TATA MOTORS LTD. versus ANTONIO PAULO VAZ AND ANR.
[2021] 1 S.C.R. 625, Supreme Court of India, 2021
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
A
B
C
D
E
F
G
H
625
   [2021] 1 S.C.R. 625
625
TATA MOTORS LTD.
v.
ANTONIO PAULO VAZ AND ANR.
(Civil Appeal No. 574 of 2021)
FEBRUARY 18, 2021
[UDAY UMESH LALIT, HEMANT GUPTA
AND S. RAVINDRA BHAT, JJ.]
Consumer Protection:
Deficiency in service – Purchase of car by complainant from
the dealer – Refused to take delivery of the car as it was an old and
used one (2009 make) – Dealer refused to deliver new car (2011
make) – Consumer complaint – The manufacturer contested the
complaint taking the plea that it cannot be held liable for the act of
dealer as the relationship between the dealer and the manufacturer
was that of principal to principal and not that of agent and principal
– Dealer never appeared – District forum held that there was
deficiency in service on the part of dealer as well as manufacturer
and they were jointly and severally liable to replace the car with a
new model or to refund the entire amount with interest @10% from
the date of delivery – State Consumer Commission as well as National
Consumer Commission affirmed the order of the District Forum –
Appeal to Supreme Court by the manufacturer – Held: There was
absolute dearth of pleadings by the complainant with regard to
manufacturer’s role or its having special knowledge regarding
dealer’s role in representing the car as new and selling an old used
car – The failure of the complainant to plead or prove the
manufacturer’s liability could not have been improved upon through
inferential findings – Having regard
to the nature of dealer’s
relationship with the manufacturer, the dealer’s omissions and acts
could not have resulted in manufacturer’s liability – Therefore, the
findings of the fora below are set aside – Appeal allowed.
Maruti Udyog Ltd. v. Susheel Kumar Gabgotra (2006)
4 SCC 644 : [2006] 3 SCR 603; Indian Oil Corporation
v. Consumer Protection Council (1994) 1 SCC 397;
Vivek Automobiles Ltd. v. Indian Inc. (2009) 17 SCC
657; Indian Oil Corporation v. Consumer Protection
A
B
C
D
E
F
G
H
626
SUPREME COURT REPORTS
[2021] 1 S.C.R.
Council, Kerala (1994) 1 SCC 397; General Motors
(I) (P) Ltd. v. Ashok Ramnik Lal Tolat (2015) 1 SCC
429 : [2014] 11 SCR 16 – relied on.
Jos Philip Mampillil v. Premier Automobiles Limited and
Anr. (2004) 2 SCC 278 : [2004] 1 SCR 1095 –
distinguished.
Case Law Reference
[2006] 3 SCR 603
relied on
para 9
(1994) 1 SCC 397
relied on
para 9
[2004] 1 SCR 1095
distinguished
para 15
(2009) 17 SCC 657
relied on
para 18
(1994) 1 SCC 397
relied on
para 24
[2014] 11 SCR 16
relied on
para 25
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 574 of
2021.
From the Judgment and Order dated 09.01.2020 of the National
Consumer Disputes Redressal Commission, New Delhi in Revision
Petition No.1809 of 2014.
Siddharth Bhatnagar, Sr. Adv., Debmalya Banerjee, Ms. Seema
Sundd, Kartik Bhatnagar, Rohan Sharma, A.S. Aman, Ujjwal Singh, Ritu
Raj, Vardaan Wanchoo, Aditya Sidhra, Ms. Astha Prasad, M/s.
Karanjawala & Co., Advs for the Appellant.
Ninand Laud, Karan Mathur, Ms. Ananyaa Mazumdar, Ivo
D’Costa, Ms. Ila Sheel, Advs. for the Respondents.
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 Redressal
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. 1809 of 2014
A
B
C
D
E
F
G
H
627
2. The relevant facts are that that the first respondent, Antonio
Paulo Vaz (hereafter “Vaz”) bought a car after paying the agreed total
consideration price in 2011 to the second respondent, Vistar Goa (P)
Ltd, a dealer in cars (hereafter “the dealer”). At the time 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 notice 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 dealer was
absent and was unrepresented; it was therefore proceeded against ex
parte. The district forum determined ‘deficiency in service’ and held
the dealer and the appellant (i.e. manufacturer of the car) to be jointly
and severally liable. The district forum’s order, (made on 27.09.2013)
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 him was a
2009 model. The district forum observed that this averment (by the
appellant) was apparently incorrect because if Vaz had agreed 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 vehicle,
and make of 2009 but the registration was done for the 1st
time in the name of the Complainant in 2011. Also the car
had travelled almost 622 kms. The O.P. 2 stated that there
was pre delivery test. But for this test the car travelled 622
kms?”
