Supreme Court of India
M/S DAIMLER CHRYSLER INDIA PVT. LTD.versusM/S CONTROLS & SWITCHGEAR COMPANY LTD. & ANR.
- Citation
- 2024 INSC 496
- Decided
- 9 July 2024
- Bench
- BELA M TRIVEDI
Holding
Purchases of vehicles for personal use of directors are not for commercial purpose; the overheating defect and non‑deployment of airbags constitute a defect and unfair trade practice, and the National Commission’s awards are upheld with a reduced refund.
Summary
The Supreme Court examined whether a company’s purchase of luxury cars for the personal use of its directors fell within the definition of a "commercial purpose" under the Consumer Protection Act, 1986, and whether defects in the cars entitled the buyer to compensation. It held that such purchases are for personal use and not linked to any profit‑generating activity, so the buyer remains a consumer. The Court found that the overheating of the car’s centre hump was a defect within the meaning of s.2(1)(f) and that the non‑deployment of airbags, coupled with misleading promotional statements, amounted to a deficiency in service and an unfair trade practice under s.2(1)(r). The National Consumer Disputes Redressal Commission’s orders directing the seller to refund the purchase price and pay compensation were upheld, with the refund reduced to Rs.36 lakhs and the buyer allowed to retain the car. The appeals concerning the same matters filed in 2017‑2018 were dismissed.
Issues considered
- The purchase of a vehicle by a company for the personal use of its directors: does it constitute a "commercial purpose" under s.2(1)(d) of the Consumer Protection Act, 1986?
- Whether the overheating of the car’s centre hump qualifies as a "defect" under s.2(1)(f) of the Act.
- Whether the non‑deployment of airbags and the seller’s promotional representations amount to a deficiency in service and an unfair trade practice under s.2(1)(r).
- Whether the National Commission’s award of refund and compensation is legally justified.
Legislation cited
- Consumer Protection Act, 1986s. 2(1)(d), s. 2(1)(f), s. 2(1)(r)
Subjects
Commercial purposeConsumerOnus to proveProfit generating activityDominant purposeMaintainability of the consumer complaintProblem of hump heating of the carCompensationRepurchase the carHigh-end luxurious carsBalance of equityMercedes Benz, E-Class-E 240 petrol version carAirbags of the carGrievous injuriesMinor injuriesDeficiency in serviceUnfair trade practiceSafety measure in the carDefect in the carTrade practiceDeceptive practice
Judgment
[2024] 7 S.C.R. 416 : 2024 INSC 496
M/s Daimler Chrysler India Pvt. Ltd.
v.
M/s Controls & Switchgear Company Ltd. & Anr.
(Civil Appeal No. 353 of 2008)
09 July 2024
[Bela M. Trivedi* and Pankaj Mithal, JJ.]
Issue for Consideration
Issue arose as regards the purchase of a vehicle/good by a
Company for the use/personal use of its directors, if would amount
to purchase for “commercial purpose” within the meaning of s. 2(1)
(d) of the Consumer Protection Act, 1986; in the matter pertaining
to overheating of the car, the National Commission, if justified in
awarded the compensation by directing the appellants to refund the
purchase price-Rs. 58 lakhs approx. to the complainant, and take
back the car; and National Commission, if justified in directing the
appellants to pay a sum of Rs. 5 lakhs to the complainant for the
deficiency in the services rendered to it on account of the airbags
of the car having not deployed/triggered and to pay a sum of Rs.
5 lakhs as compensation to the complainant for the unfair trade
practice indulged into by them.
Headnotes†
Consumer Protection Act, 1986 – ss. 2(1)(d), 2(1)(f) –
Consumer – Commercial purpose – Defect in the car –
Complainant purchased two high priced luxury cars
for the personal use of its Directors and for his family
members, as a part of the perquisite to the Director from the
appellant company – Persistent problem of hump heating
in one of the car – Complaint and applications before the
National Commission – National Commission awarded the
compensation by directing the appellants to refund the
purchase price-Rs. 58 lakhs approx. to the complainant, and
take back the car – Interference with:
Held: No material to suggest that the purchase of car had a nexus
or was linked to any profit generating activity of the company, as
such it could not be said that such a high-priced luxurious car was
purchased by the complainant for its “commercial purpose” – It
* Author
[2024] 7 S.C.R. 417
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
was clearly established by the complainant that an excessive
heat was generated in the car – Appellant though not admitted
specifically about the said defects in the car, had indirectly stated
about the same in the applications filed before the Commission –
Thus, the inherent defect of overheating of the car had persisted
despite the appellant having provided the rectification measures
like providing additional insulation in the car, which caused great
inconvenience and discomfort to the passengers seated in the
car – Such overheating of the surface of hump and the overall high
temperature in the car was a fault, imperfection or shortcoming in
the quality or standard which was expected to be maintained by
the appellants under the contract with the complainant and thus,
was a ‘defect’ within the meaning of s. 2(1)(f) – People do not
purchase the high-end luxurious cars to suffer discomfort more
particularly when they buy the vehicle keeping utmost faith in the
supplier who would make the representations in the brochures or
the advertisements projecting and promoting such cars as the finest
and safest automobile in the world – Complainant having suffered
great inconvenience, discomfort and also the waste of time and
energy in pursuing the litigations, the impugned order passed by
the National Commission directing the appellants to refund the
purchase price-Rs. 58 lakhs approx. to the complainant, and take
back the car does not warrant any interference – However, having
regard to the offer made by the appellants to repurchase the car,
and having regard to the complainant having retained and used
the car for about seventeen years, in the interest of justice and
balance of equity the complainant permitted to retain the car and
the appellant to refund Rs. 36 lakhs instead of Rs. 58 lakhs to the
complainant by way of compensation within the stipulated time.
[Paras 17, 23, 24, 25, 40]
Consumer Protection Act, 1986 – s. 2(1)(d), 2(1)(r) – Consumer –
Commercial purpose – Deficiency in the services – Unfair trade
practice – Complainant’s case that they purchased Mercedes
Benz, E-Class-E 240 petrol version car from the appellants
for its Managing Director based on its safety features – Said
car met with the accident, the car was being driven by the
company driver, while the director was seated on the rear
left side seat of the car, and the driver was wearing the seat
belt, whereas the Director did not wear the seat belt – At the
time of accident, neither the airbags on the front side nor the
airbags on the side of the the Director opened, as a result the
418 [2024] 7 S.C.R.
