Tata Motors Ltd. v. Antonio Paulo Vaz and Anr.
The Order of the Court was passed by
S. RAVINDRA BHAT, J.
1. This special leave petition was heard finally; Leave granted, it
impugns an order of the National Consumer Disputes R edressal
Commission1 (hereafter “Commission”) which affirmed the order of the
Goa State Consumer Disputes Redressal Commission (hereafter “State
Commission”).
1 Dated 09 January, 2020 in Revision Petition No. 18 09 of 2014
627
2. The relevant facts are that that the first respondent, A ntonio
Paulo Vaz (hereafter “Vaz”) bought a car after paying the agre ed total
consideration price in 2011 to the second respondent, Vista r Goa (P)
Ltd, a dealer in cars (hereafter “the dealer”). At the ti me of purchase,
Vaz availed bank credit. A 2009 model car which had run 622 kilometres
was sold to him in place of a new car of 2011 make. Vaz, therefore,
requested for refund of the price paid or replacement of the car with
one of 2011. The price was however not refunded; neither was the car
replaced. Vaz refused to take delivery of the 2009 model car. He attempted
a resolution of his concern and thereafter, caused a legal no tice to be
issued to the dealer, as well as the appellant. Upon his grievance remaining
unaddressed, he preferred a complaint before the Goa District Consumer
Redressal Forum (hereafter “the district forum”).
3. The district forum heard the appellant, which was represented,
and Vaz. Despite service of notice (of the complaint) the de aler was
absent and was unrepresented; it was therefore proceeded a gainst ex
parte. The district forum determined ‘deficiency in service’ and held
the dealer and the appellant (i.e. manufacturer of the car) to b e jointly
and severally liable. The district forum’s order, (made on 27.0 9.2013)
noted that the car had some defects; the undercarriage of the car was
“fully corrugated and had scratch marks on the body . The alloy
wheels were also corrugated inside and the car also travelled almost
622 km. Also some parts such as music system was not provided
although agreed.” The appellant denied the facts and alleged that Vaz,
the customer had been informed that the car purchased by hi m was a
2009 model. The district forum observed that this averment ( by the
appellant) was apparently incorrect because if Vaz had a greed to such
an offer, he would not have refused to take the delivery of the car which
was even then with the dealer; he also urged that the music system was
not provided. The district forum further stated that:
“the customer when he buys new vehicle, he is under the
impression that a new vehicle would be defect free. And in
the said case it is admitted that the said car is used vehi cle,
and make of 2009 but the registration was done for the 1 st
time in the name of the Complainant in 2011. Also th e car
had travelled almost 622 kms. The O.P. 2 stated tha t there
was pre delivery test. But for this test the car trav elled 622
kms?”
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
4. In the light of these facts and observations, the district forum
held that there was deficiency in the service committed by the dealer
and the appellant, and allowed Vaz’s complaint, holding the dealer and
the appellant jointly and severally liable to replace t he car with a new
one of the same model or to refund the entire amount of the car with
interest @10% from the date given of delivery. Both were also jointly
and severally directed to pay C 20,000/- to Vaz towards mental stress
and agony in addition to costs of 5,000/-.
5. Aggrieved, the manufacturer preferred an appeal to the
State Commission under Section 15 of the Consumer Protection Ac t
(hereafter “the Act”). The state commission dismissed the appeal with
costs of 5,000/-. It held that Vaz was a consumer as defined und er
Section 2 (d) (i) of the Act; and that he was awaiting delivery of the car.
It also ruled that an expert report was not necessary for cases where
the facts speak for themselves, and the present case was one such. The
appellant’s plea that its relation with the dealer was o n a principal-to-
principal basis was unsubstantiated according to the state commission,
by any material or evidence. The appellant had not p roduced any
documentary evidence in support of its allegation; nor did it produce the
invoice No. 9010016851 dated 28.02.2009. The state commission also
rejected the plea that no direct sale was undertaken by the appellant; it
concluded that the appellant sold to Vaz, the defective car manufactured
by it, and the dealer and the appellant were liable for sale of the defective
car.
6. Before the National Commission, the appellant urged two
contentions: one that Vaz was not a “consumer” since he did not accept
delivery of the car from the dealer, and two that its relationship with the
dealer was on principal-to-principal basis and that therefore, no liability
could be fastened upon it. The impugned order negatived both arguments.
