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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 8072-8073 OF 2009

GENERAL MOTORS (INDIA) PRIVATE LIMITED ..... APPELLANT

VERSUS

ASHOK RAMNIK LAL TOLAT & ANR. ..... RESPONDENTS

J U D G M E N T

ADARSH KUMAR GOEL, J.

1.These appeals have been preferred against the order

dated 16

th

December, 2008 of the National Consumer Disputes

Redressal Commission (for short “the National Commission”) in

Revision Petition Nos.3349 of 2006 and 2858 of 2008.

2.The main question raised in these appeals is whether in the

absence of any prayer made in the complaint and without

evidence of any loss suffered, the award of punitive damages

was permissible. Apart from the said main question, the

appellant has also called in question the refund ordered and

other relief granted in favour of the respondent-complainant.

3.In the complaint, filed before the District Forum,

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Ahmedabad (Rural) (for short “the District Forum”), the prayer of

the respondent-complainant was as follows :

“The complainant, therefore, most respectfully

prays :

(a) That this Hon’ble Forum be pleased to

hold that the opposite parties (joint and

severally) to have practiced unfair trade

practice, towards the complainant and

direct them (jointly and severally) to

remove unfair trade practice, practiced by

them against the complainant;

(b)This Hon’ble Forum be pleased to direct the

opposite parties (jointly and severally) to

remove the deficiencies in their services

and negligence towards the complainant.

(c) This Hon’ble Forum be pleased to direct

the opposite parties (jointly and severally)

to refund the complainant a sum of

Rs.14,00,000/- (Rupees Fourteen Lakh) and

Rs.1,91,295/- to the complainant along with

the 18% interest, from the date of payment

to the complainant and the Hon’ble Forum

be pleased to direct the opposite parties to

forthwith to take back the said vehicle from

the complainant, after refunding the

complainant’s money with interest, as

prayed;

(d)This Hon’ble Forum be pleased to direct the

opposite parties (jointly and severally) to

pay compensation for physical and mental

pain, shock, suffering, agonies, hardships,

inconveniences and expenses suffered by

the complainant, to the tune of Rs.50,000/-

(Rupees Fifty Thousand) or as thought fit in

the interest of justice, by this Hon’ble

Forum;

(e) The Hon’ble Forum be pleased to direct

the opposite parties (jointly and serverally)

to pay Rs.25,000/- to the complainant, as

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cost of this complaint.”

4.The case of the complainant is that he had passion for

driving and dream to visit Leh Ladakh, Jammu & Kashmir and

Nepal by driving a motor car. By surfing the internet, he read

advertisement given by the appellant as follows :

“Introducing a world without borders, an SUV to

end all SUVs. That’s the new Chevrolet Forester.

With the Power of 120 horses under its borne

unique All-Wheels (AWD), it literally puts the four

corners of the earth within your easy reach. It

won’t just get you there. But get you there. But

get you there in unmatched comfort and luxury

by-road, off-road or no-road.”

5.Relying upon the same, he visited the agents of the

appellant and was given a book titled “for a special journey

called life”. He was assured that the vehicle offered for sale

will realise his dream. The brochure also assured that “the

vehicle in question is an SUV to end all SUVs. And

…………… it will put the four corners of the earth within

your each and ……….. it won’t just get you their every

time. But get you’re there in unmatched comfort, by

road, off-road or no road”. He was also shown visual

presentation of the vehicle and was also given a copy of the

VCD. Accordingly, he purchased the vehicle on 1

st

May, 2004 for

Rs.14 Lakhs and got accessories worth Rs.1,91,295/- fitted and

also got the vehicle insured and registered.

6.Thereafter he realised that the vehicle was not fit for “off-

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road, no road and dirt road” driving as represented and had

defects. Accordingly, he approached the appellant and its

dealers who referred to the owner’s manual at pages 8-6 column

1 & 3 printed by the Company to the effect :

“off-road driving ………… But please keep in

mind that AWD Chevrolet is a passenger car and

is neither a conventional off-road vehicle nor an

all terrain vehicle …….. If the driving through

water such as when crossing shallow streams,

first check the depth of the water and the water

stream bed for firmness and ensure that the bed

of stream is flat ………… the water should be

shallow enough that it does not reach under

carriage.”

