TATA MOTORS LTD. versus ANTONIO PAULO VAZ AND ANR. on 18 February 2021

1. This special leave petition was heard finally; Leave granted, itGimpugns an order of the National Consumer Disputes RedressalCommission[1] (hereafter “Commission”) which affirmed the order of theGoa State Consumer Disputes Redressal Commission (hereafter “StateCommission”).

H1 Dated 09 January, 2020 in Revision Petition No. 1809 of 2014

2. The relevant facts are that that the first respondent, AntonioPaulo Vaz (hereafter “Vaz”) bought a car after paying the agreed totalconsideration price in 2011 to the second respondent, Vistar Goa (P)Ltd, a dealer in cars (hereafter “the dealer”). At the time of purchase,Vaz availed bank credit. A 2009 model car which had run 622 kilometreswas sold to him in place of a new car of 2011 make. Vaz, therefore,requested for refund of the price paid or replacement of the car withone of 2011. The price was however not refunded; neither was the carreplaced. Vaz refused to take delivery of the 2009 model car. He attempteda resolution of his concern and thereafter, caused a legal notice to beissued to the dealer, as well as the appellant. Upon his grievance remainingunaddressed, he preferred a complaint before the Goa District ConsumerRedressal Forum (hereafter “the district forum”).

3. The district forum heard the appellant, which was represented,and Vaz. Despite service of notice (of the complaint) the dealer wasabsent and was unrepresented; it was therefore proceeded against exparte. The district forum determined ‘deficiency in service’ and heldthe dealer and the appellant (i.e. manufacturer of the car) to be jointlyand severally liable. The district forum’s order, (made on 27.09.2013)noted that the car had some defects; the undercarriage of the car was“fully corrugated and had scratch marks on the body. The alloywheels were also corrugated inside and the car also travelled almost 622 km. Also some parts such as music system was not providedalthough agreed.” The appellant denied the facts and alleged that Vaz,the customer had been informed that the car purchased by him was a2009 model. The district forum observed that this averment (by theappellant) was apparently incorrect because if Vaz had agreed to suchan offer, he would not have refused to take the delivery of the car whichwas even then with the dealer; he also urged that the music system wasnot provided. The district forum further stated that:

“the customer when he buys new vehicle, he is under theimpression that a new vehicle would be defect free. And inthe said case it is admitted that the said car is used vehicle,and make of 2009 but the registration was done for the 1sttime in the name of the Complainant in 2011. Also the carhad travelled almost 622 kms. The O.P. 2 stated that therewas pre delivery test. But for this test the car travelled 622kms?”

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A4. In the light of these facts and observations, the district forumheld that there was deficiency in the service committed by the dealerand the appellant, and allowed Vaz’s complaint, holding the dealer andthe appellant jointly and severally liable to replace the car with a newone of the same model or to refund the entire amount of the car withinterest @10% from the date given of delivery. Both were also jointlyBand severally directed to pay C 20,000/- to Vaz towards mental stressand agony in addition to costs of 5,000/-.

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5. Aggrieved, the manufacturer preferred an appeal to theState Commission under Section 15 of the Consumer Protection Act(hereafter “the Act”). The state commission dismissed the appeal withCcosts of 5,000/-. It held that Vaz was a consumer as defined underSection 2 (d) (i) of the Act; and that he was awaiting delivery of the car.It also ruled that an expert report was not necessary for cases wherethe facts speak for themselves, and the present case was one such. Theappellant’s plea that its relation with the dealer was on a principal-to-Dprincipal basis was unsubstantiated according to the state commission,

by any material or evidence. The appellant had not produced anydocumentary evidence in support of its allegation; nor did it produce theinvoice No. [REDACTED] dated 28.02.2009. The state commission alsorejected the plea that no direct sale was undertaken by the appellant; itconcluded that the appellant sold to Vaz, the defective car manufacturedEby it, and the dealer and the appellant were liable for sale of the defectivecar.