Digital Supreme Court Reports
Director sustained grievous injuries, and the driver sustained
some minor injuries – Complainants filed the complaint
seeking compensation – National Commission directed the
appellants to pay a sum of Rs. 5 lakhs to the complainant
for the deficiency in the services rendered to it on account
of the airbags of the car having not deployed/triggered and
further directed the appellants to pay a sum of Rs. 5 lakhs as
compensation to the complainant for the unfair trade practice
indulged into by them – Interference with:
Held: Not called for – Trade practice which for the purpose of
promoting the sale of any goods by adopting deceptive practice
like falsely representing that the goods are of a particular
standard, quality, style or model, would amount to “unfair trade
practice” within the meaning of s. 2(1)(r) – It cannot be said that
the purchase of the car by the company for the use of its director
would tantamount to purchase for commercial purpose – Appellants
failed to bring on record any material to show that the dominant
purpose or dominant use of the car was for commercial purpose
or that the purchase of the car had any nexus or was linked with
any profit generating activity of the complainant company, thus, the
complaint was maintainable – Nothing produced by the appellants
to show that they had disclosed either in the Owner’s Manual or
in the Brochure about the limited functioning of the airbags, which
according to them was an additional safety measure in the car – On
the contrary, the complainant’s case that misrepresentation was
made by the appellants at the time of promotion of the car that
it had a safety system which included front airbags, side-airbags
and window airbags – Even if it is accepted that the airbags would
deploy only when the seat belt was fastened by the passenger,
admittedly, the frontal airbags of the car were not deployed though
the driver had already fastened the seat belt – Thus, the defect in
the car clearly established as regards non-deployment of frontal
airbags – National Commission rightly considered incomplete
disclosure or non-disclosure of the complete details with regard to
the functioning of the airbags at the time of promotion of the car,
as the “unfair trade practice” on the part of the appellants, and
awarded a sum of Rs. 5 lakhs towards it as also rightly balanced
the equity by awarding Rs. 5 lakhs towards the deficiency in service
on account of the frontal airbags of the car having not deployed
at the time of accident. [Para 40]
[2024] 7 S.C.R. 419
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
Consumer Protection Act, 1986 – s. 2(1)(d) – Consumer –
Commercial purpose – Purchase of a vehicle/good by a
Company for the use/personal use of its directors, if would
amount to purchase for “commercial purpose” within the
meaning of s. 2(1)(d) – Determination:
Held: Would depend upon facts and circumstances of each
case – However ordinarily “commercial purpose” is understood to
include manufacturing/industrial activity or business-to-business
transactions between commercial entities – Purchase of the goods
should have a close and direct nexus with a profit generating
activity – It has to be seen whether the dominant intention or
dominant purpose for the transaction was to facilitate some kind
of profit generation for the purchaser and/or their beneficiary –
If it is found that the dominant purpose behind purchasing the
goods was for the personal use and consumption was not linked
to any commercial activity, it need not be looked into, if such
purchase was for the purpose of “generating livelihood by means
of self-employment” – Said determination cannot be restricted
in a straitjacket formula and has to be decided on case-to-case
basis – Furthermore, in a consumer complaint, the onus to prove
that the goods were purchased for “commercial purpose” and
thus, such goods would fall outside the definition of “consumer”
contained in s. 2(1)(d), would be on the opponent-seller and not
on the complainant-buyer. [Para 17]
Case Law Cited
General Motors Pvt. Ltd. v. G.S. Fertilizers Pvt. Ltd. (2013) CPJ
72 (NC); Laxmi Engineering Works v. P.S.G Industrial Institute
[1995] 3 SCR 174 : (1995) 3 SCC 583; Lilavati Kirtilal Mehta
Medical Trust v. Unique Shanti Developers and Others [2019]
14 SCR 563 : (2020) 2 SCC 265; Shrikant G. Mantri v. Punjab
National Bank [2022] 5 SCR 945 : (2022) 5 SCC 42; National
Insurance Company Limited v. Harsolia Motors and Others
[2023] 3 SCR 448 : (2023) 8 SCC 362; Rohit Chaudhary and
Another v. Vipul Limited [2023] 14 SCR 394 : (2024) 1 SCC
8 – referred to.
List of Acts
Consumer Protection Act, 1986.
420 [2024] 7 S.C.R.
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List of Keywords
Commercial purpose; Consumer; Onus to prove; Profit generating
activity; Dominant purpose; Maintainability of the consumer
complaint; Problem of hump heating of the car; Compensation;
Repurchase the car; High-end luxurious cars; Balance of equity;
Mercedes Benz, E-Class-E 240 petrol version car; Airbags of the
car; Grievous injuries; Minor injuries; Deficiency in service; Unfair
trade practice; Safety measure in the car; Defect in the car; Trade
practice; Deceptive practice.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 353 of 2008
From the Judgment and Order dated 17.09.2007 of the National
Consumers Disputes Redressal Commission, New Delhi, in CC No.9
of 2006
With
Civil Appeal Nos. 19536-19537 of 2017 and Civil Appeal No. 2633
of 2018
Appearances for Parties
Dhruv Mehta, P. C Sen, Sr. Advs., Rakesh Kumar, Sidharth Sethi,
Avinash Das, Ms. Anupama Dhurve, P. S. Sudheer, Rishi Maheshwari,
Ms. Anne Mathew, Bharat Sood, Ms. Miranda Solaman, Ms. Akshita
Chhabra, Kamal Kant, Vivek Jain, Arun Khosla, M. A. Chinnasamy,
Mrs. C Rubavathi, C Raghavendren, P Raja Ram, Sarubh Gupta,
Manoj Kumar Chowdhary, Ms. Janani B, Dr. B.P. Nilaratna, Ch. Leela
Sarveswar, V. Senthil Kumar, Ms. Manjula Gupta, Vipin Singhania,
Diwakar Chirania, Abhay Singh Malik, Ms. Sapna Kaushik, Pranav
Raina, Sanjay Kumar Pathak, S.N. Pandey, Miss K.K. Kiran Pathak,
M.S. Akhtar, Sunil Kr. Jha, Mayank Madhu, Miss Nidhi Thakur Advs.
for the appearing parties.
Judgment / Order of the Supreme Court
Judgment
Bela M. Trivedi, J.
1. Though factually different, these appeals involve common question
of law - whether the purchase of a vehicle/good by a Company for
[2024] 7 S.C.R. 421
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
the use/personal use of its directors would amount to purchase
for “commercial purpose” within the meaning of Section 2(1)(d) of
the Consumer Protection Act, 1986 (now re-enacted as Consumer
Protection Act, 2019)?
2. The CA No. 353 of 2008 has been filed by the appellant - M/s
Daimler Chrysler India Pvt. Ltd., now known as Mercedes Benz
India Pvt. Ltd. (original opponent no. 1) arising out of the Original
Petition No. 09 of 2006 filed by the respondent no. 1 - M/s Controls
and Switchgear Company Ltd. (original complainant), challenging
the impugned judgment and order dated 17.09.2007 passed by the
National Consumer Disputes Redressal Commission (hereinafter
referred to as the National Commission), in the said O.P. No. 9/2006.
