Date of the Judgment: 8 September 2022
Citation: Civil Appeal No. 5928 of 2022
Judges: M. R. Shah, J., Krishna Murari, J.
Can a car dealer deliver a used “demo” car to a customer who paid for a new one? The Supreme Court of India recently addressed this issue, emphasizing the importance of fair trade practices and consumer rights. The court overturned the National Consumer Disputes Redressal Commission’s (NCDRC) order, which had reduced the compensation to the customer, and restored the original order directing the dealer to provide a new car. This judgment reinforces the principle that consumers are entitled to receive exactly what they pay for, especially when purchasing big-ticket items like vehicles. The judgment was delivered by a bench comprising Justice M. R. Shah and Justice Krishna Murari, with Justice M.R. Shah authoring the opinion.
Case Background
The appellant, Rajiv Shukla, booked a Tata Victa GX TC car with M/s. Gold Rush Sales and Services Ltd. (respondent no. 1). He paid a booking amount and later an additional sum of Rs. 5,30,000 towards the purchase of the vehicle. However, the car was not delivered until 26 May 2006, approximately one year after the full payment. When delivered, the car turned out to be a 2005 model, which was already used and had run 10,000 kms. It was discovered that the car was used by the dealer as a “Demo-Test Drive Vehicle,” and it also had several defects.
The complainant lodged a First Information Report (FIR) with the police. However, the matter could not be resolved. Consequently, the complainant filed a complaint before the District Forum seeking the replacement of the used car with a new one, a refund of all amounts with interest, compensation for damages, and any other relief deemed appropriate.
Timeline
| Date | Event |
|---|---|
| [Date not specified] | Rajiv Shukla books a Tata Victa GX TC Car and pays booking amount. |
| [Date not specified] | Rajiv Shukla deposits a further sum of Rs. 5,30,000 towards purchase of the car. |
| 26 May 2006 | Car delivered to Rajiv Shukla, found to be a used 2005 model with 10,000 kms on it. |
| [Date not specified] | Rajiv Shukla lodges an FIR with the police. |
| [Date not specified] | Rajiv Shukla files a complaint before the District Forum. |
| 29 April 2011 | District Forum orders the dealer to replace the used car with a new one and awards compensation. |
| 19 September 2014 | State Commission confirms the District Forum’s order. |
| 4 January 2016 | National Commission modifies the order, directing compensation of Rs. 1 lakh instead of car replacement. |
| 8 September 2022 | Supreme Court sets aside the National Commission’s order and restores the District Forum’s order. |
Course of Proceedings
The District Forum ruled in favor of the complainant, directing the dealer to take back the used vehicle and deliver a new car in its place. The District Forum also awarded Rs. 5,000 for mental agony and Rs. 2,500 towards litigation costs. The State Commission upheld the District Forum’s decision. However, the National Commission, in its revisional jurisdiction, set aside the findings of the lower forums, stating that there was no evidence to prove that the car delivered was used. It modified the order, directing the dealer to pay Rs. 1 lakh as compensation to the complainant for the defective car instead of replacing the car.
Legal Framework
The Supreme Court considered Section 21 of the Consumer Protection Act, 1986, which outlines the revisional jurisdiction of the National Commission. Specifically, Section 21(b) states that the National Commission can review cases where the State Commission has:
- Exercised jurisdiction not vested in it by law.
- Failed to exercise a jurisdiction so vested.
- Acted in the exercise of its jurisdiction illegally or with material irregularity.
The court noted that the powers of the National Commission under Section 21 of the Consumer Protection Act, 1986 are limited to correcting jurisdictional errors or material irregularities, and it does not have the power to re-evaluate evidence and overturn concurrent findings of fact by the District Forum and the State Commission.
Arguments
Appellant’s Arguments (Rajiv Shukla):
- The National Commission erred in overturning the concurrent findings of the District Forum and the State Commission that the car delivered was a used car.
- The District Forum and the State Commission’s findings were based on a proper appreciation of the evidence.
- The National Commission exceeded its revisional jurisdiction under Section 21 of the Consumer Protection Act, 1986, by interfering with factual findings.
- The test drive/demo slip of the delivered car with Chassis No. 939353 proved that the car was used as a demo/test drive car.
- The dealer was duty-bound to supply a new car as the full sale consideration was paid for a new car.
- Non-supply of a new car amounts to dishonesty and unfair trade practice.
Respondent’s Arguments (Gold Rush Sales and Services Ltd.):
- The National Commission was justified in interfering with the findings of the District Forum and the State Commission.
- The National Commission correctly observed that there was no evidence to prove that the car delivered was an old car.
Respondent’s Arguments (Tata Motors Ltd.):
- Tata Motors Ltd. is a proforma respondent as no order has been passed against them.