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
A
B
C
D
E
F
G
H
628
SUPREME COURT REPORTS
[2021] 1 S.C.R.
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 the 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 Act
(hereafter “the Act”). The state commission dismissed the appeal with
costs of   5,000/-. It held that Vaz was a consumer as defined under
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 on a principal-to-
principal basis was unsubstantiated according to the state commission,
by any material or evidence. The appellant had not produced 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 Manufacturer
through its dealers, the Manufacturer exercises superintendence
over its dealers including the right to terminate their 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:
A
B
C
D
E
F
G
H
629
“the serious short comings in the fulfilment of the obligations
cast upon you under the said agreement. In spite of repeated
follow ups, meetings, telecons and correspondence vide emails
(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 Manager,
RCSM and others in the region explaining you the continuous
drop in sales volume for last 18 months across all categories
of products, non-availability of vehicle stocks, inadequate
manpower for Sales & After Sales, not adhering to the
standard operating procedures on processes, non-availability
of Test Drive Vehicles, increasing number of customer
complaints & inability/lack of effort in resolving them. There
is no improvement in overall operations of the dealerships
nor have we seen any efforts put by you for the same.
We, on a review, find that due to the aforesaid reasons you
are in serious breach of the terms of the dealership agreement
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 justify
continuance of dealership.
We are therefore constrained to issue you this 90 day notice
of termination of your dealership. You shall cease to be the
Tata Motors Passenger Cars dealer after 90 days from the
receipt of this letter and all business pertaining to Tata Motors
Passenger Vehicles, parts and accessories shall stand
withdrawn.”
The
National Commission was also influenced by the fact that
the appellant had, before the district forum, filed its written version in
which it inter alia explicitly stated that the relationship between the
Manufacturer and its dealer was on ‘principal to principal’ 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 (mis)acts were
only on the part of the Dealer alone. On the contrary, it inter 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 workshop setup
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
A
B
C
D
E
F
G
H
630
SUPREME COURT REPORTS
[2021] 1 S.C.R.
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 substantiate its
relationship between the dealer being one of principal-to-principal basis
had been adduced. It further went on to notice the averments in the
appeal before the state commission and highlighted that the dealer’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 indulged 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 the
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 District 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 drift of the
complaint was that the 2009 make car manufactured by it, which 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 therefore, urged
A
B
C
D
E
F
G
H
631
that there was neither averment, nor allegation by Vaz, on the basis of
which any liability could be pinned upon it, a third party to the entire
transaction, merely because it was the manufacturer. It was 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 manufacturer
could not be fastened with liability. Reliance was placed upon the
decisions of this court in Maruti Udyog Ltd. v. Susheel Kumar
Gabgotra2and Indian Oil Corporation v. Consumer Protection
Council3.
10. It was argued on behalf of the appellant that the invoice by
which the car was sold to the dealer was a part of the record. Reliance
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 was of 2011
make and further that it was new). Since no evidence was led 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 manufacturer.
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 pleadings 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.]
A
B
C
D
E
F
G
H
632
SUPREME COURT REPORTS
[2021] 1 S.C.R.
of the car was represented to be 2011, and that someone on its 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 upon. 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 agreement
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 Agreement, all
orders, which may have been received from the Dealer
previous to such termination or expiry, shall, without any
liability to the Company for the Spare Parts, be cancelled
unless expressly otherwise agreed in writing by the Parties,
but in such a
case, no obligation of the Dealer arising out of
the previous supplies shall cease. On termination of the
Agreement, the Company may, at its option, require the Dealer
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 as to
how many or how much, if at all, of the Spare Parts previously
sold to the Dealer shall be bought from him in terms of this
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 delivery of
the Spare Parts front the Company.”
