Vol. V DAIMLER CHRYSLER INDIA PVT. LTD. v. CONTROLS & SWITCHGEAR CO. LTD.

485

V (2024) SLT 485 available to it under Income Tax Act,

nonetheless in absence of any material
SUPREME COURT OF INDIA
placed on record to suggest that such
Bela M. Trivedi, J. & Pankaj Mithal, J. purchase of car had a nexus or was linked to
M/S DAIMLER CHRYSLER INDIA PVT. any profit generating activity of company, it
LTD. —Appellant could not be said that such a high-priced
versus luxurious car was purchased by the
respondent no. 1 for its “commercial
M/S CONTROLS & SWITCHGEAR CO. purpose” — Complainant is consumer.
LTD. & ANR. —Respondents [Para 17]
with
(ii) Consumer Protection Act, 1986 —
MERCEDES BENZ INDIA PVT. LTD. &
Sections 2(1)(g), 2(1)(r), 14(1)(d), 23 — Motor
ANR. —Appellants/Respondents vehicle — Defect — Excessive heating —
versus Deficiency in service — Unfair trade practice
CG POWER AND INDUSTRIAL — Such overheating of the surface of hump
SOLUTIONS LTD. & ORS. and overall high temperature in the car was
—Respondents/Appellants a fault, imperfection or shortcoming in the
quality or standard which was expected to be
Civil Appeal No. 353 of 2008 with C.A. No. 19536-
19537 of 2017 & C.A. No. 2633 of 2018—Decided on
maintained by appellants under the contract
9.7.2024 with respondent-complainant and therefore
was a ‘defect’ within the meaning of Section
Civil Appeal No. 353 of 2008: 2(1)(f) of the Consumer Protection Act —
(i) Consumer Protection Act, 1986 — People do not purchase high-end luxurious
Sections 2(1)(d), 23 — Consumer — Purchase cars to suffer discomfort more particularly
of a vehicle/good by a Company for the use/ when they buy the vehicle keeping utmost
personal use of its Directors — Commercial faith in the supplier who would make
purpose — Legality — When a consumer files representations in the brochures or
a complaint alleging defects in goods advertisements projecting and promoting
purchased by him from opponent seller, and such cars as the finest and safest automobile
if opponent-seller raises an objection with in the world — Respondent-complainant
regard to maintainability of consumer having suffered great inconvenience,
complaint on ground that goods in question discomfort and also the waste of time and
were purchased by complainant-buyer for its energy in pursuing litigations — Interest of
commercial purpose, onus to prove that they justice and balance of equity would be met
were purchased for “commercial purpose” if the respondent-complainant is permitted
and therefore, such goods would fall outside to retain the car in question and appellant is
definition of “consumer” contained in directed to refund Rs. 36 lakhs instead of Rs.
Section 2(1)(d) of the Act, would be on 58 lakhs as directed by National Commission
opponent-seller and not on complainant- in impugned order. [Paras 23, 24, 25]
buyer — It has been specifically asserted by
respondent-complainant that car in question Civil Appeal Nos. 19536-19537/2017 and 2633/
was purchased by it for personal use of its 2018:
Whole-time Director and for his immediate (iii) Consumer Protection Act, 1986 —
family members, and dominant purpose of Sections 2(1)(g), 2(1)(r), 14(1)(d), 23 — Motor
purchasing the car was to treat it as a part of vehicle — Defect — Airbags not opened at
perquisite to the Director — Even if it is time of accident — Deficiency in service —
presumed that respondent-complainant Unfair trade practice — At the time of
company had taken benefit of deduction

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486 SUPREME LAWS TODAY (July) 2024

accident, driver of car was wearing seat belt, (2022) CPJ 9 (SC)=II (2022) SLT 583. (Relied)
[Para 13]
whereas respondent No. 2 who was sitting on
rear left side seat did not wear the seat belt 5. National Insurance Co. Ltd. v. Harsolia Motors &
Ors., II (2023) CPJ 33 (SC)=III (2023) SLT 536. (Relied)
— It is also not disputed that neither the
[Para 14]
airbags on the front side nor the airbags on
6. Rohit Chaudhary & Anr. v. Vipul Limited, IV (2023)
the side of the respondent no. 2 had opened CPJ 45 (SC)=VIII (2023) SLT 622. (Relied) [Para 15]
at the time of accident, as a result thereof, the
respondent no. 2 sustained grievous injuries, JUDGMENT
and driver sustained some minor injuries — Bela M. Trivedi, J.—Though factually
Frontal airbags of car were not deployed different, these appeals involve common question
though driver had already fastened seat belt of law-whether the purchase of a vehicle/good
— Defect in car was clearly established so far by a Company for the use/personal use of its
as non-deployment of frontal airbags was Directors would amount to purchase for
concerned — Incomplete disclosure or non- “commercial purpose” within the meaning of
disclosure of complete details with regard to Section 2(1)(d) of the Consumer Protection Act,
functioning of the airbags at time of 1986 (now re-enacted as Consumer Protection
promotion of car, has rightly been considered Act, 2019)?
by National Commission as the “unfair trade
2. The CA No. 353 of 2008 has been filed by
practice” on part of the appellants, and
the appellant-M/s Daimler Chrysler India Pvt.
awarded a sum of Rs. 5 lakhs towards it —
Ltd., now known as Mercedes Benz India Pvt.
National Commission has rightly balanced
Ltd. (original opponent No. 1) arising out of the
the equity by awarding Rs. 5 lakhs only
Original Petition No. 09 of 2006 filed by the
towards deficiency in service on account of
respondent No. 1-M/s Controls and Switchgear
frontal airbags of the car having not deployed
Company Ltd. (original complainant),
at time of accident — Impugned judgment
challenging the impugned judgment and order
upheld. [Paras 34, 35, 36, 37]
dated 17.09.2007 passed by the National
(iv) Consumer Protection Act, 1986 — Consumer Disputes Redressal Commission
Section 2(1)(r), 23 — Unfair trade practice — (hereinafter referred to as the National
Trade practice which for the purpose of Commission), in the said O.P. No. 9/2006.
promoting the sale of any goods by adopting
3. The CA Nos. 19536-19537 of 2017 have
deceptive practice like falsely representing
been preferred by the appellant-Mercedes Benz
that the goods are of a particular standard,
India Pvt. Ltd. and Anr. (original opponent Nos.
quality, style or model, would amount to
1 and 2) arising out of the Consumer Case No. 51
“unfair trade practice” within the meaning of
of 2006 filed by the respondent No. 1-CG Power
Section 2(1)(r) of the Consumer Protection
and Industrial Solutions Ltd. and Mr. Sudhir M.
Act. [Para 39]
Trehan, M.D. of respondent No. 1, (original
Result: Appeals disposed of. complainants), challenging the impugned orders
Cases referred: dated 08.07.2016 and 11.09.2017 passed by the
1. General Motors Pvt. Ltd. v. G.S. Fertilizers Pvt. Ltd., National Commission in the said C.C. No. 51/
II (2013) CPJ 72 (NC). (Referred) [Para 5] 2006. The cross appeal being No. CA No. 2633 of
2. Laxmi Engineering Works v. P.S.G Industrial 2018 has been preferred by the appellant – M/s
Institute, 1995 (SLT SOFT) 632=II (1995) CPJ 1 (SC). CG Power and Industrial Solutions Ltd. (original
(Relied) [Para 11] complainant No. 1) against the respondents-
3. Lilavati Kirtilal Mehta Medical Trust v. Unique Mercedes Benz India Pvt. Ltd. and Ors. (original
Shanti Developers & Ors., IV (2019) CPJ 65 (SC)=I opponents) challenging the judgment and order
(2020) SLT 102. (Relied) [Para 12]
dated 11.09.2017 passed in the said Consumer
4. Shrikant G. Mantri v. Punjab National Bank, II