6. Before the National Commission, the appellant urged twocontentions: one that Vaz was not a “consumer” since he did not acceptdelivery of the car from the dealer, and two that its relationship with theFdealer was on principal-to-principal basis and that therefore, no liabilitycould be fastened upon it. The impugned order negatived both arguments.For rejecting the second submission, the impugned order noticed that themanufacturer (i.e. appellant) appointed dealers after its due diligence,and that “the sale of its goods is undertaken by the ManufacturerGthrough its dealers, the Manufacturer exercises superintendenceover its dealers including the right to terminate their dealerships.”The appellant’s subsequent conduct, i.e., termination of the dealership,weighed with the National Commission, which relied on a letter dated04.12.2012 issued to the dealer, which stated that it was informed by theappellant about:H

“the serious short comings in the fulfilment of the obligationscast upon you under the said agreement. In spite of repeatedfollow ups, meetings, telecons and correspondence vide emails(copies enclosed) dated 18/5/12, 5/11/12, 8/11/12, 9/11/12,15/11/12, 16/11/12, 19/11/12 and 21/11/12 by Area Manager,RCSM and others in the region explaining you the continuousdrop in sales volume for last 18 months across all categoriesof products, non-availability of vehicle stocks, inadequatemanpower for Sales & After Sales, not adhering to thestandard operating procedures on processes, non-availabilityof Test Drive Vehicles, increasing number of customercomplaints & inability/lack of effort in resolving them. Thereis no improvement in overall operations of the dealershipsnor have we seen any efforts put by you for the same.

We, on a review, find that due to the aforesaid reasons youare in serious breach of the terms of the dealership agreementand are unable to continue business operations with TataMotors Ltd., and there remains no chance to improve yourperformance and therefore the state of affairs does not justifycontinuance of dealership.

We are therefore constrained to issue you this 90 day noticeof termination of your dealership. You shall cease to be theTata Motors Passenger Cars dealer after 90 days from thereceipt of this letter and all business pertaining to Tata MotorsPassenger Vehicles, parts and accessories shall standwithdrawn.”

The National Commission was also influenced by the fact thatthe appellant had, before the district forum, filed its written version inwhich it inter alia explicitly stated that the relationship between theManufacturer and its dealer was on ‘principal to principal’ basis;nevertheless, it did not file a copy of the dealership agreement in supportof its argument. The National Commission was also crucially impressedwith the fact that despite this lacuna, the appellant further did not “makeany categorical averment that the deficiency and (mis)acts wereonly on the part of the Dealer alone. On the contrary, it inter aliaalso defended its Dealer.” It was further observed in the impugnedorder, that the appellant averred that it had the support of excellentdealerships/authorized service centres, with excellent workshop setup A

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Afor after-sales servicing of the cars, and its products were, according toit, well known in the market over a period of time.

7. The National Commission closely scrutinized the reply of theappellant before the district forum, and concluded that other than extollingits product and its after-sales services, no material to substantiate itsBrelationship between the dealer being one of principal-to-principal basishad been adduced. It further went on to notice the averments in theappeal before the state commission and highlighted that the dealer’sfault was not put forward as a defence. After considering all theseaverments and the submissions made before it, the National Commissionheld that the relationship of the dealer and the appellant in the factsCappearing from the record, did not absolve it of liability. It therefore,issued several directions- firstly upholding the orders of the fora belowit and further declaring that the appellant had indulged in unfairtrade practice, for which it was imposed with costs of C 2,00,000/- ofwhich 1,00,000/- was to be made over to Vaz and the balance to theDConsumer Legal Aid Account of the District Forum within four weeks.The appellant was also ordered, through its Chief Executive under Section14 (1) (f) of the Act to immediately pass appropriate directions to all itsdealers to discontinue such unfair and deceptive acts, and not to put‘consumer’(s) to such loss and injury and to imbibe accountability andsystemic improvements for the future. Further, the Chief Executive wasEdirected to furnish a report-in-compliance to the District Forum withinfour weeks. In addition, the amount deposited with the District Forum incompliance of the National Commission’s Order dated 01.05.2014, alongwith interest accrued on it, was to be utilized by the District Forumtowards satisfaction of the Award.F

Arguments of parties

8. The appellant contested the findings in the impugned order, andmainly focused its submissions on the conclusions drawn by the NationalCommission regarding the absence of a principal-to-principal relationship.It was highlighted that besides impleading the appellant and seeking relief,Gno allegations against it were made in the complaint by Vaz before theDistrict Forum. The appellant highlighted that the entire drift of thecomplaint was that the 2009 make car manufactured by it, which hadbeen sold by the dealer, was an old one, and that Vaz was misled intoagreeing to purchase it, without being aware of the model, or that theHparticular car had already been used. The appellant therefore, urged that there was neither averment, nor allegation by Vaz, on the basis ofwhich any liability could be pinned upon it, a third party to the entiretransaction, merely because it was the manufacturer. It was submittedthat the complainant never alleged or proved that any one of its employeeswas privy to the transaction in question, or had led Vaz to purchase thecar in question from the dealer.