Thus he found that the owner’s manual was contrary to the

assurance in the brochure, internet and the book titled “for a

special journey called life”. He also realised that the vehicle

was not SUV but a mere passenger car, not fit for “off-road, no

road and dirt road” driving. He could not realise his dream to

drive it to Leh Ladakh, Jammu & Kashmir and Nepal. The action

of the appellant was thus, “unfair trade practice”. He sought

permission to remove “unfair trade practice” and deficiencies

in service and also to refund a sum of Rs.14 Lakhs the price of

the vehicle and Rs.1,91,295/- the price of accessories with 18%

interest from the date of purchase till the date of payment and

also to pay compensation for physical and mental pain shock,

suffering, agonies, hardships, inconvenience and expenses

suffered by the complainant, to the tune of Rs.50,000/- or as

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thought fit in the interest of justice and the costs. The District

Forum directed refund of Rs.14 Lakhs plus Rs.1,91,295/- towards

cost of accessories with interest @ 9% per annum from the date

of complaint to the date of payment subject to the return of the

vehicle, apart from compensation of Rs.5,000/- for mental agony

and Rs.2,000/- as costs of litigation.

7.The said order of the District Forum was challenged by the

appellant before the Consumer Disputes Redressal Commission,

Gujarat State, Ahmedabad (for short “the State Commission”).

The State Commission held that the vehicle had no mechanical

or manufacturing defect but the advertisement that car was SUV

amounted to “unfair trade practice”. Accordingly, in

substitution of the order of the District Forum, the complainant

was held entitled to Rs.50,000/- as compensation which

included costs of litigation. But at the same time, the

complainant was required to pay Rs.5,000/- towards costs for

undeserving claim. The appellant was directed not to describe

the vehicle in question as SUV in any form of advertisement,

website, literature etc. and to make the correction that it is a

passenger car as mentioned in the manual.

8.Accordingly, the appellant complied with the said direction

by issuing a disclaimer.

9.The respondent preferred a revision petition against the

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Order of the State Commission while the appellant filed a cross

revision petition.

10.The National Commission held that the appellant could not

be allowed to contest the finding of committing “unfair trade

practice” in view of its conduct in voluntarily complying with

the order of the State Commission and filing cross revision

without any justification and belatedly. Referring to the material

on record, particularly, the undisputed correspondence, the said

finding was also affirmed on merits. After referring to the

definition of “unfair trade practice” under Section 2(1) (r) of

the Consumer Protection Act, 1986 (for short “the Act”), it was

concluded :

“Keeping in view the above definition of unfair

trade practice and the material obtaining on

record more particularly the representations

made and held out by the respondent in their

brochures relating to the vehicle in question, the

owner’s manual as also the clarification rendered

by the manufacturer of the vehicle, there can be

hardly any doubt that the motor vehicle

Chevrolet forester AWD model was not a vehicle

of the said description in as much as it was not a

SUV vehicle. Therefore, the petitioner must have

been misled on that score to believe that the

vehicle offered for sale was a SUV. This act of

the respondent would clearly fall within the

mischief of unfair trade practice as envisaged in

section 2(r) (supra). We therefore, affirm the

findings of the State Commission in this behalf.”

11.After recording the above finding the National Commission

proceeded to consider the relief to be given. It was held that

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the State Commission was not justified in reversing the direction

of the District Forum once the commission of “ unfair trade

practice” was established, even as per finding of the State

Commission. Accordingly, the National Commission restored the

relief given by the District Forum with slight modification as

follows :

“Once it is found that respondent has indulged in

unfair trade practice which had misled the

petitioner to purchase the vehicle in question, in

our view, the most appropriate relief to the

petitioner would be to reinstate the petitioner to

his original position before the purchase of the

vehicle viz., refund of the price of the vehicle

along with some compensation in that behalf.

Keeping in view that the vehicle was used by the

petitioner for a period of about one year and it

has run approximately 14,000 kms, we consider it

appropriate that the respondent should refund a

sum of Rs.12,50,000 (Rupees twelve lacs fifty

thousand only) to the petitioner subject to the

condition that the vehicle in question, without the

accessories, which the petitioner got fixed at a

cost of Rs.1,91,295/-, is returned to the

respondent.”

12.The above was not the end of the journey, though the

above relief met the claim of the complainant in his complaint.