13. Refuting the appellant’s arguments, it is urged on behalf of
Vaz that the impugned order has no error calling for interference, and
that this Court should not exercise its discretion to upset the findings
A
B
C
D
E
F
G
H
633
conferred by it in exercise of its powers under Article 136 of the
Constitution of India. It is reiterated that the consumer, i.e., Vaz was
informed at the time of the vehicle’s booking that it was 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 showroom and then
discovered that the car had several defects, including that the
undercarriage was fully corrugated and the body had several scratch
marks. These flaws were immediately pointed out to the dealer; 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 expects that
the product would be free from all defects. In this case, however, 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 car was
being sold to him, but in fact held out that it was brand new, and
furthermore in the reply to the letter dated 18.02.2011, the appellant
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 vehicles,
pointedly alleged that a cash discount of Rs.80,000/- was offered to
Vaz.
15. Learned counsel for Vaz relied upon the following written
submission of the present appellant before the District Form, “the
opposite party No.1 also informed him about the old Tata Xenon
car of 2009 bearing a cash discount of Rs.80,000/- along with a
free music system, mud flap and matting was offered.” This deliberate
misrepresentation, emphasised learned counsel for Vaz, was squarely
attributable to the appellant, i.e. the manufacturer as well as its dealer,
and this amounted to unfair trade practice and deficiency in service
within the meaning of the expression under Section 2(1)(g) read with
Section 2(1)(o) and Section 2(1)(r) of the Consumer Protection Act.
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.]
A
B
C
D
E
F
G
H
634
SUPREME COURT REPORTS
[2021] 1 S.C.R.
“It is shameful that a defective car was sought to be sold as a
brand new car and instead of acknowledging the defects,
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 adjudicatory 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 apparent that
the commercial relationship between the appellant and its dealer remains
that of a principal and agent. It is urged that nomenclature apart, 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 04.12.2012 and
stated that it clearly established
that there was a direct 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 court
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 recapitulate the
facts. Vaz approached the dealer to purchase a car; he was informed
4 (2004) 2 SCC 278
5 (2009) 17 SCC 657
A
B
C
D
E
F
G
H
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 both 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 undercarriage,
scratches, etc.) clearly pointing to its being used and old. The vehicle
registration document, hypothecation, invoice and gate pass issued, 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 08.02.2011, 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 representation 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 were
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 principal 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. However, it
was produced with an application after seeking this court’s leave in that
regard. Clause 4 defines the territorial scope and subject matter 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 agreement
4 (a) subject to the terms hereof, the Company hereby appoints
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 Carrier,
Tata Spacio, Tata Tourin (hereinafter referred to as the
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
A
B
C
D
E
F
G
H
636
SUPREME COURT REPORTS
[2021] 1 S.C.R.
‘Products’ which expression shall also mean and include,
wherever the context so permits, such other products marketed
by the Company as may specifically and expressly be included
within the scope of this Agreement by mutual consent of the
Parties in writing from time to time) and parts and accessories
thereof (hereinafter referred to as the ‘Spare Parts’) presently
manufactured and/or marketed by the Company.
(b) It is agreed that the Products and Spare Parts specified in
Clause (a) above shall be sold to the Dealer by the Logistics
Provider and/or the Company as the case may be for resale
by the Dealer within the territory described hereunder
(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 also to
customers outside the city but within the State, provided that
(a) such customers are from a ‘free territory’ i.e. a place which
is not allocated by the company to any other Dealer for
distribution of such vehicles and (b) all sales, whether they
be to the city or the non-city customers, shall take place within
the city.
(ii) In the State of Goa, districts: ALL for Tata Sumo, Tata
Carrier, Tata Spacio, Tata Tourin and their variants, 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 Territory
or any parts or parts thereof is/are altered, re-demarcated or
reconstituted by Governments or any other authorities for
any reason whatsoever, the Company shall be at liberty to
redetermine and reallot the territory of the Dealer under this
Agreement.
(d) The Agreement shall not preclude the Company from
entering into or continuing any Dealership Agreement or
Agreements with any other person or persons within the
Territory for sale of the products and/or the Spare Parts and
A
B
C
D
E
F
G
H
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 notwithstanding
anything herein contained, this Agreement does not constitute
any form of agency or principal-agent relationship between
the Dealer and the Company. The Dealer and the Company
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 right 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 Company
and all implied warranties under law are hereby excluded.
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 the
purchasers of the products and/or the Spare Parts in
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 agreement, 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 centre or bonafide
retail parts that he may have in hand for execution which 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, service centres etc; appoint staff
or appropriate trained salesmen and technical personnel in adequate number; establish
additional sales officers, showrooms etc. in the territories with the consent of the
company.”
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
A
B
C
D
E
F
G
H
638
SUPREME COURT REPORTS
[2021] 1 S.C.R.