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Vol. V DAIMLER CHRYSLER INDIA PVT. LTD. v. CONTROLS & SWITCHGEAR CO. LTD. 487

No. 51 of 2006 by the National Commission, in so Director would amount to its purchase for a
far as it is against M/s. C.G. Power. commercial purpose, the matter was referred to
4. At the outset, it may be noted that in the three-member Bench of the National
Original Petition No. 09 of 2006 (from which CA Commission. The three-member Bench in the
No. 353 of 2008 arises), the National Commission Consumer Complaint No. 51 of 2006 vide the
vide the impugned order dated 17.09.2007 after impugned judgment and order dated 08.07.2016
holding that the Complainant-Company being a held as under:
legal entity, was entitled to file a Complaint, and “11(a) If a car or any other goods are
that the cars purchased for the use of the directors obtained or any services are hired or
of the Company, not used for any activity directly availed by a company for the use/
connected with commercial purpose of earning personal use of its Directors or
profit, could not be said to have been purchased employees, such a transaction does not
by the complainant-company for “commercial amount to purchase of goods or hiring
purpose”, had directed the appellant (original or availing of services for a commercial
opponent No. 1) to replace the Car No. DL-5CR- purpose, irrespective of whether the
0333 with a new car of the same or similar model, goods or services are used solely for the
or in the alternative refund its full purchase personal purposes of the directors or
price, namely one half of the amount of Rs. employees of the company or they are
1,15,72,280/-which was paid by the complainant used primarily for the use of the
to the opposite parties for the purchase of the two directors or employees of the company
vehicles in question, and take back the vehicle. It and incidentally for the purposes of the
may further be noted that vide the said impugned company.
order dated 17.09.2007, the National Commission (b) The purchase of a car or any other
had also passed the order with regard to the goods or hiring or availing of services by
second car being car No. DL-9CV-5555, purchased a company for the purposes of the
by the complainant. In respect of that part of the company amount to purchase for a
order pertaining to the second car, the appellant commercial purpose, even if such a car
had preferred an appeal being CA No. 6042 of or other goods or such services are
2007 before this Court. The said Appeal came to incidentally used by the directors or
be disposed of vide the order dated 11.01.2008 by employees of the company for their
this Court. Hence, now, we are concerned with personal purposes.”
the impugned order dated 17.09.2007 pertaining
to the car No. DL-5CR-0333 only, so far as the CA 6. The appellants-Mercedes Benz India Pvt.
No. 353 of 2008 is concerned. Ltd. (the original opponents in Consumer
Complaint No. 51/2006) challenged the said
5. It is further pertinent to note that the Judgment and Order dated 08.07.2016 passed by
findings recorded in the said judgment and order the three-member Bench of the National
dated 17.09.2007 in Original Petition No. 09 of Commission, before this Court by preferring an
2006 with regard to the maintainability of the Appeal being C.A. No. 10410 of 2016. This Court
Complaint at the instance of the complainant- disposed of the said Appeal by passing following
company in respect of the car purchased for the order on 20.02.2017:
use/personal use of the director of the company,
being in conflict with the findings recorded by an “Heard Mr. Shyam Divan, learned
another two-member Bench of the National Senior Counsel along with Mr. Vineet
Commission in case of General Motors Pvt. Ltd. Maheshwari, learned Counsel
v. G.S. Fertilizers Pvt. Ltd., II (2013) CPJ 72 (NC), appearing for the petitioner and Mr.
in which it was held inter alia that the vehicle Amir Singh Pasrich, learned Counsel
purchased by a company for its Managing appearing for the 1st respondent.