9. It was urged that unless Vaz, the complainant, could establishthat there was a defect in the product, i.e. the car, the manufacturercould not be fastened with liability. Reliance was placed upon thedecisions of this court in Maruti Udyog Ltd. v. Susheel KumarGabgotra[2]and Indian Oil Corporation v. Consumer ProtectionCouncil[3].

10. It was argued on behalf of the appellant that the invoice bywhich the car was sold to the dealer was a part of the record. Reliancewas placed on that invoice, which is dated 28th of February 2009 tocontend that the title to the property, i.e. the car in question had passedto the dealer. In the circumstances, urged the appellant, the onus squarelylay upon Vaz to prove the alleged defect or deficiency in the car, (forwhich the dealer made a misleading representation that it was of 2011make and further that it was new). Since no evidence was led in thisregard, it was contended that the district forum as well as the State andNational Commission fell into a fundamental error in holding that therewas a deficiency in service on the part of the appellant manufacturer.

11. Stressing that the manufacturer had no relationship with theconsumer, i.e. Vaz, it was urged further that neither was any specialknowledge on the part of the appellant attributed to it, nor proved duringthe proceedings, nor was in any fact a word in any of the pleadings inthis regard. Learned counsel further argued that the materials placed onrecord, such as the invoice or purchase of the car, as well as a registrationcertificate clearly showed that the model and make of the car was of2009; this was apparent and well known to Vaz. It was also highlightedthat the complaint stated that the car was an old one and had already run622 km; however, the legal notice issued to the dealer, on behalf of Vazhad, to the contrary, claimed that the car had done 1448 kilometres. Itwas submitted that in these circumstances, it was essential that specialknowledge on the part of the manufacturer about the fact that the make 2 (2006) 4 SCC 644

3 (1994) 1 SCC 397

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Aof the car was represented to be 2011, and that someone on its behalfhad made that representation, had to be both pleaded and proved. In theabsence of such proof, the manufacturer-appellant could not be heldliable. During the period of warranty, the appellant could have notifiedthe manufacturer of any latent or obvious defect in the product. In suchan event, if the manufacturer, i.e. the appellant, were to not take adequateBaction to repair the car or replace it, then, it could have been held liable.

12. The learned counsel appearing on behalf of the appellant reliedupon documents that were produced with the leave of this court, alongwith an application. Two documents especially were relied upon. Thefirst was the invoice by which the dealer purchased the vehicle. LearnedCcounsel stressed that the vehicle was purchased and delivered in February2009 itself. The second document relied upon, which concededly hadnot been produced in the fora below, was the dealership agreementbetween the appellant and the second respondent. Reliance was placedupon clause 29 of this dealership agreement, which reads as follows:

D“29. In case of termination or expiry of this Agreement, allorders, which may have been received from the Dealerprevious to such termination or expiry, shall, without anyliability to the Company for the Spare Parts, be cancelledunless expressly otherwise agreed in writing by the Parties,Ebut in such a case, no obligation of the Dealer arising out ofthe previous supplies shall cease. On termination of theAgreement, the Company may, at its option, require the Dealerto sell and the Dealer shall thereupon sell to the Company allunsold or unused units of Spare Parts as the Dealer may havein hand. It shall be entirely at the Company’s discretion as toFhow many or how much, if at all, of the Spare Parts previouslysold to the Dealer shall be bought from him in terms of thisClause. Such Spare Parts as are bought by the Company underthis Clause shall be paid for by the Company at the actualNet Dealer price paid by the Dealer to the Company for theGpurchase of the Spare Parts. The Company shall also pay tothe Dealer all expenses incurred by him of taking delivery ofthe Spare Parts front the Company.”