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 was
levelled against it. In para 2, the complaint narrates that Vaz was informed
about securing delivery; para 3 states that after registering 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 requested for
replacement which was denied and that the dealer forced him 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 assistance from
the Syndicate Bank, Agacaim Branch, Agacaim, Goa to
purchase the said car and the entire amount of the said 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 made any
efforts to replace the said car with a new car, on the contrary
the respondent has tried carrying repair works of the 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 approached 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 the
complainant and he is thus forced to institute a legal
A
B
C
D
E
F
G
H
639
proceedings in the Consumer Court to seek compensation
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 Goa 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, Kerala7. 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 memorandum 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 as
distributor of the Corporation, on principal to principal basis.
(emphasis supplied) Clause 17 of the agreement is as under:
“In all contracts or engagements entered into by the
Distributor with the customers for sale of LPG and/or the
sale and/or installation and/or repairs of appliances and/
or connections thereof with LPG cylinders (filled or empty)
and/or refills and/or pressure regulators and/or attached
equipment the Distributor shall act and shall always be
deemed to have acted as a principal and not as an agent
or on account of the Corporation, and the Corporation
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 otherwise. The
Distributor shall be bound to inform the customers in
writing of this provision, through correspondence or 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.]
A
B
C
D
E
F
G
H
640
SUPREME COURT REPORTS
[2021] 1 S.C.R.
15. Thus, it is clear that the relationship is one of principal-
to-principal basis. The reliance by the authorities below that
the circumstances, documents and conduct of parties proved
the relationship as of principal and agent is difficult to
understand. This is a case in which the second respondent
Karthika Gas Agency has given an unauthorised connection.
If it was a legal connection nothing would have been easier
than to produce tile subscription voucher. Such a voucher as
rightly pointed out by the learned counsel for the appellant,
is important and will bind the appellant-Corporation. 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 liquefied
petroleum gas filled in cylinder or in bulk form unless he has
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, shortcoming
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 between the
appellant and the consumer no ‘deficiency’ as defined under
Section 2 (g)  (quoted above) arises. Therefore, the action
itself is not maintainable before the Consumer Forum. For all
these reasons, we set aside the judgments of the authorities
below. Civil Appeal will stand allowed. However, in the
circumstances of the case there shall be no order as to costs.”
A
B
C
D
E
F
G
H
641
25. In General Motors (I) (P) Ltd. v. Ashok Ramnik Lal Tolat8
the concurrent findings of the three forums under the Consumer Protection
Act were that the appellant was guilty of unfair trade practice, leading
to award of punitive damages. The court took into consideration the fact
that there was no pleading in support of such a claim (for 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 punitive
damages nor had the appellant an opportunity to meet such
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 about the
suffering of punitive damages by the other consumers nor
was the appellant aware that any such claim is to be met by it.
Normally, punitive damages are awarded against a conscious
wrongdoing unrelated to the actual loss suffered. Such a claim
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 the
National Commission after the State Commission set aside the
relief granted by the District Forum. The National Commission
in exercise of revisional jurisdiction was only concerned
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 much
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 that we
have not gone into the merits of the direction but the aspect
that in absence of such a claim being made before the National
Commission and the appellant having no notice of such a
8 (2015) 1 SCC 429
TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.
[S. RAVINDRA BHAT, J.]
A
B
C
D
E
F
G
H
642
SUPREME COURT REPORTS
[2021] 1 S.C.R.
claim, the said order is contrary to the principles of fair
procedure and natural justice. We also make it clear that this
order will not stand in the way of any aggrieved party raising
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 knowledge
about the two disputed issues, i.e. that the dealer had represented 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, because 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. However,
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. There 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, cannot be
accepted. The agent of the 1st respondent i.e. 2nd respondent,
had acknowledged that the piston rings were defective. They
would not have so acknowledged unless it was a defect at the
A
B
C
D
E
F
G
H
643
time of the delivery. Had this defect occurred by virtue of the
appellant’s misusing the car, the 2nd respondent would never
have accepted the responsibility for repair of the piston rings.
*************
************
8. In our view, it is shameful that a defective car was sought
to be sold as a brand new car. It is further regrettable that,
instead of acknowledging the defects, the 1st respondent
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 condition 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 have
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 set aside.
This court is conscious that the car, by now would have deteriorated; in
these circumstances, it is open to the respondent, Vaz to execute 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.]