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488 SUPREME LAWS TODAY (July) 2024

The present appeal calls in question the information with respect to the
legal propriety of the order dated deployment triggering of the
8.7.2016 passed by the National airbags of the vehicle, in
Consumer Disputes Redressal consultation with AAUI.
Commission, Bench No. 1, New Delhi (iv) The opposite parties No.1 & 2 shall
(for short, 'the National Commission’) in pay a sum of Rs. 25,000/-as the
Consumer Complaint No. 51 of 2006 cost of litigation to complainant
repelling the submission of the appellant No.1.
that the complaint before the said
Commission is not maintainable. (v) The payment in terms of this order
Having heard learned Counsel for the shall be made and the directions
parties, we are of the considered opinion contained herein will be complied
that the National Commission should within three months from today.”
adjudicate the dispute finally and 8. As stated earlier, the said two orders
thereafter it will be open to the appellant 08.07.2016 and 11.09.2017 passed in Consumer
to challenge the order of maintainability, case No. 51 of 2006 have been challenged by the
i.e., the present order as well as the final appellants-Mercedes Benz by way of C.A. No.
order. The National Commission is 19536-19537 of 2017. The Cross Appeal being
requested to dispose of the Consumer C.A. No. 2633 has been preferred by M/s CG
Complaint No. 51 of 2006 within three Power and Industrial Solutions Ltd. (original
months hence. complainant), being aggrieved by the judgment
With the aforesaid observation and and order dated 11.09.2017 passed by the National
liberty, the civil appeal stands disposed Commission.
of. There shall be no order as to costs.” 9. The common bone of contention raised
7. Thereafter, the National Commission by the learned Counsels appearing for the
adjudicated the disputes between the parties on appellants-M/s Daimler Chrysler India Pvt. Ltd.,
merits vide the impugned judgment and order (now Mercedes Benz India Pvt. Ltd.) in their
dated 11.09.2017 and disposed of the Consumer respective Appeals is that the purchase of car/
Case No. 51 of 2006 by giving following directions: vehicle by a company for the use/personal use of
its Directors could not be said to be the purchase
“(i) The opposite parties No.1 & 2 shall of vehicle for self-employment to earn its
pay a sum of Rs.5.00 lacs to livelihood, but it has to be construed as the
complainant No.1 for the purchase of vehicle for “commercial purposes”,
deficiency in the services rendered and therefore such company would fall outside
to it on account of the airbags of the purview of the definition of “consumer”
the car having not deployed/ within the meaning of Section 2(1)(d) of the said
triggered; Act. In this regard it would be apt to reproduce
(ii) The opposite parties No.1 & 2 shall the relevant part of the definition of “Consumer”
pay a sum of Rs.5.00 lacs as as contained in Section 2(1)(d) of the Act, which
compensation to complainant reads as under—
No.1 for the unfair trade practice “2(1)(d) “consumer” means any person
indulged into by them; who,—
(iii) The Opposite Parties No.1 & 2 (i) buys any goods for a
shall, in the Owner’s Manual to be consideration which has been paid
provided to the buyers of their E- or promised or partly paid and
class Cars, as well as on their partly promised, or under any
website, provide adequate

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Vol. V DAIMLER CHRYSLER INDIA PVT. LTD. v. CONTROLS & SWITCHGEAR CO. LTD. 489

system of deferred payment and “19. To summarise from the above

includes any user of such goods discussion, though a strait jacket
other than the person who buys formula cannot be adopted in every
such goods for consideration paid case, the following broad principles can
or promised or partly paid or be culled out for determining whether
partly promised, or under any an activity or transaction is “for a
system of deferred payment when commercial purpose”:
such use is made with the 19.1. The question of whether a
approval of such person, but does transaction is for a commercial purpose
not include a person who obtains would depend upon the facts and
such goods for resale or for any circumstances of each case. However,
commercial purpose; or ordinarily, “commercial purpose” is
(ii) …. understood to include manufacturing/
Explanation.—For the purposes of this industrial activity or business-to-
clause, “commercial purpose” does not business transactions between
include use by a person of goods bought commercial entities.
and used by him and services availed by 19.2. The purchase of the good or service
him exclusively for the purposes of should have a close and direct nexus
earning his livelihood by means of self- with a profit-generating activity.
employment;” 19.3. The identity of the person making
10. From the bare reading of the said the purchase or the value of the
definition, it is discernible that the definition of transaction is not conclusive to the
“consumer” does not include a person who question of whether it is for a
obtains any goods for “resale” or for “any commercial purpose. It has to be seen
commercial purpose”. Though what is whether the dominant intention or
“commercial purpose” has not been defined dominant purpose for the transaction
under the Act, it has been interpreted in catena of was to facilitate some kind of profit
decisions by this Court. generation for the purchaser and/or
11. In Laxmi Engineering Works v. P.S.G their beneficiary.
Industrial Institute, 1995 (SLT SOFT) 632=II 19.4. If it is found that the dominant
(1995) CPJ 1 (SC)=(1995) 3 SCC 583, this Court purpose behind purchasing the good or
after discussing the earlier decisions concluded service was for the personal use and
inter alia that whether the purpose for which a consumption of the purchaser and/or
person has bought goods is a “commercial their beneficiary, or is otherwise not
purpose” within a meaning of definition of linked to any commercial activity, the
expression “consumer” in Section 2(1)(d) of the question of whether such a purchase
Act, is always a question of fact to be decided in was for the purpose of “generating
the facts and circumstances of each case. livelihood by means of self-
12. In Lilavati Kirtilal Mehta Medical Trust employment” need not be looked into.”
v. Unique Shanti Developers & Ors., IV (2019) 13. Further in the case of Shrikant G. Mantri
CPJ 65 (SC)=I (2020) SLT 102=(2020) 2 SCC 265, v. Punjab National Bank, II (2022) CPJ 9 (SC)=II
this Court culled out broad principles for (2022) SLT 583=(2022) 5 SCC 42, this Court
determining whether an activity or transaction is observed thus—
for a “commercial purpose” or not, while holding “50. It is thus clear, that this Court has
that though no strait jacket formula could be held that the question, as to whether a
adopted in every case.