3. The CA Nos. 19536-19537 of 2017 have been preferred by the
appellant - Mercedes Benz India Pvt. Ltd. and Anr. (original opponent
nos. 1 and 2) arising out of the Consumer Case No. 51 of 2006
filed by the respondent no. 1 - CG Power and Industrial Solutions
Ltd. and Mr. Sudhir M. Trehan, M.D. of respondent no. 1, (original
complainants), challenging the impugned orders dated 08.07.2016
and 11.09.2017 passed by the National Commission in the said
C.C. No. 51/2006. The cross appeal being no. CA No. 2633 of 2018
has been preferred by the appellant – M/s CG Power and Industrial
Solutions Ltd. (original complainant no. 1) against the respondents
- Mercedes Benz India Pvt. Ltd. and Ors. (original opponents)
challenging the judgment and order dated 11.09.2017 passed in the
said Consumer No. 51 of 2006 by the National Commission, in so
far as it is against M/s. C.G. Power.
4. At the outset, it may be noted that in Original Petition No. 09 of 2006
(from which CA No. 353 of 2008 arises), the National Commission
vide the impugned order dated 17.09.2007 after holding that the
Complainant-Company being a legal entity, was entitled to file a
Complaint, and that the cars purchased for the use of the directors
of the Company, not used for any activity directly connected with
commercial purpose of earning profit, could not be said to have been
purchased by the complainant-company for “commercial purpose”,
had directed the appellant (original opponent no. 1) to replace the Car
no. DL-5CR-0333 with a new car of the same or similar model, or in
the alternative refund its full purchase price, namely one half of the
amount of Rs. 1,15,72,280/- which was paid by the complainant to
the opposite parties for the purchase of the two vehicles in question,
422 [2024] 7 S.C.R.
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and take back the vehicle. It may further be noted that vide the said
impugned order dated 17.09.2007, the National Commission had
also passed the order with regard to the second car being car no.
DL-9CV-5555, purchased by the complainant. In respect of that part
of the order pertaining to the second car, the appellant had preferred
an appeal being CA No. 6042 of 2007 before this Court. The said
Appeal came to be disposed of vide the order dated 11.01.2008 by
this Court. Hence, now, we are concerned with the impugned order
dated 17.09.2007 pertaining to the car no. DL-5CR-0333 only, so
far as the CA No. 353 of 2008 is concerned.
5. It is further pertinent to note that the findings recorded in the said
judgment and order dated 17.09.2007 in Original Petition No. 09 of
2006 with regard to the maintainability of the Complaint at the instance
of the complainant-company in respect of the car purchased for the
use/personal use of the director of the company, being in conflict
with the findings recorded by an another two-member Bench of the
National Commission in case of General Motors Pvt. Ltd. Vs. G.S.
Fertilizers Pvt. Ltd.1 in which it was held inter alia that the vehicle
purchased by a company for its Managing Director would amount
to its purchase for a commercial purpose, the matter was referred
to the three-member Bench of the National Commission. The three-
member Bench in the Consumer Complaint No. 51 of 2006 vide
the impugned judgment and order dated 08.07.2016 held as under:
“11(a) If a car or any other goods are obtained or any
services are hired or availed by a company for the
use/personal use of its directors or employees, such a
transaction does not amount to purchase of goods or
hiring or availing of services for a commercial purpose,
irrespective of whether the goods or services are used
solely for the personal purposes of the directors or
employees of the company or they are used primarily for
the use of the directors or employees of the company and
incidentally for the purposes of the company.
(b) The purchase of a car or any other goods or hiring or
availing of services by a company for the purposes of the
company amount to purchase for a commercial purpose,
1 II (2013) CPJ 72 (NC)
[2024] 7 S.C.R. 423
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
even if such a car or other goods or such services are
incidentally used by the directors or employees of the
company for their personal purposes.”
6. The appellants - Mercedes Benz India Pvt. Ltd. (the original opponents
in Consumer Complaint No. 51/2006) challenged the said Judgment
and Order dated 08.07.2016 passed by the three-member Bench of
the National Commission, before this Court by preferring an Appeal
being C.A. No. 10410 of 2016. This Court disposed of the said Appeal
by passing following order on 20.02.2017: -
“Heard Mr. Shyam Divan, learned senior counsel along
with Mr. Vineet Maheshwari, learned counsel appearing for
the petitioner and Mr. Amir Singh Pasrich, learned counsel
appearing for the 1st respondent.
The present appeal calls in question the legal propriety of
the order dated 8.7.2016 passed by the National Consumer
Disputes Redressal Commission, Bench No. 1, New
Delhi (for short, ‘the National Commission’) in Consumer
Complaint No. 51 of 2006 repelling the submission of the
appellant that the complaint before the said Commission
is not maintainable.
Having heard learned counsel for the parties, we are of the
considered opinion that the National Commission should
adjudicate the dispute finally and thereafter it will be open to
the appellant to challenge the order of maintainability, i.e.,
the present order as well as the final order. The National
Commission is requested to dispose of the Consumer
Complaint No. 51 of 2006 within three months hence.
With the aforesaid observation and liberty, the civil appeal
stands disposed of. There shall be no order as to costs.”
7. Thereafter, the National Commission adjudicated the disputes
between the parties on merits vide the impugned judgment and
order dated 11.09.2017 and disposed of the Consumer Case No.
51 of 2006 by giving following directions:
"(i) The opposite parties No.1 & 2 shall pay a sum of
Rs.5.00 lacs to complainant No.1 for the deficiency in
the services rendered to it on account of the airbags
of the car having not deployed/triggered;
424 [2024] 7 S.C.R.
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(ii) The opposite parties No.1 & 2 shall pay a sum of
Rs.5.00 lacs as compensation to complainant No.1
for the unfair trade practice indulged into by them;
(iii) The Opposite Parties No.1 & 2 shall, in the Owner’s
Manual to be provided to the buyers of their E-class
Cars, as well as on their website, provide adequate
information with respect to the deployment triggering
of the airbags of the vehicle, in consultation with AAUI.
(iv) The opposite parties No.1 & 2 shall pay a sum of Rs.
25,000/- as the cost of litigation to complainant No.1.
(v) The payment in terms of this order shall be made
and the directions contained herein will be complied
within three months from today.”
8. As stated earlier, the said two orders 08.07.2016 and 11.09.2017
passed in Consumer case no. 51 of 2006 have been challenged by
the appellants-Mercedes Benz by way of C.A. No. 19536-19537 of
2017. The Cross Appeal being C.A. No. 2633 has been preferred by
M/s CG Power and Industrial Solutions Ltd. (original complainant),
being aggrieved by the judgment and order dated 11.09.2017 passed
by the National Commission.
9. The common bone of contention raised by the learned counsels
appearing for the appellants - M/s Daimler Chrysler India Pvt. Ltd.,
(now Mercedes Benz India Pvt. Ltd.) in their respective Appeals is
that the purchase of car/vehicle by a company for the use/personal
use of its directors could not be said to be the purchase of vehicle
for self-employment to earn its livelihood, but it has to be construed
as the purchase of vehicle for “commercial purposes”, and therefore
such company would fall outside the purview of the definition of
“consumer” within the meaning of Section 2(1)(d) of the said Act.
