SUPREME COURT HOLDS THAT DELIVERY OF A DEFECTIVE CAR IN PLACE OF A NEW CAR IS DISHONEST, UNETHICAL AND AMOUNTS TO UNFAIR TRADE PRACTICE

A two Judge Bench of the Hon’ble Supreme Court of India comprising of Justice M.R. Shah and Justice Krishna Murari passed a Judgment dated 08.09.2022 in the case of Rajiv Shukla  v. Gold Rush Sales and Services Ltd. & Anr. [Civil Appeal No. 5928 of 2022] and held that delivering a used and a defective car against a booking for a new car amounts to unfair trade practice and is dishonest and unethical.

In the present case, the original Complainant herein (Appellant in the Hon’ble Supreme Court) purchased a Tata Victa GX TC Car (Vehicle). The booking amount was deposited with the dealer M/s. Gold Rush Sales and Services Ltd. (Respondent No.1) and a receipt was issued to the Complainant / Appellant. Thereafter, the Complainant/Appellant also deposited a sum of Rs. 5,30,000/­ towards purchase amount of the said Vehicle. However, the booked Vehicle was not delivered to the Complainant/Appellant till 26.05.2006. The delivery of the car was given to the Complainant/Appellant after a period of one year of deposit of the total amount, which as such was an old one, was of 2005 model and was a second hand car. It also had various other defects. The vehicle had already been run for 10,000 km and before the delivery to the Complainant/Appellant was being used as by the dealer as ‘Demo­-Test Drive Vehicle’.

The Complainant/Appellant lodged an F.I.R. with the Police. However, the matter could not be settled and therefore, the Complainant/Appellant filed a complaint before the District Forum. The said Complaint was allowed by the District Forum and the Respondent No. 1 was directed to take back the delivered Vehicle and in lieu thereof to deliver a new car to the Complainant/Appellant against the previously deposited amount. The District Forum also awarded a sum of Rs. 5,000/- towards mental agony besides a sum of Rs.2500/­- towards litigation costs. The District Forum specifically gave a finding that the delivered car was used car and was being used as ‘Demo Test Drive Vehicle’.

The State Consumer Disputes Redressal Commission (SCDRC/State Commission) upheld the order passed by the District Forum. However, the National Consumer Disputes Redressal Commission (NCDRC/National Commission) in the Revision Petition No.2082   of   2015 that was filed against the order of District Forum and SCDRC, set aside the findings of facts of both the Forums that the car delivered was a used car, vide Impugned Judgment and Order dated 04.01.2016.

However, on the ground that the Complainant/Appellant had received a defective car, the NCDRC modified the orders passed by the District Forum and SCDRC and directed that the Complainant / Appellant should be paid compensation of Rs.1 lakh.

The Complainant/Appellant challenged the Impugned Judgment and Order dated 04.01.2016 before the Hon’ble Supreme Court.

The Apex Court after taking into consideration the facts and contentions raised by the Parties to the dispute, observed that the District Forum and the State Commission were absolutely justified in directing the Respondent No.1 to replace the delivered car and to deliver a new car as the Complainant/Appellant had paid the total sale consideration of a new car and the dealer was supposed to and bound to deliver the new car. The delivery of a defective car was also not permissible. The Supreme Court held that:

“Not to deliver the new car despite the full sale consideration paid and/or to deliver the defective car can be said to be unfair trade practice.”

“At this stage it is required to be noted that on appreciation of evidence on record the District Forum as well as the State Commission concurrently found that the car delivered was used car. Such findings of facts recorded by the District Forum and the State Commission were not required to be interfered by the National Commission in exercise of the revisional jurisdiction.”

The Apex Court also held that the NCDRC is vested with the powers of Revision under Section 21 of the Consumer Protection Act, 1986 (Act).

Section 21of the Act is reproduced below for easy reference:

21. Jurisdiction of the National Commission.—Subject to the other provisions of this Act, the National Commission shall have jurisdiction—

(a) to entertain—

(i) complaints where the value of the goods or services and compensation, if any, claimed exceeds [rupees one crore]; and

(ii) appeals against the orders of any State Commission; and

(b) to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any State Commission where it appears to the National Commission that such State Commission has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity.

 

Section 21(b) stipulates that the NCDRC shall have the jurisdiction to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by the any State Commission where it appears to the National Commission that such State Commission has exercised its jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity.

The Bench observed that:

“7.1…..In   exercising   of revisional   jurisdiction   the   National   Commission   has   no jurisdiction to interfere with the concurrent findings recorded by the District Forum and the State Commission which are on appreciation of evidence on record.   Therefore, while passing the impugned judgment and order the National Commission has   acted   beyond   the   scope   and   ambit   of   the   revisional jurisdiction conferred under Section 21(b) of the Consumer Protection Act….”

Thus, while allowing the Appeal, the Apex Court set aside the Impugned Judgment and Order dated 04.01.2016 passed by the NCDRC and held that non delivery of a new car can be said to be an unfair trade practice and it shows dishonesty on the part of the dealer which is against morality and ethics.

Accordingly, the Respondent No.1 was directed to deposit Rs 1 Lakh within a period of six weeks from the date of the Judgment with the Registry of the Court. On such deposit   Rs.50,000/­ shall be paid to the Appellant   herein   towards  the   costs/litigation   cost   etc.   and Rs.50,000/­ to be transferred to the Mediation and Conciliation Project Committee, Supreme Court   of   India, New Delhi.

Editor’s Comments:

The Apex Court coming to the rescue of the Appellant clearly establishes the importance of consumer rights. Though consumer courts have a summary trial, they have by and large been able to render expeditious justice to the consumer. Possibly, higher costs and compensation amounts would go a long way to deter the seller or service provider from cheating the consumer.

 

Suchitra Upadhyay

Associate

The Indian Lawyer & Allied Services

 

Edited by

Sushila Ram Varma

Chief Consultant

The Indian Lawyer & Allied Services