For rejecting the second submission, the impugned order noticed that the
manufacturer (i.e. appellant) appointed dealers after its due diligence,
and that “the sale of its goods is undertaken by the Manufact urer
through its dealers, the Manufacturer exercises sup erintendence
over its dealers including the right to terminate thei r dealerships.”
The appellant’s subsequent conduct, i.e., termination of the dealership,
weighed with the National Commission, which relied on a letter dated
04.12.2012 issued to the dealer, which stated that it was informed by the
appellant about:
629
“the serious short comings in the fulfilment of the obligati ons
cast upon you under the said agreement. In spite of repeated
follow ups, meetings, telecons and correspondence vide email s
(copies enclosed) dated 18/5/12, 5/11/12, 8/11/12, 9/11/12,
15/11/12, 16/11/12, 19/11/12 and 21/11/12 by Area Manage r,
RCSM and others in the region explaining you the continuous
drop in sales volume for last 18 months across all catego ries
of products, non-availability of vehicle stocks, in adequate
manpower for Sales & After Sales, not adhering to t he
standard operating procedures on processes, non-availabilit y
of Test Drive Vehicles, increasing number of custom er
complaints & inability/lack of effort in resolving them. The re
is no improvement in overall operations of the deal erships
nor have we seen any efforts put by you for the same.
We, on a review, find that due to the aforesaid rea sons you
are in serious breach of the terms of the dealership agre ement
and are unable to continue business operations with Tata
Motors Ltd., and there remains no chance to improve your
performance and therefore the state of affairs does not jus tify
continuance of dealership.
We are therefore constrained to issue you this 90 day noti ce
of termination of your dealership. You shall cease to b e the
Tata Motors Passenger Cars dealer after 90 days fro m the
receipt of this letter and all business pertaining to Tata Motors
Passenger Vehicles, parts and accessories shall sta nd
withdrawn.”
The National Commission was also influenced by the fact that
the appellant had, before the district forum, filed its written v ersion in
which it inter alia explicitly stated that the relationship between the
Manufacturer and its dealer was on ‘principal to pr incipal’ basis;
nevertheless, it did not file a copy of the dealership agreement in support
of its argument. The National Commission was also crucially impressed
with the fact that despite this lacuna, the appellant further did not “make
any categorical averment that the deficiency and (m is)acts were
only on the part of the Dealer alone. On the contrary, it i nter alia
also defended its Dealer.” It was further observed in the impugned
order, that the appellant averred that it had the support of excellent
dealerships/authorized service centres, with excellent worksho p setup
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
for after-sales servicing of the cars, and its products were, according to
it, well known in the market over a period of time.
7. The National Commission closely scrutinized the reply of the
appellant before the district forum, and concluded that other than extolling
its product and its after-sales services, no material to s ubstantiate its
relationship between the dealer being one of principal-to-principal basis
had been adduced. It further went on to notice the averments i n the
appeal before the state commission and highlighted that the de aler’s
fault was not put forward as a defence. After considering all these
averments and the submissions made before it, the National Commission
held that the relationship of the dealer and the appellant in the facts
appearing from the record, did not absolve it of liability. It therefore,
issued several directions- firstly upholding the orders of the fora below
it and further declaring that the appellant had ind ulged in unfair
trade practice, for which it was imposed with costs of C 2,00,000/- of
which 1,00,000/- was to be made over to Vaz and the balance to t he
Consumer Legal Aid Account of the District Forum within four weeks.
The appellant was also ordered, through its Chief Executive under Section
14 (1) (f) of the Act to immediately pass appropriate directions to all its
dealers to discontinue such unfair and deceptive acts, and not to put
‘consumer’(s) to such loss and injury and to imbibe accountability and
systemic improvements for the future. Further, the Chief Executive was
directed to furnish a report-in-compliance to the District Forum within
four weeks. In addition, the amount deposited with the District Forum in
compliance of the National Commission’s Order dated 01.05.2014, along
with interest accrued on it, was to be utilized by the Dist rict Forum
towards satisfaction of the Award.
Arguments of parties
8. The appellant contested the findings in the impugned order, and
mainly focused its submissions on the conclusions drawn by the National
Commission regarding the absence of a principal-to-principal relationship.