The National Commission proceeded to consider the issue of

punitive damages for “unfair trade practice” in selling the

said vehicles to about 260 consumers. It was held that though

the consumers had not approached the National Commission and

a period of four years had passed, the appellant should pay

punitive damages of Rs.25 lakhs and out of the said amount, a

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sum of Rs.5 Lakhs be paid to the complainant while the rest be

deposited in the “Consumer Welfare Fund” of the Central

Government to be utilized for the benefit and protection of the

interests of the consumers generally. Final operative order

passed by the National Commission is as follows :

“The respondents are hereby directed to pay a

sum of Rs.12,50,000/- (Rupees Twelve Lacs Fifty

Thousand only) to the petitioner towards price of

the vehicle subject to the petitioner returning the

vehicle in question without accessories to the

respondents. The respondents are hereby called

upon to deposit a sum of Rs.25 lacs (Rupess

Twenty Five Lacs) as punitive damages with this

Commission. Out of the said deposited amount, a

sum of Rs.5 lacs (rupees five lacs) shall be paid to

the petitioner-complainant and rest of the

amount shall be credited to the “Consumer

Welfare Fund” of the Central Government to be

utilized for the benefit and protection of the

interests of the consumers generally. We also

award a sum of Rs.50,000/- (rupees fifty

thousand) in favour of the complainant to meet

his cost of litigation before the three consumer

fora. The liability to pay and deposit the amounts

shall be joint and several on the respondents. We

grant six weeks to the respondents to comply

with the directions given herein above. ”

13.We have heard learned counsel for the appellant and the

respondent No.1-complainant in-person and perused the record.

14.The concurrent finding recorded by the District Forum, the

State Commission and the National Commission to the effect

that “unfair trade practice” was committed by the appellant

which is based on adequate material on record, does not call for

any interference by this Court and the same is affirmed .

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15.What survives for consideration is the submission of

learned senior counsel for the appellant, that there was no claim

before the National Commission for the punitive damages nor

the appellant had an opportunity to meet such claim and that

part of the order needs to be set aside.

16. We find merit in this submission. Vide interim order of this

Court dated 17

th

July, 2009, the operation of the impugned order

awarding punitive damages was stayed. Learned counsel for the

appellant undertook to deposit the amount awarded in favour of

the respondent-complainant towards his claim. The said order

was allowed to continue, vide order dated 20.11.2009, with the

following modifications :

“(i)Respondent No.1 shall return the vehicle to the

appellant within a period of four weeks from

today. The latter shall arrange for accepting

delivery of the vehicle at Ahmedabad.

(ii)After return of the vehicle to the appellant,

respondent No.1 shall be entitled to withdraw

the amount of Rs.12,50,000/- together with

litigation cost deposited by the appellant before

the District Forum in terms of order of this Court

dated 17

th

July, 2009 subject to his furnishing

security to the satisfaction of the District Forum.

(iii)It will be open to the appellant to sell the vehicle

and keep the sale proceeds in a separate

interest bearing account. Respondent No.1 shall

cooperate with the appellant by signing the

documents necessary for selling the vehicle.”

17.We proceed to deal with the issue of correctness of finding

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recorded by National Commission for awarding punitive

damages. Before doing so, we may notice that the respondent-

complainant appearing in-person, in his written submissions has

raised various questions, including the question that the

appellant should be asked to account for the proceeds of the

vehicles sold by it. Admittedly, the vehicle in question has been

ordered to be handed back to the appellant against which

respondent-complainant has no claim. Thus, the plea raised is

without any merit. The other issue raised for further punitive

damages of Rs.100 crores and also damages for dragging him in

this Court, merits no consideration being beyond the claim of the

complainant in the complaint filed by him. Moreover, no litigant

can be punished by way of punitive damages for merely

approaching this Court, unless its case is found to be frivolous.

18.The Act is a piece of social legislation to provide a forum to

the consumers who are taken for a ride by suppliers of goods

and services. The redress is provided to a consumer against any

deficiency in service as well as against any loss or injury arising

out of “unfair trade practice”. By later amendment, scope of

a complaint can cover not only individual consumer but also

consumers who are not identifiable conveniently. However, the

complainant has to make an averment and make a claim.

Section 12 of the Act permits not only a complaint by a

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consumer to whom goods are sold or delivered but also any

recognised consumer association or one or more consumers on

behalf of and for the benefit of all consumers but still, a case has

to be made out and the affected party heard on such issue. We

are conscious that having regard to the laudable object of the

social legislation to protect the interest of consumers, liberal and

purposive interpretation has to be placed on the scheme of the

Act avoiding hyper technical approach. At the same time, fair

procedure is hall mark of every legal proceeding and an affected

party is entitled to be put to notice of the claim with such

affected party has to meet.

19.We may at this stage refer to the scheme of the Act with

regard to claim against “ unfair trade practice”. The

background and scope of the provision was dealt with in

Ludhiana Improvement Trust v. Shakti Coop. House

Building Society Ltd.