Submissions Table
| Main Submission | Appellant (Rajiv Shukla) | Respondent (Gold Rush Sales) | Respondent (Tata Motors) |
|---|---|---|---|
| Interference with Findings | ✓ National Commission erred in overturning concurrent findings of lower forums. | ✓ National Commission was justified in its interference. | – |
| Evidence of Used Car | ✓ Test drive slip proved the car was a demo vehicle. | ✓ No evidence to prove car was old. | – |
| Obligation to Deliver New Car | ✓ Dealer was bound to deliver a new car upon full payment. | – | – |
| Nature of Trade Practice | ✓ Non-supply of a new car is dishonest and unfair. | – | – |
| Role of Tata Motors | – | – | ✓ Proforma respondent, no order against them. |
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section. However, the core issue before the court was:
- Whether the National Commission was justified in overturning the concurrent findings of the District Forum and the State Commission that the car delivered was a used car, and whether the National Commission exceeded its revisional jurisdiction under Section 21 of the Consumer Protection Act, 1986.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reasoning |
|---|---|---|
| Whether the National Commission was justified in overturning the concurrent findings of the District Forum and the State Commission that the car delivered was a used car, and whether the National Commission exceeded its revisional jurisdiction under Section 21 of the Consumer Protection Act, 1986. | The Supreme Court held that the National Commission was not justified in overturning the concurrent findings of the District Forum and the State Commission and that the National Commission exceeded its revisional jurisdiction. | The Supreme Court noted that the National Commission’s powers under Section 21 of the Consumer Protection Act, 1986, are limited to correcting jurisdictional errors or material irregularities. It does not have the power to re-evaluate evidence and overturn concurrent findings of fact by the District Forum and the State Commission. |
Authorities
The Supreme Court considered the following legal provision:
- Section 21 of the Consumer Protection Act, 1986: This section defines the revisional jurisdiction of the National Commission. The court clarified that the National Commission’s powers are limited to cases where the State Commission has acted without jurisdiction, failed to exercise jurisdiction, or acted illegally or with material irregularity.
Authorities Table
| Authority | Court | How it was used |
|---|---|---|
| Section 21 of the Consumer Protection Act, 1986 | Supreme Court of India | The court interpreted the scope of revisional jurisdiction of the National Commission and held that it does not extend to re-appreciation of evidence. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Appellant (Rajiv Shukla) | Respondent (Gold Rush Sales) | Respondent (Tata Motors) | Court’s Treatment |
|---|---|---|---|---|
| Interference with Findings | ✓ National Commission erred in overturning concurrent findings of lower forums. | ✓ National Commission was justified in its interference. | – | ✓ Accepted appellant’s submission. The court held that the National Commission exceeded its revisional jurisdiction. |
| Evidence of Used Car | ✓ Test drive slip proved the car was a demo vehicle. | ✓ No evidence to prove car was old. | – | ✓ Accepted appellant’s submission. The court noted that the District Forum and State Commission had found the car to be used based on evidence. |
| Obligation to Deliver New Car | ✓ Dealer was bound to deliver a new car upon full payment. | – | – | ✓ Accepted appellant’s submission. The court emphasized that the dealer was obligated to provide a new car. |
| Nature of Trade Practice | ✓ Non-supply of a new car is dishonest and unfair. | – | – | ✓ Accepted appellant’s submission. The court characterized the dealer’s actions as an unfair trade practice. |
| Role of Tata Motors | – | – | ✓ Proforma respondent, no order against them. | ✓ Accepted respondent’s submission. The court acknowledged that Tata Motors was a proforma respondent. |
How each authority was viewed by the Court?
- Section 21 of the Consumer Protection Act, 1986: The court interpreted this provision to emphasize that the National Commission’s revisional jurisdiction is limited. It cannot re-evaluate evidence or overturn concurrent factual findings of lower forums. The court stated that the National Commission had acted beyond the scope of its revisional jurisdiction under Section 21(b) of the Consumer Protection Act.
The Supreme Court held that the National Commission had acted beyond its jurisdiction by re-evaluating the evidence and overturning the concurrent findings of the District Forum and the State Commission. The court emphasized that the dealer was obligated to deliver a new car as per the booking and payment made by the complainant. The delivery of a used “demo” car was considered an unfair trade practice and a breach of trust.
The Supreme Court restored the orders of the District Forum and the State Commission, directing the dealer to replace the used car with a new one. The court also imposed a cost of Rs. 1 lakh on the dealer, with Rs. 50,000 to be paid to the appellant and Rs. 50,000 to be transferred to the Mediation and Conciliation Project Committee (MCPC) of the Supreme Court of India.
The court quoted the following from the judgment:
- “Therefore, when the complainant – customer booked a new car and paid the sale consideration of a new car, the dealer was supposed to and/or bound to deliver the new car. Instead, the respondent no.1 – dealer delivered the used car which was used as “Demo-Test Drive Vehicle”.”
- “In exercising of revisional jurisdiction the National Commission has no jurisdiction to interfere with the concurrent findings recorded by the District Forum and the State Commission which are on appreciation of evidence on record.”