It was highlighted that besides impleading the appellant and seeking relief,
no allegations against it were made in the complaint by Vaz before the
District Forum. The appellant highlighted that the entire dri ft of the
complaint was that the 2009 make car manufactured by it, whic h had
been sold by the dealer, was an old one, and that Vaz was misled into
agreeing to purchase it, without being aware of the model, or that the
particular car had already been used. The appellant theref ore, urged
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that there was neither averment, nor allegation by Vaz, on the b asis of
which any liability could be pinned upon it, a third party to the e ntire
transaction, merely because it was the manufacturer. It w as submitted
that the complainant never alleged or proved that any one of its employees
was privy to the transaction in question, or had led Vaz to purchase the
car in question from the dealer.
9. It was urged that unless Vaz, the complainant, could establish
that there was a defect in the product, i.e. the car, the m anufacturer
could not be fastened with liability. Reliance was pla ced upon the
decisions of this court in Maruti Udyog Ltd. v. Susheel Kumar
Gabgotra 2and Indian Oil Corporation v. Consumer Protection
Council 3.
10. It was argued on behalf of the appellant that the invoic e by
which the car was sold to the dealer was a part of the record. Reli ance
was placed on that invoice, which is dated 28th of February 2009 to
contend that the title to the property, i.e. the car in question had passed
to the dealer. In the circumstances, urged the appellant, the onus squarely
lay upon Vaz to prove the alleged defect or deficiency in the car, (for
which the dealer made a misleading representation that it w as of 2011
make and further that it was new). Since no evidence was le d in this
regard, it was contended that the district forum as well as the State and
National Commission fell into a fundamental error in holding that there
was a deficiency in service on the part of the appellant manufa cturer.
11. Stressing that the manufacturer had no relationship with the
consumer, i.e. Vaz, it was urged further that neither was any special
knowledge on the part of the appellant attributed to it, nor proved during
the proceedings, nor was in any fact a word in any of the pleadin gs in
this regard. Learned counsel further argued that the materials placed on
record, such as the invoice or purchase of the car, as well as a registration
certificate clearly showed that the model and make of the car was of
2009; this was apparent and well known to Vaz. It was also highlighted
that the complaint stated that the car was an old one and had already run
622 km; however, the legal notice issued to the dealer, on behalf of Vaz
had, to the contrary, claimed that the car had done 1448 kilometres . It
was submitted that in these circumstances, it was essential that special
knowledge on the part of the manufacturer about the fact that the make
2 (2006) 4 SCC 644
3 (1994) 1 SCC 397
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
of the car was represented to be 2011, and that someone on i ts behalf
had made that representation, had to be both pleaded and proved. In the
absence of such proof, the manufacturer-appellant could not be held
liable. During the period of warranty, the appellant could have notified
the manufacturer of any latent or obvious defect in the product. In such
an event, if the manufacturer, i.e. the appellant, were to not take adequate
action to repair the car or replace it, then, it could have been held liable.
12. The learned counsel appearing on behalf of the appellant relied
upon documents that were produced with the leave of this court, along
with an application. Two documents especially were relied up on. The
first was the invoice by which the dealer purchased the vehicle. Learned
counsel stressed that the vehicle was purchased and delivered in February
2009 itself. The second document relied upon, which concededly had
not been produced in the fora below, was the dealership agree ment
between the appellant and the second respondent. Reliance was placed
upon clause 29 of this dealership agreement, which reads as follows:
“29. In case of termination or expiry of this Agreem ent, all
orders, which may have been received from the Deale r
previous to such termination or expiry, shall, with out any
liability to the Company for the Spare Parts, be ca ncelled
unless expressly otherwise agreed in writing by the Pa rties,
but in such a case, no obligation of the Dealer arising out of
the previous supplies shall cease. On termination o f the
Agreement, the Company may, at its option, require the Deal er
to sell and the Dealer shall thereupon sell to the Company all
unsold or unused units of Spare Parts as the Dealer may have
in hand. It shall be entirely at the Company’s discretion a s to
how many or how much, if at all, of the Spare Parts previous ly
sold to the Dealer shall be bought from him in terms of thi s
Clause. Such Spare Parts as are bought by the Company under
this Clause shall be paid for by the Company at the actual
Net Dealer price paid by the Dealer to the Company for the
purchase of the Spare Parts. The Company shall also pay to
the Dealer all expenses incurred by him of taking deliver y of
the Spare Parts front the Company.”
