Brand Ambassador Not Liable For Unfair Trade Practices Or Deficient Service Unless Directly Linked To Transaction With Consumer: Kerala HC
The Kerala High Court recently held that a brand ambassador will not be liable for a brand's unfair trade practice or deficiency in service unless a direct link is established between him and the consumer's transaction.Justice Ziyad Rahman A.A. however clarified that an action may lie against a brand ambassador/endorser under Section 21 of the Consumer Protection Act for false or...
The Kerala High Court recently held that a brand ambassador will not be liable for a brand's unfair trade practice or deficiency in service unless a direct link is established between him and the consumer's transaction.
Justice Ziyad Rahman A.A. however clarified that an action may lie against a brand ambassador/endorser under Section 21 of the Consumer Protection Act for false or misleading advertisements.
As per Section 21, the Central Authority may impose a penalty of Rs. 10 lakhs on an endorse if there is a false or misleading advertisement. One of the clauses specifically provide that endorser shall not be liable to pay the penalty if he has exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service endorsed.
The Court was considering a plea by actor Mohanlal, who challenged the orders passed by the District and State Consumer Dispute Redressal Commissions rejecting his challenge to maintainability against a complaint filed by persons, who availed the services of Manappuram Finance.
The Court referred to the provisions of the Consumer Protection Act and observed:
“ in relation to deficiency of service or unfair trade practices are concerned, the liability can be imposed upon an endorser, only in a case in which, a direct link has been established between the person who is availing the service and the persons who are impleaded as the opposite parties in the complaint, as service providers or suppliers of equipments.”
The complainants had pledged their gold ornaments at Catholic Syrian Bank for an interest at 15% per annum. Subsequently, this loan was taken over by the Manager of Manappuram Finance by promising a lower interest rate of 12% as endorsed by its brand ambassador Mohanlal in various advertisements.
However, when they approached the Manager of Manappuram to close the loan and release their gold, a higher interest rate was demanded. At this time, they preferred the consumer complaint alleging deficiency in service and unfair trade practice. They sought refund of excess interest collected and additionally, Rs. 25 lakhs as compensation. They arrayed the actor as an opposite party, claiming that they were also attracted by the offer because of the said endorsements made by him.
In his written version before the district commission, the actor submitted that he did not have any direct relation and cannot be held responsible for deficiency of service or unfair trade practice. The question of maintainability of the complaint against him as brand ambassador was also raised.
The district commission, however, relied on the definition of 'endorsement' under Section 2(18) of the Consumer Protection Act, 2019 and held the complaint to be maintainable. This was challenged in revision before the State Commission but it also refused to enter into any specific finding as to maintainability. Aggrieved, the actor came before the High Court.
The Court considered the definitions of 'endorsement' and 'unfair trade practice' under the Act and remarked that the term 'endorser' is not specifically mentioned therein, except under Section 21.
The Court then opined that liability for deficiency of service or unfair trade practice can be imposed on endorser only if there is a direct link between endorser and the persons availing the service.
Next, the Court looked into the complaint to see if there was any direct link was made out. It noted that there were only two references of the endorser in the complaint, the first one that he was an ambassador and the second that Manappuram's manager assured that the interest rate will be as endorsed by its brand ambassador in the advertisements. This, the Court felt, did not establish a direct link between the complainants and the brand ambassador.
Noting that the there was no direct link between the brand ambassador and the complainants' transaction with the brand, the Court absolved the actor from liability and quashed the impugned orders.
Case No: WP(C) No. 31700 of 2024
Case Title: Actor Mohanlal Viswanathan v. State of Kerala and Ors.
Citation: 2026 LiveLaw (Ker) 18
Counsel for the petitioner: B.S. Suresh Kumar, George Sebastian
Counsel for the respondents: K.S. Arundas, Ashley John, Ranjana V., Anusree C.S., Christopher Thomas, Ambily Joshy, Anamika