Case: TATA MOTORS LTD Vs. ANTONIO PAULO VAZ AND ANR

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 forums 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?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 Vazs 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 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 appellants 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 appellants 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: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, nonavailability 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 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 aftersales 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 dealers 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 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 Commissions Order dated 01.05.2014, along with interest accrued on it, was to be utilized by the District Forum towards satisfaction of the Award.

Court's reasoning:
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 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 Honble Court. As such this Honble 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 (1994) 1 SCC 397. 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.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.25. In General Motors (I) (P) Ltd. v. Ashok Ramnik Lal Tolat (2015) 1 SCC 429  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 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 appellants 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 manufacturers 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 dealers relationship with the appellant, the latters omissions and acts could not have resulted in the appellants liability.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 manufacturers 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 principalto-principal basis.