13. Refuting the appellant’s arguments, it is urged on behal f of
Vaz that the impugned order has no error calling for interfere nce, and
that this Court should not exercise its discretion to upset the findings
633
conferred by it in exercise of its powers under Artic le 136 of the
Constitution of India. It is reiterated that the consumer, i.e., V az was
informed at the time of the vehicle’s booking that it wa s fitted in
accordance with the specifications required by him. At that time, he was
never informed that the vehicle (the car) in question had been used and
had been manufactured in 2009 and, was therefore old. After registering
the vehicle, the complainant returned to the showro om and then
discovered that the car had several defects, includ ing that the
undercarriage was fully corrugated and the body had several scratch
marks. These flaws were immediately pointed out to the de aler; the
dealer was also requested to replace the vehicle. However, they refused
to do that.
14. It is urged that the purchaser of the car always expect s that
the product would be free from all defects. In this case, howe ver, the
consumer/Vaz consistently refused to take delivery because the car was
old; it was not in accordance with the representations made, had several
drawbacks and to top it all, had been used previously. It was also argued
on behalf of Vaz that the dealer nowhere stated that an old c ar was
being sold to him, but in fact held out that it was b rand new, and
furthermore in the reply to the letter dated 18.02.2011, the appe llant
insisted that the vehicle had no defects and was manufactured in 2009.
Learned counsel for Vaz highlighted that in the written statement before
the District Forum as well as in the appeal to the State Commission, the
present appellant, despite highlighting the absence of any direct relationship
or dealing with customers regarding sale and purchase of v ehicles,
pointedly alleged that a cash discount of Rs.80,000/- was offere d to
Vaz.
15. Learned counsel for Vaz relied upon the following writt en
submission of the present appellant before the Distri ct Form, “the
opposite party No.1 also informed him about the old T ata Xenon
car of 2009 bearing a cash discount of Rs.80,000/- a long with a
free music system, mud flap and matting was offered.” This deliberate
misrepresentation, emphasised learned counsel for Vaz, was sq uarely
attributable to the appellant, i.e. the manufacturer as well a s its dealer,
and this amounted to unfair trade practice and deficiency in s ervice
within the meaning of the expression under Section 2(1)(g) r ead with
Section 2(1)(o) and Section 2(1)(r) of the Consumer Protection A ct.
Learned counsel for Vaz relied upon the decision in Jos Philip Mampillil
v. Premier Automobiles Limited and Anr.4 where it was observed that:
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
“It is shameful that a defective car was sought to be sold as a
brand new car and instead of acknowledging the defe cts,
the manufacturer chose to deny its liability.”
16. It is submitted that though the appellant was provided sufficient
opportunity, it chose not to produce the dealership agreement. Having
repeatedly failed to place the material before the adjudica tory forums,
the appellant should not be granted further opportunity to rely upon a
document which was always available with it.
17. Learned counsel submitted that arguendo, even if the
dealership agreement were to be taken into account, it is apparen t that
the commercial relationship between the appellant and its dealer remains
that of a principal and agent. It is urged that nomenclature apa rt, three
factors portray the relationship between the two parties. Firstly, customers
cannot purchase vehicles manufactured by the appellant directly and
have to purchase them through an authorised dealer like the one in the
present case. Secondly, the dealer exclusively sells cars manufactured
by the appellant in the designated territories. Its sales policy, pricing etc.
are entirely dictated by the appellant and consideration paid towards the
product/car is remitted to the appellant by the dealer.
18. Learned counsel for Vaz also relied upon the appellant’s letter
terminating the dealership in the present case, dated 04.12.2 012 and
stated that it clearly established that there was a dire ct and substantial
cost borne by the appellant as a consequence of the dealer’s misconduct
in respect of the sales and customers’ dissatisfaction and (2 ) that there
was a commercial relationship between the appellant and the dealer
which was liable to be terminated on account of the latter ’s failure to
render satisfactory service to customers. It is underlined that both these
factors can only be comprehended in the context of a principal- agent
relationship. Learned counsel relied upon the judgment of this c ourt
reported as Vivek Automobiles Ltd. v. Indian Inc. 5 and argued that the
decision establishes that in law, a car dealer acts as the agent of the
manufacturer, in India.