In this regard it would be apt to reproduce the relevant part of the
definition of “Consumer” as contained in Section 2(1)(d) of the Act,
which reads as under-
“2(1)(d) “consumer” means any person who,—
(i) buys any goods for a consideration which has been
paid or promised or partly paid and partly promised, or
under any system of deferred payment and includes any
[2024] 7 S.C.R. 425
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
user of such goods other than the person who buys such
goods for consideration paid or promised or partly paid or
partly promised, or under any system of deferred payment
when such use is made with the approval of such person,
but does not include a person who obtains such goods
for resale or for any commercial purpose; or
(ii)….
Explanation.—For the purposes of this clause, “commercial
purpose” does not include use by a person of goods bought
and used by him and services availed by him exclusively
for the purposes of earning his livelihood by means of
self-employment;”
10. From the bare reading of the said definition, it is discernible that the
definition of “consumer” does not include a person who obtains any
goods for “resale” or for “any commercial purpose”. Though what
is “commercial purpose” has not been defined under the Act, it has
been interpreted in catena of decisions by this Court.
11. In Laxmi Engineering Works vs. P.S.G Industrial Institute 2 this
Court after discussing the earlier decisions concluded inter alia that
whether the purpose for which a person has bought goods is a
“commercial purpose” within a meaning of definition of expression
“consumer” in Section 2(1)(d) of the Act, is always a question of fact
to be decided in the facts and circumstances of each case.
12. In Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti
Developers and Others 3, this Court culled out broad principles for
determining whether an activity or transaction is for a “commercial
purpose” or not, while holding that though no strait jacket formula
could be adopted in every case.
“19. To summarise from the above discussion, though a
strait jacket formula cannot be adopted in every case, the
following broad principles can be culled out for determining
whether an activity or transaction is “for a commercial
purpose”:
2 [1995] 3 SCR 174 : (1995) 3 SCC 583
3 [2019] 14 SCR 563 : (2020) 2 SCC 265
426 [2024] 7 S.C.R.
Digital Supreme Court Reports
19.1. The question of whether a transaction is for a
commercial purpose would depend upon the facts
and circumstances of each case. However, ordinarily,
“commercial purpose” is understood to include
manufacturing/industrial activity or business-to-business
transactions between commercial entities.
19.2. The purchase of the good or service should have
a close and direct nexus with a profit-generating activity.
19.3. The identity of the person making the purchase
or the value of the transaction is not conclusive to the
question of whether it is for a commercial purpose. It has
to be seen whether the dominant intention or dominant
purpose for the transaction was to facilitate some kind of
profit generation for the purchaser and/or their beneficiary.
19.4. If it is found that the dominant purpose behind
purchasing the good or service was for the personal use
and consumption of the purchaser and/or their beneficiary,
or is otherwise not linked to any commercial activity, the
question of whether such a purchase was for the purpose
of “generating livelihood by means of self-employment”
need not be looked into.”
13. Further in the case of Shrikant G. Mantri vs. Punjab National
Bank 4, this Court observed thus-
“50. It is thus clear, that this Court has held that the
question, as to whether a transaction is for a commercial
purpose would depend upon the facts and circumstances of
each case. However, ordinarily, “commercial purpose”
is understood to include manufacturing/industrial
activity or business-to-business transactions between
commercial entities; that the purchase of the good or
service should have a close and direct nexus with a
profit-generating activity; that the identity of the person
making the purchase or the value of the transaction
is not conclusive for determining the question as to
whether it is for a commercial purpose or not. What
4 [2022] 5 SCR 945 : (2022) 5 SCC 42
[2024] 7 S.C.R. 427
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
is relevant is the dominant intention or dominant
purpose for the transaction and as to whether the
same was to facilitate some kind of profit generation
for the purchaser and/or their beneficiary. It has further
been held that if the dominant purpose behind purchasing
the good or service was for the personal use and the
consumption of the purchaser and/or their beneficiary, or
is otherwise not linked to any commercial activity, then the
question of whether such a purchase was for the purpose
of “generating livelihood by means of self-employment”
need not be looked into.”
14. In the case of National Insurance Company Limited vs. Harsolia
Motors and Others 5, this Court while relying and emphasizing on
the principles laid down in Lilavati Kirtilal Mehta Medical Trust
(supra) noted that what needs to be seen while determining whether
the object purchased is being used for commercial purpose or
not, is whether the dominant intention or dominant purpose for the
transaction was to facilitate some kind of profit generation for the
purchaser and/or their beneficiary. What needs to be determined
is whether the object had a close and direct nexus with the profit
generating activity and whether the dominant intention or dominant
purpose for the transaction was to facilitate some kind of profit
generation for the purchaser and/or their beneficiary.
15. Further in the case Rohit Chaudhary and Another vs. Vipul
Limited 6, it was held as follows –
“15. The expression “commercial purpose” has not been
defined under the Act. In the absence thereof we have
to go by its ordinary meaning. “Commercial” denotes
“pertaining to commerce” (Chamber’s Twentieth Century
Dictionary); it means “connected” with or engaged in
commerce; mercantile; “having profit as the main aim”
(Collin’s English Dictionary); relate to or is connected with
trade and traffic or commerce in general, is occupied with
business and commerce.
5 [2023] 3 SCR 448 : (2023) 8 SCC 362
6 [2023] 14 SCR 394 : (2024) 1 SCC 8
428 [2024] 7 S.C.R.
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16. The Explanation [added by Consumer Protection
(Amendment) Act 50 of 1993 replacing Ordinance 24 of
1993 w.e.f. 18-6-1993] excludes certain purposes from the
purview of the expression “commercial purpose” — a case
of explanation to an exception to amplify this definition
by way of an illustration would certainly clear the clouds
surrounding such interpretation. For instance, a person
who buys a car for his personal use would certainly be a
consumer, but if purchased for plying the car for commercial
purposes, namely, as a taxi, it can be said that it is for a
commercial purpose. However, the Explanation clarifies
that even purchases in certain situations for “commercial
purposes” would not take within its sweep the purchaser
out of the definition of expression “consumer”. In other
words, if the commercial use is by the purchaser himself
for the purpose of earning his livelihood by means of self-
employment, such purchaser of goods would continue to
be a “consumer”.
17. This Court in Lilavati Kirtilal Mehta Medical Trust v.
Unique Shanti Developers [Lilavati Kirtilal Mehta Medical
Trust v. Unique Shanti Developers, (2020) 2 SCC 265 :
(2020) 1 SCC (Civ) 320] , has held that a straitjacket
formula cannot be adopted in every case and the broad
principles which can be curled out for determining
whether an activity or transaction is for a commercial
purpose would depend on facts and circumstances
of each case.
18. Thus, if the dominant purpose of purchasing the goods
or services is for a profit motive and this fact is evident
from the record, such purchaser would not fall within the
four corners of the definition of “consumer”. On the other
hand, if the answer is in the negative, namely, if such
person purchases the goods or services is not for any
commercial purpose and for one’s own use, it cannot
be gainsaid even in such circumstances the transaction
would be for a commercial purpose attributing profit motive
and thereby excluding such person from the definition of
“consumer”.”
