NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
(From the order dated 23.3.98 in complaint No.194/97
of the State Commission, Delhi)
Vinoo Bhagat … Appellant Vs.
1. General Motors (India) Ltd.
2. Regent Automobiles Ltd. … Respondents
Motor vehicle - purchase of Opel Astra car - defects in new vehicle - criteria laid for replacement and refund of the price.
Misrepresentation as to the manufacturer of the vehicle - if a German vehicle engine of the vehicle manufactured in Australia ‘engineered with finest German precision’ amounts to same thing - consumer misled - case for replacement of the vehicle
HON’BLE MR. JUSTICE D.P. WADHWA,
HON’BLE MR. JUSTICE J.K. MEHRA, MEMBER.
MRS. RAJYALAKSHMI RAO, MEMBER
MR. B.K. TAIMNI, MEMBER.
For the appellant : In person
For the respondent No.1 : Mr. S.K. Sharma and
Mr. Ashutosh Sharma, Advocates
For the respondent No.2 : Mr. Rajiv Nanda, Advocate
O R D E R
DATED THE 30th JANUARY, 2003.
JUSTICE D.P. WADHWA, J.(PRESIDENT)
Vinoo Bhagat, the complainant is the appellant before us. When he purchased a new Opel Astra car from the respondents(manufacturer and the dealer respectively) on 25.3. 1997 for Rs.7,34,244.00, he was under the illusion that he was buying a German car and not a car which is manufactured as German car and that it would be defect free. He made a mistake. According to him a false representation was made that the car he was purchasing was a
German car manufactured in Germany. He was not told that the car had been manufactured in Australia by Holden Company, a subsidiary of General Motors, an American multi-national company . Bhagat also found that defects in the new car substantially impaired the use of the car by him right from the day one till 25.5.97. The new car visited the workshop of the respondents number of times but defects persisted and since 25.5.1997 car is lying with the respondents. He, therefore, filed this complaint before the State Commission for refund of the price with interest, damages and cost. After the pleadings were complete evidence was led by means of affidavits. No expert evidence was led by either of the parties. Respondents in their different written versions denied the allegations of any misrepresentation or defect in the vehicle. State Commission dismissed the complaint. Hence, this appeal by the complainant.
During these proceedings before this Commission, car was sent to the Automotive Research Association of India (ARAI) at the cost of the respondents for its opinion on the functioning of the car. ARAI is a research institute with the Ministry of Industry, Government of India. A report was received on 20th December, 1999, operative portion of which reads as under :
“With the conclusions of all tests as given in the Appendix and detailed in the Report, we find that the vehicle has behaved normally and is very much similar to the one which we have tested during prototype approval. From above it can be concluded that the production quality of the vehicle under test is the same as was given to ARAI for prototype approval. The results of the additional subjective evaluations, conducted to evaluate the complaints, show that the vehicle has behaved normally”.
Bhagat filed objections to the report praying that it be discarded. To these objections reply was filed by the respondents. The correctness or reliability of the report of ARAI, we will consider at a later stage.
The question that arises, however, is as to what are the rights of a consumer in the circumstances of the case before us. He can seek return of the defective car on account of malfunctioning and also on the ground that he was made to believe that it was a particular brand of car when it was not so. If the car is defective and its use is substantially impaired, a consumer can seek replacement as well and if there is any misrepresentation then he can get refund of the purchase price which he paid. Undoubtedly it is for the consumer who complains, to prove the defects in the car but that would not mean that he is required to pinpoint the precise nature of the defects, its cause or source. In the present case, however, Bhagat did point out the defects and filed his own affidavit. The warranty for the car is for the whole of the product and is breached when the car does not perform properly even if no individual part can be identified as defective. A consumer forum has to examine the case from the angle of a reasonable and a man of ordinary prudence. We may say when the consumer who buys a brand new car alleges that that is not properly functioning, his statement is to be taken as adequate to meet the requirement of burden of proof when it is supported by his affidavit. Of course, the expert testimony will put his case still on a higher footing. In the present case we need not consider the question of replacement of the car as according to the complainant he has no confidence left in the make of the car sold to him. Otherise it becomes necessary for us to examine as to how many times the car was sent to the workshop and the number of days it was kept there for repairs and whether the
respondents were given sufficient advance notice of the defects in the car. When reasonable opportunity had been given to the respondents to repair the car and yet there is a failure it would certainly be a case for refund or replacement. It is no duty of the consumer to take new car again and again to the workshop and deprive him of the use of the car for number of days. He never bargained for such a situation.
