NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
(From the order dated 21.9.2000 in F.A. No.178/2000
of the State Commission, Tamil Nadu)
M/s. T.V. Sundaram Iyengar & Sons Ltd. … Petitioner
Dr. Muthuswamy Duraiswamy & Anr. … Respondents
(From the order dated 21.9.2000 in F.A. No.246/2000
of the State Commission, Tamil Nadu)
M/s. Sundaram Motors … Petitioner
M/s. Elsons Garments (P) Ltd. & Anr. … Respondents
A N D
(From the order dated 21.9.2000 in F.A. No.689/1999
of the State Commission, Tamil Nadu)
M/s. T.V. Sundaram Iyengar & Sons Ltd. … Petitioner
CNR Consumer Rights Protection Cell & Ors. … Respondents
HON’BLE MR. JUSTICE D.P. WADHWA,
MRS. RAJYALAKSHMI RAO, MEMBER.
MR. B.K. TAIMNI, MEMBER.
Dealer - deficiency in service - liability vis-a-vis pincipal/manufacturer - depends on the terms of appointment of dealer and facts of each case.
For the petitioner in RP 1916/2000 : Mr. Mohan Parasaran and
Mr. G. umapathy, Advocates.
For the respondents in RP 1916/2000 : N E M O
For the petitioner in RP 1917/2000 : Mr. Anil B. Diwan, Senior Advocate and
Mr. Mohan Parasaran and Mr. G. Umapathy
Advocates with him.
For the respondent in RP 1917/00 : Mr. C. Paramasivan, Advocate.
For Pal Peugot : N E M O
For the petitioner in RP 1970/2000 : Mr. Mohan Parasaran and
Mr. G. umapathy, Advocates.
For the respondents in RP 1970/2000 : N E M O
O R D E R
DATED THE APRIL, 2002.
JUSTICE D.P. WADHWA, J.(PRESIDENT).
Question involved in all the three petitions is as to who can be held liable for service; whether it is whether it is the manufacturer of cars, M/s. Pal Peugeot Ltd. or the dealer Sundaram Motors (stated to be a division of T.V. Sundaram Iyengar & Sons Ltd. )? Complainants in all the three different complaints out of which these petitions arose alleged deficiency in service both on the part of the dealer and the manufacturer. They had cancelled the booking of the cars and demanded payment of advance booking amount of Rs.25,000/- with interest.
As to how these claims arose we may have a brief look into the background.
M/s. Automobiles Peugeot of France, an international car manufacturer, had entered into a joint venture agreement with M/s. Premier Automobiles Ltd., manufacturers of Fiat cars in India, in order to manufacture and sale of Peugeot -309 models car. The joint venture agreement was in the name of M/s. Kalyan Motors Company Ltd. which was incorporated during 1994. Later this Company was re-christened as M/s. Pal Peugeot Ltd. Premier Automobiles Ltd. who were manufacturer of Fiat cars in the country had a network of dealers spread all over the country. It is stated that with this background M/s. Pal Peugeot Ltd. approached Sundaram Motors who were already dealers of Fiat cars in the southern region of the country. In anticipation of appointment as dealers for Peugeot-309 cars Sundaram Motors paid a sum of Rs.1.00 Crore to Pal Peugeot Ltd. as security deposit. It is nobody’s case that any dealership arrangement came into being between Pal Peugeot Ltd. and Sundaram Motors. However, Sundaram Motors in anticipation of the dealership agreement, provided space in its existing showroom and made arrangements to collect completed application forms with demand drafts/bankers cheque favouring M/s. Pal Peugeot Ltd. payable at Bombay from the individual who desired to book the cars. These applications were received by Sundaram Motors in response to various newspapers advertisements directly given by Pal Peugeot Ltd. for priority-cum-registration of Peugeot-309 cars by individuals from all over the country. What was the arrangement between the individual who wanted to book the car Peugeot-309 , Sundaram Motors and Pal Peugeot Ltd. is reflected in the application form which contained the Terms and Conditions and other relevant information. An applicant agreed to these terms as he records over the signature ‘I/we have carefully read the Terms & Conditions for the priority registration attached herewith and agree to all Terms & Conditions. I/we understand that improper filling will render the application void.”