[2024] 7 S.C.R. 429
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
16. The sum and substance of the above decisions is that to determine
whether the goods purchased by a person (which would include a
legal entity like a company) were for a commercial purpose or not,
within the definition of a “consumer” as contemplated in Section 2(1)
(d) of the said Act, would depend upon facts and circumstances of
each case. However ordinarily “commercial purpose” is understood
to include manufacturing/industrial activity or business-to-business
transactions between commercial entities. The purchase of the
goods should have a close and direct nexus with a profit generating
activity. It has to be seen whether the dominant intention or dominant
purpose for the transaction was to facilitate some kind of profit
generation for the purchaser and/or their beneficiary. If it is found
that the dominant purpose behind purchasing the goods was for
the personal use and consumption of the purchaser and/or their
beneficiary, or was otherwise not linked to any commercial activity,
the question of whether such a purchase was for the purpose of
“generating livelihood by means of self-employment” need not be
looked into. Again, the said determination cannot be restricted in a
straitjacket formula and it has to be decided on case-to-case basis.
I. CIVIL APPEAL NO. 353 OF 2008
17. So far as the CA No. 353/2008 is concerned, it appears that as
per the case of the respondent no. 1 (original complainant), it had
purchased two cars for the use by its Whole-time Executive Directors
as part of their perquisites and the said high priced luxury cars were
in fact being used by them for their personal use and for the use of
their immediate family members. It was strenuously urged by the
learned senior counsel Ms. Arora for the appellant that if the car in
question was purchased by the respondent no. 1 for the personal
use of its Director, it must carry a requisite form attested by the
Chartered Accountant along with the Income Tax returns of the
concerned Director, and since such document or form having never
been submitted and produced before the Commission, it was required
to be presumed that the car was purchased by the respondent no.
1-company for its commercial purpose. Such a submission could not
be accepted. It is trite to say that when a consumer files a complaint
alleging defects in the goods purchased by him from the opponent
seller, and if the opponent-seller raises an objection with regard to
the maintainability of the consumer complaint on the ground that the
goods in question were purchased by the complainant-buyer for its
430 [2024] 7 S.C.R.
Digital Supreme Court Reports
commercial purpose, the onus to prove that they were purchased for
“commercial purpose” and therefore, such goods would fall outside
the definition of “consumer” contained in Section 2(1)(d) of the
Act, would be on the opponent-seller and not on the complainant-
buyer. In the instant case, it has been specifically asserted by the
respondent-complainant that the car in question was purchased by it
for the personal use of its Whole-time Director and for his immediate
family members, and the dominant purpose of purchasing the car
was to treat it as a part of the perquisite to the Director. There is
nothing on record worth the name to show that the said car was
used for any commercial purpose by the respondent-complainant.
Even if it is presumed that the respondent-complainant company had
taken benefit of deduction available to it under the Income Tax Act,
nonetheless in absence of any material placed on record to suggest
that such purchase of car had a nexus or was linked to any profit
generating activity of the company, it could not be said that such a
high-priced luxurious car was purchased by the respondent no. 1
for its “commercial purpose”.
18. As regards the defects in the car, both the sides have heavily placed
reliance upon the correspondence which took place between them
after the purchase of the car by the respondent no. 1 and after
the defects were detected in the car. The said correspondence
has also been tabulated by National Commission in the impugned
order from which it appears that within a very short time after the
purchase of the car in question on 31.03.2003, one of the directors
of the respondent-company namely Mr. Ashok Khanna had taken the
car out from Delhi for going to Chandigarh and Dehradun in April,
2003 and found that “sitting at the back seat, the center hump on
the floor over the drive shaft of the vehicle was excessively heated
and particularly so on the left side of the center hump”. The said
defect was immediately reported to the appellant and the respondent
no. 2, however after examining the vehicle they had reported that
everything was fine and nothing unusual was observed. Since, the
said complaint of heating persisted, the respondent-complainant
again requested the appellant to rectify the defect. Thereafter, several
correspondences ensued between the parties. It is pertinent to note
that in the letter dated 21.08.2003, it was stated by the appellant
that “although the area (center hump) was observed to be warm,
it is not a defect”. In its letter dated 02.07.2004, the respondent
[2024] 7 S.C.R. 431
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
no. 2 who happened to be the dealer of the appellant required the
complainant-company with regard to the center hump to keep it
under observation over a longer distance and to report the matter
in case of any abnormalities, had confirmed that the AC control unit
was found to be defective. Thereafter, on the respondent-company
having made the complaint of excessive heating on the center hump
more prominently on long drives out of station, the car was once
again inspected by the engineers of the appellant-company, who had
informed the respondent-complainant vide letter dated 03.12.2004
that “on account of the catalytic converter fitted underneath the
car, these cars do heat a lot”, and advised that “the matter could
be resolved by adjusting the rear air-conditioning vents suitably”. It
appears that thereafter repeated requests/complaints having been
made by the respondent-complainant, the respondent no. 2 wrote
vide the letter dated 22.12.2004 that the exhaust pipe of the car
needed replacement. The respondent-complainant again wrote
to the appellant vide the letter dated 23.12.2004 that though they
were offering to replace the exhaust pipe, it was not only the center
portion which was heating up but the entire floor was heating up with
excessive heat and therefore, the vehicle needed to be replaced. The
respondent-complainant ultimately wrote a letter dated 21.03.2005
to the appellant reiterating the persisting problem of hump heating
despite a catena of experiments carried out towards rectification of
the malfunctioning of the car and requested for the replacement of
the vehicle. The said request having been rejected by the appellant
on 30.03.2005, the complaint was filed by the respondent-complainant
before the National Commission.
19. It appears that on the submission made on behalf of the appellant
that it would call the concerned Engineer for examining the vehicle,
the National Commission vide order dated 10.08.2006 directed that
the vehicle would be examined by the Engineer of the appellant in
presence of the respondent No.1 or its representative. Pursuant to
the said order, Mr. Stephen Lobo, Manager Field Service working
at Pune Office of the Appellant, conducted a test drive alongwith
the representative of the respondent – complainant, and submitted
his affidavit to the Commission. However, the temperature recorded
by the said Manager of the Appellant having been disputed by the
respondent - complainant, the National Commission vide the order
dated 25.09.2006 appointed one Joint Registrar and one Deputy
432 [2024] 7 S.C.R.
Digital Supreme Court Reports
Registrar of the Commission as Local Commissioners, further directing
them to travel in the cars in question separately on 07.10.2006 for
more than 300 kms towards Rishikesh side. Accordingly, the Local
Commissioners travelled and submitted their respective reports
before the Commissioner.