13. Refuting the appellant’s arguments, it is urged on behalf ofVaz that the impugned order has no error calling for interference, andHthat this Court should not exercise its discretion to upset the findings conferred by it in exercise of its powers under Article 136 of theConstitution of India. It is reiterated that the consumer, i.e., Vaz wasinformed at the time of the vehicle’s booking that it was fitted inaccordance with the specifications required by him. At that time, he wasnever informed that the vehicle (the car) in question had been used andhad been manufactured in 2009 and, was therefore old. After registeringthe vehicle, the complainant returned to the showroom and thendiscovered that the car had several defects, including that theundercarriage was fully corrugated and the body had several scratchmarks. These flaws were immediately pointed out to the dealer; thedealer was also requested to replace the vehicle. However, they refusedto do that.

14. It is urged that the purchaser of the car always expects thatthe product would be free from all defects. In this case, however, theconsumer/Vaz consistently refused to take delivery because the car wasold; it was not in accordance with the representations made, had severaldrawbacks and to top it all, had been used previously. It was also arguedon behalf of Vaz that the dealer nowhere stated that an old car wasbeing sold to him, but in fact held out that it was brand new, andfurthermore in the reply to the letter dated 18.02.2011, the appellantinsisted that the vehicle had no defects and was manufactured in 2009.Learned counsel for Vaz highlighted that in the written statement beforethe District Forum as well as in the appeal to the State Commission, thepresent appellant, despite highlighting the absence of any direct relationshipor dealing with customers regarding sale and purchase of vehicles,pointedly alleged that a cash discount of Rs.80,000/- was offered toVaz.

15. Learned counsel for Vaz relied upon the following writtensubmission of the present appellant before the District Form, “theopposite party No.1 also informed him about the old Tata Xenoncar of 2009 bearing a cash discount of Rs.80,000/- along with afree music system, mud flap and matting was offered.” This deliberatemisrepresentation, emphasised learned counsel for Vaz, was squarelyattributable to the appellant, i.e. the manufacturer as well as its dealer,and this amounted to unfair trade practice and deficiency in servicewithin the meaning of the expression under Section 2(1)(g) read withSection 2(1)(o) and Section 2(1)(r) of the Consumer Protection Act.Learned counsel for Vaz relied upon the decision in Jos Philip Mampillilv. Premier Automobiles Limited and Anr.[4] where it was observed that:

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634SUPREME COURT REPORTS

A“It is shameful that a defective car was sought to be sold as abrand new car and instead of acknowledging the defects,the manufacturer chose to deny its liability.”

16. It is submitted that though the appellant was provided sufficientopportunity, it chose not to produce the dealership agreement. HavingBrepeatedly failed to place the material before the adjudicatory forums,the appellant should not be granted further opportunity to rely upon adocument which was always available with it.

17. Learned counsel submitted that arguendo, even if thedealership agreement were to be taken into account, it is apparent thatCthe commercial relationship between the appellant and its dealer remainsthat of a principal and agent. It is urged that nomenclature apart, threefactors portray the relationship between the two parties. Firstly, customerscannot purchase vehicles manufactured by the appellant directly andhave to purchase them through an authorised dealer like the one in thepresent case. Secondly, the dealer exclusively sells cars manufacturedDby the appellant in the designated territories. Its sales policy, pricing etc.are entirely dictated by the appellant and consideration paid towards theproduct/car is remitted to the appellant by the dealer.

18. Learned counsel for Vaz also relied upon the appellant’s letterterminating the dealership in the present case, dated 04.12.2012 andEstated that it clearly established that there was a direct and substantialcost borne by the appellant as a consequence of the dealer’s misconductin respect of the sales and customers’ dissatisfaction and (2) that therewas a commercial relationship between the appellant and the dealerwhich was liable to be terminated on account of the latter’s failure toFrender satisfactory service to customers. It is underlined that both thesefactors can only be comprehended in the context of a principal-agentrelationship. Learned counsel relied upon the judgment of this courtreported as Vivek Automobiles Ltd. v. Indian Inc.[5] and argued that thedecision establishes that in law, a car dealer acts as the agent of themanufacturer, in India.GAnalysis and conclusions