Analysis and conclusions
19. Before proceeding further, it is essential to recapitul ate the
facts. Vaz approached the dealer to purchase a car; he was informed
4 (2004) 2 SCC 278
5 (2009) 17 SCC 657
635
about the availability. Thereafter, he appears to have been told to have
the car registered (after payment of the consideration), which he did.
The vehicle delivery note and invoice (issued to Vaz) are b oth dated
25.1.2011. Then, he discovered in the showroom, that the car was old, a
2009 model and that it had many features (corrugated undercarriag e,
scratches, etc.) clearly pointing to its being used and ol d. The vehicle
registration document, hypothecation, invoice and gate pass issue d, as
well as the vehicle delivery document, all show that the car was of 2009
make. Vaz refused to take delivery, and insisted upon delivery of a new
car. The dealer refused. The matter stood thus. On 08.02.20 11, Vaz
wrote a letter to the dealer. In this, he claimed that the vehicle was old,
and levelled allegations about it being used and certain features noticed
by him, which caused him to refuse to take delivery. On 18.02.2011, the
dealer denied Vaz’s legal notice and stated that no repres entation was
ever made, that the vehicle was not of 2009 make and that replacement
was out of the question. Upon no further response, Vaz caused a legal
notice to be issued on 11.11.2011. The consumer complaint was filed on
his behalf, on 14.12.2011.
20. Before the district forum, the dealer and the appellant w ere
served with notices; the former never appeared and went unrepresented;
it was therefore set down ex-parte. The appellant entered appearance,
contested its liability and alleged that its relationship with the dealer was
not one of agent principal, but rather, principal to princi pal and that it
could not be held liable.
21. The dealership agreement in this case, dated 31.07.2008 as
observed earlier, was not produced before the fora below. Ho wever, it
was produced with an application after seeking this court’s leave in that
regard. Clause 4 defines the territorial scope and subject m atter of the
agreement constituting the second respondent as a dealer. It is extracted
below and reads as follows:
“Territorial Scope and subject matter of the agreemen t
4 (a) subject to the terms hereof, the Company hereby appoin ts
the Dealer as its Authorised Dealers to sell and service on a
principal-to-principal basis the following products
manufactured by the Company:
Tata Indica, Tata Indigo, Tata Safari, Tata Sumo, Tata Carri er,
Tata Spacio, Tata Tourin (hereinafter referred to a s the
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
‘Products’ which expression shall also mean and inc lude,
wherever the context so permits, such other products market ed
by the Company as may specifically and expressly be incl uded
within the scope of this Agreement by mutual consent of the
Parties in writing from time to time) and parts and accessor ies
thereof (hereinafter referred to as the ‘Spare Parts’) p resently
manufactured and/or marketed by the Company.
(b) It is agreed that the Products and Spare Parts specifie d in
Clause (a) above shall be sold to the Dealer by the Logistic s
Provider and/or the Company as the case may be for r esale
by the Dealer within the territory described hereun der
(hereinafter called the ‘Territory’) in accordance with the
provisions of this Agreement.
(i) The city of PANJIM for Tata Indica, Tata Indigo , Tata
Safari and their variants, where the Dealer is entitled to sell
such vehicles to customers dwelling within that city as a lso to
customers outside the city but within the State, provided that
(a) such customers are from a ‘free territory’ i.e. a pl ace which
is not allocated by the company to any other Dealer for
distribution of such vehicles and (b) all sales, whe ther they
be to the city or the non-city customers, shall take plac e within
the city.
(ii) In the State of Goa, districts: ALL for Tata Su mo, Tata
Carrier, Tata Spacio, Tata Tourin and their variant s, where
the Dealer is entitled to sell such vehicles to all customers
located within those districts.
(c) In the event the areas or the boundaries of the Te rritory
or any parts or parts thereof is/are altered, re-demarca ted or
reconstituted by Governments or any other authoriti es for
any reason whatsoever, the Company shall be at libe rty to
redetermine and reallot the territory of the Dealer under th is
Agreement.
(d) The Agreement shall not preclude the Company fr om
entering into or continuing any Dealership Agreemen t or
Agreements with any other person or persons within the
Territory for sale of the products and/or the Spare Parts and
637
resale by that person thereof in the Territory on such terms as
the Company in its absolute discretion deems fit.