20. In view of the order dated 10.08.2006 passed by the National
Commission the test drive was conducted by the engineers of the
appellant in presence of the respondent-complainant on 21.08.2006
and the result of the test drive of the car DL-5CA-0333 was as under:
Chassis No. Time Kms Temp Temp Remark Ambient
Gauge I Gauge II Temp
WDB Provided Provided
201676A by DCIPL by C&S
326003
1 start 11.45 41523 32.5 39 38
2 13.15 41577 19.7 44 36
3 14.35 41632 17.00 51 35.5
4 16.11 41673 19.1 50 34
5 17.22 41723 19.6 53 34.5
6 19.23 41769 19.4 49 36.5
7 20.18 41823 17.4 48 35
21. Again, the National Commission having passed the order on
25.09.2006, appointing the Local Commissioners for measuring the
temperature of the hump of the car, in presence of representatives
of both the parties, the Local Commissioners had travelled on
07.10.2006 in the car in question for more than 300 kms. towards
Rishikesh side, and submitted the report regarding the temperature
of the running car at a distance of every 50 kms. as under:
S. No. Time Km. Temp. gauge Temp. gauge Ambient
1 of DCIPL 2 of C & S (Degree)
(Degree) (Degree)
1. 8.30 AM 43649 33.2 39 25.5
2. 9.45 AM 43699 38.6 46 30.5
3. 10.45 AM 43749 38.6 47 32
4. 11.05 AM 43759 39.5 47 34
5. 12.40 PM 43799 38.6 46 32
[2024] 7 S.C.R. 433
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
6. 1.55 PM 43850 37.3 47 32
Return Journey
7. 4.00 PM 43866 35.7 39 35
8. 5.00 PM 43899 37.3 47 33
9. 6.00 PM 43950 38.1 46 29
10. 7.50 PM 44000 38.1 45 29.5
11. 9.00 PM 44050 37 44 30
12. 10.00 PM 44083 38.2 46 29.5
The Local Commissioner in his report dated 09.10.2006, had
made following note with regard to the car in question: -
"1. The sensor gauge fixed by the opposite party was 1
mm above while the sensor gauge provided by the
complainant was fixed on the mat. The same can be
seen with the help of photographs taken by the parties.
2. While traveling in the car the temperature recorded by
the sensor gauges generally showing the increasing
tendency.
3. There is a variation of 5 - 9 degree temperature
between the temperatures noted down from the two
sensor gauges provided by the parties.
4. On perusing the temperature chart, it is found that
the temperature recorded by both the sensor gauges
is higher than ambient temperature throughout the
journey.”
22. It is further pertinent to note that pending the said proceedings before
the National Commission, the appellant had made two applications,
one on 12.10.2006 seeking permission to make one more effort
by providing additional insulation to address the concerns of the
complainant in regard to the high temperature at the left hand side
of the hump felt by it, and the other application seeking prayer to
permit to test the complainant’s car by an appropriate laboratory, or
in the alternative to dispose of the matter with direction to provide
an additional insulation to the hump of the cars being used by the
complainant or in the alternative to hold that the used car be resold
by the complainant to the appellant (opponent no. 1) for present
market value/book value. The respondent-complainant having not
434 [2024] 7 S.C.R.
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agreed to the said proposals made in the said applications, the
National Commission vide the order dated 06.02.2007 had rejected
the said applications.
23. From the afore-discussed documents/applications produced on
record before the National Commission, it was clearly established by
the respondent-complainant that an excessive heat was generated
in the car, and particularly, the center hump on the floor over the
drive shaft was felt excessively heated as also the left side of the
center hump. As rightly submitted by the learned counsel for the
respondent-complainant, after continuous trial and error method of
rectification conducted to remove the defect of overheating, since the
said complaint persisted, the appellant had moved the applications
seeking permission of the Commission to make one more effort by
providing additional insulation, and also for permitting the appellant
to repurchase the car in question for the market value/book value
as it existed at the relevant time in 2007. The market value of the
car in question as on 25.11.2006 was stated to be Rs. 34 lakhs, and
the book value thereof as on 31.12.2006 was stated to be about Rs.
36 lakhs. The appellant though not admitted specifically about the
said defects in the car, had indirectly stated in the said application
seeking permission to provide additional insulation to the effect that
the warm surface of hump/tunnel was a natural physical characteristic
of the car and hence could not be altered to a large extent and that
the additional insulation could be fitted by a minor modification. The
said statements in the said applications read with the other materials/
documents on record as also the reports of the Local Commissioner
appointed by the National Commission, has led us to come to an
irresistible conclusion that the inherent defect of overheating of the
car in question had persisted despite the appellant having provided
the rectification measures like providing additional insulation in the
car, which had caused great inconvenience and discomfort to the
passengers seated in the car in question. The advice given by the
technical expert of the appellants that the overheated portions of the
rear cabin of the car should be cooled by directing the draft from
the air-conditioning vents towards the said portion, was not only an
illogical advice but was an absolute improper advice given to conceal
the defect in the car.
24. Considering the affidavits, correspondences, reports and the other
material on record, we have no hesitation in holding that such
[2024] 7 S.C.R. 435
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
overheating of the surface of hump and the overall high temperature
in the car was a fault, imperfection or shortcoming in the quality or
standard which was expected to be maintained by the appellants
under the contract with the respondent-complainant and therefore
was a ‘defect’ within the meaning of Section 2(1)(f) of the said Act.
25. People do not purchase the high-end luxurious cars to suffer
discomfort more particularly when they buy the vehicle keeping
utmost faith in the supplier who would make the representations
in the brochures or the advertisements projecting and promoting
such cars as the finest and safest automobile in the world. The
respondent-complainant having suffered great inconvenience,
discomfort and also the waste of time and energy in pursuing the
litigations, we are of the opinion that the impugned order passed by
the National Commission of awarding the compensation by directing
the appellants to refund the purchase price i.e., Rs. 58 lakhs approx.
to the respondent-complainant, and take back the car (vehicle) as
such does not warrant any interference. However, at this juncture, it
may be noted that the impugned order was passed on 17.09.2007
and before that pending the proceedings, the appellant had already
made an offer in the year 2006 to repurchase the car in question
as per the market value of the car as of November 2006 to be Rs.
34 lakhs or at the book value of the car as of December 2006 to
be about Rs. 36 lakhs, however the respondent had not agreed
to the said proposal, and continued to use the said car for about
seventeen years till this date. Therefore, having regard to the said
offer made by the appellants, and having regard to the subsequent
event of the respondent-complainant having retained and used the
car in question for about seventeen years, we are of the opinion
that the interest of justice and balance of equity would be met if the
respondent-complainant is permitted to retain the car in question and
the appellant is directed to refund Rs. 36 lakhs instead of Rs. 58
lakhs as directed by the National Commission in the impugned order.
II. CIVIL APPEAL NOS. 19536-19537/2017 AND 2633/2018
26. So far as C.A. No. 19536-19537/2017 filed by the appellants -
Mercedes Benz India Private Ltd. and another (Original Opponents)
and the cross Appeal being C.A. No.2633 of 2018 filed by M/s C.G.
Power and Industrial Solutions Ltd., (Original Complainant No.1)
arising out of Consumer Complaint No. 51/2006 are concerned, as
436 [2024] 7 S.C.R.