- “Non delivery of a new car can be said to be an unfair trade practice and even it can be said to be dishonesty on the part of the dealer and against the morality and ethics.”
What weighed in the mind of the Court?
The Supreme Court’s decision was heavily influenced by the following factors:
- Consumer Rights: The court emphasized the importance of protecting consumer rights, especially when consumers pay for a new product and receive a used or defective one.
- Fair Trade Practices: The court condemned the dealer’s actions as an unfair trade practice, highlighting the need for ethical and honest business dealings.
- Revisional Jurisdiction Limits: The court reiterated that the National Commission’s revisional powers are limited and do not allow for the re-evaluation of evidence or overturning of concurrent factual findings.
- Breach of Trust: The court viewed the dealer’s actions as a breach of trust, as the customer had paid for a new car and was instead given a used one.
Sentiment Analysis Table
| Factor | Percentage |
|---|---|
| Consumer Rights | 30% |
| Fair Trade Practices | 30% |
| Revisional Jurisdiction Limits | 25% |
| Breach of Trust | 15% |
Fact:Law Ratio Table
| Consideration | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
Logical Reasoning
Customer books and pays for a new car
Dealer delivers a used car
District Forum orders replacement with new car
State Commission confirms District Forum’s order
National Commission modifies, orders compensation
Supreme Court sets aside National Commission’s order
Supreme Court restores District Forum’s order for new car
Key Takeaways
- Consumer Rights Protection: Consumers have the right to receive the goods they pay for, especially new items. Dealers cannot deliver used or defective goods against payment for new goods.
- Revisional Jurisdiction Limits: The National Commission’s revisional powers are limited and do not allow for the re-evaluation of evidence or overturning of concurrent factual findings.
- Unfair Trade Practices: Delivering a used car when a new car was booked and paid for is an unfair trade practice and a breach of trust.
- Ethical Business Practices: Dealers must maintain ethical and honest business practices.
- Cost Implications: Dealers may face penalties and costs for engaging in unfair trade practices.
Directions
The Supreme Court directed the following:
- The judgment and order passed by the National Commission was quashed and set aside.
- The judgment and order passed by the District Forum and confirmed by the State Commission were restored.
- The Respondent no.1 was directed to comply with the judgment and order passed by the District Forum.
- The Respondent no.1 was directed to deposit Rs. 1 lakh as costs with the Registry of the Supreme Court within six weeks.
- Rs. 50,000 was to be paid to the appellant towards costs/litigation cost.
- Rs. 50,000 was to be transferred to the Mediation and Conciliation Project Committee (MCPC), Supreme Court of India, New Delhi.
Development of Law
The ratio decidendi of this case is that the National Commission cannot re-evaluate evidence or overturn concurrent factual findings of the District Forum and the State Commission in exercise of its revisional jurisdiction under Section 21 of the Consumer Protection Act, 1986. This judgment reinforces the principle that consumers are entitled to receive exactly what they pay for, especially when purchasing big-ticket items like vehicles. It also clarifies the scope of the revisional jurisdiction of the National Commission. There is no change in the previous positions of law, but the judgment reinforces the existing legal provisions and principles.
Conclusion
The Supreme Court’s decision in this case reaffirms the importance of consumer rights and fair trade practices. The court held that a car dealer must provide a new car to a customer who paid for one, and cannot deliver a used “demo” car instead. The judgment emphasizes that the National Commission’s revisional jurisdiction is limited and cannot be used to overturn concurrent factual findings of lower forums. This ruling provides a significant precedent for consumer protection cases, ensuring that businesses are held accountable for their dealings with consumers.
Category
Parent Category: Consumer Protection Law
Child Categories:
- Consumer Rights
- Unfair Trade Practices
- Revisional Jurisdiction
- Section 21, Consumer Protection Act, 1986
Parent Category: Consumer Protection Act, 1986
Child Categories:
- Section 21, Consumer Protection Act, 1986
FAQ
Q: What does this judgment mean for consumers?
A: This judgment means that consumers have the right to receive the goods they pay for, especially new items. Dealers cannot deliver used or defective goods against payment for new goods. This ruling provides a significant precedent for consumer protection cases, ensuring that businesses are held accountable for their dealings with consumers.
Q: What is the revisional jurisdiction of the National Commission?
A: The revisional jurisdiction of the National Commission is limited to cases where the State Commission has acted without jurisdiction, failed to exercise jurisdiction, or acted illegally or with material irregularity. It does not allow for the re-evaluation of evidence or overturning of concurrent factual findings.
Q: What is considered an unfair trade practice?
A: Delivering a used car when a new car was booked and paid for is considered an unfair trade practice. It is a breach of trust and goes against ethical business practices.
Q: What should a consumer do if they receive a used product when they paid for a new one?
A: Consumers should file a complaint with the appropriate consumer forum. This judgment provides a strong precedent for such cases, and the consumer has a good chance of obtaining relief.