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490 SUPREME LAWS TODAY (July) 2024

transaction is for a commercial purpose 15. Further in the case Rohit Chaudhary &
would depend upon the facts and Anr. v. Vipul Limited, IV (2023) CPJ 45 (SC)=VIII
circumstances of each case. However, (2023) SLT 622=(2024) 1 SCC 8, it was held as
ordinarily, “commercial purpose” is follows—
understood to include manufacturing/ “15. The expression “commercial
industrial activity or business-to-business purpose” has not been defined under the
transactions between commercial entities; Act. In the absence thereof we have to go
that the purchase of the good or service by its ordinary meaning. “Commercial”
should have a close and direct nexus with a denotes “pertaining to commerce”
profit-generating activity; that the identity (Chamber's Twentieth Century
of the person making the purchase or the Dictionary); it means “connected” with
value of the transaction is not conclusive for or engaged in commerce; mercantile;
determining the question as to whether it is “having profit as the main aim” (Collin's
for a commercial purpose or not. What is English Dictionary); relate to or is
relevant is the dominant intention or connected with trade and traffic or
dominant purpose for the transaction and as commerce in general, is occupied with
to whether the same was to facilitate some business and commerce.
kind of profit generation for the purchaser
and/or their beneficiary. It has further been 16. The Explanation [added by
held that if the dominant purpose Consumer Protection (Amendment) Act
behind purchasing the good or service 50 of 1993 replacing Ordinance 24 of
was for the personal use and the 1993 w.e.f. 18-6-1993] excludes certain
consumption of the purchaser and/or purposes from the purview of the
their beneficiary, or is otherwise not expression “commercial purpose” — a
linked to any commercial activity, then case of explanation to an exception to
the question of whether such a purchase amplify this definition by way of an
was for the purpose of “generating illustration would certainly clear the
livelihood by means of self- clouds surrounding such interpretation.
employment” need not be looked into.” For instance, a person who buys a car for
his personal use would certainly be a
14. In the case of National Insurance Co. consumer, but if purchased for plying
Ltd. v. Harsolia Motors & Ors., II (2023) CPJ 33 the car for commercial purposes,
(SC)=III (2023) SLT 536=(2023) 8 SCC 362, this namely, as a taxi, it can be said that it is
Court while relying and emphasizing on the for a commercial purpose. However, the
principles laid down in Lilavati Kirtilal Mehta Explanation clarifies that even
Medical Trust (supra) noted that what needs to be purchases in certain situations for
seen while determining whether the object “commercial purposes” would not take
purchased is being used for commercial purpose within its sweep the purchaser out of the
or not, is whether the dominant intention or definition of expression “consumer”. In
dominant purpose for the transaction was to other words, if the commercial use is by
facilitate some kind of profit generation for the the purchaser himself for the purpose of
purchaser and/or their beneficiary. What needs earning his livelihood by means of self-
to be determined is whether the object had a close employment, such purchaser of goods
and direct nexus with the profit generating would continue to be a “consumer”.
activity and whether the dominant intention or
dominant purpose for the transaction was to 17. This Court in Lilavati Kirtilal Mehta
facilitate some kind of profit generation for the Medical Trust v. Unique Shanti Developers
purchaser and/or their beneficiary. [Lilavati Kirtilal Mehta Medical Trust v.

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Vol. V DAIMLER CHRYSLER INDIA PVT. LTD. v. CONTROLS & SWITCHGEAR CO. LTD. 491

Unique Shanti Developers, (2020) 2 SCC such a purchase was for the purpose of
265 : (2020) 1 SCC (Civ) 320], has held “generating livelihood by means of self-
that a straitjacket formula cannot be employment” need not be looked into. Again,
adopted in every case and the broad the said determination cannot be restricted in a
principles which can be curled out for straitjacket formula and it has to be decided on
determining whether an activity or case-to-case basis.
transaction is for a commercial purpose I. CIVIL APPEAL NO. 353 OF 2008
would depend on facts and
circumstances of each case. 17. So far as the CA No. 353/2008 is
concerned, it appears that as per the case of the
18. Thus, if the dominant purpose of respondent No. 1 (original complainant), it had
purchasing the goods or services is for a purchased two cars for the use by its Whole-time
profit motive and this fact is evident Executive Directors as part of their perquisites
from the record, such purchaser would and the said high priced luxury cars were in fact
not fall within the four corners of the being used by them for their personal use and for
definition of “consumer”. On the other the use of their immediate family members. It
hand, if the answer is in the negative, was strenuously urged by the learned Senior
namely, if such person purchases the Counsel Ms. Arora for the appellant that if the car
goods or services is not for any in question was purchased by the respondent
commercial purpose and for one's own No. 1 for the personal use of its Director, it must
use, it cannot be gainsaid even in such carry a requisite form attested by the Chartered
circumstances the transaction would be Accountant along with the Income Tax returns of
for a commercial purpose attributing the concerned Director, and since such document
profit motive and thereby excluding or form having never been submitted and
such person from the definition of produced before the Commission, it was required
“consumer”.” to be presumed that the car was purchased by the
16. The sum and substance of the above respondent No. 1-company for its commercial
decisions is that to determine whether the goods purpose. Such a submission could not be accepted.
purchased by a person (which would include a It is trite to say that when a consumer files a
legal entity like a company) were for a commercial complaint alleging defects in the goods purchased
purpose or not, within the definition of a by him from the opponent seller, and if the
“consumer” as contemplated in Section 2(1)(d) opponent-seller raises an objection with regard
of the said Act, would depend upon facts and to the maintainability of the consumer complaint
circumstances of each case. However ordinarily on the ground that the goods in question were
“commercial purpose” is understood to include purchased by the complainant-buyer for its
manufacturing/industrial activity or business- commercial purpose, the onus to prove that they
to-business transactions between commercial were purchased for “commercial purpose” and
entities. The purchase of the goods should have therefore, such goods would fall outside the
a close and direct nexus with a profit generating definition of “consumer” contained in Section
activity. It has to be seen whether the dominant 2(1)(d) of the Act, would be on the opponent-
intention or dominant purpose for the transaction seller and not on the complainant-buyer. In the
was to facilitate some kind of profit generation instant case, it has been specifically asserted by
for the purchaser and/or their beneficiary. If it is the respondent-complainant that the car in
found that the dominant purpose behind question was purchased by it for the personal use
purchasing the goods was for the personal use of its Whole-time Director and for his immediate
and consumption of the purchaser and/or their family members, and the dominant purpose of
beneficiary, or was otherwise not linked to any purchasing the car was to treat it as a part of the
commercial activity, the question of whether perquisite to the Director. There is nothing on