19. Before proceeding further, it is essential to recapitulate thefacts. Vaz approached the dealer to purchase a car; he was informed 4 (2004) 2 SCC 278H5 (2009) 17 SCC 657

about the availability. Thereafter, he appears to have been told to havethe car registered (after payment of the consideration), which he did.The vehicle delivery note and invoice (issued to Vaz) are both dated25.1.2011. Then, he discovered in the showroom, that the car was old, a2009 model and that it had many features (corrugated undercarriage,scratches, etc.) clearly pointing to its being used and old. The vehicleregistration document, hypothecation, invoice and gate pass issued, aswell as the vehicle delivery document, all show that the car was of 2009make. Vaz refused to take delivery, and insisted upon delivery of a newcar. The dealer refused. The matter stood thus. On 08.02.2011, Vazwrote a letter to the dealer. In this, he claimed that the vehicle was old,and levelled allegations about it being used and certain features noticedby him, which caused him to refuse to take delivery. On 18.02.2011, thedealer denied Vaz’s legal notice and stated that no representation wasever made, that the vehicle was not of 2009 make and that replacementwas out of the question. Upon no further response, Vaz caused a legalnotice to be issued on 11.11.2011. The consumer complaint was filed onhis behalf, on 14.12.2011.

20. Before the district forum, the dealer and the appellant wereserved with notices; the former never appeared and went unrepresented;it was therefore set down ex-parte. The appellant entered appearance,contested its liability and alleged that its relationship with the dealer wasnot one of agent principal, but rather, principal to principal and that itcould not be held liable.

21. The dealership agreement in this case, dated 31.07.2008 asobserved earlier, was not produced before the fora below. However, itwas produced with an application after seeking this court’s leave in thatregard. Clause 4 defines the territorial scope and subject matter of theagreement constituting the second respondent as a dealer. It is extractedbelow and reads as follows:

“Territorial Scope and subject matter of the agreement 4 (a) subject to the terms hereof, the Company hereby appointsthe Dealer as its Authorised Dealers to sell and service on aprincipal-to-principal basis the following productsmanufactured by the Company:

Tata Indica, Tata Indigo, Tata Safari, Tata Sumo, Tata Carrier,Tata Spacio, Tata Tourin (hereinafter referred to as the AB

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‘Products’ which expression shall also mean and include,wherever the context so permits, such other products marketedby the Company as may specifically and expressly be includedwithin the scope of this Agreement by mutual consent of theParties in writing from time to time) and parts and accessoriesthereof (hereinafter referred to as the ‘Spare Parts’) presentlymanufactured and/or marketed by the Company.

(b) It is agreed that the Products and Spare Parts specified inClause (a) above shall be sold to the Dealer by the LogisticsProvider and/or the Company as the case may be for resaleby the Dealer within the territory described hereunder(hereinafter called the ‘Territory’) in accordance with theprovisions of this Agreement.

(i) The city of PANJIM for Tata Indica, Tata Indigo, TataSafari and their variants, where the Dealer is entitled to sellsuch vehicles to customers dwelling within that city as also tocustomers outside the city but within the State, provided that(a) such customers are from a ‘free territory’ i.e. a place whichis not allocated by the company to any other Dealer fordistribution of such vehicles and (b) all sales, whether theybe to the city or the non-city customers, shall take place withinthe city.

(ii) In the State of Goa, districts: ALL for Tata Sumo, TataCarrier, Tata Spacio, Tata Tourin and their variants, wherethe Dealer is entitled to sell such vehicles to all customerslocated within those districts.

(c) In the event the areas or the boundaries of the Territoryor any parts or parts thereof is/are altered, re-demarcated orreconstituted by Governments or any other authorities forany reason whatsoever, the Company shall be at liberty toredetermine and reallot the territory of the Dealer under thisAgreement.

(d) The Agreement shall not preclude the Company fromentering into or continuing any Dealership Agreement orAgreements with any other person or persons within theTerritory for sale of the products and/or the Spare Parts and resale by that person thereof in the Territory on such terms asthe Company in its absolute discretion deems fit.