A copy of the application containing terms and conditions and instructions for priority registration of Peugeot-309 car is retained by the applicant. Some of the relevant terms may bet set out as under:
“2 a) Application for each car should be made in a separate application form.
b) Any number of applications can be made in the name of an individual or a Company, subject to clause 2(a) above.
4. The application form comprises of two parts:
Part I: To be filled in by applicant
Part II: With regard to those applicants who are seeking finance through any finance company/bank for the booking amount, PAL PEUGEOT LTD., hereinafter referred to as ‘The Company’ shall send all communications to and take all instructions including those relating to cancellation, transfer, etc. directly from such finance company/bank only. The applicant in such case shall not have any right to hold the Company responsible or liable for any action taken pursuant to the instructions of the finance company/bank.
6. The company reserves the right to close booking any time after 15 calendar days from the date of commencement of booking.
7. Applicantion should be accompanied by an Account Payee demand draft/pay order/banker’s cheque in MICR format for Rs.25,000/- (Rs.Twenty-five Thousand only) issued by any Scheduled Bank, payable at Bombay, in favour of ‘PAL PEUGEOT LTD. -A/c 309 Booking’ being advance for priority registration. Payment by way of cash/cheque will not be accepted.
8. The Dealers from whom the applicant may take delivery of Peugeot 309 cars are indicated in the list attached under item 8 of the application form, in the space marked, the applicant should enter the code number of the Dealer from whom the applicant would like to take delivery of the car.
9. applicant should obtain applicant’s copy of the application form duly stamped after submitting the completed form.
10. All valid applications will be segregated Dealerwise and priority numbers will be allotted to them by Pseudo Random Number Generation Technique using a Computer.
11. The Receipt-cum-Priority Cards, for the accepted bookings, will be sent to the applicants within three months from the date of closing of booking Under Certificate of Posting.
12. (a) Interest would be payable @ 9% per annum, compounded annually. This will be calculated from the last date of booking for priority registration up to the last date of the month preceding the month in which priority is likely to mature as per the first intimation letter from the Company.
(b) In case of cancellation, interest will be calculated from the last date of booking up to the date on which cancellation application is received by the Company. If the cancellation has been made after the issue of first intimation letter, the interest will be calculated as per 12(a) above.
(c) However, no interest will be paid if the cancellation request is received or the offer intimation letter is released by the Company, within 365 days from the date of closing of booking.
13. Interest payable on delivery of car will be sent by way of an interest warrant after receipt of relevant delivery documents from the Dealer.
15. The letter of cancellation of booking should be sent to Sales Department (Peugeot 309), PAL PEUGEOT LTD., Kalyan Shill Road, Manpada, Dombivli 421 204 Dist. Thane (Maharashtra), duly signed by the applicant who has signed the application form along with the duly discharged Receipt-cum-Priority Card. The refund with interest, if applicable will be made to the applicant within 60 days from the date of receipt of cancellation documents complete in al respects.
In case of the death of the applicant, the refund will be made in the name of the nominee as indicated in the booking form.
16. The bookings are transferable to any person, company, firm, etc. only after the issue of Receipt-cum-Priority Cards. The normal handling charges for each transfer will be Rs.2000/-. This amount should be paid by way of a demand draft in favour of PAL PEUGEOT LTD., payable at Bombay, accompanied by a transfer application.
In the event of the death of the applicant the booking may be transferred to the nominee as indicated in the booking form without any handling charges.
Change of address will be permitted only after the issue of Receipt-cum-Priority cards.
17. The applicant will be intimated in advance of the likely maturity of the priority. The Company will, from time to time, release the offer intimation letters out of the priority list, for each dealer. This entitles the applicants with the matured priority numbers to complete delivery formalities and make balance payments against the price of the car to the dealer mentioned in the offer intimation letter. The delivery of the cars will depend upon the seniority of the customers based on the date of balance payment and colour choice opted for the car,
18. The car will be billed to the applicant either directly by the Company or by its authoried dealer, as may be decided by the Company.
19. If for any reason the Company is unable to deliver the car from the dealer of applicant’s choice, it reserves the right to deliver the car from any other dealer.
20. Acceptance of Rs.25,000/- (Rupees Twenty-five Thousand only) does not create any contractual liability on the Company to sell and deliver any car to the applicant.