As noted above, the defence of the respondents in the present case is that the car was defect free and there was no misrepresentation that it was a German car which was sold to Bhagat. Respondents denied that they indulged in any unfair trade practice. They say that if one reads the brochure of the car what has been represented is that the car is a product of technical know-how /engineering which they had obtained from Adam Opel A.G. (a German Company) and not that the car is manufactured in Germany or by Adam Opel A.G. In support of their submissions, respondents had brought on record an agreement between the first respondent and Adam Opel A.G. dated 24.11.94 called the ‘Technical Information and Assistance Agreement’ which according to the respondents contemplates technical assistance and support from Adam Opel A.G. to the first respondent. But then the consumer is handed over the brochure when he wants to purchase the car and not the agreement which the manufacturer might have entered with Adam Opel A.G., Germany. Still when we refer to this agreement and yet another agreement under which agreement called ‘trade mark license agreement’ between first respondent and Adam Opel A.G. these merely mean that first respondent can use the trade name of Opel on its product and on the terms for the technical assistance and training. The
reason for the first agreement dated 24.11.94 are set out in the preamble containing clauses (a) to (f) which we record as under:
“A. Opel is engaged in the business of designing, developing manufacturing and marketing motor vehicles.
B. GMI wishes to produce and market certain motor vehicles with the technical assistance of, and under a technology license from, Opel, the terms of which are set out below.
C. Opel has a continuing interest to ensure that motor vehicles which are based on Opel’s technology and produced worldwide achieve a high level of quality and customer satisfaction.
D. GMI has assured Opel that it is capable of achieving, and will achieve, that high level of quality and customer satisfaction for motor vehicles which it produces with the technology and technical assistance of Opel.
E. Opel is therefore willing to give GMI such technology license and technical assistance, on the terms and subject to the conditions set out below.
F. The Government of India has approved this project as set out in letter No.FC.II 38 (92) dated 26/2/92 read with letters of same number dated 28/8/93, 13/9/93, 12/10/93, 6/1/94. 28/1/94, 7/3/94 and 31/8/94 received from the Secretariat for Industrial Approvals (FC II Section), Department of Industrial Development, Ministry of Industry, Government of India, which are made a part of this Agreement and copies of which are attached collectively as Appendix A”.
(Appendix –A not quoted).
We may now refer to the brochure which is the main document. This brochure has logo of Opel and advantages of Opel Astra are described as Under:
“YOUR LIFE DRIVES OUR ENGINEERING
Opel is a name that’s synonymous with fine automobile engineering in Germany - a country that really knows what precision engineering is all about.
Vision has always been the driving force at Opel. We were the first automobile company to introduce assembly line manufacturing in Germany. The first company to introduce world-class safety features as standard equipment. And Opel is the first choice with car buyers in Western Europe, where it is the largest selling brand.
We build our cars with the finest German technology. And we’ve built our name on it.
We are committed to our customers. Committed to provide them with the very best, both in terms of driving pleasure and safety. At Opel, we set the standards for today and tomorrow - in technology, quality, safety, as well as environmental awareness which is whole new area of concern for car makers in India.
DISCOVER THE DRIVING EDGE OF GERMAN ENGINEERING
The Astra invites you to a real driving experience. Let us introduce you to a car that offers you everything you’ve been looking for… and more. A car that’s been engineered with the finest German precision.
The Astra gives you a feeling of solidity and total control. German engineers have really studied Indian road conditions and driving behavior - you can see this in so may important details. ……”
It will be seen that in the brochure there is no indication that the car has been manufactured elsewhere than Germany. It is a car, which is not a German car made in Germany but made outside Germany as German car. There is vast difference in these two expressions for a consumer who has to buy a German car. According to Bhagat it is a clear case of misrepresentation and unfair trade practice indulged by the respondents. He said he bought the car believing on the basis of representation made in the brochure that though he was getting a car assembled in India but nonetheless one that ‘engineered with finest German precision’, that German Engineers came to India to study the Indian roads conditions (to modify the car accordingly) and that it had mostly German components and that it is a product representing ‘fine automobile engineering in Germany’. Bhagat says that all this was not true. He wanted to buy a German car made in Germany and not a car manufactured as German car elsewhere. Reference is made to the following paragraph in the affidavit of the first respondent and Bhagat commented that it contained blatantly falsehood on the face of it:
“3. That I say that the Holden, Australia is a fully owned subsidiary of General Motors Corporation. The car is indeed a marvel of German engineering, with various assembly lines sourced from various parts of the world… it is a worldwide practice of General Motors, that various parts are sourced from various assembly lines from different parts of the Globe. Holden Engines are a German design assembled in one of the corporation plants in Australia. In fact GM operates on a Global Scale and sourcing components from various countries is essential to provide the latest technology in each component as engineered by German Engineers. In view of this unlike other car manufacturers General Motors is not required to disclose the make of the engine as the engine being a product of its own corporation”.