(e) It is expressly agreed and declared that notwithstandinganything herein contained, this Agreement does not constituteany form of agency or principal-agent relationship betweenthe Dealer and the Company. The Dealer and the Companyshall deal solely on a principal to principal basis in themanner provided in this Agreement.

22. Clause 1(iv) reserves to the appellant an overriding right to“make direct sales of the products and/or the spare parts to anypersons within the territory”[6] Clause 18 binds the appellant to conformto the warranty published by it and all implied warranties under law. Itreads as follows:

“Warranty

18. The Dealer agrees that the only warranty binding on theCompany shall be the warranty published by the Companyand all implied warranties under law are hereby excluded.The Dealer shall have no authority to give to his purchasersa different warranty binding upon the Company. The Dealershall meet the Company’s warranty obligations to thepurchasers of the products and/or the Spare Parts inaccordance with the sales procedures and advices issued orto be issued by the Company from time to time.”

By Clause 20, the dealer is under an obligation to advertise, displayor demonstrate at its own expense the products, spare parts and servicefacilities within the territory granted to it as is approved by the appellant.By virtue of Clause 30(a), upon the termination of the agreement, thedealer has to immediately turn over to it its works (i.e. that of the appellant)or original spare parts, warehouse or spare parts centre or bonafideretail parts that he may have in hand for execution which remainsunfulfilled together with deposits made by the buyers and also records 6 The relevant parts allow the present appellant to “make direct sales of the productsand/or the spare parts to any persons within the territory” for use or resale, includingestablishment of showrooms, branches, workshops, service centres etc; appoint staffor appropriate trained salesmen and technical personnel in adequate number; establishadditional sales officers, showrooms etc. in the territories with the consent of thecompany.”

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Aand complete lists of owners. Clause 30(b) states that on termination orexpiry of the agreement the dealer has to return to the company free ofcosts all technical, sales or other literature, statutory circulars, catalogues,bulletins and folders.

23. It is useful to notice that before the District Forum, no role orBwrong-doing was attributed to the appellant; in fact, no allegation waslevelled against it. In para 2, the complaint narrates that Vaz was informedabout securing delivery; para 3 states that after registering the car, he(Vaz) went to the showroom to take delivery and was shocked to seethat the car was not a brand new one, and that it had several defects.Para 3 further describes the nature of the defects. In para 4, Vaz statesCthat he immediately lodged a protest with the dealer and requested forreplacement which was denied and that the dealer forced him to takedelivery of the car. Vaz alleges that the delivery however, was not taken.Paras 5, 6, 7 and 8 are extracted which contain the subsequent narrationof facts:D“5. The complainant states that he had already informed therespondent that he had obtained financial assistance fromthe Syndicate Bank, Agacaim Branch, Agacaim, Goa topurchase the said car and the entire amount of the said carhas been fully paid to Vistar Motor, however, till date, theEcomplainant had not received the delivery of the car due tothe aforesaid defect also. The respondent has not made anyefforts to replace the said car with a new car, on the contrarythe respondent has tried carrying repair works of the saidcar with the said defect. Due to the negligence on theRespondent No.1 part, the complainant has to undergo mentalFtension, hardship and financial loss.

6. The complainant states that he thereafter approached theconciliation forum; however, the same failed as the respondentrefused to give him a new car. The complainant has thereafterby way of a legal notice, called upon the respondent no.1 toGreplace the said car with the new car or refund the entireamount of Rs.9,50,536/- which is the amount spent by him ason date including interest on the loan until final payment within7 days. However no response has been received by thecomplainant and he is thus forced to institute a legal H

TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.[S. RAVINDRA BHAT, J.]

proceedings in the Consumer Court to seek compensationagainst you.

7. The complainant states that this complaint is not barred bythe limitation.

8. The cause of action has arisen in the State of Goa andwithin the territorial jurisdiction of this Hon’ble Court. Assuch this Hon’ble Court has the jurisdiction to entertain, hearand decide the present petition.”