(e) It is expressly agreed and declared that notwith standing
anything herein contained, this Agreement does not constitute
any form of agency or principal-agent relationship be tween
the Dealer and the Company. The Dealer and the Comp any
shall deal solely on a principal to principal basis in the
manner provided in this Agreement.
22. Clause 1(iv) reserves to the appellant an overriding rig ht to
“make direct sales of the products and/or the spare parts to any
persons within the territory”6 Clause 18 binds the appellant to conform
to the warranty published by it and all implied warranties under law. It
reads as follows:
“Warranty
18. The Dealer agrees that the only warranty binding on the
Company shall be the warranty published by the Comp any
and all implied warranties under law are hereby exc luded.
The Dealer shall have no authority to give to his purchasers
a different warranty binding upon the Company. The Dealer
shall meet the Company’s warranty obligations to th e
purchasers of the products and/or the Spare Parts i n
accordance with the sales procedures and advices issued or
to be issued by the Company from time to time.”
By Clause 20, the dealer is under an obligation to advertise, display
or demonstrate at its own expense the products, spare parts and service
facilities within the territory granted to it as is approved by the appellant.
By virtue of Clause 30(a), upon the termination of the agre ement, the
dealer has to immediately turn over to it its works (i.e. that of the appellant)
or original spare parts, warehouse or spare parts cent re or bonafide
retail parts that he may have in hand for execution whi ch remains
unfulfilled together with deposits made by the buyers and also records
6 The relevant parts allow the present appellant to “make direct sales of the products
and/or the spare parts to any persons within the territory” for use or resale, including
establishment of showrooms, branches, workshops, se rvice centres etc; appoint staff
or appropriate trained salesmen and technical personnel in adequate number; establish
additional sales officers, showrooms etc. in the te rritories with the consent of the
company.”
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
and complete lists of owners. Clause 30(b) states that on termination or
expiry of the agreement the dealer has to return to the company free of
costs all technical, sales or other literature, statutory circulars, catalogues,
bulletins and folders.
23. It is useful to notice that before the District Forum, no role or
wrong-doing was attributed to the appellant; in fact, no allegation wa s
levelled against it. In para 2, the complaint narrates that Vaz was informed
about securing delivery; para 3 states that after registe ring the car, he
(Vaz) went to the showroom to take delivery and was shocked to see
that the car was not a brand new one, and that it had several defects.
Para 3 further describes the nature of the defects. In para 4, Vaz states
that he immediately lodged a protest with the dealer and reques ted for
replacement which was denied and that the dealer forced hi m to take
delivery of the car. Vaz alleges that the delivery however, was not taken.
Paras 5, 6, 7 and 8 are extracted which contain the subsequent narration
of facts:
“5. The complainant states that he had already informed the
respondent that he had obtained financial assistanc e from
the Syndicate Bank, Agacaim Branch, Agacaim, Goa to
purchase the said car and the entire amount of the sai d car
has been fully paid to Vistar Motor, however, till date, the
complainant had not received the delivery of the car due to
the aforesaid defect also. The respondent has not m ade any
efforts to replace the said car with a new car, on the cont rary
the respondent has tried carrying repair works of t he said
car with the said defect. Due to the negligence on the
Respondent No.1 part, the complainant has to undergo mental
tension, hardship and financial loss.
6. The complainant states that he thereafter approac hed the
conciliation forum; however, the same failed as the respondent
refused to give him a new car. The complainant has thereafter
by way of a legal notice, called upon the respondent no.1 to
replace the said car with the new car or refund the entire
amount of Rs.9,50,536/- which is the amount spent by him as
on date including interest on the loan until final payment within
7 days. However no response has been received by th e
complainant and he is thus forced to institute a le gal
639
proceedings in the Consumer Court to seek compensat ion
against you.
7. The complainant states that this complaint is not barred by
the limitation.
8. The cause of action has arisen in the State of G oa and
within the territorial jurisdiction of this Hon’ble Court. As
such this Hon’ble Court has the jurisdiction to entertain, hear
and decide the present petition.”
24. The liability of a manufacturer, such as the present appellant,
was the subject matter of a decision of this court in Indian Oil
Corporation v. Consumer Protection Council, Kerala 7. There, this
court observed as follows:
“14. In order to decide this question it is necessary for us to
look at clause 1 (a) of Ex. R-2. That is the memoran dum of
agreement between Indian Oil Corporation and M/s Karthika
Gas Agency. That establishes the relationship between Indian
Oil Corporation, the appellant and Karthika Gas Agency a s
distributor of the Corporation, on principal to principal ba sis.