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stated hereinabove, after the challenge of the order dated 08.07.2016
passed by the National Commission in the said case, before this Court
by way of filing C.A. No.10410/2016, this Court had disposed of the
said Appeal by directing the National Commission to adjudicate the
dispute between the parties finally, leaving it open for the appellant
Mercedes Benz to challenge the order on maintainability as well as
the final order. Accordingly, the final order having been passed by the
Commission, the appellant has challenged the order dated 08.07.2016
as well as the final order dated 11.09.2017 by way of instant appeals,
and the cross appeal has been filed by the respondent-complainant
against the order dated 11.09.2017.
27. In the instant case, the respondent nos. 1 and 2 (Original Complainants)
had filed the complaint being Consumer Complaint No. 51/2006 before
the National Commission, alleging inter alia that in October 2002, the
appellants (original opponents) had launched a new Mercedes Benz,
E-Class - E 240 petrol version (hereinafter referred to as the car in
question). At the time of launch of e-class model, the appellants had
proclaimed and elaborated safety system of e-class inter alia that it
included front airbags, side airbags, and window airbags, automatic
child seat recognition and central locking with crash sensors, and
that it was the safest place on the road etc. The correct operation of
the airbags was also guaranteed by the appellants. Based on such
representations and especially of the safety features, the respondent
no. 1 on 27.11.2002 had purchased the car in question bearing
registration No. MH-01-GA-6245 from the appellants for its Managing
Director-respondent No. 2 for a total consideration of Rs.45,38,123/-.
28. It was further alleged in the complaint by the respondents that on
an official trip on 17.01.2006 at 06:20 A.M, the respondent No.2 was
returning from Nasik to Mumbai. At that time, the car in question was
being driven by the company driver Mr. Madhukar Ganpat Shinde,
while the respondent no. 2 was seated in the back seat of the car. On
Nasik express, NH-3, a goods carrier coming from the opposite side,
collided head-on with the car, and the impact of the collision was so
high that the entire front portion of the car was smashed, however
none of the airbags opened. As a result, thereof, the driver suffered
the injuries on his neck, arms and forehead, whereas the respondent
no. 2 suffered grievous injuries on his face, a deep gash on the
forehead fracture at the nasal bone and nasal septum, fracture of the
C1 vertebra at the anterior and posterior arches and fracture of C2
[2024] 7 S.C.R. 437
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
vertebra. The respondent no. 2 had to be hospitalized for more than
six weeks and even after the discharge he was advised strict bedrest
at home. It took very long time for him to recover and resume the
work. According to the respondents-complainants, if the airbags had
opened at the right time, as represented by the appellants-opponents,
the respondent no. 2 might have suffered less or no injuries. The
complainants had also filed an FIR with the police station at Nasik
on 17.01.2006. On 20.01.2006, the car was taken by the respondent
No. 3 being authorized service centre and a detailed inspection and
assessment of cost for the repairs was made. It was also alleged
that in number of cases the airbags had failed to deploy at the time
of accidents and people had suffered grievous injuries or had died
also. Due to the said accident, not only that respondent no.2 had
suffered grave injuries, agony and mental trauma, his family members
and the respondent-company itself, had suffered lot of inconvenience
and financial loss. It appears that lot of correspondence had ensued
between the parties, and ultimately the respondents-complainants had
filed the complaint seeking compensation under the various heads.
29. On the maintainability of the complaint, though the learned Senior
Advocate Mr. Dhruv Mehta had strenuously urged that the purchase
of the car by the respondent no. 1 company for the use of the
respondent no.2 i.e., its director would tantamount to purchase for
commercial purpose, the said submission cannot be accepted in
view of the elaborate discussion and reasonings recorded by us
hereinbefore while dealing with the issue in C.A. No. 353/2008. In this
case also the appellants had failed to bring on record any material
to show that the dominant purpose or dominant use of the car in
question was for commercial purpose or that the purchase of the
car had any nexus or was linked with any profit generating activity
of the respondent no. 1 company. We therefore confirm the finding
recorded by the three-member Bench of the National Commission
in the order dated 08.07.2016 on the maintainability of the complaint
filed by the respondent-complainant company.
30. On the merits of the claim made by the respondents – complainants,
it was sought to be submitted by Learned Senior Advocate Mr. Dhruv
Mehta for the appellants-original opponents that the complainants did
not lead any expert evidence or any other evidence to establish that
there was any defect in the front airbags of the car in question and
in absence of any such evidence, the National Commission could
438 [2024] 7 S.C.R.
Digital Supreme Court Reports
not have concluded that the front airbags of the car were defective.
According to him, the Commission had committed gross error in
discarding the report of the expert produced by the appellants,
who had stated as to why deployment of the driver’s airbag was
not required in this case. According to him, since, the driver was
sufficiently restrained by the seat belt, there was no need for the
front airbag to deploy at the time of accident and the front passenger
airbag would be triggered only if the front passenger seat was
occupied, whereas in the instant case, the complainant no. 2 was
sitting at the rear left seat and therefore the front passenger’s airbag
could not have deployed. In any case, runs the submission of Mr.
Mehta, the complainants had already sold out the car during the
pendency of the proceedings before the National Commission and
thereby had created a situation where the Commission could not
have inspected the car in question. He further submitted that there
was no “unfair trade practice” practiced by the appellants and the
damages/compensation awarded by the Commission was without
any legal basis.
31. The Senior Learned Advocate Mr. Prashanto Chandra Sen appearing
on behalf of the respondents-complainants however vehemently
submitted that admittedly neither the front airbags nor the side airbags
of the car deployed as a result of the accident. The appellants had
not produced on record the owner’s manual and the features of the
airbags given in the owner’s manual on record produced by the
complainants did not disclose as to what was the pre-determined level
at which the airbags would deploy. According to him, the appellants
had misrepresented that their car was the safest place on the road
and that the provision of airbags was an additional safety measure
not only for the front passengers but also for the rear passengers.
According to him, since the owner’s manual did not contain accurate
and complete information as regards the safety measure of airbags,
and the appellants having misrepresented about the safety measures
at the time of the promotion of the car, it was rightly construed as an
“unfair trade practice” on the part of the appellants by the Commission,
however, the Commission had committed an error in not awarding
exemplary damages to the respondents-complainants.
32. In the instant case, there are certain undisputed facts as transpiring
from the record, like that the purchase of the car was by the respondent
no.1 for the respondent no. 2 its Managing Director. The occurrence
[2024] 7 S.C.R. 439
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
of the accident on 17.01.2006 is not disputed. It is also not disputed
that at the time of accident, the driver of the car was wearing the
seat belt, whereas the respondent No. 2 who was sitting on the rear
left side seat did not wear the seat belt. It is also not disputed that
neither the airbags on the front side nor the airbags on the side
of the respondent no. 2 had opened at the time of accident, as a
result thereof, the respondent no. 2 sustained grievous injuries, and
the driver sustained some minor injuries. It is also not disputed that
neither the respondents nor the appellants had produced on record
the owner’s manual of 2002 i.e. the year when the car in question
was purchased by the respondents, though it was specifically directed
by the Commission to produce the same by passing the order on
24.08.2017. Though subsequently, the complainant had produced
on record one owner’s manual, the same did not appear to be of
the relevant year by the Commission. The appellants-opponents
had produced on record certain photographs as also the reports of
technical experts of the appellants.