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492 SUPREME LAWS TODAY (July) 2024

record worth the name to show that the said car the AC control unit was found to be defective.
was used for any commercial purpose by the Thereafter, on the respondent-company having
respondent-complainant. Even if it is presumed made the complaint of excessive heating on the
that the respondent-complainant company had center hump more prominently on long drives
taken benefit of deduction available to it under out of station, the car was once again inspected
the Income Tax Act, nonetheless in absence of by the engineers of the appellant-company, who
any material placed on record to suggest that had informed the respondent-complainant vide
such purchase of car had a nexus or was linked to letter dated 03.12.2004 that “on account of the
any profit generating activity of the company, it catalytic converter fitted underneath the car, these
could not be said that such a high-priced luxurious cars do heat a lot”, and advised that “the matter
car was purchased by the respondent No. 1 for its could be resolved by adjusting the rear air-
“commercial purpose”. conditioning vents suitably”. It appears that
18. As regards the defects in the car, both thereafter repeated requests/complaints having
the sides have heavily placed reliance upon the been made by the respondent-complainant, the
correspondence which took place between them respondent No. 2 wrote vide the letter dated
after the purchase of the car by the respondent 22.12.2004 that the exhaust pipe of the car needed
No. 1 and after the defects were detected in the replacement. The respondent-complainant again
car. The said correspondence has also been wrote to the appellant vide the letter dated
tabulated by National Commission in the 23.12.2004 that though they were offering to
impugned order from which it appears that replace the exhaust pipe, it was not only the
within a very short time after the purchase of the center portion which was heating up but the
car in question on 31.03.2003, one of the directors entire floor was heating up with excessive heat
of the respondent-company namely Mr. Ashok and therefore, the vehicle needed to be replaced.
Khanna had taken the car out from Delhi for The respondent-complainant ultimately wrote a
going to Chandigarh and Dehradun in April, letter dated 21.03.2005 to the appellant reiterating
2003 and found that “sitting at the back seat, the the persisting problem of hump heating despite
center hump on the floor over the drive shaft of a catena of experiments carried out towards
the vehicle was excessively heated and rectification of the malfunctioning of the car and
particularly so on the left side of the center hump". requested for the replacement of the vehicle. The
The said defect was immediately reported to the said request having been rejected by the appellant
appellant and the respondent No. 2, however on 30.03.2005, the complaint was filed by the
after examining the vehicle they had reported respondent-complainant before the National
that everything was fine and nothing unusual Commission.
was observed. Since, the said complaint of heating 19. It appears that on the submission made
persisted, the respondent-complainant again on behalf of the appellant that it would call the
requested the appellant to rectify the defect. concerned Engineer for examining the vehicle,
Thereafter, several correspondences ensued the National Commission vide order dated
between the parties. It is pertinent to note that in 10.08.2006 directed that the vehicle would be
the letter dated 21.08.2003, it was stated by the examined by the Engineer of the appellant in
appellant that “although the area (center hump) presence of the respondent No.1 or its
was observed to be warm, it is not a defect”. In its representative. Pursuant to the said order, Mr.
letter dated 02.07.2004, the respondent No. 2 Stephen Lobo, Manager Field Service working at
who happened to be the dealer of the appellant Pune Office of the Appellant, conducted a test
required the complainant-company with regard drive alongwith the representative of the
to the center hump to keep it under observation respondent – complainant, and submitted his
over a longer distance and to report the matter in affidavit to the Commission. However, the
case of any abnormalities, had confirmed that temperature recorded by the said Manager of the

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Vol. V DAIMLER CHRYSLER INDIA PVT. LTD. v. CONTROLS & SWITCHGEAR CO. LTD. 493

Appellant having been disputed by the and submitted their respective reports before the
respondent-complainant, the National Commissioner.
Commission vide the order dated 25.09.2006 20. In view of the order dated 10.08.2006
appointed one Joint Registrar and one Deputy passed by the National Commission the test drive
Registrar of the Commission as Local was conducted by the engineers of the appellant
Commissioners, further directing them to travel in presence of the respondent-complainant on
in the cars in question separately on 07.10.2006 21.08.2006 and the result of the test drive of the
for more than 300 kms towards Rishikesh side. car DL-5CA-0333 was as under:
Accordingly, the Local Commissioners travelled
Chassis No. Time Kms Temp Temp Remark Ambient
Gauge I Gauge II Temp
WDB Provided Provided
by DCIPL by C&S
2201676A
326003
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
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 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 Temp. gauge Ambient
1 of DCIPL 2 of C & S (Degree)
(Degree) (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

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494 SUPREME LAWS TODAY (July) 2024

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 the said applications, the National Commission
09.10.2006, had made following note with regard vide the order dated 06.02.2007 had rejected the
to the car in question: said applications.
“1. The sensor gauge fixed by the 23. From the afore-discussed documents/
opposite party was 1 mm above applications produced on record before the
while the sensor gauge provided National Commission, it was clearly established
by the complainant was fixed on by the respondent-complainant that an excessive
the mat. The same can be seen heat was generated in the car, and particularly,
with the help of photographs the center hump on the floor over the drive shaft
taken by the parties. was felt excessively heated as also the left side of
2. While traveling in the car the the center hump. As rightly submitted by the
temperature recorded by the learned Counsel for the respondent-complainant,
sensor gauges generally showing after continuous trial and error method of
the increasing tendency. rectification conducted to remove the defect of
overheating, since the said complaint persisted,
3. There is a variation of 5-9 degree the appellant had moved the applications seeking
temperature between the permission of the Commission to make one more
temperatures noted down from effort by providing additional insulation, and
the two sensor gauges provided by also for permitting the appellant to repurchase
the parties. the car in question for the market value/book
4. On perusing the temperature value as it existed at the relevant time in 2007.
chart, it is found that the The market value of the car in question as on
temperature recorded by both the 25.11.2006 was stated to be Rs. 34 lakhs, and the
sensor gauges is higher than book value thereof as on 31.12.2006 was stated to
ambient temperature throughout be about Rs. 36 lakhs. The appellant though not
the journey.” admitted specifically about the said defects in the
car, had indirectly stated in the said application
22. It is further pertinent to note that pending
seeking permission to provide additional
the said proceedings before the National
insulation to the effect that the warm surface of
Commission, the appellant had made two
hump/tunnel was a natural physical
applications, one on 12.10.2006 seeking
characteristic of the car and hence could not be
permission to make one more effort by providing
altered to a large extent and that the additional
additional insulation to address the concerns of
insulation could be fitted by a minor modification.
the complainant in regard to the high temperature
The said statements in the said applications read
at the left hand side of the hump felt by it, and the
with the other materials/documents on record
other application seeking prayer to permit to test
as also the reports of the Local Commissioner
the complainant’s car by an appropriate
appointed by the National Commission, has led
laboratory, or in the alternative to dispose of the
us to come to an irresistible conclusion that the
matter with direction to provide an additional
inherent defect of overheating of the car in
insulation to the hump of the cars being used by
question had persisted despite the appellant
the complainant or in the alternative to hold that
having provided the rectification measures like
the used car be resold by the complainant to the
providing additional insulation in the car, which
appellant (opponent No. 1) for present market
had caused great inconvenience and discomfort
value/book value. The respondent-complainant
to the passengers seated in the car in question.
having not agreed to the said proposals made in