Bhagat wondered if the averment that each component of General Motors’ car is engineered by German Engineers and he referred to following facts:
i) Adam Opel A.G. in Germay, and Holden in Australia, are different companies, which make Opel, and Holden cars, respectively. They are different corporations and their cars have different reputations. The fact that General Motors acquired controlling interest in them does not make them the same company.
ii) On the respondent’s logic, a Holden car can be represented as an Opel, and vice versa - and all General Motors cars, e.g. Cadillac, Buick, Chevrolet etc., can be represented as German cars because German engineers engineer ‘each component’ of GM cars. This is preposterous.
iii) Suppressing the fact that Australian engineers, make the engine at a Holden plant in Australia, and representing it instead as ‘engineered with the finest German precision’ is blatant misrepresentation, and an unfair trade practice.
iv) If the brochure disclosed that the car’s engine is of German design, but made in Australia by Holden, there would have been no case: the Appellant would never have bought it”.
In our view what Bhagat says is correct. It was the duty of the respondents to disclose the make of the engine which was a Holden engine manufactured by Holden Company of Australia, though it might be as per with the technical know-how of Adam Opel A.G. If we read the brochure it conveys to consumer that Opel Astra is a German car made in Germany. The origin of the car had to be disclosed so that a consumer is not misled. A consumer has to be protected against such practices. Even an innocent representation is of no avail. Reference may be made to Section 18 of the Contract Act and particularly sub-section (3) thereof which is as under:
“18. Misrepresentation means and includes -
(1) the positive assertion in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement”.
Bhagat further submitted that in the brochure it is represented that German Engineer had really studied the Indian road conditions for the Opel car to run properly there but subsequent admission was made by respondents that the car could not run satisfactorily because of Indian petrol which was yet another case of misrepresentation. Bhagat says he would not have bought the car had it been disclosed to him at the time of sale that car would not run satisfactorily on Indian petrol. The circular of the respondents saying that Opel car cannot run properly on Indian petrol was issued by the respondents during the pendency of the complaint and was several months after the purchase of the car by Bhagat. The circular cautions that “currently the fuel available in India has high level of impurities. In addition, the fuel does not contain the required additives and detergents…” and advises Opel owners that they must use a special additive every time the fuel tank is filled. When the German Engineers studied the Indian roads as claimed in the brochure they would certainly have tested the petrol available in India. It is thus certainly another case of misrepresentation.
We should not be understood to have said that cars made in Australia are not as good as that made in Germany. However, it is no secret that in India people have strong preference for anything that is German. When a consumer has a fancy or yearns for German car, i.e. a car made in Germany, he cannot be sold a car saying it to be as German car when the engine which is its driving force is manufactured in Australia. In the brochure it is all German, German and German and there is not a whisper of the engine of Australian origin. An engine manufactured in Australia may be as good as that manufactured in Germany even though “engineered with finest German precision”. But it is a question of faith and confidence. Of course, a manufacturer need not tell why he got engine manufactured in Australia and that it is as good as manufactured in Germany but the fact must be disclosed to the consumer. It may be that when a product even of better quality with a lesser price can be obtained from one country still a consumer may be labouring, even though under wrong notion that he must get a product of particular country which product he considers to be of better quality even on a higher price. He certainly has a right to do so. Respondents could not pay on the feelings of a consumer when that consumer has longing for a car made in Germany and sell him a car representing it as German car when it is not made in Germany though it may be as good as German car being ‘engineered with finest German precision’. Similarly, when a consumer entertains a view point that a product made in Germany will be of a higher quality he may not be satisfied if the same product is made in another country though engineered with finest German precision is offered to him. Take the case of PFAFF sewing machine. PFAFF machine made in Germany and that made in India engineered with finest German precision will not mean same thing to him and when you do not tell him where that machine is made and stop of saying that it is engineered with finest German precision you are certainly guilty of suppression of material fact and it is misrepresentation.