33. The National Commission after considering the material on record
disposed of the complaint of the respondents - complainants directing
the appellants to pay a sum of Rs. 5 lakhs to the complainant no.
1 for the deficiency in the services rendered to it on account of the
airbags of the car having not deployed/ triggered and further directed
the appellants to pay a sum of Rs. 5 lakhs as compensation to the
complainant no. 1 for the unfair trade practice indulged into by them,
and a sum of Rs.25,000/- as cost of litigation.
34. The National Commission after elaborately considering the Owner’s
Manual produced by the complainants, as the appellants - opponents
had failed to produce the owner’s manual of the relevant year 2002
when the car was purchased by the complainants and the other
material on record, observed in Para no. 9 and 10 of the impugned
judgment dated 11th September, 2017 as under: -
“9. It is evident from a perusal of the above referred extract
from the Manual that the side airbags are triggered only
on the side on which an impact occurs in an accident and
that the said airbags are independent of the front airbags.
Since, admittedly, there was no impact on the side of the
car in which complainant no.2 was sitting at the time of
the accident, the side airbag would obviously not have
triggered. Even otherwise the airbags on the side will not
440 [2024] 7 S.C.R.
Digital Supreme Court Reports
trigger in the event of frontal accident unless the airbags
system is such as to trigger every airbag irrespective of the
side on which the impact occurs in an accident. Similarly,
window bags which are independent of the front airbags
also trigger on the side on which the impact occurs.
Therefore, the window airbags would not have triggered
in this case since there was no impact on the sides on
which the window bags were provided in the vehicle.
10. As far as the front airbags are concerned, it is stated
in the Manual that they are triggered if (i) a front-end
impact occurs (ii) if collision happens at a force exceeding
a ‘predetermined level.’ The Manual however, does not
disclose as to what the said predetermined level was.
If the front airbags were not to deploy in every accident
resulting in front end impact, the opposite parties, in my
view, ought to have disclosed to the buyers as to what
the predetermined level necessary to trigger the front
passenger airbag were. In the absence of such a disclosure
in the Owner’s Manual, as far as the functioning of the
front passenger airbags are concerned would be deficient,
on account of its not providing the requisite information
to the buyer.
Section 2(1)(r) of the Consumer Protection Act, 1986 to
the extent it is relevant provides that unfair trade practice
means a trade practice which for the purpose of promoting
the sale, use or supply of any goods adopts any unfair
method or unfair or deceptive practice including that the
goods are of a particular standard and quality. It is alleged
in the complaint that the opposite parties at the time of
launching E-Class Model highlighted its safety system,
including airbags while proclaiming the vehicle to be the
safest place on the road. Obviously, the opposite parties
were seeking to encash upon the safety features of the
vehicle, including the airbags provided therein, for the
purpose of selling the vehicle. Therefore, it would be
necessary for them to disclose to the buyers as to what
the predetermined levels, necessary for triggering the
front airbags of the vehicle were. Highlighting the safety
features including the airbags for selling the vehicle, without
[2024] 7 S.C.R. 441
M/s Daimler Chrysler India Pvt. Ltd. v.
M/s Controls & Switchgear Company Ltd. & Anr.
such a disclosure, in my opinion, constituted an unfair and
deceptive trade practice. It is only the opposite parties
which knew what would be the level which would trigger
the frontal airbags in the event of an accident. Therefore,
the aforesaid material information ought not to have been
withheld while selling the vehicle. The opposite parties
therefore, indulged in unfair trade practice or the purpose
or promoting the sale of their vehicle.”
35. The National Commission also considered the report of Mr. Lothar
Ralf Schusdzarra, the Technical Expert and Senior Engineer working
with the Appellant Company who had inspected the car after the
accident, and the photographs forming part of the report of the
technical expert, and observed that the vehicle that is the car in
question, had frontal accidental with another vehicle stated to be a
container truck which had a higher chassis, and that the front portion
of the car was badly damaged as a result of the said accident. The
said photographs also corroborated with the depositions of the
driver Mr. Madhukar Shinde and the respondent-complainant no.
2 Mr. Mohan Trehan which established that the front portion of the
vehicle was smashed when it was hit by the truck and the collision
of car with the truck was quite impactful.
36. There was nothing on record produced by the appellants to show that
they had disclosed either in the Owner’s Manual or in the Brochure
about the limited functioning of the airbags, which according to them
was an additional safety measure in the car. On the contrary, as
per the case of the respondents-complainants a misrepresentation
was made by the appellants at the time of promotion of the car in
question that e-class car had a safety system which included front
airbags, side-airbags and window airbags. Even if it is accepted that
the airbags would deploy only when the seat belt was fastened by
the passenger, in the instant case admittedly, the frontal airbags of
the car were not deployed though the driver had already fastened
the seat belt. Thus, the defect in the car was clearly established so
far as non-deployment of frontal airbags was concerned.
37. Incomplete disclosure or non-disclosure of the complete details with
regard to the functioning of the airbags at the time of promotion of
the car, has rightly been considered by the National Commission as
the “unfair trade practice” on the part of the appellants, and awarded
442 [2024] 7 S.C.R.
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a sum of Rs. 5 lakhs towards it. The National Commission has also
rightly balanced the equity by awarding Rs. 5 lakhs only towards
the deficiency in service on account of the frontal airbags of the car
having not deployed at the time of accident.
38. Since the National Commission has considered in detail the evidence
and the material on record adduced by the both the parties, in
our opinion the well-considered judgment dated 11th September
2017 passed by the National Commission does not warrant any
interference.
39. It is needless to say that a trade practice which for the purpose of
promoting the sale of any goods by adopting deceptive practice
like falsely representing that the goods are of a particular standard,
quality, style or model, would amount to “unfair trade practice” within
the meaning of Section 2(1)(r) of the said Act.
40. In that view of the matter, following order is passed: -
I. C.A. No. 353/2008
The respondent-complainant is permitted to retain the car bearing
registration no. DL-9CV-5555. The appellant is directed to refund
Rs. 36,00,000/- (Rupees thirty-six lakhs) to the respondent by way
of compensation within three months from the date of this order,
failing which the appellant shall pay interest at the rate of 9% per
annum thereon from the date of this order till payment. The Appeal
stands partly allowed.
II. C.A. No. 19536 & 19537/2017 and C.A. No. 2633/2018
All the three Appeals are dismissed.
Result of the case: C.A. No. 353/2008 partly allowed.
C.A. No. 19536 and 19537/2017
and C.A. No. 2633/2018 dismissed.
†
Headnotes prepared by: Nidhi Jain
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