24. The liability of a manufacturer, such as the present appellant,was the subject matter of a decision of this court in Indian OilCorporation v. Consumer Protection Council, Kerala[7]. There, thiscourt observed as follows:

“14. In order to decide this question it is necessary for us tolook at clause 1 (a) of Ex. R-2. That is the memorandum ofagreement between Indian Oil Corporation and M/s KarthikaGas Agency. That establishes the relationship between IndianOil Corporation, the appellant and Karthika Gas Agency asdistributor of the Corporation, on principal to principal basis.(emphasis supplied) Clause 17 of the agreement is as under:

“In all contracts or engagements entered into by theDistributor with the customers for sale of LPG and/or thesale and/or installation and/or repairs of appliances and/or connections thereof with LPG cylinders (filled or empty)and/or refills and/or pressure regulators and/or attachedequipment the Distributor shall act and shall always bedeemed to have acted as a principal and not as an agentor on account of the Corporation, and the Corporationshall not in any way be liable in any manner in respect ofsuch contracts and/or engagements and/or in respect ofany act or omission on the part of the Distributor, hisservants, agents and workmen in regard to such installation,sale, distribution, connections, repairs or otherwise. TheDistributor shall be bound to inform the customers inwriting of this provision, through correspondence or atthe time of enrolment, of the customer.”

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15. Thus, it is clear that the relationship is one of principal-to-principal basis. The reliance by the authorities below thatthe circumstances, documents and conduct of parties provedthe relationship as of principal and agent is difficult tounderstand. This is a case in which the second respondentKarthika Gas Agency has given an unauthorised connection.If it was a legal connection nothing would have been easierthan to produce tile subscription voucher. Such a voucher asrightly pointed out by the learned counsel for the appellant,is important and will bind the appellant-Corporation. Theauthorities below have not given due importance to thesubscription voucher. Section 3(2) of the LPG Control Orderreads as under: “No person shall possess or use liquefiedpetroleum gas filled in cylinder or in bulk form unless he hasreceived supply thereof from a distributor or from an OilCompany.”********************** *******

18. This puts the position beyond doubt. It should have madethe consumer aware of his legal rights. Further, in this casefor the unauthorised acts of second respondent, itsdistributorship came to be cancelled. The fact that it wasrevived is of no consequence if due regard is to be had toclause 17 of the agreement which has been extracted above.Section 2 (g) of the Consumer Protection Act states as follows:

“(g) ‘deficiency’ means any fault, imperfection, shortcomingor inadequacy in the quality, nature and manner ofperformance which is required to be maintained by or underany law for the time being in force or has been undertaken tobe performed by a person in pursuance of a contract orotherwise in relation to any service;”

19. Insofar as there is no privity of contract between theappellant and the consumer no ‘deficiency’ as defined underSection 2 (g) (quoted above) arises. Therefore, the actionitself is not maintainable before the Consumer Forum. For allthese reasons, we set aside the judgments of the authoritiesbelow. Civil Appeal will stand allowed. However, in thecircumstances of the case there shall be no order as to costs.”

TATA MOTORS LTD. v. ANTONIO PAULO VAZ AND ANR.[S. RAVINDRA BHAT, J.]

25. In General Motors (I) (P) Ltd. v. Ashok Ramnik Lal Tolat[8]the concurrent findings of the three forums under the Consumer ProtectionAct were that the appellant was guilty of unfair trade practice, leadingto award of punitive damages. The court took into consideration the factthat there was no pleading in support of such a claim (for punitivedamages). This court observed as follows:

“15. What survives for consideration is the submission of thelearned Senior Counsel for the appellant that there was noclaim before the National Commission for the punitivedamages nor had the appellant an opportunity to meet suchclaim and that part of the order needs to be set aside. We findmerit in this submission.…

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20. We have already set out the relief sought in the complaint.Neither there is any averment in the complaint about thesuffering of punitive damages by the other consumers norwas the appellant aware that any such claim is to be met by it.Normally, punitive damages are awarded against a consciouswrongdoing unrelated to the actual loss suffered. Such a claimhas to be specially pleaded. The respondent complainant wassatisfied with the order of the District Forum and did notapproach the State Commission. He only approached theNational Commission after the State Commission set aside therelief granted by the District Forum. The National Commissionin exercise of revisional jurisdiction was only concernedabout the correctness or otherwise of the order of the StateCommission setting aside the relief given by the District Forumand to pass such order as the State Commission ought to havepassed. However, the National Commission has gone muchbeyond its jurisdiction in awarding the relief which was neithersought in the complaint nor before the State Commission. Weare thus, of the view that to this extent the order of the NationalCommission cannot be sustained. We make it clear that wehave not gone into the merits of the direction but the aspectthat in absence of such a claim being made before the NationalCommission and the appellant having no notice of such a A

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Aclaim, the said order is contrary to the principles of fairprocedure and natural justice. We also make it clear that thisorder will not stand in the way of any aggrieved party raisinga claim before an appropriate forum in accordance with law.”