Bhagat also submitted that it was a case of false trade description. In this connection he referred to the provision of Monopolies and Restrictive Trade Practices Act, Weights & Measures Act, and Drugs & Cosmetics Act etc. and the Trade & Merchandise Marks Act, 1958. We are, therefore, of the opinion that respondents made Bhagat to believe that the car he would be buying a German Car when in fact it was a car manufactured outside Germany by different company, though under the technical know-how of the German Company Adam Opel A.G. Brochure issued suppresses relevant information which should have been made known to the purchaser of the car. It is certainly a case of misrepresentation.
After the respondents had filed their respective submissions Bhagat filed application for judgment on admission wherein it was said that car sold to him was fitted with Australian engine by the company called Holden and not a German Opel one. He said when this was admission on the part of the respondents he was entitled to a judgment on the misrepresentation of the car.
Bhagat had been complaining about various defects in the car. During the period the car was delivered to him till it was finally left with the Respondents, he lodged various complaints numbering about 10. Thereafter also he has been writing to the respondents pointing out various defects in the car. Main defects which he pointed out in the car were detailed in para 33 of his complaint which are as under:
“33. The main defects in the car relate to the engine-
a) The engine has very little power, acceleration, and de-acceleration especially with air-conditioning on. It is possible that power varies from time to time due to the defective engine. A normal 1600 cc engine will have much more power; it is also likely that the engine does not generate 75 bhp that the specifications attribute to it.
b) The engine has run on three cylinders for quite some time on at least two occasions in May 1997, after the car had been used for two months; the engine is deteriorating. It is impossible to rely on the car for travelling out of Delhi.
c) On 14.6.97, the Engine Malfunction Warning light came on each time the engine was started; this also shows that the engine has deteriorated further.
d) Fuel consumption at 6-7 kms./litre with air-conditioning is unacceptably low; this also suggests a defective engine - it appears to have the power of a 1200 cc. and the fuel consumption of a 2500 cc. engine.
e) The car starts vibrating at idling when the air-conditioning is switched on. Sometimes it vibrates with a grating rotational feel even when the air-conditioner is off.
f) The idling speed is unstable despite being controlled by the car’s computer, it can fall by itself; this shows that the engine is defective. On 14.6.97 it was falling to about 600 r.p.m. on switching on the air-conditioner. The engine must have been damaged by the load of the air-conditioner at such low engine speed.
The respondents stated that these defects had been looked into and car was in perfect running condition. It is not necessary for us to go into the correspondence that was exchanged between the parties on the complaints made by Bhagat as this Commission in appeal sought expert opinion of ARAI. Bhagat said that the report was clearly biased and tailored to support the respondents. Bhagat said that it was a new car which had been sent to ARAI for report but ARAI considered it to be an old car when it was not so. He said the car had run about 2500 kms. which was only due to the trips to the workshop or on test drives. The whole basis of the report of ARAI is therefore, according to him, not correct. His principal objections could be stated as under:
(i) ARAI said that “there is no deficiency in cooling controls due to lack of thermostat - when carefully read what is said is that cooling can be reduced by letting in warm air from the fresh air vent (called ‘A/C flap’ in the report) - equivalent to lowering the window. This is outrageously absurd. The report suppresses the fact that letting in outside air by the A/C flap also lets in diesel and other exhaust fumes into the passenger compartment, making it impossible to sit in the car without choking. The nature and quality of this test and report - and the obvious care taken to protect the manufacturer, albeit by an asinine and silly suggestion - makes it clear that the report is biased and unreliable. ARAI is unable to simply admit that there is no thermostat in the air-conditioner”.
(ii) The remark of ARAI that car had low torque which could be normally expected for an used engine without adjustment for maximum performance when the car was new.
(iii) The complaint that the car’s engine HP was less than 75 bhp specified and it had low acceleration and de-acceleration and it will be proved by the readings as given in annexures 5 and 6 of the report of ARAI. The complaint was that fuel consumption was 6 to 7 Kms. with air-conditioning but the ARAI report finds that by driving at a constant speed the car’s fuel consumption was about 17 Kms. per litre with air-conditioning when as per the affidavit of respondents it was 9.3. Kms. with air-conditioning. The finding of ARAI, therefore that car did almost double of what the respondents could achieve with their best efforts in similar conditions is certainly not only wrong but absurd. The instruction book supplied with the car showed fuel consumption was 10 Kms. in the city driving (without air-conditioning as subsequently clarified by the respondents).
