The Supreme Court ordered Mercedes to refund Rs. 36 lakh for selling a defective car. The buyer reported that one of the two cars purchased had a central floor hump over the drive shaft that overheated. This defect led to the legal dispute. The court ruled in favour of the purchaser, mandating the refund.
New Delhi: The Supreme Court ruled in favour of the respondent, M/s Controls and Switchgear Company Limited, directing Mercedes Benz India Private Limited to refund Rs. 36 lakh.
The respondent-company argued that one of the two cars purchased from Mercedes suffered from an inherent defect, where the central hump on the floor over the drive shaft experienced excessive overheating, despite multiple attempts by Mercedes to rectify the issue.
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The Division Bench of Justices Bela M Trivedi and Pankaj Mithal agreed with the respondent’s contention, stating that such overheating constituted a fault, imperfection, or shortcoming in the quality or standard that expected to be maintained by Mercedes under the contract with the respondent-company.
The Supreme Court stated,
“People do not purchase high-end luxury cars to experience discomfort, especially when they buy such vehicles with the utmost faith in the supplier, who promotes these cars as the finest and safest in the world through brochures and advertisements,”
Acknowledging the respondent’s discomfort and the waste of time and energy, the Court upheld the decision of the National Consumer Disputes Redressal Commission (NCDRC), which held Mercedes liable to refund the purchase price and take back the defective car.
The Court stated,
“The respondent-complainant has endured significant inconvenience, discomfort, and the waste of time and energy in pursuing litigation. Therefore, we believe that the National Commission’s order to award compensation by directing the appellants to refund the purchase price of approximately ₹58 lakhs and take back the vehicle does not warrant interference,”
However, taking into account that the car purchased in 2006 and has been retained and used by the company for about seventeen years, the Court, in the interest of justice, directed Mercedes to refund Rs. 36 lakh (the original purchase price) instead of Rs. 58 lakh as ordered by the NCDRC. It also allowed the respondent to keep the car.
During the hearing, Mercedes contended that the respondent company did not qualify as a ‘consumer’ under Section 2(1)(d) of the Consumer Protection Act, 2019 (CPA). Consequently, Mercedes argued that it should not be held liable for any payments, as the defects cited by the respondent would not fall under Section 2(1)(f) of the CPA.
To bolster this argument, Mercedes claimed that the company’s purchase of the car for the personal use of its directors should be interpreted as a purchase for ‘commercial purposes.’ Therefore, the company would not meet the definition of ‘consumer‘ under the CPA.
The Court observed that it was incumbent upon Mercedes to demonstrate that the respondent company had bought the car for ‘commercial purposes.‘ However, the Court found that Mercedes had not provided any evidence to substantiate its claim.
The Court noted,
“Even if it is assumed that the respondent-complainant company benefited from deductions under the Income Tax Act, no evidence presented to indicate that the car purchase connected to any profit-generating activities of the company. Thus, it could not be concluded that the respondent had bought the high-priced luxury car for commercial purposes,”
Therefore, the Court held that the respondent company qualified as a ‘consumer‘ under the CPA.
Additionally, the Court ruled that the excessive overheating of the car’s surface hump constituted a ‘defect‘ under Section 2(1)(f) of the CPA, making Mercedes liable under the Act.
The Court stated, dismissing Mercedes’ appeal against the NCDRC order,
“We have no hesitation in holding that such overheating of the surface of the hump and the overall high temperature in the car was a fault, imperfection, or shortcoming in the quality or standard 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,”
Senior Advocate Meenakshi Arora, along with advocates Sidharth Sethi, Avinash Das, PS Sudheer, Prasouk Jain, Rabiya Thakur, Saurabh Mishra, Karan Sinha, Shalini Nair, Komal Gupta, and Vivek Jain, represented the appellant.
Advocates Arun Khosla, MA Chinnasamy, C Raghavendren, C Rubavathi, Ch. Leela Sarveswar, Saurabh Gupta, Sidharth Sethi, Avinash Das, and PS Sudheer represented the respondents.
Read Judgment: [M/S Daimler Chrysler India Private Limited v. M/S Controls and Switchgear Company Limited and Another].