Falsely Representing That Goods Are Of Particular Standard Is “Unfair Trade Practice” Under Consumer Protection Act: Supreme Court

The Supreme Court observed that falsely representing that the goods are of a particular standard, quality, style, or model, amounts to “unfair trade practice” under Section 2(1)(r) of the Consumer Protection Act, 1986 (now re-enacted as Consumer Protection Act, 2019).

The Court observed thus in a batch of civil appeals involving common question of law that whether the purchase of a vehicle/good by a Company for the use/personal use of its directors would amount to purchase for “commercial purpose” within the meaning of Section 2(1)(d) of CPA.

The two-Judge Bench of Justice Bela M. Trivedi and Justice Pankaj Mithal held, “Incomplete disclosure or non-disclosure of the complete details with regard to the functioning of the airbags at the time of promotion of the car, has rightly been considered by the National Commission as the “unfair trade practice” on the part of the appellants, and awarded a sum of Rs. 5 lakhs towards it. … It is needless to say that a trade practice which for the purpose of promoting the sale of any goods by adopting deceptive practice like falsely representing that the goods are of a particular standard, quality, style or model, would amount to “unfair trade practice” within the meaning of Section 2(1)(r) of the said Act.”

Senior Advocate Dhruv Mehta represented the appellants while Senior Advocate Prashanto Chandra Sen represented the respondents.

Factual Background -

Mercedes Benz India Pvt. Ltd. (formerly known as M/s Daimler Chrysler India Pvt. Ltd.) i.e., the appellant challenged the judgment of the National Consumer Disputes Redressal Commission (NCDRC). The NCDRC held that the complainant company being a legal entity was entitled to file a complaint and that the cars purchased for the use of the directors of the company, not used for any activity directly connected with commercial purpose of earning profit could not be said to have been purchased by the company for “commercial purpose”.

The NCDRC directed the appellant to replace the car with a new one of the same or similar model or in the alternative, refund its full purchase price, namely one half of the amount of Rs. 1,15,72,280/-, paid by the complainant for the purchase of two vehicles and take back the vehicle. Being aggrieved by the judgment of the National Commission, the appellant was before the Apex Court.

The Supreme Court in the above context of the case noted, “People do not purchase the high-end luxurious cars to suffer discomfort more particularly when they buy the vehicle keeping utmost faith in the supplier who would make the representations in the brochures or the advertisements projecting and promoting such cars as the finest and safest automobile in the world. The respondent complainant having suffered great inconvenience, discomfort and also the waste of time and energy in pursuing the litigations, we are of the opinion that the impugned order passed by the National Commission of awarding the compensation by directing the appellants to refund the purchase price i.e., Rs. 58 lakhs approx. to the respondent-complainant, and take back the car (vehicle) as such does not warrant any interference.”

The Court said that the interest of justice and balance of equity would be met if the respondent complainant is permitted to retain the car in question and the appellant is directed to refund Rs. 36 lakhs instead of Rs. 58 lakhs as directed by the National Commission in the impugned order.

“Even if it is accepted that the airbags would deploy only when the seat belt was fastened by the passenger, in the instant case admittedly, the frontal airbags of the car were not deployed though the driver had already fastened the seat belt. Thus, the defect in the car was clearly established so far as non-deployment of frontal airbags was concerned”, it also said.

Furthermore, the Court observed that the National Commission rightly balanced the equity by awarding Rs. 5 lakhs only towards the deficiency in service on account of the frontal airbags of the car having not deployed at the time of accident.

“Since the National Commission has considered in detail the evidence and the material on record adduced by the both the parties, in our opinion the well-considered judgment dated 11th September 2017 passed by the National Commission does not warrant any interference”, it concluded.

Accordingly, the Apex Court dismissed the appeals, permitted the complainant to retain the car, and directed the appellant to refund the amount within 3 months.

Cause Title- M/s Daimler Chrysler India Pvt. Ltd. v. M/s Controls & Switchgear Company Ltd. & Anr. (Neutral Citation: 2024 INSC 496)

Appearance:

Appellant: Senior Advocate Dhruv Mehta, AOR Sidharth Sethi, Advocate Avinash Das, AOR P. S. Sudheer, Advocates Prasouk Jain, Rabiya Thakur, Saurabh Mishra, Karan Sinha, Shalini Nair, Komal Gupta, and AOR Vivek Jain.

Respondents: Senior Advocate Prashanto Chandra Sen, Advocate Arun Khosla, AOR M. A. Chinnasamy, Advocates C Raghavendren, C Rubavathi, Ch. Leela Sarveswar, Saurabh Gupta, AOR Sidharth Sethi, Advocate Avinash Das, and AOR Mr. P. S. Sudheer.

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