(iv) The report finds fuel consumption in average Indian city driving at 12.5 Kms. per litre and if this was with air-condoning then it would be 50% higher than the manufacturer’s claim. According to Bhagat these findings give no credibility or value to the report. There was a complaint that car starts vibrating when air-conditioning was switched on at idling but ARAI’s report showed that vibration was only tested when the car was running at road at 50 Kms. per hour. The absence of a report of vibration with the engine idling would make the report faulty.
All these and other objections Bhagat gave details. In reply to these objections, respondents except for denying same gave no particulars. For example, when Bhagat questioned the report admitting low torque and said that car was new, there was no specific denial by the respondents. The fact that the car was new had also not been denied specifically by the respondents. Allegation about fuel consumption again there is just vague denial without any particulars. From the reply filed by respondents to the objections to the report of ARAI we would rather say that the objections stand unrebutted and in that view of the matter we would have to discard the report. All the same we do not find defects could be of such a nature that would substantially impair the use of the car. But then car has been sent to respondents for repairs again and again and complaints also lodged with considerable regularity, yet the defects could not be removed. On that account respondents have rendered deficient service. That made it a case for replacement of the car. However, in view of our finding that there was misrepresentation about the make of the car we will hold that in the present case complainant is entitled to refund of the price paid by him for purchase of the car
Accordingly this appeal is allowed. The impugned order is set aside. Appellant-complainant is entitled to refund to Rs.7,34,244/- (price of the car) with 12% interest per annum from 22.1.97 when the payment was made. Complainant will also be entitled to cost which we assess at Rs.10,000/-. Considering that the complainant has suffered because of the defective car supplied to him and also because of misrepresentation, we further award him compensation of Rs.2.00 lakhs. This is what we call as consumer component or consumer surplus. In this connection, we may refer to our order dated 7th November, 2002 in the case of Bombay Brazzerie vs. Mulchand Agarwal & Anr. (First Appeal No. 613/95) wherein we held as under:
“Deficiency in service has two aspects- (i) claim for the amount of actual loss and (ii) damages for inconvenience, harassment and mental tension. This second aspect is what we call consumer factor or consumer component or consumer surplus like the present one. Consumer component may not be present in every contract. It would depend upon the nature of the contract. Mulchand had given his car to the Hotel management apparently for safe parking till he consumes his food and pays the price. One of the factors which brought him to the Hotel was the offer of the Hotel management for free but safe parking. After consuming his food and paying the price Mulchand comes out and to his horror he finds his car has been stolen. He and his friends suffer a great deal of inconvenience and mental tension. Mulchand has claimed compensation for inconvenience, harassment and mental tension which he had to undergo. In our view, though the Mulchand may not be entitled to the price of the car in view of the contract he is certainly entitled to damages for mental tension, harassment and inconvenience caused to him and his friends. Mulchand has claimed Rs.25,000/- as compensation on this account.
In Ruxley Electronics v. Forsyth  AC 344, HL, Ruxley, the builder had been contracted to build a 7 ft. 6” swimming pool but constructed a 6 ft. deep swimming pool. The pool was safe for diving and the shortfall did not decrease its value. At first instance the trial Judge rejected the claim for L 21,000/- for reinstatement but awarded L 2500 for loss of amenity. For certain reasons the loss of amenity award was not in issue in the House of Lords. However, several of the Law Lords commented on it. Lloyd of Berwick LJ said that “He (the judge) took the view that the contract was one ‘for the provision of a pleasurable amenity’. In the event, Mr. Forsyth’s pleasure was not so great as it would have been if the swimming pool had been 7 feet 6 inches deep. This was a view which the judge was entitled to take.” However Lord Mustil indicated a more principled approach to the assessment of damages in such situation he said, “The law must cater for those occasions where the value of the promise to the promisee exceeds the financial enhancement of his position which full performance will secure. This excess, often referred to in the literature as the ‘consumer surplus’ is usually incapable of precise valuation in terms of money, exactly because it represents a personal, subjective and non-monetary gain. Nevertheless where it exists the law should recognise it and compensate the promisee if the misperformance takes it away.”
Keeping in view the aspect of ‘consumer factor’ or ‘ consumer component’ or ‘consumer surplus’ as aforementioned we are of the opinion that Mulchand is certainly entitled to compensation for the mental tension, harassment and inconvenience caused to him. Mulchand has claimed Rs.25,000/- but in our view award of Rs.10,000/- will meet the ends of justice. There cannot be any standard for measruing damages in such a situation.
Six weeks time is granted to the respondents to make the payment as ordered. In case of default the amount of Rs.2.00 lakhs awarded as compensation will also carry interest @ 12% per annum till payment.
(JUSTICE D.P. WADHWA)