22. At the time of completing formalities for taking delivery of the car or in the event of cancellation, the applicant should surrender the Receipt-cum-Priority Card to the Dealer or to the Company respectively duly discharged by affixing the applicable revenue stamp and signing the same.
23. The Company reserves the right to retain 5% of the production of Peugeot 309 cars as manufacturer’s quota to be allotted as per the guidelines framed by the management from time to time.
24. The Company also reserves the right to sell upto 15% of production of Peugeot 309 cars to Defence Organisation. Government Departments, Public Sector Companies, Fleet Operators, against payment in foreign exchange; vendors for company use taxi etc. even if such customers have not registered their priorities with the Company. In addition, the Company reserves the right to export Peugeot 309 cars at its discretion.
25. At an appropriate time at its sole and absolute discretion, the Company may offer the car through other dealers also.
27. Change in address, of the applicant, notice of surrender of priority number etc., should be intimated to Sales Department (Peugeot 309), PAL-PEUGEOT LTD., Kalyan Shill road Manpada Dombivli 421 204 Dist. Thane, Maharashtra. In all future correspondence the application form number and the priority number when allotted should be quoted.
28. In case of any dispute, the same will be subject to the exclusive jurisdiction of courts in Bombay.
29. The Company will not be liable for loss of application form and of demand draft/pay order/banker’s cheque or any delay in the receipt when sent by mail.
Since the Pal Peugeot Ltd. was unable to deliver the cars, complainants in each of three complaints sought refund of the amount of Rs.25,000/- with interest and damages.
District Forum in complaint filed by M/s. Elson Garments (P) Ltd. (out of which Revision Petition No.1917/2000 arose) proceeded ex parte against both the Pal Peugeot Ltd. and Sundaram Motors as they were absent in spite of service and on the basis of the record directed both of them to refund Rs.25,000/- with interest @ 12% per annum together with compensation of Rs.25,000/- and Rs.500/- as cost. In the complaint of Dr. Muthuswamy Duraiswamy ( Revision Petition No.1916 before us) District Forum held that it was only Pal Peugeot Ltd. which was liable and directed it to refund Rs.25,000/- with interest @ 12% per annum. District Forum also awarded Rs.5000/- as compensation towards mental agony and Rs.1000/- as cost. In the complaint filed by CNR Consumer Rights Protection Cell (Revision Petition No.1970 before us) which was only against Pal Peugeot Ltd., District Forum held that there was relationship of buyer and seller and the complainant had not hired the services of Pal Peugeot Ltd. for consideration and he being not a consumer his complaint was held not to be maintainable. From the record it is not clear to us as to how later M/s. T.V. Sundaram Iyender & Sons Ltd. filed appeal against that order. Since the State Commission in the impugned order has raised a common question of law we need not go into the question as to how T.V. Sundaram Iyengar & Sons Ltd. came into picture in this revision petition.
State Commission on the basis of the averments framed the following questions for its decision.
1) Whether the customer who booked the PAEUGEOT 309 cars by remitting the deposit amount of Rs.25,000/- through the dealer M/s. Sundaram Motors by way of demand draft in favour of the manufacturer M/s. PAL PEUGEOT Limited on priority-cum-registration basis can be construed as a “consumer” within the meaning of Sec.2(1)(d)(i) or 2(1)(d)(ii) of the Act?
2) If point No.1 as above is answered in the affirmative, whether liability can be mulcted upon the manufacturer M/s. PAL PEUGEOT Limited as well as the dealer M/s. Sundaram Motors jointly and severally for the non-
refund of the deposit amount within the prescribed time in case of due cancellation of the registration made by the customer.
Thereafter the State Commission in its impugned order after referring to various judgments of Supreme Court, National Commission, State Commission held as under:
“41. For the reasons as above, we answer the point No. in the affirmative by holding that the customers who booked PEUGEOT 309 cars by remitting the deposit amount of Rs.25,000/- through the dealer M/s. Sundaram Motors by way of demand draft in favour of the manufacturer M/s. PAL PEUGEOT Ltd. on priority-cum-registration basis, have to be necessarily considered as “consumers’ within the meaning of Section 2(1)(d)(ii) of the Act.
42. We hold on Point No.2 that liability can be mulcted upon the manufacturer M/s. PAL PEUGEOT Ltd. as well as the dealer M/s. Sundaram Motors jointly and severally for the non-refund of the deposit amount within the prescribed time in case of due cancellation of the registration made by the customer.”