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Vol. V DAIMLER CHRYSLER INDIA PVT. LTD. v. CONTROLS & SWITCHGEAR CO. LTD. 495

The advice given by the technical expert of the and having regard to the subsequent event of the
appellants that the overheated portions of the respondent-complainant having retained and
rear cabin of the car should be cooled by directing used the car in question for about seventeen
the draft from the air-conditioning vents towards years, we are of the opinion that the interest of
the said portion, was not only an illogical advice justice and balance of equity would be met if the
but was an absolute improper advice given to respondent-complainant is permitted to retain
conceal the defect in the car. the car in question and the appellant is directed
24. Considering the affidavits, to refund Rs. 36 lakhs instead of Rs. 58 lakhs as
correspondences, reports and the other material directed by the National Commission in the
on record, we have no hesitation in holding that impugned order.
such overheating of the surface of hump and the II. CIVIL APPEAL NOS. 19536-19537/2017 AND
overall high temperature in the car was a fault, 2633/2018
imperfection or shortcoming in the quality or 26. So far as C.A. No. 19536-19537/2017
standard which was expected to be maintained filed by the appellants-Mercedes Benz India
by the appellants under the contract with the Private Ltd. and another (Original Opponents)
respondent-complainant and therefore was a and the cross Appeal being C.A. No.2633 of 2018
‘defect’ within the meaning of Section 2(1)(f) of filed by M/s C.G. Power and Industrial Solutions
the said Act. Ltd., (Original Complainant No.1) arising out of
25. People do not purchase the high-end Consumer Complaint No. 51/2006 are concerned,
luxurious cars to suffer discomfort more as stated hereinabove, after the challenge of the
particularly when they buy the vehicle keeping order dated 08.07.2016 passed by the National
utmost faith in the supplier who would make the Commission in the said case, before this Court by
representations in the brochures or the way of filing C.A. No.10410/2016, this Court had
advertisements projecting and promoting such disposed of the said Appeal by directing the
cars as the finest and safest automobile in the National Commission to adjudicate the dispute
world. The respondent-complainant having between the parties finally, leaving it open for
suffered great inconvenience, discomfort and the appellant Mercedes Benz to challenge the
also the waste of time and energy in pursuing the order on maintainability as well as the final
litigations, we are of the opinion that the order. Accordingly, the final order having been
impugned order passed by the National passed by the Commission, the appellant has
Commission of awarding the compensation by challenged the order dated 08.07.2016 as well as
directing the appellants to refund the purchase the final order dated 11.09.2017 by way of instant
price i.e., Rs. 58 lakhs approx. to the respondent- appeals, and the cross appeal has been filed by
complainant, and take back the car (vehicle) as the respondent-complainant against the order
such does not warrant any interference. However, dated 11.09.2017.
at this juncture, it may be noted that the impugned 27. In the instant case, the respondent Nos.
order was passed on 17.09.2007 and before that 1 and 2 (Original Complainants) had filed the
pending the proceedings, the appellant had complaint being Consumer Complaint No. 51/
already made an offer in the year 2006 to 2006 before the National Commission, alleging
repurchase the car in question as per the market inter alia that in October 2002, the appellants
value of the car as of November 2006 to be Rs. 34 (original opponents) had launched a new
lakhs or at the book value of the car as of December Mercedes Benz, E-Class-E 240 petrol version
2006 to be about Rs. 36 lakhs, however the (hereinafter referred to as the car in question). At
respondent had not agreed to the said proposal, the time of launch of e-class model, the appellants
and continued to use the said car for about had proclaimed and elaborated safety system of
seventeen years till this date. Therefore, having e-class inter alia that it included front airbags, side
regard to the said offer made by the appellants,

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496 SUPREME LAWS TODAY (July) 2024

