2024 INSC 496 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 353 OF 2008

M/S DAIMLER CHRYSLER INDIA

PVT. LTD. …APPELLANT(S)

VERSUS

M/S CONTROLS & SWITCHGEAR

COMPANY LTD. & ANR. …RESPONDENT(S)

WITH

C.A. NO. 19536-19537 OF 2017

MERCEDES BENZ INDIA

PVT. LTD. & ANR. …APPELLANT(S)

VERSUS

CG POWER AND INDUSTRIAL

SOLUTIONS LTD. & ORS. …RESPONDENT(S)

WITH

C.A. NO. 2633 OF 2018

M/S. CG POWER AND INDUSTRIAL

SOLUTIONS LTD. …APPELLANT(S)

VERSUS

MERCEDES BENZ INDIA PVT. LTD. & ORS. …RESPONDENT(S)

2

J U D G M E N T

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 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

3

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,

4

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

1

II (2013) CPJ 72 (NC)

5

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, 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

6

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;

(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

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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 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

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(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.

2

(1995) 3 SCC 583

3

(2020) 2 SCC 265

9

“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”:

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 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

4

(2022) 5 SCC 42

10

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);

5

(2023) 8 SCC 362

6

(2024) 1 SCC 8

11

relate to or is connected with trade and traffic or commerce in

general, is occupied with business and commerce.

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”.”

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

12

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

13

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

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

14

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,

15

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 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

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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

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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

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

Gauge I

Temp

Gauge II

Remark Ambient

Temp

WDB

2201676A

326003

Provided

by DCIPL

Provided

by C&S

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

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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

1 of DCIPL

(Degree)

Temp. gauge

2 of C & S

(Degree)

Ambient

(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

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,

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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

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

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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

21

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

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

22

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

stated hereinabove, after the challenge of the order dated 08.07.2016

23

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

24

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

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-

25

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

26

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 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

27

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

28

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 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

29

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 11

th

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

30

side will not 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 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.”

31

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

32

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 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 11

th

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,

33

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.

……………………………J.

(BELA M. TRIVEDI)

.………………………….. J.

(PANKAJ MITHAL)

NEW DELHI;

JULY 09, 2024.