It is not disputed before us that a complainant in such circumstances would be consumer within the meaning of the Consumer Protection Act, 1986.
In coming to the conclusion as to how Sundaram Motors is also liable as dealer, State Commission took into consideration the following factors:
1. Service to be rendered to the customers either by the manufacturer or by the dealer may consist of pre-sales service and after sales service. Pre-sales service is rendered to customers who happen to be potential users i.e. persons who booked the cars by remitting the amount of advance and getting the priority-cum-registration card. After-sales-service is to be rendered to customers who become the actual users by effecting the purchase of cars which had already been booked by remitting the prescribed deposit amount as required by the manufacturer for getting the priority-cum-registration card. The dealer and the manufacturer as well, in the sales promotion of manufactured new brands of cars, in the very nature of things are expected to do service - pre-sales and after sales as the case may be to would be customers and the actual users as well and that that sort of service must necessarily be the legitimate expectation of potential and the actual users. None will purchase new brands of cars unless this sort of a service i.e. pre-sales and after-sales is rendered to them.
2. Sundaram Motors happens to be the exclusive dealer of M/s. Pal Peugeot Ltd. so far as State of Tamil Nadu is concerned. Sundaram Motors receives applications from the intending purchasers of Peugeot-309 cars; retains one copy of the application and gives an acknowledgment for receipt of the application; receives draft though in the name of Pal Peugeot Ltd. which Sundaram Motors along with application sends to Pal Peugeot Ltd.; answers all queries, information, if any, sought by the intending customer; even if cancellation is to be made by a customer of the booked car, he could have cancellation effected by serving intimation to the manufacturer through the dealer; effects delivery of car to the customer as and when his turn comes according to the priority-cum registration card issued to him; during the time of effecting the delivery of the car adjusts the payment of advance amount deposited by the customer at the time of booking of the car towards the sale price of the car and receives only the balance amount to be paid by the customer; and lastly after effecting sale of the car do after-sales free service during the warranty period.
3. The transaction of purchase of car right from the booking till upto the sale and consequent delivery must have to be construed as one individual transaction. Such transaction cannot at all be dissected into different parts as -pre-sale trnsaction and after-sale transaction.
4. Service is to be rendered, of course, for consideration not only to the actual user but also to potential user. This is apparent from the definition of service as contained under Section 2(1)(o) of the Act.
State Commission considering all these factors observed that inference was irresistible that both the manufacturer and dealer did in fact contemplate rendering of service to the actual and potential users of the cars. State Commission was conscious of the fact that Sundaram Motors at the time of booking of the car by receiving the deposit amount by way of demand draft in favour of Pal Peugeot Ltd. along with the application did not at all charge fee from the customer and that it simply remitted the deposit amount received by it from the customer to the manufacturer. Yet it held that this by itself would not lead one to the conclusion that for rendering such service Sundaram Motors did not at all charge or collect any fee for rendering of such service. Strangely, State Commission observed that there are certain visible-invisible things in the transaction to be taken note of into consideration for arriving at a just decision. State Commission then said it was pertinent to note that for the service to be rendered by the dealer during the warranty period after the sale of the car no fee or charge is levied or collected from the customers and for any deficiency occurring during the warranty period on the part of the dealer it was liable for that deficiency in service and to compensate the customer.
During the course of argument before us it was brought to our notice that the application forms were sold to the customers by the dealer @ Rs.25/- per form. In fact, the amount of Rs.25/- is printed on each application form. It is not clear to us as to who had charged this amount, whether it was Pal Peugeot Ltd. or Sundaram Motors. It was also pointed out during the course of arguments that Sundaram Motors had purchased these forms in bulk from Pal Peugeot Ltd. and in turn sold the same to the customers. Since there is nothing on the record to support this contention we will assume for the sake of argument that it was Sundaram Motors which was charging Rs.25/- for every form sold by it to the customer.