airbags, and window airbags, automatic child injuries or had died also. Due to the said accident,
seat recognition and central locking with crash not only that respondent No.2 had suffered grave
sensors, and that it was the safest place on the injuries, agony and mental trauma, his family
road etc. The correct operation of the airbags was members and the respondent-company itself,
also guaranteed by the appellants. Based on such had suffered lot of inconvenience and financial
representations and especially of the safety loss. It appears that lot of correspondence had
features, the respondent No. 1 on 27.11.2002 had ensued between the parties, and ultimately the
purchased the car in question bearing registration respondents-complainants had filed the
No. MH-01-GA-6245 from the appellants for its complaint seeking compensation under the
Managing Director-respondent No. 2 for a total various heads.
consideration of Rs.45,38,123/-. 29. On the maintainability of the complaint,
28. It was further alleged in the complaint though the learned Senior Advocate Mr. Dhruv
by the respondents that on an official trip on Mehta had strenuously urged that the purchase
17.01.2006 at 06:20 A.M, the respondent No.2 of the car by the respondent No. 1 company for
was returning from Nasik to Mumbai. At that the use of the respondent No.2 i.e., its director
time, the car in question was being driven by the would tantamount to purchase for commercial
company driver Mr. Madhukar Ganpat Shinde, purpose, the said submission cannot be accepted
while the respondent No. 2 was seated in the in view of the elaborate discussion and reasonings
back seat of the car. On Nasik express, NH-3, a recorded by us hereinbefore while dealing with
goods carrier coming from the opposite side, the issue in C.A. No. 353/2008. In this case also
collided head-on with the car, and the impact of the appellants had failed to bring on record any
the collision was so high that the entire front material to show that the dominant purpose or
portion of the car was smashed, however none of dominant use of the car in question was for
the airbags opened. As a result, thereof, the driver commercial purpose or that the purchase of the
suffered the injuries on his neck, arms and car had any nexus or was linked with any profit
forehead, whereas the respondent No. 2 suffered generating activity of the respondent No. 1
grievous injuries on his face, a deep gash on the company. We therefore confirm the finding
forehead fracture at the nasal bone and nasal recorded by the three-member Bench of the
septum, fracture of the C1 vertebra at the anterior National Commission in the order dated
and posterior arches and fracture of C2 vertebra. 08.07.2016 on the maintainability of the complaint
The respondent No. 2 had to be hospitalized for filed by the respondent-complainant company.
more than six weeks and even after the discharge 30. On the merits of the claim made by the
he was advised strict bedrest at home. It took respondents – complainants, it was sought to be
very long time for him to recover and resume the submitted by Learned Senior Advocate Mr.
work. According to the respondents- Dhruv Mehta for the appellants-original
complainants, if the airbags had opened at the opponents that the complainants did not lead
right time, as represented by the appellants- any expert evidence or any other evidence to
opponents, the respondent No. 2 might have establish that there was any defect in the front
suffered less or no injuries. The complainants airbags of the car in question and in absence of
had also filed an FIR with the police station at any such evidence, the National Commission
Nasik on 17.01.2006. On 20.01.2006, the car was could not have concluded that the front airbags
taken by the respondent No. 3 being authorized of the car were defective. According to him, the
service centre and a detailed inspection and Commission had committed gross error in
assessment of cost for the repairs was made. It discarding the report of the expert produced by
was also alleged that in number of cases the the appellants, who had stated as to why
airbags had failed to deploy at the time of deployment of the driver’s airbag was not
accidents and people had suffered grievous required in this case. According to him, since, the

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Vol. V DAIMLER CHRYSLER INDIA PVT. LTD. v. CONTROLS & SWITCHGEAR CO. LTD. 497

driver was sufficiently restrained by the seat belt, respondent No.1 for the respondent No. 2 its
there was no need for the front airbag to deploy Managing Director. The occurrence of the
at the time of accident and the front passenger accident on 17.01.2006 is not disputed. It is also
airbag would be triggered only if the front not disputed that at the time of accident, the
passenger seat was occupied, whereas in the driver of the car was wearing the seat belt, whereas
instant case, the complainant No. 2 was sitting at the respondent No. 2 who was sitting on the rear
the rear left seat and therefore the front left side seat did not wear the seat belt. It is also
passenger’s airbag could not have deployed. In not disputed that neither the airbags on the front
any case, runs the submission of Mr. Mehta, the side nor the airbags on the side of the respondent
complainants had already sold out the car during No. 2 had opened at the time of accident, as a
the pendency of the proceedings before the result thereof, the respondent No. 2 sustained
National Commission and thereby had created a grievous injuries, and the driver sustained some
situation where the Commission could not have minor injuries. It is also not disputed that neither
inspected the car in question. He further the respondents nor the appellants had produced
submitted that there was no “unfair trade on record the owner’s manual of 2002 i.e. the year
practice” practiced by the appellants and the when the car in question was purchased by the
damages/compensation awarded by the respondents, though it was specifically directed
Commission was without any legal basis. by the Commission to produce the same by
31. The Senior Learned Advocate Mr. passing the order on 24.08.2017. Though
Prashanto Chandra Sen appearing on behalf of subsequently, the complainant had produced on
the respondents-complainants however record one owner’s manual, the same did not
vehemently submitted that admittedly neither appear to be of the relevant year by the
the front airbags nor the side airbags of the car Commission. The appellants-opponents had
deployed as a result of the accident. The appellants produced on record certain photographs as also
had not produced on record the owner’s manual the reports of technical experts of the appellants.
and the features of the airbags given in the owner’s 33. The National Commission after
manual on record produced by the complainants considering the material on record disposed of
did not disclose as to what was the pre- the complaint of the respondents-complainants
determined level at which the airbags would directing the appellants to pay a sum of Rs. 5
deploy. According to him, the appellants had lakhs to the complainant No. 1 for the deficiency
misrepresented that their car was the safest place in the services rendered to it on account of the
on the road and that the provision of airbags was airbags of the car having not deployed/ triggered
an additional safety measure not only for the and further directed the appellants to pay a sum
front passengers but also for the rear passengers. of Rs. 5 lakhs as compensation to the complainant
According to him, since the owner’s manual did No. 1 for the unfair trade practice indulged into
not contain accurate and complete information by them, and a sum of Rs.25,000/-as cost of
as regards the safety measure of airbags, and the litigation.
appellants having misrepresented about the 34. The National Commission after
safety measures at the time of the promotion of elaborately considering the Owner’s Manual
the car, it was rightly construed as an “unfair produced by the complainants, as the appellants-
trade practice” on the part of the appellants by opponents had failed to produce the owner’s
the Commission, however, the Commission had manual of the relevant year 2002 when the car
committed an error in not awarding exemplary was purchased by the complainants and the
damages to the respondents-complainants. other material on record, observed in Para No. 9
32. In the instant case, there are certain and 10 of the impugned judgment dated 11th
undisputed facts as transpiring from the record, September, 2017 as under:
like that the purchase of the car was by the

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498 SUPREME LAWS TODAY (July) 2024

