Supreme Court orders Mercedes to refund ₹36 lakh for defective car

The Supreme Court on Tuesday directed Mercedes Benz India Private Limited to refund ₹36 lakh to M/s Controls and Switchgear Company Limited (respondent/ complainant) for malfunctioning and defects in the car purchased by the latter [M/S Daimler Chrysler India Private Limited v. M/S Controls and Switchgear Company Limited and Another]..The respondent-company had argued that in one of two cars purchased by them from Mercedes, the central hump on the floor over the drive shaft of the vehicle suffered from overheating.This inherent defect of excessive heating in the car persisted despite several attempts by Mercedes to rectify the defect, it was contended..A Division Bench of Justices Bela M Trivedi and Pankaj Mithal was of the view that such overheating a fault, imperfection or shortcoming in the quality or standard expected to be maintained by Mercedes under the contract with the respondent-company."People do not purchase the high-end luxurious cars to suffer discomfort more particularly when they buy the vehicle keeping utmost faith in the supplier who would make the representations in the brochures or the advertisements projecting and promoting such cars as the finest and safest automobile in the world," the top court said. In view of the respondent-company having suffered discomfort and waste of time and energy, the Court upheld the order of National Consumer Disputes Redressal Commission (NCDRC) which had held Mercedes liable to refund the purchase price and take back the car."The respondent-complainant having suffered great inconvenience, discomfort and also the waste of time and energy in pursuing the litigations, we are of the opinion that the impugned order passed by the National Commission of awarding the compensation by directing the appellants to refund the purchase price i.e., Rs. 58 lakhs approx. to the respondent-complainant, and take back the car (vehicle) as such does not warrant any interference," the Court said.However, considering that the car was bought in 2006 and the company had retained and used the car in question for about seventeen years, the Court, to meet the ends of justice, directed Mercedes to refund ₹36 lakh (the original purchase price of the car) instead of ₹58 lakh as ordered by NCDRC. It also allowed the respondent to retain the car..During the course of hearing, Mercedes had argued that the respondent-company was not a 'consumer' under Section 2(1)(d) of the Consumer Protection Act, 2019 (CPA).Hence, Mercedes contended that it cannot be held liable to pay anything since defects raised by the respondent would not come under Section 2(1)(f) of CPA.To supplement this, Mercedes argued that purchase of car by the company for the personal use of its directors has to be construed as the purchase of vehicle for 'commercial purposes', and therefore such company would fall outside the purview of the definition of 'consumer' under CPA..The Court noted that it is upon Mercedes to prove that the respondent-company had purchased the car for 'commercial purpose'. However, the Court was of the view that there was nothing placed on record by Mercedes to support its stand."Even if it is presumed that the respondent-complainant company had taken benefit of deduction available to it under the Income Tax Act, nonetheless in absence of any material placed on record to suggest that such purchase of car had a nexus or was linked to any profit generating activity of the company, it could not be said that such a high-priced luxurious car was purchased by the respondent no. 1 for its “commercial purpose”," the Court observed..Therefore, it proceeded to hold the respondent-company as a 'consumer' under CPA. It also said that excessive overheating of the surface of hump of the car in question was a 'defect' under Section 2(1)(f) of CPA and accordingly ruled that Mercedes was liable under the CPA. "We have no hesitation in holding that such overheating of the surface of hump and the overall high temperature in the car was a fault, imperfection or shortcoming in the quality or standard which was expected to be maintained by the appellants under the contract with the respondent-complainant and therefore was a ‘defect’ within the meaning of Section 2(1)(f) of the said Act," the Court said while dismissing the appeal filed by Mercedes against the NCDRC order..Senior Advocate Meenakshi Arora, advocates Sidharth Sethi, Avinash Das, PS Sudheer, Prasouk Jain, Rabiya Thakur, Saurabh Mishra, Karan Sinha, Shalini Nair, Komal Gupta and Vivek Jain appeared for the appellant.Advocates Arun Khosla, MA Chinnasamy, C Raghavendren, C Rubavathi, Ch. Leela Sarveswar, Saurabh Gupta, Sidharth Sethi, Avinash Das and PS Sudheer appeared for the respondents..[Read Judgment]