(emphasis supplied) Clause 17 of the agreement is as un der:
“In all contracts or engagements entered into by th e
Distributor with the customers for sale of LPG and/or the
sale and/or installation and/or repairs of appliances an d/
or connections thereof with LPG cylinders (filled or empt y)
and/or refills and/or pressure regulators and/or attache d
equipment the Distributor shall act and shall alway s be
deemed to have acted as a principal and not as an agent
or on account of the Corporation, and the Corporati on
shall not in any way be liable in any manner in respect of
such contracts and/or engagements and/or in respect of
any act or omission on the part of the Distributor, his
servants, agents and workmen in regard to such installation,
sale, distribution, connections, repairs or otherwi se. The
Distributor shall be bound to inform the customers in
writing of this provision, through correspondence o r at
the time of enrolment, of the customer.”
7 (1994) 1 SCC 397
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
15. Thus, it is clear that the relationship is one of pri ncipal-
to-principal basis. The reliance by the authorities below that
the circumstances, documents and conduct of parties pro ved
the relationship as of principal and agent is diffi cult to
understand. This is a case in which the second resp ondent
Karthika Gas Agency has given an unauthorised connection.
If it was a legal connection nothing would have been e asier
than to produce tile subscription voucher. Such a voucher as
rightly pointed out by the learned counsel for the appel lant,
is important and will bind the appellant-Corporatio n. The
authorities below have not given due importance to the
subscription voucher. Section 3(2) of the LPG Control Order
reads as under: “No person shall possess or use liq uefied
petroleum gas filled in cylinder or in bulk form unless he ha s
received supply thereof from a distributor or from an Oil
Company.”
*********** *********** *******
18. This puts the position beyond doubt. It should have made
the consumer aware of his legal rights. Further, in this case
for the unauthorised acts of second respondent, its
distributorship came to be cancelled. The fact that it was
revived is of no consequence if due regard is to be had to
clause 17 of the agreement which has been extracted above .
Section 2 (g) of the Consumer Protection Act states as follows :
“(g) ‘deficiency’ means any fault, imperfection, shortco ming
or inadequacy in the quality, nature and manner of
performance which is required to be maintained by or under
any law for the 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;”
19. Insofar as there is no privity of contract betw een the
appellant and the consumer no ‘deficiency’ as defined under
Section 2 (g) (quoted above) arises. Therefore, th e action
itself is not maintainable before the Consumer Forum. For all
these reasons, we set aside the judgments of the aut horities
below. Civil Appeal will stand allowed. However, in the
circumstances of the case there shall be no order as to cos ts.”
641
25. In General Motors (I) (P) Ltd. v. Ashok Ramnik Lal Tolat 8
the concurrent findings of the three forums under the Consumer Protection
Act were that the appellant was guilty of unfair trade practice, le ading
to award of punitive damages. The court took into consideration the fact
that there was no pleading in support of such a claim (f or punitive
damages). This court observed as follows:
“15. What survives for consideration is the submission of the
learned Senior Counsel for the appellant that there was no
claim before the National Commission for the puniti ve
damages nor had the appellant an opportunity to meet suc h
claim and that part of the order needs to be set aside. We find
merit in this submission. …
**************** ***************
20. We have already set out the relief sought in the complaint.
Neither there is any averment in the complaint abou t the
suffering of punitive damages by the other consumer s nor
was the appellant aware that any such claim is to be met by it.
Normally, punitive damages are awarded against a consciou s
wrongdoing unrelated to the actual loss suffered. Such a cl aim
has to be specially pleaded. The respondent complainant was
satisfied with the order of the District Forum and did not
approach the State Commission. He only approached t he
National Commission after the State Commission set aside t he
relief granted by the District Forum. The National Commission
in exercise of revisional jurisdiction was only con cerned
about the correctness or otherwise of the order of the State
Commission setting aside the relief given by the District Forum
and to pass such order as the State Commission ought to have
passed. However, the National Commission has gone m uch
beyond its jurisdiction in awarding the relief which was neither
sought in the complaint nor before the State Commission. We
are thus, of the view that to this extent the order of the National
Commission cannot be sustained. We make it clear tha t we
have not gone into the merits of the direction but the aspe ct
that in absence of such a claim being made before the National
Commission and the appellant having no notice of su ch a
8 (2015) 1 SCC 429
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
claim, the said order is contrary to the principles of fair
procedure and natural justice. We also make it clear that thi s
order will not stand in the way of any aggrieved party raisin g
a claim before an appropriate forum in accordance with law.”