“9. It is evident from a perusal of the practice means a trade practice which
above referred extract from the Manual for the purpose of promoting the sale,
that the side airbags are triggered only use or supply of any goods adopts any
on the side on which an impact occurs unfair method or unfair or deceptive
in an accident and that the said airbags practice including that the goods are of
are independent of the front airbags. a particular standard and quality. It is
Since, admittedly, there was no impact alleged in the complaint that the
on the side of the car in which opposite parties at the time of launching
complainant No.2 was sitting at the time E-Class Model highlighted its safety
of the accident, the side airbag would system, including airbags while
obviously not have triggered. Even proclaiming the vehicle to be the safest
otherwise the airbags on the side will not place on the road. Obviously, the
trigger in the event of frontal accident opposite parties were seeking to encash
unless the airbags system is such as to upon the safety features of the vehicle,
trigger every airbag irrespective of the including the airbags provided therein,
side on which the impact occurs in an for the purpose of selling the vehicle.
accident. Similarly, window bags which Therefore, it would be necessary for
are independent of the front airbags also them to disclose to the buyers as to what
trigger on the side on which the impact the predetermined levels, necessary for
occurs. Therefore, the window airbags triggering the front airbags of the vehicle
would not have triggered in this case were. Highlighting the safety features
since there was no impact on the sides including the airbags for selling the
on which the window bags were vehicle, without such a disclosure, in my
provided in the vehicle. opinion, constituted an unfair and
10. As far as the front airbags are deceptive trade practice. It is only the
concerned, it is stated in the Manual that opposite parties which knew what
they are triggered if (i) a front-end would be the level which would trigger
impact occurs (ii) if collision happens at the frontal airbags in the event of an
a force exceeding a ‘predetermined accident. Therefore, the aforesaid
level.’ The Manual however, does not material information ought not to have
disclose as to what the said been withheld while selling the vehicle.
predetermined level was. If the front The opposite parties therefore, indulged
airbags were not to deploy in every in unfair trade practice or the purpose or
accident resulting in front end impact, promoting the sale of their vehicle.”
the opposite parties, in my view, ought 35. The National Commission also
to have disclosed to the buyers as to considered the report of Mr. Lothar Ralf
what the predetermined level necessary Schusdzarra, the Technical Expert and Senior
to trigger the front passenger airbag Engineer working with the Appellant Company
were. In the absence of such a disclosure who had inspected the car after the accident, and
in the Owner’s Manual, as far as the the photographs forming part of the report of the
functioning of the front passenger technical expert, and observed that the vehicle
airbags are concerned would be that is the car in question, had frontal accidental
deficient, on account of its not providing with another vehicle stated to be a container
the requisite information to the buyer. truck which had a higher chassis, and that the
Section 2(1)(r) of the Consumer front portion of the car was badly damaged as a
Protection Act, 1986 to the extent it is result of the said accident. The said photographs
relevant provides that unfair trade also corroborated with the depositions of the

20
Vol. V MIR MUSTAFA ALI HASMI v. STATE OF A.P. 499

driver Mr. Madhukar Shinde and the respondent- particular standard, quality, style or model,
complainant No. 2 Mr. Mohan Trehan which would amount to “unfair trade practice” within
established that the front portion of the vehicle the meaning of Section 2(1)(r) of the said Act.
was smashed when it was hit by the truck and the 40. In that view of the matter, following
collision of car with the truck was quite impactful. order is passed:
36. There was nothing on record produced I. C.A. No. 353/2008
by the appellants to show that they had disclosed
either in the Owner’s Manual or in the Brochure The respondent-complainant is
about the limited functioning of the airbags, permitted to retain the car bearing
which according to them was an additional safety registration No. DL-9CV-5555. The
measure in the car. On the contrary, as per the appellant is directed to refund Rs.
case of the respondents-complainants a 36,00,000/-(Rupees thirty-six lakhs) to
misrepresentation was made by the appellants at the respondent by way of compensation
the time of promotion of the car in question that within three months from the date of
e-class car had a safety system which included this order, failing which the appellant
front airbags, side-airbags and window airbags. shall pay interest at the rate of 9% per
Even if it is accepted that the airbags would annum thereon from the date of this
deploy only when the seat belt was fastened by order till payment. The Appeal stands
the passenger, in the instant case admittedly, the partly allowed.
frontal airbags of the car were not deployed II. C.A. No. 19536 & 19537/2017 and C.A. No.
though the driver had already fastened the seat 2633/2018
belt. Thus, the defect in the car was clearly
All the three Appeals are dismissed.
established so far as non-deployment of frontal
airbags was concerned. Appeals disposed of.

37. Incomplete disclosure or non-disclosure

of the complete details with regard to the V (2024) SLT 499
functioning of the airbags at the time of promotion
SUPREME COURT OF INDIA
of the car, has rightly been considered by the
National Commission as the “unfair trade B.R. Gavai, J. & Sandeep Mehta, J.
practice” on the part of the appellants, and MIR MUSTAFA ALI HASMI—Appellant
awarded a sum of Rs. 5 lakhs towards it. The versus
National Commission has also rightly balanced STATE OF A.P. —Respondent
the equity by awarding Rs. 5 lakhs only towards
the deficiency in service on account of the frontal Criminal Appeal No. ......... of 2024 (Arising out of SLP
(Crl.) No. 9091 of 2022)—Decided on 10.7.2024
airbags of the car having not deployed at the time
of accident. Prevention of Corruption Act, 1988 —
Sections 7, 13(1)(d), 13(2) — Illegal
38. Since the National Commission has
gratification — Demand and acceptance —
considered in detail the evidence and the material
Prosecution miserably failed to prove the
on record adduced by the both the parties, in our
factum of demand of bribe against appellant
opinion the well-considered judgment dated 11th
by reliable direct or circumstantial evidence
September 2017 passed by the National
— Complainant (PW-1) had opportunity to
Commission does not warrant any interference.
plant the tainted currency notes into bag
39. It is needless to say that a trade practice being carried by appellant (AO1) —
which for the purpose of promoting the sale of Complainant (PW-1) was simply used as a
any goods by adopting deceptive practice like tool to get the appellant (AO1) trapped on
falsely representing that the goods are of a made up allegations — Prosecution cannot be

21