State Commission has referred various decisions where the manufacturer and dealer are made parties and they have been held to be jointly liable. These cases would be those of Maruti Udyog Ltd., Lohia Machines etc. We cannot decide the issue involved in the present case with reference to the decision rendered in those cases. We have to examine the terms of appointment and role of dealer in each case. One thing has to be kept in mind and that is that we cannot go against the terms of contract between the parties unless of course, the terms are illegal and the contract void. It has not been suggested before us that the terms and conditions stipulated in the application form are in any way is illegal. Some of the conditions may appear to be unreasonable but that would not make contract void or even voidable. A consumer Forum has no jurisdiction to strike down a condition in the contract howsoever unreasonable it may appear to be so, so long it is not unlawful. We are unable to appreciate the so called “invisible conditions” which the State Commission is referring to. Transaction has to be seen with reference to the terms and conditions to which complainant agreed to remain bound. We have also not been able to appreciate the reasoning of the State Commission as to pre-sales and after-sales service of the cars. Assuming that Rs.25/- is charged by Sundaram Motors for it to render service the question would arise as to what service it has to render under the terms of agreement and that to our mind that would appear only to receiving application along with demand draft/pay order in the name of Pal Peugeot Ltd. and then to forward the same to Pal Peugeot Ltd. Sundaram Motors would certainly be held deficient in service in case it does not do that and the customer loses his priority number for delivery of car to him. Sundaram Motors will also be perhaps liable if the application form and the demand draft/pay order/banker cheque is lost or there is delay in sending the same to the Pal Peugeot Ltd. Terms of the contract are specific that when booking is cancelled it is the Pal Peugeot Ltd., the manufacturer, who has to refund the money with interest. Sundaram Motors does not come into the picture. It will be the manufacturer who will be deficient in service if amount is not refunded with interest as stipulated in the conditions of booking. We fail to see how Sundaram Motors would be liable for deficiency in service on the part of Pal Peugeot Ltd. and how it could be held that both are jointly and severally liable.
A dealer cannot necessarily be a agent. If we refer to Law Lexicon ‘dealer’ is seller of specified articles. For example in the present case Sundaram Motors is a dealer in cars. As to what are its terms with the manufacturer - Pal Peugeot Ltd. for being its dealer of Peugeot-309 cars we have to see the terms and conditions on which the customer has booked the car. We cannot go beyond that and assume something which is not there. In the present case Sundaram Motors could well be classified as purchasers for resale. It is nobody’s case that Sundaram Motors is the agent of Pal Peugeot Ltd. Chitty on Contracts (para 31-002, 27th Edition) says “…..but the doctrines of agency are not always so well worked out beyond the main affairs of their operation and the context in which the reasoning is used and the extent of its use may, therefore, require careful consideration in each case.”
Sundaram Motors may be canvassing for booking of Peugeot-309 cars but that would also not make them liable for refund of the advance booking of Rs.25,000/- as Sundaram Motors promised no such service. Even if we have to see the substance and not the form of transaction we are unable to agree with the State commission that Sundaram Motors will be held to be deficient in service and may be liable to refund the advance amount along with manufacturer - Pal Peugeot Ltd. When we refer to the definitions of ‘consumer’, ‘complainant, ‘deficiency’ and ‘service’ as contained in Section 2 of sub-section (1) read with clauses (c ), (d) and (e) of Section 14 of the Act we fail to see how Sundaram Motors could at all be held liable.
State Commission has no doubt made interesting discussion of law between the dealer and manufacturer but then the term ‘dealer’ is sometimes a misnomer and for a dealer it will have different consequences depending upon the terms and conditions of each case. State Commission attributes various functions to the Sundaram Motors to hold it liable but those functions are not to be found in the terms and conditions of booking of Peugeot -309 car by the complainants. This has led to serious error of jurisdiction. We would, therefore, set aside the impugned order of the State Commission and hold that it is only Pal Peugeot Ltd. who would be liable to refund the amount of Rs.25,000/- payable to each complainant as advance booking with interest @ 12% per annum from the date of booking till payment since Pal Peugeot Ltd. has committed breach of the agreement, we will also award Rs.5,000/- to each of the complainants towards mental agony payable by Pal Peugeot Ltd.
In cases like the present one this Commission has been requiring the petitioner to deposit a particular sum to defray the expenses of the respondent which is payable to him irrespective of the result of the revision petition. Normally costs follows the event and though the petitioner succeeds in all these revision petitions but considering the practice of this Commission we will direct the petitioner to pay Rs.5000/- to each of the complainants as costs to defray their expenses to defend these petitions.