26. The record establishes the absolute dearth of pleadings by theBcomplainant with regard to the appellant’s role, or special knowledgeabout the two disputed issues, i.e. that the dealer had represented thatthe car was new, and in fact sold an old, used one, or that the undercarriageappeared to be worn out. This, in the opinion of this court, was fatal tothe complaint. No doubt, the absence of the dealer or any explanation onits part, resulted in a finding of deficiency on its part, because the carCwas in its possession, was a 2009 model and sold in 2011. The findingsagainst the dealer were, in that sense, justified on demurrer. However,the findings against the appellant, the manufacturer, which had not soldthe car to Vaz, and was not shown to have made the representationsin question, were not justified. The failure of the complainant to pleadDor prove the manufacturer’s liability could not have been improved upon,through inferential findings, as it were, which the district, state andNational Commission rendered. The circumstance that a certain kind ofargument was put forward or a defence taken by a party in a given case(like the appellant, in the case) cannot result in the inference that it wasinvolved or culpable, in some manner. Special knowledge of the allegationsEmade by the dealer, and involvement, in an overt or tacit manner, by theappellant, had to be proved to lay the charge of deficiency of service atits door. In these circumstances, having regard to the nature of the dealer’srelationship with the appellant, the latter’s omissions and acts could nothave resulted in the appellant’s liability.F27. The consumer, Vaz had relied on Jose Philip Mampillil(supra). The deficiencies found are extracted below:

“6. We have heard the parties at great length. We have seenthe material on record. From the material on record, it is clearthat the car was defective at the time of delivery. There is noGdoubt that there were defects in the paint and that the pistonrings of the engine had gone. The submission that the pistonrings got spoiled after the delivery was taken, cannot beaccepted. The agent of the 1st respondent i.e. 2nd respondent,had acknowledged that the piston rings were defective. TheyHwould not have so acknowledged unless it was a defect at the time of the delivery. Had this defect occurred by virtue of theappellant’s misusing the car, the 2nd respondent would neverhave accepted the responsibility for repair of the piston rings.*************************

8. In our view, it is shameful that a defective car was soughtto be sold as a brand new car. It is further regrettable that,instead of acknowledging the defects, the 1st respondentchose to deny liability and has contested this matter.”

28. Clearly, the dealer, in the facts of that case, acknowledged thedefects in the car. In the present case, the dealer did not acknowledgeany such deficiency; furthermore, the car had been made over to thedealer on 28.02.2009 (as is evident from an invoice issued to the dealer,a copy of which is on the record). Therefore, it is difficult to expect theappellant, a manufacturer, to be aware of the physical condition of thecar, two years after its delivery to the dealer. During that period, a numberof eventualities could have occurred; the dealer may have allowed peopleto use the car for the distance it is alleged to have covered. Also, the useof the car and prolonged idleness without proper upkeep could haveresulted in the undercarriage being corrugated. All these are realpossibilities. Unless the manufacturer’s knowledge is proved, a decisionfastening liability upon the manufacturer would be untenable, given thatits relationship with the dealer, in the facts of this case, were on principal-to-principal basis.

29. For all the above reasons, the findings of the NationalCommission and the lower forums against the appellant are set aside.This court is conscious that the car, by now would have deteriorated; inthese circumstances, it is open to the respondent, Vaz to execute theorder for alternative relief (of refund, with interest granted to him, by thedistrict forum, as affirmed by the State and National Commissions) throughthe district forum concerned. During pendency of this appeal, the courthad directed the appellant to deposit certain amounts. It is hereby directedthat the amounts so deposited, with interest accrued should be refundedto the appellant. Subject to these observations and directions, the appealis allowed; but in the circumstances, without order on costs.

Appeal allowed.

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B

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