists in Port Harcourt, Rivers state, the solicitor explained that after paying the mentioned money to Innoson company’s account, the company was yet to refund the money after an alleged failed transaction.

According to the complaint letter signed by Olaniwun Ajay, and addressed to the Executive Vice Chairman of FCCPC, the transaction took place in 2021 with Innoson not allegedly meeting up with specification of vehicles meant for leasing to Shell Petroleum Development Company (SPDC).

The Solicitor explained that efforts to have Innoson supply the right vehicle or refund the deposited money back to Petronella failed, stressed that Innoson violated the federal competition and consumer protection commission act.

The solicitor also urged the FCCPC to investigate the complaint, and enforce its order on motor company to pay due compensation to Petronella’s, an oil servicing company, which also involves in leasing operational vehicles to, and maintaining the fleet of, oil companies in Nigeria.

Parts of the petition reads: “Petronella purchased goods from Innoson Vehicle Manufacturing Company Limited (“IVM”), and in the course of that relationship IVM behaved in ways that breach several provisions of the Federal Competition and Consumer Protection Commission Act (“the FCCPC Act”), resulting in considerable damage to our client. We urge the Commission to investigate IVM’s unlawful behaviour, details of which are supplied below, and cause IVM to pay due compensation to our client.

“In September 2021 Petronella entered into an agreement with Shell Petroleum Development Company of Nigeria Ltd (“SPDC”), under which Petronella would provide SPDC with pick-up trucks for use in SPDC’s operations. Given the environment in which SPDC operates, vehicles intended for the company’s use must meet certain engineering and safety specifications. In particular, SPDC required that vehicles leased from Petronella must possess a five-star New Car Assessment Programme (NCAP) rating.

“Eager to support local enterprise, Petronella opted to buy made-in-Nigeria vehicles rather than vehicles of foreign manufacture. Petronella therefore approached IVM in September 2021 and inquired about IVM’s ability to produce and supply Petronella with vehicles that meet SPDC’s specifications.

“In an email to IVM on 04 September 2021, Petronella’s Managing Director listed the specifications that SPDC required and sought assurances that IVM vehicles met those specifications. One of the requirements listed in Petronella’s email was that “all vehicles must have New Car Assessment Programme (NCAP) 5-Star rating”. A copy of the email of 04 September 2021 from Petronella to IVM is attached herewith as Annexure A.

“IVM responded to Petronella’s inquiry by an email dated 07 September 2021, assuring Petronella that “IVM Vehicles have all the features as requested by your client, as contained in your email of September 04, 2021”. A copy of IVM’s email is attached herewith as Annexure B.

“On the strength of IVM’s representation in Annexure B above, Petronella requested, and IVM issued, an invoice for twenty units of IVM’s five-seater, double-cabin, 3.0L diesel pick-up known as the IVM Granite. Each unit of the IVM Granite was priced at N21,500,000.00 (twenty-one million, five hundred thousand Naira), bringing the price for all twenty vehicles to a total sum of N430,000,000.00.

“Having received the invoice, Petronella placed an order for twenty units of the IVM Granite on 11 October 2021, and also paid a deposit of N65 million. Petronella then paid the rest of the purchase price in two tranches, comprising N80 million on 28 October 2021 and N270 million on 29th October 2021, leaving a balance of only N15 million. IVM issued a receipt for the initial deposit of N65 million, which is attached herewith as Annexure E, and assured Petronella that the vehicles would be delivered within two weeks from 11 October 2021.

“IVM only supplied eight out of twenty vehicles, the vehicles supplied did not have the features that IVM claimed they would have, and IVM has refused to refund money paid by Petronella

“Despite having received about N415 million from Petronella by 29 October 2021 for twenty units of the IVM Granite, IVM did not deliver the vehicles within the two- week timeframe that it had promised. When IVM finally delivered vehicles to Petronella, it delivered only nine vehicles, one of which it immediately retrieved because of a defect in the engine, so that Petronella was ultimately left with eight vehicles out of the twenty that IVM had agreed to supply. IVM ‘never delivered the remaining twelve vehicles.