1

as follows :

“18. Prior to the substitution of clause (r) in sub-

section (1) of Section 2 of he Act with

retrospective effect from 18-6-1993, there was no

separate definition of the term “unfair trade

practice” and the said term was given the same

meaning as in Section 36-A of the Monopolies and

Restrictive Trade Practices Act, 1969 (for short

“the MRTP Act”). But now after the said

amendment, the definition of the term has been

specifically provided in Section 2(1)(r), although

the definition is practically a verbatim

reproduction of the definition in Section 36-A of

1

(2009) 12 SCC 369

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the MRTP Act.

19. The basic ingredients of “unfair trade

practice” are:

(i) it must be a trade practice;

(ii) the trade practice must be employed for

the purpose of promoting the sale, use

or supply of any goods or for the provision

of any service; and

(iii) the trade practice adopts any unfair

method or unfair or deceptive practice

including any of the practices enumerated

in clauses (1) to (6) of Section 2(1)(r) of

the Act.

Therefore, any trade practice which is adopted for

the purpose of promoting the sale, use or supply

of any goods or for the provision of any service,

by adopting any unfair method or unfair or

deceptive practice has to be treated as “unfair

trade practice” for which an action under the

provisions of the Act would lie, provided, the

complainant is able to establish that he is a

consumer within the meaning of Section 2(1)( d)

of the Act.”

In Colgate Palmolive (India) Ltd. v. MRTP

Commission

2

this Court laid down five ingredients which have

to be established before a trade practice can be said to be an

“unfair trade practice”. The Court laid the ingredients in the

following manner:

“16. A bare perusal of the aforementioned

provision would clearly indicate that the following

five ingredients are necessary to constitute an

unfair trade practice:

1.There must be a trade practice [within the

2

(2003) 1 SCC 129

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meaning of Section 2(u) of the Monopolies and

Restrictive Trade Practices Act].

2.The trade practice must be employed for the

purpose of promoting the sale, use or supply of

any goods or the provision of any services.

3. The trade practice should fall within the ambit

of one or more of the categories enumerated

in clauses (1) to (5) of Section 36-A.

4.The trade practice should cause loss or injury

to the consumers of goods or services.

5.The trade practice under clause (1) should

involve making a ‘statement’ whether orally or

in writing or by visible representation.”

Again in Godfrey Phillips India Ltd. v. Ajay Kumar

3

, it

was observed :

“18. So far as Direction (iii) is concerned, it is to

be noted that there was no prayer for any

compensation. There was no allegation that the

complainant had suffered any loss. Compensation

can be granted only in terms of Section 14(1)(d)

of the Act. Clause (d) contemplates award of

compensation to the consumer for any loss or

injury suffered due to negligence of the opposite

party. In the present case there was no allegation

or material placed on record to show negligence.”

Thus, mere proof of “unfair trade practice” is not

enough for claim or award of relief unless causing of loss is also

established which in the present case has not been established.

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 the

appellant was aware that any such claim is to be met by it.

3

(2008) 4 SCC 504

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Normally, punitive damages are awarded against a conscious

wrong doing 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 before the National Commission and the

appellant having no notice of such a claim, the said order is

contrary to 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.

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21.Accordingly we allow these appeals and set aside the order

of the National Commission to the extent of award of punitive

damages.

……..…………………………….J.

[ V. GOPALA GOWDA ]

.….………………………………..J.

NEW DELHI [ ADARSH KUMAR GOEL ]

October 9, 2014

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ITEM NO.1A-For Judgment COURT NO.13 SECTION

XVII

S U P R E M E C O U R T O F I N D I A

RECORD OF PROCEEDINGS

Civil Appeal No(s). 8072-8073/2009

GENERAL MOTORS (I) PRIVATE LIMITED Appellant(s)

VERSUS

ASHOK RAMNIK LAL TOLAT & ANR. Respondent(s)

Date : 09/10/2014 These appeals were called on for JUDGMENT

today.

For Appellant(s) Mr. Vikram Shokalia, Adv.

For M/s. Dua Associates

For Respondent(s)

Caveator-in-person

Ms. Aparna Jha,Adv.

Hon'ble Mr. Justice Adarsh Kumar Goel pronounced

the judgment of the Bench comprising His Lordship and

Hon'ble Mr. Justice V.Gopala Gowda.

The appeals are allowed in terms of the signed

order.

(VINOD KUMAR) (MINAKSHI MEHTA)

COURT MASTER COURT MASTER

(Signed Reportable judgment is placed on the file)