26. The record establishes the absolute dearth of pleadings by the
complainant with regard to the appellant’s role, or special kno wledge
about the two disputed issues, i.e. that the dealer had represe nted that
the car was new, and in fact sold an old, used one, or that the undercarriage
appeared to be worn out. This, in the opinion of this court, was fatal to
the complaint. No doubt, the absence of the dealer or any explanation on
its part, resulted in a finding of deficiency on its part, b ecause the car
was in its possession, was a 2009 model and sold in 2011. The findings
against the dealer were, in that sense, justified on demurrer. H owever,
the findings against the appellant, the manufacturer, which had not sold
the car to Vaz, and was not shown to have made the representations
in question, were not justified. The failure of the complainant to plead
or prove the manufacturer’s liability could not have been improved upon,
through inferential findings, as it were, which the district , state and
National Commission rendered. The circumstance that a certain kind of
argument was put forward or a defence taken by a party in a given case
(like the appellant, in the case) cannot result in the inference that it was
involved or culpable, in some manner. Special knowledge of the allegations
made by the dealer, and involvement, in an overt or tacit manner, by the
appellant, had to be proved to lay the charge of deficiency of service at
its door. In these circumstances, having regard to the nature of the dealer’s
relationship with the appellant, the latter’s omissions and acts could not
have resulted in the appellant’s liability.
27. The consumer, Vaz had relied on Jose Philip Mampillil
(supra). The deficiencies found are extracted below:
“6. We have heard the parties at great length. We have seen
the material on record. From the material on record, it is clear
that the car was defective at the time of delivery. The re is no
doubt that there were defects in the paint and that the piston
rings of the engine had gone. The submission that the piston
rings got spoiled after the delivery was taken, can not be
accepted. The agent of the 1st respondent i.e. 2nd respondent,
had acknowledged that the piston rings were defective. T hey
would not have so acknowledged unless it was a defect at the
643
time of the delivery. Had this defect occurred by vir tue of the
appellant’s misusing the car, the 2nd respondent would neve r
have accepted the responsibility for repair of the piston r ings.
************* ************
8. In our view, it is shameful that a defective car was sought
to be sold as a brand new car. It is further regret table that,
instead of acknowledging the defects, the 1st respo ndent
chose to deny liability and has contested this matter.”
28. Clearly, the dealer, in the facts of that case, acknowledged the
defects in the car. In the present case, the dealer did not acknowledge
any such deficiency ; furthermore, the car had been made over to the
dealer on 28.02.2009 (as is evident from an invoice issued to the dealer,
a copy of which is on the record). Therefore, it is difficult to expect the
appellant, a manufacturer, to be aware of the physical conditio n of the
car, two years after its delivery to the dealer. During that period, a number
of eventualities could have occurred; the dealer may have allowed people
to use the car for the distance it is alleged to have covered. Also, the use
of the car and prolonged idleness without proper upkeep could ha ve
resulted in the undercarriage being corrugated. All these are real
possibilities. Unless the manufacturer’s knowledge is proved, a decision
fastening liability upon the manufacturer would be untenable, given that
its relationship with the dealer, in the facts of this case, were on principal-
to-principal basis.
29. For all the above reasons, the findings of the National
Commission and the lower forums against the appellant are s et aside.
This court is conscious that the car, by now would have deteriorated; in
these circumstances, it is open to the respondent, Vaz to ex ecute the
order for alternative relief (of refund, with interest granted to him, by the
district forum, as affirmed by the State and National Commissions) through
the district forum concerned. During pendency of this appeal, the court
had directed the appellant to deposit certain amounts. It is hereby directed
that the amounts so deposited, with interest accrued should be refunded
to the appellant. Subject to these observations and directions, the appeal
is allowed; but in the circumstances, without order on costs.
Kalpana K. Tripathy Appeal allowed.
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]