“Crucially, the vehicles that IVM delivered did not meet the specifications that IVM had represented that they would meet. Specifically, the vehicles did not possess a five-star NCAP rating. When Petronella requested an NCAP crash test report, IVM did not provide one. Instead, IVM forwarded by email a document that had the appearance of a crash test report, but which gave no indication that it had been issued by a crash testing authority. IVM’s forwarding email dated 18 November 2021 and the non-descript crash test report are herewith attached together as Annexure F.

“Petronella made repeated requests to IVM for details of the authority that issued the crash report via emails dated 20 and 22 November 2021, as well as a letter dated 21 November 2021. IVM did not respond to these requests. Printouts of the emails and letter are attached herewith as Annexures G, H, and I respectively”.

The solicitor continue, “As Petronella had made clear to IVM before placing the order for the vehicles, it was essential for the vehicles to have a five-star NCAP rating, and IVM’s failure to provide a crash test report verifying that the IVM Granite had that rating meant that Petronella could not fulfil the terms of its agreement with SPDC. In consequence, SPDC rescinded its lease with Petronella.

“Given that Petronella had purchased the vehicles specifically to perform its lease with SPDC, SPDC’s rescission of the lease meant that Petronella no longer had need of the vehicles. Therefore, Petronella delivered the eight vehicles to IVM’s service center in Port Harcourt on 01 December 2021. It then notified IVM of the delivery and demanded a refund of the N415 million that had been paid for the vehicles”.

In addition to the N415 million which IVM has refused to refund, Petronella has incurred huge losses due directly to IVM’s false representations. Petronella has lost about N805,443.20 (eight hundred and five thousand, four hundred and forty- three naira, twenty kobo) per day in expected income from the rescinded SPDC lease, from 04 November 2021 to date. Furthermore, Petronella obtained a substantial part of the purchase price through a bank loan, which Petronella aimed to repay from the proceeds of the SPDC lease. IVM’s false representations and the consequent loss of the SPDC lease has deprived Petronella of the means to service the loan, resulting in mounting interest payments”.

Stating that the Innoson conduct on the transaction violated the FCCPC Act, the petitioner added “A certain standard of conscientiousness and integrity in businesspeople is essential to any functional economy, and it is that standard that the provisions of the FCCPC Act aim to enforce. It would defeat the objectives of the Act if any manufacturer can conduct itself as IVM has done without consequence”.

The petitioner however, urged the Commission to ensure that the matter is investigated and appropriate relief provided to their client (Petronella).

Meanwhile, Mr Cornel Osigwe,

Head of Corporate Communications, Innoson Vehicles Manufacturing, has countered the claims by Petronella that there was a failed transaction.

In a statement made available to journalists, Osigwe said “It is now an incontrovertible fact that Innoson Vehicles manufactures durable and affordable vehicles that meets international specifications.
“As regards to our client, Petronella Nig Ltd which ordered for 20 Units of Granite Diesel Pick Ups, We met the standard and basic specifications it demanded from us and provided every certifications it requested for.

“On our receipt of the part payment made by Petronella Nig Ltd, we supplied the first set of the vehicles to Petronella and it took delivery of them from our factory in Nnewi with a view that the remaining quantity will be supplied to it once we receive the outstanding purchase price.

“After a while, surprisingly, rather than pay their outstanding, Petronella said it was returning the ones it took delivery of. Then giving that we trust our quality and standard, and that the vehicles are in high demand, we asked Petronella to return the vehicles to our factory in Nnewi so we will refund it the purchase price it paid.

“However, up till this day, these vehicles are still in possession, custody of Petronella and it has refused to return them to us as said above. We are willing to refund Petronella the purchase price once it returns these vehicles to us stated earlier, perhaps giving the passage of time in the state they were when it took delivery of them”, Osigwe added.